The use of these strategies involves certain special risks, including a possible imperfect correlation, or even no correlation, between price movements of derivative instruments and price movements of related investments. While some strategies involving derivative instruments can reduce the risk of loss, they can also reduce the opportunity for gain or even result in losses by offsetting favorable price movements in related investments or otherwise, due to the possible inability of the Fund to purchase or sell a portfolio security at a time that otherwise would be favorable or the possible need to sell a portfolio security at a disadvantageous time because the Fund is required to maintain asset coverage or offsetting positions in connection with transactions in derivative instruments. Additional associated risks from investing in derivatives also exist and potentially could have significant effects on the valuation of the derivative and the Fund. Associated risks are not the risks that the Fund is attempting to increase or decrease exposure to, per its investment objectives, but are the additional risks from investing in derivatives. Examples of these associated risks are liquidity risk, which is the risk that the Fund will not be able to sell the derivative in the open market in a timely manner, and counterparty credit risk, which is the risk that the counterparty will not fulfill its obligation to the Fund. Associated risks can be different for each type of derivative and are discussed by each derivative type in the following notes.
The Fund may also enter into collateral agreements with certain counterparties to further mitigate credit risk associated with OTC derivative and forward foreign
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED)
NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES (continued)
currency contracts. Subject to established minimum levels, collateral is generally determined based on the net aggregate unrealized gain or loss on contracts with a certain counterparty. Collateral pledged to the Fund is held in a segregated account by a third-party agent and can be in the form of cash or debt securities issued by the U.S. government or related agencies.
The Fund’s master agreements with derivative counterparties have credit related contingent features that if triggered would allow its derivatives counterparties to close out and demand payment or additional collateral to cover their exposure from the Fund. Credit related contingent features are established between the Fund and its derivatives counterparties to reduce the risk that the Fund will not fulfill its payment obligations to its counterparties. These triggering features include, but are not limited to, a percentage decrease in the Fund’s net assets and or a percentage decrease in the Fund’s NAV, which could cause the Fund to accelerate payment of any net liability owed to the counterparty. The contingent features are established within the Fund’s Master Agreements.
Written options by the Fund do not give rise to counterparty credit risk, as written options obligate the Fund to perform and not the counterparty. As of August 31, 2015, the total value of written OTC call options subject to Master Agreements in a liability position was $3,042,222. If a contingent feature had been triggered, the Fund could have been required to pay this amount in cash to its counterparties. The Fund did not hold or post collateral for its open written OTC options at period end. There were no credit events during the period ended August 31, 2015 that triggered any credit related contingent features.
H. Options Contracts. The Fund may purchase put and call options and may write (sell) put options and covered call options. The premium received by the Fund upon the writing of a put or call option is included in the Statement of Assets and Liabilities as a liability which is subsequently marked-to-market until it is exercised or closed, or it expires. The Fund will realize a gain or loss upon the expiration or closing of the option contract. When an option is exercised, the proceeds on sales of the underlying security for a written call option or purchased put option or the purchase cost of the security for a written put option or a purchased call option is adjusted by the amount of premium received or paid. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases and the option is exercised. The risk in buying an option is that the Fund pays a premium whether or not the option is exercised. Risks may also arise from an illiquid secondary market or from the inability of counterparties to meet the terms of the contract.
Under normal market conditions, the Fund will seek to secure gains and generate premiums over a market cycle by writing (selling) call options. Please refer to Note 7 for the volume of written option activity for the period ended August 31, 2015.
I. Indemnifications. In the normal course of business, the Fund may enter into contracts that provide certain indemnifications. The Fund’s maximum exposure under these arrangements is dependent on future claims that may be made against the Fund and, therefore, cannot be estimated; however, based on experience, management considers the risk of loss from such claims remote.
NOTE 3 — INVESTMENT TRANSACTIONS
The cost of purchases and proceeds from sales of investments for the period ended August 31, 2015, excluding short-term securities, were $76,624,283 and $84,705,809 respectively.
NOTE 4 — INVESTMENT MANAGEMENT FEES
Prior to May 1, 2015, the Fund had entered into an investment management agreement (“Management Agreement”) with the Investment Adviser. The Management Agreement compensated the Investment Adviser with a management fee, payable monthly, based on an annual rate of 1.00% of the Fund’s average daily managed assets. For purposes of the Management Agreement, managed assets are defined as the Fund’s average daily gross asset value, minus the sum of the Fund’s accrued and unpaid dividends on any outstanding preferred shares and accrued liabilities (other than liabilities for the principal amount of any borrowings incurred, commercial paper or notes issued by the Fund and the liquidation preference of any outstanding preferred shares). As of August 31, 2015, there were no preferred shares outstanding. Amounts paid to the Investment Adviser through April 30, 2015 are reflected as investment management fees on the accompanying Statements of Operations.
Also, prior to May 1, 2015, the Fund had entered into an administrative agreement (“Administrative Agreement”) with Voya Funds Services, LLC (the “Administrator”), a Delaware limited liability company. The Administrator provided certain administrative and shareholder services necessary for Fund operations and was responsible for the supervision of other service providers. For its services, the Administrator was entitled to receive from the Fund a fee at an annual rate of 0.10% of the Fund’s average daily managed assets. Amounts paid to the Administrator
14
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED)
NOTE 4 — INVESTMENT MANAGEMENT FEES (continued)
through April 30, 2015 are reflected as administrative service fees on the accompanying Statement of Operations.
Effective May 1, 2015, the terms of the Fund’s Management Agreement and Administrative Agreement were combined under a single Amended and Restated Investment Management Agreement with a single management fee. The single management fee rate under the Fund’s Amended and Restated Investment Management Agreement does not exceed the former combined investment management and administrative services fee rates for the Fund and there is no change to the investment management or administrative services provided.
The Amended and Restated Investment Management Agreement compensates the Investment Adviser with a management fee, payable monthly, based on an annual rate of 1.10% of the Fund’s average daily managed assets. Single management fee amounts paid to the Investment Adviser from May 1, 2015 through August 31, 2015 are reflected as investment management fees on the accompanying Statement of Operations.
The Investment Adviser has entered into a sub-advisory agreement with Voya IM. Subject to policies as the Board or the Investment Adviser may determine, Voya IM manages the Fund’s assets in accordance with the Fund’s investment objectives, policies and limitations.
NOTE 5 — EXPENSE LIMITATION AGREEMENT
The Investment Adviser has entered into a written expense limitation agreement (“Expense Limitation Agreement”) with the Fund under which it will limit the expenses of the Fund, excluding interest, taxes, investment-related costs, leverage expenses, extraordinary expenses, and acquired fund fees and expenses to 1.30% of average daily managed assets.
The Investment Adviser may at a later date recoup from the Fund for fees waived and other expenses assumed by the Investment Adviser during the previous 36 months, but only if, after such recoupment, the Fund’s expense ratio does not exceed the percentage described above. Waived and reimbursed fees net of any recoupment by the Investment Adviser of such waived and reimbursed fees are reflected on the accompanying Statement of Operations. Amounts payable by the Investment Adviser are reflected on the accompanying Statement of Assets and Liabilities.
As of August 31, 2015, there are no amounts of waived or reimbursed fees that are subject to possible recoupment by the Investment Adviser.
The Expense Limitation Agreement is contractual through March 1, 2016 and shall renew automatically for one-year terms. Termination or modification of this obligation requires approval by the Board.
