UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
Certified Shareholder Report of
Registered Management Investment Companies
Investment Company Act File Number: 811-05364
American High-Income Trust
(Exact Name of Registrant as Specified in Charter)
333 South Hope Street
Los Angeles, California 90071
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (213) 486-9200
Date of fiscal year end: September 30
Date of reporting period: September 30, 2009
Kimberly S. Verdick
Capital Research and Management Company
333 South Hope Street
Los Angeles, California 90071
(Name and Address of Agent for Service)
Copies to:
Michael Glazer
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
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The right choice for the long term®
American High-Income Trust
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Where do we go from here?
Perspectives from your fund’s portfolio counselors
Annual report for the year ended September 30, 2009
American High-Income TrustSM 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 30 American Funds. American Funds is one of the nation’s largest mutual fund families. For nearly 80 years, 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.
Fund results shown in this report, unless otherwise indicated, are for Class A shares at net asset value. If a sales charge (maximum 3.75%) had been deducted, the results would have been lower. Results are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. Investing for short periods makes losses more likely. Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value. For current information and month-end results, visit americanfunds.com.
Results at a glance | ||||||||||||||||
For periods ended September 30, 2009, with all distributions reinvested | ||||||||||||||||
Total returns | Average annual total returns | |||||||||||||||
1 year | 5 years | 10 years | Lifetime | |||||||||||||
(since 2/19/88) | ||||||||||||||||
American High-Income Trust (Class A shares) | 14.0 | % | 4.8 | % | 6.0 | % | 8.2 | % | ||||||||
Lipper High Current Yield Bond Funds Index* | 12.1 | 4.1 | 3.8 | 6.5 | ||||||||||||
Credit Suisse High Yield Index† | 17.9 | 5.7 | 6.6 | 8.4 | ||||||||||||
Citigroup Broad Investment-Grade | ||||||||||||||||
(BIG) Bond Index† | 11.0 | 5.4 | 6.5 | 7.4 | ||||||||||||
*The Lipper index does not reflect the effect of sales charges. | ||||||||||||||||
†The market indexes are unmanaged and do not reflect the effect of sales charges, commissions or expenses. | ||||||||||||||||
Since its inception through September 30, 2009, American High-Income Trust ranked 3rd in total return among the 35 high current yield funds in existence throughout the period, according to Lipper. For the 10 years ended September 30, 2009, the fund ranked 33rd of 206; for the five years ended September 30, 2009, it ranked 130th of 331; and for the 12 months ended September 30, 2009, it ranked 238th of 459. Lipper rankings do not reflect the effect of sales charges. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 25 and 26 for details.
The fund’s 30-day yield for Class A shares as of October 31, 2009, calculated in accordance with the Securities and Exchange Commission formula, was 7.68%. The fund’s distribution rate for Class A shares as of that date was 8.12%. 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.
See page 3 for Class A share results with relevant sales charges deducted. Results for other share classes can be found on page 31.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds. Bond ratings are generally issued by independent rating agencies and are designed to provide an indication of an issuer’s creditworthiness. See the fund’s most recent statement of additional information for details. Investing in bonds issued outside the U.S. may be subject to additional risks. They include currency fluctuations, political and social instability, differing securities regulations and accounting standards, higher transaction costs, possible changes in taxation and illiquidity. See the prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow shareholders:
For shareholders in American High-Income Trust, fiscal 2009 encompassed the best of times and the worst of times. In the past 12 months, shareholders experienced tremendous volatility, suffering through some of the worst monthly results and enjoying some of the strongest monthly gains of the fund’s lifetime.
In the end, American High-Income Trust reported a total return of 14.0% for the fiscal year ending September 30, 2009, assuming the reinvestment of monthly dividends totaling 88 cents a share. Shareholders who reinvested dividends received an income return of 9.2% for the year. Those who elected to take dividends in cash received an income return of 8.8% and saw the value of their shares increase 2.8%.
Those results compare with a 12.1% return for the Lipper High Current Yield Bond Funds Index, a benchmark of similar funds, and a 17.9% gain for the Credit Suisse High Yield Index, which attempts to mirror the high-yield debt markets. The latter index is unmanaged and includes no expenses.
The Citigroup Broad Investment-Grade (BIG) Bond Index, an unmanaged index that measures high-quality bond markets including Treasuries, posted an 11.0% return, not including expenses.
A tale of two markets
When the fund’s fiscal year began on October 1, 2008, troubles in the credit market had deepened into the worst financial crisis since the Great Depression. Just weeks earlier, the U.S. government allowed Lehman Brothers to file for bankruptcy. Because Lehman had involvement in many parts of the financial markets, its bankruptcy had worldwide repercussions, causing global stock markets to fall sharply and credit markets to freeze. Grave concerns about liquidity and solvency in the financial system dominated the headlines.
As panic and fear spread throughout the investment world, forced selling among all asset classes drove down bond prices. From early September to the end of November 2008, credit and money markets essentially stopped functioning. The magnitude and seriousness of what was happening in the financial markets had a profound impact on high-yield issuers because of their need for access to credit. Corporate bond yield spreads reached levels not seen in decades; default rates on high-yield bonds rose to 4.1% by the end of calendar 2008, up from 0.9% at the end of 2007, according to Moody’s. In this volatile environment, American High-Income Trust declined 17.2% during the first six months of the fiscal year.
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In this report
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Special feature | |
4 | Where do we go from here? |
Perspectives from your fund’s portfolio counselors | |
Contents | |
1 | Letter to shareholders |
3 | The value of a long-term perspective |
10 | Summary investment portfolio |
15 | Financial statements |
32 | Board of trustees and other officers |
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For us, the key is to identify those companies with strong or improving fundamentals and the liquidity necessary to meet their debt obligations, even in a weak economy.
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Starting in October 2008, policymakers redoubled their efforts to save the banking system from collapse. The U.S. and other countries propped up several large financial institutions through direct takeovers, government-mediated buyouts, purchases of impaired assets or recapitalizations through government-guaranteed debt. Those efforts began to pay off by the second half of the fiscal year, causing a radical shift in the market. As liquidity returned to the markets and fears of insolvency in the financial system largely subsided, investors rushed to take advantage of depressed prices in high-yield bonds. In the face of a sluggish economy, the stock and bond markets enjoyed an exceptionally strong rebound, helping American High-Income Trust to gain 37.7% for the last six months of the period.
Managing expectations going forward
While we are pleased with the fund’s exceptional returns in recent months, it’s important to keep in mind that the strong rebound is off severely depressed prices and has simply returned markets to normal valuations. There are still numerous challenges ahead as the market responds to continued economic sluggishness, high unemployment rates and questions about corporate profitability.
In this environment, we believe that fundamental research and security selection will be particularly important in the period ahead. Over the years, our research-driven investment approach has allowed American High-Income Trust to provide shareholders with a consistent source of income and solid returns. For us, the key is to identify those companies with strong or improving fundamentals and the liquidity necessary to meet their debt obligations, even in a weak economy.
The past two years have been an unusual market cycle of extreme highs and lows. Now that the markets have moved closer to historical norms, we expect more modest returns in the months ahead. To help manage expectations, it’s helpful to consider results over longer time periods that encompass a variety of market cycles. Shareholders in the fund have earned an average annual return of 6.0%, with dividends and coupons reinvested, for the past 10-year period ended September 30, 2009. That compares with a 3.8% return for the Lipper High Current Yield Bond Funds Index and a 6.6% return for the Credit Suisse High Yield Index. Standard & Poor’s 500 Composite Index, a broad measure of mostly large U.S. stocks, posted a –0.2% return for the same period.
For more information on this year’s results and how the fund’s portfolio counselors are guiding the fund in the current environment, please see the article beginning on page 4.
As always, we appreciate your continued support and long-term investment perspective.
Sincerely,
/s/ Paul G. Haaga, Jr.
Paul G. Haaga, Jr.
Vice Chairman
/s/ David C. Barclay
David C. Barclay
President
November 12, 2009
For current information about the fund, visit americanfunds.com.
The value of a long-term perspective
Here’s how a $10,000 investment in American High-Income Trust grew between February 19, 1988, when the fund began operations, and September 30, 2009, the end of its latest fiscal year. As you can see, that $10,000 grew to $53,376 with all distributions reinvested.
Fund results shown reflect deduction of the maximum sales charge of 3.75% on the $10,000 investment.1 Thus, the net amount invested was $9,625.2
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Year ended Sept. 30th | American High-Income Trust | Lipper High Current Yield Bond Funds Index4 | Citigroup Broad Investment-Grade (BIG) Bond Index3 | Credit Suisse High Yield Index3 | Consumer Price Index (inflation)5 | |||||||||||||||
2/19/88 | $ | 9,625 | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 10,000 | ||||||||||
1988 | 10,182 | 10,475 | 10,222 | 10,447 | 10,328 | |||||||||||||||
1989 | 11,189 | 10,935 | 11,367 | 11,026 | 10,776 | |||||||||||||||
1990 | 10,735 | 9,570 | 12,237 | 10,047 | 11,440 | |||||||||||||||
1991 | 13,873 | 12,290 | 14,198 | 13,757 | 11,828 | |||||||||||||||
1992 | 16,376 | 15,132 | 15,999 | 16,573 | 12,181 | |||||||||||||||
1993 | 18,764 | 17,473 | 17,627 | 19,172 | 12,509 | |||||||||||||||
1994 | 19,066 | 17,899 | 17,063 | 19,831 | 12,879 | |||||||||||||||
1995 | 21,604 | 20,178 | 19,461 | 22,619 | 13,207 | |||||||||||||||
1996 | 24,570 | 22,644 | 20,423 | 25,054 | 13,603 | |||||||||||||||
1997 | 28,176 | 26,120 | 22,406 | 28,994 | 13,897 | |||||||||||||||
1998 | 27,491 | 25,688 | 24,975 | 28,842 | 14,103 | |||||||||||||||
1999 | 29,721 | 27,037 | 24,908 | 29,980 | 14,474 | |||||||||||||||
2000 | 31,295 | 27,021 | 26,632 | 30,555 | 14,974 | |||||||||||||||
2001 | 30,218 | 23,569 | 30,110 | 29,050 | 15,371 | |||||||||||||||
2002 | 28,442 | 22,814 | 32,632 | 29,877 | 15,603 | |||||||||||||||
2003 | 38,197 | 28,862 | 34,423 | 38,257 | 15,966 | |||||||||||||||
2004 | 42,235 | 32,215 | 35,738 | 43,352 | 16,371 | |||||||||||||||
2005 | 45,421 | 34,421 | 36,783 | 46,089 | 17,138 | |||||||||||||||
2006 | 49,174 | 36,744 | 38,147 | 49,667 | 17,491 | |||||||||||||||
2007 | 53,103 | 39,586 | 40,148 | 53,807 | 17,973 | |||||||||||||||
2008 | 46,800 | 35,054 | 41,947 | 48,410 | 18,861 | |||||||||||||||
2009 | 53,376 | 39,311 | 46,553 | 57,069 | 18,618 |
1As outlined in the prospectus, the sales charge is reduced for accounts (and aggregated investments) of $100,000 or more and is eliminated for purchases of $1 million or more. There is no sales charge on dividends or capital gain distributions that are reinvested in additional shares. |
2The maximum initial sales charge was 4.75% prior to January 10, 2000. |
3The market indexes are unmanaged, and their results include reinvested distributions but do not reflect the effect of sales charges, commissions or expenses. |
4Results of the Lipper Index reflect fund expenses but do not reflect any applicable front-end sales charges. If any applicable front-end sales charges were included, results of the index would be lower. |
5Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. |
6For the period February 19 through September 30, 1988 (when the fund began operations). |
Past results are not predictive of results in future periods. The results shown are before taxes on fund distributions and sale of fund shares.
Average annual total returns based on a $1,000 investment (for periods ended September 30, 2009)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 9.76 | % | 3.99 | % | 5.62 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 3.75% sales charge. |
The total annual fund operating expense ratio was 0.80% for Class A shares as of September 30, 2009.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 25 and 26 for details.
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Where do we go from here?
Perspectives from your fund’s portfolio counselors
When the fund began its fiscal year last October, the world was in the midst of an economic storm. With the global credit crisis deepening and concerns about liquidity and solvency in the financial system rising to new heights, the fall of 2008 marked some of the greatest volatility in the stock market’s history. For the three-month period from August 31, 2008, through November 30, 2008, Standard & Poor’s 500 Composite Index plummeted 30% and the Lipper High Current Yield Bond Funds Index dropped 29%.
Since then, markets have stabilized, and in recent months, stock and bond prices have rallied. While some believe the worst is over, the global economy remains weak and the future is uncertain.
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“In a world of lowered income, high yield can be an important part of shareholders’ income-generating assets, as long as investors recognize there is a combination of bond and equity risk and are able to hold on through various market cycles.”
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David Barclay
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“This has really been an unusual time period in the markets. The breadth, magnitude and speed of the declines around the world and throughout different parts of the investment universe were extraordinary,” says David Barclay, president of American High-Income Trust. “After a difficult start to the 2009 fiscal year, the markets have begun to return to normal, with fundamental value coming closer to reasserting itself. But that doesn’t mean there won’t be continued volatility. The economy is recovering but remains weak, and there are still a lot of companies that have not fixed their balance sheets.”
So where does this leave shareholders going forward? We talk with Barclay, along with three of the fund’s other portfolio counselors — Abner Goldstine, David Daigle and Marc Linden — for their insights into what has happened this past year and how to manage expectations going forward.
Describe the impact the global credit crisis has had on the high-yield bond market.
Goldstine: As a result of the global credit crisis, investors essentially became reluctant to own any risk-related investments, so they sold all but the highest quality securities. That put substantial selling pressure on the prices of risk-related securities and high-yield issues in particular. It also raised questions about whether companies with near-term maturities would be able to refinance those maturities. Financial markets not only went into a free fall, but activity came to a halt, so it was both difficult to sell outstanding bonds and difficult for potential borrowers to secure credit either from the banks or from the public market. Bond prices went down to a greater extent than would have been justified by any issuer’s fundamentals.
Daigle: Overall, the credit shock was not as much a function of the underlying companies performing badly as it was a massive deleveraging event. Much of the leverage that had been building in the system for many years was unwound very rapidly in the fall of 2008. Hedge funds, commercial and investment banks, and structured vehicles were all deleveraging by selling assets. The solvency of core financial institutions was being questioned, and no one quite knew how the government would react or whether its actions would have positive or negative consequences. There were concerns about a catastrophic, Great Depression-like scenario unfolding. After several unprecedented actions, the government has largely succeeded in stabilizing the core of the financial system, and concerns about worst-case scenarios have abated. As a result of this stabilization, risk premiums on financial assets, including high-yield bonds, have declined to more normal levels.
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Why didn’t fundamental research protect investors more during this downturn?
Barclay: In the fall of 2008, losses in highly leveraged areas such as structured investment vehicles and hedge funds — combined with a lack of new money coming into the market and a weakening economy — resulted in forced selling throughout the market. As forced sellers, these investors were looking to sell anything that was liquid, regardless of its long-term value. That produced a broad-brush, indiscriminate decline in prices across the board. The market didn’t distinguish between companies with fairly well-structured balance sheets and those that were in trouble. Research did not necessarily help as market prices were driven by factors other than company and industry fundamentals. Over the long run, however, our fundamental research should help us to focus on companies better able to survive in a weak economic environment and to provide long-term value.
Linden: It’s not a question of whether research worked or not. Research helps us decide which companies will survive over longer periods of time. It does not determine over a given day, week or month whether prices are going to be up or down. Over the short term, the market drives returns, not the company.
Daigle: As traditional long-term, high-yield investors, we are heavily focused on bottom-up research in addition to broad macroeconomic factors. We study companies and industries in depth. However, much of what was happening in the investment universe in recent years was driven by market participants using significant leverage, such as hedge funds, proprietary trading desks, and even traditional banks. These firms do many things we do not, such as using leveraged structured vehicles, using credit default swaps, buying on margin, and short selling. Because we are not active participants in these areas, we did not fully appreciate the magnitude of leverage that was building in the system. What ultimately mattered in 2008 was not fundamental research, but understanding the systemic risks associated with the massive leverage that had accumulated in such firms as Lehman Brothers, Goldman Sachs and AIG.
Where are we now in the market cycle?
Goldstine: The answer depends on what happens to the economy. We expect that the worst of the storm has passed. If at some point in 2010 we see some modest increases in employment, as I think we will, more and more companies should generate the earnings and cash flow necessary to service their debt. But there still may be problems ahead. In addition to unemployment, there are problems still to surface in the credits of the commercial real estate market and the expectation that defaults will continue in the residential mortgage market.
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“Because of the uncertainty of the economic environment, this is a period where it’s useful to try to find issuers with relatively short maturities, a good yield and a business that has the ability to withstand further economic problems.”
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Abner Goldstine
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Linden: Now that the debt markets have largely recovered and companies can, for the most part, easily access the high-yield market, the market runs the risk of beginning to fund companies inappropriately once again. So we’re now back at a time when selection will again be especially important; companies are starting to come to market that really shouldn’t be funded because their business models are not sufficiently robust to support the leverage they’re incurring. The roots of the next downturn will be sown in the emergence from this downturn. We need to make sure that the companies we put into our portfolios will be those that will survive the next cycle. We need to focus not on the exuberance of the market but on the dangers of the next cycle. That’s part of a bond investor’s job. We need to worry about the things that everyone else is celebrating because, oftentimes, celebrations can lead to overindulgence.
What other perspectives did investors gain from the past down cycle?
Barclay: It’s important to consider both market cycles and economic cycles as part of any long-term investment horizon. As we all learned in 2002 and 2008, debt markets for new financing can close down suddenly and dramatically. Companies need buffers and some flexibility. In addition to thinking about the market cycle, you need to think about the economic cycle and what may happen with an investment when the economy is weaker than you had expected. It goes back to the importance of research and realizing that research is not about daily or monthly fluctuations in the market, but whether companies can survive extreme fluctuations in the market over a longer period of time.
Goldstine: The first lesson: When there is little liquidity in general, it is particularly important to try to be in the part of the market that will be the most liquid. That is going to be determined, in part, by the size of the issue and the quality of the issuer. The second lesson: Continue to re-evaluate your expectations and thoughts to consider a variety of scenarios that could happen and to be aware of the consequences of these scenarios.
Daigle: I learned that you cannot have healthy high-yield issuers when the large core financial institutions are sick. The large core financial institutions have a significant influence on overall credit availability, and high-yield issuers need ongoing access to credit. We need to focus more on the health of these institutions and, more broadly, on macroeconomic issues that could impact credit availability. Are there asset bubbles forming? If they deflate, what will be the impact on access to credit? What is the impact from relatively new instruments like credit derivatives that are used to amplify leverage? In the future, we will place a greater emphasis on market and macroeconomic issues.
During the worst of the downfall, did you have any doubts about your investment approach?
Linden: Doubt is a daily part of what we do. Re-asking the question, challenging and re-challenging our theses are an essential part of our process. Assumption of certainty is very calming because you don’t have to question yourself, but that’s not the way the world works. We’re constantly challenging ourselves and each other: What would it take to change our investment view? What would it take to make an attractive investment unattractive or vice versa? I hope we continue to doubt everything we do every day.
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David Daigle
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“When [the] economic system gets into trouble, we will not be immune to that; we will be pressured significantly. Yet for long-term shareholders, it’s still about picking the right industries and the right companies.”
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Looking ahead, where do you see opportunities?
Barclay: Right now, there are a lot of ways companies are looking at their balance sheets and sustainable debt loads; our analysts are particularly well-equipped to understand these changes and which companies are worth holding in our portfolio.
One theme going forward is that the total amount of debt and leverage will be less. A number of leveraged buyouts (LBOs) will need to reduce their debt ratios before they can refinance. They can do that in a number of ways, one of which is through out-of-court exchange offerings, which allow companies to restructure their liabilities outside of bankruptcy court. In situations where you have a good company but debt levels are high and now the business prospects are weaker than expected, an exchange offering can create a more sustainable leverage structure. There are more of these kinds of exchange offers and negotiated restructurings in this cycle, particularly for the most recent, highly leveraged LBOs, and they can be mutually beneficial to the company and the bondholder. Sometimes, we are even involved in the negotiations, so we may be able to help shape the outcome.
Goldstine: The lower quality part of the market has recovered significantly this year. We question how much more upside there is, but even more importantly, we think about where the downside is. Because of the uncertainty of the economic environment, this is a period where it’s useful to try to find issuers with relatively short maturities, a good yield and a business that has the ability to withstand further economic problems. I see opportunities in those parts of the market that are least subject to a cyclical downturn.
Daigle: I am looking at companies that have very attractive liquidity profiles in which there are no near-term maturities and the long-term franchise looks good.
What major headwinds do you expect over the next several years?
Goldstine: The economy. It’s not clear if we are in a period of recovery now or in a period in which the economy is healing. The general expectation is that the course will be fairly slow and measured, so it may be some time before we get into an environment where the economy is operating at its normal capacity. Until then, you have to be concerned about which credits will survive and which will not. You have to be conscious not only of the structure of a balance sheet but also the liquidity a company has and its potential ability to repay maturing debt. A company can be in good shape in terms of its balance sheet, but it may not have the liquidity to meet its obligations on a short-term basis. And that can turn into a long-term problem.
Daigle: One area of remaining concern is the real estate markets, both commercial and residential. Neither area is out of the woods. And, as defaults and foreclosures occur over the next several years, this could have an impact on availability of credit. Price stabilization in real estate markets should have a positive impact on the financial system, while continuing price erosion could lead to further problems in the credit markets.
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“Research helps us decide which companies will survive over longer periods of time. It does not determine over a given day, week or month whether prices are going to be up or down. Over the short term, the market drives returns, not the company.”
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[photo of Marc Linden]
Marc Linden
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Another concern is the resolution of some LBOs. If the economy doesn’t improve, companies won’t be able to refinance their debt and we could see some LBOs fail. How that impacts high yield will depend on how widespread it is and what conclusions investors draw from that. If the failures are considered to be just a handful of unique cases, it may not spill into the broader market. But if investors begin to worry about the ability of companies to pay down debt, it could put pressure on prices.
Linden: I think the headwinds will be of investors’ own making, in the sense that there’s always the risk that this cycle creates the next big problem — that the returns generated in the market over the last six months create an exuberance that results in the problems of the next downturn. The markets are cyclical and that tends to happen. People fund companies that shouldn’t be funded, and eventually, those investments come back to haunt the market.
What role should a high-yield bond fund play in a diversified portfolio?
Goldstine: For longer term investors who have the ability to undergo some fluctuations in the value of their holdings, it provides an intermediate step between very comfortable investments, which typically offer lower returns and lower volatility, and the equity markets, which typically offer higher returns and higher volatility.
