UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS
OF REGISTERED MANAGEMENT INVESTMENT COMPANY
Investment Company Act file number: 811-21869
NEXPOINT CREDIT STRATEGIES FUND
(Exact name of registrant as specified in charter)
200 Crescent Court
Suite 700
Dallas, Texas 75201
(Address of principal executive offices)(Zip code)
NexPoint Advisors, L.P.
200 Crescent Court
Suite 700
Dallas, Texas 75201
(Name and Address of Agent for Service)
Registrants telephone number, including area code: (877) 665-1287
Date of fiscal year end: December 31
Date of reporting period: September 30, 2015
Item 1: Schedule of Investments
The Schedule of Investments are attached herewith.
INVESTMENT PORTFOLIO (unaudited) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
Principal Amount ($) |
Value ($) | |||||
U.S. Senior Loans (a) - 16.9% |
||||||
CHEMICALS - 0.6% |
||||||
2,978,959 |
Vertellus Specialties, Inc. |
2,636,378 | ||||
|
|
|||||
ENERGY - 0.2% |
||||||
459,930 |
Azure Midstream Energy LLC |
395,540 | ||||
1,529,000 |
Fieldwood Energy LLC |
434,488 | ||||
|
|
|||||
830,028 | ||||||
|
|
|||||
GAMING & LEISURE - 1.0% |
||||||
3,883,480 |
Ginn-LA CS Borrower LLC |
77,670 | ||||
8,322,966 |
First Lien Tranche B Term Loan (c) |
166,459 | ||||
8,604,815 |
LLV Holdco LLC |
4,120,846 | ||||
|
|
|||||
4,364,975 | ||||||
|
|
|||||
HOUSING - 0.0% |
||||||
2,221,161 |
LBREP/L-SunCal Master I LLC |
| ||||
|
|
|||||
INFORMATION TECHNOLOGY - 1.0% |
||||||
4,982,000 |
Scientific Games International, Inc. |
4,371,705 | ||||
|
|
|||||
MEDIA & TELECOMMUNICATIONS - 0.0% |
||||||
2,578,841 |
Endurance Business Media, Inc. |
| ||||
|
|
|||||
SERVICE - 1.9% |
||||||
14,715,754 |
Weight Watchers International, Inc. |
8,088,147 | ||||
|
|
|||||
TELECOMMUNICATIONS - 3.2% |
||||||
13,549,570 |
TerreStar Corp. |
13,495,372 | ||||
|
|
|||||
UTILITY - 9.0% |
||||||
8,759,095 |
Entegra TC LLC |
8,649,607 | ||||
60,329,417 |
Texas Competitive Electric Holdings Co. LLC |
23,249,750 | ||||
17,000,000 |
Non-Extended Term Loan |
6,393,615 | ||||
|
|
|||||
38,292,972 | ||||||
|
|
|||||
Total U.S. Senior Loans (Cost $117,376,566) | 72,079,577 | |||||
|
|
|||||
Principal Amount |
||||||
Foreign Denominated or Domiciled Senior Loans (a) - 0.3% |
||||||
MARSHALL ISLANDS - 0.2% |
||||||
1,504,646 |
Drillships Financing Holding, Inc. |
898,395 | ||||
|
|
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
UNITED KINGDOM - 0.1% |
| |||||
986,568 |
Henson No. 4, Ltd. (c)(e) | 130,689 | ||||
998,204 |
Henson No. 4, Ltd. (c)(e) | 131,999 | ||||
|
|
|||||
Total Foreign Denominated or Domiciled Senior Loans (Cost $2,955,949) | 1,161,083 | |||||
|
|
|||||
Principal Amount ($) |
||||||
Asset-Backed Securities (g)(h) - 16.7% |
||||||
10,000,000 |
Acis CLO, Ltd. |
8,064,000 | ||||
2,000,000 |
Series 2013-2A, Class E |
1,912,333 | ||||
14,000,000 |
Series 2013-1A, Class SUB |
6,790,000 | ||||
4,500,000 |
Series 2013-1A, Class E |
3,992,625 | ||||
5,000,000 |
Series 2014-3A, Class F |
3,731,250 | ||||
9,142,000 |
Series 2013-1A, Class F |
7,477,242 | ||||
2,250,000 |
ALM VII, Ltd. |
1,653,750 | ||||
1,000,000 |
Apidos CLO |
796,200 | ||||
1,925,000 |
Betony CLO, Ltd. |
1,395,625 | ||||
2,000,000 |
CFIP CLO, Ltd. |
1,636,580 | ||||
1,000,000 |
CIFC Funding, Ltd. |
780,000 | ||||
3,375,116 |
Eastland CLO, Ltd. |
3,063,508 | ||||
1,000,000 |
Flagship CLO VIII, Ltd. |
790,000 | ||||
2,915,407 |
Grayson CLO, Ltd. |
2,597,919 | ||||
850,000 |
Greywolf CLO, Ltd. |
659,260 | ||||
3,000,000 |
Harbourview CLO, Ltd. |
2,520,000 | ||||
2,127,119 |
Hewetts Island CDO, Ltd. |
2,105,847 | ||||
753,309 |
Highland Loan Funding V, Ltd. |
489,651 | ||||
13,375,000 |
Highland Park CDO, Ltd. |
9,228,750 | ||||
2,000,000 |
KVK CLO, Ltd. |
1,690,000 | ||||
2,000,000 |
Lenox CDO, Ltd. |
1,800,000 | ||||
2,752,426 |
Rockwall CDO II, Ltd. |
2,400,804 |
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
1,500,000 |
Valhalla CLO, Ltd. |
386,250 | ||||
2,100,000 |
Vibrant CLO II, Ltd. |
1,606,500 | ||||
3,980,138 |
Westchester CLO, Ltd. |
3,643,658 | ||||
|
|
|||||
Total Asset-Backed Securities (Cost $74,520,170) | 71,211,752 | |||||
|
|
|||||
Corporate Bonds & Notes - 9.6% |
||||||
ENERGY - 0.8% |
||||||
877,000 |
American Energy-Permian Basin LLC |
517,430 | ||||
307,681 |
7.38%, 11/01/2021(f)(h) |
179,993 | ||||
4,062,000 |
Arch Coal, Inc. |
324,960 | ||||
3,363,000 |
Linn Energy LLC |
874,380 | ||||
2,493,000 |
Penn Virginia Corp. |
657,529 | ||||
5,000,000 |
Venoco, Inc. |
925,000 | ||||
|
|
|||||
3,479,292 | ||||||
|
|
|||||
INFORMATION TECHNOLOGY - 2.6% |
||||||
23,971,250 |
Avaya, Inc. |
11,146,631 | ||||
|
|
|||||
TELECOMMUNICATIONS - 0.2% |
||||||
2,020,000 |
iHeartCommunications, Inc., PIK |
847,138 | ||||
|
|
|||||
TRANSPORTATION - 0.1% |
||||||
3,750,000 |
