Neuberger Berman
High Yield Strategies Fund Inc.
Contents
PRESIDENT’S LETTER | 1 | |
PORTFOLIO COMMENTARY. | 2 | |
SCHEDULE OF INVESTMENTS | 6 | |
FINANCIAL STATEMENTS | 19 | |
FINANCIAL HIGHLIGHTS/PER SHARE DATA | 31 | |
Report of Independent Registered Public Accounting Firm | 33 | |
Distribution Reinvestment Plan | 34 | |
Directory | 37 | |
Directors and Officers | 38 | |
Proxy Voting Policies and Procedures | 46 | |
Quarterly Portfolio Schedule | 46 | |
Report of Votes of Shareholders | 47 | |
Board Consideration of the Management and Sub-Advisory Agreements |
48 |
The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC. “Neuberger Berman Management LLC” and the individual Fund name in this piece are either service marks or registered service marks of Neuberger Berman Management LLC. ©2014 Neuberger Berman Management LLC. All rights reserved.
President’s Letter
Dear Shareholder,
I am pleased to present the annual report for Neuberger Berman High Yield Strategies Fund Inc. for the 12 months ended October 31, 2014. The report includes a portfolio commentary, a listing of the Fund’s investments and its audited financial statements for the reporting period.
The Fund seeks high total return (income plus capital appreciation). To pursue that objective, we have assembled a portfolio that consists primarily of high yield debt securities.
Thank you for your confidence in the Fund. We will do our best to continue earning your trust in the years to come.
Sincerely,
ROBERT CONTI
PRESIDENT AND CEO
NEUBERGER BERMAN HIGH YIELD STRATEGIES FUND INC.
Neuberger Berman High Yield Strategies Fund Inc.
Portfolio Commentary (Unaudited)
Neuberger Berman High Yield Strategies Fund Inc. generated a 6.48% total return on a net asset value (NAV) basis for the 12 months ended October 31, 2014 and outperformed its benchmark, the BofA Merrill Lynch U.S. High Yield Master II Constrained Index, which provided a 5.85% return for the period. (Fund performance on a market price basis is provided in the table immediately following this letter.) The use of leverage (typically a performance enhancer in up markets and a detractor during market retreats) was beneficial for performance.
The overall fixed income market was volatile at times during the reporting period. Short-term Treasury yields moved higher as the U.S. Federal Reserve (Fed) ended its quantitative easing program and the market began pricing in a 2015 rate hike. In contrast, longer-term rates declined given several flights to quality due to concerns over global growth and numerous geopolitical issues. The high yield market posted positive returns during 10 of the 12 months of this reporting period and outperformed equal-duration Treasuries. Supporting the high yield market were generally solid corporate fundamentals, low defaults and overall solid investor demand. For the period, CCC-rated securities (a relatively low rating) and BB-rated securities (rated higher) in the benchmark returned 3.58% and 7.28%, respectively.
From a sector perspective, security selection in telecommunications, gaming and health care contributed the most to performance. Conversely, security selection in metals & mining and utilities, along with an underweight in banking, detracted the most from performance.
The Fund’s lower quality biases were generally negative for performance. In particular, an underweight to securities rated BB and above detracted the most from results. This was partially offset by the Fund’s strong security selection and leverage.
We made several adjustments to the portfolio during the reporting period. We increased the Fund’s allocation to BB-rated securities, while paring its exposures to securities rated CCC and BBB and higher. From a sector perspective, we increased the Fund’s allocations to energy, diversified financial services and support services. Conversely, we reduced exposures to technology, metals & mining and super retail.
The high yield market’s performance has been choppy in recent months. However, underlying fundamentals, in our view, have not meaningfully changed. Given this, we believe periods of weakness have been largely driven by poor supply/demand technicals. We think a backdrop of economic growth and low inflation in the U.S., if it continues, could be supportive for corporate profits and the overall high yield market. In addition, given what we believe is likely to be a continued low interest rate environment, we feel investor demand could improve. Still, market volatility, in our opinion, could remain elevated given uncertainties regarding the timing of future Fed rate hikes, signs of weakening growth overseas and numerous geopolitical issues.
Sincerely,
ANN H. BENJAMIN, THOMAS P. O’REILLY, RUSS COVODE AND DANIEL DOYLE
PORTFOLIO CO-MANAGERS
The composition, industries and holdings of the Fund are subject to change.
The opinions expressed are those of the Fund’s portfolio managers. The opinions are as of the date of this report and are subject to change without notice.
The value of securities owned by the Fund, as well as the market value of Fund shares, may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional, national or global political, social or economic instability; regulatory or legislative developments; price, currency and interest rate fluctuations, including those resulting from changes in central bank policies; and changes in investor sentiment.
TICKER SYMBOL |
|||
High Yield Strategies Fund Inc. | NHS |
PORTFOLIO BY MATURITY DISTRIBUTION |
|||
(as a % of Total Investments) | |||
Less than One Year | 1.7 | % | |
One to less than Five Years | 22.4 | ||
Five to less than Ten Years | 67.6 | ||
Ten Years or Greater | 8.3 | ||
Total | 100.0 | % |
PERFORMANCE HIGHLIGHTS1 |
|||||||||||
Average Annual Total Return | |||||||||||
Inception | Ended 10/31/2014 | ||||||||||
Date | 1 Year | 5 Years | 10 Years | Life of Fund | |||||||
At NAV2 | 07/28/2003 | 6.48% | 13.33% | 10.26% | 11.00% | ||||||
At Market Price3
Index
|
07/28/2003 | 5.13% | 13.72% | 8.88% | 9.65% | ||||||
BofA Merrill Lynch
U.S. High Yield
Master II
|
5.85% | 10.22% | 8.12% | 8.71% |
Closed-end funds, unlike open-end funds, are not continually offered. Generally, there is an initial public offering and, once issued, common shares of closed-end funds are sold in the open market through a stock exchange.
The performance data quoted represent past performance and do not indicate future results. Current performance may be lower or higher than the performance data quoted. For more current performance data, please visit www.nb.com/performance.
The results shown in the table reflect the reinvestment of income dividends and other distributions, if any. The results do not reflect the effect of taxes a shareholder would pay on Fund distributions or on the sale of Fund common shares.
The investment return and market price will fluctuate and common shares may trade at prices below NAV. Fund common shares, when sold, may be worth more or less than their original cost.
Returns would have been lower if Neuberger Berman Management LLC (Management) had not waived a portion of its investment management fees during certain of the periods shown. Please see the Notes to the Financial Highlights for additional information regarding fee waivers.
Endnotes
1 The performance information for periods prior to August 6, 2010 is that of Neuberger Berman High Yield Strategies Fund, a predecessor to the Fund.
2 Returns based on the NAV of the Fund.
3 Returns based on the market price of Fund common shares on the NYSE MKT.
4 Please see “Description of Index” on page 5 for a description of the index.
For more complete information on Neuberger Berman High Yield Strategies Fund Inc., call Management at (800) 877-9700, or visit our website at www.nb.com.
Description of Index
BofA Merrill Lynch US High Yield Master II Constrained Index: |
The index tracks the performance of U.S. dollar-denominated below investment grade corporate debt publicly issued in the U.S. domestic market. In addition to meeting other criteria, qualifying securities must have a below investment grade rating (based on an average of Moody’s, S&P and Fitch ratings), and have risk exposure to countries that are members of the FX-G10, Western Europe or territories of the U.S. and Western Europe. Securities in legal default are excluded from the index. Index constituents are capitalization-weighted, provided the total allocation to an individual issuer does not exceed 2%. |
Please note that the index does not take into account any fees and expenses or any tax consequences of investing in individual securities that it tracks and that individuals cannot invest directly in any index. Data about the performance of this index are prepared or obtained by Management and include reinvestment of all income dividends and other distributions, if any. The Fund may invest in securities not included in the above described index and generally does not invest in all securities included in the index.
Schedule of Investments High Yield Strategies Fund Inc.
PRINCIPAL AMOUNT |
VALUE† | ||||||||
Bank Loan Obligationsµ(6.5%)
|
|||||||||
All Telecom (1.7%) | |||||||||
$630,111 | Integra Telecom, Term Loan B, 5.25%, due 2/22/19 | $627,433 | |||||||
4,125,000 | Level 3 Financing Inc., Term Loan, due 7/1/15 | 4,125,000 | Ѣ^^f | ||||||
4,752,433 | |||||||||
Automotive (0.4%) | |||||||||
1,227,600 | Navistar, Inc., Term Loan B, 5.75%, due 8/17/17 | 1,229,908 | |||||||
Business Equipment & Services (0.3%) | |||||||||
190,323 | Advantage Sales and Marketing, First Lien Term Loan, due 7/23/21 | 188,515 | ¢^^ | ||||||
4,677 | Advantage Sales and Marketing, First Lien Term Loan, due 7/23/21 | 4,633 | ¢^^ | ||||||
375,000 | Advantage Sales and Marketing, Second Lien Term Loan, due 7/25/22 | 372,094 | ¢^^ | ||||||
440,000 | Servicemaster Company, Term Loan, 4.25%, due 7/1/21 | 435,692 | |||||||
1,000,934 | |||||||||
Health Care (0.6%) | |||||||||
98,731 | Multiplan, Inc., Term Loan, 4.00%, due 3/31/21 | 97,109 | |||||||
1,528,730 | United Surgical Partners International, Inc., Term Loan B, 4.75%, due 4/3/19 | 1,527,645 | |||||||
1,624,754 | |||||||||
Lodging & Casinos (2.9%) | |||||||||
1,531,865 | Centaur Acquisition, LLC, Second Lien Term Loan, 8.75%, due 2/20/20 | 1,543,354 | ¢^^ | ||||||
1,759,000 | Four Seasons Holdings Inc., Second Lien Term Loan, 6.25%, due 12/27/20 | 1,763,397 | Ñ | ||||||
1,741,838 | Mohegan Tribal Gaming, Term Loan B, 5.50%, due 11/19/19 | 1,689,582 | |||||||
3,175,000 | Scientific Games Corp., Term Loan B-2, 6.00%, due 10/1/21 | 3,106,198 | |||||||
8,102,531 | |||||||||
Radio & Television (0.6%) | |||||||||
310,544 | iHeartCommunications Inc., Term Loan B, 3.80%, due 1/29/16 | 307,696 | |||||||
407,000 | iHeartCommunications Inc., Term Loan D, 6.90%, due 1/30/19 | 383,662 | |||||||
997,961 | iHeartCommunications Inc., Term Loan E, 7.65%, due 7/30/19 | 958,352 | |||||||
1,649,710 | |||||||||
Total Bank Loan Obligations (Cost $18,387,553) | 18,360,270 | ||||||||
Corporate Debt Securities (135.1%) | |||||||||
Advertising (1.8%) |
|||||||||
1,190,000 | Clear Channel Worldwide Holdings, Inc., Guaranteed Notes, Ser. B, 7.63%, due 3/15/20 | 1,265,862 | |||||||
1,800,000 | Clear Channel Worldwide Holdings, Inc., Guaranteed Notes, Ser. B, 6.50%, due 11/15/22 | 1,863,000 | |||||||
495,000 | Clear Channel Worldwide Holdings, Inc., Guaranteed Notes, Ser. A, 6.50%, due 11/15/22 | 509,850 | |||||||
1,300,000 | Nielsen Finance LLC, Guaranteed Notes, 5.00%, due 4/15/22 | 1,319,500 | ñ | ||||||
4,958,212 | |||||||||
Aerospace & Defense (0.4%) | |||||||||
1,165,000 | Kratos Defense & Security Solutions, Inc., Senior Secured Notes, 7.00%, due 5/15/19 | 1,141,700 |
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Auto Loans (0.4%)
|
|||||||||
$1,170,000
|
General Motors Financial Co., Inc., Guaranteed Notes, 4.38%, due 9/25/21
|
$1,225,692
|
|||||||
Automakers (0.6%)
|
|||||||||
1,200,000
|
Chrysler Group LLC/CG Co-Issuer, Inc., Secured Notes, 8.25%, due 6/15/21
|
1,341,000
|
|||||||
390,000
|
General Motors Co., Senior Unsecured Notes, 6.25%, due 10/2/43
|
464,100
|
|||||||
1,805,100
|
|||||||||
Beverages (0.5%)
|
|||||||||
235,000
|
Constellation Brands, Inc., Guaranteed Notes, 3.88%, due 11/15/19
|
238,525
|
Ø
|
||||||
725,000
|
Constellation Brands, Inc., Guaranteed Notes, 4.25%, due 5/1/23
|
728,625
|
|||||||
340,000
|
Constellation Brands, Inc., Guaranteed Notes, 4.75%, due 11/15/24
|
347,650
|
Ø
|
||||||
1,314,800
|
|||||||||
Building & Construction (2.3%)
|
|||||||||
155,000
|
D.R. Horton, Inc., Guaranteed Notes, 4.38%, due 9/15/22
|
153,063
|
|||||||
2,025,000
|
D.R. Horton, Inc., Guaranteed Notes, 5.75%, due 8/15/23
|
2,159,156
|
|||||||
1,545,000
|
Lennar Corp., Guaranteed Notes, 4.75%, due 11/15/22
|
1,529,550
|
|||||||
570,000
|
Ryland Group, Inc., Guaranteed Notes, 5.38%, due 10/1/22
|
558,600
|
|||||||
490,000
|
Standard Pacific Corp., Guaranteed Notes, 8.38%, due 1/15/21
|
573,300
|
|||||||
1,445,000
|
Taylor Morrison Communities, Inc./Monarch Communities, Inc., Guaranteed Notes, 5.25%, due 4/15/21
|
1,455,303
|
ñ
|
||||||
6,428,972
|
|||||||||
Building Materials (1.2%)
|
|||||||||
1,990,000
|
USG Corp., Senior Unsecured Notes, 9.75%, due 1/15/18
|
2,293,475
|
|||||||
1,050,000
|
USG Corp., Guaranteed Notes, 8.38%, due 10/15/18
|
1,098,615
|
ñ
|
||||||
3,392,090
|
|||||||||
Cable & Satellite Television (7.3%)
|
|||||||||
2,070,000
|
Altice SA, Senior Secured Notes, 7.75%, due 5/15/22
|
2,168,325
|
ñ
|
||||||
1,040,000
|
CCO Holdings LLC, Guaranteed Notes, 8.13%, due 4/30/20
|
1,102,400
|
|||||||
655,000
|
CCO Holdings LLC, Guaranteed Notes, 5.25%, due 9/30/22
|
659,094
|
|||||||
1,832,000
|
Cequel Communications Escrow I LLC/Cequel Communications Escrow Capital Corp., Senior Unsecured Notes, 6.38%, due 9/15/20
|
1,909,860
|
ñ
|
||||||
1,094,000
|
Cequel Communications Escrow I LLC/Cequel Communications Escrow Capital Corp., Senior Unsecured Notes, 5.13%, due 12/15/21
|
1,068,017
|
ñ
|
||||||
615,000
|
CSC Holdings LLC, Senior Unsecured Notes, 7.63%, due 7/15/18
|
696,488
|
|||||||
2,120,000
|
DISH DBS Corp., Guaranteed Notes, 5.13%, due 5/1/20
|
2,204,800
|
ØØ
|
||||||
1,145,000
|
DISH DBS Corp., Guaranteed Notes, 6.75%, due 6/1/21
|
1,270,950
|
|||||||
1,805,000
|
Numericable Group SA, Senior Secured Notes, 4.88%, due 5/15/19
|
1,800,487
|
ñ
|
||||||
2,170,000
|
Numericable Group SA, Senior Secured Notes, 6.00%, due 5/15/22
|
2,218,825
|
ñ
|
||||||
510,000
|
Numericable Group SA, Senior Secured Notes, 6.25%, due 5/15/24
|
524,663
|
ñ
|
||||||
1,110,000
|
UPCB Finance III Ltd., Senior Secured Notes, 6.63%, due 7/1/20
|
1,168,275
|
ñ
|
||||||
895,000
|
Virgin Media Finance PLC, Senior Unsecured Notes, 6.00%, due 10/15/24
|
930,800
|
ñ
|
||||||
685,000
|
Virgin Media Secured Finance PLC, Senior Secured Notes, 5.38%, due 4/15/21
|
710,687
|
ñ
|
||||||
2,000,000
|
WideOpenWest Finance LLC/WideOpenWest Capital Corp., Guaranteed Notes, 10.25%, due 7/15/19
|
2,185,000
|
|||||||