Linden: We talk about the value of long-term fundamentals in differentiating between companies that can survive the long term and those that cannot. But it’s also important to recognize the impact of volatility on security prices and, therefore, the value of an investment in the short term. We hope that investors take this into consideration in structuring their personal portfolios. We think that high yield can provide an attractive investment opportunity, but it should be part of a balanced portfolio. It shouldn’t be the entire portfolio.
Daigle: It’s important to understand that high yield is one part of a broader economic system, and when that economic system gets into trouble, we will not be immune to that; we will be pressured significantly. Yet for long-term shareholders, it’s still about picking the right industries and the right companies. What matters most is that we invest in companies that can manage through volatile periods and still be attractive investments.
Barclay: While we are definitely disappointed that the high-yield market — and American High-Income Trust in particular — exhibited more downside volatility than in the past, it still can provide a high source of income relative to other types of assets. In a world of lowered income, high yield can be an important part of shareholders’ income-generating assets, as long as investors recognize there is a combination of bond and equity risk and are able to hold on through various market cycles. n
Summary investment portfolio, September 30, 2009
The following summary investment portfolio is designed to streamline the report and help investors better focus on a fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
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Portfolio by type of security (percent of net assets) | 9/30/2009 | |||
U.S. corporate bonds & notes | 59.1 | |||
Corporate bonds & notes of issuers outside the U.S. | 12.7 | |||
Corporate loans | 8.0 | |||
Bonds & notes of governments & government agencies outside the U.S. | 2.8 | |||
Other | 1.9 | |||
Common stocks & warrants | 2.3 | |||
Convertible securities | 1.1 | |||
Preferred securities | 1.0 | |||
Short-term securities & other assets less liabilities | 11.1 |
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Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds, notes & other debt instruments - 84.57% | (000 | ) | (000 | ) | assets | |||||||||
Corporate bonds, notes & loans - 79.87% | ||||||||||||||
Consumer discretionary - 19.62% | ||||||||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00%-10.875% 2012-2014 (1) | $ | 115,350 | $ | 119,763 | ||||||||||
CCH II, LLC and CCH II Capital Corp. 10.25% 2010 (2) | 62,980 | 71,167 | ||||||||||||
Charter Communications Operating, LLC, Term Loans 6.25%-9.25% 2014 (3) (4) (5) | 47,595 | 46,121 | ||||||||||||
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 2013 (2) | 36,490 | 37,220 | ||||||||||||
CCH I, LLC and CCH I Capital Corp. 11.00% 2015 (2) | 7,475 | 1,420 | ||||||||||||
Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 11.75% 2011 (2) | 6,000 | 45 | 1.83 | % | ||||||||||
Univision Communications Inc.: | ||||||||||||||
First Lien Term Loan B, 2.533% 2014 (3) (4) (5) | 123,170 | 104,569 | ||||||||||||
10.50% 2015 (1) (3) (6) | 144,039 | 111,630 | ||||||||||||
12.00% 2014 (1) | 20,310 | 21,935 | 1.59 | |||||||||||
NTL Cable PLC: | ||||||||||||||
8.75% 2014 | 65,893 | 67,540 | ||||||||||||
9.50% 2016 | 99,825 | 105,565 | ||||||||||||
8.75% 2014 | € | 5,300 | 8,030 | |||||||||||
9.75% 2014 | £ | 3,000 | 5,037 | |||||||||||
9.125% 2016 | $ | 36,015 | 37,185 | 1.49 | ||||||||||
Michaels Stores, Inc. 10.00% 2014 | 95,825 | 94,867 | .63 | |||||||||||
AMC Entertainment Inc. 8.75% 2019 | 68,675 | 71,250 | .47 | |||||||||||
Toys "R" Us, Inc. 7.625% 2011 | 57,410 | 56,836 | .38 | |||||||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 54,303 | 55,118 | .37 | |||||||||||
FCE Bank PLC 7.125% 2013 | € | 24,150 | 32,878 | |||||||||||
Ford Motor Co. 9.50% 2011 | $ | 1,000 | 1,015 | .22 | ||||||||||
Other securities | 1,898,218 | 12.64 | ||||||||||||
2,947,409 | 19.62 | |||||||||||||
Telecommunication services - 10.43% | ||||||||||||||
Nextel Communications, Inc.: | ||||||||||||||
Series F, 5.95% 2014 | 120,790 | 107,503 | ||||||||||||
Series D, 7.375% 2015 | 74,753 | 67,465 | ||||||||||||
Series E, 6.875% 2013 | 23,013 | 21,460 | ||||||||||||
Sprint Capital Corp. 7.625%-8.75% 2011-2032 | 10,750 | 10,856 | ||||||||||||
Sprint Nextel Corp. 0.683% 2010 (3) | 5,120 | 4,974 | 1.41 | |||||||||||
Qwest Capital Funding, Inc.: | ||||||||||||||
7.25% 2011 | 95,650 | 96,128 | ||||||||||||
7.90% 2010 | 23,185 | 23,591 | ||||||||||||
Qwest Communications International Inc. 7.25%-8.00% 2011-2015 (1) | 56,475 | 57,343 | ||||||||||||
Qwest Corp. 7.875%-8.875% 2011-2012 | 15,600 | 16,242 | 1.29 | |||||||||||
Cricket Communications, Inc.: | ||||||||||||||
9.375% 2014 | 91,530 | 93,361 | ||||||||||||
7.75% 2016 (1) | 92,450 | 94,299 | 1.25 | |||||||||||
Windstream Corp.: | ||||||||||||||
8.125% 2013 | 89,875 | 92,796 | ||||||||||||
7.00%-8.625% 2016-2019 | 24,800 | 25,263 | ||||||||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 31,370 | 32,178 | 1.00 | |||||||||||
Wind Acquisition SA 11.75% 2017 (1) | 90,700 | 102,718 | .68 | |||||||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 74,600 | 76,652 | .51 | |||||||||||
Digicel Group Ltd. 12.00% 2014 (1) | 61,825 | 69,553 | .46 | |||||||||||
Other securities | 574,948 | 3.83 | ||||||||||||
1,567,330 | 10.43 | |||||||||||||
Industrials - 9.91% | ||||||||||||||
Nielsen Finance LLC and Nielsen Finance Co.: | ||||||||||||||
10.00% 2014 | 101,500 | 102,515 | ||||||||||||
11.50% 2016 | 58,700 | 61,929 | ||||||||||||
0%/12.50% 2016 (7) | 149,450 | 118,439 | ||||||||||||
11.625% 2014 | 14,650 | 15,529 | ||||||||||||
Nielsen Finance LLC, Term Loans 2.249%-8.50% 2013-2017 (3) (4) (5) | 42,652 | 41,571 | 2.26 | |||||||||||
RailAmerica Inc. 9.25% 2017 (1) | 66,650 | 70,149 | .47 | |||||||||||
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013 | 61,577 | 63,116 | .42 | |||||||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.283% 2014 (3) (4) (5) | 80,417 | 61,921 | .41 | |||||||||||
Other securities | 952,722 | 6.35 | ||||||||||||
1,487,891 | 9.91 | |||||||||||||
Financials - 9.33% | ||||||||||||||
Ford Motor Credit Co.: | ||||||||||||||
3.26% 2012 (3) | 85,585 | 77,133 | ||||||||||||
5.549%-9.875% 2009-2016 (3) | 127,430 | 125,789 | 1.35 | |||||||||||
Realogy Corp.: | ||||||||||||||
Term Loan B, 3.254% 2013 (3) (4) (5) | 94,064 | 79,784 | ||||||||||||
Term Loans 3.254%-13.50% 2013-2017 (3) (4) (5) | 89,251 | 86,054 | ||||||||||||
10.50%-11.75% 2014 (3) (6) | 33,367 | 23,977 | 1.27 | |||||||||||
CIT Group Inc.: | ||||||||||||||
Term Loan, 13.00% 2012 (3) (4) (5) | 131,000 | 135,539 | ||||||||||||
0.42%-7.625% 2009-2013 (3) | 76,504 | 54,143 | 1.26 | |||||||||||
Other securities | 818,324 | 5.45 | ||||||||||||
1,400,743 | 9.33 | |||||||||||||
Health care - 8.49% | ||||||||||||||
Tenet Healthcare Corp.: | ||||||||||||||
8.875% 2019 (1) | 158,730 | 168,254 | ||||||||||||
7.375%-10.00% 2013-2018 (1) | 78,785 | 80,748 | 1.66 | |||||||||||
Elan Finance PLC and Elan Finance Corp.: | ||||||||||||||
8.875% 2013 | 70,975 | 71,862 | ||||||||||||
4.44%-8.75% 2011-2016 (1) (3) (8) | 133,163 | 131,124 | 1.35 | |||||||||||
HCA Inc.: | ||||||||||||||
Term Loan B1, 2.533% 2013 (3) (4) (5) | 25,788 | 24,409 | ||||||||||||
7.875%-9.625% 2014-2020 (1) (3) (6) | 129,036 | 133,354 | 1.05 | |||||||||||
HealthSouth Corp.: | ||||||||||||||
7.218% 2014 (3) | 57,305 | 56,445 | ||||||||||||
10.75% 2016 | 76,190 | 83,047 | ||||||||||||
Term Loan B, 2.55% 2013 (3) (4) (5) | 12,698 | 12,247 | 1.01 | |||||||||||
VWR Funding, Inc. 11.25% 2015 (3) (6) | 119,260 | 109,421 | .73 | |||||||||||
PTS Acquisition Corp. 9.50% 2015 (3) (6) | 86,500 | 75,688 | .50 | |||||||||||
Bausch & Lomb Inc. 9.875% 2015 | 53,025 | 55,809 | .37 | |||||||||||
Other securities | 273,436 | 1.82 | ||||||||||||
1,275,844 | 8.49 | |||||||||||||
Information technology - 7.24% | ||||||||||||||
NXP BV and NXP Funding LLC: | ||||||||||||||
10.00% 2013 (9) | 77,049 | 76,375 | ||||||||||||
7.875% 2014 | 111,615 | 88,176 | ||||||||||||
9.50% 2015 | 112,265 | 74,937 | ||||||||||||
3.259% 2013 (3) | 64,365 | 46,745 | ||||||||||||
3.746%-8.625% 2013-2015 (3) | € | 95,203 | 94,564 | 2.53 | ||||||||||
Freescale Semiconductor, Inc.: | ||||||||||||||
8.875% 2014 | $ | 85,928 | 66,164 | |||||||||||
Term Loan B, 12.50% 2014 (4) (5) | 63,687 | 64,218 | ||||||||||||
Term Loan B, 2.011% 2013 (3) (4) (5) | 30,020 | 24,129 | ||||||||||||
4.174%-10.125% 2014-2016 (3) (6) | 106,998 | 73,411 | 1.52 | |||||||||||
Sanmina-SCI Corp.: | ||||||||||||||
8.125% 2016 | 87,707 | 82,444 | ||||||||||||
3.049%-6.75% 2010-2014 (1) (3) (8) | 73,080 | 67,932 | 1.00 | |||||||||||
First Data Corp., Term Loan B2, 3.036% 2014 (3) (4) (5) | 79,514 | 68,670 | .46 | |||||||||||
Other securities | 259,059 | 1.73 | ||||||||||||
1,086,824 | 7.24 | |||||||||||||
Materials - 4.58% | ||||||||||||||
Georgia Gulf Corp., Term Loans 6.50%-10.00% 2011-2013 (3) (4) (5) (10) (11) | 45,137 | 43,341 | .29 | |||||||||||
Other securities | 644,586 | 4.29 | ||||||||||||
687,927 | 4.58 | |||||||||||||
Utilities - 4.41% | ||||||||||||||
Edison Mission Energy 7.00%-7.75% 2013-2027 | 194,075 | 162,015 | ||||||||||||
Midwest Generation, LLC, Series B, 8.56% 2016 (4) | 48,812 | 49,544 | ||||||||||||
Homer City Funding LLC 8.734% 2026 (4) | 9,104 | 8,604 | 1.47 | |||||||||||
Intergen Power 9.00% 2017 (1) | 74,950 | 77,573 | .52 | |||||||||||
Other securities | 365,194 | 2.42 | ||||||||||||
662,930 | 4.41 | |||||||||||||
Consumer staples - 3.31% | ||||||||||||||
Other securities | 497,846 | 3.31 | ||||||||||||
Energy - 2.55% | ||||||||||||||
Other securities | 383,086 | 2.55 | ||||||||||||
Total corporate bonds, notes & loans | 11,997,830 | 79.87 | ||||||||||||
Bonds & notes of governments & government agencies outside the U.S. - 2.84% | ||||||||||||||
Other securities | 426,331 | 2.84 | ||||||||||||
Mortgage-backed obligations - 1.42% | ||||||||||||||
Other securities | 213,735 | 1.42 | ||||||||||||
Other - 0.44% | ||||||||||||||
U.S. Treasury 1.375%-6.00% 2012-2026 | 51,000 | 56,546 | .38 | |||||||||||
Other securities | 8,679 | .06 | ||||||||||||
65,225 | .44 | |||||||||||||
Total bonds, notes & other debt instruments (cost: $12,624,510,000) | 12,703,121 | 84.57 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Convertible securities - 1.07% | (000 | ) | (000 | ) | assets | |||||||||
Other - 1.05% | ||||||||||||||
Linear Technology Corp., Series A, 3.00% convertible notes 2027 | $ | 61,000 | $ | 59,170 | .40 | % | ||||||||
Other securities | 97,931 | .65 | ||||||||||||
157,101 | 1.05 | |||||||||||||
Miscellaneous - 0.02% | ||||||||||||||
Other convertible securities in initial period of acquisition | 3,469 | .02 | ||||||||||||
Total convertible securities (cost: $136,207,000) | 160,570 | 1.07 | ||||||||||||
Shares | Percent | |||||||||||||
Value | of net | |||||||||||||
Preferred securities - 0.99% | (000 | ) | assets | |||||||||||
Financials - 0.99% | ||||||||||||||
Other securities | $ | 148,754 | .99 | % | ||||||||||
Total preferred securities (cost: $192,056,000) | 148,754 | .99 | ||||||||||||
Shares | Percent | |||||||||||||
Value | of net | |||||||||||||
Common stocks - 2.27% | (000 | ) | assets | |||||||||||
Other - 2.27% | ||||||||||||||
Georgia Gulf Corp. (8) (9) (10) (12) | 4,809,206 | $ | 129,848 | .87 | % | |||||||||
Ford Motor Co. (12) | 1,620,210 | 11,682 | .08 | % | ||||||||||
Sprint Nextel Corp., Series 1 (12) | 777,508 | 3,071 | .02 | % | ||||||||||
Other securities | 196,078 | 1.30 | % | |||||||||||
Total common stocks (cost: $319,188,000) | 340,679 | 2.27 | ||||||||||||
Shares | Percent | |||||||||||||
Value | of net | |||||||||||||
Warrants - 0.00% | (000 | ) | assets | |||||||||||
Other - 0.00% | ||||||||||||||
Other securities | $ | 230 | .00 | % | ||||||||||
Total warrants (cost: $723,000) | 230 | .00 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Short-term securities - 11.09% | (000 | ) | (000 | ) | assets | |||||||||
U.S. Treasury Bills 0.18%-0.34% due 10/15/2009-7/15/2010 | $ | 456,000 | $ | 455,125 | 3.03 | % | ||||||||
Freddie Mac 0.16%-0.245% due 10/5/2009-4/19/2010 | 337,622 | 337,407 | 2.25 | |||||||||||
Federal Home Loan Bank 0.15%-0.20% due 10/21-12/16/2009 | 236,091 | 236,056 | 1.57 | |||||||||||
Fannie Mae 0.17%-0.54% due 11/4/2009-7/13/2010 | 142,342 | 142,288 | .95 | |||||||||||
Abbott Laboratories 0.14%-0.20% due 10/14-12/1/2009 (1) | 84,348 | 84,325 | .56 | |||||||||||
Coca-Cola Co. 0.23%-0.25% due 11/13/2009-1/13/2010 (1) | 83,200 | 83,142 | .55 | |||||||||||
Private Export Funding Corp. 0.19%-0.24% due 10/19-12/1/2009 (1) | 78,400 | 78,380 | .52 | |||||||||||
Other securities | 249,245 | 1.66 | ||||||||||||
Total short-term securities (cost: $1,665,706,000) | 1,665,968 | 11.09 | ||||||||||||
Total investment securities (cost: $14,938,390,000) | 15,019,322 | 99.99 | ||||||||||||
Other assets less liabilities | 1,434 | .01 | ||||||||||||
Net assets | $ | 15,020,756 | 100.00 | % |
"Miscellaneous" securities include holdings in their initial period of acquisition that have not previously been publicly disclosed. |
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
Investments in affiliates |
A company is considered to be an affiliate of the fund under the Investment Company Act of 1940 if the fund's holdings in that company represent 5% or more of the outstanding voting shares of that company. The fund's affiliated holdings listed below are either shown in the preceding summary investment portfolio or included in the value of "Other securities" under their respective industry sectors. Further details on these holdings and related transactions during the year ended September 30, 2009, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income | ) | Value of affiliates at 9/30/09 (000 | ) | |||||||||||||||||
Georgia Gulf Corp. (8) (9) (12) | - | 4,809,206 | - | 4,809,206 | $ | - | $ | 129,848 | ||||||||||||||||
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 2011 (3) (4) (5) (11) | $ | - | $ | 25,640,000 | $ | - | $ | 25,640,000 | 291 | 24,102 | ||||||||||||||
Georgia Gulf Corp., Term Loan B, 10.00% 2013 (3) (4) (5) | $ | - | $ | 19,496,523 | $ | - | $ | 19,496,523 | 772 | 19,239 | ||||||||||||||
American Media Operation 14.00% 2013 (1) (3) (6) | $ | - | $ | 44,909,399 | $ | - | $ | 44,909,399 | 5,451 | 28,293 | ||||||||||||||
American Media Operation 9.00% 2013 (1) (6) | $ | - | $ | 3,249,793 | $ | - | $ | 3,249,793 | 317 | 2,015 | ||||||||||||||
American Media Operations, Inc. (1) (8) (12) | - | 823,272 | - | 823,272 | - | 8 | ||||||||||||||||||
ZiLOG, Inc. (12) | 1,140,500 | - | - | 1,140,500 | - | 2,954 | ||||||||||||||||||
Clarent Hospital Corp. (8) (12) | 576,849 | - | - | 576,849 | - | 29 | ||||||||||||||||||
$ | 6,831 | $ | 206,488 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. |
(1) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $3,456,656,000, which represented 23.01% of the net assets of the fund. |
(2) Scheduled interest and/or principal payment was not received. |
(3) Coupon rate may change periodically. |
(4) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(5) Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans, including those in "Other securities," was $1,206,728,000, which represented 8.03% of the net assets of the fund. |
(6) Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
(7) Step bond; coupon rate will increase at a later date. |
(8) Valued under fair value procedures adopted by authority of the board of trustees.The total value of all such securities, including those in "Other securities," was $402,339,000, which represented 2.68% of the net assets of the fund. |
(9) Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Acquisition | Cost | Value | Percent of | ||||||||||
date(s) | (000) | (000) | net assets | ||||||||||
Georgia Gulf Corp. | 9/28/2006-7/29/2009 | $ | 85,188 | $ | 129,848 | .87 | % | ||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | 60,765 | 76,375 | .51 | |||||||||
Other restricted securities | 62,088 | 37,920 | .25 | ||||||||||
Total restricted securities | $ | 208,041 | $ | 244,143 | 1.63 | % |
(10) Represents an affiliated company as defined under the Investment Company Act of 1940. |
(11) Unfunded loan commitment; the total value of all unfunded loan commitments was $12,679,000, which represented .08% of the net assets of the fund. |
(12) Security did not produce income during the last 12 months. |
Key to symbols |
€ = Euros |
£ = British pounds |
The industry classifications shown in the summary investment portfolio were obtained from sources believed to be reliable and are not covered by the Report of Independent Registered Public Accounting Firm. |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at September 30, 2009 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $14,769,010) | $ | 14,812,834 | ||||||
Affiliated issuers (cost: $169,380) | 206,488 | $ | 15,019,322 | |||||
Unrealized appreciation on open forward currency contracts | 41 | |||||||
Receivables for: | ||||||||
Sales of investments | 33,730 | |||||||
Sales of fund's shares | 33,446 | |||||||
Dividends and interest | 285,732 | 352,908 | ||||||
15,372,271 | ||||||||
Liabilities: | ||||||||
Unrealized depreciation on open forward currency contracts | 163 | |||||||
Payables for: | ||||||||
Purchases of investments | 221,694 | |||||||
Bank overdraft | 78,430 | |||||||
Repurchases of fund's shares | 34,271 | |||||||
Dividends on fund's shares | 6,131 | |||||||
Closed forward currency contracts | 23 | |||||||
Investment advisory services | 3,907 | |||||||
Services provided by affiliates | 5,823 | |||||||
Trustees' deferred compensation | 140 | |||||||
Other | 933 | 351,352 | ||||||
Net assets at September 30, 2009 | $ | 15,020,756 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 16,685,990 | ||||||
Distributions in excess of net investment income | (16,338 | ) | ||||||
Accumulated net realized loss | (1,730,256 | ) | ||||||
Net unrealized appreciation | 81,360 | |||||||
Net assets at September 30, 2009 | $ | 15,020,756 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized (1,460,310 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share* | ||||||||||
Class A | $ | 10,274,019 | 998,835 | $ | 10.29 | |||||||
Class B | 549,822 | 53,453 | 10.29 | |||||||||
Class C | 1,212,974 | 117,925 | 10.29 | |||||||||
Class F-1 | 1,481,973 | 144,077 | 10.29 | |||||||||
Class F-2 | 340,867 | 33,139 | 10.29 | |||||||||
Class 529-A | 171,725 | 16,695 | 10.29 | |||||||||
Class 529-B | 21,879 | 2,127 | 10.29 | |||||||||
Class 529-C | 67,891 | 6,600 | 10.29 | |||||||||
Class 529-E | 9,416 | 915 | 10.29 | |||||||||
Class 529-F-1 | 7,576 | 737 | 10.29 | |||||||||
Class R-1 | 17,766 | 1,727 | 10.29 | |||||||||
Class R-2 | 169,749 | 16,503 | 10.29 | |||||||||
Class R-3 | 272,343 | 26,477 | 10.29 | |||||||||
Class R-4 | 171,610 | 16,684 | 10.29 | |||||||||
Class R-5 | 202,421 | 19,679 | 10.29 | |||||||||
Class R-6 | 48,725 | 4,737 | 10.29 | |||||||||
(*) 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 $10.69 each. | ||||||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended September 30, 2009 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Interest (net of non-U.S. | ||||||||
taxes of $26; also includes | ||||||||
$6,831 from affiliates) | $ | 1,144,154 | ||||||
Dividends | 7,321 | $ | 1,151,475 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 40,374 | |||||||
Distribution services | 38,211 | |||||||
Transfer agent services | 12,060 | |||||||
Administrative services | 5,771 | |||||||
Reports to shareholders | 982 | |||||||
Registration statement and prospectus | 2,385 | |||||||
Trustees' compensation | 117 | |||||||
Auditing and legal | 133 | |||||||
Custodian | 237 | |||||||
State and local taxes | 118 | |||||||
Other | 765 | |||||||
Total fees and expenses before reimbursements/waivers | 101,153 | |||||||
Less reimbursements/waivers of fees and expenses: | ||||||||
Investment advisory services | 941 | |||||||
Administrative services | 278 | |||||||
Total fees and expenses after reimbursements/waivers | 99,934 | |||||||
Net investment income | 1,051,541 | |||||||
Net realized loss and unrealized | ||||||||
appreciation on investments, forward currency contracts | ||||||||
and currency: | ||||||||
Net realized loss on: | ||||||||
Investments (net of non-U.S. taxes of $173; also includes $3 net loss from affiliates) | (1,492,307 | ) | ||||||
Forward currency contracts | (1,393 | ) | ||||||
Currency transactions | (3,902 | ) | (1,497,602 | ) | ||||
Net unrealized appreciation (depreciation) on: | ||||||||
Investments | 2,453,765 | |||||||
Forward currency contracts | (782 | ) | ||||||
Currency translations | 1,793 | 2,454,776 | ||||||
Net realized loss and | ||||||||
unrealized appreciation | ||||||||
on investments, forward currency contracts and currency | 957,174 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 2,008,715 | ||||||
(*) Additional information related to class-specific fees and expenses is included in the Notes to Financial Statements. | ||||||||
See Notes to Financial Statements | ||||||||
Statements of changes in net assets | (dollars in thousands) | |||||||
Year ended September 30 | ||||||||
2009 | 2008 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,051,541 | $ | 1,021,310 | ||||
Net realized loss on investments, forward currency contracts and currency transactions | (1,497,602 | ) | (210,963 | ) | ||||
Net unrealized appreciation (depreciation) on investments, forward currency contracts and currency translations | 2,454,776 | (2,410,161 | ) | |||||
Net increase (decrease) in net assets resulting from operations | 2,008,715 | (1,599,814 | ) | |||||
Dividends and distributions paid or accrued to | ||||||||
shareholders | ||||||||
Dividends from net investment income | (1,103,307 | ) | (1,018,627 | ) | ||||
Distributions from net realized gain on investments | - | (25,932 | ) | |||||
Total dividends and distributions paid or accrued to shareholders | (1,103,307 | ) | (1,044,559 | ) | ||||
Net capital share transactions | 2,587,103 | 887,582 | ||||||
Total increase (decrease) in net assets | 3,492,511 | (1,756,791 | ) | |||||
Net assets: | ||||||||
Beginning of year | 11,528,245 | 13,285,036 | ||||||
End of year (including distributions in excess of and undistributed | ||||||||
net investment income:$(16,338) and $42,869, respectively) | $ | 15,020,756 | $ | 11,528,245 | ||||
See Notes to Financial Statements |
Notes to financial statements
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 has 16 share classes consisting of five retail share classes, five 529 college savings plan share classes and six retirement plan share classes. The 529 college savings plan share classes (529-A, 529-B, 529-C, 529-E and 529-F-1) can be used to save for college education. The six retirement plan share classes (R-1, R-2, R-3, R-4, R-5 and R-6) are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 3.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Effective April 21, 2009, Class B and 529-B shares of the fund are not available for purchase.
