MLP & Energy Income Fund
The Advisory Research MLP & Energy Income Fund invests in publicly traded equity and debt securities of master limited partnerships (MLPs) and in equity and debt securities of other companies focused in the energy infrastructure sector. The Fund will purchase securities across the capital structure of MLPs and their affiliates with the goal of providing greater liquidity and lower volatility with a high correlation to MLP returns. The Fund seeks to provide investors with the following benefits:
- MLP and energy infrastructure dedicated balanced portfolio with an increased opportunity set by investing across the capital structure.
- Midstream focus.
- 1099 tax reporting – no K-1’s, state tax filings, Unrelated Business Taxable Income (“UBTI”) or fund-level taxation.
- Seeks a high level of current income.
- Daily liquidity in a mutual fund format.
|Minimum Investment||$2,500||$2,500||$2,500 – $1,000,000*|
|Net Expense Ratio||1.43%||2.18%||1.18%|
|Gross Expense Ratio||1.40%||2.15%||1.15%|
|Total Net Assets (all classes)||$632 million||$632 million||$632 million|
|Portfolio Managers||Jim Cunnane,
*Minimum depends upon location of the account.
*Asset allocation percentages are as of 1/31/2016.
Top Ten Holdings
|Enbridge Energy Management LLC||7.3%|
|The Williams Companies, Inc.||5.3%|
|DCP Midstream Partners, LP||4.3%|
|Columbia Pipeline Group, Inc.||3.9%|
|Western Refining, Inc. 6.25% Due 4-1-21||3.8%|
|Plains GP Holdings, L.P.||3.6%|
|Energy Transfer Partners, L.P.||3.4%|
|Midcontinent Express Pipeline LLC 6.70% Due 9-15-19||2.9%|
Holdings are subject to change and risk.
Monthly Fund PerformanceTotal Returns As of January 31, 2016
|1 Month||Year to Date||1 Year||3 Year||5 Year||Since Inception1|
Quarterly Fund PerformanceTotal Returns As of December 31, 2015
|3 Months||Year to Date||1 Year||3 Year||5 Year||Since Inception1|
1Inception date: Class A: 05/18/2011; Class C 4/1/2012; Class I: 12/27/2010
Performance for periods over one year is annualized. The performance data quoted here represents past performance. Past performance is no guarantee of future results. Investment return and principal value will fluctuate, so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance information quoted. A redemption fee of 2.00% will be imposed on redemptions or exchanges of shares you have owned for 90 days or less.
Performance results with load reflect the deduction for Class A Shares of the 5.75% maximum front end sales charge. Class C Shares are subject to a contingent deferred sales charge of 1.00% when redeemed within 12 months of purchase.
The Fund’s advisor has contractually agreed to waive its fees and/or absorb expenses of the Fund to ensure that total annual fund operating expenses (excluding taxes, leverage interest, brokerage commissions, dividend expenses on short sales, acquired fund fees and expenses as determined in accordance with Form N-1A, expenses incurred in connection with any merger or reorganization, or extraordinary expenses such as litigation) do not exceed “Net Expense Ratio” listed on the Portfolio tab. This agreement is in effect until March 31, 2016, and it may be terminated before that date only by the Trust’s Board of Trustees. The Fund’s advisor is permitted to seek reimbursement from the Fund, subject to limitations, for fees it waived and Fund expenses it paid for three years from the date of any such waiver or payment. Performance would have been lower without fee waivers in effect.
The Alerian MLP Index is a composite of the 50 most prominent energy master limited partnerships that provides investors with an unbiased, comprehensive benchmark for this emerging asset class. The index, which is calculated using a float-adjusted, capitalization-weighted methodology, is disseminated real-time on a price return basis (NYSE: AMZ).
Principal Risks of Investing
The Fund’s principal risks are mentioned below. Before you decide whether to invest in the Fund, carefully consider these risk factors and special considerations associated with investing in the Fund, which may cause you to lose part or all of your investment in the Fund.
Market Risk: Market risk is the risk that the Fund’s share price may be affected by a sudden decline in the market value of an investment, or by an overall decline in the stock market.
