AMERICAN HIGH-INCOME TRUST
Semi-Annual Report
for the six months ended
March 31, 1997
[cover: photos of off-shore oil rig, satellite, and radio]
[The American Funds Group(r)]
American High-Income Trust (sm) seeks a high level of current income and,
secondarily, capital appreciation through a diversified, carefully supervised
portfolio consisting primarily of lower rated, higher risk corporate bonds.
About our cover: American High-Income Trust invests in a broad spectrum of
companies in industries ranging from oil drilling to telecommunications to
radio broadcasting.
Fund results in this report were computed without a sales charge unless
otherwise indicated. Here are returns, with all distributions reinvested,
through March 31, 1997, assuming payment of the 4.75% maximum sales charge at
the beginning of the stated periods:
Total Average Annual
Return Compound Return
Lifetime (since 2/19/88) + 151.83% + 10.67%
Five Years + 59.49 + 9.79
One Year + 4.77 -
Sales charges are lower for accounts of $25,000 or more.
THE FIGURES IN THIS REPORT REFLECT PAST RESULTS, AND ARE NOT PREDICTIVE OF
FUTURE RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY
INVESTING IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE
GREATER THE POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS
OF, OR INSURED OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL
INSTITUTION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY,
ENTITY OR PERSON.
FELLOW SHAREHOLDERS:
The first half of American High-Income Trust's 1997 fiscal year was a period of
divergent trends in the bond markets. The fund began the year last October 1
amid widespread optimism over the future of inflation and interest rates. Then,
toward the end of 1996, the outlook changed and prices of investment-grade
bonds began to falter. High-yield bonds proved more resilient, but turned down
in late February.
High-yield bond prices slid through the remainder of the fiscal period, but the
strength of the first few months more than offset the slide. As a result, your
fund posted a positive total return for the six months ended March 31.
Investors who reinvested their monthly dividends totaling 64 cents a share and
their 1.5 cents per share capital gain distribution saw the value of their
holdings rise 3.6%. That was essentially in line with the 3.7% return of the
Lipper High Current Yield Bond Funds Index, but somewhat behind the unmanaged
Salomon Brothers Long-Term High-Yield Index, which rose 5.4%. High-quality
bonds, as measured by the unmanaged Salomon Brothers Broad Investment-Grade
Bond Index, rose 2.5%.
Investors who took their dividends in cash had an income return of 4.3%, and
the value of their holdings declined 0.7%.
When investors expect inflation will heat up and reduce the purchasing power of
their interest income, they demand higher yields. As yields rise, bond prices
fall. Conversely, expectations of low inflation can push bond prices higher.
The bumpy ride in bond prices experienced during the period was caused, in
large part, by investors' changing perceptions about inflation and interest
rates.
Although the fiscal year began with optimism in the bond markets, by December
that optimism had begun to be replaced by fears that the Federal Reserve Board
would raise interest rates in a preemptive strike against inflation. When the
Fed finally raised the federal funds rate, the rate banks charge each other on
overnight loans, by 0.25% on March 25, bond prices had been falling for more
than three months. It is generally expected by market participants that the Fed
may raise short-term rates again.
As we have often noted in the past, American High-Income Trust does not base
investment decisions solely, or even primarily, on interest rate predictions.
Rather, your fund relies on thorough research into individual companies to find
corporate bonds that offer the opportunity for good reward relative to the risk
involved.
Of course, general trends in the bond markets also influence your fund's
investment decisions. The first half of this fiscal year offers an example.
When the year began, the high-yield market was so strong that finding
attractive opportunities had become increasingly difficult. In this
environment, the fund held a larger-than- usual portion of its assets in cash,
U.S. Treasury bonds and other lower yielding securities while we continued to
search for high-yield bonds that offered potential for solid long-term rewards.
Against this background, American High-Income Trust reduced its regular
dividend to 10 cents a share from 10.25 cents, effective with the February
payment.
However, with yields rising in late February and March, the fund's portfolio
counselors and analysts were again able to find high-yielding bonds that
appeared to offer good value. As a result, the fund is now more fully invested
than at the end of 1996. If interest rates do not fall to the levels of late
1996 and early 1997, we hope to increase the regular monthly dividend payment
soon or pay a special dividend at the end of the year (or both).
During the past six months, your fund's assets grew 13% to $1.8 billion, and
the number of shareholder accounts increased 12% to almost 72,000. Many of our
new shareholders may not be aware of American High-Income Trust's commitment to
research and the critical role played by our investment analysts. This process
was described in detail in the fund's 1996 annual report. If you would like to
learn more about the fund's research efforts, you may request a copy of the
1996 annual report by calling 800/421-0180.
We look forward to reporting to you after the close of this fiscal year.
Cordially,
[/s/Paul G. Haaga, Jr.]
Paul G. Haaga, Jr.
