NML Neuberger Berman Energy Infrastructure and Income Fund Inc

Table of Contents 

 

Neuberger Berman Energy Infrastructure and Income Fund Inc.

 

 

Semi-Annual Report May 31, 2023

 

 

 

 

	Contents
	PRESIDENT’S LETTER		1
	PORTFOLIO COMMENTARY		2
	SCHEDULE OF INVESTMENTS		6
	FINANCIAL STATEMENTS		8
	NOTES TO FINANCIAL STATEMENTS		12
	FINANCIAL HIGHLIGHTS		19
	Distribution Reinvestment Plan		21
	Directory		24
	Proxy Voting Policies and Procedures		25
	Quarterly Portfolio Schedule		25
	Privacy Notice	Located after the Fund’s Report

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. ©2023 Neuberger Berman Investment Advisers LLC. All rights reserved.

 

President’s Letter

Dear Stockholder,

I am pleased to present the semi-annual report for Neuberger Berman Energy Infrastructure and Income Fund Inc. (the Fund) (formerly, Neuberger Berman MLP and Energy Income Fund Inc.) for the six-month period ended May 31, 2023 (the reporting period). The report includes a portfolio commentary, a listing of the Fund’s investments, and its unaudited financial statements for the reporting period.

The Fund seeks to provide total return with an emphasis on cash distributions. As previously communicated to stockholders, during the reporting period certain changes to the Fund’s name and investment policy were approved. Effective May 15, 2023, the Fund’s name changed from “Neuberger Berman MLP and Energy Income Fund Inc.” to “Neuberger Berman Energy Infrastructure and 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.”

The Fund’s previous investment policy required the Fund to invest, under normal market conditions, at least 80% of its total assets in master limited partnerships (“MLPs”) or energy companies. As of May 15, 2023, under the Fund’s revised (and current) investment policy, under normal market conditions, the Fund invests at least 80% of its total assets in U.S. and non-U.S. equity or fixed income securities of “Energy Infrastructure Companies.” For purposes of the Fund’s revised (and current) 80% policy, Energy Infrastructure Companies include MLPs and limited liability companies taxed as partnerships, MLP affiliates, YieldCos, pipeline companies, utilities, “C” corporations and other companies that (i) operate within the oil and gas storage, transportation, refining, marketing, equipment and services, drilling, exploration or production sub-industries or (ii) have at least 50% of their assets, income, sales or profits committed to, or derived from, the exploration, development, production, gathering, transportation (including marine), transmission, terminal operation, processing, storage, refining, fractionating, distribution, mining or marketing of natural gas, natural gas liquids (including propane), crude oil, refined petroleum products, energy-related equipment or services, electricity or other energy sources, including alternative energy sources, such as renewables and alternative fuels.

Neuberger Berman Investment Advisers LLC, the Fund’s investment adviser, believes the name change and amended investment policy better reflect the Fund’s current investment focus within the energy infrastructure sector, regardless of underlying portfolio company structure.

Thank you for your confidence in the Fund. We will continue to do our best to retain your trust in the years to come.

Sincerely,

Joseph V. Amato

President and CEO

Neuberger Berman Energy Infrastructure and Income Fund Inc.

 

Neuberger Berman Energy Infrastructure and Income Fund Inc.* Portfolio Commentary (Unaudited)

Neuberger Berman Energy Infrastructure and Income Fund Inc. (formerly Neuberger Berman MLP and Energy Income Fund Inc.) (the Fund) produced a -11.01% total return on a net asset value (NAV) basis for the six months ended May 31, 2023 (the reporting period), underperforming its benchmark, the Alerian MLP Index (the Index), which posted a 0.39% total return for the same period. The use of leverage (typically a performance enhancer in up markets and a detractor during market retreats) contributed negatively to the Fund’s performance during the reporting period. (Fund performance on a market price basis is provided in the table immediately following this commentary.)

Falling oil and natural gas prices (the result of mild winter temperatures in the United States and Europe), rising interest rates (driven by more hawkish central banks), and concerns regarding a potential systemic banking crisis (spurred by the collapse of Silicon Valley Bank and Signature Bank in March) weighed on the Fund’s portfolio of primarily midstream companies. Renewables, in which the Fund was overweight relative to the Index, were also disproportionately impacted by these broader economic headwinds.

Despite this challenging reporting period, we believe the fundamental long-term outlook for energy is strong. We anticipate the U.S. will continue to be a leading exporter of energy to meet the world’s insatiable demand. We believe Europe is seeking to diversify its energy sources in the wake of geopolitical turmoil, while the developing world has shown a growing appetite for exported U.S. oil and natural gas. OPEC production cuts and growing demand from the aviation industry and Asia (China in particular) provide, in our view, support for oil markets.

While renewables underperformed during the reporting period, electricity producers have been increasingly shifting from coal to natural gas and renewable energy sources, to lower overall CO₂ emissions, a trend we believe is playing out globally. Recent power crises throughout the world continue to underscore the need for an “all-of-the-above” energy-policy approach, and U.S. lawmakers have shown strong support for capital investment in renewable energy and electric utilities.

