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. 13
and
Registration Statement
Under
The Investment Company Act of 1940
Amendment No. 16
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:
ROBERT E. CARLSON, ESQ.
PAUL, HASTINGS, JANOFSKY & WALKER LLP
555 S. Flower Street
Los Angeles, CA 90071-2371
(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 19, 1996, it filed its 24f-2 notice for fiscal 1996.
Approximate date of proposed public offering:
It is proposed that this filing become effective on February 1, 1997, pursuant
to paragraph (a) of rule 485.
<PAGE>
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 Expenses
3. Condensed Financial Information Financial Highlights; Investment Results
4. General Description of Registrant Investment Policies and Risks
5. Management of the Fund Financial Highlights
6. Capital Stock and Other Securities Investment Policies and Risks; Securities
and Investment Techniques; Fund Organization
and Management; Dividends, Distributions and Taxes
7. Purchase of Securities Being Offered Purchasing Shares; Other Important Things to Remember
8. Redemption or Repurchase Selling 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
13. Investment Objectives and Policies Description of Securities and Investment Techniques;
Investment Restrictions
14. Management of the Registrant Fund Officers and Trustees;
15. Control Persons and Principal Holders Fund Officers and Trustees
16. Investment Advisory and Other Services Fund Officers and Trustees; Management; General
Information
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; Redeeming Shares; Shareholder
Securities Being Offered Account Services and Privileges
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>
[LOGO OF THE AMERICAN FUNDS GROUP(R)]
- -------------------------------------------------------------------------------
American High-Income
Trust(R)
Prospectus
FEBRUARY 1, 1997
<PAGE>
AMERICAN HIGH-INCOME TRUST
333 South Hope Street
Los Angeles, CA 90071
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C> <C> <C>
Expenses 3 Investment Results 10
....................................... .......................................
Financial Highlights 4 Dividends, Distributions and Taxes 11
....................................... .......................................
Investment Policies and Risks 5 Fund Organization and Management 12
....................................... .......................................
Securities and Investment Techniques 5 Shareholder Services 15
....................................... .......................................
Multiple Portfolio Counselor System 9
</TABLE>
- --------------------------------------------------------------------------------
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.
This prospectus presents information you should know before investing in the
fund. You should keep it on file for future reference.
YOU MAY LOSE MONEY BY INVESTING IN THE FUND. THE LIKELIHOOD OF LOSS IS GREATER
IF YOU INVEST FOR A SHORTER PERIOD OF TIME. YOUR INVESTMENT IN THE FUND IS NOT
A DEPOSIT OR OBLIGATION OF, OR INSURED OR GUARANTEED BY, ANY ENTITY OR PERSON
INCLUDING THE U.S. GOVERNMENT AND THE FEDERAL DEPOSIT INSURANCE CORPORATION.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
21-010-0297
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
EXPENSES
The effect of the expenses described below is reflected in the fund's share
price or return.
You may pay certain shareholder transaction expenses when you buy or sell
shares of the fund. Fund operating expenses are paid out of the fund's earned
income.
SHAREHOLDER TRANSACTION EXPENSES
Maximum sales charge on purchases
(as a percentage of offering price) 4.75%
................................................................................
SALES CHARGES ARE REDUCED OR ELIMINATED FOR LARGER PURCHASES. There is 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 made within 12 months following purchases without a sales charge.
FUND OPERATING EXPENSES
(as a percentage of average net assets for the fiscal year ended September 30,
1996)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Management fees 0.49%
................................................................................
12b-1 expenses 0.23%/1/
................................................................................
Other expenses 0.15%
................................................................................
Total fund operating expenses 0.87%
</TABLE>
/1/12b-1 expenses may not exceed 0.30% of the fund's average net assets
annually. 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, Inc.
EXAMPLES
Assuming a hypothetical annual return of 5% and shareholder transaction and
operating expenses as described above, for every $1,000 you invested, you would
pay the following total expenses over the following periods:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
One year $56
................................................................................
Three years $74
................................................................................
Five years $93
................................................................................
Ten years $150
</TABLE>
THESE EXAMPLES ARE NOT MEANT TO REPRESENT YOUR ACTUAL INVESTMENT RESULTS OR
EXPENSES, WHICH MAY VARY. YOUR EXPENSES WILL BE LESS IF YOU QUALIFY TO PURCHASE
SHARES AT A REDUCED OR NO SALES CHARGE.
3
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following information has been audited by Deloitte & Touche LLP,
independent auditors. This table should be read together with the financial
statements which are included in the statement of additional information and
annual report.
SELECTED PER-SHARE DATA
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30
........................
1996 1995 1994 1993 1992 1991 1990 1989 1988/1/
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of year $14.30 $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15 $14.29
- -------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income 1.29 1.33 1.25 1.28 1.35 1.46 1.59 1.58 .96
.................................................................................................
Net realized and
unrealized gain (loss)
on investments .59 .39 (.99) .74 .99 1.78 (2.11) (.24) (.16)
.................................................................................................
Total income (loss)
from investment
operations 1.88 1.72 .26 2.02 2.34 3.24 (.52) 1.34 .80
- -------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
Dividends from
net investment
income (1.32) (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 (1.32) (1.39) (1.47) (1.42) (1.32) (1.49) (1.58) (1.58) (.94)
.................................................................................................
Net asset value,
end of year $14.86 $14.30 $13.97 $15.18 $14.58 $13.56 $11.81 $13.91 $14.15
- -------------------------------------------------------------------------------------------------
Total return/2/ 13.68% 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) $1,547 $1,111 $ 835 $ 707 $ 438 $ 255 $ 140 $ 125 $ 68
.................................................................................................
Ratio of expenses to
average net assets .87% .89% .86% .87% .94% 1.00% 1.00% .97% .49%/3/
.................................................................................................
Ratio of net income
to average net assets 8.90% 9.72% 8.63% 8.60% 9.58% 11.41% 12.42% 11.49% 7.48%/3/
.................................................................................................
Portfolio turnover
rate 39.74% 29.56% 42.03% 44.37% 58.04% 44.38% 37.89% 45.78% 21.63%/3/
- -------------------------------------------------------------------------------------------------
</TABLE>
/1/Represents the initial period of operations from February 19, 1988 to
September 30, 1988.
/2/Excludes maximum sales charge of 4.75%.
/3/Based on operations for the period shown and, accordingly, are not
representative of a full year's operations.
4
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT POLICIES AND RISKS
The fund's primary investment objective is a high level of current income; its
secondary investment objective is capital appreciation.
The fund invests primarily in fixed-income securities, with an emphasis on
higher yielding, higher risk, lower rated or unrated corporate bonds. Under
normal market conditions, the fund will invest at least 65% of its total assets
in high-yield, high-risk bonds and other 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 and
cash equivalents and government securities.
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 may
also invest for this purpose up to 25% of its assets in common stocks or other
equity or equity-related securities, such as convertible debentures. 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.
MORE INFORMATION ON THE FUND'S INVESTMENT POLICIES IS CONTAINED IN ITS
STATEMENT OF ADDITIONAL INFORMATION.
The fund's fundamental investment restrictions (described in the statement of
additional information) and objectives may not be changed without shareholder
approval. All other investment practices may be changed by the fund's board of
trustees.
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>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
SECURITIES AND INVESTMENT TECHNIQUES
DEBT SECURITIES
Bonds and other debt securities are used by issuers to borrow money. Issuers
pay investors interest and generally must repay the amount borrowed at
maturity. Some debt securities, such as zero coupon bonds, do not pay current
interest but are purchased at a discount from their face values.
The prices of debt securities fluctuate depending on such factors as interest
rates, credit quality, and maturity. In general their prices decline when
interest rates rise and vice versa.
