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Neuberger Berman
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Annual Report November 30, 2019 |
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Beginning on January 1, 2021, as permitted by regulations adopted by the U.S. Securities and Exchange Commission, paper copies of the Fund’s annual and semi-annual shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Fund’s website www.nb.com/CEFliterature, and you will be notified by mail each time a report is posted and provided with a website link to access the report. If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or, if you are a direct investor, by calling 800.877.9700 or by sending an e-mail request to fundinfo@nb.com. Beginning on January 1, 2019, you may elect to receive all future reports in paper free of charge. If you invest through a financial intermediary, you can contact your financial intermediary to request that you continue to receive paper copies of your shareholder reports. If you invest directly with the Fund, you can call 800.877.9700 or send an email request to fundinfo@nb.com to inform the Fund that you wish to continue receiving paper copies of your shareholder reports. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all funds held with the fund complex if you invest directly with the Fund. |
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Contents |
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| PRESIDENT’S LETTER | 1 | |||||
| PORTFOLIO COMMENTARY | 2 | |||||
| SCHEDULE OF INVESTMENTS | 7 | |||||
| FINANCIAL STATEMENTS | 9 | |||||
| FINANCIAL HIGHLIGHTS/PER SHARE DATA | 19 | |||||
| Report of Independent Registered Public Accounting Firm | 21 | |||||
| Distribution Reinvestment Plan | 22 | |||||
| Directory | 25 | |||||
| Directors and Officers | 26 | |||||
| Proxy Voting Policies and Procedures | 36 | |||||
| Quarterly Portfolio Schedule | 36 | |||||
| Report of Votes of Stockholders | 37 | |||||
| Board Consideration of the Management Agreement | 38 | |||||
The “Neuberger Berman” name and logo and “Neuberger Berman Investment Advisers LLC” name are registered service marks of Neuberger Berman Group LLC. The individual Fund name in this piece is either a service mark or registered service mark of Neuberger Berman Investment Advisers LLC. ©2020 Neuberger Berman Investment Advisers LLC. All rights reserved.
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President’s Letter |
Dear Stockholder,
I am pleased to present the annual report for Neuberger Berman MLP and Energy Income Fund Inc. (the Fund) for the 12 months ended November 30, 2019. The report includes a portfolio commentary, a listing of the Fund’s investments, and its audited financial statements for the reporting period.
The Fund seeks to provide total return with an emphasis on cash distributions. As previously communicated to stockholders, the Fund’s Board of Directors approved certain changes to the Fund’s investment policy and, as a result, effective June 3, 2019, the Fund changed its name from “Neuberger Berman MLP Income Fund Inc.” to “Neuberger Berman MLP and Energy Income Fund Inc.” The changes did not alter the Fund’s investment objective and the Fund continues to trade on the NYSE American under its ticker symbol of “NML.”
Under the Fund’s revised (and current) 80% investment policy, the Fund continues to invest in MLPs but also has the ability to invest in energy companies, regardless of whether the companies are structured as partnerships or “C” corporations. Neuberger Berman and the Fund’s Board of Directors believe the amended investment policy will allow Neuberger Berman to better manage the Fund’s portfolio in the best interests of the Fund and in pursuit of its investment objective.
Thank you for your continued confidence in the Fund. We will continue to do our best to retain your trust in the years to come.
Sincerely,
Joseph V. Amato
President and CEO
Neuberger Berman MLP and Energy Income Fund Inc.
| 1 |
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Neuberger Berman MLP and Energy Income Fund Inc.* |
Neuberger Berman MLP and Energy Income Fund Inc. (the Fund) produced a -9.33% total return on a net asset value (NAV) basis for the 12-month reporting period ended November 30, 2019, outperforming its benchmark, the Alerian MLP Index (the Index), which posted a -11.00% total return for the same period. (Fund performance on a market price basis is provided in the table immediately following this letter.)
The Fund operated within a difficult environment for the energy sector over the reporting period ended November 30, 2019. The master limited partnerships (MLPs) space in particular remained mired in its recovery from the 2015 oil price collapse, which caused a dramatic fall in MLPs equity prices and undercut the ability of MLPs to finance projects through the issuance of public equity. In many instances, MLPs cut distributions in order to fund projects and to deleverage balance sheets, which caused investors to lose confidence in the sustainability of distributions.
The past year saw the continued consolidation of MLP General Partnerships (GPs) into Limited Partnerships (LPs). While the Fund’s emphasis on owning GPs over LPs contributed to its outperformance relative to the Index in past years, we believe the simplified structure, which eliminates the incentive distribution rights of GPs, is healthier for the sector. This structure allows the surviving entity to retain cash flow beyond its distribution payments, enabling it to reinvest in growth and capital projects without relying on outside capital markets.
At the end of the reporting period, the Fund no longer held any GPs, as the last remaining GP in the portfolio finalized the consolidation with its underlying LP earlier in 2019. The Fund continues to maintain an emphasis on midstream companies, i.e., those primarily engaged in activities such as the transportation, storage, gathering, and processing of natural resources, particularly those focused on natural gas and natural gas liquids.
We believe the market has not yet recognized the changes that have transformed the midstream energy sector. We believe the consolidation trend has resulted in improved balance sheets and stronger distribution/dividend coverage and that selective midstream energy companies are well positioned to deliver strong cash flow over the next couple of years. We also believe stock valuations are very compelling relative to historic averages and yield alternatives.
However, the market has, correctly, we believe, differentiated among midstream companies. The best performers generally have been the large, well-capitalized companies that are integrated across the energy value chain and are diversified geographically. Assuming U.S. exports continue to grow, we think those companies that can reach both domestic and global markets will likely have a competitive advantage over peers. In just the past few years, the United States has transformed into a leading global provider of energy in oil, natural gas, and natural gas liquids. The midstream businesses that the Fund invests in are playing a significant part by moving those commodities to export terminals, storing energy, and processing natural gas and natural gas liquids. We believe the Fund, which is focused on geographically diversified midstream companies, is well positioned to benefit from this ongoing trend.
The Fund’s investments in renewable energy contributed to the Fund’s outperformance relative to the Index for the reporting period. We believe that renewables will continue to gain market share as the world battles climate change and as advances in technology enable renewables to become increasingly competitive economically.
During the period, the Fund reduced its level of leverage from $161 million to $145 million. This was done to reduce the impact on the portfolio from anticipated year-end volatility tied to potential tax loss selling. Approximately 69% of the Fund’s leverage is insulated from the impact of rising interest rates given that $100 million of the leverage is in the form of fixed-rate loans. Stockholders need to be aware that the use of leverage magnifies the movement of the Fund’s NAV, possibly resulting in greater returns in a rising market and greater losses in a declining market. The Fund’s use of leverage detracted from performance during the reporting period.
| 2 |
We are optimistic about the prospects for midstream energy companies in 2020, as we are hopeful that investors will recognize the potential durability and stability of the cash flows inside these underlying businesses. The Fund has invested in issuers with a historical track record of paying dividends that, in our opinion, are attractively valued and incrementally strengthen and diversify the portfolio. The major risks, in our view, are on the political and regulatory fronts. Delays in government approval of infrastructure projects, especially in the Northeast, have been costly. We are hopeful that logic will prevail over the longer term as the need for further buildout of energy infrastructure is essential to support a growing U.S. economy.
Sincerely,
Douglas Rachlin
Lead Portfolio Manager
Yves C. Siegel
Portfolio Manager
Paolo Frattaroli
Portfolio Manager
| * | As previously announced, effective June 3, 2019, the Fund changed its name from “Neuberger Berman MLP Income Fund Inc.” to “Neuberger Berman MLP and Energy Income Fund Inc.” |
The portfolio composition, industries and holdings of the Fund are subject to change without notice.
The opinions expressed are those of the Fund’s portfolio managers. The opinions are as of the date of this report and are subject to change without notice.