NOTE 6 — OTHER TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
The Fund has adopted a Deferred Compensation Plan (the “Plan”), which allows eligible non-affiliated trustees, as described in the Plan, to defer the receipt of all or a portion of the trustees’ fees that they are entitled to receive from the Fund. For purposes of determining the amount owed to the trustee under the Plan, the amounts deferred are invested in shares of the funds selected by the trustee (the “Notional Funds”). The Fund purchases shares of the Notional Funds, which are all advised by Voya Investments, in amounts equal to the trustees’ deferred fees, resulting in a Fund asset equal to the deferred compensation liability. Such assets are included as a component of “Other assets” on the accompanying Statement of Assets and Liabilities. Deferral of trustees’ fees under the Plan will not affect net assets of the Fund, and will not materially affect the Fund’s assets, liabilities or net investment income per share. Amounts will be deferred until distributed in accordance with the Plan.
NOTE 7 — PURCHASED AND WRITTEN OPTIONS
Transactions in written OTC call options on indices were as follows:
| | | | Number of
Contracts
| | Premiums
Received
|
|---|
| | | | | 1,661,445 | | | $ | 1,505,644 | |
| | | | | 9,624,447 | | | | 7,274,667 | |
| | | | | (4,796,900 | ) | | | (2,874,658 | ) |
Options Terminated in Closing Purchase Transactions | | | | | (4,892,431 | ) | | | (4,074,644 | ) |
| | | | | 1,596,561 | | | $ | 1,831,008 | |
NOTE 8 — CONCENTRATION OF INVESTMENT RISKS
All Voya family of funds involve risk — some more than others — and there is always the chance that you could lose money or not earn as much as you hope. The Fund’s risk profile is largely a factor of the principal securities in which it invests and investment techniques that it uses. The following are the principal risks associated with investing in the Fund. This is not, and is not intended to be, a description of all risks of investing in the Fund.
Foreign Securities and Emerging Markets. The Fund makes significant investments in foreign securities and may invest up to 20% of its managed assets, measured at the time of investment, in securities issued by companies located in countries with emerging markets. Investing in foreign (non-U.S.) securities may result in the Fund
15
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED)
NOTE 8 — CONCENTRATION OF INVESTMENT RISKS (continued)
experiencing more rapid and extreme changes in value than a fund that invests exclusively in securities of U.S. companies due to: smaller markets; differing reporting, accounting, and auditing standards; nationalization, expropriation, or confiscatory taxation; foreign currency fluctuations, currency blockage, or replacement; potential for default on sovereign debt; or political changes or diplomatic developments, which may include the imposition of economic sanctions or other measures by the United States or other governments and supranational organizations. Markets and economies throughout the world are becoming increasingly interconnected, and conditions or events in one market, country or region may adversely impact investments or issuers in another market, country or region.
Leverage. Although the Fund has no current intention to do so, the Fund is authorized to utilize leverage through the issuance of preferred shares and/or borrowings, including the issuance of debt securities. In the event that the Fund determines in the future to utilize investment leverage, there can be no assurance that such a leveraging strategy will be successful during any period in which it is employed.
Market Discount. Shares of closed-end investment companies frequently trade at a discount from their NAV. The possibility that Shares of the Fund will trade at a discount from their NAV is a risk separate and distinct from the risk that the Fund’s NAV may decrease.
Non-Diversified and Natural Resources Companies. The Fund may be subject to large price volatility due to non-diversification and concentration in Natural Resources Companies. Securities of such companies may be subject to broad price fluctuations, reflecting volatility of energy and basic materials’ prices and possible instability of supply of various natural resources. Because many Natural Resources Companies have significant operations in many countries worldwide, the Fund’s portfolio will be more exposed than a more diversified portfolio to unstable political, social and economic conditions, including expropriation and disruption of licenses or operations. This means that the Fund’s portfolio of Natural Resources Companies may be more exposed to price volatility, liquidity and other risks that accompany an investment in equities of foreign companies than portfolios of international equities generally.
NOTE 9 — CAPITAL SHARES
There was no capital shares activity during the period ended August 31, 2015 and during the year ended February 28, 2015.
NOTE 10 — FEDERAL INCOME TAXES
The amount of distributions from net investment income and net realized capital gains are determined in accordance with federal income tax regulations, which may differ from U.S. GAAP for investment companies. These book/tax differences may be either temporary or permanent. Permanent differences are reclassified within the capital accounts based on their federal tax-basis treatment; temporary differences are not reclassified. Key differences include the treatment of short-term capital gains, foreign currency transactions, and wash sale deferrals. Distributions in excess of net investment income and/or net realized capital gains for tax purposes are reported as return of capital.
Dividends paid by the Fund from net investment income and distributions of net realized short-term capital gains are, for federal income tax purposes, taxable as ordinary income to shareholders.
The tax composition of dividends and distributions in the current period will not be determined until after the Fund’s tax year-end of December 31, 2015. The tax composition of dividends and distributions as of the Fund’s most recent tax year-end was as follows:
Tax Year Ended
December 31, 2014
|
|---|
Ordinary
Income
|
|---|
|
The tax-basis components of distributable earnings and the capital loss carryforwards which may be used to offset future realized capital gains for federal income tax purposes as of December 31, 2014 are detailed below. The Regulated Investment Company Modernization Act of 2010 (the “Act”) provides an unlimited carryforward period for newly generated capital losses. Under the Act, there may be a greater likelihood that all or a portion of the Fund’s pre-enactment capital loss carryforwards may expire without being utilized due to the fact that post-enactment capital losses are required to be utilized before pre-enactment capital loss carryforwards.
Late Year
Ordinary
Losses
Deferred
| | | | Unrealized
Appreciation/
(Depreciation)
| | Short-term
Capital Loss
Carryforwards
| | Expiration
|
|---|
| $(818) | | | | $ | (10,864,588 | ) | | $ | (26,287,867 | ) | | | 2017 | |
| | | | | | | | | | (5,692,716 | ) | | | 2018 | |
| | | | | | | | | $ | (31,980,583 | ) | | | | |
The Fund’s major tax jurisdictions are U.S federal and Arizona. The earliest tax year that remains subject to examination by these jurisdictions is 2010.
As of August 31, 2015, no provision for income tax is required in the Fund’s financial statements as a result of tax
16
NOTES TO FINANCIAL STATEMENTS AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED)
NOTE 10 — FEDERAL INCOME TAXES (continued)
positions taken on federal and state income tax returns for open tax years. The Fund’s federal and state income and federal excise tax returns for tax years for which the applicable statutes of limitations have not expired are subject to examination by the Internal Revenue Service and state department of revenue.
NOTE 11 — RESTRUCTURING PLAN
Prior to May 2013, Voya Financial, Inc. was a wholly-owned subsidiary of ING Groep N.V. (“ING Groep”). In October 2009, ING Groep submitted a restructuring plan (the “Restructuring Plan”) to the European Commission in order to receive approval for state aid granted to ING Groep by the Kingdom of the Netherlands in November 2008 and March 2009. To receive approval for this state aid, ING Groep was required to divest its insurance and investment management businesses, including Voya Financial, Inc., before the end of 2013. In November 2012, the Restructuring Plan was amended to permit ING Groep additional time to complete the divestment. Pursuant to the amended Restructuring Plan, ING Groep was required to divest at least 25% of Voya Financial, Inc. by the end of 2013 and more than 50% by the end of 2014, and was required to divest its remaining interest by the end of 2016 (such divestment, the “Separation Plan”).