Last year’s passage of the Inflation Reduction Act unlocked a host of opportunities in wind, solar, hydrogen, carbon capture, and storage, helping to transform the world’s electric grid. We believe the balance sheets of our energy midstream holdings are stronger than ever, as debt levels continue to fall. These metrics have been recognized by leading debt rating agencies in the form of debt upgrades for companies held in the Fund’s portfolio. During the reporting period, many of these companies reported robust earnings with raising dividends and distributions, underscoring our strong confidence in future cash flows.

Looking ahead, we see several developments which may benefit the companies held in the Fund’s portfolio: increased energy demand globally, the end to U.S. Strategic Petroleum Reserve releases (and potential purchases to refill inventory), sanctions and price caps on Russian oil products, and OPEC supply restraints. We feel renewable energy has the global political support and demand needed to expand. We also believe the energy and midstream sector could provide an excellent hedge against persistent inflation. Many energy infrastructure companies, including utility-scale renewable power providers, have inflation adjustments built in to their fees. These companies typically pay dividends, and their shares are often uncorrelated with broader equity and fixed-income investments, potentially reducing long-term portfolio volatility within broader asset allocations. In our opinion, these factors, along with strengthening balance sheets and dividend growth, provide a supportive backdrop for the Fund’s holdings.

Sincerely,

Douglas Rachlin
Lead Portfolio Manager

Paolo Frattaroli
Portfolio Manager

* As previously communicated to stockholders, effective May 15, 2023, the name of Neuberger Berman MLP and Energy Income Fund Inc. changed to Neuberger Berman Energy Infrastructure and 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.

 

Energy Infrastructure and Income Fund Inc. (Unaudited)

 

Energy Infrastructure and Income Fund Inc. (Unaudited)

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

The Alerian MLP Index is a capped, float-adjusted, market capitalization-weighted index that measures the performance of energy infrastructure Master Limited Partnerships (MLPs). The index’s constituents are publicly traded partnerships or LLCs who earn the majority of their cash flows from qualified activities involving energy commodities. The maximum constituent weight is capped at 10% at each quarterly rebalancing. 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 NBIA 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.

For more complete information on Neuberger Berman Energy Infrastructure and Income Fund Inc., call Neuberger Berman Investment Advisers LLC (NBIA) at (877) 461-1899, or visit our website at www.nb.com.

 

Schedule of Investments Energy Infrastructure and Income Fund Inc.^{†^} (Unaudited) May 31, 2023

NUMBER OF SHARES						VALUE
Common Stocks 79.5%
Capital Markets 1.0%
	24,000			CME Group Inc.		$	4,290,000	(a)
Electric Utilities 1.3%
	76,000			NextEra Energy Inc.			5,582,960	(a)
Independent Power and Renewable Electricity Producers 10.1%
	400,000			Clearway Energy Inc.			11,492,000	(a)
	476,000			NextEra Energy Partners LP			28,521,920	(a)
	100,986			Northland Power Inc.			2,215,369
							42,229,289
Multi-Utilities 9.0%
	640,000			CenterPoint Energy Inc.			18,054,400	(a)
	136,000			Sempra Energy			19,520,080	(a)
							37,574,480
Oil, Gas & Consumable Fuels 58.1%
	840,000			Antero Midstream Corp.			8,576,400	(a)
	1,016,000			Antero Resources Corp.			20,736,560	(a)*
	150,000			Cheniere Energy Inc.			20,965,500	(a)
	24,000			Chevron Corp.			3,614,880	(a)
	300,000			Civitas Resources Inc.			20,040,000	(a)
	176,000			ConocoPhillips			17,476,800	(a)
	196,000			Denbury Inc.			17,673,320	(a)*
	476,000			Kinetik Holdings Inc.			15,484,280	(a)
	400,000			New Fortress Energy Inc.			10,508,000	(a)
	106,000			Occidental Petroleum Corp.			6,111,960	(a)
	100,000			ONEOK Inc.			5,666,000	(a)
	55,000			Pembina Pipeline Corp.			1,664,850
	924,000			Targa Resources Corp.			62,878,200	(a)
	1,100,000			Williams Cos Inc.			31,526,000	(a)
							242,922,750
Total Common Stocks (Cost $238,953,363)							332,599,479
NUMBER OF UNITS
Master Limited Partnerships and Limited Partnerships 42.0%
Hotels, Restaurants & Leisure 3.0%
	284,000			Cedar Fair LP			12,672,080	(a)
Oil, Gas & Consumable Fuels 39.0%
	4,160,000			Energy Transfer LP			51,584,000	(a)
	2,076,000			Enterprise Products Partners LP			52,585,080	(a)
	132,000			MPLX LP			4,400,880	(a)
	636,000			NuStar Energy LP			10,385,880	(a)
	1,750,000			Western Midstream Partners LP			44,170,000	(a)*
							163,125,840
Total Master Limited Partnerships and Limited Partnerships (Cost $128,981,114)							175,797,920

 

 

Schedule of Investments Energy Infrastructure and Income Fund Inc.^{†^} (Unaudited) (cont’d)

NUMBER OF SHARES						VALUE
Short-Term Investments 0.5%
Investment Companies 0.5%
	2,256,023			Invesco STIT Treasury Portfolio Money Market Fund Institutional Class, 5.04%(b) (Cost $2,256,023)		$	2,256,023
Total Investments 122.0% (Cost $370,190,500)							510,653,422
Liabilities less other Assets (22.0)%							(92,234,190	)
Net Assets Applicable to Common Stockholders 100.0%						$	418,419,232

*

Non-income producing security.