20,618,671
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Chemicals (2.1%)
|
|
|
|
|
|
||||
|
$555,000
|
|
|
Huntsman Int’l LLC, Guaranteed Notes, 8.63%, due 3/15/20
|
$595,382
|
|
|||
|
1,130,000
|
|
|
Huntsman Int’l LLC, Guaranteed Notes, 4.88%, due 11/15/20
|
|
|
1,138,475
|
|
|
1,775,000
|
Huntsman Int’l LLC, Guaranteed Notes, 8.63%, due 3/15/21
|
1,934,750
|
|||||||
|
360,000
|
|
|
NOVA Chemicals Corp., Senior Unsecured Notes, 5.00%, due 5/1/25
|
|
|
371,250
|
ñ
|
|
1,075,000
|
PQ Corp., Secured Notes, 8.75%, due 5/1/18
|
1,139,500
|
ñ
|
||||||
|
715,000
|
|
|
US Coatings Acquisition, Inc., Guaranteed Notes, 7.38%, due 5/1/21
|
|
|
773,988
|
ñ
|
|
5,953,345
|
|||||||||
Consumer-Commercial-Lease Financing (7.8%)
|
|
|
|
|
|
||||
1,750,000
|
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, Guaranteed Notes, 3.75%, due 5/15/19
|
1,736,875
|
ñ
|
||||||
|
1,150,000
|
|
|
AerCap Ireland Capital Ltd./AerCap Global Aviation Trust, Guaranteed Notes, 4.50%, due 5/15/21
|
|
|
1,161,500
|
ñ
|
|
2,915,000
|
Ally Financial, Inc., Guaranteed Notes, 8.00%, due 3/15/20
|
3,505,288
|
ØØ
|
||||||
|
245,000
|
|
|
Ally Financial, Inc., Senior Unsecured Notes, 5.13%, due 9/30/24
|
|
|
254,800
|
|
|
1,830,000
|
CIT Group, Inc., Senior Unsecured Notes, 6.63%, due 4/1/18
|
2,003,850
|
ñ
|
||||||
|
755,000
|
|
|
CIT Group, Inc., Senior Unsecured Notes, 5.38%, due 5/15/20
|
|
|
806,906
|
|
|
525,000
|
CIT Group, Inc., Senior Unsecured Notes, 5.00%, due 8/15/22
|
549,281
|
|||||||
|
1,640,000
|
|
|
Int’l Lease Finance Corp., Senior Unsecured Notes, 8.88%, due 9/1/17
|
|
|
1,886,000
|
|
|
2,345,000
|
Int’l Lease Finance Corp., Senior Unsecured Notes, 6.25%, due 5/15/19
|
2,564,844
|
|||||||
|
1,110,000
|
|
|
Int’l Lease Finance Corp., Senior Unsecured Notes, 8.63%, due 1/15/22
|
|
|
1,376,400
|
|
|
1,325,000
|
SLM Corp., Senior Unsecured Medium-Term Notes, 5.50%, due 1/15/19
|
1,373,866
|
|||||||
|
3,465,000
|
|
|
SLM Corp., Senior Unsecured Medium-Term Notes, 4.88%, due 6/17/19
|
|
|
3,516,975
|
ØØ
|
|
1,185,000
|
SLM Corp., Senior Unsecured Medium-Term Notes, 6.13%, due 3/25/24
|
1,223,524
|
|||||||
|
|
|
|
|
|
|
21,960,109
|
|
|
Electric - Generation (3.5%)
|
|||||||||
|
395,000
|
|
|
Calpine Corp., Senior Secured Notes, 6.00%, due 1/15/22
|
|
|
425,613
|
ñ
|
|
925,000
|
Dynegy Finance I, Inc./Dynegy Finance II, Inc., Senior Secured Notes, 6.75%, due 11/1/19
|
957,375
|
ñ
|
||||||
|
890,000
|
|
|
NRG Energy, Inc., Guaranteed Notes, 7.63%, due 1/15/18
|
|
|
999,025
|
|
|
1,775,000
|
NRG Energy, Inc., Guaranteed Notes, 8.25%, due 9/1/20
|
1,919,219
|
|||||||
|
3,460,000
|
|
|
NRG Energy, Inc., Guaranteed Notes, 7.88%, due 5/15/21
|
|
|
3,771,400
|
ØØ
|
|
1,715,000
|
NRG Energy, Inc., Guaranteed Notes, 6.25%, due 7/15/22
|
1,796,462
|
|||||||
|
|
|
|
|
|
|
9,869,094
|
|
|
Electric - Integrated (0.4%)
|
|||||||||
|
1,155,000
|
|
|
RJS Power Holdings LLC, Guaranteed Notes, 5.13%, due 7/15/19
|
|
|
1,152,113
|
ñ
|
|
Electronics (0.8%)
|
|||||||||
|
1,090,000
|
|
|
Flextronics Int’l Ltd., Guaranteed Notes, 5.00%, due 2/15/23
|
|
|
1,111,800
|
|
|
303,000
|
Freescale Semiconductor, Inc., Guaranteed Notes, 8.05%, due 2/1/20
|
319,665
|
ØØ
|
||||||
|
840,000
|
|
|
Freescale Semiconductor, Inc., Senior Secured Notes, 6.00%, due 1/15/22
|
|
|
861,000
|
ñ
|
|
2,292,465
|
|||||||||
Energy - Exploration & Production (18.1%)
|
|
|
|
|
|
||||
1,405,000
|
Antero Resources Corp., Guaranteed Notes, 5.13%, due 12/1/22
|
1,405,281
|
ñ
|
||||||
|
635,000
|
|
|
Antero Resources Finance Corp., Guaranteed Notes, 5.38%, due 11/1/21
|
|
|
644,525
|
|
|
485,000
|
California Resources Corp., Guaranteed Notes, 5.00%, due 1/15/20
|
492,275
|
ñ
|
||||||
|
645,000
|
|
|
California Resources Corp., Guaranteed Notes, 5.50%, due 9/15/21
|
|
|
657,900
|
ñ
|
|
1,655,000
|
California Resources Corp., Guaranteed Notes, 6.00%, due 11/15/24
|
1,696,375
|
ñ
|
||||||
|
535,000
|
|
|
Chesapeake Energy Corp., Guaranteed Notes, 6.50%, due 8/15/17
|
|
|
580,475
|
|
|
620,000
|
Chesapeake Energy Corp., Guaranteed Notes, 6.63%, due 8/15/20
|
699,050
|
|||||||
|
535,000
|
|
|
Chesapeake Energy Corp., Guaranteed Notes, 6.13%, due 2/15/21
|
|
|
593,850
|
|
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
|
$2,055,000
|
|
|
Chesapeake Energy Corp., Guaranteed Notes, 4.88%, due 4/15/22
|
|
$2,101,751
|
|
|
|
1,444,000
|
Concho Resources, Inc., Guaranteed Notes, 5.50%, due 4/1/23
|
1,527,030
|
|||||||
|
2,650,000
|
|
|
Denbury Resources, Inc., Guaranteed Notes, 4.63%, due 7/15/23
|
|
|
2,438,000
|
|
|
5,222,000
|
EP Energy LLC/EP Energy Finance, Inc., Guaranteed Notes, 9.38%, due 5/1/20
|
5,705,035
|
|||||||
|
2,560,000
|
|
|
EXCO Resources, Inc., Guaranteed Notes, 7.50%, due 9/15/18
|
|
|
2,259,200
|
ØØ
|
|
2,155,000
|
EXCO Resources, Inc., Guaranteed Notes, 8.50%, due 4/15/22
|
1,880,238
|
|||||||
|
185,000
|
|
|
Laredo Petroleum, Inc., Guaranteed Notes, 7.38%, due 5/1/22
|
|
|
192,400
|
|
|
5,625,000
|
Linn Energy LLC, Guaranteed Notes, 6.25%, due 11/1/19
|
5,175,000
|
|||||||
|
610,000
|
|
|
Linn Energy LLC, Guaranteed Notes, 8.63%, due 4/15/20
|
|
|
611,525
|
|
|
4,406,000
|
Linn Energy LLC, Guaranteed Notes, 7.75%, due 2/1/21
|
4,317,880
|
|||||||
|
45,000
|
|
|
Linn Energy LLC, Guaranteed Notes, 6.50%, due 9/15/21
|
|
|
41,175
|
|
|
4,420,000
|
Newfield Exploration Co., Senior Unsecured Notes, 5.75%, due 1/30/22
|
4,784,650
|
|||||||
|
1,365,000
|
|
|
Newfield Exploration Co., Senior Unsecured Notes, 5.63%, due 7/1/24
|
|
|
1,467,375
|
|
|
745,000
|
Oasis Petroleum, Inc., Guaranteed Notes, 6.88%, due 3/15/22
|
774,800
|
|||||||
|
590,000
|
|
|
Range Resources Corp., Guaranteed Notes, 5.75%, due 6/1/21
|
|
|
622,450
|
|
|
1,085,000
|
Rosetta Resources, Inc., Guaranteed Notes, 5.63%, due 5/1/21
|
1,052,450
|
|||||||
|
1,245,000
|
|
|
Rosetta Resources, Inc., Guaranteed Notes, 5.88%, due 6/1/22
|
|
|
1,195,200
|
|
|
820,000
|
Rosetta Resources, Inc., Guaranteed Notes, 5.88%, due 6/1/24
|
787,200
|
|||||||
|
4,233,000
|
|
|
SandRidge Energy, Inc., Guaranteed Notes, 7.50%, due 3/15/21
|
|
|
3,767,370
|
|
|
395,000
|
SandRidge Energy, Inc., Guaranteed Notes, 8.13%, due 10/15/22
|
356,488
|
|||||||
|
2,865,000
|
|
|
SandRidge Energy, Inc., Guaranteed Notes, 7.50%, due 2/15/23
|
|
|
2,557,012
|
|
|
500,000
|
WPX Energy, Inc., Senior Unsecured Notes, 5.25%, due 9/15/24
|
487,500
|
|||||||
|
|
|
|
|
|
|
50,871,460
|
|
|
Food & Drug Retailers (1.1%)
|
|||||||||
|
750,000
|
|
|
Rite Aid Corp., Guaranteed Notes, 9.25%, due 3/15/20
|
|
|
828,600
|
|
|
1,442,000
|
Rite Aid Corp., Senior Secured Notes, 8.00%, due 8/15/20
|
1,557,360
|
|||||||
|
570,000
|
|
|
Rite Aid Corp., Guaranteed Notes, 6.75%, due 6/15/21
|
|
|
608,475
|
|
|
2,994,435
|
|||||||||
Food - Wholesale (0.7%)
|
|
|
|
|
|
||||
1,975,000
|
Post Holdings, Inc., Guaranteed Notes, 6.00%, due 12/15/22
|
1,905,875
|
ñ
|
||||||
Gaming (8.0%)
|
|
|
|
|
|
||||
900,000
|
Ameristar Casinos, Inc., Guaranteed Notes, 7.50%, due 4/15/21
|
960,750
|
|||||||
|
435,000
|
|
|
GLP Capital L.P./GLP Financing II, Inc., Guaranteed Notes, 4.38%, due 11/1/18
|
|
|
446,963
|
|
|
2,350,000
|
GLP Capital L.P./GLP Financing II, Inc., Guaranteed Notes, 4.88%, due 11/1/20
|
2,444,000
|
|||||||
|
670,000
|
|
|
GLP Capital L.P./GLP Financing II, Inc., Guaranteed Notes, 5.38%, due 11/1/23
|
|
|
705,175
|
|
|
3,300,000
|
Graton Economic Development Authority, Senior Secured Notes, 9.63%, due 9/1/19
|
3,696,000
|
ñ
|
||||||
|
740,000
|
|
|
Isle of Capri Casinos, Inc., Guaranteed Notes, 8.88%, due 6/15/20
|
|
|
791,800
|
|
|
1,225,000
|
Isle of Capri Casinos, Inc., Guaranteed Notes, 5.88%, due 3/15/21
|
1,255,625
|
|||||||
|
1,245,000
|
|
|
MGM Resorts Int’l, Guaranteed Notes, 8.63%, due 2/1/19
|
|
|
1,441,087
|
|
|
640,000
|
Mohegan Tribal Gaming Authority, Guaranteed Notes, 11.00%, due 9/15/18
|
633,600
|
ñ
|
||||||
|
2,970,000
|
|
|
Mohegan Tribal Gaming Authority, Guaranteed Notes, 9.75%, due 9/1/21
|
|
|
3,059,100
|
|
|
1,635,000
|
MTR Gaming Group, Inc., Secured Notes, 11.50%, due 8/1/19
|
1,794,412
|
|||||||
|
1,520,000
|
|
|
Peninsula Gaming LLC, Guaranteed Notes, 8.38%, due 2/15/18
|
|
|
1,603,600
|
ñ
|
|
625,000
|
Pinnacle Entertainment, Inc., Guaranteed Notes, 6.38%, due 8/1/21
|
668,750
|
|||||||
|
880,000
|
|
|
Pinnacle Entertainment, Inc., Guaranteed Notes, 7.75%, due 4/1/22
|
|
|
961,400
|
|
|
265,000
|
Scientific Games Int’l, Inc., Guaranteed Notes, 6.63%, due 5/15/21
|
210,675
|
ñ
|
||||||
|
1,810,000
|
|
|
Station Casinos LLC, Guaranteed Notes, 7.50%, due 3/1/21
|
|
|
1,891,450
|
|
|
22,564,387
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Gas Distribution (7.6%)
|
|
|
|
|
|
||||
|
$420,000
|
|
|
Access Midstream Partners L.P., Guaranteed Notes, 5.88%, due 4/15/21
|
|
$444,150
|
|||
|
1,200,000
|
|
|
Access Midstream Partners L.P., Guaranteed Notes, 6.13%, due 7/15/22
|
|
|
1,305,000
|
|
|
570,000
|
Access Midstream Partners L.P., Guaranteed Notes, 4.88%, due 5/15/23
|
595,650
|
|||||||
|
540,000
|
|
|
Access Midstream Partners L.P., Guaranteed Notes, 4.88%, due 3/15/24
|
|
|
564,300
|
|
|
2,280,000
|
AmeriGas Finance LLC, Guaranteed Notes, 6.75%, due 5/20/20
|
2,428,200
|
|||||||
|
2,207,000
|
|
|
AmeriGas Finance LLC, Guaranteed Notes, 7.00%, due 5/20/22
|
|
|
2,383,560
|
|
|
960,000
|
Energy Transfer Equity L.P., Senior Secured Notes, 7.50%, due 10/15/20
|
1,104,000
|
|||||||
|
755,000
|
|
|
Energy Transfer Equity L.P., Senior Secured Notes, 5.88%, due 1/15/24
|
|
|
792,750
|
|
|
1,690,000
|
Ferrellgas L.P./Ferrellgas Finance Corp., Senior Unsecured Notes, 6.75%, due 1/15/22
|
1,702,675
|
|||||||
|
1,523,000
|
|
|
MarkWest Energy Partners L.P./MarkWest Energy Finance Corp., Guaranteed Notes, 4.50%, due 7/15/23
|
|
|
1,561,075
|
|
|
1,500,000
|
Regency Energy Partners L.P./Regency Energy Finance Corp., Guaranteed Notes, 6.88%, due 12/1/18
|
1,556,250
|
|||||||
|
455,000
|
|
|
Regency Energy Partners L.P./Regency Energy Finance Corp., Guaranteed Notes, 6.50%, due 7/15/21
|
|
|
483,438
|
|
|
1,110,000
|
Regency Energy Partners L.P./Regency Energy Finance Corp., Guaranteed Notes, 5.88%, due 3/1/22
|
1,182,150
|
|||||||
|
725,000
|
|
|
Regency Energy Partners L.P./Regency Energy Finance Corp., Guaranteed Notes, 5.50%, due 4/15/23
|
|
|
750,375
|
|
|
2,035,000
|
Regency Energy Partners L.P./Regency Energy Finance Corp., Guaranteed Notes, 4.50%, due 11/1/23
|
2,019,737
|
|||||||
|
487,000
|
|
|
Suburban Propane Partners L.P./Suburban Energy Finance Corp., Senior Unsecured Notes, 7.38%, due 8/1/21
|
|
|
523,525
|
|
|
765,000
|
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., Guaranteed Notes, 4.13%, due 11/15/19
|
776,475
|
ñ
|
||||||
|
300,000
|
|
|
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., Guaranteed Notes, 4.25%, due 11/15/23
|
|
|
297,000
|
|
|
320,000
|
Tesoro Logistics L.P./Tesoro Logistics Finance Corp., Senior Unsecured Notes, 5.50%, due 10/15/19
|
328,800
|
ñ
|
||||||
|
510,000
|
|
|
Tesoro Logistics L.P./Tesoro Logistics Finance Corp., Senior Unsecured Notes, 6.25%, due 10/15/22
|
527,850
|
ñ
|
|
||
21,326,960
|
|||||||||
Health Facilities (10.0%)
|
|
|
|
|
|
||||
1,080,000
|
Amsurg Corp., Guaranteed Notes, 5.63%, due 7/15/22
|
1,119,015
|
ñ
|
||||||
|
680,000
|
|
|
CHS/Community Health Systems, Inc., Senior Secured Notes, 5.13%, due 8/15/18
|
|
|
707,200
|
|
|
605,000
|
CHS/Community Health Systems, Inc., Senior Secured Notes, 5.13%, due 8/1/21
|
632,225
|
|||||||
|
1,720,000
|
|
|
CHS/Community Health Systems, Inc., Guaranteed Notes, 6.88%, due 2/1/22
|
|
|
1,853,300
|
|
|
3,000,000
|
Columbia/HCA Corp., Guaranteed Notes, 7.69%, due 6/15/25
|
3,390,000
|
|||||||
|
1,160,000
|
|
|
Columbia/HCA Corp., Guaranteed Notes, 7.05%, due 12/1/27
|
|
|
1,200,600
|
|
|
1,545,000
|
DaVita HealthCare Partners, Inc., Guaranteed Notes, 5.13%, due 7/15/24
|
1,575,900
|
|||||||
|
1,370,000
|
|
|
DaVita, Inc., Guaranteed Notes, 5.75%, due 8/15/22
|
|
|
1,452,200
|
|
|
600,000
|
HCA Holdings, Inc., Senior Unsecured Notes, 6.25%, due 2/15/21
|
645,750
|
|||||||
|
980,000
|
|
|
HCA, Inc., Senior Secured Notes, 4.25%, due 10/15/19
|
|
|
995,925
|
|
|
1,225,000
|
HCA, Inc., Senior Secured Notes, 6.50%, due 2/15/20
|
1,368,937
|
|||||||
|
335,000
|
|
|
HCA, Inc., Senior Secured Notes, 4.75%, due 5/1/23
|
|
|
340,444
|
|
|
220,000
|
HCA, Inc., Guaranteed Notes, 5.88%, due 5/1/23
|
236,500
|
|||||||
|
1,565,000
|
|
|
HCA, Inc., Senior Secured Notes, 5.00%, due 3/15/24
|
|
|
1,613,922
|
|
|
2,845,000
|
IASIS Healthcare LLC/IASIS Capital Corp., Guaranteed Notes, 8.38%, due 5/15/19
|
3,001,475
|
|||||||
|
1,365,000
|
|
|
MPT Operating Partnership L.P./MPT Finance Corp., Guaranteed Notes, 5.50%, due 5/1/24
|
|
|
1,412,604
|
|
|
145,000
|
Sabra Health Care L.P./Sabra Capital Corp., Guaranteed Notes, 5.50%, due 2/1/21
|
150,438
|
|||||||
|
1,375,000
|
|
|
Tenet Healthcare Corp., Senior Secured Notes, 6.25%, due 11/1/18
|
|
|
1,493,594
|
|
|
360,000
|
Tenet Healthcare Corp., Senior Unsecured Notes, 5.00%, due 3/1/19
|
360,450
|
ñ
|
||||||
|
670,000
|
|
|
Tenet Healthcare Corp., Senior Unsecured Notes, 6.75%, due 2/1/20
|
|
|
708,525
|
|
|
970,000
|
Tenet Healthcare Corp., Senior Secured Notes, 6.00%, due 10/1/20
|
1,042,750
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
|
$1,045,000
|
|
|
Tenet Healthcare Corp., Senior Unsecured Notes, 8.13%, due 4/1/22
|
|
|
$1,197,831
|
|
|
1,165,000
|
Tenet Healthcare Corp., Senior Unsecured Notes, 6.88%, due 11/15/31
|
1,141,700
|
|||||||
|
625,000
|
|
|
United Surgical Partners Int’l, Inc., Guaranteed Notes, 9.00%, due 4/1/20
|
|
|
675,000
|
|
|
28,316,285
|
|||||||||
Health Services (0.5%)
|
|
|
|
|
|||||
620,000
|
Envision Healthcare Corp., Guaranteed Notes, 5.13%, due 7/1/22
|
627,750
|
ñ
|
||||||
|
670,000
|
|
|
Service Corp. Int’l, Senior Unsecured Notes, 5.38%, due 5/15/24
|
|
|
690,100
|
|
|
1,317,850
|
|||||||||
Investments & Misc. Financial Services (1.7%)
|
|
|
|
|
|||||
1,915,000
|
Icahn Enterprises L.P./Icahn Enterprises Finance Corp., Guaranteed Notes, 4.88%, due 3/15/19
|
1,948,513
|
|||||||
|
2,955,000
|
|
|
Walter Investment Management Corp., Guaranteed Notes, 7.88%, due 12/15/21
|
|
|
2,785,087
|
ñ
|
|
4,733,600
|
|||||||||
Machinery (1.5%)
|
|
|
|
|
|||||
2,235,000
|
Case New Holland Industrial, Inc., Guaranteed Notes, 7.88%, due 12/1/17
|
2,508,788
|
ØØ
|
||||||
|
725,000
|
|
|
Terex Corp., Guaranteed Notes, 6.00%, due 5/15/21
|
|
|
754,000
|
|
|
870,000
|
The Manitowoc Co., Inc., Guaranteed Notes, 8.50%, due 11/1/20
|
941,775
|
|||||||
|
|
|
|
|
|
|
4,204,563
|
|
|
Media - Diversified (1.5%)
|
|||||||||
|
840,000
|
|
|
Gannett Co., Inc., Guaranteed Notes, 7.13%, due 9/1/18
|
|
|
872,550
|
|
|
1,480,000
|
Gannett Co., Inc., Guaranteed Notes, 5.13%, due 10/15/19
|
1,539,200
|
|||||||
|
865,000
|
|
|
Gannett Co., Inc., Guaranteed Notes, 5.13%, due 7/15/20
|
|
|
895,275
|
|
|
165,000
|
Gannett Co., Inc., Guaranteed Notes, 4.88%, due 9/15/21
|
166,238
|
ñ
|
||||||
|
245,000
|
|
|
Gannett Co., Inc., Guaranteed Notes, 5.50%, due 9/15/24
|
|
|
252,962
|
ñ
|
|
615,000
|
