AMERICAN HIGH-INCOME TRUST
[The American Funds Group (R)]
LOOKING BEYOND TODAY'S YIELD
[cover: sketch of man looking through binoculars]
ANNUAL REPORT
for the year ended September 30, 1997
A
merican 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.
American High-Income Trust is one of the 28 funds in The American Funds
Group,(R)managed by Capital Research and Management Company. Since 1931,
Capital has invested with a long-term focus based on thorough research and
attention to risk.
RESULTS AT A GLANCE
TOTAL RETURNS
Lifetime/2/
(for periods ended 9/30/97)/1/ One Year (annualized)
American High-Income Trust +14.66% +11.82%
Salomon Brothers
Broad Investment-Grade Bond Index +9.71% +8.76%
Salomon Brothers
Long-Term High-Yield Index +18.82% +12.13%
Lipper
High Current Yield Bond Funds Index +14.96% +10.45%
30-DAY RATES (AS OF 10/31/97)
Yield based on Securities and Exchange
Commission formula 7.22%
Distribution rate based on offering price 7.27%
Distribution rate based on net asset value 7.63%
In its lifetime of over 9-1$2 years (2/19/88 through 9/30/97), American
High-Income Trust ranked 8th in total return among the 52 high current yield
funds in existence throughout the period, according to Lipper Analytical
Services. For the five years ended September 30, it ranked 29th of 65 and for
the 12 months ended September 30, the fund ranked 101st of 171. Lipper rankings
do not reflect the effects of sales charges.
/1/Change in value of investment with dividends and capital gain distributions
reinvested
/2/Since 2/19/88
The SEC yield reflects income the fund expects to earn based on its current
portfolio of securities, while the distribution rate is based solely on the
fund's past dividends. Accordingly, the fund's SEC yield and distribution rate
may differ.
Fund results in this report were computed without a sales charge unless
otherwise indicated. The maximum sales charge is 4.75%; sales charges are lower
for accounts of $25,000 or more. THE FIGURES IN THIS REPORT REFLECT PAST
RESULTS. SHARE PRICE AND RETURN WILL VARY, SO YOU MAY LOSE MONEY BY INVESTING
IN THE FUND. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE
POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED
OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
About our cover: American High-Income Trust is a bond fund with a difference -
the difference being that it looks beyond today's yield to find long-term
growth.
FELLOW SHAREHOLDERS:
We are pleased to report that fiscal 1997 was a rewarding year for investors in
American High-Income Trust. The fund provided a steady stream of income and a
solid total return during the 12 months ended September 30.
Shareholders who reinvested their dividends totaling $1.24 a share and the 1.5
cents a share capital gain distribution paid in December earned a total return
of 14.7%, including an income return of 8.7%. Investors who elected to take
dividends in cash saw the value of their holdings increase 5.7% while earning
an income return of 8.4%.
For the year, the fund trailed the unmanaged Salomon Brothers Long-Term
High-Yield Index, which had a total return of 18.8%, and nearly matched the
Lipper High Current Yield Bond Funds Index, an index of the 30 largest
high-yield funds tracked by Lipper Analytical Services, which had a total
return of 15.0%. The unmanaged Salomon Brothers Broad Investment-Grade Bond
Index, which measures higher quality bonds, rose 9.7%.
This was a strong year for the U.S. bond market. Inflation remained in check
and the government's economic indicators showed little threat of rising prices
on the horizon. That was good news for the bond market because investors'
expectations about inflation are a key factor in determining which way bond
prices move. If bond buyers expect inflation to drop or remain low, they
frequently bid bond prices higher.
The good economic news led some analysts to speak of a "new paradigm" in the
market, with the idea that this favorable confluence of economic events may
last well into the future. While we are pleased that American High-Income Trust
benefited from the bond market's strength during the past year, we must caution
against expecting such strong returns to continue indefinitely.
This year, the fund marked an important milestone when it passed $2 billion in
assets, making it one of the 50 largest taxable fixed-income funds tracked by
Lipper. Since the fund's inception in February 1988, the bond market has
changed in many ways. One of the biggest changes has been the market's growth.
Much of the growth has come outside the United States, including bonds issued
by corporations and governments in both developed countries and emerging
markets. The fund's portfolio reflects the increased number of opportunities
available around the world. In the past year, the fund increased its holdings
of non-U.S. securities to 20% of net assets from 14%, including about 9% in
emerging markets.
We believe our extensive global research will continue to find attractive
opportunities in emerging markets in the future. Regardless of where it finds
opportunities, your fund has always invested with an eye toward providing solid
long-term returns in addition to high current income. To accomplish this,
American High-Income Trust concentrates its efforts on research, with the aim
of buying bonds of the right companies at the right price.
Richard Schotte, the fund's president since its inception and one of its three
portfolio counselors, has announced his retirement effective December 31. The
fund's Trustees wish to thank Richard for his years of service and his tireless
efforts on the fund's behalf.
We anticipate that in December we will declare a special income dividend, as
well as a capital gain distribution of about 34 cents per share. We look
forward to reporting to you again in six months.
Cordially,
[/s/ Paul G. Haaga, Jr.] [/s/ Richard T. Schotte]
Paul G. Haaga, Jr. Richard T. Schotte
Chairman of the Board President
November 14, 1997
CHARTING AN INVESTMENT
Here's how a $10,000 investment in American High-Income Trust grew between
February 19, 1988, when the fund began operations, and September 30, 1997, the
end of its latest fiscal year. As you can see, that $10,000 grew to $27,872
with all distributions reinvested.
[begin chart]
$30,057/1/
Salomon Brothers Long-Term High Yield Index
$27,872/2,3/
American High-Income Trust with dividends reinvested
$25,995/1/
Lipper High Current Yield Bond Funds Index
$22,406/1/
Salomon Brothers Broad Investment-Grade Bond Index
$13,897/4/
Consumer Price Index (inflation)
$10,000/2/
original investment
<TABLE>
<CAPTION>
American
High-Income Lipper High
Year ended Salomon Brothers Trust/2/,/3/ Current Yield Salomon Brothers Consumer
September Long-Term High- with dividends Bond Funds Broad Investment- Price Index
30 Yield Index/1/ reinvested Index/1/ Grade Bond Index/1/ (inflation)/4/
<S> <C> <C> <C> <C> <C>
1988/5/ $10,506 $10,074 $10,475 $10,222 $10,328
1989 11,010 11,073 10,935 11,367 10,776
1990 9,560 10,628 9,570 12,237 11,440
1991 13,190 13,723 12,290 14,198 11,828
1992 16,298 16,204 15,132 15,999 12,181
1993 19,162 18,568 17,473 17,627 12,509
1994 18,957 18,866 17,899 17,063 12,879
1995 23,330 21,382 20,178 19,461 13,207
1996 25,295 24,308 22,612 20,423 13,603
1997 30,057 27,872 25,995 22,406 13,897
</TABLE>
[end chart]
/1/All results calculated with dividends reinvested or interest compounded. The
Salomon Brothers indexes are unmanaged and do not reflect sales charges,
commissions or expenses. The Lipper index is at net asset value.
