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, 2011
Courtney R. Taylor
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
Understanding and managing the risks of high-yield bonds
u See page 4
Annual report for the year ended September 30, 2011
American High-Income Trust seeks a high level of current income and, secondarily, capital appreciation through a diversified, carefully supervised portfolio consisting primarily of lower rated, higher risk corporate bonds.
This fund is one of the 33 American Funds. American Funds is one of the nation’s largest mutual fund families. For 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, 2011, 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) | 0.7 | % | 5.0 | % | 7.6 | % | 8.3 | % | ||||||||
Barclays Capital U.S. Corporate High Yield | ||||||||||||||||
2% Issuer Capped Index*,† | 1.7 | 7.3 | 8.9 | — | ||||||||||||
Lipper High Current Yield Funds Index | 0.9 | 4.8 | 7.0 | 6.7 | ||||||||||||
Citigroup Broad Investment-Grade | ||||||||||||||||
(BIG) Bond Index† | 5.3 | 6.7 | 5.8 | 7.3 | ||||||||||||
*This index did not exist prior to December 31, 1992. | ||||||||||||||||
†The market indexes are unmanaged and, therefore, have no expenses. |
Since its inception through September 30, 2011, American High-Income Trust ranked 3rd in total return among the 32 high current yield funds in existence throughout the period, according to Lipper. For the 10 years ended September 30, 2011, the fund ranked 77th of 232; for the five years ended September 30, 2011, it ranked 194th of 350; and for the 12 months ended September 30, 2011, it ranked 278th of 495. 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, 2011, calculated in accordance with the U.S. Securities and Exchange Commission formula, was 7.97%. The fund’s distribution rate for Class A shares as of that date was 7.81%. 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 taxation, 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 investors:
After a strong start to the fiscal year beginning on October 1, 2010, growing concerns about the European sovereign debt crisis, policy uncertainty in the U.S. and weak global economic growth caused investors to sell off riskier assets in favor of higher quality investments such as Treasuries. The shift marked the end of a high-yield market rally that began in the aftermath of the 2008 financial crisis.
In this environment, American High-Income Trust reported a total return of 0.7% for the 12 months ended September 30, 2011, assuming the reinvestment of monthly dividends totaling 88 cents a share. Shareholders who reinvested dividends received an income return of 8.2% for the year. Those who elected to take their dividends in cash received an income return of 7.9% and saw the value of their holdings decline by 6.9%.
By comparison, the Lipper High Current Yield Funds Index, a benchmark of similar funds, posted a 0.9% total return, and 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%, earned 1.7%. The latter index is unmanaged and, therefore, has no expenses.
The year in review
The 2011 fiscal year was a tale of two markets. Throughout the first half of the period, liquidity in the credit markets, low default rates, an improving economy and strong investor demand helped high-yield bond markets post healthy returns. Companies were focused on reducing their leverage, lowering their debt burdens, extending their debt maturities and improving their balance sheets overall. In the first six months of the fiscal year, American High-Income Trust posted a 7.7% gain, with dividends reinvested.
But as the year progressed, market and investor sentiment weakened amid concerns that global economic growth was stalling and the European sovereign debt crisis was escalating. The European financial crisis, a reflection of high debt levels in Europe, sparked concerns about leverage and debt levels throughout the world. The high-yield market, which by definition is a market of leverage, was a target of those concerns. Investors sold off riskier assets in favor of the relative safety of higher quality bonds, causing U.S. Treasuries to rally. The fund posted a –6.5% return for the last half of the fiscal year, ending the 12 months relatively flat.
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In this report | |
Special feature | |
4 | Understanding and managing the risks of high-yield bonds |
Contents | |
1 | Letter to investors |
3 | The value of a long-term perspective |
10 | Summary investment |
portfolio | |
15 | Financial statements |
31 | Board of trustees and |
other officers |
[End Sidebar]
[Begin Sidebar]
High-yield bonds of companies that aren’t necessarily growing but are able to service their debt can provide a stream of income during periods of muted growth and can do reasonably well as part of a diversified portfolio.
[End Sidebar]
Finding opportunity in a volatile environment
The recent market weakness has made high-yield bond valuations more attractive, allowing the fund’s managers to become more fully invested through the second half of the year. Because we cannot depend on economic growth in the immediate future to fuel rapid credit improvement, we are seeking higher yielding investments that we believe can support their capital structures in a weak or stalled economy.
With that in mind, we have increased our ownership of leveraged loans, which tend to be more senior in the capital structure, which means they have better loss-protection features. They also tend to have floating rates, which will help protect against interest rate increases.
Because of the opportunity created by lower valuations, we are also taking more credit risk by increasing our investments in lower rated parts of the market.
While a weakening economy will be detrimental for high-yield bonds, a low-growth environment can be beneficial. In a low-growth and low-return environment, income can be a good way to generate investment returns. High-yield bonds of companies that aren’t necessarily growing but are able to service their debt can provide a stream of income during periods of muted growth and can do reasonably well as part of a diversified portfolio.
American High-Income Trust’s investment professionals focus on in-depth fundamental research to make the right credit selections and balance risk with return in different market environments. When choosing holdings for the portfolio, the fund’s investment professionals actively manage all dimensions of risk. To gain a better understanding of the risks associated with high-yield bonds and how we manage those risks in the portfolio, please see the feature on page 4.
Maintaining a long-term perspective
Despite the market challenges and the possibility of slow growth going forward, it is important for investors to maintain a long-term perspective. The last several years have certainly been volatile for investors, but over the long run high-yield bonds have provided attractive returns and a steady source of income. For the past 10-year period ended September 30, 2011, the fund’s shareholders earned an average annual total return of 7.6%, with dividends reinvested. That compares with a 7.0% average annual total return for the Lipper High Current Yield Funds Index and an 8.9% gain for Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index for that same period.
Those long-term returns surpassed other asset classes over the same 10-year time period. Investment-grade bonds, as measured by the Citigroup BIG Index, earned an average annual total return of 5.8% and Standard & Poor’s 500 Composite Index, a broad measure of mostly large U.S. stocks, posted a 2.8% annualized return. Both indexes are unmanaged and, therefore, have
no expenses.
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, 2011
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, 2011, the end of its latest fiscal year. As you can see, that $10,000 grew to $62,731 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 September 30 | American High-Income Trust | Barclays Capital U.S. Corporate High Yield 2% Issuer Capped Index3,4 | 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 | ||||||||||
1988 | 10,182 | 10,447 | 10,475 | 10,222 | 10,328 | |||||||||||||||
1989 | 11,189 | 11,026 | 10,935 | 11,367 | 10,776 | |||||||||||||||
1990 | 10,735 | 10,047 | 9,570 | 12,237 | 11,440 | |||||||||||||||
1991 | 13,873 | 13,757 | 12,290 | 14,198 | 11,828 | |||||||||||||||
1992 | 16,376 | 16,573 | 15,132 | 15,999 | 12,181 | |||||||||||||||
1993 | 18,764 | 18,976 | 17,473 | 17,627 | 12,509 | |||||||||||||||
1994 | 19,066 | 19,580 | 17,899 | 17,063 | 12,879 | |||||||||||||||
1995 | 21,604 | 22,549 | 20,178 | 19,461 | 13,207 | |||||||||||||||
1996 | 24,570 | 25,035 | 22,644 | 20,423 | 13,603 | |||||||||||||||
1997 | 28,176 | 28,661 | 26,120 | 22,406 | 13,897 | |||||||||||||||
1998 | 27,491 | 29,160 | 25,688 | 24,975 | 14,103 | |||||||||||||||
1999 | 29,721 | 30,002 | 27,037 | 24,908 | 14,474 | |||||||||||||||
2000 | 31,295 | 30,288 | 27,021 | 26,632 | 14,974 | |||||||||||||||
2001 | 30,218 | 28,647 | 23,569 | 30,110 | 15,371 | |||||||||||||||
2002 | 28,442 | 28,400 | 22,814 | 32,632 | 15,603 | |||||||||||||||
2003 | 38,197 | 36,767 | 28,862 | 34,423 | 15,966 | |||||||||||||||
2004 | 42,235 | 41,372 | 32,215 | 35,738 | 16,371 | |||||||||||||||
2005 | 45,421 | 44,096 | 34,421 | 36,783 | 17,138 | |||||||||||||||
2006 | 49,174 | 47,286 | 36,744 | 38,147 | 17,491 | |||||||||||||||
2007 | 53,103 | 50,887 | 39,586 | 40,148 | 17,973 | |||||||||||||||
2008 | 46,800 | 45,540 | 35,054 | 41,947 | 18,861 | |||||||||||||||
2009 | 53,376 | 55,792 | 39,311 | 46,553 | 18,618 | |||||||||||||||
2010 | 62,318 | 65,967 | 46,058 | 50,168 | 18,831 | |||||||||||||||
2011 | 62,731 | 67,119 | 46,476 | 52,804 | 19,559 |
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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, therefore, have no expenses. |
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 for the Lipper High Current Yield Funds Index do not reflect sales charges. |
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 for 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, 2011)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | –3.08 | % | 4.19 | % | 7.17 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 3.75% sales charge. |
The total annual fund operating expense ratio was 0.67% 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.
Understanding and managing the risks of high-yield bonds
American High-Income Trust’s investment professionals explain the main types of risk associated with high-yield bonds and dispel some common misperceptions about investing in this market.
For many investors still recovering from the 2008-2009 financial crisis, risk has become a four-letter word. “Since 2008, there are some investors whose primary concern is to avoid risk,” says David Barclay, president of American High-Income Trust. “Although that’s an understandable reaction, the reality is that investing is always a risk. What investors can do is manage their exposure by taking risks appropriate to their time horizon and making sure their portfolios are well-diversified.”
With high-yield bonds, it’s understood that a certain amount of risk comes with the territory. Commonly referred to as “junk” bonds, they often pay higher yields than investment-grade bonds because they have a higher chance of default and are therefore rated lower by rating agencies. But investors often misunderstand the nature of that risk.
“People view bonds with high yields as having high risk,” says Richard Lewis, an analyst for the fund. “While that may sometimes be true, there are also companies where people assumed the risks to be very low because they were rated higher, and yet the company ended up having serious problems.”
Sometimes, the policy of being too cautious can be the biggest risk of all. “Some investors become so blinded by fear that they talk themselves out of investing altogether,” says Barclay, who is also a portfolio counselor for the fund. “There always will be reasons not to invest and there is always the possibility of losing money, but there’s also the opportunity cost of not investing at all.”
In the following pages, we talk with several of the fund’s investment professionals to better understand the various risks associated with high-yield bonds and the strategies used by American Funds analysts and traders to balance those risks with the potential for return.
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[photo of Richard Lewis]
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flexibility
“You can never predict all the financial outcomes, but you can try to understand the flexibilities and options a company may have in order to persevere through different environments.”
— Richard Lewis, analyst
[End Sidebar]
Credit analysis is key
In the world of high-yield bonds, credit analysis is crucial in managing risk. Credit risk measures how likely it is that the issuer may not be able to make its scheduled interest and principal payments. “Our analysts evaluate the potential impact of improving, stable or deteriorating credit,” says Barclay.
As part of his analysis, David Daigle, a portfolio counselor for the fund, looks at the underlying stability of the company’s earnings stream. “I think about how a company’s earnings could potentially weaken over a three- to five-year time horizon. Even if the company is at a record level of earnings, I think about what could happen that would impact profitability,” he says. “For example, if there is a health care provider that currently has strong earnings, but the vast majority of its revenues are from Medicare, what is the risk that Medicare reimbursement cuts could have a material adverse impact on these earnings over time?”
Irina Goedemans, an analyst with the fund, says her credit analysis is both quantitative and qualitative. The quantitative part of her analysis includes looking at a company’s cash flows, the sustainability of those cash flows and its capital structure. The capital structure represents a hierarchy of claims on a company and will determine the priority of that debt getting paid in the event of a corporate reorganization.
The qualitative part of her analysis focuses on the company’s management. “I build a relationship with management to understand whether they behave more conservatively or tend to take more risks,” says Goedemans. She also researches the industry by evaluating the competition and reading her colleagues’ research. “From that, I can come up with an expectation of cash flows and volatility of cash flows, and look at all the paths the company can take.”
Evaluating the creditworthiness of high-yield bonds can be complex, mainly because high-yield companies’ capital structures often have several layers of debt (senior secured, senior unsecured, subordinated), and most high-yield securities have covenants. Covenants are clauses in the formal debt agreement, usually designed to protect the lender, that dictate what each party can and cannot do.
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liquidity
“Liquidity risk can negatively impact an actively managed portfolio in two ways. First, it can raise the cost of transacting and, second, it can limit your ability to transact altogether.”
— Jim Hudnall, trader
[End Sidebar]
Because of these complexities, the high-yield market is an area where in-depth research can add value. “We must analyze the overall attributes of a specific bond within the context of a capital structure that has multiple types of liabilities,” says Daigle, “and we need to understand the covenants and the extent to which they will provide protection for us as investors in the securities.”
Defaults don’t tell the whole story
Defaults occur when a company fails to make a scheduled interest or principal payment to a bondholder. The risk of default can be on principal or interest, or both. Myriad factors can lead to a default, including business cycle volatility and excessive leverage, as was the case in 2008. Other cycles where defaults became prominent were the 1990 recession and the aftermath of the technology bubble in 2002.
While the likelihood of defaults is certainly an issue, fixating on the default rate alone can be misleading because you miss a lot of the dynamics, says Lewis. “It goes back to what you are actually paying for the investment. You can generate a 0% default rate by selling investments right before they default, but that’s not necessarily beneficial for shareholders. We have sometimes bought companies’ bonds knowing they would default because we believed they offered good return potential. Our reasoning was that if the company converted some of its debt to equity, it could ease the burden on the company, allowing it to generate the cash flow needed to meet its debt obligations. So looking at the default rate alone gives you very little information about the returns of a portfolio. In fact, focusing only on avoiding defaults can be detrimental to shareholders.”
Preparing for “event” risk
Another type of risk, known as “event” risk, occurs whenever a company makes a decision to increase its debt load, which then causes the value of its bonds to decline or impacts its ability to make timely interest and principal payments to bondholders. “A company may be trying to buy back shares or fund an acquisition or dividend payment,” says Barclay. “In effect, the company increases its leverage and reduces its equity, causing its bonds to be downgraded.”
This type of risk can sometimes vary by industry. For example, if a particular industry is experiencing consolidation, more companies in that sector may make the decision to increase their debt levels in order to purchase a competing company.
Event risk can also encompass a variety of unforeseen situations that could result in an abrupt downgrade of a company’s corporate bonds, such as management changes, rising costs, regulatory shifts or a natural disaster. “In these circumstances, we try to imagine a company’s financial flexibility in different scenarios,” says Lewis. “Does it have assets it can sell? Can it raise capital in different ways in different markets? You can never predict all the financial outcomes, but you can try to understand the flexibilities and options a company may have in order to persevere through different environments.”
The link between liquidity and price
Liquidity risk, which was a big issue during the financial crisis and leverage unwind of 2008-2009, refers to the investor’s ability to transact in a bond quickly and at an attractive price, as reflected in what is called the bid-ask spread. Much like the process of selling a home, a difference may exist between the prices sellers are asking and the prices buyers are bidding. When the gap is small, it produces greater liquidity because sellers can find buyers. When the spread rises on less actively traded bonds, liquidity tightens.
Because new financial regulations will restrict proprietary trading and effectively reduce the number of buyers and sellers in the market, liquidity will become an even greater risk than in recent years.
“Liquidity risk can negatively impact an actively managed portfolio in two ways. First, it can raise the cost of transacting and, second, it can limit your ability to transact altogether,” says Jim Hudnall, a trader for the fund. “Traders are the eyes and ears of the firm. It’s our job to understand the market’s ‘risk appetite’ before we make a decision to purchase a particular security.”
The risks are pronounced in the high-yield market, which can sometimes be less liquid than equities and other parts of fixed income. “High yield is a more ‘technical’ market than equities, meaning supply-demand characteristics play a more important role in determining bid-offer spreads. In general, there are more participants in equity markets and that leads to more buyers and sellers, and ultimately more liquidity.”
Experiencing the liquidity issues of 2008 and 2009 emphasized the benefits of being a contrarian in liquidity-challenged times, says Hudnall. “Buying into market weakness is a much more efficient way to invest than waiting for the market to turn positive and then trying to buy into strength,” he says. “In high yield, liquidity can be challenging both when the market is going down and when it is going up. When ‘the market’ wants to sell, you have to be ready to be a buyer, and when ‘the market’ wants to buy, you have to be willing to sell. A contrarian approach can be painful in the short term, but it pays off over the long run.”
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“Some investors become so blinded by fear that they talk themselves out of investing altogether. There always will be reasons not to invest and there is always the possibility of losing money, but there’s also the opportunity cost of not investing at all.”
David Barclay
Portfolio counselor
[End Sidebar]
[photo of David Daigle]
[Begin Sidebar]
“There is always a tension between protecting against near-term losses and getting good long-term returns. We could choose to be ultra conservative — for example, we could totally protect ourselves against another European debt shock — but it may be at the cost of giving up attractive long-term returns.”
David Daigle
Portfolio counselor
[End Sidebar]
A long-term approach is also crucial. “We constantly evaluate all the potential risks and liquidity factors, particularly in good markets,” says Hudnall. “During the good times, it is tempting to reach for small incremental yield pickups, but ‘reaching’ often leads to buying less liquid securities that lag in bad markets. The old adage, ‘bad loans are made in good markets,’ still rings true. Having a long-term time horizon gives us confidence to stay in more liquid investments. If your goal is to beat the benchmark this quarter, you may feel more pressure to take a bad risk.”
Why rising rates can actually be good for high-yield bonds
Fixed-income investors understand that rising interest rates cause bond prices to decline. Longer maturity bonds are the most vulnerable when rates rise because they have a long future stream of interest rate payments that are now lower than the current rates, and so their bond prices must drop to compensate for the difference.
High-yield bonds, however, are not as susceptible to rising rates as other parts of the fixed-income market for two reasons. First, rising rates are usually a sign of an improving economy, which is beneficial to high-yield bonds, which often act more like stocks. And second, rising rates have a greater impact on bonds with longer maturity dates; because high-yield bonds are shorter in duration compared with the rest of the bond market, they are not as affected by a rate increase.
The fund’s investment professionals also have options to manage the effects of rising rates. “We can shorten our duration and invest in floating-rate instruments such as leveraged loans,” says Goedemans. “We can also invest in lower quality bonds, which tend to trade on an absolute yield basis and are less sensitive to interest rate risk.”
Daigle adds, “People tend to overestimate the interest rate risk with high-yield bonds, and underestimate the correlation with equities. A 20% decline in equities will represent a greater risk to high-yield bond prices than a 100-basis-point rise in Treasury bond yields.”
