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TEAF Ecofin Sustainable and Social Impact Term Fund

Filed: 5 Feb 20, 5:02pm

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 Comparison1TEAF: Fund Focus20
Letter to Stockholders2Financial Statements24
TYG: Fund Focus5Notes to Financial Statements62
NTG:Fund Focus                   8Report of Independent Registered
TTP:Fund Focus11     Public Accounting Firm82
NDP:Fund Focus14Company Officers and Directors83
TPZ:Fund Focus17Additional Information85




 
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
f
ocus
   Structure   Total assets
($ millions)
1
   Portfolio mix
by asset type2
   Portfolio mix
by structure2

Tortoise Energy
Infrastructure Corp.

NYSE: TYG
Inception: 2/2004

Midstream
MLPs

C-corp

$1,826.5

Tortoise Midstream
Energy Fund, Inc.

NYSE: NTG
Inception: 7/2010

Natural gas
infrastructure
MLPs

C-corp

$1,266.8

Tortoise Pipeline
& Energy Fund, Inc.

NYSE: TTP
Inception: 10/2011

North
American
pipeline
companies

Regulated
investment
company

$209.1

Tortoise Energy
Independence
Fund, Inc.

NYSE: NDP
Inception: 7/2012

North
American
oil & gas
producers

Regulated
investment
company

$99.4

Tortoise Power and
Energy Infrastructure
Fund, Inc.

NYSE: TPZ
Inception: 7/2009

Power
& energy
infrastructure
companies
(Fixed income
& equity)

Regulated
investment
company

$184.8

Tortoise Essential
Assets Income
Term Fund

NYSE: TEAF
Inception: 3/2019

Essential
assets

Regulated
investment
company

$289.5


1

As of 12/31/2019

2

As of 11/30/2019


(unaudited)
 
Tortoise1



 
 
 
 
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)
 
2Tortoise



 
 
 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)
 
Tortoise3



 
 
 
 
 
 
 

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.

1Energy Information Administration, Short-Term Outlook, December 2019
2BTU Analytics
3Wood MacKenzie, power and renewables, December 2019
4AWEA July-September 2019

(unaudited)
 
4Tortoise



 
 
 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 increase0.0%
Year-over-year distribution increase0.0%
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 MLPAcquired at a premium
MTP Energy KMAA LLC – PrivateMidstream natural gasThe underlying company was acquired for a premium
Phillips 66 Partners LPMidstream refined product pipeline MLPEliminated incentive distribution rights (IDRs) leading to a lower cost of capital
Western Gas Partners LPMidstream gathering and processing MLPClarity on Colorado drilling legislation and close of LP/GP merger
NuStar Energy L.P.Refined products pipelines MLPStrong volume growth from Permian and outlook for St. James and Corpus Christi assets
 
Bottom five contributors     Company type     Performance driver
EQM Midstream Partners, LPMidstream natural gas/natural gas liquids pipeline MLPUncertainty around Mountain Valley Pipeline project combined with potential for slowing drilling activity in the Marcellus
Antero Midstream CorporationMidstream gathering and processing companyConcerns 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, LPMidstream gathering and processing MLPCarrying out strategic review
EnLink Midstream, LLCMidstream gathering and processing companyConcern around producers slowing drilling activity in Oklahoma
MPLX LPRefined products pipeline MLPContinued 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)
 
Tortoise5



 
 
 
 
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, net149,18238,218
       Other1,655729
              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)
 
6Tortoise



 
 
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 30,20182019
   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 kind2,752801113115117269300
       Interest earned on corporate bonds467119348
       Premiums on options written1,2743,2671,2587931,092668714
              Total from investments181,886179,23145,58544,05645,77343,96645,436
Operating Expenses Before Leverage
       Costs and Current Taxes
       Advisory fees, net of fees waived21,46619,5225,3924,8495,2154,9794,479
       Other operating expenses1,7411,624438415420407382
23,20721,1465,8305,2645,6355,3864,861
       Distributable cash flow before
              leverage costs and current taxes158,679158,08539,75538,79240,13838,58040,575
       Leverage costs(2)26,08825,9566,5616,3656,6376,6076,347
       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 investments7.75%8.55%7.91%8.61%8.42%8.38%9.71%
       Operating expenses before
              leverage costs and current taxes1.01%1.03%1.01%1.03%1.04%1.03%1.04%
       Distributable cash flow before
              leverage costs and current taxes6.74%7.52%6.90%7.58%7.38%7.35%8.67%
As a percent of average net assets(5)
       Total from investments12.81%14.51%12.90%14.36%14.01%14.41%17.12%
       Operating expenses before
              leverage costs and current taxes1.67%1.76%1.65%1.72%1.72%1.77%1.83%
       Leverage costs and current taxes1.88%2.16%1.86%2.08%2.03%2.17%2.39%
       Distributable cash flow9.26%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 share2.62002.62000.65500.65500.65500.65500.6550
Total assets, end of period(6)2,136,3391,680,7752,136,3392,129,1742,110,2731,951,0351,680,775
Average total assets during period(6)(7)2,293,9982,044,1022,311,2562,074,9012,157,9192,080,5911,876,534
Leverage(8)652,100623,900652,100679,100683,700688,900623,900
Leverage as a percent of total assets30.5%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 period1,260,300930,2861,260,3001,245,7661,220,9461,097,489930,286
Average net assets during period(9)1,388,6831,203,9431,417,5811,243,9811,296,3361,210,0781,064,735
Net asset value per common share23.5017.3123.5023.2322.7620.4317.31
Market value per share22.5916.8222.5922.9121.9020.3916.82
Shares outstanding (000’s)53,63553,73253,63553,63553,63553,73253,732

(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.

Tortoise7



 
 
 
 
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 increase0.0%
Year-over-year distribution increase0.0%
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 MLPAcquired at a premium
Western Gas Partners LPMidstream gathering and processing MLPClarity on Colorado drilling legislation and close of LP/GP merger
NuStar Energy L.P.Refined products pipelines MLPStrong volume growth from Permian and outlook for St. James and Corpus Christi assets
ONEOK, Inc.Midstream natural gas/natural gas liquids pipeline companyContinued execution of backlog of infrastructure projects with high returns
Phillips 66 Partners LPMidstream refined product pipeline MLPEliminated incentive distribution rights (IDRs) leading to a lower cost of capital
     
Bottom five contributorsCompany typePerformance driver
EQM Midstream Partners, LPMidstream natural gas/natural gas liquids pipeline MLPUncertainty around Mountain Valley Pipeline project combined with potential for slowing drilling activity in the Marcellus
Western Midstream Partners, LPMidstream gathering and processing MLPCarrying out strategic review
Antero Midstream CorporationMidstream gathering and processing companyConcerns 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, LLCMidstream gathering and processing companyConcern around producers slowing drilling activity in Oklahoma
MPLX LPRefined products pipeline MLPContinued 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)
 
8Tortoise



 
 
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 capital112,44327,870
     Other3,8331,075
          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)
 
Tortoise9



 
 
 
 
