--------------------------------------------------------------------------------
July 24, 2000
Dear Shareholders:
On June 30, 2000, the Fund's net asset value per share was $3.50 and the market
price closed at $3.375, representing a market price discount to the net asset
value of 3.6%. At a market price of $3.375, annualizing the current monthly
dividend of $.035, the Fund's shares had a dividend yield of 12.4% on June
30th.
The unfavorable high yield bond market conditions described below affected both
the Fund's net asset value per share and the level of the premium/discount of
the market price to the Fund's net asset value. During most of 1999, the Fund's
shares traded at a premium to the net asset value. The figures in the table
below illustrate the volatility of the Fund's market price premium or discount
to its net asset value per share over time. A change in the level of the
premium or discount to the net asset value can have a major impact on the total
return for any given period. For example, in the last quarter of 1999, the
Fund's share price went to a deep discount, from which it has only recently
begun to recover. The Fund's total return in the fourth quarter of 1999 was
-18.6%. However, the market price discount to the net asset value per share has
narrowed considerably. Based on the share price, shareholders earned a total
return of 14.8% for the first six months of 2000.
<TABLE>
<CAPTION>
Market Price Premium/(Discount)
To Net Asset Value Per Share
--------------------------------
<S> <C>
December 31, 1997 11.8%
December 31, 1998 2.2%
December 31, 1999 (19.0)%
July 21, 2000 (2.3)%
</TABLE>
High Yield Market Update
The high yield market showed a tentative bounce towards the end of the first
half of the year. Sentiment improved modestly following data that indicated
that open-end, high yield mutual funds had been the beneficiaries of some
positive cash flows during the month of June. Year-to-date, the high yield
mutual fund community has suffered outflows of $6.5 billion. The recent inflows
may reflect investors' belief that the Fed may be near the end of its interest
rate tightening regimen. (Demand for fixed income mutual funds tends to be
highly sensitive to interest rate direction.)
Nevertheless, the market remains choppy given the still uncertain Fed policy
outlook combined with weak technical and credit conditions. As we noted in our
annual letter to shareholders, the high yield market has experienced an
elevated default rate over the last year, and access to financing for leveraged
companies may be less available than it was several years ago. Mitigating some
of these credit concerns is the reality that the global economy appears to be
on strong footings, and to date the US economy remains healthy despite the
Federal Reserve Board's interest rate actions.
During the first half of the year, the difference in yield between 10-year US
Treasuries and the Lehman High Yield Index widened from 510 basis points to 661
basis points. This widening reflected both a decrease in yield of the 10-Year
Treasury from 6.4% to 6.0%, and an increase in yield of the high yield index
from 11.5% to 12.6%. While short term rates have increased, longer term
interest rates have moderated, reflecting investors' expectations for a cooling
economy and government debt buybacks of the 30-Year Treasury. This yield
difference of 661 basis points is quite high relative to the trailing five year
average of 417 basis points, and appears to be compensating investors for at
least some degree of illiquidity and credit risk.
<PAGE>
--------------------------------------------------------------------------------
Because the high yield market generally declined in price during the first six
months, leverage had a negative impact on Portfolio returns. The Fund modestly
reduced its overall dollar amount of leverage by eliminating $10 million face
amount of its preferred stock earlier in the year. This reduction was funded by
the Fund's cash position and was not otherwise required. (We would note that
the Fund's leverage positively impacts returns when prices, on average, are
stable or improve.) Despite the Fund's relatively high degree of leverage,
however, during this period of weak market returns, the Fund nevertheless
outperformed the Lipper category for the three month and one year periods,
and only minimally trailed the Lipper average for the 6 month period ended
June 30, 2000.
<TABLE>
<CAPTION>
Total Returns for Periods Ended June 30, 2000
-----------------------------------------------------
Six Mos. One Year Three Years
---------- ---------- ---------------------------
Cumulative Avg. Annual
------------ ------------
<S> <C> <C> <C> <C>
New America High Income Fund
(NAV and Dividends)* -3.9% -2.1% 2.9% 1.0%
Lipper Closed-End Fund Leveraged
High Yield Average* -3.8 -3.8 3.7 1.2
New America High Income Fund
(Stock Price and Dividends) 14.8 -14.3 -5.3 -1.8
</TABLE>
* Returns are adjusted for dilutive effect of rights offerings as calculated by
Lipper Analytical Services, Inc.
Source: Lipper Analytical Services, Inc. and The New America High Income Fund,
Inc.
The Portfolio is highly diversified with exposure to over 150 different
corporate issuers. The top ten issuers held by the Fund represent 14.7% of
invested assets. The average quality of the Portfolio is rated Ba2/BB by
Moody's and Standard and Poor's respectively, and the average yield,
incorporating the impact of potential calls, is 11.3%. Average maturity and
duration (including optionality) are 6.4 years and 4.3, although we would
caution that these statistics have less bearing for a high yield portfolio than
for an investment grade portfolio. The cash position of the Fund was slightly
under 9% at June 30, 2000. We have maintained this higher than average cash
position to cushion the Fund against adverse market conditions and to ensure
that the Fund remains well within its compliance guidelines with respect to its
aaa/AAA rating on its preferred stock.
For additional information, please visit the Fund's web-site at
www.newamerica-hyb.com. As always, we appreciate your interest in the Fund.
Sincerely,
/s/ Robert F Birch /s/ Catherine A. Smith
------------------ ----------------------
Robert F. Birch Catherine A. Smith
President Senior Vice President
The New America High Income Fund, Inc. Wellington Management Company, LLP
2
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited)
(Dollar Amounts in Thousands)
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- 86.25% (e)
-------------------------------------------------------------------------
Aerospace and Defense -- 1.92%
$ 870 Argo-Tech Corporation, Senior
Subordinated Notes, 8.625%,
10/01/07 ............................ B3 $ 609
2,500 L-3 Communications Corporation,
Senior Subordinated Notes,
8.50%, 05/15/08 ..................... B2 2,300
3,500 Loral Space Communications,
Senior Notes, 9.50%, 01/15/06 ....... B1 2,564
3,000 Moog, Inc., Senior Subordinated
Notes, 10%, 05/01/06 ................ B1 2,985
------
8,458
------
Automobile -- 3.58%
3,000 Accuride Corporation, Senior
Subordinated Notes, 9.25%,
02/01/08 ............................ B2 2,550
2,835 Exide Corp., Senior Notes, 10%,
04/15/05 ............................ B1 2,537
3,500 Federal-Mogul Corporation, Notes,
7.375%, 01/15/06 .................... Ba2 2,520
3,500 Federal-Mogul Corporation, Senior
Notes, 8.80%, 04/15/07 .............. Ba2 2,520
3,000 Key Plastics, Inc., Senior
Subordinated Notes, 10.25%,
03/15/07 (a)(c) ..................... Caa2 300
2,265 LDM Technologies, Inc., Senior
Subordinated Notes, 10.75%,
01/15/07 ............................ B3 1,778
1,000 Lear Corporation, Senior Notes,
8.11%, 05/15/09 ..................... Ba1 911
1,500 Lear Corporation, Subordinated
Notes, 9.50%, 07/15/06 .............. Ba3 1,455
1,880 Prestolite Electric Incorporated,
Senior Notes, 9.625%, 02/01/08....... B2 1,203
------
15,774
------
Banking -- 1.33%
710 United Companies Financial
Corporation, Subordinated
Notes, 8.375%, 07/01/05 (a)(c) ...... (f) 7
6,580 Western Financial Savings Bank,
Subordinated Capital
Debentures, 8.875%, 08/01/07 ........ B2 5,856
------
5,863
------
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
Broadcasting and Entertainment -- 1.76%
$2,500 Carmike Cinemas, Inc., Senior
Subordinated Notes, 9.375%,
02/01/09 ............................ Caa2 $1,375
1,500 Chancellor Media Corporation of
Los Angeles, Senior
Subordinated Notes, 8.125%,
12/15/07 ............................ B1 1,506
4,000 Fox/Liberty Networks, LLC, Senior
Notes, 8.875%, 08/15/07 ............. Ba1 3,960
2,000 Loews Cineplex Entertainment
Corporation, Senior
Subordinated Notes, 8.875%,
08/01/08 ............................ Caa2 920
------
7,761
------
Building and Real Estate -- 5.42%
4,000 Beazer Homes USA, Inc., Senior
Notes, 8.875%, 04/01/08 ............. Ba3 3,600
5,000 Del Webb Corporation, Senior
Subordinated Debentures,
10.25%, 02/15/10 .................... B2 4,375
2,500 D.R. Horton, Inc., Senior Notes,
8%, 02/01/09 ........................ Ba1 2,150
2,500 Kaufman and Broad Home
Corporation, Senior
Subordinated Notes, 9.625%,
11/15/06 ............................ B1 2,381
4,000 The Ryland Group, Inc., Senior
Subordinated Notes, 8.25%,
04/01/08 ............................ B1 3,320
5,000 Standard Pacific Corp., Senior
Notes, 8.50%, 06/15/07 .............. Ba2 4,500
2,000 Standard Pacific Corp., Senior
Notes, 8%, 02/15/08 ................. Ba2 1,795
2,000 Toll Corp., Senior Subordinated
Notes, 7.75%, 9/15/07 ............... Ba2 1,780
------
23,901
------
Chemicals, Plastics and Rubber -- 5.09%
1,500 Acetex Corporation, Senior
Secured Notes, 9.75%,
10/01/03 ............................ B3 1,410
7,000 Arco Chemical Co., Debentures,
9.80%, 02/01/20 ..................... Ba3 6,370
</TABLE>
The accompanying notes are an integral
part of these financial statements.