The value of securities owned by the Fund, as well as the market value of shares of the Fund’s common stock, may decline in response to certain events, including those directly involving the issuers whose securities are owned by the Fund; conditions affecting the general economy; overall market changes; local, regional, national or global political, social or economic instability; regulatory or legislative developments; price, currency and interest rate fluctuations, including those resulting from changes in central bank policies; and changes in investor sentiment.
| 3 |
| TICKER SYMBOL | ||
| MLP and Energy Income Fund Inc. | NML | |
| PORTFOLIO BY TYPE OF SECURITY | ||
| (as a % of Total Investments*) | ||
| Master Limited Partnerships and Energy Companies |
90.5 | % |
| Common Stocks | 8.1 | |
| Short-Term Investments | 1.4 | |
| Total | 100.0 | % |
| * |
Does not include the impact of the Fund’s open positions in derivatives, if any. |
| PERFORMANCE HIGHLIGHTS | ||||||||
| Average Annual Total Return | ||||||||
| Inception | Ended 11/30/2019 | |||||||
| Date* | 1 Year | 5 Year | Life of Fund | |||||
| At NAV1 | 03/25/2013 | -9.33% | -11.74% | -6.39% | ||||
| At Market Price2 | 03/25/2013 | -8.11% | -12.60% | -8.89% | ||||
| Index | ||||||||
| Alerian MLP Index3 | -11.00% | -9.56% | -4.68% | |||||
| * | Date of initial public offering. The Fund commenced operations on March 28, 2013. |
Listed closed-end funds, unlike open-end funds, are not continually offered. Generally, there is an initial public offering and, once issued, shares of common stock of closed-end funds are sold in the secondary market on a stock exchange.
The performance data quoted represent past performance and do not indicate future results. Current performance may be lower or higher than the performance data quoted. For current performance data, please visit www.nb.com/cef-performance.
The results shown in the table reflect the reinvestment of income dividends and other distributions, if any. The results do not reflect the effect of taxes a stockholder would pay on Fund distributions or on the sale of shares of the Fund’s common stock.
The investment return and market price will fluctuate and shares of the Fund’s common stock may trade at prices above or below NAV. Shares of the Fund’s common stock, when sold, may be worth more or less than their original cost.
| 4 |
| Endnotes |
| 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 American. |
| 3 | Please see “Description of Index” on page 6 for a description of the index. |
For more complete information on Neuberger Berman MLP and Energy Income Fund Inc., call Neuberger Berman Investment Advisers LLC at (800) 877-9700, or visit our website at www.nb.com.
| 5 |
| Description of Index |
| Alerian MLP Index: |
The index is a capped, float-adjusted, capitalization-weighted index that measures the performance of energy infrastructure Master Limited Partnerships (MLPs). The index’s constituents earn the majority of their cash flow from midstream activities involving energy commodities. Effective after market close on December 21, 2018, index constituents were required to have a minimum market cap of $75 million. Prior to this date, the index also included other non-infrastructure energy MLPs. |
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 Neuberger Berman Investment Advisers LLC and include reinvestment of all income dividends and other distributions, if any. The Fund invests in securities not included in the above described index and generally does not invest in all securities included in the described index.
| 6 |
| Schedule of Investments MLP and Energy Income Fund Inc.^(a) |
| November 30, 2019 |
| NUMBER OF SHARES | VALUE | |||||
| Master Limited Partnerships and Energy Companies 122.5% | ||||||
| Coal & Consumable Fuels 4.5% | ||||||
| 1,760,000 | Alliance Resource Partners, L.P. | $ | 18,480,000 | (b) | ||
| Leisure Facilities 9.5% | ||||||
| 700,000 | Cedar Fair L.P. | 39,088,000 | (b) | |||
| Oil & Gas Storage & Transportation 94.2% | ||||||
| 400,000 | Antero Midstream Corp. | 1,832,000 | (b) | |||
| 136,000 | DCP Midstream Partners, LP | 2,870,960 | (b) | |||
| 70,000 | Dominion Energy Inc. | 5,817,700 | (b) | |||
| 4,860,000 | Energy Transfer LP | 57,396,600 | (b) | |||
| 2,160,000 | Enterprise Products Partners L.P. | 56,851,200 | (b) | |||
| 540,000 | EQM Midstream Partners, LP | 12,511,800 | (b) | |||
| 50,000 | Magellan Midstream Partners | 2,923,500 | (b) | |||
| 216,000 | MPLX LP | 5,108,400 | (b) | |||
| 776,000 | NuStar Energy L.P. | 21,898,720 | (b) | |||
| 600,000 | ONEOK, Inc. | 42,630,000 | (b) | |||
| 200,000 | Pembina Pipeline Corp | 7,000,000 | (b) | |||
| 50,000 | Phillips 66 Partners LP | 2,786,500 | ||||
| 32,000 | Sempra Energy | 4,712,640 | (b) | |||
| 1,960,000 | Shell Midstream Partners LP | 38,533,600 | (b) | |||
| 840,000 | Targa Resources Corp. | 30,685,200 | (b) | |||
| 50,000 | Teekay LNG Partners L.P. | 762,500 | (b) | |||
| 3,060,000 | Western Midstream Partners, LP | 54,253,800 | (b) | |||
| 1,640,000 | Williams Cos., Inc. | 37,260,800 | (b) | |||
| 385,835,920 | ||||||
| Utilities 14.3% | ||||||
| 100,000 | Atlantica Yield PLC | 2,592,000 | (b) | |||
| 80,000 | Brookfield Renewable Partners | 3,716,000 | (b) | |||
| 476,000 | Clearway Energy, Inc. | 9,439,080 | (b) | |||
| 24,000 | NextEra Energy Inc. | 5,611,680 | (b) | |||
| 700,000 | NextEra Energy Partners LP | 37,191,000 | (b) | |||
| 58,549,760 | ||||||
| Total Master Limited Partnerships and Energy Companies (Cost $517,532,172) | 501,953,680 | |||||
| Common Stocks 11.0% | ||||||
| Equity Real Estate Investment Trusts 2.6% | ||||||
| 80,000 | Crown Castle International Corp. | 10,692,800 | (b) | |||
| Diversified Banks 2.9% | ||||||
| 90,000 | JP Morgan Chase & CO | 11,858,400 | (b) | |||
| Hotels, Restaurants & Leisure 3.0% | ||||||
| 300,000 | BJ's Restaurants Inc. | 12,345,000 | (b) | |||
| Trading Companies & Distributors 2.5% | ||||||
| 57,100 | Watsco Inc. | 10,162,087 | (b) | |||
| Total Common Stocks (Cost $39,985,206) | 45,058,287 | |||||
| See Notes to Financial Statements | 7 |
| Schedule of Investments MLP and Energy Income Fund Inc.^(a) (cont’d) |
| NUMBER OF SHARES | VALUE | |||||
| Short-Term Investments 2.1% | ||||||
| Investment Companies 2.1% | ||||||
| 8,392,862 | Invesco STIT Treasury Portfolio Money Market Fund Institutional Class, 1.52%(c) | $ | 8,392,862 | |||
| (Cost $8,392,862) | ||||||
| Total Investments 135.6% (Cost $565,910,240) | 555,404,829 | |||||
| Liabilities less other Assets (35.6)% | (145,677,481 | ) | ||||
| Net Assets Applicable to Common Stockholders 100.0% | $ | 409,727,348 | ||||
| (a) |
Formerly Neuberger Berman MLP Income Fund through June 3, 2019. |
| (b) |
All or a portion of this security is pledged with the custodian in connection with the Fund’s loans payable outstanding. |
| (c) |
Represents 7-day effective yield as of November 30, 2019. |
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, 2019:
| Asset Valuation Inputs | ||||||||||||
| Investments: | Level 1 | Level 2 | Level 3 | Total | ||||||||
| Master Limited Partnerships and Energy Companies(a) | $ | 501,953,680 | $ | — | $ | — | $ | 501,953,680 | ||||
| Common Stocks(a) | 45,058,287 | — | — | 45,058,287 | ||||||||
| Short-Term Investments | — | 8,392,862 | — | 8,392,862 | ||||||||
| Total Investments | $ | 547,011,967 | $ | 8,392,862 | $ | — | $ | 555,404,829 | ||||
| (a) | The Schedule of Investments provides information on the industry categorization for the portfolio. |
| ^ | A balance indicated with “-” reflects either a zero balance or an amount that rounds to less than 1. |
| See Notes to Financial Statements | 8 |
| Statement of Assets and Liabilities |
Neuberger Berman
| MLP AND | |||
| ENERGY INCOME | |||
| FUND INC. | |||
| Assets | November 30, 2019 | ||
| Investments in securities, at value* (Note A)—see Schedule of Investments: | |||
| Unaffiliated issuers(a) | $555,404,829 | ||
| Dividends and interest receivable | 252,313 | ||
| Deferred tax receivable (Note A) | 308,010 | ||
| Income Tax Receivable | 308,009 | ||
| Prepaid expenses and other assets | 10,216 | ||
| Total Assets | 556,283,377 | ||
| Liabilities | |||
| Loans payable (Note A) | 145,000,000 | ||
| Distributions payable—common stock | 107,427 | ||
| Payable to investment manager (Note B) | 351,333 | ||
| Payable to administrator (Note B) | 117,111 | ||
| Payable to directors | 7,735 | ||
| Interest payable (Note A) | 460,397 | ||
| Other accrued expenses and payables | 512,026 | ||
| Total Liabilities | 146,556,029 | ||
| Net Assets applicable to Common Stockholders | $409,727,348 | ||
| Net Assets applicable to Common Stockholders consist of: | |||
| Paid-in capital—common stock | $764,495,491 | ||
| Total distributable earnings/(losses) | (354,768,143 | ) | |
| Net Assets applicable to Common Stockholders | $409,727,348 | ||
| Shares of Common Stock Outstanding ($.0001 par value; 1,000,000,000 shares authorized) | 56,658,928 | ||
| Net Asset Value Per Share of Common Stock Outstanding | $7.23 | ||
| * Cost of Investments | |||
| (a) Unaffiliated issuers | $565,910,240 | ||
| See Notes to Financial Statements | 9 |
| Statement of Operations |
Neuberger Berman
| MLP AND | |||
| ENERGY INCOME | |||
| FUND INC. | |||
| For the Fiscal | |||
| Year Ended | |||
| November 30, 2019 | |||
| Investment Income: | |||
| Income (Note A): | |||
| Dividend income—unaffiliated issuers | $46,029,007 | ||
| Return of capital on dividends from master limited partnerships and energy companies | (41,577,144 | ) | |
| Net dividend income—unaffiliated issuers | 4,451,863 | ||
| Interest income—unaffiliated issuers | 214,220 | ||
| Total income | $4,666,083 | ||
