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, 2012
Courtney R. Taylor
American High-Income Trust
333 South Hope Street
Los Angeles, California 90071
(Name and Address of Agent for Service)
Copies to:
Michael Glazer
Bingham McCutchen LLP
355 South Grand Avenue, Suite 4400
Los Angeles, California 90071
(Counsel for the Registrant)
ITEM 1 – Reports to Stockholders
American High-Income Trust®
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Special feature
The anatomy of an investment: from research to returns
See page 4
Annual report for the year ended September 30, 2012
American High-Income Trust seeks a high level of current income and, secondarily, capital appreciation through a diversified, carefully supervised portfolio consisting primarily of lower rated, higher risk corporate bonds.
This fund is one of more than 40 offered by American Funds, which is one of the nation’s largest mutual fund families. For more than 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, 2012, with all distributions reinvested | ||||||||||||||||
Total returns | Average annual total returns | |||||||||||||||
1 year | 5 years | 10 years | Lifetime | |||||||||||||
(since 2/19/88) | ||||||||||||||||
American High-Income Trust | ||||||||||||||||
(Class A shares) | 16.4 | % | 6.6 | % | 9.9 | % | 8.6 | % | ||||||||
Barclays U.S. Corporate High Yield 2% | ||||||||||||||||
Issuer Capped Index* | 19.4 | 9.5 | 10.9 | — | ||||||||||||
Lipper High Yield Funds Index | 18.3 | 6.8 | 9.2 | 7.2 | ||||||||||||
*This market index did not exist prior to December 31, 1992. It is unmanaged and, therefore, has no expenses. |
Since its inception through September 30, 2012, American High-Income Trust ranked 3rd in total return among the 31 high current yield funds in existence throughout the period, according to Lipper. For the 10 years ended September 30, 2012, the fund ranked 59th of 256; for the five years ended September 30, 2012, it ranked 259th of 372; and for the 12 months ended September 30, 2012, it ranked 397th of 496. Lipper rankings do not reflect the effect of sales charges.
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
The fund’s 30-day yield for Class A shares as of October 31, 2012, calculated in accordance with the U.S. Securities and Exchange Commission (SEC) formula, was 5.06%. The fund’s 12-month distribution rate for Class A shares as of that date was 7.00%. 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. Refer to the fund prospectus and the Risk Factors section of this report for more information on these and other risks associated with investing in the fund.
Fellow investors:
High-yield bond markets posted double-digit returns for the fiscal year ended September 30, 2012, as investors’ appetite for risk increased, leading them to seek higher yielding debt amid signs of an improving U.S. economy and progress in resolving the euro zone debt crisis. The European Central Bank (ECB) announced an unlimited bond-buying program, helping investors overcome worries about the future of the euro zone. Market sentiment was also helped after the U.S. Federal Reserve announced that it would provide additional stimulus measures.
In this environment, American High-Income Trust reported a total return of 16.4% for the 12 months ended September 30, assuming the reinvestment of monthly dividends totaling more than 82 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 8.0% and saw the value of their holdings increase by 7.9%.
By comparison, the Lipper High Yield Funds Index, a benchmark of similar funds, posted a total return of 18.3%, and the Barclays U.S. Corporate High Yield 2% Issuer Capped Index, which covers the universe of fixed-rate, non-investment-grade debt and limits the maximum exposure of any one issuer to 2%, returned 19.4%. The latter market index is unmanaged and, therefore, has no expenses.
The year in review
Monetary easing by central banks around the world allayed investor concerns about a global economic slowdown. Reacting to disappointing economic indicators, the ECB and the Fed unveiled aggressive new bond-buying programs aimed at lowering borrowing costs and boosting the U.S. and European economies. The central bank intervention helped to calm investors’ worries about a global economic slowdown and disorderly euro-zone breakup, supporting a strong rally in riskier assets.
Corporate bonds fared well, particularly at the lower end of the credit spectrum, as investors continued to search for yield in a low interest rate environment. High-yield bonds generally did better than investment-grade bonds, with all major sectors gaining ground amid improving corporate health. Strength in the market was broad-based as many companies bolstered their cash flow, profitability and balance sheets. A number of firms were able to refinance their debt at lower costs, improve liquidity and lengthen bond maturities.
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In this report | |
Special feature | |
4 | The anatomy of an investment: from research to returns |
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 |
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[Begin Sidebar]
High-yield bonds generally did better than investment-grade bonds, with all major sectors gaining ground amid improving corporate health.
[End Sidebar]
While the outlook for the U.S. economy continues to improve, growth is likely to be modest by historical standards. With the Fed’s commitment to keeping interest rates low, demand has increased for high-yield bonds from investors in search of income. Broadly, total returns for below-investment-grade (BB and below) bonds eclipsed those of investment-grade (BBB and above) bonds during the fiscal year as investors’ tolerance for risk increased.
Likewise, the ECB’s recent efforts to support local bond markets, along with central bank easing in developing markets, have helped reduce risks and raise investors’ hopes for a recovery in global economic growth, despite a negative outlook for the euro zone. Total returns for non-U.S. high-yield bonds were broadly in line with their U.S. counterparts, with bonds in developing markets posting the best returns. The fund’s exposure to non-U.S. bonds rose to more than 18%.
High-yield bonds still have higher yields than other fixed-income and equity asset classes, which has boosted demand from investors seeking income. This demand has been met by new issuance, which has been robust all year as companies have sought to take advantage of historically low interest rates. But the new issuance has failed to keep pace with the demand, and as a result yields have been driven down to near-record lows. With low absolute yields and strong demand from high-yield bond buyers, some companies are finding it more attractive to increase their debt load in addition to refinancing it, which can increase risks to existing holdings. In such a rapidly changing market, strong research is more important than ever (see the related feature story starting on page 4 that highlights three recent investments).
A long-term perspective
Much uncertainty remains in the market. Political upheaval is further complicating the debt problems in the U.S. and Europe as well as the economic prospects for China. With these issues in mind and on the heels of several years of strong returns, our investment managers are taking a slightly more cautious view of the market. While volatility in the high-yield market should be expected, it is important to remember that investors who have maintained a long-term perspective have been rewarded with solid returns and a steady source of income. For the past 10-year period ended September 30, 2012, the fund’s shareholders earned an average annual total return of 9.9%, with dividends reinvested. That compares with a 9.2% average annual total return for the Lipper High Yield Funds Index and a 10.9% gain for the Barclays U.S. Corporate High Yield 2% Issuer Capped Index for that same period.
As always, we appreciate your continued support and long-term investment perspective.
Sincerely,
/s/ David C. Barclay
David C. Barclay
President
November 12, 2012
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, 2012, the end of its latest fiscal year. As you can see, that $10,000 grew to $72,988 with all distributions reinvested.
Fund results shown reflect deduction of the maximum sales charge of 3.75% on the $10,000 investment.1 Thus, the net amount invested was $9,625.2
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Year ended Sept. 30th | American High-Income Trust | Barclays U.S. Corporate High Yield 2% Issuer Capped Index3,4 | Lipper High Yield Funds Index5 | Consumer Price Index (inflation)6 | ||||||||||||
2/19/88 | $ | 9,625 | $ | 10,000 | $ | 10,000 | $ | 10,000 | ||||||||
1988 | 10,182 | 10,447 | 10,475 | 10,328 | ||||||||||||
1989 | 11,189 | 11,026 | 10,935 | 10,776 | ||||||||||||
1990 | 10,735 | 10,047 | 9,570 | 11,440 | ||||||||||||
1991 | 13,873 | 13,757 | 12,290 | 11,828 | ||||||||||||
1992 | 16,376 | 16,573 | 15,132 | 12,181 | ||||||||||||
1993 | 18,764 | 18,976 | 17,473 | 12,509 | ||||||||||||
1994 | 19,066 | 19,580 | 17,899 | 12,879 | ||||||||||||
1995 | 21,604 | 22,549 | 20,178 | 13,207 | ||||||||||||
1996 | 24,570 | 25,034 | 22,644 | 13,603 | ||||||||||||
1997 | 28,176 | 28,661 | 26,120 | 13,897 | ||||||||||||
1998 | 27,491 | 29,160 | 25,688 | 14,103 | ||||||||||||
1999 | 29,721 | 30,002 | 27,037 | 14,474 | ||||||||||||
2000 | 31,295 | 30,288 | 27,021 | 14,974 | ||||||||||||
2001 | 30,218 | 28,647 | 23,569 | 15,371 | ||||||||||||
2002 | 28,442 | 28,400 | 22,814 | 15,603 | ||||||||||||
2003 | 38,197 | 36,766 | 28,862 | 15,966 | ||||||||||||
2004 | 42,235 | 41,372 | 32,215 | 16,371 | ||||||||||||
2005 | 45,421 | 44,096 | 34,421 | 17,138 | ||||||||||||
2006 | 49,174 | 47,286 | 36,744 | 17,491 | ||||||||||||
2007 | 53,103 | 50,887 | 39,586 | 17,973 | ||||||||||||
2008 | 46,800 | 45,540 | 35,054 | 18,861 | ||||||||||||
2009 | 53,376 | 55,792 | 39,311 | 18,618 | ||||||||||||
2010 | 62,318 | 65,967 | 46,058 | 18,831 | ||||||||||||
2011 | 62,731 | 67,119 | 46,476 | 19,559 | ||||||||||||
2012 | 72,988 | 80,108 | 54,967 | 19,949 |
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 index is unmanaged and, therefore, has 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 U.S. Corporate High Yield 2% Issuer Capped Index has been used. |
5Results of the Lipper High Yield Funds Index do not reflect any 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, 2012)* | ||||||||||||
1 year | 5 years | 10 years | ||||||||||
Class A shares | 12.03 | % | 5.76 | % | 9.47 | % | ||||||
*Assumes reinvestment of all distributions and payment of the maximum 3.75% sales charge. |
The total annual fund operating expense ratio is 0.69% for Class A shares as of the prospectus dated December 1, 2012 (unaudited).
Investment results assume all distributions are reinvested and reflect applicable fees and expenses. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
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The anatomy of an investment: from research to returns
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“Situations present themselves in different ways, but no matter how you approach an investment, you need to have the deep research to be able to do the fundamental business and company analysis.”
David Barclay
Portfolio counselor
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[End Pull Quote]
A struggling mid-size lender trying to emerge from bankruptcy in the aftermath of the financial crisis. An aircraft leasing firm whose parent company required a government bailout. A small oil and gas pipeline company affiliated with a bigger and stronger industry player. Three very different companies, each one requiring a different approach, but that shared some common traits when it came to evaluating their investment prospects for American High-Income Trust.
In the wide-ranging and dynamic high-yield bond market, there are a variety of ways to find the most attractive investments. Sometimes opportunities emerge in moments of crisis, as was the case in 2008 when American International Group, the parent company of International Lease Finance Corp., needed a bailout, and in 2009 when CIT Group filed for bankruptcy. Other times it can be that a company has ties to a larger firm that actually makes it more attractive than it may first seem, as it is with Regency Energy Partners and Energy Transfer Partners. While these investments illustrate the breadth of approaches used in American High-Income Trust, they also exemplify a process that draws heavily on collaboration across investment and research groups.
Regardless of the circumstances, the importance of having a strong research organization in place to evaluate the investment opportunities cannot be underestimated. “Using our depth of research is important when making all investment decisions,” says fund President David Barclay, also a portfolio counselor for the fund. “There are a number of different ways of finding investment opportunities for the fund in this diverse and changing marketplace, so it is even more important to have that broad and flexible research operation in place.”
Each of the three cases that follow highlight both the importance of strong research as well as the diversity of approaches the analysts and portfolio counselors take when making investment decisions. In each case, rigorous research led to a unique opportunity and a decision was made to invest in the company. The fund has benefited from these investment decisions in recent years but behind every investment there is a story. In the following pages, three analysts share those stories.
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CIT Group is a diversified lender to both small and medium-sized companies, and operates a strong leasing portfolio.
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Company in crisis: CIT Group
The fallout from the 2008 financial crisis was far and wide and is still being felt in many respects. In some cases, companies went under — the most prominent example being Lehman Brothers — while in other situations, the government bailed out firms or arranged a merger, as it did with Bear Stearns. Then there are the relative success stories, like New York-based CIT Group, which filed for bankruptcy in the aftermath of the financial crisis but was able to re-emerge as a leaner but stronger company.
CIT is a diversified lender to both small and medium-sized companies, and operates a strong leasing portfolio. During the financial crisis, however, the company suffered a double hit. CIT, which funded itself with short-term debt and made long-term loans to customers, faced mounting pressure when liquidity dried up in the credit market and it became increasingly difficult to fund its near-term maturities. At the same time, many of its customers also faced liquidity pressures as economic and operating trends deteriorated, causing them to make late payments or to default. Many of CIT’s customers accelerated requests for funding on committed loan lines, requiring the company to raise even more cash to fund them, which put additional pressure on its balance sheet.
The company initially was able to obtain more than $5 billion in government funding and from private investors. But by late 2009, CIT was forced to file for bankruptcy protection. This presented an opportunity for American High-Income Trust to get involved directly as a creditor in the firm’s restructuring. The fund lent CIT an emergency facility to provide liquidity and allow it to emerge from bankruptcy. In doing so, the fund was also able to make an investment in the company’s new loans at an attractive rate. “It’s not that common but we have the ability to do it,” David says of the emergency lending facility to CIT. “Situations present themselves in different ways, but no matter how you approach an investment, you need to have the deep research to be able to do the fundamental business and company analysis.”
That’s where analyst Jonathan Deeringer entered the picture. His research led him to conclude that CIT’s underwriting business, which he thought was difficult to replicate due to its complexity and longevity, was not broken. If the company could ride out a difficult post-bankruptcy period of balance sheet restructuring, Jonathan believed market trends would gradually recover and CIT would be able to take advantage of an easing competitive environment as traditional banks pulled back from the lending market. In addition, he was encouraged by the company’s improved liquidity, strong asset base and new management team, led by former Merrill Lynch CEO John Thain.
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“We believed that if given enough breathing room and if credit quality trends stabilized, CIT had the underwriting structure in place for the company to return to lending growth under new management as the banks pulled back,” explains Jonathan, adding that even if that thesis didn’t play out as expected, he was still comfortable making the investment. “When we saw that CIT entered bankruptcy, we did an analysis showing that even if the company stopped lending, the value of its assets in the wind-down process would be able to cover its secured debt.”
Fortunately, CIT was able to emerge from bankruptcy and to gradually increase its lending activities. This has allowed for further investment in the company to support its efforts to rebuild a healthier lending platform. “What’s happened since then is that credit quality has indeed stabilized and CIT has shrunk its balance sheet, returning to its core lending niches,” he says, noting that the company has been able to reduce its financing costs over time. “The return on assets has improved and CIT has dramatically strengthened its liquidity and capital cushion to the point where the company is better off than it was before bankruptcy.”
Jonathan says the next leg of the thesis is for CIT to continue on its path to more profitable lending, and ultimately to achieve an investment-grade rating. He said the latter could be influenced by the Federal Reserve, which is reviewing the conditions of CIT’s supervisory arrangement that were set under its bankruptcy. “CIT has the strongest tangible capital ratios of any major bank in the U.S.,” he notes. “I expect the Fed to relax the restrictions soon, which will remove a key obstacle in the company returning to investment grade.” He says CIT has already replaced secured debt with unsecured debt at low costs, which has freed up a lot of assets on its balance sheet, but ratings agencies have been slow to recognize its progress.
In the end, Jonathan says he would not have been able to move forward on the investment in CIT Group were it not for the strong leadership and collaborative efforts of his colleagues. He says he consulted with other analysts inside and outside of his group in order to get a better understanding of the regulatory environment, securitization markets, and the bankruptcy process. “Investing in emergency loans can be risky, but the depth of the research team and our willingness to take a more active lending role than typical made it possible,” he says. “It was a unique environment, but we were able to step back and see the benefits of financing a company in that situation.”
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“Investing in emergency loans can be risky, but the depth of the research team and our willingness to take a more active lending role than typical made it possible. It was a unique environment, but we were able to step back and see the benefits of financing a company in that situation.”
Jonathan Deeringer
Investment analyst
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Los Angeles-based International Lease Finance Corp. is the global market leader in commercial jet aircraft leasing.
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“The airline industry was doing well despite the downturn, and by working with the insurance analyst I was able to better understand that industry and how it fit in with airlines. As a result, we developed a view different than that of the market and made the investment.”
Tara Torrens
Investment analyst
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Collaborative effort: International Lease Finance Corp.
Like CIT, the opportunity to invest in International Lease Finance Corp. came about in the aftermath of the financial crisis. ILFC’s parent company, insurance firm American International Group, was deemed “too big to fail” and received a $182 billion government bailout. The association with AIG had typically been considered a strong suit for Los Angeles-based ILFC, which issued its own debt but relied on the higher credit rating of its larger parent to help keep its financing costs lower. However, when ratings agencies downgraded AIG’s credit in 2008 in advance of the company’s bailout, ILFC was also negatively impacted.
The airline leasing company ran into its own liquidity problems as a result of AIG’s downgrade and financing long-term assets with short-term liabilities, which required frequent refinancing and continuous access to bond markets. ILFC’s bonds dropped precipitously, trading near 50 cents on the dollar, as liquidity issues mounted. This piqued the interest of airline analyst Tara Torrens, who began evaluating the investment opportunity with her insurance analyst counterpart who covered AIG. Even though Tara hadn’t directly covered ILFC, she was familiar with the airline industry and knew how the leasing process worked. In collaborating with the insurance analyst, who provided his views on ILFC parent AIG, she was able to take a broader approach and better understand the investment opportunity.
“We started investing in the bonds of ILFC on the view that the company’s core fundamentals were good and its asset base was solid in spite of the issues at AIG,” recalls Tara. “The airline industry was doing well despite the downturn, and by working with the insurance analyst I was able to better understand that industry and how it fit in with airlines. As a result, we developed a view different than that of the market and made the investment. We concluded that regardless of the outcome, our investment in the bonds was protected by the value of the company’s business.”
Indeed, the investment in ILFC bonds, which were yielding about 15% at the time, has paid off and the fund has since sold most of its position in the bonds, now yielding around 5%. David Barclay commends the investment and the collaboration between Tara and the insurance analyst. “AIG was thought of as the better credit; then the roles reversed and ILFC looked better than AIG,” he says in recalling the circumstances that allowed for the investment to be made at the height of the financial crisis. “The price became attractive for ILFC bonds and because of our ability to collaborate and approach the investment from different angles, the crisis at AIG provided us with the opportunity to make the investment.”
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Regency Energy Partners is a midstream oil and gas pipeline company that is affiliated with larger firm Energy Transfer Partners.
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Symbiotic relationship: Regency Energy Partners
Like ILFC, midstream oil and gas pipeline company Regency Energy Partners is affiliated with a larger entity, another midstream firm known as Energy Transfer Partners. This relationship, as well as Regency Energy’s transition to more stable revenue generation, is what initially attracted analyst Damien McCann to the company. Regency Energy owns assets that are broadly similar to Energy Transfer, an investment-grade company he was already covering in his research. But because Dallas-based Regency Energy was smaller, it was not considered investment grade, even though the credit risk was similar. After conducting further due diligence on Regency Energy and collaborating with other analysts, Damien says he became comfortable enough with the investment to move forward.
“It was an investment made with the expectation that Regency Energy will benefit from increased scale through additional organic growth, acquisitions or possibly even a consolidation with Energy Transfer,” explains Damien. “Regency Energy has high-yield peers in the industry that lack the association with a larger entity, making the potential for an upgrade somewhat unique.”
Since the initial investment in 2011, Regency Energy has continued to grow through acquisition and organic expansion, but the pace has not been quite as fast as Damien would have liked. “Regency Energy has been a solid, steady investment, providing decent returns for the fund,” he says. “I had hoped for more rapid growth, but my long-term investment thesis remains intact.”
For David Barclay, the Regency Energy investment highlights yet another approach to finding the best opportunities for American High-Income Trust, which he noted has also invested in Energy Transfer. “Sometimes there are investment-grade holdings that provide an attractive risk-return profile for the fund but also help give us a broader perspective of the markets and potential investments,” he notes. “In the case of Energy Transfer, our knowledge of the investment-grade market and the ability to look across the ratings spectrum gave us even more insight into the high-yield market, and using our research capabilities we were able to make an investment in a lesser-known issuer like Regency Energy.” ¾
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[photo of Damien McCann]
“It was an investment made with the expectation that Regency Energy will benefit from increased scale through additional organic growth, acquisitions, or possibly even a consolidation with Energy Transfer. Regency Energy has high-yield peers in the industry that lack the association with a larger entity, making the potential for an upgrade somewhat unique.”
