Docoh
Loading...

TEAF Ecofin Sustainable and Social Impact Term Fund

Filed: 5 Feb 21, 5:26pm

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: November 30, 2020


Item 1. Report to Stockholders.





Annual Report | November 30, 2020




2020 Annual Report
Closed-End Funds




 
 
 
 
Tortoise
2020 Annual Report to Stockholders
 

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


 
Table of contents
 
Closed-end Fund Comparison1TEAF: Fund Focus21
Letter to Stockholders2Financial Statements25
TYG: Fund Focus6Notes to Financial Statements64
NTG:Fund Focus9Report of Independent Registered
TTP:Fund Focus12       Public Accounting Firm86
NDP:Fund Focus15Company Officers and Directors87
TPZ:Fund Focus18Additional Information89




 
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 $0.05, each month to its common shareholders. Prior to June 2020, the monthly distribution rate was $0.125. 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 Annual Report | November 30, 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$446.8

Tortoise Midstream
Energy Fund, Inc.

NYSE: NTG
Inception: 7/2010
Natural gas infrastructure MLPsC-corp$220.4

Tortoise Pipeline
& Energy Fund, Inc.

NYSE: TTP
Inception: 10/2011

North American pipeline companies

Regulated investment company

$68.5

Tortoise Energy
Independence
Fund, Inc.

NYSE: NDP
Inception: 7/2012
North American oil & gas producers

Regulated investment company

$34.1

Tortoise Power
and Energy Infrastructure
Fund, Inc.

NYSE: TPZ
Inception: 7/2009

Power & energy infrastructure companies (Fixed income & equity)

Regulated investment company

$115.8

Tortoise Essential
Assets Income
Term Fund

NYSE: TEAF Inception:
3/2019

Essential assets

Regulated investment company

$249.9

1

As of 12/31/2020

2

As of 11/30/2020


(unaudited)
 
Tortoise1



 
 
 
 
Tortoise
2020 Annual Report to closed-end fund stockholders
 

Dear stockholder

The 2020 fiscal year, ending on November 30, 2020 was certainly like no other. The COVID-19 global pandemic affected every part of our lives and the essential assets in which Tortoise invests. Energy demand concerns and volatile commodity prices plagued the energy sector. Social impact projects in the education segment were greatly impacted by virtual learning, and senior living facilities literally shut down as they fought to keep residents safe. After a tumultuous year, all of these segments appear to be on their way to recovery with high hopes for 2021. The sustainable infrastructure sector, particularly renewable energy, had a strong year propelled even higher by anticipated Biden Administration energy policy. As we move into 2021, with COVID-19 vaccinations being administered throughout the world driving energy demand toward pre-COVID-19 levels and the push toward cleaner energy gaining momentum, we are optimistic that 2021 will be a strong year for investors in these essential assets sectors.

Energy and power infrastructure

The broader energy sector, as represented by the S&P Energy Select Sector® Index, finished the fourth fiscal quarter ending November 30, 2020 in positive territory, returning 4.9%, bringing fiscal year 2020 performance to -31.7%. Energy markets and prices experienced significant volatility throughout the fiscal year driven by the uncertainty around energy demand due to COVID-19, concerns over the massively oversupplied global oil market in April, and ultimately a recovery in the latter part of 2020. Looking ahead to 2021, all eyes are focused on energy demand and the subsequent rollout of COVID-19 vaccinations. Pfizer and Moderna’s November announcements of positive data regarding their vaccines for COVID-19 led to a stock market surge, with beaten down energy companies leading the charge, along with commodities such as crude oil. With the growing belief in vaccine success and visibility to significantly improved economic activity, 2021 energy demand growth could exceed anything ever seen on a year-over-year basis.

Following the price war between Saudi Arabia and Russia in early March, the Organization of Petroleum Exporting Countries (OPEC) and their Non-OPEC partners (OPEC+) announced deep production cuts with a clear goal of balancing the global crude oil market. The market dramatically shifted from an approximate 20 million barrels per day (b/d) surplus in April to an approximate 4 million b/d deficit in July, providing the path for market rebalancing. Overall adherence to the production cut agreement remained strong in the second half of 2020 leading to inventory draws. Entering 2021, the global crude oil market remains in deficit, supported by the OPEC+ crude oil production cut agreement, and expected inventory draws are expected to continue throughout 2021.

U.S. crude oil production declined in 2020 in response to the supply-demand imbalance resulting from the economic shutdowns and stay-at-home orders in March and April. This resulted in the first annual decline in U.S. production since 2016. Specifically, U.S. crude oil production fell from a record 12.9 million barrels per day (b/d) in November 2019 to 11.2 million b/d in November 20201. EIA forecasts that U.S. crude oil production will average 11.1 million b/d in 2021.

For U.S. producers, 2020 was a year of change. The COVID-19 pandemic accelerated producers’ capital discipline as investors focused on higher free cash flow generation and return of capital to shareholders. This free-cash-flow emphasis led to a host of M&A deals as E&P companies prioritized the importance of scale, diversity and strengthening balance sheets in a challenging oil price environment.

While oil dominated the headlines, natural gas continued to provide a cleaner burning source. As a result, we continue to see natural gas as a critical source of energy supply going forward. During the 2020 fiscal year, a reduction in natural gas demand caused by COVID-19 initially resulted in the convergence of global natural gas prices. However, in the final months of the year, LNG exports from the U.S. rapidly shot back up driven by increasing demand for natural gas in Asia and resulting in Asian gas prices trading at a premium relative to the U.S. Henry Hub prices. Domestically, the backdrop of slowing production growth and strong domestic and export demand paints a picture of improving natural gas fundamentals in the future. Rising U.S. energy exports of liquids and natural gas are expected to positively affect the U.S. trade deficit and to ultimately help reduce global CO2 emissions, along with renewables, as they take market share from coal.

Midstream energy outperformed broader energy in the fourth fiscal quarter and the fiscal year with the Tortoise North American Pipeline IndexSM returning 6.3% and the Tortoise MLP Index® returning 11.2%, bringing fiscal year performance to -15.8% and -23.6%, respectively. There were several contributors to midstream energy’s negative performance for the fiscal year including: negative energy sentiment following energy demand uncertainty, excess pipeline takeaway capacity related to the COVID-19 pandemic resulting in lower production, and political rhetoric focused on an energy transition to cleaner energy sources. Midstream companies structured as C-Corporations continued to benefit from several items versus MLPs, including: stronger corporate governance, broad market index inclusion for some companies, lack of K-1s, and a more certain corporate structure.

There were a couple of positive themes standing out for midstream businesses throughout the fiscal year. First, resiliency. Resilient cash flows confirm the essential nature of the assets that midstream businesses operate. Strong contractual obligations (take or pay contracts) and customer profiles (large, investment grade rated counterparties) helped midstream energy companies generate consistent cash flow from operations even in the low and volatile 2020 price environment. At the onset of the COVID-19 pandemic, we forecasted midstream EBITDA declining 5%-10% in 2020. However, heading into the final months of 2020, companies revised their forecasts higher and EBITDA is expected to only be down 4% for the year. Notably, 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.

(unaudited)
 
2Tortoise



 
 
 2020 Annual Report | November 30, 2020
 
 
 
 

The other clear trend in earnings was virtually every midstream energy company transitioning to a capital allocation focused on positive free-cash-flow after dividends. This is a stark change made possible by declining capital expenditures for midstream projects and sale of non-core assets. We forecast growth capex to decline by approximately $16 billion YTD as midstream rationalizes project spending. This shift in spending has allowed the midstream sector to not only be free cash flow positive, but materially so, especially compared to other asset classes and the S&P 500. In 2021, we expect midstream companies to have $8 billion of free cash flow after distributions and by 2024 we expect $21 billion of free cash flow after distributions.

We believe midstream companies will more directly return cash flow to shareholders in the form of dividends, debt reduction and share buybacks. While continuing to pay out very high dividend yields, we are advocating for companies to utilize stock buybacks to create their own flows and help turn the tide on stock performance. The numbers show that this can be achieved while still reducing leverage in a meaningful way.

During the last few months of the fiscal year, the buyback announcements started coming in earnest. In early October, Targa Resources (TRGP) announced a $500 million stock buyback program. MPLX and Plains All American followed suit, announcing significant buyback programs for $1 billion and $500 million, respectively for the three largest during the quarter. In total, 10 midstream companies announced share buyback programs in 2020, including six during the fourth quarter. We believe the forthcoming free cash flow and share buyback themes can help drive sustainable outperformance for the midstream sector.

One of the key regulatory announcements of 2020 was the Army Corps of Engineers announcing it began work on an environmental impact statement for the Dakota Access Pipeline, something the district court requested for the better part of the year. Another requirement of the court was that the Corps determine a remedy for the fact that the pipeline no longer has a permit to cross Federal land. The Corps stated that it would require no immediate action and that it does not think the court has jurisdiction over the matter. We are closely monitoring Dakota Access Pipeline developments as the fate of the pipeline impacts several midstream companies. In other pipeline news, in July, the Supreme Court agreed to reinstate streamlined permitting for pipelines across the country, except for Keystone XL. This is positive for the most notable project under construction, the Mountain Valley Pipeline, Equitrans’ 300+ mile natural gas pipeline which is nearing completion after a series of several delays. Construction of the pipeline continues, and we expect for it to be in service within the next year.

While the 2020 presidential election created headline risks for the energy sector, we believe the consensus path forward for the Biden Administration will focus on getting Americans back to work with supportive policies versus policies aimed at opposing the oil and gas industry or destroying jobs. The predominant theme around Biden’s energy plan is to address climate change and create substantial job opportunities for Americans. The topic of climate change and related opportunities for the overall economy was one of the four pillars of the convention platform, integrated into an overall vision of revitalization of America. We expect market economics to dictate the trajectory of future energy supply and demand. Renewables and natural gas are more economic than coal in generating electricity and will likely continue to take share, while crude oil will likely remain the predominant fuel source in the transportation sector for the near future.

Finally, despite past comments early on during the campaign, we do not expect a ban on fracking. It is worth noting that under the Obama Administration, the ban on crude oil exports was lifted which was supportive of the energy industry. Ironically, regulatory pressures have the potential to tighten new supply, pushing oil and gas prices up, and making existing infrastructure more valuable.

2020 also ushered in continued questions about midstream energy’s role in an energy transition environment. During the fiscal year, there were three oil majors, Shell, Total SE and BP, that openly discussed a path forward around renewable energy. The European Union (EU) moved further towards renewables and 7 of the 10 largest economies stated their intention to have net-zero emissions by 2050. While the energy transition will take time to play out, midstream management teams openly discussed the role their companies could play in such a transition. Pipeline infrastructure, for example, could be repurposed to transport hydrogen. As the world continues to demand more energy and less carbon, we are encouraging midstream companies to view energy transition opportunistically.

Within the downstream portion of the energy value chain, the refining sector remained among the most challenged sectors in 2020 due to the COVID-19 pandemic. Refinery utilization has recovered from the depths of the economic contraction in March and April but remains below 2019 levels. Permanent refinery closures have and should continue to help balance the market from a supply and demand perspective. From a U.S. refined product standpoint, we believe gasoline and diesel will continue to inch towards pre-COVID levels during 2021 while a slower recovery should be expected in jet fuel. As U.S. energy demand recovers in 2021, U.S. refinery utilization and throughput should exhibit strong growth and return to more normalized levels.

Natural gas liquids, unlike the refining sector, has proved resilient despite challenges faced during the COVID-19 pandemic. Strength can be seen in LPGs (liquid petroleum gases) where demand is driven by global population growth and improvements in living standards in Asia, notably in China and India.

Sustainable infrastructure

Renewable energy

2020 started out strong for new renewables installation on the heels of a 2019 that itself was the second and third-strongest years ever for solar and wind, respectively. Like most of the economy, renewables then saw a COVID-driven decline bottom-out during the second quarter, but rebounded substantially in the following months. Utility solar in particular has been only minimally impacted by COVID-19 related construction delays. For solar, more than 19 giga watts (GW) of installations are expected for the full year of 2020 – making it the

(unaudited)
 
Tortoise3



 
 
 
 
 
 
 

most capacity installed in a single year in the U.S. and an increase of new growth of around 40% over 20192. Activity remains concentrated in the southwest and southeast, with Texas ahead of Florida and California in year-to-date installations2. According to the U.S. Energy Information Administration, wind installation is also expected to see a strong finish to the year with as much as 23 GW of new capacity coming on line in 2020.

The pandemic caused little to no slowdown in new project announcements as growth is expected to continue in the coming years with a backlog of more than 150 GW over the next five years. That includes major announcements we’ve seen this year from the likes of Amazon, Google, and Microsoft, among others, as well as from several individual states. This represents market share gain for renewables as, between them, wind and solar represent more than 70% of all U.S. electricity-generating capacity additions in 20202. This is not surprising, given that on a levelized cost of energy basis (LCOE) wind and utility-scale solar tend to be a cheaper option than building out any new fossil fuel powered options. Support from the incoming Biden Administration should serve to only provide further momentum to this trend.

Sustainable Project Finance

During 2020, the ongoing sustainability trend that is transforming the waste and energy sectors continued to foster strong growth in waste-to-energy and waste-to-value projects, with a potential for accelerated growth in coming years based on new project announcements.

Waste-to-energy may not be as recognized within the broad renewables sector when compared to more visible solutions such as wind, solar, and hydro. However, bioenergy and biofuel is nearly comparable in size at 44% of U.S. renewable energy consumption, versus 55% for wind, solar, and hydro combined, according to data released in the fourth quarter of 2020 by the U.S. Energy Information Administration. Within the waste-to-energy sector, the strongest growth continues to be within the renewable natural gas (RNG) and renewable diesel sectors as part of ongoing efforts to decarbonize electricity production and transportation fuels.

The number of RNG production facilities operating in the U.S. at year-end increased to 157, up 78% from 2019. In addition, there are 76 new projects under construction and another 79 projects in planning, which suggests continued strong growth in RNG production into 2021. During 2020, more than 20 new waste-to-energy projects were announced for the production of renewable diesel and sustainable aviation fuel (SAF), totaling approximately $4 billion in new project costs. Many of these projects are expected to begin construction during 2021 and 2022.

In the waste-to-value sector, 2020 was a promising year for plastic and food-waste recycling, including targeted corporate sustainability goals, the formation of new recycling alliances, and the development of new technologies for commercial scale-up. Regarding plastics, several new projects were announced for items with low recycling rates, such as polypropylene, polystyrene, and mixed-plastics. Several new projects involving the anaerobic digestion of food waste are also under construction or planned for 2021. These food waste recycling projects typically produce RNG and other value-added co-products, while diverting methane-producing organics from landfills, thereby reducing greenhouse gas emissions.

Social impact

Education

In early Spring, COVID-19 prompted most state and/or municipalities to issue full closure orders prohibiting in-person instruction for all K-12 public school students. As of December 15, 2020, only Washington, DC & Puerto Rico had full closure orders in effect. Four states (TX, FL, AK & IA) had full opening orders in effect that require full-time in-person be available to all K-12 students; seven states (CA, OR, NM, WV, NC, DE & HI) had partial closure orders in effect that prohibit in-person instruction for students in some regions or certain grade levels. For the remaining 39 states, the decisions to make full-time in-person instruction available are being made at the local level3. Many school districts saw their first enrollment declines in decades with families making the decision to transfer students to private schools or shift to home schooling.

In the fourth quarter of 2020, challenges associated with school re-openings, COVID testing and immunization planning and events surrounding the Presidential election shifted the attention of many charter school opponents. Many concerns about the potential for anti-charter school policies from the incoming Biden Administration have been alleviated by the announcement that Connecticut Education Commissioner Miguel Cardona would be the nominee to lead the US Department of Education. While it is highly unlikely that the results of 2020 local, state and national elections will significantly improve the political environment for charter schools, securing federal aid and addressing the tremendous educational inequity spotlighted throughout the pandemic will almost certainly be the primary political focus in K-12 education for the first quarter 2021.

In spite of the uncertainty created by the pandemic, 2020 was another record year for the charter school and K-12 private school bond market with more than 160 offerings and nearly $4 billion in new issuance. While attempts to return to full-time in-person instruction remain controversial in some parts of the country, parental demand for safe, high-quality school facilities has only increased. Overall, there has been no reduction to state and local funding for K-12 public schools during the current school year with many school districts implementing previously approved budgeted increases. While California has indicated that some charter school payment deferrals may be implemented, there are well established options in place to assist schools with any resulting cash flow challenges.

While the challenges in K-12 education in 2020 were unprecedented, the opportunity for investing in facilities for excellent schools has only increased. Relationships with bankers, financial advisors and developers continue to grow stronger as we are seen as one of the go-to solutions for schools that do not have the luxury of off-the-shelf facility financing. As our K-12 portfolio and market presence continues to grow, we believe our ability to find and finance outstanding schools that offer exceptional returns for our investors will continue to improve.

