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 811-22409


Tortoise Midstream Energy Fund, Inc.
(Exact name of registrant as specified in charter)


6363 College Boulevard, Suite 100A, Overland Park, KS 66211
(Address of principal executive offices) (Zip code)


P. Bradley Adams
Diane Bono
6363 College Boulevard, Suite 100A, Overland Park, 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, 2021


Item 1. Report to Stockholders.

(a) The report to Shareholders is attached herewith.


Annual Report | November 30, 2021

2021 Annual Report
Closed-End Funds




 
 
 
 
Tortoise
2021 Annual Report to Stockholders
 

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

 

Table of contents

 
Closed-end Fund Comparison       1       TEAF: Fund Focus       21
Letter to Stockholders 2 Financial Statements 25
TYG: Fund Focus 6 Notes to Financial Statements 62
NTG: Fund Focus 9 Report of Independent Registered
TTP: Fund Focus 12      Public Accounting Firm 81
NDP: Fund Focus 15 Company Officers and Directors 82
TPZ: Fund Focus 18 Additional Information 84

 
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 managed distribution policy (the “Policy”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. In accordance with its Policy, TTP distributes a fixed amount per common share, currently $0.37, each quarter to its common shareholders. Prior to August 2021, the quarterly distribution rate was $0.16. TPZ distributes a fixed amount per common share, currently $0.06, each month to its common shareholders. Prior to August 2021, the monthly distribution rate was $0.05. 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 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



 
 
2021 Annual Report | November 30, 2021
 

Closed-end Fund Comparison

Name/Ticker

      Primary
focus 
     

Structure

     

Total assets
($ millions)
1

     

Portfolio mix
by asset type1

     

Portfolio mix
by structure1

Tortoise Energy Infrastructure Corp.

NYSE: TYG Inception: 2/2004

Energy Infrastructure

C-corp

$569.2

Tortoise Midstream Energy Fund, Inc.

NYSE: NTG Inception: 7/2010

Natural Gas Infrastructure

C-corp

$279.5

Tortoise Pipeline
& Energy Fund, Inc.

NYSE: TTP
Inception: 10/2011

North American pipeline companies

Regulated investment company

$80.9

Tortoise Energy Independence
Fund, Inc.

NYSE: NDP Inception: 7/2012

North American
oil & gas producers

Regulated investment company

$51.1

Tortoise Power
and Energy
Infrastructure Fund, Inc.

NYSE: TPZ Inception: 7/2009

Power
& energy infrastructure companies (Fixed income
& equity)

Regulated investment company

$123.0

Ecofin Sustainable and Social Impact Term Fund

NYSE: TEAF Inception: 3/2019

Essential assets

Regulated investment company

$260.2

1

As of 11/30/2021

(unaudited)
 
Tortoise 1



 
 
 
 
Tortoise
2021 Annual Report to closed-end fund stockholders
 

Dear stockholder

After years of suboptimal returns, energy was the top performing sector in 2021. The broad energy sector performance surged in spite of investor concerns about the COVID-19 Omicron variant’s impact on global energy demand. The global economic recovery is expected to continue into 2022, driving further demand for essential assets and services including energy, senior living facilities and high-quality in-person education.

Energy and power infrastructure

The broader energy sector, as represented by the S&P Energy Select Sector® Index, finished the fiscal year ending November 30, 2021, returning 47.1%. Global underinvestment resulting from environmental, social and governance (ESG) commitments and energy transition is likely to keep global inventories balances for all energy commodities tight for the foreseeable future, a dynamic that presents higher but perhaps more volatile prices.

Throughout 2021 OPEC+ producers closely managed the crude oil market resulting in a drawdown in inventories. A tighter market led to rising commodity prices even with bouts of the Delta and Omicron COVID variants during the second half of 2021. Despite uncertainty, OPEC+ maintained plans to increase production by 400,000 barrels per month. Various OPEC+ countries face obstacles to raising production, complicating assessments of the actual amount of supply that will be added over the next year. Finally, in 2022 the OPEC+ group’s spare capacity is in focus. If spare capacity is lower than market participants assume, prices could be biased towards further upside.

In North America, higher prices spurred a revival of shale drilling. The Permian, America’s biggest oil field, was the primary driver of production growth. In fact, during the fourth quarter, production within the basin reached an all-time high of almost 5.0 million barrels per day.1 The surge is driven by private operators, rather than the publicly traded companies that fueled the previous booms. For 2022, the Energy Information Agency (EIA) forecasts U.S. production will increase from 11.8 million barrels per day (b/d), up from 11.2 million b/d at the end of 2021.

In the second half of 2021, stress on global power markets pulled on all available natural gas supplies, pushing prices to the highest levels in over a decade. This led to switching to coal and even fuel oil for power generation. Due to its low emission intensity relative to other dispatchable fuels, natural gas is being called on to fill power generation gaps created by intermittent renewable sources. Demand for U.S. liquefied natural gas (LNG) was on full display in the fourth quarter. Exports of U.S. feedgas hit an incredible 13 billion cubic feet per day (bcf/d) during the quarter, or 14% of U.S. production.2 From zero a few years ago, the U.S. is now the world’s largest LNG exporter.

Midstream energy, represented by the Tortoise North American Pipeline IndexSM, returned 31.1% during the fiscal year. This performance resulted in outperformance versus the S&P 500® Index in calendar year 2021 for the first time since 2016. 2021 was a story of consistency for energy infrastructure fundamentals. A pandemic recovery coupled with growing free cash flow and the return of capital to shareholders were the main drivers of returns. 2021 EBITDA expectations were consistently revised higher based on increasing pipeline volumes as the economy reopened. Companies stayed disciplined on capital expenditures and used excess cash flow to reduce debt with stock buybacks as a secondary and growing consideration. At year-end, seventeen midstream companies maintained active equity buyback programs totaling more than $2 billion in buybacks through the third quarter of 2021. In 2022, we expect return of capital to continue with capital expenditures declining and free cash flow returned to investors via buybacks and higher distributions. Finally, with balance sheets strengthened, the industry could see additional mergers and acquisitions (M&A) as we saw in 2021 with exploration and production companies (E&Ps).

On the legislative front, the Congressional infrastructure bill was passed in November. Hydrogen received significant funding with targeted development of regional hubs presenting growth opportunities for energy infrastructure companies. Of more significance is the outcome of climate change legislation. If a bill is passed in 2022, it will likely focus more on tax credits rather than more restrictive, comprehensive climate policies. We believe the bill will also include regulatory support for existing infrastructure. For example, the expansion of Section 45Q tax credit would incentivize more widespread carbon capture adoption for harder to abate sectors such as steel, cement, and chemicals.

On the regulatory front, demand for low-cost U.S. natural gas created a need for additional natural gas pipelines and LNG export terminals. In the northeast Marcellus Basin, pipeline infrastructure is constrained. Despite this need, the regulatory environment remains incredibly challenging as evidenced by the recent cancellations of the Atlantic Coast Pipeline and the Constitution Pipeline. The one major pipeline under construction is the Mountain Valley Pipeline. The long-haul natural gas pipeline received key water permits during the fourth quarter with a couple hurdles to overcome before becoming operational. While LNG export facilities take time to construct, with the largest outstanding LNG opportunity, Cheniere Energy expects to advance their Corpus Christi stage 3 in 2022, once remaining investment and commercial parameters are met. Finally, Enbridge received final regulatory approval on its Line 3 crude oil pipeline project and started moving volumes during the fourth quarter, making it the largest crude oil project to come online in 2021.

Several events in 2021 reminded investors how critical energy infrastructure is to daily life. Notable events like Winter Storm Uri in Texas, the cyber-attack of the Colonial Pipeline, Hurricane Ida in the Gulf Coast, or U.S. LNG cargoes rapidly replenishing Europe’s low gas storage levels via LNG tankers all argue towards a holistic view towards energy transition. With the understanding that fossil fuels will remain critical to the economy for decades, we believe focusing on decarbonizing existing infrastructure is the best approach to reducing emissions.

(unaudited)
 
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2021 Annual Report | November 30, 2021
 
 
 
 

Midstream companies concentrated on decarbonization throughout 2021. Sustainability reports included more granular detail than previous annual reports, net-zero emission targets were established, pledges were made to reduce methane intensity, and companies engaged with projects and growth opportunities around energy transition. Energy transition projects support the longevity of existing assets and cash flow growth. Fuels including carbon (through carbon capture and sequestration), hydrogen, renewable diesel, and renewable natural gas all create a pathway to a lower carbon future. Repurposing existing pipelines significantly reduces the capital expenditures versus building a new pipeline as we expect energy infrastructure companies to take advantage of the existing infrastructure already in the ground.

With inflation increasing throughout the year, many investors began to recognize midstream as an asset class with inflation protection. Pipelines typically have long-term contracts with inflation protection from regulated tariff escalators. Additionally, tariffs on regulated liquid pipelines typically include an inflation escalator. This allows increases aligned with the Producer Price Index (PPI) offering some protection from inflation. Through November 2021, the PPI increased by 9.0% from the prior year which could be a material driver of cash flows in 2022.

As the world economy continues to reopen, the energy sector is positioned for a reflation around increased energy demand. The focus continues to be on companies with strong balance sheets and exposure to the most competitive basins for hydrocarbon production, including the Permian and Marcellus basins. The fund also continues to emphasize export infrastructure, both LNG and liquefied petroleum gas (LPG).

The downstream portion of the energy value chain continues its recovery from the COVID-19 pandemic. The EIA sees refined product demand increasing 3% year over year driven largely by increases in jet fuel. U.S. demand for gasoline and distillate normalized in 2021 relative to 2019 levels while jet fuel demand is still down from pre-COVID levels. The natural gas liquids backdrop is strong entering 2022. NGL prices have been elevated on favorable fundamentals including constrained supply and low stockpiles. There has been particular strength 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

The renewables sector had a difficult year in terms of share price performance— in part due to the starting point left by large gains from 2020. After being recognized in 2020 as a larger secular growth sector than previously realized, some near-term challenges to fundamental momentum emerged. A combination of fears around equipment cost inflation and its impact on development project returns, rising interest rates and their impact on discounted cash flows, and COVID-related development and construction delays and their impact on the pace of growth all conspired to question the robustness of the growth story. Consequently, concerns about near-term earnings growth prospects emerged for some companies, leading to negative near-term revisions, with attendant share price weakness, especially for smaller companies and unregulated companies who have less offsetting predictable businesses that provide greater visibility into their growth prospects.

At the same time, the sector saw improved policy frameworks in some emerging markets (particularly in China) but lost some momentum on the policy front in certain developed markets, which also had an adverse impact on the sector and the strategy. The following developments from late in the fourth quarter are worth highlighting:

California Net Energy Metering 3.0 (NEM 3.0): NEM allows customers who generate their own energy to receive a financial credit on their electric bills for any surplus energy sent to the grid. The Californian Public Utility Commission (CPUC) reviewed the financial benefit received in particular by rooftop solar customers and its proposed decision (NEM 3.0) was worse than expected, with lower prices for excess power and particularly with regard to a “connection fee”, which would introduce a new monthly fixed cost for future rooftop solar owners to remain connected to the grid. The reaction of the stocks exposed to rooftop solar reflected that worse-than-expected proposed decision. The final decision on NEM 3.0 is due at the end of January at the earliest, it is unlikely that the final decision will be even more onerous on the rooftop solar industry, and there is a chance that after the consultation period the outcome could be either neutral or improved relative to the proposal.

Build Back Better (BBB): The proposed US BBB bill seems to be highly uncertain at this stage, due to objections from a single Senator, whose vote is needed for passage. This development late in December was negative for investor sentiment across much of the energy transition space as the bill was not only a targeted form of financial support for renewables, storage, green hydrogen and electric vehicles, but importantly also signalled a somewhat unprecedented U.S. intent to accelerate decarbonization. We believe that current incentive policies such as the solar ITC (Investment Tax Credit) and wind PTC (Production Tax Credit) have a higher probability to be extended through a tax extenders package should BBB fail to be enacted in any form. However, policies that require new legislation – such as green hydrogen subsidization, Carbon Capture & Storage (CCS) incentives, standalone storage ITCs, domestic manufacturing credits – have a lower probability of making it into subsequent legislation, thereby removing the odds of an important positive catalyst. As with all political negotiations, these situations are fluid and could break in either direction.

(unaudited)
 
Tortoise 3



 
 
 
 
 
 
 

Waste transition

The sustainability trend in the U.S. remains strong, highlighted by increased efforts to reduce the landfilling of single-use waste, promote decarbonization across all economic sectors, and reduce greenhouse gas emissions. The yearend included many highlights that continue to support strong growth in the sustainability sector.

The Biden Administration indicated they will not support Small Refiners seeking waivers from their obligations under the Renewable Fuels Standards program, which encourages the usage of renewable fuels to reduce greenhouse gas (GHG) emissions in the transportation sector. As of mid-September 2021, there were 62 Small Refiner Exemptions (SRE’s), outstanding. If granted, these SREs would cause reduced demand and lower pricing for renewable fuel credits, known as Renewable Identification Numbers or RINs. Absent the granting of exemptions, pricing has remained strong and near all-time highs for D3 RINs involving the production of renewable natural gas from cellulosic organic waste.