In May 2013, Voya Financial, Inc. conducted an initial public offering of its common stock (the “IPO”). In October 2013, March 2014, and September 2014, ING Groep divested additional shares in several secondary offerings of common stock of Voya Financial, Inc. and concurrent share repurchases by Voya Financial, Inc. These transactions reduced ING Groep’s ownership interest in Voya Financial, Inc. to 32%. Voya Financial, Inc. did not receive any proceeds from these offerings.
In November 2014, through an additional secondary offering and the concurrent repurchase of shares by Voya Financial, Inc., ING Groep further reduced its interest in Voya Financial, Inc. below 25% to approximately 19% (the “November 2014 Offering”). The November 2014 Offering was deemed by the Investment Adviser to be a change of control (the “Change of Control”), which resulted in the automatic termination of the existing investment advisory and sub-advisory agreements under which the Investment Adviser and sub-adviser provide services to the Fund. In anticipation of this termination, and in order to ensure that the existing investment advisory and sub-advisory services could continue uninterrupted, in 2013 the Board approved new advisory and sub-advisory agreements for the Fund, as applicable, in connection with the IPO. In addition, in 2013, shareholders of the Fund approved new investment advisory and affiliated sub-advisory agreements prompted by the IPO, as well as any future advisory and affiliated sub-advisory agreements prompted by the Separation Plan that are approved by the Board and that have terms not materially different from the current agreements. This meant that shareholders would not have another opportunity to vote on a new agreement with the Investment Adviser or the current affiliated sub-adviser even upon a change of control prompted by the Separation Plan, as long as no single person or group of persons acting together gains “control” (as defined in the 1940 Act) of Voya Financial, Inc.
On November 18, 2014, in response to the Change of Control, the Board, at an in-person meeting, approved new investment advisory and sub-advisory agreements. At that meeting, the Investment Adviser represented that the new investment advisory and affiliated sub-advisory agreements approved by the Board were not materially different from the agreements approved by shareholders in 2013 and no single person or group of persons acting together was expected to gain “control” (as defined in the 1940 Act) of Voya Financial, Inc. As a result, shareholders of the Fund will not be asked to vote again on the new agreements with the Investment Adviser and affiliated sub-adviser.
In March 2015, ING Groep divested the remainder of its interest in Voya Financial, Inc. through a secondary offering of Voya Financial, Inc.’s common stock and a concurrent share repurchase by Voya Financial, Inc. Voya Financial, Inc. did not receive any proceeds from these transactions.
NOTE 12 — SUBSEQUENT EVENTS
Dividends: Subsequent to August 31, 2015, the Fund made a distribution of:
Per Share
Amount
| | | | Declaration
Date
| | Payable
Date
| | Record
Date
|
|---|
| | | | | | | | |
Each quarter, the Fund will provide disclosures with distribution payments made that estimate the percentages of that distribution that represent net investment income, capital gains, and return of capital, if any. A significant portion of the quarterly distribution payments made by the Fund may constitute a return of capital.
Portfolio Manager changes: Effective September 29, 2015, Paul Zemsky and Steven Wetter were added as portfolio managers of the Fund.
The Fund has evaluated events occurring after the Statement of Assets and Liabilities date (“subsequent events”) to determine whether any subsequent events necessitated adjustment to or disclosure in the financial statements. Other than the above, no such subsequent events were identified.
17
VOYA NATURAL RESOURCES
EQUITY INCOME FUND | SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2015 (UNAUDITED) |
Shares
|
|
|
|
|
|
|
| Value
|
| Percentage
of Net
Assets
|
|---|
| |
|
| |
| 74,621 | | | | | | | | $ | 5,341,371 | | | | 3.2 | |
| 25,497 | | | | | | | | | 1,427,832 | | | | 0.8 | |
| 203,738 | | | | | | | | | 1,114,447 | | | | 0.7 | |
| 199,920 | | | | | | | | | 1,107,557 | | | | 0.7 | |
| 84,883 | | | | | | Canadian Natural Resources Ltd. | | | 1,907,321 | | | | 1.1 | |
| 39,787 | | | | | | | | | 1,449,440 | | | | 0.9 | |
| 134,303 | | | | | | | | | 10,877,200 | | | | 6.5 | |
| 283,425 | | | | | | | | | 1,354,772 | | | | 0.8 | |
| 113,336 | | | | | | | | | 5,570,464 | | | | 3.3 | |
| 17,336 | | | | | | | | | 2,005,428 | | | | 1.2 | |
| 70,052 | | | | | | | | | 2,988,418 | | | | 1.8 | |
| 25,380 | | | | | | | | | 1,749,697 | | | | 1.0 | |
| 78,745 | | | | | | | | | 6,166,521 | | | | 3.7 | |
| 33,502 | | | | | | | | | 2,607,126 | | | | 1.5 | |
| 159,898 | | | | | | | | | 12,030,726 | | | | 7.1 | |
| 29,020 | | | | | | | | | 1,039,787 | | | | 0.6 | |
| 127,472 | | | | | | | | | 5,016,023 | | | | 3.0 | |
| 51,422 | | | | | | | | | 3,057,038 | | | | 1.8 | |
| 35,531 | | | | | | | | | 1,664,983 | | | | 1.0 | |
| 155,137 | | | | | | | | | 5,027,990 | | | | 3.0 | |
| 140,150 | | | | | | | | | 1,428,129 | | | | 0.8 | |
| 37,229 | | | | | | | | | 1,761,304 | | | | 1.0 | |
| 35,595 | | | | | | | | | 1,185,669 | | | | 0.7 | |
| 104,250 | | | | | | | | | 1,357,335 | | | | 0.8 | |
| 103,538 | | | | | | Occidental Petroleum Corp. | | | 7,559,309 | | | | 4.5 | |
| 31,003 | | | | | | Oceaneering International, Inc. | | | 1,358,551 | | | | 0.8 | |
| 101,410 | | | | | | Patterson-UTI Energy, Inc. | | | 1,650,955 | | | | 1.0 | |
| 44,124 | | | | | | | | | 3,488,885 | | | | 2.1 | |
| 66,771 | | | | | | | | | 1,308,044 | | | | 0.8 | |
| 122,461 | | | | | | | | | 1,719,352 | | | | 1.0 | |
| 48,440 | | | | | | | | | 1,870,753 | | | | 1.1 | |
| 23,144 | | | | | | Royal Dutch Shell PLC — Class A ADR | | | 1,224,781 | | | | 0.7 | |
| 157,340 | | | | | | | | | 12,173,396 | | | | 7.2 | |
| 38,091 | | | | | | | | | 1,107,305 | | | | 0.7 | |
| 209,711 | | | | | | | | | 5,922,239 | | | | 3.5 | |
| 28,658 | | | | | | | | | 1,329,731 | | | | 0.8 | |
| 116,115 | | | | | | | | | 4,019,901 | | | | 2.4 | |
| 93,196 | | | | | | | | | 1,326,179 | | | | 0.8 | |
| 76,958 | | | | | | | | | 4,566,688 | | | | 2.7 | |
| |
COMMON STOCK: (continued) |
| |
| 50,839 | | | | | | | | $ | 2,450,440 | | | | 1.5 | |
| 547,630 | | | | | | | | | 11,019,130 | | | | 6.5 | |
| | | | | | | | | | 143,332,217 | | | | 85.1 | |
| |
| |
| 284,494 | | | | | | | | | 2,688,468 | | | | 1.6 | |
| 21,455 | | | | | | | | | 1,246,106 | | | | 0.7 | |
| 41,997 | | | | | | | | | 2,081,791 | | | | 1.2 | |
| 41,123 | | | | | | | | | 1,653,556 | | | | 1.0 | |
| 76,825 | | | | | | | | | 3,314,231 | | | | 2.0 | |
| 59,347 | | | | | | | | | 1,013,053 | | | | 0.6 | |
| 28,931 | | | | | | Packaging Corp. of America | | | 1,941,560 | | | | 1.2 | |
| 128,144 | | | | | | | | | 1,223,775 | | | | 0.7 | |
| 135,401 | | | | | | | | | 1,133,306 | | | | 0.7 | |
| 48,756 | | | | | | | | | 2,893,669 | | | | 1.7 | |
| 683,789 | | | | | | | | | 6,624,688 | | | | 3.9 | |
| | | | | | | | | | 25,814,203 | | | | 15.3 | |
| |
| | | | | | | Total Common Stock
(Cost $201,527,013) | | | 169,146,420 | | | | 100.4 | |
| |
SHORT-TERM INVESTMENTS: 1.2% |
| |
| 2,005,000 | | | | | | BlackRock Liquidity Funds, TempFund, Institutional Class, 0.100%††
(Cost $2,005,000) | | | 2,005,000 | | | | 1.2 | |
| |
| | | | | | | Total Short-Term Investments
(Cost $2,005,000) | | | 2,005,000 | | | | 1.2 | |
| |
| | | | | | | Total Investments in Securities
(Cost $203,532,013) | | $ | 171,151,420 | | | | 101.6 | |
| | | | | | | Liabilities in Excess of Other Assets | | | (2,614,990 | ) | | | (1.6 | ) |
| | | | | | | | | $ | 168,536,430 | | | | 100.0 | |
“Other Securities” represents issues not identified as the top 50 holdings in terms of market value and issues or issuers not exceeding 1% of net assets individually or in aggregate respectively as of August 31, 2015.
