New York, New York 10104
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Neuberger Berman
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Annual ReportOctober 31, 2016 |
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Contents |
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| PRESIDENT’S LETTER | 1 | |||||
| PORTFOLIO COMMENTARY . | 2 | |||||
| SCHEDULE OF INVESTMENTS | 6 | |||||
| FINANCIAL STATEMENTS | 24 | |||||
| FINANCIAL HIGHLIGHTS/PER SHARE DATA | 36 | |||||
| Report of Independent Registered Public Accounting Firm | 38 | |||||
| Distribution Reinvestment Plan | 39 | |||||
| Directory | 42 | |||||
| Directors and Officers | 43 | |||||
| Proxy Voting Policies and Procedures | 52 | |||||
| Quarterly Portfolio Schedule | 52 | |||||
| Notice to Stockholders | 52 | |||||
| Report of Votes of Stockholders | 53 | |||||
| Board Consideration of the Management Agreement | 54 | |||||
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The “Neuberger Berman” name and logo are registered service marks of Neuberger Berman Group LLC. “Neuberger Berman Investment Advisers LLC” and the individual Fund name in this piece are either service marks or registered service marks of Neuberger Berman Investment Advisers LLC. © 2016 Neuberger Berman Investment Advisers LLC. All rights reserved. |
| President’s Letter |
Dear Stockholder,
I am pleased to present the annual report for Neuberger Berman High Yield Strategies Fund Inc. (the “Fund”) for the twelve months ended October 31, 2016. 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.
1
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Neuberger Berman High Yield Strategies Fund Inc.
Portfolio Commentary (Unaudited) |
Neuberger Berman High Yield Strategies Fund Inc. generated a 13.08% total return on a net asset value (NAV) basis for the 12 months ended October 31, 2016 and outperformed its benchmark, the BofA Merrill Lynch U.S. High Yield Master II Constrained Index, which provided a 10.18% return for the period. (Fund performance on a market 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) contributed to performance.
After initially declining, the high yield market then posted positive returns over the last nine months of the reporting period. The turnaround was driven by a number of factors, led by a rebound in commodity prices that began in February 2016 and carried through to the end of the period. Over that time, investors’ demand was generally robust as they looked to generate incremental yield in a low interest rate environment. At the same time, new issuance declined and, outside of the energy and metals/mining sectors, defaults were well below their historical average. Within the benchmark, securities rated CCC or lower (a relatively low rating) and securities rated BB (a higher rating) returned 18.49% and 8.90%, respectively. 1
From a sector perspective, an overweight to gas distribution and gaming, as well as security selection within support–services, contributed the most to results. In contrast, security selection within media–broadcast and diversified financial services, as well as an underweight to metals/mining, detracted the most from performance.
In terms of the Fund’s quality biases, security selection within securities rated B was generally positive for performance. This was partially offset by the negative impact from the Fund’s security selection within securities rated BB and CCC.
We made several adjustments to the portfolio during the reporting period. The Fund’s allocation to securities rated BBB increased due to ratings’ upgrades. We reduced our allocation to securities rated CCC, moving to roughly a 1.5% underweight versus the benchmark. From a sector perspective, the Fund slightly increased its allocation to higher quality metals, including mining (excluding steel), utilities and gas distribution securities.
The Fund’s use of swap contracts contributed to performance during the reporting period.
In our view, the high yield market has continued to compensate investors for default risk. As anticipated, the lengthy, albeit relatively tepid economic expansion, continued during the third quarter. While GDP accelerated in the third quarter, growth is expected to remain fairly modest for the year as a whole. Turning to the U.S. Federal Reserve (Fed), we believe the market continues to price in a rate hike prior to the end of the year. Regardless, we believe the Fed will take a very measured approach in terms of monetary policy normalization. We believe high yield defaults in 2016-2017 will be well below historical averages as credit fundamentals remain reasonable. Finally, the volatility we have experienced in recent months could continue as the year progresses. This may be triggered by uncertainties regarding global economic growth, future monetary policy, geopolitical issues and the fallout from the U.S. November elections.
Sincerely,
Thomas P. O’Reilly, Russ Covode, Daniel Doyle And Patrick Flynn
Portfolio Co-Managers
1 The performance of certain rated bonds within the benchmark, as noted above, represent issues that are rated Ba1/BB+ through Ba3/BB- and CCC+/Caa1 or lower, based on an average of Moody’s, S&P and Fitch, as calculated by BofA Merrill Lynch.
The portfolio composition, industries and holdings of the Fund are subject to change without notice.
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 shares of the Fund’s common stock, 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.
2
| TICKER SYMBOL | |
| High Yield Strategies Fund | NHS |
| PORTFOLIO BY MATURITY DISTRIBUTION | ||
| (as a % of Total Investments*) | ||
| Less than One Year | 3.1 | % |
| One to less than Five Years | 27.0 | |
| Five to less than Ten Years | 59.0 | |
| Ten Years or Greater | 10.9 | |
| Total | 100.0 | % |
| * | Does not include Short-Term Investments or the impact of the Fund’s open positions in derivatives, if any. |
| PERFORMANCE HIGHLIGHTS 1 | ||||||||||
| Average Annual Total Return | ||||||||||
| Inception | Ended 10/31/2016 | |||||||||
| Date | 1 Year | 5 Years | 10 Years | Life of Fund | ||||||
| At NAV 2 | 07/28/2003 | 13.08% | 8.88% | 9.31% | 9.92% | |||||
| At Market Price 3 | 07/28/2003 | 18.69% | 5.37% | 7.88% | 8.54% | |||||
| Index | ||||||||||
| BofA Merrill Lynch | ||||||||||
| U.S. High Yield | ||||||||||
| Master II | ||||||||||
| Constrained Index 4 | 10.18% | 7.07% | 7.56% | 7.98% | ||||||
Closed-end funds, unlike open-end funds, are not continually offered. Generally, there is an initial public offering and, once issued, shares of common stock of closed-end funds are sold in the secondary market on 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/cef-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 stockholder would pay on Fund distributions or on the sale of shares of the Fund’s common stock.
The investment return and market price will fluctuate and shares of the Fund’s common stock may trade at prices above or below NAV. Shares of the Fund’s common stock, when sold, may be worth more or less than their original cost.
Returns would have been lower if Neuberger Berman Investment Advisers LLC (“Management”) had not waived certain expenses during certain of the periods shown. Please see the Notes to Financial Highlights for additional information regarding fee waivers.
3
| 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 shares of the Fund’s common stock 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 Neuberger Berman Investment Advisers LLC at (800) 877-9700, or visit our website at www.nb.com.
4
Description of Index |
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BofA Merrill Lynch
U.S. 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.
5
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Schedule of Investments High Yield Strategies Fund Inc. 10/31/16 |
| See Notes to Financial Statements | 6 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 7 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Auto Parts & Equipment (0.5%) | |||||||
| $ | IHO Verwaltungs GmbH | ||||||
| 310,000 | 4.13% Cash/4.88% PIK, due 9/15/21 | $ | 317,363 | (e)(f) | |||
| 315,000 | 4.50% Cash/5.25% PIK, due 9/15/23 | 318,937 | (e)(f) | ||||
| 540,000 | ZF N.A. Capital, Inc., 4.00%, due 4/29/20 | 568,350 | (e) | ||||
| 1,204,650 | |||||||
| Banking (5.9%) | |||||||
| Ally Financial, Inc. | |||||||
| 315,000 | 2.75%, due 1/30/17 | 315,000 | |||||
| 2,310,000 | 5.50%, due 2/15/17 | 2,330,212 | |||||
| 1,125,000 | 3.60%, due 5/21/18 | 1,133,438 | |||||