DPH Holdings Corp. (c) |
154,688 | ||||
3,933,000 |
DPH Holdings Corp. (c) |
162,236 | ||||
8,334,000 |
DPH Holdings Corp. (c) |
343,777 | ||||
|
|
|||||
660,701 | ||||||
|
|
|||||
UTILITY - 5.9% |
||||||
8,622,712 |
Entegra TC LLC, PIK |
8,816,723 | ||||
21,239,000 |
Ocean Rig UDW, Inc. |
11,913,805 | ||||
5,000,000 |
Texas Competitive Electric Holdings Co. LLC (c)(f)(h) | 1,950,000 | ||||
24,000,000 |
Texas Competitive Electric Holdings Co. LLC (c)(f) | 2,460,000 | ||||
|
|
|||||
25,140,528 | ||||||
|
|
|||||
Total Corporate Bonds & Notes (Cost $78,351,507) | 41,274,290 | |||||
|
|
|||||
Principal Amount |
||||||
Foreign Corporate Bonds & Notes - 1.0% |
||||||
CANADA - 0.9% |
||||||
USD |
||||||
5,069,000 |
Tervita Corp. |
3,827,095 | ||||
|
|
|||||
NETHERLANDS - 0.1% |
||||||
USD |
||||||
64,515,064 |
Celtic Pharma Phinco BV (c) | 645,151 | ||||
28,665,284 |
Celtic Pharma Phinco BV (c)(e) | | ||||
|
|
|||||
645,151 | ||||||
|
|
|||||
Total Foreign Corporate Bonds & Notes (Cost $67,323,526) | 4,472,246 | |||||
|
|
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
Principal Amount ($) |
||||||
Sovereign Bonds (c)(f) - 9.2% |
||||||
10,000,000 |
Argentine Republic Government International Bond |
5,805,000 | ||||
22,017,585 |
Argentine Republic Government International Bond |
22,266,871 | ||||
4,128,293 |
Argentine Republic Government International Bond |
4,175,034 | ||||
7,010,200 |
Argentine Republic Government International Bond |
6,975,149 | ||||
20 |
Argentine Republic Government International Bond |
20 | ||||
|
|
|||||
Total Sovereign Bonds (Cost $40,133,957) | 39,222,074 | |||||
|
|
|||||
Shares |
||||||
Common Stocks - 81.3% |
||||||
BROADCASTING - 0.0% |
||||||
2,317,006 |
Communications Corp. of America (e)(i)(j) | 2 | ||||
|
|
|||||
CONSUMER DISCRETIONARY - 3.4% |
||||||
55,125 |
American Airlines Group, Inc. (k) | 2,140,504 | ||||
24,950 |
Apollo Group, Inc., Class A (i)(k) | 275,947 | ||||
982,727 |
K12, Inc. (i)(k) | 12,225,124 | ||||
|
|
|||||
14,641,575 | ||||||
|
|
|||||
ENERGY - 1.1% |
||||||
161,280 |
Atlantic Power Corp. (f) | 299,981 | ||||
3,360 |
California Resources Corp. (k) | 8,736 | ||||
2,060,928 |
Ocean Rig UDW, Inc. (f)(k) | 4,389,776 | ||||
|
|
|||||
4,698,493 | ||||||
|
|
|||||
FINANCIAL - 6.7% |
||||||
1,000,000 |
Adelphia Recovery Trust (i) | 2,500 | ||||
46,601 |
American Banknote Corp. (e) | 221,821 | ||||
1,098,185 |
Fortress Investment Group LLC, Class A (f)(k) | 6,094,927 | ||||
83,904 |
MPM Holdings, Inc. (i) | 1,908,816 | ||||
12,819,115 |
Specialty Finance, Inc. (e)(i)(l) | 12,362,754 | ||||
1,175,233 |
SWS Group, Inc. (e)(f)(i)(k) | 8,120,860 | ||||
|
|
|||||
28,711,678 | ||||||
|
|
|||||
GAMING & LEISURE - 0.0% |
||||||
14 |
LLV Holdco LLC - Litigation Trust Units (e) | | ||||
26,712 |
LLV Holdco LLC - Series A, Membership Interest (e) | | ||||
144 |
LLV Holdco LLC - Series B, Membership Interest (e) | | ||||
|
|
|||||
| ||||||
|
|
|||||
HEALTHCARE - 0.4% |
||||||
24,000,000 |
Genesys Ventures IA, LP (e) | 1,569,600 | ||||
|
|
|||||
HOUSING - 0.3% |
||||||
368,150 |
CCD Equity Partners LLC (e) | 1,214,895 | ||||
|
|
|||||
INDUSTRIALS - 0.4% |
||||||
6,241,435 |
DryShips, Inc. (f)(i)(k) | 1,053,554 | ||||
18,550 |
JetBlue Airways Corp. (i)(k) | 478,034 | ||||
|
|
|||||
1,531,588 | ||||||
|
|
|||||
INFORMATION TECHNOLOGY - 2.6% |
||||||
833 |
CDK Global, Inc. (k) | 39,801 | ||||
563,485 |
Corning, Inc. (f)(k) | 9,646,863 | ||||
1 |
Magnachip Semiconductor Corp. (i) | 7 | ||||
4,897 |
Microsoft Corp. (k) | 216,741 | ||||
27,450 |
NetApp, Inc. (k) | 812,520 | ||||
11,600 |
Teradata Corp. (f)(i)(k) | 335,936 | ||||
|
|
|||||
11,051,868 | ||||||
|
|
|||||
MEDIA & TELECOMMUNICATIONS - 18.5% |
||||||
6,480 |
Endurance Business Media, Inc., Class A (e)(i) | | ||||
18,000 |
Gray Television, Inc., Class A (f)(i) | 208,800 |
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
49,784 |
Loral Space & Communications, Inc. (f)(i) | 2,343,831 | ||||
3,160,625 |
Media General, Inc. (i)(k) | 44,217,144 | ||||
308,875 |
Metro-Goldwyn-Mayer, Inc., Class A (i)(m) | 23,880,053 | ||||
372,971 |
MPM Holdings, Inc. (i)(k) | 8,485,090 | ||||
645 |
Time, Inc. (k) | 12,287 | ||||
|
|
|||||
79,147,205 | ||||||
|
|
|||||
REAL ESTATE - 0.0% |
||||||
417,307 |
Allenby (e)(n) | | ||||
4,739,161 |
Claymore (e)(n) | 5 | ||||
|
|
|||||
5 | ||||||
|
|
|||||
REAL ESTATE INVESTMENT TRUST - 33.2% |
||||||
25,096,927 |
Freedom, REIT (e)(n) | 67,510,733 | ||||
30,000 |
Landmark Apartment Trust, Inc., REIT (e) | 175,500 | ||||
5,983,095 |
Nexpoint Real Estate Capital, REIT (e)(n) | 69,488,867 | ||||
537,527 |
Spirit Realty Capital, Inc., REIT (f)(k) | 4,912,997 | ||||
|
|
|||||
142,088,097 | ||||||
|
|
|||||
TELECOMMUNICATIONS - 7.8% |
||||||
110,872 |
