UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-05364
American High-Income Trust
(Exact Name of Registrant as Specified in Charter)
333 South Hope Street
Los Angeles, California 90071
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: September 30
Date of reporting period: March 31, 2013
Steven I. Koszalka
American High-Income Trust
333 South Hope Street
Los Angeles, California 90071
(Name and Address of Agent for Service)
Copies to:
Michael Glazer
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
From Capital Group
American
High-Income Trust®
Semi-annual report for the six months ended March 31, 2013
American High-Income Trust 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.
This fund is one of more than 40 offered by one of the nation’s largest mutual fund families, American Funds, from Capital Group. For more than 80 years, Capital has invested with a long-term focus based on thorough research and attention to risk.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 3.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For current information and month-end results, visit americanfunds.com.
Here are the average annual total returns on a $1,000 investment with all distributions reinvested for periods ended March 31, 2013:
Class A shares | 1 year | 5 years | 10 years | |||||||||
Reflecting 3.75% maximum sales charge | 6.77% | 8.19% | 8.26% |
The total annual fund operating expense ratio was 0.69% for Class A shares as of the prospectus dated December 1, 2012.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
Results for other share classes can be found on page 4.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal than investment-grade bonds. Bond ratings, which typically range from Aaa/AAA (highest) to D (lowest), are assigned by credit rating agencies such as Moody’s, Standard & Poor’s and/or Fitch as an indication of an issuer’s creditworthiness. Investing in bonds issued outside the U.S. may be subject to additional risks. They include currency fluctuations, political and social instability, differing securities regulations and accounting standards, higher transaction costs, illiquidity, price volatility and possible changes in taxation. These risks may be heightened in connection with investments in developing countries. Refer to the fund prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow investors:
High-yield bond markets were strong for the six-month period ended March 31, 2013, as the economy rebounded and investors sought to take on more risk. Sentiment was helped by a partial resolution to the fiscal cliff negotiations, continuing monetary easement and more progress in resolving the euro-zone debt crisis.
For the period, American High-Income Trust reported a total return of 6.0%, assuming the reinvestment of monthly dividends totaling approximately 38 cents a share. Shareholders who reinvested dividends received an income return of 3.5%. Those who elected to take their dividends in cash received an income return of 3.4% and saw the value of their holdings increase by 2.5%.
By comparison, the Lipper High Yield Funds Index, a benchmark of similar funds, posted a total return of 6.4%, and the Barclays U.S. Corporate High Yield 2% Issuer Capped Index, which covers the universe of fixed-rate, non-investment-grade debt and limits the maximum exposure of any one issuer to 2%, returned 6.3%. The latter index is unmanaged and, therefore, has no expenses.
Results at a glance
For periods ended March 31, 2013, with all distributions reinvested
Total returns | Average annual total returns | |||||||||||||||||||
6 months | 1 year | 5 years | 10 years | Lifetime | ||||||||||||||||
(since 2/19/88) | ||||||||||||||||||||
American High-Income Trust (Class A shares) | 6.0 | % | 10.9 | % | 9.0 | % | 8.7 | % | 8.7 | % | ||||||||||
Barclays U.S. Corporate High Yield 2% Issuer Capped Index* | 6.3 | 13.1 | 11.8 | 10.1 | — | |||||||||||||||
Lipper High Yield Funds Index | 6.4 | 12.5 | 9.2 | 8.6 | 7.3 |
* | This market index did not exist prior to December 31, 1992. It is unmanaged and, therefore, has no expenses. |
American High-Income Trust | 1 |
The six months in review
President Obama was re-elected amidst a gradual improvement in the U.S. economy, especially in the housing and job markets. However, the fiscal cliff of tax increases and spending cuts created significant uncertainty for investors and companies alike. While politicians reached a partial agreement on tax increases, they failed to do so on sequestration, triggering automatic spending cuts that could affect U.S. economic growth. Political and fiscal risks also re-emerged in Europe following Italy’s inconclusive elections results and an unconventional bailout plan for banks in Cyprus. As it continued to provide funding and support recovery efforts in the euro zone, the European Central Bank defended its unlimited bond-buying program, which is designed to lower borrowing costs for troubled nations while requiring them to pursue fiscal reforms.
The U.S. Federal Reserve also extended its bond-buying program and announced that it would link monetary policy to jobs for the first time, stating that it would keep interest rates at close to zero at least until the unemployment rate fell to 6.5%. Despite these actions, the acceleration in U.S. economic activity caused investors to question the Fed’s commitment to its bond-buying program and whether interest rates would rise sooner than had previously been expected. As a result, the yield curve steepened, with longer dated Treasury yields rising more than shorter dated maturities.
The credit markets continued to see substantial levels of new supply as companies looked to take advantage of low borrowing costs. Many companies have been looking to refinance — both lowering their interest rates and extending their maturities — which has helped to keep defaults at a minimum. However, since demand for higher yielding assets remained strong, spreads to Treasuries narrowed over the period. In general, corporate bonds across the ratings spectrum did well, but higher yielding bonds (BB and below) produced stronger results than investment-grade issues (BBB and above) as the search for yield continued.
Investments in the bonds of wireless telecommunication services companies helped the fund’s returns as they benefited from access to financing and the potential for positive event risk (in the form of refinancing or merger-and-acquisition activity). The fund’s cash holdings, on the other hand, continued to be a drag on results. Loans, which made up approximately 10% of the fund’s assets, also provided weaker returns as they tend to do relatively better in weaker markets due to their higher credit quality.
A long-term perspective
While there are signs of progress in the U.S. economy, GDP growth has been weak and the unemployment rate — though down from its peak — still remains high relative to prior economic cycles. There is also continuing uncertainty around public policy changes, which has made corporations generally cautious with their long-term spending plans. This
2 | American High-Income Trust |
environment of slow growth and low interest rates has been good for high-yield investors, as corporate bond issuers have been able to improve their balance sheets and overall creditworthiness. However, with yields and spreads now at lower levels, the opportunity for price appreciation from a further decline in yields has diminished.
With these issues in mind and on the heels of several years of strong returns, our investment managers are taking a cautious view of the market. While volatility in the high-yield market should be expected, it is important to remember that investors who have maintained a long-term perspective have been rewarded with solid returns and a steady source of income. For the past 10-year period ended March 31, 2013, the fund’s investors earned an average annual total return of 8.7%, with dividends reinvested. That compares with an 8.6% average annual total return for the Lipper High Yield Funds Index and a 10.1% gain for the Barclays U.S. Corporate High Yield 2% Issuer Capped Index for that same period.
As always, we appreciate your continued support and long-term investment perspective.
Sincerely,
David C. Barclay
President
May 14, 2013
For current information about the fund, visit americanfunds.com.
The fund’s 30-day yield for Class A shares as of April 30, 2013, calculated in accordance with the U.S. Securities and Exchange Commission (SEC) formula, was 4.08%. The fund’s 12-month distribution rate for Class A shares as of that date was 6.36%. Both reflect the 3.75% maximum sales charge. The SEC yield reflects the rate at which the fund is earning income on its current portfolio of securities while the distribution rate reflects the fund’s past dividends paid to shareholders. Accordingly, the fund’s SEC yield and distribution rate may differ.
American High-Income Trust | 3 |
Other share class results | unaudited |
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended March 31, 2013:
1 year | 5 years | 10 years/ Life of class1 | ||||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales charge (CDSC), maximum of 5%, payable only if shares are sold within six years of purchase | 5.10 | % | 7.91 | % | 8.01 | % | ||||||
Not reflecting CDSC | 10.10 | 8.20 | 8.01 | |||||||||
Class C shares | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only if shares are sold within one year of purchase | 9.04 | 8.16 | 7.80 | |||||||||
Not reflecting CDSC | 10.04 | 8.16 | 7.80 | |||||||||
Class F-1 shares3 | ||||||||||||
Not reflecting annual asset-based fee charged by sponsoring firm | 10.87 | 8.99 | 8.62 | |||||||||
Class F-2 shares3 — first sold 8/4/08 | ||||||||||||
Not reflecting annual asset-based fee charged by sponsoring firm | 11.15 | — | 9.69 | |||||||||
Class 529-A shares4 | ||||||||||||
Reflecting 3.75% maximum sales charge | 6.68 | 8.12 | 8.20 | |||||||||
Not reflecting maximum sales charge | 10.82 | 8.96 | 8.61 | |||||||||
Class 529-B shares2,4 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable only if shares are sold within six years of purchase | 4.96 | 7.79 | 7.88 | |||||||||
Not reflecting CDSC | 9.96 | 8.08 | 7.88 | |||||||||
Class 529-C shares4 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only if shares are sold within one year of purchase | 8.96 | 8.09 | 7.71 | |||||||||
Not reflecting CDSC | 9.96 | 8.09 | 7.71 | |||||||||
Class 529-E shares3,4 | 10.56 | 8.66 | 8.28 | |||||||||
Class 529-F-1 shares3,4 | ||||||||||||
Not reflecting annual asset-based fee charged by sponsoring firm | 11.05 | 9.18 | 8.75 |
1 | Applicable to Class F-2 shares only. All other share classes reflect 10-year results. |
2 | These shares are not available for purchase. |
3 | These shares are sold without any initial or contingent deferred sales charge. |
4 | Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
For information regarding the differences among the various share classes, refer to the fund prospectus.
