AMERICAN HIGH-INCOME TRUST
Annual Report
for the year ended September 30, 1996
[The American Funds Group(R)]
[cover: photos of off-shore oil rig, satellite, and radio]
AMERICAN HIGH-INCOME TRUST(R) seeks a high level of current income and,
secondarily, capital appreciation through a diversified, carefully supervised
portfolio consisting primarily of lower rated, higher risk corporate bonds.
ABOUT OUR COVER:
American High-Income Trust invests in a broad spectrum of companies in
industries ranging from oil drilling to telecommunications to radio
broadcasting.
Results at a Glance
<TABLE>
<CAPTION>
TOTAL RETURNS Lifetime/2/
(for periods ended 9/30/96)/1/ One Year (annualized)
<S> <C> <C>
American High-Income Trust +13.68% +11.49%
Salomon Brothers Broad
Investment-Grade Bond Index + 4.94 +8.64
Salomon Brothers Long-Term
High-Yield Index + 8.42 +11.38
Lipper High Current Yield Bond
Funds Index +12.06 +9.93
</TABLE>
- --
<TABLE>
<CAPTION>
30-DAY RATES (as of 10/31/96)
<S> <C>
Yield based on Securities and
Exchange Commission formula 7.85%
Distribution rate based on offering price 7.88%
Distribution rate based on net asset value 8.28%
</TABLE>
In its lifetime of over 8 1/2 years (2/19/88 through 9/30/96), American
High-Income Trust ranked eighth in total return among the 54 high current yield
funds in existence throughout the period, according to Lipper Analytical
Services. For the five years ended September 30, it ranked 40th of 63 high
current yield funds. For the 12 months ended September 30, the fund ranked 40th
of 143 high current yield funds. Lipper rankings do not reflect the effects of
sales charges.
/1/ Change in value of investment with dividends and capital gain distributions
reinvested
/2/ Since 2/19/88
The SEC yield reflects income the fund expects to earn based on its current
portfolio of securities, while the distribution rate is based solely on the
fund's past dividends. Accordingly, the fund's SEC yield and distribution rate
may differ.
Fund results in this report were computed without a sales charge unless
otherwise indicated. The maximum sales charge is 4.75%; sales charges are lower
for accounts of $25,000 or more. THE FIGURES IN THIS REPORT REFLECT PAST
RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING
IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE
POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED
OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
This was a very good year for American High-Income Trust. The fund produced
solid returns and a steady stream of dividends in the fiscal year ended
September 30, 1996.
The value of your investment grew 13.7% if you reinvested your dividends, as
most shareholders do. Those who took dividends in cash had an income return of
9.2% and saw the value of their holdings rise 3.9%.
For the 12 months, the fund outpaced both benchmarks we use to track results of
your fund. The Salomon Brothers Long-Term High-Yield Index, which measures the
returns of individual high-yield bonds, increased 8.4% with dividends
reinvested. The fund also far surpassed the 4.9% total return generated by
investment-grade bonds, as measured by the Salomon Brothers Broad
Investment-Grade Bond Index. Both indexes are unmanaged.
The fund paid $1.31 a share in dividends during the year, including a special
dividend of eight cents a share in December 1995. Again this year, a special
dividend of about six cents a share will be paid in December, reflecting the
higher income which led us to increase the monthly dividend from 10 cents to
10.25 cents a share in September. Also, a capital gain distribution of about
1.5 cents a share will be paid in December. We expect dividends to fluctuate as
interest rates change and the portfolio is adjusted. The fund's portfolio
counselors and analysts do not invest to maintain a specific dividend level;
rather, they invest in companies which they believe offer the best potential
for long-term rewards.
This was a strong year for the high-yield bond market as a whole. The rally was
broad-based and many of the fund's holdings rose in value. Much of that success
reflected a strong equity market. The stock market's continuing strength
provided companies with a source of capital, giving them resources to grow.
Their stronger financial positions and healthy growth in turn boosted the value
of their bonds. As the market rallied, more and more investors came into the
market and bid up the prices of high-yield securities.
While we are pleased with the fund's results, we hasten to remind our
shareholders that we do not expect the fund to have such favorable results
regularly. Nor do we expect it to outpace the indexes, especially by such a
wide margin, every year. All fixed-income investments can lose value if
interest rates rise; the value of high-yield bonds also depends on the
financial health of the issuing companies, much the way a company's stock price
is linked to its fortunes. Nevertheless, we believe the fund is an attractive
vehicle for those income-oriented investors willing to take equity-type risks.
To find the best opportunities in the high-yield market, your fund's portfolio
counselors and analysts research each company thoroughly, with the
understanding that they are investing in individual companies, not just buying
bonds. In the following pages, we introduce you to three analysts who describe
their efforts to learn more about the firms in which they invest.
Assets in American High-Income Trust rose almost 40% to $1.5 billion during the
year and the number of shareholder accounts increased to more than 64,000. We
welcome all our new shareholders and look forward to reporting to you again in
six months.
Cordially,
/s/Paul G. Haaga, Jr.
Chairman of the Board
/s/Richard T. Schotte
President
November 13, 1996
CHARTING AN INVESTMENT IN AMERICAN HIGH-INCOME TRUST
Here's how a $10,000 investment in the fund grew between February 19, 1988,
when the fund began operations, and September 30, 1996, the end of its latest
fiscal year. As you can see, that $10,000 would have grown to $24,308 with all
distributions reinvested.
[chart]
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
American
High-Income Lipper High
Year ended Salomon Brothers Trust/2/,/3/ Current Yield Salomon Brothers Consumer
September Long-Term High- with dividends Bond Funds Broad Investment- Price Index
30 Yield Index/1/ reinvested Index/1/ Grade Bond Index/1/ (inflation)/4/
1988/5/ $10,506 $10,074 $10,475 $10,222 $10,328
1989 11,010 11,073 10,935 11,367 10,776
1990 9,560 10,628 9,570 12,237 11,440
1991 13,190 13,723 12,290 14,198 11,828
1992 16,298 16,204 15,132 15,999 12,181
1993 19,162 18,568 17,473 17,627 12,509
1994 18,957 18,866 17,899 17,063 12,879
1995 23,330 21,382 20,178 19,461 13,207
1996 25,295 24,308 22,611 20,423 13,603
</TABLE>
/1/ All results calculated with dividends reinvested or interest compounded.
The Salomon Brothers indexes are unmanaged and do not reflect sales charges,
commissions or expenses. The Lipper index is at net asset value.
/2/ These figures, unlike those shown earlier in this report, reflect payment
of the maximum sales charge of 4.75% on the $10,000 investment. Thus, the net
amount invested was $9,525. As outlined in the prospectus, the sales charge is
reduced for larger investments. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares. No
adjustment has been made for income or capital gain taxes.
