UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K

|**þ**                                             |  | ANNUAL REPORT
      PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934    
|------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------
|                                                  |  |                                                                                                     
|For the
      fiscal year ended November 30, 2008
|OR                                               
|**o**                                             |  | TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

**For the transition period from ____________****to ____________**


**COMMISSION FILE NUMBER:
001-33292**

**TORTOISE CAPITAL RESOURCES
CORPORATION(Exact Name of Registrant as Specified in its
Charter)**

|**Maryland**                                                                 | 20-3431375                                         
|---------------------------------------------------------------------------- | ---------------------------------------------------
|**(State or Other Jurisdiction of Incorporation
      or Organization)**     | **(IRS Employer
      Identification No.)**        
|                                                                            
|**11550 Ash Street, Suite
    300**                                          |                                                    
|**Leawood, Kansas**                                                          | 66211                                              
|**(Address of Principal Executive
      Offices)**                           | (Zip
      Code)                                   
|**Registrants Telephone Number,
      Including Area Code: (913) 981-1020**
|                                                                            
|**Securities registered pursuant to
      Section 12(b) of the Act:**       
|**Title of Each
    Class**                                                  | **Name Of Each Exchange On Which
      Registered**
|**Common Stock, par
    value**                                              | **New York Stock
    Exchange**                    
|**$0.001 per share**                                                         |                                                    

Securities registered pursuant to
Section 12(g) of the Act: None

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.  YesoNo þ

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Act.  Yes oNo þ

Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.  YesþNo o

Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of large accelerated
filer, accelerated filer, and smaller reporting company in Rule 12b-2 of
the Exchange Act. (Check one):

|Large accelerated
      filer o | Accelerated
      filer þ |                                                     | Non-accelerated filero |  | Smaller
      reporting company o
|------------------------------- | ------------------------- | --------------------------------------------------- | ---------------------- |  | ---------------------------------
|                                |                           | (Do not check if a smaller reporting
      company) |                       

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act)  Yes
oNo þ

The aggregate market value of common
stock held by non-affiliates of the registrant on May 30, 2008 based on the
closing price on that date of $12.45 on the New York Stock Exchange was
$109,590,805. Common shares held by each executive officer and director and by
each person who owns 10% or more of the outstanding common shares (as determined
by information provided to the registrant) have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.

As of January 31, 2009, the registrant
had 8,962,147 common shares outstanding.

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DOCUMENTS INCORPORATED BY
REFERENCE

Portions
of the registrants Proxy Statement for its 2009 Annual Meeting of Stockholders
to be filed not later than 120 days after the end of the fiscal year covered by
this Annual Report on Form 10-K are incorporated by reference into Part III of
this Form 10-K.

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Tortoise Capital Resources
Corporation

FORM 10-K

FOR THE FISCAL YEAR ENDED NOVEMBER 30,
2008

TABLE OF CONTENTS

|PART I   |  |                                                                                                                    |   
|-------- |  | ------------------------------------------------------------------------------------------------------------------ | --
|Item 1.  |  | Business                                                                                                           | 2 
|Item 1A. |  | Risk Factors                                                                                                       | 10
|Item 1B. |  | Unresolved Staff Comments                                                                                          | 17
|Item 2.  |  | Properties                                                                                                         | 17
|Item 3.  |  | Legal Proceedings                                                                                                  | 18
|Item 4.  |  | Submission of Matters to a Vote of Security
      Holders                                                          | 18
|         | 
|PART II  |  |                                                                                                                    |   
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder
      Matters and Issuer Purchases of Equity Securities | 18
|Item 6.  |  | Selected Financial Data                                                                                            | 20
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and
      Results of Operations                        | 21
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market
      Risk                                                   | 31
|Item 8.  |  | Financial Statements and Supplementary Data                                                                        | 32
|Item 9.  |  | Changes in and Disagreements with Accountants on
      Accounting and Financial Disclosure                         | 32
|Item 9A. |  | Controls and Procedures                                                                                            | 32
|Item 9B. |  | Other Information                                                                                                  | 34
|         | 
|PART III |  |                                                                                                                    |   
|Item 10. |  | Directors, Executive Officers and Corporate
      Governance                                                       | 34
|Item 11. |  | Executive Compensation                                                                                             | 34
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
      and Related Stockholder Matters               | 34
|Item 13. |  | Certain Relationships and Related Transactions, and
      Director Independence                                    | 34
|Item 14. |  | Principal Accounting Fees and Services                                                                             | 34
|         | 
|PART IV  |  |                                                                                                                    |   
|Item 15. |  | Exhibits, Financial Statement Schedules                                                                            | 35
|         |  | Signatures                                                                                                         | 66
|         |  |                                                                                                                    |   

1

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PART I

ITEM 1.
BUSINESS

General

We were organized as a Maryland
corporation on September 8, 2005, commenced operations on December 8, 2005, and
are a non-diversified closed-end management investment company focused on the
U.S. energy infrastructure sector. We are regulated as a business development
company (BDC) under the Investment Company Act of 1940 (the 1940 Act). Our
common shares began trading on the New York Stock Exchange under the symbol
TTO on February 2, 2007. We invest primarily in privately-held and micro-cap
public companies operating in the midstream and downstream segments and to a
lesser extent the upstream segment of the U.S. energy infrastructure sector. We
seek to invest in companies in the energy infrastructure sector that generally
produce stable cash flows as a result of their fee-based revenues and proactive
hedging programs which help to limit direct commodity price risk. Our goal is to
provide our stockholders with a high level of total return, with an emphasis on
distributions and distribution growth. We invest primarily in the equity
securities of companies that we expect to pay us distributions on a current
basis and provide us distribution growth. These securities will generally be
limited partner interests, including interests in master limited partnerships
(MLPs), and limited liability company interests, and may also include, among
others, general partner interests, common and preferred stock, convertible
securities, warrants and depository receipts of companies that are organized as
corporations, limited partnerships or limited liability companies. We may also
invest in the securities of entities formed as joint ventures with companies in
the energy infrastructure sector to spin off assets deemed to be better suited
for ownership through a separate entity or to construct projects involving new
energy infrastructure assets. We refer to such construction projects as
greenfield projects.

Companies in the midstream segment of
the energy infrastructure sector engage in the business of transporting,
processing or storing natural gas, natural gas liquids, crude oil, refined
petroleum products and renewable energy resources. Companies in the downstream
segment of the energy infrastructure sector engage in distributing or marketing
such commodities, and companies in the upstream segment of the energy
infrastructure sector engage in exploring, developing, managing or producing
such commodities. The energy infrastructure sector also includes producers and
processors of coal and aggregates, two business segments that also are eligible
for MLP status. Under normal conditions, we intend to invest at least 90% of our
total assets (including assets obtained through leverage) in companies in the
energy infrastructure sector. Companies in the energy infrastructure sector
include (i) companies that derive a majority of their revenues from activities
within the downstream, midstream and upstream segments of the energy
infrastructure sector, (ii) companies that derive a majority of their revenues
from providing products or services to such companies, and (iii) producers and
processors of coal and aggregates, as described above. Our investments are
expected to range between $5,000,000 and $30,000,000 per investment, although
investment sizes may be smaller or larger than this targeted range.

Unlike most investment companies, we
have not elected, and do not intend to elect, to be treated as a regulated
investment company (RIC) under the Internal Revenue Code of 1986, as amended
(the Code). Therefore, we are, and intend to continue to be, obligated to pay
federal and applicable state corporate income taxes on our taxable
income.

Our Adviser

We are externally managed by Tortoise
Capital Advisors, L.L.C. (our Adviser), a registered investment adviser
specializing in the energy sector that had approximately $1.7 billion of assets
under management as of January 31, 2009, including the assets of three other
publicly traded and two privately-held closed-end management investment
companies and separate accounts for institutions and high net worth individuals.
Our Advisers aggregate managed capital is among the largest of investment
advisers managing closed-end management investment companies focused on the
energy sector.

Our Adviser currently has six
investment professionals who are responsible for the origination, structuring
and managing of our investments:

- Jeffrey Fulmer Prior to joining our Adviser in September 2007, Mr. Fulmer was with
  the U.S. Department of Defense since 2002,
  where he headed a group of oil, gas, electric power, communications,
  transportation, chemical,and water
  infrastructure analysts engaged globally in critical infrastructure analysis,
  assessment, and protection.From 2000 to 2002,
  Mr. Fulmer served as President of Redland Energy, a natural gas property
  acquisition and exploitation company. From 1989
  to 2000, Mr. Fulmer served as Senior Vice President and in other
  management capacities for Statoil Energy and
  its predecessor, responsible for exploration, development and land
  acquisition. Prior to joining Statoil Energy, Mr. Fulmer served six years in
  engineering and geological positions for ARCO Oil and Gas and Tenneco Oil Exploration and Production, working oil and
  gas field evaluation and exploitation projects.

2

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- David Henriksen Prior to joining our Adviser in August 2007, Mr. Henriksen held
  various positions with Great Plains Energy, an
  energy holding company, since 2001 where he most recently served as Vice
  President, Strategy and Investor Relations. His
  prior experience includes merger and acquisition advisory services, as well as
  corporate finance and corporate development
  positions with Koch Industries, a holder of a diverse group of companies
  engaged in trading, operations and investment
  worldwide, and CGF Industries, a multi-industry leveraged buyout and
  operating holding company.
- Lisa Marquard Prior to joining our Adviser in June 2007, Ms. Marquard was with
  Stifel, Nicolaus & Company, Incorporated
  (Stifel Nicolaus) since 2002, where she worked in the Financial Institution
  Investment Banking Group. Her prior experience
  includes executing public and private capital offerings, merger and
  acquisition advisory services, as well as
  general advisory services including valuations, strategic alternatives and
  shareholder reduction transactions.
- Terry Matlack Mr. Matlack has been a Managing Director of our Adviser since 2002
  and also serves as our Chief Financial Officer,
  and as a Director. Mr. Matlack is also the Chief Financial Officer and a
  Director of Tortoise Energy Infrastructure
  Corporation (TYG), Tortoise Energy Capital Corporation (TYY), Tortoise
  North American Energy Corporation (TYN), and
  the two privately held closed-end investment companies managed by our Adviser.
  From 2001 to 2002, Mr. Matlack was a full-time
  Managing Director at Kansas City Equity Partners, L.C. (KCEP). Prior
  to joining KCEP, Mr. Matlack was President of
  GreenStreet Capital and its affiliates, which invested primarily in the
  telecommunications service industry. Prior to 1995, he
  was Executive Vice President and a member of the Board of Directors of W. K. Communications, Inc., a cable television
  acquisition company, and Chief Operating Officer of W.K. Cellular, a rural cellular service area operator.
- Edward Russell Mr. Russell serves as our President, and also serves as President of
  one of the two privately held closed-end
  investment companies managed by our Adviser. Prior to joining our Adviser in
  March 2006, Mr. Russell was at Stifel Nicolaus
  since 1999, where he headed the Energy and Power Group as a Managing Director
  from 2003 to March 2006, and served as Vice
  President-Investment Banking before that. While a Managing Director at
  Stifel Nicolaus, Mr. Russell was responsible
  for all of the energy and power transactions, including all of the debt
  and equity transactions for TYG, TYY and TYN
  and our first private placement transaction. Prior to joining Stifel
  Nicolaus, Mr. Russell worked for more than 15 years as
  an investment banker at Pauli & Company, Inc. and Arch Capital LLC and as a commercial banker with Magna Group and
  South Side National Bank.
- David J. Schulte Mr. Schulte has been a Managing Director of our Adviser since 2002
  and also serves as our Chief Executive Officer.
  In addition, Mr. Schulte serves as Chief Executive Officer and President of
  TYG and TYY, Chief Executive Officer of TYN and
  one of the two privately held closed-end investment companies managed by
  our Adviser, and President of the other of the
  two privately held closed-end investment companies managed by our Adviser. From 1993 to 2002, Mr. Schulte was a full-time
  Managing Director at KCEP. While a partner at KCEP, Mr. Schulte led private financings for two growth MLPs in the energy
  infrastructure sector, Inergy, L.P., where he served as a director, and MarkWest Energy Partners, L.P., where he was
  a board observer. Prior to joining KCEP, Mr.
  Schulte had over five years of experience completing acquisition and public
  equity financings as an investment banker at
  the predecessor of Oppenheimer & Co., Inc.

Our Adviser has retained Kenmont
Investments Management, L.P. (Kenmont) as a sub-adviser. Kenmont is a Houston,
Texas based registered investment adviser with experience investing in
privately-held and public companies in the U.S. energy and power sectors.
Kenmont provides additional contacts to us and enhances our number and range of
potential investment opportunities. The principals of Kenmont have collectively
created and managed private equity portfolios in excess of $1.5 billion and
collectively have over 50 years of experience working for investment banks,
accounting firms, operating companies and money management firms. Our Adviser
compensates Kenmont for the services it provides to us. Our Adviser also
indemnifies and holds us harmless from any obligation to pay or reimburse
Kenmont for any fees or expenses incurred by Kenmont in providing such services
to us. Entities managed by Kenmont own approximately 5.6 percent of our
outstanding common shares and warrants to purchase an additional 281,666 of our
common shares.

Staffing

We do not currently have or expect to
have any employees. Services necessary for our business are provided by
individuals who are employees of our Adviser, pursuant to the terms of the
Investment Advisory Agreement and the Administration Agreement. Our Adviser
currently has 33 employees. Our executive officers, our six investment
professionals and our Valuation Officer (whose primarily responsibility is
oversight of the fair valuation process for our private investments) are
employees of our Advisor.

3

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License Agreement

Pursuant to the Investment Advisory
Agreement, our Adviser has consented to our use on a non-exclusive, royalty-free
basis, of Tortoise in our name. We will have the right to use the Tortoise
name so long as our Adviser or one of its approved affiliates remains our
investment adviser. Other than with respect to this limited right, we will have
no legal right to the Tortoise name. This right will remain in effect for so
long as the Investment Advisory Agreement with our Adviser is in effect and will
automatically terminate if the Investment Advisory Agreement were to terminate
for any reason, including upon its assignment.

Our Investments

We pursue our investment objective by
investing principally in a portfolio of privately-held and micro-cap public
companies in the U.S. energy infrastructure sector. The energy infrastructure
sector can be broadly categorized as follows:

- Midstream
  the gathering, processing, storing and transmission of energy resources and
  their byproducts in a form that is usable by
  wholesale power generation, utility, petrochemical, industrial and gasoline
  customers, including pipelines, gas processing
  plants, liquefied natural gas facilities and other energy infrastructure
  companies.
- Downstream
  the refining, marketing and distribution of refined energy sources, such as
  customer-ready natural gas, natural gas
  liquids, propane and gasoline, to end-user customers, and customers engaged in
  the generation, transmission and distribution
  of power and electricity.
- Upstream
  the exploitation and extraction of energy resources, including natural gas and
  crude oil from onshore and offshore geological
  reservoirs as well as from renewable sources, including agricultural, thermal,
  solar, wind and biomass.
- Other
  includes production and processing of coal and aggregates.

We focus our investments in the
midstream and downstream segments, and to a lesser extent the upstream segment,
of the U.S. energy infrastructure sector. We also intend to allocate our
investments among asset types and geographic regions within the U.S. energy
infrastructure sector.

Targeted Investment
Characteristics

We anticipate that our targeted
investments will have the following characteristics:

- Long-Life Assets with Stable Cash Flows and
  Limited Commodity Price Sensitivity.We
  anticipate that most of our investments will be
  made in companies with assets having the potential to generate stable cash
  flows over long periods of time. We intend to
  invest a portion of our assets in companies that own and operate assets with
  long useful lives and that generate cash flows
  by providing critical services primarily to the producers or end-users of
  energy. We expect to limit the direct exposure
  to energy commodity price risk in our portfolio. We intend to target companies
  that have a majority of their cash flows
  generated by contractual obligations.
- Experienced Management Teams with Energy
  Infrastructure Focus.We target investments
  in companies with management teams that have a
  track record of success and that often have substantial knowledge and focus
  in particular segments of the energy
  infrastructure sector or with certain types of assets. We expect that our
  management teams extensive experience and
  network of business relationships in the energy infrastructure sector will
  enable us to identify and attract portfolio
  company management teams that meet these criteria.
- Fixed Asset-Intensive Investments.We anticipate that most of our investments
  will be made in companies with a relatively
  significant base of fixed assets that we believe will provide for reduced
  downside risk compared to making investments in
  companies with lower relative fixed asset levels. As fixed asset-intensive
  companies typically have less variable cost
  requirements, we expect they will generate attractive cash flow growth even
  with limited demand-driven or supply-driven growth.

4

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- Limited Technological Risk.We do not intend to target investment opportunities
  involving the application of new technologies
  or significant geological, drilling or development risk.
- Exit Opportunities.We focus our investments on prospective portfolio companies that we
  believe will generate a steady stream of cash
  flow to generate returns on our investments as well as allow such companies to
  reinvest in their respective businesses. We
  expect that such internally generated cash flow will lead to distributions or
  the repayment of the principal of our
  investments in portfolio companies and will be a key means by which we
  monetize our investments over time. In
  addition, we seek to invest in companies whose business models and expected
  future cash flows offer attractive exit
  possibilities. These companies include candidates for strategic acquisition by
  other industry participants and companies that
  may repay, or provide liquidity for, our investments through an initial public
  offering of common stock or other capital
  markets transactions. We believe our Advisers investment experience will help
  us identify such companies.

Investment Structure and Types of
Investments

Once our Advisers investment committee
has determined that a prospective portfolio company is suitable for investment,
for those transactions in which we buy securities in a private transaction, we
work with the management of that company, its advisers, and its other capital
providers, including other senior and junior debt and equity capital providers,
if any, to structure an investment. As a BDC, we are subject to numerous
regulations and restrictions. We may not acquire any asset other than assets of
the type listed in Section 55(a) of the 1940 Act, or qualifying assets, unless
at the time the acquisition is made qualifying assets represent at least 70
percent of our total assets. We may invest up to 30 percent of our total assets
in assets that are non-qualifying assets in, among other things, high yield
bonds, bridge loans, distressed debt, commercial loans, private equity and
securities of public companies or secondary market purchases of securities of
target portfolio companies.

The types of securities in which we may
invest include, but are not limited to, the following:

Equity
InvestmentsWe expect our equity
investments will likely consist of common or preferred equity (generally limited
partner interests, including interests in MLPs, and limited liability company
interests) that is expected to pay distributions on a current basis. Preferred
equity generally has a preference over common equity as to distributions during
operations and upon liquidation. In general, we expect that our equity
investments will not be control-oriented investments and we may acquire equity
securities as part of a group of private equity investors in which we are not
the lead investor. In many cases, we also may obtain registration rights in
connection with these equity interests, which may include demand and piggyback
registration rights.

In addition to limited partner
interests and limited liability company interests, we may also purchase, among
others, general partner interests, common and preferred stock, convertible
securities, warrants and depository receipts of companies that are organized as
corporations, limited partnerships or limited liability companies. We may also
invest in the securities of entities formed as joint ventures with companies in
the energy infrastructure sector to spin off assets deemed to be better suited
for ownership through a separate entity or to construct greenfield
projects.

Debt
InvestmentsOur debt investments may
be secured or unsecured. In general, our debt investments will not be
control-oriented investments and we may acquire debt securities as a part of a
group of investors in which we are not the lead investor. We anticipate
structuring a significant amount of our debt investments as mezzanine loans.
Mezzanine loans typically are not secured by assets of the company, and usually
rank subordinate in priority of payment to senior debt, such as senior bank
debt, but senior to common and preferred equity, in a borrowers capital
structure. We expect to invest in a range of debt investments generally having a
term of five to ten years and bearing interest at either a fixed or floating
rate. These loans typically will have interest-only payments in the early years,
with amortization of principal deferred to the later years of the term of the
loan.

In addition to bearing fixed or
variable rates of interest, mezzanine loans also may provide an opportunity to
participate in the capital appreciation of a borrower through an equity
interest. We expect this equity interest will typically be in the form of a
warrant. Due to the relatively higher risk profile and often less restrictive
covenants, as compared to senior loans, mezzanine loans generally earn a higher
return than senior loans. The warrants associated with mezzanine loans are
typically detachable, which allows lenders to receive repayment of principal
while retaining their equity interest in the borrower. In some cases, we
anticipate that mezzanine loans may be collateralized by a subordinated lien on
some or all of the assets of the borrower.

5

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In some cases, our debt investments may
provide for a portion of the interest payable to be payment-in-kind interest. To
the extent interest is payment-in-kind, it will likely be payable through the
increase of the principal amount of the loan by the amount of interest due on
the then-outstanding aggregate principal amount of such loan.

We tailor the terms of our debt
investments to the facts and circumstances of the transaction and the
prospective portfolio company, creating a structure that aims to protect our
rights and manage risk while creating incentives for the portfolio company to
achieve its business plan and improve its profitability. For example, in
addition to seeking a position senior to common and preferred equity in the
capital structure of our portfolio companies, we will seek, where appropriate,
to limit the downside potential of our debt investments by:

- requiring a total return on our investments
  (including both interest and potential equity appreciation) that
  compensates us for our credit
  risk;
- incorporating put rights and call protection
  into the investment structure; and
- structuring covenants in connection with our
  investments that afford portfolio companies as much flexibility in
  managing their businesses as possible, consistent with
  preservation of our capital. Such restrictions may include affirmative and negative covenants, default penalties, lien
  protection, change of control provisions and board rights, including either observation or participation
  rights.

WarrantsOur investments may include warrants or options to establish
or increase an equity interest in the portfolio company. Warrants we receive in
connection with an investment may require only a nominal cost to exercise, and
thus, as a portfolio company appreciates in value, we may achieve additional
investment return from this equity interest. We may structure the warrants to
provide provisions protecting our rights as a minority-interest holder, as well
as puts, or rights to sell such securities back to the portfolio company, upon
the occurrence of specified events. In certain cases, we also may obtain
registration rights in connection with these equity interests, which may include
demand and piggyback registration rights.

Market Opportunity

We believe the environment for
investing in privately-held and micro-cap public companies in the energy
infrastructure sector has the potential to be attractive for the following
reasons:

- Increased Demand Among Small and Middle Market
  Private Companies for Capital.We believe
  many private and micro-cap public companies
  have faced increased difficulty accessing the capital markets due to a
  continuing preference by investors for
  issuances in larger companies with more liquid securities. Such difficulties
  have been magnified in asset-focused and
  capital intensive industries such as the energy infrastructure sector. We
  believe that the U.S. energy infrastructure
  sectors high level of projected capital expenditures and continuing
  acquisition and divestiture activity will
  provide us with numerous attractive investment opportunities.
- Finance Market for Small and Middle Market
  Energy Companies is Underserved by Many Capital Providers.We believe that many lenders
  have, in recent years, de-emphasized their service and product offerings to
  small and middle market energy companies in
  favor of lending to large corporate clients and managing capital
  markets transactions. We believe, in addition,
  that many capital providers lack the necessary technical expertise to
  evaluate the quality of the underlying assets
  of small and middle market private companies and micro-cap public companies
  in the energy infrastructure sector and lack a
  network of relationships with such companies.
- Attractive Companies with Limited Access to
  Other Capital.We believe there are, and
  will continue to be, attractive companies that
  will benefit from private equity investments prior to a public offering of
  their equity, whether as an MLP or otherwise.
  We also believe that there are a number of companies in the midstream and
  downstream segments of the U.S. energy
  infrastructure sector with the same stable cash flow characteristics as those
  being acquired by MLPs or funded by private
  equity capital in anticipation of contribution to an MLP. We believe that many
  such companies are not being acquired by MLPs
  or attracting private equity capital because they do not produce income
  that qualifies for inclusion in an MLP pursuant to the
  applicable U.S. Federal income tax laws, are perceived by such investors as too small, or are in areas of the midstream
  energy infrastructure segment in which most MLPs do not have specific expertise. We believe that these companies
  represent attractive investment candidates for us.

6

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Competition

We compete with public and private
funds, commercial and investment banks and commercial financing companies to
make the types of investments that we plan to make in the U.S. energy
infrastructure sector. Many of our competitors are substantially larger and have
considerably greater financial, technical and marketing resources than us. For
example, some competitors may have a lower cost of funds and access to funding
sources that are not available to us. In addition, some of our competitors may
have higher risk tolerances or different risk assessments, allowing them to
consider a wider variety of investments and establish more relationships than
us. Furthermore, many of our competitors are not subject to the regulatory
restrictions that the 1940 Act imposes on us as a BDC. These competitive
conditions may adversely affect our ability to make investments in the energy
infrastructure sector and could adversely affect our distributions to
stockholders.

As investors in privately-held
companies, we seek to make investments at valuation metrics that are more
favorable than those of comparable public entities (often MLPs) to account for,
among other things, the lack of liquidity. Under normal market conditions, such
valuation metrics often result in pricing and transaction values that are
acceptable to sellers of interests in private companies. With the recent
volatility and lower valuations in the MLP market, our desired pricing for
private equity investments may be unattractive to sellers, dampening or limiting
the market opportunities that otherwise might be available to us.

Competitive
Advantages

We believe that we are well positioned
to meet the financing needs of companies within the U.S. energy infrastructure
sector for the following reasons:

- Existing Investment Platform and Focus on the
  Energy Infrastructure Sector.We believe
  that our Advisers current investment platform
  provides us with significant advantages in sourcing, evaluating, executing and
  managing investments. Our Adviser is a
  registered investment adviser specializing in the energy sector and had
  approximately $1.7 billion of assets under
  management as of January 31, 2009, including the assets of three other
  publicly traded and two privately-held
  closed-end management investment companies and separate accounts for
  institutions and high net worth individuals.
  Our Adviser created the first publicly traded closed-end management investment
  company focused primarily on investing in MLPs
  involved in the energy infrastructure sector, and its aggregate managed
  capital is among the largest of those closed-end
  management investment company advisers focused on the energy sector.
- Experienced Management Team.The members of our Advisers investment committee have an
  average of over 20 years of financial
  investment experience. Our Advisers six investment professionals are
  responsible for the structuring and managing of
  our investments and have over 120 years of combined experience in energy,
  investment banking, leveraged finance and
  private equity investing. We believe that the members of our Advisers
  investment committee and the Advisers
  investment professionals have developed strong reputations in the
  capital markets, particularly in the energy
  infrastructure sector, that we believe affords us a competitive advantage
  in identifying and investing in energy
  infrastructure companies.
- Disciplined Investment Philosophy.In making its investment decisions, our
  Adviser intends to continue the disciplined
  investment approach that it has used since its founding. That investment
  approach emphasizes current income with the
  potential for enhanced returns through distribution growth, capital
  appreciation, low volatility and minimization
  of downside risk. Our Advisers investment process involves an assessment of
  the overall attractiveness of the specific
  subsector of the energy infrastructure sector in which a prospective portfolio
  company is involved; such companys specific
  competitive position within that subsector; potential commodity price, supply
  and demand and regulatory concerns; the
  stability and potential growth of the prospective portfolio companys cash
  flows; the prospective portfolio companys
  management track record and incentive structure and our Advisers ability
  to structure an attractive
  investment.
- Flexible Transaction Structuring.We are not subject to many of the
  regulatory limitations that govern traditional lending institutions such as commercial banks. As a result, we can be
  flexible in structuring investments and selecting the types of securities in which we invest. Our Advisers investment
  professionals have substantial experience in structuring investments that balance the needs of energy infrastructure
  companies with appropriate risk control.
- Extended Investment Horizon.Unlike private equity and venture capital funds, we are not
  subject to standard periodic capital return
  requirements. These provisions often force private equity and venture capital
  funds to seek quicker returns on their
  investments through mergers, public equity offerings or other liquidity events
  than may otherwise be desirable, potentially
  resulting in both a lower overall return to investors and an adverse impact on
  their portfolio companies. We believe our
  flexibility to make investments with a long-term view and without the capital
  return requirements of traditional private investment funds enhances our
  ability to generate attractive returns on invested capital.

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Investment Process and Due
Diligence

In conducting due diligence, our
Adviser uses available public information and information obtained from its
relationships with former and current management teams, vendors and suppliers to
prospective portfolio companies, investment bankers, consultants and other
advisers. Although our Adviser uses research provided by third parties when
available, primary emphasis is placed on proprietary analysis and valuation
models conducted and maintained by our Advisers in-house investment
professionals.

The due diligence process followed by
our Advisers investment professionals is highly detailed and structured. Our
Adviser exercises discipline with respect to company valuation and institutes
appropriate structural protections in our investment agreements. After our
Advisers investment professionals undertake initial due diligence of a
prospective portfolio company, if appropriate, more extensive due diligence will
be undertaken. Our due diligence process may include the following as
appropriate:

- review of historical and prospective financial
  information;
- review and analysis of financial models and
  projections;
- for many midstream and upstream investments,
  review of third party engineering reserve reports and internal engineering reviews;
- on-site visits;
- review of the status of the potential portfolio
  companys title to any assets serving as collateral and liens on such
  assets;
- environmental diligence and
  assessments;
- interviews with management, and if accessible,
  employees, customers and vendors of the prospective portfolio company;
- research relating to the prospective portfolio
  companys industry, regulatory environment, products and services and
  competitors;
- review of financial, accounting and operating
  systems;
- review of relevant corporate, partnership and
  other loan documents; and
- research relating to the prospective portfolio
  companys management and contingent liabilities, including background
  and reference checks using our Advisers industry
  contact base and commercial data bases and other investigative sources.

Additional due diligence with respect
to any investment may be conducted on our behalf by our legal counsel and
accountants, as well as by other outside advisers and consultants, as
appropriate.