The following footnotes apply to either the individual securities noted or one or more of the securities aggregated and listed as a single line item.
| †† | | Rate shown is the 7-day yield as of August 31, 2015. |
| @ | | Non-income producing security. |
| ADR | | American Depositary Receipt |
| | Cost for federal income tax purposes is $205,122,738. |
Net unrealized depreciation consists of: | | | | | | |
Gross Unrealized Appreciation | | | | $ | 3,879,891 | |
Gross Unrealized Depreciation | | | | | (37,851,209 | ) |
Net Unrealized Depreciation | | | | $ | (33,971,318 | ) |
See Accompanying Notes to Financial Statements
18
VOYA NATURAL RESOURCES
EQUITY INCOME FUND | SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED) |
Fair Value Measurementsˆ
The following is a summary of the fair valuations according to the inputs used as of August 31, 2015 in valuing the assets and liabilities:
| | | | Quoted Prices
in Active Markets
for Identical
Investments
(Level 1)
| | Significant
Other
Observable
Inputs
(Level 2)
| | Significant
Unobservable
Inputs
(Level 3)
| | Fair Value
at
August 31, 2015
|
|---|
| | | | | | | | | | | | | | | | | | |
Investments, at fair value | | | | | | | | | | | | | | | | | | |
| | | | $ | 169,146,420 | | | $ | — | | | $ | — | | | $ | 169,146,420 | |
| | | | | 2,005,000 | | | | — | | | | — | | | | 2,005,000 | |
Total Investments, at fair value | | | | $ | 171,151,420 | | | $ | — | | | $ | — | | | $ | 171,151,420 | |
| | | | | | | | | | | | | | | | | | |
Other Financial Instruments+ | | | | | | | | | | | | | | | | | | |
| | | | $ | — | | | $ | (3,042,222 | ) | | $ | — | | | $ | (3,042,222 | ) |
| | | | $ | — | | | $ | (3,042,222 | ) | | $ | — | | | $ | (3,042,222 | ) |
| ˆ | | See Note 2, “Significant Accounting Policies” in the Notes to Financial Statements for additional information. |
| + | | Other Financial Instruments are derivatives not reflected in the Portfolio of Investments and may include open forward foreign currency contracts, futures, centrally cleared swaps, OTC swaps and written options. Forward foreign currency contracts, futures and centrally cleared swaps are valued at the unrealized gain (loss) on the instrument. OTC swaps and written options are valued at the fair value of the instrument. |
| * | | For further breakdown of Common Stock by sector, please refer to the Summary Portfolio of Investments. |
At August 31, 2015, the following over-the-counter written options were outstanding for Voya Natural Resources Equity Income Fund:
Number of
Contracts
| | | | Counterparty
| | Description
| | Exercise
Price
| | Expiration
Date
| | Premiums
Received
| | Fair Value
|
|---|
Options on Indices
| | | | | | | | | | | | | | |
|---|
| 1,041,102 | | | | | | Call on Energy Select Sector SPDR® Fund | | | | | 09/18/15 | | | $ | 1,467,641 | | | $ | (2,811,131 | ) |
| 268,356 | | | | | | Call on Market Vectors® Gold Miners ETF | | | | | 09/18/15 | | | | 188,521 | | | | (60,532 | ) |
| 287,103 | | | | | | Call on Materials Select Sector SPDR® Fund | | | | | 09/18/15 | | | | 174,846 | | | | (170,559 | ) |
| | | | | | | | | Total Written OTC Options | | $ | 1,831,008 | | | $ | (3,042,222 | ) |
A summary of derivative instruments by primary risk exposure is outlined in the following tables.
The fair value of derivative instruments as of August 31, 2015 was as follows:
Derivatives not accounted for as
hedging instruments
| | | Location on Statement
of Assets and Liabilities
| | | Fair Value
|
|---|
| | | | | | | |
| | | Written options, at fair value | | | $ | 3,042,222 |
Total Liability Derivatives | | | | | | $ | 3,042,222 |
The effect of derivative instruments on the Fund’s Statement of Operations for the period ended August 31, 2015 was as follows:
| | | | Amount of Realized Gain or (Loss) on
Derivatives Recognized in Income |
|---|
Derivatives not accounted for as hedging instruments
| | | | Written options
|
|---|
| | | | $ | 2,807,349 | |
| | | | $ | 2,807,349 | |
| | | | Change in Unrealized Appreciation
or (Depreciation) on Derivatives
Recognized in Income |
|---|
Derivatives not accounted for as hedging instruments
| | | | Written options
|
|---|
| | | | $ | (1,964,189 | ) |
| | | | $ | (1,964,189 | ) |
See Accompanying Notes to Financial Statements
19
VOYA NATURAL RESOURCES
EQUITY INCOME FUND | SUMMARY PORTFOLIO OF INVESTMENTS
AS OF AUGUST 31, 2015 (UNAUDITED) (CONTINUED) |
The following is a summary by counterparty of the fair value of OTC derivative instruments subject to Master Netting Agreements and collateral pledged (received), if any, at August 31, 2015:
| | | | Citigroup, Inc.
| | JPMorgan
Chase & Co.
