SEC. File Nos. 33-17917
811-5364
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
Registration Statement
Under
the Securities Act of 1933
Post-Effective Amendment No. 12
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 15
AMERICAN HIGH-INCOME TRUST
(Exact Name of Registrant as specified in charter)
333 South Hope Street
Los Angeles, California 90071
(Address of principal executive offices)
Registrant's telephone number, including area code:
(213) 486-9200
JULIE F. WILLIAMS
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Cary I. Klafter, Esq.
MORRISON & FOERSTER
345 California Street
San Francisco, California 94104
(Counsel for the Registrant)
The Registrant has filed a declaration pursuant to rule 24f-2
registering an indefinite number of shares under the Securities Act of 1933.
On November 16, 1995, it filed its 24f-2 notice for fiscal 1995.
Approximate date of proposed public offering:
It is proposed that this filing become effective on November 25, 1995,
pursuant to paragraph (b) of rule 485.
AMERICAN HIGH-INCOME TRUST
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Item Number of
Part "A" of Form N-1A Captions in Prospectus (Part "A")
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Summary of Expenses
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Investment Objectives and Policies
5. Management of the Fund Summary of Expenses: Fund Organization and Management
6. Capital Stock and Other Securities Investment Objectives and Policies; Certain Securities and
Investment Techniques; Fund Organization and Management; Dividends,
Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares
8. Redemption or Repurchase Redeeming Shares
9. Legal Proceedings N/A
</TABLE>
<TABLE>
<CAPTION>
Item Number of Captions in Statement of
Part "B" of Form N-1A Additional Information (Part "B")
<S> <C> <C>
10. Cover Page Cover
11. Table of Contents Table of Contents
12. General Information and History General Information; Investment Restrictions
13. Investment Objectives and Policies Description of Securities and Investment Techniques;
Investment Restrictions
14. Management of the Registrant Fund Officers and Trustees; Management
15. Control Persons and Principal Holders Fund Officers and Trustees of Securities
16. Investment Advisory and Other Services Management
17. Brokerage Allocation and Other Practices Execution of Portfolio Transactions
18. Capital Stock and Other Securities None
19. Purchase, Redemption and Pricing of Purchase of Shares; Shareholder Account Services and Privileges
Securities Being Offered
20. Tax Status Dividends, Distributions and Federal Taxes
21. Underwriter Management -- Principal Underwriter
22. Calculation of Performance Data Investment Results
23. Financial Statements Financial Statements
</TABLE>
<TABLE>
<CAPTION>
Item in Part "C"
<S> <C>
24. Financial Statements and Exhibits
25. Persons Controlled by or under Common Control
with Registrant
26. Number of Holders of Securities
27. Indemnification
28. Business and Other Connections of Investment Adviser
29. Principal Underwriters
30. Location of Accounts and Records
31. Management Services
32. Undertakings
</TABLE>
Signature Page
<PAGE>
Prospectus
AMERICAN HIGH-INCOME TRUST(R)
AN OPPORTUNITY FOR A HIGH LEVEL OF
CURRENT INCOME AND, SECONDARILY,
CAPITAL APPRECIATION
November 25, 1995
[LOGO OF THE AMERICAN FUNDS GROUP]
AMERICAN HIGH-INCOME TRUST
333 South Hope Street
Los Angeles, California 90071
The fund's primary investment objective is a high level of current income; its
secondary investment objective is capital appreciation.
Under normal market conditions, the fund will invest at least 65% of its assets
in bonds and debt securities rated Ba and BB or below by Moody's Investors
Service, Inc., or Standard and Poor's Corporation or unrated but determined to
be of comparable quality. Securities rated Ba and BB or below are commonly known
as "junk" bonds and are subject to greater fluctuations in value and risk of
loss of income and principal, including risk of default, than are lower yielding
higher rated bonds; therefore, an investment in the fund may not be suitable for
all investors and should be considered carefully prior to investing. (For
additional information see "Investment Objectives and Policies," page 4; and
"Certain Securities and Investment Techniques--Risks of Investing in Bonds,"
page 6.)
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information dated November 25, 1995,
which contains the fund's financial statements, without charge, by writing to
the Secretary of the fund at the above address or telephoning 800/421-0180.
These requests will be honored within three business days of receipt.
SHARES OF THE FUND 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. THE PURCHASE OF
FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
21-010-1195
<PAGE>
TABLE OF CONTENTS
Summary of Expenses.............................................. 3
Financial Highlights............................................. 4
Investment Objectives and Policies............................... 4
Certain Securities and Investment Techniques..................... 6
Investment Results............................................... 9
Dividends, Distributions and Taxes............................... 9
Fund Organization and Management................................. 10
Appendix......................................................... 14
The American FundsShareholder Guide.............................. 16-24
Purchasing Shares............................................... 16
Reducing Your Sales Charge...................................... 19
Shareholder Services............................................ 20
Redeeming Shares................................................ 22
Retirement Plans................................................ 24
IMPORTANT PHONE NUMBERS
Shareholder Services:....800/421-0180 ext. 1
Dealer Services:.........800/421-9900 ext. 11
American FundsLine(R):...800/325-3590
(24-hour information)
<PAGE>
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SUMMARY
OF EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $15 per
year, assuming a $1,000
investment and a 5%
annual return with a
maximum sales charge.
This table is designed to help you understand costs of investing in the fund.
These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offer-ing price)................................. 4.75%/1/
The fund has no sales charge on reinvested dividends, deferred sales charge,/2/
redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management fees...................................................... 0.53%
12b-1 expenses....................................................... 0.22%/3/
Other expenses (including audit, legal, shareholder
services, transfer agent and custodian expenses).................... 0.14%
Total fund operating expenses........................................ 0.89%
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following
cumulative expenses on a $1,000
investment, assuming
a 5% annual return./4/ $56 $75 $94 $152
</TABLE>
/1/ Sales charges are reduced for certain large purchases. (See "The American
Funds Shareholder Guide: Purchasing Shares--Sales Charges.")
/2/ Any employer-sponsored 403(b) plan or defined contribution plan qualified
under Section 401(a) of the Internal Revenue Code including a "401(k)" plan
with 200 or more eligible employees or any other purchaser investing at
least $1 million in shares of the fund (or in combination with shares of
other funds in The American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a contingent deferred sales
charge of 1% applies on certain redemptions within 12 months following such
purchases. (See "The American Funds Shareholder Guide: Redeeming Shares--
Contingent Deferred Sales Charge.")
/3/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/4/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
3
<PAGE>
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FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose unquali-
fied report covering each of the most recent five years
(For a share is included in the statement of additional information.
outstanding This information should be read in conjunction with the
throughout the financial statements and accompanying notes which are
fiscal year) also included in the statement of additional informa-
tion.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
----------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988/1/
------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15 $14.29
------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.. 1.33 1.25 1.28 1.35 1.46 1.59 1.58 .96
Net realized and
unrealized gain (loss)
on investments........ .39 (.99) .74 .99 1.78 (2.11) (.24) (.16)
------ ------ ------ ------ ------ ------ ------ ------
Total income (loss)
from investment
operations........... 1.72 .26 2.02 2.34 3.24 (.52) 1.34 .80
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net in-
vestment income....... (1.32) (1.21) (1.29) (1.32) (1.49) (1.58) (1.58) (.94)
Distributions from net
realized gains........ (.07) (.26) (.13) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total distributions... (1.39) (1.47) (1.42) (1.32) (1.49) (1.58) (1.58) (.94)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $14.30 $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15
====== ====== ====== ====== ====== ====== ====== ======
Total Return/2/......... 13.34% 1.60% 14.59% 18.08% 29.13% (4.02)% 9.92% 5.77%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of year
(in millions)......... $1,111 $ 835 $ 707 $ 438 $ 255 $ 140 $ 125 $ 68
Ratio of expenses to
average net assets.... .89% .86% .87% .94% 1.00% 1.00% .97% .49%/3/
Ratio of net income to
average net assets.... 9.72% 8.63% 8.60% 9.58% 11.41% 12.42% 11.49% 7.48%/3/
Portfolio turnover
rate.................. 29.56% 42.03% 44.37% 58.04% 44.38% 37.89% 45.78% 21.63%/3/
</TABLE>
--------
/1/ Period from 2/19/88-9/30/88.
/2/ This was calculated without deducting a sales charge. The maximum sales
charge is 4.75% of the fund's offering price.
/3/ These ratios are based on operations for the period shown, and,
accordingly, are not representative of a full year's operations.
INVESTMENT The fund's primary investment objective is a high level
OBJECTIVES of current income; its secondary investment objective
AND POLICIES is capital appreciation.
The fund's primary The fund invests primarily in fixed-income securities,
goal is to provide with an emphasis on higher yielding, higher risk, lower
you with high rated or unrated corporate bonds. Under normal market
current income. conditions, the fund will invest at least 65% of its
Its secondary goal total assets in high-yield, high-risk bonds and other
is capital similar securities including preferred stocks. High-
appreciation. yield, high-risk bonds (also commonly referred to as
"junk bonds") typically are subject to greater market
fluctuations and risk of loss of income and principal
due to default by the issuer than are investments in
lower yielding, higher-rated bonds. The fund may also
maintain assets in cash and cash equivalents and gov-
ernment securities. (See the statement of additional
information for a description of cash equivalents.)
High-yield, high-risk bonds generally include any bonds
rated Ba or below by Moody's Investors Service, Inc.
and BB or below by Standard & Poor's Corporation or
unrated but considered to be of equivalent quality by
the fund's investment adviser, Capital Research and
Manage-
4
<PAGE>
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ment Company. The fund may invest without limitation in
bonds rated as low as Ca by Moody's or C by S&P (or in
unrated bonds that are determined to be of equivalent
quality). In addition, the fund may invest less than
10% of its total assets in bonds rated C by Moody's or
D by S&P (or in unrated bonds that are determined to be
of equivalent quality).
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended September 30, 1995 was as fol-
lows: bonds--Aaa/AAA--4.00%; Baa/BB--0.43%; Ba/BB--
24.24%; B/B--53.64%; and Caa/CCC--5.24%. Other invest-
ments, including non-rated investments, equity-type se-
curities, and cash or cash equivalents amounted to
2.77%, 3.01% and 6.67%, respectively.
In pursuing its secondary investment objective of
capital appreciation, the fund may purchase high-yield,
high-risk bonds that Capital Research and Management
Company expects will increase in value due to
improvements in credit quality or ratings, or
anticipated declines in interest rates. The fund also
may invest for this purpose up to 25% of its assets in
common stocks or other equity or equity-related
securities, such as convertible debentures and
preferred stocks (which may or may not have a dividend
yield). Equity-type securities may be purchased as part
of a unit with fixed-income securities or when an
unusual opportunity for capital appreciation is
perceived. The fund also may purchase or hold warrants
or rights, subject to certain limitations set forth in
the statement of additional information.
Treating high current income as its primary investment
objective means that the fund may forego opportunities
that would result in capital gains and may accept
prudent risks to capital value, in each case to take
advantage of opportunities for higher current income.
The fund's investment restrictions (described in the
statement of additional information) and objectives
cannot be changed without shareholder approval. All
other investment practices may be changed by the fund's
board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
5
<PAGE>
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CERTAIN RISKS OF INVESTING IN BONDS The market values of fixed-
SECURITIES AND income securities generally vary inversely with the
INVESTMENT level of interest rates--when interest rates rise,
TECHNIQUES their values will tend to decline and vice versa. The
magnitude of these changes generally will be greater
Investing in high- the longer the remaining maturity of the security.
yield bonds Fluctuations in the value of the fund's investments
involves special will be reflected in its net asset value per share;
risks. typically declining when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba and BB or
below) typically are subject to greater market
fluctuations and to greater risk of loss of income and
principal due to default by the issuer than are higher-
rated bonds. Their values tend to reflect short-term
corporate, economic and market developments and
investor perceptions of the issuer's credit quality to
a greater extent than lower yielding, higher-rated
bonds. In addition, it may be more difficult to dispose
of, or to determine the value of, high-yield, high-risk
bonds. Bonds rated Ba or BB are considered speculative.
High-yield, high-risk bonds are very sensitive to
adverse economic changes. During an economic downturn
or substantial period of rising interest rates, highly
leveraged issuers may experience financial stress that
would adversely affect their ability to service their
principal and interest payment obligations, to meet
projected financial goals, and to obtain additional
financing. If the issuer of a bond defaulted on its
obligations to pay interest or principal, the fund may
incur losses or expenses in seeking recovery of amounts
owed to it. In addition, periods of economic
uncertainty and changes can be expected to result in
increased volatility of market prices and yields of
high-yield, high-risk bonds and the fund's net asset
value. From time to time legislation has been proposed
that would limit the use of high-yield, high-risk bonds
in certain instances. The impact that such legislation,
if enacted, could have on the market for such bonds
cannot be predicted.
High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these
provisions in a declining interest rate market, the
fund might have to replace the security with a lower
yielding security, resulting in a decreased return for
investors. Conversely, a high-yield, high-risk bond's
value will decrease in a rising interest rate market,
as will the value of the fund's assets. If the fund
experiences unexpected net redemptions, this may force
it to sell high-yield, high-risk bonds without regard
to their investment merits, thereby decreasing the
asset base upon which expenses can be spread and
possibly reducing the fund's rate of return.
There may be little trading in the secondary market for
particular bonds, which may affect adversely the fund's
ability to value accurately or dispose of such bonds.
Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the
values and
6
<PAGE>
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liquidity of high-yield, high-risk bonds, especially in
a thin market. See the Appendix on page 13 for a com-
plete description of the bond ratings.
Capital Research and Management Company attempts to re-
duce the risks described above through diversification
of the portfolio and by analysis of each issuer as well
as by monitoring broad economic trends and corporate
and legislative developments.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments, which are managed by individual counselors.
Each counselor decides how their segment will be
invested (within the limits provided by the fund's
objectives and policies and by Capital Research and
Management Company's investment committee). In
addition, Capital Research and Management Company's
research professionals make investment decisions with
respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund
are listed below.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
YEARS OF EXPERIENCE AS AS INVESTMENT PROFESSIONAL
PORTFOLIO COUNSELOR (APPROXIMATE)
(AND RESEARCH
PORTFOLIO COUNSELORS PROFESSIONAL, IF WITH CAPITAL
FOR APPLICABLE) FOR RESEARCH AND
AMERICAN AMERICAN MANAGEMENT
HIGH-INCOME HIGH-INCOME TRUST COMPANY OR TOTAL
TRUST PRIMARY TITLE(S) (APPROXIMATE) ITS AFFILIATES YEARS
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard T. Schotte President of the Fund. Since the fund began 18 years 28 years
Senior Vice President, operations in 1988
Capital Research and
Management Company
- ---------------------------------------------------------------------------------------------------------
David C. Barclay Executive Vice President, 6 years 8 years 14 years
Capital Research Company*
- ---------------------------------------------------------------------------------------------------------
Susan M. Tolson Vice President, Capital 1 year, plus 2 years as 6 years 7 years
Research Company* research professional for
the fund prior to
becoming a portfolio
counselor
- ---------------------------------------------------------------------------------------------------------
The fund began operations on February 19, 1988.
* Company affiliated with Capital Research and Management Company.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
INVESTING IN VARIOUS COUNTRIES Up to 25% of the fund's
assets may be invested in securities of issuers outside
the United States, which may be denominated in
currencies other than the U.S. dollar. Investing
globally involves special risks, particularly in
certain developing countries, caused by, among other
things: trade balances and imbalances and related
economic policies; currency exchange rate fluctuations;
7
<PAGE>
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exchange control policies; the possibilities of
expropriation or confiscatory taxation or limitations
on the removal of assets; political or social
instability; the diverse structure and liquidity of
securities markets in various countries and regions;
and policies of governments with respect to possible
nationalization of their industries and other specific
local political and economic considerations. Companies
located outside the United States operate under
different accounting, auditing and financial reporting
regulations than U.S. companies, and frequently there
is less information publicly available about such
companies. However, investing outside the U.S. can also
reduce certain of these risks due to greater
diversification opportunities.
Brokerage commissions are generally higher outside the
U.S., and the fund will bear certain expenses in con-
nection with its currency transactions. Increased cus-
todian costs as well as administrative difficulties
(for example, delays in clearing and settling portfolio
transactions or in receiving payments of dividends) may
be associated with the maintenance of assets in certain
jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to hold
a portion of its assets in various currencies and to
enter into forward currency contracts to protect
against changes in currency exchange rates. The fund
does not currently intend to enter into forward
currency contracts other than foreign exchange
contracts which will be used to facilitate settlement
of trades.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS
The fund may purchase securities on a delayed delivery
or "when issued" basis and enter into firm commitment
agreements (transactions whereby the payment obligation
and interest rate are fixed at the time of the
transaction but the settlement is delayed). The fund as
purchaser assumes the risk of any decline in value of
the security beginning on the date of the agreement or
purchase. As the fund's aggregate commitments under
these transactions increase the opportunity for
leverage similarly may increase.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private
placement or directly from the issuers of the
securities. Generally, securities acquired in private
placements are subject to contractual restrictions on
resale and may not be resold except pursuant to a
registration statement under the Securities Act of 1933
or in reliance upon an exemption from the registration
requirements under the Act, for example, private
placements sold pursuant to Rule 144A. Accordingly, any
such obligation will be deemed illiquid unless it has
been specifically determined to be liquid under
procedures adopted by the fund's board of directors.
8
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In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be
considered. Additionally, the liquidity of any
particular security will depend on such factors as the
availability of "qualified" institutional investors and
the extent of investor interest in the security, which
can change from time to time.
MATURITY There are no restrictions on the maturity
composition of the portfolio, although it is
anticipated that the fund normally will be invested
substantially in intermediate-term (three to ten years
to maturity) and long-term (over ten years to maturity)
securities.
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return of 10.50% a various periods, with or without sales charges. Results
year (assuming the calculated without a sales charge will be higher. Total
maximum sales returns assume the reinvestment of all dividends and
charge was paid) capital gain distributions.
over its lifetime
The fund's yield and the average annual total returns
(February 19, 1988 are calculated in accordance with Securities and
through September Exchange Commission requirements which provide that the
30, 1995). maximum sales charge be reflected. The fund's
distribution rate is calculated by annualizing the
current month's dividend and dividing by the average
price for the month. For the 30-day period ended
September 30, 1995, the fund's SEC yield was 9.06% and
the distribution rate was 8.42% at maximum offering
price. The SEC yield reflects income earned by the
fund, while the distribution rate reflects dividends
paid by the fund. Among the elements used to calculate
the SEC yield are the dividend and interest income
earned and expenses paid by the fund, whereas the
income paid to shareholders is used to calculate the
distribution rate. The fund's total return over the
past 12 months and average annual total returns over
the past five-year and lifetime periods, as of
September 30, 1995, were 7.93%, 13.89% and 10.50%,
respectively. Of course, past results are not an
indication of future results. Further information
regarding the fund's investment results is contained in
the fund's annual report which may be obtained without
charge by writing to the Secretary of the fund at the
address indicated on the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund declares dividends
DISTRIBUTIONS from its net investment income daily and distributes
AND TAXES the accrued dividends to shareholders each month.
Dividends begin accruing one day after payment for
Income shares is received by the fund or American Funds
distributions are Service Company. All capital gains, if any, are
made each month. distributed annually, usually in December. When a
capital gain is declared, the net asset value per share
is reduced by the amount of the payment.
9
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FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. For any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax.
All dividends and capital gains are taxable whether
they are reinvested or received in cash--unless you are
exempt from taxation or entitled to tax deferral. Early
each year, you will be notified as to the amount and
federal tax status of all dividends and capital gains
paid during the prior year. Such dividends and capital
gains may also be subject to state or local taxes.
IF YOU HAVE NOT FURNISHED A CERTIFIED CORRECT TAXPAYER
IDENTIFICATION NUMBER (GENERALLY YOUR SOCIAL SECURITY
NUMBER) AND HAVE NOT CERTIFIED THAT WITHHOLDING DOES
NOT APPLY, OR IF THE INTERNAL REVENUE SERVICE HAS
NOTIFIED THE FUND THAT THE TAXPAYER IDENTIFICATION
NUMBER LISTED ON YOUR ACCOUNT IS INCORRECT ACCORDING TO
ITS RECORDS OR THAT YOU ARE SUBJECT TO BACKUP
WITHHOLDING, FEDERAL LAW GENERALLY REQUIRES THE FUND TO
WITHHOLD 31% FROM ANY DIVIDENDS AND/OR REDEMPTIONS
(INCLUDING EXCHANGE REDEMPTIONS). Amounts withheld are
applied to your federal tax liability; a refund may be
obtained from the Service if withholding results in
overpayment of taxes. Federal law also requires the
fund to withhold 30% or the applicable tax treaty rate
from dividends paid to certain nonresident alien, non-
U.S. partnership and non-U.S. corporation shareholder
accounts.
This is a brief summary of some of the tax laws that
affect your investment in the fund. Please see the
statement of additional information and your tax
adviser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was
AND organized as a Massachusetts business trust in 1987.
MANAGEMENT The fund's board supervises fund operations and
performs duties required by applicable state and
The fund is a federal law. Members of the board who are not employed
member of The by Capital Research and Management Company or its
American Funds affiliates are paid certain fees for services rendered
Group, which is to the fund as described in the statement of additional
managed by one of information. They may elect to defer all or a portion
the largest and of these fees through a deferred compensation plan in
most experienced effect for the fund. Shareholders have one vote per
investment share owned and, at the request of the holders of at
advisers. least 10% of the shares, the fund will hold a meeting
at which any member of the board could be removed by a
majority vote. There will not usually be a shareholder
meeting in any year except, for example, when the
election of the board is required to be acted upon by
shareholders under the Investment Company Act of 1940.
10
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THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. (See "The American Funds
Shareholder Guide: Purchasing Shares--Investment
Minimums and Fund Numbers" for a listing of funds in
The American Funds Group.) Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.30% of the first $60 million of the
fund's net assets, plus 0.21% on net assets in excess
of $60 million but not exceeding $1 billion, plus 0.18%
on net assets in excess of $1 billion, plus 3% of the
first $100 million of annual gross income, plus 2.5% of
annual gross investment income in excess of $100
million. Assuming net assets of $1 billion and gross
investment income levels of 4%, 5%, 6%, 7% and 8%,
management fees would be .34%, .37%, .40%, .43% and
.46%, respectively.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles, CA 90071. The
research activities of Capital Research and Management
Company are conducted by affiliated companies which
have offices in Los Angeles, San Francisco, New York,
Washington, D.C., London, Geneva, Singapore, Hong Kong
and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
11
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Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures by the fund under
the plan may not exceed 0.30% of its average net assets
annually (0.25% of which may be for service fees). See
"Purchasing Shares--Sales Charges" below.
TRANSFER AGENT American Funds Service Company, a wholly
owned subsidiary of Capital Research and Management
Company, is the transfer agent and performs shareholder
service functions. It was paid a fee of $738,000 for
the fiscal year ended September 30, 1995. Telephone
conversations with American Funds Service Company may
be recorded or monitored for verification,
recordkeeping and quality assurance purposes.
12
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AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
SERVICE ADDRESS AREAS SERVED
AREA
-------------------------------------------------------------
WEST P.O. Box 2205
Brea, CA 92622-2205
Fax: 714/671-7080
AK, AZ, CA, HI, ID,
MT, NV, OR, UT, WA and
outside the U.S.
-------------------------------------------------------------
CENTRAL-
WEST
P.O. Box 659522
San Antonio, TX 78265-9522
Fax: 210/530-4050
AR, CO, IA, KS, LA,
MN, MO, ND, NE, NM,
OK, SD, TX and WY
-------------------------------------------------------------
CENTRAL-
EAST
P.O. Box 6007
Indianapolis, IN 46206-6007
Fax: 317/735-6620
AL, IL, IN, KY, MI,
MS, OH, TNand WI
-------------------------------------------------------------
EAST P.O. Box 2280
Norfolk, VA 23501-2280
Fax: 804/670-4773
CT, DE, FL, GA, MA,
MD, ME, NC, NH, NJ,
NY, PA, RI, SC, VA,
VT, WV and Washington,
D.C.
-------------------------------------------------------------
ALL SHAREHOLDERS MAY CALL AMERICAN FUNDS SERVICE
COMPANY AT 800/421-0180 FOR SERVICE.
-------------------------------------------------------------
[LOGO]
-------------------------------------------------------------
West (light grey); Central-West (white); Central-East
(dark grey); East (green)
13
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APPENDIX Moody's Investors, Service Inc. rates the long-term
debt securities issued by various entities in
Description of categories ranging from "Aaa" to "C," according to
Bond Ratings. quality as described below.
"AAA -- Best quality. These securities carry the
smallest degree of investment risk and are generally
referred to as "gilt edge.' Interest payments are
protected by a large, or by an exceptionally stable
margin and principal is secure. While the various
protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the
fundamentally strong position of such issues."
"AA -- High quality by all standards. They are rated
lower than the best bond because margins of protection
may not be as large as in Aaa securities, fluctuation
of protective elements may be of greater amplitude, or
there may be other elements present which make the
long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds
possess many favorable investment attributes. Factors
giving security to principal and interest are
considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the
future."
"BAA -- Medium grade obligations. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative
characteristics as well."
"BA -- Have speculative elements; future cannot be
considered as well assured. The protection of interest
and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times
over the future. Bonds in this class are characterized
by uncertainty of position."
"B -- Generally lack characteristics of the desirable
investment; assurance of interest and principal
payments or of maintenance of other terms of the
contract over any long period of time may be small."
"CAA -- Of poor standing. Issues may be in default or
there may be present elements of danger with respect to
principal or interest."
"CA -- Speculative in a high degree; often in default
or have other marked shortcomings."
"C -- Lowest rated class of bonds; can be regarded as
having extremely poor prospects of ever attaining any
real investment standing."
14
<PAGE>
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Standard & Poor's Corporation rates the long-term debt
securities issued by various entities in categories
ranging from "AAA" to "D," according to quality as
described below.
"AAA -- Highest rating. Capacity to pay interest and
repay principal is extremely strong."
"AA -- High grade. Very strong capacity to pay interest
and repay principal. Generally, these bonds differ from
AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible
to the adverse effects of change in circumstances and
economic conditions, than debt in higher rated
categories."
"BBB -- Regarded as having adequate capacity to pay
interest and repay principal. These bonds normally
exhibit adequate protection parameters, but adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest
and repay principal than for debt in higher rated
categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as
predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation.
While such debt will likely have some quality and
protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions."
"C1 -- Reserved for income bonds on which no interest
is being paid."
"D -- In default and payment of interest and/or
repayment of principal is in arrears."
15
<PAGE>
THE AMERICAN FUNDS SHAREHOLDER GUIDE
---------------------------------------------------------
PURCHASING SHARES METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
---------------------------------------------------------
---------------------------------------------------------
Your investment By See "Investment $50 minimum (except
dealer can help contacting Minimums and Fund where a lower
you establish your your Numbers" for minimum is noted
account--and help investment initial under "Investment
you add to it dealer investment Minimums and Fund
whenever you like. minimums. Numbers").