TerreStar Corp. (e)(i)(m) | 33,585,346 | ||||
|
|
|||||
UTILITY - 6.5% |
||||||
26,220 |
Entegra TC LLC, Class A (i) | 7,407,150 | ||||
1,272,973 |
Entegra TC LLC, Class B (i) | 4,455 | ||||
1,365,663 |
NRG Energy, Inc. (k) | 20,280,096 | ||||
|
|
|||||
27,691,701 | ||||||
|
|
|||||
WIRELESS COMMUNICATIONS - 0.4% |
||||||
2,260,529 |
Pendrell Corp. (f)(i) | 1,627,581 | ||||
|
|
|||||
Total Common Stocks (Cost $508,449,956) | 347,559,634 | |||||
|
|
|||||
Preferred Stocks (h) 32.2% |
||||||
FINANCIAL - 32.2% |
||||||
14,500 |
Aberdeen Loan Funding, Ltd. | 5,872,500 | ||||
1,200 |
Brentwood CLO, Ltd. | 588,000 | ||||
13,800 |
Brentwood CLO, Ltd. | 6,762,000 | ||||
34,500 |
Eastland CLO, Ltd. | 17,244,825 | ||||
5,000 |
Eastland Investors Corp. | 2,499,250 | ||||
7,750 |
Gleneagles CLO, Ltd. | 2,063,437 | ||||
62,600 |
Grayson CLO, Ltd., Series II | 28,170,000 | ||||
1,500 |
Grayson Investors Corp. | 675,000 | ||||
39,000 |
Greenbriar CLO, Ltd. | 21,450,000 | ||||
3,750 |
Greenbriar CLO, Ltd. | 2,062,500 | ||||
2,500 |
Liberty CLO, Ltd. | 863,500 | ||||
8,500 |
Red River CLO, Ltd., Series PS-2 | 2,040,000 | ||||
10,500 |
Rockwall CDO, Ltd. | 7,247,100 | ||||
6,000 |
Southfork CLO, Ltd. | 2,829,000 | ||||
41,500 |
Stratford CLO, Ltd. | 22,410,000 | ||||
29,007 |
Westchester CLO, Ltd. | 14,793,570 | ||||
|
|
|||||
137,570,682 | ||||||
|
|
|||||
Total Preferred Stocks (Cost $169,308,711) | 137,570,682 | |||||
|
|
|||||
Exchange-Traded Funds (i)(k) - 1.7% |
||||||
23,400 |
Direxion Daily Gold Miners Bull 3x Shares, ETF | 67,626 | ||||
77,076 |
ProShares Ultra Silver, ETF (f) | 2,353,131 | ||||
121,455 |
ProShares UltraShort Nasdaq Biotechnology, ETF | 4,682,090 | ||||
|
|
|||||
Total Exchange-Traded Funds (Cost $13,301,185) | 7,102,847 | |||||
|
|
|||||
Units |
||||||
Warrants (e)(i) - 0.0% |
||||||
GAMING & LEISURE - 0.0% |
||||||
602 |
LLV Holdco LLC - Series C, Membership Interest, expires 07/15/15 | | ||||
828 |
LLV Holdco LLC - Series D, Membership Interest, expires 07/15/15 | |
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
925 |
LLV Holdco LLC - Series E, Membership Interest, expires 07/15/15 | | ||||
1,041 | LLV Holdco LLC - Series F, Membership Interest, expires 07/15/15 | | ||||
1,179 | LLV Holdco LLC - Series G, Membership Interest, expires 07/15/15 | | ||||
|
|
|||||
| ||||||
|
|
|||||
Total Warrants (Cost $0) | | |||||
|
|
|||||
Contracts |
||||||
Purchased Call Options (o) - 1.2% | ||||||
9,000 | Anadarko Petroleum Corp., Strike price $72.50, expires 01/15/2016 | 1,224,000 | ||||
4,000 | Anadarko Petroleum Corp., Strike price $80.00, expires 01/15/2016 | 200,000 | ||||
7,900 | Salesforce.com, Inc., Strike price $72.50, expires 03/18/2016 | 3,871,000 | ||||
|
|
|||||
Total Purchased Call Options (Cost $20,111,061) | 5,295,000 | |||||
|
|
|||||
Total Investments - 170.1% |
726,949,185 | |||||
|
|
|||||
Securities Sold Short - (5.2)% | ||||||
Shares |
||||||
Common Stocks (p) - (5.2)% | ||||||
ENERGY - (0.4)% | ||||||
31,350 | Cheniere Energy, Inc. | (1,514,205 | ) | |||
8,451 | Seventy Seven Energy, Inc. | (11,662 | ) | |||
(1,525,867 | ) | |||||
|
|
|||||
HEALTHCARE - (2.6)% | ||||||
13,025 | Alexion Pharmaceuticals, Inc. | (2,036,980 | ) | |||
236,200 | Myriad Genetics, Inc. | (8,852,776 | ) | |||
|
|
|||||
(10,889,756 | ) | |||||
|
|
|||||
INFORMATION TECHNOLOGY - (2.2)% | ||||||
114,750 | Zillow Group, Inc., Class A | (3,296,768 | ) | |||
229,500 | Zillow Group, Inc., Class C | (6,196,500 | ) | |||
|
|
|||||
(9,493,268 | ) | |||||
|
|
|||||
Total Common Stocks |
(21,908,891 | ) | ||||
|
|
|||||
Total Securities Sold Short |
(21,908,891 | ) | ||||
|
|
|||||
Other Assets & Liabilities, Net - (64.9)% |
(277,587,571 | ) | ||||
|
|
|||||
Net Assets - 100.0% |
427,452,723 | |||||
|
|
(a) | Senior loans (also called bank loans, leveraged loans, or floating rate loans) in which the Fund invests generally pay interest at rates which are periodically determined by reference to a base lending rate plus a spread (unless otherwise identified, all senior loans carry a variable rate of interest). These base lending rates are generally (i) the Prime Rate offered by one or more major United States banks, (ii) the lending rate offered by one or more European banks such as the London Interbank Offered Rate (LIBOR) or (iii) the Certificate of Deposit rate. Rate shown represents the weighted average rate at September 30, 2015. Senior loans, while exempt from registration under the Securities Act of 1933 (the 1933 Act), contain certain restrictions on resale and cannot be sold publicly. Senior secured floating rate loans often require prepayments from excess cash flow or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturity shown. |
(b) | All or a portion of this position has not settled. Full contract rates do not take effect until settlement date. |