4 | American High-Income Trust |
Summary investment portfolio March 31, 2013 | unaudited |
The following summary investment portfolio is designed to streamline the report and help investors better focus on the fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
Portfolio by type of security | Percent of net assets |
Bonds, notes & other debt instruments — 91.44% | Principal amount (000) | Value (000) | Percent of net assets | |||||||||
Corporate bonds, notes & loans — 84.64% | ||||||||||||
Consumer discretionary — 15.57% | ||||||||||||
MGM Resorts International 5.875%–8.625% 2013–20221 | $ | 242,515 | $ | 263,218 | 1.25 | % | ||||||
Boyd Gaming Corp.: | ||||||||||||
9.125% 2018 | 82,070 | 87,456 | 1.06 | |||||||||
6.75%–9.00% 2014–20201 | 132,090 | 135,432 | ||||||||||
Needle Merger Sub Corp. 8.125% 20191 | 106,855 | 112,198 | .53 | |||||||||
Cequel Communications Holdings I, LLC and Cequel Capital Corp. 6.375% 20201 | 98,955 | 103,161 | .49 | |||||||||
DISH DBS Corp. 4.625% 2017 | 95,950 | 100,028 | .48 | |||||||||
Quebecor Media Inc. 5.75% 20231 | 87,150 | 89,329 | .43 | |||||||||
Other securities | 2,377,122 | 11.33 | ||||||||||
3,267,944 | 15.57 | |||||||||||
Telecommunication services — 13.78% | ||||||||||||
Sprint Nextel Corp.: | ||||||||||||
8.375% 2017 | 83,450 | 97,532 | ||||||||||
7.00% 2020 | 112,925 | 124,782 | 2.14 | |||||||||
6.00%–11.50% 2016–20221 | 180,305 | 216,414 | ||||||||||
Sprint Capital Corp. 6.90%–8.75% 2019–2032 | 9,800 | 11,261 | ||||||||||
Frontier Communications Corp.: | ||||||||||||
7.125% 2023 | 103,375 | 105,055 | ||||||||||
7.625% 2024 | 91,925 | 94,798 | 1.89 | |||||||||
8.125%–9.25% 2018–2022 | 172,053 | 196,139 |
American High-Income Trust | 5 |
Bonds, notes & other debt instruments | Principal amount (000) | Value (000) | Percent of net assets | |||||||||
Telecommunication services (continued) | ||||||||||||
Cricket Communications, Inc.: | ||||||||||||
7.75% 2016 | $ | 163,265 | $ | 170,612 | ||||||||
7.75% 2020 | 47,450 | 47,569 | 1.88 | % | ||||||||
Leap Wireless International, Inc., Term Loan C, 0.50% 20202,3,4 | 175,750 | 177,096 | ||||||||||
Clearwire Communications and Clearwire Finance, Inc.: | ||||||||||||
Series B, 12.00% 20151 | 123,930 | 133,922 | ||||||||||
Series A, 12.00% 20151 | 81,140 | 87,682 | ||||||||||
14.75% 20161 | 16,600 | 23,323 | 1.65 | |||||||||
12.00% 20171 | 86,930 | 102,143 | ||||||||||
Wind Acquisition SA: | ||||||||||||
11.75% 20171 | 140,330 | 149,451 | ||||||||||
7.25% 20181 | 65,460 | 68,423 | 1.51 | |||||||||
7.375%–11.75% 2017–2018 | € | 73,005 | 98,518 | |||||||||
MetroPCS Wireless, Inc.: | ||||||||||||
6.25% 20211 | $ | 124,975 | 127,631 | |||||||||
6.625% 20231 | 124,900 | 127,866 | 1.22 | |||||||||
Digicel Group Ltd.: | ||||||||||||
6.00% 20211 | 91,950 | 91,720 | ||||||||||
8.25%–12.00% 2014–20201 | 119,475 | 127,685 | 1.05 | |||||||||
LightSquared, Term Loan B, 12.00% 20143,4,5,6 | 144,713 | 136,302 | .65 | |||||||||
Trilogy International Partners, LLC 10.25% 20161 | 92,240 | 90,856 | .43 | |||||||||
Other securities | 285,130 | 1.36 | ||||||||||
2,891,910 | 13.78 | |||||||||||
Industrials — 10.36% | ||||||||||||
Associated Materials, LLC and AMH New Finance, Inc. | ||||||||||||
9.125% 2017 | 144,817 | 155,316 | .74 | |||||||||
Ply Gem Industries, Inc. 8.25% 2018 | 136,055 | 148,810 | .71 | |||||||||
BE Aerospace, Inc. 5.25% 2022 | 103,270 | 107,014 | .51 | |||||||||
Other securities | 1,762,375 | 8.40 | ||||||||||
2,173,515 | 10.36 | |||||||||||
Financials — 9.69% | ||||||||||||
Realogy Corp.: | ||||||||||||
Letter of Credit, 4.50% 20162,3,4 | 8,238 | 8,238 | ||||||||||
7.875% 20191 | 143,060 | 157,366 | ||||||||||
Term Loan B, 4.50% 20202,3,4 | 108,432 | 110,092 | 1.82 | |||||||||
7.625% 20201 | 3,000 | 3,398 | ||||||||||
9.00% 20201 | 87,735 | 102,431 |
6 | American High-Income Trust |
Bonds, notes & other debt instruments | Principal amount (000) | Value (000) | Percent of net assets | |||||||||
Financials (continued) | ||||||||||||
CIT Group Inc.: | ||||||||||||
Series C, 4.75% 20151 | $ | 133,800 | $ | 140,490 | ||||||||
5.00% 2017 | 94,495 | 101,818 | 1.38 | % | ||||||||
4.25%–5.50% 2017–20191 | 43,850 | 46,691 | ||||||||||
iStar Financial Inc., Term Loan B, 4.50% 20172,3,4 | 106,857 | 108,126 | .51 | |||||||||
Crescent Resources 10.25% 20171 | 88,170 | 96,987 | .46 | |||||||||
Other securities | 1,158,657 | 5.52 | ||||||||||
2,034,294 | 9.69 | |||||||||||
Materials — 9.03% | ||||||||||||
Reynolds Group Inc.: | ||||||||||||
5.75% 2020 | 176,500 | 180,251 | 1.30 | |||||||||
7.125%–9.875% 2018–2019 | 83,695 | 91,796 | ||||||||||
Inmet Mining Corp.: | ||||||||||||
8.75% 20201 | 136,930 | 151,992 | ||||||||||
7.50% 20211 | 70,630 | 76,634 | 1.09 | |||||||||
JMC Steel Group Inc. 8.25% 20181 | 94,655 | 100,808 | .48 | |||||||||
Other securities | 1,292,815 | 6.16 | ||||||||||
1,894,296 | 9.03 | |||||||||||
Health care — 8.32% | ||||||||||||
inVentiv Health Inc.: | ||||||||||||
9.00% 20181 | 123,450 | 129,931 | ||||||||||
10.75% 20181 | 103,250 | 89,311 | 1.24 | |||||||||
11.00% 20181 | 48,390 | 41,857 | ||||||||||
Kinetic Concepts, Inc. 10.50% 2018 | 108,400 | 117,885 | .56 | |||||||||
VPI Escrow Corp. 6.375% 20201 | 106,895 | 113,175 | .54 | |||||||||
Quintiles, Term Loan B-2, 4.50% 20182,3,4 | 106,121 | 107,511 | .51 | |||||||||
Elan Finance PLC and Elan Finance Corp. 6.25% 20191 | 84,890 | 99,534 | .48 | |||||||||
Patheon Inc., Term Loan B1, 7.25% 20182,3,4 | 90,738 | 92,326 | .44 | |||||||||
Other securities | 953,667 | 4.55 | ||||||||||
1,745,197 | 8.32 | |||||||||||
Energy — 6.82% | ||||||||||||
NGPL PipeCo LLC 9.625% 20191 | 95,015 | 106,892 | .51 | |||||||||
Sabine Pass Liquefaction, LLC 5.625% 20211 | 102,725 | 106,706 | .51 | |||||||||
Other securities | 1,217,203 | 5.80 | ||||||||||
1,430,801 | 6.82 |
American High-Income Trust | 7 |
Bonds, notes & other debt instruments | Principal amount (000) | Value (000) | Percent of net assets | |||||||||
Information technology — 5.72% | ||||||||||||
First Data Corp.: | ||||||||||||
11.25% 2016 | $ | 229,965 | $ | 232,265 | ||||||||
Term Loan D, 5.204% 20172,3,4 | 73,036 | 73,669 | ||||||||||
12.625% 2021 | 118,026 | 128,501 | 2.96 | % | ||||||||
6.75%–10.625% 2015–20221,2,6 | 177,633 | 186,687 | ||||||||||
SRA International, Inc., Term Loan B, 6.50% 20182,3,4 | 101,487 | 101,487 | .48 | |||||||||
Other securities | 478,221 | 2.28 | ||||||||||
1,200,830 | 5.72 | |||||||||||
Consumer staples — 2.73% | ||||||||||||
Other securities | 573,888 | 2.73 | ||||||||||
Utilities — 2.62% | ||||||||||||
TXU, Term Loan, 4.702% 20172,3,4 | 149,658 | 106,630 | .51 | |||||||||
Other securities | 443,230 | 2.11 | ||||||||||
549,860 | 2.62 | |||||||||||
Total corporate bonds, notes & loans | 17,762,535 | 84.64 | ||||||||||
Other — 6.80% | ||||||||||||
Other securities | 1,427,962 | 6.80 | ||||||||||
Total bonds, notes & other debt instruments (cost: $18,232,766,000) | 19,190,497 | 91.44 | ||||||||||
Convertible securities — 1.04% | ||||||||||||
Telecommunication services — 0.10% | ||||||||||||
Leap Wireless International, Inc. 4.50% convertible notes 2014 | 12,500 | 12,797 | .06 | |||||||||
Clearwire Corp. 8.25% convertible notes 20401 | 7,722 | 8,639 | .04 | |||||||||
21,436 | .10 | |||||||||||
Other — 0.94% | ||||||||||||
Other securities | 197,097 | .94 | ||||||||||
Total convertible securities (cost: $200,605,000) | 218,533 | 1.04 |
8 | American High-Income Trust |
Preferred securities — 0.49% | Value (000) | Percent of net assets | ||||||||||
Financials — 0.49% | ||||||||||||
Other securities | $ | 102,423 | .49 | % | ||||||||
Total preferred securities (cost: $87,788,000) | 102,423 | .49 | ||||||||||
Common stocks — 1.75% | Shares | |||||||||||
Industrials — 0.87% | ||||||||||||
Beech Holdings, LLC7,8,9 | 14,946,134 | 102,232 | .49 | |||||||||
Other securities | 80,575 | .38 | ||||||||||
182,807 | .87 | |||||||||||
Financials — 0.33% | ||||||||||||
CIT Group Inc.7 | 124,904 | 5,431 | .03 | |||||||||
Other securities | 64,150 | .30 | ||||||||||
69,581 | .33 | |||||||||||
Telecommunication services — 0.12% | ||||||||||||
Frontier Communications Corp., Class B | 6,000,000 | 23,880 | .12 | |||||||||
Other — 0.43% | ||||||||||||
Other securities | 90,421 | .43 | ||||||||||
Total common stocks (cost: $423,578,000) | 366,689 | 1.75 | ||||||||||
Warrants — 0.02% | ||||||||||||
Other — 0.02% | ||||||||||||
Other securities | 4,109 | .02 | ||||||||||
Total warrants (cost: $7,329,000) | 4,109 | .02 | ||||||||||
Principal | ||||||||||||
amount | ||||||||||||
Short-term securities — 3.74% | (000) | |||||||||||
Fannie Mae 0.10%–0.16% due 7/1–10/25/2013 | $ | 240,100 | 239,991 | 1.14 | ||||||||
Freddie Mac 0.11%–0.17% due 4/24–8/13/2013 | 155,400 | 155,348 | .74 | |||||||||
Federal Home Loan Bank 0.09%–0.155% due 4/1–6/21/2013 | 147,950 | 147,928 | .71 | |||||||||
Other securities | 241,006 | 1.15 | ||||||||||
Total short-term securities (cost: $784,251,000) | 784,273 | 3.74 | ||||||||||
Total investment securities (cost: $19,736,317,000) | 20,666,524 | 98.48 | ||||||||||
Other assets less liabilities | 319,593 | 1.52 | ||||||||||
Net assets | $ | 20,986,117 | 100.00 | % |
“Other securities” includes all issues that are not disclosed separately in the summary investment portfolio.
