New York, New York 10104-0002
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Neuberger Berman
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Semi-Annual Report April 30, 2021 |
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As permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website www.nb.com/CEFliterature, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800.877.9700 or by sending an e-mail request to fundinfo@nb.com. You may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.877.9700 or send an email request to fundinfo@nb.com to inform the Fund that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund. |
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President’s Letter |
Dear Stockholder,
I am pleased to present this semi-annual report for Neuberger Berman High Yield Strategies Fund Inc. (the Fund) for the six months ended April 30, 2021 (the reporting period). The report includes a portfolio commentary, a listing of the Fund’s investments and its unaudited 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.
As previously communicated, on November 10, 2020, the Fund commenced a tender offer to purchase up to 25% of its outstanding shares of common stock for cash at a price equal to 96% of its net asset value (NAV) per share determined on the date the tender offer expired, December 10, 2020. In accordance with the terms of the tender offer, since the tender offer was oversubscribed, the Fund purchased 25% of its outstanding shares of common stock on a pro-rata basis, with appropriate adjustment to avoid purchase of fractional shares of common stock. The Fund purchased 4,885,146 shares of common stock at a purchase price of $12.03 per share, representing 96% of the NAV per share as of the close of the regular trading session of the NYSE on December 10, 2020. Shares of the Fund’s common stock that were not purchased remain outstanding.
As previously announced, in connection with the reduction in the Fund’s asset level following the tender offer, the Fund reduced the total amount of leverage it employs. The Fund redeemed a portion of its outstanding Mandatory Redeemable Preferred Shares (Preferred Shares) and prepaid a portion of its outstanding Floating Rate Senior Notes (Notes). The total amount of leverage employed by the Fund was reduced from $125 million to $95.5 million, consisting of $76 million of Preferred Shares and $19.5 million of Notes.
Neuberger Berman continues to monitor the ongoing developments related to COVID-19 with a particular focus on two areas: the safety and health of its employees and clients, and the ability to continue to conduct effectively its investment and business operations, including all critical services. Neuberger Berman has a dedicated Business Continuity Management team staffed with full-time professionals, who partner with over 60 Business Continuity Coordinators covering all business functions across all geographies. Neuberger Berman currently has not experienced a significant impact on its operating model and will continue to monitor the potential long-term implications for global economies. Neuberger Berman will remain flexible and look to adapt, as necessary, the firm’s operations and processes to most effectively manage portfolios.
Thank you for your confidence in the Fund. We will continue to do our best to retain your trust in the years to come.
Sincerely,
Joseph V. Amato
President and CEO
Neuberger Berman High Yield Strategies Fund Inc.
| 1 |
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Neuberger Berman High Yield Strategies Fund Inc.
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Neuberger Berman High Yield Strategies Fund Inc. (the Fund) generated a 12.93% total return on a net asset value (NAV) basis for the six months ended April 30, 2021 (the reporting period), outperforming its benchmark, the ICE BofA U.S. High Yield Constrained Index (the Index), which provided an 8.13% total return for the same period. The use of leverage (typically a performance enhancer in up markets and a detractor during market retreats) enhanced the Fund’s performance during the reporting period. (Fund performance on a market price basis is provided in the table immediately following this commentary.)
The overall high yield market, as measured by the Index, generated a strong return and significantly outperformed the overall investment-grade fixed income market, as measured by the Bloomberg Barclays U.S. Aggregate Bond Index, during the reporting period, as U.S. Treasury yields moved higher. This was primarily driven by the rollout of COVID-19 vaccines, improving economic data and an uptick in inflation expectations. Despite this improving economic backdrop, the U.S. Federal Reserve Board continued to indicate that it planned to maintain a highly accommodative monetary policy. Credit spreads, which substantially widened at the onset of the pandemic, tightened over the reporting period. Dispersion in returns across credit quality and between distressed and non-distressed was also a feature of the high yield market over the reporting period. While we did shift the positioning to reflect the new credit cycle and declining default trends, many of the distressed issuers do not meet our disciplined credit underwriting standards.
From a sector perspective, security selection within and an underweight to health care versus the Index, security selection within automotive & auto parts, and an overweight to and security selection within gas distribution were the top contributors to performance. In contrast, security selection within and an underweight to energy, security selection within and an overweight to support-services, and security selection within aerospace & defense detracted the most from results.
In terms of the Fund’s credit quality, security selection within and an underweight to securities rated BB versus the Index and security selection within non-rated and securities rated B contributed the most to performance. Conversely, security selection within securities rated CCC and below and an underweight to non-rated securities were the primary detractors.
As it became increasingly clear that there would be a successful vaccination plan and the market’s expectations for growth improved, we selectively increased the Fund’s exposure to securities rated B and securities rated CCC and below. As credit spreads narrowed, especially in the higher quality segments, in part on expectations for some securities to be upgraded, we also decreased the Fund’s exposure to securities rated BB and BBB and above on relative valuation considerations.
The tender offer conducted by the Fund had an accretive impact to the Fund’s NAV and contributed to performance during the reporting period.
High yield spreads tightened over the reporting period and we believe valuations are more than compensating investors for what we see as a benign default outlook. The economic recovery is now confirmed by recent data and we anticipate it to be on an improving trajectory, which continues to be supportive of issuer fundamentals. We believe that continued progress on vaccinations, combined with significant consumer pent-up demand for travel, leisure and services, businesses rebuilding inventories and rehiring plus accommodative monetary and fiscal policy, should continue to support economic activity going forward. While any interruptions in COVID-19 vaccine delivery or an increase in cases could result in pockets of short-term volatility, we believe our bottom-up, fundamental credit research focused on individual credit selection while seeking to avoid defaults and credit deterioration and putting only our “best ideas” into portfolios, position us well to take advantage of any volatility.
Sincerely,
Russ Covode, Daniel Doyle, Joe Lind and Chris Kocinski
Portfolio Co-Managers
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.
The performance of certain rated bonds within the Index, as noted above, represent issues that are rated Baa1/BBB+ through Baa3/BBB-, Ba1/BB+ through Ba3/BB-, B1/B+ through B3/B- and Caa1/CCC+ or lower, based on an average of Moody’s, S&P Global and Fitch ratings, as calculated by ICE BofA.
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2 |
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| TICKER SYMBOL |
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| High Yield Strategies Fund |
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NHS |
| PORTFOLIO BY MATURITY DISTRIBUTION | |||
| (as a % of Total Investments*) |
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| Less than One Year |
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0.0 | % |
| One to less than Five Years |
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25.4 |
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| Five to less than Ten Years |
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70.7 |
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| Ten Years or Greater |
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3.9 |
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| Total |
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100.0 | % |
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Does not include Short-Term Investments or the impact of the Fund’s open positions in derivatives, if any. |
| PERFORMANCE HIGHLIGHTS1 | |||||||||||||||||||||||||||
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Six Month |
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Average Annual Total Return | |||||||||||||||||||||
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Period |
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Ended 04/30/2021 | |||||||||||||||||||||
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Inception |
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Ended |
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Date | 04/30/2021 | 1 Year | 5 Years | 10 Years | Life of Fund | |||||||||||||||||||||
| At NAV2 |
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07/28/2003 |
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12.93 | % |
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34.67 | % |
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9.11 | % |
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7.50 | % |
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9.40 | % | ||||||
| At Market Price3 |
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07/28/2003 |
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24.89 | % |
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44.62 | % |
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12.41 | % |
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7.43 | % |
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9.19 | % |
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| Index |
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| ICE BofA |
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| U.S. High Yield |
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| Constrained Index4 |
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8.13 | % |