| | Totals
|
|---|
| | | | | | | | | | | | | | |
| | | | $ | 60,532 | | | $ | 2,981,690 | | | $ | 3,042,222 | |
| | | | $ | 60,532 | | | $ | 2,981,690 | | | $ | 3,042,222 | |
Net OTC derivative instruments by counterparty, at fair value | | | | $ | (60,532 | ) | | $ | (2,981,690 | ) | | $ | (3,042,222 | ) |
Total collateral pledged by the Fund/(Received from counterparty) | | | | $ | — | | | $ | — | | | $ | — | |
| | | | $ | (60,532 | ) | | $ | (2,981,690 | ) | | $ | (3,042,222 | ) |
(1) | | Positive net exposure represents amounts due from each respective counterparty. Negative exposure represents amounts due from the Fund. Please refer to Note 2 for additional details regarding counterparty credit risk and credit related contingent features. |
Supplemental Option Information (Unaudited)
Supplemental Call Option Statistics as of August 31, 2015:
% of Total Net Assets against which calls written | | | | | 51.45 | % |
Average Days to Expiration at time written | | | | | 28 days | |
Average Call Moneyness* at time written | | | | | OTM | |
Premiums received for calls | | | | $ | 1,831,008 | |
| | | | $ | (3,042,222 | ) |
| * | | “Moneyness” is the term used to describe the relationship between the price of the underlying asset and the option’s exercise or strike price. For example, a call (buy) option is considered “in-the-money” when the value of the underlying asset exceeds the strike price. Conversely, a put (sell) option is considered “in-the-money” when its strike price exceeds the value of the underlying asset. Options are characterized for the purpose of Moneyness as, “in-the-money” (“ITM”), “out-of-the-money” (“OTM”) or “at-the-money” (“ATM”), where the underlying asset value equals the strike price. |
See Accompanying Notes to Financial Statements
20
SHAREHOLDER MEETING INFORMATION (UNAUDITED)
Proposal:
| 1 | | To elect four nominees to the Board of Trustees of Voya Natural Resources Equity Income Fund. |
An annual shareholder meeting of Voya Natural Resources Equity Income Fund was held July 1, 2015, at the offices of Voya Investment Management, 7337 East Doubletree Ranch Road, Suite 100, Scottsdale, AZ 85258.
| | | | Proposal
| | Shares
voted for
| | Shares voted
against or
withheld
| | Shares
abstained
| | Broker
non-vote
| | Total Shares
Voted
|
|---|
Voya Natural Resources Equity Income Fund | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | 19,766,515.670 | | | | 874,456.000 | | | | 0.000 | | | | 0.000 | | | | 20,640,971.670 | |
| | | | | | | 19,720,087.670 | | | | 920,884.000 | | | | 0.000 | | | | 0.000 | | | | 20,640,971.670 | |
| | | | | | | 19,686,620.670 | | | | 954,351.000 | | | | 0.000 | | | | 0.000 | | | | 20,640,971.670 | |
| | | | | | | 19,763,036.670 | | | | 877,935.000 | | | | 0.000 | | | | 0.000 | | | | 20,640,971.670 | |
21
ADVISORY CONTRACT APPROVAL DISCUSSION (UNAUDITED)
APPROVAL OF AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT
At a meeting held on March 12, 2015, the Board of Trustees (the “Board”) of Voya Natural Resources Equity Income Fund (the “Fund”), including a majority of Board members who have no direct or indirect interest in the advisory agreement (“Independent Trustees”), approved amending and restating the Investment Management Agreement between the Fund and Voya Investments, LLC (the “Adviser”) so that, effective May 1, 2015, the terms of the Fund’s Investment Management Agreement and its Administration Agreement are combined under a single Amended and Restated Investment Management Agreement with a single management fee. The single management fee rate under the Fund’s Amended and Restated Investment Management Agreement does not exceed the former combined investment management and administrative services fee rates for the Fund and, under the Fund’s Amended and Restated Investment Management Agreement, there was no change to the investment management or administrative services provided or the fees charged to the Fund.
In connection with its review, the Board determined that it did not need to consider certain factors it typically considers during its review of the Fund’s advisory agreements because it had reviewed, among other matters, the nature, extent and quality of services being provided and, as applicable, actions taken in certain instances to improve the relationship between the costs and the quality of services being provided, on September 12, 2014, when it renewed the Agreement. On September 12, 2014, the Board concluded, in light of all factors it considered, to renew the Agreement and that the fee rate set forth in the Agreement was fair and reasonable. Among other factors considered at that meeting, the Board considered: (1) the nature, extent and quality of services provided under the Agreement; (2) the extent to which economies of scale are reflected in the fee rate schedule under the Agreement; (3) the existence of any “fall-out” benefits to the Adviser and its affiliates; (4) a comparison of the fee rate, expense ratio, and investment performance to those of similar funds; and (5) the costs incurred and profits realized by the Adviser and its affiliates with respect to their services to the Fund. A further description of the process followed by the Board in approving the Agreement on September 12, 2014, including the information reviewed, certain material factors considered and certain related conclusions reached, is set forth in the Fund’s annual report to shareholders for the period ended February 28, 2015.
On March 12, 2015, the Board, including the Independent Trustees, approved the Amended and Restated Investment Management Agreement. In analyzing whether to approve the Amended and Restated Investment Management Agreement, the Board did consider, among other things: (1) a memorandum and related materials outlining the terms of this Agreement and Management’s rationale for proposing the amendments that combine the terms of the Fund’s investment management and administrative services arrangements under a single agreement; (2) Management’s representations that, under the Amended and Restated Investment Management Agreement, there would be no change in the fees payable for the combination of advisory and administrative services provided to the Fund; (3) Management’s confirmation that the implementation of the Amended and Restated Investment Management Agreement would result in no change in the scope of services that the Adviser provides to the Fund and that the personnel who have provided administrative and advisory services to the Fund previously would continue to do so after the Amended and Restated Investment Management Agreement becomes effective; and (4) representations from Management that the combination of the Agreements better aligns the Fund’s contracts with the manner in which the Adviser and its affiliates provide such services to the Fund. In approving the amendment to the Fund’s Investment Management Agreement, different Board members may have given different weight to different individual factors and related conclusions.
22
ADDITIONAL INFORMATION (UNAUDITED)
During the reporting period, there were no material changes in the Fund’s investment objective or policies that were not approved by the shareholders or the Fund’s charter or by-laws or in the principal risk factors associated with investment in the Fund. Effective August 7, 2015, Frank van Etten was removed as a portfolio manager of the Fund.
Effective on March 21, 2014, the Fund no longer employs an options “collar” strategy. Effective on April 1, 2014, the Fund’s option strategy will consist of selling (writing) call options to secure gains and generate premiums over a market cycle, generally on 30-80% of the total value of the Fund’s portfolio. The Fund’s equity portfolio will be actively managed and invests in stocks in North American natural resources companies using proprietary stock selection screens and fundamental input from sector analysts. Prior to October 1, 2015, the Fund generally held approximately 40-80 equity securities in its portfolio. Under normal market conditions, the Fund will generally hold approximately 60-100 equity securities in its portfolio.
The Fund may lend portfolio securities in an amount equal to up to 33 1/3% of its managed assets to broker dealers or other institutional borrowers, in exchange for cash collateral and fees. The fund may use the cash collateral in connection with the Fund’s investment program as approved by the Investment Adviser, including generating cash to cover collateral posting requirements. Although the Fund has no current intention to do so, it may use the cash collateral to generate additional income. The use of cash collateral in connection with the Fund’s investment program may have a leveraging effect on the Fund, which would increase the volatility of the Fund and could reduce its returns and/or cause a loss.
