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TEAF Ecofin Sustainable and Social Impact Term Fund

Filed: 10 Aug 20, 6:14am

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 number 811-23248

 

Tortoise Essential Assets Income Term Fund
(Exact name of registrant as specified in charter)

 

5100 W. 115th Place, Leawood, KS 66211
(Address of principal executive offices) (Zip code)

 

P. Bradley Adams
Diane Bono
5100 W. 115th Place, 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: May 31, 2020


Item 1. Report to Stockholders.



Quarterly Report | May 31, 2020




2020 2nd Quarter Report
Closed-End Funds





 
 
 
 
Tortoise
2020 2nd Quarter Report to Stockholders
 


This combined report provides you with a comprehensive review of our funds that span essential assets.



 
Table of contents
 
Closed-end Fund Comparison     1          TPZ: Fund Focus     17
Letter to Stockholders2TEAF: Fund Focus20
TYG: Fund Focus5Financial Statements24
NTG: Fund Focus8Notes to Financial Statements64
TTP: Fund Focus11Additional Information85
NDP: Fund Focus14




 

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 $0.16, each quarter to its common shareholders. Prior to May 2020, the quarterly distribution rate was $0.285. 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



 
 
2020 2nd Quarter Report | May 31, 2020

Closed-end Fund Comparison
Name/Ticker     Primary
focus
     Structure     Total assets
($ millions)
1
     Portfolio mix
by asset type2
   Portfolio mix
by structure2

Tortoise Energy Infrastructure Corp.

NYSE: TYG
Inception: 2/2004

Midstream MLPsC-corp$467.0

Tortoise Midstream Energy Fund, Inc.

NYSE: NTG
Inception: 7/2010

Natural gas infrastructure MLPsC-corp$226.2

Tortoise Pipeline & Energy Fund, Inc.

NYSE: TTP
Inception: 10/2011

North American pipeline companiesRegulated investment company$72.1

Tortoise Energy Independence Fund, Inc.

NYSE: NDP
Inception: 7/2012

North American oil & gas producersRegulated investment company$33.0

Tortoise Power and Energy Infrastructure Fund, Inc.

NYSE: TPZ
Inception: 7/2009

Power & energy infrastructure companies (Fixed income & equity)Regulated investment company$108.3

Tortoise Essential Assets Income Term Fund

NYSE: TEAF
Inception: 3/2019

Essential assetsRegulated investment company$236.4

1As of 6/30/2020
2As of 5/31/2020

(unaudited)
 
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Tortoise
Second Quarter 2020 Report to closed-end fund stockholders
 

Dear stockholder,

The second fiscal quarter ending in May certainly had its highs and lows. When the period started, COVID-19 was just starting to become a serious concern in the U.S. and many other countries across the globe. There weren’t yet shelter-at-home orders and basic shutdowns of countries and economies. By the end of the period, some parts of the world, including the U.S. began to emerge from several months of quarantine-induced economic slumber. While the virus is still gaining momentum in some parts of the globe, it is slowing in others and we are seeing more indicators that life is slowly making the first hesitant steps back towards normalcy. This has taken the form of direct data showing the narrowing gaps between oil and gas supply/ demand, as well as untraditional metrics showing more people out on the roads requesting driving directions.

Energy infrastructure

During the period, the broad equity markets were driven by hopes and possibilities that the world could be closer to a COVID-19 vaccine. Markets vacillated as each drug saw successes or failures during trials. Energy markets improved throughout the period as oil inventories declined with transportation demand increases and supply cuts, and the market saw signs that we are getting closer to balance. The broader energy sector, as represented by the S&P Energy Select Sector® Index, faced headwinds, returning -13.6% in the second fiscal quarter ending May 31, 2020.

Rarely have we seen a sector experience two consecutive months with more extremes than energy did in April and May. In April, oil prices plummeted to negative $37 around expiration of the front-month futures contract. May’s front-month futures contract expiration did not result in similar theatrics. The massively oversupplied global oil market in April that resulted in higher inventories subsided, resulting in higher prices. In fact, oil prices had the largest monthly gain in history in May. Crude oil spot prices, represented by West Texas Intermediate (WTI), began the fiscal period at $44.76 per barrel, troughed at -$37.63 on April 20 and ended the period at $35.49.

Indications are that China oil demand is approaching pre-COVID levels. U.S. demand appears to be increasing as well. Increased demand from two of the largest energy consumers in the world are helping balance the global oil supply and demand equation. Meanwhile, on the supply side, Saudi Arabia, Russia, and other OPEC nations are cutting production along with the U.S. In fact, the U.S. rig count is at its lowest level since 2009, indicating further production declines. According to Energy Information Administration (EIA) estimates, U.S. crude oil production fell from a record 12.9 million barrels per day (b/d) in November 2019 to 11.4 million b/d in May 2020. Baker Hughes reported that the U.S. had the fewest active drilling wells on record dating back to 1987. EIA forecasts that U.S. crude oil production will average 11.6 million b/d in 2020, and 10.8 million b/d in 2021, which would mark the first annual decline since 2016.1

While oil dominated the headlines, natural gas has continued to provide a cleaner burning energy source. As a result, we continue to see natural gas as a critical source of energy supply going forward. A reduction in natural gas demand caused by COVID-19 has resulted in the convergence of global natural gas prices. Natural gas prices, represented by Henry Hub, opened the fiscal quarter at $1.79 per million British Thermal Units (mmbtu), bottomed at $1.50 on April 3 and then peaked on May 5 at $1.93 before ending the fiscal quarter close to where it began at $1.70.

In the short term, the convergence of gas prices restricts the global liquefied natural gas (LNG) trade. It was reported that potentially 35-45 U.S. LNG cargoes scheduled for July loading could be canceled. However, low natural gas prices encourage coal-to-gas switching. We expect low natural gas prices in Europe to result in coal-to-gas fuel switching for electricity generation in countries like Germany this summer. Also, South Korea and Japan are expected to switch to natural gas from coal due to low prices as well. Clearly, more natural gas and less coal will reduce carbon emissions. According to the EIA, U.S. dry natural gas production averaged 92.2 billion cubic feet per day (Bcf/d) in 2019, setting a new record. EIA forecasts dry natural gas production will average 89.7 Bcf/d in 2020 and 85.4 Bcf/d in 2021 before production is expected to begin rising in the second quarter of 2021 in response to higher prices.1

On the demand side, EIA expects U.S. LNG exports to decline through the end of the summer as a result of reduced global demand for natural gas. COVID-19 has reduced global energy consumption, thereby reducing CO2 emissions significantly in 2020, and a further increase of natural gas usage and less coal will accelerate CO2 emissions reductions.

Longer term, lower natural gas prices are causing deferrals and cancellations of several LNG projects. Therefore, the global LNG market is expected to balance faster than analysts expected and there will likely be fewer players in the global LNG market. Existing LNG providers with stable cash flows backed by long-term contracts, will likely benefit from fewer market participants as LNG demand and commodity prices rise in the future.

Midstream energy was on par with broad energy in the second fiscal quarter with the Tortoise North American Pipeline IndexSM return of -14.0% and the Tortoise MLP Index® return of -13.9% during the period. In general, first quarter earnings for midstream companies were treated as a non-event, with an exclusive focus on company outlooks. Conditions appear to be improving, but are still far from normal. Full year guidance is now 8% lower on average. Companies with significant natural gas businesses and/or take or pay contracts reaffirmed guidance, whereas others with cash flows tied to wellhead volumes provided a wider range of outcomes. This falls in line with the sensitivity analysis we’ve conducted. Management teams are seeking to insulate and improve their balance sheets while investor focus has remained on their sustainability of cash flows and ultimately, the dividends. Companies continued to reduce spending to better align activity with the new environment and we estimate capex at the end of the fiscal quarter is 25% lower than original 2020 plans. Although in most cases these projects did shift out of 2020 capital budgets, we believe many of these projects will be necessary when demand stabilizes and may reappear in 2021 capital programs or beyond.

(unaudited)
 
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2020 2nd Quarter Report | May 31, 2020
 
 
 

Capital markets activity was driven solely by debt issuance with midstream companies raising approximately $11.9 billion of debt during the second fiscal quarter of 2020, down from the first fiscal quarter. Merger and acquisition activity was minimal with less than $600 million for the period. The largest deal was Plains All American (PAA) selling its natural gas liquids (NGL) terminal assets to Crestwood Equity Partners (CEQP) totaling approximately $160 million.

On the regulatory front, New York regulators denied a water permit for William’s proposed Northeast Supply Enhancement natural gas pipeline. Now, it is unlikely that Williams will pursue this project, which would have resulted in lower heating bills for certain New York residents. The project cancellation would immediately improve Williams’ free cash flow. And as we are emphasizing a free cash flow focus to management teams, we consequently view this and other project cancellations and deferrals favorably.

Sustainable infrastructure

Renewables and utilities have seen fairly modest overall impacts to fundamentals and valuations throughout the pandemic. The sector has remained highly defensive while maintaining its overall growth outlook. In terms of short-term impact across regions, the primary issue is intense disruptions from ‘stay in place’ policies. Europe has proved to be the most impacted, with short-run electricity demand falling in a range of 5% to 20% versus last year, which relates to a more significant short-term disruption in manufacturing and industrial activity versus other regions. We expect these declines to recover sharply over the next few months, consistent with a gradual relaxation of lockdowns, which will favor essential business activities. Regarding renewables, growth continues unabated. Renewable power generation technologies are the cheapest options globally, accounting for 72% of all new capacity additions in 2019.2

In the U.S. we have seen far more limited impacts, with electricity demand flat to down 5% broadly year-over-year, in part because U.S. industrial and commercial activity has been less disrupted. In China, which experienced an earlier disruption and recovery cycle, we are seeing signs of not only full power demand recovery, but also the potential for annualized power demand to continue to be higher year-over-year for the rest of 2020. Unsurprisingly, residential usage appears to have increased compared to last year, almost everywhere. ‘‘Stay in place” has fueled more usage of appliances, lighting, computers and general activity in the home that relies on ever more plug-in nodes. And importantly, residential mix tends to be more profitable for utility companies. Our views before the crisis and now, are consistent: we expect power demand to remain relatively well underpinned, outperforming overall economic impacts during the economic downturn and to see gradual recovery as manufacturing activity bottoms and re-starts, especially in Europe. General sentiment from the International Energy Agency (IEA) concurs that renewables are growing and will continue to grow despite the generally weak economic environment and the decline in overall energy consumption in 2020.3

Social Infrastructure

Education

COVID-19 has required almost every industry to rethink how they do business and provide services, and education is no exception. Schools have had to rely exclusively on virtual learning, putting a strain on teachers and parents. It is our belief that education inside of facilities is imperative. Parents and children need brick and mortar facilities not only for education, but also for face-to-face social interaction, security, discipline, and in many cases, for a reliable meal. There are some full-time virtual charter schools, but data shows that in a given year full-time virtual charter school students overall make no gains in math and less than half the gains in reading realized by their peers in traditional schools.4

With regard to funding, for K-12 public education, it has proven extremely reliable over time. State level public school funding increased every year from 1985 through 2017, including during the recessions of the late 80’s and late 90’s. The only exception of positive state level growth was due to the recession in 2009 and 2010. Even in 2009, when state level funding declined, the federal stimulus kicked in and continued to demonstrate positive year-over-year growth for total funding (state and federal) in that year. Public school funding growth year-over-year in 2010 was negative for the first time with a nearly 2% decline. Since then, year-over-year growth has been positive. State level funding grew every year since 2011 with the exception of the stimulus pull back in 2012 due to the funding rebound at the state levels.5

To reach full enrollment, we typically need less than 3% of the age-based population in a catchment area. In the event that there is a population shift in a given area or a broad change in parent sentiment regarding allowing their children back into a school building, our underwriting strategy should allow for quite a bit of attrition before showing signs of weakness. For funding, there is a buffer in the revenue side of our underwriting in that we underestimate projected enrollment, funding per pupil, and the year-over-year growth of the revenue per child. In addition, we have cushion in debt service coverage. We think the expertise of our underwriting strategy is a key advantage of working with a strong and experienced team.

Senior Living

The key to handling any crisis is communication. In the case of COVID-19, and its effect on senior living facilities, over communication, being open and very honest with families and employees through not only written communication, but also through webinars and meetings has been essential. It is important to be very clear about the protocols in place to give families, residents and employees comfort that it is a safe environment. Another effect of the pandemic has been the increased expense of personal protective equipment, disinfectant supplies, and staffing. Facilities have always had these items on hand but not at current levels. Cleaning products and anything related to sanitation have increased in price and quantity needed. Many facilities will be tracking four categories of PPEs in key performance indicator formats and will be breaking out the surge pay for those differentials. Additional staff has been hired in some facilities to help maintain distancing of residents. For example, additional staff has been

(unaudited)
 
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transporting meals three times a day to each room. If outside staffing agencies are utilized, some are now charging $35 - $40 an hour for a nurse’s aide that is typically paid $14.

Fortunately, there has been access to financial support through the government initiatives in the form of Paycheck Protection Program loans. It is required that 75% of those funds go toward payroll, which can be used for the additional hazard pay. The majority of our investments have received PPP to help offset additional payroll and PPE expenses.

We believe that the spectrum of senior living options will see different levels of demand in the near future. After COVID-19, because of the strict visitation restrictions in place, some families may want to modify their homes to accommodate their aging parents in lieu of senior living facilities, but it’s very hard to provide the level of care and socialization that residents thrive on. There will be little to no change in the tremendous need for memory care because of the specific nature of the care. The need for independent living facilities may slow down a bit because it can be considered discretionary depending on the healthcare needs of the individual.

From an investment standpoint, we believe that cap rates may increase. Evaluations may change somewhat because of the perceived risk, particularly with institutional investors. Facilities that are successful should not have trouble accessing capital or refinancing. We continue to be bullish on the senior living sector and believe that there will continue to be a strong need once our communities bounce back, which will take some time.

Project Finance

The COVID-19 pandemic and related economic shutdown impacted the project finance sector late in the first quarter and throughout the second quarter. However, the impact did not hit each sub-sector equally. The sub-sectors hardest hit include recycling and liquid fuels. Demand for recycled content, such as plastics and metals, plummeted across several sub-sectors, as many new-product production facilities were temporarily shuttered or operated at significantly reduced capacities. Demand for liquid fuels, including ethanol, renewable diesel, and renewable jet fuel, also plummeted, due to the contraction of the transportation sector. Demand reduction was exacerbated by the hardship-based switch to lower-cost virgin raw materials (instead of recycled content) and fossil fuels (instead of biomass-based fuels). Finally, many planned or under-construction facilities were paused until economic re-openings bolster the demand for finished products. We expect the recovery in these sectors to follow the general recovery of the overall economy in general and the transportation sector in particular.

The renewable natural gas (RNG) sector was relatively unaffected during the crisis, with the landfill gas, wastewater treatment plant, and anaerobic digester sub-sectors performing particularly well. From a supply perspective, the production of methane at landfills and water treatment facilities, the collection of manure at farms, and the production of food processing waste remained relatively consistent. From a demand perspective, RNG production is typically contracted and benefits from various tax credits, such as the federal Renewable Identification Number (RIN) and California’s Low Carbon Fuel Standard (LCFS). Pricing for RINs and LCFS has held steady during the crisis, which helped insulate RNG-producing facilities from economic hardship. We expect these sectors to receive further underlying support as other states pass LCFS mandates similar to California’s standard.

Concluding thoughts

Despite the ripple effect that the COVID-19 crisis has had on the economy, we remain optimistic about the recovery potential as the world works hard to return to a new version of normal. We believe that energy markets will continue to improve and the energy demand and usage mix will continue to transition to natural gas and renewables. Our social infrastructure investments continued to be secure and are using the opportunity to plan for the future through this difficult experience. We believe that the need for these essential assets will prevail.


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 IndexSM is 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 IndexSM is 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 IndexSM and Tortoise North American Oil and Gas Producers IndexSM (the “Indices”). The Indices are not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, “S&P Dow Jones Indices LLC”). S&P Dow Jones Indices will not be liable for any errors or omission in calculating the Indices. “Calculated by S&P Dow Jones Indices” and its related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Tortoise Index Solutions, LLC and its affiliates. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).

It is not possible to invest directly in an index.

Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost.