3
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- continued
-------------------------------------------------------------------------
$2,165 Borden Chemicals and Plastics
Operating Limited Partnership,
Notes, 9.50%, 05/01/05 ............. B1 $1,948
1,500 Buckeye Cellulose Corporation,
Senior Subordinated Notes,
8.50%, 12/15/05 .................... Ba3 1,440
3,000 Georgia Gulf Corp., Senior
Subordinated Notes, 10.375%,
11/1/07 ............................ B1 3,105
2,500 Huntsman ICI Chemicals, LLC,
Senior Subordinated Notes,
10.125%, 07/01/09 .................. B2 2,513
2,620 Lyondell Chemical Company,
Senior Subordinated Notes,
10.875%, 05/01/09 .................. B2 2,593
1,500 PCI Chemicals Canada Inc.,
Senior Secured Notes, 9.25%,
10/15/07 ........................... B3 945
1,440 Sovereign Speciality Chemical,
Inc., Senior Subordinated Notes,
11.875%, 03/15/10 (i) .............. B3 1,483
750 Sterling Chemicals, Inc., Senior
Subordinated Notes, 11.75%,
08/15/06 ........................... Caa3 615
------
22,422
------
Containers, Packaging and Glass -- 5.02%
3,000 Abitibi-Consolidated Inc., Notes,
7.875%, 08/01/09 ................... Baa3 2,887
1,220 Anchor Glass Container
Corporation, First Mortgage
Notes, 11.25%, 04/01/05 ............ B3 903
2,000 BWAY Corporation, Senior
Subordinated Notes, 10.25%,
04/15/07 ........................... B2 1,900
2,910 Consumers Packaging, Inc.,
Senior Notes, 9.75%, 02/01/07 ...... Caa1 1,164
1,000 Container Corporation of America,
Senior Notes, Series B, 10.75%,
05/01/02 ........................... B2 1,005
4,000 Container Corporation of America,
Senior Notes, 9.75%, 04/01/03 ...... B2 4,000
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
$2,500 Corning Consumer Products Co.,
Senior Subordinated Notes,
9.625%, 05/01/08 ................... B3 $1,662
1,000 Domtar Inc., Debentures, 9.50%,
08/01/16 ........................... Baa3 1,040
3,500 Paperboard Industries International
Inc., Senior Notes, 8.375%,
09/15/07 ........................... Ba3 2,975
4,000 Silgan Corporation, Senior
Subordinated Debentures, 9%,
06/01/09 ........................... B1 3,640
1,000 Tembec Industries Inc., Guaranteed
Senior Notes, 8.625% 06/30/09 ...... Ba2 955
------
22,131
------
Diversified/Conglomerate Manufacturing -- .95%
2,000 Henry Company, Senior Notes,
10%, 04/15/08 ...................... Caa1 1,400
2,000 International Wire Group, Inc.,
Senior Subordinated Notes,
11.75%, 06/01/05 ................... B3 2,010
1,000 Numatics, Incorporated, Senior
Subordinated Notes, 9.625%,
04/01/08 ........................... B3 770
------
4,180
------
Diversified/Conglomerate Service -- 3.87%
5,000 Allied Waste North America, Inc.,
Senior Notes, 7.625%, 01/01/06...... Ba3 4,350
1,000 Allied Waste North America, Inc.,
Senior Subordinated Notes,
10%, 08/01/09 ...................... B2 835
3,500 Globo Communcacoes e
Participacoes S.A., Notes,
10.625%, 12/15/08 (i) .............. B2 2,957
1,000 PSINet Inc., Senior Notes, 10%,
02/15/05 ........................... B3 925
2,000 Rogers Communications Inc.,
Senior Notes, 8.875%, 07/15/07...... Ba3 1,965
3,500 United Rentals (North America),
Inc., Senior Subordinated Notes,
9%, 04/01/09 ....................... B1 3,097
1,300 Waste Management, Inc.,
Debentures, 7.65%, 03/15/11 ........ Ba1 1,179
2,000 Waste Management, Inc., Senior
Notes, 6.875%, 05/15/09 ............ Ba1 1,765
------
17,073
------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
4
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- continued
-------------------------------------------------------------------------
Diversified Natural Resources, Metals and
Minerals -- 1.09%
$3,000 P&L Coal Holdings Corporation,
Senior Notes, 8.875%, 05/15/08...... Ba3 $2,842
2,000 Pacifica Papers Inc., Senior Notes,
10%, 03/15/09 ....................... B1 1,970
------
4,812
------
Electronics -- 6.40%
3,000 Advanced Micro Devices, Inc.
Senior Secured Notes, 11%,
08/01/03 ............................ B2 3,090
4,000 Amkor Technology, Senior Notes,
9.25%, 05/01/06 ..................... Ba3 3,940
1,000 Amkor Technology, Senior
Subordinated Notes, 10.50%,
05/01/09 ............................ B1 1,007
1,200 Amphenol Corporation, Senior
Subordinated Notes, 9.875%,
05/15/07 ............................ B1 1,212
2,515 Fairchild Semiconductor
Corporation, Senior
Subordinated Notes, 10.375%,
10/01/07 ............................ B2 2,540
2,460 Flextronics International, Ltd.,
Senior Subordinated Notes,
9.875%, 07/01/10 (i) ................ Ba3 2,491
1,000 Hadco Corporation, Senior
Subordinated Notes, 9.50%,
06/15/08 ............................ B2 1,005
2,500 MCMS, Inc., Senior Subordinated
Notes, 9.75%, 03/01/08 .............. Caa3 1,450
3,000 Samsung Electronics America,
Inc., Guaranteed Notes, 9.75%,
05/01/03 (i) ........................ Baa3 3,109
1,459 SCG Holding Corporation, Senior
Subordinated Notes, 12%,
08/01/09 ............................ B2 1,561
1,750 Viasystems, Inc., Senior
Subordinated Notes, 9.75%,
06/01/07 ............................ B3 1,522
1,000 Viasystems, Inc., Senior
Subordinated Notes, Series B,
9.75%, 06/01/07 ..................... B3 870
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
$2,500 WESCO Distribution, Inc., Senior
Subordinated Notes, 9.125%,
06/01/08 ........................... B2 $2,287
2,500 Zilog, Inc., Senior Secured Notes,
9.50%, 03/01/05 .................... B2 2,137
------
28,221
------
Finance -- .45%
2,000 Navistar Financial Corporation,
Senior Subordinated Notes, 9%,
06/01/02 ........................... Ba2 1,990
------
Furnishings, Housewares, Durable Consumer Products -- .93%
1,500 Nortek, Inc., Senior Notes, 9.25%,
03/15/07 ........................... B1 1,402
1,500 Nortek, Inc., Senior Notes,
9.125%, 09/01/07 .................... B1 1,391
1,500 Simmons Company, Senior
Subordinated Notes, 10.25%,
03/15/09 ............................ B3 1,320
------
4,113
------
Grocery -- .13%
850 Homeland Stores, Inc., Senior
Subordinated Notes, 10%,
08/01/03 ........................... (f) 595
------
Healthcare, Education and Childcare -- 6.54%
1,500 Alaris Medical Systems, Inc.,
Senior Subordinated Notes,
9.75%, 12/01/06 .................... Caa1 975
4,000 Beverly Enterprises, Inc., Senior
Notes, 9%, 02/15/06 ................ B1 3,340
1,500 Bio Rad Labs, Inc., Senior
Subordinated Notes, 11.625%,
02/15/07 (i) ....................... B2 1,545
4,000 Columbia/HCA Healthcare
Corporation, Notes, 7.25%,
05/20/08 ........................... Ba2 3,568
2,000 ConMed Corporation, Senior
Subordinated Notes, 9%, 03/15/08. B3 1,830
2,500 DJ Orthopedics LLC, Senior
Subordinated Notes, 12.625%,
06/15/09 ........................... B3 2,381
2,000 Fisher Scientific International Inc.,
Senior Subordinated Notes, 9%,
02/01/08 ........................... B3 1,855
</TABLE>
The accompanying notes are an integral
part of these financial statements.
