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, 2010
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
American
High-Income TrustSM
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Special feature
The role of a high-yield bond fund in a diversified portfolio
„ See page 4
Annual report for the year ended September 30, 2010
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, 2010, 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) | 16.8 | % | 6.5 | % | 7.1 | % | 8.6 | % | ||||||||
Barclays Capital U.S. Corporate | ||||||||||||||||
High Yield 2% Issuer Capped Index1,2 | 18.2 | 8.4 | 8.1 | — | ||||||||||||
Credit Suisse High Yield Index2 | 17.8 | 7.9 | 8.2 | 8.8 | ||||||||||||
Lipper High Current Yield Funds Index3 | 17.2 | 6.0 | 5.5 | 7.0 | ||||||||||||
Citigroup Broad Investment-Grade | ||||||||||||||||
(BIG) Bond Index2 | 7.8 | 6.4 | 6.5 | 7.4 | ||||||||||||
1 This index did not exist prior to December 31, 1992. | ||||||||||||||||
2 The market indexes are unmanaged, and their results do not reflect the effect of sales charges, commissions, account fees, expenses or taxes. | ||||||||||||||||
3 The Lipper Index does not reflect the effect of sales charges. |
Since its inception through September 30, 2010, 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, 2010, the fund ranked 58th of 234; for the five years ended September 30, 2010, it ranked 154th of 351; and for the 12 months ended September 30, 2010, it ranked 204th of 482. 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. Applicable 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, 2010, calculated in accordance with the Securities and Exchange Commission formula, was 6.03%. The fund’s distribution rate for Class A shares as of that date was 7.07%. 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 30.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. High-yield bonds are subject to greater fluctuations in value and risk of loss of income and principal than investment-grade bonds. Bond ratings, which typically range from Aaa/AAA (highest) to D (lowest), are assigned by credit rating agencies such as Moody’s, Standard & Poor’s and/or Fitch as an indication of an issuer’s creditworthiness. Investing in bonds issued outside the U.S. may be subject to additional risks. They include currency fluctuations, political and social instability, differing securities regulations and accounting standards, higher transaction costs, possible changes in tax ation; illiquidity and price volatility. These risks may be heightened in connection with investments in developing countries. 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:
Buoyed by better-than-expected corporate earnings, a continued decline in default rates and a strong appetite among investors for high-yielding assets, the high-yield bond market continued to post strong gains in fiscal 2010, with returns on higher yielding debt outpacing those of both higher quality bonds and developed market equities.
In this environment, American High-Income Trust reported a total return of 16.8% for the 12 months ended September 30, 2010, assuming the reinvestment of monthly dividends totaling approximately 83 cents a share. Shareholders who reinvested dividends received an income return of 8.3% for the year. Those who elected to take dividends in cash received an income return of 8.0% and saw the value of their shares increase 8.2%.
Those results compare with a 17.2% return for the Lipper High Current Yield Funds Index, a benchmark of similar funds, and a 17.8% 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.
This year, we are introducing a new benchmark, the Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index, which covers the universe of fixed-rate, non-investment-grade debt and limits the maximum exposure of any one issuer to 2%. The index is unmanaged, and its results include reinvested distributions but do not reflect the effect of sales charges, account fees, expenses or taxes. It will replace the Credit Suisse High Yield Index starting in next year’s annual report. We believe this index better reflects the universe in which American High-Income Trust invests. For the past 12-month period, this index posted an 18.2% total return.
By comparison, the Citigroup Broad Investment-Grade (BIG) Bond Index, an unmanaged index that measures high-quality bond markets including Treasuries, posted a 7.8% gain, not including expenses. The unmanaged Standard & Poor’s 500 Composite Index, a broad measure of mostly large U.S. stocks, returned 10.2% for the same period.
The year in review
The double-digit gains for fiscal 2010 reflect a continuation of the rebound from severely depressed prices in 2008, when troubles in the credit market deepened into the worst financial crisis since the Great Depression. That year, many companies in the high-yield market were unable to raise money to repay maturing debt. Grave concerns about liquidity and solvency in the financial system frightened investors, causing bond prices to decline and market yields to rise.
In 2009, credit markets re-opened, giving companies the liquidity and financing options they needed to manage their capital structures in an appropriate manner. As fears of insolvency in the financial system subsided, investors rushed back into the markets to take advantage of lower prices, helping the high-yield market to post some of the highest gains of its lifetime.
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In this report | |
Special feature | |
4 | The role of a high-yield bond fund in a diversified portfolio |
In a world of lowered income, a high-yield bond fund can be an important part of a long-term shareholder’s portfolio. | |
Contents | |
1 | Letter to shareholders |
3 | The value of a long-term perspective |
10 | Summary investment portfolio |
15 | Financial statements |
31 | Board of trustees and other officers |
[Begin Sidebar]
Conditions in the high-yield bond market continued to improve throughout fiscal 2010, propelled by strong investor demand for higher yielding debt, a recovering economy and a surge of refinancing among companies looking to improve their capital structures.
[End Sidebar]
Conditions in the high-yield bond market continued to improve throughout fiscal 2010, propelled by strong investor demand for higher yielding debt, a recovering economy and a surge of refinancing among companies looking to improve their capital structures. In addition, the Federal Reserve stepped in to actively buy Treasuries and mortgages in fixed-income markets, which helped lower interest rates and boost fixed-income markets across the board.
As the markets have become more fairly valued, we believe fundamental factors will be the key driver of returns going forward. In addition, the market still faces a number of challenges, including weak economic growth, high unemployment and uncertainties surrounding the implementation of health care legislation and financial reform. In this environment, we believe that in-depth research and analysis, attention to risk and security selection will be critical factors in building the fund’s portfolio. For us, that means identifying those companies with strong or improving fundamentals and the liquidity necessary to meet their debt obligations through a variety of business and market cycles.
Managing expectations going forward
It’s important to note that the past several years have been an unusual market cycle of extreme highs and lows. While we have been pleased with the fund’s returns for fiscal 2009 and fiscal 2010, these gains follow a period of severely depressed bond prices. Now that market valuations have moved closer to historical norms, we believe it is reasonable to expect more modest returns in the months ahead. To manage expectations, it’s helpful to consider results over longer periods that encompass a variety of market cycles. On average, shareholders in the fund have earned an annual total return of 7.1%, with dividends and capital gains reinvested, for the past 10-year period ended September 30, 2010. That compares to a 5.5% total return for the Lipper High Current Yield Funds Index, an 8.2% total return for the Credit Suisse High Yield Index, and an 8.1% total return for the Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index.
American High-Income Trust will undoubtedly again go through periods where the value of your shares will decline; in the high-yield market, price fluctuations should be anticipated. But for long-term investors who have the ability to ride out short-term volatility in the market, high-yield bonds can be an important part of their income-generating assets. To gain a better understanding of the role a high-yield bond fund can play in a diversified portfolio, please see the article 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 11, 2010
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, 2010, the end of its latest fiscal year. As you can see, that $10,000 grew to $62,318 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 | Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index3,4 | Credit Suisse High Yield Index3 | Lipper High Current Yield Funds Index5 | Citigroup Broad Investment-Grade (BIG) Bond Index3 | Consumer Price Index (inflation)6 | ||||||||||||||||||
2/19/88 | $ | 9,625 | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 10,000 | $ | 10,000 | ||||||||||||
19887 | 10,182 | 10,447 | 10,447 | 10,475 | 10,222 | 10,328 | ||||||||||||||||||
1989 | 11,189 | 11,026 | 11,026 | 10,935 | 11,367 | 10,776 | ||||||||||||||||||
1990 | 10,735 | 10,047 | 10,047 | 9,570 | 12,237 | 11,440 | ||||||||||||||||||
1991 | 13,873 | 13,757 | 13,757 | 12,290 | 14,198 | 11,828 | ||||||||||||||||||
1992 | 16,376 | 16,573 | 16,573 | 15,132 | 15,999 | 12,181 | ||||||||||||||||||
1993 | 18,764 | 18,976 | 19,172 | 17,473 | 17,627 | 12,509 | ||||||||||||||||||
1994 | 19,066 | 19,580 | 19,831 | 17,899 | 17,063 | 12,879 | ||||||||||||||||||
1995 | 21,604 | 22,549 | 22,619 | 20,178 | 19,461 | 13,207 | ||||||||||||||||||
1996 | 24,570 | 25,035 | 25,054 | 22,644 | 20,423 | 13,603 | ||||||||||||||||||
1997 | 28,176 | 28,661 | 28,994 | 26,120 | 22,406 | 13,897 | ||||||||||||||||||
1998 | 27,491 | 29,160 | 28,842 | 25,688 | 24,975 | 14,103 | ||||||||||||||||||
1999 | 29,721 | 30,002 | 29,980 | 27,037 | 24,908 | 14,474 | ||||||||||||||||||
2000 | 31,295 | 30,288 | 30,555 | 27,021 | 26,632 | 14,974 | ||||||||||||||||||
2001 | 30,218 | 28,647 | 29,050 | 23,569 | 30,110 | 15,371 | ||||||||||||||||||
2002 | 28,442 | 28,400 | 29,877 | 22,814 | 32,632 | 15,603 | ||||||||||||||||||
2003 | 38,197 | 36,767 | 38,257 | 28,862 | 34,423 | 15,966 | ||||||||||||||||||
2004 | 42,235 | 41,372 | 43,352 | 32,215 | 35,738 | 16,371 | ||||||||||||||||||
2005 | 45,421 | 44,096 | 46,089 | 34,421 | 36,783 | 17,138 | ||||||||||||||||||
2006 | 49,174 | 47,286 | 49,667 | 36,744 | 38,147 | 17,491 | ||||||||||||||||||
2007 | 53,103 | 50,887 | 53,807 | 39,586 | 40,148 | 17,973 | ||||||||||||||||||
2008 | 46,800 | 45,540 | 48,410 | 35,054 | 41,947 | 18,861 | ||||||||||||||||||
2009 | 53,376 | 55,792 | 57,069 | 39,311 | 46,553 | 18,618 | ||||||||||||||||||
2010 | 62,318 | 65,967 | 67,253 | 46,058 | 50,168 | 18,831 |
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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, account fees, expenses or taxes. |
4From February 19, 1988, through December 31, 1992, the Credit Suisse High Yield Index was used because the Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index did not yet exist. Since January 1, 1993, the Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index has been used. |
5Results of the Lipper High Current Yield Funds 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. |
6Computed from data supplied by the U.S. Department of Labor, Bureau of Labor Statistics. |
7For the period February 19, 1988 (when the fund began operations) through September 30, 1988. |
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, 2010)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 12.38 | % | 5.71 | % | 6.73 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 3.75% sales charge. |
The total annual fund operating expense ratio was 0.68% for Class A shares as of the most recent fiscal year-end.
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. Applicable 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.
[Begin Sidebar]
The role of a high-yield bond fund in a diversified portfolio
In a world of lowered income, a high-yield bond fund can be an important part of a long-term shareholder’s portfolio.
[End Sidebar]
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[Begin Sidebar]
Striking a balance
Investing in high-yield bonds is essentially a process of balancing risk against the prospects of receiving a higher return, both in income and the potential for capital appreciation.
[End Sidebar]
Looking for sources of investment income in the current interest-rate environment can be quite a challenge. As of September 30, 2010, one-year certificates of deposit, or CDs, were paying an average 1.08% interest,1 investment-grade corporate bonds were yielding an average 3.63%,2 and the average S&P 500 stock was producing a 1.96% yield.
By comparison, high-yield bonds were yielding an average 7.80%.3 “There are simply not many places to find yield these days,” says David Barclay, president of American High-Income Trust. “In today’s investment environment, high-yield bond funds can be an important part of a portfolio’s income-generating assets, as long as investors recognize there is a combination of bond and equity risk and are able to stay invested through various market cycles.”
In addition, high-yield bonds offer the potential for capital appreciation. A growing economy or improvements in an industry or issuing company — such as a ratings upgrade, a new product line or improved earnings — can also benefit shareholders by increasing the price of the high-yield bond.
“For longer term investors who have the ability to undergo some fluctuations in the value of their holdings, high-yield bond funds provide an intermediate step between stable, short-term investments, which have low yields and limited volatility, and the equity market, which has a history of higher volatility and historically higher returns,” adds Abner Goldstine, a portfolio counselor in the fund.
Striking a balance
Investing in high-yield bonds is essentially a process of balancing risk against the prospects of receiving a higher return, both in income and the potential for capital appreciation. High-yield bonds pay higher interest rates because they are issued by companies that do not qualify for an investment-grade rating by one of the leading credit-rating agencies. Companies are rated based on the agency’s opinion of the issuer’s ability to make scheduled interest and principal payments. The lower the credit rating, the more difficult it may be for the issuer to make interest payments and repay principal.
High-yield bonds are sometimes called “junk” bonds. It’s important to remember, however, that a number of issuers of high-yield bonds are young emerging companies that some day will be larger mainstream companies.
Because high-yield securities have a combination of equity and bond risk, they react to how well the issuer’s business is doing and also to external factors, such as general economic trends and investor confidence as reflected in stock market activity.
1As measured by Bloomberg. |
2As measured by Barclays Capital U.S. Corporate Index. |
3As measured by Barclays Capital U.S. Corporate High Yield Index. |
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The impact of interest rates
As an asset class, high yield is much less sensitive to broad moves in interest rates and more sensitive to idiosyncratic changes in credit quality.
[End Sidebar]
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There is, however, a fundamental difference when it comes to investing in high-yield bond funds versus equity funds. “High-yield bond investors are creditors, not owners,” says Barclay. “Because you are a lender and not an owner, the company has an obligation to pay you that it does not have to equity shareholders.” That gives you some downside protection, even though you may still benefit in similar ways as an equity investor, including the potential for capital appreciation.
In other words, a company must pay bondholders interest and principal if it has the cash to do so. A stockholder’s investment, on the other hand, generally will fluctuate in a less predictable manner. Furthermore, in the event of bankruptcy, bondholders have priority over stockholders in the claim on corporate assets.
The impact of interest rates and market cycles
The market price of bonds is influenced by a variety of market conditions, including the general level of interest rates. Like investment-grade bonds, high-yield bond prices usually move in the opposite direction of their yield. Rising rates typically result in declining bond prices, while declining rates cause prices to rise.
“Yet, as an asset class, high yield is much less sensitive to broad moves in interest rates and more sensitive to idiosyncratic changes in credit quality,” says David Daigle, a portfolio counselor in the fund. “High-yield bonds tend to have relatively short duration periods, which make them less sensitive to Treasury yields and more sensitive to GDP growth.”
In addition, the economic conditions that often lead interest rates to rise are beneficial to high-yield bonds. “For that reason, we spend a greater amount of time worrying about the state of the economy, which has a more profound effect on high-yield bonds,” says Daigle. “In a rising Treasury yield environment, high yield can still do well because of rising credit quality.”
So what is the best economic environment for high-yield bonds? Generally, high yield can do well in an environment of disinflation and low, single-digit GDP growth. “High yield is the ‘Goldilocks’ of the corporate market,” says Marc Linden, another portfolio counselor in the fund. “When the economy is too hot, high-yield bonds tend to act like investment-grade bonds. When the economy is too cold, they tend to act like equities.”
The ability to navigate different market environments is an important factor in managing the fund. “It’s not a cookie-cutter approach,” Barclay says. “As markets change, we change. It gives us the ability to look at new industries, new instruments, new geographies. We have the research capacity and flexibility in the fund to understand what’s going on in the broader market and make the appropriate investment decisions.”
How your fund manages risk
Because American High-Income Trust invests primarily in lower rated corporate bonds, which possess a greater exposure to risk than high-quality bonds, the portfolio counselors and investment analysts who manage the fund carefully weigh the rewards of each bond against the potential risks before any purchase is made.
“We do not manage the fund by trying to hit some target yield,” says Barclay. “We are not seeking yield at the expense of return later. We first look for holdings that can meet their debt obligations over a variety of business and market cycles and then, from those companies, look for the ones with the most attractive yields. We would rather take less risk and accept a lower yield that is more sustainable.”
Potential risks fall into several main categories. In addition to interest rate risk, as discussed above, the fund’s investment professionals also look at credit risk, liquidity risk and market volatility.
Credit risk refers to the ability of a bond issuer to make timely payments of interest and principal. A default is the most severe form of credit risk. A bond issuer is said to be in default if an interest payment has been missed, the repayment of principal is not made on a timely basis or the technical provisions of a bond agreement have been violated. “If a weak economic recovery continues, we need to be careful and diligent in our research to ensure that a company can do well and manage through a struggling economic environment,” says Barclay.
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A unique management system
American High-Income Trust is managed in a unique fashion — as are all the American Funds — using a method we call the multiple portfolio counselor system. In this system, each of the fund’s portfolio counselors is entrusted with a segment of the portfolio to manage as he or she deems appropriate, within the objective of the fund. This allows them to focus on the sectors of the market they know best and deem the best value. What makes the system special is that it enables counselors to consult with each other, yet follow their own highest convictions. Because the fund is not dependent on any single individual, transition of fund management from one generation to the next becomes almost seamless.
American High-Income Trust has five counselors, each of whom has at least 12 years of experience.* A fourth segment of the fund is managed directly by the fund’s investment analysts, each contributing to the portfolio in his or her own area of expertise. Those contributions, in turn, signal to counselors the degree of an analyst’s conviction.
This type of portfolio management provides for diverse viewpoints and leads to consistent results. Because not every individual style works in every market environment, this system balances out the different styles and provides greater stability over the long term.
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[photo of Abner D. Goldstine]
Abner D. Goldstine
59 years of investment experience
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[photo of David C. Barclay]
David C. Barclay
29 years of investment experience
[End Photo Caption]
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[photo of David Daigle]
David Daigle
16 years of investment experience
[End Photo Caption]
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[photo of Marc Linden]
Marc Linden
16 years of investment experience
[End Photo Caption]
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[photo of Ellen Carr]
Ellen Carr
12 years of investment experience
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*As of December 2010.
[End Sidebar]
Another risk is market volatility, which is driven by supply and investor demand. “Investors need to understand that high-yield bonds have a level of volatility that is greater than investment-grade bonds,” says Linden. “In addition, the high-yield market tends to be made up of smaller total-capitalization companies. Because a significant component of their total capitalization is debt, high-yield bonds tend to be more volatile than other parts of the bond market.”
Liquidity risk refers to an investor’s ability to sell a bond quickly and at an appropriate price. High-yield bonds can sometimes be less liquid than investment-grade bonds, depending on the issuer and market conditions. “As we have learned, markets can close down suddenly and dramatically,” says Barclay. “During periods of increased market volatility, investors often become more risk averse, which can reduce the demand for high-yield bonds and make them harder to sell than investment-grade or government bonds.”
[Begin Sidebar]
The benefits of staying the course
Despite the volatility of the past decade, high-yield bond investors who were able to ride out the market cycles and maintain a long-term perspective enjoyed solid returns.
Fund results shown 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. For current information and month-end results, visit americanfunds.com.
