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: 811-5364
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, 2004
Date of reporting period: March 31, 2004
Julie F. Williams
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(name and address of agent for service)
Copies to:
Robert E. Carlson, Esq.
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 - Reports to Stockholders
[logo - American Funds(R)]
The right choice for the long term(R)
AMERICAN HIGH-INCOME TRUST
[cover: man looking through report]
Semi-annual report for the six months ended March 31, 2004
AMERICAN HIGH-INCOME TRUST(SM) seeks a high level of current income and,
secondarily, capital appreciation through a diversified, carefully supervised
portfolio consisting primarily of lower rated, higher risk corporate bonds.
This fund is one of the 29 American Funds, the nation's third-largest mutual
fund family. For more than seven decades, Capital Research and Management
Company,SM the American Funds adviser, has invested with a long-term focus based
on thorough research and attention to risk.
Here are the average annual total returns on a $1,000 investment with all
distributions reinvested for periods ended March 31, 2004:
Class A shares 1 year 5 years 10 years
Reflecting 3.75% maximum sales charge +17.40% +5.87% +7.60%
The fund's 30-day yield for Class A shares as of April 30, 2004, calculated in
accordance with the Securities and Exchange Commission formula, was 5.74%. The
fund's distribution rate for Class A shares as of that date was 6.59%. 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.
Results for other share classes can be found on page 44. Please see page 45 for
important information about other share classes.
FIGURES SHOWN ON THESE TWO PAGES ARE PAST RESULTS FOR CLASS A SHARES AND ARE NOT
PREDICTIVE OF RESULTS IN 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 THE MOST CURRENT INFORMATION AND MONTH-END RESULTS, VISIT
AMERICANFUNDS.COM. FUND RESULTS SHOWN, UNLESS OTHERWISE INDICATED, ARE AT NET
ASSET VALUE. IF A SALES CHARGE (MAXIMUM 3.75%) HAD BEEN DEDUCTED, THE RESULTS
WOULD HAVE BEEN LOWER.
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. High-yield bonds are subject to greater fluctuations in value and risk
of loss of income and principal. Investing outside the United States involves
additional risks, such as currency fluctuations, political instability,
differing securities regulations and periods of illiquidity, which are detailed
in the fund's prospectus.
[photograph: man on the phone looking through report]
FELLOW SHAREHOLDERS:
An improving economy and declining interest rates helped American High-Income
Trust to post strong gains for the first half of fiscal 2004.
Shareholders who reinvested monthly dividends totaling 42 cents a share earned a
total return of 7.5% for the six months ended March 31, 2004, including an
income return of 3.6% (7.2% annualized). That compares with a 7.9% return for
the Lipper High Current Yield Bond Funds Index, a benchmark of similar funds,
and an 8.6% return for the Credit Suisse First Boston High Yield Bond Index,
which attempts to mirror the high-yield debt markets. The Citigroup Broad
Investment-Grade (BIG) Bond Index, which measures high-quality bond markets
including Treasuries, posted a 3.1% return for the same period. The latter two
indexes are unmanaged and include no expenses.
RESULTS AT A GLANCE
CLASS A SHARE TOTAL RETURNS(1) (for periods ended March 31, 2004)
SIX MONTHS 1 YEAR LIFETIME(2)
American High-Income Trust +7.5% +21.9% +9.4%
Credit Suisse First Boston High Yield Bond Index +8.6 +22.9 +9.2
Citigroup Broad Investment-Grade (BIG)
Bond Index +3.1 + 5.5 +8.2
Lipper High Current Yield Bond Funds Index +7.9 +21.2 +7.3
(1) Change in value of investment with dividends and capital gain distributions
reinvested. Market indexes are unmanaged.
(2) Average annual total return since February 19, 1988.
Shareholders who elected to take their dividends in cash saw the value of their
holdings increase 3.9%, while also earning an income return of 3.5%.
Over the past 12 months ended March 31, 2004, results were even stronger, as the
high-yield bond market bounced back from its 2002 lows. American High-Income
Trust earned a total return of 21.9%, compared to 21.2% for the Lipper index and
22.9% for the Credit Suisse First Boston index.
We have been pleased with the fund's recent high returns, but also want to
remind shareholders that such results are not likely to be repeated in the
period ahead. Over the past 10 years, shareholders have earned an average annual
return of 8.0%, with dividends reinvested. That compares to a 5.5% return for
the Lipper index and a 7.7% return for the Credit Suisse First Boston index.
PUTTING THE SIX MONTHS IN PERSPECTIVE
The 2002 downturn in prices of high-yield bonds was the product of reduced
corporate earnings, diminished access to capital, a high default rate and
concerns about accounting irregularities. In recent months, many issuers of
high-yield bonds focused on improving their balance sheets through debt
reduction. As the economy improved throughout 2003, concerns of solvency and
liquidity eased, the default rate declined and many high-yield bonds experienced
a sharp bounce back in prices. The strong results of the past six-month period
were a continuation of the recovery, which began in late 2002.
We believe that the prices of high-yield bonds are now closer to their intrinsic
value. Some of the most lucrative investments of the past two years, including
investment-grade companies facing temporary liquidity concerns and
telecommunications companies reconstructing their operations, are now more
fairly valued. We are, however, finding interesting opportunities in other
sectors in the midst of credit improvement, including many companies in the
utility and health care sectors that are continuing to improve their operations
and balance sheets. We focus our research on companies that will do well not
only in the current stronger economic climate, but can experience improvement in
credit-worthiness over a full economic cycle.
PROCEEDING WITH CAUTION
Going forward, we are preparing the portfolio for the possibility of increasing
inflation and higher interest rates. Rising rates typically cause bond prices to
decline. As a result, we are reducing our positions in some of the more
interest-rate-sensitive investment-grade bonds that have already posted
significant gains. Although lower quality bonds can also be negatively affected
by a rise in rates, they can benefit when higher rates are accompanied by strong
economic growth or greater pricing power, which allows them to improve their
credit standing.
American High-Income Trust's analysts and portfolio counselors take a long-term
view in finding holdings for the portfolio. We rely on intensive research to
look beyond immediate market cycles to find the issuers that will be able to
weather difficult environments, and thrive in various business and market
cycles. We believe this remains a sound approach for long-term investment
success.
Cordially,
/s/ Paul G. Haaga, Jr. /s/ David C. Barclay
Paul G. Haaga, Jr. David C. Barclay
Chairman of the Board President
May 17, 2004
Figures shown on the opposite page are past results for Class A shares and are
not predictive of results in 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.
Fund results shown are at net asset value. If a sales charge (maximum 3.75%) had
been deducted, the results would have been lower. For current information about
the fund, visit americanfunds.com.
INVESTMENT PORTFOLIO, March 31, 2004 Unaudited
[begin pie chart]
PORTFOLIO BREAKDOWN: % of Net Assets
U.S. corporate bonds 78.2 %
Non-U.S. corporate bonds 13.5
U.S. Government obligations 1.1
Non-U.S. government bonds 2.6
Common stocks & warrants 1.7
Other 0.4
Cash & equivalents 2.5
[end pie chart]
Market
Principal amount value
BONDS, NOTES AND PREFERRED STOCKS - 95.87% (000) or shares (000)
TELECOMMUNICATION SERVICES - 14.15%
American Tower Corp.:
9.375% 2009 $ 105,850 112,201
5.00% convertible debentures 2010 25,925 25,893
7.25% 2011 (1) 5,425 5,574
7.50% 2012 (1) 18,300 17,568
American Towers, Inc. 0%/12.25% 2008 (2) 38,250 27,062
Dobson Communications Corp.:
Series F, 6.00% convertible preferred (1) 57,760 Shares 6,094
13.00% senior exchangeable preferred 2009 29,237 20,466
10.875% 2010 $ 27,025 24,052
8.875% 2013 48,835 38,580
American Cellular Corp., Series B, 10.00% 2011 61,050 58,913
Qwest Services Corp.: (1)
13.00% 2007 51,641 59,645
13.50% 2010 20,280 23,677
14.00% 2014 8,097 9,818
Qwest Capital Funding, Inc. 7.75% 2006 29,100 29,391
Qwest Corp. 9.125% 2012 (1) 3,600 4,104
U S WEST, Inc. 7.20% 2004 1,500 1,545
Nextel Communications, Inc.:
6.875% 2013 27,000 28,822
5.95% 2014 2,000 1,995
7.375% 2015 77,650 84,444
Crown Castle International Corp.:
9.375% 2011 15,750 17,167
10.75% 2011 20,000 22,500
7.50% 2013 42,000 41,475
Series B, 7.50% 2013 33,300 32,884
Nextel Partners, Inc.:
12.50% 2009 9,858 11,632
11.00% 2010 12,750 14,216
8.125% 2011 77,175 81,998
Western Wireless Corp. 9.25% 2013 78,925 81,490
Centennial Cellular Corp. 10.75% 2008 25,051 25,990
Centennial Communications Corp. and Centennial Cellular Operating Co.