On May 1, 2009, the fund made an additional retirement plan share class (Class R-6) available for sale pursuant to an amendment to its registration statement filed with the Securities and Exchange Commission (“SEC”). Refer to the fund’s retirement plan prospectus for more details.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
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:
Net asset value – The fund generally determines its net asset value as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
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, including short-term securities purchased with more than 60 days left to maturity, are valued at prices obtained from one or more independent pricing vendors when such prices are available. However, where the investment adviser deems it appropriate to do so, such securities will be valued in good faith at the mean quoted bid and asked prices that are reasonably and timely available (or bid prices, if asked prices are not available) or at prices for securities of comparable maturity, quality and type. Vendors base bond prices on, among other things, valuation matrices that incorporate dealer-supplied valuations, proprietary pricing models and evaluations of the yield curve as of approximately 3:00 p.m. New York time. Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates market value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days or less remaining to maturity. Forward currency contracts are valued at the mean of representative quoted bid and asked prices.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the investment adviser are fair valued as determined in good faith under guidelines adopted 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. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations – Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders – Dividends paid to shareholders are declared daily from net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date.
Currency translation – Assets and liabilities, including investment securities, denominated in currencies other than U.S. dollars are translated into U.S. dollars at the exchange rates in effect on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
Loan transactions – The fund may enter into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal.
2. Risk factors
Investing in the fund may involve certain risks including, but not limited to, those described below.
Lower rated debt securities generally have higher rates of interest and involve greater risk of default or prices changes due to changes in the issuer’s creditworthiness than higher rated debt securities. The market prices of these securities may fluctuate more than higher quality securities and may decline significantly in periods of general economic difficulty. There may be little trading in the secondary market for particular debt securities, which may make them more difficult to value or sell.
The prices of, and the income generated by, most debt securities held by the fund may be affected by changing interest rates and by changes in the effective maturities and credit ratings of these securities. For example, the prices of debt securities in the fund's portfolio generally will decline when interest rates rise and increase when interest rates fall. In addition, falling interest rates may cause an issuer to redeem, "call" or refinance a security before its stated maturity, which may result in the fund having to reinvest the proceeds in lower yielding securities. Debt securities are also subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default. Longer maturity debt securities generally have higher rates of interest and may be subject to greater price fluctuations than shorter maturity debt securities.
The prices of, and the income generated by, the common stocks and other securities held by the fund may decline in response to certain events taking place around the world, including those directly involving the companies whose securities are owned by the fund; conditions affecting the general economy; overall market changes; local, regional or global political, social or economic instability; governmental or governmental agency responses to economic conditions and currency, interest rate and commodity price fluctuations. Investments in securities issued by entities based outside the U.S. may be subject to the risks described above to a greater extent and may also be affected by currency controls; different accounting, auditing, financial reporting, and legal standards and practices; expropriation; changes in tax policy; greater market volatility; differing securities market structures; higher transaction costs; and various administrative difficulties, such as delays in clearing and settling portfolio transactions or in receiving payment of dividends. These risks may be heightened in connection with investments in developing countries. Investments in securities issued by entities domiciled in the U.S. may also be subject to many of these risks. The fund's investment adviser attempts to reduce these risks through diversification of the portfolio and ongoing credit analysis, as well as by monitoring economic and legislative developments, but there can be no assurance that it will be successful at doing so.
3. Taxation and distributions
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended September 30, 2009, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2005, by state tax authorities for tax years before 2004 and by tax authorities outside the U.S. for tax years before 2004.
Non-U.S. 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.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; cost of investments sold; paydowns on fixed-income securities; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
During the year ended September 30, 2009, the fund reclassified $7,225,000 from distributions in excess of net investment income to accumulated net realized loss and $216,000 from distributions in excess of net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.
As of September 30, 2009, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | |||||
Undistributed ordinary income | $ | 43,455 | |||
Post-October currency loss deferrals (realized during the period November 1, 2008, through September 30, 2009)* | (14,028 | ) | |||
Capital loss carryforward expiring 2017† | (407,267 | ) | |||
Post-October capital loss deferrals (realized during the period November 1, 2008, through September 30, 2009)* | (1,259,044 | ) | |||
Gross unrealized appreciation on investment securities | 915,104 | ||||
Gross unrealized depreciation on investment securities | (923,224 | ) | |||
Net unrealized depreciation on investment securities | (8,120 | ) | |||
Cost of investment securities | 15,027,442 | ||||
*These deferrals are considered incurred in the subsequent year. | |||||
†The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while a capital loss carryforward remains. |
The tax character of distributions paid or accrued to shareholders was as follows (dollars in thousands):
Year ended September 30, 2009 | Year ended September 30, 2008 | |||||||||||||||||||||||
Share class | Ordinary income | Long-term capital gains | Total distributions paid or accrued | Ordinary income | Long-term capital gains | Total distributions paid or accrued | ||||||||||||||||||
Class A | $ | 773,043 | - | $ | 773,043 | $ | 730,206 | $ | 18,402 | $ | 748,608 | |||||||||||||
Class B | 43,681 | - | 43,681 | 49,409 | 1,431 | 50,840 | ||||||||||||||||||
Class C | 78,706 | - | 78,706 | 72,541 | 2,038 | 74,579 | ||||||||||||||||||
Class F-1 | 112,760 | - | 112,760 | 102,194 | 2,457 | 104,651 | ||||||||||||||||||
Class F-2* | 13,372 | - | 13,372 | 89 | - | 89 | ||||||||||||||||||
Class 529-A | 12,208 | - | 12,208 | 10,246 | 252 | 10,498 | ||||||||||||||||||
Class 529-B | 1,579 | - | 1,579 | 1,467 | 41 | 1,508 | ||||||||||||||||||
Class 529-C | 4,466 | - | 4,466 | 3,831 | 106 | 3,937 | ||||||||||||||||||
Class 529-E | 670 | - | 670 | 559 | 14 | 573 | ||||||||||||||||||
Class 529-F-1 | 552 | - | 552 | 475 | 11 | 486 | ||||||||||||||||||
Class R-1 | 1,104 | - | 1,104 | 919 | 25 | 944 | ||||||||||||||||||
Class R-2 | 11,518 | - | 11,518 | 10,006 | 274 | 10,280 | ||||||||||||||||||
Class R-3 | 18,748 | - | 18,748 | 15,162 | 381 | 15,543 | ||||||||||||||||||
Class R-4 | 12,118 | - | 12,118 | 10,337 | 246 | 10,583 | ||||||||||||||||||
Class R-5 | 17,558 | - | 17,558 | 11,186 | 254 | 11,440 | ||||||||||||||||||
Class R-6† | 1,224 | - | 1,224 | - | - | - | ||||||||||||||||||
Total | $ | 1,103,307 | - | $ | 1,103,307 | $ | 1,018,627 | $ | 25,932 | $ | 1,044,559 | |||||||||||||
*Class F-2 was offered beginning August 1, 2008. | ||||||||||||||||||||||||
†Class R-6 was offered beginning May 1, 2009. |
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. These fees are based on a declining series of annual rates beginning with 0.30% on the first $60 million of daily net assets and decreasing to 0.135% on such assets in excess of $15 billion. The agreement also provides for monthly fees, accrued daily, based on a declining series of rates beginning with 3.00% on the first $8,333,333 of the fund's monthly gross income and decreasing to 1.50% on such income in excess of $50 million. CRMC waived a portion of its investment advisory services fee commencing on September 1, 2004, and terminating on December 31, 2008. During the year ended September 30, 2009, total investment advisory services fees waived by CRMC were $941,000. As a result, the fee shown on the accompanying financial statements of $40,374,000, which was equivalent to an annualized rate of 0.363%, was reduced to $39,433,000, or 0.354% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has adopted plans of distribution for all share classes, except Classes F-2, R-5 and R-6. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For 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. These classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of September 30, 2009, 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-1, 529-F-1 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 as described below.
Administrative services – The fund has an administrative services agreement with CRMC to provide transfer agent and other related shareholder services for all share classes other than Classes A and B. Each relevant share class pays CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) based on its respective average daily net assets. Each relevant share 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. CRMC has agreed to pay AFS on the fund's behalf for a portion of the transfer agent services fees for some of the retirement plan share classes. For the year ended September 30, 2009, the total administrative services fees paid by CRMC were $278,000 for Class R-2. Administrative services fees are presented gross of any payments made by CRMC. Each 529 share class is subject to an additional administrative services fee payable to the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a declining series of annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related party.
Expenses under the agreements described above for the year ended September 30, 2009, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | ||
CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||
Class A | $19,015 | $11,366 | Not applicable | Not applicable | Not applicable |
Class B | 4,633 | 694 | Not applicable | Not applicable | Not applicable |
Class C | 8,553 | Included in administrative services | $1,285 | $236 | Not applicable |
Class F-1 | 2,732 | 1,691 | 236 | Not applicable | |
Class F-2 | Not applicable | 196 | 16 | Not applicable | |
Class 529-A | 259 | 125 | 26 | $122 | |
Class 529-B | 170 | 17 | 8 | 17 | |
Class 529-C | 485 | 50 | 19 | 49 | |
Class 529-E | 34 | 7 | 1 | 7 | |
Class 529-F-1 | - | 6 | 1 | 5 | |
Class R-1 | 122 | 12 | 16 | Not applicable | |
Class R-2 | 930 | 186 | 609 | Not applicable | |
Class R-3 | 975 | 282 | 162 | Not applicable | |
Class R-4 | 303 | 174 | 22 | Not applicable | |
Class R-5 | Not applicable | 169 | 12 | Not applicable | |
Class R-6* | Not applicable | 7 | -† | Not applicable | |
Total | $38,211 | $12,060 | $4,207 | $1,364 | $200 |
*Class R-6 was offered beginning May 1, 2009.
†Amount less than one thousand.
Trustees’ deferred 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 of $117,000, shown on the accompanying financial statements, includes $131,000 in current fees (either paid in cash or deferred) and a net decrease of $14,000 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. Disclosure of fair value measurements
The fund classifies its assets and liabilities into three levels based on the method used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the fund’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation levels are not necessarily an indication of the risk or liquidity associated with the underlying investment. For example, U.S. government securities are generally high-quality and liquid; however, they are reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following table presents the fund’s valuation levels as of September 30, 2009 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Bonds, notes & other debt instruments: | ||||||||||||||||
Corporate bonds, notes & loans | $ | - | $ | 11,896,018 | $ | 101,812 | $ | 11,997,830 | ||||||||
Bonds & notes of governments & government agencies outside the U.S. | - | 426,331 | - | 426,331 | ||||||||||||
Mortgage-backed obligations | - | 213,735 | - | 213,735 | ||||||||||||
Other | - | 65,225 | - | 65,225 | ||||||||||||
Convertible securities | 16,503 | 144,067 | - | 160,570 | ||||||||||||
Preferred securities | - | 148,754 | - | 148,754 | ||||||||||||
Common stocks | 210,109 | 130,406 | 164 | 340,679 | ||||||||||||
Warrants | 1 | - | 229 | 230 | ||||||||||||
Short-term securities | - | 1,665,968 | - | 1,665,968 | ||||||||||||
Total | $ | 226,613 | $ | 14,690,504 | $ | 102,205 | $ | 15,019,322 | ||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Forward currency contracts (*) | - | $ | (122 | ) | - | $ | (122 | ) |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended September 30, 2009 (dollars in thousands): | ||||||||||||||||||||||||
Beginning value | Net purchases | Net realized | Net unrealized appreciation (†) | Net transfers into | Ending value | |||||||||||||||||||
Investment securities | $ | 67,983 | $ | 10,007 | $ | 4,721 | $ | 3,768 | $ | 15,726 | $ | 102,205 | ||||||||||||
Net unrealized appreciation during the period on Level 3 investment securities held at September 30, 2009 (dollars in thousands) (†): | $ | 8,982 | ||||||||||||||||||||||
(*) Forward currency contracts are not included in the investment portfolio. | ||||||||||||||||||||||||
(†) Net realized gain and unrealized appreciation are included in the related amounts on investments in the statement of operations. |
6. Capital share transactions
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Share class | Sales(1) | Reinvestments of dividends and distributions | Repurchases(1) | Net increase (decrease) | ||||||||||||||||||||||||||||
Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | |||||||||||||||||||||||||
Year ended September 30, 2009 | ||||||||||||||||||||||||||||||||
Class A | $ | 3,153,668 | 371,762 | $ | 647,705 | 76,450 | $ | (2,194,686 | ) | (255,978 | ) | $ | 1,606,687 | 192,234 | ||||||||||||||||||
Class B | 108,890 | 12,953 | 34,327 | 4,084 | (164,888 | ) | (19,243 | ) | (21,671 | ) | (2,206 | ) | ||||||||||||||||||||
Class C | 433,641 | 50,441 | 60,856 | 7,170 | (244,407 | ) | (28,586 | ) | 250,090 | 29,025 | ||||||||||||||||||||||
Class F-1 | 783,541 | 93,073 | 90,817 | 10,741 | (678,655 | ) | (80,004 | ) | 195,703 | 23,810 | ||||||||||||||||||||||
Class F-2 | 312,188 | 36,051 | 9,800 | 1,089 | (49,240 | ) | (5,357 | ) | 272,748 | 31,783 | ||||||||||||||||||||||
Class 529-A | 47,842 | 5,592 | 12,189 | 1,436 | (20,124 | ) | (2,326 | ) | 39,907 | 4,702 | ||||||||||||||||||||||
Class 529-B | 3,755 | 445 | 1,577 | 187 | (2,874 | ) | (335 | ) | 2,458 | 297 | ||||||||||||||||||||||
Class 529-C | 20,117 | 2,338 | 4,456 | 526 | (10,235 | ) | (1,195 | ) | 14,338 | 1,669 | ||||||||||||||||||||||
Class 529-E | 2,574 | 304 | 670 | 79 | (1,226 | ) | (142 | ) | 2,018 | 241 | ||||||||||||||||||||||
Class 529-F-1 | 2,633 | 309 | 549 | 65 | (1,651 | ) | (195 | ) | 1,531 | 179 | ||||||||||||||||||||||
Class R-1 | 8,045 | 928 | 1,081 | 127 | (4,453 | ) | (516 | ) | 4,673 | 539 | ||||||||||||||||||||||
Class R-2 | 64,190 | 7,450 | 11,458 | 1,355 | (43,464 | ) | (5,051 | ) | 32,184 | 3,754 | ||||||||||||||||||||||
Class R-3 | 149,245 | 17,754 | 18,673 | 2,198 | (99,770 | ) | (12,006 | ) | 68,148 | 7,946 | ||||||||||||||||||||||
Class R-4 | 75,335 | 8,636 | 12,091 | 1,427 | (50,394 | ) | (5,883 | ) | 37,032 | 4,180 | ||||||||||||||||||||||
Class R-5 | 163,896 | 19,818 | 16,646 | 1,969 | (141,365 | ) | (16,054 | ) | 39,177 | 5,733 | ||||||||||||||||||||||
Class R-6(2) | 41,389 | 4,663 | 1,199 | 124 | (508 | ) | (50 | ) | 42,080 | 4,737 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 5,370,949 | 632,517 | $ | 924,094 | 109,027 | $ | (3,707,940 | ) | (432,921 | ) | $ | 2,587,103 | 308,623 | ||||||||||||||||||
Year ended September 30, 2008 | ||||||||||||||||||||||||||||||||
Class A | $ | 1,832,026 | 159,405 | $ | 607,542 | 53,246 | $ | (2,022,226 | ) | (176,467 | ) | $ | 417,342 | 36,184 | ||||||||||||||||||
Class B | 58,432 | 5,104 | 37,258 | 3,262 | (158,870 | ) | (13,890 | ) | (63,180 | ) | (5,524 | ) | ||||||||||||||||||||
Class C | 246,125 | 21,376 | 55,146 | 4,833 | (250,750 | ) | (21,944 | ) | 50,521 | 4,265 | ||||||||||||||||||||||
Class F-1 | 734,169 | 63,613 | 80,516 | 7,080 | (507,861 | ) | (44,805 | ) | 306,824 | 25,888 | ||||||||||||||||||||||
Class F-2(3) | 15,292 | 1,418 | 62 | 6 | (708 | ) | (68 | ) | 14,646 | 1,356 | ||||||||||||||||||||||
Class 529-A | 28,484 | 2,472 | 10,354 | 909 | (16,441 | ) | (1,438 | ) | 22,397 | 1,943 | ||||||||||||||||||||||
Class 529-B | 2,433 | 211 | 1,488 | 130 | (2,201 | ) | (193 | ) | 1,720 | 148 | ||||||||||||||||||||||
Class 529-C | 13,564 | 1,179 | 3,879 | 340 | (9,536 | ) | (836 | ) | 7,907 | 683 | ||||||||||||||||||||||
Class 529-E | 1,899 | 165 | 565 | 50 | (1,241 | ) | (110 | ) | 1,223 | 105 | ||||||||||||||||||||||
Class 529-F-1 | 1,651 | 143 | 479 | 42 | (944 | ) | (81 | ) | 1,186 | 104 | ||||||||||||||||||||||
Class R-1 | 5,262 | 459 | 908 | 80 | (4,723 | ) | (410 | ) | 1,447 | 129 | ||||||||||||||||||||||
Class R-2 | 52,030 | 4,528 | 10,105 | 886 | (44,002 | ) | (3,829 | ) | 18,133 | 1,585 | ||||||||||||||||||||||
Class R-3 | 103,670 | 8,970 | 15,333 | 1,345 | (78,446 | ) | (6,830 | ) | 40,557 | 3,485 | ||||||||||||||||||||||
Class R-4 | 71,390 | 6,189 | 10,447 | 917 | (47,098 | ) | (4,125 | ) | 34,739 | 2,981 | ||||||||||||||||||||||
Class R-5 | 91,071 | 7,933 | 10,522 | 925 | (69,473 | ) | (6,009 | ) | 32,120 | 2,849 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 3,257,498 | 283,165 | $ | 844,604 | 74,051 | $ | (3,214,520 | ) | (281,035 | ) | $ | 887,582 | 76,181 | ||||||||||||||||||
(1)Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
(2)Class R-6 was offered beginning May 1, 2009. | ||||||||||||||||||||||||||||||||
(3)Class F-2 was offered beginning August 1, 2008. |
7. Investment transactions
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $6,221,997,000 and $4,046,632,000, respectively, during the year ended September 30, 2009.
8. Forward currency contracts
The fund may enter into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund enters into these contracts to manage its exposure to changes in exchange rates. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates.
On a daily basis, the fund values forward currency contracts based on the applicable exchange rate and records unrealized appreciation or depreciation for open forward currency contracts in the statement of assets and liabilities. 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. Closed forward currency contracts that have not reached their expiration date are included in the respective receivables or payables for closed forward currency contracts in the statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the statement of operations. As of September 30, 2009, the fund had open open forward currency contracts to sell currencies as follows (amounts in thousands):
Contract Amount | Unrealized (depreciation) appreciation at | ||||||||||||
Sales: | Settlement date | Receive | Deliver | September 30, 2009 | |||||||||
Euros | 10/15/2009 | $ | 14,510 | € | 10,000 | $ | (132 | ) | |||||
Euros | 10/15/2009 | $ | 2,612 | € | 1,800 | (23 | ) | ||||||
Euros | 10/19/2009 | $ | 220 | € | 150 | 1 | |||||||
Euros | 10/19/2009 | $ | 1,471 | € | 1,000 | 7 | |||||||
Euros | 10/21/2009 | $ | 221 | € | 150 | 2 | |||||||
Euros | 10/23/2009 | $ | 10,815 | € | 7,365 | 31 | |||||||
Euros | 10/30/2009 | $ | 3,433 | € | 2,350 | (8 | ) | ||||||
Euros | 12/2/2009 | $ | 1,098 | € | 750 | - | |||||||
Forward currency contracts - net | $ | (122 | ) |
9. Subsequent events
As of November 12, 2009, the date the financial statements were available to be issued, no subsequent events or transactions had occurred that would have materially impacted the financial statements as presented.