Comparing calendar-year total returns (2000 – 2009)
[begin bar chart]
American High-Income Trust | S&P 500 | Citigroup BIG Index | Lipper High Current Yield Bond Funds Index | |||||||||||||
01/01/2000 - 12/31/2000 | -3.25 | % | -9.10 | % | 11.59 | % | -9.71 | % | ||||||||
01/01/2001 - 12/31/2001 | 7.44 | % | -11.88 | % | 8.52 | % | -1.04 | % | ||||||||
01/01/2002 - 12/31/2002 | -3.58 | % | -22.09 | % | 10.09 | % | -2.41 | % | ||||||||
01/01/2003 - 12/31/2003 | 28.87 | % | 28.67 | % | 4.20 | % | 26.36 | % | ||||||||
01/01/2004 - 12/31/2004 | 9.75 | % | 10.87 | % | 4.48 | % | 10.34 | % | ||||||||
01/01/2005 - 12/31/2005 | 3.63 | % | 4.91 | % | 2.57 | % | 3.00 | % | ||||||||
01/01/2006 - 12/31/2006 | 12.19 | % | 15.78 | % | 4.33 | % | 10.17 | % | ||||||||
01/01/2007 - 12/31/2007 | 1.53 | % | 5.49 | % | 7.22 | % | 2.13 | % | ||||||||
01/01/2008 - 12/31/2008 | -27.52 | % | -36.99 | % | 7.02 | % | -28.84 | % | ||||||||
01/01/2009 - 12/31/2009 | 48.42 | % | 26.47 | % | 5.06 | % | 49.49 | % |
[end bar chart]
The market indexes are unmanaged, and their results include reinvested distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or taxes.
The Lipper Index does not reflect the effect of sales charges.
[End Sidebar]
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[Begin Sidebar]
An integrated research effort
The global analysts are integrated with their equity counterparts, helping the fund’s managers to spot trends and gain access to companies they may not otherwise have had.
[End Sidebar]
Other risks can result from the way a bond is structured. “We evaluate the credit quality of the company as well as the characteristics of the bond itself,” says Daigle. Not all bonds are equal; each has its own structural characteristics. A single issuer can issue five or more bonds that are all different. For example, some bonds have priority — or are senior — to other debt, which means those creditors get paid first. Other bonds may have stronger call protection, which protects the bondholder because it prevents the issuer from redeeming the bond before it reaches maturity. “Ultimately, we analyze whether we are being paid sufficiently for the level of risk being taken,” says Daigle.
An in-depth, integrated research effort
Managing and analyzing these risks is inherent in American High-Income Trust’s research process, which distinguishes itself in several ways. One important aspect is the depth of research. “The fund tends to have analysts who follow industries for many years,” says Daigle, who has followed the health care industry since 1995. “There’s a lot of longitudinal experience on the part of analysts, which helps them to dig deeper into industries and individual companies.”
Second, the fund’s integrated approach to research allows high-yield analysts to tap into the research efforts of investment-grade bond analysts and equity analysts across the globe. “The global analysts are integrated with their equity counterparts, helping the fund’s managers to spot trends and gain access to companies they may not otherwise have had,” says Ellen Carr, another portfolio counselor in the fund. “This has been particularly helpful in gaining access to top management.”
Both bond investors and stock investors benefit from this cross-fertilization of ideas and perspectives. “It gives each analyst the opportunity to share views on a company,” says Goldstine. “Yet, what makes a good fixed-income investment does not always make a good equity investment, and vice versa.
Finally, the fund’s time horizon when considering investments is much longer than that of most investors in the high-yield market, many of whom have migrated toward shorter term strategies. “Many investors in the market have incorporated hedge-fund models where they’re interested in short-term liquidity,” says Daigle. “Our time horizon is measured in years. It’s a very different focus.”
The merits of a long-term perspective
It’s important to note that American High-Income Trust does have defaults and short-term volatility, but that can be consistent with meeting the fund’s objectives. “We seek to maximize long-term total returns with reasonable levels of downside volatility,” says Daigle. “We don’t manage the fund for a three-month or 12-month period; we are more focused on generating good returns over a period of three to five years or longer.”
Because there can be short-term volatility in the high-yield market, shareholders in the fund also need to take a long-term view. Unlike higher quality bond investments, it’s not a place for short-term savings. “You can’t have a short-term tactical perspective,” advises Carr. It’s also important to remember that high-yield bonds are just one element of a diversified portfolio. As such, they should complement an investor’s equity and investment-grade bond holdings, not replace them.
Maintaining a long-term view is particularly important in today’s market, which follows one of the most volatile periods in stock and bond market history. In just the past several years, American High-Income Trust has posted the best and worst calendar-year total returns of its lifetime, shifting from a 27.5% loss in calendar 2008 to a 48.4% gain in calendar 2009. Historically, the fund has averaged an 8.6% annual total return since its inception on February 19, 1988.
“During the past several months, the high-yield bond market has shifted toward a more typical environment — and that means we will likely revert to more normal returns going forward,” says Barclay. “We can’t expect the same sort of recovery in prices that we saw this past year, and that means looking at companies with long-term potential.” n
Summary investment portfolio September 30, 2010
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.
[begin pie chart]
Portfolio by type of security (percent of net assets) | ||||
U.S. corporate bonds & notes | 64.5 | |||
Corporate bonds & notes of issuers outside the U.S. | 13.5 | |||
Corporate loans | 6.7 | |||
Bonds & notes of governments & government agencies outside the U.S. | 2.7 | |||
Other | 1.2 | |||
Common stocks & warrants | 2.1 | |||
Convertible securities | 1.2 | |||
Preferred securities | 1.5 | |||
Short-term securities & other assets less liabilities | 6.6 |
[end pie chart]
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds, notes & other debt instruments - 88.64% | (000 | ) | (000 | ) | assets | |||||||||
Corporate bonds, notes & loans - 84.71% | ||||||||||||||
Consumer discretionary - 22.14% | ||||||||||||||
Univision Communications, Inc.: | ||||||||||||||
First Lien Term Loan B, 2.506% 2014 (1) (2) (3) | $ | 124,055 | $ | 109,300 | ||||||||||
10.50% 2015 (1) (4) (5) | 191,390 | 183,138 | ||||||||||||
12.00% 2014 (4) | 17,065 | 18,750 | 1.84 | % | ||||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.: | ||||||||||||||
7.25% 2017 (4) | 70,900 | 72,229 | ||||||||||||
7.875%-10.875% 2012-2020 (4) | 157,025 | 168,243 | ||||||||||||
Charter Communications, Inc. 13.50% 2016 | 55,038 | 65,633 | ||||||||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 2014 (1) (2) (3) | 1,005 | 1,040 | 1.82 | |||||||||||
Michaels Stores, Inc.: | ||||||||||||||
10.00% 2014 | 136,900 | 144,943 | ||||||||||||
0%-11.375% 2016 (4) (6) | 90,120 | 90,236 | ||||||||||||
Term Loans, 2.625%-4.875% 2013-2016 (1) (2) (3) | 28,436 | 27,614 | 1.56 | |||||||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 101,400 | 115,089 | ||||||||||||
Virgin Media Finance PLC 8.375%-9.125% 2016-2019 (4) | 93,450 | 102,038 | ||||||||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 9,325 | 9,885 | 1.34 | |||||||||||
Allison Transmission Holdings, Inc.: | ||||||||||||||
11.25% 2015 (1) (4) (5) | 81,644 | 88,992 | ||||||||||||
11.00% 2015 (4) | 50,195 | 54,713 | ||||||||||||
Term Loan B, 3.01% 2014 (1) (2) (3) | 33,305 | 31,336 | 1.04 | |||||||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 80,550 | 86,390 | .51 | |||||||||||
Neiman Marcus Group, Inc. 9.00% 2015 (1) (5) | 79,954 | 83,452 | .49 | |||||||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 77,775 | 76,997 | .46 | |||||||||||
AMC Entertainment Inc. 8.75% 2019 | 68,675 | 72,710 | .43 | |||||||||||
Other securities | 2,137,737 | 12.65 | ||||||||||||
3,740,465 | 22.14 | |||||||||||||
Telecommunication services - 12.00% | ||||||||||||||
Cricket Communications, Inc.: | ||||||||||||||
9.375% 2014 | 216,225 | 224,874 | ||||||||||||
7.75% 2016 | 142,615 | 152,063 | ||||||||||||
10.00% 2015 | 23,245 | 25,221 | 2.38 | |||||||||||
Nextel Communications, Inc.: | ||||||||||||||
Series F, 5.95% 2014 | 144,965 | 144,965 | ||||||||||||
Series D, 7.375% 2015 | 138,523 | 139,908 | ||||||||||||
Series E, 6.875% 2013 | 46,088 | 46,606 | ||||||||||||
Sprint Capital Corp. 7.625%-8.75% 2011-2032 | 30,680 | 32,696 | 2.16 | |||||||||||
MetroPCS Wireless, Inc.: | ||||||||||||||
9.25% 2014 | 124,195 | 130,715 | ||||||||||||
9.25% 2014 | 83,640 | 88,031 | 1.29 | |||||||||||
Wind Acquisition SA 11.75% 2017 (4) | 106,800 | 120,217 | .71 | |||||||||||
Clearwire Communications LLC/Finance 12.00% 2015 (4) | 82,125 | 88,900 | .53 | |||||||||||
Trilogy International Partners, LLC, 10.25% 2016 (4) | 84,250 | 78,774 | .47 | |||||||||||
Other securities | 754,098 | 4.46 | ||||||||||||
2,027,068 | 12.00 | |||||||||||||
Financials - 10.81% | ||||||||||||||
CIT Group Inc.: | ||||||||||||||
Series A, 7.00% 2013 | 98,988 | 99,978 | ||||||||||||
Series A, 7.00% 2014 | 77,200 | 77,393 | ||||||||||||
Series A, 7.00% 2015 | 111,668 | 111,389 | ||||||||||||
Series A, 7.00% 2016 | 51,190 | 50,678 | ||||||||||||
Term Loan 3, 6.25% 2015 (1) (2) (3) | 18,147 | 18,324 | 2.12 | |||||||||||
Realogy Corp.: | ||||||||||||||
Term Loan B, 3.258% 2013 (1) (2) (3) | 99,343 | 88,771 | ||||||||||||
Second Lien Term Loan A, 13.50% 2017 (2) (3) | 85,475 | 91,512 | ||||||||||||
Term Loans, 3.258%-3.313% 2013 (1) (2) (3) | 57,884 | 51,723 | 1.37 | |||||||||||
International Lease Finance Corp., 4.75%-8.625% 2010-2015 (4) | 188,296 | 190,850 | 1.13 | |||||||||||
Other securities | 1,045,805 | 6.19 | ||||||||||||
1,826,423 | 10.81 | |||||||||||||
Industrials - 10.48% | ||||||||||||||
Nielsen Finance LLC and Nielsen Finance Co.: | ||||||||||||||
10.00% 2014 | 73,450 | 77,582 | ||||||||||||
0%/12.50% 2016 (6) | 134,190 | 135,029 | ||||||||||||
7.75%-11.625% 2014-2018 (4) | 86,525 | 97,357 | ||||||||||||
Nielsen Finance LLC, Term Loans, 2.258%-8.50% 2013-2017 (1) (2) (3) (10) | 35,411 | 36,376 | 2.05 | |||||||||||
TransDigm Inc. 7.75% 2014 | 93,421 | 94,939 | .56 | |||||||||||
AMH Holdings, Inc. 11.25% 2014 | 86,433 | 90,755 | .54 | |||||||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.256% 2014 (1) (2) (3) | 106,771 | 86,556 | .51 | |||||||||||
DAE Aviation Holdings, Inc. 11.25% 2015 (4) | 76,129 | 77,088 | .46 | |||||||||||
Other securities | 1,073,588 | 6.36 | ||||||||||||
1,769,270 | 10.48 | |||||||||||||
Information technology - 8.41% | ||||||||||||||
First Data Corp.: | ||||||||||||||
Term Loan B2, 3.006% 2014 (1) (2) (3) | 112,599 | 99,311 | ||||||||||||
9.875% 2015 | 224,835 | 183,241 | ||||||||||||
10.55% 2015 (5) | 124,606 | 101,249 | ||||||||||||
8.875%-11.25% 2015-2020 (4) | 61,890 | 54,881 | 2.60 | |||||||||||
NXP BV and NXP Funding LLC: | ||||||||||||||
10.00% 2013 (7) | 77,049 | 86,199 | ||||||||||||
9.75% 2018 (4) | 82,650 | 88,436 | ||||||||||||
3.585%-8.625% 2013-2015 (1) | € | 72,128 | 93,789 | |||||||||||
3.276%-9.50% 2013-2015 (1) | $ | 86,405 | 87,922 | 2.11 | ||||||||||
Freescale Semiconductor, Inc.: | ||||||||||||||
9.125% 2014 (1) (5) | 99,685 | 100,183 | ||||||||||||
Term Loan, 4.509% 2016 (1) (2) (3) | 19,993 | 18,300 | ||||||||||||
8.875%-10.125% 2014-2018 (4) | 187,482 | 186,329 | 1.80 | |||||||||||
Sanmina-SCI Corp. 8.125% 2016 | 86,807 | 89,411 | .53 | |||||||||||
Other securities | 231,166 | 1.37 | ||||||||||||
1,420,417 | 8.41 | |||||||||||||
Health care - 7.24% | ||||||||||||||
Elan Finance PLC and Elan Finance Corp.: | ||||||||||||||
8.875% 2013 | 85,740 | 88,312 | ||||||||||||
8.75% 2016 (4) | 108,650 | 110,280 | ||||||||||||
8.75% 2016 (4) | 43,550 | 43,768 | 1.44 | |||||||||||
Tenet Healthcare Corp.: | ||||||||||||||
7.375% 2013 | 71,295 | 76,107 | ||||||||||||
8.00%-9.25% 2015-2020 (4) | 96,855 | 104,649 | 1.07 | |||||||||||
VWR Funding, Inc., Series B, 10.25% 2015 (1) (5) | 138,243 | 144,119 | .85 | |||||||||||
PTS Acquisition Corp. 9.50% 2015 (1) (5) | 109,873 | 111,521 | .66 | |||||||||||
Other securities | 544,398 | 3.22 | ||||||||||||
1,223,154 | 7.24 | |||||||||||||
Materials - 4.03% | ||||||||||||||
Georgia Gulf Corp.: | ||||||||||||||
9.00% 2017 (4) (8) | 90,285 | 95,025 | ||||||||||||
10.75% 2016 (8) | 5,388 | 5,657 | .60 | |||||||||||
Other securities | 580,583 | 3.43 | ||||||||||||
681,265 | 4.03 | |||||||||||||
Utilities - 3.78% | ||||||||||||||
Edison Mission Energy 7.00%-7.75% 2013-2027 | 178,325 | 136,532 | ||||||||||||
Midwest Generation, LLC, Series B, 8.56% 2016 (2) | 45,241 | 44,732 | ||||||||||||
Homer City Funding LLC 8.734% 2026 (2) | 8,970 | 8,207 | 1.12 | |||||||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 4.066% 2014 (1) (2) (3) | 104,050 | 81,067 | .48 | |||||||||||
Intergen Power 9.00% 2017 (4) | 71,950 | 76,447 | .45 | |||||||||||
Other securities | 290,455 | 1.73 | ||||||||||||
637,440 | 3.78 | |||||||||||||
Consumer staples - 3.60% | ||||||||||||||
Other securities | 608,083 | 3.60 | ||||||||||||
Energy - 2.22% | ||||||||||||||
Other securities | 374,362 | 2.22 | ||||||||||||
Total corporate bonds, notes & loans | 14,307,947 | 84.71 | ||||||||||||
Bonds & notes of governments & government agencies outside the U.S. - 2.70% | ||||||||||||||
Other securities | 456,259 | 2.70 | ||||||||||||
Other - 1.23% | ||||||||||||||
Other securities | 208,765 | 1.23 | ||||||||||||
Total bonds, notes & other debt instruments (cost: $13,969,699,000) | 14,972,971 | 88.64 | ||||||||||||
Convertible securities - 1.16% | ||||||||||||||
Other - 1.16% | ||||||||||||||
Other securities | 196,493 | 1.16 | ||||||||||||
Total convertible securities (cost: $168,798,000) | 196,493 | 1.16 | ||||||||||||
Preferred securities - 1.50% | ||||||||||||||
Other - 1.50% | ||||||||||||||
Other securities | 252,808 | 1.50 | ||||||||||||
Total preferred securities (cost: $220,703,000) | 252,808 | 1.50 | ||||||||||||
Common stocks - 2.04% | Shares | |||||||||||||
Other - 2.04% | ||||||||||||||
Georgia Gulf Corp. (8) (9) | 4,809,206 | 78,582 | .46 | |||||||||||
CIT Group Inc. (9) | 124,904 | 5,098 | .03 | |||||||||||
Sprint Nextel Corp., Series 1 (9) | 777,508 | 3,600 | .02 | |||||||||||
Charter Communications, Inc., Class A (9) | 39,810 | 1,294 | .01 | |||||||||||
Other securities | 256,775 | 1.52 | ||||||||||||
Total common stocks (cost: $341,825,000) | 345,349 | 2.04 | ||||||||||||
Warrants - 0.02% | ||||||||||||||
Consumer discretionary - 0.02% | ||||||||||||||
Charter Communications, Inc., warrants, expire 2014 (9) (10) | 13,390 | 74 | .00 | |||||||||||
Other securities | 2,758 | .02 | ||||||||||||
Total warrants (cost: $2,244,000) | 2,832 | .02 | ||||||||||||
Principal | ||||||||||||||
amount | ||||||||||||||
Short-term securities - 5.31% | (000 | ) | ||||||||||||
Freddie Mac 0.17%-0.345% due 10/13/2010-3/15/2011 | $ | 209,950 | 209,883 | 1.24 | ||||||||||
JPMorgan Chase & Co. 0.21% due 11/29/2010 | 66,100 | 66,069 | ||||||||||||
Jupiter Securitization Co., LLC 0.34% due 10/22/2010 (4) | 44,300 | 44,292 | .65 | |||||||||||
Fannie Mae 0.195%-0.43% due 10/1-12/3/2010 | 105,400 | 105,384 | .62 | |||||||||||
Straight-A Funding LLC 0.34% due 10/14-10/15/2010 (4) | 105,000 | 104,987 | .62 | |||||||||||
Procter & Gamble Co. 0.23%-0.27% due 11/2-11/19/2010 (4) | 85,400 | 85,380 | .51 | |||||||||||
Medtronic Inc. 0.22% due 10/26-11/2/2010 (4) | 77,600 | 77,583 | .46 | |||||||||||
Other securities | 203,608 | 1.21 | ||||||||||||
Total short-term securities (cost: $897,143,000) | 897,186 | 5.31 | ||||||||||||
Total investment securities (cost: $15,600,412,000) | 16,667,639 | 98.67 | ||||||||||||
Other assets less liabilities | 225,269 | 1.33 | ||||||||||||
Net assets | $ | 16,892,908 | 100.00 | % |
"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. The value of the fund's affiliated-company holdings is either shown in the summary investment portfolio or included in the value of "Other securities" under the respective industry sectors. Further details on such holdings and related transactions during the year ended September 30, 2010, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 9/30/2010 (000) | |||||||||||||||||||
Georgia Gulf Corp. 9.00% 2017 (4) | - | $ | 90,285,000 | - | $ | 90,285,000 | $ | 5,992 | $ | 95,025 | ||||||||||||||
Georgia Gulf Corp. (9) | 4,809,206 | - | - | 4,809,206 | - | 78,582 | ||||||||||||||||||
Georgia Gulf Corp. 10.75% 2016 | - | $ | 5,388,000 | - | $ | 5,388,000 | 326 | 5,657 | ||||||||||||||||
Georgia Gulf Corp., Term Loan, Revolver (funded), 6.50% 2011 | $ | 25,640,000 | - | $ | 25,640,000 | - | 375 | - | ||||||||||||||||
Georgia Gulf Corp., Term Loan B, 10.00% 2013 | $ | 19,496,523 | - | $ | 19,496,523 | - | 580 | - | ||||||||||||||||
Nortek, Inc. 11.00% 2013 | - | $ | 66,164,079 | - | $ | 66,164,079 | 3,960 | 70,630 | ||||||||||||||||
Nortek, Inc. (9) | - | 793,646 | - | 793,646 | - | 30,992 | ||||||||||||||||||
Cooper-Standard Holdings Inc. (4) (9) (7) (10) | - | 1,139,235 | - | 1,139,235 | 338 | 34,958 | ||||||||||||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred (4) (7) (10) | - | 101,063 | - | 101,063 | - | 14,822 | ||||||||||||||||||
Cooper-Standard Holdings Inc., warrants, expire 2017 (4) (9) (7) (10) | - | 190,869 | - | 190,869 | - | 2,758 | ||||||||||||||||||
American Media Operations, Inc. 14.00% 2013 (1) (4) (5) | $ | 44,909,399 | $ | 6,192,157 | $ | 5,350,000 | $ | 45,751,556 | 6,777 | 30,196 | ||||||||||||||
American Media Operations, Inc. 9.00% 2013 (4) (5) (10) | $ | 3,249,793 | $ | 299,061 | - | $ | 3,548,854 | 432 | 2,342 | |||||||||||||||
American Media, Inc. (7) (9) (10) | 823,272 | - | - | 823,272 | - | 8 | ||||||||||||||||||
Clarent Hospital Corp. Liquidating Trust (9) (10) | 576,849 | - | - | 576,849 | - | 23 | ||||||||||||||||||
ZiLOG, Inc. (11) | 1,140,500 | - | 1,140,500 | - | - | - | ||||||||||||||||||
$ | 18,780 | $ | 365,993 |
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) Coupon rate may change periodically. |
(2) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(3) 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 $1,124,517,000, which represented 6.66% of the net assets of the fund. |
(4) Acquired 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 $4,339,152,000, which represented 25.69% of the net assets of the fund. |
(5) Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
(6) Step bond; coupon rate will increase at a later date. |
(7) Acquired 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 | ||||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 64,091 | $ | 86,199 | .51 | % | ||||||
