|
Neuberger Berman
|
||||
| Annual Report | ||||
| November 30, 2016 |
| Contents | |||||
| PRESIDENT’S LETTER | 1 | ||||
| PORTFOLIO COMMENTARY | 2 | ||||
| SCHEDULE OF INVESTMENTS | 7 | ||||
| FINANCIAL STATEMENTS | 10 | ||||
| FINANCIAL HIGHLIGHTS/PER SHARE DATA | 21 | ||||
| Report of Independent Registered Public Accounting Firm | 23 | ||||
| Distribution Reinvestment Plan | 24 | ||||
| Directory | 27 | ||||
| Directors and Officers | 28 | ||||
| Proxy Voting Policies and Procedures | 37 | ||||
| Quarterly Portfolio Schedule | 37 | ||||
| Report of Votes of Stockholders | 38 | ||||
| Board Consideration of the Management Agreement | 39 |
Dear Stockholder,
I am pleased to present the annual report for Neuberger Berman MLP Income Fund Inc. (the “Fund”) for the fiscal year ended November 30, 2016. The report includes portfolio commentary, a listing of the Fund’s investments, and its audited financial statements for the reporting period.
The Fund seeks to provide total return with an emphasis on cash distributions. To pursue this objective, we have assembled a portfolio that focuses on Master Limited Partnerships (MLPs) and select companies that have economic characteristics substantially similar to MLPs. The portfolio currently emphasizes midstream natural resources companies.
On March 31, 2016, we announced a restructuring of the Fund’s leverage facility, resulting in a $200 million facility, reduced from $500 million. The resized facility gives the Fund access to up to $100 million of fixed-rate, fixed-term debt and up to $100 million of floating rate revolving debt. As of November 30, 2016, the Fund had $142.5 million of leverage outstanding.
Thank you for your confidence in the Fund. We will continue to do our best to earn your trust in the years to come. Sincerely,
Robert Conti
President and CEO
Neuberger Berman MLP Income Fund Inc.
1
Neuberger Berman MLP Income Fund Inc. generated a 0.77% total return on a net asset value (NAV) basis for the 12 months ended November 30, 2016, underperforming its benchmark, the Alerian MLP Index, which posted a 9.28% return for the same period. (Fund performance on a market basis is provided in the table immediately following this letter.)
At the beginning of the fiscal year, the energy market and related sectors had already been undergoing a period of weakness as continued energy price volatility served as a primary driver of negative investor sentiment. The Master Limited Partnership (MLP) space continued to underperform into 2016 as the price of crude oil continued to decline. We attribute much of the Fund’s turbulence during the first half of its fiscal year to a confluence of factors: bearish investor psychology stemming from weak commodity prices, investor concern and confusion over the viability of the MLP business model and the sustainability of MLP distributions, hedge fund trading activity, industry-wide deleveraging, and open-end MLP fund redemptions. Negative market sentiment also resulted in increased financing costs at a time when certain companies were in the middle of large expansion programs that required additional capital investment.
The challenges in the capital markets led to a broad reduction in growth expectations. Accordingly, valuations for general partnerships (GPs) were depressed and a number of companies chose to cut distributions to either internally fund growth or reduce leverage. These companies were the primary detractors to Fund performance over the first half of the fiscal year.
As the overall energy market and MLP prices began moving higher following the bottom in crude oil prices on February 11, 2016, we believe that investors began to focus more on the positive fundamentals of high quality MLPs and less on fear and uncertainty. The Fund began to more fully participate in the market rebound once it completed the restructuring of its leverage facility at the end of March 2016. After the restructuring, the Fund was able to more effectively use leverage to participate in the market recovery. Investors need to be aware that the use of leverage, which magnifies the directional movement of a fund’s common share NAV, will not only result in greater returns in a rising market; but also can generate losses in declining market.
We continue to hold a positive fundamental view of midstream MLPs and believe that several quarters of consistent positive earnings reports confirm that these MLPs can continue to generate stable and growing cash flows. Since the February bottom, access to the debt and equity markets has steadily improved for MLPs. Most recently, certain growth projects that, for a myriad of reasons, were previously shelved or delayed may now have a clearer path to completion as the incoming Presidential administration has expressed heightened support for U.S. energy infrastructure and energy independence. We continue to maintain a concentrated portfolio of midstream energy companies with a particular focus on GPs and natural gas oriented companies. At the end of the Fund’s fiscal year, approximately 44% of the Fund’s assets were allocated to publicly traded GPs versus a 0% allocation for the Fund’s benchmark. The Fund’s focus on GPs detracted from performance during the market decline, but has been a positive as the market has rallied.
We continue to focus on what we see as emerging long-term positive trends such as the U.S. becoming a significant exporter of crude oil, natural gas, and refined products. The U.S. sits on an abundant and relatively cheap resource base of crude oil, natural gas, and natural gas liquids. In our opinion, MLPs will continue to play a vital role in building the infrastructure to facilitate the development of this resource base as well as the infrastructure to reach both domestic and foreign markets. We believe that the Fund’s portfolio holdings are positioned to capitalize on these trends and to realize growth in cash flows and distributions from these investments as a result.
Sincerely,
Douglas Rachlin
Lead Portfolio Manager
Yves C. Siegel
Portfolio Manager
2
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.
3
| TICKER SYMBOL | |||
| MLP Income Fund Inc. | NML | ||
| PORTFOLIO BY TYPE OF SECURITY | |||
| (as a % of Total Investments) | |||
| Master Limited Partnerships and | |||
| Related Companies | 97.1 | % | |
| Convertible Preferred Stock | 2.8 | ||
| Short-Term Investment | 0.1 | ||
| Total | 100.0 | % | |
| PERFORMANCE HIGHLIGHTS | ||||||||||
| Average Annual Total Return | ||||||||||
| Inception | Ended 11/30/2016 | |||||||||
| Date* | 1 Year | Life of Fund | ||||||||
| At NAV1 | 03/25/2013 | 0.77 | % | -8.84 | % | |||||
| At Market Price2 | 03/25/2013 | -1.55 | % | -11.89 | % | |||||
| Index | ||||||||||
| Alerian MLP Index3 | 9.28 | % | -3.86 | % | ||||||
* Date of initial public offering. The Fund commenced operations on March 28, 2013.
Closed-end funds, unlike open-end funds, are not continually offered. Generally, there is an initial public offering and, once issued, shares of common stock of closed-end funds are sold in the secondary market on a stock exchange.
The performance data quoted represent past performance and do not indicate future results. Current performance may be lower or higher than the performance data quoted. For more current performance data, please visit www.nb.com/cef-performance.
The results shown in the table reflect the reinvestment of income dividends and other distributions, if any. The results do not reflect the effect of taxes a stockholder would pay on Fund distributions or on the sale of shares of the Fund’s common stock.
The investment return and market price will fluctuate and shares of the Fund’s common stock may trade at prices above or below NAV. Shares of the Fund’s common stock, when sold, may be worth more or less than their original cost.
4
| 1 | Returns based on the NAV of the Fund. |
|
| 2 | Returns based on the market price of shares of the Fund’s common stock on the NYSE MKT. |
|
| 3 | Please see “Description of Index” on page 6 for a description of the index. |
For more complete information on Neuberger Berman MLP Income Fund Inc., call Neuberger Berman Investment Advisers LLC (“Management”) at (800) 877-9700, or visit our website at www.nb.com.
5
| Alerian MLP Index: | The index is a float-adjusted, capitalization-weighted index that measures the performance of energy Master Limited Partnerships (MLPs). The index’s constituents represent approximately 85% of total float-adjusted market capitalization. |
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 Management and include reinvestment of all income dividends and other distributions, if any. The Fund may invest in securities not included in the above described index and generally does not invest in all securities included in the index.
