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Letter to Shareholders
February 20, 2024


Dear Shareholders,

We are pleased to report to our stockholders on the results of The New America High Income Fund, Inc. (the "Fund") for the year ended December 31, 2023. The Fund's net asset value ("NAV") per share was $8.29 as of December 31. The market price for the Fund's shares ended the period at $7.04, representing a market price discount of approximately 15.1%. During the period, the Fund paid dividends totaling $0.4875 per share, which included a special dividend of $0.0475 per share. The dividend yield for a share of common stock purchased at the market price of $6.60 on December 31, 2022 was 7.39%. The dividend yield based upon the December 31, 2022 NAV of $7.57 was 6.44%.

As of December 31, the Fund had outstanding borrowings of $84 million through its liquidity facility with State Street Bank and Trust Company (the "Facility"). Amounts borrowed under the Facility bear interest at an adjustable rate based on a margin above the Overnight Bank Financing Rate ("OBFR").

The rate paid on the Fund's borrowings increased in 2023 as the Federal Reserve (the "Fed") continued its campaign to reduce inflation by increasing the Federal Funds rate. For the second consecutive year, the rising cost of leverage resulted in a narrowing of the spread between the interest rate paid on the Facility and the market value-weighted average current yield earned on the portfolio. At year-end 2022, the Fund was paying 5.32% in interest on leverage and earning a market value-weighted current yield of 7.39%, for a spread of 2.07%. At the end of 2023, the Fund was paying 6.17% in interest on the borrowings and earning a market value-weighted current yield of 7.21% for an historically narrow spread of only 1.04%. While the leverage remains a contributor to the dividend, it is contributing significantly less than in recent years.

We remind our stockholders that there is no certainty that the dividend will remain at the current level. The dividend can be affected by portfolio results, the cost and amount of leverage, market conditions, how fully invested the portfolio is, and operating expenses, among other factors.

The Fund's leverage produces a higher dividend for stockholders than the same portfolio would produce without leverage. Leverage also magnifies the effects of price movements on the Fund's NAV per share. In 2023's favorable high yield market environment, the Fund's NAV rose more than it would have if the Fund did not have a leveraged structure. In a poor high yield market, the leverage decreases the Fund’s total return.

  Total Returns for the Periods Ending
December 31, 2023
  1 Year 3 Years Cumulative
New America High Income Fund, Inc.
(Stock Price and Dividends)*
14.58% 1.76%
New America High Income Fund, Inc.
(NAV and Dividends)*
17.64% 6.24%
Credit Suisse High Yield Index 13.55% 7.16%

Sources: Credit Suisse and The New America High Income Fund, Inc. Past performance is no guarantee of future results. Total return assumes the reinvestment of dividends. The Credit Suisse High Yield Index (the "Index") is an unmanaged index. Unlike the Fund, the Index has no trading activity, expenses or leverage.

*Returns are historical and are calculated by determining the percentage change stock price or NAV with all distributions reinvested. Distributions are assumed to be reinvested at prices obtained under the Fund's dividend reinvestment plan. Because the Fund's shares may trade at either a discount or premium to the Fund's NAV per share, returns based upon the stock price and dividends will tend to differ from those derived from the underlying change in NAV and dividends. The variance between the Fund's total return based on stock price and dividends and the total return based on the Fund's NAV and dividends is due to the widening of the stock price discount to the NAV over the last year.

Market Review

The high yield market returned 13.55% in the twelve months ended December 31, 2023, according to the Credit Suisse High Yield Index.

The Fed raised short-term interest rates four times through the end of July, lifting the fed funds target rate to the 5.25% to 5.50% range, the highest level in 22 years. Long-term U.S. Treasury yields climbed for much of the year, peaking during the third quarter, before falling sharply in response to weaker-than-expected inflation and labor market data. The benchmark 10-year U.S. Treasury note's yield briefly reached 5.00% in October for the first time since late 2007, but it ended the year where it began at 3.88%.

The collapse of two major regional banks in mid-March sent financials sharply lower. Following a run on its deposits, Silicon Valley Bank fell into FDIC receivership, followed immediately by New York-based Signature Bank. Reports of stressed balance sheets at other regional banks fed concerns that problems in the industry-a key source of financing for commercial real estate and other smaller-size businesses-would result in a severe tightening in credit conditions. However, working with other regulators, the Fed appeared to successfully stem the regional bank outflows.

Economic data generally surprised on the upside as the year progressed and suggested that the economy might manage to skirt a recession. The Commerce Department reported that the economy had expanded at an annualized pace of 2.1% in the second quarter, marking only a modest slowdown since the start of the year. Consumers continued to spend freely in July and August, especially on services.

Firms also continued to add workers, if at a less robust pace than earlier in the year. After hitting a post-pandemic low in June, monthly payroll gains picked up in July and August. At 3.8%, the unemployment rate remained near multi-decade lows. While average hourly earnings gains moderated, growing demands from unions for higher wages and other concessions appeared to threaten profit margins and weigh on sentiment as the third quarter came to an end. Most notably, the United Auto Workers announced limited strikes targeting all three of the major domestic automakers.

The early-October Hamas attack against Israel increased geopolitical risks considerably. Financial markets weakened as investor sentiment shifted to favor less risky assets amid concerns that Israel's military response in the Gaza Strip could lead to a wider conflict in the Middle East.