Visit any Mail directly to
investment dealer your investment
who is registered dealer's address
in the state printed on your
where the account statement.
purchase is made
and who has a
sales agreement
with American
Funds
Distributors.
---------------------------------------------------------
By mail Make your check Fill out the account
payable to the additions form at the
fund and mail to bottom of a recent
the address account statement,
indicated on the make your check
account payable to the fund,
application. write your account
Please indicate number on your check,
an investment and mail the check
dealer on the and form in the
account envelope provided
application. with your account
statement.
---------------------------------------------------------
By wire Call 800/421-0180 Your bank should wire
to obtain your your additional
account investments in the
number(s), if same manner as
necessary. Please described under
indicate an "Initial Investment."
investment dealer
on the account.
Instruct your
bank to wire
funds to:
Wells Fargo Bank
155 Fifth Street
Sixth Floor
San Francisco,
CA 94106
(ABA #121000248)
For credit to the
account of:
American Funds
Service Company
a/c #4600-076178
(fund name)
(your fund acct.
no.)
---------------------------------------------------------
THE FUNDS AND AMERICAN FUNDS DISTRIBUTORS RESERVE
THE RIGHT TO REJECT ANY PURCHASE ORDER.
SHARE PRICE Shares are purchased at the offering price
next determined after the order is received by the fund
or American Funds Service Company. In the case of orders
sent directly to the fund or American Funds Service
Company, an investment dealer MUST be indicated. This
price is the net asset value plus a sales charge, if
applicable. Dealers are responsible for promptly
transmitting orders. (See the statement of additional
information under "Purchase of Shares--Price of
Shares.")
The net asset value per share is determined as of the
close of trading (currently 4:00 p.m., New York time) on
each day the New York Stock Exchange is open. The
current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share. The net asset value
per share of the money market funds normally will remain
constant at $1.00 based on the funds' current practice
of valuing their shares using the penny-rounding method
in accordance with rules of the Securities and Exchange
Commission.
SHARE CERTIFICATES Shares are credited to your account
and certificates are not issued unless specifically
requested. This eliminates the costly problem of lost or
destroyed certificates.
16
<PAGE>
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If you would like certificates issued, please request
them by writing to American Funds Service Company.
There is usually no charge for issuing certificates in
reasonable denominations. CERTIFICATES ARE NOT AVAIL-
ABLE FOR THE MONEY MARKET FUNDS.
INVESTMENT MINIMUMS AND FUND NUMBERS Here are the
minimum initial investments required by the funds in
The American Funds Group along with fund numbers for
use with our automated phone line, American
FundsLine(R) (see description below):
<TABLE>
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R)...................................... $1,000 02
American Balanced Fund(R).......................... 500 11
American Mutual Fund(R)............................ 250 03
Capital Income Builder(R).......................... 1,000 12
Capital World Growth and Income Fund(SM)........... 1,000 33
EuroPacific Growth Fund(R)......................... 250 16
Fundamental Investors(SM).......................... 250 10
The Growth Fund of America(R)...................... 1,000 05
The Income Fund of America(R)...................... 1,000 06
The Investment Company of America(R)............... 250 04
The New Economy Fund(R)............................ 1,000 14
New Perspective Fund(R)............................ 250 07
SMALLCAP World Fund(SM)............................ 1,000 35
Washington Mutual Investors Fund(SM)............... 250 01
<CAPTION>
MINIMUM
INITIAL FUND
FUND INVESTMENT NUMBER
- ---- ---------- ------
<S> <C> <C>
BOND FUNDS
American High-Income Municipal Bond Fund(SM)....... $1,000 40
American High-Income Trust(R)...................... 1,000 21
The Bond Fund of America(SM)....................... 1,000 08
Capital World Bond Fund(R)......................... 1,000 31
Intermediate Bond Fund of America(R)............... 1,000 23
Limited Term Tax-Exempt Bond Fund of America(SM)... 1,000 43
The Tax-Exempt Bond Fund of America(SM)............ 1,000 19
The Tax-Exempt Fund of California(R)*.............. 1,000 20
The Tax-Exempt Fund of Maryland(R)*................ 1,000 24
The Tax-Exempt Fund of Virginia(R)*................ 1,000 25
U.S. Government Securities Fund(SM)................ 1,000 22
MONEY MARKET FUNDS
The Cash Management Trust of America(R)............ 2,500 09
The Tax-Exempt Money Fund of America(SM)........... 2,500 39
The U.S. Treasury Money Fund of America(SM)........ 2,500 49
</TABLE>
- --------
* Available only in certain states.
For retirement plan investments, the minimum is $250,
except that the money market funds have a minimum of
$1,000 for individual retirement accounts (IRAs). Mini-
mums are reduced to $50 for purchases through "Auto-
matic Investment Plans" (except for the money market
funds) or to $25 for purchases by retirement plans
through payroll deductions and may be reduced or waived
for shareholders of other funds in The American Funds
Group. TAX-EXEMPT FUNDS SHOULD NOT SERVE AS RETIREMENT
PLAN INVESTMENTS. The minimum is $50 for additional in-
vestments (except as noted above).
SALES CHARGES The sales charges you pay when purchasing
the stock, stock/bond, and bond funds of The American
Funds Group are set forth below. The money market funds
of The American Funds Group are offered at net asset
value. (See "Investment Minimums and Fund Numbers" for
a listing of the funds.)
17
<PAGE>
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<TABLE>
<CAPTION>
DEALER
SALES CHARGE AS CONCESSION
PERCENTAGE OF THE: AS PERCENTAGE
------------------ OF THE
AMOUNT OF PURCHASE NET AMOUNT OFFERING OFFERING
AT THE OFFERING PRICE INVESTED PRICE PRICE
--------------------- ---------- -------- -------------
<S> <C> <C> <C>
STOCK AND STOCK/BOND FUNDS
Less than $50,000................. 6.10% 5.75% 5.00%
$50,000 but less than $100,000.... 4.71 4.50 3.75
BOND FUNDS
Less than $25,000................. 4.99 4.75 4.00
$25,000 but less than $50,000..... 4.71 4.50 3.75
$50,000 but less than $100,000.... 4.17 4.00 3.25
STOCK, STOCK/BOND, AND BOND FUNDS
$100,000 but less than $250,000... 3.63 3.50 2.75
$250,000 but less than $500,000... 2.56 2.50 2.00
$500,000 but less than $1,000,000. 2.04 2.00 1.60
$1,000,000 or more................ none none (see below)
</TABLE>
Commissions of up to 1% will be paid to dealers who
initiate and are responsible for purchases of $1
million or more, for purchases by any employer-
sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue
Code including a "401(k)" plan with 200 or more
eligible employees (paid pursuant to the fund's plan of
distribution), and for purchases made at net asset
value by certain retirement plans of organizations with
collective retirement plan assets of $100 million or
more as set forth in the statement of additional
information (paid by American Funds Distributors).
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. These incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these promotional
incentives.
Any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees or any other purchaser
investing at least $1 million in shares of the fund (or
in combination with shares of other funds in The
American Funds Group other than the money market funds)
may purchase shares at net asset value; however, a
contingent deferred sales charge of 1% is imposed on
certain redemptions made within one year of the
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.")
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to
18
<PAGE>
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compensate them for providing certain services. (See
"Fund Organization and Management--Plan of
Distribution.") These services include processing
purchase and redemption transactions, establishing
shareholder accounts and providing certain information
and assistance with respect to the fund.
NET ASSET VALUE PURCHASES The stock, stock/bond and
bond funds may sell shares at net asset value to: (1)
current or retired directors, trustees, officers and
advisory board members of the funds managed by Capital
Research and Management Company, employees of
Washington Management Corporation, employees and
partners of The Capital Group Companies, Inc. and its
affiliated companies, certain family members of the
above persons, and trusts or plans primarily for such
persons; (2) current registered representatives,
retired registered representatives with respect to
accounts established while active, or full-time
employees (and their spouses, parents, and children) of
dealers who have sales agreements with American Funds
Distributors (or who clear transactions through such
dealers) and plans for such persons or the dealers; (3)
companies exchanging securities with the fund through a
merger, acquisition or exchange offer; (4) trustees or
other fiduciaries purchasing shares for certain
retirement plans of organizations with retirement plan
assets of $100 million or more; (5) insurance company
separate accounts; (6) accounts managed by subsidiaries
of The Capital Group Companies, Inc.; and (7) The
Capital Group Companies, Inc., its affiliated companies
and Washington Management Corporation. Shares are
offered at net asset value to these persons and
organizations due to anticipated economies in sales
effort and expense.
REDUCING AGGREGATION Sales charge discounts are available for
YOUR SALES certain aggregated investments. Qualifying investments
CHARGE include those by you, your spouse and your children
under the age of 21, if all parties are purchasing
You and your shares for their own account(s), which may include
immediate family purchases through employee benefit plan(s) such as an
may combine IRA, individual-type 403(b) plan or single-participant
investments to Keogh-type plan or by a business solely controlled by
reduce your costs. these individuals (for example, the individuals own the
entire business) or by a trust (or other fiduciary
arrangement) solely for the benefit of these
individuals. Individual purchases by a trustee(s) or
other fiduciary(ies) may also be aggregated if the
investments are (1) for a single trust estate or
fiduciary account, including an employee benefit plan
other than those described above or (2) made for two or
more employee benefit plans of a single employer or of
affiliated employers as defined in the Investment
Company Act of 1940, again excluding employee benefit
plans described above, or (3) for a diversified common
trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating
fund shares. Purchases made for nominee or street name
accounts (securities held in the name of an investment
dealer or another nominee such as a bank trust
department instead of the customer) may not be
aggregated with those made for
19
<PAGE>
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other accounts and may not be aggregated with other
nominee or street name accounts unless otherwise
qualified as described above.
CONCURRENT PURCHASES To qualify for a reduced sales
charge, you may combine concurrent purchases of two or
more funds in The American Funds Group, except direct
purchases of the money market funds. (Shares of the
money market funds purchased through an exchange,
reinvestment or cross-reinvestment from a fund having a
sales charge do qualify.) For example, if you
concurrently invest $25,000 in one fund and $25,000 in
another, the sales charge would be reduced to reflect a
$50,000 purchase.
RIGHT OF ACCUMULATION The sales charge for your invest-
ment may also be reduced by taking into account the
current value of your existing holdings in The American
Funds Group. Direct purchases of the money market funds
are excluded. (See account application.)
STATEMENT OF INTENTION You may reduce sales charges on
all investments by meeting the terms of a statement of
intention, a non-binding commitment to invest a certain
amount in fund shares subject to a commission within a
13-month period. Five percent of the statement amount
will be held in escrow to cover additional sales
charges which may be due if your total investments over
the statement period are insufficient to qualify for a
sales charge reduction. (See account application and
the statement of additional information under "Purchase
of Shares--Statement of Intention.")
YOU MUST LET YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY KNOW IF YOU QUALIFY FOR A REDUCTION IN
YOUR SALES CHARGE USING ONE OR ANY COMBINATION OF THE
METHODS DESCRIBED ABOVE.
SHAREHOLDER AUTOMATIC INVESTMENT PLAN You may make regular monthly
SERVICES or quarterly investments through automatic charges to
your bank account. Once a plan is established, your ac-
The fund offers count will normally be charged by the 10th day of the
you a valuable month during which an investment is made (or by the
array of services 15th day of the month in the case of any retirement
designed to plan for which Capital Guardian Trust Company--another
increase the affiliate of The Capital Group Companies, Inc.--acts as
convenience and trustee or custodian).
flexibility of
your investment-- AUTOMATIC REINVESTMENT Dividends and capital gain dis-
services you can tributions are reinvested in additional shares at no
use to alter your sales charge unless you indicate otherwise on the
investment program account application. You also may elect to have divi-
as your needs and dends and/or capital gain distributions paid in cash by
circumstances informing the fund, American Funds Service Company or
change. your investment dealer.
CROSS-REINVESTMENT You may cross-reinvest dividends or
dividends and capital gain distributions paid by one
fund into another fund in The American Funds Group,
subject to conditions outlined in the statement of ad-
ditional information. Generally, to use this service
the value of your account in the paying fund must equal
at least $5,000.
20
<PAGE>
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EXCHANGE PRIVILEGE You may exchange shares into other
funds in The American Funds Group. Exchange purchases
are subject to the minimum investment requirements of
the fund purchased and no sales charge generally
applies. However, exchanges of shares from the money
market funds are subject to applicable sales charges on
the fund being purchased, unless the money market fund
shares were acquired by an exchange from a fund having
a sales charge, or by reinvestment or cross-
reinvestment of dividends or capital gain
distributions.
You may exchange shares by writing to American Funds
Service Company (see "Redeeming Shares"), by contacting
your investment dealer, by using American FundsLine(R)
(see "Shareholder Services--American FundsLine(R)" be-
low), or by telephoning 800/421-0180 toll-free, faxing
(see "Transfer Agent" above for the appropriate fax
numbers) or telegraphing American Funds Service Compa-
ny. (See "Telephone Redemptions and Exchanges" below.)
Shares held in corporate-type retirement plans for
which Capital Guardian Trust Company serves as trustee
may not be exchanged by telephone, fax or telegraph.
Exchange redemptions and purchases are processed simul-
taneously at the share prices next determined after the
exchange order is received. (See "Purchasing Shares--
Share Price.") THESE TRANSACTIONS HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
AUTOMATIC EXCHANGES You may automatically exchange
shares (in amounts of $50 or more) among any of the
funds in The American Funds Group on any day (or pre-
ceding business day if the day falls on a non-business
day) of each month you designate. You must either meet
the minimum initial investment requirement for the re-
ceiving fund OR the originating fund's balance must be
at least $5,000 and the receiving fund's minimum must
be met within one year.
AUTOMATIC WITHDRAWALS You may make automatic
withdrawals of $50 or more as follows: five or more
times per year if you have an account of $10,000 or
more, or four or fewer times per year if you have an
account of $5,000 or more. Withdrawals are made on or
about the 15th day of each month you designate, and
checks will be sent within seven days. (See "Other
Important Things to Remember.") Additional investments
in a withdrawal account must not be less than one
year's scheduled withdrawals or $1,200, whichever is
greater. However, additional investments in a
withdrawal account may be inadvisable due to sales
charges and tax liabilities.
THESE SERVICES ARE AVAILABLE ONLY IN STATES WHERE THE
FUND TO BE PURCHASED MAY BE LEGALLY OFFERED AND MAY BE
TERMINATED OR MODIFIED AT ANY TIME UPON 60 DAYS'
WRITTEN NOTICE.
ACCOUNT STATEMENTS Your account is opened in accordance
with your registration instructions. Transactions in
the account, such as additional investments and
dividend reinvestments, will be reflected on regular
confirmation statements from American Funds Service
Company.
21
<PAGE>
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AMERICAN FUNDSLINE(R) You may check your share balance,
the price of your shares, or your most recent account
transaction, redeem shares (up to $10,000 per fund, per
account each day), or exchange shares around the clock
with American FundsLine(R). To use this service, call
800/325-3590 from a TouchTone(TM) telephone.
Redemptions and exchanges through American FundsLine(R)
are subject to the conditions noted above and in
"Redeeming Shares--Telephone Redemptions and Exchanges"
below. You will need your fund number (see the list of
funds in The American Funds Group under "Purchasing
Shares--Investment Minimums and Fund Numbers"),
personal identification number (the last four digits of
your Social Security number or other tax identification
number associated with your account) and account
number.
---------------------------------------------------------
REDEEMING By writing to Send a letter of instruction
SHARES American specifying the name of the fund, the
Funds Service number of shares or dollar amount to
You may take money Company (at be sold, your name and account
out of your the number. You should also enclose any
account whenever appropriate share certificates you wish to
you please. address redeem. For redemptions over $50,000
indicated and for certain redemptions of
under "Fund $50,000 or less (see below), your
Organization signature must be guaranteed by a
and bank, savings association, credit
Management-- union, or member firm of a domestic
Transfer stock exchange or the National
Agent") Association of Securities Dealers,
Inc., that is an eligible guarantor
institution. You should verify with
the institution that it is an
eligible guarantor prior to signing.
Additional documentation may be
required for redemption of shares
held in corporate, partnership or
fiduciary accounts. Notarization by a
Notary Public is not an acceptable
signature guarantee.
---------------------------------------------------------
By contacting If you redeem shares through your
your investment dealer, you may be charged
investment for this service. SHARES HELD FOR YOU
dealer IN YOUR INVESTMENT DEALER'S STREET
NAME MUST BE REDEEMED THROUGH THE
DEALER.
--------------------------------------------------------
You may have You may use this option, provided the
a redemption account is registered in the name of
check sent to an individual(s), a UGMA/UTMA
you by using custodian, or a non-retirement plan
American trust. These redemptions may not
FundsLine(R) exceed $10,000 per day, per fund
or by account and the check must be made
telephoning, payable to the shareholder(s) of
faxing, or record and be sent to the address of
telegraphing record provided the address has been
American used with the account for at least 10
Funds Service days. See "Transfer Agent" and
Company "Exchange Privilege" above for the
(subject to appropriate telephone or fax number.
the
conditions
noted in this
section and
in "Telephone
Redemptions
and
Exchanges"
below)
--------------------------------------------------------
In the case Upon request (use the account
of the money application for the money market
market funds, funds) you may establish telephone
you may have redemption privileges (which will
redemptions enable you to have a redemption sent
wired to your to your bank account) and/or check
bank by writing privileges. If you request
telephoning check writing privileges, you will be
American provided with checks that you may use
Funds Service to draw against your account. These
Company checks may be made payable to anyone
($1,000 or you designate and must be signed by
more) or by the authorized number of registered
writing a shareholders exactly as indicated on
check ($250 your checking account signature card.
or more)
--------------------------------------------------------
A SIGNATURE GUARANTEE IS NOT CURRENTLY REQUIRED FOR ANY
REDEMPTION OF $50,000 OR LESS PROVIDED THE REDEMPTION
CHECK IS MADE PAYABLE TO THE REGISTERED SHAREHOLDER(S)
AND IS MAILED TO THE ADDRESS OF RECORD, PROVIDED THE
ADDRESS HAS BEEN USED WITH THE ACCOUNT FOR AT LEAST 10
DAYS.
22
<PAGE>
- -------------------------------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND
ALL REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE.")
TELEPHONE REDEMPTIONS AND EXCHANGES By using the
telephone (including American FundsLine(R)), fax or
telegraph redemption and/or exchange options, you agree
to hold the fund, American Funds Service Company, any
of its affiliates or mutual funds managed by such
affiliates, and each of their respective directors,
trustees, officers, employees and agents harmless from
any losses, expenses, costs or liability (including
attorney fees) which may be incurred in connection with
the exercise of these privileges. Generally, all
shareholders are automatically eligible to use these
options. However, you may elect to opt out of these
options by writing American Funds Service Company (you
may reinstate them at any time also by writing American
Funds Service Company). If American Funds Service
Company does not employ reasonable procedures to
confirm that the instructions received from any person
with appropriate account information are genuine, the
fund may be liable for losses due to unauthorized or
fraudulent instructions. In the event that shareholders
are unable to reach the fund by telephone because of
technical difficulties, market conditions, or a natural
disaster, redemption and exchange requests may be made
in writing only.
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions
within the first year on investments of $1 million or
more and on any investment made with no initial sales
charge by any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code including a "401(k)" plan with
200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive
of reinvested dividends and capital gain distributions)
or the total cost of such shares. Shares held for the
longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is
waived for exchanges (except if shares acquired by
exchange were then redeemed within 12 months of the
initial purchase); for distributions from qualified
retirement plans and other employee benefit plans; for
redemptions resulting from participant-directed
switches among investment options within a participant-
directed employer-sponsored retirement plan; for
distributions from 403(b) plans or IRAs due to death,
disability or attainment of age 59 1/2; for tax-free
returns of excess contributions to IRAs; for
redemptions through certain automatic withdrawals not
exceeding 10% of the amount that would otherwise be
subject to the charge; and for redemptions in
connection with loans made by qualified retirement
plans.
REINSTATEMENT PRIVILEGE You may reinvest proceeds from
a redemption or a dividend or capital gain distribution
without a sales charge (any contingent deferred sales
charge paid will be credited to your
23
<PAGE>
- -------------------------------------------------------------------------------
account) in any fund in The American Funds Group. Send
a written request and a check to American Funds Service
Company within 90 days after the date of the redemption
or distribution. Reinvestment will be at the next
calculated net asset value after receipt. The tax
status of a gain realized on a redemption will not be
affected by exercise of the reinstatement privilege,
but a loss may be nullified if you reinvest in the same
fund within 30 days. If you redeem your shares within
90 days after purchase and the sales charge on the
purchase of other shares is waived under the
reinstatement privilege, the sales charge you
previously paid for the shares may not be taken into
account when you calculate your gain or loss on that
redemption.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because each stock,
stock/bond and bond fund's net asset value fluctuates,
reflecting the market value of the fund's portfolio,
the amount a shareholder receives for shares redeemed
may be more or less than the amount paid for them.
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
A fund may, with 60 days' written notice, close your
account if, due to a redemption, the account has a
value of less than the minimum required initial
investment. (For example, a fund may close an account
if a redemption is made shortly after a minimum initial
investment is made.)
RETIREMENT You may invest in the funds through various retirement
PLANS plans including the following plans for which Capital
Guardian Trust Company acts as trustee or custodian:
IRAs, Simplified Employee Pension plans, 403(b) plans
and Keogh- and corporate-type business retirement
plans. For further information about any of the plans,
agreements, applications and annual fees, contact
American Funds Distributors or your investment dealer.
To determine which retirement plan is appropriate for
you, please consult your tax adviser. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS INVESTMENTS FOR RETIREMENT PLANS.
FOR MORE INFORMATION, PLEASE REFER TO THE ACCOUNT
APPLICATION OR THE STATEMENT OF ADDITIONAL INFORMATION.
IF YOU HAVE ANY QUESTIONS ABOUT ANY OF THE SHAREHOLDER
SERVICES DESCRIBED HEREIN OR YOUR ACCOUNT, PLEASE
CONTACT YOUR INVESTMENT DEALER OR AMERICAN FUNDS
SERVICE COMPANY.
[RECYCLE LOGO] This prospectus has been printed on
recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
24
Prospectus
for Eligible Retirement Plans
AMERICAN HIGH-INCOME TRUST(R)
AN OPPORTUNITY FOR A HIGH LEVEL OF
CURRENT INCOME AND, SECONDARILY,
CAPITAL APPRECIATION
NOVEMBER 25, 1995
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
The fund's primary investment objective is a high level of current income; its
secondary investment objective is capital appreciation.
UNDER NORMAL MARKET CONDITIONS, THE FUND WILL INVEST AT LEAST 65% OF ITS ASSETS
IN BONDS AND DEBT SECURITIES RATED BA AND BB OR BELOW BY MOODY'S INVESTORS
SERVICE, INC., OR STANDARD AND POOR'S CORPORATION OR UNRATED BUT DETERMINED TO
BE OF COMPARABLE QUALITY. SECURITIES RATED BA AND BB OR BELOW ARE COMMONLY KNOWN
AS "JUNK" BONDS AND ARE SUBJECT TO GREATER FLUCTUATIONS IN VALUE AND RISK OF
LOSS OF INCOME AND PRINCIPAL, INCLUDING RISK OF DEFAULT, THAN ARE LOWER
YIELDING, HIGHER RATED BONDS; THEREFORE, AN INVESTMENT IN THE FUND MAY NOT BE
SUITABLE FOR ALL INVESTORS AND SHOULD BE CONSIDERED CAREFULLY PRIOR TO
INVESTING. (FOR ADDITIONAL INFORMATION SEE "INVESTMENT OBJECTIVES AND POLICIES,"
PAGE 3; AND "CERTAIN SECURITIES AND INVESTMENT TECHNIQUES--RISKS OF INVESTING IN
BONDS," PAGE 5.)
This prospectus relates only to shares of the fund offered without a sales
charge to eligible retirement plans. For a prospectus regarding shares of the
fund to be acquired otherwise, contact the Secretary of the fund at the address
indicated above.
This prospectus presents information you should know before investing in the
fund. It should be retained for future reference.
You may obtain the statement of additional information for the fund dated
November 25, 1995, which contains the fund's financial statements, without
charge, by writing to the Secretary of the fund at 333 South Hope Street, Los
Angeles, CA 90071 or telephoning 800/421-0180. These requests will be honored
within three business days of receipt.
SHARES OF THE FUND 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. THE PURCHASE OF
FUND SHARES INVOLVES INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
21-010-1195
<PAGE>
- -------------------------------------------------------------------------------
SUMMARY OF EXPENSES
Average annual expenses
paid over a 10-year
period would be
approximately $11 per
year, assuming a $1,000
investment and a 5%
annual return with no
sales charge.
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Expenses.............................. 2
Financial Highlights............................. 3
Investment Objectives and Policies............... 3
Certain Securities and Investment Techniques..... 5
Investment Results............................... 8
Dividends, Distributions and Taxes............... 8
Fund Organization and Management................. 9
Purchasing Shares................................ 11
Shareholder Services............................. 12
Redeeming Shares................................. 13
Appendix......................................... 14
</TABLE>
This table is designed to help you understand the costs of investing in the
fund. These are historical expenses; your actual expenses may vary.
SHAREHOLDER TRANSACTION EXPENSES
Certain retirement plans may purchase shares of the fund with no sales
charge./1/ The fund has no sales charge on reinvested dividends, deferred
sales charge, redemption fees or exchange fees.
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
<TABLE>
<S> <C>
Management fees....................................................... 0.53%
12b-1 expenses........................................................ 0.22%/2/
Other expenses (including audit, legal, shareholder services, transfer
agent and custodian expenses)........................................ 0.14%
Total fund operating expenses......................................... 0.89%
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following cumulative ex-
penses on a $1,000 investment, assuming a 5%
annual return./3/ $9 $28 $49 $110
</TABLE>
/1/ Retirement plans of organizations with $100 million or more in collective
retirement plan assets may purchase shares of the fund with no sales charge.
In addition, any employer-sponsored 403(b) plan or defined contribution plan
qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any other plan that
invests at least $1 million in shares of the fund (or in combination with
shares of other funds in The American Funds Group other than the money
market funds) may purchase shares at net asset value; however, a contingent
deferred sales charge of 1% applies on certain redemptions within 12 months
following such purchases. (See "Redeeming Shares--Contingent Deferred Sales
Charge.")
/2/ These expenses may not exceed 0.30% of the fund's average net assets
annually. (See "Fund Organization and Management--Plan of Distribution.")
Due to these distribution expenses, long-term shareholders may pay more than
the economic equivalent of the maximum front-end sales charge permitted by
the National Association of Securities Dealers.
/3/ Use of this assumed 5% return is required by the Securities and Exchange
Commission; it is not an illustration of past or future investment results.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES; ACTUAL EXPENSES MAY BE GREATER OR LESSER THAN THOSE SHOWN.