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20.01 | % |
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7.31 | % |
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6.26 | % |
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7.57 | % |
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Listed 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 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 (“NBIA”) had not waived certain expenses during certain of the periods shown. The waived fees are from prior years that are no longer disclosed in the Financial Highlights.
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3 |
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| Endnotes |
| 1 | The performance information for periods prior to August 6, 2010 is that of a predecessor fund (Neuberger Berman High Yield Strategies 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 American. |
| 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.
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4 |
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| Description of Index |
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ICE BofA U.S. High Yield
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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 the 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 NBIA 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 |
| Legend April 30, 2021 (Unaudited) |
Neuberger Berman High Yield Strategies Fund Inc.
Benchmarks
LIBOR = London Interbank Offered Rate
Currency Abbreviations:
USD = United States Dollar
Counterparties:
SSB = State Street Bank and Trust Company
Clearinghouses:
CME = CME Group, Inc.
Index Periods/Payment Frequencies:
1M = 1 Month
3M = 3 Months
6M = 6 Months
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6 |
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| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) April 30, 2021 |
| See Notes to Financial Statements | 7 |
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| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| See Notes to Financial Statements | 8 |
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| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
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VALUE | |||||
| $ | 185,000 | Panther BF Aggregator 2 L.P./Panther Finance Co., Inc., 6.25%, due 5/15/2026 | $ | 196,227 | (f) | ||
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475,000 |
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Tenneco, Inc., 7.88%, due 1/15/2029 |
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534,826 | (f) |
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4,284,972 |
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| Automakers 3.8% |
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Ford Motor Co. |
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1,090,000 |
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9.63%, due 4/22/2030 |
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1,528,725 |
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300,000 |
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7.45%, due 7/16/2031 |
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385,875 |
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760,000 |
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4.75%, due 1/15/2043 |
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766,346 |
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3,055,000 |
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7.40%, due 11/1/2046 |
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3,796,448 | (h) |
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525,000 |
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5.29%, due 12/8/2046 |
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552,773 |
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7,030,167 |
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| Beverages 0.7% |
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1,325,000 |
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Triton Water Holdings, Inc., 6.25%, due 4/1/2029 |
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1,341,562 | (f) |
| Building & Construction 0.3% |
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Shea Homes L.P./Shea Homes Funding Corp. |
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300,000 |
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4.75%, due 2/15/2028 |
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305,250 | (f) |
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280,000 |
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4.75%, due 4/1/2029 |
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282,926 | (f) |
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588,176 |
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| Building Materials 2.3% |
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975,000 |
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Cornerstone Building Brands, Inc., 6.13%, due 1/15/2029 |
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1,039,672 | (f) |
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1,775,000 |
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Jeld-Wen, Inc., 4.88%, due 12/15/2027 |
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1,854,875 | (f) |
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1,370,000 |
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Masonite Int’l Corp., 5.38%, due 2/1/2028 |
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1,445,350 | (f) |
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4,339,897 |
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| Cable & Satellite Television 4.9% |
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CSC Holdings LLC |
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430,000 |
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7.50%, due 4/1/2028 |
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473,538 | (f) |
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535,000 |
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6.50%, due 2/1/2029 |
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591,175 | (f) |
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3,085,000 |
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5.75%, due 1/15/2030 |
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3,279,741 | (f) |
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880,000 |
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4.63%, due 12/1/2030 |
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860,200 | (f) |
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DISH DBS Corp. |
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595,000 |
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7.75%, due 7/1/2026 |
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685,737 |
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505,000 |
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7.38%, due 7/1/2028 |
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545,362 |
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925,000 |
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Radiate Holdco LLC/Radiate Finance, Inc., 6.50%, due 9/15/2028 |
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962,980 | (f) |
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800,000 |
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Virgin Media Finance PLC, 5.00%, due 7/15/2030 |
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797,664 | (f) |
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800,000 |
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Virgin Media Vendor Financing Notes IV DAC, 5.00%, due 7/15/2028 |
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809,808 | (f) |
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9,006,205 |
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| Chemicals 2.7% |
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640,000 |
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Hexion, Inc., 7.88%, due 7/15/2027 |
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688,931 | (f) |
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325,000 |
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Illuminate Buyer LLC/Illuminate Holdings IV, Inc., 9.00%, due 7/1/2028 |
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364,000 | (f) |
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1,050,000 |
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Nouryon Holding BV, 8.00%, due 10/1/2026 |
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1,115,730 | (f) |
| See Notes to Financial Statements | 9 |
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| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| See Notes to Financial Statements | 10 |
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| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
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VALUE | |||||
| $ | 1,040,000 | PDC Energy, Inc., 5.75%, due 5/15/2026 | $ | 1,081,267 |
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Range Resources Corp. |
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375,000 |
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4.88%, due 5/15/2025 |
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|
372,656 |
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770,000 |
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9.25%, due 2/1/2026 |
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|
845,522 |
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9,364,099 |
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| Food - Wholesale 3.3% |
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925,000 |
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BCPE Empire Holdings, Inc., 7.63%, due 5/1/2027 |
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|
920,375 | (f) |
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Performance Food Group, Inc. |
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|
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|
240,000 |
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6.88%, due 5/1/2025 |
|
|
256,531 | (f) |
|
|
1,390,000 |
|
5.50%, due 10/15/2027 |
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|
1,464,838 | (f) |
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Post Holdings, Inc. |
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|
400,000 |
|
5.75%, due 3/1/2027 |
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|
419,000 | (f) |
|
|
865,000 |
|
4.63%, due 4/15/2030 |
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|
873,650 | (f) |
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|
745,000 |
|
4.50%, due 9/15/2031 |
|
|
739,636 | (f) |
|
|
1,365,000 |
|
U.S. Foods, Inc., 4.75%, due 2/15/2029 |
|
|
1,376,944 | (f) |
|
|
|
|
|
|
|
6,050,974 |
|
| Forestry & Paper 0.3% |
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|
