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.

April was another month that saw equity markets fall in value, albeit only marginally in the UK. The backdrop was a negative first quarter gross domestic product (GDP) number, indicating that the economy contracted over the period as both construction and gas production came in softer than expected. Economic activity was also weak in mainland Europe which, combined with a continued emphasis on austerity, led investors towards the defensive sectors of the market. Our view is that there is unlikely to be much change to this ‘stop-start’ progress of economic activity for the remainder of the year, which will likely favour sectors such as utilities, food, and beverages. The companies in these sectors do not exhibit high levels of growth, but their earnings are reliable and they are generous dividend payers. We feel that investors will increasingly seek investments that will not disappoint expectations for profit growth, and if these can be purchased on reasonable valuations then there will be potential for capital growth.

The bond market experienced a solid month, reflecting investor caution and an understanding that interest rates must remain lower for some time to aid recovery. A lack of new issuance is also helping to push up prices and lower yields. We have been broadening the bond portfolio beyond the UK, purchasing some euro-denominated bonds from cable TV operators including Ziggo in the Netherlands and Kabel Deutschland in Germany. The resulting euro exposure has been reduced by the action of backing these purchases with euro borrowings.

Overall, income from dividends is holding up well and, given Henderson High Income's defensive mix of equities and bonds, we believe the trust can potentially deliver further returns over the coming year.

Alex Crooke
April 2012