(unaudited)
 
4Tortoise



 
 
 2020 Annual Report | November 30, 2020
 
 
 
 

Senior Living

There’s a common phrase floating around the senior living industry these days; light at the end of the tunnel. While 2020 was a trying year, many of our operators have begun inoculating residents and staff per the CDC’s recommendation that they be among the first recipients of the vaccine. As one can imagine, a vaccine has more than lifted the spirits in many of our communities. Given the salacious headlines and doomsday projections in March 2020, one might have expected senior living to be wiped off the map, but it hasn’t, thanks to the industry’s resilience and federal stimulus dollars.

Regarding the resilience of the senior living industry, the reality is that senior living is a high turnover model that’s enduring, and the average high acuity setting hasn’t seen many more deaths than a typical year. Statistically, through December 2020, nationwide occupancy for independent living and assisted living decreased to 83.5% and 77.7%, respectively. Occupancy has decreased for independent and assisted living, 6.2% and 7.5% since the pandemic began4. The rate of occupancy decline from month to month has been decelerating for both independent and assisted living, and primary markets have seen a higher rate of decline than the secondary markets that we typically invest in.

One reason the senior living industry has weathered the pandemic better than expected, is the Federal stimulus dollars which almost all of our borrowers had access to through the Payroll Protection Program (“PPP”) which provided for 2.5 months of average monthly payroll costs. Additionally, in late September, the Department of Health and Human Services announced that assisted living providers can receive 2% of annual revenue, plus a payment to account for revenue loss and expenses attributable to the pandemic. Applications were due November 6th and should provide timely aid to an industry on the front lines.

From a capital markets perspective, the senior living community has seen the lowest number of financings since the great financial crisis of 2007-08. As of October, $1.5 billion had been publicly issued for a tax-exempt market that normally issues over $4 billion a year5. The senior living capital markets were “frozen” until mid-summer when the first investment grade senior living deal priced. Since then, there has been a slow thaw of the senior living capital markets with a significant portion of banks and equity investors on the “sidelines”. With each passing day, more capital is returning to the space and deals across the spectrum of senior living are crossing the finish line once again. Simultaneously, vaccinations at our senior living communities have created a surge of capital market activity as groups vie for the “first mover’s advantage”.

On a positive note, the pandemic has strengthened the industry’s infectious disease policies and procedures which has brought lasting change for the better. For example, the industry has been remarkably slow to adopt telehealth; however, telehealth visits have gone from approximately 3% pre-COVID-19 to more than 50% currently. The dramatic positive shift was made possible by Congress passing bills in the spring of 2020 which now allow telehealth to be covered by Medicare.

Clearly it will not happen overnight, but we are cautiously optimistic the senior living community is poised to rebound to pre-COVID-19 levels in short order.

Concluding thoughts

We feel strongly that the future of energy will be driven by a combination of natural gas and renewables to meet growing energy demand while simultaneously reducing global CO2 emissions. There are many tailwinds driving the move to cleaner energy with the Biden Administration and the trends toward ESG investing. Although 2020 and the pandemic proved challenging in the education and senior living sectors, we anticipate more of a return to normal during 2021. We are positioning the funds to take advantage of these trends and have an optimistic outlook for 2021 and beyond.



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.Energy Information Administration, December 2020 STEO
2.Solar Market Insight Report, 2020 Q4
3.CNN “Where Schools are Reopening in the U.S.”, December 15, 2020
4.NIC
5.Ziegler

(unaudited)
 
Tortoise5



 
 
 
 
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

There were several contributors to midstream energy’s negative performance for the fiscal year including volatile commodity prices and negative energy sentiment, energy demand concerns and excess takeaway capacity related to the COVID-19 pandemic, as well as political rhetoric and uncertainty related to the 2020 U.S. presidential election, regulatory concerns around pipeline permitting, and concerns around midstream’s role in the evolving energy transition. Beyond this, one positive theme stood out for midstream businesses throughout the fiscal year — resiliency. Resilient cash flows confirm the essential nature of the assets that midstream businesses operate. Strong contractual obligations (take or pay contracts) and customer profiles (large, investment grade rated counterparties) helped midstream energy companies generate consistent cash flow from operations even in the low and volatile 2020 price environment. The average leverage for the fund’s portfolio companies was 3.41x in the fourth fiscal quarter. Since the fund’s inception, it has paid out more than $144 in cumulative distributions to stockholders. Leverage drastically impacted the fund’s returns throughout the period. The fund’s use of leverage drove outperformance compared to the index during the strong fourth fiscal quarter with market-based and NAV-based returns of 17.8% and 12.4%, respectively (including the reinvestment of distributions). Conversely, the required deleveraging during the weak market earlier in the year magnified negative performance with 2020 fiscal year returns of -69.7% and -61.7%, respectively. The Tortoise MLP Index® returned 11.2% and -23.6% during the same periods, respectively.

2020 fiscal year summary      
Distributions paid per share (fiscal year 2020) $2.1800(1)
Distributions paid per share (4th quarter 2020)$0.3000
Distribution rate (as of 11/30/2020)6.3%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease) (88.5)%(1)
Cumulative distributions paid per share to   
       stockholders since inception in February 2004 $144.9900(1)
Market-based total return(69.7)%
NAV-based total return(61.7)%
Premium (discount) to NAV (as of 11/30/2020)(23.2)%

(1)

Includes impact of reverse stock split.

Key asset performance drivers

Top five contributors     Company type     Performance driver
Sunnova Energy International Inc.Solar companyPositive solar growth fundamentals and lower financing costs
Targa Resources Corp. – Preferred Shares AMidstream gathering and processing companyConvertible debt structure provided downside protection
DCP Midstream LPNatural gas pipeline MLPStrong operating performance and improved NGL price outlook
Sunnova Energy International Inc. – Convertible Notes 9.750% Due 4/30/2025Solar companyPositive solar growth fundamentals and lower financing costs
Altus Midstream Company PreferredNatural gas pipeline companyPreferred structure outperformed equity midstream equity performance
 
Bottom five contributors     Company type     Performance driver
Energy Transfer LPNatural gas pipeline MLPConcern Dakota Access Pipeline operations may be halted due to potential need for Environmental Impact Statement
Targa Resources Corp.Midstream gathering and processing companyConcern about prolonged slowdown in production growth
ONEOK, Inc.Midstream natural gas/natural gas liquids pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL)
Plains All American Pipeline, L.P.Midstream crude oil pipeline MLPConcerns regarding excess capacity for Permian crude pipelines
Enterprise Products Partners L.P.Midstream natural gas/natural gas liquids pipeline MLPConcerns of lower U.S.and global energy demand due to slower than expected recovery

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)
 
6Tortoise



 
 
 2020 Annual Report | November 30, 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 investments, paid-in-kind distributions, and dividend and interest payments. Income also includes the premiums received from sales of covered call options, net of amounts paid to buy back out-of-the-money options. The total expenses include current or anticipated operating expenses, leverage costs and current income taxes. Current income taxes include taxes paid on net investment income, in addition to foreign taxes, if any. Taxes incurred from realized gains on the sale of investments, expected tax benefits and deferred taxes are not included in DCF.

Income from investments increased slightly as compared to 3rd quarter 2020. Operating expenses, consisting primarily of fund advisory fees, decreased approximately 5.7% during the quarter due mainly to lower asset-based fees. Overall leverage costs decreased approximately 3.1% as compared to 3rd quarter 2020 due primarily to lower interest rates during the period. As a result of the changes in income and expenses, DCF increased approximately 2.8% as compared to 3rd quarter 2020. The fund paid a quarterly distribution of $0.30 per share during the quarter, no change from the distribution paid from the prior quarter and a decrease of approximately 88.5% from the distribution paid in Q3 2019. The fund has paid cumulative distributions to stockholders of $144.99 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 4th quarter 2020 (in thousands):

YTD 20204th Qtr 2020
Net Investment Loss,        
       before Income Taxes     $   (15,465)$       (2,805)
Adjustments to reconcile to DCF:
       Distributions characterized as        
              return of capital, net61,7949,292
       Premiums on redemption of        
              senior notes and MRP stock3,659
       Other652441
              DCF$50,640$6,928

Leverage

The fund’s leverage utilization decreased $8.4 million during 4th quarter 2020 and represented 29.3% of total assets at November 30, 2020. At year-end, the fund was in compliance with applicable coverage ratios, 100% of the leverage cost was fixed, the weighted-average maturity was 2.8 years and the weighted-average annual rate on leverage was 3.84%. 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, $4.8 million of Senior Notes were paid in full upon maturity.

Income taxes

As of November 30, 2020, the fund’s deferred tax asset was zero. The fund had capital loss carryforwards of $572.0 million for federal income tax purposes, which can be used to offset prior or future capital gains. 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.tortoiseecofin.com.

(unaudited)
 
Tortoise7



 
 
 
 
TYG Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements

       Year Ended November 30, 2019 2020
2019 2020 Q4(1) Q1(1) Q2(1) Q3(1) Q4(1)
Total Income from Investments                     
       Distributions and dividends
              from investments$174,696$68,737$44,074$40,436$10,138$8,982$9,181
       Dividends paid in kind801357300178179
       Interest earned on corporate bonds4672,283348712604547420
       Premiums on options written3,267250714250
              Total from investments179,23171,62745,43641,57610,9219,5299,601
 
Operating Expenses Before Leverage
   ��   Costs and Current Taxes
       Advisory fees19,5227,2594,4794,1431,373923820
       Other operating expenses1,6241,342382407313294328
21,1468,6014,8614,5501,6861,2171,148
       Distributable cash flow before
              leverage costs and current taxes158,08563,02640,57537,0269,2358,3128,453
       Leverage costs(2)25,95612,3866,3475,8783,4091,5741,525
       Current income tax expense(3)
              Distributable Cash Flow(4)$132,129$50,640$34,228$31,148$5,826$6,738$6,928
 
Net realized gain (loss), net of
       income taxes, for the period$29,053$(632,460)$(6,537)$(17,195)$(572,057)$(34,087)$(9,121)
As a percent of average total assets(5)
       Total from investments8.55%8.11%9.71%10.04%5.58%8.02%8.95%
       Operating expenses before
              leverage costs and current taxes1.03%1.01%1.04%1.10%0.86%1.02%1.07%
       Distributable cash flow before
              leverage costs and current taxes7.52%7.10%8.67%8.94%4.72%7.00%7.88%
As a percent of average net assets(5)
       Total from investments14.51%14.67%17.12%16.87%14.35%12.31%13.97%
       Operating expenses before
              leverage costs and current taxes1.76%1.84%1.83%1.85%2.22%1.57%1.67%
       Leverage costs and current taxes2.16%2.64%2.39%2.38%4.48%2.03%2.22%
       Distributable cash flow10.59%10.19%12.90%12.64%7.65%8.71%10.08%
 
Selected Financial Information
Distributions paid on common stock$140,588$28,912$35,195$21,224$$3,979$3,709
Distributions paid on common stock
       per share(7)10.48002.18002.62001.58000.30000.3000
Total assets, end of period(6)1,680,775455,8391,680,7751,416,246508,235450,671455,839
Average total assets during period(6)(8)2,044,102847,4731,876,5341,665,499778,359472,659431,543
Leverage(9)623,900133,427623,900565,300129,100125,067133,427
Leverage as a percent of total assets37.1%29.3%37.1%39.9%25.4%27.8%29.3%
Net unrealized depreciation,
       end of period(543,310)(473,357)(543,310)(662,820)(526,684)(513,439)(473,357)
Net assets, end of period930,286305,628930,286769,227334,413294,394305,628
Average net assets during period(10)1,203,943468,7051,064,735991,440302,755307,880276,337
Net asset value per common share(7)69.2424.9569.2457.2825.0822.5224.95
Market value per share(7)67.2819.1667.2850.6018.7016.5019.16
Shares outstanding (000’s)53,73212,25053,73253,73213,33413,07212,250

(1)

Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November.

(2)

Leverage costs include interest expense, distributions to preferred stockholders, interest rate swap expenses and other recurring leverage expenses.

(3)

Includes taxes paid on net investment income and foreign taxes, if any. Taxes related to realized gains are excluded from the calculation of Distributable Cash Flow (“DCF”).

(4)

“Net investment income (loss), before income taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF: increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind, the net premiums on options written and amortization of debt issuance costs; and decreased by realized and unrealized gains (losses) on interest rate swap settlements, distributions received that are excluded for DCF purposes and amortization on certain investments.

(5)

Annualized for periods less than one year.

(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.


8Tortoise



 
 

2020 Annual Report | November 30, 2020

 
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

There were several contributors to midstream energy’s negative performance for the fiscal year including volatile commodity prices and negative energy sentiment, energy demand concerns and excess takeaway capacity related to the COVID-19 pandemic as well as political rhetoric and uncertainty related to the 2020 U.S. presidential election, regulatory concerns around pipeline permitting, and concerns around midstream’s role in the evolving energy transition. Beyond this, one positive theme stood out for midstream businesses throughout the fiscal year — resiliency. Resilient cash flows confirm the essential nature of the assets that midstream businesses operate. Strong contractual obligations (take or pay contracts) and customer profiles (large, investment grade rated counterparties) helped midstream energy companies generate consistent cash flow from operations even in the low and volatile 2020 price environment. The average leverage for the fund’s portfolio companies was 3.35x in the fourth fiscal quarter. Leverage drastically impacted the fund’s performance throughout the period. The fund’s use of leverage drove outperformance compared to the index during the strong fiscal quarter with market-based and NAV-based returns of fiscal quarter ending November 30, 2020 were 17.6% and 13.9%, respectively (including the reinvestment of distributions). Conversely, the required deleveraging during the weak market earlier in the year magnified negative performance with 2020 fiscal year returns of -78.8% and -73.9%, respectively. The Tortoise MLP Index® returned 11.2% and -23.6% during the same periods, respectively.

2020 fiscal year summary     
Distributions paid per share (fiscal year 2020)$2.9700(1) 
Distributions paid per share (4th quarter 2020)$0.3100
Distribution rate (as of 11/30/2020)6.4%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)(92.7)%(1) 
Cumulative distributions paid per share to
       stockholders since inception in July 2010$157.5700(1) 
Market-based total return(78.8)%
NAV-based total return(73.9)%
Premium (discount) to NAV (as of 11/30/2020)(23.9)%

(1)Includes impact of reverse stock split.

Key asset performance drivers

Top five contributors       Company type       Performance driver
MPLX LPRefined products pipeline MLPProtection from minimum volume commitments and business diversification with Northeast midstream business
Sunnova Energy International Inc.Solar companyPositive solar growth fundamentals and lower financing costs
DCP Midstream LPNatural gas pipeline MLPStrong operating performance and improved natural gas liquids price outlook
Altus Midstream Company PreferredNatural gas pipeline companyPreferred structure outperformed equity midstream equity performance
Targa Resources Corp. – Preferred Shares AMidstream gathering and processing companyConvertible debt structure provided downside protection
     
Bottom five contributorsCompany typePerformance driver
Energy Transfer LPNatural gas pipeline MLPConcern Dakota Access Pipeline operations may be halted due to potential need for Environmental Impact Statement
Targa Resources Corp.Midstream gathering and processing companyConcern about prolonged slowdown in production growth
Enterprise Products Partners L.P.Midstream natural gas/natural gas liquids pipeline MLPConcerns of lower U.S. and global energy demand due to slower than expected recovery
Plains All American Pipeline, L.P.Midstream crude oil pipeline MLPConcerns regarding excess capacity for Permian crude pipelines
Phillips 66 Partners LPMidstream refined product pipeline MLPConcern Dakota Access Pipeline operations may be halted due to potential need for Environmental Impact Statement

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)
  
Tortoise9



 
 
 
 
Tortoise
Midstream Energy Fund, Inc. (NTG) (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 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 9.1% as compared to 3rd quarter 2020 primarily due to lower distributions from investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, increased slightly during the quarter. Leverage costs decreased approximately 11% as compared to 3rd quarter 2020 due to lower interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 11% as compared to 3rd quarter 2020. The fund paid a quarterly distribution of $0.31 per share during the quarter, no change from the distribution paid in the prior quarter and a decrease of approximately 93% from the distribution paid in Q4 2019. The fund has paid cumulative distributions to stockholders of $157.57 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 4th quarter 2020 (in thousands):

    YTD 2020    4th Qtr 2020
Net Investment Loss,           
       before Income Taxes$(10,472)$(2,086)
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital (ROC)39,8285,192
       Premiums on redemption of
              senior notes and MRP stock4,081
       Prior year ROC re-class(1,606)
       Other888372
              DCF$32,719$3,478

Leverage

The fund’s leverage utilization increased approximately $17 million during 4th quarter 2020 and represented 30.0% of total assets at November 30, 2020. At year-end, the fund was in compliance with applicable coverage ratios, 100% of the leverage cost was fixed, the weighted-average maturity was 1.5 years and the weighted-average annual rate on leverage was 2.39%. 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, $22.9 million of Senior Notes were paid in full upon maturity.