The fund may invest its assets in debt securities rated Ba and BB or below by
Moody's Investor Service, Inc. or Standard & Poor's Corporation or in unrated
securities that are determined to be of equivalent quality. These securities
are commonly known as "high-yield, high-risk" or "junk" bonds. High-yield,
high-risk bonds have speculative characteristics and involve greater risk of
default or price changes due to changes in the issuer's creditworthiness, or
they may already be in default. The market prices of these securities may
fluctuate more than higher quality securities and may decline significantly. It
may be more difficult to dispose of, or to determine the value of, high-yield,
high-risk bonds.
High-yield, high-risk bonds may be very sensitive to adverse economic changes
and may be less sensitive to interest rate changes. In addition, periods of
economic uncertainty and changes may increase volatility of market prices and
yields of high-yield, high-risk bonds and in turn the fund's net asset value.
High-yield, high-risk bonds may contain redemption or call provisions which, if
exercised during a period of declining interest rates, may cause the fund to
have to replace the security with a lower yielding security, resulting in a
decreased return for investors. Furthermore, 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.
The fund may invest in bonds rated as low as C by Moody's or D by S&P. See the
Appendix for a complete description of the bond ratings.
Capital Research and Management Company attempts to reduce the risks described
above through diversification of the portfolio and by credit analysis of each
issuer as well as by monitoring broad economic trends and corporate and
legislative developments.
6
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
The average monthly composition of the fund's portfolio based on the higher of
Moody's or S&P ratings for the fiscal year ended December 31, 1996 was as
follows:
<TABLE>
------------------
<C> <S>
Aaa/AAA 6.28%
..................
Baa/BBB 1.06%
..................
Ba/BB 22.55%
..................
B/B 49.68%
..................
Caa/CCC 2.72%
..................
C 0.02%
..................
Non-rated 4.53%
</TABLE>
Some or all of these non-rated securities were determined to be equivalent to
securities rated by Moody's or S&P as follows:
<TABLE>
<S> <C>
------------------
Ba/BB 0.14%
..................
B/B 0.95%
..................
Caa/CCC 3.43%
</TABLE>
Equity-type securities and money market instruments and cash made up an average
of 3.38% and 9.78%, respectively, of the fund's portfolio.
INVESTING IN VARIOUS COUNTRIES
The fund has the flexibility to invest up to 25% of its total assets in
securities of issuers domiciled outside the U.S. Investing outside the U.S.
involves special risks, particularly in certain developing countries, caused
by, among other things: fluctuating currency values; different accounting,
auditing, and financial reporting regulations and practices in some countries;
changing local and regional economic, political, and social conditions; greater
market volatility; differing securities market structures; and various
administrative difficulties such as delays in clearing and settling portfolio
transactions or in receiving payment of dividends. However, in the opinion of
Capital Research and Management Company, investing outside the U.S. also can
reduce certain portfolio risks due to greater diversification opportunities.
Additional costs could be incurred in connection with the fund's investment
activities outside the U.S. Brokerage commissions may be higher outside the
U.S., and the fund will bear certain expenses in connection with its currency
7
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
transactions. Furthermore, increased custodian costs may be associated withthe
maintenance of assets in certain jurisdictions.
CURRENCY TRANSACTIONS
The fund can purchase and sell currencies to facilitate securities transactions
and enter into forward currency contracts to hedge against changes in currency
exchange rates. While entering into forward currency transactions 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. The fund will not generally attempt to protect
against all potential changes in exchange rates.
FORWARD COMMITMENTS
The fund may enter into commitments to purchase or sell securities at a future
date. When the fund agrees to purchase such securities, it assumes the risk of
any decline in value of the securities beginning on the date of the agreement.
When the fund agrees to sell such securities, it does not participate in
further gains or losses with respect to the securities beginning on the date of
the agreement. If the other party to such a transaction fails to deliver or pay
for the securities, the fund could miss a favorable price or yield opportunity,
or could experience a loss.
U.S. 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 such 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, all such private placements will be considered illiquid unless
they have been specifically determined to be liquid taking into account factors
such as the frequency and volume of trading and the commitment of dealers to
make markets under procedures adopted by the fund's board of trustees.
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.
8
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
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 securities with maturities in excess of three years.
- --------------------------------------------------------------------------------
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. Counselors decide how their respective segments will be invested
(within the limits provided by the fund's objective 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
AS
INVESTMENT
PROFESSIONAL
(APPROXIMATE)
.......................
YEARS OF
EXPERIENCE AS
PORTFOLIO
COUNSELOR WITH CAPITAL
FOR RESEARCH AND
PORTFOLIO COUNSELORS AMERICAN HIGH- MANAGEMENT
FOR INCOME COMPANY OR
AMERICAN TRUST ITS TOTAL
HIGH-INCOME TRUST PRIMARY TITLE(S) (APPROXIMATE) AFFILIATES YEARS
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
RICHARD T. President of 9 years (since 19 30 years
SCHOTTE the fund. the fund began years
Senior Vice operations)
President,
Capital
Research and
Management
Company
- -------------------------------------------------------------------------------
DAVID C. Executive Vice 7 years 9 years 15 years
BARCLAY President,
Capital
Research
Company*
- -------------------------------------------------------------------------------
SUSAN M. Vice President, 3 years 7 years 8 years
TOLSON Capital
Research
Company**
- -------------------------------------------------------------------------------
</TABLE>
The fund began operations on February 19, 1988.
*Company affiliated with Capital Research and Management Company.
9
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
INVESTMENT RESULTS
The fund may from time to time compare investment results to various indices or
other mutual funds. Fund results may be calculated on a total return, yield
and/or distribution rate basis. Results calculated without a sales charge will
be higher.
X TOTAL RETURN is the change in value of an investment in the fund over a
given period, assuming reinvestment of any dividends and capital gain
distributions.
X YIELD is computed by dividing the net investment income per share earned by
the fund over a given period of time by the maximum offering price per share
on the last day of the period, according to a formula mandated by the
Securities and Exchange Commission. A yield calculated using this formula
may be different than the income actually paid to shareholders.
X DISTRIBUTION RATE reflects dividends that were paid by the fund. The
distribution rate is calculated by dividing the dividends paid over the last
12 months by the sum of the month-end price and the capital gain
distributions paid over the last 12 months.
INVESTMENT RESULTS
(FOR PERIODS ENDED DECEMBER 31, 1996)
<TABLE>
<CAPTION>
THE FUND SALOMON
AVERAGE ANNUAL AT NET THE FUND AT MAXIMUM BROTHERS LIPPER
TOTAL RETURNS: ASSET VALUE/1/ SALES CHARGE/1/,/2/ INDEX/3/ INDEX/4/
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
One year 13.76% 8.34% 3.62% 12.66%
................................................................................
Five years 11.78% 10.71% 7.13% 12.56%
................................................................................
Lifetime/5/ 11.60% 10.99% 8.75% 10.04%
- --------------------------------------------------------------------------------
Yield/1/,/2/: 7.32%
Distribution rate/2/: 7.78%
</TABLE>
/1/These fund results were calculated according to a standard that is required
for all stock and bond funds.
/2/The maximum sales charge has been deducted.
/3/Salomon Brothers Broad Investment-Grade Bond Index represents a market
capitalization-weighted index that includes Treasury, Government-sponsored,
mortgage, and investment-grade fixed-rate corporates (BBB-/Baa3) with a
maturity of one year or longer.
/4/Lipper High Current Yield Bond Funds Index represents an equally weighted
performance index adjusted for capital gain distributions and income
dividends of the largest qualifying funds in this objective.
/5/The fund began investment operations on February 19, 1988.
10
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
% 35 30 25 20 15 10 5 0 -5 -10
1988 8.38
1989 5.63
1990 0.07
1991 32.36
1992 14.29
1993 17.22
1994 -5.11
1995 20.68
1996 13.75
Past results are not an indication of future results.