The pros and cons of reinvestment
A consequence of falling interest rates is reinvestment risk. Much like the homeowner who refinances his mortgage at a lower rate when rates decline, the same happens with issuers of corporate bonds. Many corporate bonds are callable, which means they can be redeemed or paid off prior to the bonds’ maturity dates. Typically, an issuer will call its bonds when interest rates drop, worsening the investor’s total return potential as a result. Analysts consider whether call options exist and when they may be exercised when determining the price they are willing to pay for a bond.
Because a bond fund is able to invest in hundreds of individual securities with varying maturity dates, it can better adapt to fluctuating rates and reinvestment risk than a portfolio with fewer bonds. As bonds in a fund with earlier dates mature, the proceeds from those bonds can be reinvested in bonds with higher interest rates. “For that reason, a fund is a lot safer from a diversification standpoint than individual bonds,” says Lewis. “In high yield, you have to face reinvestment constantly so we just deal with it on a constant, ongoing basis.”
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[photo of Irina Goedemans]
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opportunity
“We know the various drivers of our companies and have seen how they act in various environments. We can envision macro scenarios and translate how it will impact companies. That helps us to find opportunities and have conviction in them when they arrive.”
— Irina Goedemans, analyst
[End Sidebar]
As such, reinvestment is often viewed more as a portfolio strategy than a cyclical risk. “I don’t have high conviction about where interest rates and inflation will be in three years,” says Daigle, “so for now I am keeping my portfolio duration quite short, as I want the ability to reinvest over shorter cycles.”
The impact of economic downturns
Economic risk refers to the vulnerability of a bond to downturns in the economy. High-yield bonds behave more like stocks in periods of economic uncertainty, and will typically lose more of their principal value than investment-grade bonds as investors seek the safety of higher quality investments.
High-yield bonds also have a lower margin for error during these periods. “Some may only have a certain amount of free cash flow and others may rely on the ability to come to market in order to refinance maturing obligations,” says Goedemans.
The biggest issues right now are a weakening economic environment and the European sovereign debt crisis. “Our credit selections reflect these concerns,” says Goedemans, who is investing in companies that she believes will withstand a weak or stalled recovery. “We know the various drivers of our companies and have seen how they act in various environments. We can envision macro scenarios and translate how they will impact companies. That helps us to find opportunities and have conviction in them when they arrive.”
While a deteriorating economic environment will have a negative effect on high-yield bonds, periods of weak but positive growth can actually be advantageous. “Income can be a good way to generate investment returns in a low-growth and low-return environment,” says Barclay. “High-yield bonds of companies that can service their debt, even if they aren’t necessarily growing, can provide a stream of income during periods of sluggish growth and can serve a purpose in a diversified portfolio.”
A balance of risk and return
Ultimately, achieving the best returns with the least amount of risk is a matter of balance. “We actively manage the portfolio across all dimensions of risk,” says Daigle. “There is always a tension between protecting against near-term losses and getting good long-term returns. We could choose to be ultra conservative — for example, we could totally protect ourselves against another European debt shock — but it may be at the cost of giving up attractive long-term returns.”
Lewis adds, “Each investment is different. I weigh what I like versus what I worry about and how much we are getting paid in yield to own it. We always try to calibrate one investment opportunity relative to other bonds, which have different sets of risks, opportunities and valuation. While we do a similar kind of risk-return analysis with every bond we consider for the portfolio, we can never use a single lens for understanding the risks in every investment.” n
Summary investment portfolio September 30, 2011
The following summary investment portfolio is designed to streamline the report and help investors better focus on the fund’s principal holdings. See the inside back cover for details on how to obtain a complete schedule of portfolio holdings.
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Portfolio by type of security (percent of net assets) | ||||
U.S. corporate bonds & notes | 63.9 | % | ||
Corporate bonds & notes of issuers outside the U.S. | 13.1 | |||
Corporate loans | 11.4 | |||
Other | 3.6 | |||
Common stocks & warrants | 1.6 | |||
Convertible securities | 0.9 | |||
Preferred securities | 0.6 | |||
Short-term securities & other assets less liabilities | 4.9 |
[end pie chart]
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds, notes & other debt instruments - 91.95% | (000 | ) | (000 | ) | assets | |||||||||
Corporate bonds, notes & loans - 88.37% | ||||||||||||||
Consumer discretionary - 24.51% | ||||||||||||||
MGM Resorts International: | ||||||||||||||
5.875% 2014 | $ | 82,445 | $ | 75,643 | ||||||||||
6.625 %-13.00% 2012-2020 | 238,118 | 234,186 | ||||||||||||
Mandalay Resort Group 6.375% 2011 | 4,150 | 4,129 | 1.97 | % | ||||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp.: | ||||||||||||||
7.25% 2017 | 70,900 | 71,255 | ||||||||||||
7.875%-8.125% 2018-2020 | 78,600 | 81,228 | ||||||||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 2014 (1) (2) (3) | 28 | 28 | ||||||||||||
Charter Communications, Inc. 13.50% 2016 | 47,704 | 54,621 | ||||||||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00% 2019 | 10,000 | 9,750 | 1.36 | |||||||||||
Univision Communications Inc.,: | ||||||||||||||
Term Loan, 4.489% 2017 (1) (2) (3) | 133,119 | 112,357 | ||||||||||||
6.875%-8.50% 2019-2021 (4) | 75,605 | 61,696 | 1.09 | |||||||||||
Virgin Media Finance PLC: | ||||||||||||||
Series 1, 9.50% 2016 | 88,775 | 96,321 | ||||||||||||
8.375% 2019 (4) | 57,435 | 61,312 | ||||||||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 9,325 | 9,954 | 1.05 | |||||||||||
Michaels Stores, Inc.: | ||||||||||||||
0%/13.00% 2016 (5) | 67,520 | 69,883 | ||||||||||||
Term Loans 2.50%-4.75% 2013-2016 (1) (2) (3) | 23,223 | 22,264 | ||||||||||||
7.75%-11.375% 2016-2018 | 76,100 | 72,386 | 1.03 | |||||||||||
Needle Merger Sub Corp. 8.125% 2019 (4) | 122,990 | 107,616 | .67 | |||||||||||
Nara Cable Funding Ltd. 8.875% 2018 | € | 93,800 | 103,039 | .64 | ||||||||||
Neiman Marcus Group, Inc., Term Loan B, 4.75% 2018 (1) (2) (3) | $ | 102,945 | 95,467 | .60 | ||||||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 82,450 | 84,717 | .53 | |||||||||||
Allison Transmission Holdings, Inc. 11.00% 2015 (4) | 73,035 | 75,956 | .48 | |||||||||||
DISH DBS Corp 6.75% 2021 (4) | 74,265 | 71,294 | .45 | |||||||||||
Revel Entertainment, Term Loan B, 9.00% 2018 (1) (2) (3) | 83,325 | 69,368 | .43 | |||||||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 85,775 | 69,049 | �� | .43 | ||||||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 67,753 | 67,753 | .42 | |||||||||||
Other securities | 2,134,804 | 13.36 | ||||||||||||
3,916,076 | 24.51 | |||||||||||||
Telecommunication services - 11.42% | ||||||||||||||
Nextel Communications, Inc.: | ||||||||||||||
Series E, 6.875% 2013 | 46,088 | 45,051 | ||||||||||||
Series F, 5.95% 2014 | 117,065 | 110,334 | ||||||||||||
Series D, 7.375% 2015 | 178,423 | 169,948 | ||||||||||||
Sprint Capital Corp. 8.375%-8.75% 2012-2032 | 11,800 | 11,553 | ||||||||||||
Sprint Nextel Corp. 6.00% 2016 | 12,000 | 10,380 | 2.17 | |||||||||||
Clearwire Communications and Clearwire Finance, Inc.: | ||||||||||||||
Series B, 12.00% 2015 (4) | 136,130 | 116,051 | ||||||||||||
Series A, 12.00% 2015 (4) | 129,180 | 110,126 | ||||||||||||
12.00% 2017 (4) | 87,930 | 53,198 | 1.75 | |||||||||||
Cricket Communications, Inc.: | ||||||||||||||
7.75% 2016 | 151,590 | 152,916 | ||||||||||||
7.75%-10.00% 2015-2020 | 49,245 | 46,622 | 1.25 | |||||||||||
Wind Acquisition SA: | ||||||||||||||
11.75% 2017 (4) | 127,465 | 108,983 | ||||||||||||
7.25% 2018 (4) | 30,530 | 26,141 | ||||||||||||
7.375% 2018 | € | 21,915 | 24,957 | 1.00 | ||||||||||
Level 3 Escrow Inc. 8.125% 2019 (4) | $ | 96,750 | 85,745 | .54 | ||||||||||
Trilogy International Partners, LLC, 10.25% 2016 (4) | 85,890 | 84,602 | .53 | |||||||||||
LightSquared, Term Loan B, 12.00% 2014 (2) (3) (6) | 147,173 | 72,430 | .45 | |||||||||||
Digicel Group Ltd. 12.00% 2014 (4) | 61,825 | 69,553 | .44 | |||||||||||
Other securities | 525,415 | 3.29 | ||||||||||||
1,824,005 | 11.42 | |||||||||||||
Financials - 10.82% | ||||||||||||||
Realogy Corp.: | ||||||||||||||
10.50% 2014 | 1,000 | 865 | ||||||||||||
Letter of Credit, 4.518% 2016 (1) (2) (3) | 14,852 | 12,120 | ||||||||||||
Term Loan B, 4.522% 2016 (1) (2) (3) | 148,893 | 121,507 | ||||||||||||
Second Lien Term Loan A, 13.50% 2017 (2) (3) | 147,699 | 143,268 | ||||||||||||
7.875% 2019 (4) | 150,435 | 114,331 | 2.45 | |||||||||||
CIT Group Inc. Series A: | ||||||||||||||
7.00% 2014 (2) | 12,585 | 12,852 | ||||||||||||
7.00% 2015 | 164,536 | 163,508 | ||||||||||||
7.00% 2016 | 167,495 | 162,679 | 2.12 | |||||||||||
Other securities | 997,083 | 6.25 | ||||||||||||
1,728,213 | 10.82 | |||||||||||||
Industrials - 9.91% | ||||||||||||||
Hawker Beechcraft Acquisition Co., LLC: | ||||||||||||||
Letter of Credit, 2.146% 2014 (1) (2) (3) | 9,456 | 6,564 | ||||||||||||
Term Loan B, 2.369% 2014 (1) (2) (3) | 156,753 | 108,808 | ||||||||||||
Term Loan B, 10.50% 2014 (1) (2) (3) | 22,071 | 19,257 | ||||||||||||
8.50%-9.75% 2015-2017 (1) (6) | 65,620 | 27,495 | 1.02 | |||||||||||
Ply Gem Industries, Inc. 8.25% 2018 | 142,150 | 116,563 | .73 | |||||||||||
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017 | 121,680 | 99,169 | .62 | |||||||||||
DAE Aviation Holdings, Inc. 11.25% 2015 (4) | 80,629 | 81,838 | .51 | |||||||||||
Other securities | 1,123,978 | 7.03 | ||||||||||||
1,583,672 | 9.91 | |||||||||||||
Health care - 8.51% | ||||||||||||||
Elan Finance PLC and Elan Finance Corp.: | ||||||||||||||
8.875% 2013 | 90,830 | 94,009 | ||||||||||||
8.75% 2016 | 115,660 | 120,286 | ||||||||||||
8.75% 2016 | 45,885 | 48,294 | 1.64 | |||||||||||
VWR Funding, Inc., Series B, 10.25% 2015 (1) (6) | 138,533 | 137,841 | .86 | |||||||||||
Quintiles, Term Loan B, 5.00% 2018 (1) (2) (3) | 137,176 | 129,431 | .81 | |||||||||||
PTS Acquisition Corp. 9.50% 2015 (1) (6) | 120,218 | 110,300 | .69 | |||||||||||
Other securities | 719,909 | 4.51 | ||||||||||||
1,360,070 | 8.51 | |||||||||||||
Information technology - 7.09% | ||||||||||||||
First Data Corp.: | ||||||||||||||
Term Loan B2, 2.985% 2014 (1) (2) (3) | 69,455 | 60,535 | ||||||||||||
12.625% 2021 (4) | 190,117 | 141,637 | ||||||||||||
8.75% 2022 (1) (4) (6) | 106,127 | 84,371 | ||||||||||||
7.375%-11.25% 2015-2021 (4) (6) | 203,025 | 155,986 | 2.77 | |||||||||||
Freescale Semiconductor, Inc.: | ||||||||||||||
Term Loan, 4.472% 2016 (1) (2) (3) | 19,735 | 18,131 | ||||||||||||
10.125% 2016 | 87,627 | 89,599 | ||||||||||||
9.25%-10.125% 2018 (4) | 86,911 | 90,263 | 1.24 | |||||||||||
NXP BV and NXP Funding LLC: | ||||||||||||||
10.00% 2013 (7) | $ | 77,049 | 85,428 | |||||||||||
2.999%-9.75% 2013-2018 (1) (4) | 58,084 | 60,797 | ||||||||||||
4.355%-8.625% 2013-2015 (1) (2) | € | 10,223 | 13,831 | 1.00 | ||||||||||
Blackboard Inc., Term Loan B, 7.50% 2018 (1) (2) (3) | 76,925 | 71,694 | .45 | |||||||||||
Other securities | 260,728 | 1.63 | ||||||||||||
1,133,000 | 7.09 | |||||||||||||
Materials - 5.29% | ||||||||||||||
Reynolds Group: | ||||||||||||||
9.875% 2019 (4) | 80,890 | 71,588 | ||||||||||||
7.125%-9.00% 2016-2019 (4) | 160,930 | 150,765 | 1.39 | |||||||||||
Georgia Gulf Corp. 9.00% 2017 (4) (8) | 92,490 | 93,877 | .59 | |||||||||||
Other securities | 528,680 | 3.31 | ||||||||||||
844,910 | 5.29 | |||||||||||||
Energy - 3.88% | ||||||||||||||
Petroplus Finance Ltd.: | ||||||||||||||
6.75% 2014 (4) | 75,767 | 66,296 | ||||||||||||
7.00% 2017 (4) | 107,488 | 87,603 | ||||||||||||
9.375% 2019 (4) | 32,210 | 27,701 | 1.14 | |||||||||||
Other securities | 438,416 | 2.74 | ||||||||||||
620,016 | 3.88 | |||||||||||||
Consumer staples - 3.84% | ||||||||||||||
SUPERVALU INC. 8.00% 2016 | 81,860 | 77,767 | .49 | |||||||||||
Other securities | 535,959 | 3.35 | ||||||||||||
613,726 | 3.84 | |||||||||||||
Utilities - 3.10% | ||||||||||||||
Intergen Power 9.00% 2017 (4) | 71,950 | 73,569 | .46 | |||||||||||
Other securities | 421,897 | 2.64 | ||||||||||||
495,466 | 3.10 | |||||||||||||
Total corporate bonds, notes & loans | 14,119,154 | 88.37 | ||||||||||||
Other - 3.58% | ||||||||||||||
Other securities | 571,098 | 3.58 | ||||||||||||
Total bonds, notes & other debt instruments (cost: $15,301,044,000) | 14,690,252 | 91.95 | ||||||||||||
Value | of net | |||||||||||||
Convertible securities - 0.94% | (000 | ) | assets | |||||||||||
Telecommunication services - 0.16% | ||||||||||||||
Clearwire Corp. 8.25% convertible notes 2040 (4) | $ | 7,722 | 3,803 | .02 | ||||||||||
Other securities | 22,253 | .14 | ||||||||||||
26,056 | .16 | |||||||||||||
Other - 0.78% | ||||||||||||||
Other securities | 123,995 | .78 | ||||||||||||
Total convertible securities (cost: $152,489,000) | 150,051 | .94 | ||||||||||||
Preferred securities - 0.61% | ||||||||||||||
Other - 0.61% | ||||||||||||||
Other securities | 97,814 | .61 | ||||||||||||
Total preferred securities (cost: $104,487,000) | 97,814 | .61 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Common stocks - 1.53% | Shares | (000 | ) | assets | ||||||||||
Financials - 0.20% | ||||||||||||||
CIT Group Inc. (9) | 124,904 | 3,793 | .02 | |||||||||||
Other securities | 27,960 | .18 | ||||||||||||
31,753 | .20 | |||||||||||||
Energy - 0.09% | ||||||||||||||
Petroplus Holdings AG (9) | 2,440,000 | 13,783 | .09 | |||||||||||
Other - 1.24% | ||||||||||||||
Other securities | 199,078 | 1.24 | ||||||||||||
Total common stocks (cost: $255,792,000) | 244,614 | 1.53 | ||||||||||||
Percent | ||||||||||||||
Shares | Value | of net | ||||||||||||
Warrants - 0.04% | (000 | ) | assets | |||||||||||
Consumer discretionary - 0.04% | ||||||||||||||
Charter Communications, Inc., warrants, expire 2014 (9) (10) | 13,390 | 151 | .01 | |||||||||||
Other securities | 4,835 | .03 | ||||||||||||
4,986 | .04 | |||||||||||||
Other - 0.00% | ||||||||||||||
Other securities | 641 | .00 | ||||||||||||
Total warrants (cost: $45,203,000) | 5,627 | .04 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Short-term securities - 2.95% | (000 | ) | (000 | ) | assets | |||||||||
Freddie Mac 0.11%-0.21% due 11/9/2011-6/7/2012 | $ | 114,540 | $ | 114,506 | .72 | |||||||||
Coca-Cola Co. 0.09%-0.10% due 10/24-11/16/2011 (4) | 90,800 | 90,790 | .57 | |||||||||||
Other securities | 266,235 | 1.66 | ||||||||||||
Total short-term securities (cost: $471,464,000) | 471,531 | 2.95 | ||||||||||||
Total investment securities (cost: $16,330,479,000) | 15,659,889 | 98.02 | ||||||||||||
Other assets less liabilities | 316,674 | 1.98 | ||||||||||||
Net assets | $ | 15,976,563 | 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, 2011, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 9/30/2011 (000) | |||||||||||||||||||
Georgia Gulf Corp. 9.00% 2017 (4) | $ | 90,285,000 | $ | 2,205,000 | - | $ | 92,490,000 | $ | 8,248 | $ | 93,877 | |||||||||||||
Georgia Gulf Corp. (9) | 4,809,206 | 525,000 | 3,135,798 | 2,198,408 | - | 30,404 | ||||||||||||||||||
Georgia Gulf Corp. 10.75% 2016 | $ | 5,388,000 | - | - | $ | 5,388,000 | 587 | 5,630 | ||||||||||||||||
Nortek Inc. 10.00% 2018 (4) | - | $ | 50,485,000 | - | $ | 50,485,000 | 3,921 | 46,951 | ||||||||||||||||
Nortek Inc. 8.50% 2021 (4) | - | $ | 51,015,000 | - | $ | 51,015,000 | 1,374 | 41,322 | ||||||||||||||||
Nortek, Inc. (9) | 793,646 | - | - | 793,646 | - | 17,064 | ||||||||||||||||||
Nortek, Inc. 11.00% 2013 | $ | 66,164,079 | $ | 9,500,000 | $ | 75,664,079 | - | 3,255 | - | |||||||||||||||
Cooper-Standard Holdings Inc. (4) (9) | 1,139,235 | 85,450 | - | 1,224,685 | - | 51,437 | ||||||||||||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred (4) (10) | 101,063 | - | 1,376 | 99,687 | 836 | 19,056 | ||||||||||||||||||
Cooper-Standard Holdings Inc., warrants, expire 2017 (4) (9) (10) | 190,869 | 5,096 | - | 195,965 | - | 4,801 | ||||||||||||||||||
American Media, Inc. (7) (9) (10) | - | 1,122,345 | - | 1,122,345 | - | 14,366 | ||||||||||||||||||
American Media, Inc. | 823,272 | - | 823,272 | - | - | - | ||||||||||||||||||
American Media, Inc. 13.50% 2018 | - | $ | 3,723,386 | $ | 3,723,386 | - | 40 | - | ||||||||||||||||
American Media Operations, Inc. 9.00% 2013 | $ | 3,548,854 | $ | 159,698 | $ | 3,708,552 | - | 21 | - | |||||||||||||||
American Media Operations, Inc. 14.00% 2013 | $ | 45,751,556 | - | $ | 45,751,556 | - | 1,247 | - | ||||||||||||||||
Clarent Hospital Corp. Liquidating Trust (11) | 576,849 | - | 576,849 | - | - | - | ||||||||||||||||||
$ | 19,529 | $ | 324,908 |
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 $1,816,000,000, which represented 11.37% 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 $5,246,784,000, which represented 32.84% of the net assets of the fund. |
(5) Step bond; coupon rate will increase at a later date. |
(6) Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
(7) Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. This security (acquired 7/17/2009 at a cost of $68,045,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities, including those in "Other securities," was $144,126,000, which represented .90% of the net assets of the fund. These securities were acquired from 12/17/2007 to 9/16/2011 at an aggregate cost of $143,409,000. |