(a)

All or a portion of this security is pledged with the custodian in connection with the Fund’s loans payable outstanding.

(b)

Represents 7-day effective yield as of May 31, 2023.

The following is a summary, categorized by Level (see Note A of the Notes to Financial Statements), of inputs used to value the Fund’s investments as of May 31, 2023:

Asset Valuation Inputs

Investments:		Level 1		Level 2		Level 3		Total
Common Stocks(a)		$332,599,479	$	—		$—		$332,599,479
Master Limited Partnerships and Limited Partnerships(a)		175,797,920		—		—		175,797,920
Short-Term Investments		—		2,256,023		—		2,256,023
Total Investments		$508,397,399	$	2,256,023		$—		$510,653,422

(a)

The Schedule of Investments provides information on the industry or sector categorization.

†

Formerly Neuberger Berman MLP and Energy Income Fund Inc. through May 14, 2023.

^

A balance indicated with a “—”, reflects either a zero balance or an amount that rounds to less than 1.

 

Statement of Assets and Liabilities (Unaudited)

Neuberger Berman

 

		ENERGY INFRASTRUCTURE AND INCOME FUND INC.
		May 31, 2023
Assets
Investments in securities, at value* (Note A)—see Schedule of Investments:
Unaffiliated issuers(a)		$	510,653,422
Receivable for securities sold			5,711,074
Dividends and interest receivable			446,094
Prepaid expenses and other assets			9,318
Total Assets			516,819,908
Liabilities
Loans payable (Note A)			97,500,000
Distributions payable—common stock			47,259
Payable to investment manager (Note B)			334,732
Payable to administrator (Note B)			111,577
Payable to directors			5,510
Interest payable (Note A)			15,928
Other accrued expenses and payables			385,670
Total Liabilities			98,400,676
Net Assets applicable to Common Stockholders		$	418,419,232
Net Assets applicable to Common Stockholders consist of:
Paid-in capital—common stock		$	714,841,223
Total distributable earnings/(losses)			(296,421,991	)
Net Assets applicable to Common Stockholders		$	418,419,232
Shares of Common Stock Outstanding ($0.0001 par value; 1,000,000,000 shares authorized)			56,658,928
Net Asset Value Per Share of Common Stock Outstanding		$	7.38
*   Cost of Investments
(a) Unaffiliated issuers		$	370,190,500

 

 

Statement of Operations (Unaudited)

Neuberger Berman

 

		ENERGY INFRASTRUCTURE AND INCOME FUND INC.
		For the Six Months Ended May 31, 2023
Investment Income:
Income (Note A):
Dividend income—unaffiliated issuers		$	15,291,886
Return of capital on dividends from master limited partnerships and related companies			(10,069,552	)
Net dividend income—unaffiliated issuers			5,222,334
Foreign taxes withheld			(18,182	)
Interest income—unaffiliated issuers			51,510
Total income		$	5,255,662
Expenses:
Investment management fees (Note B)			2,046,525
Administration fees (Note B)			682,175
Audit fees			91,041
Custodian and accounting fees			128,340
Insurance			7,502
Legal fees			111,028
Stock exchange listing fees			7,340
Stockholder reports			24,200
Stock transfer agent fees			8,480
Interest (Note A)			2,682,935
Directors' fees and expenses			21,324
Miscellaneous and other fees			2,232
Total expenses			5,813,122
Net investment income/(loss)		$	(557,460	)
Realized and Unrealized Gain/(Loss) on Investments (Note A):
Net realized gain/(loss) on:
Transactions in investment securities of unaffiliated issuers			20,213,809
Settlement of foreign currency transactions			311
Change in net unrealized appreciation/(depreciation) in value of:
Investment securities of unaffiliated issuers			(76,132,037	)
Foreign currency translations			(53	)
Net gain/(loss) on investments			(55,917,970	)
Net increase/(decrease) in net assets applicable to Common Stockholders resulting from operations		$	(56,475,430	)

 

 

Statements of Changes in Net Assets

Neuberger Berman

 

		ENERGY INFRASTRUCTURE AND INCOME FUND INC.
		Six Months Ended				Fiscal Year Ended
		May 31, 2023				November 30, 2022
		(Unaudited)
Increase/(Decrease) in Net Assets Applicable to Common Stockholders:
From Operations (Note A):
Net investment income/(loss)		$	(557,460	)		$	(1,104,400	)
Net realized gain/(loss) on investments			20,214,120				21,855,152
Change in net unrealized appreciation/(depreciation) of investments			(76,132,090	)			129,532,764
Net increase/(decrease) in net assets applicable to Common Stockholders resulting from operations			(56,475,430	)			150,283,516
Distributions to Common Stockholders From (Note A):
Distributable earnings			—				(12,477,343	)
Tax return of capital			(19,853,288	)			(1,202,388	)
Total distributions to Common Stockholders			(19,853,288	)			(13,679,731	)
Net Increase/(Decrease) in Net Assets Applicable to Common Stockholders			(76,328,718	)			136,603,785
Net Assets Applicable to Common Stockholders:
Beginning of period			494,747,950				358,144,165
End of period		$	418,419,232			$	494,747,950