| Expenses: | |||
| Investment management fees (Note B) | 4,745,742 | ||
| Administration fees (Note B) | 1,581,914 | ||
| Audit fees | 175,101 | ||
| Custodian and accounting fees | 243,939 | ||
| Insurance expense | 21,865 | ||
| Legal fees | 181,281 | ||
| Stock exchange listing fees | 16,199 | ||
| Stockholder reports | 78,573 | ||
| Stock transfer agent fees | 14,873 | ||
| Interest expense (Note A) | 5,890,656 | ||
| Directors' fees and expenses | 53,001 | ||
| Franchise and income tax expense | 27 | ||
| Miscellaneous | 3,241 | ||
| Total expenses | 13,006,412 | ||
| Net investment income/(loss) | $(8,340,329 | ) | |
| Realized and Unrealized Gain/(Loss) on Investments (Note A): | |||
| Net realized gain/(loss) on: | |||
| Transactions in investment securities of unaffiliated issuers | (12,117,829 | ) | |
| Change in net unrealized appreciation/(depreciation) in value of: | |||
| Investment securities of unaffiliated issuers | (26,860,167 | ) | |
| Net gain/(loss) on investments | (38,977,996 | ) | |
| Net increase/(decrease) in net assets applicable to Common Stockholders resulting from operations | $(47,318,325 | ) |
| See Notes to Financial Statements | 10 |
|
Statements of Changes in Net Assets |
Neuberger Berman
| MLP AND ENERGY INCOME FUND INC. | ||||||
| Fiscal Year Ended | Fiscal Year Ended | |||||
| November 30, 2019 | November 30, 2018 | |||||
| Increase/(Decrease) in Net Assets Applicable to Common Stockholders: | ||||||
| From Operations (Note A): | ||||||
| Net investment income/(loss) | $(8,340,329 | ) | $(9,050,250 | ) | ||
| Net realized gain/(loss) on investments | (12,117,829 | ) | 54,476,628 | |||
| Change in net unrealized appreciation/(depreciation) of investments | (26,860,167 | ) | (34,278,387 | ) | ||
| Net increase/(decrease) in net assets applicable to Common Stockholders resulting | ||||||
| from operations | (47,318,325 | ) | 11,147,991 | |||
| Distributions to Common Stockholders From (Note A): | ||||||
| Distributable earnings | — | (30,595,821 | ) | |||
| Tax return of capital | (37,394,892 | ) | (6,799,071 | ) | ||
| Total distributions to common stockholders | (37,394,892 | ) | (37,394,892 | ) | ||
| Net Increase/(Decrease) in Net Assets Applicable to Common Stockholders | (84,713,217 | ) | (26,246,901 | ) | ||
| Net Assets Applicable to Common Stockholders: | ||||||
| Beginning of year | 494,440,565 | 520,687,466 | ||||
| End of year | $409,727,348 | $494,440,565 | ||||
| See Notes to Financial Statements | 11 |
|
Statement of Cash Flows |
Neuberger Berman
| MLP AND | |||
| ENERGY INCOME | |||
| FUND INC. | |||
| For the Fiscal | |||
| Year Ended | |||
| November 30, 2019 | |||
| Increase/(Decrease) in cash: | |||
| Cash flows from operating activities: | |||
| Net increase in net assets applicable to Common Stockholders resulting from operations | $(47,318,325 | ) | |
| Adjustments to reconcile net increase in net assets applicable to Common Stockholders | |||
| resulting from operations to net cash provided by operating activities: | |||
| Changes in assets and liabilities: | |||
| Purchase of investment securities | (180,514,987 | ) | |
| Proceeds from disposition of investment securities | 206,461,179 | ||
| Purchase/sale of short-term investment securities, net | (6,101,669 | ) | |
| Increase in dividends and interest receivable | (60,931 | ) | |
| Increase in prepaid expenses and other assets | (2,550 | ) | |
| Decrease in payable to investment manager | (54,155 | ) | |
| Decrease in payable to administrator | (18,051 | ) | |
| Increase in payable to directors | 5,751 | ||
| Increase in interest payable | 443,856 | ||
| Increase in other accrued expenses and payables | 15,220 | ||
| Return of capital on dividends | 41,577,144 | ||
| Unrealized (appreciation)/depreciation on investment securities of unaffiliated issuers | 26,860,167 | ||
| Net realized loss from transactions in investment securities of unaffiliated issuers | 12,117,829 | ||
| Net cash provided by/(used in) operating activities | $53,410,478 | ||
| Cash flows from financing activities: | |||
| Cash distributions paid on common stock | (37,410,478 | ) | |
| Cash disbursement for loan repayments | (16,000,000 | ) | |
| Net cash provided by/(used in) financing activities | $(53,410,478 | ) | |
| Net increase/(decrease) in cash | — | ||
| Cash: | |||
| Beginning balance | — | ||
| Ending balance | $— | ||
| Supplemental disclosure: | |||
| Cash paid for interest | $5,446,800 |
| See Notes to Financial Statements | 12 |
|
Notes to Financial Statements Neuberger Berman MLP and Energy Income Fund Inc. |
Note A—Summary of Significant Accounting Policies:
| 1 |
General: Neuberger Berman MLP and Energy Income Fund Inc. (the “Fund”) (formerly, Neuberger Berman MLP Income Fund Inc.), 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. On April 2, 2019, the Board approved certain changes to the Fund’s investment policy and, as a result, a change in the name of the Fund from “Neuberger Berman MLP Income Fund Inc.” to “Neuberger Berman MLP and Energy Income Fund Inc.” that became effective on June 3, 2019. The changes did not alter the Fund’s investment objective and the Fund continues to trade on the NYSE American under its ticker symbol of “NML.” Under the revised investment policy, the Fund continues to invest in master limited partnerships but also has the ability to invest in energy companies regardless of whether the companies are structured as partnerships or “C” corporations. The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 “Financial Services – Investment Companies.” The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires Neuberger Berman Investment Advisers LLC (“Management” or “NBIA”) to make estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. |
| 2 |
Portfolio valuation: In accordance with ASC 820 “Fair Value Measurement” (“ASC 820”), all investments held by the Fund are carried at the value that Management believes the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market, are considered in valuing the Fund’s investments, some of which are discussed below. Significant Management judgment may be necessary to value investments in accordance with ASC 820. ASC 820 established a three-tier hierarchy of inputs to create a classification of value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below. ●Level 1 – 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), 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, |
| 13 |
|
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. 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 (“NAV”) per share (Level 2 inputs). If a valuation is not available from an independent pricing service, or if Management has reason to believe that the valuation received does not represent the amount the Fund might reasonably expect to receive on a current sale in an orderly transaction, Management seeks to obtain quotations from brokers or dealers (generally considered Level 2 or Level 3 inputs depending on the number of quotes available). If such quotations are not readily available, the security is valued using methods the 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 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 fiscal year ended November 30, 2019, 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 9.7% as income and approximately 90.3% 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. For the fiscal year ended November 30, 2019, the Fund used the highest regular marginal federal income tax rate for a corporation of 21%. At November 30, 2019, the cost for all long security positions on a U.S. federal income tax basis was $454,602,975. Gross unrealized appreciation of long security positions was $152,549,373 and gross unrealized depreciation of long security positions was $(51,747,519) resulting in net unrealized appreciation of $100,801,854 based on cost for U.S. federal income tax purposes. The Fund invests a significant portion of its assets 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 |
| 14 |
|
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 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, 2019, are as follows: |
| Deferred tax assets: | ||||
| Net operating loss carryforwards | $ | 48,585,727 | ||
| Capital loss carryforwards | 54,114,287 | |||
| Alternative Minimum Tax (“AMT”) credit carryforwards | 308,010 | |||
| Future deductible difference | 1,290,435 | |||
| Unrealized losses on investment securities | 0 | |||
| Total deferred tax asset, before valuation allowance | 104,298,459 | |||
| Valuation allowance | (77,949,105 | ) | ||
| Net deferred tax asset, after valuation allowance | 26,349,354 | |||
| Deferred tax liabilities: | ||||
| Unrealized gains on investment securities | 26,041,344 | |||
| Total net deferred tax asset | $308,010 |
|
At November 30, 2019, a valuation allowance on deferred tax assets was deemed necessary because Management does not believe that it is more likely than not that, with the exception of its AMT credit carryforwards, the Fund will be able to recognize its net 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, 2019, 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 21% to net investment loss and net realized and unrealized gains on investments for the fiscal year ended November 30, 2019, as follows: |
| Application of statutory income tax rate | $ | (9,936,848 | ) |
| State income tax benefit, net of federal tax benefit | (819,738 | ) | |
| Tax benefit on permanent items | (553,179 | ) | |
| Valuation allowance | 11,309,765 | ||
| Total income tax benefit | $ | 0 |
Total income taxes are computed by applying the federal statutory rate plus a blended state income tax rate.
