UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number811-23248
Tortoise Essential Assets Income Term Fund
(Exact name of registrant as specified in charter)
11550 Ash Street, Suite 300, Leawood, KS 66211
(Address of principal executive offices) (Zip code)
P. Bradley Adams
Diane Bono
11550 Ash Street, Suite 300, Leawood, KS 66211
(Name and address of agent for service)
913-981-1020
Registrant's telephone number, including area code
Date of fiscal year end:November 30
Date of reporting period:November 30, 2019
Item 1. Report to Stockholders.
Annual Report| November 30, 2019
2019 Annual Report
Closed-End Funds
| Tortoise |
| 2019 Annual Report to Stockholders |
This combined report provides you with a comprehensive review of our funds that span essential assets.
| Table of contents | ||||||
| Closed-end Fund Comparison | 1 | TEAF: Fund Focus | 20 | |||
| Letter to Stockholders | 2 | Financial Statements | 24 | |||
| TYG: | Fund Focus | 5 | Notes to Financial Statements | 62 | ||
| NTG: | Fund Focus | 8 | Report of Independent Registered | |||
| TTP: | Fund Focus | 11 | Public Accounting Firm | 82 | ||
| NDP: | Fund Focus | 14 | Company Officers and Directors | 83 | ||
| TPZ: | Fund Focus | 17 | Additional Information | 85 | ||
| TTP and TPZ distribution policies |
Tortoise Pipeline & Energy Fund, Inc. (“TTP”) and Tortoise Power and Energy Infrastructure Fund, Inc. (“TPZ”) are relying on exemptive relief permitting them to make long-term capital gain distributions throughout the year. Each of TTP and TPZ, with approval of its Board of Directors (the “Board”), has adopted a distribution policy (the “Policy”) with the purpose of distributing over the course of each year, through periodic distributions as nearly equal as practicable and any required special distributions, an amount closely approximating the total taxable income of TTP and TPZ during such year and, if so determined by the Board, all or a portion of the return of capital paid by portfolio companies to TTP and TPZ during such year. In accordance with its Policy, TTP distributes a fixed amount per common share, currently $0.285, each quarter to its common shareholders. Prior to August 2019, the quarterly distribution rate was $0.4075. TPZ distributes a fixed amount per common share, currently $0.125, each month to its common shareholders. These amounts are subject to change from time to time at the discretion of the Board. Although the level of distributions is independent of TTP’s and TPZ’s performance, TTP and TPZ expect such distributions to correlate with its performance over time. Each quarterly and monthly distribution to shareholders is expected to be at the fixed amount established by the Board, except for extraordinary distributions in light of TTP’s and TPZ’s performance for the entire calendar year and to enable TTP and TPZ to comply with the distribution requirements imposed by the Internal Revenue Code. The Board may amend, suspend or terminate the Policy without prior notice to shareholders if it deems such action to be in the best interests of TTP, TPZ and their respective shareholders. For example, the Board might take such action if the Policy had the effect of shrinking TTP’s or TPZ’s assets to a level that was determined to be detrimental to TTP or TPZ shareholders. The suspension or termination of the Policy could have the effect of creating a trading discount (if TTP’s or TPZ’s stock is trading at or above net asset value), widening an existing trading discount, or decreasing an existing premium. You should not draw any conclusions about TTP’s or TPZ’s investment performance from the amount of the distribution or from the terms of TTP’s or TPZ’s distribution policy. Each of TTP and TPZ estimates that it has distributed more than its income and net realized capital gains; therefore, a portion of your distribution may be a return of capital. A return of capital may occur, for example, when some or all of the money that you invested in TTP or TPZ is paid back to you. A return of capital distribution does not necessarily reflect TTP’s or TPZ’s investment performance and should not be confused with “yield” or “income.” The amounts and sources of distributions reported are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon TTP’s and TPZ’s investment experience during the remainder of their fiscal year and may be subject to changes based on tax regulations. TTP and TPZ will send you a Form 1099-DIV for the calendar year that will tell you how to report these distributions for federal income tax purposes.
| Tortoise |
| 2019 Annual Report| November 30, 2019 |
Closed-end Fund Comparison | |||||||||||
| Name/Ticker | Primary focus | Structure | Total assets ($ millions)1 | Portfolio mix by asset type2 | Portfolio mix by structure2 | ||||||
 | Tortoise Energy NYSE: TYG | Midstream | C-corp | $1,826.5 |  |  | |||||
Tortoise Midstream NYSE: NTG | Natural gas | C-corp | $1,266.8 |  |  | ||||||
Tortoise Pipeline NYSE: TTP | North | Regulated | $209.1 |  |  | ||||||
 | Tortoise Energy NYSE: NDP | North | Regulated | $99.4 |  |  | |||||
 | Tortoise Power and NYSE: TPZ | Power | Regulated | $184.8 |  |  | |||||
 | Tortoise Essential NYSE: TEAF | Essential | Regulated | $289.5 |  |  | |||||
| 1 | As of 12/31/2019 |
| 2 | As of 11/30/2019 |
| (unaudited) | |
| Tortoise | 1 |
| Tortoise |
| 2019 Annual Report to closed-end fund stockholders |
Dear stockholder,
With our emphasis on essential assets, we focus on the trends and opportunities occurring across the sectors. One of our biggest focuses is on the energy evolution that is underway globally. Energy demand is growing worldwide, particularly from electrification in emerging countries. This increasing demand needs to be met with lower-carbon supply in order to decrease global carbon emissions. For this to happen, natural gas and renewables must take market share from coal for electricity generation. Additionally, U.S. midstream energy is playing a big role, exporting cheap and lower carbon energy to the rest of the world, increasing the need for critical infrastructure to support these exports. In the social infrastructure sector, we are encouraged by the role charter schools are playing in the school choice movement and are mindful of where senior living construction projects are most needed.
Energy Infrastructure
The broader energy sector, as represented by the S&P Energy Select Sector®Index, finished the fourth fiscal quarter ending November 30, 2019 in positive territory, returning 3.3%, bringing fiscal year 2019 performance to -7.7%. Oil markets experienced significant volatility during the period. Prices were caught in a tug-of-war between escalating tensions in the Middle East culminating in significant, but temporary supply outages, mixed signals from U.S.-China trade negotiations impacting demand growth.
Upstream
The Tortoise North American Oil and Gas Producers IndexSMreturned -1.3% in the fourth fiscal quarter, bringing fiscal year performance to -22.7%. Crude oil prices, represented by West Texas Intermediate (WTI), began the fiscal quarter at $53.94 per barrel and peaked at $62.90 on Sept. 16, 2019 following the attacks on Saudi oil infrastructure. Prices troughed quickly thereafter at $52.45 on Oct. 3, 2019 on Saudi claims of minimal disruption to production and the potential for a U.S.-Iran deal before ending the fiscal year at $58.11.
U.S. crude oil production growth is expected to broadly moderate in 2020 as compared to the rapid growth over the past two years. Specifically, U.S. crude oil production is projected to average 12.3 million barrels per day (MMbbl/d) in 2019 and 13.2 MMbbl/d in 20201. U.S. producers are facing increased pressure from investors to exhibit capital discipline and reign in production growth in favor of higher free cash flow generation and return of capital to shareholders. Nonetheless, with multiple years of tremendous production growth, propelled by the U.S. shale revolution, the U.S. transitioned into a net exporter of oil and petroleum products for the first time in recent history. The U.S. became a net exporter of oil and petroleum products in September 2019 with net exports projected to grow in 2020 and beyond1. Rising U.S. energy exports of liquids and natural gas are expected to positively affect the U.S. trade deficit and will ultimately help reduce global CO2emissions, along with renewables, as they take market share from coal.
Following the end of the fiscal year, the Organization of Petroleum Exporting Countries (OPEC) and their Non-OPEC partners (OPEC+) announced in December a clear goal of establishing a floor for crude oil prices through the seasonally weaker first quarter of 2020. OPEC+ members agreed to an incremental 0.5 MMbbl/d cut to the existing agreement taking the official cut to 1.7 MMbbl/d for 1Q20. In addition, Saudi Arabia agreed to continue its over-complianceof 0.4 MMbbl/d implying a new commitment level of cutting 2.1 MMbbl/d. Saudi Arabia is focused on stabilizing of crude oil prices following the recent Saudi Aramco initial public offering. While the deal was not extended, OPEC+ did set a date for an extraordinary meeting to be held in early March 2020 to determine the need for additional cuts. Emphasis will likely be placed upon improved compliance from various OPEC members with poor historical compliance (Iraq, Nigeria, and UAE). With trade tensions easing and the global economy not showing any signs of a true slowdown, oil demand growth is currently expected to improve in 2020, which should bring worldwide supply and demand into better balance.
Natural gas demand has remained robust supported by record levels of domestic power burn, increased exports to Mexico and record liquefied natural gas (LNG) exports driven by the startup of three new liquefaction and export facilities (Elba Island, Cameron LNG, Freeport LNG). However, surging natural gas supply more than offset strong demand, resulting in an elevated pace of inventory builds and pricing pressure through much of the period. Natural gas prices, represented by Henry Hub, opened the fiscal quarter at $2.39 per million British thermal units, hit a low of $2.08 on Oct. 18, and then peaked at $2.87 in November, due to colder than average weather in the midwest, before ending the fiscal year back down to $2.46.
Persistently low natural gas prices have prompted natural gas producers to reign in capex budgets and drilling programs in 2020. While natural gas production is expected to continue growing, the pace of supply growth is set to slow measurably, with production expected to average 91.8 billion cubic feet per day (Bcf/d) in 2019 and 93.8 Bcf/d in 20202. The backdrop of slowing production growth and strong domestic and export demand paints a picture of improving natural gas fundamentals in the future. The second wave of LNG export facilities, led by final investment decisions (FIDs) made to Exxon’s Golden Pass and Venture Global’s Calcasieu Pass LNG export facilities in 2019, will provide another meaningful catalyst for natural gas export demand growth from 2022 to 2025.
Midstream
Midstream energy performance lagged broader energy in the fourth fiscal quarter with the Tortoise North American Pipeline IndexSMreturning -2.6% and the Tortoise MLP Index®returning -8.9%, bringing fiscal year performance to 5.9% and -7.0%, respectively. The sharp contrast in midstream index performance is due to midstream companies structured as C-Corporations outperforming those structured as MLPs. C-Corporations benefitted from several items versus MLPs, including: stronger corporate governance, broad market index inclusion for some companies, lack of K-1s, and a more certain corporate structure. Contributing to broad midstream underperformance for the fiscal quarter were concerns regarding a slowdown in U.S. production growth, political rhetoric regarding proposed fracking bans from Democratic Presidential candidates and tax loss selling. Gathering and processing companies in particular suffered following lower natural gas and natural gas liquids (NGL) pricing and the ‘going concern’ language introduced into Chesapeake Energy’s (CHK) quarterly filing. These items drove negative sentiment and raised questions related to producer financial health, counterparty risk and exposure to drilling slowdowns. However, the U.S. has seen tremendous production growth in recent years and we believe a more moderate pace of growth is healthy for the midstream sector through the reduction in growth capital expenditures and reduced risk of takeaway capacity overbuild.
| (unaudited) | |
| 2 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
DCP Midstream LP (DCP) became the latest MLP to announce the elimination of its incentive distribution rights (IDRs) in the fourth fiscal quarter. As the era of simplification comes to a close, the results have advanced the midstream sector in our view and accomplished widespread cost of capital and corporate governance improvements. Looking forward, the midstream sector continues to evolve. There has been an industry-wide shift to higher distribution coverage and self-funding the equity portion of capital expenditure programs. With the expected moderation in U.S. production growth, midstream companies are now shifting focus toward executing on delivering value through the return of capital to shareholders in the form of debt reduction, sustainable yields and distribution growth, and potential stock buybacks. A particular emphasis on the generation of free cash flow yields comparable to other S&P 500 sectors continues to emerge, achieved through the sale of non-core assets and the reduction of growth capital expenditures.
Interest in publicly traded midstream companies and assets, from both public and private entities, has remained elevated, highlighting their strategic value and attractive valuations. Recently announced or closed transactions include Energy Transfer’s (ET) acquisition of SemGroup Corporation (SEMG), DTE Energy’s (DTE) acquisition of a natural gas gathering system in the Haynesville Shale and Pembina Pipeline Corporation’s (PPL CN) acquisition of Kinder Morgan Canada and the Cochin pipeline.
Downstream
Refinery utilization has remained challenged in 2019 due to heavy spring and fall turnarounds in preparation for the International Maritime Organization’s Jan. 1, 2020 implementation of sulfur reduction regulations on the shipping industry (IMO 2020), unplanned refinery outages, as well as the closure of Philadelphia Energy Solutions’ 350 Mbbl/d Philadelphia refinery, the largest refining complex on the east coast. IMO 2020 has positioned U.S. refiners to take advantage of higher distillate pricing and more heavily discounted medium-heavy sour crude oils as they have more flexibility than international refiners to use a wide range of crude oil feedstocks. We expected that U.S. refinery utilization and throughput will exhibit strong growth as refiners attempt to capture margin upside driven by IMO 2020.
Incremental NGL supply from completed Permian takeaway projects and overall liquids production growth surpassed current levels of domestic NGL demand, primarily from petrochemical facilities, resulting in price pressure. We expect that moderating northeast liquids production growth and increased demand from petrochemical projects coming online in late 2019 and early 2020 will begin to draw down inventories.
Capital Markets
Capital markets activity increased during the fourth fiscal quarter with MLPs and other pipeline companies raising approximately $10.8 billion in total capital, with nearly all of the issuance in debt. This brings the total capital raised for the fiscal year to approximately $36.4 billion, slightly lower than the previous fiscal year. As expected, alternative options for capital and self-funding projects have continued to trend higher.
Merger and acquisition activity among MLPs and other pipeline companies in the last fiscal quarter of the year was largely driven by Energy Transfer’s acquisition of SemGroup Corporation, which at$5.1 billion made up nearly all of the merger and acquisition activity in the quarter. This brought the fiscal year’s announced transactions to $26.6 billion. This is significantly below the previous year when many large simplification transactions were announced. This fiscal year’s activity was driven by three large transactions. In addition to Energy Transfer’s acquisition of SemGroup Corporation, MPLX purchased Andeavor Logistics for approximately $13.5 billion and Pembina Pipeline Corporation purchased two businesses from Kinder Morgan for approximately $4.4 billion combined.
Sustainable infrastructure
Solar
The solar industry is set to install 13 gigawatts (GWs) of capacity in the U.S. in 2019, the second highest annual installation on record. Much of the activity has been concentrated in the southwest and southeast, with Florida and Texas ranking behind California in year-to-date installations. Signed solar PPA prices range from $18-35 megawatts/hour, putting solar on par with new gas generation and competitive with the operating costs of existing coal plants. Costs continue to decline, as evidenced by the 12% decline year-over-year in Q3 2019 to $0.95/watt for utility-scale projects3. On the policy front, the investment tax credit (ITC) is set to phase down for projects beginning construction at the end of 2019. We continue to monitor efforts to extend the ITC as we enter 2020, but do not view an extension as necessary given anticipated continued cost declines.
Wind
Wind installations totaled 1,927 megawatts (MWs) in the third calendar quarter of 2019, reaching a total installed capacity of more than 100,000 MW across the U.S. with an additional 46,500 MW of capacity currently under construction or in advanced development. Nineteen states now have more than 1,000 MW under construction or advanced development. Texas hosts 19% of the total development pipeline, followed by Wyoming (11%), Oklahoma (7%), Iowa, (6%), and Virginia (6%). It is also important to have offtake agreements in place. Currently, 44% of capacity in the pipeline has a Power Purchase Agreement (PPA) in place, while 28% is utility-owned and 6% has a hedge contract4. New developments are largely being driven by corporate customers who have signed 64% of capacity contracted in the third quarter. Turbine technology continues to improve with 22% of new turbines installed year to date rated between 3.4 MW and 3.6 MW in size4.
Social Infrastructure
Education
As campaigns for 2020 elections have intensified, school choice in general, and charter schools specifically, have received increased media attention. In this politically charged atmosphere, it is worth noting that a recent national poll indicated that a significant majority of voters support some form of school of choice (69%) with the overwhelming majority of african-american voters indicating it is an “important priority.” In some faster-growing states, a number of school district superintendents have acknowledged they would be unable to meet increasing enrollment without the growth of charter public schools.
| (unaudited) | |
| Tortoise | 3 |
The market for publicly issued tax-exempt bonds for charter public schools, a proxy for the overall demand and the primary vehicle for charter school facility finance, was exceptionally strong in 2019. Par value of these bonds exceeded $3 billion, including more than $500 million of higher risk, single-investor projects. Chartering laws across the nation do not require school districts or municipalities to provide school buildings for charters, making access to facilities one of the greatest challenges faced by charter school leaders. With less than 10% of charter schools having ever accessed the public tax-exempt bond market, and resistance to purchasing bonds for early-stage charter schools by large, high-yield bond funds, Tortoise believes the unmet demand for private, single-investor capital for charter school facilities to be at least as large as today’s public market for charter school bonds. Tortoise will continue to seek out high-quality and high potential charter schools and selectively invest.
Senior Living
According to the National Investment Center for Seniors Housing and Care (NIC), which is particularly focused on for-profit communities, the national market occupancy for senior housing increased slightly to 88.0% in the third quarter, after falling to 87.7% in the second quarter, its lowest level in eight years.
Occupancy at non-profit communities has presented a different picture. As of the third quarter, not-for-profit senior living occupancy was nearly 7% higher than the for-profit space and the third quarter represented the highest occupancy levels for not-for-profit providers since 2007.
Regardless of its status as a for-profit or non-profit senior living provider, the local variation between market supply/demand seems to be widening while national construction continues to slow. We believe this should help markets with oversupply over the long term.
We remain bullish in the senior living space, with demographic trends in our favor. NIC estimates that 881,000 additional units of senior housing inventory will be needed to serve seniors between 2019 and 2030. If you consider the typical senior living facility size of approximately 100 units, that equates to 8,810 projects.
Project Finance
Demand for energy-related projects within the project finance sector has remained strong as efforts continue to de-carbonize power generation and fuel production throughout the U.S. In particular, there have been several positive renewable natural gas (RNG) updates. In July 2019, the Coalition for Renewable Natural Gas announced that the North American RNG industry had surpassed the 100-facility milestone. This equates to growth of nearly 150% over the past five years, from the 41 projects built between 1982 and 2014 and more than 50 additional projects under construction or in development. This evidences a strengthening of support for landfill gas and anaerobic digester projects that produce RNG. Demand for recycling projects is also growing as circular-economy efforts gain momentum in the areas of landfill avoidance and waste repurposing.
We continue to rely on our deep expertise in each of these areas, as well as our vast respective networks, to seek out opportunities where significant demand and barriers to entry exist and we can be a strategic provider of capital.
Concluding thoughts
We expect plenty of opportunities in essential assets in 2020. We believe there are catalyst driving the social infrastructure sector with the aging population driving housing demand and school of choice being a key driver for charter schools. We are also optimistic across the energy sector where we expect supply and demand will find better balance and companies will shine a brighter light on their cash flow as they return it to shareholders. Our long-term outlook is built around worldwide electricity demand doubling by 2050. In our view, natural gas and renewables need to replace coal in power generation. This is the fastest and most economical way to lower global CO2emissions and improve living standards for people around the globe.
The S&P Energy Select Sector®Index is a capitalization-weighted index of S&P 500®Index companies in the energy sector involved in the development or production of energy products. The Tortoise North American Oil and Gas Producers IndexSMis a float-adjusted, capitalization-weighted index of North American energy companies engaged primarily in the production of crude oil, condensate, natural gas or natural gas liquids (NGLs). The Tortoise North American Pipeline IndexSMis a float adjusted, capitalization-weighted index of energy pipeline companies domiciled in the United States and Canada. The Tortoise MLP Index®is a float-adjusted, capitalization-weighted index of energy master limited partnerships.
The Tortoise indices are the exclusive property of Tortoise Index Solutions, LLC, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) to calculate and maintain the Tortoise MLP Index®, Tortoise North American Pipeline IndexSMand Tortoise North American Oil and Gas Producers IndexSM(the “Indices”). The Indices are not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, “S&P Dow Jones Indices LLC”). S&P Dow Jones Indices will not be liable for any errors or omission in calculating the Indices. “Calculated by S&P Dow Jones Indices” and its related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Tortoise Index Solutions, LLC and its affiliates.S&P®is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones®is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).
It is not possible to invest directly in an index.
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost.
| 1 | Energy Information Administration, Short-Term Outlook, December 2019 |
| 2 | BTU Analytics |
| 3 | Wood MacKenzie, power and renewables, December 2019 |
| 4 | AWEA July-September 2019 |
| (unaudited) | |
| 4 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise |
| Energy Infrastructure Corp. (TYG) |
Fund description
TYG seeks a high level of total return with an emphasis on current distributions paid to stockholders. TYG invests primarily in equity securities of master limited partnerships (MLPs) and their affiliates that transport, gather, process or store natural gas, natural gas liquids (NGLs), crude oil and refined petroleum products.
Fund performance review
Midstream energy performance lagged broader energy for the fourth fiscal quarter, but outperformed for the fiscal year. A combination of concerns regarding a slowdown in U.S. production growth, political rhetoric regarding proposed frack bans from Democratic candidates, and tax loss selling largely contributed to midstream underperformance for the fiscal quarter. Coverage and leverage has improved for many midstream companies. The average coverage ratio for the fund’s portfolio companies was 1.40x in 3Q2019 while average leverage was 3.80x. Since the fund’s inception, it has paid out more than $35 in cumulative distributions to stockholders. The fund’s market-based and NAV-based returns for the fiscal year ending November 30, 2019 were -15.5% and -16.4%, respectively (including the reinvestment of distributions). Comparatively, the Tortoise MLP Index®returned -7.0% for the same period.
| 2019 fiscal year highlights | ||
| Distributions paid per share (fiscal year 2019) | $2.6200 | |
| Distribution paid per share (4th quarter 2019) | $0.6550 | |
| Distribution rate (as of 11/30/2019) | 15.6% | |
| Quarter-over-quarter distribution increase | 0.0% | |
| Year-over-year distribution increase | 0.0% | |
| Cumulative distributions paid per share to stockholders since inception in February 2004 | $35.7025 | |
| Market-based total return | (15.5)% | |
| NAV-based total return | (16.4)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (2.8)% |
Key asset performance drivers
| Top five contributors | Company type | Performance driver | ||
| Buckeye Partners, L.P. | Midstream refined product pipeline MLP | Acquired at a premium | ||
| MTP Energy KMAA LLC – Private | Midstream natural gas | The underlying company was acquired for a premium | ||
| Phillips 66 Partners LP | Midstream refined product pipeline MLP | Eliminated incentive distribution rights (IDRs) leading to a lower cost of capital | ||
| Western Gas Partners LP | Midstream gathering and processing MLP | Clarity on Colorado drilling legislation and close of LP/GP merger | ||
| NuStar Energy L.P. | Refined products pipelines MLP | Strong volume growth from Permian and outlook for St. James and Corpus Christi assets | ||
| Bottom five contributors | Company type | Performance driver | ||
| EQM Midstream Partners, LP | Midstream natural gas/natural gas liquids pipeline MLP | Uncertainty around Mountain Valley Pipeline project combined with potential for slowing drilling activity in the Marcellus | ||
| Antero Midstream Corporation | Midstream gathering and processing company | Concerns around potential recontracting of gathering and process contracts and financial health of parent company Antero Resources (AR) as natural gas prices moved lower | ||
| Western Midstream Partners, LP | Midstream gathering and processing MLP | Carrying out strategic review | ||
| EnLink Midstream, LLC | Midstream gathering and processing company | Concern around producers slowing drilling activity in Oklahoma | ||
| MPLX LP | Refined products pipeline MLP | Continued uncertainty regarding organizational structure and parental support combined with north east natural G&P exposure |
Unlike the fund return, index return is pre-expenses and taxes.
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| Tortoise | 5 |
| Tortoise |
| Energy Infrastructure Corp. (TYG)(continued) |
Fund structure and distribution policy
The fund is structured as a corporation and is subject to federal and state income tax on its taxable income. The fund has adopted a distribution policy in which the Board of Directors considers many factors in determining distributions to stockholders. Over the long term, the fund expects to distribute substantially all of its distributable cash flow (DCF) to holders of common stock. The fund’s Board of Directors reviews the distribution rate quarterly, and may adjust the quarterly distribution throughout the year. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
DCF is distributions received from investments less expenses. The total distributions received from investments include the amount received as cash distributions from investments, paid-in-kind distributions, and dividend and interest payments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses, leverage costs and current income taxes. Current income taxes include taxes paid on net investment income, in addition to foreign taxes, if any. Taxes incurred from realized gains on the sale of investments, expected tax benefits and deferred taxes are not included in DCF.
