Deborah
Bielicke Eades, Esq.
Vedder,
Price, Kaufman & Kammholz, P.C.
222
N. LaSalle Street
Chicago,
IL 60601
|
Steven
F. Carman, Esq.
Blackwell
Sanders Peper Martin LLP
4801
Main Street, Suite 1000
Kansas
City, MO 64112
|
Title
of Securities
Being
Registered
|
Amount
Registered(1)
|
Proposed
Maximum Aggregate Offering Price(2)
|
Amount
of Registration Fee(3)
|
Common
stock, $0.001 par value per share
Preferred
stock, $0.001 par value per share
Debt
securities
|
$125,000,000
|
$13,375
|
Base Prospectus
|
|
1
|
|
9
|
|
11
|
|
13
|
|
13
|
|
14
|
|
15
|
|
15
|
|
23
|
|
26
|
|
35
|
|
38
|
|
38
|
|
44
|
|
45
|
|
47
|
|
56
|
|
57
|
|
59
|
|
61
|
|
62
|
|
62
|
|
62
|
|
63
|
· |
We
may invest up to 30% of our total assets in restricted securities,
primarily through direct placements. Subject to this policy, we
may invest
without limitation in illiquid securities. The types of restricted
securities that we may purchase include securities of private energy
infrastructure companies and privately issued securities of publicly
traded energy infrastructure companies. Restricted securities,
whether
issued by public companies or private companies, are generally
considered
illiquid. Investments in private companies that do not have any
publicly
traded shares or units are limited to 5% of total
assets.
|
· |
We
may invest up to 25% of our total assets in debt securities of energy
infrastructure companies, including securities rated below investment
grade (commonly referred to as “junk bonds”). Below investment grade debt
securities will be rated at least B3 by Moody’s Investors Service, Inc.
(“Moody’s”) and at least B- by Standard & Poor’s Ratings Group
(“S&P”) at the time of purchase, or comparably rated by another
statistical rating organization or if unrated, determined to be of
comparable quality by the Adviser.
|
· |
We
will not invest more than 10% of total assets in any single
issuer.
|
· |
We
will not engage in short sales.
|
Sales
Load (as a percentage of offering price)
|
--(1)
|
Offering
Expenses Borne by the Company (as a percentage of offering
price)
|
--(1)
|
Dividend
Reinvestment Plan Fees(2)
|
None
|
Percentage
of Net Assets
Attributable
to Common
Stockholders
|
||||
Annual
Expenses
|
||||
Management
Fee
|
1.62
|
% | ||
Leverage
Costs(3)
|
2.62
|
% | ||
Other
Expenses(4)
|
0.34
|
% | ||
Total
Annual Expenses(5)
|
4.58
|
%
|
||
Less
Fee and Expense Reimbursement (through
2/28/09)(6)
|
(0.17)
|
%
|
||
Net
Annual Expenses(5)
|
4.41
|
%
|
(1)
|
If
the securities to which this prospectus relates are sold to or through
underwriters, the prospectus supplement will set forth any applicable
sales load and the estimated offering expenses borne by
us.
|
(2)
|
Stockholders
will pay a transaction fee plus brokerage charges if they direct
the Plan
Agent to sell common stock held in a dividend reinvestment account.
See
“Automatic Dividend Reinvestment
Plan.”
|
(3)
|
Leverage
Costs in the table reflect the weighted average cost of MMP Shares
and
Tortoise Notes, expressed as a percentage of average net assets.
Because
Tortoise Notes and MMP Shares were fully hedged under swap agreements
as
of February 28, 2006, the Leverage Costs are based on the rates
payable under the swap agreements as of February 28, 2006. As of
that
date, the interest payable on Tortoise Notes exceeded the interest
payable
under the swap agreements. As of February 28, 2006, the interest
payable
under the swap agreements exceeded the dividends payable on MMP
Shares.
|
(4)
|
Other
Expenses are based on estimated amounts for the current fiscal year
and do
not include the expenses of leverage. Other Expenses do not include
income
tax expense (benefit) related to realized or unrealized investment
and
interest rate swap gains or losses.
|
(5)
|
If
the Total Annual Expenses and Net Annual Expenses of the Company
were
expressed as a percentage of average Managed Assets (assuming
$235 million in leverage), Total Annual Expenses would be 2.68% and
the Net Annual Expenses would be
2.58%.
|
(6)
|
Beginning March
1, 2006, the Adviser has contractually
agreed to reimburse us for expenses in an amount equal to
0.10% of
our average monthly Managed Assets, which represents 0.17% of our
average
net assets as of February 28, 2006. The management fee and reimbursement
are expressed as a percentage of average net assets in the table.
Because
holders of preferred stock and debt securities do not bear management
fees
and other expenses, the cost to common stockholders increases as
leverage
increases.
|
1
Year
|
3
Years
|
5
Years
|
10
Years
|
||||||||||
Total
Expenses Paid by Common Stockholders (2)(3)
|
$
|
44
|
$
|
133
|
$ | 227 | $ | 465 |
(1)
|
This
example also assumes that (1) we have issued $235 million in
senior securities; (2) the estimated Other Expenses set forth in the
fee table are accurate; (3) all distributions are reinvested at NAV;
and (4) the cost of leverage is 2.62%. The cost of leverage is
expressed as a percentage and represents the weighted average rates
payable under the swap agreements on Tortoise Notes and MMP Shares.
Without leverage, the 1 year, 3 years, 5 years and 10 years expenses
would
be $18, $56, $101, and $224, respectively. The
example should not be considered a representation of future expenses.
Actual expenses may be greater or less than those assumed. Moreover,
our
actual rate of return may be greater or less than the hypothetical
5%
return shown in the
example.
|
(2)
|
Assumes
reimbursement of expenses of 0.17% of average net assets in years
one
through three. The Adviser has not agreed to reimburse expenses for
any
year beyond 2009.
|
(3)
|
The
example above does not include sales loads or estimated offering
costs.
|
Period
from December 1, 2005 through February 28,
2006
|
Year
Ended November
30, 2005
|
Period
from
February
27, 2004(1)
through
November
30, 2004
|
||||||||
(Unaudited)
|
||||||||||
Per
Common Share Data(2)
|
||||||||||
Net
Asset Value, beginning of period
|
$
|
27.12
|
$
|
26.53
|
$
|
—
|
||||
Public
offering price
|
—
|
—
|
25.00
|
|||||||
Underwriting
discounts and offering costs on initial public offering
|
—
|
—
|
(1.17
|
)
|
||||||
Underwriting
discounts and offering costs on issuance of preferred
shares
|
—
|
(0.02
|
)
|
(0.06
|
)
|
|||||
Premiums
and underwriting discounts and offering costs on secondary
offering(3)
|
—
|
—
|
—
|
|||||||
Income
(loss) from Investment Operations:
|
||||||||||
Net
investment loss(4)
|
(0.04
|
)
|
(0.16
|
)
|
(0.03
|
)
|
||||
Net
realized and unrealized gain on investments(4)
|
1.00
|
2.67
|
3.77
|
|||||||
Total
increase from investment operations
|
0.96
|
2.51
|
3.74
|
|||||||
Less
Dividends to Preferred Stockholders:
|
||||||||||
Net
investment income
|
—
|
—
|
—
|
|||||||
Return
of capital
|
(0.05
|
)
|
(0.11
|
)
|
(0.01
|
)
|
||||
Total
dividends to preferred stockholders
|
(0.05
|
)
|
(0.11
|
)
|
(0.01
|
)
|
||||
Less
Dividends to Common Stockholders:
|
||||||||||
Net
investment income
|
—
|
—
|
—
|
|||||||
Return
of capital
|
(0.48
|
)
|
(1.79
|
)
|
(0.97
|
)
|
||||
Total
dividends to common stockholders
|
(0.48
|
)
|
(1.79
|
)
|
(0.97
|
)
|
||||
Net
Asset Value, end of period
|
$
|
27.55
|
$
|
27.12
|
$
|
26.53
|
||||
Per
common share market value, end of period
|
$
|
29.42
|
$
|
28.72
|
$
|
27.06
|
||||
Total
Investment Return Based on Market Value(5)
|
4.22
|
%
|
13.06
|
%
|
12.51
|
%
|
||||
Supplemental
Data and Ratios
|
||||||||||
Net
assets applicable to common stockholders, end of period
(000’s)
|
$
|
410,642
|
404,274
|
336,553
|
||||||
Ratio
of expenses (including current and deferred income tax expense)
to average
net assets before waiver:(6)(7)(8)
|
12.97
|
%
|
9.10
|
%
|
15.20
|
%
|
||||
Ratio
of expenses (including current and deferred income tax expense)
to average
net assets after waiver:(6)(7)(8)
|
12.58
|
%
|
8.73
|
%
|
14.92
|
%
|
||||
Ratio
of expenses (excluding current and deferred income tax expense)
to average
net assets before waiver:(6)(7)(8)
|
3.96
|
%
|
3.15
|
%
|
2.01
|
%
|
||||
Ratio
of expenses (excluding current and deferred income tax expense)
to average
net assets after waiver:(6)(7)(8)
|
3.57
|
%
|
2.78
|
%
|
1.73
|
%
|
||||
Ratio
of expenses (excluding current and deferred income tax expense),
without
regard to non-recurring organizational expenses, to average net
assets
before waiver:(6)(7)(8)
|
3.96
|
%
|
3.15
|
%
|
1.90
|
%
|
Period
from December 1, 2005 through February 28,
2006
|
Year
Ended November
30, 2005
|
Period
from
February
27, 2004(1)
through
November
30, 2004
|
||||||||
(Unaudited)
|
||||||||||
Ratio
of expenses (excluding current and deferred income tax expense),
without
regard to non-recurring organizational expenses, to average net
assets
after waiver:(6)(7)(8)
|
3.57
|
% |
2.78
|
% |
1.62
|
%
|
||||
Ratio
of net investment loss to average net assets before waiver:(6)(7)(9)
|
(1.30
|
)%
|
(1.42
|
)%
|
(0.45
|
)%
|
||||
Ratio
of net investment loss to average net assets after waiver:(6)(7)(9)
|
(0.91
|
)%
|
(1.05
|
)%
|
(0.17
|
)%
|
||||
Ratio
of net investment loss to average net assets after current and
deferred
income tax expense, before waiver:(6)(8)
|
(10.31
|
)%
|
(7.37
|
)%
|
(13.37
|
)%
|
||||
Ratio
of net investment loss to average net assets after current and
deferred
income tax expense, after waiver:(6)(8)
|
(9.92
|
)%
|
(7.00
|
)%
|
(13.65
|
)%
|
||||
Portfolio
turnover rate
|
0.02
|
%
|
4.92
|
%
|
1.39
|
%
|
||||
Tortoise
Auction Rate Senior Notes, end of period (000’s)
|
$
|
165,000
|
$
|
165,000
|
$
|
110,000
|
||||
Tortoise
Preferred Shares, end of period (000’s)
|
$
|
70,000
|
$
|
70,000
|
$
|
35,000
|
||||
Per
common share amount of auction rate senior notes outstanding
at end of
period
|
$
|
11.07
|
$
|
11.07
|
$
|
8.67
|
||||
Per
common share amount of net assets, excluding auction rate senior
notes, at
end of period
|
$
|
38.62
|
$
|
38.19
|
$
|
35.21
|
||||
Asset
coverage, per $1,000 of principal amount of auction rate senior
notes
|
||||||||||
Series
A
|
$
|
3,913
|
$
|
3,874
|
$
|
4,378
|
||||
Series
B
|
$
|
3,913
|
$
|
3,874
|
$
|
4,378
|
||||
Series
C
|
$
|
3,913
|
$
|
3,874
|
$
|
—
|
||||
Asset
coverage, per $25,000 liquidation value per share of preferred
shares
|
$
|
171,658
|
$
|
169,383
|
$
|
265,395
|
||||
Asset
coverage ratio of auction rate senior notes(10)
|
391
|
%
|
387
|
%
|
438
|
%
|
||||
Asset
coverage ratio of MMP shares(11)
|
275
|
%
|
272
|
%
|
332
|
%
|
(1)
|
Commencement
of Operations.
|
(2)
|
Information
presented relates to a share of common stock outstanding for
the entire
period.
|
(3)
|
The
amount is less than $0.01 per share, and represents the premium
on the
secondary offering of $0.14 per share, less the underwriting
discounts and
offering costs of $0.14 per share for the year ending November
30,
2005.
|
(4)
|
The
per common share data for the period ended November 30, 2004,
do not
reflect the change in estimate of investment income and return
of capital.
See note 2 of the Accompanying Notes to the Financial
Statements.
|
(5)
|
Not
Annualized for periods less than a year. Total investment return
is
calculated assuming a purchase of common stock at the market
price on the
first day and a sale at the current market price on the last
day of the
period reported. The calculation also assumes reinvestment
of dividends at
actual prices pursuant to the Company’s dividend reinvestment plan. Total
investment return does not reflect brokerage
commissions.
|
(6)
|
Annualized
for periods less than one full
year.
|
(7)
|
The
expense ratios and net investment ratios do not reflect the
effect of
dividend payments to preferred
stockholders.
|
(8)
|
The
Company accrued $24,659,420 and $30,330,018 for the year ended
November
30, 2005 and for the period from February 27, 2004 through
November 30,
2004, respectively, in current and deferred income
taxes.
|
(9)
|
The
ratio excludes net deferred income tax benefit on net investment
income.
|
(10)
|
Represents
value of total assets less all liabilities and indebtedness
not
represented by auction rate senior notes and MMP shares at
the end of the
period divided by auction rate senior notes outstanding at
the end of the
period.
|
(11)
|
Represents
value of total assets less all liabilities and indebtedness
not
represented by auction rate senior notes and MMP shares at
the end of the
period, divided by the sum of auction rate senior notes and
MMP shares
outstanding at the end of the
period.
|
Title
of Security
|
Total
Principal
Amount/Liquidation
Preference Outstanding
|
Asset
Coverage
Per
$1,000 of
Principal
Amount
|
Asset
Coverage Per Share ($25,000 Liquidation
Preference)
|
Average
Fair Value Per $25,000 Denomination or Per Share
Amount(1)
|
Tortoise
Notes:
|
||||
Series
A
|
$
60,000,000
|
$3,913
|
$25,000
|
|
Series
B
|
$
50,000,000
|
$3,913
|
$25,000
|
|
Series
C
|
$
55,000,000
|
$3,913
|
$25,000
|
|
$165,000,000
|
||||
MMP
Shares
|
||||
Series
I (1,400 shares)
|
$
35,000,000
|
$171,658
|
$25,000
|
|
Series
II (1,400 shares)
|
$
35,000,000
|
$171,658
|
$25,000
|
|
$
70,000,000
|
||||
$235,000,000
|
(1)
|
Fair
value of the Tortoise Notes and MMP Shares approximates the principal
amount and liquidation preference, respectively, because the interest
and
dividend rates payable on Tortoise Notes and MMP Shares are determined
at
auctions and fluctuate with changes in prevailing market interest
rates.
|
Market
Price(1)
|
Premium/
(Discount) To
Net
Asset
Value(3)
|
|||||||||||||||
Month
Ended
|
High
|
Low
|
Net
Asset
Value(2)
|
High
|
Low
|
March 31,
2004
|
$
|
26.00
|
$
|
24.95
|
$
|
23.77
|
9.4
|
%
|
5.0
|
%
|
||||||
April 30,
2004
|
25.00
|
23.10
|
23.83
|
4.9
|
%
|
-3.1
|
%
|
|||||||||
May 31,
2004
|
24.20
|
21.99
|
22.84
|
6.0
|
%
|
-3.7
|
%
|
|||||||||
June 30,
2004
|
24.00
|
22.45
|
22.67
|
5.9
|
%
|
-1.0
|
%
|
|||||||||
July 31,
2004
|
24.19
|
22.74
|
23.25
|
4.0
|
%
|
-2.2
|
%
|
|||||||||
August 31,
2004
|
25.06
|
23.86
|
24.19
|
3.6
|
%
|
-1.4
|
%
|
|||||||||
September 30,
2004
|
26.60
|
24.98
|
24.38
|
9.1
|
%
|
2.5
|
%
|
|||||||||
October 31,
2004
|
26.60
|
24.65
|
25.30
|
5.1
|
%
|
-2.6
|
%
|
|||||||||
November 30,
2004
|
27.70
|
25.39
|
25.54
|
8.5
|
%
|
-0.6
|
%
|
|||||||||
December
31, 2004
|
27.53
|
26.56
|
26.53
|
3.8
|
%
|
0.1
|
%
|
|||||||||
January
31, 2005
|
28.57
|
27.10
|
27.17
|
5.2
|
%
|
-0.3
|
%
|
|||||||||
February
28, 2005
|
31.05
|
28.55
|
28.56
|
8.7
|
%
|
0.0
|
%
|
|||||||||
March
31, 2005
|
30.91
|
28.54
|
28.37
|
9.0
|
%
|
0.6
|
%
|
|||||||||
April
30, 2005
|
30.00
|
28.40
|
27.61
|
8.7
|
%
|
2.9
|
%
|
|||||||||
May
31, 2005
|
29.15
|
28.19
|
28.61
|
1.9
|
%
|
-1.5
|
%
|
|||||||||
June
30, 2005
|
31.50
|
28.30
|
27.75
|
13.5
|
%
|
2.0
|
%
|
|||||||||
July
31, 2005
|
33.25
|
31.10
|
28.69
|
15.9
|
%
|
8.4
|
%
|
|||||||||
August
31, 2005
|
33.19
|
31.10
|
30.32
|
9.5
|
%
|
2.6
|
%
|
|||||||||
September
30, 2005
|
32.01
|
30.32
|
29.16
|
9.8
|
%
|
4.0
|
%
|
|||||||||
October
31, 2005
|
31.20
|
28.10
|
29.09
|
7.3
|
%
|
-3.4
|
%
|
|||||||||
November
30, 2005
|
30.75
|
28.25
|
28.70
|
7.1
|
%
|
-1.6
|
%
|
|||||||||
December
31, 2005
|
28.60
|
26.60
|
27.12
|
5.5
|
%
|
-1.9
|
%
|
|||||||||
January
31, 2006
|
29.95
|
27.92
|
26.65
|
12.4
|
%
|
4.8
|
%
|
|||||||||
February
28, 2006
|
29.48
|
28.35
|
28.17
|
4.7
|
%
|
0.6
|
%
|
|||||||||
March
31, 2006
|
29.58
|
27.91
|
27.55
|
7.4
|
%
|
1.3
|
%
|
|||||||||
April 30,
2006
|
28.95
|
27.56
|
28.58
|
1.3
|
%
|
-3.6
|
%
|
|||||||||
May 31,
2006
|
29.89
|
28.52
|
28.91
|
3.4
|
%
|
-1.3
|
%
|
(1)
|
Based
on high and low closing market price for the respective
month.