Income taxes

As of November 30, 2020, the fund’s deferred tax asset was zero. The fund had capital loss carryforwards of $550.7 million for federal income tax purposes, which can be used to offset future capital gains. 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.tortoiseecofin.com.

(unaudited)
  
10Tortoise



 
 

2020 Annual Report | November 30, 2020

 
NTG Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

   Year Ended November 30,2019   2020
2019   2020   Q4(1)Q1(1)   Q2(1)   Q3(1)   Q4(1)
Total Income from Investments       
       Distributions and dividends
              from investments$125,782$44,780$31,315$28,806$6,309$5,045$4,620
       Dividends paid in kind518257200127130
       Interest earned on corporate bonds3151,194230489317222166
       Premiums on options written3,300216941216
              Total from investments129,91546,44732,68629,6386,7565,2674,786
 
Operating Expenses Before Leverage
       Costs and Current Taxes
       Advisory fees, net of fees waived13,5314,6653,1452,868873482442
       Other operating expenses1,271944301321156207260
 14,8025,6093,4463,1891,029689702
       Distributable cash flow before
              leverage costs and current taxes115,11340,83829,24026,4495,7274,5784,084
       Leverage costs(2) 20,1218,1194,8594,4282,402683606
       Current income tax expense(3) 
              Distributable Cash Flow(4)$94,992$32,719$24,381$22,021$3,325$3,895$3,478
 
Net realized gain (loss), net of
       income taxes, for the period$(35,176)$(561,915)$(8,640)$(6,917)$(518,170)$(28,505)$(8,323)
As a percent of average total assets (5)
       Total from investments8.69%8.59%9.96%10.37%5.77%9.32%9.29%
       Operating expenses before
              leverage costs and current taxes1.02%1.08%1.05%1.12%0.88%1.22%1.36%
       Distributable cash flow before
              leverage costs and current taxes7.67%7.51%8.91%9.25%4.89%8.10%7.93%
As a percent of average net assets(5)
       Total from investments14.43%15.49%17.18%16.80%16.18%13.90%14.47%
       Operating expenses before
              leverage costs and current taxes1.70%1.94%1.81%1.81%2.46%1.82%2.12%
       Leverage costs and current taxes2.31%2.81%2.55%2.51%5.75%1.80%1.83%
       Distributable cash flow10.42%10.74%12.82%12.48%7.97%10.28%10.52%
 
Selected Financial Information
Distributions paid on common stock$106,822$18,638$26,705$14,854$$1,952$1,832
Distributions paid on common stock
       per share(7) 16.90002.97004.22502.35000.31000.3100
Total assets, end of period(6) 1,163,500226,4491,163,500964,276239,673212,560226,449
Average total assets during period(6)(8) 1,447,092521,0281,316,0531,149,464466,040224,762207,191
Leverage(9) 462,60068,021462,600409,50050,90050,90068,021
Leverage as a percent of total assets39.8%30.0%39.8%42.5%21.2%23.9%30.0%
Net unrealized appreciation
      (depreciation), end of period(64,329)14,962(64,329)(157,875)(22,960)(11,035)14,962
Net assets, end of period667,708149,407667,708549,293162,369141,403149,407
Average net assets during period(10) 871,496289,147762,956709,609166,096150,772132,986
Net asset value per common share(7) 105.6025.56105.6086.9025.6922.7625.56
Market value per common share(7) 98.8019.4698.8078.0020.9516.7919.46
Shares outstanding (000’s)63,2085,84663,20863,2086,3216,2145,846

(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, distributions to preferred stockholders and other recurring leverage expenses.
(3)Includes taxes paid on net investment income and foreign taxes, if any. Taxes related to realized gains are excluded from the calculation of Distributable Cash Flow (“DCF”).
(4)“Net investment income (loss), before income taxes” on the Statement of Operations is adjusted as follows to reconcile to DCF: increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind and amortization of debt issuance costs.
(5)Annualized for periods less than one year.
(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.

Tortoise11



 
 
 
 
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

There were several contributors to midstream energy’s negative performance for the fiscal year including volatile commodity prices and negative energy sentiment, energy demand concerns and excess takeaway capacity related to the COVID-19 pandemic as well as political rhetoric and uncertainty related to the 2020 U.S. presidential election, regulatory concerns around pipeline permitting, and concerns around midstream’s role in the evolving energy transition. Beyond this, one positive theme stood out for midstream businesses throughout the fiscal year — resiliency. Resilient cash flows confirm the essential nature of the assets that midstream businesses operate. Strong contractual obligations (take or pay contracts) and customer profiles (large, investment grade rated counterparties) helped midstream energy companies generate consistent cash flow from operations even in the low and volatile 2020 price environment. Leverage impacted the fund’s performance throughout the period. The fund’s use of leverage drove outperformance compared to the index during the strong fiscal quarter with market-based and NAV-based returns of 8.4% and 6.9%, respectively (including the reinvestment of distributions). Conversely, the required deleveraging during the weak market earlier in the year magnified negative performance with 2020 fiscal year returns of -64.7% and -58.6%, respectively. The Tortoise North American Pipeline Index returned 6.3% and -15.8% during the same periods, respectively.

2020 fiscal year summary     
Distributions paid per share (fiscal year 2020)$1.6200(1) 
Distributions paid per share (4th quarter 2020)$0.1600
Distribution rate (as of 11/30/2020)4.2%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)(86.0)%(1) 
Cumulative distributions paid per share to
       stockholders since inception in October 2011$54.0700(1) 
Market-based total return(64.7)%
NAV-based total return(58.6)%
Premium (discount) to NAV (as of 11/30/2020)(24.1)%

(1)Includes impact of reverse stock split.

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
Tallgrass Energy LPMidstream natural gas/natural gas liquids pipeline companyAcquisition by Blackstone
Semgroup CorpMidstream crude oil pipeline companyAcquisition by Energy Transfer
Nextera Energy Partners LPDownstream power companyPositive solar and wind growth fundamentals
Equitrans Midstream CorporationMidstream gathering and processing companyRelatively steady natural gas outlook amid market volatility
Targa Resources Corp. – Preferred Shares AMidstream gathering and processing companyConvertible debt structure provided downside protection
     
Bottom five contributorsCompany typePerformance driver
ONEOK, Inc.Midstream natural gas/natural gas liquids pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL)
Plains GP Holdings, L.P.Midstream crude oil pipeline companyReduced crude oil volume outlook
Targa Resources Corp.Midstream gathering and processing companyConcern about prolonged slowdown in production growth
Energy Transfer LPMidstream natural gas/natural gas liquids pipeline MLPConcern Dakota Access Pipeline operations may be halted due to potential need for Environmental Impact Statement
Kinder Morgan Inc.Midstream natural gas/natural gas liquids pipeline companySlower improvement in refined product demand following COVID-19 than expected

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)
  
12Tortoise



 
 

2020 Annual Report | November 30, 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 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 2.8% as compared to 3rd quarter 2020, primarily due to lower distributions from investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, increased approximately 14% during the quarter, primarily due to a one-time increase in operating expenses partially offset by lower asset-based fees. Leverage costs decreased approximately 11% as compared to 3rd quarter 2020 primarily due to reduced leverage utilization during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 6.5% as compared to 3rd quarter 2020. The fund had net realized gains on investments of approximately $0.2 million during 4th quarter 2020. The fund paid a quarterly distribution of $0.16 per share, no change from the distribution paid in the prior quarter and a decrease of approximately 86% from 4th quarter 2020. The fund has paid cumulative distributions to stockholders of $54.07 per share since its inception in October 2011.

The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) the Statement of Operations, in conformity with U.S. generally accepted accounting principles (GAAP), recognizes distributions and dividend income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distributions and dividend income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes; and (4) net premiums on options written (premiums received less amounts paid to buy back out-of-the-money options) with expiration dates during the fiscal quarter are included in the DCF calculation, whereas GAAP recognizes the net effect of options written as realized and unrealized gains (losses).

“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2020 (in thousands):

     YTD 2020     4th Qtr 2020
Net Investment Loss$(679)$(564)
Adjustments to reconcile to DCF:
       Net premiums on options written747
       Distributions characterized as
              return of capital (ROC)     5,443       1,207
       Premiums on redemption of
              senior notes and MRP stock195
       Prior year ROC re-class(580)
       Other13764
              DCF$5,263$707

Leverage

The fund’s leverage utilization decreased approximately $3.9 million during 4th quarter 2020 and represented 29.7% of total assets at November 30, 2020. At year-end, the fund was in compliance with applicable coverage ratios, 100% of the leverage cost was fixed, the weighted-average maturity was 2.5 years and the weighted-average annual rate on leverage was 4.94%. 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, $3.9 million of Senior Notes were paid in full upon maturity.

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.tortoiseecofin.com.

(unaudited)
 
Tortoise13



 
 
  
 
TTP Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

Year Ended November 30,20192020
  2019  2020     Q4(1)   Q1(1)   Q2(1)    Q3(1)   Q4(1)
Total Income from Investments            
       Dividends and distributions
              from investments, net of
              foreign taxes withheld$15,444$7,763$3,890$3,744$1,349$1,357$1,313
       Dividends paid in kind2371968910
       Net premiums on options written3,622747483539208
              Total from investments19,3038,5294,4414,2921,5671,3571,313
  
Operating Expenses Before
       Leverage Costs
       Advisory fees, net of fees waived2,4141,171563548235202186
       Other operating expenses54952411614713786154
  2,9631,695679695372288340
       Distributable cash flow before
              leverage costs16,3406,8343,7623,5971,1951,069973
       Leverage costs(2)2,5091,571609585409311266
              Distributable Cash Flow(3)$13,831$5,263$3,153$3,012$786$758$707
    
Net realized gain (loss) on
       investments and foreign currency
       translation, for the period$(16,707)$(95,821)$(1,524)$(5,807)$(86,692)$(3,517)$195
As a percent of average total assets(4)
       Total from investments8.82%7.85%8.74%8.96%6.29%7.44%7.80%
       Operating expenses before
              leverage costs1.35%1.56%1.34%1.45%1.49%1.58%2.02%
       Distributable cash flow before
              leverage costs7.47%6.29%7.40%7.51%4.80%5.86%5.78%
As a percent of average net assets(4)
       Total from investments12.29%12.18%12.46%12.31%12.85%11.11%12.18%
       Operating expenses before
              leverage costs1.89%2.42%1.91%1.99%3.05%2.36%3.15%
       Leverage costs1.60%2.24%1.71%1.68%3.35%2.55%2.47%
       Distributable cash flow8.80%7.52%8.84%8.64%6.45%6.20%6.56%
   
Selected Financial Information
Distributions paid on common stock13,8734,0412,8552,855401397$  388
Distributions paid on common stock
       per share(5)5.54001.62001.14001.14000.16000.16000.1600
Total assets, end of period(6)192,75169,207192,751169,68075,70071,57969,207
Average total assets during period(6)(7)218,949108,608203,852192,75099,13272,55967,662
Leverage(8)61,80020,55761,80058,00024,50024,50020,557
Leverage as a percent of total assets32.1%29.7%32.1%34.2%32.4%34.2%29.7%
Net unrealized depreciation,
       end of period(37,569)(17,638)(37,569)(48,038)(20,652)(20,791)(17,638)
Net assets, end of period129,88748,108129,887110,70750,72146,63648,108
Average net assets during period(9)157,01770,052142,932140,19548,52248,60843,353
Net asset value per common share(5)51.8819.9751.8844.2020.2618.8619.97
Market value per common share(5)46.0815.1546.0839.4416.9814.1115.15
Shares outstanding (000’s)10,0162,40910,01610,0162,5042,4732,409

(1)Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November.
(2)Leverage costs include interest expense, distributions to preferred stockholders and other recurring leverage expenses.
(3)“Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by net premiums on options written, the return of capital on distributions, the dividends paid in stock and increased liquidation value, the premium on dividends paid in kind and amortization of debt issuance costs.
(4)Annualized for periods less than one year.
(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.

14Tortoise



 
 
2020 Annual Report | November 30, 2020
 
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

For U.S. producers, 2020 was a year of change. The COVID-19 pandemic accelerated producers’ capital discipline as investors focused on higher free cash flow generation and return of capital to shareholders. This free-cash-flow focus led to a host of M&A deals as E&P companies focused on the importance of scale, diversity and strengthening balance sheets in a challenging oil price environment. Following the price war between Saudi Arabia and Russia in early March, the Organization of Petroleum Exporting Countries (OPEC) and their Non-OPEC partners (OPEC+) announced deep production cuts with a clear goal of balancing the global crude oil market. The market dramatically shifted from an approximate 20 million barrels per day (b/d) surplus in April to an approximate 4 million b/d deficit in July, providing the path for market rebalancing. Overall adherence to the production cut agreement remained strong in the second half of 2020 leading to inventory draws. Entering 2021, the global crude market remains in deficit, supported by the OPEC+ crude oil production cut agreement, and inventory draws are expected to continue throughout 2021. The fund’s market-based and NAV-based returns for the fiscal quarter ending November 30, 2020 were 7.4% and 4.1%, respectively (including the reinvestment of distributions) bringing the 2020 fiscal year returns to -54.9% and -48.9%, respectively.

2020 fiscal year summary
Distributions paid per share       $0.8000(1) 
Distributions paid per share (4th quarter 2020)None
Distribution rate (as of 11/30/2020)0.0%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)(100.0)%
Cumulative distributions paid per share to
       stockholders since inception in July 2012$96.9000(1) 
Market-based total return(54.9)%
NAV-based total return(48.9)%
Premium (discount) to NAV (as of 11/30/2020)(23.1)%

(1)Includes impact of reverse stock split.

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 CorporationUpstream oil and natural gas producing companyStrong balance sheet supporting attractive dividend sustained during period of low commodity prices
ConocoPhillipsLiquids producing companyRelatively low leverage amid volatile energy environment
EQT CorporationUpstream natural gas producing companyPure-play natural gas producers that benefitted from rising natural gas prices
Nextera Energy Inc.Power/utility companyIncreased guidance tied to renewable energy growth
TC Energy CorpNatural gas pipeline companyLimited cash flow decline given limited commodity price exposure
   
Bottom five contributorsCompany typePerformance driver
Marathon Petroleum CorpRefining companyConcerns about global refined product (gasoline, diesel, and jet fuel) demand declines
Noble Energy IncNatural gas producing companyLower crude oil prices negatively impacting cash flow
WPX Energy IncOil and 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
Cimarex Energy CoOil 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)
  
Tortoise15



 
 
 
 
Tortoise
Energy Independence Fund, Inc. (NDP) (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 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 5.5% as compared to 3rd quarter 2020, primarily due to lower distributions from investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, increased approximately 5.6% during the quarter, primarily due to a one-time increase in operating expenses partially offset by lower asset-based fees. Total leverage costs were substantially unchanged as compared to 3rd quarter 2020. As a result of the changes in income and expenses, DCF decreased by approximately 16% as compared to 3rd quarter 2020.

The fund announced the temporary suspension of distributions during the 2nd quarter and did not pay any distributions during the 4th 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 4th quarter 2020 (in thousands):

       YTD 2020       4th Qtr 2020
Net Investment Income (loss)$12$(15)
Adjustments to reconcile to DCF:      
       Net premiums on options written1,734
       Distributions characterized as
              return of capital675188
       Other(11)(1)
              DCF$        2,410$        172

Leverage

The fund’s leverage utilization increased $0.6 million as compared to 3rd quarter 2020. The fund utilizes all floating rate leverage that had an interest rate of 0.95% and represented 14.1% of total assets at year-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.tortoiseecofin.com.