2
<PAGE>
- -------------------------------------------------------------------------------
FINANCIAL The following information has been audited by Deloitte
HIGHLIGHTS & Touche LLP, independent accountants, whose unquali-
(For a share fied report covering each of the most recent five years
outstanding is included in the statement of additional information.
throughout the This information should be read in conjunction with the
fiscal year) financial statements and accompanying notes which are
also included in the statement of additional informa-
tion.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
----------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988/1/
------ ------ ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Begin-
ning of Year........... $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15 $14.29
------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS
Net investment income.. 1.33 1.25 1.28 1.35 1.46 1.59 1.58 .96
Net realized and
unrealized gain (loss)
on investments........ .39 (.99) .74 .99 1.78 (2.11) (.24) (.16)
------ ------ ------ ------ ------ ------ ------ ------
Total income (loss)
from investment
operations........... 1.72 .26 2.02 2.34 3.24 (.52) 1.34 .80
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net in-
vestment income....... (1.32) (1.21) (1.29) (1.32) (1.49) (1.58) (1.58) (.94)
Distributions from net
realized gains........ (.07) (.26) (.13) -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------
Total Distributions... (1.39) (1.47) (1.42) (1.32) (1.49) (1.58) (1.58) (.94)
------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of
Year................... $14.30 $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15
====== ====== ====== ====== ====== ====== ====== ======
Total Return/2/......... 13.34% 1.60% 14.59% 18.08% 29.13% (4.02)% 9.92% 5.77%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year
(in millions)......... $1,111 $ 835 $ 707 $ 438 $ 255 $ 140 $ 125 $ 68
Ratio of expenses to
average net assets.... .89% .86% .87% .94% 1.00% 1.00% .97% .49%/3/
Ratio of net income to
average net assets.... 9.72% 8.63% 8.60% 9.58% 11.41% 12.42% 11.49% 7.48%/3/
Portfolio turnover
rate.................. 29.56% 42.03% 44.37% 58.04% 44.38% 37.89% 45.78% 21.63%/3/
</TABLE>
--------
/1/ Period from 2/19/88-9/30/88/.
/2/ Calculated with no sales charge.
/3/ These ratios are based on operations for the period shown, and,
accordingly, are not representative of a full year's operations.
- -------------------------------------------------------------------------------
INVESTMENT The fund's primary investment objective is a high level
OBJECTIVES of current income; its secondary investment objective
AND POLICIES is capital appreciation.
The fund's primary The fund invests primarily in fixed-income securities,
goal is to provide with an emphasis on higher yielding, higher risk, lower
you with high rated or unrated corporate bonds. Under normal market
current income. conditions, the fund will invest at least 65% of its
Its secondary goal total assets in high-yield, high-risk bonds and other
is appreciation. similar securities including preferred stocks. High-
yield, high-risk bonds (also commonly referred to as
"junk bonds") typically are subject to greater market
fluctuations and risk of loss of income and principal
due to default by the issuer than are investments in
lower yielding, higher-rated bonds. The fund may also
maintain assets in cash or cash equivalents and govern-
ment securities. (See the statement of additional in-
formation for a description of cash equivalents.)
High-yield, high-risk bonds generally include any bonds
rated Ba or below by Moody's Investors Service, Inc.
and BB or below by Standard & Poor's Corporation or
unrated but considered to be of equivalent quality by
the fund's investment adviser, Capital Research and
Manage-
3
<PAGE>
- -------------------------------------------------------------------------------
ment Company. The fund may invest without limitation in
bonds rated as low as Ca by Moody's or C by S&P (or in
unrated bonds that are determined to be of equivalent
quality). In addition, the fund may invest less than
10% of its total assets in bonds rated C by Moody's or
D by S&P (or in unrated bonds that are determined to be
of equivalent quality).
The average monthly composition of the fund's portfolio
based on the higher of the Moody's or S&P ratings for
the fiscal year ended September 30, 1995 was as fol-
lows: bonds--Aaa/AAA--4.00%; Baa/BB--0.43%; Ba/BB--
24.24%; B/B--53.64%; and Caa/CCC--5.24%. Other invest-
ments, including non-rated investments, equity-type se-
curities, and cash or cash equivalents amounted to
2.77%, 3.01% and 6.67%, respectively.
In pursuing its secondary investment objective of capi-
tal appreciation, the fund may purchase high-yield,
high-risk bonds that Capital Research and Management
Company expects will increase in value due to improve-
ments in credit quality or ratings, or anticipated de-
clines in interest rates. The fund also may invest for
this purpose up to 25% of its assets in common stocks
or other equity or equity-related securities, such as
convertible debentures and preferred stocks (which may
or may not have a dividend yield). Equity-type securi-
ties may be purchased as part of a unit with fixed-in-
come securities or when an unusual opportunity for cap-
ital appreciation is perceived. The fund also may pur-
chase or hold warrants or rights, subject to certain
limitations set forth in the statement of additional
information.
Treating high current income as its primary investment
objective means that the fund may forego opportunities
that would result in capital gains and may accept pru-
dent risks to capital value, in each case to take ad-
vantage of opportunities for higher current income.
The fund's investment restrictions (which are described
in the statement of additional information) and objec-
tives cannot be changed without shareholder approval.
All other investment practices may be changed by the
fund's board.
ACHIEVEMENT OF THE FUND'S INVESTMENT OBJECTIVES CANNOT,
OF COURSE, BE ASSURED DUE TO THE RISK OF CAPITAL LOSS
FROM FLUCTUATING PRICES INHERENT IN ANY INVESTMENT IN
SECURITIES.
4
<PAGE>
- -------------------------------------------------------------------------------
CERTAIN RISKS OF INVESTING IN BONDS The market values of fixed-
SECURITIES AND income securities generally vary inversely with the
INVESTMENT level of interest rates -- when interest rates rise,
TECHNIQUES their values will tend to decline and vice versa. The
magnitude of these changes generally will be greater
Investing in high- the longer the remaining maturity of the security.
yield bonds Fluctuations in the value of the fund's investments
involves special will be reflected in its net asset value per share;
risks. typically declining when interest rates rise.
High-yield, high-risk bonds (bonds rated Ba and BB or
below) typically are subject to greater market fluctua-
tions and to greater risk of loss of income and princi-
pal due to default by the issuer than are higher-rated
bonds. Their values tend to reflect short-term corpo-
rate, economic and market developments and investor
perceptions of the issuer's credit quality to a greater
extent than lower yielding, higher-rated bonds. In ad-
dition, it may be more difficult to dispose of, or to
determine the value of, high-yield, high-risk bonds.
Bonds rated Ba or BB are considered speculative. High-
yield, high-risk bonds are very sensitive to adverse
economic changes. During an economic downturn or sub-
stantial period of rising interest rates, highly
leveraged issuers may experience financial stress that
would adversely affect their ability to service their
principal and interest payment obligations, to meet
projected financial goals, and to obtain additional fi-
nancing. If the issuer of a bond defaulted on its obli-
gations to pay interest or principal, the fund may in-
cur losses or expenses in seeking recovery of amounts
owed to it. In addition, periods of economic uncer-
tainty and changes can be expected to result in in-
creased volatility of market prices and yields of high-
yield, high-risk bonds and the fund's net asset value.
From time to time legislation has been proposed that
would limit the use of high-yield, high-risk bonds in
certain instances. The impact that such legislation, if
enacted, could have on the market for such bonds cannot
be predicted.
High-yield, high-risk bonds may contain redemption or
call provisions. If an issuer exercised these provi-
sions in a declining interest rate market, the fund
might have to replace the security with a lower yield-
ing security, resulting in a decreased return for in-
vestors. Conversely, a high-yield, high-risk bond's
value will decrease in a rising interest rate market,
as will the value of the fund's assets. If the fund ex-
periences unexpected net redemptions, this may force it
to sell high-yield, high-risk bonds without regard to
their investment merits, thereby decreasing the asset
base upon which expenses can be spread and possibly re-
ducing the fund's rate of return.
There may be little trading in the secondary market for
particular bonds, which may affect adversely the fund's
ability to value accurately or dispose of such bonds.
Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, may decrease the
values and
5
<PAGE>
- -------------------------------------------------------------------------------
liquidity of high-yield, high-risk bonds, especially in
a thin market. See the Appendix on page 14 for a com-
plete description of the bond ratings.
Capital Research and Management Company attempts to re-
duce the risks described above through diversification
of the portfolio and by analysis of each issuer as well
as by monitoring broad economic trends and corporate
and legislative developments.
MULTIPLE PORTFOLIO COUNSELOR SYSTEM The basic
investment philosophy of Capital Research and
Management Company is to seek fundamental values at
reasonable prices, using a system of multiple portfolio
counselors in managing mutual fund assets. Under this
system the portfolio of the fund is divided into
segments, which are managed by individual counselors.
Each counselor decides how their segment will be
invested (within the limits provided by the fund's
objectives and policies and by Capital Research and
Management Company's investment committee). In
addition, Capital Research and Management Company's
research professionals make investment decisions with
respect to a portion of the fund's portfolio. The
primary individual portfolio counselors for the fund
are listed below.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
YEARS OF EXPERIENCE
YEARS OF EXPERIENCE AS AS INVESTMENT PROFESSIONAL
PORTFOLIO COUNSELORS PORTFOLIO COUNSELOR (APPROXIMATE)
FOR (AND RESEARCH
AMERICAN PRIMARY TITLE(S) PROFESSIONAL, WITH CAPITAL
HIGH-INCOME TRUST IF APPLICABLE) RESEARCH AND
FOR AMERICAN MANAGEMENT
HIGH-INCOME TRUST COMPANY OR TOTAL
(APPROXIMATE) ITS AFFILIATES YEARS
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard T. Schotte President of the fund. Since the fund began 18 years 28 years
Senior Vice President, operations in 1988
Capital Research and
Management Company
- -----------------------------------------------------------------------------------------------------
David C. Barclay Executive Vice President, 6 years 8 years 14 years
Capital Research Company*
- -----------------------------------------------------------------------------------------------------
Susan M. Tolson Vice President, Capital 1 year, plus 2 years as 6 years 7 years
Research Company* research professional
for the fund prior to
becoming a portfolio
counselor
- -----------------------------------------------------------------------------------------------------
</TABLE>
The fund began operations on February 19, 1988.
* Company affiliated with Capital Research and Management Company.
- --------------------------------------------------------------------------------
INVESTING IN VARIOUS COUNTRIES Up to 25% of the fund's
assets may be invested in securities of issuers outside
the United States, which may be denominated in
currencies other than the U.S. dollar. Investing
globally includes special risks, particularly in
certain developing countries, caused by, among other
things: trade balances and imbalances and related
economic policies; currency exchange rate fluctuations;
6
<PAGE>
- -------------------------------------------------------------------------------
exchange control policies; the possibilities of
expropriation or confiscatory taxation or limitations
on the removal of assets; political or social
instability; the diverse structure and liquidity of
securities markets in various countries and regions;
and policies of governments with respect to possible
nationalization of their industries and other specific
local political and economic considerations. Companies
located outside the United States operate under
different accounting, auditing and financial reporting
regulations than U.S. companies, and frequently there
is less information publicly available about such
companies. However, investing outside the U.S. can also
reduce certain of these risks due to greater
diversification opportunities.
Brokerage commissions are generally higher outside the
U.S. and the fund will bear certain expenses in connec-
tion with its currency transactions. Increased custo-
dian costs as well as administrative difficulties (for
example, delays in clearing and settling portfolio
transactions or in receiving payments of dividends) may
be associated with the maintenance of assets in certain
jurisdictions.
CURRENCY TRANSACTIONS The fund has the ability to hold
a portion of its assets in various currencies and to
enter into forward currency contracts to protect
against changes in currency exchange rates. The fund
does not currently intend to enter into forward
currency contracts other than foreign exchange
contracts which will be used to facilitate settlement
of trades.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS
The fund may purchase securities on a delayed delivery
or "when issued" basis and enter into firm commitment
agreements (transactions whereby the payment obligation
and interest rate are fixed at the time of the
transaction but the settlement is delayed). The fund as
purchaser assumes the risk of any decline in value of
the security beginning on the date of the agreement or
purchase. As the fund's aggregate commitments under
these transactions increase the opportunity for
leverage similarly may increase.
PRIVATE PLACEMENTS Private placements may be either
purchased from another institutional investor that
originally acquired the securities in a private
placement or directly from the issuers of the
securities. Generally, securities acquired in private
placements are subject to contractual restrictions on
resale and may not be resold except pursuant to a
registration statement under the Securities Act of 1933
or in reliance upon an exemption from the registration
requirements under the Act, for example, private
placements sold pursuant to Rule 144A. Accordingly, any
such obligation will be deemed illiquid unless it has
been specifically determined to be liquid under
procedures adopted by the fund's board of directors.
In determining whether these securities are liquid,
factors such as the frequency and volume of trading and
the commitment of dealers to make markets will be
considered. Additionally, the liquidity of any
particular
7
<PAGE>
- -------------------------------------------------------------------------------
security will depend on such factors as the
availability of "qualified" institutional investors and
the extent of investor interest in the security, which
can change from time to time.
MATURITY There are no restrictions on the maturity
composition of the portfolio, although it is
anticipated that the fund normally will be invested
substantially in intermediate-term (three to ten years
to maturity) and long-term (over ten years to maturity)
securities.
INVESTMENT The fund may from time to time compare its investment
RESULTS results to various unmanaged indices or other mutual
funds in reports to shareholders, sales literature and
The fund has advertisements. The results may be calculated on a to-
averaged a total tal return, yield and/or distribution rate basis for
return (at no various periods, with or without sales charges. Results
sales charge) of calculated without a sales charge will be higher. Total
11.21% a year over returns assume the reinvestment of all dividends and
its lifetime capital gain distributions.
(February 19, 1988 The fund's yield and the average annual total returns
through September are calculated with no sales charge in accordance with
30, 1995). Securities and Exchange Commission requirements. The
fund's distribution rate is calculated by annualizing
the current month's dividend and dividing by the aver-
age price for the month. For the 30-day period ended
September 30, 1995, the fund's SEC yield was 9.52% and
the distribution rate was 8.84% with no sales charge.
The SEC yield reflects income earned by the fund, while
the distribution rate reflects dividends paid by the
fund. Among the elements used to calculate the SEC
yield are the dividend and interest income earned and
expenses paid by the fund, whereas the income paid to
shareholders is used to calculate the distribution
rate. The fund's total return over the past 12 months
and average annual total returns over the past five-
year and lifetime periods, as of September 30, 1995,
were 13.33%, 15.01% and 11.21%, respectively. Of
course, past results are not an indication of future
results. Further information regarding the fund's in-
vestment results is contained in the fund's annual re-
port which may be obtained without charge by writing to
the Secretary of the fund at the address indicated on
the cover of this prospectus.
DIVIDENDS, DIVIDENDS AND DISTRIBUTIONS The fund declares dividends
DISTRIBUTIONS from its net investment income daily and distributes
AND TAXES the accrued dividends to shareholders each month.
Dividends begin accruing one day after payment for
Income shares is received by the fund or American Funds
distributions are Service Company. All capital gains, if any, are
made each month. istributed annually, usually in December. When a
capital gain is declared, the net asset value per share
is reduced by the amount of the payment.
The terms of your plan will govern how your plan may
receive distributions from the fund. Generally, peri-
odic distributions from the fund to your plan are rein-
vested in additional fund shares, although your plan
may permit fund distributions from net investment in-
come to be received by you in cash while reinvesting
capital gains distributions in
8
<PAGE>
- -------------------------------------------------------------------------------
additional shares or all fund distributions to be re-
ceived in cash. Unless you select another option, all
distributions will be reinvested in additional fund
shares.
FEDERAL TAXES The fund intends to operate as a
"regulated investment company" under the Internal
Revenue Code. For any fiscal year in which the fund so
qualifies and distributes to shareholders all of its
net investment income and net capital gains, the fund
itself is relieved of federal income tax. The tax
treatment of redemptions from a retirement plan may
differ from redemptions from an ordinary shareholder
account.
Please see the statement of additional information and
your tax adviser for further information.
FUND FUND ORGANIZATION AND VOTING RIGHTS The fund, an open-
ORGANIZATION end, diversified management investment company, was
AND organized as a Massachusetts business trust in 1987.
MANAGEMENT The fund's board supervises fund operations and
performs duties required by applicable state and
The fund is a federal law. Members of the board who are not employed
member of The by Capital Research and Management Company or its
American Funds affiliates are paid certain fees for services rendered
Group, which is to the fund as described in the statement of additional
managed by one of information. They may elect to defer all or a portion
the largest and of these fees through a deferred compensation plan in
most experienced effect for the fund. Shareholders have one vote per
investment share owned and, at the request of the holders of at
advisers. least 10% of the shares, the fund will hold a meeting
at which any member of the board could be removed by a
majority vote. There will not usually be a shareholder
meeting in any year except, for example, when the
election of the board is required to be acted upon by
shareholders under the Investment Company Act of 1940.
THE INVESTMENT ADVISER Capital Research and Management
Company, a large and experienced investment management
organization founded in 1931, is the investment adviser
to the fund and other funds, including those in The
American Funds Group. Capital Research and Management
Company is located at 333 South Hope Street, Los
Angeles, CA 90071 and at 135 South State College
Boulevard, Brea, CA 92621. Capital Research and
Management Company manages the investment portfolio and
business affairs of the fund and receives a fee at the
annual rate of 0.30% of the first $60 million of the
fund's net assets, plus 0.21% on net assets in excess
of $60 million but not exceeding $1 billion, plus 0.18%
on net assets in excess of $1 billion, plus 3% of the
first $100 million of annual gross income, plus 2.5% of
annual gross investment income in excess of $100
million. Assuming net assets of $1 billion and gross
investment income levels of 4%, 5%, 6%, 7% and 8%,
management fees would be .34%, .37%, .40%, .43% and
.46%, respectively.
Capital Research and Management Company is a wholly
owned subsidiary of The Capital Group Companies, Inc.
(formerly "The Capital Group, Inc."), which is located
at 333 South Hope Street, Los Angeles,
9
<PAGE>
- -------------------------------------------------------------------------------
CA 90071. The research activities of Capital Research
and Management Company are conducted by affiliated
companies which have offices in Los Angeles, San
Francisco, New York, Washington, D.C., London, Geneva,
Singapore, Hong Kong and Tokyo.
Capital Research and Management Company and its
affiliated companies have adopted a personal investing
policy that is consistent with the recommendations
contained in the report dated May 9, 1994 issued by the
Investment Company Institute's Advisory Group on
Personal Investing. (See the statement of additional
information.)
PORTFOLIO TRANSACTIONS Orders for the fund's portfolio
securities transactions are placed by Capital Research
and Management Company, which strives to obtain the
best available prices, taking into account the costs
and quality of executions. Fixed-income securities are
generally traded on a "net" basis with a dealer acting
as principal for its own account without a stated
commission, although the price of the security usually
includes a profit to the dealer. In underwritten
offerings, securities are usually purchased at a fixed
price which includes an amount of compensation to the
underwriter, generally referred to as the underwriter's
concession or discount. On occasion, securities may be
purchased directly from an issuer, in which case no
commissions or discounts are paid.
Subject to the above policy, when two or more brokers
are in a position to offer comparable prices and
executions, preference may be given to brokers that
have sold shares of the fund or have provided
investment research, statistical, and other related
services for the benefit of the fund and/or other funds
served by Capital Research and Management Company.
PRINCIPAL UNDERWRITER American Funds Distributors,
Inc., a wholly owned subsidiary of Capital Research and
Management Company, is the principal underwriter of the
fund's shares. American Funds Distributors is located
at 333 South Hope Street, Los Angeles, CA 90071, 135
South State College Boulevard, Brea, CA 92621, 8000 IH-
10 West, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 46240, and 5300 Robin Hood
Road, Norfolk, VA 23513. Telephone conversations with
American Funds Distributors may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PLAN OF DISTRIBUTION The fund has a plan of
distribution or "12b-1 Plan" under which it may finance
activities primarily intended to sell shares, provided
the categories of expenses are approved in advance by
the board and the expenses paid under the plan were
incurred within the last 12 months and accrued while
the plan is in effect. Expenditures
10
<PAGE>
- --------------------------------------------------------------------------------
by the fund under the plan may not exceed 0.30% of its
average net assets annually (0.25% of which may be for
service fees).
TRANSFER AGENT American Funds Service Company, 800/421-
0180, a wholly owned subsidiary of Capital Research and
Management Company, is the transfer agent and performs
shareholder service functions. American Funds Service
Company is located at 333 South Hope Street, Los
Angeles, CA 90071, 135 South State College Boulevard,
Brea, CA 92621, 8000 IH-10 West, San Antonio, TX 78230,
8332 Woodfield Crossing Boulevard, Indianapolis, IN
46240 and 5300 Robin Hood Road, Norfolk, VA 23513. It
was paid a fee of $738,000 for the fiscal year ended
September 30, 1995. Telephone conversations with
American Funds Service Company may be recorded or
monitored for verification, recordkeeping and quality
assurance purposes.
PURCHASING ALL ORDERS TO PURCHASE SHARES MUST BE MADE THROUGH YOUR
SHARES RETIREMENT PLAN. FOR MORE INFORMATION ABOUT HOW TO
PURCHASE SHARES OF THE FUND THROUGH YOUR PLAN OR
LIMITATIONS ON THE AMOUNT THAT MAY BE PURCHASED, PLEASE
CONSULT WITH YOUR EMPLOYER. Shares are sold to eligible
retirement plans at the net asset value per share next
determined after receipt of an order by the fund or
American Funds Service Company. Orders must be received
before the close of regular trading on the New York
Stock Exchange in order to receive that day's net asset
value. Plans of organizations with collective retirement
plan assets of $100 million or more may purchase shares
at net asset value. In addition, any employer-sponsored
403(b) plan or defined contribution plan qualified under
Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees or any
other plan that invests at least $1 million in shares of
the fund (or in combination with shares of other funds
in The American Funds Group other than the money market
funds) may purchase shares at net asset value; however,
a contingent deferred sales charge of 1% is imposed on
certain redemptions made within one year of such
purchase. (See "Redeeming Shares--Contingent Deferred
Sales Charge.") Plans may also qualify to purchase
shares at net asset value by completing a statement of
intention to purchase $1 million in fund shares subject
to a commission over a maximum of 13 consecutive months.
Certain redemptions of such shares may also be subject
to a contingent deferred sales charge as described
above. (See the statement of additional information.)
The minimum initial investment is $250, except that the
money market funds have a minimum of $1,000 for
individual retirement accounts (IRAs). Minimums are
reduced to $50 for purchases through "Automatic
Investment Plans" (except for the money market funds) or
to $25 for purchases by retirement plans through payroll
deductions and may be reduced or waived for shareholders
of other funds in The American Funds Group.
11
<PAGE>
- -------------------------------------------------------------------------------
American Funds Distributors, at its expense (from a
designated percentage of its income), will, during
calendar year 1996, provide additional promotional
incentives to dealers. Currently these incentives are
limited to the top one hundred dealers who have sold
shares of the fund or other funds in The American Funds
Group. The incentive payments will be based on a pro
rata share of a qualifying dealer's sales. American
Funds Distributors will, on an annual basis, determine
the advisability of continuing these promotional
incentives.
Qualified dealers currently are paid a continuing
service fee not to exceed 0.25% of average net assets
(0.15% in the case of the money market funds) annually
in order to promote selling efforts and to compensate
them for providing certain services. (See "Fund
Organization and Management--Plan of Distribution.")
These services include processing purchase and
redemption transactions, establishing shareholder
accounts and providing certain information and
assistance with respect to the fund.
Shares of the fund are offered to other shareholders
pursuant to another prospectus at public offering
prices that may include an initial sales charge.
SHARE PRICE Shares are offered to eligible retirement
plans at the net asset value next determined after the
order is received by the fund or American Funds Service
Company. In the case of orders sent directly to the
fund or American Funds Service Company, an investment
dealer must be indicated. Dealers are responsible for
promptly transmitting orders. (See the statement of
additional information under "Purchase of Shares--Price
of Shares.")
The fund's net asset value per share is determined as
of the close of trading (currently 4:00 p.m., New York
time) on each day the New York Stock Exchange is open.
The current value of the fund's total assets, less all
liabilities, is divided by the total number of shares
outstanding and the result, rounded to the nearer cent,
is the net asset value per share.
SHAREHOLDER Subject to any restrictions contained in your plan, you
SERVICES can exchange your shares for shares of other funds in
The American Funds Group which are offered through the
plan at net asset value. In addition, again depending
on your plan, you may be able to exchange shares
automatically or cross-reinvest dividends in shares of
other funds. Contact your plan administrator/trustee
regarding how to use these services. Also, see the
fund's statement of additional information for a
description of these and other services that may be
available through your plan. These services are
available only in states where the fund to be purchased
may be legally offered and may be terminated or
modified at any time upon 60 days' written notice.
12
<PAGE>
- --------------------------------------------------------------------------------
REDEEMING Subject to any restrictions imposed by your plan, you
SHARES can sell your shares through the plan any day the New
York Stock Exchange is open. For more information about
how to sell shares of the fund through your retirement
plan, including any charges that may be imposed by the
plan, please consult with your employer.
---------------------------------------------------------
By contacting Your plan administrator/trustee must
your plan send a letter of instruction
administrator/ specifying the name of the fund, the
trustee number of shares or dollar amount to
be sold, and, if applicable, your
name and account number. For your
protection, if you redeem more than
$50,000, the signatures of the
registered owners (i.e., trustees or
their legal representatives) must be
guaranteed by a bank, savings
association, credit union, or member
firm of a domestic stock exchange or
the National Association of
Securities Dealers, Inc. that is an
eligible guarantor institution. Your
plan administrator/trustee should
verify with the institution that it
is an eligible guarantor prior to
signing. Additional documentation
may be required to redeem shares
from certain accounts. Notarization
by a Notary Public is not an
acceptable signature guarantee.
---------------------------------------------------------
By contacting Shares may also be redeemed through
your an investment dealer, however, you
investment or your plan may be charged for this
dealer service. SHARES HELD FOR YOU IN AN
INVESTMENT DEALER'S STREET NAME MUST
BE REDEEMED THROUGH THE DEALER.
---------------------------------------------------------
THE PRICE YOU RECEIVE FOR THE SHARES YOU REDEEM IS THE
NET ASSET VALUE NEXT DETERMINED AFTER YOUR ORDER AND ALL
REQUIRED DOCUMENTATION ARE RECEIVED BY THE FUND OR
AMERICAN FUNDS SERVICE COMPANY. (SEE "PURCHASING
SHARES--SHARE PRICE")
CONTINGENT DEFERRED SALES CHARGE A contingent deferred
sales charge of 1% applies to certain redemptions within
the first year on investments of $1 million or more and
on any investment made with no initial sales charge by
any employer-sponsored 403(b) plan or defined
contribution plan qualified under Section 401(a) of the
Internal Revenue Code, including a "401(k)" plan with
200 or more eligible employees. The charge is 1% of the
lesser of the value of the shares redeemed (exclusive of
reinvested dividends and capital gain distributions) or
the total cost of such shares. Shares held for the
longest period are assumed to be redeemed first for
purposes of calculating this charge. The charge is
waived for exchanges (except if shares acquired by
exchange were then redeemed within 12 months of the
initial purchase) and for distributions from qualified
retirement plans and other employee benefit plans; for
redemptions resulting from participant-directed switches
among investment options within a participant-directed
employer-sponsored retirement plan; and for redemptions
in connection with loans made by qualified retirement
plans.