- --------------------------------------------------------------------------------
DIVIDENDS, DISTRIBUTIONS AND TAXES
DIVIDENDS AND DISTRIBUTIONS
The fund declares dividends, which may fluctuate, from its net investment
income daily and distributes the accrued dividends to shareholders each month.
Dividends begin accruing one day after payment for shares is received by the
fund or American Funds Service Company. All capital gains, if any, are
distributed annually, usually in December. When a dividend or capital gain is
distributed, the net asset value per share is reduced by the amount of the
payment.
FEDERAL TAXES
In any fiscal year in which the fund qualifies as a regulated investment
company and distributes to shareholders all of its net investment income and
net capital gains, the fund itself is relieved of federal income tax.
Generally, 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
11
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
deferral. Early each year, you will be notified as to the amount and federal
tax status of all income distributions paid during the prior year. Such
distributions may also be subject to state or local taxes. The tax treatment of
redemptions from a retirement plan account may differ from redemptions from an
ordinary shareholder account.
YOU MUST PROVIDE THE FUND WITH A CERTIFIED CORRECT TAXPAYER IDENTIFICATION
NUMBER (GENERALLY YOUR SOCIAL SECURITY NUMBER) AND CERTIFY THAT YOU ARE NOT
SUBJECT TO BACKUP WITHHOLDING. IF YOU FAIL TO DO SO THE IRS CAN REQUIRE THE
FUND TO WITHHOLD 31% OF YOUR TAXABLE DISTRIBUTIONS AND REDEMPTIONS. 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 ORGANIZATION AND MANAGEMENT
FUND ORGANIZATION AND VOTING RIGHTS
The fund, an open-end, diversified management investment company, was organized
as a Massachusetts business trust in 1987. All fund operations are supervised
by the fund's board of trustees who meet periodically and perform duties
required by applicable state and federal laws. Members of the board who are not
employed by Capital Research and Management Company or its affiliates are paid
certain fees for services rendered to the fund as described in the statement of
additional information. They may elect to defer all or a portion of these fees
through a deferred compensation plan in effect for the fund. The fund does not
hold annual meetings of shareholders. However, significant corporate matters
which require shareholder approval, such as certain elections of board members
or a change in a fundamental investment policy, will be presented to
shareholders at a meeting called for such purpose. Shareholders have one vote
per share owned. At the request of the holders of at 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.
THE INVESTMENT ADVISER
Capital Research and Management Company, a large and experienced investment
management organization founded in 1931, is the investment
12
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
adviser to the fund and other funds, including those in The American Funds
Group. Capital Research and Management Company, a wholly owned subsidiary of
The Capital Group Companies, Inc., is headquartered at 333 South Hope Street,
Los Angeles, CA 90071. Capital Research and Management Company manages the
investment portfolio and business affairs of the fund. The management fee paid
by the fund to Capital Research and Management Company is composed of a
management fee, which may not exceed 0.30% of the fund's average net assets
annually and declines at certain asset levels, plus an amount which may not
exceed 3% of the fund's gross investment income for the preceding month and
which also declines at certain annual gross investment levels. The total
management fee paid by the fund, as a percentage of average net assets, for the
previous fiscal year is listed earlier under "Expenses."
Capital Research and Management Company and its affiliated companies have
adopted a personal investing policy that is consistent with the recommendations
contained in the May 9, 1994 report issued by the Investment Company
Institute's Advisory Group on Personal Investing. This policy has also been
incorporated into the fund's "code of ethics."
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 preceding 12 months and accrued while the plan is
in effect. The 12b-1 fee paid by the fund, as a percentage of average net
assets, for the previous fiscal year is listed earlier under "Expenses."
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 dealer, generally referred to as a concession or
discount. On occasion, securities may be purchased directly from an issuer, in
which case no commissions or discounts are paid. In the over-the-counter
market, purchases and sales are transacted directly with principal market-
makers except in those circumstances where it appears better prices and
executions are available elsewhere.
13
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
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 who
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 AND TRANSFER AGENT
American Funds Distributors, Inc. and American Funds Service Company serve as
the principal underwriter and transfer agent for the fund, respectively. They
are headquartered at 333 South Hope Street, Los Angeles, CA 90071 and 135 South
State College Boulevard, Brea, CA 92821, respectively.
AMERICAN FUNDS SERVICE COMPANY SERVICE AREAS
CALL TOLL-FREE FROM ANYWHERE IN THE U.S.
(8 A.M. TO 8 P.M. ET):
800/421-0180
[MAP APPEARS HERE]
WESTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2205
Brea, California
92822-2205
Fax: 714/671-7080
WESTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 659522
San Antonio, Texas
78265-9522
Fax: 210/530-4050
EASTERN CENTRAL SERVICE CENTER
American Funds Service Company
P.O. Box 6007
Indianapolis, Indiana
46206-6007
Fax: 317/735-6620
EASTERN SERVICE CENTER
American Funds Service Company
P.O. Box 2280
Norfolk, Virginia
23501-2280
Fax: 804/670-4773
14
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
APPENDIX
Moody's Investors Service, Inc. rates the long-term debt securities issued by
various entities in categories ranging from "Aaa" to "C," according to 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 shares."
"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 having other marked
shortcomings."
"C--Lowest rated class of bonds; can be regarded as having extremely poor
prospects of ever attaining any real investment standing."
15
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
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 interest is being paid."
"D--In default and payment of interest and/or repayment of principal is in
arrears."
16
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
The fund offers you a valuable array of services you can use to alter your
investment program as your needs and circumstances change. These services,
which are summarized below, are available only in states where they may be
legally offered and may be terminated or modified at any time upon 60 days'
written notice. A COMPLETE DESCRIPTION OF SHAREHOLDER SERVICES AND ACCOUNT
POLICIES IS CONTAINED IN THE FUND'S STATEMENT OF ADDITIONAL INFORMATION. In
addition, an easy-to-read guide to owning a fund in The American Funds Group
titled "Welcome to the Family" is sent to new shareholders and is available by
writing or calling American Funds Service Company.
THE SERVICES DESCRIBED MAY NOT BE AVAILABLE THROUGH SOME RETIREMENT PLANS. IF
YOU ARE INVESTING THROUGH A RETIREMENT PLAN, YOU SHOULD CONTACT YOUR PLAN
ADMINISTRATOR/TRUSTEE ABOUT WHAT SERVICES ARE AVAILABLE AND WITH QUESTIONS
ABOUT YOUR ACCOUNT.
- --------------------------------------------------------------------------------
PURCHASING SHARES
HOW TO PURCHASE SHARES
Generally, you may open an account by contacting any investment dealer
authorized to sell the fund's shares. You may add to your account through your
dealer or directly through American Funds Service Company by mail, wire, or
bank debit. You may also establish or add to your account by exchanging shares
from any of your other accounts in The American Funds Group. The fund and
American Funds Distributors reserve the right to reject any purchase order.
Various purchase options are available as described below subject to certain
investment minimums and limitations described in the statement of additional
information and "Welcome to the Family."
X Automatic Investment Plan
You may invest monthly or quarterly through automatic withdrawals from your
bank account.
X Automatic Reinvestment
You may reinvest your dividends and capital gain distributions into the
fund (with no sales charge). This will be done automatically unless you
elect to have the dividends and/or capital gain distributions paid to you
in cash.
17
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
X Cross-Reinvestment
You may invest your dividend and capital gain distributions into any other
fund in The American Funds Group.
X Exchange Privilege
You may exchange your shares into other funds in The American Funds Group
generally with no sales charge. Exchanges of shares from the money market
funds that were initially purchased with no sales charge will generally be
subject to the appropriate sales charge. You may also elect to
automatically exchange shares among any of the funds in The American Funds
Group. Exchange requests may be made in writing, by telephone including
American FundsLine(R) (see below) or by fax. EXCHANGES HAVE THE SAME TAX
CONSEQUENCES AS ORDINARY SALES AND PURCHASES.