Cooper-Standard Holdings Inc. | 5/25/2010–5/27/2010 | 30,746 | 34,958 | .21 | |||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred | 5/26/2010 | 9,867 | 14,822 | .09 | |||||||||
Cooper-Standard Holdings Inc., warrants, expire 2017 | 5/25/2010–5/27/2010 | 2,156 | 2,758 | .02 | |||||||||
American Media, Inc. | 1/30/2009 | 8 | 8 | - | |||||||||
Other restricted securities | 21,703 | 21,105 | .13 | ||||||||||
Total restricted securities | $ | 128,571 | $ | 159,850 | .96 | % |
(8) Represents an affiliated company as defined under the Investment Company Act of 1940. |
(9) Security did not produce income during the last 12 months. |
(10) 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 $220,515,000, which represented 1.31% of the net assets of the fund. |
(11) Unaffiliated issuer at 9/30/2010. |
Key to symbol |
€ = Euros |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at September 30, 2010 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $15,238,899) | $ | 16,301,646 | ||||||
Affiliated issuers (cost: $361,513) | 365,993 | $ | 16,667,639 | |||||
Cash | 29,199 | |||||||
Unrealized appreciation on open forward currency contracts | 1 | |||||||
Receivables for: | ||||||||
Sales of investments | 56,671 | |||||||
Sales of fund's shares | 33,627 | |||||||
Dividends and interest | 322,462 | 412,760 | ||||||
17,109,599 | ||||||||
Liabilities: | ||||||||
Unrealized depreciation on open forward currency contracts | 1,852 | |||||||
Payables for: | ||||||||
Purchases of investments | 167,335 | |||||||
Repurchases of fund's shares | 27,253 | |||||||
Dividends on fund's shares | 7,229 | |||||||
Closed forward currency contracts | 2,194 | |||||||
Investment advisory services | 4,262 | |||||||
Services provided by affiliates | 6,277 | |||||||
Trustees' deferred compensation | 167 | |||||||
Other | 122 | 214,839 | ||||||
Net assets at September 30, 2010 | $ | 16,892,908 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 17,318,309 | ||||||
Undistributed net investment income | 79,931 | |||||||
Accumulated net realized loss | (1,571,332 | ) | ||||||
Net unrealized appreciation | 1,066,000 | |||||||
Net assets at September 30, 2010 | $ | 16,892,908 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - unlimited shares authorized (1,517,284 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 11,686,765 | 1,049,680 | $ | 11.13 | |||||||
Class B | 452,131 | 40,609 | 11.13 | |||||||||
Class C | 1,336,978 | 120,084 | 11.13 | |||||||||
Class F-1 | 1,457,008 | 130,865 | 11.13 | |||||||||
Class F-2 | 511,465 | 45,939 | 11.13 | |||||||||
Class 529-A | 229,615 | 20,624 | 11.13 | |||||||||
Class 529-B | 22,824 | 2,050 | 11.13 | |||||||||
Class 529-C | 91,198 | 8,191 | 11.13 | |||||||||
Class 529-E | 12,230 | 1,099 | 11.13 | |||||||||
Class 529-F-1 | 10,658 | 957 | 11.13 | |||||||||
Class R-1 | 22,498 | 2,021 | 11.13 | |||||||||
Class R-2 | 208,997 | 18,772 | 11.13 | |||||||||
Class R-3 | 316,021 | 28,384 | 11.13 | |||||||||
Class R-4 | 213,466 | 19,173 | 11.13 | |||||||||
Class R-5 | 231,929 | 20,831 | 11.13 | |||||||||
Class R-6 | 89,125 | 8,005 | 11.13 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended September 30, 2010 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Interest (net of non-U.S. taxes of $56; | ||||||||
also includes $18,442 from affiliates) | $ | 1,390,567 | ||||||
Dividends (includes $338 from affiliates) | 17,833 | $ | 1,408,400 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 50,683 | |||||||
Distribution services | 50,591 | |||||||
Transfer agent services | 12,974 | |||||||
Administrative services | 7,564 | |||||||
Reports to shareholders | 887 | |||||||
Registration statement and prospectus | 1,428 | |||||||
Trustees' compensation | 137 | |||||||
Auditing and legal | 138 | |||||||
Custodian | 300 | |||||||
State and local taxes | 150 | |||||||
Other | 612 | |||||||
Total fees and expenses before reimbursement | 125,464 | |||||||
Less reimbursement of fees and expenses | 141 | |||||||
Total fees and expenses after reimbursement | 125,323 | |||||||
Net investment income | 1,283,077 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments, forward currency contracts and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (net of non-U.S. taxes of $189; also includes $5,275 net loss from affiliates) | 173,304 | |||||||
Forward currency contracts | (8,307 | ) | ||||||
Currency transactions | 211 | 165,208 | ||||||
Net unrealized appreciation (depreciation) on: | ||||||||
Investments | 986,295 | |||||||
Forward currency contracts | (1,729 | ) | ||||||
Currency translations | 74 | 984,640 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments, forward currency contracts and currency | 1,149,848 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 2,432,925 | ||||||
(*) 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 | ||||||||
2010 | 2009 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,283,077 | $ | 1,051,541 | ||||
Net realized gain (loss) on investments, forward currency contracts and currency transactions | 165,208 | (1,497,602 | ) | |||||
Net unrealized appreciation on investments, forward currency contracts and currency translations | 984,640 | 2,454,776 | ||||||
Net increase in net assets resulting from operations | 2,432,925 | 2,008,715 | ||||||
Dividends paid or accrued to shareholders from net investment income | (1,193,041 | ) | (1,103,307 | ) | ||||
Net capital share transactions | 632,268 | 2,587,103 | ||||||
Total increase in net assets | 1,872,152 | 3,492,511 | ||||||
Net assets: | ||||||||
Beginning of year | 15,020,756 | 11,528,245 | ||||||
End of year (including undistributed and distributions in excess of | ||||||||
net investment income: $79,931 and $(16,338), respectively) | $ | 16,892,908 | $ | 15,020,756 | ||||
See Notes to Financial Statements |
Notes to financial statements
1. | Organization |
American High-Income Trust (the "fund") is registered under the Investment Company Act of 1940 as an open-end, diversified management investment company. The fund seeks a high level of current income and, secondarily, capital appreciation through a diversified, carefully supervised portfolio consisting primarily of lower rated, higher risk corporate bonds.
On November 24, 2009, shareholders approved a proposal to reorganize the fund from a Massachusetts business trust to a Delaware statutory trust. The reorganization is anticipated to be completed on December 1, 2010; however, the fund reserves the right to delay the implementation. Shareholders also approved amendments to the fund’s Investment Advisory and Service Agreement and amendments to and elimination of certain fundamental investment policies of the fund.
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 |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
2. | Significant accounting policies |
The financial statements have been prepared to comply with accounting principles generally accepted in the United States of America. These principles require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. The fund follows the significant accounting policies described below, as well as the valuation policies described in the next section on valuation.
Security transactions and related investment income – Security transactions are recorded by the fund as of the date the trades are executed with brokers. Realized gains and losses from security transactions are determined based on the specific identified cost of the securities. In the event a security is purchased with a delayed payment date, the fund will segregate liquid assets sufficient to meet its payment obligations. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. Market discounts, premiums and original issue discounts on fixed-income securities are amortized daily over the expected life of the security.
Class allocations –Income, fees and expenses (other than class-specific fees and expenses) are allocated daily among the various share classes based on the relative value of their settled shares. Realized and unrealized gains and losses are allocated daily among the various share classes based on their relative net assets. Class-specific fees and expenses, such as distribution, administrative and shareholder services, are charged directly to the respective share class.
Dividends and distributions to shareholders –Dividends 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.
3. | Valuation |
The fund’s investments are reported at fair value as defined by accounting principles generally accepted in the United States of America. 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.
Methods and inputs – The fund uses the following methods and inputs to establish the fair value of its assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market in which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained as of approximately 3:00 p.m. New York time from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) |
Corporate bonds & notes; convertible securities | Standard inputs and underlying equity of the issuer |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information |
Municipal securities | Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts |
Where the investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and 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.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days. Forward currency contracts are valued at the mean of representative quoted bid and 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 inputs may be reviewed in order to make a good faith determination of a security’s fair value. These inputs 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 t hat are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Classifications - The fund classifies its assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the 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 reflected as Level 2 because the inputs used to determine fair value may not always be quoted prices in an active market. The following tables present the fund’s valuation levels as of September 30, 2010 (dollars in thousands):
Investment securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Bonds, notes & other debt instruments: | ||||||||||||||||
Corporate bonds, notes & loans | $ | - | $ | 14,161,252 | $ | 146,695 | $ | 14,307,947 | ||||||||
Bonds & notes of governments & government agencies outside the U.S. | - | 456,259 | - | 456,259 | ||||||||||||
Other | - | 208,765 | - | 208,765 | ||||||||||||
Convertible securities | 14,354 | 167,317 | 14,822 | 196,493 | ||||||||||||
Preferred securities | 5,534 | 227,295 | 19,979 | 252,808 | ||||||||||||
Common stocks | 309,162 | - | 36,187 | 345,349 | ||||||||||||
Warrants | - | - | 2,832 | 2,832 | ||||||||||||
Short-term securities | - | 897,186 | - | 897,186 | ||||||||||||
Total | $ | 329,050 | $ | 16,118,074 | $ | 220,515 | $ | 16,667,639 | ||||||||
Forward currency contracts (1): | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Unrealized appreciation on open forward currency contracts | $ | - | $ | 1 | $ | - | $ | 1 | ||||||||
Unrealized depreciation on open forward currency contracts | - | (1,852 | ) | - | (1,852 | ) | ||||||||||
Total | $ | - | $ | (1,851 | ) | $ | - | $ | (1,851 | ) | ||||||
(1) Forward currency contracts are not included in the investment portfolio. |
The following table reconciles the valuation of the fund's Level 3 investment securities and related transactions for the year ended September 30, 2010 (dollars in thousands): | ||||||||||||||||||||||||
Beginning value at 10/1/2009 | Net purchases and sales | Net realized loss(2) | Net unrealized appreciation (2) | Net transfers into Level 3(3) | Ending value at 9/30/2010 | |||||||||||||||||||
Investment securities | $ | 102,205 | $ | 69,019 | $ | (8,841 | ) | $ | 45,309 | $ | 12,823 | $ | 220,515 | |||||||||||
Net unrealized appreciation during the period on Level 3 investment securities held at September 30, 2010 (dollars in thousands) (2): | $ | 42,766 | ||||||||||||||||||||||
(2) Net realized loss and unrealized appreciation are included in the related amounts on investments in the statement of operations. | ||||||||||||||||||||||||
(3) Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. |
4. | Risk factors |
Investing in the fund may involve certain risks including, but not limited to, those described below.
Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes in the issuer’s creditworthiness than higher quality debt securities. The market prices of these securities may fluctuate more than higher quality debt securities and may decline significantly in periods of general economic difficulty. These risks may be increased with respect to investments in junk bonds.
Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value or sell.
Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to 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. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities.
Bonds and other debt securities are subject to credit risk, which is the possibility that the credit strength of an issuer will weaken and/or an issuer of a debt security will fail to make timely payments of principal or interest and the security will go into default.
Market conditions — The prices of, and the income generated by, the securities held by the fund may decline due to market conditions and other factors, including those directly involving the issuers of securities held by the fund.
Investing outside the U.S. — Securities of issuers domiciled outside the U.S., or with significant operations outside the U.S., may lose value because of political, social or economic developments in the country or region in which the issuer operates. These securities may also lose value due to changes in the exchange rate of the country’s currency against the U.S. dollar. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards than those in the U.S.
Management – The investment adviser to the fund actively manages the fund's investments. Consequently, the fund is subject to the risk that the techniques and risk analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its results to lag relevant benchmarks or other funds with similar objectives.
5. | 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, 2010, 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 2006 and by state tax authorities and tax authorities outside the U.S. for tax years before 2005.
Non-U.S. taxation – Dividend and interest income is recorded net of non-U.S. taxes paid. Gains realized by the fund on the sale of securities in certain countries are subject to non-U.S. taxes.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; cost of investments sold; paydowns on fixed-income securities; net capital losses; amortization of premiums; 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, 2010, the fund reclassified $6,284,000 from accumulated net realized loss to undistributed net investment income and $51,000 from undistributed net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.
As of September 30, 2010, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||||||
Undistributed ordinary income | $ | 116,049 | ||||||
Post-October currency loss deferrals (realized during the period November 1, 2009, through September 30, 2010)* | (7,536 | ) | ||||||
Capital loss carryforwards†: | ||||||||
Expiring 2017 | $ | (407,267 | ) | |||||
Expiring 2018 | (1,061,287 | ) | (1,468,554 | ) | ||||
Post-October capital loss deferrals (realized during the period November 1, 2009, through September 30, 2010)* | (76,579 | ) | ||||||
Gross unrealized appreciation on investment securities | 1,343,849 | |||||||
Gross unrealized depreciation on investment securities | (326,643 | ) | ||||||
Net unrealized appreciation on investment securities | 1,017,206 | |||||||
Cost of investment securities | 15,650,433 | |||||||
*These deferrals are considered incurred in the subsequent year. | ||||||||
†The capital loss carryforwards will be used to offset any capital gains realized by the fund in future years through the expiration dates. The fund will not make distributions from capital gains while capital loss carryforwards remain. |
Ordinary income distributions paid or accrued to shareholders from net investment income and currency gains were as follows (dollars in thousands):
Year ended September 30 | ||||||||
Share class | 2010 | 2009 | ||||||
Class A | $ | 834,904 | $ | 773,043 | ||||
Class B | 34,275 | 43,681 | ||||||
Class C | 86,904 | 78,706 | ||||||
Class F-1 | 111,786 | 112,760 | ||||||
Class F-2 | 29,436 | 13,372 | ||||||
Class 529-A | 15,068 | 12,208 | ||||||
Class 529-B | 1,534 | 1,579 | ||||||
Class 529-C | 5,379 | 4,466 | ||||||
Class 529-E | 786 | 670 | ||||||
Class 529-F-1 | 716 | 552 | ||||||
Class R-1 | 1,356 | 1,104 | ||||||
Class R-2 | 12,981 | 11,518 | ||||||
Class R-3 | 20,641 | 18,748 | ||||||
Class R-4 | 14,263 | 12,118 | ||||||
Class R-5 | 16,441 | 17,558 | ||||||
Class R-6* | 6,571 | 1,224 | ||||||
Total | $ | 1,193,041 | $ | 1,103,307 | ||||
*Class R-6 was offered beginning May 1, 2009. |
6. | Fees and transactions with related parties |
Capital Research and Management Company ("CRMC"), the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.
Investment advisory services - The Investment Advisory and Service Agreement with CRMC provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.300% on the first $60 million of daily net assets and decreasing to 0.135% on such assets in excess of $15 billion. The agreement also provides for monthly fees, accrued daily, based on a series of decreasing rates beginning with 3.000% on the first $8,333,333 of the fund's monthly gross income and decreasing to 1.500% on such income in excess of $50 million. For the year ended September 30, 2010, the investment advisory services fee was $50,683,000, which was equivalent to an annualized rate of 0.322% 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, 2010, 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 for all share classes, except Classes A and B, to provide certain services, including transfer agent and recordkeeping services; coordinating, monitoring, assisting and overseeing third-party service providers; and educating advisers and shareholders about the impact of market-related events, tax laws affecting investments, retirement plan restrictions, exchange limitations and other related matters. 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, 2010, the total administrative services fees paid by CRMC were $141,000 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 series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. Although these amounts are included with administrative services fees on the accompanying financial statements, the Commonwealth of Virginia is not considered a related part y.