6
| NUMBER OF SHARES | VALUE | |||||
| Master Limited Partnerships and Related Companies (121.7%) | ||||||
| Coal & Consumable Fuels (9.7%) | ||||||
| 1,916,000 | Alliance Holdings GP, L.P. | $ | 55,487,360 | (a) | ||
| Leisure Facilities (9.6%) | ||||||
| 898,000 | Cedar Fair L.P. | 54,795,960 | (a) | |||
| Oil & Gas Storage & Transportation (97.4%) | ||||||
| 900,000 | American Midstream Partners LP | 13,275,000 | (a) | |||
| 826,000 | Antero Midstream Partners LP | 23,268,420 | (a) | |||
| 376,026 | DCP Midstream Partners, LP | 13,021,780 | (a) | |||
| 134,118 | Dominion Midstream Partners, LP | 3,433,421 | (a) | |||
| 760,000 | Energy Transfer Equity, L.P. | 12,942,800 | (a) | |||
| 4,500,000 | Energy Transfer Equity, L.P. | 64,429,386 | *(b)(d) | |||
| 1,400,000 | Energy Transfer Partners, L.P. | 49,168,000 | (a) | |||
| 1,632,000 | Enterprise Products Partners L.P. | 42,317,760 | (a) | |||
| 536,000 | EQT GP Holdings LP | 13,239,200 | (a) | |||
| 476,000 | EQT Midstream Partners, LP | 34,857,480 | (a) | |||
| 840,000 | MPLX LP | 27,594,000 | (a) | |||
| 250,000 | NuStar Energy L.P. | 11,935,000 | (a) | |||
| 1,343,571 | NuStar GP Holdings, LLC | 34,126,703 | (a) | |||
| 860,000 | ONEOK, Inc. | 47,239,800 | (a) | |||
| 200,000 | ONEOK Partners, L.P. | 8,360,000 | (a) | |||
| 40,000 | Shell Midstream Partners LP | 1,103,200 | (a) | |||
| 276,000 | Spectra Energy Partners, LP | 11,727,240 | (a) | |||
| 180,000 | Sunoco Logistics Partners L.P. | 4,264,200 | (a) | |||
| 264,000 | Targa Resources Corp. | 14,068,560 | (a) | |||
| 1,400,000 | Teekay LNG Partners L.P. | 21,490,000 | (a) | |||
| 1,578,048 | Western Gas Equity Partners, LP | 67,761,381 | (a) | |||
| 650,000 | Western Gas Partners, LP | 37,095,500 | (a) | |||
| 12,000 | Williams Cos., Inc. | 368,400 | ||||
| 557,087,231 | ||||||
| Propane (1.2%) | ||||||
| 90,000 | AmeriGas Partners, L.P. | 4,039,200 | (a) | |||
| 100,000 | Suburban Propane Partners, L.P. | 2,833,000 | (a) | |||
| 6,872,200 | ||||||
| Utilities (3.8%) | ||||||
| 846,000 | NextEra Energy Partners LP | 21,666,060 | (a) | |||
| Total Master Limited Partnerships and Related Companies (Cost $657,318,059) | 695,908,811 | |||||
| Convertible Preferred Stock (3.5%) | ||||||
| Oil & Gas Storage & Transportation (3.5%) | ||||||
| 4,500,000 | Energy Transfer Equity, L.P., Preferred (Cost $2,362,500) | 19,932,044 | (b)(d) | |||
| Short-Term Investment (0.1%) | ||||||
| 598,823 | Invesco STIT Treasury Portfolio Money Market Fund Institutional Class, 0.26% | |||||
| (Cost $598,823) | 598,823 | (c) | ||||
| Total Investments (125.3%) (Cost $660,279,382) | 716,439,678 | |||||
| Other Assets Less Liabilities [(25.3%)] | (144,442,696 | ) | ||||
| Net Assets Applicable to Common Stockholders (100.0%) | $ | 571,996,982 | ||||
| * | Non-income producing security. |
| (a) | All or a portion of this security is pledged with the custodian for loans payable. |
| (b) | Security fair valued as of 11/30/2016 in accordance with procedures approved by the Fund's Board of Directors (the “Board”). Total value of all such securities at 11/30/2016 amounted to $84,361,430, which represents 14.8% of net assets applicable to common stockholders of the Fund. |
| (c) | Represents 7-day effective yield as of 11/30/2016. |
| See Notes to Financial Statements | 7 |
| (d) | These securities have been deemed by the investment manager to be illiquid, and are restricted securities subject to restrictions on resale. At 11/30/2016, these securities amounted to $84,361,430, which represents 14.8% of net assets applicable to common stockholders. |
| Acquisition | |||||||||||
| Cost Percentage | Fair Value | ||||||||||
| of Net Assets as of | Percentage of | ||||||||||
| Acquisition | Acquisition | Acquisition | Value as of | Net Assets as of | |||||||
| Restricted Security | Date | Cost | Date | 11/30/2016 | 11/30/2016 | ||||||
| Energy Transfer Equity, L.P. | 3/16/2016 | $57,957,425 | 15.0 | % | $64,429,386 | 11.3 | % | ||||
| Energy Transfer | |||||||||||
| Equity, L.P., Preferred | 3/16/2016 | 2,362,500 | 0.6 | 19,932,044 | 3.5 | ||||||
| $60,319,925 | $84,361,430 | 14.8 | % | ||||||||
|
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 November 30, 2016: |
| Asset Valuation Inputs | |||||||||||
| Investments: | Level 1 | Level 2 | Level 3(a) | Total | |||||||
| Master Limited Partnerships and Related Companies | |||||||||||
| Coal & Consumable Fuels | $ | 55,487,360 | $ | — | $ | — | $ | 55,487,360 | |||
| Leisure Facilities | 54,795,960 | — | — | 54,795,960 | |||||||
| Oil & Gas Storage & Transportation | 492,657,845 | — | 64,429,386 | 557,087,231 | |||||||
| Propane | 6,872,200 | — | — | 6,872,200 | |||||||
| Utilities | 21,666,060 | — | — | 21,666,060 | |||||||
| Total Master Limited Partnerships and Related Companies | 631,479,425 | — | 64,429,386 | 695,908,811 | |||||||
| Convertible Preferred Stock | |||||||||||
| Oil & Gas Storage & Transportation | — | — | 19,932,044 | 19,932,044 | |||||||
| Short-Term Investment | — | 598,823 | — | 598,823 | |||||||
| Total Investments | $ | 631,479,425 | $ | 598,823 | $ | 84,361,430 | $ | 716,439,678 | |||
| (a) | The following is a reconciliation between the beginning and ending balances of investments in which unobservable inputs (Level 3) were used in determining value: |
| Investments in Securities: | Beginning balance as of 12/1/2015 |
Accrued discounts/ (premiums) |
Realized gain/(loss) |
Change in unrealized appreciation/ (depreciation) |
Purchases | Sales | Transfers in to Level 3 |
Transfers out of Level 3 |
Balance as of 11/30/2016 |
Net change in unrealized appreciation/ (depreciation) from investments still held as of 11/30/2016 |
||||||||||||||
| Master Limited Partnerships | ||||||||||||||||||||||||
| and Related Companies | ||||||||||||||||||||||||
| Oil & Gas Storage & | ||||||||||||||||||||||||
| Transportation | $— | $— | $— | $ | 6,471,961 | $— | $— | $ | 57,957,425 | $— | $ | 64,429,386 | $ | 6,471,961 | ||||||||||
| Convertible Preferred Stock | ||||||||||||||||||||||||
| Oil & Gas Storage & | ||||||||||||||||||||||||
| Transportation | — | — | — | 17,569,544 | — | — | 2,362,500 | — | 19,932,044 | 17,569,544 | ||||||||||||||
| Total | $— | $— | $— | $ | 24,041,505 | $— | $— | $ | 60,319,925 | $— | $ | 84,361,430 | $ | 24,041,505 | ||||||||||
|
As of the year ended November 30, 2016, certain securities were transferred from one level (as of November 30, 2015) to another. Based on beginning of year market values as of December 1, 2015, approximately $85,230,000 was transferred from Level 1 to Level 3 due to the Fund’s election to participate in a private placement offer in which the Fund agreed to restrict certain common shares in exchange for additional shares of restricted convertible preferred units. |
| See Notes to Financial Statements | 8 |
|
The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of November 30, 2016: |
| Impact to | |||||||||||||
| valuation | |||||||||||||
| from an | |||||||||||||
| Asset | Fair value | Valuation | Unobservable | Input | increase | ||||||||
| class | at 11/30/2016 | techniques | inputs | Range | Value | in input | |||||||
| Quarterly Cash | |||||||||||||
| Master Limited | Distribution | $0.285 | $0.285 | Increase | |||||||||
| Partnerships | Discount | ||||||||||||
| and Related | Income | for Lack of | |||||||||||
| Energy Transfer Equity, L.P. | Companies | $64,429,386 | Approach | Marketability | 6.6% | 6.6% | Decrease | ||||||
| Quarterly Cash | |||||||||||||
| Distribution | $0.285 | $0.285 | Increase | ||||||||||
| Discount | |||||||||||||
| Convertible | Income | for Lack of | |||||||||||
| Energy Transfer Equity, L.P., Preferred | Preferred Stock | $19,932,044 | Approach | Marketability | 6.6% | 6.6% | Decrease | ||||||
| See Notes to Financial Statements | 9 |
Neuberger Berman
| MLP INCOME | |||
| FUND INC. | |||
| November 30, 2016 | |||
| Assets | |||
| Investments in securities, at value* (Note A)—see Schedule of Investments: | |||
| Unaffiliated issuers | $716,439,678 | ||
| Dividends and interest receivable | 616 | ||
| Prepaid expenses and other assets | 1,065 | ||
| Total Assets | 716,441,359 | ||
| Liabilities | |||
| Loans payable (Note A) | 142,500,000 | ||
| Payable for securities purchased | 721,734 | ||
| Distributions payable—common stock | 148,074 | ||
| Payable to investment manager (Note B) | 429,917 | ||
| Payable to administrator (Note B) | 143,306 | ||
| Payable to directors | 487 | ||
| Interest payable (Note A) | 10,970 | ||
| Accrued expenses and other payables | 489,889 | ||
| Total Liabilities | 144,444,377 | ||
| Net Assets applicable to Common Stockholders | $571,996,982 | ||
| Net Assets applicable to Common Stockholders consist of: | |||
| Paid-in capital—common stock | $846,084,340 | ||
| Accumulated net investment income (loss), net of income taxes | (2,518,256 | ) | |
| Accumulated net realized gains (losses) on investments, net of income taxes | (284,781,218 | ) | |
| Net unrealized appreciation (depreciation) in value of investments, net of income taxes | 13,212,116 | ||
| Net Assets applicable to Common Stockholders | $571,996,982 | ||
| Shares of Common Stock Outstanding ($.0001 par value; 1,000,000,000 shares authorized) | 56,658,928 | ||
| Net Asset Value Per Share of Common Stock Outstanding | $10.10 | ||
| * Cost of Investments | $660,279,382 | ||
| See Notes to Financial Statements | 10 |
Neuberger Berman
| MLP INCOME | |||
| FUND INC. | |||
| For the | |||
| Year Ended | |||
| November 30, 2016 | |||
| Investment Income: | |||
| Income (Note A): | |||
| Dividend income from master limited partnerships and related companies | |||
| (includes $2,070,750 from affiliated issuers (Note E)) | $46,327,184 | ||
| Return of capital on dividends | (41,299,474 | ) | |
| Net dividend income from master limited partnerships and related companies | 5,027,710 | ||
| Interest income—unaffiliated issuers | 24,084 | ||
| Total income | $5,051,794 | ||
| Expenses: | |||
| Investment management fees (Note B) | 4,748,989 | ||
| Administration fees (Note B) | 1,582,996 | ||
| Audit fees | 64,737 | ||
| Custodian and accounting fees | 234,030 | ||
| Insurance expense | 50,084 | ||
| Legal fees | 299,303 | ||
| Stock exchange listing fees | 12,395 | ||
| Stockholder reports | 131,279 | ||
| Stock transfer agent fees | 20,075 | ||
| Interest expense (Note A) | 5,957,827 | ||
| Directors’ fees and expenses | 51,739 | ||
| Franchise and income tax expense | 987,224 | ||
| Fees on prepayment of loans (Note A) | 4,203,658 | ||
| Miscellaneous | 24,469 | ||
| Total expenses | 18,368,805 | ||
| Net investment income (loss) | $(13,317,011 | ) | |
| Realized and Unrealized Gain (Loss) on Investments (Note A): | |||
| Net realized gain (loss) on: | |||
| Sales of investment securities of unaffiliated issuers | (252,847,410 | ) | |
| Sales of investment securities of affiliated issuers | (39,258,728 | ) | |
| Change in net unrealized appreciation (depreciation) in value of: | |||
| Unaffiliated investment securities | 260,390,652 | ||
| Affiliated investment securities | 31,720,545 | ||
| Net gain (loss) on investments | 5,059 | ||
| Net increase (decrease) in net assets applicable to Common Stockholders resulting from operations | $(13,311,952 | ) |
| See Notes to Financial Statements | 11 |
Neuberger Berman
| MLP Income Fund Inc. | |||||
| Year Ended | Year Ended | ||||
| November 30, 2016 | November 30, 2015 | ||||
| Increase (Decrease) in Net Assets Applicable to Common Stockholders: | |||||
| From Operations (Note A): | |||||
| Net investment income (loss) | $(13,317,011 | ) | $(4,380,289 | ) | |
| Net realized gain (loss) on investments | (292,106,138 | ) | 12,353,048 | ||
| Change in net unrealized appreciation (depreciation) of investments | 292,111,197 | (472,558,936 | ) | ||
| Net increase (decrease) in Net Assets Applicable to Common Stockholders | |||||
| resulting from operations | (13,311,952 | ) | (464,586,177 | ) | |