|
|
|||
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|
605,000 |
|
SpA Holdings 3 Oy, 4.88%, due 2/4/2028 |
|
|
608,781 | (f) |
| Gaming 5.0% |
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|
|
|
|||
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|
|
|
Boyd Gaming Corp. |
|
|
|
|
|
|
1,335,000 |
|
6.38%, due 4/1/2026 |
|
|
1,378,387 |
|
|
|
270,000 |
|
6.00%, due 8/15/2026 |
|
|
280,125 |
|
|
|
1,225,000 |
|
4.75%, due 12/1/2027 |
|
|
1,255,735 |
|
|
|
1,540,000 |
|
Caesars Entertainment, Inc., 8.13%, due 7/1/2027 |
|
|
1,711,217 | (f) |
|
|
1,140,000 |
|
Caesars Resort Collection LLC/CRC Finco, Inc., 5.25%, due 10/15/2025 |
|
|
1,149,277 | (f) |
|
|
|
|
Scientific Games Int’l, Inc. |
|
|
|
|
|
|
400,000 |
|
5.00%, due 10/15/2025 |
|
|
413,000 | (f) |
|
|
475,000 |
|
8.25%, due 3/15/2026 |
|
|
511,813 | (f) |
|
|
1,240,000 |
|
7.00%, due 5/15/2028 |
|
|
1,333,000 | (f) |
|
|
1,240,000 |
|
Wynn Las Vegas LLC/Wynn Las Vegas Capital Corp., 5.50%, due 3/1/2025 |
|
|
1,323,700 | (f) |
|
|
|
|
|
|
|
9,356,254 |
|
| Gas Distribution 11.6% |
|
|
|
|
|||
|
|
|
|
Antero Midstream Partners L.P./Antero Midstream Finance Corp. |
|
|
|
|
|
|
530,000 |
|
5.38%, due 9/15/2024 |
|
|
538,612 |
|
|
|
1,800,000 |
|
7.88%, due 5/15/2026 |
|
|
1,962,000 | (f) |
|
|
|
|
Buckeye Partners L.P. |
|
|
|
|
|
|
810,000 |
|
3.95%, due 12/1/2026 |
|
|
810,000 |
|
|
|
910,000 |
|
4.13%, due 12/1/2027 |
|
|
898,625 |
|
|
|
460,000 |
|
5.85%, due 11/15/2043 |
|
|
452,815 |
|
|
|
785,000 |
|
Cheniere Energy Partners L.P., 4.50%, due 10/1/2029 |
|
|
819,344 |
|
|
|
920,000 |
|
DCP Midstream LLC, 5.85%, due 5/21/2043 |
|
|
832,600 | (f)(i) |
| See Notes to Financial Statements | 11 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
|
VALUE | |||||
|
|
|
|
DCP Midstream Operating L.P. |
|
|
|
|
| $ | 685,000 | 5.63%, due 7/15/2027 | $ | 748,130 |
|
||
|
|
595,000 |
|
5.60%, due 4/1/2044 |
|
|
610,294 |
|
|
|
|
|
EQM Midstream Partners L.P. |
|
|
|
|
|
|
345,000 |
|
6.00%, due 7/1/2025 |
|
|
376,913 | (f) |
|
|
250,000 |
|
6.50%, due 7/1/2027 |
|
|
276,059 | (f) |
|
|
320,000 |
|
4.50%, due 1/15/2029 |
|
|
317,600 | (f) |
|
|
320,000 |
|
4.75%, due 1/15/2031 |
|
|
316,765 | (f) |
|
|
|
|
EQT Midstream Partners L.P. |
|
|
|
|
|
|
450,000 |
|
4.13%, due 12/1/2026 |
|
|
454,500 |
|
|
|
1,095,000 |
|
5.50%, due 7/15/2028 |
|
|
1,163,109 |
|
|
|
|
|
Genesis Energy L.P./Genesis Energy Finance Corp. |
|
|
|
|
|
|
165,000 |
|
6.50%, due 10/1/2025 |
|
|
165,825 |
|
|
|
520,000 |
|
6.25%, due 5/15/2026 |
|
|
509,210 |
|
|
|
275,000 |
|
8.00%, due 1/15/2027 |
|
|
283,311 |
|
|
|
|
|
Global Partners L.P./GLP Finance Corp. |
|
|
|
|
|
|
160,000 |
|
7.00%, due 8/1/2027 |
|
|
171,048 |
|
|
|
270,000 |
|
6.88%, due 1/15/2029 |
|
|
291,938 |
|
|
|
625,000 |
|
Harvest Midstream I L.P., 7.50%, due 9/1/2028 |
|
|
673,437 | (f) |
|
|
|
|
New Fortress Energy, Inc. |
|
|
|
|
|
|
800,000 |
|
6.75%, due 9/15/2025 |
|
|
827,752 | (f) |
|
|
1,815,000 |
|
6.50%, due 9/30/2026 |
|
|
1,851,899 | (f) |
|
|
|
|
NuStar Logistics L.P. |
|
|
|
|
|
|
400,000 |
|
5.75%, due 10/1/2025 |
|
|
430,500 |
|
|
|
355,000 |
|
6.00%, due 6/1/2026 |
|
|
384,731 |
|
|
|
435,000 |
|
5.63%, due 4/28/2027 |
|
|
457,837 |
|
|
|
585,000 |
|
Summit Midstream Holdings LLC/Summit Midstream Finance Corp., 5.75%, due 4/15/2025 |
|
|
491,400 |
|
|
|
|
|
Tallgrass Energy Partners L.P./Tallgrass Energy Finance Corp. |
|
|
|
|
|
|
202,000 |
|
5.50%, due 9/15/2024 |
|
|
205,788 | (f) |
|
|
375,000 |
|
7.50%, due 10/1/2025 |
|
|
409,687 | (f) |
|
|
500,000 |
|
6.00%, due 3/1/2027 |
|
|
507,350 | (f) |
|
|
405,000 |
|
5.50%, due 1/15/2028 |
|
|
399,938 | (f) |
|
|
405,000 |
|
6.00%, due 12/31/2030 |
|
|
406,012 | (f) |
|
|
1,010,000 |
|
Targa Resources Partners L.P./Targa Resources Partners Finance Corp., 5.50%, due 3/1/2030 |
|
|
1,092,406 |
|
|
|
1,270,000 |
|
Western Midstream Operating L.P., 5.30%, due 2/1/2030 |
|
|
1,385,887 | (k) |
|
|
|
|
|
|
|
21,523,322 |
|
| Health Facilities 7.2% |
|
|
|
|
|||
|
|
|
|
Acadia Healthcare Co., Inc. |
|
|
|
|
|
|
730,000 |
|
5.50%, due 7/1/2028 |
|
|
771,062 | (f) |
|
|
270,000 |
|
5.00%, due 4/15/2029 |
|
|
279,113 | (f) |
|
|
|
|
CHS/Community Health Systems, Inc. |
|
|
|
|
|
|
590,000 |
|
8.13%, due 6/30/2024 |
|
|
615,813 | (f) |
|
|
1,375,000 |
|
8.00%, due 12/15/2027 |
|
|
1,512,500 | (f) |
|
|
2,605,000 |
|
6.88%, due 4/15/2029 |
|
|
2,722,225 | (f) |
|
|
480,000 |
|
4.75%, due 2/15/2031 |
|
|
476,400 | (f) |
|
|
635,000 |
|
Select Medical Corp., 6.25%, due 8/15/2026 |
|
|
675,154 | (f) |
| See Notes to Financial Statements | 12 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
|
VALUE | |||||
|
|
|
|
Tenet Healthcare Corp. |
|
|
|
|
| $ | 1,215,000 | 6.75%, due 6/15/2023 | $ | 1,326,780 |
|
||
|
|
320,000 |
|
4.63%, due 6/15/2028 |
|
|
330,637 | (f) |
|
|
4,455,000 |
|
6.13%, due 10/1/2028 |
|
|
4,700,025 | (f) |
|
|
|
|
|
|
|
13,409,709 |
|
| Health Services 3.6% |
|
|
|
|
|||
|
|
925,000 |
|
DaVita, Inc., 4.63%, due 6/1/2030 |
|
|
936,562 | (f) |
|
|
1,125,000 |
|
Envision Healthcare Corp., 8.75%, due 10/15/2026 |
|
|
816,784 | (f) |
|
|
845,000 |
|
Jaguar Holding Co. II/PPD Development L.P., 5.00%, due 6/15/2028 |
|
|
921,473 | (f) |
|
|
1,579,000 |
|
Ortho-Clinical Diagnostics, Inc./Ortho-Clinical Diagnostics SA, 7.25%, due 2/1/2028 |
|
|
1,732,163 | (f) |
|
|
1,445,000 |
|
Team Health Holdings, Inc., 6.38%, due 2/1/2025 |
|
|
1,275,212 | (f) |
|
|
320,000 |
|
U.S. Acute Care Solutions LLC, 6.38%, due 3/1/2026 |
|
|
334,080 | (f) |
|
|
550,000 |
|
Vizient, Inc., 6.25%, due 5/15/2027 |
|
|
582,582 | (f) |
|
|
|
|
|
|
|
6,598,856 |
|
| Hotels 1.5% |
|
|
|
|
|||
|
|
1,895,000 |
|
Park Intermediate Holdings LLC/PK Domestic Property LLC/PK Finance Co-Issuer, 5.88%, due |
|
|
2,011,069 | (f) |
|
|
|
|
10/1/2028 |
|
|
|
|
|
|
825,000 |
|
Wyndham Hotels & Resorts, Inc., 4.38%, due 8/15/2028 |
|
|
851,565 | (f) |
|
|
|
|
|
|
|
2,862,634 |
|
| Insurance Brokerage 5.7% |
|
|
|
|
|||
|
|
1,295,000 |
|
Alliant Holdings Intermediate LLC/Alliant Holdings Co-Issuer, 6.75%, due 10/15/2027 |
|
|
1,359,750 | (f) |
|
|
1,425,000 |
|
AmWINS Group, Inc., 7.75%, due 7/1/2026 |
|
|
1,512,281 | (f) |
|
|
|
|
AssuredPartners, Inc. |
|
|
|
|
|
|
1,515,000 |
|
7.00%, due 8/15/2025 |
|
|
1,545,300 | (f) |
|
|
815,000 |
|
5.63%, due 1/15/2029 |
|
|
826,190 | (f) |
|
|
2,605,000 |
|
GTCR AP Finance, Inc., 8.00%, due 5/15/2027 |
|
|
2,774,325 | (f) |
|
|
2,520,000 |
|
HUB Int’l Ltd., 7.00%, due 5/1/2026 |
|
|
2,610,897 | (f) |
|
|
|
|
|
|
|
10,628,743 |
|
| Machinery 2.1% |
|
|
|
|
|||
|
|
495,000 |
|
Granite U.S. Holdings Corp., 11.00%, due 10/1/2027 |
|
|
555,637 | (f)(g) |
|
|
630,000 |
|
Harsco Corp., 5.75%, due 7/31/2027 |
|
|
664,222 | (f) |
|
|
730,000 |
|
Terex Corp., 5.00%, due 5/15/2029 |
|
|
759,200 | (f) |
|
|
1,485,000 |
|
Vertical Holdco GmbH, 7.63%, due 7/15/2028 |
|
|
1,618,650 | (f) |
|
|
360,000 |
|
Vertical U.S. Newco, Inc., 5.25%, due 7/15/2027 |
|
|
376,877 | (f) |
|
|
|
|
|
|
|
3,974,586 |
|
| Managed Care 0.9% |
|
|
|
|
|||
|
|
1,685,000 |
|
MPH Acquisition Holdings LLC, 5.75%, due 11/1/2028 |
|
|
1,661,562 | (f)(g) |
| Media Content 2.0% |
|
|
|
|
|||
|
|
1,070,000 |
|
Lions Gate Capital Holdings LLC, 5.50%, due 4/15/2029 |
|
|
1,072,675 | (f) |
|
|
545,000 |
|
Scripps Escrow II, Inc., 5.38%, due 1/15/2031 |
|
|
552,494 | (f) |
|
|
1,855,000 |
|
Sirius XM Radio, Inc., 5.50%, due 7/1/2029 |
|
|
2,004,559 | (f) |
|
|
|
|
|
|
|
3,629,728 |
|
| See Notes to Financial Statements | 13 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| See Notes to Financial Statements | 14 |
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
|
VALUE | |||||
| Real Estate Investment Trusts 7.6% |
|
|
|
|
|||
| $ | 485,000 | Communications Sales & Leasing, Inc./CSL Capital LLC, 7.13%, due 12/15/2024 | $ | 500,714 | (f) | ||
|
|
|
|
EPR Properties |
|
|
|
|
|
|
430,000 |
|
4.50%, due 6/1/2027 |
|
|
442,980 |
|
|
|
290,000 |
|
4.95%, due 4/15/2028 |
|
|
303,129 |
|
|
|
305,000 |
|
3.75%, due 8/15/2029 |
|
|
296,609 |
|
|
|
|
|
ESH Hospitality, Inc. |
|
|
|
|
|
|
100,000 |
|
5.25%, due 5/1/2025 |
|
|
102,030 | (f) |
|
|
1,195,000 |
|
4.63%, due 10/1/2027 |
|
|
1,266,700 | (f) |
|
|
|
|
Iron Mountain, Inc. |
|
|
|
|
|
|
2,605,000 |
|
5.25%, due 3/15/2028 |
|
|
2,732,645 | (f) |
|
|
245,000 |
|
5.00%, due 7/15/2028 |
|
|
253,575 | (f) |
|
|
2,120,000 |
|
4.88%, due 9/15/2029 |
|
|
2,159,263 | (f) |
|
|
905,000 |
|
5.63%, due 7/15/2032 |
|
|
954,268 | (f) |
|
|
|
|
Outfront Media Capital LLC/Outfront Media Capital Corp. |
|
|
|
|
|
|
145,000 |
|
5.00%, due 8/15/2027 |
|
|
149,531 | (f) |
|
|
415,000 |
|
4.63%, due 3/15/2030 |
|
|
410,850 | (f) |
|
|
1,345,000 |
|
RHP Hotel Properties L.P./RHP Finance Corp., 4.75%, due 10/15/2027 |
|
|
1,384,166 |
|
|
|
|
|
Uniti Group L.P./Uniti Fiber Holdings, Inc./CSL Capital LLC |
|
|
|
|
|
|
1,285,000 |
|
7.88%, due 2/15/2025 |
|
|
1,384,588 | (f) |
|
|
1,820,000 |
|
6.00%, due 4/15/2023 |
|
|
1,847,300 | (f) |
|
|
|
|
|
|
|
14,188,348 |
|
| Recreation & Travel 7.4% |
|
|
|
|
|||
|
|
|
|
Carnival Corp. |
|
|
|
|
|
|
1,155,000 |
|
10.50%, due 2/1/2026 |
|
|
1,361,341 | (f) |
|
|
205,000 |
|
7.63%, due 3/1/2026 |
|
|
224,475 | (f) |
|
|
1,810,000 |
|
5.75%, due 3/1/2027 |
|
|
1,908,428 | (f) |
|
|
1,095,000 |
|
9.88%, due 8/1/2027 |
|
|
1,286,625 | (f) |
|
|
1,005,000 |
|
Cedar Fair L.P./Canada’s Wonderland Co./Magnum Management Corp./Millennium Op, 5.50%, | 1,052,858 | (f) | ||
|
|
|
|
due 5/1/2025 |
|
|
|
|
|
|
900,000 |
|
Motion Bondco DAC, 6.63%, due 11/15/2027 |
|
|
909,000 | (f) |
|
|
985,000 |
|
NCL Corp. Ltd., 5.88%, due 3/15/2026 |
|
|
1,029,325 | (f) |
|
|
1,085,000 |
|
NCL Finance Ltd., 6.13%, due 3/15/2028 |
|
|
1,142,852 | (f) |
|
|
|
|
Royal Caribbean Cruises Ltd. |
|
|
|
|
|
|
405,000 |
|
11.50%, due 6/1/2025 |
|
|
469,168 | (f) |
|
|
1,530,000 |
|
5.50%, due 4/1/2028 |
|
|
1,604,511 | (f) |
|
|
1,065,000 |
|
SeaWorld Parks & Entertainment, Inc., 9.50%, due 8/1/2025 |
|
|
1,156,398 | (f) |
|
|
555,000 |
|
Six Flags Entertainment Corp., 4.88%, due 7/31/2024 |
|
|
558,469 | (f) |
|
|
925,000 |
|
Six Flags Theme Parks, Inc., 7.00%, due 7/1/2025 |
|
|
999,342 | (f) |
|
|
|
|
|
|
|
13,702,792 |
|
| Software - Services 2.7% |
|
|
|
|
|||
|
|
615,000 |
|
Ahead DB Holdings LLC, 6.63%, due 5/1/2028 |
|
|
625,762 | (f) |
|
|
975,000 |
|
Endurance Acquisition Merger Sub, 6.00%, due 2/15/2029 |
|
|
933,562 | (f) |
|
|
430,000 |
|
Granite Merger Sub 2, Inc., 11.00%, due 7/15/2027 |
|
|
495,038 | (f) |
| See Notes to Financial Statements | 15 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
|
VALUE | |||||
|
|
|
|
Presidio Holdings, Inc. |
|
|
|
|
| $ | 295,000 | 4.88%, due 2/1/2027 | $ | 303,850 | (f) | ||
|
|
925,000 |
|
8.25%, due 2/1/2028 |
|
|
1,008,250 | (f) |
|
|
695,000 |
|
Rackspace Technology Global, Inc., 5.38%, due 12/1/2028 |
|
|
709,512 | (f)(g) |
|
|
975,000 |
|
Solera LLC/Solera Finance, Inc., 10.50%, due 3/1/2024 |
|
|
1,004,250 | (f) |
|
|
|
|
|
|
|
5,080,224 |
|
| Specialty Retail 3.6% |
|
|
|
|
|||
|
|
|
|
Carvana Co. |
|
|
|
|
|
|
540,000 |
|
5.63%, due 10/1/2025 |
|
|
556,200 | (f) |
|
|
1,620,000 |
|
5.50%, due 4/15/2027 |
|