The State of Washington enacted a Clean Fuel Standard law which requires the implementation by 2023 of reductions in greenhouse gas emissions per unit of transportation fuel energy to 10% below 2017 levels by 2028, and 20% below 2017 levels by 2035. Washington’s law creates an uninterrupted corridor of fuel credit support along the western region of North America, as California, Oregon, Washington, and British Columbia have each passed a Low Carbon Fuel Standard providing fuel credits for renewable fuels production. This geographic block is expected to create strong demand over the next decade for renewable fuels such as renewable natural gas, diesel and jet.

The Biden Administration announced its goal to increase the conversion of organic waste into Sustainable Aviation Fuel (SAF) to at least 3 billion gallons per year by 2030, which would reduce U.S. aviation GHG emissions by 20%, and to at least 35 billion gallons per year by 2050, which would reduce U.S. aviation GHG emissions by 100%, thereby rendering the sector Net-Zero. These SAF goals are ambitious, in that current U.S. SAF production is only 4.5 million gallons per year.

The dramatic increase in actual (and expected) biofuel production capacity has led to significant demand and price inflation for waste feedstocks, such as vegetable oils, waste oils, and animal fats, with feedstock prices more than doubling year-over-year. In addition, several planned projects have been temporarily delayed due to supply-chain issues and project cost inflation as the U.S. economy continues to recover. For the time being, projects in planning must adjust to the economic realities of high feedstock and construction costs in order to justify their continued development.

California confirmed that its ban of organic waste from landfills will go into effect in 2022, following a 5-year phase-in that began in 2016. By 2025, California’s goal is to reduce landfilled organic waste by 75% of 2014 levels. The organic ban should drive more organic waste to recycling facilities for the production of renewable fuels. Connecticut, Massachusetts, New York, Rhode Island, and Vermont have similar organic bans in place.

Maine and Oregon enacted Extended Producer Responsibility (ERP) laws. These EPR laws aim to reduce single-use plastics, and require manufacturers to support the recycling of their products and incorporate more recycled content into their products. A similar EPR effort is underway at the federal level with the U.S. House of Representatives. As these EPR laws extend to other states, as expected, they should provide strong foundational support for new recycling projects.

Social impact

Senior Living

In the fourth quarter of 2021, the senior living industry continued its upward trajectory of occupancy increases after having established a “bottom” in occupancy deterioration in the beginning of the second quarter. Statistically, nationwide occupancy for independent living and assisted living increased to 83.6% and 78.3%, respectively. Occupancy has increased 3.2% for independent and 4.2% for assisted living since the first quarter 2021.3 Moreover, Q3 absorption was the highest recorded and more than 4 times the pace of absorption pre-pandemic. While there’s clearly ground to cover, it’s revitalizing to see the industry making strides to get back to pre-pandemic levels.

Just as operations have picked up, construction starts have continued to slow. Nationally, the percentage of newly constructed independent and assisted living units as a percentage of existing inventory was just 1.9% and 3.0%, respectively, at the end of the fourth quarter 2021. In December 2019, pre-COVID-19, the number of units under construction as a percentage of inventory was 7.3% which was down from an all-time high of 10% in late 2017.3 Clearly this trend suggests less supply pressure on occupancy in the months ahead.

In June 2021, the University of Chicago and the National Investment Center for Seniors Housing & Care (NIC) released a study which examined COVID -19’s impact on senior housing in 2020. Two main takeaways from the study were; (1) lower acuity settings saw dramatically lower rates of COVID -19 related deaths and (2) continuing care retirement communities (CCRCs) had half the COVID -19 mortality rates by comparison to non-CCRCs. Statistically, 67% of independent living, 64% of assisted living and 61% of memory care saw no COVID -19 related deaths, which is staggering given the doomsday headlines of 2020.3

Finally, in late September, the U.S. Department of Health and Human Services (HHS) released another $25.5B in Provider Relief Funds (PRF) aimed at reimbursing the senior living industry for lost revenues and increased expenses related to the pandemic. This is a timely “shot in the arm” for an industry that hasn’t seen additional stimulus since the last HHS PRF funding of $14B back in December 2020.

(unaudited)
 
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2021 Annual Report | November 30, 2021
 
 
 
 

With the combination of occupancy on the rise and timely federal stimulus, we remain confident in the senior living industry’s ability to rebound and prepare for the upcoming “Silver Tsunami” as the oldest baby boomer turns 76 years old this year.

Education

For 2021, the public bond market for new issuance of K-12 charter school and high-yield private school revenue bonds exceeded $5.38 billion, a 28.4% increase over the previous year. Driving this was both the growth of new charter schools in need of facilities and record low yields for refinancing. While the Federal Reserve has been very direct about its intention to raise interest rates in the coming year, the average yield for all K-12 charter school & private school bond issuance in 2021 was below 3.8% with an average maturity exceeding 32 years.4

Over the year, state required remote-learning mandates offered parents a first-hand look into the curriculum and instruction their children received. This, along with well-documented “learning losses,” high-profile clashes between districts and teacher unions, and the open conflicts between parents and school board members has driven public scrutiny of K-12 education to a level not seen in decades. As a result, from the Fall 2019 to the Fall 2020 school years, US public school enrollment fell by more than 1.4 million, its largest decrease in at least two decades. Nationally, the percentage of students “homeschooling” more than doubled, and K-12 private and parochial schools have reported an influx of new attendees. Within public education, a very bright spot has been charter schools, where enrollment grew by 7% - an overall increase of 237,000 students.5

The pandemic has exposed long-simmering frustrations with K-12 public education experienced by families across the nation. Tensions continue to rise as clashes between teachers unions and many large school districts threaten to prevent an orderly return to the classroom to start the new year. Evidence shows “the pandemic has negatively affected academic growth, widening pre-existing disparities,”6 driving parental demand for a greater say in the education of their children. As ever-increasing numbers of families consider K-12 charter and private school options, demand for high-quality school facilities requiring sustainable financial solutions should continue to grow.

Concluding thoughts

We are extremely optimistic about our essential asset investments for 2022 and well into the future. It appears that the end may be in sight on the global pandemic, which will support increased pent-up demand for the assets in which the funds invest. We expect both senior living facilities and charter schools to continue to recover as we return to normalcy. There are indications of global acceptance that natural gas should be included as a sustainable energy source along with renewables and an investment option as energy transitions. We believe that all of these catalysts will lead to strong returns. We are positioning the funds to take advantage of this momentum and have a positive 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 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® and Tortoise North American Pipeline IndexSM (the “Indices”). The Indices are not sponsored by S&P Dow Jones Indices or its affiliates or its third party licensors (collectively, “S&P Dow Jones Indices LLC”). S&P Dow Jones Indices will not be liable for any errors or omission in calculating the Indices. “Calculated by S&P Dow Jones Indices” and its related stylized mark(s) are service marks of S&P Dow Jones Indices and have been licensed for use by Tortoise Index Solutions, LLC and its affiliates. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“SPFS”), and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”).

It is not possible to invest directly in an index.

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

1.

EIA Drilling Productivity Report

2.

S&P Global Market Intelligence

3.

NIC

4.

EMMA & MuniOS.

5.

Voting with their Feet, A State-Level Analysis of Public Charter School and District Public School Trends, Veney and Jacobs, National Alliance for Public Charter Schools; September 2021.

6.

Education in a Pandemic: The Disparate Impacts of COVID-19 on America’s Students, Office for Civil Rights, US Department of Education; June 2021.

(unaudited)
 
Tortoise 5



 
 
 
 
Tortoise
Energy Infrastructure Corp. (TYG)
 

Fund description

Tortoise Energy Infrastructure Corp. (TYG) was introduced in 2004 and invests in energy infrastructure companies. The fund is positioned to benefit from growing energy demand and accelerated efforts to reduce global CO2 emissions in energy production. Energy infrastructure companies generate, transport and distribute electricity, as well as process, store, distribute and market natural gas, natural gas liquids, refined products and crude oil.

Management’s discussion of fund performance

Midstream energy outperformed the S&P 500® Index for the first time since 2016. 2021 was a story of consistency for energy infrastructure fundamentals. A pandemic recovery coupled with growing free cash flow and the return of capital to shareholders were the main drivers of returns. 2021 EBITDA expectations were consistently revised higher based on increasing pipeline volumes as the economy reopened. Companies stayed disciplined on capital expenditures and used excess cash flow to reduce debt with stock buybacks as a secondary and growing consideration. At year-end, seventeen midstream companies maintained active equity buyback programs totaling more than $2 billion in buybacks through the third quarter of 2021. In 2022, we expect return of capital to continue with capital expenditures declining and free cash flow returned to investors via buybacks and higher distributions. Finally, with balance sheets strengthened, the industry could see additional M&A as we saw in 2021 with E&Ps. Since the fund’s inception, it has paid out more than $146 per share in cumulative distributions to stockholders. The fund’s market-based and NAV-based returns (including the reinvestment of distributions) for the fiscal year were 50.3% and 45.6%, respectively. The Tortoise MLP Index® returned 40.8% during the same period.

2021 fiscal year summary      
Distributions paid per share (fiscal year 2021) $1.4700
Distributions paid per share (4th quarter 2021) $0.4500
Distribution rate (as of 11/30/2021) 6.6%
Quarter-over-quarter distribution increase (decrease) 23.3%
Year-over-year distribution increase (decrease) 47.7%
Cumulative distributions paid per share to
stockholders since inception in February 2004 $146.4600
Market-based total return 50.3%
NAV-based total return 45.6%
Premium (discount) to NAV (as of 11/30/2021) (21.6)%

Key asset performance drivers

Top five contributors       Company type
MPLX LP Liquids Infrastructure
ONEOK, Inc. Natural Gas Infrastructure
Williams Companies Inc. Natural Gas Infrastructure
DCP Midstream LP Natural Gas Infrastructure
Targa Resources Corp. Natural Gas Infrastructure
 
Bottom five contributors Company type
Hennessy Capital Investment Corp V Energy Technology
Tortoise HoldCo II, LLC – Private Renewables and Power Infrastructure
Sunnova Energy  International Inc. – Convertible Notes Renewables and Power Infrastructure
European Sustainable Growth Acquisition Corp Energy Technology
Spartan Acquisition Corp II Energy Technology

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)
6 Tortoise


 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Value of $10,000 vs. Tortoise Energy Infrastructure Fund – Market (unaudited)
From November 30, 2011 through November 30, 2021

The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

      1-Year       3-Year       5-Year       10-Year       Since Inception(1)
Tortoise Energy Infrastructure Fund – NAV 45.62 % -22.26 % -14.24 % -5.70 % 1.62%
Tortoise Energy Infrastructure Fund – Market 50.27 % -27.25 % -19.22 % -9.43 % 0.01%
Tortoise MLP Index® 40.81 % 0.05 % -1.08 % 1.74 % 7.11%

(1) Inception date of the Fund was Feburary 25, 2004.

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 managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November.

Leverage

The fund’s leverage utilization decreased $16.7 million during the six months ended Q4 2021, compared to the six months ended Q2 2021, and represented 23.8% of total assets at November 30, 2021. At year-end, the fund was in compliance with applicable coverage ratios, 85.8% of the leverage cost was fixed, the weighted-average maturity was 2.3 years and the weighted-average annual rate on leverage was 3.56%. 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 fiscal year ended November 2021, $4.0 million of Senior Notes were paid in full upon maturity.

Income taxes

As of November 30, 2021, the fund’s deferred tax asset was zero. The fund had capital loss carryforwards of $179.0 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 tax impact on distributions, please visit www.tortoiseecofin.com.

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

The information presented below is supplemental non-GAAP financial information, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

2020 2021
      Q4(1)       Q1(1)       Q2(1)       Q3(1)       Q4(1)
Selected Financial Information
Distributions paid on common stock $ 3,709 $ 3,757 $ 4,056 $ 4,353 $ 5,368
Distributions paid on common stock per share(2) 0.3000 0.3150 0.3400 0.3650 0.4500
Total assets, end of period(3) 455,839 523,106 581,461 555,604 569,245
Average total assets during period(3)(4) 431,543 479,525 553,147 576,902 570,748
Leverage(5) 133,427 154,427 152,127 140,293 135,393
Leverage as a percent of total assets 29.3 % 29.5 % 26.2 % 25.3 % 23.8 %
Operating expenses before leverage costs and current taxes(6) 1.07 % 1.10 % 1.05 % 1.06 % 1.11 %
Net unrealized depreciation, end of period (473,357 ) (418,329 ) (353,117 ) (357,262 ) (358,544 )
Net assets, end of period 305,628 357,783 409,216 400,314 414,945
Average net assets during period(7) 276,337 345,122 391,953 419,744 432,282
Net asset value per common share(2) 24.95 30.00 34.31 33.56 34.79
Market value per share(2) 19.16 25.25 27.26 26.81 27.27
Shares outstanding (000's) 12,250 11,928 11,928 11,928 11,928

(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)

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

(3)

Includes deferred issuance and offering costs on senior notes and preferred stock.