IAC/InterActiveCorp, Guaranteed Notes, 4.88%, due 11/30/18
|
633,450
|
|||||||
|
|
|
|
|
|
|
4,359,675
|
|
|
Media Content (4.9%)
|
|||||||||
|
652,000
|
|
|
AMC Networks, Inc., Guaranteed Notes, 7.75%, due 7/15/21
|
|
|
710,680
|
|
|
1,840,000
|
Cumulus Media Holdings, Inc., Guaranteed Notes, 7.75%, due 5/1/19
|
1,904,400
|
|||||||
|
2,110,000
|
|
|
iHeartCommunications, Inc., Senior Unsecured Notes, 10.00%, due 1/15/18
|
|
|
1,763,169
|
|
|
452,000
|
iHeartCommunications, Inc., Senior Unsecured Notes, 6.88%, due 6/15/18
|
410,190
|
|||||||
|
485,000
|
|
|
iHeartCommunications, Inc., Senior Secured Notes, 9.00%, due 12/15/19
|
|
|
490,153
|
|
|
5,452,000
|
iHeartCommunications, Inc., Senior Secured Notes, 11.25%, due 3/1/21
|
5,765,490
|
|||||||
|
1,265,000
|
|
|
iHeartCommunications, Inc., Senior Unsecured Notes, 7.25%, due 10/15/27
|
|
|
1,049,950
|
|
|
155,000
|
Sirius XM Radio, Inc., Senior Unsecured Notes, 4.25%, due 5/15/20
|
154,128
|
ñ
|
||||||
|
28,000
|
|
|
Sirius XM Radio, Inc., Senior Unsecured Notes, 5.88%, due 10/1/20
|
|
|
29,540
|
ñ
|
|
1,205,000
|
Univision Communications, Inc., Senior Secured Notes, 6.88%, due 5/15/19
|
1,266,756
|
ñ
|
||||||
|
375,000
|
|
|
Univision Communications, Inc., Senior Secured Notes, 7.88%, due 11/1/20
|
|
|
405,469
|
ñ
|
|
13,949,925
|
|||||||||
Medical Products (1.2%)
|
|
|
|
|
|||||
860,000
|
DJO Finance LLC/DJO Finance Corp., Guaranteed Notes, 9.88%, due 4/15/18
|
905,150
|
|||||||
|
1,480,000
|
|
|
Fresenius Medical Care US Finance II, Inc., Guaranteed Notes, 4.13%, due 10/15/20
|
|
|
1,484,625
|
ñ
|
|
590,000
|
Fresenius Medical Care US Finance II, Inc., Guaranteed Notes, 5.88%, due 1/31/22
|
643,100
|
ñ
|
||||||
|
355,000
|
|
|
Fresenius Medical Care US Finance II, Inc., Guaranteed Notes, 4.75%, due 10/15/24
|
|
|
357,219
|
ñ
|
|
3,390,094
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Metals - Mining Excluding Steel (2.3%)
|
|
|
|
|
|
||||
|
$695,000
|
|
|
Alcoa, Inc., Senior Unsecured Notes, 5.13%, due 10/1/24
|
$733,422
|
||||
|
360,000
|
|
|
Alpha Natural Resources, Inc., Guaranteed Notes, 9.75%, due 4/15/18
|
|
|
234,900
|
|
|
3,645,000
|
Alpha Natural Resources, Inc., Guaranteed Notes, 6.00%, due 6/1/19
|
1,822,500
|
|||||||
|
2,290,000
|
|
|
Alpha Natural Resources, Inc., Guaranteed Notes, 6.25%, due 6/1/21
|
|
|
1,053,400
|
|
|
2,495,000
|
CONSOL Energy, Inc., Guaranteed Notes, 5.88%, due 4/15/22
|
2,532,425
|
ñ
|
||||||
|
|
|
|
|
|
|
6,376,647
|
|
|
Packaging (5.6%)
|
|||||||||
|
5,225,000
|
|
|
Berry Plastics Corp., Secured Notes, 9.75%, due 1/15/21
|
|
|
5,825,875
|
ØØ
|
|
441,000
|
Berry Plastics Corp., Secured Notes, 5.50%, due 5/15/22
|
442,654
|
|||||||
|
390,000
|
|
|
Beverage Packaging Holdings Luxembourg II SA/Beverage Packaging Holdings II Issuer, Inc., Guaranteed Notes, 5.63%, due 12/15/16
|
|
|
390,975
|
ñ
|
|
765,000
|
Beverage Packaging Holdings Luxembourg II SA/Beverage Packaging Holdings II Issuer, Inc., Guaranteed Notes, 6.00%, due 6/15/17
|
763,088
|
ñ
|
||||||
|
2,065,000
|
|
|
Reynolds Group Issuer, Inc., Senior Secured Notes, 7.88%, due 8/15/19
|
|
|
2,212,131
|
|
|
3,650,000
|
Reynolds Group Issuer, Inc., Guaranteed Notes, 9.88%, due 8/15/19
|
3,969,375
|
|||||||
|
535,000
|
|
|
Reynolds Group Issuer, Inc., Senior Secured Notes, 5.75%, due 10/15/20
|
|
|
556,400
|
|
|
905,000
|
Reynolds Group Issuer, Inc., Senior Secured Notes, 6.88%, due 2/15/21
|
961,562
|
|||||||
|
550,000
|
|
|
Reynolds Group Issuer, Inc., Guaranteed Notes, 8.25%, due 2/15/21
|
|
|
591,250
|
|
|
15,713,310
|
|||||||||
Pharmaceuticals (3.6%)
|
|
|
|
|
|
||||
770,000
|
Endo Finance LLC & Endo Finco, Inc., Guaranteed Notes, 7.00%, due 7/15/19
|
810,425
|
ñ
|
||||||
|
355,000
|
|
|
Endo Finance LLC & Endo Finco, Inc., Guaranteed Notes, 7.25%, due 1/15/22
|
|
|
378,963
|
ñ
|
|
2,135,000
|
Endo Finance LLC & Endo Finco, Inc., Guaranteed Notes, 5.38%, due 1/15/23
|
2,086,962
|
ñ
|
||||||
|
1,080,000
|
|
|
Jaguar Holding Co. II/Jaguar Merger Sub, Inc., Senior Unsecured Notes, 9.50%, due 12/1/19
|
|
|
1,158,300
|
ñ
|
|
750,000
|
Valeant Pharmaceuticals Int’l, Guaranteed Notes, 6.75%, due 8/15/18
|
797,813
|
ñ
|
||||||
|
768,000
|
|
|
Valeant Pharmaceuticals Int’l, Guaranteed Notes, 6.88%, due 12/1/18
|
|
|
794,880
|
ñ
|
|
4,045,000
|
Valeant Pharmaceuticals Int’l, Guaranteed Notes, 6.38%, due 10/15/20
|
4,151,181
|
ñ
|
||||||
|
|
|
|
|
|
|
10,178,524
|
|
|
Printing & Publishing (2.9%)
|
|||||||||
|
2,610,000
|
|
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 8.25%, due 3/15/19
|
|
|
3,060,225
|
|
|
1,755,000
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 7.63%, due 6/15/20
|
1,956,825
|
|||||||
|
950,000
|
|
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 7.88%, due 3/15/21
|
|
|
1,068,750
|
|
|
285,000
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 7.00%, due 2/15/22
|
304,950
|
|||||||
|
605,000
|
|
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 6.50%, due 11/15/23
|
|
|
626,175
|
|
|
1,155,000
|
R.R. Donnelley & Sons Co., Senior Unsecured Notes, 6.00%, due 4/1/24
|
1,155,000
|
|||||||
|
|
|
|
|
|
|
8,171,925
|
|
|
Real Estate Dev. & Mgt. (0.3%)
|
|||||||||
|
680,000
|
|
|
Realogy Group LLC, Senior Secured Notes, 7.63%, due 1/15/20
|
|
|
737,800
|
ñ
|
|
Recreation & Travel (0.2%)
|
|||||||||
|
535,000
|
|
|
Cedar Fair L.P./Canada’s Wonderland Co./Magnum Management Corp., Guaranteed Notes, 5.25%, due 3/15/21
|
|
|
537,675
|
|
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Software - Services (5.5%)
|
|
|
|
|
|
||||
|
$760,000
|
|
|
Ceridian Corp., Senior Secured Notes, 8.88%, due 7/15/19
|
$839,800
|
ñ
|
|||
|
1,745,000
|
|
|
Ceridian LLC/Comdata, Inc., Guaranteed Notes, 8.13%, due 11/15/17
|
|
|
1,745,000
|
ñ
|
|
755,000
|
First Data Corp., Senior Secured Notes, 7.38%, due 6/15/19
|
800,300
|
ñ
|
||||||
|
1,620,000
|
|
|
First Data Corp., Guaranteed Notes, 11.25%, due 1/15/21
|
|
|
1,867,050
|
|
|
3,855,000
|
First Data Corp., Guaranteed Notes, 12.63%, due 1/15/21
|
4,654,912
|
|||||||
|
648,000
|
|
|
First Data Corp., Guaranteed Notes, 10.63%, due 6/15/21
|
|
|
746,820
|
|
|
553,000
|
First Data Corp., Guaranteed Notes, 11.75%, due 8/15/21
|
648,393
|
|||||||
|
1,285,000
|
|
|
Sophia Holding Finance L.P./Sophia Holding Finance, Inc., Guaranteed Notes, 9.63%, due 12/1/18
|
|
|
1,307,488
|
ñc
|
|
1,010,000
|
Sophia, L.P., Guaranteed Notes, 9.75%, due 1/15/19
|
1,083,225
|
ñ
|
||||||
|
264,000
|
|
|
SunGard Data Systems, Inc., Guaranteed Notes, 6.63%, due 11/1/19
|
|
|
273,240
|
|
|
605,000
|
SunGard Data Systems, Inc., Guaranteed Notes, 7.63%, due 11/15/20
|
645,081
|
|||||||
|
810,000
|
|
|
Syniverse Holdings, Inc., Guaranteed Notes, 9.13%, due 1/15/19
|
|
|
850,500
|
|
|
15,461,809
|
|||||||||
Specialty Retail (1.3%)
|
|
|
|
|
|
||||
825,000
|
L Brands, Inc., Guaranteed Notes, 5.63%, due 10/15/23
|
884,812
|
|||||||
|
239,000
|
|
|
Limited Brands, Inc., Guaranteed Notes, 6.63%, due 4/1/21
|
|
|
270,668
|
|
|
475,000
|
Limited Brands, Inc., Guaranteed Notes, 5.63%, due 2/15/22
|
509,438
|
|||||||
|
219,000
|
|
|
Michaels FinCo Holdings LLC/Michaels FinCo, Inc., Senior Unsecured Notes, 7.50%, due 8/1/18
|
|
|
222,285
|
ñc
|
|
1,685,000
|
Party City Holdings, Inc., Guaranteed Notes, 8.88%, due 8/1/20
|
1,828,225
|
|||||||
|
|
|
|
|
|
|
3,715,428
|
|
|
Steel Producers - Products (2.4%)
|
|
|
|
|
|
||||
|
3,435,000
|
|
|
ArcelorMittal, Senior Unsecured Notes, 5.75%, due 8/5/20
|
|
|
3,645,394
|
|
|
2,950,000
|
ArcelorMittal, Senior Unsecured Notes, 7.50%, due 10/15/39
|
3,149,125
|
|||||||
|
|
|
|
|
|
|
6,794,519
|
|
|
Support - Services (6.7%)
|
|
|
|
|
|
||||
|
420,000
|
|
|
AECOM Technology Corp., Guaranteed Notes, 5.88%, due 10/15/24
|
|
|
444,150
|
ñ
|
|
1,980,000
|
Anna Merger Sub, Inc., Senior Unsecured Notes, 7.75%, due 10/1/22
|
2,039,400
|
ñ
|
||||||
|
355,000
|
|
|
APX Group, Inc., Senior Secured Notes, 6.38%, due 12/1/19
|
|
|
348,787
|
|
|
2,925,000
|
APX Group, Inc., Guaranteed Notes, 8.75%, due 12/1/20
|
2,544,750
|
|||||||
|
335,000
|
|
|
APX Group, Inc., Senior Unsecured Notes, 8.75%, due 12/1/20
|
|
|
291,450
|
ñ
|
|
730,000
|
Hertz Corp., Guaranteed Notes, 5.88%, due 10/15/20
|
735,475
|
|||||||
|
425,000
|
|
|
IHS, Inc., Guaranteed Notes, 5.00%, due 11/1/22
|
|
|
431,375
|
ñ
|
|
1,295,000
|
Iron Mountain, Inc., Guaranteed Notes, 7.75%, due 10/1/19
|
1,392,125
|
|||||||
|
450,000
|
|
|
Iron Mountain, Inc., Senior Subordinated Notes, 8.38%, due 8/15/21
|
|
|
468,000
|
|
|
3,035,000
|
Iron Mountain, Inc., Guaranteed Notes, 5.75%, due 8/15/24
|
3,095,700
|
|||||||
|
3,334,000
|
|
|
ServiceMaster Co., Guaranteed Notes, 8.00%, due 2/15/20
|
|
|
3,559,045
|
|
|
986,000
|
ServiceMaster Co., Guaranteed Notes, 7.00%, due 8/15/20
|
1,042,695
|
|||||||
|
750,000
|
|
|
United Rental N.A., Inc., Guaranteed Notes, 7.38%, due 5/15/20
|
|
|
813,750
|
|
|
1,610,000
|
United Rental N.A., Inc., Senior Unsecured Notes, 8.25%, due 2/1/21
|
1,754,900
|
|||||||
|
|
|
|
|
|
|
18,961,602
|
|
|
Tech Hardware & Equipment (0.6%)
|
|
|
|
|
|
||||
|
280,000
|
|
|
CommScope, Inc., Guaranteed Notes, 5.00%, due 6/15/21
|
|
|
279,300
|
ñ
|
|
1,420,000
|
CommScope, Inc., Guaranteed Notes, 5.50%, due 6/15/24
|
1,435,975
|
ñ
|
||||||
|
|
|
|
|
|
|
1,715,275
|
|
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
PRINCIPAL
AMOUNT |
VALUE†
|
||||||||
Telecom - Satellite (2.6%)
|
|
|
|
|
|
||||
|
$810,000
|
|
|
Hughes Satellite Systems Corp., Senior Secured Notes, 6.50%, due 6/15/19
|
|
$876,825
|
|||
|
1,085,000
|
|
|
Inmarsat Finance PLC, Guaranteed Notes, 4.88%, due 5/15/22
|
|
|
1,085,000
|
ñ
|
|
2,100,000
|
Intelsat Jackson Holdings SA, Guaranteed Notes, 5.50%, due 8/1/23
|
2,105,250
|
|||||||
|
1,225,000
|
|
|
Intelsat Luxembourg SA, Guaranteed Notes, 7.75%, due 6/1/21
|
|
|
1,280,125
|
|
|
1,875,000
|
Intelsat Luxembourg SA, Guaranteed Notes, 8.13%, due 6/1/23
|
1,992,187
|
|||||||
|
|
|
|
|
|
|
7,339,387
|
|
|
Telecom - Wireless (7.7%)
|
|||||||||
|
35,000
|
|
|
Crown Castle Int’l Corp., Senior Unsecured Notes, 4.88%, due 4/15/22
|
|
|
35,350
|
|
|
455,000
|
SBA Telecommunications, Inc., Guaranteed Notes, 5.75%, due 7/15/20
|
475,475
|
|||||||
|
2,355,000
|
|
|
Sprint Capital Corp., Guaranteed Notes, 6.88%, due 11/15/28
|
|
|
2,290,237
|
ØØ
|
|
2,877,000
|
Sprint Capital Corp., Guaranteed Notes, 8.75%, due 3/15/32
|
3,215,047
|
|||||||
|
1,965,000
|
|
|
Sprint Corp., Guaranteed Notes, 7.88%, due 9/15/23
|
|
|
2,127,112
|
ñ
|
|
1,640,000
|
Sprint Corp., Guaranteed Notes, 7.13%, due 6/15/24
|
1,685,100
|
ñ
|
||||||
|
475,000
|
|
|
Sprint Nextel Corp., Guaranteed Notes, 9.00%, due 11/15/18
|
|
|
558,719
|
ñ
|
|
895,000
|
Sprint Nextel Corp., Senior Unsecured Notes, 7.00%, due 8/15/20
|
948,700
|
|||||||
|
1,945,000
|
|
|
T-Mobile USA, Inc., Guaranteed Notes, 6.54%, due 4/28/20
|
|
|
2,051,975
|
|
|
1,300,000
|
T-Mobile USA, Inc., Guaranteed Notes, 6.63%, due 4/28/21
|
1,369,875
|
|||||||
|
485,000
|
|
|
T-Mobile USA, Inc., Guaranteed Notes, 6.13%, due 1/15/22
|
|
|
502,581
|
|
|
605,000
|
T-Mobile USA, Inc., Guaranteed Notes, 6.73%, due 4/28/22
|
639,788
|
|||||||
|
1,055,000
|
|
|
T-Mobile USA, Inc., Guaranteed Notes, 6.00%, due 3/1/23
|
|
|
1,086,650
|
|
|
295,000
|
T-Mobile USA, Inc., Guaranteed Notes, 6.84%, due 4/28/23
|
311,963
|
|||||||
|
475,000
|
|
|
T-Mobile USA, Inc., Guaranteed Notes, 6.50%, due 1/15/24
|
|
|
497,563
|
|
|
1,300,000
|
T-Mobile USA, Inc., Guaranteed Notes, 6.38%, due 3/1/25
|
1,335,750
|
|||||||
|
2,485,000
|
|
|
Wind Acquisition Finance SA, Senior Secured Notes, 4.75%, due 7/15/20
|
|
|
2,429,087
|
ñ
|
|
21,560,972
|
|||||||||
Telecom - Wireline Integrated (6.9%)
|
|
|
|
|
|
||||
485,000
|
CenturyLink, Inc., Senior Unsecured Notes, Ser. W, 6.75%, due 12/1/23
|
538,350
|
|||||||
|
3,900,000
|
|
|
CenturyLink, Inc., Senior Unsecured Notes, Ser. P, 7.60%, due 9/15/39
|
|
|
3,939,000
|
|
|
3,194,000
|
Citizens Communications Co., Senior Unsecured Notes, 9.00%, due 8/15/31
|
3,465,490
|
ØØ
|
||||||
|
940,000
|
|
|
Embarq Corp., Senior Unsecured Notes, 8.00%, due 6/1/36
|
|
|
1,043,400
|
|
|
830,000
|
Frontier Communications Corp., Senior Unsecured Notes, 6.88%, due 1/15/25
|
840,375
|
|||||||
|
1,590,000
|
|
|
Level 3 Financing, Inc., Guaranteed Notes, 8.63%, due 7/15/20
|
|
|
1,749,000
|
|
|
1,825,000
|
Telecom Italia Capital SA, Guaranteed Notes, 6.00%, due 9/30/34
|
1,797,625
|
|||||||
|
655,000
|
|
|
Telecom Italia SpA, Senior Unsecured Notes, 5.30%, due 5/30/24
|
|
|
663,188
|
ñ
|
|
2,619,000
|
U.S. West Communications Group, Senior Unsecured Notes, 6.88%, due 9/15/33
|
2,639,428
|
|||||||
|
545,000
|
|
|
Windstream Corp., Guaranteed Notes, 7.75%, due 10/1/21
|
|
|
583,150
|
|
|
2,125,000
|
Windstream Corp., Guaranteed Notes, 7.50%, due 6/1/22
|
2,257,812
|
|||||||
|
|
|
|
|
|
|
19,516,818
|
|
|
Theaters & Entertainment (0.6%)
|
|||||||||
|
1,569,000
|
|
|
Activision Blizzard, Inc., Guaranteed Notes, 5.63%, due 9/15/21
|
|
|
1,669,024
|
ñ
|
|
Total Corporate Debt Securities (Cost $375,663,094)
|
380,498,187
|
See Notes to Schedule of Investments
Schedule of Investments High Yield Strategies Fund Inc. (cont’d)
NUMBER OF SHARES | VALUE† | |||||
Short-Term Investments (0.9%) | ||||||
2,692,010 | State Street Institutional Liquid Reserves Fund Premier Class (Cost $2,692,010) | $2,692,010 | ||||
Total Investments (142.5%) (Cost $396,742,657) | 401,550,467 | ## | ||||
Liabilities, less cash, receivables and other assets [(30.1%)] | (84,831,580 | )± | ||||
Liquidation Value of Mandatory Redeemable Preferred Shares [(12.4%)] | (35,000,000 | ) | ||||
Total Net Assets Applicable to Common Shareholders (100.0%) | $281,718,887 |
See Notes to Schedule of Investments
Notes to Schedule of Investments
† In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by Neuberger Berman High Yield Strategies Fund Inc. (the “Fund”) are carried at the value that Neuberger Berman Management LLC (“Management”) believes the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market, are considered in valuing the Fund’s investments, some of which are discussed below. Significant management judgment may be necessary to value investments in accordance with ASC 820.
ASC 820 established a three-tier hierarchy of inputs to create a classification of value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.
The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities.
The value of the Fund’s investments in debt securities is determined by Management primarily by obtaining valuations from independent pricing services based on readily available bid quotations, or if quotations are not available, by methods which include various considerations based on security type (generally Level 2 inputs). In addition to the consideration of yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions, the following is a description of other Level 2 inputs and related valuation techniques used by independent pricing services to value certain types of debt securities of the Fund:
Corporate Debt Securities. Inputs used to value corporate debt securities generally include relative credit information, observed market movements, sector news, spread to the U.S. Treasury market, and other market information, which may include benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data, such as market research publications, when available (“Other Market Information”).
High Yield Securities. Inputs used to value high yield securities generally include a number of observations of equity and credit default swap curves related to the issuer and Other Market Information.
The value of bank loan obligations is determined by Management primarily by obtaining valuations from independent pricing services based on broker quotes (generally Level 2 or Level 3 inputs depending on the number of quotes available).
The value of the Fund’s investments in interest rate swap contracts is determined by Management primarily by obtaining valuations from independent pricing services based on references to the underlying rates including the overnight index swap rate and London Interbank Offered Rate (“LIBOR”) forward rate to produce the daily settlement price (generally Level 2 inputs).
Management has developed a process to periodically review information provided by independent pricing services for all types of securities.
Investments in investment companies are valued using the respective fund’s daily calculated net asset value (“NAV”) per share (Level 2 inputs).
See Notes to Financial Statements
Notes to Schedule of Investments (cont’d)
If a valuation is not available from an independent pricing service, or if Management has reason to believe that the valuation received does not represent the amount the Fund might reasonably expect to receive on a current sale in an orderly transaction, Management seeks to obtain quotations from brokers or dealers (generally considered Level 2 or Level 3 inputs depending on the number of quotes available). If such quotations are not readily available, the security is valued using methods the Fund’s Board of Directors (the “Board”) has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Numerous factors may be considered when determining the fair value of a security based on Level 2 or Level 3 inputs, including available analyst, media or other reports, trading in futures or American Depositary Receipts (“ADRs”) and whether the issuer of the security being fair valued has other securities outstanding.
Fair value prices are necessarily estimates, and there is no assurance that such a price will be at or close to the price at which the security is next quoted or next trades.
The following is a summary, categorized by Level, of inputs used to value the Fund’s investments as of October 31, 2014:
Asset Valuation Inputs
Level 1 | Level 2 | Level 3§ | Total | ||||||
Investments: | |||||||||
Bank Loan Obligations | |||||||||
Lodging & Casinos | $— | $6,339,134 | $1,763,397 | $8,102,531 | |||||
Other Bank Loan Obligations^ | — | 10,257,739 | — | 10,257,739 | |||||
Total Bank Loan Obligations | — | 16,596,873 | 1,763,397 | 18,360,270 | |||||
Corporate Debt Securities^ | — | 380,498,187 | — | 380,498,187 | |||||
Short-Term Investments | — | 2,692,010 | — | 2,692,010 | |||||
Total Investments | $— | $399,787,070 | $1,763,397 | $401,550,467 |
^ The Schedule of Investments provides information on the industry categorization for the portfolio.
§ The following is a reconciliation between the beginning and ending balances of investments in which unobservable inputs (Level 3) were used in determining value:
Beginning balance, as of 11/1/13 |
Accrued discounts/ (premiums) |
Realized gain/(loss) |
Change in unrealized appreciation/ (depreciation) |
Purchases | Sales | Transfers in to Level 3 |
Transfers out of Level 3 |
Balance as |
Net change in |
|||||||||||||||||||||||||
Investments in | ||||||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||||
Bank Loan Obligations | ||||||||||||||||||||||||||||||||||
Lodging & Casinos | $— | $(1,343 | ) | $— | $(30,962 | ) | $1,795,702 | $— | $— | $— | $1,763,397 | $(30,962 | ) | |||||||||||||||||||||
Corporate Debt Securities | ||||||||||||||||||||||||||||||||||
Airlines | 1,508,616 | — | 113,055 | (89,215 | ) | — | (1,532,456 | ) | — | — | — | — | ||||||||||||||||||||||
Total | $1,508,616 | $(1,343 | ) | $113,055 | $(120,177 | ) | $1,795,702 | $(1,532,456 | ) | $— | $— | $1,763,397 | $(30,962 | ) |
Securities categorized as Level 3 are valued based on a single quotation obtained from a dealer. The Fund does not have access to unobservable inputs and therefore cannot disclose inputs used in formulating such quotation.
See Notes to Financial Statements
Notes to Schedule of Investments (cont’d)
As of the year ending October 31, 2014, the Fund had no transfers between levels 1, 2 or 3 based on the beginning of period market values as of October 31, 2013.
Liability Valuation Inputs
The following is a summary, categorized by Level, of inputs used to value the Fund’s derivatives as of October 31, 2014:
Level 1 | Level 2 | Level 3 | Total | |||||||
Over the counter interest rate swap contracts | $— | $(1,591,455 | ) | $— | $(1,591,455 | ) | ||||
Open centrally cleared interest rate swap contracts | $— | (182,601 | ) | $— | (182,601 | ) | ||||
Total | $— | $(1,774,056 | ) | $— | $(1,774,056 | ) |
## At October 31, 2014, the cost of investments for U.S. federal income tax purposes was $396,744,674. Gross unrealized appreciation of investments was $11,626,390 and gross unrealized depreciation of investments was $6,820,597, resulting in net unrealized appreciation of $4,805,793 based on cost for U.S. federal income tax purposes.
ñ Securities were purchased under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”), or are private placements and, unless registered under the 1933 Act or exempted from registration, may only be sold to qualified institutional investors. These securities have been deemed by the investment manager to be liquid. At October 31, 2014, these securities amounted to $86,283,256 or 30.6% of net assets applicable to common shareholders.
Ñ These securities have been deemed by the investment manager to be illiquid. At October 31, 2014 these securities amounted to $5,888,397 or 2.1% of net assets applicable to common shareholders.
ØØ All or a portion of this security is segregated in connection with obligations for when-issued security purchase commitments and/or interest rate swap contracts and delayed delivery purchase commitments. In addition, the Fund had deposited $1,759,414 in a segregated account for interest rate swap contracts.
Ø All or a portion of this security was purchased on a when-issued basis. At October 31, 2014 these securities amounted to $586,175 or 0.2% of net assets applicable to common shareholders.
µ Floating rate securities are securities whose yields vary with a designated market index or market rate. These securities are shown at their current rates as of October 31, 2014, and their final maturities.
c Payment-in-kind security for which part of the income earned may be paid as additional principal.
f Value of the security was determined using methods the Board has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security.
¢ All or a portion of this security was purchased on a delayed delivery basis.
^^ All or a portion of this security has not settled as of October 31, 2014 and thus does not have an interest rate in effect. Interest rates do not take effect until settlement.
± See Note A-10 in the Notes to Financial Statements for the Fund’s open positions in derivatives at October 31, 2014.
See Notes to Financial Statements
Statement of Assets and Liabilities
Neuberger Berman
HIGH YIELD STRATEGIES FUND INC. |
|||
October 31, 2014 | |||
Assets | |||
Investments in securities, at value * (Note A)-see Schedule of Investments: | |||
Unaffiliated issuers | $401,550,467 | ||
Cash | 40,556 | ||
Deposits with brokers for open interest rate swap contracts | 1,759,414 | ||
Interest receivable | 6,952,846 | ||
Receivable for securities sold | 3,968,807 | ||
Receivable for variation margin on open centrally cleared interest rate swap contracts (Note A) | 191,570 | ||
Prepaid expenses and other assets | 213,536 | ||
Total Assets | 414,677,196 | ||
Liabilities | |||
Notes payable (Note A) | 90,000,000 | ||
Mandatory Redeemable Preferred Shares Series B ($25,000 liquidation value per share; | |||
1,400 shares issued and outstanding) (Note A) | 35,000,000 | ||
Over the counter interest rate swap contracts, at value (Note A) | 1,591,455 | ||
Distributions payable-preferred shares | 81,934 | ||
Distributions payable-common shares | 38,639 | ||
Payable for securities purchased | 5,757,464 | ||
Payable to investment manager (Note B) | 205,753 | ||
Payable to administrator (Note B) | 17,146 | ||
Payable to directors | 1,881 | ||
Interest payable | 114,688 | ||
Accrued expenses and other payables | 149,349 | ||
Total Liabilities | 132,958,309 | ||
Net Assets applicable to Common Shareholders | $281,718,887 | ||
Net Assets applicable to Common Shareholders consist of: | |||
Paid-in capital-common shares | $292,263,935 | ||
Undistributed net investment income (loss) | 472,879 | ||
Accumulated net realized gains (losses) on investments | (14,051,681 | ) | |
Net unrealized appreciation (depreciation) in value of investments | 3,033,754 | ||
Net Assets applicable to Common Shareholders | $281,718,887 | ||
Common Shares Outstanding ($0.0001 par value; 999,999,997,100 shares authorized) | 19,540,585 | ||
Net Asset Value Per Common Share Outstanding | $14.42 | ||
* Cost of Investments | $396,742,657 |
See Notes to Financial Statements
Statement of Operations
Neuberger Berman
HIGH YIELD STRATEGIES FUND INC. |
|||
For the Year Ended October 31, 2014 |
|||
Investment Income: | |||
Income (Note A): | |||
Interest and other income-unaffiliated issuers | $27,017,459 | ||
Foreign taxes withheld (Note A) | (25 | ) | |
Total income | $27,017,434 | ||
Expenses: | |||
Investment management fees (Note B) | 2,481,340 | ||
Administration fees (Note B) | 206,778 | ||
Audit fees | 63,850 | ||
Basic maintenance expense (Note A) | 31,250 | ||
Custodian and accounting fees | 164,959 | ||
Insurance expense | 12,635 | ||
Legal fees | 83,202 | ||
Shareholder reports | 41,889 | ||
Stock exchange listing fees | 7,434 | ||
Stock transfer agent fees | 24,397 | ||
Interest expense (Note A) | 1,335,709 | ||
Distributions to mandatory redeemable preferred shareholders (Note A) | 936,589 | ||
Directors’ fees and expenses | 37,095 | ||
Miscellaneous | 39,598 | ||
Total net expenses | 5,466,725 | ||
Net investment income (loss) | $21,550,709 | ||
Realized and Unrealized Gain (Loss) on Investments (Note A): | |||
Net realized gain (loss) on: | |||
Sales of investment securities of unaffiliated issuers | 4,957,362 | ||
Interest rate swap contracts | (1,390,460 | ) | |
Net increase from payments by affiliates (Note B) | 11,145 | ||
Change in net unrealized appreciation (depreciation) in value of: | |||
Unaffiliated investment securities | (9,950,208 | ) | |
Interest rate swap contracts | 986,143 | ||
Net gain (loss) on investments | (5,386,018 | ) | |
Net increase (decrease) in net assets applicable to Common Shareholders resulting from operations | $16,164,691 |
See Notes to Financial Statements
Statements of Changes in Net Assets
Neuberger Berman
HIGH YIELD STRATEGIES FUND INC. | |||||||
Year Ended October 31, 2014 |
Year Ended October 31, 2013 |
||||||
Increase (Decrease) in Net Assets Applicable to Common Shareholders: | |||||||
From Operations (Note A): | |||||||
Net investment income (loss) | $21,550,709 | $22,485,067 | |||||
Net realized gain (loss) on investments | 3,566,902 | 10,064,753 | |||||
Net increase from payments by affiliates (Note B) | 11,145 | — | |||||
Change in net unrealized appreciation (depreciation) of investments | (8,964,065 | ) | 1,844,458 | ||||
Distributions to Preferred Shareholders From (Note A): | |||||||
Net investment income | — | (768,900 | ) | ||||
Net increase (decrease) in net assets applicable to Common Shareholders | |||||||
resulting from operations | 16,164,691 | 33,625,378 | |||||
Distributions to Common Shareholders From (Note A): | |||||||
Net investment income | (21,103,832 | ) | (21,103,832 | ) | |||
Net Increase (Decrease) in Net Assets Applicable to | |||||||
Common Shareholders | (4,939,141 | ) | 12,521,546 | ||||
Net Assets Applicable to Common Shareholders: | |||||||
Beginning of year | 286,658,028 | 274,136,482 | |||||
End of year | $281,718,887 | $286,658,028 | |||||
Undistributed net investment income (loss) at end of year | $472,879 | $324,506 |
See Notes to Financial Statements
Statement of Cash Flows
Neuberger Berman
HIGH YIELD |
|||
For the Year Ended October 31, 2014 |
|||
Increase (Decrease) in Cash: | |||
Cash flows from operating activities: | |||
Net increase in net assets applicable to Common Shareholders resulting from operations | $16,164,691 | ||
Adjustments to reconcile net increase in net assets applicable to
Common Shareholders resulting from operations to net
cash provided by operating activities:
|
|||
Changes in assets and liabilities: | |||
Purchase of investment securities | (253,565,555 | ) | |
Proceeds from disposition of investment securities | 251,323,533 | ||
Purchase/sale of short-term investment securities, net | (1,300,124 | ) | |
Increase in net interest payable/receivable on interest rate swap contracts | (7,219 | ) | |
Increase in receivable for variation margin on centrally cleared interest rate swap contracts | (191,570 | ) | |
Unrealized depreciation of centrally cleared interest rate swap contracts | (34,982 | ) | |
Decrease in interest receivable | 303,491 | ||
Decrease in prepaid expenses and other assets | (79,070 | ) | |
Decrease in receivable for securities sold | 3,143,996 | ||
Decrease in deposits with brokers for open interest rate swap contracts | 841,606 | ||
Decrease in accumulated unpaid dividends on preferred shares | (451 | ) | |
Decrease in payable for securities purchased | (2,263,894 | ) | |
Decrease in interest payable | (1,160 | ) | |
Net amortization of discount on investments | 956,071 | ||
Decrease in accrued expenses and other payables | (19,818 | ) | |
Unrealized depreciation on securities | 9,950,208 | ||
Unrealized appreciation on interest rate swap contracts | (986,143 | ) | |
Net increase from payments by affiliates | (11,145 | ) | |
Net realized gain from investments | (4,957,362 | ) | |
Net realized loss from interest rate swap contracts | 1,390,460 | ||
Net cash provided by operating activities | $20,655,563 | ||
Cash flows from financing activities: | |||
Cash distributions paid on common shares | (21,119,602 | ) | |
Net cash used in financing activities: | (21,119,602 | ) | |
Net increase (decrease) in cash | (464,039 | ) | |
Cash: | |||
Beginning balance | 504,595 | ||
Ending balance | $40,556 | ||
Supplemental disclosure: | |||
Cash paid for interest | $1,336,869 |
See Notes to Financial Statements
Notes to Financial Statements High Yield Strategies Fund Inc.