(c) | The issuer is, or is in danger of being, in default of its payment obligation. Income is not being accrued. |
(d) | Fixed rate senior loan. |
(e) | Represents fair value as determined by the Funds Board of Trustees (the Board), or its designee in good faith, pursuant to the policies and procedures approved by the Board. Securities with a total aggregate value of $212,129,289, or 49.6% of net assets, were fair valued under the Funds valuation procedures as of September 30, 2015. |
(f) | All or part of the security is pledged as collateral for the Committed Facility Agreement with BNP Paribas Prime Brokerage, Inc. The market value of the securities pledged as collateral was $102,495,454. |
(g) | Variable or floating rate security. The interest rate shown reflects the rate in effect September 30, 2015. |
(h) | Securities exempt from registration under Rule 144A of the 1933 Act. These securities may only be resold in transaction exempt from registration to qualified institutional buyers. At September 30, 2015, these securities amounted to $247,134,111 or 57.8% of net assets. |
(i) | Non-income producing security. |
(j) | Shares are held in an escrow account. |
INVESTMENT PORTFOLIO (unaudited) (continued) |
As of September 30, 2015 | NexPoint Credit Strategies Fund |
(k) | All or part of this security is pledged as collateral for short sales and written options contracts. The market value of the securities pledged as collateral was $115,095,423. |
(l) | This investment is made up of the fair value of ten life settlement contracts. |
(m) | Restricted Securities. These securities are not registered and may not be sold to the public. There are legal and/or contractual restrictions on resale. The Fund does not have the right to demand that such securities be registered. The values of these securities are determined by valuations provided by pricing services, brokers, dealers, market makers, or in good faith under the procedures established by the Funds Board of Trustees. |
(n) | Affiliated issuer. Assets with a total aggregate market value of $136,999,605, or 32.1% of net assets, were affiliated with the Fund as of September 30, 2015. |
(o) | Options are shown at market value. |
(p) | No dividend payable on security sold short. |
Currency Abbreviations: | ||
EUR |
Euro Currency | |
GBP |
British Pound | |
USD |
United States Dollar | |
Glossary: |
||
CDO |
Collateralized Debt Obligation | |
CLO |
Collateralized Loan Obligation | |
ETF |
Exchange-Traded Fund | |
PIK |
Payment-in-Kind | |
REIT |
Real Estate Investment Trust |
Written options contracts outstanding as of September 30, 2015 were as follows:
Description |
Exercise Price |
Expiration Date |
Number of Contracts |
Premium | Value | |||||||||||||||
WRITTEN PUT OPTIONS: |
||||||||||||||||||||
Anadarko Petroleum Corp. |
$ | 80.00 | January 2016 | 4,000 | $ | 2,529,793 | $ | (8,200,000 | ) | |||||||||||
Salesforce.com, Inc. |
72.50 | March 2016 | 7,900 | 5,981,827 | (6,517,500 | ) | ||||||||||||||
|
|
|
|
|||||||||||||||||
Total Written Options Contracts |
$ | 8,511,620 | $ | (14,717,500 | ) | |||||||||||||||
|
|
|
|
Foreign Denominated or Domiciled Senior Loans and Foreign Corporate Bonds & Notes
Industry Concentration Table:
(% of Net Assets)
Service |
0.9 | % | ||
Energy |
0.2 | % | ||
Healthcare |
0.1 | % | ||
Retail |
0.1 | % | ||
|
|
|||
Total |
1.3 | % | ||
|
|
NOTES TO INVESTMENT PORTFOLIO (unaudited)
September 30, 2015 |
NexPoint Credit Strategies Fund |
Valuation of Investments
In computing the NexPoint Credit Strategies Funds (the Fund) net assets attributable to common shares, securities with readily available market quotations on the New York Stock Exchange, National Association of Securities Dealers Automated Quotation, or other nationally recognized exchange, use the closing quotations on the respective exchange for valuation of those securities. Securities for which there are no readily available market quotations will be valued at the mean between the most recently quoted bid and ask prices provided by the principal market makers. If there is more than one such principal market maker, the value shall be the average of such means. Securities without a sale price or quotations from principal market makers on the valuation day may be priced by an independent pricing service. Generally, the Funds loan and bond positions are not traded on exchanges and consequently are valued based on a mean of the bid and ask price from the third-party pricing services or broker-dealer sources that NexPoint Advisors, L.P. (the Investment Adviser) has determined to generally have the capability to provide appropriate pricing services and have been approved by the Trustees.