5
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- continued
-------------------------------------------------------------------------
$2,595 Mediq/PRN Life Support Services,
Inc., Senior Subordinated Notes,
11%, 06/01/08 (a)(c) ............... C $ 260
2,500 Owens & Minor, Inc., Senior
Subordinated Notes, 10.875%,
06/01/06 ........................... B2 2,587
2,500 Tenet Healthcare Corporation,
Senior Subordinated Notes,
8.625%, 01/15/07 ................... Ba3 2,394
3,000 Tenet Healthcare Corporation,
Senior Subordinated Notes,
8.125%, 12/01/08 ................... Ba3 2,760
2,135 Triad Hospitals Holdings, Inc.,
Senior Subordinated Notes,
11%, 05/15/09 ...................... B3 2,188
5,500 Universal Hospital Services, Inc.,
Senior Notes, 10.25%, 03/01/08...... B3 3,135
------
28,818
------
Hotels, Motels, Inns and Gaming -- 1.98%
5,000 John Q. Hammons Hotels, L.P.,
First Mortgage Notes, 8.875%,
02/15/04 ........................... B2 4,388
2,000 Harrah's Operating Company, Inc.,
Guaranteed Senior
Subordinated Notes, 7.875%,
12/15/05 ........................... Ba2 1,880
1,500 Hollywood Casino Corporation,
Senior Secured Notes, 11.25%,
05/01/07 ........................... B3 1,534
1,000 Station Casinos, Inc., Senior
Subordinated Notes, 8.875%,
12/01/08 ........................... B1 940
------
8,742
------
Leisure, Amusement and Entertainment -- .47%
2,000 Polaroid Corporation, Notes,
11.50%, 02/15/06 ................... Ba3 2,087
------
Machinery -- 1.22%
1,500 Anthony Crane Rental, L.P., Senior
Notes, 10.375%, 08/01/08 ........... B3 975
2,500 Bucyrus International, Inc., Senior
Notes, 9.75%, 09/15/07 ............. B1 425
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
$2,790 Grove Worldwide LLC, Senior
Subordinated Notes, 9.25%,
05/01/08 ........................... Caa1 $ 1,032
2,000 The IT Group, Inc., Senior
Subordinated Notes, 11.25%,
04/01/09 ........................... B3 1,800
1,500 Neenah Corporation, Senior
Subordinated Notes, 11.125%,
05/01/07 ........................... B3 1,147
------
5,379
------
Mining, Steel, Iron and Non-Precious Metals -- 4.87%
3,000 AK Steel Corporation, Senior
Notes, 9.125%, 12/15/06 ............ Ba2 2,880
1,000 AK Steel Corporation, Senior
Notes, 7.875%, 02/15/09 ............ Ba2 890
2,500 Algoma Steel, Inc., First Mortgage
Notes, 12.375%, 07/15/05 ........... B2 2,150
4,000 Bayou Steel Corporation, First
Mortgage Notes, 9.50%,
05/15/08 ........................... B1 3,420
1,000 Bethlehem Steel Corporation,
Senior Notes, 10.375%,
09/01/03 ........................... Ba3 990
3,100 The LTV Corporation, Senior
Notes, 11.75%, 11/15/09 ............ Ba3 2,604
4,500 The LTV Corporation, Senior
Notes, 8.20%, 09/15/07 ............. Ba3 3,330
2,000 Pen Holdings, Inc., Senior Notes,
9.875%, 06/15/08 ................... B2 1,620
3,640 Weirton Steel Corporation, Senior
Notes, 11.375%, 07/01/04 ........... B2 3,567
------
21,451
------
Oil and Gas -- 3.60%
3,000 Clark Refining and Marketing, Inc.,
Senior Notes, 8.375%, 11/15/07...... Ba3 2,355
5,000 Frontier Oil Corporation, Senior
Notes, 9.125%, 02/15/06 ............ B2 4,425
2,000 Pioneer Natural Resources Co.,
Senior Notes, 9.625%, 04/01/10...... Ba2 2,070
1,005 Plains Resources Inc., Senior
Subordinated Notes, 10.25%,
03/15/06 ........................... B2 1,015
1,900 RAM Energy, Inc., Senior Notes,
11.50%, 02/15/08 ................... Caa1 931
</TABLE>
The accompanying notes are an integral
part of these financial statements.
6
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- continued
-------------------------------------------------------------------------
$1,760 RBF Finance Co., Senior Secured
Notes, 11%, 03/15/06 ............... Ba3 $ 1,892
3,500 Tuboscope Inc., Senior Notes,
7.50%, 02/15/08 .................... Ba1 3,165
------
15,853
------
Personal, Food and Miscellaneous Services -- 1.34%
1,005 Bell Sports, Inc., Senior
Subordinated Notes, 11%,
08/15/08 ........................... B3 1,000
2,000 Evenflo Company, Inc., Senior
Notes, 11.75%, 08/15/06 ............ B2 1,960
3,000 True Temper Sports, Inc. Senior
Subordinated Notes, 10.875%,
12/01/08 ........................... B3 2,940
------
5,900
------
Personal Transportation -- 1.09%
2,000 Atlas Air, Inc., Senior Notes,
10.75%, 08/01/05 ................... B1 2,050
500 Atlas Air, Inc., Senior Notes,
9.375%, 11/15/06 ................... B1 485
2,500 Valujet, Inc., Senior Notes,
10.25%, 04/15/01 ................... B3 2,250
------
4,785
------
Printing and Publishing -- 10.39%
3,000 The Ackerly Group, Inc., Senior
Subordinated Notes, 9%,
01/15/09 ........................... B2 2,715
2,500 Adelphia Communications
Corporation, Senior Notes,
9.875%, 03/01/07 ................... B1 2,394
4,050 Adelphia Communications
Corporation, Senior Notes,
8.375%, 02/01/08 ................... B1 3,574
950 Adelphia Communications
Corporation, Senior Notes,
7.75%, 01/15/09 .................... B1 795
1,000 Boise Cascade Corp., Debentures,
9.45%, 11/01/09 .................... Baa3 1,029
2,500 Classic Cable, Inc., Senior
Subordinated Notes, 10.50%,
03/01/10 ........................... B3 2,306
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
$3,500 CSC Holdings, Inc., Senior
Debentures, Series B, 8.125%,
08/15/09 ........................... Ba1 $ 3,421
1,000 CSC Holdings, Inc., Senior
Subordinated Notes, 9.875%,
05/15/06 ........................... Ba3 1,005
3,265 Doman Industries Limited, Senior
Notes, 8.75%, 03/15/04 ............. Caa1 2,514
2,500 Doman Industries Limited, Senior
Secured Notes, 12%, 07/01/04 ....... B3 2,519
2,500 Insight Midwest, L.P., Senior
Notes, 9.75%, 10/01/09 ............. B1 2,462
3,000 Lin Television Corporation, Senior
Subordinated Notes, 8.375%,
03/01/08 ........................... B2 2,685
1,500 Mail-Well I Corporation, Senior
Subordinated Notes, 8.75%,
12/15/08 ........................... B1 1,290
2,500 Multicanal S.A., Notes, 9.25%,
02/01/02 ........................... B1 2,363
2,500 Outdoor Systems, Inc., Senior
Subordinated Notes, 8.875%,
06/15/07 ........................... Baa1 2,525
1,000 RCN Corporation, Senior Notes,
10.125%, 01/15/20 .................. B3 830
1,500 Sullivan Graphics, Inc., Senior
Subordinated Exchange Notes,
12.75%, 08/01/05 ................... Caa1 1,515
3,000 Sun Media Corporation, Senior
Subordinated Notes, 9.50%,
02/15/07 ........................... B1 2,910
1,000 Time Warner Telecom LLC, Senior
Notes, 9.75%, 07/15/08 ............. B2 970
6,255 World Color Press, Inc., Senior
Subordinated Notes, 8.375%,
11/15/08 ........................... Baa3 5,972
-------
45,794
-------
Telecommunications -- 13.87%
725 BTI Telecom Corp., Senior Notes,
10.50%, 09/15/07 ................... B3 553
3,500 Charter Communications Holdings,
LLC, Senior Notes, 10%,
04/01/09 ........................... B2 3,395
</TABLE>
The accompanying notes are an integral
part of these financial statements.