Chairman of the Board
[/s/Richard T. Schotte]
Richard T. Schotte
President
May 16, 1997
RESULTS AT A GLANCE
<TABLE>
<CAPTION>
TOTAL RETURNS/1/
(for periods ended 3/31/97) Six Months One Year Lifetime/2/
<S> <C> <C> <C>
American High-Income Trust +3.60% +10.02% +164.40%
Salomon Brothers Broad
Investment-Grade Bond Index +2.49 +4.92 +109.31
Salomon Brothers Long-Term
High-Yield Index +5.40 +8.72 +166.62
Lipper High Current Yield Bond
Funds Index +3.74 +10.30 +134.58
</TABLE>
30-DAY RATES (as of 4/30/97)
Yield based on Securities and
Exchange Commission formula 8.17%
Distribution rate based on offering price 7.76%
Distribution rate based on net asset value 8.15%
/1/Change in value of investment with dividends and capital gain distributions
reinvested
/2/Since 2/19/88
The SEC yield reflects income the fund expects to earn based on its current
portfolio of securities, while the distribution rate is based solely on the
fund's past dividends. Accordingly, the fund's SEC yield and distribution rate
may differ.
<TABLE>
<S> <C> <C> <C>
American High-Income Trust
Investment Portfolio
March 31, 1997
Unaudited
- -------------------------------------------------- --------- ----------- --------
[pie chart]
U.S. Corporate Bonds 64%
Non-U.S. Corporate Bonds 13%
U.S. Treasuries 7%
Stocks 5%
Non-U.S. Government Bonds 3%
Cash Equivalents 8%
[end pie chart]
- -------------------------------------------------- --------- ----------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes - 86.75% (000) (000) Assets
Banking & Financial Services - 0.48%
Chevy Chase Bank, FSB 9.25% 2008 $2,000 $1,960 .11%
First Nationwide Holdings Inc.:
10.625% 2003(1) 4,000 4,240
12.50% 2003 2,000 2,180 .37
----------- --------
8,380 .48
----------- --------
Beverages - 1.93%
Canandaigua Wine Co., Inc:
8.75% 2003 12,000 12,000
8.75% 2003(1) 5,250 5,224 .98
Delta Beverage Group, Inc. 9.75% 2003(1) 9,750 9,872 .57
Dr Pepper Bottling Co. of Texas 10.25% 2000 6,500 6,630 .38
----------- --------
33,726 1.93
----------- --------
Broadcasting & Publishing - 5.20%
American Media Operations, Inc. 11.625% 2004 16,400 17,712 1.01
American Radio Systems Corp. 9.00% 2006 11,250 10,856 .62
Chancellor Broadcasting Co.:
9.375% 2004 11,000 10,780
12.50% 2004 4,685 5,294 .92
Globo Comunicacoes E Participacoes LTDA. 10.50% 2006(1) 10,500 10,644 .61
Gray Communications Systems, Inc. 10.625% 2006 2,750 2,832 .16
Grupo Televisa, SA
Series A, 11.375% 2003 1,250 1,303
0%/13.25% 2008(2) 4,250 2,731 .23
Newsquest Capital PLC:
11.00% 2006 3,250 3,323
Series B, 11.00% 2006 4,750 4,857 .47
RBS Participacoes SA 11.00% 2007(1) 5,000 4,977 .28
STC Broadcasting, Inc. 11.00% 2007(1) 3,000 2,970 .17
Tevecap SA:
12.625% 2004(1) 4,875 5,058
12.625% 2004 250 259 .30
TV Azteca, SA de CV 10.125% 2004(1) 4,250 4,117 .23
Young Broadcasting Inc. 10.125% 2005 3,500 3,465 .20
----------- --------
91,178 5.20
----------- --------
Cable & Telephone in the United
Kingdom - 6.28%
Bell Cablemedia PLC 0%/11.95% 2004(2) 31,000 26,582 1.52
Colt Telecom Group PLC Units 0%/12.00% 2006(2) 16,000 9,600 .55
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(2) 20,750 13,487 .77
International CableTel Inc.:
0%/10.875% 2003(2) 21,175 16,728
0%/12.75% 2005(2) 1,000 690
10.00% 2007(1) 3,000 2,835 1.15
TeleWest PLC:
9.625% 2006 8,000 7,760
0%/11.00% 2007(2) 8,000 5,200 .74
Videotron Holdings PLC:
0%/11.125% 2004(2) 26,000 22,360
0%/11.00% 2005(2) 6,000 4,740 1.55
----------- --------
109,982 6.28
----------- --------
Cellular, Paging & Wireless
Communications - 12.86%
Cellular, Inc. 0%/11.75% 2003(2) 8,500 7,735 .44
Cellular Communications International, Inc.
Units, 0.00% 2000 17,250 12,247 .70
Cellular Communications of Puerto Rico, Inc.
10.00% 2007(1) 17,000 15,895 .91
Centennial Cellular Corp.:
8.875% 2001 17,000 15,980
10.125% 2005 2,500 2,513 1.05
Comunicacion Celular SA 0%/13.125% 2003(2) 16,000 11,040 .63
Geotek Communications, Inc. 0%/15.00% 2005(2) 1,000 572 .03
Globalstar LP 11.375% 2004(1) 3,500 3,395 .19
Heartland Wireless Communications, Inc.