Damien McCann
Investment analyst
[End Pull Quote]
Summary investment portfolio September 30, 2012
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 | 61.7 | % | ||
Corporate bonds & notes of issuers outside the U.S. | 12.8 | |||
Corporate loans | 9.8 | |||
U.S. Treasury bonds & notes | 0.5 | |||
Common stocks & warrants | 1.4 | |||
Convertible securities | 0.7 | |||
Preferred securities | 0.5 | |||
Other | 4.8 | |||
Short-term securities & other assets less liabilities | 7.8 |
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Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Bonds, notes & other debt instruments - 89.54% | (000 | ) | (000 | ) | assets | |||||||||
Corporate bonds, notes & loans - 84.22% | ||||||||||||||
Consumer discretionary - 17.72% | ||||||||||||||
MGM Resorts International 5.875%-13.00% 2013-2022 (1) | $ | 305,855 | $ | 324,303 | 1.64 | % | ||||||||
Charter Communications, Inc. 13.50% 2016 | 46,320 | 50,373 | ||||||||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25%-8.125% 2017-2020 | 139,500 | 153,577 | ||||||||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00%-7.375% 2019-2020 | 33,000 | 36,664 | 1.22 | |||||||||||
EchoStar DBS Corp 7.125%-7.75% 2015-2016 | 12,000 | 13,420 | ||||||||||||
DISH DBS Corp.: | ||||||||||||||
4.625% 2017 (1) | 95,950 | 98,589 | ||||||||||||
5.875%-7.875% 2019-2022 (1) | 96,240 | 102,768 | 1.08 | |||||||||||
Boyd Gaming Corp.: | ||||||||||||||
9.125% 2018 | 82,070 | 86,584 | ||||||||||||
6.75%-9.00% 2014-2020 (1) | 117,090 | 118,350 | 1.03 | |||||||||||
Needle Merger Sub Corp. 8.125% 2019 (1) | 121,855 | 124,901 | .63 | |||||||||||
Univision Communications Inc., Term Loan B, 4.466% 2017 (2) (3) (4) | 122,468 | 121,243 | .61 | |||||||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 88,775 | 98,762 | .50 | |||||||||||
Revel Entertainment, Term Loan B, 9.00% 2017 (2) (3) (4) | 117,150 | 93,093 | .47 | |||||||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 82,450 | 89,252 | .45 | |||||||||||
Other securities | 1,998,210 | 10.09 | ||||||||||||
3,510,089 | 17.72 | |||||||||||||
Telecommunication services - 11.79% | ||||||||||||||
Nextel Communications, Inc.,: | ||||||||||||||
Series F, 5.95% 2014 | 117,065 | 117,650 | ||||||||||||
Series D, 7.375% 2015 | 62,258 | 62,647 | ||||||||||||
Sprint Nextel Corp.: | ||||||||||||||
8.375% 2017 | 83,450 | 93,255 | ||||||||||||
7.00% 2020 | 108,500 | 113,247 | ||||||||||||
6.00%-11.50% 2016-2021 (1) | 139,555 | 163,399 | ||||||||||||
Sprint Capital Corp. 6.90%-8.75% 2019-2032 | 9,800 | 10,204 | 2.83 | |||||||||||
Frontier Communications Corp.: | ||||||||||||||
8.25% 2017 | 125,266 | 142,803 | ||||||||||||
8.50% 2020 | 72,760 | 82,583 | ||||||||||||
7.125% 2023 | 100,875 | 105,288 | ||||||||||||
8.125%-9.25% 2018-2022 | 99,293 | 114,271 | 2.25 | |||||||||||
Clearwire Communications and Clearwire Finance, Inc.,: | ||||||||||||||
Series B, 12.00% 2015 (1) | 123,930 | 123,310 | ||||||||||||
Series A, 12.00% 2015 (1) | 120,730 | 120,126 | ||||||||||||
12.00%-14.75% 2016-2017 (1) | 103,530 | 98,070 | 1.72 | |||||||||||
Cricket Communications, Inc.: | ||||||||||||||
7.75% 2016 | 178,140 | 188,828 | ||||||||||||
7.75%-10.00% 2015-2020 | 81,595 | 83,906 | 1.38 | |||||||||||
Wind Acquisition SA 11.75% 2017 (1) | 140,330 | 132,963 | .67 | |||||||||||
LightSquared, Term Loan B, 12.00% 2014 (3) (4) (5) (6) | 144,713 | 101,842 | .51 | |||||||||||
Other securities | 481,251 | 2.43 | ||||||||||||
2,335,643 | 11.79 | |||||||||||||
Financials - 10.41% | ||||||||||||||
Realogy Corp.: | ||||||||||||||
Term Loan B, 4.478% 2016 (2) (3) (4) | 140,462 | 139,057 | ||||||||||||
Letter of Credit, 4.491% 2016 (2) (3) (4) | 11,765 | 11,647 | ||||||||||||
Second Lien Term Loan A, 13.50% 2017 (3) (4) | 147,699 | 149,545 | ||||||||||||
7.875% 2019 (1) | 145,435 | 153,434 | ||||||||||||
9.00% 2020 (1) | 87,735 | 97,167 | ||||||||||||
7.625%-10.50% 2014-2020 (1) | 4,000 | 4,367 | 2.80 | |||||||||||
CIT Group Inc.,: | ||||||||||||||
Series C, 4.75% 2015 (1) | 135,300 | 141,727 | ||||||||||||
5.00% 2017 | 96,625 | 103,630 | ||||||||||||
4.25%-5.50% 2017-2019 (1) | 62,050 | 66,078 | 1.57 | |||||||||||
International Lease Finance Corp. 4.875% 2015 | 126,930 | 132,409 | .67 | |||||||||||
Other securities | 1,062,460 | 5.37 | ||||||||||||
2,061,521 | 10.41 | |||||||||||||
Industrials - 10.20% | ||||||||||||||
CEVA Group PLC: | ||||||||||||||
12.75% 2020 (1) | 122,000 | 101,565 | ||||||||||||
8.375%-11.625% 2016-2018 (1) | 115,112 | 109,875 | 1.07 | |||||||||||
Ply Gem Industries, Inc. 8.25% 2018 | 147,025 | 154,192 | .78 | |||||||||||
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017 | 143,967 | 141,808 | .72 | |||||||||||
BE Aerospace, Inc. 5.25% 2022 | 103,270 | 107,659 | .54 | |||||||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 4.25% 2014 (2) (3) (4) | 163,487 | 107,084 | .54 | |||||||||||
Nortek Inc.: | ||||||||||||||
10.00% 2018 (7) | 47,735 | 52,986 | ||||||||||||
8.50% 2021 (7) | 47,660 | 50,996 | .52 | |||||||||||
DAE Aviation Holdings, Inc. 11.25% 2015 (1) | 82,414 | 85,299 | .43 | |||||||||||
Other securities | 1,109,390 | 5.60 | ||||||||||||
2,020,854 | 10.20 | |||||||||||||
Health care - 8.88% | ||||||||||||||
VWR Funding, Inc.,: | ||||||||||||||
Series B, 10.25% 2015 (6) | 138,533 | 141,824 | ||||||||||||
7.25% 2017 (1) | 77,125 | 78,426 | 1.11 | |||||||||||
VPI Escrow Corp. 6.375% 2020 (1) | 121,060 | 124,087 | .63 | |||||||||||
PTS Acquisition Corp. 9.50% 2015 (6) | 119,206 | 122,037 | .62 | |||||||||||
Quintiles, Term Loan B, 5.00% 2018 (2) (3) (4) | 118,813 | 119,704 | .60 | |||||||||||
Kinetic Concepts, Inc. 10.50% 2018 (1) | 94,405 | 100,305 | .51 | |||||||||||
inVentiv Health Inc. 10.00% 2018 (1) | 91,315 | 80,814 | .41 | |||||||||||
Other securities | 991,410 | 5.00 | ||||||||||||
1,758,607 | 8.88 | |||||||||||||
Materials - 7.02% | ||||||||||||||
Reynolds Group Inc.: | ||||||||||||||
9.875% 2019 | 121,160 | 129,490 | ||||||||||||
5.75% 2020 (1) | 187,475 | 187,709 | ||||||||||||
7.125%-9.00% 2018-2019 | 67,985 | 71,749 | 1.96 | |||||||||||
Inmet Mining Corp. 8.75% 2020 (1) | 104,955 | 109,153 | .55 | |||||||||||
Georgia Gulf Corp. 9.00% 2017 (1) | 81,885 | 91,916 | .47 | |||||||||||
Other securities | 800,150 | 4.04 | ||||||||||||
1,390,167 | 7.02 | |||||||||||||
Information technology - 6.72% | ||||||||||||||
First Data Corp.: | ||||||||||||||
11.25% 2016 | 185,840 | 181,194 | ||||||||||||
Term Loan D, 5.217% 2017 (2) (3) (4) | 73,036 | 72,205 | ||||||||||||
12.625% 2021 | 113,026 | 117,688 | ||||||||||||
6.75%-10.55% 2015-2022 (1) (2) (6) | 202,078 | 204,562 | 2.91 | |||||||||||
Blackboard Inc., Term Loan B, 7.50% 2018 (2) (3) (4) | 94,994 | 96,003 | .49 | |||||||||||
SRA International, Inc., Term Loan B, 6.50% 2018 (2) (3) (4) | 91,412 | 90,650 | .46 | |||||||||||
NXP BV and NXP Funding LLC 10.00% 2013 (8) | 77,049 | 81,680 | .41 | |||||||||||
Other securities | 486,230 | 2.45 | ||||||||||||
1,330,212 | 6.72 | |||||||||||||
Energy - 5.93% | ||||||||||||||
Other securities | 1,175,051 | 5.93 | ||||||||||||
Consumer staples - 3.11% | ||||||||||||||
Other securities | 616,445 | 3.11 | ||||||||||||
Utilities - 2.44% | ||||||||||||||
TXU, Term Loan, 4.728% 2017 (2) (3) (4) | 139,658 | 96,434 | .49 | |||||||||||
Other securities | 386,386 | 1.95 | ||||||||||||
482,820 | 2.44 | |||||||||||||
Total corporate bonds, notes & loans | 16,681,409 | 84.22 | ||||||||||||
U.S. Treasury bonds & notes - 0.52% | ||||||||||||||
U.S. Treasury 1.375%-3.25% 2013-2016 | 99,500 | 103,028 | .52 | |||||||||||
Other - 4.80% | ||||||||||||||
Other securities | 951,674 | 4.80 | ||||||||||||
Total bonds, notes & other debt instruments (cost: $17,230,789,000) | 17,736,111 | 89.54 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Convertible securities - 0.69% | (000 | ) | (000 | ) | assets | |||||||||
Telecommunication services - 0.09% | ||||||||||||||
Leap Wireless International, Inc. 4.50% convertible notes 2014 | $ | 12,500 | 11,968 | .06 | ||||||||||
Clearwire Corp. 8.25% convertible notes 2040 (1) | $ | 7,722 | 5,642 | .03 | ||||||||||
17,610 | .09 | |||||||||||||
Other - 0.60% | ||||||||||||||
Other securities | 118,310 | .60 | ||||||||||||
Total convertible securities (cost: $124,915,000) | 135,920 | .69 | ||||||||||||
Percent | ||||||||||||||
Value | of net | |||||||||||||
Preferred securities - 0.52% | (000 | ) | assets | |||||||||||
Financials - 0.52% | ||||||||||||||
Other securities | 103,619 | .52 | ||||||||||||
Total preferred securities (cost: $91,542,000) | 103,619 | .52 | ||||||||||||
Shares | Percent | |||||||||||||
Value | of net | |||||||||||||
Common stocks - 1.40% | (000 | ) | assets | |||||||||||
Financials - 0.30% | ||||||||||||||
CIT Group Inc. (9) | 124,904 | 4,920 | .02 | |||||||||||
Other securities | 55,191 | .28 | ||||||||||||
60,111 | .30 | |||||||||||||
Telecommunication services - 0.15% | ||||||||||||||
Frontier Communications Corp., Class B | 6,000,000 | 29,400 | .15 | |||||||||||
Other - 0.95% | ||||||||||||||
Other securities | 187,885 | .95 | ||||||||||||
Total common stocks (cost: $241,992,000) | 277,396 | 1.40 | ||||||||||||
Shares | Percent | |||||||||||||
Value | of net | |||||||||||||
Warrants - 0.03% | (000 | ) | assets | |||||||||||
Consumer discretionary - 0.03% | ||||||||||||||
Charter Communications, Inc., warrants, expire 2014 (9) | 13,390 | 348 | .00 | |||||||||||
Other securities | 5,511 | .03 | ||||||||||||
5,859 | .03 | |||||||||||||
Energy - 0.00% | ||||||||||||||
Other securities | 153 | .00 | ||||||||||||
Total warrants (cost: $7,329,000) | 6,012 | .03 | ||||||||||||
Principal | Percent | |||||||||||||
amount | Value | of net | ||||||||||||
Short-term securities - 8.39% | (000 | ) | (000 | ) | assets | |||||||||
Freddie Mac 0.10%-0.17% due 10/2/2012-5/29/2013 | $ | 385,500 | $ | 385,397 | 1.95 | |||||||||
Federal Home Loan Bank 0.11%-0.19% due 10/16/2012-3/15/2013 | 361,600 | 361,491 | 1.82 | |||||||||||
Fannie Mae 0.135%-0.19% due 10/1/2012-7/1/2013 | 339,750 | 339,619 | 1.71 | |||||||||||
U.S. Treasury Bills 0.12%-0.16% due 10/25/2012-5/30/2013 | 163,500 | 163,458 | .83 | |||||||||||
Other securities | 411,720 | 2.08 | ||||||||||||
Total short-term securities (cost: $1,661,603,000) | 1,661,685 | 8.39 | ||||||||||||
Total investment securities (cost: $19,358,170,000) | 19,920,743 | 100.57 | ||||||||||||
Other assets less liabilities | (112,073 | ) | (.57 | ) | ||||||||||
Net assets | $ | 19,808,670 | 100.00 | % |
"Other securities" includes all issues that are not disclosed separately in the summary investment portfolio. |
Forward currency contracts
The fund has entered into forward currency contracts to purchase or sell currencies as shown in the following table. The open forward currency contracts shown are generally indicative of the level of activity over the prior 12-month period.
Contract amount | Unrealized appreciation | ||||||||||||||
Settlement date | Counterparty | Receive (000) | Deliver (000) | (depreciation) at 9/30/2012 | |||||||||||
Purchases: | |||||||||||||||
Russian rubles | 10/10/2012 | Citibank | RUB323,978 | $ | 10,082 | $ | 282 | ||||||||
Sales: | |||||||||||||||
Brazilian reais | 10/5/2012 | Citibank | $ | 11,775 | BRL24,000 | (50 | ) | ||||||||
Brazilian reais | 10/29/2012 | JPMorgan Chase | $ | 19,670 | BRL40,000 | 27 | |||||||||
Euros | 10/11/2012 | Citibank | $ | 11,459 | € | 9,000 | (55 | ) | |||||||
Euros | 10/22/2012 | HSBC Bank | $ | 2,608 | € | 2,000 | 37 | ||||||||
Euros | 10/24/2012 | JPMorgan Chase | $ | 41,102 | € | 31,750 | 291 | ||||||||
Euros | 10/29/2012 | Bank of New York Mellon | $ | 1,295 | € | 1,000 | 10 | ||||||||
260 | |||||||||||||||
Forward currency contracts - net | $ | 542 |
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, 2012, appear below. |
Beginning shares or principal amount | Additions | Reductions | Ending shares or principal amount | Dividend or interest income (000) | Value of affiliates at 9/30/2012 (000) | |||||||||||||||||||
Nortek Inc. 10.00% 2018 | $ | 50,485,000 | $ | 53,485,000 | $ | 56,235,000 | $ | 47,735,000 | $ | 4,819 | $ | 52,986 | ||||||||||||
Nortek Inc. 8.50% 2021 | $ | 51,015,000 | $ | 67,785,000 | $ | 71,140,000 | $ | 47,660,000 | 4,146 | 50,996 | ||||||||||||||
Nortek, Inc. (9) | 793,646 | - | - | 793,646 | - | 43,436 | ||||||||||||||||||
Cooper-Standard Holdings Inc. (9) | 1,224,685 | 1,252,391 | 1,238,538 | 1,238,538 | - | 46,445 | ||||||||||||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred (1) (10) | 99,687 | - | - | 99,687 | 698 | 16,491 | ||||||||||||||||||
Cooper-Standard Holdings Inc., warrants, expire 2017 (9) | 195,965 | 197,905 | 196,935 | 196,935 | - | 2,551 | ||||||||||||||||||
American Media, Inc. (1) (9) (10) | 1,122,345 | - | - | 1,122,345 | - | 11,380 | ||||||||||||||||||
Georgia Gulf Corp. (11) | 2,198,408 | 1,222,333 | 1,897,333 | 1,523,408 | 260 | - | ||||||||||||||||||
Georgia Gulf Corp. 10.75% 2016 (11) | $ | 5,388,000 | - | $ | 5,388,000 | - | 33 | - | ||||||||||||||||
Georgia Gulf Corp. 9.00% 2017 (1) (11) | $ | 92,490,000 | - | $ | 10,605,000 | $ | 81,885,000 | 8,155 | - | |||||||||||||||
$ | 18,111 | $ | 224,285 |
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item. |
(1) Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities, including those in "Other securities," was $6,411,646,000, which represented 32.37% of the net assets of the fund. |
(2) Coupon rate may change periodically. |
(3) Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
(4) Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans, including those in "Other securities," was $1,950,200,000, which represented 9.85% of the net assets of the fund. |
(5) Scheduled interest and/or principal payment was not received. |
(6) Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
(7) Represents an affiliated company as defined under the Investment Company Act of 1940. |
(8) Acquired through a private placement transaction exempt from registration under the Securities Act of 1933. This security (acquired on 7/17/2009 at a cost of $72,739,000) may be subject to legal or contractual restrictions on resale. The total value of all such securities, including those in "Other securities," was $94,253,000, which represented .48% of the net assets of the fund. These securities were acquired from 6/26/2008 to 7/17/2009 at an aggregate cost of $84,652,000. |
(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 $121,146,000, which represented .61% of the net assets of the fund. |
(11) Unaffiliated issuer at 9/30/2012. |
Key to abbreviations and symbol |
BRL = Brazilian reais |
€ = Euros |
RUB = Russian rubles |
See Notes to Financial Statements |
Financial statements
Statement of assets and liabilities | ||||||||
at September 30, 2012 | (dollars in thousands) | |||||||
Assets: | ||||||||
Investment securities, at value: | ||||||||
Unaffiliated issuers (cost: $19,163,367) | $ | 19,696,458 | ||||||
Affiliated issuers (cost: $194,803) | 224,285 | $ | 19,920,743 | |||||
Cash | 41,946 | |||||||
Unrealized appreciation on open forward currency contracts | 647 | |||||||
Receivables for: | ||||||||
Sales of investments | $ | 106,025 | ||||||
Sales of fund's shares | 53,754 | |||||||
Dividends and interest | 382,105 | 541,884 | ||||||
20,505,220 | ||||||||
Liabilities: | ||||||||
Unrealized depreciation on open forward currency contracts | 105 | |||||||
Payables for: | ||||||||
Purchases of investments | 618,763 | |||||||
Repurchases of fund's shares | 56,184 | |||||||
Dividends on fund's shares | 9,152 | |||||||
Closed forward currency contracts | 59 | |||||||
Investment advisory services | 4,660 | |||||||
Services provided by related parties | 7,264 | |||||||
Trustees' deferred compensation | 207 | |||||||
Other | 156 | 696,445 | ||||||
Net assets at September 30, 2012 | $ | 19,808,670 | ||||||
Net assets consist of: | ||||||||
Capital paid in on shares of beneficial interest | $ | 20,135,818 | ||||||
Distributions in excess of net investment income | (36,445 | ) | ||||||
Accumulated net realized loss | (853,953 | ) | ||||||
Net unrealized appreciation | 563,250 | |||||||
Net assets at September 30, 2012 | $ | 19,808,670 |
(dollars and shares in thousands, except per-share amounts) | ||||||||||||
Shares of beneficial interest issued and outstanding (no stated par value) - | ||||||||||||
unlimited shares authorized (1,771,474 total shares outstanding) | ||||||||||||
Net assets | Shares outstanding | Net asset value per share | ||||||||||
Class A | $ | 13,822,395 | 1,236,126 | $ | 11.18 | |||||||
Class B | 204,268 | 18,267 | 11.18 | |||||||||
Class C | 1,417,963 | 126,807 | 11.18 | |||||||||
Class F-1 | 1,584,333 | 141,686 | 11.18 | |||||||||
Class F-2 | 902,465 | 80,707 | 11.18 | |||||||||
Class 529-A | 341,069 | 30,502 | 11.18 | |||||||||
Class 529-B | 13,295 | 1,189 | 11.18 | |||||||||
Class 529-C | 128,076 | 11,454 | 11.18 | |||||||||
Class 529-E | 18,871 | 1,688 | 11.18 | |||||||||
Class 529-F-1 | 19,584 | 1,751 | 11.18 | |||||||||
Class R-1 | 24,795 | 2,217 | 11.18 | |||||||||
Class R-2 | 231,514 | 20,704 | 11.18 | |||||||||
Class R-3 | 351,583 | 31,442 | 11.18 | |||||||||
Class R-4 | 231,805 | 20,730 | 11.18 | |||||||||
Class R-5 | 290,267 | 25,958 | 11.18 | |||||||||
Class R-6 | 226,387 | 20,246 | 11.18 | |||||||||
See Notes to Financial Statements |
Statement of operations | ||||||||
for the year ended September 30, 2012 | (dollars in thousands) | |||||||
Investment income: | ||||||||
Income: | ||||||||
Interest (net of non-U.S. taxes of $61; | ||||||||
also includes $17,153 from affiliates) | $ | 1,400,913 | ||||||
Dividends (also includes $958 from affiliates) | 14,187 | $ | 1,415,100 | |||||
Fees and expenses*: | ||||||||
Investment advisory services | 53,862 | |||||||
Distribution services | 55,038 | |||||||
Transfer agent services | 22,800 | |||||||
Administrative services | 3,509 | |||||||
Reports to shareholders | 979 | |||||||
Registration statement and prospectus | 509 | |||||||
Trustees' compensation | 151 | |||||||
Auditing and legal | 134 | |||||||
Custodian | 240 | |||||||
State and local taxes | 108 | |||||||
Other | 594 | 137,924 | ||||||
Net investment income | 1,277,176 | |||||||
Net realized gain and unrealized appreciation | ||||||||
on investments, forward currency contracts and currency: | ||||||||
Net realized gain (loss) on: | ||||||||
Investments (also includes $16,341 net gain from affiliates) | 142,191 | |||||||
Forward currency contracts | 18,035 | |||||||
Currency transactions | (1,071 | ) | 159,155 | |||||
Net unrealized appreciation (depreciation) on: | ||||||||
Investments | 1,233,163 | |||||||
Forward currency contracts | (5,293 | ) | ||||||
Currency translations | 1,236 | 1,229,106 | ||||||
Net realized gain and unrealized appreciation | ||||||||
on investments, forward currency contracts and currency | 1,388,261 | |||||||
Net increase in net assets resulting | ||||||||
from operations | $ | 2,665,437 | ||||||
(*) 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 | ||||||||
2012 | 2011 | |||||||
Operations: | ||||||||
Net investment income | $ | 1,277,176 | $ | 1,310,018 | ||||
Net realized gain on investments, forward currency contracts and currency transactions | 159,155 | 550,497 | ||||||
Net unrealized appreciation (depreciation) on investments, forward currency contracts and currency translations | 1,229,106 | (1,731,856 | ) | |||||
Net increase in net assets resulting from operations | 2,665,437 | 128,659 | ||||||
Dividends paid or accrued to shareholders from net investment income | (1,345,763 | ) | (1,350,032 | ) | ||||
Net capital share transactions | 2,512,433 | 305,028 | ||||||
Total increase (decrease) in net assets | 3,832,107 | (916,345 | ) | |||||
Net assets: | ||||||||
Beginning of year | 15,976,563 | 16,892,908 | ||||||
End of year (including distributions in excess of and undistributed | ||||||||
net investment income: $(36,445) and $34,947, respectively) | $ | 19,808,670 | $ | 15,976,563 | ||||
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.