Income from investments increased approximately 3.3% as compared to 3rd quarter 2019 primarily due to increased distribution rates on investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 9.7% during the quarter due to lower asset-based fees. Overall leverage costs decreased approximately 3.9% as compared to 3rd quarter 2019 primarily due to leverage utilization during the quarter. As a result of the changes in income and expenses, DCF increased approximately 7.1% as compared to 3rd quarter 2019. The fund paid a quarterly distribution of $0.655 per share, which was equal to the distribution paid in the prior quarter and 4th quarter 2018. The fund has paid cumulative distributions to stockholders of $35.7025 per share since its inception in Feb. 2004.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between distributions received from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distribution income from MLPs and other investments on their ex-dates, whereas the DCF calculation may reflect distribution income on their pay dates; GAAP recognizes that a significant portion of the cash distributions received from MLPs and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital (net of any distributions deemed to be return of principal); and distributions received from investments in the DCF calculation include the value of dividends paid-in-kind (additional stock or MLP units), whereas such amounts may not be included as income for GAAP purposes and includes distributions related to direct investments when the purchase price is reduced in lieu of receiving cash distributions. Net premiums onoptions written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during the fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses). Income for DCF purposes is reduced by amortizing the cost of certain investments that may not have a residual value after a known time period and by distributions received from investments deemed to be return of principal. The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. In addition to the total operating expenses, including fee waiver, as disclosed in the Statement of Operations, the DCF calculation reflects interest expense, realized and unrealized gains (losses) on interest rate swap settlements, distributions to preferred stockholders, other recurring leverage expenses, as well as taxes paid on net investment income.
“Net Investment Income (Loss), before Income Taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | |||||||
| Net Investment Loss, | ||||||||
| before Income Taxes | $ | (18,708 | ) | $ | (4,719 | ) | ||
| Adjustments to reconcile to DCF: | ||||||||
| Distributions characterized as | ||||||||
| return of capital, net | 149,182 | 38,218 | ||||||
| Other | 1,655 | 729 | ||||||
| DCF | $ | 132,129 | $ | 34,228 | ||||
Leverage
The fund’s leverage utilization decreased $65.0 million during 4th quarter 2019 and represented 37.1% of total assets at November 30, 2019. The fund has maintained compliance with its applicable coverage ratios. At year-end, including the impact of interest rate swaps, approximately 79% of the leverage cost was fixed, the weighted-average maturity was 3.3 years and the weighted-average annual rate on leverage was 3.66%. During the quarter, Series CC notes, with a notional amount of $15,000,000 and a fixed rate of 3.48% were paid in full upon maturity. These rates will vary in the future as a result of changing floating rates, utilization of the fund’s credit facilities and as leverage and swaps mature or are redeemed.
Income taxes
During 4th quarter 2019, the fund’s deferred tax liability decreased by $39.4 million to $116.5 million, primarily as a result of a decrease in value of its investment portfolio. The fund had net realized losses of $6.5 million during the quarter. To the extent that the fund has taxable income, it will owe federal and state income taxes. Tax payments can be funded from investment earnings, fund assets, or borrowings.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage, taxes and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions and results and recent tax reform, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| 6 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TYG Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Year Ended November 30, | 2018 | 2019 | |||||||||||||||||||||||||||||||||
| 2018 | 2019 | Q4(1) | Q1(1) | Q2(1) | Q3(1) | Q4(1) | |||||||||||||||||||||||||||||
| Total Income from Investments | |||||||||||||||||||||||||||||||||||
| Distributions and dividends | |||||||||||||||||||||||||||||||||||
| from investments | $ | 177,860 | $ | 174,696 | $ | 44,214 | $ | 43,148 | $ | 44,564 | $ | 42,910 | $ | 44,074 | |||||||||||||||||||||
| Dividends paid in kind | 2,752 | 801 | 113 | 115 | 117 | 269 | 300 | ||||||||||||||||||||||||||||
| Interest earned on corporate bonds | — | 467 | — | — | — | 119 | 348 | ||||||||||||||||||||||||||||
| Premiums on options written | 1,274 | 3,267 | 1,258 | 793 | 1,092 | 668 | 714 | ||||||||||||||||||||||||||||
| Total from investments | 181,886 | 179,231 | 45,585 | 44,056 | 45,773 | 43,966 | 45,436 | ||||||||||||||||||||||||||||
| Operating Expenses Before Leverage | |||||||||||||||||||||||||||||||||||
| Costs and Current Taxes | |||||||||||||||||||||||||||||||||||
| Advisory fees, net of fees waived | 21,466 | 19,522 | 5,392 | 4,849 | 5,215 | 4,979 | 4,479 | ||||||||||||||||||||||||||||
| Other operating expenses | 1,741 | 1,624 | 438 | 415 | 420 | 407 | 382 | ||||||||||||||||||||||||||||
| 23,207 | 21,146 | 5,830 | 5,264 | 5,635 | 5,386 | 4,861 | |||||||||||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 158,679 | 158,085 | 39,755 | 38,792 | 40,138 | 38,580 | 40,575 | ||||||||||||||||||||||||||||
| Leverage costs(2) | 26,088 | 25,956 | 6,561 | 6,365 | 6,637 | 6,607 | 6,347 | ||||||||||||||||||||||||||||
| Current income tax expense(3) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Distributable Cash Flow(4) | $ | 132,591 | $ | 132,129 | $ | 33,194 | $ | 32,427 | $ | 33,501 | $ | 31,973 | $ | 34,228 | |||||||||||||||||||||
| Net realized gain (loss), net of | |||||||||||||||||||||||||||||||||||
| income taxes, for the period | $ | 42,565 | $ | 29,053 | $ | (45,158 | ) | $ | (10,210 | ) | $ | 10,905 | $ | 34,895 | $ | (6,537 | ) | ||||||||||||||||||
| As a percent of average total assets(5) | |||||||||||||||||||||||||||||||||||
| Total from investments | 7.75 | % | 8.55 | % | 7.91 | % | 8.61 | % | 8.42 | % | 8.38 | % | 9.71 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 1.01 | % | 1.03 | % | 1.01 | % | 1.03 | % | 1.04 | % | 1.03 | % | 1.04 | % | |||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 6.74 | % | 7.52 | % | 6.90 | % | 7.58 | % | 7.38 | % | 7.35 | % | 8.67 | % | |||||||||||||||||||||
| As a percent of average net assets(5) | |||||||||||||||||||||||||||||||||||
| Total from investments | 12.81 | % | 14.51 | % | 12.90 | % | 14.36 | % | 14.01 | % | 14.41 | % | 17.12 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 1.67 | % | 1.76 | % | 1.65 | % | 1.72 | % | 1.72 | % | 1.77 | % | 1.83 | % | |||||||||||||||||||||
| Leverage costs and current taxes | 1.88 | % | 2.16 | % | 1.86 | % | 2.08 | % | 2.03 | % | 2.17 | % | 2.39 | % | |||||||||||||||||||||
| Distributable cash flow | 9.26 | % | 10.59 | % | 9.39 | % | 10.56 | % | 10.26 | % | 10.47 | % | 12.90 | % | |||||||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||||||||||||||
| Distributions paid on common stock | $ | 138,298 | $ | 140,588 | $ | 35,131 | $ | 35,131 | $ | 35,131 | $ | 35,131 | $ | 35,195 | |||||||||||||||||||||
| Distributions paid on common stock | |||||||||||||||||||||||||||||||||||
| per share | 2.6200 | 2.6200 | 0.6550 | 0.6550 | 0.6550 | 0.6550 | 0.6550 | ||||||||||||||||||||||||||||
| Total assets, end of period(6) | 2,136,339 | 1,680,775 | 2,136,339 | 2,129,174 | 2,110,273 | 1,951,035 | 1,680,775 | ||||||||||||||||||||||||||||
| Average total assets during period(6)(7) | 2,293,998 | 2,044,102 | 2,311,256 | 2,074,901 | 2,157,919 | 2,080,591 | 1,876,534 | ||||||||||||||||||||||||||||
| Leverage(8) | 652,100 | 623,900 | 652,100 | 679,100 | 683,700 | 688,900 | 623,900 | ||||||||||||||||||||||||||||
| Leverage as a percent of total assets | 30.5 | % | 37.1 | % | 30.5 | % | 31.9 | % | 32.4 | % | 35.3 | % | 37.1 | % | |||||||||||||||||||||
| Net unrealized depreciation, | |||||||||||||||||||||||||||||||||||
| end of period | (338,892 | ) | (543,310 | ) | (338,892 | ) | (302,159 | ) | (300,530 | ) | (421,920 | ) | (543,310 | ) | |||||||||||||||||||||
| Net assets, end of period | 1,260,300 | 930,286 | 1,260,300 | 1,245,766 | 1,220,946 | 1,097,489 | 930,286 | ||||||||||||||||||||||||||||
| Average net assets during period(9) | 1,388,683 | 1,203,943 | 1,417,581 | 1,243,981 | 1,296,336 | 1,210,078 | 1,064,735 | ||||||||||||||||||||||||||||
| Net asset value per common share | 23.50 | 17.31 | 23.50 | 23.23 | 22.76 | 20.43 | 17.31 | ||||||||||||||||||||||||||||
| Market value per share | 22.59 | 16.82 | 22.59 | 22.91 | 21.90 | 20.39 | 16.82 | ||||||||||||||||||||||||||||
| Shares outstanding (000’s) | 53,635 | 53,732 | 53,635 | 53,635 | 53,635 | 53,732 | 53,732 | ||||||||||||||||||||||||||||
| (1) | Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November. |
| (2) | Leverage costs include interest expense, distributions to preferred stockholders, interest rate swap expenses and other recurring leverage expenses. |
| (3) | Includes taxes paid on net investment income and foreign taxes, if any. Taxes related to realized gains are excluded from the calculation of Distributable Cash Flow (“DCF”). |
| (4) | “Net investment income (loss), before income taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF: increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind, the net premiums on options written and amortization of debt issuance costs; and decreased by realized and unrealized gains (losses) on interest rate swap settlements, distributions received that are excluded for DCF purposes and amortization on certain investments. |
| (5) | Annualized for periods less than one full year. |
| (6) | Includes deferred issuance and offering costs on senior notes and preferred stock. |
| (7) | Computed by averaging month-end values within each period. |
| (8) | Leverage consists of senior notes, preferred stock and outstanding borrowings under credit facilities. |
| (9) | Computed by averaging daily net assets within each period. |
| Tortoise | 7 |
| Tortoise |
| Midstream Energy Fund, Inc. (NTG) |
Fund description
NTG seeks to provide stockholders with a high level of total return with an emphasis on current distributions. NTG invests primarily in midstream energy equities that own and operate a network of pipeline and energy related logistical infrastructure assets with an emphasis on those that transport, gather, process and store natural gas and natural gas liquids (NGLs). NTG targets midstream energy equities, including MLPs benefiting from U.S. natural gas production and consumption expansion, with minimal direct commodity exposure.
Fund performance review
Midstream energy performance lagged broader energy for the fourth fiscal quarter, but outperformed for the fiscal year. A combination of concerns regarding a slowdown in U.S. production growth, political rhetoric regarding proposed frack bans from Democratic candidates, and tax loss selling largely contributed to midstream underperformance for the fiscal quarter. Coverage and leverage has improved for many midstream companies. The average coverage ratio for the fund’s portfolio companies was 1.42x in 3Q2019 while average leverage was 3.82x.
The fund’s market-based and NAV-based returns for the fiscal year ending November 30, 2019 were -17.6% and -16.6%, respectively (including the reinvestment of distributions). Comparatively, the Tortoise MLP Index®returned -7.0% for the same period.
| 2019 fiscal year highlights | ||
| Distributions paid per share (fiscal year 2019) | $1.6900 | |
| Distributions paid per share (4th quarter 2019) | $0.4225 | |
| Distribution rate (as of 11/30/2019) | 17.1% | |
| Quarter-over-quarter distribution increase | 0.0% | |
| Year-over-year distribution increase | 0.0% | |
| Cumulative distributions paid per share to | ||
| stockholders since inception in July 2010 | $15.4600 | |
| Market-based total return | (17.6)% | |
| NAV-based total return | (16.6)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (6.4)% |
Key asset performance drivers
| Top five contributors | Company type | Performance driver | ||
| Buckeye Partners, L.P. | Midstream refined product pipeline MLP | Acquired at a premium | ||
| Western Gas Partners LP | Midstream gathering and processing MLP | Clarity on Colorado drilling legislation and close of LP/GP merger | ||
| NuStar Energy L.P. | Refined products pipelines MLP | Strong volume growth from Permian and outlook for St. James and Corpus Christi assets | ||
| ONEOK, Inc. | Midstream natural gas/natural gas liquids pipeline company | Continued execution of backlog of infrastructure projects with high returns | ||
| Phillips 66 Partners LP | Midstream refined product pipeline MLP | Eliminated incentive distribution rights (IDRs) leading to a lower cost of capital | ||
| Bottom five contributors | Company type | Performance driver | ||
| EQM Midstream Partners, LP | Midstream natural gas/natural gas liquids pipeline MLP | Uncertainty around Mountain Valley Pipeline project combined with potential for slowing drilling activity in the Marcellus | ||
| Western Midstream Partners, LP | Midstream gathering and processing MLP | Carrying out strategic review | ||
| Antero Midstream Corporation | Midstream gathering and processing company | Concerns around potential recontracting of gathering and process contracts and financial health of parent company Antero Resources (AR) as natural gas prices moved lower | ||
| EnLink Midstream, LLC | Midstream gathering and processing company | Concern around producers slowing drilling activity in Oklahoma | ||
| MPLX LP | Refined products pipeline MLP | Continued uncertainty regarding organizational structure and parental support combined with north east natural G&P exposure |
Unlike the fund return, index return is pre-expenses and taxes.
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| 8 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
Fund structure and distribution policy
The fund is structured as a corporation and is subject to federal and state income tax on its taxable income. The fund has adopted a distribution policy in which the Board of Directors considers many factors in determining distributions to stockholders. Over the long term, the fund expects to distribute substantially all of its distributable cash flow (DCF) to holders of common stock. The fund’s Board of Directors reviews the distribution rate quarterly, and may adjust the quarterly distribution throughout the year. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
DCF is distributions received from investments less expenses. The total distributions received from investments include the amount received as cash distributions from MLPs, paid-in-kind distributions, and dividend and interest payments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses, leverage costs and current income taxes. Current income taxes include taxes paid on net investment income in addition to foreign taxes, if any. Taxes incurred from realized gains on the sale of investments, expected tax benefits and deferred taxes are not included in DCF.
Income from investments increased approximately 0.8% as compared to 3rd quarter 2019 primarily due to increased distribution rates on investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 10.2% during the quarter due to lower asset-based fees. Leverage costs decreased approximately 4.5% as compared to 3rd quarter 2019 primarily due to lower leverage utilization during the quarter. As a result of the changes in income and expenses, DCF increased approximately 3.7% as compared to 3rd quarter 2019. The fund paid a quarterly distribution of $0.4225 per share, which was equal to the distribution paid in the prior quarter and 4th quarter 2018. The fund has paid cumulative distributions to stockholders of $15.46 per share since its inception in July 2010.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between distributions received from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distribution income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distribution income on their pay dates; GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; and distributions received from investments in the DCF calculation include the value of dividends paid-in-kind (additional stock or MLP units), whereas such amounts may not be included as income for GAAP purposes, and includes distributions related to direct investments when the purchase price is reduced in lieu ofreceiving cash distributions. Net premiums on options written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during the fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses). The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. In addition to the total operating expenses, including fee waiver, as disclosed in the Statement of Operations, the DCF calculation reflects interest expense, distributions to preferred stockholders, other recurring leverage expenses, as well as taxes paid on net investment income.
“Net Investment Income (Loss), before Income Taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | |||||||
| Net Investment Loss, | ||||||||
| before Income Taxes | $ | (21,284 | ) | $ | (4,564 | ) | ||
| Adjustments to reconcile to DCF: | ||||||||
| Distributions characterized | ||||||||
| as return of capital | 112,443 | 27,870 | ||||||
| Other | 3,833 | 1,075 | ||||||
| DCF | $ | 94,992 | $ | 24,381 | ||||
Leverage
The fund’s leverage utilization decreased by $65.5 million during 4th quarter 2019 and represented 39.8% of total assets at November 30, 2019. The fund has maintained compliance with its applicable coverage ratios. At year-end, approximately 84% of the leverage cost was fixed, the weighted-average maturity was 3.3 years and the weighted-average annual rate on leverage was 3.84%. During the quarter, Series K notes, with a notional amount of $35,000,000 and a floating rate based on 3-month LIBOR plus 1.30% were paid in full upon maturity. These rates will vary in the future as a result of changing floating rates, utilization of the fund’s credit facility and as leverage matures or is redeemed.
Income taxes
During 4th quarter 2019, the fund’s deferred tax liability decreased by $28.3 million to $27.9 million, primarily as a result of the decrease in value of its investment portfolio. The fund had net realized losses of $8.6 million during the quarter. As of November 30, 2019, the fund had net operating losses of $1.3 million and capital loss carryforwards of $26.9 million for federal income tax purposes.To the extent that the fund has taxable income in the future that is not offset by net operating losses, it will owe federal and state income taxes. Tax payments can be funded from investment earnings, fund assets, or borrowings.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage, taxes and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions and results and recent tax reform, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| Tortoise | 9 |
| NTG Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Year Ended November 30, | 2018 | 2019 | |||||||||||||||||||||||||||||||||
| 2018 | 2019 | Q4(1) | Q1(1) | Q2(1) | Q3(1) | Q4(1) | |||||||||||||||||||||||||||||
| Total Income from Investments | |||||||||||||||||||||||||||||||||||
| Distributions and dividends | |||||||||||||||||||||||||||||||||||
| from investments | $ | 115,952 | $ | 125,782 | $ | 31,874 | $ | 31,399 | $ | 31,824 | $ | 31,244 | $ | 31,315 | |||||||||||||||||||||
| Dividends paid in kind | 1,879 | 518 | 68 | 69 | 70 | 179 | 200 | ||||||||||||||||||||||||||||
| Interest earned on corporate bonds | 315 | — | — | — | 85 | 230 | |||||||||||||||||||||||||||||
| Premiums on options written | 1,254 | 3,300 | 1,254 | 542 | 890 | 927 | 941 | ||||||||||||||||||||||||||||
| Total from investments | 119,085 | 129,915 | 33,196 | 32,010 | 32,784 | 32,435 | 32,686 | ||||||||||||||||||||||||||||
| Operating Expenses Before Leverage | |||||||||||||||||||||||||||||||||||
| Costs and Current Taxes | |||||||||||||||||||||||||||||||||||
| Advisory fees, net of fees waived | 12,863 | 13,531 | 3,264 | 3,145 | 3,715 | 3,526 | 3,145 | ||||||||||||||||||||||||||||
| Other operating expenses | 1,319 | 1,271 | 352 | 334 | 324 | 312 | 301 | ||||||||||||||||||||||||||||
| 14,182 | 14,802 | 3,616 | 3,479 | 4,039 | 3,838 | 3,446 | |||||||||||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 104,903 | 115,113 | 29,580 | 28,531 | 28,745 | 28,597 | 29,240 | ||||||||||||||||||||||||||||
| Leverage costs(2) | 17,304 | 20,121 | 4,749 | 4,999 | 5,175 | 5,088 | 4,859 | ||||||||||||||||||||||||||||
| Current income tax expense(3) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||
| Distributable Cash Flow(4) | $ | 87,599 | $ | 94,992 | $ | 24,831 | $ | 23,532 | $ | 23,570 | $ | 23,509 | $ | 24,381 | |||||||||||||||||||||
| Net realized gain (loss), net of | |||||||||||||||||||||||||||||||||||
| income taxes, for the period | $ | 46,530 | $ | (35,176 | ) | $ | (4,243 | ) | $ | (29,889 | ) | $ | (6,278 | ) | $ | 9,631 | $ | (8,640 | ) | ||||||||||||||||
| As a percent of average total assets(5) | |||||||||||||||||||||||||||||||||||
| Total from investments | 8.11 | % | 8.69 | % | 8.38 | % | 8.81 | % | 8.46 | % | 8.73 | % | 9.96 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 0.99 | % | 1.02 | % | 0.91 | % | 0.96 | % | 1.04 | % | 1.03 | % | 1.05 | % | |||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 7.12 | % | 7.67 | % | 7.47 | % | 7.85 | % | 7.42 | % | 7.70 | % | 8.91 | % | |||||||||||||||||||||
| As a percent of average net assets(5) | |||||||||||||||||||||||||||||||||||
| Total from investments | 13.07 | % | 14.43 | % | 13.08 | % | 14.36 | % | 13.79 | % | 14.70 | % | 17.18 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs and current taxes | 1.60 | % | 1.70 | % | 1.42 | % | 1.56 | % | 1.70 | % | 1.74 | % | 1.81 | % | |||||||||||||||||||||
| Leverage costs and current taxes | 1.95 | % | 2.31 | % | 1.87 | % | 2.24 | % | 2.18 | % | 2.31 | % | 2.55 | % | |||||||||||||||||||||
| Distributable cash flow | 9.52 | % | 10.42 | % | 9.79 | % | 10.56 | % | 9.91 | % | 10.65 | % | 12.82 | % | |||||||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||||||||||||||
| Distributions paid on common stock | $ | 86,693 | $ | 106,822 | $ | 26,705 | $ | 26,706 | $ | 26,705 | $ | 26,706 | $ | 26,705 | |||||||||||||||||||||
| Distributions paid on common stock | |||||||||||||||||||||||||||||||||||
| per share | 1.6900 | 1.6900 | 0.4225 | 0.4225 | 0.4225 | 0.4225 | 0.4225 | ||||||||||||||||||||||||||||
| Total assets, end of period(6) | 1,506,745 | 1,163,500 | 1,506,745 | 1,508,643 | 1,498,278 | 1,380,446 | 1,163,500 | ||||||||||||||||||||||||||||
| Average total assets during period(6)(7) | 1,429,518 | 1,447,092 | 1,588,197 | 1,472,955 | 1,536,794 | 1,473,596 | 1,316,053 | ||||||||||||||||||||||||||||
| Leverage(8) | 517,100 | 462,600 | 517,100 | 522,600 | 527,300 | 528,100 | 462,600 | ||||||||||||||||||||||||||||
| Leverage as a percent of total assets | 34.3 | % | 39.8 | % | 34.3 | % | 34.6 | % | 35.2 | % | 38.3 | % | 39.8 | % | |||||||||||||||||||||
| Net unrealized appreciation (depreciation), | |||||||||||||||||||||||||||||||||||
| end of period | 23,424 | (64,329 | ) | 23,424 | 75,853 | 93,595 | 15,163 | (64,329 | ) | ||||||||||||||||||||||||||
| Net assets, end of period | 915,033 | 667,708 | 915,033 | 905,859 | 886,270 | 786,294 | 667,708 | ||||||||||||||||||||||||||||
| Average net assets during period(9) | 887,014 | 871,496 | 1,018,337 | 903,917 | 943,080 | 875,555 | 762,956 | ||||||||||||||||||||||||||||
| Net asset value per common share | 14.48 | 10.56 | 14.48 | 14.33 | 14.02 | 12.44 | 10.56 | ||||||||||||||||||||||||||||
| Market value per common share | 13.72 | 9.88 | 13.72 | 13.66 | 13.21 | 12.03 | 9.88 | ||||||||||||||||||||||||||||
| Shares outstanding (000’s) | 63,208 | 63,208 | 63,208 | 63,208 | 63,208 | 63,208 | 63,208 | ||||||||||||||||||||||||||||
| (1) | Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November. |
| (2) | Leverage costs include interest expense, distributions to preferred stockholders and other recurring leverage expenses. |
| (3) | Includes taxes paid on net investment income and foreign taxes, if any. Taxes related to realized gains are excluded from the calculation of Distributable Cash Flow (“DCF”). |
| (4) | “Net investment income (loss), before income taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF: increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind and amortization of debt issuance costs. |
| (5) | Annualized for periods less than one full year. |
| (6) | Includes deferred issuance and offering costs on senior notes and preferred stock. |
| (7) | Computed by averaging month-end values within each period. |
| (8) | Leverage consists of senior notes, preferred stock and outstanding borrowings under the credit facility. |
| (9) | Computed by averaging daily net assets within each period. |
| 10 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise |
| Pipeline & Energy Fund, Inc. (TTP) |
Fund description
TTP seeks a high level of total return with an emphasis on current distributions paid to stockholders. TTP invests primarily in equity securities of North American pipeline companies that transport natural gas, natural gas liquids (NGLs), crude oil and refined products and, to a lesser extent, in other energy infrastructure companies.