LLC 10.125% 2013 31,305 32,401
Centennial Communications Corp., Centennial Cellular Operating Co. LLC and
Centennial Puerto Rico Operating Corp.16,700% 2014 (1) 16,700 15,489
Triton PCS, Inc.:
8.75% 2011 16,075 15,271
9.375% 2011 15,135 14,681
8.50% 2013 39,705 42,484
Cincinnati Bell Inc. 7.25% 2013 59,925 60,824
Sprint Capital Corp.:
6.375% 2009 6,820 7,609
7.625% 2011 23,860 27,906
8.375% 2012 10,550 12,869
6.90% 2019 11,332 12,420
Cricket Communications, Inc.: (3) (4)
6.375% 2007 11,325 10,306
6.1875% 2007 24,355 22,163
9.50% 2007 7,000 6,370
AirGate PCS, Inc.: (5)
9.375% 2009 (1) 16,253 15,237
9.375% 2009 3,000 2,812
Mobile TeleSystems Finance 5.13% 2004 (1) (3) 18,000 18,045
AT&T Corp. 8.05% 2011 (3) 15,250 17,859
France Telecom 8.75% 2011 (3) 14,250 17,432
AT&T Wireless Services, Inc.:
8.125% 2012 10,000 12,204
8.75% 2031 3,000 3,905
NTELOS Inc. 9.00% convertible bond 2013 (1) (6) 14,555 16,077
TeleWest PLC 11.00% 2007 (4) 4,675 2,992
Telewest Communications PLC: (4)
11.25% 2008 2,460 1,568
9.875% 2010 6,500 3,965
Millicom International Cellular SA 10.00% 2013 (1) 6,500 6,792
FairPoint Communications, Inc. 11.875% 2010 4,950 5,965
UbiquiTel Operating Co. 9.875% 2011 (1) 5,875 5,757
PCCW-HKT Capital Ltd. 7.75% 2011 (1) 4,750 5,723
US Unwired, Series B, 0%/13.375% 2009 (2) 3,000 2,820
Rogers Cantel Inc. 9.75% 2016 1,625 2,047
Cellco Finance NV 12.75% 2005 1,500 1,657
MetroPCS, Inc. 10.75% 2011 1,000 1,065
GT Group Telecom Inc. 0%/13.25% 2010 (2) (4) (6) 11,000
XO Communications, Inc. 14.00% preferred 2009 (7) (8) 40 Shares
1,333,911
MATERIALS - 10.65%
Georgia-Pacific Corp.:
7.50% 2006 $ 14,875 16,065
7.375% 2008 28,700 31,498
8.875% 2010 4,750 5,569
8.125% 2011 25,575 29,155
9.50% 2011 1,250 1,512
9.375% 2013 250 296
7.70% 2015 775 852
9.125% 2022 3,000 3,116
9.50% 2022 5,000 5,225
8.25% 2023 5,000 5,175
8.875% 2031 10,095 11,357
Fort James Corp. 6.625% 2004 1,600 1,632
Lyondell Chemical Co.:
9.50% 2008 10,000 10,275
11.125% 2012 12,340 13,327
Equistar Chemicals, LP:
10.125% 2008 16,050 17,334
8.75% 2009 9,315 9,548
Equistar Chemicals, LP and Equistar Funding Corp. 10.625% 2011 43,875 47,495
Freeport-McMoRan Copper & Gold Inc. 10.125% 2010 70,755 80,661
Jefferson Smurfit Corp. (U.S.):
8.25% 2012 26,670 29,204
7.50% 2013 19,375 20,537
Stone Container Corp.:
9.25% 2008 6,425 7,196
9.75% 2011 10,700 12,011
8.375% 2012 500 549
Owens-Brockway Glass Container Inc.:
8.875% 2009 9,425 10,226
7.75% 2011 15,985 16,784
8.75% 2012 22,225 24,281
Owens-Illinois, Inc.:
8.10% 2007 5,250 5,381
7.35% 2008 4,440 4,396
7.50% 2010 2,000 1,925
Abitibi-Consolidated Co. of Canada:
6.95% 2006 5,000 5,227
5.25% 2008 13,750 13,419
6.00% 2013 30,575 28,701
Abitibi-Consolidated Inc. 8.55% 2010 10,100 11,057
Abitibi-Consolidated Finance LP 7.875% 2009 2,500 2,663
Millennium America Inc.:
9.25% 2008 (1) 13,950 14,961
9.25% 2008 31,375 33,650
7.625% 2026 4,675 4,254
Graphic Packaging International, Inc.:
8.50% 2011 26,490 29,669
9.50% 2013 8,250 9,364
Potlatch Corp. 10.00% 2011 33,355 37,858
United States Steel Corp.:
10.75% 2008 5,500 6,435
9.75% 2010 22,500 25,762
Gerdau Ameristeel Corp. and GUSAP Partners 10.375% 2011 27,375 31,071
Kappa Beheer BV:
10.625% 2009 16,250 21,381
0%/12.50% 2009 (2) Euro 6,150 7,979
Associated Materials Inc. 0%/11.25% 2014 (1) (2) $ 45,135 27,645
Norampac Inc. 6.75% 2013 23,100 24,601
AK Steel Corp.:
7.875% 2009 7,120 6,550
7.75% 2012 19,900 17,860
Oregon Steel Mills, Inc. 10.00% 2009 23,724 23,902
Nalco Co. 7.75% 2011 (1) 22,250 23,362
Longview Fibre Co. 10.00% 2009 17,950 19,565
Earle M. Jorgensen Co. 9.75% 2012 16,390 18,521
Steel Dynamics, Inc. 9.50% 2009 15,800 17,735
Luscar Coal Ltd. 9.75% 2011 15,215 17,421
Ainsworth Lumber Co. Ltd. 6.75% 2014 (1) 16,600 16,766
Smurfit Capital Funding PLC 6.75% 2005 10,175 10,582
JSG Funding PLC:
9.625% 2012 1,650 1,873
15.50% 2013 (7) 2,625 3,018
Ispat Inland ULC 9.75% 2014 (1) 14,450 15,100
Tekni-Plex, Inc., Series B, 12.75% 2010 10,575 11,130
Ball Corp., Series A, 6.875% 2012 7,500 8,147
Peabody Energy Corp., Series B, 6.875% 2013 7,000 7,595
UCAR Finance Inc. 10.25% 2012 5,551 6,495
Georgia Gulf Corp. 7.125% 2013 (1) 6,000 6,405
Allegheny Technologies, Inc. 8.375% 2011 5,000 5,050
Norske Skogindustrier ASA 7.125% 2033 (1) 2,500 2,688
Airgas, Inc. 6.25% 2014 (1) 2,500 2,587
Kaiser Aluminum & Chemical Corp. 12.75% 2025 (9) 11,875 1,425
Indah Kiat Finance Mauritius Ltd. 10.00% 2007 (4) 125 64
Indah Kiat International Finance Co. BV 11.875% 2002 (9) 2,250 1,159
Pindo Deli Finance Mauritius Ltd.:
10.25% 2002 (9) 2,500 656
10.75% 2007 (4) 550 146
APP International Finance Co. BV 11.75% 2005 (4) 275 126
1,004,207
MEDIA - 9.80%
Cinemark USA, Inc.:
Series B, 8.50% 2008 4,000 4,200
9.00% 2013 58,218 63,603
Cinemark USA, Inc. 0%/9.75% 2014 (1) (2) 42,950 26,844
Hollinger Participation Trust 12.125% 2010 (1) (3) (7) 43,912 50,883
CanWest Media Inc., Series B:
10.625% 2011 16,100 18,354
7.625% 2013 6,000 6,570
Young Broadcasting Inc.:
8.50% 2008 (1) 7,000 7,595
10.00% 2011 50,560 54,352
Quebecor Media Inc.:
0%/13.75% 2011 (2) 2,192 2,006
11.125% 2011 38,678 44,576
Sun Media Corp. 7.625% 2013 4,250 4,643
Charter Communications Holdings, LLC:
10.75% 2009 6,925 6,094
10.25% 2010 (1) 23,500 24,322
0%/9.92% 2011 (2) 3,400 2,830
0%/11.75% 2011 (2) 11,175 7,152
0%/13.50% 2011 (2) 5,525 3,978
Charter Communications Holdings Capital Corp. 0%/12.125% 2012 (2) 2,850 1,753
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 (1) 4,500 4,612
AMC Entertainment Inc.:
9.50% 2011 7,307 7,672
9.875% 2012 23,150 25,349
8.00% 2014 (1) 16,340 16,299
Tele-Communications, Inc.:
9.80% 2012 9,380 12,469
7.875% 2013 3,173 3,832
TCI Communications, Inc. 8.75% 2015 7,500 9,670
Comcast Corp.:
10.625% 2012 2,245 2,982
7.05% 2033 5,000 5,578
Lenfest Communications, Inc. 7.625% 2008 6,750 7,731
Telenet Communication NV 9.00% 2013 Euro 17,635 22,119
Telenet Group Holding NV 0%/11.50% 2014 (1) (2) $ 31,530 19,391
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013 33,000 37,785
Antenna TV SA:
9.00% 2007 8,852 8,985
9.75% 2008 Euro 20,750 26,090
AOL Time Warner Inc.:
6.15% 2007 $ 20,000 21,992
6.875% 2012 9,500 10,889
Liberty Media Corp.:
7.75% 2009 4,750 5,582
7.875% 2009 5,500 6,501
5.70% 2013 5,000 5,231
8.50% 2029 6,000 7,508
8.25% 2030 6,450 7,969
Carmike Cinemas, Inc. 7.50% 2014 (1) 26,600 27,198
Gray Communications Systems, Inc.:
9.25% 2011 20,800 23,348
Series C, 8.00% convertible preferred 2012 (1) (6) (7) 300 Shares 3,523
Emmis Communications Corp. 0%/12.50% 2011 (2) $ 27,297 26,273
EchoStar DBS Corp. 9.125% 2009 22,425 25,452
Adelphia Communications Corp.:
10.25% 2006 (4) 9,955 9,557
10.25% 2011 (4) 9,850 9,899
Series B, 13.00% preferred 2009 (8) 36,196 Shares 480
Century Communications Corp. 0% 2013 (9) $ 4,565 4,223
Comcast UK Cable Partners Ltd. 11.20% 2007 20,605 20,811
Regal Cinemas Corp., Series B, 9.375% 2012 17,750 20,146
Videotron Ltee 6.875% 2014 19,005 19,955
NextMedia Operating, Inc. 10.75% 2011 15,000 16,875
Dex Media East LLC, Dex Media East Finance Co., Series B, 9.875% 2009 5,000 5,650
Dex Media, Inc. 0%/9.00% 2013 (1) (2) 16,225 10,465
RH Donnelley Inc.: (1)
8.875% 2010 10,605 11,984
10.875% 2012 3,000 3,592
LBI Media, Inc. 10.125% 2012 11,140 12,783
Radio One, Inc., Series B, 8.875% 2011 10,250 11,429
Clear Channel Communications, Inc. 4.625% 2008 3,000 3,145
Chancellor Media Corp. of Los Angeles 8.00% 2008 6,699 7,871
British Sky Broadcasting Group PLC 8.20% 2009 7,500 9,060
Entercom Radio, LLC 7.625% 2014 6,500 7,069
Entravision Communications Corp. 8.125% 2009 6,000 6,465
Reader's Digest Association, Inc. 6.50% 2011 (1) 5,350 5,537
RBS Participacoes SA 11.00% 2007 (1) 4,500 3,982
Univision Communications Inc. 7.85% 2011 3,000 3,642
News America Inc. 6.75% 2038 2,990 3,480
Globo Comunicacoes e Participacoes Ltda., Series B, 10.50% 2006 (1) (4) 2,600 1,521
Globo Comunicacoes e Participacoes SA 10.625% 2008 (1) (4) 2,485 1,454
PanAmSat Corp. 6.125% 2005 1,025 1,052
923,912
TECHNOLOGY HARDWARE & EQUIPMENT - 7.97%
Solectron Corp.:
Series B, 7.375% 2006 13,095 13,701
9.625% 2009 54,425 60,412
0% LYON convertible notes 2020 69,150 40,626
Xerox Corp.:
7.15% 2004 5,500 5,610
9.75% 2009 2,000 2,340
7.125% 2010 46,405 49,421
7.625% 2013 5,000 5,350
Xerox Capital (Europe) PLC 5.875% 2004 28,500 28,571
ON Semiconductor Corp.:
13.00% 2008 (3) 33,636 40,868
Semiconductor Components Industries, LLC 12.00% 2010 (3) 16,174 20,056
Semiconductor Note Participation Trust 0% 2011 (1) 14,745 21,307
SCG Holding Corp. 12.00% 2009 7,555 8,197
SCI Systems, Inc. 3.00% convertible subordinated debentures 2007 12,000 11,550
Sanmina-SCI Corp. 10.375% 2010 51,750 61,324
Micron Technology, Inc.:
6.50% 2005 (1) 45,000 45,000
2.50% convertible notes 2010 (1) 8,000 12,350
2.50% convertible notes 2010 5,000 7,719
Amkor Technology, Inc.:
5.75% convertible notes 2006 6,800 6,808
9.25% 2008 19,930 22,072
7.75% 2013 30,810 31,580
Motorola, Inc.:
7.625% 2010 7,000 8,158
8.00% 2011 18,235 21,827
7.50% 2025 9,500 10,644
6.50% 2028 1,000 1,019
5.22% 2097 4,550 3,549
Fairchild Semiconductor Corp.:
5.00% convertible notes 2008 17,850 19,390
10.50% 2009 18,475 20,484
Viasystems, Inc. 10.50% 2011 (1) 34,450 38,670
Flextronics International Ltd.:
9.75% 2010 Euro 11,310 15,507
6.50% 2013 $ 14,300 15,122
Lucent Technologies Inc.:
7.25% 2006 15,000 15,787
5.50% 2008 4,000 3,950
Nortel Networks Ltd. 6.125% 2006 17,925 18,463
Celestica Inc. 0% convertible debentures 2020 32,625 17,862
Jabil Circuit, Inc. 5.875% 2010 14,750 15,845
Conexant Systems, Inc. 4.00% convertible subordinated notes 2007 14,700 14,553
Juniper Networks, Inc. 4.75% convertible subordinated notes 2007 6,676 6,784
LSI Logic Corp. 4.00% convertible notes 2006 3,000 2,959
Hyundai Semiconductor America, Inc. 8.625% 2007 (1) 2,600 2,540
ZiLOG, Inc. - MOD III Inc., units (6) (8) 3,315 1,776
Cypress Semiconductor Corp. 3.75% convertible subordinated notes 2005 1,525 1,533
751,284
RETAILING - 7.43%
J.C. Penney Co., Inc.:
7.60% 2007 1,375 1,540
7.375% 2008 3,750 4,242
8.00% 2010 29,995 35,319
9.00% 2012 4,020 5,125
6.875% 2015 12,920 14,309
7.65% 2016 2,000 2,345
7.95% 2017 13,800 16,387
9.75% 2021 (10) 8,136 8,441
8.25% 2022 (10) 13,937 14,494
8.125% 2027 6,100 6,893