13.00% 2003 5,300 2,226 .13
InterCel, Inc. 0%/12.50% 2006(2) 12,500 7,140 .41
McCaw International, Ltd. 0%/13.00% 2007(1),(2) 7,000 3,185 .18
Mobile Telecomm 13.50% 2002 16,375 14,860 .85
MobileMedia Communications, Inc.:
0%/10.50% 2003(2) 14,900 2,906
9.375% 2007 6,500 1,462 .25
NEXTEL Communications, Inc.:
0%/11.50% 2003(2) 2,250 1,733
0%/10.125% 2004 (formerly CenCall)(2) 6,750 4,523 .36
Omnipoint Corp.:
12.00% 2000(3) 12,500 11,297
11.625% 2006 21,500 17,630 1.65
Orion Network Systems, Inc.:
Units 0%/12.50% 2007(2) 3,000 1,500
Units 11.25% 2007 21,975 21,316 1.30
Paging Network, Inc. 11.75% 2002 14,750 15,635 .89
PanAmSat, LP:
9.75% 2000 6,500 6,727
0%/11.375% 2003(2) 7,000 6,580 .76
PriCellular Wireless Corp.:
0%/14.00% 2001(2) 8,000 8,160
0%/12.25% 2003(2) 15,710 13,589
10.75% 2004 4,000 3,940 1.47
Rogers Cantel Mobile Communications Inc.:
11.125% 2002 2,500 2,600
9.375% 2008 3,000 3,030 .32
Sprint Spectrum LP, Sprint Spectrum Finance Corp.,
11.00% 2006 1,000 1,060 .06
Vanguard Cellular Systems, Inc. 9.375% 2006 2,000 1,970 .11
Western Wireless Corp. 10.50% 2006(1) 3,000 2,910 .17
----------- --------
225,356 12.86
----------- --------
Construction & Housing - 0.52%
M.D.C. Holdings, Inc. 11.125% 2003 8,750 9,100 .52
----------- --------
Diversified Manufacturing - 0.47%
Fage Dairy Industry SA 9.00% 2007(1) 8,500 8,245 .47
----------- --------
Diversified Media, Cable Television &
Telecommunications - 5.22%
Brooks Fiber Properties, Inc. 0%/10.875% 2006(2) 4,750 2,945 .17
Cablevision Systems Corp. 9.875% 2013 4,000 3,800 .22
CEI Citicorp Holdings, SA 11.25% 2007(1) 3,500 3,247 .19
Comcast Corp. 10.25% 2001 3,200 3,328 .19
Comtel Brasileira Ltda. 10.75% 2004(1) 4,250 4,399 .25
Esat Holdings Ltd. Units 0%/12.50% 2007(1),(2) 11,250 6,103 .35
ICG Communications, Inc., ICG Holdings, Inc.
0%/11.625% 2007(1),(2) 2,000 1,060 .06
IntelCom Group Inc., IntelCom Group (USA), Inc.
0%/13.50% 2005(2) 1,000 670 .04
IXC Communications Inc. 12.50% 2005 2,000 2,190 .12
Jones Intercable, Inc. 9.625% 2002 2,000 2,050 .12
MFS Communications Co., Inc.:
0%/9.375% 2004(2) 27,850 25,065
0%/8.875% 2006(2) 2,000 1,510 1.52
Multicanal Participacoes SA 12.625% 2004 10,000 11,050 .63
Nextlink Communications LLC,
Nextlink Capital, Inc. 12.50% 2006(1) 1,750 1,776 .10
Qwest Communications International Inc.
10.875% 2007(1) 5,000 4,925 .28
Storer Communications, Inc. 10.00% 2003 3,034 3,049 .17
Teleport Communications Group Inc. 9.875% 2006 3,000 3,105 .18
Viacom International Inc.:
9.125% 1999 4,859 4,932
10.25% 2001 4,000 4,280
7.75% 2005 2,000 1,932 .64
----------- --------
91,416 5.22
----------- --------
Electric & Gas Utilities - 0.17%
Columbia Gas System, Inc., Series A, 6.39% 2000 3,000 2,928 .17
----------- --------
Energy & Related Companies - 6.55%
Abraxas Petroleum Corp. 11.50% 2004 17,000 17,850 1.02
Benton Oil and Gas Co. 11.625% 2003 7,000 7,595 .43
Chesapeake Energy Corp. 10.50% 2002 3,700 3,987 .23
Cliffs Drilling Co. 10.25% 2003 5,500 5,665 .32
Dual Drilling Co. 9.875% 2004 9,050 9,593 .55
Falcon Drilling Co., Inc.:
9.75% 2001 2,500 2,587
8.875% 2003 4,250 4,292 .39
Flores & Rucks, Inc. 13.50% 2004 2,250 2,633 .15
Forcenergy Inc. 9.50% 2006 3,700 3,682 .21
Global Marine, Inc. 12.75% 1999 1,900 2,018 .12
Gulf Canada Resources Ltd. 9.25% 2004 4,000 4,120 .24
J. Ray McDermott, SA 9.375% 2006 2,250 2,272 .13
Kelley Oil & Gas Corp. 10.375% 2006 9,225 9,340 .53
Lomak Petroleum, Inc. 8.75% 2007 8,750 8,400 .48
Mariner Energy, Inc. 10.50% 2006(1) 6,750 7,020 .40