/2/This figure, unlike those shown earlier in this report, reflects payment of
the maximum sales charge of 4.75% on the $10,000 investment. Thus, the net
amount invested was $9,525. As outlined in the prospectus, the sales charge is
reduced for larger investments. There is no sales charge on dividends or
capital gain distributions that are reinvested in additional shares. No
adjustment has been made for income or capital gain taxes.
/3/Includes reinvested dividends of $15,068 and reinvested capital gain
distributions of $597.
/4/Computed from data supplied by the U.S. Department of Labor, Bureau of Labor
Statistics.
/5/For the period February 19 through September 30, 1988.
Past results are not predictive of future results.
Average ANNUAL COMPOUND RETURNS* (for periods ended September 30, 1997)
Lifetime (since February 19, 1988) +11.25%
Five Years +10.37%
One Year +9.23%
*Assumes reinvestment of all distributions and payment of the 4.75% maximum
sales charge at the beginning of the stated periods.
A CONCENTRATION ON COMPANIES
From its earliest investments almost 10 years ago, to being a $2 billion
portfolio today, American High-Income Trust has always had a unique approach to
the bond market.
Three attributes help set American High-Income Trust apart: concentration on
individual companies, a research process that provides many different
perspectives on potential investments, and a focus on long-term results - not
just today's high yield.
These attributes are especially important in the high-yield bond market. Many
issuers are not well known on Wall Street because they do not have publicly
traded shares outstanding and others may be experiencing a difficult period. To
understand value, investors need to study individual companies closely,
consider many perspectives and develop a realistic outlook on a company's
prospects over a long time period.
Despite its large size, the fund's portfolio has been built meticulously, one
company at a time from the bottom up. "It is driven by decisions on individual
companies," says Richard Schotte, the fund's president.
Understanding a company's management is key to the process, he says. "We want
to be quite comfortable that the people running the company are building
value." The fund's analysts and portfolio counselors analyze the quality of a
company's leaders, its objectives, whether they think it will be successful and
how long it will take to realize its goals.
To come up with answers to these questions, the fund's investment managers
study a company's financial statements and business plan. They interview the
firm's president, chief financial officer, and other managers. They also often
visit the facilities and talk with suppliers, competitors and customers.
Each potential investment is also judged as to how it relates to the fund's
total portfolio. "That complicates your decision," says Richard. "Say you
want to allocate 2% or 3% of your portfolio to the bonds of one company. You
then have to look at how much exposure you already have to that type of company
or industry in your portfolio."
There are different kinds of industry risks. Some are correlated across
industries and some aren't. Suppose you own restaurants in San Francisco, Des
Moines and Detroit, and a national recession occurs. As a result, many people
eat out less often - and that's a correlation. But if there's a strike at an
auto plant in Detroit, it's probably only going to hurt your Detroit restaurant
- - not the ones in Des Moines and San Francisco. "You try to make sure that you
don't have too many correlated risks in the portfolio," says Richard.
[sketch: couple shaking hands in front of building]
The fund's investment managers must also have the ability to understand a
business in a short period of time. "We're apt to have a company coming out
with a new $250 million bond issue - and we may not know the company or the
industry very well," says Richard. "We may only have a week to make a judgment
on it."
When that happens, the fund's investment managers may only take a small
position and increase it slowly as they learn more about the company. Such was
the case with AMF Group, a Richmond, Virginia operator of bowling centers. The
fund originally took a small position in AMF and then added to it steadily over
time. The company's earnings have increased and it has made several
acquisitions. Today, AMF represents 1.1% of the fund's portfolio and has been a
very good investment.
A DEDICATION TO RESEARCH
American High-Income Trust's research process has many unique aspects. An
important one is the cooperation of equity and fixed-income analysts throughout
Capital Research and Management Company (CRMC), the fund's adviser. Both bond
investors and stock investors benefit from this cross-fertilization of ideas
and perspectives, but in the end the fixed-income professionals make the
investment decisions in this fund.
[sketch: woman sitting at desk piled with paper]
Mike Kerr, a CRMC oil industry stock analyst, frequently works with Cathy Kehr,
his counterpart for American High-Income Trust. "It's too big an industry for
one analyst to be everywhere," Mike says.
"In some cases I use her work because she has already researched the
companies," Mike says. "I'm able to borrow her work and consider whether to buy
the stock based in part on her research. I have a bigger-picture focus, an
industry-wide background, and Cathy typically has done the research on the
individual company." High-yield bond analysts develop financial models that
have sensitivity to various risks because they are attempting to find out
whether the company can survive the risks and keep making the interest payments
on the debt.
"It just becomes part of a habit. You share information, meetings and
conclusions," Mike says.
At times, the bond analysts have researched a company that the equity analysts
know little about. "Often, we look at a company before it issues shares
publicly so we may be up to speed on it before the equity analysts," says Susan
Tolson, one of the fund's three portfolio counselors.
"I've been following cable companies for 25 years and I have good contacts in
the business and know what's going on. That's a resource the bond analysts can
tap," says Gordon Crawford, a portfolio counselor for several equity funds
managed by CRMC. "I also think access can be opened up tremendously if we own
a large equity stake in a company," he adds.
A FOCUS ON LONG-TERM RESULTS
The fund's investment managers are also able to use the global resources of
CRMC which, along with its affiliates, maintains research offices across the
United States and in five other countries. CRMC's size - it manages the assets
of 28 mutual funds with more than $175 billion invested - can give the fund an
edge.
The primary goal of American High-Income Trust is a high level of current
income, but bonds in the fund's portfolio are never judged solely against the
yardstick of current yield. The fund also strives to produce solid, long-term
total returns. To balance current income and long-term gains, the fund's
portfolio counselors and analysts have to know both what to buy and when to buy
it.
At times, riskier securities, which pay higher interest, may offer the best
potential for long-term rewards. Other times, less risky securities may be the
most attractive opportunities available. The fund's dividends will fluctuate as
the makeup of the portfolio changes and as interest rates rise and fall.
Because its goal has always been to invest prudently for the long term, there
will be times when the fund finds it necessary to forgo some yield today to be
in a better position to take advantage of opportunities in the future. This
past year, for example, the fund reduced its monthly dividend from 10.25 cents
a share to 10 cents.
Over the long term, the philosophy of buying the right companies after thorough
research has paid solid returns. A shareholder who invested $10,000 at the
beginning of the fund's first full fiscal quarter on March 1, 1988 and took
income distributions in cash, has received most of the initial investment back
in dividends alone - $8,964 as of September 30, 1997.
As you read through the portfolio, which begins on the next page, you may
recognize many companies from previous reports. It's not unusual for the fund
to hold a company's bonds for several years.
This buy-and-hold philosophy is especially evident when an industry falls on
hard times. In these situations, the fund's investment professionals are more
likely to increase, not decrease, their research into companies in the
industry. They know that good companies often suffer when an industry hits
rough times. Finding an opportunity in an under-appreciated sector of the
market or increasing the fund's holdings in a company during a temporary
setback can be one of the most rewarding decisions over the long term.