Securities for which market quotations are not readily available, for which the Fund has determined the price received from a pricing service or broker-dealer is stale or otherwise does not represent fair value (such as when events materially affecting the value of securities occur between the time when market price is determined and calculation of the Funds net asset value (NAV), will be valued by the Fund at fair value, as determined by the Board or its designee in good faith in accordance with procedures approved by the Board, taking into account factors reasonably determined to be relevant, including: (i) the fundamental analytical data relating to the investment; (ii) the nature and duration of restrictions on disposition of the securities; and (iii) an evaluation of the forces that influence the market in which these securities are purchased and sold. In these cases, the Funds NAV will reflect the affected portfolio securities fair value as determined in the judgment of the Board or its designee instead of being determined by the market. Using a fair value pricing methodology to value securities may result in a value that is different from a securitys most recent sale price and from the prices used by other investment companies to calculate their NAV. Determination of fair value is uncertain because it involves subjective judgments and estimates.
There can be no assurance that the Funds valuation of a security will not differ from the amount that it realizes upon the sale of such security. Those differences could have a material impact to the Fund. Short-term debt investments, that is, those with a remaining maturity of 60 days or less, are valued at cost adjusted for amortization of premiums and accretion of discounts. Foreign price quotations are converted to U.S. dollar equivalents using the 4:00 PM London Time Spot Rate.
Fair Value Measurements
The Fund has performed an analysis of all existing investments and derivative instruments to determine the significance and character of all inputs to their fair value determination. The levels of fair value inputs used to measure the Funds investments are characterized into a fair value hierarchy. Where inputs for an asset or liability fall into more than one level in the fair value hierarchy, the investment is classified in its entirety based on the lowest level input that is significant to that investments valuation. The three levels of the fair value hierarchy are described below:
Level 1 Quoted unadjusted prices for identical instruments in active markets to which the Fund has access at the date of measurement;
Level 2 Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active, but are valued based on executed trades; broker quotations that constitute an executable price; and alternative pricing sources supported by observable inputs are classified within Level 2. Level 2 inputs are either directly or indirectly observable for the asset in connection with market data at the measurement date; and
Level 3 Model derived valuations in which one or more significant inputs or significant value drivers are unobservable. In certain cases, investments classified within Level 3 may include securities for which the Fund has obtained indicative quotes from broker-dealers that do not necessarily represent prices the broker may be willing to trade on, as such quotes can be subject to material management judgment. Unobservable inputs are those inputs that reflect the Funds own assumptions that market participants would use to price the asset or liability based on the best available information.
The Investment Adviser has established policies, as described above and approved by the Board, to ensure that valuation methodologies for investments and financial instruments that are categorized within all levels of the fair value hierarchy
NOTES TO INVESTMENT PORTFOLIO (unaudited) (continued)
September 30, 2015 |
NexPoint Credit Strategies Fund |
are fair and consistent. A Pricing Committee has been established to provide oversight of the valuation policies, processes and procedures, and is comprised of personnel from the Investment Adviser. The Pricing Committee meets monthly to review the proposed valuations for investments and financial instruments and is responsible for evaluating the overall fairness and consistent application of those policies.
As September 30, 2015, the Funds investments consisted of senior loans, asset-backed securities, corporate bonds and notes, common stocks, preferred stocks, exchange-traded funds, rights, warrants and securities sold short. The fair value of the Funds loans, bonds and asset-backed securities are generally based on quotes received from brokers or independent pricing services. Loans, bonds and asset-backed securities with quotes that are based on actual trades with a sufficient level of activity on or near the measurement date are classified as Level 2 assets. Loans, bonds and asset-backed securities that are priced using quotes derived from implied values, indicative bids, or a limited number of actual trades are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable.
The fair value of the Funds common stocks, preferred stocks rights and warrants that are not actively traded on national exchanges are generally priced using quotes derived from implied values, indicative bids, or a limited amount of actual trades and are classified as Level 3 assets because the inputs used by the brokers and pricing services to derive the values are not readily observable.
At the end of each calendar quarter, management evaluates the Level 2 and 3 assets and liabilities for changes in liquidity, including but not limited to: whether a broker is willing to execute at the quoted price, the depth and consistency of prices from third party services, and the existence of contemporaneous, observable trades in the market. Additionally, management evaluates the Level 1 and 2 assets and liabilities on a quarterly basis for changes in listings or delistings on national exchanges.
Due to the inherent uncertainty of determining the fair value of investments that do not have a readily available market value, the fair value of the Funds investments may fluctuate from period to period. Additionally, the fair value of investments may differ significantly from the values that would have been used had a ready market existed for such investments and may differ materially from the values the Fund may ultimately realize. Further, such investments may be subject to legal and other restrictions on resale or otherwise less liquid than publicly traded securities.