| Distributions to Common Stockholders From (Note A): | |||||
| Tax return of capital | (48,691,158 | ) | (71,224,511 | ) | |
| From Capital Share Transactions (Note D): | |||||
| Proceeds from reinvestment of dividends and distributions | 755,606 | 276,607 | |||
| Total net proceeds from capital share transactions | 755,606 | 276,607 | |||
| Net Increase (Decrease) in Net Assets Applicable to Common Stockholders | (61,247,504 | ) | (535,534,081 | ) | |
| Net Assets Applicable to Common Stockholders: | |||||
| Beginning of year | 633,244,486 | 1,168,778,567 | |||
| End of year | $571,996,982 | $633,244,486 | |||
| Accumulated net investment income (loss) at end of year | $(2,518,256 | ) | $10,798,755 | ||
| See Notes to Financial Statements | 12 |
Neuberger Berman
| MLP INCOME | |||
| FUND INC. | |||
| For the | |||
| Year Ended | |||
| November 30, 2016 | |||
| Increase (Decrease) in cash: | |||
| Cash flows from operating activities: | |||
| Net decrease in net assets applicable to Common Stockholders | |||
| resulting from operations | $(13,311,952 | ) | |
| Adjustments to reconcile net decrease 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 | (300,220,933 | ) | |
| Proceeds from disposition of investment securities | 396,039,384 | ||
| Purchase/sale of short-term investment securities, net | 47,709,608 | ||
| Decrease in dividends and interest receivable | 64,400 | ||
| Decrease in prepaid expenses and other assets | 169,479 | ||
| Decrease in payable for securities purchased | (998,108 | ) | |
| Decrease in payable to investment manager | (178,012 | ) | |
| Decrease in payable to administrator | (59,337 | ) | |
| Decrease in payable to directors | (1,056 | ) | |
| Decrease in interest payable | (16,513 | ) | |
| Increase in accrued expenses and other payables | 114,306 | ||
| Return of capital on dividends | 41,299,474 | ||
| Unrealized (appreciation)/depreciation on securities | (292,111,197 | ) | |
| Net realized (gain)/loss from investments | 292,106,138 | ||
| Net cash provided by (used in) operating activities | $170,605,681 | ||
| Cash flows from financing activities: | |||
| Cash distributions paid on common stock | (48,105,681 | ) | |
| Cash receipts from loan borrowings | 42,500,000 | ||
| Cash disbursement for loan repayments | (225,000,000 | ) | |
| Net cash provided by (used in) financing activities | $(230,605,681 | ) | |
| Net increase (decrease) in cash | (60,000,000 | ) | |
| Cash: | |||
| Beginning balance | 60,000,000 | ||
| Ending balance | $— | ||
| Supplemental disclosure: | |||
| Reinvestment of dividends and distributions | $755,606 | ||
| Cash paid for interest | $5,824,129 |
| See Notes to Financial Statements | 13 |
Note A—Summary of Significant Accounting Policies:
| 1 | General: Neuberger Berman MLP Income Fund Inc. (the “Fund”) was organized as a Maryland corporation on November 16, 2012 as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). 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. |
|
The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 946 “Financial Services – Investment Companies.” The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires Neuberger Berman Investment Advisers LLC (“Management”) to make estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. |
|
| 2 | Portfolio valuation: In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by the Fund are carried at the value that Management believes the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market, are considered in valuing the Fund’s investments, some of which are discussed below. Significant Management judgment may be necessary to value investments in accordance with ASC 820. |
| ASC 820 established a three-tier hierarchy of inputs to create a classification of value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below. | |
|
●Level 1 – quoted prices in active markets for identical investments
●Level 2 – other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, amortized cost, etc.)
●Level 3 – unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
|
|
| The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities. | |
| The value of the Fund’s investments in equity securities (including master limited partnerships) and convertible preferred stock, for which market quotations are readily available, is generally determined by Management by obtaining valuations from independent pricing services based on the latest sale price quoted on a principal exchange or market for that security (Level 1 inputs). Securities traded primarily on the NASDAQ Stock Market are normally valued at the NASDAQ Official Closing Price (“NOCP”) provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., Eastern Time, unless that price is outside the range of the “inside” bid and asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Because of delays in reporting trades, the NOCP may not be based on the price of the last trade to occur before the market closes. If there is no sale of a security on a particular day, the independent pricing services may value the security based on market quotations. | |
14
| Management has developed a process to periodically review information provided by independent pricing services for all types of securities. | |
| Investments in non-exchange traded investment companies are valued using the respective fund’s daily calculated net asset value per share (Level 2 inputs). | |
| If a valuation is not available from an independent pricing service, or if Management has reason to believe that the valuation received does not represent the amount the Fund might reasonably expect to receive on a current sale in an orderly transaction, Management seeks to obtain quotations from brokers or dealers (generally considered Level 2 or Level 3 inputs depending on the number of quotes available). If such quotations are not readily available, the security is valued using methods the Board has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Numerous factors may be considered when determining the fair value of a security based on Level 2 or Level 3 inputs, including available analyst, media or other reports, securities within the same industry with recent highly correlated performance, trading in futures or American Depositary Receipts (“ADRs”) and whether the issuer of the security being fair valued has other securities outstanding. | |
| Fair value prices are necessarily estimates, and there is no assurance that such a price will be at or close to the price at which the security is next quoted or next trades. | |
| 3 | Securities transactions and investment income: Securities transactions are recorded on trade date for financial reporting purposes. Dividend and distribution income is recorded on the ex-dividend date. Distributions received from the Fund’s investments in master limited partnerships or limited liability companies that have economic characteristics substantially similar to master limited partnerships (collectively, “MLPs”) generally are comprised of ordinary income and return of capital from the MLPs. The Fund allocates distributions between income and return of capital based on estimates made at the time such distributions are received. Such estimates are based on information provided by each MLP and other industry sources. These estimates may subsequently be revised based on actual allocations received from MLPs after their tax reporting periods are concluded, as the actual character of these distributions is not known until after the fiscal year end of the Fund. For the year ended November 30, 2016, the Fund estimated the allocation of investment income and return of capital for the distributions received from MLPs within the Statement of Operations to be approximately 0.6% as income and approximately 99.4% as return of capital. |
| Non-cash dividends included in dividend income, if any, are recorded at the fair market value of the securities received. Interest income, including accretion of original issue discount, where applicable, and accretion of discount on short-term investments, if any, is recorded on the accrual basis. Realized gains and losses from securities transactions are recorded on the basis of identified cost and stated separately in the Statement of Operations. | |
| 4 | Income tax information: The Fund, as a corporation, is obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 35%. The Fund may be subject to a 20% federal alternative minimum tax (“AMT”) on its federal alternative minimum taxable income to the extent that its AMT exceeds its regular federal income tax. |
| At November 30, 2016, the cost of investments for U.S. federal income tax purposes was $590,203,415. Gross unrealized appreciation of investments was $176,511,522 and gross unrealized depreciation of investments was $50,275,259 resulting in net unrealized appreciation of $126,236,263 based on cost for U.S. federal income tax purposes. | |
| The Fund invests its assets primarily in MLPs, which generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLPs, the Fund reports its allocable share of the MLP’s taxable income or loss in computing its own taxable income or loss. The Fund’s income tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of | |
15
|
assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized. Components of the Fund’s deferred tax assets and liabilities as of November 30, 2016, are as follows: |
| Deferred tax assets: | |||
| Net operating loss carryforwards | $ | 45,274,305 | |
| Capital loss carryforwards | 114,304,809 | ||
| AMT credit carryforwards | 616,019 | ||
| Total deferred tax asset, before valuation allowance | 160,195,133 | ||
| Valuation allowance | (107,556,509 | ) | |
| Net deferred tax asset, after valuation allowance | 52,638,624 | ||
| Deferred tax liabilities: | |||
| Unrealized gains on investment securities | 52,638,624 | ||
| Total net deferred tax asset | — |
|
At November 30, 2016, a valuation allowance on deferred tax assets was deemed necessary because Management does not believe that it is more likely than not that the Fund will be able to recognize its deferred tax assets through future taxable income. The impact of any adjustments to the Fund’s estimates of future taxable income will be made in the same period that such determination is made. The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Fund’s policy is to record interest and penalties on uncertain tax positions as part of tax expense. As of November 30, 2016, the Fund had no uncertain tax positions. Total income tax benefit differs from the amount computed by applying the federal statutory income tax rate of 35% to net investment loss and net realized and unrealized gains on investments for the year ended November 30, 2016, as follows: |
| Application of statutory income tax rate | $ | (4,659,183 | ) | |
| State income tax benefit, net of federal tax benefit | (284,503 | ) | ||
| Tax benefit on permanent items | (1,305,782 | ) | ||
| Total current tax expense | 616,019 | |||
| Valuation allowance | 6,249,468 | |||
| Total income tax expense | $ | 616,019 |
|
Total income taxes are computed by applying the federal statutory rate plus a blended state income tax rate. Net operating loss carryforwards and capital loss carryforwards are available to offset future taxable income. The Fund has the following net operating loss carryforwards and capital loss carryforwards amounts: |
| Net Operating Loss | ||||
| Fiscal Period Ended | Carryforwards | Expiration | ||
| November 30, 2014 | $ | 89,632,264 | November 30, 2034 | |
| November 30, 2016 | 23,587,546 | November 30, 2036 | ||
| $ | 113,219,810 | |||
| Capital Loss | ||||
| Fiscal Period Ended | Carryforwards | Expiration | ||
| November 30, 2014 | $ | 10,417,472 | November 30, 2019 | |
| November 30, 2015 | 23,361,453 | November 30, 2020 | ||
| November 30, 2016 | $ | 274,006,485 | November 30, 2021 | |
| $ | 307,785,410 | |||
16