When Paracelsus Healthcare, a Houston, Texas owner of specialty hospitals, fell
from favor last year, the fund increased its holdings. Today, Paracelsus is one
of the fund's largest holdings at 1.5% of the portfolio and has turned out to
be a good investment.
"We're researching companies that have the ability to create value over time.
That's fundamentally what it's all about," says Richard Schotte.
[sketch: man looking through telescope at horizon]
<TABLE>
<S> <C> <C> <C>
American High-Income Trust
Investment Portfolio
September 30, 1997
- --------------------------------------------------
U.S. Corporate Bonds 61%
Non-U.S. Corporate Bonds 16%
U.S. Treasuries 5%
Stocks 6%
Non-U.S. Government Bonds 3%
Cash Equivalents 9%
Percent
Ten Largest Corporate of Net
Bond Holdings Assets
- ------------------------ --------
Omnipoint 1.86%
USAir 1.71
Bell Cablemedia/Videotron Holdings 1.70
Integrated Health Services 1.55
Container Corp. of America 1.53
Paracelsus Healthcare 1.51
California Energy 1.48
PriCellular Wireless 1.36
Orion Network Systems 1.31
International CableTel/NTL 1.25
- -------------------------------------------------- --------- ----------- --------
Principal Market Percent
Amount Value of Net
Bonds & Notes - 84.55% (000) (000) Assets
Banking & Financial Services - 0.42%
Chevy Chase Bank, FSB 9.25% 2008 $2,000 $2,030 0.10%
First Nationwide Holdings Inc.:
10.625% 2003(1) 4,000 4,400
12.50% 2003 2,000 2,250 .32
----------- --------
8,680 .42
----------- --------
Beverages - 1.70%
Canandaigua Wine Co., Inc.:
8.75% 2003 12,000 12,120
8.75% 2003(1) 5,250 5,355 .83
Delta Beverage Group, Inc. 9.75% 2003(1) 11,100 11,669 .55
Dr Pepper Bottling Co. of Texas 10.25% 2000 6,500 6,695 .32
----------- --------
35,839 1.70
----------- --------
Broadcasting & Publishing - 4.99%
Acme Intermediate 0%/12.00% 2005 (1),(2) 11,939 6,667 .32
American Media Operations, Inc. 11.625% 2004 13,400 14,673 .70
American Radio Systems Corp. 9.00% 2006 12,750 13,515 .64
Antenna TV, SA 9.00% 2007(1) 4,500 4,511 .21
Chancellor Broadcasting Co.:
9.375% 2004 11,000 11,522
8.75% 2007(1) 6,500 6,646 .86
EZ Communications, Inc. 9.75% 2005 1,500 1,650 .08
Gray Communications Systems, Inc. 10.625% 2006 6,870 7,385 .35
Grupo Televisa, SA:
Series A, 11.375% 2003 1,250 1,391
0%/13.25% 2008(2) 1,000 752 .10
ITT Publimedia BV 9.375% 2007(1) 5,750 6,038 .29
Newsquest Capital PLC:
11.00% 2006 3,250 3,624
Series B, 11.00% 2006 6,750 7,526 .53
Radio One, Inc. 7%/12.00% 2004(1),(2) 4,750 4,560 .22
STC Broadcasting, Inc. 11.00% 2007(1) 3,000 3,203 .15
Sun Media Corp.:
9.50% 2007 1,500 1,553
9.50% 2007 1,000 1,035 .12
TV Azteca, SA de CV:
10.125% 2004 4,250 4,468
10.125% 2004 750 788 .25
Young Broadcasting Inc. 10.125% 2005 3,500 3,675 .17
----------- --------
105,182 4.99
----------- --------
Cable & Telephone in the United
Kingdom - 5.20%
Bell Cablemedia PLC 0%/11.95% 2004(2) 11,000 10,092
(owned by Cable and Wireless PLC)
Videotron Holdings PLC (owned by Cable and Wireless PLC):
0%/11.125% 2004(2) 24,000 22,380
0%/11.00% 2005(2) 4,000 3,450 1.70
COLT Telecom Group PLC Units 0%/12.00% 2006(2) 18,250 13,687 .65
Comcast UK Cable Partners Ltd. 0%/11.20% 2007(2) 20,750 16,289 .77
International CableTel Inc.:
0%/10.875% 2003(2) 21,175 19,375
0%/12.75% 2005(2) 1,000 800
NTL Inc., Series B, 10.00% 2007 5,750 6,009 1.25
TeleWest PLC:
9.625% 2006 9,000 9,338
0%/11.00% 2007(2) 11,000 8,250 .83
----------- --------
109,670 5.20
----------- --------
Cellular, Paging & Wireless
Communications - 13.42%
Cellular, Inc. 0%/11.75% 2003(2) 2,000 1,980 .09
Cellular Communications International, Inc.:
0.00% 2000 1,000 777
Units 0.00% 2000 17,250 13,455 .68
Cellular Communications of Puerto Rico, Inc. 10.00% 2007 17,000 17,510 .83
Centennial Cellular Corp.:
8.875% 2001 17,000 17,255
10.125% 2005 2,500 2,681 .95
Clearnet Communications Inc. 0%/11.75% 2007(2) C$ 19,375 8,555 .41
Comcast Cellular Holdings, Inc. 9.50% 2007(1) $12,000 12,540 .60
Comunicacion Celular SA 0%/13.125% 2003(2) 16,000 12,400 .59
Esat Telecom Group PLC 0%/12.50% 2007(2) 11,250 7,369 .35
Geotek Communications, Inc. 0%/15.00% 2005(2) 1,000 605 .03
Globalstar, LP 11.375% 2004 3,000 3,120 .15
Heartland Wireless Communications, Inc. 13.00% 2003 5,300 2,199 .10
InterCel, Inc.:
0%/12.00% 2006(2) 13,500 9,214
11.125% 2007(1) 7,500 7,819 .81
McCaw International, Ltd. 0%/13.00% 2007(2) 8,500 5,164 .24
Mobile Telecomm 13.50% 2002 15,875 18,018 .85
MobileMedia Communications, Inc.:(8)
0%/10.50% 2003(2) 14,900 2,570
9.375% 2007 6,500 1,446 .19
NEXTEL Communications, Inc.:
0%/11.50% 2003(2) 2,250 2,177
0%/10.125% 2004(2) 11,500 10,149 .58
Omnipoint Corp.:
12.00% 2000(3) 12,500 12,500
11.625% 2006 25,500 26,265
11.625% 2006 500 515 1.86
Orion Network Systems, Inc. Units 11.25% 2007 25,475 27,640 1.31
PriCellular Wireless Corp.:
0%/14.00% 2001(2) 8,000 8,780
0%/12.25% 2003(2) 15,710 15,553
10.75% 2004 4,000 4,320 1.36
PTC International Finance BV 0%/10.75% 2007 12,800 8,384 .40
Rogers Cantel Mobile Communications Inc.:
11.125% 2002 2,500 2,589
9.375% 2008 3,000 3,210 .28
Sprint Spectrum LP, Sprint Spectrum Finance Corp. 11.00% 2006 1,000 1,120 .05
Telesystems International, Inc. 0%/13.25% 2007(1),(2) 3,225 2,000 .09
Teletrac, Inc. Units 14.00% 2007(1) 7,500 7,837 .37
Vanguard Cellular Systems, Inc. 9.375% 2006 2,000 2,070 .10
Western Wireless Corp. 10.50% 2006(1) 3,000 3,135 .15
----------- --------
282,921 13.42
----------- --------
Construction & Housing - 0.43%
M.D.C. Holdings, Inc. 11.125% 2003 8,250 9,034 .43
----------- --------
Diversified Media, Cable Television &
Telecommunications - 9.50%