| 2,915,000 | 8.00%, due 3/15/20 | 3,301,237 | (g) | ||||
| CIT Group, Inc. | |||||||
| 4,590,000 | 5.00%, due 5/15/17 | 4,647,375 | |||||
| 420,000 | 5.25%, due 3/15/18 | 434,977 | |||||
| 1,830,000 | 6.63%, due 4/1/18 | 1,921,500 | (e) | ||||
| 365,000 | 5.50%, due 2/15/19 | 384,619 | (e) | ||||
| 525,000 | 5.00%, due 8/15/22 | 561,897 | |||||
| 15,030,255 | |||||||
| Beverage (0.8%) | |||||||
| Constellation Brands, Inc. | |||||||
| 1,455,000 | 4.25%, due 5/1/23 | 1,527,750 | |||||
| 560,000 | 4.75%, due 11/15/24 | 613,200 | |||||
| 2,140,950 | |||||||
| Building & Construction (2.2%) | |||||||
| CalAtlantic Group, Inc. | |||||||
| 490,000 | 8.38%, due 1/15/21 | 581,875 | |||||
| 570,000 | 5.38%, due 10/1/22 | 599,212 | |||||
| 445,000 | 5.25%, due 6/1/26 | 442,775 | |||||
| Lennar Corp. | |||||||
| 1,140,000 | 4.75%, due 12/15/17 | 1,162,800 | |||||
| 1,415,000 | 4.75%, due 11/15/22 | 1,458,865 | |||||
| 300,000 | Meritage Homes Corp., 6.00%, due 6/1/25 | 315,000 | |||||
| 210,000 | PulteGroup, Inc., 4.25%, due 3/1/21 | 220,500 | |||||
| 305,000 | Taylor Morrison Communities, Inc./Monarch Communities, Inc., 5.63%, due 3/1/24 | 316,438 | (e) | ||||
| Toll Brothers Finance Corp. | |||||||
| 260,000 | 4.00%, due 12/31/18 | 268,450 | |||||
| 290,000 | 4.38%, due 4/15/23 | 294,350 | |||||
| 5,660,265 | |||||||
| See Notes to Financial Statements | 8 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Building Materials (2.0%) | |||||||
| $ | 250,000 | Allegion PLC, 5.88%, due 9/15/23 | $ | 269,375 | |||
| HD Supply, Inc. | |||||||
| 1,325,000 | 5.25%, due 12/15/21 | 1,407,812 | (e) | ||||
| 435,000 | 5.75%, due 4/15/24 | 456,750 | (e) | ||||
| USG Corp. | |||||||
| 400,000 | 6.30%, due 11/15/16 | 399,560 | |||||
| 1,990,000 | 9.50%, due 1/15/18 | 2,144,225 | (h) | ||||
| 320,000 | 5.50%, due 3/1/25 | 340,800 | (e) | ||||
| 5,018,522 | |||||||
| Cable & Satellite Television (12.2%) | |||||||
| Altice Luxembourg SA | |||||||
| 1,585,000 | 7.75%, due 5/15/22 | 1,670,194 | (e) | ||||
| 850,000 | 7.63%, due 2/15/25 | 884,000 | (e) | ||||
| 1,080,000 | Altice US Finance I Corp., 5.50%, due 5/15/26 | 1,101,600 | (e) | ||||
| CCO Holdings LLC/CCO Holdings Capital Corp. | |||||||
| 500,000 | 6.63%, due 1/31/22 | 521,250 | |||||
| 705,000 | 5.25%, due 9/30/22 | 734,081 | |||||
| 215,000 | 5.13%, due 5/1/23 | 222,525 | (e) | ||||
| 590,000 | 5.38%, due 5/1/25 | 606,225 | (e) | ||||
| 310,000 | 5.75%, due 2/15/26 | 322,981 | (e) | ||||
| 2,845,000 | 5.88%, due 5/1/27 | 2,980,138 | (e) | ||||
| Cequel Communications Holdings I LLC/Cequel Capital Corp. | |||||||
| 1,202,000 | 6.38%, due 9/15/20 | 1,238,060 | (e) | ||||
| 1,389,000 | 5.13%, due 12/15/21 | 1,368,165 | (e) | ||||
| 200,000 | 7.75%, due 7/15/25 | 214,000 | (e) | ||||
| 615,000 | CSC Holdings, Inc., 7.63%, due 7/15/18 | 659,588 | |||||
| CSC Holdings LLC | |||||||
| 2,145,000 | 10.88%, due 10/15/25 | 2,466,750 | (e) | ||||
| 1,310,000 | 5.50%, due 4/15/27 | 1,328,831 | (e) | ||||
| DISH DBS Corp. | |||||||
| 1,145,000 | 6.75%, due 6/1/21 | 1,230,165 | |||||
| 2,135,000 | 5.88%, due 11/15/24 | 2,149,678 | |||||
| 440,000 | 7.75%, due 7/1/26 | 483,177 | |||||
| Numericable-SFR SA | |||||||
| 2,410,000 | 6.00%, due 5/15/22 | 2,464,225 | (e) | ||||
| 510,000 | 6.25%, due 5/15/24 | 509,679 | (e) | ||||
| 2,180,000 | 7.38%, due 5/1/26 | 2,201,800 | (e) | ||||
| 355,000 | UPCB Finance IV Ltd., 5.38%, due 1/15/25 | 360,325 | (e) | ||||
| Virgin Media Secured Finance PLC | |||||||
| 526,500 | 5.38%, due 4/15/21 | 543,611 | (e) | ||||
| 1,250,000 | 5.50%, due 8/15/26 | 1,264,063 | (e) | ||||
| 1,560,000 | WideOpenWest Finance LLC/WideOpenWest Capital Corp., 10.25%, due 7/15/19 | 1,638,000 | |||||
| 2,145,000 | Ziggo Secured Finance B.V., 5.50%, due 1/15/27 | 2,106,793 | (e) | ||||
| 31,269,904 | |||||||
| See Notes to Financial Statements | 9 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 10 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Electric - Integrated (2.0%) | |||||||
| $ | 495,000 | IPALCO Enterprises, Inc., 5.00%, due 5/1/18 | $ | 517,275 | |||
| 2,405,000 | PPL Energy Supply LLC, 4.60%, due 12/15/21 | 1,978,112 | |||||
| 2,305,000 | RJS Power Holdings LLC, 4.63%, due 7/15/19 | 2,189,750 | (e) | ||||
| 585,000 | Talen Energy Supply LLC, 6.50%, due 6/1/25 | 488,475 | |||||
| 5,173,612 | |||||||
| Electronics (2.0%) | |||||||
| 1,085,000 | Amkor Technology, Inc., 6.38%, due 10/1/22 | 1,118,906 | |||||
| Flextronics Int’l Ltd. | |||||||
| 220,000 | 4.63%, due 2/15/20 | 235,570 | |||||
| 960,000 | 5.00%, due 2/15/23 | 1,042,178 | |||||
| Micron Technology, Inc. | |||||||
| 435,000 | 5.25%, due 8/1/23 | 426,300 | (e) | ||||
| 440,000 | 5.50%, due 2/1/25 | 430,391 | |||||
| 385,000 | 5.63%, due 1/15/26 | 373,450 | (e) | ||||
| 670,000 | NXP BV/NXP Funding LLC, 4.13%, due 6/1/21 | 715,225 | (e) | ||||
| 420,000 | Sensata Technologies UK Financing Co. PLC, 6.25%, due 2/15/26 | 451,500 | (e) | ||||
| 390,000 | Zebra Technologies Corp., 7.25%, due 10/15/22 | 420,225 | |||||
| 5,213,745 | |||||||
| Energy - Exploration & Production (9.6%) | |||||||
| Antero Resources Corp. | |||||||
| 245,000 | 5.38%, due 11/1/21 | 247,450 | |||||
| 1,160,000 | 5.13%, due 12/1/22 | 1,168,700 | |||||
| Chesapeake Energy Corp. | |||||||
| 400,000 | 6.50%, due 8/15/17 | 406,500 | |||||
| 1,075,000 | 6.13%, due 2/15/21 | 980,937 | |||||
| 1,365,000 | 5.38%, due 6/15/21 | 1,187,550 | |||||
| 595,000 | 5.75%, due 3/15/23 | 514,675 | |||||
| 625,000 | Concho Resources, Inc., 5.50%, due 4/1/23 | 639,375 | |||||
| Continental Resources, Inc. | |||||||
| 520,000 | 4.50%, due 4/15/23 | 495,300 | |||||
| 705,000 | 3.80%, due 6/1/24 | 648,600 | |||||
| 310,000 | 4.90%, due 6/1/44 | 263,888 | |||||
| Encana Corp. | |||||||
| 1,240,000 | 6.50%, due 8/15/34 | 1,337,675 | |||||
| 650,000 | 6.63%, due 8/15/37 | 706,517 | |||||
| 500,000 | 6.50%, due 2/1/38 | 535,000 | |||||
| EP Energy LLC/Everest Acquisition Finance, Inc. | |||||||
| 2,801,000 | 9.38%, due 5/1/20 | 2,191,782 | |||||
| 870,000 | 7.75%, due 9/1/22 | 591,600 | |||||
| 2,190,000 | 6.38%, due 6/15/23 | 1,489,200 | |||||
| 555,000 | Extraction Oil & Gas Holdings LLC/Extraction Finance Corp., 7.88%, due 7/15/21 | 586,913 | (e) | ||||
| 970,000 | Newfield Exploration Co., 5.38%, due 1/1/26 | 996,675 | |||||
| 1,110,000 | Oasis Petroleum, Inc., 6.88%, due 3/15/22 | 1,098,900 | |||||
| See Notes to Financial Statements | 11 |
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Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 12 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Scientific Games Int’l, Inc. | |||||||
| $ | 1,150,000 | 6.25%, due 9/1/20 | $ | 964,562 | |||
| 890,000 | 6.63%, due 5/15/21 | 732,025 | |||||
| 1,735,000 | 10.00%, due 12/1/22 | 1,596,200 | |||||
| 635,000 | Station Casinos LLC, 7.50%, due 3/1/21 | 668,031 | |||||
| 10,315,099 | |||||||
| Gas Distribution (11.5%) | |||||||
| 1,055,000 | Antero Midstream Partners L.P./Antero Midstream Finance Corp., 5.38%, due 9/15/24 | 1,062,253 | (e) | ||||
| 325,000 | Chesapeake Midstream Partners L.P., 6.13%, due 7/15/22 | 334,344 | |||||
| Crestwood Midstream Partners L.P./Crestwood Midstream Finance Corp. | |||||||
| 605,000 | 6.00%, due 12/15/20 | 615,587 | |||||
| 1,280,000 | 6.25%, due 4/1/23 | 1,296,000 | |||||
| DCP Midstream LLC | |||||||
| 270,000 | 5.35%, due 3/15/20 | 278,100 | (e) | ||||
| 300,000 | 4.75%, due 9/30/21 | 306,750 | (e) | ||||
| 155,000 | 6.75%, due 9/15/37 | 161,975 | (e) | ||||
| 225,000 | 5.85%, due 5/21/43 | 191,250 | (a)(e) | ||||
| DCP Midstream Operating L.P. | |||||||
| 485,000 | 2.50%, due 12/1/17 | 481,363 | |||||
| 645,000 | 5.60%, due 4/1/44 | 604,688 | |||||
| Duke Energy Corp. | |||||||
| 270,000 | 8.13%, due 8/16/30 | 306,450 | |||||
| 170,000 | 6.45%, due 11/3/36 | 176,800 | (e) | ||||
| Energy Transfer Equity L.P. | |||||||
| 475,000 | 7.50%, due 10/15/20 | 517,750 | |||||
| 1,140,000 | 5.88%, due 1/15/24 | 1,154,250 | |||||
| 510,000 | 5.50%, due 6/1/27 | 497,250 | |||||
| Ferrellgas L.P./Ferrellgas Finance Corp. | |||||||
| 240,000 | 6.50%, due 5/1/21 | 226,200 | |||||
| 1,230,000 | 6.75%, due 1/15/22 | 1,153,125 | |||||
| 405,000 | 6.75%, due 6/15/23 | 377,663 | |||||
| MPLX LP | |||||||
| 583,000 | 4.50%, due 7/15/23 | 599,916 | |||||
| 1,395,000 | 4.88%, due 12/1/24 | 1,459,470 | |||||
| 120,000 | ONEOK, Inc., 6.00%, due 6/15/35 | 119,400 | |||||
| 995,000 | Regency Energy Partners L.P./Regency Energy Finance Corp., 5.50%, due 4/15/23 | 1,024,977 | |||||
| Rockies Express Pipeline LLC | |||||||