/3/ Includes reinvested dividends of $12,960 and reinvested capital gain
distributions of $572.
/4/ Computed from data supplied by the U.S. Department of Labor, Bureau of
Labor Statistics.
/5/ For the period February 19 through September 30, 1988.
Past results are not predictive of future results.
[end chart]
<TABLE>
<CAPTION>
Average Annual Compound Returns*
(for periods ended September 30, 1996)
<S> <C>
Lifetime (since 2/19/88) +10.86%
Five Years +11.02%
One Year + 8.31%
</TABLE>
*Assumes reinvestment of all distributions and payment of the 4.75% maximum
sales charge at the beginning of the stated periods.
KNOWLEDGE PRECEDES EVERY INVESTMENT
Shareholders in American High-Income Trust don't have to look far to see their
investments at work. From the newspapers they read to their favorite radio
stations to the stores in which they shop, shareholders can be in touch with
their fund's investments every day.
Finding the best opportunities in such diverse industries is challenging. At
Capital Research and Management Company (CRMC), the investment adviser to
American High-Income Trust, the search for solid opportunities begins with the
portfolio counselors and analysts who study the companies and make the
investment decisions.
In the next few pages, you'll read about the investment philosophy and research
efforts of three of your fund's analysts. You'll discover similar themes: a
devotion to extensive research, a desire to know the management of the
companies in which the fund invests and, perhaps most importantly, an intense
interest in the industries they follow. A guiding principle at CRMC is that
knowledge must precede investment: If we don't know a company, we don't invest
in it.
WEIGHING POTENTIAL RETURN
The portfolio counselors and analysts apply another test to any investment:
What is the potential return? Many high-yield funds focus primarily on yield,
but your fund's portfolio counselors and analysts take a somewhat different
approach. Yield is certainly important, but before investing they also
carefully weigh a bond's risks and potential total return - that is, its
potential for appreciation as well as income.
Investing also requires more than simply buying wisely and putting an
investment on the shelf. It means analyzing and constantly monitoring a
company's growth prospects as well as its ability to repay its debt.
Understanding when the yield is high enough to compensate for the risk
investors are taking is also crucial, as is knowing when to buy more, or when
to sell. It can mean going against the crowd or recognizing a long-term trend
or seeing value in a new industry and taking advantage of it.
CUTTING-EDGE COMPANIES
Many of the companies in which we invest are in new high-growth areas such as
cellular telephones or cable television. Successfully investing in cutting-edge
companies requires more than just understanding the industries, though. It
requires knowing the entrepreneurs who drive the business and judging their
ability to create value.
Of course, the core objectives of managing for both yield and capital
appreciation, and relying on thorough research and knowledge, can't guarantee
that every investment will work out well. A high-income fund by definition
invests in riskier bonds. But American High-Income Trust's investment
principles have helped it build an enviable track record. Since its inception
in February 1988, your fund has earned an average annual return of 11.5%, while
the Lipper High Current Yield Bond Funds Index, which measures the 30 largest
similar funds, has earned 9.9% annually. Over this period the fund ranked 8th
of 54 such funds tracked by Lipper.
The fund's analysts, three of whom you'll meet in the following pages, have
played a crucial role in compiling this record.
[Pull Quote]
"When you look at companies, you realize that everything is very human."
Cathy Kehr, Investment Analyst
[End Pull Quote]
[photos: Cathy Kehr]
When asked to evaluate a possible investment, many analysts pick up the
prospectus and pull out their calculators. Cathy Kehr makes airline
reservations.
For Cathy and the other CRMC analysts and portfolio counselors, analyzing the
numbers is just one phase of the exhaustive research behind every investment.
The numbers won't tell you the most important thing - the character of the
management. In the high-yield market, the difference between success and
failure often is dictated by the ability of a company's managers.
"When you look at companies," says Cathy, who covers retailing and energy, "you
realize that everything is very human. I can't emphasize that enough. When I
meet with a company, I ask very specific questions and I often write down word
for word what they say. A person's choice of words tells you a lot about what
he or she is thinking. What they don't tell you is equally important."
Before she ever meets with a company's management, Cathy has read newspapers
and trade publications, talked with CRMC's equity analysts and interviewed the
firm's competitors, bankers and suppliers so she thoroughly understands the
company.
"I try to become an expert on it," Cathy says. She doesn't have to spend her
time learning a little about a lot of companies. Instead, she learns a lot
about a few firms, she says. "I have the luxury of becoming an expert on things
because I study only a few industries. At CRMC, we're more interested in
insight than information. To get there, you really have to do your homework."
The type of homework varies by industry. Explains Cathy: "I'm trying to figure
out the current and future value of the company assets that will back our bond
investment. With oil and gas companies, I focus on the amount of oil and gas in
the ground and the companies' opportunities to add to their reserves. A small
oil company can have one big successful well and double its size. With retail
companies, I focus on understanding a company's competitive advantage. The life
cycle of retailers is short because competitive advantage in the retail
industry can change quickly."
One trip tells the story:
"I was considering an investment in one retailer, so I got on a plane and went
to see the stores. I didn't tell the managers I was coming. I just dressed in
blue jeans and a tee shirt and went in and started collecting information. I
spoke with customers and clerks. I said that I was new in town and asked if
this was a good place to shop. The stores I saw were no match for the
competition. I also learned that the company had lowered its prices a few
months before. I looked at the shelves, and you could see the old prices right
through the labels. Well, the lower prices wouldn't show up in the gross margin
for a while, but eventually the chain's cash flow was going to go down a lot.
Few Wall Street analysts had even gone to see the stores. They were looking at
the financials and the financials looked fine. If you looked at the stores, you
would come to a different conclusion. My conclusion was that the company didn't
have a distinct competitive advantage and that we shouldn't invest in it."
[Photo caption]
American High-Income Trust analysts are never satisfied with just studying the
numbers. They travel extensively to meet managements and personally inspect the
facilities of companies in which the fund invests.
[End photo caption]
[Pull quote]
"I really like getting out and kicking the tires."
Susan Tolson, Investment Analyst
[End pull quote]
[photos: Susan Tolson]
For most people, rush-hour traffic is a headache. For Susan Tolson, it's a
research opportunity: She turns on the radio. Susan, who follows the
broadcasting, publishing, restaurant and casino industries for American
High-Income Trust, listens to the radio every chance she gets. She listens with
the ears of an analyst.
"I want to hear an energy level," she says. "I want the disc jockeys to be able
to develop a following. Growing the number of listeners is essential to growing
the station's advertising dollars."
In a high-tech world of cellular phones and satellite communication, some
people might dismiss radio as old-fashioned and stodgy. Not Susan. "I love
radio. I've been following this industry since I became an analyst and it's
always been a fun, high-energy business that has never faced a significant
competitive threat.