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return(3) (4) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers(4) | Ratio of net income to average net assets(4) | ||||||||||||||||||||||||||||||||||||||||
Class A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | $ | 10.01 | $ | .83 | $ | .33 | $ | 1.16 | $ | (.88 | ) | $ | - | $ | (.88 | ) | $ | 10.29 | 14.03 | % | $ | 10,274 | .80 | % | .79 | % | 9.57 | % | ||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | (.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.87 | ) | 8,074 | .70 | .67 | 8.14 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .93 | .04 | .97 | (.92 | ) | - | (.92 | ) | 12.35 | 7.99 | 9,516 | .69 | .66 | 7.35 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .92 | .05 | .97 | (.94 | ) | - | (.94 | ) | 12.30 | 8.26 | 8,285 | .69 | .65 | 7.52 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .89 | .01 | .90 | (.89 | ) | - | (.89 | ) | 12.27 | 7.54 | 7,448 | .68 | .65 | 7.17 | |||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | (.81 | ) | - | (.81 | ) | 10.29 | 13.18 | 550 | 1.56 | 1.55 | 8.93 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .85 | (2.32 | ) | (1.47 | ) | (.85 | ) | (.02 | ) | (.87 | ) | 10.01 | (12.55 | ) | 557 | 1.47 | 1.44 | 7.37 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .83 | .04 | .87 | (.82 | ) | - | (.82 | ) | 12.35 | 7.19 | 756 | 1.44 | 1.41 | 6.62 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .83 | .05 | .88 | (.85 | ) | - | (.85 | ) | 12.30 | 7.44 | 760 | 1.46 | 1.42 | 6.76 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .80 | .01 | .81 | (.80 | ) | - | (.80 | ) | 12.27 | 6.72 | 771 | 1.45 | 1.43 | 6.39 | |||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | (.81 | ) | - | (.81 | ) | 10.29 | 13.15 | 1,213 | 1.58 | 1.57 | 8.74 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | (.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.59 | ) | 890 | 1.52 | 1.48 | 7.32 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .83 | .04 | .87 | (.82 | ) | - | (.82 | ) | 12.35 | 7.14 | 1,045 | 1.48 | 1.45 | 6.55 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .82 | .05 | .87 | (.84 | ) | - | (.84 | ) | 12.30 | 7.39 | 871 | 1.50 | 1.46 | 6.71 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .79 | .01 | .80 | (.79 | ) | - | (.79 | ) | 12.27 | 6.65 | 804 | 1.51 | 1.49 | 6.32 | |||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .83 | .33 | 1.16 | (.88 | ) | - | (.88 | ) | 10.29 | 14.02 | 1,482 | .81 | .80 | 9.54 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | (.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.90 | ) | 1,204 | .74 | .70 | 8.09 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .92 | .04 | .96 | (.91 | ) | - | (.91 | ) | 12.35 | 7.98 | 1,166 | .70 | .67 | 7.32 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .92 | .05 | .97 | (.94 | ) | - | (.94 | ) | 12.30 | 8.23 | 846 | .71 | .68 | 7.47 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .88 | .01 | .89 | (.88 | ) | - | (.88 | ) | 12.27 | 7.45 | 637 | .76 | .74 | 7.07 | |||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .81 | .37 | 1.18 | (.90 | ) | - | (.90 | ) | 10.29 | 14.32 | 341 | .53 | .53 | 8.99 | |||||||||||||||||||||||||||||||||||||
Period from 8/4/2008 to 9/30/2008 | 11.01 | .14 | (1.00 | ) | (.86 | ) | (.14 | ) | - | (.14 | ) | 10.01 | (7.84 | ) | 13 | .08 | .07 | 1.34 | ||||||||||||||||||||||||||||||||||
Class 529-A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .82 | .33 | 1.15 | (.87 | ) | - | (.87 | ) | 10.29 | 13.99 | 172 | .84 | .83 | 9.50 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | (.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.91 | ) | 120 | .74 | .71 | 8.11 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .92 | .04 | .96 | (.91 | ) | - | (.91 | ) | 12.35 | 7.92 | 124 | .76 | .72 | 7.30 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .91 | .05 | .96 | (.93 | ) | - | (.93 | ) | 12.30 | 8.21 | 92 | .74 | .70 | 7.47 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .88 | .01 | .89 | (.88 | ) | - | (.88 | ) | 12.27 | 7.44 | 66 | .77 | .75 | 7.09 | |||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | (.80 | ) | - | (.80 | ) | 10.29 | 13.08 | 22 | 1.65 | 1.64 | 8.76 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | (.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.64 | ) | 18 | 1.58 | 1.55 | 7.26 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .82 | .04 | .86 | (.81 | ) | - | (.81 | ) | 12.35 | 7.06 | 21 | 1.56 | 1.53 | 6.50 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .81 | .05 | .86 | (.83 | ) | - | (.83 | ) | 12.30 | 7.30 | 18 | 1.58 | 1.55 | 6.63 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .77 | .01 | .78 | (.77 | ) | - | (.77 | ) | 12.27 | 6.52 | 15 | 1.64 | 1.61 | 6.22 | |||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | (.80 | ) | - | (.80 | ) | 10.29 | 13.08 | 68 | 1.64 | 1.63 | 8.71 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | (.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.64 | ) | 49 | 1.57 | 1.54 | 7.27 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .82 | .04 | .86 | (.81 | ) | - | (.81 | ) | 12.35 | 7.07 | 52 | 1.55 | 1.52 | 6.50 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .81 | .05 | .86 | (.83 | ) | - | (.83 | ) | 12.30 | 7.31 | 40 | 1.57 | 1.54 | 6.64 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .77 | .01 | .78 | (.77 | ) | - | (.77 | ) | 12.27 | 6.53 | 32 | 1.63 | 1.60 | 6.23 | |||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .80 | .33 | 1.13 | (.85 | ) | - | (.85 | ) | 10.29 | 13.66 | 9 | 1.13 | 1.12 | 9.23 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .90 | (2.32 | ) | (1.42 | ) | (.90 | ) | (.02 | ) | (.92 | ) | 10.01 | (12.18 | ) | 7 | 1.06 | 1.02 | 7.79 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .88 | .04 | .92 | (.87 | ) | - | (.87 | ) | 12.35 | 7.62 | 7 | 1.04 | 1.01 | 7.01 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .88 | .05 | .93 | (.90 | ) | - | (.90 | ) | 12.30 | 7.88 | 5 | 1.05 | 1.01 | 7.17 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .84 | .01 | .85 | (.84 | ) | - | (.84 | ) | 12.27 | 7.09 | 4 | 1.10 | 1.07 | 6.77 | |||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | $ | 10.01 | $ | .84 | $ | .33 | $ | 1.17 | $ | (.89 | ) | $ | - | $ | (.89 | ) | $ | 10.29 | 14.23 | % | $ | 7 | .63 | % | .62 | % | 9.72 | % | ||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .95 | (2.32 | ) | (1.37 | ) | (.95 | ) | (.02 | ) | (.97 | ) | 10.01 | (11.74 | ) | 6 | .56 | .52 | 8.29 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .94 | .04 | .98 | (.93 | ) | - | (.93 | ) | 12.35 | 8.15 | 6 | .54 | .51 | 7.51 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .94 | .05 | .99 | (.96 | ) | - | (.96 | ) | 12.30 | 8.41 | 4 | .55 | .52 | 7.66 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .88 | .01 | .89 | (.88 | ) | - | (.88 | ) | 12.27 | 7.45 | 3 | .75 | .72 | 7.13 | |||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .75 | .33 | 1.08 | (.80 | ) | - | (.80 | ) | 10.29 | 13.08 | 18 | 1.64 | 1.63 | 8.65 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | (.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.62 | ) | 12 | 1.55 | 1.52 | 7.29 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .82 | .04 | .86 | (.81 | ) | - | (.81 | ) | 12.35 | 7.08 | 13 | 1.57 | 1.52 | 6.50 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .82 | .05 | .87 | (.84 | ) | - | (.84 | ) | 12.30 | 7.35 | 8 | 1.59 | 1.50 | 6.68 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .78 | .01 | .79 | (.78 | ) | - | (.78 | ) | 12.27 | 6.61 | 6 | 1.61 | 1.52 | 6.35 | |||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .76 | .33 | 1.09 | (.81 | ) | - | (.81 | ) | 10.29 | 13.17 | 170 | 1.79 | 1.56 | 8.81 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .84 | (2.32 | ) | (1.48 | ) | (.84 | ) | (.02 | ) | (.86 | ) | 10.01 | (12.58 | ) | 128 | 1.70 | 1.48 | 7.34 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .82 | .04 | .86 | (.81 | ) | - | (.81 | ) | 12.35 | 7.13 | 138 | 1.69 | 1.47 | 6.56 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .82 | .05 | .87 | (.84 | ) | - | (.84 | ) | 12.30 | 7.37 | 106 | 1.90 | 1.48 | 6.70 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .79 | .01 | .80 | (.79 | ) | - | (.79 | ) | 12.27 | 6.64 | 74 | 1.94 | 1.49 | 6.36 | |||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .80 | .33 | 1.13 | (.85 | ) | - | (.85 | ) | 10.29 | 13.66 | 272 | 1.13 | 1.12 | 9.20 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .89 | (2.32 | ) | (1.43 | ) | (.89 | ) | (.02 | ) | (.91 | ) | 10.01 | (12.20 | ) | 185 | 1.07 | 1.04 | 7.77 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .88 | .04 | .92 | (.87 | ) | - | (.87 | ) | 12.35 | 7.58 | 186 | 1.07 | 1.04 | 6.98 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .87 | .05 | .92 | (.89 | ) | - | (.89 | ) | 12.30 | 7.84 | 134 | 1.08 | 1.05 | 7.13 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .84 | .01 | .85 | (.84 | ) | - | (.84 | ) | 12.27 | 7.06 | 97 | 1.13 | 1.10 | 6.74 | |||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .83 | .33 | 1.16 | (.88 | ) | - | (.88 | ) | 10.29 | 14.02 | 172 | .81 | .80 | 9.56 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .93 | (2.32 | ) | (1.39 | ) | (.93 | ) | (.02 | ) | (.95 | ) | 10.01 | (11.93 | ) | 125 | .77 | .73 | 8.08 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .92 | .04 | .96 | (.91 | ) | - | (.91 | ) | 12.35 | 7.93 | 118 | .75 | .72 | 7.30 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .91 | .05 | .96 | (.93 | ) | - | (.93 | ) | 12.30 | 8.19 | 73 | .75 | .72 | 7.46 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .88 | .01 | .89 | (.88 | ) | - | (.88 | ) | 12.27 | 7.46 | 42 | .75 | .72 | 7.14 | |||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2009 | 10.01 | .85 | .33 | 1.18 | (.90 | ) | - | (.90 | ) | 10.29 | 14.37 | 202 | .51 | .50 | 9.88 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2008 | 12.35 | .96 | (2.32 | ) | (1.36 | ) | (.96 | ) | (.02 | ) | (.98 | ) | 10.01 | (11.65 | ) | 140 | .45 | .42 | 8.40 | |||||||||||||||||||||||||||||||||
Year ended 9/30/2007 | 12.30 | .96 | .04 | 1.00 | (.95 | ) | - | (.95 | ) | 12.35 | 8.26 | 137 | .44 | .41 | 7.61 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2006 | 12.27 | .95 | .05 | 1.00 | (.97 | ) | - | (.97 | ) | 12.30 | 8.51 | 84 | .46 | .42 | 7.75 | |||||||||||||||||||||||||||||||||||||
Year ended 9/30/2005 | 12.26 | .92 | .01 | .93 | (.92 | ) | - | (.92 | ) | 12.27 | 7.78 | 63 | .46 | .43 | 7.37 | |||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Period from 5/1/2009 to 9/30/2009 | 8.47 | .33 | 1.83 | 2.16 | (.34 | ) | - | (.34 | ) | 10.29 | 25.96 | 49 | .18 | .18 | 3.55 |
Year ended September 30 | ||||||||||||||||||||
2009 | 2008 | 2007 | 2006 | 2005 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 43 | % | 35 | % | 42 | % | 41 | % | 39 | % |
(1)Based on operations for the periods shown (unless otherwise noted) and, accordingly, may not be representative of a full year. | |||||||||||||
(2)Based on average shares outstanding. | |||||||||||||
(3)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(4)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
See Notes to Financial Statements |
Report of Independent Registered Public Accounting Firm
To the Shareholders and Board of Trustees of American High-Income Trust:
We have audited the accompanying statement of assets and liabilities, including the summary investment portfolio, of American High-Income Trust (the “Fund”), as of September 30, 2009, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2009, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of American High-Income Trust as of September 30, 2009, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
November 12, 2009
Expense example
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period (April 1, 2009, through September 30, 2009).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 4/1/2009 | Ending account value 9/30/2009 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,376.55 | $ | 4.53 | .76 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.26 | 3.85 | .76 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,371.48 | 9.04 | 1.52 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.45 | 7.69 | 1.52 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,371.19 | 9.27 | 1.56 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.25 | 7.89 | 1.56 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,376.39 | 4.71 | .79 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.11 | 4.00 | .79 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,378.13 | 3.10 | .52 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.46 | 2.64 | .52 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,376.25 | 4.83 | .81 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.01 | 4.10 | .81 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,370.79 | 9.63 | 1.62 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,016.95 | 8.19 | 1.62 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,370.83 | 9.57 | 1.61 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.00 | 8.14 | 1.61 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,374.30 | 6.55 | 1.10 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.55 | 5.57 | 1.10 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,377.64 | 3.58 | .60 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.06 | 3.04 | .60 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,370.92 | 9.51 | 1.60 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.05 | 8.09 | 1.60 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,371.30 | 9.21 | 1.55 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.30 | 7.84 | 1.55 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,374.33 | 6.55 | 1.10 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.55 | 5.57 | 1.10 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,376.40 | 4.71 | .79 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.11 | 4.00 | .79 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,378.43 | 2.92 | .49 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.61 | 2.48 | .49 | ||||||||||||
Class R-6 -- actual return † | 1,000.00 | 1,259.63 | 2.02 | .43 | ||||||||||||
Class R-6 -- assumed 5% return † | 1,000.00 | 1,022.91 | 2.18 | .43 |
*The “expenses paid during period” are equal to the “annualized expense ratio,” multiplied by the average account value over the period, multiplied by the number of days in the period, and divided by 365 (to reflect the one-half year period).
† The period for the “annualized expense ratio” and “actual return” line is based on the number of days from May 1, 2009 (the initial sale of the share class), through September 30, 2009, and accordingly, is not representative of a full period. The “assumed 5% return” line is based on 183 days.
Tax information
unaudited
We are required to advise you within 60 days of the fund’s fiscal year-end regarding the federal tax status of certain distributions received by shareholders during such fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended September 30, 2009:
Qualified dividend income | $ | 17,507,000 | ||
Corporate dividends received deduction | $ | 13,856,000 | ||
U.S. government income that may be exempt from state taxation | $ | 3,724,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2010, to determine the calendar year amounts to be included on their 2009 tax returns. Shareholders should consult their tax advisers.
Approval of Investment Advisory and Service Agreement
The fund’s board has approved the fund’s Investment Advisory and Service Agreement (the “agreement”) with Capital Research and Management Company (“CRMC”) for an additional one-year term through October 31, 2010. The board approved the agreement following the recommendation of the fund’s Contracts Committee (the “committee”), which is composed of all of the fund’s independent board members. The board and the committee determined that the fund’s advisory fee structure was fair and reasonable in relation to the services provided and that approving the agreement was in the best interests of the fund and its shareholders.
In reaching this decision, the board and the committee took into account information furnished to them throughout the year, as well as information prepared specifically in connection with their review of the agreement and were advised by their independent counsel. They considered the factors discussed below, among others, but did not identify any single issue or particular piece of information that, in isolation, was the controlling factor.
1. Nature, extent and quality of services
The board and the committee considered the depth and quality of CRMC’s investment management process, including its global research capabilities; the experience, capability and integrity of its senior management and other personnel; the low turnover rates of its key personnel; the overall financial strength and stability of its organization; and the ongoing evolution of CRMC’s organizational structure designed to maintain and strengthen these qualities. The board and the committee considered, among other things, the impact of current market conditions on the fund and CRMC. The board and the committee also considered the nature, extent and quality of administrative, compliance and shareholder services provided by CRMC to the fund under the agreement and other agreements as well as the benefits to fund shareholders from investing in a fund that is part of a large family of funds. The board and the committee concluded that the nature, extent and quality of the services provided by CRMC have benefited and should continue to benefit the fund and its shareholders.
2. Investment results
The board and the committee considered the investment results of the fund in light of its primary objective of providing a high level of current income and its secondary objective of capital appreciation. They compared the fund’s total returns with those of other relevant funds (including the other funds that are the basis of the Lipper index for the category in which the fund is included) and market data such as relevant market indices, in each case as available at the time of the related meetings. In addition to the information reviewed by the board and the committee, this report, including the letter to shareholders and related disclosures, contains certain information about the fund’s investment results. The board and the committee concluded that the fund’s long-term results have been satisfactory and that CRMC’s record in managing the fund indicated that its continued management should benefit the fund and its shareholders.
3. Advisory fees and total expenses
The board and the committee compared the advisory fees and total expense levels of the fund to those of other relevant funds. They observed that the fund’s advisory fees and expenses remain significantly below those of most other relevant funds. The board and the committee also noted the breakpoint discounts in the fund’s advisory fee structure that reduce the level of fees charged by CRMC to the fund as fund assets increase. In addition, they reviewed information regarding the advisory fees paid by institutional clients of an affiliate of CRMC with investment mandates similar to those of the fund. They noted that, although the fees paid by those clients generally were lower than those paid by the fund, the differences appropriately reflected the significant investment, operational and regulatory differences between advising mutual funds and institutional clients. The board and the committee concluded that the fund’s cost structure was fair and reasonable in relation to the services provided, and that the shareholders receive reasonable value in return for the advisory fees and other amounts paid to CRMC by the fund.
4. Ancillary benefits
The board and the committee considered a variety of other benefits received by CRMC and its affiliates as a result of CRMC’s relationship with the fund and the other American Funds, including fees for administrative services provided to certain share classes; fees paid to CRMC’s affiliated transfer agent; sales charges and distribution fees received and retained by the fund’s principal underwriter, an affiliate of CRMC; and possible ancillary benefits to CRMC’s institutional management affiliates. The board and the committee reviewed CRMC’s portfolio trading practices, noting that while CRMC receives the benefit of research provided by broker-dealers executing portfolio transactions on behalf of the fund, it does not obtain third-party research or other services in return for allocating brokerage to such broker-dealers. The board and the committee took these ancillary benefits into account in evaluating the reasonableness of the advisory fees and other amounts paid to CRMC by the fund.
5. Adviser financial information
The board and the committee reviewed information regarding CRMC’s costs of providing services to the American Funds, including personnel, systems and resources of investment, compliance, trading, accounting and other administrative operations. They considered CRMC’s costs and willingness to invest in technology, infrastructure and staff to maintain and expand services and capabilities, respond to industry and regulatory developments and attract and retain qualified personnel. They noted information previously received regarding the compensation structure for CRMC’s investment professionals. The board and the committee also compared CRMC’s profitability to the reported results of several large, publicly held investment management companies. The board and the committee noted the competitiveness and cyclicality of both the mutual fund industry and the capital markets, and the importance in that environment of CRMC’s long-term profitability for maintaining its independence, company culture and management continuity. They further considered the breakpoint discounts in the fund’s advisory fee structure and the impact of the termination of CRMC’s 10% advisory fee waiver effective December 31, 2008. The board and the committee concluded that the fund’s advisory fee structure reflected a reasonable sharing of benefits between CRMC and the fund’s shareholders.
Other share class results
unaudited
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Classes B, C, F and 529
Average annual total returns for periods | ||||||||||||
ended September 30, 2009: | 1 year | 5 years | Life of class | |||||||||
Class B shares1 — first sold 3/15/00 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares | ||||||||||||
are sold within six years of purchase | 8.18 | % | 3.71 | % | 5.12 | % | ||||||
Not reflecting CDSC | 13.18 | 4.00 | 5.12 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 12.15 | 3.95 | 5.42 | |||||||||
Not reflecting CDSC | 13.15 | 3.95 | 5.42 | |||||||||
Class F-1 shares2 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 14.02 | 4.76 | 6.21 | |||||||||
Class F-2 shares2 — first sold 8/4/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 14.32 | — | 4.63 | |||||||||
Class 529-A shares3 — first sold 2/19/02 | ||||||||||||
Reflecting 3.75% maximum sales charge | 9.71 | 3.93 | 6.51 | |||||||||
Not reflecting maximum sales charge | 13.99 | 4.73 | 7.04 | |||||||||
Class 529-B shares1,3 — first sold 2/25/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, | ||||||||||||
payable only if shares are sold | ||||||||||||
within six years of purchase | 8.08 | 3.58 | 6.32 | |||||||||
Not reflecting CDSC | 13.08 | 3.87 | 6.32 | |||||||||
Class 529-C shares3 — first sold 2/19/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, | ||||||||||||
payable only if shares are sold | ||||||||||||
within one year of purchase | 12.08 | 3.88 | 6.16 | |||||||||
Not reflecting CDSC | 13.08 | 3.88 | 6.16 | |||||||||
Class 529-E shares2,3 — first sold 3/15/02 | 13.66 | 4.42 | 6.45 | |||||||||
Class 529-F-1 shares2,3 — first sold 9/16/02 | ||||||||||||
Not reflecting annual asset-based fee | ||||||||||||
charged by sponsoring firm | 14.23 | 4.90 | 9.03 |
1These shares are not available for purchase. |
2These shares are sold without any initial or contingent deferred sales charge. |
3Results shown do not reflect the $10 account setup fee and an annual $10 account maintenance fee. |
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. The fund’s investment adviser waived a portion of its management fees from September 1, 2004, through December 31, 2008. Fund results shown reflect the waiver, without which they would have been lower. See the Financial Highlights table on pages 25 and 26 for details that include expense ratios for all share classes.
For information regarding the differences among the various share classes, refer to the fund’s prospectus.