| 15 |
|
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: |
| Fiscal Year Ended | Net Operating Loss Carryforwards |
Expiration | |||||
| November 30, 2014 | $ | 89,632,265 | November 30, 2034 | ||||
| November 30, 2016 | 35,502,250 | November 30, 2036 | |||||
| November 30, 2017 | 39,290,305 | November 30, 2037 | |||||
| November 30, 2018 | 28,172,155 | Not Applicable | |||||
| November 30, 2019 | 18,685,740 | Not Applicable | |||||
| $ | 211,282,715 | ||||||
| Fiscal Year Ended | Capital Loss Carryforwards |
Expiration | |||||
| November 30, 2016 | $ | 227,011,538 | November 30, 2021 | ||||
| November 30, 2019 | 11,037,716 | November 30, 2024 | |||||
| $ | 238,049,254 | ||||||
| 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 2019 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, 2019, 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 fiscal year ended November 30, 2019, 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, 2019, the Fund declared a monthly distribution to common stockholders in the amount of $0.055 per share, payable on December 31, 2019 to common stockholders of record on December 16, 2019, with an ex-date of December 13, 2019. Subsequent to November 30, 2019, the Fund declared three distributions on December 31, 2019 to common stockholders, each in the amount of $0.055 per share, payable on January 31, 2020, February 28, 2020 and March 31, 2020 to common stockholders of record on January 15, 2020, February 18, 2020 and March 16, 2020, respectively, with ex-dates of January 14, 2020, February 14, 2020 and March 13, 2020, respectively. |
| 16 |
| 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 NBIA 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 “Old Facility”) with Merrill Lynch Professional Clearing Corp. that had a 270-day rolling term that reset daily. Under the Old 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 Old 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 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 New Facility. 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 fiscal year, 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 fiscal year ended November 30, 2019, the average principal balance and interest rate was approximately $160 million and 3.58%, respectively. At November 30, 2019, the principal balance outstanding under the New Facility was $145 million. |
| 8 |
Concentration of risk: Under normal market conditions, the Fund invests in MLPs and other energy companies, 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. |
| 17 |
Note B—Investment Management Fees, Administration Fees, and Other Transactions with Affiliates:
The Fund retains NBIA as its investment manager under a Management Agreement. For such investment management services, the Fund pays NBIA 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 NBIA as its administrator under an Administration Agreement. The Fund pays NBIA an administration fee at the annual rate of 0.25% of its average weekly Managed Assets under this agreement. Additionally, NBIA retains U.S. Bancorp Fund Services, LLC, d/b/a U.S. Bank Global Fund Services (“Fund Services”) as its sub-administrator under a Sub-Administration Agreement. NBIA pays Fund Services a fee for all services received under the Sub-Administration Agreement.
Note C—Securities Transactions:
During the fiscal year ended November 30, 2019, there were purchase and sale transactions of long-term securities of $180,514,987 and $206,461,179, respectively.
During the fiscal year ended November 30, 2019, no brokerage commissions on securities transactions were paid to affiliated brokers.
Note D—Recent Accounting Pronouncement:
In August 2018, FASB issued Accounting Standards Update No. 2018-13, Fair Value Measurement (Topic 820: “Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement”) (“ASU 2018-13”). ASU 2018-13 eliminates the requirement to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the timing of transfers between levels of the fair value hierarchy and the valuation processes for Level 3 fair value measurements. ASU 2018-13 will require the disclosure of the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements and the changes in unrealized gains and losses for recurring Level 3 fair value measurements. ASU 2018-13 will also require that information is provided about the measurement of uncertainty of Level 3 fair value measurements as of the reporting date. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 and allows for early adoption of either the entire standard or only the provisions that eliminate or modify the disclosure requirements. Management has elected to adopt early the provisions that eliminate the disclosure requirements. Management is still currently evaluating the impact of applying the rest of the guidance.
| 18 |
|
Financial Highlights |
MLP and Energy Income Fund Inc.
The following table includes selected data for a share of common stock outstanding throughout each year and other performance information derived from the Financial Statements. Amounts that do not round to $0.01 or $(0.01) per share are presented as $0.00 or $(0.00), respectively. Ratios that do not round to 0.01% or (0.01)% are presented as 0.00% or (0.00)%, respectively. A “—” indicates that the line item was not applicable in the corresponding period.
