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.

January produced a strong recovery, in both equities and bonds, as the downbeat mood of investors lifted. Economic news in the US and Asia continued to beat expectations, as exports, industrial production and new jobs all surprised positively. Companies exposed to world economic growth performed the best, with the mining, chemical and financial sectors all ending the month in positive territory. The defensive sectors such as telecoms, healthcare and utilities did not participate in the rally; as these form the backbone of the Trust’s income generation, the Trust’s Net Asset Value underperformed the market through the month.

Europe and the UK are struggling to match the growth elsewhere, as economies across Europe shrank in the fourth quarter of 2011. Companies that rely on consumer spending, such as Tesco, revealed profits warnings around Christmas trading. Henderson High Income’s portfolio has been broadened to include more growth stocks and is underweight retailers, which should allow the Trust to participate in the market’s growth.

The upcoming reporting season and the outlook from corporates will be critical in determining the market’s direction in the next few months. If expectations for profits can be met, then share prices may move higher. However, the spectre of the European sovereign debt crisis still looms overhead which may limit progress until further clarity can be provided.

Alex Crooke
January 2012