X Retirement Plans
You may invest in the fund through various retirement plans. For further
information contact your investment dealer or American Funds Distributors.
SHARE PRICE
The fund's share price, also called net asset value, is determined as of the
close of trading (normally 4:00 p.m., Eastern time) every day the New York
Stock Exchange is open. The fund calculates its net asset value per share,
generally using market prices, by dividing the total value of its assets after
subtracting liabilities by the number of its shares outstanding. Shares are
purchased at the offering price next determined after your investment is
received and accepted by American Funds Service Company. The offering price is
the net asset value plus a sales charge, if applicable.
SHARE CERTIFICATES
Shares are credited to your account and certificates are not issued unless you
request them by writing to American Funds Service Company.
INVESTMENT MINIMUMS
- ----------------------------------------------------------------
<TABLE>
<S> <C>
To establish an account $1,000
For a retirement plan account $ 250
For a retirement plan account through payroll deduction $ 25
To add to an account $ 50
For a retirement plan account $ 25
</TABLE>
18
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
SALES CHARGES
A sales charge may apply, as described below, when purchasing shares. Sales
charges may be reduced for larger purchases as indicated below.
<TABLE>
<CAPTION>
SALES CHARGE AS A
PERCENTAGE OF
.................. DEALER
NET CONCESSION AS
OFFERING AMOUNT % OF OFFERING
INVESTMENT PRICE INVESTED PRICE
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Less than $25,000 4.75% 4.99% 4.00%
...................................................................
$25,000 but less than $50,000 4.50% 4.71% 3.75%
...................................................................
$50,000 but less than $100,000 4.00% 4.17% 3.25%
...................................................................
$100,000 but less than $250,000 3.50% 3.63% 2.75%
...................................................................
$250,000 but less than $500,000 2.50% 2.56% 2.00%
...................................................................
$500,000 but less than $1 million 2.00% 2.04% 1.60%
...................................................................
$1 million or more and certain
other investments described below see below see below see below
</TABLE>
PURCHASES NOT SUBJECT TO SALES CHARGES
Investments of $1 million or more and investments made by employer-sponsored
defined contribution-type plans with 200 or more eligible employees are sold
with no initial sales charge. A 1% CONTINGENT DEFERRED SALES CHARGE MAY BE
IMPOSED ON CERTAIN REDEMPTIONS MADE WITHIN ONE YEAR OF PURCHASE BY THESE
ACCOUNTS. A dealer concession of up to 1% may be paid by the fund from its Plan
of Distribution on these investments. Investments by retirement plans with $100
million or more in assets may be made with no sales charge and are not subject
to a contingent deferred sales charge. A dealer concession of up to 1% may be
paid by American Funds Distributors on these investments. Investments by
certain individuals and entities including employees and other associated
persons of dealers authorized to sell shares of the fund and Capital Research
and Management Company and its affiliated companies are not subject to a sales
charge.
19
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
ADDITIONAL DEALER COMPENSATION
In addition to the concessions listed, up to 0.25% of average net assets is
paid annually to qualified dealers for providing certain services pursuant to
the fund's Plan of Distribution. During 1997, American Funds Distributors will
also provide additional compensation to the top one hundred dealers who have
sold shares of funds in The American Funds Group based on the pro rata share of
a qualifying dealer's sales.
REDUCING YOUR SALES CHARGE
You and your immediate family may combine investments to reduce your costs. 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 below.
X Aggregation
Investments that may be aggregated include those made by you, your spouse
and your children under the age of 21, if all parties are purchasing shares
for their own account(s), including any business account solely "controlled
by," as well as any retirement plan or trust account solely for the benefit
of, these individuals. Investments made for multiple employee benefit plans
of a single employer or "affiliated" employers may be aggregated provided
they are not also aggregated with individual accounts. Finally, investments
made by a common trust fund or other diversified pooled account not
specifically formed for the purpose of accumulating fund shares may be
aggregated.
Purchases made for nominee or street name accounts will generally not be
aggregated with those made for other accounts unless qualified as described
above.
X Concurrent Purchases
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.
X Right of Accumulation
You may take into account the current value of your existing holdings in
The American Funds Group to determine your sales charge. Direct purchases
of the money market funds are excluded.
20
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
X Statement of Intention
You may enter into a non-binding commitment to invest a certain amount
(which, at your request, may include purchases made during the previous 90
days) in non-money market fund shares over a 13-month period. A portion of
your account may 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 the applicable sales charge reduction.
- --------------------------------------------------------------------------------
SELLING SHARES
HOW TO SELL SHARES
You may sell (redeem) shares in your account by contacting your investment
dealer or American Funds Service Company. You may also use American
FundsLine(R) (see below). In addition, you may sell shares in amounts of $50 or
more automatically. If you sell shares through your investment dealer you may
be charged for this service. Shares held for you in your dealer's street name
must be sold through the dealer.
Shares are sold at the net asset value next determined after your request is
received in good order by American Funds Service Company. Sale requests may be
made in writing, by telephone, including American FundsLine(R) (see below), or
by fax. Sales by telephone or fax are limited to $10,000 in accounts registered
to individual(s) (including non-retirement trust accounts). In addition, checks
must be made payable to the registered shareholder(s) and mailed to an address
of record that has been used with the account for at least 10 days. 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), sale proceeds will be paid on or before the
seventh day following receipt and acceptance of an order. The fund may, with 60
days' written notice, close your account if due to a sale of shares the account
has a value of less than the minimum required initial investment.
Generally, written requests to sell shares must be signed by you and must
include any shares you wish to sell that are in certificate form. Your
signature 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. A
signature guarantee is not currently required for any sale of $50,000 or less
provided the check is made
21
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
payable to the registered shareholder(s) and is mailed to the address of record
on the account, and provided the address has been used with the account for at
least 10 days. Additional documentation may be required for sale of shares held
in corporate, partnership or fiduciary accounts.
You may reinvest proceeds from a redemption or a dividend or capital gain
distribution without a sales charge in any fund in The American Fund Group
within 90 days after the date of the redemption or distribution. Reinvestment
will be at the next calculated net asset value after receipt and acceptance by
American Funds Service Company.
- --------------------------------------------------------------------------------
OTHER IMPORTANT THINGS TO REMEMBER
AMERICAN FUNDSLINE(R)
You may check your share balance, the price of your shares, or your most recent
account transactions, sell 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.
TELEPHONE PURCHASES, SALES AND EXCHANGES
Unless you opt out of the telephone (including American FundsLine(R)) or fax
purchase, sale and/or exchange options (see below), 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 provided American Funds Service Company employs reasonable
procedures to confirm that the instructions received from any person with
appropriate account information are genuine. If reasonable procedures are not
employed, the fund may be liable for losses due to unauthorized or fraudulent
instructions.
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 also reinstate them at any time by writing to
American Funds Service Company.)
ACCOUNT STATEMENTS
You will receive regular confirmation statements reflecting transactions in
your account. Purchases through automatic investment plans and certain
retirement plans will be confirmed at least quarterly.
22
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
NOTES
23
<PAGE>
- --------------------------------------------------------------------------------
AMERICAN HIGH-INCOME TRUST / PROSPECTUS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR SHAREHOLDER FOR DEALER FOR 24-HOUR
SERVICES SERVICES INFORMATION
<S> <C> <C>
American Funds American Funds American
Service Company Distributors FundsLine(R)
800/421-0180 ext. 1 800/421-9900 ext. 11 800/325-3590
</TABLE>
Telephone conversations may be recorded or monitored for
verification, recordkeeping and quality assurance purposes.
--------------------------------------------------------------
OTHER FUND INFORMATION
ANNUAL/SEMI-ANNUAL STATEMENT OF ADDITIONAL
REPORT TO SHAREHOLDERS INFORMATION (SAI)
Includes financial Contains more detailed
statements, detailed information on all aspects of
performance information, the fund, including the
portfolio holdings, a fund's financial statements.
statement from portfolio
management and the auditor's
report.