1.EIA, June 2020 STEO
2.The International Renewable Energy Agency: Renewable Power Generation Costs in 2019
3.IEA Renewable Energy Market Update, Outlook for 2020 and 2021
4.NWEA, The COVID-19 Slide: What summer learning loss can tell us about the potential on student academic achievement, April 2020
5.BMO Capital Markets, The Education Industry: 2018

(unaudited)
 
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2020 2nd Quarter Report | May 31, 2020
 
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 was on par with broad energy in the second fiscal quarter with the Tortoise MLP Index® returning -13.9% during the period. In general, first quarter earnings for midstream companies were treated as a non-event, with an exclusive focus on company outlooks. Conditions appear to be improving, but are still far from normal. Full year guidance is now 8% lower on average. Companies with significant natural gas businesses and/or take or pay contracts reaffirmed guidance, whereas others with cash flows tied to wellhead volumes provided a wider range of outcomes. The average coverage ratio for the fund’s portfolio companies was 2.7x in 1Q20 while average leverage was 3.9x. Since the fund’s inception, it has paid out more than $144 in cumulative distributions to stockholders. The fund’s market-based and NAV-based returns for the fiscal quarter ending May 31, 2020 were -63.0% and -57.5%, respectively (including the reinvestment of distributions).

Second fiscal quarter highlights     
Distributions paid per shareNone
Distribution rate (as of 5/31/2020)0.0%
Quarter-over-quarter distribution increase (decrease)(100.0)%
Year-over-year distribution increase (decrease)(100.0)%
Cumulative distributions paid per share to
       stockholders since inception in February 2004$144.3900
Market-based total return(63.0)%
NAV-based total return(57.5)%
Premium (discount) to NAV (as of 5/31/2020)(25.4)%

Key asset performance drivers
 
Top five contributorsCompany typePerformance driver
Crestwood Equity
Partners LP, 9.250%
Natural gas pipeline companyPreferred structure provided downside protection
Noble Midstream
Partners LP
Gathering and processing MLPRelatively strong counterparty amid market volatility
Targa Resources Corp.,
9.500%
Gathering and processing companyConvertible debt structure provided downside protection
BP Midstream
Partners LP
Crude oil pipelines MLPCombination of steady outlook for Gulf of Mexico crude oil production and minimum volume commitments
Altus Midstream
Company Preferred
Natural gas pipeline companySponsor (Apache) reducing drilling activity
Bottom five contributorsCompany typePerformance driver
Targa Resources Corp.Gathering and processing companyRelatively high leverage
Energy Transfer LPNatural gas/natural gas liquids pipeline MLPRelatively high leverage
ONEOK, Inc.Natural gas/natural gas liquids pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL) volumes
Enterprise Products
Partners L.P.
Natural gas/natural gas liquids pipeline MLPConcerns regarding U.S. crude oil and natural gas liquids (NGL) production volumes
Magellan Midstream
Partners, L.P.
Refined product pipeline MLPConcerns regarding reduced refined product demand and Permian crude oil volumes

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)
 
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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, including NAV performance and distributable cash flow (DCF). The fund’s Board of Directors reviews the distribution rate at least 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 decreased approximately 74% as compared to 1st quarter 2020 primarily due to trading activity within the fund’s portfolio to fund leverage reductions. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 63% during the quarter due mainly to lower asset-based fees. Overall leverage costs decreased approximately 42% as compared to 1st quarter 2020 as the fund materially reduced leverage during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 81% as compared to 1st quarter 2020. The fund announced the temporary suspension of distributions during the quarter and did not pay any distributions during the 2nd quarter. Subsequent to quarter-end, the fund announced reinstatement of the distribution at a lower level in the 3rd quarter 2020. The fund has paid cumulative distributions to stockholders of $144.39 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 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). 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 2nd quarter 2020 (in thousands):

       YTD 2020     2nd Qtr 2020
Net Investment Loss,
       before Income Taxes$(11,524)$(7,990)
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital, net44,57710,102
       Premiums on redemption of
              senior notes and MRP stock3,6593,659
       Other26255
              DCF$36,974     $5,826

Leverage

The fund’s leverage utilization decreased $436.2 million during 2nd quarter 2020 and represented 25.4% of total assets at May 31, 2020. The fund was not in compliance with its applicable coverage ratios at March 31, 2020 and took action to materially reduce leverage outstanding. At quarter-end, the fund was in compliance with applicable coverage ratios. At quarter-end, 100% of the leverage cost was fixed, the weighted-average maturity was 3.5 years and the weighted-average annual rate on leverage was 4.50%. These rates will vary in the future as a result of changing floating rates, utilization of the fund’s credit facility and as leverage and swaps mature or are redeemed. During the quarter, $233.2 million of Senior Notes and $132.7 million of MRP stock was redeemed. A prepayment premium of 1% was paid upon redemption of the Senior Notes and MRP stock.

Income taxes

During 2nd quarter 2020, due primarily to a decrease in the value of its investment portfolio, the fund’s deferred tax liability was reduced to zero. The fund had net realized losses of approximately $572 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, please visit www.tortoiseadvisors.com.

(unaudited)
 
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2020 2nd Quarter Report | May 31, 2020
 
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.

20192020
     Q2(1)     Q3(1)     Q4(1)   Q1(1)     Q2(1)
Total Income from Investments
       Distributions and dividends from investments$44,564$42,910$44,074$40,436$10,138
       Dividends paid in kind117269300178179
       Interest earned on corporate bonds119348712604
       Premiums on options written1,092668714250
              Total from investments45,77343,96645,43641,57610,921
Operating Expenses Before Leverage
       Costs and Current Taxes
       Advisory fees5,2154,9794,4794,1431,373
       Other operating expenses420407382407313
5,6355,3864,8614,5501,686
       Distributable cash flow before leverage costs and current taxes40,13838,58040,57537,0269,235
       Leverage costs(2)6,6376,6076,3475,8783,409
       Current income tax expense(3)
              Distributable Cash Flow(4)$33,501$31,973$34,228$31,148$5,826
 
Net realized gain (loss), net of income taxes,
       for the period$10,905$34,895$(6,537)$(17,195)$(572,057)
As a percent of average total assets(5)
       Total from investments8.42%8.38%9.71%10.04%5.58%
       Operating expenses before leverage costs and current taxes1.04%1.03%1.04%1.10%0.86%
       Distributable cash flow before leverage costs and current taxes7.38%7.35%8.67%8.94%4.72%
As a percent of average net assets(5)
       Total from investments14.01%14.41%17.12%16.87%14.35%
       Operating expenses before leverage costs and current taxes1.72%1.77%1.83%1.85%2.22%
       Leverage costs and current taxes2.03%2.17%2.39%2.38%4.48%
       Distributable cash flow10.26%10.47%12.90%12.64%7.65%
 
Selected Financial Information
Distributions paid on common stock$35,131$35,131$35,195$21,224$
Distributions paid on common stock per share(7)2.62002.62002.62001.5800
Total assets, end of period(6)2,110,2731,951,0351,680,7751,416,246508,235
Average total assets during period(6)(8)2,157,9192,080,5911,876,5341,665,499778,359
Leverage(9)683,700688,900623,900565,300129,100
Leverage as a percent of total assets32.4%35.3%37.1%39.9%25.4%
Net unrealized depreciation, end of period(300,530)(421,920)(543,310)(662,820)(526,684)
Net assets, end of period1,220,9461,097,489930,286769,227334,413
Average net assets during period(10)1,296,3361,210,0781,064,735991,440302,755
Net asset value per common share(7)91.0481.7269.2457.2825.08
Market value per share(7)87.6081.5667.2850.6018.70
Shares outstanding (000’s)53,63553,73253,73253,73213,334

(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.
(6)Includes deferred issuance and offering costs on senior notes and preferred stock.
(7)Adjusted to reflect 1 for 4 reverse stock split effective May 1, 2020.
(8)Computed by averaging month-end values within each period.
(9)Leverage consists of senior notes, preferred stock and outstanding borrowings under credit facilities.
(10)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 was on par with broad energy in the second fiscal quarter with the Tortoise MLP Index® returning -13.9% during the period. In general, first quarter earnings for midstream companies were treated as a non-event, with an exclusive focus on company outlooks. Conditions appear to be improving, but are still far from normal. Full year guidance is now 8% lower on average. Companies with significant natural gas businesses and/or take or pay contracts reaffirmed guidance, whereas others with cash flows tied to wellhead volumes provided a wider range of outcomes. The average coverage ratio for the fund’s portfolio companies was 2.6x in 1Q20 while average leverage was 3.9x. The fund’s market-based and NAV-based returns for the fiscal quarter ending May 31, 2020 were -73.1% and -70.8%, respectively (including the reinvestment of distributions).

Second fiscal quarter highlights
Distributions paid per share     None
Distribution rate (as of 5/31/2020)0.0%
Quarter-over-quarter distribution increase (decrease)(100.0)%
Year-over-year distribution increase (decrease)(100.0)%
Cumulative distributions paid per share to
       stockholders since inception in July 2010$156.9500
Market-based total return(73.1)%
NAV-based total return(70.8)%
Premium (discount) to NAV (as of 5/31/2020)(18.5)%

Key asset performance drivers

Top five contributors       Company type       Performance driver
Crestwood Equity Partners LP, 9.250%Natural gas pipeline companyPreferred structure provided downside protection
MPLX LPRefined products pipeline MLPProtection from minimum volume commitments and business diversification with Northeast midstream business
Noble Midstream Partners LPGathering and processing MLPRelatively strong counterparty amid market volatility
Targa Resources Corp., 9.500%Gathering and processing companyConvertible debt structure provided downside protection
DCP Midstream, LPNatural gas pipeline MLPAggressive cost cutting initiative amid energy market volatility
Bottom five contributorsCompany typePerformance driver
Energy Transfer LPNatural gas pipeline companyRelatively high leverage
Targa Resources Corp.Gathering and processing companyRelatively high leverage
Enterprise Products Partners L.P.Natural gas pipeline MLPConcerns regarding U.S. crude oil and natural gas liquids (NGL) production volumes
ONEOK, Inc.Natural gas pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL) volumes
Holly Energy Partners, L.P.Refined products pipeline MLPReduced distribution following lower refined product demand

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



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 

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, including NAV performance and distributable cash flow (DCF). The fund’s Board of Directors reviews the distribution rate at least 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 decreased approximately 79% as compared to 1st quarter 2020 primarily due to trading activity within the fund’s portfolio to fund leverage reductions. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 75% during the quarter due primarily to lower asset-based fees. Leverage costs decreased approximately 54% as compared to 1st quarter 2020 as the fund materially reduced leverage during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 86% as compared to 1st quarter 2020. The fund announced the temporary suspension of distributions during the quarter and did not pay any distributions during the 2nd quarter. Subsequent to quarter-end, the fund announced reinstatement of the distribution at a lower level in the 3rd quarter 2020. The fund has paid cumulative distributions to stockholders of $156.95 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 of receiving 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 2nd quarter 2020 (in thousands):

     YTD 2020     2nd Qtr 2020
Net Investment Loss,
       before Income Taxes$   (7,754) $(3,615)   
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital (ROC)30,16425,303
       Premiums on redemption of
              senior notes and MRP stock4,0814,081
       Prior year ROC re-class(1,606)(1,606)
       Other461128
              DCF$25,346$3,325

Leverage

The fund’s leverage utilization decreased by $358.6 million during 2nd quarter 2020 and represented 21.2% of total assets at May 31, 2020. The fund was not in compliance with its applicable coverage ratios at March 31, 2020 and took action to materially reduce leverage outstanding. At quarter-end, the fund was in compliance with applicable coverage ratios. At quarter-end, 100% of the leverage cost was fixed, the weighted-average maturity was 2.1 years and the weighted-average annual rate on leverage was 5.25%. 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. During the quarter, $218.8 million of Senior Notes and $119.3 million of MRP stock was redeemed. Prepayment premiums of approximately 1.3% and 1% were paid upon redemption of the Senior Notes and MRP stock, respectfully.

Income taxes

During 2nd quarter 2020, the fund’s deferred tax asset was reduced to zero, primarily due to application of a valuation allowance as a result of the decrease in value of its investment portfolio. The fund had net realized losses of approximately $520 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, 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.

20192020
     Q2(1)     Q3(1)     Q4(1)     Q1(1)     Q2(1)
Total Income from Investments 
       Distributions and dividends from investments$31,824$31,244$31,315$28,806$6,309
       Dividends paid in kind70179200127130
       Interest earned on corporate bonds85230489317
       Premiums on options written890927941216
              Total from investments32,78432,43532,68629,6386,756
Operating Expenses Before Leverage
       Costs and Current Taxes
       Advisory fees, net of fees waived3,7153,5263,1452,868873
       Other operating expenses324312301321156
4,0393,8383,4463,1891,029
       Distributable cash flow before leverage costs and current taxes28,74528,59729,24026,4495,727
       Leverage costs(2)5,1755,0884,8594,4282,402
       Current income tax expense(3)
              Distributable Cash Flow(4)$23,570$23,509$24,381$22,021$3,325
 
Net realized gain (loss), net of income taxes,
       for the period$(6,278)$9,631$(8,640)$(6,917)$(518,170)
As a percent of average total assets(5)
       Total from investments8.46%8.73%9.96%10.37%5.77%
       Operating expenses before leverage costs and current taxes1.04%1.03%1.05%1.12%0.88%
       Distributable cash flow before leverage costs and current taxes7.42%7.70%8.91%9.25%4.89%
As a percent of average net assets(5)
       Total from investments13.79%14.70%17.18%16.80%16.18%
       Operating expenses before leverage costs and current taxes1.70%1.74%1.81%1.81%2.46%
       Leverage costs and current taxes2.18%2.31%2.55%2.51%5.75%
       Distributable cash flow9.91%10.65%12.82%12.48%7.97%
 
Selected Financial Information
Distributions paid on common stock$26,705$26,706$26,705$14,854$
Distributions paid on common stock per share(7)4.22504.22504.22502.3500
Total assets, end of period(6)1,498,2781,380,4461,163,500964,276239,673
Average total assets during period(6)(8)1,536,7941,473,5961,316,0531,149,464466,040
Leverage(9)527,300528,100462,600409,50050,900
Leverage as a percent of total assets35.2%38.3%39.8%42.5%21.2%
Net unrealized appreciation (depreciation), end of period93,59515,163(64,329)(157,875)(22,960)
Net assets, end of period886,270786,294667,708549,293162,369
Average net assets during period(10)943,080875,555762,956709,609166,096
Net asset value per common share(7)140.20124.40105.6086.9025.69
Market value per common share(7)132.10120.3098.8078.0020.95
Shares outstanding (000’s)63,20863,20863,20863,2086,321

(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.
(6)Includes deferred issuance and offering costs on senior notes and preferred stock.
(7)Adjusted to reflect 1 for 10 reverse stock split effective May 1, 2020.
(8)Computed by averaging month-end values within each period.
(9)Leverage consists of senior notes, preferred stock and outstanding borrowings under the credit facility.
(10)Computed by averaging daily net assets within each period.

10Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
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 was on par with broad energy in the second fiscal quarter with the Tortoise North American Pipeline IndexSM returning -14.0%. In general, first quarter earnings for midstream companies were treated as a non-event, with an exclusive focus on company outlooks. Conditions appear to be improving, but are still far from normal. Full year guidance is now 8% lower on average. Companies with significant natural gas businesses and/or take or pay contracts reaffirmed guidance, whereas others with cash flows tied to wellhead volumes provided a wider range of outcomes. The fund’s market-based and NAV-based returns for the fiscal quarter ending May 31, 2020 were -56.6% and -53.8%, respectively (including the reinvestment of distributions).

Second fiscal quarter highlights     
Distributions paid per share$0.1600
Distribution rate (as of 5/31/2020)3.8%
Quarter-over-quarter distribution increase (decrease)(86.0)%
Year-over-year distribution increase (decrease)(90.2)%
Cumulative distributions paid per share to
       stockholders since inception in October 2011
$53.7500
Market-based total return(56.6)%
NAV-based total return(53.8)%
Premium (discount) to NAV (as of 5/31/2020)(16.2)%

Please refer to the inside front cover of the report for important information about the fund’s distribution policy.

The fund utilizes a covered call strategy when appropriate, which seeks to generate income while reducing overall volatility. No covered calls were written during the quarter.