Expenses under the agreements described above for the year ended September 30, 2010, were as follows (dollars in thousands):
Administrative services | ||||||||||||||||||||
Share class | Distribution services | Transfer agent services | CRMC administrative services | Transfer agent services | Commonwealth of Virginia administrative services | |||||||||||||||
Class A | $ | 24,340 | $ | 12,393 | Not applicable | Not applicable | Not applicable | |||||||||||||
Class B | 4,961 | 581 | Not applicable | Not applicable | Not applicable | |||||||||||||||
Class C | 12,662 | Included in administrative services | $ | 1,846 | $ | 272 | Not applicable | |||||||||||||
Class F-1 | 3,650 | 1,978 | 184 | Not applicable | ||||||||||||||||
Class F-2 | Not applicable | 506 | 32 | Not applicable | ||||||||||||||||
Class 529-A | 423 | 167 | 31 | $ | 198 | |||||||||||||||
Class 529-B | 225 | 19 | 8 | 22 | ||||||||||||||||
Class 529-C | 785 | 67 | 23 | 79 | ||||||||||||||||
Class 529-E | 53 | 9 | 2 | 11 | ||||||||||||||||
Class 529-F-1 | - | 8 | 1 | 9 | ||||||||||||||||
Class R-1 | 198 | 20 | 17 | Not applicable | ||||||||||||||||
Class R-2 | 1,416 | 281 | 645 | Not applicable | ||||||||||||||||
Class R-3 | 1,412 | 400 | 184 | Not applicable | ||||||||||||||||
Class R-4 | 466 | 270 | 21 | Not applicable | ||||||||||||||||
Class R-5 | Not applicable | 199 | 13 | Not applicable | ||||||||||||||||
Class R-6 | Not applicable | 41 | 1 | Not applicable | ||||||||||||||||
Total | $ | 50,591 | $ | 12,974 | $ | 5,811 | $ | 1,434 | $ | 319 |
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 $137,000, shown on the accompanying financial statements, includes $127,000 in current fees (either paid in cash or deferred) and a net increase of $10,000 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.
7. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales(*) | Reinvestments of dividends | Repurchases(*) | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended September 30, 2010 | ||||||||||||||||||||||||||||||||
Class A | $ | 2,549,658 | 237,137 | $ | 718,689 | 66,733 | $ | (2,711,019 | ) | (253,025 | ) | $ | 557,328 | 50,845 | ||||||||||||||||||
Class B | 59,021 | 5,490 | 28,604 | 2,660 | (225,133 | ) | (20,994 | ) | (137,508 | ) | (12,844 | ) | ||||||||||||||||||||
Class C | 333,246 | 30,974 | 69,926 | 6,493 | (378,365 | ) | (35,308 | ) | 24,807 | 2,159 | ||||||||||||||||||||||
Class F-1 | 567,831 | 52,781 | 96,858 | 8,992 | (804,727 | ) | (74,985 | ) | (140,038 | ) | (13,212 | ) | ||||||||||||||||||||
Class F-2 | 310,713 | 28,776 | 21,074 | 1,954 | (190,621 | ) | (17,930 | ) | 141,166 | 12,800 | ||||||||||||||||||||||
Class 529-A | 60,849 | 5,661 | 14,969 | 1,389 | (33,452 | ) | (3,121 | ) | 42,366 | 3,929 | ||||||||||||||||||||||
Class 529-B | 3,632 | 338 | 1,524 | 142 | (5,994 | ) | (557 | ) | (838 | ) | (77 | ) | ||||||||||||||||||||
Class 529-C | 28,229 | 2,627 | 5,337 | 495 | (16,411 | ) | (1,531 | ) | 17,155 | 1,591 | ||||||||||||||||||||||
Class 529-E | 3,160 | 295 | 780 | 73 | (1,975 | ) | (184 | ) | 1,965 | 184 | ||||||||||||||||||||||
Class 529-F-1 | 3,580 | 334 | 711 | 66 | (1,922 | ) | (180 | ) | 2,369 | 220 | ||||||||||||||||||||||
Class R-1 | 8,700 | 809 | 1,320 | 123 | (6,828 | ) | (638 | ) | 3,192 | 294 | ||||||||||||||||||||||
Class R-2 | 73,929 | 6,877 | 12,843 | 1,193 | (62,328 | ) | (5,801 | ) | 24,444 | 2,269 | ||||||||||||||||||||||
Class R-3 | 141,257 | 13,093 | 20,523 | 1,907 | (139,982 | ) | (13,093 | ) | 21,798 | 1,907 | ||||||||||||||||||||||
Class R-4 | 101,937 | 9,508 | 14,129 | 1,311 | (88,963 | ) | (8,330 | ) | 27,103 | 2,489 | ||||||||||||||||||||||
Class R-5 | 108,455 | 10,143 | 16,300 | 1,514 | (111,893 | ) | (10,505 | ) | 12,862 | 1,152 | ||||||||||||||||||||||
Class R-6 | 70,051 | 6,607 | 6,543 | 607 | (42,497 | ) | (3,946 | ) | 34,097 | 3,268 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 4,424,248 | 411,450 | $ | 1,030,130 | 95,652 | $ | (4,822,110 | ) | (450,128 | ) | $ | 632,268 | 56,974 | ||||||||||||||||||
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(†) | 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 | ||||||||||||||||||
* Includes exchanges between share classes of the fund. | ||||||||||||||||||||||||||||||||
(†)Class R-6 was offered beginning May 1, 2009. |
8. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $7,843,303,000 and $6,729,646,000, respectively, during the year ended September 30, 2010.
9. | Forward currency contracts |
The fund has entered into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund 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, 2010, the fund had open forward currency contracts to sell currencies, as shown on the following table. The open forward currency contracts shown are generally indicative of the level of activity over the prior 12-month period.
(amounts in thousands) | ||||||||||||||
Settlement | Contract amount | Unrealized (depreciation) appreciation | ||||||||||||
Sales: | date | Counterparty | Receive | Deliver | at 9/30/2010 | |||||||||
Brazilian reais | 11/5/2010 | J.P.Morgan Chase | $ | 24,319 | BRL42,200 | $ | (243 | ) | ||||||
Euros | 10/14/2010 | J.P.Morgan Chase | $ | 8,912 | € | 7,000 | (629 | ) | ||||||
Euros | 10/14/2010 | J.P.Morgan Chase | $ | 3,179 | € | 2,500 | (229 | ) | ||||||
Euros | 10/20/2010 | UBS AG | $ | 397 | € | 305 | (18 | ) | ||||||
Euros | 10/26/2010 | J.P.Morgan Chase | $ | 1,511 | € | 1,150 | (57 | ) | ||||||
Euros | 10/26/2010 | HSBC Bank | $ | 6,357 | € | 4,750 | (117 | ) | ||||||
Euros | 10/27/2010 | HSBC Bank | $ | 13,749 | € | 10,300 | (289 | ) | ||||||
Euros | 10/29/2010 | J.P.Morgan Chase | $ | 48,840 | € | 36,000 | (226 | ) | ||||||
Euros | 10/29/2010 | Bank of New York Mellon | $ | 10,860 | € | 8,000 | (44 | ) | ||||||
Euros | 11/1/2010 | Bank of New York Mellon | $ | 4,089 | € | 3,000 | - | * | ||||||
Euros | 11/4/2010 | Societe Generale | $ | 5,793 | € | 4,250 | 1 | |||||||
Forward currency contracts - net | (1,851 | ) | ||||||||||||
*Amount less than one thousand. |
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 9/30/2010 | $ | 10.29 | $ | .89 | $ | .78 | $ | 1.67 | $ | (.83 | ) | $ | - | $ | (.83 | ) | $ | 11.13 | 16.75 | % | $ | 11,687 | .68 | % | .68 | % | 8.26 | % | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | (.74 | ) | - | (.74 | ) | 11.13 | 15.86 | 452 | 1.46 | 1.46 | 7.50 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | (.74 | ) | - | (.74 | ) | 11.13 | 15.80 | 1,337 | 1.51 | 1.51 | 7.44 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .88 | .78 | 1.66 | (.82 | ) | - | (.82 | ) | 11.13 | 16.69 | 1,457 | .74 | .74 | 8.21 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .91 | .78 | 1.69 | (.85 | ) | - | (.85 | ) | 11.13 | 16.98 | 511 | .48 | .48 | 8.44 | |||||||||||||||||||||||||||||||||||||
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 9/30/2010 | 10.29 | .88 | .78 | 1.66 | (.82 | ) | - | (.82 | ) | 11.13 | 16.66 | 230 | .76 | .76 | 8.18 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | (.73 | ) | - | (.73 | ) | 11.13 | 15.74 | 23 | 1.56 | 1.56 | 7.39 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | (.73 | ) | - | (.73 | ) | 11.13 | 15.75 | 91 | 1.56 | 1.56 | 7.39 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .85 | .78 | 1.63 | (.79 | ) | - | (.79 | ) | 11.13 | 16.34 | 12 | 1.04 | 1.04 | 7.90 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | $ | 10.29 | $ | .90 | $ | .78 | $ | 1.68 | $ | (.84 | ) | $ | - | $ | (.84 | ) | $ | 11.13 | 16.91 | % | $ | 11 | .55 | % | .55 | % | 8.40 | % | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .79 | .78 | 1.57 | (.73 | ) | - | (.73 | ) | 11.13 | 15.78 | 23 | 1.53 | 1.53 | 7.41 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .80 | .78 | 1.58 | (.74 | ) | - | (.74 | ) | 11.13 | 15.80 | 209 | 1.58 | 1.51 | 7.44 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .85 | .78 | 1.63 | (.79 | ) | - | (.79 | ) | 11.13 | 16.33 | 316 | 1.05 | 1.05 | 7.90 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .88 | .78 | 1.66 | (.82 | ) | - | (.82 | ) | 11.13 | 16.68 | 213 | .75 | .75 | 8.19 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .91 | .78 | 1.69 | (.85 | ) | - | (.85 | ) | 11.13 | 17.03 | 232 | .44 | .44 | 8.50 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2010 | 10.29 | .92 | .78 | 1.70 | (.86 | ) | - | (.86 | ) | 11.13 | 17.09 | 89 | .39 | .39 | 8.56 | |||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
Portfolio turnover rate for all classes of shares | 47 | % | 43 | % | 35 | % | 42 | % | 41 | % |
(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, 2010, 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 a nd 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, 2010, 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, 2010, 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 11, 2010
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, 2010, through September 30, 2010).
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/on the previous page>. In addition, your ending accou nt 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 4/1/2010 | Ending account value 9/30/2010 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,057.23 | $ | 3.51 | .68 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.66 | 3.45 | .68 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,053.14 | 7.51 | 1.46 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.75 | 7.38 | 1.46 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,052.87 | 7.72 | 1.50 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.55 | 7.59 | 1.50 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,056.95 | 3.76 | .73 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.41 | 3.70 | .73 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,058.25 | 2.48 | .48 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.66 | 2.43 | .48 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,056.82 | 3.87 | .75 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.31 | 3.80 | .75 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,052.61 | 8.03 | 1.56 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.25 | 7.89 | 1.56 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,052.64 | 7.98 | 1.55 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.30 | 7.84 | 1.55 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,055.34 | 5.36 | 1.04 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.85 | 5.27 | 1.04 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,057.95 | 2.79 | .54 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.36 | 2.74 | .54 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,052.78 | 7.82 | 1.52 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.45 | 7.69 | 1.52 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,052.89 | 7.72 | 1.50 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.55 | 7.59 | 1.50 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,055.28 | 5.36 | 1.04 | ||||||||||||
Class R-3 -- assumed 5% return | �� | 1,000.00 | 1,019.85 | 5.27 | 1.04 | |||||||||||
Class R-4 -- actual return | 1,000.00 | 1,056.89 | 3.82 | .74 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.36 | 3.75 | .74 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,058.48 | 2.27 | .44 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.86 | 2.23 | .44 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,058.76 | 2.01 | .39 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.11 | 1.98 | .39 | ||||||||||||
*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) |
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, 2010:
Qualified dividend income | $ | 16,070,000 | ||
Corporate dividends received deduction | $ | 9,198,000 | ||
U.S. government income that may be exempt from state taxation | $ | 2,795,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2011, to determine the calendar year amounts to be included on their 2010 tax returns. Shareholders should consult their tax advisers.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended | 10 years1/ | |||||||||||
September 30, 2010: | 1 year | 5 years | Life of class | |||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares are | ||||||||||||
sold within six years of purchase | 10.86 | % | 5.43 | % | 6.48 | % | ||||||
Not reflecting CDSC | 15.86 | 5.72 | 6.48 | |||||||||
Class C shares — first sold 3/15/01 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 14.80 | 5.68 | 6.46 | |||||||||
Not reflecting CDSC | 15.80 | 5.68 | 6.46 | |||||||||
Class F-1 shares3 — first sold 3/15/01 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.69 | 6.50 | 7.26 | |||||||||
Class F-2 shares3 — first sold 8/4/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.98 | — | 10.19 | |||||||||
Class 529-A shares4 — first sold 2/19/02 | ||||||||||||
Reflecting 3.75% maximum sales charge | 12.30 | 5.66 | 7.64 | |||||||||
Not reflecting maximum sales charge | 16.66 | 6.47 | 8.12 | |||||||||
Class 529-B shares2,4 — first sold 2/25/02 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | 10.74 | 5.31 | 7.43 | |||||||||
Not reflecting CDSC | 15.74 | 5.61 | 7.43 | |||||||||
Class 529-C shares4 — first sold 2/19/02 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 14.75 | 5.62 | 7.23 | |||||||||
Not reflecting CDSC | 15.75 | 5.62 | 7.23 | |||||||||
Class 529-E shares3,4 — first sold 3/15/02 | 16.34 | 6.16 | 7.56 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/16/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.91 | 6.69 | 9.98 |
1Applicable to Class B shares only. All other share classes reflect results for the life of the class. |
2These shares are not available for purchase. |
3These shares are sold without any initial or contingent deferred sales charge. |
4Results 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. Applicable 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” trustees1 | ||
Year first | ||
elected a | ||
trustee of | ||
Name and age | the fund2 | Principal occupation(s) during past five years |
Lee A. Ault III, 74 | 2010 | Private investor and corporate director; former |
Chairman of the Board, In-Q-Tel, Inc. (technology | ||
venture company) | ||
William H. Baribault, 65 | 2010 | Chairman of the Board and CEO, Oakwood |
Enterprises (private investment and consulting) | ||
Ambassador | 1999 | Corporate director and author; former U.S. |
Richard G. Capen, Jr., 76 | Ambassador to Spain | |
James G. Ellis, 63 | 2006 | Dean and Professor of Marketing, Marshall School of |
Business, University of Southern California | ||
Martin Fenton, 75 | 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, 64 | 1994 | President and CEO, Fuller Consulting (financial |
management consulting firm) | ||
W. Scott Hedrick, 65 | 2010 | Founding General Partner, InterWest Partners |
(venture capital firm) | ||
R. Clark Hooper, 64 | 2005 | Private investor; former President, Dumbarton Group |
LLC (securities industry consulting) | ||
Merit E. Janow, 52 | 2010 | Professor, Columbia University, School of |
International and Public Affairs; former Member, | ||
World Trade Organization Appellate Body | ||
Laurel B. Mitchell, Ph.D., 55 | 2010 | Clinical Professor and Director, Accounting Program, |
University of Redlands | ||
Richard G. Newman, 76 | 1991 | Chairman of the Board, AECOM Technology |
Corporation (engineering, consulting and professional | ||
technical services) | ||
Frank M. Sanchez, 67 | 1999 | Principal, The Sanchez Family Corporation dba |
McDonald’s Restaurants (McDonald’s licensee) | ||
Margaret Spellings, 53 | 2010 | President and CEO, Margaret Spellings & Company; |
Executive Vice President, National Chamber | ||
Foundation and Senior Advisor to the President and | ||
CEO, U.S. Chamber of Commerce; former United | ||
States Secretary of Education, United States | ||
Department of Education — Federal Government | ||
Agency; former Assistant to the President for | ||
Domestic Policy, The White House: Federal | ||
Government, Executive Branch — Domestic Policy | ||
Steadman Upham, Ph.D., 61 | 2007 | President and Professor of Anthropology, |
The University of Tulsa | ||
“Independent” trustees1 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
overseen by | ||
Name and age | trustee | Other directorships4 held by trustee |
Lee A. Ault III, 74 | 38 | Anworth Mortgage Asset Corporation; |
Office Depot, Inc. | ||
William H. Baribault, 65 | 38 | None |
Ambassador | 12 | Capital Private Client |
Richard G. Capen, Jr., 76 | Services Funds; Carnival Corporation | |
James G. Ellis, 63 | 41 | Quiksilver, Inc. |
Martin Fenton, 75 | 41 | Capital Private Client Services Funds |
Chairman of the Board | ||
(Independent and | ||
Non-Executive) | ||
Leonard R. Fuller, 64 | 41 | None |
W. Scott Hedrick, 65 | 38 | Hot Topic, Inc.; Office Depot, Inc. |
R. Clark Hooper, 64 | 44 | JPMorgan Value Opportunities Fund, Inc.; |
The Swiss Helvetia Fund, Inc. | ||
Merit E. Janow, 52 | 41 | The NASDAQ Stock Market LLC; |
Trimble Navigation Limited | ||
Laurel B. Mitchell, Ph.D., 55 | 38 | None |
Richard G. Newman, 76 | 13 | Capital Private Client Services Funds; |
Sempra Energy; SouthWest Water Company | ||
Frank M. Sanchez, 67 | 38 | None |
Margaret Spellings, 53 | 38 | None |
Steadman Upham, Ph.D., 61 | 41 | None |
H. Frederick Christie, a trustee of the fund since 1987, retired from the board in December 2009. The trustees thank Mr. Christie for his dedication and service to the fund.
See footnotes on page 32. |
“Interested” trustees5 | ||
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 |
position with fund | the fund2 | principal underwriter of the fund |
Paul G. Haaga, Jr., 61 | 1987 | 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, 54 | 1995 | Director, Capital Research and Management |
President | Company; Senior Vice President — Fixed Income, | |
Capital Research and Management Company | ||
“Interested” trustees5 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
Name, age and | overseen by | |
position with fund | trustee | Other directorships4 held by trustee |
Paul G. Haaga, Jr., 61 | 12 | None |
Vice Chairman of the Board | ||
David C. Barclay, 54 | 1 | None |
President |
The fund’s statement of additional information includes further details about fund trustees and is available without charge upon request by calling American Funds Service Company at 800/421-0180 or by visiting the American Funds website at americanfunds.com. The address for all trustees and officers of the fund is 333 South Hope Street, Los Angeles, CA 90071, Attention: Secretary.
Other officers | ||
Year first | ||
elected | Principal occupation(s) during past five years | |
Name, age and | an officer | and positions held with affiliated entities or the |
position with fund | of the fund2 | principal underwriter of the fund |
Jennifer L. Hinman, 52 | 2001 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research Company;6 Director, Capital International | |
Research, Inc.6 | ||
David A. Daigle, 43 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company6 | |
Marcus B. Linden, 44 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company6 | |
Kristine M. Nishiyama, 40 | 2003 | Senior Vice President and Senior Counsel — Fund |
Vice President | Business Management Group, Capital Research and | |
Management Company; Vice President and Senior | ||
Counsel, Capital Bank and Trust Company6 | ||
Kimberly S. Verdick, 46 | 1994 | Vice President — Fund Business Management |
Secretary | Group, Capital Research and Management Company | |
Ari M. Vinocor, 36 | 2007 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Courtney R. Taylor, 35 | 2006 | Assistant Vice President — Fund Business |
Assistant Secretary | Management Group, Capital Research and | |
Management Company | ||
M. Susan Gupton, 37 | 2008 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company |
1The term “independent” trustee refers to a trustee who is not an “interested person” of the fund within the meaning of the 1940 Act. |
2Trustees and officers of the fund serve until their resignation, removal or retirement. |
3Capital 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 10 funds and is available through tax-deferred retirement plans and IRAs; and Endowments,SM which is available to certain nonprofit organizations. |
4This 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. |
5“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). |
6Company affiliated with Capital Research and Management Company. |
Offices of the fund and of the
investment adviser
Capital Research and Management Company
333 South Hope Street
Los Angeles, CA 90071-1406
6455 Irvine Center Drive
Irvine, CA 92618
Transfer agent for shareholder accounts
American Funds Service Company
(Write to the address near you.)