7
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
CORPORATE DEBT SECURITIES -- continued
-------------------------------------------------------------------------
$3,500 Charter Communications Holdings,
LLC, Senior Notes, 8.25%,
04/01/07 ........................... B2 $3,097
5,000 Deutsche Telekom International
Finance B.V., 8%, 06/15/10 ......... Aa2 5,049
3,500 Echostar DBS Corporation, Senior
Notes, 9.25%, 02/01/06 ............. B2 3,395
3,000 FLAG Limited, Senior Notes,
8.25%, 01/30/08 ................... Ba3 2,670
2,500 FLAG Telecom Holdings Limited, Senior
Notes, 11.625%, 03/30/10 (i) ....... B2 2,400
3,500 Global Crossing Holdings Ltd.,
Senior Notes, 9.125%, 11/15/06...... Ba2 3,369
2,430 Hermes Europe Railtel B.V.,
Senior Notes, 11.50%, 08/15/07...... B3 2,126
2,500 Hyperion Telecommunications,
Inc., Senior Secured Notes,
12.25%, 09/01/04 ................... B3 2,600
1,500 Intermedia Communications Inc.,
Senior Notes, 9.50%, 03/01/09 ...... B2 1,410
2,000 Intermedia Communications Inc.,
Senior Notes, 8.875%, 11/01/07...... B2 1,850
1,500 Intermedia Communications Inc.,
Senior Notes, 8.50%, 01/15/08 ...... B2 1,365
1,500 Level 3 Communications, Inc.,
Senior Notes, 11%, 03/15/08 (i) .... B3 1,485
3,500 MasTec, Inc., Senior Subordinated
Notes, 7.75%, 02/01/08 ............. Ba1 3,224
5,000 McLeodUSA Incorporated, Senior
Notes, 9.25%, 07/15/07 ............. B1 4,825
2,315 Metromedia Fiber Network, Inc.,
Senior Notes, 10%, 12/15/09 ........ B2 2,269
2,000 NTL Incorporated, Senior Notes,
10%, 02/15/07 ...................... B3 1,900
2,000 Rogers Cantel Inc., Senior Secured
Debentures, 9.75%, 06/01/16 ........ Ba3 2,120
1,000 Rogers Cantel Inc., Senior Secured
Notes, 8.30%, 10/01/07 ............. Ba3 990
3,000 Telewest Communications, Senior
Notes, 9.875%, 02/01/10 (i) ........ B1 2,865
3,000 Verio, Inc., Senior Notes, 11.25%,
12/01/08 ........................... B3 3,330
1,500 Viatel, Inc., Senior Dollar Notes,
11.50%, 03/15/09 ................... B3 1,140
</TABLE>
<TABLE>
<CAPTION>
Principal Moody's Value
Amount/Units Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
$1,000 Viatel, Inc., Senior Notes, 11.50%,
03/15/09 ........................... B3 $ 760
3,000 Williams Communications Group,
Inc., Senior Notes, 10.875%,
10/01/09 ........................... B2 2,925
-------
61,112
-------
Textiles and Leather -- 1.31%
2,320 Pillowtex Corporation, Senior
Subordinated Notes, 9%, 12/15/07.... Ca 812
6,250 WestPoint Stevens, Inc., Senior
Notes, 7.875%, 06/15/08 ............ B1 4,969
-------
5,781
-------
Utilities -- 1.63%
1,000 CMS Energy Corporation, Senior
Notes, 7.50%, 01/15/09 ............. Ba3 891
4,000 CMS Energy Corporation,
Subordinated Notes, 7.625%,
11/15/04 ........................... Ba3 3,750
2,500 TNP Enterprises, Inc., Senior
Subordinated Notes, 10.25%,
04/01/10 (i) ....................... Ba3 2,550
-------
7,191
-------
Total Corporate Debt Securities
(Total cost of $426,042).......... 380,187
-------
Shares
-------------------------------------------------------------------------
PREFERRED STOCK -- .60% (e)
-------------------------------------------------------------------------
Banking -- 0.00%
57,935 WestFed Holdings, Inc.,
Cumulative, Series A, Preferred
Stock, 15.50% (a)(d)(h) ............ (f) 0
Machinery -- .26%
1,350 Fairfield Manufacturing Company,
Inc., Cumulative Exchangeable
Preferred Stock, 11.25% ............ (f) 1,147
Personal, Food and Miscellaneous Services -- .34%
275 SF Holdings Group, Inc.,
Exchangeable Preferred Stock,
13.75% (c) ......................... (f) 1,155
84 SF Holdings, Group, Inc.,
Exchangeable Preferred Stock,
13.75% (c)(i) ...................... (f) 353
------
1,508
------
Total Preferred Stock
(Total cost of $9,072).............. 2,655
------
</TABLE>
The accompanying notes are an integral
part of these financial statements.
8
<PAGE>
The New America High Income Fund, Inc.
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Schedule of Investments -- June 30, 2000 (Unaudited) -- Continued
(Dollar Amounts in Thousands)
=========================================================================
-------------------------------------------------------------------------
<TABLE>
<CAPTION>
Moody's Value
Shares Rating (Note 1(a))
-------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK and WARRANTS -- .06% (e)
-------------------------------------------------------------------------
12,500 Benedek Communications
Corporation, Warrants, exp.
07/01/07 (b)(h) ..................... $ 25
515 Concentric Network Corporation,
Warrants, exp. 12/15/07 (h)(i) ...... 242
9,719 DecisionOne Corp., Common
Stock (a)(h) ........................ 3
5,479 DecisionOne Corp., Class A,
Warrants, exp. 4/18/07 (a)(h) ....... 0
9,442 DecisionOne Corp., Class B
Warrants, exp. 4/18/07 (a)(h) ....... 0
5,600 DecisionOne Corp., Class C
Warrants, exp. 4/18/07(a)(h) ........ 0
37,620 Fitzgerald Gaming Corporation,
Common Stock (b)(h) ................. 4
1,017 SF Holdings Group, Inc., Class C,
Common Stock (h)(i) ................. 0
27,474 WestFed Holdings, Inc., Series B,
Common Stock (a)(d)(h) .............. 0
------
Total Common Stock and
Warrants (Total cost of $5,250)...... $ 274
======
Principal
Amount
-------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.26% (e)
-------------------------------------------------------------------------
$40,799 Paine Webber, Inc., Repurchase
Agreement, 6.55%, 07/03/00
(Collateral U.S. Treasury Bonds,
5.25%, 2/15/29, $45,845
principal) .......................... $ 40,799
--------
Total Short-Term Investments
(Total cost of $40,799).............. 40,799
--------
TOTAL INVESTMENTS
(Total cost of $481,163)............. $423,915
========
</TABLE>
(a) Denotes issuer is in bankruptcy proceedings
(b) Restricted as to public resale. At the date of acquisition, these
securities were valued at cost. The total value of restricted securities
owned at June 30, 2000 was $29 or .01% of total assets.
