†

In accordance with Accounting Standards Codification (“ASC”) 820 “Fair Value Measurement” (“ASC 820”), all investments held by each of Neuberger Berman California Intermediate Municipal Fund Inc. (“California”), Neuberger Berman Intermediate Municipal Fund Inc. (“Intermediate”) and Neuberger Berman New York Intermediate Municipal Fund Inc. (“New York”) (each individually a “Fund” and collectively, the “Funds”) are carried at the value that Neuberger Berman Management LLC (“Management”) believes a 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 Funds’ 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 2 – other observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, amortized cost, etc.)

 

Level 3 – unobservable inputs (including a 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 Funds’ investments in municipal securities is determined by Management primarily by obtaining valuations from independent pricing services based on readily available bid quotations, or if quotations are not available, by methods which include various considerations such as yields or prices of securities of comparable quality, coupon, maturity and type; indications as to values from dealers; and general market conditions (generally Level 2 inputs). Other Level 2 inputs used by an independent pricing service to value municipal securities include current trades, bid-wanted lists (which informs the market that a holder is interested in selling a position and that offers will be considered), offerings, general information on market movement, direction, trends, and specific data on specialty issues.

 

 

 

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

 

 

 

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 a Fund might reasonably expect to receive on a current sale in an orderly transaction, the applicable 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 (each Fund’s Board of Directors, a “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 Funds’ investments as of July 31, 2014:

Asset Valuation Inputs

 

 

 

 

 

 

 

 

 

(000’s omitted)

Level 1

Level 2

Total

California

 

 

 

 

Investments:

 

 

 

 

Municipal Notes^

$—

$146,208

$—

$146,208

Total Investments

—

146,208

—

146,208

Intermediate

 

 

 

 

Investments:

 

 

 

 

Municipal Notes^

—

473,158

—

473,158

Tax Exempt Preferred^

Total Investments

—

—

1,900

475,058

—

—

1,900

475,058

New York

 

 

 

 

Investments:

 

 

 

 

Municipal Notes^

—

119,375

—

119,375

Liquidating Trust—Real Estate

—

—

2,011

2,011

Total Investments

—

119,375

2,011

121,386

^

The Schedule of Investments provides information on the state categorization for the portfolio.

 

 

§

The following is a reconciliation between the beginning and ending balances of investments in which unobservable inputs (Level 3) were used in determining value:

 

 

 

 

 

 

(000’s omitted)

 

 

 

 

 

Beginning

balance, as of

11/1/13

Accrued

discounts/

(premiums)

Realized

gain/(loss)

Change in

unrealized

appreciation/

(depreciation)

 

 

 

 

 

 

 

Purchases

 

 

 

 

 

 

 

Sales

 

Transfers

in

to Level 3

Transfers

out of

Level 3

Balance

as of

7/31/14

Net change in

unrealized

appreciation/

(depreciation)

from

investments still

held as of

7/31/14

Investments in Securities

New York

 

 

 

 

 

 

 

 

 

 

Units

 

 

 

 

 

 

 

 

 

 

Liquidating Trust—Real Estate

$1,920

$—

$—

$91

$—

 

 

$—

 

 

$—

 

 

$—

$2,011

 

 

$91

Total

$1,920

$—

$—

$91

$—

$—

$—

$—

$2,011

$91

 

The following table presents additional information about valuation techniques and inputs used for investments that are measured at fair value and categorized within Level 3 as of July 31, 2014.

 

 

 

 

 

Asset class

 

 

 

Fair value at

7/31/14

 

 

 

Valuation

techniques

 

 

 

Unobservable

input

 

 

 

 

Range per unit

 

 

Weighted

average per

unit

Impact to

valuation from

increase in input

New York

Units

$2,011,000

Income Approach

Appraised Value

$3,252-$3,680

$3,466

Increase

 

As of the period ending July 31, 2014, the Funds had no transfers between Levels 1, 2 or 3 based on beginning of period market values as of October 31, 2013.

 

 

##

At July 31, 2014, selected fund information on a U.S. federal income tax basis was as follows:

 

 

(000’s omitted)

 

 

Cost

 

Gross Unrealized

Appreciation

 

Gross Unrealized

Depreciation

Net Unrealized

Appreciation

(Depreciation)

California

$139,243

$ 7,472

$507

$6,965

Intermediate

441,053

37,162

3,157

34,005

New York

118,177

5,465

2,256

3,209

ß

Security is guaranteed by the corporate or non-profit obligor.