|
(2)
|
Based
on the NAV calculated on the close of business on the last business
day of
each prior calendar month.
|
(3)
|
Calculated
based on the information presented. Percentages are
rounded.
|
Title
of Class
|
Amount
Authorized
|
|
|
Amount
Held
by the
Company
or for
its
Account
|
|
|
Amount
Outstanding
|
|||
Common
Stock
|
100,000,000
|
0
|
14,944,103
|
|
||||||
Tortoise
Notes
|
||||||||||
Series A
|
$
|
60,000,000
|
0
|
$
|
60,000,000
|
|||||
Series B
|
$
|
50,000,000
|
0
|
$
|
50,000,000
|
|||||
Series C
|
$
|
55,000,000
|
0
|
$
|
55,000,000
|
|||||
Preferred
Stock
|
10,000,000
|
(1)
|
||||||||
Series I
MMP Shares
|
1,400
|
(2)
|
0
|
1,400
|
||||||
Series II
MMP Shares
|
1,400
|
(2)
|
0
|
1,400
|
(1) | Includes 2,800 shares of preferred stock designated as MMP Shares as set forth below. |
(2)
|
Each
share has a liquidation preference of $25,000 ($35,000,000 in the
aggregate for each of Series I and Series II MMP
Shares).
|
·
|
Pipeline
MLPs.
Pipeline MLPs are common carrier transporters of natural gas, natural
gas
liquids (primarily propane, ethane, butane and natural gasoline),
crude
oil or refined petroleum products (gasoline, diesel fuel and jet
fuel).
Pipeline MLPs also may operate ancillary businesses such as storage
and
marketing of such products. Revenue is derived from capacity and
transportation fees. Historically, pipeline output has been less
exposed
to
cyclical economic forces due to its low cost structure and
government-regulated nature. In addition, pipeline MLPs do not have
direct
commodity price exposure because they do not own the product being
shipped.
|
·
|
Processing
MLPs.
Processing MLPs are gatherers and processors of natural gas, as
well as
providers of transportation, fractionation and storage of natural
gas
liquids (“NGLs”).
|
|
Revenue
is derived from providing services to natural gas producers, which
require
treatment or processing before their natural gas commodity can be
marketed
to utilities and other end user markets. Revenue for the processor
is fee
based, although it is not uncommon to have some participation in
the
prices of the natural gas and NGL commodities for a portion of
revenue.
|
·
|
Propane
MLPs.
Propane MLPs are distributors of propane to homeowners for space
and water
heating. Revenue is derived from the resale of the commodity on a
margin
over wholesale cost. The ability to maintain margin is a key to
profitability. Propane serves approximately 3% of the household energy
needs in the United States, largely for homes beyond the geographic
reach
of natural gas distribution pipelines. Approximately 70% of annual
cash
flow is earned during the winter heating season (October through
March). Accordingly, volumes are weather dependent, but have utility
type
functions similar to electricity and natural
gas.
|
·
|
Coal
MLPs.
Coal MLPs own, lease and manage coal reserves. Revenue is derived
from
production and sale of coal, or from royalty payments related to
leases to
coal producers. Electricity generation is the primary use of coal
in the
United States. Demand for electricity and supply of alternative fuels
to
generators are the primary drivers of coal demand. Coal MLPs are
subject
to operating and production risks, such as: the MLP or a lessee meeting
necessary production volumes; federal, state and local laws and
regulations which may limit the ability to produce coal; the MLP’s ability
to manage production costs and pay mining reclamation costs; and
the
effect on demand that the Clean Air Act standards have on coal-end
users.
|
·
|
Marine
Shipping MLPs.
Marine shipping MLPs are primarily marine transporters of natural
gas,
crude oil or refined petroleum products. Marine shipping MLPs
derive
revenue from charging customers for the transportation of these
products
utilizing the MLPs’ vessels. Transportation services are typically
provided pursuant to a charter or contract, the terms of which
vary
depending on, for example, the length of use of a particular
vessel, the
amount of cargo transported, the number of voyages made, the
parties
operating a vessel or other
factors.
|
· |
Under
normal circumstances, we invest at least 70% and up to 100% of our
total
assets in equity securities issued by MLPs. Equity securities currently
consist of common units, convertible subordinated units, and pay-in-kind
units.
|
· |
We
may invest up to 30% of our total assets in restricted securities,
primarily through direct placements. Subject to this policy,
we may invest
without limitation in illiquid securities. The types of restricted
securities that we may purchase include securities of private
energy
infrastructure companies and privately issued securities of publicly
traded energy infrastructure companies. Restricted securities,
whether
issued by public companies or private companies, are generally
considered
illiquid. Investments in private companies that do not have any
publicly
traded shares or units are limited to 5% of total
assets.
|
· |
We
may invest up to 25% of our total assets in debt securities of energy
infrastructure companies, including certain securities rated below
investment grade (“junk bonds”). Below investment grade debt securities
will be rated at least B3 by Moody’s and at least B- by S&P at the
time of purchase, or comparably rated by another statistical rating
organization or if unrated, determined to be of comparable quality
by the
Adviser.
|
· |
We
will not invest more than 10% of our total assets in any single
issuer.
|
· |
We
will not engage in short sales.
|
Common
Units (for MLPs taxed as partnerships)1
|
Convertible
Subordinated
Units (for MLPs taxed as partnerships)
|
I-Shares
|
||
Voting
Rights
|
Limited
to certain significant decisions; no annual election of directors
|
Same
as common units
|
No
direct MLP voting rights
|
|
Dividend
Priority
|
First
right to minimum quarterly distribution (“MQD”) specified in Partnership
Agreement; arrearage rights
|
Second
right to MQD; no arrearage rights; may be paid in additional
units
|
Equal
in priority to common units but paid in additional I-Shares at current
market value of I-Shares
|
|
Dividend
Rate
|
Minimum
set in partnership agreement; participate pro rata with subordinated
units
after both MQDs are met
|
Equal
in amount to common units; participate pro rata with common units
above
the MQD
|
Equal
in amount to common units
|
|
Trading
|
Listed
on NYSE, AMEX or NASDAQ National Market
|
Not
publicly traded
|
Listed
on NYSE
|
|
Federal
Income Tax Treatment
|
Generally,
ordinary income to the extent of taxable income allocated to holder;
distributions are tax-free return of capital to extent of holder’s basis;
remainder as capital gain
|
Same
as common units
|
Full
distribution treated as return of capital; since distribution is
in
shares, total basis is not reduced
|
|
Type
Of Investor
|
Retail;
creates unrelated business taxable income for tax-exempt investor;
investment by regulated investment companies limited to 25% of total
assets
|
Same
as common units
|
Retail
and Institutional; does not create unrelated business taxable income;
qualifying income for regulated investment companies
|
|
Liquidity
Priority
|
Intended
to receive return of all capital first
|
Second
right to return of capital; pro rata with common units
thereafter
|
Same
as common units (indirect right through I-Share issuer)
|
|
Conversion
Rights
|
None
|
One-to-one
ratio into common units
|
None
|
(1)
|
Some
energy infrastructure companies in which we may invest have been
organized
as LLCs. Such companies are generally treated in the same manner
as MLPs
for federal income tax purposes. Common units of LLCs have similar
characteristics as those of MLP common units, except that LLC common
units
typically have voting rights with respect to the LLC and LLC common
units
held by management are not entitled to increased percentages of cash
distributions as increased levels of cash distributions are received
by
the LLC. The characteristics of LLCs and their common units are more
fully
discussed below.
|
Assumed
Portfolio Return (net of expenses)
|
-10
|
%
|
-5
|
%
|
0
|
%
|
5
|
%
|
10
|
%
|
|||||||
Corresponding
Common Share Return
|
-21.8
|
%
|
-13.1
|
%
|
-4.3
|
%
|
4.4 |
%
|
13.1 | % |
· |
Processing
and coal MLPs may be directly affected by energy commodity prices.
The
volatility of commodity prices can indirectly affect certain other
MLPs
due to the impact of prices on volume of commodities transported,
processed, stored or distributed. Pipeline MLPs are not subject to
direct
commodity price exposure because they do not own the underlying energy
commodity. While propane MLPs do own the underlying energy commodity,
the
Adviser seeks high quality MLPs that are able to mitigate or manage
direct
margin exposure to commodity price levels. The MLP sector can be
hurt by
market perception that MLPs’ performance and distributions are directly
tied to commodity prices.
|
· |
The
profitability of MLPs, particularly processing and pipeline MLPs,
may be
materially impacted by the volume of natural gas or other energy
commodities available for transporting, processing, storing or
distributing. A significant decrease in the production of natural
gas,
oil, coal or other energy commodities, due to a decline in production
from
existing facilities, import supply disruption, depressed commodity
prices
or otherwise, would reduce revenue and operating income of MLPs and,
therefore, the ability of MLPs to make distributions to
partners.
|
· |
A
sustained decline in demand for crude oil, natural gas and refined
petroleum products could adversely affect MLP revenues and cash
flows.
Factors that could lead to a decrease in market demand include
a recession
or other adverse economic conditions, an increase in the market
price of the underlying commodity, higher taxes or other regulatory
actions that increase costs, or a shift in consumer demand for
such
products.
|
· |
A
portion of any one MLP’s assets may be dedicated to natural gas reserves
and other commodities that naturally deplete over time, which could
have a
materially adverse impact on an MLP’s ability to make distributions. Often
the MLPs depend upon exploration and development activities by third
parties. MLPs employ a variety of means of increasing cash flow,
including
increasing utilization of existing facilities, expanding operations
through new construction, expanding operations through acquisitions,
or
securing additional long-term contracts. Thus, some MLPs may be subject
to
construction risk, acquisition risk or other risk factors arising
from
their specific business strategies. A significant slowdown in large
energy
companies’ disposition of energy infrastructure assets and other merger
and acquisition activity in the energy MLP industry could reduce
the
growth rate of cash flows we receive from MLPs that grow through
acquisitions.
|
· |
The
profitability of MLPs could be adversely affected by changes in the
regulatory environment. Most MLPs’ assets are heavily regulated by federal
and state governments in diverse matters, such as the way in which
certain
MLP assets are constructed, maintained and operated and the prices
MLPs
may charge for their services. Such regulation can change over time
in
scope and intensity. For example, a particular byproduct of an MLP
process
may be declared hazardous by a regulatory agency and unexpectedly
increase
production costs. Moreover, many state and federal environmental
laws
provide for civil as well as regulatory remediation, thus adding
to the
potential exposure an MLP may face.
|
· |
Extreme
weather patterns, such as hurricane Ivan in 2004 and hurricane Katrina
in
2005, could result in significant volatility in the supply of energy
and
power and could adversely impact the value of the securities in which
we
invest. This volatility may create fluctuations in commodity prices
and
earnings of companies in the energy infrastructure industry.
|
· |
A
rising interest rate environment could adversely impact the performance
of
MLPs. Rising interest rates could limit the capital appreciation
of equity
units of MLPs as a result of the increased availability of alternative
investments at competitive yields with MLPs. Rising interest rates
also
may increase an MLP’s cost of capital. A higher cost of capital could
limit growth from acquisition/expansion projects and limit MLP
distribution growth rates.
|
· |
Since
the September 11, 2001 attacks, the U.S. Government has issued public
warnings indicating that energy assets, specifically those related
to
pipeline infrastructure, production facilities and transmission and
distribution facilities, might be specific targets of terrorist activity.
The continued threat of terrorism and related military activity likely
will increase volatility for prices in natural gas and oil and could
affect the market for products of
MLPs.
|
· |
Holders
of MLP units are subject to certain risks inherent in the partnership
structure of MLPs including (1) tax risks (described below),
(2) limited ability to elect or remove management, (3) limited
voting rights, except with respect to extraordinary transactions,
and
(4) conflicts of interest of the general partner, including those
arising from incentive distribution
payments.
|
· |
Pipeline
MLPs are subject to demand for crude oil or refined products
in the
markets served by the pipeline, sharp decreases in crude oil
or natural
gas prices that cause producers to curtail production or reduce
capital
spending for exploration activities, and environmental regulation.
Demand
for gasoline, which accounts for a substantial portion of refined
product transportation, depends on price, prevailing economic
conditions in the markets served, and demographic and seasonal
factors.
Pipeline MLP unit prices are primarily driven by distribution
growth rates
and prospects for distribution growth. Pipeline MLPs are subject
to
regulation by FERC with respect to tariff rates these companies
may charge
for pipeline transportation services. An adverse determination
by FERC
with respect to the tariff rates of a pipeline MLP could have
a material
adverse effect on the business, financial condition, results
of operations
and cash flows of that pipeline MLP and its ability to make cash
distributions to its equity
owners.
|
· |
Processing
MLPs are subject to declines in production of natural gas fields,
which
utilize the processing facilities as a way to market the gas, prolonged
depression in the price of natural gas or crude oil refining, which
curtails production due to lack of drilling activity and declines
in the
prices of natural gas liquids products and natural gas prices, resulting
in lower processing margins.
|
· |
Propane
MLPs are subject to earnings variability based upon weather patterns
in
the locations where the company operates and the wholesale cost of
propane
sold to end customers. Propane MLP unit prices are based on safety
in
distribution coverage ratios, interest rate environment and, to a
lesser
extent, distribution growth.
|
· |
Coal
MLPs are subject to demand variability based on favorable weather
conditions, strong or weak domestic economy, the level of coal stockpiles
in the customer base, and the general level of prices of competing
sources
of fuel for electric generation. They also are subject to supply
variability based on the geological conditions that reduce productivity
of
mining operations, regulatory permits for mining activities and the
availability of coal that meets Clean Air Act
standards.
|
· |
Marine
shipping MLPs are subject to the demand for, and the level of
consumption
of, refined petroleum products, crude oil or natural gas in the
markets
served by the marine shipping MLPs, which in turn could affect
the demand
for tank vessel capacity and charter rates. These MLPs’ vessels and their
cargoes are also subject to the risks of being damaged or lost
due to
marine disasters, bad weather, mechanical failures, grounding,
fire,
explosions and collisions, human error, piracy, and war and
terrorism.
|
· |
Cash
Flow Risk.
We derive substantially all of our cash flow from investments in
equity
securities of MLPs. The amount of cash that we have available to
pay or
distribute to holders of our securities depends entirely on the ability
of
MLPs held by us to make distributions to their partners and the tax
character of those distributions. We have no control over the actions
of
underlying MLPs. The amount of cash that each individual MLP can
distribute to its partners will depend on the amount of cash it generates
from operations, which will vary from quarter to quarter depending
on
factors affecting the energy infrastructure market generally and
on
factors affecting the particular business lines of the MLP. Available
cash
will also depend on the MLPs’ level of operating costs (including
incentive distributions to the general partner), level of capital
expenditures, debt service requirements, acquisition costs (if any),
fluctuations in working capital needs and other
factors.
|
· |
Tax
Risk of MLPs.