NOTES TO INVESTMENT PORTFOLIO (unaudited) (continued)
September 30, 2015 |
NexPoint Credit Strategies Fund |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Transfers in and out of the levels are recognized at the value at the end of the period. A summary of the inputs used to value the Funds assets as of September 30, 2015 is as follows:
Total value at September 30, 2015 |
Level 1 Quoted Price |
Level 2 Significant Observable Inputs |
Level 3 Significant Unobservable Inputs |
|||||||||||||
NexPoint Credit Strategies Fund |
||||||||||||||||
Assets |
||||||||||||||||
U.S. Senior Loans |
||||||||||||||||
Chemicals |
$ | 2,636,378 | $ | | $ | 2,636,378 | $ | | ||||||||
Energy |
830,028 | | 830,028 | | ||||||||||||
Gaming & Leisure |
4,364,975 | | 244,129 | 4,120,846 | ||||||||||||
Housing |
| | | | (2) | |||||||||||
Information Technology |
4,371,705 | | 4,371,705 | | ||||||||||||
Media & Telecommunications |
| | | | (2) | |||||||||||
Service |
8,088,147 | | 8,088,147 | | ||||||||||||
Telecommunications |
13,495,372 | | | 13,495,372 | ||||||||||||
Utility |
38,292,972 | | 38,292,972 | | ||||||||||||
Foreign Denominated or Domiciled Senior Loans |
1,161,083 | | 898,395 | 262,688 | ||||||||||||
Asset-Backed Securities |
71,211,752 | | 71,211,752 | | ||||||||||||
Corporate Bonds & Notes(1) |
41,274,290 | | 41,274,290 | | ||||||||||||
Foreign Corporate Bonds & Notes |
4,472,246 | | 4,472,246 | (2) | | |||||||||||
Sovereign Bonds |
39,222,074 | | 39,222,074 | | ||||||||||||
Common Stocks |
||||||||||||||||
Broadcasting |
2 | | | 2 | ||||||||||||
Consumer Discretionary |
14,641,575 | 14,641,575 | | | ||||||||||||
Energy |
4,698,493 | 4,698,493 | | | ||||||||||||
Financial |
28,711,678 | 6,097,427 | | 22,614,251 | ||||||||||||
Gaming & Leisure |
| | | | (2) | |||||||||||
Healthcare |
1,569,600 | | | 1,569,600 | ||||||||||||
Housing |
1,214,895 | | | 1,214,895 | ||||||||||||
Industrials |
1,531,588 | 1,531,588 | | | ||||||||||||
Information Technology |
11,051,868 | 11,051,868 | | | ||||||||||||
Media & Telecommunications |
79,147,205 | 46,782,062 | 23,880,053 | 8,485,090 | (2) | |||||||||||
Real Estate |
5 | | | 5 | (2) | |||||||||||
Real Estate Investment Trust |
142,088,097 | 4,912,996 | | 137,175,101 | ||||||||||||
Telecommunications |
33,585,346 | | | 33,585,346 | ||||||||||||
Utility |
27,691,701 | 20,280,096 | 7,411,605 | | ||||||||||||
Wireless Communications |
1,627,581 | 1,627,581 | | | ||||||||||||
Preferred Stocks(1) |
137,570,682 | | 137,570,682 | | ||||||||||||
Exchange-Traded Funds |
7,102,847 | 7,102,847 | | | ||||||||||||
Warrants(1) |
||||||||||||||||
Equity Contracts |
| | | | (2) | |||||||||||
Purchased Call Options |
5,295,000 | 5,295,000 | | | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Assets |
726,949,185 | 124,021,533 | 380,404,456 | 222,523,196 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Securities Sold Short(1) |
(21,908,891 | ) | (21,908,891 | ) | | | ||||||||||
Other Financial Instruments |
||||||||||||||||
Written Put Options Contracts |
||||||||||||||||
Equity Contracts |
(14,717,500 | ) | (14,717,500 | ) | | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Liabilities |
(36,626,391 | ) | (36,626,391 | ) | | | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total |
$ | 690,322,794 | $ | 87,395,142 | $ | 380,404,456 | $ | 222,523,196 | ||||||||
|
|
|
|
|
|
|
|
(1) | See Investment Portfolio detail for industry breakout. |
(2) | This category includes securities with a value of zero. |
NOTES TO INVESTMENT PORTFOLIO (unaudited) (continued)
September 30, 2015 |
NexPoint Credit Strategies Fund |
The table below sets forth a summary of changes in the Funds Level 3 assets (assets measured at fair value using significant unobservable inputs) for the nine months ended September 30, 2015.
