New City High Yield Fund Ltd : Interim Manageme...

To:      RNS
Date:  18 November 2011
From: New City High Yield Fund Limited

Interim Management Statement

For the Three Month Period from 1 July 2011 to 30 September 2011

Investment Objective

The  investment objective  of the  Company is  to provide  investors with a high
dividend  yield and the potential for capital growth by investing mainly in high
yielding fixed interest securities.

Performance Summary

                             For the three month period ended 30 September 2011



 Total Return



 Net asset value per share                                                -8.3%

 Ordinary share price                                                     -7.8%


                                               As at          As at
                                        30 September        30 June
Capital Values                                  2011           2011 % Change



Net assets                            £108.1 million £120.6 million

Net asset value per share                     53.13p         59.30p   -10.4%

Share price                                   58.75p         63.75p    -7.8%



Premium                                        10.6%           7.5%

Gearing (100 = nil geared position) *            109            109


  * Gearing = Total assets ÷ Equity Shareholders' Funds


Review for the Period:

In  the last quarter I  alluded to the idea  that the global economic background
and  Europe in  particular was  like the  1995 film "Groundhog  Day" without the
humour  of Bill Murray or  the beauty of Andie  MacDowell; this was a theme that
continued throughout the quarter.

We  have always believed that the cost of borrowing represents confidence in the
ability  of the borrower to  pay the interest and  repay or re-finance the debt.
 This  confidence is absent, as  we have seen with  Greece, Ireland and Portugal
during the quarter and subsequently spreading to Italy and Spain.

After  many months  of speculation  about the  state of  the US  economy, the US
Government debt was finally downgraded by Standard and Poors at the beginning of
August.  It came as s surprise to many when US debt became more of a safe haven,
witnessed  by  the  fall  in  treasury  yields, while corporate bond markets and
equities  suffered  two  weeks  of  utter  mayhem  at  a  time  when markets are
historically illiquid.

Then  in September,  the Swiss  National Bank  ('SNB') intervened to correct the
"current  massive overvaluation of the Swiss franc"  on the 6(th) of the month -
aiming  to substantially  weaken the  Swiss franc,  actively selling against the
Euro  in particular.  The SNB stated it will enforce its aim of devaluation with
the  "utmost determination" and buy  foreign currency in "unlimited quantities".
 Even  at the time of writing (early  November) with a EUR/CHF rate of 1.24, the
Swiss franc is still high and the SNB would like it to weaken over time.

As  a result of the ongoing fears, the quoted spreads on all securities widened,
volumes were very low and the volatility of markets was extremely high.

The  Company's Metals  Ex convertible  was redeemed  at par  at the beginning of
September, while the volatility of the markets allowed profit to be taken on the
Investec 9 5/8( )2022 which was reinvested into the Co-op 9 1/4 2021.

Noreco, an issuer in which the Company had previously invested, sold its South
Arne field for $200m, realising a gain of more than $50m on the sale, largely
compensating for the $60m loss on its Siri field earlier in the year. Having
sold the 12.9% 2014 NOK bonds at 105 1/2 in early April, we felt that this was
an opportunity to re-enter Noreco, buying back the 12.9% 2014 NOK bonds at 94.
This purchase was funded by the sale of the Morpol FRN back to the company which
had outperformed the Norwegian high yield market

Another  piece of positive news was the "giant oil discovery" by STATOIL linking
the  Aldous  and  Araldsnes  structures,  potentially  doubling  the size of the
resource.  Detnor has a 20% interest in the field and this news was positive for
the rating of the Dentor's debt.




Dividend:
A  fourth interim dividend for  the year to 30 June  2011 of 1.32p per share was
paid on 26 August 2011 to shareholders on the register on 29 July 2011.








Top Ten Holdings as at 30 September 2011
                                                    Percentage of total assets

Company                          Sector

Balfour Beatty 10.75% Cum Pref   Construction                              4.0

AMI 31/10/13 10% Cv              Oil & Gas                                 3.9

REA Finance 9.5% 31/12/17        Food products                             3.7

Skipton 10% 12/12/18             Financial                                 2.6

Brit Insurance 6.625% 9/12/30    Insurance                                 2.2

Phoenix Life 7.25% 23/07/49      Insurance                                 2.2

Santos Finance 8.25% 22/09/70    Oil and Gas                               2.1

Cable & Wireless 8.625% 25/03/19 Telecommunications                        2.1

Tullett Prebon 7.04% 06/07/16    Financial                                 2.1

Beazley Group 7.25% 17/1/26      Real Estate                               1.9
                                                   ---------------------------
Total                                                                     26.8
                                                   ---------------------------

Analysis of Investments by Currency as at 30 September 2011
                     Percentage of total investments



 Sterling                                         58

 US Dollar                                        13

 Australian Dollar                                12

 Euro                                              8

 Norwegian Krone                                   6

 Canadian Dollar                                   3
                   ----------------------------------
 Total                                           100
                   ----------------------------------

Analysis of Investments by Asset Class as at 30 September 2011
                     Percentage of total investments



 Bonds                                            71

 Convertibles                                     15

 Preference shares                                10

 Equities                                          4
                   ----------------------------------
 Total                                           100
                   ----------------------------------

Analysis of Investments by Quotation as at 30 September 2011
                                                 Percentage of total investments



Listed/Quoted on a recognised investment                                      96
exchange

Unquoted (convertible into a security quoted on
a recognised exchange)                                                         3

Unquoted                                                                       1
                                                --------------------------------
Total                                                                        100
                                                --------------------------------

Significant Events or Transactions since 30 September 2011
A  first interim dividend  for the year  to 30 June 2012 of  0.88p per share was
declared  on 20 October 2011.  This  dividend is payable  to shareholders on the
register on 28 October 2011 and will be paid on 25 November 2011.

On  15 November 2011 the Company issued 16,863,332 new ordinary shares of no par
value at a price of 55.05p per share.  Following this issue the Company's issued
share capital consists of 220,267,581 ordinary shares, none of which are held in
treasury.

The  Board is not  aware of any  other significant events  or transactions which
have  occurred  since  30 September  2011 and  the  date  of publication of this
statement  which would have a  material impact on the  financial position of the
Company.

Daily and Key Information
Further  information regarding  the Company  including the  share price  and the
recent   monthly   fact   sheet,  can  be  found  at  the  Investment  Manager's
websitewww.ncim.co.uk

Disclaimer
This interim management statement has been prepared solely to provide
information to meet the requirements of the UK Listing Authority's Disclosure
and Transparency Rules.

For further information please contact:
Ian Francis, New City Investment Managers
020 7201 5366

Martin Cassels, F&C Investment Business Limited
020 7628 8000






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Source: New City High Yield Fund Ltd via Thomson Reuters ONE

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