(c) Nonincome producing security which is on nonaccrual and/or has defaulted on
interest payments.
(d) Security is valued at fair value using methods determined by the Board of
Directors. The total value of these securities at June 30, 2000 was $0.
(e) Percentages indicated are based on total assets of $440,772
(f) Not rated.
(g) Security is a step interest bond. Interest on these bonds accrue based upon
the effective interest rate.
(h) Nonincome producing.
(i) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. Such securities may be resold, normally to qualified
institutional buyers in transactions exempt from registration. See Note
1(a) of the Notes to Financial Statements for valuation policy. Total
market value of Rule 144A securities amounted to $19,935 as of June 30,
2000.
The accompanying notes are an integral
part of these financial statements.
9
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Statement of Operations
Balance Sheet For the Six Months Ended
June 30, 2000 (Unaudited) June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<S> <C>
Assets: (Dollars in thousands, except per share amounts)
INVESTMENTS IN SECURITIES, at value (Identified
cost of $481,163 see Schedule of Investments
and Notes 1 and 2)............................... $423,915
INTEREST RATE SWAP, at fair value
(Note 6)......................................... 4,261
RECEIVABLES:
Investment Securities Sold........................ 1,531
Interest and dividends............................ 10,918
OTHER ASSET........................................ 68
PREPAID EXPENSE.................................... 79
--------
Total assets..................................... $440,772
--------
Liabilities:
PAYABLES:
Investment Securities Purchased................... $ 5,465
Dividend payable on common stock.................. 319
Dividend payable on preferred stock............... 543
ACCRUED EXPENSES (Note 3).......................... 228
--------
Total liabilities................................ $ 6,555
--------
Net Assets:
AUCTION TERM PREFERRED STOCK:
$1.00 par value, 1,000,000 shares authorized,
8,000 shares issued and outstanding,
liquidation preference of $25,000 per share
(Notes 4 and 5)................................. $200,000
--------
COMMON STOCK:
$0.01 par value, 200,000,000 shares authorized,
66,900,549 shares issued and outstanding........ $ 669
CAPITAL IN EXCESS OF PAR VALUE...................... 335,359
UNDISTRIBUTED NET INVESTMENT INCOME
(Note 2)......................................... 2,029
ACCUMULATED NET REALIZED LOSS FROM
SECURITIES TRANSACTIONS (Note 2)................. (50,853)
NET UNREALIZED DEPRECIATION ON
INVESTMENTS AND INTEREST RATE SWAPS.............. (52,987)
--------
Net assets applicable to common stock
(Equivalent to $3.50 per share, based on
66,900,549 shares outstanding).................. $234,217
--------
Total Net Assets................................... $434,217
========
</TABLE>
<TABLE>
<S> <C>
Investment Income: (Note 1) (Dollars in thousands, except per
share amounts)
Interest income................................... $ 21,897
Dividend income................................... 76
Other income...................................... 268
--------
Total investment income.......................... $ 22,241
--------
Expenses:
Cost of leverage:
Preferred and auction fees........................ $ 235
--------
Total cost of leverage........................... $ 235
--------
Professional services expenses:
Management fees (Note 3).......................... $ 541
Custodian and transfer agent fees ................ 138
Legal fees........................................ 127
Audit fees........................................ 38
--------
Total professional services expenses............. $ 844
--------
Administrative expenses:
General administrative fees....................... $ 180
Directors' fees................................... 103
Shareholder meeting expenses...................... 48
Miscellaneous expenses............................ 28
NYSE fee.......................................... 28
--------
Total administrative expenses.................... $ 387
--------
Total expense.................................... $ 1,466
--------
Net investment income............................ $ 20,775
--------
Realized and Unrealized Gain (Loss) on Investment Activities:
Realized loss on investments...................... $ (8,387)
--------
Change in net unrealized appreciation (depreciation)
on investments.................................. $(17,529)
Unrealized change in appreciation (depreciation)
on interest rate swap agreements................ 346
--------
Total change in net unrealized depreciation on
investments and interest rate swaps............ $(17,183)
--------
Net loss on investments.......................... $(25,570)
--------
Net decrease in net assets resulting from operations $ (4,795)
--------
Cost of Preferred Leverage:
Distributions to preferred stockholders........... $ (6,345)
Net swap settlement receipts (Note 6)............. 187
--------
Total cost of preferred leverage................. $ (6,158)
--------
Net decrease in net assets resulting from operations
less cost of preferred leverage................. $(10,953)
========
----------------------------------------------------------------
Amount Available for Distribution to Common Stockholders
Net investment income............................. $ 20,775
Total cost of preferred leverage................. (6,158)
--------
Net amount available for distribution to common
stockholders................................... $ 14,617
========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
10
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Statements of Changes in Net Assets
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended
June 30, 2000 For the Year Ended
(Unaudited) December 31, 1999
----------------- -------------------
<S> <C> <C>
From Operations: (Dollars in thousands, except per share amounts)
Net investment income.......................................................... $ 20,775 $ 43,669
Realized gain (loss) on investments, net....................................... (8,387) (36,780)
Change in net unrealized appreciation (depreciation) on investments and other
financial instruments......................................................... (17,183) 17,266
--------- ---------
Net increase (decrease) in net assets resulting from operations............... $ (4,795) $ 24,155
--------- ---------
From Fund Share Transactions:
Net asset value of 1,136,530 shares issued to common
stockholders for reinvestment of dividends in 1999............................ $ -- 4,692
Repurchase of Auction Term Preferred Stock (400 shares) in 2000 (Note 4)....... (10,000) --
--------- ---------
Increase (decrease) in net assets resulting from fund share transactions...... $ (10,000) $ 4,692
--------- ---------
Distributions to Stockholders:
Preferred dividends ($773 and $1,347 per share in 2000 and 1999, respectively). $ (6,345) $ (11,313)
Net swap settlement receipts (disbursements)................................... 187 (740)
Common Dividends:
From net investment income ($.20 and $.48 per share in 2000 and 1999,
respectively)................................................................ (13,045) (32,097)
--------- ---------
Decrease in net assets resulting from distributions to stockholders........... $ (19,203) $ (44,150)
--------- ---------
Total net decrease in net assets................................................ $ (33,998) $ (15,303)
--------- ---------
Net Assets Applicable to Common and Preferred Stock:
Beginning of period............................................................ $ 468,215 $ 483,518
--------- ---------
End of period (Including $2,029 and $457 of undistributed net investment
income at June 30, 2000 and December 31, 1999, respectively).................. $ 434,217 $ 468,215
========= =========
</TABLE>
The accompanying notes are an integral
part of these financial statements.