Fund performance review
Midstream energy performance lagged broader energy for the fourth fiscal quarter, but outperformed for the fiscal year. A combination of concerns regarding a slowdown in U.S. production growth, political rhetoric regarding proposed frack bans from Democratic candidates, and tax loss selling largely contributed to midstream underperformance for the fiscal quarter. The fund’s market-based and NAV-based returns for the fiscal year ending November 30, 2019 were -11.1% and -12.0%, respectively (including the reinvestment of distributions). Comparatively, the Tortoise North American Pipeline IndexSMreturned 5.9% for the same period.
| 2019 fiscal year highlights | ||
| Distributions paid per share (fiscal year 2019) | $1.3850 | |
| Distributions paid per share (4th quarter 2019) | $0.2850 | |
| Distribution rate (as of 11/30/2019) | 9.9% | |
| Quarter-over-quarter distribution increase (decrease) | (0.0)% | |
| Year-over-year distribution increase (decrease) | (30.1)% | |
| Cumulative distributions paid per share to | ||
| stockholders since inception in October 2011 | $13.1125 | |
| Market-based total return | (11.1)% | |
| NAV-based total return | (12.0)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (11.2)% | |
Please refer to the inside front cover of the report for important information about the fund’s distribution policy
The fund’s covered call strategy, which focuses on independent energy companies that are key pipeline transporters, enabled the fund to generate current income. The notional amount of the fund’s covered calls averaged approximately 6% of total assets, and their out-of-the-money percentage at the time written averaged approximately 9% during the fiscal quarter.
Key asset performance drivers
| Top five contributors | Company type | Performance driver | ||
| Enbridge Inc. | Midstream crude oil pipeline company | Visible dividend growth of 5-7% in 2020+ | ||
| ONEOK, Inc. | Midstream natural gas/natural gas liquids pipeline company | Continued execution of backlog of infrastructure projects with high returns | ||
| Buckeye Partners, L.P. | Midstream refined product pipeline MLP | Acquired at a premium | ||
| NuStar Energy L.P. | Refined products pipelines MLP | Strong volume growth from Permian and outlook for St. James and Corpus Christi assets | ||
| Inter Pipeline Ltd. | Midstream crude oil | Bid to acquire the company | ||
| pipeline company | in corporate transaction | |||
| Bottom five contributors | Company type | Performance driver | ||
| Antero Midstream Corporation | Midstream gathering and processing company | Concerns around potential recontracting of gathering and process contracts and financial health of parent company Antero Resources (AR) as natural gas prices moved lower | ||
| EnLink Midstream, LLC | Midstream gathering and processing company | Concern around producers slowing drilling activity in Oklahoma | ||
| Equitrans Midstream Corporation | Midstream natural gas/natural gas liquids pipeline company | Uncertainty around Mountain Valley Pipeline project | ||
| Plains GP Holdings, L.P. | Midstream crude oil pipeline company | Uncertain crude oil production growth from Permian in 2020 leading to concerns to potential of over build | ||
| MPLX LP | Refined products pipeline MLP | Continued uncertainty regarding organizational structure and parental support combined with north east natural G&P exposure |
Unlike the fund return, index return is pre-expenses.
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| Tortoise | 11 |
| Tortoise |
| Pipeline & Energy Fund, Inc. (TTP) (continued) |
Fund structure and distribution policy
The fund is structured to qualify as a Regulated Investment Company (RIC) allowing it to pass-through to shareholders income and capital gains earned, thus avoiding double-taxation. To qualify as a RIC, the fund must meet specific income, diversification and distribution requirements. Regarding income, at least 90 percent of the fund’s gross income must be from dividends, interest and capital gains. The fund must meet quarterly diversification requirements including the requirement that at least 50 percent of the assets be in cash, cash equivalents or other securities with each single issuer of other securities not greater than 5 percent of total assets. No more than 25 percent of total assets can be invested in any one issuer other than government securities or other RIC’s. The fund must also distribute at least 90 percent of its investment company income. RIC’s are also subject to excise tax rules which require RIC’s to distribute approximately 98 percent of net income and net capital gains to avoid a 4 percent excise tax.
The fund has adopted a distribution policy which is included on the inside front cover of this report. To summarize, the fund intends to distribute an amount closely approximating the total taxable income for the year and, if so determined by the Board, distribute all or a portion of the return of capital paid by portfolio companies during the year. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last calendar quarter of the year to meet annual excise distribution requirements. The fund distributes a fixed amount per common share, currently $0.285, each quarter to its common shareholders. This amount is subject to change from time to time at the discretion of the Board. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
Distributable cash flow (DCF) is income from investments less expenses. Income from investments includes the amount received as cash or paid-in-kind distributions from common stock, master limited partnerships (MLPs), affiliates of MLPs, and pipeline and other energy companies in which the fund invests, and dividend payments on short-term investments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses and leverage costs.
Income from investments decreased approximately 10.0% as compared to 3rd quarter 2019, primarily due to lower premiums from covered call options. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 8.2% during the quarter, primarily due to lower asset-based fees. Leverage costs decreased 2.7% as compared to 3rd quarter 2019 primarily as a result of a decrease in interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 11.6% as compared to 3rd quarter 2019. In addition, the fund had net realized losses on investments of $1.5 million during 4th quarter 2019. The fund paid a quarterly distribution of $0.285 per share, which was equal to the distribution paid in the prior quarter and a decrease of 30% from the 4th quarter 2018. The fund has paid cumulative distributions to stockholders of $13.1125 per share since its inception in October 2011.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distributions and dividend income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distributions and dividend income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes; and (4) net premiums on options written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during the fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses).
“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | |||||||
| Net Investment Loss | $ | (1,236 | ) | $ | (71 | ) | ||
| Adjustments to reconcile to DCF: | ||||||||
| Net premiums on options written | 3,623 | 484 | ||||||
| Distributions characterized | ||||||||
| as return of capital | 11,183 | 2,671 | ||||||
| Other | 261 | 69 | ||||||
| DCF | $ | 13,831 | $ | 3,153 | ||||
Leverage
The fund’s leverage utilization increased by $0.3 million during 4th quarter 2019 and represented 32.1% of total assets at November 30, 2019. The fund has maintained compliance with its applicable coverage ratios. At year-end, approximately 71% of the leverage cost was fixed, the weighted-average maturity was 2.9 years and the weighted-average annual rate on leverage was 3.82%. These rates will vary in the future as a result of changing floating rates, utilization of the fund’s credit facility and as leverage matures or is redeemed.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| 12 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TTP Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Year Ended November 30, | 2018 | 2019 | |||||||||||||||||||||||||||||||||
| 2018 | 2019 | Q4(1) | Q1(1) | Q2(1) | Q3(1) | Q4(1) | |||||||||||||||||||||||||||||
| Total Income from Investments | |||||||||||||||||||||||||||||||||||
| Dividends and distributions | |||||||||||||||||||||||||||||||||||
| from investments, net of | |||||||||||||||||||||||||||||||||||
| foreign taxes withheld | $ | 14,738 | $ | 15,444 | $ | 3,649 | $ | 3,617 | $ | 4,032 | $ | 3,905 | $ | 3,890 | |||||||||||||||||||||
| Dividends paid in kind | 1,796 | 237 | 422 | 53 | 54 | 62 | 68 | ||||||||||||||||||||||||||||
| Net premiums on options written | 4,808 | 3,622 | 1,154 | 1,133 | 1,039 | 967 | 483 | ||||||||||||||||||||||||||||
| Total from investments | 21,342 | 19,303 | 5,225 | 4,803 | 5,125 | 4,934 | 4,441 | ||||||||||||||||||||||||||||
| Operating Expenses Before | |||||||||||||||||||||||||||||||||||
| Leverage Costs | |||||||||||||||||||||||||||||||||||
| Advisory fees, net of fees waived | 2,845 | 2,414 | 696 | 606 | 643 | 602 | 563 | ||||||||||||||||||||||||||||
| Other operating expenses | 605 | 549 | 147 | 146 | 149 | 138 | 116 | ||||||||||||||||||||||||||||
| 3,450 | 2,963 | 843 | 752 | 792 | 740 | 679 | |||||||||||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs | 17,892 | 16,340 | 4,382 | 4,051 | 4,333 | 4,194 | 3,762 | ||||||||||||||||||||||||||||
| Leverage costs(2) | 2,582 | 2,509 | 668 | 641 | 633 | 626 | 609 | ||||||||||||||||||||||||||||
| Distributable Cash Flow(3) | $ | 15,310 | $ | 13,831 | $ | 3,714 | $ | 3,410 | $ | 3,700 | $ | 3,568 | $ | 3,153 | |||||||||||||||||||||
| Net realized loss on investments | |||||||||||||||||||||||||||||||||||
| and foreign currency translation, | |||||||||||||||||||||||||||||||||||
| for the period | $ | (356 | ) | $ | (16,707 | ) | $ | (596 | ) | $ | (6,959 | ) | $ | (5,479 | ) | $ | (2,745 | ) | $ | (1,524 | ) | ||||||||||||||
| As a percent of average total assets(4) | |||||||||||||||||||||||||||||||||||
| Total from investments | 8.29 | % | 8.82 | % | 8.29 | % | 8.73 | % | 8.84 | % | 8.96 | % | 8.74 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs | 1.34 | % | 1.35 | % | 1.34 | % | 1.37 | % | 1.37 | % | 1.34 | % | 1.34 | % | |||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs | 6.95 | % | 7.47 | % | 6.95 | % | 7.36 | % | 7.47 | % | 7.62 | % | 7.40 | % | |||||||||||||||||||||
| As a percent of average net assets(4) | |||||||||||||||||||||||||||||||||||
| Total from investments | 11.32 | % | 12.29 | % | 11.43 | % | 12.16 | % | 11.97 | % | 12.63 | % | 12.46 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs | 1.83 | % | 1.89 | % | 1.84 | % | 1.90 | % | 1.85 | % | 1.89 | % | 1.91 | % | |||||||||||||||||||||
| Leverage costs | 1.37 | % | 1.60 | % | 1.46 | % | 1.62 | % | 1.48 | % | 1.60 | % | 1.71 | % | |||||||||||||||||||||
| Distributable cash flow | 8.12 | % | 8.80 | % | 8.13 | % | 8.64 | % | 8.64 | % | 9.14 | % | 8.84 | % | |||||||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||||||||||||||
| Distributions paid on common stock | $ | 16,327 | $ | 13,873 | $ | 4,082 | $ | 4,082 | $ | 4,081 | $ | 2,855 | $ | 2,855 | |||||||||||||||||||||
| Distributions paid on common stock | |||||||||||||||||||||||||||||||||||
| per share | 1.6300 | 1.3850 | 0.4075 | 0.4075 | 0.4075 | 0.2850 | 0.2850 | ||||||||||||||||||||||||||||
| Total assets, end of period(5) | 235,259 | 192,751 | 235,259 | 227,676 | 222,673 | 207,072 | 192,751 | ||||||||||||||||||||||||||||
| Average total assets during period(5)(6) | 257,585 | 218,949 | 252,876 | 223,114 | 229,950 | 218,436 | 203,852 | ||||||||||||||||||||||||||||
| Leverage(7) | 69,800 | 61,800 | 69,800 | 61,800 | 63,100 | 61,500 | 61,800 | ||||||||||||||||||||||||||||
| Leverage as a percent of total assets | 29.7 | % | 32.1 | % | 29.7 | % | 27.1 | % | 28.3 | % | 29.7 | % | 32.1 | % | |||||||||||||||||||||
| Net unrealized depreciation, | |||||||||||||||||||||||||||||||||||
| end of period | (34,897 | ) | (37,569 | ) | (34,897 | ) | (23,375 | ) | (19,404 | ) | (28,190 | ) | (37,569 | ) | |||||||||||||||||||||
| Net assets, end of period | 163,202 | 129,887 | 163,202 | 163,313 | 157,061 | 143,463 | 129,887 | ||||||||||||||||||||||||||||
| Average net assets during period(8) | 188,518 | 157,017 | 183,386 | 160,184 | 169,837 | 155,032 | 142,932 | ||||||||||||||||||||||||||||
| Net asset value per common share | 16.29 | 12.97 | 16.29 | 16.30 | 15.68 | 14.32 | 12.97 | ||||||||||||||||||||||||||||
| Market value per common share | 14.33 | 11.52 | 14.33 | 14.63 | 14.02 | 12.84 | 11.52 | ||||||||||||||||||||||||||||
| Shares outstanding (000’s) | 10,016 | 10,016 | 10,016 | 10,016 | 10,016 | 10,016 | 10,016 | ||||||||||||||||||||||||||||
| (1) | Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November. |
| (2) | Leverage costs include interest expense, distributions to preferred stockholders and other recurring leverage expenses. |
| (3) | “Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by net premiums on options written, the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind and amortization of debt issuance costs. |
| (4) | Annualized for periods less than one full year. |
| (5) | Includes deferred issuance and offering costs on senior notes and preferred stock. |
| (6) | Computed by averaging month-end values within each period. |
| (7) | Leverage consists of senior notes, preferred stock and outstanding borrowings under the revolving credit facility. |
| (8) | Computed by averaging daily net assets within each period. |
| Tortoise | 13 |
| Tortoise |
| Energy Independence Fund, Inc. (NDP) |
Fund description
NDP seeks a high level of total return with an emphasis on current distributions paid to stockholders. NDP invests primarily in equity securities of upstream North American energy companies that engage in the exploration and production of crude oil, condensate, natural gas and natural gas liquids that generally have a significant presence in North American oil and gas fields, including shale reservoirs.
Fund performance review
Oil markets experienced significant volatility during the period. Prices were caught in a tug-of-war between escalating tensions in the Middle East culminating in significant but temporary supply outages, mixed signals from U.S.-China trade negotiations impacting demand growth. The fund’s market-based and NAV-based returns for the fiscal year ending November 30, 2019 were -52.4% and -45.4%, respectively (including the reinvestment of distributions). Comparatively, the Tortoise North American Oil and Gas Producers IndexSMreturned -22.7% for the same period.
| 2019 fiscal year highlights | ||
| Distributions paid per share (fiscal year 2019) | $1.0750 | |
| Distributions paid per share (4th quarter 2019) | $0.1000 | |
| Distribution rate (as of 11/30/2019) | 11.0% | |
| Quarter-over-quarter distribution increase (decrease) | (0.0)% | |
| Year-over-year distribution increase (decrease) | (77.1)% | |
| Cumulative distributions paid per share to | ||
| stockholders since inception in July 2012 | $12.0125 | |
| Market-based total return | (52.4)% | |
| NAV-based total return | (45.4)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (12.9)% |
The fund utilizes a covered call strategy, which seeks to generate income while reducing overall volatility. The premium income generated from this strategy helped to lower NAV volatility during the quarter. The notional amount of the fund’s covered calls averaged approximately 70% of total assets and their out-of-the-money percentage at the time written averaged approximately 14% during the fiscal quarter.
Key asset performance drivers
| Top five contributors | Company type | Performance driver | ||
| Anadarko Petroleum Corp. | Upstream oil and natural gas producer | Occidental Petroleum offered premium to acquire all of the outstanding shares | ||
| Marathon Petroleum Corporation | Downstream refiner | Generated significant free cash flow to pay dividend and buyback shares as well as announced spin-off of retail gasoline business | ||
| Valero Energy Corporation | Downstream refiner | Increased exports and IMO exposure and margin capture leading to improved earnings outlook | ||
| NextEra Energy, Inc. | Integrated infrastructure | Highly visible growth from renewable buildout | ||
| Buckeye Partners, L.P. | Midstream refined product pipeline MLP | Acquired at a premium | ||
| Bottom five contributors | Company type | Performance driver | ||
| Range Resources Corporation | Upstream natural gas producer | Declining natural gas prices resulting in weaker earnings and a lower growth outlook | ||
| Antero Resources Corporation | Upstream oil and natural gas producer | Declining natural gas prices resulting in weaker earnings and a lower growth outlook | ||
| EQTCorporation | Upstream natural gas producer | Declining natural gas prices resulting in weaker earnings and a lower growth outlook | ||
| Concho Resources Inc. | Upstream liquids producer | Unexpected operational challenge tied to well spacing raised concerns about future growth | ||
| Cabot Oil & Gas Corporation | Upstream natural gas producer | Declining natural gas prices resulting in weaker earnings and a lower growth outlook |
Unlike the fund return, index return is pre-expenses.
Performance data quoted represent past performance: past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| 14 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
Fund structure and distribution policy
The fund is structured to qualify as a Regulated Investment Company (RIC) allowing it to pass-through to shareholders income and capital gains earned, thus avoiding double-taxation. To qualify as a RIC, the fund must meet specific income, diversification and distribution requirements. Regarding income, at least 90 percent of the fund’s gross income must be from dividends, interest and capital gains. The fund must meet quarterly diversification requirements including the requirement that at least 50 percent of the assets be in cash, cash equivalents or other securities with each single issuer of other securities not greater than 5 percent of total assets. No more than 25 percent of total assets can be invested in any one issuer other than government securities or other RIC’s. The fund must also distribute at least 90 percent of its investment company income. RIC’s are also subject to excise tax rules which require RIC’s to distribute approximately 98 percent of net income and net capital gains to avoid a 4 percent excise tax.
The fund has adopted a distribution policy which intends to distribute an amount closely approximating the total taxable income for the year and, if so determined by the Board, distribute all or a portion of the return of capital paid by portfolio companies during the year. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last calendar quarter of the year to meet annual excise distribution requirements. Distribution amounts are subject to change from time to time at the discretion of the Board. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
Distributable cash flow (DCF) is income from investments less expenses. Income from investments includes the amount received as cash or paid-in-kind distributions from investments and dividend payments on short-term investments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses and leverage costs.
Income from investments decreased approximately 54.5% as compared to 3rd quarter 2019, primarily due to decreased premiums received on written covered call options. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 15.1% during the quarter due primarily to lower asset-based fees. Total leverage costs decreased approximately 26.0% as compared to 3rd quarter 2019, due to lower leverage utilization and interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased by approximately 59.6% as compared to 3rd quarter 2019. In addition, the fund had net realized losses on investments of $2.3 million during 4th quarter 2019.
The fund paid a distribution of $0.10 per share during 4th quarter 2019, which was equal to the distribution paid in the prior quarter and a decrease of 77% from 4th quarter 2018. The fund has paid cumulative distributions to stockholders of $12.0125 per share since its inception in July 2012.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distributions and dividend income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distributions and dividend income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes; and (4) net premiums on options written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses).
“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | ||||||
| Net Investment Income (loss) | $ | (1,491 | ) | $ | 66 | ||
| Adjustments to reconcile to DCF: | |||||||
| Net premiums on options written | 17,101 | 1,771 | |||||
| Distributions characterized | |||||||
| as return of capital | 1,323 | 146 | |||||
| DCF | $ | 16,933 | $ | 1,983 | |||
Leverage
The fund’s leverage utilization decreased $2.2 million as compared to 3rd quarter 2019. The fund utilizes all floating rate leverage that had an interest rate of 2.70% and represented 29.9% of total assets at year-end. The fund has maintained compliance with its applicable coverage ratios. The interest rate on the fund’s leverage will vary in the future along with changing floating rates.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| Tortoise | 15 |
| NDP Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Year Ended November 30, | 2018 | 2019 | |||||||||||||||||||||||||||||||||
| 2018 | 2019 | Q4(1) | Q1(1) | Q2(1) | Q3(1) | Q4(1) | |||||||||||||||||||||||||||||
| Total Income from Investments | |||||||||||||||||||||||||||||||||||
| Distributions and dividends | |||||||||||||||||||||||||||||||||||
| from investments, net of | |||||||||||||||||||||||||||||||||||
| foreign taxes withheld | $ | 5,122 | $ | 2,971 | $ | 1,167 | $ | 1,250 | $ | 394 | $ | 538 | $ | 789 | |||||||||||||||||||||
| Dividends paid in stock | 796 | — | 152 | — | — | — | — | ||||||||||||||||||||||||||||
| Net premiums on options written | 24,820 | 17,101 | 6,400 | 4,966 | 5,279 | 5,085 | 1,771 | ||||||||||||||||||||||||||||
| Total from investments | 30,738 | 20,072 | 7,719 | 6,216 | 5,673 | 5,623 | 2,560 | ||||||||||||||||||||||||||||
| Operating Expenses Before | |||||||||||||||||||||||||||||||||||
| Leverage Costs | |||||||||||||||||||||||||||||||||||
| Advisory fees, net of fees waived | 2,639 | 1,434 | 613 | 437 | 421 | 315 | 261 | ||||||||||||||||||||||||||||
| Other operating expenses | 566 | 476 | 134 | 133 | 133 | 110 | 100 | ||||||||||||||||||||||||||||
| 3,205 | 1,910 | 747 | 570 | 554 | 425 | 361 | |||||||||||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs | 27,533 | 18,162 | 6,972 | 5,646 | 5,119 | 5,198 | 2,199 | ||||||||||||||||||||||||||||
| Leverage costs(2) | 1,759 | 1,229 | 486 | 371 | 350 | 292 | 216 | ||||||||||||||||||||||||||||
| Distributable Cash Flow(3) | $ | 25,774 | $ | 16,933 | $ | 6,486 | $ | 5,275 | $ | 4,769 | $ | 4,906 | $ | 1,983 | |||||||||||||||||||||
| Net realized loss on investments | |||||||||||||||||||||||||||||||||||
| and foreign currency translation, | |||||||||||||||||||||||||||||||||||
| for the period | $ | (6,693 | ) | $ | (88,310 | ) | $ | (2,031 | ) | $ | (37,544 | ) | $ | (17,350 | ) | $ | (31,152 | ) | $ | (2,264 | ) | ||||||||||||||
| As a percent of average total assets(4) | |||||||||||||||||||||||||||||||||||
| Total from investments | 12.72 | % | 15.22 | % | 13.91 | % | 15.48 | % | 15.12 | % | 19.20 | % | 10.92 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs | 1.33 | % | 1.45 | % | 1.35 | % | 1.42 | % | 1.48 | % | 1.45 | % | 1.54 | % | |||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||||||
| leverage costs | 11.39 | % | 13.77 | % | 12.56 | % | 14.06 | % | 13.64 | % | 17.75 | % | 9.38 | % | |||||||||||||||||||||
| As a percent of average net assets(4) | |||||||||||||||||||||||||||||||||||
| Total from investments | 17.42 | % | 21.32 | % | 19.29 | % | 21.38 | % | 20.05 | % | 28.01 | % | 15.34 | % | |||||||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||||||
| leverage costs | 1.82 | % | 2.03 | % | 1.87 | % | 1.96 | % | 1.96 | % | 2.12 | % | 2.16 | % | |||||||||||||||||||||
| Leverage costs | 1.00 | % | 1.31 | % | 1.21 | % | 1.28 | % | 1.24 | % | 1.45 | % | 1.29 | % | |||||||||||||||||||||
| Distributable cash flow | 14.60 | % | 17.98 | % | 16.21 | % | 18.14 | % | 16.85 | % | 24.44 | % | 11.89 | % | |||||||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||||||||||||||
| Distributions paid on common stock | $ | 25,587 | $ | 15,829 | $ | 6,414 | $ | 6,430 | $ | 6,445 | $ | 1,477 | $ | 1,477 | |||||||||||||||||||||
| Distributions paid on common stock | |||||||||||||||||||||||||||||||||||
| per share | 1.7500 | 1.0750 | 0.4375 | 0.4375 | 0.4375 | 0.1000 | 0.1000 | ||||||||||||||||||||||||||||
| Total assets, end of period | 191,285 | 88,684 | 191,285 | 156,648 | 123,229 | 95,078 | 88,684 | ||||||||||||||||||||||||||||
| Average total assets during period(5) | 241,656 | 131,848 | 222,541 | 162,807 | 148,821 | 116,182 | 94,064 | ||||||||||||||||||||||||||||
| Leverage(6) | 57,100 | 26,500 | 57,100 | 42,400 | 34,600 | 28,700 | 26,500 | ||||||||||||||||||||||||||||
| Leverage as a percent of total assets | 29.9 | % | 29.9 | % | 29.9 | % | 27.1 | % | 28.1 | % | 30.2 | % | 29.9 | % | |||||||||||||||||||||
| Net unrealized depreciation, | |||||||||||||||||||||||||||||||||||
| end of period | (50,328 | ) | (21,026 | ) | (50,328 | ) | (28,074 | ) | (27,092 | ) | (21,503 | ) | (21,026 | ) | |||||||||||||||||||||
| Net assets, end of period | 132,488 | 61,550 | 132,488 | 111,490 | 87,720 | 65,322 | 61,550 | ||||||||||||||||||||||||||||
| Average net assets during period(7) | 176,481 | 94,144 | 160,534 | 117,918 | 112,274 | 79,655 | 66,948 | ||||||||||||||||||||||||||||
| Net asset value per common share | 9.02 | 4.17 | 9.02 | 7.57 | 5.94 | 4.42 | 4.17 | ||||||||||||||||||||||||||||
| Market value per common share | 9.00 | 3.63 | 9.00 | 8.08 | 7.40 | 3.99 | 3.63 | ||||||||||||||||||||||||||||
| Shares outstanding (000’s) | 14,696 | 14,768 | 14,696 | 14,733 | 14,768 | 14,768 | 14,768 | ||||||||||||||||||||||||||||
| (1) | Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November. |
| (2) | Leverage costs include interest expense and other recurring leverage expenses. |
| (3) | “Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by net premiums on options written, the return of capital on distributions the distributions paid in stock and the premium on dividends paid in kind. |
| (4) | Annualized for periods less than one full year. |
| (5) | Computed by averaging month-end values within each period. |
| (6) | Leverage consists of outstanding borrowings under the revolving credit facility. |
| (7) | Computed by averaging daily net assets within each period. |
| 16 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise |
| Power and Energy Infrastructure Fund, Inc. (TPZ) |
Fund description
TPZ seeks to provide a high level of current income to stockholders, with a secondary objective of capital appreciation. TPZ seeks to invest primarily in fixed income and dividend-paying equity securities of power and energy infrastructure companies that provide stable and defensive characteristics throughout economic cycles.