 

 

Statement of Cash Flows (Unaudited)

Neuberger Berman

 

		ENERGY INFRASTRUCTURE AND INCOME FUND INC.
		For the Six Months Ended May 31, 2023
Increase/(Decrease) in cash:
Cash flows from operating activities:
Net decrease in net assets applicable to Common Stockholders resulting from operations		$	(56,475,430	)
Adjustments to reconcile net increase in net assets applicable to Common Stockholders resulting from operations to net cash used in operating activities:
Changes in assets and liabilities:
Purchase of investment securities			(57,691,958	)
Proceeds from disposition of investment securities			72,473,482
Purchase/sale of short-term investment securities, net			(2,137,286	)
Decrease in dividends and interest receivable			19,429
Increase in receivable for securities sold			(5,711,074	)
Decrease in due from custodian			375,426
Decrease in prepaid expenses and other assets			375
Decrease in payable to investment manager			(21,474	)
Decrease in payable to administrator			(7,158	)
Decrease in payable to directors			(1,296	)
Increase in interest payable			3,554
Decrease in other accrued expenses and payables			(183,235	)
Return of capital on dividends			10,069,552
Unrealized appreciation on investment securities of unaffiliated issuers			76,132,037
Unrealized appreciation on foreign currency translations			53
Net realized gain from settlement of foreign currency transactions			(311	)
Net realized gain from transactions in investment securities of unaffiliated issuers			(20,213,809	)
Net cash provided by/(used in) operating activities		$	16,630,877
Cash flows from financing activities:
Cash distributions paid on common stock			(19,830,877	)
Cash receipts from loan borrowings			3,200,000
Net cash provided by/(used in) financing activities		$	(16,630,877	)
Net increase/(decrease) in cash			—
Cash:
Cash and restricted cash at beginning of period			—
Cash and restricted cash at the end of period		$	—
Supplemental disclosure:
Cash paid for interest		$	2,679,381

 

 

Notes to Financial Statements Neuberger Berman Energy Infrastructure and Income Fund Inc. (Unaudited)

Note A – Summary of Significant Accounting Policies:

1

General: Neuberger Berman Energy Infrastructure and Income Fund Inc. (the “Fund”) (formerly, Neuberger Berman MLP and Energy 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 March 3, 2023, certain changes to the Fund’s name and investment policy were approved. Effective May 15, 2023, the Fund’s name changed from “Neuberger Berman MLP and Energy Income Fund Inc.” to “Neuberger Berman Energy Infrastructure and Income Fund Inc.”, in addition to certain changes being implemented to the Fund’s investment policy. 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.”

A balance indicated with a “—”, reflects either a zero balance or a balance that rounds to less than 1.

The Fund is an investment company and accordingly follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 946 “Financial Services – Investment Companies.”

The preparation of financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”) requires Neuberger Berman Investment Advisers LLC (“Management” or “NBIA”) to make estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates.

2

Portfolio valuation: In accordance with ASC 820 “Fair Value Measurement” (“ASC 820”), all investments held by the Fund are carried at the value that Management believes the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market, are considered in valuing the Fund’s investments, some of which are discussed below. At times, Management may need to apply significant judgement to value investments in accordance with ASC 820.

ASC 820 established a three-tier hierarchy of inputs to create a classification of value measurements for disclosure purposes. The three-tier hierarchy of inputs is summarized in the three broad Levels listed below.

•

Level 1 – unadjusted quoted prices in active markets for identical investments

•

Level 2 – other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, amortized cost, etc.)

•

Level 3 – unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodology used for valuing an investment are not necessarily an indication of the risk associated with investing in those securities.

The value of the Fund’s investments in equity securities, master limited partnerships and limited partnerships, for which market quotations are available, is generally determined by Management by obtaining valuations from independent pricing services based on the latest sale price quoted on a principal exchange or market for that security (Level 1 inputs). Securities traded primarily on the NASDAQ Stock Market are normally valued at the NASDAQ Official Closing Price (“NOCP”) provided by NASDAQ each business day. The NOCP is the most recently reported price as of 4:00:02 p.m., Eastern Time, unless that price is outside the range of the “inside” bid and 

 

asked prices (i.e., the bid and asked prices that dealers quote to each other when trading for their own accounts); in that case, NASDAQ will adjust the price to equal the inside bid or asked price, whichever is closer. Because of delays in reporting trades, the NOCP may not be based on the price of the last trade to occur before the market closes. If there is no sale of a security on a particular day, the independent pricing services may value the security based on market quotations.

The value of the Fund’s investments in foreign securities is generally determined using the same valuation methods and inputs as other Fund investments, as discussed above. Foreign security prices expressed in local currency values are normally translated from the local currency into U.S. dollars using the exchange rates as of 4:00 p.m., Eastern Time on days the New York Stock Exchange (“NYSE”) is open for business. Management has approved the use of ICE Data Services (“ICE”) to assist in determining the fair value of foreign equity securities when changes in the value of a certain index suggest that the closing prices on the foreign exchanges may no longer represent the amount that the Fund could expect to receive for those securities or on days when foreign markets are closed and U.S. markets are open. In each of these events, ICE will provide adjusted prices for certain foreign equity securities using a statistical analysis of historical correlations of multiple factors (Level 2 inputs). In the absence of precise information about the market values of these foreign securities as of the time as of which the Fund’s share price is calculated, Management has determined on the basis of available data that prices adjusted or evaluated in this way are likely to be closer to the prices the Fund could realize on a current sale than are the prices of those securities established at the close of the foreign markets in which the securities primarily trade.