"In the past it was a highly-fragmented business, but now that the FCC has
eased its rules on station ownership, the industry has been re-energized. It's
in the middle of a huge transformation and is growing rapidly. It's a very
exciting time to be following the radio business."
Susan especially enjoys finding good opportunities when others see only risks.
"It's really exciting to see a company that has been abandoned by other
investors, but because we've done our homework we see the potential," says
Susan.
"Several years ago we invested in a restaurant company which ran into some
trouble. During the tough times its bonds fell to 70 cents on the dollar. We
remained very confident that the company would survive because we knew the
management was exceptionally competent and had financial resources. We even
increased our investment in the bonds. Today the company has successfully
turned itself around and the bonds trade at 100 cents on the dollar."
Planning a picnic when everyone else is buying umbrellas requires courage,
conviction and, above all, knowledge. To gain that knowledge, Susan and the
fund's other analysts and portfolio counselors have to know the industries as
thoroughly as they know the individual companies.
"We want to make sure it's an industry we can understand very well. How
cyclical is it? Is it an industry that can manage a heavy debt load? Because we
focus so intensely on the nuts and bolts of industries and companies, we're
really doing equity research in disguise," Susan says.
Understanding an industry is just the first step, though. Finding the right
companies within an industry takes legwork and homework. "I read a lot of trade
publications, including Broadcasting and Cable, Advertising Age, and Variety. I
even read one newsletter that's dedicated solely to new regulations in the
casino industry.
"I also get a lot of ideas from talking to Capital's equity analysts. I go to a
lot of meetings with our equity analysts and portfolio counselors and sometimes
I'll hear about a company that's highly leveraged and worth looking at."
Once she's found an interesting situation, the company research begins. In the
radio industry, she starts by meeting the managers. "I believe the quality of
the management is critical in broadcasting. Radio is a highly competitive
business and, more often than not, one station's advantage over another can
simply be determined by the caliber of its people."
Visiting the stations provides additional insights. Explains Susan: "The
managers of well-run stations pride themselves on keeping their overhead low.
If the facilities are too nice, management is probably spending money on
unnecessary things.
"I care more about who's running a company than a lot of people do. What are
the top executives' personal motivations? What do they want to do with the
company over the long term? I like to ask them, $In 10 years, what do you think
the company's going to look like?' That tells you a lot about the potential for
the business, whether they're being realistic and honest. I really like getting
out and kicking the tires, finding great companies to invest in and following
their progress for a long time."
[Photo caption]
Small details often can make a big difference in how rewarding an investment
will be. Analysts for the fund learn as much as possible about each company
before investing in it.
[End photo caption]
Please keep in mind that our views on the companies discussed in this report,
and the fund's ownership of their securities, may change at any time depending
on market or economic conditions.
[Pull quote]
"Basically, I'm taking an equity value approach."
Michael Cahill, Investment Analyst
[End pull quote]
[photos: Michael Cahill]
Mike Cahill analyzes the world's high-tech communications companies with one of
the oldest communication tools known to man - conversation. Every workday,
Mike, who follows the cellular, cable television and telecommunications
industries, has an in-depth discussion with the senior management of a company
somewhere in the world.
"These sectors have been growing so fast that it's critical to stay in constant
touch with the management of the companies whose bonds we own or we're thinking
about buying," says Mike. "Meeting a couple hundred management teams makes it
easier to differentiate the strong from the weak."
Spending hundreds of hours talking to the managers gives Mike another
advantage. "I want to feel very comfortable with the management teams. It's
that comfort level that lets you make the type of investment that looks risky
on the surface but pays off in the long run."
It is a time-consuming, exhausting process. But, Mike says, patience and
research can lead to attractive opportunities.
"For example, about a year ago we made an investment in a small wireless
company called Omnipoint. To help me get a better understanding of the
technology it was developing, I took three CRMC technology analysts to
Omnipoint's R&D center in Colorado Springs. After spending a day talking to the
management and testing its technology, we came away with a strong feeling that
the company was on the right track. A few weeks later Omnipoint was having
difficulty raising money because other investors didn't see the management
team's potential. But we'd already done our homework and were ready to invest.
We put together a deal that gave us a good return on our bond investment and a
considerable equity stake in the company. Early this year Omnipoint came public
and the value of our investment went up tremendously. So far Omnipoint has been
one of the most successful investments the fund has ever made."
The best opportunities aren't always in the United States, though, and Mike
doesn't hesitate to look for good companies in developing markets.
"I'd seen how successful the U.S. cellular and cable companies had been in
their early years. Then I started looking for similar situations around the
world because I thought there was going to be an opportunity to capture some of
that success for our shareholders. So I went with CRMC's emerging markets team
to Brazil, Argentina and Mexico. In Brazil, I met with the management of
Multicanal, one of the country's biggest cable companies. I also talked to two
of its largest shareholders, its biggest programming provider and its primary
competitors. The week after I got back Multicanal issued bonds. Many of our
competitors didn't have the expertise to make a decision, but we were in a
perfect position to take advantage of what we thought was an attractive offer.
We took a stake in the company and it's worked out very well."
Not all investments pay off so quickly, of course. "We take a buy-and-hold
philosophy and invest large sums in companies in which we feel very confident.
Basically, I'm taking an equity value approach. I'm asking myself, $What is the
value of this company? What is it going to be in three, five or ten years?' By
looking ahead like that I can invest in strategically attractive companies,
like MFS Communications, which is one of our holdings. I opened the paper one
day in August and read that MFS was being bought out for $14 billion. Of course
it was too late to start investing then, but because we'd started accumulating
a position in 1994 and had millions of dollars invested in MFS bonds, our
shareholders benefited."
[Photo caption]
American High-Income Trust's analysts don't hesitate to look outside the United
States for good opportunities. The fund currently has investments in Europe,
Latin America and Asia.