(4)

Computed by averaging month-end values within each period.

(5)

Leverage consists of senior notes, preferred stock and outstanding borrowings under credit facilities.

(6)

Computed as a percent of total assets.

(7)

Computed by averaging daily net assets within each period.


8 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
Tortoise
Midstream Energy Fund, Inc. (NTG)
 

Fund description

The Tortoise Midstream Energy Fund (NTG) invests primarily in midstream energy entities. NTG primarily focuses on natural gas infrastructure companies that are actively participating in the energy evolution including exporting low carbon gas and propane to allow developing markets to reduce their dependence on coal, transporting renewable natural gas and renewable diesel, and integrating renewable power into operations.

Management’s discussion of fund performance

Midstream energy outperformed the S&P 500® Index for the first time since 2016. 2021 was a story of consistency for energy infrastructure fundamentals. A pandemic recovery coupled with growing free cash flow and the return of capital to shareholders were the main drivers of returns. 2021 EBITDA expectations were consistently revised higher based on increasing pipeline volumes as the economy reopened. Companies stayed disciplined on capital expenditures and used excess cash flow to reduce debt with stock buybacks as a secondary and growing consideration. At year-end, seventeen midstream companies maintained active equity buyback programs totaling more than $2 billion in buybacks through the third quarter of 2021. In 2022, we expect return of capital to continue with capital expenditures declining and free cash flow returned to investors via buybacks and higher distributions. Finally, with balance sheets strengthened, the industry could see additional M&A as we saw in 2021 with E&Ps. The fund’s market-based and NAV-based returns (including the reinvestment of distributions) for the fiscal year were 64.9% and 52.4%, respectively. The Tortoise MLP Index® returned 40.8% during the same period.

2021 fiscal year summary
Distributions paid per share (fiscal year 2021)         $1.6450
Distributions paid per share (4th quarter 2021) $0.5700
Distribution rate (as of 11/30/2021) 7.5%
Quarter-over-quarter distribution increase (decrease) 48.1%
Year-over-year distribution increase (decrease) 92.4%
Cumulative distributions paid per share to
       stockholders since inception in July 2010 $159.2150
Market-based total return 64.9%
NAV-based total return 52.4%
Premium (discount) to NAV (as of 11/30/2021) (18.6)%

Key asset performance drivers

Top five contributors Company type
MPLX LP         Liquids Infrastructure
Targa Resources Corp. Natural Gas Infrastructure
ONEOK, Inc. Natural Gas Infrastructure
Williams Companies Inc. Natural Gas Infrastructure
DCP Midstream LP Natural Gas Infrastructure
     
Bottom five contributors Company type
Hennessy Capital Investment Corp V Energy Technology
Sunnova Energy International Inc. – Convertible Notes Renewables and Power Infrastructure
Pembina Pipeline Corporation Liquids Infrastructure
Spartan Acquisition Corp II Energy Technology
Climate Change Crisis Real Impact I Acquisition Corp Energy Technology

Unlike the fund return, index return is pre-expenses and taxes.

Performance data quoted represent past performance; past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.

(unaudited)
 
Tortoise 9



 
 
 
 
Tortoise
Midstream Energy Fund, Inc. (NTG) (continued)
 

Value of $10,000 vs. Tortoise Midstream Energy Fund – Market (unaudited)
From November 30, 2011 through November 30, 2021
 

The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

        1-Year         3-Year         5-Year         10-Year         Since Inception(1)
Tortoise Midstream Energy Fund – NAV 52.38% -30.52% -20.98% -10.04%        -8.04%       
Tortoise Midstream Energy Fund – Market 64.86% -33.95% -23.90% -11.98%   -10.05%  
Tortoise MLP Index® 40.81% 0.05% -1.08% 1.74%   3.49%  

(1) Inception date of the Fund was July 27, 2010.

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 managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November.

Leverage

The fund’s leverage utilization decreased approximately $11.6 million during the six months ended Q4 2021, compared to the six months ended Q2 2021, and represented 21.6% of total assets at November 30, 2021. At year-end, the fund was in compliance with applicable coverage ratios, 32.1% of the leverage cost was fixed, the weighted-average maturity was 2.0 years and the weighted-average annual rate on leverage was 2.20%. 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 fiscal year ended November 2021, $8.2 million of Senior Notes and $0.5 million of preferred stock were paid in full upon maturity.

Income taxes

As of November 30, 2021, the fund’s deferred tax asset was zero. The fund had capital loss carryforwards of $459.0 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 tax impact on distributions, please visit www.tortoiseecofin.com.

(unaudited)
 
10 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
NTG Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below is supplemental non-GAAP financial information, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

2020 2021
      Q4(1)       Q1(1)       Q2(1)       Q3(1)       Q4(1)
Selected Financial Information
Distributions paid on common stock $ 1,832   $ 1,862   $ 2,032   $ 2,172   $ 3,217  
Distributions paid on common stock per share(2) 0.3100 0.3300 0.3600 0.3850 0.5700
Total assets, end of period(3) 226,449 257,953 287,686 277,673 279,464
Average total assets during period(3)(4) 207,191 237,709 271,233 287,464 281,292
Leverage(5) 68,021 68,640 71,869 67,969 60,269
Leverage as a percent of total assets 30.0 % 26.6 % 25.0 % 24.5 % 21.6 %
Operating expenses before leverage costs and current taxes(6) 1.36 % 1.28 % 1.10 % 1.21 % 1.25 %
Net unrealized appreciation (depreciation), end of period 14,962 44,946 82,670 81,302 93,436
Net assets, end of period 149,407 176,826 206,310 202,684 210,018
Average net assets during period(7) 132,986 171,201 195,863 213,041 221,422
Net asset value per common share(2) 25.56 31.34 36.56 35.92 37.22
Market value per common share(2) 19.46 27.00 28.71 28.55 30.31
Shares outstanding (000's) 5,846 5,643 5,643 5,643 5,643

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

 
Tortoise 11



 
 
 
 
Tortoise
Pipeline & Energy Fund, Inc. (TTP)
 

Fund description

The Tortoise Pipeline & Energy Fund is a closed-end fund that focuses particularly on the broader North American pipeline universe. TTP invests primarily in equity securities of 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.

Management’s discussion of fund performance

Midstream energy outperformed the S&P 500® Index for the first time since 2016. 2021 was a story of consistency for energy infrastructure fundamentals. A pandemic recovery coupled with growing free cash flow and the return of capital to shareholders were the main drivers of returns. 2021 EBITDA expectations were consistently revised higher based on increasing pipeline volumes as the economy reopened. Companies stayed disciplined on capital expenditures and used excess cash flow to reduce debt with stock buybacks as a secondary and growing consideration. At year-end, seventeen midstream companies maintained active equity buyback programs totaling more than $2 billion in buybacks through the third quarter of 2021. In 2022, we expect return of capital to continue with capital expenditures declining and free cash flow returned to investors via buybacks and higher distributions. Finally, with balance sheets strengthened, the industry could see additional M&A as we saw in 2021 with E&Ps. The fund’s market-based and NAV-based returns (including the reinvestment of distributions) for the fiscal year were 60.1% and 45.5%, respectively. The Tortoise North American Pipeline IndexSM returned 31.1% for the same period.

2021 fiscal year summary      
Distributions paid per share (fiscal year 2021) $1.0600
Distributions paid per share (4th quarter 2021) $0.3700
Distribution rate (as of 11/30/2021) 6.4%
Quarter-over-quarter distribution increase (decrease) 0.0%
Year-over-year distribution increase (decrease) 38.6%
Cumulative distributions paid per share to
       stockholders since inception in October 2011 $55.1300
Market-based total return 60.1%
NAV-based total return 45.5%
Premium (discount) to NAV (as of 11/30/2021) (17.2)%

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

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

Key asset performance drivers

Top five contributors         Company type
ONEOK, Inc. Natural Gas Infrastructure
Williams Companies Inc. Natural Gas Infrastructure
MPLX LP Liquids Infrastructure
Enbridge Inc Liquids Infrastructure
Plains GP Holdings, L.P. Liquids Infrastructure
     
Bottom five contributors Company type
Spartan Acquisition Corp II Energy Technology
Climate Change Crisis Real Impact I Acquisition Corp Energy Technology
Arclight Clean Transition Corp. Energy Technology
Star Peak Energy Transition Energy Technology
Peridot Acquisition Carp. Energy Technology

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)
 
12 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Value of $10,000 vs. Tortoise Pipeline and Energy Fund – Market (unaudited)
From November 30, 2011 through November 30, 2021
 

The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

      1-Year       3-Year       5-Year       10-Year       Since Inception(1)
Tortoise Pipeline and Energy Fund – NAV 45.46% -18.89% -14.94% -4.83%           -4.57%          
Tortoise Pipeline and Energy Fund – Market 60.09% -20.50% -16.71% -6.83% -6.76%
Tortoise North American Pipeline Index 27.92% 20.38% 17.90% 16.16% 6.28%

(1) Inception date of the Fund was October 26, 2011.

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 has adopted a managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last 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.

Leverage

The fund’s leverage utilization decreased approximately $2.4 million during the six months ended Q4 2021, compared to the six months ended Q2 2021, and represented 22.4% of total assets at November 30, 2021. At year-end, the fund was in compliance with applicable coverage ratios, 55.4% of the leverage cost was fixed, the weighted-average maturity was 2.1 years and the weighted-average annual rate on leverage was 3.71%. These rates will vary in the future as a result of changing floating rates, utilization of the fund’s credit facility and as leverage matures or is redeemed.

Please see the Financial Statements and Notes to Financial Statements for additional detail regarding critical accounting policies, results of operations, leverage and other important fund information.

For further information regarding the tax impact on distributions, please visit www.tortoiseecofin.com.

(unaudited)
 
Tortoise 13



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

The information presented below is supplemental non-GAAP financial information, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

      2020        2021
Q4(1)       Q1(1)       Q2(1)         Q3(1)         Q4(1)  
Selected Financial Information
Distributions paid on common stock $ 388 $ 370 $ 365 $ 831 $ 824
Distributions paid on common stock per share(2) 0.1600 0.1600 0.1600 0.3700 0.3700
Total assets, end of period(3) 69,207 75,473 88,149 83,133 80,898
Average total assets during period(3)(4) 67,662 71,333 81,482 86,656 84,993
Leverage(5) 20,557 20,557 20,557 20,557 18,143
Leverage as a percent of total assets 29.7 % 27.2 % 23.3 % 24.7 % 22.4 %
Operating expenses before leverage costs(6) 2.02 % 1.78 % 1.66 % 1.60 % 1.03 %
Net unrealized appreciation (depreciation), end of period (17,638 ) (11,507 ) 1,568 (313 ) 1,003
Net assets, end of period 48,108 53,891 66,024 62,043 62,289
Average net assets during period(7) 43,353 52,929 61,405 66,284 67,014
Net asset value per common share(2) 19.97 23.35 28.96 27.70 27.96
Market value per common share(2) 15.15 21.32 22.69 23.05 23.16
Shares outstanding (000's) 2,409 2,308 2,279 2,239 2,228

(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) Adjusted to reflect 1 for 4 reverse stock split effective May 1, 2020.
(3) Includes deferred issuance and offering costs on senior notes and preferred stock.
(4) Computed by averaging month-end values within each period.
(5) Leverage consists of senior notes, preferred stock and outstanding borrowings under the revolving credit facility.
(6) Computed as a percent of total assets.
(7) Computed by averaging daily net assets within each period.

14 Tortoise



 
 

2021 Annual Report | November 30, 2021

 
Tortoise
Energy Independence Fund, Inc. (NDP)
 

Fund description

The Tortoise Energy Independence Fund is the first closed-end fund with a dedicated focus on North American crude oil and natural gas production, which supports energy independence through reduced reliance on foreign sources. 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. While upstream investments may experience some price volatility, we believe that focusing on this portion of the value chain is the best way to access the heart of the North American oil and gas production growth opportunity.

Management’s discussion of fund performance

In North America, higher prices spurred a revival of shale drilling. The Permian, America’s biggest oil field, was the primary driver of production growth. In fact, during the fourth quarter, production within the basin reached an all-time high of almost 5.0 million barrels per day. The surge is driven by private operators, rather than the publicly traded companies that fueled the previous booms. For 2022, the Energy Information Agency (EIA) forecasts US production will increase from 11.8 million barrels per day (b/d), up from 11.2 million barrels per day (b/d) at the end of 2021. The fund’s market-based and NAV-based returns (including the reinvestment of distributions) for the fiscal year were 81.4% and 57.1%, respectively. The S&P 500 Energy Select Sector Index returned 55.5% for the same period.