| 5 | Distributions to common stockholders: It is the policy of the Fund to declare quarterly and pay monthly distributions to common stockholders. The Fund has adopted a policy to pay common stockholders a stable monthly distribution. The Fund currently intends to pay distributions out of its distributable cash flow, which generally consists of cash and paid-in-kind distributions from MLPs or their affiliates, dividends from common stocks, interest from debt instruments and income from other investments held by the Fund less current or accrued operating expenses of the Fund, including taxes on Fund taxable income and leverage costs. Distributions to common stockholders relating to in-kind dividends or distributions received by the Fund on its investments will be paid in cash or additional shares of common stock. There is no assurance that the Fund will always be able to pay distributions of a particular size. The composition of the Fund’s distributions for the calendar year 2016 will be reported to Fund stockholders on IRS Form 1099DIV. Distributions to common stockholders are recorded on the ex-date. |
| The Fund invests a significant portion of its assets in MLPs. The distributions the Fund receives from MLPs are generally composed of income and/or return of capital, but the MLPs do not report this information to the Fund until the following calendar year. At November 30, 2016, the Fund estimated these amounts within the financial statements since the information is not available from the MLPs until after the Fund’s fiscal year-end. For the year ended November 30, 2016, the character of distributions paid to stockholders disclosed within the Statement of Changes in Net Assets is based on estimates made at that time. All estimates are based upon MLP information sources available to the Fund. Based on past experience with MLPs, it is likely that a portion of the Fund’s distributions during the current fiscal year will be considered tax return of capital, but the actual amount of the tax return of capital, if any, is not determinable until after the Fund’s fiscal year-end. After calendar year-end, the Fund learns the nature of the distributions paid by MLPs during the previous year. After all applicable MLPs have informed the Fund of the actual breakdown of distributions paid to the Fund during its fiscal year, estimates previously recorded are adjusted on the books of the Fund to reflect actual results. As a result, the composition of the Fund’s distributions as reported herein may differ from the final composition determined after fiscal year-end and reported to Fund stockholders on IRS Form 1099DIV. | |
| On September 30, 2016, the Fund declared a monthly distribution to common stockholders in the amount of $0.055 per share payable on December 30, 2016 to common stockholders of record on December 15, 2016 with an ex-date of December 13, 2016. Subsequent to November 30, 2016, the Fund declared three monthly distributions to common stockholders in the amount of $0.055 per share per month, payable on January 31, 2017, February 28, 2017, and March 31, 2017, to common stockholders of record on January 17, 2017, February 15, 2017, and March 15, 2017, respectively. | |
| 6 | Expense allocation: Certain expenses are applicable to multiple funds within the complex of related investment companies. Expenses directly attributable to the Fund are charged to the Fund. Expenses borne by the complex of related investment companies, which includes open-end and closed-end investment companies for which Management serves as investment manager, that are not directly attributable to a particular investment company (e.g., the Fund) are allocated among the Fund and the other investment companies 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. |
| 7 | Financial leverage: In July 2013, the Fund entered into a $500 million secured, committed, margin facility (the “Facility”) with Merrill Lynch Professional Clearing Corp that had a 270-day rolling term that reset daily. Under the Facility, interest was charged on LIBOR Loans at an adjusted LIBOR rate and was payable on the last day of each interest period. On April 14, 2015, the Fund terminated the Facility and entered into a $500 million secured, committed, leverage facility (the “New Facility”) with Société Générale, consisting of $300 million in committed floating-rate debt financing and $200 million in committed fixed-rate debt financing. |
| On January 15, 2016, the Fund entered into an amendment to the credit agreement underlying the New Facility (the “January Amendment”). The January Amendment waived prior compliance with, and amended certain terms relating to, the Fund’s levels of net assets and the covenant relating to distributions; amended certain other | |
17
| terms relating to margin requirements; and reduced the amount of permitted leverage. On March 31, 2016, the Fund entered into an additional amendment to the credit agreement underlying the New Facility (the “March Amendment”). The March Amendment decreased the lender’s total commitment from $500 million to $200 million, bringing the amount of available debt financing in line with the Fund’s then-current asset level, and amended the terms of the commitment fees and duration of the floating-rate revolving portion of the Facility. The Fund paid $4,203,658 in breakage expenses/penalty fees in connection with reducing the principal amount of its fixed-rate loans, which is included in the Fees on prepayment of loans line item that is reflected in the Statement of Operations. The Fund now has access to committed financing of up to $100 million in floating-rate debt and $100 million in fixed-rate debt, consisting of a $50 million loan due April 14, 2020 and $50 million loan due April 14, 2022. Under the New Facility, interest is charged on floating-rate loans based on an adjusted LIBOR rate and is payable on the last day of each interest period. Interest is charged on the two fixed rate loans at 3.28% and 3.64%, respectively, and interest is payable on the last day of each interest period. | |
| The Fund is required to pay a commitment fee under the New Facility if the level of debt outstanding falls below a certain percentage. During the reporting period the Fund was required to pay this commitment fee. The commitment fee is included in the Interest expense line item that is reflected in the Statement of Operations. Under the terms of the New Facility, the Fund is also required to satisfy certain collateral requirements and maintain a certain level of net assets. | |
| For the year ended November 30, 2016, the average principal balance and interest rate was approximately $158 million and 3.28%, respectively. At November 30, 2016, the principal balance outstanding under the Facility was $142.5 million. | |
| 8 | Concentration of risk: Under normal market conditions, the Fund will concentrate in MLPs, many of which operate in the natural resources industry. The natural resources industry includes companies involved in: exploration and production, refining and marketing, coal and metals mining, oilfield service, drilling, integrated natural gas midstream services, transportation and storage, shipping, electricity generation, distribution, development, gathering, processing and renewable resources. The focus of the Fund’s portfolio on a specific group of largely interrelated sectors may present more risks than if its portfolio were broadly diversified over numerous industries and sectors of the economy. A downturn in the natural resources industry would have a larger impact on the Fund than on an investment company that does not concentrate in such industry. |
| 9 | 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. |
Note B—Investment Management Fees, Administration Fees, and Other Transactions with Affiliates:
| The Fund retains Management as its investment manager under a Management Agreement. For such investment management services, the Fund pays Management a fee at the annual rate of 0.75% of its average weekly Managed Assets. Managed Assets equal the total assets of the Fund, less liabilities other than the aggregate indebtedness entered into for purposes of leverage. | |
| The Fund retains Management as its administrator under an Administration Agreement. The Fund pays Management an administration fee at the annual rate of 0.25% of its average weekly Managed Assets under this agreement. Additionally, Management retains US Bancorp Fund Services, LLC (“USBFS”) as its sub-administrator under a Sub-Administration Agreement. Management pays USBFS a fee for all services received under the agreement. | |
18
| Prior to January 1, 2016, Neuberger Berman LLC (“Neuberger”) was retained by Management pursuant to a Sub-Advisory Agreement to furnish it with investment recommendations and research information without added cost to the Fund. Several individuals who are Officers and/or Directors of the Fund are also employees of Management. |
Note C—Securities Transactions:
| During the year ended November 30, 2016, there were purchase and sale transactions of long-term securities of $300,220,933 and $397,614,384, respectively. | |
| During the year ended November 30, 2016, no brokerage commissions on securities transactions were paid to affiliated brokers. | |
Note D—Capital:
| Transactions in shares of common stock for the years ended November 30, 2016 and 2015 were as follows: |
| For the Year Ended | For the Year Ended | ||
| November 30, 2016 | November 30, 2015 | ||
| Stock Issued on Reinvestment of Dividends and Distributions | 112,249 | 23,147 | |
| Net Increase in Common Stock Outstanding | 112,249 | 23,147 |
Note E— Investments in Affiliates(a):
| Net Realized | |||||||||||||||||
| Distributions | Gain (Loss) | ||||||||||||||||
| Balance of | Gross | Balance of | from | from | |||||||||||||
| Shares Held | Purchases | Gross | Shares Held | Value | Investments | Investments | |||||||||||
| November 30, | and | Sales and | November 30, | November 30, | in Affiliated | in Affiliated | |||||||||||
| 2015 | Additions | Reductions | 2016 | 2016 | Issuers | Issuers | |||||||||||
| American Midstream | |||||||||||||||||
| Partners LP (b) | 1,762,311 | — | 862,311 | 900,000 | $ | 13,275,000 | $ | 1,763,250 | $(7,264,852 | ) | |||||||
| CNX Coal | |||||||||||||||||
| Resources LP (b) | 1,000,000 | — | 1,000,000 | — | — | 307,500 | (7,497,379 | ) | |||||||||
| Southcross Energy | |||||||||||||||||
| Partners, L.P. (b) | 1,800,000 | — | 1,800,000 | — | — | — | (24,496,497 | ) | |||||||||
| Total | $ | 13,275,000 | $ | 2,070,750 | $ | (39,258,728 | ) | ||||||||||
| (a) | Affiliated issuers, as defined in the Investment Company Act of 1940, as amended. | ||
| (b) | At November 30, 2016, the issuers of these securities were no longer affiliated with the Fund. | ||
19
| Effective January 1, 2016, Neuberger Berman Management LLC (“NBM”) and Neuberger transferred to Neuberger Berman Fixed Income LLC (“NBFI”) their rights and obligations pertaining to all services they provided to the Fund under the Management Agreement, Sub-Advisory Agreement and Administration Agreement (the “Agreements”). Following such transfer, NBFI was renamed Neuberger Berman Investment Advisers LLC. Additionally, effective January 1, 2016, the Sub-Advisory Agreement between Neuberger and NBFI was terminated. | |
| Management now serves as the Fund’s investment manager and administrator. The investment professionals of NBM and Neuberger, who provided services to the Fund under the Agreements, continue to provide the same services, except that they provide those services in their new capacities as investment professionals of Management. Further, the consolidation did not result in any change in the investment processes currently employed by the Fund, the nature or level of services provided to the Fund, or the fees the Fund pays under its Agreements. | |
20
MLP Income 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.