The fund has 16 share classes consisting of five retail share classes (Classes A, B and C, as well as two F share classes, F-1 and F-2), five 529 college savings plan share classes (Classes 529-A, 529-B, 529-C, 529-E and 529-F-1) and six retirement plan share classes (Classes R-1, R-2, R-3, R-4, R-5 and R-6). The 529 college savings plan share classes can be used to save for college education. The retirement plan share classes are generally offered only through eligible employer-sponsored retirement plans. The fund’s share classes are further described below:
Share class | Initial sales charge | Contingent deferred sales charge upon redemption | Conversion feature |
Classes A and 529-A | Up to 3.75% | None (except 1% for certain redemptions within one year of purchase without an initial sales charge) | None |
Classes B and 529-B* | None | Declines from 5% to 0% for redemptions within six years of purchase | Classes B and 529-B convert to Classes A and 529-A, respectively, after eight years |
Class C | None | 1% for redemptions within one year of purchase | Class C converts to Class F-1 after 10 years |
Class 529-C | None | 1% for redemptions within one year of purchase | None |
Class 529-E | None | None | None |
Classes F-1, F-2 and 529-F-1 | None | None | None |
Classes R-1, R-2, R-3, R-4, R-5 and R-6 | None | None | None |
*Class B and 529-B shares of the fund are not available for purchase.
Holders of all share classes have equal pro rata rights to assets, dividends and liquidation proceeds. Each share class has identical voting rights, except for the exclusive right to vote on matters affecting only its class. Share classes have different fees and expenses ("class-specific fees and expenses"), primarily due to different arrangements for distribution, administrative and shareholder services. Differences in class-specific fees and expenses will result in differences in net investment income and, therefore, the payment of different per-share dividends by each class.
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 supplied by one or more pricing vendors on the valuation date. Purchases and sales of investment securities and income and expenses are translated into U.S. dollars at the exchange rates on the dates of such transactions. On the accompanying financial statements, the effects of changes in exchange rates on investment securities are included with the net realized gain or loss and net unrealized appreciation or depreciation on investments. The realized gain or loss and unrealized appreciation or depreciation resulting from all other transactions denominated in currencies other than U.S. dollars are disclosed separately.
3. | Valuation |
Capital Research and Management Company (“CRMC”), the fund’s investment adviser, values the fund’s investments at fair value as defined by accounting principles generally accepted in the United States of America. The net asset value of each share class of the fund is generally determined as of approximately 4:00 p.m. New York time each day the New York Stock Exchange is open.
Methods and inputs – The fund’s investment adviser uses the following methods and inputs to establish the fair value of the fund’s assets and liabilities. Use of particular methods and inputs may vary over time based on availability and relevance as market and economic conditions evolve.
Equity securities are generally valued at the official closing price of, or the last reported sale price on, the exchange or market on which such securities are traded, as of the close of business on the day the securities are being valued or, lacking any sales, at the last available bid price. Prices for each security are taken from the principal exchange or market on which the security trades.
Fixed-income securities, including short-term securities purchased with more than 60 days left to maturity, are generally valued at prices obtained from one or more pricing vendors. Vendors value such securities based on one or more of the inputs described in the following table. The table provides examples of inputs that are commonly relevant for valuing particular classes of fixed-income securities in which the fund is authorized to invest. However, these classifications are not exclusive, and any of the inputs may be used to value any other class of fixed-income security.
Fixed-income class | Examples of standard inputs |
All | Benchmark yields, transactions, bids, offers, quotations from dealers and trading systems, new issues, spreads and other relationships observed in the markets among comparable securities; and proprietary pricing models such as yield measures calculated using factors such as cash flows, financial or collateral performance and other reference data (collectively referred to as “standard inputs”) |
Corporate bonds & notes; convertible securities | Standard inputs and underlying equity of the issuer |
Bonds & notes of governments & government agencies | Standard inputs and interest rate volatilities |
Mortgage-backed; asset-backed obligations | Standard inputs and cash flows, prepayment information, default rates, delinquency and loss assumptions, collateral characteristics, credit enhancements and specific deal information |
Municipal securities | Standard inputs and, for certain distressed securities, cash flows or liquidation values using a net present value calculation based on inputs that include, but are not limited to, financial statements and debt contracts |
When the fund’s investment adviser deems it appropriate to do so (such as when vendor prices are unavailable or not deemed to be representative), fixed-income securities will be valued in good faith at the mean quoted bid and ask prices that are reasonably and timely available (or bid prices, if ask prices are not available) or at prices for securities of comparable maturity, quality and type.
Securities with both fixed-income and equity characteristics, or equity securities traded principally among fixed-income dealers, are generally valued in the manner described above for either equity or fixed-income securities, depending on which method is deemed most appropriate by the fund’s investment adviser. Short-term securities purchased within 60 days to maturity are valued at amortized cost, which approximates fair value. The value of short-term securities originally purchased with maturities greater than 60 days is determined based on an amortized value to par when they reach 60 days. Forward currency contracts are valued at the mean of representative quoted bid and ask prices, generally based on prices supplied by one or more pricing vendors.
Securities and other assets for which representative market quotations are not readily available or are considered unreliable by the fund’s investment adviser are fair valued as determined in good faith under fair value guidelines adopted by authority of the fund’s board of trustees as further described below. The investment adviser follows fair valuation guidelines, consistent with U.S. Securities and Exchange Commission rules and guidance, to consider relevant principles and factors when making fair value determinations. The investment adviser considers relevant indications of value that are reasonably and timely available to it in determining the fair value to be assigned to a particular security, such as the type and cost of the security; contractual or legal restrictions on resale of the security; relevant financial or business developments of the issuer; actively traded similar or related securities; conversion or exchange rights on the security; related corporate actions; significant events occurring after the close of trading in the security; and changes in overall market conditions. Fair valuations and valuations of investments that are not actively trading involve judgment and may differ materially from valuations that would have been used had greater market activity occurred.
Processes and structure – The fund’s board of trustees has delegated authority to the fund’s investment adviser to make fair value determinations, subject to board oversight. The investment adviser has established a Joint Fair Valuation Committee (the “Fair Valuation Committee”) to administer, implement and oversee the fair valuation process, and to make fair value decisions. The Fair Valuation Committee regularly reviews its own fair value decisions, as well as decisions made under its standing instructions to the investment adviser’s valuation teams. The Fair Valuation Committee reviews changes in fair value measurements from period to period and may, as deemed appropriate, update the fair valuation guidelines to better reflect the results of back testing and address new or evolving issues. The Fair Valuation Committee reports any changes to the fair valuation guidelines to the board of trustees with supplemental information to support the changes. The fund’s board and audit committee also regularly review reports that describe fair value determinations and methods.
The fund’s investment adviser has also established a Fixed-Income Pricing Review Group to administer and oversee the fixed-income valuation process, including the use of fixed-income pricing vendors. This group regularly reviews pricing vendor information and market data. Pricing decisions, processes and controls over security valuation are also subject to additional internal reviews, including an annual control self-evaluation program facilitated by the investment adviser’s compliance group.
Classifications – The fund’s investment adviser classifies the fund’s assets and liabilities into three levels based on the inputs used to value the assets or liabilities. Level 1 values are based on quoted prices in active markets for identical securities. Level 2 values are based on significant observable market inputs, such as quoted prices for similar securities and quoted prices in inactive markets. Level 3 values are based on significant unobservable inputs that reflect the investment adviser’s determination of assumptions that market participants might reasonably use in valuing the securities. The valuation 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, 2012 (dollars in thousands):
Investment securities | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Bonds ,notes & other debt instruments: | ||||||||||||||||
Corporate bonds, notes, & loans | $ | - | $ | 16,641,529 | $ | 39,880 | $ | 16,681,409 | ||||||||
U.S. Treasury bonds & notes | - | 103,028 | - | 103,028 | ||||||||||||
Other | - | 951,674 | - | 951,674 | ||||||||||||
Convertible securities | 28,652 | 107,268 | - | 135,920 | ||||||||||||
Preferred securities | 5,736 | 97,883 | - | 103,619 | ||||||||||||
Common stocks | 264,769 | 1 | 12,626 | 277,396 | ||||||||||||
Warrants | 2,899 | 2,960 | 153 | 6,012 | ||||||||||||
Short-term securities | - | 1,661,685 | - | 1,661,685 | ||||||||||||
Total | $ | 302,056 | $ | 19,566,028 | $ | 52,659 | $ | 19,920,743 | ||||||||
Other investments(*) | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Assets: | ||||||||||||||||
Unrealized appreciation on open forward currency contracts | $ | - | $ | 647 | $ | - | $ | 647 | ||||||||
Liabilities: | ||||||||||||||||
Unrealized depreciation on open forward currency contracts | - | (105 | ) | - | (105 | ) | ||||||||||
Total | $ | - | $ | 542 | $ | - | $ | 542 | ||||||||
(*) Forward currency contracts are not included in the investment portfolio. |
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 or instability 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. | Certain investment techniques |
Loan transactions – The fund has entered into loan transactions in which the fund acquires a loan either through an agent, by assignment from another holder, or as a participation interest in another holder's portion of a loan. The loan is often administered by a financial institution that acts as agent for the holders of the loan, and the fund may be required to receive approval from the agent and/or borrower prior to the sale of the investment. The loan's interest rate and maturity date may change based on the terms of the loan, including potential early payments of principal.
Unfunded commitments – The fund has participated in transactions that involve unfunded commitments, which may obligate the fund to lend additional sums based upon the terms of the loan agreement. As of September 30, 2012, the fund’s maximum exposure of unfunded loan commitments was $14,859,000, which would represent 0.08% of the net assets of the fund should such commitments become due. Unrealized appreciation of $116,000 is included in other payables in the statement of assets and liabilities and net unrealized appreciation on investments in the statement of operations.
Forward currency contracts - The fund has entered into forward currency contracts, which represent agreements to exchange currencies on specific future dates at predetermined rates. The fund’s investment adviser uses forward currency contracts to manage the fund’s exposure to changes in exchange rates. Upon entering into these contracts, risks may arise from the potential inability of counterparties to meet the terms of their contracts and from possible movements in exchange rates.
On a daily basis, the fund’s investment adviser values forward currency contracts based on the applicable exchange rates and records unrealized appreciation or depreciation for open forward currency contracts in the fund’s statement of assets and liabilities. Realized gains or losses are recorded at the time the forward currency contract is closed or offset by another contract with the same broker for the same settlement date and currency.
Closed forward currency contracts that have not reached their settlement date are included in the respective receivables or payables for closed forward currency contracts in the fund’s statement of assets and liabilities. Net realized gains or losses from closed forward currency contracts and net unrealized appreciation or depreciation from open forward currency contracts are recorded in the fund’s statement of operations.
Collateral – To reduce the risk to counterparties of forward currency contracts, the fund has entered into a collateral program with certain counterparties. The program calls for the fund to either receive or pledge collateral based on the net unrealized gain or loss on unsettled forward currency contracts by counterparty. The purpose of the collateral is to cover potential losses that could occur in the event that either party can not meet its contractual obligations.
6. | Taxation and distributions |
Federal income taxation – The fund complies with the requirements under Subchapter M of the Internal Revenue Code applicable to mutual funds and intends to distribute substantially all of its net taxable income and net capital gains each year. The fund is not subject to income taxes to the extent such distributions are made. Therefore, no federal income tax provision is required.
As of and during the period ended September 30, 2012, the fund did not have a liability for any unrecognized tax benefits. The fund recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense in the statement of operations. During the period, the fund did not incur any interest or penalties.
The fund is not subject to examination by U.S. federal tax authorities for tax years before 2008 and by state tax authorities and tax authorities outside the U.S. for tax years before 2007.
Non-U.S. taxation – Dividend and interest income are recorded net of non-U.S. taxes paid.
Distributions – Distributions paid to shareholders are based on net investment income and net realized gains determined on a tax basis, which may differ from net investment income and net realized gains for financial reporting purposes. These differences are due primarily to different treatment for items such as currency gains and losses; short-term capital gains and losses; capital losses related to sales of certain securities within 30 days of purchase; unrealized appreciation of certain investments in securities outside the U.S.; cost of investments sold; net capital losses; and income on certain investments. The fiscal year in which amounts are distributed may differ from the year in which the net investment income and net realized gains are recorded by the fund for financial reporting purposes.
During the year ended September 30, 2012, the fund reclassified $2,773,000 from distributions in excess of net investment income to accumulated net realized loss and $32,000 from distributions in excess of net investment income to capital paid in on shares of beneficial interest to align financial reporting with tax reporting.
Under the Regulated Investment Company Modernization Act of 2010 (the “Act”), net capital losses recognized after September 30, 2011, may be carried forward indefinitely, and their character is retained as short-term and/or long-term losses. Previously, net capital losses were carried forward for eight years and treated as short-term losses. As a transition rule, the Act requires that post-enactment net capital losses be used before pre-enactment net capital losses.
As of September 30, 2012, the tax basis components of distributable earnings, unrealized appreciation (depreciation) and cost of investment securities were as follows:
(dollars in thousands) | |||||
Undistributed ordinary income | $ | 30,332 | |||
Capital loss carryforward expiring 2018* | (840,948 | ) | |||
Gross unrealized appreciation on investment securities | 1,275,567 | ||||
Gross unrealized depreciation on investment securities | (783,337 | ) | |||
Net unrealized appreciation on investment securities | 492,230 | ||||
Cost of investment securities | 19,428,513 | ||||
*Reflects the utilization of capital loss carryforward of $157,075,000. 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 a capital loss carryforward remains. |
Tax-basis distributions paid or accrued to shareholders from ordinary income were as follows (dollars in thousands):
Year ended September 30 | ||||||||
Share class | 2012 | 2011 | ||||||
Class A | $ | 948,806 | $ | 948,181 | ||||
Class B | 15,866 | 26,714 | ||||||
Class C | 89,548 | 95,927 | ||||||
Class F-1 | 109,529 | 115,447 | ||||||
Class F-2 | 60,321 | 46,320 | ||||||
Class 529-A | 22,659 | 20,211 | ||||||
Class 529-B | 991 | 1,431 | ||||||
Class 529-C | 7,725 | 7,106 | ||||||
Class 529-E | 1,230 | 1,063 | ||||||
Class 529-F-1 | 1,304 | 1,045 | ||||||
Class R-1 | 1,527 | 1,552 | ||||||
Class R-2 | 14,463 | 15,146 | ||||||
Class R-3 | 23,467 | 24,160 | ||||||
Class R-4 | 16,653 | 17,338 | ||||||
Class R-5 | 20,422 | 19,644 | ||||||
Class R-6 | 11,252 | 8,747 | ||||||
Total | $ | 1,345,763 | $ | 1,350,032 |
7. | Fees and transactions with related parties |
CRMC, the fund’s investment adviser, is the parent company of American Funds Distributors,® Inc. ("AFD"), the principal underwriter of the fund’s shares, and American Funds Service Company® ("AFS"), the fund’s transfer agent.
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, 2012, the investment advisory services fee was $53,862,000, which was equivalent to an annualized rate of 0.299% of average daily net assets.
Class-specific fees and expenses – Expenses that are specific to individual share classes are accrued directly to the respective share class. The principal class-specific fees and expenses are described below:
Distribution services – The fund has plans of distribution for all share classes, except Class F-2, R-5 and R-6 shares. Under the plans, the board of trustees approves certain categories of expenses that are used to finance activities primarily intended to sell fund shares and service existing accounts. The plans provide for payments, based on an annualized percentage of average daily net assets, ranging from 0.30% to 1.00% as noted below. In some cases, the board of trustees has limited the amounts that may be paid to less than the maximum allowed by the plans. All share classes with a plan may use up to 0.25% of average daily net assets to pay service fees, or to compensate AFD for paying service fees, to firms that have entered into agreements with AFD to provide certain shareholder services. The remaining amounts available to be paid under each plan are paid to dealers to compensate them for their sales activities.
For Class A and 529-A shares, distribution-related expenses include the reimbursement of dealer and wholesaler commissions paid by AFD for certain shares sold without a sales charge. These share classes reimburse AFD for amounts billed within the prior 15 months but only to the extent that the overall annual expense limit of 0.30% is not exceeded. As of September 30, 2012, there were no unreimbursed expenses subject to reimbursement for Class A or 529-A shares.
Share class | Currently approved limits | Plan limits |
Class A | 0.30% | 0.30% |
Class 529-A | 0.30 | 0.50 |
Classes B and 529-B | 1.00 | 1.00 |
Classes C, 529-C and R-1 | 1.00 | 1.00 |
Class R-2 | 0.75 | 1.00 |
Classes 529-E and R-3 | 0.50 | 0.75 |
Classes F-1, 529-F-1 and R-4 | 0.25 | 0.50 |
Transfer agent services – The fund has a shareholder services agreement with AFS under which the fund compensates AFS for providing transfer agent services to each of the fund’s share classes. These services include recordkeeping, shareholder communications and transaction processing. In addition, the fund reimburses AFS for amounts paid to third parties for performing transfer agent services on behalf of fund shareholders.
During the period October 1, 2011, through December 31, 2011, only Class A and B shares were subject to the shareholder services agreement with AFS. During this period, AFS and other third parties were compensated for providing transfer agent services to Class C, F, 529 and R shares through the fees paid by the fund to CRMC under the fund’s administrative services agreement with CRMC as described in the administrative services section below and on the following page; CRMC paid for any transfer agent services expenses in excess of 0.10% of the respective average daily net assets of each of such share classes.
Effective January 1, 2012, the shareholder services agreement with AFS was modified to include Class C, F, 529 and R shares and payment for transfer agent services for such classes under the administrative services agreement terminated. Under this structure, transfer agent services expenses for some classes may exceed 0.10% of average daily net assets, resulting in an increase in expenses paid by some share classes.
For the year ended September 30, 2012, the total transfer agent services fee paid under these agreements was $22,800,000, of which $21,741,000 was paid by the fund to AFS and $1,059,000 was paid by the fund to CRMC through its administrative services agreement with the fund. Amounts paid to CRMC by the fund were then paid by CRMC to AFS and other third parties.
Administrative services – The fund has an administrative services agreement with CRMC under which the fund compensates CRMC for providing administrative services to Class A, C, F, 529 and R shares. These services include, but are not limited to, coordinating, monitoring, assisting and overseeing third parties that provide services to fund shareholders.
During the period October 1, 2011, through December 31, 2011, the agreement applied only to Class C, F, 529 and R shares. The agreement also required CRMC to arrange for the provision of transfer agent services for such share classes, which paid CRMC annual fees up to 0.15% (0.10% for Class R-5 and 0.05% for Class R-6) of their respective average daily net assets. During this period, up to 0.05% of these fees were used to compensate CRMC for performing administrative services; all other amounts paid under this agreement were used to compensate AFS and other third parties for transfer agent services.
Effective January 1, 2012, the administrative services agreement with CRMC was modified to include Class A shares. Under the revised agreement, Class A shares pay an annual fee of 0.01% and Class C, F, 529 and R shares pay an annual fee of 0.05% of their respective average daily net assets to CRMC for administrative services. Fees for transfer agent services are no longer included as part of the administrative services fee paid by the fund to CRMC.
For the year ended September 30, 2012, total fees paid to CRMC for performing administrative services were $3,509,000.