11
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Financial Highlights
Selected Per Share Data and Ratios
For Each Share of Common Stock Outstanding Throughout the Period
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended June 30, 2000
(Unaudited)
--------------------
<S> <C>
NET ASSET VALUE:
Beginning of period ......... $ 3.86
-------
NET INVESTMENT INCOME .31
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS AND
OTHER FINANCIAL
INSTRUMENTS ................. (.38)
--------
TOTAL FROM
INVESTMENT
OPERATIONS ................ (.07)
--------
DISTRIBUTIONS:
Dividends from net
investment income:
To preferred
stockholders
(including
net swap settlement
receipts/payments) ........ (.09)
To common
stockholders .............. (.20)
Dividends in excess of
net investment income:
To common
stockholders ............... --
--------
TOTAL
DISTRIBUTIONS ............. (.29)
--------
Effect of rights offering and
related expenses; and
Auction Term Preferred
Stock offering costs and
sales load .................. --
--------
NET ASSET VALUE:
End of period ............... $ 3.50
========
PER SHARE MARKET VALUE:
End of period ............... $ 3.38
========
TOTAL INVESTMENT RETURN+ 14.77%
========
<CAPTION>
For the Years Ended December 31,
1999 1998 (c) 1997 (c) 1996 1995 1994 (b) 1993
------------- ------------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE:
Beginning of period ......... $ 4.16 $ 5.03 $ 4.94 $ 4.71 $ 4.13 $ 5.15 $ 4.32
--------- --------- ------- ------- ------- --------- -------
NET INVESTMENT INCOME .66 .71# .70# .69 .67 .72# .59
NET REALIZED AND
UNREALIZED
GAIN (LOSS) ON
INVESTMENTS AND
OTHER FINANCIAL
INSTRUMENTS ................. (.30) (.81)# .25# .22 .62 (.82)# .89
--------- --------- ------- ------- ------- --------- -------
TOTAL FROM
INVESTMENT
OPERATIONS ................ .36 (.10) .95 .91 1.29 (.10) 1.48
--------- --------- ------- ------- ------- --------- -------
DISTRIBUTIONS:
Dividends from net
investment income:
To preferred
stockholders
(including
net swap settlement
receipts/payments) ........ (.18) (.17) (.16) (.16) (.17) (.17) (.05)
To common
stockholders .............. (.48) (.54) (.53) (.52) (.50) (.53) (.53)
Dividends in excess of
net investment income:
To common
stockholders ............... -- -- (.01) -- (.04) -- (.07)
--------- --------- ------- ------- ------- --------- -------
TOTAL
DISTRIBUTIONS ............. (.66) (.71) (.70) (.68) (.71) (.70) (.65)
--------- --------- ------- ------- ------- --------- -------
Effect of rights offering and
related expenses; and
Auction Term Preferred
Stock offering costs and
sales load .................. -- (.06) (.16) -- -- (.22) --
--------- --------- -------- ------- ------- --------- -------
NET ASSET VALUE:
End of period ............... $ 3.86 $ 4.16 $ 5.03 $ 4.94 $ 4.71 $ 4.13 $ 5.15
========= ========= ======= ======= ======= ========= =======
PER SHARE MARKET VALUE:
End of period ............... $ 3.13 $ 4.25 $ 5.63 $ 5.13 $ 4.75 $ 4.00 $ 5.13
========= ========= ======= ======= ======= ========= =======
TOTAL INVESTMENT RETURN+ (16.92)% (15.15)% 21.97% 19.89% 33.50% (11.88)% 40.08%
========= ========= ======= ======= ======= ========= =======
</TABLE>
The accompanying notes are an integral
part of these financial statements.
12
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Financial Highlights
Selected Per Share Data and Ratios
For Each Share of Common Stock Outstanding Throughout the Period -- Continued
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Six Months
Ended June 30, 2000
(Unaudited)
--------------------
<S> <C>
NET ASSETS, END OF
PERIOD, APPLICABLE
TO COMMON STOCK (a) $234,217
========
NET ASSETS, END OF
PERIOD, APPLICABLE
TO PREFERRED
STOCK (a) ........................ $200,000
========
TOTAL NET ASSETS, END
OF PERIOD (a) .................... $434,217
========
EXPENSE RATIOS:
Ratio of interest expense
to average net assets** --
Ratio of preferred and
other debt expenses to
average net assets** ............ .20%*
Ratio of operating
expenses to average
net assets** .................... 1.02%*
Ratio of litigation settlement
expense to average net
assets** ........................ --
--------
RATIO OF TOTAL EXPENSES
TO AVERAGE NET ASSETS** 1.22%*
========
RATIO OF NET INVESTMENT
INCOME TO AVERAGE
NET ASSETS** ..................... 17.27%*
RATIO OF TOTAL EXPENSES
TO AVERAGE NET
ASSETS APPLICABLE
TO COMMON AND
PREFERRED STOCK .................. .66%*
PORTFOLIO TURNOVER
RATE ............................. 50.80%*
<CAPTION>
For the Years Ended December 31,
1999 1998 (c) 1997 (c) 1996 1995 1994 (b)
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS, END OF
PERIOD, APPLICABLE
TO COMMON STOCK (a) $258,215 $273,518 $243,625 $176,408 $164,823 $141,590
======== ======== ======== ======== ======== ========
NET ASSETS, END OF
PERIOD, APPLICABLE
TO PREFERRED
STOCK (a) ........................ $210,000 $210,000 $150,000 $100,000 $100,000 $100,000
======== ======== ======== ======== ======== ========
TOTAL NET ASSETS, END
OF PERIOD (a) .................... $468,215 $483,518 $393,625 $276,408 $264,823 $241,590
======== ======== ======== ======== ======== ========
EXPENSE RATIOS:
Ratio of interest expense
to average net assets** -- -- -- -- -- .01%
Ratio of preferred and
other debt expenses to
average net assets** ............ .18% .14% .13% .16% .18% .22%
Ratio of operating
expenses to average
net assets** .................... .89% .82% .92% 1.16% 1.39% 1.31%
Ratio of litigation settlement
expense to average net
assets** ........................ -- -- -- -- .80% --
--------- --------- --------- --------- --------- ---------
RATIO OF TOTAL EXPENSES
TO AVERAGE NET ASSETS** 1.07% .96% 1.05% 1.32% 2.37% 1.54%
========= ========= ========= ========= ========= =========
RATIO OF NET INVESTMENT
INCOME TO AVERAGE
NET ASSETS** ..................... 16.36% 15.22% 13.86% 14.36% 14.61% 15.89%
RATIO OF TOTAL EXPENSES
TO AVERAGE NET
ASSETS APPLICABLE
TO COMMON AND
PREFERRED STOCK .................. .60% .58% .66% .83% 1.44% .89%
PORTFOLIO TURNOVER
RATE ............................. 66.74% 124.67% 108.84% 53.45% 62.66% 58.56%
<CAPTION>
For the Years
Ended
December
31,
1993
-------------
<S> <C>
NET ASSETS, END OF
PERIOD, APPLICABLE
TO COMMON STOCK (a) $130,673
========
NET ASSETS, END OF
PERIOD, APPLICABLE
TO PREFERRED
STOCK (a) ........................ $ 35,000
========
TOTAL NET ASSETS, END
OF PERIOD (a) .................... $165,673
========
EXPENSE RATIOS:
Ratio of interest expense
to average net assets** 1.83%
Ratio of preferred and
other debt expenses to
average net assets** ............ .51%
Ratio of operating
expenses to average
net assets** .................... 2.01%
Ratio of litigation settlement
expense to average net
assets** ........................ --
--------
RATIO OF TOTAL EXPENSES
TO AVERAGE NET ASSETS** 4.35%
========
RATIO OF NET INVESTMENT
INCOME TO AVERAGE
NET ASSETS** ..................... 11.86%
RATIO OF TOTAL EXPENSES
TO AVERAGE NET
ASSETS APPLICABLE
TO COMMON AND
PREFERRED STOCK .................. 3.38%
PORTFOLIO TURNOVER
RATE ............................. 85.76%
</TABLE>
(a) Dollars in thousands.
(b) The Fund entered into a refinancing transaction on January 4, 1994, and the
per share data and ratios for the year ended December 31, 1994 reflect this
transaction.
(c) The Fund issued Series C ATP on May 6, 1997 and Series D ATP on May 20,
1998. The per share data and ratios for the years ended December 31, 1997
and 1998 reflect these transactions.
* Annualized
** Ratios calculated on the basis of expenses and net investment income
applicable to the common shares relative to the average net assets of the
common stockholders only. The expense ratio and net investment income ratio
do not reflect the effect of dividend payments (including net swap
settlement receipts/payments) to preferred stockholders.
# Calculation is based on average shares outstanding during the indicated
period due to the per share effect of the Fund's June 1994, March 1997 and
March 1998 rights offerings.
+ Total investment return is calculated assuming a purchase of common stock
at the current market value on the first day and a sale at the current
market value on the last day of each year reported. Dividends and
distributions are assumed for purposes of this calculation to be reinvested
at prices obtained under the dividend reinvestment plan. This calculation
does not reflect brokerage commissions.
The accompanying notes are an integral
part of these financial statements.