| Period from | ||||||||||||||||
| March 28, 2013* | ||||||||||||||||
| through | ||||||||||||||||
| Year Ended November 30, | November 30, | |||||||||||||||
| 2016 | 2015 | 2014 | 2013 | |||||||||||||
| Common Stock Net Asset Value, Beginning of Period | $ | 11.20 | $ | 20.68 | $ | 19.71 | $ | 19.10 | ||||||||
| Income From Investment Operations Applicable to | ||||||||||||||||
| Common Stockholders: | ||||||||||||||||
| Net Investment Income (Loss)¢ | (0.24 | ) | (0.08 | ) | 0.33 | (0.06 | ) | |||||||||
| Net Gains or Losses on Securities | ||||||||||||||||
| (both realized and unrealized) | (0.00 | ) | (8.14 | ) | 1.90 | 1.45 | ||||||||||
| Total From Investment Operations Applicable to | ||||||||||||||||
| Common Stockholders | (0.24 | ) | (8.22 | ) | 2.23 | 1.39 | ||||||||||
| Less Distributions to Common Stockholders From: | ||||||||||||||||
| Net Investment Income | — | — | — | — | ||||||||||||
| Tax Return of Capital | (0.86 | ) | (1.26 | ) | (1.26 | ) | (0.74 | ) | ||||||||
| Total Distributions to Common Stockholders | (0.86 | ) | (1.26 | ) | (1.26 | ) | (0.74 | ) | ||||||||
| Less Capital Charges: | ||||||||||||||||
| Issuance of Common Stock | — | — | — | (0.04 | ) | |||||||||||
| Common Stock Net Asset Value, End of Period | $ | 10.10 | $ | 11.20 | $ | 20.68 | $ | 19.71 | ||||||||
| Common Stock Market Value, End of Period | $ | 9.33 | $ | 10.59 | $ | 18.99 | $ | 18.18 | ||||||||
| Total Return, Common Stock Net Asset Value† | 0.77 | % | (41.24 | )% | 11.89 | % | 7.27 | % @@ | ||||||||
| Total Return, Common Stock Market Value† | (1.55 | )% | (39.49 | )% | 11.39 | % | (5.51 | )% @@ | ||||||||
| Supplemental Data/Ratios | ||||||||||||||||
| Net Assets Applicable to Common Stockholders, | ||||||||||||||||
| End of Period (in millions) | $ | 572.0 | $ | 633.2 | $ | 1,168.8 | $ | 1,114.0 | ||||||||
| Ratios are Calculated Using Average Net Assets | ||||||||||||||||
| Applicable to Common Stockholders | ||||||||||||||||
| Ratio of Expenses Including Deferred Income | ||||||||||||||||
| Tax (Benefit) Expense# | 3.86 | % | (9.75 | )% | 7.81 | % | 5.65 | % @ | ||||||||
| Ratio of Expenses Excluding Deferred Income | ||||||||||||||||
| Tax (Benefit) Expense | 3.86 | % | 2.38 | % | 1.77 | % | 1.43 | % @ | ||||||||
| Ratio of Net Investment Income (Loss) Including Deferred Income | ||||||||||||||||
| Tax Benefit (Expense)# | (2.80 | )% | 10.99 | % | (7.24 | )% | (5.09 | )% @ | ||||||||
| Ratio of Net Investment Income (Loss) Excluding Deferred Income | ||||||||||||||||
| Tax Benefit (Expense) | (2.80 | )% | (1.13 | )% | (1.20 | )% | (0.87 | )% @ | ||||||||
| Portfolio Turnover Rate | 49 | % | 43 | % | 10 | % | 0 | % @@ | ||||||||
| Loans Payable (in millions) | $ | 143 | $ | 325 | $ | 410 | $ | 405 | ||||||||
| Asset Coverage Per $1,000 of Loans PayableØ | $ | 5,014 | $ | 2,948 | $ | 3,851 | $ | 3,751 | ||||||||
| See Notes to Financial Highlights | 21 |
| * | Commencement of operations. | |
| † | 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. Dividends and distributions, if any, are assumed to be reinvested at prices obtained under the Fund’s distribution reinvestment plan. Results represent past performance and do not indicate future results. Current returns may be lower or higher than the performance data quoted. Investment returns may fluctuate and shares of common stock when sold may be worth more or less than original cost. | |
| # | For the years ended November 30, 2016 and November 30, 2015, the Fund accrued $0 and $117,348,831, respectively, for net deferred income tax benefit. For the year ended November 30, 2014, the Fund accrued $72,009,636 for net deferred income tax expense. For the period from March 28, 2013 through November 30, 2013, the Fund accrued $45,339,195 for net deferred income tax expense, which is included in this ratio on a non-annualized basis. | |
| ¢ | Calculated based on the average number of shares of common stock outstanding during each fiscal period. | |
| @ | Annualized. | |
| @@ | Not annualized. | |
| Ø | Calculated by subtracting the Fund’s total liabilities (excluding loans payable and accumulated unpaid interest on loans payable) from the Fund’s total assets and dividing by the outstanding loans payable balance. |
22
To the Board of Directors and Stockholders of
Neuberger Berman MLP Income Fund Inc.
We have audited the accompanying statements of assets and liabilities of Neuberger Berman MLP Income Fund Inc., (the “Fund”), including the schedule of investments, as of November 30, 2016, and the related statement of operations and cash flows for the year then ended, the statement of changes in net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. We were not engaged to perform an audit of the Fund’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and financial highlights, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2016 by correspondence with the custodian and others or by other appropriate auditing procedures where replies from others were not received. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Neuberger Berman MLP Income Fund Inc. at November 30, 2016, the results of its operation and cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated therein, in conformity with U.S. generally accepted accounting principles.
Boston, Massachusetts
January 25, 2017
23
Computershare, Inc. (the “Plan Agent”) will act as Plan Agent for stockholders who have not elected in writing to receive dividends and other distributions in cash (each a “Participant”), will open an account for each Participant under the Distribution Reinvestment Plan (“Plan”) in the same name as its 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 other distribution after the account is opened.
Whenever the Fund declares a dividend or distribution with respect to the Shares, each Participant will receive such dividends and other 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 its 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 Fund may, but is not required to, issue new Shares. If the Fund does not issue new Shares, and the net asset value per Share exceeds the market price per Share plus estimated brokerage commissions on the payment date for a cash dividend or distribution, then 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-distribution” 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.
24
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 its 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 its 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 its 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 other distributions, the Fund will be authorized to pay to such successor Plan Agent, for each Participant’s account, all dividends and other distributions payable on Shares held in its name or under the Plan for retention or application by such successor Plan Agent as provided in these terms and conditions.
25
Reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions — i.e., reinvestment in additional Shares does not relieve stockholders of, or defer the need to pay, any income tax that may be payable (or that is required to be withheld) on Fund dividends and distributions. Participants should contact their tax professionals for information on how the Plan impacts their personal tax situation. For additional information about the Plan, please contact the Plan Agent at 1-866-227-2136 or P.O. Box 30170, College Station, TX 77842-3170.
26
|
Investment Manager and Administrator Sub-Adviser (prior to January 1, 2016) Custodian Stock Transfer Agent |
Plan Agent Overnight correspondence should be sent to: Legal Counsel Independent Registered Public Accounting Firm |
27
The following tables set forth information concerning the Directors and Officers of the Fund. All persons named as Directors and Officers also serve in similar capacities for other funds administered or managed by Management. The Fund’s Statement of Additional Information includes additional information about the Directors as of the time of the Fund’s most recent public offering and is available upon request, without charge, by calling (877) 461-1899.