OTHER IMPORTANT THINGS TO REMEMBER The net asset value
for redemptions is determined as indicated under
"Purchasing Shares--Share Price." Because the fund's net
asset value fluctuates, reflecting the market value of
the portfolio, the amount you receive for shares
redeemed may be more or less than the amount paid for
them.
13
<PAGE>
- -------------------------------------------------------------------------------
Redemption proceeds will not be mailed until sufficient
time has passed to provide reasonable assurance that
checks or drafts (including certified or cashier's
checks) for shares purchased have cleared (which may
take up to 15 calendar days from the purchase date).
Except for delays relating to clearance of checks for
share purchases or in extraordinary circumstances (and
as permissible under the Investment Company Act of
1940), redemption proceeds will be paid on or before
the seventh day following receipt of a proper
redemption request.
APPENDIX Moody's Investors Service Inc. rates the long-term debt
securities issued by various entities in categories
Description of ranging from "Aaa" to "C," according to quality as
Bond Ratings. described below.
"AAA -- Best quality. These securities carry the
smallest degree of investment risk and are generally
referred to as "gilt edge.' Interest payments are
protected by a large, or by an exceptionally stable
margin and principal is secure. While the various
protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the
fundamentally strong position of such issues."
"AA -- High quality by all standards. They are rated
lower than the best bond because margins of protection
may not be as large as in Aaa securities, fluctuation
of protective elements may be of greater amplitude, or
there may be other elements present which make the
long-term risks appear somewhat greater."
"A -- Upper medium grade obligations. These bonds
possess many favorable investment attributes. Factors
giving security to principal and interest are
considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the
future."
"BAA -- Medium grade obligations. Interest payments and
principal security appear adequate for the present but
certain protective elements may be lacking or may be
characteristically unreliable over any great length of
time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative
characteristics as well."
"BA -- Have speculative elements; future cannot be
considered as well assured. The protection of interest
and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times
over the future. Bonds in this class are characterized
by uncertainty of position."
"B -- Generally lack characteristics of the desirable
investment; assurance of interest and principal
payments or of maintenance of other terms of the
contract over any long period of time may be small."
14
<PAGE>
- -------------------------------------------------------------------------------
"CAA -- Of poor standing. Issues may be in default or
there may be present elements of danger with respect to
principal or interest."
"CA -- Speculative in a high degree; often in default
or have other marked shortcomings."
"C -- Lowest rated class of bonds; can be regarded as
having extremely poor prospects of ever attaining any
real investment standing."
Standard & Poor's Corporation rates the long-term debt
securities issued by various entities in categories
ranging from "AAA" to "D," according to quality as
described below.
"AAA -- Highest rating. Capacity to pay interest and
repay principal is extremely strong."
"AA -- High grade. Very strong capacity to pay interest
and repay principal. Generally, these bonds differ from
AAA issues only in a small degree."
"A -- Have a strong capacity to pay interest and repay
principal, although they are somewhat more susceptible
to the adverse effects of change in circumstances and
economic conditions, than debt in higher rated
categories."
"BBB -- Regarded as having adequate capacity to pay
interest and repay principal. These bonds normally
exhibit adequate protection parameters, but adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest
and repay principal than for debt in higher rated
categories."
"BB, B, CCC, CC, C -- Regarded, on balance, as
predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree
of speculation and C the highest degree of speculation.
While such debt will likely have some quality and
protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions."
"C1 -- Reserved for income bonds on which no interest
is being paid."
"D -- In default and payment of interest and/or
repayment of principal is in arrears."
[LOGO OF RECYLED This prospectus has been printed on
PAPER] recycled paper that meets the
guidelines of the United States
Environmental Protection Agency
15
<PAGE>
-----------------------------------------------------
THIS PROSPECTUS RELATES ONLY TO SHARES OF THE FUND
OFFERED WITHOUT A SALES CHARGE TO ELIGIBLE RETIREMENT
PLANS. FOR A PROSPECTUS REGARDING SHARES OF THE FUND
TO BE ACQUIRED OTHERWISE, CONTACT THE SECRETARY OF
THE FUND AT THE ADDRESS INDICATED ON THE FRONT.
-----------------------------------------------------
<PAGE>
American
High-
Income
Trust(R)
November 25, 1995
AMERICAN HIGH-INCOME TRUST(R)
Profile
333 South Hope Street November 25, 1995
Los Angeles, CA 90071
1. Goal
The fund primarily seeks high income. The fund also attempts to make your
money grow.
2. Investment Strategies
The fund primarily invests in lower rated bonds (also known as junk bonds).
The fund may also invest up to 25% of its assets in common stocks and in
securities of issuers outside the U.S.
3. Risks
Bond and stock prices rise and fall. Bonds are subject to credit risk (the
possibility that the bond issuer will default on its obligation) and market
risk (when interest rates rise, bond prices fall and vice versa). Lower rated
bonds are subject to greater price fluctuations and risk of loss than higher
rated bonds. Stocks are also subject to certain market risks. Moreover,
investing outside the U.S. involves special risks, such as currency
fluctuations.
YOU CAN LOSE MONEY BY INVESTING IN THE FUND; YOUR INVESTMENT IS NOT GUARANTEED.
THE LIKELIHOOD OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD
OF TIME.
4. Appropriateness
If you are not a long-term investor primarily seeking high income and are
willing to accept the risks described above including the risks of investing in
lower rated bonds, this fund may not be appropriate for you. Please consult
your investment dealer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
<TABLE>
<CAPTION>
<S> <C>
Maximum sales charge
on purchases
(as a percentage of offering price) 4.75%
</TABLE>
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. The fund has no
sales charge on reinvested dividends, and no deferred sales charge or
redemption or exchange fees. A contingent deferred sales charge of 1% applies
on certain redemptions within 12 months following purchases without a sales
charge.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.53%
12b-1 expenses 0.22%
Other expenses 0.14%
Total fund operating expenses 0.89%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 56
Three years 75
Five years 94
Ten years 152
</TABLE>
6. Past Results
Here are the fund's annual total returns for each calendar year over the fund's
lifetime:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1989 0.64
1990 -4.66
1991 26.12
1992 8.90
1993 11.63
1994 -9.62
</TABLE>
[END CHART]
Sales charges have not been deducted from results shown above.
The fund's average annual total return* is +10.50% over its lifetime (February
19, 1988 through September 30, 1995). PAST RESULTS ARE NOT A GUARANTEE OF
FUTURE RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 7.93%
Five years + 13.89%
Lifetime + 10.50%
30-Day Yield*
9.06%
</TABLE>
* These results were calculated for periods ended September 30, 1995 in
accordance with Securities and Exchange Commission rules which require that the
maximum sales charge be deducted.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
diversified mutual fund using the multiple portfolio counselor system. Under
this system, the fund's assets are divided into several portions. Each portion
is independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
The fund's shares are sold through investment dealers. Your investment dealer
can help you with your account, or you may call American Funds Service Company
at 800/421-0180 with questions about your account. Generally, the minimum
initial investment is $1,000.
9. Redemptions
You may redeem shares through your investment dealer or by calling American
FundsLineR at 800/325-3590. (You will need the fund's number - 21 - if you use
this service.) Transactions will be processed as of the next close of the New
York Stock Exchange.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made monthly. Capital gains, if any, are usually distributed in
December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you who purchase shares at net asset value through a retirement plan, some or
all of the services or features described may not be available. Contact your
employer for details.
THIS PROFILE CONTAINS KEY INFORMATION ABOUT THE FUND. MORE DETAILS APPEAR IN
THE FUND'S ACCOMPANYING PROSPECTUS.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
American
High-
Income
Trust(R)
November 25, 1995
AMERICAN HIGH-INCOME TRUST(R)
Profile for Eligible Retirement Plans
333 South Hope Street November 25, 1995
Los Angeles, CA 90071
1. Goal
The fund primarily seeks high income. The fund also attempts to make your
money grow.
2. Investment Strategies
The fund primarily invests in lower rated bonds (also known as junk bonds).
The fund may also invest up to 25% of its assets in common stocks and in
securities of issuers outside the U.S.
3. Risks
Bond and stock prices rise and fall. Bonds are subject to credit risk (the
possibility that the bond issuer will default on its obligation) and market
risk (when interest rates rise, bond prices fall and vice versa). Lower rated
bonds are subject to greater price fluctuations and risk of loss than higher
rated bonds. Stocks are also subject to certain market risks. Moreover,
investing outside the U.S. involves special risks, such as currency
fluctuations.
YOU CAN LOSE MONEY BY INVESTING IN THE FUND; YOUR INVESTMENT IS NOT GUARANTEED.
THE LIKELIHOOD OF LOSS IS GREATER IF YOU INTEND TO INVEST FOR A SHORTER PERIOD
OF TIME.
4. Appropriateness
If you are not a long-term investor primarily seeking high income and are
willing to accept the risks described above including the risks of investing in
lower rated bonds, this fund may not be appropriate for you. For more
information, consult your investment dealer or employer.
5. Fees and Expenses
Shareholder transaction expenses are charges you pay when you buy or sell
shares of a fund. Annual fund operating expenses are paid out of the fund's
assets. The fund's expenses are factored into its share price or dividends and
are not charged directly to shareholder accounts.
Shareholder Transaction Expenses
Shares of the fund are sold to eligible retirement plans* with no sales charge.
However, a 1% contingent deferred sales charge is imposed on certain
redemptions within one year of the purchase from certain plans investing $1
million or more. The fund has no sales charge on reinvested dividends and no
deferred sales charge for redemptions or exchanges.
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
<S> <C>
Management fees 0.53%
12b-1 expenses 0.22%
Other expenses 0.14%
Total fund operating expenses 0.89%
</TABLE>
Example
You would pay the following cumulative expenses on a $1,000 investment,
assuming a 5% annual return. This example should not be considered a
representation of past or future expenses.
<TABLE>
<CAPTION>
<S> <C>
One year $ 9
Three years 28
Five years 49
Ten years 110
</TABLE>
* Plans of companies with collective retirement plan assets of $100 million or
more or plans purchasing $1 million or more or having 200 or more eligible
employees.
6. Past Results
Here are the fund's annual total returns for each calendar year over the fund's
lifetime:
[CHART]
<TABLE>
<CAPTION>
<S> <C>
1989 5.63
1990 0.07
1991 3.24
1992 14.29
1993 17.22
1994 -5.11
</TABLE>
[END CHART]
The fund's average annual total return* is +11.21% over its lifetime (February
19, 1988 through September 30, 1995). PAST RESULTS ARE NOT A GUARANTEE OF
FUTURE RESULTS.
<TABLE>
<CAPTION>
<S> <C>
Average Annual
Total Returns*
One year + 13.33%
Five years + 15.01%
Lifetime + 11.21%
30-Day Yield*
9.52%
</TABLE>
* These results were calculated for periods ended September 30, 1995 in
accordance with Securities and Exchange Commission rules.
7. Investment Adviser
Capital Research and Management Company, one of the world's largest and most
experienced investment advisers, manages the fund, which is a member of The
American Funds Group. Capital Research and Management Company manages this
diversified mutual fund using the multiple portfolio counselor system. Under
this system, the fund's assets are divided into several portions. Each portion
is independently managed by a portfolio counselor or a group of research
professionals, subject to oversight by the investment adviser's investment
committee.
8. Purchases
All orders to purchase shares must be made through your retirement plan. For
more information about how to purchase shares of the fund through your plan or
limitations on the amount that may be purchased, please consult with your
employer.
9. Redemptions
Subject to any restrictions imposed by your plan, you may sell your shares
through the plan any day the New York Stock Exchange is open. For more
information about how to sell shares of the fund through your retirement plan,
including any charges that may be imposed by the plan, please consult with your
employer.
10. Distributions
Dividends and capital gain distributions are automatically reinvested unless
you notify American Funds Service Company that you would like to invest them in
another of the American Funds or receive payment in cash. Income distributions
are usually made monthly. Capital gains, if any, are usually distributed in
December.
11. Other Services
You may exchange your shares for any of the other American Funds or obtain
information about your investment any time by calling American FundsLineR. If
you who purchase shares at net asset value through a retirement plan, some or
all of the services or features described may not be available. Contact your
employer for details.
THIS PROFILE RELATES ONLY TO SHARES OF THE FUND OFFERED WITHOUT SALES CHARGE TO
ELIGIBLE RETIREMENT PLANS. TO RECEIVE A FULL PROSPECTUS, CONTACT YOUR EMPLOYER
OR THE SECRETARY OF THE FUND AT THE ABOVE ADDRESS.
This profile has been printed on recycled
paper that meets the guidelines of the United
States Environmental Protection Agency.
<PAGE>
Part B
Statement of Additional Information
November 25, 1995
This document is not a prospectus but should be read in conjunction with a
current prospectus dated November 25, 1995 of American High-Income Trust (the
"fund"). A prospectus may be obtained from your investment dealer or financial
planner or by writing to the fund at the following address:
American High-Income Trust
Attention: Secretary
333 South Hope Street
Los Angeles, CA 90071
(213) 486-9200
The fund has two forms of prospectuses. Each reference to the prospectus in
this Statement of Additional Information includes both of the fund's
prospectuses. Shareholders who purchase shares at net asset value through
employer-sponsored defined contribution plans should note that not all of the
services or features described below may be available to them, and they should
contact their employer for details.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEMPAGE NO.
<S> <C>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES 1
INVESTMENT RESTRICTIONS 5
FUND OFFICERS AND TRUSTEES 7
MANAGEMENT 10
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES 12
PURCHASE OF SHARES 15
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES 17
EXECUTION OF PORTFOLIO TRANSACTIONS 17
GENERAL INFORMATION 18
INVESTMENT RESULTS 19
APPENDIX 22
FINANCIAL STATEMENTS ATTACHED
</TABLE>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Investment Objectives and Policies."
PORTFOLIO TRADING - The fund intends to engage in portfolio trading when it is
believed that the sale of a security owned by the fund and the purchase of
another security of better value can enhance principal and/or increase income.
A security may be sold to avoid any prospective decline in market value in
light of what is evaluated as an expected rise in prevailing yields, or a
security may be purchased in anticipation of a market rise (a decline in
prevailing yields). A security also may be sold and a comparable security
purchased coincidentally in order to take advantage of what is believed to be a
disparity in the normal yield and price relationship between the two
securities.
COMMERCIAL BANK OBLIGATIONS - The fund will invest in certificates of deposit
(interest-bearing time deposits) and bankers' acceptances (time drafts drawn on
a commercial bank where the bank accepts an irrevocable obligation to pay at
maturity) only to the extent that such items represent direct or contingent
obligations of commercial banks with assets in excess of $1 billion, based on
latest published reports, or obligations issued by commercial banks with assets
of less than $1 billion if the principal amount of such obligation is federally
insured.
WHEN-ISSUED SECURITIES AND FIRM COMMITMENT AGREEMENTS - The fund may purchase
securities on a delayed delivery or "when-issued" basis and enter into firm
commitment agreements (transactions whereby the payment obligation and interest
rate are fixed at the time of the transaction but the settlement is delayed).
The fund as purchaser assumes the risk of any decline in value of the security
beginning on the date of the agreement or purchase.
The fund will identify liquid assets such as cash, U.S. Government securities
or other appropriate high-grade debt obligations in an amount sufficient to
meet its payment obligations in these transactions. Although these
transactions will not be entered into for leveraging purposes, to the extent
the fund's aggregate commitments under these transactions exceed its holdings
of cash and securities that do not fluctuate in value (such as short-term money
market instruments), the fund temporarily will be in a leveraged position
(because it will have an amount greater than its net assets subject to market
risk). Should market values of the fund's portfolio securities decline while
the fund is in a leveraged position, greater depreciation of its net assets
will likely occur than were it not in such a position. The fund will not
borrow money to settle these transactions and, therefore, will liquidate other
portfolio securities in advance of settlement if necessary to generate
additional cash to meet its obligations thereunder.
PRIVATE PLACEMENTS - The fund will invest no more than 15% of its net assets,
in aggregate, in securities that are not readily marketable, including
securities acquired in private placements (which are direct sales of securities
to a limited number of investors). These purchases may be either from another
institutional investor that originally acquired the securities in a private
placement or directly from the issuers of the securities. Securities acquired
in private placements may be subject to contractual restrictions on resale and
may not be resold except pursuant to a registration statement under the
Securities Act of 1933 or in reliance upon an exemption from the registration
requirements under that Act. Accordingly, such securities may not be readily
marketable, and the fund may incur certain additional costs in disposing of
such securities.
VARIABLE, FLOATING RATE AND SYNTHETIC OBLIGATIONS - The interest rates payable
on certain securities in which the fund may invest may not be fixed but may
fluctuate based upon changes in market rates. Variable and floating rate
obligations bear coupon rates that are adjusted at designated intervals, based
on the then current market rates of interest on which the coupon rates are
based. Variable and floating rate obligations permit the fund to "lock in" the
current interest rate for only the period until the next scheduled rate
adjustment, but the rate adjustment feature tends to limit the extent to which
the market value of the obligation will fluctuate. The fund may also invest in
"synthetic" securities whose value depends on the level of currencies,
commodities, securities, securities indexes, or other financial indicators or
statistics. For example, these could include fixed-income securities whose
value or interest rate is determined by reference to the value of a foreign
currency relative to the U.S. dollar, or to the value of different foreign
currencies relative to each other. The value or interest rate of these
securities may increase or decrease as the value of the underlying instrument
changes.
CASH AND CASH EQUIVALENTS - Subject to the requirement that it maintain at
least 65% of its assets in high-risk, high-yield bonds under normal market
conditions, the fund may maintain assets in cash or cash equivalents, including
commercial bank obligations (certificates of deposit, which are
interest-bearing time deposits; bankers' acceptances, which are time drafts on
a commercial bank where the bank accepts an irrevocable obligation to pay at
maturity; and demand or time deposits) and commercial paper (short-term notes
issued by corporations or governmental bodies).
WARRANTS OR RIGHTS - As a condition of its continuing registration in a state,
the fund has undertaken that its investments in warrants or rights, valued at
the lower of cost or market, will not exceed 5% of the value of its net assets.
Included within that amount, but not to exceed 2% of the fund's net assets, may
be warrants or rights that are not listed on either the New York Stock Exchange
or the American Stock Exchange. Warrants or rights acquired by the fund in
units or attached to securities will be deemed to be without value for purposes
of these restrictions. These limits are not fundamental policies of the fund
and may be changed by the Board of Trustees without shareholder approval.
CURRENCY TRANSACTIONS - The fund has the ability to hold a portion of its
assets in various currencies and to enter into forward currency contracts to
protect against changes in currency exchange rates. The fund does not
currently intend to enter into forward currency contracts other than foreign
exchange contracts which will be used to facilitate settlement of trades
A forward currency contract is an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract agreed upon by the parties, at a price set at the time of the
contract. The fund might purchase a currency or enter into a forward purchase
contract for the currency to preserve the U.S. dollar price of securities it
has the authority to purchase or has contracted to purchase. Alternatively, it
might sell a currency on either a spot or forward basis to hedge against an
anticipated decline in the U.S. dollar value of securities in its portfolio or
which it intends or has contracted to sell. Although this strategy could
minimize the risk of loss due to a decline in the value of the hedged currency,
it could also limit any potential gain which might result from an increase in
the value of the currency.
LOANS OF PORTFOLIO SECURITIES - Although the fund has no current intention
to do so during the next 12 months, the fund is authorized to lend portfolio
securities to selected securities dealers or other institutional investors
whose financial condition is monitored by Capital Research and Management
Company (the "Investment Adviser"). The borrower must maintain with the fund's
custodian collateral consisting of cash, cash equivalents or U.S. Government
securities equal to at least 100% of the value of the borrowed securities, plus
any accrued interest. The Investment Adviser will monitor the adequacy of the
collateral on a daily basis. The fund may at any time call in a loan of its
portfolio securities and obtain the return of the loaned securities. The fund
will receive any interest paid on the loaned securities and a fee or a portion
of the interest earned on the collateral. The fund will limit its loans of
portfolio securities to an aggregate of 10% of the value of its total assets,
computed at the time any such loan is made.
REPURCHASE AGREEMENTS - Although the fund has no current intention to do so
during the next 12 months, the fund may enter into repurchase agreements, under
which it buys a security and obtains a simultaneous commitment from the seller
to repurchase the security at a specified time and price. The seller must
maintain with the fund's custodian collateral equal to at least 100% of the
repurchase price including accrued interest, as monitored daily by Capital
Research and Management Company. If the seller under the repurchase agreement
defaults, the fund may incur a loss if the value of the collateral security
under the repurchase agreement has declined and may incur disposition costs in
connection with liquidating the collateral. If bankruptcy proceedings are
commenced with respect to the seller, liquidation of the collateral by the fund
may be delayed or limited.
REVERSE REPURCHASE AGREEMENTS AND "ROLL" TRANSACTIONS - Although the fund
has no current intention of doing so during the next 12 months, the fund is
authorized to enter into reverse repurchase agreements and "roll" transactions.
This type of agreements involves the sale of a security by a fund and its
commitment to repurchase the security at a specified time and price. A "roll"
transaction is the sale of securities together with a commitment (for which the
fund may receive a fee) to purchase similar, but not identical, securities at a
future date. The fund will segregate liquid assets such as cash, U.S.
Government securities or other appropriate high grade debt obligations in an
amount sufficient to cover its obligations under "roll" transactions and
reverse repurchase agreements with broker-dealers (but no collateral is
required on reverse repurchase agreements with banks). Under the Investment
Company Act of 1940 (the "1940 Act"), these transactions may be considered
borrowings by the fund; accordingly, the fund will limit these transactions,
together with any other borrowings, to no more than one-third of its total
assets. Although these transactions will not be entered into for the purpose
of leveraging, to the extent the fund's aggregate commitments under these
transactions exceed its holdings of cash and securities that do not fluctuate
in value (such as short-term money market instruments), the fund temporarily
will be in a leveraged position (because it will have an amount greater than
its net assets subject to market risk). Should market values of the fund's
portfolio securities decline while the fund is in a leveraged position, greater
depreciation of its net assets would likely occur than were it not in such a
position. As the fund's aggregate commitments under these transactions
increase, the opportunity for leverage similarly increases. If the income and
gains on securities purchased with the proceeds of reverse repurchase
agreements exceed the costs of the agreements, the fund's earnings or net asset
value will increase faster than otherwise would be the case; conversely, if the
income and gains fail to exceed the costs, earnings or net asset value would
decline faster than otherwise would be the case.
OPTIONS ON U.S. TREASURY SECURITIES - ALTHOUGH THE FUND HAS NO CURRENT
INTENTION OF DOING SO DURING THE NEXT 12 MONTHS, from time to time, the fund
may purchase put and call options on U.S. Treasury securities ("Treasury
securities"). A put (call) option gives the fund as purchaser of the option the
right (but not the obligation) to sell (buy) a specified amount of Treasury
securities at the exercise price until the expiration of the option. The value
of a put (call) option on Treasury securities generally increases (decreases)
with an increase (decrease) in prevailing interest rates. Accordingly, the
fund would purchase puts (calls) in anticipation of, or to protect against, an
increase in interest rates. These put options are listed on an exchange or
traded over-the-counter ("OTC options"). Exchange-traded put options have
standardized exercise prices and expiration dates; OTC options are two-party
contracts with negotiated exercise prices and expiration dates. OTC options
differ from exchange-traded options in that OTC options are transacted with
dealers directly and not through a clearing corporation (which guarantees
performance). Consequently, there is a risk of non-performance by the dealer.
Since no exchange is involved, OTC options are valued on the basis of a quote
provided by the dealer. In the case of OTC options, there can be no assurance
that a liquid secondary market will exist for any particular option at any
specific time.
Although the fund may purchase options to reduce the risk of increases in
interest rates, it cannot thereby eliminate all such risks. For example, while
the value of options on Treasury securities principally is related to general
levels of interest rates on Treasury securities, the values of higher yielding
corporate obligations in which the fund primarily invests also are affected by
credit and other factors. The fund is subject to the loss of its entire
premium payment where the put option is allowed to expire without exercise.
The fund may not purchase any additional options if, as a result, the value of
all options owned by the fund would exceed 5% of the fund's total assets.
PORTFOLIO TURNOVER - Portfolio changes will be made without regard to the
length of time particular investments may have been held. High portfolio
turnover involves correspondingly greater transaction costs in the form of
dealer spreads or brokerage commissions, and may result in the realization of
net capital gains, which are taxable when distributed to shareholders.
Fixed-income securities are generally traded on a net basis and usually neither
brokerage commissions nor transfer taxes are involved. The fund does not
anticipate its portfolio turnover to exceed 100% annually. The fund's
portfolio turnover rate would equal 100% if each security in the fund's
portfolio were replaced once per year. See "Financial Highlights" in the
Prospectus for the fund's portfolio turnover for each of the last eight
years.
INVESTMENT RESTRICTIONS
The fund has adopted the following fundamental policies and investment
restrictions which may not be changed without a majority vote of its
outstanding shares. Such majority is defined by the 1940 Act as the vote of
the lesser of (i) 67% or more of the outstanding voting securities present at a
meeting, if the holders of more than 50% of the outstanding voting securities
are present in person or by proxy, or (ii) more than 50% of the outstanding
voting securities. All percentage limitations expressed in the following
investment restrictions are measured immediately after and giving effect to the
relevant transaction. These restrictions provide that the fund may not:
1. Purchase any security (other than securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities) if immediately after and
as a result of such investment, more than 5% of the fund's total assets would
be invested in securities of the issuer;
2. Invest 25% or more of the value of its total assets in the securities of
issuers conducting their principal business activities in the same industry;
3. Invest in companies for the purpose of exercising control or management;
4. Knowingly purchase securities of other registered management investment
companies, except in connection with a merger, consolidation, acquisition, or
reorganization;
5. Buy or sell real estate or commodities or commodity contracts; however,
the fund may invest in debt securities secured by real estate or interests
therein or issued by companies which invest in real estate or interests
therein, including real estate investment trusts, and may purchase or sell
currencies (including forward currency contracts);
6. Acquire illiquid securities, if, immediately after and as a result, the
value of illiquid securities held by the fund would exceed, in the aggregate,
15% of the fund's net assets;
7. Engage in the business of underwriting securities of other issuers, except
to the extent that the disposal of an investment position may technically cause
it to be considered an underwriter as that term is defined under the Securities
Act of 1933;
8. Make loans, except that this does not prevent the fund from purchasing debt
securities, entering into repurchase agreements or making loans of portfolio
securities;
9. Sell securities short, except to the extent that the fund contemporaneously
owns or has the right to acquire at no additional cost securities identical to
those sold short;
10. Purchase securities on margin, provided that the fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of securities;
11. Borrow money, except from banks for temporary or emergency purposes not in
excess of 5% of the value of the fund's total assets. The fund will not
purchase securities while such borrowings are outstanding. This restriction
shall not prevent the fund from entering into reverse repurchase agreements or
"roll" transactions, provided that these transactions and any other
transactions constituting borrowing by the fund may not exceed one-third of the
fund's total assets. In the event that the asset coverage for the fund's
borrowings falls below 300%, the fund will reduce, within three days (excluding
Sundays and holidays), the amount of its borrowings in order to provide for
300% asset coverage;
12. Mortgage, pledge, or hypothecate any of its assets, provided that this
restriction shall not apply to the transfer of securities in connection with
any permissible borrowing;
13. Purchase or retain the securities of any issuer, if those individual
officers and Trustees of the fund, its investment adviser, or distributor, each
owning beneficially more than 1/2 of 1% of the securities of such issuer,
together own more than 5% of the securities of such issuer;
14. Invest in interests in oil, gas, or other mineral exploration or
development programs;
15. Invest more than 5% of its total assets in securities of companies having,
together with their predecessors, a record of less than three years of
continuous operation;
16. Write, purchase or sell put options, call options or combinations thereof,
except that this shall not prevent the purchase of put or call options on
currencies or U. S. Government securities.