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), when available.

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 available, the security is valued using methods Management has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Pursuant to Rule 2a-5 under the 1940 Act, the Fund’s Board designated Management as the Fund’s valuation designee. As the Fund’s valuation designee, Management is responsible for determining fair value in good faith for any and all Fund investments. Inputs and assumptions considered in determining the fair value of a security based on Level 2 or Level 3 inputs may include, but are not limited to, the type of the security; the initial cost of the security; the existence of any contractual restrictions on the security’s disposition; the price and extent of public trading in similar securities of the issuer or of comparable companies; quotations or evaluated prices from broker-dealers and/or pricing services; information obtained from the issuer and/or analysts; an analysis of the company’s or issuer’s financial statements; an evaluation of the inputs that influence the issuer and the market(s) in which the security is purchased and sold.

Fair value prices are necessarily estimates, and there is no assurance that such a price will be at or close to the price at which the security is next quoted or next trades.

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 six months ended May 31, 2023, 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 34.1% as income and approximately 65.9% 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 discount (adjusted for original issue discount, where applicable), 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

Foreign currency translations: The accounting records of the Fund are maintained in U.S. dollars. Foreign currency amounts are normally translated into U.S. dollars using the exchange rate as of 4:00 p.m. Eastern Time, on days the NYSE is open for business, to determine the value of investments, other assets and liabilities. Purchase and sale prices of securities, and income and expenses, are translated into U.S. dollars at the prevailing rate of exchange on the respective dates of such transactions. Net unrealized foreign currency gain/(loss), if any, arises from changes in the value of assets and liabilities, other than investments in securities, as a result of changes in exchange rates and is stated separately in the Statement of Operations.

5

Income tax information: The Fund, as a corporation, is obligated to pay federal and state income tax on its taxable income. Currently, the highest regular marginal federal income tax rate for a corporation is 21%.

For federal income tax purposes, the estimated cost of investments held at May 31, 2023 was $294,591,525. The estimated gross unrealized appreciation was $218,145,419 and estimated gross unrealized depreciation was $2,083,522 resulting in net unrealized appreciation in value of investments of $216,061,897 based on cost for U.S. federal income tax purposes.

The Fund may invest a significant portion of its assets in MLPs. MLPs generally are treated as partnerships for federal income tax purposes. As a limited partner in the MLPs, the Fund reports its allocable share of the MLP’s taxable income or loss in computing its own taxable income or loss. The Fund’s income tax expense or benefit is included in the Statement of Operations based on the component of income or gains (losses) to which such expense or benefit relates. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of 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 May 31, 2023, are as follows: 

Deferred tax assets:
Net operating loss carryforwards		$	46,188,201
Capital loss carryforwards			16,853,755
Total deferred tax asset, before valuation allowance			63,041,956
Valuation allowance			(13,196,182	)
Net deferred tax asset, after valuation allowance			49,845,774
Deferred tax liabilities:
Unrealized gains on investment securities			49,845,774
Total net deferred tax asset		$	—

At May 31, 2023, a valuation allowance on deferred tax assets was deemed necessary because Management does not believe that it is more likely than not that the Fund will be able to recognize its deferred tax assets through future taxable income. The impact of any adjustments to the Fund’s estimates of future taxable income will be made in the same period that such determination is made. The Fund recognizes the tax benefits of uncertain tax positions only when the position is “more likely than not” to be sustained upon examination by the tax authorities based on the technical merits of the tax position. The Fund’s policy is to record interest and penalties on uncertain tax positions as part of tax expense. As of May 31, 2023, 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 six months ended May 31, 2023, as follows: 

Application of statutory income tax rate		$	(11,859,829	)
State income tax benefit, net of federal tax benefit			(752,932	)
Tax expense on permanent items			78,056
Valuation allowance			12,534,705
Total income tax benefit		$	—

Total income taxes are computed by applying the federal statutory rate plus a blended state income tax rate.

Net operating loss carryforwards and capital loss carryforwards are available to offset future taxable income. The Fund has the following net operating loss carryforwards and capital loss carryforwards amounts: 

		Net Operating Loss
Fiscal Period Ended		Carryforwards				Expiration
November 30, 2014		$	63,859,910			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			November 30, 2038
November 30, 2019			17,466,578			Not Applicable
November 30, 2021			15,326,982			Not Applicable
November 30, 2023			7,195,861			Not Applicable
		$	206,814,041
Fiscal Period Ended		Capital Loss Carryforwards				Expiration
November 30, 2020		$	75,465,013			November 30, 2025
		$	75,465,013

For the six months ended May 31, 2023, the Fund utilized capital loss carryforwards of $28,628,987.

6

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 2023 will be reported to Fund stockholders on IRS Form 1099-DIV. Distributions to common stockholders are recorded on the ex-date.