Upon the conclusion of the due
diligence process, our Advisers investment professionals present a detailed
investment proposal to our Advisers investment committee. The Advisers six
investment professionals have over 120 years of combined experience in energy,
investment banking, leveraged finance and private equity investing. The members
of our Advisers investment committee have an average of over 20 years of
financial investment experience. All decisions to invest in a portfolio company
must be approved by the unanimous decision of our Advisers investment
committee.

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Ongoing Relationships with Portfolio
Companies

Monitoring

The investment professionals of our
Adviser monitor each portfolio company to determine progress relative to meeting
the companys business plan and to assess the companys strategic and tactical
courses of action. This monitoring may be accomplished by attendance at Board of
Directors meetings, the review of periodic operating reports and financial
reports, an analysis of relevant reserve information and capital expenditure
plans, and periodic consultations with engineers, geologists, and other experts.
The performance of each portfolio company is also periodically compared to
performance of similarly sized companies with comparable assets and businesses
to assess performance relative to peers. Our Advisers monitoring activities are
expected to provide it with the necessary access to monitor compliance with
existing covenants, to enhance its ability to make qualified valuation
decisions, and to assist its evaluation of the nature of the risks involved in
each individual investment. In addition, these monitoring activities should
permit our Adviser to diagnose and manage the common risk factors held by our
total portfolio, such as sector concentration, exposure to a single financial
sponsor, or sensitivity to a particular geography.

Significant Managerial
Assistance

A BDC must be organized and have its
principal place of business in the United States and must be operated for the
purpose of making investments in the types of securities described below.
However, in order to count portfolio securities as qualifying assets for the
purpose of the 70 percent test, a BDC must either control the issuer of the
securities or must offer to make available to the issuer of the securities
(other than small and solvent companies described above) significant managerial
assistance. Making available significant managerial assistance means, among
other things, any arrangement whereby a BDC, through its directors, officers or
employees, offers to provide, and, if accepted, does so provide, significant
guidance and counsel concerning the management, operations or business
objectives and policies of a portfolio company through monitoring of portfolio
company operations, selective participation in board and management meetings,
consulting with and advising a portfolio companys officers, or other
organizational or financial guidance. Although we are not currently doing so, we
may in the future charge for providing managerial assistance.

Operating and Regulatory
Structure

We are regulated as a BDC under the
1940 Act, and classified as a non-diversified closed-end management investment
company under the 1940 Act. We are, and intend to continue to be, taxed as a
general business corporation under the Code.

As a BDC, we are subject to numerous
regulations and restrictions. We may not acquire any asset other than assets of
the type listed in Section 55(a) of the 1940 Act, or qualifying assets, unless
at the time the acquisition is made qualifying assets represent at least 70
percent of our total assets. We may invest up to 30 percent of our total assets
in assets that are non-qualifying assets and are not subject to the limitations
referenced above. These investments may include, among other things, investments
in high yield bonds, bridge loans, distressed debt, commercial loans, private
equity, securities of public companies or secondary market purchases of
otherwise qualifying assets. If the value of non-qualifying assets should at any
time exceed 30 percent of our total assets, we will be precluded from acquiring
any additional non-qualifying assets until such time as the value of our
qualifying assets again equals at least 70 percent of our total
assets.

Unlike most investment companies, we
have not elected, and do not intend to elect, to be treated as a RIC under the
Code. Therefore, we are, and intend to continue to be, obligated to pay federal
and applicable state corporate income taxes on our taxable income. As a result
of not electing to be treated as a RIC, we are not subject to the Codes
diversification rules limiting the assets in which a RIC can invest. In
addition, we are not subject to the Codes restrictions on the types of income
that a RIC can recognize without adversely affecting its election to be treated
as a RIC, allowing us the ability to invest in operating entities treated as
partnerships under the Code, which we believe provide attractive investment
opportunities. Finally, unlike RICs, we are not effectively required by the Code
to distribute substantially all of our income and capital gains. Distributions
on the common shares will be treated first as taxable dividend income to the
extent of our current or accumulated earnings and profits, then as a tax free
return of capital to the extent of a stockholders tax basis in the common
shares, and last as capital gain. We anticipate that the distributed cash from
our portfolio investments in entities treated as partnerships for tax purposes
will exceed our share of taxable income from those portfolio investments. Thus,
we anticipate that only a portion of distributions we make on the common shares
will be treated as taxable dividend income to our stockholders.

Codes of Ethics

We have adopted a code of ethics which
applies to our principal executive officer and principal financial officer. We
have also adopted a code of ethics pursuant to Rule 17j-1 under the 1940 Act
that establishes procedures for personal investments and restricts certain
personal securities transactions. Personnel subject to the code of ethics may
invest in securities for their personal investment accounts, including
securities that may be purchased or held by us, so long as such investments are
made in accordance with the code of ethics. This information may be obtained,
without charge, upon request by calling us at (913) 981-1020 or toll-free at
(866) 362-9331 and on our Web site at
www.tortoiseadvisors.com/tto.cfm.

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You may also read and copy the codes of
ethics at the Securities and Exchange Commissions Public Reference Room in
Washington, D.C. You may obtain information on the operation of the Public
Reference Room by calling the Securities and Exchange Commission at
1-800-SEC-0330. In addition, the codes of ethics are available on the EDGAR
Database on the Securities and Exchange Commissions Internet site at
http://www.sec.gov. You may obtain copies of the codes of ethics, after paying a
duplicating fee, by electronic request at the following email address:
publicinfo@sec.gov, or by writing the Securities and Exchange Commissions
Public Reference Section, Washington, D.C. 20549.

Sarbanes-Oxley Act of
2002

The Sarbanes-Oxley Act of 2002 (the
Act) imposes a wide variety of regulatory requirements for publicly-held
companies and their insiders. Under the Act, we are required to review our
policies and procedures to determine whether we comply with the provisions of
the Act. We will continue to monitor our compliance with all future regulations
that are adopted under the Act and will take actions necessary to ensure that we
are in compliance therewith.

As of November 30, 2008, we are an
accelerated filer. As an accelerated filer for the fiscal year ended November
30, 2008, we are required to prepare and include in our annual report to
stockholders for such period a report regarding managements assessment of our
internal control over financial reporting under the Securities Exchange Act of
1934 (the 1934 Act) and have included this report in Item 9A of this Annual
Report on Form 10-K.

Available Information

Our principal executive offices are
located at 11550 Ash Street, Suite 300, Leawood, Kansas 66211, our telephone
number is (913) 981-1020, or toll-free 1-866-362-9331, and our Web site is
www.tortoiseadvisors.com/tto.cfm. We will make available free of charge our
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on
Form 8-K and any amendments to those reports when we electronically file such
material with, or furnish it to, the SEC. This information may be obtained,
without charge, upon request by calling us at (913) 981-1020 or toll-free at
(866) 362-9331 and on our Web site at www.tortoiseadvisors.com/tto.cfm. This
information will also be available at the SECs Public Reference Room at 100 F
Street, NE, Washington, DC 20549. You may obtain information on the operation of
the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC
maintains an Internet site that contains reports, proxy and information
statements and other information filed by us with the SEC which is available on
the SECs internet site at www.sec.gov. Please note that any internet addresses
provided in this Form 10-K are for informational purposes only and are not
intended to be hyperlinks. Accordingly, no information found and/or provided at
such internet address is intended or deemed to be included by reference
herein.

ITEM 1A. RISK
FACTORS

Risks Related to Our
Operations

We have a limited operating
history.We were incorporated in
Maryland on September 8, 2005. We are subject to all of the business risks and
uncertainties associated with any business, including the risk that we will not
achieve our investment objective and that the value of an investment in our
common shares could decline substantially.

Our Adviser serves as investment
adviser to other funds, which may create conflicts of interest not in the best
interest of us or our stockholders.Our Adviser was formed in October 2002 and has been managing investments
in portfolios of MLPs and other issuers in the energy sector since that time,
including management of the investments of TYG since February 27, 2004, TYY
since May 31, 2005, TYN since October 31, 2005, one of the two privately-held
closed-end management investment companies since June 29, 2007 and the other of
the two privately-held closed end management investment companies since July 19,
2007. From time to time the Adviser may pursue areas of investments in which the
Adviser has more limited experience.

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Our investment committee is the same
for, and all of our Advisers employees provide services for, other funds
managed by our Adviser. Our Advisers services under the investment advisory
agreement are not exclusive, and it is not prohibited from furnishing the same
or similar services to other entities, including businesses that may directly or
indirectly compete with us so long as its services to us are not impaired by the
provision of such services to others. In addition, the publicly traded funds and
private accounts managed by our Adviser may make investments similar to
investments that we may pursue. Unlike the other funds managed by our Adviser
(other than one of the privately-held closed-end management investment
companies), we generally target investments in companies that are privately-held
or have market capitalizations of less than $250,000,000, and that are earlier
in their stage of development. We also focus on privately-held and micro-cap
public energy companies operating in the midstream and downstream segment, and
to a lesser extent the upstream segment, of the U.S energy infrastructure
sector. The privately-held closed-end management investment company focuses on
privately-held companies and publicly traded MLPs in the upstream, and to a
lesser extent the midstream, gas and oil segments of the energy sector and could
contemplate an investment that falls within our investment focus. Accordingly,
our Adviser and the members of its investment committee may have obligations to
other investors, the fulfillment of which might not be in the best interests of
us or our stockholders, and it is possible that our Adviser might allocate
investment opportunities to other entities, limiting attractive investment
opportunities available to us. However, our Adviser intends to allocate
investment opportunities in a fair and equitable manner consistent with our
investment objectives and strategies, and in accordance with written allocation
policies and procedures of our Adviser, so that we will not be disadvantaged in
relation to any other client.

We are dependent upon our
Advisers key personnel for our future success.We depend on the diligence, expertise and business
relationships of the senior management of our Adviser. Our Advisers investment
professionals and senior management will evaluate, structure, close and monitor
our investments. Our future success will depend on the continued service of the
senior management team of our Adviser. The departure of one or more investment
professionals of our Adviser could have a material adverse effect on our ability
to achieve our investment objective and on the value of our common shares. We
will rely on certain employees of the Adviser who will be devoting significant
amounts of their time to other activities of the Adviser. To the extent the
Advisers investment professionals and senior management are unable to, or do
not, devote sufficient amounts of their time and energy to our affairs, our
performance may suffer.

The incentive fee payable to our
Adviser may create conflicting incentives.The incentive fee payable by us to our Adviser may create an incentive
for our Adviser to make investments on our behalf that are riskier or more
speculative than would be the case in the absence of such a compensation
arrangement. Because a portion of the incentive fee payable to our Adviser is
calculated as a percentage of the amount of our net investment income that
exceeds a hurdle rate, our Adviser may imprudently use leverage to increase the
return on our investments. Under some circumstances, the use of leverage may
increase the likelihood of default, which would disfavor the holders of our
common shares. In addition, our Adviser will receive an incentive fee based, in
part, upon net realized capital gains on our investments. Unlike the portion of
the incentive fee based on net investment income, there is no hurdle rate
applicable to the portion of the incentive fee based on net capital gains. As a
result, our Adviser may have an incentive to pursue investments that are likely
to result in capital gains as compared to income producing securities. Such a
practice could result in our investing in more speculative or long term
securities than would otherwise be the case, which could result in higher
investment losses, particularly during economic downturns or longer return
cycles.

We may be required to pay an incentive
fee even in a fiscal quarter in which we have incurred a loss. For example, if
we have pre-incentive fee net investment income above the hurdle rate and
realized capital losses, we will be required to pay the investment income
portion of the incentive fee.

The investment income portion of the
incentive fee payable by us will be computed and paid on income that may include
interest that has been accrued but not yet received in cash, and the collection
of which is uncertain or deferred. If a portfolio company defaults on a loan
that is structured to provide accrued interest, it is possible that accrued
interest previously used in the calculation of the investment income portion of
the incentive fee will become uncollectible. Our Adviser will not be required to
reimburse us for any such incentive fee payments.

Because we expect to distribute
substantially all of our income to our stockholders, we will continue to need
additional capital to make new investments. If additional funds are unavailable
or not available on favorable terms, our ability to make new investments will be
impaired.If we distribute
substantially all of our income to our stockholders and desire to make new
investments, our business will require a substantial amount of capital. We may
acquire additional capital from the issuance of securities senior to our common
shares, including additional borrowings or other indebtedness or the issuance of
additional securities. We may also acquire additional capital through the
issuance of additional equity. However, we may not be able to raise additional
capital in the future on favorable terms or at all. Unfavorable economic
conditions could increase our funding costs, limit our access to the capital
markets or result in a decision by lenders not to extend credit to us. We may
issue debt securities, other instruments of indebtedness or preferred stock, and
we intend to borrow money from banks or other financial institutions, which we
refer to collectively as senior securities, up to the maximum amount permitted
by the 1940 Act. The 1940 Act permits us to issue senior securities in amounts
such that our asset coverage, as defined in the 1940 Act, equals at least 200
percent after each issuance of senior securities. Our ability to pay
distributions or issue additional senior securities is restricted if our asset
coverage ratio is not at least 200 percent, or put another way, the value of our
assets (less all liabilities and indebtedness not represented by senior
securities) must be at least twice that of any outstanding senior securities
(plus the aggregate involuntary liquidation preference of any preferred stock).
If the value of our assets declines, we may be unable to satisfy this test. If
that happens, we may be required to liquidate a portion of our investments and
repay a portion of our indebtedness at a time when such sales may be
disadvantageous. As a result of issuing senior securities, we will also be
exposed to typical risks associated with leverage, including increased risk of
loss. If we issue preferred securities which will rank senior to our common
shares in our capital structure, the holders of such preferred securities may
have separate voting rights and other rights, preferences or privileges more
favorable than those of our common shares, and the issuance of such preferred
securities could have the effect of delaying, deferring or preventing a
transaction or a change of control that might involve a premium price for
security holders or otherwise be in our best interest.

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To the extent our ability to issue debt
or other senior securities is constrained, we will depend on issuances of
additional common shares to finance new investments. As a BDC, we generally are
not able to issue additional common shares at a price below NAV (net of any
sales load (underwriting discount)) without first obtaining required approvals
of our stockholders and our independent directors, which could constrain our
ability to issue additional equity. If we raise additional funds by issuing more
of our common shares or senior securities convertible into, or exchangeable for,
our common shares, the percentage ownership of our stockholders at that time
would decrease, and you may experience dilution.

As a BDC, we are subject to
limitations on our ability to engage in certain transactions with
affiliates.As a BDC, we are
prohibited under the 1940 Act from knowingly participating in certain
transactions with our affiliates without the prior approval of our independent
directors or the SEC. Any person that owns, directly or indirectly, 5 percent or
more of our outstanding voting securities is our affiliate for purposes of the
1940 Act and we are generally prohibited from buying or selling any security
from or to such affiliate, absent the prior approval of our independent
directors. The 1940 Act also prohibits joint transactions with an affiliate,
which could include investments in the same portfolio company (whether at the
same or different times), without prior approval of our independent directors.
If a person acquires more than 25 percent of our voting securities, we will be
prohibited from buying or selling any security from or to such person, or
entering into joint transactions with such person, absent prior approval of the
SEC.

If an investment that was
initially believed to be a qualifying asset is later deemed not to have been a
qualifying asset at the time of investment, we could lose our status as a BDC or
be precluded from investing according to our current business
plan.As a BDC, we must not acquire
any assets other than qualifying assets unless, at the time of and after
giving effect to such acquisition, at least 70 percent of our total assets are
qualifying assets. If an investment that was originally believed to be a
qualifying asset is later deemed not to have been a qualifying asset at the time
of investment, our status as a BDC may be jeopardized or we may be precluded
from investing according to our current business plan, either of which would
have a material adverse effect on our business, financial condition and results
of operations. We also may be required to dispose of investments, which could
have a material adverse effect on us and our shareholders, because even if we
were successful in finding a buyer, we may have difficulty in finding a buyer to
purchase such investments on favorable terms or in a sufficient
timeframe.

We may choose to invest a portion
of our portfolio in investments that may be considered highly speculative and
that could negatively impact our ability to pay distributions and cause you to
lose part of your investment.The 1940
Act permits a BDC to invest up to 30 percent of its assets in investments that
do not meet the test for qualifying assets. Such investments may be made by us
with the expectation of achieving a higher rate of return or increased cash flow
with a portion of our portfolio and may fall outside of our targeted investment
criteria. These investments may be made even though they may expose us to
greater risks than our other investments and may consequently expose our
portfolio to more significant losses than may arise from our other investments.
We may invest up to 30 percent of our total assets in assets that are
non-qualifying assets in among other things, high yield bonds, bridge loans,
distressed debt, commercial loans, private equity, and securities of public
companies or secondary market purchases of securities of target portfolio
companies. Such investments could impact negatively our ability to pay you
distributions and cause you to lose part of your investment.

Our debt increases the risk of
investing in us.We have a $50,000,000
secured revolving credit facility with U.S. Bank National Association, as
lender, agent and lead arranger, First National Bank of Kansas and Wells Fargo
Bank, N.A. The credit facility terminates on March 20, 2009. As of November 30,
2008, we had an outstanding balance of $22,200,000 under the credit facility.
Our credit facility contains a covenant precluding us from incurring additional
debt. Lenders from whom we may borrow money or holders of our debt securities
will have fixed dollar claims on our assets that are superior to the claims of
our stockholders, and we have and may in the future grant a security interest in
our assets in connection with our debt. In the case of a liquidation event,
those lenders or note holders would receive proceeds before our stockholders. In
addition, debt, also known as leverage, magnifies the potential for gain or loss
on amounts invested and, therefore, increases the risks associated with
investing in our securities. Leverage is generally considered a speculative
investment technique and the costs of any leverage transactions will be borne by
our stockholders. In addition, because the base management fees we pay to our
Adviser are based on Managed Assets (which includes any assets purchased with
borrowed funds); our Adviser may imprudently borrow funds in an attempt to
increase our managed assets and in conflict with our or our stockholders best
interests. If the value of our assets increases, then leveraging would cause the
net asset value attributable to our common shares to increase more than it
otherwise would have had we not leveraged. Conversely, if the value of our
assets decreases, leveraging would cause the net asset value attributable to our
common shares to decline more than it otherwise would have had we not leveraged.
Similarly, any increase in our revenue in excess of interest expense on our
borrowed funds would cause our net income to increase more than it would without
the leverage. Any decrease in our revenue would cause our net income to decline
more than it would have had we not borrowed funds and could negatively affect
our ability to make distributions on our common shares. Our ability to service
any debt that we incur will depend largely on our financial performance and the
performance of our portfolio companies and will be subject to prevailing
economic conditions and competitive pressures. Under the terms of our credit
facility, we must maintain the asset coverage ratio required under the 1940 Act.
If we fail to maintain the required coverage, we may be required to repay a
portion of any outstanding balance until the asset coverage requirement has been
met. This may require us to sell assets. The illiquid nature of most of our
investments may make it difficult to dispose of such assets at a favorable
price, and as a result, we may suffer losses.

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We operate in a highly
competitive market for investment opportunities.We compete with public and private funds, commercial and
investment banks and commercial financing companies to make the types of
investments that we plan to make in the U.S. energy infrastructure sector. Many
of our competitors are substantially larger and have considerably greater
financial, technical and marketing resources than us. For example, some
competitors may have a lower cost of funds and access to funding sources that
are not available to us. In addition, some of our competitors may have higher
risk tolerances or different risk assessments, allowing them to consider a wider
variety of investments and establish more relationships than us. Furthermore,
many of our competitors are not subject to the regulatory restrictions that the
1940 Act imposes on us as a BDC. These competitive conditions may adversely
affect our ability to make investments in the energy infrastructure sector and
could adversely affect our distributions to stockholders.

Our quarterly results may
fluctuate.We could experience
fluctuations in our quarterly operating results due to a number of factors,
including the return on our equity investments, the interest rates payable on
our debt investments, the default rates on such investments, the level of our
expenses, variations in and the timing of the recognition of realized and
unrealized gains or losses, the degree to which we encounter competition in our
markets and general economic conditions. As a result of these factors, results
for any period should not be relied upon as being indicative of performance in
future periods.

Our portfolio may be concentrated
in a limited number of portfolio companies.We currently have investments in a limited number of portfolio companies.
An inherent risk associated with this investment concentration is that we may be
adversely affected if one or two of our investments perform poorly or if we need
to write down the value of any one investment. Financial difficulty on the part
of any single portfolio company or the failure of a portfolio company to make
distributions will expose us to a greater risk of loss than would be the case if
we were a diversified company holding numerous investments.

Our investments in privately-held
companies present certain challenges, including the lack of available
information about these companies and a greater inability to liquidate our
investments in an advantageous manner.We primarily make investments in privately-held companies. Generally,
little public information will exist about these companies, and we will be
required to rely on the ability of our Adviser to obtain adequate information to
evaluate the potential risks and returns involved in investing in these
companies. If our Adviser is unable to obtain all material information about
these companies, including with respect to operational, regulatory,
environmental, litigation and managerial risks, our Adviser may not make a
fully-informed investment decision, and we may lose some or all of the money
invested in these companies. In addition, our Adviser may inappropriately value
the prospects of an investment, causing us to overpay for such investment and
fail to receive an expected or projected return on its investment. Substantially
all of these securities will be subject to legal and other restrictions on
resale or will otherwise be less liquid than publicly traded securities. The
illiquidity of these investments may make it difficult for us to sell such
investments at advantageous times and prices or in a timely manner. In addition,
if we are required to liquidate all or a portion of our portfolio quickly, we
may realize significantly less than the value at which we previously have
recorded our investments. We also may face other restrictions on our ability to
liquidate an investment in a portfolio company to the extent that we or one of
our affiliates have material non-public information regarding such portfolio
company.

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Most of our portfolio investments
are and will continue to be recorded at fair value as determined in good faith
by our Board of Directors. As a result, there is and will continue to be
uncertainty as to the value of our portfolio
investments.Most of our investments
are and will be in the form of securities or loans that are not publicly traded.
The fair value of these investments may not be readily determinable. We will
value these investments quarterly at fair value as determined in good faith by
our Board of Directors. We have retained Duff & Phelps, LLC (an independent
valuation firm) to provide third party valuation consulting services which
consist of certain limited procedures that the Board of Directors has identified
and requested they perform. For the period ended November 30, 2008, the Board of
Directors requested Duff & Phelps, LLC to perform the limited procedures on
investments in seven portfolio companies comprising approximately 84 percent of
our restricted investments at fair value as of November 30, 2008. Duff &
Phelps, LLCs limited procedures did not involve an audit, review, compilation
or any other form of examination or attestation under the standards of the
Public Company Accounting Oversight Board (United States). Upon completion of
the limited procedures, Duff & Phelps, LLC concluded that the fair value of
the investments subjected to the limited procedures did not appear to be
unreasonable. The Board of Directors is solely responsible for determining the
fair value of the investments in good faith. The types of factors that may be
considered in fair value pricing of an investment include the nature and
realizable value of any collateral, the portfolio companys earnings and ability
to make payments, the markets in which the portfolio company does business,
comparison to publicly traded companies, discounted cash flow and other relevant
factors. Because such valuations are inherently uncertain, our determinations of
fair value may differ materially from the values that would have been used if a
ready market for these securities existed. As a result, we may not be able to
dispose of our holdings at a price equal to or greater than the determined fair
value, which could have a negative impact on our net asset value.

Our equity investments may
decline in value.The equity
securities in which we invest may not appreciate or may decline in value. We may
thus not be able to realize gains from our equity securities, and any gains that
we do realize on the disposition of any equity securities may not be sufficient
to offset any other losses we experience. As a result, the equity securities in
which we invest may decline in value, which may negatively impact our ability to
pay distributions and cause you to lose all or part of your
investment.

An investment in MLPs will pose
risks unique from other equity investments.An investment in MLP securities involves some risks that differ from an
investment in the common stock of a corporation. Holders of MLP units have
limited control and voting rights on matters affecting the partnership. Holders
of units issued by an MLP are exposed to a remote possibility of liability for
all of the obligations of that MLP in the event that a court determines that the
rights of the holders of MLP units to vote to remove or replace the general
partner of that MLP, to approve amendments to that MLPs partnership agreement,
or to take other action under the partnership agreement of that MLP would
constitute control of the business of that MLP, or a court or governmental
agency determines that the MLP is conducting business in a state without
complying with the partnership statute of that state.

Holders of MLP units are also exposed
to the risk that they be required to repay amounts to the MLP that are
wrongfully distributed to them. In addition, the value of our investment in an
MLP will depend largely on the MLPs treatment as a partnership 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 treated as a corporation for U.S. federal income tax
purposes. In that case, the MLP would be obligated to pay income tax at the
entity level and distributions received by us generally would be taxed as
dividend income. As a result, there could be a material reduction in our cash
flow and there could be a material decrease in the value of our common
shares.

Unrealized decreases in the value
of debt investments in our portfolio may impact the value of our common shares
and may reduce our income for distribution.As a BDC, we are required to carry our investments at fair value.
Decreases in the fair values of our debt investments will be recorded as
unrealized depreciation. Any unrealized depreciation in our investment portfolio
could be an indication of a portfolio companys inability to meet its
obligations to us with respect to the loans whose fair values decreased. This
could result in realized losses in the future and ultimately in reductions of
our income available for distribution in future periods.

When we are a minority equity or
a debt investor in a portfolio company, we may not be in a position to control
that portfolio company.When we make
minority equity investments or invest in debt, we will be subject to the risk
that a portfolio company may make business decisions with which we may disagree,
and that the stockholders and management of such company may take risks or
otherwise act in ways that do not serve our interests. As a result, a portfolio
company may make decisions that could decrease the value of our
investments.

14

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Our portfolio companies can incur
debt that ranks senior to our equity investments in such
companies.Portfolio companies in which we invest usually will have,
or may be permitted to incur, debt that ranks senior to our equity investments.
As a result, payments on such securities may have to be made before we receive
any payments on our investments. For example, these debt instruments may provide
that the holders are entitled to receive payment of interest or principal on or
before the dates on which we are entitled to receive payments with respect to
our investments. These debt instruments will usually prohibit the portfolio
companies from paying interest on or repaying our investments in the event and
during the continuance of a default under such debt. In the event of insolvency,
liquidation, dissolution, reorganization or bankruptcy of a portfolio company,
holders of debt instruments ranking senior to our investment in that portfolio
company would typically be entitled to receive payment in full before we receive
any distribution in respect of our investment. After repaying its senior
creditors, a portfolio company may not have any remaining assets to use to repay
its obligation to us or provide a full or even partial return of capital on an
equity investment made by us.

If our investments do not meet
our performance expectations, you may not receive
distributions.We intend to make
distributions on a quarterly basis to our stockholders out of assets legally
available for distribution. We may not be able to achieve operating results that
will allow us to make distributions at a specific level or to increase the
amount of these distributions from time to time. In addition, due to the asset
coverage test applicable to us as a BDC, we may be limited in our ability to
make distributions. Also, restrictions and provisions in any future credit
facilities and debt securities may limit our ability to make distributions. We
cannot assure you that you will receive distributions at a particular level or
at all.

The lack of liquidity in our
investments may adversely affect our business, and if we need to sell any of our
investments, we may not be able to do so at a favorable price. As a result, we
may suffer losses.We generally expect
to invest in the equity of companies whose securities are not publicly traded,
and whose securities will be subject to legal and other restrictions on resale
or will otherwise be less liquid than publicly-traded securities. We also expect
to invest in debt securities with terms of five to ten years and hold such
investments until maturity. The illiquidity of these investments may make it
difficult for us to sell these investments when desired. In addition, if we are
required to liquidate all or a portion of our portfolio quickly (to meet debt
covenants in our credit facility, for example), we may realize significantly
less than the value at which we had previously recorded these investments. As a
result, we do not expect to achieve liquidity in our investments in the
near-term. However, to maintain our status as a BDC, we may have to dispose of
investments if we do not satisfy one or more of the applicable criteria under
the regulatory framework. Our investments are usually subject to contractual or
legal restrictions on resale or are otherwise illiquid because there is usually
no established trading market for such investments. The illiquidity of most of
our investments may make it difficult for us to dispose of them at a favorable
price, and, as a result, we may suffer losses.

We will be exposed to risks
associated with changes in interest rates.Equity securities may be particularly sensitive to rising interest rates,
which generally increase borrowing costs and the cost of capital and may reduce
the ability of portfolio companies in which we own equity securities to either
execute acquisitions or expansion projects in a cost-effective manner or provide
us liquidity by completing an initial public offering or completing a sale.
Fluctuations in interest rates will also impact any debt investments we make.
Changes in interest rates may also negatively impact the costs of our
outstanding borrowings, if any.

We may not have the funds to make
additional investments in our portfolio companies.After our initial investment in a portfolio company, we may be
called upon from time to time to provide additional funds to such company or
have the opportunity to increase our investment through the exercise of a
warrant to purchase common stock. There is no assurance that we will make, or
will have sufficient funds to make, follow-on investments. Any decisions not to
make a follow-on investment or any inability on our part to make such an
investment may have a negative impact on a portfolio company in need of such an
investment, may result in a missed opportunity for us to increase our
participation in a successful operation or may reduce the expected yield on the
investment.

Changes in laws or regulations or
in the interpretations of laws or regulations could significantly affect our
operations and cost of doing business.We are subject to federal, state and local laws and regulations and are
subject to judicial and administrative decisions that affect our operations,
including loan originations, maximum interest rates, fees and other charges,
disclosures to portfolio companies, the terms of secured transactions,
collection and foreclosure procedures and other trade practices. If these laws,
regulations or decisions change, we may have to incur significant expenses in
order to comply, or we may have to restrict our operations. In addition, if we
do not comply with applicable laws, regulations and decisions, or fail to obtain
licenses that may become necessary for the conduct of our business; we may be
subject to civil fines and criminal penalties, any of which could have a
material adverse effect upon our business, results of operations or financial
condition.