[End photo caption]
<PAGE>
<TABLE>
American High-Income Trust
Investment Portfolio
September 30, 1996
[CHART]
- -------------------------------------------------- --------- ----------- --------
<S> <C> <C> <C>
U.S. Corporate Bonds 67%
Non-U.S. Corporate Bonds 12%
U.S. Treasuries 6%
Stocks 4%
Non-U.S. Government Bonds 2%
Cash Equivalents 9%
[END CHART]
TEN LARGEST HOLDINGS
MFS Communications 3.36%
California Energy 1.95
Container Corp. of America 1.83
Videotron Holdings 1.76
USAir 1.60
Bell Cablemedia 1.54
Integrated Health Services 1.46
Fort Howard Paper 1.36
CellNet Data Systems 1.35
NEXTEL Communications 1.27
- -------------------------------------------------- --------- ----------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes - 87.17% (000) (000) Assets
Banking & Financial Services - 0.50%
First Nationwide Holdings Inc.:
10.625% 2003 /1/ $4,000 $4,175
12.50% 2003 2,000 2,165 .41%
Ocwen Financial Corp. 11.875% 2003 1,375 1,444 .09
----------- --------
7,784 .50
----------- --------
Beverages - 1.28%
Canandaigua Wine Co., Inc. 8.75% 2003 12,000 11,580 .75
Dr Pepper Bottling Co. of Texas 10.25% 2000 8,000 8,280 .53
----------- --------
19,860 1.28
----------- --------
Broadcasting & Publishing - 4.09%
American Media Operations, Inc. 11.625% 2004 16,400 17,261 1.12
American Radio Systems Corp. 9.00% 2006 8,750 8,487 .55
Chancellor Broadcasting Co.:
9.375% 2004 10,000 9,900
12.50% 2004 1,185 1,332 .73
EZ Communications, Inc. 9.75% 2005 4,750 4,821 .31
Grupo Televisa, S.A.
Series A, 11.375% 2003 /1/ 1,250 1,309
0%/13.25% 2008 /1/ /2/ 3,750 2,325 .23
Infinity Broadcasting Corp. 10.375% 2002 6,000 6,330 .41
Newsquest Capital PLC 11.00% 2006 /1/ 3,250 3,347 .22
Univision Television Group, Inc. 11.75% 2001 4,350 4,611 .30
Young Broadcasting Inc. 10.125% 2005 3,500 3,482 .22
----------- --------
63,205 4.09
----------- --------
Cable & Telephone in the United
Kingdom - 6.42%
Bell Cablemedia PLC 0%/11.95% 2004 /2/ 31,000 23,870 1.54
Comcast UK Cable Partners Ltd. 0%/11.20% 2007 /2/ 25,750 16,319 1.06
International CableTel Inc.:
0%/10.875% 2003 /2/ 21,175 15,987
0%/12.75% 2005 /2/ 1,000 675 1.08
Ionica, PLC Units 13.50% 2006 /1/ 6,000 6,015 .39
TeleWest PLC:
9.625% 2006 8,000 7,920
0%/11.00% 2007 /2/ 2,000 1,270 .59
Videotron Holdings PLC:
0%/11.125% 2004 /2/ 31,000 23,250
0%/11.00% 2005 /2/ 6,000 3,975 1.76
----------- --------
99,281 6.42
----------- --------
Cellular, Paging & Wireless
Communications - 14.45%
CAI Wireless Systems, Inc. 12.25% 2002 5,200 5,421 .35
CellNet Data Systems, Inc. 0%/13.00% 2005 /1/ /2/ /3/ 32,000 20,960 1.35
Cellular, Inc. 0%/11.75% 2003 /2/ 8,500 7,183 .46
Cellular Communications International, Inc.
Units, 0.00% 2000 17,250 11,299 .73
Centennial Cellular Corp.:
8.875% 2001 17,000 15,980
10.125% 2005 2,500 2,431 1.19
Comunicacion Celular S.A. 0%/13.125% 2003 /2/ 15,000 9,150 .59
Geotek Communications, Inc. 0%/15.00% 2005 /2/ 2,000 1,295 .08
Heartland Wireless Communications, Inc.
13.00% 2003 3,800 4,076 .26
Horizon Cellular Telephone Co., LP
0%/11.375% 2000 /2/ 17,065 16,428 1.06
InterCel, Inc. 0%/12.50% 2006 /2/ 12,500 7,156 .46
Mobile Telecomm 13.50% 2002 5,750 5,980 .39
MobileMedia Communications, Inc.:
0%/10.50% 2003 /2/ 21,150 13,959
9.375% 2007 5,000 3,950 1.16
NEXTEL Communications, Inc.:
0%/11.50% 2003 /2/ 7,250 5,365
0%/9.75% 2004 /2/ 3,000 1,935
0%/10.125% 2004 (formerly CenCall) /2/ 18,750 12,375 1.27
Omnipoint Corp.:
6.00%/12.00% 2000 /2/ /3/ 12,500 12,250
11.625% 2006 6,000 6,240 1.20
Paging Network, Inc. 11.75% 2002 14,750 15,782 1.02
PanAmSat, LP:
9.75% 2000 6,500 6,857
0%/11.375% 2003 /2/ 7,000 6,370 .86
PriCellular Wireless Corp.:
0%/14.00% 2001 /2/ 4,000 3,780
0%/12.25% 2003 /2/ 16,210 13,049 1.09
Rogers Cantel Mobile Communications Inc.:
11.125% 2002 2,500 2,625
9.375% 2008 3,000 2,963 .36
Sprint Spectrum LP, Sprint Spectrum Finance Corp.:
0%/12.50% 2006 /2/ 1,000 585
11.00% 2006 3,000 3,090 .24
Vanguard Cellular Systems, Inc. 9.375% 2006 2,000 1,980 .13
Western Wireless Corp. 10.50% 2006 /1/ 3,000 3,045 .20
----------- --------
223,559 14.45
----------- --------
Construction & Housing - 1.45%
Del Webb Corp. 9.75% 2003 2,250 2,250 .15
M.D.C. Holdings, Inc. 11.125% 2003 5,000 4,975 .32
The Ryland Group, Inc. 10.50% 2006 2,500 2,494 .16
Toll Corp. 9.50% 2003 4,000 4,090 .26
Triangle Pacific Corp. 10.50% 2003 8,250 8,580 .56
----------- --------
22,389 1.45
----------- --------
Diversified Media, Cable Television &
Telecommunications - 8.15%
Brooks Fiber Properties, Inc. 0%/10.875% 2006 /2/ 11,750 7,226 .47
Cablevision Systems Corp. 9.875% 2013 4,000 3,850 .25
Comcast Corp. 10.25% 2001 3,200 3,328 .22
Comtel Brasileira Ltda. 10.75% 2004 /1/ 4,000 4,095 .26
Insight Communications Co., LP 11.25% 2000 3,000 3,075 .20
IntelCom Group Inc.:
0%/13.50% 2005 /2/ 12,000 8,055
0%/12.50% 2006 /2/ 6,000 3,780 .76
Jones Intercable, Inc. 9.625% 2002 4,500 4,680 .30
MFS Communications Co., Inc.:
0%/9.375% 2004 /2/ 59,350 49,854
0%/8.875% 2006 /2/ 3,000 2,100 3.36
Multicanal Participacoes SA 12.625% 2004 /1/ 10,000 10,738 .69
Muzak, LP Muzak Capital Corp. 10.00% 2003 2,750 2,771 .18
Storer Communications, Inc. 10.00% 2003 3,034 3,072 .20
Telecom Argentina STET - France Telecom SA
12.00% 2002 3,000 3,225 .21
Teleport Communications Group Inc. 9.875% 2006 5,000 5,125 .33
Viacom International Inc.:
9.125% 1999 4,859 4,968
10.25% 2001 4,000 4,270
7.75% 2005 2,000 1,932 .72
----------- --------
126,144 8.15
----------- --------
Electric & Gas Utilities - 0.19%
Columbia Gas System, Inc., Series A, 6.39% 2000 3,000 2,946 .19
----------- --------
Energy & Related Companies - 5.98%
Benton Oil and Gas Co. 11.625% 2003 7,000 7,578 .49
Chesapeake Energy Corp.:
10.50% 2002 4,700 4,959
9.125% 2006 6,260 6,182 .72
Cliffs Drilling Co. 10.25% 2003 5,500 5,720 .37
Dual Drilling Co. 9.875% 2004 9,450 10,017 .65
Falcon Drilling Co., Inc.:
9.75% 2001 2,500 2,531
8.875% 2003 5,000 4,900 .48
Flores & Rucks, Inc. 13.50% 2004 10,150 11,926 .77
Global Marine, Inc. 12.75% 1999 5,900 6,372 .41
Kelley Oil & Gas Corp. 13.50% 1999 6,570 7,424 .48
Mariner Energy, Inc. 10.50% 2006 /1/ 6,750 6,986 .45
Mesa Operating Co.:
0%/11.625% 2006 /2/ 2,000 1,280
10.625% 2006 1,000 1,050 .15
Triton Energy Corp. 0%/9.75% 2000 /2/ 8,000 8,080 .53
Tuboscope Vetco International Inc. 10.75% 2003 7,000 7,438 .48
----------- --------
92,443 5.98
----------- --------
Food Retailing - 3.44%
Bruno's, Inc. 10.50% 2005 12,500 12,813 .83
Carr-Gottstein Foods Co. 12.00% 2005 4,000 4,230 .27
The Penn Traffic Co. 9.625% 2005 2,000 1,350 .09
Rykoff-Sexton, Inc. 8.875% 2003 10,000 9,125 .59
Safeway Inc. 10.00% 2002 1,700 1,910 .12
Star Markets Co., Inc. 13.00% 2004 11,000 11,577 .75
Stater Brothers Holdings Inc. 11.00% 2001 11,500 12,190 .79
----------- --------
53,195 3.44
----------- --------
Forest Products & Paper - 5.66%
Container Corp. of America:
10.75% 2002 6,000 6,300
9.75% 2003 18,000 18,270
11.25% 2004 3,500 3,718 1.83
Fort Howard Paper Co.:
9.25% 2001 13,500 13,770
8.25% 2002 2,000 1,960
11.00% 2002 2,058 2,140
9.00% 2006 3,250 3,201 1.36
Four M Corp., Series A, 12.00% 2006 13,250 14,045 .91
Grupo Industrial Durango, SA de CV 12.625% 2003 1,000 1,068 .07
MAXXAM Group Inc. 11.25% 2003 3,000 3,075 .20
Pacific Lumber Co. 10.50% 2003 7,000 6,895 .44
PT Indah Kiat Pulp & Paper Corp., 11.875% 2002 1,000 1,077 .07
PT Pabrik Kertas Tjiwi Kimia 13.25% 2001 8,500 9,478 .61
Repap Wisconsin, Inc.:
First Priority 9.25% 2002 1,140 1,154
Second Priority 9.875% 2006 1,500 1,470 .17
----------- --------
87,621 5.66
----------- --------
Health & Personal Care - 4.57%
Integrated Health Services, Inc.:
9.625% 2002 4,485 4,597
10.75% 2004 6,000 6,323
10.25% 2006 /1/ 11,250 11,616 1.46
Mariner Health Group, Inc. 9.50% 2006 8,000 8,100 .52
Merit Behavioral Care Corp. 11.50% 2005 4,750 5,011 .32
Paracelsus Healthcare Corp. 10.00% 2006 8,250 8,539 .55
Regency Health Services, Inc.:
9.875% 2002 13,050 13,115
12.25% 2003 /1/ 3,000 3,188 1.06
Universal Health Services, Inc. 8.75% 2005 10,200 10,251 .66
----------- --------
70,740 4.57
----------- --------
Independent Power Producers - 2.34%
California Energy Co., Inc.
0%/10.25% 2004 /2/ 29,750 30,196 1.95
CE Casecnan Water and Energy Co., Inc.:
Series A, 11.45% 2005 2,000 2,145
Series B, 11.95% 2010 3,500 3,780 .39
----------- --------
36,121 2.34
----------- --------
Leisure, Tourism & Restaurants - 4.53%
AMF Group Inc.:
10.875% 2006 6,000 6,150
0%/12.25% 2006 /2/ 10,500 6,261 .80
California Hotel Finance Corp. 11.00% 2002 7,000 7,350 .47
Casino America, Inc. 12.50% 2003 3,500 3,662 .24
Foodmaker, Inc.:
9.25% 1999 8,950 8,950
9.75% 2002 6,000 5,850 .96
Four Seasons Hotels Inc. 9.125% 2000 /1/ 7,000 7,070 .46
Plitt Theatres, Inc. 10.875% 2004 1,025 1,038 .07
Rio Hotel & Casino, Inc. 10.625% 2005 5,400 5,670 .36
Station Casinos, Inc. 9.625% 2003 8,750 8,466 .55
Trump Atlantic City Associates, Trump Atlantic
City Funding, Inc. 11.25% 2006 5,000 4,925 .32
Wyndham Hotel Corp. 10.50% 2006 4,500 4,618 .30
----------- --------
70,010 4.53
----------- --------
Manufacturing & Materials - 7.64%
Acme Metals Inc.:
12.50% 2002 7,000 7,420
0%/13.50% 2004 /2/ 5,750 5,577 .84
Advanced Micro Devices, Inc. 11.00% 2003 9,000 9,292 .60
AGCO Corp. 8.50% 2006 6,000 6,000 .39
AK Steel Corp. 10.75% 2004 1,250 1,363 .09
Coltec Industries Inc.:
9.75% 1999 2,500 2,588
9.75% 2000 16,000 16,560 1.24
Kaiser Aluminum & Chemical Corp.:
9.875% 2002 4,750 4,833
12.75% 2003 7,500 8,138 .84
Knoll Group, Inc. 10.875% 2006 5,000 5,225 .34
Lifestyle Furnishings International Ltd.