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 May 31, 2023, the Fund estimated these amounts for the period January 1, 2023 to May 31, 2023 within the financial statements because the 2023 information is not available from the MLPs until after the Fund’s fiscal year-end. All estimates are based on MLP information sources available to the Fund together with the actual IRS Forms 1099-DIV received to date. For the six months ended May 31, 2023, 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 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 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 year-end and reported to Fund stockholders on IRS Form 1099-DIV.

On May 31, 2023, the Fund declared a monthly distribution to common stockholders in the amount of $0.0584 per share, payable on June 30, 2023, to common stockholders of record on June 15, 2023, with an ex-date of June 14, 2023. Subsequent to May 31, 2023, the Fund declared a monthly distribution on June 30, 2023, to common stockholders in the amount of $0.0584 per share, payable on July 31, 2023, to common stockholders of record on July 17, 2023, with an ex-date of July 14, 2023.

7

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.

8

Financial leverage: In April 2015, the Fund entered into a $500 million secured, committed, margin facility with Société Générale, consisting of $300 million in committed floating-rate debt financing and $200 million in committed fixed-rate debt financing (the “Facility”).

On January 15, 2016, the Fund entered into an amendment to the credit agreement underlying the Facility (the “January 2016 Amendment”). The January 2016 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 Facility (the “March 2016 Amendment”). The March 2016 Amendment decreased the lender’s total commitment from $500 million to $200 million, bringing the amount of available debt financing in line with the Fund’s then-current asset level, and amended the terms of the commitment fees and duration of the floating-rate revolving portion of the Facility. On March 31, 2020, the Fund entered into an additional amendment to the credit agreement underlying the Facility (the “March 2020 Amendment”). The March 2020 Amendment decreased the lender’s total commitment from $200 million to $50 million, bringing the amount of available debt financing in line with the Fund’s then-current asset level, and amended the terms of the commitment fees and duration of the floating-rate revolving portion of the Facility. The Fund paid $1,360,000 in breakage expenses/penalty fees in connection with the March 2020 Amendment and repaid the outstanding amount of its fixed-rate loans. On March 31, 2021, the Fund entered into an additional amendment to the credit agreement underlying the Facility (the “March 2021 Amendment”). The March 2021 Amendment increased the lender’s total commitment from $50 million to $75 million, amended the terms of the commitment fee and spread-component of the interest rate, and extended the duration of the Facility, among other changes. On November 19, 2021, the Fund entered into an additional amendment to the credit agreement underlying the Facility (the “November 2021 Amendment”). The November 2021 Amendment further increased the lender’s total commitment from $75 million to $100 million, bringing the amount of available debt financing in line with the Fund’s then-current asset level. In June 2023, the Fund entered into an additional amendment to the credit agreement underlying the Facility (the “June 2023 Amendment”). The June 2023 Amendment changed the interest rate to Daily Simple Secured Overnight Financing Rate (“SOFR”). The Fund currently has access to committed financing of up to $100 million in floating-rate revolving loans due March 28, 2024. Under the Facility, interest is charged on floating-rate loans based on an adjusted SOFR rate and is payable on the last day of each interest period. 

 

The Fund is required to pay a commitment fee under the Facility if the level of debt outstanding falls below a certain percentage. During the six months ended May 31, 2023, 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 Facility, the Fund is also required to satisfy certain collateral requirements and maintain a certain level of net assets.

For the six months ended May 31, 2023, the average principal balance outstanding and average annualized interest rate under the Facility were approximately $95.2 million and 5.65%, respectively. At May 31, 2023, the principal balance outstanding under the Facility was $97.5 million.

9

Concentration of risk: Under normal market conditions, the Fund invests in energy infrastructure companies, most of which operate in the natural resources industry. The natural resources industry includes companies involved in: exploration and production, refining and marketing, 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.

10

Indemnifications: Like many other companies, the Fund’s organizational documents provide that its officers (“Officers”) and directors (“Directors”) are indemnified against certain liabilities arising out of the performance of their duties to the Fund. In addition, both in some of its principal service contracts and in the normal course of its business, the Fund enters into contracts that provide indemnifications to other parties for certain types of losses or liabilities. The Fund’s maximum exposure under these arrangements is unknown as this could involve future claims against the Fund.

Note B – Investment Management Fees, Administration Fees, and Other Transactions with Affiliates:

The Fund retains NBIA as its investment manager under a Management Agreement. For such investment management services, the Fund pays NBIA an investment management fee at an annual rate of 0.75% of the Fund’s 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 an 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 six months ended May 31, 2023, there were purchase and sale transactions of long-term securities of $57,691,958 and $72,473,224, respectively.

During the six months ended May 31, 2023, no brokerage commissions on securities transactions were paid to affiliated brokers. 

 

Note D – Recent Accounting Pronouncements:

In June 2022, FASB issued Accounting Standards Update No. 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” (“ASU 2022-03”). ASU 2022-03 clarifies the guidance in ASC 820, related to the measurement of the fair value of an equity security subject to contractual sale restrictions, where it eliminates the ability to apply a discount to the fair value of these securities, and introduces disclosure requirements related to such equity securities. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023, and allows for early adoption. Management is currently evaluating the impact of applying this update.