(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 $296,833,000, which represented 1.86% of the net assets of the fund. |
(11) Unaffiliated issuer at 9/30/2011. |
Key to symbol |
€ = Euros |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at September 30, 2011 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $16,012,509) | $ | 15,334,981 | ||||||
Affiliated issuers (cost: $317,970) | 324,908 | $ | 15,659,889 | |||||
Cash | 31,393 | |||||||
Unrealized appreciation on open forward currency contracts | 5,955 | |||||||
Receivables for: | ||||||||
Sales of investments | 115,988 | |||||||
Sales of fund's shares | 27,660 | |||||||
Closed forward currency contracts | 2,196 | |||||||
Dividends and interest | 357,081 | 502,925 | ||||||
16,200,162 | ||||||||
Liabilities: | ||||||||
Unrealized depreciation on open forward currency contracts | 120 | |||||||
Payables for: | ||||||||
Purchases of investments | 171,376 | |||||||
Repurchases of fund's shares | 33,934 | |||||||
Dividends on fund's shares | 6,974 | |||||||
Closed forward currency contracts | 163 | |||||||
Investment advisory services | 4,321 | |||||||
Services provided by related parties | 6,389 | |||||||
Trustees' deferred compensation | 180 | |||||||
Other | 142 | 223,479 | ||||||
Net assets at September 30, 2011 | $ | 15,976,563 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 17,623,353 | ||||||
Undistributed net investment income | 34,947 | |||||||
Accumulated net realized loss | (1,015,881 | ) | ||||||
Net unrealized depreciation | (665,856 | ) | ||||||
Net assets at September 30, 2011 | $ | 15,976,563 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - | ||||||||||||
unlimited shares authorized (1,542,218 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 11,223,267 | 1,083,382 | $ | 10.36 | |||||||
Class B | 263,749 | 25,460 | 10.36 | |||||||||
Class C | 1,228,396 | 118,577 | 10.36 | |||||||||
Class F-1 | 1,264,157 | 122,029 | 10.36 | |||||||||
Class F-2 | 568,036 | 54,832 | 10.36 | |||||||||
Class 529-A | 260,743 | 25,170 | 10.36 | |||||||||
Class 529-B | 15,887 | 1,534 | 10.36 | |||||||||
Class 529-C | 100,980 | 9,748 | 10.36 | |||||||||
Class 529-E | 14,677 | 1,417 | 10.36 | |||||||||
Class 529-F-1 | 14,200 | 1,371 | 10.36 | |||||||||
Class R-1 | 20,005 | 1,931 | 10.36 | |||||||||
Class R-2 | 200,145 | 19,320 | 10.36 | |||||||||
Class R-3 | 266,160 | 25,692 | 10.36 | |||||||||
Class R-4 | 208,266 | 20,104 | 10.36 | |||||||||
Class R-5 | 223,673 | 21,591 | 10.36 | |||||||||
Class R-6 | 104,222 | 10,060 | 10.36 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended September 30, 2011 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Interest (net of non-U.S. taxes of $49; | ||||||||
also includes $18,693 from affiliates) | $ | 1,433,346 | ||||||
Dividends (also includes $836 from affiliates) | 11,147 | $ | 1,444,493 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 53,627 | |||||||
Distribution services | 55,499 | |||||||
Transfer agent services | 14,182 | |||||||
Administrative services | 8,485 | |||||||
Reports to shareholders | 929 | |||||||
Registration statement and prospectus | 491 | |||||||
Trustees' compensation | 142 | |||||||
Auditing and legal | 132 | |||||||
Custodian | 246 | |||||||
State and local taxes | 155 | |||||||
Other | 678 | |||||||
Total fees and expenses before reimbursement | 134,566 | |||||||
Less reimbursement of fees and expenses | 91 | |||||||
Total fees and expenses after reimbursement | 134,475 | |||||||
Net investment income | 1,310,018 | |||||||
Net realized gain and unrealized depreciation | ||||||||
on investments, forward currency contracts and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (includes $341 net gain from affiliates) | 550,425 | |||||||
Forward currency contracts | (667 | ) | ||||||
Currency transactions | 739 | 550,497 | ||||||
Net unrealized (depreciation) appreciation on: | ||||||||
Investments | (1,737,817 | ) | ||||||
Forward currency contracts | 7,686 | |||||||
Currency translations | (1,725 | ) | (1,731,856 | ) | ||||
Net realized gain and unrealized depreciation | ||||||||
on investments, forward currency contracts and currency | (1,181,359 | ) | ||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 128,659 | ||||||
(*) 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 | ||||||||
2011 | 2010 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,310,018 | $ | 1,283,077 | ||||
Net realized gain on investments, forward currency contracts and currency transactions | 550,497 | 165,208 | ||||||
Net unrealized (depreciation) appreciation on investments, forward currency contracts and currency translations | (1,731,856 | ) | 984,640 | |||||
Net increase in net assets resulting from operations | 128,659 | 2,432,925 | ||||||
Dividends paid or accrued to shareholders from net investment income | (1,350,032 | ) | (1,193,041 | ) | ||||
Net capital share transactions | 305,028 | 632,268 | ||||||
Total (decrease) increase in net assets | (916,345 | ) | 1,872,152 | |||||
Net assets: | ||||||||
Beginning of year | 16,892,908 | 15,020,756 | ||||||
End of year (including undistributed | ||||||||
net investment income: $34,947 and $79,931, respectively) | $ | 15,976,563 | $ | 16,892,908 | ||||
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. Effective December 1, 2010, the fund reorganized from a Massachusetts business trust to a Delaware statutory trust in accordance with a proposal approved by shareholders on November 24, 2009.
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 after the determination of the fund’s net investment income and are paid to shareholders monthly. Distributions paid to shareholders are recorded on the ex-dividend date.
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 the net asset value of each share class 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 on which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) |
Corporate bonds & notes; 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, generally based on prices supplied by one or more pricing vendors.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the 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 that 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, 2011 (dollars in thousands):
Investment securities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Bonds, notes & other debt instruments: | ||||||||||||||||
Corporate bonds, notes, & loans | $ | - | $ | 13,862,090 | $ | 257,064 | $ | 14,119,154 | ||||||||
Other | - | 571,098 | - | 571,098 | ||||||||||||
Convertible securities | 16,569 | 133,482 | - | 150,051 | ||||||||||||
Preferred securities | 17,988 | 79,826 | - | 97,814 | ||||||||||||
Common stocks | 229,528 | - | 15,086 | 244,614 | ||||||||||||
Warrants | - | 5,593 | 34 | 5,627 | ||||||||||||
Short-term securities | - | 471,531 | - | 471,531 | ||||||||||||
Total | $ | 264,085 | $ | 15,123,620 | $ | 272,184 | $ | 15,659,889 |
Forward currency contracts(1): | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Unrealized appreciation on open forward currency contracts | $ | - | $ | 5,955 | $ | - | $ | 5,955 | ||||||||
Unrealized depreciation on open forward currency contracts | - | (120 | ) | - | (120 | ) | ||||||||||
Total | $ | - | $ | 5,835 | $ | - | $ | 5,835 | ||||||||
(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, 2011 (dollars in thousands): | ||||||||||||||||||||||||||||||||
Beginning value at 10/1/2010 | Transfers into Level 3(2) | Purchases | Sales | Net realized loss(3) | Unrealized depreciation(3) | Transfers out of Level 3(2) | Ending value at 9/30/2011 | |||||||||||||||||||||||||
Investment securities | $ | 220,515 | $ | 41,182 | $ | 183,269 | $ | (76,336 | ) | $ | (2,679 | ) | $ | (40,355 | ) | $ | (53,412 | ) | $ | 272,184 | ||||||||||||
Net unrealized depreciation during the period on Level 3 investment securities held at September 30, 2011 (dollars in thousands)(3): | $ | (21,487 | ) | |||||||||||||||||||||||||||||
(2) Transfers into or out of Level 3 are based on the beginning market value of the quarter in which they occurred. | ||||||||||||||||||||||||||||||||
(3) Net realized loss and unrealized depreciation are included in the related amounts on investments in the statement of operations. |
4. | Risk factors |
Investing in the fund may involve certain risks including, but not limited to, those described below.
Investing in lower rated bonds — Lower rated bonds and other lower rated debt securities generally have higher rates of interest and involve greater risk of default or price declines due to changes in the issuer’s creditworthiness than those of higher quality debt securities. The market prices of these securities may fluctuate more than the prices of higher quality debt securities and may decline significantly in periods of general economic difficulty. These risks may be increased with respect to investments in junk bonds.
Thinly traded securities — There may be little trading in the secondary market for particular bonds or other debt securities, which may make them more difficult to value, acquire or sell.
Investing in bonds — Rising interest rates will generally cause the prices of bonds and other debt securities to fall. Longer maturity debt securities may be subject to greater price fluctuations than shorter maturity debt securities. In addition, falling interest rates 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.
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, economic or market developments in the countries or regions in which the issuer operates. These securities may also lose value due to changes in foreign currency exchange rates against the U.S. dollar and/or currencies of other countries. Securities markets in certain countries may be more volatile and/or less liquid than those in the U.S. Investments outside the U.S. may also be subject to different settlement and accounting practices and different regulatory, legal and reporting standards, and may be more difficult to value, than those in the U.S.
Management — The investment adviser to the fund actively manages the fund’s investments. Consequently, the fund is subject to the risk that the methods and analyses employed by the investment adviser in this process may not produce the desired results. This could cause the fund to lose value or its investment results to lag relevant benchmarks or other funds with similar objectives.
5. | 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, 2011, 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 2007 and by state tax authorities and tax authorities outside the U.S. for tax years before 2006.
Non-U.S. taxation – Dividend and interest income are recorded net of non-U.S. taxes paid.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; cost of investments sold; paydowns on fixed-income securities; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
During the year ended September 30, 2011, the fund reclassified $4,954,000 from undistributed net investment income to accumulated net realized loss and $16,000 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, 2011, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | ||||
Undistributed ordinary income | $ | 67,652 | ||
Capital loss carryforward expiring 2018* | (998,023 | ) | ||
Gross unrealized appreciation on investment securities | 456,253 | |||
Gross unrealized depreciation on investment securities | (1,174,129 | ) | ||
Net unrealized depreciation on investment securities | (717,876 | ) | ||
Cost of investment securities | 16,377,765 | |||
*Reflects the utilization of capital loss carryforwards of $470,531,000. The capital loss carryforward will be used to offset any capital gains realized by the fund in future years through the expiration date. The fund will not make distributions from capital gains while capital loss carryforward remains. |
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after September 30, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
Tax-basis distributions paid or accrued to shareholders from ordinary income were as follows (dollars in thousands):
Year ended September 30 | ||||||||
Share class | 2011 | 2010 | ||||||
Class A | $ | 948,181 | $ | 834,904 | ||||
Class B | 26,714 | 34,275 | ||||||
Class C | 95,927 | 86,904 | ||||||
Class F-1 | 115,447 | 111,786 | ||||||
Class F-2 | 46,320 | 29,436 | ||||||
Class 529-A | 20,211 | 15,068 | ||||||
Class 529-B | 1,431 | 1,534 | ||||||
Class 529-C | 7,106 | 5,379 | ||||||
Class 529-E | 1,063 | 786 | ||||||
Class 529-F-1 | 1,045 | 716 | ||||||
Class R-1 | 1,552 | 1,356 | ||||||
Class R-2 | 15,146 | 12,981 | ||||||
Class R-3 | 24,160 | 20,641 | ||||||
Class R-4 | 17,338 | 14,263 | ||||||
Class R-5 | 19,644 | 16,441 | ||||||
Class R-6 | 8,747 | 6,571 | ||||||
Total | $ | 1,350,032 | $ | 1,193,041 |
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 fund has an investment advisory and service agreement with CRMC that provides for monthly fees accrued daily. These fees are based on a series of decreasing annual rates beginning with 0.300% on the first $60 million of daily net assets and decreasing to 0.135% on such assets in excess of $15 billion. The agreement also provides for monthly fees, accrued daily, based on a series of decreasing rates beginning with 3.00% on the first $8,333,333 of the fund's monthly gross income and decreasing to 1.50% on such income in excess of $50 million. For the year ended September 30, 2011, the investment advisory services fee was $53,627,000, which was equivalent to an annualized rate of 0.306% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has plans of distribution for all share classes, except 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, distribution-related expenses include 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, 2011, 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, 2011, the total administrative services fees paid by CRMC were $91,000 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 party.
Expenses under the agreements described above for the year ended September 30, 2011, 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 | $ | 28,461 | $ | 13,748 | Not applicable | Not applicable | Not applicable | |||||||||||||
Class B | 3,766 | 434 | Not applicable | Not applicable | Not applicable | |||||||||||||||
Class C | 13,712 | Included in administrative services | $ | 1,925 | $ | 294 | Not applicable | |||||||||||||
Class F-1 | 3,693 | 2,085 | 143 | Not applicable | ||||||||||||||||
Class F-2 | Not applicable | 762 | 41 | Not applicable | ||||||||||||||||
Class 529-A | 544 | 252 | 43 | $ | 261 | |||||||||||||||
Class 529-B | 205 | 19 | 7 | 21 | ||||||||||||||||
Class 529-C | 1,024 | 99 | 29 | 103 | ||||||||||||||||
Class 529-E | 71 | 12 | 2 | 14 | ||||||||||||||||
Class 529-F-1 | - | 13 | 2 | 13 | ||||||||||||||||
Class R-1 | 222 | 26 | 16 | Not applicable | ||||||||||||||||
Class R-2 | 1,623 | 323 | 670 | Not applicable | ||||||||||||||||
Class R-3 | 1,621 | 460 | 200 | Not applicable | ||||||||||||||||
Class R-4 | 557 | 324 | 20 | Not applicable | ||||||||||||||||
Class R-5 | Not applicable | 239 | 11 | Not applicable | ||||||||||||||||
Class R-6 | Not applicable | 54 | 2 | Not applicable | ||||||||||||||||
Total | $ | 55,499 | $ | 14,182 | $ | 6,593 | $ | 1,480 | $ | 412 |
Trustees’ deferred compensation – Trustees who are unaffiliated with CRMC may elect to defer the cash payment of part or all of their compensation. These deferred amounts, which remain as liabilities of the fund, are treated as if invested in shares of the fund or other American Funds. These amounts represent general, unsecured liabilities of the fund and vary according to the total returns of the selected funds. Trustees’ compensation of $142,000, shown on the accompanying financial statements, includes $120,000 in current fees (either paid in cash or deferred) and a net increase of $22,000 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, 2011 | ||||||||||||||||||||||||||||||||
Class A | $ | 2,605,724 | 229,912 | $ | 844,366 | 75,016 | $ | (3,058,911 | ) | (271,226 | ) | $ | 391,179 | 33,702 | ||||||||||||||||||
Class B | 41,092 | 3,620 | 23,217 | 2,059 | (236,503 | ) | (20,828 | ) | (172,194 | ) | (15,149 | ) | ||||||||||||||||||||
Class C | 324,695 | 28,610 | 81,992 | 7,284 | (421,827 | ) | (37,401 | ) | (15,140 | ) | (1,507 | ) | ||||||||||||||||||||
Class F-1 | 529,143 | 46,653 | 110,292 | 9,796 | (730,942 | ) | (65,285 | ) | (91,507 | ) | (8,836 | ) | ||||||||||||||||||||
Class F-2 | 277,746 | 24,465 | 34,006 | 3,025 | (210,334 | ) | (18,597 | ) | 101,418 | 8,893 | ||||||||||||||||||||||
Class 529-A | 75,124 | 6,629 | 20,114 | 1,788 | (43,688 | ) | (3,871 | ) | 51,550 | 4,546 | ||||||||||||||||||||||
Class 529-B | 2,565 | 226 | 1,419 | 126 | (9,838 | ) | (868 | ) | (5,854 | ) | (516 | ) | ||||||||||||||||||||
Class 529-C | 30,054 | 2,653 | 7,072 | 629 | (19,438 | ) | (1,725 | ) | 17,688 | 1,557 | ||||||||||||||||||||||
Class 529-E | 4,520 | 401 | 1,058 | 94 | (1,995 | ) | (177 | ) | 3,583 | 318 | ||||||||||||||||||||||
Class 529-F-1 | 6,417 | 566 | 1,037 | 92 | (2,737 | ) | (244 | ) | 4,717 | 414 | ||||||||||||||||||||||
Class R-1 | 6,478 | 571 | 1,518 | 135 | (9,006 | ) | (796 | ) | (1,010 | ) | (90 | ) | ||||||||||||||||||||
Class R-2 | 78,238 | 6,908 | 14,994 | 1,332 | (87,033 | ) | (7,692 | ) | 6,199 | 548 | ||||||||||||||||||||||
Class R-3 | 119,975 | 10,572 | 24,046 | 2,133 | (173,188 | ) | (15,397 | ) | (29,167 | ) | (2,692 | ) | ||||||||||||||||||||
Class R-4 | 91,285 | 8,062 | 17,262 | 1,533 | (98,183 | ) | (8,664 | ) | 10,364 | 931 | ||||||||||||||||||||||
Class R-5 | 95,406 | 8,410 | 19,487 | 1,731 | (105,669 | ) | (9,381 | ) | 9,224 | 760 | ||||||||||||||||||||||
Class R-6 | 49,975 | 4,389 | 8,737 | 776 | (34,734 | ) | (3,110 | ) | 23,978 | 2,055 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 4,338,437 | 382,647 | $ | 1,210,617 | 107,549 | $ | (5,244,026 | ) | (465,262 | ) | $ | 305,028 | 24,934 | ||||||||||||||||||
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 | ||||||||||||||||||
*Includes exchanges between share classes of the fund. |
8. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $8,713,606,000 and $8,233,164,000, respectively, during the year ended September 30, 2011.