| Year Ended November 30, | ||||||||||||||||||||
| 2019 | 2018 | 2017 | 2016 | 2015 | ||||||||||||||||
| Common Stock Net Asset Value, Beginning of Year | $ | 8.73 | $ | 9.19 | $ | 10.10 | $ | 11.20 | $ | 20.68 | ||||||||||
| Income From Investment Operations Applicable to | ||||||||||||||||||||
| Common Stockholders: | ||||||||||||||||||||
| Net Investment Income/(Loss)¢ | (0.15 | ) | (0.16 | ) | (0.19 | ) | (0.24 | ) | (0.08 | ) | ||||||||||
| Net Gains or Losses on Securities | ||||||||||||||||||||
| (both realized and unrealized) | (0.69 | ) | 0.36 | (0.06 | ) | (0.00 | ) | (8.14 | ) | |||||||||||
| Total From Investment Operations Applicable to | ||||||||||||||||||||
| Common Stockholders | (0.84 | ) | 0.20 | (0.25 | ) | (0.24 | ) | (8.22 | ) | |||||||||||
| Less Distributions to Common Stockholders From: | ||||||||||||||||||||
| Net Investment Income | — | (0.54 | ) | — | — | — | ||||||||||||||
| Tax Return of Capital | (0.66 | ) | (0.12 | ) | (0.66 | ) | (0.86 | ) | (1.26 | ) | ||||||||||
| Total Distributions to Common Stockholders | (0.66 | ) | (0.66 | ) | (0.66 | ) | (0.86 | ) | (1.26 | ) | ||||||||||
| Common Stock Net Asset Value, End of Year | $ | 7.23 | $ | 8.73 | $ | 9.19 | $ | 10.10 | $ | 11.20 | ||||||||||
| Common Stock Market Value, End of Year | $ | 6.32 | $ | 7.53 | $ | 8.44 | $ | 9.33 | $ | 10.59 | ||||||||||
| Total Return, Common Stock Net Asset Value† | (9.33 | )% | 2.43 | % | (2.62 | )% | 0.77 | % | (41.24 | )% | ||||||||||
| Total Return, Common Stock Market Value† | (8.11 | )% | (3.80 | )% | (3.19 | )% | (1.55 | )% | (39.49 | )% | ||||||||||
| Supplemental Data/Ratios | ||||||||||||||||||||
| Net Assets Applicable to Common Stockholders, | ||||||||||||||||||||
| End of Year (in millions) | $ | 409.7 | $ | 494.4 | $ | 520.7 | $ | 572.0 | $ | 633.2 | ||||||||||
| Ratios are Calculated Using Average Net Assets Applicable to | ||||||||||||||||||||
| Common Stockholders | ||||||||||||||||||||
| Ratio of Expenses Including Deferred Income Tax (Benefit)/Expense# | 2.75 | % | 2.44 | % | 2.29 | % | 3.86 | % | (9.75 | )% | ||||||||||
| Ratio of Expenses Excluding Deferred Income Tax (Benefit)/Expense | 2.75 | % | 2.55 | % | 2.29 | % | 3.86 | % | 2.38 | % | ||||||||||
| Ratio of Net Investment Income/(Loss) Including Deferred Income Tax | ||||||||||||||||||||
| Benefit/(Expense)# | (1.76 | )% | (1.69 | )% | (1.79 | )% | (2.80 | )% | 10.99 | % | ||||||||||
| Ratio of Net Investment Income/(Loss) Excluding Deferred Income Tax | ||||||||||||||||||||
| Benefit/(Expense) | (1.76 | )% | (1.80 | )% | (1.79 | )% | (2.80 | )% | (1.13 | )% | ||||||||||
| Portfolio Turnover Rate | 29 | % | 35 | % | 15 | % | 49 | % | 43 | % | ||||||||||
| Loans Payable (in millions) | $ | 145.0 | $ | 161.0 | $ | 161.0 | $ | 142.5 | $ | 325.0 | ||||||||||
| Asset Coverage Per $1,000 of Loans PayableØ | $ | 3,826 | $ | 4,234 | $ | 4,234 | $ | 5,014 | $ | 2,948 | ||||||||||
| See Notes to Financial Highlights | 19 |
| Notes to Financial Highlights MLP and Energy Income Fund Inc. |
| ¢ | Calculated based on the average number of shares of common stock outstanding during each fiscal period. |
| † | Total return based on per share NAV reflects the effects of changes in NAV on the performance of the Fund during each fiscal period. Total return based on per share market value assumes the purchase of shares of common stock at the market price on the first day and sale of common stock at the market price on the last day of the period indicated. Distributions, if any, are assumed to be reinvested at prices obtained under the Fund’s distribution reinvestment plan. Results represent past performance and do not indicate future results. Current returns may be lower or higher than the performance data quoted. Investment returns will fluctuate and shares of common stock when sold may be worth more or less than original cost. |
| # | For the years ended November 30, 2019, November 30, 2018, November 30, 2017, November 30, 2016, and November 30, 2015, the Fund accrued $0, $616,019, $0, $0, $117,348,831, respectively, for net deferred income tax benefit. |
| 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. |
| 20 |
| Report of Independent Registered Public Accounting Firm |
To the Stockholders and Board of Directors of
Neuberger Berman MLP and Energy Income Fund Inc.
Opinion on the Financial Statements
We have audited the accompanying statement of assets and liabilities of Neuberger Berman MLP and Energy Income Fund Inc. (formerly, Neuberger Berman MLP Income Fund Inc.) (the “Fund”), including the schedule of investments, as of November 30, 2019 and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at November 30, 2019, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Fund’s management. Our responsibility is to express an opinion on the Fund’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund’s internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the auditor of one or more Neuberger Berman investment companies since 1954.
Boston, Massachusetts
January 22, 2020
| 21 |
| Distribution Reinvestment Plan |
American Stock Transfer & Trust Company, LLC (the “Plan Agent”) will act as Plan Agent for stockholders who have not elected in writing to receive dividends and 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.
| 22 |
Open-market purchases provided for above may be made on any securities exchange where the Fund’s Shares are traded, in the over-the-counter market or in negotiated transactions and may be on such terms as to price, delivery and otherwise as the Plan Agent shall determine. Each Participant’s uninvested funds held by the Plan Agent will not bear interest, and it is understood that, in any event, the Plan Agent shall have no liability in connection with any inability to purchase Shares within 30 days after the initial date of such purchase as herein provided, or with the timing of any purchases effected. The Plan Agent shall have no responsibility as to the value of the Shares acquired for each Participant’s account. For the purpose of cash investments, the Plan Agent may commingle each Participant’s funds with those of other stockholders of the Fund for whom the Plan Agent similarly acts as agent, and the average price (including brokerage commissions) of all Shares purchased by the Plan Agent as Plan Agent shall be the price per Share allocable to each Participant in connection therewith.
The Plan Agent may hold each Participant’s Shares acquired pursuant to the Plan together with the Shares of other stockholders of the Fund acquired pursuant to the Plan in noncertificated form in the Plan Agent’s name or that of the Plan Agent’s nominee. The Plan Agent will forward to each Participant any proxy solicitation material and will vote any Shares so held for each Participant only in accordance with the instructions set forth on proxies returned by the Participant to the Fund.
The Plan Agent will confirm to each Participant each acquisition made for 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.
| 23 |
The Plan Agent shall at all times act in good faith and agrees to use its best efforts within reasonable limits to ensure the accuracy of all services performed under this Agreement and to comply with applicable law, but assumes no responsibility and shall not be liable for loss or damage due to errors unless such error is caused by the Plan Agent’s negligence, bad faith, or willful misconduct or that of its employees. These terms and conditions are governed by the laws of the State of Maryland.
Reinvested dividends and distributions are taxed in the same manner as cash dividends and distributions — i.e., reinvestment in additional Shares does not relieve stockholders of, or defer the need to pay, any income tax that may be payable (or that is required to be withheld) on Fund dividends and distributions. Participants should contact their tax professionals for information on how the Plan impacts their personal tax situation. For additional information about the Plan, please contact the Plan Agent by telephone at 1-866-227-2136 or by mail at 6201 15th Avenue, Brooklyn, NY, 11219 or online at www.astfinancial.com.
| 24 |
|
Directory |
| Investment Manager and Administrator | Plan Agent |
| Neuberger Berman Investment Advisers LLC | American Stock Transfer & Trust Company, LLC |
| 1290 Avenue of the Americas | Plan Administration Department |
| New York, NY 10104-0002 | P.O. Box 922 |
| 877.461.1899 or 212.476.8800 | Wall Street Station |
| New York, NY 10269-0560 | |
| Custodian | |
| U.S. Bank, National Association | Overnight correspondence should be sent to: |
| 1555 North Rivercenter Drive, Suite 302 | American Stock Transfer & Trust Company, LLC |
| Milwaukee, WI 53212 | 6201 15th Avenue |
| Brooklyn, NY 11219 | |
| Transfer Agent | |
| American Stock Transfer & Trust Company, LLC | Legal Counsel |
| 6201 15th Avenue | K&L Gates LLP |
| Brooklyn, NY 11219 | 1601 K Street, NW |
| Washington, DC 20006-1600 | |
| Independent Registered Public Accounting Firm | |
| Ernst & Young LLP | |
| 200 Clarendon Street | |
| Boston, MA 02116 | |
| 25 |
|
Directors and Officers |
The following tables set forth information concerning the Directors and Officers of the Fund. All persons named as Directors and Officers also serve in similar capacities for other funds administered or managed by NBIA. 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), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
| CLASS I | ||||||||
| Independent Directors | ||||||||
| 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; formerly, Executive Vice President and General Counsel, BellSouth Corporation, 2004 to 2007; formerly, Vice President and Associate General Counsel, BellSouth Corporation, 2000 to 2004; formerly, Associate, Partner, and National Litigation Practice Co-Chair, Mayer, Brown LLP, 1981 to 2000; formerly, Associate Independent Counsel, Office of Independent Counsel, 1990 to 1992. | 51 | Trustee, Jewish Theological Seminary, since 2015; Director, Legility, Inc. (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; formerly, Director, Corporate Counsel Institute, Georgetown University Law Center, 2007 to 2012; formerly, Director, Greater Boston Legal Services (not-for-profit), 2007 to 2012. | ||||
| 26 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