|
1,639,521 | (f) |
|
|
700,000 |
|
Crocs, Inc., 4.25%, due 3/15/2029 |
|
|
711,137 | (f) |
|
|
|
|
L Brands, Inc. |
|
|
|
|
|
|
290,000 |
|
5.25%, due 2/1/2028 |
|
|
317,912 |
|
|
|
645,000 |
|
6.63%, due 10/1/2030 |
|
|
743,337 | (f) |
|
|
565,000 |
|
LCM Investments Holdings II LLC, 4.88%, due 5/1/2029 |
|
|
577,950 | (f) |
|
|
|
|
Petsmart, Inc./Petsmart Finance Corp. |
|
|
|
|
|
|
365,000 |
|
4.75%, due 2/15/2028 |
|
|
376,406 | (f) |
|
|
1,545,000 |
|
7.75%, due 2/15/2029 |
|
|
1,673,961 | (f) |
|
|
|
|
|
|
|
6,596,424 |
|
| Steel Producers - Products 1.1% |
|
|
|
|
|||
|
|
|
|
ArcelorMittal |
|
|
|
|
|
|
305,000 |
|
7.25%, due 10/15/2039 |
|
|
430,166 | (k) |
|
|
310,000 |
|
7.00%, due 3/1/2041 |
|
|
430,493 |
|
|
|
493,000 |
|
Joseph T Ryerson & Son, Inc., 8.50%, due 8/1/2028 |
|
|
544,740 | (f) |
|
|
670,000 |
|
TMS Int’l Corp., 6.25%, due 4/15/2029 |
|
|
696,800 | (f) |
|
|
|
|
|
|
|
2,102,199 |
|
| Support - Services 10.5% |
|
|
|
|
|||
|
|
|
|
APX Group, Inc. |
|
|
|
|
|
|
505,000 |
|
7.63%, due 9/1/2023 |
|
|
518,256 |
|
|
|
2,090,000 |
|
6.75%, due 2/15/2027 |
|
|
2,247,440 | (f) |
|
|
|
|
Aramark Services, Inc. |
|
|
|
|
|
|
1,660,000 |
|
6.38%, due 5/1/2025 |
|
|
1,765,825 | (f) |
|
|
630,000 |
|
5.00%, due 2/1/2028 |
|
|
659,138 | (f) |
|
|
1,060,000 |
|
ASGN, Inc., 4.63%, due 5/15/2028 |
|
|
1,102,400 | (f) |
|
|
|
|
Avis Budget Car Rental LLC/Avis Budget Finance, Inc. |
|
|
|
|
|
|
721,000 |
|
5.25%, due 3/15/2025 |
|
|
731,815 | (f) |
|
|
480,000 |
|
5.38%, due 3/1/2029 |
|
|
499,800 | (f) |
|
|
690,000 |
|
frontdoor, Inc., 6.75%, due 8/15/2026 |
|
|
731,628 | (f) |
|
|
1,810,000 |
|
Garda World Security Corp., 8.75%, due 5/15/2025 |
|
|
1,889,188 | (f) |
|
|
430,000 |
|
GW B-CR Security Corp., 9.50%, due 11/1/2027 |
|
|
474,075 | (f) |
|
|
785,000 |
|
IAA Spinco, Inc., 5.50%, due 6/15/2027 |
|
|
825,231 | (f) |
|
|
2,925,000 |
|
KAR Auction Services, Inc., 5.13%, due 6/1/2025 |
|
|
2,965,774 | (f) |
|
|
790,000 |
|
Korn/Ferry Int’l, 4.63%, due 12/15/2027 |
|
|
822,469 | (f) |
| See Notes to Financial Statements | 16 |
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| PRINCIPAL AMOUNT |
|
|
VALUE |
|
|||
|
|
|
|
Prime Security Services Borrower LLC/Prime Finance, Inc. |
|
|
|
|
| $ | 965,000 | 5.75%, due 4/15/2026 | $ | 1,055,546 | (f) | ||
|
|
990,000 |
|
6.25%, due 1/15/2028 |
|
|
1,034,550 | (f) |
|
|
538,000 |
|
Tempo Acquisition LLC/Tempo Acquisition Finance Corp., 6.75%, due 6/1/2025 |
|
|
547,931 | (f) |
|
|
735,000 |
|
Univar Solutions USA, Inc., 5.13%, due 12/1/2027 |
|
|
768,053 | (f) |
|
|
860,000 |
|
White Cap Buyer LLC, 6.88%, due 10/15/2028 |
|
|
912,675 | (f) |
|
|
|
|
|
|
|
19,551,794 |
|
| Technology Hardware & Equipment 2.4% |
|
|
|
|
|||
|
|
|
|
CommScope Finance LLC |
|
|
|
|
|
|
345,000 |
|
6.00%, due 3/1/2026 |
|
|
363,544 | (f) |
|
|
510,000 |
|
8.25%, due 3/1/2027 |
|
|
546,338 | (f) |
|
|
|
|
CommScope Technologies LLC |
|
|
|
|
|
|
1,354,000 |
|
6.00%, due 6/15/2025 |
|
|
1,377,695 | (f) |
|
|
1,375,000 |
|
5.00%, due 3/15/2027 |
|
|
1,362,195 | (f) |
|
|
660,000 |
|
CommScope, Inc., 7.13%, due 7/1/2028 |
|
|
713,625 | (f) |
|
|
|
|
|
|
|
4,363,397 |
|
| Telecom - Wireline Integrated & Services 6.9% |
|
|
|
|
|||
|
|
2,355,000 |
|
Altice France Holding SA, 6.00%, due 2/15/2028 |
|
|
2,336,867 | (f) |
|
|
|
|
Altice France SA |
|
|
|
|
|
|
1,960,000 |
|
8.13%, due 2/1/2027 |
|
|
2,148,650 | (f) |
|
|
675,000 |
|
5.50%, due 1/15/2028 |
|
|
695,385 | (f) |
|
|
|
|
Frontier Communications Corp. |
|
|
|
|
|
|
3,215,000 |
|
5.88%, due 10/15/2027 |
|
|
3,415,937 | (f) |
|
|
235,000 |
|
6.75%, due 5/1/2029 |
|
|
247,563 | (f) |
|
|
650,000 |
|
Lumen Technologies, Inc., 4.50%, due 1/15/2029 |
|
|
640,250 | (f) |
|
|
488,000 |
|
Numericable-SFR SA, 7.38%, due 5/1/2026 |
|
|
505,958 | (f) |
|
|
2,260,000 |
|
Uniti Group L.P./Uniti Group Finance, Inc./CSL Capital LLC, 6.50%, due 2/15/2029 |
|
|
2,246,519 | (f) |
|
|
645,000 |
|
Zayo Group Holdings, Inc., 6.13%, due 3/1/2028 |
|
|
663,544 | (f) |
|
|
|
|
|
|
|
12,900,673 |
|
| Theaters & Entertainment 2.0% |
|
|
|
|
|||
|
|
675,000 |
|
Cinemark USA, Inc., 5.88%, due 3/15/2026 |
|
|
699,469 | (f) |
|
|
|
|
Live Nation Entertainment, Inc. |
|
|
|
|
|
|
285,000 |
|
4.88%, due 11/1/2024 |
|
|
290,344 | (f) |
|
|
655,000 |
|
6.50%, due 5/15/2027 |
|
|
723,775 | (f) |
|
|
1,930,000 |
|
4.75%, due 10/15/2027 |
|
|
1,947,481 | (f) |
|
|
|
|
|
|
|
3,661,069 |
|
|
|
|
|
Total Corporate Bonds (Cost $246,481,910) |
|
|
255,837,438 |
|
| Convertible Bonds 1.0% |
|
|
|
|
|||
| Media 1.0% |
|
|
|
|
|||
|
|
1,787,000 |
|
DISH Network Corp., 3.38%, due 8/15/2026 (Cost $1,648,710) |
|
|
1,880,817 |
|
| See Notes to Financial Statements | 17 |
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| (a) | Variable or floating rate security. The interest rate shown was the current rate as of April 30, 2021 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 April 30, 2021 and thus may not have an interest rate in effect. Interest rates do not take effect until settlement. |
| (d) | Value determined using significant unobservable inputs. |
| (e) | The stated interest rates represent the range of rates at April 30, 2021 of the underlying contracts within the Loan Assignment. |
| See Notes to Financial Statements | 18 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
| (f) | Securities were purchased under Rule 144A of the Securities Act of 1933, as amended, or are otherwise restricted and, unless registered under the Securities Act of 1933 or exempted from registration, may only be sold to qualified institutional investors or may have other restrictions on resale. At April 30, 2021, these securities amounted to $216,620,345, which represents 116.5% of net assets applicable to common stockholders of the Fund. |
| (g) | The security or a portion of this security is on loan at April 30, 2021. Total value of all such securities at April 30, 2021 amounted to $4,452,818 for the Fund (see Note A of the Notes to Financial Statements). |
| (h) | All or a portion of this security is segregated in connection with obligations for swap contracts and/or delayed delivery securities with a total value of $7,713,031. |
| (i) | Security issued at a fixed coupon rate, which converts to a variable rate at a future date. Rate shown is the rate in effect as of period end. |
| (j) | Payment-in-kind (PIK) security. |
| (k) | 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 predetermined trigger. The interest rate shown was the current rate as of April 30, 2021. |
| (l) | Represents 7-day effective yield as of April 30, 2021. |
| (m) | Represents investment of cash collateral received from securities lending. |
| (n) | Includes the impact of the Fund’s open positions in derivatives at April 30, 2021. |
| (o) | As of April 30, 2021, the value of unfunded loan commitments was $263,998 for the Fund (see Note A of Notes to Financial Statements). |
Positions By Country
|
|
|
Investments |
|
|
Percentage of | ||
| Country | at Value |
|
Net Assets | ||||
| United States |
|
$ | 243,851,344 |
|
|
131.1 | % |
| Cayman Islands |
|
|
8,491,097 |
|
|
4.6 | % |
| Canada |
|
|
3,843,176 |
|
|
2.1 | % |
| France |
|
|
3,349,993 |
|
|
1.8 | % |
| Luxembourg |
|
|
3,197,526 |
|
|
1.7 | % |
| United Kingdom |
|
|
3,071,617 |
|
|
1.7 | % |
| Zambia |
|
|
2,783,700 |
|
|
1.5 | % |
| Germany |
|
|
1,995,527 |
|
|
1.1 | % |
| Netherlands |
|
|
1,854,030 |
|
|
1.0 | % |
| Peru |
|
|
1,016,681 |
|
|
0.5 | % |
| Ireland |
|
|
761,475 |
|
|
0.4 | % |
| Finland |
|
|
608,781 |
|
|
0.3 | % |
| Liquidation Preference of Mandatory Redeemable Preferred Shares |
|
|
(76,000,000 | ) |
|
(40.9) | % |
| Short-Term Investments and Other Liabilities-Net |
|
|
(12,911,377 | ) |
|
(6.9) | % |
|
|
|
$ | 185,913,570 |
|
|
100.0 | % |
| See Notes to Financial Statements | 19 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
Derivative Instruments
Interest rate swap contracts (“interest rate swaps”)
At April 30, 2021, the Fund had outstanding interest rate swaps as follows:
Centrally cleared interest rate swaps
|
|
|
|
|
Fund |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued |
|
|
|
|
|
|
|
|
|
|
|
Receives/ |
|
|
|
|
|
Frequency |
|
|
|
|
|
|
|
Net |
|
|
|
|
|
|
|
|
|
|
|
Pays |
|
|
|
|
|
of Fund |
|
|
|
Unrealized |
|
|
Interest |
|
|
|
|
|
||
|
|
|
Notional |
|
Floating |
|
Floating Rate |
|
Annual |
|
Receipt/ |
|
Maturity |
|
Appreciation/ |
|
|
Receivable/ |
|
|
|
|
|
||
| Clearinghouse | Amount | Rate | Index | Fixed-Rate | Payment | Date | (Depreciation) |
|
(Payable) |
|
Value |
|
||||||||||||
| CME |
|
USD 25,000,000 |
|
Receive |
|
3M LIBOR |
|
1.14% |
|
3M/6M |
|
6/17/2021 |
|
$ | (30,408 | ) |
|
$ | (101,537 | ) |
|
$ | (131,945 | ) |
| CME |
|
USD 20,000,000 |
|
Receive |
|
3M LIBOR |
|
0.99% |
|
3M/6M |
|
6/29/2021 |
|
|
(25,699 | ) |
|
|
(64,723 | ) |
|
|
(90,422 | ) |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | (56,107 | ) |
|
$ | (166,260 | ) |
|
$ | (222,367 | ) |
At April 30, 2021, the Fund had $311,151 deposited in a segregated account to cover margin requirements for centrally cleared swaps.
For the six months ended April 30, 2021, the average notional value for the months where the Fund had interest rate swaps outstanding was $45,000,000 when the Fund paid the fixed rate.
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 April 30, 2021:
| Asset Valuation Inputs | Level 1 | Level 2 | Level 3(b) | Total | ||||||||
| Investments: |
|
|
|
|
|
|
|
|
|
|
|
|
| Loan Assignments |
|
|
|
|
|
|
|
|
|
|
|
|
| Food Service |
|
$ | — |
|
$ | — |
|
$ | 592,500 |
|
$ | 592,500 |
| Industrial Equipment |
|
|
|
|
|
— |
|
|
682,143 |
|
|
682,143 |
| Other Loan Assignments(a) |
|
|
— |
|
|
10,133,460 |
|
|
— |
|
|
10,133,460 |
| Total Loan Assignments |
|
|
— |
|
|
10,133,460 |
|
|
1,274,643 |
|
|
11,408,103 |
| Corporate Bonds(a) |
|
|
— |
|
|
255,837,438 |
|
|
— |
|
|
255,837,438 |
| Convertible Bonds(a) |
|
|
— |
|
|
1,880,817 |
|
|
— |
|
|
1,880,817 |
| Asset-Backed Securities |
|
|
— |
|
|
5,698,589 |
|
|
— |
|
|
5,698,589 |
| Short-Term Investments |
|
|
— |
|
|
8,462,695 |
|
|
— |
|
|
8,462,695 |
| Total Investments |
|
$ | — |
|
$ | 282,012,999 |
|
$ | 1,274,643 |
|
$ | 283,287,642 |
| (a) | The Schedule of Investments provides information on the industry or sector categorization as well as a Positions by Country summary. |
| (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: |
| See Notes to Financial Statements | 20 |
|
| Schedule of Investments High Yield Strategies Fund Inc.^ |
| (Unaudited) (cont’d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in unrealized | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
appreciation/ | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(depreciation) | |
|
|
|
Beginning |
|
|
|
|
|
|
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
from | |||
|
|
|
balance, |
|
Accrued |
|
|
|
|
|
in unrealized |
|
|
|
|
|
|
|
|
Transfers |
|
Transfers |
|
Balance, |
|
investments | |||||||
|
|
|
as of |
|
discounts/ |
|
Realized |
|
|
appreciation/ |
|
|
|
|
|
|
|
|
into |
|
out of |
|
as of |
|
still held as of | ||||||||
|
|
11/1/2020 | (premiums) | gain/(loss) |