Our ability to meet our investment objective will depend on the
level of
taxable income, dividends and distributions we receive from the MLPs
and other securities of energy infrastructure companies in which
we
invest, a factor over which we have no control. The benefit we
derive from our investment in MLPs depends largely on the MLPs
being
treated as partnerships for federal income tax purposes. As a
partnership,
an MLP has no federal income tax liability at the entity level. If, as a
result of a change in current law or a change in an MLP’s business, an MLP
were treated as a corporation for federal income tax purposes,
the MLP
would be obligated to pay federal income tax on its income at
the
corporate tax rate. If an MLP were classified as a corporation
for federal
income tax purposes, the amount of cash available for distribution
would
be reduced and the distributions we
receive might be taxed entirely as dividend income. Therefore,
treatment
of one or more MLPs as a corporation for federal income tax purposes
could
affect our ability to meet our investment objective and would
reduce the
amount of cash available to pay or distribute to holders of our
securities.
|
· |
Deferred
Tax Risks of MLPs. As
a limited partner in the MLPs in which we invest, we will receive
a pro
rata share of income, gains, losses and deductions from those MLPs.
Historically, a significant portion of income from such MLPs has
been
offset by tax deductions. We will incur a current tax liability on
that
portion of an MLP’s income and gains that is not offset by tax deductions
and losses. The percentage of an MLP’s income and gains which is offset by
tax deductions and losses will fluctuate over time for various reasons.
A
significant slowdown in acquisition activity by MLPs held in our
portfolio
could result in a reduction of accelerated depreciation generated
by new
acquisitions, which may result in increased current income tax liability
to us.
|
· |
for
equity securities, the Accounting Services Provider will first use
readily
available market quotations and will obtain direct written broker-dealer
quotations if a security is not traded on an exchange or quotations
are
not available from an approved pricing
service;
|
· |
for
fixed income securities, the Accounting Services Provider will
use readily
available market quotations based upon the last sale price of a
security
on the day we value our assets or a market value from a pricing
service or
by obtaining a direct written broker-dealer quotation from a dealer
who
has made a market in the security; and
|
· |
other
assets will be valued at market value pursuant to the Valuation
Procedures.
|
· |
market
conditions;
|
· |
the
timing of our investments in portfolio
securities;
|
· |
the
securities comprising our
portfolio;
|
· |
changes
in interest rates (including changes in the relationship between
short-term rates and long-term
rates);
|
· |
the
amount and timing of the use of borrowings and other leverage by
us;
|
· |
the
effects of leverage on our common stock (discussed above under
“Leverage”);
|
· |
the
timing of the investment of offering proceeds and leverage proceeds
in
portfolio securities; and
|
· |
our
net assets and operating expenses.
|
Common
shares currently outstanding
|
14,944,103
|
Common
shares that currently may be issued below NAV
|
2,988,820
|
Total
common shares outstanding if all authorized are issued below
NAV
|
17,932,923
|
Net
asset value per share as of May 31, 2006
|
$28.91
|
Aggregate
net asset value of all currently outstanding common shares
based on NAV as
of May 31, 2006
|
432,077,223
|
Aggregate
net proceeds to the Company (assuming the Company sold all
authorized
shares and received net proceeds equal to $27.46 per share
(95% of the NAV
as of May 31, 2006))
|
82,072,997
|
Expected
aggregate net asset value of the Company after issuance
|
514,150,220
|
NAV
per share after issuance
|
$28.67
|
· |
the
form and title of the
security;
|
· |
the
aggregate liquidation preference of preferred
stock;
|
· |
the
dividend rate of the preferred
stock;
|
· |
the
frequency with which auctions will be
held;
|
· |
any
optional or mandatory redemption
provisions;
|
· |
any
changes in auction agents, paying agents or security registrar;
and
|
· |
any
other terms of the preferred stock.
|
· |
the
form and title of the security;
|
· |
the
aggregate principal amount of the
securities;
|
· |
the
interest rate of the securities;
|
· |
the
maturity dates on which the principal of the securities will
be
payable;
|
· |
the
frequency with which auctions will be
held;
|
· |
any
changes to or additional events of default or
covenants;
|
· |
any
optional or mandatory redemption
provisions;
|
· |
any
changes in trustees, auction agents, paying agents or security
registrar;
and
|
· |
any
other terms of the securities.
|
· |
default
in the payment of any interest upon a series of debt securities when
it
becomes due and payable and the continuance of such default for 30
days;
|
· |
default
in the payment of the principal of, or premium on, a series of debt
securities at its stated maturity;
|
· |
default
in the performance, or breach, of any covenant or warranty of ours
in the
Indenture, and continuance of such default or breach for a period
of 90
days after written notice has been given to us by the
trustee;
|
· |
certain
voluntary or involuntary proceedings involving us and relating to
bankruptcy, insolvency or other similar laws;
|
· |
if,
on the last business day of each of twenty-four consecutive calendar
months, the debt securities have a 1940 Act asset coverage of less
than
100%; or
|
· |
any
other “event of default” provided with respect to a series, including a
default in the payment of any redemption price payable on the redemption
date.
|
·
|
DTC
notifies us that it is unwilling or unable to continue as a depository
and
we do not appoint a successor within 60
days;
|
·
|
we,
at our option, notify the trustee in writing that we elect to cause
the
issuance of notes in definitive form under the Indenture;
or
|
·
|
an
event of default has occurred and is
continuing.
|
· |
the
names of any agents, underwriters or
dealers
|
· |
any
sales loads or other items constituting underwriters’
compensation;
|
· |
any
discounts, commissions, or fees allowed or paid to dealers
or
agents;
|
· |
the
public offering or purchase price of the offered securities and
the net
proceeds we will receive from the sale;
and
|
· |
any
securities exchange on which the offered securities may be
listed.
|
· |
An
overallotment in connection with an offering creates a short position
in
the common stock for the underwriter’s own
account.
|
· |
An
underwriter may place a stabilizing bid to purchase the common stock
for
the purpose of pegging, fixing, or maintaining the price of the common
stock.
|
· |
Underwriters
may engage in syndicate covering transactions to cover overallotments
or
to stabilize the price of the common stock by bidding for, and purchasing,
the common stock or any other securities in the open market in order
to
reduce a short position created in connection with the
offering.
|
· |
The
managing underwriter may impose a penalty bid on a syndicate member
to
reclaim a selling concession in connection with an offering when
the
common stock originally sold by the syndicate member is purchased
in
syndicate covering transactions or
otherwise.
|
Investment
Limitations
|
S-1
|
Investment
Objective and Principal Investment Strategies
|
S-3
|
Management
of the Company
|
S-15
|
Net
Asset Value
|
S-25
|
Portfolio
Transactions
|
S-26
|
Certain
Federal Income Tax Matters
|
S-28
|
Proxy
Voting Policies
|
S-35
|
Independent
Registered Public Accounting Firm
|
S-36
|
Internal
Accountant
|
S-36
|
Additional
Information
|
S-36
|
Audited
Financial Statements as of November 30, 2005
|
F-1
|
Unaudited
Financial Statements as of February 28, 2006
|
F-17
|
Appendix
A - Summary of Certain Provisions of the Indenture and Supplemental
Indenture
|
A-1
|
Appendix
B - Form of Articles Supplementary
|
B-1
|
Appendix
C - Rating of Investments
|
C-1
|
|
|
|
Per
$25,000 Principal Amount of Tortoise Notes
|
Total
|
|||
Public
offering price
|
$
|
25,000
|
$
|
||||
Sales
load
|
$
|
$
|
|||||
Proceeds
to the Company (before expenses)
(1)
|
$
|
$
|
(1)
|
Does
not include offering expenses payable by the Company, estimated
to be
$______.
|
[Underwriter(s)]
|
________,
20__
|
1
|
|
1
|
|
2
|
|
10
|
|
14
|
|
15
|
|
Actual
|
As
Adjusted
|
|||||
|
(Unaudited)
|
||||||
Long-Term
Debt:
|
|||||||
Tortoise
Notes, denominations of $25,000 or any multiple thereof1
|
$
|
165,000,000
|
$
|
||||
Preferred
Stock:
|
|||||||
MMP
Shares, $25,000 stated value per share at liquidation; 10,000,000
shares
authorized/2,800 shares issued1
|
$
|
$
|
|||||
Common
Stockholders’ Equity:
|
|||||||
Common
Stock, $.001 par value per share; 100,000,000 shares authorized;
_______
shares outstanding1
|
$
|
$2
|
|||||
Additional
paid-in capital
|
$
|
$
|
|||||
Accumulated
net investment loss, net of deferred tax benefit
|
$
|
$
|
|||||
Accumulated
realized gain from investments, net of deferred tax
expense
|
$
|
$
|
|||||
Net
unrealized gain on investments
|
$
|
$
|
|||||
Net
assets applicable to common stock
|
$
|
$
|
1
|
None
of these outstanding shares/notes are held by us or for our
account.
|
2
|
The
sales load and estimated offering costs of the Series __ Tortoise
Notes
will be capitalized and amortized over the life of the Series __
Tortoise
Notes.
|
Value
of Company assets less all liabilities and
indebtedness
not represented by senior securities
|
=
|
$
|
=
|
___%
|
Senior
securities representing indebtedness, including the aggregate principal
amount of Tortoise Notes
|
$
|
Moody’s
Credit
Rating
|
Fitch
Credit
Rating
|
Applicable
Percentage
|
· |
Hold
Order - indicating its desire to hold Tortoise Notes of such series
without regard to the Applicable Rate for Tortoise Notes of such
series
for the next Rate Period thereof.
|
· |
Bid
- indicating its desire to sell the principal amount of Outstanding
Tortoise Notes, if any, of such series held by such Beneficial
Owner which
such Beneficial Owner offers to sell if the Applicable Rate for
Tortoise
Notes of such series for the next succeeding Rate Period of Tortoise
Notes
of such series shall be less than the rate per annum specified
by such
Beneficial Owner (also known as a hold at rate
order).
|
· |
Sell
Order - indicating its desire to sell the principal amount of Outstanding
Tortoise Notes, if any, of such series held by such Beneficial
Owner which
such Beneficial Owner offers to sell without regard to the Applicable
Rate
for Tortoise Notes of such series for the next succeeding Rate
Period of
Tortoise Notes of such series.
|
(1)
|
pursuant
to a Bid or Sell Order placed with the Auction Agent in accordance
with
the Auction Procedures,
|
(2)
|
to
or through a Broker-Dealer, or
|
(3)
|
to
us or any affiliate of ours; provided, however, that (a) a sale,
transfer or other disposition of an aggregate principal amount
of Tortoise
Notes from a customer of a Broker-Dealer who is listed on the records
of
that Broker-Dealer as the holder of such Tortoise Notes to that
Broker-Dealer or another customer of that Broker-Dealer shall not
be
deemed to be a sale, transfer or other disposition for purposes
of the
foregoing if such Broker-Dealer remains the Existing Holder of
the
Tortoise Notes so sold, transferred or disposed of immediately
after such
sale, transfer or disposition and (b) in the case of all transfers
other than pursuant to Auctions, the Broker-Dealer (or other person,
if
permitted by us) to whom such transfer is made shall advise the
Auction
Agent of such transfer.
|
1
|
|
9
|
|
11
|
|
13
|
|
13
|
|
14
|
|
15
|
|
15
|
|
23
|
|
26
|
|
35
|
|
38
|
|
38
|
|
44
|
|
45
|
|
47
|
|
56
|
|
57
|
|
59
|
|
61
|
|
62
|
|
62
|
|
62
|
|
63
|
[Underwriters]
|
Per
Share
|
Total
|
||||||
Public
offering price
|
$
|
25,000
|
$
|
||||
Sales
load
|
$
|
$
|
|||||
Proceeds
to the Company (before expenses)(1)
|
$
|
$
|
(1)
|
Does
not include offering expenses payable by the Company estimated
to be
$_______.
|
1
|
|
1
|
|
2
|
|
9
|
|
13
|
|
14
|
Actual
|
As
Adjusted
|
||||||
(Unaudited)
|
|||||||
Long-Term
Debt:
|
|||||||
Tortoise
Notes, denominations of $25,000 or any multiple thereof1
|
$
|
$
|
|||||
Preferred
Stock Outstanding:
|
|||||||
MMP
Shares, $.001 par value per share, $25,000 stated value per share
at
liquidation; 10,000,000 shares authorized; 2,800 shares issued
and _____
shares issued, as adjusted, respectively1
|
$
|
70,000,000
|
$
|
||||
Common
Stockholders’ Equity:
|
|||||||
Common
Stock, $.001 par value per share; 100,000,000 shares authorized;
__________ shares issued and outstanding1
|
$
|
$
|
|||||
Additional
paid-in capital
|
$
|
2
|
$
|
3
|
|||
Accumulated
net investment loss, net of deferred tax benefit
|
$
|
$
|
|||||
Undistributed
net realized gain, net of deferred tax expense
|
$
|
$
|
|||||
Net
unrealized gain on investments and interest rate swap contracts,
net of
deferred tax expense
|
$
|
$
|
|||||
Net
assets applicable to common stock
|
$
|
$
|
1
|
None
of these outstanding shares/notes are held by us or for our
account.
|
2
|
Reflects
return of capital distributions to common stockholders and dividends
to
preferred stockholders in the aggregate of approximately $__
million.
|
3
|
As
adjusted, additional paid-in capital reflects the proceeds of all
issuances of the common stock ($___________) less $0.001 par value
per
share of common stock ($_______) and the offering costs related
to the
issuance of common stock in the amount of $______ per share of
common
stock ($_______), less return of capital distributions to common
stockholders and dividends to preferred stockholders in the aggregate
of
approximately $___ million, less the offering costs related to
the prior
issuances of preferred stock and less the estimated offering costs
related
to preferred stock for this offering in the amount of
$________.
|
Value
of Company assets less all liabilities and
indebtedness
not represented by senior securities
|
=
|
$
|
=
|
___%
|
Senior
securities representing indebtedness, plus aggregate liquidation
preference of MMP Shares
|
$
|
Moody’s
Credit
Rating
|
Fitch
Credit
Rating
|
Applicable
Percentage
|
· |
Hold
Order - indicating its desire to hold shares without regard to
the
Applicable Rate for shares for the next Dividend Period
thereof.
|
· |
Bid
- indicating its desire to sell shares if the Applicable Rate for
shares
for the next Dividend Period thereof is less than the rate specified
in
such Bid (also known as a hold-at-a-rate
order).
|
· |
Sell
Order - indicating its desire to sell shares without regard to
the
Applicable Rate for shares for the next Dividend Period
thereof.
|
(1)
|
pursuant
to a Bid or Sell Order placed with the Auction Agent in accordance
with
the Auction Procedures,
|
(2)
|
to
a Broker-Dealer, or
|
(3)
|
to
us or any affiliate of ours; provided, however, that (a) a sale,
transfer or other disposition of MMP Shares from a customer of
a
Broker-Dealer who is listed on the records of that Broker-Dealer
as the
holder of such shares to that Broker-Dealer or another customer
of that
Broker-Dealer shall not be deemed to be a sale, transfer or other
disposition for purposes of the foregoing if such Broker-Dealer
remains
the Existing Holder of the shares so sold, transferred or disposed
of
immediately after such sale, transfer or disposition and (b) in the
case of all transfers other than pursuant to Auctions, the Broker-Dealer
(or other person, if permitted by us) to whom such transfer is
made shall
advise the Auction Agent of such
transfer.
|
1
|
|
9
|
|
11
|
|
13
|
|
13
|
|
14
|
|
15
|
|
15
|
|
23
|
|
26
|
|
35
|
|
38
|
|
38
|
|
44
|
|
45
|
|
47
|
|
56
|
|
57
|
|
59
|
|
61
|
|
62
|
|
62
|
|
62
|
|
63
|
S-1
|
|
S-3
|
|
S-16
|
|
S-25
|
|
S-27
|
|
S-28
|
|
S-35
|
|
S-36
|
|
S-36
|
|
S-36
|
|
F-1
|
|
Unaudited Financial Statements as of February 28, 2006 | F-17 |
A-1
|
|
B-1
|
|
C-1
|
(1)
|
Under
normal circumstances, we will invest at least 90% of our total assets
in
securities of energy infrastructure
companies.
|
(2)
|
Under
normal circumstances, we will invest at least 70% of our total assets
in
equity securities issued by master limited partnerships
(“MLPs”).
|
(3)
|
We
may invest up to 30% of our total assets in restricted securities,
primarily through direct placements. Subject to this policy,
we may invest
without limitation in illiquid securities. The types of restricted
securities that we may purchase include securities of private
energy
infrastructure companies and privately issued securities of publicly
traded energy infrastructure companies. Restricted securities,
whether
issued by public companies or private companies, are generally
considered
illiquid. Investments in private companies that do not have any
publicly
traded shares or units are limited to 5% of total
assets.
|
(4)
|
We
may invest up to 25% of our total assets in debt securities of energy
infrastructure companies, including securities rated below investment
grade (commonly referred to as “junk bonds”). Below investment grade debt
securities will be rated at least B3 by Moody’s Investors Service, Inc.