2021 fiscal year summary
Distributions paid per share (fiscal year 2021)       $0.6200
Distributions paid per share (4th quarter 2021 $0.3100
Distribution rate (as of 11/30/2021) 5.6%
Quarter-over-quarter distribution increase (decrease) 0.0%
Year-over-year distribution increase (decrease) 520.0%
Cumulative distributions paid per share to
       stockholders since inception in July 2012 $97.5200
Market-based total return 81.4%
NAV-based total return 57.1%
Premium (discount) to NAV (as of 11/30/2021) (11.5)%

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 fiscal year.

Key asset performance drivers

Top five contributors       Company type
Diamondback Energy Inc Upstream, oilfield services, and refining
ConocoPhillips Liquids Infrastructure
Pioneer Natural Resources Co Upstream, oilfield services, and refining
Cheniere Energy Inc. Natural Gas Infrastructure
EOG Resources Inc Upstream, oilfield services, and refining
 
Bottom five contributors Company type
Hennessy Capital Investment Corp V   Energy Technology
Spartan Acquisition Corp II   Energy Technology
Star Peak Energy Transition Energy Technology
Climate Change Crisis Real Impact I Acquisition Corp Energy Technology
Arclight Clean Transition Corp. Energy Technology

Unlike the fund return, index return is pre-expenses.

Performance data quoted represent past performance: past performance does not guarantee future results. Like any other stock, total return and market value will fluctuate so that an investment, when sold, may be worth more or less than its original cost. Portfolio composition is subject to change due to ongoing management of the fund. References to specific securities or sectors should not be construed as a recommendation by the fund or its adviser. See Schedule of Investments for portfolio weighting at the end of the fiscal quarter.

(unaudited)
 
Tortoise 15



 
 

 

 
Tortoise
Energy Independence Fund, Inc. (NDP) (continued)
 

Value of $10,000 vs. Tortoise Energy Independence Fund – Market (unaudited)
Since inception on July 26, 2012 through November 30, 2021


The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

      1-Year       3-Year       5-Year       Since Inception(1)
Tortoise Energy Independence Fund – NAV 57.13% -23.96% -20.82%        -11.25%       
Tortoise Energy Independence Fund – Market 81.36% -26.94% -21.69%   -12.83%  
S&P 500 Energy Select Sector Index 55.52% -0.66% -1.55%   1.09%  

(1) Inception date of the Fund was July 26, 2012.

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 managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last quarter of the year to meet annual excise distribution requirements.

Leverage

The fund’s leverage utilization decreased $0.9 million during the six months ended Q4 2021, as compared to the six months ended Q2 2021. The fund utilizes all floating rate leverage that had an interest rate of 1.19% and represented 5.3% 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 tax impact on distributions, please visit www.tortoiseecofin.com.

(unaudited)
 
16 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
NDP Key Financial Data (supplemental unaudited information)
(dollar amounts in thousands unless otherwise indicated)
 

The information presented below is supplemental non-GAAP financial information, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

      2020   2021
Q4(1)         Q1(1)           Q2(1)         Q3(1)         Q4(1)  
Selected Financial Information
Distributions paid on common stock $ $ $ $ 572 $ 572
Distributions paid on common stock per share(2) 0.3100 0.3100
Total assets, end of period 35,482 43,206 46,930 43,973 51,135
Average total assets during period(3) 32,358 37,831 44,782 45,851 49,036
Leverage(4) 5,000 4,400 3,600 3,100 2,700
Leverage as a percent of total assets 14.1 % 10.2 % 7.7 % 7.0 % 5.3 %
Operating expenses before leverage costs as a percent
       of total assets 2.34 % 2.27 % 2.03 % 2.12 % 1.30 %
Net unrealized appreciation (depreciation), end of period (3,569 ) 2,902 7,043 5,595 9,327
Net assets, end of period 30,307 38,160 42,560 40,604 46,398
Average net assets during period(5) 27,155 34,528 41,089 42,801 46,787
Net asset value per common share(2) 16.42 20.67 23.06 22.00 25.13
Market value per common share(2) 12.63 17.74 19.88 19.49 22.24
Shares outstanding (000's) 1,846 1,846 1,846 1,846 1,846

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

Tortoise 17



 
 

 

 
Tortoise
Power and Energy Infrastructure Fund, Inc. (TPZ)
 

Fund description

The Tortoise Power and Energy Infrastructure Fund is a closed-end fund that invests primarily in power and energy infrastructure companies. TPZ seeks to invest in fixed income and dividend-paying equity securities of power and energy infrastructure companies that provide stable and defensive characteristics throughout economic cycles.

Management’s discussion of fund performance

Midstream energy outperformed the S&P 500® Index for the first time since 2016. 2021 was a story of consistency for energy infrastructure fundamentals. A pandemic recovery coupled with growing free cash flow and the return of capital to shareholders were the main drivers of returns. 2021 EBITDA expectations were consistently revised higher based on increasing pipeline volumes as the economy reopened. Companies stayed disciplined on capital expenditures and used excess cash flow to reduce debt with stock buybacks as a secondary and growing consideration. At year-end, seventeen midstream companies maintained active equity buyback programs totaling more than $2 billion in buybacks through the third quarter of 2021. In 2022, we expect return of capital to continue with capital expenditures declining and free cash flow returned to investors via buybacks and higher distributions. Finally, with balance sheets strengthened, the industry could see additional M&A as we saw in 2021 with E&Ps. The fund’s market-based and NAV-based returns (including the reinvestment of distributions) for the fiscal year were 36.0% and 21.0%, respectively. Comparatively, the TPZ Benchmark Composite* returned 11.3% for the same period. The fund’s equity holdings outperformed its fixed income holdings for the fiscal year on a total return basis.

2021 fiscal year summary
Distributions paid per share (fiscal year 2021) $0.6400
Monthly distributions paid per share $0.0600
Distribution rate (as of 11/30/2021) 5.6%
Quarter-over-quarter distribution increase (decrease) 12.5%
Year-over-year distribution increase (decrease) (39.0)%
Cumulative distribution to stockholders
        since inception in July 2009 $18.4650
Market-based total return 36.0%
NAV-based total return 21.0%
Premium (discount) to NAV (as of 11/30/2021) (14.4)%

* The TPZ Benchmark Composite includes the BofA Merrill Lynch U.S. Energy Index (CIEN), the BofA Merrill Lynch U.S. Electricity Index (CUEL) and the Tortoise MLP Index® (TMLP). It is comprised of a blend of 70% fixed income and 30% equity securities issued by companies in the power and energy infrastructure sectors.

Key asset performance drivers

Top five contributors        Company type
MPLX LP Liquids Infrastructure
Western Midstream Partners LP Natural Gas Infrastructure
DCP Midstream LP Natural Gas Infrastructure
Williams Companies Natural Gas Infrastructure
Blue Racer Midstream LLC Natural Gas Infrastructure
     
Bottom five contributors Company type
Sunnova Energy International Inc. Renewables and Power Infrastructure
New Fortress Energy Inc. Energy Technology
DTE Energy Co Renewables and Power Infrastructure
DT Midstream Inc. Renewables and Power Infrastructure
Bluescape Opportunities Acquisition Corp Energy Technologies

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

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)
 
18 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Value of $10,000 vs. Tortoise Power and Energy Infrastructure Fund – Market (unaudited)
From November 30, 2011 through November 30, 2021

The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

      1-Year       3-Year       5-Year       10-Year       Since Inception(2)
Tortoise Power and Energy Infrastructure Fund – NAV 20.99% -1.24% -1.57% 2.31%         5.16%        
Tortoise Power and Energy Infrastructure Fund – Market 35.99% -1.73% -2.48% 1.22% 3.85%
TPZ Benchmark Composite(1) 11.25% 3.53% 2.38% 3.35% 5.47%

(1)

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).

(2)

Inception date of the Fund was July 29, 2009.

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 has adopted a managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 7% to 10% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last 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.

Leverage

The fund’s leverage utilization was substantially unchanged during the six months ended Q4 2021, compared to the six months ended Q2 2021, and represented 19.5% of total assets at November 30, 2021. During the period, the fund maintained compliance with its applicable coverage ratios. At year-end, including the impact of interest rate swaps, approximately 100% of the leverage cost was fixed, the weighted-average maturity was 2.2 years and the weighted-average annual rate on leverage was 3.33%. 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 tax impact on distributions, please visit www.tortoiseecofin.com.

(unaudited)
 
Tortoise 19



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

The information presented below is supplemental non-GAAP financial information, is not inclusive of required financial disclosures (e.g. Total Expense Ratio), and should be read in conjunction with the full financial statements.

2020 2021
      Q4(1)       Q1(1)       Q2(1)       Q3(1) Q4(1)
Selected Financial Information
Distributions paid on common stock $ 1,040 $ 1,015 $ 999 $ 1,050 $ 1,175
Distributions paid on common stock per share 0.1500 0.1500 0.1500 0.1600 0.1800
Total assets, end of period 116,212 122,293 129,169 124,958 123,000
Average total assets during period(2) 110,592 118,439 125,151 127,825 125,633
Leverage(3) 26,200 24,000 24,000 24,000 24,000
Leverage as a percent of total assets 22.5 % 19.6 % 18.6 % 19.2 % 19.5 %
Operating expenses before leverage costs as a percent
of total assets 1.40 % 1.38 % 1.31   % 1.32   % 1.32   %
Net unrealized appreciation (depreciation), end of period (9,695 ) (2,769 ) 5,384 3,749 2,356
Net assets, end of period 89,426 96,962 103,878 100,388 98,462
Average net assets during period(4) 83,906 95,458 101,010 103,705 103,148
Net asset value per common share 13.01 14.44 15.70 15.38 15.09
Market value per common share 9.99 12.19 13.23 13.00 12.92
Shares outstanding (000's) 6,873 6,715 6,617 6,526 6,526

(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)

Computed by averaging month-end values within each period.

(3)

Leverage consists of outstanding borrowings under the revolving credit facility.

(4)

Computed by averaging daily net assets within each period.


20 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
Ecofin
Sustainable and Social Impact Term Fund (TEAF)
 

Fund description

The Ecofin Sustainable and Social Impact Term Fund 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.

Management’s discussion of fund performance

TEAF generated positive NAV performance in fiscal year 2021. Energy infrastructure companies performed extremely well during the period, driven by rebounding fundamentals and commodity prices. Additionally, we saw strong performance in a number of our private energy infrastructure investments driven by the same factors. Listed sustainable infrastructure companies performed in-line with our expectations in 2021, after an extremely strong 2020. Private sustainable infrastructure and social impact also contributed to NAV in-line with our expectations and the assets are generally performing well.

Looking ahead to 2022, we continue to have a constructive outlook for the underlying assets in the TEAF portfolio. Listed sustainable equities, TEAF’s largest allocation, are expected to continue to benefit from secular tailwinds including a focus on decarbonizing power generation and industrial activity and renewable generation buildout. Those tailwinds are expected to drive strong earnings growth for companies in the portfolio, which we expect to drive strong risk-adjusted equity returns in the sector. We are continuing to monitor supply chain and labor headwinds that impacted input costs for sustainable infrastructure in 2021, however we believe they are set to fade during 2022. Energy infrastructure equities are well positioned moving into 2022, as commodity prices and fundamentals have improved significantly. As noted previously, we expect robust free cash flow generation from our portfolio companies to support return of capital to investors in 2022. Capital allocation will continue to drive equity performance in the sector, in our view. Lastly, TEAF’s social impact assets are largely performing in-line with our expectations despite various headwinds as a result of lingering COVID-19 impacts.

We continue to progress on transitioning the portfolio to the targeted allocation of 60% direct investments. As of November 30, 2021, TEAF’s total direct investment commitments were approximately $124 million or approximately 50% 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 2022.