| Michael M. Knetter (1960) | Director since 2013 | President and Chief Executive Officer, University of Wisconsin Foundation, since 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. | 51 | Director, 1 William Street Credit Income Fund, since 2018; Board Member, American Family Insurance (a mutual company, not publicly traded), since March 2009; formerly, Trustee, Northwestern Mutual Series Fund, Inc., 2007 to 2011; formerly, Director, Wausau Paper, 2005 to 2011; formerly, Director, Great Wolf Resorts, 2004 to 2009. | ||||
| Peter P. Trapp (1944) | Director since 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. | 51 | None. | ||||
| Director who is an “Interested Person” | ||||||||
| Robert Conti* (1956) | Director since 2013; formerly, Chief Executive Officer and President 2013 to 2018 | Retired; formerly, Managing Director, Neuberger Berman, 2007 to 2018; formerly, President—Mutual Funds, NBIA, 2008 to 2018; formerly, Senior Vice President, Neuberger Berman, 2003 to 2006; formerly, Vice President, Neuberger Berman, 1999 to 2003. | 51 | Director, Staten Island Mental Health Society, since 1994; formerly, Chairman of the Board, Staten Island Mental Health Society, 2008 to 2011; formerly, Member of the Board of Governors, Investment Company Institute. | ||||
| 27 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
| CLASS II | ||||||||
| Independent Directors | ||||||||
| 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. | 51 | Director, America Press, Inc. (not-for-profit Jesuit publisher), since 2015; formerly, Director, Fordham University, 2001 to 2018; formerly, Director, The Gabelli Go Anywhere Trust, June 2015 to June 2016; formerly, Director, Skin Cancer Foundation (not-for-profit), 2006 to 2015; formerly, Director, GE Investments Funds, Inc., 1997 to 2014; formerly, Trustee, GE Institutional Funds, 1997 to 2014; formerly, Director, GE Asset Management, 1988 to 2014; formerly, Director, Elfun Trusts, 1988 to 2014; formerly, Trustee, GE Pension & Benefit Plans, 1988 to 2014; formerly, Member of Board of Governors, Investment Company Institute. | ||||
| 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. | 51 | 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; formerly, Director, National Executive Service Corps (not-for-profit), 2012 to 2013; formerly, Trustee, Richmond, The American International University in London, 1999 to 2013. | ||||
| 28 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
| George W. Morriss (1947) | Director since 2013 | Adjunct Professor, Columbia University School of International and Public Affairs, since 2012; formerly, Executive Vice President and Chief Financial Officer, People’s United Bank, Connecticut (a financial services company), 1991 to 2001. | 51 | Director, 1 William Street Credit Income Fund, since 2018; Director and Chair, Thrivent Church Loan and Income Fund, since 2018; formerly, Trustee, Steben Alternative Investment Funds, Steben Select Multi-Strategy Fund, and Steben Select Multi-Strategy Master Fund, 2013 to 2017; 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 | Formerly, Managing Member, Ridgefield Farm LLC (a private investment vehicle), 2004 to 2016; 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. | 51 | Formerly, Director, H&R Block, Inc. (tax services company), 2001 to 2018; formerly, Director, Talbot Hospice Inc., 2013 to 2016; formerly, Chairman, Governance and Nominating Committee, H&R Block, Inc., 2011 to 2015; formerly, Chairman, Compensation Committee, H&R Block, Inc., 2006 to 2010; formerly, Director, Forward Management, Inc. (asset management company), 1999 to 2006. | ||||
| 29 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
| CLASS III | ||||||||
| Independent Directors | ||||||||
| Martha C. Goss (1949) | Director since 2013 | President, Woodhill Enterprises Inc./Chase Hollow Associates LLC (personal investment vehicle), since 2006; formerly, Consultant, Resources Global Professionals (temporary staffing), 2002 to 2006; formerly, Chief Financial Officer, Booz-Allen & Hamilton, Inc., 1995 to 1999; formerly, Enterprise Risk Officer, Prudential Insurance, 1994 to 1995; formerly, President, Prudential Asset Management Company, 1992 to 1994; formerly, President, Prudential Power Funding (investments in electric and gas utilities and alternative energy projects), 1989 to 1992; formerly, Treasurer, Prudential Insurance Company, 1983 to 1989. | 51 | 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. | ||||
| 30 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
|
James G. Stavridis (1955) |
Director since 2015 |
Operating Executive, The Carlyle Group, since 2018; Commentator, NBC News, since 2015; formerly, Dean, Fletcher School of Law and Diplomacy, Tufts University, 2013 to 2018; formerly, Admiral, United States Navy, 1976 to 2013, including Supreme Allied Commander, NATO and Commander, European Command, 2009 to 2013, and Commander, United States Southern Command, 2006 to 2009. |
51 |
Director, American Water (water utility), since 2018; Director, NFP Corp. (insurance broker and consultant), since 2017; Director, U.S. Naval Institute, since 2014; Director, Onassis Foundation, since 2014; Director, BMC Software Federal, LLC, since 2014; Director, Vertical Knowledge, LLC, since 2013; formerly, Director, Navy Federal Credit Union, 2000-2002. |
||||
|
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. |
51 |
Director, ERA Coalition (not-for-profit), since January 2019; Director, Re belle Media (a privately held TV and film production company), since 2018; formerly, Public Member, Board of Governors and Board of Trustees, Rutgers University, 2011 to 2016; formerly, Director, Montpelier Re Holdings Ltd. (reinsurance company), 2006 to 2015; formerly, Director, National Atlantic Holdings Corporation (property and casualty insurance company), 2004 to 2008; formerly, Director, The Proformance Insurance Company (property and casualty insurance company), 2004 to 2008; formerly, Director, Providence Washington Insurance Company (property and casualty insurance company), 1998 to 2006; formerly, Director, Summit Global Partners (insurance brokerage firm), 2000 to 2005. |
| 31 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | Number of Funds in Fund Complex Overseen by Director |
Other Directorships Held Outside Fund Complex by Director(3) |
||||
|
Director who is an “Interested Person” |
||||||||
| Joseph V. Amato* (1962) |
Chief Executive Officer and President since 2018 and Director since 2013 |
President and Director, Neuberger Berman Group LLC, since 2009; President and Chief Executive Officer, Neuberger Berman BD LLC (“Neuberger Berman”) and Neuberger Berman Holdings LLC (including its predecessor, Neuberger Berman Inc.), since 2007; Chief Investment Officer (Equities) and President (Equities), Neuberger Berman Investment Advisers LLC (“NBIA”) (formerly, Neuberger Berman Fixed Income LLC and including predecessor entities), 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; President and Chief Executive Officer, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
51 |
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. |
||||
| 32 |
| (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 Class I, Class II and Class III Directors shall serve until the annual meeting of stockholders held in 2021, 2022 and 2020, respectively, and each third annual meeting of stockholders thereafter, or until their successors have been duly elected and qualified. |
| (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 is an interested person of the Fund by virtue of the fact that he is an officer of NBIA and/or its affiliates. Mr. Conti is an interested person of the Fund by virtue of the fact that he was an officer of NBIA and/or its affiliates until June 2018. |
| 33 |
|
Information about the Officers of the Fund |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | ||
|
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 and Secretary, twenty-nine 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, ten registered investment companies for which NBIA acts as investment manager and/or administrator. |
||
|
Anthony DiBernardo (1979) |
Assistant Treasurer since 2013 |
Senior Vice President, Neuberger Berman, since 2014; 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. |
||
|
Savonne Ferguson (1973) |
Chief Compliance Officer since 2018 |
Senior Vice President, Chief Compliance Officer (Mutual Funds) and Associate General Counsel, NBIA, since November 2018; formerly, Vice President T. Rowe Price Group, Inc. (2018), Vice President and Senior Legal Counsel, T. Rowe Price Associates, Inc. (2014-2018), Vice President and Director of Regulatory Fund Administration, PNC Capital Advisors, LLC (2009-2014), Secretary, PNC Funds and PNC Advantage Funds (2010-2014); Chief Compliance Officer, twenty-nine 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) |
General Counsel and Head of Compliance — Mutual Funds since 2016 and Managing Director, NBIA, since 2017; formerly, Associate General Counsel (2015 to 2016), Counsel (2007 to 2015), Senior Vice President (2013-2016), Vice President (2009 — 2013); Chief Legal Officer (only for purposes of sections 307 and 406 of the Sarbanes-Oxley Act of 2002), twenty-nine 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-nine 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; 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-nine registered investment companies for which NBIA acts as investment manager and/or administrator. |
| 34 |
| Name, (Year of Birth), and Address(1) |
Position(s) and Length of Time Served(2) |
Principal Occupation(s)(3) | ||
|
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. |
||
|
Josephine Marone (1963) |
Assistant Secretary since 2017 |
Senior Paralegal, Neuberger Berman, since 2007 and Employee since 2007; Assistant Secretary, twenty-nine 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-nine 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. |
| (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. |
| 35 |
|
Proxy Voting Policies and Procedures |
A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, by calling 800-877-9700 (toll-free) and on the SEC’s website, at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available, upon request, without charge, by calling 800-877-9700 (toll-free), on the SEC’s website at www.sec.gov, and on Neuberger Berman’s website at www.nb.com.