15

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Our internal controls over
financial reporting may not be adequate, and our independent registered public
accounting firm may not be able to certify as to their adequacy, which could
have a significant and adverse effect on our business and
reputation.As of November 30, 2008,
we are an accelerated filer, and as such, our management and independent
registered public accounting firm are required to report on the adequacy of
our internal controls over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act of 2002 and rules and regulations of the SEC there under. We
will be required to review on an annual basis our internal controls over
financial reporting, and to disclose on a quarterly basis changes that have
materially affected, or are reasonably likely to materially affect, our internal
controls over financial reporting. There can be no assurance that our quarterly
reviews will not identify material weaknesses.

Provisions of the Maryland
General Corporation Law and our charter and bylaws could deter takeover attempts
and have an adverse impact on the price of our common
shares.The Maryland General
Corporation Law and our charter and bylaws contain provisions that may have the
effect of discouraging, delaying or making difficult a change in control of our
company or the removal of our incumbent directors. We will be covered by the
Business Combination Act of the Maryland General Corporation Law to the extent
that such statute is not superseded by applicable requirements of the 1940 Act.
However, our Board of Directors has adopted a resolution exempting us from the
Business Combination Act for any business combination between us and any person
to the extent that such business combination receives the prior approval of our
board, including a majority of our directors who are not interested persons as
defined in the 1940 Act.

Under our charter, our Board of
Directors is divided into three classes serving staggered terms, which will make
it more difficult for a hostile bidder to acquire control of us. In addition,
our Board of Directors may, without stockholder action, authorize the issuance
of shares of stock in one or more classes or series, including preferred stock.
Subject to compliance with the 1940 Act, our Board of Directors may, without
stockholder action, amend our charter to increase the number of shares of stock
of any class or series that we have authority to issue. The existence of these
provisions, among others, may have a negative impact on the price of our common
shares and may discourage third party bids for ownership of our company. These
provisions may prevent any premiums being offered to you for our common
shares.

Risks Related to an Investment in
the U.S. Energy Infrastructure Sector

Our portfolio is and will
continue to be concentrated in the energy infrastructure sector, which will
subject us to more risks than if we were broadly
diversified.We invest primarily in
privately-held and micro-cap public energy companies. Because we are
specifically focused on the energy infrastructure sector, investments in our
common shares may present more risks than if we were broadly diversified over
numerous sectors of the economy. Therefore, a downturn in the U.S. energy
infrastructure sector would have a larger impact on us than on an investment
company that does not concentrate in one sector of the economy. The energy
infrastructure sector can be significantly affected by the supply of and demand
for specific products and services; the supply and demand for crude oil, natural
gas, and other energy commodities; the price of crude oil, natural gas, and
other energy commodities; exploration, production and other capital
expenditures; government regulation; world and regional events and economic
conditions. At times, the performance of securities of companies in the energy
infrastructure sector may lag the performance of securities of companies in
other sectors or the broader market as a whole.

The portfolio companies in which
we invest are subject to variations in the supply and demand of various energy
commodities.A decrease in the
production of natural gas, natural gas liquids, crude oil, coal, aggregates,
refined petroleum products or other such commodities, or a decrease in the
volume of such commodities available for transportation, mining, processing,
storage or distribution, may adversely impact the financial performance of
companies in the energy infrastructure sector. Production declines and volume
decreases could be caused by various factors, including catastrophic events
affecting production, depletion of resources, labor difficulties, political
events, OPEC actions, environmental proceedings, increased regulations,
equipment failures and unexpected maintenance problems, failure to obtain
necessary permits, unscheduled outages, unanticipated expenses, inability to
successfully carry out new construction or acquisitions, import supply
disruption, increased competition from alternative energy sources or related
commodity prices. Alternatively, a sustained decline in demand for such
commodities could also adversely affect the financial performance of companies
in the energy infrastructure sector. Factors that could lead to a decline in
demand include economic recession or other adverse economic conditions, higher
fuel taxes or governmental regulations, increases in fuel economy, consumer
shifts to the use of alternative fuel sources, changes in commodity prices or
weather.

16

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Many companies in the energy
infrastructure sector are subject to the risk that they, or their customers,
will be unable to replace depleted reserves of energy
commodities.Many companies in the energy infrastructure sector are
either engaged in the production of natural gas, natural gas liquids, crude oil,
refined petroleum products, coal, or aggregates or are engaged in transporting,
storing, distributing and processing these items on behalf of producers. To
maintain or grow their revenues, many customers of these companies need to
maintain or expand their reserves through exploration of new sources of supply,
through the development of existing sources, through acquisitions, or through
long-term contracts to acquire reserves. The financial performance of companies
in the energy infrastructure sector may be adversely affected if the companies
to which they provide service are unable to cost-effectively acquire additional
reserves sufficient to replace the natural decline.

Our portfolio companies are and
will be subject to extensive regulation because of their participation in the
energy infrastructure sector.Companies in the energy infrastructure sector are subject to significant
federal, state and local government regulation in virtually every aspect of
their operations, including how facilities are constructed, maintained and
operated, environmental and safety controls, and the prices they may charge for
the products and services they provide. Various governmental authorities have
the power to enforce compliance with these regulations and the permits issued
under them, and violators are subject to administrative, civil and criminal
penalties, including civil fines, injunctions or both. Stricter laws,
regulations or enforcement policies could be enacted in the future that likely
would increase compliance costs and may adversely affect the financial
performance of companies in the energy infrastructure sector and the value of
our investments in those companies.

Energy infrastructure companies
are and will be subject to the risk of fluctuations in commodity
prices.The operations and financial
performance of companies in the energy infrastructure sector may be directly
affected by energy commodity prices, especially those companies in the energy
infrastructure sector owning the underlying energy commodity. Commodity prices
fluctuate for several reasons, including changes in market and economic
conditions, the impact of weather on demand or supply, levels of domestic
production and imported commodities, energy conservation, domestic and foreign
governmental regulation and taxation and the availability of local, intrastate
and interstate transportation systems. Volatility of commodity prices, which may
lead to a reduction in production or supply, may also negatively impact the
performance of companies in the energy infrastructure sector that are solely
involved in the transportation, processing, storing, distribution or marketing
of commodities. Volatility of commodity prices may also make it more difficult
for companies in the energy infrastructure sector to raise capital to the extent
the market perceives that their performance may be tied directly or indirectly
to commodity prices. Historically, energy commodity prices have been cyclical
and exhibited significant volatility.

Our portfolio companies are and
will be subject to the risk of extreme weather patterns.Extreme weather patterns, such as prolonged or abnormal
seasons, or specific events, such as hurricanes, could result in significant
volatility in the supply of energy and power. This volatility may create
fluctuations in commodity prices and earnings of companies in the energy
infrastructure sector. Moreover, any extreme weather events, such as hurricanes
Katrina and Rita, could adversely impact the assets and valuation of our
portfolio companies.

Acts of terrorism may adversely
affect us.The value of our common
shares and our investments could be significantly and negatively impacted as a
result of terrorist activities, such as the terrorist attacks on the World Trade
Center on September 11, 2001; war, such as the war in Iraq and its aftermath;
and other geopolitical events, including upheaval in the Middle East or other
energy producing regions. The U.S. government has issued warnings that energy
assets, specifically those related to pipeline infrastructure, production
facilities and transmission and distribution facilities, might be specific
targets of terrorist activity. Such events have led, and in the future may lead,
to short-term market volatility and may have long-term effects on the U.S.
economy and markets. Such events may also adversely affect our business and
financial condition.

ITEM 1B. UNRESOLVED
STAFF COMMENTS

None.

ITEM 2.
PROPERTIES

We do not own any real estate or other
physical properties. Our Adviser is the current leaseholder for all properties
in which we operate. We occupy these premises pursuant to our Investment
Advisory Agreement and the Administration Agreement with our Adviser. Our
principal executive office is located in Leawood, Kansas, and one of our
investment professionals operates from a location in Alexandria, Virginia.

17

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ITEM 3. LEGAL
PROCEEDINGS

Neither we nor our Adviser are
currently subject to any material legal proceedings, nor, to our knowledge, is
any material legal proceeding threatened against us.

ITEM 4. SUBMISSION OF
MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of
security holders during the fourth quarter of the fiscal year covered by this
report.

PART II

ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES

Price Range of Common Stock

Our common shares began trading on the
New York Stock Exchange (NYSE) under the symbol TTO on February 2, 2007 at a
price of $15.00 per share. Prior to our initial public offering, there was no
public market for our common shares.

The following table sets forth the
range of high and low sales prices of our common shares as reported on the NYSE,
and the distributions declared by us for each fiscal quarter since our initial
public offering.

CashPrice Range
    
    Distribution2007
    
    
    **NAV(1)**
    
    High
    
    Low
    
    per Share(2)First quarter
    
    $
    13.84
    
    $
    15.03
    
    $
    14.50
    
    $
    0.1000
    (3)Second
      quarter
    
    $
    14.05
    
    $
    18.47
    
    $
    14.31
    
    $
    0.1600Third quarter
    
    $
    13.77
    
    $
    18.99
    
    $
    13.79
    
    $
    0.1800Fourth
      quarter
    
    $
    13.76
    
    $
    15.29
    
    $
    11.66
    
    $
    0.23002008First
      quarter
    
    $
    13.28
    
    $
    13.05
    
    $
    11.00
    
    $
    0.2500Second quarter
    
    $
    13.69
    
    $
    13.42
    
    $
    11.80
    
    $
    0.2625Third
      quarter
    
    $
    13.38
    
    $
    12.52
    
    $
    11.00
    
    $
    0.2650Fourth quarter
    
    $
    9.96
    
    $
    11.18
    
    $
    4.40
    
    $
    0.2650


| | (1) |  | Net asset value per share is
      generally determined as of the last day in the relevant period and
      therefore may not reflect the net asset value per share on the date of the
      high and low sales prices. The net asset values shown are based on
      outstanding shares at the end of each period.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | Represents the distribution
      declared in the specified period.                                                                                                                                                                                                                                                
| | (3) |  | Partial distribution paid to
      pre-IPO shareholders on February 7, 2007, the closing date of the
      IPO.                                                                                                                                                                                                    

The last reported price for our common
stock on January 30, 2009 was $6.17 per share. As of January 30, 2009, we had 30
stockholders of record.

Distributions Policy

Our portfolio generates cash flow to us
from which we pay distributions to stockholders. When our Board of Directors
determines the amount of any distribution we expect to pay our stockholders, it
will review distributable cash flow (DCF). DCF is distributions received from
investments less our total expenses. Total distributions received from our
investments include the amount received by us as cash distributions from equity
investments, paid-in-kind distributions, and dividend and interest payments.
Total expenses include current or anticipated operating expenses, leverage costs
and current income taxes on our operating income. Total expenses do not include
deferred income taxes or accrued capital gain incentive fees.

We intend, subject to adjustment at the
discretion of our Board of Directors, to pay out to our stockholders
substantially all of the amounts we receive as cash or paid-in-kind
distributions on equity securities we own and interest payments on debt
securities we own, less current or anticipated operating expenses, current
income taxes on our income and our leverage costs. Historically we have included
all paid-in-kind distributions in distributable cash flow, however, in the
future, we do not intend to include in distributable cash flow the value of
distributions received from portfolio companies which are paid in stock as a
result of credit constraints, market dislocation or other similar
issues.

We have an opt out dividend
reinvestment plan. As a result, if we declare a distribution, stockholders cash
distributions will be automatically reinvested in additional common shares,
unless the stockholders specifically opt out of the dividend reinvestment plan
so as to receive cash distributions. Stockholders who receive distributions in
the form of common shares will generally be subject to the same federal, state
and local tax consequences as stockholders who elect to receive their
distributions in cash.

18

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As a BDC, we are prohibited from paying
distributions if doing so would cause us to fail to maintain the asset coverage
ratios stipulated by the 1940 Act. Distributions also may be limited by the
terms of our borrowings. It is our objective to invest our assets and structure
our borrowings so as to permit stable and consistently growing distributions.
However, there can be no assurances that we will achieve that objective or that
our results will permit the payment of any cash distributions.

Taxation of our
Distributions

We have invested, and intend to invest,
primarily in partnerships and limited liability companies treated as
partnerships for tax purposes, which generally have larger distributions of cash
than the taxable income which they generate. Accordingly, we anticipate that the
distributions we receive typically will include a return of capital component
for accounting and tax purposes. Distributions declared and paid by us in any
year generally will differ from our taxable income for that year; as such
distributions may include the distribution of current year taxable income and
returns of capital.

Performance Graph

The following graph compares the return
on our common stock (TTO) with that of the Wachovia MLP Total Return Index
(WMLPT), the Standard & Poors 500 Stock Index (SPX) and a BDC Peer
Group (BDC Peers)(2), for the period February 2, 2007 to November
30, 2008. The graph assumes that, on February 2, 2007, a $100 investment was
made in each of our common stock, WMLPT, SPX and the BDC Peers, and assumes the
reinvestment of all cash dividends. The comparisons in the graph below are based
on historical data and are not intended to forecast future performance of our
common stock.

Shareholder Return Performance
GraphCumulative Total Return Since Initial Public Offering
(1)Through November 30, 2008



| | (1) |  | Our shares began
      trading on the NYSE on February 2, 2007.                                                                                                                       
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | The BDC Peer Group consists of
      the following closed-end investment companies that have elected to be
      regulated as business development companies under the 1940
      Act:

| | Allied Capital Corp.          |  | Highland Distressed         
| | ----------------------------- |  | ----------------------------
| | American Capital Strategies   |  | Kohlberg Capital Corp.      
| | Ameritrans Capital Corp.      |  | Main Street Capital Corp.   
| | Apollo Investment Corp.       |  | MCG Capital Corp.           
| | Ares Capital Corporation      |  | Medallion Financial Corp.   
| | Blackrock Kelso Capital Corp. |  | MVC Capital                 
| | Capital Southwest Corp.       |  | NGP Capital Resources Co.   
| | Equus Total Return            |  | Patriot Capital Funding Inc.
| | Gladstone Capital Corp.       |  | PennantPark Investment Corp 
| | Gladstone Investment Corp.    |  | Prospect Capital Corp.      
| | GSC Investment Corp           |  | TICC Capital                
| | Harris & Harris Group Inc.    |  | Triangle Capital Corp.      
| | Hercules Tech Growth Capital  |  |                             

19

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Recent Sales of Unregistered
Securities

We did not sell any securities during
the year ended November 30, 2008 that were not registered under the Securities
Act of 1933.

Issuer Purchases of Equity
Securities

We did not repurchase any shares of our
common stock during the year ended November 30, 2008.

ITEM 6. SELECTED
FINANCIAL DATA

The selected financial data set forth
below should be read in conjunction with Managements Discussion and Analysis
of Financial Condition and Results of Operations, and the financial statements
and related notes included in this Annual Report on Form 10-K. Financial
information presented below for the years ended November 30, 2008, November 30,
2007, and the period from December 8, 2005 to November 30, 2006 has been derived
from our financial statements audited by Ernst & Young LLP, our independent
registered public accounting firm, which are included herein. The historical
data is not necessarily indicative of results to be expected for any future
period.

|                                                                                |                        |             |                        |  | Period from          
|------------------------------------------------------------------------------- | ---------------------- | ----------- | ---------------------- |  | ---------------------
|                                                                                | **Year
      Ended**   |             | **Year
      Ended**   |  | December 8, 2005     
|                                                                                | **November
      30,** |             | **November
      30,** |  | to
      November 30,
|                                                                                | 2008                   |             | 2007                   |  | **2006** (1)         
|Statements of operations data:                                                  |                        |             |                        |  |                      
|Investment
      income                                                         | $                      | 2,943,953   |                        |  | $                    
|Base management fees(2)                                                         |                        | 2,006,120   |                        |  |                      
|All other
      expenses(3)                                                     |                        | 2,688,550   |                        |  |                      
|Total expenses                                                                  | $                      | 4,694,670   |                        |  | $                    
|Less expense
      reimbursement by Adviser                                     |                        | 385,622     |                        |  |                      
|Current and deferred tax benefit (expense), net                                 |                        | 9,859,785   |                        |  |                      
|Net realized
      gain (loss) on investments before current tax benefit        |                        | 8,716,197   |                        |  |                      
|Unrealized
      appreciation (depreciation) on investments                     |                        |             |                        |  |                      
|before deferred tax
      expense                                               |                        | (41,581,120 | )                      |  |                      
|Increase
      (decrease) in net assets resulting from operations               | $                      | (24,370,233 | )                      |  | $                    
|                                                                               
|Per common share data:                                                          |                        |             |                        |  |                      
|Distributions to
      common stockholders(4)                                   | $                      | 1.04        |                        |  | $                    
|Net increase (decrease) in stockholders equity resulting from
      operations |                        |             |                        |  |                      
|Basic and
      diluted                                                         | $                      | (2.74       | )                      |  | $                    
|Net asset
      value                                                           | $                      | 9.96        |                        |  | $                    
|                                                                               
|                                                                                | November 30,           |             | November 30,           |  | November 30,         
|                                                                                | 2008                   |             | 2007                   |  | 2006                 
|Statements of assets and liabilities data:                                      |                        |             |                        |  |                      
|Short-term
      investments                                                    | $                      | 360,372     |                        |  | $                    
|Long-term investments                                                           |                        | 105,790,858 |                        |  |                      
|Other
      assets                                                              |                        | 6,169,827   |                        |  |                      
|Total assets                                                                    | $                      | 112,321,057 |                        |  | $                    
|Total
      liabilities                                                         |                        | 23,095,757  |                        |  |                      
|Total net assets                                                                | $                      | 89,225,300  |                        |  | $                    

| | (1)   |  | We were incorporated on
      September 8, 2005, but did not commence operations until December 8,
      2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | ----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)   |  | For the year ended November
      30, 2008, base management fees include $2,313,731 accrued as base
      management fees payable to the Adviser under the Investment Advisory
      Agreement, and $307,611 as a reduction in the provision for capital gain
      incentive fees payable to the Adviser. For the year ended November 30,
      2007, base management fees include $1,926,059 accrued as base management
      fees payable to the Adviser under the Investment Advisory Agreement and
      $307,611 as an increase in the provision for capital gain incentive fees
      payable to the Adviser. For the period from December 8, 2005 to November
      30, 2006, base management fees include $634,989 accrued as base management
      fees payable to the Adviser under the Investment Advisory Agreement. The
      payable for capital gain incentive fees is a result of the increase or
      decrease in the fair value of investments and realized gains or losses
      from investments. Pursuant to the Investment Advisory Agreement, the
      capital gain incentive fee is paid annually only if there are realization
      events and only if the calculation defined in the agreement results in an
      amount due. No capital gain incentive fees were due or payable at November
      30, 2008, 2007, or 2006.
| | (3)   |  | For the year ended November
      30, 2008, other expenses include $1,037,624 in operating expenses and
      $1,650,926 in interest expense on the credit facility. For the year ended
      November 30, 2007, other expenses include $1,094,677 in operating
      expenses, $847,421 of interest expense on the credit facility, $228,750 in
      preferred stock dividends, and $731,713 of non-recurring expenses related
      to the loss on redemption of the previously outstanding Series A
      Redeemable Preferred Stock. The Series A Redeemable Preferred Stock
      issuance in December 2006 was utilized as bridge financing to fund
      portfolio investments and was fully redeemed upon completion of our
      initial public offering in February 2007. For the period from December 8,
      2005 to November 30, 2006, other expenses include $360,156 in operating
      expenses. Other expenses do not include current and deferred income
      taxes.                                                                                                                                                                                                                                                                                                                                                                 
| | *(4)* |  | *The character of distributions made
      during the year may differ from the ultimate characterization for federal
      income tax purposes. For the year ended November 30, 2008 the companys
      distributions, for book purposes, were comprised of 100 percent return of
      capital, and for tax purposes were comprised of 3.2 percent investment
      income and 96.8 percent return of capital. For the year ended November 30,
      2007, the companys distributions, for book and tax purposes, were
      comprised of 100 percent return of capital. For the period ended December
      8, 2005 to November 30, 2006, the companys distributions, for book
      purposes, were comprised of 87.3 percent investment income and 12.7
      percent return of capital, and for tax purposes were comprised of 41.7
      percent investment income and 58.3 percent return of
      capital.*                                                                                                                                                                                                                                                                                                                                                                                                                                     

20

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ITEM 7. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

All statements contained herein,
other than historical facts, constitute forward-looking statements. These
statements may relate to, among other things, future events or our future
performance or financial condition. In some cases, you can identify
forward-looking statements by terminology such as may, might, believe,
will, provided, anticipate, future, could, growth, plan, intend,
expect, should, would, if, seek, possible, potential, likely or
the negative of such terms or comparable terminology. These forward-looking
statements involve known and unknown risks, uncertainties and other factors that
may cause our actual results, levels of activity, performance or achievements to
be materially different from any anticipated results, levels of activity,
performance or achievements expressed or implied by such forward-looking
statements. For a discussion of factors that could cause our actual results to
differ from forward-looking statements contained herein, please see the
discussion under the heading Risk Factors in Part I, Item 1A. of this report.

We may experience fluctuations in
our operating results due to a number of factors, including the return on our
equity investments, the interest rates payable on our debt investments, the
default rates on such investments, the level of our expenses, variations in and
the timing of the recognition of realized and unrealized gains or losses, the
degree to which we encounter competition in our markets and general economic
conditions. As a result of these factors, results for any period should not be
relied upon as being indicative of performance in future periods.

Overview

We have elected to be regulated as a
BDC and we are classified as a non-diversified closed-end management investment
company under the 1940 Act. As a BDC, we are subject to numerous regulations and
restrictions. Unlike most investment companies, we are, and intend to continue
to be, taxed as a general business corporation under the Code.

We invest in companies operating in the
U.S. energy infrastructure sector, primarily in privately-held and micro-cap
public companies focused on the midstream and downstream segments, and to a
lesser extent the upstream segment. We believe companies in the energy
infrastructure sector generally produce stable cash flows as a result of their
fee-based revenues and have limited direct commodity price risk. Our goal is to
provide our stockholders with a high level of total return, with an emphasis on
distributions and distribution growth. We invest primarily in equity securities
of companies that we expect to pay us distributions on a current basis and
provide us distribution growth.

Investment Review and Portfolio
Outlook

Against a very difficult backdrop of
broad, global economic recession, major institution failures and bailouts, and
the accompanying collapse of most major asset class valuations in the latter
part of 2008, MLPs were further challenged by selling pressure from deleveraging
and unwinding of total return swaps. The Wachovia MLP Index (a float-adjusted,
capitalization-weighted index of energy master limited partnerships with a
market capitalization of at least $20 million at the time of inclusion)
reflected a total return based on market value, assuming reinvestment of
quarterly distributions, of -35.6 percent for the twelve months ended November
30, 2008. Because our privately-held energy infrastructure investments are
valued, in part, based on public MLP values, the value of our portfolio also
declined, most notably during the fourth quarter. Our stock price was adversely
impacted by deepening problems in the broad market and continued pressure on the
BDC sector as result of the global credit crisis. Our total return for the
fiscal year based on market value, assuming reinvestment of quarterly
distributions was -49.89 percent.

21

---

Our total assets decreased from
$159,174,320 as of November 30, 2007 to $112,321,057 as of November 30, 2008,
attributable to the decrease in the value of our investments this year. Because
we are a taxpaying entity, our financial statements reflect deferred tax assets
according to generally accepted accounting principles. This differs from many
closed end funds, as well as many BDCs, which are qualified as regulated
investment companies (RIC). The accounting for a RIC does not result in
deferred taxes because it is not a taxpaying entity. Presently, the total cost
basis of our investments for financial statement reporting purposes exceeds the
fair value we are reflecting on our Statement of Assets and Liabilities. That,
combined with our operating losses, results in a deferred tax asset. As a
result, our Statement of Assets and Liabilities reflects a deferred tax asset of
$5,683,747 (net of a $2,814,891 valuation allowance), or approximately $0.63 per
share. We do not include the deferred tax asset in the calculation of our
management fee.

The deferred tax asset of $5,683,747
reflects the benefit we have determined will be realized in future periods under
U.S. generally accepted accounting principles. Realization of a deferred tax
asset is dependent on whether there will be sufficient future taxable income
within the carryforward periods to realize a portion or all of the deferred tax
benefit. The carryforward period for ordinary losses to offset ordinary income
is 20 years while capital losses can be carried forward 5 years to offset
capital gains. A valuation allowance against the deferred tax asset is needed
when, based on the weight of the available evidence, it is more likely than not
that some portion or all of the deferred tax asset will not be realized. Our
valuation allowance policy is based upon our estimation of potential future
taxable income and is in conformity with U.S. generally accepted accounting
principles. If we do not believe we can use a deferred tax asset in a relatively
short period, in our case three years or less, we create a valuation allowance
against the current gross deferred tax asset.

We have managed through a difficult
fourth quarter and fiscal year. We maintained adequate asset coverage ratios,
such that, when values declined we were not required to sell any investments to
pay down leverage in order to comply with the coverage ratios as mandated by the
1940 Act and our loan documents. During the 2008 fiscal year we were able to
moderately increase our distributions to our stockholders. While we expect the
next year to be challenging for almost every industry, including the energy
infrastructure sector, we believe the long-term fundamentals to be strong,
particularly within the fee-for-service and fee-for-capacity areas of the
midstream sector. These companies provide essential services and exhibit high
barriers to entry. We continue to believe the flow of energy commodities remains
critical to our economy and that the long-term prospects for energy
infrastructure investments are attractive.

Following is a summary of our
investment activity during the fiscal year ended November 30, 2008:

Mowood, LLC (Mowood) 
Follow-on InvestmentsWe invested an
additional $3,500,000 in equity of Mowood this year. We also invested $1,235,000
in the form of three promissory notes, each of which has a fixed annual interest
rate equal to 9.0 percent with a maturity date of December 31, 2008. The
proceeds were used by Mowood in part to fund landfill gas-to-energy projects at
its subsidiary, Timberline Energy LLC.Timberline now operates a high Btu facility, a
direct use facility and an electricity generation facilityone of each of the
three types of landfill gas-to-energy projects feasible under current
technology.

VantaCore Partners LP
(VantaCore)  Follow-on InvestmentIn August, VantaCore repaid our $3,750,000 term note at a 3 percent
premium to par value. We reinvested those funds and an additional $6,051,885, to
purchase 508,430 common units and 199 incentive distribution rights of
VantaCore. VantaCore used the proceeds from this investment to partially fund
its acquisition of Southern Aggregates LLC, a sand and gravel operation located
near Baton Rouge, Louisiana.

LONESTAR Midstream Partners, LP
and LSMP GP, LP (collectively, LONESTAR)  Realization EventDuring the first and second quarter,
we invested $2,735,994 in additional Class A Common Units and GP LP Units of
LONESTAR.

In July, LONESTAR sold its gas
gathering and transportation assets to Penn Virginia Resource Partners, L.P.
(NYSE: PVR). LONESTAR distributed substantially all of the initial sales
proceeds to its limited partners. . We received $10,476,511 in cash, 468,001
newly issued unregistered common units of PVR, and 59,503 unregistered common
units of Penn Virginia GP Holdings, L.P. (NYSE: PVG). The capital gain incentive
fee is accrued during the year, but only paid annually if there are realization
events that result in an amount due under the Investment Advisory Agreement. For
the November 30, 2008 calculation, we included $2,112,206 of
realized gains from the LONESTAR transaction in the calculation for the
accrual, but not for purposes of determining if an amount were actually due and
payable. The gains will be included in the annual calculation for payment after
the LONESTAR units are ultimately sold or otherwise disposed of.

LONESTAR has no current operations, but
has rights to receive future payments from PVR relative to the sale. From these
future payments, we expect to receive unregistered common units of PVR and PVG
from an escrow to be released to LONESTAR six to twelve months from the closing
date (along with cash distributions received on these units retained in escrow).
We also expect a cash distribution from LONESTAR of approximately $1 million,
payable on December 31, 2009. There are two future contingent payments due
LONESTAR for which we would expect to receive roughly $9.6 million, payable in
cash or common units of PVR (at PVRs election). These payments are contingent
on the achievement of specific revenue targets by or before June 30, 2013, and
no payments are due if the revenue targets are not achieved. The fair value of
LONESTAR as of November 30, 2008 is related to the potential receipt of these
future payments.

22

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Millennium Midstream Partners, LP
(Millennium)  Realization EventIn October, Millennium sold its partnership
interests to Eagle Rock Energy Partners, L.P. (NASDAQ: EROC) for approximately
$181,000,000 in cash and approximately four million EROC unregistered common
units. In exchange for our Millennium partnership interests, we received
$13,687,081 in cash and 373,224 EROC unregistered common units with a basis of
$5,044,980 for a total implied value at closing of $18,732,061. Approximately
212,404 units with an aggregate cost basis of $2,920,555 will be held in escrow
for 18 months from the date of the transaction. This includes a reserve we have
placed against the restricted cash and units held in the escrow for estimated
post-closing adjustments. We originally invested $17,500,000 in Millennium
(including common units and incentive distribution rights), and had an adjusted
cost basis of $15,161,125 (after reducing our basis for cash distributions
received since investment that were treated as return of capital), resulting in
a realized gain for book purposes of $6,491,491. For purposes of the capital
gain incentive fee, the realized gain is approximately $4,152,616, which
excludes that portion of the fee that would be due as a result of cash
distributions which were characterized as return of capital. No capital gain
incentive fees were due or payable at November 30, 2008.