Board of trustees and other officers
“Independent” trustees | ||
Year first | ||
elected | ||
a trustee | ||
Name and age | of the fund1 | Principal occupation(s) during past five years |
Ambassador | 1999 | Corporate director and author; former U.S. |
Richard G. Capen, Jr., 75 | Ambassador to Spain; former Vice Chairman, Knight- | |
Ridder, Inc. (communications company); former | ||
Chairman and Publisher, The Miami Herald | ||
H. Frederick Christie, 76 | 1987 | Private investor; former President and CEO, The |
Mission Group (non-utility holding company, | ||
subsidiary of Southern California Edison Company) | ||
James G. Ellis, 62 | 2006 | Dean and Professor of Marketing, Marshall School of |
Business, University of Southern California | ||
Martin Fenton, 74 | 1989 | Chairman of the Board, Senior Resource Group LLC |
Chairman of the Board | (development and management of senior living | |
(Independent and | communities) | |
Non-Executive) | ||
Leonard R. Fuller, 63 | 1994 | President and CEO, Fuller Consulting (financial |
management consulting firm) | ||
R. Clark Hooper, 63 | 2005 | Private investor; former President, Dumbarton Group |
LLC (securities industry consulting); former Executive | ||
Vice President — Policy and Oversight, NASD | ||
Richard G. Newman, 75 | 1991 | Chairman of the Board, AECOM Technology |
Corporation (engineering, consulting and professional | ||
technical services) | ||
Frank M. Sanchez, 66 | 1999 | Principal, The Sanchez Family Corporation dba |
McDonald’s Restaurants (McDonald’s licensee) | ||
Steadman Upham, Ph.D., 60 | 2007 | President and Professor of Anthropology, The |
University of Tulsa; former President and Professor of | ||
Archaeology, Claremont Graduate University | ||
“Independent” trustees | ||
Number of | ||
portfolios in | ||
fund complex2 | ||
overseen by | Other directorships3 | |
Name and age | trustee | held by trustee |
Ambassador | 14 | Carnival Corporation |
Richard G. Capen, Jr., 75 | ||
H. Frederick Christie, 76 | 14 | AECOM Technology Corporation; DineEquity, Inc.; |
Ducommun Incorporated; SouthWest Water Company | ||
James G. Ellis, 62 | 13 | Quiksilver, Inc. |
Martin Fenton, 74 | 17 | None |
Chairman of the Board | ||
(Independent and | ||
Non-Executive) | ||
Leonard R. Fuller, 63 | 15 | None |
R. Clark Hooper, 63 | 17 | JPMorgan Value Opportunities Fund, Inc.; |
The Swiss Helvetia Fund, Inc. | ||
Richard G. Newman, 75 | 13 | Sempra Energy; SouthWest Water Company |
Frank M. Sanchez, 66 | 12 | None |
Steadman Upham, Ph.D., 60 | 14 | None |
“Interested” trustees4 | ||
Year first | ||
elected a | ||
trustee or | Principal occupation(s) during past five years and | |
Name, age and | officer of | positions held with affiliated entities or the principal |
position with fund | the fund1 | underwriter of the fund |
Abner D. Goldstine, 79 | 1987 | Senior Vice President — Fixed Income, Capital |
Vice Chairman of the Board | Research and Management Company; Director, | |
Capital Research and Management Company | ||
Paul G. Haaga, Jr., 60 | 1987 | Vice Chairman of the Board, Capital Research and |
Vice Chairman of the Board | Management Company; Senior Vice President — | |
Fixed Income, Capital Research and Management | ||
Company | ||
David C. Barclay, 53 | 1995 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company | |
“Interested” trustees4 | ||
Number of | ||
portfolios | ||
in fund | ||
complex2 | ||
Name, age and | overseen by | |
position with fund | trustee | Other directorships3 held by trustee |
Abner D. Goldstine, 79 | 11 | None |
Vice Chairman of the Board | ||
Paul G. Haaga, Jr., 60 | 13 | None |
Vice Chairman of the Board | ||
David C. Barclay, 53 | 1 | None |
President |
The fund’s statement of additional information includes additional information about fund trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180. The address for all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
1Trustees and officers of the fund serve until their resignation, removal or retirement. |
2Capital Research and Management Company manages the American Funds, consisting of 30 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 16 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® Inc., which is composed of nine funds and is available through tax-deferred retirement plans and IRAs; and Endowments, which is composed of two portfolios and is available to certain nonprofit organizations. |
3This includes all directorships (other than those in the American Funds or other funds managed by Capital Research and Management Company) that are held by each trustee as a director of a public company or a registered investment company. |
4“Interested persons” within the meaning of the 1940 Act, as amended, on the basis of their affiliation with the fund’s investment adviser, Capital Research and Management Company, or affiliated entities (including the fund’s principal underwriter). |
5Company affiliated with Capital Research and Management Company. |
Other officers | ||
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities or |
position with fund | of the fund1 | the principal underwriter of the fund |
Jennifer L. Hinman, 51 | 2001 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research Company;5 Director, Capital Research | |
Company;5 Director, Capital International Research, Inc.5 | ||
Susan M. Tolson, 47 | 1997 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research and Management Company | |
David A. Daigle, 42 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company5 | |
Marcus B. Linden, 43 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company5 | |
Kristine M. Nishiyama, 39 | 2003 | Vice President and Senior Counsel — Fund Business |
Vice President | Management Group, Capital Research and | |
Management Company; Vice President and Counsel, | ||
Capital Bank and Trust Company5 | ||
Kimberly S. Verdick, 45 | 1994 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Ari M. Vinocor, 35 | 2007 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Courtney R. Taylor, 34 | 2006 | Assistant Vice President — Fund Business |
Assistant Secretary | Management Group, Capital Research and | |
Management Company | ||
M. Susan Gupton, 36 | 2008 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
See page 32 for footnotes.
Offices of the fund and of the investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete September 30, 2009, portfolio of American High-Income Trust’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
American High-Income Trust files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available on the American Funds website or by calling AFS.
This report is for the information of shareholders of American High-Income Trust, but it also may be used as sales literature when preceded or accompanied by the current summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2009, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
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The right choice for the long term®
What makes American Funds different?
For nearly 80 years, we have followed a consistent philosophy to benefit our investors. Our 30 carefully conceived, broadly diversified funds, in addition to the target date retirement series, offer opportunities that have attracted over 50 million shareholder accounts.
Our unique combination of strengths includes these five factors:
•A long-term, value-oriented approach |
We seek to buy securities at reasonable prices relative to their prospects and hold them for the long term. |
•An extensive global research effort |
Our investment professionals travel the world to find the best investment opportunities and gain a comprehensive understanding of companies and markets. |
•The multiple portfolio counselor system |
Our unique approach to portfolio management, developed 50 years ago, blends teamwork with individual accountability and has provided American Funds with a sustainable method of achieving fund objectives. |
•Experienced investment professionals |
American Funds portfolio counselors have an average of 25 years of investment experience, providing a depth of knowledge and broad perspective that few organizations have. |
•A commitment to low management fees |
The American Funds provide exceptional value for shareholders, with management fees that are among the lowest in the mutual fund industry. |
American Funds span a range of investment objectives
•Growth funds |
Emphasis on long-term growth through stocks |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World Fund® |
SMALLCAP World Fund® |
•Growth-and-income funds |
Emphasis on long-term growth and dividends through stocks |
American Mutual Fund® |
Capital World Growth and Income FundSM |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
•Equity-income funds |
Emphasis on above-average income and growth through stocks and/or bonds |
Capital Income Builder® |
The Income Fund of America® |
•Balanced fund |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
•Bond funds |
Emphasis on current income through bonds |
>American High-Income TrustSM |
The Bond Fund of AmericaSM |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of AmericaSM |
U.S. Government Securities FundSM |
•Tax-exempt bond funds |
Emphasis on tax-exempt current income through municipal bonds |
American Funds Short-Term Tax-Exempt Bond FundSM |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of AmericaSM |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
•Money market fund |
American Funds Money Market FundSM |
•American Funds Target Date Retirement Series® |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGEAR-921-1109P
Litho in USA RCG/N/8049-S20660
Printed on paper containing 10% post-consumer waste
Printed with inks containing soy and/or vegetable oil
ITEM 2 – Code of Ethics
The Registrant has adopted a Code of Ethics that applies to its Principal Executive Officer and Principal Financial Officer. The Registrant undertakes to provide to any person without charge, upon request, a copy of the Code of Ethics. Such request can be made to American Funds Service Company at 800/421-0180 or to the Secretary of the Registrant, 333 South Hope Street, Los Angeles, California 90071.
ITEM 3 – Audit Committee Financial Expert
The Registrant’s board has determined that H. Frederick Christie, a member of the Registrant’s audit committee, is an “audit committee financial expert” and "independent," as such terms are defined in this Item. This designation will not increase the designee’s duties, obligations or liability as compared to his or her duties, obligations and liability as a member of the audit committee and of the board, nor will it reduce the responsibility of the other audit committee members. There may be other individuals who, through education or experience, would qualify as "audit committee financial experts" if the board had designated them as such. Most importantly, the board believes each member of the audit committee contributes significantly to the effective oversight of the Registrant’s financial statements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2008 | $109,000 | |||
2009 | $110,000 | |||
b) Audit-Related Fees: | ||||
2008 | $9,000 | |||
2009 | $4,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2008 | $7,000 | |||
2009 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | None | |||
Adviser and affiliates (includes only fees for non-audit services billed to the adviser and affiliates for engagements that relate directly to the operations and financial reporting of the Registrant and were subject to the pre-approval policies described below): | ||||
a) Audit Fees: | ||||
Not Applicable | ||||
b) Audit-Related Fees: | ||||
2008 | $1,047,000 | |||
2009 | $1,034,000 | |||
The audit-related fees consist of assurance and related services relating to the examination of the Registrant’s transfer agent, principal underwriter and investment adviser conducted in accordance with Statement on Auditing Standards Number 70 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2008 | $8,000 | |||
2009 | None | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2008 | None | |||
2009 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. |
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant, adviser and affiliates that provide ongoing services to the Registrant, were $1,366,000 for fiscal year 2008 and $1,530,000 for fiscal year 2009. The non-audit services represented by these amounts were brought to the attention of the committee and considered to be compatible with maintaining the auditors’ independence.
ITEM 5 – Audit Committee of Listed Registrants
Not applicable to this Registrant, insofar as the Registrant is not a listed issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934.
ITEM 6 – Schedule of Investments
[logo – American Funds®]
American High-Income TrustSM
Investment portfolio
September 30, 2009
Bonds, notes & other debt instruments — 84.57% | Principal amount (000) | Value (000) | ||||||
CORPORATE BONDS, NOTES & LOANS — 79.87% | ||||||||
CONSUMER DISCRETIONARY — 19.62% | ||||||||
CCH II, LLC and CCH II Capital Corp. 10.25% 20101 | $ | 62,980 | $ | 71,167 | ||||
Charter Communications Holdings, LLC and Charter Communications Holdings Capital Corp. 11.75% 20111 | 6,000 | 45 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20122 | 50,950 | 52,096 | ||||||
CCO Holdings, LLC and CCO Holdings Capital Corp. 8.75% 20131 | 36,490 | 37,220 | ||||||
Charter Communications Operating, LLC, Term Loan B, 6.25% 20143,4,5 | 31,096 | 29,395 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.375% 20142 | 37,900 | 38,848 | ||||||
Charter Communications Operating, LLC, Term Loan B, 9.25% 20143,4,5 | 16,499 | 16,726 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20142 | 26,500 | 28,819 | ||||||
CCH I, LLC and CCH I Capital Corp. 11.00% 20151 | 7,475 | 1,420 | ||||||
Univision Communications, Inc., First Lien Term Loan B, 2.533% 20143,4,5 | 123,170 | 104,569 | ||||||
Univision Communications Inc. 12.00% 20142 | 20,310 | 21,935 | ||||||
Univision Communications Inc. 10.50% 20152,3,6 | 144,039 | 111,630 | ||||||
NTL Cable PLC 8.75% 2014 | 65,893 | 67,540 | ||||||
NTL Cable PLC 8.75% 2014 | € | 5,300 | 8,030 | |||||
NTL Cable PLC 9.75% 2014 | £ | 3,000 | 5,037 | |||||
NTL Cable PLC 9.125% 2016 | $ | 36,015 | 37,185 | |||||
NTL Cable PLC 9.50% 2016 | 99,825 | 105,565 | ||||||
Michaels Stores, Inc., Term Loan B, 2.563% 20133,4,5 | 28,698 | 25,669 | ||||||
Michaels Stores, Inc. 10.00% 2014 | 95,825 | 94,867 | ||||||
Michaels Stores, Inc. 0%/13.00% 20167 | 2,170 | 1,465 | ||||||
MGM MIRAGE 8.50% 2010 | 3,100 | 3,092 | ||||||
Mandalay Resort Group 6.375% 2011 | 1,500 | 1,350 | ||||||
MGM MIRAGE 6.75% 2012 | 1,700 | 1,432 | ||||||
MGM MIRAGE 6.75% 2013 | 16,855 | 14,179 | ||||||
MGM MIRAGE 13.00% 20132 | 27,775 | 31,941 | ||||||
MGM MIRAGE 5.875% 2014 | 25,425 | 20,086 | ||||||
MGM MIRAGE 10.375% 20142 | 12,725 | 13,648 | ||||||
MGM MIRAGE 6.625% 2015 | 7,975 | 6,201 | ||||||
MGM MIRAGE 7.50% 2016 | 4,000 | 3,120 | ||||||
MGM MIRAGE 11.125% 20172 | 18,275 | 20,057 | ||||||
Allison Transmission Holdings, Inc., Term Loan B, 3.00% 20143,4,5 | 19,785 | 17,337 | ||||||
Allison Transmission Holdings, Inc. 11.00% 20152 | 38,300 | 37,726 | ||||||
Allison Transmission Holdings, Inc. 12.00% 20152,3,6 | 56,485 | 52,813 | ||||||
AMC Entertainment Inc. 8.00% 2014 | 8,175 | 7,930 | ||||||
AMC Entertainment Inc., Series B, 11.00% 2016 | 10,000 | 10,700 | ||||||
AMC Entertainment Inc. 8.75% 2019 | 68,675 | 71,250 | ||||||
Macy’s Retail Holdings, Inc. 8.875% 20153 | 30,100 | 31,551 | ||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 37,000 | 34,084 | ||||||
Federated Department Stores, Inc. 6.79% 2027 | 8,302 | 6,094 | ||||||
Federated Department Stores, Inc. 7.00% 2028 | 6,900 | 5,478 | ||||||
Federated Department Stores, Inc. 6.90% 2029 | 8,925 | 7,085 | ||||||
Federated Retail Holdings, Inc. 6.375% 2037 | 3,379 | 2,679 | ||||||
Toys “R” Us, Inc. 7.625% 2011 | 57,410 | 56,836 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 4.496% 20123,4,5 | 24,012 | 23,142 | ||||||
Toys “R” Us, Inc. 7.375% 2018 | 3,050 | 2,669 | ||||||
CSC Holdings, Inc., Series B, 6.75% 2012 | 4,500 | 4,657 | ||||||
Cablevision Systems Corp., Series B, 8.00% 2012 | 350 | 367 | ||||||
CSC Holdings, Inc. 8.50% 20142 | 31,575 | 33,312 | ||||||
CSC Holdings, Inc. 8.50% 20152 | 8,500 | 8,967 | ||||||
CSC Holdings, Inc. 8.625% 20192 | 26,700 | 28,436 | ||||||
TL Acquisitions, Inc., Term Loan B, 2.75% 20143,4,5 | 20,725 | 18,632 | ||||||
Thomson Learning 10.50% 20152 | 56,890 | 54,046 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 54,303 | 55,118 | ||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 20192 | 16,450 | 16,985 | ||||||
Dollar General Corp., Term Loan B2, 2.996% 20143,4,5 | 4,988 | 4,824 | ||||||
Dollar General Corp. 10.625% 2015 | 24,250 | 26,918 | ||||||
Dollar General Corp. 11.875% 20173,6 | 33,675 | 38,053 | ||||||
Boyd Gaming Corp. 7.75% 2012 | 27,925 | 27,995 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 25,000 | 22,500 | ||||||
Boyd Gaming Corp. 7.125% 2016 | 18,000 | 15,930 | ||||||
J.C. Penney Co., Inc. 8.00% 2010 | 21,655 | 22,169 | ||||||
J.C. Penney Co., Inc. 9.00% 2012 | 8,980 | 9,811 | ||||||
J.C. Penney Co., Inc. 7.95% 2017 | 805 | 837 | ||||||
J.C. Penney Corp., Inc. 5.75% 2018 | 20,350 | 19,027 | ||||||
J.C. Penney Co., Inc. 7.125% 2023 | 12,000 | 11,100 | ||||||
J.C. Penney Corp., Inc. 6.375% 2036 | 1,265 | 1,050 | ||||||
Royal Caribbean Cruises Ltd. 8.00% 2010 | 3,200 | 3,272 | ||||||
Royal Caribbean Cruises Ltd. 8.75% 2011 | 435 | 447 | ||||||
Royal Caribbean Cruises Ltd. 7.00% 2013 | 3,825 | 3,662 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 44,825 | 50,652 | ||||||
Quebecor Media Inc. 7.75% 2016 | 33,400 | 33,233 | ||||||
Quebecor Media Inc. 7.75% 2016 | 22,370 | 22,258 | ||||||
UPC Holding BV 9.875% 20182 | 50,075 | 52,829 | ||||||
Cinemark USA, Inc., Term Loan B, 2.06% 20133,4,5 | 5,578 | 5,394 | ||||||
Cinemark USA, Inc. 8.625% 20192 | 42,405 | 44,048 | ||||||
Warner Music Group 7.375% 2014 | 18,090 | 17,412 | ||||||
Warner Music Group 9.50% 20162 | 28,400 | 30,104 | ||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 6.625% 2014 | 47,925 | 46,487 | ||||||