American High-Income Trust | 9 |
Forward currency contracts
The fund has entered into forward currency contracts to purchase or sell currencies as shown in the following table. The open forward currency contracts shown are generally indicative of the level of activity over the prior 12-month period.
Unrealized (depreciation) | ||||||||||||||||
Contract amount | appreciation at | |||||||||||||||
Settlement date | Counterparty | Receive (000) | Deliver (000) | 3/31/2013 (000) | ||||||||||||
Purchases: | ||||||||||||||||
Russian rubles | 4/12/2013 | Citibank | RUB | 323,978 | $ | 10,483 | $ | (92 | ) | |||||||
Sales: | ||||||||||||||||
Brazilian reais | 4/8/2013 | Citibank | $ | 8,149 | 16,200 145 | |||||||||||
Brazilian reais | 4/12/2013 | JPMorgan Chase | $ | 10,138 | BRL | 19,825 | 348 | |||||||||
Brazilian reais | 4/12/2013 | Citibank | $ | 12,271 | BRL | 24,000 | 419 | |||||||||
Brazilian reais | 4/12/2013 | Citibank | $ | 4,006 | BRL | 7,835 | 137 | |||||||||
Colombian pesos | 4/5/2013 | Citibank | $ | 6,157 | COP | 11,200,000 | 27 | |||||||||
Colombian pesos | 4/5/2013 | Citibank | $ | 17,012 | COP | 30,994,725 | 47 | |||||||||
Euros | 4/4/2013 | Bank of New York Mellon | $ | 8,296 | € | 6,357 | 147 | |||||||||
Euros | 4/8/2013 | JPMorgan Chase | $ | 19,232 | € | 14,750 | 311 | |||||||||
Euros | 4/24/2013 | Citibank | $ | 11,658 | € | 9,000 | 121 | |||||||||
Euros | 4/29/2013 | JPMorgan Chase | $ | 11,391 | € | 8,858 | 35 | |||||||||
Euros | 4/29/2013 | JPMorgan Chase | $ | 5,238 | € | 4,100 | (18 | ) | ||||||||
Euros | 4/30/2013 | JPMorgan Chase | $ | 15,419 | € | 12,000 | 35 | |||||||||
Mexican pesos | 4/8/2013 | HSBC Bank | $ | 16,763 | MXN | 215,000 | (622 | ) | ||||||||
Mexican pesos | 4/8/2013 | Barclays Bank PLC | $ | 49,793 | MXN | 638,615 | (1,845 | ) | ||||||||
Turkish lira | 4/5/2013 | HSBC Bank | $ | 7,795 | TRY | 14,100 | 8 | |||||||||
Turkish lira | 4/5/2013 | Barclays Bank PLC | $ | 24,840 | TRY | 44,855 | 68 | |||||||||
Polish zloty | 4/8/2013 | Barclays Bank PLC | $ | 17,643 | PLN | 56,370 | 359 | |||||||||
Polish zloty | 4/19/2013 | Barclays Bank PLC | $ | 7,343 | PLN | 23,375 | 182 | |||||||||
Russian rubles | 4/4/2013 | JPMorgan Chase | $ | 13,071 | RUB | 403,375 | 115 | |||||||||
Russian rubles | 4/5/2013 | Citibank | $ | 5,109 | RUB | 158,000 | 35 | |||||||||
54 | ||||||||||||||||
Forward currency contracts — net | $ | (38 | ) |
Investments in affiliates
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund’s holdings in that company represent 5% or more of the outstanding voting shares. The value of the fund’s holdings in affiliated companies is included in “Other securities” under the respective industry sectors in the summary investment portfolio. Further details on these holdings and related transactions during the six months ended March 31, 2013, appear below.
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 3/31/2013 (000) | |||||||||||||||||||
Cooper-Standard Holdings Inc.7 | 1,238,538 | — | — | 1,238,538 | $ | — | $ | 51,523 | ||||||||||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred1,8 | 99,687 | — | — | 99,687 | 349 | 17,902 |
10 | American High-Income Trust |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 3/31/2013 (000) | ||||||||||||||
Cooper-Standard Holdings Inc.,warrants, expire 20177 | 196,935 | — | — | 196,935 | $ | — | $ | 3,244 | |||||||||||
American Media, Inc.1,7,8 | 1,122,345 | — | — | 1,122,345 | — | 3,120 | |||||||||||||
Nortek Inc. 10.00% 201810 | $ | 47,735,000 | — | — | $ | 47,735,000 | 2,354 | — | |||||||||||
Nortek Inc. 8.50% 202110 | $ | 47,660,000 | $ | 15,940,000 | — | $ | 63,600,000 | 2,349 | — | ||||||||||
Nortek, Inc.7,10 | 793,646 | — | 229,400 | 564,246 | — | — | |||||||||||||
$ | 5,052 | $ | 75,789 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
1 | Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in “Other securities,” was $7,383,672,000, which represented 35.18% of the net assets of the fund. |
2 | Coupon rate may change periodically. |
3 | Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
4 | Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans, including those in “Other securities,” was $1,870,702,000, which represented 8.91% of the net assets of the fund. |
5 | Scheduled interest and/or principal payment was not received. |
6 | Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
7 | Security did not produce income during the last 12 months. |
8 | Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities, including those in “Other securities,” was $273,470,000, which represented 1.30% of the net assets of the fund. |
9 | Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Acquisition dates | Cost (000) | Value (000) | Percent of net assets | |||||||||||
Beech Holdings, LLC | 11/4/2008–2/15/2013 | $ | 160,248 | $ | 102,232 | .49 | % | |||||||
Other restricted securities | 43,698 | 24,588 | .12 | |||||||||||
Total restricted securities | $ | 203,946 | $ | 126,820 | .61 | % |
10 | Unaffiliated issuer at 3/31/2013. |
Key to abbreviations and symbol
BRL = Brazilian reais |
COP = Colombian pesos |
€ = Euros |
MXN = Mexican pesos |
PLN = Polish zloty |
RUB = Russian rubles |
TRY = Turkish lira |
See Notes to Financial Statements
American High-Income Trust | 11 |
Financial statements
Statement of assets and liabilities at March 31, 2013 | unaudited (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $19,669,919) | $ | 20,590,735 | ||||||
Affiliated issuers (cost: $66,398) | 75,789 | $ | 20,666,524 | |||||
Cash | 45,783 | |||||||
Unrealized appreciation on open forward currency contracts | 2,539 | |||||||
Receivables for: | ||||||||
Sales of investments | 416,460 | |||||||
Sales of fund’s shares | 35,197 | |||||||
Closed forward currency contracts | 15 | |||||||
Dividends and interest | 389,515 | 841,187 | ||||||
21,556,033 | ||||||||
Liabilities: | ||||||||
Unrealized depreciation on open forward currency contracts | 2,577 | |||||||
Payables for: | ||||||||
Purchases of investments | 494,087 | |||||||
Repurchases of fund’s shares | 52,388 | |||||||
Dividends on fund’s shares | 7,931 | |||||||
Investment advisory services | 4,860 | |||||||
Services provided by related parties | 7,608 | |||||||
Trustees’ deferred compensation | 226 | |||||||
Other | 239 | 567,339 | ||||||
Net assets at March 31, 2013 | $ | 20,986,117 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 20,825,002 | ||||||
Distributions in excess of net investment income | (53,787 | ) | ||||||
Accumulated net realized loss | (714,538 | ) | ||||||
Net unrealized appreciation | 929,440 | |||||||
Net assets at March 31, 2013 | $ | 20,986,117 |
(dollars and shares in thousands, except per-share amounts)
Shares of beneficial interest issued and outstanding (no stated par value) —
unlimited shares authorized (1,831,942 total shares outstanding)
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | 14,736,764 | 1,286,417 | $ | 11.46 | ||||||||
Class B | 177,027 | 15,453 | 11.46 | |||||||||
Class C | 1,467,759 | 128,125 | 11.46 | |||||||||
Class F-1 | 1,506,741 | 131,528 | 11.46 | |||||||||
Class F-2 | 1,024,045 | 89,392 | 11.46 | |||||||||
Class 529-A | 367,064 | 32,042 | 11.46 | |||||||||
Class 529-B | 11,485 | 1,003 | 11.46 | |||||||||
Class 529-C | 136,882 | 11,949 | 11.46 | |||||||||
Class 529-E | 20,221 | 1,765 | 11.46 | |||||||||
Class 529-F-1 | 23,137 | 2,020 | 11.46 | |||||||||
Class R-1 | 27,142 | 2,369 | 11.46 | |||||||||
Class R-2 | 243,061 | 21,218 | 11.46 | |||||||||
Class R-3 | 339,501 | 29,636 | 11.46 | |||||||||
Class R-4 | 240,787 | 21,019 | 11.46 | |||||||||
Class R-5 | 309,920 | 27,054 | 11.46 | |||||||||
Class R-6 | 354,581 | 30,952 | 11.46 |
See Notes to Financial Statements
12 | American High-Income Trust |
Statement of operations | unaudited | |||||||
for the six months ended March 31, 2013 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Interest (net of non-U.S. taxes of $77; also includes $4,703 from affiliates) | $ | 731,583 | ||||||
Dividends (includes $349 from affiliates) | 6,613 | $ | 738,196 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 28,976 | |||||||
Distribution services | 29,721 | |||||||
Transfer agent services | 12,777 | |||||||
Administrative services | 2,200 | |||||||
Reports to shareholders | 589 | |||||||
Registration statement and prospectus | 646 | |||||||
Trustees’ compensation | 89 | |||||||
Auditing and legal | 77 | |||||||
Custodian | 205 | |||||||
State and local taxes | 57 | |||||||
Other | 374 | 75,711 | ||||||
Net investment income | 662,485 | |||||||
Net realized gain and unrealized appreciation on investments, forward currency contracts and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (includes $6,280 net gain from affiliates) | 139,606 | |||||||
Forward currency contracts | 1,402 | |||||||
Currency transactions | (1,593 | ) | 139,415 | |||||
Net unrealized appreciation (depreciation) on: | ||||||||
Investments | 367,634 | |||||||
Forward currency contracts | (580 | ) | ||||||
Currency translations | (864 | ) | 366,190 | |||||
Net realized gain and unrealized appreciation on investments, forward currency contracts and currency | 505,605 | |||||||
Net increase in net assets resulting from operations | $ | 1,168,090 |
* | Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. |
See Notes to Financial Statements
American High-Income Trust | 13 |
Statements of changes in net assets | |
(dollars in thousands) |
Six months ended March 31, 2013* | Year ended September 30, 2012 | |||||||
Operations: | ||||||||
Net investment income | $ | 662,485 | $ | 1,277,176 | ||||
Net realized gain on investments, forward currency contracts and currency transactions | 139,415 | 159,155 | ||||||
Net unrealized appreciation on investments, forward currency contracts and currency translations | 366,190 | 1,229,106 | ||||||
Net increase in net assets resulting from operations | 1,168,090 | 2,665,437 | ||||||
Dividends paid or accrued to shareholders from net investment income | (679,827 | ) | (1,345,763 | ) | ||||
Net capital share transactions | 689,184 | 2,512,433 | ||||||
Total increase in net assets | 1,177,447 | 3,832,107 | ||||||
Net assets: | ||||||||
Beginning of period | 19,808,670 | 15,976,563 | ||||||
End of period (including distributions in excess of net investment income: $(53,787) and $(36,445), respectively) | $ | 20,986,117 | $ | 19,808,670 |
*Unaudited.