1 General: The Fund was organized as a Maryland corporation on March 18, 2010, and registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as a non-diversified, closed-end management investment company. Management is the investment manager to the Fund. Neuberger Berman Fixed Income LLC (“NBFI”) is the sub-adviser to the Fund. The Fund’s common shares are listed on the NYSE MKT under the symbol NHS. After the close of business on August 6, 2010, Neuberger Berman High Yield Strategies Fund (“Old NHS”) merged with and into the Fund. After Old NHS merged with and into the Fund, Neuberger Berman Income Opportunity Fund Inc. (“NOX”) merged with and into the Fund. The historical performance and financial statement history prior to August 6, 2010 are those of Old NHS. For periods prior to August 6, 2010, the term the “Fund” will refer to Old NHS.
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (FASB) Accounting Standard Codification Topic 946 “Financial Services—Investment Companies”.
The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires Management to make estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.
2 Portfolio valuation: Investment securities are valued as indicated in the notes following the Schedule of Investments.
3 Securities transactions and investment income: Security transactions are recorded on trade date for financial reporting purposes. Dividend income is recorded on the ex-dividend date. Interest income, including amortization of premium, where applicable, and accretion of discount on securities (adjusted for original issue discount, where applicable) is recorded on the accrual basis. Realized gains and losses from security transactions are recorded on the basis of identified cost and stated separately in the Statement of Operations.
4 Income tax information: It is the policy of the Fund to continue to qualify for treatment as a regulated investment company (“RIC”) by complying with the requirements of the U.S. Internal Revenue Code applicable to RICs and to distribute substantially all of its net investment income and net realized capital gains to its shareholders. To the extent the Fund distributes substantially all of its net investment income and net realized capital gains to shareholders, no federal income or excise tax provision is required.
The Fund has adopted the provisions of ASC 740 “Income Taxes” (“ASC 740”). ASC 740 sets forth a minimum threshold for financial statement recognition of a tax position taken, or expected to be taken, in a tax return. The Fund recognizes interest and penalties, if any, related to unrecognized tax positions as an income tax expense in the Statement of Operations. The Fund is subject to examination by U.S. federal and state tax authorities for returns filed for the tax years for which the applicable statutes of limitations have not yet expired. As of October 31, 2014, the Fund did not have any unrecognized tax positions.
Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund.
As determined on October 31, 2014, permanent differences resulting primarily from different book and tax accounting were reclassified at year end. Such differences may be attributed to the tax treatment of one or more of the following: income recognized on interest rate swap contracts, distributions in excess of current earnings and
non-deductible restructuring costs. These reclassifications had no effect on net income, NAV applicable to common shareholders or NAV per common share of the Fund. For the year ended October 31, 2014, the Fund recorded the following permanent reclassifications:
Paid-in Capital | Undistributed Net Investment Income (Loss) |
Accumulated Net |
||||
$(1,090,906) | $(298,504) | $1,389,410 |
For tax purposes, distributions of short-term gains are taxable to shareholders as ordinary income.
The tax character of distributions paid during the years ended October 31, 2014 and October 31, 2013 was as follows:
Distributions Paid From: | ||||||||||||||||
Ordinary Income | Long-Term Capital Gains |
Tax Return of Capital |
Total | |||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||
$22,040,421 | $21,986,079 | $— | $— | $— | $— | $22,040,421 | $21,986,079 |
As of October 31, 2014, the components of distributable earnings (accumulated losses) on a U.S. federal income tax basis were as follows:
Undistributed Ordinary Income |
Undistributed Long-Term Capital Gain |
Unrealized Appreciation (Depreciation) |
Loss Carryforwards and Deferrals |
Other Temporary Differences |
Total | |||||||
$— | $— | $3,625,269 | $(14,049,744) | $(120,573) | $(10,545,048) |
The differences between book basis and tax basis distributable earnings are primarily due to: losses disallowed or recognized on wash sales, delayed settlement compensation on bank loans, distribution payments, mark to market on certain swap contract transactions and capital loss carryforwards.
To the extent the Fund’s net realized capital gains, if any, can be offset by capital loss carryforwards, it is the policy of the Fund not to distribute such gains. The Regulated Investment Company Modernization Act of 2010 (the “Act”) became effective for the Fund on November 1, 2011. The Act modernizes several of the federal income and excise tax provisions related to RICs. Among the changes made are changes to the capital loss carryforward rules allowing for RICs to carry forward capital losses indefinitely and to retain the character of capital loss carryforwards as short-term or long-term (“Post-Enactment”). Rules in effect previously limited the carryforward period to eight years and all carryforwards were considered short-term in character (“Pre-Enactment”). As determined at October 31, 2014, the Fund had unused capital loss carryforwards available for federal income tax purposes to offset net realized capital gains, if any, as follows:
Pre-Enactment | |||||||
Expiring in: | |||||||
2015 | 2016 | 2017 | |||||
$4,989,077(1) | $4,971,059(1) | $4,089,608 |
(1) The capital loss carryforwards shown above include $4,989,077 and $4,971,059 expiring in 2015 and 2016, respectively, which were acquired on August 6, 2010 in the merger with NOX. The use of these losses to offset future gains may be limited.
During the year ended October 31, 2014, the Fund utilized capital loss carryforwards of $4,953,040.
5 Foreign taxes: Foreign taxes withheld, if any, represent amounts withheld by foreign tax authorities net of refunds recoverable.
6 Distributions to common shareholders: The Fund earns income, net of expenses, daily on its investments. It is the policy of the Fund to declare and pay monthly distributions to common shareholders. The Fund has adopted a policy to pay common shareholders a stable monthly distribution. The Fund’s ability to satisfy its policy will depend on a number of factors, including the stability of income received from its investments, the availability of capital gains, distributions paid on preferred shares, interest paid on notes and the level of Fund expenses. In an effort to maintain a stable monthly distribution amount, the Fund may pay distributions consisting of net investment income, net realized gains and paid-in capital. There is no assurance that the Fund will always be able to pay distributions of a particular size, or that distributions will consist solely of net investment income and net realized capital gains. The composition of the Fund’s distributions for the calendar year 2014 will be reported to Fund shareholders on IRS Form 1099-DIV. The Fund may pay distributions in excess of those required by its stable distribution policy to avoid excise tax or to satisfy the requirements of the U.S. Internal Revenue Code. Distributions to common shareholders are recorded on the ex-date. Net realized capital gains, if any, will be offset to the extent of any available capital loss carryforwards. Any such offset will not reduce the level of the stable distribution paid by the Fund. Distributions to preferred shareholders are accrued and determined as described in Note A-8.
On October 31, 2014, the Fund declared a monthly distribution to common shareholders in the amount of $0.09 per share, payable on November 28, 2014 to shareholders of record on November 17, 2014, with an ex-date of November 13, 2014. Subsequent to October 31, 2014, the Fund declared a monthly distribution to common shareholders in the amount of $0.09 per share, payable on December 31, 2014 to shareholders of record on December 15, 2014, with an ex-date of December 11, 2014.
7 Expense allocation: Certain expenses are applicable to multiple funds. Expenses directly attributable to the Fund are charged to the Fund. Expenses borne by the complex of related investment companies, which includes open-end and closed-end investment companies for which Management serves as investment manager, that are not directly attributable to a particular investment company (e.g., the Fund) are allocated among the Fund and the other investment companies in the complex or series thereof on the basis of relative net assets, except where a more appropriate allocation of expenses to each of the investment companies in the complex or series thereof can otherwise be made fairly.
8 Financial leverage: In September 2008, Old NHS entered into a Master Securities Purchase Agreement and a Master Note Purchase Agreement pursuant to which it could issue privately placed notes (“Old NHS PNs”) and privately placed perpetual preferred shares (“Old NHS PPS”). In November 2008, Old NHS issued Old NHS PNs with an aggregate principal value of $45,900,000 and issued 492 Old NHS PPS with an aggregate liquidation preference of $12,300,000 and used those proceeds to redeem outstanding Money Market Cumulative Preferred Shares.
On August 6, 2010, each of Old NHS and NOX merged with and into the Fund. In connection with the mergers, the Fund issued 1,087 Perpetual Preferred Shares, Series A (“PPS”) with an aggregate liquidation preference of $27,175,000 to preferred shareholders of Old NHS and NOX in exchange for their Old NHS PPS and NOX preferred shares. In connection with the mergers, the Fund also assumed the Old NHS PNs and the notes that NOX had previously issued (“NOX Notes”). On September 30, 2010, the Fund issued privately placed notes (“PNs”) with an aggregate principal value of $82,600,000 to holders of Old NHS PNs and NOX Notes in exchange for their Old NHS PNs and NOX Notes.
In September 2013, the Fund issued privately placed notes (“New PNs”) with an aggregate principal value of $90,000,000 and Mandatory Redeemable Preferred Shares, Series B (“MRPS” and, together with the New PNs, “Private Securities”) with an aggregate value of $35,000,000 to holders of the PNs and PPS and used the proceeds to redeem and prepay their PNs and PPS and increase the Fund’s leverage.
The New PNs and MRPS have a maturity date of September 18, 2023. The interest on the New PNs is accrued daily and paid quarterly. The MRPS have a liquidation preference of $25,000 per share plus any accumulated unpaid distributions, whether or not earned or declared by the Fund, but excluding interest thereon (“MRPS Liquidation Value”). Distributions on the MRPS are accrued daily and paid quarterly. The PNs and PPS had these same terms. For financial reporting purposes only, the liquidation preference of the MRPS is recognized as a liability in the Statement of Assets and Liabilities.
For the year ended October 31, 2014, the distribution rates on the MRPS ranged from 2.63% to 2.65% and the interest rates on the New PNs ranged from 1.43% to 1.45%.
The table below sets forth key terms of the MPRS.
Mandatory | Aggregate | ||||||||||
Redemption | Interest | Shares | Liquidation | Estimated | |||||||
Series | Date | Rate | Outstanding | Preference | Fair Value | ||||||
Series B | 9/18/23 | 2.65%* | 1,400 | $35,000,000 | $35,000,000 |
* Floating rate effective for the year ended October 31, 2014.
The Fund has paid up front offering and organizational expenses which are being amortized over the life of the New PNs and MRPS. The expenses are included in the interest expense that is reflected in the Statement of Operations.
The Fund may redeem MRPS or prepay the New PNs, in whole or in part, at its option after giving a minimum amount of notice to the relevant holders of the Private Securities but will incur additional expenses if it chooses to so redeem or prepay. The Fund is also subject to certain restrictions relating to the Private Securities. Failure to comply with these restrictions could preclude the Fund from declaring any distributions to common shareholders or repurchasing common shares and/or could trigger the mandatory redemption of MRPS at MRPS Liquidation Value and certain expenses and/or mandatory prepayment of New PNs at par plus accrued but unpaid interest and certain expenses. The holders of MRPS are entitled to one vote per share and will vote with holders of common shares as a single class, except that the holders of MRPS will vote separately as a class on certain matters, as required by law or the Fund’s organizational documents. The holders of MRPS, voting as a separate class, are entitled at all times to elect two Directors of the Fund, and to elect a majority of the Directors of the Fund if the Fund fails to pay distributions on MRPS for two consecutive years.
9 Concentration of credit risk: The Fund will normally invest at least 80% of its total assets in high yield debt securities of U.S. and foreign issuers, which include securities that are rated below investment grade by a rating agency or are unrated debt securities determined to be of comparable quality by the Fund’s investment manager.
Due to the inherent volatility and illiquidity of the high yield securities in which the Fund invests and the real or perceived difficulty of issuers of those high yield securities to meet their payment obligations during economic downturns or because of negative business developments relating to the issuer or its industry in general, the value and/or price of the Fund’s common shares may fluctuate more than would be the case if the Fund did not concentrate in high yield securities.
10 Derivative instruments: During the year ended October 31, 2014, the Fund’s use of derivatives, as described below, was limited to interest rate swap contracts and centrally cleared interest rate swap contracts. The Fund has adopted the provisions of ASC 815 “Derivatives and Hedging” (“ASC 815”). The disclosure requirements of ASC 815 distinguish between derivatives that qualify for hedge accounting and those that do not. Because investment companies value their derivatives at fair value and recognize changes in fair value through the Statement of Operations, they do not qualify for hedge accounting. Accordingly, even though the Fund’s investments in derivatives may represent economic hedges, they are considered non-hedge transactions for purposes of this disclosure.
Interest rate swaps: The Fund entered into over the counter interest rate swap transactions, with institutions that Management has determined are creditworthy, to reduce the risk that an increase in short-term interest rates could reduce common share net earnings as a result of leverage. Under the terms of the over the counter interest rate swap contracts, the Fund agrees to pay the swap counterparty a fixed-rate payment in exchange for the counterparty’s paying the Fund a variable-rate payment that is intended to approximate all or a portion of the Fund’s variable-rate payment obligations on the Fund’s Private Securities, or the Fund agrees to pay the swap counterparty a variable-rate payment that is intended to approximate all or a portion of the Fund’s variable-rate payment obligations on the Fund’s Private Securities in exchange for the counterparty’s paying the Fund a fixed-rate payment. The fixed-rate and variable-rate payment flows are netted against each other, with the difference being paid by one party to the other on a monthly basis. The Fund segregates cash or liquid securities having a value at least equal to the Fund’s net payment obligations under any interest rate swap transaction, marked to market daily. There is no guarantee that these interest rate swap transactions will be successful in reducing or limiting risk.
Risks may arise if the counterparty to a swap contract fails to comply with the terms of its contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Fund and/or the termination value at the end of the contract. Additionally, risks may arise if there is no liquid market for these agreements or from movements in interest rates unanticipated by Management.