Mesa Operating Co., 10.625% 2006 14,650 15,309 .87
Triton Energy Corp. 0%/9.75% 2000(2) 8,000 8,420 .48
----------- --------
114,783 6.55
----------- --------
Food Retailing - 2.64%
Bruno's, Inc. 10.50% 2005 12,500 12,688 .72
Carr-Gottstein Foods Co. 12.00% 2005 4,000 4,360 .25
Quality Food Centers, Inc. 8.70% 2007(1) 2,000 1,935 .11
Rykoff-Sexton, Inc. 8.875% 2003 10,000 9,600 .55
Star Markets Co., Inc. 13.00% 2004 4,500 5,040 .29
Stater Brothers Holdings Inc. 11.00% 2001 11,500 12,535 .72
----------- --------
46,158 2.64
----------- --------
Forest Products & Paper - 3.80%
Container Corp. of America:
10.75% 2002 6,000 6,480
9.75% 2003 18,000 18,720
11.25% 2004 3,500 3,780 1.65
Fort Howard Paper Co.:
9.25% 2001 12,500 12,938
8.25% 2002 2,000 1,990
11.00% 2002 3,038 3,137
9.00% 2006 3,250 3,283 1.22
Grupo Industrial Durango, SA de CV 12.625% 2003 1,500 1,613 .09
MAXXAM Group Inc. 11.25% 2003 3,000 3,060 .18
Pacific Lumber Co. 10.50% 2003 7,000 7,070 .40
PT Pabrik Kertas Tjiwi Kimia 13.25% 2001 4,000 4,560 .26
----------- --------
66,631 3.80
----------- --------
Health & Personal Care - 5.26%
Integrated Health Services, Inc.:
9.625% 2002 4,985 5,135
10.75% 2004 6,000 6,510
10.25% 2006(1) 11,250 11,869 1.34
Mariner Health Group, Inc. 9.50% 2006 8,000 8,000 .46
Merit Behavioral Care Corp. 11.50% 2005 4,750 5,178 .30
Paracelsus Healthcare Corp. 10.00% 2006 20,775 19,528 1.11
Regency Health Services, Inc.:
9.875% 2002 13,050 13,180
12.25% 2003(1) 3,750 4,031 .98
Revlon Worldwide (Parent) Corp. 0.00% 2001(1) 8,400 5,271 .30
Tenet Healthcare Corp.:
8.00% 2005 3,000 2,917
8.625% 2007 3,250 3,169 .35
Unison HealthCare Corp. 12.25% 2006(1) 2,850 2,280 .13
Universal Health Services, Inc. 8.75% 2005 5,100 5,151 .29
----------- --------
92,219 5.26
----------- --------
Independent Power Producers - 2.20%
California Energy Co., Inc.
10.25% 2004 29,750 32,353 1.85
CE Casecnan Water and Energy Co., Inc.:
Series A, 11.45% 2005 2,000 2,210
Series B, 11.95% 2010 3,500 3,920 .35
----------- --------
38,483 2.20
----------- --------
Insurance - 0.14%
Integon Capital I, Integon Corp. 10.75% 2027(1) 2,400 2,436 .14
----------- --------
Leisure, Tourism & Restaurants - 4.89%
AMF Group Inc.:
0%/12.25% 2006(2) 18,000 12,240
10.875% 2006 7,500 7,800 1.14
Boyd Gaming Corp. 9.25% 2003 7,250 6,815 .39
California Hotel Finance Corp. 11.00% 2002 9,000 9,270 .53
Foodmaker, Inc.:
9.25% 1999 5,000 5,050
9.75% 2002 8,950 9,039 .80
Four Seasons Hotels Inc. 9.125% 2000(1) 7,000 7,096 .41
Rio Hotel & Casino, Inc.:
10.625% 2005 6,400 6,464
9.50% 2007(1) 1,250 1,188 .44
Station Casinos, Inc. 9.625% 2003 9,250 8,834 .50
Sun International Hotels Ltd., Sun International
North America, Inc. 9.00% 2007(1) 2,750 2,599 .15
Trump Atlantic City Associates, Trump Atlantic
City Funding, Inc. 11.25% 2006 5,000 4,550 .26
Wyndham Hotel Corp. 10.50% 2006 4,500 4,793 .27
----------- --------
85,738 4.89
----------- --------
Manufacturing & Materials - 8.99%
Acme Metals Inc.:
12.50% 2002 7,000 7,420
0%/13.50% 2004(2) 5,750 5,865 .76
AGCO Corp. 8.50% 2006 8,000 7,960 .45
AK Steel Corp.:
10.75% 2004 3,125 3,328
9.125% 2006 11,000 10,835 .81
Derlan Manufacturing Inc. 10.00% 2007(1) 17,600 17,336 .99
Fairchild Semiconductor Corp. 10.125% 2007(1) 9,650 9,602 .55
Kaiser Aluminum & Chemical Corp.:
9.875% 2002 9,750 9,652
12.75% 2003 7,500 8,063
10.875% 2006 2,750 2,908
Series B, 10.875% 2006 4,500 4,703 1.45
Key Plastics, Inc. 10.25% 2007(1) 4,000 3,970 .23
Knoll Group, Inc. 10.875% 2006 5,000 5,500 .31
Lifestyle Furnishings International Ltd.