As of November 30, 2008, the value of
our investment portfolio (excluding short-term investments) was $105,790,858
including equity investments of $97,505,858 and debt investments of $8,285,000
across the following segments of the energy infrastructure sector:



23

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|                                                                               |  |                                                                                                                                                                                                                                                           |  |                                            |  |                       |  |                      |  | Current        
|------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------ |  | --------------------- |  | -------------------- |  | ---------------
|                                                                               |  |                                                                                                                                                                                                                                                           |  |                                            |  |                       |  |                      |  | Yield on       
|Name of
      Portfolio                                                        |  | Nature of
      its                                                                                                                                                                                                                                       |  | Securities                                 |  | Amount
      Invested |  | Fair
      Value     |  | Amount         
|Company (Segment)                                                              |  | Principal Business                                                                                                                                                                                                                                        |  | Held by Us                                 |  | (in millions)         |  | **(in millions)**(1) |  | **Invested**(2)
|Abraxas Energy Partners,L.P.
      (Upstream)                                  |  | Natural gas and oil exploitation anddevelopment in the Delaware and GulfCoast Basins of Texas, Rockies andMid-Continent region of the U.S.                                                                                                                |  | Common Units                               |  | $7.5                  |  | $4.1                 |  | 10.6           
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Eagle Rock Energy
      Partners,L.P. (Upstream/Midstream)                     |  | Gatherer and processor of natural gas innorth and east Texas and Louisiana andproducer and developer of upstream andmineral assets located in 17 states                                                                                                   |  | Common Units(Registered andUnregistered)   |  | 20.1                  |  | 9.7                  |  | 10.4           
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|EV Energy Partners,
      L.P.(Upstream)                                       |  | Acquirer, producer and developer of oiland gas properties in the AppalachianBasin, the Monroe field in Louisiana,Michigan, the Austin Chalk, SouthCentral Texas, the Permian Basin, theSan Juan Basin and the Mid-continentarea.                          |  | Common Units                               |  | 7.5                   |  | 2.9                  |  | 8.7            
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|High Sierra Energy,
      LP       (Midstream)
      (3)                       |  | Marketer, processor, storer andtransporter of hydrocarbons withoperations primarily in Colorado,Wyoming, Oklahoma and Florida                                                                                                                             |  | Common Units                               |  | 24.8                  |  | 19.5                 |  | 10.2           
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|High Sierra Energy GP,
      LLC       (Midstream)
      (3) (4)               |  | General Partner of High Sierra Energy, LP                                                                                                                                                                                                                 |  | Equity Interest                            |  | 2.0                   |  | 1.9                  |  | 1.8            
|                                                                              
|International ResourcePartners LP
      (Coal)                                 |  | Operator of both metallurgical and steam coal mines in Central
      Appalachia                                                                                                                                                                           |  | Class A Units                              |  | 10.0                  |  | 9.5                  |  | 8.0            
|                                                                              
|Legacy Reserves LP       (Upstream)                                            |  | Oil and
      natural gas exploitation and development primarily in the Permian
      Basin                                                                                                                                                               |  | Limited PartnerUnits                       |  | 4.5                   |  | 2.4                  |  | 12.2           
|                                                                              
|LONESTAR Midstream       Partners, LP (Midstream)(5)                           |  | LONESTAR Midstream Partners, LP sold its assets to Penn Virginia
      Resource Partners, L.P (PVR) in July 2008. LONESTAR has no continuing
      operations, but currently holds rights to receive future payments from PVR
      relative to the sale. |  | Class A Units                              |  | 4.4                   |  | 4.0                  |  | N/A            
|                                                                              
|LSMP GP, LP (Midstream) (5)                                                    |  | Indirectly owns General Partner of LONESTAR Midstream Partners,
      LP                                                                                                                                                                                  |  | GP LP Units                                |  | 0.2                   |  | 0.5                  |  | N/A            
|                                                                              
|Mowood, LLC      
      (Midstream/Downstream) (6)                             |  | Natural
      gas distribution in central Missouri and landfill gas to energy
      projects                                                                                                                                                              |  | Equity interest                            |  | 5.0                   |  | 5.7                  |  | 10.8           
|                                                                              
|                                                                               |  |                                                                                                                                                                                                                                                           |  | SubordinatedDebt andPromissoryNotes        |  | 8.3                   |  | 8.3                  |  | 11.6           
|                                                                              
|Penn Virginia Resource      
      Partners, L.P.      
      (Midstream/Coal) |  | Operator of a midstream natural gasgathering and processing
      business andmanager of coal properties and relatedassets                                                                                                                                |  | UnregisteredCommon Units                   |  | 10.8                  |  | 6.0                  |  | 8.2            
|                                                                              
|Penn Virginia GP Holdings,      
      L.P. (Midstream/Coal)                   |  | Owns
      the general partner interest, incentive distribution rights and a portion
      of the limited partner interests in Penn Virginia Resource Partners,
      L.P.                                                                                |  | UnregisteredCommon Units                   |  | 1.7                   |  | 0.6                  |  | 5.4            
|                                                                              
|Quest Midstream Partners,      
      L.P. (Midstream) (7)                     |  | Operator of natural gas gathering pipelines in the Cherokee Basin
      and interstate natural gas transmission pipelines in Oklahoma, Kansas and
      Missouri                                                                                          |  | Common Units                               |  | 22.2                  |  | 14.5                 |  | 0.0            
|                                                                              
|VantaCore Partners LP      
      (Aggregates)                                 |  | Acquirer and operator of aggregate companies, with quarry and
      asphalt operations in Clarksville, Tennessee and sand and gravel
      operations located near Baton Rouge, Louisiana                                                                 |  | Common
UnitsandIncentiveDistributionRights |  | 18.4                  |  | 16.2                 |  | 10.1           
|                                                                               |  |                                                                                                                                                                                                                                                           |  |                                            |  |                       |  |                      |  |                
|                                                                               |  |                                                                                                                                                                                                                                                           |  | ****                                       |  | **$147.4**            |  | **$105.8**           |  |                

| | (1) |  | Fair value as of November 30,
      2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | The current yield has been
      calculated by annualizing the most recent distribution during the period
      and dividing by the amount invested in the underlying security. Actual
      distributions to us are based on each companys available cash flow and
      are subject to change.                                                                                                                                                                                                                                                                                                                                                            
| | (3) |  | Distributions paid-in-kind
      during the quarters ended August 31, 2008 and November 30,
      2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (4) |  | Includes original purchase of
      3 percent equity interest, sale of 0.6274 percent equity interest in July
      2007 and subsequent capital calls.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | (5) |  | LONESTAR Midstream Partners,
      LP sold its assets to Penn Virginia Resource Partners, L.P in July 2008.
      LONESTAR has no continuing operations, but currently holds rights to
      receive future payments from PVR relative to the sale. The cost basis and
      the fair value of the LONESTAR and LSMP GP, LP units as of November 30,
      2008 is related to the potential receipt of those future payments. Since
      this investment is not deemed to be active, the yield is not meaningful
      and we have excluded it from our weighted average yield to cost on
      investments as described below in Results of
  Operations.
| | (6) |  | Current yield represents an
      equity distribution on the previous quarter fair value of our invested
      capital, including the effect of the management incentive plan, divided by
      the amount invested. We expect that, pending cash availability, such
      equity distributions will recur on a quarterly basis at or above such
      yield.                                                                                                                                                                                                                                                                                                
| | (7) |  | Currently non-income
      producing. The Board of Directors of Quest Midstream GP, LLC determined
      that no distribution would be paid on the units of Quest Midstream
      Partners, L.P. during the quarter ended November 30,
    2008.                                                                                                                                                                                                                                                                                                                                                                                                             

24

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Portfolio Company
Profiles

Abraxas Energy Partners, L.P.
(Abraxas)Abraxas is a private
company that operates long-lived, low-decline natural gas and oil reserves
located primarily in the Delaware and Gulf Coast Basins of Texas, Rocky
Mountains and Mid-Continent regions of the U.S. Abraxas was formed by Abraxas
Petroleum Corporation, an independent publicly-traded energy company engaged in
the exploration and production of natural gas and crude oil. Abraxas principal
office is located at 18803 Meisner Drive, San Antonio, TX
78258.

Eagle Rock Energy Partners, L.P.
(Eagle Rock Energy)Eagle Rock
Energy (NASDAQ: EROC) is a publicly traded master limited partnership with
midstream assets located primarily in Texas and Louisiana and upstream assets,
including mineral and royalty interests, in seventeen states. Eagle Rock
Energys principal office is located at 16701 Greenspoint Park Drive, Suite 200,
Houston, TX 77060.

EV Energy Partners, L.P.
(EV)EV (NASDAQ: EVEP) is a publicly
traded master limited partnership engaged in acquiring, producing and developing
oil and gas properties. EVs current properties are located in the Appalachian
Basin, the Monroe Field in Louisiana, the Austin Chalk, South Central Texas, the
Permian Basin, the San Juan Basin and the Mid-Continent area. EVs principal
office is located at 1001 Fannin Street, Suite 800, Houston, TX 77002.

High Sierra Energy, LP (High
Sierra)High Sierra is a holding
company with diversified midstream energy assets focused on the processing,
transportation, storage and marketing of hydrocarbons. The companys businesses
include a natural gas liquids logistics and transportation business in Colorado,
natural gas gathering and processing operations in Louisiana, a natural gas
storage facility in Mississippi, an ethanol terminal in Nevada, crude and
natural gas liquids trucking businesses in Kansas and Colorado, businesses
providing crude oil gathering, transportation and marketing services, primarily
focused in the Mid-Continent, Western and Gulf Coast regions, water treatment
transportation and disposal businesses serving oil and gas producers in Wyoming
and Oklahoma, and two asphalt processing, packaging and distribution terminals
in Florida. We hold board of director observation rights. High Sierras
principal office is located at 3773 Cherry Creek Drive North, Suite 655, Denver,
CO 80209.

High Sierra Energy GP, LLC (High
Sierra GP)High Sierra GP is the
general partner of High Sierra. High Sierra GPs principal office is located at
3773 Cherry Creek Drive North, Suite 655, Denver, CO 80209.

International Resource Partners
LP (IRP)IRP has surface and
underground coal mine operations in southern West Virginia comprised of
metallurgical and steam coal reserves, a coal washing and preparation plant,
rail load-out facilities and a sales and marketing subsidiary. IRPs principal
office is located at 725 5th Avenue, New York, NY 10022.

Legacy Reserves LP
(Legacy)Legacy (NASDAQ: LGCY) is a
publicly traded master limited partnership focused on the acquisition and
development of long-lived oil and natural gas properties primarily located in
the Permian Basin and Mid-Continent regions of the United States. Legacys
principal office is located at 303 West Wall, Suite 1400, Midland, TX 79701.

LONESTAR Midstream Partners, LP
(LONESTAR)LONESTAR Midstream
Partners, LP sold its assets to Penn Virginia Resource Partners, L.P in July
2008. LONESTAR has no continuing operations, but currently holds rights to
receive future payments from PVR relative to the sale. Our President holds one
of four seats on LONESTARs board of directors. LONESTARs principal office is
located at 300 E. John Carpenter Freeway, Suite 800, Irving, TX
75062.

LSMP GP, LP (LSMP
GP)LSMP GP indirectly owns the
general partner of LONESTAR. LSMP GPs principal office is located at 300 E.
John Carpenter Freeway, Suite 800, Irving, TX 75062.

Mowood, LLC
(Mowood)Mowood is a holding company
whose assets include Omega Pipeline, LLC (Omega) and Timberline Energy, LLC
(Timberline). Omega is a natural gas local distribution company located on the
Fort Leonard Wood army base in south central Missouri. Omega serves the natural
gas and propane needs of Fort Leonard Wood and other customers in the
surrounding area. Timberline is an owner and developer of projects that convert
landfill gas to energy. We currently hold all seats on Mowoods board of
directors. Mowoods principal office is located at 14694 Orchard Parkway, Suite
200, Westminster, CO 80020.

25

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Penn Virginia Resource Partners,
L.P. (PVR)Penn Virginia Resource
Partners, L.P. (NYSE: PVR) is a publicly traded master limited partnership
formed by Penn Virginia Corporation (NYSE: PVA). PVR operates a midstream
natural gas gathering and processing business and manages coal properties and
related assets. PVRs principal office is located at Three Radnor Corporate
Center, Suite 300, 100 Matsonford Road, Radnor, PA 19087.

Penn Virginia GP Holdings, L.P.
(PVG)Penn Virginia GP Holdings,
L.P. (NYSE: PVG) is a publicly traded master limited partnership formed to own
the general partner interest, all of the incentive distribution rights and a
portion of the limited partner interests in PVR. PVGs principal office is
located at Three Radnor Corporate Center, Suite 300, 100 Matsonford Road,
Radnor, PA 19087.

Quest Midstream Partners, L.P.
(Quest)Quest was formed by the
spin-off of Quest Resource Corporations midstream coal bed methane natural gas
gathering assets in the Cherokee Basin. Quest owns more than 1,800 miles of
natural gas gathering pipelines (primarily serving Quest Energy Partners, L.P.,
an affiliate) and over 1,100 miles of interstate natural gas transmission
pipelines in Oklahoma, Kansas and Missouri. We hold one of seven seats on
Quests board of directors. Quests principal office is located at 210 Park
Avenue, Suite 2750, Oklahoma City, OK 73102.

VantaCore Partners LP
(VantaCore)VantaCore was formed to
acquire companies in the aggregate industry and currently owns a quarry and
asphalt plant in Clarksville, Tennessee and sand and gravel operations located
near Baton Rouge, Louisiana. We hold one of four seats on VantaCores Board of
Directors. VantaCores principal office is located at 666 Fifth Avenue,
26th Floor, New York, NY 10103.

Portfolio Company
Monitoring

Our Adviser monitors each portfolio
company to determine progress relative to meeting the companys business plan
and to assess the companys strategic and tactical courses of action. This
monitoring may be accomplished by attendance at Board of Directors meetings, the
review of periodic operating reports and financial reports, an analysis of
relevant reserve information and capital expenditure plans, and periodic
consultations with engineers, geologists, and other experts. The performance of
each portfolio company is also periodically compared to performance of similarly
sized companies with comparable assets and businesses to assess performance
relative to peers. Our Advisers monitoring activities are expected to provide
it with the necessary access to monitor compliance with existing covenants, to
enhance our ability to make qualified valuation decisions, and to assist our
evaluation of the nature of the risks involved in each individual investment. In
addition, these monitoring activities should enable our Adviser to diagnose and
manage the common risk factors held by our total portfolio, such as sector
concentration, exposure to a single financial sponsor, or sensitivity to a
particular geography.

As part of the monitoring process, our
Adviser continually assesses the risk profile of each of our investments and
rates them on a scale of (1) to (3) based on the following:

| | (1) |  | The portfolio company is
      performing at or above expectations and the trends and risk factors are
      generally favorable to neutral.                                                                                                                                                                                                       
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | The portfolio company is
      performing below expectations and the investments risk has increased
      materially since origination. The portfolio company is generally out of
      compliance with various covenants; however, payments are generally not
      more than 120 days past due.                                                 
| | (3) |  | The portfolio company is
      performing materially below expectations and the investment risk has
      substantially increased since origination. Most or all of the covenants
      are out of compliance and payments are substantially delinquent.
      Investment is not expected to provide a full repayment of the amount
      invested.

As of November 30, 2008, all of our
portfolio companies have a rating of (1), with the exception of Quest Midstream
Partners, L.P., High Sierra Energy, LP and High Sierra Energy GP, LLC, each of
which has a rating of (2).

On August 25, 2008, the boards of
directors of Quest Resource Corporation (NASDAQ: QRCP), Quest Energy Partners,
L.P. (NASDAQ: QELP) and Quest Midstream Partners, L.P. (QMP) (collectively,
Quest) announced that they had accepted the resignation of Jerry Cash, as
Chairman and CEO of all three entities. The resignation followed the discovery,
in connection with an inquiry from the Oklahoma Department of Securities, of
questionable transfers of company funds to an entity controlled by Mr. Cash.
Initial reports indicated the amount in question to be about $10 million.
Promptly following the discovery of the alleged misappropriation of funds,
members of the three boards met in joint sessions and immediately formed a Joint
Special Committee comprised of representatives from each board, including the
chairs of the audit committees of QRCP and QELP, to investigate the matter and
consider the effects on the companies' financial statements, along with the
assistance of external counsel and forensic accountants. The board of directors
of QMP was increased to seven members and Ed Russell, our President, was named
as a director of QMP. QELP and QMP Chief Financial Officer David Grose was also
placed on a paid administrative leave of absence during the
investigation.

26

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On September 13, 2008, the boards of
QRCP and the general partners of QELP and QMP terminated Mr. Grose as the chief
financial officer of the companies. Mr. Jack T. Collins was appointed to serve
as interim CFO of the companies. The special committee stated that, although it
and its advisers have reviewed substantial numbers of company records and
conducted numerous interviews of company personnel and others, significant
additional work remains to be done to confirm the full extent of inappropriate
uses of the companies assets and their effects on the companies. Based on the
information obtained in the investigation to date, the special committee
believes that the questionable transfers to the Cash-controlled entity involved
a total of approximately $10 million as originally announced. The special
committee and its advisers are also working to determine the effect of those
transfers on the companies financial statements, the methods by which the
companies internal controls may have been circumvented by those transferring
the funds, and the appropriate remedial measures. In addition, the special
committee is attempting to identify possible sources of recovery of the assets
that were inappropriately transferred. At this time, the companies cannot
accurately predict when the investigation will be complete, what the results of
that investigation will be, or whether any recovery of the missing assets can be
made.

On December 5, 2008, the Board of
Directors of Quest Midstream GP, LLC formally determined that no third quarter
distribution would be paid on the units of Quest Midstream Partners,
L.P.

On January 14, 2009, the boards of QRCP
and the general partner of QELP announced the election of Eddie M. LeBlanc as
Chief Financial Officer of these two entities. Mr. LeBlanc is an experienced
E&P CFO and replaces Jack Collins, who was appointed Interim Chief Financial
Officer in September 2008. Mr. Collins will continue in the role of Executive
Vice President Finance/Corporate Development of the Quest entities where he will
focus on the development and implementation of the organizations strategic plan
and capital structure.

High Sierra Energy, L.P. (High
Sierra) continued to experience tightening of its transactional trade finance
credit line. The challenging credit environment was made more difficult by High
Sierras exposure to a voluntary petition for reorganization under Chapter 11 of
the U.S. Bankruptcy Code filed by SemGroup, L.P. and certain of its North
American subsidiaries on July 22, 2008. High Sierra Crude Oil & Marketing
and certain of High Sierras other subsidiaries, had a material aggregate net
exposure to the SemGroup bankruptcy in the form of unsecured trade receivables.
In response to these challenges High Sierra has utilized cash generated from
operations to reduce borrowings and to support its marketing businesses.

During our fiscal quarter ended August
31, 2008, High Sierra elected to distribute additional common units in lieu of a
cash distribution. In addition, High Sierras senior management voluntarily
chose to forego receiving any distributions, including payments-in-kind, on
their LP units and in connection with their interests in High Sierras general
partner. During our fiscal quarter ended November 30, 2008, High Sierras Board
of Directors again determined that the most prudent course of action would be to
distribute additional common units in lieu of a cash distribution, instead
utilizing the cash to support the companys marketing businesses during this
period of constrained credit. This quarter all investors that were entitled to
distributions received additional common units in lieu of a cash distribution.

Results of
Operations

Set forth are the results of operations
for the year ended November 30, 2008 as compared to November 30, 2007.Comparisons to the period from December 8, 2005
through November 30, 2006 are not considered meaningful as we had not completed
our initial public offering and we were not fully invested.

Investment Income:Investment income decreased $90,991 for the year ended
November 30, 2008 as compared to November 30, 2007; however, total distributions
from investments increased $3,168,089 in comparison to the
prior fiscal year. The decrease in investment income is generally due to
the reclassification of investment income and return of capital based on the
2007 tax reporting information we received from the individual portfolio
companies after November 30, 2007 (as described in Note 2D to the financial
statements). The increase in total distributions from investments is
attributable to follow-on investments and distribution increases during the year
from several of our portfolio companies.

The weighted average yield (to cost) on
our investment portfolio (excluding short-term investments) as of November 30,
2008 was 8.0 percent as compared to 8.8 percent at November 30, 2007. The
decrease in the weighted average yield to cost is related to slightly lower
yields on securities received from our two realization events this year as
described above, as well as Quests non-payment of a distribution during the
quarter ended November 30, 2008.

27

---

Net Expenses:Net expenses decreased $733,002 in fiscal 2008 as compared to
fiscal 2007. The decrease is attributed to a reduction in the capital gain
incentive fee accrual this year and higher leverage costs which were
incurred in 2007 (we incurred a redemption premium and issuance costs
on previously outstanding Series A Redeemable Preferred Stock which was utilized
as bridge financing to fund portfolio investments and was fully redeemed upon
completion of our initial public offering). The provision for capital gain
incentive fees results from the increase or decrease in fair value and
unrealized appreciation or depreciation on investments. During the year ended
November 30, 2008, we reversed the prior years accrual for capital gain
incentive fees as a result of the decrease in fair value of the investment
portfolio. Pursuant to the Investment Advisory Agreement, the capital gain
incentive fee is paid annually only if there are realization events and only if
the calculation defined in the agreement results in an amount due. No capital
gains fees were due or payable at November 30, 2008 or November 30, 2007.

Distributable Cash Flow:Our portfolio generates cash flow to us from
which we pay distributions to stockholders. When our Board of Directors
determines the amount of any distribution we expect to pay our stockholders, it
will review distributable cash flow (DCF). DCF is distributions received from
investments less our total expenses. The total distributions received from our
investments include the amount received by us as cash distributions from equity
investments, paid-in-kind distributions, and dividend and interest payments.
Total expenses include current or anticipated operating expenses, leverage costs
and current income taxes on our operating income. Total expenses do not include
deferred income taxes or accrued capital gain incentive fees. Distributions paid
to stockholders may exceed distributable cash flow for the period. Historically
we have included all paid-in-kind distributions in distributable cash flow,
however, in the future, we do not intend to include in distributable cash flow
the value of distributions received from portfolio companies which are paid in
stock as a result of credit constraints, market dislocation, or other similar
issues.

We disclose DCF in order to provide
supplemental information regarding our results of operations and to enhance our
investors overall understanding of our core financial performance and our
prospects for the future. We believe that our investors benefit from seeing the
results of DCF in addition to U.S. generally accepted accounting principles
(GAAP) information. This non-GAAP information facilitates managements
comparison of current results with historical results of operations and with
those of our peers. This information is not in accordance with, or an
alternative to, GAAP and may not be comparable to similarly titled measures
reported by other companies.

Distributable cash flow increased
$4,049,691 in fiscal 2008 as compared to fiscal 2007. The following table
represents DCF for the years ended November 30, 2008 and 2007:

28

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|                                                                           |  | Year Ended        |            | Year Ended       
|-------------------------------------------------------------------------- |  | ----------------- | ---------- | -----------------
|Distributable
      Cash Flow                                              |  | November 30, 2008 |            | November 30, 2007
|Total from Investments                                                     |  |                   |            |                  
|Distributions from investments                                             |  | $                 | 9,688,521  |                  
|Distributions paid in stock (1)                                            |  |                   | 2,186,767  |                  
|Interest income from investments                                           |  |                   | 1,103,059  |                  
|Dividends from money market mutual funds                                   |  |                   | 18,205     |                  
|Other income                                                               |  |                   | 28,987     |                  
|Total from Investments                                                     |  |                   | 13,025,539 |                  
|                                                                          
|Operating Expenses Before Leverage Costs and Current
      Taxes           |  |                   |            |                  
|Advisory fees (net of expense reimbursement by
      Adviser)              |  |                   | 1,928,109  |                  
|Other operating expenses (excluding capital gain incentive
      fees)     |  |                   | 1,037,624  |                  
|Total Operating Expenses                                                   |  |                   | 2,965,733  |                  
|Distributable cash flow before leverage costs and current
      taxes      |  |                   | 10,059,806 |                  
|Leverage Costs                                                             |  |                   | 1,650,926  |                  
|Distributable Cash Flow                                                    |  | $                 | 8,408,880  |                  
|                                                                          
|Distributions paid on common stock                                         |  | $                 | 9,265,351  |                  
|                                                                          
|Payout percentage for period (2)                                           |  |                   | 110        | %                
|                                                                          
|DCF/GAAP Reconciliation                                                    |  |                   |            |                  
|Distributable Cash Flow                                                    |  | $                 | 8,408,880  |                  
|Adjustments to reconcile to Net Investment Loss, before
      Income Taxes |  |                   |            |                  
|Distributions paid in stock                                                |  |                   | (2,186,767 | )                
|Return of capital on distributions received from equity
      investments  |  |                   | (7,894,819 | )                
|Capital gain incentive fees                                                |  |                   | 307,611    |                  
|Loss
      on redemption of preferred stock                                |  |                   | -          |                  
|Net Investment Loss, before Income Taxes                                   |  | $                 | (1,365,095 | )                

| | (1) |  | Distributions paid in stock for
      the year ended November 30, 2008 include paid-in-kind distributions from
      Lonestar Midstream Partners, LP, High Sierra Energy, LP and High Sierra
      Energy GP, LLC. Distributions paid in stock for the year ended November
      30, 2007 include paid-in-kind distributions from Lonestar Midstream
      Partners, LP.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |  |                                                                                                                                                                                                                                                                                                                                                                         
| | (2) |  | Distributions paid as a
      percentage of Distributable Cash Flow.                                                                                                                                                                                                                                                                                                    

Distributions:The following table sets forth distributions for the two years
ended November 30, 2008 and 2007.

Record
      Date
    
    Payment
      Date
    
    AmountNovember 20,
      2008
    
    November 28,
      2008
    
    $0.2650August 21,
      2008
    
    September 2,
      2008
    
    $0.2650May 22,
      2008
    
    June 2,
      2008
    
    $0.2625February 21,
      2008
    
    March 3,
      2008
    
    $0.2500November 23,
      2007
    
    November 30,
      2007
    
    $0.2300August 21,
      2007
    
    September 4,
      2007
    
    $0.1800May 22,
      2007
    
    June 1,
      2007
    
    $0.1600January 31,
      2007
    
    February 7,
      2007
    
    $0.1000


Net Investment Loss:Net investment loss for the year ended
November 30, 2008 was $978,493 as compared to a net investment loss of
$1,565,774 in the prior year. The decreased loss is primarily related
to the decrease in net expenses described above.

Net Realized and Unrealized Gain
(Loss):We had unrealized depreciation of
$29,595,528 (after deferred taxes) as compared to unrealized appreciation of
$6,548,370 (after deferred taxes) in the prior year. We had realized
gains this year of $6,203,788 (after deferred taxes) as compared
to realized gains last year of $161,380 (after deferred taxes). The
realized gains for this year are attributable to the LONESTAR and Millennium
realization events and the VantaCore debt redemption as previously
described.

29

---

Recent Developments

We invested $515,000 on December 5,
2008 in Mowood in the form of a promissory note with a fixed annual interest
rate equal to 9.0 percent and a maturity date of December 31, 2008. The proceeds
were used by Mowood for working capital purposes. On December 8, 2008, we
entered into an agreement with Mowood to amend and combine the existing
subordinated debt and multiple promissory notes into a single new promissory
note with a principal balance of $8,800,000. The new note has an annual interest
rate of 9.0 percent and a maturity date of December 31, 2009. The initial
interest payment, which includes accrued but unpaid interest on the previously
outstanding notes, is due on December 31, 2008. Due to the start-up nature of
Timberline (subsidiary of Mowood) and the delays encountered in completing its
first three landfill gas to energy projects, we deemed it prudent to reduce the
interest rate charged on Mowoods debt and distributions on invested equity to
9.0 percent to provide Mowood more operational flexibility and to reduce the
risk of non-compliance with loan covenants. As Timberline matures, we would
anticipate increasing the distribution and interest rates subject to continued
compliance with bank covenants and Mowoods operational needs.

On January 20, 2009, our President, Ed
Russell, accepted his election to fill a vacant seat on Abraxas board of
directors.

Liquidity and Capital
Resources

We expect to raise additional capital
to support our future growth through equity offerings, rights offerings, and
issuances of senior securities or future borrowings to the extent permitted by
the 1940 Act and our current credit facility and subject to market conditions.
We generally may not issue additional common shares at a price below our net
asset value (net of any sales load (underwriting discount)) without first
obtaining approval of our stockholders and Board of Directors. We are restricted
in our ability to incur additional debt by the terms of our credit facility. We
have filed an initial shelf registration statement with the Securities and
Exchange Commission, which when effective, will allow us to prudently raise
additional capital.

Total leverage outstanding on our
credit facility at November 30, 2008 was $22,200,000 a decrease of $8,350,000
compared to November 30, 2007. At November 30, 2008, our total leverage
represented approximately 20 percent of total assets, including deferred tax. We
are, and intend to remain, in compliance with our asset coverage ratios under
the Investment Company Act of 1940 and our basic maintenance covenants under our
credit facility.