(“Moody’s”) and at least B- by Standard & Poor’s Ratings
Group (“S&P”) at the time of purchase, or comparably rated by
another statistical rating organization or if unrated, determined
to be of
comparable quality by the Adviser.
|
(5)
|
We
will not invest more than 10% of our total assets in any single
issuer.
|
(6)
|
We
will not engage in short sales.
|
·
|
increased
price sensitivity to changing interest rates and to a deteriorating
economic environment;
|
·
|
greater
risk of loss due to default or declining credit
quality;
|
·
|
adverse
company specific events are more likely to render the issuer unable
to
make interest and/or principal payments;
and
|
·
|
if
a negative perception of the below investment grade debt market develops,
the price and liquidity of below investment grade debt securities
may be
depressed. This negative perception could last for a significant
period of
time.
|
Name
and Age
|
Position(s)
Held With Company and Length of Time Served
|
Principal
Occupation During Past Five Years
|
Number
of Portfolios in Fund Complex Overseen by Director2
|
Other
Public Company Directorships Held by Director
|
Independent
Directors
|
||||
Conrad
S. Ciccotello, 45
|
Director
since 2003
|
Tenured
Associate Professor of Risk Management and Insurance, Robinson College
of
Business, Georgia State University (faculty member since 1999); Director
of Graduate Personal Financial Planning (PFP) Programs, Editor, “Financial
Services Review,” (an academic journal dedicated to the study of
individual financial management); formerly, faculty member, Pennsylvania
State University.
|
3
|
None
|
John
R. Graham, 60
|
Director
since 2003
|
Executive-in-Residence
and Professor of Finance, College of Business Administration, Kansas
State
University (has served as a professor or adjunct professor since
1970);
Chairman of the Board, President and CEO, Graham Capital Management,
Inc.,
primarily a real estate development and investment company and a
venture
capital company; and Owner of Graham Ventures, a business services
and
venture capital firm; formerly, CEO, Kansas Farm Bureau Financial
Services, including seven affiliated insurance or financial service
companies (1979-2000).
|
3
|
Erie
Indemnity Company; Erie Family Life Insurance Company; Kansas State
Bank
|
Name
and Age
|
Position(s)
Held With Company and Length of Time Served
|
Principal
Occupation During Past Five Years
|
Number
of Portfolios in Fund Complex Overseen by Director2
|
Other
Public Company Directorships Held by
Director
|
Charles
E. Heath, 63
|
Director
since 2003
|
Retired
in 1999. Formerly, Chief Investment Officer, GE Capital’s Employers
Reinsurance Corporation (1989-1999). Chartered Financial Analyst
(“CFA”)
since 1974.
|
3
|
None
|
Interested
Directors and Officers1
|
||||
H.
Kevin Birzer, 46
|
Director
and
Chairman
of the
Board
since 2003
|
Managing
Director of the Adviser since 2002; Partner/Senior Analyst, Fountain
Capital (1990-present); formerly, Vice President, Corporate Finance
Department, Drexel Burnham Lambert (1986-1989); Vice President, F.
Martin
Koenig & Co., an investment management firm
(1983-1986).
|
3
|
None
|
Terry
C. Matlack, 50
|
Director
and Chief Financial Officer since 2003, Chief Compliance Officer
from 2004
through May 2006; Treasurer from 2003 to November 2005
|
Managing
Director of the Adviser since 2002; Managing Director, KCEP
(2001-present); formerly, President, GreenStreet Capital, a private
investment firm (1998-2001).
|
3
|
None
|
|
David J.
Schulte, 45
|
President
and Chief Executive Officer since 2003
|
Managing
Director of the Adviser since 2002; Managing Director, KCEP
(1993-present); CFA since 1992.
|
None
|
||
Zachary
A. Hamel, 40
|
Secretary
since 2003
|
Managing
Director of the Adviser since 2002; Partner/Senior Analyst with
Fountain
Capital (1997-present).
|
None
|
||
Kenneth
P. Malvey, 41
|
Treasurer
since November 2005; Assistant Treasurer from 2003 to November
2005
|
Managing
Director of the Adviser since 2002; Partner/Senior Analyst, Fountain
Capital Management (2002-present); formerly, Investment Risk Manager
and
member of the Global Office of Investments, GE Capital’s Employers
Reinsurance Corporation (1996-2002).
|
None
|
(1)
|
As
a result of their respective positions held with the Adviser or its
affiliates, these individuals are considered our “interested persons”
within the meaning of the 1940 Act.
|
(2)
|
This
number includes Tortoise North American Energy Corporation (“TYN”) and
Tortoise Energy Capital Corporation (“TYY”) but excludes Tortoise Capital
Resources Corporation (“TTO”). The Adviser also serves as investment
adviser to TYN, TYY and TTO.
|
Name
and Position With the Company
|
Aggregate
Compensation From the Company
|
Aggregate
Compensation From the Company and Fund Complex Paid to Directors
(3
Companies)
|
|||||
Independent
Directors
|
|||||||
Conrad
S. Ciccotello
|
$
|
35,500 |
$
|
69,000
|
|||
John
R. Graham
|
$
|
32,500 |
$
|
59,333
|
|||
Charles
E. Heath
|
$
|
38,500 |
$
|
65,333
|
|||
Interested
Directors
|
|||||||
H.
Kevin Birzer
|
$
|
0
|
$
|
0
|
|||
Terry
C. Matlack
|
$
|
0
|
$
|
0
|
Name
of Director
|
Aggregate
Dollar Range of Company Securities Beneficially Owned By
Director*
|
Aggregate
Dollar Range of Equity Securities in all Registered Investment Companies
Overseen by Director in Family of Investment
Companies
(3
Companies)
|
|||||
Independent
Directors
|
|||||||
Conrad
S. Ciccotello
|
$50,001-$100,000
|
$50,001-$100,000
|
|||||
John
R. Graham
|
Over
$100,000
|
Over
$100,000
|
|||||
Charles
E. Heath
|
Over
$100,000
|
|
Over
$100,000
|
||||
Interested
Directors
|
|||||||
H.
Kevin Birzer
|
Over
$100,000
|
Over
$100,000
|
|||||
Terry
C. Matlack
|
Over
$100,000
|
Over
$100,000
|
*
|
As
of May 31, 2006, the officers and directors of the Company, as
a group,
own less than 1% of any class of the Company’s outstanding shares of
stock.
|
Stifel,
Nicolaus & Company Inc.
501
North Broadway
St.
Louis, MO 63102
|
11.40%
|
Merrill
Lynch Safekeeping
4
Corporate Place
Piscataway,
NJ 08854
|
8.94% |
RBC
Dain Rauscher Inc.
1221
Avenue of the Americas
New
York, NY 10036
|
8.64%
|
Charles
Schwab & Co., Inc.
101
Montgomery St.
San
Francisco, CA 94104
|
7.29% |
Davenport
& Company LLC
One
James Center
901
East Cary Street
Richmond,
VA 23219
|
5.82%
|
Lehman
Brothers Inc.
745
Seventh Avenue
New
York, NY 10019
|
5.77%
|
Oppenheimer &
Co. Inc.
125
Broad Street
New
York, NY 10004
|
5.21%
|
Name
of Manager
|
Number
of Accounts
|
Total
Assets of Accounts
|
Number
of Accounts Paying a Performance Fee
|
Total
Assets of Accounts Paying a Performance Fee*
|
H. Kevin Birzer Registered
investment companies
Other
pooled investment vehicles
Other
accounts
|
2
8
208
|
$774,494,092
$257,488,599
$1,914,574,935
|
0
4
0
|
$—
$56,498,350
$—
|
Zachary
A. Hamel
Registered
investment companies
Other
pooled investment vehicles
Other
accounts
|
2
8
208
|
$774,494,092
$257,488,599
$1,914,574,935
|
0
4
0
|
$—
$56,498,350
$—
|
Kenneth
P. Malvey
Registered
investment companies
Other
pooled investment vehicles
Other
accounts
|
2
8
208
|
$774,494,092
$257,488,599
$1,914,574,935
|
0
4
0
|
$—
$56,498,350
$—
|
Terry
C. Matlack
Registered
investment companies
Other
pooled investment vehicles
Other
accounts
|
2
5
184
|
$774,494,092
$83,498,350
$158,337,165
|
0
5
0
|
$—
$83,498,350
$—
|
David J.
Schulte
Registered
investment companies
Other
pooled investment vehicles
Other
accounts
|
2
5
184
|
$774,494,092
$83,498,350
$158,337,165
|
0
5
0
|
$—
$83,498,350
$—
|
Name
of Manager
|
Aggregate
Dollar Range of Company
Securities
Beneficially Owned by Manager
|
H.
Kevin Birzer
|
Over
$100,000
|
Zachary
A. Hamel
|
Over
$100,000
|
Kenneth
P. Malvey
|
Over
$100,000
|
Terry
C. Matlack
|
Over
$100,000
|
David
J. Schulte
|
Over
$100,000
|
/s/
Ernst & Young LLP
|
Shares
|
Value
|
||||||
COMMON
STOCK—0.9%+
|
|||||||
Natural
Gas Gathering/Processing—0.9%+
|
|||||||
Crosstex
Energy, Inc. (Cost $2,280,917)
|
56,836
|
$
|
3,715,369
|
||||
MASTER
LIMITED PARTNERSHIPS—166.9%+
|
|||||||
Coal—1.2%+
|
|||||||
Natural
Resource Partners L.P.
|
86,400
|
$
|
4,975,776
|
||||
Crude/Refined
Products Pipelines—99.4%+
|
|||||||
Buckeye
Partners, L.P.
|
568,802
|
24,805,455
|
|||||
Enbridge
Energy Partners, L.P.
|
904,000
|
41,584,000
|
|||||
Holly
Energy Partners, L.P.
|
427,070
|
16,519,068
|
|||||
Kinder
Morgan Management, LLC #
|
1,436,408
|
68,803,943
|
|||||
Magellan
Midstream Partners, L.P.
|
1,668,474
|
53,641,439
|
|||||
Magellan
Midstream Partners, L.P.^
|
521,739
|
15,568,692
|
|||||
Pacific
Energy Partners, L.P.
|
656,500
|
19,478,355
|
|||||
Pacific
Energy Partners, L.P.^
|
325,200
|
9,060,072
|
|||||
Plains
All American Pipeline, L.P.
|
1,247,155
|
49,536,997
|
|||||
Sunoco
Logistics Partners, L.P.
|
934,625
|
35,469,019
|
|||||
TEPPCO
Partners, L.P.
|
812,745
|
29,900,888
|
|||||
Valero,
L.P.
|
709,874
|
37,268,385
|
|||||
401,636,313
|
|||||||
Natural
Gas/Natural Gas Liquid Pipelines—16.1%+
|
|||||||
Enterprise
GP Holdings, L.P.
|
71,400
|
2,463,300
|
|||||
Enterprise
Products Partners, L.P.
|
2,248,940
|
56,290,968
|
|||||
Northern
Border Partners, L.P.
|
144,600
|
6,172,974
|
|||||
64,927,242
|
|||||||
Natural
Gas Gathering/Processing—33.1%+
|
|||||||
Copano
Energy, LLC
|
91,950
|
3,447,205
|
|||||
Copano
Energy, LLC^
|
531,701
|
19,534,695
|
|||||
Crosstex
Energy L.P.^
|
160,009
|
4,957,079
|
|||||
Crosstex
Energy L.P.^
|
108,578
|
3,449,523
|
|||||
Energy
Transfer Partners, L.P.
|
1,804,600
|
60,941,342
|
|||||
Hiland
Partners, L.P.
|
36,548
|
1,450,225
|
|||||
Markwest
Energy Partners, L.P.
|
805,810
|
37,937,535
|
|||||
Williams
Partners, L.P.
|
59,750
|
2,011,782
|
|||||
133,729,386
|
|||||||
Shipping—5.1%+
|
|||||||
K-Sea
Transportation Partners, L.P.
|
71,300
|
2,489,083
|
|||||
K-Sea
Transportation Partners, L.P.^
|
500,000
|
16,245,000
|
|||||
Teekay
LNG Partners, L.P.
|
67,200
|
1,883,616
|
|||||
20,617,699
|
|||||||
Propane
Distribution—12.0%+
|
|||||||
Inergy,
L.P.
|
1,767,979
|
44,641,470
|
|||||
Inergy,
L.P.^
|
82,655
|
1,848,992
|
|||||
Inergy
Holdings, L.P.
|
61,761
|
2,204,868
|
|||||
48,695,330
|
|||||||
Total
Master Limited Partnerships (Cost $540,092,473)
|
674,581,746
|
Principal
Amount
|
Value
|
||||||
PROMISSORY
NOTES—1.6%+
|
|||||||
Shipping—1.6%+
|
|||||||
E.W.
Transportation, LLC—Unregistered, 8.56%, Due 3/31/2009 (Cost $6,309,278)
^@
|
$
|
6,379,054
|
6,309,278
|
Shares
|
|||||||
SHORT-TERM
INVESTMENTS—1.3%+
|
|||||||
First
American Government Obligations Money Market Fund—Class Y, 3.67% (Cost
$5,329,456)(1)
|
5,329,456
|
5,329,456
|
|||||
TOTAL
INVESTMENTS—170.7%+
(Cost $554,012,124)
|
689,935,849
|
||||||
Auction
Rate Senior Notes—(40.8%)+
|
(165,000,000
|
)
|
|||||
Interest
Rate Swap Contracts—0.7%+
|
|||||||
$345,000,000
notional—Unrealized Appreciation, Net(2)
|
2,902,516
|
||||||
Liabilities
in Excess of Other Assets—(13.3%)+
|
(53,564,865
|
)
|
|||||
Preferred
Shares at Redemption Value—(17.3%)+
|
(70,000,000
|
)
|
|||||
TOTAL
NET ASSETS APPLICABLE TO COMMON STOCKHOLDERS—100.00%+
|
$
|
404,273,500
|
+
|
Calculated
as a percentage of net assets applicable to common
stockholders.
|
^
|
Fair
valued securities represent a total market value of $76,973,331
which
represents 19.1% of net assets. These securities are deemed
to be
restricted; see Note 6 for further
disclosure.
|
#
|
Security
distributions are paid in kind.
|
@
|
Security
is a variable rate instrument. Interest rate is as of November 30,
2005.
|
(1)
|
7-day
effective yield.
|
(2)
|
See
Note 10 for further disclosure.