Adelphia Communications Corp.:
9.25% 2002(1) 15,000 15,075
10.50% 2004(1) 9,000 9,540 1.17
Brooks Fiber Properties, Inc.:
10.00% 2007 7,000 7,927
0%/10.875% 2006(2) 4,750 3,800 .55
Cablevision Systems Corp.:
8.125% 2009(1) 9,500 9,619
9.875% 2013 7,000 7,560 .82
CEI Citicorp Holdings SA 11.25% 2007(1) 2,500 2,556 .12
Century Communications Corp., Senior Note 8.75% 2007 4,000 4,000 .19
Comcast Corp. 10.25% 2001 3,200 3,552 .17
Comtel Brasileira Ltda. 10.75% 2004(1) 4,250 4,526 .21
Conecel Holdings Ltd., Series A, Units 14.00% 2000(1) 5,500 5,672 .27
Fox/Liberty Networks, LLC 8.875% 2007(1) 6,500 6,541 .31
FrontierVision 11.00% 2006 2,500 2,728 .13
Globo Comunicacoes E Participacoes LTDA.:
10.50% 2006(1) 10,500 10,972
10.50% 2006 2,000 2,090 .62
GST Equipment Funding, Inc. 13.25% 2007(1) 9,000 10,395 .49
Hermes Euro Railtel BV 11.50% 2007(1) 7,000 7,577 .36
IntelCom Group Inc., IntelCom Group (USA), Inc. 0%/13.50% 2005(2) 1,000 795 .04
Intermedia Communications Inc. 0%/11.25% 2007(1)(2) 3,000 2,078 .10
IXC Communications, Inc. 12.50% 2005 4,500 5,158 .24
Jones Intercable, Inc. 9.625% 2002 2,000 2,130 .10
Multicanal Participacoes SA 12.625% 2004 6,250 7,078 .34
Nextlink Communications, Inc. 9.625% 2007 11,000 11,412
Nextlink Communications LLC, Nextlink Capital, Inc. 12.50% 2006(1) 1,750 2,013 .64
Qwest Communications International, Inc. 10.875% 2007 5,000 5,600 .27
RBS Participacoes SA 11.00% 2007(1) 5,000 5,281 .25
TCI Communications, Inc. 6.375% 1999 3,500 3,497 .17
Teleport Communications Group Inc. 9.875% 2006 3,000 3,263 .15
TEVECAP, SA 12.625% 2004 7,875 8,357 .40
Verio Inc. Units 13.50% 2004 3,000 3,450 .16
Viacom International Inc.:
9.125% 1999 4,859 4,950
10.25% 2001 4,000 4,380
7.75% 2005 2,000 2,011 .54
WorldCom, Inc. 9.375% 2004 13,814 14,692 .70
----------- --------
200,275 9.51
----------- --------
Electric & Gas Utilities - 0.14%
Columbia Gas System, Inc., Series A, 6.39% 2000 3,000 3,009 .14
----------- --------
Energy & Related Companies - 5.79%
Abraxas Petroleum Corp. 11.50% 2004 20,000 21,800 1.03
Benton Oil and Gas Co. 11.625% 2003 7,000 7,700 .37
Falcon Drilling Co., Inc.:
9.75% 2001 2,500 2,631
8.875% 2003 4,250 4,484 .34
Forcenergy Inc.:
9.50% 2006 5,950 6,188
8.50% 2007 3,000 2,992 .43
Gulf Canada Resources Ltd. 9.25% 2004 4,000 4,232 .20
J. Ray McDermott, SA 9.375% 2006 2,250 2,346 .11
Kelley Oil & Gas Corp. 10.375% 2006 11,225 11,646 .55
Lomak Petroleum, Inc. 8.75% 2007 11,250 10,969 .52
Mariner Energy, Inc. 10.50% 2006 2,500 2,525 .12
McDermott Inc. 9.375% 2002 5,525 5,901 .28
Mesa Operating Co. 10.625% 2006 14,650 16,774 .80
Ocean Energy, Inc. 8.875% 2007(1) 3,500 3,587 .17
Pogo Producing Co. 8.75% 2007(1) 18,000 18,360 .87
----------- --------
122,135 5.79
----------- --------
Food Retailing - 1.86%
Bruno's, Inc. 10.50% 2005 22,000 12,980 .61
Carr-Gottstein Foods Co. 12.00% 2005 4,000 4,440 .21
Quality Food Centers, Inc. 8.70% 2007(1) 2,000 2,040 .10
Randall's Food Markets, Inc. 9.375% 2007(1) 9,750 9,848 .47
Rykoff-Sexton, Inc. 8.875% 2003 4,000 4,060 .19
Star Markets Co., Inc. 13.00% 2004 2,000 2,280 .11
Stater Brothers Holdings Inc. 11.00% 2001 3,250 3,575 .17
----------- --------
39,223 1.86
----------- --------
Forest Products & Paper - 3.00%
Container Corp. of America:
10.75% 2002 6,000 6,630
9.75% 2003 18,000 19,440
11.25% 2004 5,500 6,077 1.53
Copamex Industrias, SA de CV 11.375% 2004(1) 7,625 8,483 .40
Indah Kiat Finance Mauritius Ltd.:
10.00% 2007 2,000 1,955
10.00% 2007(1) 7,000 6,843 .42
MAXXAM Group Inc. 11.25% 2003 3,000 3,180 .15
Pacific Lumber Co. 10.50% 2003 7,000 7,245 .34
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002(1) 1,500 1,518
10.75% 2007(1) 1,750 1,787 .16
----------- --------
63,158 3.00
----------- --------
Health & Personal Care - 6.00%
Integrated Health Services, Inc.:
10.75% 2006(1) 11,250 12,066
9.50% 2007(1) 14,750 15,119
9.25% 2008(1) 5,500 5,583 1.55
Mariner Health Group, Inc. 9.50% 2006 10,000 10,400 .49
Merit Behavioral Care Corp. 11.50% 2005 4,750 5,273 .25
Paracelsus Healthcare Corp. 10.00% 2006 30,825 31,827 1.51
Regency Health Services, Inc.:
9.875% 2002 15,250 16,699
12.25% 2003(1) 3,750 4,463 1.00
Sun Healthcare Group, Inc. 9.50% 2007(1) 3,000 3,090 .15
Tenet Healthcare Corp. 8.00% 2005 2,000 2,040 .10
Unison HealthCare Corp. 13.00% 2006(1) 4,000 3,480 .17
Universal Health Services, Inc. 8.75% 2005 5,100 5,393 .26
UroHealth Systems, Inc. 12.50% 2004(1) 7,000 6,965 .33
Vencor, Inc. 8.625% 2007(1) 4,000 4,060 .19
----------- --------
126,458 6.00
----------- --------
Independent Power Producers - 1.67%
California Energy Co., Inc. 10.25% 2004 28,750 31,206 1.48
CE Casecnan Water and Energy Co., Inc., Series B, 11.95% 2010 3,500 3,903 .19
----------- --------
35,109 1.67
----------- --------
Insurance - 0.14%
Integon Capital I, Integon Corp. 10.75% 2027 2,400 2,928 .14
----------- --------
Leisure, Tourism & Restaurants - 4.70%
AMF Group Inc.:
0%/12.25% 2006(2) 19,500 14,527
10.875% 2006 7,500 8,175 1.08
Aztar Corp. 11.00% 2002 2,000 2,060 .10
Boyd Gaming Corp.:
9.25% 2003 12,750 13,324
9.50% 2007(1) 6,000 6,120 .92
California Hotel Finance Corp. 11.00% 2002 4,000 4,200 .20
FelCor Suites LP 7.375% 2004 4,250 4,236 .20
Foodmaker, Inc.:
9.25% 1999 3,572 3,652
9.75% 2002 6,450 6,627 .49
KSL Recreation Group Inc. 10.25% 2007(1) 4,500 4,793 .23
Rio Hotel & Casino, Inc.:
10.625% 2005 6,400 6,960
9.50% 2007(1) 1,250 1,316 .39
Station Casinos, Inc. 9.625% 2003 15,225 15,111 .71
Sun International Hotels Ltd., Sun International 2,750 2,860 .14
North America, Inc. 9.00% 2007
Wyndham Hotel Corp. 10.50% 2006 4,500 5,085 .24
----------- --------