See Notes to Financial Statements
14 | American High-Income Trust |
Notes to financial statements
unaudited
1. Organization
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 fund has 16 share classes consisting of five retail share classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are further described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature | ||||
Classes A and 529-A | Up to 3.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None | ||||
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years | ||||
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years | ||||
Class 529-C | None | 1% for redemptions within one year of purchase | None | ||||
Class 529-E | None | None | None | ||||
Classes F-1, F-2 and 529-F-1 | None | None | None | ||||
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
* | Class B and 529-B shares of the fund are not available for purchase. |
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses (“class-specific fees and expenses”), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
American High-Income Trust | 15 |
2. Significant accounting policies
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income — Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations — Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders — Dividends to shareholders are declared daily after the determination of the fund’s net investment income and are paid to shareholders monthly. Distributions to shareholders are recorded on the ex-dividend date.
Currency translation — Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates supplied by one or more pricing vendors on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
3. Valuation
Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
16 | American High-Income Trust |
Methods and inputs — The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or the last reported sale 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. Prices for each security are taken from the principal exchange or market on which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs | |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) | |
Corporate bonds, notes & loans; convertible securities | Standard inputs and underlying equity of the issuer | |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities | |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information | |
Municipal securities | Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts |
When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’s investment adviser. Short-term securities purchased within
American High-Income Trust | 17 |
60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days. Forward currency contracts are valued at the mean of representative quoted bid and ask prices, generally based on prices supplied by one or more pricing vendors.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in good faith under fair value guidelines adopted by authority of the fund’s board of trustees as further described below. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Processes and structure — The fund’s board of trustees has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information to support the changes. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.
The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.
Classifications — The fund’s investment adviser classifies the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation
18 | American High-Income Trust |
levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following tables present the fund’s valuation levels as of March 31, 2013 (dollars in thousands):
Investment securities | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Bonds, notes & other debt instruments: | ||||||||||||||||
Corporate bonds, notes & loans | $ | — | $ | 17,637,969 | $ | 124,566 | $ | 17,762,535 | ||||||||
Other | — | 1,427,962 | — | 1,427,962 | ||||||||||||
Convertible securities | 79,632 | 138,901 | — | 218,533 | ||||||||||||
Preferred securities | 5,734 | 96,689 | — | 102,423 | ||||||||||||
Common stocks | 235,829 | — | 130,860 | 366,689 | ||||||||||||
Warrants | 3,967 | — | 142 | 4,109 | ||||||||||||
Short-term securities | — | 784,273 | — | 784,273 | ||||||||||||
Total | $ | 325,162 | $ | 20,085,794 | $ | 255,568 | $ | 20,666,524 |
Other investments1 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Unrealized appreciation on open forward currency contracts | $ | — | $ | 2,539 | $ | — | $ | 2,539 | ||||||||
Liabilities: | ||||||||||||||||
Unrealized depreciation on open forward currency contracts | — | (2,577 | ) | — | (2,577 | ) | ||||||||||
Total | $ | — | $ | (38 | ) | $ | — | $ | (38 | ) |
1 | Forward currency contracts are not included in the investment portfolio. |
The following table reconciles the valuation of the fund’s Level 3 investment securities and related transactions for the six months ended March 31, 2013 (dollars in thousands):
Beginning value at 10/1/2012 | Transfers into Level 32 | Purchases | Sales | Net realized loss3 | Unrealized depreciation3 | Transfers out of Level 32 | Ending value at 3/31/2013 | |||||||||||||||||||||||||
Investment securities | $ | 52,659 | $ | 129,795 | $ | 219,734 | $ | (2,536 | ) | $ | (398 | ) | $ | (137,223 | ) | $ | (6,463 | ) | $ | 255,568 | ||||||||||||
Net unrealized depreciation during the period on Level 3 investment securities held at March 31, 20133: | $ | (128,284 | ) |
2 | Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. |
3 | Net realized loss and unrealized depreciation are included in the related amounts on investments in the statement of operations. |
American High-Income Trust | 19 |
Unobservable inputs — The significant unobservable inputs used to value the fund’s Level 3 investments include financial multiples of publicly traded comparable companies, estimates of recovery allocation and financial performance, and calculated discounts for lack of marketability. The following table provides additional information used by the fund’s investment adviser to fair value securities with significant unobservable inputs.
Value at 3/31/2013 (000) | Valuation technique(s) | Unobservable input(s) | Range | Impact to valuation from an increase in input* | |||||||
Bonds, notes & | $ | 124,566 | Estimated recovery | Recovery allocation | 9.5% – 80.8% (percent of par) | Increase | |||||
other debt | proceeds | EBITDA | $ 210M – $ 320M | Increase | |||||||
instruments | EBITDA multiple | 8x – 10x | Increase | ||||||||
Blend of bid and | EBITDA multiple | 6.0x – 8.8x | Increase | ||||||||
market comparable companies | DLOM (applied to multiple) | 22.7% – 25.0% | Decrease | ||||||||
Common stocks | 130,860 | Market comparable companies | EBITDA multiple | 4.3x – 7.4x | Increase | ||||||
DLOM | 10.0% – 18.0% | Decrease | |||||||||
Warrants | 142 | Black-Scholes model | Underlying share price | N/A | Increase | ||||||
$ | 255,568 |
* | This column represents the directional change in fair value of the Level 3 securities that would result in an increase from the corresponding input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements. |
Key to abbreviations
EBITDA = Earnings before income taxes, depreciation and amortization
DLOM = Discount for lack of marketability
4. Risk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes in the issuer’s creditworthiness than those of higher quality debt securities. The market prices of these securities may fluctuate more than the prices of higher quality debt securities and may decline significantly in periods of general economic difficulty. These risks may be increased with respect to investments in junk bonds.
Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value, acquire or sell.
Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities. In addition, falling interest rates
20 | American High-Income Trust |
may cause an issuer to redeem, call or refinance a debt security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities.
Bonds and other debt securities are subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default.
Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.
Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of adverse political, social, economic or market developments in the countries or regions in which the issuers operate. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the U.S.
Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.
5. Certain investment techniques
Loan transactions — The fund has entered into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder’s portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan’s interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal.
Unfunded commitments — The fund has participated in transactions that involve unfunded commitments, which may obligate the fund to lend additional sums based upon the terms of the loan agreement. As of March 31, 2013, the fund’s maximum exposure of unfunded loan commitments was $10,581,000, which would represent 0.05% of the net assets of the fund should such commitments become due. Unrealized depreciation of $106,000 is included in other payables in the statement of assets and liabilities and net unrealized appreciation on investments in the statement of operations.
Forward currency contracts — The fund has entered into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund’s investment adviser uses forward currency contracts to manage the fund’s exposure to changes in exchange rates. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates.
American High-Income Trust | 21 |
On a daily basis, the fund’s investment adviser values forward currency contracts based on the applicable exchange rates and records unrealized appreciation or depreciation for open forward currency contracts in the fund’s statement of assets and liabilities. Realized gains or losses are recorded at the time the forward currency contract is closed or offset by another contract with the same broker for the same settlement date and currency. Closed forward currency contracts that have not reached their settlement date are included in the respective receivables or payables for closed forward currency contracts in the fund’s statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the fund’s statement of operations.
Collateral — To reduce the risk to counterparties of forward currency contracts, the fund has entered into a collateral program with certain counterparties. The program calls for the fund to either receive or pledge collateral based on the net gain or loss on unsettled forward currency contracts by counterparty. The purpose of the collateral is to cover potential losses that could occur in the event that either party cannot meet its contractual obligations.
6. Taxation and distributions
Federal income taxation — The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended March 31, 2013, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2008 and by state tax authorities and tax authorities outside the U.S. for tax years before 2007.
Non-U.S. taxation — Dividend and interest income are recorded net of non-U.S. taxes paid.