Listed energy infrastructure

Listed energy infrastructure equities were the strongest driver of performance in the TEAF portfolio in fiscal year 2021
Strong equity performance during the period was driven by a strong recovery in global energy demand off of COVID-19 driven depressed levels supporting commodity prices
Global LNG prices strengthened notably during the period due to rebounding demand and low inventory levels in North America, Europe and Asia providing a tailwind for natural gas levered equities
Free cash flow generation in the sector is expected to accelerate due to lower capital expenditures and stable earnings providing valuation support

Listed sustainable infrastructure

The year was dominated by significant mean reversion on names which had performed well in 2020. Pure renewables as well as renewable-driven utilities underperformed during the whole period, as investors turned their attention to the effects of inflationary pressure on returns and steepening yield curves.
Equity market flows switched out of long-duration defensive business models into more cyclical sectors. Clean energy and utilities’ performance stood at the bottom-end of MSCI World’s sectors.
In such context, TEAF’s sustainable listed infrastructure sleeve resisted well due to good diversification of risk across sub-segments. Commodity strength supported waste-to-energy and cyclical infrastructure holdings benefited from the re-opening trade through exposure to airports and toll roads.
Yield curves started to flatten towards the end of the first 6-months, leading to some gradual recovery in some regulated utilities names in the portfolio. Further easing of long-term interest rates as well as the positive impact of rising power and carbon prices on clean power generators have supported performance of listed sustainable infrastructure in the second half of the year.
Asset reorganizations and M&A continued to feature in the listed infrastructure sector and two portfolio holdings received takeover bids. These offers for infrastructure businesses on two sides of the world with different business focuses demonstrate the attractiveness of the sector and availability of capital for private infrastructure investors.
In general, earnings reports have been in line with or better than consensus expectations among the portfolio’s utility holdings. Utilities with commodity exposure, either through generation or trading, have benefitted from the exceptional strength in commodity prices this year.
On the policy front, the EU released its “Fit for 55” plan with specific 2030 targets for renewables across the energy, building, industry and transport sectors, Japan issued a new draft energy policy with the renewable energy generation ratio target for FY30/31 lifted to 36-38% from 22-24%, Germany’s general

(unaudited)
 
Tortoise 21


 
 
 
 
Ecofin
Sustainable and Social Impact Term Fund (TEAF) (continued)
 

  elections led to the Green party joining a new coalition government, Glasgow’s COP26 summit agreed on further cuts in carbon emissions and a clear “phase down” of coal, while the US infrastructure and reconciliation bills have been in intense discussions.
Outlook: Substantial commodity and electricity price inflation around the world is disruptive in the short term and will need to be addressed through improved market structure and energy mix. While few renewable energy operators will benefit from this in the short run due to typically low merchant / uncontracted volumes, over time it will be possible to market output from assets with a fixed cost at more attractive prices as contracts roll over. We also expect renewables developers to enjoy increased demand for renewable electricity – from governments and corporates alike – as its cost, already the lowest in the technology stack, becomes increasingly competitive against fossil fuel alternatives. These factors combined should more than offset any potential headwinds (so far very few) affecting renewables developers in the form of higher input prices and/or logistical delays.

Social impact

TEAF completed four direct investments in the social impact portfolio during the period
In March 2021, TEAF completed a debt investment in Clearwater at Glendora. Clearwater at Glendora will use the proceeds to construct a new, 117-unit Assisted Living and Memory Care facility in Glendora, California to meet the underserved needs for senior care in the specific submarket near the Los Angeles metropolitan area. The developer and manager is an experienced regional player in the senior living space. When complete, Clearwater at Glendora will offer a mix of studio, 1-bedroom and 2-bedroom units with amenities that provide for a high-end, luxury feel with prices that are comparable to other facilities in the area.
In April 2021, TEAF closed a debt investment in Dynamic BC Holding, a bioenergy engineering, construction and development firm. The funding will partially finance a waste-to-energy anaerobic digester facility near Green Bay, Wisconsin that will source manure from local dairy farms, which will be converted into renewable natural gas. The project will generate environmentally-friendly RNG and provide a sustainable method of recycling manure into fertilizer, thus reducing surface and groundwater pollution coming from nitrates, phosphorous and sediment runoff in the area.
In September 2021, TEAF closed a debt investment in the Telra Institute, a charter school located in Charlotte, North Carolina. Telra offers a unique model of an open enrollment charter school with a focus on high-performing, gifted students. The school opened in the fall of 2021 and is enrolled at full capacity, with a plan to expand its offering to grades K-8 over time.
In October 2021, TEAF closed a debt investment in Estancia Senior Living, a recently-constructed senior living facility located in Fallbrook, California. The facility offers 103 units of assisted living and memory care.

Private energy infrastructure

No investments were completed in private companies in the private energy infrastructure portfolio during the period.

Private sustainable infrastructure

TEAF did not invest in any additional private sustainable infrastructure projects in 2021 as the fund previously reached its targeted allocation.
Operating assets held at TEAF continue to operate as expected with stable cash flow generation profiles driven by long-term contracts with highly-rated counterparties.
TEAF expects the last solar project under construction in the portfolio to come online in summer 2022.

2021 fiscal year summary      
Distributions paid per share (fiscal year 2021) $0.90000
Monthly distributions paid per share $0.0750
Distribution rate (as of 11/30/2021) 6.1%
Quarter-over-quarter distribution increase (decrease) 0.0%
Year-over-year distribution increase (decrease) (18.3)%
Cumulative distribution to stockholders
since inception in July 2009 $2.7605
Market-based total return 19.5%
NAV-based total return 14.1%
Premium (discount) to NAV (as of 11/30/2021) (14.6)%

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)
 
22 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Value of $10,000 vs. Ecofin Sustainable and Social Impact Term Fund – Market (unaudited)
Since inception on March 29, 2019 through November 30, 2021

The chart assumes an initial investment of $10,000. Performance reflects waivers of fee and operating expenses in effect. In the absence of such waivers, total return would be reduced. Performance data quoted represents past performance and does not guarantee future results. Investment returns and principal value will fluctuate, and when sold, may be worth more or less than their original cost. Performance current to the most recent month-end may be lower or higher than the performance quoted and can be obtained by calling 866-362-9331. Performance assumes the reinvestment of capital gains and income distributions. The performance does not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares.

Annualized Rates of Return as of November 30, 2021

      1-Year       Since Inception(1)
Ecofin Sustainable and Social Impact Term Fund – NAV 14.10%       1.78%      
Ecofin Sustainable and Social Impact Term Fund – Market 19.50% -4.26%
S&P Real Assets Index 13.90% 6.90%

(1) Inception date of the Fund was March 29, 2019.

Fund structure and distribution policy

The fund is structured to qualify as a Regulated Investment Company (RIC) allowing it to pass-through to shareholders income and capital gains earned, thus avoiding double-taxation. To qualify as a RIC, the fund must meet specific income, diversification and distribution requirements. Regarding income, at least 90 percent of the fund 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 managed distribution policy (“MDP”). Annual distribution amounts are expected to fall in the range of 6% to 8% of the average week-ending net asset value (“NAV”) per share for the prior fiscal semi-annual period. Distribution amounts will be reset both up and down to provide a consistent return on trailing NAV. Under the MDP, distribution amounts will normally be reset in February and August, with no changes in distribution amounts in May and November. The fund may designate a portion of its distributions as capital gains and may also distribute additional capital gains in the last quarter of the year to meet annual excise distribution requirements.

Leverage

The fund’s leverage utilization decreased $8.8 million during the six months ended Q4 2021, as compared to six months ended Q2 2021. The fund utilizes all floating rate leverage that had an interest rate of 0.89% and represented 8.4% 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 tax impact on distributions, please visit www.tortoiseecofin.com.

(unaudited)
 
Tortoise 23



 
 
 
 
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.

2020 2021
      Q4(1)       Q1(1)       Q2(1)       Q3(1)       Q4(1)
Selected Financial Information
Distributions paid on common stock $ 3,035 $ 3,035 $ 3,036 $ 3,036 $ 3,036
Distributions paid on common stock per share 0.2250 0.2250 0.2250 0.2250 0.2250
Total assets, end of period 246,112 263,959 259,311 262,769 260,153
Average total assets during period(2) 235,505 253,187 261,033 260,599 262,969
Leverage(3) 31,100 42,800 30,400 29,700 21,600
Leverage as a percent of total assets 12.6   % 16.2   % 11.7   % 11.3   % 8.3   %
Operating expenses before leverage costs as a percent
       of total assets 1.92 % 1.57 % 1.68 % 1.71 % 1.72 %
Net unrealized appreciation (depreciation), end of period 5,259 (1,352 ) 13,357 16,157 12,165
Net assets, end of period 213,825 218,560 227,356 231,658 231,382
Average net assets during period(4) 204,319 224,328 225,036 229,497 235,252
Net asset value per common share 15.85 16.20 16.85 17.17 17.15
Market value per common share 13.04 13.89 14.76 14.40 14.64
Shares outstanding (000's) 13,491 13,491 13,491 13,491 13,491

(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) Computed by averaging month-end values within each period.
(3) Leverage consists of outstanding borrowings under the margin loan facility.
(4) Computed by averaging daily net assets within each period.

24 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
TYG Consolidated Schedule of Investments
November 30, 2021
 

Principal
      Amount/Shares       Fair Value
Common Stocks — 96.7%(1)
Energy Technology — 1.3%(1)
United States — 1.3%(1)
ESS Tech, Inc.(2) 261,007 $ 4,163,062
Fluence Energy, Inc.(2) 39,547 1,253,244
5,416,306
 
Natural Gas Gathering/Processing — 7.5%(1)
United States — 7.5%(1)
Targa Resources Corp. 598,861 30,919,193
 
Natural Gas/Natural Gas Liquids Pipelines — 31.0%(1)
United States — 31.0%(1)
Cheniere Energy, Inc. 130,004 13,625,719
Kinder Morgan Inc. 1,443,949 22,323,452
ONEOK, Inc. 685,180 41,001,171
The Williams Companies, Inc. 1,933,782 51,806,020
128,756,362
 
Renewables and Power Infrastructure — 56.9%(1)
United States — 56.9%(1)
AES Corp. 1,078,820 25,222,812
Alliant Energy Corp. 475,265 26,039,769
American Electric Power Co, Inc. 346,293 28,067,048
Archaea Energy, Inc.(2) 316,715 6,046,089
Atlantica Sustainable
       Infrastructure PLC 600,395 23,031,152
Clearway Energy Inc. 997,808 37,238,195
DTE Energy Company 242,094 26,228,464
NextEra Energy, Inc. 212,228 18,417,146
NextEra Energy Partners, LP 540,010 45,927,850
236,218,525
Total Common Stocks
       (Cost $345,443,163) 401,310,386
  
Master Limited Partnerships — 29.9%(1)
Crude Oil Pipelines — 1.4%(1)
United States — 1.4%(1)
NuStar Energy L.P. 431,102 6,035,428
 
Natural Gas Gathering/Processing — 4.5%(1)
United States — 4.5%(1)
Western Midstream Partners, LP 971,673 18,685,272
 
Natural Gas/Natural Gas Liquids Pipelines — 13.7%(1)
United States — 13.7%(1)
DCP Midstream, LP 602,984 15,876,569
Energy Transfer LP 2,976,633 25,063,250
Enterprise Products Partners L.P. 742,362 15,879,123
56,818,942
 
Refined Product Pipelines — 10.3%(1)
United States — 10.3%(1)
Magellan Midstream Partners L.P. 325,113 15,078,741
MPLX LP 938,855 27,517,840
42,596,581
Total Master Limited Partnerships
       (Cost $129,192,043) 124,136,223
 
Preferred Stock — 4.2%(1)
Natural Gas/Natural Gas Liquids Pipelines — 3.2%(1)
United States — 3.2%(1)
Altus Midstream Company 7.000%,(3)(4) 10,427 13,302,893
 
Renewable Infrastructure — 1.0%(1)
United States — 1.0%(1)
NextEra Energy, Inc. 72,016 3,888,864
Total Preferred Stock
       (Cost $13,927,322) 17,191,757

See accompanying Notes to Financial Statements.
 
Tortoise 25



 
 
 
 
TYG Consolidated Schedule of Investments (continued)
November 30, 2021
 

Principal
      Amount/Shares       Fair Value
Private Investment — 2.8%(1)
Renewables — 2.8%(1)
United States — 2.8%(1)
TK NYS Solar Holdco, LLC(3)(4)(5)
       (Cost $50,481,469) N/A $ 11,744,821
 
Corporate Bonds — 1.2%(1)
Refined Products Pipelines — 0.2%(1)
United States — 0.2%(1)
Buckeye Partners LP,
       6.375%, 01/22/2078 $ 1,200,000 1,056,000
 
Natural Gas Gathering/Processing — 1.0%(1)
United States — 1.0%(1)
EnLink Midstream Partners
       6.000%, Perpetual 5,100,000 4,029,000
Total Corporate Bonds
       (Cost $5,467,498) 5,085,000
 
Warrants — 0.0%(1)
Energy Technology — 0.0%(1)
EVgo, Inc.(2)
Total Warrants
       (Cost $1) 1 2
 
Short-Term Investment — 0.1%(1)
United States Investment Company — 0.1%(1)
Invesco Government & Agency Portfolio,
       0.03%(6) (Cost $483,058) 483,058 483,058
 
Total Investments — 134.9%
     (Cost $544,994,554)(1) 559,951,247
Liabilities in Excess of Other Assets — (2.3)%(1) (9,613,243 )
Senior Notes — (20.2)%(1) (83,893,333 )
Line of Credit — (4.6)%(1) (19,200,000 )
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (7.8)%(1) (32,300,000 )
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1) $ 414,944,671

(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 $25,047,714 which represents 6.0% of net assets. See Note 6 to the financial statements for further disclosure.
(4) Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements.
(5) 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, 2021.

See accompanying Notes to Financial Statements.
 