7.625% 2097 9,875 10,517
Ahold Finance U.S.A., Inc.:
6.25% 2009 25,960 26,609
8.25% 2010 17,977 20,044
6.50% 2017 Pound 1,375 2,315
Koninklijke Ahold NV:
4.00% convertible subordinated notes 2005 Euro 10,000 12,405
5.875% 2008 15,750 19,852
Ahold Lease Pass Through Trust: (10)
Series 2001-A-1, 7.82% 2020 $ 3,139 3,282
Series 2001-A-2, 8.62% 2025 5,570 5,824
Ahold Finance U.S.A., Inc. 6.875% 2029 3,000 2,805
Delhaize America, Inc.:
7.375% 2006 12,155 13,173
8.125% 2011 39,145 45,212
9.00% 2031 23,000 27,571
Amazon.com, Inc.:
4.75% convertible subordinated debentures 2009 8,825 9,035
6.875% PEACS convertible subordinated notes 2010 Euro 59,550 73,595
Pathmark Stores, Inc. 8.75% 2012 $ 47,575 49,954
Toys "R" Us, Inc.:
7.625% 2011 9,900 10,395
7.875% 2013 24,590 25,942
7.375% 2018 9,980 9,830
Saks Inc.:
7.50% 2010 5,000 5,575
9.875% 2011 16,492 20,368
7.375% 2019 17,050 17,860
Boise Cascade Corp.:
7.50% 2008 2,000 2,198
9.45% 2009 3,250 3,833
6.50% 2010 23,000 24,693
Gap, Inc. 10.55% 2008 (3) 22,610 28,149
Winn-Dixie Stores, Inc.:
8.875% 2008 26,650 23,718
7.803% 2017 (1) (10) 3,171 2,602
Dillard's, Inc.:
6.43% 2004 2,950 2,976
6.69% 2007 1,000 1,025
6.30% 2008 2,950 2,979
6.625% 2018 3,000 2,962
7.00% 2028 3,000 2,835
Mercantile Stores Company, Inc. 8.20% 2022 (10) 7,500 7,425
Dillard Department Stores, Inc. 7.875% 2023 2,500 2,612
Payless ShoeSource, Inc. 8.25% 2013 20,650 20,185
Office Depot, Inc. 10.00% 2008 13,375 16,251
PETCO Animal Supplies, Inc. 10.75% 2011 10,875 12,751
DR Securitized Lease Trust, Series 1994 K-2, 4.68% 2019 (10) (11) 8,303 4,489
Kmart Corp. Pass Through Trust, Series 1995-K-2, 3.06% 2020 (10) (11) 9,009 4,150
Rite Aid Corp.:
6.875% 2013 1,600 1,488
7.70% 2027 6,280 5,778
Petro Stopping Centers, LP and Petro Financial Corp. 9.00% 2012 (1) 4,750 4,916
Great Atlantic & Pacific Tea Co., Inc.:
9.125% 2011 300 264
9.375% QUIBS preferred 2039 18,500 Shares 428
699,965
HOTELS, RESTAURANTS & LEISURE - 6.21%
Six Flags, Inc.:
Series B, 7.25% PIERS convertible preferred 2009 1,000,000 24,150
9.50% 2009 $ 16,000 16,960
8.875% 2010 29,625 30,736
9.75% 2013 16,125 17,213
9.625% 2014 (1) 15,650 16,706
Royal Caribbean Cruises Ltd.:
7.00% 2007 18,168 19,712
6.75% 2008 7,340 7,890
8.00% 2010 13,750 15,606
8.75% 2011 13,525 15,892
6.875% 2013 6,750 7,138
Mohegan Tribal Gaming Authority:
8.125% 2006 7,055 7,655
6.375% 2009 22,160 23,379
8.375% 2011 4,000 4,440
8.00% 2012 7,775 8,630
Argosy Gaming Co.:
9.00% 2011 10,350 11,696
7.00% 2014 (1) 25,650 26,997
Boyd Gaming Corp.:
9.25% 2009 6,595 7,428
7.75% 2012 22,750 24,456
8.75% 2012 4,500 4,984
ITT Corp. 6.75% 2005 12,000 12,690
Starwood Hotels & Resorts Worldwide, Inc.:
7.375% 2007 3,875 4,233
7.875% 2012 12,575 14,273
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012 26,430 27,025
MGM Mirage, Inc.:
6.00% 2009 11,000 11,605
8.50% 2010 3,100 3,635
Mirage Resorts, Inc.:
6.75% 2007 5,700 6,156
6.75% 2008 4,800 5,184
Extended Stay America, Inc. 9.875% 2011 20,625 24,853
Buffets, Inc. 11.25% 2010 22,400 24,752
Hilton Hotels Corp.:
7.625% 2008 4,700 5,299
7.20% 2009 9,710 10,924
8.25% 2011 4,422 5,229
7.625% 2012 2,825 3,259
Horseshoe Gaming Holding Corp., Series B, 8.625% 2009 19,500 20,524
Harrah's Operating Co., Inc.:
7.875% 2005 10,875 11,799
7.125% 2007 3,850 4,319
8.00% 2011 3,189 3,836
YUM Brands, Inc. 7.70% 2012 14,150 16,856
Coast Hotels and Casinos, Inc. 9.50% 2009 12,000 12,660
Eldorado Resorts LLC 10.50% 2006 12,527 12,652
Perkins Family Restaurants, LP, Perkins Finance Corp., Series B, 10.125% 2007 10,250 10,609
Mandalay Resort Group, Series B, 10.25% 2007 7,500 8,869
Sbarro, Inc. 11.00% 2009 10,000 8,588
Florida Panthers Holdings, Inc. 9.875% 2009 7,250 7,667
CKE Restaurants, Inc. 9.125% 2009 6,179 6,442
International Game Technology 8.375% 2009 3,250 3,955
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 12.00% 2010 3,000 3,630
Ameristar Casinos, Inc. 10.75% 2009 2,000 2,323
585,514
UTILITIES - 5.82%
Edison Mission Energy:
10.00% 2008 22,300 23,582
7.73% 2009 32,500 31,525
9.875% 2011 20,625 21,811
Mission Energy Holding Co. 13.50% 2008 34,975 36,199
Midwest Generation, LLC, Series B, 8.56% 2016 (10) 25,350 26,380
Homer City Funding LLC 8.734% 2026 (10) 20,050 22,356
Southern California Edison, First and Refunding Mortgage Bonds, 8.00% 2007 12,025 13,806
Edison International 6.875% 2004 10,000 10,200
AES Corp.:
10.00% 2005 (1) 8,726 8,987
9.50% 2009 19,357 21,099
9.375% 2010 10,569 11,573
8.75% 2013 (1) 43,985 48,603
9.00% 2015 (1) 15,150 16,798
AES Trust VII 6.00% convertible preferred 2008 382,250 Shares 17,201
AES Red Oak, LLC, Series B, 9.20% 2029 (10) $ 7,000 7,455
Dynegy Holdings Inc.: (1)
9.875% 2010 21,025 22,970
10.125% 2013 40,890 45,081
Nevada Power Co.:
Series A, 8.25% 2011 5,500 6,064
9.00% 2013 (1) 22,555 25,431
Sierra Pacific Resources 8.625% 2014 (1) 8,625 8,798
AES Generation SA 7.50% 2014 (1) 29,850 30,537
Duke Capital Corp.:
7.50% 2009 18,375 21,280
5.50% 2014 2,000 2,026
Drax Group Ltd.: (1) (3)
Class A-1, 6.68% 2015 Pound 4,127 7,481
Class B, 6.18% 2025 3,491 5,011
Drax Group Ltd., Class A-2, unit, 8.18% 2015 (1) (3) (12) 4,746 9,695
Williams Companies, Inc.:
8.625% 2010 $ 7,250 8,011
8.125% 2012 3,000 3,326
8.75% 2032 5,000 5,325
Williams Holdings of Delaware, Inc. 6.25% 2006 1,250 1,298
Enersis SA 7.375% 2014 (1) 10,000 10,389
FPL Energy American Wind, LLC 6.639% 2023 (1) (10) 8,600 9,223
TNP Enterprises, Inc., Series B, 10.25% 2010 4,250 4,654
Israel Electric Corp. Ltd. 7.75% 2027 (1) 2,550 2,786
El Paso Production Holding Co. 7.75% 2013 2,000 1,868
548,829
AUTOMOBILES & COMPONENTS - 4.10%
Ford Motor Credit Co.:
6.875% 2006 4,500 4,788
7.375% 2009 38,000 41,758
7.875% 2010 12,025 13,472
7.25% 2011 31,500 34,166
7.375% 2011 34,000 37,129
Ford Motor Co. Capital Trust II 6.50% cumulative convertible trust
preferred 2032 160,600 Shares 8,520
General Motors Acceptance Corp.:
6.125% 2006 $ 5,000 5,349
6.125% 2007 13,500 14,560
6.15% 2007 10,000 10,766
6.875% 2011 12,000 13,038
6.875% 2012 27,500 29,751
General Motors Corp.:
7.20% 2011 7,250 7,956
Series B, 5.25% convertible debentures 2032 500 12,750
Visteon Corp.:
8.25% 2010 12,750 14,066
7.00% 2014 22,410 22,306
Tenneco Automotive Inc.:
Series B, 11.625% 2009 11,000 11,963
10.25% 2013 8,875 10,251
TRW Automotive Acquisition Corp.:
9.375% 2013 15,951 18,423
11.00% 2013 2,704 3,245
Stoneridge, Inc. 11.50% 2012 17,290 20,705
Lear Corp., Series B, 8.11% 2009 12,675 15,052
Dana Corp.:
10.125% 2010 4,925 5,713
9.00% 2011 5,500 6,641
Dura Operating Corp.:
Series D, 9.00% 2009 3,000 3,053
Series B, 8.625% 2012 4,625 4,949
ArvinMeritor, Inc.:
6.625% 2007 750 782
8.75% 2012 4,375 4,889
Meritor Automotive, Inc. 6.80% 2009 2,200 2,294
R.J. Tower Corp., Series B, 12.00% 2013 5,000 4,925
DaimlerChrysler North America Holding Corp. 7.20% 2009 3,000 3,419
Key Plastics Holdings, Inc., Series B, 10.25% 2007 (4) (6) 9,650 121
386,800
OIL & GAS - 3.95%
Premcor Refining Group Inc.:
9.25% 2010 12,675 14,513
6.75% 2011 23,700 25,892
7.75% 2012 33,650 37,015
9.50% 2013 34,625 40,511
7.50% 2015 23,900 26,410
Port Arthur Finance Corp. 12.50% 2009 (10) 1,821 2,158
Petrozuata Finance, Inc., Series B: (10)
8.22% 2017 (1) 49,190 45,009
8.22% 2017 8,900 8,144
General Maritime Corp. 10.00% 2013 40,700 45,788
Western Oil Sands Inc. 8.375% 2012 29,605 35,452
Newfield Exploration Co.:
Series B, 7.45% 2007 1,750 1,916
7.625% 2011 3,500 4,008
8.375% 2012 23,500 26,908
Teekay Shipping Corp. 8.875% 2011 18,875 22,013
Overseas Shipholding Group, Inc.:
8.25% 2013 12,000 13,260
8.75% 2013 7,000 7,989
Pogo Producing Co.:
10.375% 2009 8,250 8,745
Series B, 8.25% 2011 1,700 1,921
Pemex Project Funding Master Trust:
7.875% 2009 1,400 1,621
8.625% 2022 1,170 1,357
XTO Energy Inc. 6.25% 2013 1,500 1,664
372,294
CAPITAL GOODS - 3.91%
Tyco International Group SA:
6.375% 2005 2,150 2,251
6.125% 2008 18,225 19,848
6.125% 2009 11,500 12,513
6.375% 2011 16,000 17,527
6.00% 2013 (1) 6,500 6,866
Terex Corp.:
9.25% 2011 23,900 26,888
Class B, 10.375% 2011 12,300 14,084
7.375% 2014 (1) 15,750 16,971
Technical Olympic USA, Inc.:
9.00% 2010 23,896 26,106
7.50% 2011 (1) 6,000 6,023
10.375% 2012 20,180 22,854
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual
capital securities (1) 1,125,000 Shares 31,219
Swire Pacific Offshore Financing Ltd. 9.33% cumulative guaranteed perpetual
preferred capital securities (1) 546,648 15,169
Nortek, Inc.:
0%/10.00% 2011 (1) (2) $ 48,425 37,045
Class B, 9.875% 2011 5,850 6,611
American Standard Inc.:
7.375% 2008 4,450 4,995
8.25% 2009 10,190 11,973
7.625% 2010 16,850 19,588
Koppers Industry Inc. 9.875% 2013 (1) 17,570 19,415
Cummins Inc. 9.50% 2010 (1) 5,550 6,563
Cummins Capital Trust I 7.00% QUIPS convertible preferred 2031 (1) 180,000 Shares 12,499
Jacuzzi Brands, Inc. 9.625% 2010 $ 13,500 14,985
AGCO Corp. 9.50% 2008 5,250 5,788
BE Aerospace, Inc. 8.50% 2010 3,000 3,225
Aviall, Inc. 7.625% 2011 3,000 3,225
NMHG Holding Co. 10.00% 2009 2,000 2,210
Bombardier Capital Inc., Series A, 6.125% 2006 (1) 2,000 2,137
368,578
DIVERSIFIED FINANCIALS - 3.64%
Fuji JGB Investment LLC, Series A, 9.87% noncumulative preferred (undated)(1)(3) 67,315 79,257
IBJ Preferred Capital Co. LLC, Series A, 8.79% noncumulative preferred
(undated) (1) (3) 51,675 58,651
Capital One Financial Corp.:
7.25% 2006 2,500 2,720
8.75% 2007 19,800 22,677
7.125% 2008 5,000 5,642
Capital One Bank 6.50% 2013 12,500 13,621
Providian Financial Corp.:
3.25% convertible debentures 2005 20,000 19,750
Series A, 9.525% 2027 (1) 15,000 14,963
UFJ Finance Aruba AEC 6.75% 2013 16,745 18,550
Tokai Preferred Capital Co. LLC, Series A, 9.98% noncumulative preferred
(undated) (1) (3) 13,500 15,951
Sumitomo Mitsui Banking Corp. 8.00% 2012 9,750 11,831
SB Treasury Co. LLC, Series A, 9.40% noncumulative preferred (undated) (1) (3) 8,480 9,964
MBNA Corp.:
5.625% 2007 10,000 10,860
MBNA Capital A, Series A, 8.278% 2026 7,500 8,444
Bayer Hypo-Vereinsbank 8.741% 2031 (1) 11,003 13,883
Advanta Capital Trust I, Series B, 8.99% 2026 9,000 7,763
Kazkommerts International BV 8.50% 2013 (1) 7,000 7,455
Sovereign Capital Trust I 9.00% 2027 5,000 5,848
Chevy Chase Bank, FSB 6.875% 2013 5,500 5,679
BankUnited Capital Trust, BankUnited Financial Corp. 10.25% 2026 4,500 4,916