|
(depreciation) | Purchases | Sales |
|
Level 3 | Level 3 | 4/30/2021 | 4/30/2021 | ||||||||||||||||||||
| Investments in |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Securities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assignments(c) |
|
$ | 643,327 |
|
$ | 7,071 |
|
$ | (2,828 | ) |
|
$ | 83,285 |
|
$ | 665,723 |
|
$ | (669,063 | ) |
|
$ | 547,128 |
|
$ | — |
|
$ | 1,274,643 |
|
$ | 56,915 |
| Total |
|
$ | 643,327 |
|
$ | 7,071 |
|
$ | (2,828 | ) |
|
$ | 83,285 |
|
$ | 665,723 |
|
$ | (669,063 | ) |
|
$ | 547,128 |
|
$ | — |
|
$ | 1,274,643 |
|
$ | 56,915 |
| (c) | Securities categorized as Level 3 were valued using a single quotation obtained from a dealer. The Fund does not have access to unobservable inputs and therefore cannot disclose such inputs used in formulating such quotation. |
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 April 30, 2021:
| Other Financial Instruments | Level 1 | Level 2 |
|
Level 3 | Total |
|
||||||
| Swaps |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities |
|
$— |
|
$ | (222,367 | ) |
|
$— |
|
$ | (222,367 | ) |
| Total |
|
$— |
|
$ | (222,367 | ) |
|
$— |
|
$ | (222,367 | ) |
| ^ | A balance indicated with a “—”, reflects either a zero balance or an amount that rounds to less than 1. |
| See Notes to Financial Statements | 21 |
|
| Statement of Assets and Liabilities (Unaudited) |
Neuberger Berman
|
|
|
HIGH YIELD | ||
|
|
|
STRATEGIES | ||
|
|
FUND INC. | |||
|
|
|
April 30, 2021 | ||
| Assets |
|
|
|
|
| Investments in securities, at value*† (Note A)—see Schedule of Investments: |
|
|
|
|
| Unaffiliated issuers(a) |
|
$ | 283,287,642 |
|
| Cash |
|
|
1,952,760 |
|
| Cash collateral segregated for centrally cleared swap contracts (Note A) |
|
|
311,151 |
|
| Interest receivable |
|
|
3,818,187 |
|
| Receivable for securities sold |
|
|
1,228,822 |
|
| Receivable for securities lending income (Note A) |
|
|
2,195 |
|
| Prepaid expenses and other assets |
|
|
3 |
|
| Total Assets |
|
|
290,600,760 |
|
| Liabilities |
|
|
|
|
| Notes payable (net of unamortized deferred issuance costs of $312,020) (Note A) |
|
|
19,187,980 |
|
| Mandatory Redeemable Preferred Shares, Series C ($12.50 liquidation preference per share; 6,080,000 shares |
|
|
|
|
| issued and outstanding) (Note A) |
|
|
76,000,000 |
|
| Distributions payable—preferred shares |
|
|
412,424 |
|
| Distributions payable—common stock |
|
|
14,974 |
|
| Payable to investment manager (Note B) |
|
|
138,533 |
|
| Payable for securities purchased |
|
|
3,871,927 |
|
| Payable for accumulated variation margin on centrally cleared swap contracts (Note A) |
|
|
222,367 |
|
| Payable to administrator (Note B) |
|
|
11,544 |
|
| Payable to directors |
|
|
6,317 |
|
| Interest payable (Note A) |
|
|
23,550 |
|
| Payable for loaned securities collateral (Note A) |
|
|
4,546,113 |
|
| Payable for unfunded loan commitments (Note A) |
|
|
181 |
|
| Other accrued expenses and payables |
|
|
251,280 |
|
| Total Liabilities |
|
|
104,687,190 |
|
| Net Assets applicable to Common Stockholders |
|
$ | 185,913,570 |
|
| Net Assets applicable to Common Stockholders consist of: |
|
|
|
|
| Paid-in capital—common stock |
|
$ | 206,958,432 |
|
| Total distributable earnings/(losses) |
|
|
(21,044,862 | ) |
| Net Assets applicable to Common Stockholders |
|
$ | 185,913,570 |
|
| Shares of Common Stock Outstanding ($0.0001 par value; 999,999,997,100 shares authorized) |
|
|
14,656,635 |
|
| Net Asset Value Per Share of Common Stock Outstanding |
|
$ | 12.68 |
|
| † Securities on loan, at value: |
|
|
|
|
| Unaffiliated issuers |
|
$ | 4,452,818 |
|
| * Cost of Investments: |
|
|
|
|
| (a) Unaffiliated Issuers |
|
$ | 273,214,924 |
|
| See Notes to Financial Statements | 22 |
|
| Statement of Operations (Unaudited) |
Neuberger Berman
|
|
|
HIGH YIELD | ||
|
|
|
STRATEGIES | ||
|
|
FUND INC. | |||
|
|
|
For the Six | ||
|
|
|
Months Ended | ||
|
|
|
April 30, 2021 | ||
| Investment Income: |
|
|
|
|
| Income (Note A): |
|
|
|
|
| Interest and other income-unaffiliated issuers |
|
$ | 8,636,993 |
|
| Income from securities loaned-net |
|
|
11,504 |
|
| Total income |
|
$ | 8,648,497 |
|
| Expenses: |
|
|
|
|
| Investment management fees (Note B) |
|
|
897,178 |
|
| Administration fees (Note B) |
|
|
74,765 |
|
| Audit fees |
|
|
28,393 |
|
| Basic maintenance (Note A) |
|
|
6,199 |
|
| Custodian and accounting fees |
|
|
59,179 |
|
| Insurance |
|
|
6,244 |
|
| Legal fees |
|
|
248,811 |
|
| Stockholder reports |
|
|
25,374 |
|
| Stock exchange listing fees |
|
|
5,781 |
|
| Stock transfer agent fees |
|
|
15,016 |
|
| Distributions to mandatory redeemable preferred shareholders (Note A) |
|
|
913,655 |
|
| Directors’ fees and expenses |
|
|
23,609 |
|
| Interest |
|
|
225,890 |
|
| Miscellaneous |
|
|
15,880 |
|
| Total expenses |
|
|
2,545,974 |
|
| Net investment income/(loss) |
|
$ | 6,102,523 |
|
| Realized and Unrealized Gain/(Loss) on Investments (Note A): |
|
|
|
|
| Net realized gain/(loss) on: |
|
|
|
|
| Transactions in investment securities of unaffiliated issuers |
|
|
12,295,220 |
|
| Expiration or closing of swap contracts |
|
|
(188,372 | ) |
| Change in net unrealized appreciation/(depreciation) in value of: |
|
|
|
|
| Investment securities of unaffiliated issuers |
|
|
5,358,995 |
|
| Unfunded loan commitments |
|
|
(4,520 | ) |
| Swap contracts |
|
|
183,680 |
|
| Net gain/(loss) on investments |
|
|
17,645,003 |
|
| Net increase/(decrease) in net assets applicable to Common Stockholders resulting from operations |
|
$ | 23,747,526 |
|
| See Notes to Financial Statements | 23 |
|
| Statements of Changes in Net Assets |
Neuberger Berman
|
|
|
HIGH YIELD | ||||||
|
|
|
STRATEGIES FUND INC. | ||||||
|
|
Six Months Ended |
|
Fiscal Year Ended |
|
||||
|
|
|
April 30, 2021 |
|
|
October 31, |
|
||
|
|
|
(Unaudited) |
|
|
2020 |
|
||
| Increase/(Decrease) in Net Assets Applicable to Common Stockholders: |
|
|
|
|
|
|
|
|
| From Operations (Note A): |
|
|
|
|
|
|
|
|
| Net investment income/(loss) |
|
$ | 6,102,523 |
|
|
$ | 14,255,720 |
|
| Net realized gain/(loss) on investments |
|
|
12,106,848 |
|
|
|
(12,364,703 | ) |
| Change in net unrealized appreciation/(depreciation) of investments |
|
|
5,538,155 |
|
|
|
1,130,937 |
|
| Net increase/(decrease) in net assets applicable to Common Stockholders resulting |
|
|
|
|
|
|
|
|
| from operations |
|
|
23,747,526 |
|
|
|
3,021,954 |
|
| Distributions to Common Stockholders From (Note A): |
|
|
|
|
|
|
|
|
| Distributable earnings |
|
|
(8,400,117 | ) |
|
|
(15,049,600 | ) |
| Tax return of capital |
|
|
— |
|
|
|
(6,171,475 | ) |
| Total distributions to Common Stockholders |
|
|
(8,400,117 | ) |
|
|
(21,221,075 | ) |
| From Capital Share Transactions (Note D): |
|
|
|
|
|
|
|
|
| Proceeds from reinvestment of dividends and distributions |
|
|
15,035 |
|
|
|
— |
|
| Payments for shares repurchased in connection with common stock tender offer (Note E) |
|
|
(58,768,306 | ) |
|
|
— |
|
| Net increase/(decrease) from capital share transactions |
|
|
(58,753,271 | ) |
|
|
— |
|
| Net Increase/(Decrease) in Net Assets Applicable to Common Stockholders |
|
|
(43,405,862 | ) |
|
|
(18,199,121 | ) |
| Net Assets Applicable to Common Stockholders: |
|
|
|
|
|
|
|
|
| Beginning of period |
|
|
229,319,432 |
|
|
|
247,518,553 |
|
| End of period |
|
$ | 185,913,570 |
|
|
$ | 229,319,432 |
|
| See Notes to Financial Statements | 24 |
|
| Statement of Cash Flows (Unaudited) |
Neuberger Berman
|
|
|
HIGH YIELD | ||
|
|
|
STRATEGIES | ||
|
|
FUND INC. | |||
|
|
|
For the | ||
|
|
|
Six Months Ended | ||
|
|
|
April 30, 2021 | ||
| Increase/(Decrease) in cash: |
|
|
|
|
| Cash flows from operating activities: |
|
|
|
|
| Net increase in net assets applicable to Common Stockholders resulting from operations |
|
$ | 23,747,526 |
|
| 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 |
|
|
(112,781,690 | ) |
| Proceeds from disposition of investment securities |
|
|
199,515,982 |
|
| Purchase/sale of short-term investment securities, net |
|
|
1,111,145 |
|
| Increase/decrease in receivable/payable for accumulated variation margin on centrally cleared swap contracts |
|
|
(183,680 | ) |
| Decrease in interest receivable |
|
|
1,442,491 |
|
| Decrease in unamortized deferred issuance costs |
|
|
67,486 |
|
| Increase in receivable for securities lending income |
|
|
(1,359 | ) |
| Decrease in prepaid expenses and other assets |
|
|
20,626 |
|
| Increase in receivable for securities sold |
|
|
(693,696 | ) |
| Increase in payable for collateral on loaned securities |
|
|
1,548,553 |
|
| Decrease in distributions payable on preferred shares |
|
|
(127,991 | ) |
| Increase in payable for securities purchased |
|
|
2,615,002 |
|
| Decrease in interest payable |
|
|
(14,327 | ) |
| Net amortization/(accretion) of premium/(discount) on investments |
|
|
148,816 |
|
| Decrease in payable to investment manager |
|
|
(43,066 | ) |
| Decrease in payable to directors |
|
|
(14,625 | ) |
| Decrease in payable to administrator |
|
|
(3,589 | ) |
| Decrease in other accrued expenses and payables |
|
|
(394,908 | ) |
| Unrealized appreciation on investment securities of unaffiliated issuers |
|
|
(5,358,995 | ) |
| Unrealized depreciation unfunded loan commitments |
|
|
4,520 |
|
| Net realized gain from transactions in investment securities of unaffiliated issuers |
|
|
(12,295,220 | ) |
| Net cash provided by (used in) operating activities |
|
$ | 98,309,001 |
|
| Cash flows from financing activities: |
|
|
|
|
| Cash distributions paid on common stock |
|
|
(8,385,851 | ) |
| Payout for common stock repurchased via tender offer |
|
|
(58,768,306 | ) |
| Cash disbursement for change in loan |
|
|
(19,000,000 | ) |
| Cash disbursement from repayment of Mandatory Redeemable Preferred Shares Series C |
|
|
(10,500,000 | ) |
| Net cash provided by (used in) financing activities |
|
|
(96,654,157 | ) |
| Net increase/(decrease) in cash and restricted cash |
|
|
1,654,844 |
|
| Cash and restricted cash at beginning of period |
|
|
609,067 |
|
| Cash and restricted cash at end of period |
|
$ | 2,263,911 |
|
| Supplemental disclosure |
|
|
|
|
| Cash paid for interest |
|
$ | 240,217 |
|
The following table provides a reconciliation of cash and restricted cash, if any, reported within the Statement of Assets and Liabilities that sum to the total of such amounts shown on the Statement of Cash Flows.
|
|
April 30, 2021 | October 31, 2020 | ||||
| Cash |
|
$ | 1,952,760 |
|
$ | 21,699 |
| Deposit for derivative collateral |
|
|
|
|
|
|
| Cash collateral segregated for centrally cleared swap contracts due to broker |
|
|
311,151 |
|
|
587,368 |
| Total cash and restricted cash as shown in the Statement of Cash Flows |
|
$ | 2,263,911 |
|
$ | 609,067 |
| See Notes to Financial Statements | 25 |
|
|
Notes to Financial Statements High Yield Strategies Fund Inc. (Unaudited) |
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. The Fund’s Board of Directors (the “Board”) may classify or re-classify any unissued shares of capital stock into one or more
classes of preferred stock without the approval of stockholders.