(unaudited)
  
16Tortoise



 
 
2020 Annual Report | November 30, 2020
 
NDP Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

Year Ended November 30,20192020
  2019  2020  Q4(1)  Q1(1)  Q2(1)  Q3(1)    Q4(1)
Total Income from Investments          
       Distributions and dividends
              from investments, net of
              foreign taxes withheld$2,971$1,877$789$657$448$397$375
       Dividends paid in stock
       Net premiums on options written17,1011,7341,7711,275459
       Total from investments20,0723,6112,5601,932907397375
   
Operating Expenses Before
       Leverage Costs
       Advisory fees, net of fees waived1,434521261247939487
       Other operating expenses47643710012812484101
   1,910958361375217178188
       Distributable cash flow before
              leverage costs18,1622,6532,1991,557690219187
       Leverage costs(2)1,229243216184301415
              Distributable Cash Flow(3)$     16,933$     2,410$     1,983$     1,373$     660$     205$     172
    
Net realized loss on investments
       and foreign currency translation,
       for the period$(88,310)$(48,686)$(2,264)$(3,945)$(44,750)$(8)$17
As a percent of average total assets(4)
       Total from investments15.22%7.46%10.92%9.16%8.97%4.74%4.66%
       Operating expenses before
              leverage costs1.45%1.98%1.54%1.78%2.15%2.12%2.34%
       Distributable cash flow before
              leverage costs13.77%5.48%9.38%7.38%6.82%2.62%2.32%
As a percent of average net assets(4)
       Total from investments21.32%9.74%15.34%12.10%13.19%5.33%5.55%
       Operating expenses before
              leverage costs2.03%2.59%2.16%2.35%3.15%2.39%2.78%
       Leverage costs1.31%0.66%1.29%1.15%0.44%0.19%0.22%
       Distributable cash flow17.98%6.49%11.89%8.60%9.60%2.75%2.55%
    
Selected Financial Information
Distributions paid on common stock$15,829$1,477$1,477$1,477$$$
Distributions paid on common stock
       per share(5)8.60000.80000.80000.8000
Total assets, end of period88,68435,48288,68466,43933,89533,76035,482
Average total assets during period(6)131,84848,39994,06484,87340,20733,34532,358
Leverage(7)26,5005,00026,50020,4004,1004,4005,000
Leverage as a percent of total assets29.9%14.1%29.9%30.7%12.1%13.0%14.1%
Net unrealized depreciation,
       end of period(21,026)(3,569)(21,026)(32,908)(4,249)(4,737)(3,569)
Net assets, end of period61,55030,30761,55045,25329,56629,13730,307
Average net assets during period(8)94,14437,05766,94864,23927,36429,65827,155
Net asset value per common share(5)33.3616.4233.3624.4816.2015.7816.42
Market value per common share(5)29.0412.6329.0421.7612.0111.7612.63
Shares outstanding (000’s)14,7681,84614,76814,7681,8461,8461,846

(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 for periods less than one year.
(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.

Tortoise17



 
 
   
 
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

There were several contributors to midstream energy’s negative performance for the fiscal year including volatile commodity prices and negative energy sentiment, energy demand concerns and excess takeaway capacity related to the COVID-19 pandemic as well as political rhetoric and uncertainty related to the 2020 U.S. presidential election, regulatory concerns around pipeline permitting, and concerns around midstream’s role in the evolving energy transition. Beyond this, one positive theme stood out for midstream businesses throughout the fiscal year — resiliency. Resilient cash flows confirm the essential nature of the assets that midstream businesses operate. Strong contractual obligations (take or pay contracts) and customer profiles (large, investment grade rated counterparties) helped midstream energy companies generate consistent cash flow from operations even in the low and volatile 2020 price environment. Leverage impacted the fund’s performance throughout the period. The fund’s use of leverage drove outperformance compared to the index during the strong fiscal quarter with market-based and NAV-based returns of 9.9% and 7.9%, respectively (including the reinvestment of distributions). Conversely, the required deleveraging during the weak market earlier in the year magnified negative performance with 2020 fiscal year returns of -29.2% and -18.9%, respectively. The TPZ Benchmark Composite returned 5.3% and 1.5% during the same periods, respectively.

2020 fiscal year summary
Distributions paid per share (fiscal year 2020)           $1.0500
Monthly distributions paid per share$0.0500
Distribution rate (as of 11/30/2020)6.0%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)(60.0)%
Cumulative distribution to stockholders
       since inception in July 2009$17.8250
Market-based total return(29.2)%
NAV-based total return(18.9)%
Premium (discount) to NAV (as of 11/30/2020)(23.2)%

*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%, 07/15/2026Gathering and processing MLP companyImproved Marcellus shale natural gas and natural gas liquids outlook following lower production in other basins
Sunnova Energy International Inc.Solar companyPositive solar growth fundamentals and lower financing costs
Ascent Resources Utica Holdings, LLC, 7.000%, 11/01/2026Oil and gas production companyHigher forecast for natural gas prices following lower associated natural gas prices
EnLink Midstream LLC, 5.375%, 06/01/2029Gathering and processing MLPImproved commodity prices leading to stronger counterparties along with lower interest rate environment
Tallgrass Energy LPMidstream natural gas/natural gas liquids pipeline companyAcquisition by Blackstone
   
Bottom five contributorsCompany typePerformance driver
Energy Transfer LPMidstream natural gas/natural gas liquids pipeline MLPConcern Dakota Access Pipeline operations may be halted due to potential need for Environmental Impact Statement
Targa Resources Corp.Gathering and processing companyConcern about prolonged slowdown in production growth
Plains GP Holdings, L.P.Midstream crude oil pipeline companyReduced crude oil volume outlook
TransCanada Corporation, 5.625%, 05/20/2075Natural gas pipeline companyUncertainty about pipeline viability and interest rate level over long-term
ONEOK, IncMidstream natural gas/natural gas liquids pipeline companyConcern about declining crude oil volumes negatively impacting natural gas and natural gas liquids (NGL) volumes

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)
  
18Tortoise



 
 
2020 Annual Report | November 30, 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 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 3.2% as compared to 3rd quarter 2020, primarily due to lower distributions from investments within the fund’s portfolio. Operating expenses, consisting primarily of fund advisory fees, increased slightly during the quarter. Total leverage costs decreased approximately 4.1% as compared to 3rd quarter 2020 due to lower interest rates during the quarter. As a result of the changes in income and expenses, DCF decreased approximately 4.4% as compared to 3rd quarter 2020. The fund had net realized gains on investments of approximately $0.5 million during 4th quarter 2020.

The fund paid monthly distributions of $0.05 per share during 4th quarter 2020, no change from the prior quarter and a decrease of approximately 60% from 4th quarter 2019. The fund’s Board of Directors has announced monthly distributions of $0.05 per share are expected to be paid during 1st quarter 20201. The fund has paid cumulative distributions to stockholders of $17.825 per share since its inception in July 2009.

The Key Financial Data table discloses the calculation of DCF and should be read in conjunction with this discussion. The difference between income from investments in the DCF calculation and total investment income as reported in the Statement of Operations, is reconciled as follows: (1) U.S. generally accepted accounting principles (GAAP), recognizes distribution income from MLPs, common stock and other investments on their ex-dates, whereas the DCF calculation may reflect distribution income on their pay dates; (2) GAAP recognizes that a significant portion of the cash distributions received from MLPs, common stock and other investments are characterized as a return of capital and therefore excluded from investment income, whereas the DCF calculation includes the return of capital; (3) income from investments in the DCF calculation includes the value of dividends paid-in-kind (additional stock or units), whereas such amounts may not be included as income for GAAP purposes; and (4) amortization of premium or discount for all securities is calculated using the yield to worst methodology for GAAP purposes while yield to call is used in calculating amortization for long-dated hybrid securities in the DCF calculation. The treatment of expenses in the DCF calculation also differs from what is reported in the Statement of Operations. In addition to the total operating expenses, including fee waiver, as disclosed in the Statement of Operations, the DCF calculation reflects interest expense and realized and unrealized gains (losses) on interest rate swap settlements as leverage costs.

“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2020 (in thousands):

     YTD 2020     4th Qtr 2020
Net Investment Income$2,431$472
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital3,795822
       Other50
              DCF$      6,276$         1,294

Leverage

The fund’s leverage utilization increased $0.1 million as compared to 3rd quarter 2020 and represented 22.5% of total assets at November 30, 2020. During the period, the fund maintained compliance with its applicable coverage ratios. At year-end, including the impact of interest rate swaps, approximately 92% of the leverage cost was fixed, the weighted-average maturity was 3.0 years and the weighted-average annual rate on leverage was 3.16%. 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.tortoiseecofin.com.

(unaudited)
 
Tortoise19



 
 
 
 
TPZ Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

Year Ended November 30,20192020
    2019    2020    Q4(1)    Q1(1)    Q2(1)    Q3(1)    Q4(1)
Total Income from Investments
      Interest earned on corporate bonds$5,437$4,366$1,331$1,311$1,116$1,013$926
      Distributions and dividends
            from investments, net of
            foreign taxes withheld7,6324,5781,9751,924800914940
      Dividends paid in kind175164988
            Total from investments13,2448,9603,3553,2431,9241,9271,866
 
Operating Expenses Before
      Leverage Costs
      Advisory fees1,8251,196440426251261258
      Other operating expenses521503109141120116126
2,3461,699549567371377384
      Distributable cash flow before
            leverage costs10,8987,2612,8062,6761,5531,5501,482
      Leverage costs(2)1,640985382367234196188
            Distributable Cash Flow(3)$9,258$6,276$2,424$2,309$1,319$1,354$1,294
 
Net realized gain (loss) on
      investments and foreign currency
      translation, for the period$4,740$(25,728)$4,288$1,376$(27,995)$351$540
As a percent of average total assets(4)
      Total from investments6.89%6.98%7.23%7.35%6.59%7.00%6.79%
      Operating expenses before
            leverage costs1.22%1.32%1.18%1.28%1.27%1.37%1.40%
      Distributable cash flow before
            leverage costs5.67%5.66%6.05%6.07%5.32%5.63%5.39%
As a percent of average net assets(4)
      Total from investments9.62%9.63%10.25%10.18%10.12%9.05%8.94%
      Operating expenses before
            leverage costs1.70%1.83%1.68%1.78%1.95%1.77%1.84%
      Leverage costs1.19%1.06%1.17%1.15%1.23%0.92%0.90%
      Distributable cash flow6.73%6.74%7.40%7.25%6.94%6.36%6.20%
 
Selected Financial Information
Distributions paid on common stock$10,427$7,297$2,607$2,607$2,607$1,043$1,040
Distributions paid on common stock
      per share1.50001.05000.37500.37500.37500.15000.1500
Total assets, end of period  177,843  116,212  177,843  165,718  109,703  111,838  116,212
Average total assets during period(5)192,260128,284186,087177,506116,136109,506110,592
Leverage(6)54,10026,20054,10052,90024,90026,10026,200
Leverage as a percent of total assets30.4%22.5%30.4%31.9%22.7%23.3%22.5%
Net unrealized depreciation,
      end of period(7,471)(9,695)(7,471)(17,866)(15,664)(14,689)(9,695)
Net assets, end of period123,01589,426123,015112,09584,32285,23289,426
Average net assets during period(7)137,70193,027131,313128,16775,64784,67183,906
Net asset value per common share17.7013.0117.7016.1312.1312.2613.01
Market value per common share15.579.9915.5714.719.789.249.99
Shares outstanding (000’s)6,9516,8736,9516,9516,9516,9516,873

(1)Q1 is the period from December through February. Q2 is the period from March through May. Q3 is the period from June through August. Q4 is the period from September through November.
(2)Leverage costs include interest expense, interest rate swap expenses and other recurring leverage expenses.
(3)“Net investment income (loss)” on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow (“DCF”): increased by the return of capital on distributions, the dividends paid in stock and increased liquidation value and the premium on dividends paid in kind; and decreased by realized and unrealized gains (losses) on interest rate swap settlements.
(4)Annualized for periods less than one year.
(5)Computed by averaging month-end values within each period.
(6)Leverage consists of outstanding borrowings under the revolving credit facility.
(7)Computed by averaging daily net assets within each period.

20Tortoise



 
 
2020 Annual Report | November 30, 2020
 
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

TEAF realized positive price appreciation in all sectors of the portfolio during fourth fiscal quarter. Integrated utilities and renewables companies in the portfolio continued strong performance during the period, benefitting from de-carbonization and ESG tailwinds. Additionally, energy infrastructure, which had been under pressure most of the year, rebounded strongly during the fourth fiscal quarter on the prospects of strengthening demand in 2021 as a result of COVID-19 vaccine announcements. Direct sustainable investments continued to perform well during the fiscal quarter. As a reminder, we currently have a mix of operating assets and assets under construction in the portfolio. Assets under construction are on-time and on-budget, and expected to enter service in late 2020 and early 2021.

We believe the portfolio is positioned well heading into 2021 to benefit from several key themes, including de-carbonization of global power generation, renewable infrastructure investment and growing demand for natural gas globally. We expect to see integrated utilities and renewables companies execute on their growing backlog of projects, driving solid cash flow growth in 2021. We also expect rebounding LNG exports and prices to increase natural gas demand year-over-year, which should benefit natural gas infrastructure companies in the portfolio.

We continue to progress on transitioning the portfolio to the targeted allocation of 60% direct investments. As of November 30, 2020, TEAF’s total direct investment commitments were approximately $117 million or approximately 48% of the portfolio. As previously mentioned, we have completed the fund’s allocation to direct sustainable and energy infrastructure investments. We expect to reach the targeted allocation for direct investments in the first half of 2021.

Public Energy Infrastructure

Public energy infrastructure equities performed well during the fourth fiscal quarter, driven by the expectation that global energy demand rebounds strongly in 2021 following positive COVID-19 vaccine announcements in November.
 
Commodity prices (crude oil and global LNG) strengthened during the period, driving positive sentiment in the sector. We expect stronger LNG demand in 2021 to support volumes for natural gas infrastructure companies in 2021.
 
We continue to see capital discipline from portfolio companies, which we expect to drive strong free cash flow generation in 2021. Increasing free cash flow and lower debt levels are expected to support valuation of the sector moving forward.

Private Energy Infrastructure

TEAF participated in a Series A convertible preferred issuance by Enterprise Products Partners (EPD) during the fourth fiscal quarter.

EPD is a leading midstream infrastructure company in North America providing services to producers and consumers of natural gas, NGLs, crude oil, refined products and petrochemicals.
 
The preferred security pays a current coupon of 7.25%.

Our private energy deals performed extremely well during the period, driven by strong tailwinds in the renewable energy sector.

Public Sustainable Infrastructure

Public sustainable infrastructure equities had a strong fourth fiscal quarter driven primarily by the performance of renewable developers and operators. Canadian renewables companies performed extremely well during the period.
 
The EU confirmed its target to reduce emissions 55% by 2030 (vs 1990), outlined further plans to boost renewables investment (with respect to offshore wind capacity) and the UK announced its Green Plan, including its interest in green hydrogen and a ban on the sale of traditional combustion engine cars by 2030 (5 years earlier than the last plan).

(unaudited)
 
Tortoise21



 
 
 
 
Tortoise
Essential Assets Income Term Fund (TEAF) (continued)
 

Moreover, the anticipation of a Biden administration is generating hopes that his $2tn climate change investment program will further boost renewables growth prospects and accelerate the sector’s transformation.
 
Finally, China announced its target to achieve net zero before 2060, a very important objective for a country that relies heavily on coal. On that basis, we look forward to the United Nation Climate Change Conference (COP-26) in November 2021 where we should expect to hear more commitments about de-carbonization.
 
Aside from government actions, corporates have been active in announcing plans to migrate to net zero and green their supply chain. All these developments are positive and we expect growth to continue unabated in the sustainable infrastructure space.

Private Sustainable Infrastructure

TEAF did not invest in any additional private sustainable infrastructure projects during the fourth fiscal quarter as the fund previously reached its target allocation.
 
To date, the fund has invested approximately $52 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.
 
One of the solar projects in Massachusetts was placed into service in December 2020 and expect the second Massachusetts solar project to be online in first half of 2021.

Social Infrastructure

TEAF completed a debt investment in Drumlin Reserve during the fourth fiscal quarter. Drumlin Reserve is an existing 154-unit senior living community located in Cottage Grove, Wisconsin. The community provides Independent Living, Assisted Living and Memory Care services and has held steady levels of occupancy despite COVID-19. TEAF invested in two tranches of debt, for a total of approximately $2.8 million.

 

TEAF completed a debt investment in PureCycle Technologies (PCT) during the fourth fiscal quarter. PCT will use the proceeds to fund the construction and operation of a plastics recycling facility in Iroton, Ohio. When complete, the project will use proprietary, non-chemical technology to recycle polypropylene from post-consumer plastics into an ultra-pure form. Currently, less than 2% of polypropylene is recycled per year due to limitations of current recycling methods. All of the annual offtake volume produced by the project has been contracted under long-term LOIs with large, well-known industry participants at premium pricing. PCT has entered into long-term agreements to secure more than 100% of the project’s required feedstock, most of which would otherwise end up in landfills. TEAF invested $9 million in the senior secured bonds.

2020 fiscal year summary     
Distributions paid per share (fiscal year 2020)$1.1010
Monthly distributions paid per share$0.0750
Distribution rate (as of 11/30/2020)6.9%
Quarter-over-quarter distribution increase (decrease)0.0%
Year-over-year distribution increase (decrease)(30.9)%
Cumulative distribution to stockholders
       since inception in July 2009$1.8605
Market-based total return(8.7)%
NAV-based total return(1.6)%
Premium (discount) to NAV (as of 11/30/2020)(17.7)%

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)
 
22Tortoise



 
 
2020 Annual Report | November 30, 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 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 increased approximately 11% as compared to 3rd quarter 2020, primarily due to an increase in premiums received from call options written. Operating expenses, consisting primarily of fund advisory fees, increased approximately 23% during the quarter, primarily due to a one-time increase in operating expenses partially offset by lower asset-based fees. Total leverage costs decreased approximately 8.3% as compared to 3rd quarter 2020, primarily due to lower interest rates during the quarter. As a result of the changes in income and expenses, DCF increased approximately 7.5% as compared to 3rd quarter 2020. The fund had net realized gains on investments of approximately $5.4 million during 4th quarter 2020.