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 30,20182019
   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 kind1,879518686970179200
       Interest earned on corporate bonds31585230
       Premiums on options written1,2543,3001,254542890927941
              Total from investments119,085129,91533,19632,01032,78432,43532,686
Operating Expenses Before Leverage
       Costs and Current Taxes
       Advisory fees, net of fees waived12,86313,5313,2643,1453,7153,5263,145
       Other operating expenses1,3191,271352334324312301
14,18214,8023,6163,4794,0393,8383,446
       Distributable cash flow before
              leverage costs and current taxes104,903115,11329,58028,53128,74528,59729,240
       Leverage costs(2)17,30420,1214,7494,9995,1755,0884,859
       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 investments8.11%8.69%8.38%8.81%8.46%8.73%9.96%
       Operating expenses before
              leverage costs and current taxes0.99%1.02%0.91%0.96%1.04%1.03%1.05%
       Distributable cash flow before
              leverage costs and current taxes7.12%7.67%7.47%7.85%7.42%7.70%8.91%
As a percent of average net assets(5)
       Total from investments13.07%14.43%13.08%14.36%13.79%14.70%17.18%
       Operating expenses before
              leverage costs and current taxes1.60%1.70%1.42%1.56%1.70%1.74%1.81%
       Leverage costs and current taxes1.95%2.31%1.87%2.24%2.18%2.31%2.55%
       Distributable cash flow9.52%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 share1.69001.69000.42250.42250.42250.42250.4225
Total assets, end of period(6)1,506,7451,163,5001,506,7451,508,6431,498,2781,380,4461,163,500
Average total assets during period(6)(7)1,429,5181,447,0921,588,1971,472,9551,536,7941,473,5961,316,053
Leverage(8)517,100462,600517,100522,600527,300528,100462,600
Leverage as a percent of total assets34.3%39.8%34.3%34.6%35.2%38.3%39.8%
Net unrealized appreciation (depreciation),
       end of period23,424(64,329)23,42475,85393,59515,163(64,329)
Net assets, end of period915,033667,708915,033905,859886,270786,294667,708
Average net assets during period(9)887,014871,4961,018,337903,917943,080875,555762,956
Net asset value per common share14.4810.5614.4814.3314.0212.4410.56
Market value per common share13.729.8813.7213.6613.2112.039.88
Shares outstanding (000’s)63,20863,20863,20863,20863,20863,20863,208

(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.

10Tortoise



 
 
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 companyVisible dividend growth of 5-7% in 2020+
ONEOK, Inc.Midstream natural gas/natural gas liquids pipeline companyContinued execution of backlog of infrastructure projects with high returns
Buckeye Partners, L.P.Midstream refined product pipeline MLPAcquired at a premium
NuStar Energy L.P.Refined products pipelines MLPStrong volume growth from Permian and outlook for St. James and Corpus Christi assets
Inter Pipeline Ltd.Midstream crude oilBid to acquire the company
pipeline companyin corporate transaction
     
Bottom five contributorsCompany typePerformance driver
Antero Midstream CorporationMidstream gathering and processing companyConcerns 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, LLCMidstream gathering and processing companyConcern around producers slowing drilling activity in Oklahoma
Equitrans Midstream CorporationMidstream natural gas/natural gas liquids pipeline companyUncertainty around Mountain Valley Pipeline project
Plains GP Holdings, L.P.Midstream crude oil pipeline companyUncertain crude oil production growth from Permian in 2020 leading to concerns to potential of over build
MPLX LPRefined products pipeline MLPContinued 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)
 
Tortoise11



 
 
 
 
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 written3,623484
Distributions characterized
as return of capital11,1832,671
Other26169
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)
 
12Tortoise



 
 
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 30,20182019
     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 kind1,79623742253546268
Net premiums on options written4,8083,6221,1541,1331,039967483
Total from investments21,34219,3035,2254,8035,1254,9344,441
Operating Expenses Before
Leverage Costs
Advisory fees, net of fees waived2,8452,414696606643602563
Other operating expenses605549147146149138116
3,4502,963843752792740679
Distributable cash flow before
leverage costs17,89216,3404,3824,0514,3334,1943,762
Leverage costs(2)2,5822,509668641633626609
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 investments8.29%8.82%8.29%8.73%8.84%8.96%8.74%
Operating expenses before
leverage costs1.34%1.35%1.34%1.37%1.37%1.34%1.34%
Distributable cash flow before
leverage costs6.95%7.47%6.95%7.36%7.47%7.62%7.40%
As a percent of average net assets(4)
Total from investments11.32%12.29%11.43%12.16%11.97%12.63%12.46%
Operating expenses before
leverage costs1.83%1.89%1.84%1.90%1.85%1.89%1.91%
Leverage costs1.37%1.60%1.46%1.62%1.48%1.60%1.71%
Distributable cash flow8.12%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 share1.63001.38500.40750.40750.40750.28500.2850
Total assets, end of period(5)235,259192,751235,259227,676222,673207,072192,751
Average total assets during period(5)(6)257,585218,949252,876223,114229,950218,436203,852
Leverage(7)69,80061,80069,80061,80063,10061,50061,800
Leverage as a percent of total assets29.7%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 period163,202129,887163,202163,313157,061143,463129,887
Average net assets during period(8)188,518157,017183,386160,184169,837155,032142,932
Net asset value per common share16.2912.9716.2916.3015.6814.3212.97
Market value per common share14.3311.5214.3314.6314.0212.8411.52
Shares outstanding (000’s)10,01610,01610,01610,01610,01610,01610,016

(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.

Tortoise13



 
 
 
 
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 producerOccidental Petroleum offered premium to acquire all of the outstanding shares
Marathon Petroleum CorporationDownstream refinerGenerated significant free cash flow to pay dividend and buyback shares as well as announced spin-off of retail gasoline business
Valero Energy CorporationDownstream refinerIncreased exports and IMO exposure and margin capture leading to improved earnings outlook
NextEra Energy, Inc.Integrated infrastructureHighly visible growth from renewable buildout
Buckeye Partners, L.P.Midstream refined product pipeline MLPAcquired at a premium
     
Bottom five contributorsCompany typePerformance driver
Range Resources CorporationUpstream natural gas producerDeclining natural gas prices resulting in weaker earnings and a lower growth outlook
Antero Resources CorporationUpstream oil and natural gas producerDeclining natural gas prices resulting in weaker earnings and a lower growth outlook
EQTCorporationUpstream natural gas producerDeclining natural gas prices resulting in weaker earnings and a lower growth outlook
Concho Resources Inc.Upstream liquids producerUnexpected operational challenge tied to well spacing raised concerns about future growth
Cabot Oil & Gas CorporationUpstream natural gas producerDeclining 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)
 
14Tortoise



 
 
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)$66
Adjustments to reconcile to DCF:
       Net premiums on options written17,1011,771
      Distributions characterized
             as return of capital1,323146
             DCF$  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)
 
Tortoise15



 
 
  
 
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 30,20182019
   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 stock796152
       Net premiums on options written24,82017,1016,4004,9665,2795,0851,771
              Total from investments30,73820,0727,7196,2165,6735,6232,560
Operating Expenses Before
       Leverage Costs
       Advisory fees, net of fees waived2,6391,434613437421315261
       Other operating expenses566476134133133110100
3,2051,910747570554425361
       Distributable cash flow before
              leverage costs27,53318,1626,9725,6465,1195,1982,199
       Leverage costs(2)1,7591,229486371350292216
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 investments12.72%15.22%13.91%15.48%15.12%19.20%10.92%
       Operating expenses before
              leverage costs1.33%1.45%1.35%1.42%1.48%1.45%1.54%
       Distributable cash flow before
              leverage costs11.39%13.77%12.56%14.06%13.64%17.75%9.38%
As a percent of average net assets(4)
       Total from investments17.42%21.32%19.29%21.38%20.05%28.01%15.34%
       Operating expenses before
              leverage costs1.82%2.03%1.87%1.96%1.96%2.12%2.16%
       Leverage costs1.00%1.31%1.21%1.28%1.24%1.45%1.29%
       Distributable cash flow14.60%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 share1.75001.07500.43750.43750.43750.10000.1000
Total assets, end of period191,28588,684191,285156,648123,22995,07888,684
Average total assets during period(5)241,656131,848222,541162,807148,821116,18294,064
Leverage(6)57,10026,50057,10042,40034,60028,70026,500
Leverage as a percent of total assets29.9%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 period132,48861,550132,488111,49087,72065,32261,550
Average net assets during period(7)176,48194,144160,534117,918112,27479,65566,948
Net asset value per common share9.024.179.027.575.944.424.17
Market value per common share9.003.639.008.087.403.993.63
Shares outstanding (000’s)14,69614,76814,69614,73314,76814,76814,768

(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.