Fund performance review
Midstream energy performance lagged broader energy for the fourth fiscal quarter, but outperformed for the fiscal year. A combination of concerns regarding a slowdown in U.S. production growth, political rhetoric regarding proposed frack bans from Democratic candidates, and tax loss selling largely contributed to midstream underperformance for the fiscal quarter. The fund’s market-based and NAV-based returns for the fiscal year ending November 30, 2019 were -1.4% and -2.6%, respectively (including the reinvestment of distributions). Comparatively, the TPZ Benchmark Composite* returned 9.4% for the same period. The fund’s fixed income holdings outperformed its equity holdings on a total return basis.
| 2019 fiscal year highlights | ||
| Distributions paid per share (fiscal year 2019) | $1.5000 | |
| Monthly distribution paid per share (4th quarter 2019) | $0.1250 | |
| Distribution rate (as of 11/30/2019) | 9.6% | |
| Quarter-over-quarter distribution increase | 0.0% | |
| Year-over-year distribution increase | 0.0% | |
| Cumulative distribution to stockholders | ||
| since inception in July 2009 | $16.7750 | |
| Market-based total return | (1.4)% | |
| NAV-based total return | (2.6)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (12.0)% |
* The TPZ Benchmark Composite includes the BofA Merrill Lynch U.S. Energy Index (CIEN), the BofA Merrill Lynch U.S. Electricity Index (CUEL) and the Tortoise MLP Index®(TMLP).It is comprised of a blend of 70% fixed income and 30% equity securities issued by companies in the power and energy infrastructure sectors.
Please refer to the inside front cover of the report for important information about the fund’s distribution policy.
Key asset performance drivers
| Top five contributors | Company type | Performance driver | ||
| Enbridge Inc. (fixed income) | Midstream crude oil pipeline company | Successful efforts to reduce leverage | ||
| Enbridge Inc. | Midstream crude oil pipeline company | Visible dividend growth of 5-7% in 2020+ | ||
| TransCanada Corporation (fixed income) | Midstream natural gas/natural gas liquids pipeline company | Regulated business model and defensive fixed income security | ||
| Buckeye Partners, L.P. | Midstream refined product pipeline MLP | Acquired at a premium | ||
| SemGroup Corp. (fixed income) | Midstream crude oil pipeline company | Acquired by an investment grade company | ||
| Bottom five contributors | Company type | Performance driver | ||
| Antero Midstream Corporation | Midstream gathering and processing company | Concerns around potential recontracting of gathering and process contracts and financial health of parent company Antero Resources (AR) as natural gas prices moved lower | ||
| Western Midstream Partners, LP | Midstream gathering and processing MLP | Carrying out strategic review | ||
| EnLink Midstream, LLC | Midstream gathering and processing company | Concern around producers slowing drilling activity in Oklahoma | ||
| MPLX LP | Refined products pipeline MLP | Continued uncertainty regarding organizational structure and parental support combined with north east natural G&P exposure | ||
| Equitrans Midstream Corporation | Midstream natural gas/natural gas liquids pipeline company | Uncertainty around Mountain Valley Pipeline project |
Unlike the fund return, index return is pre-expenses.
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| Tortoise | 17 |
| Tortoise |
| Power and Energy Infrastructure Fund, Inc. (TPZ)(continued) |
Fund structure and distribution policy
The fund is structured to qualify as a Regulated Investment Company (RIC) allowing it to pass-through to shareholders income and capital gains earned, thus avoiding double-taxation. To qualify as a RIC, the fund must meet specific income, diversification and distribution requirements. Regarding income, at least 90 percent of the fund gross income must be from dividends, interest and capital gains. The fund must meet quarterly diversification requirements including the requirement that at least 50 percent of the assets be in cash, cash equivalents or other securities with each single issuer of other securities not greater than 5 percent of total assets. No more than 25 percent of total assets can be invested in any one issuer other than government securities or other RIC’s. The fund must also distribute at least 90 percent of its investment company income. RIC’s are also subject to excise tax rules which require RIC’s to distribute approximately 98 percent of net income and net capital gains to avoid a 4 percent excise tax.
The fund has adopted a distribution policy which is included on the inside front cover of this report. To summarize, the fund intends to distribute an amount closely approximating the total taxable income for the year and, if so determined by the Board, distribute all or a portion of the return of capital paid by portfolio companies during the year. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last calendar quarter of the year to meet annual excise distribution requirements. The fund distributes a fixed amount per common share, currently $0.125, each month to its common shareholders. This amount is subject to change from time to time at the discretion of the Board. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
Distributable cash flow (DCF) is income from investments less expenses. Income from investments includes the accrued interest from corporate bonds, cash distributions and paid-in-kind distributions from master limited partnerships (MLPs) and other equity investments and dividends earned from short-term investments. The total expenses include current or anticipated operating expenses and leverage costs.
Income from investments increased approximately 1.0% as compared to 3rd quarter 2019 due primarily to trading activity within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 7.4% during the quarter due primarily to lower asset-based fees. Total leverage costs decreased approximately 6.8% as compared to 3rd quarter 2019, primarily due to lower leverage utilization and interest rates during the quarter. As a result of the changes in income and expenses, DCF increased approximately 4.5% as compared to 3rd quarter 2019. In addition, the fund had net realized gains on investments of $4.3 million during 4th quarter 2019.
The fund paid monthly distributions of $0.125 per share during 4th quarter 2019, which was unchanged over the prior quarter and 4th quarter 2018. The fund’s Board of Directors has declared monthly distributions of $0.125 per share to be paid during 1st quarter 2020. The fund has paid cumulative distributions to stockholders of $16.775 per share since its inception in July 2009.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) U.S. generally accepted accounting principles (GAAP), recognizes distribution income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distribution income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes; and (4) amortization of premium or discount for all securities is calculated using the yield to worst methodology for GAAP purposes while yield to call is used in calculating amortization for long-dated hybrid securities in the DCF calculation. The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. In addition to the total operating expenses, including fee waiver, as disclosed in the Statement of Operations, the DCF calculation reflects interest expense and realized and unrealized gains (losses) on interest rate swap settlements as leverage costs.
“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | |||||
| Net Investment Income | $ | 2,722 | $ | 747 | ||
| Adjustments to reconcile to DCF: | ||||||
| Distributions characterized | ||||||
| as return of capital | 6,296 | 1,624 | ||||
| Other | 240 | 53 | ||||
| DCF | $ | 9,258 | $ | 2,424 | ||
Leverage
The fund’s leverage utilization decreased $2.0 million as compared to 3rd quarter 2019 and represented 30.4% of total assets at November 30, 2019. The fund has maintained compliance with its applicable coverage ratios. At year-end, including the impact of interest rate swaps, approximately 61% of the leverage cost was fixed, the weighted-average maturity was 2.4 years and the weighted-average annual rate on leverage was 2.81%. These rates will vary in the future as a result of changing floating rates and as swaps mature or are redeemed.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| 18 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TPZ Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Year Ended November 30, | 2018 | 2019 | |||||||||||||||||||||||||||||
| 2018 | 2019 | Q4(1) | Q1(1) | Q2(1) | Q3(1) | Q4(1) | |||||||||||||||||||||||||
| Total Income from Investments | |||||||||||||||||||||||||||||||
| Interest earned on corporate bonds | $ | 5,440 | $ | 5,437 | $ | 1,369 | $ | 1,357 | $ | 1,381 | $ | 1,368 | $ | 1,331 | |||||||||||||||||
| Distributions and dividends | |||||||||||||||||||||||||||||||
| from investments, net of | |||||||||||||||||||||||||||||||
| foreign taxes withheld | 6,747 | 7,632 | 1,654 | 1,841 | 1,909 | 1,907 | 1,975 | ||||||||||||||||||||||||
| Dividends paid in kind | 1,233 | 175 | 284 | 39 | 40 | 47 | 49 | ||||||||||||||||||||||||
| Total from investments | 13,420 | 13,244 | 3,307 | 3,237 | 3,330 | 3,322 | 3,355 | ||||||||||||||||||||||||
| Operating Expenses Before | |||||||||||||||||||||||||||||||
| Leverage Costs | |||||||||||||||||||||||||||||||
| Advisory fees | 1,898 | 1,825 | 473 | 447 | 476 | 462 | 440 | ||||||||||||||||||||||||
| Other operating expenses | 546 | 521 | 137 | 140 | 141 | 131 | 109 | ||||||||||||||||||||||||
| 2,444 | 2,346 | 610 | 587 | 617 | 593 | 549 | |||||||||||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||
| leverage costs | 10,976 | 10,898 | 2,697 | 2,650 | 2,713 | 2,729 | 2,806 | ||||||||||||||||||||||||
| Leverage costs(2) | 1,394 | 1,640 | 373 | 413 | 435 | 410 | 382 | ||||||||||||||||||||||||
| Distributable Cash Flow(3) | $ | 9,582 | $ | 9,258 | $ | 2,324 | $ | 2,237 | $ | 2,278 | $ | 2,319 | $ | 2,424 | |||||||||||||||||
| Net realized gain (loss) on | |||||||||||||||||||||||||||||||
| investments and foreign currency | |||||||||||||||||||||||||||||||
| translation, for the period | $ | 8,973 | $ | 4,740 | $ | 3,996 | $ | (520 | ) | $ | 878 | $ | 94 | $ | 4,288 | ||||||||||||||||
| As a percent of average total assets(4) | |||||||||||||||||||||||||||||||
| Total from investments | 6.72 | % | 6.89 | % | 6.55 | % | 6.85 | % | 6.66 | % | 6.78 | % | 7.23 | % | |||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||
| leverage costs | 1.22 | % | 1.22 | % | 1.21 | % | 1.24 | % | 1.23 | % | 1.21 | % | 1.18 | % | |||||||||||||||||
| Distributable cash flow before | |||||||||||||||||||||||||||||||
| leverage costs | 5.50 | % | 5.67 | % | 5.34 | % | 5.61 | % | 5.43 | % | 5.57 | % | 6.05 | % | |||||||||||||||||
| As a percent of average net assets(4) | |||||||||||||||||||||||||||||||
| Total from investments | 9.09 | % | 9.62 | % | 8.93 | % | 9.54 | % | 9.20 | % | 9.53 | % | 10.25 | % | |||||||||||||||||
| Operating expenses before | |||||||||||||||||||||||||||||||
| leverage costs | 1.66 | % | 1.70 | % | 1.65 | % | 1.73 | % | 1.70 | % | 1.70 | % | 1.68 | % | |||||||||||||||||
| Leverage costs | 0.94 | % | 1.19 | % | 1.01 | % | 1.22 | % | 1.20 | % | 1.18 | % | 1.17 | % | |||||||||||||||||
| Distributable cash flow | 6.49 | % | 6.73 | % | 6.27 | % | 6.59 | % | 6.30 | % | 6.65 | % | 7.40 | % | |||||||||||||||||
| Selected Financial Information | |||||||||||||||||||||||||||||||
| Distributions paid on common stock | $ | 10,427 | $ | 10,427 | $ | 2,607 | $ | 2,607 | $ | 2,607 | $ | 2,606 | $ | 2,607 | |||||||||||||||||
| Distributions paid on common stock | |||||||||||||||||||||||||||||||
| per share | 1.5000 | 1.5000 | 0.3750 | 0.3750 | 0.3750 | 0.3750 | 0.3750 | ||||||||||||||||||||||||
| Total assets, end of period | 191,906 | 177,843 | 191,906 | 195,308 | 197,731 | 190,032 | 177,843 | ||||||||||||||||||||||||
| Average total assets during period(5) | 199,749 | 192,260 | 200,269 | 191,512 | 198,360 | 194,528 | 186,087 | ||||||||||||||||||||||||
| Leverage(6) | 53,400 | 54,100 | 53,400 | 53,800 | 56,600 | 56,100 | 54,100 | ||||||||||||||||||||||||
| Leverage as a percent of total assets | 27.8 | % | 30.4 | % | 27.8 | % | 27.5 | % | 28.6 | % | 29.5 | % | 30.4 | % | |||||||||||||||||
| Net unrealized appreciation (depreciation), | |||||||||||||||||||||||||||||||
| end of period | 3,956 | (7,471 | ) | 3,956 | 9,850 | 9,939 | 5,062 | (7,471 | ) | ||||||||||||||||||||||
| Net assets, end of period | 137,325 | 123,015 | 137,325 | 140,763 | 139,785 | 133,107 | 123,015 | ||||||||||||||||||||||||
| Average net assets during period(7) | 147,616 | 137,701 | 146,848 | 137,573 | 143,596 | 138,251 | 131,313 | ||||||||||||||||||||||||
| Net asset value per common share | 19.76 | 17.70 | 19.76 | 20.25 | 20.11 | 19.15 | 17.70 | ||||||||||||||||||||||||
| Market value per common share | 17.17 | 15.57 | 17.17 | 17.97 | 18.25 | 18.17 | 15.57 | ||||||||||||||||||||||||
| Shares outstanding (000’s) | 6,951 | 6,951 | 6,951 | 6,951 | 6,951 | 6,951 | 6,951 | ||||||||||||||||||||||||
| (1) | Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November. |
| (2) | Leverage costs include interest expense, interest rate swap expenses and other recurring leverage expenses. |
| (3) | “Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value and the premium on dividends paid in kind; and decreased by realized and unrealized gains (losses) on interest rate swap settlements. |
| (4) | Annualized for periods less than one full year. |
| (5) | Computed by averaging month-end values within each period. |
| (6) | Leverage consists of outstanding borrowings under the revolving credit facility. |
| (7) | Computed by averaging daily net assets within each period. |
| Tortoise | 19 |
| Tortoise |
| Essential Assets Income Term Fund (TEAF) |
Fund description
TEAF seeks to provide a high level of total return with an emphasis on current distributions. TEAF provides investors access to a combination of public and direct investments in essential assets that are making an impact on clients and communities.
Fund performance
We are pleased with the performance of much of the fund’s portfolio; however continue to be frustrated with the volatility in the energy infrastructure allocation of the portfolio, which negatively impacted NAV during the last fiscal quarter. We continue to manage TEAF with a long-term focus and continue to believe the energy infrastructure companies in the fund will benefit from growing natural gas demand over the long and medium term and we have seen a strong rebound in early fiscal 2020. We continue to have conviction that TEAF’s investment strategy, investments in public and direct investments across social infrastructure, sustainable infrastructure and energy infrastructure, offers investors attractive total return potential while providing stable current income.
We continue to progress in transitioning the portfolio to the targeted allocation of 60% direct investments. As of Nov. 30, 2019, TEAF’s total direct investment commitments were approximately $87 million or 32% of the portfolio. Additionally, we are very pleased to have completed the fund’s allocation to direct sustainable infrastructure investments. The direct investment pipeline remains robust.
Public Energy Infrastructure
| ● | Energy infrastructure equities remained an underperformer during the fourth fiscal quarter, despite generally constructive 3Q earnings reports in October and November. |
| ● | Natural gas prices rebounded early in the fiscal quarter, but ultimately did not sustain the rally as growing natural gas supply has outpaced demand. |
| ● | Gathering and processing companies in the natural gas sector were the main performance detractors in the energy infrastructure sleeve as a result of the weaker natural gas prices and concerns around volume growth in 2020. |
| ● | Valuation of energy infrastructure companies are at all-time lows entering 2020 and we maintain conviction that the medium and long-term fundamentals of the group will drive cash flow higher in subsequent years. |
| ● | We continue to believe that equities will perform better as free cash flow generation in the sector is will inflect significantly higher in 2020 / 2021. |
Private Energy Infrastructure
| ● | TEAF funded a private investment in Mexico Pacific Limited, an LNG export facility on the pacific coast of Mexico, during the fiscal quarter. The facility is under development and expected to export 12 million tons per annum of U.S. shale gas to Asia. |
| ● | TEAF closed a private investment in public equity transaction (PIPE) during the fiscal quarter. The fund purchased $5.5 million of Noble Midstream Partners (NBLX) units. The investment was used by NBLX in a simplification transaction in which NBLX acquired 100% of its outstanding incentive distribution rights and all of Noble Energy’s (NBL) remaining midstream interests. |
| (unaudited) | |
| 20 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
Public Sustainable Infrastructure
| ● | The fund’s global listed sustainable infrastructure securities performed extremely well during the fiscal quarter. |
| ● | An overweight position in UK utilities contributed to the strong performance. These securities outperformed ahead of the UK general elections as the risk of a Labour victory, which had weighed on sector over the past three years due to the party’s nationalization plan, faded away in the polls. |
| ● | Additionally, renewable-focused securities performed well, supported by continued value creation in the renewable value chain. Overall, investors seeking yield and exposure to clean electricity generators continued to value these assets at higher multiples. |
Private Sustainable Infrastructure
| ● | TEAF did not make any additional private sustainable infrastructure investments during the quarter as the fund previously reached its target allocation in private sustainable deals. |
| ● | To date, the fund has invested approximately $44 million in three entities. |
Social Infrastructure
| ● | TEAF completed a debt investment in The Cottages of Perry Hall during the fiscal quarter. The senior living facility is located in Parkville, MD, just outside of Baltimore and has 64 units. Since undergoing a management change in early 2018, the facility has recently reached 100% occupancy following renovations and a new operational plan. |
| ● | TEAF completed a debt investment in a private school in Fort Pierce, FL, during the fiscal quarter. The school, St. James Christian Academy, is using the proceeds to acquire and renovate one of the facilities it is currently leasing. The investment is expected to allow the school to increase enrollment from 700 students to more than 1,000 students within three years. |
| 2019 fiscal year highlights (since fund inception 3/26/2019) | ||
| Distributions paid per share (fiscal year 2019) | $0.7595 | |
| Distributions paid per share (4th quarter 2019) | $0.3255 | |
| Distribution rate (as of 11/30/2019) | 8.3% | |
| Quarter-over-quarter distribution increase | 0.0% | |
| Year-over-year distribution increase | 0.0% | |
| Cumulative distributions paid per share to stockholders since inception in March 2019 | $0.7595 | |
| Market-based total return | (18.5)% | |
| NAV-based total return | (8.0)% | |
| Premium (discount) to NAV (as of 11/30/2019) | (11.4)% |
Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.
| (unaudited) | |
| Tortoise | 21 |
| Tortoise |
| Essential Assets Income Term Fund (TEAF)(continued) |
Fund structure and distribution policy
The fund is structured to qualify as a Regulated Investment Company (RIC) allowing it to pass-through to shareholders income and capital gains earned, thus avoiding double-taxation. To qualify as a RIC, the fund must meet specific income, diversification and distribution requirements. Regarding income, at least 90 percent of the fund gross income must be from dividends, interest and capital gains. The fund must meet quarterly diversification requirements including the requirement that at least 50 percent of the assets be in cash, cash equivalents or other securities with each single issuer of other securities not greater than 5 percent of total assets. No more than 25 percent of total assets can be invested in any one issuer other than government securities or other RIC’s. The fund must also distribute at least 90 percent of its investment company income. RIC’s are also subject to excise tax rules which require RIC’s to distribute approximately 98 percent of net income and net capital gains to avoid a 4 percent excise tax.
The fund has adopted a distribution policy which intends to distribute an amount closely approximating the total taxable income for the year and, if so determined by the Board, distribute all or a portion of the return of capital paid by portfolio companies during the year. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last calendar quarter of the year to meet annual excise distribution requirements. Distribution amounts are subject to change from time to time at the discretion of the Board. Although the level of distributions is independent of the funds’ performance in the short term, the fund expects such distributions to correlate with its performance over time.
Distributable cash flow and distributions
DCF is income from investments less expenses. Income from investments includes the accrued interest from bonds, the amount received as cash or paid-in-kind distributions from investments and dividend payments on short-term investments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses and leverage costs.
Income from investments decreased approximately 16.9% as compared to 3rd quarter 2019 due primarily to the impact of distribution timing differences quarter over quarter. Operating expenses, consisting primarily of fund advisory fees, increased slightly during the quarter. Total leverage costs decreased approximately 9.1% as compared to 3rd quarter 2019, primarily due to lower interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 20.7% as compared to 3rd quarter 2019. In addition, the fund had net realized losses on investments of $9.2 million during 4th quarter 2019.
The fund paid monthly distributions of $0.1085 per share during 4th quarter 2019. The fund’s Board of Directors has declared monthly distributions of $0.1085 per share to be paid during1st quarter 2020. The fund has paid cumulative distributions to stockholders of $0.7595 per share since its inception in March 2019.
The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distributions and dividend income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distributions and dividend income on their pay dates; GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes. Net premiums on options written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses). The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. Transaction costs related to acquiring certain investments in affiliated entities are included in cost basis of the investment for DCF purposes and amortized over a period of time.
“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD 2019 and 4th quarter 2019 (in thousands):
| YTD 2019 | 4th Qtr 2019 | |||||
| Net Investment Income, | ||||||
| before Income Taxes | $ | 3,725 | $ | 172 | ||
| Adjustments to reconcile to DCF: | ||||||
| Distributions characterized | ||||||
| as return of capital | 3,965 | 1,400 | ||||
| Net premiums on options written | 5,368 | 1,762 | ||||
| Other | 649 | 649 | ||||
| DCF | $ | 13,707 | $ | 3,983 | ||
Leverage
The fund’s leverage utilization was relatively unchanged as compared to 3rd quarter 2019. The fund utilizes all floating rate leverage that had an interest rate of 2.50% and represented 11.8% of total assets at year-end. The fund has maintained compliance with its applicable coverage ratios. The interest rate on the fund’s leverage will vary in the future along with changing floating rates.
Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage and other important fund information.