Periodic expected interim net interest payments or receipts on the swaps are recorded as an adjustment to unrealized gains/losses, along with the fair value of the future periodic payment streams on the swaps. The unrealized gains/losses associated with the periodic interim net interest payments are reclassified to realized gains/losses in conjunction with the actual net receipt or payment of such amounts. The reclassifications do not impact the Fund’s total net assets applicable to common shareholders or its total net increase (decrease) in net assets applicable to common shareholders resulting from operations. At October 31, 2014, the Fund had outstanding over the counter interest rate swap contracts as follows:
Rate Type | |||||||||||||||||||||||||
Variable-rate | Accrued Net | ||||||||||||||||||||||||
Payments | Interest | Unrealized | |||||||||||||||||||||||
Swap | Notional | Termination | Received/(Paid) | Receivable | Appreciation | Total Fair | |||||||||||||||||||
Counterparty | Amount | Date | Fixed-rate | by the Fund | (Payable) | (Depreciation) | Value | ||||||||||||||||||
Citibank, N.A. | $25,000,000 | March 18, 2015 | 1.677% | .234%(1) | $(42,930 | ) | $(137,056 | ) | $(179,986 | ) | |||||||||||||||
Citibank, N.A. | 25,000,000 | August 9, 2015 | 1.120% | .223%(2) | (48,948 | ) | (166,149 | ) | (215,097 | ) | |||||||||||||||
Citibank, N.A. | 50,000,000 | December 7, 2015 | 1.883% | .233%(3) | (354,035 | ) | (842,337 | ) | (1,196,372 | ) | |||||||||||||||
$(445,913 | ) | $(1,145,542 | ) | $(1,591,455 | ) |
(1) | 90 day LIBOR at September 16, 2014. | ||
(2) | 90 day LIBOR at August 8, 2014. | ||
(3) | 90 day LIBOR at September 4, 2014. |
During the year ended October 31, 2014, the average notional value of over the counter interest rate swap contracts was $100,000,000.
For centrally cleared swaps, the daily change in valuation is recorded as a receivable or payable for variation margin and settled in cash with the centrally clearing party daily. Certain clearinghouses currently offer clearing for limited types of derivative transactions, principally credit derivatives. In a cleared derivative transaction, a fund typically enters into the transaction with a financial institution counterparty, and performance of the transaction is effectively guaranteed by a central clearinghouse, thereby reducing or eliminating the fund’s exposure to the credit risk of the original counterparty. A fund typically will be required to post specified levels of both initial
and variation margin with the clearinghouse or at the instruction of the clearinghouse; the margin required by a clearinghouse may be greater than the margin the fund would be required to post in an uncleared derivative transaction. At October 31, 2014, the Fund had outstanding centrally cleared interest rate swap contracts as follows:
Rate Type | ||||||||||||||||||||||
Variable-rate | Accrued Net | |||||||||||||||||||||
Payments | Interest | Unrealized | ||||||||||||||||||||
Swap | Notional | Termination | Received/(Paid) | Receivable | Appreciation | Total Fair | ||||||||||||||||
Counterparty | Amount(1) | Date | Fixed-rate | by the Fund | (Payable) | (Depreciation) | Value | |||||||||||||||
CME Group Inc. | 25,000,000 | May 14, 2018 | .235% | .225%(1) | $(147,619 | ) | $(34,982 | ) | $(182,601 | ) |
(1) | 90 day LIBOR at August 8, 2014. | ||
During the year ended October 31, 2014, the average notional value of centrally cleared interest rate swap contracts was $11,538,462. |
At October 31, 2014, the Fund had the following derivatives (which did not qualify for hedge accounting under ASC 815), grouped by primary risk exposure:
Liability Derivatives | |||||||
Interest Rate Risk | Statement of Assets and Liabilities Location | ||||||
Over the Counter Interest Rate Swap Contracts | $(1,591,455 | ) | Over the counter interest rate swap contracts, at value(1) | ||||
Open Centrally Cleared Interest Rate | Receivable/Payable for variation margin on open | ||||||
Swap Contracts | (182,601 | ) | centrally cleared interest rate swap contracts(2) | ||||
Total Value | $(1,774,056 | ) |
(1) | “Interest Rate Swap Contracts” reflects the appreciation (depreciation) of the interest rate swap contracts plus accrued interest as of October 31, 2014 which is reflected in the Statement of Assets and Liabilities under the caption “Over the counter interest rate swap contracts, at value (Note A).” | ||
(2) | Amount represents cumulative unrealized appreciation or (depreciation). Only the current day’s variation margin on open centrally cleared interest rate swap contracts is reported within the Statement of Assets and Liabilities as “Receivable/Payable for variation margin on open centrally cleared interest rate swap contracts.” |
The impact of the use of these derivative instruments on the Statement of Operations during the year ended October 31, 2014, was as follows:
Realized Gain (Loss)
Interest Rate Risk | Statement of Operations Location | ||||
Interest Rate Swap Contracts | $(1,390,460) | Net realized gain (loss) | |||
Total Realized Gain (Loss) | $(1,390,460) | on: interest rate swap contracts |
Change in Appreciation (Depreciation)
Interest Rate Risk | Statement of Operations Location | ||||
Interest Rate Swap Contracts | $986,143 | Change in net unrealized appreciation | |||
Total Change in Appreciation (Depreciation) | $986,143 | (depreciation) in value of: interest rate swap contracts |
During the current reporting period, the Fund adopted the provisions of Accounting Standards Update 2011-11 Disclosures about Offsetting Assets and Liabilities (“ASU 2011-11”). ASU 2011-11 is intended to enhance disclosure requirements on the offsetting of financial assets and liabilities. Pursuant to ASU 2011-11, an entity is required to disclose both gross and net information for assets and liabilities related to derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions that are eligible for offset or subject to an enforceable master netting or similar agreement. The Fund’s derivative assets and liabilities at fair value by type are reported gross in the Statement of Assets and Liabilities. The following tables present the Fund’s derivative assets and liabilities by counterparty, net of amounts available for offset under a master netting agreement and net of the related collateral received by the Fund for assets and pledged by the Fund for liabilities as of October 31, 2014.
Net Amounts of | ||||||||
Gross Amounts | Gross Amounts Offset | Liabilities Presented in | ||||||
of Recognized | in the Statement of | the Statement of | ||||||
Description | Liabilities | Assets and Liabilities | Assets and Liabilities | |||||
Over the Counter Interest Rate Swap Contracts | $(1,591,455) | $— | $(1,591,455) | |||||
Total | $(1,591,455) | $— | $(1,591,455) |
Gross Amounts Not Offset in the Statement of Assets and Liabilities | |||||||||||
Net Amounts of | |||||||||||
Liabilities Presented in | |||||||||||
the Statement of Assets | Cash Collateral | Net | |||||||||
Counterparty | and Liabilities | Financial Instruments | Pledged(a) | Amount(b) | |||||||
Citibank, N.A. | $(1,591,455) | $— | $1,510,348 | $(81,107) | |||||||
Total | $(1,591,455) | $— | $1,510,348 | $(81,107) |
(a) | Cash collateral received (or pledged) is limited to an amount not to exceed 100% of the net amount of assets (or liabilities) in the tables presented above, for each respective counterparty. | ||
(b) | Net Amount represents amounts under-collateralized by the Fund to each counterparty as of October 31, 2014. |
11 Indemnifications: Like many other companies, the Fund’s organizational documents provide that its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, both in some of its principal service contracts and in the normal course of its business, the Fund enters into contracts that provide indemnifications to other parties for certain types of losses or liabilities. The Fund’s maximum exposure under these arrangements is unknown as this could involve future claims against the Fund.
12 Arrangements with certain non-affiliated service providers: In order to satisfy rating agency requirements and the terms of the Private Securities, the Fund is required to provide the rating agency and holders of Private Securities a report on a monthly basis verifying that the Fund is maintaining eligible assets having a discounted value equal to or greater than the basic maintenance amount, which is the minimum level set by the rating agency as one of the conditions to maintain the AAA rating on the New PNs and the AA rating on the MRPS “Discounted value” refers to the fact that the rating agency requires the Fund, in performing this calculation, to discount portfolio securities below their face value, at rates determined by the rating agency. The Fund pays State Street Bank and Trust Company (“State Street”) for the preparation of this report, which is reflected in the Statement of Operations under the caption “Basic maintenance expense (Note A).”
The Fund retains Management as its investment manager under a Management Agreement. For such investment management services, the Fund pays Management a monthly fee computed at an annual rate of 0.60% of the Fund’s average daily Managed Assets. Managed Assets equal the total assets of the Fund, less liabilities other than the aggregate indebtedness entered into for purposes of leverage. Management is responsible for developing, implementing and supervising the Fund’s investment program and providing certain administrative services to the Fund. Management has retained NBFI to serve as the sub-adviser of the Fund and to manage the Fund’s investment portfolio. Management compensates NBFI for its services as sub-adviser. Management pays NBFI a monthly sub-advisory fee calculated at an annual percentage rate of 0.15% of the Fund’s average daily Managed Assets.
Several individuals who are officers and/or Directors of the Fund are also employees of NBFI, Neuberger Berman LLC (“Neuberger”) and/or Management.
The Fund retains Management as its administrator under an Administration Agreement. The Fund pays Management an administration fee at the annual rate of 0.05% of its average daily Managed Assets under this agreement. Additionally, Management retains State Street as its sub-administrator under a Sub-Administration Agreement. Management pays State Street a fee for all services received under the agreement.
On June 3, 2014, Management made a voluntary contribution of $11,145 to the Fund in connection with a payment matter related to the Fund’s investment in a State Street money market fund.
During the year ended October 31, 2014, there were purchases and sales of long-term securities (excluding interest rate swap contracts) of $241,221,621 and $245,110,105, respectively.
At October 31, 2014 the common shares outstanding and the common shares of the Fund owned by Neuberger, an affiliate of Management, were as follows:
Common Shares | Common Shares | |||
Outstanding | Owned by Neuberger | |||
19,540,585 | — |
There were no transactions in common shares for the years ended October 31, 2014 and October 31, 2013.
Financial Highlights
The following table includes selected data for a share outstanding throughout each period and other performance information derived from the Financial Statements. Per share amounts that round to less than $0.01 or $(0.01) per share are presented as $0.00 or $(0.00), respectively. Ratios that round to less than 0.00% or (0.00%) per share are presented as 0.00% or (0.00%), respectively. A “-” indicates that the line item was not applicable in the corresponding period.
Period from | |||||||||||||||||||
January 1, | |||||||||||||||||||
2010 to | Year Ended | ||||||||||||||||||
Year Ended October 31, | October 31 | December 31, | |||||||||||||||||
2014 | 2013 | 2012 | 2011 | 2010^^^ | 2009 | ||||||||||||||
Common Share Net Asset Value, | |||||||||||||||||||
Beginning of Period | $14.67 | $14.03 | $13.00 | $13.82 | $12.54 | $7.42 | |||||||||||||
Net Investment Income¢ | 1.10 | 1.15 | 1.17 | 1.34 | 1.19 | 1.43 | |||||||||||||
Net Gains or Losses on Securities | |||||||||||||||||||
(both realized and unrealized) | (0.27 | ) | 0.61 | 1.03 | (0.83 | ) | 1.20 | 4.97 | |||||||||||
Common Share Equivalent of Distributions to | |||||||||||||||||||
Preferred Shareholders From: | |||||||||||||||||||
Net Investment Income¢ | — | (0.04 | ) | (0.05 | ) | (0.05 | ) | (0.03 | ) | (0.04 | ) | ||||||||
Total From Investment Operations | |||||||||||||||||||
Applicable to Common Shareholders | 0.83 | 1.72 | 2.15 | 0.46 | 2.36 | 6.36 | |||||||||||||
Less Distributions to Common | |||||||||||||||||||
Shareholders From: | |||||||||||||||||||
Net Investment Income | (1.08 | ) | (1.08 | ) | (1.12 | ) | (1.28 | ) | (1.08 | ) | (1.26 | ) | |||||||
Accretive Effect of Tender Offer | — | — | — | — | — | 0.02 | ## | ||||||||||||
Voluntary Contribution from Management | 0.00 | — | — | — | — | — | |||||||||||||
Common Share Net Asset Value, End of Period | $14.42 | $14.67 | $14.03 | $13.00 | $13.82 | $12.54 | |||||||||||||
Common Share Market Value, End of Period | $13.16 | $13.56 | $14.18 | $13.55 | $14.04 | $11.95 | |||||||||||||
Total Return, Common Share Net Asset Value† | 6.48 | % | 13.18 | % | 17.24 | % | 3.34 | % | 19.78 | %** | 92.44 | % | |||||||
Total Return, Common Share Market Value† | 5.13 | % | 3.51 | % | 13.68 | % | 6.03 | % | 27.69 | %** | 113.27 | % | |||||||
Ratios/Supplemental Data†† | |||||||||||||||||||
Ratios are Calculated Using Average Net Assets | |||||||||||||||||||
Applicable to Common Shareholders | |||||||||||||||||||
Ratio of Gross Expenses#Ø | 1.89 | % | 1.73 | % | 1.81 | % | 1.75 | % | 2.02 | %* | 2.65 | % | |||||||
Ratio of Net Expenses§Ø | 1.89 | % | 1.73 | % | 1.76 | % | 1.68 | % | 1.95 | %*‡‡ | 2.60 | % | |||||||
Ratio of Net Investment Income | 7.47 | % | 8.02 | % | 8.79 | % | 9.86 | % | 11.02 | %* | 14.30 | % | |||||||
Portfolio Turnover Rate | 60 | % | 69 | % | 94 | % | 100 | % | 130 | %**ØØ | 159 | % | |||||||
Net Assets Applicable to Common | |||||||||||||||||||
Shares, End of Period (000’s) | $281,719 | $286,658 | $274,136 | $253,170 | $267,819 | $138,293 | |||||||||||||
Preferred Shares | |||||||||||||||||||
Preferred Shares Outstanding,¢¢ | |||||||||||||||||||
End of Period (000’s) | $35,000 | $35,000 | $27,175 | $27,175 | $27,175 | $12,300 | |||||||||||||
Asset Coverage Per Share@ | $226,286 | $229,815 | $277,268 | $257,980 | $271,454 | $306,086 | |||||||||||||
Liquidation Value Per Share | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | $25,000 | |||||||||||||
Notes Payable | |||||||||||||||||||
Notes Payable Outstanding, End of Period (000’s) | $90,000 | $90,000 | $82,600 | $82,600 | $82,600 | $45,900 | |||||||||||||
Asset Coverage Per $1,000 of Notes Payable@@ | $4,520 | $4,575 | $4,649 | $4,395 | $4,572 | $4,281 |
See Notes to Financial Highlights
Notes to Financial Highlights High Yield Strategies Fund Inc.
† Total return based on per share NAV reflects the effects of changes in NAV on the performance of the Fund during each fiscal period. Total return based on per share market value assumes the purchase of common shares at the market price on the first day and sales of common shares at the market price on the last day of the period indicated. Distributions, if any, are assumed to be reinvested at prices obtained under the Fund’s distribution reinvestment plan. Results represent past performance and do not indicate future results. Current returns may be lower or higher than the performance data quoted. Investment returns may fluctuate and shares when sold may be worth more or less than original cost. Total return would have been lower if Management had not waived certain expenses during certain of the periods shown. The voluntary contribution listed in Note B of the Notes to Financial Statements had no impact on the Fund’s total returns for the year ended October 31, 2014.
# Represents the annualized ratios of net expenses to average daily net assets if Management had not waived a portion of the investment management fee.
§ Prior to January 1, 2013, the Fund had an expense offset arrangement in connection with its custodian contract. The impact of expense reductions related to expense offset arrangements, if any, was less than .01%.
@ Calculated by subtracting the Fund’s total liabilities (excluding the liquidation preference of MRPS and accumulated unpaid distributions on MRPS (PPS prior to September 18, 2013 and Old NHS PPS prior to August 6, 2010)) from the Fund’s total assets and dividing by the number of MRPS/PPS outstanding.
@@ Calculated by subtracting the Fund’s total liabilities (excluding the liquidation preference of MRPS, the outstanding principal of New PNs (PNs prior to September 18, 2013 and Old NHS PNs prior to August 6, 2010) and accumulated unpaid liabilities on Private Securities (PPS and PNs prior to September 18, 2013; Old NHS PPS and Old NHS PNs prior to August 6, 2010) and New PNs (PNs prior to September 18, 2013 and Old NHS PNs prior to August 6, 2010)) from the Fund’s total assets and dividing by the outstanding Notes payable balance.
†† Expense ratios do not include the effect of distribution payments to PPS shareholders (Old NHS PPS prior to August 6, 2010) outstanding. Income ratios include income earned on assets attributable to MRPS (PPS prior to September 18, 2013 and Old NHS PPS prior to August 6, 2010) outstanding. Income ratios also include the effect of interest expense from the PNs.
¢ Calculated based on the average number of common shares outstanding during each fiscal period.
¢¢ From November 14, 2008 to August 6, 2010, the Fund had 492 Old NHS PPS outstanding. From August 6, 2010 to September 17, 2013, the Fund had 1,087 PPS outstanding. Since September 18, 2013, the Fund has 1,400 MRPS outstanding (see Note A-8 to Financial Statements).
Ø Interest expense is included in expense ratios. The annualized ratio of interest expense to average net assets applicable to common shareholders was:
Year Ended October 31, | Period from January 1, 2010 to October 31, 2010 |
Year Ended December 31, 2009 |
||||||||||
2014 | 2013 | 2012 | 2011 | |||||||||
.46% |
.58% |
.69% |
.61% |
.63% |
1.05% |
* Annualized.
** Not Annualized.
^^^ The Fund’s fiscal year end changed from December 31 to October 31.
ØØ Portfolio turnover excludes purchases and sales by NOX (which merged with and into the Fund on August 6, 2010) prior to the merger date.
‡‡ Includes merger related expenses. If such expenses were not included, the annualized ratio of net expenses to average net assets applicable to common shareholders for the period ended October 31, 2010 would have been 1.81%.
## The Fund conducted a tender offer and purchased approximately 10% of its outstanding common shares at 98% of the Fund’s NAV per share with final payment of $9.60 per share on May 29, 2009.