10.875% 2006 6,500 7,150 .41
MagneTek, Inc. 10.75% 1998 4,775 4,823 .27
Newport News Shipbuilding Inc. 9.25% 2006 3,380 3,439 .20
Nortek, Inc. 9.25% 2007(1) 3,850 3,773 .21
Owens-Illinois, Inc. 11.00% 2003 2,250 2,481 .14
Printpack Inc.:
Series B, 9.875% 2004 3,000 3,045
10.625% 2006 5,480 5,617 .49
Sterling Chemicals, Inc. 11.75% 2006 2,500 2,600 .15
Texas Petrochemicals Corp. 11.125% 2006 10,250 10,814 .62
UCAR Global Enterprises Inc. 12.00% 2005 5,630 6,404 .36
U.S. Can Corp. 10.125% 2006(1) 3,000 3,120 .18
Westinghouse Air Brake Co. 9.375% 2005 7,250 7,177 .41
----------- --------
157,585 8.99
----------- --------
Merchandising - 1.00%
AnnTaylor 8.75% 2000 3,500 3,474 .20
Barnes & Noble, Inc. 11.875% 2003 10,450 11,391 .65
Loehmann's 11.875% 2003 2,500 2,675 .15
----------- --------
17,540 1.00
----------- --------
Miscellaneous Services - 2.93%
Allied Waste North America, Inc. 10.25% 2006 13,700 13,974 .80
CellNet Data Systems, Inc. 0%/13.00% 2005(2),(3) 32,000 21,280 1.21
EarthWatch Inc. Units 12.50% 2001(1) 6,000 6,000 .34
Petro Stopping Centers, LP, Petro Financial Corp.
10.50% 2007(1) 10,250 10,186 .58
----------- --------
51,440 2.93
----------- --------
Protection Services - 0.78%
Borg-Warner Security Corp. 9.625% 2007(1) 4,750 4,608 .26
Protection One Alarm Monitoring, Inc.
0%/13.625% 2005(2) 9,500 9,025 .52
----------- --------
13,633 .78
----------- --------
Real Estate - 0.24%
B.F. Saul Real Estate Investment Trust
11.625% 2002 4,000 4,280 .24
----------- --------
Textiles & Apparel - 0.37%
Dawson Production Services, Inc. 9.375% 2007 4,000 3,900 .22
Tultex Corp. 10.625% 2005 1,000 1,088 .06
WestPoint Stevens Inc. 8.75% 2001 1,500 1,500 .09
----------- --------
6,488 .37
----------- --------
Transportation - 4.01%
Airplanes Pass Through Trust, pass-through
certificates, Class D, 10.875% 2019(4) 8,350 9,143 .52
Continental Airlines, Inc. 9.50% 2001 14,250 14,464 .83
Teekay Shipping Corp. 8.32% 2008 13,500 13,230 .75
USAir, Inc.:
8.625% 1998 1,000 1,000
9.625% 2001 12,000 12,210
9.625% 2003 2,240 2,285
10.00% 2003 10,250 10,340
Pass-through trust, Series 1993-A3,
10.375% 2013(4) 7,400 7,640 1.91
----------- --------
70,312 4.01
----------- --------
Private Issue Collateralized Mortgage/Asset-Backed
Obligations(4) - 0.02%
Resolution Trust Corp.:
Series 1993-C1, Class E, 9.50% 2024 226 226
Series 1993-C2, Class E, 8.50% 2025 191 190 .02
----------- --------
416 .02
----------- --------
Non-U.S. Governments and Governmental
Authorities - 3.06%
Argentina (Republic of):
6.75% 2005(5) 970 867
11.00% 2006 750 769
11.75% 2007(1) ARP 19,880 19,983
11.375% 2017 $4,625 4,746 1.50
Brazil (Federal Republic of):
Eligible Interest Bond 6.50% 2006(5) 1,900 1,691
Debt Conversion Bond 6.563% 2012(5) 750 588
Capitalization Bond PIK 8.00% 2014(6) 275 204 .14
Ecuador (Republic of) Past Due Interest Bonds:
Registered 6.50% 2015(5) 8,745 4,941
Bearer 6.50% 2015(5) 404 228 .30
New Zealand Index Linked
4.65% 2016(7) NZ$ 3,000 2,010 .11
Panama (Republic of) Interest Reduction Bond
3.50% 2014(1),(5) $11,500 8,007 .46
Peru (Republic of) Front Loaded Interest
Reduction Bond 3.25% 2017(1),(5) 500 258 .02
Poland (Republic of)
Treasury Bill 1997 PLZ 8,000 2,450 .14
United Mexican States:
Collateralized Eurobond, Series A, 6.453% 2019 $500 436
Government:
9.75% 2001 1,000 1,038
11.375% 2016 3,695 3,764
11.50% 2026 125 128 .31
Venezuela (Republic of):
Front Loaded Interest Reduction Bond 6.75% 2007(5) 952 826
6.50% 2007(5) 750 645 .08
----------- --------
53,579 3.06
----------- --------
U.S. Treasury Obligations - 6.74%
7.25% 1998 5,000 5,048
6.875% 1999 39,000 39,293
7.50% 2001 19,000 19,537
8.00% 2001 3,000 3,135
5.75% 2003 10,000 9,439
7.875% 2004 1,000 1,056
11.625% 2004 28,000 35,695
6.50% 2006 5,000 4,845
-------- --------
118,048 6.74
----------- --------