Information about the Board of Directors
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| CLASS I | ||||||||
| Independent Directors | ||||||||
| Marc Gary (1952) | Director since 2015 |
Executive Vice Chancellor and Chief Operating Officer, Jewish Theological Seminary, since 2012; formerly, Executive Vice President and General Counsel, Fidelity Investments, 2007 to 2012; Executive Vice President and General Counsel, BellSouth Corporation, 2004 to 2007; Vice President and Associate General Counsel, BellSouth Corporation, 2000 to 2004; Associate, Partner, and National Litigation Practice Co-Chair, Mayer, Brown LLP, 1981 to 2000; Associate Independent Counsel, Office of Independent Counsel, 1990 to 1992. | 55 | Trustee, Jewish Theological Seminary, since 2015; Director, Counsel on Call (privately held for-profit company), since 2012; Director, Lawyers Committee for Civil Rights Under Law (not-for-profit), since 2005; formerly, Director, Equal Justice Works (not-for-profit), 2005 to 2014; Director, Corporate Counsel Institute, Georgetown University Law Center, 2007 to 2012; Director, Greater Boston Legal Services (not-for-profit), 2007 to 2012. | ||||
| Michael M. Knetter (1960) | Director since 2013 |
President and Chief Executive Officer, University of Wisconsin Foundation, since October 2010; formerly, Dean, School of Business, University of Wisconsin - Madison; formerly, Professor of International Economics and Associate Dean, Amos Tuck School of Business - Dartmouth College, 1998 to 2002. | 55 | Board Member, American Family Insurance (a mutual company, not publicly traded), since March 2009; formerly, Trustee, Northwestern Mutual Series Fund, Inc., 2007 to 2011; formerly, Director, Wausau Paper, 2005 to 2011; formerly, Director, Great Wolf Resorts, 2004 to 2009. | ||||
28
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Peter P. Trapp (1944) | Director since 2013 |
Retired; formerly, Regional Manager for Mid-Southern Region, Ford Motor Credit Company, September 1997 to 2007; formerly, President, Ford Life Insurance Company, April 1995 to August 1997. | 55 | None. | ||||
| Director who is an “Interested Person” | ||||||||
| Robert Conti* (1956) | Chief Executive Officer, President and Director since 2013 |
Managing Director, Neuberger Berman, since 2007; President—Mutual Funds, Neuberger Berman Investment Advisers LLC (“NBIA”) (formerly, Neuberger Berman Fixed Income LLC and including predecessor entities), since 2008; formerly, Senior Vice President, Neuberger Berman BD LLC (“Neuberger Berman”), 2003 to 2006; formerly, Vice President, Neuberger Berman, 1999 to 2003; President and Chief Executive Officer, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
55 | Director, Staten Island Mental Health Society, since 1994; formerly, Chairman of the Board, Staten Island Mental Health Society, 2008 to 2011. | ||||
| CLASS II | ||||||||
| Independent Directors | ||||||||
| Faith Colish (1935) | Director since 2013 | Counsel, Carter Ledyard & Milburn LLP (law firm) since October 2002; formerly, Attorney-at-Law and President, Faith Colish, A Professional Corporation, 1980 to 2002. | 55 | Formerly, Director, 1997 to 2003, and Advisory Director, 2003 to 2006, ABA Retirement Funds (formerly, American Bar Retirement Association) (not-for-profit membership corporation). | ||||
29
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Michael J. Cosgrove (1949) | Director since 2015 |
President, Carragh Consulting USA, since 2014; formerly, Executive, General Electric Company, 1970 to 2014, including President, Mutual Funds and Global Investment Programs, GE Asset Management, 2011 to 2014, President and Chief Executive Officer, Mutual Funds and Intermediary Business, GE Asset Management, 2007 to 2011, President, Institutional Sales and Marketing, GE Asset Management, 1998 to 2007, and Chief Financial Officer, GE Asset Management and Deputy Treasurer, GE Company, 1988 to 1993. | 55 | Director, America Press, Inc. (not-for-profit Jesuit publisher), since 2015; Director, Fordham University, since 2001; formerly, Director, The Gabelli Go Anywhere Trust, June 2015 to June 2016; Director, Skin Cancer Foundation (not-for-profit), 2006 to 2015; Director, GE Investments Funds, Inc., 1997 to 2014; Trustee, GE Institutional Funds, 1997 to 2014; Director, GE Asset Management, 1988 to 2014; Director, Elfun Trusts, 1988 to 2014. | ||||
| Deborah C. McLean (1954) | Director since 2015 |
Member, Circle Financial Group (private wealth management membership practice), since 2011; Managing Director, Golden Seeds LLC (an angel investing group), since 2009; Adjunct Professor, Columbia University School of International and Public Affairs, since 2008; formerly, Visiting Assistant Professor, Fairfield University, Dolan School of Business, Fall 2007; formerly, Adjunct Associate Professor of Finance, Richmond, The American International University in London, 1999 to 2007. | 55 | Board member, Norwalk Community College Foundation, since 2014; Dean’s Advisory Council, Radcliffe Institute for Advanced Study, since 2014; formerly, Director and Treasurer, At Home in Darien (not-for-profit), 2012 to 2014; Director, National Executive Service Corps (not-for-profit), 2012 to 2013; Trustee, Richmond, The American International University in London, 1999 to 2013. |
30
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) |
Complex |
by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| George W. Morriss (1947) | Director since 2013 |
Adjunct Professor, Columbia University School of International and Public Affairs, since October 2012; formerly, Executive Vice President and Chief Financial Officer, People’s United Bank, Connecticut (a financial services company), 1991 to 2001. | 55 | Director, National Association of Corporate Directors, Connecticut Chapter, since 2011; Trustee, Steben Alternative Investment Funds, Steben Select Multi-Strategy Fund, and Steben Select Multi-Strategy Master Fund, since 2013; formerly, Treasurer, National Association of Corporate Directors, Connecticut Chapter, 2011 to 2015; formerly, Manager, Larch Lane Multi-Strategy Fund complex (which consisted of three funds), 2006 to 2011; formerly, Member, NASDAQ Issuers’ Affairs Committee, 1995 to 2003. | ||||
| Tom D. Seip (1950) | Director since 2013; Chairman of the Board since 2013 |
General Partner, Ridgefield Farm LLC (a private investment vehicle); formerly, President and CEO, Westaff, Inc. (temporary staffing), May 2001 to January 2002; formerly, Senior Executive, The Charles Schwab Corporation, 1983 to 1998, including Chief Executive Officer, Charles Schwab Investment Management, Inc.; Trustee, Schwab Family of Funds and Schwab Investments, 1997 to 1998; and Executive Vice President-Retail Brokerage, Charles Schwab & Co., Inc., 1994 to 1997. | 55 | Director, H&R Block, Inc. (financial services company), since May 2001; Chairman, Governance and Nominating Committee, H&R Block, Inc., since 2011; formerly, Chairman, Compensation Committee, H&R Block, Inc., 2006 to 2010; formerly, Director, Forward Management, Inc. (asset management company), 1999 to 2006. |
31
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| CLASS III | ||||||||
| Independent Directors | ||||||||
| Martha C. Goss (1949) | Director since 2013 |
President, Woodhill Enterprises Inc./Chase Hollow Associates LLC (personal investment vehicle), since 2006; formerly, Consultant, Resources Global Professionals (temporary staffing), 2002 to 2006. | 55 | Director, American Water (water utility), since 2003; Director, Allianz Life of New York (insurance), since 2005; Director, Berger Group Holdings, Inc. (engineering consulting firm), since 2013; Director, Financial Women’s Association of New York (not-for-profit association), since 2003; Trustee Emerita, Brown University, since 1998; Director, Museum of American Finance (not-for-profit), since 2013; formerly, Non-Executive Chair and Director, Channel Reinsurance (financial guaranty reinsurance), 2006 to 2010; formerly, Director, Ocwen Financial Corporation (mortgage servicing), 2005 to 2010; formerly, Director, Claire’s Stores, Inc. (retailer), 2005 to 2007; formerly, Director, Parsons Brinckerhoff Inc. (engineering consulting firm), 2007 to 2010; formerly, Director, Bank Leumi (commercial bank), 2005 to 2007; formerly, Advisory Board Member, Attensity (software developer), 2005 to 2007. | ||||
| Howard A. Mileaf (1937) | Director since 2013 |
Retired; formerly, Vice President and General Counsel, WHX Corporation (holding company), 1993 to 2001. | 55 | Formerly, Director, Webfinancial Corporation (holding company), 2002 to 2008; formerly, Director, WHX Corporation (holding company), 2002 to 2005; formerly, Director, State Theatre of New Jersey (not-for-profit theatre), 2000 to 2005. | ||||
32
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Candace L. Straight (1947) | Director since 2013 |
Private investor and consultant specializing in the insurance industry; formerly, Advisory Director, Securitas Capital LLC (a global private equity investment firm dedicated to making investments in the insurance sector), 1998 to 2003. | 55 | Formerly, Public Member, Board of Governors and Board of Trustees, Rutgers University, 2011 to 2106; formerly, Director, Montpelier Re Holdings Ltd. (reinsurance company), 2006 to 2015; formerly, Director, National Atlantic Holdings Corporation (property and casualty insurance company), 2004 to 2008; formerly, Director, The Proformance Insurance Company (property and casualty insurance company), 2004 to 2008; formerly, Director, Providence Washington Insurance Company (property and casualty insurance company), 1998 to 2006; formerly, Director, Summit Global Partners (insurance brokerage firm), 2000 to 2005. | ||||
| James G. Stavridis (1955) | Director since 2015 |
Dean, Fletcher School of Law and Diplomacy, Tufts University since 2013; formerly, Admiral, United States Navy, 2006 to 2013, including Supreme Allied Commander, NATO and Commander, European Command, 2009 to 2013, and Commander, United States Southern Command, 2006 to 2009. | 55 | Director, Utilidata Inc., since 2015; Director, BMC Software Federal, LLC, since 2014; Director, Vertical Knowledge, LLC, since 2013; formerly, Director, Navy Federal Credit Union, 2000-2002. |
33
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | Number of | Other Directorships Held | ||||