529 plan services – Each 529 share class is subject to service fees to compensate the Commonwealth of Virginia for the maintenance of the 529 college savings plan. The quarterly fee is based on a series of decreasing annual rates beginning with 0.10% on the first $30 billion of the net assets invested in Class 529 shares of the American Funds and decreasing to 0.06% on such assets between $120 billion and $150 billion. The fee for any given calendar quarter is accrued and calculated on the basis of the average net assets of Class 529 shares of the American Funds for the last month of the prior calendar quarter. The fee is included in other expenses on the accompanying financial statements. The Commonwealth of Virginia is not considered a related party.
Class-specific expenses under the agreements described above and on the previous page for the year ended September 30, 2012, were as follows (dollars in thousands):
Share class | Distribution services | Transfer agent services | Administrative services | 529 plan services | ||||||||||||
Class A | $ | 29,913 | $ | 16,170 | $ | 965 | Not applicable | |||||||||
Class B | 2,308 | 294 | Not applicable | Not applicable | ||||||||||||
Class C | 13,235 | 1,688 | 625 | Not applicable | ||||||||||||
Class F-1 | 3,551 | 1,572 | 696 | Not applicable | ||||||||||||
Class F-2 | Not applicable | 765 | 378 | Not applicable | ||||||||||||
Class 529-A | 646 | 295 | 147 | $ | 303 | |||||||||||
Class 529-B | 147 | 18 | 7 | 15 | ||||||||||||
Class 529-C | 1,152 | 125 | 56 | 115 | ||||||||||||
Class 529-E | 85 | 10 | 8 | 17 | ||||||||||||
Class 529-F-1 | - | 17 | 8 | 17 | ||||||||||||
Class R-1 | 227 | 29 | 13 | Not applicable | ||||||||||||
Class R-2 | 1,607 | 927 | 111 | Not applicable | ||||||||||||
Class R-3 | 1,619 | 522 | 178 | Not applicable | ||||||||||||
Class R-4 | 548 | 229 | 114 | Not applicable | ||||||||||||
Class R-5 | Not applicable | 135 | 131 | Not applicable | ||||||||||||
Class R-6 | Not applicable | 4 | 72 | Not applicable | ||||||||||||
Total class-specific expenses | $ | 55,038 | $ | 22,800 | $ | 3,509 | $ | 467 |
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 $151,000, shown on the accompanying financial statements, includes $131,000 in current fees (either paid in cash or deferred) and a net increase of $20,000 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.
8. | Capital share transactions |
Capital share transactions in the fund were as follows (dollars and shares in thousands):
Sales(*) | Reinvestments of dividends | Repurchases(*) | Net increase (decrease) | |||||||||||||||||||||||||||||
Share class | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Shares | ||||||||||||||||||||||||
Year ended September 30, 2012 | ||||||||||||||||||||||||||||||||
Class A | $ | 2,950,296 | 270,595 | $ | 873,157 | 79,970 | $ | (2,148,697 | ) | (197,821 | ) | $ | 1,674,756 | 152,744 | ||||||||||||||||||
Class B | 26,355 | 2,420 | 14,390 | 1,320 | (118,497 | ) | (10,933 | ) | (77,752 | ) | (7,193 | ) | ||||||||||||||||||||
Class C | 364,739 | 33,439 | 80,091 | 7,338 | (353,351 | ) | (32,547 | ) | 91,479 | 8,230 | ||||||||||||||||||||||
Class F-1 | 697,962 | 64,204 | 108,051 | 9,897 | (589,494 | ) | (54,444 | ) | 216,519 | 19,657 | ||||||||||||||||||||||
Class F-2 | 504,614 | 46,634 | 50,181 | 4,592 | (275,623 | ) | (25,351 | ) | 279,172 | 25,875 | ||||||||||||||||||||||
Class 529-A | 78,742 | 7,226 | 22,698 | 2,078 | (43,253 | ) | (3,972 | ) | 58,187 | 5,332 | ||||||||||||||||||||||
Class 529-B | 2,460 | 226 | 987 | 91 | (7,187 | ) | (662 | ) | (3,740 | ) | (345 | ) | ||||||||||||||||||||
Class 529-C | 30,760 | 2,822 | 7,735 | 708 | (19,864 | ) | (1,824 | ) | 18,631 | 1,706 | ||||||||||||||||||||||
Class 529-E | 4,687 | 431 | 1,231 | 113 | (2,982 | ) | (273 | ) | 2,936 | 271 | ||||||||||||||||||||||
Class 529-F-1 | 5,877 | 539 | 1,304 | 119 | (3,024 | ) | (278 | ) | 4,157 | 380 | ||||||||||||||||||||||
Class R-1 | 8,138 | 746 | 1,514 | 139 | (6,534 | ) | (599 | ) | 3,118 | 286 | ||||||||||||||||||||||
Class R-2 | 74,293 | 6,812 | 14,398 | 1,319 | (73,343 | ) | (6,747 | ) | 15,348 | 1,384 | ||||||||||||||||||||||
Class R-3 | 181,751 | 16,666 | 23,421 | 2,146 | (141,935 | ) | (13,062 | ) | 63,237 | 5,750 | ||||||||||||||||||||||
Class R-4 | 81,945 | 7,516 | 16,629 | 1,523 | (91,436 | ) | (8,413 | ) | 7,138 | 626 | ||||||||||||||||||||||
Class R-5 | 101,958 | 9,370 | 20,450 | 1,872 | (74,803 | ) | (6,875 | ) | 47,605 | 4,367 | ||||||||||||||||||||||
Class R-6 | 139,385 | 12,686 | 11,239 | 1,028 | (38,982 | ) | (3,528 | ) | 111,642 | 10,186 | ||||||||||||||||||||||
Total net increase | ||||||||||||||||||||||||||||||||
(decrease) | $ | 5,253,962 | 482,332 | $ | 1,247,476 | 114,253 | $ | (3,989,005 | ) | (367,329 | ) | $ | 2,512,433 | 229,256 | ||||||||||||||||||
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 | ||||||||||||||||||
* Includes exchanges between share classes of the fund. |
9. | Investment transactions |
The fund made purchases and sales of investment securities, excluding short-term securities and U.S. government obligations, if any, of $7,798,136,000 and $6,271,971,000, respectively, during the year ended September 30, 2012.
Financial highlights
Income (loss) from investment operations(1) | Dividends and distributions | |||||||||||||||||||||||||||||||||||||||||||||||||||
Net asset value, beginning of period | Net investment income | Net gains (losses) on securities (both realized and unrealized) | Total from investment operations | Dividends (from net investment income) | Distributions (from capital gains) | Total dividends and distributions | Net asset value, end of period | Total return(2) (3) | Net assets, end of period (in millions) | Ratio of expenses to average net assets before reimbursements/ waivers | Ratio of expenses to average net assets after reimbursements/ waivers(3) | Ratio of net income to average net assets(3) | ||||||||||||||||||||||||||||||||||||||||
Class A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | $ | 10.36 | $ | .78 | $ | .86 | $ | 1.64 | $ | (.82 | ) | $ | - | $ | (.82 | ) | $ | 11.18 | 16.35 | % | $ | 13,822 | .69 | % | .69 | % | 7.17 | % | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | (.74 | ) | - | (.74 | ) | 11.18 | 15.49 | 204 | 1.44 | 1.44 | 6.47 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | (.74 | ) | - | (.74 | ) | 11.18 | 15.43 | 1,418 | 1.48 | 1.48 | 6.38 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | (.82 | ) | - | (.82 | ) | 11.18 | 16.32 | 1,584 | .71 | .71 | 7.14 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class F-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .81 | .86 | 1.67 | (.85 | ) | - | (.85 | ) | 11.18 | 16.62 | 903 | .46 | .46 | 7.37 | |||||||||||||||||||||||||||||||||||||
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(4) | 11.01 | .14 | (1.00 | ) | (.86 | ) | (.14 | ) | - | (.14 | ) | 10.01 | (7.84 | ) | 13 | .08 | .07 | 1.34 | ||||||||||||||||||||||||||||||||||
Class 529-A: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | (.82 | ) | - | (.82 | ) | 11.18 | 16.26 | 341 | .77 | .77 | 7.08 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-B: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | (.73 | ) | - | (.73 | ) | 11.18 | 15.34 | 13 | 1.57 | 1.57 | 6.32 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-C: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | (.73 | ) | - | (.73 | ) | 11.18 | 15.35 | 128 | 1.56 | 1.56 | 6.29 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-E: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .75 | .86 | 1.61 | (.79 | ) | - | (.79 | ) | 11.18 | 15.97 | 19 | 1.02 | 1.02 | 6.83 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class 529-F-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | $ | 10.36 | $ | .80 | $ | .86 | $ | 1.66 | $ | (.84 | ) | $ | - | $ | (.84 | ) | $ | 11.18 | 16.50 | % | $ | 20 | .56 | % | .56 | % | 7.28 | % | ||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-1: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .70 | .86 | 1.56 | (.74 | ) | - | (.74 | ) | 11.18 | 15.42 | 25 | 1.50 | 1.50 | 6.36 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-2: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .69 | .86 | 1.55 | (.73 | ) | - | (.73 | ) | 11.18 | 15.38 | 232 | 1.54 | 1.54 | 6.32 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-3: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .75 | .86 | 1.61 | (.79 | ) | - | (.79 | ) | 11.18 | 15.96 | 352 | 1.03 | 1.03 | 6.84 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-4: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .78 | .86 | 1.64 | (.82 | ) | - | (.82 | ) | 11.18 | 16.32 | 232 | .72 | .72 | 7.16 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-5: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .81 | .86 | 1.67 | (.85 | ) | - | (.85 | ) | 11.18 | 16.67 | 290 | .41 | .41 | 7.44 | |||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||
Class R-6: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Year ended 9/30/2012 | 10.36 | .82 | .86 | 1.68 | (.86 | ) | - | (.86 | ) | 11.18 | 16.72 | 226 | .36 | .36 | 7.44 | |||||||||||||||||||||||||||||||||||||
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(4) | 8.47 | .33 | 1.83 | 2.16 | (.34 | ) | - | (.34 | ) | 10.29 | 25.96 | 49 | .18 | .18 | 3.55 |
Year ended September 30 | ||||||||||||||||||||
2012 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
Portfolio turnover rate for all share classes | 38 | % | 51 | % | 47 | % | 43 | % | 35 | % |
(1)Based on average shares outstanding. | |||||||||||||
(2)Total returns exclude any applicable sales charges, including contingent deferred sales charges. | |||||||||||||
(3)This column reflects the impact, if any, of certain reimbursements/waivers from CRMC. During some of the periods shown, CRMC reduced fees for investment advisory services. In addition, during some of the periods shown, CRMC paid a portion of the fund's transfer agent fees for certain retirement plan share classes. | |||||||||||||
(4)Based on operations for the period shown and, accordingly, is not representative of a full year. | |||||||||||||
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, 2012, 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, 2012, 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, 2012, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
Deloitte & Touche LLP
Costa Mesa, California
November 12, 2012
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, 2012, through September 30, 2012).
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 4/1/2012 | Ending account value 9/30/2012 | Expenses paid during period* | Annualized expense ratio | |||||||||||||
Class A -- actual return | $ | 1,000.00 | $ | 1,046.52 | $ | 3.48 | .68 | % | ||||||||
Class A -- assumed 5% return | 1,000.00 | 1,021.60 | 3.44 | .68 | ||||||||||||
Class B -- actual return | 1,000.00 | 1,042.64 | 7.30 | 1.43 | ||||||||||||
Class B -- assumed 5% return | 1,000.00 | 1,017.85 | 7.21 | 1.43 | ||||||||||||
Class C -- actual return | 1,000.00 | 1,042.36 | 7.56 | 1.48 | ||||||||||||
Class C -- assumed 5% return | 1,000.00 | 1,017.60 | 7.47 | 1.48 | ||||||||||||
Class F-1 -- actual return | 1,000.00 | 1,046.37 | 3.63 | .71 | ||||||||||||
Class F-1 -- assumed 5% return | 1,000.00 | 1,021.45 | 3.59 | .71 | ||||||||||||
Class F-2 -- actual return | 1,000.00 | 1,047.66 | 2.35 | .46 | ||||||||||||
Class F-2 -- assumed 5% return | 1,000.00 | 1,022.70 | 2.33 | .46 | ||||||||||||
Class 529-A -- actual return | 1,000.00 | 1,046.05 | 3.94 | .77 | ||||||||||||
Class 529-A -- assumed 5% return | 1,000.00 | 1,021.15 | 3.89 | .77 | ||||||||||||
Class 529-B -- actual return | 1,000.00 | 1,041.92 | 7.96 | 1.56 | ||||||||||||
Class 529-B -- assumed 5% return | 1,000.00 | 1,017.20 | 7.87 | 1.56 | ||||||||||||
Class 529-C -- actual return | 1,000.00 | 1,041.95 | 7.96 | 1.56 | ||||||||||||
Class 529-C -- assumed 5% return | 1,000.00 | 1,017.20 | 7.87 | 1.56 | ||||||||||||
Class 529-E -- actual return | 1,000.00 | 1,044.80 | 5.16 | 1.01 | ||||||||||||
Class 529-E -- assumed 5% return | 1,000.00 | 1,019.95 | 5.10 | 1.01 | ||||||||||||
Class 529-F-1 -- actual return | 1,000.00 | 1,047.16 | 2.81 | .55 | ||||||||||||
Class 529-F-1 -- assumed 5% return | 1,000.00 | 1,022.25 | 2.78 | .55 | ||||||||||||
Class R-1 -- actual return | 1,000.00 | 1,042.34 | 7.56 | 1.48 | ||||||||||||
Class R-1 -- assumed 5% return | 1,000.00 | 1,017.60 | 7.47 | 1.48 | ||||||||||||
Class R-2 -- actual return | 1,000.00 | 1,041.90 | 8.01 | 1.57 | ||||||||||||
Class R-2 -- assumed 5% return | 1,000.00 | 1,017.15 | 7.92 | 1.57 | ||||||||||||
Class R-3 -- actual return | 1,000.00 | 1,044.74 | 5.21 | 1.02 | ||||||||||||
Class R-3 -- assumed 5% return | 1,000.00 | 1,019.90 | 5.15 | 1.02 | ||||||||||||
Class R-4 -- actual return | 1,000.00 | 1,046.36 | 3.63 | .71 | ||||||||||||
Class R-4 -- assumed 5% return | 1,000.00 | 1,021.45 | 3.59 | .71 | ||||||||||||
Class R-5 -- actual return | 1,000.00 | 1,047.91 | 2.10 | .41 | ||||||||||||
Class R-5 -- assumed 5% return | 1,000.00 | 1,022.95 | 2.07 | .41 | ||||||||||||
Class R-6 -- actual return | 1,000.00 | 1,048.20 | 1.84 | .36 | ||||||||||||
Class R-6 -- assumed 5% return | 1,000.00 | 1,023.20 | 1.82 | .36 | ||||||||||||
*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 366 (to reflect the one-half year period). |
Tax information
unaudited
We are required to advise you of the federal tax status of certain distributions received by shareholders during the fiscal year. The fund hereby designates the following amounts for the fund’s fiscal year ended September 30, 2012:
Qualified dividend income | $ | 23,008,000 | ||
Corporate dividends received deduction | $ | 17,588,000 | ||
U.S. government income that may be exempt from state taxation | $ | 1,175,000 |
Individual shareholders should refer to their Form 1099 or other tax information, which will be mailed in January 2013, to determine the calendar year amounts to be included on their 2012 tax returns. Shareholders should consult their tax advisers.
Other share class results
unaudited
Classes B, C, F and 529
Fund results shown are for past periods and are not predictive of results for future periods. Current and future results may be lower or higher than those shown. Share prices and returns will vary, so investors may lose money. For current information and month-end results, visit americanfunds.com.
Average annual total returns for periods ended | 10 years/ | |||||||||||
September 30, 2012: | 1 year | 5 years | Life of class1 | |||||||||
Class B shares2 | ||||||||||||
Reflecting applicable contingent deferred sales charge | ||||||||||||
(CDSC), maximum of 5%, payable only if shares | ||||||||||||
are sold within six years of purchase | 10.49 | % | 5.47 | % | 9.21 | % | ||||||
Not reflecting CDSC | 15.49 | 5.76 | 9.21 | |||||||||
Class C shares | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 14.43 | 5.72 | 8.99 | |||||||||
Not reflecting CDSC | 15.43 | 5.72 | 8.99 | |||||||||
Class F-1 shares3 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.32 | 6.53 | 9.83 | |||||||||
Class F-2 shares3 — first sold 8/4/08 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.62 | — | 9.35 | |||||||||
Class 529-A shares4 | ||||||||||||
Reflecting 3.75% maximum sales charge | 11.94 | 5.69 | 9.39 | |||||||||
Not reflecting maximum sales charge | 16.26 | 6.50 | 9.80 | |||||||||
Class 529-B shares2,4 | ||||||||||||
Reflecting applicable CDSC, maximum of 5%, payable | ||||||||||||
only if shares are sold within six years of purchase | 10.34 | 5.35 | 9.07 | |||||||||
Not reflecting CDSC | 15.34 | 5.65 | 9.07 | |||||||||
Class 529-C shares4 | ||||||||||||
Reflecting CDSC, maximum of 1%, payable only | ||||||||||||
if shares are sold within one year of purchase | 14.35 | 5.65 | 8.91 | |||||||||
Not reflecting CDSC | 15.35 | 5.65 | 8.91 | |||||||||
Class 529-E shares3,4 | 15.97 | 6.21 | 9.47 | |||||||||
Class 529-F-1 shares3,4 | ||||||||||||
Not reflecting annual asset-based fee charged | ||||||||||||
by sponsoring firm | 16.50 | 6.72 | 9.94 |
1Applicable to Class F-2 shares only. All other share classes reflect 10-year results. |
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. When applicable, investment results reflect fee waivers, without which results would have been lower. Visit americanfunds.com for more information.
For information regarding the differences among the various share classes, refer to the fund prospectus.
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 |
William H. Baribault, 67 | 2010 | Chairman of the Board and CEO, Oakwood Enterprises (private investment and consulting) |
James G. Ellis, 65 | 2006 | Dean and Professor of Marketing, Marshall School of |
Business, University of Southern California | ||
Leonard R. Fuller, 66 | 1994 | President and CEO, Fuller Consulting (financial |
management consulting firm) | ||
W. Scott Hedrick, 67 | 2010 | Founding General Partner, InterWest Partners |
(venture capital firm) | ||
R. Clark Hooper, 66 | 2005 | Private investor |
Chairman of the Board | ||
(Independent and Non-Executive) | ||
Merit E. Janow, 54 | 2010 | Professor, Columbia University, School of |
International and Public Affairs; former Member, | ||
World Trade Organization Appellate Body | ||
Laurel B. Mitchell, Ph.D., 57 | 2010 | Clinical Professor and Director, Accounting Program, |
University of Redlands | ||
Frank M. Sanchez, 69 | 1999 | Principal, The Sanchez Family Corporation dba |
McDonald’s Restaurants (McDonald’s licensee) | ||
Margaret Spellings, 55 | 2010 | President and CEO, Margaret Spellings & Company |
(public policy and strategic consulting); 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 | ||
Steadman Upham, Ph.D., 63 | 2007 | President and University Professor, |
The University of Tulsa | ||
“Independent” trustees1 | ||
Number of | ||
portfolios | ||
in fund | ||
complex3 | ||
overseen by | ||
Name and age | trustee | Other directorships4 held by trustee |
William H. Baribault, 67 | 58 | None |
James G. Ellis, 65 | 62 | Quiksilver, Inc. |
Leonard R. Fuller, 66 | 62 | None |
W. Scott Hedrick, 67 | 58 | Hot Topic, Inc.; Office Depot, Inc. |
R. Clark Hooper, 66 | 64 | JPMorgan Value Opportunities Fund, Inc.; |
Chairman of the Board | The Swiss Helvetia Fund, Inc. | |
(Independent and Non-Executive) | ||
Merit E. Janow, 54 | 61 | The NASDAQ Stock Market LLC; |
Trimble Navigation Limited | ||
Laurel B. Mitchell, Ph.D., 57 | 58 | None |
Frank M. Sanchez, 69 | 58 | None |
Margaret Spellings, 55 | 61 | None |
Steadman Upham, Ph.D., 63 | 61 | None |
Lee A. Ault III, a trustee of the fund since 2010, and Martin Fenton, a trustee of the fund since 1989, have retired from the board. The trustees thank Mr. Ault and Mr. Fenton for their dedication and service to the fund.
“Interested” trustee5,6 | ||
Year first | ||
elected a | ||
trustee or | Principal occupation(s) during past five years | |
Name, age and | officer of | and positions held with affiliated entities or the |
position with fund | the fund2 | principal underwriter of the fund |
John H. Smet, 56 | 2011 | Senior Vice President — Fixed Income, Capital |
Research and Management Company; Director, | ||
The Capital Group Companies, Inc.7 | ||
“Interested” trustee5,6 | ||
Number of | ||
portfolios in | ||
fund complex3 | ||
Name, age and | overseen | |
position with fund | by trustee | Other directorships4 held by trustee |
John H. Smet, 56 | 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 800/421-4225 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.
See footnotes on page 32.