A further investment policy of the fund, which may be changed by action of the
Board of Trustees without shareholder approval, is that the Fund will not
invest in securities of an issuer if the investment would cause the fund to own
more than 10% of the outstanding voting securities of any one issuer.
Notwithstanding Investment Restriction #4, the fund may invest in securities
of other managed investment companies if deemed advisable by its officers in
connection with the administration of a deferred compensation plan adopted by
Trustees and to the extent such investments are allowed by an exemptive order
granted by the U.S. Securities and Exchange Commission.
FUND OFFICERS AND TRUSTEES
Trustees and Trustee Compensation
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION WITH PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL TOTAL NUMBER
REGISTRANT PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION COMPENSATION OF FUND
ORGANIZATIONS LISTED MAY HAVE (INCLUDING FROM ALL FUNDS BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED MANAGED BY WHICH
COMPENSATION/1/) FROM CAPITAL DIRECTOR
THE COMPANY DURING RESEARCH AND SERVES/2/
FISCAL YEAR ENDED MANAGEMENT
SEPTEMBER 30, 1995 COMPANY/2/
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Private Investor. The Mission Group $
Age: 62 Trustee (non-utility holding company, subsidiary of 3,259/3/ $137,600 18
P.O. Box 144 Southern California Edison Company),
Palos Verdes Estates, former President and Chief
CA 90274 Executive Officer
Diane C. Creel Trustee Chairwoman, CEO and President, $
Age: 46 The Earth Technology Corporation 2,555 $37,825 12
100 W. Broadway
Suite 5000
Long Beach, CA
90802
Martin Fenton, Jr. Trustee Chairman, Senior Resource Group $
Age: 60 (management of senior living centers) 2,871/3/ $103,850 16
4350 Executive
Drive
Suite 101
San Diego, CA
92121-2116
Leonard R. Fuller Trustee President, Fuller & Company, Inc. $
Age: 48 (financial management consulting firm) 2,811 $38,325 12
4337 Marina City
Drive
Suite 841 ETN
Marina del Rey, CA
90292
+* Abner D. Goldstine Capital Research and Management n
Age: 65 Trustee Company, Senior Vice President one/4/ none/4/ 12
and Director
+** Paul G. Haaga, Jr. Capital Research and Management n
Age: 46 Chairman of Company, Senior Vice President one/4/ none/4/ 14
the Board and Director
Herbert Hoover III Trustee Private Investor $
Age: 67 3,077 $59,600 14
200 S. Los Robles
Avenue
Suite 520
Pasadena, CA
91101-2431
Richard G. Newman Trustee Chairman, President and CEO, $
Age: 60 AECOM Technology Corporation 2,891/3/ $39,000 12
3250 Wilshire (architectural engineering)
Boulevard
Los Angeles, CA
90010-1599
Peter C. Valli Trustee Chairman and CEO, BW/IP $
Age: 68 International Inc. (industrial 2,800/3/ $37,000 12
200 Oceangate manufacturing)
Boulevard
Suite 900
Long Beach, CA
90802
</TABLE>
+ Directors who are considered "interested persons as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"), on
the basis of their affiliation with the fund's Investment Adviser, Capital
Research and Management Company.
++ May be deemed an "interested person" of the fund due to membership on the
board of directors of the parent company of a registered broker-dealer.
* Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025
** Address is 333 South Hope Street, Los Angeles, CA 90071
/1/ Amounts may be deferred by eligible Trustees under a non-qualified deferred
compensation plan adopted by the fund in 1994. Deferred amounts accumulate at
an earnings rate determined by the total return of one or more funds in The
American Funds Group as designated by the Trustee.
/2/ Capital Research and Management Company manages The American Funds Group
consisting of 28 funds: AMCAP Fund, Inc., American Balanced Fund, Inc.,
American High-Income Municipal Bond Fund, Inc., American High-Income Trust,
American Mutual Fund, Inc., The Bond Fund of America, Inc., The Cash Management
Trust of America, Capital Income Builder, Inc., Capital World Growth and Income
Fund, Inc., Capital World Bond Fund, Inc., EuroPacific Growth Fund, Fundamental
Investors, Inc., The Growth Fund of America, Inc., The Income Fund of America,
Inc., Intermediate Bond Fund of America, The Investment Company of America,
Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund, New
Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund of
America, Inc., The Tax-Exempt Fund of California, The Tax-Exempt Fund of
Maryland, The Tax-Exempt Fund of Virginia, The Tax-Exempt Money Fund of
America, The U. S. Treasury Money Fund of America, U.S. Government Securities
Fund and Washington Mutual Investors Fund, Inc. Capital Research and
Management Company also manages American Variable Insurance Series and Anchor
Pathway Fund which serve as the underlying investment vehicle for certain
variable insurance contracts; and Bond Portfolio for Endowments, Inc. and
Endowments, Inc. whose shares may be owned only by tax-exempt organizations.
/3/ Since the plan's adoption, the total amount of deferred compensation
accrued by the fund (plus earnings thereon) for participating Trustees is as
follows: H. Frederick Christie ($2,174), Martin Fenton, Jr. ($4,248), Richard
G. Newman ($6,094), and Peter C. Valli ($5,868). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Trustee.
/4/ Paul G. Haaga, Jr. and Abner D. Goldstine are affiliated with the
Investment Adviser and, accordingly, receive no compensation from the fund.
OFFICERS
*** Richard T. Schotte, PRESIDENT. Capital Research Company, Senior Vice
President
** Mary C. Cremin, VICE PRESIDENT AND TREASURER. Capital Research and
Management
Company, Senior Vice President - Fund Business Management Group
* Michael J. Downer, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
* Julie F. Williams, SECRETARY. Capital Research and Management Company,
Vice President - Fund Business Management Group
* Kimberly S. Verdick, ASSISTANT SECRETARY. Capital Research and Management
Company,
Assistant Vice President - Fund Business Management Group
** Anthony W. Hynes, Jr., ASSISTANT TREASURER. Capital Research and Management
Company,
Vice President - Fund Business Management Group
* Address is 333 South Hope Street, Los Angeles, CA 90071.
** Address is 135 South State College Boulevard, Brea, CA 92621.
*** Address is 11100 Santa Monica Boulevard, Los Angeles, CA 90025.
No compensation is paid by the fund to any officer or Trustee who is a
director or officer of the Investment Adviser. The fund pays annual fees of
$1,800 to Trustees who are not affiliated with the Investment Adviser, plus
$200 for each Board of Trustees meeting attended, plus $200 for each meeting
attended as a member of a committee of the Board of Trustees. The Trustees may
elect, on a voluntary basis, to defer all or a portion of their fees through a
deferred compensation plan in effect for the fund. The fund also reimburses
certain expenses of the Trustees who are not affiliated with the Investment
Adviser. As of November 1, 1995, the officers and Trustees and their families
as a group, owned beneficially or of record fewer than 1% of the outstanding
shares of the fund.
MANAGEMENT
INVESTMENT ADVISER - The Investment Adviser, founded in 1931, maintains
research facilities in the U.S. and abroad, with a staff of professionals, many
of whom have years of investment experience. The Investment Adviser's research
professionals travel several million miles a year, making more than 5,000
research visits in more than 50 countries around the world. The Investment
Adviser believes that it is able to attract and retain quality personnel.
An affiliate of the Investment Adviser compiles indices for major stock
markets around the world and compiles and edits the Morgan Stanley Capital
International Perspective, providing financial and market information about
more than 2,400 companies around the world.
The Investment Adviser is responsible for more than $100 billion of stocks,
bonds and money market instruments and serve over five million investors of all
types throughout the world. These investors include privately owned businesses
and large corporations as well as schools, colleges, foundations and other
non-profit and tax-exempt organizations.
INVESTMENT ADVISORY AND SERVICE AGREEMENT - The Investment Advisory and
Service Agreement (the "Agreement"), between the fund and the Investment
Adviser will continue in effect until October 31, 1996, unless sooner
terminated, and may be renewed from year to year thereafter provided that any
such renewal has been specifically approved at least annually by (i) the Board
of Trustees or by the vote of a majority (as defined in the 1940 Act) of the
outstanding voting securities of the fund, and (ii) the vote of a majority of
Trustees who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person, at a meeting called for the
purpose of voting on such approval. The Agreement provides that the Investment
Adviser has no liability to the fund for its acts or omissions in the
performance of its obligations to the fund not involving willful misconduct,
bad faith, gross negligence or reckless disregard of its obligations under the
Agreement. The Agreement also provides that either party has the right to
terminate it without penalty, upon 60 days' written notice to the other party,
and that the Agreement automatically terminates in the event of its assignment
(as defined in the 1940 Act).
The Investment Adviser has voluntarily agreed to waive its fees by any
amount necessary to assure that the fund's expenses will not exceed 1.00% of
the average daily net assets. Additionally, the Investment Adviser has agreed
to waive its fees by any amount necessary to assure that such expenses do not
exceed applicable expense limitations in any state in which the fund's shares
are being offered for sale. Only one state, California, currently imposes
expense limitations on funds registered for sale therein. The California
provision currently limits annual expenses to the sum of 2-1/2% of the first
$30 million of average net assets, 2% of the next $70 million and 1-1/2% of the
remaining average net assets. Expenses pursuant to the fund's Plan of
Distribution are excluded from this limit. Other expenses which are not
subject to these limitations include interest, taxes, brokerage commissions,
transaction costs, and extraordinary items such as litigation, as well as, for
purposes of the state expense limitations, any amounts excludable under the
applicable regulation. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and not as
expenses.
During the fiscal years ended September 30, 1995, 1994, and 1993, the
Investment Adviser's total fees amounted to $4,916,000, $4,005,000, and
$2,781,000, respectively.
The fund pays all expenses not specifically assumed by the Investment Adviser,
including, but not limited to, registration and filing fees with federal and
state agencies, blue sky expenses, expenses of shareholders meetings, the
expense of reports to existing shareholders, expenses of printing proxies and
prospectuses, insurance premiums, legal and auditing fees, dividend
disbursement expenses, the expense of the issuance, transfer and redemption of
its shares, expenses pursuant to the fund's Plan of Distribution, custodian
fees, printing and preparation of registration statements, taxes and
compensation and expenses of Trustees who are not affiliated with the
Investment Adviser.
PRINCIPAL UNDERWRITER - American Funds Distributors, Inc. (the "Principal
Underwriter") is the principal underwriter of the fund's shares. The fund has
adopted a Plan of Distribution (the "Plan"), pursuant to rule 12b-1 under the
1940 Act (see "Principal Underwriter" in the Prospectus). The Principal
Underwriter receives amounts payable pursuant to the Plan (see below) and
commissions consisting of that portion of the sales charge remaining after the
discounts which it allows to investment dealers. Commissions retained by the
Principal Underwriter on sales of fund shares during the fiscal year ended
September 30, 1995 amounted to $1,209,000 after allowance of $5,116,000 to
dealers. During the fiscal years ended September 30, 1994 and 1993, the
Principal Underwriter retained $1,298,000 and $1,492,000, respectively.
As required by rule 12b-1 the Plan (together with the Principal Underwriting
Agreement) has been approved by the full Board of Trustees and separately by a
majority of the Trustees who are not interested persons of the fund and who
have no direct or indirect financial interest in the operation of the Plan or
the Principal Underwriting Agreement, and the Plan has been approved by a vote
of a majority of the outstanding voting securities of the fund. The officers
and Trustees who are "interested persons" of the fund due to present or past
affiliations with the Investment Adviser and related companies may be
considered to have a direct or indirect financial interest in the operation of
the Plan. Potential benefits of the Plan to the fund include improved
shareholder services, savings to the fund in transfer agency costs, savings to
the fund in advisory fees and other expenses, benefits to the investment
process from growth or stability of assets and maintenance of a financially
healthy management organization. The selection and nomination of Trustees who
are not "interested persons" of the fund shall be committed to the discretion
of the Trustees who are not "interested persons" during the existence of the
Plan. The Plan is reviewed quarterly and must be renewed annually by the Board
of Trustees.
Under the Plan the fund may expend up to 0.30% of its average net assets
annually to finance any activity which is primarily intended to result in the
sale of fund shares, provided the fund's Board of Trustees has approved the
category of expenses for which payment is made. These include service fees for
qualified dealers and dealers commissions and wholesaler compensation on sales
of shares exceeding $1 million (including purchases by any employer-sponsored
403(b) plan or any defined contribution plan qualified under Section 401(a) of
the Internal Revenue Code, including a "401(k)" plan with 200 or more eligible
employees). During the fund's fiscal year ended September 30, 1995, such
expenses were $2,068,000 under the Plan as compensation to dealers. As of
September 30, 1995, accrued and unpaid distribution expenses were $173,000.
The Glass-Steagall Act and other applicable laws, among other things,
generally prohibit federally chartered or supervised banks from engaging in the
business of underwriting, selling or distributing securities, but permit banks
to make shares of mutual funds available to their customers and to perform
administrative and shareholder servicing functions. However, judicial or
administrative decisions or interpretations of such laws, as well as changes in
either federal or state statutes or regulations relating to the permissible
activities of banks or their subsidiaries of affiliates, could prevent a bank
from continuing to perform all or a part of its servicing activities. If a
bank were prohibited from so acting, shareholder clients of such bank would be
permitted to remain shareholders of the fund and alternate means for continuing
the servicing of such shareholders would be sought. In such event, changes in
the operation of the fund might occur and shareholders serviced by such bank
might no longer be able to avail themselves of any automatic investment or
other services then being provided by such bank. It is not expected that
shareholders would suffer adverse financial consequences as a result of any of
these occurrences.
In addition, state securities laws on this issue may differ from the
interpretations of federal law expressed herein and certain banks and financial
institutions may be required to be registered as dealers pursuant to state law.
DIVIDENDS, DISTRIBUTIONS AND FEDERAL TAXES
The fund intends to meet all the requirements and has elected the tax status
of a "regulated investment company" under the provisions of Subchapter M of the
Internal Revenue Code of 1986 (the "Code"). Under Subchapter M, if the fund
distributes within specified times at least 90% of its investment company
taxable income (net investment income and the excess of net short-term capital
gains over net long-term capital losses), it will be taxed only on that portion
(if any) of such investment company taxable income and any net capital gain
that it retains.
To qualify, the fund must (a) derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans and gains from
the sale or other disposition of stock, securities, currencies, or other income
derived with respect to its business of investing in such stock, securities, or
currencies; (b) derive less than 30% of its gross income from the sale or
other disposition of stock or securities held less than three months; and (c)
diversify its holdings so that, at the end of each fiscal quarter, (i) at least
50% of the market value of the fund's assets is represented by cash, cash
items, U.S. Government securities, securities of other regulated investment
companies and other securities (but such other securities must be limited, in
respect of any one issuer, to an amount not greater than 5% of the fund's
assets and 10% of the outstanding voting securities of such issuer) and (ii)
not more than 25% of the value of its assets is invested in the securities of
any one issuer (other than U.S. Government securities or the securities of
other regulated investment companies), or in two or more issuers which the fund
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses.
Under the Code, a nondeductible excise tax of 4% is imposed on the excess of a
regulated investment company's "required distribution" for the calendar year
ending within the regulated investment company's taxable year over the
"distributed amount" for such calendar year. The term "required distribution"
means the sum of (i) 98% of ordinary income (generally net investment income)
for the calendar year, (ii) 98% of capital gain (both long-term and short-term)
for the one-year period ending on October 31 (as though the one-year period
ending on October 31 were the regulated investment company's taxable year), and
(iii) the sum of any untaxed, undistributed net investment income and net
capital gains of the regulated investment company for prior periods. The term
"distributed amount" generally means the sum of (i) amounts actually
distributed by the fund from its current year's ordinary income and capital
gain net income and (ii) any amount on which the fund pays income tax for the
year. The fund intends to distribute net investment income and net capital
gains so as to minimize or avoid the excise tax liability.
The fund also intends to distribute to shareholders all of the excess of net
long-term capital gain over net short-term capital loss on sales of
securities. If the net asset value of shares of the fund should, by reason of
a distribution of realized capital gains, be reduced below a shareholder's
cost, such distribution would to that extent be a return of capital to that
shareholder even though taxable to the shareholder, and a sale of shares by a
shareholder at net asset value at that time would establish a capital loss for
federal tax purposes. In particular, investors should consider the tax
implications of purchasing shares just prior to a dividend or distribution
record date. Those investors purchasing shares just prior to such a date will
then receive a partial return of capital upon the dividend or distribution,
which will nevertheless be taxable to them as an ordinary or capital gains
dividend.
If a shareholder exchanges or otherwise disposes of shares of the fund
within 90 days of having acquired such shares, and if, as a result of having
acquired those shares, the shareholder subsequently pays a reduced sales charge
for shares of the fund, or of a different fund, the sales charge previously
incurred in acquiring the fund's shares shall not be taken into account (to the
extent such previous sales charges do not exceed the reduction in sales
charges) for the purpose of determining the amount of gain or loss on the
exchange, but will be treated as having been incurred in the acquisition of
such other shares. Also, any loss realized on a redemption or exchange of
shares of a fund will be disallowed to the extent substantially identical
shares are reacquired within the 61-day period beginning 30 days before and
ending 30 days after the shares are disposed of.
Under the Code, distributions of net investment income by the fund to a
shareholder who, as to the U.S., is a nonresident alien individual, nonresident
alien fiduciary of a trust or estate, non-U.S. corporation, or non-U.S.
partnership (a "non-U.S. shareholder") will be subject to U.S. withholding tax
(at a rate of 30% or lower treaty rate). Withholding will not apply if a
dividend paid by the fund to a non-U.S. shareholder is "effectively connected"
with a U.S. trade or business, in which case the reporting and withholding
requirements applicable to U.S. citizens, U.S. residents or domestic
corporations will apply. However, if the distribution is effectively connected
with the conduct of the non-U.S. shareholder's trade or business within the
U.S., the distribution would be included in the net income of the shareholder
and subject to U.S. income tax at the applicable marginal rate. Distributions
of capital gains not effectively connected with a U.S. trade or business are
not subject to the withholding, but if the non-U.S. shareholder was an
individual who was physically present in the U.S. during the tax year for more
than 182 days and such shareholder is nonetheless treated as a nonresident
alien, the distributions would be subject to a 30% tax.
The fund may be required to pay withholding and other taxes imposed by
countries outside the U.S. which would reduce the fund's investment income,
generally at rates from 10% to 40%. Tax conventions between certain countries
and the United States may reduce or eliminate such taxes. If more than 50% in
value of the fund's total assets at the close of its taxable year consist of
securities of non-U.S. corporations, the fund will be eligible to file
elections with the Internal Revenue Service pursuant to which shareholders of
the fund will be required to include their respective pro rata portions of such
withholding taxes in their federal income tax returns as gross income, treat
such amounts as foreign taxes paid by them, and deduct such amounts in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their federal income taxes. The fund does not currently expect
to meet the eligibility requirement for filing this election as its investments
in securities of non-U.S. issuers are limited to 25% of its assets.
The fund may enter into forward currency contracts in connection with its
non-U.S. investments. The amount of any realized gain or loss on closing out a
forward contract will generally result in a realized capital gain or loss for
tax purposes. Under Code Section 1256, forward currency contracts held by the
fund at the end of each fiscal year will be required to be "marked to market"
for federal income tax purposes, that is, deemed to have been sold at market
value. Sixty percent (60%) of any net gain or loss recognized on these deemed
sales and sixty percent (60%) of any net realized gain or loss from any actual
sales, will be treated as long-term capital gain or loss, and the remainder
will be treated as short-term capital gain or loss. Code Section 988 may also
apply to forward contracts. Under Section 988, each foreign currency gain or
loss is generally computed separately and treated as ordinary income or loss.
In the case of overlap between Sections 1256 and 988, special provisions
determine the character and timing of any income, gain or loss. The fund will
attempt to monitor Section 988 transactions to avoid an adverse tax impact.
Dividends and distributions generally are taxable to shareholders at the time
they are paid. However, dividends and distributions declared in October,
November and December and made payable to shareholders of record in such a
month are treated as paid and are thereby taxable as of December 31, provided
that the fund pays the dividend no later than the end of January of the
following year.
As of the date of this statement of additional information, the maximum
Federal individual tax rate applicable to ordinary income is 39.6% (effective
tax rates may be higher for some individuals due to phase out of exemptions and
elimination of deductions); the maximum individual tax rate applicable to net
capital gain is 28%; and the maximum corporate tax applicable to ordinary
income and net capital gain is 35%. However, to eliminate the benefit of lower
marginal corporate income tax rates, corporations which have taxable income in
excess of $100,000 in a taxable year will be required to pay an additional
amount of tax of up to $11,750, and corporations which have taxable income in
excess of $15,000,000 for a taxable year will be required to pay an additional
amount of income tax up to $100,000. Naturally, the amount of tax payable by a
taxpayer will be affected by a combination of tax law rules covering, E.G.,
deductions, credits, deferrals, exemptions, sources of income and other
matters. Under the Code, an individual is entitled to establish an IRA each
year (prior to the tax return filing deadline for that year) whereby earnings
on investments are tax-deferred. In addition, in some cases, the IRA
contribution itself may be deductible.
The foregoing is limited to a summary discussion of federal taxation and
should not be viewed as a comprehensive discussion of all provisions of the
Code relevant to investors. Dividends and distributions may also be subject to
state or local taxes. Investors should consult their own tax advisers for
additional details to their own tax status.
PURCHASE OF SHARES
PRICE OF SHARES - Purchases of shares are made at the offering price next
determined after the purchase order is received by the fund or American Funds
Service Company; this offering price is effective for orders received prior to
the time of determination of the net asset value and, in the case of orders
placed with dealers, accepted by the Principal Underwriter prior to its close
of business. The dealer is responsible for promptly transmitting purchase
orders to the Principal Underwriter. Orders received by the investment dealer,
the Transfer Agent, or the fund after the time of the determination of the net
asset value will be entered at the next calculated offering price. Prices
which appear in the newspaper are not always indicative of prices at which you
will be purchasing and redeeming shares of the fund, since such prices
generally reflect the previous day's closing price whereas purchases and
redemptions are made at the next calculated price.
The price you pay for fund shares, the public offering price, is based on
the net asset value per share which is calculated once daily at the close of
trading (currently 4:00 p.m., New York time) each day the New York Stock
Exchange is open as set forth below. The New York Stock Exchange is currently
closed on weekends and on the following holidays: New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas Day. The net asset value per share is determined as follows:
1. 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 year or, for listed securities having no sales reported,
upon last-reported bid prices on that date. Securities traded in the
over-the-counter market are valued at the last available sale prior to the time
of valuation or, lacking any sales, at the last reported bid price.
Bonds and Treasury notes are valued at prices obtained from a bond-pricing
service provided by a major dealer in bonds, when such prices are available;
however, in circumstances where the Investment Adviser deems it appropriate to
do so, such securities will be valued at the mean of their representative
quoted bid and asked prices or, if such prices are not available, at prices for
securities of comparable maturity, quality and type. Short-term securities
with original or remaining maturities in excess of 60 days, including forward
currency contracts, 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.
2. The value of each security denominated in a currency other than U.S.
dollars will be translated into U.S. dollars at the prevailing market rate as
determined by the fund's officers.
3. The fund's liabilities, including proper accruals of expense items, are
deducted from total assets; and
4. The net assets so obtained are then divided by the total number of shares
outstanding and the result, rounded to the nearer cent, is the net asset value
per share.
Any purchase order may be rejected by the Principal Underwriter or by
the fund. The fund will not knowingly sell fund shares (other than for the
reinvestment of dividends or capital gain distributions) directly or indirectly
or through a unit investment trust to any other investment company, person or
entity, where, after the sale, such investment company, person, or entity would
beneficially OWN directly, indirectly, or through a unit investment trust more
than 4.5% of the outstanding shares of the fund without the consent of a
majority of the Board of Trustees.
STATEMENT OF INTENTION - The reduced sales charges and offering prices set
forth in the prospectus apply to purchases of $25,000 or more made within a
13-month period subject to the following statement of intention (the Statement)
terms. The Statement is not a binding obligation to purchase the indicated
amount. When a shareholder elects to utilize the Statement in order to qualify
for a reduced sales charge, shares equal to 5% of the dollar amount specified
in the Statement will be held in escrow in the shareholder's account out of the
initial purchase (or subsequent purchases, if necessary) by the Transfer Agent.
All dividends and capital gain distributions on these shares held in escrow
will be credited to the shareholder's account in shares (or paid in cash, if
requested). If the intended investment is not completed within the specified
13-month period, the purchaser will remit to the Principal Underwriter the
difference between the sales charge actually paid and the sales charge which
would have been paid if the total purchases had been made at a single time. If
the difference is not paid within 20 days after written request by the
Principal Underwriter or the securities dealer, the appropriate number of
escrowed shares will be redeemed to pay such difference. If the proceeds from
this redemption are inadequate, the purchaser will be liable to the Principal
Underwriter for the balance still outstanding. The Statement may be revised
upward at any time during the 13-month period, and such a revision will be
treated as a new Statement, except that the 13-month period during which the
purchase must be made will remain unchanged and there will be no retroactive
reduction of the sales charges paid on prior purchases. Existing holdings
eligible for rights of accumulation (see the prospectus and account
application) may be credited toward satisfying the Statement. During the
Statement period reinvested dividends and capital gain distributions,
investments in money market funds, and investments made under a right of
reinstatement will not be credited toward satisfying the Statement.