99,046 4.70
----------- --------
Manufacturing & Materials - 10.06%
AK Steel Corp.:
10.75% 2004 1,250 1,356
9.125% 2006 7,000 7,367 .41
Altos Hornos de Mexico, SA de CV:
11.375% 2002(1) 3,500 3,793
11.875% 2004(1) 4,250 4,728 .40
Anchor Glass Container Corp. 11.25% 2005(1) 17,250 18,673 .89
Coleman Escrow 0.00% 2001(1) 5,600 3,808 .18
Consumers International Inc. 10.25% 2005(1) 8,250 8,910 .42
Derlan Manufacturing Inc. 10.00% 2007 18,950 19,992 .95
DGS International Finance Co. BV 10.00% 2007(1) 6,250 6,383 .30
Fage Dairy Industry SA 9.00% 2007(1) 9,250 9,019 .43
Fairchild Semiconductor Corp. 10.125% 2007 10,250 10,993 .52
Impress Metal Packaging Holdings BV 9.875% 2007(1) DM 9,400 5,668 .27
Kaiser Aluminum & Chemical Corp.:
9.875% 2002 $9,750 10,164
12.75% 2003 5,750 6,210
10.875% 2006 4,000 4,330
Series B, 10.875% 2006 2,750 3,015 1.13
Key Plastics, Inc. 10.25% 2007 9,150 9,608 .46
Lifestyle Furnishings International Ltd. 10.875% 2006 13,005 14,533 .69
Nortek, Inc. 9.25% 2007 5,850 5,945 .28
Polymer Group, Inc. 9.00% 2007(1) 2,000 2,015 .10
Printpack, Inc.:
Series B, 9.875% 2004 6,250 6,562
10.625% 2006 1,980 2,136 .41
Standard Commercial Corp. 8.875% 2005 12,250 12,311 .58
Texas Petrochemicals Corp. 11.125% 2006 11,250 12,262 .58
Therma-Wave, Inc. 10.625% 2004(1) 6,000 6,450 .31
UCAR Global Enterprises Inc. 12.00% 2005 4,500 5,124 .24
U.S. Can Corp. 10.125% 2006 3,000 3,184 .15
Westinghouse Air Brake Co. 9.375% 2005 7,250 7,522 .36
----------- --------
212,061 10.06
----------- --------
Merchandising - 0.18%
Barnes & Noble, Inc. 11.875% 2003 1,100 1,184 .06
Loehmann's, Inc. 11.875% 2003 2,500 2,587 .12
----------- --------
3,771 .18
----------- --------
Miscellaneous Services - 3.18%
Allied Waste North America, Inc. 10.25% 2006 17,200 18,834 .89
Cellnet Data Systems, Inc. Units 0%/14.00% 2007(1),(2) 47,786 24,311 1.15
EarthWatch Inc. Units 12.50% 2001(1),(3) 6,000 6,000 .28
Petro Stopping Centers, LP, Petro Financial Corp. 10.50% 2007(1) 17,500 18,156 .86
----------- --------
67,301 3.18
----------- --------
Protection Services - 0.80%
Borg-Warner Security Corp. 9.625% 2007 6,250 6,469 .31
Protection One Alarm Monitoring, Inc.0%/13.625% 2005(2),(3) 9,500 10,307 .49
----------- --------
16,776 .80
----------- --------
Real Estate - 0.20%
B.F. Saul Real Estate Investment Trust
11.625% 2002 4,000 4,290 .20
----------- --------
Textiles & Apparel - 0.32%
Dawson Production Services, Inc. 9.375% 2007 4,000 4,100 .20
Tultex Corp. 10.625% 2005 1,000 1,105 .05
WestPoint Stevens Inc. 8.75% 2001 1,500 1,560 .07
----------- --------
6,765 .32
----------- --------
Transportation - 2.90%
Airplanes Pass Through Trust, pass-through 6,625 7,586 .36
certificates, Class D, 10.875% 2019(4)
Continental Airlines, Inc. 9.50% 2001 4,500 4,759 .23
Teekay Shipping Corp. 8.32% 2008 12,500 12,688 .60
USAir, Inc.:
8.625% 1998 1,000 1,015
9.625% 2001 12,000 12,480
9.625% 2003 2,240 2,397
10.00% 2003 11,500 12,017
Pass-through trust, Series 1993-A3,
10.375% 2013(4) 7,400 8,281 1.71
----------- --------
61,223 2.90
----------- --------
Private Issue Collateralized Mortgage/Asset-Backed
Obligations(4) - 0.22%
Residential Reinsurance Ltd., Class A-2, 11.45% 1998(1),(5) 4,250 4,338 .21
Resolution Trust Corp.:
Series 1993-C1, Class E, 9.50% 2024 186 186
Series 1993-C2, Class E, 8.50% 2025 41 41 .01
----------- --------
4,565 .22
----------- --------
Non-U.S. Governments and Governmental
Authorities - 3.10%
Argentina (Republic of):
6.75% 2005(5) 970 923
11.00% 2006 925 1,055
11.75% 2007(1) ARP 17,380 19,635
11.375% 2017 $4,250 4,958 1.26
Brazil (Federal Republic of):
Debt Conversion Bond 6.938% 2012(5) 750 637
Capitalization Bond PIK 8.00% 2014(6) 280 239 .04
Ecuador (Republic of) Past Due Interest Bonds:
Registered 6.688% 2015(5) 5,878 4,335
Bearer 6.688% 2015(5) 410 303
Registered 6.438% 2025 250 208 .22
New Zealand Index-Linked 4.66% 2016(5),(7) NZ$ 4,000 2,482 .12
Panama (Republic of) Interest Reduction Bonds:
3.75% 2014(1)(5) $11,500 8,927
6.688% 2016(5) 514 445 .44
Peru (Republic of):
Front Loaded Interest Reduction Bond 3.25% 2017(1),(5) 500 308
Past Due Interest Bond 4.00% 2017 750 503 .04
Poland (Republic of):
Treasury Bill 1997 18,400 5,255
Treasury Bill 1998 27,370 6,801
Past Due Interest Bond 4.00% 2014(7) 2,000 1,755 .66
United Mexican States:
Collateralized Eurobond, Series A, 6.453% 2019(5) 500 477 .02
Government:
11.375% 2016 3,695 4,393
11.50% 2026 125 152 .22
Venezuela (Republic of):
6.75% 2007(5) 750 716
Front Loaded Interest Reduction Bond 6.50% 2007(5) 952 908 .08
----------- --------
65,415 3.10
----------- --------
U.S. Treasury Obligations - 4.62%
7.25% 1998 5,000 5,031
6.875% 1999 39,000 39,695
7.50% 2001 19,000 20,024
8.00% 2001 5,000 5,328
6.625% 2002 3,000 3,072
5.75% 2003 6,000 5,907
11.625% 2004 14,000 18,382 4.62
-------- --------
97,439 4.62
----------- --------
Total Bonds & Notes (cost: $1,701,328,000) 1,782,273 84.55
----------- --------
Number of
Stocks (Common & Preferred) - 5.70% Shares
Acme Television, LLC(1),(8) 725 725 .03
American Radio Systems Corp., Class A(8) 20,000 952 .04
American Radio Systems Corp., exchangeable preferred(6),(8) 161,966 18,869 .96
AnnTaylor, Inc.(8) 40,000 595 .03
CalEnergy Co., Inc. (formerly California Energy Co. Inc.)(8) 65,000 2,161 .10
CellNet Data Systems, Inc.(8),(3) 256,000 2,573 .12
Cellular Communications International, Inc.(8) 32,800 1,361 .06
Chancellor Media Corp., Class A(8) 37,091 1,952
Chancellor Radio Broadcasting Co.,
exchangeable preferred(1),(8) 125,999 14,490 .78
Columbia Gas System, Inc. 14,700 1,029 .05
Comcast Corp., Class A 10,000 256