| 745,000 | 5.63%, due 4/15/20 | 781,319 | (e) | ||||
| 495,000 | 7.50%, due 7/15/38 | 532,125 | (e) | ||||
| 895,000 | 6.88%, due 4/15/40 | 933,037 | (e) | ||||
| 930,000 | Rose Rock Midstream L.P./Rose Rock Finance Corp., 5.63%, due 11/15/23 | 892,800 | |||||
| See Notes to Financial Statements | 13 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Sabine Pass Liquefaction LLC | |||||||
| $ | 175,000 | 5.63%, due 2/1/21 | $ | 184,625 | |||
| 715,000 | 5.63%, due 4/15/23 | 759,687 | |||||
| 1,055,000 | 5.75%, due 5/15/24 | 1,115,662 | |||||
| 3,495,000 | 5.63%, due 3/1/25 | 3,695,962 | |||||
| 705,000 | 5.88%, due 6/30/26 | 759,778 | (e) | ||||
| 525,000 | 5.00%, due 3/15/27 | 534,188 | (e) | ||||
| 427,000 | Suburban Propane Partners L.P./Suburban Energy Finance Corp., 7.38%, due 8/1/21 | 444,080 | |||||
| Targa Resources Partners L.P./Targa Resources Partners Finance Corp. | |||||||
| 750,000 | 4.25%, due 11/15/23 | 705,000 | |||||
| 520,000 | 6.75%, due 3/15/24 | 551,294 | |||||
| 535,000 | 5.13%, due 2/1/25 | 535,000 | (e) | ||||
| 625,000 | 5.38%, due 2/1/27 | 625,000 | (e) | ||||
| Tesoro Logistics L.P./Tesoro Logistics Finance Corp. | |||||||
| 535,000 | 6.25%, due 10/15/22 | 567,100 | |||||
| 255,000 | 6.38%, due 5/1/24 | 274,763 | |||||
| Williams Cos., Inc. | |||||||
| 305,000 | Ser. A, 7.50%, due 1/15/31 | 350,561 | |||||
| 2,280,000 | 5.75%, due 6/24/44 | 2,329,875 | |||||
| 29,517,417 | |||||||
| Health Facilities (10.3%) | |||||||
| 645,000 | Amsurg Corp., 5.63%, due 7/15/22 | 657,900 | |||||
| 1,500,000 | Columbia Healthcare Corp., 7.50%, due 12/15/23 | 1,665,000 | |||||
| Columbia/HCA Corp. | |||||||
| 1,500,000 | 7.69%, due 6/15/25 | 1,680,000 | |||||
| 2,160,000 | 7.05%, due 12/1/27 | 2,305,800 | |||||
| HCA, Inc. | |||||||
| 125,000 | 5.88%, due 3/15/22 | 137,500 | |||||
| 210,000 | 4.75%, due 5/1/23 | 218,663 | |||||
| 315,000 | 5.00%, due 3/15/24 | 329,175 | |||||
| 490,000 | 5.38%, due 2/1/25 | 500,903 | |||||
| 725,000 | 5.25%, due 4/15/25 | 759,437 | |||||
| 755,000 | 5.25%, due 6/15/26 | 789,352 | |||||
| 910,000 | 4.50%, due 2/15/27 | 898,625 | |||||
| 3,300,000 | IASIS Healthcare LLC/IASIS Capital Corp., 8.38%, due 5/15/19 | 3,143,250 | |||||
| 520,000 | LifePoint Health, Inc., 5.88%, due 12/1/23 | 527,800 | |||||
| MPT Operating Partnership L.P./MPT Finance Corp. | |||||||
| 540,000 | 6.38%, due 3/1/24 | 581,850 | |||||
| 1,715,000 | 5.50%, due 5/1/24 | 1,766,450 | |||||
| 800,000 | 5.25%, due 8/1/26 | 816,000 | |||||
| 1,900,000 | OMEGA Healthcare Investors, Inc., 5.88%, due 3/15/24 | 1,974,651 | |||||
| 860,000 | Sabra Health Care L.P./Sabra Capital Corp., 5.50%, due 2/1/21 | 896,550 | |||||
| 1,295,000 | Team Health, Inc., 7.25%, due 12/15/23 | 1,463,350 | (e) | ||||
| See Notes to Financial Statements | 14 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 15 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Media Content (4.6%) | |||||||
| Gannett Co., Inc. | |||||||
| $ | 480,000 | 5.13%, due 10/15/19 | $ | 493,800 | |||
| 725,000 | 5.13%, due 7/15/20 | 754,000 | |||||
| Gray Television, Inc. | |||||||
| 630,000 | 5.13%, due 10/15/24 | 611,100 | (e) | ||||
| 210,000 | 5.88%, due 7/15/26 | 208,950 | (e) | ||||
| iHeartCommunications, Inc. | |||||||
| 452,000 | 6.88%, due 6/15/18 | 350,300 | |||||
| 365,000 | 9.00%, due 12/15/19 | 276,944 | |||||
| 2,982,000 | 11.25%, due 3/1/21 | 2,258,865 | |||||
| 555,000 | 7.25%, due 10/15/27 | 333,000 | |||||
| Netflix, Inc. | |||||||
| 665,000 | 5.50%, due 2/15/22 | 719,863 | |||||
| 875,000 | 4.38%, due 11/15/26 | 859,688 | (e) | ||||
| Sirius XM Radio, Inc. | |||||||
| 605,000 | 4.25%, due 5/15/20 | 617,856 | (e) | ||||
| 185,000 | 6.00%, due 7/15/24 | 196,331 | (e) | ||||
| 2,105,000 | 5.38%, due 7/15/26 | 2,138,549 | (e) | ||||
| 235,000 | TEGNA, Inc., 7.13%, due 9/1/18 | 235,000 | |||||
| 1,680,000 | Univision Communications, Inc., 5.13%, due 5/15/23 | 1,705,200 | (e) | ||||
| 11,759,446 | |||||||
| Medical Products (2.8%) | |||||||
| 3,140,000 | DJO Finco, Inc./DJO Finance LLC/DJO Finance Corp., 8.13%, due 6/15/21 | 2,880,950 | (e) | ||||
| Fresenius Medical Care US Finance II, Inc. | |||||||
| 240,000 | 6.50%, due 9/15/18 | 258,600 | (e) | ||||
| 485,000 | 5.63%, due 7/31/19 | 525,012 | (e) | ||||
| 1,480,000 | 4.13%, due 10/15/20 | 1,539,200 | (e) | ||||
| 590,000 | 5.88%, due 1/31/22 | 668,293 | (e) | ||||
| 850,000 | 4.75%, due 10/15/24 | 886,125 | (e) | ||||
| 495,000 | Hologic, Inc., 5.25%, due 7/15/22 | 523,512 | (e) | ||||
| 7,281,692 | |||||||
| Metals - Mining Excluding Steel (2.7%) | |||||||
| 460,000 | Alcoa, Inc., 5.13%, due 10/1/24 | 479,559 | |||||
| 365,000 | Anglo American Capital PLC, 4.45%, due 9/27/20 | 372,300 | (e) | ||||
| 1,760,000 | First Quantum Minerals Ltd., 7.00%, due 2/15/21 | 1,680,800 | (e) | ||||
| Freeport-McMoRan, Inc. | |||||||
| 245,000 | 4.00%, due 11/14/21 | 231,525 | |||||
| 215,000 | 3.55%, due 3/1/22 | 196,725 | |||||
| 340,000 | 3.88%, due 3/15/23 | 309,400 | |||||
| 215,000 | 4.55%, due 11/14/24 | 196,591 | |||||
| 1,305,000 | 5.40%, due 11/14/34 | 1,123,931 | |||||
| See Notes to Financial Statements | 16 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Novelis Corp. | |||||||
| $ | 365,000 | 6.25%, due 8/15/24 | $ | 379,600 | (e) | ||
| 850,000 | 5.88%, due 9/30/26 | 860,625 | (e) | ||||
| Teck Resources Ltd. | |||||||
| 435,000 | 4.75%, due 1/15/22 | 432,555 | |||||
| 645,000 | 6.25%, due 7/15/41 | 638,550 | |||||
| 6,902,161 | |||||||
| Oil Field Equipment & Services (0.9%) | |||||||
| Precision Drilling Corp. | |||||||
| 810,000 | 6.63%, due 11/15/20 | 785,700 | |||||
| 855,000 | 6.50%, due 12/15/21 | 825,075 | |||||
| 700,000 | 5.25%, due 11/15/24 | 617,050 | |||||
| 2,227,825 | |||||||
| Packaging (2.5%) | |||||||
| 610,000 | Ball Corp., 4.38%, due 12/15/20 | 649,650 | |||||
| Berry Plastics Corp. | |||||||
| 95,000 | 6.00%, due 10/15/22 | 100,640 | |||||
| 1,220,000 | 5.13%, due 7/15/23 | 1,241,350 | |||||
| 780,000 | BWAY Holding Co., 9.13%, due 8/15/21 | 815,100 | (e) | ||||
| Reynolds Group Issuer, Inc. | |||||||
| 226,000 | 9.88%, due 8/15/19 | 231,650 | |||||
| 535,000 | 5.75%, due 10/15/20 | 549,060 | |||||
| 765,000 | 6.88%, due 2/15/21 | 791,775 | |||||
| 1,095,000 | 5.13%, due 7/15/23 | 1,121,691 | (e) | ||||
| 865,000 | Sealed Air Corp., 5.50%, due 9/15/25 | 922,306 | (e) | ||||
| 6,423,222 | |||||||
| Personal & Household Products (1.0%) | |||||||
| Energizer Holdings, Inc. | |||||||
| 485,000 | 4.70%, due 5/19/21 | 509,453 | |||||
| 1,295,000 | 4.70%, due 5/24/22 | 1,357,316 | |||||
| 210,000 | Prestige Brands, Inc., 6.38%, due 3/1/24 | 223,125 | (e) | ||||
| 370,000 | Spectrum Brands, Inc., 5.75%, due 7/15/25 | 400,525 | |||||
| 2,490,419 | |||||||
| Pharmaceuticals (4.3%) | |||||||
| 2,840,000 | Endo Finance LLC & Endo Finco, Inc., 5.38%, due 1/15/23 | 2,414,000 | (e)(h) | ||||
| Endo Ltd./Endo Finance LLC/Endo Finco, Inc. | |||||||
| 890,000 | 6.00%, due 7/15/23 | 769,850 | (e) | ||||
| 265,000 | 6.50%, due 2/1/25 | 223,263 | (e) | ||||
| 605,000 | Jaguar Holding Co. II/Pharmaceutical Product Development LLC, 6.38%, due 8/1/23 | 608,327 | (e) | ||||
| 385,000 | Mallinckrodt Int’l Finance SA/Mallinckrodt CB LLC, 5.50%, due 4/15/25 | 355,644 | (e) | ||||
| See Notes to Financial Statements | 17 |
|
Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 18 |
| Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| See Notes to Financial Statements | 19 |
| Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Telecom - Satellite (0.6%) | |||||||
| $ | 519,000 | Hughes Satellite Systems Corp., 6.50%, due 6/15/19 | $ | 566,359 | |||
| Intelsat Luxembourg SA | |||||||
| 1,470,000 | 7.75%, due 6/1/21 | 477,750 | |||||
| 1,340,000 | 8.13%, due 6/1/23 | 442,200 | |||||
| 1,486,309 | |||||||
| Telecom - Wireless (7.0%) | |||||||
| Sprint Corp. | |||||||
| 485,000 | 7.25%, due 9/15/21 | 496,519 | |||||
| 3,185,000 | 7.88%, due 9/15/23 | 3,145,187 | |||||
| 3,335,000 | 7.13%, due 6/15/24 | 3,176,587 | |||||
| 3,765,000 | Sprint Nextel Corp., 6.00%, due 11/15/22 | 3,501,450 | |||||
| T-Mobile USA, Inc. | |||||||
| 970,000 | 6.54%, due 4/28/20 | 999,408 | |||||
| 360,000 | 6.63%, due 11/15/20 | 370,800 | |||||
| 795,000 | 6.63%, due 4/28/21 | 830,278 | |||||
| 425,000 | 6.13%, due 1/15/22 | 449,438 | |||||
| 605,000 | 6.73%, due 4/28/22 | 633,738 | |||||
| 1,585,000 | 6.00%, due 3/1/23 | 1,668,213 | |||||
| Wind Acquisition Finance SA | |||||||
| 1,895,000 | 4.75%, due 7/15/20 | 1,904,475 | (e) | ||||
| 875,000 | 7.38%, due 4/23/21 | 896,875 | (e) | ||||