In the case of purchase orders by the trustees of certain retirement plans
by payroll deduction, the sales charge for the investments made during the
13-month period will be handled as follows: The regular monthly payroll
deduction investment will be multiplied by 13 and then multiplied by 1.5. The
current value of existing American Funds investments (other than money market
fund investments) and any rollovers or transfers reasonably anticipated to be
invested in non-money market American Funds during the 13-month period are
added to the figure determined above. The sum is the Statement amount and
applicable breakpoint level. On the first investment and all other investments
made pursuant to the statement of intention, a sales charge will be assessed
according to the sales charge breakpoint thus determined. There will be no
retroactive adjustments in sales charges on investments previously made during
the 13-month period.
Shareholders purchasing shares at a reduced sales charge under a Statement
indicate their acceptance of these terms with their first purchase.
DEALER COMMISSIONS - The following commissions will be paid to dealers who
initiate and are responsible for purchases of $1 million or more, for purchases
by any employer-sponsored 403(b) plan or purchases by any defined contribution
plan qualified under Section 401(a) of the Internal Revenue Code including a
"401(k)" plan with 200 or more eligible employees, and for purchases made at
net asset value by certain retirement plans of organizations with collective
retirement plan assets of $100 million or more: 1.00% on amounts to $2
million, 0.80% on amounts over $2 million to $3 million, 0.50% on amounts over
$3 million to $50 million, 0.25% on amounts over $50 million to $100 million,
and 0.15% on amounts over $100 million. The level of dealer commissions will be
determined based on sales made over a 12-month period commencing from the date
of the first sale at net asset value. See "The American Funds Shareholder
Guide" in the fund's prospectus for more information.
SHAREHOLDER ACCOUNT SERVICES AND PRIVILEGES
AUTOMATIC INVESTMENT PLAN - The automatic investment plan enables shareholders
to make regular monthly or quarterly investments in shares through automatic
charges to their bank accounts. With shareholder authorization and bank
approval, the Transfer Agent will automatically charge the bank account for the
amount specified ($50 minimum), which will be automatically invested in shares
at the offering price on or about the 10th day of the month (or on or about the
15th day of the month in the case of retirement plans for which Capital
Guardian Trust Company serves as trustee or custodian). Bank accounts will be
charged on the day or a few days before investments are credited, depending on
the bank's capabilities, and shareholders will receive a confirmation statement
showing the current transaction. Participation in the plan will begin within
30 days after receipt of the account application. If the shareholder's bank
account cannot be charged due to insufficient funds, a stop-payment order or
closing of the account, the plan may be terminated and the related investment
reversed. The shareholder may change the amount of the investment or
discontinue the plan at any time by writing the Transfer Agent.
AUTOMATIC WITHDRAWALS - Withdrawal payments are not to be considered as
dividends, yield or income. Automatic investments may not be made into a
shareholder account from which there are automatic withdrawals. Withdrawals of
amounts exceeding reinvested dividends and distributions and increases in share
value would reduce the aggregate value of the shareholder's account. The
Transfer Agent arranges for the redemption by the fund of sufficient shares,
deposited by the shareholder with the Transfer Agent, to provide the withdrawal
payment specified.
CROSS-REINVESTMENT OF DIVIDENDS AND DISTRIBUTIONS - A shareholder in one fund
may elect to cross-reinvest dividends or dividends and capital gain
distributions paid by that fund (the "paying fund") into any other fund in The
American Funds Group (the "receiving fund") subject to the following
conditions: (i) the aggregate value of the shareholder's account(s) in the
paying fund(s) must equal or exceed $5,000 (this condition is waived if the
value of the account in the receiving fund equals or exceeds that fund's
minimum initial investment requirement), (ii) as long as the value of the
account in the receiving fund is below that fund's minimum initial investment
requirement, dividends and capital gain distributions paid by the receiving
fund must be automatically reinvested in the receiving fund, and (iii) if this
privilege is discontinued with respect to a particular receiving fund, the
value of the account in that fund must equal or exceed the fund's minimum
initial investment requirement or the fund shall have the right, if the
shareholder fails to increase the value of the account to such minimum within
90 days after being notified of the deficiency, automatically to redeem the
account and send the proceeds to the shareholder. These cross-reinvestments of
dividends and capital gain distributions will be at net asset value (without
sales charge).
EXECUTION OF PORTFOLIO TRANSACTIONS
There are occasions on which portfolio transactions for the fund may be
executed as part of concurrent authorizations to purchase or sell the same
security for other funds served by the Investment Adviser, or for trusts or
other accounts served by affiliated companies of the Investment Adviser.
Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to the fund, they are effected only when the
Investment Adviser believes that to do so is in the interest of the fund. When
such concurrent authorizations occur, the objective is to allocate the
executions in an equitable manner. The fund does not intend to pay a mark-up
in exchange for research in connection with principal transactions.
Brokerage commissions paid on portfolio transactions, including dealer
concessions on underwritings, for the fiscal year ended September 30, 1995
amounted to $3,523,000. Dealcer concessions paid on underwritings, including
dealer concessions on underwritings, for the fiscal years ended September 30,
1994 and 1993 amounted to $4,991,000, and $4,623,000, respectively. No
brokerage commissions were paid for the fiscal years ended September 30, 1994
and 1993.
GENERAL INFORMATION
CUSTODIAN OF ASSETS - Securities and cash owned by the fund, including proceeds
from the sale of shares of the fund and of securities in the fund's portfolio,
are held by The Chase Manhattan Bank, N.A., One Chase Manhattan Plaza, New
York, NY 10081, as Custodian. Non-U.S. securities may be held by the Custodian
in non-U.S. banks or securities depositories or non-U.S. branches of U.S.
banks.
INDEPENDENT ACCOUNTANTS - Deloitte & Touche LLP, 1000 Wilshire Boulevard, 15th
Floor, Los Angeles, CA 90017, has served as the fund's independent auditors
since its inception, providing audit services, preparation of tax returns and
review of certain documents to be filed with the Securities and Exchange
Commission. The financial statements included in this Statement of Additional
Information have been so included in reliance on the report of the independent
auditors given on the authority of said firm as experts in accounting and
auditing.
REPORTS TO SHAREHOLDERS - The fund's fiscal year ends on September 30.
Shareholders are provided at least semiannually with reports showing the
investment portfolio, financial statements and other information audited
annually by the fund's independent auditors, Deloitte & Touche LLP, whose
selection is determined annually by the Trustees.
PERSONAL INVESTING POLICY - Capital Research and Management Company and its
affiliated companies have adopted a personal investing policy consistent with
Investment Company Institute guidelines. This policy includes: a ban on
acquisitions of securities pursuant to an initial public offering; restrictions
on acquisitions of private placement securities; pre-clearance and reporting
requirements; review of duplicate confirmation statements; annual
recertification of compliance with codes of ethics; disclosure of personal
holdings by certain investment personnel prior to recommendation for purchase
for the fund; blackout periods on personal investing for certain investment
personnel; ban on short-term trading profits for investment personnel;
limitations on service as a director of publicly traded companies; and
disclosure of personal securities transactions.
The financial statements including the investment portfolio and the report of
Independent Auditors contained in the Annual Report are included in this
Statement of Additional Information. The following information is not included
in the Annual Report:
<TABLE>
<CAPTION>
DETERMINATION OF NET ASSET VALUE, REDEMPTION PRICE AND
OFFERING PRICE PER SHARE -- September 30, 1995
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $14.30
Offering price per share (100/95.25 of per share
net asset value, which takes into account the
fund's current maximum sales charge) 15.01
</TABLE>
SHAREHOLDER AND TRUSTEE RESPONSIBILITY - Under the laws of certain states,
including Massachusetts, where the Fund was organized, and California, where
the Fund's principal office is located, shareholders of a Massachusetts
business trust may, under certain circumstances, be held personally liable as
partners for the obligations of the Fund. However, the risk of a shareholder
incurring any financial loss on account of shareholder liability is limited to
circumstances in which the Fund itself would be unable to meet its obligations.
The Declaration of Trust contains an express disclaimer of shareholder
liability for acts or obligations of the Fund and provides that notice of the
disclaimer may be given in each agreement, obligation, or instrument which is
entered into or executed by the Fund or Trustees. The Declaration of Trust
provides for indemnification out of Fund property of any shareholder held
personally liable for the obligations of the Fund and also provides for the
Fund to reimburse such shareholder for all legal and other expenses reasonably
incurred in connection with any such claim or liability.
Under the Declaration of Trust, the Trustees or officers are not liable for
actions or failure to act; however, they are not protected from liability by
reason of their willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of their office. The Fund will
provide indemnification to its Trustees and officers as authorized by its
By-Laws and by the 1940 Act and the rules and regulations thereunder.
SHAREHOLDER VOTING RIGHTS - At any meeting of shareholders, duly called and at
which a quorum is present, the shareholders may, by the affirmative vote of the
holders of a majority of the votes entitled to be cast thereon, remove any
trustee or trustees from office and may elect a successor or successors to fill
any resulting vacancies for the unexpired terms of removed trustees. The fund
has made an undertaking, at the request of the staff of the Securities and
Exchange Commission, to apply the provisions of section 16(c) of the 1940 Act
with respect to the removal of trustees, as though the fund were a common-law
trust. Accordingly, the trustees of the fund shall promptly call a meeting of
shareholders for the purpose of voting upon the question of removal of any
trustee when requested in writing to do so by the record holders of not less
than 10% of the outstanding shares.
INVESTMENT RESULTS
The fund's yield is 9.06% based on the 30-day (or one month) period ended
September 30, 1995, computed by dividing the net investment income per share
earned during the period by the maximum offering price per share on the last
day of the period, according to the following formula:
YIELD = 2[( a-b/cd + 1)/6/ -1]
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = the maximum offering price per share on the last day of the period.
The fund may also calculate a distribution rate on a taxable and tax
equivalent basis. The distribution rate is computed by annualizing the current
month's dividend and dividing by the average net asset value or maximum
offering price for the month. The distribution rate may differ from the
yield.
The fund's total return over the past 12 months and average annual total
return for the five-year and lifetime periods ending on September 30, 1995 was
7.93%, 13.89%, and 10.50%, respectively. The average annual total return ("T")
will be computed by equating the value at the end of the period ("ERV") with a
hypothetical initial investment of $1,000 ("P") over a period of years ("n")
according to the following formula as required by the Securities and Exchange
Commission: P(1+T)/n/ = ERV.
The following assumptions will be reflected in computations made in accordance
with the formula stated above: (1) deduction of the maximum sales load of
4.75% from the $1,000 initial investment; (2) reinvestment of dividends and
distributions at net asset value on the reinvestment date determined by the
Board; and (3) a complete redemption at the end of any period illustrated. The
Fund will calculate total return for one, five and ten-year periods after such
periods have elapsed. In addition, the Fund will provide lifetime average
total return figures.
<TABLE>
<CAPTION>
HERE'S HOW MUCH YOU WOULD HAVE IF YOU
INVESTED $2,000 A YEAR IN THE FUND:
<S> <C> <C>
1 year 3 years Lifetime
(10/1/94-9/30/95) (10/1/92-9/30/95) (2/19/88-9/30/95)
$2,159 $6,865 $24,963
</TABLE>
SEE THE DIFFERENCE TIME CAN MAKE IN AN INVESTMENT PROGRAM
<TABLE>
<CAPTION>
... and taken all distributions
If you had invested in shares your investment
$10,000 in the Fund would have been worth this
this many years ago... much at September 30, 1995
<S> <C> <C>
| |
Periods
Number of Years 10/1-9/30 Value**
1 1994 - 1995 $10,793
2 1993 - 1995 10,966
3 1992 - 1995 12,567
4 1991 - 1995 14,837
5 1990 - 1995 19,162
6 1989 - 1995 18,397
7 1988 - 1995 20,212
Lifetime 2/19/88 - 1995 21,382
</TABLE>
** Results assume deduction of the maximum sales charge of 4.75% from the
initial purchase payment.
* * * * *
ILLUSTRATION OF A $10,000 INVESTMENT IN THE FUND WITH DIVIDENDS REINVESTED
(For the lifetime of the fund February 19, 1988 - September 30, 1995)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
COST OF SHARES VALUE OF SHARES**
Fiscal Total From From From
Year End Annual Dividends Investment Initial Capital Dividends Total
Gains
September 30 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
1988* $ 640 $ 640 $10,640 $9,433 --- $ 641 $10,07
4
1989 1,188 1,828 11,828 9,273 --- 1,800 11,073
1990 1,334 3,162 13,162 7,873 --- 2,754
10,628
1991 1,411 4,573 14,573 9,040 --- 4,683
13,723
1992 1,404 5,977 15,977 9,720 --- 6,484
16,204
1993 1,503 7,480 17,480 10,120 155 8,293
18,568
1994 1,555 9,035 19,035 9,313 438 9,115
18,866
1995 1,879 10,914 20,914 9,533 561 11,288
21,382
</TABLE>
The dollar amount of capital gain distributions during the period was
$572.
* From inception on February 19, 1988.
** Results assume deduction of the maximum sales charge of 4.75% from the
initial purchase payment.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages eight common stock funds that are at least 10 years old. Since 1964,
in all of the 10-year periods during which those funds were managed by Capital
Research and Management Company (115 in all), those funds have had better total
returns than the Standard and Poor's 500 Stock Composite Index in 94 of the 115
periods.
Note that past results are not an indication of future investment results.
Also, the fund has different investment policies than the funds mentioned
above. These results are included solely for the purpose of informing
investors about the experience and history of Capital Research and Management
Company.
The fund may also refer to results compiled by organizations such as Lipper
Analytical Services, Morningstar, Inc. and Wiesenberger Investment Companies
Services. Additionally, the fund may, from time to time, refer to results
published in various newspapers or periodicals, including Barrons, Forbes,
Fortune, Institutional Investor, Kiplinger's Personal Finance Magazine, Money,
U.S. News and World Report and The Wall Street Journal.
The fund may from time to time compare its investment results with the
following:
(1) Salomon Brothers High-Yield Index, which is a market value weighted index
of bonds having a minimum issue size of $50 million, a minimum maturity of 10
years and that carry a minimum/maximum quality rating of CCC/BB+.
(2) Salomon Brothers Broad Investment-Grade Bond Index, which is a market
capitalization weighted index and includes Treasury, Government-sponsored
mortgage and investment-grade fixed-rate corporates (BBB/Baa3) with a maturity
of one year or longer and a minimum of $50 million outstanding at entry, and
remain in the Index until their amount falls below $25 million.
(3) Lipper's "High Current Yield" funds average, which is the arithmetic
average of Total Return of a number of mutual funds with investment objectives
and policies similar to those of the Fund, as published by Lipper Analytical
Services. The number of funds contained in the data base varies as funds are
added or deleted over time.
(4) Average of Savings Accounts, which is a measure of all kinds of savings
deposits, including longer-term certificates (based on figures supplied by the
U.S. League of Savings Institutions). Savings accounts offer a guaranteed rate
of return on principal, but no opportunity for capital growth. The period
shown may include periods during which the maximum rates paid on some savings
deposits were fixed by law.
(5) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g. food,
clothing, shelter, and fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
APPENDIX
DESCRIPTION OF COMMERCIAL PAPER RATINGS
Moody's Investors Service, Inc. employs the designations "Prime-1," "Prime-2"
and "Prime-3" to indicate commercial paper having the highest capacity for
timely repayment. Issuers rated Prime-1 have a superior capacity for repayment
of short-term promissory obligations. Prime-1 repayment capacity will normally
be evidenced by the following characteristics: leading market positions in
well-established industries; high rates of return on funds employed;
conservative capitalization structures with moderate reliance on debt and ample
asset protections; broad margins in earnings coverage of fixed financial
charges and high internal cash generation; and well-established access to a
range of financial markets and assured sources of alternate liquidity. Issuers
rated Prime-2 have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics
cited above, but to a lesser degree. Earnings trends and coverage ratios,
while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3
have an acceptable capacity for repayment of short-term obligations. The
effect of industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and may require relatively high
financial leverage. Adequate alternate liquidity is maintained.
Standard & Poor's Corporation's ratings of commercial paper are graded into
four categories ranging from "A" for the highest quality obligations to "D" for
the lowest. A -- Issues assigned its highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with numbers 1, 2, and 3 to indicate the relative degree of safety. A-1 --
This designation indicates that the degree of safety regarding timely payment
is either overwhelming or very strong. Those issues determined to possess
overwhelming safety characteristics will be denoted with a plus (+) sign
designation. A-2 -- Capacity for timely payments on issues with this
designation is strong. However, the relative degree of safety is not as high
as for issues designated "A-1." A-3 -- Issues carrying this designation have a
satisfactory capacity for timely payment. They are, however, somewhat more
vulnerable to the adverse effects of changes in circumstances than obligations
carrying the higher designations.
<PAGE>
American High-Income Trust
Investment Portfolio
September 30, 1995
<TABLE>
<CAPTION>
<S> <C> <C> <C>
U.S. Corporate Bonds 70%
Non-U.S. Bonds 16%
U.S. Treasuries 4%
Stocks 3%
Cash and Equivalents 7%
- -------------------------------------------------- --------- ----------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes - 90.16% (000) (000) Assets
Beverages - 1.47%
Canandaigua Wine Co., Inc. 8.75% 2003 $7,000 $6,930 .63%
Dr Pepper Bottlng Co. of Texas 10.25% 2000 9,000 9,360 .84
----------- --------
16,290 1.47
----------- --------
Broadcasting & Publishing - 4.22%
American Media Operation, Inc. 11.625% 2004 10,750 11,099 1.00
Infinity Broadcasting Corp. 10.375% 2002 8,450 9,042 .81
Marvel Holdings Inc. 0% 1998 24,000 17,400 1.57
Univision Television Group, Inc.:
11.75% 2001 4,350 4,676 .42
7.00% 2002 2,567 1,547 .14
Young Broadcasting Inc. 10.125% 2005 3,000 3,150 .28
----------- --------
46,914 4.22
----------- --------
Cable & Telephone in the United
Kingdom - 5.88%
Bell Cablemedia PLC 0%/11.95% 2004/1/ 29,000 18,995 1.71
International CableTel Inc.:
0%/10.875% 2003/1/ 21,175 13,764 1.24
0%/12.75% 2005/1/ 1,000 595 .05
TeleWest PLC:
9.625% 2006 4,500 4,522 .41
0%/11.00% 2007/1/ 7,000 4,130 .37
Videotron Holdings PLC:
0%/11.125% 2004/1/ 31,000 20,460 1.84
0%/11.00% 2005/1/ 5,000 2,863 .26
----------- --------
65,329 5.88
----------- --------
Cellular, Paging & Wireless
Communications - 18.43%
CAI Wireless Systems, Inc. 12.25% 2002 5,200 5,408 .49
CellNet Data Systems, Inc. 0%/13.00% 2005/1/ 25,000 12,031 1.08
Cellular, Inc. 0%/11.75% 2003/1/ 8,500 6,545 .59
Cellular Communications International, Inc.
Units, 0% 2000 20,250 11,239 1.01
CenCall Communications Corp. 0%/10.125% 2004/1//2//3/ 24,050 12,506 1.13
Centennial Cellular Corp. 8.875% 2001 17,000 16,235 1.46
Comcast Cellular Corp.:
Series A, 0% 2000 1,500 1,148 .10
Series B, 0% 2000 3,250 2,486 .22
Dial Call Communications, Inc. 0%/12.25% 2004/1//2/ 16,750 8,857 .80
Geotek Communications, Inc. Units, 0%/15.00% 2005/1/ 2,000 1,020 .09
Heartland Wireless Communications, Inc.
Units, 13.00% 2003 3,800 4,199 .38
Horizon Cellular Telephone Co., LP
0%/11.375% 2000/1/ 17,065 14,420 1.30
MobileMedia Communications, Inc.
0%/10.50% 2003/1/ 19,150 13,980 1.26
NEXTEL Communications, Inc./2/:
0%/11.50% 2003/1/ 18,000 10,238 .92
0%/9.75% 2004/1/ 15,500 7,614 .69
Paging Network, Inc. 11.75% 2002 14,250 15,675 1.41
PanAmSat, LP:
9.75% 2000 6,500 6,793 .61
0%/11.375% 2003/1/ 7,000 5,460 .49
People's Choice TV Corp. Units, 0%/13.125% 2004/1/ 18,250 9,672 .87
PriCellular Wireless Corporation:
0%/14.00% 2001/1/ 4,000 3,320 .30
0%/12.25% 2003/1/ 13,710 9,803 .88
Rogers Cantel Mobile Communications Inc.:
10.75% 2001 22,330 23,446 2.11
11.125% 2002 2,500 2,644 .24
----------- --------
204,739 18.43
----------- --------
Construction & Housing - 1.72%
Building Materials Corp. of America
0%/11.75% 2004/1/ 6,500 4,062 .37
Del Webb Corp.:
9.75% 2003 3,000 2,940 .26
9.00% 2006 1,750 1,623 .15
Toll Corp. 9.50% 2003 4,000 4,020 .36
Triangle Pacific Corp. 10.50% 2003 6,250 6,469 .58
----------- --------
19,114 1.72
----------- --------
Diversified Media, Cable Television &
Telecommunications - 6.99%
Cablevision Systems Corp. 9.875% 2013 4,000 4,180 .38
Century Communications Corp. 9.50% 2000 4,100 4,141 .37
Comcast Corp. 10.25% 2001 2,200 2,354 .21
Continental Cablevision, Inc.:
10.625% 2002 8,000 8,440 .76
8.625% 2003 10,000 10,125 .91
11.00% 2007 1,500 1,657 .15
Insight Communications Co., LP 8.25% 2000/4/ 1,500 1,515 .14
IntelCom Group Inc. Units, 0%/13.50% 2005/1/ 13,000 7,150 .64
Jones Intercable, Inc. 9.625% 2002 4,500 4,680 .42
MFS Communications Co., Inc. 0%/9.375% 2004/1/ 40,850 30,944 2.78
Storer Communications, Inc. 10.00% 2003 2,534 2,547 .23
----------- --------
77,733 6.99
----------- --------
Energy & Related Companies - 7.11%
Dual Drilling Co. 9.875% 2004 9,450 8,812 .79
Flores & Rucks, Inc. 13.50% 2004 9,000 10,080 .91
Global Marine, Inc. 12.75% 1999 5,900 6,519 .59
Mesa Capital Corp. 12.75% 1998 4,500 4,151 .37
Oil Co. Ltd. 8.90% 2000/5/ 3,500 3,561 .32
TransTexas Gas Corp. 11.50% 2002 15,750 16,498 1.48
Triton Energy Corp. 0%/9.75% 2000/1/ 8,000 7,320 .66
Tuboscope Vetco International Inc. 10.75% 2003 7,000 6,965 .63
Wilrig AS 11.25% 2004 14,000 15,120 1.36
----------- --------
79,026 7.11
----------- --------
Food Retailing - 2.16%
Safeway Inc. 10.00% 2002 1,700 1,946 .18
Star Markets Co., Inc. 13.00% 2004 11,000 10,450 .94
Stater Bros. Holdings Inc. 11.00% 2001 11,500 11,586 1.04
----------- --------
23,982 2.16
----------- --------
Forest Products & Paper - 9.27%
Container Corp. of America:
10.75% 2002 3,000 3,158 .28
9.75% 2003 23,750 23,869 2.15
11.25% 2004 2,500 2,644 .24
Fort Howard Paper Co.:
9.25% 2001 15,250 15,059 1.36
8.25% 2002 3,000 2,850 .26
9.00% 2006 4,750 4,465 .40
Klabin Fabricadora de Papel e Cellulose
SA 10.00% 2001/5/ 834 788 .07
MAXXAM Group Inc. 11.25% 2003 3,000 2,933 .26
Pacific Lumber Co. 10.50% 2003 7,000 6,650 .60
P.T. Indah Kiat Pulp & Paper Corp.:
8.875% 2000/5/ 13,750 12,994 1.17
11.875% 2002 2,000 2,055 .19
P.T. Inti Indorayon Utama 9.125% 2000 1,000 940 .08
P.T. Pabrik Kertas Tjiwi Kimia 13.25% 2001 5,500 5,940 .53
Repap Wisconsin, Inc. Second Priority 9.875% 2006 5,000 4,800 .43
Riverwood International Corp.:
10.75% 2000 8,500 9,052 .81
Series II, 10.75% 2000 1,000 1,065 .10
11.25% 2002 3,500 3,754 .34
----------- --------
103,016 9.27
----------- --------
Independent Power Producers - 4.46%
California Energy Co., Inc.
0%/10.25% 2004/1/ 34,750 30,580 2.75
Midland Cogeneration Venture LP:
Series C-91, 10.33% 2002 6,573 6,771 .61
Series C-94, 10.33% 2002 5,909 6,146 .55
Subic Power Corp. 9.50% 2008/5/ 6,517 6,061 .55
----------- --------
49,558 4.46
----------- --------
Leisure, Tourism & Restaurants - 6.32%
Foodmaker, Inc.:
9.25% 1999 14,000 13,020 1.17
9.75% 2002 8,824 7,677 .69
Four Seasons Hotels Inc. 9.125% 2000/5/ 7,000 6,825 .61
Harrah's Jazz Finance Corp. 14.25% 2001 16,125 15,077 1.36
Kloster Cruise Ltd. 13.00% 2003 13,100 9,563 .86
Plitt Theatres, Inc. 10.875% 2004 15,500 14,725 1.33
Station Casinos, Inc. 9.625% 2003 3,500 3,325 .30
----------- --------
70,212 6.32
----------- --------
Manufacturing & Materials - 6.82%
ACME Metals Inc.:
12.50% 2002 7,000 6,930 .62
0%/13.50% 2004/1/ 5,750 4,514 .41
AK Steel Corporation 10.75% 2004 6,500 6,947 .63
Coltec Industries Inc.:
9.75% 1999 2,500 2,606 .23
9.75% 2000 12,500 13,031 1.17
Exide Corp. 10.00% 2005 7,250 7,649 .69
Kaiser Aluminum and Chemical Corp.:
9.875% 2002 3,000 3,000 .27
12.75% 2003 8,000 8,660 .78
MagneTek, Inc. 10.75% 1998 5,700 5,985 .54
Owens-Illinois, Inc. 11.00% 2003 4,750 5,219 .47
UCAR Global Enterprises Inc. 12.00% 2005 3,430 3,824 .34
Westinghouse Air Brake Company 9.375% 2005 5,750 5,951 .54
Westpoint Stevens Inc. 8.75% 2001 1,500 1,489 .13
----------- --------
75,805 6.82
----------- --------
Merchandising - 3.94%
Ann Taylor 8.75% 2000 3,000 2,730 .25
Barnes & Noble, Inc. 11.875% 2003 9,450 10,442 .94
Levitz Furniture Corp. 12.375% 1997 2,000 2,010 .18
Thrifty PayLess, Inc.:
11.75% 2003 10,000 10,525 .95
Units, 12.25% 2004 2,000 2,157 .19
12.25% 2004 15,250 15,860 1.43
----------- --------
43,724 3.94
----------- --------
Miscellaneous Services - 2.24%
ADT Operations 9.25% 2003 2,000 2,085 .19
Neodata Services, Inc. 0%/12.00% 2003/1/ 12,000 10,680 .96
Protection One Alarm Monitoring, Inc.