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 currency contract is closed or offset by another contract with the same broker for the same settlement date and currency. Closed forward currency contracts that have not reached their settlement date are included in the respective receivables or payables for closed forward currency contracts in the 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, 2011, the fund had open forward currency contracts to sell currencies, as shown in the following table. The open forward currency contracts shown are generally indicative of the level of activity over the prior 12-month period.
(amounts in thousands) | |||||||||||||||
Contract amount | Unrealized appreciation (depreciation) at 9/30/2011 | ||||||||||||||
Sales: | Settlement date | Counterparty | Receive | Deliver | |||||||||||
Brazilian reais | 10/18/2011 | JPMorgan Chase | $ | 23,214 | BRL40,000 | $ | 2,040 | ||||||||
Euros | 10/19/2011 | Barclays Bank PLC | $ | 13,880 | € | 10,000 | 485 | ||||||||
Euros | 10/20/2011 | JPMorgan Chase | $ | 826 | € | 600 | 22 | ||||||||
Euros | 10/20/2011 | HSBC Bank | $ | 14,193 | € | 10,300 | 396 | ||||||||
Euros | 10/21/2011 | Bank of New York Mellon | $ | 9,542 | € | 7,000 | 166 | ||||||||
Euros | 10/25/2011 | HSBC Bank | $ | 1,025 | € | 750 | 21 | ||||||||
Euros | 10/26/2011 | UBS AG | $ | 420 | € | 305 | 12 | ||||||||
Euros | 10/26/2011 | JPMorgan Chase | $ | 1,571 | € | 1,150 | 31 | ||||||||
Euros | 10/27/2011 | Barclays Bank PLC | $ | 9,390 | € | 6,875 | 181 | ||||||||
Euros | 10/27/2011 | Barclays Bank PLC | $ | 12,006 | € | 8,790 | 232 | ||||||||
Euros | 10/28/2011 | Citibank | $ | 4,038 | € | 3,000 | 20 | ||||||||
Euros | 10/31/2011 | JPMorgan Chase | $ | 56,606 | € | 41,500 | 1,019 | ||||||||
Euros | 10/31/2011 | JPMorgan Chase | $ | 8,184 | € | 6,000 | 147 | ||||||||
Euros | 11/3/2011 | UBS AG | $ | 2,046 | € | 1,500 | 37 | ||||||||
Euros | 11/3/2011 | HSBC Bank | $ | 14,987 | € | 11,150 | 52 | ||||||||
Euros | 11/3/2011 | Citibank | $ | 61,937 | € | 45,700 | 726 | ||||||||
Euros | 11/3/2011 | JPMorgan Chase | $ | 23,139 | € | 17,000 | 368 | ||||||||
Indonesian rupiah | 10/18/2011 | JPMorgan Chase | $ | 1,810 | IDR16,973,450 | (118 | ) | ||||||||
Philippine pesos | 10/18/2011 | JPMorgan Chase | $ | 4,707 | PHP206,100 | (2 | ) | ||||||||
Forward currency contracts - net | $ | 5,835 |
Financial highlights(1)
Income (loss) from investment operations(2) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net (losses) gains 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 9/30/2011 | $ | 11.13 | $ | .85 | $ | (.74 | ) | $ | .11 | $ | (.88 | ) | $ | - | $ | (.88 | ) | $ | 10.36 | .67 | % | $ | 11,223 | .67 | % | .67 | % | 7.57 | % | |||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .77 | (.74 | ) | .03 | (.80 | ) | - | (.80 | ) | 10.36 | (.10 | ) | 264 | 1.44 | 1.44 | 6.82 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | (.79 | ) | - | (.79 | ) | 10.36 | (.15 | ) | 1,229 | 1.48 | 1.48 | 6.76 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | (.88 | ) | - | (.88 | ) | 10.36 | .62 | 1,264 | .72 | .72 | 7.52 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .88 | (.74 | ) | .14 | (.91 | ) | - | (.91 | ) | 10.36 | .88 | 568 | .46 | .46 | 7.77 | ||||||||||||||||||||||||||||||||||||
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 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | (.88 | ) | - | (.88 | ) | 10.36 | .59 | 261 | .74 | .74 | 7.50 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .75 | (.74 | ) | .01 | (.78 | ) | - | (.78 | ) | 10.36 | (.22 | ) | 16 | 1.55 | 1.55 | 6.70 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | (.79 | ) | - | (.79 | ) | 10.36 | (.21 | ) | 101 | 1.54 | 1.54 | 6.70 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .81 | (.74 | ) | .07 | (.84 | ) | - | (.84 | ) | 10.36 | .31 | 15 | 1.02 | 1.02 | 7.22 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | $ | 11.13 | $ | .87 | $ | (.74 | ) | $ | .13 | $ | (.90 | ) | $ | - | $ | (.90 | ) | $ | 10.36 | .80 | % | $ | 14 | .53 | % | .53 | % | 7.70 | % | |||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | (.79 | ) | - | (.79 | ) | 10.36 | (.17 | ) | 20 | 1.50 | 1.50 | 6.74 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .76 | (.74 | ) | .02 | (.79 | ) | - | (.79 | ) | 10.36 | (.15 | ) | 200 | 1.53 | 1.48 | 6.76 | |||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .81 | (.74 | ) | .07 | (.84 | ) | - | (.84 | ) | 10.36 | .31 | 266 | 1.02 | 1.02 | 7.22 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .85 | (.74 | ) | .11 | (.88 | ) | - | (.88 | ) | 10.36 | .61 | 208 | .72 | .72 | 7.52 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .88 | (.74 | ) | .14 | (.91 | ) | - | (.91 | ) | 10.36 | .91 | 224 | .42 | .42 | 7.82 | ||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2011 | 11.13 | .89 | (.74 | ) | .15 | (.92 | ) | - | (.92 | ) | 10.36 | .96 | 104 | .37 | .37 | 7.86 | ||||||||||||||||||||||||||||||||||||
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 | ||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | ||||||||||||||||
Portfolio turnover rate for all share classes | 51 | % | 47 | % | 43 | % | 35 | % | 42 | % |
(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 of American High-Income Trust (the “Fund”), including the summary investment portfolio as of September 30, 2011, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of September 30, 2011, 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, such 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, 2011, 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, 2011
Expense example
unaudited
As a shareholder of the fund, you incur two types of costs: (1) transaction costs, such as initial sales charges on purchase payments and contingent deferred sales charges on redemptions (loads), and (2) ongoing costs, including management fees, distribution and service (12b-1) fees, and other expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the fund so you can compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire six-month period (April 1, 2011, through September 30, 2011).
Actual expenses:
The first line of each share class in the table on the next page provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses paid during period" to estimate the expenses you paid on your account during this period.
Hypothetical example for comparison purposes:
The second line of each share class in the table on the next page provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio for the share class and an assumed rate of return of 5.00% per year before expenses, which is not the actual return of the share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the fund and other funds. To do so, compare this 5.00% hypothetical example with the 5.00% hypothetical examples that appear in the shareholder reports of the other funds.
Notes:
There are some account fees that are charged to certain types of accounts, such as individual retirement accounts and 529 college savings plan accounts (generally, a $10 fee is charged to set up the account and an additional $10 fee is charged to the account annually), that would increase the amount of expenses paid on your account. In addition, retirement plan participants may be subject to certain fees charged by the plan sponsor, and Class F-1, F-2 and 529-F-1 shareholders may be subject to fees charged by financial intermediaries, typically ranging from 0.75% to 1.50% of assets annually depending on services offered. You can estimate the impact of these fees by adding the amount of the fees to the total estimated expenses you paid on your account during the period as calculated above. In addition, your ending account value would be lower by the amount of these fees.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads). Therefore, the second line of each share class in the table is useful in comparing ongoing costs only and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher.
Beginning account value 4/1/2011 | Ending account value 9/30/2011 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 935.10 | $ | 3.25 | .67 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.71 | 3.40 | .67 | ||||||||||||
Class B -- actual return | 1,000.00 | 931.49 | 6.97 | 1.44 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.85 | 7.28 | 1.44 | ||||||||||||
Class C -- actual return | 1,000.00 | 931.31 | 7.17 | 1.48 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.65 | 7.49 | 1.48 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 934.88 | 3.44 | .71 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.51 | 3.60 | .71 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 936.11 | 2.18 | .45 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.81 | 2.28 | .45 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 934.73 | 3.64 | .75 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.31 | 3.80 | .75 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 930.92 | 7.55 | 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 | 930.97 | 7.50 | 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 | 933.48 | 4.94 | 1.02 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.95 | 5.16 | 1.02 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 935.72 | 2.62 | .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 | 931.16 | 7.26 | 1.50 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.55 | 7.59 | 1.50 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 931.28 | 7.17 | 1.48 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.65 | 7.49 | 1.48 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 933.41 | 4.94 | 1.02 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.95 | 5.16 | 1.02 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 934.85 | 3.49 | .72 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.46 | 3.65 | .72 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 936.28 | 2.04 | .42 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.96 | 2.13 | .42 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 936.53 | 1.80 | .37 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.21 | 1.88 | .37 | ||||||||||||
*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, 2011:
Qualified dividend income | $ | 20,933,000 | ||
Corporate dividends received deduction | $ | 15,453,000 | ||
U.S. government income that may be exempt from state taxation | $ | 2,193,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2012, to determine the calendar year amounts to be included on their 2011 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 September 30, 2011: | ||||||||||||
10 years1/ | ||||||||||||
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 | −4.76 | % | 3.91 | % | 6.93 | % | ||||||
Not reflecting CDSC | −0.10 | 4.20 | 6.93 | |||||||||
Class C shares | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | −1.08 | 4.15 | 6.70 | |||||||||
Not reflecting CDSC | −0.15 | 4.15 | 6.70 | |||||||||
Class F-1 shares3 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 0.62 | 4.96 | 7.52 | |||||||||
Class F-2 shares3 — first sold 8/4/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 0.88 | — | 7.15 | |||||||||
Class 529-A shares4 — first sold 2/19/02 | ||||||||||||
Reflecting 3.75% maximum sales charge | −3.15 | 4.13 | 6.89 | |||||||||
Not reflecting maximum sales charge | 0.59 | 4.93 | 7.31 | |||||||||
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 | −4.87 | 3.80 | 6.70 | |||||||||
Not reflecting CDSC | −0.22 | 4.08 | 6.70 | |||||||||
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 | −1.14 | 4.09 | 6.43 | |||||||||
Not reflecting CDSC | −0.21 | 4.09 | 6.43 | |||||||||
Class 529-E shares3,4 — first sold 3/15/02 | 0.31 | 4.63 | 6.78 | |||||||||
Class 529-F-1 shares3,4 — first sold 9/16/02 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 0.80 | 5.15 | 8.92 |
1Applicable to Classes B, C and F-1 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, 75 | 2010 | Private investor and corporate director; former |
Chairman of the Board, In-Q-Tel, Inc. (technology | ||
venture company) | ||
William H. Baribault, 66 | 2010 | Chairman of the Board and CEO, Oakwood |
Enterprises (private investment and consulting) | ||
James G. Ellis, 64 | 2006 | Dean and Professor of Marketing, Marshall School of |
Business, University of Southern California | ||
Martin Fenton, 76 | 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, 65 | 1994 | President and CEO, Fuller Consulting (financial |
management consulting firm) | ||
W. Scott Hedrick, 66 | 2010 | Founding General Partner, InterWest Partners |
(venture capital firm) | ||
R. Clark Hooper, 65 | 2005 | Private investor; former President, Dumbarton Group |
LLC (securities industry consulting) | ||
Merit E. Janow, 53 | 2010 | Professor, Columbia University, School of |
International and Public Affairs; former Member, | ||
World Trade Organization Appellate Body | ||
Laurel B. Mitchell, | 2010 | Clinical Professor and Director, Accounting Program, |
Ph.D., 56 | University of Redlands | |
Frank M. Sanchez, 68 | 1999 | Principal, The Sanchez Family Corporation dba |
McDonald’s Restaurants (McDonald’s licensee) | ||
Margaret Spellings, 54 | 2010 | President and CEO, Margaret Spellings & Company; |
President, U.S. Forum for Policy Innovation 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 | ||
Steadman Upham, Ph.D., 62 | 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, 75 | 42 | Anworth Mortgage Asset Corporation |
William H. Baribault, 66 | 42 | None |
James G. Ellis, 64 | 46 | Quiksilver, Inc. |
Martin Fenton, 76 | 42 | Capital Private Client Services Funds; Capital |
Chairman of the Board | Emerging Markets Total Opportunities Fund | |
(Independent and | ||
Non-Executive) | ||
Leonard R. Fuller, 65 | 46 | None |
W. Scott Hedrick, 66 | 42 | Hot Topic, Inc.; Office Depot, Inc. |
R. Clark Hooper, 65 | 48 | JPMorgan Value Opportunities Fund, Inc.; |
The Swiss Helvetia Fund, Inc. | ||
Merit E. Janow, 53 | 45 | The NASDAQ Stock Market LLC; |
Trimble Navigation Limited | ||
Laurel B. Mitchell, | 42 | None |
Ph.D., 56 | ||
Frank M. Sanchez, 68 | 42 | None |
Margaret Spellings, 54 | 42 | None |
Steadman Upham, Ph.D., 62 | 45 | None |
Ambassador Richard G. Capen, Jr., a trustee of the fund since 1999, and Richard G. Newman, a trustee of the fund since 1991, have retired from the board. The trustees thank Ambassador Capen and Mr. Newman for their 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., 62 | 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 | ||
John H. Smet, 55 | 2011 | Senior Vice President — Fixed Income, Capital |
Research and Management Company; Director, | ||
The Capital Group Companies, Inc.6 | ||
“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., 62 | 14 | None |
Vice Chairman of the Board | ||
John H. Smet, 55 | 17 | None |
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 |
David C. Barclay, 55 | 1995 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company; Director, | |
Capital Research and Management Company | ||
Jennifer L. Hinman, 53 | 2001 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research Company;6 Director, Capital International | |
Research, Inc.;6 Director, Capital Strategy Research, | ||
Inc.6 | ||
David A. Daigle, 44 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company6 | |
Marcus B. Linden, 45 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company6 | |
Richard N. Lewis, 38 | 2011 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company6 | |
Kristine M. Nishiyama, 41 | 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 | ||
Courtney R. Taylor, 36 | 2006 | Assistant Vice President — Fund Business |
Secretary | Management Group, Capital Research and | |
Management Company | ||
Karl C. Grauman, 43 | 2011 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Steven I. Koszalka, 47 | 2010 | Vice President — Fund Business Management |
Assistant Secretary | Group, Capital Research and Management Company | |
M. Susan Gupton, 38 | 2008 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company | |
Dori Laskin, 60 | 2010 | 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 Investment Company Act of 1940. |
2Trustees and officers of the fund serve until their resignation, removal or retirement. |
3Capital Research and Management Company manages the American Funds, consisting of 33 funds. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 18 funds and serves as the underlying investment vehicle for certain variable insurance contracts; and American Funds Target Date Retirement Series,® which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs. |
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 Investment Company Act of 1940, 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
Independent registered public accounting firm
Deloitte & Touche LLP
695 Town Center Drive
Suite 1200
Costa Mesa, CA 92626-7188
Principal underwriter
American Funds Distributors, Inc.
333 South Hope Street
Los Angeles, CA 90071-1406
Investors should carefully consider the investment objectives, risks, charges and expenses of the American Funds. This and other important information is contained in the fund’s prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 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, 2011, portfolio of American High-Income Trust’s investments is available free of charge by calling AFS or visiting the SEC website (where it is part of Form N-CSR).
American High-Income Trust files a complete list of its portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. This filing is available free of charge on the SEC website. You may also review or, for a fee, copy this filing at the SEC’s Public Reference Room in Washington, D.C. Additional information regarding the operation of the Public Reference Room may be obtained by calling the SEC’s Office of Investor Education and Advocacy at 800/SEC-0330. Additionally, the list of portfolio holdings is available on the American Funds website or by calling AFS.
This report is for the information of shareholders of American High-Income Trust, but it also may be used as sales literature when preceded or accompanied by the current prospectus or summary prospectus, which gives details about charges, expenses, investment objectives and operating policies of the fund. If used as sales material after December 31, 2011, this report must be accompanied by an American Funds statistical update for the most recently completed calendar quarter.
The American Funds difference
Since 1931, American Funds has helped investors pursue long-term investment success. Our consistent approach — in combination with a proven system — has resulted in a superior
long-term track record.
Consistent approach
We base our decisions on a long-term perspective because we believe it is the best way to achieve superior long-term investment results. Our portfolio counselors average 27 years of investment experience, including 22 years at our company, reflecting a career commitment to our long-term approach.
Proven system
Our system combines individual accountability with teamwork. Each fund is divided into portions that are managed by investment professionals with varied backgrounds, ages and investment styles. An extensive global research effort is the backbone of our system.
Superior long-term track record
Our equity funds have beaten their Lipper peer indexes in 89% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 65% of 10-year periods and 75% of 20-year periods.* Our fund management fees have consistently been among the lowest in the industry.†
*Based on Class A share results for periods through 12/31/10. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date. |
†Based on management fees for the 20-year period ended 12/31/10 versus comparable Lipper categories, excluding funds of funds. |
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 funds |
Emphasis on long-term growth and current income through stocks and bonds |
American Balanced Fund® |
American Funds Global Balanced FundSM |
• | Bond funds |
Emphasis on current income through bonds |
American Funds Mortgage FundSM |
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 |
American Funds Tax-Exempt Fund of New YorkSM |
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-921-1111P
Litho in USA RCG/RRD/8049-S28688
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 statements and condition.
ITEM 4 – Principal Accountant Fees and Services
Registrant: | ||||
a) Audit Fees: | ||||
2010 | $105,000 | |||
2011 | $109,000 | |||
b) Audit-Related Fees: | ||||
2010 | $5,000 | |||
2011 | $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 Standards for Attestation Engagements Number 16 (which replaced Statement on Auditing Standards Number 70) issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2010 | $7,000 | |||
2011 | $7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns. | ||||
d) All Other Fees: | ||||
2010 | None | |||
2011 | 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: | ||||
2010 | $999,000 | |||
2011 | $1,055,000 | |||
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 Standards for Attestation Engagements Number 16 (which replaced Statement on Auditing Standards Number 70) issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2010 | $10,000 | |||
2011 | $38,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2010 | $2,000 | |||
2011 | $2,000 | |||
The other fees consist of subscription services related to an accounting research tool. |
All audit and permissible non-audit services that the Registrant’s audit committee considers compatible with maintaining the independent registered public accounting firm’s independence are required to be pre-approved by the committee. The pre-approval requirement will extend to all non-audit services provided to the Registrant, the investment adviser, and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant. The committee will not delegate its responsibility to pre-approve these services to the investment adviser. The committee may delegate to one or more committee members the authority to review and pre-approve audit and permissible non-audit services. Actions taken under any such delegation will be reported to the full committee at its next meeting. The pre-approval requirement is waived with respect to non-audit services if certain conditions are met. The pre-approval requirement was not waived for any of the non-audit services listed above provided to the Registrant, adviser and affiliates.