Total Bonds & Notes (cost: $1,509,422,000) 1,520,080 86.75
----------- --------
Number of
Stocks (Common & Preferred) - 4.65% Shares
American Radio Systems Corp., Class A(8) 40,000 $1,220
American Radio Systems Corp.,
exchangeable preferred(1),(6) 112,500 10,969 .69
AnnTaylor, Inc.(8) 40,000 815 .05
California Energy Co., Inc.(8) 65,000 2,210 .13
CellNet Data Systems, Inc.,
warrants, expire 6/29/97(3),(8) 128,000 1,536 .09
Cellular Communications International, Inc.(8) 32,800 910 .05
Chancellor Broadcasting Co., Class A(8) 60,000 1,590 .09
Chancellor Radio Broadcasting Co.,
exchangeable preferred(1) 88,000 8,580 .49
Columbia Gas System, Inc. 14,700 851 .05
Comcast Corp., Class A 10,000 164
Comcast Corp., Class A, special stock 20,000 338 .03
Comunicacion Celular SA,
warrants, expire 11/15/03(8) 15,000 105 .01
EarthWatch Inc., 12.00% convertible preferred(1),(3),(8) 675,000 7,523 .43
Falcon Drilling Co., Inc.(8) 35,000 1,295 .07
Foodmaker, Inc.(8) 30,000 304 .02
Heartland Wireless Communications, Inc.,
warrants, expire 4/26/00(1),(8) 22,800 2 .00
ICG Communications, Inc., 14.00%
exchangeable preferred(1),(6) 3,000 2,880 .16
ICG Holdings (Canada), Inc. (formerly IntelCom Group Inc.),
warrants, expire 8/8/05(1),(8) 33,000 190 .01
Integrated Health Services, Inc. 48,500 1,419 .08
J. Ray McDermott, SA(8) 63,600 1,542 .09
Kelley Oil & Gas Corp. convertible preferred(8) 70,000 1,715 .10
Kmart Corp., 7.75% convertible preferred 60,000 3,210 .18
Marriott International, Inc. 13,896 691 .04
McDermott International, Inc. 60,000 1,283 .07
MESA Inc.(8) 275,000 1,650
MESA Inc. 8.00% convertible preferred, Series A(6) 282,484 2,154 .22
Nacional Financiera SNC PRIDES 11.25% 1998 20,000 767 .04
Nortel Inversora SA, Class A, preferred
(American Depositary Receipts)(1),(3) 1,174,607 14,659 .84
Omnipoint Corp.(3),(8) 278,001 2,168 .12
Protection One Alarm Monitoring, Inc.,
warrants, expire 6/30/05(1),(8) 30,400 190 .01
Station Casinos, Inc. 7.00% convertible preferred 90,000 3,881 .22
Sterling Chemicals Inc., warrants, expire 8/15/08(8) 3,000 96 .00
Time Warner Inc. 10.25% exchangeable preferred
Series M(6) 2,956 3,133 .18
Viacom International Inc., Class B(8) 30,000 994 .06
Worldcom, Inc.(8) 21,000 462 .03
----------- --------
Total Stocks (cost: $72,373,000) 81,496 4.65
----------- --------
Principal
Amount
(000)
Convertible Debentures - 0.42%
Banco Nacional de Mexico, SA 11.00% 2003 $500 525 .03
Integrated Health Services, Inc. 6.00% 2003 6,500 6,841 .39
----------- --------
Total Convertible Debentures (cost:
$6,937,000) 7,366 .42
----------- --------
Miscellaneous - 0.30%
Investment securities in initial
period of acquisition 5,536 5,303 .30
----------- --------
Total Miscellaneous (cost: $5,351,000) 5,303 .30
----------- --------
Short-Term Securities
Corporate Short-Term Notes - 7.36%
American Brands, Inc. 5.30% due 4/14/97 8,000 7,983 .46
Ameritech Capital Funding Corp. 5.33% due 4/9/97 29,000 28,961 1.65
CIT Group Holdings, Inc. 6.72% due 4/1/97 17,890 17,887 1.02
Ford Motor Credit Co. 5.30% due 4/10/97 20,400 20,370 1.16
Monsanto Co. 5.28% due 4/10/97 10,000 9,985 .57
National Rural Utilities Cooperative Finance Corp.:
5.24% due 4/10/97 7,500 7,489
5.28% due 4/11/97 8,300 8,287 .90
J.C. Penney Funding Corp.:
5.28% due 4/10/97 8,000 7,988
5.31% due 4/15/97 5,000 4,989 .74
Pepsico Inc. 5.54% due 4/21/97 15,000 14,952 .86
----------- --------
Total Short-Term Securities (cost:
$128,890,000) 128,891 7.36
----------- --------
Total Investment Securities (cost:
$1,722,973,000) 1,743,136 99.48
Excess of cash and receivables
over payables 9,140 .52
----------- --------
Net Assets $1,752,276 100.00%
=========== ========
(1)Purchased in a private placement transaction;
resale to the public may require registration
or sale only to qualified institutional buyers.