16Tortoise



 
 
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 increase0.0%
Year-over-year distribution increase0.0%
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 companySuccessful efforts to reduce leverage
Enbridge Inc.Midstream crude oil pipeline companyVisible dividend growth of 5-7% in 2020+
TransCanada Corporation (fixed income)Midstream natural gas/natural gas liquids pipeline companyRegulated business model and defensive fixed income security
Buckeye Partners, L.P.Midstream refined product pipeline MLPAcquired at a premium
SemGroup Corp. (fixed income)Midstream crude oil pipeline companyAcquired by an investment grade company
 
Bottom five contributorsCompany typePerformance driver
Antero Midstream CorporationMidstream gathering and processing companyConcerns 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, LPMidstream gathering and processing MLPCarrying out strategic review
EnLink Midstream, LLCMidstream gathering and processing companyConcern around producers slowing drilling activity in Oklahoma
MPLX LPRefined products pipeline MLPContinued uncertainty regarding organizational structure and parental support combined with north east natural G&P exposure
Equitrans Midstream CorporationMidstream natural gas/natural gas liquids pipeline companyUncertainty 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)
  
Tortoise17



 
 
  
 
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$747
Adjustments to reconcile to DCF:
       Distributions characterized
             as return of capital6,2961,624
      Other24053
             DCF$  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) 
  
18Tortoise



 
 
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 30,20182019
20182019Q4(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 withheld6,7477,6321,6541,8411,9091,9071,975
       Dividends paid in kind1,23317528439404749
              Total from investments13,42013,2443,3073,2373,3303,3223,355
Operating Expenses Before
       Leverage Costs
       Advisory fees1,8981,825473447476462440
       Other operating expenses546521137140141131109
2,4442,346610587617593549
       Distributable cash flow before
              leverage costs10,97610,8982,6972,6502,7132,7292,806
       Leverage costs(2)1,3941,640373413435410382
              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 investments6.72 %6.89%6.55 %6.85%6.66 %6.78 %7.23%
       Operating expenses before
              leverage costs1.22 %1.22%1.21%1.24%1.23%1.21%1.18%
       Distributable cash flow before
              leverage costs5.50%5.67%5.34%5.61%5.43%5.57%6.05%
As a percent of average net assets(4)
       Total from investments9.09%9.62%8.93%9.54%9.20%9.53%10.25%
       Operating expenses before
              leverage costs1.66%1.70%1.65%1.73%1.70%1.70%1.68%
       Leverage costs0.94%1.19%1.01%1.22%1.20%1.18%1.17%
       Distributable cash flow6.49%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 share1.50001.50000.37500.37500.37500.37500.3750
Total assets, end of period191,906177,843191,906195,308197,731190,032177,843
Average total assets during period(5)199,749192,260200,269191,512198,360194,528186,087
Leverage(6)53,40054,10053,40053,80056,60056,10054,100
Leverage as a percent of total assets27.8%30.4%27.8%27.5%28.6%29.5%30.4%
Net unrealized appreciation (depreciation),
       end of period3,956(7,471)3,9569,8509,9395,062(7,471)
Net assets, end of period137,325123,015137,325140,763139,785133,107123,015
Average net assets during period(7)147,616137,701146,848137,573 143,596138,251131,313
Net asset value per common share19.7617.7019.7620.2520.1119.1517.70
Market value per common share17.1715.5717.1717.9718.2518.1715.57
Shares outstanding (000’s)6,9516,9516,9516,9516,9516,9516,951

(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.

Tortoise19



 
 
 
 
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)
 
20Tortoise



 
 
 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 increase0.0%
Year-over-year distribution increase0.0%
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)
 
Tortoise21



 
 
 
 
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 capital3,9651,400
       Net premiums on options written5,3681,762
       Other649649
              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)
 
22Tortoise



 
 
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)
through2019
     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 withheld9,6163,8053,5762,235
       Distributions paid in kind20662144
       Net premiums on options written3,9651,1371,4281,400
              Total from investments16,8965,4906,2305,176
 
Operating Expenses Before Leverage Costs
       Advisory fees2,099546792761
       Other operating expenses470102165203
2,569648957964
       Distributable cash flow before leverage costs14,3274,8425,2734,212
       Leverage costs(3)620139252229
              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 investments8.89%11.25%8.65%7.46%
       Operating expenses before leverage costs1.35%1.33%1.33%1.39%
       Distributable cash flow before leverage costs7.54%9.92%7.32%6.07%
As a percent of average net assets(5)
       Total from investments9.90%12.01%9.73%8.49%
       Operating expenses before leverage costs1.51%1.42%1.50%1.58%
       Leverage costs0.36%0.30%0.39%0.38%
       Distributable cash flow8.03%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 share0.75950.10850.32550.3255
Total assets, end of period271,915288,040276,736271,915
Average total assets during period(6)280,814278,413285,731278,477
Leverage(7)32,00031,50031,50032,000
Leverage as a percent of total assets11.8%10.9%11.4%11.8%
Net unrealized depreciation, end of period(15,821)(15,131)(22,549)(15,821)
Net assets, end of period237,461255,534243,882237,461
Average net assets during period(8)252,217260,772253,916244,483
Net asset value per common share17.6018.9418.0817.60
Market value per common share15.6018.4516.2515.60
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.

Tortoise23



 
 
 
 
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 LP248,258$3,624,567
Genesis Energy L.P.621,84711,821,312
PBF Logistics LP856,85617,522,705
Plains All American Pipeline, L.P.4,497,55378,257,422
Shell Midstream Partners, L.P.2,940,94657,818,998
169,045,004
Natural Gas/Natural Gas Liquids Pipelines — 38.4%(1)
United States — 38.4%(1)
Cheniere Energy Partners LP300,31411,673,205
DCP Midstream, LP2,268,26447,883,053
Energy Transfer LP(2)13,261,563156,619,059
Enterprise Products Partners L.P.5,353,209140,896,461
357,071,778
Natural Gas Gathering/Processing — 22.4%(1)
United States — 22.4%(1)
CNX Midstream Partners LP2,621,59938,013,186
Enable Midstream Partners LP2,023,70418,597,840
EQM Midstream Partners, LP2,612,47660,531,069
Hess Midstream Partners LP647,63513,244,136
Noble Midstream Partners LP(3)432,6638,406,642
Western Midstream Partners, LP3,939,05369,839,410
208,632,283
Other — 0.5%(1)
United States — 0.5%(1)
Westlake Chemical Partners LP206,8374,589,713
Refined Product Pipelines — 46.9%(1)
United States — 46.9%(1)
Holly Energy Partners, L.P.2,356,96252,701,670
Magellan Midstream Partners, L.P.2,112,028123,490,277
MPLX LP5,177,155122,439,716
NuStar Energy L.P.(4)2,518,02071,058,524
Phillips 66 Partners LP1,193,61466,520,108
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.353,09013,417,420
Marine Transportation — 1.6%(1)
Monaco — 1.6%(1)
GasLog Partners LP1,039,95915,131,403
Natural Gas Gathering/Processing — 17.9%(1)
United States — 17.9%(1)
Antero Midstream Corporation6,010,62227,528,649
EnLink Midstream, LLC4,396,86620,885,114
Rattler Midstream LP3,64357,960
Targa Resources Corp.1,766,09764,515,523
The Williams Companies, Inc.2,359,52253,608,340
166,595,586
Natural Gas/Natural Gas Liquids Pipelines — 16.5%(1)
United States — 16.5%(1)
Kinder Morgan Inc.2,224,60843,624,563
ONEOK, Inc.(4)907,86864,504,021
Tallgrass Energy, LP2,532,73145,361,212
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)6,2776,948,972
Natural Gas/Natural Gas Liquids Pipelines — 8.1%(1)
United States — 8.1%(1)
Altus Midstream Company
       Preferred(3)(5)(7)10,07210,421,842
Crestwood Equity Partners LP, 9.25%7,126,64065,422,555
75,844,397
Natural Gas Gathering/Processing — 2.5%(1)
United States — 2.5%(1)
Targa Resources Corp., 9.500%(3)(5)21,75823,242,766
Total Preferred Stock
       (Cost $102,238,517)106,036,135