A current SAI has been filed
with the Securities and
CODE OF ETHICS Exchange Commission and is
incorporated by reference (is
Includes a description of the legally part of the
fund's personal investing prospectus).
policy.
To request a free copy of any of the documents above:
Call American Funds or Write to the Secretary of the fund
Service Company 333 South Hope Street
800/421-0180 ext. 1 Los Angeles, CA 90071
This prospectus has been printed on recycled paper. [LOGO OF RECYCLED PAPER]
24
<PAGE>
AMERICAN HIGH-INCOME TRUST
Part B
Statement of Additional Information
February 1, 1997
This document is not a prospectus but should be read in conjunction with a
current prospectus dated February 1, 1997 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
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>
Item Page 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 13
Purchase of Shares 16
Redeeming Shares 22
Shareholder Account Services and Privileges 23
Execution of Portfolio Transactions 25
General Information 25
Investment Results 27
Appendix 30
Financial Statements Attached
</TABLE>
DESCRIPTION OF SECURITIES AND INVESTMENT TECHNIQUES
The descriptions below are intended to supplement the material in the
prospectus under "Securities and Investment Techniques."
PORTFOLIO TRADING - The fund intends to engage in portfolio trading when
Capital Research and Management Company (the "Investment Adviser") believes
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.
FORWARD COMMITMENTS - The fund may enter into commitments to purchase or sell
securities. When the fund agrees to purchase such securities it assumes the
risk of any decline in value of the security beginning on the date of the
agreement. When the fund agrees to sell such securities, it does not
participate in further gains or losses with respect to the securities beginning
on the date of the agreement. If the other party to such a transaction fails
to deliver or pay for the securities, the fund could miss a favorable price or
yield opportunity, or could experience a loss beginning on the date of the
agreement.
As the fund's aggregate commitments under these transactions increase, the
opportunity for leverage similarly may increase. The fund will not use these
transactions for the purpose of leveraging and will segregate liquid assets
which will be marked to market daily 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 segregated assets, the fund
temporarily could be in a leveraged position (because it may 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.
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. A reverse repurchase agreement is the sale of a security
by a fund and its agreement to repurchase the security at a specified time and
price. A "roll" transaction is the sale of GNMA certificates or other
securities together with a commitment to purchase similar, but not identical,
securities at a future date. The fund will segregate liquid assets which will
be marked to market daily 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 segregated assets, the fund
temporarily could 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 or roll 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.
U.S. 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). 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 such 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, all private placements
will be deemed illiquid unless they have been specifically determined to be
liquid taking into account factors such as the frequency and volume of trading
and the commitment of dealers to make markets under procedures adopted by the
fund's board of trustees.
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. Cash
equivalents include (1) commercial paper (short-term notes up to 9 months in
maturity issued by corporations or governmental bodies); (2) commercial bank
obligations such as certificates of deposit, (interest-bearing time deposits);
and bankers' acceptances, (time drafts on a commercial bank where the bank
accepts an irrevocable obligation to pay at maturity); (3) savings association
obligations (certificates of deposit issued by mutual savings banks or savings
and loan associations); (4) securities of the U.S. Government, its agencies or
instrumentalities that mature, or may be redeemed, in one year or less; and (5)
corporate bonds and notes that mature, or that may be redeemed, in one year or
less.
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 enter into forward currency
contracts to protect against changes in currency exchange rates. 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. Forward currency contracts entered into by the fund will involve the
purchase or sale of a currency against the U.S. dollar. The fund will
segregate liquid assets which will be marked to market daily to meet its
forward contract commitments to the extent required by the Securities and
Exchange Commission.
Certain provisions of the Internal Revenue Code may affect the extent to which
the fund may enter into forward contracts. Such transactions may also affect,
for U.S. federal income tax purposes, the character and timing of income, gain
or loss recognized by the fund.
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 the
Investment Adviser. 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.
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 nine
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.AMERICAN HIGH-INCOME
TRUST
FUND OFFICERS AND TRUSTEES
TRUSTEES AND TRUSTEE COMPENSATION
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE POSITION PRINCIPAL OCCUPATION(S) DURING AGGREGATE TOTAL COMPENSATION TOTAL NUMBER
WITH PAST 5 YEARS (POSITIONS WITHIN THE COMPENSATION FROM ALL FUNDS OF FUND
REGISTRANT ORGANIZATIONS LISTED MAY HAVE (INCLUDING MANAGED BY CAPITAL BOARDS ON
CHANGED DURING THIS PERIOD) VOLUNTARILY DEFERRED RESEARCH AND WHICH
COMPENSATION/1/) FROM MANAGEMENT TRUSTEE
THE FUND DURING COMPANY FOR THE YEAR SERVES/2/
FISCAL YEAR ENDED ENDED
SEPTEMBER 30, 1996 9/30/96/2/
<S> <C> <C> <C> <C> <C>
++ H. Frederick Christie Private Investor. Former President and 3,400 $137,600 18
Age: 63 Trustee Chief Executive Officer, The Mission /3/
P.O. Box 144 Group (non-utility holding company,
Palos Verdes Estates, CA 90274 subsidiary of Southern California Edison
Company)
+ Don R. Conlan Trustee President Emeritus, The Capital Group none/4/ none/4/ 12
Age: 61 Companies, Inc.
1630 Milan Avenue
South Pasadena, CA 91030
Diane C. Creel Trustee CEO and President, $2,600 $37,300 12
Age: 48 The Earth Technology Corporation
100 W. Broadway
Suite 5000
Long Beach, CA 90802
Martin Fenton, Jr. Trustee Chairman, Senior Resource Group $2,800 $116,300 16
Age: 61 (management of senior living centers)
4350 Executive Drive
Suite 101
San Diego, CA 92121-2116
Leonard R. Fuller Trustee President, Fuller & Company, Inc. $3,200 $40,300 12
Age: 50 (financial management consulting firm)
4337 Marina City Drive
Suite 841 ETN
Marina del Rey, CA 90292
+* Abner D. Goldstine Trustee Capital Research and Management none/4/ 12
Age: 67 Company, Senior Vice President none/4/
and Director
+** Paul G. Haaga, Jr. Chairman of Capital Research and Management none/4/ none/4/ 14
Age: 48 the Board Company, Executive Vice President and
Director
Herbert Hoover III Trustee Private Investor $2,800 $61,400 14
Age: 69
1520 Circle Drive
San Marino, CA 91108
Richard G. Newman Trustee Chairman, President and CEO, $2,800
Age: 62 AECOM Technology Corporation /3/ $65,300 13
3250 Wilshire Boulevard (architectural engineering)
Los Angeles, CA 90010-1599
Peter C. Valli Trustee Chairman, BW/IP International Inc. $2,800
Age: 69 (industrial manufacturing) /3/ $37,950 12
45 Sea Isle Drive
Long Beach, CA 90803
</TABLE>
+ Trustees 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 ($6,112), Martin Fenton, Jr. ($4,876), Richard
G. Newman ($9,913), and Peter C. Valli ($9,701). Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the fund until paid to the Director.
/4/ Don R. Conlan, Abner D. Goldstine and Paul G. Haaga, Jr. 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
* Michael J. Downer, VICE PRESIDENT. Capital Research and Management Company,
Senior Vice President - Fund Business Management Group
** Mary C. Hall, 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
** Anthony W. Hynes, Jr., TREASURER. 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
** Todd L. Miller, ASSISTANT TREASURER. Capital Research and Management
Company, Assistant 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 92821.
*** 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
$2,500 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 January 1, 1997, 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 (Los Angeles, San Francisco, New
York, Washington, D.C., London, Geneva, Singapore, Hong Kong and Tokyo), with a
staff of professionals, many of whom have years of investment experience. The
Investment Adviser is located at 333 South Hope Street, Los Angeles, CA 90071,
and at 135 South State College Boulevard, Brea, CA 92821. 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. The Investment Adviser is a wholly owned subsidiary of The Capital
Group Companies, Inc.