P.O. Box 6007
Indianapolis, IN 46206-6007
P.O. Box 2280
Norfolk, VA 23501-2280
Custodian of assets
JPMorgan Chase Bank
270 Park Avenue
New York, NY 10017-2070
Counsel
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, CA 90071-3106
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
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 and 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, 2010, portfolio of American High-Income Trust’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
American High-Income Trust files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available by calling AFS.
This report is for the information of shareholders of American High-Income Trust, but it also may be used as sales literature when preceded or accompanied by the current summary prospectus or prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2010, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
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 more than 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 26 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 Fund® |
•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-921-1110P
Litho in USA RCG/Q/8049-S26199
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 Frank M. Sanchez, 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 s tatements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2009 | $110,000 | |||
2010 | $105,000 | |||
b) Audit-Related Fees: | ||||
2009 | $4,000 | |||
2010 | $5,000 | |||
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: | ||||
2009 | $7,000 | |||
2010 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2009 | None | |||
2010 | 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: | ||||
2009 | $1,034,000 | |||
2010 | $999,000 | |||
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: | ||||
2009 | None | |||
2010 | $10,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2009 | $2,000 | |||
2010 | $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-audi t 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 $1,530,000 for fiscal year 2009 and $1,416,000 for fiscal year 2010. 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
American High-Income TrustSM
Investment portfolio
September 30, 2010
Bonds, notes & other debt instruments — 88.64% | Principal amount (000) | Value (000) | ||||||
CORPORATE BONDS, NOTES & LOANS — 84.71% | ||||||||
CONSUMER DISCRETIONARY — 22.14% | ||||||||
Univision Communications, Inc., First Lien Term Loan B, 2.506% 20141,2,3 | $ | 124,055 | $ | 109,300 | ||||
Univision Communications Inc. 12.00% 20144 | 17,065 | 18,750 | ||||||
Univision Communications Inc. 10.50% 20151,4,5 | 191,390 | 183,138 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.00% 20124 | 45,175 | 48,111 | ||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 20141,2,3 | 1,005 | 1,040 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 10.875% 20144 | 26,500 | 30,144 | ||||||
Charter Communications, Inc. 13.50% 2016 | 55,038 | 65,633 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25% 20174 | 70,900 | 72,229 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 20184 | 40,425 | 42,143 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.125% 20204 | 44,925 | 47,845 | ||||||
Michaels Stores, Inc., Term Loan B1, 2.625% 20131,2,3 | 22,087 | 21,379 | ||||||
Michaels Stores, Inc. 10.00% 2014 | 136,900 | 144,943 | ||||||
Michaels Stores, Inc. 0%/13.00% 20166 | 43,820 | 42,396 | ||||||
Michaels Stores, Inc. 0%/13.00% 20164,6 | 21,700 | 20,995 | ||||||
Michaels Stores, Inc., Term Loan B2, 4.875% 20161,2,3 | 6,349 | 6,235 | ||||||
Michaels Stores, Inc. 11.375% 2016 | 24,600 | 26,845 | ||||||
Virgin Media Finance PLC 9.125% 2016 | 36,015 | 38,716 | ||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 101,400 | 115,089 | ||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 9,325 | 9,885 | ||||||
Virgin Media Finance PLC 8.375% 20194 | 57,435 | 63,322 | ||||||
Allison Transmission Holdings, Inc., Term Loan B, 3.01% 20141,2,3 | 33,305 | 31,336 | ||||||
Allison Transmission Holdings, Inc. 11.00% 20154 | 50,195 | 54,713 | ||||||
Allison Transmission Holdings, Inc. 11.25% 20151,4,5 | 81,644 | 88,992 | ||||||
Mandalay Resort Group 6.375% 2011 | 4,150 | 4,057 | ||||||
MGM Resorts International 6.75% 2012 | 5,550 | 5,273 | ||||||
MGM Resorts International 6.75% 2013 | 16,855 | 15,738 | ||||||
MGM Resorts International 13.00% 2013 | 37,775 | 44,575 | ||||||
MGM Resorts International 5.875% 2014 | 25,425 | 21,866 | ||||||
MGM Resorts International 10.375% 2014 | 12,725 | 14,220 | ||||||
MGM Resorts International 6.625% 2015 | 7,975 | 6,719 | ||||||
MGM Resorts International 7.50% 2016 | 16,600 | 14,110 | ||||||
MGM Resorts International 11.125% 2017 | 18,275 | 20,902 | ||||||
MGM Resorts International 9.00% 20204 | 18,925 | 20,013 | ||||||
Macy’s Retail Holdings, Inc. 8.375% 20151 | 56,645 | 65,142 | ||||||
Federated Retail Holdings, Inc. 5.90% 2016 | 27,000 | 28,890 | ||||||
Federated Department Stores, Inc. 7.45% 2017 | 19,366 | 21,738 | ||||||
Federated Department Stores, Inc. 6.79% 2027 | 8,767 | 8,504 | ||||||
Federated Department Stores, Inc. 7.00% 2028 | 6,900 | 7,211 | ||||||
Federated Department Stores, Inc. 6.90% 2029 | 18,491 | 18,815 | ||||||
Toys “R” Us, Inc. 7.625% 2011 | 57,410 | 59,563 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20161,2,3 | 14,300 | 14,330 | ||||||
Toys “R” Us-Delaware, Inc. 7.375% 20164 | 19,580 | 20,021 | ||||||
Toys “R” Us, Inc. 8.50% 20174 | 36,325 | 38,595 | ||||||
Toys “R” Us Property Co. I, LLC 10.75% 2017 | 3,875 | 4,398 | ||||||
Toys “R” Us, Inc. 7.375% 2018 | 9,550 | 9,168 | ||||||
Neiman Marcus Group, Inc. 9.00% 20151,5 | 79,954 | 83,452 | ||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 34,125 | 36,002 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 69,003 | 70,901 | ||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019 | 26,450 | 27,508 | ||||||
AMC Entertainment Inc. 8.00% 2014 | 12,175 | 12,342 | ||||||
AMC Entertainment Inc., Series B, 11.00% 2016 | 10,000 | 10,725 | ||||||
AMC Entertainment Inc. 8.75% 2019 | 68,675 | 72,710 | ||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 80,550 | 86,390 | ||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 77,775 | 76,997 | ||||||
Ziggo Bond Co. BV 8.00% 2018 | € | 48,000 | 68,976 | |||||
Boyd Gaming Corp. 7.75% 2012 | $ | 27,925 | 28,204 | |||||
Boyd Gaming Corp. 6.75% 2014 | 25,000 | 22,375 | ||||||
Boyd Gaming Corp. 7.125% 2016 | 18,775 | 15,794 | ||||||
Cinemark USA, Inc., Term Loan, 3.55% 20161,2,3 | 5,521 | 5,513 | ||||||
Cinemark USA, Inc. 8.625% 2019 | 56,255 | 60,193 | ||||||
J.C. Penney Co., Inc. 9.00% 2012 | 8,980 | 9,945 | ||||||
J.C. Penney Co., Inc., Series A, 6.875% 2015 | 5,352 | 5,794 | ||||||
J.C. Penney Co., Inc. 7.65% 2016 | 13,014 | 14,559 | ||||||
J.C. Penney Co., Inc. 5.75% 2018 | 26,155 | 27,070 | ||||||
Regal Cinemas Corp., Series B, 9.375% 2012 | 13,300 | 13,300 | ||||||
Regal Entertainment Group 9.125% 2018 | 13,000 | 13,699 | ||||||
Regal Cinemas Corp. 8.625% 2019 | 27,955 | 29,458 | ||||||
Burlington Coat Factory Warehouse Corp. 11.125% 2014 | 52,410 | 55,031 | ||||||
Hanesbrands Inc., Series B, 4.121% 20141 | 45,550 | 44,070 | ||||||
Hanesbrands Inc. 8.00% 2016 | 9,600 | 10,188 | ||||||
Royal Caribbean Cruises Ltd. 8.75% 2011 | 435 | 446 | ||||||
Royal Caribbean Cruises Ltd. 6.875% 2013 | 4,000 | 4,230 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 40,475 | 49,278 | ||||||
CSC Holdings, Inc., Series B, 6.75% 2012 | 4,500 | 4,719 | ||||||
CSC Holdings, Inc. 8.50% 2014 | 28,850 | 31,915 | ||||||
CSC Holdings, Inc. 8.50% 2015 | 3,500 | 3,841 | ||||||
CSC Holdings, Inc. 8.625% 2019 | 11,400 | 12,939 | ||||||
Dollar General Corp., Term Loan B2, 3.007% 20141,2,3 | 4,268 | 4,165 | ||||||
Dollar General Corp. 10.625% 2015 | 21,363 | 23,660 | ||||||
Dollar General Corp. 11.875% 20171,5 | 21,283 | 25,008 | ||||||
Tower Automotive Holdings 10.625% 20174 | 51,525 | 52,298 | ||||||
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014 | 40,750 | 43,093 | ||||||
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016 | 8,292 | 9,121 | ||||||
Limited Brands, Inc. 5.25% 2014 | 55 | 56 | ||||||
Limited Brands, Inc. 6.90% 2017 | 5,478 | 5,834 | ||||||
Limited Brands, Inc. 8.50% 2019 | 8,750 | 10,216 | ||||||
Limited Brands, Inc. 7.00% 2020 | 25,084 | 27,216 | ||||||
Limited Brands, Inc. 7.60% 2037 | 5,133 | 5,056 | ||||||
Wynn Las Vegas, LLC and Wynn Las Vegas Capital Corp. 7.75% 20204 | 45,250 | 47,965 | ||||||
Technical Olympic USA, Inc. 9.25% 20114,7 | 36,325 | 22,522 | ||||||
Technical Olympic USA, Inc. 9.00% 20107 | 22,486 | 13,941 | ||||||
Technical Olympic USA, Inc. 9.00% 20107 | 7,325 | 4,541 | ||||||
UPC Holding BV 9.875% 20184 | 37,310 | 39,922 | ||||||
Edcon (Proprietary) Ltd. 4.129% 20141 | € | 22,425 | 25,985 | |||||
Edcon (Proprietary) Ltd. 4.129% 20141 | 11,000 | 12,746 | ||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | $ | 22,450 | 17,174 | |||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 1,225 | 975 | ||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 24,600 | 14,514 | ||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 6,775 | 3,769 | ||||||
LBI Media, Inc. 8.50% 20174 | 40,150 | 34,328 | ||||||
Local T.V. Finance LLC, Term Loan B, 2.29% 20131,2,3 | 8,462 | 7,768 | ||||||
Local T.V. Finance LLC 10.00% 20151,4,5 | 30,394 | 26,150 | ||||||
American Media Operations, Inc. 9.00% 20134,5,8,9 | 3,549 | 2,342 | ||||||
American Media Operations, Inc. 14.00% 20131,4,5,8 | 45,752 | 30,196 | ||||||
Tenneco Automotive Inc. 8.625% 2014 | 30,995 | 31,925 | ||||||
Fox Acquisition LLC, Term Loan B, 7.50% 20151,2,3 | 4,251 | 4,208 | ||||||
Fox Acquisition LLC 13.375% 20164 | 26,240 | 27,486 | ||||||
Quebecor Media Inc. 7.75% 2016 | 19,700 | 20,414 | ||||||
Quebecor Media Inc. 7.75% 2016 | 10,375 | 10,751 | ||||||
Marina District Finance 9.50% 20154 | 7,500 | 7,312 | ||||||
Marina District Finance 9.875% 20184 | 24,000 | 23,280 | ||||||
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012 | 28,180 | 26,348 | ||||||
Jarden Corp. 8.00% 2016 | 23,250 | 24,877 | ||||||
Atlantic Broadband Finance, LLC and Atlantic Broadband Finance, Inc. 9.375% 2014 | 23,950 | 24,369 | ||||||
Warner Music Group 7.375% 2014 | 18,090 | 17,140 | ||||||
Warner Music Group 9.50% 2016 | 6,700 | 7,203 | ||||||
Seneca Gaming Corp., Series B, 7.25% 2012 | 16,000 | 15,840 | ||||||
Seneca Gaming Corp. 7.25% 2012 | 8,440 | 8,356 | ||||||
Allbritton Communications Co. 8.00% 2018 | 22,000 | 22,165 | ||||||
UPC Germany GmbH 8.125% 20174 | 3,550 | 3,710 | ||||||
UPC Germany GmbH 9.625% 2019 | € | 10,800 | 16,041 | |||||
Radio One, Inc. 6.375% 20137 | $ | 20,260 | 17,145 | |||||
Gray Television, Inc. 10.50% 2015 | 16,620 | 16,682 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 15,245 | 15,245 | ||||||
Lamar Media Corp. 7.875% 2018 | 13,525 | 14,269 | ||||||
TL Acquisitions, Inc., Term Loan B, 2.54% 20141,2,3 | 14,975 | 13,471 | ||||||
NCL Corporation Ltd. 11.75% 2016 | 10,110 | 11,374 | ||||||
Vidéotron Ltée 6.875% 2014 | 6,780 | 6,916 | ||||||
Vidéotron Ltée 6.375% 2015 | 3,720 | 3,822 | ||||||
Lear Corp. 7.875% 2018 | 9,000 | 9,585 | ||||||
Seminole Tribe of Florida 7.804% 20202,4 | 9,515 | 8,950 | ||||||
KB Home 6.25% 2015 | 9,285 | 8,914 | ||||||
Meritage Corp. 7.731% 20174 | 9,000 | 8,078 | ||||||
Interactive Data Corp. 10.25% 20184 | 6,575 | 7,068 | ||||||
Ford Motor Co. 9.50% 2011 | 1,000 | 1,060 | ||||||
FCE Bank PLC 7.125% 2013 | € | 3,550 | 5,045 | |||||
Wendy’s/Arby’s Restaurants, LLC 10.00% 2016 | $ | 5,700 | 6,092 | |||||
Kabel Deutschland GmbH 10.625% 2014 | 5,750 | 6,023 | ||||||
Clear Channel Communications, Inc. 5.00% 2012 | 5,750 | 5,463 | ||||||
Phillips-Van Heusen Co. 7.375% 2020 | 5,000 | 5,294 | ||||||
Standard Pacific Corp. 6.25% 2014 | 3,065 | 2,969 | ||||||
Standard Pacific Corp. 7.00% 2015 | 2,315 | 2,228 | ||||||
Sinclair Broadcast Group, Inc. 8.00% 2012 | 3,000 | 3,012 | ||||||
Grupo Televisa, SAB 6.625% 2040 | 2,500 | 2,856 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 750 | 885 | ||||||
Cox Communications, Inc. 5.45% 2014 | 390 | 442 | ||||||
KAC Acquisition Corp. 8.00% 20264,5,9 | 256 | — | ||||||
3,740,465 | ||||||||
TELECOMMUNICATION SERVICES — 12.00% | ||||||||
Cricket Communications, Inc. 9.375% 2014 | 216,225 | 224,874 | ||||||
Cricket Communications, Inc. 10.00% 2015 | 23,245 | 25,221 | ||||||
Cricket Communications, Inc. 7.75% 2016 | 142,615 | 152,063 | ||||||
Sprint Capital Corp. 7.625% 2011 | 4,000 | 4,075 | ||||||
Sprint Capital Corp. 8.375% 2012 | 23,680 | 25,456 | ||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 46,088 | 46,606 | ||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 144,965 | 144,965 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 138,523 | 139,908 | ||||||
Sprint Capital Corp. 8.75% 2032 | 3,000 | 3,165 | ||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 124,195 | 130,715 | ||||||
MetroPCS Wireless, Inc. 9.25% 2014 | 83,640 | 88,031 | ||||||
Clearwire Communications LLC/Finance 12.00% 20154 | 82,125 | 88,900 | ||||||
Clearwire Communications LLC/Finance 12.00% 20154 | 43,970 | 47,598 | ||||||
Frontier Communications Corp. 7.875% 2015 | 22,300 | 24,196 | ||||||
Frontier Communications Corp. 8.25% 2017 | 47,325 | 51,998 | ||||||
Frontier Communications Corp. 8.50% 2020 | 35,950 | 39,860 | ||||||
Frontier Communications Corp. 8.75% 2022 | 15,925 | 17,597 | ||||||
Digicel Group Ltd. 12.00% 20144 | 61,825 | 71,872 | ||||||
Digicel Group Ltd. 12.00% 2014 | 600 | 698 | ||||||
Digicel Group Ltd. 8.875% 20154 | 32,475 | 33,287 | ||||||
Digicel Group Ltd. 8.875% 2015 | 10,015 | 10,265 | ||||||
Digicel Group Ltd. 10.50% 20184 | 10,450 | 11,521 | ||||||
Wind Acquisition SA 11.75% 20174 | 106,800 | 120,217 | ||||||
Windstream Corp. 8.125% 2013 | 66,250 | 72,213 | ||||||
Valor Telecommunications Enterprises, LLC and Valor Telecommunications Enterprises Finance Corp. 7.75% 2015 | 8,895 | 9,211 | ||||||
Windstream Corp. 8.625% 2016 | 19,300 | 20,506 | ||||||
Windstream Corp. 7.00% 2019 | 2,500 | 2,463 | ||||||
Trilogy International Partners, LLC, 10.25% 20164 | 84,250 | 78,774 | ||||||
Intelsat, Ltd. 8.50% 2013 | 3,000 | 3,049 | ||||||
Intelsat, Ltd. 8.875% 2015 | 11,250 | 11,700 | ||||||
Intelsat Jackson Holding Co., Series B, 8.875% 20154 | 10,750 | 11,180 | ||||||
Intelsat, Ltd. 9.50% 2015 | 7,000 | 7,280 | ||||||
Intelsat, Ltd. 9.25% 2016 | 5,000 | 5,356 | ||||||
Intelsat Jackson Holding Co. 9.50% 2016 | 15,425 | 16,524 | ||||||
Intelsat Jackson Holding Co. 8.50% 20194 | 20,250 | 22,072 | ||||||
Vodafone Group PLC, Term Loan, 6.875% 20152,3,5,9 | 69,395 | 69,742 | ||||||