Sector Concentration Risk: The Fund’s investments will be concentrated in the energy infrastructure sector. The focus of the Fund’s portfolio on a specific sector may present more risks than if the portfolio were broadly diversified over numerous sectors.
MLP Units Risk: An investment in MLP units involves some risks which differ from an investment in the common stock of a corporation. Holders of MLP units generally have limited control and voting rights on matters affecting the partnership. The value of the Fund’s investment in MLPs depends largely on the MLPs being treated as partnerships for U.S. federal income tax purposes. If an MLP does not meet current legal requirements to maintain partnership status, or if it is unable to do so because of tax law changes, it would be taxed as a corporation and there could be a material decrease in the value of its securities.
General MLP Risk: MLPs historically have shown sensitivity to interest rate movements. In an increasing interest rate environment, MLPs may experience upward pressure on their yields in order to stay competitive with other interest rate sensitive securities. Also, a significant portion of the market value of an MLP may be based upon its current yield. Accordingly, the prices of MLP units may be sensitive to fluctuations in interest rates and may decline when interest rates rise.
Energy and Natural Resource Risk: Under normal circumstances, the Fund concentrates its investments in the energy infrastructure sector and may invest a significant portion of its assets in the natural resources sector of the economy, which includes a number of risks, including the following: supply and demand risk, depletion and exploration risk, marine transportation companies risk, regulatory risk, commodity pricing risk, weather risk, cash flow risk, affiliated party risk, catastrophe risk, acquisition risk, and natural resources sector risk.
Small Capitalization Risk: Small capitalization companies often have limited product lines, markets, distribution channels or financial resources, and the management of such companies may be dependent upon one or a few key people. The market movements of equity securities issued by MLPs with smaller capitalizations may be more abrupt or erratic than the market movements of equity securities of larger, more established companies or the stock market in general. Historically, smaller capitalization companies have sometimes gone through extended periods when they did not perform as well as larger companies. In addition, equity securities of smaller capitalization companies generally are less liquid than those of larger companies. This means that the Fund could have greater difficulty selling such securities at the time and price than the Fund would like.
Credit Risk: This is the risk that the issuer or guarantor of a fixed income security will be unable or unwilling to make timely payments of interest or principal.
Interest Rate Risk: Generally, fixed income securities decrease in value if interest rates rise and increase in value if interest rates fall, and lower rated securities are more volatile than higher rated securities.
High Yield Securities Risk: High yield securities, also known as “junk bonds”, are below investment grade quality and may be considered speculative with respect to the issuer’s continuing ability to make principal and interest payments. Lower-rated securities may be more susceptible to real or perceived adverse economic and competitive industry conditions than higher-rated securities.
Tax Risk: The Fund has elected to be treated, and intends to qualify each year for treatment, as a “regulated investment company” under the U.S. Internal Revenue Code of 1986 (the “Code”). To maintain qualification for federal income tax purposes as a regulated investment company under the Code, the Fund must meet certain source-of-income, asset diversification and annual distribution requirements, as discussed in detail below under “Federal Income Tax Consequences.”
- Depreciation or other cost recovery deductions passed through to the Fund from investments in MLPs in a given year will generally reduce the Fund’s taxable income, but those deductions may be recaptured in the Fund’s income in one or more subsequent years. When recognized and distributed, recapture income will generally be taxable to shareholders at the time of the distribution at ordinary income tax rates, even though those shareholders might not have held shares in the Fund at the time the deductions were taken by the Fund, and even though those shareholders will not have corresponding economic gain on their shares at the time of the recapture. In order to distribute recapture income or to fund redemption requests, the Fund may need to liquidate investments, which may lead to additional recapture income.
Non-Diversification Risk: The Fund is non-diversified, which means that the Fund may invest in the securities of relatively few issuers. Investment in securities of a limited number of issuers exposes the Fund to greater market risk and potential losses than if its assets were diversified among the securities of a greater number of issuers.
Advisor Risk: The skill of the Fund’s advisor plays a significant role in the Fund’s ability to achieve its investment objective. The Fund’s ability to achieve its investment objective depends on the advisor’s ability to select securities.
Derivatives Risk: There are various risks associated with transactions in derivative instruments. A decision as to whether, when and how to use derivatives involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. In addition, derivatives used by the Fund for hedging purposes may have an imperfect correlation to the assets held by the Fund and may not adequately protect against losses by, or may result in greater losses for, the Fund.