(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 shortly 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>
<TABLE>
<S> <C> <C>
American High-Income Trust
Financial Statements
Statement of Assets and Liabilities (Unaudited)
at March 31, 1997 (dollars in thousands)
Assets:
Investment securities
(cost: $1,722,973) $ 1,743,136
Cash 18
Receivables for--
Sales of investments $ 8,584
Sales of fund's shares 6,473
Forward currency contracts 98
Accrued dividends and interest 31,443 46,598
------- -------
1,789,752
Liabilities:
Payables for--
Purchases of investments 22,946
Repurchases of fund's shares 7,768
Dividends on fund's shares 5,717
Management services 701
Accrued expenses 344 37,476
------- -------
Net Assets at March 31, 1997 --
Equivalent to $14.74 per share on
118,906,148 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $ 1,752,276
==============
Statement of Operations
for the six months ended March 31, 1997 (Unaudited)
(dollars in thousands)
Investment Income:
Income:
Dividends $ 1,379
Interest 75,389 $ 76,768
-------
Expenses:
Management services fee 3,846
Distribution expenses 2,075
Transfer agent fee 547
Reports to shareholders 82
Registration statement and prospectus 223
Postage, stationery and supplies 142
Trustees' fees 13
Auditing and legal fees 43
Custodian fee 42
Taxes other than federal income tax 26
Other expenses 17 7,056
------- -------
Net investment income 69,712
-------
Realized Gain and Unrealized
Appreciation on Investments:
Net realized gain 18,975
Net change in unrealized appreciation
on investments (33,068)
Net unrealized appreciation on
open forward currency contracts 102 (32,966)
------- -------
Net realized gain and unrealized
appreciation on investments (13,991)
-------
Net Increase in Net Assets
Resulting from Operations $ 55,721
========
Statement of Changes in Net Assets
(dollars in thousands)
Six months
ended Year ended
3/31/97* 9/30/96
Operations: ------- -------
Net investment income $ 69,712 $ 118,127
Net realized gain on investments 18,975 4,164
Net change in unrealized appreciation
on investments (32,966) 47,452
------- -------
Net increase in net assets
resulting from operations 55,721 169,743
------- -------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (71,244) (118,864)
Distributions from net realized
gain on investments (1,653) -
------- -------
Total dividends and distributions (72,897) (118,864)
------- -------
Capital Share Transactions:
Proceeds from shares sold:
26,119,205 and 43,729,904
shares, respectively 393,135 636,739
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on
investments: 3,055,312 and
5,021,604 shares, respectively 45,835 73,124
Cost of shares repurchased:
14,395,028 and 22,319,120
shares, respectively (216,414) (324,832)
------- -------
Net increase in net assets
resulting from capital share
transactions 222,556 385,031
------- -------
Total Increase in Net Assets 205,380 435,910
Net Assets:
Beginning of period 1,546,896 1,110,986
------- -------
End of period (including undistributed
net investment income: $5,570
and $7,102, respectively) $ 1,752,276 $ 1,546,896
========= =========
*Unaudited
See Notes to Financial Statements
</TABLE>
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. 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. Short-term
securities with more than 60 days remaining to maturity, including forward
currency contracts, are valued at the mean of their representative quoted bid
and asked prices. Where pricing service or market quotations are not readily
available, securities will be valued at fair value by the Board of Trustees or
a committee thereof. Short-term securities with 60 days or less remaining 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 asset value 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 period. Purchases and sales of
investment securities and income are calculated using the prevailing exchange
rate. 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 $42,000 includes $40,000 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 March 31, 1997, net unrealized appreciation on investments, excluding
forward currency contracts, for book and federal income tax purposes aggregated
$20,163,000, of which $62,037,000 related to appreciated securities and
$41,874,000 related to depreciated securities. During the six months ended
March 31, 1997, the fund realized, on a tax basis, a net capital gain of
$18,994,000 on securities transactions. Net losses related to non-U.S. currency
transactions of $16,000 were treated as ordinary income for federal tax
purposes. The cost of portfolio securities, excluding forward currency
contracts, for book and federal income tax purposes was $1,722,973,000 at March
31, 1997.
3. The fee of $3,846,000 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 six months ended March 31,
1997, distribution expenses under the Plan were $2,075,000. As of March 31,
1997, accrued and unpaid distribution expenses were $293,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $547,000. American Funds Distributors, Inc. (AFD), the principal
underwriter of the fund's shares, received $1,111,000 (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 March 31, 1997,
aggregate amounts deferred and earnings thereon were $38,000.
CRMC is owned by The Capital Group Companies, Inc. AFS and AFD are both wholly
owned subsidiaries of CRMC. Certain Trustees and officers of the fund are or
may be considered to be affiliated with CRMC, AFS and AFD. No such persons
received any remuneration directly from the fund.
4. As of March 31, 1997, accumulated undistributed net realized gain on
investments was $14,378,000 and paid-in capital was $1,712,067,000.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $648,558,000 and $446,068,000, respectively, during
the six months ended March 31, 1997.