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Neuberger Berman High Yield Strategies Fund Inc.
We have audited the accompanying statement of assets and liabilities of Neuberger Berman High Yield Strategies Fund Inc., (the “Fund”), including the schedule of investments, as of October 31, 2014, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2014 by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Neuberger Berman High Yield Strategies Fund Inc. at October 31, 2014, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
December 19, 2014
Distribution Reinvestment Plan
Computershare Trust Company, N.A. (the “Plan Agent”) will act as Plan Agent for shareholders who have not elected in writing to receive dividends and distributions in cash (each a “Participant”), will open an account for each Participant under the Distribution Reinvestment Plan (“Plan”) in the same name as their then-current shares of the Fund’s common stock (“Shares”) are registered, and will put the Plan into effect for each Participant as of the first record date for a dividend or capital gains distribution.
Whenever the Fund declares a dividend or distribution with respect to the Shares, each Participant will receive such dividends and distributions in additional Shares, including fractional Shares acquired by the Plan Agent and credited to each Participant’s account. If on the payment date for a cash dividend or distribution, the net asset value is equal to or less than the market price per Share plus estimated brokerage commissions, the Plan Agent shall automatically receive such Shares, including fractions, for each Participant’s account. Except in the circumstances described in the next paragraph, the number of additional Shares to be credited to each Participant’s account shall be determined by dividing the dollar amount of the dividend or distribution payable on their Shares by the greater of the net asset value per Share determined as of the date of purchase or 95% of the then current market price per Share on the payment date.
Should the net asset value per Share exceed the market price per Share plus estimated brokerage commissions on the payment date for a cash dividend or distribution, the Plan Agent or a broker-dealer selected by the Plan Agent shall endeavor, for a purchase period lasting until the last business day before the next date on which the Shares trade on an “ex-dividend” basis, but in no event, except as provided below, more than 30 days after the payment date, to apply the amount of such dividend or distribution on each Participant’s Shares (less their pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of such dividend or distribution) to purchase Shares on the open market for each Participant’s account. No such purchases may be made more than 30 days after the payment date for such dividend or distribution except where temporary curtailment or suspension of purchase is necessary to comply with applicable provisions of federal securities laws. If, at the close of business on any day during the purchase period the net asset value per Share equals or is less than the market price per Share plus estimated brokerage commissions, the Plan Agent will not make any further open-market purchases in connection with the reinvestment of such dividend or distribution. If the Plan Agent is unable to invest the full dividend or distribution amount through open-market purchases during the purchase period, the Plan Agent shall request that, with respect to the uninvested portion of such dividend or distribution amount, the Fund issue new Shares at the close of business on the earlier of the last day of the purchase period or the first day during the purchase period on which the net asset value per Share equals or is less than the market price per Share, plus estimated brokerage commissions, such Shares to be issued in accordance with the terms specified in the third paragraph hereof. These newly issued Shares will be valued at the then-current market price per Share at the time such Shares are to be issued.
For purposes of making the reinvestment purchase comparison under the Plan, (a) the market price of the Shares on a particular date shall be the last sales price on the New York Stock Exchange (or if the Shares are not listed on the New York Stock Exchange, such other exchange on which the Shares are principally traded) on that date, or, if there is no sale on such Exchange (or if not so listed, in the over-the-counter market) on that date, then the mean between the closing bid and asked quotations for such Shares on such Exchange on such date and (b) the net asset value per Share on a particular date shall be the net asset value per Share most recently calculated by or on behalf of the Fund. All dividends, distributions and other payments (whether made in cash or Shares) shall be made net of any applicable withholding tax.
Open-market purchases provided for above may be made on any securities exchange where the Fund’s Shares are traded, in the over-the-counter market or in negotiated transactions and may be on such terms as to price, delivery and otherwise as the Plan Agent shall determine. Each Participant’s uninvested funds held by the Plan Agent will not bear interest, and it is understood that, in any event, the Plan Agent shall have no liability in connection with any inability to purchase Shares within 30 days after the initial date of such purchase as herein provided, or with the timing of any purchases effected. The Plan Agent shall have no responsibility as to the value of the Shares acquired for each
Participant’s account. For the purpose of cash investments, the Plan Agent may commingle each Participant’s funds with those of other shareholders of the Fund for whom the Plan Agent similarly acts as agent, and the average price (including brokerage commissions) of all Shares purchased by the Plan Agent as Plan Agent shall be the price per Share allocable to each Participant in connection therewith.
The Plan Agent may hold each Participant’s Shares acquired pursuant to the Plan together with the Shares of other shareholders of the Fund acquired pursuant to the Plan in noncertificated form in the Plan Agent’s name or that of the Plan Agent’s nominee. The Plan Agent will forward to each Participant any proxy solicitation material and will vote any Shares so held for each Participant only in accordance with the instructions set forth on proxies returned by the Participant to the Fund.
The Plan Agent will confirm to each Participant each acquisition made for their account as soon as practicable but not later than 60 days after the date thereof. Although each Participant may from time to time have an undivided fractional interest (computed to three decimal places) in a Share, no certificates for a fractional Share will be issued. However, dividends and distributions on fractional Shares will be credited to each Participant’s account. In the event of termination of a Participant’s account under the Plan, the Plan Agent will adjust for any such undivided fractional interest in cash at the market value of the Shares at the time of termination, less the pro rata expense of any sale required to make such an adjustment.
Any Share dividends or split Shares distributed by the Fund on Shares held by the Plan Agent for Participants will be credited to their accounts. In the event that the Fund makes available to its shareholders rights to purchase additional Shares or other securities, the Shares held for each Participant under the Plan will be added to other Shares held by the Participant in calculating the number of rights to be issued to each Participant.
The Plan Agent’s service fee for handling capital gains and other distributions or income dividends will be paid by the Fund. Participants will be charged their pro rata share of brokerage commissions on all open-market purchases.
Each Participant may terminate their account under the Plan by notifying the Plan Agent in writing. Such termination will be effective immediately if the Participant’s notice is received by the Plan Agent not less than ten days prior to any dividend or distribution record date, otherwise such termination will be effective the first trading day after the payment date for such dividend or distribution with respect to any subsequent dividend or distribution. The Plan may be terminated by the Plan Agent or the Fund upon notice in writing mailed to each Participant at least 30 days prior to any record date for the payment of any dividend or distribution by the Fund.
These terms and conditions may be amended or supplemented by the Plan Agent or the Fund at any time or times but, except when necessary or appropriate to comply with applicable law or the rules or policies of the Securities and Exchange Commission or any other regulatory authority, only by mailing to each Participant appropriate written notice at least 30 days prior to the effective date thereof. The amendment or supplement shall be deemed to be accepted by each Participant unless, prior to the effective date thereof, the Plan Agent receives written notice of the termination of their account under the Plan. Any such amendment may include an appointment by the Plan Agent in its place and stead of a successor Plan Agent under these terms and conditions, with full power and authority to perform all or any of the acts to be performed by the Plan Agent under these terms and conditions. Upon any such appointment of any Plan Agent for the purpose of receiving dividends and distributions, the Fund will be authorized to pay to such successor Plan Agent, for each Participant’s account, all dividends and distributions payable on Shares held in their name or under the Plan for retention or application by such successor Plan Agent as provided in these terms and conditions.
The Plan Agent shall at all times act in good faith and agrees to use its best efforts within reasonable limits to ensure the accuracy of all services performed under this Agreement and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Agent’s negligence, bad faith, or willful misconduct or that of its employees. These terms and conditions are governed by the laws of the State of Maryland.
Reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions — i.e., reinvestment in additional Shares does not relieve shareholders of, or defer the need to pay, any income tax that may be payable (or that is required to be withheld) on Fund dividends and distributions. Participants should contact their tax professionals for information on how the Plan impacts their personal tax situation. For additional information about the Plan, please contact the Plan Agent at 1-866-227-2136 or P.O. Box 30170, College Station, TX 77842-3170.
Directory
Investment Manager and Administrator
Neuberger Berman Management LLC
605 Third Avenue, 2nd Floor
New York, NY 10158-0180
877.461.1899 or 212.476.8800
Sub-Adviser
Neuberger Berman Fixed Income LLC
200 South Wacker Drive
Suite 2100
Chicago, IL 60601
Custodian
State Street Bank and Trust Company
One Lincoln Street
Boston, MA 02111
Stock Transfer Agent
Computershare Trust Company N.A.
480 Washington Boulevard
Jersey City, NJ 07310
Plan Agent
Computershare Trust Company, N.A.
P.O. Box 30170
College Station, TX 77842-3170
Overnight correspondence should be sent to:
Computershare Trust Company, N.A.
211 Quality Circle, Suite 210
College Station, TX 77845
Legal Counsel
K&L Gates LLP
1601 K Street, NW
Washington, DC 20006-1600
Independent Registered Public Accounting Firm
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
Directors and Officers
The following tables set forth information concerning the directors (“Directors”) and officers (“Officers”) of the Fund. All persons named as Directors and Officers also serve in similar capacities for other funds administered or managed by Management and NBFI. The Fund’s Statement of Additional Information includes additional information about the Directors as of the time of the Fund’s most recent public offering and is available upon request, without charge, by (877) 461-1899.
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
CLASS I | ||||||||
Independent Directors | ||||||||
Michael M. Knetter (1960) | Director since 2007 |
President and Chief Executive Officer, University of Wisconsin Foundation, since October 2010; formerly, Dean, School of Business, University of Wisconsin - Madison; formerly, Professor of International Economics and Associate Dean, Amos Tuck School of Business - Dartmouth College, 1998 to 2002. | 59 | Board Member, American Family Insurance (a mutual company, not publicly traded), since March 2009; formerly, Trustee, Northwestern Mutual Series Fund, Inc., 2007 to 2011; formerly, Director, Wausau Paper, 2005 to 2011; formerly, Director, Great Wolf Resorts, 2004 to 2009. | ||||
Peter P. Trapp (1944) | Director since 2006 |
Retired; formerly, Regional Manager for Mid-Southern Region, Ford Motor Credit Company, September 1997 to 2007; formerly, President, Ford Life Insurance Company, April 1995 to August 1997. | 59 | None. |
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
Director who is an “Interested Person” | ||||||||
Robert Conti* (1956) | Chief Executive Officer, President and Director since 2008; prior thereto, Executive Vice President in 2008 and Vice President 2006 to 2008 | Managing Director, Neuberger, since 2007; Managing Director, NBFI, since 2009; formerly, Senior Vice President, Neuberger, 2003 to 2006; formerly, Vice President, Neuberger, 1999 to 2003; President and Chief Executive Officer, Management, since 2008; formerly, Senior Vice President, Management, 2000 to 2008. | 59 | Director, Staten Island Mental Health Society, since 1994; formerly, Chairman of the Board, Staten Island Mental Health Society, 2008 to 2011. | ||||
CLASS II | ||||||||
Independent Directors | ||||||||
Faith Colish (1935) | Director since 2006 |
Counsel, Carter Ledyard & Milburn LLP (law firm) since October 2002; formerly, Attorney-at-Law and President, Faith Colish, A Professional Corporation, 1980 to 2002. | 59 | Formerly, Director, 1997 to 2003, and Advisory Director, 2003 to 2006, ABA Retirement Funds (formerly, American Bar Retirement Association) (not-for-profit membership corporation). | ||||
George W. Morriss (1947) | Director since 2007 |
Adjunct Professor, Columbia University School of International and Public Affairs, since October 2012; formerly, Executive Vice President and Chief Financial Officer, People’s Bank, Connecticut (a financial services company), 1991 to 2001. | 59 | Director and Treasurer, National Association of Corporate Directors, Connecticut Chapter, since 2011; Trustee, Steben Alternative Investment Funds, Steben Select Multi-Strategy Fund and Steben Select Multi-Strategy Master Fund, since 2013; formerly, Manager, Larch Lane Multi-Strategy Fund complex (which consisted of three funds), 2006 to 2011; formerly, Member, NASDAQ Issuers’ Affairs Committee, 1995 to 2003. |
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
Tom D. Seip (1950) | Director since 2006; Chairman of the Board since 2008; formerly, Lead Independent Director from 2006 to 2008 | General Partner, Ridgefield Farm LLC (a private investment vehicle); formerly, President and CEO, Westaff, Inc. (temporary staffing), May 2001 to January 2002; formerly, Senior Executive, The Charles Schwab Corporation, 1983 to 1998, including Chief Executive Officer, Charles Schwab Investment Management, Inc.; Trustee, Schwab Family of Funds and Schwab Investments, 1997 to 1998; and Executive Vice President-Retail Brokerage, Charles Schwab & Co., Inc., 1994 to 1997. | 59 | Director, H&R Block, Inc. (financial services company), since May 2001; Chairman, Governance and Nominating Committee, H&R Block, Inc., since 2011; formerly, Chairman, Compensation Committee, H&R Block, Inc., 2006 to 2010; formerly, Director, Forward Management, Inc. (asset management company), 1999 to 2006. |
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
CLASS III | ||||||||
Independent Directors | ||||||||
Martha C. Goss (1949) | Director since 2007 |
President, Woodhill Enterprises Inc./Chase Hollow Associates LLC (personal investment vehicle), since 2006; formerly, Consultant, Resources Global Professionals (temporary staffing), 2002 to 2006. | 59 | Director, American Water (water utility), since 2003; Director, Allianz Life of New York (insurance), since 2005; Director, Berger Group Holdings, Inc. (engineering consulting firm), since 2013; Director, Financial Women’s Association of New York (not-for-profit association), since 2003; Trustee Emerita, Brown University, since 1998; Director, Museum of American Finance (not-for-profit), since 2013; formerly, Non-Executive Chair and Director, Channel Reinsurance (financial guaranty reinsurance), 2006 to 2010; formerly, Director, Ocwen Financial Corporation (mortgage servicing), 2005 to 2010; formerly, Director, Claire’s Stores, Inc. (retailer), 2005 to 2007; formerly, Director, Parsons Brinckerhoff Inc. (engineering consulting firm), 2007 to 2010; formerly, Director, Bank Leumi (commercial bank), 2005 to 2007; formerly, Advisory Board Member, Attensity (software developer), 2005 to 2007. |
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
Howard A. Mileaf (1937) | Director since 2006 |
Retired; formerly, Vice President and General Counsel, WHX Corporation (holding company), 1993 to 2001. | 59 | Formerly, Director, Webfinancial Corporation (holding company), 2002 to 2008; formerly, Director, WHX Corporation (holding company), 2002 to 2005; formerly, Director, State Theatre of New Jersey (not-for-profit theatre), 2000 to 2005. | ||||
Candace L. Straight (1947) | Director since 2006 |
Private investor and consultant specializing in the insurance industry; formerly, Advisory Director, Securitas Capital LLC (a global private equity investment firm dedicated to making investments in the insurance sector), 1998 to 2003. | 59 | Public Member, Board of Governors and Board of Trustees, Rutgers University, since 2011; Director, Montpelier Re Holdings Ltd. (reinsurance company), since 2006; formerly, Director, National Atlantic Holdings Corporation (property and casualty insurance company), 2004 to 2008; formerly, Director, The Proformance Insurance Company (property and casualty insurance company), 2004 to 2008; formerly, Director, Providence Washington Insurance Company (property and casualty insurance company), 1998 to 2006; formerly, Director, Summit Global Partners (insurance brokerage firm), 2000 to 2005. |
Name,
(Year of
Birth),
and
Address(1)
|
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
Director who is an “Interested Person” |
||||||||
Joseph V. Amato* (1962) |
Director since |
President and Director, Neuberger Berman Group LLC, since 2009; President and Chief Executive Officer, Neuberger and Neuberger Berman Holdings LLC (including its predecessor, Neuberger Berman Inc.), since 2007; Chief Investment Officer (Equities) and Managing Director, Management, since 2009; Managing Director, NBFI, since 2007; Board member of NBFI since 2006; formerly, Global Head of Asset Management of Lehman Brothers Holdings Inc.’s (“LBHI”) Investment Management Division, 2006 to 2009; formerly, member of LBHI’s Investment Management Division’s Executive Management Committee, 2006 to 2009; formerly, Managing Director, Lehman Brothers Inc. (“LBI”), 2006 to 2008; formerly, Chief Recruiting and Development Officer, LBI, 2005 to 2006; formerly, Global Head of LBI’s Equity Sales and a Member of its Equities Division Executive Committee, 2003 to 2005. |
59 |
Member of Board of Advisors, McDonough School of Business, Georgetown University, since 2001; Member of New York City Board of Advisors, Teach for America, since 2005; Trustee, Montclair Kimberley Academy (private school), since 2007; Member of Board of Regents, Georgetown University, since 2013. |
(1) | The business address of each listed person is 605 Third Avenue, New York, New York 10158. | |
(2) | The Board shall at all times be divided as equally as possible into three classes of Directors designated Class I, Class II and Class III. The terms of office of Class I, Class II and Class III Directors shall expire at the annual meeting of shareholders held in 2015, 2016 and 2017, respectively, and at each third annual meeting of shareholders thereafter. | |
(3) | Except as otherwise indicated, each individual has held the positions shown for at least the last five years. | |
* |
Indicates a Director who is an “interested person” within the meaning of the Investment Company Act of 1940, as amended (the “1940 Act”). Joseph Amato and Robert Conti are interested persons of the Fund by virtue of the fact that each is an officer of Management, NBFI and/or their affiliates. |
Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served |
Principal Occupation(s)(2) | ||
Andrew B. Allard (1961) |
Chief Legal Officer since 2013 (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002) and Anti-Money Laundering Compliance Officer since 2006 |
General Counsel and Senior Vice President, Management since 2013; Senior Vice President, Neuberger, since 2006 and Employee since 1999; Deputy General Counsel, Neuberger, since 2004; formerly, Vice President, Neuberger, 2000 to 2005; formerly, Employee, Management, 1994 to 1999; Chief Legal Officer since 2013 (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002), ten registered investment companies for which Management acts as investment manager and administrator (ten since 2013); Anti-Money Laundering Compliance Officer, ten registered investment companies for which Management acts as investment manager and administrator (six since 2002, one since 2003, one since 2005, one since 2006 and one since 2013). |
||
Claudia A. Brandon (1956) |
Executive Vice President since 2008 and Secretary since 2006 |
Senior Vice President, Neuberger, since 2007 and Employee since 1999; Senior Vice President, Management, since 2008 and Assistant Secretary since 2004; formerly, Vice President, Neuberger, 2002 to 2006; formerly, Vice President-Mutual Fund Board Relations, Management, 2000 to 2008; formerly, Vice President, Management, 1986 to 1999 and Employee 1984 to 1999; Executive Vice President, ten registered investment companies for which Management acts as investment manager and administrator (nine since 2008 and one since 2013); Secretary, ten registered investment companies for which Management acts as investment manager and administrator (three since 1985, three since 2002, one since 2003, one since 2005, one since 2006 and one since 2013). |
||
Agnes Diaz (1971) |
Vice President since 2013 |
Senior Vice President, Neuberger, since 2012; Employee, Management, since 1996; formerly, Vice President, Neuberger, 2007 to 2012; Vice President, ten registered investment companies for which Management acts as investment manager and administrator (ten since 2013). |
||
Anthony DiBernardo (1979) |
Assistant Treasurer since 2011 |
Senior Vice President, Neuberger, since 2014; Employee, Management, since 2003; formerly, Vice President, Neuberger, 2009 to 2014; Assistant Treasurer, ten registered investment companies for which Management acts as investment manager and administrator (nine since 2011 and one since 2013). |
||
Sheila R. James (1965) |
Assistant Secretary since 2006 |
Vice President, Neuberger, since 2008 and Employee since 1999; formerly, Assistant Vice President, Neuberger, 2007; formerly, Employee, Management, 1991 to 1999; Assistant Secretary, ten registered investment companies for which Management acts as investment manager and administrator (six since 2002, one since 2003, one since 2005, one since 2006 and one since 2013). |
Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served |
Principal Occupation(s)(2) | ||
Brian Kerrane (1969) |
Vice President since 2008 |
Managing Director, Neuberger, since 2014; Vice President, Management, since 2008 and Employee, since 1991; formerly, Senior Vice President, Neuberger, 2006 to 2014; Vice President, ten registered investment companies for which Management acts as investment manager and administrator (nine since 2008 and one since 2013). |
||
Kevin Lyons (1955) |
Assistant Secretary since 2006 |
Assistant Vice President, Neuberger, since 2008 and Employee, since 1999; formerly, Employee, Management, 1993 to 1999; Assistant Secretary, ten registered investment companies for which Management acts as investment manager and administrator (seven since 2003, one since 2005, one since 2006 and one since 2013). |
||
Owen F. McEntee, Jr. (1961) |
Vice President since 2008 |
Vice President, Neuberger, since 2006; Employee, Management, since 1992; Vice President, ten registered investment companies for which Management acts as investment manager and administrator (nine since 2008 and one since 2013). |
||
John M. McGovern (1970) |
Treasurer and Principal Financial and Accounting Officer since 2006 |
Senior Vice President, Neuberger, since 2007; Employee, Management, since 1993; Treasurer and Principal Financial and Accounting Officer, ten registered investment companies for which Management acts as investment manager and administrator (eight since 2005, one since 2006 and one since 2013); formerly, Vice President, Neuberger, 2004 to 2006; formerly, Assistant Treasurer, eight registered investment companies for which Management acts as investment manager and administrator, 2002 to 2005. |
||
Frank Rosato (1971) |
Assistant Treasurer since 2006 |
Vice President, Neuberger, since 2006; Employee, Management, since 1995; Assistant Treasurer, ten registered investment companies for which Management acts as investment manager and administrator (eight since 2005, one since 2006 and one since 2013). |
||
Neil S. Siegel (1967) |
Vice President since 2008 |
Managing Director, Management, since 2008; Managing Director, Neuberger, since 2006; Managing Director, NBFI, since 2011; formerly, Senior Vice President, Neuberger, 2004 to 2006; Vice President, ten registered investment companies for which Management acts as investment manager and administrator (nine since 2008 and one since 2013). |
||
Chamaine Williams (1971) |
Chief Compliance Officer since 2006 |
Senior Vice President, Neuberger, since 2007; Chief Compliance Officer, Management, since 2006; Chief Compliance Officer, ten registered investment companies for which Management acts as investment manager and administrator (eight since 2005, one since 2006 and one since 2013); formerly, Senior Vice President, LBI, 2007 to 2008; formerly, Vice President, LBI, 2003 to 2006; formerly, Chief Compliance Officer, Lehman Brothers Asset Management Inc., 2003 to 2007; formerly, Chief Compliance Officer, Lehman Brothers Alternative Investment Management LLC, 2003 to 2007. |
(1) | The business address of each listed person is 605 Third Avenue, New York, New York 10158. | |
(2) | Except as otherwise indicated, each individual has held the positions shown for at least the last five years. |
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, by calling 800-877-9700 (toll-free) and on the Securities and Exchange Commission’s website, at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available upon request, without charge, by calling 800-877-9700 (toll-free), on the Securities and Exchange Commission’s website at www.sec.gov, and on Management’s website at www.nb.com.