| and Address(1) | and Length of | Funds in Fund | Outside Fund Complex | |||||
| Time Served(2) | Complex | by Director(3) | ||||||
| Overseen by | ||||||||
| Director | ||||||||
| Director who is an “Interested Person” | ||||||||
| Joseph V. Amato* (1962) | Director since 2013 |
President and Director, Neuberger Berman Group LLC, since 2009; President and Chief Executive Officer, Neuberger Berman and Neuberger Berman Holdings LLC (including its predecessor, Neuberger Berman Inc.), since 2007; Chief Investment Officer (Equities) and President (Equities), NBIA, since 2007, and Board Member of NBIA since 2006; formerly, Global Head of Asset Management of Lehman Brothers Holdings Inc.’s (“LBHI”) Investment Management Division, 2006 to 2009; formerly, member of LBHI’s Investment Management Division’s Executive Management Committee, 2006 to 2009; formerly, Managing Director, Lehman Brothers Inc. (“LBI”), 2006 to 2008; formerly, Chief Recruiting and Development Officer, LBI, 2005 to 2006; formerly, Global Head of LBI’s Equity Sales and a Member of its Equities Division Executive Committee, 2003 to 2005. | 55 | Member of Board of Advisors, McDonough School of Business, Georgetown University, since 2001; Member of New York City Board of Advisors, Teach for America, since 2005; Trustee, Montclair Kimberley Academy (private school), since 2007; Member of Board of Regents, Georgetown University, since 2013. | ||||
| (1) | The business address of each listed person is 1290 Avenue of the Americas New York, NY 10104. | |
| (2) | The Board shall at all times be divided as equally as possible into three classes of Directors designated Class I, Class II and Class III. The terms of office of Class I, Class II and Class III Directors shall expire at the annual meeting of stockholders held in 2018, 2019 and 2017, respectively, and at each third annual meeting of stockholders thereafter. | |
| (3) | Except as otherwise indicated, each individual has held the positions shown during at least the last five years. | |
| * | Indicates a Director who is an “interested person” within the meaning of the 1940 Act. Mr. Amato and Mr. Conti are interested persons of the Fund by virtue of the fact that each is an officer of Management and/or its affiliates. |
34
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | ||
| and Address(1) | and Length of | |||
| Time Served(2) | ||||
|
Claudia A. Brandon (1956) |
Executive Vice President and Secretary since 2013 |
Senior Vice President, Neuberger Berman, since 2007 and Employee since 1999; Senior Vice President, NBIA, since 2008 and Assistant Secretary since 2004; formerly, Vice President, Neuberger Berman, 2002 to 2006; formerly, Vice President – Mutual Fund Board Relations, NBIA, 2000 to 2008; formerly, Vice President, NBIA, 1986 to 1999 and Employee, 1984 to 1999; Executive Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator; Secretary, fifteen registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Agnes Diaz (1971) |
Vice President since 2013 |
Senior Vice President, Neuberger Berman, since 2012; Senior Vice President, NBIA, since 2012 and Employee since 1996; formerly, Vice President, Neuberger Berman, 2007 to 2012; Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Anthony DiBernardo (1979) |
Assistant Treasurer since 2013 |
Senior Vice President, NBIA, since 2014, and Employee since 2003; formerly, Vice President, Neuberger Berman, 2009 to 2014; Assistant Treasurer, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Corey A. Issing (1978) |
Chief Legal Officer since 2016 (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002) and Anti-Money Laundering Compliance Officer since 2016 |
General Counsel and Head of Compliance– Mutual Funds since 2016 and Senior Vice President, NBIA, since 2013, formerly, Associate General Counsel (2015 to 2016), Counsel (2007 to 2015), Vice President (2009 – 2013); Chief Legal Officer (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002), twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator; Anti-Money Laundering Compliance Officer, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Sheila R. James (1965) |
Assistant Secretary since 2013 |
Vice President, Neuberger Berman, since 2008 and Employee since 1999; Vice President, NBIA, since 2008; formerly, Assistant Vice President, Neuberger Berman, 2007; Employee, NBIA, 1991 to 1999; Assistant Secretary, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Brian Kerrane (1969) |
Chief Operating Officer since 2015 and Vice President since 2013 |
Managing Director, Neuberger Berman, since 2013; Chief Operating Officer – Mutual Funds and Managing Director, NBIA, since 2015 and Employee since 1991; formerly, Senior Vice President, Neuberger Berman, 2006 to 2014; Vice President, NBIA, 2008 to 2015 and Employee since 1991; Chief Operating Officer, ten registered investment companies for which NBIA acts as investment manager and/or administrator; Vice President, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
35
| Name, (Year of Birth), | Position(s) | Principal Occupation(s)(3) | ||
| and Address(1) | and Length of | |||
| Time Served(2) | ||||
|
Kevin Lyons (1955) |
Assistant Secretary since 2013 |
Assistant Vice President, Neuberger Berman, since 2008 and Employee since 1999; Assistant Vice President, NBIA, since 2008; formerly, Employee, NBIA, 1993 to 1999; Assistant Secretary, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Anthony Maltese (1959) |
Vice President since 2015 |
Senior Vice President, Neuberger Berman, since 2014 and Employee since 2000; Senior Vice President, NBIA, since 2014; Vice President, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Owen F. McEntee, Jr. (1961) |
Vice President since 2013 |
Vice President, Neuberger Berman, since 2006; Vice President, NBIA, since 2006 and Employee since 1992; Vice President, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
John M. McGovern (1970) |
Treasurer and Principal Financial and Accounting Officer since 2013 |
Senior Vice President, Neuberger Berman, since 2007; Senior Vice President, NBIA, since 2007 and Employee since 1993; formerly, Vice President, Neuberger Berman, 2004 to 2006; formerly, Assistant Treasurer, 2002 to 2005; Treasurer and Principal Financial and Accounting Officer, twenty-eight registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Frank Rosato (1971) |
Assistant Treasurer since 2013 |
Vice President, Neuberger Berman, since 2006; Vice President, NBIA, since 2006 and Employee since 1995; Assistant Treasurer, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Chamaine Williams (1971) |
Chief Compliance Officer since 2013 |
Chief Compliance Officer–Mutual Funds and Senior Vice President, NBIA, since 2006; formerly, Senior Vice President, LBI, 2007 to 2008; formerly, Vice President, LBI, 2003 to 2006; formerly, Chief Compliance Officer, Lehman Brothers Asset Management Inc., 2003 to 2007; formerly, Chief Compliance Officer, Lehman Brothers Alternative Investment Management LLC, 2003 to 2007; Chief Compliance Officer, fifteen registered investment companies for which NBIA acts as investment manager and/or administrator. |
| (1) | The business address of each listed person is 1290 Avenue of the Americas New York, NY 10104. | |
| (2) | Pursuant to the Bylaws of the Fund, each officer elected by the Directors shall hold office until his or her successor shall have been elected and qualified or until his or her earlier death, inability to serve, or resignation. Officers serve at the pleasure of the Directors and may be removed at any time with or without cause. | |
| (3) | Except as otherwise indicated, each individual has held the positions shown during at least the last five years. | |
36
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, by calling 800-877-9700 (toll-free) and on the Securities and Exchange Commission’s website, at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available, upon request, without charge, by calling 800-877-9700 (toll-free), on the Securities and Exchange Commission’s website at www.sec.gov, and on Management’s website at www.nb.com.
Quarterly Portfolio Schedule
The Fund files a complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Forms N-Q are available on the Securities and Exchange Commission’s website at www.sec.gov and may be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. The information on Form N-Q is available upon request, without charge, by calling 800-877-9700 (toll-free).
37
An annual meeting of stockholders was held on September 7, 2016. Stockholders voted to elect five Class II Directors to serve until the annual meeting of stockholders in 2019, or until their successors are elected and qualified. Class I Directors (which include Marc Gary, Michael M. Knetter, Peter P. Trapp, and Robert Conti) and the Class III Directors (which include Martha C. Goss, Howard A. Mileaf, James G. Stavridis, Candace L. Straight, and Joseph V. Amato) continue to hold office until the annual meeting in 2018 and 2017, respectively.
To elect five Class II Directors to serve until the annual meeting of stockholders in 2019 or until their successors are elected and qualified.
Shares of Common Stock
| Votes | Broker | |||||||
| Votes For | Withheld | Abstentions | Non-Votes | |||||
| Faith Colish | 51,452,047 | 965,214 | — | — | ||||
| Michael J. Cosgrove | 51,536,106 | 881,155 | — | — | ||||
| Deborah C. McLean | 51,517,386 | 899,875 | — | — | ||||
| George W. Morriss | 51,532,433 | 884,828 | — | — | ||||
| Tom D. Seip | 51,559,276 | 857,985 | — | — |
38
On an annual basis, the Board of Directors (the “Board”) of Neuberger Berman MLP Income Fund Inc. (the “Fund”), including the Directors who are not “interested persons” of Neuberger Berman Investment Advisers LLC (“Management”) (including its affiliates) or the Fund (“Independent Fund Directors”), considers whether to continue the Fund’s management agreement with Management (the “Agreement”). Throughout the process, the Independent Fund Directors are advised by counsel that is experienced in Investment Company Act of 1940 matters and that is independent of Management (“Independent Counsel”). At a meeting held on October 18, 2016, the Board, including the Independent Fund Directors, approved the continuation of the Agreement.