Aggregate non-audit fees paid to the Registrant’s auditors, including fees for all services billed to the Registrant, adviser and affiliates that provide ongoing services to the Registrant, were $1,416,000 for fiscal year 2010 and $1,651,000 for fiscal year 2011. 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, 2011
Bonds, notes & other debt instruments — 91.95% | Principal amount (000) | Value (000) | ||||||
CORPORATE BONDS, NOTES & LOANS — 88.37% | ||||||||
CONSUMER DISCRETIONARY — 24.51% | ||||||||
Mandalay Resort Group 6.375% 2011 | $ | 4,150 | $ | 4,129 | ||||
MGM Resorts International 6.75% 2012 | 52,553 | 51,765 | ||||||
MGM Resorts International 6.75% 2013 | 45,790 | 44,645 | ||||||
MGM Resorts International 13.00% 2013 | 27,275 | 31,230 | ||||||
MGM Resorts International 5.875% 2014 | 82,445 | 75,643 | ||||||
MGM Resorts International 10.375% 2014 | 10,225 | 11,209 | ||||||
MGM Resorts International 6.625% 2015 | 18,975 | 16,176 | ||||||
MGM Resorts International 6.875% 2016 | 9,000 | 7,695 | ||||||
MGM Resorts International 7.50% 2016 | 40,600 | 35,424 | ||||||
MGM Resorts International 11.125% 2017 | 14,775 | 16,289 | ||||||
MGM Resorts International 9.00% 2020 | 18,925 | 19,753 | ||||||
Charter Communications Operating, LLC, Term Loan B, 7.25% 20141,2,3 | 28 | 28 | ||||||
Charter Communications, Inc. 13.50% 2016 | 47,704 | 54,621 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25% 2017 | 70,900 | 71,255 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 2018 | 40,425 | 41,335 | ||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00% 2019 | 10,000 | 9,750 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.125% 2020 | 38,175 | 39,893 | ||||||
Univision Communications Inc., Term Loan, 4.489% 20171,2,3 | 133,119 | 112,357 | ||||||
Univision Communications Inc. 6.875% 20194 | 21,330 | 19,090 | ||||||
Univision Communications Inc. 8.50% 20214 | 54,275 | 42,606 | ||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 88,775 | 96,321 | ||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 9,325 | 9,954 | ||||||
Virgin Media Finance PLC 8.375% 20194 | 57,435 | 61,312 | ||||||
Michaels Stores, Inc., Term Loan B1, 2.50% 20131,2,3 | 17,346 | 16,634 | ||||||
Michaels Stores, Inc. 0%/13.00% 20165 | 67,520 | 69,883 | ||||||
Michaels Stores, Inc., Term Loan B2, 4.75% 20161,2,3 | 5,877 | 5,630 | ||||||
Michaels Stores, Inc. 11.375% 2016 | 11,000 | 11,192 | ||||||
Michaels Stores, Inc. 7.75% 2018 | 65,100 | 61,194 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20161,2,3 | 14,157 | 13,626 | ||||||
Toys “R” Us-Delaware, Inc. 7.375% 20164 | 19,580 | 18,797 | ||||||
Toys “R” Us Property Co. II, LLC 8.50% 2017 | 38,025 | 37,265 | ||||||
Toys “R” Us Property Co. I, LLC 10.75% 2017 | 3,875 | 4,117 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B2, 5.25% 20181,2,3 | 65,486 | 62,469 | ||||||
Toys “R” Us, Inc. 7.375% 2018 | 9,550 | 8,165 | ||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 34,125 | 34,637 | ||||||
Neiman Marcus Group, Inc., Term Loan B, 4.75% 20181,2,3 | 102,945 | 95,467 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 27,850 | 24,090 | ||||||
Boyd Gaming Corp. 7.125% 2016 | 30,615 | 22,655 | ||||||
Boyd Gaming Corp. 9.125% 20184 | 79,570 | 65,844 | ||||||
Nara Cable Funding Ltd. 8.875% 2018 | € | 93,800 | 103,039 | |||||
ONO Finance II PLC 10.875% 20194 | $ | 350 | 247 | |||||
ONO Finance II PLC 11.125% 2019 | € | 8,925 | 7,922 | |||||
Needle Merger Sub Corp. 8.125% 20194 | $ | 122,990 | 107,616 | |||||
Allison Transmission Holdings, Inc., Term Loan B, 2.98% 20141,2,3 | 31,319 | 29,631 | ||||||
Allison Transmission Holdings, Inc. 11.00% 20154 | 73,035 | 75,956 | ||||||
Revel Entertainment, Term Loan B, 9.00% 20181,2,3 | 83,325 | 69,368 | ||||||
Revel Entertainment 12.00% 20186,7,8 | 36,178 | 25,515 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 67,753 | 67,753 | ||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019 | 26,450 | 26,450 | ||||||
Limited Brands, Inc. 5.25% 2014 | 703 | 735 | ||||||
Limited Brands, Inc. 8.50% 2019 | 14,560 | 16,526 | ||||||
Limited Brands, Inc. 7.00% 2020 | 18,193 | 19,194 | ||||||
Limited Brands, Inc. 6.625% 2021 | 55,628 | 56,323 | ||||||
J.C. Penney Co., Inc., Series A, 6.875% 2015 | 4,548 | 4,741 | ||||||
J.C. Penney Co., Inc. 5.75% 2018 | 52,184 | 51,140 | ||||||
J.C. Penney Co., Inc. 5.65% 2020 | 33,397 | 31,477 | ||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 82,450 | 84,717 | ||||||
EchoStar DBS Corp 7.125% 2016 | 7,000 | 7,122 | ||||||
DISH DBS Corp 7.875% 2019 | 3,550 | 3,639 | ||||||
DISH DBS Corp 6.75% 20214 | 74,265 | 71,294 | ||||||
Warner Music Group 9.50% 20164 | 10,550 | 10,735 | ||||||
Warner Music Group 9.50% 2016 | 7,550 | 7,682 | ||||||
Warner Music Group 11.50% 20184 | 48,350 | 44,724 | ||||||
Warner Music Group 13.75% 20194 | 16,975 | 15,023 | ||||||
AMC Entertainment Inc. 8.00% 2014 | 7,825 | 7,590 | ||||||
AMC Entertainment Inc. 8.75% 2019 | 46,675 | 46,092 | ||||||
AMC Entertainment Inc. 9.75% 2020 | 23,000 | 20,930 | ||||||
Hanesbrands Inc., Series B, 3.77% 20141 | 45,550 | 44,753 | ||||||
Hanesbrands Inc. 8.00% 2016 | 18,350 | 19,497 | ||||||
Hanesbrands Inc. 6.375% 2020 | 9,000 | 8,775 | ||||||
Burger King Corp. 9.875% 2018 | 28,250 | 29,239 | ||||||
Burger King Corp 0%/11.00% 20194,5 | 76,125 | 42,059 | ||||||
Bon-Ton Department Stores, Inc. 10.25% 2014 | 85,775 | 69,049 | ||||||
Macy’s Retail Holdings, Inc. 8.125% 20151 | 35,947 | 41,907 | ||||||
Federated Department Stores, Inc. 6.79% 2027 | 23,385 | 23,660 | ||||||
PETCO Animal Supplies, Inc. 9.25% 20184 | 63,505 | 63,823 | ||||||
Academy, Ltd., Term Loan B, 6.00% 20181,2,3 | 45,950 | 44,083 | ||||||
Academy, Ltd. 9.25% 20194 | 21,050 | 19,682 | ||||||
Wynn Las Vegas, LLC and Wynn Capital Corp. 7.875% 2017 | 3,400 | 3,578 | ||||||
Wynn Las Vegas, LLC and Wynn Capital Corp. 7.75% 2020 | 53,250 | 56,179 | ||||||
Cinemark USA, Inc., Term Loan, 3.48% 20161,2,3 | 5,466 | 5,373 | ||||||
Cinemark USA, Inc. 8.625% 2019 | 47,461 | 49,122 | ||||||
Royal Caribbean Cruises Ltd. 6.875% 2013 | 4,000 | 4,050 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 42,475 | 49,483 | ||||||
CityCenter Holdings, LLC 7.625% 20164 | 27,500 | 25,988 | ||||||
CityCenter Holdings, LLC 11.50% 20174,7 | 28,501 | 25,342 | ||||||
Sally Holdings LLC and Sally Capital Inc. 9.25% 2014 | 40,750 | 41,769 | ||||||
Sally Holdings LLC and Sally Capital Inc. 10.50% 2016 | 8,292 | 8,603 | ||||||
Regal Entertainment Group 9.125% 2018 | 17,450 | 17,363 | ||||||
Regal Cinemas Corp. 8.625% 2019 | 30,455 | 31,140 | ||||||
Tower Automotive Holdings 10.625% 20174 | 48,696 | 48,453 | ||||||
Jaguar Land Rover PLC 7.75% 20184 | 15,960 | 14,284 | ||||||
Jaguar Land Rover PLC 8.125% 20214 | 36,000 | 31,860 | ||||||
Burlington Coat Factory Warehouse Corp., Term Loan B, 6.25% 20171,2,3 | 37,147 | 35,640 | ||||||
Burlington Coat Factory Warehouse Corp. 10.00% 20194 | 9,550 | 8,165 | ||||||
Technical Olympic USA, Inc. 9.00% 20108,9 | 22,486 | 14,773 | ||||||
Technical Olympic USA, Inc. 9.00% 20108,9 | 7,325 | 4,813 | ||||||
Technical Olympic USA, Inc. 9.25% 20114,8,9 | 36,325 | 23,866 | ||||||
Local T.V. Finance LLC, Term Loan B, 2.24% 20131,2,3 | 7,206 | 6,770 | ||||||
Local T.V. Finance LLC 9.25% 20151,4,7 | 31,914 | 29,520 | ||||||
NCL Corp. Ltd. 11.75% 2016 | 18,925 | 21,385 | ||||||
NCL Corp. Ltd. 9.50% 20184 | 9,725 | 9,871 | ||||||
Fox Acquisition LLC 13.375% 20164 | 29,470 | 31,165 | ||||||
CSC Holdings, Inc. 8.50% 2014 | 14,750 | 15,985 | ||||||
CSC Holdings, Inc. 8.50% 2015 | 3,500 | 3,701 | ||||||
CSC Holdings, Inc. 8.625% 2019 | 10,125 | 11,112 | ||||||
DineEquity, Inc. 9.50% 2018 | 28,775 | 28,703 | ||||||
Mohegan Tribal Gaming Authority 8.00% 2012 | 17,950 | 11,937 | ||||||
Mohegan Tribal Gaming Authority 6.125% 2013 | 1,225 | 827 | ||||||
Mohegan Tribal Gaming Authority 7.125% 2014 | 24,600 | 12,423 | ||||||
Mohegan Tribal Gaming Authority 6.875% 2015 | 6,775 | 3,286 | ||||||
Marina District Finance Co., Inc. 9.50% 2015 | 10,000 | 9,075 | ||||||
Marina District Finance Co., Inc. 9.875% 2018 | 21,000 | 17,640 | ||||||
Gray Television, Inc. 10.50% 2015 | 9,175 | 8,349 | ||||||
Gray Television, Inc., Series D, 17.00%1,6,8,9 | 21,003 | 18,063 | ||||||
Vidéotron Ltée 6.875% 2014 | 4,110 | 4,131 | ||||||
Vidéotron Ltée 6.375% 2015 | 3,720 | 3,757 | ||||||
Quebecor Media Inc. 7.75% 2016 | 13,600 | 13,634 | ||||||
Quebecor Media Inc. 7.75% 2016 | 4,375 | 4,397 | ||||||
LBI Media, Inc. 8.50% 20174 | 40,150 | 25,495 | ||||||
Jarden Corp. 8.00% 2016 | 23,250 | 24,674 | ||||||
Radio One, Inc., Term Loan B, 7.50% 20161,2,3 | 25,079 | 24,156 | ||||||
Cumulus Media Inc., Term Loan, 7.50% 20191,2,3 | 4,665 | 4,423 | ||||||
Cumulus Media Inc. 7.75% 20194 | 22,000 | 18,645 | ||||||
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 2012 | 28,180 | 21,910 | ||||||
Allbritton Communications Co. 8.00% 2018 | 22,000 | 20,790 | ||||||
Chrysler Group LLC, Term Loan B, 6.00% 20171,2,3 | 7,731 | 6,759 | ||||||
Chrysler Group LLC 8.00% 20194 | 13,585 | 10,664 | ||||||
UPC Germany GmbH 8.125% 20174 | 2,300 | 2,311 | ||||||
UPC Germany GmbH 9.625% 2019 | € | 10,800 | 14,096 | |||||
Seneca Gaming Corp. 8.25% 20184 | $ | 16,750 | 16,206 | |||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 16,245 | 15,920 | ||||||
Lamar Media Corp. 7.875% 2018 | 13,525 | 13,593 | ||||||
Cequel Communications Holdings I, LLC and Cequel Capital Corp. 8.625% 20174 | 13,250 | 13,184 | ||||||
Gymboree Corp., Term Loan 1L, 5.00% 20181,2,3 | 13,994 | 12,523 | ||||||
Dynacast International Ltd. 9.25% 20194 | 10,950 | 9,964 | ||||||
Kabel BW Erste Beteiligu 7.50% 2019 | € | 7,250 | 9,373 | |||||
Seminole Tribe of Florida 7.804% 20202,4 | $ | 8,935 | 8,533 | |||||
Meritage Corp. 7.731% 20174 | 9,000 | 7,965 | ||||||
Phillips-Van Heusen Co. 7.375% 2020 | 5,000 | 5,237 | ||||||
FCE Bank PLC 7.125% 2013 | € | 3,550 | 4,863 | |||||
Marks and Spencer Group PLC 7.125% 20374 | $ | 4,270 | 4,442 | |||||
Tenneco Inc. 6.875% 2020 | 4,300 | 4,192 | ||||||
Clear Channel Communications, Inc. 5.00% 2012 | 2,815 | 2,787 | ||||||
Grupo Televisa, SAB 6.625% 2040 | 2,500 | 2,662 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 750 | 849 | ||||||
Cox Communications, Inc. 5.45% 2014 | 390 | 432 | ||||||
KAC Acquisition Corp. 8.00% 20262,4,7,8 | 256 | — | ||||||
3,916,076 | ||||||||
TELECOMMUNICATION SERVICES — 11.42% | ||||||||
Sprint Capital Corp. 8.375% 2012 | 8,800 | 8,932 | ||||||
Nextel Communications, Inc., Series E, 6.875% 2013 | 46,088 | 45,051 | ||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 117,065 | 110,334 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 178,423 | 169,948 | ||||||
Sprint Nextel Corp. 6.00% 2016 | 12,000 | 10,380 | ||||||
Sprint Capital Corp. 8.75% 2032 | 3,000 | 2,621 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series B, 12.00% 20154 | 136,130 | 116,051 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series A, 12.00% 20154 | 129,180 | 110,126 | ||||||
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20174 | 87,930 | 53,198 | ||||||
Cricket Communications, Inc. 10.00% 2015 | 29,245 | 29,172 | ||||||
Cricket Communications, Inc. 7.75% 2016 | 151,590 | 152,916 | ||||||
Cricket Communications, Inc. 7.75% 2020 | 20,000 | 17,450 | ||||||
Wind Acquisition SA 11.75% 20174 | 127,465 | 108,983 | ||||||
Wind Acquisition SA 7.25% 20184 | $ | 30,530 | 26,141 | |||||
Wind Acquisition SA 7.375% 2018 | € | 21,915 | 24,957 | |||||
Level 3 Financing, Inc. 9.25% 2014 | $ | 2,582 | 2,563 | |||||
Level 3 Financing, Inc. 8.75% 2017 | 17,793 | 16,481 | ||||||
Level 3 Financing, Inc. 10.00% 2018 | 16,050 | 15,488 | ||||||
Level 3 Escrow Inc. 8.125% 20194 | 96,750 | 85,745 | ||||||
Level 3 Communications, Inc. 11.875% 20194 | 18,450 | 17,620 | ||||||
Digicel Group Ltd. 12.00% 20144 | 61,825 | 69,553 | ||||||
Digicel Group Ltd. 12.00% 2014 | 600 | 675 | ||||||
Digicel Group Ltd. 8.875% 20154 | 47,975 | 45,816 | ||||||
Digicel Group Ltd. 8.875% 2015 | 10,015 | 9,564 | ||||||
Digicel Group Ltd. 10.50% 20184 | 10,450 | 10,398 | ||||||
Frontier Communications Corp. 7.875% 2015 | 19,800 | 19,949 | ||||||
Frontier Communications Corp. 8.25% 2017 | 64,725 | 63,107 | ||||||
Frontier Communications Corp. 8.50% 2020 | 29,150 | 28,421 | ||||||
Frontier Communications Corp. 8.75% 2022 | 11,625 | 11,218 | ||||||
Vodafone Group PLC, Term Loan, 6.875% 20152,3,7,8 | 58,033 | 58,323 | ||||||
Vodafone Group PLC, Term Loan B, 6.25% 20162,3,7,8 | 44,900 | 44,900 | ||||||
Trilogy International Partners, LLC, 10.25% 20164 | 85,890 | 84,602 | ||||||
LightSquared, Term Loan B, 12.00% 20142,3,7 | 147,173 | 72,430 | ||||||
Crown Castle International Corp. 9.00% 2015 | 29,475 | 31,686 | ||||||
Crown Castle International Corp. 7.75% 20174 | 11,150 | 11,930 | ||||||
Crown Castle International Corp. 7.125% 2019 | 2,900 | 3,001 | ||||||
American Tower Corp. 7.00% 2017 | 21,825 | 24,729 | ||||||
American Tower Corp. 7.25% 2019 | 11,225 | 12,934 | ||||||
Intelsat Jackson Holding Co. 9.50% 2016 | 15,425 | 15,676 | ||||||
Intelsat Jackson Holding Co. 8.50% 2019 | 20,250 | 19,845 | ||||||
SBA Telecommunications, Inc. 8.00% 2016 | 12,850 | 13,525 | ||||||
Sorenson Communications 10.50% 20154 | 20,700 | 12,109 | ||||||
Portugal Telecom International Finance BV 5.625% 2016 | € | 10,000 | 11,353 | |||||
América Móvil, SAB de CV 5.00% 2020 | $ | 4,350 | 4,637 | |||||
América Móvil, SAB de CV 8.46% 2036 | MXN65,000 | 4,435 | ||||||
Telecom Italia Capital SA 6.999% 2018 | $ | 5,950 | 5,976 | |||||
Syniverse Holdings, Inc. 9.125% 2019 | 4,600 | 4,531 | ||||||
Hawaiian Telcom, Inc., Term Loan, 9.00% 20151,2,3,7 | 4,518 | 4,525 | ||||||
1,824,005 | ||||||||
FINANCIALS — 10.82% | ||||||||
Realogy Corp. 10.50% 2014 | 1,000 | 865 | ||||||
Realogy Corp., Letter of Credit, 4.518% 20161,2,3 | 14,852 | 12,120 | ||||||
Realogy Corp., Term Loan B, 4.522% 20161,2,3 | 148,893 | 121,507 | ||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20172,3 | 147,699 | 143,268 | ||||||
Realogy Corp. 7.875% 20194 | 150,435 | 114,331 | ||||||
CIT Group Inc., Series A, 7.00% 20142 | 12,585 | 12,852 | ||||||
CIT Group Inc., Series A, 7.00% 2015 | 164,536 | 163,508 | ||||||