Quarterly Portfolio Schedule
The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT (Form N-Q for filings prior to March 31, 2019). The Fund’s Forms N-Q and N-PORT are available on the SEC’s website at www.sec.gov. The portfolio holdings information on Form N-Q or Form N-PORT is available upon request, without charge, by calling 800-877-9700 (toll-free).
| 36 |
|
Report of Votes of Stockholders |
The annual meeting of stockholders was held on October 3, 2019. Stockholders voted to elect four Class II Directors to serve until the annual meeting of stockholders in 2022, or until their successors are elected and qualified. Class I Directors (which include Robert Conti, Marc Gary, Michael M. Knetter and Peter P. Trapp) and the Class III Directors (which include Joseph V. Amato, Martha C. Goss, James G. Stavridis and Candace L. Straight) continue to hold office until the annual meeting in 2021 and 2020, respectively.
To elect four Class II Directors to serve until the annual meeting of stockholders in 2022 or until their successors are elected and qualified.
Shares of Common Stock
| Votes | Broker | |||||||
| Votes For | Withheld | Abstentions | Non-Votes | |||||
| Michael J. Cosgrove | 45,412,417 | 5,532,109 | — | — | ||||
| Deborah C. McLean | 45,385,924 | 5,558,602 | — | — | ||||
| George W. Morriss | 45,385,996 | 5,558,530 | — | — | ||||
| Tom D. Seip | 45,409,971 | 5,534,555 | — | — |
| 37 |
|
Board Consideration of the Management Agreement |
On an annual basis, the Board of Directors (the “Board”) of Neuberger Berman MLP and Energy Income Fund Inc. (the “Fund”), including the Directors who are not “interested persons” of the Fund or of Neuberger Berman Investment Advisers LLC (“Management”) (including its affiliates) (“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 September 12, 2019, the Board, including the Independent Fund Directors, approved the continuation of the Agreement for the Fund.
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 reports on investment performance based on net asset value and common share market prices, portfolio risk, use of leverage, information regarding share price premiums and/or discounts, and other portfolio information for the Fund, as well as periodic reports on, among other matters, pricing and valuation; quality and cost of portfolio trade execution; compliance; and stockholder and other services provided by Management and its affiliates. The Contract Review Committee, which is comprised of Independent Fund Directors, was established by the Board to assist in its deliberations regarding the annual contract review. The Board has also established other committees that focus throughout the year on specific areas relevant to the annual contract review, such as Fund performance or compliance matters, and that are charged with specific responsibilities regarding the annual contract review. Those committees provide reports to the Contract Review Committee and the full Board, which consider that information as part of the annual contract review process. The Board’s Contract Review Committee annually considers and updates the questions it asks of Management in light of legal advice furnished to them by Independent Counsel; their own business judgment; and developments in the industry, in the markets, in fund regulation and litigation, and in Management’s business model.
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.
Provided below is a description of the Board’s contract approval process and material factors that the Board considered at its meetings regarding renewals of the Agreement and the compensation to be paid thereunder. 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’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.
This description is not intended to include all of the factors considered by the Board. 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 costs and benefits of the Agreement to the Fund and, through the Fund, its stockholders.
| 38 |
Nature, Extent, and Quality of Services
With respect to the nature, extent, and quality of the services provided, the Board considered the investment philosophy and decision-making processes of, and the qualifications, experience, and capabilities of, and the 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 services. The Board also considered Management’s policies and practices regarding brokerage, commissions, other trading costs, and allocation of portfolio transactions and reviewed the quality of the execution services that Management had provided. The Board also reviewed Management’s use of brokers to execute Fund transactions that provide research services to Management. Moreover, the Board considered Management’s approach to potential conflicts of interest both generally and between the Fund’s investments and those of other funds or accounts managed by Management. The Board also noted that Management had increased its research capabilities with respect to environmental, social, and corporate governance matters and how those factors may relate to investment performance.
The Board noted the extensive range of services that Management provides to the Fund beyond the investment management services. The Board noted that Management is also responsible for monitoring compliance with the Fund’s investment objectives, policies, and restrictions, as well as compliance with applicable law, including implementing rulemaking initiatives of the U.S. Securities and Exchange Commission. In addition, the Board considered that Management has developed a leverage structure for the Fund tailored to its investment strategy and needs, has monitored the Fund’s ongoing compliance with legal and other restrictions associated with its leverage, and has recommended changes in and/or amendments to the amount or structure of its leverage over time. The Board also considered that Management assumes significant ongoing risks with respect to the Fund, for which it is entitled to reasonable compensation. Specifically, Management’s responsibilities include continual management of investment, operational, enterprise, legal, regulatory, and compliance risks as they relate to the Fund, and the Board considers on a regular basis information regarding Management’s processes for monitoring and managing risk. In addition, the Board noted that when Management launches a new fund, it assumes entrepreneurial risk with respect to that fund, and that some funds have been liquidated without ever having been profitable to Management.
The Board also noted Management’s activities under its contractual obligation to oversee the Fund’s various outside service providers, including its renegotiation of certain service providers’ fees and its evaluation of service providers’ infrastructure, cybersecurity programs, compliance programs, and business continuity programs, among other matters. The Board also considered Management’s ongoing development of its own infrastructure and information technology to support the Fund through, among other things, cybersecurity, business continuity planning, and risk management. In addition, the Board noted the positive compliance history of Management, as no significant compliance problems were reported to the Board with respect to Management. The Board also considered the general structure of the portfolio managers’ compensation and whether this structure provides appropriate incentives to act in the best interests of the Fund. The Board also considered the ability of Management to attract and retain qualified personnel to service the Fund.
As in past years, the Board also considered the manner in which Management addressed various matters that arose during the year, some of them a result of developments in the broader fund industry or the regulations governing it. In addition, the Board considered actions taken by Management in response to recent market conditions and considered the overall performance of Management in this context. The Board also noted that Management actively monitors any discount from net asset value per share at which the Fund’s common stock trades and evaluates potential ways to reduce the discount and potential impacts on the discount, including the level of distributions that the Fund pays. The Board likewise took into account that Management monitors, to the extent information is publicly available, events that may disrupt the Fund’s long-term investment program.
| 39 |
Fund Performance
The Board requested a report from an outside consulting firm that specializes in the analysis of fund industry data that compared the Fund’s performance, along with its fees and other expenses, to a group of industry peers and a broader universe of funds pursuing generally similar strategies with the same investment classification and/or objective. The Board considered the Fund’s performance and fees in light of the limitations inherent in the methodology for constructing such comparative groups and determining which investment companies should be included in the comparative groups. The Board also considered the impact and inherent limitation on the comparisons due to the small number of funds included in the peer group and broader universe of funds. In this regard, the Board recognized that the number of leveraged closed-end funds pursuing similar strategies with the same investment classification and/or objective as the Fund has decreased over time. The Board also recognized the limitations inherent in comparing the Fund’s performance to a benchmark index due to the Fund’s use of leverage and pursuit of an investment strategy that is not tied directly to an index. The Board also considered the premium/discount levels at which peer funds traded along with the distribution rates and yields of those funds.
With respect to investment performance, the Board considered information regarding the Fund’s short- and intermediate-term performance, net of the Fund’s fees and expenses, on an absolute basis, relative to a benchmark index that does not deduct the fee or expenses of investing, and compared to the performance of the industry peer group and a broader universe of funds, each constructed by the consulting firm. The Board also reviewed performance in relation to certain measures of the degree of investment risk undertaken by the portfolio managers.
The broader universe of funds referenced in this section was identified by the consulting firm, as discussed above. For any period of underperformance, the Board considered the magnitude and duration of that underperformance relative to the broader universe and the benchmark (e.g., the amount by which the Fund underperformed, including, for example, whether the Fund slightly underperformed or significantly underperformed its benchmark). With respect to performance quintile rankings for the Fund compared to its broader universe (“Performance Universe”), the first quintile represents the highest (best) performance and the fifth quintile represents the lowest performance. The Board considered that, based on performance data for the periods ended December 31, 2018: (1) as compared to its benchmark, the Fund’s performance was lower for the 1- and 5-year periods and higher for the 3-year period; and (2) as compared to its Performance Universe, the Fund’s performance was in the third quintile for the 1-year period, the first quintile for the 3-year period, and the fourth quintile for the 5-year period. The Fund was launched in 2013 and therefore does not have 10-year performance.