The Fund intends to engage in lending portfolio securities only when such lending is secured by cash or other permissible collateral in an amount at least equal to the market value of the securities loaned. The Fund will maintain cash, cash equivalents or liquid securities holdings in an amount sufficient to cover its repayment obligation with respect to the collateral, marked to market on a daily basis.
Securities lending involves the risks of delay in recovery or even loss of rights in the securities loaned if the borrower of the securities fails financially. Loans will be made only to organizations whose credit quality or claims paying ability is considered by the Sub-Adviser to be at least investment grade. The financial condition of the borrower will be monitored by the Investment Adviser on an ongoing basis. The Fund will not lend portfolio securities subject to a written American style covered call option contract. The Fund may lend portfolio securities subject to a written European style covered call option contract as long as the lending period is less than or equal to the term of the covered call option contract.
The Fund was granted exemptive relief by the SEC (the “Order”), which under the 1940 Act, would permit the Fund, subject to Board approval, to include realized long-term capital gains as a part of its regular distributions to Common Shareholders more frequently than would otherwise be permitted by the 1940 Act (generally once per taxable year) (“Managed Distribution Policy”). The Fund may in the future adopt a Managed Distribution Policy.
Dividend Reinvestment Plan
Unless the registered owner of Common Shares elects to receive cash by contacting Computershare Shareowner Services LLC (the “Plan Agent”), all dividends declared on Common Shares of the Fund will be automatically reinvested by the Plan Agent for shareholders in additional Common Shares of the Fund through the Fund’s Dividend Reinvestment Plan (the “Plan”). Shareholders who elect not to participate in the Plan will receive all dividends and other distributions in cash paid by check mailed directly to the shareholder of record (or, if the Common Shares are held in street or other nominee name, then to such nominee) by the Plan Agent. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by notice if received and processed by the Plan Agent prior to the dividend record date; otherwise such termination or resumption will be effective with respect to any subsequently declared dividend or other distribution. Some brokers may automatically elect to receive cash on your behalf and may re-invest that cash in additional Common Shares of the Fund for you. If you wish for all dividends declared on your Common Shares of the Fund to be automatically reinvested pursuant to the Plan, please contact your broker.
The Plan Agent will open an account for each Common Shareholder under the Plan in the same name in which such Common Shareholder’s Common Shares are registered. Whenever the Fund declares a dividend or other distribution (together, a “Dividend”) payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in Common Shares. The Common Shares will be acquired by the Plan Agent for the participants’ accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized Common Shares from the Fund (“Newly Issued Common Shares”) or (ii) by purchase of outstanding Common Shares on the open market (“Open-Market Purchases”) on the NYSE or elsewhere. Open-market purchases and sales are usually made through a broker affiliated with the Plan Agent.
If, on the payment date for any Dividend, the closing market price plus estimated brokerage commissions per Common
23
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Share is equal to or greater than the NAV per Common Share, the Plan Agent will invest the Dividend amount in Newly Issued Common Shares on behalf of the participants. The number of Newly Issued Common Shares to be credited to each participant’s account will be determined by dividing the dollar amount of the Dividend by the NAV per Common Share on the payment date; provided that, if the NAV is less than or equal to 95% of the closing market value on the payment date, the dollar amount of the Dividend will be divided by 95% of the closing market price per Common Share on the payment date. If, on the payment date for any Dividend, the NAV per Common Share is greater than the closing market value plus estimated brokerage commissions, the Plan Agent will invest the Dividend amount in Common Shares acquired on behalf of the participants in Open-Market Purchases. In the event of a market discount on the payment date for any Dividend, the Plan Agent will have until the last business day before the next date on which the Common Shares trade on an “ex-dividend” basis or 30 days after the payment date for such Dividend, whichever is sooner (the “Last Purchase Date”), to invest the Dividend amount in Common Shares acquired in Open-Market Purchases.
The Fund pays quarterly Dividends. Therefore, the period during which Open-Market Purchases can be made will exist only from the payment date of each Dividend through the date before the next “ex-dividend” date, which typically will be approximately ten days.
If, before the Plan Agent has completed its Open-Market Purchases, the market price per common share exceeds the NAV per Common Share, the average per Common Share purchase price paid by the Plan Administrator may exceed the NAV of the Common Shares, resulting in the acquisition of fewer Common Shares than if the Dividend had been paid in Newly Issued Common Shares on the Dividend payment date. Because of the foregoing difficulty with respect to Open-Market Purchases, the Plan provides that if the Plan Agent is unable to invest the full Dividend amount in Open-Market Purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent will cease making Open-Market Purchases and will invest the un-invested portion of the Dividend amount in Newly Issued Common Shares at the NAV per common share at the close of business on the Last Purchase Date provided that, if the NAV is less than or equal to 95% of the then current market price per Common Share, the dollar amount of the Dividend will be divided by 95% of the market price on the payment date.
The Plan Agent maintains all shareholders’ accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common Shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.
In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of Common Shares certified from time to time by the record shareholder’s name and held for the account of beneficial owners who participate in the Plan.
There will be no brokerage charges with respect to Common Shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with Open-Market Purchases. The automatic reinvestment of Dividends will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such Dividends. Participants that request a partial or full sale of shares through the Plan Agent are subject to a $15.00 sales fee and a $0.10 per share brokerage commission on purchases or sales, and may be subject to certain other service charges.
The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants with regard to purchases in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants.
All questions concerning the Plan or a request to terminate participation should be directed to the Fund’s Shareholder Service Department at (800) 992-0180.
Key Financial Dates — Calendar 2015 Distributions:
Declaration Date
| | | | Ex Date
| | | Record Date
| | | Payable Date
| |
|---|
| March 16, 2015 | | | | | April 1, 2015 | | | | April 6, 2015 | | | | April 15, 2015 | |
| June 15, 2015 | | | | | July 1, 2015 | | | | July 6, 2015 | | | | July 15, 2015 | |
| September 15, 2015 | | | | | October 1, 2015 | | | | October 5, 2015 | | | | October 15, 2015 | |
| December 15, 2015 | | | | | December 29, 2015 | | | | December 31, 2015 | | | | January 15, 2016 | |
Record date will be two business days after each Ex-Dividend Date. These dates are subject to change.
24
ADDITIONAL INFORMATION (UNAUDITED) (CONTINUED)
Stock Data
The Fund’s common shares are traded on the NYSE (Symbol: IRR).
Repurchase of Securities by Closed-End Companies
In accordance with Section 23(c) of the 1940 Act, and Rule 23c-1 under the 1940 Act the Fund may from time to time purchase shares of beneficial interest of the Fund in the open market, in privately negotiated transactions and/or purchase shares to correct erroneous transactions.
Number of Shareholders
The number of record holders of Common Stock as of August 31, 2015 was 10, which does not include approximately 12,060 beneficial owners of shares held in the name of brokers of other nominees.
Certifications
In accordance with Section 303A.12 (a) of the New York Stock Exchange Listed Company Manual, the Fund’s CEO submitted the Annual CEO Certification on July 31, 2015 certifying that he was not aware, as of that date, of any violation by the Fund of the NYSE’s Corporate governance listing standards. In addition, as required by Section 302 of the Sarbanes-Oxley Act of 2002 and related SEC rules, the Fund’s principal executive and financial officers have made quarterly certifications, included in filings with the SEC on Forms N-CSR and N-Q, relating to, among other things, the Fund’s disclosure controls and procedures and internal controls over financial reporting.