Distributions — Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; cost of investments sold; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
22 | American High-Income Trust |
The components of distributable earnings on a tax basis are reported as of the fund’s most recent year-end. As of September 30, 2012, the components of distributable earnings on a tax basis were as follows (dollars in thousands):
Undistributed ordinary income | $ | 30,332 | ||
Capital loss carryforward expiring 2018* | (840,948 | ) |
* | The capital loss carryforward will be used to offset any capital gains realized by the fund in the current year or in subsequent years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. |
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after September 30, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
As of March 31, 2013, the tax basis unrealized appreciation (depreciation) and cost of investment securities were as follows (dollars in thousands):
Gross unrealized appreciation on investment securities | $ | 1,451,314 | ||
Gross unrealized depreciation on investment securities | (605,944 | ) | ||
Net unrealized appreciation on investment securities | 845,370 | |||
Cost of investment securities | 19,821,154 |
Tax-basis distributions paid or accrued to shareholders from ordinary income were as follows (dollars in thousands):
Share class | Six months ended March 31, 2013 | Year ended September 30, 2012 | ||||||
Class A | $ | 481,293 | $ | 948,806 | ||||
Class B | 5,689 | 15,866 | ||||||
Class C | 43,016 | 89,548 | ||||||
Class F-1 | 50,579 | 109,529 | ||||||
Class F-2 | 34,656 | 60,321 | ||||||
Class 529-A | 11,748 | 22,659 | ||||||
Class 529-B | 360 | 991 | ||||||
Class 529-C | 3,885 | 7,725 | ||||||
Class 529-E | 624 | 1,230 | ||||||
Class 529-F-1 | 723 | 1,304 | ||||||
Class R-1 | 758 | 1,527 | ||||||
Class R-2 | 7,040 | 14,463 | ||||||
Class R-3 | 10,809 | 23,467 | ||||||
Class R-4 | 7,891 | 16,653 | ||||||
Class R-5 | 10,510 | 20,422 | ||||||
Class R-6 | 10,246 | 11,252 | ||||||
Total | $ | 679,827 | $ | 1,345,763 |
American High-Income Trust | 23 |
7. Fees and transactions with related parties
CRMC, the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. (“AFD”), the principal underwriter of the fund’s shares, and American Funds Service Company® (“AFS”), the fund’s transfer agent. CRMC, AFD and AFS are considered related parties to the fund.
Investment advisory services — The fund has an investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.300% on the first $60 million of daily net assets and decreasing to 0.135% on such assets in excess of $15 billion. The agreement also provides for monthly fees, accrued daily, based on a series of decreasing rates beginning with 3.00% on the first $8,333,333 of the fund’s monthly gross income and decreasing to 1.50% on such income in excess of $50 million. For the six months ended March 31, 2013, the investment advisory services fee was $28,976,000, which was equivalent to an annualized rate of 0.283% of average daily net assets.
Class-specific fees and expenses — Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services — The fund has plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities. | |
For Class A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of March 31, 2013, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares. |
Share class | Currently approved limits | Plan limits | ||||||||
Class A | 0.30 | % | 0.30 | % | ||||||
Class 529-A | 0.30 | 0.50 | ||||||||
Classes B and 529-B | 1.00 | 1.00 | ||||||||
Classes C, 529-C and R-1 | 1.00 | 1.00 | ||||||||
Class R-2 | 0.75 | 1.00 | ||||||||
Classes 529-E and R-3 | 0.50 | 0.75 | ||||||||
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
24 | American High-Income Trust |
Transfer agent services — The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders. | |
Administrative services — The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring, assisting and overseeing third parties that provide services to fund shareholders. Under the agreement, Class A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily net assets. | |
529 plan services — Each 529 share class is subject to service fees to compensate the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. The fee is included in other expenses on the accompanying financial statements. The Commonwealth of Virginia is not considered a related party. | |
Class-specific expenses under the agreements described above for the six months ended March 31, 2013, were as follows (dollars in thousands): |
Share class | Distribution services | Transfer agent services | Administrative services | 529 plan services | |||||||||||
Class A | $16,347 | $ 9,056 | $ 716 | Not applicable | |||||||||||
Class B | 947 | 128 | Not applicable | Not applicable | |||||||||||
Class C | 7,246 | 937 | 363 | Not applicable | |||||||||||
Class F-1 | 1,889 | 909 | 379 | Not applicable | |||||||||||
Class F-2 | Not applicable | 562 | 250 | Not applicable | |||||||||||
Class 529-A | 381 | 174 | 89 | $175 | |||||||||||
Class 529-B | 61 | 7 | 3 | 6 | |||||||||||
Class 529-C | 659 | 71 | 33 | 65 | |||||||||||
Class 529-E | 48 | 5 | 5 | 10 | |||||||||||
Class 529-F-1 | — | 10 | 5 | 10 | |||||||||||
Class R-1 | 127 | 16 | 6 | Not applicable | |||||||||||
Class R-2 | 880 | 434 | 59 | Not applicable | |||||||||||
Class R-3 | 842 | 267 | 85 | Not applicable | |||||||||||
Class R-4 | 294 | 119 | 59 | Not applicable | |||||||||||
Class R-5 | Not applicable | 79 | 75 | Not applicable | |||||||||||
Class R-6 | Not applicable | 3 | 73 | Not applicable | |||||||||||
Total class-specific expenses | $29,721 | $12,777 | $2,200 | $266 |
American High-Income Trust | 25 |
Trustees’ deferred compensation — Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $89,000, shown on the accompanying financial statements, includes $70,000 in current fees (either paid in cash or deferred) and a net increase of $19,000 in the value of the deferred amounts.
Affiliated officers and trustees — Officers and certain trustees of the fund are or may be considered to be affiliated with CRMC, AFD and AFS. No affiliated officers or trustees received any compensation directly from the fund.
8. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales* | Reinvestments of dividends | Repurchases* | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Six months ended March 31, 2013 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,494,698 | 131,491 | $ | 448,469 | 39,425 | $ | (1,371,781 | ) | (120,625 | ) | $ | 571,386 | 50,291 | ||||||||||||||||||
Class B | 9,668 | 853 | 5,286 | 465 | (46,920 | ) | (4,132 | ) | (31,966 | ) | (2,814 | ) | ||||||||||||||||||||
Class C | 167,785 | 14,761 | 39,608 | 3,483 | (192,504 | ) | (16,926 | ) | 14,889 | 1,318 | ||||||||||||||||||||||
Class F-1 | 213,968 | 18,800 | 49,696 | 4,371 | (376,512 | ) | (33,329 | ) | (112,848 | ) | (10,158 | ) | ||||||||||||||||||||
Class F-2 | 374,240 | 33,028 | 29,776 | 2,616 | (306,198 | ) | (26,959 | ) | 97,818 | 8,685 | ||||||||||||||||||||||
Class 529-A | 38,842 | 3,417 | 11,698 | 1,028 | (33,048 | ) | (2,905 | ) | 17,492 | 1,540 | ||||||||||||||||||||||
Class 529-B | 670 | 59 | 357 | 31 | (3,143 | ) | (276 | ) | (2,116 | ) | (186 | ) | ||||||||||||||||||||
Class 529-C | 15,588 | 1,371 | 3,866 | 340 | (13,834 | ) | (1,216 | ) | 5,620 | 495 | ||||||||||||||||||||||
Class 529-E | 2,369 | 208 | 620 | 54 | (2,109 | ) | (185 | ) | 880 | 77 | ||||||||||||||||||||||
Class 529-F-1 | 4,612 | 405 | 719 | 64 | (2,273 | ) | (200 | ) | 3,058 | 269 | ||||||||||||||||||||||
Class R-1 | 4,476 | 393 | 736 | 65 | (3,474 | ) | (306 | ) | 1,738 | 152 | ||||||||||||||||||||||
Class R-2 | 43,940 | 3,863 | 6,965 | 612 | (45,048 | ) | (3,961 | ) | 5,857 | 514 | ||||||||||||||||||||||
Class R-3 | 63,788 | 5,607 | 10,656 | 937 | (94,370 | ) | (8,350 | ) | (19,926 | ) | (1,806 | ) | ||||||||||||||||||||
Class R-4 | 46,189 | 4,063 | 7,837 | 689 | (50,679 | ) | (4,463 | ) | 3,347 | 289 | ||||||||||||||||||||||
Class R-5 | 53,251 | 4,684 | 10,472 | 921 | (51,291 | ) | (4,509 | ) | 12,432 | 1,096 | ||||||||||||||||||||||
Class R-6 | 158,597 | 13,969 | 9,975 | 876 | (47,049 | ) | (4,139 | ) | 121,523 | 10,706 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 2,692,681 | 236,972 | $ | 636,736 | 55,977 | $ | (2,640,233 | ) | (232,481 | ) | $ | 689,184 | 60,468 |
26 | American High-Income Trust |
Sales* | Reinvestments of dividends | Repurchases* | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended September 30, 2012 | ||||||||||||||||||||||||||||||||
Class A | $ | 2,950,296 | 270,595 | $ | 873,157 | 79,970 | $ | (2,148,697 | ) | (197,821 | ) | $ | 1,674,756 | 152,744 | ||||||||||||||||||
Class B | 26,355 | 2,420 | 14,390 | 1,320 | (118,497 | ) | (10,933 | ) | (77,752 | ) | (7,193 | ) | ||||||||||||||||||||
Class C | 364,739 | 33,439 | 80,091 | 7,338 | (353,351 | ) | (32,547 | ) | 91,479 | 8,230 | ||||||||||||||||||||||
Class F-1 | 697,962 | 64,204 | 108,051 | 9,897 | (589,494 | ) | (54,444 | ) | 216,519 | 19,657 | ||||||||||||||||||||||
Class F-2 | 504,614 | 46,634 | 50,181 | 4,592 | (275,623 | ) | (25,351 | ) | 279,172 | 25,875 | ||||||||||||||||||||||
Class 529-A | 78,742 | 7,226 | 22,698 | 2,078 | (43,253 | ) | (3,972 | ) | 58,187 | 5,332 | ||||||||||||||||||||||
Class 529-B | 2,460 | 226 | 987 | 91 | (7,187 | ) | (662 | ) | (3,740 | ) | (345 | ) | ||||||||||||||||||||
Class 529-C | 30,760 | 2,822 | 7,735 | 708 | (19,864 | ) | (1,824 | ) | 18,631 | 1,706 | ||||||||||||||||||||||
Class 529-E | 4,687 | 431 | 1,231 | 113 | (2,982 | ) | (273 | ) | 2,936 | 271 | ||||||||||||||||||||||
Class 529-F-1 | 5,877 | 539 | 1,304 | 119 | (3,024 | ) | (278 | ) | 4,157 | 380 | ||||||||||||||||||||||
Class R-1 | 8,138 | 746 | 1,514 | 139 | (6,534 | ) | (599 | ) | 3,118 | 286 | ||||||||||||||||||||||
Class R-2 | 74,293 | 6,812 | 14,398 | 1,319 | (73,343 | ) | (6,747 | ) | 15,348 | 1,384 | ||||||||||||||||||||||
Class R-3 | 181,751 | 16,666 | 23,421 | 2,146 | (141,935 | ) | (13,062 | ) | 63,237 | 5,750 | ||||||||||||||||||||||
Class R-4 | 81,945 | 7,516 | 16,629 | 1,523 | (91,436 | ) | (8,413 | ) | 7,138 | 626 | ||||||||||||||||||||||
Class R-5 | 101,958 | 9,370 | 20,450 | 1,872 | (74,803 | ) | (6,875 | ) | 47,605 | 4,367 | ||||||||||||||||||||||
Class R-6 | 139,385 | 12,686 | 11,239 | 1,028 | (38,982 | ) | (3,528 | ) | 111,642 | 10,186 | ||||||||||||||||||||||
Total net increase (decrease) | $ | 5,253,962 | 482,332 | $ | 1,247,476 | 114,253 | $ | (3,989,005 | ) | (367,329 | ) | $ | 2,512,433 | 229,256 |
* | Includes exchanges between share classes of the fund. |
9. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $6,630,158,000 and $5,520,063,000, respectively, during the six months ended March 31, 2013.