10.875% 2006 5,500 5,693 .37
MagneTek, Inc. 10.75% 1998 5,700 5,786 .37
Oregon Steel Mills 11.00% 2003 4,750 4,993 .32
Owens-Illinois, Inc. 11.00% 2003 4,750 5,195 .34
Printpack Inc. 10.625% 2006 2,500 2,562 .16
Sterling Chemicals, Inc.:
11.75% 2006 2,500 2,612
Unit, 0%/13.50% 2008 /2/ 3,000 1,845 .29
Texas Petrochemicals Corp. 11.125% 2006 /1/ 7,500 7,912 .51
UCAR Global Enterprises Inc. 12.00% 2005 6,430 7,338 .47
Westinghouse Air Brake Co. 9.375% 2005 7,250 7,196 .47
----------- --------
118,128 7.64
----------- --------
Merchandising - 1.88%
Ann Taylor 8.75% 2000 3,500 3,395 .22
Barnes & Noble, Inc. 11.875% 2003 10,450 11,390 .73
Loehmann's 11.875% 2003 2,500 2,650 .17
Thrifty PayLess, Inc. 12.25% 2004 10,549 11,762 .76
----------- --------
29,197 1.88
----------- --------
Miscellaneous Services - 0.39%
Neodata Services, Inc. 12.00% 2003 6,000 6,060 .39
----------- --------
Protection Services - 0.68%
ADT Operations 9.25% 2003 2,000 2,070 .13
Protection One Alarm Monitoring, Inc.
0%/13.625% 2005 /2/ 9,500 8,455 .55
----------- --------
10,525 .68
----------- --------
Real Estate - 0.28%
B.F. Saul Real Estate Investment Trust ----------- --------
11.625% 2002 4,000 4,260 .28
----------- --------
Textiles & Apparel - 0.17%
Tultex Corp. 10.625% 2005 1,000 1,050 .07
WestPoint Stevens Inc. 8.75% 2001 1,500 1,519 .10
----------- --------
2,569 .17
----------- --------
Transportation - 3.51%
Airplanes Pass Through Trust, pass-through
certificates, Class D, 10.875% 2019 /4/ 13,375 14,412 .93
Teekay Shipping Corp. 8.32% 2008 13,500 12,859 .83
TNT Transport (Europe) PLC/TNT (USA)
Inc. 11.50% 2004 500 521 .03
USAir, Inc.:
9.625% 2001 8,000 7,600
9.625% 2003 1,490 1,460
10.00% 2003 8,000 7,600
Pass-through trust, Series 1993-A3,
10.375% 2013 /4/ 8,150 8,109 1.60
ValuJet, Inc. 10.25% 2001 /1/ 2,000 1,810 .12
----------- --------
54,371 3.51
----------- --------
Private Issue Collateralized Mortgage/Asset-Backed
Obligations 4 - 0.75%
Fifth Avenue Capital Trust, Class C, 12.36% 2002 /1/ 10,000 10,975 .71
Resolution Trust Corp.:
Series 1993-C1, Class E, 9.50% 2024 274 272
Series 1993-C2, Class E, 8.50% 2025 363 358 .04
----------- --------
11,605 .75
----------- --------
Non-U.S. Governments and Governmental
Authorities - 2.38%
Argentina (Republic of):
8.375% 2003 1,500 1,348
6.312% 2005 /5/ 3,960 3,317
Bocon PIK 4.717% 2007 /5/ /6/ ARP 6,000 2,858 .48
Brazil (Federal Republic of):
Eligible Interest Bond 6.50% 2006 /5/ $1,000 872
Debt Conversion Bond 6.563% 2012 /5/ 500 378
Capitalization Bond PIK 8.00% 2014 /6/ 271 191 .09
Ecuador (Republic of) Past Due Interest Bond
6.50% 2015 /5/ 8,459 4,335 .28
New Zealand Index Linked
4.59% 2016 /7/ NZ$ 3,000 1,827 .12
Panama (Republic of) Interest Reduction Bond
3.50% 2014 /1/ /5/ $11,500 7,245 .47
Peru (Republic of) Front Loaded Interest
Reduction Bond 0.00% 2049 /1/ 500 261 .02
Poland (Republic of):
Past Due Interest Bonds:
Bearer 3.75% 2014 /5/ 1,375 1,090
Registered 3.75% 2014 /5/ 375 297
Treasury Bill 1997 PLZ 8,000 2,472 .25
Russia Interest Arrears Notes:
Euro 2015 /5/ $2,000 1,287
SF 2015 /5/ 4,250 2,736 .26
United Mexican States:
Collateralized Eurobond:
Series A, 6.398% 2019 500 422
Series B, 6.25% 2019 3,000 2,081 .34
Government 9.75% 2001 1,000 1,020
Government 11.50% 2026 1,784 1,773
Venezuela (Republic of):
Front Loaded Interest Reduction Bond 6.375% 2007 500 422
6.625% 2007 750 622 .07
----------- --------
36,854 2.38
----------- --------
U.S. Treasury Obligations - 6.44%
6.00% 1998 3,000 2,997
7.25% 1998 5,000 5,081
6.875% 1999 39,000 39,579
6.625% 2001 7,000 7,042
7.50% 2001 16,000 16,692
8.00% 2001 4,000 4,244
5.75% 2003 13,000 12,401
7.875% 2004 1,000 1,075
11.625% 2004 8,000 10,445
----------- --------
99,556 6.44
----------- --------
Total Bonds & Notes (cost: $1,308,727,000) 1,348,423 87.17
----------- --------
Number of
Stocks (Common & Preferred) - 3.40% Shares
AnnTaylor, Inc. /8/ 40,000 675 .04
California Energy Co., Inc. /8/ 65,000 2,072 .13
CellNet Data Systems, Inc.,
warrants, expire 6/15/05 /3/ /8/ 128,000 2,816 .18
Columbia Gas System, Inc. 14,700 823 .05
Comcast Corp., Class A 10,000 154
Comcast Corp., Class A, special stock 20,000 308 .03
Comunicacion Celular SA
warrants, expire 11/15/03 /8/ 15,000 90 .01
El Paso Electric Co., Series A, preferred
11.40% 2008 /6/ 6,000 690 .05
Earthwatch Inc., preferred 12.00% /3/ 675,000 7,092 .46
Falcon Drilling Co., Inc. /8/ 35,000 910 .06
Foodmaker, Inc. /8/ 30,000 300 .02
Heartland Wireless Communications, Inc.,
warrants, expire 4/26/00 /8/ 22,800 137 .01
Host Marriott Corp. /8/ 13,896 201 .01
IntelCom Group Inc., warrants, expire 8/8/05 /2/ /8/ 42,900 691 .05
Kelley Oil & Gas Corp. convertible preferred 70,000 1,733 .11
Kmart Corp. 7.75% convertible preferred 60,000 2,933 .19
MFS Communications Co., Inc. /8/ 10,000 436 .03
Marriott International, Inc. 13,896 766 .05
MESA Inc. /8/ 275,000 1,134
MESA Inc. 8.00% convertible preferred, Series A 276,945 1,454 .17
Nacional Financiera SNC PRIDES 11.25% 1998 20,000 640 .04
NEXTEL Communications, Inc. warrants /3/ /8/ 21,250 0 .00
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts) /1/ /3/ 1,174,607 13,978 .90
Omnipoint Corp./3/ /8/ 278,001 6,477 .42
Protection One Alarm Monitoring, Inc.,
warrants, expire 6/30/05 /8/ 30,400 274 .02
Station Casinos, Inc. 7.00% convertible preferred 30,000 1,582 .10
Thrifty PayLess Inc., Class B /8/ 11,400 212 .01
Time Warner Inc. exchangeable preferred, Series K 2,811 2,937 .19
Viacom International Inc., Class B /8/ 30,000 1,065 .07
----------- --------
Total Stocks (cost: $39,470,000) 52,580 3.40
----------- --------
Principal
Amount
(000)
Convertible Debentures - 0.54%
Banco Nacional de Mexico, SA 11.00% 2003 $500 512 .03
Euro Disney S.C.A. 6.75% 2001 7,700 1,505 .10
Integrated Health Services, Inc. 6.00% 2003 6,500 6,403 .41
----------- --------
Total Convertible Debentures (cost:
$7,993,000) 8,420 .54
----------- --------
Short-Term Securities
Corporate Short-Term Notes - 9.51%