|
November 30,
2005
|
||||
Assets
|
||||
Investments
at value (cost $554,012,124)
|
$
|
689,935,849
|
||
Cash
|
45,422
|
|||
Receivable
for Adviser reimbursement
|
275,801
|
|||
Receivable
for investments sold
|
366,959
|
|||
Interest
and dividend receivable
|
37,763
|
|||
Unrealized
appreciation on interest rate swap contracts
|
2,902,516
|
|||
Prepaid
expenses and other assets
|
2,413,455
|
|||
Total
assets
|
695,977,765
|
|||
Liabilities
|
||||
Payable
to Adviser
|
1,139,177
|
|||
Dividend
payable on preferred shares
|
183,726
|
|||
Accrued
expenses and other liabilities
|
391,924
|
|||
Current
tax liability
|
214,261
|
|||
Deferred
tax liability
|
54,775,177
|
|||
Auction
rate senior notes payable:
|
||||
Series
A, due July 15, 2044
|
60,000,000
|
|||
Series
B, due July 15, 2044
|
50,000,000
|
|||
Series
C, due April 10, 2045
|
55,000,000
|
|||
Total
liabilities
|
221,704,265
|
|||
Preferred
Shares
|
||||
$25,000
liquidation value per share applicable to 2,800 outstanding shares
(7,500
shares authorized)
|
70,000,000
|
|||
Net
assets applicable to common stockholders
|
$
|
404,273,500
|
||
Net
Assets Applicable to Common Stockholders Consist
of
|
||||
Capital
stock, $0.001 par value; 14,905,515 shares issued and outstanding
(100,000,000 shares authorized)
|
$
|
14,906
|
||
Additional
paid-in capital
|
318,834,703
|
|||
Accumulated
net investment loss, net of income tax effect
|
(2,907,862
|
)
|
||
Undistributed
realized gain, net of income tax effect
|
3,875,986
|
|||
Net
unrealized gain on investments and interest rate swap contracts,
net of
income tax effect
|
84,455,767
|
|||
Net
assets applicable to common stockholders
|
$
|
404,273,500
|
||
Net
Asset Value per common share outstanding (net assets applicable
to common
shares, divided by common shares outstanding)
|
$
|
27.12
|
Year
Ended
November 30,
2005
|
||||
Investment
Income
|
||||
Distributions
received from master limited partnerships
|
$
|
36,171,740
|
||
Less
return of capital on distributions
|
(30,211,629
|
)
|
||
Distribution
income from master limited partnerships
|
5,960,111
|
|||
Dividends
from common stock
|
95,813
|
|||
Dividends
from money market mutual funds
|
486,361
|
|||
Interest
|
634,686
|
|||
Total
Investment Income
|
7,176,971
|
|||
Expenses
|
||||
Advisory
fees
|
6,339,680
|
|||
Administrator
fees
|
437,139
|
|||
Professional
fees
|
405,980
|
|||
Reports
to stockholders
|
193,624
|
|||
Directors’
fees
|
102,170
|
|||
Custodian
fees and expenses
|
67,768
|
|||
Fund
accounting fees
|
60,831
|
|||
Registration
fees
|
46,182
|
|||
Stock
transfer agent fees
|
14,508
|
|||
Other
expenses
|
121,917
|
|||
Total
Expenses before Interest Expense and Auction Agent Fees
|
7,789,799
|
|||
Interest
expense
|
4,812,145
|
|||
Auction
agent fees
|
478,051
|
|||
Total
Interest Expense and Auction Agent Fees
|
5,290,196
|
|||
Total
Expenses
|
13,079,995
|
|||
Less
expense reimbursement by Adviser
|
(1,534,870
|
)
|
||
Net
Expenses
|
11,545,125
|
|||
Net
Investment Loss, before income taxes
|
(4,368,154
|
)
|
||
Current
tax expense
|
(214,261
|
)
|
||
Deferred
tax benefit
|
1,917,841
|
|||
Total
income taxes
|
1,703,580
|
|||
Net
Investment Loss
|
(2,664,574
|
)
|
||
Realized
and Unrealized Gain (Loss) on Investments
|
||||
Net
realized gain on investments
|
7,264,671
|
|||
Net
realized loss on interest rate swap settlements
|
(854,814
|
)
|
||
Net
realized gain, before deferred tax expense
|
6,409,857
|
|||
Deferred
tax expense
|
(2,499,844
|
)
|
||
Net
realized gain on investments and interest rate swap
settlements
|
3,910,013
|
|||
Net
unrealized appreciation of investments
|
57,338,735
|
|||
Net
unrealized appreciation of interest rate swap contracts
|
3,111,046
|
|||
Net
unrealized gain, before deferred tax expense
|
60,449,781
|
|||
Deferred
tax expense
|
(23,863,156
|
)
|
||
Net
unrealized appreciation of investments and interest rate swap
contracts
|
36,586,625
|
|||
Net
Realized and Unrealized Gain on Investments
|
40,496,638
|
Dividends
to Preferred Stockholders
|
(1,639,910
|
)
|
||
Net
Increase in Net Assets Applicable to Common Stockholders
Resulting from
Operations
|
$
|
36,192,154
|
Year
Ended November 30, 2005
|
Period
from February 27, 2004(1)
through November 30, 2004
|
||||||
Operations
|
|||||||
Net
investment loss
|
$
|
(2,664,574
|
)
|
$
|
(243,288
|
)
|
|
Net
realized gain (loss) on investments and interest rate swap
settlements
|
3,910,013
|
(34,027
|
)
|
||||
Net
unrealized appreciation of investments and interest rate
swap
contracts
|
36,586,625
|
47,869,142
|
|||||
Dividends
to preferred stockholders
|
(1,639,910
|
)
|
(152,568
|
)
|
|||
Net
increase in net assets applicable to common stockholders
resulting from
operations
|
36,192,154
|
47,439,259
|
|||||
Dividends
and Distributions to Common Stockholders
|
|||||||
Net
investment income
|
—
|
—
|
|||||
Return
of capital
|
(26,506,341
|
)
|
(12,278,078
|
)
|
|||
Total
dividends to common stockholders
|
(26,506,341
|
)
|
(12,278,078
|
)
|
|||
Capital
Share Transactions
|
|||||||
Proceeds
from initial public offering of 11,000,000 common shares
|
—
|
275,000,000
|
|||||
Proceeds
from issuance of 1,600,000 common shares in connection with
exercising an
overallotment option granted to underwriters of the initial
public
offering
|
—
|
40,000,000
|
|||||
Proceeds
from secondary offering of 1,755,027 common shares
|
47,999,988
|
—
|
|||||
Proceeds
from issuance of 263,254 common shares in connection with
exercising an
overallotment option granted to underwriters of the secondary
offering
|
7,199,997
|
—
|
|||||
Underwriting
discounts and offering expenses associated with the issuance
of common
shares
|
(2,443,688
|
)
|
(14,705,165
|
)
|
|||
Underwriting
discounts and offering expenses associated with the issuance
of preferred
shares
|
(356,815
|
)
|
(725,000
|
)
|
|||
Issuance
of 203,080 and 61,107 common shares from reinvestment of
dividend
distributions to stockholders, respectively
|
5,635,662
|
1,453,105
|
|||||
Net
increase in net assets, applicable to common stockholders,
from capital
share transactions
|
58,035,144
|
301,022,940
|
|||||
Total
increase in net assets applicable to common stockholders
|
67,720,957
|
336,184,121
|
|||||
Net
Assets
|
|||||||
Beginning
of period
|
336,552,543
|
368,422
|
|||||
End
of period
|
$
|
404,273,500
|
$
|
336,552,543
|
|||
Accumulated
net investment loss, net of deferred tax benefit, at end
of
period
|
$
|
(2,907,862
|
)
|
$
|
(243,288
|
)
|
(1)
|
Commencement
of Operations.
|
Year
Ended November 30, 2005
|
||||
Cash
Flows from Operating Activities
|
||||
Distributions
received from master limited partnerships
|
$
|
36,171,740
|
||
Interest
and dividend income received
|
1,183,801
|
|||
Purchases
of long-term investments
|
(172,064,905
|
)
|
||
Proceeds
from sale of long-term investments
|
31,230,812
|
|||
Purchases
of short-term investments
|
(2,487,089
|
)
|
||
Payments
for interest rate swap contracts, net
|
(854,814
|
)
|
||
Interest
expense paid
|
(5,349,296
|
)
|
||
Operating
expenses paid
|
(6,003,206
|
)
|
||
Net
cash used in operating activities
|
(118,172,957
|
)
|
||
Cash
Flows from Financing Activities
|
||||
Issuance
of common stock
|
55,199,985
|
|||
Issuance
of preferred stock
|
35,000,000
|
|||
Issuance
of auction rate senior notes payable
|
55,000,000
|
|||
Common
and preferred stock issuance costs
|
(2,632,812
|
)
|
||
Debt
issuance costs
|
(804,099
|
)
|
||
Dividends
paid to preferred stockholders
|
(1,498,670
|
)
|
||
Dividends
paid to common stockholders
|
(26,324,865
|
)
|
||
Net
cash provided by financing activities
|
113,939,539
|
|||
Net
increase in cash
|
(4,233,418
|
)
|
||
Cash—beginning
of period
|
4,278,840
|
|||
Cash—end
of period
|
$
|
45,422
|
||
Reconciliation
of net increase in net assets applicable to common stockholders
resulting
from operations to net
cash used in operating activities
|
||||
Net
increase in net assets applicable to common stockholders
resulting from
operations
|
36,192,154
|
|||
Adjustments
to reconcile net increase in net assets applicable to common
stockholders
resulting from operations to net cash used in operating
activities:
|
||||
Purchases
of long-term investments, net of return of capital
adjustments
|
(141,853,276
|
)
|
||
Proceeds
from sales of long-term investments
|
31,230,812
|
|||
Purchases
of short-term investments
|
(2,487,089
|
)
|
||
Deferred
income taxes
|
24,445,159
|
|||
Net
unrealized appreciation on investments and interest rate
swap
contracts
|
(60,449,781
|
)
|
||
Realized
gains on investments and interest rate swap settlements
|
(6,409,857
|
)
|
||
Accretion
of discount on investments
|
(19,327
|
)
|
||
Amortization
of debt issuance costs
|
50,730
|
|||
Dividends
to preferred stockholders
|
1,639,910
|
|||
Changes
in operating assets and liabilities:
|
||||
Increase
in interest and dividend receivable
|
(13,732
|
)
|
||
Increase
in prepaid expenses and other assets
|
(523,770
|
)
|
||
Increase
in payable to Adviser, net of expense reimbursement
|
290,078
|
|||
Increase
in current tax liability
|
214,261
|
|||
Decrease
in accrued expenses and other liabilities
|
(479,229
|
)
|
||
Total
adjustments
|
(154,365,111
|
)
|
||
Net
cash used in operating activities
|
$
|
(118,172,957
|
)
|
|
Non-Cash
Financing Activities
|
||||
Reinvestment
of distributions by common stockholders in additional common
shares
|
$
|
5,635,662
|
Year
Ended November 30, 2005
|
Period
from
February 27,
2004(1)
through
November 30,
2004
|
||||||
Per
Common Share Data(2)
|
|||||||
Net
Asset Value, beginning of period
|
$
|
26.53
|
$
|
—
|
|||
Public
offering price
|
—
|
25.00
|
|||||
Underwriting
discounts and offering costs on initial public offering
|
—
|
(1.17
|
)
|
||||
Underwriting
discounts and offering costs on issuance of preferred
shares
|
(0.02
|
)
|
(0.06
|
)
|
|||
Premiums
and underwriting discounts and offering costs on secondary
offering(7)
|
—
|
—
|
|||||
Income
(loss) from Investment Operations:
|
|||||||
Net
investment loss(8)
|
(0.16
|
)
|
(0.03
|
)
|
|||
Net
realized and unrealized gain on investments(8)
|
2.67
|
3.77
|
)
|
||||
Total
increase from investment operations
|
2.51
|
3.74
|
)
|
||||
Less
Dividends to Preferred Stockholders:
|
|||||||
Net
investment income
|
—
|
—
|
|||||
Return
of capital
|
(0.11
|
)
|
(0.01
|
)
|
|||
Total
dividends to preferred stockholders
|
(0.11
|
)
|
(0.01
|
||||
Less
Dividends to Common Stockholders:
|
|||||||
Net
investment income
|
—
|
—
|
|||||
Return
of capital
|
(1.79
|
)
|
(0.97
|
)
|
|||
Total
dividends to common stockholders
|
(1.79
|
)
|
(0.97
|
)
|
|||
Net
Asset Value, end of period
|
$
|
27.12
|
$
|
26.53
|
|||
Per
common share market value, end of period
|
$
|
28.72
|
$
|
27.06
|
|||
Total
Investment Return Based on Market Value(3)
|
13.06
|
%
|
12.51
|
%
|
|||
Supplemental
Data and Ratios
|
|||||||
Net
assets applicable to common stockholders, end of period
(000’s)
|
404,274
|
336,553
|
|||||
Ratio
of expenses (including current and deferred income tax expense)
to average
net assets before waiver:(4)(6)(9)
|
9.10
|
%
|
15.20
|
%
|
|||
Ratio
of expenses (including current and deferred income tax expense)
to average
net assets after waiver:(4)(6)(9)
|
8.73
|
%
|
14.92
|
%
|
|||
Ratio
of expenses (excluding current and deferred income tax expense)
to average
net assets before waiver:(4)(6)(9)
|
3.15
|
%
|
2.01
|
%
|
|||
Ratio
of expenses (excluding current and deferred income tax expense)
to average
net assets after waiver:(4)(6)(9)
|
2.78
|
%
|
1.73
|
%
|
|||
Ratio
of expenses (excluding current and deferred income tax expense),
without
regard to non-recurring organizational expenses, to average
net assets
before waiver:(4)(6)(9)
|
3.15
|
%
|
1.90
|
%
|
|||
Ratio
of expenses (excluding current and deferred income tax expense),
without
regard to non-recurring organizational expenses, to average
net assets
after waiver:(4)(6)(9)
|
2.78
|
%
|
1.62
|
%
|
|||
Ratio
of net investment loss to average net assets before waiver:(4)(6)(10)
|
(1.42
|
)%
|
(0.45
|
)%
|
Year
Ended November 30, 2005
|
Period
from
February 27,
2004(1)
through
November 30,
2004
|
Ratio
of net investment loss to average net assets after waiver:(4)(6)(10)
|
(1.05
|
)%
|
(0.17
|
)%
|
|||
Ratio
of net investment loss to average net assets after current and
deferred
income tax expense, before waiver:(4)(9)
|
(7.37
|
)%
|
(13.37
|
)%
|
|||
Ratio
of net investment loss to average net assets after current and
deferred
income tax expense, after waiver:(4)(9)
|
(7.00
|
)%
|
(13.65
|
)%
|
|||
Portfolio
turnover rate
|
4.92
|
%
|
1.39
|
%
|
|||
Tortoise
Auction Rate Senior Notes, end of period (000’s)
|
$
|
165,000
|
$
|
110,000
|
|||
Tortoise
Preferred Shares, end of period (000’s)
|
$
|
70,000
|
$
|
35,000
|
|||
Per
common share amount of auction rate senior notes outstanding
at end of
period
|
$
|
11.07
|
$
|
8.67
|
|||
Per
common share amount of net assets, excluding auction rate senior
notes, at
end of period
|
$
|
38.19
|
$
|
35.21
|
|||
Asset
coverage, per $1,000 of principal amount of auction rate senior
notes
|
|||||||
Series
A
|
$
|
3,874
|
$
|
4,378
|
|||
Series
B
|
$
|
3,874
|
$
|
4,378
|
|||
Series
C
|
$
|
3,874
|
$
|
—
|
|||
Asset
coverage, per $25,000 liquidation value per share of preferred
shares
|
$
|
169,383
|
$
|
265,395
|
|||
Asset
coverage ratio of auction rate senior notes(5)
|
387
|
%
|
438
|
%
|
|||
Asset
coverage ratio of MMP shares(11)
|
272
|
%
|
332
|
%
|
(1)
|
Commencement
of Operations.
|
(2)
|
Information
presented relates to a share of common stock outstanding for
the entire
period.
|
(3)
|
Not
Annualized for periods less than a year. Total investment return
is
calculated assuming a purchase of common stock at the market
price on the
first day and a sale at the current market price on the last
day of the
period reported. The calculation also assumes reinvestment of
dividends at
actual prices pursuant to the Company’s dividend reinvestment plan. otal
investment return does not reflect brokerage
commissions.
|
(4)
|
Annualized
for periods less than one full
year.
|
(5)
|
Represents
value of total assets less all liabilities and indebtedness not
represented by auction rate senior notes and MMP shares at the
end of the
period divided by auction rate senior notes outstanding at the
end of the
period.
|
(6)
|
The
expense ratios and net investment ratios do not reflect the effect
of
dividend payments to preferred
stockholders.
|
(7)
|
The
amount is less than $0.01 per share, and represents the premium
on the
secondary offering of $0.14 per share, less the underwriting
discounts and
offering costs of $0.14 per share for the year ending November
30,
2005.
|
(8)
|
The
ratios for the period ended November 30, 2004, do not reflect
the change
in estimate of investment income and return of capital. See note
2.
|
(9)
|
The
Company accrued $24,659,420 and $30,330,018 for the year ended
November
30, 2005 and for the period from February 27, 2004 through November
30,
2004, respectively, in current and deferred income
taxes.
|
(10)
|
The
ratio excludes net deferred income tax benefit on net investment
income.
|
(11)
|
Represents
value of total assets less all liabilities and indebtedness not
represented by auction rate senior notes and MMP shares at the
end of the
period, divided by the sum of auction rate senior notes and MMP
shares
outstanding at the end of the
period.
|
Deferred
tax assets:
|
||||
Net
operating loss carryforwards
|
$
|
6,566,312
|
||
Organization
costs
|
63,056
|
|||
Other
|
214,261
|
|||
6,843,629
|
||||
Deferred
tax liabilities:
|
||||
Unrealized
gains on investment securities and interest rate swap
contracts
|
54,142,234
|
|||
Basis
reduction of investment in MLPs
|
7,476,572
|
|||
61,618,806
|
||||
Total
net deferred tax liability
|
$
|
54,775,177
|
Application
of statutory income tax rate
|
$
|
21,872,019
|
||
State
income taxes, net of federal tax benefit
|
2,499,659
|
|||
Other,
net
|
287,742
|
|||
Total
|
$
|
24,659,420
|
Gross
unrealized appreciation
|
$
|
155,094,423
|
||
Gross
unrealized depreciation
|
—
|
|||
Net
unrealized appreciation
|
$
|
155,094,423
|
Investment
Security
|
Number
of Units or Principal Amount
|
Acquisition
Date
|
Acquisition
Cost
|
Value
Per Unit
|
Percent
of Net Assets
|
||||||||||||||
K-Sea
Transportation Partners, L.P.
|
Common
Units
|
500,000
|
6/01/05
|
$
|
16,080,000
|
$
|
32.49
|
4.0
|
%
|
||||||||||
Magellan
Midstream Partners, L.P.
|
Subordinated
Units
|
521,739
|
4/13/05
|
14,999,996
|
29.84
|
3.9
|
|||||||||||||
Copano
Energy, LLC
|
Common
Units
|
531,701
|
8/01/05
|
15,000,089
|
36.74
|
4.8
|
|||||||||||||
Crosstex
Energy, L.P.
|
Subordinated
Units
|
160,009
|
6/24/05
|
5,350,004
|
30.98
|
1.2
|
|||||||||||||
Crosstex
Energy, L.P.
|
Common
Units
|
108,578
|
11/01/05
|
4,000,014
|
31.77
|
0.9
|
|||||||||||||
Pacific
Energy Partners, L.P.
|
Common
Units
|
325,200
|
9/30/05
|
9,824,902
|
27.86
|
2.2
|
|||||||||||||
Inergy,
L.P.
|
Subordinated
Units
|
82,655
|
9/14/04-
2/04/05
|
2,232,123
|
22.37
|
0.5
|
|||||||||||||
E.W.