Crown Castle International Corp. 9.00% 2015 | 42,550 | 46,911 | ||||||
Crown Castle International Corp. 7.75% 20174 | 11,150 | 12,376 | ||||||
Crown Castle International Corp. 7.125% 2019 | 2,900 | 3,103 | ||||||
American Tower Corp. 7.00% 2017 | 21,825 | 25,508 | ||||||
American Tower Corp. 7.25% 2019 | 11,225 | 13,260 | ||||||
Orascom Telecom 7.875% 20144 | 32,780 | 31,879 | ||||||
SBA Telecommunications, Inc. 8.00% 2016 | 12,850 | 13,878 | ||||||
Qwest Communications International Inc. 8.00% 2015 | 12,750 | 13,866 | ||||||
Sorenson Communications 10.50% 20154 | 20,700 | 12,213 | ||||||
América Móvil, SAB de CV 5.00% 2020 | 4,350 | 4,713 | ||||||
América Móvil, SAB de CV 8.46% 2036 | MXN65,000 | 5,217 | ||||||
Hawaiian Telcom Communications, Inc. 8.765% 20131,7,9 | $ | 19,715 | 59 | |||||
Hawaiian Telcom Communications, Inc. 9.75% 20137 | 23,340 | 70 | ||||||
Hawaiian Telcom Communications, Inc., Term Loan C, 4.75% 20141,2,3,5 | 9,160 | 7,076 | ||||||
Hawaiian Telcom Communications, Inc., Series B, 12.50% 20157 | 8,725 | 1 | ||||||
Level 3 Financing, Inc. 9.25% 2014 | 4,000 | 3,780 | ||||||
2,027,068 | ||||||||
FINANCIALS — 10.81% | ||||||||
CIT Group Inc., Series A, 7.00% 2013 | 98,988 | 99,978 | ||||||
CIT Group Inc., Series A, 7.00% 2014 | 77,200 | 77,393 | ||||||
CIT Group Inc., Term Loan 3, 6.25% 20151,2,3 | 18,147 | 18,324 | ||||||
CIT Group Inc., Series A, 7.00% 2015 | 111,668 | 111,389 | ||||||
CIT Group Inc., Series A, 7.00% 2016 | 51,190 | 50,678 | ||||||
Realogy Corp., Term Loan B, 3.258% 20131,2,3 | 99,343 | 88,771 | ||||||
Realogy Corp., Term Loan DD, 3.258% 20131,2,3 | 44,978 | 40,191 | ||||||
Realogy Corp., Letter of Credit, 3.313% 20131,2,3 | 12,906 | 11,532 | ||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20172,3 | 85,475 | 91,512 | ||||||
International Lease Finance Corp. 5.125% 2010 | 2,375 | 2,381 | ||||||
International Lease Finance Corp., Series R, 4.95% 2011 | 10,265 | 10,316 | ||||||
International Lease Finance Corp., Series Q, 5.45% 2011 | 44,505 | 44,894 | ||||||
International Lease Finance Corp., Series Q, 5.75% 2011 | 50,436 | 50,940 | ||||||
International Lease Finance Corp. 4.75% 2012 | 9,060 | 9,105 | ||||||
International Lease Finance Corp. 5.00% 2012 | 6,705 | 6,705 | ||||||
International Lease Finance Corp., Series R, 5.30% 2012 | 8,810 | 8,876 | ||||||
International Lease Finance Corp., Series R, 5.35% 2012 | 8,390 | 8,484 | ||||||
International Lease Finance Corp., Series R, 5.40% 2012 | 17,500 | 17,675 | ||||||
International Lease Finance Corp., Series R, 6.375% 2013 | 15,500 | 15,655 | ||||||
International Lease Finance Corp. 8.625% 20154 | 14,750 | 15,819 | ||||||
Liberty Mutual Group Inc. 6.50% 20354 | 18,000 | 16,531 | ||||||
Liberty Mutual Group Inc., Series B, 7.00% 20671,4 | 11,185 | 10,058 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20871,4 | 75,343 | 71,953 | ||||||
Liberty Mutual Group Inc., Series C, 10.75% 20881,4 | 47,950 | 57,061 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 10,385 | 10,140 | ||||||
Developers Diversified Realty Corp. 9.625% 2016 | 55,296 | 61,757 | ||||||
Developers Diversified Realty Corp. 7.50% 2017 | 26,110 | 27,165 | ||||||
Developers Diversified Realty Corp. 7.875% 2020 | 18,125 | 18,813 | ||||||
Host Marriott, LP, Series K, 7.125% 2013 | 3,068 | 3,137 | ||||||
Host Hotels & Resorts, LP, Series S, 6.875% 2014 | 11,150 | 11,568 | ||||||
Host Marriott, LP, Series O, 6.375% 2015 | 10,725 | 11,033 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 18,325 | 19,081 | ||||||
Host Hotels & Resorts LP 9.00% 2017 | 29,025 | 32,544 | ||||||
GMAC LLC 7.25% 2011 | 8,898 | 9,098 | ||||||
GMAC LLC 6.875% 2012 | 1,468 | 1,540 | ||||||
GMAC LLC 7.00% 2012 | 2,945 | 3,074 | ||||||
GMAC LLC 7.50% 2013 | 3,030 | 3,250 | ||||||
GMAC LLC 2.497% 20141 | 9,210 | 8,244 | ||||||
GMAC LLC 6.75% 2014 | 7,500 | 7,746 | ||||||
GMAC LLC 8.30% 20154 | 31,226 | 34,114 | ||||||
Rouse Co. 7.20% 20127 | 12,145 | 14,513 | ||||||
Rouse Co. 5.375% 20137 | 22,130 | 24,979 | ||||||
Rouse Co. 6.75% 20134,7 | 17,950 | 20,957 | ||||||
Zions Bancorporation 5.65% 2014 | 31,690 | 31,532 | ||||||
Zions Bancorporation 7.75% 2014 | 7,225 | 7,662 | ||||||
Zions Bancorporation 6.00% 2015 | 12,560 | 12,484 | ||||||
MetLife Capital Trust IV 7.875% 20671,4 | 14,950 | 15,772 | ||||||
MetLife Capital Trust X 9.25% 20681,4 | 22,500 | 26,663 | ||||||
MetLife Inc. 10.75% 20691 | 7,000 | 9,105 | ||||||
ProLogis 5.625% 2016 | 8,685 | 8,372 | ||||||
ProLogis 6.625% 2018 | 8,570 | 8,459 | ||||||
ProLogis 7.375% 2019 | 10,740 | 10,856 | ||||||
ProLogis 6.875% 2020 | 19,260 | 18,967 | ||||||
Ford Motor Credit Co. 7.25% 2011 | 8,000 | 8,400 | ||||||
Ford Motor Credit Co. 7.375% 2011 | 1,500 | 1,528 | ||||||
Ford Motor Credit Co. 3.277% 20121 | 6,000 | 6,002 | ||||||
Ford Motor Credit Co. 7.50% 2012 | 5,000 | 5,310 | ||||||
Ford Motor Credit Co. 7.80% 2012 | 2,000 | 2,128 | ||||||
Ford Motor Credit Co. 8.70% 2014 | 2,000 | 2,246 | ||||||
Ford Motor Credit Co. 5.625% 2015 | 2,000 | 2,059 | ||||||
Ford Motor Credit Co. 7.00% 2015 | 6,000 | 6,418 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 8,950 | 10,129 | ||||||
Ford Motor Credit Co. 6.625% 2017 | 2,150 | 2,294 | ||||||
National City Preferred Capital Trust I 12.00% (undated)1 | 41,340 | 46,352 | ||||||
HBOS PLC 6.75% 20184 | 40,925 | 41,182 | ||||||
HBOS PLC 6.00% 20334 | 4,050 | 3,095 | ||||||
Hospitality Properties Trust 7.875% 2014 | 4,090 | 4,605 | ||||||
Hospitality Properties Trust 5.125% 2015 | 4,410 | 4,513 | ||||||
Hospitality Properties Trust 6.30% 2016 | 2,215 | 2,364 | ||||||
Hospitality Properties Trust 5.625% 2017 | 12,870 | 13,234 | ||||||
Hospitality Properties Trust 6.70% 2018 | 6,820 | 7,321 | ||||||
Capital One Capital IV 6.745% 20371 | 22,000 | 22,110 | ||||||
Capital One Capital V 10.25% 2039 | 8,365 | 9,107 | ||||||
Royal Bank of Scotland Group PLC 5.00% 2014 | 2,050 | 2,056 | ||||||
Royal Bank of Scotland Group PLC 5.05% 2015 | 4,178 | 4,190 | ||||||
Royal Bank of Scotland Group PLC 4.70% 2018 | 8,490 | 7,272 | ||||||
RBS Capital Trust II 6.425% noncumulative trust (undated)1,7 | 18,585 | 13,521 | ||||||
Royal Bank of Scotland Group PLC 6.99% (undated)1,4 | 3,615 | 2,946 | ||||||
Lazard Group LLC 7.125% 2015 | 21,926 | 23,943 | ||||||
Nationwide Mutual Insurance Co. 9.375% 20394 | 18,000 | 21,315 | ||||||
Unum Group 7.125% 2016 | 13,575 | 15,686 | ||||||
Unum Group 5.625% 2020 | 1,650 | 1,698 | ||||||
Genworth Financial, Inc. 6.15% 20661 | 22,500 | 17,241 | ||||||
Regions Financial Corp. 7.75% 2014 | 15,500 | 16,805 | ||||||
Citigroup Inc. 6.125% 2017 | 4,350 | 4,759 | ||||||
Citigroup Inc. 6.125% 2018 | 4,675 | 5,108 | ||||||
Citigroup Capital XXI 8.30% 20771 | 6,500 | 6,858 | ||||||
Simon Property Group, LP 10.35% 2019 | 7,350 | 10,289 | ||||||
SLM Corp., Series A, 5.375% 2013 | 9,000 | 9,078 | ||||||
Brandywine Operating Partnership, LP 7.50% 2015 | 7,000 | 7,855 | ||||||
Lehman Brothers Holdings Inc., Series G, 4.80% 20147 | 5,000 | 1,131 | ||||||
Lehman Brothers Holdings Inc., Series I, 6.20% 20147 | 4,640 | 1,050 | ||||||
Lehman Brothers Holdings Inc., Series H, 5.50% 20167 | 360 | 81 | ||||||
Lehman Brothers Holdings Inc., Series I, 6.875% 20187 | 23,000 | 5,520 | ||||||
Banco Mercantil del Norte, SA 6.135% 20161,4 | 3,500 | 3,518 | ||||||
Banco Mercantil del Norte, SA 6.862% 20211,4 | 2,000 | 2,010 | ||||||
VEB Finance Ltd. 6.902% 20204 | 4,950 | 5,426 | ||||||
HVB Funding Trust I 8.741% 20314 | 5,325 | 5,325 | ||||||
Banco de Crédito del Perú 5.375% 20204 | 5,000 | 5,075 | ||||||
PHH Corp. 9.25% 20164 | 4,700 | 4,912 | ||||||
Synovus Financial Corp. 4.875% 2013 | 4,940 | 4,469 | ||||||
BBVA Bancomer SA 7.25% 20204 | 2,805 | 3,020 | ||||||
Banco del Estado de Chile 4.125% 20204 | 2,500 | 2,481 | ||||||
Allstate Corp., Series B, 6.125% 20671 | 2,530 | 2,366 | ||||||
AXA SA 6.463% (undated)1,4 | 200 | 176 | ||||||
1,826,423 | ||||||||
INDUSTRIALS — 10.48% | ||||||||
Nielsen Finance LLC, Term Loan A, 2.258% 20131,2,3 | 7,411 | 7,116 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 10.00% 2014 | 73,450 | 77,582 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 14,625 | 16,673 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 0%/12.50% 20166 | 134,190 | 135,029 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 63,200 | 72,048 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20172,3,9 | 28,000 | 29,260 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 7.75% 20184 | 8,700 | 8,636 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.189% 20141,2,3 | 6,353 | 5,150 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.256% 20141,2,3 | 106,771 | 86,556 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20141,2,3 | 21,404 | 21,324 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015 | 8,045 | 6,245 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.875% 20151,5 | 54,450 | 41,041 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017 | 1,305 | 780 | ||||||
US Investigations Services, Inc., Term Loan B, 3.292% 20151,2,3 | 8,244 | 7,513 | ||||||
US Investigations Services, Inc., Term Loan B, 7.75% 20151,2,3 | 57,852 | 58,105 | ||||||
US Investigations Services, Inc. 10.50% 20154 | 46,330 | 46,156 | ||||||
US Investigations Services, Inc. 11.75% 20164 | 16,700 | 16,303 | ||||||
TransDigm Inc. 7.75% 2014 | 93,421 | 94,939 | ||||||
TransDigm Inc. 7.75% 2014 | 17,520 | 17,805 | ||||||
AMH Holdings, Inc. 11.25% 2014 | 86,433 | 90,755 | ||||||
AMH Holdings, Inc. 9.875% 2016 | 9,425 | 11,451 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 4.23% 20141,2,3 | 11,935 | 11,219 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 4.23% 20141,2,3 | 11,557 | 10,863 | ||||||
DAE Aviation Holdings, Inc. 11.25% 20154 | 76,129 | 77,088 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class A-2, 7.57% 20122 | 3,200 | 3,218 | ||||||
Delta Air Lines, Inc., Series 2000-1, Class B, 7.92% 20122 | 3,500 | 3,523 | ||||||
Northwest Airlines, Inc., Term Loan B, 3.79% 20131,2,3 | 10,083 | 9,352 | ||||||
Delta Air Lines, Inc., Series 2001-1, Class A-2, 7.111% 20132 | 2,500 | 2,622 | ||||||
Delta Air Lines, Inc., Second Lien Term Loan B, 3.507% 20141,2,3 | 11,610 | 11,078 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20142 | 15,353 | 16,082 | ||||||
Delta Air Lines, Inc. 9.50% 20144 | 3,256 | 3,549 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.04% 20181,2,3 | 10,166 | 8,768 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20242 | 32,352 | 32,514 | ||||||
ARAMARK Corp., Term Loan B, 2.164% 20141,2,3 | 2,672 | 2,550 | ||||||
ARAMARK Corp., Letter of Credit, 2.18% 20141,2,3 | 215 | 205 | ||||||
ARAMARK Corp. 3.966% 20151 | 29,270 | 26,819 | ||||||
ARAMARK Corp. 8.50% 2015 | 51,370 | 53,682 | ||||||
ARAMARK Corp., Letter of Credit, 3.405% 20161,2,3 | 388 | 381 | ||||||
ARAMARK Corp., Term Loan B, 3.539% 20161,2,3 | 5,897 | 5,795 | ||||||
CEVA Group PLC, Bridge Loan, 9.327% 20151,2,3,9 | 56,263 | 45,292 | ||||||
CEVA Group PLC 11.625% 20164 | 16,330 | 17,310 | ||||||
CEVA Group PLC 11.50% 20184 | 20,725 | 21,761 | ||||||
Ashtead Group PLC 8.625% 20154 | 26,250 | 27,169 | ||||||
Ashtead Capital, Inc. 9.00% 20164 | 48,955 | 50,913 | ||||||
Continental Airlines, Inc. 8.75% 2011 | 21,200 | 21,757 | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20172 | 6,049 | 5,988 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20182 | 5,757 | 5,527 | ||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20182 | 4,421 | 4,399 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20192 | 4,697 | 4,982 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20192 | 2,298 | 2,332 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20202 | 5,828 | 6,141 | ||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20202 | 944 | 913 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20202 | 11,306 | 10,996 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20222 | 5,092 | 5,372 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20222 | 2,494 | 2,730 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20222 | 291 | 318 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20222 | 5,854 | 5,927 | ||||||
Nortek, Inc. 11.00% 20138 | 66,164 | 70,630 | ||||||
AMR Corp., Series B, 10.45% 2011 | 1,850 | 1,878 | ||||||
American Airlines, Inc., Series 2001-1, Class A-2, 6.817% 20122 | 11,375 | 11,674 | ||||||
American Airlines, Inc., Series 2001-2, Class B, 8.608% 20122 | 8,690 | 8,907 | ||||||
AMR Corp. 9.00% 2012 | 16,155 | 15,832 | ||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20132 | 1,300 | 1,370 | ||||||
AMR Corp. 9.00% 2016 | 1,475 | 1,390 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20192 | 13,690 | 12,732 | ||||||
AMR Corp. 9.88% 2020 | 1,275 | 1,055 | ||||||
AMR Corp. 9.80% 2021 | 2,555 | 2,114 | ||||||
AMR Corp. 10.00% 2021 | 9,000 | 7,448 | ||||||
RBS Global, Inc. 8.50% 2018 | 46,200 | 47,182 | ||||||
United Air Lines, Inc., Term Loan B, 2.313% 20141,2,3 | 31,836 | 30,017 | ||||||
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20062,7,9 | 1,135 | — | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20212,4 | 8,594 | 7,992 | ||||||
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20242 | 5,821 | 5,847 | ||||||
RailAmerica, Inc. 9.25% 2017 | 35,064 | 38,614 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 17,247 | 17,764 | ||||||
Esterline Technologies Corp. 7.00% 20204 | 18,190 | 18,918 | ||||||
Kansas City Southern Railway Co. 13.00% 2013 | 2,710 | 3,276 | ||||||
Kansas City Southern Railway Co. 8.00% 2015 | 18,892 | 20,427 | ||||||
Ply Gem Industries, Inc. 11.75% 2013 | 19,740 | 21,220 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 17,875 | 17,964 | ||||||
Sequa Corp., Term Loan B, 3.79% 20141,2,3 | 9,618 | 9,045 | ||||||
Esco Corp. 4.167% 20131,4 | 950 | 874 | ||||||
Esco Corp. 8.625% 20134 | 5,600 | 5,768 | ||||||
Oshkosh Corp. 8.25% 2017 | 2,450 | 2,646 | ||||||
Oshkosh Corp. 8.50% 2020 | 3,525 | 3,833 | ||||||
BE Aerospace, Inc. 6.875% 2020 | 6,200 | 6,355 | ||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014 | 3,650 | 3,801 | ||||||
Allied Waste North America, Inc. 6.875% 2017 | 2,800 | 3,095 | ||||||
1,769,270 | ||||||||
INFORMATION TECHNOLOGY — 8.41% | ||||||||
First Data Corp., Term Loan B2, 3.006% 20141,2,3 | 112,599 | 99,311 | ||||||
First Data Corp. 9.875% 2015 | 224,835 | 183,241 | ||||||
First Data Corp. 9.875% 2015 | 19,785 | 16,273 | ||||||
First Data Corp. 10.55% 20155 | 124,606 | 101,249 | ||||||
First Data Corp. 11.25% 2016 | 16,650 | 12,071 | ||||||
First Data Corp. 8.875% 20204 | 25,455 | 26,537 | ||||||
NXP BV and NXP Funding LLC 3.276% 20131 | 11,640 | 11,043 | ||||||