Other officers6 | ||
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, 56 | 1995 | Senior Vice President — Fixed Income, Capital |
President | Research and Management Company; Director, | |
Capital Research and Management Company | ||
David A. Daigle, 45 | 2008 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research Company7 | |
Jennifer L. Hinman, 54 | 2001 | Senior Vice President — Fixed Income, Capital |
Senior Vice President | Research Company;7 Director, Capital International | |
Research, Inc.;7 Director, Capital Strategy Research, | ||
Inc.7 | ||
Kristine M. Nishiyama, 42 | 2003 | Senior Vice President and Senior Counsel — Fund |
Senior Vice President | Business Management Group, Capital Research and | |
Management Company; Vice President and Senior | ||
Counsel, Capital Bank and Trust Company7 | ||
Richard N. Lewis, 39 | 2011 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company7 | |
Marcus B. Linden, 46 | 2008 | Senior Vice President — Fixed Income, Capital |
Vice President | Research Company7 | |
Courtney R. Taylor, 37 | 2006 | Assistant Vice President — Fund Business |
Secretary | Management Group, Capital Research and | |
Management Company | ||
Karl C. Grauman, 44 | 2011 | Vice President — Fund Business Management |
Treasurer | Group, Capital Research and Management Company | |
Steven I. Koszalka, 48 | 2010 | Vice President — Fund Business Management |
Assistant Secretary | Group, Capital Research and Management Company | |
Brian C. Janssen, 40 | 2012 | Vice President — Fund Business Management |
Assistant Treasurer | Group, Capital Research and Management Company | |
Dori Laskin, 61 | 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. Capital Research and Management Company also manages American Funds Insurance Series,® which is composed of 19 funds and serves as the underlying investment vehicle for certain variable insurance contracts; American Funds Target Date Retirement Series,® which is composed of 10 funds and is available through tax-deferred retirement plans and IRAs; American Funds Portfolio Series,SM which is composed of eight funds; and American Funds College Target Date Series,SM which is composed of seven funds. |
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 trustee or 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). |
6All of the officers listed are officers and/or directors/trustees of one or more of the other funds for which Capital Research and Management Company serves as investment adviser. |
7Company 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 investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 or visit the American Funds website at americanfunds.com.
“American Funds Proxy Voting Procedures and Principles” — which describes how we vote proxies relating to portfolio securities — is available on the American Funds website or upon request by calling AFS. The fund files its proxy voting record with the U.S. Securities and Exchange Commission (SEC) for the 12 months ended June 30 by August 31. The proxy voting record is available free of charge on the SEC website at sec.gov and on the American Funds website.
A complete September 30, 2012, 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, 2012, 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 25 years of investment experience, including 21 years at our company, reflecting a career commitment to our long-term approach.1
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 91% of 10-year periods and 96% of 20-year periods. Our fixed-income funds have beaten their Lipper indexes in 60% of 10-year periods and 67% of 20-year periods.2 Our fund management fees have been among the lowest in the industry.3
1As of 12/31/11. |
2Based on Class A share results for periods through 12/31/11. Periods covered are the shorter of the fund’s lifetime or since the comparable Lipper index inception date. |
3Based on management fees for the 20-year period ended 12/31/11 versus comparable Lipper categories, excluding funds of funds. |
American Funds span a range of investment objectives
• | Growth funds |
AMCAP Fund® |
EuroPacific Growth Fund® |
The Growth Fund of America® |
The New Economy Fund® |
New Perspective Fund® |
New World Fund® |
SMALLCAP World Fund® |
• | Growth-and-income funds |
American Mutual Fund® |
Capital World Growth and Income Fund® |
Fundamental InvestorsSM |
International Growth and Income FundSM |
The Investment Company of America® |
Washington Mutual Investors FundSM |
• | Equity-income funds |
Capital Income Builder® |
The Income Fund of America® |
• | Balanced funds |
American Balanced Fund® |
American Funds Global Balanced FundSM |
• | Bond funds |
American Funds Mortgage Fund® |
American High-Income Trust® |
The Bond Fund of America® |
Capital World Bond Fund® |
Intermediate Bond Fund of America® |
Short-Term Bond Fund of America® |
U.S. Government Securities Fund® |
• | Tax-exempt bond funds |
American Funds Short-Term Tax-Exempt Bond Fund® |
American High-Income Municipal Bond Fund® |
Limited Term Tax-Exempt Bond Fund of America® |
The Tax-Exempt Bond Fund of America® |
State-specific tax-exempt funds |
American Funds Tax-Exempt Fund of New York® |
The Tax-Exempt Fund of California® |
The Tax-Exempt Fund of Maryland® |
The Tax-Exempt Fund of Virginia® |
• | Money market fund |
American Funds Money Market Fund® |
• | American Funds Portfolio SeriesSM |
American Funds Global Growth PortfolioSM |
American Funds Growth PortfolioSM |
American Funds Growth and Income PortfolioSM |
American Funds Balanced PortfolioSM |
American Funds Income PortfolioSM |
American Funds Tax-Advantaged Income PortfolioSM |
American Funds Preservation PortfolioSM |
American Funds Tax-Exempt Preservation PortfolioSM |
• | American Funds Target Date Retirement Series® |
• | American Funds College Target Date SeriesSM |
The Capital Group Companies
American Funds Capital Research and Management Capital International Capital Guardian Capital Bank and Trust
Lit. No. MFGEARX-021-1112P
Litho in USA RCG/RRD/8049-S33534
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 Laurel B. Mitchell, 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: | ||||
2011 | $109,000 | |||
2012 | $112,000 | |||
b) Audit-Related Fees: | ||||
2011 | $ 5,000 | |||
2012 | $ 6,000 | |||
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 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2011 | $ 7,000 | |||
2012 | $ 7,000 | |||
The tax fees consist of professional services relating to the preparation of the Registrant’s tax returns including returns relating to the Registrant’s investments in non-U.S. jurisdictions. | ||||
d) All Other Fees: | ||||
2011 | None | |||
2012 | 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: | ||||
2011 | $ 1,055,000 | |||
2012 | $ 1,028,000 | |||
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 issued by the American Institute of Certified Public Accountants. | ||||
c) Tax Fees: | ||||
2011 | $ 38,000 | |||
2012 | $ 18,000 | |||
The tax fees consist of consulting services relating to the Registrant’s investments. | ||||
d) All Other Fees: | ||||
2011 | $ 2,000 | |||
2012 | $ 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 $1,651,000 for fiscal year 2011 and $1,582,000 for fiscal year 2012. 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 Trust ®
Investment portfolio
September 30, 2012
Bonds, notes & other debt instruments — 89.54% | Principal amount (000) | Value (000) | ||||||
CORPORATE BONDS, NOTES & LOANS — 84.22% | ||||||||
CONSUMER DISCRETIONARY — 17.72% | ||||||||
MGM Resorts International 6.75% 2013 | $ | 45,790 | $ | 46,992 | ||||
MGM Resorts International 13.00% 2013 | 26,725 | 30,266 | ||||||
MGM Resorts International 5.875% 2014 | 70,090 | 73,244 | ||||||
MGM Resorts International 10.375% 2014 | 9,525 | 10,763 | ||||||
MGM Resorts International 6.625% 2015 | 22,975 | 24,698 | ||||||
MGM Resorts International 6.875% 2016 | 12,000 | 12,600 | ||||||
MGM Resorts International 7.50% 2016 | 36,400 | 39,130 | ||||||
MGM Resorts International 11.125% 2017 | 13,800 | 15,335 | ||||||
MGM Resorts International 6.75% 20201 | 33,125 | 33,208 | ||||||
MGM Resorts International 9.00% 2020 | 12,225 | 13,707 | ||||||
MGM Resorts International 7.75% 2022 | 23,200 | 24,360 | ||||||
Charter Communications, Inc. 13.50% 2016 | 46,320 | 50,373 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.25% 2017 | 70,900 | 77,636 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 7.875% 2018 | 40,425 | 43,962 | ||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.00% 2019 | 10,000 | 10,875 | ||||||
CCO Holdings LLC and CCO Holdings Capital Corp. 7.375% 2020 | 23,000 | 25,789 | ||||||
Charter Communications Operating, LLC and Charter Communications Operating Capital Corp. 8.125% 2020 | 28,175 | 31,979 | ||||||
EchoStar DBS Corp 7.75% 2015 | 5,000 | 5,650 | ||||||
EchoStar DBS Corp 7.125% 2016 | 7,000 | 7,770 | ||||||
DISH DBS Corp. 4.625% 20171 | 95,950 | 98,589 | ||||||
DISH DBS Corp 7.875% 2019 | 3,550 | 4,145 | ||||||
DISH DBS Corp 6.75% 2021 | 48,490 | 53,097 | ||||||
DISH DBS Corp. 5.875% 20221 | 44,200 | 45,526 | ||||||
Boyd Gaming Corp. 6.75% 2014 | 31,675 | 31,833 | ||||||
Boyd Gaming Corp. 7.125% 2016 | 34,465 | 34,293 | ||||||
Boyd Gaming Corp. 9.125% 2018 | 82,070 | 86,584 | ||||||
Boyd Gaming Corp. 9.00% 20201 | 50,950 | 52,224 | ||||||
Virgin Media Finance PLC, Series 1, 9.50% 2016 | 88,775 | 98,762 | ||||||
Virgin Media Secured Finance PLC 6.50% 2018 | 9,325 | 10,258 | ||||||
Virgin Media Finance PLC 8.375% 20191 | 57,435 | 65,619 | ||||||
Univision Communications Inc., Term Loan B, 4.466% 20172,3,4 | 122,468 | 121,243 | ||||||
Univision Communications Inc. 8.50% 20211 | 31,790 | 32,426 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 8.50% 2015 | 67,753 | 68,993 | ||||||
Mediacom LLC and Mediacom Capital Corp. 9.125% 2019 | 26,450 | 29,360 | ||||||
Mediacom LLC and Mediacom Capital Corp. 7.25% 2022 | 19,300 | 20,796 | ||||||
Mediacom Broadband LLC and Mediacom Broadband Corp. 6.375% 20231 | 10,475 | 10,527 | ||||||
Revel Entertainment, Term Loan, 8.50% 20142,3,4 | 8,656 | 8,496 | ||||||
Revel Entertainment, Term Loan B, 9.00% 20172,3,4 | 117,150 | 93,093 | ||||||
Revel Entertainment, Term Loan B, 9.00% 20172,3,4 | 7,260 | 5,769 | ||||||
Revel Entertainment 12.00% 20181,2,5 | 40,649 | 18,182 | ||||||
Needle Merger Sub Corp. 8.125% 20191 | 121,855 | 124,901 | ||||||
Limited Brands, Inc. 5.25% 2014 | 703 | 747 | ||||||
Limited Brands, Inc. 8.50% 2019 | 9,934 | 12,020 | ||||||
Limited Brands, Inc. 7.00% 2020 | 17,513 | 19,965 | ||||||
Limited Brands, Inc. 6.625% 2021 | 58,180 | 66,325 | ||||||
Limited Brands, Inc. 5.625% 2022 | 22,500 | 24,356 | ||||||
Michaels Stores, Inc., Term Loan B3, 5.00% 20162,3,4 | 17,346 | 17,531 | ||||||
Michaels Stores, Inc., Term Loan B2, 5.00% 20162,3,4 | 5,877 | 5,940 | ||||||
Michaels Stores, Inc. 11.375% 2016 | 11,000 | 11,551 | ||||||
Michaels Stores, Inc. 13.00% 2016 | 22,678 | 23,869 | ||||||
Michaels Stores, Inc. 7.75% 2018 | 50,750 | 54,683 | ||||||
Clear Channel Worldwide Holdings, Inc., Series B, 9.25% 2017 | 82,450 | 89,252 | ||||||
Clear Channel Worldwide Holdings, Inc. 7.625% 2020 | 22,750 | 22,295 | ||||||
Neiman Marcus Group, Inc. 10.375% 2015 | 25,700 | 26,278 | ||||||
Neiman Marcus Group, Inc., Term Loan B, 4.75% 20182,3,4 | 77,945 | 78,503 | ||||||
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 2016 | 36,500 | 39,146 | ||||||
CityCenter Holdings, LLC and CityCenter Finance Corp. 7.625% 20161 | 20,000 | 21,450 | ||||||
CityCenter Holdings, LLC and CityCenter Finance Corp. 11.50% 20175 | 37,745 | 40,482 | ||||||
Warner Music Group 9.50% 2016 | 16,261 | 17,826 | ||||||
Warner Music Group 9.50% 2016 | 11,855 | 12,996 | ||||||
Warner Music Group 11.50% 2018 | 43,650 | 49,325 | ||||||
Warner Music Group 13.75% 2019 | 16,975 | 18,757 | ||||||
J.C. Penney Co., Inc. 5.75% 2018 | 52,531 | 50,167 | ||||||
J.C. Penney Co., Inc. 5.65% 2020 | 32,096 | 29,127 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B, 6.00% 20162,3,4 | 3,087 | 3,085 | ||||||
Toys “R” Us-Delaware, Inc. 7.375% 20161 | 19,080 | 19,509 | ||||||
Toys “R” Us Property Co. II, LLC 8.50% 2017 | 27,475 | 29,742 | ||||||
Toys “R” Us Property Co. I, LLC 10.75% 2017 | 1,725 | 1,889 | ||||||
Toys “R” Us-Delaware, Inc., Term Loan B2, 5.25% 20182,3,4 | 14,738 | 14,514 | ||||||
Toys “R” Us, Inc. 7.375% 2018 | 6,700 | 6,047 | ||||||
Burger King Corp 0%/11.00% 20191,6 | 76,125 | 63,374 | ||||||
PETCO Animal Supplies, Inc. 9.25% 20181 | 53,750 | 59,931 | ||||||
Academy, Ltd., Term Loan B, 6.00% 20182,3,4 | 35,132 | 35,320 | ||||||
Academy, Ltd. 9.25% 20191 | 21,050 | 23,234 | ||||||
Burlington Coat Factory Warehouse Corp., Term Loan B1, 5.50% 20172,3,4 | 35,280 | 35,726 | ||||||
Burlington Coat Factory Warehouse Corp. 10.00% 2019 | 15,250 | 16,947 | ||||||
NCL Corp. Ltd. 11.75% 2016 | 18,925 | 21,906 | ||||||
NCL Corp. Ltd. 9.50% 2018 | 20,875 | 23,223 | ||||||
Jaguar Land Rover PLC 7.75% 20181 | 18,960 | 20,548 | ||||||
Jaguar Land Rover PLC 8.125% 20211 | 18,725 | 20,480 | ||||||
Cinemark USA, Inc. 8.625% 2019 | 36,250 | 40,419 | ||||||
Tousa, Inc. 9.00% 20107,8 | 22,486 | 13,559 | ||||||
Tousa, Inc. 9.00% 20107,8 | 7,325 | 4,417 | ||||||
Tousa, Inc. 9.25% 20111,2,7,8 | 36,325 | 21,904 | ||||||
Royal Caribbean Cruises Ltd. 6.875% 2013 | 4,000 | 4,230 | ||||||
Royal Caribbean Cruises Ltd. 11.875% 2015 | 27,725 | 34,240 | ||||||
Bon-Ton Department Stores Inc. 10.625% 20171 | 41,230 | 37,416 | ||||||
DineEquity, Inc. 9.50% 2018 | 29,275 | 33,154 | ||||||
Local T.V. Finance LLC, Term Loan B, 2.22% 20132,3,4 | 110 | 110 | ||||||
Local T.V. Finance LLC 9.25% 20151,2,5 | 31,914 | 32,712 | ||||||
Sally Holdings LLC and Sally Capital Inc. 6.875% 2019 | 21,625 | 24,166 | ||||||
Sally Holdings LLC and Sally Capital Inc. 5.75% 2022 | 7,250 | 7,757 | ||||||
Marina District Finance Co., Inc. 9.50% 2015 | 10,000 | 10,138 | ||||||
Marina District Finance Co., Inc. 9.875% 2018 | 21,000 | 21,158 | ||||||
Mohegan Tribal Gaming Authority 10.50% 20161 | 19,175 | 17,641 | ||||||
Mohegan Tribal Gaming Authority 11.00% 20181,2,5 | 17,875 | 12,691 | ||||||
Circus and Eldorado Joint Venture and Silver Legacy Resort Casino 10.125% 20127 | 37,251 | 29,987 | ||||||
Tower Automotive Holdings 10.625% 20171 | 23,925 | 25,899 | ||||||
UPC Germany GmbH 7.50% 2019 | € | 7,250 | 10,202 | |||||
UPC Germany GmbH 9.625% 2019 | 10,800 | 15,484 | ||||||
Jarden Corp. 8.00% 2016 | $ | 23,250 | 24,936 | |||||
Cablevision Systems Corp. 7.75% 2018 | 3,000 | 3,337 | ||||||
CSC Holdings, Inc. 8.625% 2019 | 900 | 1,069 | ||||||
Cablevision Systems Corp. 5.875% 2022 | 19,900 | 19,900 | ||||||
Fox Acquisition LLC 13.375% 20161 | 5,000 | 5,344 | ||||||
Fox Acquisition LLC, Term-Loan B, 5.50% 20172,3,4 | 16,075 | 16,221 | ||||||
Cumulus Media Holdings Inc. 7.75% 2019 | 22,000 | 21,505 | ||||||
Seneca Gaming Corp. 8.25% 20181 | 17,650 | 18,621 | ||||||
Videotron Ltd. 6.375% 2015 | 3,720 | 3,794 | ||||||
Quebecor Media Inc. 7.75% 2016 | 3,725 | 3,846 | ||||||
Videotron Ltd. 5.00% 2022 | 9,200 | 9,660 | ||||||
Lamar Media Corp. 7.875% 2018 | 13,525 | 15,013 | ||||||
Lamar Media Corp. 5.875% 2022 | 1,500 | 1,605 | ||||||
Carmike Cinemas, Inc. 7.375% 2019 | 14,000 | 15,120 | ||||||
Nara Cable Funding Ltd. 8.875% 20181 | 16,250 | 14,909 | ||||||
National CineMedia, Inc. 6.00% 20221 | 13,550 | 14,363 | ||||||
Allison Transmission Holdings, Inc., Term Loan B, 2.72% 20142,3,4 | 13,951 | 13,993 | ||||||
Education Management LLC and Education Management Finance Corp. 8.75% 2014 | 17,420 | 13,805 | ||||||
Gray Television, Inc., Series D, 17.00% (undated)2,7,8,9 | 12,573 | 12,573 | ||||||
Dynacast International LLC 9.25% 2019 | 10,950 | 11,607 | ||||||
Chrysler Group LLC, Term Loan B, 6.00% 20172,3,4 | 10,606 | 10,844 | ||||||