Korea First Bank 7.267% 2034 (1) (3) 4,395 4,659
343,084
CONSUMER DURABLES & APPAREL - 3.14%
D.R. Horton, Inc.:
5.00% 2009 4,000 4,160
8.00% 2009 18,270 21,193
9.75% 2010 6,955 8,555
7.875% 2011 2,030 2,385
6.875% 2013 5,575 6,216
Schuler Homes, Inc. 10.50% 2011 6,280 7,442
K. Hovnanian Enterprises, Inc.:
10.50% 2007 12,480 14,789
8.875% 2012 14,475 16,429
7.75% 2013 10,750 11,771
6.375% 2014 (1) 6,000 6,075
William Lyon Homes, Inc.:
10.75% 2013 17,495 20,775
7.50% 2014 (1) 15,750 16,459
WCI Communities, Inc.:
10.625% 2011 22,900 25,992
9.125% 2012 9,200 10,304
Warnaco, Inc. 8.875% 2013 21,275 23,030
Toll Corp.:
8.25% 2011 5,500 6,243
8.25% 2011 1,750 1,956
Toll Brothers, Inc. 6.875% 2012 6,750 7,659
MDC Holdings, Inc.:
7.00% 2012 10,000 11,357
5.50% 2013 4,000 4,117
Beazer Homes USA, Inc. 8.375% 2012 13,250 14,873
Salton/Maxim Housewares, Inc. 10.75% 2005 4,300 4,171
Salton, Inc. 12.25% 2008 10,200 10,047
Ryland Group, Inc.:
5.375% 2008 11,000 11,660
9.75% 2010 1,625 1,861
Standard Pacific Corp.:
5.125% 2009 7,000 6,983
6.25% 2014 5,000 5,000
Boyds Collection, Ltd., Series B, 9.00% 2008 8,122 7,594
Bombardier Recreation Products 8.375% 2013 (1) 4,000 4,130
Lennar Corp., Series B, 9.95% 2010 2,500 2,856
296,082
HEALTH CARE PROVIDERS & SERVICES - 2.57%
Tenet Healthcare Corp.:
5.375% 2006 18,015 17,024
5.00% 2007 9,175 8,418
6.375% 2011 29,260 25,456
7.375% 2013 12,590 11,425
Quintiles Transnational Corp. 10.00% 2013 (1) 41,650 43,524
Pharma Services Intermediate Holding Corp. 0%/11.50% 2014 (1) (2) 21,250 12,538
Columbia/HCA Healthcare Corp.:
6.91% 2005 13,250 13,873
7.00% 2007 8,255 9,111
HCA Inc.:
7.875% 2011 4,000 4,612
6.95% 2012 5,000 5,462
6.25% 2013 16,275 16,987
Concentra Operating Corp.:
Series A, 13.00% 2009 3,975 4,392
9.50% 2010 24,600 27,429
Universal Hospital Services, Inc. 10.125% 2011 (1) 18,000 19,530
Team Health, Inc. 9.00% 2012 (1) 12,250 11,974
Triad Hospitals, Inc. 7.00% 2013 (1) 10,000 10,300
242,055
COMMERCIAL SERVICES & SUPPLIES - 2.20%
Allied Waste North America, Inc.:
Series B, 7.625% 2006 4,000 4,280
8.50% 2008 18,000 20,250
Series B, 8.875% 2008 18,750 21,141
10.00% 2009 37,320 40,212
6.50% 2010 (1) 14,500 14,881
5.75% 2011 (1) 13,700 13,323
Series B, 9.25% 2012 3,000 3,428
6.125% 2014 (1) 15,500 15,054
United Rentals (North America), Inc.:
Series B, 9.00% 2009 2,500 2,634
6.50% 2012 (1) 21,125 21,125
7.00% 2014 (1) 3,000 2,835
KinderCare Learning Centers, Inc., Series B, 9.50% 2009 15,241 15,558
PHH Corp. 7.125% 2013 5,000 5,760
Cendant Corp. 7.125% 2015 7,500 8,717
Worldspan, LP and WS Financing Corp. 9.625% 2011 4,425 4,757
Synagro Technologies, Inc. 9.50% 2009 4,000 4,350
Stericycle, Inc., Series B, 12.375% 2009 3,407 3,952
Protection One Alarm Monitoring, Inc. 13.625% 2005 (3) (6) 3,543 3,012
WMX Technologies, Inc. 7.10% 2026 2,150 2,414
207,683
TRANSPORTATION - 1.90%
Northwest Airlines, Inc.:
8.52% 2004 1,825 1,825
7.625% 2005 10,040 9,839
8.875% 2006 20,740 18,044
8.70% 2007 1,600 1,328
9.875% 2007 20,425 17,566
7.875% 2008 15,900 12,720
10.00% 2009 18,205 14,837
Delta Air Lines, Inc.:
7.70% 2005 18,875 16,138
10.00% 2008 (1) 15,250 10,904
Series 2000-1, Class B, 7.92% 2010 2,500 2,081
Series 2001-1, Class A-1, 6.619% 2011 (10) 3,420 3,383
9.75% 2021 2,200 1,375
10.375% 2022 3,000 2,055
Continental Airlines, Inc.:
8.00% 2005 9,815 9,177
Series 2000-2, Class A-1, 7.487% 2012 5,000 5,102
Series 2000-2, Class C, 8.312% 2012 (10) 6,589 5,744
Series 2001-1, Class B, 7.373% 2017 (10) 3,856 3,387
Series 2000-1, Class A-1, 8.048% 2022 (10) 3,079 3,126
TFM, SA de CV:
10.25% 2007 2,295 2,387
11.75% 2009 9,600 9,696
12.50% 2012 2,310 2,599
Kansas City Southern Railway Co.:
9.50% 2008 3,375 3,763
7.50% 2009 5,365 5,553
RailAmerica Transportation Corp. 12.875% 2010 6,905 8,087
Laidlaw International, Inc. 10.75% 2011 (1) 4,225 4,753
International Shipholding Corp., Series B, 7.75% 2007 1,950 2,021
United Air Lines, Inc.: (4)
9.00% 2003 3,000 405
1991 Equipment Trust Certificates, Series A, 10.11% 2006 (10) 1,907 667
USAir, Inc. Pass Through Trust, Series 1993-A3, 10.375% 2013 (4) (10) 2,977 893
179,455
FOOD & BEVERAGES - 1.72%
Burns Philp Capital Pty Ltd.: (1)
9.50% 2010 16,750 18,006
10.75% 2011 15,575 16,899
9.75% 2012 55,247 58,562
Gold Kist Inc. 10.25% 2014 (1) 18,100 18,372
Constellation Brands, Inc. 8.125% 2012 16,000 17,760
Del Monte Corp., Series B, 8.625% 2012 12,550 14,182
Fage Dairy Industry SA 9.00% 2007 10,000 10,200
Dole Food Co., Inc. 8.875% 2011 5,210 5,705
WH Holdings and WH Capital 9.50% 2011 (1) 2,300 2,415
162,101
REAL ESTATE - 1.34%
Host Marriott, LP:
Series E, 8.375% 2006 6,450 6,918
Series G, 9.25% 2007 3,675 4,134
Series I, 9.50% 2007 2,800 3,150
Series J, 7.125% 2013 33,825 35,263
HMH Properties, Inc., Series B, 7.875% 2008 1,350 1,409
FelCor Lodging LP 9.00% 2011 (3) 20,855 22,471
iStar Financial, Inc.:
7.00% 2008 7,060 7,713
8.75% 2008 1,714 1,997
6.00% 2010 9,600 10,128
5.70% 2014 (1) 2,500 2,506
Crescent Real Estate LP 7.50% 2007 10,820 11,537
Equity Office Properties Trust, Series B, 5.25% convertible preferred 2008 200,000 Shares 10,200
Rouse Co. 7.20% 2012 $ 5,000 5,807
Chevy Chase Preferred Capital Corp., Series A, 10.375% exchangeable preferred 55,994 Shares 3,318
126,551
OTHER - 1.12%
Playtex Products, Inc.:
8.00% 2011 (1) $ 14,625 15,283
9.375% 2011 5,750 5,549
Freddie Mac 4.25% 2005 20,000 20,688
Electronic Data Systems Corp.:
6.85% 2004 5,000 5,117
Series B, 6.00% 2013 (3) 15,790 15,351
Iron Mountain Inc.:
8.625% 2013 2,000 2,190
7.75% 2015 11,200 11,816
ACE Capital Trust II 9.70% 2030 6,250 8,746
Mangrove Bay Pass Through Trust 6.102% 2033 (1) 8,000 8,357
CNA Financial Corp. 7.25% 2023 5,000 5,374
Wyeth 5.50% 2013 5,000 5,258
Athena Neurosciences Finance, LLC 7.25% 2008 2,000 2,015
Exodus Communications, Inc. 11.625% 2010 (4) 3,907 10
105,754
ASSET BACKED OBLIGATIONS- 0.30%
Consumer Credit Reference Index Securities Program Trust, Series 2002-2A,
Class FX, 10.421% 2007 (1) (10) 16,500 17,571
Mediterranean Re PLC 6.97% 2005 (1) (3) (10) 5,000 5,138
Residential Reinsurance 2002 Ltd. 6.02% 2005 (1) (3) (10) 5,000 5,080
27,789
NON-U.S. GOVERNMENT OBLIGATIONS- 2.63%
Brazil (Federal Republic of):
Global 10.00% 2007 1,000 1,103
Debt Conversion Bond, Series L, Bearer 2.063% 2012 (3) 6,500 5,724
10.25% 2013 26,500 28,554
Bearer 8.00% 2014 (7) 7,957 7,798
8.875% 2024 1,895 1,743
11.00% 2040 13,110 14,067
Russian Federation:
8.25% 2010 3,000 3,413
12.75% 2028 8,000 13,190
5.00% 2030 22,865 23,008
Panama (Republic of):
10.75% 2020 415 526
Global 9.375% 2023 16,708 18,922
8.875% 2027 2,000 2,180
8.125% 2034 3,150 3,182
United Mexican States Government:
10.50% 2011 MXP 12,300 1,259
Eurobonds, Global 6.375% 2013 $ 4,000 4,342
Eurobonds 11.375% 2016 6,751 10,238
Global 8.125% 2019 3,695 4,397
Global 8.30% 2031 3,020 3,556
Peru (Republic of):
9.125% 2012 4,909 5,584
9.875% 2015 7,500 8,846
Past Due Interest Eurobond 5.00% 2017 (3) 396 366
Turkey (Republic of):
Treasury Bill 0% 2004 TRL 1,958,215,000 1,448
Treasury Bill 0% 2004 5,376,000,000 3,782
Treasury Bill 0% 2004 5,000,000,000 3,284
9.875% 2008 $ 2,335,000 2,720
12.375% 2009 1,925,000 2,487
Venezuela (Republic of):
10.75% 2013 (1) 4,300 4,515
10.75% 2013 1,700 1,785
9.25% 2027 4,630 4,142
9.375% 2034 3,000 2,655
Colombia (Republic of):
10.00% 2012 1,500 1,748
Global 10.75% 2013 6,800 8,204
Global 10.375% 2033 700 804
Ecuador (Republic of) 7.00% 2030 (3) 9,500 8,491
Dominican Republic:
9.50% 2006 (1) 3,130 2,426
9.50% 2006 1,250 969
9.04% 2013 (1) 6,095 4,419
2.063% 2024 (3) 500 358
Guatemala (Republic of):
10.25% 2011 (1) 1,000 1,210
10.25% 2011 1,000 1,210
9.25% 2013 (1) 1,500 1,744
Bulgaria (Republic of):
8.25% 2015 (1) 3,160 3,886
8.25% 2015 1,840 2,262
Ukraine Government 7.65% 2013 (1) 4,900 5,133
State of Qatar 9.75% 2030 3,500 5,058
Banque Centrale de Tunisie 7.375% 2012 3,500 4,086
El Salvador (Republic of) 7.75% 2023 (1) 2,775 3,129
Argentina (Republic of):
Global 7.00%/15.50% 2008 (2) (11) 1,500 452
11.75% 2009 (11) 75 23
1.234% 2012 (3) 2,380 1,602
Global 12.25% 2018 (7) (11) 2,860 844
Global 12.00% 2031 (7) (11) 53 15
Indonesia (Republic of) 6.75% 2014 (1) 1,250 1,241
248,130
U.S. TREASURY NOTES AND BONDS - 0.90%
7.50% February 2005 6,000 6,332
5.75% November 2005 14,000 14,973
6.625% May 2007 25,000 28,449
3.25% August 2007 5,000 5,177
4.75% November 2008 10,000 10,909
9.875% November 2015 2,000 3,074
7.50% November 2016 12,000 15,825
84,739
MISCELLANEOUS - 0.42%
Investment securities in initial period of acquisition 39,532
9,038,249
EQUITY-RELATED SECURITIES - 1.68%
SpectraSite, Inc. (1) (6) (8) 959,076 shares $ 30,244
NTELOS Inc. (1) (6) (8) (5) 1,247,194 27,239
Dobson Communications Corp., Class A (1) (8) 5,754,785 16,631
ZiLOG, Inc. (8) 1,140,500 14,393
Nextel Communications, Inc., Class A (1) (8) 613,418 15,170
Fairchild Semiconductor International, Inc. (8) 500,000 12,015
AirGate PCS, Inc. (1) (8) (5) 671,293 10,069
iStar Financial, Inc. 130,000 5,499
Emmis Communications Corp., Class A (8) 201,000 4,786
American Tower Corp., warrants, expire 2008 (1) (8) 38,250 4,380
Equity Office Properties Trust 150,000 4,334
DigitalGlobe, Inc. (1) (6) (8) 3,064,647 3,065
Viacom Inc., Class B, nonvoting 63,225 2,479
Clear Channel Communications, Inc. 51,012 2,160
VersaTel Telecom International NV (8) 779,280 1,830
NTL Inc. (1) (8) 29,500 1,754
Radio One, Inc., Class A (8) 22,000 409
Radio One, Inc., Class D, nonvoting (8) 44,000 814
Clarent Hospital Corp. (8) (5) 576,849 721
Netia Holdings SA (8) 327,966 337
Cincinnati Bell Inc. (8) 70,740 288
XO Communications, Inc. (8) 18,882 94
XO Communications, Inc., Series A, warrants, expire 2010 (8) 37,767 79
XO Communications, Inc., Series B, warrants, expire 2010 (8) 28,325 47
XO Communications, Inc., Series C, warrants, expire 2010 (8) 28,325 32
Protection One, Inc., warrants, expire 2005 (1) (6) (8) 30,400 5
Allegiance Telecom, Inc., warrants, expire 2008 (1) (6) (8) 5,000
KMC Telecom Holdings, Inc., warrants, expire 2008 (1) (6) (8) 22,500
GT Group Telecom Inc., warrants, expire 2010 (1) (6) (8) 11,000
158,874
TOTAL BONDS, NOTES, PREFERRED STOCKS & EQUITY SECURITIES (cost:$8,697,646,000) 9,197,123
SHORT-TERM SECURITIES - 1.70%