American High-Income Trust | 27 |
Financial highlights
Income (loss) from investment operations1 | ||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | |||||||||||||||
Class A: | Six months ended 3/31/20134,5 | $ | 11.18 | $ | .37 | $ | .29 | $ | .66 | |||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .89 | .78 | 1.67 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .83 | .33 | 1.16 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | ||||||||||||
Class B: | Six months ended 3/31/20134,5 | 11.18 | .33 | .29 | .62 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .77 | (.74 | ) | .03 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .85 | (2.32 | ) | (1.47 | ) | ||||||||||||
Class C: | Six months ended 3/31/20134,5 | 11.18 | .33 | .29 | .62 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | ||||||||||||
Class F-1: | Six months ended 3/31/20134,5 | 11.18 | .37 | .29 | .66 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .88 | .78 | 1.66 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .83 | .33 | 1.16 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | ||||||||||||
Class F-2: | Six months ended 3/31/20134,5 | 11.18 | .38 | .29 | .67 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .81 | .86 | 1.67 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .88 | (.74 | ) | .14 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .91 | .78 | 1.69 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .81 | .37 | 1.18 | ||||||||||||||
Period from 8/4/2008 to 9/30/20084 | 11.01 | .14 | (1.00 | ) | (.86 | ) | ||||||||||||
Class 529-A: | Six months ended 3/31/20134,5 | 11.18 | .37 | .29 | .66 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .88 | .78 | 1.66 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .82 | .33 | 1.15 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | ||||||||||||
Class 529-B: | Six months ended 3/31/20134,5 | 11.18 | .32 | .29 | .61 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .75 | (.74 | ) | .01 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | ||||||||||||
Class 529-C: | Six months ended 3/31/20134,5 | 11.18 | .32 | .29 | .61 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) |
28 | American High-Income Trust |
Dividends and distributions | ||||||||||||||||||||||||||||||||||
Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return2,3 | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers3 | Ratio of net income to average net assets3 | ||||||||||||||||||||||||||
$ | (.38 | ) | $ | — | $ | (.38 | ) | $ | 11.46 | 5.99 | % | $ | 14,737 | .67 | %6 | .67 | %6 | 6.55 | %6 | |||||||||||||||
(.82 | ) | — | (.82 | ) | 11.18 | 16.35 | 13,822 | .69 | .69 | 7.17 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.36 | .67 | 11,223 | .67 | .67 | 7.57 | ||||||||||||||||||||||||
(.83 | ) | — | (.83 | ) | 11.13 | 16.75 | 11,687 | .68 | .68 | 8.26 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.29 | 14.03 | 10,274 | .80 | .79 | 9.57 | ||||||||||||||||||||||||
(.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.87 | ) | 8,074 | .70 | .67 | 8.14 | ||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 11.46 | 5.59 | 177 | 1.43 | 6 | 1.43 | 6 | 5.81 | 6 | |||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.18 | 15.49 | 204 | 1.44 | 1.44 | 6.47 | ||||||||||||||||||||||||
(.80 | ) | — | (.80 | ) | 10.36 | (.10 | ) | 264 | 1.44 | 1.44 | 6.82 | |||||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.13 | 15.86 | 452 | 1.46 | 1.46 | 7.50 | ||||||||||||||||||||||||
(.81 | ) | — | (.81 | ) | 10.29 | 13.18 | 550 | 1.56 | 1.55 | 8.93 | ||||||||||||||||||||||||
(.85 | ) | (.02 | ) | (.87 | ) | 10.01 | (12.55 | ) | 557 | 1.47 | 1.44 | 7.37 | ||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 11.46 | 5.57 | 1,468 | 1.48 | 6 | 1.48 | 6 | 5.74 | 6 | |||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.18 | 15.43 | 1,418 | 1.48 | 1.48 | 6.38 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 10.36 | (.15 | ) | 1,229 | 1.48 | 1.48 | 6.76 | |||||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.13 | 15.80 | 1,337 | 1.51 | 1.51 | 7.44 | ||||||||||||||||||||||||
(.81 | ) | — | (.81 | ) | 10.29 | 13.15 | 1,213 | 1.58 | 1.57 | 8.74 | ||||||||||||||||||||||||
(.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.59 | ) | 890 | 1.52 | 1.48 | 7.32 | ||||||||||||||||||||||
(.38 | ) | — | (.38 | ) | 11.46 | 5.96 | 1,507 | .72 | 6 | .72 | 6 | 6.51 | 6 | |||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.18 | 16.32 | 1,584 | .71 | .71 | 7.14 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.36 | .62 | 1,264 | .72 | .72 | 7.52 | ||||||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.13 | 16.69 | 1,457 | .74 | .74 | 8.21 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.29 | 14.02 | 1,482 | .81 | .80 | 9.54 | ||||||||||||||||||||||||
(.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.90 | ) | 1,204 | .74 | .70 | 8.09 | ||||||||||||||||||||||
(.39 | ) | — | (.39 | ) | 11.46 | 6.09 | 1,024 | .46 | 6 | .46 | 6 | 6.77 | 6 | |||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 11.18 | 16.62 | 903 | .46 | .46 | 7.37 | ||||||||||||||||||||||||
(.91 | ) | — | (.91 | ) | 10.36 | .88 | 568 | .46 | .46 | 7.77 | ||||||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 11.13 | 16.98 | 511 | .48 | .48 | 8.44 | ||||||||||||||||||||||||
(.90 | ) | — | (.90 | ) | 10.29 | 14.32 | 341 | .53 | .53 | 8.99 | ||||||||||||||||||||||||
(.14 | ) | — | (.14 | ) | 10.01 | (7.84 | ) | 13 | .08 | .07 | 1.34 | |||||||||||||||||||||||
(.38 | ) | — | (.38 | ) | 11.46 | 5.94 | 367 | .76 | 6 | .76 | 6 | 6.46 | 6 | |||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.18 | 16.26 | 341 | .77 | .77 | 7.08 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.36 | .59 | 261 | .74 | .74 | 7.50 | ||||||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.13 | 16.66 | 230 | .76 | .76 | 8.18 | ||||||||||||||||||||||||
(.87 | ) | — | (.87 | ) | 10.29 | 13.99 | 172 | .84 | .83 | 9.50 | ||||||||||||||||||||||||
(.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.91 | ) | 120 | .74 | .71 | 8.11 | ||||||||||||||||||||||
(.33 | ) | — | (.33 | ) | 11.46 | 5.53 | 11 | 1.56 | 6 | 1.56 | 6 | 5.68 | 6 | |||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.18 | 15.34 | 13 | 1.57 | 1.57 | 6.32 | ||||||||||||||||||||||||
(.78 | ) | — | (.78 | ) | 10.36 | (.22 | ) | 16 | 1.55 | 1.55 | 6.70 | |||||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.13 | 15.74 | 23 | 1.56 | 1.56 | 7.39 | ||||||||||||||||||||||||
(.80 | ) | — | (.80 | ) | 10.29 | 13.08 | 22 | 1.65 | 1.64 | 8.76 | ||||||||||||||||||||||||
(.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.64 | ) | 18 | 1.58 | 1.55 | 7.26 | ||||||||||||||||||||||
(.33 | ) | — | (.33 | ) | 11.46 | 5.54 | 137 | 1.55 | 6 | 1.55 | 6 | 5.67 | 6 | |||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.18 | 15.35 | 128 | 1.56 | 1.56 | 6.29 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 10.36 | (.21 | ) | 101 | 1.54 | 1.54 | 6.70 | |||||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.13 | 15.75 | 91 | 1.56 | 1.56 | 7.39 | ||||||||||||||||||||||||
(.80 | ) | — | (.80 | ) | 10.29 | 13.08 | 68 | 1.64 | 1.63 | 8.71 | ||||||||||||||||||||||||
(.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.64 | ) | 49 | 1.57 | 1.54 | 7.27 |
See page 32 for footnotes.