 

 

ñ

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 exempted from registration, may only be sold to qualified institutional investors. These securities have been deemed by the investment manager to be liquid. At July 31, 2014, these securities amounted to approximately $2,133,000 or 2.5% of net assets applicable to common shareholders for California and approximately $7,232,000 or 2.5% of net assets applicable to common shareholders for Intermediate.

 

 

Ø

All or a portion of this security was purchased on a when-issued basis. At July 31, 2014, these securities amounted to $4,482,000 or 5.3% of net assets applicable to common shareholders for California, $6,821,000 or 2.3% of net assets applicable to common shareholders for Intermediate and $3,204,000 or 4.4% of net assets applicable to common shareholders for New York.

 

 

ØØ

All or a portion of this security is segregated in connection with obligations for when-issued security purchase commitments.

 

 

µ

Floating rate securities are securities whose yields vary with a designated market index or market rate. These securities are shown at their current rates as of July 31, 2014, and at their final maturity dates.

 

 

b

Currently a zero coupon security; will convert to 6.00% on December 1, 2015.

 

 

c

Currently a zero coupon security; will convert to 6.50% on December 1, 2015.

 

 

d

Currently a zero coupon security; will convert to 5.50% on August 1, 2021.

 

 

e

Currently a zero coupon security; will convert to 6.38% on August 1, 2016.

 

 

f

Currently a zero coupon security; will convert to 6.38% on August 1, 2019.

 

 

g

Currently a zero coupon security; will convert to 6.13% on August 1, 2023.

 

 

h

Currently a zero coupon security; will convert to 6.75% on August 1, 2015.

 

 

i

Currently a zero coupon security; will convert to 6.88% on August 1, 2019.

 

 

j

Currently a zero coupon security; will convert to 7.30% on August 1, 2026.

 

 

z

A zero balance, if any, may reflect actual amounts rounding to less than $1,000.

 

 

*

Security did not produce income during the last twelve months.

 

 

‡

Security had an event of default.

 

 

#

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

 

 

 

At July 31, 2014, these securities amounted to approximately $503,000 or 0.6% of net assets applicable to common shareholders for California, approximately $5,156,000 or 1.8% of net assets applicable to common shareholders for Intermediate, and approximately $2,513,000 or 3.5% of net assets applicable to common shareholders for New York.

 

 

 

 

 

 

 

 

(000’s

omitted)

 

 

 

 

 

 

 

 

 

Restricted Security

 

 

 

 

 

Acquisition

Date

 

Acquisition

Cost

Acquisition

Cost

Percentage of

Net Assets

Applicable to

Common

Shareholders

as of

Acquisition

Date

 

 

 

 

 

 

 

 

Value as of

July 31, 2014

 

 

Fair Value

Percentage of

Net Assets

Applicable to

Common

Shareholders

as of July 31,

2014

California

Collier Co. Ind. Dev. Au. Continuing Care Comm. Rev. (Arlington of Naples Proj.), Ser. 2014-B1, 6.88%, due 5/15/21

12/16/2013

$500

0.6%

$503

0.6%

Intermediate

Collier Co. Ind. Dev. Au. Continuing Care Comm. Rev. (Arlington of Naples Proj.), Ser. 2014-B1, 6.88%, due 5/15/21

12/16/2013

1,000

0.4%

1,005

0.4%

 

 

 

 

 

 

 

 

Munimae TE Bond Subsidiary LLC, Unsecured Notes, 5.00%, due 4/30/28

1/31/2013

1,900

0.7%

1,900

0.6%

 

New York Liberty Dev. Corp. Rev. (Nat’l Sports Museum Proj.), Ser. 2006-A, 6.13%, due 2/15/19

8/4/2006

1,100

0.4%

0

0.0%

 

Non-Profit Pfd. Fdg. Trust I, Ser. 2006-C, 4.72%, due 9/15/37

10/2/2006

3,000

1.0%

2,251

0.8%

 

 

 

 

 

 

 

New York

Collier Co. Ind. Dev. Au. Continuing Care Comm. Rev. (Arlington of Naples Proj.), Ser. 2014-B1, 6.88%, due 5/15/21

12/16/2013

500

0.7%

502

0.7%

 

New York Liberty Dev. Corp. Rev. (Nat’l Sports Museum Proj.), Ser. 2006-A, 6.13%, due 2/15/19

8/4/2006

660

0.9%

0

0.0%

 

CMS Liquidating Trust

11/21/2012

3,105

4.0%

2,011

2.8%