Key asset performance drivers

Top five contributors     Company type     Performance driver
Equitrans Midstream CorporationGathering and processing companyRelatively steady natural gas outlook amid market volatility
Cabot Oil & Gas CorporationNatural gas producing companyView of natural gas prices being a beneficiary of lower crude oil production
Noble Midstream Partners LPGathering and processing MLPRelatively strong counterparty amid market volatility
Targa Resources Corp., 9.500%Gathering and processing companyConvertible debt structure provided downside protection
Cimarex Energy Co.Oil and gas producing companyDiversified production provided more stability in volatile market
Bottom five contributorsCompany typePerformance driver
ONEOK, Inc.Natural gas pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL) volumes
Targa Resources Corp.Gathering and processing companyRelatively high leverage
Energy Transfer LPNatural gas pipeline MLPRelatively high leverage
Plains GP Holdings, L.P.Crude oil pipeline companyReduced crude oil volume outlook
Inter Pipeline Ltd.Crude oil pipeline companyRelatively high leverage due to growth capex spend

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. 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 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 64% as compared to 1st quarter 2020, primarily due to trading activity within the fund’s portfolio to fund leverage reductions. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 47% during the quarter, primarily due to lower asset-based fees. Leverage costs decreased approximately 30% as compared to 1st quarter 2020 as the fund materially reduced leverage during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 74% as compared to 1st quarter 2020. In addition, the fund had net realized losses on investments of $86.7 million during 2nd quarter 2020. The fund paid a quarterly distribution of $0.16 per share, a decrease of approximately 86% from the distribution paid in the prior quarter and a decrease of approximately 90% from the 2nd quarter 2020. The fund has paid cumulative distributions to stockholders of $53.75 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 2nd quarter 2020 (in thousands):

     YTD 2020     2nd Qtr 2020
Net Investment Income (loss)$52$99
Adjustments to reconcile to DCF:
       Net premiums on options written747208
       Distributions characterized as
              return of capital
3,321849
       Premiums on redemption of
              senior notes and MRP stock
195195
       Prior year ROC re-class(580)       (580)
       Other6315
              DCF$       3,798$786

Leverage

The fund’s leverage utilization decreased by $33.5 million during 2nd quarter 2020 and represented 32.4% of total assets at May 31, 2020. The fund was not in compliance with its applicable coverage ratios at March 31, 2020 and took action to materially reduce leverage outstanding. At quarter-end, the fund was in compliance with applicable coverage ratios. At quarter-end, 100% of the leverage cost was fixed, the weighted-average maturity was 2.6 years and the weighted-average annual rate on leverage was 4.72%. 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. During the quarter, $15.6 million of Senior Notes and $9.9 million of MRP stock was redeemed. Prepayment premiums of approximately 0.6% and 1% were paid upon redemption of the Senior Notes and MRP stock, respectfully.

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



 
 
2020 2nd Quarter Report | May 31, 2020
 
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.

2019     2020
     Q2(1)     Q3(1)     Q4(1)     Q1(1)     Q2(1)
Total Income from Investments
       Dividends and distributions from investments,
              net of foreign taxes withheld
$4,032$3,905$3,890$3,744$1,349
       Dividends paid in kind546268910
       Net premiums on options written1,039967483539208
              Total from investments5,1254,9344,4414,2921,567
Operating Expenses Before Leverage Costs
       Advisory fees, net of fees waived643602563548235
       Other operating expenses149138116147137
792740679695372
       Distributable cash flow before leverage costs4,3334,1943,7623,5971,195
       Leverage costs(2)633626609585409
              Distributable Cash Flow(3) $3,700$3,568$3,153$3,012$786
Net realized loss on investments and foreign
       currency translation, for the period
$(5,479)$(2,745)$(1,524)$(5,807)$(86,692)
As a percent of average total assets(4)
       Total from investments8.84%8.96%8.74%8.96%5.82%
       Operating expenses before leverage costs1.37%1.34%1.34%1.45%1.38%
       Distributable cash flow before leverage costs7.47%7.62%7.40%7.51%4.44%
As a percent of average net assets(4)
       Total from investments11.97%12.63%12.46%12.31%12.85%
       Operating expenses before leverage costs1.85%1.89%1.91%1.99%3.05%
       Leverage costs1.48%1.60%1.71%1.68%3.35%
       Distributable cash flow8.64%9.14%8.84%8.64%6.45%
                     
Selected Financial Information
Distributions paid on common stock$4,081$2,855$2,855$2,855$401
Distributions paid on common stock per share(5)1.63001.14001.14001.14000.1600
Total assets, end of period(6)   222,673   207,072   192,751   169,68075,700
Average total assets during period(6)(7)229,950218,436203,852192,750   107,094
Leverage(8)63,10061,50061,80058,00024,500
Leverage as a percent of total assets28.3%29.7%32.1%34.2%32.4%
Net unrealized depreciation, end of period(19,404)(28,190)(37,569)(48,038)(20,652)
Net assets, end of period157,061143,463129,887110,70750,721
Average net assets during period(9)169,837155,032142,932140,19548,522
Net asset value per common share(5)62.7257.2851.8844.2020.26
Market value per common share(5)56.0851.3646.0839.4416.98
Shares outstanding (000’s)10,01610,01610,01610,0162,504

(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.
(5)

Adjusted to reflect 1 for 4 reverse stock split effective May 1, 2020.

(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 revolving credit facility.

(9)

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

Rarely have we seen a sector experience two consecutive months with more extremes than energy did in April and May. In April, oil prices plummeted to -$37 around expiration of the front-month futures contract. May’s front-month futures contract expiration did not result in similar theatrics. The massively oversupplied global oil market in April that resulted in higher inventories subsided, resulting in higher prices. In fact, oil prices had the largest monthly gain in history in May. Crude oil spot prices, represented by West Texas Intermediate (WTI), began the fiscal period at $44.76 per barrel, troughed at -$37.63 on April 20 and ended the period at $35.49. The fund’s market-based and NAV-based returns for the fiscal quarter ending May 31, 2020 were -44.8% and -34.1%, respectively (including the reinvestment of distributions).

Second fiscal quarter highlights     
Distributions paid per shareNone
Distribution rate (as of 5/31/2020)0.0%
Quarter-over-quarter distribution increase (decrease)(100.0)%
Year-over-year distribution increase (decrease)(100.0)%
Cumulative distributions paid per share to
       stockholders since inception in July 2012
$96.9000
Market-based total return(44.8)%
NAV-based total return(34.1)%
Premium (discount) to NAV (as of 5/31/2020)(25.0)%

The fund utilizes a covered call strategy when appropriate, which seeks to generate income while reducing overall volatility. No covered calls were written during the quarter.

Key asset performance drivers

Top five contributors     Company type     Performance driver
Chevron CorporationOil and natural gas producing companyDiversified business expected to prove more stable amid volatile energy environment
ConocoPhillipsLiquids producing companyRelatively low leverage amid volatile energy environment
EQT CorporationNatural gas producing companyView of natural gas prices being a beneficiary of lower crude oil production
Kinder Morgan Inc.Natural gas pipeline companyDiversified midstream business offers greater stability amid volatile energy environment
TC Energy CorporationNatural gas pipeline companyStability of regulated business model benefitted during volatile commodity prices
Bottom five contributorsCompany typePerformance driver
Marathon Petroleum Corp.Refining companyConcerns about global refined product (gasoline, diesel, and jet fuel) demand declines
Noble Energy Inc.Natural gas producing companyLower crude oil prices negatively impacting cash flow
Parsley Energy, Inc.Oil and gas producing companyLower crude oil prices negatively impacting cash flow
WPX Energy Inc.Oil and gas producing companyLower crude oil prices negatively impacting cash flow
Pioneer Natural Resources CompanyOil and gas producing companyLower crude oil prices negatively impacting cash flow

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


 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 

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 53% as compared to 1st quarter 2020, primarily due to decreased premiums received on written covered call options. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 42% during the quarter, as primarily due to lower asset-based fees. Total leverage costs decreased approximately 84% as compared to 1st quarter 2020 as the fund materially reduced leverage during the quarter. As a result of the changes in income and expenses, DCF decreased by approximately 52% as compared to 1st quarter 2020. In addition, the fund had net realized losses on investments of $44.8 million during 2nd quarter 2020.

The fund announced the temporary suspension of distributions during the quarter and did not pay any distributions during the 2nd quarter. The fund has paid cumulative distributions to stockholders of $96.90 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 2nd quarter 2020 (in thousands):

    YTD 2020    2nd Qtr 2020
Net Investment Income (loss)$(28)   $37   
Adjustments to reconcile to DCF:   
       Net premiums on options written1,734 459 
       Distributions characterized as  
              return of capital337 174 
       Other(10) (10) 
              DCF   $   2,033    $   660 

Leverage

The fund’s leverage utilization decreased $16.3 million as compared to 1st quarter 2020. The fund utilizes all floating rate leverage that had an interest rate of 1.18% and represented 12.1% of total assets at quarter-end. During the period, the fund 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.

20192020
     Q2(1)     Q3(1)     Q4(1)     Q1(1)     Q2(1)
Total Income from Investments
Distributions and dividends from investments,
       net of foreign taxes withheld
$394$538$789$657$448
Dividends paid in stock
Net premiums on options written5,2795,0851,7711,275459
Total from investments5,6735,6232,5601,932907
Operating Expenses Before Leverage Costs
Advisory fees, net of fees waived42131526124793
Other operating expenses133110100128124
554425361375217
Distributable cash flow before leverage costs5,1195,1982,1991,557690
Leverage costs(2)35029221618430
Distributable Cash Flow(3)$4,769$4,906$1,983$1,373$660
Net realized loss on investments and foreign
       currency translation, for the period
$(17,350)$(31,152)$(2,264)$(3,945)$(44,750)
As a percent of average total assets(4)
Total from investments15.12 %19.20 %10.92 %9.16 %8.52 %
Operating expenses before leverage costs1.48 %1.45 %1.54 %1.78 %2.04 %
Distributable cash flow before leverage costs13.64 %17.75 %9.38 %7.38 %6.48 %
As a percent of average net assets(4)
Total from investments20.05 %28.01 %15.34 %12.10 %13.19 %
Operating expenses before leverage costs1.96 %2.12 %2.16 %2.35 %3.15 %
Leverage costs1.24 %1.45 %1.29 %1.15 %0.44 %
Distributable cash flow16.85 %24.44 %11.89 %8.60 %9.60 %
 
Selected Financial Information
Distributions paid on common stock$6,445$1,477$1,477$1,477$
Distributions paid on common stock per share(5)3.50000.80000.80000.8000
Total assets, end of period123,22995,07888,68466,43933,895
Average total assets during period(6)148,821116,18294,06484,87342,362
Leverage(7)34,60028,70026,50020,4004,100
Leverage as a percent of total assets28.1 %30.2 %29.9 %30.7 %12.1 %
Net unrealized depreciation, end of period(27,092)(21,503)(21,026)(32,908)(4,249)
Net assets, end of period87,72065,32261,55045,25329,566
Average net assets during period(8)112,27479,65566,94864,23927,364
Net asset value per common share(5)47.5235.3633.3624.4816.20
Market value per common share(5)59.2031.9229.0421.7612.01
Shares outstanding (000’s)14,76814,76814,76814,7681,846

(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.
(5)Adjusted to reflect 1 for 8 reverse stock split effective May 1, 2020.
(6)Computed by averaging month-end values within each period.
(7)Leverage consists of outstanding borrowings under the revolving credit facility.
(8)Computed by averaging daily net assets within each period.

16Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
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 was on par with broad energy in the second fiscal quarter with the Tortoise North American Pipeline IndexSM returning -14.0%. In general, first quarter earnings for midstream companies were treated as a non-event, with an exclusive focus on company outlooks. Conditions appear to be improving, but are still far from normal. Full year guidance is now 8% lower on average. Companies with significant natural gas businesses and/or take or pay contracts reaffirmed guidance, whereas others with cash flows tied to wellhead volumes provided a wider range of outcomes. The fund’s market-based and NAV-based returns for the fiscal quarter ending May 31, 2020 were -30.6% and -21.5%, respectively (including the reinvestment of distributions). Comparatively, the TPZ Benchmark Composite* returned -3.1% for the same period. The fund’s fixed income holdings outperformed its equity holdings on a total return basis.

Second fiscal quarter highlights     
Monthly distributions paid per share$0.1250
Distribution rate (as of 5/31/2020)15.3%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)0.0%
Cumulative distribution to stockholders
       since inception in July 2009$17.5250
Market-based total return(30.6)%
NAV-based total return(21.5)%
Premium (discount) to NAV (as of 5/31/2020)(19.4)%

*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
Blue Racer Midstream
LLC, 6.625%,
07/15/2026
Gathering and processing companyRelatively steady natural gas outlook amid market volatility
Ascent Resources Utica
Holdings, LLC, 7.000%,
11/01/2026
Oil and gas producing companyView of natural gas prices being a beneficiary of lower crude oil production
Antero Midstream
Partners, LP, 5.750%,
03/01/2027
Gathering and processing companyRelatively steady natural gas outlook amid market volatility
Hess Corporation,
5.625%, 02/15/2026
Gathering and processing companyRelatively strong counterparty and minimum volume commitment protections amid market volatility
Cheniere Corp.,
7.000%, 06/30/2024
Natural gas pipeline companyLong-term take or pay contracts provide visibility to stable cash flow
Bottom five contributorsCompany typePerformance driver
Targa Resources Corp.Gathering and processing companyRelatively high leverage
Energy Transfer LPNatural gas pipeline MLPRelatively high leverage
TransCanada
Corporation,
5.625%, 05/20/2075
Natural gas pipeline companyRelatively high leverage
ONEOK, Inc.Natural gas pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL) volumes
Plains GP Holdings, L.P.Crude oil pipeline companyReduced crude oil volume 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)
 
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. 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 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 decreased approximately 41% as compared to 1st quarter 2020 due primarily to trading activity within the fund’s portfolio to fund leverage reductions. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 35% during the quarter, primarily due to lower asset-based fees. Total leverage costs decreased approximately 36% as compared to 1st quarter 2020 as the fund materially reduced leverage during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 43% as compared to 1st quarter 2020. In addition, the fund had net realized losses on investments of $28.0 million during 2nd quarter 2020.

The fund paid monthly distributions of $0.125 per share during 2nd quarter 2020, which was unchanged over the prior quarter and 2nd quarter 2020. The fund’s Board of Directors has announced monthly distributions of $0.05 per share are expected to be paid during 3rd quarter 2020. The fund has paid cumulative distributions to stockholders of $17.525 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 2nd quarter 2020 (in thousands):

     YTD 2020     2nd Qtr 2020
Net Investment Income $1,338    $630  
Adjustments to reconcile to DCF:  
       Distributions characterized as  
              return of capital2,230 659  
       Other60 30 
              DCF$3,628 $1,319 

Leverage

The fund’s leverage utilization decreased $28.0 million as compared to 1st quarter 2020 and represented 22.7% of total assets at May 31, 2020. During the period, the fund maintained compliance with its applicable coverage ratios. At quarter-end, including the impact of interest rate swaps, approximately 97% of the leverage cost was fixed, the weighted-average maturity was 3.2 years and the weighted-average annual rate on leverage was 3.36%. 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



 
 
2020 2nd Quarter Report | May 31, 2020
 
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.