Neiman Marcus Group, Inc. 9.75% 20153,6 | 48,459 | 41,675 | ||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 1,800 | 1,548 | ||||||
CBS Corp. 8.875% 2019 | 36,425 | 40,241 | ||||||
Hanesbrands Inc., Series B, 4.593% 20143 | 45,550 | 40,198 | ||||||
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014 | 32,850 | 34,164 | ||||||
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016 | 4,292 | 4,496 | ||||||
Regal Cinemas Corp., Series B, 9.375% 2012 | 13,300 | 13,533 | ||||||
Regal Cinemas Corp. 8.625% 20192 | 23,955 | 24,913 | ||||||
Kabel Deutschland GmbH 10.625% 2014 | 36,275 | 38,361 | ||||||
Gray Television Inc., Series D, 17.00% (undated)8,9 | 64,500 | 37,811 | ||||||
Edcon (Proprietary) Ltd. 4.023% 20143 | € | 22,425 | 23,964 | |||||
Edcon (Proprietary) Ltd. 4.023% 20143 | 11,000 | 11,755 | ||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | $ | 17,950 | 15,302 | |||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 1,225 | 1,020 | ||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 22,100 | 15,801 | ||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 3,775 | 2,576 | ||||||
Ford Motor Co. 9.50% 2011 | 1,000 | 1,015 | ||||||
FCE Bank PLC 7.125% 2013 | € | 24,150 | 32,878 | |||||
Cooper-Standard Automotive Inc., Term Loan D, 2.504% 20113,4,5 | $ | 11,242 | 9,876 | |||||
Cooper-Standard Automotive Inc., Term Loan C, 2.504% 20113,4,5 | 7,594 | 6,671 | ||||||
Cooper-Standard Automotive Inc., Term Loan B, 2.504% 20113,4,5 | 3,040 | 2,713 | ||||||
Cooper-Standard Automotive Inc. 7.00% 20121 | 19,525 | 10,251 | ||||||
Cooper-Standard Automotive Inc. 8.375% 20141 | 9,275 | 1,438 | ||||||
American Media Operation 9.00% 20132,6,10 | 3,250 | 2,015 | ||||||
American Media Operation 14.00% 20132,3,6,10 | 44,909 | 28,293 | ||||||
Sealy Mattress Co. 8.25% 2014 | 7,825 | 7,277 | ||||||
Sealy Mattress Co. 10.875% 20162 | 18,825 | 20,849 | ||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 37,200 | 27,342 | ||||||
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 20129 | 28,180 | 26,305 | ||||||
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014 | 23,950 | 23,531 | ||||||
Seneca Gaming Corp., Series B, 7.25% 2012 | 16,000 | 14,880 | ||||||
Seneca Gaming Corp. 7.25% 2012 | 8,440 | 7,849 | ||||||
Tenneco Automotive Inc. 8.625% 2014 | 16,020 | 15,099 | ||||||
Tenneco Inc. 8.125% 2015 | 5,000 | 4,875 | ||||||
LBI Media, Inc. 8.50% 20172 | 30,380 | 19,139 | ||||||
Fox Acquisition LLC, Term Loan B, 7.25% 20153,4,5 | 2,767 | 2,415 | ||||||
Fox Acquisition LLC 13.375% 20162 | 26,095 | 16,701 | ||||||
Local T.V. Finance LLC, Term Loan B, 2.25% 20133,4,5 | 11,093 | 8,745 | ||||||
Local T.V. Finance LLC 10.00% 20152,3,6 | 26,838 | 9,259 | ||||||
Beazer Homes USA, Inc. 8.625% 2011 | 9,600 | 9,072 | ||||||
Beazer Homes USA, Inc. 8.125% 2016 | 11,405 | 8,725 | ||||||
Meritage Corp. 7.00% 2014 | 8,575 | 8,082 | ||||||
Meritage Homes Corp. 6.25% 2015 | 2,675 | 2,501 | ||||||
Meritage Corp. 7.731% 20172 | 9,000 | 7,065 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 14,495 | 15,437 | ||||||
Gaylord Entertainment Co. 8.00% 2013 | 12,450 | 12,823 | ||||||
Gaylord Entertainment Co. 6.75% 2014 | 2,450 | 2,278 | ||||||
DISH DBS Corp. 7.875% 20192 | 14,500 | 14,717 | ||||||
Burlington Coat Factory Warehouse Corp. 11.125% 2014 | 14,350 | 14,135 | ||||||
Wendy’s/Arby’s Group Inc. 10.00% 20162 | 10,700 | 11,422 | ||||||
Standard Pacific Corp. 7.75% 2013 | 3,920 | 3,704 | ||||||
Standard Pacific Corp. 6.25% 2014 | 4,940 | 4,322 | ||||||
Standard Pacific Corp. 7.00% 2015 | 2,715 | 2,389 | ||||||
Vidéotron Ltée 6.875% 2014 | 6,780 | 6,746 | ||||||
Vidéotron Ltée 6.375% 2015 | 3,720 | 3,571 | ||||||
Jarden Corp. 8.00% 2016 | 9,025 | 9,296 | ||||||
KB Home 6.25% 2015 | 9,285 | 8,914 | ||||||
Seminole Tribe of Florida 7.804% 20202,4 | 10,050 | 8,586 | ||||||
Time Warner Cable Inc. 6.20% 2013 | 1,250 | 1,363 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 4,700 | 5,396 | ||||||
Time Warner Cable Inc. 8.25% 2019 | 1,500 | 1,816 | ||||||
Goodyear Tire & Rubber Co. 5.01% 20093 | 3,000 | 3,000 | ||||||
Goodyear Tire & Rubber Co. 9.00% 2015 | 5,000 | 5,212 | ||||||
Dillard Department Stores, Inc. 9.125% 2011 | 8,230 | 8,189 | ||||||
Technical Olympic USA, Inc. 9.00% 20101 | 22,486 | 2,586 | ||||||
Technical Olympic USA, Inc. 9.00% 20101 | 7,325 | 842 | ||||||
Technical Olympic USA, Inc. 9.25% 20111,2 | 36,325 | 4,177 | ||||||
Radio One, Inc. 6.375% 2013 | 20,260 | 7,142 | ||||||
DIRECTV Holdings LLC and DIRECTV Financing Co., Inc. 8.375% 2013 | 6,031 | 6,212 | ||||||
TRW Automotive Inc. 7.00% 20142 | 4,650 | 4,255 | ||||||
TRW Automotive Inc. 7.25% 20172 | 2,000 | 1,770 | ||||||
Liberty Media Corp. 8.25% 2030 | 7,050 | 5,851 | ||||||
Comcast Corp. 5.50% 2011 | 1,090 | 1,147 | ||||||
Comcast Cable Communications, Inc. 6.75% 2011 | 2,935 | 3,122 | ||||||
Cox Communications, Inc. 5.45% 2014 | 390 | 419 | ||||||
Cox Communications, Inc. 9.375% 20192 | 2,500 | 3,164 | ||||||
Visteon Corp. 8.25% 20101 | 3,772 | 943 | ||||||
Visteon Corp. 12.25% 20161,2 | 9,737 | 2,532 | ||||||
WPP Finance (UK) 8.00% 2014 | 2,000 | 2,196 | ||||||
Carmike Cinemas, Inc., Delayed Draw, Term Loan DD, 4.24% 20123,4,5 | 1,591 | 1,535 | ||||||
Marks and Spencer Group PLC 7.125% 20372 | 1,480 | 1,387 | ||||||
Delphi Automotive Systems Corp. 6.55% 20061 | 7,180 | 90 | ||||||
Delphi Automotive Systems Corp. 7.125% 20291 | 14,300 | 179 | ||||||
Delphi Trust I 8.25% 20331 | 4,470 | 6 | ||||||
Young Broadcasting Inc. 10.00% 20111 | 58,845 | 74 | ||||||
Young Broadcasting Inc. 8.75% 20141 | 4,040 | 5 | ||||||
KAC Acquisition Corp. 8.00% 20262,6,9 | 237 | 0 | ||||||
2,947,409 | ||||||||
TELECOMMUNICATION SERVICES — 10.43% | ||||||||
Sprint Nextel Corp. 0.683% 20103 | 5,120 | 4,974 | ||||||
Sprint Capital Corp. 7.625% 2011 | 4,000 | 4,115 | ||||||
Sprint Capital Corp. 8.375% 2012 | 3,750 | 3,891 | ||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 23,013 | 21,460 | ||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 120,790 | 107,503 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 74,753 | 67,465 | ||||||
Sprint Capital Corp. 8.75% 2032 | 3,000 | 2,850 | ||||||
Qwest Capital Funding, Inc. 7.90% 2010 | 23,185 | 23,591 | ||||||
Qwest Capital Funding, Inc. 7.25% 2011 | 95,650 | 96,128 | ||||||
Qwest Communications International Inc. 7.25% 2011 | 43,725 | 44,545 | ||||||
Qwest Corp. 7.875% 2011 | 12,000 | 12,435 | ||||||
Qwest Corp. 8.875% 2012 | 3,600 | 3,807 | ||||||
Qwest Communications International Inc. 8.00% 20152 | 12,750 | 12,798 | ||||||
Cricket Communications, Inc. 9.375% 2014 | 91,530 | 93,361 | ||||||
Cricket Communications, Inc. 7.75% 20162 | 92,450 | 94,299 | ||||||
Windstream Corp. 8.125% 2013 | 89,875 | 92,796 | ||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 31,370 | 32,178 | ||||||
Windstream Corp. 8.625% 2016 | 22,300 | 22,913 | ||||||
Windstream Corp. 7.00% 2019 | 2,500 | 2,350 | ||||||
Centennial Communications Corp. 6.347% 20133 | 49,250 | 48,265 | ||||||
Centennial Communications Corp. 10.00% 2013 | 14,750 | 15,432 | ||||||
Centennial Communications Corp. and Centennial Cellular Operating Co. LLC 10.125% 2013 | 37,505 | 38,818 | ||||||
Centennial Communications Corp., Centennial Cellular Operating Co. LLC | ||||||||
and Centennial Puerto Rico Operations Corp. 8.125% 20143 | 24,175 | 24,658 | ||||||
American Tower Corp. 7.125% 2012 | 32,035 | 32,676 | ||||||
American Tower Corp. 7.00% 2017 | 51,825 | 53,380 | ||||||
American Tower Corp. 7.25% 20192 | 39,000 | 40,267 | ||||||
MetroPCS Wireless, Inc., Term Loan B, 2.75% 20133,4,5 | 10,597 | 10,169 | ||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 74,600 | 76,652 | ||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 35,850 | 36,836 | ||||||
Digicel Group Ltd. 12.00% 20142 | 61,825 | 69,553 | ||||||
Digicel Group Ltd. 12.00% 2014 | 600 | 675 | ||||||
Digicel Group Ltd. 8.875% 20152 | 33,300 | 31,136 | ||||||
Digicel Group Ltd. 8.875% 2015 | 9,150 | 8,555 | ||||||
Wind Acquisition SA 11.75% 20172 | 90,700 | 102,718 | ||||||
Crown Castle International Corp. 9.00% 2015 | 41,900 | 44,309 | ||||||
Crown Castle International Corp. 7.75% 20172 | 27,830 | 28,943 | ||||||
Intelsat, Ltd. 8.50% 2013 | 3,000 | 3,052 | ||||||
Intelsat, Ltd. 0%/9.50% 20157 | 7,000 | 7,017 | ||||||
Intelsat, Ltd. 8.875% 2015 | 12,250 | 12,526 | ||||||
Intelsat Jackson Holding Co., Series B, 8.875% 20152 | 10,750 | 10,992 | ||||||
Intelsat Jackson Holding Co. 9.50% 2016 | 21,600 | 22,788 | ||||||
Orascom Telecom 7.875% 20142 | 32,780 | 31,469 | ||||||
SBA Telecommunications, Inc. 8.00% 20162 | 12,000 | 12,330 | ||||||
Telecom Italia Capital SA 7.175% 2019 | 10,000 | 11,178 | ||||||
Nordic Telephone Co. Holding ApS 8.875% 20162 | 8,425 | 8,762 | ||||||
Trilogy International Partners LLC, Term Loan B, 3.783% 20123,4,5 | 10,475 | 8,694 | ||||||
Cincinnati Bell Inc. 7.25% 2013 | 6,875 | 7,012 | ||||||
Hawaiian Telcom Communications, Inc. 9.75% 20131 | 23,340 | 350 | ||||||
Hawaiian Telcom Communications, Inc. 8.765% 20131,3 | 19,715 | 148 | ||||||
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20143,4,5,6 | 8,999 | 5,633 | ||||||
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20151 | 8,725 | 11 | ||||||
Rogers Wireless Inc. 7.50% 2015 | 4,025 | 4,645 | ||||||
Verizon Communications Inc. 3.75% 20112 | 4,000 | 4,129 | ||||||
América Móvil, SAB de CV 8.46% 2036 | MXN65,000 | 3,713 | ||||||
Level 3 Financing, Inc. 9.25% 2014 | $ | 4,000 | 3,545 | |||||
AT&T Inc. 6.70% 2013 | 2,500 | 2,835 | ||||||
1,567,330 | ||||||||
INDUSTRIALS — 9.91% | ||||||||
Nielsen Finance LLC, Term Loan A, 2.249% 20133,4,5 | 14,652 | 13,851 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014 | 101,500 | 102,515 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 14,650 | 15,529 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20167 | 149,450 | 118,439 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 58,700 | 61,929 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20174,5 | 28,000 | 27,720 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.283% 20143,4,5 | 80,417 | 61,921 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.283% 20143,4,5 | 4,729 | 3,641 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015 | 4,975 | 3,557 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.625% 20153,6 | 48,710 | 31,418 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017 | 2,880 | 1,771 | ||||||
United Air Lines, Inc., Series 2000-2, Class B, 7.811% 20111,4 | 17,433 | 23,709 | ||||||
United Air Lines, Inc., Series 2000-2, Class A-2, 7.186% 20124 | 1,694 | 1,707 | ||||||
United Air Lines, Inc., Term Loan B, 2.25% 20143,4,5 | 73,152 | 54,498 | ||||||
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20061,4,9 | 1,135 | 0 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20212,4 | 8,668 | 6,154 | ||||||
Continental Airlines, Inc. 8.75% 2011 | 21,200 | 19,027 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-2, 7.487% 20124 | 5,000 | 4,994 | ||||||
Continental Airlines, Inc., Series 2000-2, Class C, 8.312% 20124 | 2,394 | 2,226 | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20174 | 5,066 | 4,382 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20184 | 6,469 | 5,692 | ||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20184 | 4,830 | 4,347 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20194 | 4,920 | 4,616 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20194 | 2,230 | 2,029 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20204 | 7,344 | 7,078 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20204 | 12,947 | 10,163 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20224 | 2,928 | 2,736 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20224 | 2,646 | 2,525 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20224 | 350 | 334 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20224 | 6,736 | 5,995 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 4.24% 20143,4,5 | 10,488 | 9,413 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 4.24% 20143,4,5 | 10,261 | 9,209 | ||||||
DAE Aviation Holdings, Inc. 11.25% 20152 | 66,070 | 51,865 | ||||||
RailAmerica Inc. 9.25% 20172 | 66,650 | 70,149 | ||||||
ARAMARK Corp., Term Loan B, 2.158% 20143,4,5 | 15,092 | 14,114 | ||||||
ARAMARK Corp., Letter of Credit, 4.721% 20143,4,5 | 990 | 926 | ||||||
ARAMARK Corp. 3.983% 20153 | 16,220 | 14,152 | ||||||
ARAMARK Corp. 8.50% 2015 | 36,820 | 37,326 | ||||||
TransDigm Inc. 7.75% 20142 | 50,045 | 48,606 | ||||||
TransDigm Inc. 7.75% 2014 | 16,960 | 16,918 | ||||||
DynCorp International and DIV Capital Corp., Series B, 9.50% 2013 | 61,577 | 63,116 | ||||||
AMR Corp., Series B, 10.45% 2011 | 1,850 | 1,364 | ||||||
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20124 | 17,375 | 16,419 | ||||||
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20124 | 8,690 | 7,995 | ||||||
AMR Corp. 9.00% 2012 | 16,155 | 12,762 | ||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20134 | 1,300 | 1,299 | ||||||
AMR Corp. 9.00% 20169 | 1,475 | 1,018 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20194 | 14,153 | 10,473 | ||||||
AMR Corp. 9.88% 20209 | 1,275 | 931 | ||||||
AMR Corp. 9.80% 20219 | 2,555 | 1,865 | ||||||
AMR Corp. 10.00% 20219 | 9,000 | 6,570 | ||||||
Ashtead Group PLC 8.625% 20152 | 17,750 | 17,129 | ||||||
Ashtead Capital, Inc. 9.00% 20162 | 42,955 | 41,452 | ||||||
CEVA Group PLC 10.00% 20142 | 9,675 | 8,659 | ||||||
CEVA Group PLC, Bridge Loan, 7.499% 20153,4,5,9 | 56,263 | 37,696 | ||||||
CEVA Group PLC 11.625% 20162 | 10,800 | 10,490 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class A-1, 7.379% 20114 | 560 | 555 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20124 | 17,018 | 16,890 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class B, 7.92% 20124 | 3,500 | 3,448 | ||||||
Northwest Airlines, Inc., Term Loan B, 3.79% 20133,4,5 | 12,234 | 10,338 | ||||||
Delta Air Lines, Inc., Series 2001-1, Class A-2, 7.111% 20134 | 2,500 | 2,441 | ||||||
Delta Air Lines, Inc., Second Lien Term Loan B, 3.499% 20143,4,5 | 11,730 | 9,858 | ||||||
Delta Air Lines, Inc. 9.50% 20142 | 3,625 | 3,643 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.04% 20183,4,5 | 10,851 | 8,410 | ||||||
Nortek, Inc. 10.00% 2013 | 28,868 | 29,590 | ||||||
THL Buildco, Inc. 8.50% 20141 | 34,620 | 24,061 | ||||||
US Investigations Services, Inc., Term Loan B, 3.292% 20153,4,5 | 10,540 | 9,887 | ||||||
US Investigations Services, Inc. 10.50% 20152 | 34,825 | 29,601 | ||||||
US Investigations Services, Inc. 11.75% 20162 | 12,875 | 9,978 | ||||||
Allied Waste North America, Inc., Series B, 6.125% 2014 | 5,350 | 5,487 | ||||||
Allied Waste North America, Inc., Series B, 7.375% 2014 | 15,705 | 16,358 | ||||||
Allied Waste North America, Inc. 6.875% 2017 | 15,800 | 16,713 | ||||||
B/E Aerospace 8.50% 2018 | 32,955 | 33,861 | ||||||
Atrium Companies, Inc., Term Loan B, 11.75% 20123,4,5,6 | 41,457 | 19,761 | ||||||
Atrium Companies, Inc. 15.00% 20122,6 | 45,037 | 901 | ||||||
RBS Global, Inc. and Rexnord LLC 9.50% 2014 | 11,675 | 11,383 | ||||||
RBS Global, Inc. and Rexnord LLC 8.875% 2016 | 8,475 | 6,928 | ||||||
TFM, SA de CV 9.375% 2012 | 2,500 | 2,550 | ||||||
Kansas City Southern Railway Co. 13.00% 2013 | 4,175 | 4,822 | ||||||
Kansas City Southern Railway Co. 8.00% 2015 | 8,382 | 8,592 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 13,250 | 12,786 | ||||||
Iron Mountain Inc. 7.75% 2015 | 11,175 | 11,315 | ||||||
United Rentals (North America), Inc., Series B, 6.50% 2012 | 10,675 | 10,755 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 9,875 | 9,085 | ||||||
Accuride Corp. 8.50% 20151 | 15,345 | 8,977 | ||||||
Navios Maritime Holdings Inc. 9.50% 2014 | 7,475 | 7,172 | ||||||
Esco Corp. 4.174% 20132,3 | 950 | 860 | ||||||
Esco Corp. 8.625% 20132 | 5,600 | 5,516 | ||||||
Sequa Corp., Term Loan B, 3.85% 20143,4,5 | 6,871 | 5,991 | ||||||
Park-Ohio Industries, Inc. 8.375% 2014 | 6,225 | 4,824 | ||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014 | 3,650 | 3,541 | ||||||
Alion Science and Technology Corp. 10.25% 2015 | 2,750 | 2,076 | ||||||
RSC Holdings III, LLC, Second Lien Term Loan B, 4.08% 20133,4,5 | 1,959 | 1,741 | ||||||
FTI Consulting, Inc. 7.625% 2013 | 775 | 777 | ||||||
1,487,891 | ||||||||
FINANCIALS — 9.33% | ||||||||
Ford Motor Credit Co. 7.375% 2009 | 25,150 | 25,157 | ||||||
Ford Motor Credit Co. 8.625% 2010 | 2,405 | 2,433 | ||||||
Ford Motor Credit Co. 9.75% 20103 | 31,000 | 31,686 | ||||||
Ford Motor Credit Co. 5.549% 20113 | 21,675 | 20,727 | ||||||
Ford Motor Credit Co. 7.25% 2011 | 5,000 | 4,858 | ||||||
Ford Motor Credit Co. 7.375% 2011 | 6,775 | 6,742 | ||||||
Ford Motor Credit Co. 9.875% 2011 | 10,600 | 10,755 | ||||||
Ford Motor Credit Co. 3.26% 20123 | 85,585 | 77,133 | ||||||
Ford Motor Credit Co. 7.50% 2012 | 5,000 | 4,804 | ||||||
Ford Motor Credit Co. 7.80% 2012 | 5,500 | 5,319 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 14,325 | 13,308 | ||||||
Realogy Corp., Term Loan B, 3.254% 20133,4,5 | 94,064 | 79,784 | ||||||
Realogy Corp., Term Loan DD, 3.254% 20133,4,5 | 13,699 | 11,620 | ||||||
Realogy Corp., Letter of Credit, 3.281% 20133,4,5 | 23,552 | 19,977 | ||||||
Realogy Corp. 10.50% 2014 | 27,510 | 20,082 | ||||||
Realogy Corp. 11.75% 20143,6 | 5,857 | 3,895 | ||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20174,5 | 52,000 | 54,457 | ||||||
CIT Group Inc. 4.125% 2009 | 2,500 | 2,017 | ||||||
CIT Group Inc. 4.80% 2009 | 8 | 6 | ||||||
CIT Group Inc. 6.50% 2009 | 15 | 11 | ||||||
CIT Group Inc. 0.42% 20103 | 5,000 | 3,606 | ||||||
CIT Group Inc. 4.25% 2010 | 51,342 | 37,018 | ||||||
CIT Group Inc. 7.625% 2012 | 16,615 | 10,828 | ||||||
CIT Group Inc., Term Loan, 13.00% 20123,4,5 | 131,000 | 135,539 | ||||||
CIT Group Inc. 5.40% 2013 | 1,024 | 657 | ||||||
Residential Capital Corp. 8.375% 2010 | 26,050 | 19,538 | ||||||
General Motors Acceptance Corp. 7.25% 20112 | 27,783 | 27,019 | ||||||
General Motors Acceptance Corp. 6.625% 20122 | 1,899 | 1,766 | ||||||
General Motors Acceptance Corp. 6.875% 20122 | 7,250 | 6,743 | ||||||
General Motors Acceptance Corp. 7.00% 20122 | 12,062 | 11,338 | ||||||
General Motors Acceptance Corp. 7.50% 20132 | 3,030 | 2,682 | ||||||
General Motors Acceptance Corp. 2.561% 20142,3 | 9,210 | 7,149 | ||||||
General Motors Acceptance Corp. 6.75% 20142 | 2,529 | 2,175 | ||||||
General Motors Acceptance Corp. 8.00% 20182 | 3,269 | 2,501 | ||||||