American Express Credit Corp.:
5.37% due 10/11/96 10,000 9,984
5.41% due 10/25/96 4,290 4,274 .92
Ciesco LP:
5.32% due 10/9/96 10,000 9,987
5.46% due 12/2/96 9,300 9,212 1.24
Hewlett-Packard Co.:
5.45% due 10/1/96 6,050 6,049
5.34% due 12/20/96 10,000 9,880 1.03
International Lease Finance Corp.:
5.39% due 10/23/96 15,000 14,948
5.42% due 12/11/96 4,500 4,452 1.26
J.C. Penney Funding Corp.:
5.29% due 10/2/96 11,200 11,197
5.39% due 11/20/96 12,300 12,206 1.51
Raytheon Co. 5.34% due 10/18/96 12,700 12,666 .82
SAFECO Credit Co. Inc. 5.47% due 11/6/96 10,000 9,944 .64
UBS Finance (Delaware) Inc. 5.85% due 10/1/96 32,300 32,295 2.09
----------- --------
Total Short-Term Securities (cost:
$147,096,000) 147,094 9.51
----------- --------
Total Investment Securities (cost:
$1,503,286,000) 1,556,517 100.62
Excess of payables over cash and
receivables 9,621 .62
----------- --------
Net Assets $1,546,896 100.00%
=========== ========
/1/ Purchased in a private placement transaction;
resale to the public may require registration.
/2/ Step bond; coupon rate will increase at a later date.
/3/ Valued under procedures established by the Board of Trustees.
/4/ Pass-through security backed by a pool of mortgages
or other loans on which principal payments are
periodically made. Therefore, the effective maturity
is shorter than the stated maturity.
/5/ Coupon rate may change periodically.
/6/ Payment in kind. The issuer has the option of
paying additional securities in lieu of cash.
/7/ Index-linked bond, which is a floating rate
bond whose principal amount
moves with a government retail price index.
/8/ Non-income-producing security.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
American High-Income Trust
Financial Statements
Statement of Assets and Liabilities
at September 30, 1996 (dollars in thousands)
<S> <C> <C>
Assets:
Investment securities
(cost: $1,503,286) $ 1,556,517
Cash 80
Receivables for--
Sales of investments $ 5,519
Sales of fund's shares 7,557
Accrued dividends and interest 28,538 41,614
-------- ---------
1,598,211
Liabilities:
Payables for--
Purchases of investments 43,105
Repurchases of fund's shares 2,210
Forward currency contracts 4
Dividends on fund's shares 5,137
Management services 597
Accrued expenses 262 51,315
-------- ---------
Net Assets at September 30, 1996 --
Equivalent to $14.86 per share on
104,126,659 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $ 1,546,896
========
Statement of Operations
for the year ended September 30, 1996
(dollars in thousands)
Investment Income:
Income:
Dividends $ 2,300
Interest 127,327 $ 129,627
--------
Expenses:
Management services fee 6,481
Distribution expenses 3,079
Transfer agent fee 976
Reports to shareholders 164
Registration statement and prospectus 289
Postage, stationery and supplies 343
Trustees' fees 21
Auditing and legal fees 45
Custodian fee 64
Taxes other than federal income tax 20
Other expenses 18 11,500
-------- ---------
Net investment income 118,127
---------
Realized Gain and Increase in Unrealized
Appreciation on Investments:
Net realized gain 4,164
Net unrealized appreciation
on investments:
Beginning of year 5,775
End of year 53,227
---------
Net increase in unrealized
appreciation on investments 47,452
---------
Net realized gain and unrealized
appreciation on investments 51,616
---------
Net Increase in Net Assets
Resulting from Operations $ 169,743
========
Statement of Changes in Net Assets
(dollars in thousands)
Year ended September 30
1996 1995
Operations: -------- ---------
Net investment income $ 118,127 $ 89,824
Net realized gain (loss) on investments 4,164 (7,154)
Net increase in unrealized appreciation
on investments 47,452 36,963
-------- ---------
Net increase in net assets
resulting from operations 169,743 119,633
-------- ---------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (118,864) (87,231)
Distributions from net realized
gain on investments - (4,494)
-------- ---------
Total dividends and distributions (118,864) (91,725)
-------- ---------
Capital Share Transactions:
Proceeds from shares sold:
43,729,904 and 30,002,672
shares, respectively 636,739 414,416
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on
investments: 5,021,604 and
4,145,269 shares, respectively 73,124 56,782
Cost of shares repurchased:
22,319,120 and 16,228,009
shares, respectively (324,832) (223,033)
-------- ---------
Net increase in net assets
resulting from capital share
transactions 385,031 248,165
-------- ---------
Total Increase in Net Assets 435,910 276,073
Net Assets:
Beginning of year 1,110,986 834,913
-------- ---------
End of year (including undistributed
net investment income: $7,102
and $7,839, respectively) $ 1,546,896 $ 1,110,986
======== ========
See Notes to Financial Statements
</TABLE>
<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 fund seeks a high level of current income and, secondarily, capital
appreciation through a diversified, carefully supervised portfolio consisting
primarily of lower rated, higher risk corporate bonds. The following paragraphs
summarize the significant accounting policies consistently followed by the fund
in the preparation of its financial statements:
Stocks and convertible debentures traded on a national securities exchange (or
reported on the NASDAQ national market) and securities traded in the
over-the-counter market are stated at the last reported sales price on the day
of valuation; other securities, and securities for which no sale was reported
on that date, are stated at the last quoted 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. Securities denominated in non-U.S.
currencies are generally valued on the basis of bid quotations. 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 provided by a
pricing service in accordance with procedures established by the fund's
officers. Securities for which market quotations are not readily available are
valued at fair value by the Board of Trustees or a committee thereof.