20192020
     Q2(1)      Q3(1)      Q4(1)     Q1(1)     Q2(1)
Total Income from Investments

 

       Interest earned on corporate bonds$1,381$1,368$1,331$1,311$1,116
       Distributions and dividends from investments,
              net of foreign taxes withheld1,9091,9071,9751,924800
       Dividends paid in kind40474988
              Total from investments3,3303,3223,3553,2431,924
Operating Expenses Before Leverage Costs
       Advisory fees476462440426251
       Other operating expenses141131109141120
617593549567371
       Distributable cash flow before leverage costs2,7132,7292,8062,6761,553
       Leverage costs(2)435410382367234
              Distributable Cash Flow(3)$2,278$2,319$2,424$2,309$1,319
Net realized gain (loss) on investments and foreign
       currency translation, for the period$878$94$4,288$1,376$(27,995)
As a percent of average total assets(4)
       Total from investments6.66%6.78%7.23%7.35%6.59%
       Operating expenses before leverage costs1.23%1.21%1.18%1.28%1.27%
       Distributable cash flow before leverage costs5.43%5.57%6.05%6.07%5.32%
As a percent of average net assets(4)
       Total from investments9.20%9.53%10.25%10.18%10.12%
       Operating expenses before leverage costs1.70%1.70%1.68%1.78%1.95%
       Leverage costs1.20%1.18%1.17%1.15%1.23%
       Distributable cash flow6.30%6.65%7.40%7.25%6.94%
 
Selected Financial Information
Distributions paid on common stock$2,607$2,606$2,607$2,607$2,607
Distributions paid on common stock per share0.37500.37500.37500.37500.3750
Total assets, end of period197,731190,032177,843165,718109,703
Average total assets during period(5)198,360194,528186,087177,506116,136
Leverage(6)56,60056,10054,10052,90024,900
Leverage as a percent of total assets28.6%29.5%30.4%31.9%22.7%
Net unrealized appreciation (depreciation), end of period9,9395,062(7,471)(17,866)(15,664)
Net assets, end of period139,785133,107123,015112,09584,322
Average net assets during period(7)143,596138,251131,313128,16775,647
Net asset value per common share20.1119.1517.7016.1312.13
Market value per common share18.2518.1715.5714.719.78
Shares outstanding (000’s)6,9516,9516,9516,9516,951

(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.
(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

Performance of the portfolio during the second fiscal quarter was impacted by uncertainty around COVID-19, which created an overhang for commodity prices and resulted in broader equity market volatility. The portfolio’s negative performance during the period was primarily driven by the fund’s energy infrastructure allocation. The downward pressure on commodity prices, as a result of COVID-19 and OPEC’s decision in early March, negatively impacted the fund’s energy infrastructure holdings. Energy infrastructure did rebound in April and May as commodity prices recovered from the lows, however is still down materially from fair value, in our view. Both the sustainable and social infrastructure sleeves held up relatively well during the COVID-19 driven market volatility. The direct and public sustainable portfolios outperformed broader equity markets, due to the regulated nature and contract structures of those companies and projects. The social infrastructure portfolio also performed relatively well in the second fiscal quarter as the portfolio saw minimal disruption as a result of COVID-19.

Despite the challenging market environment, we continue to have conviction in TEAF’s investment strategy. True to the underlying investment thesis of the portfolio, the essential assets we own are critical to a successfully functioning society and we believe as market uncertainty around COVID-19 subsides, the value of our investments will be recognized in the market.

We have made progress in transitioning the portfolio to the targeted allocation of 60% direct investments. As of May 31, 2020, TEAF’s total direct investment commitments were approximately $90 million or approximately 43% of the portfolio. Additionally, we are very pleased to have completed the fund’s allocation to direct sustainable and energy infrastructure investments. The fund anticipates reaching the targeted allocation for direct investments in the next three to four months.

Public Energy Infrastructure

As mentioned above, the negative impact to global energy demand due to COVID-19 and the lack of an agreement between OPEC and Russia in early March put significant downward pressure on commodity prices. As a result, the energy infrastructure equities in the portfolio faced a significant drawdown in value.
The sell-off in the equities was driven largely by the decrease in commodity prices, but also several unknowns in the market regarding the pace of recovery in global energy demand and the resulting impact on U.S. energy supply, which our portfolio companies transport, store and export on a daily basis.
We do believe global energy demand will recover as the global economies emerge from COVID-19 driven shut-downs, which we have already started to see in several countries around the world. As energy demand recovers, we expect U.S. energy production to increase benefitting the holdings in the portfolio.
Importantly, we believe the drawdown in energy infrastructure equities is overdone and have confidence long-term energy demand will rebound from depressed levels driving the need for energy infrastructure companies to transport supply to demand markets.
Lastly, despite our expectation for near-term volatility, we believe current valuations present upside in the energy infrastructure equities, which we believe will be recognized over time.

Private Energy Infrastructure

TEAF rolled its previously announced convertible notes investment in Sunnova Energy International Inc. to a new issuance. The coupon on the new convertible notes increased to 9.75%.

Public Sustainable Infrastructure

Listed sustainable infrastructure equities demonstrated solid defensive characteristics during the March 2020 downfall in global equity markets. Utilities resisted better than broad equity indices thanks to a good proportion of regulated business models, largely immune from short-term economic fluctuations. The stocks that suffered most in the fund were those with industrial exposure.
April witnessed aggressive moves in commodity markets and bullish rallies in equities. Longer term government bond yields traded in a tight range, finishing the month almost flat in the US (10-year Treasury yield closed at 0.6%) and some 10bps lower in the UK and across northern Europe, despite grim economic data everywhere. Utilities underperformed other infrastructure shares for the first time in a while but both participated in the equity market rebound, as did the fund overall. We slightly adjusted the holdings to lighten industrial exposure and focus on those names where we anticipated the most solid dividend cover and growth prospects.
In May, rallies took hold in many equity markets as lockdowns began to be eased and further massive stimulus measures raised hopes for the recovery phase. Growth became a critical driving factor behind equities’ performance. Interestingly, the MSCI World Utilities Index (+4.3%) kept pace with the MSCI World Index (+4.9%). The fund’s dominant exposure to names that benefit from renewable energy’s secular growth trends allowed us to capture significant upside. With companies gradually updating their guidance, we became increasingly confident that our investment universe and portfolio holdings would prove resilient in the global context. Dividend prospects notably looked solid.

(unaudited)
 
20Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 

Overall, the fund appears well positioned to both resist the economic downturn and participate in the equity markets’ recovery, thanks to limited exposure to short-term economic cycles, secular growth trends related to the development of renewables worldwide and sustainable dividend flows.

Private Sustainable Infrastructure

TEAF did not invest in any additional private sustainable infrastructure projects during the quarter as the fund previously reached its target allocation in private sustainable deals.
To date, the fund has invested approximately $49 million in three entities.
Operating assets held at TEAF continued to operate as expected with cash flow generation profiles driven by long term contracted cash flows.
Projects that remained under construction did not have to make any material changes to their construction plans or cash flow profiles that would impact the expected returns to be generated by TEAF.

Social Infrastructure

TEAF completed a debt investment in Pioneer Technology & Arts Academy (PTAA). PTAA is an open enrollment charter school currently operating three campuses around the Dallas, TX area. Proceeds from the financing were used to fund the acquisition of PTAA’s fourth campus. The campus will enroll will enroll students in kindergarten through eighth grade beginning in 2020-2021 and expand by one grade level each year until reaching K-12 in the school year 2024-2025. PTAA has a three-year track record, achieving an “A” rating by the Texas Education Agency in each of its first two years, with the third year not yet available.
TEAF completed a debt investment in C2NC Holdings (C2NC), also known as Carbon Cycle North Carolina. C2NC is constructing a biomethane-producing waste-to-energy anaerobic digester plant in North Carolina. The project will convert waste from local animal processing plants and food processing operations into renewable natural gas. The facility will help local energy companies meet a state level mandate under which a portion of their fuel must be obtained from animal sources. This mandate is in place because of the significant waste generated by pork and poultry production in North Carolina.
So far, the fund has seen limited and manageable exposure to COVID-19. In terms of senior living facilities, TEAF has focused on independent and assisted living facilities rather than nursing homes. Nursing homes house individuals with more acute health risks that are more susceptible to the risks of COVID-19. These nursing homes are not part of TEAF’s portfolio. That being said we continue to carefully monitor the situation with routine interaction and are taking proactive measures to ensure the facilities in which TEAF has invested practice all proper precautions.
While education facilities have seen significant operational changes in the short term, we expect the investment profile of charter schools to remain relatively unchanged moving forward. While schools may move towards a blended classroom and online experience, having a safe and reliable school building is expected to remain very important to the long term value proposition of schooling. We also believe this shift could provide additional investment opportunities for TEAF.
The backlog of opportunities in Social Infrastructure remains robust and the team believes it is on track to achieve its allocation target over the next three to four months.

Second fiscal quarter highlights
Monthly distributions paid per share     $0.1085
Distribution rate (as of 5/31/2020)12.1%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)0.0%
Cumulative distributions paid per share
       to stockholders since inception in March 2019$1.4105
Market-based total return(27.9)%
NAV-based total return(11.5)%
Premium (discount) to NAV (as of 5/31/2020)(26.3)%

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 14% as compared to 1st quarter 2020 due primarily due to decreased premiums received on written covered call options. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 12% during the quarter, primarily due to lower asset-based fees. Total leverage costs decreased approximately 55% as compared to 1st quarter 2020, primarily due to lower interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 13% as compared to 1st quarter 2020. In addition, the fund had net realized losses on investments of $37.4 million during 2nd quarter 2020.

The fund paid monthly distributions of $0.1085 per share during 2nd quarter 2020. The fund’s Board of Directors has declared monthly distributions of $0.075 per share to be paid during 3rd quarter 2020. The fund has paid cumulative distributions to stockholders of $1.4105 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: (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 2nd quarter 2020 (in thousands):

     YTD 2020     2nd Qtr 2020
Net Investment Income, before
       income taxes$     8,851    $     7,585
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital2,6271,018
       Net premiums on options written1,589372
       Return of principal excluded
              for DCF purposes(5,194)(5,194)
       Amortization on certain investments(536)(268)
       Other(172)(172)    
              DCF$7,165$3,341

Leverage

The fund’s leverage utilization decreased $3.7 million as compared to 1st quarter 2020. The fund utilizes all floating rate leverage that had an interest rate of 1.18% and represented 13.2% of total assets at quarter-end. During the period, the fund 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



 
 

2020 2nd Quarter Report | May 31, 2020

 
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.

     2019     2020
Q2(1)    Q3(2)    Q4(2)Q1(2)    Q2(2)
Total Income from Investments
       Interest earned on bonds and notes$548$1,164$1,397$1,488$1,571
       Distributions and dividends from investments,
              net of foreign taxes withheld3,8053,5762,2352,2162,257
   ��   Distributions paid in kind621447475
       Net premiums on options written1,1371,4281,4001,217372
              Total from investments5,4906,2305,1764,9954,275
 
Operating Expenses Before Leverage Costs
       Advisory fees546792761772679
       Other operating expenses102165203177155
 648957964949834
       Distributable cash flow before leverage costs4,8425,2734,2124,0463,441
       Leverage costs(3)139252229222100
              Distributable Cash Flow(4)$4,703$5,021$3,983$3,824$3,341
 
Net realized loss on investments and foreign currency
       translation, for the period$(71)$(3,168)$(9,697)$(1,758)$(37,365)
As a percent of average total assets(5)
       Total from investments11.25%8.65%7.46%7.24%7.57%
       Operating expenses before leverage costs1.33%1.33%1.39%1.38%1.48%
       Distributable cash flow before leverage costs9.92%7.32%6.07%5.86%6.09%
As a percent of average net assets(5)
       Total from investments12.01%9.73%8.49%8.13%9.18%
       Operating expenses before leverage costs1.42%1.50%1.58%1.55%1.79%
       Leverage costs0.30%0.39%0.38%0.36%0.21%
       Distributable cash flow10.29%7.84%6.53%6.22%7.18%
 
Selected Financial Information
Distributions paid on common stock$1,464$4,391$4,392$4,391$4,392
Distributions paid on common stock per share0.10850.32550.32550.32550.3255
Total assets, end of period288,040276,736271,915264,801234,072
Average total assets during period(6)278,413285,731278,477277,296224,806
Leverage(7)31,50031,50032,00034,60030,900
Leverage as a percent of total assets10.9%11.4%11.8%13.1%13.2%
Net unrealized depreciation, end of period(15,131)(22,549)(15,821) (19,861)(18,369)
Net assets, end of period255,534243,882237,461228,885196,262
Average net assets during period(8)260,772253,916244,483247,031185,254
Net asset value per common share18.9418.0817.6016.9714.55
Market value per common share18.4516.2515.6015.3210.73
Shares outstanding (000’s)13,49113,49113,49113,49113,491

(1)Represents the period from March 29, 2019 (commencement of operations) through May 31, 2019.
(2)Q1 represents the period from December through February. Q2 represents the period from March through May. 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 (unaudited)
May 31, 2020
 

     Shares     Fair Value
Master Limited Partnerships — 80.4%(1)
Crude Oil Pipelines — 16.8%(1)
United States — 16.8%(1)
BP Midstream Partners LP491,507$6,148,753
Genesis Energy L.P.18
NuStar Energy L.P.1,333,37123,160,654
Plains All American Pipeline, L.P.1,043,89810,125,811
Shell Midstream Partners, L.P.1,227,66216,561,160
 55,996,386
Natural Gas/Natural Gas Liquids Pipelines — 22.3%(1)
United States — 22.3%(1)
DCP Midstream, LP1,744,33919,187,729
Energy Transfer LP3,031,91924,740,459
Enterprise Products Partners L.P.1,611,57330,781,044
 74,709,232
Natural Gas Gathering/Processing — 9.8%(1)
United States — 9.8%(1)
CNX Midstream Partners LP432,1373,137,315
Enable Midstream Partners LP704,7682,931,835
EQM Midstream Partners, LP508,94610,000,789
Noble Midstream Partners LP352,6633,410,251
Western Midstream Partners, LP1,415,81513,223,712
 32,703,902
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP29,130597,165
Refined Product Pipelines — 31.3%(1)
United States — 31.3%(1)
Holly Energy Partners, L.P.365,3405,903,894
Magellan Midstream Partners, L.P.(2)796,08236,094,358
MPLX LP1,652,63531,383,539
Phillips 66 Partners LP701,79231,356,067
 104,737,858
Total Master Limited Partnerships
       (Cost $379,050,337)268,744,543
 
Common Stock — 4.4%(1)
Natural Gas/Natural Gas Liquids Pipelines — 4.4%(1)
United States — 4.4%(1)
ONEOK, Inc.181,8426,671,783
The Williams Companies, Inc.398,1978,135,165
 14,806,948
Total Common Stock
       (Cost $11,062,056)14,806,948
 
Preferred Stock — 23.0%(1)
Natural Gas/Natural Gas Liquids Pipelines — 16.7%(1)
United States — 16.7%(1)
Altus Midstream Company, 7.000%(3)(4)(5)10,4279,981,054
Crestwood Equity Partners LP, 9.250%6,938,27746,000,777
 55,981,831
Natural Gas Gathering/Processing — 6.3%(1)
United States — 6.3%(1)
Targa Resources Corp., 9.500%(3)(4)21,75821,083,720
Total Preferred Stock
       (Cost $94,487,720)77,065,551

See accompanying Notes to Financial Statements.
  
24Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
TYG Consolidated Schedule of Investments (unaudited) (continued)
May 31, 2020
 

         Principal AmountFair Value
Corporate Bonds — 3.7%(1)
Refined Product Pipelines — 3.3%(1)
United States — 3.3%(1)
Buckeye Partners,
       5.850%, 11/15/2043$11,950,000$9,963,313
Buckeye Partners,
       6.370%, 01/22/20781,200,000852,000
10,815,313
Natural Gas Gathering/Processing — 0.4%(1)
United States — 0.4%(1)
EnLink Midstream Partners,
       6.000%, Perpetual5,100,0001,428,000
Total Corporate Bonds
       (Cost $15,103,988)12,243,313
 
Convertible Bonds — 2.3%(1)
Solar — 2.3%(1)
Grand Cayman — 2.3%(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(3)(4)7,838,0007,838,000
Total Convertible Bonds
       (Cost $7,838,000)7,838,000
  
Private Investments — 3.3%(1)
Renewables — 3.3%(1)
United States — 3.3%(1)
TK NYS Solar Holdco, LLC(3)(4)(6)
       (Cost $53,206,470)N/A11,127,975
 
 Shares      Fair Value
Short-Term Investment — 18.8%(1)
United States Investment Company — 18.8%(1)
Invesco Government & Agency Portfolio — Institutional Class,
       0.10%(7) (Cost $62,701,013)62,701,013$62,701,013
Total Investments — 135.9%(1)
     (Cost $623,449,584)454,527,343
Interest Rate Swap Contracts — (0.1)%(1)
$10,000,000 notional — net unrealized depreciation(8)(301,653)
Other Assets and Liabilities — 2.8%(1)9,287,616
Senior Notes — (28.9)%(1)(96,800,000)
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (9.7)%(1)(32,300,000)
Total Net Assets Applicable to
       Common Stockholders — 100.0%(1)$334,413,306

(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 $301,653.
(3)Restricted securities have a total fair value of $50,030,749, which represents 15.0% of net assets. See Note 6 to the financial statements for further disclosure.
(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 paid in the form of additional shares.
(6)Deemed to be an affiliate of the fund. See Affiliated Company Transactions Note 7 and Basis For Consolidation Note 13 to the financial statements for further disclosure.
(7)Rate indicated is the current yield as of May 31, 2020.
(8)See Schedule of Interest Rate Swap Contracts and Note 12 to the financial statements for further disclosure.

See accompanying Notes to Financial Statements.
  