Encouraging inflation data in November appeared to provide a boost to investor sentiment. Headline consumer inflation was flat in October. Core inflation (less food and energy) rose just 0.2%, bringing the year-over-year increase to 4.0%, the slowest pace in two years. On the final day of the month, the Commerce Department reported that the Fed’s preferred inflation gauge, the core personal consumption expenditures (PCE) price index, had risen at an annual rate of 1.9% (just below the Fed's 2% inflation target) in October.

While Fed officials left interest rates unchanged at their final policy meeting of the year in mid-December, the quarterly summary of the individual policymakers' rate expectations indicated that the median projection was for 75 basis points of rate cuts in 2024, up from the 50 basis points of easing in their previous projection. This positive interest rate cut indication helped sustain the market's momentum through year-end.

Global economies and markets showed surprising resilience in 2023, but considerable uncertainty remains as we look ahead. Geopolitical events, the path of monetary policy, and the impact of the Fed's rate hikes on the economy all raise the potential for additional volatility.

High yield capital market activity increased roughly 65% year over year. Gross issuance in 2023 totaled $175.9 billion compared with $106.5 billion in 2022, according to J.P. Morgan. Refinancing activity was the largest category of issuance for the year, accounting for 66% of the total volume. The J.P. Morgan par-weighted default rate increased to 2.08% in 2023 from 0.84% in 2022, but remains below its long-term average.

Portfolio Review

The portfolio's holdings in the wireless communications industry contributed to the total return. Asurion, the leading provider of mobile protection services with over 150 million mobile phone subscribers globally. In our view, Asurion's dominant market position, solid credit profile, near-term revenue visibility (partly due to the recent extension of its contract with Verizon through the end of 2027), and an attractive coupon support our high conviction in the name.

Security selection in the services segment was also beneficial, partly due to UKG (Ultimate Kronos Group), a provider of workforce management and human capital management solutions. It has a market leading product suite, diversified and sticky customer base, and, in our view, a recession-resilient recurring revenue profile. The company's fundamentals have been trending in the right direction with continued double-digit organic growth and material EBITDA improvement. Overall, UKG's recent results have been encouraging and the setup for 2024 looks attractive.

Security selection in financials aided relative results partly due to Navient, a company that originates, maintains, and services a portfolio of student loans. Navient’s third-quarter results showed that delinquencies, forbearance rates, and credit losses in its private education portfolio remain at or below pre-COVID levels, reflecting the high-quality nature of the portfolio.

The portfolio's overweight in entertainment and leisure companies was beneficial as the sector outperformed all other high yield industries during the year. Within this segment, cruise lines have been a top performer. We feel that cruises are an excellent area to help capitalize on the continued resurgence of live events, trips, and activities. The cruise line industry is entering a multi-year deleveraged phase, there are structural positive changes related to onboard spending, and bookings remain higher than historical levels.

The Fund's investments in the broadcasting industry detracted from performance, partly due to leading audio company iHeartMedia . The bonds traded lower due to a Moody's downgrade following the company's disappointing third quarter results and fourth quarter guidance. Persistent challenges in the advertising environment for traditional media in general and radio in particular resulted in the company's management lowering expectations for fourth quarter performance to well below consensus.

The cable operators segment weighed on relative results, partly due to wireless telecommunications services and cable provider Altice France. The issuer's underperformance has largely been the result of its split CCC rated capital structure and a 2025 maturity wall. However, we expect the company will be able to access capital markets to execute a refinancing of the debt well ahead of maturity. Management recently confirmed that Altice is in the process of imminently launching asset sales, which are credit-positive transactions with meaningful deleveraging potential.

The portfolio's underweight in the building products segment weighed on relative returns as the segment outperformed most other industries during the year. In addition, the portfolio's performance compared to the Index was further negatively impacted due to the Fund not being invested in several CCC- rated issues that were able to recover from distressed levels during the year.


Tighter financial conditions have contributed to historically light new high yield bond issuance over the past 12 months. Consequently, it has been more difficult for companies in the high yield market to obtain debt financing for much of the past year. However, the current conditions were preceded by a period of record issuance in 2020 and 2021 during which many companies were able to access capital markets "at will," allowing them to extend maturities, reduce fixed financing costs, and optimize capital structures. Despite the historically large volume of high yield debt maturing in 2024 - 2025, it appears the market will be able to manage the refinancing of these issues, a large portion of which are coming from more financially stable BB rated issuers.

Higher interest costs will likely be onerous for some lower-quality below investment-grade companies, particularly those with large unhedged floating rate debt obligations. As a result of the challenging macro environment and tighter financial conditions, we anticipate the default rate could continue to normalize over the near to medium term toward the market's long-term average of 3%-4%. Nevertheless, fundamental conditions in the high yield asset class, its solid underlying credit quality, the amount of secured debt, supportive technical conditions, and the value we currently see in the market partly mitigate the macro concerns. Historically, when dollar prices and yields in our market have reached current levels, we have seen strong forward returns in the high yield asset class, which bodes well for its performance over the medium term.


Ellen E. Terry
The New America High Income Fund, Inc.
Rodney M. Rayburn
Vice President
T. Rowe Price Associates, Inc.

Past performance is no guarantee of future results. The views expressed in this update are as of the date of this letter. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The Fund and T. Rowe Price Associates, Inc. disclaim any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies' securities should not be regarded as investment recommendations or indicative of the Fund's portfolio as a whole.


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