See accompanying Notes to Financial Statements.
 
24Tortoise



 
 
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%, 11/15/204321,000,00017,928,501
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/A14,093,091
 
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)221,598221,598
 
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.
 
Tortoise25



 
 
 
 
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 LP885,663$12,930,680
Delek Logistics Partners, LP481,17715,455,405
Genesis Energy L.P.447,6978,510,720
PBF Logistics LP1,043,76321,344,953
Plains All American Pipeline, L.P.3,010,83952,388,599
Shell Midstream Partners, L.P.2,164,80042,559,968
153,190,325
Natural Gas/Natural Gas Liquids Pipelines — 37.9%(1)
United States — 37.9%(1)
Cheniere Energy Partners LP217,6348,459,434
DCP Midstream, LP1,693,90235,758,271
Energy Transfer LP9,403,483111,055,134
Enterprise Products Partners L.P.3,723,14797,993,229
253,266,068
Natural Gas Gathering/Processing — 22.3%(1)
United States — 22.3%(1)
CNX Midstream Partners, LP2,374,38834,428,626
Enable Midstream Partners LP2,192,04720,144,912
EQM Midstream Partners, LP1,843,74642,719,595
Hess Midstream Partners LP429,3138,779,451
Noble Midstream Partners LP238,2934,968,409
Noble Midstream Partners LP(2)302,1005,869,803
Western Midstream Partners, LP1,791,79431,768,508
148,679,304
Refined Product Pipelines — 39.9%(1)
United States — 39.9%(1)
Holly Energy Partners, L.P.1,640,76136,687,416
Magellan Midstream Partners, L.P.953,72455,764,242
MPLX LP3,818,00790,295,865
NuStar Energy L.P.(3)1,619,66645,706,974
Phillips 66 Partners LP676,33337,692,038
266,146,535
Other — 0.7%(1)
United States — 0.7%(1)
Westlake Chemical Partners LP212,2244,709,251
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.295,20011,217,600
Marine Transportation — 1.5%(1)
Monaco — 1.5%(1)
GasLog Partners, LP713,49010,381,279
Natural Gas Gathering/Processing — 18.2%(1)
United States — 18.2%(1)
Antero Midstream Corporation4,392,61220,118,163
EnLink Midstream, LLC3,180,84815,109,028
Rattler Midstream LP2,77144,087
Targa Resources Corp.1,145,47941,844,348
The Williams Companies, Inc.1,951,69944,342,601
121,458,227
Natural Gas/Natural Gas Liquids Pipelines — 15.8%(1)
United States — 15.8%(1)
Kinder Morgan Inc.1,407,43427,599,781
ONEOK, Inc.(3)543,43338,610,915
Tallgrass Energy, LP2,199,92139,400,585
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)3,7634,165,840
Natural Gas Gathering/Processing — 2.0%(1)
United States — 2.0%(1)
Targa Resources Corp., 9.500%(2)(4)12,25213,088,076
Natural Gas/Natural Gas Liquids Pipelines — 7.9%(1)
United States — 7.9%(1)
Altus Midstream Company Preferred(2)(4)(6)7,2027,451,871
Crestwood Equity Partners LP, 9.25%4,898,61144,969,249
52,421,120
Total Preferred Stock
       (Cost $67,525,396)69,675,036

See accompanying Notes to Financial Statements.
 
26Tortoise



 
 
 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%, 11/15/204310,950,0009,348,433
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)300,953300,953
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.
 
Tortoise27



 
 
 
 
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 LP111,052$1,615,807
Crude Oil Pipelines — 40.5%(1)
Canada — 26.2%(1)
Gibson Energy Inc188,1223,534,988
Enbridge Inc.488,75018,572,500
Inter Pipeline Ltd.324,2505,370,398
Pembina Pipeline Corporation187,8886,560,450
United States — 14.3%(1)
Plains GP Holdings, L.P.870,55315,208,561
SemGroup Corporation222,0973,413,631
52,660,528
Natural Gas Gathering/Processing — 15.7%(1)
United States — 15.7%(1)
Antero Midstream Corporation671,7253,076,500
EnLink Midstream, LLC662,3633,146,224
Equitrans Midstream Corporation397,4833,962,906
Rattler Midstream LP13207
Targa Resources Corp.280,24910,237,496
20,423,333
Natural Gas/Natural Gas Liquids Pipelines — 37.3%(1)
Canada — 7.0%(1)
Keyera Corp.82,8252,020,898
TC Energy Corporation137,6057,008,223
United States — 30.3%(1)
Kinder Morgan Inc.303,7795,957,105
ONEOK, Inc.226,37216,083,731
Tallgrass Energy LP456,2208,170,900
The Williams Companies, Inc.402,8809,153,434
48,394,291
Oil and Gas Production — 8.8%(1)
United States — 8.8%(1)
Cabot Oil & Gas Corporation(2)75,6001,205,064
Cimarex Energy Co.(2)13,200606,804
Concho Resources Inc.(2)8,400609,504
Continental Resources, Inc.(2)19,700608,336
Diamondback Energy, Inc.(2)6,400494,976
EOG Resources, Inc.(2)15,5001,098,950
EQT Corporation(2)50,400439,992
Noble Energy, Inc.(2)57,4001,191,624
Parsley Energy, Inc.(2)37,500561,750
Pioneer Natural Resources Company(2)9,9001,265,616
Viper Energy Partners LP(2)89,6002,125,312
WPX Energy, Inc.(2)(3)120,7001,187,688
11,395,616
Power — 1.0%(1)
United States — 1.0%(1)
NextEra Energy Partners, LP25,3491,346,792
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 LP33,891494,809
Genesis Energy L.P.46,531884,554
PBF Logistics LP78,2781,600,785
Shell Midstream Partners, L.P.132,0892,596,870
5,577,018
Natural Gas/Natural Gas Liquids Pipelines — 13.1%(1)
United States — 13.1%(1)
DCP Midstream, LP89,1851,882,695
Energy Transfer LP958,09311,315,078
Enterprise Products Partners L.P.145,2093,821,901
17,019,674
Natural Gas Gathering/Processing — 2.9%(1)
United States — 2.9%(1)
CNX Midstream Partners LP60,605878,773
EQM Midstream Partners, LP16,045371,763
Noble Midstream Partners LP(4)24,065467,583
Western Midstream Partners, LP114,4292,028,826
3,746,945
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP11,004244,179
Refined Product Pipelines — 15.5%(1)
United States — 15.5%(1)
Holly Energy Partners, L.P.162,0523,623,483
Magellan Midstream Partners, L.P.57,1083,339,105
MPLX LP265,9106,288,771
NuStar Energy L.P.135,0213,810,293
Phillips 66 Partners LP56,9333,172,876
20,234,528
Total Master Limited Partnerships
       (Cost $52,089,151)46,822,344

See accompanying Notes to Financial Statements.
 