American High-Income Trust | 29 |
Financial highlights (continued)
Income (loss) from investment operations1 | ||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from Investment Operations | |||||||||||||||
Class 529-E: | Six months ended 3/31/20134,5 | $ | 11.18 | $ | .35 | $ | .29 | $ | .64 | |||||||||
Year ended 9/30/2012 | 10.36 | .75 | .86 | 1.61 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .81 | (.74 | ) | .07 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .85 | .78 | 1.63 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .80 | .33 | 1.13 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .90 | (2.32 | ) | (1.42 | ) | ||||||||||||
Class 529-F-1: | Six months ended 3/31/20134,5 | 11.18 | .38 | .29 | .67 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .80 | .86 | 1.66 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .87 | (.74 | ) | .13 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .90 | .78 | 1.68 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .84 | .33 | 1.17 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .95 | (2.32 | ) | (1.37 | ) | ||||||||||||
Class R-1: | Six months ended 3/31/20134,5 | 11.18 | .33 | .29 | .62 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | ||||||||||||
Class R-2: | Six months ended 3/31/20134,5 | 11.18 | .33 | .29 | .62 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | ||||||||||||
Class R-3: | Six months ended 3/31/20134,5 | 11.18 | .35 | .29 | .64 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .75 | .86 | 1.61 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .81 | (.74 | ) | .07 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .85 | .78 | 1.63 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .80 | .33 | 1.13 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .89 | (2.32 | ) | (1.43 | ) | ||||||||||||
Class R-4: | Six months ended 3/31/20134,5 | 11.18 | .37 | .29 | .66 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .88 | .78 | 1.66 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .83 | .33 | 1.16 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | ||||||||||||
Class R-5: | Six months ended 3/31/20134,5 | 11.18 | .39 | .29 | .68 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .81 | .86 | 1.67 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .88 | (.74 | ) | .14 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .91 | .78 | 1.69 | ||||||||||||||
Year ended 9/30/2009 | 10.01 | .85 | .33 | 1.18 | ||||||||||||||
Year ended 9/30/2008 | 12.35 | .96 | (2.32 | ) | (1.36 | ) | ||||||||||||
Class R-6: | Six months ended 3/31/20134,5 | 11.18 | .39 | .29 | .68 | |||||||||||||
Year ended 9/30/2012 | 10.36 | .82 | .86 | 1.68 | ||||||||||||||
Year ended 9/30/2011 | 11.13 | .89 | (.74 | ) | .15 | |||||||||||||
Year ended 9/30/2010 | 10.29 | .92 | .78 | 1.70 | ||||||||||||||
Period from 5/1/2009 to 9/30/20094 | 8.47 | .33 | 1.83 | 2.16 |
30 | American High-Income Trust |
Dividends and distributions | Ratio of | Ratio of | ||||||||||||||||||||||||||||||||
Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return3 | Net assets, end of period (in millions) | expenses to average net assets before reimbursements/ waivers | expenses to average net assets after reimbursements/ waivers3 | Ratio of net income to average net assets3 | ||||||||||||||||||||||||||
$ | (.36 | ) | $ | — | $ | (.36 | ) | $ | 11.46 | 5.82 | % | $ | 20 | 1.00 | %6 | 1.00 | %6 | 6.22 | %6 | |||||||||||||||
(.79 | ) | — | (.79 | ) | 11.18 | 15.97 | 19 | 1.02 | 1.02 | 6.83 | ||||||||||||||||||||||||
(.84 | ) | — | (.84 | ) | 10.36 | .31 | 15 | 1.02 | 1.02 | 7.22 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 11.13 | 16.34 | 12 | 1.04 | 1.04 | 7.90 | ||||||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 10.29 | 13.66 | 9 | 1.13 | 1.12 | 9.23 | ||||||||||||||||||||||||
(.90 | ) | (.02 | ) | (.92 | ) | 10.01 | (12.18 | ) | 7 | 1.06 | 1.02 | 7.79 | ||||||||||||||||||||||
(.39 | ) | — | (.39 | ) | 11.46 | 6.05 | 23 | .54 | 6 | .54 | 6 | 6.67 | 6 | |||||||||||||||||||||
(.84 | ) | — | (.84 | ) | 11.18 | 16.50 | 20 | .56 | .56 | 7.28 | ||||||||||||||||||||||||
(.90 | ) | — | (.90 | ) | 10.36 | .80 | 14 | .53 | .53 | 7.70 | ||||||||||||||||||||||||
(.84 | ) | — | (.84 | ) | 11.13 | 16.91 | 11 | .55 | .55 | 8.40 | ||||||||||||||||||||||||
(.89 | ) | — | (.89 | ) | 10.29 | 14.23 | 7 | .63 | .62 | 9.72 | ||||||||||||||||||||||||
(.95 | ) | (.02 | ) | (.97 | ) | 10.01 | (11.74 | ) | 6 | .56 | .52 | 8.29 | ||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 11.46 | 5.57 | 27 | 1.47 | 6 | 1.47 | 6 | 5.75 | 6 | |||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.18 | 15.42 | 25 | 1.50 | 1.50 | 6.36 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 10.36 | (.17 | ) | 20 | 1.50 | 1.50 | 6.74 | |||||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.13 | 15.78 | 23 | 1.53 | 1.53 | 7.41 | ||||||||||||||||||||||||
(.80 | ) | — | (.80 | ) | 10.29 | 13.08 | 18 | 1.64 | 1.63 | 8.65 | ||||||||||||||||||||||||
(.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.62 | ) | 12 | 1.55 | 1.52 | 7.29 | ||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 11.46 | 5.58 | 243 | 1.46 | 6 | 1.46 | 6 | 5.76 | 6 | |||||||||||||||||||||
(.73 | ) | — | (.73 | ) | 11.18 | 15.38 | 232 | 1.54 | 1.54 | 6.32 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 10.36 | (.15 | ) | 200 | 1.53 | 1.48 | 6.76 | |||||||||||||||||||||||
(.74 | ) | — | (.74 | ) | 11.13 | 15.80 | 209 | 1.58 | 1.51 | 7.44 | ||||||||||||||||||||||||
(.81 | ) | — | (.81 | ) | 10.29 | 13.17 | 170 | 1.79 | 1.56 | 8.81 | ||||||||||||||||||||||||
(.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.58 | ) | 128 | 1.70 | 1.48 | 7.34 | ||||||||||||||||||||||
(.36 | ) | — | (.36 | ) | 11.46 | 5.81 | 339 | 1.01 | 6 | 1.01 | 6 | 6.22 | 6 | |||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 11.18 | 15.96 | 352 | 1.03 | 1.03 | 6.84 | ||||||||||||||||||||||||
(.84 | ) | — | (.84 | ) | 10.36 | .31 | 266 | 1.02 | 1.02 | 7.22 | ||||||||||||||||||||||||
(.79 | ) | — | (.79 | ) | 11.13 | 16.33 | 316 | 1.05 | 1.05 | 7.90 | ||||||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 10.29 | 13.66 | 272 | 1.13 | 1.12 | 9.20 | ||||||||||||||||||||||||
(.89 | ) | (.02 | ) | (.91 | ) | 10.01 | (12.20 | ) | 185 | 1.07 | 1.04 | 7.77 | ||||||||||||||||||||||
(.38 | ) | — | (.38 | ) | 11.46 | 5.97 | 241 | .70 | 6 | .70 | 6 | 6.53 | 6 | |||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.18 | 16.32 | 232 | .72 | .72 | 7.16 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.36 | .61 | 208 | .72 | .72 | 7.52 | ||||||||||||||||||||||||
(.82 | ) | — | (.82 | ) | 11.13 | 16.68 | 213 | .75 | .75 | 8.19 | ||||||||||||||||||||||||
(.88 | ) | — | (.88 | ) | 10.29 | 14.02 | 172 | .81 | .80 | 9.56 | ||||||||||||||||||||||||
(.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.93 | ) | 125 | .77 | .73 | 8.08 | ||||||||||||||||||||||
(.40 | ) | — | (.40 | ) | 11.46 | 6.12 | 310 | .40 | 6 | .40 | 6 | 6.82 | 6 | |||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 11.18 | 16.67 | 290 | .41 | .41 | 7.44 | ||||||||||||||||||||||||
(.91 | ) | — | (.91 | ) | 10.36 | .91 | 224 | .42 | .42 | 7.82 | ||||||||||||||||||||||||
(.85 | ) | — | (.85 | ) | 11.13 | 17.03 | 232 | .44 | .44 | 8.50 | ||||||||||||||||||||||||
(.90 | ) | — | (.90 | ) | 10.29 | 14.37 | 202 | .51 | .50 | 9.88 | ||||||||||||||||||||||||
(.96 | ) | (.02 | ) | (.98 | ) | 10.01 | (11.65 | ) | 140 | .45 | .42 | 8.40 | ||||||||||||||||||||||
(.40 | ) | — | (.40 | ) | 11.46 | 6.15 | 355 | .35 | 6 | .35 | 6 | 6.85 | 6 | |||||||||||||||||||||
(.86 | ) | — | (.86 | ) | 11.18 | 16.72 | 226 | .36 | .36 | 7.44 | ||||||||||||||||||||||||
(.92 | ) | — | (.92 | ) | 10.36 | .96 | 104 | .37 | .37 | 7.86 | ||||||||||||||||||||||||
(.86 | ) | — | (.86 | ) | 11.13 | 17.09 | 89 | .39 | .39 | 8.56 | ||||||||||||||||||||||||
(.34 | ) | — | (.34 | ) | 10.29 | 25.96 | 49 | .18 | .18 | 3.55 |
See page 32 for footnotes.