CIT Group Inc., Series A, 7.00% 2016 | 167,495 | 162,679 | ||||||
Liberty Mutual Group Inc. 6.50% 20354 | 18,000 | 17,459 | ||||||
Liberty Mutual Group Inc., Series B, 7.00% 20671,4 | 11,185 | 9,563 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20871,4 | 54,093 | 47,872 | ||||||
Liberty Mutual Group Inc., Series C, 10.75% 20881,4 | 47,950 | 57,540 | ||||||
Regions Financial Corp. 6.375% 2012 | 19,523 | 19,913 | ||||||
Regions Financial Corp. 7.75% 2014 | 36,979 | 37,256 | ||||||
Regions Financial Corp. 5.20% 2015 | 5,300 | 4,982 | ||||||
Regions Financial Corp. 5.75% 2015 | 5,024 | 4,873 | ||||||
Springleaf Finance Corp., Series I, 5.40% 2015 | 18,513 | 13,607 | ||||||
Springleaf Finance Corp., Term Loan B, 5.50% 20171,2,3 | 37,290 | 32,442 | ||||||
Springleaf Finance Corp., Series J, 6.90% 2017 | 20,000 | 14,500 | ||||||
HBOS PLC 6.75% 20184 | 26,925 | 23,007 | ||||||
LBG Capital No.1 PLC, Series 2, 7.875% 20204 | 29,490 | 21,675 | ||||||
Lloyds TSB Bank PLC 6.375% 2021 | 1,250 | 1,236 | ||||||
HBOS PLC 6.00% 20334 | 17,185 | 11,154 | ||||||
Lloyds Banking Group PLC, junior subordinated 6.657% preference shares (undated)1,4,9 | 5,000 | 2,530 | ||||||
Host Marriott, LP, Series O, 6.375% 2015 | 10,725 | 10,725 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 18,325 | 18,417 | ||||||
Host Hotels & Resorts LP 9.00% 2017 | 3,850 | 4,177 | ||||||
Host Hotels & Resorts LP 5.875% 20194 | 16,100 | 15,456 | ||||||
Host Hotels & Resorts LP 6.00% 2020 | 4,000 | 3,910 | ||||||
Rouse Co. 7.20% 2012 | 12,145 | 12,509 | ||||||
Rouse Co. 5.375% 2013 | 22,130 | 22,019 | ||||||
Rouse Co. 6.75% 20134 | 17,950 | 18,152 | ||||||
MetLife Capital Trust IV, junior subordinated 7.875% 20671,4 | 14,950 | 14,801 | ||||||
MetLife Capital Trust X, junior subordinated 9.25% 20681,4 | 22,500 | 25,425 | ||||||
MetLife Inc., junior subordinated 10.75% 20691 | 7,000 | 8,771 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 2,470 | 2,469 | ||||||
Developers Diversified Realty Corp. 9.625% 2016 | 20,326 | 23,054 | ||||||
Developers Diversified Realty Corp. 7.50% 2017 | 9,940 | 10,511 | ||||||
Developers Diversified Realty Corp. 7.875% 2020 | 6,040 | 6,417 | ||||||
Ford Motor Credit Co. 7.25% 2011 | 8,000 | 8,010 | ||||||
Ford Motor Credit Co. 8.70% 2014 | 2,000 | 2,166 | ||||||
Ford Motor Credit Co. 5.625% 2015 | 2,000 | 2,018 | ||||||
Ford Motor Credit Co. 7.00% 2015 | 6,000 | 6,315 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 13,950 | 15,267 | ||||||
Ford Motor Credit Co. 6.625% 2017 | 5,150 | 5,373 | ||||||
Royal Bank of Scotland Group PLC 5.05% 2015 | 3,581 | 3,331 | ||||||
Royal Bank of Scotland Group PLC 4.70% 2018 | 18,909 | 15,373 | ||||||
RBS Capital Trust II 6.425% noncumulative trust1,9 | 24,535 | 11,900 | ||||||
Royal Bank of Scotland Group PLC, junior subordinated 6.99% (undated)1,4,9 | 10,755 | 6,883 | ||||||
Hospitality Properties Trust 7.875% 2014 | 4,090 | 4,444 | ||||||
Hospitality Properties Trust 5.125% 2015 | 4,410 | 4,480 | ||||||
Hospitality Properties Trust 6.30% 2016 | 5,940 | 6,167 | ||||||
Hospitality Properties Trust 5.625% 2017 | 8,870 | 9,022 | ||||||
Hospitality Properties Trust 6.70% 2018 | 9,595 | 10,285 | ||||||
Prologis, Inc. 7.625% 2014 | 3,000 | 3,272 | ||||||
Prologis, Inc. 6.25% 2017 | 2,750 | 2,883 | ||||||
Prologis, Inc. 6.625% 2018 | 8,570 | 8,908 | ||||||
Prologis, Inc. 7.375% 2019 | 7,120 | 7,723 | ||||||
Prologis, Inc. 6.875% 2020 | 6,580 | 6,884 | ||||||
Zions Bancorporation 5.65% 2014 | 6,115 | 6,245 | ||||||
Zions Bancorporation 7.75% 2014 | 5,530 | 5,836 | ||||||
Zions Bancorporation 6.00% 2015 | 17,002 | 17,181 | ||||||
Catlin Insurance Ltd., junior subordinated 7.249% (undated)1,4 | 30,275 | 26,264 | ||||||
International Lease Finance Corp. 5.00% 2012 | 3,525 | 3,463 | ||||||
International Lease Finance Corp., Series R, 6.375% 2013 | 1,000 | 978 | ||||||
International Lease Finance Corp. 8.625% 2015 | 13,430 | 13,380 | ||||||
International Lease Finance Corp. 5.75% 2016 | 9,000 | 8,012 | ||||||
Lazard Group LLC 7.125% 2015 | 22,000 | 24,330 | ||||||
Genworth Financial, Inc. 7.625% 2021 | 14,935 | 12,909 | ||||||
Genworth Financial, Inc., junior subordinated 6.15% 20661 | 22,500 | 11,363 | ||||||
Barclays Bank PLC 5.14% 2020 | 5,000 | 4,067 | ||||||
Barclays Bank PLC, junior subordinated 7.434% (undated)1,4 | 21,226 | 17,511 | ||||||
Synovus Financial Corp. 4.875% 2013 | 3,355 | 3,137 | ||||||
Synovus Financial Corp. 5.125% 2017 | 19,612 | 16,670 | ||||||
Unum Group 7.125% 2016 | 12,425 | 14,342 | ||||||
Unum Group 5.625% 2020 | 1,155 | 1,276 | ||||||
ACE Cash Express, Inc. 11.00% 20194 | 17,300 | 15,440 | ||||||
Wells Fargo & Co., Series K, junior subordinated 7.98% (undated)1 | 13,810 | 14,293 | ||||||
Associated Banc-Corp 5.125% 2016 | 12,700 | 13,236 | ||||||
NASDAQ OMX Group, Inc. 5.25% 2018 | 12,250 | 12,999 | ||||||
Community Choice Financial 10.75% 20194 | 9,825 | 9,579 | ||||||
BBVA Bancomer SA, junior subordinated 7.25% 20204 | 2,805 | 2,742 | ||||||
BBVA Bancomer SA 6.50% 20214 | 7,200 | 6,714 | ||||||
JPMorgan Chase & Co., Series I, junior subordinated 7.90% (undated)1 | 8,770 | 9,063 | ||||||
XL Capital Ltd., Series E, junior subordinated 6.50% (undated)1 | 11,250 | 8,944 | ||||||
Brandywine Operating Partnership, LP 7.50% 2015 | 7,000 | 7,593 | ||||||
Capital One Capital V 10.25% 2039 | 7,170 | 7,322 | ||||||
HSBK (Europe) BV 7.25% 20214 | 8,545 | 7,122 | ||||||
QBE Capital Funding III LP 7.25% 20411,4 | 7,650 | 6,935 | ||||||
Société Générale 5.75% 20164 | 6,000 | 5,456 | ||||||
Banco Mercantil del Norte, SA 6.135% 20161,4 | 3,500 | 3,469 | ||||||
Banco Mercantil del Norte, SA, junior subordinated 6.862% 20211,4 | 2,000 | 1,980 | ||||||
VEB Finance Ltd. 6.902% 20204 | 4,950 | 4,876 | ||||||
Banco de Crédito del Perú 5.375% 20204 | 5,000 | 4,775 | ||||||
The Export-Import Bank of Korea 4.375% 2021 | 2,900 | 2,750 | ||||||
Banco del Estado de Chile 4.125% 20204 | 2,500 | 2,511 | ||||||
Allstate Corp., Series B, junior subordinated 6.125% 20671 | 2,530 | 2,283 | ||||||
Ally Financial Inc. 6.875% 2012 | 1,468 | 1,499 | ||||||
Development Bank of Kazakhstan 5.50% 20154 | 1,475 | 1,412 | ||||||
1,728,213 | ||||||||
INDUSTRIALS — 9.91% | ||||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.146% 20141,2,3 | 9,456 | 6,564 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 2.369% 20141,2,3 | 156,753 | 108,808 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.50% 20141,2,3 | 22,071 | 19,257 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 2015 | 8,045 | 3,459 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.875% 20151,7 | 54,450 | 23,005 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 2017 | 3,125 | 1,031 | ||||||
Ply Gem Industries, Inc. 13.125% 2014 | 13,415 | 12,795 | ||||||
Ply Gem Industries, Inc. 8.25% 2018 | 142,150 | 116,563 | ||||||
US Investigations Services, Inc., Term Loan B, 2.981% 20151,2,3 | 6,544 | 5,955 | ||||||
US Investigations Services, Inc., Term Loan B, 7.75% 20151,2,3 | 53,773 | 52,787 | ||||||
US Investigations Services, Inc. 10.50% 20154 | 48,330 | 45,189 | ||||||
US Investigations Services, Inc. 11.75% 20164 | 17,700 | 16,372 | ||||||
CEVA Group PLC, Bridge Loan, 9.75% 20151,2,3,8 | 56,263 | 36,571 | ||||||
CEVA Group PLC 11.625% 20164 | 16,330 | 16,044 | ||||||
CEVA Group PLC 8.375% 20174 | 25,775 | 23,971 | ||||||
CEVA Group PLC 11.50% 20184 | 37,657 | 34,833 | ||||||
ARAMARK Corp. 3.754% 20151 | 28,570 | 26,570 | ||||||
ARAMARK Corp. 8.50% 2015 | 51,370 | 52,269 | ||||||
ARAMARK Corp. 8.625% 20164,7 | 23,800 | 23,562 | ||||||
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017 | 121,680 | 99,169 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 5.26% 20141,2,3 | 7,855 | 7,413 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 5.26% 20141,2,3 | 7,528 | 7,104 | ||||||
DAE Aviation Holdings, Inc. 11.25% 20154 | 80,629 | 81,838 | ||||||
Nortek Inc. 10.00% 20184,10 | 50,485 | 46,951 | ||||||
Nortek Inc. 8.50% 20214,10 | 51,015 | 41,322 | ||||||
Continental Airlines, Inc. 8.75% 2011 | 2,450 | 2,459 | ||||||
United Air Lines, Inc., Term Loan B, 2.25% 20141,2,3 | 29,318 | 27,974 | ||||||
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20062,8,9 | 1,135 | — | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20172 | 2,370 | 2,344 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20182 | 4,123 | 3,876 | ||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20182 | 3,355 | 3,263 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20192 | 4,345 | 4,443 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20192 | 1,061 | 1,047 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20202 | 3,305 | 3,316 | ||||||
Continental Airlines, Inc., Series 1999-1, Class B, 6.795% 20202 | 739 | 711 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20202 | 10,587 | 10,217 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20212,4 | 8,271 | 7,599 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20222 | 4,585 | 4,608 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20222 | 2,487 | 2,579 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20222 | 288 | 304 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20222 | 5,655 | 5,549 | ||||||
United Air Lines, Inc., Series 2007-1, Class A, 6.636% 20242 | 2,722 | 2,639 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 21,562 | 21,885 | ||||||
Esterline Technologies Corp. 7.00% 2020 | 44,360 | 45,802 | ||||||
Northwest Airlines, Inc., Term Loan B, 3.87% 20131,2,3 | 7,932 | 7,734 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-2, MBIA insured, 6.417% 20142 | 8,113 | 8,204 | ||||||
Delta Air Lines, Inc., Series 2010-B, Class 2-B, 6.75% 20152,4 | 7,650 | 7,153 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.12% 20181,2,3 | 9,430 | 8,676 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20242 | 28,993 | 28,558 | ||||||
Euramax International, Inc. 9.50% 20164 | 65,835 | 52,833 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 2,557 | 2,915 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 6,492 | 7,401 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20172,3,8 | 28,000 | 30,240 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 7.75% 2018 | 9,700 | 9,942 | ||||||
Navios Maritime Acquisition Corporation and Navios Acquisition Finance (US) Inc. 8.625% 2017 | 34,840 | 29,179 | ||||||
Navios Maritime Holdings Inc. 8.125% 20194 | 21,275 | 17,871 | ||||||
Navios South American Logistics Inc. 9.25% 20194 | 3,225 | 2,830 | ||||||
Ashtead Capital, Inc. 9.00% 20164 | 48,955 | 48,710 | ||||||
TransDigm Inc. 7.75% 2018 | 46,445 | 47,490 | ||||||
RBS Global, Inc. and Rexnord LLC 11.75% 2016 | 3,525 | 3,613 | ||||||
RBS Global, Inc. and Rexnord LLC 8.50% 2018 | 39,800 | 38,308 | ||||||
JELD-WEN Escrow Corp. 12.25% 20174 | 38,625 | 38,046 | ||||||
AMR Corp. 9.00% 2012 | 16,155 | 15,266 | ||||||
American Airlines, Inc., Series 2001-2, Class A-2, 7.858% 20132 | 1,300 | 1,300 | ||||||
AMR Corp. 9.00% 2016 | 1,475 | 1,283 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20192 | 6,428 | 4,339 | ||||||
AMR Corp. 9.88% 2020 | 1,275 | 1,026 | ||||||
AMR Corp. 9.80% 2021 | 2,555 | 2,057 | ||||||
AMR Corp. 10.00% 2021 | 9,000 | 7,245 | ||||||
H&E Equipment Services, Inc. 8.375% 2016 | 22,775 | 21,978 | ||||||
Baker Corp. 8.25% 20194 | 14,400 | 13,032 | ||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 9.50% 2014 | 2,960 | 2,960 | ||||||
RSC Equipment Rental, Inc. and RSC Holdings III, LLC 8.25% 2021 | 11,125 | 9,679 | ||||||
Manitowoc Company, Inc. 8.50% 2020 | 12,975 | 11,807 | ||||||
RailAmerica, Inc. 9.25% 2017 | 10,253 | 11,150 | ||||||
Kansas City Southern Railway Co. 8.00% 2015 | 10,392 | 11,106 | ||||||
Sequa Corp., Term Loan B, 3.50% 20141,2,3 | 6,469 | 6,113 | ||||||
CMA CGM 8.50% 20174 | 12,800 | 5,248 | ||||||
Odebrecht Finance Ltd 6.00% 20234 | 4,800 | 4,512 | ||||||
Florida East Coast Railway Corp. 8.125% 2017 | 3,950 | 3,851 | ||||||
1,583,672 | ||||||||
HEALTH CARE — 8.51% | ||||||||
Elan Finance PLC and Elan Finance Corp. 8.875% 2013 | 90,830 | 94,009 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | 115,660 | 120,286 | ||||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | 45,885 | 48,294 | ||||||
VWR Funding, Inc., Series B, 10.25% 20151,7 | 138,533 | 137,841 | ||||||
Quintiles, Term Loan B, 5.00% 20181,2,3 | 137,176 | 129,431 | ||||||
PTS Acquisition Corp. 9.50% 20151,7 | 120,218 | 110,300 | ||||||
PTS Acquisition Corp. 9.75% 2017 | € | 15,140 | 15,314 | |||||
Tenet Healthcare Corp. 7.375% 2013 | $ | 51,295 | 51,808 | |||||
Tenet Healthcare Corp. 9.25% 2015 | 48,935 | 49,180 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 64,975 | 65,462 | ||||||
HCA Inc. 6.375% 2015 | 21,730 | 21,241 | ||||||
HCA Inc., Term Loan B2, 3.619% 20171,2,3 | 7,015 | 6,620 | ||||||
HCA Inc. 6.50% 2020 | 5,000 | 4,900 | ||||||
HCA Inc. 7.875% 2020 | 5,050 | 5,252 | ||||||
HCA Inc. 7.50% 2022 | 25,300 | 23,403 | ||||||
Symbion Inc 8.00% 20164 | 64,460 | 58,336 | ||||||
Alkermes, Inc., Term Loan B, 6.75% 20171,2,3 | 36,975 | 36,236 | ||||||
Alkermes, Inc., Term Loan B, 9.50% 20181,2,3 | 19,930 | 19,731 | ||||||
Patheon Inc. 8.625% 20174 | 63,911 | 54,644 | ||||||
inVentiv Health Inc. 10.00% 20184 | 51,720 | 45,772 | ||||||
inVentiv Health Inc. 10.00% 20184 | 2,305 | 2,040 | ||||||
Surgical Care Affiliates, Inc. 8.875% 20151,4,7 | 28,684 | 27,823 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20174 | 19,430 | 18,556 | ||||||
Merge Healthcare Inc 11.75% 2015 | 27,425 | 27,974 | ||||||
Merge Healthcare Inc. 11.75% 20154 | 14,075 | 14,357 | ||||||
Grifols Inc 8.25% 20184 | 36,790 | 36,974 | ||||||
Rotech Healthcare Inc. 10.50% 2018 | 41,455 | 33,682 | ||||||
Centene Corp. 5.75% 2017 | 30,320 | 29,752 | ||||||
Multiplan Inc. 9.875% 20184 | 25,990 | 25,860 | ||||||
Boston Scientific Corp. 6.00% 2020 | 12,086 | 13,589 | ||||||
ConvaTec Healthcare 10.50% 20184 | 13,100 | 11,594 | ||||||
Accellent Inc. 8.375% 2017 | 7,500 | 7,181 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 20194 | 1,960 | 1,977 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 20204 | 3,500 | 3,526 | ||||||
DJO Finance LLC and DJO Finance Corp. 7.75% 20184 | 3,900 | 3,354 | ||||||