| 18,072,968 | |||||||
| Telecom - Wireline Integrated & Services (7.1%) | |||||||
| CenturyLink, Inc. | |||||||
| 475,000 | Ser. W, 6.75%, due 12/1/23 | 488,063 | |||||
| 1,630,000 | Ser. P, 7.60%, due 9/15/39 | 1,450,700 | |||||
| 3,079,000 | Citizens Communications Co., 9.00%, due 8/15/31 | 2,678,730 | |||||
| 1,275,000 | Communications Sales & Leasing, Inc./CSL Capital LLC, 8.25%, due 10/15/23 | 1,345,125 | |||||
| 2,680,000 | Embarq Corp., 8.00%, due 6/1/36 | 2,720,200 | |||||
| 515,000 | Equinix, Inc., 5.88%, due 1/15/26 | 547,027 | |||||
| Frontier Communications Corp. | |||||||
| 265,000 | 6.25%, due 9/15/21 | 251,750 | |||||
| 235,000 | 10.50%, due 9/15/22 | 244,400 | |||||
| 270,000 | 7.13%, due 1/15/23 | 242,831 | |||||
| 610,000 | 7.63%, due 4/15/24 | 538,325 | |||||
| 1,795,000 | 11.00%, due 9/15/25 | 1,832,569 | |||||
| Level 3 Financing, Inc. | |||||||
| 1,515,000 | 5.38%, due 8/15/22 | 1,560,450 | |||||
| 350,000 | 5.13%, due 5/1/23 | 353,500 | |||||
| 430,000 | 5.38%, due 1/15/24 | 437,525 | |||||
| 540,000 | 5.38%, due 5/1/25 | 548,100 | |||||
| 1,080,000 | Telecom Italia Capital SA, 6.00%, due 9/30/34 | 1,074,600 | |||||
| 1,391,000 | U.S. West Communications Group, 6.88%, due 9/15/33 | 1,377,478 | |||||
| 415,000 | Windstream Corp., 7.50%, due 6/1/22 | 392,175 | |||||
| 18,083,548 | |||||||
| See Notes to Financial Statements | 20 |
| Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| PRINCIPAL AMOUNT | VALUE | ||||||
| Theaters & Entertainment (0.6%) | |||||||
| $ | 575,000 | AMC Entertainment, Inc., 5.75%, due 6/15/25 | $ | 575,719 | |||
| 1,047,000 | Regal Entertainment Group, 5.75%, due 3/15/22 | 1,083,645 | |||||
| 1,659,364 | |||||||
| Total Corporate Bonds (Cost $341,207,641) | 348,453,400 | ||||||
| NUMBER OF SHARES | |||||||
| Short-Term Investment (2.4%) | |||||||
| Investment Company (2.4%) | |||||||
| 6,010,809 | State Street Institutional U.S. Government Money Market Fund Premier Class, 0.26% | ||||||
| (Cost $6,010,809) | 6,010,809 | (g)(k) | |||||
| Total Investments (146.9%) (Cost $368,886,976) | 376,475,372 | ||||||
| Other Assets Less Liabilities [(33.2%)] | (85,121,182 | ) (l) | |||||
| Liquidation Value of Mandatory Redeemable Preferred Shares [(13.7%)] | (35,000,000 | ) | |||||
| Net Assets Applicable to Common Shareholders (100.0%) | $ | 256,354,190 | |||||
| (a) | Variable or floating rate security. The interest rate shown was the current rate as of 10/31/2016 and changes periodically. | |
| (b) | All or a portion of this security was purchased on a delayed delivery basis. | |
| (c) | All or a portion of this security had not settled as of 10/31/2016 and thus may not have an interest rate in effect. Interest rates do not take effect until settlement. | |
| (d) | Illiquid security. | |
| (e) | Securities were purchased under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”), or are otherwise restricted and, unless registered under the 1933 Act or exempted from registration, may only be sold to qualified institutional investors or may have other restrictions on resale. At 10/31/2016, these securities amounted to approximately $130,832,530 or 51.0% of net assets applicable to common stockholders for the Fund. Securities denoted with (e) but without (d) have been deemed by the investment manager to be liquid. | |
| (f) | Payment-in-kind (PIK) security. Security has the ability to pay in-kind or pay income in cash. When applicable, separate rates of such payments are disclosed. | |
| (g) | All or a portion of this security is segregated in connection for when-issued securities and/or swap contracts and/or delayed delivery securities with a total value of approximately $13,798,434. | |
| (h) | Step Bond. Coupon rate is a fixed rate for an initial period that either resets at a specific date or may reset in the future contingent upon a rating change made by a rating agency. | |
| (i) | Defaulted Security. | |
| (j) | When-issued security. Total value of all such securities at 10/31/2016, amounted to approximately $876,094, which represents 0.3% of net assets of the Fund. | |
| (k) | Represents 7-day effective yield as of 10/31/2016. | |
| (l) | Includes the impact of the Fund’s open positions in derivatives at 10/31/2016. | |
| See Notes to Financial Statements | 21 |
| Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
Derivative Instruments
Interest rate swap contracts (“interest rate swaps”)
At October 31, 2016, the Fund had outstanding centrally cleared interest rate swaps as follows:
| Portfolio | ||||||||||||||
| Notional | Pays/Receives | Floating Rate | Annual | Termination | Total Fair | |||||||||
| Clearinghouse | Amount | Floating Rate | Index | Fixed-rate | Date | Value (a) | ||||||||
| CME Group, Inc. | $25,000,000 | Receive | 3-month LIBOR | 1.371% | 5/14/2018 | $ | (239,612 | ) | ||||||
| CME Group, Inc. | $20,000,000 | Receive | 3-month LIBOR | 1.292% | 4/17/2019 | (85,160 | ) | |||||||
| CME Group, Inc. | $25,000,000 | Receive | 3-month LIBOR | 1.138% | 6/17/2021 | 107,519 | ||||||||
| CME Group, Inc. | $20,000,000 | Receive | 3-month LIBOR | 0.994% | 6/29/2021 | 232,694 | ||||||||
| $ | 15,441 | |||||||||||||
| (a) | Total Fair Value reflects the appreciation/(depreciation) of the interest rate swaps plus accrued interest as of October 31, 2016. |
For the year ended October 31, 2016, the average notional value of interest rate swaps was $69,716,069 when the Fund paid the fixed rate.
At October 31, 2016, the Fund did not have any outstanding over-the-counter interest rate swaps.
At October 31, 2016, the Fund had $838,953 deposited in a segregated account to cover margin requirements for interest rate swaps.
The following is a summary, categorized by Level (see Note A of Notes to Financial Statements), of inputs used to value the Fund’s investments as of October 31, 2016:
| Asset Valuation Inputs | Level 1 | Level 2 | Level 3 (b) | Total | |||||||
| Investments: | |||||||||||
| Loan Assignments | |||||||||||
| Radio & Television | $— | $ | — | $ | 308,427 | $ | 308,427 | ||||
| Other Loan Assignments (a) | — | 21,702,736 | — | 21,702,736 | |||||||
| Total Loan Assignments | — | 21,702,736 | 308,427 | 22,011,163 | |||||||
| Corporate Bonds (a) | — | 348,453,400 | — | 348,453,400 | |||||||
| Short-Term Investment | — | 6,010,809 | — | 6,010,809 | |||||||
| Total Investments | $— | $ | 376,166,945 | $ | 308,427 | $ | 376,475,372 | ||||
| (a) | The Schedule of Investments provides information on the industry or sector categorization for the portfolio. |
| See Notes to Financial Statements | 22 |
| Schedule of Investments High Yield Strategies Fund Inc. (cont’d) |
| (b) | The following is a reconciliation between the beginning and ending balances of investments in which unobservable inputs (Level 3) were used in determining value: |
| Net change in | |||||||||||||||||||||||||
| unrealized | |||||||||||||||||||||||||
| appreciation/ | |||||||||||||||||||||||||
| (depreciation) | |||||||||||||||||||||||||
| Beginning | Change in | from | |||||||||||||||||||||||
| balance, | Accrued | unrealized | Transfers | Transfers | Balance | investments | |||||||||||||||||||
| as of | discounts/ | Realized | appreciation/ | into | out of | as of | still held as | ||||||||||||||||||
| 11/1/2015 | (premiums) | gain/(loss) | (depreciation) | Purchases | Sales | Level 3 | Level 3 | 10/31/2016 | of 10/31/2016 | ||||||||||||||||
| Investments in | |||||||||||||||||||||||||
| Securities | |||||||||||||||||||||||||
| Loan Assignments | |||||||||||||||||||||||||
| Radio & | |||||||||||||||||||||||||
| Television | $— | $161 | $12 | $2,510 | $308,334 | $(2,590 | ) | $— | $ | — | $ | 308,427 | $ | 2,510 | |||||||||||
| Corporate Bonds | |||||||||||||||||||||||||
| Chemicals | 63 | — | — | — | — | — | — | (63 | ) | — | — | ||||||||||||||
| Total | $63 | $161 | $12 | $2,510 | $308,334 | $(2,590 | ) | $— | $ | (63 | ) | $ | 308,427 | $ | 2,510 | ||||||||||
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 the inputs used in formulating such quotation.
As of the year ended October 31, 2016, certain securities were transferred from one level (as of October 31, 2015) to another. Based on beginning of period market values as of November 1, 2015, approximately $63 was transferred from Level 3 to Level 2. Transfers of corporate bonds out of Level 3 were primarily due to the pricing methodology being based on a single broker quote (Level 3). As of the year ended October 31, 2016, the Fund had no transfers between Levels 1 and 2.