28Tortoise



 
 
 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)535553,634
Natural Gas Gathering/Processing — 1.7%(1)
United States — 1.7%(1)
Targa Resources Corp., 9.500%(4)(5)2,1082,251,850
Power — 2.6%(1)
United States — 2.6%(1)
Sempra Energy, 6.000%, 01/15/202128,8113,397,105
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)236,602236,602
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.
 
Tortoise29



 
 
 
 
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 LP91,843$1,336,316
Natural Gas/Natural Gas Liquids Pipelines — 10.7%(1)
United States — 10.7%(1)
Cheniere Energy, Inc.(2)64,3003,892,722
The Williams Companies, Inc.117,7742,675,825
6,568,547
Natural Gas Gathering/Processing — 3.9%(1)
United States — 3.9%(1)
Equitrans Midstream Corporation188,3041,877,391
Targa Resources Corp.14,000511,420
2,388,811
Oil and Gas Production — 79.6%(1)
United States — 79.6%(1)
Cabot Oil & Gas Corporation293,6004,679,984
Cimarex Energy Co.(3)57,5002,643,275
Concho Resources Inc.(3)67,3004,883,288
Continental Resources, Inc.(3)95,6002,952,128
Diamondback Energy, Inc.(3)64,4004,980,696
EOG Resources, Inc.(3)74,0005,246,600
EQT Corporation(3)263,0002,295,990
Marathon Oil Corporation(3)263,3003,067,445
Noble Energy, Inc.(3)177,6003,686,976
Parsley Energy, Inc.(3)267,8004,011,644
Pioneer Natural Resources Company(3)38,8004,960,192
Range Resources Corporation(3)691,0002,411,590
WPX Energy, Inc.(2)(3)325,1003,198,984
49,018,792
Oilfield Services — 1.1%(1)
United States — 1.1%(1)
Chart Industries, Inc.(2)12,417685,418
Power/Utility — 6.7%(1)
United States — 6.7%(1)
NextEra Energy, Inc.17,7004,138,614
Refining — 26.5%(1)
United States — 26.5%(1)
Delek US Holdings, Inc.(3)117,7004,038,287
Marathon Petroleum Corporation(3)124,9007,573,936
Valero Energy Corporation(3)49,2004,698,108
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 LP274,4373,241,101
Enterprise Products Partners L.P.60,6521,596,361
4,837,462
Natural Gas Gathering/Processing — 1.1%(1)
United States — 1.1%(1)
Noble Midstream Partners LP(4)37,208722,952
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)1,9972,133,275
 
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)299,161299,161
 
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.
 
30Tortoise



 
 
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%, 03/15/20256,000,0006,255,000
 14,967,500
Natural Gas/Natural Gas Liquids Pipelines — 40.9%(1)
Canada — 6.8%(1)
TransCanada Corporation,
      5.625%, 05/20/20757,000,0007,311,220
TransCanada Corporation,
      5.300%, 03/15/20771,000,0001,021,860
United States — 34.1%(1)
Antero Midstream Partners LP,
      5.750%, 03/01/20272,000,0001,580,000
Cheniere Corp.,
      7.000%, 06/30/20244,000,0004,589,360
Cheniere Corp.,
      5.875%, 03/31/20252,000,0002,235,400
Kinder Morgan, Inc.,
      6.500%, 09/15/20204,000,0004,134,680
Florida Gas Transmission Co., LLC,
      5.450%, 07/15/2020(2)1,500,0001,529,010
NGPL PipeCo LLC,
      4.875%, 08/15/2027(2)2,000,0002,119,517
ONEOK, Inc.,
      4.250%, 02/01/20224,500,0004,667,097
ONEOK, Inc.,
      7.500%, 09/01/20232,000,0002,336,000
Rockies Express Pipeline LLC,
      4.950%, 07/15/2029(2)3,000,0002,890,545
Ruby Pipeline, LLC,
      6.000%, 04/01/2022(2)1,102,2731,140,775
Southern Star Central Corp.,
      5.125%, 07/15/2022(2)3,000,0003,030,000
Tallgrass Energy LP,
      5.500%, 01/15/2028(2)3,250,0003,006,315
The Williams Companies, Inc.,
      7.875%, 09/01/20215,000,0005,463,531
The Williams Companies, Inc.,
      4.550%, 06/24/20243,000,0003,211,480
 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)5,900,0005,103,500
EnLink Midstream LLC,
      5.375%, 06/01/20292,000,0001,694,400
Hess Corporation,
      5.625%, 02/15/2026(2)4,160,0004,326,400
 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)1,302,0001,249,920
Ascent Resources Utica Holdings, LLC,
      7.000%, 11/01/20262,000,0001,540,000
 2,789,920
Power/Utility — 13.0%(1)
United States — 13.0%(1)
The AES Corporation,
      5.500%, 04/15/20254,000,0004,144,800
Duquesne Light Holdings, Inc.,
      6.400%, 09/15/2020(2)3,000,0003,090,538
Duquesne Light Holdings, Inc.,
      5.900%, 12/01/2021(2)2,000,0002,127,572
NextEra Energy, Inc.,
      4.800%, 12/01/20774,500,0004,584,186
NV Energy Inc.,
      6.250%, 11/15/20201,000,0001,039,556
Pattern Energy Group Inc.,
      5.875%, 02/01/2024(2)1,000,0001,030,000
 16,016,652
Refined Product Pipelines — 1.4%(1)
United States — 1.4%(1)
Buckeye Partners,
      5.850%, 11/15/20432,000,0001,707,476
Total Corporate Bonds
      (Cost $95,495,122)96,872,638

See accompanying Notes to Financial Statements.
   
Tortoise31



 
 
  
 
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 LP25,000$365,000
PBF Logistics LP85,8681,756,001
Shell Midstream Partners, L.P.89,0441,750,605
3,871,606
Natural Gas/Natural Gas Liquids Pipelines — 10.6%(1)
United States — 10.6%(1)
DCP Midstream, LP96,7582,042,561
Energy Transfer LP717,7878,477,065
Enterprise Products Partners L.P.98,6822,597,310
13,116,936
Natural Gas Gathering/Processing — 3.5%(1)
United States — 3.5%(1)
CNX Midstream Partners, LP47,302685,879
EQM Midstream Partners, LP8,010185,592
Noble Midstream Partners LP(2)21,975426,974
Western Midstream Partners, LP166,9072,959,261
4,257,706
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP9,289206,123
Refined Product Pipelines — 15.4%(1)
United States — 15.4%(1)
Holly Energy Partners, L.P.136,3273,048,272
Magellan Midstream Partners, L.P.56,1193,281,278
MPLX LP(3)312,1187,381,592
NuStar Energy L.P.102,3382,887,978
Phillips 66 Partners LP41,6542,321,377
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.47,8881,819,744
Plains GP Holdings, L.P.331,4535,790,484
7,610,228
Marine Transportation — 1.0%(1)
Monaco — 1.0%(1)
GasLog Partners LP86,6751,261,121
Natural Gas/Natural Gas Liquids Pipelines — 7.8%(1)
United States — 7.8%(1)
ONEOK, Inc.69,1174,910,763
Tallgrass Energy LP264,0524,729,171
9,639,934
Natural Gas Gathering/Processing — 8.8%(1)
United States — 8.8%(1)
Antero Midstream Corporation444,9312,037,784
EnLink Midstream, LLC259,5981,233,091
Equitrans Midstream Corporation145,0931,446,577
Targa Resources Corp.166,0236,064,820
10,782,272
Power — 1.8%(1)
United States — 1.8%(1)
DTE Energy Company17,2292,152,591
Total Common Stock
      (Cost $37,437,512)31,446,146

See accompanying Notes to Financial Statements.
   