Contractual
Obligations

The following table summarizes our
significant contractual payment obligations as of November 30, 2008.

|                                            |  | Payments due by period
|------------------------------------------- |  | ----------------------
|                                            |  |                       
|                                            |  | Total                 
|Secured
      revolving credit facility (1) |  | $22,200,000           
|                                            |  | $22,200,000           

|(1) |  | At November 30, 2008, the
      outstanding balance under the credit facility was $22,200,000, with a
      maturity date of March 20, 2009.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------

Off-Balance Sheet
Arrangements

We do not have any off-balance sheet
arrangements that have or are reasonably likely to have a current or future
effect on our financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures, or capital
resources.

30

---

Borrowings

On March 21, 2008, we secured an
extension to our revolving credit facility and on March 28, 2008, amended the
credit agreement to exclude Bank of Oklahoma and include Wells Fargo as a
lender, and to increase the total credit facility to $50,000,000. The credit
facility matures on March 20, 2009. The revolving credit facility has a variable
annual interest rate equal to the one-month LIBOR plus 1.75 percent, a non-usage
fee equal to an annual rate of 0.375 percent of the difference between the total
credit facility commitment and the average outstanding balance at the end of
each day for the preceding fiscal quarter, and is secured with all our assets.
The credit facility contains a covenant precluding us from incurring additional
debt.

For the year ended November 30, 2008,
the average principal balance and interest rate for the period during which the
credit facility was utilized were $32,033,333 and 4.76 percent, respectively. As
of November 30, 2008, the principal balance outstanding was $22,200,000 at a
rate of 3.65 percent. We intend to renew or replace the credit facility upon
maturity; however, there can be no assurance that we can obtain such financing
on terms that we find acceptable, if at all.

Critical Accounting
Policies

The financial statements included in
this report are based on the selection and application of critical accounting
policies, which require management to make significant estimates and
assumptions. Critical accounting policies are those that are both important to
the presentation of our financial condition and results of operations and
require managements most difficult, complex or subjective judgments. While our
critical accounting policies are discussed below, Note 2 in the Notes to
Financial Statements included in this report provides more detailed disclosure
of all of our significant accounting policies.

Valuation of Portfolio
Investments

We invest primarily in illiquid
securities including debt and equity securities of privately-held companies.
These investments generally are subject to restrictions on resale, have no
established trading market and are fair valued on a quarterly basis. Because of
the inherent uncertainty of valuation, the fair values of such investments,
which are determined in accordance with procedures approved by our Board of
Directors, may differ materially from the values that would have been used had a
ready market existed for the investments.

Security Transactions and
Investment Income Recognition

Security transactions are accounted for
on the date the securities are purchased or sold (trade date). Realized gains
and losses are reported on an identified cost basis. Distributions received from
our equity investments generally are comprised of ordinary income, capital gains
and return of capital from the portfolio company. We record investment income
and returns of capital based on estimates made at the time such distributions
are received. Such estimates are based on information available from each
portfolio company and/or other industry sources. These estimates may
subsequently be revised based on information received from the portfolio
companies after their tax reporting periods are concluded, as the actual
character of these distributions are not known until after our fiscal year end.

Federal and State Income
Taxation

We, as a corporation, are obligated to
pay federal and state income tax on our taxable income. Our tax expense or
benefit is included in the Statement of Operations based on the component of
income or gains (losses) to which such expense or benefit relates. Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.

ITEM 7A. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business activities contain
elements of market risk. We consider fluctuations in the value of our equity
securities and the cost of capital under our credit facility to be our principal
market risk.

We carry our investments at fair value,
as determined by our Board of Directors. The fair value of securities is
determined using readily available market quotations from the principal market
if available. The fair value of securities that are not publicly traded or whose
market price is not readily available is determined in good faith by our Board
of Directors. Because there are no readily available market quotations for most
of the investments in our portfolio, we value substantially all of our portfolio
investments at fair value as determined in good faith by our Board of Directors
under a valuation policy and a consistently applied valuation process. Due to
the inherent uncertainty of determining the fair value of investments that do
not have readily available market quotations, the fair value of our investments
may differ significantly from the fair values that would have been used had a
ready market quotation existed for such investments, and these differences could
be material.

As of November 30, 2008, the fair value
of our investment portfolio (excluding short-term investments) totaled
$105,790,858. We estimate that the impact of a 10 percent increase or decrease
in the fair value of these investments, net of capital gain incentive fees and
related deferred taxes, would increase or decrease net assets applicable to
common stockholders by approximately $6,559,033.

31

---

Our revolving credit facility has a
variable annual interest rate equal to the one-month LIBOR plus 1.75 percent. We
estimate that a one percentage point interest rate movement in the average
market interest rates (either higher or lower) over a one year period would
either increase or decrease net investment income by approximately $325,672.

Debt investments in our portfolio may
be based on floating or fixed rates. Loans bearing a floating interest rate are
usually based on LIBOR and, in most cases, a spread consisting of additional
basis points. The interest rates for these debt instruments typically have one
to six-month durations and reset at the current market interest rates. As of
November 30, 2008, we had no floating rate debt investments outstanding.

We consider the management of risk
essential to conducting our businesses. Accordingly, our risk management systems
and procedures are designed to identify and analyze our risks, to set
appropriate policies and limits and to continually monitor these risks and
limits by means of reliable administrative and information systems and other
policies and programs.

ITEM 8. FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements and financial
statement schedules are set forth beginning on pages F-1 in this Annual Report
and are incorporated herein by reference.

ITEM 9. CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

None.

ITEM 9A. CONTROLS AND
PROCEDURES

Managements Annual Report on
Internal Control over Financial Reporting

Management of Tortoise Capital
Resources Corporation (the Company) is responsible for the preparation,
consistency, integrity, and fair presentation of the financial statements. The
financial statements have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis and, in
managements opinion, are fairly presented. The financial statements include
amounts that are based on managements informed judgments and best estimates.

Management is responsible for
establishing and maintaining adequate internal control over financial reporting
for the Company. Management has established and maintains comprehensive systems
of internal control that provide reasonable assurance as to the consistency,
integrity, and reliability of the preparation and presentation of financial
statements and the safeguarding of assets. The concept of reasonable assurance
is based upon the recognition that the cost of the controls should not exceed
the benefit derived. Management monitors the systems of internal control and
maintains an internal auditing program that assesses the effectiveness of
internal control. Management assessed the Companys disclosure controls and
procedures and the Companys systems of internal control over financial
reporting for financial presentations in conformity with U.S. generally accepted
accounting principles. This assessment was based on criteria for effective
internal control established inInternal
ControlIntegrated Frameworkissued by the
Committee of Sponsoring Organizations of the Treadway Commission (the COSO
Report).

Based on this assessment, management
believes that the Company maintained effective systems of internal control that
provided reasonable assurance as to adequate design and effective operation of
the Companys disclosure controls and procedures and the Companys systems of
internal control over financial reporting for financial presentations in
conformity with U.S. generally accepted accounting principles as of November 30,
2008.

The Board of Directors exercises its
oversight role with respect to the Companys systems of internal control
primarily through its Audit and Valuation Committee, which is comprised solely
of independent outside directors. The Committee oversees the Companys systems
of internal control and financial reporting to assess whether their quality,
integrity, and objectivity are sufficient to protect shareholders investments.

The Companys financial statements have
been audited by Ernst & Young LLP (Ernst & Young), independent
registered public accounting firm. As part of its audit, Ernst & Young
considers the Companys internal control to plan the audit and determine the
nature, timing and extent of audit procedures considered necessary to render its
opinion as to the fair presentation, in all material respects, of the financial
statements, which is based on independent audits made in accordance with the
standards of the Public Company Accounting Oversight Board (United
States).

Ernst & Young has issued an audit
report on the Companys internal control over financial reporting. This report
begins on the next page.

32

---

REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM

The Board of Directors and
StockholdersTortoise Capital Resources Corporation

We have audited Tortoise Capital
Resources Corporations (the Company) internal control over financial
reporting as of November 30, 2008, based on criteria established in Internal
ControlIntegrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (the COSO criteria). The Companys management is
responsible for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Managements Annual Report on Internal
Control Over Financial Reporting. Our responsibility is to express an opinion on
the Companys internal control over financial reporting based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and
performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our
opinion.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with U.S. generally
accepted accounting principles. A companys internal control over financial
reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with U.S. generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as
of November 30, 2008, based on the COSO criteria.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the statement of assets and liabilities of the Company, including the
schedules of investments, as of November 30, 2008 and 2007, and the related
statements of operations, changes in net assets, cash flows, and financial
highlights for each of the two years in the period ended November 30, 2008 and
for the period from December 8, 2005 (commencement of operations) through
November 30, 2006, and our report dated February 9, 2009, expressed an
unqualified opinion thereon.

|                            | /s/ ERNST &
      YOUNG LLP
|--------------------------- | ---------------------------
|                           
|Kansas City,
      Missouri |                            
|February 9,
      2009      |                            

33

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Disclosure Controls and
Procedures

Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934) as of the end of
the period covered by this report. Based upon such evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures were effective and provided reasonable assurance that
information required to be disclosed by us in the reports we file or submit
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the SEC rules and forms, and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure.

Changes in Internal Control over
Financial Reporting

There have been no changes in our
internal control over financial reporting (as defined in Rules 13a-15(f) and
15d-15(f) of the Securities Exchange Act of 1934) during the fiscal quarter
ended November 30, 2008, that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER
INFORMATION

None.

PART III

ITEM 10. DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Incorporated by reference to our proxy
statement for our 2009 Annual Stockholder Meeting to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Annual Report.

ITEM 11. EXECUTIVE
COMPENSATION

Incorporated by reference to our proxy
statement for our 2009 Annual Stockholder Meeting to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Annual Report.

ITEM 12. SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS

Incorporated by reference to our proxy
statement for our 2009 Annual Stockholder Meeting to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Annual Report.

ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

Incorporated by reference to our proxy
statement for our 2009 Annual Stockholder Meeting to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Annual Report.

ITEM 14. PRINCIPAL
ACCOUNTING FEES AND SERVICES

Incorporated by reference to our proxy
statement for our 2009 Annual Stockholder Meeting to be filed with the
Securities and Exchange Commission within 120 days after the end of the fiscal
year covered by this Annual Report.

34

---

PART IV

ITEM 15. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES

The following documents are filed as
part of this Annual Report on Form 10-K:

| | 1. |  | The Financial Statements listed
      in the Index to Financial Statements on Page F-1.
| | -- |  | ---------------------------------------------------------------------------------------
| |   
| | 2. |  | The Exhibits listed in the
      Exhibit Index below.                                  
| |   

|Exhibit |  |                                                                                                                                                                                                                                      | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
|No.     |  | Description of Document                                                                                                                                                                                                              | 
|3.1     |  | Articles of Incorporation
      (1)                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                     
|3.2     |  | Articles Supplementary
      (2)                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                     
|3.3     |  | Bylaws (3)                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                     
|4.1     |  | Form of Stock Certificate
      (2)                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                     
|4.2     |  | Form of Warrant dated December
      2006 (2)                                                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                     
|4.3     |  | Registration Rights Agreements
      with Merrill Lynch & Co; Merrill Lynch, Pierce, Fenner & Smith
      Incorporated, and Stifel, Nicolaus & Company, Incorporated dated
      January 9, 2006 (1)                                
|        |  |                                                                                                                                                                                                                                     
|4.4     |  | Registration Rights Agreement
      dated April 2007 (4)                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                     
|10.1    |  | Dividend Reinvestment Plan
      (5)                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                     
|10.2    |  | Investment Advisory Agreement
      with Tortoise Capital Advisors, L.L.C. dated January 1, 2007
    (2)                                                                                                                            
|        |  |                                                                                                                                                                                                                                     
|10.3    |  | Expense Reimbursement and Partial
      Fee Waiver Agreement dated as of November 30, 2007 by and among Tortoise
      Capital Resources Corporation and Tortoise Capital Advisors, LLC
      (6)                                   
|        |  |                                                                                                                                                                                                                                     
|10.4    |  | Sub-Advisory Agreement with
      Kenmont Investments Management, L.P. dated January 1, 2007
    (2)                                                                                                                                
|        |  |                                                                                                                                                                                                                                     
|10.5    |  | Custody Agreement with U.S. Bank
      National Association dated September 13, 2005 (1)                                                                                                                                            
|        |  |                                                                                                                                                                                                                                     
|10.6    |  | Stock Transfer Agency Agreement
      with Computershare Investor Services, LLC dated September 13, 2005
      (1)                                                                                                                  
|        |  |                                                                                                                                                                                                                                     
|10.7    |  | Administration Agreement with
      Tortoise Capital Advisors, L.L.C. dated November 14, 2006
  (2)                                                                                                                                 
|        |  |                                                                                                                                                                                                                                     
|10.8    |  | Warrant Agreement with
      Computershare Investor Services, LLC as Warrant Agent dated December 8,
      2005 (1)                                                                                                                 
|        |  |                                                                                                                                                                                                                                     
|10.9    |  | Credit Agreement dated April 23,
      2007 (7)                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                     
|10.10   |  | First Amendment to Credit
      Agreement dated July 18, 2007 (8)                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                     
|10.11   |  | Second Amendment to Credit
      Agreement dated September 28, 2007 (9)                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                     
|10.12   |  | Security Agreement dated April
      23, 2007 (7)                                                                                                                                                                                   
|        |  |                                                                                                                                                                                                                                     
|10.13   |  | Third Amendment to Credit
      Agreement, dated as of March 21, 2008, by and among the Company and U.S.
      Bank, N.A. as a lender, agent and lead arranger, Bank of Oklahoma, N.A.
      and First National Bank of Kansas (10) 
|        |  |                                                                                                                                                                                                                                     
|10.14   |  | Fourth Amendment to Credit
      Agreement, dated as of March 28, 2008, by and among the Company and U.S.
      Bank, N.A. as a lender, agent and lead arranger, First National Bank of
      Kansas and Wells Fargo Bank, N.A. (11)
|        |  |                                                                                                                                                                                                                                     
|10.15   |  | Expense Reimbursement Agreement
      dated as of November 11, 2008 by and among Tortoise Capital Resources
      Corporation and Tortoise Capital Advisors, LLC
  (12)                                                             

35

---

| | 14.1 |  | Code of Ethics for Principal
      Executive Officer and Principal Financial Officerfiled
    herewith                                                                                                        
| | ---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     
| | 24   |  | Power of Attorney (included on
      the signature page)                                                                                                                                                       
| |     
| | 31.1 |  | Certification by Chief Executive
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002filed
  herewith.                           
| |     
| | 31.2 |  | Certification by Chief Financial
      Officer pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002filed
  herewith.                           
| |     
| | 32.1 |  | Certification by Chief Executive
      Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002filed
      herewith.
| |     
| |     

|   | *(1)*  | ** | *Incorporated by
      reference to the Registrants Registration Statement on Form N-2, filed
      August 28, 2006 (File No. 333-136923).*                                       
|-- | ------ | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | **    
|** | *(2)*  | ** | *Incorporated by
      reference to Pre-Effective Amendment No. 2 to the Registrants
      Registration Statement on Form N-2, filed January 9, 2007 (File No.
      333-136923).*
|** | **    
|** | *(3)*  | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed January
      21, 2009.*                                                                    
|** | **    
|** | *(4)*  | ** | *Incorporated by
      reference to Pre-Effective Amendment No. 1 to the Registrants
      Registration Statement on Form N-2, filed July 3, 2007 (File No.
      333-142859)*    
|** | **    
|** | *(5)*  | ** | *Incorporated by
      reference to the Registrants Quarterly Report on Form 10-Q for the
      quarter ended August 31, 2007 and filed on October 12,
  2007.*                   
|** | **    
|** | *(6)*  | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed December
      6, 2007.*                                                                    
|** | **    
|** | *(7)*  | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed April 27,
      2007.*                                                                      
|** | **    
|** | *(8)*  | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed July 20,
      2007.*                                                                       
|** | **    
|** | *(9)*  | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed October 3,
      2007.*                                                                     
|** | **    
|** | *(10)* | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed March 27,
      2008.*                                                                      
|** | **    
|** | *(11)* | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed April 1,
      2008.*                                                                       
|** | **    
|** | *(12)* | ** | *Incorporated by
      reference to the Registrants current report on Form 8-K, filed November
      12, 2008.*                                                                   
|   |       

All other exhibits for which provision
is made in the applicable regulations of the Securities and Exchange Commission
are not required under the related instruction or are inapplicable and therefore
have been omitted.

36

---

INDEX TO FINANCIAL
STATEMENTS

|                                                                                                        | Page
|------------------------------------------------------------------------------------------------------- | ----
|Report of Independent Registered Public Accounting
      Firm                                           | F-2 
|Statements of Assets and Liabilities as of November 30, 2008
      and November 30, 2007                | F-3 
|Schedule of Investments as of November 30,
      2008                                                   | F-4 
|Schedule of Investments as of November 30,
      2007                                                   | F-5 
|Statements of Operations for the years ended November
      30, 2008, November 30, 2007 and the period  |     
|from December 8, 2005 through November 30,
      2006                                                   | F-6 
|Statements of Changes in Net Assets for the years ended
      November 30, 2008, November 30, 2007 and  |     
|the period from December 8, 2005 through
      November 30, 2006                                        | F-7 
|Statements of Cash Flows for the years ended November
      30, 2008, November 30, 2007 and the period  |     
|from December 8, 2005 through November 30,
      2006                                                   | F-8 
|Financial Highlights for the years ended November 30, 2008,
      November 30, 2007 and the period from |     
|December 8, 2005 through November 30,
      2006                                                        | F-9 
|Notes to Financial Statements                                                                           | F-10
|Company Officers and Directors (Unaudited)                                                              | F-24
|Additional Information (Unaudited)                                                                      | F-26
|                                                                                                       
|EXHIBIT 14.1                                                                                            |     
|EXHIBIT 31.1                                                                                            |     
|EXHIBIT 31.2                                                                                            |     
|EXHIBIT 32.1                                                                                            |     
|                                                                                                        |     

F-1

---

Report of Independent
Registered Public Accounting Firm

The Board of Directors and
StockholdersTortoise Capital Resources Corporation

We have audited the accompanying
statements of assets and liabilities of Tortoise Capital Resources Corporation
(the Company), including the schedules of investments, as of November 30, 2008
and 2007, and the related statements of operations, changes in net assets, cash
flows, and the financial highlights for each of the two years in the period
ended November 30, 2008, and for the period from December 8, 2005 (commencement
of operations) through November 30, 2006. These financial statements and
financial highlights are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the financial
statements and financial highlights referred to above present fairly, in all
material respects, the financial position of Tortoise Capital Resources
Corporation at November 30, 2008 and 2007, the results of its operations,
changes in its net assets, its cash flows, and its financial highlights for each
of the two years in the period ended November 30, 2008, and for the period from
December 8, 2005 (commencement of operations) through November 30, 2006, in
conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), Tortoise Capital Resources Corporation's internal control over
financial reporting as of November 30, 2008, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 9,
2009expressed an unqualified opinion thereon.

|                            | /s/ Ernst &
      Young LLP
|--------------------------- | ---------------------------
|                           
|                           
|Kansas City,
      Missouri |                            
|February 9,
      2009      |                            

F-2

---

|**Tortoise
      Capital Resources Corporation**
|------------------------------------------------
|**STATEMENTS OF ASSETS & LIABILITIES**          

|                                                                                                       |  | November 30, 2008 |             | November 30, 2007
|------------------------------------------------------------------------------------------------------ |  | ----------------- | ----------- | -----------------
|Assets                                                                                                 |  |                   |             |                  
|Investments at fair value,
      control (cost $30,418,802 and $20,521,816, respectively)              |  | $                 | 30,213,280  |                  
|Investments
      at fair value, affiliated (cost $56,662,500 and $95,507,198,
      respectively)     |  |                   | 48,016,925  |                  
|Investments
      at fair value, non-affiliated (cost $49,760,304 and $31,716,576,
      respectively) |  |                   | 27,921,025  |                  
|Total investments (cost $136,841,606 and $147,745,590,
      respectively)                             |  |                   | 106,151,230 |                  
|Income tax
      receivable                                                                            |  |                   | 212,054     |                  
|Receivable
      for Adviser expense reimbursement                                                     |  |                   | 88,925      |                  
|Interest
      receivable from control investments                                                     |  |                   | 76,609      |                  
|Dividends
      receivable                                                                             |  |                   | 696         |                  
|Deferred tax
      asset, net                                                                          |  |                   | 5,683,747   |                  
|Prepaid
      expenses and other assets                                                                |  |                   | 107,796     |                  
|Total assets                                                                                           |  |                   | 112,321,057 |                  
|                                                                                                      
|Liabilities                                                                                            |  |                   |             |                  
|Base
      management fees payable to Adviser                                                          |  |                   | 533,552     |                  
|Accrued
      capital gain incentive fees payable to Adviser (Note 4)                                  |  |                   | -           |                  
|Payable for
      investments purchased                                                                |  |                   | -           |                  
|Accrued
      expenses and other liabilities                                                           |  |                   | 362,205     |                  
|Short-term
      borrowings                                                                            |  |                   | 22,200,000  |                  
|Deferred tax
      liability, net                                                                      |  |                   | -           |                  
|Total liabilities                                                                                      |  |                   | 23,095,757  |                  
|Net assets applicable to common stockholders                                                           |  | $                 | 89,225,300  |                  
|                                                                                                      
|Net Assets Applicable to Common Stockholders Consist
    of:                                           |  |                   |             |                  
|Warrants, no
      par value; 945,594 issued and outstanding                                           |  |                   |             |                  
|at November 30, 2008 and 945,774 issued and outstanding
      at                                       |  |                   |             |                  
|November 30, 2007 (5,000,000 authorized)                                                               |  | $                 | 1,370,700   |                  
|Capital
      stock, $0.001 par value; 8,962,147 shares issued and                                     |  |                   |             |                  
|outstanding at November 30, 2008 and 8,858,168 issued and
      outstanding                            |  |                   |             |                  
|at November 30, 2007 (100,000,000 shares
      authorized)                                             |  |                   | 8,962       |                  
|Additional
      paid-in capital                                                                       |  |                   | 106,869,132 |                  
|Accumulated
      net investment loss, net of income taxes                                             |  |                   | (2,544,267  | )                
|Accumulated
      realized gain, net of income taxes                                                   |  |                   | 6,364,262   |                  
|Net
      unrealized appreciation (depreciation) of investments, net of income
      taxes             |  |                   | (22,843,489 | )                
|Net assets applicable to common stockholders                                                           |  | $                 | 89,225,300  |                  
|                                                                                                      
|Net Asset
      Value per common share outstanding (net assets applicable                              |  |                   |             |                  
|to common stock, divided by common shares
      outstanding)                                           |  | $                 | 9.96        |                  

See accompanying Notes to Financial
Statements.

F-3

---

|**Tortoise
      Capital Resources Corporation**
|------------------------------------------------
|**SCHEDULE OF INVESTMENTS**                     
|November 30,
      2008                         

|Company                                            |  | Energy Infrastructure
      Segment |  | Type of Investment                                     |  | Cost |             | Fair Value
|-------------------------------------------------- |  | ----------------------------------- |  | ------------------------------------------------------ |  | ---- | ----------- | ----------
|Control Investments (1)                            |  |                                     |  |                                                        |  |      |             |           
|Mowood,
      LLC                                  |  | Midstream/Downstream                |  | Equity Interest
      (99.6%) (2)                      |  | $    | 5,000,000   |           
|                                                   |  |                                     |  | Subordinated Debt (12% Due 7/1/2016) (2)               |  |      | 7,050,000   |           
|                                                   |  |                                     |  | Promissory Notes
      (9% Due 12/31/08) (2)           |  |      | 1,235,000   |           
|VantaCore Partners LP                              |  | Aggregates                          |  | Common Units (933,430) (2)                             |  |      | 16,989,861  |           
|                                                   |  |                                     |  | Incentive
      Distribution Rights (988) (2) (6)      |  |      | 143,941     |           
|Total Control Investments - 33.9% (3)              |  |                                     |  |                                                        |  |      | 30,418,802  |           
|                                                  
|Affiliated Investments (4)                         |  |                                     |  |                                                        |  |      |             |           
|High Sierra
      Energy, LP                       |  | Midstream                           |  | Common Units
      (1,042,685) (2) (5)                 |  |      | 22,930,679  |           
|International Resource Partners LP                 |  | Coal                                |  | Class A Units (500,000) (2)                            |  |      | 8,933,333   |           
|LONESTAR
      Midstream Partners, LP              |  | Midstream                           |  | Class A Units
      (1,327,900)(2) (6) (7)             |  |      | 4,444,986   |           
|LSMP GP, LP                                        |  | Midstream                           |  | GP LP Units (180)(2) (6)
      (7)                     |  |      | 168,514     |           
|Quest Midstream
      Partners, L.P.               |  | Midstream                           |  | Common Units
      (1,180,946) (2) (6)                 |  |      | 20,184,988  |           
|Total Affiliated Investments - 53.8% (3)           |  |                                     |  |                                                        |  |      | 56,662,500  |           
|                                                  
|Non-affiliated Investments                         |  |                                     |  |                                                        |  |      |             |           
|Abraxas Energy
      Partners, L.P.                |  | Upstream                            |  | Common Units
      (450,181) (2)                       |  |      | 6,742,023   |           
|Eagle Rock Energy Partners, L.P.                   |  | Midstream/Upstream                  |  | Common Units (659,071) (8)                             |  |      | 9,892,328   |           
|Eagle Rock
      Energy Partners, L.P.             |  | Midstream/Upstream                  |  | Unregistered
      Common Units (373,224)(2)
      (8) |  |      | 5,044,980   |           
|Eagle Rock Energy Partners, L.P.                   |  | Midstream/Upstream                  |  | Unregistered Common Units (212,404) (2) (8) (9)        |  |      | 2,920,555   |           
|EV Energy
      Partners, L.P.                     |  | Upstream                            |  | Common Units
      (217,391) (8)                       |  |      | 7,247,077   |           
|High Sierra Energy GP, LLC                         |  | Midstream                           |  | Equity Interest (2.37%)(2)
      (5)                   |  |      | 2,010,355   |           
|Legacy Reserves
      LP                           |  | Upstream                            |  | Limited Partner
      Units (264,705) (8)              |  |      | 3,454,771   |           
|Penn Virginia Resource Partners, L.P.              |  | Midstream/Coal                      |  | Unregistered Common Units (468,001) (2) (8)            |  |      | 10,437,920  |           
|Penn Virginia GP
      Holdings, L.P.              |  | Midstream/Coal                      |  | Unregistered
      Common Units (59,503) (2) (8)       |  |      | 1,649,923   |           
|First American Government Obligations Fund         |  | Short-term investment               |  | Class Y shares                                         |  |      | 360,372     |           
|Total
      Non-affiliated Investments - 31.3% (3) |  |                                     |  |                                                        |  |      | 49,760,304  |           
|                                                   |  |                                     |  |                                                        |  |      |             |           
|Total Investments - 119.0% (3)                     |  |                                     |  |                                                        |  | $    | 136,841,606 |           

|** | (1) | ** | Control investments are
      generally defined under the Investment Company Act of 1940 as companies in
      which at least 25% of the voting securities are owned; see Note 8 to the
      financial statements for further disclosure.                                                                                                                                                                                                  
|-- | --- | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|** | (2) | ** | Restricted securities have
      been fair valued in accordance with procedures approved by the Board of
      Directors and have a total fair value of $95,316,463, which represents
      106.8% of net assets applicable to common stockholders; see Note 7 to the
      financial statements for further disclosure.                                                                                                                    
|** | (3) | ** | Calculated as a percentage of
      net assets applicable to common stockholders.                                                                                                                                                                                                                                                                                                                                                           
|** | (4) | ** | Affiliated investments are
      generally defined under the Investment Company Act of 1940 as companies in
      which at least 5% of the voting securities are owned. Affiliated
      investments in which at least 25% of the voting securities are owned are
      generally defined as control investments as described in footnote 1; see
      Note 8 to the financial statements for further
    disclosure.                       
|** | (5) | ** | Security distributions are
      paid-in-kind.                                                                                                                                                                                                                                                                                                                                                                                              
|** | (6) | ** | Currently non-income
      producing.                                                                                                                                                                                                                                                                                                                                                                                                       
|** | (7) | ** | In July 2008, Lonestar
      Midstream Partners, LP sold its assets to Penn Virginia Resource Partners,
      L.P. (PVR). Lonestar has no continuing operations, but currently holds
      certain rights to receive future payments from PVR relative to the sale.
      LSMP GP, LP indirectly owns the general partner of Lonestar Midstream
      Partners, LP. See Note 9 to the financial statements for additional
      information.
|** | (8) | ** | Publicly-traded
      company.                                                                                                                                                                                                                                                                                                                                                                                                              
|** | (9) | ** | Units are held in an escrow
      account, along with restricted cash, to satisfy any potential claims from
      the purchaser of Millennium Midstream Partners, L.P. The escrow agreement
      terminates April 1, 2010. See Note 9 to the financial statements for
      additional information.                                                                                                                                        

See accompanying Notes to Financial
Statements.