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, 1997, 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. 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.
The Investment Adviser, in addition to providing investment advisory services,
furnishes the services and pays the compensation and travel expenses of persons
to perform the executive, administrative, clerical and bookkeeping functions of
the fund, and provides suitable office space and utilities, necessary small
office equipment and general purpose accounting forms, supplies, and postage
used at the offices of the fund. The fund pays all expenses not assumed by the
Investment Adviser, including, but not limited to, custodian, stock transfer
and dividend disbursing fees and expenses; costs of the designing, printing and
mailing of reports, prospectuses, proxy statements, and notices to its
shareholders; taxes; expenses of the issuance and redemption of shares
(including stock certificates, registration and qualification fees and
expenses); legal and auditing expenses; compensation, fees, and expenses paid
to trustees unaffiliated with the Investment Adviser; association dues; costs
of stationery and forms prepared exclusively for the fund; and costs of
assembling and storing shareholder account data.
The management fee is based upon the net assets of the fund and monthly gross
investment income. Gross investment income means gross income, computed
without taking account of gains or losses from sales of capital assets, but
including original issue discount as defined for federal income tax purposes.
The Internal Revenue Code in general defines original issue discount to mean
the difference between the issue price and the stated redemption price at
maturity of certain debt obligations. The holder of such indebtedness is in
general required to treat as ordinary income the proportionate part of the
original issue discount attributable to the period during which the holder held
the indebtedness. The management fee is based upon the annual rates of 0.30%
of the first $60 million of the fund's average net assets, plus 0.21% on
average net assets in excess of $60 million but not exceeding $1 billion, plus
0.18% on average 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 $1.5 billion and gross
investment income levels of 5%, 6%, 7%, 8% and 9%, management fees would be
0.35%, 0.38%, 0.41%, 0.44%, and 0.46%, respectively.
During the fiscal years ended September 30, 1996, 1995, and 1994, the
Investment Adviser's total fees amounted to $6,481,000, $4,916,000, and
$4,005,000, 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, costs of 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. 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, 1996 amounted to $1,943,000 after
allowance of $8,164,000 to dealers. During the fiscal years ended September
30, 1995 and 1994, the Principal Underwriter retained $1,209,000 and
$1,298,000, 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. Plan expenditures are 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, 1996, the fund
paid $3,079,000 under the Plan as compensation to dealers. As of September 30,
1996, accrued and unpaid distribution expenses were $221,000.
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, as amended (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 of any net gain or loss recognized on these deemed sales
and 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
<TABLE>
<CAPTION>
<S> <C> <C>
METHOD INITIAL INVESTMENT ADDITIONAL INVESTMENTS
See "Investment Minimums and $50 minimum (except where a lower
Fund Numbers" for initial minimum is noted under "Investment
investment minimums. Minimums and Fund Numbers").
By contacting Visit any investment dealer who is Mail directly to your investment
your registered in the state where the dealer's address printed on your
investment purchase is made and who has a account statement.
dealer sales agreement with American
Funds Distributors.
By mail Make your check payable to the fund Fill out the account additions form at the
and mail to the address indicated on bottom of a recent account statement,
the account application. Please make your check payable to the fund,
indicate an investment dealer on the write your account number on your
account application. check, and mail the check and form in
the envelope provided with your account
statement.
By telephone Please contact your investment Complete the "Investments by Phone"
dealer to open account, then follow section on the account application or
the procedures for additional American FundsLink Authorization Form.
investments. Once you establish the privilege, you,
your financial advisor or any person with
your account information can call
American FundsLine(R) and make
investments by telephone (subject to
conditions noted in "Telephone
Purchases, Sales and Exchanges"
below).
By wire Call 800/421-0180 to obtain Your bank should wire your additional
your account number(s), if investments in the same manner as
necessary. Please indicate an described under "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.
</TABLE>
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>
<S> <C> <C>
FUND MINIMUM FUND
INITIAL NUMBER
INVESTMENT
STOCK AND STOCK/BOND FUNDS
AMCAP Fund(R) 02
$1,000
American Balanced Fund(R) 11
500
American Mutual Fund(R) 03
250
Capital Income Builder(R) 12
1,000
Capital World Growth and Income Fund(SM) 33
1,000
EuroPacific Growth Fund(R) 16
250
Fundamental Investors(SM) 10
250
The Growth Fund of America(R) 05
1,000
The Income Fund of America(R) 06
1,000
The Investment Company of America(R) 04
250
The New Economy Fund(R) 14
1,000
New Perspective Fund(R) 07
250
SMALLCAP World Fund(R) 35
1,000
Washington Mutual Investors Fund(SM) 01
250
BOND FUNDS
American High-Income Municipal Bond Fund(R) 40
1,000
American High-Income Trust(SM) 21
1,000
The Bond Fund of America(SM) 08
1,000
Capital World Bond Fund(R) 31
1,000
Intermediate Bond Fund of America(SM) 23
1,000
Limited Term Tax-Exempt Bond Fund of 43
America(SM) 1,000
The Tax-Exempt Bond Fund of America(R) 19
1,000
The Tax-Exempt Fund of California(R)* 20
1,000
The Tax-Exempt Fund of Maryland(R)* 24
1,000
The Tax-Exempt Fund of Virginia(R)* 25
1,000
U.S. Government Securities Fund(SM) 22
1,000
MONEY MARKET FUNDS
The Cash Management Trust of America(R) 09
2,500
The Tax-Exempt Money Fund of America(SM) 39
2,500
The U.S. Treasury Money Fund of America(SM) 49
2,500
___________
*Available only in certain states.
</TABLE>
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). 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. TAX-EXEMPT FUNDS
SHOULD NOT SERVE AS RETIREMENT PLAN INVESTMENTS. The minimum is $50 for
additional investments (except as noted above).
DEALER COMMISSIONS - 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.)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AMOUNT OF PURCHASE SALES CHARGE AS DEALER
AT THE OFFERING PRICE PERCENTAGE OF THE: CONCESSION
AS PERCENTAGE
OF THE
OFFERING
PRICE
NET AMOUNT OFFERING
INVESTED PRICE
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 (see below)
none none
</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 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 of $1 million
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.
American Funds Distributors, at its expense (from a designated percentage of
its income), will, during calendar year 1997, provide additional compensation
to dealers. Currently these payments are limited to the top one hundred dealers
who have sold shares of the fund or other funds in The American Funds Group.
These 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 payments.
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 twelve months 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 compensate them for
providing certain services. 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.
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.
AGGREGATION - Sales charge discounts are available for certain aggregated
investments. Qualifying investments include those by you, your spouse and your
children under the age of 21, if all parties are purchasing shares for their
own account(s), which may include purchases through employee benefit plan(s)
such as an IRA, individual-type 403(b) plan or single-participant Keogh-type
plan or by a business solely controlled by 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 other accounts and may not be aggregated with other nominee or
street name accounts unless otherwise qualified as described above.
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. In case of orders sent directly to the fund or American Funds
Service Company, an investment dealer MUST be indicated. 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.
REDEEMING SHARES
<TABLE>
<CAPTION>
<S> <C>
By writing to American Send a letter of instruction specifying the name of the fund,
Funds Service Company (at the number of shares or dollar amount to be sold, your name
the appropriate address and account number. You should also enclose any share
indicated under "Principal certificates you wish to redeem. For redemptions over
Underwriter and Transfer $50,000 and for certain redemptions of $50,000 or less (see
Agent" in the Prospectus) below), your signature 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.
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 your If you redeem shares through your investment dealer, you
investment dealer may be charged for this service. SHARES HELD FOR YOU IN
YOUR INVESTMENT DEALER'S STREET NAME MUST BE REDEEMED
THROUGH THE DEALER.