32Tortoise



 
 
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)1,6851,799,984
Natural Gas Liquids Pipelines — 0.4%(1)
United States — 0.4%(1)
Altus Midstream Company, 7.000%(2)(4)(6)467482,845
Power — 2.0%(1)
United States — 2.0%(1)
Sempra Energy,
       6.000%, 01/15/202121,1892,498,395
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)     244,583244,583
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.
   
Tortoise33



 
 
  
 
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)82,6005,000,604
ONEOK, Inc.(4)46,7323,320,309
Tallgrass Energy LP(2)325,1465,823,365
The Williams Companies, Inc.(4)53,6281,218,428
19,456,406
Natural Gas Gathering/Processing — 3.6%(1)
United States — 3.6%(1)
Targa Resources Corp.(2)232,1018,478,650
Oil and Gas Production — 5.3%(1)
United States — 5.3%(1)
Cabot Oil & Gas Corporation(2)211,8003,376,092
Cimarex Energy Co.(2)44,1002,027,277
EQT Corporation(2)273,3002,385,909
Noble Energy, Inc.(2)230,5004,785,180
12,574,458
Other — 1.1%(1)
Australia — 1.1%(1)
Spark Infrastructure Group1,734,8512,546,385
Power — 18.5%(1)
Australia — 0.7%(1)
APA Group235,7601,754,143
Canada — 1.4%(1)
Algonquin Power & Utilities Corp233,4523,274,268
France — 2.0%(1)
Engie SA310,1114,906,506
Italy — 2.3%(1)
Enel SpA(2)741,4205,600,616
Portugal — 3.9%(1)
EDP — Energias de Portugal SA1,330,9155,381,671
REN — Redes Energeticas Nacionais
      SGPS SA1,237,8903,778,005
Spain — 1.4%(1)
Iberdrola SA344,1003,384,851
United States — 2.0%(1)
Covanta Holding Corp(4)316,0924,649,713
United Kingdom — 4.8%(1)
National Grid PLC(2)524,5776,036,007
SSE PLC(2)311,5045,237,257
44,003,037
Renewables — 6.0%(1)
Canada — 3.5%(1)
Innergex Renewable Energy Inc295,0543,805,070
TransAlta Renewables Inc389,0604,402,298
United States — 2.5%(1)
Pattern Energy Group Inc A(4)160,2444,409,915
TerraForm Power Inc(5)(6)105,9091,642,649
14,259,932
Water Infrastructure — 2.5%(1)
France — 0.6%(1)
Suez94,6201,400,623
United Kingdom — 1.9%(1)
Pennon Group PLC292,2183,446,662
Pentair PLC(2)23,3751,036,681
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)134,0272,829,310
Energy Transfer LP(4)574,0306,779,294
Enterprise Products Partners L.P.(4)321,5048,461,985
 18,070,589
Natural Gas Gathering/Processing — 6.3%(1)
United States — 6.3%(1)
EQM Midstream Partners, LP(4)199,7324,627,790
Noble Midstream Partners LP(4)110,6202,306,427
Noble Midstream Partners LP(7)265,0405,149,727
Western Midstream Partners, LP(4)157,1222,785,773
 14,869,717
Other — 2.5%(1)
United States — 2.5%(1)
Enviva Partners LP(4)175,4396,063,172
Renewables — 2.5%(1)
Canada — 2.5%(1)
Brookfield Renewable Partners LP(4)125,3455,846,854
Total Master Limited Partnerships
       (Cost $52,916,846)44,850,332

See accompanying Notes to Financial Statements.
   
34Tortoise



 
 
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)3,000,0002,615,415
6,905,415
Healthcare — 2.3%(1)
United States — 2.3%(1)
Grace Commons Property,
      15.000%, 10/31/2021(7)1,825,0001,825,000
Grace Commons Property,
      8.000%, 10/31/2021(7)3,650,0003,650,000
5,475,000
Natural Gas/Natural Gas Liquids Pipelines — 1.7%(1)
Canada — 1.7%(1)
TransCanada Corporation,
      5.300%, 03/15/2077(4)4,000,0004,087,440
Natural Gas Gathering/Processing — 2.3%(1)
United States — 2.3%(1)
Antero Midstream Partners LP,
      5.750%, 01/15/2028(4)(7)3,750,0002,896,875
Blue Racer Midstream, LLC,
      6.625%, 07/15/2026(4)(7)3,000,0002,595,000
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)3,500,0002,695,000
Southwestern Energy Co,
      7.750%, 10/01/2027(4)3,000,0002,606,250
Southwestern Energy Co,
      7.500%, 04/01/2026(4)3,000,0002,628,750
7,930,000
Senior Living — 1.0%(1)
United States — 1.0%(1)
Realco Perry Hall,
      10.000%, 10/01/2024(7)2,280,0002,279,850
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$3,000,0001,500,000
Natural Gas/Natural Gas Liquids Pipelines — 4.3%(1)
United States — 4.3%(1)
DCP Midstream LP,
      7.375% Perpetuity(4)5,000,0004,775,000
Energy Transfer Operating LP,
      6.250%, Perpetuity(4)6,000,0005,400,000
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)800,000800,000
 
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)161,1201,479,082
Altus Midstream Company
      Preferred(7)(8)(9)4,1484,291,720
5,770,802
Natural Gas Gathering/Processing — 1.8%(1)
United States — 1.8%(1)
Targa Resources Corp., 9.500%(7)(8)4,0004,272,960
Power/Utility — 1.3%(1)
United States — 1.3%(1)
Aqua America Inc.,
      6.000%, 04/30/202250,0002,975,500
Renewables — 0.6%(1)
United States — 0.6%(1)
NextEra Energy Partners LP29,4101,460,207
Total Preferred Stock
      (Cost $13,881,284)14,479,469

See accompanying Notes to Financial Statements.
   
Tortoise35



 
 
 
 
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/A12,497,810
Renewable Holdco I, LLC(7)(8)(10)N/A25,400,059
Renewable Holdco II, LLC(7)(8)(10)N/A987,905
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%, 07/01/2025445,000445,036
       (Obligor: Athenian Academy,
       Inc. — Series B)
Public Finance Authority Educational
       Facility Revenue,
       12.000%, 10/01/2029185,000183,539
       (Obligor: St. James Christian
       Academy, Inc.)
628,575
Pennsylvania — 1.3%(1)
Philadelphia Authority for Industrial
       Development,
       10.000%, 06/15/20303,135,0003,161,679
       (Obligor: MaST Community
       Charter School III)
Wisconsin — 3.8%(1)
Public Finance Authority,
       9.000%, 06/01/20298,925,0008,954,096
       (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)3,510,0003,516,669
 
Short-Term Investment — 0.2%(1)
United States Investment Company — 0.2%(1)
First American Government Obligations Fund,
       1.56%(11)(Cost $410,126)410,126410,126
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.
 