CORPORATE SHORT-TERM NOTES - 1.16%
Variable Funding Capital Corp. 1.02% due 4/15/2004 (1) (13) 28,000 27,988
Park Avenue Receivables 1.02% due 4/13/2004 (1) 20,000 19,993
CAFCO LLC 1.02% due 4/27-5/24/2004 (1) 20,000 19,973
Triple-A One Funding Corp. 1.02% due 4/1/2004 (1) 17,261 17,260
Netjets Inc. 1.01% due 4/27/2004 (1) 10,000 9,993
FCAR Owner Trust 1.02% due 5/7/2004 10,000 9,990
Gillette Co. 1.03% due 4/1/2004 (1) 4,200 4,200
109,397
CERTIFICATES OF DEPOSIT - 0.40%
Wells Fargo & Co. 1.02% due 4/27/2004 38,000 38,000
U.S. TREASURIES - 0.14%
U.S. Treasury Bills 0.94% due 5/27/04 (13) 5,400 5,392
U.S. Treasury Bills 0.97% due 6/24/04 7,800 7,783
13,175
TOTAL SHORT-TERM SECURITIES (cost: $160,570,000) 160,572
TOTAL INVESTMENT SECURITIES (cost: $8,697,646,000) 9,357,695
Other assets less liabilities 70,819
NET ASSETS $9,428,514
(1) Purchased in a private placement transaction; resale may be
limited to qualified institutional buyers; resale to the public
may require registration.
(2) Step bond; coupon rate will increase at a later date.
(3) Coupon rate may change periodically.
(4) Company not making scheduled interest payments;
bankruptcy proceedings pending.
(5) The fund owns 12.47%, 5.71% and 9.45% of the outstanding voting securities
of NTELOS, Inc., AirGate PCS, Inc. and Clarent Hospital Corp.,
respectively, and thus is considered an affiliate of these companies under
the Investment Company Act of 1940.
(6) Valued under fair value procedures adopted by authority of the Board of
Trustees.
(7) Payment in kind; the issuer has the option of paying additional
securities in lieu of cash.
(8) Security did not produce income during the last 12 months.
(9) Company did not make principal payment upon scheduled maturity date;
reorganization pending.
(10)Pass-through securities backed by a pool of mortgages or other loans on
which principal payments are periodically made. Therefore, the effective
maturities are shorter than the stated maturities.
(11) Scheduled interest payments not made; reorganization pending.
(12) This unit also contains 895,000 par of Drax Group Ltd., Class A-3, 9.18%
2020 and 895,000 shares of Drax Group Ltd. common stock.
(13) This security, or a portion of this security, has been segregated to cover
funding requirements on investment transactions settling in the future.
See Notes to Financial Statements
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES unaudited
at March 31, 2004 (dollars and shares in thousands,
except per-share amounts)
ASSETS:
Investment securities at market:
Unaffiliated issuers (cost: $8,613,116) $9,285,540
Affiliated issuers (cost: $84,530) 72,155 $9,357,695
Cash 10,870
Receivables for:
Sales of investments 38,802
Sales of fund's shares 27,253
Open forward currency contracts 273
Dividends and interest 171,782 238,110
9,606,675
LIABILITIES:
Payables for:
Purchases of investments 147,163
Repurchases of fund's shares 18,480
Dividends on fund's shares 6,484
Open forward currency contracts 32
Investment advisory services 2,684
Services provided by affiliates 3,047
Deferred Trustees' compensation 81
Other fees and expenses 190 178,161
NET ASSETS AT MARCH 31, 2004 $9,428,514
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $9,309,857
Undistributed net investment income 13,217
Accumulated net realized loss (554,871)
Net unrealized appreciation 660,311
NET ASSETS AT MARCH 31, 2004 $9,428,514
SHARES OF BENEFICIAL INTEREST ISSUED AND OUTSTANDING - UNLIMITED SHARES
AUTHORIZED
Net assets Shares outstanding Net asset value per share
Class A $6,946,293 562,827 $12.34
Class B 816,200 66,133 12.34
Class C 876,380 71,009 12.34
Class F 555,568 45,015 12.34
Class 529-A 41,355 3,351 12.34
Class 529-B 10,663 864 12.34
Class 529-C 21,997 1,782 12.34
Class 529-E 1,639 196 12.34
Class 529-F 2,424 133 12.34
Class R-1 2,454 199 12.34
Class R-2 31,401 2,544 12.34
Class R-3 40,723 3,300 12.34
Class R-4 14,372 1,165 12.34
Class R-5 67,045 5,432 12.34
(1) Maximum offering price and redemption price per share were equal to the
net asset value per share for all share classes, except for classes A and
529-A,for which the maximum offering prices per share were $12.82 for each.
See Notes to Financial Statements
STATEMENT OF OPERATIONS unaudited
for the six months ended March 31, 2004 (dollars in thousands)
INVESTMENT INCOME:
Income:
Interest $346,144
Dividends 6,341 $352,485
Fees and expenses:
Investment advisory services 15,697
Distribution services 15,914
Transfer agent services 3,016
Administrative services 1,507
Reports to shareholders 161
Registration statement and prospectus 442
Postage, stationery and supplies 368
Trustees' compensation 29
Auditing and legal 166
Custodian 109
Other 47
Total expenses before reimbursement 37,456
Reimbursement of expenses 87 37,369
Net investment income 315,116
NET REALIZED LOSS AND UNREALIZED
APPRECIATION ON INVESTMENTS
AND NON-U.S. CURRENCY:
Net realized loss on:
Investments (12,782)
Non-U.S. currency transactions (2,309) (15,091)
Net unrealized appreciation on:
Investments 336,654
Non-U.S. currency translations 1,270 337,924
Net realized loss and
unrealized appreciation
on investments and non-U.S. currency 322,833
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $637,949
See Notes to Financial Statements
STATEMENT OF CHANGES IN NET ASSETS (dollars in thousands)
Six months Year ended
ended March 31, September 30,
2004* 2003
OPERATIONS:
Net investment income $315,116 $526,736
Net realized loss on investments and
non-U.S. currency transactions (15,091) (145,200)
Net unrealized appreciation
on investments and non-U.S. currency translations 337,924 1,380,578
Net increase in net assets
resulting from operations 637,949 1,762,114
DIVIDENDS PAID OR ACCRUED TO
SHAREHOLDERS FROM NET INVESTMENT INCOME (304,254) (509,744)
CAPITAL SHARE TRANSACTIONS 714,021 3,033,873
TOTAL INCREASE IN NET ASSETS 1,047,716 4,286,243
NET ASSETS:
Beginning of period 8,380,798 4,094,555
End of period (including undistributed
net investment income: $13,217 and $2,355,
respectively) $9,428,514 $8,380,798
*Unaudited
See Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS unaudited
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
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 offers 14 share classes consisting of four retail share classes, five
CollegeAmerica savings plan share classes and five retirement plan share
classes. The CollegeAmerica savings plan share classes (529-A, 529-B, 529-C,
529-E and 529-F) are sponsored by the Commonwealth of Virginia and can be
utilized to save for college education. The five retirement plan share classes
(R-1, R-2, R-3, R-4 and R-5) are sold without any sales charges and do not carry
any conversion rights. The fund's share classes are described below:
- ---------------------------------------------------------------------------------------------------------
Share class Initial sales charge Contingent deferred sales Conversion feature
charge upon redemption
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes A and 529-A Up to 3.75% None (except 1% for None
certain redemptions
within one year of
purchase without an
initial sales charge)
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes B and 529-B None Declines from 5% to zero Classes B and 529-B convert to
for redemptions within classes A and 529-A,
six years of purchase respectively, after eight years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class C None 1% for redemptions within Class C converts to Class F
one year of purchase after 10 years
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-C None 1% for redemptions within None
one year of purchase
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Class 529-E None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes F and 529-F None None None
- ---------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------
Classes R-1, R-2, R-3, None None None
R-4 and R-5
- ---------------------------------------------------------------------------------------------------------
Holders of all share classes have equal pro rata rights to assets, dividends and
liquidation. 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.
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 following is a summary of the significant accounting
policies followed by the fund:
SECURITY VALUATION - Equity securities are 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 in which the security
trades. Fixed-income securities are valued at prices obtained from an
independent pricing service, when such prices are available. However,
where the investment adviser deems it appropriate, such securities
will be valued at the mean quoted bid and asked prices or at prices
for securities of comparable maturity, quality and type. Short-term
securities maturing within 60 days are valued at amortized cost, which
approximates market value. The ability of the issuers of the debt
securities held by the fund to meet their obligations may be affected
by economic developments in a specific industry, state or region.
Forward currency contracts are valued at the mean of their
representative quoted bid and asked prices. Securities and other
assets for which representative market quotations are not readily
available are fair valued as determined in good faith by authority of
the fund's Board of Trustees. Various factors may be reviewed in order
to make a good faith determination of a security's fair value. These
factors include, but are not limited to, 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.
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) and 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 paid to
shareholders are declared daily after the determination of the fund's
net investment income and are paid to shareholders monthly.
Distributions paid to shareholders are recorded on the ex-dividend
date.
NON-U.S. CURRENCY TRANSLATION - Assets and liabilities, including
investment securities, denominated in non-U.S. currencies are
translated into U.S. dollars at the exchange rates in effect at the
end of the reporting period. 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. In the
accompanying financial statements, the effects of changes in non-U.S.