You may have a redemption You may use this option, provided the account is registered in
check sent to you by using the name of an individual(s), a UGMA/UTMA custodian, or a
American FundsLine(R) or non-retirement plan trust. These redemptions may not
by telephoning, faxing, or exceed $10,000 per day, per fund account and the check
telegraphing American must be made payable to the shareholder(s) of record and be
Funds Service Company sent to the address of record provided the address has been
(subject to the conditions used with the account for at least 10 days. See "Principal
noted in this section and in Underwriter and Transfer Agent" in the Prospectus and
"Telephone Purchases, "Exchange Privilege" below for the appropriate telephone or
Sales and Exchanges" fax number.
below)
In the case of the money Upon request (use the account application for the money
market funds, you may have market funds) you may establish telephone redemption
redemptions wired to your privileges (which will enable you to have a redemption sent to
bank by telephoning your bank account) and/or check writing privileges. If you
American Funds Service request check writing privileges, you will be provided with
Company ($1,000 or more) checks that you may use to draw against your account.
or by writing a check ($250 These checks may be made payable to anyone you designate
or more) and must be signed by the authorized number of registered
shareholders exactly as indicated on your checking account
signature card.
</TABLE>
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 15 DAYS.
CONTINGENT DEFERRED SALES CHARGE - A contingent deferred sales charge of 1%
applies to certain redemptions made within twelve months of purchase 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 591/2; 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.
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 dates you select. 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
at least quarterly. 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 REINVESTMENT - Dividends and capital gain distributions are
reinvested in additional shares at no sales charge unless you indicate
otherwise on the account application. You also may elect to have dividends
and/or capital gain distributions paid in cash by informing the fund, American
Funds Service Company or your investment dealer.
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).
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 "American FundsLine(R)" below), or by telephoning
800/421-0180 toll-free, faxing (see "Principal Underwriter and Transfer Agent"
in the Prospectus for the appropriate fax numbers) or telegraphing American
Funds Service Company. (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 simultaneously at the share
prices next determined after the exchange order is received. (See "Purchase of
Shares--Price of Shares.") 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
preceding 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 receiving 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 - 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.
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. Purchases through
automatic investment plans and certain retirement plans will be confirmed at
least quarterly.
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 "Purchase of
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.
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 also reinstate them at any time 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.
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, 1996
amounted to $8,510,000. Dealer concessions on underwritings for the fiscal
years ended September 30, 1995 and 1994 amounted to $3,523,000 and $4,991,000,
respectively. No brokerage commissions were paid for the fiscal year ended
September 30, 1994.
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, ., 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.
TRANSFER AGENT - American Funds Service Company, a wholly owned subsidiary of
the Investment Adviser, maintains the records of each shareholder's account,
processes purchases and redemptions of the fund's shares, acts as dividend and
capital gain distribution disbursing agent, and performs other related
shareholder service functions. American Funds Service Company was paid a fee
of $976,000 for the fiscal year ended September 30, 1996.
INDEPENDENT AUDITORS - 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. The fund's
financial statements are audited annually by the fund's independent auditors,
Deloitte & Touche LLP, whose selection is determined annually by the
Trustees.
PERSONAL INVESTING POLICY - The Investment Adviser 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. You may obtain a summary of the personal investing policy by
contacting the Secretary of the fund.
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, 1996
<S> <C>
Net asset value and redemption price per share
(Net assets divided by shares outstanding) $14.86
Offering price per share (100/95.25 of per share
net asset value, which takes into account the
fund's current maximum sales charge) 15.60
</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 8.18% based on the 30-day (or one month) period ended
September 30, 1996, 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, 1996 was
8.31%, 11.02% and 10.86%, 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.
EXPERIENCE OF INVESTMENT ADVISER - Capital Research and Management Company
manages eight common stock funds that are at least 10 years old. In the
rolling 10-year periods since January 1, 1996 (121 in all), those funds have
had better total returns than the Standard and Poor's 500 Stock Composite Index
in 94 of the 121 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).
<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
(10/1/95-9/30/96) (10/1/93-9/30/96) (2/19/88-9/30/96)
$2,166 $7,113 $30,389
</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, 1996
<S> <C> <C>
| |
Periods
Number of Years 10/1-9/30 Value**
1 1995 - 1996 $10,830
2 1994 - 1996 12,269
3 1993 - 1996 12,467
4 1992 - 1996 14,286
5 1991 - 1996 16,867
6 1990 - 1996 21,784
7 1989 - 1996 20,914
8 1988 - 1996 22,977
Lifetime 2/19/88 - 1996 24,308
</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, 1996)
<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 Gains Dividends Total
September 30 Dividends (cumulative) Cost Investment Reinvested Reinvested Value
1988* $ 640 $ 640 $10,640 $9,433 --- $ 641 $10,074
1989 1,188 1,828 11,828 9,273 --- 1,800 11,073
1990 1,334 3,162 13,162 7,873 --- 2,755 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
1996 2,046 12,960 22,960 9,907 583 13,818 24,308
</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.
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>
<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>
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. On file (see SEC file No. 33-17917, Post-Effective Amendment No. 12 filed
11/24/95)
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. On file (see SEC file No. 33-17917, Post-Effective Amendment No. 12 filed
11/24/95)
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, 1996
<TABLE>
<CAPTION>
Number of
Title of Class Record Holders
<S> <C>
Shares of beneficial 64,253
interest (no par value)
</TABLE>
ITEM 27. INDEMNIFICATION.
Registrant is a joint-insured under an Investment Advisor/Mutual Fund Errors
and Omissions Policies 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 Regional Vice President None
5657 Lemona Avenue
Van Nuys, CA 91411
John A. Agar Regional Vice President None
1501 N. University, Suite 227A
Little Rock, AR 72207
Robert B. Aprison Vice President None
2983 Bryn Wood Drive
Madison, WI 53711
S Richard Armstrong Assistant Vice President None
L William W. Bagnard Vice President None
Steven L. Barnes Senior Vice President None
8000 Town Line Avenue South
Suite 204
Minneapolis, MN 55438
Michelle A. Bergeron Vice President None
4160 Gateswalk Drive
Smyrna, GA 30080
Joseph T. Blair Senior Vice President None
27 Drumlin Road
West Simsbury, CT 06092
John A. Blanchard Regional Vice President None
6421 Aberdeen Road
Mission Hills, KS 66208
Ian B. Bodell Senior 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
L Daniel C. Brown Sr. Vice President None
H J. Peter Burns Vice President None
Brian C. Casey Regional Vice President None
9508 Cable Drive
Kensington, MD 20895
Victor C. Cassato Vice President None
609 W. Littleton, Blvd., Suite 310
Littleton, CO 80120
Christopher J. Cassin Senior Vice President None
111 W. Chicago Avenue, Suite G3
Hinsdale, IL 60521
Denise M. Cassin Regional Vice President None
1301 Stoney Creek Drive
San Ramon, CA 94538
L Larry P. Clemmensen Director, None
L Kevin G. Clifford Director, 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
4116 Woodbine Street
Chevy Chase, MD 20815
L Carl D. Cutting Vice President None
Dan J. Delianedis Regional Vice President None
8689 Braxton Drive
Eden Prairie, MN 55347
Michael A. Dilella Vice President None
P. O. Box 661
Ramsey, NJ 07446
G. Michael Dill Senior Vice President None
505 E. Main Street
Jenks, OK 74037
Kirk D. Dodge Vice President None
3034 Parkridge Drive
Ann Arbor, MI 48103
Peter J. Doran Senior Vice President None
1205 Franklin Avenue
Garden City, NY 11530
L Michael J. Downer Secretary Vice President
Robert W. Durbin Vice President None
74 Sunny Lane
Tiffin, OH 44883
I Lloyd G. Edwards Vice President None
L Paul H. Fieberg Senior Vice President None
John Fodor Regional Vice President None
15 Latisquama Road
Southborough, MA 01772
L Mark P. Freeman, Jr. Director, President None
Clyde E. Gardner Senior Vice President None
Route 2, Box 3162
Osage Beach, MO 65065
B Evelyn K. Glassford Vice President None
Jeffrey J. Greiner Regional Vice President None
5898 Heather Glen Court
Dublin, OH 43017
David E. Harper Senior Vice President None
R.D., 1 Box 210, Rte 519
Frenchtown, NJ 08825
Ronald R. Hulsey Vice President None
6744 Avalon
Dallas, TX 75214
Robert S. Irish Regional Vice President None
1225 Vista Del Mar Drive
Delray Beach, FL 33483
L 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 Senior Vice President None
P. O. Box 247
Surfside, CA 90743
Arthur J. Levine Vice President None
12558 Highlands Place
Fishers, IN 46038
B Karl A. Lewis Assistant Vice President None
T. Blake Liberty Regional Vice President None
1940 Blake St., Suite 303
Denver, CO 80202
L Lorin E. Liesy Assistant Vice President None
L Susan G. Lindgren Vice President - Institutional
Investment Services
S Stella Lopez Vice President None
LW Robert W. Lovelace Director None
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
L John C. Massar Director, Senior Vice President None
L E. Lee McClennahan Senior Vice President None
Laurie B. McCurdy Regional Vice President None
3500 West Camino de Urania
Tucson, AZ 85741
S John V. McLaughlin Senior Vice President None
Terry W. McNabb Vice President None
2002 Barrett Station Road
St. Louis, MO 63131
L R. William Melinat Vice President - Institutional None
Investment Services Division
David R. Murray Vice President None
25701 S.E. 32nd Place
Issaquah, WA 98027
Stephen S. Nelson Vice President None
7215 Trevor Court
Charlotte, NC 28226
William E. Noe Regional Vice President None
304 River Oaks Road
Brentwood, TN 37027
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 Vice President None
32 Ridge Avenue
Newton Centre, MA 02159
B Candance D. Pilgrim Assistant Vice President None
Carl S. Platou Regional Vice President None
4021 96th Avenue, S.E.