Seminole Tribe of Florida 7.804% 20201,3 | 8,320 | 8,531 | ||||||
LBI Media, Inc. 8.50% 20171 | 32,885 | 8,386 | ||||||
Tenneco Inc. 6.875% 2020 | 4,300 | 4,730 | ||||||
FCE Bank PLC 7.125% 2013 | € | 3,550 | 4,638 | |||||
Marks and Spencer Group PLC 7.125% 20371 | $ | 4,090 | 4,483 | |||||
AMC Entertainment Inc. 8.00% 2014 | 4,268 | 4,273 | ||||||
Grupo Televisa, SAB 6.625% 2040 | 2,500 | 3,327 | ||||||
Time Warner Cable Inc. 7.50% 2014 | 750 | 824 | ||||||
Cox Communications, Inc. 5.45% 2014 | 390 | 429 | ||||||
3,510,089 | ||||||||
TELECOMMUNICATION SERVICES — 11.79% | ||||||||
Nextel Communications, Inc., Series F, 5.95% 2014 | 117,065 | 117,650 | ||||||
Nextel Communications, Inc., Series D, 7.375% 2015 | 62,258 | 62,647 | ||||||
Sprint Nextel Corp. 6.00% 2016 | 20,000 | 20,700 | ||||||
Sprint Nextel Corp. 8.375% 2017 | 83,450 | 93,255 | ||||||
Sprint Nextel Corp. 9.125% 2017 | 49,000 | 55,738 | ||||||
Sprint Nextel Corp. 9.00% 20181 | 31,150 | 37,458 | ||||||
Sprint Capital Corp. 6.90% 2019 | 5,000 | 5,212 | ||||||
Sprint Nextel Corp. 7.00% 2020 | 108,500 | 113,247 | ||||||
Sprint Nextel Corp. 11.50% 2021 | 39,405 | 49,503 | ||||||
Sprint Capital Corp. 8.75% 2032 | 4,800 | 4,992 | ||||||
Frontier Communications Corp. 8.25% 2017 | 125,266 | 142,803 | ||||||
Frontier Communications Corp. 8.125% 2018 | 17,151 | 19,381 | ||||||
Frontier Communications Corp. 8.50% 2020 | 72,760 | 82,583 | ||||||
Frontier Communications Corp. 9.25% 2021 | 55,510 | 64,530 | ||||||
Frontier Communications Corp. 8.75% 2022 | 26,632 | 30,360 | ||||||
Frontier Communications Corp. 7.125% 2023 | 100,875 | 105,288 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series B, 12.00% 20151 | 123,930 | 123,310 | ||||||
Clearwire Communications and Clearwire Finance, Inc., Series A, 12.00% 20151 | 120,730 | 120,126 | ||||||
Clearwire Communications and Clearwire Finance, Inc. 14.75% 20161 | 16,600 | 18,094 | ||||||
Clearwire Communications and Clearwire Finance, Inc. 12.00% 20171 | 86,930 | 79,976 | ||||||
Cricket Communications, Inc. 10.00% 2015 | 52,570 | 55,461 | ||||||
Cricket Communications, Inc. 7.75% 2016 | 178,140 | 188,828 | ||||||
Cricket Communications, Inc. 7.75% 2020 | 29,025 | 28,445 | ||||||
Wind Acquisition SA 11.75% 20171 | 140,330 | 132,963 | ||||||
Wind Acquisition SA 7.25% 20181 | 37,080 | 35,411 | ||||||
Wind Acquisition SA 7.375% 2018 | € | 21,915 | 26,191 | |||||
Digicel Group Ltd. 12.00% 20141 | $ | 61,825 | 70,171 | |||||
Digicel Group Ltd. 12.00% 2014 | 600 | 681 | ||||||
Digicel Group Ltd. 10.50% 20181 | 10,450 | 11,469 | ||||||
Digicel Group Ltd. 8.25% 20201 | 42,100 | 44,416 | ||||||
LightSquared, Term Loan B, 12.00% 20143,4,5,7 | 144,713 | 101,842 | ||||||
Vodafone Group PLC, Term Loan B, 6.875% 20153,4,5 | 60,050 | 62,152 | ||||||
Vodafone Group PLC, Term Loan B, 6.25% 20163,4,5,8 | 35,229 | 36,462 | ||||||
Trilogy International Partners, LLC, 10.25% 20161 | 90,290 | 74,038 | ||||||
Crown Castle International Corp. 9.00% 2015 | 29,475 | 31,833 | ||||||
Crown Castle International Corp. 7.75% 20171 | 11,150 | 11,958 | ||||||
Crown Castle International Corp. 7.125% 2019 | 1,000 | 1,090 | ||||||
Level 3 Communications, Inc. 8.125% 2019 | 4,900 | 5,231 | ||||||
Level 3 Communications, Inc. 11.875% 2019 | 15,525 | 17,698 | ||||||
SBA Communications Corp. 5.75% 20201 | 13,325 | 14,041 | ||||||
tw telecom holdings inc. 5.375% 20221 | 13,600 | 13,923 | ||||||
América Móvil, SAB de CV 5.00% 2020 | 4,350 | 5,116 | ||||||
América Móvil, SAB de CV 8.46% 2036 | MXN65,000 | 5,375 | ||||||
Sable International Finance Ltd. 8.75% 20201 | $ | 5,200 | 5,824 | |||||
Syniverse Holdings, Inc. 9.125% 2019 | 4,600 | 4,968 | ||||||
Telefónica Emisiones, SAU 6.421% 2016 | 3,025 | 3,203 | ||||||
2,335,643 | ||||||||
FINANCIALS — 10.41% | ||||||||
Realogy Corp. 10.50% 2014 | 1,000 | 1,045 | ||||||
Realogy Corp., Term Loan B, 4.478% 20162,3,4 | 140,462 | 139,057 | ||||||
Realogy Corp., Letter of Credit, 4.491% 20162,3,4 | 11,765 | 11,647 | ||||||
Realogy Corp., Second Lien Term Loan A, 13.50% 20173,4 | 147,699 | 149,545 | ||||||
Realogy Corp. 7.875% 20191 | 145,435 | 153,434 | ||||||
Realogy Corp. 7.625% 20201 | 3,000 | 3,322 | ||||||
Realogy Corp. 9.00% 20201 | 87,735 | 97,167 | ||||||
CIT Group Inc., Series C, 4.75% 20151 | 135,300 | 141,727 | ||||||
CIT Group Inc. 4.25% 2017 | 31,500 | 32,855 | ||||||
CIT Group Inc. 5.00% 2017 | 96,625 | 103,630 | ||||||
CIT Group Inc., Series C, 5.50% 20191 | 30,550 | 33,223 | ||||||
International Lease Finance Corp., Series R, 6.375% 2013 | 1,000 | 1,024 | ||||||
International Lease Finance Corp. 4.875% 2015 | 126,930 | 132,409 | ||||||
International Lease Finance Corp. 8.625% 2015 | 13,430 | 15,344 | ||||||
International Lease Finance Corp. 5.75% 2016 | 9,000 | 9,589 | ||||||
Liberty Mutual Group Inc. 6.50% 20351 | 18,000 | 19,385 | ||||||
Liberty Mutual Group Inc., Series B, 7.00% 20671,2 | 11,185 | 10,682 | ||||||
Liberty Mutual Group Inc., Series A, 7.80% 20871,2 | 52,323 | 57,032 | ||||||
Hospitality Properties Trust 7.875% 2014 | 4,090 | 4,421 | ||||||
Hospitality Properties Trust 5.125% 2015 | 4,410 | 4,632 | ||||||
Hospitality Properties Trust 6.30% 2016 | 5,940 | 6,480 | ||||||
Hospitality Properties Trust 5.625% 2017 | 8,870 | 9,609 | ||||||
Hospitality Properties Trust 6.70% 2018 | 9,595 | 10,854 | ||||||
Hospitality Properties Trust 5.00% 2022 | 46,250 | 48,690 | ||||||
Springleaf Finance Corp., Series I, 5.40% 2015 | 13,513 | 12,204 | ||||||
Springleaf Finance Corp., Term Loan B, 5.50% 20172,3,4 | 49,290 | 48,353 | ||||||
Springleaf Finance Corp., Series J, 6.90% 2017 | 20,000 | 17,100 | ||||||
HBOS PLC 6.75% 20181 | 26,925 | 27,464 | ||||||
LBG Capital No.1 PLC, Series 2, 7.875% 20201 | 29,490 | 29,785 | ||||||
HBOS PLC 6.00% 20331 | 17,781 | 15,258 | ||||||
Crescent Resources 10.25% 20171 | 67,025 | 70,041 | ||||||
Host Hotels & Resorts, LP, Series Q, 6.75% 2016 | 11,414 | 11,785 | ||||||
Host Hotels & Resorts LP 9.00% 2017 | 3,850 | 4,216 | ||||||
Host Hotels & Resorts LP 5.875% 2019 | 16,100 | 17,790 | ||||||
Host Hotels & Resorts LP 6.00% 2020 | 4,000 | 4,440 | ||||||
Host Hotels & Resorts LP 6.00% 2021 | 7,000 | 8,032 | ||||||
Host Hotels & Resorts LP, Series C, 4.75% 2023 | 13,525 | 14,083 | ||||||
MetLife Capital Trust IV, junior subordinated 7.875% 20671,2 | 14,950 | 17,716 | ||||||
MetLife Capital Trust X, junior subordinated 9.25% 20681,2 | 18,500 | 24,513 | ||||||
MetLife Inc., junior subordinated 10.75% 20692 | 7,000 | 10,447 | ||||||
iStar Financial Inc., Series B, 9.00% 2017 | 48,915 | 52,584 | ||||||
Developers Diversified Realty Corp. 5.50% 2015 | 2,470 | 2,674 | ||||||
Developers Diversified Realty Corp. 9.625% 2016 | 20,326 | 25,326 | ||||||
Developers Diversified Realty Corp. 7.50% 2017 | 9,940 | 11,908 | ||||||
Developers Diversified Realty Corp. 7.875% 2020 | 6,040 | 7,799 | ||||||
Royal Bank of Scotland Group PLC 4.70% 2018 | 22,490 | 21,738 | ||||||
RBS Capital Trust II 6.425% noncumulative trust (undated)2 | 9,780 | 8,117 | ||||||
Royal Bank of Scotland Group PLC, junior subordinated 6.99% (undated)1,2,7 | 10,705 | 9,742 | ||||||
American Tower Corp. 7.00% 2017 | 21,825 | 26,008 | ||||||
American Tower Corp. 7.25% 2019 | 8,460 | 10,342 | ||||||
Prologis, Inc. 7.625% 2014 | 3,000 | 3,294 | ||||||
Prologis, Inc. 6.25% 2017 | 2,750 | 3,153 | ||||||
Prologis, Inc. 6.625% 2018 | 8,570 | 10,254 | ||||||
Prologis, Inc. 7.375% 2019 | 7,120 | 8,831 | ||||||
Prologis, Inc. 6.875% 2020 | 6,580 | 7,999 | ||||||
Genworth Financial, Inc. 7.625% 2021 | 14,935 | 15,271 | ||||||
Genworth Financial, Inc., junior subordinated 6.15% 20662 | 22,500 | 14,541 | ||||||
Catlin Insurance Ltd., junior subordinated 7.249% (undated)1,2 | 30,275 | 29,783 | ||||||
Synovus Financial Corp. 5.125% 2017 | 21,493 | 21,063 | ||||||
Synovus Financial Corp. 7.875% 2019 | 7,585 | 8,419 | ||||||
Regions Financial Corp. 7.75% 2014 | 14,709 | 16,401 | ||||||
Regions Financial Corp. 5.20% 2015 | 5,300 | 5,525 | ||||||
Regions Financial Corp. 5.75% 2015 | 3,763 | 4,050 | ||||||
Lazard Group LLC 7.125% 2015 | 22,000 | 24,276 | ||||||
Ford Motor Credit Co. 8.70% 2014 | 1,000 | 1,138 | ||||||
Ford Motor Credit Co. 5.625% 2015 | 1,000 | 1,096 | ||||||
Ford Motor Credit Co. 7.00% 2015 | 3,000 | 3,367 | ||||||
Ford Motor Credit Co. 8.00% 2016 | 7,000 | 8,386 | ||||||
Ford Motor Credit Co. 4.25% 2017 | 6,000 | 6,384 | ||||||
Ford Motor Credit Co. 6.625% 2017 | 2,600 | 3,020 | ||||||
Unum Group 7.125% 2016 | 12,425 | 14,476 | ||||||
Unum Group 5.625% 2020 | 1,155 | 1,293 | ||||||
AXA SA, junior subordinated 6.463% (undated)1,2 | 16,244 | 15,066 | ||||||
Korea Development Bank 4.00% 2016 | 1,000 | 1,090 | ||||||
Korea Development Bank 3.50% 2017 | 3,190 | 3,442 | ||||||
Korea Development Bank 3.875% 2017 | 9,360 | 10,210 | ||||||
NASDAQ OMX Group, Inc. 5.25% 2018 | 12,250 | 13,250 | ||||||
BBVA Bancomer SA, junior subordinated 7.25% 20201 | 1,700 | 1,849 | ||||||
BBVA Bancomer SA 6.50% 20211 | 8,305 | 9,140 | ||||||
BNP Paribas, junior subordinated 7.195% (undated)1,2 | 10,000 | 9,505 | ||||||
Barclays Bank PLC, junior subordinated 6.86% (undated)1,2 | 9,000 | 8,865 | ||||||
HSBK (Europe) BV 7.25% 20211 | 8,545 | 8,721 | ||||||
Brandywine Operating Partnership, LP 7.50% 2015 | 7,000 | 7,924 | ||||||
QBE Capital Funding III LP 7.25% 20411,2 | 7,650 | 7,758 | ||||||
Zions Bancorporation 6.00% 2015 | 7,310 | 7,668 | ||||||
ACE Cash Express, Inc. 11.00% 20191 | 7,155 | 6,761 | ||||||
Rouse Co. 6.75% 20131 | 6,250 | 6,406 | ||||||
VEB Finance Ltd. 6.902% 20201 | 4,950 | 5,860 | ||||||
Banco de Crédito del Perú 5.375% 20201 | 5,000 | 5,425 | ||||||
The Export-Import Bank of Korea 4.375% 2021 | 2,900 | 3,266 | ||||||
Banco Mercantil del Norte, SA, junior subordinated 6.862% 20211,2 | 2,000 | 2,175 | ||||||
Banco Mercantil del Norte SA, junior subordinated 6.862% 20212 | 745 | 810 | ||||||
Banco del Estado de Chile 4.125% 20201 | 2,500 | 2,706 | ||||||
Allstate Corp., Series B, junior subordinated 6.125% 20672 | 2,530 | 2,615 | ||||||
Development Bank of Kazakhstan 5.50% 20151 | 1,475 | 1,608 | ||||||
Banco Votorantim SA 6.25% 201610 | BRL7,064,120 | 1,113 | ||||||
2,061,521 | ||||||||
INDUSTRIALS — 10.20% | ||||||||
CEVA Group PLC 11.625% 20161 | $ | 25,205 | 25,961 | |||||
CEVA Group PLC 8.375% 20171 | 46,525 | 45,304 | ||||||
CEVA Group PLC 11.50% 20181 | 43,382 | 38,610 | ||||||
CEVA Group PLC 12.75% 20201 | 122,000 | 101,565 | ||||||
Ply Gem Industries, Inc. 13.125% 2014 | 25,487 | 27,335 | ||||||
Ply Gem Industries, Inc. 9.375% 20171 | 11,900 | 11,989 | ||||||
Ply Gem Industries, Inc. 8.25% 2018 | 147,025 | 154,192 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Debtor in Possession Delayed Draw, 9.75% 20122,3,4 | 28,615 | 29,113 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Letter of Credit, 2.262% 20142,3,4 | 4,911 | 3,217 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 4.25% 20142,3,4 | 163,487 | 107,084 | ||||||
Hawker Beechcraft Acquisition Co., LLC, Term Loan B, 10.75% 20142,3,4 | 25,146 | 16,848 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.50% 20157 | 8,045 | 1,448 | ||||||
Hawker Beechcraft Acquisition Co., LLC 8.875% 20155,7 | 57,450 | 10,341 | ||||||
Hawker Beechcraft Acquisition Co., LLC 9.75% 20177 | 5,075 | 27 | ||||||
Associated Materials, LLC and AMH New Finance, Inc. 9.125% 2017 | 143,967 | 141,808 | ||||||
US Investigations Services, Inc., Term Loan B, 2.969% 20152,3,4 | 8,907 | 8,365 | ||||||
US Investigations Services, Inc., Term Loan D, 7.75% 20152,3,4 | 48,540 | 48,520 | ||||||
US Investigations Services, Inc. 10.50% 20151 | 48,330 | 42,530 | ||||||
US Investigations Services, Inc. 11.75% 20161 | 20,350 | 17,094 | ||||||
BE Aerospace, Inc. 5.25% 2022 | 103,270 | 107,659 | ||||||
Nortek Inc. 10.00% 201811 | 47,735 | 52,986 | ||||||
Nortek Inc. 8.50% 202111 | 47,660 | 50,996 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B1, 5.45% 20142,3,4 | 8,993 | 8,993 | ||||||
DAE Aviation Holdings, Inc. and Standard Aero Ltd., Term Loan B2, 5.45% 20142,3,4 | 8,529 | 8,529 | ||||||
DAE Aviation Holdings, Inc. 11.25% 20151 | 82,414 | 85,299 | ||||||
General Electric Capital Corp., Series B, junior subordinated 6.25% (undated)2 | 51,600 | 54,695 | ||||||
General Electric Capital Corp., Series A, junior subordinated 7.125% (undated)2 | 23,500 | 26,291 | ||||||
Euramax International, Inc. 9.50% 2016 | 85,615 | 78,766 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.625% 2014 | 2,557 | 2,896 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 11.50% 2016 | 6,492 | 7,287 | ||||||
Nielsen Finance LLC, Term Loan 1L, 8.50% 20173,4 | 28,000 | 30,287 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 7.75% 2018 | 9,700 | 10,985 | ||||||
Nielsen Finance LLC and Nielsen Finance Co. 4.50% 20201 | 17,500 | 17,478 | ||||||
Esterline Technologies Corp. 6.625% 2017 | 21,562 | 22,398 | ||||||
Esterline Technologies Corp. 7.00% 2020 | 41,460 | 46,228 | ||||||
United Air Lines, Inc., Term Loan B, 2.25% 20142,3,4 | 21,852 | 21,674 | ||||||
United Air Lines, 1991 Equipment Trust Certificates, Series A, 10.11% 20063,7,8 | 1,135 | — | ||||||
Continental Airlines, Inc., Series 2001-1, Class B, 7.373% 20173 | 2,370 | 2,513 | ||||||
Continental Airlines, Inc., Series 1998-1, Class B, 6.748% 20183 | 3,766 | 3,860 | ||||||
Continental Airlines, Inc., Series 1997-4B, Class B, 6.90% 20183 | 2,194 | 2,221 | ||||||
Continental Airlines, Inc., Series 1997-4, Class A, 6.90% 20193 | 3,907 | 4,238 | ||||||
Continental Airlines, Inc., Series 2000-2, Class B, 8.307% 20193 | 941 | 1,002 | ||||||
Continental Airlines, Inc., Series 1999-1, Class A, 6.545% 20203 | 3,054 | 3,321 | ||||||
Continental Airlines, Inc., Series 2003-ERJ3, Class A, 7.875% 20203 | 9,237 | 9,497 | ||||||
United Air Lines, Inc., Series 2007-1, Class B, 7.336% 20211,3 | 3,286 | 3,229 | ||||||
Continental Airlines, Inc., Series 2001-1, Class A-1, 6.703% 20223 | 4,582 | 4,983 | ||||||
Continental Airlines, Inc., Series 2000-2, Class A-1, 7.707% 20223 | 2,472 | 2,772 | ||||||
Continental Airlines, Inc., Series 2000-1, Class A-1, 8.048% 20223 | 282 | 321 | ||||||
Continental Airlines, Inc., Series 2000-1, Class B, 8.388% 20223 | 5,112 | 5,444 | ||||||
Navios Maritime Acquisition Corporation and Navios Acquisition Finance (US) Inc. 8.625% 2017 | 37,540 | 35,945 | ||||||
Navios Maritime Holdings Inc. and Navios Maritime Finance II (US) Inc. 8.125% 2019 | 17,575 | 15,949 | ||||||
Navios Logistics Finance (US) Inc., 9.25% 2019 | 3,225 | 3,048 | ||||||
TRAC Intermodal 11.00% 20191 | 47,275 | 49,639 | ||||||
United Rentals, Inc. 7.375% 20201 | 11,625 | 12,526 | ||||||
United Rentals, Inc. 7.625% 20221 | 31,725 | 34,818 | ||||||
ARAMARK Corp. 3.945% 20152 | 5,375 | 5,375 | ||||||
ARAMARK Corp. 8.50% 2015 | 16,875 | 17,297 | ||||||
ARAMARK Corp. 8.625% 20161,2,5 | 23,800 | 24,455 | ||||||
RBS Global, Inc. and Rexnord LLC 8.50% 2018 | 39,800 | 44,079 | ||||||
TransDigm Inc. 7.75% 2018 | 36,445 | 40,454 | ||||||
Northwest Airlines, Inc., Term Loan B, 3.87% 20132,3,4 | 5,781 | 5,752 | ||||||
Delta Air Lines, Inc., Series 2010-B, Class 2-B, 6.75% 20171,3 | 7,650 | 7,918 | ||||||
Northwest Airlines, Inc., Term Loan A, 2.12% 20182,3,4 | 8,640 | 8,122 | ||||||
Delta Air Lines, Inc., Series 2002-1, Class G-1, MBIA insured, 6.718% 20243 | 10,908 | 11,985 | ||||||
JELD-WEN Escrow Corp. 12.25% 20171 | 28,750 | 32,847 | ||||||
Odebrecht Finance Ltd 5.125% 20221 | 15,350 | 16,386 | ||||||
Odebrecht Finance Ltd 6.00% 20231 | 4,800 | 5,352 | ||||||
Odebrecht Finance Ltd 7.125% 20421 | 7,375 | 8,234 | ||||||
ADS Waste Escrow, Term Loan B, 5.25% 20192,3,4 | 19,925 | 20,068 | ||||||
ADS Waste Escrow 8.25% 20201 | 9,425 | 9,637 | ||||||
Iron Mountain Inc. 5.75% 2024 | 28,750 | 28,966 | ||||||
American Airlines, Inc., Series 2001-1, Class B, 7.377% 20193 | 6,428 | 5,436 | ||||||