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
non-U.S. currencies are disclosed separately.
FORWARD CURRENCY CONTRACTS - The fund may enter into forward currency
contracts, which represent agreements to exchange non-U.S. currencies
on specific future dates at predetermined rates. The fund enters into
these contracts to manage its exposure to changes in non-U.S. exchange
rates arising from investments denominated in non-U.S. currencies.
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 non-U.S. exchange rates. Due to these
risks, the fund could incur losses up to the entire contract amount,
which may exceed the net unrealized value shown in the accompanying
financial statements. On a daily basis, the fund values forward
currency contracts based on the applicable exchange rates and records
unrealized gains or losses. The fund records realized gains or losses
at the time the forward contract is closed or offset by another
contract with the same broker for the same settlement date and
currency.
2. NON-U.S. INVESTMENTS
INVESTMENT RISK - The risks of investing in securities of non-U.S. issuers may
include, but are not limited to, investment and repatriation restrictions;
revaluation of currencies; adverse political, social and economic developments;
government involvement in the private sector; limited and less reliable investor
information; lack of liquidity; certain local tax law considerations; and
limited regulation of the securities markets.
TAXATION - Dividend and interest income is recorded net of non-U.S. taxes paid.
Realized and unrealized gains on securities in certain countries are subject to
non-U.S. taxes. The fund records a liability based on realized and unrealized
gains to provide for potential non-U.S. taxes payable on these securities. For
the six months ended March 31, 2004, non-U.S. taxes recorded based on unrealized
gains were $120,000.
3. FEDERAL INCOME TAXATION AND DISTRIBUTIONS
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
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 differing treatment for items such as
non-U.S. currency gains and losses; short-term capital gains and losses; capital
losses related to sales of securities within 30 days of purchase; unrealized
appreciation of certain investments in non-U.S. securities; deferred expenses;
cost of investments sold; paydowns on investments; and net capital losses. 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. As of
March 31, 2004, the cost of investment securities, excluding forward currency
contracts, for federal income tax purposes was $8,700,589,000.
As of March 31, 2004, the components of distributable earnings on a tax basis
were as follows:
(dollars in thousands)
Undistributed net investment income and currency losses 20,887
Accumulated short-term capital losses (447,284)
Accumulated long-term capital losses (105,246)
Gross unrealized appreciation on investment securities 821,529
Gross unrealized depreciation on investment securities (164,423)
Accumulated short-term capital losses above include capital loss carryforwards
of $9,548,000, $167,849,000 and $300,191,000 expiring in 2009, 2010 and 2011,
respectively. The capital loss carryforwards will be used to offset any capital
gains realized by the fund in the current year or in subsequent years through
the expiration dates. The fund will not make distributions from capital gains
while capital loss carryforwards remain. Also included in accumulated capital
losses above are capital losses of $60,055,000, that were realized during the
period November 1, 2002 through September 30, 2003.
Tax basis distributions paid or accrued to shareholders from net investment
income and currency gains were as follows (dollars in thousands):
Share class Six months ended March 31, 2004 Year ended September 30, 2003
Class A $ 230,152 $ 396,679
Class B 23,974 37,860
Class C 25,442 37,330
Class F 17,996 28,874
Class 529-A 1,195 1,364
Class 529-B 264 283
Class 529-C 565 690
Class 529-E 65 68
Class 529-F 45 31
Class R-1 58 30
Class R-2 680 424
Class R-3 791 462
Class R-4 375 152
Class R-5 2,652 5,497
Total $ 304,254 $ 509,744
4. FEES AND TRANSACTIONS WITH RELATED PARTIES
Capital Research and Management Company ("CRMC"), the fund's investment adviser,
is the parent company of American Funds Service Company ("AFS"), the fund's
transfer agent, and American Funds Distributors, Inc. ("AFD"), the principal
underwriter of the fund's shares.
INVESTMENT ADVISORY SERVICES -The Investment Advisory and Service Agreement with
CRMC provides for monthly fees accrued daily. At the beginning of the period,
these fees were based on a declining series of annual rates beginning with 0.30%
on the first $60 million of daily net assets and decreasing to 0.16% on such
assets in excess of $3 billion. The agreement also provides for monthly fees,
accrued daily, based on a declining series of annual rates beginning with 3.00%
on the first $8,333,333 of the fund's monthly gross investment income and
decreasing to 2.00% on such income in excess of $25,000,000. The Board of
Trustees approved amended agreements continuing the series of rates to include
additional annual rates of 0.15% on daily net assets in excess of $6 billion
(effective November 1, 2003) and 0.14% on daily net assets in excess of $10
billion (effective April 1, 2004). Until the effective date, CRMC voluntarily
reduced investment advisory services fees to the rates provided by the amended
agreement. As a result, for the six months ended March 31, 2004, the fee shown
on the accompanying financial statements of $15,697,000, which was equivalent to
an annualized rate of 0.344%, was voluntarily reduced by $21,000 to $15,676,000.
The annualized rate was not affected by this voluntary reduction in fees.
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 adopted plans of distribution for
all share classes, except Class R-5. Under the plans, the Board of
Trustees approves certain categories of expenses that are used to
finance activities primarily intended to sell fund shares. The plans
provide for annual expenses, based on a percentage of average daily
net assets, ranging from 0.30% to 1.00% as noted below. In some cases,
the Board of Trustees has approved expense amounts lower than plan
limits. All share classes 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 for
providing certain shareholder services. Expenses in excess of these
amounts, up to approved limits, may be used to compensate dealers and
wholesalers for distribution expenses.
For classes A and 529-A, the Board of Trustees has also approved the
reimbursement of dealer and wholesaler commissions paid by AFD for
certain shares sold without a sales charge. Each class reimburses 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, 2004, there were no unreimbursed expenses subject to
reimbursement for classes A or 529-A.
------------------------------------------------ ----------------------------- -----------------------------
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, 529-F and R-4 0.25 0.50
------------------------------------------------ ----------------------------- -----------------------------
TRANSFER AGENT SERVICES - The fund has a transfer agent agreement with
AFS for classes A and B. Under this agreement, these share classes
compensate AFS for transfer agent services including shareholder
recordkeeping, communications and transaction processing. AFS is also
compensated for certain transfer agent services provided to all other
share classes from the administrative services fees paid to CRMC
described below.
ADMINISTRATIVE SERVICES - The fund has an administrative services
agreement with CRMC to provide transfer agent and other related
shareholder services for all classes of shares other than classes A
and B. Each relevant class pays CRMC annual fees of 0.15% (0.10% for
Class R-5) based on its respective average daily net assets. Each
relevant class also pays AFS additional amounts for certain transfer
agent services. CRMC and AFS may use these fees to compensate third
parties for performing these services. During the start-up period for
classes R-1, R-2 and R-3, CRMC has voluntarily agreed to pay a portion
of these fees. For the six months ended March 31, 2004, the total fees
paid by CRMC were $66,000. Each 529 share class is subject to an
additional annual administrative services fee of 0.10% of its
respective average daily net assets; this fee is payable to the
Commonwealth of Virginia for the maintenance of the CollegeAmerica
plan. Although these amounts are included with administrative services
fees in the accompanying financial statements, the Commonwealth of
Virginia is not considered a related party. Administrative services
fees are presented gross of any payments made by CRMC.
Expenses under the agreements described above for the six months ended
March 31, 2004, were as follows (dollars in thousands):
--------------------------------------------------------------------------------------------------------------
Share class Distribution Transfer agent Administrative services
services services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
CRMC Transfer agent Commonwealth of
administrative services Virginia
services administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class A $6,635 $2,678 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class B 3,976 338 Not applicable Not applicable Not applicable
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class C 4,288 Included $643 $96 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class F 675 Included 405 72 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-A 21 Included 27 2 $18
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-B 45 Included 7 2 4
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-C 97 Included 14 4 9
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-E 5 Included 2 -* 1
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class 529-F 2 Included 1 -* 1
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-1 9 Included 1 2 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-2 85 Included 17 92 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-3 62 Included 19 20 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-4 14 Included 8 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Class R-5 Not applicable Included 38 1 Not applicable
in
administrative
services
--------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------
Total $15,914 $3,016 $1,182 $292 $33
--------------------------------------------------------------------------------------------------------------
* Amount less than one thousand.
DEFERRED TRUSTEES' COMPENSATION - Since the adoption of the deferred
compensation plan in 1993, 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 in the accompanying financial statements
includes $16,000 in current fees (either paid in cash or deferred) and a net
increase of $13,000 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, AFS and AFD. No affiliated
officers or Trustees received any compensation directly from the fund.
5. CAPITAL SHARE TRANSACTIONS
Capital share transactions in the fund were as follows (dollars and shares in
thousands):
Reinvestments of
Share class Sales(1) dividends and distributions
Amount Shares Amount Shares
Six months ended March 31, 2004
Class A $ 1,133,340 92,344 $ 176,353 14,356
Class B 104,477 8,531 16,666 1,357
Class C 185,054 15,102 18,071 1,471
Class F 216,568 17,633 13,296 1,082
Class 529-A 12,741 1,037 1,186 97
Class 529-B 3,068 250 262 21
Class 529-C 6,709 546 557 45
Class 529-E 795 64 64 5
Class 529-F 604 50 45 4
Class R-1 1,778 146 56 5
Class R-2 20,034 1,630 664 54
Class R-3 29,767 2,415 771 63
Class R-4 6,671 541 370 30
Class R-5 8,969 729 1,530 124
Total net increase
(decrease) $ 1,730,575 141,018 $ 229,891 18,714
Year ended September 30, 2003
Class A $ 2,947,678 269,710 $ 293,946 26,810
Class B 401,738 36,762 25,201 2,283
Class C 515,059 47,001 25,987 2,350
Class F 537,925 49,913 19,042 1,721
Class 529-A 17,906 1,629 1,344 121
Class 529-B 4,996 452 279 25
Class 529-C 10,184 929 683 62
Class 529-E 1,070 98 67 6
Class 529-F 915 82 30 3
Class R-1 1,232 110 29 3
Class R-2 15,383 1,383 413 36
Class R-3 14,631 1,322 452 40
Class R-4 9,077 800 146 13
Class R-5 32,990 3,070 3,129 287
Total net increase
(decrease) $ 4,510,784 413,261 $ 370,748 33,760
Share class Repurchases(1) Net increase
Amount Shares Amount Shares
Six months ended March 31, 2004
Class A $ (845,193) (68,668) $ 464,500 38,032
Class B (69,982) (5,683) 51,161 4,205
Class C (129,875) (10,545) 73,250 6,028
Class F (163,984) (13,289) 65,880 5,426
Class 529-A (2,162) (175) 11,765 959
Class 529-B (186) (15) 3,144 256
Class 529-C (2,117) (172) 5,149 419
Class 529-E (39) (3) 820 66
Class 529-F (68) (6) 581 48
Class R-1 (546) (44) 1,288 107
Class R-2 (4,682) (381) 16,016 1,303
Class R-3 (4,274) (347) 26,264 2,131
Class R-4 (1,744) (142) 5,297 429
Class R-5 (21,593) (1,752) (11,094) (899)
Total net increase
(decrease) $ (1,246,445) (101,222) $ 714,021 58,510
Year ended September 30, 2003
Class A $ (1,294,863) (117,608) $ 1,946,761 178,912
Class B (84,952) (7,642) 341,987 31,403
Class C (129,541) (11,555) 411,505 37,796
Class F (313,475) (28,218) 243,492 23,416
Class 529-A (1,383) (123) 17,867 1,627
Class 529-B (282) (24) 4,993 453
Class 529-C (791) (72) 10,076 919
Class 529-E (80) (7) 1,057 97
Class 529-F -* -* 945 85
Class R-1 (249) (23) 1,012 90
Class R-2 (2,374) (208) 13,422 1,211
Class R-3 (2,825) (248) 12,258 1,114
Class R-4 (891) (78) 8,332 735
Class R-5 (15,953) (1,410) 20,166 1,947
Total net increase
(decrease) $ (1,847,659) (167,216) $ 3,033,873 279,805
* Amount less than one thousand.
(1) Includes exchanges between share classes of the fund.
6. FORWARD CURRENCY CONTRACTS
As of March 31, 2004, the fund had open forward currency contracts to sell
non-U.S. currency as follows:
Contract amount U.S. valuations at March 31, 2004
Unrealized
Non-U.S. U.S. Amount appreciation
Non-U.S. currency contracts (000) (000) (000) (000)
Sales:
Euros expiring 5/3 to 6/17/2004 Euro 25,475 $31,524 $31,283 $241
7. RESTRICTED SECURITIES
The fund has invested in certain securities for which resale may be limited to
qualified buyers or which are otherwise restricted. These securities are
identified in the investment portfolio. As of March 31, 2004, the total value of
restricted securities was $1,900,286,000, which represented 20.15% of the net
assets of the fund.