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.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. In the event
the fund purchases securities on a delayed delivery or "when-issued" basis, it
will segregate with its custodian liquid assets in an amount sufficient to meet
its payment obligations in these transactions. Realized gains and losses from
securities transactions are reported on an identified cost basis. Dividend and
interest income is reported on the accrual basis. Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
Dividends to shareholders are declared daily after determination of the fund's
net investment income and paid to shareholders monthly.
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 effects of changes in foreign currency exchange
rates on investment securities are included with the net realized and
unrealized gain or loss on investment securities.
Pursuant to the custodian agreement, the fund receives credit against its
custodian fee for imputed interest on certain balances with the custodian bank.
The custodian fee of $64,000 includes $62,000 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, 1996, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $53,231,000, of which $65,293,000 related to appreciated securities
and $12,062,000 related to depreciated securities. During the year ended
September 30, 1996, the fund realized, on a tax basis, a net capital gain of
$4,435,000 on securities transactions. Net gains related to non US currency
transactions of $271,000 are reported as ordinary income for federal tax
purposes. The fund has available at September 30, 1996 a net capital loss
carryforward totaling $2,672,000 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 the
capital gains that are so offset. It is the intention of the fund not to make
distributions from capital gains while there is a capital loss carryforward.
The cost of portfolio securities, excluding forward currency contracts, for
book and federal income tax purposes was $1,503,286,000 at September 30, 1996.
3. The fee of $6,481,000 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, 1996,
distribution expenses under the Plan were $3,079,000. As of September 30, 1996,
accrued and unpaid distribution expenses were $221,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $976,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $1,943,000 (after allowances to
dealers) as its portion of the sales charges paid by purchasers of the fund's
shares. Such sales charges are not an expense of the fund and, hence, are not
reflected in the accompanying statement of operations.
Trustees who are unaffiliated with CRMC may elect to defer part or all of the
fees earned for services as members of the Board. Amounts deferred are not
funded and are general unsecured liabilities of the fund. As of September 30,
1996, aggregate amounts deferred and earnings thereon were $30,000.
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, 1996, accumulated net realized loss on investments was
$2,943,000 and paid-in capital was $1,489,510,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $771,970,000 and $483,596,000, respectively, during
the year ended September 30, 1996.
The fund purchases and sells forward currency contracts in anticipation of, or
to protect itself against, fluctuations in exchange rates. The contracts are
recorded in the statement of assets and liabilities at their net unrealized
value; the fund's maximum potential liability in these contracts is equal to
the full contract amounts. 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 foreign exchange rates and securities values
underlying these instruments. At September 30, 1996, the fund had outstanding
forward currency contracts to purchase and sell non-U.S. currencies as follows:
<TABLE>
Contract Amount U.S. Valuation at 9/30/96
------------------------------------------------------
Unrealized
Non-U.S. Currency Sales Contract Non-U.S. U.S. Amount Depreciation
- --------------------------------------------------------------------------------------------
<C> <S> <S> <S> <S>
French Francs expiring 11/24/96 FF5,100,000 $986,000 $990,000 $(4,000)
</TABLE>
<PAGE>
<TABLE>
Per-Share
Data and Ratios Year ended September 30
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning
of Year $14.30 $13.97 $15.18 $14.58 $13.56
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income 1.29 1.33 1.25 1.28 1.35
Net realized and
unrealized gain
(loss) on investments .59 .39 (.99) .74 .99
-------- -------- -------- -------- --------
Total income from
investment operations 1.88 1.72 .26 2.02 2.34
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income (1.32) (1.32) (1.21) (1.29) (1.32)
Distributions from net
realized gains - (.07) (.26) (.13) -
-------- -------- -------- -------- --------
Total distributions (1.32) (1.39) (1.47) (1.42) (1.32)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $14.86 $14.30 $13.97 $15.18 $14.58
======== ======== ======== ======== ========
Total Return* 13.68% 13.34% 1.60% 14.59% 18.08%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $1,547 $1,111 $835 $707 $438
Ratio of expenses to average
net assets .87% .89% .86% .87% .94%
Ratio of net income to
average net assets 8.90% 9.72% 8.63% 8.60% 9.58%
Portfolio turnover rate 39.74% 29.56% 42.03% 44.37% 58.04%
*Calculated without deducting a sales charge.
The maximum sales charge is 4.75% of the
fund's offering price.
</TABLE>
<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 (the "Fund"), including the schedule of portfolio
investments, as of September 30, 1996, 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
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 as of
September 30, 1996 by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other 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, 1996, 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 29, 1996
1996 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.
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 that was derived from direct U.S. Treasury
obligations. For purposes of computing this exclusion, 4% 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 1997 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR
1996 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
<PAGE>
BOARD OF TRUSTEES
H. FREDERICK CHRISTIE, Rolling Hills Estates, California
Private investor; former President and
Chief Executive Officer, The Mission Group;
former President, Southern California Edison Company
DIANE C. CREEL, Long Beach, California
Chief Executive Officer and President,
The Earth Technology Corporation
(environmental engineering)
MARTIN FENTON, JR., San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER, Marina del Rey, California
President, Fuller & Company, Inc.
(financial management consulting)
ABNER D. GOLDSTINE, Los Angeles, California
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR., Los Angeles, California
Chairman of the Board of the fund
Senior Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III, San Marino, California
Private investor
RICHARD G. NEWMAN, Los Angeles, California
Chairman of the Board, President and Chief Executive
Officer, AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI, Long Beach, California
Chairman of the Board,
BW/IP International, Inc. (industrial manufacturing)
OTHER OFFICERS
RICHARD T. SCHOTTE, Los Angeles, California
President of the fund
Senior Vice President,
Capital Research and Management Company
DAVID C. BARCLAY, Los Angeles, California
Vice President of the fund
Executive Vice President,
Capital Research Company
MICHAEL J. DOWNER, Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
MARY C. HALL, Los Angeles, California
Vice President and Treasurer of the fund
Senior Vice President - Fund Business
Management Group,
Capital Research and Management Company
JULIE F. WILLIAMS, Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK, Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President - Fund Business
Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR., Los Angeles, California
Assistant Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Morrison & Foerster LLP
345 California Street
San Francisco, California 94104-2675
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER OR CALL AMERICAN FUNDS SERVICE COMPANY,
TOLL-FREE, AT 800/421-0180.
This report is for the information of shareholders of American High-Income
Trust, but it may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the fund. If used as sales
material after December 31, 1996, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Litho in USA MNC/FS/2743
Lit. No. AHIT-011-1196
[The American Funds Group(R)]
Printed on recycled paper