The fund paid monthly distributions of $0.075 per share during 4th quarter 2020, no change from the prior quarter and a decrease of approximately 31% from 4th quarter 2019. The fund’s Board of Directors has declared monthly distributions of $0.075 per share to be paid during 1st quarter 2020. The fund has paid cumulative distributions to stockholders of $1.8605 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 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.

“Net Investment Income (Loss)” on the Statement of Operations is adjusted as follows to reconcile to DCF for YTD and 4th quarter 2020 (in thousands):

     YTD 2020     4th Qtr 2020
Net Investment Income (Loss),
       before income taxes$7,451$         (3,644)
Adjustments to reconcile to DCF:
       Distributions characterized as
              return of capital9,8806,559
       Net premiums on options written3,125967
       Return of principal excluded
              for DCF purposes(5,194)
       Amortization on certain investments(1,126)(322)
       Other(251)(79)
              DCF$     13,885$3,481

Leverage

The fund’s leverage utilization increased $0.6 million as compared to 3rd quarter 2020. The fund utilizes all floating rate leverage that had an interest rate of 0.95% and represented 12.6% of total assets at year-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.tortoiseecofin.com

(unaudited)
 
Tortoise23



 
 
 
 
TEAF Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below regarding Distributable Cash Flow and Selected Financial Information is supplemental non-GAAP financial information, which the fund believes is meaningful to understanding operating performance. The Distributable Cash Flow Ratios include the functional equivalent of EBITDA for non-investment companies, and the fund believes they are an important supplemental measure of performance and promote comparisons from period-to-period. This information is supplemental, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

Period from
March 29,
2019(1)
throughYear Ended
November 30,November 30,20192020
   2019   2020   Q4(1)   Q1(1)   Q2(1)   Q3(1)   Q4(1)
Total Income from Investments
       Interest earned on bonds and notes$3,109$6,332$1,397$1,488$1,571$1,669$1,604
       Distributions and dividends
              from investments, net of
              foreign taxes withheld9,6168,5832,2352,2162,2571,9982,112
       Distributions paid in kind2061491447475
       Net premiums on options written3,9653,1251,4001,217372569967
              Total from investments16,89618,1895,1764,9954,2754,2364,683
 
Operating Expenses Before
       Leverage Costs
       Advisory fees2,0993,033761772679797785
       Other operating expenses470788203177155116340
2,5693,8219649498349131,125
       Distributable cash flow before
              leverage costs14,32714,3684,2124,0463,4413,3233,558
       Leverage costs(2)6204832292221008477
              Distributable Cash Flow(3)$13,707$13,885$3,983$3,824$3,341$3,239$3,481
 
Net realized loss on investments
       and foreign currency translation,
       for the period$(12,936)$(37,958)$(9,697)$(1,758)$(37,365)$(4,186)$5,351
As a percent of average total assets(4)
       Total from investments8.89%11.06%7.46%7.24%7.57%7.18%8.00%
       Operating expenses before
              leverage costs1.35%2.32%1.39%1.38%1.48%1.55%1.92%
       Distributable cash flow before
              leverage costs7.54%8.74%6.07%5.86%6.09%5.63%6.08%
As a percent of average net assets(4)
       Total from investments9.90%12.80%8.49%8.13%9.18%8.26%9.22%
       Operating expenses before
              leverage costs1.51%2.69%1.58%1.55%1.79%1.78%2.21%
       Leverage costs0.36%0.34%0.38%0.36%0.21%0.16%0.15%
       Distributable cash flow8.03%9.77%6.53%6.22%7.18%6.32%6.86%
 
Selected Financial Information
Distributions paid on common stock$10,247$14,854$4,392$4,391$4,392$3,036$3,035
Distributions paid on common stock
       per share0.75951.10100.32550.32550.32550.22500.2250
Total assets, end of period271,915246,112271,915264,801234,072237,689246,112
Average total assets during period(5)280,814243,000278,477277,296224,806234,695235,505
Leverage(6)32,00031,10032,00034,60030,90030,50031,100
Leverage as a percent of total assets11.8%12.6%11.8%13.1%13.2%12.8%12.6%
Net unrealized appreciation
       (depreciation), end of period(15,821)5,259(15,821)(19,861)(18,369)(3,411)5,259
Net assets, end of period237,461213,825237,461228,885196,262206,277213,825
Average net assets during period(7)252,217210,055244,483247,031185,254203,958204,319
Net asset value per common share17.6015.8517.6016.9714.5515.2915.85
Market value per common share15.6013.0415.6015.3210.7311.2013.04
Shares outstanding (000’s)13,49113,49113,49113,49113,49113,49113,491

(1)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.
(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 the return of capital on distributions and the net premiums on options written and decreased by amortization on certain investments.
(4)Annualized for periods less than one year.
(5)Computed by averaging month-end values within each period.
(6)Leverage consists of outstanding borrowings under the margin loan facility.
(7)Computed by averaging daily net assets within each period.

24Tortoises



 
 
2020 Annual Report | November 30, 2020
 
TYG Consolidated Schedule of Investments
November 30, 2020
 

     Shares/Units     Fair Value
Master Limited Partnerships — 80.2%(1)
Crude Oil Pipelines — 17.3%(1)
United States — 17.3%(1)
BP Midstream Partners LP588,860$6,677,672
NuStar Energy L.P.1,168,07115,523,664
Plains All American Pipeline, L.P.2,606,36820,694,562
Shell Midstream Partners, L.P.974,2159,995,446
52,891,344
Natural Gas/Natural Gas Liquids Pipelines — 23.1%(1)
United States — 23.1%(1)
DCP Midstream, LP886,83014,322,305
Energy Transfer LP2,783,86317,204,273
Enterprise Products Partners L.P.(2)2,007,97938,954,793
70,481,371
Natural Gas Gathering/Processing — 4.1%(1)
United States — 4.1%(1)
Western Midstream Partners, LP971,07112,526,816
Renewable Infrastructure — 6.8%(1)
United States — 6.8%(1)
Enviva Partners LP90,9444,059,740
Nextera Energy Partners LP264,25316,772,138
20,831,878
Refined Product Pipelines — 28.9%(1)
United States — 28.9%(1)
Holly Energy Partners, L.P.365,3404,946,704
Magellan Midstream Partners, L.P.885,53736,439,848
MPLX LP1,652,63534,771,440
Phillips 66 Partners LP450,67912,114,252
88,272,244
Total Master Limited Partnerships
       (Cost $317,428,809)245,003,653
      
Common Stock — 27.1%(1)
Renewable Infrastructure — 3.9%(1)
United States — 3.9%(1)
Algonquin Power Utilities Corp.271,759 4,261,181
Atlantica Sustainable
       Infrastructure PLC123,6004,250,604
Clearway Energy Inc.118,0003,453,860
11,965,645
Natural Gas/Natural Gas Liquids Pipelines — 19.9%(1)
United States — 19.9%(1)
Kinder Morgan Inc.986,04914,179,385
ONEOK, Inc.480,23717,226,101
The Williams Companies, Inc.1,402,28829,420,002
60,825,488
Natural Gas Gathering/Processing — 3.3%(1)
United States — 3.3%(1)
Equitrans Midstream Corp.1,241,82810,133,318
Total Common Stock
       (Cost $77,159,382)82,924,451
 
Preferred Stock — 12.3%(1)
Natural Gas/Natural Gas Liquids Pipelines — 4.0%(1)
United States — 4.0%(1)
Altus Midstream Company, 7.000%(3)(4)10,42712,180,492
Natural Gas Gathering/Processing — 7.2%(1)
United States — 7.2%(1)
Targa Resources Corp., 9.500%(3)(4)21,75821,888,112
Renewable Infrastructure — 1.1%(1)
United States — 1.1%(1)
Nextera Energy Inc.72,0163,523,743
Total Preferred Stock
       (Cost $32,324,569)37,592,347

See accompanying Notes to Financial Statements.
 
Tortoise25



 
 
 
 
TYG Consolidated Schedule of Investments (continued)
November 30, 2020
 

     Shares/Units     Fair Value
Corporate Bonds — 1.2%(1)
Refined Product Pipelines — 0.3%(1)
United States — 0.3%(1)
Buckeye Partners,
       6.375%, 01/22/20781,200,000$816,000
Natural Gas Gathering/Processing — 0.9%(1)
United States — 0.9%(1)
Enlink Midstream Partners,
       6.000%, Perpetual5,100,0002,805,000
Total Corporate Bonds
       (Cost $4,912,598)3,621,000
 
Convertible Note — 1.3%(1)
Solar — 1.3%(1)
Grand Cayman — 1.3%(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(3)(4)
       (Cost $1,307,000)1,307,0003,954,420
 
Private Investment — 3.4%(1)
Renewable Infrastructure — 3.4%(1)
United States — 3.4%(1)
TK NYS Solar Holdco, LLC(3)(4)(5)
       (Cost $52,206,469)N/A10,365,844
 
Special Purpose Acquisition Company Units — 6.0%(1)
Energy Technology — 6.0%(1)
United States — 6.0%(1)
ArcLight Clean Transition Corp.170,6081,770,911
Bluescape Opportunities
       Acquisition Corp.175,3381,756,887
Climate Change Crisis Real Impact
       Acquisition Corp.170,0031,800,332
Northern Genesis Acquisition Corp289,3124,391,756
Star Peak Energy Transition Corp172,6221,820,299
Peridot Acquisition Corp.162,0091,676,793
Qell Acquisition Corp.113,8051,358,832
Rice Acquisition Corp.174,7531,810,441
Spartan Acquisition Corp.195,1562,066,702
Total Special Purpose
       Acquisition Company Units
       (Cost $16,243,625)18,452,953
       
Short-Term Investment — 0.0%(1)
United States Investment Company — 0.0%(1)
Invesco Government & Agency Portfolio — Institutional Class,
       0.01%(6) (Cost $140,958)140,958 140,958
Total Investments — 131.6%(1)
     (Cost $501,723,410)402,055,626
Interest Rate Swap Contracts — (0.1)%(1)
$10,000,000 notional — net unrealized depreciation(7)(188,015)
Other Assets and Liabilities — 7.9%(1)23,986,566
Senior Notes — (28.8)%(1)(87,926,667)
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (10.5)%(1)(32,300,000)
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)$305,627,510

(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 $188,015.
(3)Restricted securities have a total fair value of $48,388,868, which represents 15.8% 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)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.
(6)Rate indicated is the current yield as of November 30, 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.
 
26Tortoise



 
 
2020 Annual Report | November 30, 2020
 
NTG Schedule of Investments
November 30, 2020
 

     Shares/Units     Fair Value
Master Limited Partnerships — 86.1%(1)
Crude Oil Pipelines — 17.4%(1)
United States — 17.4%(1)
BP Midstream Partners LP522,549$5,925,706
NuStar Energy L.P.277,4903,687,842
Plains All American Pipeline, L.P.1,452,13911,529,984
Shell Midstream Partners, L.P.478,9874,914,407
26,057,939
Natural Gas/Natural Gas Liquids Pipelines — 26.3%(1)
United States — 26.3%(1)
DCP Midstream, LP525,1608,481,334
Energy Transfer LP1,462,1419,036,031
Enterprise Products Partners L.P.1,127,49321,873,364
39,390,729
Natural Gas Gathering/Processing — 4.1%(1)
United States — 4.1%(1)
Western Midstream Partners, LP473,3736,106,512
Renewable Infrastructure — 8.8%(1)
United States — 8.8%(1)
Enviva Partners LP50,6402,260,570
Nextera Energy Partners LP172,09910,923,124
13,183,694
Refined Product Pipelines — 29.4%(1)
United States — 29.4%(1)
Magellan Midstream Partners, L.P.502,67220,684,953
MPLX LP894,03018,810,391
Phillips 66 Partners LP164,2524,415,094
43,910,438
Total Master Limited Partnerships
       (Cost $178,157,973)128,649,312
      
Common Stock — 39.4%(1)
Natural Gas/Natural Gas Liquids Pipelines — 26.2%(1)
United States — 26.2%(1)
Kinder Morgan Inc.603,686 8,681,005
ONEOK, Inc.304,53310,923,599
The Williams Companies, Inc.935,65419,630,021
39,234,625
Natural Gas Gathering/Processing — 4.4%(1)
United States — 4.4%(1)
Equitrans Midstream Corp.707,2415,771,089
Hess Midstream Partners LP45,146813,982
6,585,071
Renewable Infrastructure — 8.8%(1)
United States — 8.8%(1)
Algonquin Power Utilities Corp.356,3005,586,784
Atlantica Sustainable
       Infrastructure PLC162,0505,572,900
Clearway Energy Inc.66,7781,954,592
13,114,276
Total Common Stock
       (Cost $53,922,989)58,933,972

See accompanying Notes to Financial Statements.
  
Tortoise27



 
 
 
 
NTG Schedule of Investments (continued)
November 30, 2020
 

     Shares/Units     Fair Value
Preferred Stock — 15.4%(1)
Natural Gas Gathering/Processing — 8.3%(1)
United States — 8.3%(1)
Targa Resources Corp., 9.500% (2)(3)12,252$12,325,266
Natural Gas/Natural Gas Liquids Pipelines — 5.8%(1)
United States — 5.8%(1)
Altus Midstream Company, 7.000%(2)(3)7,4568,709,349
Renewable Infrastructure — 1.3%(1)
United States — 1.3%(1)
Nextera Energy Inc.39,0951,912,918
Total Preferred Stock
       (Cost $19,715,371)22,947,533
 
Corporate Bond — 1.3%(1)
Natural Gas Gathering/Processing — 1.3%(1)
United States — 1.3%(1)
Enlink Midstream Partners,
       6.000%, Perpetual
       (Cost $2,605,322)3,400,0001,870,000
 
Convertible Note — 1.8%(1)
Solar — 1.8%(1)
Grand Cayman — 1.8%(1)
Sunnova Energy Intl Inc.,
       9.75%, 04/30/2025(2)(3)
       (Cost $910,000)910,0002,753,269
 
Special Purpose Acquisition Company Units — 6.9%(1)
Energy Technology — 6.9%(1)
United States — 6.9%(1)
ArcLight Clean Transition Corp.94,940985,477
Bluescape Opportunities
       Acquisition Corp.98,145983,413
Climate Change Crisis Real Impact
       Acquisition Corp.95,0431,006,505
Peridot Acquisition Corp.90,157933,125
Qell Acquisition Corp.63,626759,694
Rice Acquisition Corp.97,9761,015,031
Spartan Acquisition Corp.109,1991,156,417
Northern Genesis Acquisition Corp160,1082,430,439
Star Peak Energy Transition Corp94,757999,213
Total Special Purpose
       Acquisition Company Units
       (Cost $9,043,739)10,269,314
       
Short-Term Investment — 0.1%(1)
United States Investment Company — 0.1%(1)
First American Government Obligations Fund,
       0.05%(4) (Cost $97,036)97,036 97,036
Total Investments — 151.0%(1)
     (Cost $264,452,430)225,520,436
Other Assets and Liabilities — (5.4%)(1)(8,092,174)
Credit Facility Borrowings — (26.8)%(1)(40,000,000)
Senior Notes — (10.3)%(1)(15,320,855)
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (8.5)%(1)(12,700,000)
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)$149,407,407

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Restricted securities have a total fair value of $23,787,884, which represents 15.9% 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)Rate indicated is the current yield as of November 30, 2020.

See accompanying Notes to Financial Statements.
 