The following is a summary, categorized by Level (see Note A of Notes to Financial Statements), of inputs used to value the Fund’s derivatives as of October 31, 2016:
| Other Financial Instruments | Level 1 | Level 2 | Level 3 | Total | ||||||||
| Swap contracts | ||||||||||||
| Assets | $— | $ | 340,213 | $— | $ | 340,213 | ||||||
| Liabilities | — | (324,772 | ) | — | (324,772 | ) | ||||||
| Total | $— | $ | 15,441 | $— | $ | 15,441 | ||||||
| See Notes to Financial Statements | 23 |
| Statement of Assets and Liabilities |
Neuberger Berman
| HIGH YIELD | ||||
| STRATEGIES | ||||
| FUND INC. | ||||
| October 31, 2016 | ||||
| Assets | ||||
| Investments in securities, at value* (Note A)—see Schedule of Investments: | ||||
| Unaffiliated issuers | $ | 376,475,372 | ||
| Cash | 843,401 | |||
| Cash collateral segregated for interest rate swaps | 838,953 | |||
| Interest receivable | 6,156,108 | |||
| Receivable for securities sold | 1,007,505 | |||
| Receivable for variation margin on centrally cleared interest rate swaps (Note A) | 505,083 | |||
| Prepaid expenses and other assets | 171,624 | |||
| Total Assets | 385,998,046 | |||
| 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 | |||
| Distributions payable—preferred shares | 100,728 | |||
| Distributions payable—common stock | 27,447 | |||
| Payable for securities purchased | 3,965,922 | |||
| Payable to investment manager (Note B) | 195,273 | |||
| Payable to administrator (Note B) | 16,273 | |||
| Payable to directors | 6,274 | |||
| Interest payable | 163,016 | |||
| Accrued expenses and other payables | 168,923 | |||
| Total Liabilities | 129,643,856 | |||
| Net Assets applicable to Common Stockholders | $ | 256,354,190 | ||
| Net Assets applicable to Common Stockholders consist of: | ||||
| Paid-in capital—common stock | $ | 279,796,188 | ||
| Undistributed net investment income (loss) | 120,590 | |||
| Accumulated net realized gains (losses) on investments | (31,166,425 | ) | ||
| Net unrealized appreciation (depreciation) in value of investments | 7,603,837 | |||
| Net Assets applicable to Common Stockholders | $ | 256,354,190 | ||
| Common Stock Outstanding ($0.0001 par value; 999,999,997,100 shares authorized) | 19,540,585 | |||
| Net Asset Value Per Common Stock Outstanding | $13.12 | |||
| * Cost of Investments | $ | 368,886,976 | ||
| See Notes to Financial Statements | 24 |
| Statement of Operations |
Neuberger Berman
| HIGH YIELD | |||
| STRATEGIES | |||
| FUND INC. | |||
| For the | |||
| Year Ended | |||
| October 31, 2016 | |||
| Investment Income: | |||
| Income (Note A): | |||
| Interest income-unaffiliated issuers | $23,806,663 | ||
| Expenses: | |||
| Investment management fees (Note B) | 2,189,326 | ||
| Administration fees (Note B) | 182,444 | ||
| Audit fees | 64,470 | ||
| Basic maintenance expense (Note A) | 40,000 | ||
| Custodian and accounting fees | 193,594 | ||
| Insurance expense | 12,626 | ||
| Legal fees | 141,526 | ||
| Stockholder reports | 58,100 | ||
| Stock exchange listing fees | 8,000 | ||
| Stock transfer agent fees | 27,492 | ||
| Interest expense (Note A) | 1,663,179 | ||
| Distributions to mandatory redeemable preferred shareholders (Note A) | 1,065,055 | ||
| Directors’ fees and expenses | 52,749 | ||
| Miscellaneous | 33,557 | ||
| Total net expenses | 5,732,118 | ||
| Net investment income (loss) | $18,074,545 | ||
| Realized and Unrealized Gain (Loss) on Investments (Note A): | |||
| Net realized gain (loss) on: | |||
| Sales of investment securities of unaffiliated issuers | (15,656,197 | ) | |
| Interest rate swaps | (719,453 | ) | |
| Net increase from payment by affiliates (Note B) | 2,435 | ||
| Change in net unrealized appreciation (depreciation) in value of: | |||
| Unaffiliated investment securities | 24,762,545 | ||
| Interest rate swaps | 893,346 | ||
| Net gain (loss) on investments | 9,282,676 | ||
| Net increase (decrease) in net assets applicable to Common Stockholders resulting from operations | $27,357,221 |
| See Notes to Financial Statements | 25 |
| Statements of Changes in Net Assets |
Neuberger Berman
| HIGH YIELD | ||||||||
| STRATEGIES FUND INC. | ||||||||
|
Year Ended
October 31, 2016 |
Year Ended
October 31, 2015 |
|||||||
| Increase (Decrease) in Net Assets Applicable to Common Stockholders: | ||||||||
| From Operations (Note A): | ||||||||
| Net investment income (loss) | $ | 18,074,545 | $ | 19,864,723 | ||||
| Net realized gain (loss) on investments | (16,375,650 | ) | (13,005,880 | ) | ||||
| Net increase from payment by affiliates (Note B) | 2,435 | — | ||||||
| Change in net unrealized appreciation (depreciation) of investments | 25,655,891 | (21,085,808 | ) | |||||
| Net increase (decrease) in net assets applicable to | ||||||||
| Common Stockholders resulting from operations | 27,357,221 | (14,226,965 | ) | |||||
| Distributions to Common Stockholders From (Note A): | ||||||||
| Net investment income | (17,647,876 | ) | (18,384,196 | ) | ||||
| Tax return of capital | (1,111,086 | ) | (1,351,795 | ) | ||||
| Net Increase (Decrease) in Net Assets Applicable to Common Stockholders | 8,598,259 | (33,962,956 | ) | |||||
| Net Assets Applicable to Common Stockholders: | ||||||||
| Beginning of year | 247,755,931 | 281,718,887 | ||||||
| End of year | $ | 256,354,190 | $ | 247,755,931 | ||||
| Undistributed net investment income (loss) at end of year | $ | 120,590 | $ | 388,219 | ||||
| See Notes to Financial Statements | 26 |
| Statement of Cash Flows |
Neuberger Berman
| HIGH YIELD | ||||
| STRATEGIES | ||||
| FUND INC. | ||||
| For the Year Ended | ||||
| October 31, 2016 | ||||
| Increase (decrease) in cash: | ||||
| Cash flows from operating activities: | ||||
| Net increase in net assets applicable to Common Stockholders resulting from operations | $ | 27,357,221 | ||
| Adjustments to reconcile net increase in net assets applicable to Common Stockholders resulting from operations to | ||||
| net cash provided by operating activities: | ||||
| Changes in assets and liabilities: | ||||
| Purchase of investment securities | (222,320,039 | ) | ||
| Proceeds from disposition of investment securities | 215,853,648 | |||
| Purchase/sale of short-term investment securities, net | 5,296,896 | |||
| Decrease in net interest receivable (payable) on interest rate swaps | (349,159 | ) | ||
| Increase in receivable (payable) for variation margin on centrally cleared interest rate swaps | (255,478 | ) | ||
| Unrealized appreciation of centrally cleared interest rate swaps | 564,330 | |||
| Decrease in interest receivable | 300,865 | |||
| Decrease in prepaid expenses and other assets | 20,241 | |||
| Decrease in receivable for securities sold | 2,445,104 | |||
| Decrease in cash collateral segregated for interest rate swaps | 31,767 | |||
| Increase in accumulated unpaid dividends on preferred shares | 15,900 | |||
| Increase in payable for securities purchased | 476,796 | |||
| Increase in interest payable | 40,888 | |||
| Net amortization of premium (discount) on investments | (698,984 | ) | ||
| Decrease in accrued expenses and other payables | (1,180 | ) | ||
| Unrealized appreciation on securities | (24,762,545 | ) | ||
| Unrealized appreciation on interest rate swaps | (893,346 | ) | ||
| Net realized loss from investments | 15,656,197 | |||
| Net increase from payments by affiliates (Note B) | (2,435 | ) | ||
| Net realized loss from interest rate swaps | 719,453 | |||
| Net cash provided by (used in) operating activities | $ | 19,496,140 | ||
| Cash flows from financing activities: | ||||
| Cash distributions paid on common stock | (18,757,570 | ) | ||
| Net cash provided by (used in) financing activities | (18,757,570 | ) | ||
| Net increase (decrease) in cash | 738,570 | |||
| Cash: | ||||
| Beginning balance | 104,831 | |||
| Ending balance | $ | 843,401 | ||
| Supplemental disclosure | ||||
| Cash paid for interest | $ | 1,622,291 | ||
| See Notes to Financial Statements | 27 |
| Notes to Financial Statements High Yield Strategies Fund Inc. |
Note A—Summary of Significant Accounting Policies:
| 1 | General: Neuberger Berman High Yield Strategies Fund Inc. (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. Under the 1940 Act, the status of a Fund that was registered as non-diversified may, under certain circumstances, change to that of a diversified fund. The Fund is currently a diversified fund. Management is the investment manager to the Fund. The Fund’s shares of common stock are listed on the NYSE MKT under the symbol 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: In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by the Fund are carried at the value that 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. | |
| ● |
Level 1 – quoted prices in active markets for identical investments
|
| ● |
Level 2 – other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, amortized cost, etc.)
|
| ● |
Level 3 – unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
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 held by the Fund:
Corporate Bonds. Inputs used to value corporate debt securities generally include relative credit information, observed market movements, sector news, U.S. Treasury yield curve or relevant benchmark curve, 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.
28
| The value of loan assignments 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 interest rate swaps is determined by Management primarily by obtaining valuations from independent pricing services based on references to the underlying rates including the local overnight index swap rate and the respective interbank offered forward rate to produce the daily price. The present value is calculated based off of expected cash flows based on swap parameters along with reference to the underlying yield curve and reference rate (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 non-exchange traded investment companies are valued using the respective fund’s daily calculated net asset value per share (Level 2 inputs). | |
| 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, securities within the same industry with recent highly correlated performance, 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. | |
| 3 | Securities transactions and investment income: Securities 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. Included in net realized gain (loss) on investments are proceeds from the settlements of class action litigation in which the Fund participated as a class member. The amount of such proceeds for the year ended October 31, 2016 was 5,664. |
| 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 stockholders. To the extent the Fund distributes substantially all of its net investment income and net realized capital gains to stockholders, 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, 2016, the Fund did not have any unrecognized tax positions. | |
| At October 31, 2016, the cost of investments for U.S. federal income tax basis was $368,943,658. Gross unrealized appreciation of investments was $15,206,951 and gross unrealized depreciation of investments was $7,675,237 resulting in net unrealized appreciation of $7,531,714 based on cost for U.S. federal income tax purposes. | |
29
As determined on October 31, 2016, 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: gains and losses on interest rate swaps, expiration of capital loss carryforwards and non-deductible restructuring costs. These reclassifications had no effect on net income, net asset value (“NAV”) applicable to common stockholders or NAV per share of common stock of the Fund. For the year ended October 31, 2016, the Fund recorded the following permanent reclassifications:
| Accumulated Net | ||||
| Undistributed | Realized Gains | |||
| Net Investment | (Losses) on | |||
| Paid-in Capital | Income (Loss) | Investments | ||
| $(4,993,455) | $(694,298) | $5,687,753 |
The tax character of distributions paid during the years ended October 31, 2016 and October 31, 2015 was as follows:
| Distributions Paid From: | ||||||||||||||
| Ordinary Income | Long-Term Capital Gains | Tax Return of Capital | Total | |||||||||||
| 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | |||||||
| $18,712,931 | $19,331,537 | $— | $— | $1,111,086 | $1,351,795 | $19,824,017 | $20,683,332 | |||||||
As of October 31, 2016, the components of distributable earnings (accumulated losses) on a U.S. federal income tax basis were as follows:
| Undistributed | Undistributed | Unrealized | Loss | Other | ||||||
| Ordinary | Long-Term | Appreciation/ | Carryforwards | Temporary | ||||||
| Income | Capital Gain | (Depreciation) | and Deferrals | Differences | Total | |||||
| $— | $— | $7,796,519 | $(31,110,342) | $(128,175) | $(23,441,998) |
The temporary differences between book basis and tax basis distributable earnings are primarily due to: losses disallowed and recognized on wash sales, distribution payments, mark to market on certain swap contract transactions, delayed settlement compensation on bank loans 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 made 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, 2016, 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: 2017 |
| $4,089,608 |
| Post-Enactment (No Expiration Date) | ||
| Long-Term | Short-Term | |
| $22,480,483 | $4,540,251 | |
During the year ended October 31, 2016, the Fund had capital loss carryforwards expire of $4,971,059.