In December 2022, the FASB issued Accounting Standards Update No. 2022-06, “Reference Rate Reform (Topic 848)” (“ASU 2022-06”), which is an update to Accounting Standards Update No. 2021-01, “Reference Rate Reform (Topic 848)” (“ASU 2021-01”) and defers the sunset date for applying the reference rate reform relief in Topic 848. ASU 2021-01 is an update of ASU 2020-04, which is in response to concerns about structural risks of interbank offered rates, and particularly the risk of cessation of LIBOR. Regulators have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. ASU 2020-04 provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. ASU 2020-04 is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The ASU 2021-01 update clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. The amendments in this update are effective immediately through December 31, 2024, for all entities. Management is currently evaluating the implications, if any, of the additional requirements and its impact on the Fund’s financial statements.

Note E – Unaudited Financial Information:

The financial information included in this interim report is taken from the records of the Fund without audit by an independent registered public accounting firm. Annual reports contain audited financial statements.

 

Financial Highlights

Energy Infrastructure and Income Fund Inc.

The following table includes selected data for a share of common stock outstanding throughout each period and other performance information derived from the Financial Statements. Amounts that do not round to $0.01 or $(0.01) per share are presented as $0.00 or $(0.00), respectively. Ratios that do not round to 0.01% or (0.01)% are presented as 0.00% or (0.00)%, respectively. A “—” indicates that the line item was not applicable in the corresponding period.

		Six Months Ended May 31, 2023				Year Ended November 30,
		(Unaudited)				2022				2021				2020				2019				2018
Common Stock Net Asset Value, Beginning of Period			$   8.73			$	6.32			$	4.27			$	7.23			$	8.73			$	9.19
Income From Investment Operations Applicable to Common Stockholders:
Net Investment Income/(Loss)¢			(0.01	)			(0.02	)			(0.05	)			(0.07	)			(0.15	)			(0.16	)
Net Gains/(Losses) on Securities (both realized and unrealized)			(0.99	)			2.67				2.28				(2.57	)			(0.69	)			0.36
Total From Investment Operations Applicable to Common Stockholders			(1.00	)			2.65				2.23				(2.64	)			(0.84	)			0.20
Less Distributions to Common Stockholders From:
Net Investment Income			—				(0.22	)			—				—				—				(0.54	)
Tax Return of Capital			(0.35	)			(0.02	)			(0.18	)			(0.32	)			(0.66	)			(0.12	)
Total Distributions to Common Stockholders			(0.35	)			(0.24	)			(0.18	)			(0.32	)			(0.66	)			(0.66	)
Common Stock Net Asset Value, End of Period			$   7.38			$	8.73			$	6.32			$	4.27			$	7.23			$	8.73
Common Stock Market Value, End of Period			$   6.24			$	7.21			$	5.02			$	3.28			$	6.32			$	7.53
Total Return, Common Stock Net Asset Value†			(11.01	)%@@			43.39	%			54.03	%			(35.28	)%			(9.22	)%			2.43	%
Total Return, Common Stock Market Value†			(8.89	)%@@			49.09	%			59.28	%			(43.13	)%			(8.11	)%			(3.80	)%
Supplemental Data/Ratios
Net Assets Applicable to Common Stockholders,
End of Period (in millions)			$ 418.4			$	494.7			$	358.1			$	241.8			$	409.7			$	494.4
Ratios are Calculated Using Average Net Assets Applicable to Common Stockholders
Ratio of Expenses Including Deferred Income Tax (Benefit)/Expense#			2.58	%@			1.85	%			1.55	%			2.77	%			2.75	%			2.44	%
Ratio of Expenses Excluding Deferred Income Tax (Benefit)/Expense			2.58	%@			1.85	%			1.55	%			2.77	%			2.75	%			2.55	%
Ratio of Net Investment Income/(Loss) Including Deferred Income Tax Benefit/(Expense)#			(0.25	)%@			(0.25	)%			(0.82	)%			(1.62	)%			(2.27	)%			(1.69	)%
Ratio of Net Investment Income/(Loss) Excluding Deferred Income Tax Benefit/(Expense)			(0.25	)%@			(0.25	)%			(0.82	)%			(1.62	)%			(2.27	)%			(1.80	)%
Portfolio Turnover Rate			11	%@@			19	%			20	%			41	%			29	%			35	%
Loans Payable (in millions)			$   97.5			$	94.3			$	66.6			$	35.8			$	145.0			$	161.0
Asset Coverage Per $1,000 of Loans Payable, End of PeriodØ			$ 5,292			$	6,247			$	6,378			$	7,754			$	3,826			$	4,234

 

Notes to Financial Highlights Energy Infrastructure and Income Fund Inc. (Unaudited)

¢	Calculated based on the average number of shares of common stock outstanding during each fiscal period.
†	Total return based on per share NAV reflects the effects of changes in NAV on the performance of the Fund during each fiscal period. Total return based on per share market value assumes the purchase of shares of common stock at the market price on the first day and sale of common stock at the market price on the last day of the period indicated. Distributions, if any, are assumed to be reinvested at prices obtained under the Fund’s distribution reinvestment plan. Results represent past performance and do not indicate future results. Current returns may be lower or higher than the performance data quoted. Investment returns will fluctuate and shares of common stock when sold may be worth more or less than original cost.
@@	Not Annualized.
#	For the six months ended May 31, 2023, and for the years ended November 30, 2022, November 30, 2021, November 30, 2020, November 30, 2019, and November 30, 2018, the Fund accrued $0, $0, $0, $0, $0, and $616,019, respectively, for net deferred income tax benefit.
@	Annualized.
Ø	Calculated by subtracting the Fund’s total liabilities (excluding loans payable and accumulated unpaid interest on loans payable) from the Fund’s total assets and dividing by the outstanding loans payable balance.