28Tortoise



 
 
2020 Annual Report | November 30, 2020
 
TTP Schedule of Investments
November 30, 2020
 

     Shares/Units     Fair Value
Common Stock — 86.9%(1)
Crude Oil Pipelines — 27.7%(1)
Canada — 21.9%(1)
Gibson Energy Inc50,815$816,202
Enbridge Inc.175,5005,477,355
Inter Pipeline Ltd.93,257929,195
Pembina Pipeline Corporation130,6373,331,560
United States — 5.8%(1)
Plains GP Holdings, L.P.352,3562,794,183
13,348,495
Renewable Infrastructure — 3.8%(1)
United States — 3.8%(1)
NextEra Energy Partners, LP29,0301,842,534
Natural Gas Gathering/Processing — 8.8%(1)  
United States — 8.8%(1)
Equitrans Midstream Corporation307,3432,507,919
Hess Midstream LP78,7841,420,476
Rattler Midstream LP13108
Targa Resources Corp.11,747276,055
4,204,558
Natural Gas/Natural Gas Liquids Pipelines — 46.6%(1)  
Canada — 13.0%(1)
Keyera Corp.73,1521,262,290
TC Energy Corporation113,6234,991,458
United States — 33.6%(1)
Kinder Morgan Inc.389,5085,601,125
ONEOK, Inc.108,8423,904,163
The Williams Companies, Inc.317,8496,668,472
22,427,508
Total Common Stock
       (Cost $54,640,622)41,823,095
 
Master Limited Partnerships — 34.6%(1)  
Crude Oil Pipelines — 4.4%(1)
United States — 4.4%(1)
BP Midstream Partners LP14,840168,286
NuStar Energy L.P.32,670434,184
PBF Logistics LP24,710230,544
Shell Midstream Partners, L.P.124,8251,280,705
2,113,719
Natural Gas/Natural Gas Liquids Pipelines — 12.0%(1)  
United States — 12.0%(1)
DCP Midstream, LP39,058630,787
Energy Transfer LP317,7871,963,924
Enterprise Products Partners L.P.163,2363,166,778
5,761,489
Natural Gas Gathering/Processing — 2.6%(1)  
United States — 2.6%(1)
Noble Midstream Partners LP24,065229,339
Western Midstream Partners, LP79,7321,028,543
1,257,882
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP4,940104,876
Refined Product Pipelines — 15.4%(1)
United States — 15.4%(1)
Holly Energy Partners, L.P.41,962568,165
Magellan Midstream Partners, L.P.56,6302,330,325
MPLX LP160,0973,368,441
Phillips 66 Partners LP42,1661,133,422
7,400,353
Total Master Limited Partnerships
       (Cost $22,297,918)16,638,319

See accompanying Notes to Financial Statements.
 
Tortoise29



 
 
 
 
TTP Schedule of Investments (continued)
November 30, 2020
 

     Shares/Units     Fair Value
Preferred Stock — 11.9%(1)
Natural Gas/Natural Gas Liquids Pipelines — 1.4%(1)  
United States — 1.4%(1)
Altus Midstream Company, 7.000%(2)(3)554$647,057
Natural Gas Gathering/Processing — 4.4%(1)  
United States — 4.4%(1)
Targa Resources Corp., 9.500%(2)(3)2,1082,120,606
Renewable Infrastructure — 6.1%(1)
United States — 6.1%(1)
Sempra Energy, 6.000%, 01/15/202128,8112,954,856
Total Preferred Stock
       (Cost $5,260,216)5,722,519
      
Special Purpose Acquisition Company Units — 6.6%(1)     
Energy Technology — 6.6%(1)
United States — 6.6%(1)
ArcLight Clean Transition Corp.29,781309,127
Bluescape Opportunities
       Acquisition Corp.29,721297,804
Climate Change Crisis Real Impact
       Acquisition Corp.29,790315,476
Northern Genesis Acquisition Corp48,873741,892
Peridot Acquisition Corp.28,491294,882
Qell Acquisition Corp.19,942238,107
Rice Acquisition Corp.29,941310,189
Spartan Acquisition Corp.32,365342,745
Star Peak Energy Transition Corp29,302308,990
Total Special Purpose
       Acquisition Company Units
       (Cost $2,783,386)3,159,212
 
Short-Term Investment — 3.2%(1)  
United States Investment Company — 3.2%(1)  
Invesco Government & Agency Portfolio — Institutional Class,     
       0.01%(4) (Cost $1,565,040)1,565,0401,565,040
 
Total Investments — 143.2%(1)  
     (Cost $86,547,182)68,908,185
Other Assets and Liabilities — (0.5)%(1)  (242,706)
Senior Notes — (30.0)%(1)(14,457,143)
Mandatory Redeemable Preferred Stock  
       at Liquidation Value — (12.7)%(1)�� (6,100,000)
 
Total Net Assets Applicable to  
     Common Stockholders — 100.0%(1)  $48,108,336

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Restricted securities have a total fair value of $2,767,663, which represents 5.8% 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)Rate indicated is the current yield as of November 30, 2020.

See accompanying Notes to Financial Statements.
 
30Tortoise



 
 
2020 Annual Report | November 30, 2020
 
NDP Schedule of Investments
November 30, 2020
 

     Shares/Units     Fair Value
Common Stock — 94.5%(1)
Crude Oil Pipelines — 4.9%(1)
Canada — 4.9%(1)
Enbridge Inc.47,200$1,473,112
Renewable Infrastructure — 6.8%(1)
United States — 6.8%(1)
NextEra Energy, Inc.15,2001,118,568
Sempra Energy7,500956,100
2,074,668
Natural Gas/Natural Gas Liquids Pipelines — 23.7%(1)  
United States — 23.7%(1)
Cheniere Energy, Inc.(2)38,9002,205,241
Kinder Morgan Inc.104,4001,501,272
TC Energy Corporation28,7481,262,900
The Williams Companies, Inc.105,5002,213,390
7,182,803
Oil and Gas Production — 59.1%(1)
United States — 59.1%(1)
BP PLC39,283768,375
Cabot Oil & Gas Corporation125,7002,202,264
Chevron Corporation27,3002,380,014
Concho Resources Inc.26,5661,527,014
ConocoPhillips35,5941,408,099
Diamondback Energy, Inc.39,7171,587,091
EOG Resources, Inc.33,0001,547,040
EQT Corporation(2)123,8001,842,144
Parsley Energy, Inc.67,606847,103
Pioneer Natural Resources Company18,7001,880,846
Royal Dutch Shell PLC56,7001,918,728
17,908,718
Total Common Stock
       (Cost $31,270,760)28,639,301
      
Master Limited Partnerships — 9.7%(1)  
Natural Gas/Natural Gas Liquids Pipelines — 6.9%(1)  
United States — 6.9%(1)
Energy Transfer LP116,900722,442
Enterprise Products Partners L.P.71,1001,379,340
2,101,782
Natural Gas Gathering/Processing — 1.2%(1)  
United States — 1.2%(1)
Noble Midstream Partners LP37,208354,592
Refined Product Pipelines — 1.6%(1)
United States — 1.6%(1)
Magellan Midstream Partners, L.P.11,423470,056
Total Master Limited Partnerships
       (Cost $4,381,818)2,926,430
 
Preferred Stock — 6.6%(1)
Natural Gas Gathering/Processing — 6.6%(1)  
United States — 6.6%(1)
Targa Resources Corp., 9.500%(3)(4)
       (Cost $1,688,542)1,9972,008,943
       
Special Purpose Acquisition Company Units — 5.4%(1)     
Energy Technology — 5.4%(1)
United States — 5.4%(1)
ArcLight Clean Transition Corp.15,543161,336
Bluescape Opportunities Acquisition
       Corp.15,155151,853
Climate Change Crisis Real Impact
       Acquisition Corp.15,471163,838
Northern Genesis Acquisition Corp25,810391,796
Peridot Acquisition Corp.14,885154,060
Qell Acquisition Corp.10,357123,663
Rice Acquisition Corp.15,364159,171
Spartan Acquisition Corp.17,033180,379
Star Peak Energy Transition Corp15,646164,987
Total Special Purpose
       Acquisition Company Units
       (Cost $1,453,329)1,651,083
      
Short-Term Investment — 0.3%(1)
United States Investment Company — 0.3%(1)  
Invesco Government & Agency Portfolio — Institutional Class,     
       0.01%(5) (Cost $76,098)76,09876,098
 
Total Investments — 116.5%(1)
     (Cost $38,870,547)35,301,855
Other Assets and Liabilities — 0.0%(1)5,092
Credit Facility Borrowings — (16.5)%(1)(5,000,000)
 
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)$30,306,947

(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 $2,008,943, which represents 6.6% 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 November 30, 2020.

See accompanying Notes to Financial Statements.
 
Tortoise31



 
 
 
 
TPZ Schedule of Investments
November 30, 2020
 

Principal Amount/
     Shares/Units     Fair Value
Corporate Bonds — 74.6%(1)
Crude Oil Pipelines — 8.0%(1)
Canada — 8.0%(1)
Enbridge Inc., 5.500%, 07/15/20777,042,000$7,147,630
Natural Gas/Natural Gas Liquids Pipelines — 25.2%(1)  
United States — 25.2%(1)
Cheniere Corp.,
       7.000%, 06/30/20244,000,0004,617,114
Cheniere Corp.,
       5.875%, 03/31/20252,000,0002,293,490
ONEOK, Inc.,
       4.250%, 02/01/20224,500,0004,641,216
ONEOK, Inc.,
       7.500%, 09/01/20232,000,0002,301,823
Rockies Express Pipeline LLC,
       4.950%, 07/15/2029(2)3,000,0003,022,500
Ruby Pipeline, LLC,
       6.000%, 04/01/2022(2)943,182886,727
Southern Star Central Corp.,
       5.125%, 07/15/2022(2)1,642,0001,644,340
Tallgrass Energy LP,
       5.500%, 01/15/2028(2)3,250,0003,095,625
22,502,835
Natural Gas Gathering/Processing — 25.9%(1)  
United States — 25.9%(1)
Antero Midstream Partners LP,
       5.750%, 03/01/2027(2)2,000,0001,822,500
Blue Racer Midstream, LLC,
       6.625%, 07/15/2026(2)5,900,0005,546,000
EnLink Midstream LLC,
       5.375%, 06/01/20293,000,0002,842,500
Hess Corporation,
       5.625%, 02/15/2026(2)4,160,0004,295,200
The Williams Companies, Inc.,
       7.875%, 09/01/20215,000,0005,271,216
The Williams Companies, Inc.,
       4.550%, 06/24/20243,000,0003,370,547
23,147,963
Oil and Gas Production — 3.6%(1)
United States — 3.6%(1)
Ascent Resources Utica Holdings, LLC,
       10.000%, 04/01/2022(2)1,302,0001,311,765
Ascent Resources Utica Holdings, LLC,
       7.000%, 11/01/2026(2)2,000,0001,880,000
3,191,765
Power — 2.3%(1)
United States — 2.3%(1)
Duquesne Light Holdings, Inc.,
       5.900%, 12/01/2021(2)2,000,0002,090,540
Renewable Infrastructure — 5.5%(1)
United States — 5.5%(1)
NextEra Energy, Inc.,
       4.800%, 12/01/20774,500,0004,944,721
Refined Product Pipelines — 4.1%(1)
United States — 4.1%(1)
Buckeye Partners,
       5.600%, 10/15/20442,000,0001,844,900
Buckeye Partners,
       5.850%, 11/15/20432,000,0001,860,000
3,704,900
Total Corporate Bonds
       (Cost $64,442,642)66,730,354
     
Convertible Note — 0.9%(1)
Solar — 0.9%(1)
Grand Cayman — 0.9%(1)
Sunnova Energy Intl Inc.,
       9.750%, 04/30/2025(2)(3)
       (Cost $262,000)262,000792,699
     
Master Limited Partnerships — 24.6%(1)  
Crude Oil Pipelines — 3.3%(1)
United States — 3.3%(1)
BP Midstream Partners LP21,729246,407
NuStar Energy L.P.88,9341,181,933
PBF Logistics LP74,599696,009
Shell Midstream Partners, L.P.77,365793,765
2,918,114
Renewable Infrastructure — 0.6%(1)
United States — 0.6%(1)
Nextera Energy Partners LP8,013508,585
Natural Gas/Natural Gas Liquids Pipelines — 7.0%(1)  
United States — 7.0%(1)
DCP Midstream, LP84,1841,359,572
Energy Transfer LP302,0351,866,576
Enterprise Products Partners L.P.157,2833,051,290
6,277,438
Natural Gas Gathering/Processing — 2.5%(1)  
United States — 2.5%(1)
Noble Midstream Partners LP21,975209,422
Western Midstream Partners, LP154,4341,992,199
2,201,621

See accompanying Notes to Financial Statements.
 
32Tortoise



 
 
2020 Annual Report | November 30, 2020
 
TPZ Schedule of Investments (continued)
November 30, 2020
 

Principal Amount/
     Shares/Units     Fair Value
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP8,074$171,411
Refined Product Pipelines — 11.0%(1)  
United States — 11.0%(1)
Holly Energy Partners, L.P.93,9911,272,638
Magellan Midstream Partners, L.P.65,1322,680,182
MPLX LP226,8044,771,956
Phillips 66 Partners LP44,3251,191,456
9,916,232
Total Master Limited Partnerships
       (Cost $32,024,146)21,993,401
       
Common Stock — 17.1%(1)
Crude Oil Pipelines — 3.4%(1)
United States — 3.4%(1)
Enbridge Inc.53,7411,677,257
Plains GP Holdings, L.P.173,0991,372,675
3,049,932
Natural Gas/Natural Gas Liquids Pipelines — 9.2%(1)  
Canada — 2.4%(1)
TC Energy Corporation48,6672,137,941
United States — 6.8%(1)
Kinder Morgan Inc.214,7093,087,515
ONEOK, Inc.5,606201,087
The Williams Companies, Inc.135,3472,839,580
8,266,123
Natural Gas Gathering/Processing — 2.7%(1)  
United States — 2.7%(1)
EnLink Midstream LLC90,964336,567
Equitrans Midstream Corporation108,596886,143
Hess Midstream LP66,9011,206,225
2,428,935
Power — 1.2%(1)
United States — 1.2%(1)
DTE Energy Company8,1161,021,074
Renewable Infrastructure — 0.6%(1)  
United States — 0.6%(1)
Atlantica Sustainable
       Infrastructure PLC16,523568,226
Total Common Stock
       (Cost $18,827,164)15,334,290
       
Preferred Stock — 4.9%(1)
Natural Gas Gathering/Processing — 1.9%(1)  
United States — 1.9%(1)
Targa Resources Corp., 9.500%(2)(3)1,6851,695,076
Natural Gas Liquids Pipelines — 0.6%(1)
United States — 0.6%(1)
Altus Midstream Company, 7.000%(2)(3)483564,322
Renewable Infrastructure — 2.4%(1)
United States — 2.4%(1)
Sempra Energy, 6.000%, 01/15/202121,1892,173,144
Total Preferred Stock
       (Cost $4,058,191)4,432,542
      
Special Purpose Acquisition Company Units — 6.1%(1)     
Energy Technology — 6.1%(1)
United States — 6.1%(1)
ArcLight Clean Transition Corp.52,972549,849
Bluescape Opportunities
       Acquisition Corp.53,868539,757
Climate Change Crisis Real Impact
       Acquisition Corp.53,355565,029
Northern Genesis Acquisition Corp81,6381,239,265
Peridot Acquisition Corp.50,672524,455
Qell Acquisition Corp.35,718426,473
Rice Acquisition Corp.54,038559,834
Spartan Acquisition Corp.56,247595,656
Star Peak Energy Transition Corp42,121444,166
Total Special Purpose
        Acquisition Company Units
       (Cost $4,808,664)5,444,484
      
Short-Term Investment — 0.1%(1)
United States Investment Company — 0.1%(1)  
Invesco Government & Agency Portfolio — Institutional Class,     
       0.01%(4) (Cost $43,354)43,35443,354
 
Total Investments — 128.3%(1)
     (Cost $124,466,161)114,771,124
Other Assets and Liabilities — 1.0%(1)854,818
Credit Facility Borrowings — (29.3)%(1)(26,200,000)
 
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1)  $89,425,942

(1)Calculated as a percentage of net assets applicable to common stockholders.
(2)Restricted securities have a total fair value of $28,647,294 which represents 32.0% 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)Rate indicated is the current yield as of November 30, 2020.

See accompanying Notes to Financial Statements.
 