F-4

---

|Tortoise Capital
      Resources Corporation
|--------------------------------------------
|SCHEDULE OF
      INVESTMENTS               
|November 30,
      2007                     

|Company                                           |  | Energy Infrastructure
      Segment |  | Type of Investment                                     |  | Cost |             | Fair Value
|------------------------------------------------- |  | ----------------------------------- |  | ------------------------------------------------------ |  | ---- | ----------- | ----------
|Control Investments(1)                            |  |                                     |  |                                                        |  |      |             |           
|Mowood,
      LLC                                 |  | Downstream                          |  | Equity Interest
      (100%)(2)                        |  | $    | 1,500,000   |           
|                                                  |  |                                     |  | Subordinated Debt (12% Due 7/1/2016)(2)                |  |      | 7,050,000   |           
|VantaCore
      Partners LP                       |  | Aggregates                          |  | Common Units
      (425,000)(2)                        |  |      | 8,169,420   |           
|                                                  |  |                                     |  | Subordinated Debt (10.73% Due 5/21/2014)(2) (3)        |  |      | 3,750,000   |           
|                                                  |  |                                     |  | Incentive
      Distribution Rights (789)(2)
      (7) |  |      | 52,396      |           
|Total Control Investments - 19.1%(4)              |  |                                     |  |                                                        |  |      | 20,521,816  |           
|                                                 
|Affiliated Investments(5)                         |  |                                     |  |                                                        |  |      |             |           
|High Sierra
      Energy, LP                      |  | Midstream                           |  | Common Units
      (999,614)(2)                        |  |      | 24,005,079  |           
|International Resource Partners LP                |  | Coal                                |  | Class A Units (500,000)(2)                             |  |      | 9,840,000   |           
|LONESTAR
      Midstream Partners, LP             |  | Midstream                           |  | Class A Units
      (1,184,532)(2) (6)                 |  |      | 23,395,520  |           
|LSMP GP, LP                                       |  | Midstream                           |  | GP LP Units (180 units)(2)                             |  |      | 549,142     |           
|Quest Midstream
      Partners, L.P.              |  | Midstream                           |  | Common Units
      (1,180,946)(2)                      |  |      | 21,235,694  |           
|Millennium Midstream Partners, LP                 |  | Midstream                           |  | Class A Common Units (875,000)(2)                      |  |      | 16,437,410  |           
|                                                  |  |                                     |  | Incentive
      Distribution Rights (78)(2)
      (7)  |  |      | 44,353      |           
|Total Affiliated Investments - 80.4%(4)           |  |                                     |  |                                                        |  |      | 95,507,198  |           
|                                                 
|Non-affiliated Investments                        |  |                                     |  |                                                        |  |      |             |           
|Abraxas Energy
      Partners, L.P.               |  | Upstream                            |  | Common Units
      (450,181)(2)                        |  |      | 7,286,495   |           
|Eagle Rock Energy Partners, L.P.                  |  | Midstream                           |  | Common Units (659,071)(8)                              |  |      | 10,931,340  |           
|EV Energy
      Partners, L.P.                    |  | Upstream                            |  | Common Units
      (217,391)(2) (8)                    |  |      | 7,407,816   |           
|Legacy Reserves LP                                |  | Upstream                            |  | Limited Partner Units (264,705)(8)                     |  |      | 3,871,099   |           
|High Sierra
      Energy GP, LLC                  |  | Midstream                           |  | Equity Interest
      (2.37%)(2)                       |  |      | 2,000,324   |           
|First American Government Obligations Fund        |  | Short-term investment               |  | Class Y shares                                         |  |      | 219,502     |           
|Total
      Non-affiliated Investments - 30.6%(4) |  |                                     |  |                                                        |  |      | 31,716,576  |           
|                                                  |  |                                     |  |                                                        |  |     
|Total Investments - 130.1%(4)                     |  |                                     |  |                                                        |  | $    | 147,745,590 |           

| | (1) |  | Control investments are
      generally defined under the Investment Company Act of 1940 as companies in
      which at least 25% of the voting securities are owned; see Note 8 to the
      financial statements for further disclosure.                                                                                                                                                                           
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | Restricted securities have
      been fair valued in accordance with procedures approved by the Board of
      Directors and have a total fair value of $138,869,515, which represents
      113.9% of net assets applicable to common stockholders. These securities
      are deemed to be restricted; see Note 7 to the financial statements for
      further disclosure.                                        
| | (3) |  | Security is a variable rate
      instrument. Interest rate is as of November 30, 2007.                                                                                                                                                                                                                                                                                                                              
| | (4) |  | Calculated as a percentage of
      net assets applicable to common stockholders.                                                                                                                                                                                                                                                                                                                                    
| | (5) |  | Affiliated investments are
      generally defined under the Investment Company Act of 1940 as companies in
      which at least 5% of the voting securities are owned. Affiliated
      investments in which at least 25% of the voting securities are owned are
      generally defined as control investments as described in footnote 1; see
      Note 8 to the financial statements for further
    disclosure.
| | (6) |  | Distributions are
      paid-in-kind.                                                                                                                                                                                                                                                                                                                                                                                
| | (7) |  | Currently non-income
      producing.                                                                                                                                                                                                                                                                                                                                                                                
| | (8) |  | Publicly-traded
      company.                                                                                                                                                                                                                                                                                                                                                                                       

See accompanying Notes to Financial
Statements.

F-5

---

|Tortoise Capital Resources Corporation                                         |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|------------------------------------------------------------------------------ |  | ----------------------- | ----------- | - | ----------------------- | - | ----------------------- | - |  | ----------------------- | ---------- | -
|STATEMENTS OF
      OPERATIONS                                                 |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|                                                                              
|                                                                               |  |                         |             |   |                         |   |                         |   |  | Period from December 8,
|                                                                               |  | Year Ended              |             |   | Year Ended              |   | 2005**(1)through**     
|                                                                               |  | November 30,
      2008 |             |   | November 30,
      2007 |   | November 30,
      2006
|Investment Income                                                              |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Distributions from investments                                                 |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Control investments                                                            |  | $                       | 1,576,716   |   |                         | $ | 389,720                 |   |  | $                       | -          |  
|Affiliated investments                                                         |  |                         | 4,699,082   |   |                         |   | 4,245,481               |   |  |                         | 100,000    |  
|Non-affiliated investments                                                     |  |                         | 3,412,723   |   |                         |   | 1,885,231               |   |  |                         | 4,122,244  |  
|Total distributions from investments                                           |  |                         | 9,688,521   |   |                         |   | 6,520,432               |   |  |                         | 4,222,244  |  
|Less
      return of capital on distributions                                  |  |                         | (7,894,819  | ) |                         |   | (5,031,851              | ) |  |                         | (3,808,154 | )
|Net
      distributions from investments                                       |  |                         | 1,793,702   |   |                         |   | 1,488,581               |   |  |                         | 414,090    |  
|Interest income from control investments                                       |  |                         | 1,103,059   |   |                         |   | 921,978                 |   |  |                         | 270,633    |  
|Dividends from money market mutual funds                                       |  |                         | 18,205      |   |                         |   | 624,385                 |   |  |                         | 1,210,120  |  
|Fee
      income                                                               |  |                         | -           |   |                         |   | -                       |   |  |                         | 225,000    |  
|Other income                                                                   |  |                         | 28,987      |   |                         |   | -                       |   |  |                         | -          |  
|Total Investment Income                                                        |  |                         | 2,943,953   |   |                         |   | 3,034,944               |   |  |                         | 2,119,843  |  
|                                                                              
|Operating Expenses                                                             |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Base management fees                                                           |  |                         | 2,313,731   |   |                         |   | 1,926,059               |   |  |                         | 634,989    |  
|Capital gain incentive fees (Note 4)                                           |  |                         | (307,611    | ) |                         |   | 307,611                 |   |  |                         | -          |  
|Professional fees                                                              |  |                         | 642,615     |   |                         |   | 727,055                 |   |  |                         | 205,018    |  
|Administrator fees                                                             |  |                         | 107,325     |   |                         |   | 81,002                  |   |  |                         | 1,322      |  
|Directors' fees                                                                |  |                         | 86,406      |   |                         |   | 84,609                  |   |  |                         | 69,550     |  
|Reports to stockholders                                                        |  |                         | 58,943      |   |                         |   | 53,610                  |   |  |                         | 15,810     |  
|Fund accounting fees                                                           |  |                         | 34,546      |   |                         |   | 32,183                  |   |  |                         | 25,536     |  
|Registration fees                                                              |  |                         | 29,668      |   |                         |   | 40,660                  |   |  |                         | -          |  
|Custodian fees and expenses                                                    |  |                         | 17,426      |   |                         |   | 10,174                  |   |  |                         | 6,647      |  
|Stock transfer agent fees                                                      |  |                         | 13,538      |   |                         |   | 13,600                  |   |  |                         | 17,329     |  
|Other expenses                                                                 |  |                         | 47,157      |   |                         |   | 51,784                  |   |  |                         | 18,944     |  
|Total Operating Expenses                                                       |  |                         | 3,043,744   |   |                         |   | 3,328,347               |   |  |                         | 995,145    |  
|Interest expense                                                               |  |                         | 1,650,926   |   |                         |   | 847,421                 |   |  |                         | -          |  
|Preferred stock distributions                                                  |  |                         | -           |   |                         |   | 228,750                 |   |  |                         | -          |  
|Loss on redemption of preferred stock                                          |  |                         | -           |   |                         |   | 731,713                 |   |  |                         | -          |  
|Total Interest Expense, Preferred Stock
      Distributions                    |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|and Loss on Redemption of Preferred
      Stock                                |  |                         | 1,650,926   |   |                         |   | 1,807,884               |   |  |                         | -          |  
|Total Expenses                                                                 |  |                         | 4,694,670   |   |                         |   | 5,136,231               |   |  |                         | 995,145    |  
|Less
      expense reimbursement by Adviser                                    |  |                         | (385,622    | ) |                         |   | (94,181                 | ) |  |                         | -          |  
|Net Expenses                                                                   |  |                         | 4,309,048   |   |                         |   | 5,042,050               |   |  |                         | 995,145    |  
|Net Investment Income (Loss), before Income Taxes                              |  |                         | (1,365,095  | ) |                         |   | (2,007,106              | ) |  |                         | 1,124,698  |  
|Current tax benefit (expense)                                                  |  |                         | (6,881      | ) |                         |   | 261,667                 |   |  |                         | (266,455   | )
|Deferred tax benefit (expense)                                                 |  |                         | 393,483     |   |                         |   | 179,665                 |   |  |                         | (124,967   | )
|Income tax benefit (expense)                                                   |  |                         | 386,602     |   |                         |   | 441,332                 |   |  |                         | (391,422   | )
|Net Investment Income (Loss)                                                   |  |                         | (978,493    | ) |                         |   | (1,565,774              | ) |  |                         | 733,276    |  
|                                                                              
|Realized and Unrealized Gain (Loss) on Investments                             |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Net realized gain (loss) on investments, before deferred
      tax expense     |  |                         | 8,716,197   |   |                         |   | 260,290                 |   |  |                         | (1,462     | )
|Current tax benefit                                                            |  |                         | -           |   |                         |   | -                       |   |  |                         | 556        |  
|Deferred tax expense                                                           |  |                         | (2,512,409  | ) |                         |   | (98,910                 | ) |  |                         | -          |  
|Net
      realized gain (loss) on investments                                  |  |                         | 6,203,788   |   |                         |   | 161,380                 |   |  |                         | (906       | )
|Net unrealized appreciation (depreciation) of control
      investments        |  |                         | (2,976,609  | ) |                         |   | 2,771,088               |   |  |                         | -          |  
|Net
      unrealized appreciation (depreciation) of affiliated investments     |  |                         | (11,145,652 | ) |                         |   | 2,262,736               |   |  |                         | 328,858    |  
|Net unrealized appreciation (depreciation) of
      non-affiliated investments |  |                         | (27,458,859 | ) |                         |   | 5,528,064               |   |  |                         | -          |  
|Net unrealized appreciation (depreciation), before
      deferred taxes        |  |                         | (41,581,120 | ) |                         |   | 10,561,888              |   |  |                         | 328,858    |  
|Deferred tax benefit (expense)                                                 |  |                         | 11,985,592  |   |                         |   | (4,013,518              | ) |  |                         | (125,189   | )
|Net unrealized appreciation (depreciation) of
      investments                |  |                         | (29,595,528 | ) |                         |   | 6,548,370               |   |  |                         | 203,669    |  
|Net Realized
      and Unrealized Gain (Loss) on Investments                   |  |                         | (23,391,740 | ) |                         |   | 6,709,750               |   |  |                         | 202,763    |  
|                                                                              
|Net Increase (Decrease) in Net Assets Applicable to Common
      Stockholders  |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Resulting from Operations                                                      |  | $                       | (24,370,233 | ) |                         | $ | 5,143,976               |   |  | $                       | 936,039    |  
|                                                                              
|Net Increase (Decrease) in Net Assets Applicable to Common
      Stockholders  |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Resulting from Operations Per Common Share:                                    |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Basic and Diluted                                                              |  | $                       | (2.74       | ) |                         | $ | 0.66                    |   |  | $                       | 0.30       |  
|                                                                              
|Weighted Average Shares of Common Stock Outstanding:                           |  |                         |             |   |                         |   |                         |   |  |                         |            |  
|Basic and Diluted                                                              |  |                         | 8,887,085   |   |                         |   | 7,751,591               |   |  |                         | 3,088,596  |  

*(1)**Commencement
of Operations*

See accompanying Notes to Financial
Statements.

F-6

---

|Tortoise Capital Resources Corporation                                                                              |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|------------------------------------------------------------------------------------------------------------------- |  | -------------------- | ----------- | -------------------- |  | ------------------------------ | ----------- | - |  | --------------------- | ---------- | -
|STATEMENTS OF
      CHANGES IN NET ASSETS                                                                           |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|                                                                                                                   
|                                                                                                                    |  |                      |             |                      |  |                                |             |   |  | **Period
      from**
|                                                                                                                    |  |                      |             |                      |  | **December 8, 2005 (1)**      
|                                                                                                                    |  | **Year
      Ended** |             | **Year
      Ended** |  | **through**                   
|                                                                                                                    |  | November 30, 2008    |             | November 30, 2007    |  | **November****30,
      2006**
|Operations                                                                                                          |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|Net investment income (loss)                                                                                        |  | $                    | (978,493    | )                    |  | $                              | (1,565,774  | ) |  | $                     | 733,276    |  
|Net
      realized gain (loss) on investments                                                                       |  |                      | 6,203,788   |                      |  |                                | 161,380     |   |  |                       | (906       | )
|Net unrealized appreciation (depreciation) of
      investments                                                     |  |                      | (29,595,528 | )                    |  |                                | 6,548,370   |   |  |                       | 203,669    |  
|Net increase (decrease) in net assets applicable to
      common stockholders resulting from operations             |  |                      | (24,370,233 | )                    |  |                                | 5,143,976   |   |  |                       | 936,039    |  
|                                                                                                                   
|Distributions to Common Stockholders                                                                                |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|Net investment income                                                                                               |  |                      | -           |                      |  |                                | -           |   |  |                       | (639,220   | )
|Return of capital                                                                                                   |  |                      | (9,265,351  | )                    |  |                                | (5,349,244  | ) |  |                       | (410,903   | )
|Total distributions to common stockholders                                                                          |  |                      | (9,265,351  | )                    |  |                                | (5,349,244  | ) |  |                       | (1,050,123 | )
|                                                                                                                   
|Capital Stock Transactions                                                                                          |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|Proceeds from initial offering of 3,066,667 common
      shares and 772,124 warrants                                |  |                      | -           |                      |  |                                | -           |   |  |                       | 46,000,005 |  
|Proceeds from initial public offering of 5,740,000 common
      shares                                              |  |                      | -           |                      |  |                                | 86,100,000  |   |  |                       | -          |  
|Proceeds from issuance of 185,000 warrants                                                                          |  |                      | -           |                      |  |                                | 283,050     |   |  |                       | -          |  
|Proceeds from exercise of 180 warrants                                                                              |  |                      | 2,700       |                      |  |                                | -           |   |  |                       | -          |  
|Proceeds from exercise of 11,350 warrants                                                                           |  |                      | -           |                      |  |                                | 170,250     |   |  |                       | -          |  
|Underwriting discounts and offering expenses associated with the
      issuance of                                  |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|common
      stock                                                                                                  |  |                      | -           |                      |  |                                | (7,006,341  | ) |  |                       | (3,769,373 | )
|Issuance of 103,799 and 18,222 common shares from
      reinvestment of distributions to stockholders, respectively |  |                      | 945,218     |                      |  |                                | 242,873     |   |  |                       | -          |  
|Net increase in net assets, applicable to common
      stockholders, from capital stock transactions                |  |                      | 947,918     |                      |  |                                | 79,789,832  |   |  |                       | 42,230,632 |  
|Total increase (decrease) in net assets applicable to
      common stockholders                                     |  |                      | (32,687,666 | )                    |  |                                | 79,584,564  |   |  |                       | 42,116,548 |  
|                                                                                                                   
|Net Assets                                                                                                          |  |                      |             |                      |  |                                |             |   |  |                       |            |  
|Beginning of year                                                                                                   |  |                      | 121,912,966 |                      |  |                                | 42,328,402  |   |  |                       | 211,854    |  
|End
      of year                                                                                                   |  | $                    | 89,225,300  |                      |  | $                              | 121,912,966 |   |  | $                     | 42,328,402 |  
|Accumulated net investment loss, net of income taxes, at
      the end of year                                      |  | $                    | (2,544,267  | )                    |  | $                              | (1,565,774  | ) |  | $                     | -          |  

*(1)**Commencementof Operations*

SeeaccompanyingNotes toFinancialStatements.

F-7

---

|Tortoise Capital Resources Corporation
|--------------------------------------
|STATEMENT OF
      CASH FLOWS         

|                                                                                                |                   |             |                   |  | Period from December 8,
|----------------------------------------------------------------------------------------------- | ----------------- | ----------- | ----------------- |  | -----------------------
|                                                                                                | Year Ended        |             | Year Ended        |  | 2005(1)through         
|                                                                                                | November 30, 2008 |             | November 30, 2007 |  | November 30, 2006      
|Cash
      Flows From Operating Activities                                                      |                   |             |                   |  |                        
|Distributions received from investments                                                         | $                 | 9,688,521   |                   |  | $                      
|Interest and dividend income received                                                           |                   | 1,106,776   |                   |  |                        
|Fee income received                                                                             |                   | -           |                   |  |                        
|Purchases of long-term investments                                                              |                   | (37,817,772 | )                 |  |                        
|Proceeds from sale of long-term investments                                                     |                   | 48,568,485  |                   |  |                        
|Proceeds (purchases) of short-term investments,
      net                                       |                   | (140,878    | )                 |  |                        
|Interest expense paid                                                                           |                   | (1,736,407  | )                 |  |                        
|Current tax expense paid                                                                        |                   | -           |                   |  |                        
|Distributions to preferred stockholders                                                         |                   | -           |                   |  |                        
|Operating expenses paid                                                                         |                   | (3,001,292  | )                 |  |                        
|Net cash provided by (used in) operating
      activities                                       |                   | 16,667,433  |                   |  |                        
|Cash
      Flows from Financing Activities                                                      |                   |             |                   |  |                        
|Issuance of common stock (including warrant
      exercises)                                    |                   | 2,700       |                   |  |                        
|Common
      stock issuance costs                                                               |                   | -           |                   |  |                        
|Issuance of preferred stock                                                                     |                   | -           |                   |  |                        
|Redemption of preferred stock                                                                   |                   | -           |                   |  |                        
|Preferred stock issuance costs                                                                  |                   | -           |                   |  |                        
|Issuance of warrants                                                                            |                   | -           |                   |  |                        
|Advances from revolving line of credit                                                          |                   | 22,750,000  |                   |  |                        
|Repayments on revolving line of credit                                                          |                   | (31,100,000 | )                 |  |                        
|Distributions paid to common stockholders                                                       |                   | (8,320,133  | )                 |  |                        
|Net cash provided by (used in) financing
      activities                                       |                   | (16,667,433 | )                 |  |                        
|Net change in cash                                                                              |                   | -           |                   |  |                        
|Cash--beginning of year                                                                         |                   | -           |                   |  |                        
|Cash--end of year                                                                               | $                 | -           |                   |  | $                      
|                                                                                                |                  
|                                                                                                |                  
|Reconciliation of net increase (decrease) in net assets applicable
      to common stockholders |                   |             |                   |  |                        
|resulting from operations to net cash provided by (used in)
      operating activities          |                   |             |                   |  |                        
|Net increase (decrease) in net assets applicable to                                             |                   |             |                   |  |                        
|common
      stockholders resulting from operations                                             | $                 | (24,370,233 | )                 |  | $                      
|Adjustments to reconcile net increase (decrease)                                                |                   |             |                   |  |                        
|in
      net assets applicable to common stockholders                                           |                   |             |                   |  |                        
|resulting
      from operations to net cash provided by (used in) operating
      activities:   |                   |             |                   |  |                        
|Purchases of long-term investments                                                              |                   | (36,592,256 | )                 |  |                        
|Return of capital on distributions received                                                     |                   | 7,894,819   |                   |  |                        
|Proceeds from sale of long-term investments,
      net                                          |                   | 48,568,485  |                   |  |                        
|Proceeds (purchases) of short-term investments,
      net                                       |                   | (140,878    | )                 |  |                        
|Accrued capital gain incentive fees payable to
      Adviser                                    |                   | (307,611    | )                 |  |                        
|Deferred income taxes, net                                                                      |                   | (9,866,666  | )                 |  |                        
|Amortization of issuance costs                                                                  |                   | 18,553      |                   |  |                        
|Realized (gain) loss on investments                                                             |                   | (8,716,197  | )                 |  |                        
|Loss on redemption of preferred stock                                                           |                   | -           |                   |  |                        
|Net unrealized depreciation (appreciation) of
      investments                                 |                   | 41,581,120  |                   |  |                        
|Changes in operating assets and liabilities:                                                    |                   |             |                   |  |                        
|Increase in income tax receivable                                                               |                   | -           |                   |  |                        
|Increase in interest, dividend and distribution
      receivable                                |                   | (7,200      | )                 |  |                        
|(Increase) decrease in prepaid expenses and other
      assets                                  |                   | (92,432     | )                 |  |                        
|Increase (decrease) in current tax liability                                                    |                   | 6,881       |                   |  |                        
|Increase (decrease) in base management fees payable
      to                                    |                   |             |                   |  |                        
|Adviser, net of expense reimbursement                                                           |                   | (26,278     | )                 |  |                        
|Increase (decrease) in payable for investments
      purchased                                  |                   | (1,235,994  | )                 |  |                        
|Increase (decrease) in accrued expenses and other
      liabilities                             |                   | (46,680     | )                 |  |                        
|Total adjustments                                                                               |                   | 41,037,666  |                   |  |                        
|Net
      cash provided by (used in) operating activities                                       | $                 | 16,667,433  |                   |  | $                      
|                                                                                                |                  
|**Non-Cash
      Financing Activities**                                                         |                   |             |                   |  |                        
|Reinvestment
      of distributions by common stockholders in additional common shares          | $                 | 945,218     |                   |  | $                      

| | (1) |  | Commencement of
      Operations.
| | --- |  | ---------------------------------

See accompanying Notes to Financial
Statements.

F-8

---

|Tortoise Capital Resources
      Corporation                                                             |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|-------------------------------------------------------------------------------------------------------- |  | ----------------- | ------ | ----------------- |  | ----------------- | ------- | -- |  | -------------------------- | ------ | --
|FINANCIAL
      HIGHLIGHTS                                                                               |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|                                                                                                        
|                                                                                                         |  |                   |        |                   |  |                   |         |    |  | Period
      from         
|                                                                                                         |  |                   |        |                   |  |                   |         |    |  | December 8,
      2005 (1)
|                                                                                                         |  | Year Ended        |        | Year Ended        |  | through          
|                                                                                                         |  | November 30, 2008 |        | November 30, 2007 |  | November 30, 2006
|Per Common
      Share Data (2)                                                                          |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|Net Asset Value,
      beginning of period                                                               |  | $                 | 13.76  |                   |  | $                 | 13.70   |    |  | $                          | -      |   
|Initial
      offering price                                                                             |  |                   | -      |                   |  |                   | -       |    |  |                            | 15.00  |   
|Underwriting
      discounts and offering costs on issuance of common shares                             |  |                   | -      |                   |  |                   | 0.01    |    |  |                            | (1.22  | ) 
|Income from Investment
      Operations:                                                                 |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|Net
      investment income (loss) (3)                                                                   |  |                   | (0.11  | )                 |  |                   | (0.18   | )  |  |                            | 0.21   |   
|Net
      realized and unrealized gain (loss) on investments
(3)                                         |  |                   | (2.65  | )                 |  |                   | 0.90    |    |  |                            | 0.05   |   
|Total
      increase (decrease) from investment operations                                               |  |                   | (2.76  | )                 |  |                   | 0.72    |    |  |                            | 0.26   |   
|Less Distributions to
      Common Stockholders:                                                         |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|Net
      investment income                                                                              |  |                   | -      |                   |  |                   | -       |    |  |                            | (0.21  | ) 
|Return
      of capital                                                                                  |  |                   | (1.04  | )                 |  |                   | (0.67   | )  |  |                            | (0.13  | ) 
|Total
      distributions to common stockholders                                                         |  |                   | (1.04  | )                 |  |                   | (0.67   | )  |  |                            | (0.34  | ) 
|Net Asset Value, end of
      period                                                                     |  | $                 | 9.96   |                   |  | $                 | 13.76   |    |  | $                          | 13.70  |   
|Per common share market
      value, end of period                                                       |  | $                 | 5.21   |                   |  | $                 | 11.66   |    |  |                            | N/A    |   
|Total Investment Return,
      including capital gain incentive fees, based on net asset value
      (4) |  |                   | (18.83 | )%                |  |                   | 5.35    | %  |  |                            | (6.39  | )%
|Total Investment Return,
      excluding capital gain incentive fees, based on net asset value
      (4) |  |                   | (20.93 | )%                |  |                   | 5.57    | %  |  |                            | (6.39  | )%
|Total Investment Return,
      based on market value (5)                                                 |  |                   | (49.89 | )%                |  |                   | 19.05   | %  |  |                            | N/A    |   
|Supplemental Data and
      Ratios                                                                       |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|Net assets applicable to
      common stockholders, end of period (000's)                                |  | $                 | 89,225 |                   |  | $                 | 121,913 |    |  | $                          | 42,328 |   
|Ratio of expenses
      (including current and deferred income tax expense (benefit)                     |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|and
      capital gain incentive fees) to average net assets (6)(7)(8)                                   |  |                   | (5.72  | )%                |  |                   | 8.35    | %  |  |                            | 3.64   | % 
|Ratio of expenses
      (excluding current and deferred income tax expense (benefit))                    |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|to
      average net assets (6)(9)                                                                       |  |                   | 4.44   | %                 |  |                   | 4.69    | %  |  |                            | 2.40   | % 
|Ratio of expenses
      (excluding current and deferred income tax expense (benefit))                    |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|and
      capital gain incentive fees) to average net assets (6)(9)(10)                                  |  |                   | 4.76   | %                 |  |                   | 4.40    | %  |  |                            | 2.40   | % 
|Ratio of net investment
      income (loss) to average net assets before current                         |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|and
      deferred income tax expense (benefit) and capital gain incentive fees
      (6)(9)(10)         |  |                   | (1.73  | )%                |  |                   | (1.58   | )% |  |                            | 2.71   | % 
|Ratio of net investment
      income (loss) to average net assets before current                         |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|and
      deferred income tax expense (benefit) (6)(8)(9)                                                |  |                   | (1.41  | )%                |  |                   | (1.87   | )% |  |                            | 2.71   | % 
|Ratio of net investment
      income (loss) to average net assets after current                          |  |                   |        |                   |  |                   |         |    |  |                            |        |   
|and
      deferred income tax expense (benefit) and capital gain incentive fees
      (6)(7)(8)          |  |                   | 8.76   | %                 |  |                   | (5.52   | )% |  |                            | 1.47   | % 
|Portfolio turnover rate
      (6)                                                                        |  |                   | 24.55  | %                 |  |                   | 0.62    | %  |  |                            | 9.51   | % 
|Short-term borrowings,
      end of period (000's)                                                       |  | $                 | 22,200 |                   |  | $                 | 30,550  |    |  | $                          | -      |   
|Asset coverage, per
      $1,000 of short-term borrowings (11)                                           |  | $                 | 5,019  |                   |  | $                 | 4,991   |    |  |                            | N/A    |   
|Asset coverage ratio of
      short-term borrowings (11)                                                 |  |                   | 502    | %                 |  |                   | 499     | %  |  |                            | N/A    |   

| | (1)  |  | Commencement of
      Operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2)  |  | Information
      presented relates to a share of common stock outstanding for the entire
      period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (3)  |  | The per common share data for
      the years ended November 30, 2008, November 30, 2007 and the period from
      December 8, 2005 through November 30, 2006 do not reflect the change in
      estimate of investment income and return of capital, for the respective
      period, as described in Note 2D.                                                                                                                                                                                                                                                                                                                                   
| | (4)  |  | Not annualized for periods
      less than one year. Total investment return is calculated assuming a
      purchase of common stock at the initial offering price or net asset value
      per share as of the beginning of the year, reinvestment of distributions
      at net asset value, and a sale at net asset value at the end of the
      year.                                                                                                                                                                                                                                                                                        
| | (5)  |  | Not annualized for periods
      less than one year. Total investment return is calculated assuming a
      purchase of common stock at the initial public offering price, or market
      value at the beginning of the period, reinvestment of distributions at
      actual prices pursuant to the Company's dividend reinvestment plan or
      market value, as applicable, and a sale at the current market price on the
      last day of the year (excluding brokerage commissions). Our common shares
      began trading on the New York Stock Exchange under the symbol TTO on
      February 2, 2007 at a price of $15.00 per share.
| | (6)  |  | Annualized for periods less
      than one full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (7)  |  | For the year ended November
      30, 2008, the Company accrued $6,881 in current tax expense and $9,866,666
      in deferred tax benefit, net.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |      |  | For the year ended November
      30, 2007, the Company accrued $261,667 in current income tax benefit and
      $3,932,763 in deferred income tax expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |      |  | For the period from December
      8, 2005 through November 30, 2006, the Company accrued $265,899 in current
      income tax expense and $250,156 in deferred income tax
      expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (8)  |  | For the year ended November
      30, 2008, the Company accrued no capital gain incentive
      fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |      |  | For the year ended November
      30, 2007, the Company accrued $307,611 as a provision for capital gain
      incentive fees. For the period from December 8, 2005 through November
      30, 2006, the Company accrued no capital gain incentive
      fees.                                                                                                                                                                                                                                                                                                                                                                                    
| | (9)  |  | The ratio excludes the impact
      of current and deferred income taxes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (10) |  | The ratio excludes the impact
      of capital gain incentive fees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (11) |  | Represents value of total
      assets less all liabilities and indebtedness not represented by short-term
      borrowings at the end of the year divided by short-term borrowings
      outstanding at the end of the year.                                                                                                                                                                                                                                                                                                                                                                                                                     

SeeaccompanyingNotes toFinancialStatements.