Balance as of December 31, 2014 |
Transfers into Level 3 |
Transfers Out of Level 3 |
Net Amortization (Accretion) of Premium/ (Discount) |
Net Realized Gains/(Losses) |
Net Unrealized Gains/(Losses) |
Net Purchases(1) | Net (Sales)(1) | Balance as of September 30, 2015 |
Change in Unrealized Gain/(Loss) on Level 3 securities still held at period end |
|||||||||||||||||||||||||||||||
U.S. Senior Loans |
|
|||||||||||||||||||||||||||||||||||||||
Chemicals |
$ | | $ | | $ | (2,827,197 | ) | $ | 4,282 | $ | 748 | $ | 187,304 | $ | 2,640,878 | $ | (6,015 | ) | $ | | $ | | ||||||||||||||||||
Gaming & Leisure |
4,596,592 | | | | | (793,935 | ) | 318,189 | | 4,120,846 | (610,769 | ) | ||||||||||||||||||||||||||||
Healthcare |
2,150,625 | | | 757 | (34,057 | ) | 47,175 | | (2,164,500 | ) | | | ||||||||||||||||||||||||||||
Housing |
72,857 | | | | 204,848 | (53,990 | ) | | (223,715 | ) | | (2) | | |||||||||||||||||||||||||||
Media & Telecommunications |
6,637,538 | | | | (2 | ) | (191,199 | ) | 208,240 | (6,654,577 | ) | | (2) | | ||||||||||||||||||||||||||
Telecommunications |
| | | (1,205 | ) | 11,518 | (64,512 | ) | 16,264,889 | (2,715,318 | ) | 13,495,372 | (76,782 | ) | ||||||||||||||||||||||||||
Utility |
7,883,995 | | (8,649,606 | ) | 81,579 | | 109,001 | 575,031 | | | | |||||||||||||||||||||||||||||
Foreign Denominated or Domiciled |
||||||||||||||||||||||||||||||||||||||||
Senior Loans |
383,212 | | | 75 | (2,178 | ) | 177,079 | | (295,500 | ) | 262,688 | 174,976 | ||||||||||||||||||||||||||||
Foreign Corporate Bonds & Notes |
||||||||||||||||||||||||||||||||||||||||
Healthcare |
645,151 | | (645,151 | ) | | | | | | | | |||||||||||||||||||||||||||||
Common Stocks |
||||||||||||||||||||||||||||||||||||||||
Broadcasting |
2,826,747 | | | | | (2,826,745 | ) | | | 2 | (2,826,745 | ) | ||||||||||||||||||||||||||||
Financial |
7,285,094 | 8,120,860 | | | | (1,229,253 | ) | 8,437,550 | | 22,614,251 | (1,229,253 | ) | ||||||||||||||||||||||||||||
Gaming & Leisure |
| | | | | | | | | (2) | | |||||||||||||||||||||||||||||
Healthcare |
3,429,600 | | | | | (1,860,000 | ) | | | 1,569,600 | (1,860,000 | ) | ||||||||||||||||||||||||||||
Housing |
1,239,193 | | | | | (24,298 | ) | | | 1,214,895 | (24,298 | ) | ||||||||||||||||||||||||||||
Media & Telecommunications |
4,085,241 | | | | | (1,742,831 | ) | 6,142,680 | | 8,485,090 | (2) | | ||||||||||||||||||||||||||||
Real Estate |
3 | | | | | (2,511,740 | ) | 2,511,742 | | 5 | (2) | (2,511,739 | ) | |||||||||||||||||||||||||||
Real Estate Investment Trust |
294,021,630 | | | | | (69,290,930 | ) | 464,785,174 | (552,340,773 | ) | 137,175,101 | (69,290,931 | ) | |||||||||||||||||||||||||||
Telecommunications |
12,325,733 | | | | | 1,995,788 | 19,263,825 | | 33,585,346 | 1,995,788 | ||||||||||||||||||||||||||||||
Warrants |
||||||||||||||||||||||||||||||||||||||||
Equity Contracts |
| | | | | | | | | (2) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
$ | 347,583,211 | $ | 8,120,860 | $ | (12,121,954 | ) | $ | 85,488 | $ | 180,877 | $ | (78,073,086 | ) | $ | 521,148,198 | $ | (564,400,398 | ) | $ | 222,523,196 | $ | (76,259,753 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Includes any applicable borrowings and/or paydowns made on revolving credit facilities held in the Funds Investment Portfolio. |
(2) | This category includes securities with a value of zero. |
Investments designated as Level 3 may include assets valued using quotes or indications furnished by brokers which are based on models or estimates and may not be executable prices. In light of the developing market conditions, the Investment Adviser continues to search for observable data points and evaluate broker quotes and indications received for portfolio investments.
For the nine months ended September 30, 2015, a net amount of $12,121,954 of the Funds portfolio investments, respectively, was transferred from Level 3 to Level 2. Transfers from Level 3 to Level 2 were due to a decrease in observable pricing inputs as compared to the previous period.
For the nine months ended September 30, 2015, a net amount of $8,120,860 of the Funds portfolio investments was transferred from Level 1 to Level 3. Transfers from Level 1 to Level 3 were due to a decrease in observable pricing inputs as compared to the previous period.
NOTES TO INVESTMENT PORTFOLIO (unaudited) (continued)
September 30, 2015 |
NexPoint Credit Strategies Fund |
For the three months ended September 30, 2015, there were no other transfers.
The following table summarizes the valuation techniques used and unobservable inputs developed to determine the fair value of material Level 3 investments:
Category |
Market Value at 9/30/2015 |
Valuation Technique |
Unobservable Inputs |
Input Value(s) | ||||||
Real Estate Investment Trust |
$ | 137,175,101 | Income Approach | Capitalization Rates | 6% - 9% | |||||
Net Asset Value | N/A | N/A | ||||||||
Common Stock |
64,684,694 | Third-Party Pricing Vendor | N/A | N/A | ||||||
Multiples Analysis | Price/MHz-PoP | $0.13 - $0.50 | ||||||||
Multiple of EBITDA | 7.1x | |||||||||
Liquidity Discount | 20% | |||||||||
Weighted Scenarios | Scenario Probabilities | Various | ||||||||
Discounted Cash Flow | Discount Rate | 15% | ||||||||
Net Asset Value | N/A | N/A | ||||||||
Bank Loans |
17,878,906 | Third-Party Pricing Vendor | N/A | N/A | ||||||
Discounted Cash Flow | Spread Adjustment | 0.0% - 0.2% | ||||||||
Adjusted Appraisal | Liquidity Discount | 10% | ||||||||
Limited Partnership Units |
2,784,495 | Recovery Analysis | Scenario Probabilities | Various | ||||||
Discounted Cash Flow | Discount Rate | 21% | ||||||||
|
|
|||||||||
Total |
$ | 222,523,196 |
Significant changes in the unobservable inputs in isolation would result in a significantly lower or higher fair value measurement.
Cash & Cash Equivalents
The Fund considers liquid assets deposited with a bank and certain short-term debt instruments with original maturities of 3 months or less to be cash equivalents. These investments represent amounts held with financial institutions that are readily accessible to pay Fund expenses or purchase investments. Cash and cash equivalents are valued at cost plus accrued interest, which approximates market value. The value of cash equivalents denominated in foreign currencies is determined by converting to U.S. dollars on the date of this financial report.
Securities Sold Short
The Fund may sell securities short. A short sale is a transaction in which the Fund sells a security it does not own in anticipation that the market price of that security will decline. When a Fund sells a security short, it must borrow the security sold short from a broker-dealer and deliver it to the buyer upon conclusion of the transaction. A Fund may have to pay a fee to borrow particular securities and is often obligated to pay over any dividends or other payments received on such borrowed securities. Securities and cash held as collateral for short sales are shown on the Investment Portfolio for the Fund.