AMR Corp. 10.00% 20217 | 9,000 | 5,715 | ||||||
AMR Corp. 9.00% 20127 | 16,155 | 10,420 | ||||||
Baker Corp. 8.25% 20191 | 14,400 | 14,652 | ||||||
Florida East Coast Railway Corp. 8.125% 2017 | 9,450 | 9,993 | ||||||
CMA CGM 8.50% 20171 | 12,800 | 9,024 | ||||||
ENA Norte Trust 4.95% 20231,3 | 7,350 | 7,400 | ||||||
Sequa Corp., Term Loan B, 3.72% 20142,3,4 | 6,469 | 6,463 | ||||||
RZD Capital Ltd. 8.30% 2019 | RUB141,500 | 4,700 | ||||||
2,020,854 | ||||||||
HEALTH CARE — 8.88% | ||||||||
VWR Funding, Inc., Series B, 10.25% 20155 | $ | 138,533 | 141,824 | |||||
VWR Funding, Inc. 7.25% 20171 | 77,125 | 78,426 | ||||||
Kinetic Concepts, Inc. 10.50% 20181 | 94,405 | 100,305 | ||||||
Kinetic Concepts, Inc. 12.50% 20191 | 62,750 | 59,613 | ||||||
PTS Acquisition Corp. 9.50% 20155 | 119,206 | 122,037 | ||||||
PTS Acquisition Corp. 9.75% 2017 | € | 16,085 | 21,393 | |||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | $ | 34,675 | 38,021 | |||||
Elan Finance PLC and Elan Finance Corp. 8.75% 2016 | 19,385 | 21,275 | ||||||
Elan Finance PLC and Elan Finance Corp. 6.25% 20191 | 78,600 | 79,386 | ||||||
VPI Escrow Corp. 6.375% 20201 | 121,060 | 124,087 | ||||||
Quintiles, Term Loan B, 5.00% 20182,3,4 | 118,813 | 119,704 | ||||||
inVentiv Health Inc. 10.00% 20181 | 39,135 | 34,634 | ||||||
inVentiv Health Inc. 10.00% 20181 | 91,315 | 80,814 | ||||||
Tenet Healthcare Corp. 7.375% 2013 | 51,295 | 52,385 | ||||||
Tenet Healthcare Corp. 9.25% 2015 | 49,435 | 55,862 | ||||||
HCA Inc. 6.375% 2015 | 25,880 | 28,015 | ||||||
HCA Inc., Term Loan B2, 3.612% 20172,3,4 | 7,015 | 7,036 | ||||||
HCA Inc. 6.50% 2020 | 5,000 | 5,575 | ||||||
HCA Inc. 7.875% 2020 | 5,050 | 5,700 | ||||||
HCA Holdings, Inc. 7.75% 2021 | 8,750 | 9,581 | ||||||
HCA Inc. 7.50% 2022 | 25,300 | 28,779 | ||||||
DJO Finance LLC 10.875% 2014 | 8,000 | 8,320 | ||||||
DJO Finance LLC 9.75% 2017 | 6,428 | 5,496 | ||||||
DJO Finance LLC 7.75% 2018 | 9,891 | 9,075 | ||||||
DJO Finance LLC 9.875% 20181 | 44,710 | 44,375 | ||||||
Patheon Inc. 8.625% 20171 | 63,911 | 65,509 | ||||||
Rotech Healthcare Inc. 10.75% 2015 | 15,145 | 14,842 | ||||||
Rotech Healthcare Inc. 10.50% 2018 | 69,465 | 40,290 | ||||||
Surgical Care Affiliates, Inc. 8.875% 20151 | 28,684 | 29,473 | ||||||
Surgical Care Affiliates, Inc. 10.00% 20171 | 19,430 | 20,110 | ||||||
Bausch & Lomb Inc. 9.875% 2015 | 47,825 | 49,439 | ||||||
Merge Healthcare Inc 11.75% 2015 | 41,500 | 45,131 | ||||||
Symbion Inc. 8.00% 2016 | 40,675 | 41,895 | ||||||
Multiplan Inc. 9.875% 20181 | 30,450 | 33,799 | ||||||
INC Research LLC 11.50% 20191 | 30,120 | 30,421 | ||||||
Centene Corp. 5.75% 2017 | 26,935 | 28,955 | ||||||
Grifols Inc. 8.25% 2018 | 25,375 | 28,166 | ||||||
Alkermes Inc., Term Loan B, 4.50% 20192,3,4 | 17,420 | 17,529 | ||||||
Boston Scientific Corp. 6.00% 2020 | 12,086 | 14,390 | ||||||
Accellent Inc. 8.375% 2017 | 7,500 | 7,744 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 2019 | 1,960 | 2,122 | ||||||
Endo Pharmaceuticals Holdings Inc. 7.00% 2020 | 3,500 | 3,789 | ||||||
Health Management Associates, Inc. 6.125% 2016 | 3,000 | 3,285 | ||||||
1,758,607 | ||||||||
MATERIALS — 7.02% | ||||||||
Reynolds Group Inc. 8.50% 2018 | 14,155 | 14,438 | ||||||
Reynolds Group Inc. 7.125% 2019 | 5,700 | 6,042 | ||||||
Reynolds Group Inc. 7.875% 2019 | 32,260 | 35,002 | ||||||
Reynolds Group Inc. 9.00% 2019 | 15,870 | 16,267 | ||||||
Reynolds Group Inc. 9.875% 2019 | 121,160 | 129,490 | ||||||
Reynolds Group Inc. 5.75% 20201 | 187,475 | 187,709 | ||||||
Inmet Mining Corp. 8.75% 20201 | 104,955 | 109,153 | ||||||
ArcelorMittal 4.50% 20172 | 19,750 | 19,395 | ||||||
ArcelorMittal 5.75% 20212 | 21,242 | 20,275 | ||||||
ArcelorMittal 6.25% 20222 | 28,575 | 28,200 | ||||||
ArcelorMittal 6.75% 20412 | 34,940 | 31,530 | ||||||
Georgia Gulf Corp. 9.00% 20171 | 81,885 | 91,916 | ||||||
Ball Corp. 7.125% 2016 | 15,285 | 16,622 | ||||||
Ball Corp. 6.75% 2020 | 2,555 | 2,823 | ||||||
Ball Corp. 5.75% 2021 | 16,830 | 18,218 | ||||||
Ball Corp. 5.00% 2022 | 44,740 | 46,921 | ||||||
FMG Resources 7.00% 20151 | 38,475 | 38,475 | ||||||
FMG Resources 6.375% 20161 | 3,000 | 2,933 | ||||||
FMG Resources 6.00% 20171 | 30,000 | 28,050 | ||||||
FMG Resources 6.875% 20181 | 3,000 | 2,801 | ||||||
FMG Resources 8.25% 20191 | 5,000 | 4,875 | ||||||
JMC Steel Group Inc. 8.25% 20181 | 69,405 | 71,140 | ||||||
Ryerson Inc. 9.00% 20171 | 40,700 | 41,768 | ||||||
Ryerson Inc. 11.25% 20181 | 13,650 | 13,735 | ||||||
Taminco Global Chemical Corp. 9.75% 20201 | 47,275 | 51,293 | ||||||
MacDermid 9.50% 20171 | 47,046 | 49,339 | ||||||
Consolidated Minerals Ltd. 8.875% 20161 | 56,985 | 47,013 | ||||||
Smurfit Kappa Acquisition 7.75% 2019 | € | 11,610 | 16,430 | |||||
Smurfit Capital Funding PLC 7.50% 2025 | $ | 25,515 | 26,089 | |||||
Newpage Corp. 11.375% 20147 | 56,550 | 35,909 | ||||||
Packaging Dynamics Corp. 8.75% 20161 | 25,345 | 26,866 | ||||||
CEMEX Finance LLC 9.50% 20161 | 10,400 | 10,790 | ||||||
CEMEX Finance LLC 9.50% 2016 | 6,850 | 7,107 | ||||||
CEMEX SA 9.25% 20201 | 7,635 | 7,694 | ||||||
OMNOVA Solutions Inc. 7.875% 2018 | 24,545 | 24,913 | ||||||
Braskem Finance Ltd. 5.75% 20211 | 2,100 | 2,237 | ||||||
Braskem America Finance Co. 7.125% 20411 | 17,650 | 18,797 | ||||||
Braskem America Finance Co. 7.125% 2041 | 2,045 | 2,178 | ||||||
Graphic Packaging International, Inc. 9.50% 2017 | 11,715 | 12,887 | ||||||
Graphic Packaging International, Inc. 7.875% 2018 | 8,965 | 9,974 | ||||||
International Paper Co. 7.95% 2018 | 17,575 | 22,653 | ||||||
Mirabela Nickel Ltd. 8.75% 20181 | 22,650 | 17,101 | ||||||
Nufarm Ltd. 6.375% 20191 | 16,000 | 16,000 | ||||||
Ardagh Packaging Finance 7.375% 20171 | 1,000 | 1,076 | ||||||
Ardagh Packaging Finance 11.125% 20181,2,5 | 5,175 | 4,980 | ||||||
Ardagh Packaging Finance 9.125% 20201 | 1,000 | 1,063 | ||||||
1,390,167 | ||||||||
INFORMATION TECHNOLOGY — 6.72% | ||||||||
First Data Corp. 9.875% 2015 | 16,639 | 16,972 | ||||||
First Data Corp. 9.875% 2015 | 4,794 | 4,914 | ||||||
First Data Corp. 10.55% 20155 | 26,774 | 27,544 | ||||||
First Data Corp. 11.25% 2016 | 185,840 | 181,194 | ||||||
First Data Corp., Term Loan D, 5.217% 20172,3,4 | 73,036 | 72,205 | ||||||
First Data Corp. 7.375% 20191 | 5,000 | 5,181 | ||||||
First Data Corp. 6.75% 20201 | 18,225 | 18,202 | ||||||
First Data Corp. 8.25% 20211 | 53,071 | 53,204 | ||||||
First Data Corp. 12.625% 2021 | 113,026 | 117,688 | ||||||
First Data Corp. 8.75% 20221,2,5 | 77,575 | 78,545 | ||||||
SRA International, Inc., Term Loan B, 6.50% 20182,3,4 | 91,412 | 90,650 | ||||||
SRA International, Inc. 11.00% 2019 | 75,535 | 77,423 | ||||||
Freescale Semiconductor, Inc., Term Loan, 4.481% 20162,3,4 | 11,235 | 11,001 | ||||||
Freescale Semiconductor, Inc. 10.125% 2016 | 12,624 | 13,129 | ||||||
Freescale Semiconductor, Inc. 9.25% 20181 | 33,725 | 36,844 | ||||||
Freescale Semiconductor, Inc. 10.125% 20181 | 31,616 | 34,936 | ||||||
Freescale Semiconductor, Inc., Term Loan B, 6.00% 20192,3,4 | 45,770 | 45,970 | ||||||
Freescale Semiconductor, Inc. 8.05% 2020 | 3,000 | 2,970 | ||||||
NXP BV and NXP Funding LLC 3.205% 20132 | 337 | 337 | ||||||
NXP BV and NXP Funding LLC 3.247% 20132,3 | € | 1,418 | 1,822 | |||||
NXP BV and NXP Funding LLC 10.00% 20139 | $ | 77,049 | 81,680 | |||||
NXP BV and NXP Funding LLC 9.75% 20181 | 51,650 | 59,656 | ||||||
Blackboard Inc., Term Loan B, 7.50% 20182,3,4 | 94,994 | 96,003 | ||||||
SunGard Data Systems Inc. 7.375% 2018 | 17,700 | 19,072 | ||||||
SunGard Data Systems Inc. 7.625% 2020 | 23,484 | 25,597 | ||||||
Hughes Satellite Systems Corp. 6.50% 2019 | 8,900 | 9,567 | ||||||
Hughes Satellite Systems Corp. 7.625% 2021 | 23,850 | 26,533 | ||||||
Jabil Circuit, Inc. 8.25% 2018 | 11,915 | 14,209 | ||||||
Jabil Circuit, Inc. 5.625% 2020 | 6,000 | 6,450 | ||||||
Jabil Circuit, Inc. 4.70% 2022 | 14,800 | 14,800 | ||||||
Lawson Software Inc., Term Loan B, 5.25% 20182,3,4 | 7,000 | 7,037 | ||||||
Lawson Software, Inc. 9.375% 20191 | 21,950 | 24,474 | ||||||
Serena Software, Inc. 10.375% 2016 | 24,540 | 25,215 | ||||||
NCR Corp. 5.00% 20221 | 12,650 | 12,840 | ||||||
Ceridian Corp. 11.25% 2015 | 12,650 | 12,523 | ||||||
Advanced Micro Devices, Inc. 7.75% 2020 | 3,750 | 3,825 | ||||||
1,330,212 | ||||||||
ENERGY — 5.93% | ||||||||
Alpha Natural Resources, Inc. 9.75% 2018 | 42,205 | 41,766 | ||||||
Alpha Natural Resources, Inc. 6.00% 2019 | 41,200 | 34,608 | ||||||
Alpha Natural Resources, Inc. 6.25% 2021 | 47,125 | 39,467 | ||||||
Arch Coal, Inc. 8.75% 2016 | 7,560 | 7,447 | ||||||
Arch Coal, Inc. 7.00% 2019 | 51,567 | 43,574 | ||||||
Arch Coal, Inc. 7.25% 2021 | 53,025 | 44,541 | ||||||
Transocean Inc. 5.05% 2016 | 11,400 | 12,754 | ||||||
Transocean Inc. 6.375% 2021 | 58,885 | 70,616 | ||||||
Transocean Inc. 7.35% 2041 | 2,385 | 3,145 | ||||||
Peabody Energy Corp. 6.00% 20181 | 57,750 | 58,039 | ||||||
Peabody Energy Corp. 6.25% 20211 | 22,300 | 22,300 | ||||||
Petrobras International 5.75% 2020 | 17,630 | 20,186 | ||||||
Petrobras International 5.375% 2021 | 44,730 | 50,634 | ||||||
Petrobras International 6.875% 2040 | 4,130 | 5,217 | ||||||
Petrobras International Finance Co. 6.75% 2041 | 2,025 | 2,526 | ||||||
Regency Energy Partners LP and Regency Energy Finance Corp. 6.50% 2021 | 11,000 | 11,825 | ||||||
Regency Energy Partners LP and Regency Energy Finance Corp. 5.50% 2023 | 61,825 | 62,675 | ||||||
PDC Energy Inc. 7.75% 20221 | 67,425 | 67,425 | ||||||
CONSOL Energy Inc. 8.00% 2017 | 35,895 | 37,690 | ||||||
CONSOL Energy Inc. 8.25% 2020 | 23,125 | 24,339 | ||||||
Laredo Petroleum, Inc. 9.50% 2019 | 41,350 | 47,036 | ||||||
Laredo Petroleum, Inc. 7.375% 2022 | 13,450 | 14,593 | ||||||
NGPL PipeCo LLC 7.119% 20171 | 5,950 | 6,352 | ||||||
NGPL PipeCo LLC 9.625% 20191 | 47,915 | 54,743 | ||||||
Reliance Holdings Ltd. 4.50% 2020 | 7,000 | 7,188 | ||||||
Reliance Holdings Ltd. 5.40% 20221 | 34,475 | 36,798 | ||||||
Reliance Holdings Ltd. 6.25% 20401 | 5,000 | 5,639 | ||||||
Energy Transfer Partners, LP 7.50% 2020 | 40,125 | 45,742 | ||||||
Petroplus Finance Ltd. 6.75% 20141,7 | 100,292 | 14,542 | ||||||
Petroplus Finance Ltd. 7.00% 20171,7 | 126,097 | 18,284 | ||||||
Petroplus Finance Ltd. 9.375% 20191,7 | 80,460 | 11,667 | ||||||
Dolphin Energy Ltd. 5.50% 20211 | 35,500 | 41,144 | ||||||
Gazprom OJSC 5.092% 20151 | 2,340 | 2,501 | ||||||
Gazprom OJSC 4.95% 20161 | 4,250 | 4,510 | ||||||
Gazprom OJSC 5.999% 20211 | 9,900 | 11,288 | ||||||
Gazprom OJSC, Series 9, 6.51% 2022 | 12,175 | 14,373 | ||||||
Gazprom OJSC 7.288% 20371 | 1,800 | 2,277 | ||||||
Teekay Corp. 8.50% 2020 | 19,135 | 20,187 | ||||||
QGOG Atlantic/Alaskan Rigs Ltd. 5.25% 20181,3 | 18,035 | 18,846 | ||||||
Pemex Project Funding Master Trust 5.75% 2018 | 5,850 | 6,881 | ||||||
Pemex Project Funding Master Trust, Series 13, 6.625% 2035 | 6,500 | 8,190 | ||||||
Petróleos Mexicanos 6.50% 2041 | 2,245 | 2,810 | ||||||
Overseas Shipholding Group, Inc. 8.125% 2018 | 25,725 | 17,236 | ||||||
Odebrecht Drilling Norbe VIII/IX Ltd 6.35% 20211,3 | 15,103 | 17,059 | ||||||
Denbury Resources Inc. 9.75% 2016 | 7,400 | 7,973 | ||||||
Denbury Resources Inc. 8.25% 2020 | 6,088 | 6,895 | ||||||
TransCanada PipeLines Ltd., junior subordinated 6.35% 20672 | 13,295 | 14,234 | ||||||
Concho Resources Inc. 8.625% 2017 | 3,300 | 3,655 | ||||||
Concho Resources Inc. 7.00% 2021 | 4,400 | 4,950 | ||||||
Concho Resources Inc. 5.50% 2023 | 5,000 | 5,231 | ||||||
Continental Resources Inc. 8.25% 2019 | 1,800 | 2,034 | ||||||
Continental Resources Inc. 7.375% 2020 | 700 | 787 | ||||||
Continental Resources Inc. 7.125% 2021 | 5,000 | 5,650 | ||||||
Enterprise Products Operating LLC 7.00% 20672 | 6,180 | 6,656 | ||||||
El Paso Pipeline Partners Operating Co., LLC 5.00% 2021 | 5,195 | 5,749 | ||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20201,3 | 2,687 | 3,037 | ||||||
Ras Laffan Liquefied Natural Gas II 5.298% 20203 | 1,848 | 2,088 | ||||||
Forest Oil Corp. 7.25% 2019 | 4,000 | 3,990 | ||||||
Enbridge Energy Partners, LP, junior subordinated 8.05% 20772 | 3,500 | 3,969 | ||||||
Transportadora de Gas Internacional 5.70% 20221 | 3,600 | 3,888 | ||||||
PTT Exploration & Production Ltd 6.35% 20421 | 3,100 | 3,605 | ||||||
1,175,051 | ||||||||
CONSUMER STAPLES — 3.11% | ||||||||
Albertson’s, Inc. 7.25% 2013 | 3,300 | 3,366 | ||||||
SUPERVALU Inc. 7.50% 2014 | 55,280 | 53,345 | ||||||
SUPERVALU Inc. 8.00% 2016 | 38,990 | 34,994 | ||||||
SUPERVALU Inc., Term Loan B, 8.00% 20182,3,4 | 50,922 | 51,313 | ||||||
Rite Aid Corp. 9.75% 2016 | 16,515 | 18,166 | ||||||
Rite Aid Corp. 10.375% 2016 | 15,250 | 16,203 | ||||||
Rite Aid Corp. 10.25% 2019 | 21,345 | 24,333 | ||||||
Rite Aid Corp. 8.00% 2020 | 18,575 | 21,176 | ||||||
Tops Holding Corp. and Tops Markets, LLC. 10.125% 2015 | 51,959 | 55,012 | ||||||
Stater Bros. Holdings Inc. 7.75% 2015 | 26,230 | 26,919 | ||||||
Stater Bros. Holdings Inc. 7.375% 2018 | 20,275 | 21,948 | ||||||
Constellation Brands, Inc. 8.375% 2014 | 4,650 | 5,295 | ||||||
Constellation Brands, Inc. 7.25% 2017 | 6,500 | 7,621 | ||||||
Constellation Brands, Inc. 6.00% 2022 | 20,575 | 23,507 | ||||||
Constellation Brands, Inc. 4.625% 2023 | 11,000 | 11,275 | ||||||
C&S Group Enterprises LLC 8.375% 20171 | 43,378 | 45,764 | ||||||
Smithfield Foods, Inc. 7.75% 2017 | 11,500 | 12,995 | ||||||
Smithfield Foods, Inc. 6.625% 2022 | 20,630 | 21,455 | ||||||
Ingles Markets, Inc. 8.875% 2017 | 29,725 | 32,177 | ||||||
Del Monte Corp. 7.625% 2019 | 29,675 | 30,677 | ||||||
BFF International Ltd. 7.25% 20201 | 23,950 | 28,927 | ||||||
Cott Beverages Inc. 8.375% 2017 | 8,700 | 9,581 | ||||||
Cott Beverages Inc. 8.125% 2018 | 13,325 | 14,874 | ||||||
Spectrum Brands Inc. 9.50% 2018 | 12,175 | 13,788 | ||||||
Pilgrim’s Pride Corp. 7.875% 2018 | 10,000 | 9,575 | ||||||
CEDC Finance Corp. 9.125% 20161 | 11,500 | 8,021 | ||||||
Post Holdings, Inc. 7.375% 20221 | 7,500 | 8,006 | ||||||
TreeHouse Foods, Inc. 7.75% 2018 | 5,600 | 6,132 | ||||||
616,445 | ||||||||
UTILITIES — 2.44% | ||||||||
TXU, Term Loan, 3.728% 20142,3,4 | 3,802 | 2,837 | ||||||
TXU, Term Loan, 4.728% 20172,3,4 | 139,658 | 96,434 | ||||||
Texas Competitive Electric Holdings Co. LLC, 11.50% 20201 | 67,845 | 53,428 | ||||||
AES Corp. 7.75% 2015 | 5,575 | 6,328 | ||||||
AES Corp. 8.00% 2017 | 34,000 | 39,440 | ||||||
AES Corp. 8.00% 2020 | 16,300 | 19,030 | ||||||
AES Corp. 7.375% 2021 | 5,775 | 6,612 | ||||||
Intergen Power 9.00% 20171 | 71,950 | 69,612 | ||||||
NRG Energy, Inc. 8.25% 2020 | 6,000 | 6,570 | ||||||
NRG Energy, Inc. 6.625% 20231 | 39,000 | 39,926 | ||||||
Edison Mission Energy 7.50% 2013 | 8,000 | 4,440 | ||||||
Midwest Generation, LLC, Series B, 8.56% 20163 | 21,150 | 19,458 | ||||||
Edison Mission Energy 7.00% 2017 | 3,095 | 1,617 | ||||||
Edison Mission Energy 7.20% 2019 | 19,200 | 9,984 | ||||||
Edison Mission Energy 7.625% 2027 | 14,205 | 7,351 | ||||||
CMS Energy Corp. 8.75% 2019 | 21,125 | 27,531 | ||||||
CMS Energy Corp. 5.05% 2022 | 5,750 | 6,364 | ||||||
NV Energy, Inc 6.25% 2020 | 26,150 | 30,355 | ||||||
Entergy Corp. 4.70% 2017 | 21,100 | 23,035 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 6.165% 20171 | 2,000 | 2,320 | ||||||
Abu Dhabi National Energy Co. PJSC (TAQA) 5.875% 20211 | 4,125 | 4,790 | ||||||
Enersis SA 7.375% 2014 | 5,000 | 5,358 | ||||||
482,820 | ||||||||
Total corporate bonds, notes & loans | 16,681,409 | |||||||
BONDS & NOTES OF GOVERNMENTS & GOVERNMENT AGENCIES OUTSIDE THE U.S. — 4.55% | ||||||||
United Mexican States Government, Series M10, 8.00% 2015 | MXN70,000 | 5,945 | ||||||
United Mexican States Government Global, Series A, 5.625% 2017 | $ | 3,000 | 3,522 | |||||
United Mexican States Government, Series M10, 7.75% 2017 | MXN120,000 | 10,515 | ||||||
United Mexican States Government 4.00% 201910 | 23,672 | 2,234 | ||||||