Leveraging Risk: Certain transactions, including the use of derivatives, may give rise to a form of leverage. To mitigate leveraging risk, the Fund’s custodian will segregate or identify liquid assets or otherwise cover the transactions that may give rise to such risk.
Hedging Risk: It is not possible to hedge fully or perfectly against any risk. While hedging can reduce losses, it can also reduce or eliminate gains or cause losses if the market moves in a different manner than anticipated by the Fund or if the cost of the derivative outweighs the benefit of the hedge. Hedging also involves the risk that changes in the value of the derivative will not match those of the holdings being hedged as expected by the Fund, in which case any losses on the holdings being hedged may not be reduced or may be increased. There can be no assurance that the Fund’s hedging strategies will be effective or that hedging transactions will be available to the Fund. The Fund is not required to engage in hedging transactions at any given time or from time to time, even under volatile market environment and the Fund may choose not to do so from time to time.
The MLP & Energy Income Fund intends to make distributions of net investment income quarterly and net capital gains, if any, at least annually.
|Fund Ticker||Record Date||Ex-dividend Date||Payment Date||Income Div Rate/share|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||12/29/15||12/30/15||12/30/15||0.02624|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||12/29/15||12/30/15||12/30/15||0.02443|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||12/29/15||12/30/15||12/30/15||0.01913|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||11/23/15||11/24/15||11/24/15||0.1763|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||11/23/15||11/24/15||11/24/15||0.1732|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||11/23/15||11/24/15||11/24/15||0.1558|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||8/27/15||8/28/15||8/28/15||0.1750|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||8/27/15||8/28/15||8/28/15||0.1709|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||8/27/15||8/28/15||8/28/15||0.1496|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||5/27/15||5/28/15||5/28/15||0.1737|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||5/27/15||5/28/15||5/28/15||0.1679|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||5/27/15||5/28/15||5/28/15||0.1420|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||2/25/15||2/26/15||2/26/15||0.1724|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||2/25/15||2/26/15||2/26/15||0.1666|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||2/25/15||2/26/15||2/26/15||0.1409|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||12/29/14||12/30/14||12/30/14||0.0163|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||12/29/14||12/30/14||12/30/14||0.0136|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||12/29/14||12/30/14||12/30/14||0.0052|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||11/24/14||11/25/14||11/25/14||0.3701|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||11/24/14||11/25/14||11/25/14||0.3669|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||11/24/14||11/25/14||11/25/14||0.3394|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||08/27/14||08/28/14||08/28/14||0.1698|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||08/27/14||08/28/14||08/28/14||0.1631|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||08/27/14||08/28/14||08/28/14||0.1345|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||05/28/14||05/29/14||05/29/14||0.1685|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||05/28/14||05/29/14||05/29/14||0.1625|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||05/28/14||05/29/14||05/29/14||0.1363|
|Adv. Research MLP & Energy Inc. Fund – Cl. I||INFIX||02/26/14||02/27/14||02/27/14||0.1672|
|Adv. Research MLP & Energy Inc. Fund – Cl. A||INFRX||02/26/14||02/27/14||02/27/14||0.1617|
|Adv. Research MLP & Energy Inc. Fund – Cl. C||INFFX||02/26/14||02/27/14||02/27/14||0.1370|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||12/26/13||12/27/13||12/27/13||0.0166|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||12/26/13||12/27/13||12/27/13||0.0136|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||12/26/13||12/27/13||12/27/13||0.0045|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||11/25/13||11/26/13||11/26/13||0.166|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||11/25/13||11/26/13||11/26/13||0.1398|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||11/25/13||11/26/13||11/26/13||0.0963|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||8/28/13||8/29/13||8/29/13||0.1648|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||8/28/13||8/29/13||8/29/13||0.1472|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||8/28/13||8/29/13||8/