Transportation, LLC
|
Promissory
Note
|
$
|
6,379,054
|
5/03/04
|
8,569,500
|
N/A
|
1.6
|
||||||||||||
$
|
76,056,625
|
19.1
|
%
|
Counterparty
|
Maturity
Date
|
Notional
Amount
|
Fixed
Rate Paid by The Company
|
Floating
Rate Received by The Company
|
Unrealized
Appreciation/ (Depreciation)
|
|||||||||||
U.
S. Bank, N.A.
|
7/10/2007
|
$
|
60,000,000
|
3.54
|
%
|
1
month U.S. Dollar LIBOR
|
$
|
1,116,589
|
||||||||
U.
S. Bank, N.A.*
|
7/10/2011
|
60,000,000
|
4.63
|
%
|
1
month U.S. Dollar LIBOR
|
499,536
|
||||||||||
U.
S. Bank, N.A.
|
7/17/2007
|
50,000,000
|
3.56
|
%
|
1
month U.S. Dollar LIBOR
|
943,766
|
||||||||||
U.
S. Bank, N.A.*
|
7/17/2011
|
50,000,000
|
4.64
|
%
|
1
month U.S. Dollar LIBOR
|
409,492
|
||||||||||
U.
S. Bank, N.A.
|
5/1/2014
|
55,000,000
|
4.54
|
%
|
1
week U.S. Dollar LIBOR
|
1,296,705
|
||||||||||
U.
S. Bank, N.A.
|
11/12/2020
|
35,000,000
|
5.20
|
%
|
1
month U.S. Dollar LIBOR
|
(667,614
|
)
|
|||||||||
U.
S. Bank, N.A.
|
11/18/2020
|
35,000,000
|
5.21
|
%
|
1
month U.S. Dollar LIBOR
|
(695,958
|
)
|
|||||||||
$
|
345,000,000
|
$
|
2,902,516
|
*
|
The
Company has entered into additional interest rate
swap contracts for
Series A and Series B notes with settlements commencing
on 7/10/2007 and
7/17/2007, respectively.
|
Shares
at February 27, 2004
|
23,047
|
|||
Shares
sold through initial public offering and exercise
of overallotment
options
|
12,600,000
|
|||
Shares
issued through reinvestment of dividends
|
61,107
|
|||
Shares
at November 30, 2004
|
12,684,154
|
|||
Shares
sold through secondary offering and exercise
of overallotment
options
|
2,018,281
|
|||
Shares
issued through reinvestment of dividends
|
203,080
|
|||
Shares
at November 30, 2005
|
14,905,515
|
February 28,
2006
|
|||||||
Shares
|
Value
|
||||||
COMMON
STOCK—1.0%(1)
|
|||||||
Natural
Gas Gathering/Processing—1.0%(1)
|
|||||||
Crosstex
Energy, Inc. (Cost $2,172,703)
|
54,136
|
$
|
4,307,602
|
||||
MASTER
LIMITED PARTNERSHIPS AND RELATED COMPANIES—167.9%(1)
|
|||||||
Coal—0.9%(1)
|
|||||||
Natural
Resource Partners, L.P.
|
71,800
|
$
|
3,781,706
|
||||
Crude/Refined
Products Pipelines—99.4%(1)
|
|||||||
Buckeye
Partners, L.P.
|
568,802
|
25,175,177
|
|||||
Enbridge
Energy Partners, L.P.
|
904,000
|
40,408,800
|
|||||
Holly
Energy Partners, L.P.
|
427,070
|
17,129,778
|
|||||
Kinder
Morgan Management, LLC(3)
|
1,464,699
|
64,051,287
|
|||||
Magellan
Midstream Partners, L.P.
|
2,190,213
|
68,969,807
|
|||||
Pacific
Energy Partners, L.P.
|
656,500
|
20,318,675
|
|||||
Pacific
Energy Partners, L.P.(2)
|
325,200
|
9,450,312
|
|||||
Plains
All American Pipeline, L.P.
|
1,247,155
|
55,885,016
|
|||||
Sunoco
Logistics Partners, L.P.
|
934,625
|
40,058,028
|
|||||
TEPPCO
Partners, L.P.
|
812,745
|
29,608,300
|
|||||
Valero,
L.P.
|
709,874
|
36,927,645
|
|||||
407,982,825
|
|||||||
Natural
Gas/Natural Gas Liquid Pipelines—15.7%(1)
|
|||||||
Enterprise
GP Holdings, L.P.
|
71,400
|
2,845,290
|
|||||
Enterprise
Products Partners, L.P.
|
2,248,940
|
54,604,263
|
|||||
Northern
Border Partners, L.P.
|
144,600
|
6,955,260
|
|||||
64,404,813
|
|||||||
Natural
Gas Gathering/Processing—33.8%(1)
|
|||||||
Copano
Energy, LLC
|
91,950
|
3,740,526
|
|||||
Copano
Energy, LLC(2)
|
531,701
|
21,198,919
|
|||||
Crosstex
Energy, L.P.
|
160,009
|
5,920,333
|
|||||
Crosstex
Energy, L.P.(2)
|
108,578
|
3,776,343
|
|||||
Energy
Transfer Partners, L.P.
|
1,804,600
|
64,460,312
|
|||||
Hiland
Partners, L.P.
|
36,548
|
1,498,468
|
|||||
Markwest
Energy Partners, L.P.
|
805,810
|
36,261,450
|
|||||
Williams
Partners, L.P.
|
59,750
|
1,977,725
|
|||||
138,834,076
|
|||||||
Shipping—5.3%(1)
|
|||||||
K-Sea
Transportation Partners, L.P.
|
571,300
|
19,806,971
|
|||||
Teekay
LNG Partners, L.P.
|
67,200
|
2,042,880
|
|||||
21,849,851
|
|||||||
Propane
Distribution—12.8%(1)
|
|||||||
Inergy,
L.P.
|
1,767,979
|
$
|
48,336,546
|
||||
Inergy,
L.P.(2)
|
82,655
|
2,001,904
|
|||||
Inergy
Holdings, L.P.
|
61,761
|
2,099,874
|
|||||
52,438,324
|
|||||||
Total Master Limited Partnerships and Related Companies (Cost $531,602,985) |
689,291,595
|
February 28,
2006
|
|||||||
Shares
|
Value
|
||||||
|
|
||||||
Promissory
Note — 1.5%(1)
|
Principal
Amount
|
||||||
Shipping
— 1.5%(1)
|
|||||||
E.W.
Transportation, LLC — Unregistered, 8.72%, Due
3/31/2009 (Cost $6,133,985)(2)(4)
|
$
|
6,197,549
|
6,133,985
|
||||
Short-Term
Investments — 1.5%(1)
|
Shares
|
||||||
First
American Government Obligations Money Market
Fund — Class Y, 4.16%(5)
(Cost $6,196,023)
|
6,196,023
|
6,196,023
|
|||||
Total
Investments — 171.9%(1)
(Cost
$546,105,696)
|
705,929,205
|
||||||
Auction
Rate Senior Notes — (40.2%)(1)
|
(165,000,000
|
)
|
|||||
Interest
Rate Swap Contracts — 0.7%(1)
|
|||||||
$345,000,000
notional — Unrealized Appreciation, Net(6)
|
2,965,831
|
||||||
Liabilities
in Excess of Cash and Other Assets — (15.4%)(1)
|
(63,252,871
|
)
|
|||||
Preferred
Shares at Redemption Value — (17.0%)(1)
|
(70,000,000
|
)
|
|||||
Total
Net Assets Applicable to Common Stockholders
— 100.0%(1)
|
$
|
410,642,165
|
(1)
|
Calculated
as a percentage of net assets applicable
to common
stockholders.
|
(2)
|
Fair
valued securities represent a total market
value of $42,561,463 which
represents 10.4% of net assets. These securities
are deemed to be
restricted; see Note 6 for further
disclosure.
|
(3)
|
Security
distributions are paid in kind. Related
company of master limited
partnership.
|
(4)
|
Security
is a variable rate instrument. Interest
rate is as of February 28,
2006.
|
(5)
|
Rate
indicated is the 7-day effective
yield.
|
(6)
|
See
Note 10 for further disclosure.
|
February 28,
2006
|
||||
Assets
|
||||
Investments
at value (cost $546,105,696)
|
$
|
705,929,205
|
||
Cash
|
6,511,031
|
|||
Receivable
for Adviser reimbursement
|
263,596
|
|||
Receivable
for investments sold
|
—
|
|||
Interest
and dividend receivable
|
39,240
|
|||
Distribution
receivable
|
—
|
|||
Unrealized
appreciation on interest rate swap contracts,
net
|
2,965,831
|
|||
Prepaid
expenses and other assets
|
2,557,302
|
|||
Total
assets
|
718,266,205
|
|||
Liabilities
|
||||
Payable
to Adviser
|
1,088,765
|
|||
Dividend
payable on common shares
|
7,154,647
|
|||
Dividend
payable on preferred shares
|
133,017
|
|||
Accrued
expenses and other liabilities
|
272,046
|
|||
Current
tax liability
|
58,500
|
|||
Deferred
tax liability
|
63,917,065
|
|||
Auction
rate senior notes payable:
|
||||
Series
A, due July 15, 2044
|
60,000,000
|
|||
Series
B, due July 15, 2044
|
50,000,000
|
|||
Series
C, due April 10, 2045
|
55,000,000
|
|||
Total
liabilities
|
237,624,040
|
|||
Preferred
Shares
|
||||
$25,000
liquidation value per share applicable
to 2,800 outstanding shares (7,500
shares authorized)
|
70,000,000
|
|||
Net
assets applicable to common stockholders
|
$
|
410,642,165
|
||
Net
Assets Applicable to Common Stockholders
Consist
of
|
||||
Capital
stock, $0.001 par value; 14,905,515 shares
issued and outstanding
(100,000,000 shares authorized)
|
$
|
14,906
|
||
Additional
paid-in capital
|
310,907,047
|
|||
Accumulated
net investment loss, net of deferred tax
benefit
|
(3,468,317
|
)
|
||
Undistributed
realized gain, net of deferred tax expense
|
4,116,258
|
|||
Net
unrealized gain on investments and interest
rate swap contracts, net of
deferred tax expense
|
99,072,271
|
|||
Net
assets applicable to common stockholders
|
$
|
410,642,165
|
||
Net
Asset Value per common share outstanding
(net assets applicable to common
shares, divided by common shares outstanding)
|
$
|
27.55
|
Period
from
December 1,
2005 through
February 28,
2006
|
||||
Investment
Income
|
||||
Distributions
received from master limited partnerships
|
$
|
10,600,860
|
||
Less
return of capital on distributions
|
(8,132,187
|
)
|
||
Distribution
income from master limited partnerships
|
2,468,673
|
|||
Dividends
from common stock
|
30,988
|
|||
Dividends
from money market mutual funds
|
53,431
|
|||
Interest
|
143,188
|
|||
Total
Investment Income
|
2,696,280
|
|||
Expenses
|
||||
Advisory
fees
|
1,646,552
|
|||
Administrator
fees
|
114,464
|
|||
Professional
fees
|
95,911
|
|||
Reports
to stockholders
|
33,140
|
|||
Directors’
fees
|
29,178
|
|||
Custodian
fees and expenses
|
16,274
|
|||
Fund
accounting fees
|
14,794
|
|||
Registration
fees
|
14,041
|
|||
Stock
transfer agent fees
|
3,373
|
|||
Other
expenses
|
22,161
|
|||
Total
Expenses before Interest Expense and
Auction Agent
Fees
|
1,989,888
|
|||
Interest
expense
|
1,805,794
|
|||
Auction
agent fees
|
159,515
|
|||
Total
Interest Expense and Auction Agent Fees
|
1,965,309
|
|||
Total
Expenses
|
3,955,197
|
|||
Less
expense reimbursement by Adviser
|
(398,639
|
)
|
||
Net
Expenses
|
3,556,558
|
|||
Net
Investment Loss, before income taxes
|
(860,278
|
)
|
||
Current
tax expense
|
(58,500
|
)
|
||
Deferred
tax benefit
|
358,323
|
|||
Income
tax benefit
|
299,823
|
|||
Net
Investment Loss
|
(560,455
|
)
|
||
Realized
and Unrealized Gain on Investments
|
||||
Net
realized gain on investments
|
$
|
380,366
|
||
Net
realized gain on interest rate swap settlements
|
13,522
|
|||
Net
realized gain, before deferred tax expense
|
393,888
|
|||
Deferred
tax expense
|
(153,616
|
)
|
||
Net
realized gain on investments and interest
rate swap
settlements
|
240,272
|
|||
Net
unrealized appreciation of investments
|
23,899,784
|
|||
Net
unrealized appreciation of interest rate
swap contracts
|
63,315
|
|||
Net
unrealized gain, before deferred tax
expense
|
23,963,099
|
|||
Deferred
tax expense
|
(9,346,595
|
)
|
||
Net
unrealized appreciation of investments
and interest rate swap
contracts
|
14,616,504
|
|||
Net
Realized and Unrealized Gain on Investments
|
14,856,776
|
|||
Dividends to Preferred Stockholders |
(773,009
|
) | ||
Net Increase in Net Assets Applicable to Common Stockholders Resulting from Operations | $ | 13,523,312 |
Period
from December 1, 2005 through
February 28,
2006
(unaudited)
|
Year
Ended
November 30,
2005
|
||||||
Operations
|
|||||||
Net
investment loss
|
$
|
(560,455
|
)
|
$
|
(2,664,574
|
)
|
|
Net
realized gain on investments and
interest rate swap
settlements
|
240,272
|
3,910,013
|
|||||
Net
unrealized appreciation of investments
and interest rate swap
contracts
|
14,616,504
|
36,586,625
|
|||||
Dividends
to preferred stockholders
|
(773,009
|
)
|
(1,639,910
|
)
|
|||
Net
increase in net assets applicable
to common stockholders resulting
from
operations
|
13,523,312
|
36,192,154
|
|||||
Dividends
and Distributions to Common Stockholders
|
|||||||
Net
investment income
|
—
|
—
|
|||||
Return
of capital
|
(7,154,647
|
)
|
(26,506,341
|
)
|
|||
Total
dividends to common stockholders
|
(7,154,647
|
)
|
(26,506,341
|
)
|
|||
Capital
Share Transactions
|
|||||||
Proceeds
from secondary offering of 1,755,027
common shares
|
—
|
47,999,988
|
|||||
Proceeds
from issuance of 263,254 common shares
in connection with exercising an
overallotment option granted to underwriters
of the secondary
offering
|
—
|
7,199,997
|
|||||
Underwriting
discounts and offering expenses associated
with the issuance of common
shares
|
—
|
(2,443,688
|
)
|
||||
Underwriting
discounts and offering expenses associated
with the issuance of preferred
shares
|
—
|
(356,815
|
)
|
||||
Issuance
of 203,080 common shares from reinvestment
of dividend distributions to
stockholders
|
—
|
5,635,662
|
|||||
Net
increase in net assets, applicable
to common stockholders, from capital
share transactions
|
—
|
58,035,144
|
|||||
Total
increase in net assets applicable
to common stockholders
|
6,368,665
|
67,720,957
|
|||||
Net
Assets
|
|||||||
Beginning
of period
|
404,273,500
|
336,552,543
|
|||||
End
of period
|
$
|
410,642,165
|
$
|
404,273,500
|
|||
Accumulated
net investment loss, net of deferred
tax benefit, at end of
period
|
$
|
(3,468,317
|
)
|
$
|
(2,907,862
|
)
|
Period
from December 1, 2005 through
February 28,
2006
|
||||
Cash
Flows from Operating Activities
|
||||
Distributions
received from master limited partnerships
|
$
|
10,600,860
|
||
Interest
and dividend income received
|
221,788
|
|||
Purchases
of long-term investments
|
(157,675
|
)
|
||
Proceeds
from sale of long-term investments
|
1,183,191
|
|||
Purchases
of short-term investments, net
|
(499,609
|
)
|
||
Proceeds
from interest rate swap settlements,
net
|
13,522
|
|||
Interest
expense paid
|
(2,034,307
|
)
|
||
Operating
expenses paid
|
(2,038,443
|
)
|
||
Net
cash provided by operating activities
|
7,289,327
|
|||
Cash
Flows from Financing Activities
|
||||
Dividends
paid to preferred stockholders
|
(823,718
|
)
|
||
Net
cash used in financing activities
|
(823,718
|
)
|
||
Net
increase in cash
|
6,465,609
|
|||
Cash—beginning
of period
|
45,422
|
|||
Cash—end
of period
|
$
|
6,511,031
|
||
Reconciliation
of net increase in net assets applicable
to common stockholders resulting
from operations to net cash provided
by operating
activities
|
||||
Net
increase in net assets applicable
to common stockholders resulting
from
operations
|
$
|
13,523,312
|
||
Adjustments
to reconcile net increase in net
assets applicable to common stockholders
resulting from operations to net
cash provided by operating
activities:
|
||||
Purchases
of long-term investments
|
(157,675
|
)
|
||
Return
of capital adjustments
|
8,132,187
|
|||
Proceeds
from sales of long-term investments
|
1,183,191
|
|||
Purchases
of short-term investments, net
|
(499,609
|
)
|
||
Deferred
income taxes
|
9,141,888
|
|||
Net
unrealized appreciation on investments
and interest rate swap
contracts
|
(23,963,099
|
)
|
||
Realized
gains on investments and interest
rate swap settlements
|
(393,888
|
)
|
||
Accretion
of discount on investments
|
(4,342
|
)
|
||
Amortization
of debt issuance costs
|
14,198
|
|||
Dividends
to preferred stockholders
|
773,009
|
|||
Changes
in operating assets and liabilities:
|
||||
Increase