26 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
NTG Schedule of Investments
November 30, 2021
 

Principal
      Amount/Shares       Fair Value
Common Stock — 95.1%(1)
Crude Oil Pipelines — 15.0%(1)
Canada — 10.6%(1)
Enbridge Inc. 275,100 $ 10,327,254
Pembina Pipeline Corp. 402,120 11,922,858
22,250,112
 
United States — 4.4%(1)
Plains GP Holdings LP 916,535 9,165,350
 
Energy Technology — 0.5%(1)
United States — 0.5%(1)
ESS Tech Inc.(2) 70,184 1,119,435
 
Natural Gas Gathering/Processing — 12.1%(1)
United States — 12.1%(1)
Hess Midstream Partners LP 45,146 1,117,815
Targa Resources Corp. 469,676 24,249,372
25,367,187
 
Natural Gas/Natural Gas Liquids Pipelines — 49.1%(1)
United States — 49.1%(1)
Cheniere Energy, Inc. 106,963 11,210,792
DT Midstream, Inc. 185,323 8,500,766
Kinder Morgan Inc. 1,550,051 23,963,789
ONEOK, Inc. 432,038 25,853,154
TC Energy Corporation 128,700 6,037,317
The Williams Companies, Inc. 1,027,603 27,529,484
103,095,302
 
Renewables and Power Infrastructure — 18.4%(1)
United States — 18.4%(1)
Archaea Energy, Inc.(2) 143,839 2,745,886
Atlantica Sustainable
       Infrastructure PLC 241,241 9,254,005
Clearway Energy Inc. 324,675 12,116,871
NextEra Energy Partners, LP 172,099 14,637,020
38,753,782
Total Common Stock
       (Cost $163,812,799) 199,751,168
 
Master Limited Partnerships — 28.0%(1)
Natural Gas Gathering/Processing — 4.4%(1)
United States — 4.4%(1)
Western Midstream Partners, LP 479,491 9,220,612
 
Natural Gas/Natural Gas Liquids Pipelines — 14.7%(1)
United States — 14.7%(1)
DCP Midstream, LP 326,064 8,585,265
Energy Transfer LP 1,514,398 12,751,231
Enterprise Products Partners L.P. 443,436 9,485,096
30,821,592
 
Refined Product Pipelines — 8.9%(1)
United States — 8.9%(1)
Magellan Midstream Partners L.P. 146,667 6,802,415
MPLX LP 406,542 11,915,746
18,718,161
Total Master Limited Partnerships
       (Cost $57,154,302) 58,760,365
 
Preferred Stocks — 5.5%(1)
Natural Gas/Natural Gas Liquids Pipelines — 4.5%(1)
United States — 4.5%(1)
Altus Midstream Company, 7.000%(3)(4) 7,456 9,511,892
 
Renewable Infrastructure — 1.0%(1)
United States — 1.0%(1)
NextEra Energy, Inc. 39,095 2,111,130
Total Preferred Stocks
       (Cost $9,355,821) 11,623,022
 
Corporate Bonds — 1.3%(1)
Natural Gas Gathering/Processing — 1.3%(1)
United States — 1.3%(1)
EnLink Midstream Partners,
       6.000%, Perpetual
       (Cost 2,955,996) $ 3,400,000 2,686,000
 
Warrants — 0.0%(1)
Energy Technology — 0.0%(1)
EVgo, Inc.(2)
Total Warrants
       (Cost $1) 1 2
 
Short-Term Investment — 0.2%(1)
United States Investment Company — 0.2%(1)
First American Government Obligations Fund,
       0.03%(5) (Cost $412,471) 412,471 412,471
 
Total Investments — 130.1%
     (Cost $233,691,390)(1) 273,233,028
Liabilities in Excess of Other Assets — (1.4)%(1) (2,946,357 )
Credit Facility Borrowings — (19.5)% (40,900,000 )
Senior Notes — (3.4)% (7,149,732 )
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (5.8)% (12,218,925 )
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1) $ 210,018,014

(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 $9,511,892, which represents 4.5% of net assets. See Note 6 to the financial statements for further disclosure.
(4) Securities have been valued by using significant unobservable inputs in accordance with fair value procedures and are categorized as level 3 investments, as more fully described in Note 2 to the financial statements.
(5) Rate indicated is the current yield as of November 30, 2021.

See accompanying Notes to Financial Statements.
 
Tortoise 27



 
 
 
 
TTP Schedule of Investments
November 30, 2021
 

      Shares       Fair Value
Common Stocks — 95.3%(1)
Crude Oil Pipelines — 27.3%(1)
Canada — 19.6%(1)
Enbridge Inc. 197,300 $ 7,406,642
Gibson Energy, Inc. 50,815 919,280
Pembina Pipeline Corp. 130,637 3,865,575
12,191,497
 
United States — 7.7%(1)
Plains GP Holdings LP 476,656 4,766,560
 
Energy Technology — 0.5%(1)
United States — 0.5%(1)
ESS Tech, Inc.(2) 20,820 332,079
 
Natural Gas Gathering/Processing — 10.8%(1)
United States — 10.8%(1)
Antero Midstream Corp. 101,317 983,788
Equitrans Midstream Corp. 307,343 2,956,640
Hess Midstream Partners LP 78,784 1,950,692
Targa Resources Corp. 16,473 850,501
6,741,621
 
Natural Gas/Natural Gas Liquids Pipelines — 46.5%(1)
Canada — 11.1%(1)
Keyera Corp. 73,152 1,606,830
TC Energy Corporation 113,623 5,330,055
6,936,885
 
United States — 35.4%(1)
Kinder Morgan Inc. 389,508 6,021,793
ONEOK, Inc. 125,406 7,504,295
The Williams Companies, Inc. 317,849 8,515,175
22,041,263
 
Renewables and Power Infrastructure — 10.2%(1)
United States — 10.2%(1)
Archaea Energy, Inc.(2) 14,797 282,475
Clearway Energy Inc. 22,000 821,040
NextEra Energy Partners, LP 29,030 2,469,002
Sempra Energy 23,017 2,759,048
6,331,565
Total Common Stocks
       (Cost $59,271,492) 59,341,470
 
Master Limited Partnerships — 32.4%(1)
Crude Oil Pipelines — 3.6%(1)
United States — 3.6%(1)
NuStar Energy L.P. 57,070 798,980
Shell Midstream Partners LP 124,825 1,423,005
2,221,985
 
Natural Gas Gathering/Processing — 2.5%(1)
United States — 2.5%(1)
Western Midstream Partners, LP 79,732 1,533,246
 
Natural Gas/Natural Gas Liquids Pipelines — 13.5%(1)
United States — 13.5%(1)
DCP Midstream, LP 64,274 1,692,334
Energy Transfer LP 386,197 3,251,779
Enterprise Products Partners L.P. 163,236 3,491,618
8,435,731
 
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP 4,940 114,361
 
Refined Product Pipelines — 12.6%(1)
United States — 12.6%(1)
Holly Energy Partners LP 41,962 703,283
Magellan Midstream Partners L.P. 56,630 2,626,500
MPLX LP 134,271 3,935,483
Phillips 66 Partners LP 16,282 560,752
7,826,018
Total Master Limited Partnerships
       (Cost $19,348,910) 20,131,341
 
Preferred Stock — 1.1%(1)
Natural Gas/Natural Gas Liquids Pipelines — 1.1%(1)
Altus Midstream Company
       7.000%(3)(4) (Cost $553,926) 554 706,682
 
Short-Term Investment — 0.6%(1)
United States Investment Company — 0.6%(1)
Invesco Government & Agency Portfolio,
       0.03%(5) (Cost $402,364) 402,364 402,364
 
Total Investments — 129.4%
     (Cost $79,576,693)(1) 80,581,857
Other Assets and Liabilities — (0.3)%(1) (149,987 )
Credit Facility Borrowings — (13.0)%(1) (8,100,000 )
Senior Notes — (6.3)%(1) (3,942,857 )
Mandatory Redeemable Preferred Stock
       at Liquidation Value — (9.8)%(1) (6,100,000 )
Total Net Assets Applicable to
     Common Stockholders — 100.0%(1) $ 62,289,013

(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 $706,682, which represents 1.1% 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, 2021.

See accompanying Notes to Financial Statements.
 
28 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
NDP Schedule of Investments
November 30, 2021
 
      Shares       Fair Value
Common Stock — 88.9%(1)
Crude Oil Pipelines — 1.9%(1)
Canada — 1.9%(1)
Enbridge Inc. 23,865 $ 895,892
             
Energy Technology — 0.4%(1)
United States — 0.4%(1)
ESS Tech, Inc.(2) 11,194 178,544
 
Natural Gas Gathering/Processing — 4.2%(1)
United States — 4.2%(1)
Baker Hughes Co. 18,968 442,713
Targa Resources Corp. 28,897 1,491,952
1,934,665
             
Natural Gas/Natural Gas Liquids Pipelines — 15.9%(1)
Canada — 2%(1)
TC Energy Corporation 19,745 926,238
 
United States — 13.9%(1)
Cheniere Energy, Inc. 43,921 4,603,360
Kinder Morgan Inc. 56,165 868,311
The Williams Companies, Inc. 36,175 969,128
7,367,037
             
Oil and Gas Production — 62.7%(1)
United Kingdom — 2.0%(1)
BP PLC 35,054 910,002
 
United States — 60.7%(1)
Chevron Corp. 27,638 3,119,501
ConocoPhillips 31,390 2,201,381
Continental Resources, Inc. 15,751 698,399
Coterra Energy, Inc. 21,071 423,106
Devon Energy Corp. 79,884 3,359,921
Diamondback Energy, Inc. 37,179 3,968,115
EOG Resources, Inc. 34,587 3,009,069
EQT Corp.(2) 91,877 1,785,170
Exxon Mobil Corp. 39,460 2,361,286
Occidental Petroleum Corp. 48,626 1,441,761
PDC Energy, Inc. 9,914 499,963
Pioneer Natural Resources Company 22,350 3,985,452
Royal Dutch Shell PLC 32,093 1,349,190
  29,112,316
             
Other — 1.4%(1)
United States — 1.4%(1)
Darling Ingredients, Inc.(2) 1,957 132,137
Denbury, Inc.(2) 6,600 525,492
  657,629
             
Renewables and Power Infrastructure — 2.4%(1)
United States — 2.4%(1)
American Electric Power Co, Inc. 2,921 236,747
Archaea Energy, Inc.(2) 7,593 144,950
Clean Energy Fuels Corp.(2) 29,780 213,523
NextEra Energy, Inc. 6,065 526,321
  1,121,541
Total Common Stocks
(Cost $31,627,939) 41,267,624
 
Master Limited Partnerships — 16.0%(1)
Crude Oil Pipelines — 2.8%(1)
United States — 2.8%(1)
Plains All American Pipeline, L.P. 138,737 1,290,254
 
Natural Gas Gathering/Processing — 2.0%(1)
United States — 2.0%(1)
Western Midstream Partners, LP 48,607 934,713
 
Natural Gas/Natural Gas Liquids Pipelines — 9.3%(1)    
United States — 9.3%(1)
DCP Midstream, LP 50,351 1,325,742
Energy Transfer LP 241,059 2,029,716
Enterprise Products Partners L.P. 43,433 929,032
  4,284,490
Refined Product Pipelines — 1.9%(1)
United States — 1.9%(1)
Magellan Midstream Partners L.P. 19,323 896,201
Total Master Limited Partnerships
(Cost $7,717,817) 7,405,658
 
Warrants — 0.0%(1)
Energy Technology — 0.0%(1)
United States — 0.0%(1)
EVgo, Inc. Warrant(2)
(Cost $1) 1 2
 
Short-Term Investment — 0.9%(1)
United States Investment Company — 0.9%(1)
Invesco Government & Agency Portfolio — Institutional Class,
0.03%(3) (Cost $414,471) 414,471 414,471
 
Total Investments — 105.8%
(Cost $39,760,228)(1) 49,087,755
Other Assets in Excess of Liabilities — 0.0%(1) 10,454
Credit Facility Borrowings — (5.8%)(1) (2,700,000 )
 
Total Net Assets Applicable to
Common Stockholders — 100.0%(1) $ 46,398,209

(1)

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

(2)

Non-income producing security.

(3)

Rate indicated is the current yield as of November 30, 2021.


See accompanying Notes to Financial Statements.