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Securities and Exchange Commission’s website at www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. The information on Form N-Q is available upon request, without charge, by calling 800-877-9700 (toll-free).
An annual meeting of shareholders was held on September 17, 2014. Shareholders voted to elect four Class III Directors (one of which was to be elected only by holders of preferred shares) to serve until the annual meeting of shareholders in 2017, or until their successors are elected and qualified, and one Class II Director to serve until the annual meeting of shareholders in 2016, or until her successor is elected and qualified. Class I Directors (which include Michael M. Knetter, Peter P. Trapp, and Robert Conti) and the other Class II Directors (which include George W. Morriss and Tom D. Seip) continue to hold office until the annual meeting in 2015 and 2016, respectively.
To elect four Class III Directors to serve until the annual meeting of shareholders in 2017, or until their successors are elected and qualified.
Common and Preferred Shares |
||||||||
Votes For | Votes Withheld |
Abstentions | Broker Non-Votes |
|||||
Candace L. Straight | 14,035,594 | 357,454 | — | — | ||||
Martha C. Goss | 14,047,757 | 345,291 | — | — | ||||
Joseph V. Amato | 14,031,114 | 361,935 | — | — | ||||
Preferred Shares | ||||||||
Votes For | Votes Withheld |
Abstentions | Broker Non-Votes |
|||||
Howard A. Mileaf | 1,400 | — | — | — |
To elect one Class II Director to serve until the annual meeting of shareholders in 2016, or until her successor is elected and qualified.
Common and Preferred Shares |
||||||||
Votes For | Votes Withheld |
Abstentions | Broker Non-Votes |
|||||
Faith Colish | 14,026,755 | 366,293 | — | — |
On an annual basis, the Board of Directors (“Board”) of Neuberger Berman High Yield Strategies Fund Inc. (the “Fund”), including the Directors who are not “interested persons” of Neuberger Berman Management LLC (“Management”) (including its affiliates) or the Fund (“Independent Fund Directors”), considers whether to continue the Management and Sub-Advisory Agreements (“Agreements”) with respect to the Fund. At a meeting held on October 6-7, 2014, the Board, including the Independent Fund Directors, approved the continuation of the Agreements.
In evaluating the Agreements, the Board, including the Independent Fund Directors, reviewed extensive materials provided by Management in response to questions submitted by the Board and counsel for the Independent Fund Directors, and met with senior representatives of Management regarding its personnel, operations and financial condition as they relate to the Fund. The annual contract review extends over at least two regular meetings of the Board to ensure that Management and Neuberger Berman Fixed Income LLC (“NBFI”) have time to respond to any questions the Independent Fund Directors may have on their initial review of the materials and that the Independent Fund Directors have time to consider those responses.
In connection with its deliberations, the Board also considered the broad range of information relevant to the annual contract review that is provided to the Board (including its various standing committees) at meetings throughout the year, including investment performance reports and related portfolio information for the Fund, as well as periodic reports on, among other matters, pricing and valuation; quality of portfolio trade execution; and compliance and other services provided by Management, NBFI and their affiliates. To assist the Board in its deliberations regarding the annual contract review, the Board has established a Contract Review Committee comprised of Independent Fund Directors, as well as other committees that focus throughout the year on specific areas relevant to the annual contract review, such as Fund performance or compliance matters.
Throughout the process, the Independent Fund Directors were advised by counsel that is experienced in Investment Company Act of 1940 matters and that is independent of Management. The Independent Fund Directors received from independent counsel a memorandum discussing the legal standards for their consideration of the proposed continuation of the Agreements. During the course of the year and during their deliberations regarding the annual contract review, the Contract Review Committee and the Independent Fund Directors met with such counsel separately from representatives of Management and NBFI.
In connection with its approval of the continuation of the Agreements, the Board evaluated the terms of the Agreements, the overall fairness of the Agreements to the Fund and whether the Agreements were in the best interests of the Fund and its shareholders. The Board considered all factors it deemed relevant with respect to the Fund, including the following factors: (1) the nature, extent, and quality of the services provided by Management and NBFI; (2) the investment performance of the Fund compared to appropriate market indices and a peer group of investment companies; (3) the costs of the services provided and the profit realized by Management and its affiliates from their relationship with the Fund; (4) whether and to what extent economies of scale might be realized as the Fund grows; and (5) whether fee levels reflect any such potential economies of scale for the benefit of investors in the Fund. While each Director may have attributed different weights to the various factors, the Board’s determination to approve the continuation of the Agreements was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically in connection with the annual contract review. The Board members did not identify any particular information or factor that was all-important or controlling. The Board focused on the overall costs and benefits of the Agreements relating to the Fund and, through the Fund, its shareholders.
With respect to the nature, extent and quality of the services provided, the Board considered the investment philosophy and decision-making processes of Management and NBFI, and the qualifications, experience and capabilities of and the resources available to the portfolio management personnel of Management and NBFI who perform services for the Fund.
The Board noted that Management also provides certain administrative services, including fund accounting and compliance oversight. The Board also considered Management’s and NBFI’s policies and practices regarding allocation of portfolio transactions and reviewed the quality of the execution services that Management had provided. The Board also considered that Management’s responsibilities include daily management of investment, operational, enterprise, legal, regulatory and compliance risks as they relate to the Fund, and considered information regarding Management’s process for managing risk. In addition, the Board noted the positive compliance history of Management and NBFI, as no significant compliance problems were reported to the Board with respect to either firm. The Board also considered the general structure of the portfolio manager compensation program and whether this structure provides appropriate incentives to act in the best interests of the Fund. As in past years, the Board also considered the manner in which Management addressed various non-routine matters that arose during the year, some of them a result of developments in the broader fund industry or the regulations governing it. In addition, the Board considered actions taken by Management and NBFI in response to recent market conditions, including actions taken in response to regulatory concerns about changes in fixed-income market liquidity and potential volatility, and considered the overall performance of Management and NBFI in this context.
With respect to investment performance, the Board considered information regarding the Fund’s short-, intermediate- and long-term performance on both a market return and net asset value basis relative to its benchmark and the average performance of a composite peer group of closed-end investment companies (as constructed by an independent organization) pursuing broadly similar strategies. The Board also reviewed performance in relation to certain measures of the degree of investment risk undertaken by portfolio managers. The Board factored into its evaluation of the Fund’s performance the limitations inherent in the methodology for constructing peer groups and determining which investment companies should be included in which peer groups. The Board noted that performance, especially short-term performance, is only one of the factors that it deems relevant to its consideration of the Fund’s Agreements and, that after considering all relevant factors, it may be appropriate to approve the continuation of the Agreements notwithstanding the Fund’s recent performance.
With respect to the overall fairness of the Agreements, the Board considered the fee structure for the Fund under the Agreements as compared to a peer group of comparable funds and any fall-out benefits likely to accrue to Management or NBFI or their affiliates from their relationship with the Fund. The Board also considered the profitability of Management and its affiliates from their association with the Fund, profitability broken out between the investment management and administrative portions of the services provided, and year-over-year changes in each of Management’s reported expense categories.
The Board reviewed a comparison of the Fund’s management fee and overall expense ratio to a peer group of broadly comparable funds. The Board noted that the comparative management fee analysis includes, in the Fund’s management fee, the separate administrative fee paid to Management, but it was not clear whether administrative services were included in the management fees for all funds in the peer group. The Board considered the mean and median of the management fees and expense ratios of the peer group. The Board noted that the Fund’s management fee was lower than the peer group mean and median.
The Board considered whether there were other funds or separate accounts that were advised or sub-advised by Management or NBFI or their affiliates with investment objectives, policies and strategies that were similar to those of the Fund. The Board compared the fees charged to the Fund to the fees charged to an advised fund and sub-advised funds managed in similar styles to the Fund. The Board considered the appropriateness and reasonableness of any differences between the fees charged to the Fund and such other funds and determined that any differences in fees or fee structures were consistent with the management and other services provided.
The Board also evaluated any apparent or anticipated economies of scale in relation to the services Management provides to the Fund. The Board considered that the Fund is a closed-end fund that is not continuously offering shares and that, without daily inflows and outflows of capital, there are limited opportunities for significant economies of scale to be realized by Management in managing the Fund’s assets.
In concluding that the benefits accruing to Management and its affiliates by virtue of their relationship with the Fund were reasonable in light of the costs of providing the investment advisory and other services and the benefits accruing to the Fund, the Board reviewed specific data as to Management’s profit on the Fund for a recent period. The Board also carefully examined Management’s cost allocation methodology. The Board recognized that Management should be entitled to earn a reasonable level of profits for services it provides to the Fund and, based on its review, concluded that Management’s reported level of profitability was reasonable.
In approving the Agreements, the Board concluded that the terms of each Agreement are fair and reasonable to the Fund and that approval of the Agreements is in the best interests of the Fund and its shareholders. In reaching this determination, the Board considered that Management and NBFI could be expected to provide a high level of service to the Fund; that it retained confidence in Management’s and NBFI’s capabilities to manage the Fund; that the Fund’s fee structure appeared to the Board to be reasonable given the nature, extent and quality of services provided; and that the benefits accruing to Management and its affiliates by virtue of their relationship with the Fund were reasonable in light of the costs of providing the investment advisory and other services and benefits accruing to the Fund. The Board’s conclusions may be based in part on its consideration of materials prepared in connection with the approval or continuance of the Agreements in prior years and on the Board’s ongoing regular review of Fund performance and operations throughout the year, in addition to material prepared specifically for the most recent annual review of the Agreements.
This page has been left blank intentionally
Neuberger Berman Management LLC |
||||
Statistics and projections in this report are derived from sources deemed to be reliable but cannot be regarded as a representation of future results of the Fund. This report is prepared for the general information of shareholders and is not an offer of shares of the Fund. |
||||
H0768 12/14 | ||||
|
|
Type of Account
|
Number of Accounts Managed
|
Total Assets Managed
($ millions)
|
Number of Accounts Managed for which Advisory Fee is Performance-Based
|
Assets Managed for which Advisory Fee is Performance-Based
($ millions)
|
Ann H. Benjamin
|
||||
Registered Investment Companies*
|
6
|
$5,370
|
0
|
N/A
|
Other Pooled Investment Vehicles***
|
15
|
$18,265
|
2
|
$638
|
Other Accounts**, ***
|
30
|
$7,539
|
0
|
N/A
|
Russ Covode
|
||||
Registered Investment Companies*
|
5
|
$4,937
|
0
|
N/A
|
Other Pooled Investment Vehicles***
|
13
|
$15,862
|
2
|
$638
|
Other Accounts**, ***
|
29
|
$7,306
|
0
|
N/A
|
Daniel J. Doyle
|
||||
Registered Investment Companies*
|
4
|
$5,064
|
0
|
N/A
|
Other Pooled Investment Vehicles***
|
17
|
$20,124
|
2
|
$638
|
Other Accounts**, ***
|
0
|
$0
|
0
|
N/A
|
Thomas P. O’Reilly
|
||||
Registered Investment Companies*
|
6
|
$5,370
|
0
|
N/A
|
Other Pooled Investment Vehicles***
|
15
|
$18,265
|
2
|
$638
|
Other Accounts**, ***
|
30
|
$7,539
|
0
|
N/A
|
Portfolio Manager
|
Dollar Range of Equity Securities Owned in the Registrant
|
Ann H. Benjamin
|
E
|
Russ Covode
|
A
|
Daniel C. Doyle
|
A
|
Thomas P. O’Reilly
|
E
|
|
A = None
B = $1-$10,000
C = $10,001 - $50,000
D =$50,001-$100,000
|
E = $100,001-$500,000
F = $500,001-$1,000,000
G = Over $1,000,000
|
(a) | Based on an evaluation of the disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “Act”)) as of a date within 90 days of the filing date of this document, the Chief Executive Officer and Treasurer and Principal Financial and Accounting Officer of the Registrant have concluded that such disclosure controls and procedures are effectively designed to ensure that information required to be disclosed by the Registrant on Form N-CSR and Form N- |
Q is accumulated and communicated to the Registrant’s management to allow timely decisions regarding required disclosure. |
(b) | There were no significant changes in the Registrant’s internal controls over financial reporting (as defined in Rule 30a-3(d) under the Act) that occurred during the Registrant’s second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
(a)(1) | A copy of the Code of Ethics is incorporated by reference to Neuberger Berman Equity Funds’ Form N-CSR, Investment Company Act file number 811-00582 (filed on May 6, 2013). |
(a)(2) | The certifications required by Rule 30a-2(a) of the Act and Section 302 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”) are filed herewith. |
(a)(3) | Not applicable to the Registrant. |
(b) | The certifications required by Rule 30a-2(b) of the Act and Section 906 of the Sarbanes-Oxley Act are filed herewith. |