Company: SRV
Filing Date: 2025-02-10
Form Type: N-CSR
Source: 0001398344-25-002262
Chunk: 4

Company: NXG Cushing Midstream Energy Fund
Filing Date: 2025-02-10
Form: N-CSR
Chunk 4
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 overweight positions in the Fund.

First Solar, one of the leading American solar technology companies and a global provider of PV (photovoltaic) solar energy solutions, generates about 95% of its sales in the U.S. Nextracker, also in the solar industry, offers integrated solar tracker and software solutions for utility-scale and ground-mounted distributed generation solar projects. Both companies faced headwinds from interest rate sensitivity, customer concerns, uncertainty around governmental policies, and reduced investor confidence in the solar industry. The Fund’s exposure to these stocks varied during the period as their prospects evolved. We believe many of the challenges faced by both companies are well understood, and they may benefit from a renewed emphasis on domestic U.S. manufacturing.

EQT, an integrated energy company focused on natural gas supply, transmission, and distribution in Appalachia, successfully acquired Equitrans Midstream Corporation during the period. This reunited the two businesses to form one of the largest vertically integrated natural gas production companies in North America. Despite this, EQT suffered from natural gas price volatility and negative sentiment while progressing on asset sales and debt retirement initiatives.

On a relative basis, the Fund’s top contributors were Vistra Corp., Viper Energy Inc., and Targa Resources Corp. All three companies delivered strong absolute performance during the period, and the Fund held overweight positions in all three. Notably, Viper Energy and Targa were the Fund’s two largest overweight holdings, while Vistra, another top overweight position, was the single best-performing stock in the S&P 500 during the period.

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Relative to the AMEI, the Fund’s top detractors were Enbridge Inc., Enterprise Products Partners L.P., and First Solar Inc. The Fund’s overweight position in First Solar detracted from performance due to its negative absolute returns. Meanwhile, underweight positions in Enbridge and Enterprise, which posted positive absolute returns but lagged the benchmark significantly, also weighed on relative performance.

Leverage

The Fund’s investment strategy focuses on holding core positions in companies generating stable cash flows and long-term growth prospects. We also work diligently to optimize the use of leverage to seek additional income and total return potential. This involves leveraging investments when the probabilities of positive total return are deemed favorable. As the prices of the Fund’s investments increase or decrease, there is a risk that leverage could negatively impact the Fund’s NAV and total return. However, this strategy is designed to have a positive impact over the longer term.

Average leverage for the period was