Derivative Transactions
The Fund is subject to equity price risk, interest rate risk, and foreign currency exchange rate risk in the normal course of pursuing its investment objective. The Fund enters into derivative transactions for the purpose of hedging against the effects of changes in the value of portfolio securities due to anticipated changes in market conditions, to gain market exposure for residual and accumulating cash positions, and for managing the duration of fixed income investments.
Options
The Fund purchases and writes options, subject to certain limitations. The Fund may invest in options contracts to manage its exposure to the stock and bond markets and fluctuations in foreign currency values. Writing puts and buying calls tend to increase the Funds exposure to the underlying instrument while buying puts and writing calls tend to decrease the Funds exposure to the underlying instrument, or economically hedge other Fund investments. The Funds risks in using these contracts include changes in the value of the underlying instruments, nonperformance of the counterparties under the contracts terms and changes in the liquidity of the secondary market for the contracts. Options are valued at the last sale price, or if no sales occurred on that day, at the last quoted bid price.
When the Fund writes an option, the amount of the premium received is recorded as a liability and is subsequently adjusted to the current fair value of the option written. Premiums received from writing options that expire unexercised are treated by the Fund on the expiration date as realized gains from investments. The difference between the premium and the amount paid on effecting a closing purchase transaction, including brokerage commissions, is also treated as a realized gain, or if the premium is less than the amount paid for the closing purchase, as a realized loss. When an option is exercised, the proceeds from the sale of the underlying security or the cost basis of the securities purchased are adjusted by the original premium received or paid.
NOTES TO INVESTMENT PORTFOLIO (unaudited) (continued)
September 30, 2015 |
NexPoint Credit Strategies Fund |
Transactions in written options for the nine months ended September 30, 2015 were as follows:
Number of Contracts |
Premium | |||||||
Outstanding, December 31, 2014 |
5,050 | $ | 1,296,020 | |||||
Call Options Written |
3,000 | 427,321 | ||||||
Put Options Written |
11,900 | 8,511,620 | ||||||
Call Options Bought back |
(2,000 | ) | (284,881 | ) | ||||
Call Options Expired |
(1,000 | ) | (142,440 | ) | ||||
Put Options Closed |
(5,050 | ) | (1,296,020 | ) | ||||
|
|
|
|
|||||
Outstanding, September 30, 2015 |
11,900 | $ | 8,511,620 | |||||
|
|
|
|
Affiliated Issuers
Under Section 2(a)(3) of the 1940 Act, a portfolio company is defined as affiliated if a Fund owns five percent or more of its outstanding voting securities. The Fund held at least five percent of the outstanding voting securities of the following companies for the nine months ended September 30, 2015 is as follows:
The Fund held at least five percent of the outstanding voting securities of the following companies during the period ended September 30, 2015:
Market Value | ||||||||||||||||||||||||||||
Issuer |
Shares at December 31, 2014 |
Shares at September 30, 2015 |
December 31, 2014 |
September 30, 2015 |
Affiliated Income |
Purchases | Sales | |||||||||||||||||||||
Allenby (Common Stocks) |
250,912 | 417,307 | $ | | $ | | $ | | $ | 166,395 | $ | |||||||||||||||||
Claymore (Common Stocks) |
2,393,814 | 4,739,161 | 3 | 5 | | 2,345,347 | | |||||||||||||||||||||
Endurance Business Media, Inc. Class A (Common Stocks)(1) |
6,480 | 6,480 | | | | | | |||||||||||||||||||||
Freedom REIT (Common Stocks)(2) |
15,006,336 | 25,096,927 | 278,967,787 | 67,510,733 | 11,769,675 | 84,430,450 | | |||||||||||||||||||||
LLV Holdco, LLC (Common Stocks)(1) |
26,870 | 26,870 | | | | | | |||||||||||||||||||||
NexPoint Real Estate Capital, REIT (Common Stocks) |
1,457,100 | 5,983,095 | 15,051,843 | 69,488,867 | 48,125,000 | |||||||||||||||||||||||
NexPoint Residential Trust, Inc., REIT (Common Stocks)(3) |
200,000 | | 2,000 | | | | | |||||||||||||||||||||
Specialty Finance, Inc. (Common Stocks)(1) |
4,762,223 | 12,819,115 | 4,630,310 | 12,362,754 | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
24,103,735 | 49,088,955 | $ | 298,651,943 | $ | 149,362,359 | $ | 11,769,675 | $ | 135,067,192 | $ | | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) | No longer an affiliate as of September 30, 2015. |
(2) | Managed by the same Investment Adviser as the Fund. |
(3) | No longer held as of September 30, 2015. |
U.S. Federal Income Tax Information
Unrealized appreciation and depreciation at September 30, 2015, based on cost of investments for U.S. federal income tax purposes was:
Gross Appreciation |
Gross Depreciation | Net Appreciation/ (Depreciation) |
Cost | |||||||||
$64,342,568 |
$ | 399,839,014 | $ | (335,496,446 | ) | $ | 1,062,445,631 | |||||
|
|
|
|
|
|
For more information with regard to significant accounting policies, see the most recent annual report filed with the Securities and Exchange Commission.
Item 2. Controls and Procedures.
(a) The registrants principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrants disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the 1940 Act) (17 CFR 270.30a-3 (c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrants internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrants last fiscal quarter that have materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting.
Item 3. Exhibits.
Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached 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.
NEXPOINT CREDIT STRATEGIES FUND
By: | /s/ James Dondero | |
James Dondero | ||
President and Principal Executive Officer | ||
Date: | November 24, 2015 |
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/ James Dondero | |
James Dondero | ||
President and Principal Executive Officer | ||
Date: | November 24, 2015 |
By: | /s/ Brian Mitts | |
Brian Mitts | ||
Executive Vice President, Principal Financial Officer and Principal Accounting Officer | ||
Date: | November 24, 2015 |