25
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(THIS PAGE INTENTIONALLY LEFT BLANK)
Investment Adviser
Voya Investments, LLC
7337 East Doubletree Ranch Road, Suite 100
Scottsdale, Arizona 85258
Transfer Agent
Computershare Shareowner Services LLC
480 Washington Boulevard
Jersey City, New Jersey 07310-1900
Custodian
The Bank of New York Mellon
One Wall Street
New York, New York 10286
Legal Counsel
Ropes & Gray LLP
Prudential Tower
800 Boylston Street
Boston, Massachusetts 02199
Toll-Free Shareholder Information
Call us from 9:00 a.m. to 7:00 p.m. Eastern time on any business day for account or other information, at (800)-992-0180
RETIREMENT | INVESTMENTS | INSURANCE
voyainvestments.com
| 
SAR-IRR (0815-102315) |
Not required for semi-annual filing.
| Item 3. | Audit Committee Financial Expert. |
Not required for semi-annual filing.
| Item 4. | Principal Accountant Fees and Services. |
Not required for semi-annual filing.
| Item 5. | Audit Committee of Listed Registrants. |
Not required for semi-annual filing.
| Item 6. | Schedule of Investments |
| Voya Natural Resources Equity Income Fund | PORTFOLIO OF INVESTMENTS
as of August 31, 2015 (Unaudited) |
| Shares | | | | | | | Value | | | Percentage
of Net
Assets | |
| COMMON STOCK: 100.4% | | | | | | |
| | | | | | | Energy: 85.1% | | | | | | | | |
| | 74,621 | | | | | Anadarko Petroleum Corp. | | | 5,341,371 | | | | 3.2 | |
| | 18,350 | | | | | Apache Corp. | | | 830,154 | | | | 0.5 | |
| | 23,444 | | | | | Atwood Oceanics, Inc. | | | 448,015 | | | | 0.3 | |
| | 25,497 | | | | | Baker Hughes, Inc. | | | 1,427,832 | | | | 0.8 | |
| | 82,907 | | | @ | | Baytex Energy Corp. | | | 478,373 | | | | 0.3 | |
| | 203,738 | | | @ | | Bill Barrett Corp. | | | 1,114,447 | | | | 0.7 | |
| | 199,920 | | | @ | | C&J Energy Services Ltd. | | | 1,107,557 | | | | 0.7 | |
| | 84,883 | | | @ | | Canadian Natural Resources Ltd. | | | 1,907,321 | | | | 1.1 | |
| | 39,787 | | | @ | | Carrizo Oil & Gas, Inc. | | | 1,449,440 | | | | 0.9 | |
| | 30,032 | | | @ | | Cenovus Energy, Inc. | | | 434,563 | | | | 0.3 | |
| | 6,503 | | | | | Cheniere Energy, Inc. | | | 404,161 | | | | 0.2 | |
| | 134,303 | | | | | Chevron Corp. | | | 10,877,200 | | | | 6.5 | |
| | 283,425 | | | @ | | Cloud Peak Energy, Inc. | | | 1,354,772 | | | | 0.8 | |
| | 3,936 | | | @ | | Concho Resources, Inc. | | | 425,718 | | | | 0.2 | |
| | 113,336 | | | | | ConocoPhillips | | | 5,570,464 | | | | 3.3 | |
| | 17,336 | | | @ | | Core Laboratories NV | | | 2,005,429 | | | | 1.2 | |
| | 9,259 | | | | | CVR Energy, Inc. | | | 372,304 | | | | 0.2 | |
| | 70,052 | | | | | Devon Energy Corp. | | | 2,988,418 | | | | 1.8 | |
| | 25,380 | | | | | Dril-Quip, Inc. | | | 1,749,697 | | | | 1.0 | |
| | 45,343 | | | @ | | Ensco PLC | | | 821,162 | | | | 0.5 | |
| | 78,745 | | | | | EOG Resources, Inc. | | | 6,166,521 | | | | 3.7 | |
| | 33,502 | | | | | EQT Corp. | | | 2,607,126 | | | | 1.5 | |
| | 25,660 | | | | | Exterran Holdings, Inc. | | | 572,731 | | | | 0.3 | |
| | 159,898 | | | | | ExxonMobil Corp. | | | 12,030,726 | | | | 7.1 | |
| | 29,020 | | | | | Gulfport Energy Corp. | | | 1,039,787 | | | | 0.6 | |
| | 127,472 | | | | | Halliburton Co. | | �� | 5,016,023 | | | | 3.0 | |
| | 51,422 | | | | | Hess Corp. | | | 3,057,038 | | | | 1.8 | |
| | 35,531 | | | | | HollyFrontier Corp. | | | 1,664,983 | | | | 1.0 | |
| | 155,137 | | | | | Kinder Morgan, Inc. | | | 5,027,990 | | | | 3.0 | |
| | 140,150 | | | @ | | Laredo Petroleum, Inc. | | | 1,428,129 | | | | 0.8 | |
| | 25,476 | | | | | Marathon Oil Corp. | | | 440,480 | | | | 0.3 | |
| | 37,229 | | | | | Marathon Petroleum Corp. | | | 1,761,304 | | | | 1.0 | |
| | 95,261 | | | @ | | MEG Energy Corp. | | | 855,872 | | | | 0.5 | |
| | 14,784 | | | | | National Oilwell Varco, Inc. | | | 625,807 | | | | 0.4 | |
| | 35,595 | | | | | Newfield Exploration Co. | | | 1,185,669 | | | | 0.7 | |
| | 104,250 | | | @ | | Noble Corp. PLC | | | 1,357,335 | | | | 0.8 | |
| | 11,677 | | | | | Noble Energy, Inc. | | | 390,129 | | | | 0.2 | |
| | 103,538 | | | | | Occidental Petroleum Corp. | | | 7,559,309 | | | | 4.5 | |
| | 31,003 | | | | | Oceaneering International, Inc. | | | 1,358,551 | | | | 0.8 | |
| | 101,410 | | | | | Patterson-UTI Energy, Inc. | | | 1,650,955 | | | | 1.0 | |
| | 44,124 | | | | | Phillips 66 | | | 3,488,885 | | | | 2.1 | |
| | 6,145 | | | | | Pioneer Natural Resources Co. | | | 756,204 | | | | 0.4 | |
| | 66,771 | | | | | Plains GP Holdings L.P. | | | 1,308,044 | | | | 0.8 | |
| | 122,461 | | | | | QEP Resources, Inc. | | | 1,719,352 | | | | 1.0 | |
| | 48,440 | | | | | Range Resources Corp. | | | 1,870,753 | | | | 1.1 | |
| | 19,891 | | | | | Rowan Companies PLC | | | 357,441 | | | | 0.2 | |
| | 23,144 | | | @ | | Royal Dutch Shell PLC - Class A ADR | | | 1,224,781 | | | | 0.7 | |
| | 157,340 | | | | | Schlumberger Ltd. | | | 12,173,396 | | | | 7.2 | |
| Shares | | | | | | | Value | | | Percentage
of Net
Assets | |
| COMMON STOCK: (continued) | | | | | | |
| | | | | | | Energy: (continued) | | | | |
| | 6,059 | | | | | SemGroup Corp. - Class A | | | 333,245 | | | | 0.2 | |
| | 9,449 | | | | | SM Energy Co. | | | 346,778 | | | | 0.2 | |
| | 38,091 | | | | | Spectra Energy Corp. | | | 1,107,305 | | | | 0.7 | |
| | 209,711 | | | @ | | Suncor Energy, Inc. | | | 5,922,239 | | | | 3.5 | |
| | 5,194 | | | | | Tesoro Corp. | | | 477,900 | | | | 0.3 | |
| | 28,658 | | | @ | | Total S.A. ADR | | | 1,329,731 | | | | 0.8 | |
| | 116,115 | | | @ | | TransCanada Corp. | | | 4,019,901 | | | | 2.4 | |
| | 93,196 | | | @ | | Transocean Ltd. | | | 1,326,179 | | | | 0.8 | |
| | 45,717 | | | | | Unit Corp. | | | 694,898 | | | | 0.4 | |
| | 76,958 | | | | | Valero Energy Corp. | | | 4,566,688 | | | | 2.7 | |
