Henderson High Income Trust is designed for investors seeking high income derived mainly from UK companies. This may particularly suit the retired, or those approaching retirement age.

Henderson High Income Trust plc invests in well-known UK companies with good yield prospects. It aims for sustainable high income with prospects for long-term growth. It invests in a diversified portfolio combining both larger and smaller companies, with fixed interest securities.

• The Trust delivers a yield, currently in excess of 6%, significantly higher than normally available through UK equities (Source: Morningstar as at 31/08/11).
• It invests in well known and smaller UK companies with good yield records or prospects.
• The Trust was launched in 1989 at 100p – total dividends paid since launch are 165.9p representing an average annual dividend yield of 7.6%. Please remember that past performance is not a guide to future performance.
• It carries a low Total Expense Ratio* of 0.83% (Annual Report and Accounts 2010).

*The total of the management fees and other administrative expenses (including expenses charged to capital) as a percentage of the average shareholders' funds at the beginning and end of the year.

• If a fund is a specialist country-specific or geographic regional fund, the investment carries greater risk than a more internationally diversified portfolio.
• Some of the investments in this portfolio are in smaller companies shares. They may be more difficult to buy and sell and their share price may fluctuate more than that of larger companies. Full details of risks.

The UK stock market finished the year on a positive note as the Euro conference of leaders relieved some of the pressure on markets. The defensive sectors remained in demand by investors, which helped increase the Trust’s portfolio value, resulting in the NAV total return for the year being positive. Gilts were the asset class of choice in 2011, boosted by purchases from the Bank of England. At some point this liquidity should filter down to the investment grade bonds we hold and ultimately equities.

The year ahead starts with most commentators expecting a very gloomy outlook for markets. However, we feel that share prices already reflect this downbeat view. The outcome may surprise positively with the Olympics and Queen’s Jubilee to boost confidence and consumption, combined with an absence of increases in income tax or VAT. Dividend growth should continue next year as many of the largest contributors are solid businesses experiencing profit growth. Our strategy remains to own good businesses on cheap valuations, with the capacity to grow dividends over time.

Alex Crooke
December 2011