A balance indicated with a “—”, reflects either a zero balance or a balance that rounds to less than 1. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 “Financial Services—Investment Companies.” The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires Neuberger Berman Investment Advisers LLC (“Management” or “NBIA”) 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 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 – unadjusted 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 yield curves, reported trades, broker-dealer quotes, issuer spreads, comparable securities, and reference data, such as market research publications, when available (“Other Market Information”). |
26
|
|
Asset-Backed Securities. Inputs used to value asset-backed securities generally include models that consider a number of factors, which may include the following: prepayment speeds, cash flows, spread adjustments and Other Market Information. Convertible Bonds. Inputs used to value convertible bonds generally include underlying stock data, conversion rates, credit specific details, relative listed bond and preferred stock prices and Other Market Information. High Yield Securities. Inputs used to value high yield securities generally include a number of observations of equity and credit default swap curves related to the issuer and Other Market Information. The value of 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 (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 with a readily determinable fair value are valued using the respective fund’s daily calculated net asset value (“NAV”) 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 has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Inputs and assumptions considered in determining the fair value of a security based on Level 2 or Level 3 inputs may include, but are not limited to, the type of the security; the initial cost of the security; the existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer and/or analysts; an analysis of the company’s or issuer’s financial statements; an evaluation of the inputs that influence the issuer and the market(s) in which the security is purchased and sold. 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. In December 2020, the Securities and Exchange Commission (“SEC”) adopted Rule 2a-5 under the 1940 Act, which establishes requirements for determining fair value in good faith for purposes of the 1940 Act, including related oversight and reporting requirements. The rule also defines when market quotations are “readily available” for purposes of the 1940 Act, the threshold for determining whether a fund must fair value a security. The rule became effective on March 8, 2021, however, the SEC adopted an eighteen-month transition period beginning from the effective date. Management is currently evaluating this guidance. |
|
|
|
|
|
| 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 accretion of discount (adjusted for original issue discount, where applicable) and amortization of premium, where applicable, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on the basis |
27
|
|
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 six months ended April 30, 2021 was $132. |
|
|
|
|
|
| 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 April 30, 2021, the Fund did not have any unrecognized tax positions. For federal income tax purposes, the estimated cost of investments held at April 30, 2021 was $273,444,195. The estimated gross unrealized appreciation was $10,443,608 and estimated gross unrealized depreciation was $822,709 resulting in net unrealized appreciation in value of investments of $9,620,899 based on cost for U.S. federal income tax purposes. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from GAAP. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Fund, timing differences and differing characterization of distributions made by the Fund. Any permanent differences resulting from different book and tax treatment are reclassified at year-end and have no impact on net income, NAV or NAV per share of common stock of the Fund. For the year ended October 31, 2020, the Fund recorded permanent reclassifications primarily related to nondeductible restructuring costs. For the year ended October 31, 2020, the Fund recorded the following permanent reclassifications: |
|
|
|
Total |
|
|
Distributable | |
| Paid-in Capital | Earnings/(Losses) | |
| $(86,649) |
|
$86,649 |
The tax character of distributions paid during the years ended October 31, 2020, and October 31, 2019, was as follows:
|
|
Distributions Paid From: |
|
||||||||||||||
| Ordinary Income |
|
Long-Term Capital Gain |
|
Return of Capital |
|
Total | ||||||||||
| 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||
| $16,669,919 |
|
$17,707,091 |
|
$— |
|
$— |
|
$6,171,475 |
|
$2,357,252 |
|
$22,841,394 |
|
$20,064,343 | ||
As of October 31, 2020, 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 | |||||
| $— |
|
$— |
|
$4,244,326 |
|
$(40,080,440) |
|
$(556,157) | $(36,392,271) |
The temporary differences between book basis and tax basis distributable earnings are primarily due to: losses disallowed and recognized on wash sales, timing differences of fund level distributions, tax adjustments related to swap contracts and amortization of bond premium.
28
| 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. Capital loss carryforward rules allow for RICs to carry forward capital losses indefinitely and to retain the character of capital loss carryforwards as short-term or long-term. As determined at October 31, 2020, the Fund had unused capital loss carryforwards available for federal income tax purposes to offset future net realized capital gains, if any, as follows: |
| Capital Loss Carryforwards | ||
| Long-Term | Short-Term | |
| $30,755,342 |
|
$9,325,098 |
| 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 any preferred shares, interest paid on any 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 2021 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 Subchapter M 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 April 30, 2021, the Fund declared a monthly distribution to common stockholders in the amount of $0.0905 per share, payable on May 28, 2021 to stockholders of record on May 17, 2021, with an ex-date of May 14, 2021. Subsequent to April 30, 2021, the Fund declared a monthly distribution on May 28, 2021 to common stockholders in the amount of $0.0905 per share, payable on June 30, 2021 to stockholders of record on June 15, 2021, with an ex-date of June 14, 2021. |
|
|
|
|
|
| 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 NBIA 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 September 2013, the Fund issued privately placed notes (“PNs”) with an aggregate principal value of $90,000,000 and Mandatory Redeemable Preferred Shares, Series B with an aggregate liquidation preference of $35,000,000. In August 2020, the Fund issued Mandatory Redeemable Preferred Shares, Series C (“MRPS” and, together with the PNs, “Private Securities”) with an aggregate liquidation preference of $95,000,000. The Fund used the proceeds from the issuance of the MRPS to repurchase the outstanding Mandatory Redeemable Preferred Shares, Series B and to prepay $60,000,000 of the aggregate principal balance of the PNs. In December 2020, in connection with the reduction in the Fund’s asset level following the tender offer (Note E), the Fund prepaid $10,500,000 of the outstanding PNs and redeemed $19,000,000 of the MRPS, reducing the PNs aggregate principal value to $19,500,000 and the MRPS aggregate liquidation preference to $76,000,000. The PNs have a |
29
maturity date of September 18, 2023 and the MRPS have a maturity date of August 3, 2023. The interest on the PNs is accrued daily and paid quarterly. The MRPS have a liquidation preference of $12.50 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. For financial reporting purposes only, the liquidation preference of the MRPS is recognized as a liability in the Statement of Assets and Liabilities.
During the six months ended April 30, 2021, the average principal balance outstanding and average annualized interest rate of the PNs were $21,994,475 and 1.45%, respectively. During the six months ended April 30, 2021, the average aggregate liquidation preference outstanding and average annualized distribution rate of the MRPS were $80,513,812 and 2.29%.
The table below sets forth key terms of the MRPS.
|
|
|
Mandatory |
|
|
|
|
|
Aggregate |
|
|
|
Redemption |
|
Interest |
|
Shares |
|
Liquidation |
| Series | Date | Rate | Outstanding | Preference | ||||
| Series C |
|
8/3/23 |
|
2.246%* |
|
6,080,000 |
|
$76,000,000 |
* Current floating rate as of April 30, 2021.
The Fund has paid organizational expenses which are being amortized over the life of the PNs and MRPS. The expenses are included in the Interest expense that is reflected in the Statement of Operations.
The Fund may redeem the MRPS or prepay the PNs, in whole or in part, at its option after giving notice to the relevant holders of the Private Securities but may incur additional expenses on the MRPS if it chooses to so redeem. 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 the MRPS at Liquidation Value and certain expenses and/or mandatory prepayment of the PNs at par plus accrued but unpaid interest and certain expenses. The holders of the 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 the MRPS will vote separately as a class on certain matters, as required by law or the Fund’s organizational documents. The holders of the 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 the 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.
30
| 10 | Derivative instruments: The Fund’s use of derivatives during the six months ended April 30, 2021, is described below. Please see the Schedule of Investments for the Fund's open positions in derivatives, if any, at April 30, 2021. 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. |
In October 2020, the SEC adopted new regulations governing the use of derivatives by registered investment companies. Rule 18f-4 will impose limits on the amount of derivatives a fund could enter into, eliminate the asset segregation framework currently used by funds to comply with Section 18 of the 1940 Act, and require funds whose use of derivatives is more than a limited specified exposure to establish and maintain a derivatives risk management program and appoint a derivatives risk manager. While the new rule became effective February 19, 2021, funds will not be required to fully comply with the new rule until August 19, 2022. It is not currently clear what impact, if any, the new rule will have on the availability, liquidity or performance of derivatives. When fully implemented, the new rule may require changes in how the Fund will use derivatives, may adversely affect the Fund’s performance and may increase costs related to the Fund’s use of derivatives.
Interest rate swap contracts: During the six months ended April 30, 2021, the Fund used interest rate swap contracts to reduce the risk that an increase in short-term interest rates could reduce common share net earnings as a result of leverage. Under the terms of the 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. The fixed-rate and variable rate payment flows are paid by one party to the other on a periodic basis and netted against each other when applicable. The Fund segregates cash or liquid securities having a value at least equal to the Fund’s net payment obligations under any interest rate swap transaction, marked to market daily. There is no guarantee that these interest rate swap transactions will be successful in reducing or limiting risk.
Risks may arise if the counterparty to a swap contract fails to comply with the terms of its contract. The loss incurred by the failure of a counterparty is generally limited to the net interest payment to be received by the Fund and/or the termination value at the end of the contract. Additionally, risks may arise if there is no liquid market for these agreements or from movements in interest rates unanticipated by Management.
Periodic expected interim net interest payments or receipts on the swaps are recorded as an adjustment to unrealized gains/losses, along with the fair value of the future periodic payment or receivable streams on the swaps. The unrealized gains/losses associated with the periodic interim net interest payments or receipts 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, the Fund typically enters into the transaction with a financial institution counterparty that is then cleared through a central clearinghouse. Upon acceptance of a swap by a central clearinghouse, the original swap is extinguished and replaced with a swap with the clearinghouse, thereby reducing or eliminating the Fund's exposure to the credit risk of the original counterparty. The 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 daily change in valuation is recorded as a receivable or payable for variation margin and settled in cash with the central clearing party. For financial reporting purposes, unamortized upfront payments, if any, are netted with unrealized appreciation or depreciation and net interest received or paid on swap contracts to determine the fair value of swaps.
31
At April 30, 2021, the Fund had the following derivatives (which did not qualify as hedging instruments under ASC 815), grouped by primary risk exposure:
| Liabilities Derivatives |
|
Interest Rate Risk |
|
Statement of Assets and Liabilities Location |
| Centrally cleared swaps | $(222,367) | Receivable/Payable for accumulated variation margin on centrally | ||
|
|
|
|
|
cleared swap contracts(a) |
| Total Value - Liabilities |
|
$(222,367) |
|
|
(a) “Centrally cleared swaps” reflect the cumulative unrealized appreciation/(depreciation) of the centrally cleared swap contracts plus accrued interest as of April 30, 2021.
The impact of the use of these derivative instruments on the Statement of Operations during the six months ended April 30, 2021, was as follows:
Realized Gain/(Loss)
|
|
|
Interest Rate Risk |
|
Statement of Operations Location |
| Swaps | $(188,372) | Net realized gain/(loss) | ||
| Total Realized Gain/(Loss) |
|
$(188,372) |
|
on: Expiration or closing of swap contracts |
| Change in Appreciation/(Depreciation) |
|
|
|
|
|
|
Interest Rate Risk | Statement of Operations Location | ||
| Swaps |
|
$183,680 |
|
Change in net unrealized appreciation/ |
| Total Change in Appreciation/(Depreciation) |
|
$183,680 |
|
(depreciation) in value of: Swap contracts |
| 11 | Securities lending: The Fund, using State Street Bank and Trust Company (“State Street”) as its lending agent, may loan securities to qualified brokers and dealers in exchange for negotiated lender’s fees. These fees, if any, would be disclosed within the Statement of Operations under the caption “Income from securities loaned-net” and are net of expenses retained by State Street as compensation for its services as lending agent. |
The initial cash collateral received by the Fund at the beginning of each transaction shall have a value equal to at least 102% of the prior day’s market value of the loaned securities (105% in the case of international securities). Thereafter, the value of the cash collateral is monitored on a daily basis, and cash collateral is moved daily between a counterparty and the Fund until the close of the transaction. The Fund may only receive collateral in the form of cash (U.S. dollars). Cash collateral is generally invested in a money market fund registered under the 1940 Act that is managed by an affiliate of State Street. The risks associated with lending portfolio securities include, but are not limited to, possible delays in receiving additional collateral or in the recovery of the loaned securities. Any increase or decrease in the fair value of the securities loaned and any interest earned or dividends paid or owed on those securities during the term of the loan would accrue to the Fund.
As of April 30, 2021, the Fund had outstanding loans of securities to certain approved brokers, with a value of $4,452,818, for which it received collateral as follows:
|
|
|
Remaining Contractual Maturity of the Agreements | ||||||||
|
|
|
Overnight and |
|
Less Than |
|
Between 30 & |
|
Greater Than |
|
|
|
|
|
Continuous |
|
30 Days |
|
90 Days |
|
90 Days |
|
Total |
| Securities Lending Transactions(a) |
|
|
|
|
|
|
|
|
|
|
| Corporate Bonds | $4,546,113 | $— | $— | $— | $4,546,113 | |||||
(a) Amounts represent the payable for loaned securities collateral received.