8. INVESTMENT TRANSACTIONS AND OTHER DISCLOSURES
The fund made purchases and sales of investment securities, excluding short-term
securities, of $2,377,760,000 and $1,550,323,000, respectively, during the six
months ended March 31, 2004.
The fund receives a reduction in its custodian fee equal to the amount of
interest calculated on certain cash balances held at the custodian bank. For the
six months ended March 31, 2004, the custodian fee of $109,000 included $87,000
that was offset by this reduction, rather than paid in cash.
FINANCIAL HIGHLIGHTS (1)
Income (loss) from investment operations(2)
Net
Net asset gains (losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
Class A:
Six months ended 3/31/2004 (5) $11.88 $.43 $.45 $.88
Year ended 9/30/2003 9.62 .93 2.25 3.18
Year ended 9/30/2002 11.27 1.08 (1.65) (.57)
Year ended 9/30/2001 12.93 1.20 (1.61) (.41)
Year ended 9/30/2000 13.52 1.18 (.48) .70
Year ended 9/30/1999 13.75 1.28 (.17) 1.11
Class B:
Six months ended 3/31/2004 (5) 11.88 .38 .45 .83
Year ended 9/30/2003 9.62 .84 2.25 3.09
Year ended 9/30/2002 11.27 1.00 (1.65) (.65)
Year ended 9/30/2001 12.93 1.10 (1.61) (.51)
Period from 3/15/2000 to 9/30/2000 13.57 .52 (.53) (.01)
Class C:
Six months ended 3/31/2004 (5) 11.88 .38 .45 .83
Year ended 9/30/2003 9.62 .83 2.25 3.08
Year ended 9/30/2002 11.27 .99 (1.65) (.66)
Period from 3/15/2001 to 9/30/2001 12.48 .53 (1.15) (.62)
Class F:
Six months ended 3/31/2004 (5) 11.88 .42 .45 .87
Year ended 9/30/2003 9.62 .92 2.25 3.17
Year ended 9/30/2002 11.27 1.07 (1.65) (.58)
Period from 3/15/2001 to 9/30/2001 12.48 .57 (1.15) (.58)
Class 529-A:
Six months ended 3/31/2004 (5) 11.88 .42 .45 .87
Year ended 9/30/2003 9.62 .92 2.25 3.17
Period from 2/19/2002 to 9/30/2002 11.37 .65 (1.76) (1.11)
Class 529-B:
Six months ended 3/31/2004 (5) 11.88 .37 .45 .82
Year ended 9/30/2003 9.62 .82 2.25 3.07
Period from 2/25/2002 to 9/30/2002 11.23 .59 (1.63) (1.04)
Class 529-C:
Six months ended 3/31/2004 (5) 11.88 .37 .45 .82
Year ended 9/30/2003 9.62 .82 2.25 3.07
Period from 2/19/2002 to 9/30/2002 11.37 .60 (1.76) (1.16)
Class 529-E:
Six months ended 3/31/2004 (5) 11.88 .40 .45 .85
Year ended 9/30/2003 9.62 .88 2.25 3.13
Period from 3/15/2002 to 9/30/2002 11.57 .57 (1.96) (1.39)
Class 529-F:
Six months ended 3/31/2004 (5) 11.88 .42 .45 .87
Year ended 9/30/2003 9.62 .91 2.25 3.16
Period from 9/16/2002 to 9/30/2002 9.88 .08 (.30) (.22)
FINANCIAL HIGHLIGHTS (1) (continued)
Income (loss) from investment operations
Net
Net asset gains(losses)
value, Net on securities Total from
beginning investment (both realized investment
of period income and unrealized) operations
Class R-1:
Six months ended 3/31/2004 (5) 11.88 .37 .45 .82
Year ended 9/30/2003 9.62 .83 2.25 3.08
Period from 7/11/2002 to 9/30/2002 10.00 .23 (.40) (.17)
Class R-2:
Six months ended 3/31/2004 (5) 11.88 .38 .45 .83
Year ended 9/30/2003 9.62 .84 2.25 3.09
Period from 6/18/2002 to 9/30/2002 10.76 .31 (1.18) (.87)
Class R-3:
Six months ended 3/31/2004 (5) 11.88 .40 .45 .85
Year ended 9/30/2003 9.62 .88 2.25 3.13
Period from 6/21/2002 to 9/30/2002 10.60 .31 (1.01) (.70)
Class R-4:
Six months ended 3/31/2004 (5) 11.88 .42 .45 .87
Year ended 9/30/2003 9.62 .92 2.25 3.17
Period from 7/19/2002 to 9/30/2002 9.97 .22 (.38) (.16)
Class R-5:
Six months ended 3/31/2004 (5) 11.88 .44 .45 .89
Year ended 9/30/2003 9.62 .95 2.25 3.20
Period from 5/15/2002 to 9/30/2002 11.30 .42 (1.70) (1.28)
FINANCIAL HIGHLIGHTS (1)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class A:
Six months ended 3/31/2004 (5) $(.42) $ - $(.42) $12.34
Year ended 9/30/2003 (.92) - (.92) 11.88
Year ended 9/30/2002 (1.08) - (1.08) 9.62
Year ended 9/30/2001 (1.25) - (1.25) 11.27
Year ended 9/30/2000 (1.29) - (1.29) 12.93
Year ended 9/30/1999 (1.29) (.05) (1.34) 13.52
Class B:
Six months ended 3/31/2004 (5) (.37) - (.37) 12.34
Year ended 9/30/2003 (.83) - (.83) 11.88
Year ended 9/30/2002 (1.00) - (1.00) 9.62
Year ended 9/30/2001 (1.15) - (1.15) 11.27
Period from 3/15/2000 to 9/30/2000 (.63) - (.63) 12.93
Class C: -
Six months ended 3/31/2004 (5) (.37) - (.37) 12.34
Year ended 9/30/2003 (.82) - (.82) 11.88
Year ended 9/30/2002 (.99) - (.99) 9.62
Period from 3/15/2001 to 9/30/2001 (.59) - (.59) 11.27
Class F: -
Six months ended 3/31/2004 (5) (.41) - (.41) 12.34
Year ended 9/30/2003 (.91) - (.91) 11.88
Year ended 9/30/2002 (1.07) - (1.07) 9.62
Period from 3/15/2001 to 9/30/2001 (.63) - (.63) 11.27
Class 529-A: -
Six months ended 3/31/2004 (5) (.41) - (.41) 12.34
Year ended 9/30/2003 (.91) - (.91) 11.88
Period from 2/19/2002 to 9/30/2002 (.64) - (.64) 9.62
Class 529-B: -
Six months ended 3/31/2004 (5) (.36) - (.36) 12.34
Year ended 9/30/2003 (.81) - (.81) 11.88
Period from 2/25/2002 to 9/30/2002 (.57) - (.57) 9.62
Class 529-C: -
Six months ended 3/31/2004 (5) (.36) - (.36) 12.34
Year ended 9/30/2003 (.81) - (.81) 11.88
Period from 2/19/2002 to 9/30/2002 (.59) - (.59) 9.62
Class 529-E: -
Six months ended 3/31/2004 (5) (.39) - (.39) 12.34
Year ended 9/30/2003 (.87) - (.87) 11.88
Period from 3/15/2002 to 9/30/2002 (.56) - (.56) 9.62
Class 529-F: -
Six months ended 3/31/2004 (5) (.41) - (.41) 12.34
Year ended 9/30/2003 (.90) - (.90) 11.88
Period from 9/16/2002 to 9/30/2002 (.04) - (.04) 9.62
FINANCIAL HIGHLIGHTS (1) (continued)
Dividends and distributions
Dividends
(from net Distributions Total Net asset
investment (from capital dividends and value, end
income) gains) distributions of period
Class R-1:
Six months ended 3/31/2004 (5) (.36) - (.36) 12.34
Year ended 9/30/2003 (.82) - (.82) 11.88
Period from 7/11/2002 to 9/30/2002 (.21) - (.21) 9.62
Class R-2: -
Six months ended 3/31/2004 (5) (.37) - (.37) 12.34
Year ended 9/30/2003 (.83) - (.83) 11.88
Period from 6/18/2002 to 9/30/2002 (.27) - (.27) 9.62
Class R-3: -
Six months ended 3/31/2004 (5) (.39) - (.39) 12.34
Year ended 9/30/2003 (.87) - (.87) 11.88
Period from 6/21/2002 to 9/30/2002 (.28) - (.28) 9.62
Class R-4: -
Six months ended 3/31/2004 (5) (.41) - (.41) 12.34
Year ended 9/30/2003 (.91) - (.91) 11.88
Period from 7/19/2002 to 9/30/2002 (.19) - (.19) 9.62
Class R-5: -
Six months ended 3/31/2004 (5) (.43) - (.43) 12.34
Year ended 9/30/2003 (.94) - (.94) 11.88
Period from 5/15/2002 to 9/30/2002 (.40) - (.40) 9.62
FINANCIAL HIGHLIGHTS (1)
Ratio of Ratio of
expenses to expenses to Ratio of
Net assets, average net average net net income
Total end of period assets before assets after to average
return (3) (in millions) reimbursement reimbursement(4) net assets
Class A:
Six months ended 3/31/2004 (5) 7.47% $6,946 .65% (6) .65% (6) 7.07% (6)
Year ended 9/30/2003 34.30 6,235 .75 .75 8.49
Year ended 9/30/2002 (5.88) 3,327 .88 .88 9.99
Year ended 9/30/2001 (3.44) 2,936 .83 .83 9.75
Year ended 9/30/2000 5.29 2,788 .82 .82 8.87
Year ended 9/30/1999 8.11 2,777 .82 .82 9.21
Class B:
Six months ended 3/31/2004 (5) 7.04 816 1.46 (6) 1.46 (6) 6.27 (6)
Year ended 9/30/2003 33.28 736 1.51 1.51 7.63
Year ended 9/30/2002 (6.57) 294 1.59 1.59 9.28
Year ended 9/30/2001 (4.17) 123 1.57 1.57 8.75
Period from 3/15/2000 to 9/30/2000 (.05) 27 1.52 (6) 1.52 (6) 8.18 (6)
Class C:
Six months ended 3/31/2004 (5) 7.00 876 1.54 (6) 1.54 (6) 6.17 (6)
Year ended 9/30/2003 33.17 772 1.60 1.60 7.49
Year ended 9/30/2002 (6.65) 262 1.67 1.67 9.21
Period from 3/15/2001 to 9/30/2001 (5.11) 44 1.70 (6) 1.70 (6) 8.54 (6)
Class F:
Six months ended 3/31/2004 (5) 7.40 556 .79 (6) .79 (6) 6.90 (6)
Year ended 9/30/2003 34.17 470 .84 .84 8.26
Year ended 9/30/2002 (5.95) 156 .93 .93 9.95
Period from 3/15/2001 to 9/30/2001 (4.86) 32 .93 (6) .93 (6) 9.32 (6)
Class 529-A:
Six months ended 3/31/2004 (5) 7.42 41 .75 (6) .75 (6) 6.97 (6)
Year ended 9/30/2003 34.17 28 .77 .77 8.36
Period from 2/19/2002 to 9/30/2002 (10.11) 7 1.07 (6) 1.07 (6) 10.40 (6)
Class 529-B:
Six months ended 3/31/2004 (5) 6.93 11 1.67 (6) 1.67 (6) 6.05 (6)
Year ended 9/30/2003 33.01 7 1.73 1.73 7.36
Period from 2/25/2002 to 9/30/2002 (9.54) 2 1.82 (6) 1.82 (6) 9.67 (6)
Class 529-C:
Six months ended 3/31/2004 (5) 6.94 22 1.66 (6) 1.66 (6) 6.07 (6)
Year ended 9/30/2003 33.03 16 1.71 1.71 7.43
Period from 2/19/2002 to 9/30/2002 (10.52) 4 1.80 (6) 1.80 (6) 9.65 (6)
Class 529-E:
Six months ended 3/31/2004 (5) 7.22 3 1.14 (6) 1.14 (6) 6.59 (6)
Year ended 9/30/2003 33.73 2 1.18 1.18 7.94
Period from 3/15/2002 to 9/30/2002 (12.29) - (7) 1.27 (6) 1.27 (6) 10.45 (6)
Class 529-F:
Six months ended 3/31/2004 (5) 7.35 2 .89 (6) .89 (6) 6.83 (6)
Year ended 9/30/2003 34.06 1 .92 .92 7.96
Period from 9/16/2002 to 9/30/2002 (2.23) - (7) .05 .05 .77
Financial highlights (1) (continued)
Ratio of Ratio of
expenses to expenses to Ratio of
Net assets, average net average net net income
Total end of period assets before assets after to average
return (in millions) reimbursement reimbursement net assets
Class R-1:
Six months ended 3/31/2004 (5) 6.98 3 1.72 (6) 1.57 (6) 6.14 (6)
Year ended 9/30/2003 33.16 1 2.01 1.60 7.20
Period from 7/11/2002 to 9/30/2002 (1.70) - (7) 2.07 .38 2.32
Class R-2:
Six months ended 3/31/2004 (5) 7.01 31 2.08 (6) 1.54 (6) 6.19 (6)
Year ended 9/30/2003 33.21 15 2.31 1.57 7.34
Period from 6/18/2002 to 9/30/2002 (8.05) - (7) .85 .48 3.17
Class R-3:
Six months ended 3/31/2004 (5) 7.21 41 1.17 (6) 1.15 (6) 6.59 (6)
Year ended 9/30/2003 33.71 14 1.28 1.18 7.74
Period from 6/21/2002 to 9/30/2002 (6.63) 1 .51 .36 3.21
Class R-4:
Six months ended 3/31/2004 (5) 7.40 14 .79 (6) .79 (6) 6.94 (6)
Year ended 9/30/2003 34.17 9 .86 .83 8.13
Period from 7/19/2002 to 9/30/2002 (1.58) - (7) 9.55 .14 2.25
Class R-5:
Six months ended 3/31/2004 (5) 7.57 67 .47 (6) .47 (6) 7.27 (6)
Year ended 9/30/2003 34.61 75 .52 .52 8.77
Period from 5/15/2002 to 9/30/2002 (11.41) 42 .23 .23 4.25
Six months
ended Year ended September 30
March 31,
2004(5) 2003 2002 2001 2000 1999
Portfolio turnover rate for all classes of shares 18% 41% 34% 44% 46% 30%
(1) Based on operations for the period shown (unless otherwise
noted) and, accordingly, may not be representative of a full year.