in interest and dividend receivable
|
(1,477
|
)
|
||
Increase
in prepaid expenses and other assets
|
(143,847
|
)
|
||
Decrease
in receivable for investments sold
|
—
|
|||
Decrease
in current tax liability
|
(155,761
|
)
|
||
Decrease
in payable to Adviser, net of expense
reimbursement
|
(38,207
|
)
|
||
Decrease
in accrued expenses and other liabilities
|
(120,553
|
)
|
||
Total
adjustments
|
(6,233,985
|
)
|
||
Net
cash provided by operating activities
|
$
|
7,289,327
|
Period
from December 1, 2005 through February 28,
2006
|
Year
Ended
November
30, 2005
|
Period
from
February
27, 2004(1)
through
November
30, 2004
|
||||||||
(Unaudited)
|
||||||||||
Per
Common Share Data(2)
|
||||||||||
Net
Asset Value, beginning of period
|
$
|
27.12
|
$
|
26.53
|
$
|
—
|
||||
Public
offering price
|
—
|
—
|
25.00
|
|||||||
Underwriting
discounts and offering costs
on initial public offering
|
—
|
—
|
(1.17
|
)
|
||||||
Underwriting
discounts and offering costs
on issuance of preferred
shares
|
—
|
(0.02
|
)
|
(0.06
|
)
|
|||||
Premiums
and underwriting discounts
and offering costs on secondary
offering(3)
|
—
|
—
|
—
|
|||||||
Income
(loss) from Investment Operations:
|
||||||||||
Net
investment loss(4)
|
(0.04
|
)
|
(0.16
|
)
|
(0.03
|
)
|
||||
Net
realized and unrealized gain
on investments(4)
|
1.00
|
2.67
|
3.77
|
|||||||
Total
increase from investment operations
|
0.96
|
2.51
|
3.74
|
|||||||
Less
Dividends to Preferred Stockholders:
|
||||||||||
Net
investment income
|
—
|
—
|
—
|
|||||||
Return
of capital
|
(0.05
|
)
|
(0.11
|
)
|
(0.01
|
)
|
||||
Total
dividends to preferred stockholders
|
(0.05
|
)
|
(0.11
|
)
|
(0.01
|
)
|
||||
Less
Dividends to Common Stockholders:
|
||||||||||
Net
investment income
|
—
|
—
|
—
|
|||||||
Return
of capital
|
(0.48
|
)
|
(1.79
|
)
|
(0.97
|
)
|
||||
Total
dividends to common stockholders
|
(0.48
|
)
|
(1.79
|
)
|
(0.97
|
)
|
||||
Net
Asset Value, end of period
|
$
|
27.55
|
$
|
27.12
|
$
|
26.53
|
||||
Per
common share market value,
end of period
|
$
|
29.42
|
$
|
28.72
|
$
|
27.06
|
||||
Total
Investment Return Based on
Market Value(5)
|
4.22
|
%
|
13.06
|
%
|
12.51
|
%
|
||||
Supplemental
Data and Ratios
|
||||||||||
Net
assets applicable to common
stockholders, end of period
(000’s)
|
$
|
410,642
|
404,274
|
336,553
|
||||||
Ratio
of expenses (including current
and deferred income tax expense)
to average
net assets before waiver:(6)(7)(8)
|
12.97
|
%
|
9.10
|
%
|
15.20
|
%
|
||||
Ratio
of expenses (including current
and deferred income tax expense)
to average
net assets after waiver:(6)(7)(8)
|
12.58
|
%
|
8.73
|
%
|
14.92
|
%
|
||||
Ratio
of expenses (excluding current
and deferred income tax expense)
to average
net assets before waiver:(6)(7)(8)
|
3.96
|
%
|
3.15
|
%
|
2.01
|
%
|
||||
Ratio
of expenses (excluding current
and deferred income tax expense)
to average
net assets after waiver:(6)(7)(8)
|
3.57
|
%
|
2.78
|
%
|
1.73
|
%
|
||||
Ratio
of expenses (excluding current
and deferred income tax expense),
without
regard to non-recurring organizational
expenses, to average net assets
before waiver:(6)(7)(8)
|
3.96
|
%
|
3.15
|
%
|
1.90
|
%
|
||||
Ratio
of expenses (excluding current
and deferred income tax expense),
without
regard to non-recurring organizational
expenses, to average net assets
after waiver:(6)(7)(8)
|
3.57
|
%
|
2.78
|
%
|
1.62
|
%
|
Period
from December 1, 2005 through February 28,
2006
|
Year
Ended
November
30, 2005
|
Period
from
February
27, 2004(1)
through
November
30, 2004
|
Ratio
of net investment loss to average
net assets before waiver:(6)(7)(9)
|
(1.30
|
)%
|
(1.42
|
)%
|
(0.45
|
)%
|
Ratio
of net investment loss to average
net assets after waiver:(6)(7)(9)
|
(0.91
|
)%
|
(1.05
|
)%
|
(0.17
|
)%
|
||||
Ratio
of net investment loss to average
net assets after current and
deferred
income tax expense, before
waiver:(6)(8)
|
(10.31
|
)%
|
(7.37
|
)%
|
(13.37
|
)%
|
||||
Ratio
of net investment loss to average
net assets after current and
deferred
income tax expense, after waiver:(6)(8)
|
(9.92
|
)%
|
(7.00
|
)%
|
(13.65
|
)%
|
||||
Portfolio
turnover rate
|
0.02
|
%
|
4.92
|
%
|
1.39
|
%
|
||||
Tortoise
Auction Rate Senior Notes,
end of period (000’s)
|
$
|
165,000
|
$
|
165,000
|
$
|
110,000
|
||||
Tortoise
Preferred Shares, end of period
(000’s)
|
$
|
70,000
|
$
|
70,000
|
$
|
35,000
|
||||
Per
common share amount of auction
rate senior notes outstanding
at end of
period
|
$
|
11.07
|
$
|
11.07
|
$
|
8.67
|
||||
Per
common share amount of net
assets, excluding auction rate
senior notes, at
end of period
|
$
|
38.62
|
$
|
38.19
|
$
|
35.21
|
||||
Asset
coverage, per $1,000 of principal
amount of auction rate senior
notes
|
||||||||||
Series
A
|
$
|
3,913
|
$
|
3,874
|
$
|
4,378
|
||||
Series
B
|
$
|
3,913
|
$
|
3,874
|
$
|
4,378
|
||||
Series
C
|
$
|
3,913
|
$
|
3,874
|
$
|
—
|
||||
Asset
coverage, per $25,000 liquidation
value per share of preferred
shares
|
$
|
171,658
|
$
|
169,383
|
$
|
265,395
|
||||
Asset
coverage ratio of auction rate
senior notes(10)
|
391
|
%
|
387
|
%
|
438
|
%
|
||||
Asset
coverage ratio of MMP shares(11)
|
275
|
%
|
272
|
%
|
332
|
%
|
(1)
|
Commencement
of Operations.
|
(2)
|
Information
presented relates to a share
of common stock outstanding
for the entire
period.
|
(3)
|
The
amount is less than $0.01 per
share, and represents the premium
on the
secondary offering of $0.14
per share, less the underwriting
discounts and
offering costs of $0.14 per
share for the year ending November
30,
2005.
|
(4)
|
The
per common share data for the
period ended November 30, 2004,
do not
reflect the change in estimate
of investment income and return
of capital.
See note 2 of the Accompanying
Notes to the Financial
Statements.
|
(5)
|
Not
Annualized for periods less
than a year. Total investment
return is
calculated assuming a purchase
of common stock at the market
price on the
first day and a sale at the
current market price on the
last day of the
period reported. The calculation
also assumes reinvestment of
dividends at
actual prices pursuant to the
Company’s dividend reinvestment plan.
Total
investment return does not
reflect brokerage
commissions.
|
(6)
|
Annualized
for periods less than one full
year.
|
(7)
|
The
expense ratios and net investment
ratios do not reflect the effect
of
dividend payments to preferred
stockholders.
|
(8)
|
The
Company accrued $24,659,420
and $30,330,018 for the year
ended November
30, 2005 and for the period
from February 27, 2004 through
November 30,
2004, respectively, in current
and deferred income
taxes.
|
(9)
|
The
ratio excludes net deferred
income tax benefit on net investment
income.
|
(10)
|
Represents
value of total assets less
all liabilities and indebtedness
not
represented by auction rate
senior notes and MMP shares
at the end of the
period divided by auction rate
senior notes outstanding at
the end of the
period.
|
(11)
|
Represents
value of total assets less
all liabilities and indebtedness
not
represented by auction rate
senior notes and MMP shares
at the end of the
period, divided by the sum
of auction rate senior notes
and MMP shares
outstanding at the end of the
period.
|
Deferred
tax assets:
|
||||
Net
operating loss carryforwards
|
$
|
8,564,090
|
||
Organization
costs
|
58,267
|
|||
8,622,357
|
||||
Deferred
tax liabilities:
|
||||
Unrealized
gains on investment securities
and interest rate swap
contracts
|
63,487,843
|
|||
Basis
reduction of investment in
MLPs
|
9,051,579
|
|||
72,539,422
|
||||
Total
net deferred tax liability
|
$
|
63,917,065
|
Application
of statutory income tax rate
|
$
|
8,223,848
|
||
State
income taxes, net of federal
tax benefit
|
939,868
|
|||
Other,
net
|
36,672
|
|||
Total
|
$
|
9,200,388
|
Investment
Security
|
Number
of Units or Principal
Amount
|
Acquisition
Date
|
Acquisition
Cost
|
Value
Per Unit
|
Percent
of Net Assets
|
||||||||||||||
Copano
Energy, LLC
|
Common
Units
|
531,701
|
8/01/05
|
$
|
15,000,089
|
$
|
39.87
|
5.2
|
%
|
||||||||||
Crosstex
Energy, L.P.
|
Common
Units
|
108,578
|
11/01/05
|
4,000,014
|
34.78
|
0.9
|
|||||||||||||
Pacific
Energy Partners, L.P.
|
Common
Units
|
325,200
|
9/30/05
|
9,824,902
|
29.06
|
2.3
|
|||||||||||||
Inergy,
L.P.
|
Subordinated
Units
|
82,655
|
9/14/04-
2/04/05
|
2,232,123
|
24.22
|
0.5
|
|||||||||||||
E.W.
Transportation, LLC
|
Promissory
Note
|
$
|
6,197,549
|
5/03/04
|
8,569,500
|
N/A
|
1.5
|
||||||||||||
$
|
39,626,628
|
10.4
|
%
|
Counterparty
|
Maturity
Date
|
Notional
Amount
|
Fixed
Rate Paid by the Company
|
Floating
Rate Received by the
Company
|
Unrealized
Appreciation/ (Depreciation)
|
|||||||||||
U.
S. Bank, N.A.
|
7/10/2007
|
$
|
60,000,000
|
3.54
|
%
|
1
month U.S. Dollar LIBOR
|
$
|
1,164,255
|
||||||||
U.
S. Bank, N.A.*
|
7/10/2011
|
60,000,000
|
4.63
|
%
|
1
month U.S. Dollar LIBOR
|
610,359
|
||||||||||
U.
S. Bank, N.A.
|
7/17/2007
|
50,000,000
|
3.56
|
%
|
1
month U.S. Dollar LIBOR
|
1,005,206
|
||||||||||
U.
S. Bank, N.A.*
|
7/17/2011
|
50,000,000
|
4.64
|
%
|
1
month U.S. Dollar LIBOR
|
499,466
|
||||||||||
U.
S. Bank, N.A.
|
5/01/2014
|
55,000,000
|
4.54
|
%
|
1
week U.S. Dollar LIBOR
|
1,489,314
|
||||||||||
U.
S. Bank, N.A.
|
11/12/2020
|
35,000,000
|
5.20
|
%
|
1
month U.S. Dollar LIBOR
|
(880,707
|
)
|
|||||||||
U.
S. Bank, N.A.
|
11/18/2020
|
35,000,000
|
5.21
|
%
|
1
month U.S. Dollar LIBOR
|
(922,062
|
)
|
|||||||||
$
|
345,000,000
|
$
|
2,965,831
|
Shares
at November 30, 2004
|
12,684,154
|
|||
Shares
sold through secondary
offering and exercise
of overallotment
options
|
2,018,281
|
|||
Shares
issued through reinvestment
of dividends
|
203,080
|
|||
Shares
at November 30, 2005
|
14,905,515
|
(i) |
each
Beneficial Owner of Tortoise Notes of such series may submit to
its
Broker-Dealer information as to:
|
(A) |
the
principal amount of Outstanding Tortoise Notes, if any, of such
series
held by such Beneficial Owner which such Beneficial Owner desires
to
continue to hold without regard to the Applicable Rate for Tortoise
Notes
of such series for the next succeeding Rate Period of such
series;
|
(B) |
the
principal amount of Outstanding Tortoise Notes, if any, of such
series
held by such Beneficial Owner which such Beneficial Owner offers
to sell
if the Applicable Rate for Tortoise Notes of such series for the
next
succeeding Rate Period of Tortoise Notes of such series shall be
less than
the rate per annum specified by such Beneficial Owner;
and/or
|
(C) |
the
principal amount of Outstanding Tortoise Notes, if any, of such
series
held by such Beneficial Owner which such Beneficial Owner offers
to sell
without regard to the Applicable Rate for Tortoise Notes of such
series
for the next succeeding Rate Period of Tortoise Notes of such series;
|
(ii) |
one
or more Broker-Dealers, using lists of Potential Beneficial Owners,
shall
in good faith for the purpose of conducting a competitive Auction
in a
commercially reasonable manner, contact Potential Beneficial Owners
(by
telephone or otherwise), including Persons that are not Beneficial
Owners,
on such lists to determine the principal amount of Tortoise Notes,
if any,
of such series which each such Potential Beneficial Owner offers
to
purchase if the Applicable Rate for Tortoise Notes of such series
for the
next succeeding Rate Period of Tortoise Notes of such series shall
not be
less than the rate per annum specified by such Potential Beneficial
Owner.
|
(A) |
the
principal amount of Outstanding Tortoise Notes of such series specified
in
such Bid if the Applicable Rate for Tortoise Notes of such series
determined on such Auction Date shall be less than the rate specified
therein;
|
(B) |
such
principal amount or a lesser principal amount of Outstanding Tortoise
Notes of such series to be determined as set forth in clause (iv)
of
paragraph (a) of Section 4 of this Appendix I if the Applicable
Rate for
Tortoise Notes of such series determined on such Auction Date shall
be
equal to the rate specified therein;
or
|
(C) |
the
principal amount of Outstanding Tortoise Notes of such series specified
in
such Bid if the rate specified therein shall be higher than the
Maximum
Rate for Tortoise Notes of such series, or such principal amount
or a
lesser principal amount of Outstanding Tortoise Notes of such series
to be
determined as set forth in clause (iii) of paragraph (b) of Section
4 of
this Appendix I if the rate specified therein shall be higher than
the
Maximum Rate for Tortoise Notes of such series and Sufficient Clearing
Bids for Tortoise Notes of such series do not
exist.
|
(ii) |
A
Sell Order by a Beneficial Owner or an Existing Holder of Tortoise
Notes
of a series of Tortoise Notes subject to an Auction on any Auction
Date
shall constitute an irrevocable offer to
sell:
|
(A) |
the
principal amount of Outstanding Tortoise Notes of such series specified
in
such Sell Order; or
|
(B) |
such
principal amount or a lesser principal amount of Outstanding Tortoise
Notes of such series as set forth in clause (iii) of paragraph (b) of
Section 4 of this Appendix I if Sufficient Clearing Bids for Tortoise
Notes of such series do not exist;
|
(iii) |
A
Bid by a Potential Beneficial Owner or a Potential Holder of Tortoise
Notes of a series subject to an Auction on any Auction Date shall
constitute an irrevocable offer to
purchase:
|
(A) |
the
principal amount of Outstanding Tortoise Notes of such series specified
in
such Bid if the Applicable Rate for Tortoise Notes of such series
determined on such Auction Date shall be higher than the rate specified
therein; or
|
(B) |
such
principal amount or a lesser principal amount of Outstanding Tortoise
Notes of such series as set forth in clause (v) of paragraph (a)
of
Section 4 of this Appendix I if the Applicable Rate for Tortoise
Notes of
such series determined on such Auction Date shall be equal to the
rate
specified therein.