30
| 5 | Foreign taxes: Foreign taxes withheld, if any, represent amounts withheld by foreign tax authorities net of refunds recoverable. |
| 6 | Distributions to common stockholders: 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 stockholders. The Fund has adopted a policy to pay common stockholders 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 2016 will be reported to Fund stockholders 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 stockholders 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 stockholders are accrued and determined as described in Note A-8. |
| On October 31, 2016, the Fund declared a monthly distribution to common stockholders in the amount of $0.08 per share, payable on November 30, 2016 to stockholders of record on November 15, 2016, with an ex-date of November 11, 2016. Subsequent to October 31, 2016, the Fund declared a monthly distribution to common stockholders in the amount of $0.08 per share, payable on December 30, 2016 to stockholders of record on December 15, 2016, with an ex-date of December 13, 2016. | |
| 7 | Expense allocation: Certain expenses are applicable to multiple funds within the complex of related investment companies, which includes open-end and closed-end investment companies for which Management serves as investment manager. Expenses directly attributable to the Fund are charged to the Fund. Expenses borne by the complex of related investment companies that are not directly attributable to a particular investment company (e.g., the Fund) are allocated among the Fund and the other investment companies or series thereof in the complex on the basis of relative net assets, except where a more appropriate allocation of expenses to each of the investment companies or series thereof in the complex can otherwise be made fairly. |
| 8 | Financial leverage: In 2010, the Fund issued 1,087 privately placed perpetual preferred shares (“PPS”) with an aggregate liquidation preference of $27,175,000 and privately placed notes (“PNs”) with an aggregate principal value of $82,610,000. 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 liquidation preference 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 (“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, 2016, the distribution rates on the MRPS ranged from 2.73% to 3.24% and the interest rates on the New PNs ranged from 1.53% to 2.04%. | |
31
| Mandatory | Aggregate | |||||||||
| Redemption | Interest | Shares | Liquidation | Estimated | ||||||
| Series | Date | Rate | Outstanding | Preference | Fair Value | |||||
| Series B | 9/18/23 | 3.2377%* | 1,400 | $35,000,000 | $35,000,000 |
| * |
Floating rate effective for the year ended October 31, 2016.
|
|
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 stockholders or repurchasing shares of common stock and/or could trigger the mandatory redemption of MRPS at 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 shares of common stock 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 likelihood of volatility and potential 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 shares of common stock may fluctuate more than would be the case if the Fund did not concentrate in high yield securities. |
| 10 |
Derivative instruments: The Fund’s use of derivatives during the year ended October 31, 2016, is described below. Please see the Schedule of Investments for the Fund’s open positions in derivatives, at October 31, 2016. 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: During the year ended October 31, 2016 the Fund used interest rate swaps 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 OTC interest rate swaps, 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. |
|
32
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 stockholders or its total net increase (decrease) in net assets applicable to common stockholders resulting from operations.
Certain clearinghouses currently offer clearing for limited types of derivative transactions. 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. The daily change in valuation for centrally cleared swaps is recorded as a receivable or payable for variation margin and settled in cash with the centrally clearing party daily.
For financial reporting purpose unamortized upfront payments, if any, are netted with unrealized appreciation or (depreciation) on swap contracts to determine the market value of swaps as presented in the table below.
At October 31, 2016, the Fund had the following derivatives (which did not qualify for hedge accounting under ASC 815), grouped by primary risk exposure:
| Asset Derivatives | Interest Rate Risk | Statement of Assets and Liabilities Location | ||
| Centrally Cleared Interest Rate Swaps | $340,213 | Receivable/Payable for variation margin on centrally cleared | ||
| interest rate swaps (a) | ||||
| Total Value - Assets | $340,213 | |||
| Liability Derivatives | Interest Rate Risk | Statement of Assets and Liabilities Location | ||
| Centrally Cleared Interest Rate Swaps | $(324,772) | Receivable/Payable for variation margin on centrally cleared | ||
| interest rate swaps (a) | ||||
| Total Value - Liabilities | $(324,772) | |||
| (a) | “Centrally Cleared Interest Rate Swaps” reflects cumulative unrealized appreciation or (depreciation). Only the current day’s variation margin on open centrally cleared interest rate swaps is reported within the Statement of Assets and Liabilities as “Payable for variation margin on centrally cleared interest rate swaps (Note A).” |
The impact of the use of these derivative instruments on the Statement of Operations during the year ended October 31, 2016, was as follows:
| Realized Gain (Loss) | ||||
| Interest Rate Risk | Statement of Operations Location | |||
| Interest Rate Swaps | $(719,453) | Net realized gain (loss) | ||
| Total Realized Gain (Loss) | $(719,453) | on: interest rate swaps | ||
| Change in Appreciation/ (Depreciation) | ||||
| Interest Rate Risk | Statement of Operations Location | |||
| Interest Rate Swaps | $893,346 | Change in net unrealized appreciation/ | ||
| Total Change in Appreciation/(Depreciation) | $893,346 | (depreciation) in value of: interest rate swaps | ||
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
33
|
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. At October 31, 2016, the Fund had no derivatives eligible for offset or subject to an enforceable master netting or similar agreement. |
|
| 11 |
Indemnifications: Like many other companies, the Fund’s organizational documents provide that its officers (“Officers”) and directors (“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).” |
Note B—Investment Management Fees, Administration Fees, Distribution Arrangements, and Other Transactions with Affiliates:
|
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. For purposes of calculating Managed Assets, the Liquidation Value of any MRPS (PPS prior to September 2013) outstanding and borrowings under the New PNs (PNs prior to September 2013) are not considered liabilities. Prior to January 1, 2016, Neuberger Berman Fixed Income LLC (“NBFI”) was the sub-adviser to the Fund, retained by Management pursuant to a Sub-Advisory Agreement to be responsible for developing, implementing and supervising the Fund’s investment program and providing certain administrative services to the Fund, and received a monthly fee paid by Management. Several individuals who are Officers and/or Directors of the Fund are also employees of 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. In April 2016, the Fund recorded a capital contribution from a portfolio manager in the amount of $2,435. This amount was paid in accordance with Section 16(b) of the Securities Exchange Act of 1934, as amended. |
Note C—Securities Transactions:
|
During the year ended October 31, 2016, there were purchases and sales of long-term securities (excluding interest rate swap contracts) of $201,360,413 and $199,503,684, respectively. |
34
Note D—Legal Matters:
|
On June 1, 2015, the Fund was served with a lawsuit filed in the United States Bankruptcy Court for the Southern District of New York, entitled Motors Liquidation Company Avoidance Action Trust vs. JPMorgan Chase Bank, N.A. et al. and numbered Adv. No. 09-00504 (MG). In addition to the Fund, the lawsuit also names over five hundred other institutional investors as defendants. The lawsuit does not allege any misconduct by the defendants, but seeks to recover payments made by General Motors Corporation (n/k/a Motors Liquidation Company) and its affiliates (collectively, “GM”) to the defendants shortly prior to and after GM’s Chapter 11 bankruptcy filing on June 1, 2009 (the “Petition Date”). The complaint alleges that GM made the payments to the defendants under a certain term loan agreement, dated as of November 29, 2006, as amended by that first amendment dated as of March 4, 2009 (the “Term Loan Agreement”); that the payments occurred both during the ninety (90) days prior to the Petition Date and after the Petition Date when all amounts due under the Term Loan Agreement were paid in full in connection with GM’s postpetition financing (the “Postpetition Transfers”); that the lien purportedly securing the Term Loan Agreement was not perfected as of the Petition Date; and that the lenders under the Term Loan Agreement should therefore have been treated as unsecured creditors rather than paid in full as secured creditors. The plaintiff seeks avoidance of the lien securing the Term Loan Agreement as unperfected under Section 544(a) of the Bankruptcy Code; disgorgement of all amounts paid to the defendants as Postpetition Transfers (plus interest) under Section 549 of the Bankruptcy Code; and disallowance of any bankruptcy claims of the defendants against GM until they repay all such amounts under Section 502(d) of the Bankruptcy Code. During 2009, the Fund received pay downs from GM in connection with the term loan totaling approximately $3.0 million. The Fund cannot predict the outcome of the lawsuit. If the lawsuit were to be decided or settled in a manner adverse to the Fund, the payment of such judgment or settlement could have an adverse effect on the Fund’s net asset value. However, no liability for litigation relating to this matter has been accrued in the financial statements as neither the likelihood nor the amount of any liability can reasonably be determined at this time. The Fund will incur legal expenses associated with the defense of the lawsuit. |
Note E—Legal Entity Consolidation:
|
Effective January 1, 2016, Neuberger Berman Management LLC (“NBM”) transferred to NBFI its rights and obligations pertaining to all services it provided to the Fund under the Management Agreement and Administration Agreement (the “Agreements”). Following such transfer, NBFI was renamed Neuberger Berman Investment Advisers LLC. Additionally, effective January 1, 2016, the Sub-Advisory Agreement between NBM and NBFI was terminated. Management now serves as the Fund’s investment manager and administrator. The investment professionals of NBM, who provided services to the Fund under the Agreements, continue to provide the same services, except that they provide those services in their new capacities as investment professionals of Management. Similarly, the investment professionals of NBFI, who provided services to the Fund under the Sub-Advisory Agreement, continue to provide the same services, except that they provide those services pursuant to the Management Agreement. Further, the consolidation did not result in any change in the investment processes currently employed by the Fund, the nature or level of services provided to the Fund, or the fees the Fund pays under its Agreements. |
35
High Yield Strategies Fund Inc.
The following table includes selected data for a share of common stock outstanding throughout each year and other performance information derived from the Financial Statements. Amounts that do not round to $0.01 or $(0.01) per share are presented as $0.00 or $(0.00), respectively. Ratios that do not round to 0.01% or (0.01)% are presented as 0.00% or (0.00)%, respectively. Net Asset amounts with a zero balance, if any, may reflect actual amounts rounding to less than $0.1 million. A “—” indicates that the line item was not applicable in the corresponding period.
| See Notes to Financial Highlights | 36 |
| † |
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 shares of common stock at the market price on the first day and sales of common stock 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 of common stock 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. |
| # |
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 0.01%. |
| @ |
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)) 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 accumulated unpaid liabilities on Private Securities (PPS and PNs prior to September 18, 2013) and New PNs (PNs prior to September 18, 2013)) 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 stockholders outstanding. Income ratios include income earned on assets attributable to MRPS (PPS prior to September 18, 2013) outstanding. Income ratios also include the effect of interest expense from the PNs. |
| ¢ |
Calculated based on the average number of shares of common stock outstanding during each fiscal period. |
| ¢¢ |
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 to Financial Statements). |
| Ø |
Interest expense is included in expense ratios. The annualized ratio of interest expense to average net assets applicable to common stockholders was: |
| Year Ended October 31, | ||||||||
| 2016 | 2015 | 2014 | 2013 | 2012 | ||||
| 0.68% | 0.51% | 0.46% | 0.58% | 0.69% | ||||
| a |
The payments by affiliates received in 2014 and 2016 had no impact on the Fund’s total returns for the years ended October 31, 2014 and October 31, 2016, respectively. |
| b |
The class action proceeds listed in Note A of the Notes to Financial Statements had no impact on the Fund’s total return for the year ended October 31, 2016. |
37
To the Board of Directors and Stockholders 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, 2016, 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 five years in the period then ended. 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, 2016 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, 2016, 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 five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
December 21, 2016
38
Computershare, Inc. (the “Plan Agent”) will act as Plan Agent for stockholders 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
39
Participant’s account. For the purpose of cash investments, the Plan Agent may commingle each Participant’s funds with those of other stockholders 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 stockholders 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 stockholders 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.
