†

In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by Neuberger Berman MLP Income Fund Inc. (the “Fund”) are carried at the value that Neuberger Berman Management LLC (“Management”) believes the Fund would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment under current market conditions. Various inputs, including the volume and level of activity for the asset or liability in the market, are considered in valuing the Fund’s investments, some of which are discussed below. Significant management judgment may be necessary to value investments in accordance with ASC 820.

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

Level 1 – quoted prices in active markets for identical investments

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

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

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

 

The value of the Fund’s investments in equity securities (including master limited partnerships) and written option contracts, for which market quotations are readily available, is generally determined by Management by obtaining valuations from an independent pricing service 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 reported sale of a security on a particular day, the independent pricing service may value the security based on reported market quotations. The value of the Fund’s investments in certain preferred stock is determined by Management by obtaining valuations from independent pricing services that are based on market information which may include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and reference data, such as market research publications, when available (generally Level 2 inputs).

 

The value of the Fund’s investments in equity securities of publicly traded companies acquired in a direct placement transaction may be subject to restrictions on resale that can affect the security’s liquidity and fair value. Such securities that are convertible or otherwise will become freely tradable will typically be valued based on the market value of the freely tradable security less an applicable discount. Inputs used generally include the duration of the restriction period and the discount on purchase date.

 

Management has developed a process to periodically review information provided by independent pricing services for all types of securities.

 

Investments in investment companies are valued using the respective fund’s daily calculated net asset value per share (Level 2 inputs).

 

If a valuation is not available from an independent pricing service, or if Management has reason to believe that the valuation received does not represent the amount the Fund might reasonably expect to receive on a current sale in an orderly transaction, the Fund seeks to obtain quotations from brokers or dealers (generally considered Level 2 or Level 3 inputs depending on the number of quotes available). If such quotations are not readily available, the security is valued using methods the Fund’s Board of Directors (the “Board”) has approved in the good-faith belief that the resulting valuation will reflect the fair value of the security. Numerous factors may be considered when determining the fair value of a security based

on Level 2 or Level 3 inputs, including available analyst, media or other reports, trading in futures or American Depositary Receipts (“ADRs”) and whether the issuer of the security being fair valued has other securities outstanding.

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

 

The following is a summary, categorized by Level, of inputs used to value the Fund’s investments as of August 31, 2014:

Investments:

Level 1

Level 2

Level 3

Total

Master Limited Partnerships and

Related Companies

Coal & Consumable Fuels

$117,699,055

$—

$—

$117,699,055

Gas Utilities

22,356,000

—

—

22,356,000

Leisure Facilities

103,285,630

—

—

103,285,630

Oil & Gas Storage & Transportation

1,395,843,332

103,429,825

—

1,499,273,157

Propane

131,069,655

—

—

131,069,655

Total Master Limited Partnerships and

Related Companies

1,770,253,672

103,429,825

—

1,873,683,497

Short-Term Investments

—

23,760,597

—

23,760,597

Total Investments

$1,770,253,672

$127,190,422

$—

$1,897,444,094

As of the period ending August 31, 2014, certain securities were transferred from one level to another, based on beginning of period market values as of November 30, 2013. Approximately $14,296,075 was transferred from Level 2 to Level 1 as a result of preferred stock converting to common stock. As of period ending August 31, 2014, the Fund had no transfers between Level 2 and Level 3, based on beginning of period market values as of November 30, 2013.

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At August 31, 2014, the cost of investments for U.S. federal income tax purposes was $1,275,554,790. Gross unrealized appreciation of investments was $645,286,745 and gross unrealized depreciation of investments was $23,397,441 resulting in net unrealized appreciation of $621,889,304 based on cost for U.S. federal income tax purposes.

+

Restricted security subject to restrictions on resale. Securities were purchased under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”), or are private placements and, unless registered under the 1933 Act or exempt from registration, may only be sold to qualified institutional investors. These securities have been deemed by the investment manager to be illiquid.

At August 31, 2014, these securities amounted to approximately $103,429,825 or 8.0% of net assets applicable to common shareholders of the Fund.

Restricted Security

Acquisition

Date

Acquisition

Cost

Acquisition Cost

Percentage of

Net Assets

Applicable to

Common

Shareholders

as of

Acquisition Date

Value as of

August 31, 2014

Fair Value

Percentage of

Net Assets

Applicable to

Common

Shareholders

as of

August 31, 2014

NGL Energy Partners LP

6/5/2013

54,600,000

5.1%

85,160,000

6.6%

Total

$72,493,682

$103,429,825

8.0%

§

Affiliated issuer.

Balance

of Shares

Held

November

30, 2013

Gross

Purchases

and

Additions

Gross

Sales and

Reductions

Balance

of Shares

Held

August

31, 2014

Value

August 31,

2014

Distributions

from

Investments

in Affiliated

Issuers

Net

Realized

Gain (Loss)

from

Investments

in Affiliated

Issuers

Southcross Energy Partners, L.P.

760,000

1,100,068

–

1,860,068

$41,126,103

$1,166,873

$–

Southcross Energy Partners, L.P.

Series A, Preferred

774,016

   27,327

(801,343)

 

–

–

945,184

–

Total

$41,126,103

$2,112,057

$–

(1)

Affiliated issuers, as defined in the Investment Company Act of 1940 as amended.

µ

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