 
Tortoise 29



 
 
 
 
TPZ Schedule of Investments
November 30, 2021
 
Principal
Amount/Shares
Fair Value
Corporate Bonds — 63.6%(1)            
Crude Oil Pipelines — 7.4%(1)
United States — 7.4%(1)
Enbridge Inc.,
5.500%, 07/15/2077 $       7,042,000 $ 7,299,448
 
Natural Gas Gathering/Processing — 21.6%(1)
United States — 21.6%(1)
Antero Midstream Partners LP,
5.750%, 03/01/2027(2) 3,800,000 3,820,862
Blue Racer Midstream, LLC
6.625%, 07/15/2026(2) 5,900,000 5,988,500
EnLink Midstream LLC,
5.375%, 06/01/2029 4,000,000 4,020,000
Hess Corporation,
5.625%, 02/15/2026(2) 4,160,000 4,253,600
The Williams Companies, Inc.,
4.550%, 06/24/2024 3,000,000 3,224,943
21,307,905
Natural Gas/Natural Gas Liquids Pipelines — 22.8%(1)
United States — 22.8%(1)
Cheniere Corp.,
7.000%, 06/30/2024 4,000,000 4,449,424
Cheniere Corp.,
5.875%, 03/31/2025 2,000,000 2,228,697
DT Midstream, Inc.,
4.375%, 06/15/2031(2) 2,000,000 1,985,000
NGPL PipeCo LLC,
3.250%, 07/15/2031(2) 1,500,000 1,519,256
ONEOK, Inc.,
7.500%, 09/01/2023 2,000,000 2,186,630
ONEOK, Inc.,
6.350%, 01/15/2031 3,000,000 3,770,405
Rockies Express Pipeline LLC,
4.950%, 07/15/2029(2) 3,000,000 3,146,250
Tallgrass Energy LP,
5.500%, 01/15/2028(2) 3,250,000 3,172,813
22,458,475
             
Renewables and Power Infrastructure — 5.0%(1)
United States — 5.0%(1)
NextEra Energy, Inc.,
4.800%, 12/01/2077 4,500,000 4,907,227
 
Refined Product Pipelines — 2.0%(1)            
United States — 2.0%(1)
Buckeye Partners LP,
5.850%, 11/15/2043 2,000,000 1,969,300
 
Other — 4.8%(1)
United States — 4.8%(1)
New Fortress Energy, Inc.,
6.500%, 09/30/2026(2) 5,000,000 4,726,650
Total Corporate Bonds
(Cost $60,379,474) 62,669,005
 
Master Limited Partnerships — 29.9%(1)
Crude Oil Pipelines — 3.6%(1)
United States — 3.6%(1)
BP Midstream Partners LP 21,729 279,652
NuStar Energy L.P. 128,534 1,799,476
PBF Logistics LP 49,521 561,073
Shell Midstream Partners LP 77,365 881,961
3,522,162
Natural Gas Gathering/Processing — 3.0%(1)
United States — 3.0%(1)
Western Midstream Partners, LP 154,434 2,969,766
 
Natural Gas/Natural Gas Liquids Pipelines — 11.1%(1)
United States — 11.1%(1)
DCP Midstream, LP 110,091 2,898,696
Energy Transfer LP 407,632 3,432,262
Enterprise Products Partners L.P. 213,683 4,570,679
10,901,637
Other — 0.2%(1)
United States — 0.2%(1)
Westlake Chemical Partners LP 8,074 186,913
 
Refined Product Pipelines — 12.0%(1)
United States — 12.0%(1)
Holly Energy Partners LP 93,991 1,575,289
Magellan Midstream Partners L.P. 78,332 3,633,038
MPLX LP 226,804 6,647,625
11,855,952
Total Master Limited Partnerships
(Cost $30,229,820) 29,436,430

See accompanying Notes to Financial Statements.
 
30 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
TPZ Schedule of Investments (continued)
November 30, 2021
 
      Principal
Amount/Shares
      Fair Value
Common Stocks — 27.2%(1)
Crude Oil Pipelines — 6.0%(1)
Canada — 2.0%(1)
Enbridge Inc. 53,741 $ 2,017,437
United States — 4.0%(1)
Plains GP Holdings LP 389,094 3,890,940
             
Energy Technology — 0.5%(1)
United States — 0.5%(1)
ESS Tech, Inc.(3) 31,987 510,193
 
Natural Gas Gathering/Processing — 3.8%(1)
United States — 3.8%(1)
EnLink Midstream LLC 90,965 592,182
Equitrans Midstream Corp. 108,596 1,044,694
Hess Midstream Partners LP 66,901 1,656,469
Targa Resources Corp. 7,603 392,543
3,685,888
             
Natural Gas/Natural Gas Liquids Pipelines — 12.1%(1)
United States — 12.1%(1)
DT Midstream, Inc. 4,058 186,140
Kinder Morgan Inc. 214,709 3,319,401
ONEOK, Inc. 42,252 2,528,360
TC Energy Corporation 48,667 2,282,969
The Williams Companies, Inc. 135,347 3,625,946
11,942,816
Renewables and Power Infrastructure — 4.8%(1)
United States — 4.8%(1)
Archaea Energy, Inc.(3) 26,704 509,779
Atlantica Sustainable
Infrastructure PLC 16,523 633,822
DTE Energy Company 8,116 879,287
NextEra Energy Partners, LP 8,013 681,506
Sempra Energy 16,927 2,029,040
4,733,434
Total Common Stocks
(Cost $26,058,157) 26,780,708
 
Preferred Stocks — 0.6%(1)
Natural Gas/Natural Gas Liquids Pipelines — 0.6%(1)
Altus Midstream Company,
7.000%(2)(4) (Cost $483,100) 483 616,324
 
Warrant — 0.0%(1)
Energy Technology — 0.0%(1)
EVgo, Inc. Warrant(3)
(Cost $1) 1 2
 
Short-Term Investment Company — 2.3%(1)
United States Investment Company — 2.3%(1)
Invesco Government & Agency Portfolio,
0.03%(5)(Cost $2,215,765) 2,215,765 2,215,765
 
Total Investments — 123.6%
(Cost $119,366,317)(1) 121,718,234
Other Assets and Liabilities — 0.8%(1) 743,329
Credit Facility Borrowings — (24.4)%(1) (24,000,000 )
 
Total Net Assets Applicable to
Common Stockholders — 100.0%(1) $ 98,461,563

(1)

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

(2)

Restricted securities have a total fair value of $29,229,255, which represents 29.7% of net assets. See Note 6 to the financial statements for further disclosure.

(3)

Non-income producing security.

(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, 2021.


See accompanying Notes to Financial Statements.

 
Tortoise 31



 
 
 
 
TEAF Consolidated Schedule of Investments
November 30, 2021
 
      Principal
Amount/Shares
      Fair Value
Common Stock — 51.7%(1)
Natural Gas/Natural Gas Liquids Pipelines — 3.8%(1)
Australia — 1.0%(1)
APA Group(6) 342,429 $ 2,326,277
United States — 2.8%(1)
Cheniere Energy, Inc.(6) 31,300 3,280,553
The Williams Companies, Inc.(6) 122,200 3,273,738
  8,880,568
Natural Gas Gathering/Processing — 2.1%(1)
United States — 2.1%(1)
Targa Resources Corp.(2)(6) 92,500 4,775,775
 
Other — 3.5%(1)
Australia — 2.0%(1)
Atlas Arteria Ltd.(6) 992,726 4,592,743
Spain — 1.5%(1)
Ferrovial SA(6) 121,999 3,398,085
7,990,828
Power — 28.2%(1)
Australia — 3.0%(1)
Spark Infrastructure Group(6) 3,380,512 6,916,119
Canada — 2.1%(1)
Algonquin Power & Utilities Corp.(6) 333,778 4,517,611
Brookfield Renewable Corp. 7,922 293,352
Germany — 1.1%(1)
RWE AG 68,204 2,641,497
Italy — 5.4%(1)
ENAV SpA(3)(6) 544,452 2,261,140
Enel SpA 939,487 7,146,093
Terna SpA 409,102 3,051,006
Portugal — 3.4%(1)
EDP — Energias de Portugal SA(6) 1,425,838 7,816,755
Spain — 4.7%(1)
Endesa SA 299,775 6,743,374
Iberdrola SA(6) 371,053 4,167,697
United Kingdom — 5.4%(1)
National Grid Plc 330,365 4,422,676
SSE PLC(6) 391,252 8,075,742
United States — 3.1%(1)
American Electric Power Co, Inc.(6) 53,287 4,318,911
Atlantica Sustainable Infrastructure PLC 75,263 2,887,089
65,259,062
Renewable Infrastructure — 3.8%(1)
United States — 0.0%(1)
Archaea Energy, Inc.(3) 27 515
United Kingdom — 3.8%(1)
Greencoat UK Wind PLC 4,953,707 8,841,317
  8,841,832
Renewables — 6.0%(1)
United States — 6.0%(1)
Brookfield Renewable Corp.(3)(6) 34,641 1,288,072
Innergex Renewable Energy, Inc.(3)(6) 294,405 4,369,579
TransAlta Renewables, Inc.(3)(6) 381,927 5,543,016
Transition SA(3) 250,000 2,764,358
  13,965,025
           
Solar — 1.3%(1)
United States — 1.3%(1)
Sunnova Energy International, Inc.(3)(6) 82,766 3,059,859
 
Transportation/Storage — 3.0%(1)
Hong Kong — 3.0%(1)
China Suntien Green Energy Corp Ltd. 9,877,979 6,929,026
Total Common Stock
(Cost $114,300,795) 119,701,975
 
Private Investments — 19.8%(1)
Natural Gas/Natural Gas Liquids Pipelines — 0.9%(1)
Mexico Pacific Limited LLC (MPL)
Series A(4)(5) 99,451 2,182,353
 
Renewables — 18.9%(1)
United States — 18.9%(1)
Renewable Holdco, LLC(4)(5)(7) N/A 5,336,772
Renewable Holdco I, LLC(4)(5)(7) N/A 23,847,777
Renewable Holdco II, LLC(4)(5)(7) N/A 14,564,175
43,748,724
Total Private Investment
(Cost $45,444,210) 45,931,077

See accompanying Notes to Financial Statements.
 
32 Tortoise


 
 
2021 Annual Report | November 30, 2021
 
TEAF Consolidated Schedule of Investments (continued)
November 30, 2021
 
      Principal
Amount/Shares
      Fair Value
Corporate Bonds — 16.2%(1)
Education — 0.3%(1)
United States — 0.3%(1)
Village Charter School, Inc.
10.000%, 12/15/2021(9) $ 800,000 $ 600,000
 
Healthcare — 3.1%(1)
United States — 3.1%(1)
315/333 West Dawson
Associates SUB 144A NT,
11.00%, 01/31/2026(5) 3,770,000 3,598,785
Grace Commons Property
8.000%, 10/31/2023(5) 3,650,000 3,650,000
7,248,785
             
Project Finance — 8.2%(1)
United States — 8.2%(1)
C2NC Holdings
13.000%, 05/01/2027 10,715,000 10,752,974
Dynamic BC Holdings LLC
13.500%, 04/01/2028(5) 8,110,000 8,105,329
18,858,303
             
Senior Living — 4.6%(1)
United States — 4.6%(1)
Contour Propco 1735 S MISSION
SUB 144A NT,
11.00%, 10/01/2025(5) 5,715,000 5,715,000
Drumlin Reserve Property LLC
10.000%, 10/02/2025(5) 1,705,311 1,712,262
Drumlin Reserve Property LLC
16.000%, 10/02/2025(5) 1,050,000 1,054,293
Realco Perry Hall MD LLC/OPCO
Sub 144A NT
10.000%, 10/01/2024(5) 2,256,000 2,256,000
10,737,555
             
Total Corporate Bonds
(Cost $37,609,713) 37,444,643
 
Master Limited Partnerships — 9.4%(1)
Natural Gas Gathering/Processing — 0.8%(1)
United States — 0.8%(1)
Crestwood Equity Partners LP 65,431 1,672,416
 
Natural Gas/Natural Gas Liquids Pipelines — 1.2%(1)
United States — 1.2%(1)
Enterprise Products Partners L.P.(6) 128,400 2,746,476
 
Refined Product Pipelines — 2.6%(1)
United States — 2.6%(1)
MPLX LP(2)(6) 206,200 6,043,722
 
Renewables — 4.8%(1)
Canada — 0.7%(1)
Brookfield Renewable Partners LP(6) 45,147 1,640,199
 
United States — 4.1%(1)
Enviva Partners LP(2)(6) 136,755 9,576,953
Total Master Limited Partnerships
(Cost $15,622,697) 21,679,766
 
Preferred Stock — 6.6%(1)
Natural Gas/Natural Gas Liquids Pipelines — 4.6%(1)
United States — 4.6%(1)
Altus Midstream Company, 7.000%(4)(5) 4,294 5,478,137
Enterprise Products Partners L.P.,
7.250%(4) 5,000,000 5,006,150
10,484,287
Renewables — 0.8%(1)
United States — 0.8%(1)
NextEra Energy Partners LP 28,900 1,832,549
 
Water Utilities — 1.2%(1)
United States — 1.2%(1)
Essential Utilities, Inc. 49,133 2,836,940
Total Preferred Stock
(Cost $14,883,280) 15,153,776

See accompanying Notes to Financial Statements.