Tortoise25



 
 
 
 
NTG Schedule of Investments (unaudited)
May 31, 2020
 

     Shares     Fair Value
Master Limited Partnerships — 91.3%(1)
Crude Oil Pipelines — 20.0%(1)
United States — 20.0%(1)
BP Midstream Partners LP522,549$6,537,088
NuStar Energy L.P.554,8169,637,154
Plains All American Pipeline, L.P.713,4566,920,523
Shell Midstream Partners, L.P.697,9879,415,845
 32,510,610
Natural Gas/Natural Gas Liquids Pipelines — 24.5%(1)
United States — 24.5%(1)
DCP Midstream, LP995,91510,955,065
Energy Transfer LP1,462,14111,931,071
Enterprise Products Partners L.P.885,87816,920,270
 39,806,406
Natural Gas Gathering/Processing — 10.0%(1)
United States — 10.0%(1)
EQM Midstream Partners, LP289,8535,695,611
Hess Midstream LP45,146876,735
Noble Midstream Partners LP302,1002,921,307
Western Midstream Partners, LP719,1316,716,684
 16,210,337
Refined Product Pipelines — 36.8%(1)
United States — 36.8%(1)
Magellan Midstream Partners, L.P.414,42018,789,803
MPLX LP1,427,36427,105,642
Phillips 66 Partners LP310,49013,872,693
 59,768,138
Total Master Limited Partnerships
       (Cost $228,053,296)148,295,491
 
Common Stock — 13.1%(1)
Natural Gas/Natural Gas Liquids Pipelines — 13.1%(1)
United States — 13.1%(1)
Kinder Morgan Inc.387,8526,128,062
ONEOK, Inc.241,7228,868,780
The Williams Companies, Inc.304,2716,216,257
 21,213,099
Total Common Stock
       (Cost $18,553,353)21,213,099
 
     Principal
Amount/Shares
     Fair Value
Preferred Stock — 27.5%(1)
Natural Gas Gathering/Processing — 7.3%(1)
United States — 7.3%(1)
Targa Resources Corp., 9.500%(2)(3)12,252$11,872,311
Natural Gas/Natural Gas Liquids Pipelines — 20.2%(1)
United States — 20.2%(1)
Altus Midstream Company, 7.000%(2)(3)(4)7,4567,136,696
Crestwood Equity Partners LP, 9.250%3,882,31825,739,768
32,876,464
Total Preferred Stock
       (Cost $54,722,308)44,748,775
 
Corporate Bonds — 0.6%(1)
Natural Gas Gathering/Processing — 0.6%(1)
United States — 0.6%(1)
EnLink Midstream Partners,
       6.000%, Perpetual3,400,000952,000
Total Corporate Bonds
       (Cost $2,454,162)952,000
 
Convertible Bonds — 3.4%(1)
Solar — 3.4%(1)
Grand Cayman — 3.4%(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(2)(3)5,458,0005,458,000
Total Convertible Bonds
       (Cost $5,458,000)5,458,000
 
Short-Term Investment — 11.2%(1)
United States Investment Company — 11.2%(1)
First American Government Obligations Fund,
       0.08%(5) (Cost $18,201,446)18,201,44618,201,446
Total Investments — 147.1%(1)
       (Cost $327,442,565)238,868,811
Other Assets and Liabilities — (15.8)%(1)(25,599,988)
Senior Notes — (23.5)%(1)(38,200,000)
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (7.8)%(1)(12,700,000)
Total Net Assets Applicable to Common
       Stockholders — 100.0%(1)$162,368,823

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Restricted securities have a total fair value of $24,467,007, which represents 15.1% of net assets. See Note 6 to the financial statements for further disclosure.
(3)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.
(4)Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares.
(5)Rate indicated is the current yield as of May 31, 2020.

See accompanying Notes to Financial Statements.
  
26Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
TTP Schedule of Investments (unaudited)
May 31, 2020
 

     Shares     Fair Value
Common Stock — 84.3%(1)
Crude Oil Pipelines — 25.2%(1)
Canada — 19.6%(1)
Gibson Energy Inc50,815$786,113
Enbridge Inc.175,5005,694,975
Inter Pipeline Ltd.93,257854,102
Pembina Pipeline Corporation103,9662,597,545
United States — 5.6%(1)
Plains GP Holdings, L.P.285,4242,851,386
12,784,121
Natural Gas Gathering/Processing — 7.6%(1)
United States — 7.6%(1)
Equitrans Midstream Corporation264,8452,142,596
Hess Midstream LP78,7841,529,985
Rattler Midstream LP13109
Targa Resources Corp.11,747210,154
3,882,844
Natural Gas/Natural Gas Liquids Pipelines — 42.6%(1)
Canada — 12.4%(1)
Keyera Corp.73,1521,159,296
TC Energy Corporation113,6235,114,171
United States — 30.2%(1)
Kinder Morgan Inc.389,5086,154,226
ONEOK, Inc.73,0072,678,627
The Williams Companies, Inc.317,8496,493,655
21,599,975
Oil and Gas Production — 6.6%(1)
United States — 6.6%(1)
Cabot Oil & Gas Corporation37,800749,952
Cimarex Energy Co.6,350166,878
Concho Resources Inc.3,850209,902
Continental Resources, Inc.(2)9,850120,466
Diamondback Energy, Inc.(2)3,100131,998
EOG Resources, Inc.7,400377,178
Noble Energy, Inc.26,900234,837
Parsley Energy, Inc.17,500159,950
Pioneer Natural Resources Company4,750435,100
Viper Energy Partners LP44,800469,952
WPX Energy, Inc.(2)49,400280,098
3,336,311
Power — 2.3%(1)
United States — 2.3%(1)
NextEra Energy Partners, LP22,3961,144,660
Total Common Stock
       (Cost $58,541,309)   42,747,911
 
Master Limited Partnerships — 35.8%(1)
Crude Oil Pipelines — 5.3%(1)
United States — 5.3%(1)
BP Midstream Partners LP14,840185,648
NuStar Energy L.P.32,670567,478
PBF Logistics LP24,710256,984
Shell Midstream Partners, L.P.124,8251,683,889
2,693,999
Natural Gas/Natural Gas Liquids Pipelines — 12.1%(1)
United States — 12.1%(1)
DCP Midstream, LP39,058429,638
Energy Transfer LP317,7872,593,142
Enterprise Products Partners L.P.163,2363,117,808
6,140,588
Natural Gas Gathering/Processing — 2.0%(1)
United States — 2.0%(1)
CNX Midstream Partners LP2,35317,083
Noble Midstream Partners LP24,065232,709
Western Midstream Partners, LP79,732744,697
994,489
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP4,940101,270
Refined Product Pipelines — 16.2%(1)
United States — 16.2%(1)
Holly Energy Partners, L.P.41,962678,106
Magellan Midstream Partners, L.P.53,0712,406,239
MPLX LP160,0973,040,242
Phillips 66 Partners LP47,0412,101,792
8,226,379
Total Master Limited Partnerships
       (Cost $23,354,281)18,156,725

See accompanying Notes to Financial Statements.
 
Tortoise27



 
 
 
TTP Schedule of Investments (unaudited) (continued)
May 31, 2020
 

            Shares     Fair Value
Preferred Stock — 11.0%(1)
Natural Gas/Natural Gas Liquids Pipelines — 1.0%(1)
United States — 1.0%(1)
Altus Midstream Company, 7.000%(3)(4)(5)554$530,218
Natural Gas Gathering/Processing — 4.0%(1)
United States — 4.0%(1)
Targa Resources Corp., 9.500%(3)(4)2,1082,042,673
Power — 6.0%(1)
United States — 6.0%(1)
Sempra Energy, 6.000%, 01/15/202128,8113,023,714
Total Preferred Stock
       (Cost $5,260,216)5,596,605
 
Short-Term Investment — 17.6%(1)
United States Investment Company — 17.6%(1)
Invesco Government & Agency Portfolio — Institutional Class,
       0.10%(6) (Cost $8,925,978)8,925,9788,925,978
Total Investments — 148.7%(1)
     (Cost $96,081,784)75,427,219
Other Assets and Liabilities — (0.4)%(1)(206,104)
Senior Notes — (36.3)%(1)   (18,400,000)
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (12.0)%(1)(6,100,000)
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)$50,721,115

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Non-income producing security.
(3)Restricted securities have a total fair value of $2,572,891, which represents 5.0% of net assets. See Note 6 to the financial statements for further disclosure.
(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 paid in the form of additional shares.
(6)Rate indicated is the current yield as of May 31, 2020.

See accompanying Notes to Financial Statements.
 
28Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
NDP Schedule of Investments (unaudited)
May 31, 2020
 

     Shares     Fair Value
Common Stock — 95.7%(1)
Crude Oil Pipelines — 5.2%(1)
Canada — 5.2%(1)
Enbridge Inc.47,200$1,531,640
Natural Gas/Natural Gas Liquids Pipelines — 23.1%(1)
United States — 23.1%(1)
Cheniere Energy, Inc.(2)38,9001,725,215
Kinder Morgan Inc.104,4001,649,520
TC Energy Corporation28,7481,293,947
The Williams Companies, Inc.105,5002,155,365
6,824,047
Oil and Gas Production — 60.9%(1)
United States — 60.9%(1)
BP PLC39,283909,009
Cabot Oil & Gas Corporation125,7002,493,888
Chevron Corporation27,3002,503,410
Concho Resources Inc.26,5661,448,378
ConocoPhillips35,5941,501,355
Diamondback Energy, Inc.39,7171,691,150
EOG Resources, Inc.33,0001,682,010
EQT Corporation(2)123,8001,651,492
Parsley Energy, Inc.67,606617,919
Pioneer Natural Resources Company18,7001,712,920
Royal Dutch Shell PLC56,7001,811,565
18,023,096
Power/Utility — 6.5%(1)
United States — 6.5%(1)
NextEra Energy, Inc.3,800971,128
Sempra Energy7,500947,325
1,918,453
Total Common Stock
       (Cost $31,452,170)   28,297,236
 
Master Limited Partnerships — 10.8%(1)
Natural Gas/Natural Gas Liquids Pipelines — 7.8%(1)
United States — 7.8%(1)
Energy Transfer LP116,900953,904
Enterprise Products Partners L.P.71,1001,358,010
2,311,914
Natural Gas Gathering/Processing — 1.2%(1)
United States — 1.2%(1)
Noble Midstream Partners LP37,208359,801
Refined Product Pipelines — 1.8%(1)
United States — 1.8%(1)
Magellan Midstream Partners, L.P.11,423517,919
Total Master Limited Partnerships
       (Cost $4,531,118)3,189,634
 
Preferred Stock — 6.5%(1)
Natural Gas Gathering/Processing — 6.5%(1)
United States — 6.5%(1)
Targa Resources Corp., 9.500%(3)(4)
       (Cost $1,688,542)1,9971,935,113
 
Short-Term Investment — 1.0%(1)
United States Investment Company — 1.0%(1)
Invesco Government & Agency Portfolio — Institutional Class,
       0.10%(5) (Cost $283,325)283,325283,325
Total Investments — 114.0%(1)
     (Cost $37,955,156)33,705,308
Other Assets and Liabilities — (0.1)%(1)(38,818)
Credit Facility Borrowings — (13.9)%(1)(4,100,000)
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)$29,566,490

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Non-income producing security.
(3)Restricted securities have a total fair value of $1,935,113, which represents 6.5% of net assets. See Note 6 to the financial statements for further disclosure.
(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)Rate indicated is the current yield as of May 31, 2020.

See accompanying Notes to Financial Statements.
 
Tortoise29



 
 
 
TPZ Schedule of Investments (unaudited)
May 31, 2020
 

     Principal Amount     Fair Value
Corporate Bonds — 82.5%(1)
Crude Oil Pipelines — 7.7%(1)
Canada — 7.7%(1)
Enbridge Inc.,
       5.500%, 07/15/2077$7,042,000$6,491,386
Natural Gas/Natural Gas Liquids Pipelines — 29.2%(1)
United States — 29.2%(1)
Cheniere Corp.,
       7.000%, 06/30/20244,000,0004,447,398
Cheniere Corp.,
       5.875%, 03/31/20252,000,0002,189,149
Florida Gas Transmission Co., LLC,
       5.450%, 07/15/2020(2)1,500,0001,505,047
ONEOK, Inc.,
       4.250%, 02/01/20224,500,0004,623,701
ONEOK, Inc.,
       7.500%, 09/01/20232,000,0002,242,661
Rockies Express Pipeline LLC,
       4.950%, 07/15/2029(2)3,000,0002,781,900
Ruby Pipeline, LLC,
       6.000%, 04/01/2022(2)1,022,727957,295
Southern Star Central Corp.,
       5.125%, 07/15/2022(2)3,000,0003,000,870
Tallgrass Energy LP,
       5.500%, 01/15/2028(2)3,250,0002,906,118
   24,654,139
Natural Gas Gathering/Processing — 25.9%(1)
United States — 25.9%(1)
Antero Midstream Partners LP,
       5.750%, 03/01/20272,000,0001,575,000
Blue Racer Midstream, LLC,
       6.625%, 07/15/2026(2)5,900,0005,265,750
EnLink Midstream LLC,
       5.375%, 06/01/20293,000,0002,322,570
Hess Corporation,
       5.625%, 02/15/2026(2)4,160,000`4,014,400
The Williams Companies, Inc.,
       7.875%, 09/01/20215,000,0005,386,948
The Williams Companies, Inc.,
       4.550%, 06/24/20243,000,0003,257,168
21,821,836
Oil and Gas Production — 3.0%(1)
United States — 3.0%(1)
Ascent Resources Utica Holdings, LLC,
       10.000%, 04/01/2022(2)1,302,0001,139,250
Ascent Resources Utica Holdings, LLC,
       7.000%, 11/01/20262,000,0001,354,040
2,493,290
Power/Utility — 12.7%(1)
United States — 12.7%(1)
Duquesne Light Holdings, Inc.,
       6.400%, 09/15/2020(2)3,000,0003,048,560
Duquesne Light Holdings, Inc.,
       5.900%, 12/01/2021(2)2,000,0002,097,924
NextEra Energy, Inc.,
       4.800%, 12/01/20774,500,0004,578,750
NV Energy Inc.,
       6.250%, 11/15/20201,000,0001,023,704
10,748,938
Refined Product Pipelines — 4.0%(1)
United States — 4.0%(1)
Buckeye Partners,
       5.600%, 10/15/20442,000,0001,660,000
Buckeye Partners,
       5.850%, 11/15/20432,000,0001,667,500
3,327,500
Total Corporate Bonds
       (Cost $71,529,973)69,537,089
 
Convertible Bonds — 1.9%(1)
Solar — 1.9%(1)
Grand Cayman — 1.9(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(2)(3)1,570,0001,570,000
Total Convertible Bonds
       (Cost $1,570,000)1,570,000

See accompanying Notes to Financial Statements.
 
30Tortoise



 
 

2020 2nd Quarter Report | May 31, 2020

 
TPZ Schedule of Investments (unaudited) (continued)
May 31, 2020
 

SharesFair Value
Master Limited Partnerships — 24.3%(1)           
Crude Oil Pipelines — 4.3%(1)
United States — 4.3%(1)
BP Midstream Partners LP21,729$271,830
NuStar Energy L.P.88,9341,544,784
PBF Logistics LP74,599775,830
Shell Midstream Partners, L.P.77,3651,043,654
3,636,098
Natural Gas/Natural Gas Liquids Pipelines — 5.7%(1) 
United States — 5.7%(1)
DCP Midstream, LP84,184926,024
Energy Transfer LP206,7361,686,966
Enterprise Products Partners L.P.113,2522,163,113
4,776,103
Natural Gas Gathering/Processing — 3.7%(1) 
United States — 3.7%(1)
CNX Midstream Partners, LP27,028196,223
Hess Midstream LP66,9011,299,217
Noble Midstream Partners LP21,975212,498
Western Midstream Partners, LP154,4341,442,414
3,150,352
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP8,074165,517
Refined Product Pipelines — 10.4%(1)
United States — 10.4%(1)
Holly Energy Partners, L.P.93,9911,518,895
Magellan Midstream Partners, L.P.48,7772,211,549
MPLX LP(4)159,6043,030,880
Phillips 66 Partners LP44,3251,980,441
8,741,765
Total Master Limited Partnerships
       (Cost $31,166,736)20,469,835
      
Common Stock — 12.1%(1)
Crude Oil Pipelines — 3.7%(1)
United States — 3.7%(1)
Enbridge Inc.41,6831,352,613
Plains GP Holdings, L.P.173,0991,729,259
3,081,872
Natural Gas/Natural Gas Liquids Pipelines — 6.1%(1) 
Canada — 2.0%(1)
TC Energy Corporation37,5411,689,720
United States — 4.1%(1)
Kinder Morgan Inc.120,6191,905,780
ONEOK, Inc.5,606205,684
The Williams Companies, Inc.66,6581,361,823
5,163,007
Natural Gas Gathering/Processing — 1.3%(1) 
United States — 1.3%(1)
EnLink Midstream LLC90,964214,675
Equitrans Midstream Corporation108,596878,542
1,093,217
Power/Utility — 1.0%(1)
United States — 1.0%(1)
DTE Energy Company8,116873,038
Total Common Stock
       (Cost $13,427,880)10,211,134

See accompanying Notes to Financial Statements.
 