32
The Fund is required to disclose both gross and net information for assets and liabilities related to over-the-counter derivatives, repurchase and reverse repurchase agreements, and securities lending and securities borrowing transactions, if any, that are eligible for offset or subject to an enforceable master netting or similar agreement. The Fund’s securities lending assets at fair value are reported gross in the Statement of Assets and Liabilities. The following tables present the Fund’s securities lending assets by counterparty and net of the related collateral received by the Fund for assets as of April 30, 2021.
|
|
|
Gross Amounts |
|
Gross Amounts Offset in |
|
Net Amounts of Assets |
|
|
|
of Recognized |
|
the Statement of Assets |
|
Presented in the Statement |
| Description |
|
Assets |
|
and Liabilities |
|
of Assets and Liabilities |
| Securities Lending | $4,452,818 | $— | $4,452,818 | |||
| Total |
|
$4,452,818 |
|
$— |
|
$4,452,818 |
(a) Collateral received is limited to an amount not to exceed 100% of the net amount of assets in the tables presented above.
(b) Net Amount represents amounts subject to loss at April 30, 2021, in the event of a counterparty failure.
| 12 | When-issued/delayed delivery securities: The Fund may purchase securities with delivery or payment to occur at a later date beyond the normal settlement period. At the time the Fund enters into a commitment to purchase a security, the transaction is recorded and the value of the security is reflected in the NAV. The price of such security and the date when the security will be delivered and paid for are fixed at the time the transaction is negotiated. The value of the security may vary with market fluctuations. No interest accrues to the Fund until payment takes place. At the time the Fund enters into this type of transaction it is required to segregate cash or other liquid assets at least equal to the amount of the commitment. When-issued and delayed delivery transactions can have a leverage-like effect on the Fund, which can increase fluctuations in the Fund’s NAV. Certain risks may arise upon entering into when-issued or delayed delivery securities transactions from the potential inability of counterparties to meet the terms of their contracts or if the issuer does not issue the securities due to political, economic, or other factors. Additionally, losses may arise due to changes in the value of the underlying securities. | |
| 13 | 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. | |
| 14 | 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 rating on the PNs and 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 for the preparation of this report, which is reflected in the Statement of Operations under the caption “Basic maintenance (Note A).” |
33
| 15 |
Unfunded loan commitments: The Fund may enter into certain credit agreements all or a portion of which may be unfunded. The Fund is obligated to fund these commitments at the borrower’s discretion. As of April 30, 2021, the value of unfunded loan commitments was $263,998, pursuant to the following loan agreement: |
|
|
Principal |
|
||
| Borrower |
|
Amount |
|
Value |
| National Mentor Holdings, Inc., Term Loan DD, (USD LIBOR + 1.88%), 1.88% due 3/2/2028(a) |
|
$55,321 |
|
$55,228 |
| Redstone Buyer LLC, Term Loan DD, (USD LIBOR + 4.75%), due 4/15/2028(b) |
|
210,968 |
|
208,770 |
|
|
(a) |
Position is a delayed draw term loan which may be partially or fully unfunded. In accordance with the underlying credit agreement, the interest rate shown reflects the unfunded rate as of April 30, 2021. |
|
|
(b) |
This security has not settled as of April 30, 2021 and thus may not have an interest rate in effect. |
| 16 |
Other matters—Coronavirus: The outbreak of the novel coronavirus in many countries has, among other things, disrupted global travel and supply chains, and adversely impacted global commercial activity, the transportation industry and commodity prices in the energy sector. The impact of this virus has negatively affected and may continue to affect the economies of many nations, individual companies and the global securities and commodities markets, including liquidity and volatility. The development and fluidity of this situation precludes any prediction as to its ultimate impact, which may have a continued adverse effect on global economic and market conditions. Such conditions (which may be across industries, sectors or geographies) have impacted and may continue to impact the issuers of the securities held by the Fund. |
|
Note B—Investment Management Fees, Administration Fees, and Other Transactions with Affiliates:
|
The Fund retains NBIA as its investment manager under a Management Agreement. For such investment management services, the Fund pays NBIA an investment management 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 preference of any MRPS outstanding and principal amount of the PNs are not considered liabilities. The Fund retains NBIA as its administrator under an Administration Agreement. The Fund pays NBIA an administration fee at the annual rate of 0.05% of its average daily Managed Assets under this agreement. Additionally, NBIA retains State Street as its sub-administrator under a Sub-Administration Agreement. NBIA pays State Street a fee for all services received under the Sub-Administration Agreement. |
Note C—Securities Transactions:
|
During the six months ended April 30, 2021, there were purchase and sale transactions of long-term securities (excluding swap contracts) of $109,631,340 and $196,337,015, respectively. |
Note D—Capital:
|
Transactions in shares of common stock for the six months ended April 30, 2021 and for the year ended October 31, 2020 were as follows: |
| For the Six Months Ended April 30, 2021 |
|
For the Year Ended October 31, 2020 | ||||||
| Stock Issued on |
|
Net Increase/ | Stock Issued on | Net Increase/ | ||||
| Reinvestment of |
|
Repurchase of Common |
|
(Decrease) In |
|
Reinvestment of |
|
(Decrease) In |
| Dividends and |
|
Stock in connection with |
|
Common Stock |
|
Dividends and |
|
Common Stock |
| Distributions |
|
Tender Offer (Note E) |
|
Outstanding |
|
Distributions |
|
Outstanding |
| 1,196 |
|
(4,885,146) |
|
(4,883,950) |
|
— |
|
— |
| 34 |
Note E—Common Stock Tender Offer:
|
On November 10, 2020, the Fund commenced a tender offer to purchase up to 25% of its outstanding shares of common stock for cash at a price equal to 96% of its NAV per share determined on December 10, 2020. The Fund’s tender offer expired on December 10, 2020 at 5:00 p.m., New York City time. In accordance with the terms of the tender offer, since the tender offer was oversubscribed, the Fund purchased 25% of its outstanding shares of common stock on a pro-rata basis, with appropriate adjustment to avoid purchase of fractional shares of common stock, based on the number of shares properly tendered. The Fund purchased 4,885,146 shares of common stock at a purchase price of $12.03 per share, representing 96% of the NAV per share as of the close of the regular trading session of the NYSE on December 10, 2020. Shares of the Fund’s common stock that were tendered but were not purchased remain outstanding. |
Note F—Recent Accounting Pronouncement:
|
In March 2020, FASB issued Accounting Standards Update No. 2020-04 (“ASU 2020-04”), “Reference Rate Reform (Topic 848)”. In response to concerns about structural risks of interbank offered rates, and particularly the risk of cessation of LIBOR, regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The guidance is effective as of March 12, 2020 through December 31, 2022. Management is currently evaluating the impact of the guidance. |
Note G—Unaudited Financial Information:
|
The financial information included in this interim report is taken from the records of the Fund without audit by an independent registered public accounting firm. Annual reports contain audited financial statements. |
| 35 |
| Financial Highlights |
High Yield Strategies Fund Inc.
The following table includes selected data for a share of common stock outstanding throughout each period 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. A “-” indicates that the line item was not applicable in the corresponding period.
|
|
|
Six Months |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
Ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
April 30, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
2021 |
|
Year Ended October 31, | ||||||||||||||||||||
|
|
|
(Unaudited) |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 | ||||||||||||
| Common Stock Net Asset Value, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
| Beginning of Period |
|
$ | 11.74 |
|
|
$ | 12.67 |
|
|
$ | 12.45 |
|
|
$ | 13.43 |
|
|
$ | 13.12 |
|
|
$ | 12.68 |
|
| Income From Investment Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Applicable to Common Stockholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Investment Income/(Loss)@ |
|
|
0.39 |
|
|
|
0.73 |
|
|
|
0.78 |
|
|
|
0.76 |
|
|
|
0.87 |
|
|
|
0.92 |
|
| Net Gains or Losses on Securities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (both realized and unrealized) |
|
|
0.92 |
|
|
|
(0.57 | ) |
|
|
0.38 |
|
|
|
(0.92 | ) |
|
|
0.35 |
|
|
|
0.48 |
|
| Total From Investment Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Applicable to Common Stockholders |
|
|
1.31 |
|
|
|
0.16 |
|
|
|
1.16 |
|
|
|
(0.16 | ) |
|
|
1.22 |
|
|
|
1.40 |
|
| Less Distributions to Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders From: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Investment Income |
|
|
(0.54 | ) |
|
|
(0.77 | ) |
|
|
(0.82 | ) |
|
|
(0.79 | ) |
|
|
(0.87 | ) |
|
|
(0.90 | ) |
| Tax Return of Capital |
|
|
— |
|
|
|
(0.32 | ) |
|
|
(0.12 | ) |
|
|
(0.03 | ) |
|
|
(0.04 | ) |
|
|
(0.06 | ) |
| Total Distributions to |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Common Stockholders |
|
|
(0.54 | ) |
|
|
(1.09 | ) |
|
|
(0.94 | ) |
|
|
(0.82 | ) |
|
|
(0.91 | ) |
|
|
(0.96 | ) |
| Accretive Effect of Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stock Tender Offer |
|
|
0.17 | e |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Voluntary Contribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| from Management |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.00 |
|
| Common Stock Net Asset Value, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| End of Period |
|
$ | 12.68 |
|
|
$ | 11.74 |
|
|
$ | 12.67 |
|
|
$ | 12.45 |
|
|
$ | 13.43 |
|
|
$ | 13.12 |
|
| Common Stock Market Value, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| End of Period |
|
$ | 12.84 |
|
|
$ | 10.75 |
|
|
$ | 11.93 |
|
|
$ | 10.33 |
|
|
$ | 12.13 |
|
|
$ | 11.61 |
|
| Total Return, Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Asset Value† |
|
|
12.93% | *a |
|
|
2.28 | % |
|
|
10.43 | % |
|
|
(0.20 | )%a |
|
|
10.41 | %ab |
|
|
13.08 | %ac |
| Total Return, Common Stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Market Value† |
|
|
24.89% | *a |
|
|
(0.53 | )% |
|
|
25.32 | % |
|
|
(8.32 | )%a |
|
|
12.70 | %ab |
|
|
18.69 | %ac |
| Supplemental Data/Ratios |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Assets Applicable to Common |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Stockholders, End of Period (in millions) |
|
$ | 185.9 |
|
|
$ | 229.3 |
|
|
$ | 247.5 |
|
|
$ | 243.3 |
|
|
$ | 262.5 |
|
|
$ | 256.4 |
|
| Preferred Stock Outstanding, End of Period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in millions)^ |
|
$ | 76.0 |
|
|
$ | 95.0 |
|
|
$ | 35.0 |
|
|
$ | 35.0 |
|
|
$ | 35.0 |
|
|
$ | 35.0 |
|
| Preferred Stock Liquidation Preference Per Share^ |
|
$ | 12.50 |
|
|
$ | 12.50 |
|
|
$ | 25,000 |
|
|
$ | 25,000 |
|
|
$ | 25,000 |
|
|
$ | 25,000 |
|
| Ratios are Calculated Using |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average Net Assets Applicable |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| to Common Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Ratio of Gross ExpensesØØ |
|
|
2.58% | ** |
|
|
3.17 | % |
|
|
3.52 | % |
|
|
2.96 | % |
|
|
2.47 | % |
|
|
2.39 | % |
| Ratio of Net ExpensesØØ |
|
|
2.58% | ** |
|
|
3.17 | % |
|
|
3.52 | % |
|
|
2.96 | % |
|
|
2.45 | %d |
|
|
2.39 | % |
| Ratio of Net Investment Income/(Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Excluding Preferred Stock Distributions |
|
|
6.19% | ** |
|
|
6.21 | % |
|
|
6.20 | % |
|
|
5.88 | % |
|
|
6.56 | %d |
|
|
7.53 | % |
| Portfolio Turnover Rate |
|
|
37% | * |
|
|
102 | % |
|
|
89 | % |
|
|
62 | % |
|
|
65 | % |
|
|
57 | % |
| Asset Coverage Per Share of Preferred Stock, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| End of Periodb |
|
$ | 43 |
|
|
$ | 43 |
|
|
$ | 201,899 |
|
|
$ | 198,912 |
|
|
$ | 212,582 |
|
|
$ | 208,182 |
|
| Notes Payable (in millions) |
|
$ | 19.2 | ^ |
|
$ | 29.6 | ^ |
|
$ | 89.9 | ^ |
|
$ | 89.9 | ^ |
|
$ | 89.9 | ^ |
|
$ | 90.0 |
|
| Asset Coverage Per $1,000 of |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Notes Payable¢¢ |
|
$ | 14,673 |
|
|
$ | 11,969 |
|
|
$ | 4,147 |
|
|
$ | 4,103 |
|
|
$ | 4,308 |
|
|
$ | 4,238 |
|
| See Notes to Financial Highlights | 36 |
Notes to Financial Highlights
High Yield Strategies Fund Inc. (Unaudited)
| @ |
Calculated based on the average number of shares of common stock outstanding during each fiscal period. |
| † |
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 sale 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 will fluctuate and shares of common stock, when sold, may be worth more or less than original cost. |
| ^ |
Net of unamortized deferred issuance costs. The unamortized deferred issuance costs were: |
| Six Months Ended April 30, |
|
Year Ended October 31, | ||||||
| 2021 | 2020 | 2019 | 2018 | 2017 | ||||
| $312,020 |
|
$379,506 |
|
$88,436 |
|
$110,770 |
|
$133,104 |
| * |
Not annualized. |
| ** |
Annualized. |
| ^^ |
From September 18, 2013 to August 4, 2020, the Fund had 1,400 Mandatory Redeemable Preferred Shares, Series B outstanding. Effective August 5, 2020, the Fund has 7,600,000 MRPS outstanding (see Note A of Notes to Financial Statements). |
| ØØ |
Distributions to mandatory redeemable preferred stockholders and interest expense is included in expense ratios. The annualized ratios of distributions to mandatory redeemable preferred stockholders and interest expense to average net assets applicable to common stockholders were: |
|
|
|
Six Months Ended April 30, |
|
|
|
Year Ended October 31, |
|
|
||||
|
|
|
2021 |
|
2020 |
|