For further information regarding the calculation of distributable cash flow and distributions to stockholders, as well as a discussion of the tax impact on distributions, please visit www.tortoiseadvisors.com.
| (unaudited) | |
| 22 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TEAF Key Financial Data (supplemental unaudited information) |
| (dollar amounts in thousands unless otherwise indicated) |
The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.
| Period from | ||||||||||||||||||||
| March 29, 2019(1) | ||||||||||||||||||||
| through | 2019 | |||||||||||||||||||
| November 30, 2019 | Q2(2) | Q3(2) | Q4(2) | |||||||||||||||||
| Total Income from Investments | ||||||||||||||||||||
| Interest earned on bonds and notes | $ | 3,109 | $ | 548 | $ | 1,164 | $ | 1,397 | ||||||||||||
| Distributions and dividends from investments, | ||||||||||||||||||||
| net of foreign taxes withheld | 9,616 | 3,805 | 3,576 | 2,235 | ||||||||||||||||
| Distributions paid in kind | 206 | — | 62 | 144 | ||||||||||||||||
| Net premiums on options written | 3,965 | 1,137 | 1,428 | 1,400 | ||||||||||||||||
| Total from investments | 16,896 | 5,490 | 6,230 | 5,176 | ||||||||||||||||
| Operating Expenses Before Leverage Costs | ||||||||||||||||||||
| Advisory fees | 2,099 | 546 | 792 | 761 | ||||||||||||||||
| Other operating expenses | 470 | 102 | 165 | 203 | ||||||||||||||||
| 2,569 | 648 | 957 | 964 | |||||||||||||||||
| Distributable cash flow before leverage costs | 14,327 | 4,842 | 5,273 | 4,212 | ||||||||||||||||
| Leverage costs(3) | 620 | 139 | 252 | 229 | ||||||||||||||||
| Distributable Cash Flow(4) | $ | 13,707 | $ | 4,703 | $ | 5,021 | $ | 3,983 | ||||||||||||
| Net realized loss on investments and foreign | ||||||||||||||||||||
| currency translation, for the period | $ | (12,936 | ) | $ | (71 | ) | $ | (3,168 | ) | $ | (9,697 | ) | ||||||||
| As a percent of average total assets(5) | ||||||||||||||||||||
| Total from investments | 8.89 | % | 11.25 | % | 8.65 | % | 7.46 | % | ||||||||||||
| Operating expenses before leverage costs | 1.35 | % | 1.33 | % | 1.33 | % | 1.39 | % | ||||||||||||
| Distributable cash flow before leverage costs | 7.54 | % | 9.92 | % | 7.32 | % | 6.07 | % | ||||||||||||
| As a percent of average net assets(5) | ||||||||||||||||||||
| Total from investments | 9.90 | % | 12.01 | % | 9.73 | % | 8.49 | % | ||||||||||||
| Operating expenses before leverage costs | 1.51 | % | 1.42 | % | 1.50 | % | 1.58 | % | ||||||||||||
| Leverage costs | 0.36 | % | 0.30 | % | 0.39 | % | 0.38 | % | ||||||||||||
| Distributable cash flow | 8.03 | % | 10.29 | % | 7.84 | % | 6.53 | % | ||||||||||||
| Selected Financial Information | ||||||||||||||||||||
| Distributions paid on common stock | $ | 10,247 | $ | 1,464 | $ | 4,391 | $ | 4,392 | ||||||||||||
| Distributions paid on common stock per share | 0.7595 | 0.1085 | 0.3255 | 0.3255 | ||||||||||||||||
| Total assets, end of period | 271,915 | 288,040 | 276,736 | 271,915 | ||||||||||||||||
| Average total assets during period(6) | 280,814 | 278,413 | 285,731 | 278,477 | ||||||||||||||||
| Leverage(7) | 32,000 | 31,500 | 31,500 | 32,000 | ||||||||||||||||
| Leverage as a percent of total assets | 11.8 | % | 10.9 | % | 11.4 | % | 11.8 | % | ||||||||||||
| Net unrealized depreciation, end of period | (15,821 | ) | (15,131 | ) | (22,549 | ) | (15,821 | ) | ||||||||||||
| Net assets, end of period | 237,461 | 255,534 | 243,882 | 237,461 | ||||||||||||||||
| Average net assets during period(8) | 252,217 | 260,772 | 253,916 | 244,483 | ||||||||||||||||
| Net asset value per common share | 17.60 | 18.94 | 18.08 | 17.60 | ||||||||||||||||
| Market value per common share | 15.60 | 18.45 | 16.25 | 15.60 | ||||||||||||||||
| Shares outstanding (000’s) | 13,491 | 13,491 | 13,491 | 13,491 | ||||||||||||||||
| (1) | Commencement of operations. |
| (2) | Q2 represents the period from March 29, 2019 (commencement of operations) through May 31, 2019. Q3 represents the period from June through August. Q4 represents the period from September through November. |
| (3) | Leverage costs include interest expense and other recurring leverage expenses. |
| (4) | “Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by the return of capital on distributions and the net premiums on options written and decreased by amortization on certain investments. |
| (5) | Annualized. |
| (6) | Computed by averaging month-end values within each period. |
| (7) | Leverage consists of outstanding borrowings under the margin loan facility. |
| (8) | Computed by averaging daily net assets within each period. |
| Tortoise | 23 |
| TYG Consolidated Schedule of Investments |
| November 30, 2019 |
| Shares | Fair Value | ||||
| Master Limited Partnerships — 126.4%(1) | |||||
| Crude Oil Pipelines — 18.2%(1) | |||||
| United States — 18.2%(1) | |||||
| BP Midstream Partners LP | 248,258 | $ | 3,624,567 | ||
| Genesis Energy L.P. | 621,847 | 11,821,312 | |||
| PBF Logistics LP | 856,856 | 17,522,705 | |||
| Plains All American Pipeline, L.P. | 4,497,553 | 78,257,422 | |||
| Shell Midstream Partners, L.P. | 2,940,946 | 57,818,998 | |||
| 169,045,004 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 38.4%(1) | |||||
| United States — 38.4%(1) | |||||
| Cheniere Energy Partners LP | 300,314 | 11,673,205 | |||
| DCP Midstream, LP | 2,268,264 | 47,883,053 | |||
| Energy Transfer LP(2) | 13,261,563 | 156,619,059 | |||
| Enterprise Products Partners L.P. | 5,353,209 | 140,896,461 | |||
| 357,071,778 | |||||
| Natural Gas Gathering/Processing — 22.4%(1) | |||||
| United States — 22.4%(1) | |||||
| CNX Midstream Partners LP | 2,621,599 | 38,013,186 | |||
| Enable Midstream Partners LP | 2,023,704 | 18,597,840 | |||
| EQM Midstream Partners, LP | 2,612,476 | 60,531,069 | |||
| Hess Midstream Partners LP | 647,635 | 13,244,136 | |||
| Noble Midstream Partners LP(3) | 432,663 | 8,406,642 | |||
| Western Midstream Partners, LP | 3,939,053 | 69,839,410 | |||
| 208,632,283 | |||||
| Other — 0.5%(1) | |||||
| United States — 0.5%(1) | |||||
| Westlake Chemical Partners LP | 206,837 | 4,589,713 | |||
| Refined Product Pipelines — 46.9%(1) | |||||
| United States — 46.9%(1) | |||||
| Holly Energy Partners, L.P. | 2,356,962 | 52,701,670 | |||
| Magellan Midstream Partners, L.P. | 2,112,028 | 123,490,277 | |||
| MPLX LP | 5,177,155 | 122,439,716 | |||
| NuStar Energy L.P.(4) | 2,518,020 | 71,058,524 | |||
| Phillips 66 Partners LP | 1,193,614 | 66,520,108 | |||
| 436,210,295 | |||||
| Total Master Limited Partnerships | |||||
| (Cost $1,246,716,130) | 1,175,549,073 | ||||
| Common Stock — 37.5%(1) | |||||
| Crude Oil Pipelines — 1.5%(1) | |||||
| Canada — 1.5%(1) | |||||
| Enbridge Inc. | 353,090 | 13,417,420 | |||
| Marine Transportation — 1.6%(1) | |||||
| Monaco — 1.6%(1) | |||||
| GasLog Partners LP | 1,039,959 | 15,131,403 | |||
| Natural Gas Gathering/Processing — 17.9%(1) | |||||
| United States — 17.9%(1) | |||||
| Antero Midstream Corporation | 6,010,622 | 27,528,649 | |||
| EnLink Midstream, LLC | 4,396,866 | 20,885,114 | |||
| Rattler Midstream LP | 3,643 | 57,960 | |||
| Targa Resources Corp. | 1,766,097 | 64,515,523 | |||
| The Williams Companies, Inc. | 2,359,522 | 53,608,340 | |||
| 166,595,586 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 16.5%(1) | |||||
| United States — 16.5%(1) | |||||
| Kinder Morgan Inc. | 2,224,608 | 43,624,563 | |||
| ONEOK, Inc.(4) | 907,868 | 64,504,021 | |||
| Tallgrass Energy, LP | 2,532,731 | 45,361,212 | |||
| 153,489,796 | |||||
| Total Common Stock | |||||
| (Cost $432,533,338) | 348,634,205 | ||||
| Preferred Stock — 11.4%(1) | |||||
| Crude Oil Pipelines — 0.8%(1) | |||||
| United States — 0.8%(1) | |||||
| SemGroup Corporation, 7.000%(3)(5)(6) | 6,277 | 6,948,972 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 8.1%(1) | |||||
| United States — 8.1%(1) | |||||
| Altus Midstream Company | |||||
| Preferred(3)(5)(7) | 10,072 | 10,421,842 | |||
| Crestwood Equity Partners LP, 9.25% | 7,126,640 | 65,422,555 | |||
| 75,844,397 | |||||
| Natural Gas Gathering/Processing — 2.5%(1) | |||||
| United States — 2.5%(1) | |||||
| Targa Resources Corp., 9.500%(3)(5) | 21,758 | 23,242,766 | |||
| Total Preferred Stock | |||||
| (Cost $102,238,517) | 106,036,135 | ||||
| See accompanying Notes to Financial Statements. | |
| 24 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TYG Consolidated Schedule of Investments (continued) |
| November 30, 2019 |
| Principal Amount/ Shares | Fair Value | ||||||
| Corporate Bonds — 2.2%(1) | |||||||
| Refined Product Pipelines — 2.2%(1) | |||||||
| United States — 2.2%(1) | |||||||
| Buckeye Partners, | |||||||
| 5.600%, 10/15/2044 | $ | 3,000,000 | $ | 2,514,676 | |||
| Buckeye Partners, | |||||||
| 5.850%, 11/15/2043 | 21,000,000 | 17,928,501 | |||||
| 20,443,177 | |||||||
| Total Corporate Bonds | |||||||
| (Cost $20,600,197) | 20,443,177 | ||||||
| Private Investments — 1.5%(1) | |||||||
| Renewables — 1.5%(1) | |||||||
| United States — 1.5%(1) | |||||||
| TK NYS Solar Holdco, LLC(3)(5)(8)(9) | |||||||
| (Cost $53,481,470) | N/A | 14,093,091 | |||||
| Short-Term Investment — 0.0%(1) | |||||||
| United States Investment Company — 0.0%(1) | |||||||
| Invesco Government & Agency Portfolio — Institutional Class, | |||||||
| 1.53%(10)(Cost $221,598) | 221,598 | 221,598 | |||||
| Total Investments — 179.0%(1) | |||||||
| (Cost $1,855,791,250) | 1,664,977,279 | ||||||
| Interest Rate Swap Contracts — (0.0)%(1) | |||||||
| $10,000,000 notional — net unrealized depreciation(11) | (161,840 | ) | |||||
| Total Value of Options Written | |||||||
| (Premiums received $127,576)(12)— (0.0)%(1) | (63,728 | ) | |||||
| Other Assets and Liabilities — 0.6%(1) | 5,905,971 | ||||||
| Deferred Tax Liability — (12.5)%(1) | (116,472,157 | ) | |||||
| Credit Facility Borrowings — (10.1)%(1) | (93,900,000 | ) | |||||
| Senior Notes — (39.2)%(1) | (365,000,000 | ) | |||||
| Mandatory Redeemable Preferred Stock | |||||||
| at Liquidation Value — (17.8)%(1) | (165,000,000 | ) | |||||
| Total Net Assets Applicable to | |||||||
| Common Stockholders — 100.0%(1) | $ | 930,285,525 | |||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $161,840. |
| (3) | Restricted securities have a total fair value of $63,113,313, which represents 6.8% of net assets. See Note 6 to the financial statements for further disclosure. |
| (4) | All or a portion of the security represents cover for outstanding call option contracts written. |
| (5) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (6) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is added to the liquidation preference of the preferred stock. |
| (7) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares. |
| (8) | Deemed to be an affiliate of the fund. |
| (9) | See Affiliated Company Transactions Note 7 and Basis For Consolidation Note 13 to the financial statements for further disclosure. |
| (10) | Rate indicated is the current yield as of November 30, 2019. |
| (11) | See Schedule of Interest Rate Swap Contracts and Note 12 to the financial statements for further disclosure. |
| (12) | See Schedule of Options Written and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| Tortoise | 25 |
| NTG Schedule of Investments |
| November 30, 2019 |
| Shares | Fair Value | ||||
| Master Limited Partnerships — 123.7%(1) | |||||
| Crude Oil Pipelines — 22.9%(1) | |||||
| United States — 22.9%(1) | |||||
| BP Midstream Partners LP | 885,663 | $ | 12,930,680 | ||
| Delek Logistics Partners, LP | 481,177 | 15,455,405 | |||
| Genesis Energy L.P. | 447,697 | 8,510,720 | |||
| PBF Logistics LP | 1,043,763 | 21,344,953 | |||
| Plains All American Pipeline, L.P. | 3,010,839 | 52,388,599 | |||
| Shell Midstream Partners, L.P. | 2,164,800 | 42,559,968 | |||
| 153,190,325 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 37.9%(1) | |||||
| United States — 37.9%(1) | |||||
| Cheniere Energy Partners LP | 217,634 | 8,459,434 | |||
| DCP Midstream, LP | 1,693,902 | 35,758,271 | |||
| Energy Transfer LP | 9,403,483 | 111,055,134 | |||
| Enterprise Products Partners L.P. | 3,723,147 | 97,993,229 | |||
| 253,266,068 | |||||
| Natural Gas Gathering/Processing — 22.3%(1) | |||||
| United States — 22.3%(1) | |||||
| CNX Midstream Partners, LP | 2,374,388 | 34,428,626 | |||
| Enable Midstream Partners LP | 2,192,047 | 20,144,912 | |||
| EQM Midstream Partners, LP | 1,843,746 | 42,719,595 | |||
| Hess Midstream Partners LP | 429,313 | 8,779,451 | |||
| Noble Midstream Partners LP | 238,293 | 4,968,409 | |||
| Noble Midstream Partners LP(2) | 302,100 | 5,869,803 | |||
| Western Midstream Partners, LP | 1,791,794 | 31,768,508 | |||
| 148,679,304 | |||||
| Refined Product Pipelines — 39.9%(1) | |||||
| United States — 39.9%(1) | |||||
| Holly Energy Partners, L.P. | 1,640,761 | 36,687,416 | |||
| Magellan Midstream Partners, L.P. | 953,724 | 55,764,242 | |||
| MPLX LP | 3,818,007 | 90,295,865 | |||
| NuStar Energy L.P.(3) | 1,619,666 | 45,706,974 | |||
| Phillips 66 Partners LP | 676,333 | 37,692,038 | |||
| 266,146,535 | |||||
| Other — 0.7%(1) | |||||
| United States — 0.7%(1) | |||||
| Westlake Chemical Partners LP | 212,224 | 4,709,251 | |||
| Total Master Limited Partnerships | |||||
| (Cost $905,758,462) | 825,991,483 | ||||
| Common Stock — 37.2%(1) | |||||
| Crude Oil Pipelines — 1.7%(1) | |||||
| Canada — 1.7%(1) | |||||
| Enbridge Inc. | 295,200 | 11,217,600 | |||
| Marine Transportation — 1.5%(1) | |||||
| Monaco — 1.5%(1) | |||||
| GasLog Partners, LP | 713,490 | 10,381,279 | |||
| Natural Gas Gathering/Processing — 18.2%(1) | |||||
| United States — 18.2%(1) | |||||
| Antero Midstream Corporation | 4,392,612 | 20,118,163 | |||
| EnLink Midstream, LLC | 3,180,848 | 15,109,028 | |||
| Rattler Midstream LP | 2,771 | 44,087 | |||
| Targa Resources Corp. | 1,145,479 | 41,844,348 | |||
| The Williams Companies, Inc. | 1,951,699 | 44,342,601 | |||
| 121,458,227 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 15.8%(1) | |||||
| United States — 15.8%(1) | |||||
| Kinder Morgan Inc. | 1,407,434 | 27,599,781 | |||
| ONEOK, Inc.(3) | 543,433 | 38,610,915 | |||
| Tallgrass Energy, LP | 2,199,921 | 39,400,585 | |||
| 105,611,281 | |||||
| Total Common Stock | |||||
| (Cost $313,416,148) | 248,668,387 | ||||
| Preferred Stock — 10.5%(1) | |||||
| Crude Oil Pipelines — 0.6%(1) | |||||
| United States — 0.6%(1) | |||||
| SemGroup Corporation, 7.000%(2)(4)(5) | 3,763 | 4,165,840 | |||
| Natural Gas Gathering/Processing — 2.0%(1) | |||||
| United States — 2.0%(1) | |||||
| Targa Resources Corp., 9.500%(2)(4) | 12,252 | 13,088,076 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 7.9%(1) | |||||
| United States — 7.9%(1) | |||||
| Altus Midstream Company Preferred(2)(4)(6) | 7,202 | 7,451,871 | |||
| Crestwood Equity Partners LP, 9.25% | 4,898,611 | 44,969,249 | |||
| 52,421,120 | |||||
| Total Preferred Stock | |||||
| (Cost $67,525,396) | 69,675,036 | ||||
| See accompanying Notes to Financial Statements. | |
| 26 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| NTG Schedule of Investments (continued) |
| November 30, 2019 |
| �� | Principal Amount/ Shares | Fair Value | |||||
| Corporate Bonds — 2.0%(1) | |||||||
| Refined Product Pipelines — 2.0%(1) | |||||||
| United States — 2.0%(1) | |||||||
| Buckeye Partners, | |||||||
| 5.600%, 10/15/2044 | $ | 5,000,000 | $ | 4,191,127 | |||
| Buckeye Partners, | |||||||
| 5.850%, 11/15/2043 | 10,950,000 | 9,348,433 | |||||
| 13,539,560 | |||||||
| Total Corporate Bonds | |||||||
| (Cost $13,577,852) | 13,539,560 | ||||||
| Short-Term Investment — 0.1%(1) | |||||||
| United States Investment Company — 0.1%(1) | |||||||
| First American Government Obligations Fund, | |||||||
| 1.56%(7)(Cost $300,953) | 300,953 | 300,953 | |||||
| Total Investments — 173.5%(1) | |||||||
| (Cost $1,300,578,811) | 1,158,175,419 | ||||||
| Total Value of Options Written | |||||||
| (Premiums received $115,174)(8)— (0.0)%(1) | (45,245 | ) | |||||
| Other Assets and Liabilities — 0.0%(1) | 70,482 | ||||||
| Deferred Tax Liability — (4.2)%(1) | (27,892,485 | ) | |||||
| Credit Facility Borrowings — (8.0)%(1) | (53,600,000 | ) | |||||
| Senior Notes — (41.5)%(1) | (277,000,000 | ) | |||||
| Mandatory Redeemable Preferred Stock | |||||||
| at Liquidation Value — (19.8)%(1) | (132,000,000 | ) | |||||
| Total Net Assets Applicable to | |||||||
| Common Stockholders — 100.0%(1) | $ | 667,708,171 | |||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | Restricted securities have a total fair value of $30,575,590, which represents 4.6% of net assets. See Note 6 to the financial statements for further disclosure. |
| (3) | All or a portion of the security represents cover for outstanding call option contracts written. |
| (4) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (5) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is added to the liquidation preference of the preferred stock. |
| (6) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares. |
| (7) | Rate indicated is the current yield as of November 30, 2019. |
| (8) | See Schedule of Options Written and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| Tortoise | 27 |
| TTP Schedule of Investments |
| November 30, 2019 |
| Shares | Fair Value | ||||
| Common Stock — 104.6%(1) | |||||
| Marine Transportation — 1.3%(1) | |||||
| Monaco — 1.3%(1) | |||||
| GasLog Partners LP | 111,052 | $ | 1,615,807 | ||
| Crude Oil Pipelines — 40.5%(1) | |||||
| Canada — 26.2%(1) | |||||
| Gibson Energy Inc | 188,122 | 3,534,988 | |||
| Enbridge Inc. | 488,750 | 18,572,500 | |||
| Inter Pipeline Ltd. | 324,250 | 5,370,398 | |||
| Pembina Pipeline Corporation | 187,888 | 6,560,450 | |||
| United States — 14.3%(1) | |||||
| Plains GP Holdings, L.P. | 870,553 | 15,208,561 | |||
| SemGroup Corporation | 222,097 | 3,413,631 | |||
| 52,660,528 | |||||
| Natural Gas Gathering/Processing — 15.7%(1) | |||||
| United States — 15.7%(1) | |||||
| Antero Midstream Corporation | 671,725 | 3,076,500 | |||
| EnLink Midstream, LLC | 662,363 | 3,146,224 | |||
| Equitrans Midstream Corporation | 397,483 | 3,962,906 | |||
| Rattler Midstream LP | 13 | 207 | |||
| Targa Resources Corp. | 280,249 | 10,237,496 | |||
| 20,423,333 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 37.3%(1) | |||||
| Canada — 7.0%(1) | |||||
| Keyera Corp. | 82,825 | 2,020,898 | |||
| TC Energy Corporation | 137,605 | 7,008,223 | |||
| United States — 30.3%(1) | |||||
| Kinder Morgan Inc. | 303,779 | 5,957,105 | |||
| ONEOK, Inc. | 226,372 | 16,083,731 | |||
| Tallgrass Energy LP | 456,220 | 8,170,900 | |||
| The Williams Companies, Inc. | 402,880 | 9,153,434 | |||
| 48,394,291 | |||||
| Oil and Gas Production — 8.8%(1) | |||||
| United States — 8.8%(1) | |||||
| Cabot Oil & Gas Corporation(2) | 75,600 | 1,205,064 | |||
| Cimarex Energy Co.(2) | 13,200 | 606,804 | |||
| Concho Resources Inc.(2) | 8,400 | 609,504 | |||
| Continental Resources, Inc.(2) | 19,700 | 608,336 | |||
| Diamondback Energy, Inc.(2) | 6,400 | 494,976 | |||
| EOG Resources, Inc.(2) | 15,500 | 1,098,950 | |||
| EQT Corporation(2) | 50,400 | 439,992 | |||
| Noble Energy, Inc.(2) | 57,400 | 1,191,624 | |||
| Parsley Energy, Inc.(2) | 37,500 | 561,750 | |||
| Pioneer Natural Resources Company(2) | 9,900 | 1,265,616 | |||
| Viper Energy Partners LP(2) | 89,600 | 2,125,312 | |||
| WPX Energy, Inc.(2)(3) | 120,700 | 1,187,688 | |||
| 11,395,616 | |||||
| Power — 1.0%(1) | |||||
| United States — 1.0%(1) | |||||
| NextEra Energy Partners, LP | 25,349 | 1,346,792 | |||
| Total Common Stock | |||||
| (Cost $169,549,566) | 135,836,367 | ||||
| Master Limited Partnerships — 36.0%(1) | |||||
| Crude Oil Pipelines — 4.3%(1) | |||||
| United States — 4.3%(1) | |||||
| BP Midstream Partners LP | 33,891 | 494,809 | |||
| Genesis Energy L.P. | 46,531 | 884,554 | |||
| PBF Logistics LP | 78,278 | 1,600,785 | |||
| Shell Midstream Partners, L.P. | 132,089 | 2,596,870 | |||
| 5,577,018 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 13.1%(1) | |||||
| United States — 13.1%(1) | |||||
| DCP Midstream, LP | 89,185 | 1,882,695 | |||
| Energy Transfer LP | 958,093 | 11,315,078 | |||
| Enterprise Products Partners L.P. | 145,209 | 3,821,901 | |||
| 17,019,674 | |||||
| Natural Gas Gathering/Processing — 2.9%(1) | |||||