13
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Information Regarding
Senior Securities
================================================================================
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 2000
(Unaudited)
---------------
<S> <C>
TOTAL AMOUNT OUTSTANDING:
Preferred Stock ................... $200,000,000
Short-term Loan ................... --
ASSET COVERAGE:
Per Preferred Stock Share (2) $ 54,277
Per $1,000 of Short-term
Loan (1) .......................... --
INVOLUNTARY LIQUIDATION
PREFERENCE:
Preferred Stock Share (3) ......... $ 25,000
APPROXIMATE MARKET VALUE:
Per Preferred Stock Share (3) $ 25,000
Per $1,000 of Short-term Loan --
<CAPTION>
As of December 31,
1999 1998 1997 1996 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
TOTAL AMOUNT OUTSTANDING:
Preferred Stock ................... $210,000,000 $210,000,000 $150,000,000 $100,000,000 $100,000,000
Short-term Loan ................... -- -- -- -- --
ASSET COVERAGE:
Per Preferred Stock Share (2) $ 55,740 $ 57,562 $ 65,604 $ 69,102 $ 66,206
Per $1,000 of Short-term
Loan (1) .......................... -- -- -- -- --
INVOLUNTARY LIQUIDATION
PREFERENCE:
Preferred Stock Share (3) ......... $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
APPROXIMATE MARKET VALUE:
Per Preferred Stock Share (3) $ 25,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Per $1,000 of Short-term Loan -- -- -- -- --
<CAPTION>
As of December 31,
1994 1993
--------------- --------------
<S> <C> <C>
TOTAL AMOUNT OUTSTANDING:
Preferred Stock ................... $100,000,000 $35,000,000
Short-term Loan ................... -- 45,000,000
ASSET COVERAGE:
Per Preferred Stock Share (2) $ 60,398 $ 473,351
Per $1,000 of Short-term
Loan (1) .......................... -- 4,682
INVOLUNTARY LIQUIDATION
PREFERENCE:
Preferred Stock Share (3) ......... $ 25,000 $ 100,000
APPROXIMATE MARKET VALUE:
Per Preferred Stock Share (3) $ 25,000 $ 100,000
Per $1,000 of Short-term Loan -- 1,000
</TABLE>
(1) Calculated by subtracting the Fund's total liabilities (not including
senior securities) from the Fund's total assets and dividing such amounts
by the number of Notes outstanding.
(2) Calculated by subtracting the Fund's total liabilities (including the Notes
but not including the Preferred Stock) from the Fund's total assets and
dividing such amount by the number of Preferred Shares outstanding.
(3) Plus accumulated and unpaid dividends.
The accompanying notes are an integral
part of these financial statements.
14
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements
June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
(1) Significant Accounting and Other Policies
The New America High Income Fund, Inc. (the Fund) was organized as a
corporation in the state of Maryland on November 19, 1987 and is registered
with the Securities and Exchange Commission as a diversified, closed-end
investment company under the Investment Company Act of 1940. The Fund commenced
operations on February 26, 1988. The investment objective of the Fund is to
provide high current income while seeking to preserve stockholders' capital
through investment in a professionally managed, diversified portfolio of "high
yield" fixed-income securities.
The Fund invests primarily in fixed maturity corporate debt securities
that are rated less than investment grade. Risk of loss upon default by the
issuer is significantly greater with respect to such securities compared to
investment grade securities because these securities are generally unsecured
and are often subordinated to other creditors of the issuer and because these
issuers usually have high levels of indebtedness and are more sensitive to
adverse economic conditions, such as a recession, than are investment grade
issuers. In some cases, the collection of principal and timely receipt of
interest is dependent upon the issuer attaining improved operating results,
selling assets or obtaining additional financing.
See the schedule of investments for information on individual securities
as well as industry diversification and credit quality ratings.
The Fund's financial statements have been prepared in conformity with
generally accepted accounting principles that require the management of the
Fund to, among other things, make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting periods. Actual results
could differ from those estimates.
The following is a summary of significant accounting policies consistently
followed by the Fund, which are in conformity with those generally accepted in
the investment company industry.
(a) Valuation of Investments--Investments for which market quotations are
readily available are stated at market value, which is determined by using the
most recently quoted bid price provided by an independent pricing service or
principal market maker. Independent pricing services provide market quotations
based primarily on quotations from dealers and brokers, market transactions,
accessing data from quotations services, offering sheets obtained from dealers
and various relationships between securities. Short-term investments having
maturities of 60 days or less are stated at amortized cost, which approximates
market value. Following procedures approved by the Board of Directors,
investments for which market quotations are not readily available (primarily
fixed-income corporate bonds and notes) are stated at fair value on the basis
of subjective valuations furnished by securities dealers and brokers. Other
investments, with a cost of approximately $4,919,000 and a value of $0, are
valued in good faith at fair market value using methods determined by the Board
of Directors.
(b) Interest and Dividend Income--Interest income is accrued on a daily
basis. Discount on short-term investments is amortized to investment income.
Market discounts or premiums on corporate debt securities are not amortized for
financial statement purposes. All income on original issue discount and step
interest bonds is accrued based on the effective interest method for both
financial reporting and tax reporting purposes as required by federal income
tax regulations. Dividend payments received in additional securities are
recorded on the ex-dividend date in an amount equal to the value of the
security on such date.
(c) Federal Income Taxes--It is the Fund's policy to comply with the
requirements of the Internal Revenue Code of 1986, as amended, applicable to
regulated
15
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements--Continued
June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
investment companies and to distribute substantially all of its taxable income
to its shareholders each year. Accordingly, no federal income tax provision is
required.
(2) Tax Matters and Distributions
At June 30, 2000, the total cost of securities (including temporary cash
investments) for federal income tax purposes was approximately $481,254,000.
Aggregate gross unrealized gain on securities in which there was an excess of
value over tax cost was approximately $6,894,000. Aggregate unrealized loss on
securities in which there was an excess of tax cost over value was
approximately $59,972,000. Net unrealized loss on investments and interest rate
swaps for tax purposes at June 30, 2000 was approximately $53,078,000.
At December 31, 1999, the Fund had approximate capital loss carryovers
available to offset future capital gain, if any, to the extent provided by
regulations:
<TABLE>
<CAPTION>
Carryover Available Expiration Date
--------------------- ------------------
<S> <C>
$ 2,227,000 December 31, 2002
35,580,000 December 31, 2007
-----------
$37,807,000
===========
</TABLE>
To the extent that capital loss carryovers are used to offset realized
capital gains, it is unlikely that gains so offset will be distributed to
shareholders.
Distributions on common stock are declared based upon annual projections
of the Fund's investment company taxable income. The Fund records all dividends
and distributions payable to shareholders on the ex-dividend date and declares
and distributes income dividends monthly.
In accordance with Statement of Position 93-2, the Fund has recorded
several reclassifications in the capital accounts. These reclassifications have
no impact on the net asset value of the Fund and are designed generally to
present undistributed net investment income or accumulated net realized gains
and losses on a tax basis, which is considered to be more informative to the
shareholder. As of December 31, 1999, the Fund has reclassified approximately
$74,000 primarily related to amortization of market discounts on corporate
bonds and gains on foreign currency transactions from accumulated net realized
loss from securities transactions to undistributed net investment income. The
Fund has also reclassified approximately $25,000 to capital in excess of par
value consisting of approximately ($107,000) and $82,000 from accumulated net
realized loss and undistributed net investment income, respectively, to reflect
the permanent differences resulting from the tax accounting for interest rate
swap agreements entered into by the Fund. In addition, the Fund has
reclassified approximately $34,426,000, related to the expiration of unused
capital loss carryovers from accumulated net realized loss from securities
transactions to capital in excess of par value.
The difference between earnings for financial statement purposes and
earnings for tax purposes is primarily due to the tax treatment of the
amortization of market discounts on corporate bonds.
(3) Investment Advisory Agreement
Wellington Management Company, LLP, the Fund's Investment Advisor, earned
approximately $541,000 in management fees during the six months ended June 30,
2000. Management fees paid by the Fund to Wellington Management are calculated
at .45 of 1% (on an annual basis) of the average weekly value of the Fund's net
assets attributable to common stock ($234.2 million at June 30, 2000). At June
30, 2000, the fee payable to the Investment Advisor was approximately $86,000,
which was included in accrued expenses on the accompanying balance sheet.
(4) Auction Term Preferred Stock (ATP)
The Fund had 8,000 shares of ATP issued and outstanding at June 30, 2000.