NXP BV and NXP Funding LLC 3.585% 20131 | € | 47,178 | 60,456 | |||||
NXP BV and NXP Funding LLC 10.00% 201310 | $ | 77,049 | 86,199 | |||||
NXP BV and NXP Funding LLC 7.875% 2014 | 4,625 | 4,810 | ||||||
NXP BV and NXP Funding LLC 8.625% 2015 | € | 24,950 | 33,333 | |||||
NXP BV and NXP Funding LLC 9.50% 2015 | $ | 70,140 | 72,069 | |||||
NXP BV and NXP Funding LLC 9.75% 20184 | 82,650 | 88,436 | ||||||
Freescale Semiconductor, Inc. 8.875% 2014 | 34,320 | 34,449 | ||||||
Freescale Semiconductor, Inc. 9.125% 20141,5 | 99,685 | 100,183 | ||||||
Freescale Semiconductor, Inc., Term Loan, 4.509% 20161,2,3 | 19,993 | 18,300 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 72,637 | 66,463 | ||||||
Freescale Semiconductor, Inc. 9.25% 20184 | 29,800 | 31,141 | ||||||
Freescale Semiconductor, Inc. 10.125% 20184 | 50,725 | 54,276 | ||||||
Sanmina-SCI Corp. 6.75% 2013 | 39,700 | 40,295 | ||||||
Sanmina-SCI Corp. 3.042% 20141,4 | 28,755 | 27,245 | ||||||
Sanmina-SCI Corp. 8.125% 2016 | 86,807 | 89,411 | ||||||
SunGard Data Systems Inc. 9.125% 2013 | 42,725 | 43,847 | ||||||
SunGard Data Systems Inc. 10.625% 2015 | 11,250 | 12,600 | ||||||
Ceridian Corp. 11.25% 2015 | 32,925 | 30,538 | ||||||
Advanced Micro Devices, Inc. 8.125% 2017 | 21,050 | 22,313 | ||||||
Advanced Micro Devices, Inc. 7.75% 20204 | 3,750 | 3,891 | ||||||
Serena Software, Inc. 10.375% 2016 | 24,540 | 25,276 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 22,415 | 25,161 | ||||||
1,420,417 | ||||||||
HEALTH CARE — 7.24% | ||||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 85,740 | 88,312 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 20164 | 108,650 | 110,280 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 20164 | 43,550 | 43,768 | ||||||
Tenet Healthcare Corp. 7.375% 2013 | 71,295 | 76,107 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 31,460 | 33,937 | ||||||
Tenet Healthcare Corp. 8.875% 2019 | 48,895 | 54,212 | ||||||
Tenet Healthcare Corp. 8.00% 20204 | 16,500 | 16,500 | ||||||
VWR Funding, Inc., Series B, 10.25% 20151,5 | 138,243 | 144,119 | ||||||
PTS Acquisition Corp. 9.50% 20151,5 | 109,873 | 111,521 | ||||||
PTS Acquisition Corp. 9.75% 2017 | € | 12,250 | 15,614 | |||||
Boston Scientific Corp. 6.25% 2015 | $ | 3,785 | 4,069 | |||||
Boston Scientific Corp. 5.125% 2017 | 4,914 | 4,971 | ||||||
Boston Scientific Corp. 6.00% 2020 | 18,846 | 20,136 | ||||||
Boston Scientific Corp. 7.00% 2035 | 7,800 | 7,906 | ||||||
Boston Scientific Corp. 7.375% 2040 | 35,596 | 40,703 | ||||||
HCA Inc., Term Loan B1, 2.539% 20131,2,3 | 2,925 | 2,819 | ||||||
HCA Inc. 6.75% 2013 | 3,800 | 3,895 | ||||||
HCA Inc. 9.125% 2014 | 12,945 | 13,673 | ||||||
HCA Inc. 6.375% 2015 | 16,230 | 16,271 | ||||||
HCA Inc. 9.25% 2016 | 5,725 | 6,212 | ||||||
HCA Inc. 9.625% 20161,5 | 8,388 | 9,122 | ||||||
HCA Inc., Term Loan B2, 3.539% 20171,2,3 | 7,015 | 6,808 | ||||||
HCA Inc. 7.875% 2020 | 5,050 | 5,549 | ||||||
HealthSouth Corp. 10.75% 2016 | 57,535 | 63,360 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 54,025 | 57,739 | ||||||
Quintiles Transnational 9.50% 20141,4,5 | 50,435 | 51,948 | ||||||
Surgical Care Affiliates, Inc. 8.875% 20151,4,5 | 28,684 | 29,365 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20174 | 19,430 | 19,940 | ||||||
Symbion Inc. 11.75% 20151,5 | 36,855 | 32,260 | ||||||
Merge Healthcare Inc. 11.75% 20154 | 27,425 | 27,836 | ||||||
Multiplan Inc. 9.875% 20184 | 25,990 | 27,225 | ||||||
Coventry Health Care, Inc. 5.875% 2012 | 4,890 | 5,074 | ||||||
Coventry Health Care, Inc. 5.95% 2017 | 20,625 | 20,660 | ||||||
Patheon Inc. 8.625% 20174 | 20,385 | 20,997 | ||||||
Accellent Inc. 8.375% 2017 | 11,180 | 11,459 | ||||||
CHS/Community Health Systems, Inc. 8.875% 2015 | 8,000 | 8,520 | ||||||
Team Finance LLC and Health Finance Corp. 11.25% 2013 | 6,944 | 7,222 | ||||||
Health Management Associates, Inc. 6.125% 2016 | 3,000 | 3,045 | ||||||
1,223,154 | ||||||||
MATERIALS — 4.03% | ||||||||
Georgia Gulf Corp. 10.75% 20168 | 5,388 | 5,657 | ||||||
Georgia Gulf Corp. 9.00% 20174,8 | 90,285 | 95,025 | ||||||
Reynolds Group 7.75% 20164 | 44,275 | 45,271 | ||||||
Reynolds Group 8.50% 20184 | 24,315 | 23,890 | ||||||
Nalco Finance Holdings LLC and Nalco Finance Holdings Inc. 9.00% 2014 | 8,825 | 9,068 | ||||||
Nalco Co., Term Loan B, 5.75% 20161,2,3 | 1,827 | 1,827 | ||||||
Nalco Co. 8.25% 2017 | 33,000 | 36,630 | ||||||
Ardagh Packaging Finance 7.375% 2017 | € | 15,100 | 20,585 | |||||
Ardagh Packaging Finance 7.375% 20174 | $ | 3,250 | 3,348 | |||||
Ardagh Packaging Finance 9.125% 20204 | 7,900 | 7,900 | ||||||
Ardagh Packaging Finance 9.25% 2020 | € | 5,800 | 7,907 | |||||
Ball Corp. 7.125% 2016 | $ | 15,285 | 16,584 | |||||
Ball Corp. 7.375% 2019 | 11,480 | 12,542 | ||||||
Ball Corp. 6.75% 2020 | 8,345 | 8,887 | ||||||
CEMEX Finance LLC 9.50% 20164 | 18,150 | 18,353 | ||||||
CEMEX Finance LLC 9.50% 2016 | 6,850 | 6,927 | ||||||
CEMEX SA 9.25% 20204 | 7,635 | 7,196 | ||||||
International Paper Co. 7.95% 2018 | 20,575 | 24,990 | ||||||
International Paper Co. 9.375% 2019 | 5,330 | 6,925 | ||||||
Owens-Brockway Glass Container Inc. 6.75% 2014 | 3,309 | 3,417 | ||||||
Owens-Brockway Glass Container Inc. 7.375% 2016 | 26,330 | 28,469 | ||||||
LBI Escrow Corp 8.00% 20174 | 26,510 | 29,028 | ||||||
Graphic Packaging International, Inc. 9.50% 2017 | 17,445 | 18,666 | ||||||
Graphic Packaging International, Inc. 7.875% 2018 | 9,950 | 10,273 | ||||||
Smurfit Kappa Acquisition 7.75% 2019 | € | 11,610 | 16,619 | |||||
Smurfit Capital Funding PLC 7.50% 2025 | $ | 12,550 | 11,295 | |||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 10,215 | 10,496 | ||||||
Rockwood Specialties Group, Inc. 7.625% 2014 | € | 12,235 | 17,117 | |||||
MacDermid 9.50% 20174 | $ | 20,695 | 21,730 | |||||
FMG Finance Pty Ltd. 4.297% 20111,4 | 3,875 | 3,914 | ||||||
FMG Finance Pty Ltd. 10.625% 20164 | 11,725 | 14,495 | ||||||
Plastipak Holdings, Inc. 8.50% 20154 | 15,515 | 16,136 | ||||||
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017 | 13,950 | 15,591 | ||||||
Dow Chemical Co. 7.60% 2014 | 13,000 | 15,197 | ||||||
Rio Tinto Finance (USA) Ltd. 8.95% 2014 | 11,830 | 14,617 | ||||||
Vertellus Specialties Inc. 9.375% 20154 | 13,750 | 14,300 | ||||||
Teck Resources Ltd. 9.75% 2014 | 10,900 | 13,449 | ||||||
Georgia-Pacific Corp. 8.125% 2011 | 11,610 | 12,103 | ||||||
Rock-Tenn Co. 9.25% 2016 | 9,795 | 10,799 | ||||||
Steel Dynamics Inc. 7.625% 20204 | 9,250 | 9,643 | ||||||
Newpage Corp. 11.375% 2014 | 10,000 | 9,100 | ||||||
Solutia Inc. 8.75% 2017 | 2,960 | 3,249 | ||||||
ArcelorMittal 7.00% 2039 | 2,000 | 2,050 | ||||||
681,265 | ||||||||
UTILITIES — 3.78% | ||||||||
Edison Mission Energy 7.50% 2013 | 42,575 | 39,914 | ||||||
Edison Mission Energy 7.75% 2016 | 12,825 | 10,100 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20162 | 45,241 | 44,732 | ||||||
Edison Mission Energy 7.00% 2017 | 32,195 | 23,422 | ||||||
Edison Mission Energy 7.20% 2019 | 46,450 | 33,096 | ||||||
Homer City Funding LLC 8.734% 20262 | 8,970 | 8,207 | ||||||
Edison Mission Energy 7.625% 2027 | 44,280 | 30,000 | ||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B1, 3.758% 20141,2,3 | 9,949 | 7,751 | ||||||
Texas Competitive Electric Holdings Co. LLC, Term Loan B2, 4.066% 20141,2,3 | 104,050 | 81,067 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series B, 10.25% 2015 | 42,288 | 27,910 | ||||||
Texas Competitive Electric Holdings Co. LLC, Series A, 10.25% 2015 | 34,015 | 22,450 | ||||||
Texas Competitive Electric Holdings Co. LLC 11.25% 20161,5 | 11,493 | 6,400 | ||||||
NRG Energy, Inc. 7.25% 2014 | 19,700 | 20,266 | ||||||
NRG Energy, Inc. 7.375% 2016 | 34,700 | 35,784 | ||||||
NRG Energy, Inc. 7.375% 2017 | 21,025 | 21,603 | ||||||
NRG Energy, Inc. 8.25% 20204 | 6,000 | 6,217 | ||||||
AES Corp. 8.75% 20134 | 5,607 | 5,705 | ||||||
AES Gener SA 7.50% 2014 | 11,750 | 13,108 | ||||||
AES Corp. 7.75% 2015 | 5,575 | 5,993 | ||||||
AES Corp. 8.00% 2017 | 35,000 | 37,975 | ||||||
AES Corp. 8.00% 2020 | 13,300 | 14,497 | ||||||
Intergen Power 9.00% 20174 | 71,950 | 76,447 | ||||||
CMS Energy Corp. 4.25% 2015 | 8,025 | 8,134 | ||||||
CMC Energy Corp. 6.55% 2017 | 7,500 | 8,102 | ||||||
CMS Energy Corp. 8.45% 2019 | 8,575 | 10,282 | ||||||
CMS Energy Corp. 6.25% 2020 | 5,700 | 6,029 | ||||||
Nevada Power Co., General and Refunding Mortgage Bonds, Series A, 8.25% 2011 | 4,000 | 4,184 | ||||||
Sierra Pacific Power Co., General and Refunding Mortgage Notes, Series H, 6.25% 2012 | 3,000 | 3,208 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012 | 525 | 565 | ||||||
Sierra Pacific Resources 8.625% 2014 | 11,075 | 11,449 | ||||||
Sierra Pacific Resources 6.75% 2017 | 4,875 | 5,042 | ||||||
Enersis SA 7.375% 2014 | 5,000 | 5,665 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174 | 2,000 | 2,136 | ||||||
637,440 | ||||||||
CONSUMER STAPLES — 3.60% | ||||||||
SUPERVALU INC., Term Loan B, 1.506% 20121,2,3 | 428 | 416 | ||||||
SUPERVALU INC. 7.50% 2012 | 3,860 | 4,010 | ||||||
Albertson’s, Inc. 7.25% 2013 | 4,990 | 5,115 | ||||||
SUPERVALU INC. 7.50% 2014 | 1,000 | 1,010 | ||||||
SUPERVALU INC., Term Loan B2, 3.006% 20151,2,3 | 759 | 736 | ||||||
SUPERVALU INC. 8.00% 2016 | 51,650 | 52,296 | ||||||
Albertson’s, Inc. 7.45% 2029 | 2,684 | 2,187 | ||||||
Albertson’s, Inc. 8.00% 2031 | 29,200 | 23,944 | ||||||
Stater Bros. Holdings Inc. 8.125% 2012 | 38,005 | 38,243 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 47,705 | 49,136 | ||||||
Rite Aid Corp. 8.625% 2015 | 14,500 | 12,597 | ||||||
Rite Aid Corp. 9.75% 2016 | 15,000 | 16,106 | ||||||
Rite Aid Corp. 10.25% 2019 | 18,085 | 18,921 | ||||||
Rite Aid Corp. 8.00% 20204 | 20,800 | 21,216 | ||||||
Rite Aid Corp. 7.70% 2027 | 7,500 | 4,313 | ||||||
Rite Aid Corp. 6.875% 2028 | 11,177 | 5,952 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 5,200 | 5,402 | ||||||
Smithfield Foods, Inc. 10.00% 20144 | 32,400 | 37,422 | ||||||
Smithfield Foods, Inc. 7.75% 2017 | 9,350 | 9,525 | ||||||
Tops Markets 10.125% 20154 | 47,500 | 51,241 | ||||||
C&S Group Enterprises LLC 8.375% 20174 | 47,120 | 46,236 | ||||||
Ingles Markets, Inc. 8.875% 2017 | 34,875 | 37,752 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 6,450 | 7,151 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 25,500 | 27,317 | ||||||
BFF International Ltd. 7.25% 20204 | 28,950 | 31,266 | ||||||
Cott Beverages Inc. 8.375% 20174 | 8,700 | 9,244 | ||||||
Cott Beverages Inc. 8.125% 20184 | 13,325 | 14,174 | ||||||
Spectrum Brands Inc. 9.50% 20184 | 20,750 | 22,280 | ||||||
Tyson Foods, Inc. 10.50% 2014 | 16,525 | 19,975 | ||||||
Elizabeth Arden, Inc. 7.75% 2014 | 12,368 | 12,507 | ||||||
CEDC Finance Corp. 9.125% 20164 | 11,500 | 12,420 | ||||||
TreeHouse Foods, Inc. 7.75% 2018 | 7,400 | 7,973 | ||||||
608,083 | ||||||||
ENERGY — 2.22% | ||||||||
Petroplus Finance Ltd. 6.75% 20144 | 44,675 | 41,101 | ||||||
Petroplus Finance Ltd. 7.00% 20174 | 73,800 | 64,575 | ||||||
Petroplus Finance Ltd. 9.375% 20194 | 30,475 | 27,885 | ||||||
Energy Transfer Partners, LP 7.50% 2020 | 29,875 | 31,593 | ||||||
General Maritime Corp. 12.00% 2017 | 22,825 | 24,195 | ||||||
Overseas Shipholding Group, Inc. 8.125% 2018 | 20,825 | 21,736 | ||||||
TransCanada PipeLines Ltd. 6.35% 20671 | 22,645 | 21,201 | ||||||
Williams Companies, Inc. 6.375% 20104 | 6,000 | 6,000 | ||||||
Williams Companies, Inc. 7.875% 2021 | 1,222 | 1,487 | ||||||
Williams Companies, Inc. 8.75% 2032 | 10,638 | 13,367 | ||||||
Forest Oil Corp. 8.50% 2014 | 1,500 | 1,646 | ||||||
Forest Oil Corp. 7.25% 2019 | 17,750 | 18,238 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.50% 2011 | 4,400 | 4,590 | ||||||
Williams Partners L.P. and Williams Partners Finance Corp. 7.25% 2017 | 12,125 | 14,461 | ||||||
Teekay Corp. 8.50% 2020 | 13,385 | 14,640 | ||||||
Pemex Project Funding Master Trust 5.75% 2018 | 5,850 | 6,440 | ||||||
Pemex Project Funding Master Trust, Series 13, 6.625% 2035 | 6,500 | 7,133 | ||||||
Enterprise Products Operating LLC 7.00% 20671 | 10,055 | 9,534 | ||||||
Denbury Resources Inc. 9.75% 2016 | 5,000 | 5,638 | ||||||
Denbury Resources Inc. 8.25% 2020 | 3,088 | 3,385 | ||||||
Continental Resources Inc. 8.25% 2019 | 1,800 | 1,980 | ||||||
Continental Resources Inc. 7.375% 20204 | 700 | 742 | ||||||
Continental Resources Inc. 7.125% 20214 | 5,000 | 5,225 | ||||||
Petrobras International 5.75% 2020 | 2,780 | 3,091 | ||||||
Petrobras International 6.875% 2040 | 4,130 | 4,748 | ||||||
Enbridge Energy Partners, LP 8.05% 20771 | 7,220 | 7,369 | ||||||
Tengizchevroil Finance Co. S.àr.l., Series A, 6.124% 20142 | 6,432 | 6,834 | ||||||
Concho Resources Inc. 8.625% 2017 | 3,300 | 3,514 | ||||||
Gazprom OJSC 7.288% 20374 | 1,800 | 2,014 | ||||||
374,362 | ||||||||
Total corporate bonds, notes & loans | 14,307,947 | |||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 2.70% | ||||||||
Brazil (Federal Republic of) 10.00% 2017 | BRL63,600 | 34,683 | ||||||
Brazil (Federal Republic of) Global 4.875% 2021 | $ | 3,100 | 3,418 | |||||
Brazil (Federal Republic of) Global 10.25% 2028 | BRL15,000 | 9,942 | ||||||
Brazil (Federal Republic of) Global 7.125% 2037 | $ | 2,500 | 3,300 | |||||
Brazil (Federal Republic of) Global 11.00% 2040 | 2,790 | 3,878 | ||||||
Brazilian Treasury Bill 6.00% 204511 | BRL19,184 | 11,533 | ||||||
Turkey (Republic of) 14.00% 2011 | TRY26,550 | 18,738 | ||||||
Turkey (Republic of) 16.00% 2012 | 16,000 | 12,228 | ||||||
Turkey (Republic of) 7.50% 2017 | $ | 9,700 | 11,810 | |||||
Turkey (Republic of) 6.75% 2018 | 3,250 | 3,803 | ||||||
Turkey (Republic of) 6.75% 2040 | 2,500 | 2,863 | ||||||
Colombia (Republic of) Global 10.00% 2012 | 1,500 | 1,671 | ||||||
Colombia (Republic of) Global 10.75% 2013 | 3,800 | 4,579 | ||||||
Colombia (Republic of) Global 8.25% 2014 | 4,000 | 4,910 | ||||||
Colombia (Republic of) Global 12.00% 2015 | COP19,150,000 | 13,998 | ||||||
Colombia (Republic of) Global 11.75% 2020 | $ | 1,936 | 3,049 | |||||
Colombia (Republic of) Global 9.85% 2027 | COP12,085,000 | 9,598 | ||||||
Colombia (Republic of) Global 10.375% 2033 | $ | 823 | 1,325 | |||||
Colombia (Republic of) Global 7.375% 2037 | 4,139 | 5,474 | ||||||
United Mexican States Government, Series M10, 10.50% 2011 | MXN12,320 | 1,049 | ||||||
United Mexican States Government, Series MI10, 9.50% 2014 | 80,000 | 7,320 | ||||||
United Mexican States Government 5.00% 201611 | 66,209 | 6,232 | ||||||
United Mexican States Government, Series M20, 10.00% 2024 | 80,000 | 8,462 | ||||||
United Mexican States Government Global, Series A, 6.75% 2034 | $ | 6,105 | 7,616 | |||||
United Mexican States Government 4.00% 204011 | MXN89,602 | 8,520 | ||||||