United Mexican States Government, Series M, 6.50% 2021 | 435,000 | 36,975 | ||||||
United Mexican States Government Global, Series A, 3.625% 2022 | $ | 15,700 | 17,160 | |||||
United Mexican States Government, Series M20, 10.00% 2024 | MXN45,000 | 4,925 | ||||||
United Mexican States Government, Series M30, 10.00% 2036 | 39,500 | 4,396 | ||||||
United Mexican States Government 4.00% 204010 | 96,107 | 9,796 | ||||||
United Mexican States Government Global 4.75% 2044 | $ | 7,712 | 8,599 | |||||
Brazil (Federal Republic of) Global 12.50% 2016 | BRL13,350 | 8,301 | ||||||
Brazil (Federal Republic of) 10.00% 2017 | 35,620 | 18,161 | ||||||
Brazil (Federal Republic of) 6.00% 201710 | 25,741 | 14,403 | ||||||
Brazil (Federal Republic of) Global 8.00% 20183 | $ | 2,499 | 2,981 | |||||
Brazil (Federal Republic of) Global 4.875% 2021 | 3,100 | 3,720 | ||||||
Brazil (Federal Republic of) Global 8.50% 2024 | BRL22,000 | 12,751 | ||||||
Brazil (Federal Republic of) Global 10.25% 2028 | 15,000 | 9,711 | ||||||
Brazil (Federal Republic of) Global 7.125% 2037 | $ | 2,500 | 3,781 | |||||
Brazil (Federal Republic of) 6.00% 204510 | BRL21,469 | 13,899 | ||||||
Turkey (Republic of) 4.00% 201510 | TRY11,781 | 7,100 | ||||||
Turkey (Republic of) 10.00% 2015 | 15,100 | 8,918 | ||||||
Turkey (Republic of) 9.00% 2016 | 4,100 | 2,380 | ||||||
Turkey (Republic of) 7.50% 2017 | $ | 9,700 | 11,664 | |||||
Turkey (Republic of) 6.75% 2018 | 12,200 | 14,442 | ||||||
Turkey (Republic of) 10.50% 2020 | TRY 3,750 | 2,363 | ||||||
Turkey (Republic of) 3.00% 202110 | 14,487 | 8,380 | ||||||
Turkey (Republic of) 5.625% 2021 | $ | 20,450 | 23,415 | |||||
Turkey (Republic of) 6.875% 2036 | 3,200 | 4,072 | ||||||
Turkey (Republic of) 6.75% 2040 | 2,500 | 3,169 | ||||||
Colombia (Republic of) Global 8.25% 2014 | 4,000 | 4,654 | ||||||
Colombia (Republic of) Global 12.00% 2015 | COP19,150,000 | 13,142 | ||||||
Colombia (Republic of) Global 7.375% 2019 | $ | 11,650 | 15,465 | |||||
Colombia (Republic of) Global 11.75% 2020 | 1,936 | 3,161 | ||||||
Colombia (Republic of) Global 4.375% 2021 | 1,700 | 1,966 | ||||||
Colombia (Republic of) Global 7.75% 2021 | COP 1,780,000 | 1,225 | ||||||
Colombia (Republic of) Global 9.85% 2027 | 12,085,000 | 10,226 | ||||||
Colombia (Republic of) Global 10.375% 2033 | $ | 823 | 1,512 | |||||
Colombia (Republic of) Global 7.375% 2037 | 4,139 | 6,384 | ||||||
Bahrain Government 5.50% 2020 | 47,513 | 49,022 | ||||||
Bahrain Government 5.50% 20201 | 2,087 | 2,153 | ||||||
Russian Federation 7.85% 2018 | RUB215,000 | 7,409 | ||||||
Russian Federation 7.85% 2018 | 115,000 | 3,963 | ||||||
Russian Federation 5.00% 2020 | $ | 14,300 | 16,452 | |||||
Russian Federation 12.75% 2028 | 2,000 | 3,880 | ||||||
Russian Federation 7.50% 20303 | 14,978 | 18,939 | ||||||
Venezuela (Republic of) 10.75% 2013 | 6,000 | 6,180 | ||||||
Venezuela (Republic of) 8.50% 2014 | 1,250 | 1,262 | ||||||
Venezuela (Republic of) 5.75% 2016 | 3,000 | 2,749 | ||||||
Venezuela (Republic of) 7.65% 2025 | 8,455 | 6,658 | ||||||
Venezuela (Republic of) 9.25% 2027 | 21,545 | 19,531 | ||||||
Venezuela (Republic of) 9.25% 2028 | 11,540 | 10,213 | ||||||
Indonesia (Republic of) 10.375% 2014 | 1,800 | 2,052 | ||||||
Indonesia (Republic of) 6.875% 20171 | 1,000 | 1,204 | ||||||
Indonesia (Republic of) 6.875% 20181 | 9,425 | 11,581 | ||||||
Indonesia (Republic of) 6.875% 2018 | 8,000 | 9,830 | ||||||
Indonesia (Republic of) 4.875% 2021 | 5,600 | 6,433 | ||||||
Indonesia (Republic of) 3.75% 2022 | 1,125 | 1,193 | ||||||
Indonesia (Republic of) 6.625% 20371 | 2,500 | 3,331 | ||||||
Indonesia (Republic of) 5.25% 2042 | 5,450 | 6,206 | ||||||
Philippines (Republic of) 4.00% 2021 | 16,350 | 18,312 | ||||||
Philippines (Republic of) 4.95% 2021 | PHP144,000 | 3,650 | ||||||
Philippines (Republic of) 5.50% 2026 | $ | 6,925 | 8,700 | |||||
Philippines (Republic of) 6.25% 2036 | PHP374,000 | 10,060 | ||||||
Polish Government, Series 0414, 5.75% 2014 | PLN24,554 | 7,863 | ||||||
Polish Government, Series 1017, 5.25% 2017 | 36,050 | 11,784 | ||||||
Polish Government 6.375% 2019 | $ | 3,535 | 4,379 | |||||
Polish Government 5.125% 2021 | 14,225 | 16,608 | ||||||
Chilean Government 5.50% 2020 | CLP3,834,000 | 8,600 | ||||||
Chilean Government 6.00% 2020 | 1,565,000 | 3,430 | ||||||
Chilean Government 3.25% 2021 | $ | 8,325 | 9,053 | |||||
Chilean Government 6.00% 2021 | CLP4,345,000 | 9,571 | ||||||
Uruguay (Republic of) 5.00% 201810 | UYU197,996 | 11,157 | ||||||
Uruguay (Republic of) 4.25% 20273,10 | 177,822 | 10,443 | ||||||
Uruguay (Republic of) 4.375% 202810 | 109,200 | 6,427 | ||||||
Latvia (Republic of) 5.25% 20171 | $ | 20,080 | 22,138 | |||||
Latvia (Republic of) 5.25% 2021 | 4,200 | 4,728 | ||||||
South Africa (Republic of) 5.50% 2020 | 6,200 | 7,394 | ||||||
South Africa (Republic of), Series R-214, 6.50% 2041 | ZAR193,000 | 19,033 | ||||||
Croatian Government 6.25% 20171 | $ | 11,850 | 12,857 | |||||
Croatian Government 6.75% 20191 | 4,510 | 5,108 | ||||||
Croatian Government 6.375% 20211 | 2,810 | 3,131 | ||||||
Panama (Republic of) Global 7.125% 2026 | 585 | 832 | ||||||
Panama (Republic of) Global 8.875% 2027 | 6,500 | 10,579 | ||||||
Panama (Republic of) Global 6.70% 20363 | 6,440 | 9,080 | ||||||
Hungarian Government 4.75% 2015 | 3,500 | 3,521 | ||||||
Hungarian Government, Series 17/B, 6.75% 2017 | HUF1,012,000 | 4,570 | ||||||
Hungarian Government 6.25% 2020 | $ | 5,800 | 6,321 | |||||
Hungarian Government 6.375% 2021 | 700 | 766 | ||||||
Hungarian Government 7.625% 2041 | 4,500 | 5,108 | ||||||
Iraq (Republic of) 5.80% 20283 | 21,500 | 19,888 | ||||||
Sri Lanka (Republic of) 6.25% 20211 | 3,300 | 3,605 | ||||||
Sri Lanka (Republic of) 5.875% 20221 | 14,250 | 15,402 | ||||||
South Korean Government 5.00% 2014 | KRW11,325,000 | 10,619 | ||||||
South Korean Government 5.50% 2017 | 2,800,000 | 2,825 | ||||||
Dominican Republic 7.50% 20211,3 | $ | 10,000 | 11,350 | |||||
Dominican Republic 7.50% 20213 | 450 | 511 | ||||||
Peru (Republic of) 7.125% 2019 | 8,545 | 11,354 | ||||||
Argentina (Republic of) 7.00% 2015 | 2,385 | 2,186 | ||||||
Argentina (Republic of) GDP-Linked 2035 | 56,982 | 7,579 | ||||||
Lithuania (Republic of) 6.625% 20221 | 6,225 | 7,742 | ||||||
Corporacion Andina de Fomento 4.375% 2022 | 6,815 | 7,427 | ||||||
Romanian Government 6.75% 20221 | 5,400 | 6,095 | ||||||
Israeli Government 4.00% 2022 | 4,000 | 4,258 | ||||||
Province of Buenos Aires 10.875% 20211,3 | 4,890 | 3,594 | ||||||
State of Qatar 5.25% 2020 | 3,000 | 3,563 | ||||||
Gabonese Republic 8.20% 2017 | 2,800 | 3,444 | ||||||
902,299 | ||||||||
U.S. TREASURY BONDS & NOTES — 0.52% | ||||||||
U.S. Treasury 1.375% 2013 | 21,500 | 21,601 | ||||||
U.S. Treasury 1.875% 2014 | 58,000 | 59,358 | ||||||
U.S. Treasury 3.25% 2016 | 20,000 | 22,069 | ||||||
103,028 | ||||||||
MORTGAGE-BACKED OBLIGATIONS3 — 0.18% | ||||||||
American Tower Trust I, Series 2007-1A, Class E, 6.249% 20371 | 8,025 | 8,458 | ||||||
American Tower Trust I, Series 2007-1A, Class F, 6.639% 20371 | 27,010 | 27,503 | ||||||
35,961 | ||||||||
MUNICIPALS — 0.07% | ||||||||
State of New Jersey, Economic Development Authority, Energy Facility Revenue Bonds (ACR Energy Partners, LLC Project), | ||||||||
Series 2011-B, 12.00% 20301 | 12,385 | 13,414 | ||||||
Total bonds, notes & other debt instruments (cost: $17,230,789,000) | 17,736,111 | |||||||
Shares or | ||||||||
Convertible securities — 0.69% | principal amount | |||||||
INFORMATION TECHNOLOGY — 0.37% | ||||||||
Linear Technology Corp., Series A, 3.00% convertible notes 2027 | $ | 46,000,000 | 47,869 | |||||
Liberty Media Corp. 3.50% convertible notes 2031 | $ | 48,500,000 | 22,973 | |||||
Suntech Power Holdings Co., Ltd. 3.00% convertible notes 2013 | $ | 4,650,000 | 2,325 | |||||
73,167 | ||||||||
ENERGY — 0.11% | ||||||||
Apache Corp., Series D, 6.00% convertible preferred 2013 | 455,000 | 22,136 | ||||||
TELECOMMUNICATION SERVICES — 0.09% | ||||||||
Leap Wireless International, Inc. 4.50% convertible notes 2014 | $ | 12,500,000 | $ | 11,968 | ||||
Clearwire Corp. 8.25% convertible notes 20401 | $ | 7,722,000 | 5,642 | |||||
17,610 | ||||||||
CONSUMER DISCRETIONARY — 0.09% | ||||||||
Cooper-Standard Holdings Inc. 7.00% convertible preferred1,8,11 | 99,687 | 16,491 | ||||||
UTILITIES — 0.03% | ||||||||
PPL Corp. 9.50% convertible preferred 2013, units | 121,677 | 6,516 | ||||||
Total convertible securities (cost: $124,915,000) | 135,920 | |||||||
Preferred securities — 0.52% | Shares | |||||||
FINANCIALS — 0.52% | ||||||||
Ally Financial Inc., Series G, 7.00%1 | 34,250 | 32,042 | ||||||
Ally Financial Inc., Series 2, 8.125% preferred | 650,000 | 16,381 | ||||||
Zions Bancorporation, Series C, 9.50% noncumulative depositary shares | 500,000 | 13,085 | ||||||
Swire Pacific Ltd. 8.84% cumulative guaranteed perpetual capital securities1 | 450,000 | 12,783 | ||||||
First Republic Bank, Series A, noncumulative convertible preferred | 400,000 | 10,875 | ||||||
Citigroup Inc. 6.95% preferred | 228,000 | 5,736 | ||||||
Citigroup Inc. 7.875% preferred | 150,150 | 4,195 | ||||||
HSBC Holdings PLC, Series 2, 8.00% | 300,000 | 8,522 | ||||||
Total preferred securities (cost: $91,542,000) | 103,619 | |||||||
Common stocks — 1.40% | ||||||||
INDUSTRIALS — 0.34% | ||||||||
Nortek, Inc.11,12 | 793,646 | 43,436 | ||||||
Delta Air Lines, Inc.12 | 2,373,769 | 21,744 | ||||||
Atrium Corp.1,8,12 | 10,987 | 728 | ||||||
United Continental Holdings, Inc.12 | 22,981 | 448 | ||||||
ACF Industries Holding Corp.8,12 | 4,746 | — | ||||||
66,356 | ||||||||
CONSUMER DISCRETIONARY — 0.33% | ||||||||
Cooper-Standard Holdings Inc.11,12 | 1,238,538 | 46,445 | ||||||
American Media, Inc.1,8,11,12 | 1,122,345 | 11,380 | ||||||
Ford Motor Co. | 810,210 | 7,989 | ||||||
Five Star Travel Corp.1,8,12 | 83,780 | 23 | ||||||
Adelphia Recovery Trust, Series Arahova12 | 1,773,964 | 18 | ||||||
Adelphia Recovery Trust, Series ACC-18,12 | 10,643,283 | 1 | ||||||
65,856 | ||||||||
FINANCIALS — 0.30% | ||||||||
American Tower Corp. | 538,967 | 38,477 | ||||||
Citigroup Inc. | 405,574 | 13,270 | ||||||
CIT Group Inc.12 | 124,904 | 4,920 | ||||||
Bank of America Corp. | 390,000 | 3,444 | ||||||
60,111 | ||||||||
MATERIALS — 0.28% | ||||||||
Georgia Gulf Corp. | 1,523,408 | 55,178 | ||||||
TELECOMMUNICATION SERVICES — 0.15% | ||||||||
Frontier Communications Corp., Class B | 6,000,000 | $ | 29,400 | |||||
ENERGY — 0.00% | ||||||||
General Maritime Corp.1,8,12 | 12,599 | 464 | ||||||
Petroplus Holdings AG8,12 | 3,360,000 | — | ||||||
464 | ||||||||
INFORMATION TECHNOLOGY — 0.00% | ||||||||
Remark Media, Inc.1,8,12 | 25,710 | 31 | ||||||
Total common stocks (cost: $241,992,000) | 277,396 | |||||||
Warrants — 0.03% | ||||||||
CONSUMER DISCRETIONARY — 0.03% | ||||||||
Revel Holdings, Inc., warrants, expire 20211,8,12 | 16,916 | 2,960 | ||||||
Cooper-Standard Holdings Inc., warrants, expire 201711,12 | 196,935 | 2,551 | ||||||
Charter Communications, Inc., warrants, expire 201412 | 13,390 | 348 | ||||||
5,859 | ||||||||
ENERGY — 0.00% | ||||||||
General Maritime Corp., warrants, expire 20171,8,12 | 19,483 | 153 | ||||||
Total warrants (cost: $7,329,000) | 6,012 | |||||||
Principal amount | ||||||||
Short-term securities — 8.39% | (000 | ) | ||||||
Freddie Mac 0.10%–0.17% due 10/2/2012–5/29/2013 | $ | 385,500 | 385,397 | |||||
Federal Home Loan Bank 0.11%–0.19% due 10/16/2012–3/15/2013 | 361,600 | 361,491 | ||||||
Fannie Mae 0.135%–0.19% due 10/1/2012–7/1/2013 | 339,750 | 339,619 | ||||||
U.S. Treasury Bills 0.12%–0.16% due 10/25/2012–5/30/2013 | 163,500 | 163,458 | ||||||
Wal-Mart Stores, Inc. 0.11% due 10/11–10/19/20121 | 75,200 | 75,197 | ||||||
E.I. duPont de Nemours and Co. 0.14%–0.15% due 10/10–10/30/20121 | 74,000 | 73,994 | ||||||
Coca-Cola Co. 0.18%–0.21% due 1/15–1/25/20131 | 64,000 | 63,963 | ||||||
Jupiter Securitization Co., LLC 0.16% due 10/1/20121 | 25,000 | 25,000 | ||||||
Chariot Funding, LLC 0.21% due 12/13/20121 | 15,000 | 14,996 | ||||||
United Technologies Corp. 0.16% due 10/29/20121 | 34,900 | 34,892 | ||||||
Wells Fargo & Co. 0.16% due 11/26/2012 | 34,700 | 34,685 | ||||||
Medtronic Inc. 0.13% due 10/16/20121 | 31,000 | 30,998 | ||||||
Procter & Gamble Co. 0.12% due 10/1/20121 | 30,000 | 30,000 | ||||||
Straight-A Funding LLC 0.17% due 11/16/20121 | 25,000 | 24,995 | ||||||
Regents of the University of California 0.18% due 10/9/2012 | 3,000 | 3,000 | ||||||
Total short-term securities (cost: $1,661,603,000) | 1,661,685 | |||||||
Total investment securities (cost: $19,358,170,000) | 19,920,743 | |||||||
Other assets less liabilities | (112,073 | ) | ||||||
Net assets | $ | 19,808,670 |
1Acquired in a transaction exempt from registration under Rule 144A or section 4(2) of the Securities Act of 1933. May be resold in the U.S. in transactions exempt from registration, normally to qualified institutional buyers. The total value of all such securities was $6,411,646,000, which represented 32.37% of the net assets of the fund. |
2Coupon rate may change periodically. |
3Principal payments may be made periodically. Therefore, the effective maturity date may be earlier than the stated maturity date. |
4Loan participations and assignments; may be subject to legal or contractual restrictions on resale. The total value of all such loans was $1,950,200,000, which represented 9.85% of the net assets of the fund. |
5Payment in kind; the issuer has the option of paying additional securities in lieu of cash. |
6Step bond; coupon rate will increase at a later date. |
7Scheduled interest and/or principal payment was not received. |
8Valued under fair value procedures adopted by authority of the board of trustees. The total value of all such securities was $121,146,000, which represented .61% of the net assets of the fund. |
9Acquired 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 | (000 | ) | (000 | ) | assets | ||||||||
NXP BV and NXP Funding LLC 10.00% 2013 | 7/17/2009 | $ | 72,739 | $ | 81,680 | .42 | % | ||||||
Gray Television, Inc., Series D, 17.00% (undated) | 6/26/2008 | 11,913 | 12,573 | .06 | |||||||||
Total restricted securities | $ | 84,652 | $ | 94,253 | .48 | % |
10Index-linked bond whose principal amount moves with a government price index. |
11Represents an affiliated company as defined under the Investment Company Act of 1940. |
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
KRW = South Korean won
MXN = Mexican pesos
PHP = Philippine pesos
PLN = Polish zloty
RUB = Russian rubles
TRY = Turkish lira
UYU = Uruguayan pesos
ZAR = South African rand
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectus and summary prospectus, which can be obtained from your financial professional and should be read carefully before investing. You may also call American Funds Service Company (AFS) at 800/421-4225 or visit the American Funds website at americanfunds.com.
MFGEFPX-021-1112O-S32853
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, 2012, and for the year then ended and have issued our report thereon dated November 12, 2012, 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, 2012, appearing in Item 6 of this Form N-CSR. This Schedule is the responsibility of the Fund’s management. Our responsibility is to express an opinion based on our audit. In our opinion, the Schedule referred to above, when considered in relation to the basic financial statements taken as a whole of the Fund referred to above, presents fairly, in all material respects, the information set forth therein.
DELOITTE & TOUCHE LLP
Costa Mesa, California
November 12, 2012
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, 2012 |
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, 2012 |
By /s/ Karl C. Grauman |
Karl C. Grauman, Treasurer and Principal Financial Officer |
Date: November 30, 2012 |