Units, 0%/13.625% 2005/1/ 9,500 6,745 .60
Universal Health Services, Inc. 8.75% 2005 5,500 5,431 .49
----------- --------
24,941 2.24
----------- --------
Real Estate - 0.35%
B.F. Saul Real Estate Investment Trust
11.625% 2002 4,000 3,920 .35
----------- --------
Transportation - 2.31%
Delta Air Lines, Inc.:
10.375% 2011 2,000 2,353 .21
Pass-through certificates, Series 1993-A2,
10.50% 2016 1,000 1,188 .11
10.375% 2022 1,750 2,096 .19
Jet Equipment Trust, Series 1995-B, 10.91% 2014 1,000 1,035 .09
Northwest Airlines, Inc. 12.092% 2000 1,668 1,720 .16
NWA Inc. 8.625% 1996 1,175 1,175 .11
NWA Trust, Class D, 13.875% 2008 3,750 4,242 .38
TNT Transport (Europe) PLC TNT (USA)
Inc. 11.50% 2004 5,500 5,706 .51
Viking Star Shipping Inc. 9.625% 2003 6,000 6,135 .55
----------- --------
25,650 2.31
----------- --------
Collateralized Mortgage/Asset-Backed
Obligations/6/ - 0.57%
Fifth Avenue Capital Trust, Class C, 12.36% 2002 5,000 5,150 .46
Resolution Trust Corp.:
Series 1993-C1, Class E, 9.50% 2024 413 406 .04
Series 1993-C2, Class E, 8.50% 2025 741 733 .07
----------- --------
6,289 .57
----------- --------
Non-U.S. Governments and Governmental
Authorities - 1.46%
Argentina (Republic of):
6.812% 2005/4/ 6,000 3,720 .34
5.00% 2023/4/ 2,000 960 .09
Brazil (Federal Republic of) DCB, 7.313% 2012/4/ 2,000 1,153 .10
Poland (Republic of):
Past Due Interest Bond 3.25% 2014/4/ 7,000 4,410 .40
Discount Bond 7.125% 2024/4/ 1,500 1,157 .10
United Mexican States Collateralized Eurobond:
Series A, 6.25% 2019 1,400 845 .08
Series B, 6.25% 2019 6,500 3,924 .35
----------- --------
16,169 1.46
----------- --------
U.S. Treasury Obligations - 4.44%
7.25% 1998 5,000 5,147 .46
6.875% 1999 20,000 20,594 1.85
6.75% 2000 3,000 3,085 .28
7.50% 2001 10,000 10,709 .97
5.75% 2003 8,000 7,783 .70
5.875% 2004 2,000 1,958 .18
----------- --------
49,276 4.44
----------- --------
Total Bonds & Notes (cost: $1,002,108,000) 1,001,687 90.16
----------- --------
Number of
Shares
Stocks (Common & Preferred) - 2.46%
California Energy Co., Inc./7/ 25,000 513 .05
CellNet Data Systems, Inc., warrants/7/ 100,000 2,057 .18
Cellular Communications, Inc./7/ 35,000 1,907 .17
Comcast Corp., Class A 10,000 199 .02
Comcast Corp., Class A, special stock 20,000 400 .04
Dial Page, Inc., warrants/7/ 21,250 - .00
Foodmaker, Inc./7/ 30,000 173 .02
Host Marriott Corp./7/ 13,896 172 .01
LIN Broadcasting Corp./7/ 2,000 259 .02
Marriott International Inc. 13,896 519 .05
Nacional Financiers S.N.C. PRIDES 11.25% 1998 20,000 655 .06
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)/5/ 2,016,500 20,467 1.84
----------- --------
Total Stocks (cost: $21,397,000) 27,321 2.46
----------- --------
Principal
Amount
(000)
Convertible Debentures - 0.12%
Euro Disney S.C.A. 6.75% 2001 $7,700 1,336 .12
----------- --------
Total Convertible Debentures (cost:
$990,000) 1,336 .12
----------- --------
Short-Term Securities
Corporate Short-Term Notes - 6.03%
Associates Corp. of North America 6.61%
due 10/2/95 8,680 8,677 .78
Commonwealth Bank of Australia 5.75% due 10/3/95 10,000 9,995 .90
Ford Motor Credit Co. 5.74% due 10/6/95 15,000 14,986 1.35
H.J. Heinz Co. 5.74% due 10/5/95 12,000 11,990 1.08
UBS Finance (Delaware) Inc. 6.50% due 10/2/95 13,300 13,295 1.20
Wal-Mart Stores Inc. 5.70% due 10/2/95 8,000 7,998 .72
----------- --------
Total Short-Term Securities (cost:
$66,941,000) 66,941 6.03
----------- --------
Total Investment Securities (cost:
$1,091,436,000) 1,097,285 98.77
Excess of cash and receivables over
payables 13,701 1.23
----------- --------
Net Assets $1,110,986 100.00%
=========== ========
/1/ Represents a zero coupon bond which
will convert to a coupon-bearing
security at a later date.
/2/ CenCall Communications merged with NEXTEL on
July 28, 1995, and Dial Call Communications is
expected to merge with NEXTEL before the end of
this calendar year. After their respective
closings, the securities of CenCall and Dial Call
will become obligations of NEXTEL.
/3/ Valued under procedures established by the Board
of Trustees.
/4/ Coupon rate may change periodically.
/5/ Purchased in a private placement
transaction; resale to the public may
require registration.
/6/ 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.
/7/ Non-income-producing security.
</TABLE>
See Notes to Financial Statements
<PAGE>
American High-Income Trust
Financial Statements
Statement of Assets and Liabilities
at September 30, 1995 (dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
Assets:
Investment securities
(cost: $1,091,436) $1,097,285
Cash 211
Receivables for--
Sales of investments $ 3,195
Sales of fund's shares 3,344
Accrued dividends and interest 20,349 26,888
------------- ---------------
1,124,384
Liabilities:
Payables for--
Purchases of investments 8,437
Repurchases of fund's shares 784
Forward currency contracts 74
Dividends on fund's shares 3,437
Management services 468
Accrued expenses 198 13,398
-------------- ---------------
Net Assets at September 30, 1995--
Equivalent to $14.30 per share on
77,694,271 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $1,110,986
===============
Statement of Operations
for the year ended September 30, 1995
(dollars in thousands)
Investment Income:
Income:
Dividends $ 2,167
Interest 95,851 $ 98,018
-------------
Expenses:
Management services fee 4,916
Distribution expenses 2,068
Transfer agent fee 738
Reports to shareholders 101
Registration statement and prospectus 103
Postage, stationery and supplies 122
Trustees' fees 21
Auditing and legal fees 43
Custodian fee 51
Taxes other than federal income tax 18
Other expenses 13 8,194
------------- ---------------
Net investment income 89,824
---------------
Realized Loss and Unrealized
Appreciation on Investments:
Net realized loss (7,154)
Net unrealized (depreciation)
appreciation on investments:
Beginning of year (31,188)
End of year 5,775
-------------
Net change from unrealized depreciation
to unrealized appreciation on investments 36,963
---------------
Net realized loss and unrealized
appreciation on investments 29,809
---------------
Net Increase in Net Assets
Resulting from Operations $119,633
===============
Statement of Changes in Net Assets
(dollars in thousands)
Year Ended
September 30,
1995 1994
Operations: ------------- ---------------
Net investment income $ 89,824 $ 68,864
Net realized (loss) gain on investments (7,154) 5,459
Net unrealized appreciation (depreciation)
on investments 36,963 (65,611)
------------- ---------------
Net increase in net assets
resulting from operations 119,633 8,712
------------- ---------------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (87,231) (65,637)
Distributions from net realized
gain on investments (4,494) (13,187)
------------- ---------------
Total dividends and distributions (91,725) (78,824)
------------- ---------------
Capital Share Transactions:
Proceeds from shares sold:
30,002,672 and 29,570,527
shares, respectively 414,416 438,518
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on
investments: 4,145,269 and
3,412,975 shares, respectively 56,782 50,345
Cost of shares repurchased:
16,228,009 and 19,805,346
shares, respectively (223,033) (291,279)
------------- ---------------
Net increase in net assets
resulting from capital share
transactions 248,165 197,584
------------- ---------------
Total Increase in Net Assets 276,073 127,472
Net Assets:
Beginning of year 834,913 707,441
------------- ---------------
End of year (including undistributed
net investment income: $7,839
and $5,246, respectively) $1,110,986 $834,913
============= ===============
</TABLE>
See Notes to Financial Statements
<PAGE>
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 year or, for listed securities having no sales reported,
upon last-reported bid prices on that date. Securities traded in the
over-the-counter market are valued at the last available sale prior to the time
of valuation or, lacking any sales, at the last reported bid price.
Bonds and notes are valued at prices obtained from a bond-pricing service
provided by a major dealer in bonds, when such prices are available; however,
in circumstances where the investment adviser deems it appropriate to do so,
such securities will be valued at the mean of their representative quoted bid
and asked prices or, if such prices are not available, at prices for securities
of comparable maturity, quality and type.
Short-term securities with original or remaining maturities in excess of 60
days, including forward currency contracts, 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. Distributions
paid to shareholders are recorded on the ex-dividend date.
Investment securities and other assets and liabilities, 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 year. Purchases and sales of
investment securities, income, and expenses are calculated using the prevailing
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 Appreciation on Investments" that arises from changes in
non-U.S.currency exchange rates.
Pursuant to the custodian agreement, the fund receives credits against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $51,000 includes $32,000 that was paid by these credits
rather than in cash.
2. It is the fund's policy to continue to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision
is required.
As of September 30, 1995, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $5,849,000, of which $33,612,000 related to appreciated securities
and $27,763,000 related to depreciated securities. The fund has available at
September 30, 1995 a net capital loss carryforward totaling $7,107,000, which
may be used to offset capital gains realized during subsequent years through
2002 and thereby relieve the fund and its shareholders of any federal income
tax liability with respect to capital gains that are so offset. It is the
intention of the fund not to make distributions from capital gains while there
is a capital loss carryforward. There was no difference between book and tax
realized gains on securities transactions for the year ended September 30,
1995. The cost of portfolio securities, excluding forward currency contracts,
for book and federal income tax purposes was $1,091,436,000 at September 30,
1995.
3. The fee of $4,916,000 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; plus 3.00% on the first $100
million of the fund's annual gross investment income; and 2.50% of such income
in excess of $100 million.
Pursuant to a Plan of Distribution, the fund may expend up to 0.30% of its
average net assets annually for any activities primarily intended to result in
sales of fund shares, provided the categories of expenses for which
reimbursement is made are approved by the fund's Board of Trustees. Fund
expenses under the Plan include payments to dealers to compensate them for
their selling and servicing efforts. During the year ended September 30, 1995,
distribution expenses under the Plan were $2,068,000. As of September 30,
1995, accrued and unpaid distribution expenses were $173,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $738,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $1,209,000 (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
September 30, 1995, aggregate amounts deferred were $16,000.
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 September 30, 1995, accumulated net realized loss on investments was
$7,107,000 and paid-in capital was $1,104,479,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $430,069,000 and $254,299,000, respectively, during
the year ended September 30, 1995.
The fund purchases forward currency contracts in anticipation of, or to
protect itself against, fluctuations in exchange rates. The contracts are
recorded at market value and reflect the extent of the fund's involvement in
these financial instruments. Risks may arise upon entering these contracts
from the potential inability of counterparties to meet the terms of their
contracts and from the possible movements in non-U.S. exchange rates and
securities values underlying these instruments. At September 30, 1995, the
fund had an outstanding forward currency contract to sell non-U.S. currency as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 9/30/95
------------ ------------ ------------- ------------
Unrealized
Non-U.S. Currency Contracts Non-U.S. U.S. Amount Depreciation
- -- ---------------------------- ------------ ------------ ------------- ------------
French Francs expiring 11/27/95 FF5,100,000 $961,000 $1,035,000 $(74,000)
</TABLE>
<PAGE>
Per-Share
Data and Ratios
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Year Ended September 30,
1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
Net Asset Value, Beginning
of Year $13.97 $15.18 $14.58 $13.56 $11.81
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income 1.33 1.25 1.28 1.35 1.46
Net realized and
unrealized gain
(loss) on investments .39 (.99) .74 .99 1.78
-------- -------- -------- -------- --------
Total income from
investment operations 1.72 .26 2.02 2.34 3.24
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income (1.32) (1.21) (1.29) (1.32) (1.49)
Distributions from net
realized gains (.07) (.26) (.13) - -
-------- -------- -------- -------- --------
Total distributions (1.39) (1.47) (1.42) (1.32) (1.49)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $14.30 $13.97 $15.18 $14.58 $13.56
======== ======== ======== ======== ========
Total Return * 13.34% 1.60% 14.59% 18.08% 29.13%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $1,111 $835 $707 $438 $255
Ratio of expenses to average
net assets .89% .86% .87% .94% 1.00%
Ratio of net income to
average net assets 9.72% 8.63% 8.60% 9.58% 11.41%
Portfolio turnover rate 29.56% 42.03% 44.37% 58.04% 44.38%
</TABLE>
* This was calculated without deducting a sales charge.
The maximum sales charge is 4.75% of the fund's offering price.
<PAGE>
Independent Auditors' Report
To the Board of Trustees and Shareholders of
American High-Income Trust:
We have audited the accompanying statement of assets and liabilities of
American High-Income Trust, including the schedule of portfolio investments as
of September 30,1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended, and the per-share data and ratios for each of the five years
in the period then ended. These financial statements and the per-share data
and ratios are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the per-share data
and ratios based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
per-share data and ratios are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned at September 30, 1995 by correspondence with the custodian and brokers;
where replies were not received from brokers, we performed other auditing
procedures. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of American High-Income Trust as of September 30, 1995, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the per-share data and ratios
for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Los Angeles, California
October 23, 1995
1995 TAX INFORMATION (unaudited)
We are required to advise you within 60 days of the fund's fiscal year-end
regarding the federal tax status of distributions received by shareholders
during such fiscal year.
Corporate shareholders may exclude up to 70% of qualifying dividends received
during the year. For purposes of computing this exclusion, 2% of the dividends
paid by the fund from net investment income represents qualifying dividends.
Certain states may exempt from income taxation a portion of the dividends paid
from net investment income if derived from direct U.S. Treasury obligations.
For purposes of computing this exclusion, 3% of the dividends paid by the fund
from net investment income was derived from interest on direct U.S. Treasury
obligations.
Dividends and distributions received by retirement plans such as IRAs,
Keogh-type plans, and 403(b) plans need not be reported as taxable income.
However, many plan retirement trusts may need this information for their annual
information reporting.
Since the amounts above are reported for the fiscal year and not the calendar
year, shareholders should refer to their Form 1099-DIV which will be mailed in
January 1996 to determine the calendar year amounts to be included on their
1995 tax returns. Shareholders should consult their tax advisers.
<PAGE>
PART C
OTHER INFORMATION
AMERICAN HIGH-INCOME TRUST
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS:
Included in Prospectus - Part A
Financial Highlights
Included in Statement of Additional Information - Part B
Investment Portfolio Notes to Financial Statements
Statement of Assets and Liabilities Per-Share Data and Ratios
Statement of Operations Independent Auditors Report
Statement of Changes in Net Assets
(B) EXHIBITS:
1. On file (see SEC file No. 33-17917, Initial Form N-1A filed 10/15/87)
2. On file (see SEC file No. 33-17917, Pre-Effec Amndmnt No. 1 filed 12/10/87)
3. None.
4. On file (see SEC file No. 33-17917, Pre-Effec Amndmnt No. 3 filed 1/15/88)
5. On file (see SEC file No. 33-17917, Pre-Effec Amndmnt No. 1 filed 12/10/87)
6. On file (see SEC file No. 33-17917, Post-Effec Amndmnt No. 10 filed
12/1/93)
7. None.
8. On file (see SEC file No. 33-17917, Pre-Effec Amndmnt No. 1 filed 12/10/87)
9. Form of Shareholder Service Agreement between Registrant and American
Funds Service Company, as amended 1/1/95
10. Not applicable to this filing.
11. Consent of Independent Auditors
12. None.
13. On file (see SEC file No. 33-17917, Pre-Effec Amndmnt No. 3 filed 1/15/88)
14. On file (see SEC file No. 33-17917, Initial Form N-1A filed 10/15/87)
15. On file (see SEC file No. 33-1791, Pre-Effec Amndmnt No. 1 filed 12/10/87)
16. Updates to previously filed schedule for computation of each performance
quotation provided in the Registration Statement in resonse to Item 22 (see SEC
file Nos. 811-5364 and 33-1791)
17. Financial data schedule (EDGAR)
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
None.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of September 30, 1995
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Shares of beneficial 63,994
interest (no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual Fund
Errors and Omissions Policy written by American International Surplus Lines
Insurance Company, Chubb Custom Insurance Company and ICI Mutual Insurance
Company which insures its officers and Trustees against certain liabilities.
However, in no event will Registrant maintain insurance to indemnify any such
person for any act for which Registrant itself is not permitted to indemnify
the individual.
Article VI of the Trust's By-Laws states:
(a) The Trust shall indemnify any Trustee or officer of the Trust who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than action by or in the right of the Trust) by reason
of the fact that such person is or was such Trustee or officer or an employee
or agent of the Trust, or is or was serving at the request of the Trust as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Trust, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe such
person's conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person reasonably believed
to be opposed to the best interests of the Trust, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that such
person's conduct was unlawful.
(b) The Trust shall indemnify any Trustee or officer of the Trust who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Trust to procure a judgment
in its favor by reason of the fact that
such person is or was such Trustee or officer or an employee or agent of the
Trust, or is or was serving at the request of the Trust as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of the
Trust, except that no indemnification shall be made in respect of any claim,
issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of such person's duty to the Trust unless and
only to the extent that the court in which such action or suit was brought, or
any other court having jurisdiction in the premises, shall determine upon
application that, despite the adjudication of liability but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
(c) To the extent that a Trustee or officer of the Trust has been
successful on the merits in defense of any action, suit or proceeding referred
to in subparagraphs (a) or (b) above or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by such person in connection
therewith, without the necessity for the determination as to the standard of
conduct as provided in subparagraph (d).
(d) Any indemnification under subparagraph (a) or (b) (unless ordered by a
court) shall be made by the Trust only as authorized in the specific case upon
a determination that indemnification of the Trustee or officer is proper in the
circumstances because such person has met the applicable standard of conduct
set forth in subparagraph (a) or (b). Such determination shall be made (i) by
the Board by a majority vote of a quorum consisting of Trustees who were not
parties to such action, suit or proceeding, or (ii) if such a quorum of
disinterested Trustees so directs, by independent legal counsel in a written
opinion; and any determination so made shall be conclusive.
(e) Expenses incurred in defending a civil or criminal action, writ or
proceeding may be paid by the Trust in advance of the final disposition of such
action, suit or proceeding, as authorized in the particular case, upon receipt
of an undertaking by or on behalf of the Trustee or officer to repay such
amount unless it shall ultimately be determined that such person is entitled to
be indemnified by the Trust as authorized herein. Such determination must be
made by disinterested trustees or independent legal counsel.
(f) Agents and employees of the Trust who are not Trustees or officers of the
Trust may be indemnified under the same standards and procedures set forth
above, in the discretion of the Board.
(g) Any indemnification pursuant to this Article shall not be deemed exclusive
of any other rights to which those indemnified may be entitled and shall
continue as to a person
who has ceased to be a Trustee or officer and shall inure to the benefit of the
heirs, executors and administrators of such a person.
(h) Nothing in the Declaration or in these By-Laws shall be deemed to protect
any Trustee or officer of the Trust against any liability to the Trust or to
its shareholders to which such person would otherwise be subject by reason of
willful malfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of such person's office.
(i) The Trust shall have power to purchase and maintain insurance on behalf of
any person against any liability asserted against or incurred by such person,
whether or not the Trust would have the power to indemnify such person against
such liability under the provisions of this Article. Nevertheless, insurance
will not be purchased or maintained by the Trust if the purchase or maintenance
of such insurance would result in the indemnification of
any person in contravention of any rule or regulation of the Securities and
Exchange Commission.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a Trustee, officer of controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such Trustee, officer of controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
None.
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) American Funds Distributors, Inc. is also the Principal Underwriter of
shares of: AMCAP Fund, Inc., American Balanced Fund, Inc., The American Funds
Income Series, The American Funds Tax-Exempt Series I, The American Funds
Tax-Exempt Series II, American High-Income Municipal Bond Fund, Inc., American
Mutual Fund, Inc., The Bond Fund of America, Inc., Capital Income Builder,
Inc., Capital World Bond Fund, Inc., Capital World Growth and Income Fund,
Inc., The Cash Management Trust of America, EuroPacific Growth Fund,
Fundamental Investors, Inc., The Growth Fund of America, Inc., The Income Fund
of America, Inc., Intermediate Bond Fund of America, The Investment Company of
America, Limited Term Tax-Exempt Bond Fund of America, The New Economy Fund,
New Perspective Fund, Inc., SMALLCAP World Fund, Inc., The Tax-Exempt Bond Fund
of America, Inc., The Tax-Exempt Money Fund of America, U.S. Treasury Money
Fund of America and Washington Mutual Investors Fund, Inc.
<TABLE>
<CAPTION>
(B) (1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C> <C>
# David L. Abzug Assistant Vice President None
John A. Agar Regional Vice President None
1501 N. University, Suite 225
Little Rock, AR 72207
Robert B. Aprison Regional Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
& Richard Armstrong Assistant Vice President None
* William W. Bagnard Vice President None
Steven L. Barnes Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Regional Vice President None
1190 Rockmart Circle
Kennesaw, GA 30144
Joseph T. Blair Vice President None
27 Drumlin Road
West Simsbury, CT 06092
Ian B. Bodell Regional Vice President None
3100 West End Avenue, Suite 870
Nashville, TN 37215
Michael L. Brethower Vice President None
108 Hagen Court
Georgetown, TX 78628
C. Alan Brown Regional Vice President None
4619 McPherson Avenue
St. Louis, MO 63108
* Daniel C. Brown Director, Sr. Vice President None
@ J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MO 20895
Victor C. Cassato Vice President None
999 Green Oaks Drive
Littleton, CO 80121
Christopher J. Cassin Regional Vice President None
231 Burlington
Clarendon Hills, IL 60514
Denise M. Cassin Regional Vice President None
1425 Vallejo, #203
San Francisco, CA 94109
* Larry P. Clemmensen Director, Treasurer None
* Kevin G. Clifford Senior Vice President None
Ruth M. Collier Vice President None
145 West 67th St. Ste. 12K
New York, NY 10023
Thomas E. Cournoyer Vice President None
2333 Granada Boulevard
Coral Gables, FL 33134
Douglas A. Critchell Vice President None
3521 Rittenhouse Stret, N.W.
Washington, DC 20007
& Carl D. Cutting Vice President None
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
3622 E. 87th Street
Tulsa, OK 74137
Kirk D. Dodge Regional Vice President None
2617 Salisbury Road
Ann Arbor, MI 48103
Peter J. Doran Sr. Vice President None
1205 Franklin Avenue
Garden City, NY 11530
* Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
& Lloyd G. Edwards Vice President None
@ Richard A. Eychner Vice President None
* Paul H. Fieberg Sr. Vice President None
John Fodor Regional Vice President None
5 Marlborough Street, Suite 51
Boston, MA 02116
* Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
# Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
* Paul G. Haaga, Jr. Director Chairman of the Board
David E. Harper Vice President None
R.D., 1 Box 210, Rte 519
Baptistown, NJ 08825
Ronald R. Hulsey Regional Vice President None
6744 Avalon
Dallas, TX 75214
* Robert L. Johansen Vice President, Controller None
Michael J. Johnston Chairman of the Board None
630 Fifth Avenue, 36th Floor
New York, NY 10111-0121
* V. John Kriss Sr. Vice President None
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
# Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
12585-E East Tennessee Circle
Aurora, CO 80012
Steve A. Malbasa Regional Vice President None
13405 Lake Shore Blvd.
Cleveland, OH 44110
Steven M. Markel Vice President None
5241 South Race Street
Littleton, CO 90121
* John C. Massar Vice President None
* E. Lee McClennahan Vice President None
Laurie B. McCurdy Regional Vice President None
6008 E. Anderson Drive
Scottsdale, AZ 85255
& John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
* R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Regional Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
* Barbara G. Nicholich Assistant Vice President - None
Institutional Investment Services Division
William E. Noe Regional Vice President None
12535 Barkley
Overland Park, KS 66209
Peter A. Nyhus Regional Vice President None
3084 Wilds Ridge Court
Prior Lake, MN 55372
Eric P. Olson Regional Vice President None
62 Park Drive
Glenview, IL 60025
Fredric Phillips Regional Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
# Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
* John O. Post Vice President None
Steven J. Reitman Vice President None
212 The Lane
Hinsdale, IL 60521
Brian A. Roberts Regional Vice President None
12025 Delmahoy Drive
Charlotte, NC 28277
* George L. Romine Vice President - Institutional None
Investment Services Division
George S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
* Julie D. Roth Vice President None
Douglas F. Rowe Regional Vice President None
104 River Road
Georgetown, TX 78628
* Christopher Rowey Regional Vice President None
Dean B. Rydquist Vice President None
1080 Bay Point Crossing
Alpharetta, GA 30202
Richard R. Samson Vice President None
4604 Glencoe Avenue, No. 4
Marina del Rey, CA 90292
Joseph D. Scarpitti Regional Vice President None
25760 Kensington Drive
Westlake, OH 44145
David W. Short Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
* Victor S. Sidhu Vice President - Institutional None
Investment Services Division
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
* John C. Smith Vice President - Institutional None
Investment Services Division
* Mary E. Smith Assistant Vice President - None
Institutional Investment Services Division
Rodney G. Smith Regional Vice President None
2350 Lakeside Blvd., #850
Richardson, TX 75082
Nicholas D. Spadaccini Regional Vice President None
855 Markley Woods Way
Cincinnati, OH 45230
Daniel S. Spradling Senior Vice President None
#4 West Fourth Avenue, Suite 406
San Mateo, CA 94402
Craig R. Strauser Regional Vice President None
17040 Summer Place
Lake Oswego, OR 97035
Francis N. Strazzeri Regional Vice President None
31641 Saddletree Drive
Westlake Village, CA 91361
& James P. Toomey Assistant Vice President None
% Christopher E. Trede Assistant Vice President None
George F. Truesdail Vice President None
400 Abbotsford Court
Charlotte, NC 28270
Scott W. Ursin-Smith Regional Vice President None
606 Glenwood Avenue
Mill Valley, CA 94941
@ Andrew J. Ward Vice President None
* David M. Ward Assistant Vice President - None
Institutional
Investment Services Division
Thomas E. Warren Regional Vice President None
4001 Crockers Lake Blvd., #1012
Sarasota, FL 34242
# J. Kelly Webb Sr. Vice President None
Gregory J. Weimer Regional Vice President None
125 Surrey Drive
Canonsburg, PA 15317
# Timothy W. Weiss Director None
* N. Dexter Williams Vice President None
*
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
@ Marshall D. Wingo Sr. Vice President None
# Robert L. Winston Director, Sr. Vice President None
William R. Yost Regional Vice President None
9320 Overlook Trail
Eden Prairie, MN 55347
Janet M. Young Regional Vice President None
1616 Vermont
Houston, TX 77006
</TABLE>
__________
* Business Address, 333 South Hope Street, Los Angeles, CA 90071
** Business Address, Four Embarcadero, Suite 1800, San Francisco, CA 94111
# Business Address, 135 South State College Boulevard, Brea, CA 92621
& Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
@ Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
% Business Address, 8332 Woodfield Crossing Blvd., Indianapolis, IN 46240
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
Accounts, books and other records required by Rules 31a-1 and 31a-2 under the
Investment Company Act of 1940, as amended, are maintained and kept in the
offices of the fund and its investment adviser, Capital Research and Management
Company, 333 South Hope Street, Los Angeles, CA 90071. Certain accounting
records are maintained and kept in the offices of the fund's accounting
department, 135 South State College Blvd., Brea, CA 92621.
Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92621, 8000 IH-10, Suite 1400, San Antonio, TX 78230, 8332 Woodfield Crossing
Boulevard, Indianapolis, IN 42640 and 5300 Robin Hood Road, Norfolk, VA
23514.
Records covering portfolio transactions are also maintained and kept by the
custodian, The Chase Manhattan Bank, One Chase Manhattan Plaza, New York, NY
10081.
ITEM 31. MANAGEMENT SERVICES.
None.
ITEM 32. UNDERTAKINGS.
(c) As reflected in the prospectus, the fund undertakes to provide each
person to whom a prospectus is delivered with a copy of the fund's latest
annual report to shareholders, upon request and without charge.
<PAGE>
SIGNATURE OF REGISTRANT
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, and State of California, on the 20th
day of November, 1995.
AMERICAN HIGH-INCOME TRUST
By/s/ Paul G. Haaga, Jr.
(Paul G. Haaga, Jr., Chairman of the Board)
Pursuant to the requirements of the Securities Act of 1933, this amendment to
registration statement has been signed below on November 20, 1995, by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
<S> <C> <C>
(1) Principal Executive Officer:
/s/ Richard T. Schotte President
(Richard T. Schotte)
(2) Principal Financial Officer and
Principal Accounting Officer:
/s/ Mary C. Cremin Vice President and Treasurer
(Mary C. Cremin)
(3) Trustees:
H. Frederick Christie* Trustee
Diane C. Creel*/1/ Trustee
Martin Fenton, Jr.* Trustee
Leonard R. Fuller*/1/ Trustee
/s/ Abner D. Goldstine Trustee
(Abner D. Goldstine)
Herbert Hoover III* Trustee
Richard G. Newman* Trustee
Peter C. Valli* Trustee
</TABLE>
/1/ Powers of Attorney attached hereto.
*By /s/ Julie F. Willliams
Julie F. Williams, Attorney-in-Fact
Counsel represents that this amendment does not contain disclosures that would
make the amendment ineligible for effectiveness under the provisions of Rule
485(b).
/s/ Michael J. Downer
Michael J. Downer
C-14
<PAGE>
POWER OF ATTORNEY
I, Leonard R. Fuller, the undersigned Trustee of American High-Income Trust, a
Massachusetts business trust, revoking all prior powers of attorney given as a
Trustee of American High-Income Trust do hereby constitute and appoint Mary C.
Cremin, Michael J. Downer, Paul G. Haaga, Jr., Kimberly S. Verdick and Julie F.
Williams, or any of them, to act as attorneys-in-fact for and in my name, place
and stead (1) to sign my name as Trustee of said Trust to any and all
Registration Statements of American High-Income Trust File No. 33-17917 under
the Securities Act of 1933 as amended and/or the Investment Company Act of
1940, as amended, and any and all amendments thereto, said Registration
Statements and amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Trust is
registered to sell shares, and (2) to deliver any and all such Registration
Statements and amendments, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended and/or the Investment Company Act of 1940, as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
/s/ Leonard R. Fuller
Leonard R. Fuller, Trustee
POWER OF ATTORNEY
I, Diane C. Creel, the undersigned Trustee of American High-Income Trust, a
Massachusetts business trust, revoking all prior powers of attorney given as a
Trustee of American High-Income Trust do hereby constitute and appoint Mary C.
Cremin, Michael J. Downer, Paul G. Haaga, Jr., Kimberly S. Verdick and Julie F.
Williams, or any of them, to act as attorneys-in-fact for and in my name, place
and stead (1) to sign my name as Trustee of said Trust to any and all
Registration Statements of American High-Income Trust File No. 33-17917 under
the Securities Act of 1933 as amended and/or the Investment Company Act of
1940, as amended, and any and all amendments thereto, said Registration
Statements and amendments to be filed with the Securities and Exchange
Commission, and to any and all reports, applications or renewal of applications
required by any State in the United States of America in which this Trust is
registered to sell shares, and (2) to deliver any and all such Registration
Statements and amendments, so signed, for filing with the Securities and
Exchange Commission under the provisions of the Securities Act of 1933 as
amended and/or the Investment Company Act of 1940, as amended, granting to said
attorneys-in-fact, and each of them, full power and authority to do and perform
every act and thing whatsoever requisite and necessary to be done in and about
the premises as fully to all intents and purposes as the undersigned might or
could do if personally present, hereby ratifying and approving the acts of said
attorneys-in-fact.
EXECUTED at Los Angeles, California, this 12th day of December, 1994.
/s/ Diane C. Creel
Diane C. Creel, Trustee
CONFORMED
SHAREHOLDER SERVICES AGREEMENT
1. The parties to this Agreement, which is effective as of January 1, 1995,
are AMERICAN HIGH-INCOME TRUST, a Massachusetts business trust (hereinafter
called "the Fund"), and American Funds Service Company, a California
corporation (hereinafter called "AFS"). AFS is a wholly owned subsidiary of
Capital Research and Management Company (hereinafter called "CRMC"). This
Agreement will continue in effect until amended or terminated in accordance
with its terms.
2. The Fund hereby employs AFS, and AFS hereby accepts such employment by the
Fund, as its transfer agent. In such capacity AFS will provide the services of
stock transfer agent, dividend disbursing agent, redemption agent, and such
additional related services as the Fund may from time to time require, all of
which services are sometimes referred to herein as "shareholder services."
3. AFS has entered into substantially identical agreements with other
investment companies for which CRMC serves as investment adviser. (For the
purposes of this Agreement, such investment companies, including the Fund, are
called "participating investment companies.")
4. AFS has entered into an agreement with DST Systems, Inc. (hereinafter
called "DST"), to provide AFS with electronic data processing services
sufficient for the performance of the shareholder services referred to in
paragraph 2.
5. The Fund, together with the other participating companies, will maintain a
Review and Advisory Committee, which Committee will review and may make
recommendations to the boards of the participating investment companies
regarding all fees and charges provided for in this Agreement, as well as
review the level and quality of the shareholder services rendered to the
participating investment companies and their shareholders. Each participating
investment company may select one director or trustee who is not affiliated
with CRMC, or any of its affiliated companies, or with Washington Management
Corporation or any of its affiliated companies, to serve on the Review and
Advisory Committee.
6. AFS will provide to the participating investment companies the shareholder
services referred to herein in return for the following fees:
ANNUAL ACCOUNT MAINTENANCE FEE (PAID MONTHLY):
$.67 per month for each open account on AFS books or in Level 2 or 4
Networking ($8.04 per year)
$.09 per month for each open account maintained in Street Name or Level 1 or
3 Networking ($1.08 per year)
EXHIBIT 9
No annual fee will be charged for a participant account underlying a 401(k)
or other defined contribution plan where the plan maintains a single account on
AFS books and responds to all participant inquiries
TRANSACTION FEES:
$2.00 per non-automated transaction
$0.50 per automated transaction
For this purpose, "transactions" shall include all types of transactions
included in an "activity index" as reported to the Review and Advisory
Committee at least annually. AFS will bill the Fund monthly, on or shortly
after the first of each calendar month, and the Fund will pay to AFS within
five business days of such billing.
Any revision of the schedule of charges set forth herein shall require the
affirmative vote of a majority of the members of the board of
directors/trustees of the Fund.
7. All fund-specific charges from third parties -- including DST charges,
payments described in the next sentence, postage, NSCC transaction charges and
similar out-of-pocket expenses -- will be passed through directly to the Fund
or other participating investment companies, as applicable. AFS, subject to
approval of its board of directors, is authorized in its discretion to
negotiate payments to third parties for account maintenance and/or transaction
processing services provided such payments do not exceed the anticipated
savings to the Fund, either in fees payable to AFS hereunder or in other direct
Fund expenses, that AFS reasonably anticipates would be realized by the Fund
from using the services of such third party rather than maintaining the
accounts directly on AFS' books and/or processing non-automated transactions.
8. It is understood that AFS may have income in excess of its expenses and may
accumulate capital and surplus. AFS is not, however, permitted to distribute
any net income or accumulated surplus to its parent, CRMC, in the form of a
dividend without the affirmative vote of a majority of the members of the
boards of directors/trustees of the Fund and all participating investment
companies.
9. This Agreement may be amended at any time by mutual agreement of the
parties, with agreement of the Fund to be evidenced by affirmative vote of a
majority of the members of the board of directors/trustees of the Fund.
10. This Agreement may be terminated on 180 days' written notice by either
party. In the event of a termination of this Agreement, AFS and the Fund will
each extend full cooperation in effecting a conversion to whatever successor
shareholder service provider(s) the Fund may select, it being understood that
all records relating to the Fund and its shareholders are property of the Fund.
11. In the event of a termination of this Agreement by the Fund, the Fund will
pay to AFS as a termination fee the Fund's proportionate share of any costs of
conversion of the Fund's shareholder service from AFS to a successor. In the
event of termination of this Agreement and all corresponding agreements with
all the participating investment companies, all assets of AFS will be sold or
otherwise converted to cash, with a view to the liquidation of AFS when it
ceases to provide shareholder services for the participating investment
companies. To the extent any such assets are sold by AFS to CRMC and/or any of
its affiliates, such sales shall be at fair market value at the time of sale as
agreed upon by AFS, the purchasing company or companies, and the Review and
Advisory Committee. After all assets of AFS have been converted to cash and
all liabilities of AFS have been paid or discharged, an amount equal to any
capital or paid-in surplus of AFS that shall have been contributed by CRMC or
its affiliates shall be set aside in cash for distribution to CRMC upon
liquidation of AFS. Any other capital or surplus and any assets of AFS
remaining after the foregoing provisions for liabilities and return of capital
or paid-in surplus to CRMC shall be distributed to the participating investment
companies in such proportions as may be determined by the Review and Advisory
Committee.
12. In the event of disagreement between the Fund and AFS, or between the Fund
and other participating investment companies as to any matter arising under
this Agreement, which the parties to the disagreement are unable to resolve,
the question shall be referred to the Review and Advisory Committee for
resolution. If the Review and Advisory Committee is unable to resolve the
question to the satisfaction of both parties, either party may elect to submit
the question to arbitration; one arbitrator to be named by each party to the
disagreement and a third arbitrator to be selected by the two arbitrators named
by the original parties. The decision of a majority of the arbitrators shall
be final and binding on all parties to the arbitration. The expenses of such
arbitration shall be paid by the party electing to submit the question to
arbitration.
13. The obligations of the Fund under this Agreement are not binding upon any
of the directors, trustees, officers, employees, agents or shareholders of the
Fund individually, but bind only the Fund itself. AFS agrees to look solely to
the assets of the Fund for the satisfaction of any liability of the Fund in
respect to this Agreement and will not seek recourse against such directors,
trustees, officers, employees, agents or shareholders, or any of them or their
personal assets for such satisfaction.
AMERICAN FUNDS SERVICE COMPANY AMERICAN HIGH-INCOME TRUST
By /s/ Don R. Conlan By /s/ Paul G. Haaga, Jr.
Don R. Conlan, Chairman Paul G. Haaga, Jr., Chairman
By /s/ Kenneth R. Gorvetzian By /s/ Julie F. Williams
Kenneth R. Gorvetzian, Secretary Julie F. Williams, Secretary
CONSENT OF INDEPENDENT AUDITORS
American High-Income Trust:
We consent to (a) the use in this Post-Effective Amendment No. 12 to
Registration Statement No. 33-17917 on Form N-1A of our report dated October
23, 1995 appearing in the Financial Statements, which are included in Part B,
the Statement of Additional Information of such Registration Statement, (b) the
reference to us under the heading "General Information" in such Statement of
Additional Information, and (c) the reference to us under the heading
"Financial Highlights" in the Prospectus, which is a part of such Registration
Statement.
DELOITTE & TOUCHE LLP
November 17, 1995
SCHEDULE FOR COMPUTATION OF EACH PERFORMANCE QUOTATION
PROVIDED IN THE REGISTRATION STATEMENT
(1) ENDING REDEMPTION VALUE AND TOTAL RETURN
Value of an initial investment at the end of a period and total return for the
period are computed as set forth below.
(A) Initial investment DIVIDED BY
Public offering price for one share at
beginning of period EQUALS
Number of shares initially purchased
(B) Number of shares initially purchased PLUS
Number of shares acquired at net asset
value through reinvestment of dividends
and capital gain distributions during period EQUALS
Number of shares purchased during period
(C) Number of shares purchased during period MULTIPLIED BY
Net asset value of one share as of the last day
of the period EQUALS
Value of investment at end of period
(D) Value of investment at end of period DIVIDED BY
Initial investment
minus one and then multiplied by 100 EQUALS
Total return for the period expressed as a percentage
EXHIBIT 16
(2) AVERAGE ANNUAL TOTAL RETURNAverage annual total return quotations for the
1-, 5-year and lifetime periods ended September 30, 1995 are computed according
to the formula set forth below.
P(1+T)/n/ = ERV
WHERE: P= a hypothetical initial investment of $1,000
T= average annual total return
n= number of years
ERV= ending redeemable value of a hypothetical $1,000 investment as of
the end of 1 year and lifetime periods (computed in accordance with the formula
shown in (1), above)
THUS: AVG. ANNUAL TOTAL RETURN AT PUBLIC OFFERING PRICE:
1 Year Total Return 1,000(1+T)/1/ = 1,079.31
T = +7.93%
5 Year Average Annual Total Return 1,000(1+T)/5/ = 1,916.33
T = +13.89%
Lifetime Average Annual Total Return 1,000(1+T)/7.61/ = 2,138.25
T = +10.50%
Hypothetical illustrations which are based on $1,000 and $10,000 initial
investments used to obtain ending values over various time periods are
attached.
(3) YIELD
Yield is computed as set forth below.
(A) Dividends and interest earned during the period MINUS
Expenses accrued for the period EQUALS
Net investment income
(B) Net income investment DIVIDED BY
Average daily number of shares
outstanding during the period that
were entitled to receive dividends EQUALS
Net investment income per share earned
during the period
(C) Net investment income per share earned
during the period DIVIDED BY
Maximum offering price per share on
last day of the period EQUALS
Current month's yield
(D) Current months yield PLUS ONE RAISED TO
THE SIXTH POWER EQUALS
Semiannual compounded yield
(E) Semiannual compounded yield MINUS ONE MULTIPLIED
BY TWO EQUALS Annualized rate
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 1000.00 14.67 4.75 % 68.166 13.970 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 1000 95 95 1095 5 975 6 981 98 1079.31 75.476
TOTAL $ 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 1000.00 12.40 4.75 % 80.645 11.810 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 1000 126 126 1126 0 1094 0 1094 135 1229.84 90.696
9/30/92 1000 126 252 1252 0 1176 0 1176 276 1452.18 99.601
9/30/93 1000 135 387 1387 13 1224 14 1238 426 1664.09 109.624
9/30/94 1000 139 526 1526 29 1127 39 1166 524 1690.82 121.032
9/30/95 1000 168 694 1694 9 1153 50 1203 713 1916.33 134.009
TOTAL $ 51
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
2/19/88 1000.00 15.00 4.75 % 66.667 14.287 952
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/88 1000 64 64 1064 0 943 0 943 64 1007.38 71.193
9/30/89 1000 119 183 1183 0 927 0 927 180 1107.29 79.604
9/30/90 1000 133 316 1316 0 787 0 787 275 1062.73 89.986
9/30/91 1000 141 457 1457 0 904 0 904 468 1372.29 101.201
9/30/92 1000 140 597 1597 0 972 0 972 648 1620.41 111.139
9/30/93 1000 150 747 1747 15 1012 16 1028 828 1856.82 122.320
9/30/94 1000 156 903 1903 32 931 44 975 911 1886.61 135.047
9/30/95 1000 188 1091 2091 10 953 56 1009 1129 2138.25 149.528
TOTAL $ 57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 1000.00 13.97 0.00 % 71.582 13.970 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 1000 100 100 1100 5 1024 6 1030 103 1133.33 79.254
TOTAL $ 5
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 1000.00 11.81 0.00 % 84.674 11.810 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 1000 133 133 1133 0 1148 0 1148 143 1291.28 95.227
9/30/92 1000 132 265 1265 0 1235 0 1235 289 1524.69 104.574
9/30/93 1000 141 406 1406 14 1285 15 1300 447 1747.16 115.096
9/30/94 1000 146 552 1552 30 1183 41 1224 551 1775.22 127.074
9/30/95 1000 177 729 1729 10 1211 53 1264 748 2012.00 140.699
TOTAL $ 54
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
2/19/88 1000.00 14.29 0.00 % 69.994 14.287 1000
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/88 1000 67 67 1067 0 990 0 990 67 1057.64 74.745
9/30/89 1000 125 192 1192 0 974 0 974 188 1162.57 83.578
9/30/90 1000 140 332 1332 0 827 0 827 288 1115.79 94.478
9/30/91 1000 148 480 1480 0 949 0 949 491 1440.79 106.253
9/30/92 1000 147 627 1627 0 1021 0 1021 680 1701.24 116.683
9/30/93 1000 158 785 1785 15 1063 16 1079 870 1949.48 128.424
9/30/94 1000 163 948 1948 34 978 46 1024 956 1980.78 141.788
9/30/95 1000 197 1145 2145 11 1001 59 1060 1184 2244.96 156.990
TOTAL $ 60
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 2000.00 14.67 4.75 % 136.333 13.970 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 2000 190 190 2190 10 1950 11 1961 197 2158.54 150.947
TOTAL $ 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/92 2000.00 15.31 4.75 % 130.634 14.580 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/93 2000 177 177 2177 17 1983 18 2001 181 2182.53 143.777
9/30/94 4000 342 519 4519 71 3578 82 3660 492 4152.81 297.266
9/30/95 6000 603 1122 7122 33 5612 120 5732 1133 6865.19 480.083
TOTAL $ 121
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
2/19/88 2000.00 15.00 4.75 % 133.333 14.287 1905
ANNUAL INVESTMENTS OF $ 2000.00 -- SAME DAY AS INITIAL INVESTMENT
DIVIDENDS AND CAPITAL GAINS REINVESTED
RIGHT OF ACCUMULATION DISCOUNT REFLECTED WHERE APPLICABLE IN THIS ILLUSTRATION
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/88 2000 128 128 2128 0 1887 0 1887 127 2014.76 142.386
9/30/89 4000 384 512 4512 0 3719 0 3719 504 4223.48 303.629
9/30/90 6000 674 1186 7186 0 4939 0 4939 1050 5989.00 507.113
9/30/91 8000 948 2134 10134 0 7768 0 7768 2220 9988.21 736.594
9/30/92 10000 1142 3276 13276 0 10322 0 10322 3563 13885.64 952.376
9/30/93 12000 1399 4675 16675 126 12717 133 12850 5144 17994.04 1185.378
9/30/94 14000 1609 6284 20284 312 13443 409 13852 6269 20121.47 1440.334
9/30/95 16000 2126 8410 24410 110 15794 538 16332 8630 24962.91 1745.658
TOTAL $ 548
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
2/19/88 10000.00 15.00 4.75 % 666.667 14.287 9525
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/88 10000 640 640 10640 0 9433 0 9433 640 10073.75 711.926
9/30/89 10000 1188 1828 11828 0 9273 0 9273 1800 11073.15 796.057
9/30/90 10000 1334 3162 13162 0 7873 0 7873 2754 10627.56 899.878
9/30/91 10000 1411 4573 14573 0 9040 0 9040 4683 13723.13 1012.030
9/30/92 10000 1404 5977 15977 0 9720 0 9720 6483 16203.95 1111.382
9/30/93 10000 1503 7480 17480 147 10120 155 10275 8293 18568.22 1223.203
9/30/94 10000 1555 9035 19035 322 9313 438 9751 9115 18866.19 1350.479
9/30/95 10000 1879 10914 20914 103 9533 561 10094 11288 21382.19 1495.258
TOTAL $ 572
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/88 10000.00 14.86 4.75 % 672.948 14.150 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/89 10000 1123 1123 11123 0 9361 0 9361 1105 10466.90 752.473
9/30/90 10000 1261 2384 12384 0 7948 0 7948 2097 10045.72 850.611
9/30/91 10000 1334 3718 13718 0 9125 0 9125 3846 12971.82 956.624
9/30/92 10000 1327 5045 15045 0 9812 0 9812 5504 15316.79 1050.534
9/30/93 10000 1421 6466 16466 139 10215 147 10362 7189 17551.63 1156.234
9/30/94 10000 1470 7936 17936 305 9401 414 9815 8018 17833.29 1276.542
9/30/95 10000 1776 9712 19712 97 9623 530 10153 10058 20211.56 1413.396
TOTAL $ 541
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/89 10000.00 14.60 4.75 % 684.932 13.910 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/90 10000 1147 1147 11147 0 8089 0 8089 1055 9144.02 774.261
9/30/91 10000 1214 2361 12361 0 9288 0 9288 2519 11807.49 870.759
9/30/92 10000 1208 3569 13569 0 9986 0 9986 3955 13941.99 956.241
9/30/93 10000 1293 4862 14862 126 10397 133 10530 5446 15976.24 1052.453
9/30/94 10000 1338 6200 16200 277 9568 377 9945 6287 16232.62 1161.963
9/30/95 10000 1617 7817 17817 88 9795 483 10278 8119 18397.42 1286.533
TOTAL $ 491
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/90 10000.00 12.40 4.75 % 806.452 11.810 9524
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/91 10000 1264 1264 11264 0 10935 0 10935 1363 12298.42 906.963
9/30/92 10000 1258 2522 12522 0 11758 0 11758 2763 14521.69 996.001
9/30/93 10000 1347 3869 13869 131 12242 139 12381 4259 16640.50 1096.212
9/30/94 10000 1394 5263 15263 289 11266 393 11659 5248 16907.51 1210.273
9/30/95 10000 1684 6947 16947 92 11532 503 12035 7127 19162.31 1340.022
TOTAL $ 512
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/91 10000.00 14.24 4.75 % 702.247 13.560 9522
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/92 10000 974 974 10974 0 10239 0 10239 1004 11243.94 771.189
9/30/93 10000 1043 2017 12017 102 10660 108 10768 2116 12884.51 848.782
9/30/94 10000 1079 3096 13096 224 9810 304 10114 2977 13091.29 937.100
9/30/95 10000 1304 4400 14400 71 10042 389 10431 4406 14837.21 1037.567
TOTAL $ 397
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/92 10000.00 15.31 4.75 % 653.168 14.580 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/93 10000 883 883 10883 86 9915 91 10006 906 10912.70 718.887
9/30/94 10000 914 1797 11797 189 9125 258 9383 1704 11087.81 793.687
9/30/95 10000 1105 2902 12902 60 9340 330 9670 2896 12566.50 878.776
TOTAL $ 335
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/93 10000.00 15.94 4.75 % 627.353 15.180 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/94 10000 798 798 10798 165 8764 152 8916 760 9676.03 692.629
9/30/95 10000 964 1762 11762 53 8971 213 9184 1782 10966.41 766.882
TOTAL $ 218
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/94 10000.00 14.67 4.75 % 681.663 13.970 9523
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 10000 949 949 10949 52 9748 57 9805 987 10792.81 754.742
TOTAL $ 52
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN HIGH-INCOME TRUST
SALES NET ASSET INITIAL
INITIAL OFFERING CHARGE SHARES VALUE NET ASSET
DATE INVESTMENT PRICE INCLUDED PURCHASED PER SHARE VALUE
10/01/95 10000.00 15.01 4.75 % 666.223 14.300 9527
DIVIDENDS AND CAPITAL GAINS REINVESTED
============COST OF SHARES============= ================VALUE OF SHARES=====================
CURRENT CUM. TOTAL CURRENT FROM FROM
CUM INCOME INCOME INVM'T CAP GAIN FROM CAP GAINS SUB- DIVS TOTAL SHARES
DATE INV'M'T DIVS DIVS COST DISTRIB'N INV'M'T REINV'D TOTAL REINV'D VALUE HELD
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9/30/95 10000 0 0 10000 0 9527 0 9527 0 9526.99 666.223
TOTAL $ 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-1-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 1,091,436
<INVESTMENTS-AT-VALUE> 1,097,285
<RECEIVABLES> 26,888
<ASSETS-OTHER> 211
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,124,384
<PAYABLE-FOR-SECURITIES> 8,437
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 4,961
<TOTAL-LIABILITIES> 13,398
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,104,479
<SHARES-COMMON-STOCK> 77,694,271
<SHARES-COMMON-PRIOR> 59,774,339
<ACCUMULATED-NII-CURRENT> 7,839
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (7,107)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,775
<NET-ASSETS> 1,110,986
<DIVIDEND-INCOME> 2,167
<INTEREST-INCOME> 95,851
<OTHER-INCOME> 0
<EXPENSES-NET> 8,194
<NET-INVESTMENT-INCOME> 89,824
<REALIZED-GAINS-CURRENT> (7,154)
<APPREC-INCREASE-CURRENT> 36,963
<NET-CHANGE-FROM-OPS> 119,633
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 87,231
<DISTRIBUTIONS-OF-GAINS> 4,494
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 30,002,672
<NUMBER-OF-SHARES-REDEEMED> 16,228,009
<SHARES-REINVESTED> 4,145,269
<NET-CHANGE-IN-ASSETS> 276,073
<ACCUMULATED-NII-PRIOR> 5,246
<ACCUMULATED-GAINS-PRIOR> 4,541
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4,916
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 8,194
<AVERAGE-NET-ASSETS> 923,762
<PER-SHARE-NAV-BEGIN> 13.97
<PER-SHARE-NII> 1.33
<PER-SHARE-GAIN-APPREC> .39
<PER-SHARE-DIVIDEND> 1.32
<PER-SHARE-DISTRIBUTIONS> .07
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.30
<EXPENSE-RATIO> .009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