Health Management Associates, Inc. 6.125% 2016 | 3,000 | 2,962 | ||||||
Vanguard Health Systems Inc. 0% 2016 | 1,235 | 809 | ||||||
1,360,070 | ||||||||
INFORMATION TECHNOLOGY — 7.09% | ||||||||
First Data Corp., Term Loan B2, 2.985% 20141,2,3 | 69,455 | 60,535 | ||||||
First Data Corp. 9.875% 2015 | 20,387 | 17,074 | ||||||
First Data Corp. 9.875% 2015 | 1,046 | 881 | ||||||
First Data Corp. 10.55% 20157 | 27,235 | 22,809 | ||||||
First Data Corp. 11.25% 2016 | 69,385 | 47,182 | ||||||
First Data Corp. 7.375% 20194 | 5,000 | 4,462 | ||||||
First Data Corp. 8.25% 20214 | 79,972 | 63,578 | ||||||
First Data Corp. 12.625% 20214 | 190,117 | 141,637 | ||||||
First Data Corp. 8.75% 20221,4,7 | 106,127 | 84,371 | ||||||
Freescale Semiconductor, Inc., Term Loan, 4.472% 20161,2,3 | 19,735 | 18,131 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 87,627 | 89,599 | ||||||
Freescale Semiconductor, Inc. 9.25% 20184 | 44,725 | 46,179 | ||||||
Freescale Semiconductor, Inc. 10.125% 20184 | 42,186 | 44,084 | ||||||
NXP BV and NXP Funding LLC 2.999% 20131 | 2,434 | 2,364 | ||||||
NXP BV and NXP Funding LLC 4.355% 20131,2 | € | 2,948 | 3,792 | |||||
NXP BV and NXP Funding LLC 10.00% 20136 | $ | 77,049 | 85,428 | |||||
NXP BV and NXP Funding LLC 8.625% 2015 | € | 7,275 | 10,039 | |||||
NXP BV and NXP Funding LLC 9.75% 20184 | $ | 55,650 | 58,433 | |||||
SRA International, Inc., Term Loan B, 6.50% 20181,2,3 | 54,250 | 50,272 | ||||||
Sterling Merger Inc. 11.00% 20194 | 60,220 | 57,510 | ||||||
Blackboard Inc., Term Loan B, 7.50% 20181,2,3 | 76,925 | 71,694 | ||||||
SunGard Data Systems Inc. 10.625% 2015 | 6,250 | 6,547 | ||||||
SunGard Data Systems Inc. 7.375% 2018 | 14,900 | 13,931 | ||||||
SunGard Data Systems Inc. 7.625% 2020 | 23,484 | 21,958 | ||||||
EH Holding Corp. 6.50% 20194 | 4,500 | 4,354 | ||||||
EH Holding Corp. 7.625% 20214 | 23,825 | 23,051 | ||||||
Serena Software, Inc. 10.375% 2016 | 24,540 | 25,153 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 11,915 | 13,553 | ||||||
Jabil Circuit, Inc. 5.625% 2020 | 6,000 | 5,880 | ||||||
Advanced Micro Devices, Inc. 8.125% 2017 | 11,050 | 11,105 | ||||||
Advanced Micro Devices, Inc. 7.75% 2020 | 3,750 | 3,694 | ||||||
Sanmina-SCI Corp. 3.097% 20141,4 | 3,105 | 2,981 | ||||||
Sanmina-SCI Corp. 8.125% 2016 | 11,466 | 11,609 | ||||||
Ceridian Corp. 11.25% 2015 | 11,000 | 9,130 | ||||||
1,133,000 | ||||||||
MATERIALS — 5.29% | ||||||||
Reynolds Group 8.50% 20164 | 52,340 | 52,733 | ||||||
Reynolds Group 8.75% 20184 | 34,685 | 29,482 | ||||||
Reynolds Group 7.125% 20194 | 15,495 | 14,488 | ||||||
Reynolds Group 7.875% 20194 | 35,840 | 34,765 | ||||||
Reynolds Group 9.00% 20194 | 22,570 | 19,297 | ||||||
Reynolds Group 9.875% 20194 | 80,890 | 71,588 | ||||||
Georgia Gulf Corp. 10.75% 201610 | 5,388 | 5,630 | ||||||
Georgia Gulf Corp. 9.00% 20174,10 | 92,490 | 93,877 | ||||||
Ardagh Packaging Finance 7.375% 2017 | € | 17,870 | 22,415 | |||||
Ardagh Packaging Finance 7.375% 20174 | $ | 7,180 | 6,893 | |||||
Ardagh Packaging Finance 11.125% 20184,7 | 11,765 | 9,174 | ||||||
Ardagh Packaging Finance 9.125% 20204 | 5,715 | 5,172 | ||||||
Ardagh Packaging Finance 9.25% 2020 | € | 12,860 | 13,503 | |||||
Ball Corp. 7.125% 2016 | $ | 15,285 | 16,126 | |||||
Ball Corp. 6.75% 2020 | 4,885 | 5,080 | ||||||
Ball Corp. 5.75% 2021 | 21,080 | 20,606 | ||||||
MacDermid 9.50% 20174 | 44,766 | 41,632 | ||||||
Smurfit Kappa Acquisition 7.75% 2019 | € | 11,610 | 14,932 | |||||
Smurfit Capital Funding PLC 7.50% 2025 | $ | 25,515 | 23,346 | |||||
Packaging Dynamics Corp. 8.75% 20164 | 34,325 | 33,810 | ||||||
Nalco Co. 8.25% 2017 | 26,500 | 29,017 | ||||||
Nalco Co. 6.625% 20194 | 3,000 | 3,300 | ||||||
Newpage Corp. 11.375% 2014 | 41,050 | 30,685 | ||||||
Consolidated Minerals Ltd. 8.875% 20164 | 33,060 | 28,349 | ||||||
JMC Steel Group Inc. 8.25% 20184 | 28,400 | 26,838 | ||||||
CEMEX Finance LLC 9.50% 20164 | 18,150 | 13,340 | ||||||
CEMEX Finance LLC 9.50% 2016 | 6,850 | 5,035 | ||||||
CEMEX SA 9.25% 20204 | 7,635 | 5,039 | ||||||
Graphic Packaging International, Inc. 9.50% 2017 | 11,715 | 12,594 | ||||||
Graphic Packaging International, Inc. 7.875% 2018 | 8,965 | 9,234 | ||||||
International Paper Co. 7.95% 2018 | 17,575 | 20,347 | ||||||
Mirabela Nickel Ltd. 8.75% 20184 | 21,025 | 17,135 | ||||||
Sappi Papier Holding GmbH 6.625% 2018 | € | 5,850 | 6,388 | |||||
Sappi Papier Holding GmbH 6.625% 20214 | $ | 12,245 | 10,469 | |||||
Rockwood Specialties Group, Inc. 7.50% 2014 | 5,840 | 5,913 | ||||||
Rockwood Specialties Group, Inc. 7.625% 2014 | € | 8,035 | 10,539 | |||||
FMG Resources 7.00% 20154 | $ | 16,475 | 15,404 | |||||
Freeport-McMoRan Copper & Gold Inc. 8.375% 2017 | 12,175 | 13,072 | ||||||
Fibria Overseas Finance Ltd. 6.75% 20214 | 13,400 | 12,127 | ||||||
Berry Plastics Corp. 9.50% 2018 | 12,665 | 10,829 | ||||||
OMNOVA Solutions Inc. 7.875% 2018 | 12,800 | 10,432 | ||||||
LBI Escrow Corp 8.00% 20174 | 7,307 | 7,910 | ||||||
ArcelorMittal 6.75% 2041 | 5,400 | 4,690 | ||||||
Solutia Inc. 8.75% 2017 | 1,565 | 1,675 | ||||||
844,910 | ||||||||
ENERGY — 3.88% | ||||||||
Petroplus Finance Ltd. 6.75% 20144 | 75,767 | 66,296 | ||||||
Petroplus Finance Ltd. 7.00% 20174 | 107,488 | 87,603 | ||||||
Petroplus Finance Ltd. 9.375% 20194 | 32,210 | 27,701 | ||||||
Arch Coal, Inc. 8.75% 2016 | 7,560 | 8,051 | ||||||
Arch Coal, Inc. 7.00% 20194 | 34,150 | 32,613 | ||||||
Arch Coal, Inc. 7.25% 20214 | 40,400 | 39,087 | ||||||
Laredo Petroleum, Inc. 9.50% 20194 | 59,850 | 63,142 | ||||||
Energy Transfer Partners, LP 7.50% 2020 | 39,325 | 40,603 | ||||||
CONSOL Energy Inc. 8.00% 2017 | 24,690 | 25,925 | ||||||
CONSOL Energy Inc. 8.25% 2020 | 8,850 | 9,359 | ||||||
Alpha Natural Resources, Inc. 6.00% 2019 | 30,375 | 28,477 | ||||||
TransCanada PipeLines Ltd., junior subordinated 6.35% 20671 | 19,950 | 19,901 | ||||||
QGOG Atlantic/Alaskan Rigs Ltd. 5.25% 20182,4 | 20,250 | 18,428 | ||||||
Teekay Corp. 8.50% 2020 | 19,135 | 18,417 | ||||||
Odebrecht Drilling Norbe VIII/IX Ltd 6.35% 20212,4 | 17,370 | 17,370 | ||||||
Overseas Shipholding Group, Inc. 8.125% 2018 | 20,725 | 17,305 | ||||||
Denbury Resources Inc. 9.75% 2016 | 7,400 | 8,029 | ||||||
Denbury Resources Inc. 8.25% 2020 | 6,088 | 6,423 | ||||||
Pemex Project Funding Master Trust 5.75% 2018 | 5,850 | 6,391 | ||||||
Pemex Project Funding Master Trust, Series 13, 6.625% 2035 | 6,500 | 7,036 | ||||||
Enterprise Products Operating LLC 7.00% 20671 | 10,055 | 9,711 | ||||||
Concho Resources Inc. 8.625% 2017 | 3,300 | 3,514 | ||||||
Concho Resources Inc. 7.00% 2021 | 4,400 | 4,400 | ||||||
Continental Resources Inc. 8.25% 2019 | 1,800 | 1,935 | ||||||
Continental Resources Inc. 7.375% 2020 | 700 | 728 | ||||||
Continental Resources Inc. 7.125% 2021 | 5,000 | 5,075 | ||||||
Enbridge Energy Partners, LP, junior subordinated 8.05% 20771 | 7,220 | 7,469 | ||||||
Petrobras International 5.75% 2020 | 2,780 | 2,913 | ||||||
Petrobras International 6.875% 2040 | 4,130 | 4,398 | ||||||
General Maritime Corp. 12.00% 2017 | 19,450 | 7,051 | ||||||
Regency Energy Partners LP and Regency Energy Finance Corp. 6.50% 2021 | 5,750 | 5,807 | ||||||
Forest Oil Corp. 8.50% 2014 | 1,500 | 1,594 | ||||||
Forest Oil Corp. 7.25% 2019 | 4,000 | 3,960 | ||||||
Gazprom OJSC 5.092% 20154 | 2,340 | 2,317 | ||||||
Gazprom OJSC, Series 9, 6.51% 2022 | 1,075 | 1,056 | ||||||
Gazprom OJSC 7.288% 20374 | 1,800 | 1,762 | ||||||
Reliance Holdings Ltd. 6.25% 20404 | 5,000 | 4,476 | ||||||
El Paso Pipeline Partners Operating Co., LLC 5.00% 2021 | 2,105 | 2,122 | ||||||
Anadarko Petroleum Corp. 6.20% 2040 | 1,500 | 1,571 | ||||||
620,016 | ||||||||
CONSUMER STAPLES — 3.84% | ||||||||
SUPERVALU INC. 7.50% 2012 | 3,860 | 3,947 | ||||||
Albertson’s, Inc. 7.25% 2013 | 4,990 | 4,965 | ||||||
SUPERVALU INC. 7.50% 2014 | 25,950 | 25,561 | ||||||
SUPERVALU INC. 8.00% 2016 | 81,860 | 77,767 | ||||||
Albertson’s, Inc. 7.45% 2029 | 2,684 | 2,026 | ||||||
Albertson’s, Inc. 8.00% 2031 | 26,420 | 21,004 | ||||||
Rite Aid Corp. 9.75% 2016 | 22,200 | 23,532 | ||||||
Rite Aid Corp. 10.375% 2016 | 13,700 | 14,077 | ||||||
Rite Aid Corp. 10.25% 2019 | 30,345 | 31,786 | ||||||
Rite Aid Corp. 8.00% 2020 | 41,150 | 43,105 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 37,765 | 38,709 | ||||||
Stater Bros. Holdings Inc. 7.375% 2018 | 19,175 | 19,654 | ||||||
C&S Group Enterprises LLC 8.375% 20174 | 55,870 | 56,429 | ||||||
Tops Holding Corp. and Tops Markets, LLC. 10.125% 2015 | 51,959 | 52,219 | ||||||
Ingles Markets, Inc. 8.875% 2017 | 38,775 | 40,811 | ||||||
BFF International Ltd. 7.25% 20204 | 28,950 | 30,470 | ||||||
Smithfield Foods, Inc., Series B, 7.75% 2013 | 2,776 | 2,880 | ||||||
Smithfield Foods, Inc. 10.00% 2014 | 12,799 | 14,591 | ||||||
Smithfield Foods, Inc. 7.75% 2017 | 9,350 | 9,654 | ||||||
Cott Beverages Inc. 8.375% 2017 | 8,700 | 8,918 | ||||||
Cott Beverages Inc. 8.125% 2018 | 13,325 | 13,658 | ||||||
Tyson Foods, Inc. 10.50% 2014 | 16,525 | 19,169 | ||||||
Spectrum Brands Inc. 9.50% 2018 | 12,175 | 13,027 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 4,650 | 5,127 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 6,500 | 6,857 | ||||||
Del Monte Foods Co. 7.625% 20194 | 11,875 | 10,094 | ||||||
CEDC Finance Corp. 9.125% 20164 | 11,500 | 8,337 | ||||||
TreeHouse Foods, Inc. 7.75% 2018 | 7,400 | 7,677 | ||||||
Pilgrim’s Pride Corp. 7.875% 20184 | 10,000 | 7,675 | ||||||
613,726 | ||||||||
UTILITIES — 3.10% | ||||||||
Edison Mission Energy 7.50% 2013 | 40,575 | 37,938 | ||||||
Edison Mission Energy 7.75% 2016 | 12,825 | 8,657 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20162 | 30,982 | 31,137 | ||||||
Edison Mission Energy 7.00% 2017 | 23,995 | 14,397 | ||||||
Edison Mission Energy 7.20% 2019 | 38,950 | 22,396 | ||||||
Homer City Funding LLC 8.734% 20262 | 7,792 | 6,584 | ||||||
Edison Mission Energy 7.625% 2027 | 32,830 | 18,221 | ||||||
TXU, Term Loan, 3.726% 20141,2,3 | 9,397 | 6,674 | ||||||
TXU, Term Loan, 4.772% 20171,2,3 | 84,978 | 57,028 | ||||||
Texas Competitive Electric Holdings Co. LLC, 11.50% 20204 | 44,925 | 36,165 | ||||||
Intergen Power 9.00% 20174 | 71,950 | 73,569 | ||||||
AES Corp. 7.75% 2015 | 5,575 | 5,686 | ||||||
AES Corp. 8.00% 2017 | 34,000 | 34,340 | ||||||
AES Corp. 8.00% 2020 | 16,300 | 16,382 | ||||||
AES Corp. 7.375% 20214 | 5,775 | 5,699 | ||||||
NRG Energy, Inc. 7.375% 2017 | 42,835 | 44,388 | ||||||
NRG Energy, Inc. 8.25% 2020 | 6,000 | 5,700 | ||||||
Nevada Power Co., General and Refunding Mortgage Notes, Series I, 6.50% 2012 | 525 | 539 | ||||||
Sierra Pacific Resources 6.75% 2017 | 14,385 | 14,616 | ||||||
NV Energy, Inc 6.25% 2020 | 22,150 | 23,263 | ||||||
CMS Energy Corp. 8.75% 2019 | 18,425 | 21,591 | ||||||
CMS Energy Corp. 6.25% 2020 | 2,700 | 2,800 | ||||||
Enersis SA 7.375% 2014 | 5,000 | 5,474 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20174 | 2,000 | 2,222 | ||||||
495,466 | ||||||||
Total corporate bonds, notes & loans | 14,119,154 | |||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 2.57% | ||||||||
Brazil (Federal Republic of) 10.00% 2017 | BRL35,620 | 17,846 | ||||||
Brazil (Federal Republic of) 6.00% 201711 | 24,499 | 13,573 | ||||||
Brazil (Federal Republic of) Global 8.00% 20182 | $ | 2,954 | 3,497 | |||||
Brazil (Federal Republic of) Global 4.875% 2021 | 3,100 | 3,329 | ||||||
Brazil (Federal Republic of) Global 10.25% 2028 | BRL15,000 | 8,416 | ||||||
Brazil (Federal Republic of) Global 7.125% 2037 | $ | 2,500 | 3,206 | |||||
Brazil (Federal Republic of) 6.00% 204511 | BRL20,432 | 11,465 | ||||||
Turkey (Republic of) 16.00% 2012 | TRY 8,000 | 4,455 | ||||||
Turkey (Republic of) 4.00% 201511 | 22,903 | 13,219 | ||||||
Turkey (Republic of) 10.00% 2015 | 15,100 | 8,491 | ||||||
Turkey (Republic of) 7.50% 2017 | $ | 9,700 | 11,082 | |||||
Turkey (Republic of) 6.75% 2018 | 3,250 | 3,595 | ||||||
Turkey (Republic of) 6.75% 2040 | 2,500 | 2,619 | ||||||
Colombia (Republic of) Global 10.00% 2012 | 1,500 | 1,539 | ||||||
Colombia (Republic of) Global 10.75% 2013 | 3,800 | 4,228 | ||||||
Colombia (Republic of) Global 8.25% 2014 | 4,000 | 4,726 | ||||||
Colombia (Republic of) Global 12.00% 2015 | COP19,150,000 | 12,080 | ||||||
Colombia (Republic of) Global 11.75% 2020 | $ | 1,936 | 2,977 | |||||
Colombia (Republic of) Global 7.75% 2021 | COP 1,780,000 | 996 | ||||||
Colombia (Republic of) Global 9.85% 2027 | 12,085,000 | 7,905 | ||||||
Colombia (Republic of) Global 10.375% 2033 | $ | 823 | 1,325 | |||||
Colombia (Republic of) Global 7.375% 2037 | 4,139 | 5,428 | ||||||
United Mexican States Government, Series MI10, 9.50% 2014 | MXN 80,000 | 6,539 | ||||||
United Mexican States Government, Series M20, 10.00% 2024 | 106,500 | 9,813 | ||||||
United Mexican States Government Global, Series A, 6.75% 2034 | $ | 6,105 | 7,540 | |||||
United Mexican States Government, Series M30, 10.00% 2036 | MXN47,000 | 4,232 | ||||||
United Mexican States Government 4.00% 204011 | 92,484 | 6,974 | ||||||
Polish Government, Series 0414, 5.75% 2014 | PLN51,554 | 15,960 | ||||||
Polish Government, Series 1017, 5.25% 2017 | 2,050 | 610 | ||||||
Polish Government 6.375% 2019 | $ | 3,535 | 3,897 | |||||
Polish Government 5.125% 2021 | 14,225 | 14,225 | ||||||
Russian Federation 7.85% 2018 | RUB160,000 | 4,891 | ||||||
Russian Federation 7.85% 2018 | 115,000 | 3,515 | ||||||
Russian Federation 5.00% 2020 | $ | 2,100 | 2,068 | |||||
Russian Federation 12.75% 2028 | 2,000 | 3,315 | ||||||
Russian Federation 7.50% 20302 | 15,536 | 17,527 | ||||||
Argentina (Republic of) 0.055% 20121,2 | 16,240 | 1,914 | ||||||
Argentina (Republic of) 7.00% 2015 | 9,560 | 7,981 | ||||||
Argentina (Republic of) 8.28% 20332,7 | 6,455 | 4,454 | ||||||
Argentina (Republic of) GDP-Linked 2035 | 77,377 | 10,833 | ||||||
Uruguay (Republic of) 5.00% 201811 | UYU276,007 | 14,110 | ||||||
Uruguay (Republic of) 4.25% 20272,11 | 164,795 | 8,022 | ||||||
Venezuela (Republic of) 10.75% 2013 | $ | 6,000 | 5,925 | |||||
Venezuela (Republic of) 8.50% 2014 | 1,250 | 1,106 | ||||||
Venezuela (Republic of) 7.65% 2025 | 8,455 | 4,819 | ||||||
Venezuela (Republic of) 9.25% 2027 | 9,795 | 6,269 | ||||||
Venezuela (Republic of) 9.25% 2028 | 2,390 | 1,482 | ||||||
Indonesia (Republic of) 10.375% 2014 | 1,800 | 2,110 | ||||||