American High-Income Trust | 31 |
Financial highlights (continued)
Six months ended | Year ended September 30 | |||||||||||||||||||||||
March 31, 20134,5 | 2012 | 2011 | 2010 | 2009 | 2008 | |||||||||||||||||||
Portfolio turnover rate for all share classes | 29% | 38 | % | 51 | % | 47 | % | 43 | % | 35 | % |
1 | Based on average shares outstanding. |
2 | Total returns exclude any applicable sales charges, including contingent deferred sales charges. |
3 | This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund’s transfer agent fees for certain retirement plan share classes. |
4 | Based on operations for the period shown and, accordingly, is not representative of a full year. |
5 | Unaudited. |
6 | Annualized. |
See Notes to Financial Statements
32 | American High-Income Trust |
Expense example | unaudited |
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (October 1, 2012, through March 31, 2013).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled “Expenses paid during period” to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
American High-Income Trust | 33 |
Beginning account value 10/1/2012 | Ending account value 3/31/2013 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A — actual return | $ | 1,000.00 | $ | 1,059.88 | $ | 3.44 | .67 | % | ||||||||
Class A — assumed 5% return | 1,000.00 | 1,021.59 | 3.38 | .67 | ||||||||||||
Class B — actual return | 1,000.00 | 1,055.94 | 7.33 | 1.43 | ||||||||||||
Class B — assumed 5% return | 1,000.00 | 1,017.80 | 7.19 | 1.43 | ||||||||||||
Class C — actual return | 1,000.00 | 1,055.73 | 7.59 | 1.48 | ||||||||||||
Class C — assumed 5% return | 1,000.00 | 1,017.55 | 7.44 | 1.48 | ||||||||||||
Class F-1 — actual return | 1,000.00 | 1,059.61 | 3.70 | .72 | ||||||||||||
Class F-1 — assumed 5% return | 1,000.00 | 1,021.34 | 3.63 | .72 | ||||||||||||
Class F-2 — actual return | 1,000.00 | 1,060.93 | 2.36 | .46 | ||||||||||||
Class F-2 — assumed 5% return | 1,000.00 | 1,022.64 | 2.32 | .46 | ||||||||||||
Class 529-A — actual return | 1,000.00 | 1,059.40 | 3.90 | .76 | ||||||||||||
Class 529-A — assumed 5% return | 1,000.00 | 1,021.14 | 3.83 | .76 | ||||||||||||
Class 529-B — actual return | 1,000.00 | 1,055.32 | 7.99 | 1.56 | ||||||||||||
Class 529-B — assumed 5% return | 1,000.00 | 1,017.15 | 7.85 | 1.56 | ||||||||||||
Class 529-C — actual return | 1,000.00 | 1,055.36 | 7.94 | 1.55 | ||||||||||||
Class 529-C — assumed 5% return | 1,000.00 | 1,017.20 | 7.80 | 1.55 | ||||||||||||
Class 529-E — actual return | 1,000.00 | 1,058.17 | 5.13 | 1.00 | ||||||||||||
Class 529-E — assumed 5% return | 1,000.00 | 1,019.95 | 5.04 | 1.00 | ||||||||||||
Class 529-F-1 — actual return | 1,000.00 | 1,060.51 | 2.77 | .54 | ||||||||||||
Class 529-F-1 — assumed 5% return | 1,000.00 | 1,022.24 | 2.72 | .54 | ||||||||||||
Class R-1 — actual return | 1,000.00 | 1,055.74 | 7.53 | 1.47 | ||||||||||||
Class R-1 — assumed 5% return | 1,000.00 | 1,017.60 | 7.39 | 1.47 | ||||||||||||
Class R-2 — actual return | 1,000.00 | 1,055.83 | 7.48 | 1.46 | ||||||||||||
Class R-2 — assumed 5% return | 1,000.00 | 1,017.65 | 7.34 | 1.46 | ||||||||||||
Class R-3 — actual return | 1,000.00 | 1,058.15 | 5.18 | 1.01 | ||||||||||||
Class R-3 — assumed 5% return | 1,000.00 | 1,019.90 | 5.09 | 1.01 | ||||||||||||
Class R-4 — actual return | 1,000.00 | 1,059.71 | 3.59 | .70 | ||||||||||||
Class R-4 — assumed 5% return | 1,000.00 | 1,021.44 | 3.53 | .70 | ||||||||||||
Class R-5 — actual return | 1,000.00 | 1,061.22 | 2.06 | .40 | ||||||||||||
Class R-5 — assumed 5% return | 1,000.00 | 1,022.94 | 2.02 | .40 | ||||||||||||
Class R-6 — actual return | 1,000.00 | 1,061.49 | 1.80 | .35 | ||||||||||||
Class R-6 — assumed 5% return | 1,000.00 | 1,023.19 | 1.77 | .35 |
* | The “expenses paid during period” are equals to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period). |
34 | American High-Income Trust |
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through March 31, 2014. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.
In reaching this decision, the board and the committee took into account information furnished to them throughout the year, as well as information prepared specifically in connection with their review of the agreement, and were advised by their independent counsel. They considered the factors discussed below, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements, as well as the benefits to fund shareholders from investing in a fund that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.
2. Investment results
The board and the committee considered the investment results of the fund in light of its objectives of providing a high level of current income and, secondarily, capital appreciation. They compared the fund’s total returns with those of other relevant funds (including the other funds that are the basis of the Lipper index for the category in which the fund is included) and market data such as relevant market indexes, in each case as available at the time of the related board and committee meetings. This report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee concluded that the fund’s long-term results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund and its shareholders.
American High-Income Trust | 35 |
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses remain significantly below those of most other relevant funds. The board and the committee also noted the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase. In addition, they reviewed information regarding the advisory fees paid by clients of an affiliate of CRMC. They noted that, to the extent there were differences between the advisory fees paid by the fund and the advisory fees paid by those clients, the differences appropriately reflected the investment, operational and regulatory differences between advising the fund and the other clients. The board and the committee concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.
4. Ancillary benefits
The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers. The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments, and attract and retain qualified personnel. They noted information regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability to the reported results of several large, publicly held investment management companies. The board and the committee noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.
36 | American High-Income Trust |
Offices
Offices of the fund and of the investment adviser
Capital Research and
Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete March 31, 2013, portfolio of American High-Income Trust’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
American High-Income Trust files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at (800) SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of American High-Income Trust, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after June 30, 2013, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
The American Funds Advantage
Since 1931, American Funds, part of Capital Group, has helped investors pursue long-term investment success. Our consistent approach — in combination with The Capital SystemSM — has resulted in a superior long-term track record.
Aligned with investor success
We base our decisions on a long-term perspective, which we believe aligns our goals with the interests of our clients. Our portfolio managers average 25 years of investment experience, including 20 years at our company, reflecting a career commitment to our long-term approach.1
The Capital SystemSM
Our investment process, The Capital System, combines individual accountability with teamwork. Each fund is divided into portions that are managed independently by investment professionals with diverse backgrounds, ages and investment approaches. An extensive global research effort is the backbone of our system.
Superior long-term track record
Our equity funds have beaten their Lipper peer indexes in 90% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 58% of 10-year periods and 63% of 20-year periods.2 Our fund management fees have been among the lowest in the industry.3
1 | Portfolio manager experience as of December 31, 2012. |
2 | Based on Class A share results for rolling periods through December 31, 2012. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date. |
3 | Based on management fees for the 20-year period ended December 31, 2012, versus comparable Lipper categories, excluding funds of funds. |
American Funds span a range of investment objectives | |
n | Growth funds |
AMCAP Fund® | |
EuroPacific Growth Fund® | |
The Growth Fund of America® | |
The New Economy Fund® | |
New Perspective Fund® | |
New World Fund® | |
SMALLCAP World Fund® | |
n | Growth-and-income funds |
American Mutual Fund® | |
Capital World Growth and Income Fund® | |
Fundamental InvestorsSM | |
International Growth and Income FundSM | |
The Investment Company of America® | |
Washington Mutual Investors FundSM | |
n | Equity-income funds |
Capital Income Builder® | |
The Income Fund of America® | |
n | Balanced funds |
American Balanced Fund® | |
American Funds Global Balanced FundSM | |
n | Bond funds |
American Funds Mortgage Fund® | |
American High-Income Trust® | |
The Bond Fund of America® | |
Capital World Bond Fund® | |
Intermediate Bond Fund of America® | |
Short-Term Bond Fund of America® | |
U.S. Government Securities Fund® | |
n | Tax-exempt bond funds |
American Funds Short-Term Tax-Exempt Bond Fund® | |
American High-Income Municipal Bond Fund® | |
Limited Term Tax-Exempt Bond Fund of America® | |
The Tax-Exempt Bond Fund of America® | |
State-specific tax-exempt funds | |
American Funds Tax-Exempt Fund of New York® | |
The Tax-Exempt Fund of California® | |
The Tax-Exempt Fund of Maryland® | |
The Tax-Exempt Fund of Virginia® | |
n | Money market fund |
American Funds Money Market Fund® | |
n | American Funds Portfolio SeriesSM |
American Funds Global Growth PortfolioSM | |
American Funds Growth PortfolioSM | |
American Funds Growth and Income PortfolioSM | |
American Funds Balanced PortfolioSM | |
American Funds Income PortfolioSM | |
American Funds Tax-Advantaged Income PortfolioSM | |
American Funds Preservation PortfolioSM | |
American Funds Tax-Exempt Preservation PortfolioSM | |
n | American Funds Target Date Retirement Series® |
n | American Funds College Target Date SeriesSM |
ITEM 2 – Code of Ethics
Not applicable for filing of semi-annual reports to shareholders.
ITEM 3 – Audit Committee Financial Expert
Not applicable for filing of semi-annual reports to shareholders.
ITEM 4 – Principal Accountant Fees and Services
Not applicable for filing of semi-annual reports to shareholders.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
![]() | American High-Income Trust® Investment portfolio March 31, 2013 |
unaudited
2 Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
3 Coupon rate may change periodically. |
4 Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
5 Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,870,702,000, which represented 8.91% of the net assets of the fund. |
6 Scheduled interest and/or principal payment was not received. |
7 Step bond; coupon rate will increase at a later date. |
8 Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $273,470,000, which represented 1.30% of the net assets of the fund. |
9 Index-linked bond whose principal amount moves with a government price index. |
10 A portion of this security was pledged as collateral for net losses on unsettled forward currency contracts with certain counterparties. The total value of pledged collateral was $369,000, which represented less than .01% of the net assets of the fund.
11 Represents an affiliated company as defined under the Investment Company Act of 1940.
12 Security did not produce income during the last 12 months.
13 Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below.
Acquisition | Cost | Value | Percent of | |
date(s) | (000) | (000) | net assets | |
Beech Holdings, LLC | 11/4/2008–2/15/2013 | $160,248 | $102,232 | .49% |
NewPage Holdings Inc. | 9/17/2009–1/9/2012 | 43,698 | 24,588 | .12 |
Liberman Broadcasting, Inc., warrants, expire 2022 | 12/31/2012 | — | — | .00 |
Total restricted securities | $203,946 | $126,820 | .61% |
Key to abbreviations and symbol
BRL = Brazilian reais
CLP = Chilean pesos
COP = Colombian pesos
€ = Euros
HUF = Hungarian forints
ILS = Israeli shekels
KRW = South Korean won
MXN = Mexican pesos
PHP = Philippine pesos
PLN = Polish zloty
RUB = Russian rubles
TRY = Turkish lira
UYU = Uruguayan pesos
ZAR = South African rand
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at (800) 421-4225 or visit the American Funds website at americanfunds.com.
MFGEFPX-021-0513O-S32807
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN HIGH-INCOME TRUST | |
By /s/ David C. Barclay | |
David C. Barclay, President and Principal Executive Officer | |
Date: May 31, 2013 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ David C. Barclay |
David C. Barclay, President and Principal Executive Officer |
Date: May 31, 2013 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: May 31, 2013 |