Comcast Corp., Class A, special stock 20,000 515 .04
Comunicacion Celular SA,
warrants, expire 11/15/03(8) 15,000 82 .00
EarthWatch Inc. 12.00% convertible preferred(1),(3),(8) 675,000 5,400 .26
Esat Holdings Ltd., warrants, expire 2007(1),(8) 11,250 338 .02
Falcon Drilling Co., Inc.(8) 50,000 1,766 .08
Globalstar Telecommunications Ltd., 3,000 315 .01
warrants, expire 2004(8)
Heartland Wireless Communications, Inc., 22,800 0 .00
warrants, expire 4/26/00(1),(8),(3)
ICG Holdings (Canada), Inc., warrants, expire 8/8/05(1)(8) 33,000 186 .01
Integrated Health Services, Inc. 62,500 2,090 .10
IXC Communications, Inc., preferred, 12.50% 2009(1),(6),(8) 6,751 7,864 .37
J. Ray McDermott, SA(8) 130,000 6,370 .30
Jacor Communications, Inc.(8) 45,000 1,988 .09
Kelley Oil & Gas Corp., convertible preferred(8) 170,000 4,165 .20
Marriott International, Inc. 13,896 987 .05
McCaw International, Ltd., warrants, expire 2007(1),(8) 8,500 26 .00
McDermott International, Inc. 60,000 2,190 .10
NEXTEL Communications, Inc., Class A(8) 13,942 403
NEXTEL Communications, Inc.,warrants, expire 1999(8) 21,250 0
NEXTEL Communications, Inc. preferred 13.00%(1),(6),(8) 5,750 6,627 .31
Nortel Inversora SA, Class A, preferred 1,174,607 15,751 .75
(American Depositary Receipts)(1),(3)
Omnipoint Corp.(1),(3),(8) 278,001 4,865 .23
Orion Network Systems, Inc., warrants, expire 1/1/07(8) 25,475 382 .02
Pioneer Natural Resources Co. 91,766 3,843 .18
Protection One Alarm Monitoring, Inc., 30,400 365 .02
warrants, expire 6/30/05(1),(8)
Station Casinos, Inc.(8) 41,600 338
Station Casinos, Inc. 7.00% convertible preferred 90,000 3,864 .20
Sterling Chemicals, Inc., warrants, expire 8/15/08(8) 3,000 108 .01
Time Warner Inc. 10.25% exchangeable preferred 3,108 3,543 .17
UroHealth Systems, Inc., warrants, expire 4/1/04(1),(8) 7,000 4 .00
WorldCom, Inc.(8) 21,000 743 .04
----------- --------
120,081 5.70
Total Stocks (cost: $92,081,000) ----------- --------
Principal
Amount
(000)
Convertible Debentures - 0.99%
Banco Nacional de Mexico, SA 11.00% 2003 $500 538 .03
Global Telesystems Group 8.75% 2000(1) 7,500 7,875 .37
Integrated Health Services, Inc. 6.00% 2003(1) 6,500 7,166 .34
Kelley Oil & Gas Corp.:
7.875% 1999 2,291 2,268
8.50% 2000 3,245 3,083 .25
----------- --------
Total Convertible Debentures (cost: 20,930 .99
$19,864,000) ----------- --------
Short-Term Securities
Corporate Short-Term Notes - 7.35%
AT&T Corp. 5.48% due 10/8/97 12,000 11,985 .57
Bell Atlantic Financial Services, Inc.:
5.53% due 10/16/97 14,900 14,863
5.54% due 11/3/97 7,000 6,964 1.03
E.I. du Pont de Nemours and Co. 5.46% due 10/3/97 20,000 19,991 .95
General Electric Capital Corp. 6.50% due 10/1/97 6,860 6,859 .33
International Lease Finance Corp. 5.49% due 10/9/97 13,000 12,982 .62
MCI Communications Corp. 5.48% due 10/1/97 25,000 24,996 1.19
PACCAR Financial Corp. 5.51% due 10/16/97 8,000 7,980 .38
PepsiCo, Inc. 5.49% due 10/6/97 29,800 29,773 1.41
Sony Capital Corp. 5.53% due 10/16/97 18,390 18,345 .87
----------- --------
Total Short-Term Securities (cost: 154,738 7.35
$154,739,000) ----------- --------
Total Investment Securities (cost: 2,078,022 98.59
$1,968,012,000)
Excess of cash and receivables over payables 29,806 1.41
----------- --------
$2,107,828 100.00%
Net Assets =========== ========
(1)Purchased in a private placement transaction;
resale may be limited to qualified institutional
buyers; 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 securities 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>
<TABLE>
<S> <C> <C>
American High-Income Trust
Financial Statements
Statement of Assets and Liabilities
at September 30, 1997 (dollars in thousands)
Assets:
Investment securities
(cost: $1,968,012) $ 2,078,022
Cash 16
Receivables for--
Sales of investments $ 19,006
Sales of fund's shares 6,461
Forward currency contracts 73
Accrued dividends and interest 37,359 62,899
-------- --------
2,140,937
Liabilities:
Payables for--
Purchases of investments 28,417
Repurchases of fund's shares 1,838
Dividends on fund's shares 1,675
Management services 787
Accrued expenses 392 33,109
-------- --------
Net Assets at September 30, 1997 --
Equivalent to $15.69 per share on
134,363,710 shares of beneficial
interest issued and outstanding;
unlimited shares authorized $ 2,107,828
==============
Statement of Operations
for the year ended September 30, 1997
(dollars in thousands)
Investment Income:
Income:
Dividends $ 2,267
Interest 163,573 $ 165,840
--------
Expenses:
Management services fee 8,242
Distribution expenses 4,552
Transfer agent fee 1,100
Reports to shareholders 132
Registration statement and prospectus 249
Postage, stationery and supplies 301
Trustees' fees 29
Auditing and legal fees 44
Custodian fee 92
Taxes other than federal income tax 25
Other expenses 20 14,786
-------- --------
Net investment income 151,054
--------
Realized Gain and Increase in Unrealized
Appreciation on Investments:
Net realized gain 42,701
Net unrealized appreciation on
Investments 56,784
Open forward currency contracts 77 56,861
-------- --------
Net realized gain and unrealized
appreciation on investments 99,562
--------
Net Increase in Net Assets
Resulting from Operations $ 250,616
==============
Statement of Changes in Net Assets
(dollars in thousands)
Year ended September 30
1997 1996
Operations: -------- --------
Net investment income $ 151,054 $ 118,127
Net realized gain on investments 42,701 4,164
Net increase in unrealized appreciation
on investments 56,861 47,452
-------- --------
Net increase in net assets
resulting from operations 250,616 169,743
-------- --------
Dividends and Distributions