 
Tortoise 33



 
 
 
 
TEAF Consolidated Schedule of Investments  (continued)
November 30, 2021
 

Principal
      Amount/Shares       Fair Value
Municipal Bonds — 4.8%(1)
Arizona — 0.2%(1)
La Paz County Industrial
Development Authority
10.042%, 01/01/2026 $      410,000 $ 404,222
 
Florida — 0.4%(1)
Florida Development Finance Corp.
4.508%, 07/01/2025(9) 445,000 400,500
Florida Development Finance Corp.
10.000%, 02/15/2028 595,000 604,188
1,004,688
 
Wisconsin — 4.2%(1)
Public Finance Authority
9.000%, 06/01/2029 8,925,000 8,940,917
Public Finance Authority
12.000%, 10/01/2029 185,000 185,365
Public Finance Authority
10.000%, 09/01/2031 525,000 496,775
  9,623,057
Total Municipal Bonds
(Cost $11,053,826)      11,031,967
 
Construction Note — 1.5%(1)
Renewables — 1.5%(1)
Bermuda — 1.5%(1)
Saturn Solar Bermuda 1 Ltd.,
9.000%, 04/30/2022(4)(5)
(Cost $3,778,904) 3,510,000 3,583,008
 
Special Purpose Acquisition Company Warrant — 0.1%(1)
Renewables — 0.1%(1)
Transition SA Warrant(3) 250,000 141,762
 
Total Investments — 110.1%
(Cost $242,693,425)(1) $ 254,667,974
Total Value of Options Written
(Premiums received $51,214)(8) — (0.0)%(1) (41,750 )
Other Assets and Liabilities — (0.7)%(1) (1,644,208 )
Credit Facility Borrowings — (9.4)%(1) (21,600,000 )
Total Net Assets Applicable to
Common Stockholders — 100.0%(1) $ 231,382,016

(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)

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)

Restricted securities have a total fair value of $81,083,891 which represents 35.0% of net assets. See Note 6 to the financial statements for further disclosure.

(6)

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.

(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)

See Schedule of Options Written and Note 12 to the financial statements for further disclosure.

(9)

Security in forbearance at November 30, 2021.


See accompanying Notes to Financial Statements.
 
34 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
Schedule of Options Written
November 30, 2021
 

TEAF
Call Options Written       Expiration Date       Strike Price       Contracts       Notional Value       Fair Value
Enviva Partners LP Dec 2021      $ 75.00       555 $ 4,162,500 $ (22,200 )
MPLX LP Dec 2021 $ 33.00 2,062 6,804,600 (10,310 )
Targa Resources Corp. Dec 2021 $ 60.00 462 2,772,000 (9,240 )
Total Value of Call Options Written (Premiums received $51,214) $ 13,739,100 $      (41,750 )

See accompanying Notes to Financial Statements.
 
Tortoise 35



 
 
 
 
Statements of Assets & Liabilities
November 30, 2021
 

      Tortoise Energy   Tortoise
  Infrastructure         Midstream Energy
      Corp.(1)   Fund, Inc.
Assets  
Investments in unaffiliated securities at fair value(2) $ 548,206,426   $ 273,233,028
Investments in affiliated securities at fair value(3) 11,744,821  
Cash at broker  
Cash(7)  
Receivable for investments sold 7,227,992   5,380,011
Dividends, distributions and interest receivable from investments 1,194,803   506,596
Tax reclaims receivable  
Expense Reimbursement Receivable  
Prepaid expenses and other assets 871,376   344,800
Total assets 569,245,418   279,464,435
Liabilities  
Overdraft due to custodian(8)  
Call options written, at fair value(4)  
Payable to Adviser 905,958   462,169
Accrued directors' fees and expenses 3,503   2,527
Payable for investments purchased 9,264,984   6,443,584
Accrued expenses and other liabilities 2,175,862   414,715
Current tax liability 6,684,880   1,878,651
Deferred tax liability  
Credit facility borrowings 19,200,000   40,900,000
Senior notes, net(5) 83,830,463   7,141,940
Mandatory redeemable preferred stock, net(6) 32,235,097   12,202,835
Interest payable  
Total liabilities 154,300,747   69,446,421
Net assets applicable to common stockholders $ 414,944,671   $ 210,018,014
Net Assets Applicable to Common Stockholders Consist of:  
Capital stock, $0.001 par value per share $ 11,928   $ 5,643
Additional paid-in capital 623,818,544   554,505,452
Total distributable accumulated losses      (208,885,801 )      (344,493,081 )
Net assets applicable to common stockholders $ 414,944,671   $ 210,018,014
Capital shares:  
Authorized 100,000,000   100,000,000
Outstanding 11,927,903   5,642,991
Net Asset Value per common share outstanding (net assets applicable  
to common stock, divided by common shares outstanding) $ 34.79   $ 37.22
   
(1) Consolidated Statement of Assets and Liabilities  
(See Note 13 to the financial statements for further disclosure).  
(2) Investments in unaffiliated securities at cost $ 494,513,084   $ 233,691,390
(3) Investments in affiliated securities at cost $ 50,481,470   $
(4) Call options written, premiums received $   $
(5) Deferred debt issuance and offering costs $ 62,870   $ 7,792
(6) Deferred offering costs $ 64,903   $ 16,090
(7) TEAF cash balance reflects cash held at TEAF Solar Holdco, LLC at the end of the period.  
See Note 13 to the financial statements for additional information.  
(8) Overdraft due to security rights subscription settlement at the end of the period.  

See accompanying Notes to Financial Statements.
 
36 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Tortoise Power Ecofin
Tortoise Pipeline Tortoise Energy and Energy Sustainable
& Energy Independence Infrastructure and Social Impact
Fund, Inc.       Fund, Inc.       Fund, Inc.       Term Fund(1)
 
$ 80,581,857 $ 49,087,755 $ 121,718,234 $ 210,919,250
43,748,724
101,698
211,511
1,771,097 2,715,924
133,779 208,996 1,260,429 2,188,583
15,960 1,583 15,751 226,580
84,117 56,994
81,860 8,090 5,949 40,440
80,897,573 51,134,515 123,000,363 260,152,710
 
3,223,741
41,750
162,903 95,846 203,881 598,282
2,855 2,796 291
1,778,898 2,722,506
334,467 158,766 195,877 475,732
108,683
8,100,000 2,700,000 24,000,000 21,600,000
3,926,305
6,082,030
138,751
18,608,560 4,736,306 24,538,800 28,770,694
$ 62,289,013 $ 46,398,209 $ 98,461,563 $ 231,382,016
 
$ 2,228 $ 1,846 $ 6,526 $ 13,491
179,945,161 221,040,928 118,166,385 250,719,694
(117,658,376 ) (174,644,565 ) (19,711,348 ) (19,351,169 )
$ 62,289,013 $ 46,398,209 $ 98,461,563 $ 231,382,016
 
100,000,000 100,000,000 100,000,000 100,000,000
2,227,773 1,845,997 6,526,499 13,491,127
 
$ 27.96 $ 25.13 $ 15.09 $ 17.15
 
$ 79,576,693 $ 39,760,228 $ 119,366,317 $ 199,277,416
$ $ $ $ 43,416,009
$ $ $ $ 51,214
$ 16,552 $ $ $
$ 17,970 $ $ $

See accompanying Notes to Financial Statements.
 
Tortoise 37



 
 
 
 
Statements of Operations
Period from December 1, 2020 through November 30, 2021
 

Tortoise Energy Tortoise
Infrastructure Midstream Energy
      Corp.(1)       Fund, Inc.
Investment Income
Distributions from master limited partnerships $ 24,545,903 $ 12,942,593
Dividends and distributions from common stock 8,663,386 5,079,050
Dividends and distributions from preferred stock 884,940 609,202
Dividends and distributions from affiliated investments 1,725,000
Less return of capital on distributions(2)      (31,041,915 )       (16,521,579 )
Less foreign taxes withheld (6,322 ) (16,914 )
Net dividends and distributions from investments 4,770,992 2,092,352
Interest income 950,014 563,432
Other income 98,081 105
Total Investment Income 5,819,087 2,655,889
Operating Expenses
Advisory fees 4,746,537 2,570,178
Administrator fees 213,774 128,453
Professional fees 382,569 218,388
Directors fees 80,679 78,434
Stockholder communication expenses 165,109 105,687
Custodian fees and expenses 20,026 10,752
Fund accounting fees 58,642 42,557
Registration fees 55,066 29,194
Stock transfer agent fees 56,404 70,259
Other operating expenses 157,653 63,281
Total Operating Expenses 5,936,459 3,317,183
Leverage Expenses
Interest expense 3,644,078 1,004,880
Distributions to mandatory redeemable preferred stockholders 1,352,798 497,890
Amortization of debt issuance costs 84,455 11,564
Other leverage expenses 229,776 166,302
Total Leverage Expenses 5,311,107 1,680,636
Total Expenses 11,247,566 4,997,819
Less fees waived by Adviser (Note 4)
Less expense reimbursement by Adviser (Note 4)
Net Expenses 11,247,566 4,997,819
Net Investment Income (Loss), before Income Taxes (5,428,479 ) (2,341,930 )
Current tax expense
Deferred tax benefit (expense)
Net Investment Income (Loss) (5,428,479 ) (2,341,930 )

(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.
 
38 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Tortoise Pipeline
& Energy
Fund, Inc.
      Tortoise Energy
Independence
Fund, Inc.
      Tortoise Power
and Energy
Infrastructure
Fund, Inc.
     

Ecofin
Sustainable
and Social Impact
Term Fund
(1)

     
     
$ 1,869,620 $ 390,328 $ 2,674,298 $ 1,566,752
3,589,631 1,371,332 1,389,122 5,082,932
53,794 14,229 45,823 692,586
13,065,393
(3,565,410 ) (596,066 ) (3,476,864 ) (14,176,922 )
(193,556 ) (37,680 ) (41,376 ) (405,265 )
1,754,079 1,142,143 591,003 5,825,476
336 92 3,401,583 5,968,136
1,754,415 1,142,235 3,992,586 11,793,612
     
904,943 495,861 1,190,231 3,495,135
49,496 57,815 65,202 139,562
161,684 147,502 169,386 326,852
76,749 76,709 75,866 75,997
58,646 42,649 74,313 39,949
3,312 10,195 5,005 9,141
27,242 27,645 29,740 33,502
29,370 26,197 24,448 25,097
23,909 12,825 15,949 15,222
30,765 29,686 17,160 95,717
1,366,116 927,084 1,667,300 4,256,174
     
601,127 65,751 828,972 301,667
400,770
19,841
13,423
1,035,161 65,751 828,972 301,667
2,401,277 992,835 2,496,272 4,557,841
(132,167 ) (89,854 )
2,269,110 902,981 2,496,272 4,557,841
(514,695 ) 239,254 1,496,314 7,235,771
67,015
(514,695 ) 239,254 1,496,314 7,302,786

See accompanying Notes to Financial Statements.
 
Tortoise 39



 
 
 
 
Statements of Operations (continued)
Period from December 1, 2020 through November 30, 2021

             
      Tortoise Energy
Infrastructure
Corp.
(1)
      Tortoise
Midstream Energy
Fund, Inc.
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Net realized gain on investments in unaffiliated securities $ 40,733,331 $ 6,726,041
Net realized gain on written options
Net realized loss on interest rate swap settlements (191,015 )
Net realized gain (loss) on foreign currency and translation of other assets and liabilities
denominated in foreign currency
Net realized gain, before income taxes 40,542,316 6,726,041
Current tax benefit (16,186,960 ) (8,514,650 )
Income tax benefit, net (16,186,960 ) (8,514,650 )
Net realized gain (loss) 24,355,356 (1,788,609 )
Net unrealized appreciation of investments in unaffiliated securities 111,520,501 78,473,632
Net unrealized appreciation (depreciation) of investments in affiliated securities 3,103,977
Net unrealized appreciation of written options
Net unrealized appreciation of interest rate swap contracts 188,015
Net unrealized appreciation (depreciation) of other assets and liabilities
due to foreign currency translation 366 23
Net unrealized appreciation 114,812,859 78,473,655
Net Realized and Unrealized Gain 139,168,215 76,685,046
Net Increase in Net Assets Applicable to Common Stockholders Resulting from Operations $ 133,739,736 $ 74,343,116

(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.
 
40 Tortoise



 
 
2021 Annual Report | November 30, 2021
 
 
 
 

Tortoise Pipeline
& Energy
Fund, Inc.
      Tortoise Energy
Independence
Fund, Inc.
      Tortoise Power
and Energy
Infrastructure
Fund, Inc.
      Ecofin
Sustainable
and Social Impact
Term Fund
(1)
     
     
$ 2,083,804 $ 4,099,886 $ 3,969,774 $ 14,321,604
1,155,956
 
4,528 772 1,418 12,490
2,088,332 4,100,658 3,971,192 15,490,050
2,088,332 4,100,658 3,971,192 15,490,050
18,644,161 12,896,219 12,050,963 7,014,355
(108,464 )
12,557
     
(2,609 ) (351 ) (621 ) (12,249 )
18,641,552 12,895,868 12,050,342 6,906,199
20,729,884 16,996,526 16,021,534 22,396,249
$ 20,215,189 $ 17,235,780 $ 17,517,848 $ 29,699,035

See accompanying Notes to Financial Statements.  
 
Tortoise 41



 
 
 
 
Statements of Changes in Net Assets
 
 

<
Tortoise Energy Infrastructure Corp.(1)
      Year Ended
November 30,
2021
      Year Ended
November 30,
2020
Operations
Net investment income (loss) $ (5,428,479 ) $ (13,242,937 )
Net realized gain (loss) 24,355,356 (632,460,065 )
Net unrealized appreciation (depreciation) 114,812,859 69,953,121
Net increase (decrease) in net assets applicable to common stockholders
resulting from operations 133,739,736 (575,749,881 )
Distributions to Common Stockholders
From distributable earnings