The Fund repurchased 400 shares of Series A ATP on April 4, 2000 at a
redemption
16
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements--Continued
June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
price equal to $25,000 per share plus accumulated and unpaid dividends. The
ATP's dividends are cumulative at a rate determined at an auction, and dividend
periods will typically be 28 days unless notice is given for periods to be
longer or shorter than 28 days. Dividend rates ranged from 5.69% to 6.70% for
the six months ended June 30, 2000.
The ATP is redeemable, at the option of the Fund, or subject to mandatory
redemption (if the Fund is in default of certain coverage requirements) at a
redemption price equal to $25,000 per share plus accumulated and unpaid
dividends. The ATP has a liquidation preference of $25,000 per share plus
accumulated and unpaid dividends. The Fund is required to maintain certain
asset coverages with respect to the ATP under the Fund's Charter and the 1940
Act.
(5) ATP Auction-Related Matters
Bankers Trust Company (BTC) serves as the ATP's auction agent pursuant to
an agreement entered into on January 4, 1994. The term of the agreement is
unlimited and may be terminated by either party. BTC may resign upon notice to
the Fund, such resignation to be effective on the earlier of the 90th day after
the delivery of such notice and the date on which a successor auction agent is
appointed by the Fund. The Fund may also replace BTC as auction agent at any
time.
After each auction, BTC as auction agent will pay to each broker-dealer,
from funds provided by the Fund, a maximum service charge at the annual rate of
.25 of 1% or such other percentage subsequently agreed to by the Fund and the
broker-dealers, of the purchase price of shares placed by such broker-dealers
at such auction. In the event an auction scheduled to occur on an auction date
fails to occur for any reason, the broker-dealers will be entitled to service
charges as if the auction had occurred and all holders of shares placed by them
had submitted valid hold orders. The Fund incurred approximately $235,000 for
service charges through June 30, 2000. This amount is included under the
caption preferred and auction fees in the accompanying statement of operations.
(6) Interest Rate Swaps
The Fund entered into four interest payment swap arrangements with
BankBoston, N.A. (BBNA) for the purpose of partially hedging its dividend
payment obligations with respect to the ATP. Pursuant to each of the Swap
Arrangements the Fund makes payments to BBNA on a monthly basis at fixed annual
rates. In exchange for such payments BBNA makes payments to the Fund on a
monthly basis at a variable rate determined with reference to one month LIBOR.
The variable rates ranged from 5.79% to 6.62% for the six months ended June 30,
2000. The effective date, notional amount, maturity and fixed rates of the
swaps are as follows:
<TABLE>
<CAPTION>
Notional Fixed
Effective Contract Annual
Date Amount Maturity Rate
<S> <C> <C> <C>
10/7/97 $20 million 10/7/02 6.07%
6/2/98 $15 million 6/2/03 5.90%
12/7/98 $25 million 12/7/03 5.58%
2/8/99 $65 million 2/7/04 5.83%
</TABLE>
Swap transactions, which involve future settlement, give rise to credit
risk. Credit risk is the amount of loss the Fund would incur in the event
counterparties failed to perform according to the terms of the contractual
commitments. The Fund is exposed to credit loss in the event of nonperformance
by counterparties on interest rate swaps, but the Fund does not anticipate
nonperformance by any counterparty. While notional contract amounts are used to
express the volume of interest rate swap agreements, the amounts potentially
subject to credit risk, in the event of nonperformance by counterparties, are
substantially smaller.
The Fund accounts for interest rate swaps in accordance with the Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments
17
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements--Continued
June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
and Hedging Activities. This statement requires an entity to recognize all
freestanding derivative instruments in the balance sheet as either assets or
liabilities and measure them at fair value. Any change in the unrealized gain
or loss is recorded in current earnings. For the six months ended June 30,
2000, the Fund's receipts under the swap agreements were more than the amount
owed to BBNA by approximately $187,000 and is included in the accompanying
statement of operations.
The estimated fair value of the interest rate swap agreements at June 30,
2000 amounted to approximately $4,261,000 and is presented in the accompanying
balance sheet.
(7) Repurchase Agreements
At the time the Fund enters into a repurchase agreement, the value of the
underlying security, including accrued interest, will be equal to or exceed the
value of the repurchase agreement, and, in the case of repurchase agreements
exceeding one day, the value of the underlying security, including accrued
interest, is required during the term of the agreement to be equal to or exceed
the value of the repurchase agreement.
The underlying securities for all repurchase agreements are held in
safekeeping in an investment account of State Street Bank and Trust Company
(SSBT), the Fund's custodian, at the Federal Reserve Bank of Boston. In the
case of repurchase agreements exceeding one day, SSBT's Money Market Department
monitors the market value of the underlying securities by pricing them daily,
and in the event any individual repurchase agreement is not fully
collateralized, SSBT advises the Fund and additional collateral is obtained.
(8) Purchase and Sales of Securities
Purchases and proceeds of sales or maturities of long-term securities
during the six months ended June 30, 2000 were as follows:
<TABLE>
<S> <C>
Purchases of securities $102,092,000
Sales of securities $129,493,000
</TABLE>
(9) Certain Transactions
A partner of Goodwin, Procter & Hoar, general counsel to the Fund, serves
as a Director of the Fund. Fees earned by Goodwin, Procter & Hoar amounted to
approximately $107,000 for the six months ended June 30, 2000. The Fund paid
approximately $125,000 during the six months ended June 30, 2000 to two
officers of the Fund for the provision of certain administrative services.
(10) Rights Offering
The Fund issued to stockholders of record as of the close of business on
February 10, 1998, rights to subscribe for an aggregate of 16,241,851 shares of
common stock, $.01 par value per share, of the Fund. One right was issued for
each three full shares of common stock beneficially held on the record date.
The rights entitled a stockholder to acquire at the subscription price of $4.72
per share one share for each right held. The subscription price was 92% of the
average of the last reported sales price of the Fund's Common Stock on the New
York Stock Exchange on March 18, 1998, the expiration date and the nine
preceding business days. On March 25, 1998, the Fund completed its rights
offering. Proceeds of approximately $76,662,000 and shares of 16,241,851 were
recorded. In addition, the deferred offering expense balance of $297,000 was
netted against the rights offering proceeds.
--------------------------------------------------------------------------------
18
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
Notes to Financial Statements--Continued
June 30, 2000 (Unaudited)
================================================================================
--------------------------------------------------------------------------------
From time to time in the future, the Fund may effect redemptions and/or
repurchases of its ATP as provided in the applicable constituent instruments or
as agreed upon by the Fund and sellers. The Fund intends to effect such
redemptions and/or repurchases to the extent necessary to maintain applicable
asset coverage requirements.
The Fund may purchase shares of its Common Stock in the open market when the
Common Stock trades at a discount to net asset value or at other times if the
Fund determines such purchases are in the best interest of its stockholders.
There can be no assurance that the Fund will take such action in the event of a
market discount to net asset value or that Fund purchases will reduce a
discount.
19
<PAGE>
The New America High Income Fund, Inc.
--------------------------------------------------------------------------------
================================================================================
--------------------------------------------------------------------------------
Directors
Robert F. Birch
Joseph L. Bower
Richard E. Floor
Bernard J. Korman
Franco Modigliani
Ernest E. Monrad
Officers
Robert F. Birch - President
Ellen E. Terry - Vice President, Treasurer
Richard E. Floor - Secretary
Investment Advisor
Wellington Management Company, LLP
75 State Street
Boston, MA 02109
Administrator
The New America High Income Fund, Inc.
33 Broad Street
Boston, MA 02109
(617) 263-6400
Custodian and Transfer Agent
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
(617) 328-5000 ext. 6406
(800) 426-5523
Listed: NYSE
Symbol: HYB
Web site: www.newamerica-hyb.com
20
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
State Street Bank and Trust Company
P.O. Box 8200
Boston, Massachusetts 02266-8200
The New
America
High Income
Fund, Inc.
[New America
HIGH
INCOME
FUND LOGO]
------------------------------------------
Semi-Annual
------------------------------------------
Report
------------------------------------------
June 30, 2000
------------------------------------------