 

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.

 

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.

 

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.

 

Directory

Investment Manager and Administrator	Plan Agent
Neuberger Berman Investment Advisers LLC	American Stock Transfer & Trust Company, LLC
1290 Avenue of the Americas	Plan Administration Department
New York, NY 10104-0002	P.O. Box 922
877.461.1899	Wall Street Station
	New York, NY 10269-0560
Custodian
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
Shareholder Services 866.227.2136	Washington, DC 20006-1600
	Independent Registered Public Accounting Firm
	Ernst & Young LLP
	200 Clarendon Street
	Boston, MA 02116

 

Proxy Voting Policies and Procedures

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available, without charge, by calling 800-877-9700 (toll-free) and on the SEC’s website at www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is also available, upon request, without charge, by calling 800-877-9700 (toll-free), on the SEC’s website at www.sec.gov, and on Neuberger Berman’s website at www.nb.com.

Quarterly Portfolio Schedule

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year as an exhibit to its report on Form N-PORT. The Fund’s Forms N-PORT are available on the SEC’s website at www.sec.gov. The portfolio holdings information on Forms N-PORT is available upon request, without charge, by calling 800-877-9700 (toll-free).

 

 

FACTS

WHAT DOES NEUBERGER BERMAN DO WITH YOUR PERSONAL INFORMATION?

Why?	Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand what we do.
What?	The types of personal information we collect and share depend on the product or service you have with us. This information can include: n    Social Security numbers, dates of birth and other numerical identifiers n    Names and addresses n    Driver’s licenses, passports and other identification documents n    Usernames and passwords n    Internet protocol addresses and other network activity information n    Income, credit history, credit scores, assets, transaction history and other financial information When you are no longer our customer, we continue to share your information as described in this notice.
How?	All financial companies need to share customers’ personal information to run their everyday business. In the section below, we list the reasons financial companies can share their customers’ personal information; the reasons Neuberger Berman chooses to share; and whether you can limit this sharing.

Reasons we can share your personal information	Does Neuberger Berman share?	Can you limit this sharing?
For our everyday business purposes— such as to process your transactions, maintain your account(s), respond to court orders and legal investigations, or report to credit bureaus	Yes	No
For our marketing purposes— to offer our products and services to you	Yes	No
For joint marketing with other financial companies	No	We don’t share
For our affiliates’ everyday business purposes— information about your transactions and experiences	Yes	No
For our affiliates’ everyday business purposes— information about your creditworthiness	No	We don’t share
For nonaffiliates to market to you	No	We don’t share

 

Questions?

Call 646.497.4003 or 866.483.1046 (toll-free) Email NBPrivacyOfficer@nb.com

This is not part of the Fund’s stockholder report.

 

 

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Who we are
Who is providing this notice?	Entities within the Neuberger Berman family of companies, mutual funds, and private investment funds.

 

What we do
How does Neuberger Berman protect my personal information?	To protect your personal information from unauthorized access and use, we use security measures that comply with federal law. These measures include physical, electronic and procedural safeguards, including secured files and buildings. We restrict access to customer information to those employees who need to know such information in order to perform their job responsibilities.
How does Neuberger Berman collect my personal information?	We collect your personal information directly from you or your representatives, for example, when you n    seek advice about your investments n    give us your contact or income information n    provide account information or open an account n    direct us to buy or sell securities, or complete other transactions n    visit one of our websites, portals or other online locations We may also collect your personal information from others, such as credit bureaus, affiliates, or other companies.
Why can’t I limit all sharing?	Federal law gives you the right to limit only n    sharing for affiliates’ everyday business purposes— information about your creditworthiness n    affiliates from using your information to market to you n    sharing for nonaffiliates to market to you State laws and individual companies may give you additional rights to limit sharing.

 

Definitions
Affiliates	Companies related by common ownership or control. They can be financial and nonfinancial companies. n    Our affiliates include companies with a Neuberger Berman name; financial companies, such as investment advisers or broker dealers; mutual funds, and private investment funds.
Nonaffiliates	Companies not related by common ownership or control. They can be financial and nonfinancial companies. n    Nonaffiliates we share with can include companies that perform administrative services on our behalf (such as vendors that provide data processing, transaction processing, and printing services) or other companies such as brokers, dealers, or counterparties in connection with servicing your account.
Joint marketing	A formal agreement between nonaffiliated financial companies that together market financial products or services to you. n    Neuberger Berman doesn’t jointly market.

 

This is not part of the Fund’s stockholder report.

 

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Neuberger Berman Investment Advisers LLC 1290 Avenue of the Americas New York, NY 10104–0002 Internal Sales & Services 877.461.1899 www.nb.com 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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