Tortoise33



 
 
 
 
TEAF Consolidated Schedule of Investments
November 30, 2020
 
Principal Amount/
    Shares/Units     Fair Value
Common Stock — 38.1%(1)
Natural Gas/Natural Gas Liquids Pipelines — 6.0%(1)  
Australia — 1.1%(1)
APA Group(4)318,729$2,421,508
Italy — 1.8%(1)
Snam SpA(2)693,3603,889,724
United States — 3.1%(1)
Cheniere Energy Inc.(2)(3)(4)39,8922,261,477
ONEOK, Inc.281,004
The Williams Companies, Inc.(4)204,9004,298,802
12,872,515
Natural Gas Gathering/Processing — 3.4%(1)  
United States — 3.4%(1)
Equitrans Midstream Corp.(4)559,5994,566,326
Targa Resources Corp.(2)(4)115,5422,715,237
7,281,563
Other — 1.5%(1)
Australia — 0.7%(1)
Atlas Arteria Ltd.(4)321,3601,528,590
Spain — 0.8%(1)
Ferrovial SA(4)61,3501,706,586
3,235,176
Power — 19.7%(1)
Australia — 1.7%(1)
Spark Infrastructure Group(4)2,368,3153,563,833
Canada — 1.5%(1)
Algonquin Power & Utilities Corp(4)201,4603,156,781
Italy — 2.9%(1)
Enel SpA(2)631,1866,301,846
Portugal — 3.1%(1)
EDP — Energias de Portugal SA(4)1,246,1916,641,755
Spain — 4.2%(1)
Endesa SA177,9505,088,046
Iberdrola SA(2)287,1933,920,800
United States — 3.3%(1)
Covanta Holding Corp(4)272,7753,382,410
Edison International(4)27,7371,701,942
FirstEnergy Corp(4)72,9681,938,030
United Kingdom — 3.0%(1)
National Grid PLC330,2543,735,335
SSE PLC(4)149,1892,667,144
42,097,922
Renewables — 4.9%(1)
Canada — 4.9%(1)
Brookfield Renewable Corp.(4)20,0231,571,066
Innergex Renewable Energy Inc(4)218,3704,321,328
TransAlta Renewables Inc(4)335,7434,637,891
10,530,285
Transportation / Storage — 1.1%(1)
Hong Kong — 1.1%(1)
China Suntien Green Energy Corp.8,675,5392,294,509
Water Infrastructure — 1.5%(1)
United Kingdom — 1.5%(1)
Pennon Group PLC(4)252,1723,179,633
Total Common Stock
       (Cost $76,324,692)81,491,603
      
Master Limited Partnerships — 6.7%(1)  
Natural Gas/Natural Gas Liquids Pipelines — 1.9%(1)  
United States — 1.9%(1)
Enterprise Products Partners L.P.(2)(4)209,0004,054,596
Refined Product Pipelines — 2.0%(1)
United States — 2.0%(1)
MPLX LP(2)(4)206,7614,350,251
Renewables — 2.8%(1)
Canada — 0.8%(1)
Brookfield Renewable Partners LP26,4321,679,909
United States — 2.0%(1)
Enviva Partners LP(4)97,4854,351,730
6,031,639
Total Master Limited Partnerships
       (Cost $10,903,999)14,436,486
      
Corporate Bonds — 15.1%(1)
Education — 0.3%(1)
United States — 0.3%(1)
Village Charter School, Inc., 10.000%,
       12/15/2021800,000600,000
Healthcare — 2.5%(1)
United States — 2.5%(1)
Grace Commons Property,
       15.000%, 10/31/2023(5)1,825,0001,778,023
Grace Commons Property,
       8.000%, 10/31/2021(5)3,650,0003,553,523
5,331,546
Natural Gas Gathering/Processing — 3.8%(1)  
United States — 3.8%(1)
Antero Midstream Partners LP,
       5.750%, 01/15/2028(4)(5)3,750,0003,375,000
Blue Racer Midstream, LLC,
       6.625%, 07/15/2026(4)(5)3,000,0002,820,000
EQT Midstream Partners LP,
       4.75%, 07/15/2023(4)1,750,0001,785,000
7,980,000
Oil and Gas Production — 1.5%(1)
United States — 1.5%(1)
Ascent Resources Utica Holdings, LLC,
       7.000%, 11/01/2026(4)(5)3,500,0003,290,000

See accompanying Notes to Financial Statements.
 
34Tortoise



 
 
 2020 Annual Report | November 30, 2020
 
TEAF Consolidated Schedule of Investments (continued)
November 30, 2020
 
Principal Amount/
    Shares/Units     Fair Value
Project Finance — 5.0%(1)
United States — 5.0%(1)
C2NC Holdings,
       13.000%, 05/01/2027(4)10,715,000$10,758,289
Senior Living — 2.0%(1)
United States — 2.0%(1)
Drumlin Reserve Property LLC,
       16.000%, 10/02/2025(5)1,050,0001,055,211
Drumlin Reserve Property LLC,
       10.000%, 10/02/2025(5)1,705,3111,713,802
Realco Perry Hall MD LLC/OPCO,
       10.000%, 10/01/2024(5)2,280,0001,550,382
4,319,395
Total Corporate Bonds
       (Cost $33,322,352)32,279,230
      
Municipal Bonds — 10.8%(1)
California — 0.2%(1)
California ST Enterprise Dev A
       Rev Bonds,
       10.000%, 06/15/2030380,000357,694
Florida — 0.5%(1)
Florida Development Finance Corp,
       10.000%, 07/01/2025445,000400,500
Florida Development Finance Corp,
       10.000%, 02/15/2028595,000586,843
987,343
Ohio — 4.2%(1)
Southern Ohio Port Authority,
       13.000%, 12/01/20279,000,0009,013,500
Pennsylvania — 1.4%(1)
Philadelphia Authority for Industrial
       Development,
       5.210%, 06/15/20303,135,0003,098,321
Texas — 0.2%(1)
Pioneer Technology & Arts Academy
       Project — Series B,
       10.000%, 01/01/2026410,000369,000
Wisconsin — 4.3%(1)
Public Finance Authority,
       9.000%, 06/01/20298,925,0009,085,293
Public Finance Authority
       Educational Facility Revenue,
       12.000%, 01/01/2029185,000182,467
9,267,760
Total Municipal Bonds
       (Cost $23,050,757)23,093,618
      
Preferred Bonds — 4.7%(1)
Natural Gas Gathering/Processing — 2.5%(1)  
United States — 2.5%(1)
DCP Midstream LP,
       7.375% Perpetuity(4)5,000,0003,668,750
EnLink Midstream Partners LP,
       6.000%, Perpetuity3,000,0001,650,000
5,318,750
Natural Gas/Natural Gas Liquids Pipelines — 2.2%(1)  
United States — 2.2%(1)
Energy Transfer Operating LP,
       6.250%, Perpetuity(4)6,000,0004,781,250
Total Preferred Bonds
       (Cost $13,385,258)10,100,000
      
Construction Note — 1.6%(1)
Renewables — 1.6%(1)
Bermuda — 1.6%(1)
Saturn Solar Bermuda 1 Ltd.,
       8.000%, 12/31/2020
       (Cost $3,778,904)(5)(6)3,510,0003,522,987
      
Convertible Note — 1.6%(1)
Solar — 1.6%(1)
Grand Cayman — 1.6%(1)
Sunnova Energy Intl Inc.,
       9.75%, 04/30/2025
       (Cost $1,090,300)(5)(6)1,098,0003,322,076
      
Preferred Stock — 10.2%(1)
Natural Gas Gathering/Processing — 1.9%(1)  
United States — 1.9%(1)
Targa Resources Corp., 9.500%(5)(6)4,0004,023,920
Natural Gas/Natural Gas Liquids Pipelines — 6.4%(1)  
United States — 6.4%(1)
Altus Midstream Company, 7.000%(5)(6)4,2945,015,933
Crestwood Equity Partners LP, 9.250%(4)512,9093,605,750
Enterprise Products
       Partners L.P., 7.250%(5)(6)5,0005,065,050
13,686,733
Renewables — 0.7%(1)
United States — 0.7%(1)
NextEra Energy Partners LP25,3801,436,254
Water Utilities — 1.2%(1)
United States — 1.2%(1)
Essential Utilities, Inc.43,1482,537,534
Total Preferred Stock
       (Cost $22,297,227)21,684,441

See accompanying Notes to Financial Statements.
 
Tortoise35



 
 
 
 
TEAF Consolidated Schedule of Investments (continued)
November 30, 2020
 
Principal Amount/
     Shares/Units    Fair Value
Private Investments — 22.2%(1)
Natural Gas/Natural Gas Liquids Pipelines — 0.1%(1)  
Mexico — 0.1%(1)
Mexico Pacific Limited LLC (MPL)
       Series A(5)(6)88,889$237,334
Renewables — 22.1%(1)
United States — 22.1%(1)
Renewable Holdco, LLC(5)(6)(7)N/A15,395,885
Renewable Holdco I, LLC(5)(6)(7)N/A25,581,152
Renewable Holdco II, LLC(5)(6)(7)N/A6,216,336
47,193,373
Total Private Investments
       (Cost $48,573,918)47,430,707
      
Special Purpose Acquisition Company Units — 2.4%(1)     
Energy Technology — 2.4%(1)
United States — 2.4%(1)
ArcLight Clean Transition Corp.56,156582,899
Bluescape Opportunities
       Acquisition Corp.57,773578,885
Climate Change Crisis Real Impact
       Acquisition Corp.(4)56,338596,619
Northern Genesis Acquisition Corp.(4)83,7721,271,659
Peridot Acquisition Corp.53,786556,685
Qell Acquisition Corp.37,714450,305
Rice Acquisition Corp.57,928600,134
Star Peak Energy Transition Corp.40,719429,382
Total Special Purpose
       Acquisition Company Units
       (Cost $4,453,443)5,066,568
      
Short-Term Investment — 0.2%(1)  
United States Investment Company — 0.2%(1)  
First American Government Obligations Fund,  
       0.05%(8) (Cost $475,125)475,125475,125
       
Total Investments — 113.6%(1)
       (Cost $237,655,975)242,902,841
Total Value of Options Written
       (Premiums received $216,428)(9) — (0.1)%(1)  (219,521)
Other Assets and Liabilities — 1.0%(1)  2,241,675
Credit Facility Borrowings — (14.5)%(1)  (31,100,000)
      
Total Net Assets Applicable to
       Common Stockholders — 100.0%(1)  $213,824,995

(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 $87,516,614 which represents 40.8% 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)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.
(8)Rate indicated is the current yield as of November 30, 2020.
(9)See Schedule of Options Written and Note 12 to the financial statements for further disclosure.

See accompanying Notes to Financial Statements.
 
36Tortoise



 
 
 2020 Annual Report | November 30, 2020
 
Schedule of Interest Rate Swap Contracts
November 30, 2020
 


TYG
Fixed RateFloating Rate
MaturityNotionalPaid byReceived byUnrealized
Counterparty     Date     Amount    TYG     TYG     Depreciation
The Bank of Nova Scotia09/02/2021$10,000,0002.381%1-month U.S. Dollar LIBOR$(188,015)

Schedule of Options Written
November 30, 2020

TEAF
Call Options Written     Expiration Date  Strike Price  Contracts     Notional Value     Fair Value
Enterprise Products Partners L.P.December 2020$     21.001,565$3,286,500$     (21,910)
Cheniere Energy Inc.December 2020$60.003982,388,000(31,840)
MPLX LPDecember 2020$23.001,5503,565,000(23,250)
Targa Resources Corp.December 2020$29.005781,676,200(7,225)
Targa Resources Corp.December 2020$30.005771,731,000(4,327)
Enel SpADecember 20208.701,2006,226,665(30,203)
Iberdrola SADecember 202011.502,8003,840,970(53,440)
Snam SpADecember 20204.803451,975,356(30,659)
Snam SpADecember 20204.903452,016,509(16,667)
Total Value of Call Options Written (Premiums received $216,428)           $     26,706,200$(219,521)

See accompanying Notes to Financial Statements.
 
Tortoise37



 
 
 
 
Statements of Assets & Liabilities
November 30, 2020
 
     
Tortoise EnergyTortoise
InfrastructureMidstream Energy
  Corp.(1)     Fund, Inc.
Assets         
       Investments in unaffiliated securities at fair value(2)$    391,689,782$    225,520,436
       Investments in affiliated securities at fair value(3)10,365,844
       Cash
       Foreign Currency
       Receivable for investments sold235,670130,408
       Dividends, distributions and interest receivable from investments814,519525,259
       Tax reclaims receivable
       Income tax receivable52,052,354
       Prepaid expenses and other assets680,592272,406
              Total assets455,838,761226,448,509
         
Liabilities
       Call options written, at fair value(4)
       Payable to Adviser551,620300,856
       Accrued directors’ fees and expenses3,2244,493
       Payable for shares repurchased585,258311,047
       Accrued expenses and other liabilities2,279,873512,550
       Unrealized depreciation of interest rate swap contracts188,015
       Current tax liability13,388,9107,929,170
       Deferred tax liability
       Credit facility borrowings13,200,00040,000,000
       Senior notes, net(5)87,831,60715,309,967
       Mandatory redeemable preferred stock, net(6)32,182,74412,673,019
              Total liabilities150,211,25177,041,102
              Net assets applicable to common stockholders$305,627,510$149,407,407
         
Net Assets Applicable to Common Stockholders Consist of:
       Capital stock, $0.001 par value per share$12,250$5,846
       Additional paid-in capital648,240,797568,237,758
       Total distributable earnings (accumulated losses)(342,625,537)(418,836,197)
              Net assets applicable to common stockholders$305,627,510$149,407,407
         
Capital shares:
       Authorized100,000,000100,000,000
       Outstanding12,249,8395,845,517
       Net Asset Value per common share outstanding (net assets applicable
              to common stock, divided by common shares outstanding)$24.95$25.56
         
(1)    Consolidated Statement of Assets and Liabilities (See Note 13 to the financial statements for further disclosure)
(2)    Investments in unaffiliated securities at cost $449,516,940$264,452,430
(3)    Investments in affiliated securities at cost $52,206,470$
(4)    Call options written, premiums received  $$
(5)    Deferred debt issuance and offering costs  $95,060$10,888
(6)    Deferred offering costs$117,256$26,981

See accompanying Notes to Financial Statements.
 
38Tortoise



 
 
2020 Annual Report | November 30, 2020
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.Fund, Inc.Fund, Inc.Fund(1)
                
$68,908,185     $35,301,855     $114,771,124     $195,709,468
47,193,373
138,110
97,905
39,81321,02466,50268,233
147,392146,6551,352,8162,673,512
14,2472,92615,590222,554
96,9769,6855,8018,529
69,206,61335,482,145116,211,833246,111,684
  
219,521
124,18158,752174,245533,163
4,1064,0874,0254,194
72,097127,737
395,113112,359279,884254,113
175,698
5,000,00026,200,00031,100,000
14,426,670
6,076,110
21,098,2775,175,19826,785,89132,286,689
$48,108,336$30,306,947$89,425,942$213,824,995
 
                
                
$2,409$1,846$6,873$13,491
185,570,919222,058,506124,375,405257,809,429
(137,464,992)(191,753,405)(34,956,336)(43,997,925)
$48,108,336$30,306,947$89,425,942$213,824,995
 
                
      100,000,000      100,000,000      100,000,000      100,000,000
2,409,1281,845,9976,873,12713,491,127
 
$19.97$16.42$13.01$15.85
 
 
$86,547,182$38,870,547$124,466,161$191,082,057
$$$$46,573,918
$$$$216,428
$30,473$$$
$23,890$$$

See accompanying Notes to Financial Statements.
 
Tortoise39



 
 
 
 
Statements of Operations
Year Ended November 30, 2020

 
Tortoise EnergyTortoise
InfrastructureMidstream Energy
Corp.(1)Fund, Inc.
Investment Income
       Distributions from master limited partnerships     $      51,890,639     $          33,574,992
       Dividends and distributions from common stock10,210,4629,468,622
       Dividends and distributions from preferred stock5,753,1273,573,720
       Dividends and distributions from affiliated investments1,275,000
       Less return of capital on distributions(2)(61,794,265)(39,827,877)
       Less foreign taxes withheld(38,670)(35,333)
       Net dividends and distributions from investments7,296,2936,754,124
       Interest income2,315,8161,207,603
              Total Investment Income9,612,1097,961,727
Operating Expenses
       Advisory fees7,259,3284,665,308
       Administrator fees252,959181,721
       Professional fees426,650284,836
       Directors fees130,626121,647
       Stockholder communication expenses149,86598,620
       Custodian fees and expenses46,88533,521
       Fund accounting fees66,06047,686
       Registration fees67,22275,751
       Swap breakage fees
       Stock transfer agent fees44,58235,074
       Franchise fees3,850
       Other operating expenses152,28565,633
              Total Operating Expenses8,600,3125,609,797
Leverage Expenses
       Interest expense7,565,2465,378,229
       Distributions to mandatory redeemable preferred stockholders3,800,7252,538,023
       Amortization of debt issuance costs1,091,200624,707
       Premium on redemption of senior notes2,332,0002,888,000
       Premium on redemption of mandatory redeemable preferred stock1,327,0001,193,000
       Other leverage expenses360,549201,850
              Total Leverage Expenses16,476,72012,823,809
              Total Expenses25,077,03218,433,606
       Less fees waived by Adviser (Note 4)
              Net Expenses25,077,03218,433,606
Net Investment Income (Loss), before Income Taxes(15,464,923)(10,471,879)
       Deferred tax benefit (expense)2,221,9861,483,383
Net Investment Income (Loss)(13,242,937)(8,988,496)

(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 Annual Report | November 30, 2020
 
 
 

Tortoise PowerTortoise 
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.Fund, Inc.Fund, Inc.Fund(1)
 
$2,714,268     $383,241     $2,828,549     $3,348,601
5,639,6291,340,6771,926,2814,272,176
201,118189,715165,4681,182,618
6,734,453
         (5,443,214)          (674,738)         (3,794,831)         (9,880,366)
(233,929)(26,492)(26,647)(331,403)
2,877,8721,212,4031,098,8205,326,079
4,2491,1924,368,7226,429,076
2,882,1211,213,5955,467,54211,755,155
 
1,171,023520,9761,195,7243,245,865
52,56430,39460,59396,184
168,924135,646176,325442,833
108,558106,56597,57791,947
54,37233,17973,10938,381
12,8327,1079,60536,356
28,85525,69328,29729,770
37,76138,15924,45014,986
370,000
30,91529,82514,96415,238
29,94230,35418,70021,782
1,695,746957,8982,069,3444,033,342
 
1,004,457243,369966,641483,244
542,315
99,590
96,000
99,000
23,742
1,865,104243,369966,641483,244
3,560,8501,201,2673,035,9854,516,586
(212,695)
3,560,8501,201,2673,035,9854,303,891
(678,729)12,3282,431,5577,451,264
(594,668)
(678,729)12,3282,431,5576,856,596

See accompanying Notes to Financial Statements.
 