| United States — 2.9%(1) | |||||
| CNX Midstream Partners LP | 60,605 | 878,773 | |||
| EQM Midstream Partners, LP | 16,045 | 371,763 | |||
| Noble Midstream Partners LP(4) | 24,065 | 467,583 | |||
| Western Midstream Partners, LP | 114,429 | 2,028,826 | |||
| 3,746,945 | |||||
| Other — 0.2%(1) | |||||
| United States — 0.2%(1) | |||||
| Westlake Chemical Partners LP | 11,004 | 244,179 | |||
| Refined Product Pipelines — 15.5%(1) | |||||
| United States — 15.5%(1) | |||||
| Holly Energy Partners, L.P. | 162,052 | 3,623,483 | |||
| Magellan Midstream Partners, L.P. | 57,108 | 3,339,105 | |||
| MPLX LP | 265,910 | 6,288,771 | |||
| NuStar Energy L.P. | 135,021 | 3,810,293 | |||
| Phillips 66 Partners LP | 56,933 | 3,172,876 | |||
| 20,234,528 | |||||
| Total Master Limited Partnerships | |||||
| (Cost $52,089,151) | 46,822,344 | ||||
| See accompanying Notes to Financial Statements. | |
| 28 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TTP Schedule of Investments (continued) |
| November 30, 2019 |
| Shares | Fair Value | |||||
| Preferred Stock — 7.2%(1) | ||||||
| Crude Oil Pipelines — 2.5%(1) | ||||||
| United States — 2.5%(1) | ||||||
| SemGroup Corporation., 7.000%(4)(5)(6) | 2,877 | $ | 3,184,991 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 0.4%(1) | ||||||
| United States — 0.4%(1) | ||||||
| Altus Midstream Company, 7.000%(4)(5)(7) | 535 | 553,634 | ||||
| Natural Gas Gathering/Processing — 1.7%(1) | ||||||
| United States — 1.7%(1) | ||||||
| Targa Resources Corp., 9.500%(4)(5) | 2,108 | 2,251,850 | ||||
| Power — 2.6%(1) | ||||||
| United States — 2.6%(1) | ||||||
| Sempra Energy, 6.000%, 01/15/2021 | 28,811 | 3,397,105 | ||||
| Total Preferred Stock | ||||||
| (Cost $8,118,326) | 9,387,580 | |||||
| Short-Term Investment — 0.2%(1) | ||||||
| United States Investment Company — 0.2%(1) | ||||||
| Invesco Government & Agency Portfolio — Institutional Class, | ||||||
| 1.53%(8)(Cost $236,602) | 236,602 | 236,602 | ||||
| Total Investments — 148.0%(1) | ||||||
| (Cost $229,993,645) | 192,282,893 | |||||
| Total Value of Options Written | ||||||
| (Premiums received $225,578)(9)— (0.0)%(1) | (83,438 | ) | ||||
| Other Assets and Liabilities — (0.4)%(1) | (512,894 | ) | ||||
| Credit Facility Borrowings — (9.1)%(1) | (11,800,000 | ) | ||||
| Senior Notes — (26.2)%(1) | (34,000,000 | ) | ||||
| Mandatory Redeemable Preferred Stock | ||||||
| at Liquidation Value — (12.3)%(1) | (16,000,000 | ) | ||||
| Total Net Assets Applicable to | ||||||
| Common Stockholders — 100.0%(1) | $ | 129,886,561 | ||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | All or a portion of the security represents cover for outstanding call option contracts written. |
| (3) | Non-income producing security. |
| (4) | Restricted securities have a total fair value of $6,458,058, which represents 5.0% of net assets. See Note 6 to the financial statements for further disclosure. |
| (5) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (6) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is added to the liquidation preference of the preferred stock. |
| (7) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares. |
| (8) | Rate indicated is the current yield as of November 30, 2019. |
| (9) | See Schedule of Options Written and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| Tortoise | 29 |
| NDP Schedule of Investments (unaudited) |
| November 30, 2019 |
| Shares | Fair Value | |||||
| Common Stock — 130.7%(1) | ||||||
| Marine Transportation — 2.2%(1) | ||||||
| Monaco — 2.2%(1) | ||||||
| GasLog Partners LP | 91,843 | $ | 1,336,316 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 10.7%(1) | ||||||
| United States — 10.7%(1) | ||||||
| Cheniere Energy, Inc.(2) | 64,300 | 3,892,722 | ||||
| The Williams Companies, Inc. | 117,774 | 2,675,825 | ||||
| 6,568,547 | ||||||
| Natural Gas Gathering/Processing — 3.9%(1) | ||||||
| United States — 3.9%(1) | ||||||
| Equitrans Midstream Corporation | 188,304 | 1,877,391 | ||||
| Targa Resources Corp. | 14,000 | 511,420 | ||||
| 2,388,811 | ||||||
| Oil and Gas Production — 79.6%(1) | ||||||
| United States — 79.6%(1) | ||||||
| Cabot Oil & Gas Corporation | 293,600 | 4,679,984 | ||||
| Cimarex Energy Co.(3) | 57,500 | 2,643,275 | ||||
| Concho Resources Inc.(3) | 67,300 | 4,883,288 | ||||
| Continental Resources, Inc.(3) | 95,600 | 2,952,128 | ||||
| Diamondback Energy, Inc.(3) | 64,400 | 4,980,696 | ||||
| EOG Resources, Inc.(3) | 74,000 | 5,246,600 | ||||
| EQT Corporation(3) | 263,000 | 2,295,990 | ||||
| Marathon Oil Corporation(3) | 263,300 | 3,067,445 | ||||
| Noble Energy, Inc.(3) | 177,600 | 3,686,976 | ||||
| Parsley Energy, Inc.(3) | 267,800 | 4,011,644 | ||||
| Pioneer Natural Resources Company(3) | 38,800 | 4,960,192 | ||||
| Range Resources Corporation(3) | 691,000 | 2,411,590 | ||||
| WPX Energy, Inc.(2)(3) | 325,100 | 3,198,984 | ||||
| 49,018,792 | ||||||
| Oilfield Services — 1.1%(1) | ||||||
| United States — 1.1%(1) | ||||||
| Chart Industries, Inc.(2) | 12,417 | 685,418 | ||||
| Power/Utility — 6.7%(1) | ||||||
| United States — 6.7%(1) | ||||||
| NextEra Energy, Inc. | 17,700 | 4,138,614 | ||||
| Refining — 26.5%(1) | ||||||
| United States — 26.5%(1) | ||||||
| Delek US Holdings, Inc.(3) | 117,700 | 4,038,287 | ||||
| Marathon Petroleum Corporation(3) | 124,900 | 7,573,936 | ||||
| Valero Energy Corporation(3) | 49,200 | 4,698,108 | ||||
| 16,310,331 | ||||||
| Total Common Stock | ||||||
| (Cost $101,644,511) | 80,446,829 | |||||
| Master Limited Partnerships — 9.0%(1) | ||||||
| Natural Gas/Natural Gas Liquids Pipelines — 7.9%(1) | ||||||
| United States — 7.9%(1) | ||||||
| Energy Transfer LP | 274,437 | 3,241,101 | ||||
| Enterprise Products Partners L.P. | 60,652 | 1,596,361 | ||||
| 4,837,462 | ||||||
| Natural Gas Gathering/Processing — 1.1%(1) | ||||||
| United States — 1.1%(1) | ||||||
| Noble Midstream Partners LP(4) | 37,208 | 722,952 | ||||
| Total Master Limited Partnerships | ||||||
| (Cost $6,188,272) | 5,560,414 | |||||
| Preferred Stock — 3.5%(1) | ||||||
| Natural Gas Gathering/Processing — 3.5%(1) | ||||||
| United States — 3.5%(1) | ||||||
| Targa Resources Corp., 9.500%(4)(5) | ||||||
| (Cost $1,688,542) | 1,997 | 2,133,275 | ||||
| Short-Term Investment — 0.5%(1) | ||||||
| United States Investment Company — 0.5%(1) | ||||||
| Invesco Government & Agency Portfolio — Institutional Class, | ||||||
| 1.53%(6)(Cost $299,161) | 299,161 | 299,161 | ||||
| Total Investments — 143.7%(1) | ||||||
| (Cost $109,820,486) | 88,439,679 | |||||
| Total Value of Options Written | ||||||
| (Premiums received $534,008)(7)— (0.3)%(1) | (179,348 | ) | ||||
| Other Assets and Liabilities — (0.3)%(1) | (209,996 | ) | ||||
| Credit Facility Borrowings — (43.1)%(1) | (26,500,000 | ) | ||||
| Total Net Assets Applicable to | ||||||
| Common Stockholders — 100.0%(1) | $ | 61,550,335 | ||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | Non-income producing security. |
| (3) | All or a portion of the security represents cover for outstanding call option contracts written. |
| (4) | Restricted securities have a total fair value of $2,856,227, which represents 4.6% of net assets. See Note 6 to the financial statements for further disclosure. |
| (5) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (6) | Rate indicated is the current yield as of November 30, 2019. |
| (7) | See Schedule of Options Written and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| 30 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TPZ Schedule of Investments |
| November 30, 2019 |
| Principal Amount | Fair Value | |||||
| Corporate Bonds — 78.7%(1) | ||||||
| Crude Oil Pipelines — 12.1%(1) | ||||||
| Canada — 7.0%(1) | ||||||
| Enbridge Inc., | ||||||
| 5.500%, 07/15/2077 | $ | 8,500,000 | $ | 8,712,500 | ||
| United States — 5.1%(1) | ||||||
| SemGroup Corp., | ||||||
| 6.375%, 03/15/2025 | 6,000,000 | 6,255,000 | ||||
| 14,967,500 | ||||||
| Natural Gas/Natural Gas Liquids Pipelines — 40.9%(1) | ||||||
| Canada — 6.8%(1) | ||||||
| TransCanada Corporation, | ||||||
| 5.625%, 05/20/2075 | 7,000,000 | 7,311,220 | ||||
| TransCanada Corporation, | ||||||
| 5.300%, 03/15/2077 | 1,000,000 | 1,021,860 | ||||
| United States — 34.1%(1) | ||||||
| Antero Midstream Partners LP, | ||||||
| 5.750%, 03/01/2027 | 2,000,000 | 1,580,000 | ||||
| Cheniere Corp., | ||||||
| 7.000%, 06/30/2024 | 4,000,000 | 4,589,360 | ||||
| Cheniere Corp., | ||||||
| 5.875%, 03/31/2025 | 2,000,000 | 2,235,400 | ||||
| Kinder Morgan, Inc., | ||||||
| 6.500%, 09/15/2020 | 4,000,000 | 4,134,680 | ||||
| Florida Gas Transmission Co., LLC, | ||||||
| 5.450%, 07/15/2020(2) | 1,500,000 | 1,529,010 | ||||
| NGPL PipeCo LLC, | ||||||
| 4.875%, 08/15/2027(2) | 2,000,000 | 2,119,517 | ||||
| ONEOK, Inc., | ||||||
| 4.250%, 02/01/2022 | 4,500,000 | 4,667,097 | ||||
| ONEOK, Inc., | ||||||
| 7.500%, 09/01/2023 | 2,000,000 | 2,336,000 | ||||
| Rockies Express Pipeline LLC, | ||||||
| 4.950%, 07/15/2029(2) | 3,000,000 | 2,890,545 | ||||
| Ruby Pipeline, LLC, | ||||||
| 6.000%, 04/01/2022(2) | 1,102,273 | 1,140,775 | ||||
| Southern Star Central Corp., | ||||||
| 5.125%, 07/15/2022(2) | 3,000,000 | 3,030,000 | ||||
| Tallgrass Energy LP, | ||||||
| 5.500%, 01/15/2028(2) | 3,250,000 | 3,006,315 | ||||
| The Williams Companies, Inc., | ||||||
| 7.875%, 09/01/2021 | 5,000,000 | 5,463,531 | ||||
| The Williams Companies, Inc., | ||||||
| 4.550%, 06/24/2024 | 3,000,000 | 3,211,480 | ||||
| 50,266,790 | ||||||
| Natural Gas Gathering/Processing — 9.0%(1) | ||||||
| United States — 9.0%(1) | ||||||
| Blue Racer Midstream, LLC, | ||||||
| 6.625%, 07/15/2026(2) | 5,900,000 | 5,103,500 | ||||
| EnLink Midstream LLC, | ||||||
| 5.375%, 06/01/2029 | 2,000,000 | 1,694,400 | ||||
| Hess Corporation, | ||||||
| 5.625%, 02/15/2026(2) | 4,160,000 | 4,326,400 | ||||
| 11,124,300 | ||||||
| Oil and Gas Production — 2.3%(1) | ||||||
| United States — 2.3%(1) | ||||||
| Ascent Resources Utica Holdings, LLC, | ||||||
| 10.000%, 04/01/2022(2) | 1,302,000 | 1,249,920 | ||||
| Ascent Resources Utica Holdings, LLC, | ||||||
| 7.000%, 11/01/2026 | 2,000,000 | 1,540,000 | ||||
| 2,789,920 | ||||||
| Power/Utility — 13.0%(1) | ||||||
| United States — 13.0%(1) | ||||||
| The AES Corporation, | ||||||
| 5.500%, 04/15/2025 | 4,000,000 | 4,144,800 | ||||
| Duquesne Light Holdings, Inc., | ||||||
| 6.400%, 09/15/2020(2) | 3,000,000 | 3,090,538 | ||||
| Duquesne Light Holdings, Inc., | ||||||
| 5.900%, 12/01/2021(2) | 2,000,000 | 2,127,572 | ||||
| NextEra Energy, Inc., | ||||||
| 4.800%, 12/01/2077 | 4,500,000 | 4,584,186 | ||||
| NV Energy Inc., | ||||||
| 6.250%, 11/15/2020 | 1,000,000 | 1,039,556 | ||||
| Pattern Energy Group Inc., | ||||||
| 5.875%, 02/01/2024(2) | 1,000,000 | 1,030,000 | ||||
| 16,016,652 | ||||||
| Refined Product Pipelines — 1.4%(1) | ||||||
| United States — 1.4%(1) | ||||||
| Buckeye Partners, | ||||||
| 5.850%, 11/15/2043 | 2,000,000 | 1,707,476 | ||||
| Total Corporate Bonds | ||||||
| (Cost $95,495,122) | 96,872,638 | |||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 31 |
| TPZ Schedule of Investments (continued) |
| November 30, 2019 |
| Shares | Fair Value | ||||
| Master Limited Partnerships — 32.8%(1) | |||||
| Crude Oil Pipelines — 3.1%(1) | |||||
| United States — 3.1%(1) | |||||
| BP Midstream Partners LP | 25,000 | $ | 365,000 | ||
| PBF Logistics LP | 85,868 | 1,756,001 | |||
| Shell Midstream Partners, L.P. | 89,044 | 1,750,605 | |||
| 3,871,606 | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 10.6%(1) | |||||
| United States — 10.6%(1) | |||||
| DCP Midstream, LP | 96,758 | 2,042,561 | |||
| Energy Transfer LP | 717,787 | 8,477,065 | |||
| Enterprise Products Partners L.P. | 98,682 | 2,597,310 | |||
| 13,116,936 | |||||
| Natural Gas Gathering/Processing — 3.5%(1) | |||||
| United States — 3.5%(1) | |||||
| CNX Midstream Partners, LP | 47,302 | 685,879 | |||
| EQM Midstream Partners, LP | 8,010 | 185,592 | |||
| Noble Midstream Partners LP(2) | 21,975 | 426,974 | |||
| Western Midstream Partners, LP | 166,907 | 2,959,261 | |||
| 4,257,706 | |||||
| Other — 0.2%(1) | |||||
| United States — 0.2%(1) | |||||
| Westlake Chemical Partners LP | 9,289 | 206,123 | |||
| Refined Product Pipelines — 15.4%(1) | |||||
| United States — 15.4%(1) | |||||
| Holly Energy Partners, L.P. | 136,327 | 3,048,272 | |||
| Magellan Midstream Partners, L.P. | 56,119 | 3,281,278 | |||
| MPLX LP(3) | 312,118 | 7,381,592 | |||
| NuStar Energy L.P. | 102,338 | 2,887,978 | |||
| Phillips 66 Partners LP | 41,654 | 2,321,377 | |||
| 18,920,497 | |||||
| Total Master Limited Partnerships | |||||
| (Cost $44,187,560) | 40,372,868 | ||||
| Common Stock — 25.6%(1) | |||||
| Crude Oil Pipelines — 6.2%(1) | |||||
| United States — 6.2%(1) | |||||
| Enbridge Inc. | 47,888 | 1,819,744 | |||
| Plains GP Holdings, L.P. | 331,453 | 5,790,484 | |||
| 7,610,228 | |||||
| Marine Transportation — 1.0%(1) | |||||
| Monaco — 1.0%(1) | |||||
| GasLog Partners LP | 86,675 | 1,261,121 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 7.8%(1) | |||||
| United States — 7.8%(1) | |||||
| ONEOK, Inc. | 69,117 | 4,910,763 | |||
| Tallgrass Energy LP | 264,052 | 4,729,171 | |||
| 9,639,934 | |||||
| Natural Gas Gathering/Processing — 8.8%(1) | |||||
| United States — 8.8%(1) | |||||
| Antero Midstream Corporation | 444,931 | 2,037,784 | |||
| EnLink Midstream, LLC | 259,598 | 1,233,091 | |||
| Equitrans Midstream Corporation | 145,093 | 1,446,577 | |||
| Targa Resources Corp. | 166,023 | 6,064,820 | |||
| 10,782,272 | |||||
| Power — 1.8%(1) | |||||
| United States — 1.8%(1) | |||||
| DTE Energy Company | 17,229 | 2,152,591 | |||
| Total Common Stock | |||||
| (Cost $37,437,512) | 31,446,146 | ||||
| See accompanying Notes to Financial Statements. | |
| 32 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TPZ Schedule of Investments (continued) |
| November 30, 2019 |
| Shares | Fair Value | |||||
| Preferred Stock — 5.8%(1) | ||||||
| Crude Oil Pipelines — 1.9%(1) | ||||||
| United States — 1.9%(1) | ||||||
| SemGroup Corporation, 7.000%(2)(4)(5) | 2,120 | $ | 2,346,952 | |||
| Natural Gas Gathering/Processing — 1.5%(1) | ||||||
| United States — 1.5%(1) | ||||||
| Targa Resources Corp., 9.500%(2)(4) | 1,685 | 1,799,984 | ||||
| Natural Gas Liquids Pipelines — 0.4%(1) | ||||||
| United States — 0.4%(1) | ||||||
| Altus Midstream Company, 7.000%(2)(4)(6) | 467 | 482,845 | ||||
| Power — 2.0%(1) | ||||||
| United States — 2.0%(1) | ||||||
| Sempra Energy, | ||||||
| 6.000%, 01/15/2021 | 21,189 | 2,498,395 | ||||
| Total Preferred Stock | ||||||
| (Cost $6,161,716) | 7,128,176 | |||||
| Short-Term Investment — 0.2%(1) | ||||||
| United States Investment Company — 0.2%(1) | ||||||
| Invesco Government & Agency Portfolio — Institutional Class, | ||||||
| 1.53%(7)(Cost $244,583) | 244,583 | 244,583 | ||||
| Total Investments — 143.1%(1) | ||||||
| (Cost $183,526,493) | 176,064,411 | |||||
| Interest Rate Swap Contracts — 0.0%(1) | ||||||
| $3,000,000 notional — net unrealized depreciation(8) | (8,589 | ) | ||||
| Other Assets and Liabilities — 0.9%(1) | 1,059,108 | |||||
| Credit Facility Borrowings — (44.0)%(1) | (54,100,000 | ) | ||||
| Total Net Assets Applicable to | ||||||
| Common Stockholders — 100.0%(1) | $ | 123,014,930 | ||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | Restricted securities have a total fair value of $35,700,847 which represents 29.0% of net assets. See Note 6 to the financial statements for further disclosure. |
| (3) | A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $8,589. |
| (4) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (5) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is added to the liquidation preference of the preferred stock. |
| (6) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares. |
| (7) | Rate indicated is the current yield as of November 30, 2019. |
| (8) | See Schedule of Interest Rate Swap Contracts and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| Tortoise | 33 |
| TEAF Consolidated Schedule of Investments |
| November 30, 2019 |
| Shares | Fair Value | ||||
| Common Stock — 45.2%(1) | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 8.2%(1) | |||||
| Italy — 1.7%(1) | |||||
| Snam SpA(2) | 823,467 | $ | 4,093,700 | ||
| United States — 6.5%(1) | |||||
| Cheniere Energy Inc.(2)(3) | 82,600 | 5,000,604 | |||
| ONEOK, Inc.(4) | 46,732 | 3,320,309 | |||
| Tallgrass Energy LP(2) | 325,146 | 5,823,365 | |||
| The Williams Companies, Inc.(4) | 53,628 | 1,218,428 | |||
| 19,456,406 | |||||
| Natural Gas Gathering/Processing — 3.6%(1) | |||||
| United States — 3.6%(1) | |||||
| Targa Resources Corp.(2) | 232,101 | 8,478,650 | |||
| Oil and Gas Production — 5.3%(1) | |||||
| United States — 5.3%(1) | |||||
| Cabot Oil & Gas Corporation(2) | 211,800 | 3,376,092 | |||
| Cimarex Energy Co.(2) | 44,100 | 2,027,277 | |||
| EQT Corporation(2) | 273,300 | 2,385,909 | |||
| Noble Energy, Inc.(2) | 230,500 | 4,785,180 | |||
| 12,574,458 | |||||
| Other — 1.1%(1) | |||||
| Australia — 1.1%(1) | |||||
| Spark Infrastructure Group | 1,734,851 | 2,546,385 | |||
| Power — 18.5%(1) | |||||
| Australia — 0.7%(1) | |||||
| APA Group | 235,760 | 1,754,143 | |||
| Canada — 1.4%(1) | |||||
| Algonquin Power & Utilities Corp | 233,452 | 3,274,268 | |||
| France — 2.0%(1) | |||||
| Engie SA | 310,111 | 4,906,506 | |||
| Italy — 2.3%(1) | |||||
| Enel SpA(2) | 741,420 | 5,600,616 | |||
| Portugal — 3.9%(1) | |||||
| EDP — Energias de Portugal SA | 1,330,915 | 5,381,671 | |||
| REN — Redes Energeticas Nacionais | |||||
| SGPS SA | 1,237,890 | 3,778,005 | |||
| Spain — 1.4%(1) | |||||
| Iberdrola SA | 344,100 | 3,384,851 | |||
| United States — 2.0%(1) | |||||
| Covanta Holding Corp(4) | 316,092 | 4,649,713 | |||
| United Kingdom — 4.8%(1) | |||||
| National Grid PLC(2) | 524,577 | 6,036,007 | |||
| SSE PLC(2) | 311,504 | 5,237,257 | |||
| 44,003,037 | |||||
| Renewables — 6.0%(1) | |||||
| Canada — 3.5%(1) | |||||
| Innergex Renewable Energy Inc | 295,054 | 3,805,070 | |||
| TransAlta Renewables Inc | 389,060 | 4,402,298 | |||
| United States — 2.5%(1) | |||||
| Pattern Energy Group Inc A(4) | 160,244 | 4,409,915 | |||
| TerraForm Power Inc(5)(6) | 105,909 | 1,642,649 | |||
| 14,259,932 | |||||
| Water Infrastructure — 2.5%(1) | |||||
| France — 0.6%(1) | |||||
| Suez | 94,620 | 1,400,623 | |||
| United Kingdom — 1.9%(1) | |||||
| Pennon Group PLC | 292,218 | 3,446,662 | |||
| Pentair PLC(2) | 23,375 | 1,036,681 | |||
| 5,883,966 | |||||
| Total Common Stock | |||||
| (Cost $112,039,913) | 107,202,834 | ||||
| Master Limited Partnerships — 18.9%(1) | |||||
| Natural Gas/Natural Gas Liquids Pipelines — 7.6%(1) | |||||
| United States — 7.6%(1) | |||||
| DCP Midstream, LP(4) | 134,027 | 2,829,310 | |||
| Energy Transfer LP(4) | 574,030 | 6,779,294 | |||
| Enterprise Products Partners L.P.(4) | 321,504 | 8,461,985 | |||
| 18,070,589 | |||||
| Natural Gas Gathering/Processing — 6.3%(1) | |||||
| United States — 6.3%(1) | |||||
| EQM Midstream Partners, LP(4) | 199,732 | 4,627,790 | |||
| Noble Midstream Partners LP(4) | 110,620 | 2,306,427 | |||
| Noble Midstream Partners LP(7) | 265,040 | 5,149,727 | |||
| Western Midstream Partners, LP(4) | 157,122 | 2,785,773 | |||
| 14,869,717 | |||||
| Other — 2.5%(1) | |||||
| United States — 2.5%(1) | |||||
| Enviva Partners LP(4) | 175,439 | 6,063,172 | |||
| Renewables — 2.5%(1) | |||||
| Canada — 2.5%(1) | |||||
| Brookfield Renewable Partners LP(4) | 125,345 | 5,846,854 | |||
| Total Master Limited Partnerships | |||||
| (Cost $52,916,846) | 44,850,332 | ||||
| See accompanying Notes to Financial Statements. | |
| 34 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| TEAF Consolidated Schedule of Investments (continued) |
| November 30, 2019 |
| Principal | ||||||
| Amount | Fair Value | |||||
| Corporate Bonds — 13.5%(1) | ||||||
| Crude Oil Pipelines — 2.9%(1) | ||||||
| Canada — 2.9%(1) | ||||||
| Enbridge Inc, | ||||||
| 6.250%, 03/01/2078(4) | $ | 4,000,000 | $ | 4,290,000 | ||
| Genesis Energy LP / Genesis | ||||||
| Energy Finance Corp, | ||||||
| 6.250%, 05/15/2026(4) | 3,000,000 | 2,615,415 | ||||
| 6,905,415 | ||||||
| Healthcare — 2.3%(1) | ||||||
| United States — 2.3%(1) | ||||||
| Grace Commons Property, | ||||||