Indonesia (Republic of), Series 30, 10.75% 2016 | IDR20,135,000 | 2,697 | ||||||
Indonesia (Republic of) 6.875% 20174 | $ | 1,000 | 1,130 | |||||
Indonesia (Republic of) 6.875% 2018 | 5,000 | 5,638 | ||||||
Indonesia (Republic of) 6.875% 20184 | 3,725 | 4,200 | ||||||
Indonesia (Republic of) 6.625% 20374 | 2,500 | 2,819 | ||||||
Panama (Republic of) Global 7.125% 2026 | 585 | 735 | ||||||
Panama (Republic of) Global 8.875% 2027 | 6,500 | 9,328 | ||||||
Panama (Republic of) Global 6.70% 20362 | 6,440 | 7,825 | ||||||
South Korean Government 5.00% 2014 | KRW11,325,000 | 9,987 | ||||||
South Korean Government 5.50% 2017 | 2,800,000 | 2,605 | ||||||
Croatian Government 6.75% 20194 | $ | 9,400 | 9,104 | |||||
Croatian Government 6.375% 20214 | 2,810 | 2,597 | ||||||
Dominican Republic 7.50% 20212,4 | 10,000 | 9,850 | ||||||
Philippines (Republic of) 6.25% 2036 | PHP293,000 | 6,350 | ||||||
Hungarian Government, Series 17/B, 6.75% 2017 | HUF1,012,000 | 4,450 | ||||||
Chilean Government 5.50% 2020 | CLP1,790,000 | 3,644 | ||||||
Peru (Republic of) 7.125% 2019 | $ | 2,945 | 3,560 | |||||
Corporación Andina de Fomento 5.75% 2017 | 3,000 | 3,287 | ||||||
Sri Lanka (Republic of) 6.25% 20214 | 3,300 | 3,179 | ||||||
Province of Buenos Aires 10.875% 20212,4 | 1,500 | 1,110 | ||||||
410,223 | ||||||||
MORTGAGE-BACKED OBLIGATIONS2 — 0.52% | ||||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20374 | 10,725 | 11,559 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20374 | 27,010 | 29,050 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2006-AR12, Class 1-A2, 5.932% 20361 | 15,000 | 10,154 | ||||||
WaMu Mortgage Pass-Through Certificates Trust, Series 2007-HY6, Class 2-A3, 5.55% 20371 | 17,469 | 13,624 | ||||||
Wells Fargo Mortgage-backed Securities Trust, Series 2006-AR4, Class 2-A-4, 5.617% 20361 | 6,000 | 5,336 | ||||||
Morgan Stanley Mortgage Loan Trust, Series 2005-3AR, Class 3-A, 2.603% 20351 | 5,999 | 4,012 | ||||||
Bear Stearns ARM Trust, Series 2006-2, Class 2-A-1, 2.802% 20361 | 4,834 | 2,754 | ||||||
CS First Boston Mortgage Securities Corp., Series 2007-3, Class 4-A-1, 5.00% 2037 | 2,126 | 2,018 | ||||||
Citicorp Mortgage Securities, Inc. 5.50% 2035 | 1,906 | 1,905 | ||||||
Banc of America Mortgage Securities, Inc., Series 2005-E, Class 4-A1, 5.321% 20351 | 1,945 | 1,720 | ||||||
82,132 | ||||||||
U.S. TREASURY BONDS & NOTES — 0.34% | ||||||||
U.S. Treasury 1.375% 2012 | 10,000 | 10,113 | ||||||
U.S. Treasury 1.375% 2013 | 21,500 | 21,836 | ||||||
U.S. Treasury 3.25% 2016 | 20,000 | 22,200 | ||||||
54,149 | ||||||||
MUNICIPALS — 0.12% | ||||||||
State of New Jersey, Economic Development Authority, Energy Facility Revenue Bonds | ||||||||
(ACR Energy Partners, LLC Project), Series 2011-B, 12.00% 20304 | 12,385 | 12,644 | ||||||
State of Texas, Sabine River Authority, Pollution Control Revenue Refunding Bonds (TXU Electric Co. Project), | ||||||||
Series 2001-B, Alternative Minimum Tax, 5.75% 2030 (put 2011) | 2,800 | 2,768 | ||||||
State of Texas, Brazos River Authority, Pollution Control Revenue Refunding Bonds (TXU Electric Co. Project), | ||||||||
Series 2001-C, Alternative Minimum Tax, 5.75% 2036 (put 2011) | 2,515 | 2,486 | ||||||
State of Connecticut, Mohegan Tribe of Indians, Gaming Authority Priority Distribution Payment, | ||||||||
Public Improvement Bonds, Series 2003, 5.25% 2033 | 2,500 | 1,731 | ||||||
19,629 | ||||||||
ASSET-BACKED OBLIGATIONS2 — 0.03% | ||||||||
AmeriCredit Automobile Receivables Trust, Series 2010-1, Class D, 6.65% 2017 | 2,500 | 2,676 | ||||||
Aesop Funding II LLC, Series 2010-3A, Class B, 6.74% 20164 | 2,000 | 2,289 | ||||||
4,965 | ||||||||
Total bonds, notes & other debt instruments (cost: $15,301,044,000) | 14,690,252 | |||||||
Shares or | ||||||||
Convertible securities — 0.94% | principal amount | |||||||
INFORMATION TECHNOLOGY — 0.52% | ||||||||
Linear Technology Corp., Series A, 3.00% convertible notes 2027 | $ | 46,000,000 | 47,150 | |||||
Liberty Media Corp. 3.50% convertible notes 2031 | $ | 48,000,000 | 26,170 | |||||
Suntech Power Holdings Co., Ltd. 3.00% convertible notes 2013 | $ | 25,000,000 | 10,000 | |||||
83,320 | ||||||||
TELECOMMUNICATION SERVICES — 0.16% | ||||||||
Portugal Telecom, SGPS, SA convertible notes 2014 | € | 20,000,000 | 22,253 | |||||
Clearwire Corp. 8.25% convertible notes 20404 | $ | 7,722,000 | 3,803 | |||||
26,056 | ||||||||
CONSUMER DISCRETIONARY — 0.12% | ||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred4,8,10 | 99,687 | 19,056 | ||||||
ENERGY — 0.08% | ||||||||
Apache Corp., Series D, 6.00% convertible preferred 2013 | 230,000 | 11,769 | ||||||
FINANCIALS — 0.03% | ||||||||
Alexandria Real Estate Equities, Inc. 3.70% convertible notes 20274 | $ | 5,000,000 | 5,050 | |||||
UTILITIES — 0.03% | ||||||||
PPL Corp. 9.50% convertible preferred 2013, units | 86,650 | 4,800 | ||||||
Total convertible securities (cost: $152,489,000) | 150,051 | |||||||
Preferred securities — 0.61% | Shares | |||||||
FINANCIALS — 0.51% | ||||||||
Ally Financial Inc., Series G, 7.00%4 | 41,250 | 27,626 | ||||||
Ally Financial Inc., Series 2, 8.125% preferred | 650,000 | 11,741 | ||||||
Zions Bancorporation, Series C, 9.50% noncumulative depositary shares | 500,000 | 12,625 | ||||||
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual capital securities4 | 450,000 | 12,431 | ||||||
Citigroup Inc. 6.95% preferred | 228,000 | 5,363 | ||||||
Citigroup Inc. 7.875% preferred | 150,150 | 3,955 | ||||||
HSBC Holdings PLC, Series 2, 8.00% | 300,000 | 7,697 | ||||||
81,438 | ||||||||
CONSUMER DISCRETIONARY — 0.10% | ||||||||
Las Vegas Sands Corp., Series A, 10.00% | 145,900 | 16,376 | ||||||
Total preferred securities (cost: $104,487,000) | 97,814 | |||||||
Common stocks — 1.53% | ||||||||
CONSUMER DISCRETIONARY — 0.46% | ||||||||
Cooper-Standard Holdings Inc.4,10,12 | 1,224,685 | 51,437 | ||||||
American Media, Inc.6,8,10,12 | 1,122,345 | 14,366 | ||||||
Ford Motor Co.12 | 810,210 | 7,834 | ||||||
Adelphia Recovery Trust, Series ACC-112 | 10,643,283 | 213 | ||||||
Adelphia Recovery Trust, Series Arahova12 | 1,773,964 | 73 | ||||||
Five Star Travel Corp.6,8,12 | 83,780 | 11 | ||||||
73,934 | ||||||||
TELECOMMUNICATION SERVICES — 0.37% | ||||||||
American Tower Corp., Class A12 | 538,967 | 28,997 | ||||||
AT&T Inc. | 1,000,000 | 28,520 | ||||||
Hawaiian Telcom Holdco, Inc.12 | 86,239 | 1,202 | ||||||
58,719 | ||||||||
INDUSTRIALS — 0.22% | ||||||||
Delta Air Lines, Inc.12 | 2,373,769 | 17,803 | ||||||
Nortek, Inc.10,12 | 793,646 | 17,064 | ||||||
Atrium Corp.6,8,12 | 10,987 | 655 | ||||||
United Continental Holdings, Inc.12 | 22,981 | 445 | ||||||
ACF Industries Holding Corp.8,12 | 4,746 | — | ||||||
35,967 | ||||||||
FINANCIALS — 0.20% | ||||||||
Citigroup Inc. | 998,169 | 25,573 | ||||||
CIT Group Inc.12 | 124,904 | 3,793 | ||||||
Bank of America Corp. | 390,000 | 2,387 | ||||||
31,753 | ||||||||
MATERIALS — 0.19% | ||||||||
Georgia Gulf Corp.10,12 | 2,198,408 | 30,404 | ||||||
ENERGY — 0.09% | ||||||||
Petroplus Holdings AG12 | 2,440,000 | 13,783 | ||||||
INFORMATION TECHNOLOGY — 0.00% | ||||||||
HSW International, Inc.6,8,12 | 25,710 | 54 | ||||||
Total common stocks (cost: $255,792,000) | 244,614 | |||||||
Value | ||||||||
Warrants — 0.04% | Shares | (000 | ) | |||||
CONSUMER DISCRETIONARY — 0.04% | ||||||||
Cooper-Standard Holdings Inc., warrants, expire 20174,8,10,12 | 195,965 | $ | 4,801 | |||||
Charter Communications, Inc., warrants, expire 20148,12 | 13,390 | 151 | ||||||
Revel Holdings, Inc., warrants, expire 20216,8,12 | 16,916 | 34 | ||||||
4,986 | ||||||||
TELECOMMUNICATION SERVICES — 0.00% | ||||||||
Hawaiian Telcom Holdco, Inc., warrants, expire 20158,12 | 182,146 | 641 | ||||||
Total warrants (cost: $45,203,000) | 5,627 | |||||||
Principal amount | ||||||||
Short-term securities — 2.95% | (000 | ) | ||||||
Freddie Mac 0.11%–0.21% due 11/9/2011–6/7/2012 | $ | 114,540 | 114,506 | |||||
Coca-Cola Co. 0.09%–0.10% due 10/24–11/16/20114 | 90,800 | 90,790 | ||||||
Straight-A Funding LLC 0.16% due 10/5/20114 | 50,500 | 50,497 | ||||||
Federal Home Loan Bank 0.13% due 5/30/2012 | 49,600 | 49,573 | ||||||
Wal-Mart Stores, Inc. 0.06% due 10/12/20114 | 42,900 | 42,899 | ||||||
Fannie Mae 0.14%–0.18% due 10/5/2011–1/3/2012 | 36,890 | 36,889 | ||||||
Variable Funding Capital Company LLC 0.20% due 11/22/20114 | 35,000 | 34,987 | ||||||
Procter & Gamble Co. 0.17% due 1/5/20124 | 15,300 | 15,296 | ||||||
U.S. Treasury Bill 0.205%–0.22% due 11/17/2011 | 12,600 | 12,600 | ||||||
Ciesco LLC 0.25% due 11/28/2011 | 12,200 | 12,197 | ||||||
NetJets Inc. 0.02%–0.11% due 10/3–11/16/20114 | 11,300 | 11,297 | ||||||
Total short-term securities (cost: $471,464,000) | 471,531 | |||||||
Total investment securities (cost: $16,330,479,000) | 15,659,889 | |||||||
Other assets less liabilities | 316,674 | |||||||
Net assets | $ | 15,976,563 |
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 $1,816,000,000, which represented 11.37% 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 $5,246,784,000, which represented 32.84% of the net assets of |
the fund. |
5Step bond; coupon rate will increase at a later date. |
6Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. May be subject to legal or contractual restrictions on resale. Further details on these holdings appear below. |
Percent | |||||||||||||
Acquisition | Cost | Value | of net | ||||||||||
date(s) | (000 | ) | (000 | ) | assets | ||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 68,045 | $ | 85,428 | .53 | % | ||||||
Revel Entertainment 12.00% 2018 | 2/15/2011–9/16/2011 | 34,858 | 25,515 | .16 | |||||||||
Revel Holdings, Inc., warrants, expire 2021 | 2/15/2011 | — | 34 | .00 | |||||||||
Gray Television, Inc., Series D, 17.00% | 6/26/2008 | 19,901 | 18,063 | .12 | |||||||||
American Media, Inc. | 11/17/2010 | 18,803 | 14,366 | .09 | |||||||||
Atrium Corp. | 4/30/2010 | 990 | 655 | .00 | |||||||||
HSW International, Inc. | 12/17/2007 | 791 | 54 | .00 | |||||||||
Five Star Travel Corp. | 12/17/2007 | 21 | 11 | .00 | |||||||||
Total restricted securities | $ | 143,409 | $ | 144,126 | .90 | % |
7Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
8Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $296,833,000, which represented 1.86% of the net assets of the fund. |
9Scheduled interest and/or principal payment was not received. |
10Represents an affiliated company as defined under the Investment Company Act of 1940. |
11Index-linked bond whose principal amount moves with a government price index. |
12Security did not produce income during the last 12 months. |
Key to abbreviations and symbol
BRL = Brazilian reais
CLP = Chilean pesos
COP = Colombian pesos
€ = Euros
HUF = Hungarian forints
IDR = Indonesian rupiah
KRW = South Korean won
MXN = Mexican pesos
PHP = Philippine pesos
PLN = Polish zloty
RUB = Russian rubles
TRY = Turkish lira
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 prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-0180 or visit the American Funds website at americanfunds.com.
MFGEFP-921-1111O-S29406
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, 2011, and for the year then ended and have issued our report thereon dated November 11, 2011, 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, 2011, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
November 11, 2011
ITEM 7 – Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 8 – Portfolio Managers of Closed-End Management Investment Companies
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 9 – Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers
Not applicable to this Registrant, insofar as the Registrant is not a closed-end management investment company.
ITEM 10 – Submission of Matters to a Vote of Security Holders
There have been no material changes to the procedures by which shareholders may recommend nominees to the Registrant’s board of trustees since the Registrant last submitted a proxy statement to its shareholders. The procedures are as follows. The Registrant has a nominating and governance committee comprised solely of persons who are not considered ‘‘interested persons’’ of the Registrant within the meaning of the Investment Company Act of 1940, as amended. The committee periodically reviews such issues as the board’s composition, responsibilities, committees, compensation and other relevant issues, and recommends any appropriate changes to the full board of trustees. While the committee normally is able to identify from its own resources an ample number of qualified candidates, it will consider shareholder suggestions of persons to be considered as nominees to fill future vacancies on the board. Such suggestions must be sent in writing to the nominating and governance committee of the Registrant, c/o the Registrant’s Secretary, and must be accompanied by complete biographical and occupational data on the prospective nominee, along with a written consent of the prospective nominee for consideration of his or her name by the nominating and governance committee.
ITEM 11 – Controls and Procedures
(a) | The Registrant’s Principal Executive Officer and Principal Financial Officer have concluded, based on their evaluation of the Registrant’s disclosure controls and procedures (as such term is defined in Rule 30a-3 under the Investment Company Act of 1940), that such controls and procedures are adequate and reasonably designed to achieve the purposes described in paragraph (c) of such rule. |
(b) | There were no changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
ITEM 12 – Exhibits
(a)(1) | The Code of Ethics that is the subject of the disclosure required by Item 2 is attached as an exhibit hereto. |
(a)(2) | The certifications required by Rule 30a-2 of the Investment Company Act of 1940 and Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 are attached as exhibits hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN HIGH-INCOME TRUST | |
By /s/ David C. Barclay | |
David C. Barclay, President and Principal Executive Officer | |
Date: November 30, 2011 |
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, 2011 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: November 30, 2011 |