Tortoise31



 
 
 
 
TPZ Schedule of Investments (unaudited) (continued)
May 31, 2020
 

SharesFair Value
Preferred Stock — 5.1%(1)          
Natural Gas Gathering/Processing — 1.9%(1)  
United States — 1.9%(1)
Targa Resources Corp., 9.500%(2)(3)1,685$1,632,782
Natural Gas/Natural Gas Liquids Pipelines — 0.6%(1)  
United States — 0.6%(1)
Altus Midstream Company, 7.000%(2)(3)(5)483462,422
Power/Utility — 2.6%(1)
United States — 2.6%(1)
Sempra Energy,
       6.000%, 01/15/202121,1892,223,786
Total Preferred Stock
       (Cost $4,058,191)4,318,990
 
Term Loan — 2.3%(1)
Other — 2.3%(1)
United States — 2.3%(1)
New Fortress Energy,
       7.8534%, 1/10/20232,000,0001,950,000
Total Term Loan
       (Cost $1,955,049)1,950,000
 
Short-Term Investment — 0.1%(1)  
United States Investment Company — 0.1%(1)  
Invesco Government & Agency Portfolio — Institutional Class,     
       0.10%(6) (Cost $120,079)120,079120,079
Total Investments — 128.3%(1)
       (Cost $123,827,908)108,177,127
Interest Rate Swap Contracts — (0.0)%(1)  
$3,000,000 notional — net unrealized depreciation(7)  (13,292)
Other Assets and Liabilities — 1.2%(1)  1,058,380
Credit Facility Borrowings — (29.5)%(1)  (24,900,000)
Total Net Assets Applicable to
       Common Stockholders — 100.0%(1)  $84,322,215

(1)

Calculated as a percentage of net assets applicable to common stockholders.

(2)

Restricted securities have a total fair value of $30,382,318 which represents 36.0% of net assets. See Note 6 to the financial statements for further disclosure.

(3)

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.

(4)

A portion of the security is segregated as collateral for the unrealized depreciation of interest rate swap contracts of $13,292.

(5)

Security distributions are paid-in-kind. Cash value of the 7.0% coupon is paid in the form of additional shares.

(6)

Rate indicated is the current yield as of May 31, 2020.

(7)

See Schedule of Interest Rate Swap Contracts and Note 12 to the financial statements for further disclosure.


See accompanying Notes to Financial Statements.
 
32Tortoise



 
 

2020 2nd Quarter Report | May 31, 2020

 
TEAF Consolidated Schedule of Investments (unaudited)
May 31, 2020
 

SharesFair Value
Common Stock — 33.6%(1)          
Natural Gas/Natural Gas Liquids Pipelines — 5.1%(1) 
Italy — 1.6%(1)
Snam SpA(4)693,360$3,220,276
United States — 3.5%(1)
Cheniere Energy Inc.(3)41,4001,836,090
ONEOK, Inc.(4)46,7321,714,597
The Williams Companies, Inc.(4)158,9923,248,207
10,019,170
Natural Gas Gathering/Processing — 2.6%(1) 
United States — 2.6%(1)
Targa Resources Corp.286,3215,122,283
Other — 1.7%(1)
Australia — 1.7%(1)
Spark Infrastructure Group(4)2,368,3153,330,852
Power — 16.9%(1)
Australia — 0.8%(1)
APA Group(4)203,4511,574,438
Canada — 1.4%(1)
Algonquin Power & Utilities Corp(4)201,4602,821,040
Italy — 2.5%(1)
Enel SpA(4)631,1864,835,174
Portugal — 2.7%(1)
EDP — Energias de Portugal SA(4)1,148,5265,383,995
Spain — 3.8%(1)
Endesa SA177,9504,217,340
Iberdrola SA (2)302,4433,252,523
United States — 2.5%(1)
Covanta Holding Corp (4)272,7752,454,975
FirstEnergy Corp58,3742,466,885
United Kingdom — 3.2%(1)
National Grid PLC (2)343,4503,927,712
SSE PLC(4)149,1892,287,434
33,221,516
Other — 0.8%(1)
Spain — 0.8%(1)
Ferrovial SA61,3501,663,041
Renewables — 4.4%(1)
Canada — 3.6%(1)
Innergex Renewable Energy Inc(4)254,6203,502,562
TransAlta Renewables Inc(4)335,7433,494,351
United States — 0.8%(1)
TerraForm Power Inc87,7431,612,716
8,609,629
Water Infrastructure — 1.8%(1)
United Kingdom — 1.8%(1)
Pennon Group PLC(4)252,1723,550,315
Water Utilities — 0.3%(1)
United States — 0.3%(1)
Essential Utilities, Inc.(4)11,571506,347
Total Common Stock
       (Cost $67,829,911)66,023,153
   
Master Limited Partnerships — 19.6%(1)  
Natural Gas/Natural Gas Liquids Pipelines — 8.2%(1)  
United States — 8.2%(1)
Energy Transfer LP(4)851,7476,950,256
Enterprise Products Partners L.P.(4)473,8679,050,856
16,001,112
Natural Gas Gathering/Processing — 6.8%(1)  
United States — 6.8%(1)
EQM Midstream Partners, LP(4)217,5704,275,251
Hess Midstream LP207,6774,033,087
Noble Midstream Partners LP132,5401,281,662
Western Midstream Partners, LP410,5673,834,696
13,424,696
Refined Product Pipelines — 2.6%(1)
United States — 2.6%(1)
MPLX LP272,6005,176,674
Renewables — 2.0%(1)
Canada — 2.0%(1)
Brookfield Renewable Partners LP(4)80,0923,920,689
Total Master Limited Partnerships
       (Cost $41,403,447)38,523,171

See accompanying Notes to Financial Statements.
 
Tortoise33



 
 
 
 
TEAF Consolidated Schedule of Investments (unaudited) (continued)
May 31, 2020
 

Principal
AmountFair Value
Corporate Bonds — 14.7%(1)          
Education — 0.4%(1)
United States — 0.4%(1)
Village Charter School Inc,
       10.000%, 12/15/2021$800,000$767,000
Healthcare — 2.8%(1)
United States — 2.8%(1)
Grace Commons Property,
       15.000%, 10/31/2023(5)1,825,0001,825,000
Grace Commons Property,
       8.000%, 10/31/2021(5)3,650,0003,650,000
5,475,000
Natural Gas/Natural Gas Liquids Pipelines — 0.9%(1)  
United States — 0.9%(1)
EQM Midstream Partners LP,
       4.750%, 07/15/20231,750,0001,731,783
Natural Gas Gathering/Processing — 2.9%(1)  
United States — 2.9%(1)
Antero Midstream Partners LP,
       5.750%, 01/15/2028(4)(5)3,750,0002,931,750
Blue Racer Midstream, LLC,
       6.625%, 07/15/2026(4)(5)3,000,0002,677,500
5,609,250
Oil and Gas Production — 1.2%(1)
United States — 1.2%(1)
Ascent Resources Utica Holdings, LLC,
       7.000%, 11/01/2026(4)3,500,0002,369,570
Project Finance — 5.4%(1)
United States — 5.4%(1)
C2NC Holdings, LLC,
       13.000%, 05/01/2027(6)10,715,00010,715,000
Senior Living — 1.1%(1)
United States — 1.1%(1)
Realco Perry Hall MD LLC/OPCO,
       10.000%, 10/01/2024(5)2,280,0002,134,842
Total Corporate Bonds
       (Cost $30,525,803)28,802,445
       
Principal
Amount/SharesFair Value
Preferred Bonds — 4.3%(1)
Natural Gas Gathering/Processing — 2.0%(1)  
United States — 2.0%(1)
DCP Midstream LP,
       7.375% Perpetuity(4)$5,000,000$3,038,150
EnLink Midstream Partners LP,
       6.000%, Perpetuity(4)3,000,000840,000
3,878,150
Natural Gas/Natural Gas Liquids Pipelines — 2.3%(1)  
United States — 2.3%(1)
Energy Transfer Operating LP,
       6.250%, Perpetuity(4)6,000,0004,560,000
Total Preferred Bonds
       (Cost $13,264,486)8,438,150
    
Preferred Stock — 7.7%(1)
Natural Gas Gathering/Processing — 2.0%(1)  
United States — 2.0%(1)
Targa Resources Corp., 9.500%(5)(6) 4,0003,876,040
Natural Gas/Natural Gas Liquids Pipelines — 3.8%(1)  
United States — 3.8%(1)
Altus Midstream Company, 7.000%(5)(6)(7) 4,2944,110,203
Crestwood Equity Partners LP, 9.250%(4) 512,9093,400,587
7,510,790
Renewables — 0.6%(1)
United States — 0.6%(1)
NextEra Energy, Inc.25,3801,287,781
Water Utilities — 1.3%(1)
United States — 1.3%(1)
Essential Utilities, Inc.(4)43,1482,515,097
Total Preferred Stock
       (Cost $15,498,186)15,189,708
       
Private Investments — 20.5%(1) 
Natural Gas/Natural Gas Liquids Pipelines – 1.0%(1)  
Mexico – 1.0%(1)
Mexico Pacific Limited LLC (MPL)
       Series A(5)(6)88,8892,000,000
Renewables — 19.5%(1)
United States — 19.5%(1)
Renewable Holdco, LLC(5)(6)(8)N/A8,391,651
Renewable Holdco I, LLC(5)(6)(8)N/A24,889,493
Renewable Holdco II, LLC(5)(6)(8)N/A5,035,303
38,316,447
Total Private Investments
       (Cost $46,452,523)40,316,447

See accompanying Notes to Financial Statements.
 
34Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
TEAF Consolidated Schedule of Investments (unaudited) (continued)
May 31, 2020
 

Principal
    Amount/Shares    Fair Value
Municipal Bonds — 6.8%(1)
Education — 5.3%(1)
United States — 0.3%(1)
Pioneer Technology & Arts Academy
       Project — Series B,
       10.000%, 01/01/2026$410,000$387,352
Public Finance Authority Educational
       Facility Revenue,
       12.000%, 10/01/2029185,000174,044
Florida — 0.5%(1)
Florida Development Finance Corp,
       10.000%, 07/01/2025445,000438,788
Florida Development Finance Corp,
       10.000%, 02/15/2028595,000563,786
Wisconsin — 4.5%(1)
Public Finance Authority,
       9.000%, 06/01/20298,925,0008,788,894
 10,352,864
Other — 1.5%(1)
Pennsylvania — 1.5%(1)
Philadelphia Authority for
       Industrial Development,
       10.000%, 06/15/20303,135,0003,049,258
Total Municipal Bonds
       (Cost $13,695,000)13,402,122
 
Construction Note — 1.8%(1)
Renewables — 1.8%(1)
Bermuda — 1.8%(1)
Saturn Solar Bermuda 1 Ltd.,
       6.000%, 06/30/2020
       (Cost $3,770,670)(5)(6)(8)3,510,0003,516,669 
 
Convertible Bonds — 2.9%(1)
Solar — 2.9%(1)
Grand Cayman — 2.9%(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(5)5,589,0005,589,000
Total Convertible Bonds
       (Cost $5,589,000)5,589,000
 
Term Loan — 2.5%(1)
Other — 2.5%(1)
United States — 2.5%(1)
New Fortress Energy,
       7.8534%, 01/10/20235,000,0004,875,000
Total Term Loan
       (Cost $4,887,622)4,875,000
 
Short-Term Investment — 0.3%(1)
United States Investment Company — 0.3%(1)
First American Government Obligations Fund,
       0.08%(9) (Cost $491,999)491,999491,999
Total Investments — 114.7%(1)
       (Cost $243,416,882)225,167,864
Total Value of Options Written
       (Premiums received $61,913)(10) — (0.1)%(1)(184,656)
Deferred Tax Asset — 0.2%(1)372,212
Other Assets and Liabilities — 0.9%(1)1,807,063
Credit Facility Borrowings — (15.7)%(1)(30,900,000)
Total Net Assets Applicable to
       Common Stockholders — 100.0%(1)$196,262,483

(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)Restricted securities have a total fair value of $70,627,451 which represents 36.0% of net assets. See Note 7 to the financial statements for further disclosure.
(6)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.
(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. See Affiliated Company Transactions Note 7 and Basis For Consolidation Note 13 to the financial statements for further disclosure.
(9)Rate indicated is the current yield as of May 31, 2020.
(10)See Schedule of Options Written and Note 12 to the financial statements for further disclosure.

See accompanying Notes to Financial Statements.
 
Tortoise35



 
 
   
 
Schedule of Interest Rate Swap Contracts (unaudited)
May 31, 2020
 

TYG
Fixed RateFloating Rate
MaturityNotionalPaid byReceived byUnrealized
Counterparty    Date     Amount     TYG     TYG     Depreciation
The Bank of Nova Scotia09/02/2021$ 10,000,0002.381%1-month U.S. Dollar LIBOR$(301,653)
 
TPZ
Fixed RateFloating Rate
MaturityNotionalPaid byReceived byUnrealized
CounterpartyDateAmountTPZTPZDepreciation
Wells Fargo Bank, N.A.08/06/2020$3,000,0002.180%3-month U.S. Dollar LIBOR$(13,292)

See accompanying Notes to Financial Statements.
 
36Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
Schedule of Options Written (unaudited)
May 31, 2020
 

TEAF
Call Options Written     Expiration Date     Strike Price     Contracts     Notional Value     Fair Value
Iberdrola SAJune 20209.25 EUR1,000$1,026,797$(59,943)
Iberdrola SAJune 20209.50EUR1,0001,054,548(39,962)
National Grid PLCJune 20209.50GBP4505,279,603(84,751)
Total Value of Call Options Written (Premiums received $61,913)$     7,360,947$   (184,656)

See accompanying Notes to Financial Statements.
 
Tortoise37



 
 
   
 
Statements of Assets & Liabilities (unaudited)
May 31, 2020
 

Tortoise EnergyTortoise
InfrastructureMidstream Energy
Corp.(1)Fund, Inc.
Assets        
       Investments in unaffiliated securities at fair value(2)$  443,399,368$      238,868,811
       Investments in affiliated securities at fair value(3)11,127,975
       Cash
       Receivable for investments sold109,72462,017
       Receivable for premiums on options written
       Dividends, distributions and interest receivable from investments736,922423,846
       Tax reclaims receivable
       Deferred tax asset
       Income tax receivable52,052,354
       Prepaid expenses and other assets808,786317,934
              Total assets508,235,129239,672,608
Liabilities
       Call options written, at fair value(4)
       Payable to Adviser648,494366,528
       Accrued directors’ fees and expenses30,65527,385
       Payable for investments purchased68,12138,490
       Accrued expenses and other liabilities2,392,320779,164
       Unrealized depreciation of interest rate swap contracts301,653
       Current tax liability42,363,62025,657,857
       Credit facility borrowings
       Senior notes, net(5)96,450,04138,077,718
       Mandatory redeemable preferred stock, net(6)31,566,91912,356,643
              Total liabilities173,821,82377,303,785
              Net assets applicable to common stockholders$334,413,306$162,368,823
Net Assets Applicable to Common Stockholders Consist of:
       Capital stock, $0.001 par value per share$13,334$6,321
       Additional paid-in capital674,038,915580,071,293
       Total distributable earnings loss(339,638,943)(417,708,791)
              Net assets applicable to common stockholders$334,413,306$162,368,823
Capital shares:
       Authorized100,000,000100,000,000
       Outstanding13,334,2396,320,839
       Net Asset Value per common share outstanding (net assets applicable
              to common stock, divided by common shares outstanding)$25.08$25.69
 
(1)Consolidated Statement of Assets and Liabilities
(See Note 13 to the financial statements for further disclosure).
(2) Investments in unaffiliated securities at cost$570,243,114$327,442,565
(3) Investments in affiliated securities at cost$53,206,470$
(4) Call options written, premiums received$$
(5) Deferred debt issuance and offering costs$349,959$122,282
(6) Deferred offering costs$733,081$343,357

See accompanying Notes to Financial Statements.
 
38Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.Fund, Inc.Fund, Inc.Fund(1)
 
$75,427,219     $33,705,308     $108,177,127     $186,851,417     
38,316,447
5,836
6,025,236
63,218
161,830151,4281,485,3772,130,538
2,71214,633267,619
372,212
110,64935,74526,26739,004
75,699,69833,895,193109,703,404234,071,527
 
184,656
132,82957,498156,637464,582
19,10317,61419,25823,333
6,039,074
455,280153,591292,002197,399
13,292
4,100,00024,900,00030,900,000
18,341,863
6,029,508
24,978,5834,328,70325,381,18937,809,044
$50,721,115$29,566,490$84,322,215$196,262,483
 
$2,504$1,846$6,951$13,491
188,323,894221,128,808126,833,340261,794,436
(137,605,283)(191,564,164)(42,518,076)(65,545,444)
$50,721,115$29,566,490$84,322,215$196,262,483
 
100,000,000100,000,000100,000,000100,000,000
2,504,1041,845,9976,951,33313,491,127
 
$20.26$16.02$12.13$14.55
 
 
 
$96,081,784$37,955,156$123,827,908$198,964,359
$$$$44,452,523
$$$$61,913
$58,137$$$
$70,492$$$

See accompanying Notes to Financial Statements.
 
Tortoise39



 
 
 
 
Statements of Operations (unaudited)
Period from December 1, 2019 through May 31, 2020
 
     
Tortoise EnergyTortoise
InfrastructureMidstream Energy
Corp.(1)Fund, Inc.
Investment Income
       Distributions from master limited partnerships     $38,258,486     $26,455,364
       Dividends and distributions from common stock7,954,1417,760,100
       Dividends and distributions from preferred stock4,358,7972,730,797
       Dividends and distributions from private investments275,000
       Less return of capital on distributions(2)    (44,577,427)       (30,164,381)
       Less foreign taxes withheld(32,347)(27,044)
       Net dividends and distributions from investments6,236,6506,754,836
       Interest income1,334,817818,077
              Total Investment Income7,571,4677,572,913
Operating Expenses
       Advisory fees 5,515,8253,741,740
       Administrator fees165,02490,511
       Professional fees207,710131,553
       Directors’ fees83,16075,731
       Stockholder communication expenses91,48059,851
       Custodian fees and expenses23,36515,680
       Fund accounting fees35,61927,946
       Registration fees24,58531,406
       Swap breakage fees
       Stock transfer agent fees11,00011,000
       Franchise fees1,925
       Other operating expenses76,14633,816
              Total Operating Expenses6,235,8394,219,234
Leverage Expenses
       Interest expense5,844,0964,533,289
       Distributions to mandatory redeemable preferred stockholders2,979,6032,217,251
       Amortization of debt issuance costs220,476196,939
       Premium on redemption of senior notes2,332,0002,888,000
       Premium on redemption of mandatory redeemable preferred stock1,327,0001,193,000
       Other leverage expenses156,10279,186
              Total Leverage Expenses12,859,27711,107,665
              Total Expenses19,095,11615,326,899
       Less fees waived by Adviser (Note 4)
              Net Expenses19,095,11615,326,899
Net Investment Income (Loss), before Income Taxes(11,523,649)(7,753,986)
       Deferred tax benefit (expense)1,652,913986,648
Net Investment Income (Loss)(9,870,736)(6,767,338)

(1)Consolidated Statement of Operations (See Note 13 to the financial statements for further disclosure).
(2)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.
 
40Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.Fund, Inc.Fund, Inc.Fund(1)
  
$1,724,074     $222,293     $1,628,014     $2,249,706     
3,995,014803,9581,316,8002,220,108
81,60094,858103,411583,687
5,694,453
(3,321,238)(337,208)(2,229,639)(2,626,950)
(148,240)(7,168)(7,979)(233,818)
2,331,210776,733810,6077,887,186
2,2651,5152,428,7453,068,751
2,333,475778,2483,239,35210,955,937
 
783,300340,223677,2351,663,298
25,88917,37531,41149,487
92,11180,75688,582170,955
66,44164,89858,41253,281
30,22620,63439,13021,836
2,8505,4472,8524,320
16,83713,75413,13216,078
12,16812,45712,225(3,007)
370,000
23,08822,4136,9897,625
14,57713,9148,55520,723
1,067,487591,8711,308,5232,004,596
 
642,055213,995592,604312,928
339,703
25,324
96,000
99,000
11,695
1,213,777213,995592,604312,928
2,281,264805,8661,901,1272,317,524
(212,695)
        2,281,264         805,866      1,901,127        2,104,829
52,211(27,618)1,338,2258,851,108
(46,758)
52,211(27,618)1,338,2258,804,350

See accompanying Notes to Financial Statements.
 
Tortoise41



 
 
 
 
Statements of Operations (unaudited) (continued)
Period from December 1, 2019 through May 31, 2020
 
     
Tortoise EnergyTortoise
InfrastructureMidstream Energy
Corp.(1)Fund, Inc.
Realized and Unrealized Loss on Investments and Foreign Currency
       Net realized loss on investments in unaffiliated securities     $(697,924,441)     $(536,315,612)
       Net realized gain (loss) on options220,14082,132
       Net realized loss on interest rate swap settlements(40,635)
       Net realized loss on currency futures
       Net realized gain (loss) on foreign currency and translation of other assets
              and liabilities denominated in foreign currency804
              Net realized loss, before income taxes(697,744,132)(536,233,480)
                     Current tax expense(1,654,939)(28,149,444)
                     Deferred tax benefit119,880,15239,296,244
                            Income tax benefit, net118,225,21311,146,800
                            Net realized loss(579,518,919)(525,086,680)
       Net unrealized appreciation (depreciation) of investments in unaffiliated securities24,581,84653,829,638
       Net unrealized depreciation of investments in affiliated securities(2,690,116)
       Net unrealized depreciation of options(63,848)(69,929)
       Net unrealized depreciation of interest rate swap contracts(139,813)
       Net unrealized appreciation of forward currency contracts
       Net unrealized appreciation (depreciation) of other assets and liabilities due
              to foreign currency translation(793)(663)
              Net unrealized appreciation (depreciation), before income taxes21,687,27653,759,046
                     Deferred tax expense(5,060,908)(12,390,407)
                            Net unrealized appreciation (depreciation)16,626,36841,368,639
Net Realized and Unrealized Loss(562,892,551)(483,718,041)
Net Decrease in Net Assets Applicable to Common Stockholders Resulting from Operations$(572,763,287)$(490,485,379)

(1)

Consolidated Statement of Operations (See Note 13 to the financial statements for further disclosure).

(2)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



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund (1)
 
$(92,438,448)$(48,695,205)$(26,618,775)$(39,056,241)
(379,817)1,438,785986,278
(5,403)
(534,591)
 
(60,921)138(404)(67,054)
(92,879,186)(47,256,282)(26,624,582)(38,671,608)
(92,879,186)(47,256,282)(26,624,582)(38,671,608)
17,056,18717,130,959(8,188,699)3,272,814
(5,743,478)
(142,140)(354,660)(404,791)
(4,703)
320,491
 
2,8165535446,751
16,916,86316,776,852(8,192,858)(2,548,213)
16,916,86316,776,852(8,192,858)(2,548,213)
(75,962,323)(30,479,430)(34,817,440)(41,219,821)
$(75,910,112)$(30,507,048)$(33,479,215)$(32,415,471)

See accompanying Notes to Financial Statements.
 
Tortoise43



 
 
 
 
Statements of Changes in Net Assets
 

      
Tortoise Energy Infrastructure Corp.(1)
Period from     
December 1, 2019Year Ended
throughNovember 30,
May 31, 20202019
(unaudited)
Operations 
       Net investment income (loss)$(9,870,736) $(16,044,174)
       Net realized gain (loss)(579,518,919) 29,052,706
       Net unrealized appreciation (depreciation)16,626,368 (204,418,240)
              Net decrease in net assets applicable to common stockholders resulting from operations(572,763,287) (191,409,708)
Distributions to Common Stockholders 
       From distributable earnings 
       From return of capital(21,224,322) (140,587,568)
              Total distributions to common stockholders(21,224,322) (140,587,568)
Capital Stock Transactions 
       Repurchases of common stock(1,884,610)(3) 
       Underwriting discounts and offering expenses associated with the issuance of common stock (6,953)
       Issuance of common shares from reinvestment of distributions to stockholders 1,990,050
              Net increase (decrease) in net assets applicable to common stockholders 
                     from capital stock transactions(1,884,610) 1,983,097
       Total increase (decrease) in net assets applicable to common stockholders(595,872,219) (330,014,179)
Net Assets 
       Beginning of period930,285,525 1,260,299,704
       End of period$334,413,306 $930,285,525
  
Transactions in common shares 
       Shares outstanding at beginning of period53,732,462 53,635,054
       Net share reduction due to reverse stock splits (See Note 14)(40,299,345) 
       Shares repurchased(98,878) 
       Shares issued through offerings 
       Shares issued through reinvestment of distributions 97,408
       Shares outstanding at end of period13,334,239 53,732,462

(1)Consolidated Statement of Changes in Net Assets (See Note 13 to the financial statements for further disclosure).
(2)Commencement of operations.
(3)Weighted-average discount to NAV of 22.8%.

See accompanying Notes to Financial Statements.
 
44Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
 
Tortoise Midstream Energy Fund, Inc.     Tortoise Pipeline & Energy Fund, Inc.
Period from     Period from     
December 1, 2019Year EndedDecember 1, 2019Year Ended
throughNovember 30,throughNovember 30,
May 31, 20202019May 31, 20202019
(unaudited)(unaudited)
 
$(6,767,338)$(17,549,941)$52,211$(1,235,742)
(525,086,680)(35,175,815)(92,879,186)(15,534,668)
41,368,639(87,752,183)16,916,863(2,671,988)
(490,485,379)(140,477,939)(75,910,112)(19,442,398)
 
(99,500)
(14,853,969)(106,822,149)(3,155,834)(13,872,732)
(14,853,969)(106,822,149)(3,255,334)(13,872,732)
 
 
(24,715)
 
(24,715)
(505,339,348)(247,324,803)(79,165,446)(33,315,130)
 
667,708,171915,032,974129,886,561163,201,691
$162,368,823$667,708,171$50,721,115$129,886,561
 
 
63,208,37763,208,37710,016,41310,016,413
(56,887,538)(7,512,309)
6,320,83963,208,3772,504,10410,016,413

See accompanying Notes to Financial Statements.
  
Tortoise45



 
 
 
 
Statements of Changes in Net Assets (continued)
 

 
     Tortoise Energy Independence Fund, Inc.
Period from           
December 1, 2019Year Ended
throughNovember 30,
May 31, 20202019
(unaudited)
Operations
       Net investment income (loss)$(27,618)$(1,490,748)
       Net realized gain (loss)(47,256,282)(83,448,293)
       Net unrealized appreciation (depreciation)16,776,85229,302,069
              Net decrease in net assets applicable to common stockholders resulting from operations(30,507,048)(55,636,972)
Distributions to Common Stockholders
       From distributable earnings
       From return of capital(1,476,797)(15,828,822)
              Total distributions to common stockholders(1,476,797)(15,828,822)
Capital Stock Transactions
       Repurchases of common stock
       Underwriting discounts and offering expenses associated with the issuance of common stock
       Issuance of common shares from reinvestment of distributions to stockholders527,895
              Net increase (decrease) in net assets applicable to common stockholders
                     from capital stock transactions527,895
       Total increase (decrease) in net assets applicable to common stockholders(31,983,845)(70,937,899)
Net Assets
       Beginning of period61,550,335132,488,234
       End of period$29,566,490$61,550,335
 
Transactions in common shares
       Shares outstanding at beginning of period14,767,96814,696,260
       Net share reduction due to reverse stock splits (See Note)(12,921,971)
       Shares repurchased
       Shares issued through offerings
       Shares issued through reinvestment of distributions71,708
       Shares outstanding at end of period1,845,99714,767,968

(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.
 
46Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 

Tortoise Power and Energy
Infrastructure Fund, Inc.Tortoise Essential Assets Income Term Fund(1)
Period fromPeriod fromPeriod from
December 1, 2019Year EndedDecember 1, 2019March 29, 2019(2)
throughNovember 30,throughthrough
May 31, 20202019May 31, 2020November 30, 2019
(unaudited)          (unaudited)     
 
$1,338,225$2,722,077$8,804,350$4,144,381
(26,624,582)4,821,830(38,671,608)(10,438,827)
(8,192,858)(11,426,405)(2,548,213)(15,820,905)
      (33,479,215)(3,882,498)(32,415,471)(22,115,351)
 
(3,770,290)(9,729,252)(6,468,915)(4,545,707)
(1,443,210)(697,748)(2,313,809)(5,700,804)
(5,213,500)(10,427,000)(8,782,724)(10,246,511)
 
 
     269,722,540
(38,692,715)(14,309,498)(41,198,195)237,360,678
 
123,014,930137,324,428     237,460,678100,000
$84,322,215$     123,014,930$196,262,483$237,460,678
 
 
6,951,3336,951,33313,491,1275,000
13,486,127
6,951,3336,951,33313,491,12713,491,127

See accompanying Notes to Financial Statements.
 
Tortoise47



 
 
 
 
Statements of Cash Flows (unaudited)
Period from December 1, 2019 through May 31, 2020

       
       Tortoise Energy
InfrastructureTortoise Midstream
Corp.(1)Energy Fund, Inc.
Cash Flows From Operating Activities          
       Dividends, distributions and interest received from investments$51,944,896$35,911,389
       Purchases of long-term investments(153,523,161)(117,731,757)
       Proceeds from sales of long-term investments708,258,030546,352,928
       Sales (purchases) of short-term investments, net(62,479,416)(17,900,493)
       Proceeds from litigation settlement1,834
       Proceeds from funds held in escrow814,669
       Call options written, net(66,903)(29,401)
       Payments on interest rate swap contracts, net(40,635)
       Payments on forward currency contracts, net
       Interest received on securities sold, net
       Interest expense paid(9,235,257)(6,603,165)
       Distributions to mandatory redeemable preferred stockholders(5,382,139)(3,150,341)
       Other leverage expenses paid(4,300)(7,326)
       Income taxes paid(205,459)(171,854)
       Premium on redemption of senior notes(2,332,000)(2,888,000)
       Premium on redemption of mandatory redeemable preferred stock(1,327,000)(1,193,000)
       Operating expenses paid(8,514,227)(6,035,011)
              Net cash provided by operating activities517,908,932426,553,969
Cash Flows From Financing Activities
       Payments on credit facilities, net(93,900,000)(53,600,000)
       Redemption of mandatory redeemable preferred stock(132,700,000)(119,300,000)
       Repayment of senior notes(268,200,000)(238,800,000)
       Redemption of common stock(1,884,610)
       Distributions paid to common stockholders(21,224,322)(14,853,969)
              Net cash used in financing activities(517,908,932)(426,553,969)
       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).

See accompanying Notes to Financial Statements.
 
48Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1)
 
$5,228,189$1,188,485$5,081,297$13,194,105
     (29,127,284)    (32,717,511)     (23,959,286)     (99,942,145)
75,970,83655,534,59254,867,68898,733,070
(8,689,376)15,836124,503(81,872)
(38,578)915,534368,586
(5,403)
(534,591)
479,801
(859,789)(340,078)(725,897)(363,482)
(414,539)
(96,000)
(99,000)
(1,319,125)(720,061)(1,461,826)(1,863,553)
40,555,33423,876,79734,400,8779,510,118
 
(11,800,000)(22,400,000)(29,200,000)(1,100,000)
(9,900,000)
(15,600,000)
(3,255,334)(1,476,797)(5,213,500)(8,782,724)
(40,555,334)(23,876,797)(34,413,500)(9,882,724)
(12,623)(372,606)
12,623378,442
$$$$5,836

See accompanying Notes to Financial Statements.
 