Panama (Republic of) Global 7.125% 2026 | $ | 585 | 746 | |||||
Panama (Republic of) Global 8.875% 2027 | 6,500 | 9,474 | ||||||
Panama (Republic of) Global 6.70% 20362 | 17,768 | 21,899 | ||||||
Argentina (Republic of) 0.169% 20121,2 | 16,240 | 3,698 | ||||||
Argentina (Republic of) 7.00% 2015 | 9,560 | 8,438 | ||||||
Argentina (Republic of) 8.28% 20332,5 | 6,296 | 5,266 | ||||||
Argentina (Republic of) GDP-Linked 2035 | ARS84,135 | 2,286 | ||||||
Argentina (Republic of) GDP-Linked 2035 | $ | 12,377 | 1,541 | |||||
Argentina (Republic of) 1.18% 20382,11 | ARS106,414 | 8,548 | ||||||
Russian Federation 12.75% 2028 | $ | 2,000 | 3,645 | |||||
Russian Federation 7.50% 20302 | 21,359 | 25,694 | ||||||
Uruguay (Republic of) 5.00% 201811 | UYU255,010 | 14,541 | ||||||
Uruguay (Republic of) 4.25% 20272,11 | 159,020 | 8,738 | ||||||
Polish Government, Series 0414, 5.75% 2014 | PLN51,554 | 18,188 | ||||||
Polish Government, Series 1017, 5.25% 2017 | 2,050 | 704 | ||||||
Polish Government 6.375% 2019 | $ | 3,535 | 4,183 | |||||
Indonesia (Republic of) 10.375% 2014 | 1,800 | 2,284 | ||||||
Indonesia (Republic of), Series 30, 10.75% 2016 | IDR39,935,000 | 5,180 | ||||||
Indonesia (Republic of) 6.875% 20174 | $ | 1,000 | 1,215 | |||||
Indonesia (Republic of) 6.875% 2018 | 5,000 | 6,088 | ||||||
Indonesia (Republic of) 6.875% 20184 | 3,725 | 4,535 | ||||||
Indonesia (Republic of) 6.625% 20374 | 2,500 | 3,069 | ||||||
Venezuela (Republic of) 10.75% 2013 | 6,000 | 5,685 | ||||||
Venezuela (Republic of) 8.50% 2014 | 1,250 | 1,056 | ||||||
Venezuela (Republic of) 7.65% 2025 | 8,455 | 5,179 | ||||||
Venezuela (Republic of) 9.25% 2027 | 9,795 | 7,224 | ||||||
Venezuela (Republic of) 9.25% 2028 | 2,390 | 1,630 | ||||||
South Africa (Republic of) 6.875% 2019 | 7,410 | 9,096 | ||||||
South Africa (Republic of) 5.50% 2020 | 4,950 | 5,556 | ||||||
Egypt (Arab Republic of) 9.10% 2010 | EGP 3,130 | 550 | ||||||
Egypt (Arab Republic of) 11.50% 2011 | 9,380 | 1,699 | ||||||
Egypt (Arab Republic of) 9.10% 2012 | 18,225 | 3,223 | ||||||
Egypt (Arab Republic of) 11.625% 2014 | 49,265 | 9,179 | ||||||
South Korean Government 5.00% 2014 | KRW11,325,000 | 10,443 | ||||||
South Korean Government 5.50% 2017 | 2,800,000 | 2,698 | ||||||
Croatian Government 6.75% 20194 | $ | 9,400 | 10,287 | |||||
Philippines (Republic of) 6.375% 2034 | 7,600 | 8,892 | ||||||
Hungarian Government, Series 17/B, 6.75% 2017 | HUF1,012,000 | 5,032 | ||||||
Peru (Republic of) 7.125% 2019 | $ | 2,945 | 3,692 | |||||
Corporación Andina de Fomento 5.75% 2017 | 3,000 | 3,280 | ||||||
Dominican Republic 9.50% 20112 | 1,125 | 1,179 | ||||||
Dominican Republic 9.50% 20112,4 | 687 | 720 | ||||||
456,259 | ||||||||
MORTGAGE-BACKED OBLIGATIONS2 — 0.76% | ||||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374 | 10,725 | 11,254 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374 | 38,760 | 40,673 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.689% 20361 | 15,000 | 11,708 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.675% 20371 | 19,851 | 17,281 | ||||||
IndyMac IMSC Mortgage Loan Trust, Series 2007-F2, Class 2-A-1, 6.50% 2037 | 16,152 | 10,304 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR4, Class 2-A-4, 5.679% 20361 | 6,000 | 5,559 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2005-3AR, Class 3-A, 2.60% 20351 | 6,318 | 4,511 | ||||||
CS First Boston Mortgage Securities Corp., Series 2007-3, Class 4-A-1, 5.00% 2037 | 3,519 | 3,275 | ||||||
CS First Boston Mortgage Securities Corp., Series 2007-1, Class 1-A-6A, 5.863% 20371 | 1,912 | 1,168 | ||||||
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 5.65% 20361 | 5,401 | 4,028 | ||||||
Citicorp Mortgage Securities, Inc. 5.50% 2035 | 3,991 | 3,972 | ||||||
Structured Adjustable Rate Mortgage Loan Trust, Series 2006-9, Class 2-A2, 5.591% 20361 | 5,497 | 3,965 | ||||||
Lehman Mortgage Trust, Series 2006-6, Class 3-A-9, 5.50% 2036 | 5,421 | 3,570 | ||||||
Washington Mutual Mortgage, WMALT Series 2007-2, Class 3-A-1, 5.50% 2022 | 2,996 | 2,750 | ||||||
Banc of America Mortgage Securities, Inc., Series 2005-E, Class 4-A1, 5.375% 20351 | 2,639 | 2,475 | ||||||
Banc of America Funding Trust, Series 2006-7, Class T-2-A-1, 5.878% 2036 | 3,520 | 2,416 | ||||||
128,909 | ||||||||
U.S. TREASURY BONDS & NOTES — 0.37% | ||||||||
U.S. Treasury 1.375% 2012 | 10,000 | 10,185 | ||||||
U.S. Treasury 3.25% 2016 | 20,000 | 21,903 | ||||||
U.S. Treasury 6.00% 2026 | 21,000 | 28,370 | ||||||
U.S. Treasury 3.875% 2040 | 2,500 | 2,585 | ||||||
63,043 | ||||||||
MUNICIPALS — 0.06% | ||||||||
State of Illinois, General Obligation Bonds, Taxable Build America Bonds, Series 2010-5, 7.35% 2035 | 8,000 | 8,390 | ||||||
State of Connecticut, Mohegan Tribe of Indians, Gaming Authority Priority Distribution Payment, Public Improvement Bonds, Series 2003, 5.25% 2033 | 2,500 | 1,848 | ||||||
10,238 | ||||||||
ASSET-BACKED OBLIGATIONS2 — 0.04% | ||||||||
AmeriCredit Automobile Receivables Trust, Series 2010-1, Class D, 6.65% 2017 | 2,500 | 2,597 | ||||||
Aesop Funding II LLC, Series 2010-3A, Class B, 6.74% 20164 | 2,000 | 2,120 | ||||||
CWHEQ Revolving Home Equity Loan Trust, Series 2006-I, Class 2-A, FSA insured, 0.397% 20371 | 2,568 | 1,858 | ||||||
6,575 | ||||||||
Total bonds, notes & other debt instruments (cost: $13,969,699,000) | 14,972,971 | |||||||
Shares or | ||||||||
Convertible securities — 1.16% | principal amount | |||||||
INFORMATION TECHNOLOGY — 0.75% | ||||||||
Linear Technology Corp., Series A, 3.00% convertible notes 2027 | $ | 46,000,000 | 46,920 | |||||
Advanced Micro Devices, Inc. 6.00% convertible notes 2015 | $ | 32,767,000 | 32,398 | |||||
Advanced Micro Devices, Inc. 5.75% convertible notes 2012 | $ | 6,218,000 | 6,358 | |||||
Suntech Power Holdings Co., Ltd. 3.00% convertible notes 2013 | $ | 25,000,000 | 21,688 | |||||
Liberty Media Corp. 3.50% convertible notes 2031 | $ | 36,000,000 | 19,300 | |||||
126,664 | ||||||||
CONSUMER DISCRETIONARY — 0.19% | ||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred8,9,10 | 101,063 | 14,822 | ||||||
Ford Motor Co. Capital Trust II 6.50% convertible preferred 2032 | 299,600 | 14,354 | ||||||
Saks Inc. 2.00% convertible notes 2024 | $ | 4,167,000 | 3,870 | |||||
33,046 | ||||||||
INDUSTRIALS — 0.12% | ||||||||
UAL Corp. 4.50% convertible notes 2021 | $ | 19,803,000 | 19,882 | |||||
ENERGY — 0.07% | ||||||||
TUI Travel PLC, Series A, 1.625% convertible notes 2037 | $ | 12,000,000 | 11,970 | |||||
FINANCIALS — 0.03% | ||||||||
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20274 | $ | 5,000,000 | 4,931 | |||||
Total convertible securities (cost: $168,798,000) | 196,493 | |||||||
Preferred securities — 1.50% | Shares | |||||||
FINANCIALS — 1.38% | ||||||||
Barclays Bank PLC 7.434%1,4 | 39,626,000 | 40,815 | ||||||
Barclays Bank PLC 8.55%1,4 | 13,934,000 | 14,387 | ||||||
Barclays Bank PLC 6.86%1,4 | 1,825,000 | 1,743 | ||||||
JPMorgan Chase & Co., Series I, 7.90%1 | 28,770,000 | 30,936 | ||||||
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual capital securities4 | 1,125,000 | 29,953 | ||||||
Catlin Insurance Ltd. 7.249%1,4 | 28,000,000 | 22,960 | ||||||
XL Capital Ltd., Series E, 6.50%1 | 26,500,000 | 22,128 | ||||||
HSBC Holdings PLC, Series 2, 8.00% | 600,000 | 16,195 | ||||||
Wells Fargo & Co., Series K, 7.98%1 | 13,810,000 | 14,604 | ||||||
Citigroup Inc. 7.875% convertible preferred 2040 | 324,250 | 8,106 | ||||||
Citigroup Inc. 6.95% convertible preferred 2031 | 228,000 | 5,534 | ||||||
Lloyds Banking Group PLC 6.657% preference shares1,4 | 13,640,000 | 9,753 | ||||||
Ally Financial Inc., Series G, 7.00%4 | 7,226 | 6,505 | ||||||
Bank of America Corp., Series K, 8.00% noncumulative1 | 6,250,000 | 6,456 | ||||||
Shinsei Finance II (Cayman) Ltd. 7.16% noncumulative1,4 | 3,330,000 | 2,276 | ||||||
SMFG Preferred Capital USD 3 Ltd. 9.50%1,4 | 315,000 | 360 | ||||||
Fannie Mae, Series O, 0%1,4,12 | 150,000 | 118 | ||||||
232,829 | ||||||||
CONSUMER DISCRETIONARY — 0.12% | ||||||||
Gray Television, Inc., Series D, 17.00%9,10,12 | 20,948,092 | 19,979 | ||||||
Total preferred securities (cost: $220,703,000) | 252,808 | |||||||
Common stocks — 2.04% | ||||||||
MATERIALS — 0.46% | ||||||||
Georgia Gulf Corp.8,12 | 4,809,206 | 78,582 | ||||||
FINANCIALS — 0.42% | ||||||||
Citigroup Inc.12 | 9,981,696 | 38,929 | ||||||
Bank of America Corp. | 2,088,132 | 27,375 | ||||||
CIT Group Inc.12 | 124,904 | 5,098 | ||||||
71,402 | ||||||||
TELECOMMUNICATION SERVICES — 0.37% | ||||||||
AT&T Inc. | 1,000,000 | 28,600 | ||||||
American Tower Corp., Class A12 | 538,967 | 27,627 | ||||||
Sprint Nextel Corp., Series 112 | 777,508 | 3,600 | ||||||
CenturyLink, Inc. | 53,258 | 2,102 | ||||||
XO Holdings, Inc.12 | 4,746 | 3 | ||||||
61,932 | ||||||||
INDUSTRIALS — 0.36% | ||||||||
Nortek, Inc.8,12 | 793,646 | 30,992 | ||||||
Delta Air Lines, Inc.12 | 2,309,268 | 26,880 | ||||||
Quad/Graphics, Inc., Class A12 | 26,732 | 1,249 | ||||||
Atrium Corp.9,10,12 | 10,986 | 990 | ||||||
UAL Corp.12 | 22,981 | 543 | ||||||
60,654 | ||||||||
CONSUMER DISCRETIONARY — 0.34% | ||||||||
Cooper-Standard Holdings Inc.8,9,10,12 | 1,139,235 | 34,958 | ||||||
Ford Motor Co.12 | 810,210 | 9,917 | ||||||
Gray Television, Inc.12 | 4,486,693 | 9,018 | ||||||
Time Warner Cable Inc. | 39,816 | 2,150 | ||||||
Charter Communications, Inc., Class A12 | 39,810 | 1,294 | ||||||
Adelphia Recovery Trust, Series ACC-112 | 16,413,965 | 238 | ||||||
Adelphia Recovery Trust, Series Arahova12 | 1,773,964 | 213 | ||||||
Adelphia Recovery Trust, Series ACC-6B9,12 | 3,619,600 | 72 | ||||||
Forbes Travel Guide, Inc.9,10,12 | 83,780 | 22 | ||||||
American Media, Inc.8,9,10,12 | 823,272 | 8 | ||||||
57,890 | ||||||||
HEALTH CARE — 0.08% | ||||||||
UnitedHealth Group Inc. | 375,000 | 13,166 | ||||||
Clarent Hospital Corp. Liquidating Trust8,9,12 | 576,849 | 23 | ||||||
13,189 | ||||||||
CONSUMER STAPLES — 0.01% | ||||||||
Winn-Dixie Stores, Inc.12 | 222,504 | 1,586 | ||||||
INFORMATION TECHNOLOGY — 0.00% | ||||||||
HSW International, Inc.9,10,12 | 25,710 | 114 | ||||||
Total common stocks (cost: $341,825,000) | 345,349 | |||||||
Warrants — 0.02% | ||||||||
CONSUMER DISCRETIONARY — 0.02% | ||||||||
Cooper-Standard Holdings Inc., warrants, expire 20178,9,10,12 | 190,869 | 2,758 | ||||||
Charter Communications, Inc., warrants, expire 20149,12 | 13,390 | 74 | ||||||
Total warrants (cost: $2,244,000) | 2,832 | |||||||
Principal amount | Value | |||||||
Short-term securities — 5.31% | (000 | ) | (000 | ) | ||||
Freddie Mac 0.17%–0.345% due 10/13/2010–3/15/2011 | $ | 209,950 | $ | 209,883 | ||||
JPMorgan Chase & Co. 0.21% due 11/29/2010 | 66,100 | 66,069 | ||||||
Jupiter Securitization Co., LLC 0.34% due 10/22/20104 | 44,300 | 44,292 | ||||||
Fannie Mae 0.195%–0.43% due 10/1–12/3/2010 | 105,400 | 105,384 | ||||||
Straight-A Funding LLC 0.34% due 10/14–10/15/20104 | 105,000 | 104,987 | ||||||
Procter & Gamble Co. 0.23%–0.27% due 11/2–11/19/20104 | 85,400 | 85,380 | ||||||
Medtronic Inc. 0.22% due 10/26–11/2/20104 | 77,600 | 77,583 | ||||||
Federal Home Loan Bank 0.18% due 10/6/2010–1/4/2011 | 61,900 | 61,885 | ||||||
Private Export Funding Corp. 0.30% due 10/4/20104 | 40,700 | 40,699 | ||||||
Coca-Cola Co. 0.25% due 12/6/20104 | 33,850 | 33,835 | ||||||
Edison Asset Securitization LLC 0.25% due 11/8/20104 | 25,000 | 24,993 | ||||||
Google, Inc. 0.23% due 10/26/20104 | 21,400 | 21,396 | ||||||
Ranger Funding Co. LLC 0.18% due 10/1/20104 | 20,800 | 20,800 | ||||||
Total short-term securities (cost: $897,143,000) | 897,186 | |||||||
Total investment securities (cost: $15,600,412,000) | 16,667,639 | |||||||
Other assets less liabilities | 225,269 | |||||||
Net assets | $ | 16,892,908 |
1Coupon rate may change periodically. |
2Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
3Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,124,517,000, which represented 6.66% of the net assets of the fund. |
4Acquired 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 $4,339,152,000, which represented 25.69% of the net assets of the fund. |
5Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
6Step bond; coupon rate will increase at a later date. |
7Scheduled interest and/or principal payment was not received. |
8Represents an affiliated company as defined under the Investment Company Act of 1940. |
9Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $220,515,000, which represented 1.31% of the net assets of the fund. |
10Acquired 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. |
Percent | |||||||||||||
Acquisition | Cost | Value | of net | ||||||||||
date(s) | (000 | ) | (000 | ) | assets | ||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 64,091 | $ | 86,199 | .51 | % | ||||||
Cooper-Standard Holdings Inc. | 5/25/2010–5/27/2010 | 30,746 | 34,958 | .21 | |||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred | 5/26/2010 | 9,867 | 14,822 | .09 | |||||||||
Cooper-Standard Holdings Inc., warrants, expire 2017 | 5/25/2010–5/27/2010 | 2,156 | 2,758 | .02 | |||||||||
Gray Television Inc., Series D, 17.00% | 6/26/2008 | 19,901 | 19,979 | .12 | |||||||||
Atrium Corp. | 4/30/2010 | 990 | 990 | .01 | |||||||||
HSW International, Inc. | 12/17/2007 | 791 | 114 | .00 | |||||||||
Forbes Travel Guide, Inc. | 12/17/2007 | 21 | 22 | .00 | |||||||||
American Media, Inc. | 1/30/2009 | 8 | 8 | .00 | |||||||||
Total restricted securities | $ | 128,571 | $ | 159,850 | .96 | % |
11Index-linked bond whose principal amount moves with a government retail price index. |
12Security did not produce income during the last 12 months. |
Key to abbreviations and symbol
ARS = Argentine pesos
BRL = Brazilian reais
COP = Colombian pesos
EGP = Egyptian pounds
€ = Euros
HUF = Hungarian forints
IDR = Indonesian rupiah
KRW = South Korean won
MXN = Mexican pesos
PLN = Polish zloty
TRY = 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 they may lose value.
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 and 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.
MFGEFP-921-1110O-S25537
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, 2010, and for the year then ended and have issued our report thereon dated November 11, 2010, 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, 2010, 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 state ments 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 11, 2010
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 c onsider 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, 2010 |
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, 2010 |
By /s/ Ari M. Vinocor |
Ari M. Vinocor, Treasurer and Principal Financial Officer |
Date: November 30, 2010 |