40
Reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions — i.e., reinvestment in additional Shares does not relieve stockholders 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.
41
| Directory |
| Investment Manager and Administrator | Stock Transfer Agent |
| Neuberger Berman Investment Advisers LLC | Computershare, Inc. |
| 1290 Avenue of the Americas | 480 Washington Boulevard |
| New York, NY 10104-0002 | Jersey City, NJ 07310 |
| 877.461.1899 or 212.476.8800 | |
| Sub-Adviser (prior to January 1, 2016) | Plan Agent |
| Neuberger Berman Fixed Income LLC | Computershare, Inc. |
| 200 South Wacker Drive | P.O. Box 30170 |
| Suite 2100 | College Station, TX 77842-3170 |
| Chicago, IL 60601 | |
| Overnight correspondence should be sent to: | |
| Custodian | Computershare, Inc. |
| State Street Bank and Trust Company | 211 Quality Circle, Suite 210 |
| One Lincoln Street | College Station, TX 77845 |
| Boston, MA 02111 | |
| 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 | |
42
| Directors and Officers |
The following tables set forth information concerning the Directors and Officers of the Fund. All persons named as Directors and Officers also serve in similar capacities for other funds administered or managed by Management. 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 calling (877) 461-1899.
Information about the Board of Directors
| Name, (Year of Birth), | Position(s) | Principal Occupation(s) (3) | Number of | Other Directorships Held | ||||
| and Address (1) | and Length of | Funds in | Outside Fund Complex by | |||||
| Time Served (2) | Fund Complex | Director (3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| CLASS I | ||||||||
| Independent Directors | ||||||||
| Marc Gary (1952) |
Director since
2015 |
Executive Vice Chancellor and Chief Operating Officer, Jewish Theological Seminary, since 2012; formerly, Executive Vice President and General Counsel, Fidelity Investments, 2007 to 2012; Executive Vice President and General Counsel, BellSouth Corporation, 2004 to 2007; Vice President and Associate General Counsel, BellSouth Corporation, 2000 to 2004; Associate, Partner, and National Litigation Practice Co-Chair, Mayer, Brown LLP, 1981 to 2000; Associate Independent Counsel, Office of Independent Counsel, 1990 to 1992. |
55 |
Trustee, Jewish Theological Seminary, since 2015; Director, Counsel on Call (privately held for-profit company), since 2012; Director, Lawyers Committee for Civil Rights Under Law (not-for-profit), since 2005; formerly, Director, Equal Justice Works (not-for-profit), 2005 to 2014; Director, Corporate Counsel Institute, Georgetown University Law Center, 2007 to 2012; Director, Greater Boston Legal Services (not-for-profit), 2007 to 2012. |
||||
| 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. |
55 |
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. |
||||
43
44
| Name, (Year of Birth), | Position(s) | Principal Occupation(s) (3) | Number of | Other Directorships Held | ||||
| and Address (1) | and Length of | Funds in | Outside Fund Complex by | |||||
| Time Served (2) | Fund Complex | Director (3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Michael J. Cosgrove (1949) |
Director since
2015 |
President, Carragh Consulting USA, since 2014; formerly, Executive, General Electric Company, 1970 to 2014, including President, Mutual Funds and Global Investment Programs, GE Asset Management, 2011 to 2014, President and Chief Executive Officer, Mutual Funds and Intermediary Business, GE Asset Management, 2007 to 2011, President, Institutional Sales and Marketing, GE Asset Management, 1998 to 2007, and Chief Financial Officer, GE Asset Management and Deputy Treasurer, GE Company, 1988 to 1993. |
55 |
Director, America Press, Inc. (not-for-profit Jesuit publisher), since 2015; Director, Fordham University, since 2001; formerly, Director, The Gabelli Go Anywhere Trust, June 2015 to June 2016; Director, Skin Cancer Foundation (not-for-profit), 2006 to 2015; Director, GE Investments Funds, Inc., 1997 to 2014; Trustee, GE Institutional Funds, 1997 to 2014; Director, GE Asset Management, 1988 to 2014; Director, Elfun Trusts, 1988 to 2014. |
||||
| Deborah C. McLean (1954) |
Director since
2015 |
Member, Circle Financial Group (private wealth management membership practice), since 2011; Managing Director, Golden Seeds LLC (an angel investing group), since 2009; Adjunct Professor, Columbia University School of International and Public Affairs, since 2008; formerly, Visiting Assistant Professor, Fairfield University, Dolan School of Business, Fall 2007; formerly, Adjunct Associate Professor of Finance, Richmond, The American International University in London, 1999 to 2007. |
55 |
Board member, Norwalk Community College Foundation, since 2014; Dean’s Advisory Council, Radcliffe Institute for Advanced Study, since 2014; formerly, Director and Treasurer, At Home in Darien (not-for-profit), 2012 to 2014; Director, National Executive Service Corps (not-for-profit), 2012 to 2013; Trustee, Richmond, The American International University in London, 1999 to 2013. |
45
| Name, (Year of Birth), | Position(s) | Principal Occupation(s) (3) | Number of | Other Directorships Held | ||||
| and Address (1) | and Length of | Funds in | Outside Fund Complex by | |||||
| Time Served (2) | Fund Complex | Director (3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| 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 United Bank, Connecticut (a financial services company), 1991 to 2001. |
55 |
Director, 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, Treasurer, National Association of Corporate Directors, Connecticut Chapter, 2011 to 2015; 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. |
||||
| 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. |
55 |
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. |
46
| Name, (Year of Birth), | Position(s) | Principal Occupation(s) (3) | Number of | Other Directorships Held | ||||
| and Address (1) | and Length of | Funds in | Outside Fund Complex by | |||||
| Time Served (2) | Fund Complex | Director (3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| 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. |
55 |
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. |
||||
47
| Name, (Year of Birth), | Position(s) | Principal Occupation(s) (3) | Number of | Other Directorships Held | ||||
| and Address (1) | and Length of | Funds in | Outside Fund Complex by | |||||
| Time Served (2) | Fund Complex | Director (3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Howard A. Mileaf (1937) |
Director since
2006 |
Retired; formerly, Vice President and General Counsel, WHX Corporation (holding company), 1993 to 2001. |
55 |
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. |
55 |
Formerly, Public Member, Board of Governors and Board of Trustees, Rutgers University, 2011 to 2016; formerly, Director, Montpelier Re Holdings Ltd. (reinsurance company), 2006 to 2015; 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. |
||||
| James G. Stavridis (1955) |
Director since
2015 |
Dean, Fletcher School of Law and Diplomacy, Tufts University since 2013; formerly, Admiral, United States Navy, 2006 to 2013, including Supreme Allied Commander, NATO and Commander, European Command, 2009 to 2013, and Commander, United States Southern Command, 2006 to 2009. |
55 |
Director, Utilidata Inc., since 2015; Director, BMC Software Federal, LLC, since 2014; Director, Vertical Knowledge, LLC, since 2013; formerly, Director, Navy Federal Credit Union, 2000-2002. |
48
| (1) |
The business address of each listed person is 1290 Avenue of the Americas New York, NY 10104.
|
|
| (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 stockholders held in 2018, 2019 and 2017, respectively, and at each third annual meeting of stockholders thereafter.
|
|
| (3) |
Except as otherwise indicated, each individual has held the positions shown during at least the last five years.
|
|
| * | Indicates a Director who is an “interested person” within the meaning of the 1940 Act. Mr. Amato and Mr. Conti are interested persons of the Fund by virtue of the fact that each is an officer of NBIA and/or its affiliates. |
49
| Information about the Officers of the Fund |
| Name, (Year of Birth), and | Position(s) | Principal Occupation(s) (3) | ||
| Address (1) | and Length of | |||
| Time Served (2) | ||||
|
Claudia A. Brandon (1956) |
Executive Vice President since 2008 and Secretary since 2006 |
Senior Vice President, Neuberger Berman, since 2007 and Employee since 1999; Senior Vice President, NBIA, since 2008 and Assistant Secretary since 2004; formerly, Vice President, Neuberger Berman, 2002 to 2006; formerly, Vice President – Mutual Fund Board Relations, NBIA, 2000 to 2008; formerly, Vice President, NBIA, 1986 to 1999 and Employee, 1984 to 1999; Executive Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator; Secretary, fifteen registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Agnes Diaz (1971) |
Vice President since 2013 |
Senior Vice President, Neuberger Berman, since 2012; Senior Vice President, NBIA, since 2012 and Employee since 1996; formerly, Vice President, Neuberger Berman, 2007 to 2012; Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Anthony DiBernardo (1979) |
Assistant Treasurer since 2011 |
Senior Vice President, NBIA, since 2014, and Employee since 2003; formerly, Vice President, Neuberger Berman, 2009 to 2014; Assistant Treasurer, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Corey A. Issing (1978) |
Chief Legal Officer since 2016 (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002) and Anti-Money Laundering Compliance Officer since 2016 |
General Counsel and Head of Compliance– Mutual Funds since 2016 and Senior Vice President, NBIA, since 2013, formerly, Associate General Counsel (2015 to 2016), Counsel (2007 to 2015), Vice President (2009 – 2013); Chief Legal Officer (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002), twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator; Anti-Money Laundering Compliance Officer, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Sheila R. James (1965) |
Assistant Secretary since 2006 |
Vice President, Neuberger Berman, since 2008 and Employee since 1999; Vice President, NBIA, since 2008; formerly, Assistant Vice President, Neuberger Berman, 2007; Employee, NBIA, 1991 to 1999; Assistant Secretary, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Brian Kerrane (1969) |
Chief Operating Officer since 2015 and Vice President since 2008 |
Managing Director, Neuberger Berman, since 2013; Chief Operating Officer – Mutual Funds and Managing Director, NBIA, since 2015 and Employee since 1991; formerly, Senior Vice President, Neuberger Berman, 2006 to 2014; Vice President, NBIA, 2008 to 2015 and Employee since 1991; Chief Operating Officer, ten registered investment companies for which NBIA acts as investment manager and/or administrator; Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
50
| Name, (Year of Birth), and | Position(s) | Principal Occupation(s) (3) | ||
| Address (1) | and Length of | |||
| Time Served (2) | ||||
|
Kevin Lyons (1955) |
Assistant Secretary since 2006 |
Assistant Vice President, Neuberger Berman, since 2008 and Employee since 1999; Assistant Vice President, NBIA, since 2008; formerly, Employee, NBIA, 1993 to 1999; Assistant Secretary, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Anthony Maltese (1959) |
Vice President since 2015 |
Senior Vice President, Neuberger Berman, since 2014 and Employee since 2000; Senior Vice President, NBIA, since 2014; Vice President, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Owen F. McEntee, Jr. (1961) |
Vice President since 2008 |
Vice President, Neuberger Berman, since 2006; Vice President, NBIA, since 2006 and Employee since 1992; Vice President, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
John M. McGovern (1970) |
Treasurer and Principal Financial and Accounting Officer since 2006 |
Senior Vice President, Neuberger Berman, since 2007; Senior Vice President, NBIA, since 2007 and Employee since 1993; formerly, Vice President, Neuberger Berman, 2004 to 2006; formerly, Assistant Treasurer, 2002 to 2005; Treasurer and Principal Financial and Accounting Officer, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Frank Rosato (1971) |
Assistant Treasurer since 2006 |
Vice President, Neuberger Berman, since 2006; Vice President, NBIA, since 2006 and Employee since 1995; Assistant Treasurer, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Chamaine Williams (1971) |
Chief Compliance Officer since 2006 |
Chief Compliance Officer–Mutual Funds and Senior Vice President, NBIA, since 2006; 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; Chief Compliance Officer, fifteen registered investment companies for which NBIA acts as investment manager and/or administrator. |
| (1) | The business address of each listed person is 1290 Avenue of the Americas New York, NY 10104. |
| (2) | Pursuant to the Bylaws of the Fund, each officer elected by the Directors shall hold office until his or her successor shall have been elected and qualified or until his or her earlier death, inability to serve, or resignation. Officers serve at the pleasure of the Directors and may be removed at any time with or without cause. |
| (3) | Except as otherwise indicated, each individual has held the positions shown during at least the last five years. |
51
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).