F-9

---

TORTOISE CAPITAL
RESOURCES CORPORATIONNOTES TO FINANCIAL STATEMENTSNovember 30, 2008

1. Organization

Tortoise Capital Resources Corporation
(the "Company") was organized as a Maryland corporation on September 8, 2005,
and is a non-diversified closed-end management investment company focused on the
U.S. energy infrastructure sector. The Company invests primarily in privately
held and micro-cap public companies operating in the midstream and downstream
segments, and to a lesser extent the upstream segment, of the energy
infrastructure sector. The Company is regulated as a business development
company (BDC) under the Investment Company Act of 1940, as amended (the 1940
Act). The Company does not report results of operations internally on an
operating segment basis. The Company is externally managed by Tortoise Capital
Advisors, L.L.C. (the Adviser), an investment adviser specializing in the
energy sector. The Companys shares are listed on the New York Stock Exchange
under the symbol TTO.

2. Significant Accounting
Policies

A.Use of Estimates The preparation of
financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amount of assets and liabilities, recognition of distribution income
and disclosure of contingent assets and liabilities at the date of the financial
statements. Actual results could differ from those estimates.

B.Investment Valuation The Company
invests primarily in illiquid securities including debt and equity securities of
privately-held companies. These investments generally are subject to
restrictions on resale, have no established trading market and are fair valued
on a quarterly basis. Because of the inherent uncertainty of valuation, the fair
values of such investments, which are determined in accordance with procedures
approved by the Companys Board of Directors, may differ materially from the
values that would have been used had a ready market existed for the investments.
The Companys Board of Directors may consider other methods of valuing
investments as appropriate and in conformity with U.S. generally accepted
accounting principles.

Effective December 1, 2007, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 157,Fair Value Measurements. SFAS 157 defines fair value, establishes a framework for
measuring fair value in accordance with U.S. generally accepted accounting
principles and expands disclosures about fair value measurements. SFAS 157 is
applicable in conjunction with other accounting pronouncements that require or
permit fair value measurements, but does not expand the use of fair value to any
new circumstances. More specifically, SFAS 157 emphasizes that fair value is a
market based measurement, not an entity-specific measurement, and sets out a
fair value hierarchy with the highest priority given to quoted prices in active
markets and the lowest priority to unobservable inputs. The Companys adoption
of SFAS 157 did not have a material impact on its financial condition or results
of operations.

In October 2008, the Financial
Accounting Standards Board, or the FASB, issued FASB Staff Position (FSP) No.
157-3,Determining the Fair Value of a
Financial Asset When the Market for That Asset Is Not Active.FSP No. 157-3 clarifies the application of SFAS No. 157 in a
market that is not active. More specifically, FSP No. 157-3 states that
significant judgment should be applied to determine if observable data in a
dislocated market represents forced liquidations or distressed sales and are not
representative of fair value in an orderly transaction. FSP No. 157-3 also
provides further guidance that the use of a reporting entitys own assumptions
about future cash flows and appropriately risk-adjusted discount rates is
acceptable when relevant observable inputs are not available. In addition, FSP
No. 157-3 provides guidance on the level of reliance of broker quotes or pricing
services when measuring fair value in a non-active market stating that less
reliance should be placed on a quote that does not reflect actual market
transactions and a quote that is not a binding offer. The guidance in FSP No.
157-3 is effective upon issuance for all financial statements that have not been
issued and any changes in valuation techniques as a result of applying FSP No.
157-3 are accounted for as a change in accounting estimate.

Consistent with SFAS 157, the Company
determines fair value to be the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market
participants at the measurement date. Also, in accordance with SFAS 157, the
Company has determined the principal market, or the market in which the Company
exits its portfolio investments with the greatest volume and level of activity,
to be the private secondary market. Typically, private companies are bought and
sold based on multiples of EBITDA, cash flows, net income, revenues, or in
limited cases, book value.

F-10

---

For private company investments, value
is often realized through a liquidity event of the entire company. Therefore,
the value of the company as a whole (enterprise value) at the reporting date
often provides the best evidence of the value of the investment and is the
initial step for valuing the Companys privately issued securities. For any one
company, enterprise value may best be expressed as a range of fair values, from
which a single estimate of fair value will be derived. In determining the
enterprise value of a portfolio company, the Company prepares an analysis
consisting of traditional valuation methodologies including market and income
approaches. The Company considers some or all of the traditional valuation
methods based on the individual circumstances of the portfolio company in order
to derive its estimate of enterprise value.

The fair value of investments in
portfolio companies is determined based on various factors, including enterprise
value, observable market transactions, such as recent offers to purchase a
company, recent transactions involving the purchase or sale of the equity
securities of the company, or other liquidation events. The determined equity
values will generally be discounted when the Company has a minority position, is
subject to restrictions on resale, has specific concerns about the receptivity
of the capital markets to a specific company at a certain time, or other
comparable factors exist.

For equity and equity-related
securities that are freely tradable and listed on a securities exchange, the
Company fair values those securities at their last sale price on that exchange
on the valuation date. If the security is listed on more than one exchange, the
Company will use the price of the exchange that it considers to be the principal
exchange on which the security is traded. Securities listed on the NASDAQ will
be valued at the NASDAQ Official Closing Price, which may not necessarily
represent the last sale price. If there has been no sale on such exchange or
NASDAQ on such day, the security will be valued at the mean between bid and ask
price on such day.

An equity security of a publicly traded
company acquired in a private placement transaction without registration is
subject to restrictions on resale that can affect the securitys liquidity and
fair value. Such securities that are convertible into or otherwise will become
freely tradable will be valued based on the market value of the freely tradable
security less an applicable discount. Generally, the discount will initially be
equal to the discount at which the Company purchased the securities. To the
extent that such securities are convertible or otherwise become freely tradable
within a time frame that may be reasonably determined, an amortization schedule
may be determined for the discount.

The Board of Directors undertakes a
multi-step valuation process each quarter in connection with determining the
fair value of private investments:

- The quarterly valuation process begins with each
  investment being initially valued by the Valuation Officer of the Adviser. As
  part of this process, materials are prepared containing the supporting
  analysis, which are reviewed by the investment professionals of the
  Adviser;
- The Investment Committee of the Adviser reviews
  the preliminary valuations, and the Valuation Officer of the Adviser considers
  and assesses, as appropriate, any changes that may be required to the
  preliminary valuations to address any comments provided by the Investment
  Committee of the Adviser;
- An independent valuation firm engaged by the Board
  of Directors to provide third-party valuation consulting services performs
  certain limited procedures that the Board of Directors has identified and
  asked it to perform on a selection of these preliminary valuations as
  determined by the Board of Directors. For the year ended November 30, 2008,
  the independent valuation firm performed limited procedures on seven portfolio
  companies comprising approximately 84 percent of the total restricted
  investments at fair value as of November 30, 2008. Upon completion of the
  limited procedures, the independent valuation firm concluded that the fair
  value of the investments subjected to the limited procedures did not appear to
  be unreasonable;
- The Board of Directors assesses the valuations and
  ultimately determines the fair value of each investment in the Companys
  portfolio in good faith.

C.Interest and Fee Income Interest
income is recorded on the accrual basis to the extent that such amounts are
expected to be collected. When investing in instruments with an original issue
discount or payment-in-kind interest (in which case the Company chooses
payment-in-kind in lieu of cash), the Company will accrue interest income during
the life of the investment, even though the Company will not necessarily be
receiving cash as the interest is accrued.Fee income will include fees, if any, for due
diligence, structuring, commitment and facility fees, transaction services,
consulting services and management services rendered to portfolio companies and
other third parties. Commitment and facility fees generally are recognized as
income over the life of the underlying loan, whereas due diligence, structuring,
transaction service, consulting and management service fees generally are
recognized as income when services are rendered. For the years ended November
30, 2008 and 2007, the Company received no fee income, and the Company received
$225,000 in fee income for the period December 8, 2005 through November 30,
2006.

F-11

---

D.Security Transactions and Investment Income Security transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses are reported on an
identified cost basis. Distributions received from the Companys investments in
limited partnerships and limited liability companies generally are comprised of
ordinary income, capital gains and return of capital. The Company records
investment income, capital gains and return of capital based on estimates made
at the time such distributions are received. Such estimates are based on
information available from each company and/or other industry sources. These
estimates may subsequently be revised based on information received from the
entities after their tax reporting periods are concluded, as the actual
character of these distributions is not known until after the fiscal year end of
the Company.

For the period from December 1, 2006
through November 30, 2007, the Company estimated the allocation of investment
income and return of capital for the distributions received from its portfolio
companies within the Statement of Operations. For this period, the Company had
estimated these distributions to be approximately 27 percent investment income
and 73 percent return of capital.

Subsequent to November 30, 2007, the
Company reclassified the amount of investment income and return of capital it
recognized based on the 2007 tax reporting information received from the
individual portfolio companies. This reclassification amounted to a decrease in
pre-tax net investment income and a corresponding increase in unrealized
appreciation of investments of approximately $1,273,000 or $0.142 per share
($805,000 or $0.090 per share, net of deferred tax) for the year ended November
30, 2008.

E.Distributions to StockholdersThe
amount of any quarterly distributions will be determined by the Board of
Directors. Distributions to stockholders are recorded on the ex-dividend date.
The Company may not declare or pay distributions to its common stockholders if
it does not meet asset coverage ratios required under the 1940 Act. The
character of distributions made during the year may differ from their ultimate
characterization for federal income tax purposes. For the year ended November
30, 2008 the Companys distributions, for book purposes, were comprised of 100
percent return of capital, and for tax purposes were comprised of 3.2 percent
investment income and 96.8 percent return of capital. For the year ended
November 30, 2007, the Companys distributions, for book and tax purposes, were
comprised of 100 percent return of capital. For the period ended December 8,
2005 to November 30, 2006, the companys distributions, for book purposes, were
comprised of 87.3 percent investment income and 12.7 percent return of capital,
and for tax purposes were comprised of 41.7 percent investment income and 58.3
percent return of capital.

F.Federal and State Income Taxation
The Company, as a corporation, is obligated to pay federal and state income tax
on its taxable income. Currently, the highest regular marginal federal income
tax rate for a corporation is 35 percent; however, the Company anticipates a
marginal effective tax rate of 34 percent due to expectations of the level of
taxable income relative to the federal graduated tax rates, including the tax
rate anticipated when temporary differences reverse. The Company may be subject
to a 20 percent federal alternative minimum tax on its federal alternative
minimum taxable income to the extent that its alternative minimum tax exceeds
its regular federal income tax.

The Company invests its assets
primarily in limited partnerships or limited liability companies which are
treated as partnerships for federal and state income tax purposes. As a limited
partner, the Company reports its allocable share of taxable income in computing
its own taxable income. The Companys tax expense or benefit is included in the
Statement of Operations based on the component of income or gains (losses) to
which such expense or benefit relates. Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for income tax
purposes. A valuation allowance is recognized, if based on the weight of
available evidence, it is more likely than not that some portion or all of the
deferred income tax asset will not be realized.

On December 1, 2007, the Company
adopted the provisions of the Financial Accounting Standards Board
Interpretation No.48 (FIN 48),Accounting for Uncertainty in Income Taxes. FIN 48 provides guidance for how uncertain tax positions
should be recognized, measured, presented and disclosed in the financial
statements. For additional information regarding adoption of FIN 48, see Note
5Income Taxes.

G.*Organization Expenses and Offering Costs* The Company is responsible for paying all organization and
offering expenses. Offering costs related to the issuance of common stock are
charged to additional paid-in capital when the stock is issued. Offering costs
paid by the Company related to a resale registration statement covering
securities issued in private placements prior to the Companys initial public
offering amounting to $90,292 were charged as a reduction of paid-in capital and
$28,454 were capitalized and amortized over a one-year period following July 26,
2007, the effective date of the registration statement.

F-12

---

H.Indemnifications Under the Companys
organizational documents, its officers and directors are indemnified against
certain liabilities arising out of the performance of their duties to the
Company. In addition, in the normal course of business, the Company may enter
into contracts that provide general indemnification to other parties. The
Companys maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the Company that have not yet
occurred, and may not occur. However, the Company has not had prior claims or
losses pursuant to these contracts and expects the risk of loss to be remote.

3. Concentration of
Risk

The Companys goal is to provide
stockholders with a high level of total return with an emphasis on distributions
and distribution growth. The Company invests primarily in privately-held and
micro-cap public companies focused on the midstream and downstream segments, and
to a lesser extent the upstream segment, of the U.S. energy infrastructure
sector. The Company may, for defensive purposes, temporarily invest all or a
significant portion of its assets in investment grade securities, short-term
debt securities and cash or cash equivalents. To the extent the Company uses
this strategy it may not achieve its investment objective.

4. Agreements

The Company has entered into an
Investment Advisory Agreement with Tortoise Capital Advisors, L.L.C. Under the
terms of the agreement, the Adviser is paid a fee consisting of a base
management fee and an incentive fee.

The base management fee is 0.375
percent (1.5 percent annualized) of the Companys average monthly Managed
Assets, calculated and paid quarterly in arrears within thirty days of the end
of each fiscal quarter. The term Managed Assets as used in the calculation of
the management fee means total assets (including any assets purchased with or
attributable to borrowed funds but excluding any net deferred tax asset) minus
accrued liabilities other than (1) net deferred tax liabilities, (2) debt
entered into for the purpose of leverage and (3) the aggregate liquidation
preference of any outstanding preferred shares. The base management fee for any
partial quarter is appropriately prorated.

The incentive fee consists of two
parts. The first part, the investment income fee, is equal to 15 percent of the
excess, if any, of the Companys Net Investment Income for the fiscal quarter
over a quarterly hurdle rate equal to 2 percent (8 percent annualized), and
multiplied, in either case, by the Companys average monthly Net Assets for the
quarter. Net Assets means the Managed Assets less deferred taxes, debt entered
into for the purposes of leverage and the aggregate liquidation preference of
any outstanding preferred shares. Net Investment Income means interest income
(including accrued interest that we have not yet received in cash), dividend and
distribution income from equity investments (but excluding that portion of cash
distributions that are treated as a return of capital), and any other income
(including any fees such as commitment, origination, syndication, structuring,
diligence, monitoring, and consulting fees or other fees that the Company is
entitled to receive from portfolio companies) accrued during the fiscal quarter,
minus the Companys operating expenses for such quarter (including the base
management fee, expense reimbursements payable pursuant to the Investment
Advisory Agreement, any interest expense, any accrued income taxes related to
net investment income, and distributions paid on issued and outstanding
preferred stock, if any, but excluding the incentive fee payable). Net
Investment Income also includes, in the case of investments with a deferred
interest or income feature (such as original issue discount, debt or equity
instruments with a payment-in-kind feature, and zero coupon securities), accrued
income that the Company has not yet received in cash. Net Investment Income does
not include any realized capital gains, realized capital losses, or unrealized
capital appreciation or depreciation. The investment income fee is calculated
and payable quarterly in arrears within thirty (30) days of the end of each
fiscal quarter. The investment income fee calculation is adjusted appropriately
on the basis of the number of calendar days in the first fiscal quarter the fee
accrues or the fiscal quarter during which the Agreement is in effect in the
event of termination of the Agreement during any fiscal quarter. During the
years ended November 30, 2008 and 2007, and the period from December 8, 2005
through November 30, 2006, the Company accrued no investment income fees.

The second part of the incentive fee
payable to the Adviser, the capital gain incentive fee, is equal to: (A) 15
percent of (i) the Companys net realized capital gains (realized capital gains
less realized capital losses) on a cumulative basis from inception to the end of
each fiscal year, less (ii) any unrealized capital depreciation at the end of
such fiscal year, less (B) the aggregate amount of all capital gain fees paid to
the Adviser in prior fiscal years. The capital gains fee is calculated and
payable annually within thirty (30) days of the end of each fiscal year. In the
event the Investment Advisory Agreement is terminated, the capital gains fee
calculation shall be undertaken as of, and any resulting capital gains fee shall
be paid within thirty (30) days of the date of termination. The Adviser may,
from time to time, waive or defer all or any part of the compensation described
in the Investment Advisory Agreement.

F-13

---

The calculation of the capital gain fee
does not include any capital gains that result from that portion of any
scheduled periodic distributions made possible by the normally recurring cash
flow from the operations of portfolio companies (Expected Distributions) that
are characterized by the Company as return of capital for U.S. generally
accepted accounting principles (GAAP) purposes. In that regard, any such
return of capital will not be treated as a decrease in the cost basis of an
investment for purposes of calculating the capital gains fee. This does not
apply to any portion of any distribution from a portfolio company that is not an
Expected Distribution. Realized capital gains on a security will be calculated
as the excess of the net amount realized from the sale or other disposition of
such security over the adjusted cost basis for the security. Realized capital
losses on a security will be calculated as the amount by which the net amount
realized from the sale or other disposition of such security is less than the
adjusted cost basis of such security. Unrealized capital depreciation on a
security will be calculated as the amount by which the Companys adjusted cost
basis of such security exceeds the fair value of such security at the end of a
fiscal year.

The payable for capital gain incentive
fees is a result of the increase or decrease in the fair value of investments
and realized gains or losses from investments. For the years ended November 30,
2008 and 2007, the Company decreased the capital gain incentive fee payable by
$307,611 and increased the capital gain incentive fee payable by $307,611,
respectively, as a result of the increase or decrease in the fair value of
investments and realized gains from investments during the period. No capital
gain fees were accrued for the period from December 8, 2005 through November 30,
2006. Pursuant to the Investment Advisory Agreement, the capital gain incentive
fee is paid annually only if there are realization events and only if the
calculation defined in the agreement results in an amount due. No capital gain
incentive fees were paid at November 30, 2008, 2007, or 2006.

On November 30, 2007, the Company
entered into an Expense Reimbursement and Partial Fee Waiver Agreement with the
Adviser. Under the terms of the agreement, the Adviser will reimburse the
Company for certain expenses incurred beginning September 1, 2007 and ending
December 31, 2008 in an amount equal to an annual rate of 0.25 percent of the
Companys average monthly Managed Assets. On November 11, 2008, the Company
entered into an Expense Reimbursement Agreement with the Adviser, for which the
Adviser will reimburse the Company for certain expenses incurred beginning
January 1, 2009 and ending December 31, 2009 in an amount equal to an annual
rate of 0.25 percent of the Companys average monthly Managed Assets. During the
years ended November 30, 2008 and November 30, 2007, the Adviser reimbursed the
Company $385,622 and $94,181, respectively.

The Company has engaged U.S. Bancorp
Fund Services, LLC to serve as the Companys fund accounting services provider.
The Company pays the provider a monthly fee computed at an annual rate of
$24,000 on the first $50,000,000 of the Companys Net Assets, 0.0125 percent on
the next $200,000,000 of Net Assets and 0.0075 percent on the balance of the
Companys Net Assets.

The Adviser has been engaged as the
Companys administrator. The Company pays the administrator a fee equal to an
annual rate of 0.07 percent of aggregate average daily Managed Assets up to and
including $150,000,000, 0.06 percent of aggregate average daily Managed Assets
on the next $100,000,000, 0.05 percent of aggregate average daily Managed Assets
on the next $250,000,000, and 0.02 percent on the balance. This fee is
calculated and accrued daily and paid quarterly in arrears.

Computershare Trust Company, N.A.
serves as the Company's transfer agent, dividend paying agent, and agent for the
automatic dividend reinvestment plan.

U.S. Bank, N.A. serves as the Company's
custodian. The Company pays the custodian a monthly fee computed at an annual
rate of 0.015 percent on the first $200,000,000 of the Company's portfolio
assets and 0.01 percent on the balance of the Company's portfolio assets,
subject to a minimum annual fee of $4,800.

5. Income Taxes

Deferred income taxes reflect the net
tax effect of temporary differences between the carrying amount of assets and
liabilities for financial reporting and tax purposes. Components of the
Companys deferred tax assets and liabilities as of November 30, 2008, and
November 30, 2007 are as follows:

|                                                    | November 30, 2008 |             | November 30, 2007
|--------------------------------------------------- | ----------------- | ----------- | -----------------
|Deferred tax assets:                                |                   |             |                  
|Organization costs                                  | $                 | (26,160     | )                
|Capital gain incentive fees                         |                   | -           |                  
|Net unrealized loss on investment
      securities  |                   | (11,287,920 | )                
|Net operating loss
      carry forwards             |                   | (3,319,098  | )                
|Valuation allowance                                 |                   | 2,814,891   |                  
|                                                    |                   | (11,818,287 | )                
|Deferred tax
      liabilities:                     |                   |             |                  
|Net unrealized gains on investment
      securities |                   | -           |                  
|Basis reduction of investment in MLPs               |                   | 6,134,540   |                  
|                                                    |                   | 6,134,540   |                  
|Total net
      deferred tax (asset) liability      | $                 | (5,683,747  | )                

F-14

---

At November 30, 2008, the Company has
recorded a valuation allowance in the amount of $2,814,891 for a portion of its
deferred tax asset which it does not believe will, more likely than not, be
realized. The entire amount of such allowance was established in the year ended
November 30, 2008. The Company estimates based on existence of sufficient
evidence, primarily regarding the amount and timing of distributions to be
received from portfolio companies, the ability to realize the remainder of its
deferred tax assets. Any adjustments to those estimates will be made in the
period such determination is made.

The Company has analyzed the tax
positions taken and has concluded that it has no uncertain tax positions as
described in FIN 48. All of the Companys tax years remain open and subject to
examination for both federal and state purposes. The Companys policy is to
record interest and penalties on uncertain tax positions, if any, as part of tax
expense. Management has determined a reserve for unrecognized tax benefits is
not necessary when the temporary differences represent future deductible amounts
rather than future taxable amounts. The Company does not expect any amount of
unrecognized tax benefits to be recorded over the next twelve months subsequent
to November 30, 2008.

Total income tax expense or benefit
differs from the amount computed by applying the federal statutory income tax
rate of 34 percent to net investment income (loss) and realized and unrealized
gains (losses) on investments before taxes as follows:

|                                               |                   |             |                   |  |                   |           |   |  | For
      the period
|---------------------------------------------- | ----------------- | ----------- | ----------------- |  | ----------------- | --------- | - |  | --------------------
|                                               |                   |             |                   |  |                   |           |   |  | December 8, 2005    
|                                               | Year
      Ended  |             | Year
      Ended  |  | through          
|                                               | November 30, 2008 |             | November 30, 2007 |  | November 30, 2006
|Application of statutory income tax rate       | $                 | (11,638,206 | )                 |  | $                 | 2,997,124 |   |  | $                   
|State income
      taxes, net of federal taxes |                   | (951,595    | )                 |  |                   | 354,031   |   |  |                     
|Preferred dividends                            |                   | -           |                   |  |                   | 86,925    |   |  |                     
|Loss on
      redemption of preferred stock    |                   | -           |                   |  |                   | 278,051   |   |  |                     
|Change in prior year tax expense               |                   | 1,842       |                   |  |                   | (45,035   | ) |  |                     
|Change in
      accrual for state income taxes |                   | (86,717     | )                 |  |                   | -         |   |  |                     
|Change in deferred tax valuation allowance     |                   | 2,814,891   |                   |  |                   | -         |   |  |                     
|                                              
|Total income tax expense (benefit)             | $                 | (9,859,785  | )                 |  | $                 | 3,671,096 |   |  | $                   

The provision for income taxes is
computed by applying the federal statutory rate plus a blended state income tax
rate. During the year ended November 30, 2008, the Company re-evaluated its
overall federal and state income tax rate, decreasing it from 38.00 percent to
36.78 percent primarily due to a change in accrual for state income taxes. The
decrease in tax rate resulted in an $86,717 increase to deferred tax
benefit.

The components of income tax include
the following for the periods presented:

|                                       |                   |            |                   |  |                   |           |   |  | For
      the period
|-------------------------------------- | ----------------- | ---------- | ----------------- |  | ----------------- | --------- | - |  | --------------------
|                                       |                   |            |                   |  |                   |           |   |  | December 8, 2005    
|                                       | Year
      Ended  |            | Year
      Ended  |  | through          
|                                       | November 30, 2008 |            | November 30, 2007 |  | November 30, 2006
|Current tax expense (benefit)          |                   |            |                   |  |                   |           |   |  |                     
|Federal                                | $                 | 6,361      |                   |  | $                 | (240,141  | ) |  | $                   
|State                                  |                   | 520        |                   |  |                   | (21,526   | ) |  |                     
|Total current
      expense (benefit)  | $                 | 6,881      |                   |  | $                 | (261,667  | ) |  | $                   
|                                      
|Deferred tax expense (benefit)         |                   |            |                   |  |                   |           |   |  |                     
|Federal                                | $                 | (9,120,898 | )                 |  | $                 | 3,557,206 |   |  | $                   
|State                                  |                   | (745,768   | )                 |  |                   | 375,557   |   |  |                     
|Total deferred
      expense (benefit) | $                 | (9,866,666 | )                 |  | $                 | 3,932,763 |   |  | $                   
|                                       |                   |            |                   |  |                   |           |   |  |                     
|Total tax
      expense (benefit)      | $                 | (9,859,785 | )                 |  | $                 | 3,671,096 |   |  | $                   

F-15

---

The deferred income tax benefit of
$9,866,666 for the year ended November 30, 2008 is net of the change in deferred
tax asset valuation allowance of $2,814,891. As of November 30, 2008, the
Company had a net operating loss for federal income tax purposes of
approximately $9,175,000. The net operating loss may be carried forward for 20
years. If not utilized, this net operating loss will expire as follows:
$3,911,000 and $5,264,000 in the years 2027 and 2028 respectively. As of
November 30, 2008, there was available an alternative minimum tax credit of
$3,109, which may be credited in the future against regular income tax. This
credit may be carried forward indefinitely.

The aggregate cost of securities for
federal income tax purposes and securities with unrealized appreciation and
depreciation, were as follows:

|                                           | November 30, 2008 |             | November 30, 2007
|------------------------------------------ | ----------------- | ----------- | -----------------
|Aggregate cost for federal income          |                   |             |                  
|tax purposes                               | $                 | 120,148,896 |                  
|Gross unrealized appreciation              |                   | 4,302,974   |                  
|Gross unrealized depreciation              |                   | (18,300,640 | )                
|Net unrealized (depreciation) appreciation | $                 | (13,997,666 | )                

6. Fair Value of Financial
Instruments

Various inputs are used in determining
the fair value of the Companys investments. These inputs are summarized in the
three broad levels listed below:

- Level 1  quoted prices in active markets for
  identical investments
- Level 2  other significant observable inputs (including
  quoted prices for similar investments, market corroborated inputs,
  etc.)
- Level 3  significant unobservable inputs (including the
  Companys own assumptions in determining the fair value of
  investments)

The inputs or methodology used for
valuing securities are not necessarily an indication of the risk associated with
investing in those securities. The following table provides the fair value
measurements of applicable Company assets and liabilities by level within the
fair value hierarchy as of November 30, 2008. These assets are measured on a
recurring basis.

|            |                     |             |                  | Fair Value Measurements at Reporting
      Date Using
|----------- | ------------------- | ----------- | ---------------- | -----------------------------------------------------
|           
|            |                     |             |                  | Quoted Prices in                                     
|            |                     |             |                  | Active Markets for                                   
|            | Fair
      Value at |             | Identical Assets |                                                      
|Description | November 30, 2008   |             | (Level 1)        |                                                      
|Investments | $                   | 106,151,230 |                  | $                                                    

|                                                                                          | Fair
      Value Measurements Using Significant
|----------------------------------------------------------------------------------------- | -----------------------------------------------
|                                                                                          | Unobservable Inputs                            
|                                                                                          | (Level 3) for Investments                      
|                                                                                          | Year
      Ended November 30, 2008             
|Fair value beginning balance                                                              |                                                
|Total unrealized
      gains (losses) included in net increase (decrease) in net          |                                                
|assets applicable to common stockholders                                                  |                                                
|Net purchases, issuances and settlements                                                  |                                                
|Return of
      capital adjustments impacting cost basis of security                      |                                                
|Transfers in (out) of Level 3                                                             |                                                
|Fair value
      ending balance                                                           |                                                
|The amount of total gains or losses for the period included in
      net                  |                                                
|increase (decrease) in net assets applicable to common stockholders
      attributable to |                                                
|the change in unrealized gains or losses relating to assets still
      held at the       |                                                
|reporting date                                                                            |                                                

F-16

---

Upon adoption of FAS 157, the Company
utilized an end of reporting period method for determining transfers into or out
of Level 3 for quarterly reporting purposes through August 31, 2008. Under this
method, the fair value of the asset (or liability, as applicable) at the end of
the period was disclosed as a transfer in/out of Level 3, gains/losses for an
asset that transferred into Level 3 during the period were excluded from the
reconciliation, and gains/losses for an asset that transferred out of Level 3
were included in the reconciliation. The Company has determined that the
beginning of reporting period method provides greater transparency of the effect
that unobservable inputs have on fair value measures, and accordingly, this
method is the basis for presenting the rollforward above. Under this method, the
fair value of the asset at the beginning of the period will be disclosed as a
transfer into or out of Level 3, gains/losses for an asset that transfers into
Level 3 during the period will be included in the reconciliation, and
gains/losses for an asset that transfers out of Level 3 will be excluded from
the reconciliation.