Paid to Shareholders:
Dividends from net investment income (147,273) (118,864)
Distributions from net realized
gain on investments (1,653) --------
-------- --------
Total dividends and distributions (148,926) (118,864)
-------- --------
Capital Share Transactions:
Proceeds from shares sold:
52,744,058 and 43,729,904
shares, respectively 800,316 636,739
Proceeds from shares issued in
reinvestment of net investment
income dividends and distributions
of net realized gain on
investments: 6,173,899 and
5,021,604 shares, respectively 93,692 73,124
Cost of shares repurchased:
28,680,906 and 22,319,120
shares, respectively (434,766) (324,832)
-------- --------
Net increase in net assets
resulting from capital share
transactions 459,242 385,031
-------- --------
Total Increase in Net Assets 560,932 435,910
Net Assets:
Beginning of year 1,546,896 1,110,986
-------- --------
End of year (including undistributed
net investment income: $10,740
and $7,102, respectively) $ 2,107,828 $ 1,546,896
============== ==============
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:
Equity securities, including depositary receipts, are valued at the last
reported sales price on the exchange or market on which such securities are
traded, as of the close of business on the day the securities are being valued
or, lacking any sales, at the last available bid price. In cases where equity
securities are traded on more than one exchange, the securities are valued on
the exchange or market determined by the investment adviser to be the broadest
and most representative market, which may be either a securities exchange or
the over-the-counter market. Fixed-income securities are valued at prices
obtained from a pricing service, 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 quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type.
Securities with original maturities of one year or less having 60 days or less
to maturity are amortized to maturity based on their cost if acquired within 60
days of maturity or, if already held on the 60th day, based on the value
determined on the 61st day. Forward currency contracts are valued at the mean
of representative quoted bid and asked prices.
Assets or liabilities initially expressed in terms of foreign currencies are
translated prior to the next determination of the net asset value of the fund's
shares into U.S. dollars at the prevailing market rates. The effects of changes
in foreign currency tares on investment securities are included with the net
realized and unrealized gain or loss on investment securities.
Securities and assets for which representative market quotations are not
readily available are valued at fair value as determined in good faith by a
committee appointed by the Board of Trustees.
As is customary in the mutual fund industry, securities transactions are
accounted for on the date the securities are purchased or sold. 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. Dividends to shareholders are declared
daily after the determination of the fund's net investment income and are paid
to shareholders monthly. Distributions paid to shareholders are recorded on the
ex-dividend date.
The fund may enter into forward currency contracts, which represent an
agreement to exchange currencies of different countries at a specified future
date at a specified rate. The fund enters into these contracts to reduce its
exposure to fluctuations in foreign exchange rates arising from investments
denominated in non-U.S. currencies. The fund's use of forward currency
contracts involves market risk in excess of the amount recognized in the
statement of assets and liabilities. The contracts are recorded in the
statement of assets and liabilities at their net unrealized value. The fund
records realized gains or losses at the time the forward contract is closed or
offset by a matching contract. The face or contract amount in U.S. dollars
reflects the total exposure the fund has in that particular contract. 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 non-U.S. exchange rates and securities values underlying these instruments.
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 investment income, including any net realized gain on
investments, to its shareholders. Therefore, no federal income tax provision is
required.
As of September 30, 1997, net unrealized appreciation on investments,
excluding forward currency contracts, for book and federal income tax purposes
aggregated $110,010,000, of which $138,405,000 related to appreciated
securities and $28,395,000 related to depreciated securities. During the year
ended September 30, 1997, the fund realized, on a tax basis, a net capital gain
of $43,118,000 on securities transactions. Net losses related to non-U.S.
currency transactions of $417,000 were treated as an adjustment to ordinary
income for federal tax purposes. The cost of portfolio securities, excluding
forward currency contracts, for book and federal income tax purposes was
$1,968,012,000 at September 30, 1997.
3. The fee of $8,242,000 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, 1997,
distribution expenses under the Plan were $4,552,000. As of September 30, 1997,
accrued and unpaid distribution expenses were $328,000.
American Funds Service Company (AFS), the transfer agent for the fund, was
paid a fee of $1,100,000. American Funds Distributors, Inc. (AFD), the
principal underwriter of the fund's shares, received $2,289,000 (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,
1997, aggregate amounts deferred and earnings thereon were $51,000.
