UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File number: 811-21869
NEXPOINT STRATEGIC OPPORTUNITIES FUND
(formerly, 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.
300 Crescent Court
Suite 700
Dallas, Texas 75201
(Name and Address of Agent for Service)
Registrant’s telephone number, including area code: (866) 351-4440
Date of fiscal year end: December 31
Date of reporting period: December 31, 2017
Explanatory Note:
The Registrant is filing this amendment to its Form N-CSR (the “Amendment”) for the period ended December 31, 2017, originally filed with the U.S. Securities and Exchange Commission on March 8, 2018 (Accession Number 0001193125-18-074920) (“Original Filing”), to supplement Item 1, “Reports to Stockholders.” The purpose of the Amendment is to include additional disclosure information (unaudited) relating to certain unconsolidated significant subsidiaries of the Registrant in the annual report. Other than the aforementioned addition, the Amendment does not reflect events occurring after the Original Filing, or modify or update the disclosures therein in any way.
The Amendment does not amend or supplement any other portion of the Original Filing, and the original portion of Item 1 of the Original Filings and Items 2 through 13 of the Original Filing continue in full force and should be read in conjunction with the Amendment.
Item 1. Reports to Stockholders
APRIL 25, 2018
SUPPLEMENT (UNAUDITED) TO THE NEXPOINT STRATEGIC OPPORTUNITIES FUND
(FORMERLY, NEXPOINT CREDIT STRATEGIES FUND)
ANNUAL REPORT DATED DECEMBER 31, 2017
This Supplement (unaudited) includes additional information to the Annual Report listed above and should be read in conjunction with the Annual Report.
1. The following is added to the Additional Information on page 36 of the Annual Report.
Unconsolidated Significant Subsidiaries
In accordance with Regulation S-X and GAAP, the Fund is not permitted to consolidate any subsidiary or other entity that is not an investment company, including those in which the Fund has a controlling interest unless the business of the controlled subsidiary consists of providing services to the Fund. In accordance with Regulation S-X Rules 3-09 and 4-08(g), the Fund evaluates its unconsolidated controlled subsidiaries as significant subsidiaries under the respective rules. As of December 31, 2017, both NexPoint Real Estate Opportunities, LLC and NexPoint Real Estate Capital, LLC were considered significant unconsolidated subsidiaries under Regulation S-X Rule 4-08(g). Both subsidiaries are wholly owned by the Fund. Based on the requirements under Regulation S-X Rule 4-08(g), the summarized consolidated financial information of these significant unconsolidated subsidiaries is presented below:
| NexPoint Real Estate Capital, LLC December 31, 2017 (unaudited) |
NexPoint Real Estate Opportunities, LLC December 31, 2017 (unaudited) |
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| Balance Sheet: |
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| Current Assets |
$ | 12,941 | $ | 12,937 | ||||
| Noncurrent Assets |
65,601 | 55,031 | ||||||
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| Total Assets |
78,542 | 67,968 | ||||||
| Current Liabilities |
458 | 1,022 | ||||||
| Noncurrent Liabilities |
— | 968 | ||||||
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| Total Liabilities |
458 | 1,990 | ||||||
| Preferred Stock |
100 | 125 | ||||||
| Non-controlling interest (in consolidated investments) |
— | 2,514 | ||||||
| Total Equity |
77,984 | 63,339 | ||||||
| NexPoint Real Estate Capital, LLC Twelve Months Ended December 31, 2017 (unaudited) |
NexPoint Real Estate Opportunities, LLC Twelve Months Ended December 31, 2017 (unaudited) |
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| Summary of Operations: |
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| Net Sales |
$ | 9,999 | $ | 25,580 | ||||
| Gross Profit |
9,832 | 7,559 | ||||||
| Net Income |
9,741 | 6,275 | ||||||
| Net Income attributable to non-controlling interest (in consolidated investments), preferred shares, and other comprehensive income |
91 | 1,284 | ||||||
PLEASE RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
Item 13. Exhibits.
| (a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |
| (a)(3) | Not applicable. | |
| (b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEXPOINT STRATEGIC OPPORTUNITIES FUND
| By (Signature and Title): | /s/ James Dondero |
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| James Dondero | ||||||
| President and Principal Executive Officer |
Date: April 25, 2018
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, and the Investment Company Act of 1940, as amended, 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 (Signature and Title): | /s/ James Dondero |
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| James Dondero | ||||||
| President and Principal Executive Officer |
Date: April 25, 2018
| By (Signature and Title): | /s/ Frank Waterhouse |
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| Frank Waterhouse | ||||||
| Treasurer, Principal Accounting Officer and Principal Financial Officer |
Date: April 25, 2018
Item 13(a)(2)
EX-99.CERT
Certification Pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act
I, James Dondero, certify that:
| 1. | I have reviewed this report on Form N-CSR of NexPoint Strategic Opportunities Fund (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| By: | /s/ James Dondero | |
| James Dondero | ||
| President and Principal Executive Officer |
Date: April 25, 2018
Certification Pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act
I, Frank Waterhouse, certify that:
| 1. | I have reviewed this report on Form N-CSR of NexPoint Strategic Opportunities Fund (the “Registrant”); |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the Registrant as of, and for, the periods presented in this report; |
| 4. | The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the Registrant and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and |
| 5. | The Registrant’s other certifying officer(s) and I have disclosed to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize, and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting. |
| By: | /s/ Frank Waterhouse | |
| Frank Waterhouse | ||
| Treasurer, Principal Accounting Officer | ||
| and Principal Financial Officer |
Date: April 25, 2018
Item 13(b)
EX-99.906CERT
Certification Pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act
I, James Dondero, President and Principal Executive Officer of NexPoint Strategic Opportunities Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| By: | /s/ James Dondero | |
| James Dondero | ||
| President and Principal Executive Officer |
Date: April 25, 2018
I, Frank Waterhouse, Treasurer, Principal Accounting Officer and Principal Financial Officer of NexPoint Strategic Opportunities Fund (the “Registrant”), certify that:
| 1. | The Form N-CSR of the Registrant (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
| By: | /s/ Frank Waterhouse | |
| Frank Waterhouse | ||
| Treasurer, Principal Accounting Officer | ||
| and Principal Financial Officer |
Date: April 25, 2018