36Tortoise



 
 
2019 Annual Report| November 30, 2019
 
Schedule of Interest Rate Swap Contracts
November 30, 2019
 

TYG
Fixed RateFloating Rate
MaturityNotionalPaid byReceived byUnrealized
CounterpartyDateAmountTYGTYGDepreciation
The Bank of Nova Scotia     09/02/2021     $10,000,000     2.381%     1-month U.S. Dollar LIBOR     $(161,840)
 
TPZ
Fixed RateFloating Rate
MaturityNotionalPaid byReceived byUnrealized
CounterpartyDateAmountTPZTPZDepreciation
Wells Fargo Bank, N.A.08/06/2020$3,000,0002.180%3-month U.S. Dollar LIBOR$(8,589)

Schedule of Forward Currency Contracts
November 30, 2019

TEAFContract Amount
Unrealized
CounterpartySettlement DatePurchases (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.
 
Tortoise37



 
 
 
 
Schedule of Options Written
November 30, 2019
 
TYG
Call Options Written     Expiration Date     Strike Price     Contracts     Notional Value     Fair Value
NuStar Energy LPDecember 2019$29.001,450$4,205,000$(1,853)
ONEOK, Inc.December 201973.501,1258,268,750(39,375)
ONEOK, Inc.December 201974.001,1258,325,000(22,500)
Total Value of Call Options Written(Premiums received $127,576)$20,798,750$(63,728)
 
NTG
Call Options WrittenExpiration DateStrike PriceContractsNotional ValueFair Value
NuStar Energy LPDecember 2019$29.002,050$5,945,000$(2,620)
ONEOK, Inc.December 201973.507755,696,250(27,125)
ONEOK, Inc.December 201974.007755,735,000(15,500)
Total Value of Call Options Written(Premiums received $115,174)$17,376,250$(45,245)
 
TTP
Call Options WrittenExpiration DateStrike PriceContractsNotional ValueFair Value
Cabot Oil & Gas CorporationDecember 2019$19.15756$1,447,740$(429)
Cimarex Energy Co.December 201949.30132650,760(11,207)
Concho Resources Inc.December 201977.7584653,100(7,986)
Continental Resources, Inc.December 201933.65197662,905(8,882)
Diamondback Energy, Inc.December 201985.0064544,000(4,160)
EOG Resources, Inc.December 201978.501551,216,750(5,873)
EQT CorporationDecember 201910.90504549,360(3,834)
Noble Energy, Inc.December 201922.105741,268,540(17,173)
Parsley Energy, Inc.December 201917.20375645,000(2,774)
Pioneer Natural Resources CompanyDecember 2019142.00991,405,800(6,088)
Viper Energy Partners LPDecember 201926.708962,392,320(2,962)
WPX Energy, Inc.December 201911.001,2071,327,700(12,070)
Total Value of Call Options Written(Premiums received $225,578)$12,763,975$(83,438)
 
NDP
Call Options WrittenExpiration DateStrike PriceContractsNotional ValueFair Value
Cimarex Energy Co.December 2019$54.00575$3,105,000$(11,067)
Concho Resources Inc.December 201983.006735,585,900(19,565)
Continental Resources, Inc.December 201935.509563,393,800(18,322)
Delek US Holdings, Inc.December 201940.001,1774,708,000(17,655)
Diamondback Energy, Inc.December 201990.006445,796,000(14,168)
EOG Resources, Inc.December 201985.007406,290,000(4,810)
EQT CorporationDecember 201912.002,6303,156,000(7,890)
Marathon Petroleum CorporationDecember 201970.851,2498,849,165(2,840)
Noble Energy, Inc.December 201924.551,7764,360,080(5,087)
Parsley Energy, Inc.December 201918.302,6784,900,740(6,160)
Pioneer Natural Resources CompanyDecember 2019153.003885,936,400(6,496)
Range Resources CorporationDecember 20194.356,9103,005,850(53,475)
Valero Energy CorporationDecember 2019110.004925,412,000(984)
WPX Energy, Inc.December 201911.603,2513,771,160(10,829)
Total Value of Call Options Written(Premiums received $534,008)$68,270,095$     (179,348)

See accompanying Notes to Financial Statements.
  
38Tortoise



 
 
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 CorporationDecember 2019$19.002,118$4,024,200$(10,590)
Cheniere Energy Inc.December 201966.008265,451,600(11,462)
Cimarex Energy Co.December 201950.454412,224,845(26,593)
EQT CorporationDecember 201911.002,7333,006,300(27,330)
Noble Energy, Inc.December 201921.402,3054,932,700(118,819)
Pentair PLCDecember 201945.002331,048,500(11,650)
Tallgrass Energy LPDecember 201919.501,6263,170,700(173)
Tallgrass Energy LPDecember 201920.001,6253,250,000(20,313)
Targa Resources Corp.December 201942.002,3219,748,200(11,605)
Euro
Enel SpADecember 20197.101,4825,796,653(13,798)
Snam SpADecember 20194.807003,702,031(2,160)
GBP
National Grid PLCDecember 20199.505246,438,012(27,107)
SSE PLCDecember 201914.002504,526,525(6,466)
Total Value of Call Options Written(Premiums received $570,114)$57,320,266$   (288,066)

See accompanying Notes to Financial Statements.
 
Tortoise39



 
 
 
 
Statements of Assets & Liabilities
November 30, 2019
 
     
Tortoise EnergyTortoise
InfrastructureMidstream 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 sold2,344,9252,291,436
       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 investments626,441395,119
       Tax reclaims receivable
       Escrow receivable814,669
       Current tax asset11,138,2142,319,733
       Deferred tax asset
       Prepaid expenses and other assets843,210317,842
              Total assets1,680,744,7381,163,499,549
 
Liabilities
       Call options written, at fair value(4)63,72845,245
       Payable to Adviser2,933,2832,054,385
       Accrued directors’ fees and expenses45,30539,133
       Payable for investments purchased
       Accrued expenses and other liabilities8,186,4153,822,708
       Unrealized depreciation of interest rate swap contracts161,840
       Unrealized depreciation of forward currency contracts
       Current tax liability
       Deferred tax liability116,472,15727,892,485
       Credit facility borrowings93,900,00053,600,000
       Senior notes, net(5)364,563,653276,743,681
       Mandatory redeemable preferred stock, net(6)164,132,832131,593,741
              Total liabilities750,459,213495,791,378
              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 capital697,107,449594,868,375
       Total distributable earnings (loss)233,124,34472,776,588
              Net assets applicable to common stockholders$930,285,525$667,708,171
       
Capital shares:
       Authorized100,000,000100,000,000
       Outstanding53,732,46263,208,377
       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.
 
40Tortoise



 
 
2019 Annual Report| November 30, 2019
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1)
 
$    192,282,893$88,439,679$176,064,411$    229,848,360
38,885,774
12,623378,442
115,403
66,735
373,815234,4631,747,9711,945,556
12,238252,481
418,970
94,5109,6235,9023,621
192,751,21888,683,765177,843,145271,915,342
 
 
83,438179,348288,066
371,545172,903291,919623,176
30,43329,21728,80813,999
940,861
733,193251,962398,899268,071
8,589
320,491
11,800,00026,500,00054,100,00032,000,000
33,924,324
15,921,724
62,864,65727,133,43054,828,21534,454,664
$129,886,561$61,550,335$123,014,930$237,460,678
 
 
$10,016$14,768$6,951$13,491
191,472,216222,592,683128,276,550264,108,245
(61,595,671)(161,057,116)(5,268,571)(26,661,058)
$129,886,561$61,550,335$123,014,930$237,460,678
                
                
100,000,000100,000,000100,000,000100,000,000
10,016,41314,767,9686,951,33313,491,127
 
$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.
 