Countrywide Financial Corp., Series B, 5.80% 2012 | 1,955 | 2,064 | ||||||
Bank of America Corp., Series L, 7.375% 2014 | 10,000 | 11,138 | ||||||
Bank of America Corp. 5.30% 2017 | 5,000 | 4,804 | ||||||
Bank of America Corp. 5.75% 2017 | 11,520 | 11,518 | ||||||
Bank of America Corp. 6.10% 2017 | 17,325 | 17,452 | ||||||
Bank of America Corp. 5.65% 2018 | 17,255 | 17,066 | ||||||
BankAmerica Capital II, Series 2, 8.00% 2026 | 1,260 | 1,235 | ||||||
MBNA Capital A, Series A, 8.278% 2026 | 7,800 | 7,722 | ||||||
Host Marriott, LP, Series M, 7.00% 2012 | 11,100 | 11,253 | ||||||
Host Marriott, LP, Series K, 7.125% 2013 | 4,450 | 4,417 | ||||||
Host Marriott, LP, Series O, 6.375% 2015 | 3,725 | 3,548 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 15,325 | 14,635 | ||||||
Host Hotels & Resorts LP 9.00% 20172 | 29,025 | 30,912 | ||||||
Rouse Co. 7.20% 20121 | 12,145 | 10,627 | ||||||
Rouse Co. 5.375% 20131 | 22,130 | 18,976 | ||||||
Rouse Co. 6.75% 20131,2 | 17,950 | 15,549 | ||||||
Rouse Co. 3.625% 20091 | 12,415 | 10,630 | ||||||
Developers Diversified Realty Corp. 5.375% 2012 | 400 | 375 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 2,490 | 2,158 | ||||||
Developers Diversified Realty Corp. 9.625% 2016 | 52,305 | 52,531 | ||||||
National City Preferred Capital Trust I 12.00% (undated)3 | 41,340 | 46,714 | ||||||
Liberty Mutual Group Inc. 6.50% 20352 | 11,000 | 8,910 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20872,3 | 6,260 | 4,852 | ||||||
Liberty Mutual Group Inc., Series C, 10.75% 20882,3 | 29,740 | 28,699 | ||||||
SLM Corp., Series A, 4.50% 2010 | 3,000 | 2,916 | ||||||
SLM Corp., Series A, 5.375% 2013 | 9,000 | 7,509 | ||||||
SLM Corp., Series A, 0.804% 20143 | 7,000 | 4,421 | ||||||
SLM Corp., Series A, 8.45% 2018 | 25,000 | 19,966 | ||||||
Capital One Financial Corp. 6.15% 2016 | 4,250 | 4,179 | ||||||
Capital One Capital III 7.686% 20363 | 11,250 | 9,563 | ||||||
Capital One Capital IV 6.745% 20373 | 8,150 | 6,316 | ||||||
Capital One Capital V 10.25% 2039 | 10,000 | 11,078 | ||||||
PLD International Finance LLC 4.375% 2011 | € | 12,500 | 17,609 | |||||
ProLogis 5.50% 2013 | $ | 3,000 | 2,849 | |||||
ProLogis 5.625% 2016 | 2,970 | 2,669 | ||||||
ProLogis 6.625% 2018 | 8,570 | 7,926 | ||||||
Hospitality Properties Trust 7.875% 2014 | 4,090 | 4,102 | ||||||
Hospitality Properties Trust 5.125% 2015 | 4,410 | 3,873 | ||||||
Hospitality Properties Trust 6.30% 2016 | 4,845 | 4,336 | ||||||
Hospitality Properties Trust 5.625% 2017 | 11,870 | 10,076 | ||||||
Hospitality Properties Trust 6.70% 2018 | 8,625 | 7,666 | ||||||
Zions Bancorporation 5.65% 2014 | 18,990 | 15,002 | ||||||
Zions Bancorporation 7.75% 2014 | 4,400 | 3,942 | ||||||
Zions Bancorporation 6.00% 2015 | 10,560 | 8,348 | ||||||
Lazard Group LLC 7.125% 2015 | 20,314 | 20,540 | ||||||
Lazard Group LLC 6.85% 2017 | 6,761 | 6,674 | ||||||
Citigroup Inc. 6.125% 2017 | 8,700 | 8,651 | ||||||
Citigroup Inc. 6.125% 2018 | 9,350 | 9,222 | ||||||
Citigroup Capital XXI 8.30% 20773 | 6,500 | 5,842 | ||||||
MetLife Capital Trust X 9.25% 20682,3 | 12,000 | 12,512 | ||||||
MetLife Inc. 10.75% 20693 | 7,000 | 8,456 | ||||||
Nationwide Mutual Insurance Co. 9.375% 20392 | 18,000 | 19,232 | ||||||
Simon Property Group, LP 6.75% 2014 | 9,375 | 10,064 | ||||||
Simon Property Group, LP 10.35% 2019 | 7,350 | 9,161 | ||||||
Scotland International Finance No. 2 BV 4.25% 20132 | 1,000 | 971 | ||||||
HBOS PLC 6.75% 20182 | 17,425 | 15,561 | ||||||
Royal Bank of Scotland Group PLC 5.00% 2014 | 10,172 | 9,210 | ||||||
Royal Bank of Scotland Group PLC 5.05% 2015 | 3,813 | 3,424 | ||||||
Royal Bank of Scotland Group PLC 6.99% (undated)2,3 | 6,300 | 3,280 | ||||||
Westfield Group 5.40% 20122 | 115 | 118 | ||||||
Westfield Capital Corp. Ltd., WT Finance (Australia) Pty Ltd. and WEA Finance LLC 5.125% 20142 | 1,200 | 1,169 | ||||||
Westfield Group 5.70% 20162 | 145 | 141 | ||||||
Westfield Group 7.125% 20182 | 3,540 | 3,696 | ||||||
Westfield Group 6.75% 20192 | 6,000 | 6,080 | ||||||
Kimco Realty Corp., Series C, 5.783% 2016 | 10,975 | 10,802 | ||||||
International Lease Finance Corp., Series R, 6.375% 2013 | 7,900 | 6,340 | ||||||
International Lease Finance Corp., Series R, 5.65% 2014 | 4,000 | 3,073 | ||||||
SunTrust Banks, Inc. 5.25% 2012 | 5,795 | 5,984 | ||||||
SunTrust Banks, Inc. 6.00% 2017 | 2,905 | 2,854 | ||||||
Catlin Insurance Ltd. 7.249% (undated)2,3 | 12,375 | 8,353 | ||||||
LaBranche & Co Inc. 11.00% 2012 | 7,750 | 7,518 | ||||||
Brandywine Operating Partnership, LP 7.50% 2015 | 7,000 | 7,011 | ||||||
JPMorgan Chase & Co. 6.30% 2019 | 6,000 | 6,562 | ||||||
Lehman Brothers Holdings Inc., Series G, 4.80% 20141 | 5,000 | 875 | ||||||
Lehman Brothers Holdings Inc., Series I, 6.20% 20141 | 4,640 | 812 | ||||||
Lehman Brothers Holdings Inc., Series H, 5.50% 20161 | 360 | 63 | ||||||
Lehman Brothers Holdings Inc., Series I, 6.875% 20181 | 23,000 | 4,198 | ||||||
Unum Group 7.125% 2016 | 5,845 | 5,922 | ||||||
Banco Mercantil del Norte, SA 6.135% 20162,3 | 3,500 | 3,380 | ||||||
Banco Mercantil del Norte, SA 6.862% 20212,3 | 2,000 | 1,808 | ||||||
Korea Development Bank 8.00% 2014 | 3,500 | 3,983 | ||||||
HVB Funding Trust I 8.741% 20312 | 4,200 | 3,612 | ||||||
UniCredito Italiano Capital Trust II 9.20% (undated)2,3 | 280 | 260 | ||||||
iStar Financial, Inc. 8.625% 2013 | 5,000 | 3,200 | ||||||
Schwab Capital Trust I 7.50% 20373 | 1,795 | 1,630 | ||||||
Northern Rock PLC 5.60% (undated)2,3 | 1,710 | 162 | ||||||
Northern Rock PLC 6.594% (undated)2,3 | 14,455 | 1,373 | ||||||
HSBK (Europe) BV 7.75% 20132 | 1,200 | 1,128 | ||||||
Capmark Financial Group Inc. 3.114% 20103 | 1,555 | 375 | ||||||
1,400,743 | ||||||||
HEALTH CARE — 8.49% | ||||||||
Tenet Healthcare Corp. 7.375% 2013 | 36,310 | 36,128 | ||||||
Tenet Healthcare Corp. 9.00% 20152 | 1,245 | 1,307 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 39,985 | 41,934 | ||||||
Tenet Healthcare Corp. 10.00% 20182 | 1,245 | 1,379 | ||||||
Tenet Healthcare Corp. 8.875% 20192 | 158,730 | 168,254 | ||||||
Elan Finance PLC and Elan Finance Corp. 4.44% 20113 | 40,467 | 39,658 | ||||||
Elan Finance PLC and Elan Finance Corp. 7.75% 2011 | 30,261 | 30,980 | ||||||
Elan Finance PLC and Elan Finance Corp. 4.486% 20133 | 16,120 | 14,750 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 70,975 | 71,862 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 20162,9 | 46,315 | 45,736 | ||||||
HCA Inc., Term Loan B1, 2.533% 20133,4,5 | 25,788 | 24,409 | ||||||
HCA Inc. 9.125% 2014 | 12,945 | 13,398 | ||||||
HCA Inc. 9.25% 2016 | 16,790 | 17,399 | ||||||
HCA Inc. 9.625% 20163,6 | 18,906 | 19,709 | ||||||
HCA Inc. 8.50% 20192 | 44,590 | 46,819 | ||||||
HCA Inc. 7.875% 20202 | 35,805 | 36,029 | ||||||
HealthSouth Corp., Term Loan B, 2.55% 20133,4,5 | 12,698 | 12,247 | ||||||
HealthSouth Corp. 7.218% 20143 | 57,305 | 56,445 | ||||||
HealthSouth Corp. 10.75% 2016 | 76,190 | 83,047 | ||||||
VWR Funding, Inc. 11.25% 20153,6 | 119,260 | 109,421 | ||||||
PTS Acquisition Corp. 9.50% 20153,6 | 86,500 | 75,688 | ||||||
Boston Scientific Corp. 5.45% 2014 | 9,235 | 9,304 | ||||||
Boston Scientific Corp. 5.125% 2017 | 13,645 | 12,877 | ||||||
Boston Scientific Corp. 7.00% 2035 | 41,985 | 38,679 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 53,025 | 55,809 | ||||||
Surgical Care Affiliates, Inc. 9.625% 20152,3,6 | 26,413 | 20,470 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20172 | 19,855 | 15,983 | ||||||
Team Finance LLC and Health Finance Corp. 11.25% 2013 | 30,640 | 32,402 | ||||||
Coventry Health Care, Inc. 5.875% 2012 | 10,580 | 10,477 | ||||||
Coventry Health Care, Inc. 5.95% 2017 | 24,050 | 21,596 | ||||||
Warner Chilcott Corp. 8.75% 2015 | 27,219 | 28,036 | ||||||
Viant Holdings Inc. 10.125% 20172 | 25,974 | 24,805 | ||||||
Symbion Inc. 11.75% 20153,6 | 32,878 | 24,494 | ||||||
Valeant Pharmaceuticals 8.375% 20162 | 16,535 | 16,866 | ||||||
CHS/Community Health Systems, Inc. 8.875% 2015 | 8,250 | 8,477 | ||||||
United Surgical Partners International Inc. 9.25% 20173,6 | 6,455 | 6,165 | ||||||
Health Management Associates, Inc. 6.125% 2016 | 3,000 | 2,805 | ||||||
1,275,844 | ||||||||
INFORMATION TECHNOLOGY — 7.24% | ||||||||
NXP BV and NXP Funding LLC 3.259% 20133 | 64,365 | 46,745 | ||||||
NXP BV and NXP Funding LLC 3.746% 20133 | € | 48,528 | 51,859 | |||||
NXP BV and NXP Funding LLC 10.00% 20138 | $ | 77,049 | 76,375 | |||||
NXP BV and NXP Funding LLC 7.875% 2014 | 111,615 | 88,176 | ||||||
NXP BV and NXP Funding LLC 8.625% 2015 | € | 46,675 | 42,705 | |||||
NXP BV and NXP Funding LLC 9.50% 2015 | $ | 112,265 | 74,937 | |||||
Freescale Semiconductor, Inc., Term Loan B, 2.011% 20133,4,5 | 30,020 | 24,129 | ||||||
Freescale Semiconductor, Inc. 4.174% 20143 | 5,325 | 3,568 | ||||||
Freescale Semiconductor, Inc. 8.875% 2014 | 85,928 | 66,164 | ||||||
Freescale Semiconductor, Inc. 9.875% 20143,6 | 68,891 | 47,879 | ||||||
Freescale Semiconductor, Inc., Term Loan B, 12.50% 20144,5 | 63,687 | 64,218 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 32,782 | 21,964 | ||||||
Sanmina-SCI Corp. 3.049% 20102,3 | 2,375 | 2,316 | ||||||
Sanmina-SCI Corp. 6.75% 2013 | 46,100 | 44,025 | ||||||
Sanmina-SCI Corp. 3.049% 20142,3,9 | 24,605 | 21,591 | ||||||
Sanmina-SCI Corp. 8.125% 2016 | 87,707 | 82,444 | ||||||
First Data Corp., Term Loan B2, 3.036% 20143,4,5 | 79,514 | 68,670 | ||||||
First Data Corp. 9.875% 2015 | 37,991 | 35,284 | ||||||
First Data Corp. 9.875% 2015 | 9,700 | 9,009 | ||||||
SunGard Data Systems Inc. 9.125% 2013 | 46,675 | 47,375 | ||||||
SunGard Data Systems Inc. 10.625% 20152 | 3,800 | 4,047 | ||||||
Hughes Communications, Inc. 9.50% 2014 | 41,300 | 41,713 | ||||||
Ceridian Corp. 11.25% 2015 | 32,925 | 29,674 | ||||||
Sensata Technologies BV, Term Loan B, 2.246% 20133,4,5 | 5,567 | 4,783 | ||||||
Sensata Technologies BV 8.00% 20143 | 20,325 | 19,055 | ||||||
Serena Software, Inc. 10.375% 2016 | 24,540 | 23,313 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 22,415 | 22,863 | ||||||
Celestica Inc. 7.875% 2011 | 10,525 | 10,762 | ||||||
Celestica Inc. 7.625% 2013 | 2,235 | 2,285 | ||||||
Xerox Corp. 7.125% 2010 | 3,650 | 3,759 | ||||||
Xerox Corp. 7.625% 2013 | 5,000 | 5,137 | ||||||
1,086,824 | ||||||||
MATERIALS — 4.58% | ||||||||
Nalco Co. 7.75% 2011 | 6,478 | 6,510 | ||||||
Nalco Co. 7.75% 2011 | € | 500 | 737 | |||||
Nalco Co. 8.875% 2013 | $ | 6,700 | 6,918 | |||||
Nalco Co. 9.00% 2013 | € | 965 | 1,469 | |||||
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014 | $ | 8,825 | 9,156 | |||||
Nalco Co., Term Loan B, 5.75% 20163,4,5 | 14,278 | 14,546 | ||||||
Nalco Co. 8.25% 20172 | 38,690 | 40,818 | ||||||
International Paper Co. 7.95% 2018 | 38,445 | 41,739 | ||||||
International Paper Co. 9.375% 2019 | 29,405 | 34,487 | ||||||
Dow Chemical Co. 7.60% 2014 | 13,000 | 14,395 | ||||||
Dow Chemical Co. 8.55% 2019 | 34,225 | 38,538 | ||||||
Dow Chemical Co. 9.40% 2039 | 12,415 | 15,334 | ||||||
Owens-Brockway Glass Container Inc. 8.25% 2013 | 9,560 | 9,823 | ||||||
Owens-Brockway Glass Container Inc. 6.75% 2014 | € | 375 | 549 | |||||
Owens-Brockway Glass Container Inc. 7.375% 2016 | $ | 48,635 | 49,608 | |||||
Georgia-Pacific Corp. 8.125% 2011 | 15,140 | 15,783 | ||||||
Georgia-Pacific Corp., First Lien Term Loan B, 2.302% 20123,4,5 | 3,037 | 2,930 | ||||||
Georgia-Pacific LLC 8.25% 20162 | 28,615 | 29,831 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017 | 42,710 | 45,496 | ||||||
Georgia Gulf Corp., Term Loan, Revolver, 6.50% 20113,4,5,10,11 | 25,640 | 24,102 | ||||||
Georgia Gulf Corp., Term Loan B, 10.00% 20133,4,5,10 | 19,497 | 19,239 | ||||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 10,215 | 10,215 | ||||||
Rockwood Specialties Group, Inc. 7.625% 2014 | € | 12,235 | 18,090 | |||||
Graphic Packaging International, Inc. 9.50% 2013 | $ | 2,425 | 2,510 | |||||
Graphic Packaging International, Inc. 9.50% 20172 | 12,905 | 13,776 | ||||||
Graphic Packaging International, Inc. 9.50% 20172 | 8,905 | 9,506 | ||||||
Associated Materials Inc. 9.75% 2012 | 5,280 | 5,214 | ||||||
AMH Holdings, Inc. 11.25% 2014 | 26,910 | 20,452 | ||||||
Ball Corp. 7.125% 2016 | 14,785 | 15,155 | ||||||
Ball Corp. 7.375% 2019 | 9,680 | 9,874 | ||||||
Newpage Corp. 11.375% 20142 | 18,095 | 17,869 | ||||||
Rio Tinto Finance (USA) Ltd. 8.95% 2014 | 14,700 | 17,365 | ||||||
FMG Finance Pty Ltd. 4.361% 20112,3 | 3,875 | 3,933 | ||||||
FMG Finance Pty Ltd. 10.625% 20162 | 11,725 | 13,044 | ||||||
Plastipak Holdings, Inc. 8.50% 20152 | 15,515 | 15,748 | ||||||
Teck Resources Ltd. 9.75% 2014 | 14,000 | 15,470 | ||||||
Rock-Tenn Co. 9.25% 2016 | 6,000 | 6,450 | ||||||
Rock-Tenn Co. 9.25% 20162 | 3,180 | 3,418 | ||||||
Neenah Paper, Inc. 7.375% 2014 | 12,385 | 9,815 | ||||||
Smurfit Capital Funding PLC 7.50% 2025 | 9,045 | 7,417 | ||||||
Metals USA Holdings Corp. 7.847% 20123,6 | 9,714 | 7,237 | ||||||
Airgas, Inc. 6.25% 2014 | 5,835 | 6,025 | ||||||
Airgas, Inc. 7.125% 20182 | 650 | 670 | ||||||
C5 Capital (SPV) Ltd. 6.196% (undated)2,3 | 400 | 311 | ||||||
C8 Capital (SPV) Ltd. 6.64% (undated)3 | 450 | 348 | ||||||
C8 Capital (SPV) Ltd. 6.64% (undated)2,3 | 300 | 232 | ||||||
C10 Capital (SPV) Ltd. 6.722% (undated)2,3 | 6,850 | 5,422 | ||||||
C10 Capital (SPV) Ltd. 6.722% (undated)3 | 300 | 237 | ||||||
ArcelorMittal 6.125% 2018 | 6,000 | 5,921 | ||||||
CSN Islands XI Corp. 6.875% 20192 | 5,300 | 5,377 | ||||||
Bway Corp. 10.00% 20142 | 5,050 | 5,366 | ||||||
MacDermid 9.50% 20172 | 4,905 | 4,537 | ||||||
Exopack Holding Corp. 11.25% 2014 | 3,650 | 3,623 | ||||||
Ashland Inc., Term Loan B, 7.65% 20143,4,5 | 3,397 | 3,480 | ||||||
Domtar Corp. 7.125% 2015 | 1,840 | 1,812 | ||||||
687,927 | ||||||||
UTILITIES — 4.41% | ||||||||
Edison Mission Energy 7.50% 2013 | 48,325 | 45,546 | ||||||
Edison Mission Energy 7.75% 2016 | 12,825 | 11,286 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20164 | 48,812 | 49,544 | ||||||
Edison Mission Energy 7.00% 2017 | 42,195 | 35,444 | ||||||
Edison Mission Energy 7.20% 2019 | 46,450 | 37,857 | ||||||
Homer City Funding LLC 8.734% 20264 | 9,104 | 8,604 | ||||||
Edison Mission Energy 7.625% 2027 | 44,280 | 31,882 | ||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 3.754% 20143,4,5 | 30,643 | 24,480 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015 | 57,035 | 41,350 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015 | 50,900 | 36,902 | ||||||
Texas Competitive Electric Holdings Co. LLC 11.25% 20163,6 | 32,719 | 22,739 | ||||||
AES Corp. 9.375% 2010 | 5,508 | 5,701 | ||||||
AES Corp. 8.875% 2011 | 8,475 | 8,772 | ||||||
AES Corp. 8.75% 20132 | 18,367 | 18,803 | ||||||
AES Gener SA 7.50% 2014 | 11,750 | 12,786 | ||||||
AES Corp. 7.75% 2015 | 2,000 | 2,020 | ||||||
AES Corp. 8.00% 2017 | 20,000 | 20,225 | ||||||
AES Red Oak, LLC, Series A, 8.54% 20194 | 6,859 | 6,499 | ||||||
AES Corp. 8.00% 2020 | 6,800 | 6,783 | ||||||
AES Red Oak, LLC, Series B, 9.20% 20294 | 5,000 | 4,637 | ||||||
Intergen Power 9.00% 20172 | 74,950 | 77,573 | ||||||
NRG Energy, Inc. 7.25% 2014 | 21,350 | 21,030 | ||||||
NRG Energy, Inc. 7.375% 2016 | 56,700 | 54,999 | ||||||
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011 | 4,000 | 4,354 | ||||||
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012 | 3,000 | 3,205 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012 | 2,650 | 2,833 | ||||||
Sierra Pacific Resources 8.625% 2014 | 11,075 | 11,449 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series L, 5.875% 2015 | 2,475 | 2,640 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series M, 5.95% 2016 | 1,600 | 1,711 | ||||||
Sierra Pacific Resources 6.75% 2017 | 2,000 | 1,971 | ||||||
Ameren Corp. 8.875% 2014 | 16,750 | 18,846 | ||||||
ISA Capital do Brasil SA 7.875% 20122 | 2,375 | 2,506 | ||||||
ISA Capital do Brasil SA 8.80% 20172 | 6,800 | 7,344 | ||||||
CMC Energy Corp. 6.55% 2017 | 8,250 | 8,095 | ||||||
Enersis SA 7.375% 2014 | 6,800 | 7,516 | ||||||
FPL Energy National Wind Portfolio, LLC 6.125% 20192,4 | 3,261 | 2,981 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20172 | 2,000 | 2,017 | ||||||
662,930 | ||||||||
CONSUMER STAPLES — 3.31% | ||||||||
Stater Bros. Holdings Inc. 8.125% 2012 | 42,605 | 43,031 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 46,405 | 45,245 | ||||||
SUPERVALU INC., Term Loan B, 1.496% 20123,4,5 | 1,319 | 1,266 | ||||||
SUPERVALU INC. 7.50% 2012 | 3,860 | 4,005 | ||||||
Albertson’s, Inc. 7.25% 2013 | 4,990 | 5,040 | ||||||
SUPERVALU INC. 7.50% 2014 | 1,000 | 1,010 | ||||||
SUPERVALU INC. 8.00% 2016 | 47,350 | 49,244 | ||||||
Albertson’s, Inc. 8.00% 2031 | 25,450 | 22,969 | ||||||
Rite Aid Corp. 8.625% 2015 | 14,500 | 11,872 | ||||||
Rite Aid Corp., Term Loan T4 9.50% 20153,4,5 | 15,000 | 15,738 | ||||||
Rite Aid Corp. 9.75% 20162 | 15,000 | 16,275 | ||||||
Rite Aid Corp. 7.70% 2027 | 7,500 | 4,387 | ||||||
Rite Aid Corp. 6.875% 2028 | 11,177 | 6,203 | ||||||
Duane Reade Inc. 11.75% 20152 | 50,860 | 53,657 | ||||||
Smithfield Foods, Inc., Series B, 8.00% 2009 | 1,000 | 1,000 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 2,300 | 2,058 | ||||||
Smithfield Foods, Inc. 10.00% 20142 | 35,900 | 37,874 | ||||||
Smithfield Foods, Inc. 7.75% 2017 | 9,350 | 7,737 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 6,775 | 7,097 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 31,375 | 31,375 | ||||||
Tyson Foods, Inc. 10.50% 2014 | 27,025 | 30,741 | ||||||
Altria Group, Inc. 10.20% 2039 | 16,650 | 23,179 | ||||||
Vitamin Shoppe Industries Inc. 7.94% 20123 | 19,535 | 19,535 | ||||||
Dole Food Co., Inc. 8.875% 2011 | 18,550 | 18,666 | ||||||
Elizabeth Arden, Inc. 7.75% 2014 | 14,273 | 13,631 | ||||||
Ingles Markets, Inc. 8.875% 2017 | 12,575 | 12,952 | ||||||
Cott Beverages Inc. 8.00% 2011 | 11,775 | 11,760 | ||||||
CVS Caremark Corp. 6.943% 20304 | 295 | 299 | ||||||
497,846 | ||||||||
ENERGY — 2.55% | ||||||||
Petroplus Finance Ltd. 6.75% 20142 | 41,000 | 38,591 | ||||||
Petroplus Finance Ltd. 7.00% 20172 | 50,200 | 45,933 | ||||||
Petroplus Finance Ltd. 9.375% 20192 | 10,975 | 10,865 | ||||||
Williams Companies, Inc. 2.597% 20102,3 | 14,000 | 13,992 | ||||||
Williams Companies, Inc. 6.375% 20102 | 6,000 | 6,161 | ||||||
Williams Companies, Inc. 8.125% 2012 | 9,800 | 10,658 | ||||||
Williams Companies, Inc. 7.625% 2019 | 14,000 | 15,141 | ||||||
Williams Companies, Inc. 8.75% 2020 | 13,755 | 15,841 | ||||||