| | 41,265 | | | | | Whiting Petroleum Corp. | | | 797,652 | | | | 0.5 | |
| | 50,839 | | | | | Williams Cos., Inc. | | | 2,450,440 | | | | 1.5 | |
| | 21,278 | | | @ | | WPX Energy, Inc. | | | 155,542 | | | | 0.1 | |
| | | | | | | | | | 143,332,217 | | | | 85.1 | |
| | | | | | | | | | | | | | | |
| | | | | | | Materials: 15.3% | | | | |
| | 284,494 | | | | | Alcoa, Inc. | | | 2,688,468 | | | | 1.6 | |
| | 21,455 | | | | | Avery Dennison Corp. | | | 1,246,106 | | | | 0.7 | |
| | 24,779 | | | @ | | Berry Plastics Group, Inc. | | | 733,458 | | | | 0.4 | |
| | 14,159 | | | @ | | Boise Cascade Co. | | | 459,460 | | | | 0.3 | |
| | 3,705 | | | | | Compass Minerals International, Inc. | | | 300,105 | | | | 0.2 | |
| | 41,997 | | | | | Crown Holdings, Inc. | | | 2,081,791 | | | | 1.2 | |
| | 41,123 | | | | | Domtar Corp. | | | 1,653,556 | | | | 1.0 | |
| | 6,470 | | | | | Eagle Materials, Inc. | | | 529,440 | | | | 0.3 | |
| | 30,391 | | | | | Freeport-McMoRan, Inc. | | | 323,360 | | | | 0.2 | |
| | 33,187 | | | | | Greif, Inc. - Class A | | | 971,715 | | | | 0.6 | |
| | 210,565 | | | | | Hecla Mining Co. | | | 433,764 | | | | 0.3 | |
| | 76,825 | | | | | International Paper Co. | | | 3,314,231 | | | | 2.0 | |
| | 59,347 | | | | | Newmont Mining Corp. | | | 1,013,053 | | | | 0.6 | |
| | 28,931 | | | | | Packaging Corp. of America | | | 1,941,560 | | | | 1.1 | |
| | 6,061 | | | | | Sealed Air Corp. | | | 311,839 | | | | 0.2 | |
| | 17,131 | | | | | Silgan Holdings, Inc. | | | 896,979 | | | | 0.5 | |
| | 10,944 | | | | | Sonoco Products Co. | | | 430,318 | | | | 0.2 | |
| | 128,144 | | | | | Stillwater Mining Co | | | 1,223,775 | | | | 0.7 | |
| | 135,401 | | | @ | | Tahoe Resources, Inc. | | | 1,133,306 | | | | 0.7 | |
| | 323,511 | | | @ | | Turquoise Hill Resources Ltd. | | | 964,063 | | | | 0.6 | |
| | 2,886 | | | | | Vulcan Materials Co. | | | 270,187 | | | | 0.2 | |
| | 48,756 | | | | | WestRock Co. | | | 2,893,669 | | | | 1.7 | |
| | | | | | | | | | 25,814,203 | | | | 15.3 | |
| | | | | | | | | | | | | | | |
| | | | | Total Common Stock
(Cost $201,527,013) | | | 169,146,420 | | | | 100.4 | |
| | | | | | | | | | | | | | | |
| SHORT-TERM INVESTMENTS: 1.2% | | | | | | | | |
| | | | | | | Mutual Funds: 1.2% | | | | |
| | 2,005,000 | | | | | BlackRock Liquidity Funds, TempFund, Institutional Class, 0.100%††
(Cost $2,005,000) | | | 2,005,000 | | | | 1.2 | |
| | | | | | | | | | | | | | | |
| | | | | Total Short-Term Investments
(Cost $2,005,000) | | | 2,005,000 | | | | 1.2 | |
See Accompanying Notes to Financial Statements
| Voya Natural Resources Equity Income Fund | PORTFOLIO OF INVESTMENTS
as of August 31, 2015 (Unaudited) (continued) |
| Shares | | | | | | | Value | | | Percentage
of Net
Assets | |
| SHORT-TERM INVESTMENTS: (continued) | | | |
| | | | | | | Mutual Funds: (continued) | |
| | | | | Total Investments in Securities
(Cost $203,532,013) | | $ | 171,151,420 | | | | 101.6 | |
| | | | | Liabilities in Excess of Other Assets | | | (2,614,990 | ) | | | (1.6 | ) |
| | | | | Net Assets | | $ | 168,536,430 | | | | 100.0 | |
| †† | Rate shown is the 7-day yield as of August 31, 2015. |
| @ | Non-income producing security. |
| ADR | American Depositary Receipt |
| | Cost for federal income tax purposes is $205,122,738. |
| | |
| | Net unrealized depreciation consists of: |
| Gross Unrealized Appreciation | | $ | 3,879,891 | |
| Gross Unrealized Depreciation | | | (37,851,209 | ) |
| Net Unrealized Depreciation | | $ | (33,971,318 | ) |
See Accompanying Notes to Financial Statements
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
Not required for semi-annual filing.
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not required for semi-annual filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
None.
| Item 10. | Submission of Matters to a Vote of Security Holders. |
N/A.
| Item 11. | Controls and Procedures. |
| (a) | Based on our evaluation conducted within 90 days of the filing date, hereof, the design and operation of the registrant’s disclosure controls and procedures are effective to ensure that material information relating to the registrant is made known to the certifying officers by others within the appropriate entities, particularly during the period in which Forms N-CSR are being prepared, and the registrant’s disclosure controls and procedures allow timely preparation and review of the information for the registrant’s Form N-CSR and the officer certifications of such Form N-CSR. |
| (b) | There were no significant changes in the registrant’s internal controls 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. |
| (a) | (1) | The Code of Ethics is not required for the semi-annual filing. |
| | | |
| (a) | (2) | A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2 under the Act (17 CFR 270.30a-2) is attached hereto as EX-99.CERT. |
| | | |
| (a) | (3) | Not required for semi-annual filing. |
| | | |
| (b) | The officer certifications required by Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto as EX-99.906CERT. |
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.
(Registrant): Voya Natural Resources Equity Income Fund
| By | /s/ Shaun P. Mathews | |
| | Shaun P. Mathews | |
| | President and Chief Executive Officer | |
Date: November 6, 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 behalf of the registrant and in the capacities and on the dates indicated.
| By | /s/ Shaun P. Mathews | |
| | Shaun P. Mathews | |
| | President and Chief Executive Officer | |
Date: November 6, 2015
| By | /s/ Todd Modic | |
| | Todd Modic | |
| | Senior Vice President and Chief Financial Officer | |
Date: November 6, 2015
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