2019 |
|
2018 |
|
2017 |
|
2016 |
| Distributions to mandatory redeemable |
|
|
|
|
|
|
|
|
|
|
|
|
| preferred stockholders | 0.16% | 0.71% | 0.71% | 0.62% | 0.48% | 0.44% | ||||||
| Interest |
|
0.93% |
|
0.89% |
|
1.38% |
|
1.16% |
|
0.81% |
|
0.68% |
| ¢ |
Calculated by subtracting the Fund’s total liabilities (excluding the liquidation preference of mandatory redeemable preferred shares and accumulated unpaid distributions on mandatory redeemable preferred shares) from the Fund’s total assets and dividing by the number of mandatory redeemable preferred shares outstanding. |
| ¢¢ |
Calculated by subtracting the Fund’s total liabilities (excluding the liquidation preference of mandatory redeemable preferred shares), the outstanding principal of the PNs and accumulated unpaid liabilities on the PNs and the mandatory redeemable preferred shares from the Fund’s total assets and dividing by the outstanding Notes Payable balance. |
| a |
The class action proceeds listed in Note A of the Notes to Financial Statements, if any, had no impact on the Fund’s total return for the six months ended April 30, 2021. The class action proceeds received in 2018, 2017 and 2016 had no impact on the Fund’s total returns for the years ended October 31, 2018, 2017 or 2016. |
| b |
In May 2016, the Fund’s custodian, State Street, announced that it had identified inconsistencies in the way in which the Fund was invoiced for categories of expenses, particularly those deemed “out-of-pocket” costs, from 1998 through November 2015, and refunded to the Fund certain expenses, plus interest, determined to be payable to the Fund for the period. These amounts had no impact on the Fund’s total return for the year ended October 31, 2017. |
| c |
The voluntary contribution received in 2016 had no impact on the Fund’s total returns for the year ended October 31, 2016. |
| d |
The custodian expenses refund noted in (b) above is non-recurring and is included in these ratios. Had the Fund not received the refund, the annualized ratio of net expenses to average net assets applicable to common stockholders and the annualized ratio of net investment income/(loss) to average net assets applicable to common stockholders would have been: |
| Ratio of Net Expenses to Average | Ratio of Net Investment Income/(Loss) | ||
|
|
Net Assets Applicable to Common |
|
to Average Net Assets Applicable |
|
|
Stockholders Year Ended |
|
to Common Stockholders Year Ended |
|
|
October 31, 2017 |
|
October 31, 2017 |
|
|
2.47% |
|
6.54% |
| e |
During the six months ended April 30, 2021, the Fund conducted a tender offer and repurchased 25% of its outstanding shares of common stock at a price equal to 96% of the Fund’s NAV per share. During the six months ended April 30, 2021, final payment for the tender offer was made at $12.03 per share representing 96% of the NAV per share on December 10, 2020. |
| 37 |
|
Distribution Reinvestment Plan for the Fund |
American Stock Transfer & Trust Company, LLC (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
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38 |
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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.
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39 |
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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 by telephone at 1-866-227-2136 or by mail at 6201 15th Avenue, Brooklyn, NY, 11219 or online at www.astfinancial.com.
|
|
40 |
|
|
Directory |
| Investment Manager and Administrator | Plan Agent |
| Neuberger Berman Investment Advisers LLC | American Stock Transfer & Trust Company, LLC |
| 1290 Avenue of the Americas | Plan Administration Department |
| New York, NY 10104-0002 | P.O. Box 922 |
| 877.461.1899 | Wall Street Station |
| New York, NY 10269-0560 | |
| Custodian | Overnight correspondence should be sent to: |
| State Street Bank and Trust Company | American Stock Transfer & Trust Company, LLC |
| One Lincoln Street | 6201 15th Avenue |
| Boston, MA 02111 | Brooklyn, NY 11219 |
| Transfer Agent | Legal Counsel |
| American Stock Transfer & Trust Company, LLC | K&L Gates LLP |
| 6201 15th Avenue | 1601 K Street, NW |
| Brooklyn, NY 11219 | Washington, DC 20006-1600 |
| Shareholder Services 866.227.2136 | |
|
|
Independent Registered Public Accounting Firm |
|
|
Ernst & Young LLP |
|
|
200 Clarendon Street |
|
|
Boston, MA 02116 |
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41 |
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Proxy Voting Policies and Procedures
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 SEC’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 SEC’s website at www.sec.gov, and on Neuberger Berman’s website at www.nb.com.
Quarterly Portfolio Schedule
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. The portfolio holdings information on Forms N-PORT are available upon request, without charge, by calling 800-877-9700 (toll-free).
| 42 |
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FACTS |
WHAT DOES NEUBERGER BERMAN
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Why? |
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Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do. |
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What? |
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The types of personal information we collect and share depend on the product or service you have with us. This information can include:
■Social Security numbers,
dates of birth and other numerical identifiers
■Names and addresses
■Driver’s licenses,
passports and other identification documents
■Usernames and passwords
■Internet protocol
addresses and other network activity information
■Income, credit history,
credit scores, assets, transaction history and other financial information
When you are no longer our customer, we continue to share your information as described in this notice. |
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How? |
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All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Neuberger Berman chooses to share; and whether you can limit this sharing. |
|
Reasons we can share your personal information |
Does Neuberger
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Can you limit this sharing? |
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For our everyday business purposes—
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Yes |
No |
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For our marketing purposes—
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Yes |
No |
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For joint marketing with other financial companies |
No |
We don’t share |
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For our affiliates’ everyday business purposes—
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Yes |
No |
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For our affiliates’ everyday business purposes—
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No |
We don’t share |
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For nonaffiliates to market to you |
No |
We don’t share |
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Questions? |
Call 646.497.4003 or 866.483.1046 (toll-free)
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This is not part of the Fund’s stockholder report.
| Page 2 |
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Who we are |
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Who is providing this notice? |
Entities within the Neuberger Berman family of companies, mutual funds, and private investment funds. |
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What we do |
|
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How does Neuberger Berman protect my personal information? |
To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include physical, electronic and procedural safeguards, including secured files and buildings. We restrict access to customer information to those employees who need to know such information in order to perform their job responsibilities. |
|
How does Neuberger Berman collect my personal information? |
We collect your personal information directly from you or your representatives, for example, when you
■seek advice about your
investments
■give us your contact or
income information
■provide account information or open an account
■direct us to buy or sell
securities, or complete other transactions
■visit one of our
websites, portals or other online locations
We may also collect your personal information from others, such as credit bureaus, affiliates, or other companies. |
|
Why can’t I limit all sharing? |
Federal law gives you the right to limit only
■sharing for affiliates’
everyday business purposes—information about your creditworthiness
■affiliates from using
your information to market to you
■sharing for nonaffiliates
to market to you
State laws and individual companies may give you additional rights to limit sharing. |
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Definitions |
|
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Affiliates |
Companies related by common ownership or control. They can be financial and nonfinancial companies.
■Our affiliates
include companies with a Neuberger Berman name; financial companies, such as investment advisers or broker dealers; mutual funds, and private investment funds.
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Nonaffiliates |
Companies not related by common ownership or control. They can be financial and nonfinancial companies.
■Nonaffiliates we
share with can include companies that perform administrative services on our behalf (such as vendors that provide data processing, transaction processing, and printing services) or other companies such as brokers, dealers, or
counterparties in connection with servicing your account.
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Joint marketing |
A formal agreement between nonaffiliated financial companies that together market financial products or services to you.
■Neuberger Berman doesn’t jointly market.
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This is not part of the Fund’s stockholder report.
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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 for shares of the Fund. |
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(a)
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The complete schedule of investments for the Registrant is disclosed in the Registrant’s semi-annual report, which is included as Item 1 of this Form N-CSR.
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(b)
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Not applicable.
|
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(a)
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Not applicable to semi-annual reports on Form N-CSR.
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(b)
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There have been no changes in any of the Portfolio Managers since the Registrant’s most recent annual report on Form N-CSR.
|
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(a)
|
(b)
|
(c)
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(d)
|
|
|
Period
|
Total Number of
Shares Purchased
|
Average Price
Paid per Share
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or Programs
|
Maximum Number of
Shares that May Yet Be
Purchased Under
the Plans or Programs
|
|
November 1 through November 30*
|
N/A
|
N/A
|
N/A
|
N/A
|
|
December 1 through December 31*
|
4,885,146
|
$12.03
|
4,885,146
|
N/A
|
|
January 1 through January 31
|
N/A
|
N/A
|
N/A
|
N/A
|
|
February 1 through February 28
|
N/A
|
N/A
|
N/A
|
N/A
|
|
March 1 through March 31
|
N/A
|
N/A
|
N/A
|
N/A
|
|
April 1 through April 30
|
N/A
|
N/A
|
N/A
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N/A
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Total
|
4,885,146
|
$12.03
|
4,885,146
|
N/A
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*The Registrant conducted a tender offer that commenced on November 10, 2020 and expired on December 10, 2020 at 5:00 p.m., New York City time (the “Tender Offer”). Under the terms of the
Tender Offer, the Registrant offered to purchase up to 25% of its outstanding shares of common stock for cash at a price equal to 96% of its Net Asset Value (“NAV”) per share determined on December 10, 2020. On December 10, 2020, the Fund
accepted 4,885,146 shares of common stock, representing approximately 25% of its then outstanding shares of common stock. Final payment was made at $12.03 per share, representing 96% of the NAV per share at the close of the regular trading
session of the NYSE on December 10, 2020.
|
| (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 most recent fiscal half-year 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) |
The Fund engaged in securities lending activity during the fiscal year ended October 31, 2020.
|
|
Gross income from securities lending activities
|
$29,408
|
|
Fees and/or compensation paid by the Fund for securities lending activities and related services
|
|
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Fees paid to securities lending agent from a revenue split
|
$2,795
|
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Fees paid for any cash collateral management service (including fees deducted from a pooled cash collateral reinvestment vehicle) that are not included in the revenue
split
|
$1,428
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Administrative fees not included in revenue split
|
$0
|
|
Indemnification fees not included in revenue split
|
$0
|
|
Rebate (paid to borrower)
|
$0
|
|
Other fees relating to the securities lending program that are not included in the revenue split
|
$0
|
|
Aggregate fees/compensation for securities lending activities
|
$4,223
|
|
Net income from securities lending activities
|
$25,185
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| (b) |
The Fund engaged in securities lending activity during the fiscal year ended October 31, 2020. State Street Bank and Trust Company, as the Fund’s securities lending agent, effected loans of available securities of
the Fund to qualified brokers and dealers in exchange for negotiated lender’s fees.
|
| (a)(1) |
| (a)(2) |
| (a)(3) |
Not applicable to the Registrant.
|
| (a)(4) |
Not applicable to the Registrant.
|
| (b) |