The Board identified the Fund as having underperformed in certain of these comparisons to an extent that the Board felt warranted additional inquiry, and discussed with Management the Fund’s performance, potential reasons for the relative performance, and steps that Management had taken, or intended to take, to improve performance. The Board’s Closed-End Funds Committee also met with the portfolio managers of the Fund during the 12 months prior to voting on the contract renewal to discuss the Fund’s performance, distribution levels, and the use of leverage. The Board also considered Management’s responsiveness with respect to the relative 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 Agreement and that, after considering all relevant factors, it may be appropriate to approve the continuation of the Agreement notwithstanding the Fund’s relative performance.
Fee Rates, Profitability, and Fall-out Benefits
With respect to the overall fairness of the Agreement, the Board considered the fee structure for the Fund under the Agreement as compared to the peer group provided by the consulting firm. The Board reviewed a comparison of the Fund’s management fee to a peer group of comparable funds. The Board noted that the comparative management fee analysis includes, in the Fund’s management fee, the separate administrative fees paid to Management. However, the Board noted that some funds in the peer group pay directly from fund assets for certain services that Management covers out of the administration fees for the Fund. Accordingly, the Board also considered the Fund’s total expense ratio
| 40 |
as compared with its peer group as a way of taking account of these differences. The Board also considered that only leveraged closed-end funds were considered for inclusion in the peer group presented for comparison with the Fund. The Board considered that, in comparison to certain other products managed by Management, including open-end funds, there are additional portfolio management challenges in managing closed-end funds such as the Fund, including those associated with less liquid holdings and the use of leverage.
The Board considered the Fund’s contractual management fee on managed assets (generally consisting of net assets plus leverage proceeds), as well as the actual management fee on managed assets as a percentage of assets attributable to common stockholders as compared to the Fund’s peer group. The Board was aware of the additional expenses borne by common stockholders as a result of the Fund’s leveraged structure. The Board took into account that Management has a financial incentive for the Fund to continue to use leverage, which may create a conflict of interest. It also considered Management’s representation that it continues to believe the use of leverage is in the best interests of the Fund’s stockholders regardless of the level of compensation Management receives. With respect to the quintile rankings for fees and total expenses (net of waivers or other adjustments, if any) for the Fund compared to its peer group (“Expense Group”), the first quintile represents the lowest fees and/or total expenses and the fifth quintile represents the highest fees and/or total expenses. The Board considered that, as compared to its Expense Group, the Fund’s contractual management fee and the actual management fee each ranked in the first quintile and total expenses ranked in the third quintile. In determining to renew the Agreement, the Board took into account Management’s representations regarding the effect that the cost of leverage had on the Fund’s total expenses relative to its peers with different leverage structures.
In concluding that the benefits accruing to Management and its affiliates by virtue of their relationship with the Fund were reasonable in light of the costs of providing the investment advisory and other services and the benefits accruing to the Fund, the Board reviewed specific data as to Management’s estimated profit on the Fund for a recent period on a pre-tax basis without regard to distribution expenses, but including year-over-year changes in each of Management’s reported expense categories. (The Board also reviewed data on Management’s estimated profit on the Fund after distribution/servicing expenses and taxes were factored in, as indicators of the health of the business and the extent to which Management is directing its profits into the growth of the business.) The Board considered the cost allocation methodology that Management used in developing its estimated profitability figures. In recent years, the Board engaged an independent forensic accountant to review the profitability methodology utilized by Management when preparing this information and discussed with the consultant its conclusion that Management’s process for calculating and reporting its estimated profit was not unreasonable.
Recognizing that there is no uniform methodology within the asset management industry for determining profitability for this purpose and that the use of different reasonable methodologies can give rise to different profit and loss results, the Board, in recent years, requested from Management examples of profitability calculated by different methods and noted that the estimated profitability levels were still reasonable when calculated by these other methods. The Board further noted Management’s representation that its estimate of profitability is derived using methodology that is consistent with the methodology used to assess and/or report measures of profitability elsewhere at the firm. In addition, the Board recognized that Management’s calculations regarding its costs may not reflect all risks, including regulatory, legal, operational, reputational, and, where appropriate, entrepreneurial risks, associated with offering and managing a closed-end fund in the current regulatory and market environment. The Board also considered any fall-out (i.e., indirect) benefits likely to accrue to Management or its affiliates from their relationship with the Fund. The Board recognized that Management and its affiliates should be entitled to earn a reasonable level of profits for services they provide to the Fund and, based on its review, concluded that Management’s reported level of estimated profitability on the Fund was reasonable.
| 41 |
Information Regarding Services to Other Clients
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 compared the fees charged to the Fund to the fees charged to such comparable funds and separate accounts. The Board considered the appropriateness and reasonableness of any differences between the fees charged to the Fund and such comparable funds and separate accounts, and determined that differences in fees and fee structures were consistent with the differences in the management and other services provided. The Board explored with Management its assertion that although, generally, the rates of fees paid by such accounts were lower than the fee rates paid by the Fund, the differences reflected Management’s greater level of responsibilities and significantly broader scope of services regarding the Fund, the more extensive regulatory obligations and risks associated with managing the Fund, and other financial considerations with respect to creation and sponsorship of the Fund.
Economies of Scale
The Board also evaluated apparent or anticipated economies of scale in relation to the services Management provides to the Fund and noted that there is little expectation that closed-end funds will show significant economies of scale. The Board considered that, as a closed-end investment company, the Fund does not continually offer new shares to raise additional assets (as does a typical open-end investment company), but may experience asset growth through investment performance and/or the increased use of leverage. The Board also considered that Management has provided, at no added cost to the Fund, certain additional services, including but not limited to, services required by new regulations or regulatory interpretations, services impelled by changes in the securities markets or the business landscape, and/or services requested by the Board. The Board considered that this is a way of sharing economies of scale with the Fund and its stockholders.
Conclusions
In approving the continuation of Agreement, the Board concluded that, in its business judgment, 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 continue to provide a high level of service to the Fund; that the Board 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.
| 42 |
 |
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|
Neuberger Berman Investment Advisers LLC |
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| |
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Statistics and projections in this report are derived from sources deemed to be reliable but cannot be regarded as a representation of future results of the Fund. This report is prepared for the general information of stockholders and is not an offer for shares of the Fund. |
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| |
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 |
||||
| |
||||
| |
|
(a)
|
Audit Fees
|
|
(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
|
|
(g)
|
Non-Audit Fees
|
|
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*
|
0
|
$0
|
0
|
$0
|
|
Other Pooled Investment Vehicles**
|
2
|
$296
|
0
|
$0
|
|
Other Accounts***
|
1,608
|
$2,183
|
0
|
$0
|
|
Yves S. Siegel
|
||||
|
Registered Investment Companies*
|
0
|
$0
|
0
|
$0
|
|
Other Pooled Investment Vehicles**
|
2
|
$296
|
0
|
$0
|
|
Other Accounts****
|
1,608
|
$2,183
|
0
|
$0
|
|
Paolo Frattaroli
|
||||
|
Registered Investment Companies*
|
0
|
$0
|
0
|
$0
|
|
Other Pooled Investment Vehicles**
|
2
|
$296
|
0
|
$0
|
|
Other Accounts***
|
1,608
|
$2,183
|
0
|
$0
|
|
*
|
Registered Investment Companies include: Mutual Funds.
|
|
**
|
A portion of certain accounts may be managed by other portfolio managers; however, the total assets of such accounts are included above even though the portfolio manager listed above is not
involved in the day-to-day management of the entire account.
|
|
***
|
Other Accounts include: Institutional Separate Accounts, Sub-Advised Accounts and Managed Accounts (WRAP Accounts).
|
|
Portfolio Manager
|
Dollar Range of Equity
Securities Owned in the Registrant |
||
|
Douglas A. Rachlin
|
E
|
||
|
Yves S. Siegel
|
C
|
||
|
Paolo Frattaroli
|
B
|
|
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) |
The Fund did not engage in any securities lending activity during the fiscal year ended November 30, 2019.
|
| (b) |
The Fund did not did not engage in any securities lending activity and no services were provided by the securities lending agent to the Fund during the fiscal year ended November 30, 2019.
|
(a)(3) Not applicable to the Registrant.
| By: |
/s/ Joseph V. Amato
Joseph V. Amato
Chief Executive Officer and President
|
| By: |
/s/ Joseph V. Amato
Joseph V. Amato
Chief Executive Officer and President
|
| By: |
/s/ John M. McGovern
John M. McGovern
Treasurer and Principal Financial and Accounting Officer
|