| 15.000%, 10/31/2021(7) | 1,825,000 | 1,825,000 | ||||
| Grace Commons Property, | ||||||
| 8.000%, 10/31/2021(7) | 3,650,000 | 3,650,000 | ||||
| 5,475,000 | ||||||
| Natural Gas/Natural Gas Liquids Pipelines — 1.7%(1) | ||||||
| Canada — 1.7%(1) | ||||||
| TransCanada Corporation, | ||||||
| 5.300%, 03/15/2077(4) | 4,000,000 | 4,087,440 | ||||
| Natural Gas Gathering/Processing — 2.3%(1) | ||||||
| United States — 2.3%(1) | ||||||
| Antero Midstream Partners LP, | ||||||
| 5.750%, 01/15/2028(4)(7) | 3,750,000 | 2,896,875 | ||||
| Blue Racer Midstream, LLC, | ||||||
| 6.625%, 07/15/2026(4)(7) | 3,000,000 | 2,595,000 | ||||
| 5,491,875 | ||||||
| Oil and Gas Production — 3.3%(1) | ||||||
| United States — 3.3%(1) | ||||||
| Ascent Resources Utica Holdings, LLC, | ||||||
| 7.000%, 11/01/2026(4) | 3,500,000 | 2,695,000 | ||||
| Southwestern Energy Co, | ||||||
| 7.750%, 10/01/2027(4) | 3,000,000 | 2,606,250 | ||||
| Southwestern Energy Co, | ||||||
| 7.500%, 04/01/2026(4) | 3,000,000 | 2,628,750 | ||||
| 7,930,000 | ||||||
| Senior Living — 1.0%(1) | ||||||
| United States — 1.0%(1) | ||||||
| Realco Perry Hall, | ||||||
| 10.000%, 10/01/2024(7) | 2,280,000 | 2,279,850 | ||||
| Total Corporate Bonds | ||||||
| (Cost $33,575,781) | 32,169,580 | |||||
| Principal | ||||||
| Amount/Shares | ||||||
| Preferred Bonds — 4.9%(1) | ||||||
| Natural Gas Gathering/Processing — 0.6%(1) | ||||||
| United States — 0.6%(1) | ||||||
| EnLink Midstream Partners LP, | ||||||
| 6.000%, Perpetuity | $ | 3,000,000 | 1,500,000 | |||
| Natural Gas/Natural Gas Liquids Pipelines — 4.3%(1) | ||||||
| United States — 4.3%(1) | ||||||
| DCP Midstream LP, | ||||||
| 7.375% Perpetuity(4) | 5,000,000 | 4,775,000 | ||||
| Energy Transfer Operating LP, | ||||||
| 6.250%, Perpetuity(4) | 6,000,000 | 5,400,000 | ||||
| 10,175,000 | ||||||
| Total Preferred Bonds | ||||||
| (Cost $13,149,496) | 11,675,000 | |||||
| Term Loan — 0.3%(1) | ||||||
| Education — 0.3%(1) | ||||||
| United States — 0.3%(1) | ||||||
| The Village Charter School, Inc., | ||||||
| 10.000%, 12/15/2021 | ||||||
| (Cost $800,000) | 800,000 | 800,000 | ||||
| Preferred Stock — 6.1%(1) | ||||||
| Natural Gas/Natural Gas Liquids Pipelines — 2.4%(1) | ||||||
| United States — 2.4%(1) | ||||||
| Crestwood Equity Partners LP, 9.25%(4) | 161,120 | 1,479,082 | ||||
| Altus Midstream Company | ||||||
| Preferred(7)(8)(9) | 4,148 | 4,291,720 | ||||
| 5,770,802 | ||||||
| Natural Gas Gathering/Processing — 1.8%(1) | ||||||
| United States — 1.8%(1) | ||||||
| Targa Resources Corp., 9.500%(7)(8) | 4,000 | 4,272,960 | ||||
| Power/Utility — 1.3%(1) | ||||||
| United States — 1.3%(1) | ||||||
| Aqua America Inc., | ||||||
| 6.000%, 04/30/2022 | 50,000 | 2,975,500 | ||||
| Renewables — 0.6%(1) | ||||||
| United States — 0.6%(1) | ||||||
| NextEra Energy Partners LP | 29,410 | 1,460,207 | ||||
| Total Preferred Stock | ||||||
| (Cost $13,881,284) | 14,479,469 | |||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 35 |
| TEAF Consolidated Schedule of Investments (continued) |
| November 30, 2019 |
| Principal | |||||||
| Amount/Shares | Fair Value | ||||||
| Private Investments — 17.2%(1) | |||||||
| Natural Gas/Natural Gas Liquids Pipelines — 0.8%(1) | |||||||
| Mexico — 0.8%(1) | |||||||
| Mexico Pacific Limited LLC | |||||||
| Series A(7)(8) | 88,889 | $ | 2,000,000 | ||||
| Renewables — 16.4%(1) | |||||||
| United States — 16.4%(1) | |||||||
| Renewable Holdco, LLC(7)(8)(10) | N/A | 12,497,810 | |||||
| Renewable Holdco I, LLC(7)(8)(10) | N/A | 25,400,059 | |||||
| Renewable Holdco II, LLC(7)(8)(10) | N/A | 987,905 | |||||
| 38,885,774 | |||||||
| Total Private Investments | |||||||
| (Cost $41,278,372) | 40,885,774 | ||||||
| Municipal Bonds — 5.4%(1) | |||||||
| Florida — 0.3%(1) | |||||||
| Florida Development Finance Corp, | |||||||
| 10.000%, 07/01/2025 | 445,000 | 445,036 | |||||
| (Obligor: Athenian Academy, | |||||||
| Inc. — Series B) | |||||||
| Public Finance Authority Educational | |||||||
| Facility Revenue, | |||||||
| 12.000%, 10/01/2029 | 185,000 | 183,539 | |||||
| (Obligor: St. James Christian | |||||||
| Academy, Inc.) | |||||||
| 628,575 | |||||||
| Pennsylvania — 1.3%(1) | |||||||
| Philadelphia Authority for Industrial | |||||||
| Development, | |||||||
| 10.000%, 06/15/2030 | 3,135,000 | 3,161,679 | |||||
| (Obligor: MaST Community | |||||||
| Charter School III) | |||||||
| Wisconsin — 3.8%(1) | |||||||
| Public Finance Authority, | |||||||
| 9.000%, 06/01/2029 | 8,925,000 | 8,954,096 | |||||
| (Obligor: Vonore Fiber Products) | |||||||
| �� | |||||||
| Total Municipal Bonds | |||||||
| (Cost $12,690,000) | 12,744,350 | ||||||
| Construction Note — 1.5%(1) | |||||||
| Renewables — 1.5%(1) | |||||||
| Bermuda — 1.5%(1) | |||||||
| Saturn Solar Bermuda 1 Ltd., | |||||||
| 6.000%, 02/28/2020 | |||||||
| (Cost $3,770,670)(7)(8) | 3,510,000 | 3,516,669 | |||||
| Short-Term Investment — 0.2%(1) | |||||||
| United States Investment Company — 0.2%(1) | |||||||
| First American Government Obligations Fund, | |||||||
| 1.56%(11)(Cost $410,126) | 410,126 | 410,126 | |||||
| Total Investments — 113.2%(1) | |||||||
| (Cost $284,512,488) | 268,734,134 | ||||||
| Total Value of Options Written | |||||||
| (Premiums received $570,114)(12)— (0.1)%(1) | (288,066 | ) | |||||
| Forward Currency Contracts — (0.2)%(1) | |||||||
| $7,357,919 notional — net unrealized depreciation(6) | (320,491 | ) | |||||
| Deferred Tax Asset — 0.2%(1) | 418,970 | ||||||
| Other Assets and Liabilities — 0.4%(1) | 916,131 | ||||||
| Credit Facility Borrowings — (13.5)%(1) | (32,000,000 | ) | |||||
| Total Net Assets Applicable to | |||||||
| Common Stockholders — 100.0%(1) | $ | 237,460,678 | |||||
| (1) | Calculated as a percentage of net assets applicable to common stockholders. |
| (2) | All or a portion of the security represents cover for outstanding call option contracts written. |
| (3) | Non-income producing security. |
| (4) | All or a portion of the security is segregated as collateral for the margin borrowing facility. See Note 11 to the financial statements for further disclosure. |
| (5) | All or a portion of the security is segregated as collateral for forward currency contracts. |
| (6) | See Schedule of Forward Currency Contracts and Note 12 to the financial statements for further disclosure. |
| (7) | Restricted securities have a total fair value of $71,363,575 which represents 30.1% of net assets. See Note 7 to the financial statements for further disclosure. |
| (8) | Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements. |
| (9) | Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares. |
| (10) | Deemed to be an affiliate of the fund. See Notes 7 and 13 to the financial statements for further disclosure. |
| (11) | Rate indicated is the current yield as of November 30, 2019. |
| (12) | See Schedule of Options Written and Note 12 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| 36 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Schedule of Interest Rate Swap Contracts |
| November 30, 2019 |
| TYG | |||||||||||||
| Fixed Rate | Floating Rate | ||||||||||||
| Maturity | Notional | Paid by | Received by | Unrealized | |||||||||
| Counterparty | Date | Amount | TYG | TYG | Depreciation | ||||||||
| The Bank of Nova Scotia | 09/02/2021 | $ | 10,000,000 | 2.381% | 1-month U.S. Dollar LIBOR | $ | (161,840 | ) | |||||
| TPZ | |||||||||||||
| Fixed Rate | Floating Rate | ||||||||||||
| Maturity | Notional | Paid by | Received by | Unrealized | |||||||||
| Counterparty | Date | Amount | TPZ | TPZ | Depreciation | ||||||||
| Wells Fargo Bank, N.A. | 08/06/2020 | $ | 3,000,000 | 2.180% | 3-month U.S. Dollar LIBOR | $ | (8,589 | ) | |||||
Schedule of Forward Currency Contracts
November 30, 2019
| TEAF | Contract Amount | |||||||||
| Unrealized | ||||||||||
| Counterparty | Settlement Date | Purchases (000’s) | Sales (000’s) | Depreciation | ||||||
| Morgan Stanley & Co. LLC | 12/16/19 | USD 7,358 | GBP 5,687 | $ | (320,491 | ) | ||||
USD = U.S. Dollars
GBP = British Pounds
| See accompanying Notes to Financial Statements. | |
| Tortoise | 37 |
| Schedule of Options Written |
| November 30, 2019 |
| TYG | ||||||||||||||
| Call Options Written | Expiration Date | Strike Price | Contracts | Notional Value | Fair Value | |||||||||
| NuStar Energy LP | December 2019 | $ | 29.00 | 1,450 | $ | 4,205,000 | $ | (1,853 | ) | |||||
| ONEOK, Inc. | December 2019 | 73.50 | 1,125 | 8,268,750 | (39,375 | ) | ||||||||
| ONEOK, Inc. | December 2019 | 74.00 | 1,125 | 8,325,000 | (22,500 | ) | ||||||||
| Total Value of Call Options Written(Premiums received $127,576) | $ | 20,798,750 | $ | (63,728 | ) | |||||||||
| NTG | ||||||||||||||
| Call Options Written | Expiration Date | Strike Price | Contracts | Notional Value | Fair Value | |||||||||
| NuStar Energy LP | December 2019 | $ | 29.00 | 2,050 | $ | 5,945,000 | $ | (2,620 | ) | |||||
| ONEOK, Inc. | December 2019 | 73.50 | 775 | 5,696,250 | (27,125 | ) | ||||||||
| ONEOK, Inc. | December 2019 | 74.00 | 775 | 5,735,000 | (15,500 | ) | ||||||||
| Total Value of Call Options Written(Premiums received $115,174) | $ | 17,376,250 | $ | (45,245 | ) | |||||||||
| TTP | ||||||||||||||
| Call Options Written | Expiration Date | Strike Price | Contracts | Notional Value | Fair Value | |||||||||
| Cabot Oil & Gas Corporation | December 2019 | $ | 19.15 | 756 | $ | 1,447,740 | $ | (429 | ) | |||||
| Cimarex Energy Co. | December 2019 | 49.30 | 132 | 650,760 | (11,207 | ) | ||||||||
| Concho Resources Inc. | December 2019 | 77.75 | 84 | 653,100 | (7,986 | ) | ||||||||
| Continental Resources, Inc. | December 2019 | 33.65 | 197 | 662,905 | (8,882 | ) | ||||||||
| Diamondback Energy, Inc. | December 2019 | 85.00 | 64 | 544,000 | (4,160 | ) | ||||||||
| EOG Resources, Inc. | December 2019 | 78.50 | 155 | 1,216,750 | (5,873 | ) | ||||||||
| EQT Corporation | December 2019 | 10.90 | 504 | 549,360 | (3,834 | ) | ||||||||
| Noble Energy, Inc. | December 2019 | 22.10 | 574 | 1,268,540 | (17,173 | ) | ||||||||
| Parsley Energy, Inc. | December 2019 | 17.20 | 375 | 645,000 | (2,774 | ) | ||||||||
| Pioneer Natural Resources Company | December 2019 | 142.00 | 99 | 1,405,800 | (6,088 | ) | ||||||||
| Viper Energy Partners LP | December 2019 | 26.70 | 896 | 2,392,320 | (2,962 | ) | ||||||||
| WPX Energy, Inc. | December 2019 | 11.00 | 1,207 | 1,327,700 | (12,070 | ) | ||||||||
| Total Value of Call Options Written(Premiums received $225,578) | $ | 12,763,975 | $ | (83,438 | ) | |||||||||
| NDP | ||||||||||||||
| Call Options Written | Expiration Date | Strike Price | Contracts | Notional Value | Fair Value | |||||||||
| Cimarex Energy Co. | December 2019 | $ | 54.00 | 575 | $ | 3,105,000 | $ | (11,067 | ) | |||||
| Concho Resources Inc. | December 2019 | 83.00 | 673 | 5,585,900 | (19,565 | ) | ||||||||
| Continental Resources, Inc. | December 2019 | 35.50 | 956 | 3,393,800 | (18,322 | ) | ||||||||
| Delek US Holdings, Inc. | December 2019 | 40.00 | 1,177 | 4,708,000 | (17,655 | ) | ||||||||
| Diamondback Energy, Inc. | December 2019 | 90.00 | 644 | 5,796,000 | (14,168 | ) | ||||||||
| EOG Resources, Inc. | December 2019 | 85.00 | 740 | 6,290,000 | (4,810 | ) | ||||||||
| EQT Corporation | December 2019 | 12.00 | 2,630 | 3,156,000 | (7,890 | ) | ||||||||
| Marathon Petroleum Corporation | December 2019 | 70.85 | 1,249 | 8,849,165 | (2,840 | ) | ||||||||
| Noble Energy, Inc. | December 2019 | 24.55 | 1,776 | 4,360,080 | (5,087 | ) | ||||||||
| Parsley Energy, Inc. | December 2019 | 18.30 | 2,678 | 4,900,740 | (6,160 | ) | ||||||||
| Pioneer Natural Resources Company | December 2019 | 153.00 | 388 | 5,936,400 | (6,496 | ) | ||||||||
| Range Resources Corporation | December 2019 | 4.35 | 6,910 | 3,005,850 | (53,475 | ) | ||||||||
| Valero Energy Corporation | December 2019 | 110.00 | 492 | 5,412,000 | (984 | ) | ||||||||
| WPX Energy, Inc. | December 2019 | 11.60 | 3,251 | 3,771,160 | (10,829 | ) | ||||||||
| Total Value of Call Options Written(Premiums received $534,008) | $ | 68,270,095 | $ | (179,348 | ) | |||||||||
| See accompanying Notes to Financial Statements. | |
| 38 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Schedule of Options Written (continued) |
| November 30, 2019 |
| TEAF | ||||||||||||||
| Call Options Written | Expiration Date | Strike Price | Contracts | Notional Value | Fair Value | |||||||||
| USD | ||||||||||||||
| Cabot Oil & Gas Corporation | December 2019 | $ | 19.00 | 2,118 | $ | 4,024,200 | $ | (10,590 | ) | |||||
| Cheniere Energy Inc. | December 2019 | 66.00 | 826 | 5,451,600 | (11,462 | ) | ||||||||
| Cimarex Energy Co. | December 2019 | 50.45 | 441 | 2,224,845 | (26,593 | ) | ||||||||
| EQT Corporation | December 2019 | 11.00 | 2,733 | 3,006,300 | (27,330 | ) | ||||||||
| Noble Energy, Inc. | December 2019 | 21.40 | 2,305 | 4,932,700 | (118,819 | ) | ||||||||
| Pentair PLC | December 2019 | 45.00 | 233 | 1,048,500 | (11,650 | ) | ||||||||
| Tallgrass Energy LP | December 2019 | 19.50 | 1,626 | 3,170,700 | (173 | ) | ||||||||
| Tallgrass Energy LP | December 2019 | 20.00 | 1,625 | 3,250,000 | (20,313 | ) | ||||||||
| Targa Resources Corp. | December 2019 | 42.00 | 2,321 | 9,748,200 | (11,605 | ) | ||||||||
| Euro | ||||||||||||||
| Enel SpA | December 2019 | 7.10 | 1,482 | 5,796,653 | (13,798 | ) | ||||||||
| Snam SpA | December 2019 | 4.80 | 700 | 3,702,031 | (2,160 | ) | ||||||||
| GBP | ||||||||||||||
| National Grid PLC | December 2019 | 9.50 | 524 | 6,438,012 | (27,107 | ) | ||||||||
| SSE PLC | December 2019 | 14.00 | 250 | 4,526,525 | (6,466 | ) | ||||||||
| Total Value of Call Options Written(Premiums received $570,114) | $ | 57,320,266 | $ | (288,066 | ) | |||||||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 39 |
| Statements of Assets & Liabilities |
| November 30, 2019 |
| Tortoise Energy | Tortoise | |||||
| Infrastructure | Midstream Energy | |||||
| Corp.(1) | Fund, Inc. | |||||
| Assets | ||||||
| Investments in unaffiliated securities at fair value(2) | $ | 1,650,884,188 | $ | 1,158,175,419 | ||
| Investments in affiliated securities at fair value(3) | 14,093,091 | — | ||||
| Cash | — | — | ||||
| Receivable for Adviser fee waiver | — | — | ||||
| Receivable for investments sold | 2,344,925 | 2,291,436 | ||||
| Receivable for premiums on options written | — | — | ||||
| Unrealized appreciation of interest rate swap contracts, net | — | — | ||||
| Unrealized appreciation of forward currency contracts | — | — | ||||
| Dividends, distributions and interest receivable from investments | 626,441 | 395,119 | ||||
| Tax reclaims receivable | — | — | ||||
| Escrow receivable | 814,669 | — | ||||
| Current tax asset | 11,138,214 | 2,319,733 | ||||
| Deferred tax asset | — | — | ||||
| Prepaid expenses and other assets | 843,210 | 317,842 | ||||
| Total assets | 1,680,744,738 | 1,163,499,549 | ||||
| Liabilities | ||||||
| Call options written, at fair value(4) | 63,728 | 45,245 | ||||
| Payable to Adviser | 2,933,283 | 2,054,385 | ||||
| Accrued directors’ fees and expenses | 45,305 | 39,133 | ||||
| Payable for investments purchased | — | — | ||||
| Accrued expenses and other liabilities | 8,186,415 | 3,822,708 | ||||
| Unrealized depreciation of interest rate swap contracts | 161,840 | — | ||||
| Unrealized depreciation of forward currency contracts | — | — | ||||
| Current tax liability | — | — | ||||
| Deferred tax liability | 116,472,157 | 27,892,485 | ||||
| Credit facility borrowings | 93,900,000 | 53,600,000 | ||||
| Senior notes, net(5) | 364,563,653 | 276,743,681 | ||||
| Mandatory redeemable preferred stock, net(6) | 164,132,832 | 131,593,741 | ||||
| Total liabilities | 750,459,213 | 495,791,378 | ||||
| Net assets applicable to common stockholders | $ | 930,285,525 | $ | 667,708,171 | ||
| Net Assets Applicable to Common Stockholders Consist of: | ||||||
| Capital stock, $0.001 par value per share | $ | 53,732 | $ | 63,208 | ||
| Additional paid-in capital | 697,107,449 | 594,868,375 | ||||
| Total distributable earnings (loss) | 233,124,344 | 72,776,588 | ||||
| Net assets applicable to common stockholders | $ | 930,285,525 | $ | 667,708,171 | ||
| Capital shares: | ||||||
| Authorized | 100,000,000 | 100,000,000 | ||||
| Outstanding | 53,732,462 | 63,208,377 | ||||
| Net Asset Value per common share outstanding (net assets applicable | ||||||
| to common stock, divided by common shares outstanding) | $ | 17.31 | $ | 10.56 | ||
| (1) Consolidated Statement of Assets and Liabilities (See Note 13 to the financial statements for further disclosure) | ||||||
| (2) Investments in unaffiliated securities at cost | $ | 1,802,309,780 | $ | 1,300,578,811 | ||
| (3) Investments in affiliated securities at cost | $ | 53,481,470 | $ | — | ||
| (4) Call options written, premiums received | $ | 127,576 | $ | 115,174 | ||
| (5) Deferred debt issuance and offering costs | $ | 436,347 | $ | 256,319 | ||
| (6) Deferred offering costs | $ | 867,168 | $ | 406,259 | ||
| See accompanying Notes to Financial Statements. | |
| 40 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise Power | Tortoise | ||||||||||||||
| Tortoise Pipeline | Tortoise Energy | and Energy | Essential Assets | ||||||||||||
| & Energy | Independence | Infrastructure | Income Term | ||||||||||||
| Fund, Inc. | Fund, Inc. | Fund, Inc. | Fund(1) | ||||||||||||
| $ | 192,282,893 | $ | 88,439,679 | $ | 176,064,411 | $ | 229,848,360 | ||||||||
| — | — | — | 38,885,774 | ||||||||||||
| — | — | 12,623 | 378,442 | ||||||||||||
| — | — | — | 115,403 | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | 66,735 | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| 373,815 | 234,463 | 1,747,971 | 1,945,556 | ||||||||||||
| — | — | 12,238 | 252,481 | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | 418,970 | ||||||||||||
| 94,510 | 9,623 | 5,902 | 3,621 | ||||||||||||
| 192,751,218 | 88,683,765 | 177,843,145 | 271,915,342 | ||||||||||||
| 83,438 | 179,348 | — | 288,066 | ||||||||||||
| 371,545 | 172,903 | 291,919 | 623,176 | ||||||||||||
| 30,433 | 29,217 | 28,808 | 13,999 | ||||||||||||
| — | — | — | 940,861 | ||||||||||||
| 733,193 | 251,962 | 398,899 | 268,071 | ||||||||||||
| — | — | 8,589 | — | ||||||||||||
| — | — | — | 320,491 | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| 11,800,000 | 26,500,000 | 54,100,000 | 32,000,000 | ||||||||||||
| 33,924,324 | — | — | — | ||||||||||||
| 15,921,724 | — | — | — | ||||||||||||
| 62,864,657 | 27,133,430 | 54,828,215 | 34,454,664 | ||||||||||||
| $ | 129,886,561 | $ | 61,550,335 | $ | 123,014,930 | $ | 237,460,678 | ||||||||
| $ | 10,016 | $ | 14,768 | $ | 6,951 | $ | 13,491 | ||||||||
| 191,472,216 | 222,592,683 | 128,276,550 | 264,108,245 | ||||||||||||
| (61,595,671 | ) | (161,057,116 | ) | (5,268,571 | ) | (26,661,058 | ) | ||||||||
| $ | 129,886,561 | $ | 61,550,335 | $ | 123,014,930 | $ | 237,460,678 | ||||||||
| 100,000,000 | 100,000,000 | 100,000,000 | 100,000,000 | ||||||||||||
| 10,016,413 | 14,767,968 | 6,951,333 | 13,491,127 | ||||||||||||
| $ | 12.97 | $ | 4.17 | $ | 17.70 | $ | 17.60 | ||||||||
| $ | 229,993,645 | $ | 109,820,486 | $ | 183,526,493 | $ | 245,234,116 | ||||||||
| $ | — | $ | — | $ | — | $ | 39,278,372 | ||||||||
| $ | 225,578 | $ | 534,008 | $ | — | $ | 570,114 | ||||||||
| $ | 75,676 | $ | — | $ | — | $ | — | ||||||||
| $ | 78,276 | $ | — | $ | — | $ | — | ||||||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 41 |
| Statements of Operations |
| Year Ended November 30, 2019 |
| Tortoise Energy | Tortoise | |||||||
| Infrastructure | Midstream Energy | |||||||
| Corp.(1) | Fund, Inc. | |||||||
| Investment Income | ||||||||
| Distributions from master limited partnerships | $ | 130,392,247 | $ | 94,386,005 | ||||
| Dividends and distributions from common stock | 34,543,506 | 26,085,341 | ||||||
| Dividends and distributions from preferred stock | 8,413,848 | 5,535,169 | ||||||
| Dividends and distributions from electronically traded funds | — | — | ||||||
| Dividends and distributions from private investments | 22,940,960 | — | ||||||
| Dividends and distributions from affiliated private investments | 1,275,000 | — | ||||||
| Less return of capital on distributions(3) | (171,298,472 | ) | (112,442,509 | ) | ||||
| Less foreign taxes withheld | — | — | ||||||