Tortoise41



 
 
 
 
Statements of Operations
Year Ended November 30, 2019

 
Tortoise EnergyTortoise
InfrastructureMidstream Energy
     Corp.(1)     Fund, Inc.
Investment Income
       Distributions from master limited partnerships$   130,392,247$         94,386,005
       Dividends and distributions from common stock34,543,50626,085,341
       Dividends and distributions from preferred stock8,413,8485,535,169
       Dividends and distributions from electronically traded funds
       Dividends and distributions from private investments22,940,960
       Dividends and distributions from affiliated private investments1,275,000
       Less return of capital on distributions(3)(171,298,472)(112,442,509)
       Less foreign taxes withheld
       Net dividends and distributions from investments26,267,08913,564,006
       Interest income469,219315,417
       Dividends from money market mutual funds8,5678,219
       Other income1,533,755
              Total Investment Income28,278,63013,887,642
Operating Expenses
       Advisory fees19,538,38813,834,487
       Administrator fees490,158455,324
       Professional fees357,321245,783
       Directors’ fees177,421151,304
       Stockholder communication expenses178,776117,156
       Custodian fees and expenses98,59770,840
       Fund accounting fees86,85278,685
       Registration fees56,11762,208
       Stock transfer agent fees13,81016,245
       Franchise fees3,851
       Other operating expenses160,84274,076
              Total Operating Expenses21,162,13315,106,108
Leverage Expenses
       Interest expense18,248,67314,648,210
       Distributions to mandatory redeemable preferred stockholders6,919,9995,363,166
       Amortization of debt issuance costs411,988248,432
       Other leverage expenses259,967109,732
              Total Leverage Expenses25,840,62720,369,540
              Total Expenses47,002,76035,475,648
       Less fees waived by Adviser (Note 4)(16,438)(303,806)
              Net Expenses46,986,32235,171,842
Net Investment Income (Loss), before Income Taxes(18,707,692)(21,284,200)
       Deferred tax benefit2,663,5183,734,259
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 securities24,387,636(54,660,742)
       Net realized gain on options2,750,7758,594,292
       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 taxes27,136,052(46,066,450)
                     Current tax (expense) benefit(7,034,755)1,510,530
                     Deferred tax benefit8,951,4099,380,105
                            Income tax benefit1,916,65410,890,635
                            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 options492,115372,847
       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 benefit61,475,44327,168,584
                            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.
 
42Tortoise



 
 
2019 Annual Report| November 30, 2019
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1)(2)
 
$         4,700,481$          894,357$      3,938,977$         3,447,268
10,688,0171,878,2023,306,1665,572,247
452,273189,715432,395402,731
895,305
(11,183,449)(1,323,155)(6,296,634)(5,367,751)
(386,869)(5,332)(35,735)(332,376)
4,270,4531,633,7871,345,1694,617,424
5,437,2743,058,746
7,71614,9155,595105,128
50,003
4,278,1691,648,7026,788,0387,831,301
 
2,414,2331,434,7101,825,1792,576,335
100,69765,04689,31773,222
150,455145,226151,2671,151,532
110,633106,271105,15334,111
54,90936,59776,97521,773
15,56414,23210,65429,733
45,56037,63629,01623,509
24,49024,86724,49027,574
12,41412,32614,15111,526
34,23833,12419,81813,943
2,963,1931,910,0352,346,0203,963,258
 
1,752,9141,229,4151,719,941619,731
735,543
41,426
20,835
2,550,7181,229,4151,719,941619,731
5,513,9113,139,4504,065,9614,582,989
(477,099)
5,513,9113,139,4504,065,9614,105,890
(1,235,742)(1,490,748)2,722,0773,725,411
418,970
(1,235,742)(1,490,748)2,722,0774,144,381
 
(16,705,273)(88,309,962)4,740,042(12,799,162)
1,171,8324,861,6691,998,935
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.
 
Tortoise43



 
 
 
 
Statements of Changes in Net Assets
 

 
 
 
Tortoise Energy Infrastructure Corp.(1)Tortoise Midstream Energy Fund, Inc.
 
Year EndedYear EndedYear EndedYear 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)29,052,70642,564,712(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 offerings114,529,368230,973,008
       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 stockholders1,990,0506,535,3032,720,036
              Net increase (decrease) in net assets applicable
                     to common stockholders from capital stock
                     transactions1,983,097120,714,701(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 period1,260,299,7041,181,528,470915,032,974754,085,120
       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 period53,635,05449,379,40863,208,37747,246,780
       Shares issued through offerings4,013,69315,802,094
       Shares issued through reinvestment of distributions97,408241,953159,503
       Shares outstanding at end of period53,732,46253,635,05463,208,37763,208,377

(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.
 
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2019 Annual Report| November 30, 2019
 
 
 

Tortoise
Essential Assets
Tortoise Power and EnergyIncome Term
Tortoise Pipeline & Energy Fund, Inc.Tortoise Energy Independence Fund, Inc.Infrastructure Fund, Inc.Fund(1)
Period from
Year EndedYear EndedYear EndedYear EndedYear EndedYear EndedMarch 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)3,657,2274,821,8309,007,176(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
 
 
527,8951,233,701
 
 
527,8951,233,701269,722,540
 
(33,315,130)(25,315,480)(70,937,899)(55,400,319)(14,309,498)(10,918,386)237,360,678
 
163,201,691188,517,171132,488,234187,888,553137,324,428148,242,814100,000
$129,886,561$163,201,691$61,550,335$132,488,234$123,014,930$137,324,428$237,460,678
 
  
10,016,41310,016,41314,696,26014,583,6626,951,3336,951,3335,000
13,486,127
71,708112,598
10,016,41310,016,41314,767,96814,696,2606,951,3336,951,33313,491,127

See accompanying Notes to Financial Statements.
 
Tortoise45



 
 
 
 
Statements of Cash Flows
Year Ended November 30, 2019

 
Tortoise EnergyTortoise
InfrastructureMidstream 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 investments568,893,979488,691,140
       Sales (purchases) of short-term investments, net10,646102
       Proceeds from litigation settlement40,328
       Proceeds from funds held in escrow880,420
       Proceeds from income tax refund1,533,755
       Call options written, net2,146,9272,775,777
       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 activities166,804,547161,428,029
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.
 
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2019 Annual Report| November 30, 2019
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome 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)
58,361,559282,029,36648,864,200127,369,367
(18,738)12,82426,492(410,126)
3,563
884,6344,605,5102,502,877
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)
22,015,81345,900,9639,739,623(291,197,587)
 
(8,000,000)(30,600,000)700,00032,000,000
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
12,623378,442
$$$12,623$378,442

See accompanying Notes to Financial Statements.
 
Tortoise47



 
 
 
 
Statements of Cash Flows(continued)
Year Ended November 30, 2019

           
Tortoise EnergyTortoise
InfrastructureMidstream 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 investments571,238,904490,982,576
                     Sales (purchases) of short-term investments, net10,646102
                     Proceeds from litigation settlement40,328
                     Proceeds from funds held in escrow880,420
                     Call options written, net2,124,7942,775,777
                     Return of capital on distributions received171,298,472112,442,509
                     Deferred tax benefit(73,090,370)(40,282,948)
                     Net unrealized (appreciation) depreciation265,893,683114,920,767
                     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 costs411,988248,432
                     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 asset3,741,365(1,852,048)
                            (Increase) decrease in receivable for investments sold(2,344,925)(2,291,436)
                            Increase in receivable for premiums on options written22,133
                            (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)