Notice to Stockholders
For the fiscal year ended October 31, 2016, the maximum amount of ordinary income distribution that is designated as qualified interest income, pursuant to the American Jobs Creation Act of 2004, was $20,357,930.
52
An annual meeting of stockholders was held on September 7, 2016. Stockholders voted to elect five Class II Directors (one of which to be elected only by holders of preferred stock) to serve until the annual meeting of stockholders in 2019, or until their successors are elected and qualified. Class I Directors (which include Marc Gary, Michael M. Knetter, Peter P. Trapp, and Robert Conti) and the Class III Directors (which include Martha C. Goss, Howard A. Mileaf, James G. Stavridis, Candace L. Straight, and Joseph V. Amato) continue to hold office until the annual meeting in 2018 and 2017, respectively.
To elect five Class II Directors (one of which to be elected only by holders of preferred stock) to serve until the annual meeting of stockholders in 2019 or until their successors are elected and qualified.
Shares of Common and Preferred Stock
| Votes | Broker | |||||||
| Votes For | Withheld | Abstentions | Non-Votes | |||||
| Faith Colish | 15,819,555 | 683,053 | — | — | ||||
| Michael J. Cosgrove | 15,867,934 | 634,674 | — | — | ||||
| Deborah C. McLean | 15,822,556 | 680,052 | — | — | ||||
| Tom D. Seip | 15,853,903 | 648,705 | — | — | ||||
| Shares of Preferred Stock | ||||||||
| Votes | Broker | |||||||
| Votes For | Withheld | Abstentions | Non-Votes | |||||
| George W. Morriss | 1,400 | — | — | — | ||||
53
On an annual basis, the Board of Directors (the “Board”) of Neuberger Berman High Yield Strategies Fund Inc. (the “Fund”), including the Directors who are not “interested persons” of Neuberger Berman Investment Advisers LLC (“Management”) (including its affiliates) or the Fund (“Independent Fund Directors”), considers whether to continue the Fund’s management agreement with Management (the “Agreement”). Throughout the process, the Independent Fund Directors are advised by counsel that is experienced in Investment Company Act of 1940 matters and that is independent of Management (“Independent Counsel”). At a meeting held on October 18, 2016, the Board, including the Independent Fund Directors, approved the continuation of the Agreement.
In evaluating the Agreement, the Board, including the Independent Fund Directors, reviewed extensive materials provided by Management in response to questions submitted by the Independent Fund Directors and Independent Counsel, 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 has 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; compliance and stockholder and other services provided by Management and its 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. Those committees provide reports that feed into the Contract Review Committee, which reviews and takes account of the information.
The Independent Fund Directors received from Independent Counsel a memorandum discussing the legal standards for their consideration of the proposed continuation of the Agreement. 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 Independent Counsel separately from representatives of Management.
In connection with its approval of the continuation of the Agreement, the Board evaluated the terms of the Agreement, the overall fairness of the Agreement to the Fund and whether the Agreement was in the best interests of the Fund and Fund stockholders. 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; (2) the investment performance of the Fund compared to an appropriate market index 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 the Fund’s stockholders. The Board’s determination to approve the continuation of the Agreement 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, and each Director may have attributed different weights to the various factors. The Board focused on the overall costs and benefits of the Agreement to the Fund and, through the Fund, its stockholders.
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 the qualifications, experience, capabilities of, and resources available to, the portfolio management personnel of Management 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 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
54
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 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 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 net asset value performance of a composite peer group (as constructed by an independent organization) of closed-end investment companies pursuing broadly similar strategies. Considering short-, intermediate- and long-term performance enables the Board to evaluate performance in a variety of market conditions. The Board also reviewed performance in relation to certain measures of the degree of investment risk undertaken by the 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 also considered Management’s responsiveness with respect to the Fund’s lagging performance. In this regard, 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 Agreement and that, after considering all relevant factors, it may be appropriate to approve the continuation of the Agreement notwithstanding the Fund’s underperformance. The Board met with the Portfolio Managers of the Fund during the period since the last contract renewal to discuss the Fund’s performance.
With respect to the overall fairness of the Agreement, the Board considered the fee structure for the Fund under the Agreement as compared to a peer group of comparable funds and any fall-out (i.e. indirect) benefits likely to accrue to Management or its affiliates from their relationship with the Fund. The Board also considered the profitability of Management and its affiliates from their association with the Fund, 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 total 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 this was the case 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.
With regard to the investment performance of the Fund and the costs of the services provided to the Fund, the Board considered the following information. The Board noted that, as compared to its peer group, the Fund’s contractual management fee and the actual management fee on managed assets (which include leverage proceeds) as a percentage of assets attributable to common stockholders were both lower than the respective medians. The Board considered that, as compared to its peer group, the Fund’s performance was lower than the median for the 1, 3 and 5-year periods, but higher than the median for the 10-year period. The Board also considered that, as compared to its benchmark, the Fund’s performance was lower for the 1, 3 and 5-year periods, but higher for the 10-year period.
The Board also considered whether there were other funds or separate accounts that were advised or sub-advised by Management or its affiliates with investment objectives, policies and strategies that were similar to those of the Fund. The Board had before them the fees charged to the Fund and the fees charged to an advised fund and separate accounts managed in similar styles to the Fund. The Board was aware of the additional expenses borne by common stockholders as a result of the Fund’s leveraged structure. The Board considered the appropriateness and reasonableness of any differences between the fees charged to the Fund and any such comparable funds and/or separate accounts and determined that differences in fees and fee structures were consistent with the management and other services provided.
55
The Board also considered that Management has provided, at no added cost to the Fund, certain additional services that were required by new regulations or regulatory interpretations, impelled by changes in the securities markets or the business landscape, and/or requested by the Board. In concluding that the benefits accruing to Management and 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 or loss on the Fund for a recent period. The Board also considered 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 on the Fund was reasonable.
Conclusions
In approving the continuation of the Agreement, the Board concluded that the terms of the Agreement are fair and reasonable to the Fund and that approval of the continuation of the Agreement is in the best interests of the Fund and its stockholders. In reaching this determination, the Board considered that Management could be expected to provide a high level of service to the Fund; that, regarding the Fund’s underperformance, it retained confidence in Management’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 the 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 Agreement 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 Agreement.
56
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Neuberger Berman Investment Advisers LLC
|
|||||
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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 stockholders and is not an offer of shares of the Fund. |
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|
|
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|
H0768 12/16 | ||||
|
|
|||||
|
|
|||||
|
(a)
|
The complete schedule of investments for the Registrant is disclosed in the Registrant’s Annual Report, which is included as Item 1 of this Form N-CSR.
|
|
(b)
|
Not applicable.
|
|
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)
|
|
Russ Covode
|
||||
|
Registered Investment Companies*
|
6
|
5,096
|
—
|
—
|
|
Other Pooled Investment Vehicles**
|
19
|
14,673
|
4
|
974
|
|
Other Accounts***
|
36
|
7,118
|
—
|
—
|
|
Daniel Doyle
|
||||
|
Registered Investment Companies*
|
7
|
5,398
|
—
|
—
|
|
Other Pooled Investment Vehicles**
|
24
|
17,752
|
4
|
974
|
|
Other Accounts***
|
34
|
6,952
|
—
|
—
|
|
Patrick Flynn
|
||||
|
Registered Investment Companies*
|
6
|
5,096
|
—
|
—
|
|
Other Pooled Investment Vehicles**
|
21
|
14,794
|
4
|
974
|
|
Other Accounts***
|
34
|
6,952
|
—
|
—
|
|
Thomas P. O’Reilly
|
||||
|
Registered Investment Companies*
|
7
|
5,398
|
—
|
—
|
|
Other Pooled Investment Vehicles**
|
26
|
17,874
|
4
|
974
|
|
Other Accounts***
|
36
|
7,118
|
—
|
—
|
|
*
|
Registered Investment Companies include: Mutual Funds.
|
|
**
|
A portion of certain accounts may be managed by other portfolio managers; however, the total assets of such accounts are included above even though the portfolio manager listed above is not involved in the day-to-day management of the entire account.
|
|
***
|
Other Accounts include: Institutional Separate Accounts, Sub-Advised Accounts and Managed Accounts (WRAP Accounts).
|
|
Portfolio Manager
|
Dollar Range of Equity
Securities Owned in the
Registrant
|
|
Russ Covode
|
A
|
|
Daniel Doyle
|
A
|
|
Patrick Flynn
|
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 Act) as of a date within 90 days of the filing date of this report, the Chief Executive Officer and President and the 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 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 Advisers Management Trust’s Form N-CSRS, Investment Company Act file number 811-04255 (filed August 25, 2016).
|
| (a)(2) |
The certifications required by Rule 30a-2(a) under 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 certification required by Rule 30a-2(b) under the Act and Section 906 of the Sarbanes-Oxley Act is furnished herewith.
|
|
By:
|
/s/ Robert Conti
|
|
|
|
|
Robert Conti
|
|
|
|
|
Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Conti
|
|
|
|
|
Robert Conti
|
|
|
|
|
Chief Executive Officer and President
|
|
|
Date: January 6, 2017
|
By:
|
/s/ John M. McGovern
|
|
|
|
|
John M. McGovern
|
|
|
|
|
Treasurer and Principal Financial
|
|
|
| and Accounting Officer |