29/13||0.1116|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||5/29/13||5/30/13||5/30/13||0.1636|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||5/29/13||5/30/13||5/30/13||0.1521|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||5/29/13||5/30/13||5/30/13||0.1265|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||2/26/13||2/27/13||2/27/13||0.1624|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||2/26/13||2/27/13||2/27/13||0.1568|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||2/26/13||2/27/13||2/27/13||0.1412|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||12/27/12||12/28/12||12/28/12||0.0128|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||12/27/12||12/28/12||12/28/12||0.0103|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||12/27/12||12/28/12||12/28/12||0.0053|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||11/28/12||11/29/12||11/29/12||0.1612|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||11/28/12||11/29/12||11/29/12||0.1544|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||11/28/12||11/29/12||11/29/12||0.1404|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||8/29/12||8/30/12||8/30/12||0.16|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||8/29/12||8/30/12||8/30/12||0.1542|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||8/29/12||8/30/12||8/30/12||0.1446|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||5/29/12||5/30/12||5/30/12||0.1588|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||5/29/12||5/30/12||5/30/12||0.1526|
|FAMCO MLP & Energy Income Fund – Class C||INFFX||5/29/12||5/30/12||5/30/12||0.1000|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||2/27/12||2/28/12||2/28/12||0.1504|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||2/27/12||2/28/12||2/28/12||0.1500|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||11/29/11||11/30/11||11/30/11||0.15|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||11/29/11||11/30/11||11/30/11||0.15|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||8/30/11||8/31/11||8/31/11||0.15|
|FAMCO MLP & Energy Income Fund – Class A||INFRX||8/30/11||8/31/11||8/31/11||0.15|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||5/27/11||5/31/11||5/31/11||0.15|
|FAMCO MLP & Energy Income Fund – Class I||INFIX||2/25/11||2/28/11||2/28/11||0.1|
MLP & ENERGY INCOME FUND MANAGEMENT
JAMES J. CUNNANE JR., CFA
MANAGING DIRECTOR, CHIEF INVESTMENT OFFICER
Jim Cunnane, with 23 years of investment experience, is Managing Director and Chief Investment Officer of the Advisory Research MLP & Energy Infrastructure team. He oversees the firm’s MLP and energy infrastructure product lines and chairs the Risk Management Committee. He joined the MLP team in 1996 and currently serves as a portfolio manager for three closed end mutual funds: the Fiduciary/Claymore MLP Opportunity Fund, the Nuveen Energy MLP Total Return Fund and the Nuveen All Cap Energy MLP Opportunities Fund. He also serves as a portfolio manager for three open‐end mutual funds: the Advisory Research MLP & Energy Income Fund, the Advisory Research MLP & Energy Infrastructure Fund and the Advisory Research MLP & Equity Fund. Mr. Cunnane holds a B.S. in finance from Indiana University and is a Chartered Financial Analyst (CFA) charterholder. He serves on the finance council and investment committee of the Archdiocese of St. Louis and on the Board of Directors of St. Patrick’s Center.
QUINN T. KILEY
MANAGING DIRECTOR, SENIOR PORTFOLIO MANAGER
Quinn Kiley, with 15 years of investment experience, is Managing Director and Senior Portfolio Manager of the Advisory Research MLP & Energy Infrastructure team and his responsibilities include portfolio management of various energy infrastructure assets and oversight of the energy infrastructure research process. He joined the MLP team in 2005. Mr. Kiley serves as a portfolio manager for three closed-end mutual funds: the Fiduciary/Claymore MLP Opportunity Fund, the Nuveen Energy MLP Total Return Fund and the Nuveen All Cap Energy MLP Opportunities Fund. He also serves as a portfolio manager for three open-end mutual funds: the Advisory Research MLP & Energy Income Fund, the Advisory Research MLP & Energy Infrastructure Fund and the Advisory Research MLP & Equity Fund. Prior to joining the MLP team, Mr. Kiley served as Vice President of Corporate & Investment Banking at Banc of America Securities in New York. He was responsible for executing strategic advisory and financing transactions for clients in the Energy & Power sectors. Mr. Kiley holds a B.S. with honors in geology from Washington & Lee University, a M.S. in geology from the University of Montana, a Juris Doctorate from Indiana University School of Law, and a M.B.A. from the Kelley School of Business at Indiana University. Mr. Kiley has been admitted to the New York State Bar.
Advisory Research Funds are distributed by IMST Distributors, LLC.