Mercer Island, WA 98040
L 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 S. Ross Vice President None
55 Madison Avenue
Morristown, NJ 07962
L Julie D. Roth Vice President None
L James R. Rothenberg Director None
Douglas F. Rowe Regional Vice President None
30309 Oak Tree Drive
Georgetown, TX 78628
Christopher Rowey Regional Vice President None
9417 Beverlywood Street
Los Angeles, CA 90034
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
31465 St. Andrews
Westlake, OH 44145
L Daniel B. Seivert Assistant Vice President None
L R. Michael Shanahan Director None
David W. Short Director, Senior Vice President None
1000 RIDC Plaza, Suite 212
Pittsburgh, PA 15238
William P. Simon, Jr. Vice President None
554 Canterbury Lane
Berwyn, PA 19312
*L John C. Smith Vice President - Institutional None
Investment Services Division
L Mary E. Smith Assistant Vice President - None
Institutional Investment Services Division
Rodney G. Smith Vice President None
100 N. Central Expressway, Suite 1214
Richardson, TX 75080
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
Thomas A. Stout Regional Vice President None
12913 Kendale Lane
Bowie, MD 20715
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
L Drew Taylor Assistant Vice President None
S James P. Toomey Assistant Vice President None
I 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
L 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
L J. Kelly Webb Senior Vice President, Treasurer None
Gregory J. Weimer Vice President None
125 Surrey Drive
Canonsburg, PA 15317
B Timothy W. Weiss Director None
SF N. Dexter Williams Vice President None
Timothy J. Wilson Regional Vice President None
113 Farmview Place
Venetia, PA 15367
B Laura L. Wimberly Assistant Vice President None
H Marshall D. Wingo Director, Senior Vice President None
L Robert L. Winston Director, Senior 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
Scott D. Zambon Regional Vice President None
209 Robinson Drive
Tustin Ranch, CA 92782
</TABLE>
__________
L Business Address, 333 South Hope Street, Los Angeles, CA 90071
LW Business Address, 11100 Santa Monica Boulevard, 15th Floor, Los Angeles, CA
90025
SF Business Address, , One Market Plaza, Steuart Towers, Suite 1800, San
Francisco, CA 94111
B Business Address, 135 South State College Boulevard, Brea, CA 92821
S Business Address, 8000 IH-10, Suite 1400, San Antonio, TX 78230
H Business Address, 5300 Robin Hood Road, Norfolk, VA 23513
I 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 92821.
Records covering shareholder accounts are maintained and kept by the transfer
agent, American Funds Service Company, 135 South State College Blvd., Brea, CA
92821, 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 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 January,
1997.
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 January 20, 1997, 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/ Anthony W. Hynes, Jr. Treasurer
(Anthony W. Hynes, Jr.)
(3) Trustees:
H. Frederick Christie* Trustee
Don R. Conlan/*1/ Trustee
Diane C. Creel* Trustee
Martin Fenton, Jr.* Trustee
Leonard R. Fuller* Trustee
/s/ Abner D. Goldstine Trustee
(Abner D. Goldstine)
Herbert Hoover III* Trustee
Richard G. Newman* Trustee
Peter C. Valli* Trustee
</TABLE>
/1/ Power of Attorney attached hereto.
*By /s/ Julie F. Williams
Julie F. Williams, Attorney-in-Fact
<PAGE>
POWER OF ATTORNEY
I, Don R. Conlan, 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 Michael
J. Downer, Paul G. Haaga, Jr., Mary C. Hall, Anthony W. Hynes, 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 16th day of January, 1997.
Don R. Conlan, Trustee
CONSENT OF INDEPENDENT AUDITORS
American High-Income Trust.:
We consent to (a) the use in this Post-Effective Amendment No. 13 to
Registration Statement No. 33-17917 on Form N-1A of our report dated October
29, 1996 appearing in the Financial Statements, which are included in Part B,
the Statement of Additional Information of such Registration Statement, (b) the
references 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
January 21, 1997
Los Angeles, California
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-1-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 1,503,286
<INVESTMENTS-AT-VALUE> 1,556,517
<RECEIVABLES> 41,614
<ASSETS-OTHER> 80
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,598,211
<PAYABLE-FOR-SECURITIES> 43,105
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 8,210
<TOTAL-LIABILITIES> 51,315
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,489,510
<SHARES-COMMON-STOCK> 104,126,659
<SHARES-COMMON-PRIOR> 77,694,271
<ACCUMULATED-NII-CURRENT> 7,102
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (2,672)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 53,227
<NET-ASSETS> 1,546,896
<DIVIDEND-INCOME> 2,300
<INTEREST-INCOME> 127,327
<OTHER-INCOME> 0
<EXPENSES-NET> 11,500
<NET-INVESTMENT-INCOME> 118,127
<REALIZED-GAINS-CURRENT> 4,164
<APPREC-INCREASE-CURRENT> 47,452
<NET-CHANGE-FROM-OPS> 169,743
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 118,864
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 43,729,904
<NUMBER-OF-SHARES-REDEEMED> 22,319,120
<SHARES-REINVESTED> 5,021,604
<NET-CHANGE-IN-ASSETS> 435,910
<ACCUMULATED-NII-PRIOR> 7,839
<ACCUMULATED-GAINS-PRIOR> (7,107)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,481
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 11,500
<AVERAGE-NET-ASSETS> 1,327,274
<PER-SHARE-NAV-BEGIN> 14.30
<PER-SHARE-NII> 1.29
<PER-SHARE-GAIN-APPREC> .59
<PER-SHARE-DIVIDEND> 1.32
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.86
<EXPENSE-RATIO> .009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