In evaluating the Agreement, the Board, including the Independent Fund Directors, reviewed extensive materials provided by Management in response to questions submitted by the Independent Fund Directors and Independent Counsel, and met with senior representatives of Management regarding its personnel, operations and financial condition as they relate to the Fund. The annual contract review extends over at least two regular meetings of the Board to ensure that Management has time to respond to any questions the Independent Fund Directors may have on their initial review of the materials and that the Independent Fund Directors have time to consider those responses.
In connection with its deliberations, the Board also considered the broad range of information relevant to the annual contract review that is provided to the Board (including its various standing committees) at meetings throughout the year, including investment performance reports and related portfolio information for the Fund, as well as periodic reports on, among other matters, pricing and valuation; brokerage and execution; compliance and stockholder and other services provided by Management and its affiliates. To assist the Board in its deliberations regarding the annual contract review, the Board has established a Contract Review Committee comprised of Independent Fund Directors, as well as other committees that focus throughout the year on specific areas relevant to the annual contract review, such as Fund performance or compliance matters. Those committees provide reports that feed into the Contract Review Committee, which reviews and takes account of the information.
The Independent Fund Directors received from Independent Counsel a memorandum discussing the legal standards for their consideration of the proposed continuation of the Agreement. During the course of the year and during their deliberations regarding the annual contract review, the Contract Review Committee and the Independent Fund Directors met with Independent Counsel separately from representatives of Management.
In connection with its approval of the continuation of the Agreement, the Board evaluated the terms of the Agreement, the overall fairness of the Agreement to the Fund and whether the Agreement was in the best interests of the Fund and Fund stockholders. The Board considered all factors it deemed relevant with respect to the Fund, including the following factors: (1) the nature, extent, and quality of the services provided by Management; (2) the investment performance of the Fund compared to an appropriate market index and a peer group of investment companies; (3) the costs of the services provided and the profit realized by Management and its affiliates from their relationship with the Fund; (4) whether and to what extent economies of scale might be realized as the Fund grows; and (5) whether fee levels reflect any such potential economies of scale for the benefit of the Fund’s stockholders. The Board’s determination to approve the continuation of the Agreement was based on a comprehensive consideration of all information provided to the Board throughout the year and specifically in connection with the annual contract review. The Board members did not identify any particular information or factor that was all-important or controlling, and each Director may have attributed different weights to the various factors. The Board focused on the overall costs and benefits of the Agreement to the Fund and, through the Fund, its stockholders.
With respect to the nature, extent and quality of the services provided, the Board considered the investment philosophy and decision-making processes of Management, and the qualifications, experience, capabilities of, and resources available to, the portfolio management personnel of Management who perform services for the Fund. The Board noted that Management also provides certain administrative services, including fund accounting and compliance oversight. The Board also considered Management’s policies and practices regarding brokerage and allocation of portfolio transactions and reviewed the quality of the execution services that Management had provided. The Board also reviewed whether
39
With respect to investment performance, the Board considered information regarding the Fund’s short-, intermediate- and long-term performance on both a market return and net asset value basis relative to its benchmark and the average net asset value performance of a composite peer group (as constructed by an independent organization) of closed-end investment companies pursuing broadly similar strategies. Considering short-, intermediate- and long-term performance enables the Board to evaluate performance in a variety of market conditions. The Board also reviewed performance in relation to certain measures of the degree of investment risk undertaken by the portfolio managers. The Board factored into its evaluation of the Fund’s performance the limitations inherent in the methodology for constructing peer groups and determining which investment companies should be included in which peer groups. The Board also considered Management’s responsiveness with respect to the Fund’s lagging performance. In this regard, the Board noted that performance, especially short-term performance, is only one of the factors that it deems relevant to its consideration of the Fund’s Agreement and that, after considering all relevant factors, it may be appropriate to approve the continuation of the Agreement notwithstanding the Fund’s underperformance. The Board met with the Portfolio Managers of the Fund during the period since the last contract renewal to discuss the Fund’s performance.
With respect to the overall fairness of the Agreement, the Board considered the fee structure for the Fund under the Agreement as compared to a peer group of comparable funds and any fall-out benefits likely to accrue to Management or its affiliates from their relationship with the Fund. The Board also considered the profitability of Management and its affiliates from their association with the Fund, and year-over-year changes in each of Management’s reported expense categories. The Board reviewed a comparison of the Fund’s management fee and total expense ratio to a peer group of broadly comparable funds. The Board noted that the comparative management fee analysis includes, in the Fund’s management fee, the separate administrative fee paid to Management, but it was not clear whether this was the case for all funds in the peer group. The Board considered the mean and median of the management fees and expense ratios of the peer group.
With regard to the investment performance of the Fund and the costs of the services provided to the Fund, the Board considered the following information. The Board noted that, as compared to its peer group, the Fund’s contractual management fee on managed assets (which include leverage proceeds) was equal to the median, but the actual management fee on managed assets as a percentage of assets attributable to common stockholders was lower than the median. The Board considered that, as compared to its peer group, the Fund’s performance was lower than the median for the 1-year period. The Board also considered that, as compared to its benchmark, the Fund’s performance was lower for the 1-year period.
The Board also considered whether there were other funds or separate accounts that were advised or sub-advised by Management or its affiliates with investment objectives, policies and strategies that were similar to those of the Fund. The Board had before them the fees charged to the Fund and the fees charged to separate accounts managed in similar styles to the Fund. The Board was aware of the additional expenses borne by common stockholders as a result of the Fund’s
40
The Board also considered that Management has provided, at no added cost to the Fund, certain additional services that were required by new regulations or regulatory interpretations, impelled by changes in the securities markets or the business landscape, and/or requested by the Board. In concluding that the benefits accruing to Management and affiliates by virtue of their relationship with the Fund were reasonable in light of the costs of providing the investment advisory and other services and the benefits accruing to the Fund, the Board reviewed specific data as to Management’s profit or loss on the Fund for a recent period. The Board also considered Management’s cost allocation methodology. The Board recognized that Management should be entitled to earn a reasonable level of profits for services it provides to the Fund and, based on its review, concluded that Management’s reported level of profitability on the Fund was reasonable.
Conclusions
In approving the continuation of the Agreement, the Board concluded that the terms of the Agreement are fair and reasonable to the Fund and that approval of the continuation of the Agreement is in the best interests of the Fund and its stockholders. In reaching this determination, the Board considered that Management could be expected to provide a high level of service to the Fund; that, regarding the Fund’s underperformance, it retained confidence in Management’s capabilities to manage the Fund; that the Fund’s fee structure appeared to the Board to be reasonable given the nature, extent and quality of services provided; and that the benefits accruing to Management and its affiliates by virtue of their relationship with the Fund were reasonable in light of the costs of providing the investment advisory and other services and the benefits accruing to the Fund. The Board’s conclusions may be based in part on its consideration of materials prepared in connection with the approval or continuance of the Agreement in prior years and on the Board’s ongoing regular review of Fund performance and operations throughout the year, in addition to material prepared specifically for the most recent annual review of the Agreement.
41
|
Neuberger Berman Investment Advisers LLC Statistics and projections in this report are derived from sources deemed to be reliable but cannot be regarded as a representation of future results of the Fund. This report is prepared for the general information of stockholders and is not an offer of shares of the Fund.
|
||||
| |
N0372 01/17|
(a)
|
Audit Fees
|
The aggregate fees billed for professional services rendered by E&Y for the audit of the annual financial statements or services that are normally provided by E&Y in connection with statutory and regulatory filings or engagements were $48,000 and $49,200 for the fiscal years ended 2015 and 2016, respectively.
|
(b)
|
Audit-Related Fees
|
|
(c)
|
Tax Fees
|
|
(d)
|
All Other Fees
|
|
(e)
|
Audit Committee’s Pre-Approval Policies and Procedures
|
|
(f)
|
Hours Attributed to Other Persons
|
|
Type of Account
|
Number of
Accounts
Managed
|
Total Assets
Managed
($ millions)
|
Number of Accounts
Managed for which
Advisory Fee is
Performance-Based
|
Assets Managed for
which Advisory Fee is
Performance-Based
($ millions)
|
|
Douglas A. Rachlin**
|
|
|
|
|
|
Registered Investment Companies*
|
–
|
–
|
–
|
–
|
|
Other Pooled Investment Vehicles
|
2
|
602
|
–
|
–
|
|
Other Accounts***
|
2,201
|
3,160
|
–
|
–
|
|
Yves S. Siegel**
|
||||
|
Registered Investment Companies*
|
–
|
–
|
–
|
–
|
|
Other Pooled Investment Vehicles
|
2
|
602
|
–
|
–
|
|
Other Accounts***
|
2,201
|
3,160
|
–
|
–
|
|
*
|
Registered Investment Companies include: Mutual Funds and Closed-End Funds
|
|
**
|
A portion of certain accounts may be managed by other portfolio managers; however, the total assets of such accounts are included even though the portfolio manager listed above is not involved in the day-to-day management of the entire account.
|
|
***
|
Other Accounts include: Institutional Separate Accounts, Sub-Advised Accounts and Managed Accounts (WRAP Accounts).
|
|
Portfolio Manager
|
Dollar Range of Equity
Securities Owned in the Registrant |
|
Douglas A. Rachlin
|
D
|
|
Yves S. Siegel
|
C
|
|
A = None
B = $1-$10,000 C = $10,001 - $50,000 D = $50,001 - $100,000 |
E = $100,001 - $500,000
F = $500,001 - $1,000,000 G = Over $1,000,000 |
(a)(3) Not applicable to the Registrant.
|
By:
|
/s/ Robert Conti
|
|
|
|
Robert Conti
|
|
|
|
Chief Executive Officer and President
|
|
|
By:
|
/s/ Robert Conti
|
|
|
|
Robert Conti
|
|
|
|
Chief Executive Officer and President
|
|
|
By:
|
/s/ John M. McGovern
|
|
|
|
John M. McGovern
|
|
|
|
Treasurer and Principal Financial and Accounting Officer
|
|