Tortoise41



 
 
 
 
Statements of Operations (continued)
Year Ended November 30, 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     $(759,974,046)     $(578,297,977)
       Net realized gain (loss) on options60,67385,772
       Net realized loss on interest rate swap settlements(151,510)
       Net realized loss on currency futures
       Net realized gain (loss) on foreign currency and translation of other assets
              and liabilities denominated in foreign currency(1,124)(939)
              Net realized loss, before income taxes(760,066,007)(578,213,144)
                     Current tax expense(7,747,729)(34,222,098)
                     Deferred tax benefit135,353,67150,520,193
                            Income tax benefit, net127,605,94216,298,095
                            Net realized loss(632,460,065)(561,915,049)
       Net unrealized appreciation (depreciation) of investments in unaffiliated securities93,598,434103,471,398
       Net unrealized appreciation (depreciation) of investments in affiliated securities(2,452,247)
       Net unrealized depreciation of options(63,848)(69,929)
       Net unrealized appreciation (depreciation) of interest rate swap contracts(26,175)
       Net unrealized appreciation of forward currency contracts
       Net unrealized appreciation of other assets and liabilities due to foreign currency translation457382
              Net unrealized appreciation (depreciation), before income taxes91,056,621103,401,851
                     Deferred tax expense(21,103,500)(24,111,091)
                            Net unrealized appreciation (depreciation)69,953,12179,290,760
Net Realized and Unrealized Loss(562,506,944)(482,624,289)
Net Decrease in Net Assets Applicable to Common Stockholders Resulting from Operations$     (575,749,881)$       (491,612,785)

(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 Annual Report | November 30, 2020
 
 
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.Fund, Inc.Fund, Inc.Fund(1)
                
$(95,778,897)$(48,687,660)$(25,729,010)$(38,363,108)
187,0011,449,5411,773,832
(18,276)
(534,591)
 
(42,227)1,5921,418405,629
        (95,634,123)         (47,236,527)         (25,745,868)         (36,718,238)
(95,634,123)(47,236,527)(25,745,868)(36,718,238)
20,071,75617,812,115(2,232,908)20,013,193
1,012,053
(142,140)(354,660)(285,141)
8,589
320,491
1,25615317419,094
19,930,87217,457,608(2,224,145)21,079,690
19,930,87217,457,608(2,224,145)21,079,690
(75,703,251)(29,778,919)(27,970,013)(15,638,548)
$(76,381,980)$(29,766,591)$(25,538,456)$(8,781,952)

See accompanying Notes to Financial Statements.
 
Tortoise43



 
 
 
 
Statements of Changes in Net Assets
 

 
Tortoise Energy Infrastructure Corp.(1)
Year EndedYear Ended
     November 30,       November 30,
20202019
Operations
Net investment income (loss)$(13,242,937)$(16,044,174)
Net realized gain (loss)(632,460,065)29,052,706
Net unrealized appreciation (depreciation)69,953,121(204,418,240)
Net decrease in net assets applicable to common stockholders resulting from operations(575,749,881)(191,409,708)
Distributions to Common Stockholders
From distributable earnings
From return of capital(28,912,095)(140,587,568)
Total distributions to common stockholders(28,912,095)(140,587,568)
Capital Stock Transactions
Repurchases of common stock(19,996,039)(3) 
Underwriting discounts and offering expenses associated with the issuance of common stock(6,953)
Issuance of common shares from reinvestment of distributions to stockholders1,990,050
Net increase (decrease) in net assets applicable to common stockholders
from capital stock transactions(19,996,039)1,983,097
Total increase (decrease) in net assets applicable to common stockholders(624,658,015)(330,014,179)
Net Assets
Beginning of period          930,285,525          1,260,299,704
End of period$305,627,510$930,285,525
         
Transactions in common shares
Shares outstanding at beginning of period53,732,46253,635,054
Net share reduction due to reverse stock splits (See Note 14)(40,299,345)
Shares repurchased (See Note 15)(1,183,278)
Shares issued through offerings
Shares issued through reinvestment of distributions97,408
Shares outstanding at end of period12,249,83953,732,462

(1)Consolidated Statement of Changes in Net Assets (See Note 13 to the financial statements for further disclosure).
(2)Commencement of operations.
(3)Of the total repurchases of common stock in TYG, $18,095,163 is due to the share repurchase program as noted in Footnote 15 of Notes to Financial Statements, remaining amount is due to share repurchases executed in May 2020.

See accompanying Notes to Financial Statements.
 
44Tortoise



 
 
2020 Annual Report | November 30, 2020
 
 
 

 
Tortoise Midstream Energy Fund, Inc.Tortoise Pipeline & Energy Fund, Inc.
Year Ended     Year Ended     Year Ended     Year Ended
November 30,November 30,November 30, November 30,
2020 20192020 2019
        
$(8,988,496)$(17,549,941)$(678,729)$(1,235,742)
(561,915,049)(35,175,815)(95,634,123)(15,534,668)
79,290,760(87,752,183)19,930,872(2,671,988)
(491,612,785)(140,477,939)(76,381,980)(19,442,398)
 
(18,637,769)(106,822,149)(4,041,041)(13,872,732)
(18,637,769)(106,822,149)(4,041,041)(13,872,732)
 
(8,050,210)(1,355,204)
(24,715)
 
(8,050,210)(24,715)(1,355,204)
         (518,300,764)          (247,324,803)(81,778,225)(33,315,130)
 
667,708,171915,032,974             129,886,561163,201,691
$149,407,407$667,708,171$48,108,336$          129,886,561
 
                
63,208,37763,208,37710,016,41310,016,413
(56,887,538)(7,512,309)
(475,322)(94,976)
5,845,51763,208,3772,409,12810,016,413

See accompanying Notes to Financial Statements.
 
Tortoise45



 
 
 
 
Statements of Changes in Net Assets (continued)
 

 
Tortoise Energy Independence Fund, Inc.
     Year Ended     Year Ended
November 30,November 30,
20202019
Operations
Net investment income (loss)$12,328$(1,490,748)
Net realized gain (loss)(47,236,527)(83,448,293)
Net unrealized appreciation (depreciation)17,457,60829,302,069
Net decrease in net assets applicable to common stockholders resulting from operations(29,766,591)(55,636,972)
Distributions to Common Stockholders
From distributable earnings(823)
From return of capital(1,475,974)(15,828,822)
Total distributions to common stockholders(1,476,797)(15,828,822)
Capital Stock Transactions
Proceeds from issuance of common shares through offerings
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(31,243,388)(70,937,899)
Net Assets
Beginning of period61,550,335              132,488,234
End of period$30,306,947$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 14)            (12,921,971)
Shares repurchased (See Note 15)
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 Annual Report | November 30, 2020
 
 
 

Tortoise Power and Energy
Infrastructure Fund, Inc.Tortoise Essential Assets Income Term Fund(1)
Period from
Year Ended     Year Ended     Year Ended     March 29, 2019(2)
November 30,November 30,November 30,through
202020192020November 30, 2019
        
$2,431,557$2,722,077$6,856,596$4,144,381
(25,745,868)4,821,830(36,718,238)(10,438,827)
(2,224,145)(11,426,405)21,079,690(15,820,905)
(25,538,456)(3,882,498)(8,781,952)(22,115,351)
 
(4,161,698)(9,729,252)(8,677,372)(4,545,707)
(3,135,711)(697,748)(6,176,359)(5,700,804)
(7,297,409)(10,427,000)(14,853,731)(10,246,511)
 
269,722,540
(753,123)
 
(753,123)269,722,540
(33,588,988)(14,309,498)(23,635,683)237,360,678
 
123,014,930137,324,428237,460,678100,000
$             89,425,942$            123,014,930$               213,824,995$              237,460,678
 
 
6,951,3336,951,33313,491,1275,000
(78,206)
13,486,127
6,873,1276,951,33313,491,12713,491,127

See accompanying Notes to Financial Statements.
  
Tortoise47



 
 
 
 
Statements of Cash Flows

Year Ended November 30, 2020


 
     Tortoise Energy     
InfrastructureTortoise Midstream
Corp.(1)Energy Fund, Inc.
Cash Flows From Operating Activities
Dividends, distributions and interest received from investments$70,847,905$45,710,558
Purchases of long-term investments             (276,717,199)             (186,296,485)
Proceeds from sales of long-term investments811,272,476608,201,789
Sales (purchases) of short-term investments, net80,640203,917
Proceeds from litigation settlement1,834
Proceeds from funds held in escrow955,424
Call options written, net(66,903)(29,401)
Payments on interest rate swap contracts, net(151,510)
Payments on forward currency contracts, net
Interest received on securities sold, net
Interest expense paid(11,053,097)(7,692,097)
Distributions to mandatory redeemable preferred stockholders(6,220,961)(3,518,364)
Other leverage expenses paid(207,175)(157,904)
Income taxes paid(35,272,959)(23,973,194)
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(11,013,265)(7,411,742)
Net cash provided by operating activities538,796,210420,956,077
Cash Flows From Financing Activities
Payments on credit facilities, net(80,700,000)(13,600,000)
Redemption of mandatory redeemable preferred stock(132,700,000)(119,300,000)
Repayment of senior notes(277,073,334)(261,679,145)
Redemption of common stock(19,410,781)(7,739,163)
Distributions paid to common stockholders(28,912,095)(18,637,769)
Net cash used in financing activities(538,796,210)(420,956,077)
Net change in cash
Cash — beginning of year
Cash — end of year$$

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

See accompanying Notes to Financial Statements.
  
48Tortoise



 
 
 2020 Annual Report | November 30, 2020
 

Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1)
 
$7,916,136$1,964,263$9,039,713$20,869,687
      (36,078,010)     (34,442,196)    (37,881,722)    (177,270,922)
80,171,39255,796,34567,195,552175,432,621
(1,328,438)223,063201,229(64,999)
(38,578)915,5341,522,200
(18,276)
(534,591)
570,985
(1,279,842)(375,421)(1,105,166)(528,596)
(613,908)
(25,590)
(96,000)
(99,000)
(1,961,157)(1,104,791)(2,192,143)(3,814,096)
46,567,00522,976,79735,810,17215,611,304
 
(11,800,000)(21,500,000)(27,900,000)(900,000)
(9,900,000)
(19,542,857)
(1,283,106)(625,386)
(4,041,042)(1,476,797)(7,297,409)(14,853,731)
(46,567,005)(22,976,797)(35,822,795)(15,753,731)
(12,623)(142,427)
12,623378,442
$$$$236,015

See accompanying Notes to Financial Statements.
 
Tortoise49



 
 
 
 
Statements of Cash Flows (continued)
Year Ended November 30, 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$        (575,749,881)$        (491,612,785)
       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(276,717,199)(186,296,485)
                     Proceeds from sales of long-term investments809,163,221606,040,761
                     Sales (purchases) of short-term investments, net80,640203,917
                     Proceeds from litigation settlement1,834
                     Proceeds from funds held in escrow955,424
                     Call options written, net(66,903)(29,401)
                     Return of capital on distributions received61,794,26539,827,877
                     Deferred tax expense (benefit)(116,472,157)(27,892,485)
                     Net unrealized (appreciation) depreciation(91,056,621)(103,401,851)
                     Amortization (accretion) of market premium (discount), net(531,119)(341,225)
                     Net realized loss759,914,497578,213,144
                     Amortization of debt issuance costs1,091,200624,707
                     Changes in operating assets and liabilities:
                            (Increase) decrease in dividends, distributions and interest receivable from investments(27,350)(1,737,821)
                            Decrease in current tax asset11,138,2142,319,733
                            Increase in income tax receivable(52,052,354)
                            (Increase) decrease in receivable for investments sold2,109,2552,161,028
                            Decrease in receivable for premiums on options written
                            (Increase) decrease in prepaid expenses and other assets162,61845,436
                            Decrease in payable for investments purchased
                            Increase (decrease) in payable to Adviser, net of fees waived(2,381,663)(1,753,529)
                            Increase in current tax liability13,388,9107,929,170
                            Decrease in accrued expenses and other liabilities(5,948,621)(3,344,114)
                                   Total adjustments1,114,546,091912,568,862
       Net cash provided by operating activities$538,796,210$420,956,077

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

See accompanying Notes to Financial Statements.
 
50Tortoise



 
 
2020 Annual Report | November 30, 2020
 
 
 

 Tortoise PowerTortoise
Tortoise PipelineTortoise Energyand EnergyEssential Assets
& EnergyIndependenceInfrastructureIncome Term
Fund, Inc.     Fund, Inc.     Fund, Inc.     Fund(1) 
 
 
$            (76,381,980)$            (29,766,591)$            (25,538,456)$            (8,781,952)
 
 
(36,078,010)(34,442,196)(37,881,722)(176,330,061)
80,211,20555,817,36967,262,054175,500,854
(1,328,438)223,063201,229(64,999)
(38,578)915,5341,455,465
5,443,214674,7383,794,8319,880,366
594,668
(19,930,872)(17,457,608)2,224,145(21,079,690)
284,293(320,048)
95,634,12347,236,52725,727,59236,183,647
99,590
 
(409,199)75,93064,032(445,786)
(39,813)(21,024)(66,502)(68,233)
66,735
(2,466)(62)101(4,908)
(940,861)
(247,364)(114,151)(117,674)25,390
(364,407)(164,732)(143,751)(59,283)
122,948,98552,743,38861,348,62824,393,256
$46,567,005$22,976,797$35,810,172$15,611,304

See accompanying Notes to Financial Statements.
 
Tortoise51



 
 
 
 
TYG Financial Highlights
 

Year EndedYear EndedYear EndedYear EndedYear Ended
November 30,November 30,November 30,November 30,November 30,
  2020  2019  2018  2017  2016
Per Common Share Data(1)(2)
       Net Asset Value, beginning of year$            69.24$            94.00$            95.72$            115.32$            117.12
       Income (Loss) from Investment Operations
              Net investment loss(3)(0.44)(1.20)(1.96)(2.60)(3.12)
              Net realized and unrealized gain (loss)(41.67)(13.08)10.36(6.56)11.76
                     Total income (loss) from investment operations(42.11)(14.28)8.40(9.16)8.64
       Distributions to Common Stockholders
              From return of capital(2.18)(10.48)(10.48)(10.48)(10.48)
       Capital Stock Transactions
              Premiums less underwriting discounts and offering
                     costs on issuance of common stock(4)(0.00)0.360.040.04
       Net Asset Value, end of year$24.95$69.24$94.00$95.72$115.32
       Per common share market value, end of year$19.16$67.28$90.36$103.44$122.52
       Total investment return based on market value(5)(69.69)%(15.46)%(3.42)%(7.49)%26.21%
 
Supplemental Data and Ratios
       Net assets applicable to common stockholders,
              end of year (000’s)$305,628$930,286$1,260,300$1,181,528$1,412,274
       Average net assets (000’s)$468,705$1,203,943$1,388,683$1,406,724$1,345,764
       Ratio of Expenses to Average Net Assets
              Advisory fees1.55%1.62%1.58%1.74%1.74%
              Other operating expenses0.280.140.130.120.12
                     Total operating expenses, before fee waiver1.831.761.711.861.86
              Fee waiver(6)(0.00)(0.04)(0.00)(0.01)
                     Total operating expenses1.831.761.671.861.85
              Leverage expenses3.522.151.871.782.29
              Income tax expense (benefit)(7)(23.19)(5.49)(11.02)(5.28)4.64
                     Total expenses(17.85)%(1.58)%(7.48)%(1.64)%8.78%

See accompanying Notes to Financial Statements.
 
52Tortoise



 
 
2020 Annual Report | November 30, 2020
 
 
 

Year EndedYear EndedYear EndedYear EndedYear Ended