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 possible movements in foreign exchange rates and securities values
underlying these instruments. At March 31, 1997, the fund had an outstanding
forward currency contract to sell non-U.S. currency as follows:
<TABLE>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation
------------- ------------- ------------- -------------
Unrealized
Non-U.S. Currency Sales Contract Non-U.S. U.S. Amount Appreciation
- ----------------------------------- ------------- ------------- ------------- -------------
French Francs expiring 11/25/97 FF5,100,000 $1,021,000 $923,000 $98,000
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share
Data and Ratios Year endedSeptember 30
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
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>
THE AMERICAN FUNDS GROUP(R) SHAREHOLDER SERVICES
ARE YOU AWARE OF YOUR RIGHTS?
Did you know you may be eligible for a sales charge discount when you buy
shares of most American Funds? The discounts begin when your investments total
$25,000 for bond funds or $50,000 for stock and stock/bond funds - and the good
news is you don't have to invest the whole amount at one time.
Through your right of accumulation, when you purchase additional shares you can
add the purchase amount to the value of shares you already own - in any of our
eligible funds* - in order to qualify for a sales charge discount on the new
investment.
Sales charges are reduced on a sliding scale as your investments increase.
You'll find a detailed breakdown of all discounts in your fund's prospectus,
which you can obtain from your financial adviser or by calling a Shareholder
Services Representative.
OTHER WAYS TO REDUCE SALES CHARGES
You can establish a statement of intention that allows you to invest at a
reduced sales charge immediately, based on purchases you intend to make over a
13-month period.* Or you can aggregate accounts by adding your purchase amount
to the total value of accounts you, your spouse and your minor children have
with The American Funds Group. Call a Shareholder Services Representative for
details and restrictions.
Whether you accumulate, aggregate or establish a statement of intention, it all
adds up - to more purchasing power for you.
INVESTING WITH STYLE
American FundsLine(r) and FundsLine OnLine (sm) - Handle transactions using
your computer or phone 24 hours a day. Obtain current prices and investment
returns, exchange shares between funds, redeem shares, check your share
balances and confirm your most recent transaction. Request duplicate statements
and order checks (phone only). Just call 800/325-3590 or visit our Web site at
www.americanfunds.com.
American FundsLink (sm) - Link your American Funds accounts with your bank
account. You can have fund dividends or automatic fund withdrawals deposited
directly into your bank account. Or you can invest money directly from your
bank account into your fund account on either a systematic or on-demand basis.
Other automatic transactions - You can reinvest dividends into the same fund or
another fund, make withdrawals, and exchange shares between funds - quarterly,
monthly or during the months you specify.
Dividend and capital gain options - Use your dividend and capital gain
distributions to meet your changing needs. You may:
- - Automatically reinvest distributions back into the fund at no sales charge.
- - Cross-reinvest dividends into another fund at no sales charge. (Certain
restrictions apply.)
- - Have dividends mailed or sent electronically to you or to someone else.
Exchange privileges - When you and your investment adviser feel it's time to
adjust your portfolio to meet your changing investment goals, you can easily
exchange shares from one American Fund to another - usually without paying a
sales charge.* To open an account in a different fund, you must meet that
fund's minimum investment requirement. An exchange generally constitutes a sale
and purchase for tax purposes.
*Investments in our money market funds - The Cash Management Trust of America,
The Tax-Exempt Money Fund of America and The U.S. Treasury Money Fund of
America - which are purchased without a sales charge, generally do not apply
when determining your sales charges unless the shares were originally purchased
in another American Fund that required a sales charge, then later exchanged
into our money market funds.
FOR MORE COMPLETE INFORMATION ABOUT THESE SERVICES OR ABOUT ANY OF THE AMERICAN
FUNDS, INCLUDING CHARGES AND EXPENSES, PLEASE OBTAIN A PROSPECTUS FROM YOUR
FINANCIAL ADVISER OR AMERICAN FUNDS SERVICE COMPANY AND READ IT CAREFULLY
BEFORE YOU INVEST OR SEND MONEY. THESE SERVICES ARE SUBJECT TO CHANGE OR
TERMINATION.
To talk to a Shareholder Services Representative, call toll-free (8 a.m. to 8
p.m. ET) from anywhere in the U.S.: 800/421-0180
Visit us at www.americanfunds.com on the World Wide Web.
OFFICES OF THE FUND AND OF THE INVESTMENT ADVISER,
CAPITAL RESEARCH AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
(PLEASE WRITE TO THE ADDRESS NEAREST YOU.)
American Funds Service Company
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. YOU MAY ALSO CALL AMERICAN FUNDS SERVICE
COMPANY, TOLL-FREE, AT 800/421-0180, OR VISIT WWW.AMERICANFUNDS.COM ON THE
WORLD WIDE WEB.
This report is for the information of shareholders of American High-Income
Trust, but it may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the fund. If used as sales
material after June 30, 1997, this report must be accompanied by an American
Funds Group Statistical Update for the most recently completed calendar
quarter.
Litho in USA CMG/FS/3406
Lit. No. AHIT-013-0597
Printed on recycled paper
[The American Funds Group (r)]