Tortoise49



 
 
 
 
Statements of Cash Flows (unaudited) (continued)
Period from December 1, 2019 through May 31, 2020

      
       Tortoise EnergyTortoise
InfrastructureMidstream Energy
Corp.(1)Fund, Inc.
Reconciliation of net decrease in net assets applicable to common stockholders          
       resulting from operations to net cash provided by operating activities
       Net decrease in net assets applicable to common stockholders resulting from operations$(572,763,287)$(490,485,379)
       Adjustments to reconcile net decrease in net assets applicable to common stockholders
              resulting from operations to net cash provided by operating activities:
                     Purchases of long-term investments(153,591,282)(117,770,247)
                     Proceeds from sales of long-term investments706,022,829544,123,509
                     Sales (purchases) of short-term investments, net(62,479,416)(17,900,493)
                     Proceeds from litigation settlement1,834
                     Call options written, net(66,903)(29,401)
                     Return of capital on distributions received44,577,42730,164,381
                     Deferred tax benefit(116,472,157)(27,892,485)
                     Net unrealized (appreciation) depreciation(21,687,276)(53,759,046)
                     Amortization (accretion) of market premium (discount), net(254,923)(190,065)
                     Net realized loss697,704,301536,233,480
                     Amortization of debt issuance costs220,476196,939
                     Changes in operating assets and liabilities:
                            (Increase) decrease in dividends, distributions and interest receivable from investments50,925(1,635,840)
                            Decrease in escrow receivable814,669
                            Decrease in current tax asset11,138,2142,319,733
                            Increase in income tax receivable(52,052,354)
                            (Increase) decrease in receivable for investments sold2,235,2012,229,419
                            Decrease in receivable for premiums on options written
                            (Increase) decrease in prepaid expenses and other assets34,424(92)
                            Increase in payable for investments purchased68,12138,490
                            Decrease in payable to Adviser, net of fees waived(2,284,789)(1,687,857)
                            Increase in current tax liability42,363,62025,657,857
                            Decrease in accrued expenses and other liabilities(5,670,722)(3,058,934)
                                   Total adjustments1,090,672,219     917,039,348
       Net cash provided by operating activities$517,908,932$426,553,969

(1)Consolidated Statement of Cash Flows (See Note 13 to the financial statements for further disclosure).

See accompanying Notes to Financial Statements.
 
50Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1)
 
 
$(75,910,112)$(30,507,048)$    (33,479,215)$(32,415,471)
 
 
(29,127,284)    (32,717,511)(23,959,286)   (105,040,358)
75,970,83655,534,59254,867,688104,758,306
(8,689,376)15,836124,503(81,872)
(38,578)915,534365,069
3,321,238337,2082,229,6392,626,950
46,758
(16,916,863)(16,776,852)8,192,8582,548,213
146,498(223,641)
92,879,18647,256,28226,619,17938,137,017
25,324
 
(426,524)73,029(54,391)(165,141)
(6,025,236)
3,517
(16,139)(26,122)(20,365)(35,383)
5,098,213
(238,716)(115,405)(135,282)(43,191)
(277,658)(112,746)(130,949)(43,632)
    116,465,44654,383,84567,880,09241,925,589
$40,555,334$23,876,797$34,400,877$9,510,118

See accompanying Notes to Financial Statements.
 
Tortoise51



 
 
 
 
TYG Financial Highlights
 
 
Period from
December 1, 2019Year EndedYear EndedYear EndedYear EndedYear Ended
throughNovember 30,November 30,November 30,November 30,November 30,
  May 31, 2020  2019  2018  2017  2016  2015
(unaudited)
Per Common Share Data(1)(2)
       Net Asset Value, beginning of period$69.24$94.00$95.72$115.32$117.12$197.36
       Income (Loss) from Investment Operations
              Net investment loss(3)(0.21)(1.20)(1.96)(2.60)(3.12)(2.48)
              Net realized and unrealized gain (loss)(1)(42.37)(13.08)10.36(6.56)11.76(67.40)
                     Total income (loss) from investment
                            operations(42.58)(14.28)8.40(9.16)8.64(69.88)
       Distributions to Common Stockholders
              From return of capital(1.58)(10.48)(10.48)(10.48)(10.48)(10.36)
       Capital Stock Transactions
              Premiums less underwriting discounts
                     and offering costs on issuance of
                     common stock(4)(0.00)0.360.040.04(0.00)
       Net Asset Value, end of period$25.08$69.24$94.00$95.72$115.32$117.12
 
       Per common share market value,
              end of period$18.70$67.28$90.36$103.44$122.52$106.28
       Total investment return based on
              market value(5)(6)(71.34)%(15.46)%(3.42)%(7.49)%26.21 %(37.86)%
 
Supplemental Data and Ratios
       Net assets applicable to common
              stockholders, end of period (000’s)$           334,413$930,286$1,260,300$1,181,528$1,412,274$1,405,733
       Average net assets (000’s)$645,216$ 1,203,943$ 1,388,683$ 1,406,724$ 1,345,764$  1,974,038
       Ratio of Expenses to Average Net Assets(7)
              Advisory fees1.71 %1.62 %1.58 %1.74 %1.74 %1.76 %
              Other operating expenses0.220.140.130.120.120.10
                     Total operating expenses,
                            before fee waiver1.931.761.711.861.861.86
              Fee waiver(8)(0.00)(0.04)(0.00)(0.01)
                     Total operating expenses1.931.761.671.861.851.86
              Leverage expenses3.992.151.871.782.291.75
              Income tax expense (benefit)(9)(35.59)(5.49)(11.02)(5.28)4.64(24.50)
                     Total expenses(29.67)%(1.58)%(7.48)%(1.64)%8.78%(20.89)%

See accompanying Notes to Financial Statements.
  
52Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 
 
   Period from               
December 1, 2019Year EndedYear EndedYear EndedYear EndedYear Ended
throughNovember 30,November 30,November 30,November 30,November 30,
May 31, 202020192018201720162015
(unaudited)
Ratio of net investment loss to average
       net assets before fee waiver(7)(3.06)%(1.33)%(1.89)%(2.27)%(2.83)%(1.50)%
Ratio of net investment loss to average
       net assets after fee waiver(7)(3.06)%(1.33)%(1.85)%(2.27)%(2.82)%(1.50)%
Portfolio turnover rate(5)14.16%26.35%17.96%20.38%24.23%12.94%
Credit facility borrowings,
       end of period (000’s)$$93,900$107,100$112,700$109,300$66,000
Senior notes, end of period (000’s)$96,800$365,000$380,000$412,500$442,500$545,000
Preferred stock, end of period (000’s)$32,300$165,000$165,000$165,000$165,000$295,000
Per common share amount of senior
       notes outstanding, end of period$7.26$27.17$28.34$33.41$36.12$45.40
Per common share amount of net assets,
       excluding senior notes, end of period$32.34$96.41$122.34$129.13$151.44$162.52
Asset coverage, per $1,000 of principal
       amount of senior notes and credit
       facility borrowings(10)$4,788$3,387$3,926$3,564$3,858$3,784
Asset coverage ratio of senior notes
       and credit facility borrowings(10)479%339%393%356%386%378%
Asset coverage, per $10 liquidation value
       per share of mandatory redeemable
       preferred stock(11)$36$25$29$27$30$26
Asset coverage ratio of preferred stock(11)359%249%293%271%297%255%

(1)Information presented relates to a share of common stock outstanding for the entire period.
(2)During the period from December 1, 2019 through May 31, 2020, the Fund effected the following reverse stock split: May 1, 2020, 1 for 4. All historical per share information has been retroactively adjusted to reflect this reverse stock split.
(3)The per common share data for the years ended November 30, 2019, 2018, 2017, 2016, and 2015 do not reflect the change in estimate of investment income and return of capital, for the respective year. See Note 2C to the financial statements for further disclosure.
(4)Represents underwriting and offering costs of less than $0.01 for the year ended November 30, 2019. Represents premium on shelf offerings of $0.40 per share, less the underwriting and offering costs of $0.04 per share, for the year ended November 30, 2018. Represents the premium on the shelf offerings of $0.04 per share, less the underwriting and offering costs of less than $0.01 per share for the year ended November 30, 2017. Represents the premium on the shelf offerings of $0.04 per share, less the underwriting and offering costs of less than $0.01 per share for the year ended November 30, 2016. Represents underwriting and offering costs of less than $0.01 per share for the year ended November 30, 2015.
(5)Not annualized for periods less than one full year.
(6)Total investment return is calculated assuming a purchase of common stock at the beginning of the period and a sale at the closing price on the last day of the period reported (excluding brokerage commissions). The calculation also assumes reinvestment of distributions at actual prices pursuant to TYG’s dividend reinvestment plan.
(7)Annualized for periods less than one full year.
(8)Less than 0.01% for the years ended November 30, 2019 and 2017.
(9)For the period from December 1, 2019 through May 31, 2020, TYG accrued $116,472,157 for net deferred income tax benefit and $1,654,939 for current income tax expense. For the year ended November 30, 2019, TYG accrued $73,090,370 for net deferred income tax benefit and $7,034,755 for current income tax expense. For the year ended November 30, 2018, TYG accrued $152,516,725 for net deferred income tax benefit, which included a deferred tax benefit of $125,271,378 due to the impact from the federal tax rate reduction related to the Tax Cuts and Jobs Act. For the year ended November 30, 2017, TYG accrued $35,365,364 for current income tax expense and $109,662,030 for net deferred income tax benefit. For the year ended November 30, 2016, TYG accrued $57,075,786 for current income tax expense and $5,303,392 for net deferred income tax expense. For the year ended November 30, 2015, TYG accrued $66,785,732 for net current income tax expense and $550,449,662 for net deferred income tax benefit.
(10)Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the year divided by senior notes and credit facility borrowings outstanding at the end of the period.
(11)Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the year divided by senior notes, credit facility borrowings and preferred stock outstanding at the end of the period.

See accompanying Notes to Financial Statements.
  
Tortoise53



 
 
 
 
NTG Financial Highlights
 
 
  Period from
December 1, 2019  Year Ended  Year Ended  Year Ended  Year Ended  Year Ended
throughNovember 30,November 30,November 30,November 30,November 30,
May 31, 202020192018201720162015
(unaudited)
Per Common Share Data(1)(2)
       Net Asset Value, beginning of period$105.60$144.80$159.60$192.20$186.50$298.30
       Income (Loss) from Investment Operation
              Net investment loss(3)(0.13)(2.80)(4.30)(4.20)(4.60)(3.20)
              Net realized and unrealized gain (loss)(3)(77.43)(19.50)13.60(11.50)27.20(91.70)
                     Total income (loss) from investment
                            operations(77.56)(22.30)9.30(15.70)22.60(94.90)
       Distributions to Common Stockholders
              From return of capital(2.35)(16.90)(16.90)(16.90)(16.90)(16.90)
       Capital stock transactions
              Premiums less underwriting discounts
                     and offering costs on issuance of
                     common stock(4)(0.00)(7.19)(0.01)(0.00)
       Net Asset Value, end of period$25.69$105.60$144.81$159.60$192.19$186.50
 
       Per common share market value,
              end of period$20.95$98.80$137.20$159.00$189.00$161.80
       Total investment return based on
              market value(5)(6)(77.85)%(17.63)%(4.10)%(7.67)%27.99%(37.08)%
 
Supplemental Data and Ratios
       Net assets applicable to common
              stockholders, end of period (000’s)$      162,369$      667,708$      915,033$      754,085$      904,866$876,409
       Average net assets (000’s)$436,368$871,496$887,014$892,196$862,527$      1,174,085
       Ratio of Expenses to Average Net Assets(7)
              Advisory fees1.71%1.59%1.54%1.61%1.56%1.56%
              Other operating expenses0.220.140.150.140.160.12
                   Total operating expenses,
                          before fee waiver1.931.731.691.751.721.68
              Fee waiver(0.03)(0.09)(0.01)(0.09)
                   Total operating expenses1.931.701.601.751.711.59
              Leverage expenses5.092.341.981.891.951.42
              Income tax expense (benefit)(8)0.12(4.80)(6.09)(4.33)7.25(21.92)
                   Total expenses7.14%(0.76)%(2.51)%(0.69)%10.91%(18.91)%

See accompanying Notes to Financial Statements.
 
54Tortoise



 
 
2020 2nd Quarter Report | May 31, 2020
 
 
 

  Period from          
December 1, 2019Year EndedYear EndedYear EndedYear EndedYear Ended
throughNovember 30,November 30,November 30,November 30,November 30,
May 31, 2020 20192018201720162015
(unaudited)
Ratio of net investment loss to average
       net assets before fee waiver(7)(3.10)%(2.05)%(2.65)%(2.22)%(2.53)%(1.36)%
Ratio of net investment loss to average
       net assets after fee waiver(7)(3.10)%(2.02)%(2.56)%(2.22)%(2.52)%(1.27)%
Portfolio turnover rate(4)16.04%29.21%13.67%20.94%35.47%17.54%
Credit facility borrowings,
       end of period (000’s)$$53,600$73,100$49,800$46,800$62,800
Senior notes, end of period (000’s)$        38,200$        277,000$        312,000$        284,000$        284,000$        348,000
Preferred stock, end of period (000’s)$12,700$132,000$132,000$110,000$110,000$90,000
Per common share amount of senior
       notes outstanding, end of period$6.04$43.82$49.36$60.11$60.30$74.00
Per common share amount of net assets,
       excluding senior notes, end of period$31.73$149.42$194.17$219.71$252.49$260.50
Asset coverage, per $1,000 of principal
       amount of senior notes and credit
       facility borrowings(7)$5,583$3,419$3,719$3,589$4,068$3,353
Asset coverage ratio of senior notes and
       credit facility borrowings(9)558%342%372%359%407%335%
Asset coverage, per $25 liquidation value
       per share of mandatory redeemable
       preferred stock(10)$105$61$69$67$76$69
Asset coverage ratio of preferred stock(10)419%244%277%270%305%275%

(1)Information presented relates to a share of common stock outstanding for the entire period.
(2)During the period from December 1, 2019 through May 31, 2020, the Fund effected the following reverse stock split: May 1, 2020, 1 for 10. All historical per share information has been retroactively adjusted to reflect this reverse stock split.
(3)The per common share data for the years ended November 30, 2019, 2018, 2017, 2016, and 2015 do not reflect the change in estimate of investment income and return of capital, for the respective year. See Note 2C to the financial statements for further disclosure.
(4)Represents underwriting and offering costs of less than $0.01 for the years ending November 30, 2019 and 2015. Represents the discounts on shares issued through rights offerings of $5.50, plus the underwriting and offering costs of $1.69 per share for the year ended November 30, 2018. Represents underwriting and offering costs of $0.01 for the year ending November 30, 2016.
(5)Not annualized for periods less than one full year.
(6)Total investment return is calculated assuming a purchase of common stock at the beginning of the period and a sale at the closing price on the last day of the period reported (excluding brokerage commissions). This calculation also assumes reinvestment of distributions at actual prices pursuant to NTG’s dividend reinvestment plan.
(7)Annualized for periods less than one full year.
(8)For the period from December 1, 2019 to May 31, 2020, NTG accrued $27,892,485 for net deferred income tax benefit and $28,149,444 for current tax expense. For the year ended November 30, 2019, NTG accrued $40,282,948 for net deferred income tax benefit and $1,510,530 for current tax benefit. For the year ended November 30, 2018, NTG accrued $54,197,357 for net deferred income tax benefit, which included a deferred tax benefit of $47,436,124 due to the impact from the federal tax rate reduction related to the Tax Cuts and Jobs Act. For the year ended November 30, 2017, NTG accrued $440,504 for current income tax expense and $39,035,257 for net deferred income tax benefit. For the year ended November 30, 2016, NTG accrued $1,891,670 for current income tax expense and $60,652,872 for net deferred income tax expense. For the year ended November 30, 2015, NTG accrued $200,550 for current income tax expense and $257,585,058 for net deferred income tax benefit.
(9)Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the period divided by senior notes and credit facility borrowings outstanding at the end of the period.
(10) Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the period divided by senior notes, credit facility borrowings and preferred stock outstanding at the end of the period.

See accompanying Notes to Financial Statements.
  
Tortoise55



 
 
 
 
TTP Financial Highlights
 

  Period from          
December 1, 2019Year EndedYear EndedYear EndedYear EndedYear Ended
throughNovember 30,November 30,November 30,November 30,November 30,
May 31, 202020192018201720162015
(unaudited)
Per Common Share Data(1)(2)
       Net Asset Value, beginning of period$51.88$       65.16$       75.28$93.68$78.84$140.16
       Income (Loss) from Investment Operations