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, 1997, accumulated undistributed net realized gain on
investments was $38,829,000 and paid-in capital was $1,948,752,000. The fund
reclassified $143,000 of realized currency losses to undistributed net
investment income from undistributed net realized gains for the year ended
September 30, 1997.
The fund made purchases and sales of investment securities, excluding
short-term securities, of $1,259,096,000 and $875,661,000 respectively, during
the year ended September 30, 1997.
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 $92,000 includes $86,000 that was paid by these credits
rather than in cash.
At September 30, 1997, the fund had outstanding forward currency contracts to
sell non-U.S. currencies as follows:
<TABLE>
<S> <C> <C> <C> <C>
Contract Amount U.S. Valuation at 9/30/97
-------------- -------------- ------------------------ --------------
Unrealized
Appreciation
Non-U.S. Currency Sales Contracts Non-U.S. U.S. Amount (Depreciation)
- -------------------------------------------- -------------- -------------- ------------------------ --------------
German Deutsch Marks expiring 11/28/97 DM5,700,000 $3,414,196 $3,246,606 $167,590
German Deutsch Marks expiring 11/05/97 DM3,431,000 $1,857,320 $1,951,640 $(94,320)
-
$73,270
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Per-Share
Data and Ratios Year ended September 30
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Net Asset Value, Beginning
of Year $14.86 $14.30 $13.97 $15.18 $14.58
-------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income 1.26 1.29 1.33 1.25 1.28
Net realized and
unrealized gain
(loss) on investments .83 .59 .39 (.99) .74
-------- -------- -------- -------- --------
Total income from
investment operations 2.09 1.88 1.72 .26 2.02
-------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income (1.24) (1.32) (1.32) (1.21) (1.29)
Distributions from net
realized gains (.02) - (.07) (.26) (.13)
-------- -------- -------- -------- --------
Total distributions (1.26) (1.32) (1.39) (1.47) (1.42)
-------- -------- -------- -------- --------
Net Asset Value, End of Year $15.70 $14.86 $14.30 $13.97 $15.18
======== ======== ======== ======== ========
Total Return* 14.66% 13.68% 13.34% 1.60% 14.59%
Ratios/Supplemental Data:
Net assets, end of year
(in millions) $2,108 $1,547 $1,111 $835 $707
Ratio of expenses to average
net assets .82% .87% .89% .86% .87%
Ratio of net income to
average net assets 8.35% 8.90% 9.72% 8.63% 8.60%
Portfolio turnover rate 53.55 % 39.74% 29.56% 42.03% 44.37%
*Calculated without deducting a sales charge. The maximum
sales charge is 4.75% of the fund's offering price.
</TABLE>
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, 1997, 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
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, 1997, by correspondence with the custodian and brokers; where
replies were not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and per-share data and ratios
referred to above present fairly, in all material respects, the financial
position of American High-Income Trust as of September 30, 1997, 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 31, 1997
1997 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, 1% 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 1998 TO DETERMINE THE CALENDAR YEAR AMOUNTS TO BE INCLUDED ON THEIR
1997 TAX RETURNS. SHAREHOLDERS SHOULD CONSULT THEIR TAX ADVISERS.
AMERICAN HIGH-INCOME TRUST
BOARD OF TRUSTEES
H. FREDERICK CHRISTIE, Rolling Hills Estates, California
Private investor; former President and Chief Executive
Officer, The Mission Group; former President,
Southern California Edison Company
DON R. CONLAN, South Pasadena, California
President (retired), The Capital Group Companies, Inc.
DIANE C. CREEL, Long Beach, California
Chief Executive Officer and President,
The Earth Technology Corporation
(international engineering consulting)
MARTIN FENTON, JR., San Diego, California
Chairman of the Board, Senior Resource Group, Inc.
(senior living centers management)
LEONARD R. FULLER, Marina del Rey, California
President, Fuller Consulting
(management consultants)
ABNER D. GOLDSTINE, Los Angeles, California
Senior Vice President and Director,
Capital Research and Management Company
PAUL G. HAAGA, JR., Los Angeles, California
Chairman of the Board of the fund
Executive Vice President and Director,
Capital Research and Management Company
HERBERT HOOVER III, San Marino, California
Private investor
RICHARD G. NEWMAN, Los Angeles, California
Chairman of the Board, President and Chief
Executive Officer, AECOM Technology Corporation
(architectural engineering)
PETER C. VALLI, Long Beach, California
Retired; former Chairman of the Board,
BW/IP International, Inc.
(industrial manufacturing)
OTHER OFFICERS
RICHARD T. SCHOTTE, Los Angeles, California
President of the fund
Senior Vice President,
Capital Research and Management Company
DAVID C. BARCLAY, Los Angeles, California
Senior Vice President of the fund
Executive Vice President, Capital Research Company
MICHAEL J. DOWNER, Los Angeles, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
MARY C. HALL, Brea, California
Vice President of the fund
Senior Vice President - Fund Business Management Group,
Capital Research and Management Company
SUSAN M. TOLSON, Los Angeles, California
Vice President of the fund
Vice President, Capital Research Company
JULIE F. WILLIAMS, Los Angeles, California
Secretary of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
ANTHONY W. HYNES, JR., Brea, California
Treasurer of the fund
Vice President - Fund Business Management Group,
Capital Research and Management Company
KIMBERLY S. VERDICK, Los Angeles, California
Assistant Secretary of the fund
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
TODD L. MILLER, Brea, California
Assistant Treasurer of the fund
Assistant Vice President - Fund Business Management Group,
Capital Research and Management Company
[The American Funds Group (R)]
OFFICES OF THE FUND AND OF THE
INVESTMENT ADVISER, CAPITAL RESEARCH
AND MANAGEMENT COMPANY
333 South Hope Street
Los Angeles, California 90071-1443
135 South State College Boulevard
Brea, California 92821-5804
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 2205
Brea, California 92822-2205
P.O. Box 659522
San Antonio, Texas 78265-9522
P.O. Box 6007
Indianapolis, Indiana 46206-6007
P.O. Box 2280
Norfolk, Virginia 23501-2280
CUSTODIAN OF ASSETS
The Chase Manhattan Bank
One Chase Manhattan Plaza
New York, New York 10081-0001
COUNSEL
Paul, Hastings, Janofsky & Walker LLP
555 South Flower Street
Los Angeles, California 90071-2371
INDEPENDENT AUDITORS
Deloitte & Touche LLP
1000 Wilshire Boulevard
Los Angeles, California 90017-2472
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, California 90071-1462
FOR INFORMATION ABOUT YOUR ACCOUNT OR ANY OF THE FUND'S SERVICES, PLEASE
CONTACT YOUR FINANCIAL ADVISER. 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 December 31, 1997, this report must be accompanied by an
American Funds Group Statistical Update for the most recently completed
calendar quarter.
Printed on recycled paper
Litho in USA SG/FS/3198
Lit. No. AHIT-011-1197