(2) Year ended 1999 is based on shares outstanding on the last day of
the year; all other periods are based on average shares outstanding.
(3) Total returns exclude all sales charges, including contingent
deferred sales charges.
(4) The ratios in this column reflect the impact, if any, of certain
reimbursements and payments from CRMC. During some of the periods shown,
CRMC voluntarily reduced fees for investment advisory services for
all share classes. In addition, during the start-up period for the
retirement share classes (except R-5), CRMC voluntarily agreed to
pay a portion of the fees related to transfer agent services.
(5) Unaudited.
(6) Annualized.
(7) Amount less than $1 million.
See Notes to Financial Statements
OTHER SHARE CLASS RESULTS
CLASS B, CLASS C, CLASS F AND CLASS 529 unaudited
RETURNS FOR PERIODS ENDED MARCH 31, 2004:
1 YEAR LIFE OF CLASS
CLASS B SHARES
Reflecting applicable contingent deferred sales charge
(CDSC), maximum of 5%, payable only if shares are
sold within six years of purchase +15.99% +5.85%(1)
Not reflecting CDSC +20.99% +6.23%(1)
CLASS C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +19.89% +7.95%(2)
Not reflecting CDSC +20.89% +7.95%(2)
CLASS F SHARES(3)
Not reflecting annual asset-based fee charged by
sponsoring firm +21.80% +8.71%(2)
CLASS 529-A SHARES
Reflecting 3.75% maximum sales charge +17.37% +11.04%(4)
Not reflecting maximum sales charge +21.91% +13.06%(4)
CLASS 529-B SHARES
Reflecting applicable CDSC, maximum of 5%, payable
only if shares are sold within six years of purchase +15.74% +11.10%(5)
Not reflecting CDSC +20.74% +12.79%(5)
CLASS 529-C SHARES
Reflecting CDSC, maximum of 1%, payable only if shares
are sold within one year of purchase +19.76% +12.12%(4)
Not reflecting CDSC +20.76% +12.12%(4)
CLASS 529-E SHARES(3) +21.39% +11.87%(6)
CLASS 529-F SHARES(3)
Not reflecting annual asset-based fee charged by
sponsoring firm +21.69% +24.87%(7)
Figures shown on this page are past results and are not predictive of results in
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 the
most current information and month-end results, visit americanfunds.com.
(1) Average annual total return from March 15, 2000, when Class B shares were
first sold.
(2) Average annual total return from March 15, 2001, when Class C and Class F
shares were first sold.
(3) These shares are sold without any initial or contingent deferred sales
charge.
(4) Average annual total return from February 19, 2002, when Class 529-A and
Class 529-C shares were first sold.
(5) Average annual total return from February 25, 2002, when Class 529-B shares
were first sold.
(6) Average annual total return from March 15, 2002, when Class 529-E shares
were first sold.
(7) Average annual total return from September 16, 2002, when Class 529-F
shares were first sold.
OFFICES OF THE FUND AND
OF THE INVESTMENT ADVISER
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
135 South State College Boulevard
Brea, CA 92821-5823
TRANSFER AGENT FOR SHAREHOLDER ACCOUNTS
American Funds Service Company
(Please write to the address nearest you.)
P.O. Box 25065
Santa Ana, CA 92799-5065
P.O. Box 659522
San Antonio, TX 78265-9522
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
Paul, Hastings, Janofsky & Walker LLP
515 South Flower Street
Los Angeles, CA 90071-2228
INDEPENDENT AUDITORS
Deloitte & Touche LLP
Two California Plaza
350 South Grand Avenue
Los Angeles, CA 90071-3462
PRINCIPAL UNDERWRITER
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
There are several ways to invest in American High-Income Trust. Class A shares
are subject to a 3.75% maximum up-front sales charge that declines for accounts
(and aggregated investments) of $100,000 or more. Other share classes, which are
generally not available for certain employer-sponsored retirement plans, have no
up-front sales charges but are subject to additional annual expenses and fees.
Annualized expenses for Class B shares were 0.81 percentage points higher than
for Class A shares; Class B shares convert to Class A shares after eight years
of ownership. If redeemed within six years, Class B shares may also be subject
to a contingent deferred sales charge ("CDSC") of up to 5% that declines over
time. Class C shares were subject to annualized expenses 0.89 percentage points
higher than those for Class A shares and a 1% CDSC if redeemed within the first
year after purchase. Class C shares convert to Class F shares after 10 years.
Class F shares, which are available only through certain fee-based programs
offered by broker-dealer firms and registered investment advisers, had higher
annualized expenses (by 0.14 percentage points) than did Class A shares, and an
annual asset-based fee charged by the sponsoring firm. Expenses are deducted
from income earned by the fund. As a result, dividends and investment results
will differ for each share class.
INVESTORS SHOULD CAREFULLY CONSIDER THE INVESTMENT OBJECTIVES, RISKS, CHARGES
AND EXPENSES OF AMERICAN HIGH-INCOME TRUST AND COLLEGEAMERICA. THIS AND OTHER
IMPORTANT INFORMATION IS CONTAINED IN THE PROSPECTUS, WHICH CAN BE OBTAINED FROM
YOUR FINANCIAL ADVISER AND SHOULD BE READ CAREFULLY BEFORE INVESTING. YOU MAY
ALSO CALL AMERICAN FUNDS SERVICE COMPANY AT 800/421-0180 OR VISIT THE AMERICAN
FUNDS WEBSITE AT AMERICANFUNDS.COM.
"AMERICAN FUNDS PROXY VOTING GUIDELINES" -- WHICH DESCRIBES HOW WE VOTE PROXIES
RELATING TO PORTFOLIO SECURITIES -- IS AVAILABLE UPON REQUEST, FREE OF CHARGE,
BY CALLING AMERICAN FUNDS SERVICE COMPANY, VISITING THE AMERICAN FUNDS WEBSITE
OR ACCESSING THE U.S. SECURITIES AND EXCHANGE COMMISSION WEBSITE AT WWW.SEC.GOV.
This report is for the information of shareholders of American High-Income
Trust, but it may also be used as sales literature when preceded or accompanied
by the current prospectus, which gives details about charges, expenses,
investment objectives and operating policies of the fund. If used as sales
material after June 30, 2004, this report must be accompanied by an American
Funds statistical update for the most recently completed calendar quarter.
[logo - American Funds(R)]
The right choice for the long term(R)
WHAT MAKES AMERICAN FUNDS DIFFERENT?
For more than 70 years, we have followed a consistent philosophy that we firmly
believe is in our investors' best interests. The range of opportunities offered
by our family of just 29 carefully conceived, broadly diversified funds has
attracted over 25 million shareholder accounts.
OUR UNIQUE COMBINATION OF STRENGTHS INCLUDES THESE FIVE FACTORS:
o A LONG-TERM, VALUE-ORIENTED APPROACH
Rather than follow fads, we pursue a consistent strategy, focusing on each
investment's long-term potential.
o AN UNPARALLELED GLOBAL RESEARCH EFFORT
American Funds draws on one of the industry's most globally integrated
research networks.
o THE MULTIPLE PORTFOLIO COUNSELOR SYSTEM
Every American Fund is divided among a number of portfolio counselors. Each
takes responsibility for a portion independently, within each fund's
objectives; in most cases, research analysts manage a portion as well. Over
time this method has contributed to a consistency of results and continuity
of management.
o EXPERIENCED INVESTMENT PROFESSIONALS
The recent market decline was not the first for most of the portfolio
counselors who serve the American Funds. Nearly 70% of them were in the
investment business before the sharp market decline of 1987.
o A COMMITMENT TO LOW OPERATING EXPENSES
American Funds' operating expenses are among the lowest in the mutual fund
industry. Our portfolio turnover rates are low as well, keeping transaction
costs and tax consequences contained.
29 MUTUAL FUNDS, CONSISTENT PHILOSOPHY, CONSISTENT RESULTS
o GROWTH FUNDS
AMCAP Fund(R)
EuroPacific Growth Fund(R)
The Growth Fund of America(R)
The New Economy Fund(R)
New Perspective Fund(R)
New World Fund(SM)
SMALLCAP World Fund(R)
o GROWTH-AND-INCOME FUNDS
American Mutual Fund(R)
Capital World Growth and Income Fund(SM)
Fundamental Investors(SM)
The Investment Company of America(R)
Washington Mutual Investors Fund(SM)
o EQUITY-INCOME FUNDS
Capital Income Builder(R)
The Income Fund of America(R)
o BALANCED FUND
American Balanced Fund(R)
o BOND FUNDS
> American High-Income Trust(SM)
The Bond Fund of America(SM)
Capital World Bond Fund(R)
Intermediate Bond Fund of America(R)
U.S. Government Securities Fund(SM)
o TAX-EXEMPT BOND FUNDS
American High-Income Municipal Bond Fund(R)
Limited Term Tax-Exempt Bond Fund of America(SM)
The Tax-Exempt Bond Fund of America(R)
STATE-SPECIFIC TAX-EXEMPT FUNDS
The Tax-Exempt Fund of California(R)
The Tax-Exempt Fund of Maryland(R)
The Tax-Exempt Fund of Virginia(R)
o MONEY MARKET FUNDS
The Cash Management Trust of America(R)
The Tax-Exempt Money Fund of America(SM)
The U.S. Treasury Money Fund of America(SM)
THE CAPITAL GROUP COMPANIES
American Funds
Capital Research and Management
Capital International
Capital Guardian
Capital Bank and Trust
Lit. No. MFGESR-921-0504
Litho in USA RCG/L/8076
Printed on recycled paper
ITEM 2 - Code of Ethics
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 3 - Audit Committee Financial Expert
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 4 - Principal Accountant Fees and Services
Not applicable for filing of Semiannual Reports to Shareholders.
ITEM 5 - Audit Committee of Listed Registrants
Not applicable.
ITEM 6 - Reserved
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 - Reserved
ITEM 9 - 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 committee comprised solely of persons
who are not considered "interested persons" of the registrant within the meaning
of the Investment Company Act of 1940. 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 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 committee.
ITEM 10 - Controls and Procedures
(a) The officers providing the certifications in this report in accordance with
rule 30a-2 under the Investment Company Act of 1940 have concluded, based
on their evaluation of the Registrant's disclosure controls and procedures
(as such term is defined in such rule), 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 last fiscal half-year (the
Registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
Registrant's internal control over financial reporting.
ITEM 11 - Exhibits
(a) The Code of Ethics - not applicable for filing of Semiannual Reports to
Shareholders.
(b) The certifications required by Rule 30a-2 of the Investment Company Act of
1940, as amended, 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 PEO
Date: June 8, 2004
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 PEO
Date: June 8, 2004
By /s/ Susi M. Silverman
Susi M. Silverman, Treasurer
Date: June 8, 2004