| Net dividends and distributions from investments | 26,267,089 | 13,564,006 | ||||||
| Interest income | 469,219 | 315,417 | ||||||
| Dividends from money market mutual funds | 8,567 | 8,219 | ||||||
| Other income | 1,533,755 | — | ||||||
| Total Investment Income | 28,278,630 | 13,887,642 | ||||||
| Operating Expenses | ||||||||
| Advisory fees | 19,538,388 | 13,834,487 | ||||||
| Administrator fees | 490,158 | 455,324 | ||||||
| Professional fees | 357,321 | 245,783 | ||||||
| Directors’ fees | 177,421 | 151,304 | ||||||
| Stockholder communication expenses | 178,776 | 117,156 | ||||||
| Custodian fees and expenses | 98,597 | 70,840 | ||||||
| Fund accounting fees | 86,852 | 78,685 | ||||||
| Registration fees | 56,117 | 62,208 | ||||||
| Stock transfer agent fees | 13,810 | 16,245 | ||||||
| Franchise fees | 3,851 | — | ||||||
| Other operating expenses | 160,842 | 74,076 | ||||||
| Total Operating Expenses | 21,162,133 | 15,106,108 | ||||||
| Leverage Expenses | ||||||||
| Interest expense | 18,248,673 | 14,648,210 | ||||||
| Distributions to mandatory redeemable preferred stockholders | 6,919,999 | 5,363,166 | ||||||
| Amortization of debt issuance costs | 411,988 | 248,432 | ||||||
| Other leverage expenses | 259,967 | 109,732 | ||||||
| Total Leverage Expenses | 25,840,627 | 20,369,540 | ||||||
| Total Expenses | 47,002,760 | 35,475,648 | ||||||
| Less fees waived by Adviser (Note 4) | (16,438 | ) | (303,806 | ) | ||||
| Net Expenses | 46,986,322 | 35,171,842 | ||||||
| Net Investment Income (Loss), before Income Taxes | (18,707,692 | ) | (21,284,200 | ) | ||||
| Deferred tax benefit | 2,663,518 | 3,734,259 | ||||||
| Net Investment Income (Loss) | (16,044,174 | ) | (17,549,941 | ) | ||||
| Realized and Unrealized Loss on Investments and Foreign Currency | ||||||||
| Net realized gain (loss) on investments in unaffiliated securities | 24,387,636 | (54,660,742 | ) | |||||
| Net realized gain on options | 2,750,775 | 8,594,292 | ||||||
| Net realized gain (loss) on interest rate swap settlements | (2,359 | ) | — | |||||
| Net realized gain on currency futures | — | — | ||||||
| Net realized loss on foreign currency and translation | ||||||||
| of other assets and liabilities denominated in foreign currency | — | — | ||||||
| Net realized gain (loss), before income taxes | 27,136,052 | (46,066,450 | ) | |||||
| Current tax (expense) benefit | (7,034,755 | ) | 1,510,530 | |||||
| Deferred tax benefit | 8,951,409 | 9,380,105 | ||||||
| Income tax benefit | 1,916,654 | 10,890,635 | ||||||
| Net realized gain (loss) | 29,052,706 | (35,175,815 | ) | |||||
| Net unrealized appreciation (depreciation) of investments in unaffiliated securities | (258,391,633 | ) | (115,293,614 | ) | ||||
| Net unrealized depreciation of investments in affiliated securities | (7,723,442 | ) | — | |||||
| Net unrealized appreciation (depreciation) of options | 492,115 | 372,847 | ||||||
| Net unrealized depreciation of interest rate swap contracts | (270,723 | ) | — | |||||
| Net unrealized depreciation of forward currency contracts | — | — | ||||||
| Net unrealized appreciation (depreciation) of other assets and liabilities due to foreign currency translation | — | — | ||||||
| Net unrealized appreciation (depreciation), before income taxes | (265,893,683 | ) | (114,920,767 | ) | ||||
| Deferred tax benefit | 61,475,443 | 27,168,584 | ||||||
| Net unrealized appreciation (depreciation) | (204,418,240 | ) | (87,752,183 | ) | ||||
| Net Realized and Unrealized Loss | (175,365,534 | ) | (122,927,998 | ) | ||||
| Net Decrease in Net Assets Applicable to Common Stockholders Resulting from Operations | $ | (191,409,708 | ) | $ | (140,477,939 | ) | ||
| (1) | Consolidated Statement of Operations (See Note 13 to the financial statements for further disclosure). |
| (2) | Fund commenced operations on March 29, 2019. |
| (3) | Return of Capital may be in excess of current year distributions due to prior year adjustments. See Note 2 to the financial statements for further disclosure. |
| See accompanying Notes to Financial Statements. | |
| 42 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise Power | Tortoise | ||||||||||||||
| Tortoise Pipeline | Tortoise Energy | and Energy | Essential Assets | ||||||||||||
| & Energy | Independence | Infrastructure | Income Term | ||||||||||||
| Fund, Inc. | Fund, Inc. | Fund, Inc. | Fund(1)(2) | ||||||||||||
| $ | 4,700,481 | $ | 894,357 | $ | 3,938,977 | $ | 3,447,268 | ||||||||
| 10,688,017 | 1,878,202 | 3,306,166 | 5,572,247 | ||||||||||||
| 452,273 | 189,715 | 432,395 | 402,731 | ||||||||||||
| — | — | — | 895,305 | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| (11,183,449 | ) | (1,323,155 | ) | (6,296,634 | ) | (5,367,751 | ) | ||||||||
| (386,869 | ) | (5,332 | ) | (35,735 | ) | (332,376 | ) | ||||||||
| 4,270,453 | 1,633,787 | 1,345,169 | 4,617,424 | ||||||||||||
| — | — | 5,437,274 | 3,058,746 | ||||||||||||
| 7,716 | 14,915 | 5,595 | 105,128 | ||||||||||||
| — | — | — | 50,003 | ||||||||||||
| 4,278,169 | 1,648,702 | 6,788,038 | 7,831,301 | ||||||||||||
| 2,414,233 | 1,434,710 | 1,825,179 | 2,576,335 | ||||||||||||
| 100,697 | 65,046 | 89,317 | 73,222 | ||||||||||||
| 150,455 | 145,226 | 151,267 | 1,151,532 | ||||||||||||
| 110,633 | 106,271 | 105,153 | 34,111 | ||||||||||||
| 54,909 | 36,597 | 76,975 | 21,773 | ||||||||||||
| 15,564 | 14,232 | 10,654 | 29,733 | ||||||||||||
| 45,560 | 37,636 | 29,016 | 23,509 | ||||||||||||
| 24,490 | 24,867 | 24,490 | 27,574 | ||||||||||||
| 12,414 | 12,326 | 14,151 | 11,526 | ||||||||||||
| — | — | — | — | ||||||||||||
| 34,238 | 33,124 | 19,818 | 13,943 | ||||||||||||
| 2,963,193 | 1,910,035 | 2,346,020 | 3,963,258 | ||||||||||||
| 1,752,914 | 1,229,415 | 1,719,941 | 619,731 | ||||||||||||
| 735,543 | — | — | — | ||||||||||||
| 41,426 | — | — | — | ||||||||||||
| 20,835 | — | — | — | ||||||||||||
| 2,550,718 | 1,229,415 | 1,719,941 | 619,731 | ||||||||||||
| 5,513,911 | 3,139,450 | 4,065,961 | 4,582,989 | ||||||||||||
| — | — | — | (477,099 | ) | |||||||||||
| 5,513,911 | 3,139,450 | 4,065,961 | 4,105,890 | ||||||||||||
| (1,235,742 | ) | (1,490,748 | ) | 2,722,077 | 3,725,411 | ||||||||||
| — | — | — | 418,970 | ||||||||||||
| (1,235,742 | ) | (1,490,748 | ) | 2,722,077 | 4,144,381 | ||||||||||
| (16,705,273 | ) | (88,309,962 | ) | 4,740,042 | (12,799,162 | ) | |||||||||
| 1,171,832 | 4,861,669 | — | 1,998,935 | ||||||||||||
| — | — | 81,937 | — | ||||||||||||
| — | — | — | 497,766 | ||||||||||||
| (1,227 | ) | — | (149 | ) | (136,366 | ) | |||||||||
| (15,534,668 | ) | (83,448,293 | ) | 4,821,830 | (10,438,827 | ) | |||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| (15,534,668 | ) | (83,448,293 | ) | 4,821,830 | (10,438,827 | ) | |||||||||
| (2,501,617 | ) | 30,519,391 | (11,289,186 | ) | (15,385,756 | ) | |||||||||
| — | — | — | (392,598 | ) | |||||||||||
| (170,855 | ) | (1,217,322 | ) | — | 282,048 | ||||||||||
| — | — | (137,219 | ) | — | |||||||||||
| — | — | — | (320,491 | ) | |||||||||||
| 484 | — | — | (4,108 | ) | |||||||||||
| (2,671,988 | ) | 29,302,069 | (11,426,405 | ) | (15,820,905 | ) | |||||||||
| — | — | — | — | ||||||||||||
| (2,671,988 | ) | 29,302,069 | (11,426,405 | ) | (15,820,905 | ) | |||||||||
| (18,206,656 | ) | (54,146,224 | ) | (6,604,575 | ) | (26,259,732 | ) | ||||||||
| $ | (19,442,398 | ) | $ | (55,636,972 | ) | $ | (3,882,498 | ) | $ | (22,115,351 | ) | ||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 43 |
| Statements of Changes in Net Assets |
| Tortoise Energy Infrastructure Corp.(1) | Tortoise Midstream Energy Fund, Inc. | |||||||||||||||
| Year Ended | Year Ended | Year Ended | Year Ended | |||||||||||||
| November 30, | November 30, | November 30, | November 30, | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Operations | ||||||||||||||||
| Net investment income (loss) | $ | (16,044,174 | ) | $ | (25,739,125 | ) | $ | (17,549,941 | ) | $ | (22,743,508 | ) | ||||
| Net realized gain (loss) | 29,052,706 | 42,564,712 | (35,175,815 | ) | 46,530,162 | |||||||||||
| Net unrealized appreciation (depreciation) | (204,418,240 | ) | 79,528,704 | (87,752,183 | ) | (946,809 | ) | |||||||||
| Net increase (decrease) in net assets | ||||||||||||||||
| applicable to common stockholders resulting | ||||||||||||||||
| from operations | (191,409,708 | ) | 96,354,291 | (140,477,939 | ) | 22,839,845 | ||||||||||
| Distributions to Common Stockholders | ||||||||||||||||
| From distributable earnings | — | — | — | — | ||||||||||||
| From return of capital | (140,587,568 | ) | (138,297,758 | ) | (106,822,149 | ) | (86,693,300 | ) | ||||||||
| Total distributions to common stockholders | (140,587,568 | ) | (138,297,758 | ) | (106,822,149 | ) | (86,693,300 | ) | ||||||||
| Capital Stock Transactions | ||||||||||||||||
| Proceeds from issuance of common shares | ||||||||||||||||
| through offerings | — | 114,529,368 | — | 230,973,008 | ||||||||||||
| Underwriting discounts and offering expenses | ||||||||||||||||
| associated with the issuance of common stock | (6,953 | ) | (349,970 | ) | (24,715 | ) | (8,891,735 | ) | ||||||||
| Issuance of common shares from reinvestment | ||||||||||||||||
| of distributions to stockholders | 1,990,050 | 6,535,303 | — | 2,720,036 | ||||||||||||
| Net increase (decrease) in net assets applicable | ||||||||||||||||
| to common stockholders from capital stock | ||||||||||||||||
| transactions | 1,983,097 | 120,714,701 | (24,715 | ) | 224,801,309 | |||||||||||
| Total increase (decrease) in net assets applicable | ||||||||||||||||
| to common stockholders | (330,014,179 | ) | 78,771,234 | (247,324,803 | ) | 160,947,854 | ||||||||||
| Net Assets | ||||||||||||||||
| Beginning of period | 1,260,299,704 | 1,181,528,470 | 915,032,974 | 754,085,120 | ||||||||||||
| End of period | $ | 930,285,525 | $ | 1,260,299,704 | $ | 667,708,171 | $ | 915,032,974 | ||||||||
| Transactions in common shares | ||||||||||||||||
| Shares outstanding at beginning of period | 53,635,054 | 49,379,408 | 63,208,377 | 47,246,780 | ||||||||||||
| Shares issued through offerings | — | 4,013,693 | — | 15,802,094 | ||||||||||||
| Shares issued through reinvestment of distributions | 97,408 | 241,953 | — | 159,503 | ||||||||||||
| Shares outstanding at end of period | 53,732,462 | 53,635,054 | 63,208,377 | 63,208,377 | ||||||||||||
| (1) | Consolidated Statement of Changes in Net Assets (See Note 13 to the financial statements for further disclosure). |
| (2) | Commencement of operations. |
| See accompanying Notes to Financial Statements. | |
| 44 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise | |||||||||||||||||||||||||||
| Essential Assets | |||||||||||||||||||||||||||
| Tortoise Power and Energy | Income Term | ||||||||||||||||||||||||||
| Tortoise Pipeline & Energy Fund, Inc. | Tortoise Energy Independence Fund, Inc. | Infrastructure Fund, Inc. | Fund(1) | ||||||||||||||||||||||||
| Period from | |||||||||||||||||||||||||||
| Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | Year Ended | March 29, 2019(2) | |||||||||||||||||||||
| November 30, | November 30, | November 30, | November 30, | November 30, | November 30, | through | |||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | November 30, 2019 | |||||||||||||||||||||
| $ | (1,235,742 | ) | $ | (1,506,036 | ) | $ | (1,490,748 | ) | $ | (4,228,300 | ) | $ | 2,722,077 | $ | 1,683,994 | $ | 4,144,381 | ||||||||||
| (15,534,668 | ) | (374,310 | ) | (83,448,293 | ) | 3,657,227 | 4,821,830 | 9,007,176 | (10,438,827 | ) | |||||||||||||||||
| (2,671,988 | ) | (7,108,381 | ) | 29,302,069 | (30,476,293 | ) | (11,426,405 | ) | (11,182,556 | ) | (15,820,905 | ) | |||||||||||||||
| (19,442,398 | ) | (8,988,727 | ) | (55,636,972 | ) | (31,047,366 | ) | (3,882,498 | ) | (491,386 | ) | (22,115,351 | ) | ||||||||||||||
| — | (428,639 | ) | — | — | (9,729,252 | ) | (10,427,000 | ) | (4,545,707 | ) | |||||||||||||||||
| (13,872,732 | ) | (15,898,114 | ) | (15,828,822 | ) | (25,586,654 | ) | (697,748 | ) | — | (5,700,804 | ) | |||||||||||||||
| (13,872,732 | ) | (16,326,753 | ) | (15,828,822 | ) | (25,586,654 | ) | (10,427,000 | ) | (10,427,000 | ) | (10,246,511 | ) | ||||||||||||||
| — | — | — | — | — | — | 269,722,540 | |||||||||||||||||||||
| — | — | — | — | — | — | — | |||||||||||||||||||||
| — | — | 527,895 | 1,233,701 | — | — | — | |||||||||||||||||||||
| — | — | 527,895 | 1,233,701 | — | — | 269,722,540 | |||||||||||||||||||||
| (33,315,130 | ) | (25,315,480 | ) | (70,937,899 | ) | (55,400,319 | ) | (14,309,498 | ) | (10,918,386 | ) | 237,360,678 | |||||||||||||||
| 163,201,691 | 188,517,171 | 132,488,234 | 187,888,553 | 137,324,428 | 148,242,814 | 100,000 | |||||||||||||||||||||
| $ | 129,886,561 | $ | 163,201,691 | $ | 61,550,335 | $ | 132,488,234 | $ | 123,014,930 | $ | 137,324,428 | $ | 237,460,678 | ||||||||||||||
| 10,016,413 | 10,016,413 | 14,696,260 | 14,583,662 | 6,951,333 | 6,951,333 | 5,000 | |||||||||||||||||||||
| — | — | — | — | — | — | 13,486,127 | |||||||||||||||||||||
| — | — | 71,708 | 112,598 | — | — | — | |||||||||||||||||||||
| 10,016,413 | 10,016,413 | 14,767,968 | 14,696,260 | 6,951,333 | 6,951,333 | 13,491,127 | |||||||||||||||||||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 45 |
| Statements of Cash Flows |
| Year Ended November 30, 2019 |
| Tortoise Energy | Tortoise | |||||||
| Infrastructure | Midstream Energy | |||||||
| Corp.(1) | Fund, Inc. | |||||||
| Cash Flows From Operating Activities | ||||||||
| Dividends, distributions and interest received from investments | $ | 197,824,408 | $ | 126,164,545 | ||||
| Purchases of long-term investments | (553,887,426 | ) | (420,452,581 | ) | ||||
| Proceeds from sales of long-term investments | 568,893,979 | 488,691,140 | ||||||
| Sales (purchases) of short-term investments, net | 10,646 | 102 | ||||||
| Proceeds from litigation settlement | 40,328 | — | ||||||
| Proceeds from funds held in escrow | 880,420 | — | ||||||
| Proceeds from income tax refund | 1,533,755 | — | ||||||
| Call options written, net | 2,146,927 | 2,775,777 | ||||||
| Proceeds (payments) on interest rate swap contracts, net | (2,359 | ) | — | |||||
| Proceeds on forward currency contracts, net | — | — | ||||||
| Other income received | — | — | ||||||
| Interest received on securities sold, net | — | — | ||||||
| Interest expense paid | (18,421,159 | ) | (14,951,385 | ) | ||||
| Distributions to mandatory redeemable preferred stockholders | (6,919,999 | ) | (5,365,848 | ) | ||||
| Other leverage expenses paid | (323,213 | ) | (203,861 | ) | ||||
| Income taxes paid | (3,293,390 | ) | (341,518 | ) | ||||
| Operating expenses paid | (21,678,370 | ) | (14,888,342 | ) | ||||
| Net cash provided by (used in) operating activities | 166,804,547 | 161,428,029 | ||||||
| Cash Flows From Financing Activities | ||||||||
| Advances (payments) on credit facilities, net | (13,200,000 | ) | (19,500,000 | ) | ||||
| Issuance of mandatory redeemable preferred stock | — | — | ||||||
| Redemption of mandatory redeemable preferred stock | — | — | ||||||
| Maturity of senior notes | (15,000,000 | ) | (35,000,000 | ) | ||||
| Debt issuance costs | — | (81,156 | ) | |||||
| Issuance of common stock | — | — | ||||||
| Common stock issuance costs | (6,953 | ) | (24,715 | ) | ||||
| Distributions paid to common stockholders | (138,597,594 | ) | (106,822,158 | ) | ||||
| Net cash provided by (used in) financing activities | (166,804,547 | ) | (161,428,029 | ) | ||||
| Net change in cash | — | — | ||||||
| Cash — beginning of period | — | — | ||||||
| Cash — end of period | $ | — | $ | — | ||||
| (1) | Consolidated Statement of Cash Flows (See Note 13 to the financial statements for further disclosure). |
| (2) | Fund commenced operations on March 29, 2019. |
| See accompanying Notes to Financial Statements. | |
| 46 | Tortoise |
| 2019 Annual Report| November 30, 2019 |
| Tortoise Power | Tortoise | ||||||||||||||
| Tortoise Pipeline | Tortoise Energy | and Energy | Essential Assets | ||||||||||||
| & Energy | Independence | Infrastructure | Income Term | ||||||||||||
| Fund, Inc. | Fund, Inc. | Fund, Inc. | Fund(1)(2) | ||||||||||||
| $ | 15,674,685 | $ | 2,777,045 | $ | 13,170,803 | $ | 11,491,977 | ||||||||
| (47,371,626 | ) | (239,980,954 | ) | (48,457,500 | ) | (428,542,836 | ) | ||||||||
| 58,361,559 | 282,029,366 | 48,864,200 | 127,369,367 | ||||||||||||
| (18,738 | ) | 12,824 | 26,492 | (410,126 | ) | ||||||||||
| — | — | 3,563 | — | ||||||||||||
| — | — | — | — | ||||||||||||
| — | — | — | — | ||||||||||||
| 884,634 | 4,605,510 | — | 2,502,877 | ||||||||||||
| — | — | 81,937 | — | ||||||||||||
| — | — | — | 497,766 | ||||||||||||
| — | — | — | 50,003 | ||||||||||||
| — | — | 127,857 | (838,607 | ) | |||||||||||
| (1,747,038 | ) | (1,427,261 | ) | (1,745,252 | ) | (544,381 | ) | ||||||||
| (722,031 | ) | — | — | — | |||||||||||
| (22,000 | ) | — | — | — | |||||||||||
| — | — | — | — | ||||||||||||
| (3,023,632 | ) | (2,115,567 | ) | (2,332,477 | ) | (2,773,627 | ) | ||||||||
| 22,015,813 | 45,900,963 | 9,739,623 | (291,197,587 | ) | |||||||||||
| (8,000,000 | ) | (30,600,000 | ) | 700,000 | 32,000,000 | ||||||||||
| 16,000,000 | — | — | — | ||||||||||||
| (16,000,000 | ) | — | — | — | |||||||||||
| — | — | — | — | ||||||||||||
| (143,081 | ) | — | — | — | |||||||||||
| — | — | — | 269,822,540 | ||||||||||||
| — | — | — | — | ||||||||||||
| (13,872,732 | ) | (15,300,963 | ) | (10,427,000 | ) | (10,246,511 | ) | ||||||||
| (22,015,813 | ) | (45,900,963 | ) | (9,727,000 | ) | 291,576,029 | |||||||||
| — | — | 12,623 | 378,442 | ||||||||||||
| — | — | — | — | ||||||||||||
| $ | — | $ | — | $ | 12,623 | $ | 378,442 | ||||||||
| See accompanying Notes to Financial Statements. | |
| Tortoise | 47 |
| Statements of Cash Flows(continued) |
| Year Ended November 30, 2019 |
| Tortoise Energy | Tortoise | |||||||
| Infrastructure | Midstream Energy | |||||||
| Corp.(1) | Fund, Inc. | |||||||
| Reconciliation of net increase (decrease) in net assets applicable to common stockholders | ||||||||
| resulting from operations to net cash provided by (used in) operating activities | ||||||||
| Net increase (decrease) in net assets applicable to common stockholders resulting from operations | $ | (191,409,708 | ) | $ | (140,477,939 | ) | ||
| Adjustments to reconcile net increase (decrease) in net assets applicable to common stockholders | ||||||||
| resulting from operations to net cash provided by (used in) operating activities: | ||||||||
| Purchases of long-term investments | (530,643,243 | ) | (420,452,581 | ) | ||||
| Proceeds from sales of long-term investments | 571,238,904 | 490,982,576 | ||||||
| Sales (purchases) of short-term investments, net | 10,646 | 102 | ||||||
| Proceeds from litigation settlement | 40,328 | — | ||||||
| Proceeds from funds held in escrow | 880,420 | — | ||||||
| Call options written, net | 2,124,794 | 2,775,777 | ||||||
| Return of capital on distributions received | 171,298,472 | 112,442,509 | ||||||
| Deferred tax benefit | (73,090,370 | ) | (40,282,948 | ) | ||||
| Net unrealized (appreciation) depreciation | 265,893,683 | 114,920,767 | ||||||
| Amortization (accretion) of market premium (discount), net | (23,635 | ) | (15,915 | ) | ||||
| Net realized (gain) loss | (27,138,411 | ) | 46,066,450 | |||||
| Amortization of debt issuance costs | 411,988 | 248,432 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| (Increase) decrease in dividends, distributions and interest receivable from investments | (195,304 | ) | (149,691 | ) | ||||
| (Increase) decrease in current tax asset | 3,741,365 | (1,852,048 | ) | |||||
| (Increase) decrease in receivable for investments sold | (2,344,925 | ) | (2,291,436 | ) | ||||
| Increase in receivable for premiums on options written | 22,133 | — | ||||||
| (Increase) decrease in prepaid expenses and other assets | (92,041 | ) | (143,582 | ) | ||||
| Increase (decrease) in payable for investments purchased | (23,244,183 | ) | — | |||||
| Increase (decrease) in payable to Adviser, net of fees waived | (596,405 | ) | (96,056 | ) | ||||
| Increase (decrease) in accrued expenses and other liabilities | (79,961 | ) | (246,388 | ) | ||||
| Total adjustments | 358,214,255 | 301,905,968 | ||||||
| Net cash provided by (used in) operating activities | ||||||||