|
(i) |
the
name of the Bidder placing such Order (which shall be the Broker-Dealer
unless otherwise permitted by the
Company);
|
(ii) |
the
aggregate principal amount of Tortoise Notes of such series that
are the
subject of such Order;
|
(iii) |
to
the extent that such Bidder is an Existing Holder of Tortoise Notes
of
such series:
|
(A) |
the
principal amount of Tortoise Notes, if any, of such series subject
to any
Hold Order of such Existing Holder;
|
(B) |
the
principal amount of Tortoise Notes, if any, of such series subject
to any
Bid of such Existing Holder and the rate specified in such Bid;
and
|
(C) |
the
principal amount of Tortoise Notes, if any, of such series subject
to any
Sell Order of such Existing Holder;
and
|
(iv) |
to
the extent such Bidder is a Potential Holder of Tortoise Notes
of such
series, the rate and principal amount of Tortoise Notes of such
series
specified in such Potential Holder’s
Bid.
|
(i) |
all
Hold Orders for Tortoise Notes of such series shall be considered
valid,
but only up to and including in the aggregate principal amount
of
Outstanding Tortoise Notes of such series held by such Existing
Holder,
and if the aggregate principal amount of Tortoise Notes of such
series
subject to such Hold Orders exceeds the aggregate principal amount
of
Outstanding Tortoise Notes of such series held by such Existing
Holder,
the principal amount of Tortoise Notes subject to each such Hold
Order
shall be reduced pro rata to cover the principal amount of Outstanding
Tortoise Notes of such series held by such Existing
Holder;
|
(ii) (A) |
any
Bid for Tortoise Notes of such series shall be considered valid
up to and
including the excess of the principal amount of Outstanding Tortoise
Notes
of such series subject to any Hold Orders referred to in clause
(i)
above;
|
(B) |
subject
to subclause (A), if more than one Bid of an Existing Holder for
Tortoise
Notes of such series is submitted to the Auction Agent with the
same rate
and the aggregate principal amount of Outstanding Tortoise Notes
of such
series subject to such Bids is greater than such excess, such Bids
shall
be considered valid up to and including the amount of such excess,
and the
principal amount of Tortoise Notes of such series subject to each
Bid with
the same rate shall be reduced pro rata to cover the principal
amount of
Tortoise Notes of such series equal to such
excess;
|
(C) |
subject
to subclauses (A) and (B), if more than one Bid of an Existing
Holder for
Tortoise Notes of such series is submitted to the Auction Agent
with
different rates, such Bids shall be
|
considered
valid in the ascending order of their respective rates up to
and including
the amount of such excess; and
|
(D) |
in
any such event, the principal amount, if any, of such Outstanding
Tortoise
Notes of such series subject to any portion of Bids considered
not valid
in whole or in part under this clause (ii) shall be treated as
the subject
of a Bid for Tortoise Notes of such series by or on behalf of a
Potential
Holder at the rate therein specified;
and
|
(iii) |
all
Sell Orders for Tortoise Notes of such series shall be considered
valid up
to and including the excess of the principal amount of Outstanding
Tortoise Notes of such series held by such Existing Holder over
the
aggregate principal amount of Tortoise Notes of such series subject
to
valid Hold Orders referred to in clause (i) above and valid Bids
referred
to in clause (ii) above.
|
(i) |
the
excess of the aggregate principal amount of Outstanding Tortoise
Notes of
such series over the principal amount of Outstanding Tortoise Notes
of
such series subject to Submitted Hold Orders (such excess being
hereinafter referred to as the “Available Tortoise Notes” of such
series);
|
(ii) |
from
the Submitted Orders for Tortoise Notes of such series
whether:
|
(A) |
the
aggregate principal amount of Outstanding Tortoise Notes of such
series
subject to Submitted Bids of Potential Holders specifying one or
more
rates between the Minimum Rate (for Standard Rate Periods or less,
only)
and the Maximum Rate (for all Rate Periods) for Tortoise Notes
of such
series; exceeds or is equal to the sum
of:
|
(B) |
the
aggregate principal amount of Outstanding Tortoise Notes of such
series
subject to Submitted Bids of Existing Holders
|
(C) |
the
aggregate principal amount of Outstanding Tortoise Notes of such
series
subject to Submitted Sell Orders (in the event such excess or such
equality exists (other than because all of the Outstanding Tortoise
Notes
of such series are subject to Submitted Hold Orders), such Submitted
Bids
in subclause (A) above being hereinafter referred to collectively
as
“Sufficient Clearing Bids” for Tortoise Notes of such series);
and
|
(iii) |
if
Sufficient Clearing Bids for Tortoise Notes of such series exist,
the
lowest rate specified in such Submitted Bids (the “Winning Bid Rate” for
Tortoise Notes of such series) which if:
|
(A) (I) |
each
such Submitted Bid of Existing Holders specifying such lowest rate
and
|
(II) |
all
other such Submitted Bids of Existing Holders specifying lower
rates were
rejected, thus entitling such Existing Holders to continue to hold
the
Tortoise Notes of such series that are subject to such Submitted
Bids;
and
|
(B) (I) |
each
such Submitted Bid of Potential Holders specifying such lowest
rate and
|
(II) |
all
other such Submitted Bids of Potential Holders specifying lower
rates were
accepted; would result in such Existing Holders described in subclause
(A)
above continuing to hold an aggregate principal amount of Outstanding
Tortoise Notes of such series which, when added to the aggregate
principal
amount of Outstanding Tortoise Notes of such series to be purchased
by
such Potential Holders described in subclause (B) above, would
equal not
less than the Available Tortoise Notes of such
series.
|
(i) |
if
Sufficient Clearing Bids for Tortoise Notes of such series exist,
that the
Applicable Rate for all Tortoise Notes of such series for the next
succeeding Rate Period thereof shall be equal to the Winning Bid
Rate for
Tortoise Notes of such series so
determined;
|
(ii) |
if
Sufficient Clearing Bids for Tortoise Notes of such series do not
exist
(other than because all of the Outstanding Tortoise Notes of such
series
|
(iii) |
if
all of the Outstanding Tortoise Notes of such series are subject
to
Submitted Hold Orders, that the Applicable Rate for all Tortoise
Notes of
such series for the next succeeding Rate Period thereof shall be
All Hold
Rate.
|
(i) |
Existing
Holders’ Submitted Bids for Tortoise Notes of such series specifying any
rate that is higher than the Winning Bid Rate for Tortoise Notes
of such
series shall be accepted, thus requiring each such Existing Holder
to sell
the Tortoise Notes subject to such Submitted
Bids;
|
(ii) |
Existing
Holders’ Submitted Bids for Tortoise Notes of such series specifying any
rate that is lower than the Winning Bid Rate for Tortoise Notes
of such
series shall be rejected, thus entitling each such Existing Holder
to
continue to hold the Tortoise Notes subject to such Submitted
Bids;
|
(iii) |
Potential
Holders’ Submitted Bids for Tortoise Notes of such series specifying any
rate that is lower than the Winning Bid Rate for Tortoise Notes
of such
series shall be accepted;
|
(iv) |
each
Existing Holder’s Submitted Bid for Tortoise Notes of such series
specifying a rate that is equal to the Winning Bid Rate for Tortoise
Notes
of such series shall be rejected, thus entitling such Existing
Holder to
continue to hold the Tortoise Notes subject to such Submitted Bid,
unless
the aggregate principal amount of Outstanding Tortoise Notes subject
to
all such Submitted Bids shall be greater than the principal amount
of
Tortoise Notes (“remaining Tortoise Notes”) in the excess of the Available
Tortoise Notes of such series over the principal amount of Tortoise
Notes
subject to Submitted Bids described in clauses (ii) and (iii) of
this
paragraph (a), in which event such Submitted Bid of such Existing
Holder
shall be rejected in part, and such Existing Holder shall be entitled
to
continue to hold Tortoise Notes subject to such Submitted Bid,
but only in
an amount equal to the principal amount of Tortoise Notes of such
series
obtained by multiplying the remaining principal amount by a fraction,
the
numerator of which shall be the principal
|
(v) |
each
Potential Holder’s Submitted Bid for aggregate principal amount of such
series specifying a rate that is equal to the Winning Bid Rate
for
aggregate principal amount of such series shall be accepted but
only in an
amount equal to the principal amount of Tortoise Notes of such
series
obtained by multiplying the principal amount of Tortoise Notes
in the
excess of the Available Tortoise Notes of such series over the
principal
amount of Tortoise Notes subject to Submitted Bids described in
clauses
(ii) through (iv) of this paragraph (a) by a fraction, the numerator
of
which shall be the principal amount of Outstanding Tortoise Notes
subject
to such Submitted Bid and the denominator of which shall be the
aggregate
principal amount of Outstanding Tortoise Notes subject to such
Submitted
Bids made by all such Potential Holders that specified a rate equal
to the
Winning Bid Rate for Tortoise Notes of such
series.
|
(i) |
Existing
Holders’ Submitted Bids for Tortoise Notes of such series specifying any
rate that is equal to or lower than the Maximum Rate for Tortoise
Notes of
such series shall be rejected, thus entitling such Existing Holders
to
continue to hold the Tortoise Notes subject to such Submitted
Bids;
|
(ii) |
Potential
Holders’ Submitted Bids for Tortoise Notes of such series specifying any
rate that is equal to or lower than the Maximum Rate for Tortoise
Notes of
such series shall be accepted; and
|
(iii) |
Each
Existing Holder’s Submitted Bid for Tortoise Notes of such series
specifying any rate that is higher than the Maximum Rate for Tortoise
Notes of such series and the Submitted Sell Orders for Tortoise
Notes of
such series of each Existing Holder shall be accepted, thus entitling
each
Existing Holder that submitted or on whose behalf was submitted
any such
Submitted Bid or Submitted Sell Order to sell the Tortoise Notes
of such
series subject to such Submitted Bid or Submitted Sell Order, but
in both
cases only in an amount equal to the principal amount of Tortoise
Notes of
such series obtained by multiplying the principal amount of Tortoise
Notes
of such series subject to Submitted Bids described in clause (ii)
of this
paragraph (b) by a fraction, the numerator of which shall be the
principal
amount of Outstanding Tortoise Notes of such series held by such
Existing
Holder subject to such Submitted Bid or Submitted Sell Order and
the
denominator of which shall be the
|
Moody’s
Credit
Rating
|
Fitch
Credit
Rating
|
Applicable
Percentage
|
Aa3
or above
|
AA-
or above
|
200%
|
A3
to A1
|
A-
to A+
|
250%
|
Baa3
to Baa1
|
BBB-
to BBB+
|
275%
|
Below
Baa3
|
Below
BBB-
|
300%
|
ATTEST: | TORTOISE ENERGY INFRASTRUCTURE CORPORATION | ||
Terry
C. Matlack
Treasurer
|
David J.
Schulte
President
|
a.1.
|
Articles
of Incorporation. 1
|
a.2.
|
Articles
of Amendment and Restatement. 2
|
a.3.
|
Articles
Supplementary relating to Series I MMP Shares.
5
|
a.4.
|
Articles
Supplementary relating to Series II MMP Shares.
***
|
a.5
|
Form
of Articles Supplementary relating to Preferred Stock, incorporated
by
reference to Appendix B of the Registrant’s Statement of Additional
Information, filed herewith.
|
a.6.
|
Articles
of Amendment. 8
|
b.1.
|
By-laws. 1
|
b.2.
|
Amended
and Restated Bylaws. 2
|
c.
|
None.
|
d.1.
|
Form
of Common Share Certificate.***
|
d.2.
|
Form
of Preferred (MMP) Stock
Certificate.***
|
d.3.
|
Form
of Note. ***
|
d.4.
|
Indenture
of Trust. ***
|
d.5.
|
Form
of Supplemental Indenture of Trust.
***
|
d.6.
|
Statement
of Eligibility of Trustee on Form T-1.
3
|
d.7.
|
Form
of Fitch Rating Guidelines and Moody’s Rating Guidelines.
***
|
e.
|
Terms
and Conditions of the Amended Dividend Reinvestment Plan.
3
|
f.
|
Not
applicable.
|
g.1.
|
Investment
Advisory Agreement with Tortoise Capital Advisors, L.L.C. 3
|
g.2.
|
Reimbursement
Agreement. 3
|
h.1.
|
Form
of Underwriting Agreement relating to Common Stock.
***
|
h.2.
|
Form
of Underwriting Agreement relating to Preferred Stock.
***
|
h.3.
|
Form
of Underwriting Agreement relating to Notes.
***
|
i.
|
None.
|
j.
|
Custody
Agreement. 3
|
k.1.
|
Stock
Transfer Agency Agreement. 3
|
k.2. | Administration Agreement. 3 |
k.3. | Fund Accounting Agreement. 3 |
k.4. | Form of Auction Agency Agreement relating to Preferred Stock. *** |
k.5. | Form of Auction Agency Agreement relating to Notes. *** |
|
k.6.
|
Form
of Broker-Dealer Agreement relating to Preferred Stock.
***
|
|
k.7.
|
Form
of Broker-Dealer Agreement relating to Notes.
***
|
k.8.
|
DTC
Representation Letter relating to Preferred Stock and Notes.
7
|
l.
|
Opinion
of Venable LLP. ***
|
m.
|
Not
applicable.
|
n.
|
Consent
of Auditors. *
|
o.
|
Not
applicable.
|
p.
|
Subscription
Agreement. 3
|
q.
|
None.
|
r1.
|
Code
of Ethics for the Registrant. 6
|
r2.
|
Code
of Ethics for the Adviser. 6
|
s.
|
Powers
of Attorney. ***
|
(*)
|
Filed
herewith.
|
(**)
|
To
be filed by amendment.
|
(***) | Previously filed. |
(1)
|
Incorporated
by reference to Registrant’s Registration Statement on Form N-2, filed on
October 31, 2003 (File Nos. 333-110143 and
811-21462).
|
(2)
|
Incorporated
by reference to Pre-Effective Amendment No. 1 to Registrant’s
Registration Statement on Form N-2, filed on January 30, 2004 (File
Nos. 333-110143 and 811-21462).
|
(3)
|
Incorporated
by reference to Pre-Effective Amendment No. 1 to Registrant’s
Registration Statement on Form N-2, filed on June 28, 2004 (File Nos.
333-114545 and 811-21462).
|
(4)
|
Incorporated
by reference to Pre-Effective Amendment No. 3 to Registrant’s
Registration Statement on Form N-2, filed on February 20, 2004 (File
Nos. 333-110143 and 811-21462)
|
(5) | Incorporated by reference to Registrant's Registration Statement on Form N-2, filed on October 15, 2004 (File Nos. 333-119784 and 811-21462). |
(6)
|
Incorporated
by reference to Pre-Effective Amendment No. 1 to Registrant’s
Registration Statement on Form N-2, filed on November 24, 2004 (File
Nos. 333-119784 and
811-21462).
|
(7)
|
Incorporated
by reference to Pre-Effective Amendment No. 1 to Registrant’s Registration
Statement on Form N-2, filed on April 1, 2005 (File Nos. 333-122350
and
811-21462).
|
(8)
|
Incorporated
by reference to Pre-Effective Amendment No. 1 to Registrant’s Registration
Statement on Form N-2, filed on July 7, 2005 (File Nos. 333-124079
and
811-21462).
|
Securities
and Exchange Commission Fees
|
$
|
13,375
|
||
Directors’
Fees and Expenses
|
6,500
|
|||
Printing
(other than certificates)
|
7,500
|
|||
Accounting
fees and expenses
|
40,000
|
|||
Legal
fees and expenses
|
285,000
|
|||
NASD
fee
|
8,500
|
|||
Rating
Agency Fees
|
30,000
|
|||
Miscellaneous
|
6,600 | |||
Total
|
$
|
397,475
|
Title
of Class
|
Number
of Record Holders
|
|||
Common
Shares ($0.001 par value)
|
89
|
|||
Preferred
Stock (Liquidation Preference $25,000 per share)
|
8
|
|||
Long-term
Debt ($165,000,000 aggregate principal amount)
|
1
|
TORTOISE ENERGY INFRASTRUCTURE CORPORATION | ||
|
|
|
By: | /s/ David J. Schulte | |
David J. Schulte, President | ||
/s/
Terry C. Matlack
Terry
C. Matlack
|
Director
(and Principal Financial and Accounting Officer)
|
June
16, 2006
|
/s/
Conrad S. Ciccotello*
Conrad
S. Ciccotello
|
Director
|
June
16, 2006
|
/s/
John R. Graham*
John
R. Graham
|
Director
|
June
16, 2006
|
/s/
Charles E. Heath*
Charles
E. Heath
|
Director
|
June
16, 2006
|
/s/
H. Kevin Birzer*
H.
Kevin Birzer
|
Director
|
June
16, 2006
|
/s/
David J. Schulte
David J.
Schulte
|
President
and Chief Executive Officer
(Principal
Executive Officer)
|
June
16, 2006
|
*
|
By
Kenneth P. Malvey pursuant to power of attorney, filed previously
in the
initial registration statement on January 20,
2006.
|
*
|
By:
/s/
Kenneth P. Malvey
|
Attorney-in-Fact
|
n.
|
Consent
of Auditors.
|