Williams Companies, Inc. 7.875% 2021 | 1,650 | 1,788 | ||||||
Williams Companies, Inc. 8.75% 2032 | 18,250 | 20,984 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011 | 11,375 | 11,796 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017 | 31,975 | 31,466 | ||||||
Drummond Co., Inc. 7.375% 20162 | 23,935 | 21,182 | ||||||
Gaz Capital SA 6.51% 20222 | 10,000 | 9,188 | ||||||
Gaz Capital SA 7.288% 20372 | 11,800 | 11,092 | ||||||
TransCanada PipeLines Ltd. 6.35% 20673 | 22,645 | 19,869 | ||||||
Forest Oil Corp. 8.50% 20142 | 6,800 | 6,885 | ||||||
Forest Oil Corp. 7.25% 2019 | 13,750 | 12,925 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20144 | 19,923 | 19,724 | ||||||
Pemex Project Funding Master Trust 5.75% 2018 | 5,850 | 5,813 | ||||||
Pemex Project Funding Master Trust 6.625% 2035 | 6,500 | 6,287 | ||||||
TEPPCO Partners LP 7.00% 20673 | 13,655 | 11,710 | ||||||
Enbridge Energy Partners, LP 9.875% 2019 | 3,250 | 4,043 | ||||||
Enbridge Energy Partners, LP 8.05% 20773 | 7,220 | 6,435 | ||||||
Kinder Morgan Energy Partners LP 9.00% 2019 | 5,730 | 6,954 | ||||||
Peabody Energy Corp. 5.875% 2016 | 2,425 | 2,322 | ||||||
Peabody Energy Corp. 7.375% 2016 | 3,200 | 3,248 | ||||||
Newfield Exploration Co. 7.125% 2018 | 5,000 | 5,013 | ||||||
Concho Resources Inc. 8.625% 2017 | 3,300 | 3,399 | ||||||
Energy Transfer Partners, LP 9.70% 2019 | 1,550 | 1,922 | ||||||
Continental Resources 8.25% 20192 | 1,800 | 1,859 | ||||||
383,086 | ||||||||
Total corporate bonds, notes & loans | 11,997,830 | |||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 2.84% | ||||||||
Brazilian Treasury Bill 6.00% 20109,12 | BRL58,946 | $ | 33,696 | |||||
Brazil (Federal Republic of) 10.00% 20179 | 63,600 | 31,440 | ||||||
Brazil (Federal Republic of) Global 8.00% 20184 | $ | 9,676 | 11,253 | |||||
Brazil (Federal Republic of) Global 10.25% 2028 | BRL15,000 | 8,190 | ||||||
Brazil (Federal Republic of) Global 7.125% 2037 | $ | 2,500 | 2,994 | |||||
Brazil (Federal Republic of) Global 11.00% 2040 | 12,485 | 16,855 | ||||||
Brazilian Treasury Bill 6.00% 20459,12 | BRL18,225 | 9,979 | ||||||
Turkey (Republic of) 15.00% 2010 | TRY16,262 | 11,269 | ||||||
Turkey (Republic of) 14.00% 2011 | 30,550 | 22,267 | ||||||
Turkey (Republic of) 16.00% 2012 | 16,000 | 12,410 | ||||||
Turkey (Republic of) 7.50% 2017 | $ | 9,700 | 10,743 | |||||
Turkey (Republic of) 6.75% 2018 | 3,250 | 3,437 | ||||||
Colombia (Republic of) Global 11.75% 2010 | COP3,295,000 | 1,766 | ||||||
Colombia (Republic of) Global 10.00% 2012 | $ | 1,500 | 1,769 | |||||
Colombia (Republic of) Global 10.75% 2013 | 8,550 | 10,628 | ||||||
Colombia (Republic of) Global 8.25% 2014 | 4,000 | 4,800 | ||||||
Colombia (Republic of) Global 12.00% 2015 | COP22,990,000 | 14,179 | ||||||
Colombia (Republic of) Global 11.75% 2020 | $ | 1,936 | 2,827 | |||||
Colombia (Republic of) Global 9.85% 2027 | COP12,085,000 | 6,706 | ||||||
Colombia (Republic of) Global 10.375% 2033 | $ | 823 | 1,206 | |||||
Colombia (Republic of) Global 7.375% 2037 | 4,139 | 4,698 | ||||||
Panama (Republic of) Global 7.125% 2026 | 585 | 677 | ||||||
Panama (Republic of) Global 8.875% 2027 | 6,500 | 8,612 | ||||||
Panama (Republic of) Global 6.70% 20364 | 27,674 | 30,718 | ||||||
United Mexican States Government, Series M10, 10.50% 2011 | MXN12,320 | 1,027 | ||||||
United Mexican States Government Global 6.375% 2013 | $ | 6,970 | 7,677 | |||||
United Mexican States Government, Series MI10, 9.50% 2014 | MXN80,000 | 6,452 | ||||||
United Mexican States Government 5.00% 20169,12 | 63,719 | 5,258 | ||||||
United Mexican States Government, Series M20, 10.00% 2024 | 80,000 | 6,851 | ||||||
United Mexican States Government Global 6.75% 2034 | $ | 6,105 | 6,746 | |||||
Russian Federation 12.75% 2028 | 2,000 | 3,340 | ||||||
Russian Federation 7.50% 20304 | 22,433 | 24,564 | ||||||
Egypt (Arab Republic of) 9.10% 2010 | EGP50,497 | 9,298 | ||||||
Egypt (Arab Republic of) 9.10% 2010 | 3,130 | 580 | ||||||
Egypt (Arab Republic of) 11.50% 2011 | 9,380 | 1,823 | ||||||
Egypt (Arab Republic of) 9.10% 2012 | 18,225 | 3,334 | ||||||
Egypt (Arab Republic of) 11.625% 2014 | 49,265 | 9,901 | ||||||
Indonesia (Republic of) 10.375% 2014 | $ | 1,800 | 2,200 | |||||
Indonesia (Republic of) 6.875% 20172 | 1,000 | 1,087 | ||||||
Indonesia (Republic of) 6.875% 2018 | 5,000 | 5,425 | ||||||
Indonesia (Republic of) 6.875% 20182 | 3,725 | 4,042 | ||||||
Indonesia (Republic of) 6.625% 20372 | 2,500 | 2,487 | ||||||
Polish Government 5.75% 2014 | PLN26,354 | 9,194 | ||||||
Polish Government 5.25% 2017 | 2,050 | 677 | ||||||
Polish Government 6.375% 2019 | $ | 3,535 | 3,989 | |||||
Venezuela (Republic of) 10.75% 2013 | 6,000 | 5,970 | ||||||
Venezuela (Republic of) Global 8.50% 2014 | 1,250 | 1,119 | ||||||
Venezuela (Republic of) 7.65% 2025 | 8,455 | 5,623 | ||||||
South Africa (Republic of) 6.875% 2019 | 7,410 | 8,299 | ||||||
Argentina (Republic of) GDP-Linked 2035 | ARS84,135 | 1,326 | ||||||
Argentina (Republic of) GDP-Linked 2035 | $ | 12,377 | 829 | |||||
Argentina (Republic of) 0.63% 20384,9,12 | ARS179,328 | 4,927 | ||||||
Uruguay (Republic of) 4.25% 20274,9,12 | UYU143,129 | 6,717 | ||||||
Dominican Republic 9.50% 20114 | $ | 2,251 | 2,352 | |||||
Dominican Republic 9.50% 20112,4 | 1,375 | �� | 1,436 | |||||
Peru (Republic of) 7.125% 2019 | 2,945 | 3,394 | ||||||
Corporación Andina de Fomento 5.75% 2017 | 3,000 | 3,061 | ||||||
Thai Government 4.125% 2009 | THB73,490 | 2,207 | ||||||
426,331 | ||||||||
MORTGAGE-BACKED OBLIGATIONS4 — 1.42% | ||||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20372 | $ | 10,725 | $ | 10,400 | ||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20372 | 38,760 | 37,493 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class F, 6.650% 20362 | 30,490 | 30,090 | ||||||
Crown Castle Towers LLC, Series 2006-1, Class G, 6.795% 20362 | 12,250 | 12,101 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.788% 20363 | 15,000 | 10,529 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY3, Class 4-A1, 5.32% 20373 | 14,645 | 11,081 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.736% 20373 | 23,769 | 16,598 | ||||||
American Home Mortgage Investment Trust, Series 2005-4, Class V-A, 5.35% 20453 | 55,916 | 36,389 | ||||||
SBA CMBS Trust, Series 2006-1A, Class F, 6.709% 20362 | 1,450 | 1,441 | ||||||
SBA CMBS Trust, Series 2006-1A, Class G, 6.904% 20362 | 5,950 | 5,912 | ||||||
SBA CMBS Trust, Series 2006-1A, Class H, 7.389% 20362 | 11,615 | 11,540 | ||||||
SBA CMBS Trust, Series 2006-1A, Class J, 7.825% 20362 | 12,950 | 12,867 | ||||||
Countrywide Alternative Loan Trust, Series 2007-14T2, Class A-4, 0.596% 20373 | 7,451 | 3,373 | ||||||
Countrywide Alternative Loan Trust, Series 2007-7T2, Class A-27, 6.00% 2037 | 1,800 | 1,127 | ||||||
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 5.65% 20363 | 6,113 | 4,137 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-9, Class 2-A2, 5.846% 20363 | 6,067 | 3,855 | ||||||
Thornburg Mortgage Securities Trust, Series 2006-5, Class A-1, 0.366% 20463 | 2,766 | 2,596 | ||||||
Citigroup Mortgage Loan Trust, Inc., Series 2007-9, Class 2-A-1, 6.50% 2037 | 4,239 | 2,206 | ||||||
213,735 | ||||||||
U.S. TREASURY BONDS & NOTES — 0.38% | ||||||||
U.S. Treasury 1.375% 2012 | 10,000 | 9,983 | ||||||
U.S. Treasury 3.25% 2016 | 20,000 | 20,493 | ||||||
U.S. Treasury 6.00% 2026 | 21,000 | 26,070 | ||||||
56,546 | ||||||||
ASSET-BACKED OBLIGATIONS4 — 0.06% | ||||||||
Prestige Auto Receivables Trust, Series 2007-1, Class A-3, FSA insured, 5.58% 20142 | 6,450 | 6,635 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.383% 20373 | 3,454 | 2,044 | ||||||
8,679 | ||||||||
Total bonds, notes & other debt instruments (cost: $12,624,510,000) | 12,703,121 | |||||||
Shares or | ||||||||
Convertible securities — 1.07% | principal amount | |||||||
INFORMATION TECHNOLOGY — 0.63% | ||||||||
Linear Technology Corp., Series A, 3.00% convertible notes 2027 | $ | 61,000,000 | 59,170 | |||||
Advanced Micro Devices, Inc. 6.00% convertible notes 2015 | $ | 19,482,000 | 14,684 | |||||
Advanced Micro Devices, Inc. 5.75% convertible notes 2012 | $ | 23,900,000 | 20,166 | |||||
94,020 | ||||||||
ENERGY — 0.15% | ||||||||
Petroplus Holdings AG 3.375% convertible notes 2013 | $ | 22,000,000 | 22,047 | |||||
HEALTH CARE — 0.11% | ||||||||
Schering-Plough Corp., 6.00% convertible preferred 2010 | 68,000 | 16,503 | ||||||
FINANCIALS — 0.09% | ||||||||
Alexandria Real Estate Equities, Inc. 8.00% convertible notes 20292 | $ | 1,197,000 | 1,813 | |||||
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20272 | $ | 5,000,000 | 4,619 | |||||
Boston Properties, Inc. 2.875% convertible notes 2037 | $ | 4,000,000 | 3,865 | |||||
Equity Residential 3.85% convertible notes 2026 | $ | 3,500,000 | 3,485 | |||||
13,782 | ||||||||
INDUSTRIALS — 0.07% | ||||||||
UAL Corp. 4.50% convertible notes 2021 | 14,500,000 | 10,749 | ||||||
MISCELLANEOUS — 0.02% | ||||||||
Other convertible securities in initial period of acquisition | 3,469 | |||||||
Total convertible securities (cost: $136,207,000) | 160,570 | |||||||
Preferred securities — 0.99% | Shares | |||||||
FINANCIALS — 0.99% | ||||||||
Barclays Bank PLC 7.434%2,3 | 38,126,000 | 33,932 | ||||||
Barclays Bank PLC 6.86%2,3 | 3,570,000 | 2,802 | ||||||
Barclays Bank PLC 8.55%2,3 | 3,009,000 | 2,768 | ||||||
Barclays Bank PLC 5.926%2,3 | 3,000,000 | 2,250 | ||||||
Barclays Bank PLC, Series 1, 6.278% noncumulative3 | 1,600,000 | 1,192 | ||||||
Barclays Bank PLC 7.375%2,3 | 1,225,000 | 1,090 | ||||||
JPMorgan Chase & Co., Series I, 7.90%3 | 28,770,000 | 27,708 | ||||||
Swire Pacific Capital Ltd. 8.84% cumulative guaranteed perpetual capital securities2 | 1,125,000 | 25,172 | ||||||
Wells Fargo & Co. 7.98%3 | 20,225,000 | 18,506 | ||||||
Wells Fargo Capital XIII 7.70%3 | 3,325,000 | 2,943 | ||||||
PNC Financial Services Group, Inc., Series K, 8.25%3 | 8,275,000 | 7,889 | ||||||
General Motors Corp. 7.00%2 | 9,240 | 5,374 | ||||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative2,3 | 8,150,000 | 4,241 | ||||||
ILFC E-Capital Trust II 6.25%2,3 | 8,000,000 | 4,120 | ||||||
Royal Bank of Scotland Group PLC, Series U, 7.64%3 | 3,700,000 | 1,815 | ||||||
Royal Bank of Scotland Group PLC 5.512% noncumulative trust3 | 2,800,000 | 1,330 | ||||||
BAC Capital Trust VI 5.625% 2035 | 2,837,000 | 2,207 | ||||||
Fannie Mae, Series O, 7.00%2,3 | 607,282 | 1,822 | ||||||
Lloyds Banking Group PLC 6.657% preference shares2,3 | 2,000,000 | 1,223 | ||||||
SMFG Preferred Capital USD 3 Ltd. 9.50%2,3 | 315,000 | 352 | ||||||
IndyMac Bancorp, Inc., Series A, 8.50% noncumulative2,13 | 1,826,000 | 18 | ||||||
Total preferred securities (cost: $192,056,000) | 148,754 | |||||||
Common stocks — 2.27% | ||||||||
MATERIALS — 0.87% | ||||||||
Georgia Gulf Corp.8,9,10,13 | 4,809,206 | 129,848 | ||||||
FINANCIALS — 0.63% | ||||||||
Citigroup Inc. | 10,711,696 | 51,845 | ||||||
Bank of America Corp. | 2,488,132 | 42,099 | ||||||
93,944 | ||||||||
TELECOMMUNICATION SERVICES — 0.34% | ||||||||
AT&T Inc. | 1,000,000 | 27,010 | ||||||
American Tower Corp., Class A13 | 538,967 | 19,618 | ||||||
Sprint Nextel Corp., Series 113 | 777,508 | 3,071 | ||||||
CenturyTel, Inc. | 53,258 | 1,790 | ||||||
Cincinnati Bell Inc.13 | 70,740 | 248 | ||||||
XO Holdings, Inc.13 | 25,291 | 17 | ||||||
51,754 | ||||||||
INDUSTRIALS — 0.15% | ||||||||
Delta Air Lines, Inc.13 | 2,304,931 | 20,652 | ||||||
World Color Press Inc.13 | 113,905 | 1,094 | ||||||
UAL Corp.13 | 22,911 | 211 | ||||||
21,957 | ||||||||
INFORMATION TECHNOLOGY — 0.11% | ||||||||
Micron Technology, Inc.2,13 | 678,656 | 5,565 | ||||||
Micron Technology, Inc.13 | 424,160 | 3,478 | ||||||
Fairchild Semiconductor International, Inc.13 | 500,000 | 5,115 | ||||||
ZiLOG, Inc.10,13 | 1,140,500 | 2,954 | ||||||
HSW International, Inc.8,9,13 | 257,091 | 88 | ||||||
17,200 | ||||||||
CONSUMER DISCRETIONARY — 0.09% | ||||||||
Ford Motor Co.13 | 1,620,210 | 11,682 | ||||||
Time Warner Cable Inc. | 39,816 | 1,716 | ||||||
Adelphia Recovery Trust, Series ACC-19,13 | 16,413,965 | 328 | ||||||
Adelphia Recovery Trust, Series Arahova9,13 | 1,773,964 | 230 | ||||||
Adelphia Recovery Trust, Series ACC-6B9,13 | 3,619,600 | 18 | ||||||
Mobile Travel Guide, Inc.8,9,13 | 83,780 | 21 | ||||||
American Media Operations, Inc.2,9,10,13 | 823,272 | 8 | ||||||
14,003 | ||||||||
HEALTH CARE — 0.06% | ||||||||
UnitedHealth Group Inc. | 375,000 | 9,390 | ||||||
Clarent Hospital Corp.9,10,13 | 576,849 | 29 | ||||||
9,419 | ||||||||
CONSUMER STAPLES — 0.02% | ||||||||
Winn-Dixie Stores, Inc.13 | 194,677 | 2,554 | ||||||
Total common stocks (cost: $319,188,000) | 340,679 | |||||||
Warrants — 0.00% | ||||||||
INDUSTRIALS — 0.00% | ||||||||
World Color Press Inc., Series I, warrants, expire 20149,13 | 64,557 | 132 | ||||||
World Color Press Inc., Series II, warrants, expire 20149,13 | 64,557 | 97 | ||||||
Atrium Corp., warrants, expire 20182,9,13 | 21,012 | 0 | ||||||
229 | ||||||||
TELECOMMUNICATION SERVICES — 0.00% | ||||||||
XO Holdings, Inc., Series A, warrants, expire 201013 | 50,587 | 1 | ||||||
XO Holdings, Inc., Series B, warrants, expire 201013 | 37,939 | — | ||||||
XO Holdings, Inc., Series C, warrants, expire 201013 | 37,939 | — | ||||||
GT Group Telecom Inc., warrants, expire 20102,9,13 | 11,000 | 0 | ||||||
1 | ||||||||
Total warrants (cost: $723,000) | 230 | |||||||
Principal amount | Value | |||||||
Short-term securities — 11.09% | (000 | ) | (000 | ) | ||||
U.S. Treasury Bills 0.18%–0.34% due 10/15/2009–7/15/2010 | $ | 456,000 | $ | 455,125 | ||||
Freddie Mac 0.16%–0.245% due 10/5/2009–4/19/2010 | 337,622 | 337,407 | ||||||
Federal Home Loan Bank 0.15%–0.20% due 10/21–12/16/2009 | 236,091 | 236,056 | ||||||
Fannie Mae 0.17%–0.54% due 11/4/2009–7/13/2010 | 142,342 | 142,288 | ||||||
Abbott Laboratories 0.14%–0.20% due 10/14–12/1/20092 | 84,348 | 84,325 | ||||||
Coca-Cola Co. 0.23%–0.25% due 11/13/2009–1/13/20102 | 83,200 | 83,142 | ||||||
Private Export Funding Corp. 0.19%–0.24% due 10/19–12/1/20092 | 78,400 | 78,380 | ||||||
NetJets Inc. 0.16%–0.18% due 10/26–11/2/20092 | 49,500 | 49,491 | ||||||
Wal-Mart Stores Inc. 0.16% due 11/30/20092 | 40,600 | 40,583 | ||||||
General Electric Capital Corp. 0.18% due 10/1/2009 | 27,400 | 27,400 | ||||||
Yale University 0.28% due 10/15/2009 | 25,000 | 24,997 | ||||||
Harvard University 0.20% due 11/23/2009 | 25,000 | 24,991 | ||||||
Straight-A Funding LLC 0.21% due 11/24/20092 | 25,000 | 24,991 | ||||||
Jupiter Securitization Co., LLC 0.19% due 10/20/20092 | 23,000 | 22,998 | ||||||
Procter & Gamble International Funding S.C.A. 0.20%–0.22% due 10/20–10/22/20092 | 18,800 | 18,797 | ||||||
Medtronic Inc. 0.20% due 10/29/20092 | 15,000 | 14,997 | ||||||
Total short-term securities (cost: $1,665,706,000) | 1,665,968 | |||||||
Total investment securities (cost: $14,938,390,000) | 15,019,322 | |||||||
Other assets less liabilities | 1,434 | |||||||
Net assets | $ | 15,020,756 |
“Miscellaneous” securities include holdings in their initial period of acquisition that have not previously been publicly disclosed.
1Scheduled interest and/or principal payment was not received. |
2Purchased in a transaction exempt from registration under the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $3,456,656,000, which represented 23.01% of the net assets of the fund. |
3Coupon rate may change periodically. |
4Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
5Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,206,728,000, which represented 8.03% of the net assets of the fund. |
6Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
7Step bond; coupon rate will increase at a later date. |
8Purchased in a transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Acquisition date(s) | Cost (000) | Value (000) | Percent of net assets | |
Georgia Gulf Corp. | 9/28/2006–7/29/2009 | $ 85,188 | $129,848 | .87% |
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | 60,765 | 76,375 | .51 |
Gray Television Inc., Series D, 17.00% (undated) | 6/26/2008–7/15/2008 | 61,275 | 37,811 | .25 |
HSW International, Inc. | 12/17/2007 | 792 | 88 | — |
Mobile Travel Guide, Inc. | 12/17/2007 | 21 | 21 | — |
Total restricted securities | $208,041 | $244,143 | 1.63% |
9Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $402,339,000, which represented 2.68% of the net assets of the fund. |
10Represents an affiliated company as defined under the Investment Company Act of 1940. |
11Unfunded loan commitment; the total value of all unfunded loan commitments was $12,679,000, which represented .08% of the net assets of the fund. |
12Index-linked bond whose principal amount moves with a government retail price index. |
13Security did not produce income during the last 12 months. |
Key to abbreviations and symbols
ARS = Argentine pesos
BRL = Brazilian reais
COP = Colombian pesos
EGP = Egyptian pounds
€ = Euros
£ = British pounds
MXN = Mexican pesos
PLN = Polish zloty
THB = Thai baht
TRY = New Turkish liras
UYU = Uruguayan pesos
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so you may lose money.
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in each fund’s prospectus, which can be obtained from your financial professional and should be read carefully before investing.
MFGEFP-921-1109O-S21462
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INVESTMENT PORTFOLIO
To the Shareholders and Board of Trustees of
American High-Income Trust:
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the financial statements of American High-Income Trust (the “Fund”) as of September 30, 2009, and for the year then ended and have issued our report thereon dated November 12, 2009, which report and financial statements are included in Item 1 of this Certified Shareholder Report on Form N-CSR. Our audit also included the Fund’s investment portfolio (the “Schedule”) as of September 30, 2009, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
November 12, 2009
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN HIGH-INCOME TRUST | |
By /s/ David C. Barclay | |
David C. Barclay, President and Principal Executive Officer | |
Date: November 30, 2009 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By /s/ David C. Barclay |
David C. Barclay, President and Principal Executive Officer |
Date: November 30, 2009 |
By /s/ Ari M. Vinocor |
Ari M. Vinocor, Treasurer and Principal Financial Officer |
Date: November 30, 2009 |