7. Restricted Securities

Certain of the Companys investments
are restricted and are valued as determined in accordance with procedures
established by the Board of Directors and more fully described in Note 2. The
tables below show the equity interest, number of units or principal amount, the
acquisition date(s), acquisition cost (excluding return of capital adjustments),
fair value per unit of such securities and fair value as percent of net assets
applicable to common stockholders as of November 30, 2008 and November 30, 2007.

|November 30,
      2008          |  |                     |  | Equity          |           |             |  |                 |  |                      |   |                      |  |                  | **Fair**
|-------------------------------- |  | ------------------- |  | --------------- | --------- | ----------- |  | --------------- |  | -------------------- | - | -------------------- |  | ---------------- | --------
|                                 |  |                     |  | Interest, Units |           |             |  |                 |  |                      |   |                      |  | **Value** **as**
|                                 |  |                     |  | or Principal    |           | Acquisition |  | Acquisition     |  | **Fair
      Value** |   | **Percent
      of**
|Investment Security              |  | Amount              |  | Date(s)         |           | Cost        |  | **Per****Unit** |  | **Net****Assets**   
|Abraxas Energy Partners,         |  | Common Units        |  |                 | 450,181   |             |  | 5/25/07         |  |                      | $ | 7,500,015            |  | $                | 9.00    
|L.P.                             |  |                     |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|Eagle Rock
      Energy          |  | Unregistered        |  |                 | 373,224   |             |  | 10/1/08         |  |                      |   | 5,044,980            |  |                  | 7.76    
|Partners, L.P.                   |  | Common
      Units  |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|Eagle Rock Energy                |  | Unregistered        |  |                 | 212,404   |             |  | 10/1/08         |  |                      |   | 2,920,555            |  |                  | 7.29    
|Partners, L.P. (1)               |  | Common Units        |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|High Sierra
      Energy, LP (2) |  | Common
      Units  |  |                 | 1,042,685 |             |  | 11/2/06-        |  |                      |   | 24,828,836           |  |                  | 18.75   
|                                 |  |                     |  |                 |           |             |  | 11/15/08        |  |                      |   |                      |  |                  |         
|High Sierra Energy GP,           |  | Equity Interest     |  |                 | 2.37      | %           |  | 11/2/06-        |  |                      |   | 2,015,969            |  |                  | N/A     
|LLC (2)                          |  |                     |  |                 |           |             |  | 5/1/07          |  |                      |   |                      |  |                  |         
|International
      Resource     |  | Class A
      Units |  |                 | 500,000   |             |  | 6/12/07         |  |                      |   | 10,000,000           |  |                  | 19.00   
|Partners LP                      |  |                     |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|LONESTAR Midstream               |  | Class A Units       |  |                 | 1,327,900 |             |  | 7/27/07-        |  |                      |   | 4,444,986            |  |                  | 3.01    
|Partners, LP (3)                 |  |                     |  |                 |           |             |  | 4/2/08          |  |                      |   |                      |  |                  |         
|LSMP GP,
      LP (3)            |  | GP LP
      Units   |  |                 | 180       |             |  | 7/27/07-        |  |                      |   | 168,514              |  |                  | 2,777.78
|                                 |  |                     |  |                 |           |             |  | 4/2/08          |  |                      |   |                      |  |                  |         
|Mowood, LLC                      |  | Equity Interest     |  |                 | 99.6      | %           |  | 6/5/06-         |  |                      |   | 5,000,000            |  |                  | N/A     
|                                 |  |                     |  |                 |           |             |  | 8/4/08          |  |                      |   |                      |  |                  |         
|                                 |  | Subordinated Debt   |  | $               | 7,050,000 |             |  | 6/5/06-         |  |                      |   | 7,050,000            |  |                  | N/A     
|                                 |  |                     |  |                 |           |             |  | 6/29/07         |  |                      |   |                      |  |                  |         
|                                 |  | Promissory Notes    |  | $               | 1,235,000 |             |  | 9/26/08-        |  |                      |   | 1,235,000            |  |                  | N/A     
|                                 |  |                     |  |                 |           |             |  | 11/26/08        |  |                      |   |                      |  |                  |         
|Penn Virginia
      Resource     |  | Unregistered        |  |                 | 468,001   |             |  | 7/24/08         |  |                      |   | 10,786,113           |  |                  | 12.88   
|Partners, L.P.                   |  | Common
      Units  |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|Penn Virginia GP                 |  | Unregistered        |  |                 | 59,503    |             |  | 7/24/08         |  |                      |   | 1,680,746            |  |                  | 11.16   
|Holdings, L.P.                   |  | Common Units        |  |                 |           |             |  |                 |  |                      |   |                      |  |                  |         
|Quest
      Midstream            |  | Common
      Units  |  |                 | 1,180,946 |             |  | 12/22/06-       |  |                      |   | 22,200,001           |  |                  | 12.25   
|Partners, L.P.                   |  |                     |  |                 |           |             |  | 11/1/07         |  |                      |   |                      |  |                  |         
|VantaCore Partners LP            |  | Common Units        |  |                 | 933,430   |             |  | 5/21/07-        |  |                      |   | 18,270,449           |  |                  | 17.00   
|                                 |  |                     |  |                 |           |             |  | 8/4/08          |  |                      |   |                      |  |                  |         
|                                 |  | Incentive           |  |                 | 988       |             |  | 5/21/07-        |  |                      |   | 143,936              |  |                  | 324.78  
|                                 |  | Distribution Rights |  |                 |           |             |  | 8/4/08          |  |                      |   |                      |  |                  |         
|                                 |  |                     |  |                 |           |             |  |                 |  |                      | $ | 123,290,100          |  |                  |         

| | (1) |  | Units are held in
      an escrow account to satisfy any potential claims from the purchaser of
      Millennium Midstream Partners, L.P. The escrow agreement terminates April
      1, 2010. See Note 9Investment Transactions for additional
      information.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | Distributions have
      been paid in cash historically; however, distributions were paid in
      additional High Sierra Energy, LP common units during the quarters ended
      August 31, 2008 and November 30, 2008.                                           
| | (3) |  | See Note
      9Investment Transactions for additional
  information.                                                                                                                                                                                             

F-17

---

The carrying value per unit of
unrestricted common units of Penn Virginia Resource Partners, L.P. was $23.76 on
July 24, 2008 and the carrying value per unit of unrestricted common units of
Penn Virginia GP Holdings, L.P. was $29.12 on July 24, 2008, the date the
Company received the respective restricted common units in a distribution from
LONESTAR Midstream Partners, LP and LSMP GP, LP.

The carrying value per unit of
unrestricted common units of Eagle Rock Energy Partners, L.P. was $10.64 on
October 1, 2008, the date the Company received the respective restricted common
units from the sale of Millennium Midstream Partners, LP.

|                               |  |                           |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|------------------------------ |  | ------------------------- |  | --------------- | --------- | ----------- |  | --------------- |  | ----------------- | - | -------------------- |  | ------------ | -------- |  | -----
|                               |  |                           |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|November 30,
      2007        |  |                           |  | Equity          |           |             |  |                 |  |                   |   |                      |  |              | **Fair**
|                               |  |                           |  | Interest, Units |           |             |  |                 |  |                   |   |                      |  | **Value as**
|                               |  |                           |  | or Principal    |           | Acquisition |  | Acquisition     |  | **Fair****Value** |   | **Percent
      of**
|Investment Security            |  | Amount                    |  | Date(s)         |           | Cost        |  | **Per****Unit** |  | **Net****Assets**
|Abraxas Energy Partners,       |  | Common Units              |  |                 | 450,181   |             |  | 5/25/07         |  |                   | $ | 7,500,015            |  | $            | 16.36    |  | 6.0  
|L.P.                           |  |                           |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|EV Energy
      Partners, L.P. |  | Common
      Units        |  |                 | 217,391   |             |  | 6/1/07          |  |                   |   | 7,499,990            |  |              | 33.84    |  | 6.0  
|High Sierra Energy, LP         |  | Common Units              |  |                 | 999,614   |             |  | 11/2/06-        |  |                   |   | 24,828,836           |  |              | 27.29    |  | 22.4 
|                               |  |                           |  |                 |           |             |  | 6/15/07         |  |                   |   |                      |  |              |          |  |      
|High Sierra
      Energy GP,   |  | Equity
      Interest     |  |                 | 2.37      | %           |  | 11/2/06-        |  |                   |   | 2,005,491            |  |              | N/A      |  | 2.3  
|LLC                            |  |                           |  |                 |           |             |  | 5/1/07          |  |                   |   |                      |  |              |          |  |      
|International Resource         |  | Class A Units             |  |                 | 500,000   |             |  | 6/12/07         |  |                   |   | 10,000,000           |  |              | 18.10    |  | 7.4  
|Partners LP                    |  |                           |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|LONESTAR
      Midstream       |  | Class A
      Units       |  |                 | 1,184,532 |             |  | 7/27/07-        |  |                   |   | 23,395,520           |  |              | 19.77    |  | 19.1 
|Partners, LP                   |  |                           |  |                 |           |             |  | 9/17/07         |  |                   |   |                      |  |              |          |  |      
|LSMP GP, LP                    |  | GP LP Units               |  |                 | 180       |             |  | 7/27/07-        |  |                   |   | 549,142              |  |              | 3,806.22 |  | 0.6  
|                               |  |                           |  |                 |           |             |  | 9/17/07         |  |                   |   |                      |  |              |          |  |      
|Millennium
      Midstream     |  | Class A
      Common      |  |                 | 875,000   |             |  | 12/28/06        |  |                   |   | 17,455,647           |  |              | 17.66    |  | 12.7 
|Partners, LP                   |  | Units                     |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|                               |  | Incentive                 |  |                 | 78        |             |  | 12/28/06        |  |                   |   | 44,353               |  |              | 3,611.47 |  | 0.2  
|                               |  | Distribution
      Rights |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|Mowood, LLC                    |  | Equity Interest           |  |                 | 100       | %           |  | 6/5/06-         |  |                   |   | 1,500,000            |  |              | N/A      |  | 2.3  
|                               |  |                           |  |                 |           |             |  | 5/4/07          |  |                   |   |                      |  |              |          |  |      
|                               |  | Subordinated Debt         |  | $               | 7,050,000 |             |  | 6/5/06-         |  |                   |   | 7,050,000            |  |              | N/A      |  | 5.8  
|                               |  |                           |  |                 |           |             |  | 6/29/07         |  |                   |   |                      |  |              |          |  |      
|Quest
      Midstream          |  | Common
      Units        |  |                 | 1,180,946 |             |  | 12/22/06-       |  |                   |   | 22,200,001           |  |              | 18.50    |  | 18.0 
|Partners, L.P.                 |  |                           |  |                 |           |             |  | 11/1/07         |  |                   |   |                      |  |              |          |  |      
|VantaCore Partners LP          |  | Common Units              |  |                 | 425,000   |             |  | 5/21/07         |  |                   |   | 8,447,604            |  |              | 22.25    |  | 7.8  
|                               |  | Incentive                 |  |                 | 789       |             |  | 5/21/07         |  |                   |   | 52,396               |  |              | 276.81   |  | 0.2  
|                               |  | Distribution Rights       |  |                 |           |             |  |                 |  |                   |   |                      |  |              |          |  |      
|                               |  | Subordinated Debt         |  | $               | 3,750,000 |             |  | 5/21/07         |  |                   |   | 3,750,000            |  |              | N/A      |  | 3.1  
|                               |  |                           |  |                 |           |             |  |                 |  |                   | $ | 136,278,995          |  |              |          |  | 113.9

F-18

---

8. Investments in Affiliates and
Control Entities

Investments representing 5 percent or
more of the outstanding voting securities of a portfolio company result in that
company being considered an affiliated company, as defined in the 1940 Act.
Investments representing 25 percent or more of the outstanding voting securities
of a portfolio company result in that company being considered a control
company, as defined in the 1940 Act. The aggregate fair value of all securities
of affiliates and controlled entities held by the Company as of November 30,
2008 amounted to $78,230,205, representing 87.7 percent of net assets applicable
to common stockholders. The aggregate fair value of all securities of affiliates
and controlled entities held by the Company as of November 30, 2007 amounted to
$121,300,179, representing 99.5 percent of net assets applicable to common
stockholders. A summary of affiliated transactions for each company which is or
was an affiliate or controlled entity at November 30, 2008 or during the year
then ended and at November 30, 2007 or during the year then ended is as
follows:

|**November 30,
      2008**  |  | Units/    |           |           |  |            |            |             |   |                   |  |          |               |            |           |           | Units/ |  |           |          
|---------------------------- |  | --------- | --------- | --------- |  | ---------- | ---------- | ----------- | - | ----------------- |  | -------- | ------------- | ---------- | --------- | --------- | ------ |  | --------- | ---------
|                             |  | Equity    |           |           |  |            |            |             |   |                   |  |          |               |            |           |           | Equity |  |           |          
|                             |  | Interest/ |           |           |  |            |            |             |   |                   |  |          | Gross         |            | Interest/ |           |        | 
|                             |  | Principal |           |           |  |            |            |             |   |                   |  |          | Distributions |            | Principal |           |        | 
|                             |  | Balance   |           | Gross     |  | Gross      |            | Realized    |   | or
      Interest |  | Balance  |               | Fair Value
|                             |  | 11/30/07  |           | Additions |  | Reductions |            | Gain/(Loss) |   | Received          |  | 11/30/08 |               | 11/30/08  
|High Sierra Energy, LP(1)    |  |           | 999,614   |           |  | $          | -          |             | $ | -                 |  | $        | -             |            | $         | 1,219,529 |        |  | 1,042,685 |          
|International
      Resource |  |           | 500,000   |           |  |            | -          |             |   | -                 |  |          | -             |            |           | 800,000   |        |  | 500,000   |          
|Partners LP                  |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|LONESTAR Midstream           |  |           | 1,184,532 |           |  |            | 1,477,140  |             |   | 21,531,919        |  |          | 1,104,244     |            |           | -         |        |  | 1,327,900 |          
|Partners, LP(2)              |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|LSMP GP, LP(2)               |  |           | 180       |           |  |            | 22,860     |             |   | 1,411,450         |  |          | 1,007,962     |            |           | -         |        |  | 180       |          
|Millennium Midstream         |  |           | 875,000   |           |  |            | -          |             |   | 21,652,616        |  |          | 6,491,491     |            |           | 1,207,500 |        |  | -         |          
|Partners, LP                 |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Class A Common               |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Units                        |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Millennium
      Midstream   |  |           | 78        |           |  |            | -          |             |   | -                 |  |          | -             |            |           | -         |        |  | -         |          
|Partners, LP                 |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Incentive Distribution       |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Rights                       |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Mowood, LLC                  |  | $         | 7,050,000 |           |  |            | -          |             |   | -                 |  |          | -             |            |           | 796,141   |        |  | $         | 7,050,000
|Subordinated Debt            |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Mowood,
      LLC            |  |           | -         |           |  |            | 1,235,000  |             |   | -                 |  |          | -             |            |           | -         |        |  | $         | 1,235,000
|Promissory Notes             |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Mowood, LLC                  |  |           | 100       | %         |  |            | 3,500,000  |             |   | -                 |  |          | -             |            |           | 472,501   |        |  | 99.6      | %        
|Equity Interest              |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Quest
      Midstream        |  |           | 1,180,946 |           |  |            | -          |             |   | -                 |  |          | -             |            |           | 1,472,053 |        |  | 1,180,946 |          
|Partners, L.P.(3)            |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|VantaCore Partners LP        |  | $         | 3,750,000 |           |  |            | -          |             |   | 3,862,500         |  |          | 112,500       |            |           | 306,918   |        |  | -         |          
|Subordinated Debt            |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|VantaCore
      Partners LP  |  |           | 425,000   |           |  |            | 9,822,845  |             |   | -                 |  |          | -             |            |           | 1,104,215 |        |  | 933,430   |          
|Common Units                 |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|VantaCore Partners LP        |  |           | 789       |           |  |            | 91,540     |             |   | -                 |  |          | -             |            |           | -         |        |  | 988       |          
|Incentive Distribution       |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|Rights                       |  |           |           |           |  |            |            |             |   |                   |  |          |               |            |           |           |        |  |           |          
|                             |  |           |           |           |  | $          | 16,149,385 |             | $ | 46,458,485        |  | $        | 8,716,197     |            | $         | 7,378,857 |        |  |           |          

| | (1) |  | Distributions have been paid
      in cash historically; however, distributions were paid in additional High
      Sierra Energy, LP common units during the quarters ended August 31, 2008
      and November 30, 2008.                    
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | See Note 9Investment
      Transactions for additional information.                                                                                                                                                                        
| | (3) |  | Currently non-income
      producing. The Board of Directors of Quest Midstream GP, LLC determined
      that no distribution would be paid on the units of Quest Midstream
      Partners, LP during the quarter ended November 30,
  2008.

F-19

---

|November 30,
      2007      | Units/     |   |           |   |            |  |                   |   |               |   |            | Units/ |   |           |  
|---------------------------- | ---------- | - | --------- | - | ---------- |  | ----------------- | - | ------------- | - | ---------- | ------ | - | --------- | -
|                             | Equity     |   |           |   |            |  |                   |   |               |   |            | Equity |   |           |  
|                             | Interest/  |   |           |   |            |  |                   |   | Gross         |   | Interest/  |        |   |          
|                             | Principal  |   |           |   |            |  |                   |   | Distributions |   | Principal  |        |   |          
|                             | Balance    |   | Gross     |   | Gross      |  | or
      Interest |   | Balance       |   | Fair Value
|                             | 11/30/06   |   | Additions |   | Reductions |  | Received          |   | 11/30/07      |   | 11/30/07  
|High Sierra Energy, LP       | 633,179    |   |           | $ | 10,000,011 |  | $                 | - |               | $ | 1,642,056  |        |   | 999,614   |  
|International
      Resource | -          |   |           |   | 10,000,000 |  |                   | - |               |   | 266,667    |        |   | 500,000   |  
|Partners LP                  |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|LONESTAR Midstream           | -          |   |           |   | 23,395,520 |  |                   | - |               |   | -          |        |   | 1,184,532 |  
|Partners, LP                 |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|LSMP GP,
      LP            | -          |   |           |   | 549,142    |  |                   | - |               |   | -          |        |   | 180       |  
|Millennium Midstream         | -          |   |           |   | 17,481,430 |  |                   | - |               |   | 1,131,375  |        |   | 875,000   |  
|Partners, LP                 |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Class A Common               |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Units                        |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Millennium
      Midstream   | -          |   |           |   | 18,570     |  |                   | - |               |   | -          |        |   | 78        |  
|Partners, LP                 |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Incentive Distribution       |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Rights                       |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Mowood, LLC                  | $4,550,000 |   |           |   | 2,500,000  |  |                   | - |               |   | -          |        | $ | 7,050,000 |  
|Subordinated Debt            |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Mowood,
      LLC            | 100        | % |           |   | 500,000    |  |                   | - |               |   | 96,895     |        |   | 100       | %
|Equity Interest              |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Quest Midstream              | -          |   |           |   | 22,200,001 |  |                   | - |               |   | 1,205,384  |        |   | 1,180,946 |  
|Partners, L.P.               |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|VantaCore
      Partners LP  | -          |   |           |   | 3,750,000  |  |                   | - |               |   | -          |        | $ | 3,750,000 |  
|Subordinated Debt            |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|VantaCore Partners LP        | -          |   |           |   | 8,500,000  |  |                   | - |               |   | 292,825    |        |   | 425,000   |  
|Common Units                 |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|VantaCore
      Partners LP  | -          |   |           |   | -          |  |                   | - |               |   | -          |        |   | 789       |  
|Incentive Distribution       |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|Rights                       |            |   |           |   |            |  |                   |   |               |   |            |        |   |           |  
|                             |            |   |           | $ | 98,894,674 |  | $                 | - |               | $ | 4,635,202  |        |   |           |  

9. Investment Transactions

For the year ended November 30, 2008,
the Company purchased (at cost) securities in the amount of $36,592,256 and sold
securities (at proceeds) in the amount of $48,568,485 (excluding short-term debt
securities). For the year ended November 30, 2007, the Company purchased (at
cost) securities in the amount of $116,235,335 and sold securities (at proceeds)
in the amount of $640,656 (excluding short-term debt securities). For the period
from December 8, 2005 through November 30, 2006, the Company purchased (at cost)
and sold securities (at proceeds) in the amount of $42,065,001 and $1,440,143
(excluding short-term debt securities), respectively.

On July 17, 2008, LONESTAR Midstream
Partners LP (LONESTAR) closed a transaction with Penn Virginia Resource
Partners, L.P. (NYSE: PVR) for the sale of its gas gathering and transportation
assets. LONESTAR distributed substantially all of the initial sales proceeds to
its limited partners but did not redeem partnership interests. On July 24, 2008,
the Company received a distribution of $10,476,511 in cash, 468,001 newly issued
unregistered common units of PVR, and 59,503 unregistered common units of Penn
Virginia GP Holdings, L.P. (NYSE: PVG).

The Company expects to receive a future
distribution of 74,609 newly issued unregistered common units of PVR and 9,487
unregistered common units of PVG units from units held in escrow to be released
to LONESTAR six to twelve months from the closing date of the transaction (along
with cash distributions received on the escrow units retained by the escrow
agent). Additionally, the Company anticipates receiving a future cash
distribution from LONESTAR of approximately $1,038,090 payable on December 31,
2009 and there are two future contingent payments due LONESTAR for which the
Companys expected portion would total approximately $9,638,829, payable in cash
or common units of PVR (at PVRs election). The contingent payments are based on
the achievement of specific revenue targets by or before June 30, 2013, no
payments are due if these revenue targets are not achieved.

On July 24, 2008, the Company recorded
the cash and the unregistered PVR and PVG common units it received at a cost
basis equal to the fair value on the date of receipt less a discount for
illiquidity. The Company reduced its basis in LONESTAR by $20,427,674,
approximately 82 percent of the respective relative value of the entire
transaction, resulting in a realized gain of $1,104,244. The Company also
reduced its basis in LSMP GP, LP by $403,488, approximately 71 percent of the
respective relative value of the entire transaction, resulting in a realized
gain of $1,007,962. These realized gains are considered in the calculation of
the accrued capital gain incentive fees as described in Note 4; however, these
realized gains will not be deemed a realization event for purposes of payment of
the capital gain incentive fee until such time as the LONESTAR and LSMP GP, LP
units are disposed or sold.

The fair value of the LONESTAR and LSMP
GP, LP units as of November 30, 2008 is based on unobservable inputs related to
the potential receipt of future payments relative to the sales transaction as
described above.

F-20

---

On October 1, 2008, Millennium sold its
partnership interests to Eagle Rock Energy Partners, L.P. (EROC) for
approximately $181,000,000 in cash and approximately four million EROC
unregistered common units. In exchange for its Millennium partnership interests,
the Company received $13,687,081 in cash and 373,224 EROC unregistered common
units with an aggregate basis of $5,044,980 for a total implied value at closing
of approximately $18,732,061. In addition, approximately 212,404 units with an
aggregate cost basis of $2,920,555 will be held in escrow for 18 months from the
date of the transaction. This includes a reserve the Company has placed against
the restricted cash and units held in the escrow for estimated post-closing
adjustments. The Company originally invested $17,500,000 in Millennium
(including common units and incentive distribution rights), and had an adjusted
cost basis of $15,161,125 (after reducing its basis for cash distributions
received since investment that were treated as return of capital), resulting in
a realized gain for book purposes of $6,491,491. For purposes of the capital
gain incentive fee, the realized gain is approximately $4,152,616, which
excludes that portion of the fee that would be due as a result of cash
distributions which were characterized as return of capital. Pursuant to the
Investment Advisory Agreement, the capital gain incentive fee is paid annually
only if there are realization events and only if the calculation defined in the
agreement results in an amount due.

10. Credit Facility

On April 25, 2007, the Company entered
into a committed credit facility with U.S. Bank, N.A. as a lender, agent and
lead arranger, and Bank of Oklahoma, N.A. providing for a revolving credit
facility of up to $20,000,000. The credit facility is secured with substantially
all of the Companys assets. On July 18, 2007, the maximum principal amount of
the revolving credit facility was increased to $35,000,000. On September 28,
2007, the maximum principal amount was increased to $40,000,000 and the facility
was amended to include First National Bank of Kansas as a lender. On March 21,
2008, the Company secured an extension to its revolving credit facility and on
March 28, 2008, amended the credit agreement to exclude Bank of Oklahoma and
include Wells Fargo as a lender, and to increase the total credit facility to
$50,000,000. The credit facility matures on March 20, 2009. The revolving credit
facility has a variable annual interest rate equal to the one-month LIBOR plus
1.75 percent, a non-usage fee equal to an annual rate of 0.375 percent of the
difference between the total credit facility commitment and the average
outstanding balance at the end of each day for the preceding fiscal quarter. The
credit facility contains a covenant precluding the Company from incurring
additional debt.

Under the terms of the credit facility,
the Company must maintain asset coverage required under the 1940 Act. If the
Company fails to maintain the required coverage, it may be required to repay a
portion of an outstanding balance until the coverage requirement has been met.
As of November 30, 2008, the Company was in compliance with the terms of the
credit facility.

For the year ended November 30, 2008,
the average principal balance and interest rate for the period during which the
credit facility was utilized were $32,033,333 and 4.76 percent, respectively. As
of November 30, 2008, the principal balance outstanding was $22,200,000 at a
rate of 3.65 percent.

11. Preferred Stock

On December 22, 2006, the Company
issued 466,666 shares of Series A Redeemable Preferred Stock and 70,000 warrants
to purchase common stock at $15.00 per share. On December 26, 2006, the Company
issued an additional 766,667 shares of Series A Redeemable Preferred Stock and
115,000 warrants at $15.00 per share. Holders of Series A Redeemable Preferred
Stock received cash distributions (as declared by the Board of Directors and
from funds legally available for distribution) at the annual rate of 10 percent
of the original issue price. On February 7, 2007, the Company redeemed all of
the preferred stock at $15.00 per share plus a 2 percent redemption premium, for
a total redemption price of $18,870,000. After attributing $283,050 in value to
the warrants, the redemption premium of $370,000 and $78,663 in issuance costs,
the Company recognized a loss on redemption of the preferred stock of $731,713.
In addition, distributions in the amount of $228,750 were paid to the preferred
stockholders.

12. Common Stock

The Company has 100,000,000 shares
authorized and 8,962,147 shares outstanding at November 30, 2008. Transactions
in common stock for the period from December 8, 2005 through November 30, 2006
and the years ended November 30, 2007 and 2008 were as follows:

Shares at December 8, 2005
    3,088,596Shares at
      November 30, 2006
    3,088,596Shares sold through initial public offering
    5,740,000Shares issued
      through reinvestment of distributions
    18,222Shares issued upon exercise of warrants
    11,350Shares at
      November 30, 2007
    8,858,168Shares issued through reinvestment of distributions
    103,799Shares
      issued upon exercise of warrants
    180Shares at
      November 30, 2008
    8,962,147


F-21

---

13. Warrants

At November 30, 2008, there were
945,594 warrants issued and outstanding. The warrants became exercisable on
February 7, 2007 (the closing date of the Companys initial public offering of
common shares), subject to a lock-up period with respect to the underlying
common shares. Each warrant entitles the holder to purchase one common share at
the exercise price of $15.00 per common share. Warrants were issued as separate
instruments from common shares and are permitted to be transferred independently
from the common shares. The warrants have no voting rights and the common shares
underlying the unexercised warrants will have no voting rights until such common
shares are received upon exercise of the warrants. All warrants will expire on
February 6, 2013. Transactions in warrants for the period from December 8, 2005
through November 30, 2006 and the years ended November 30, 2007 and 2008 were as
follows:

Warrants outstanding at December 8, 2005
    772,124Warrants
      outstanding at November 30, 2006
    772,124Warrants issued in December 2006
    185,000Warrants
      exercised
    (11,350
    )Warrants outstanding at November 30, 2007
    945,774Warrants
      exercised
    (180
    )Warrants outstanding at November 30, 2008
    945,594


14. Earnings Per Share

The following table sets forth the
computation of basic and diluted earnings per share:

Period fromDecember 8,Year Ended
    
    Year Ended
    
    2005 throughNovember 30,
    
    November 30,
    
    November 30,2008
    
    2007
    
    2006Net increase (decrease) in net assets applicable to
    $
    (24,370,233
    )
    
    $
    5,143,976
    
    $
    936,039common stockholders resulting from operationsBasic weighted average shares
    
    8,887,085
    
    
    
    7,751,591
    
    
    3,088,596Average warrants outstanding(1)
    
    -
    
    
    
    -
    
    
    -Diluted weighted average shares
    
    8,887,085
    
    
    
    7,751,591
    
    
    3,088,596Basic and diluted net increase (decrease) in net assets
    $
    (2.74
    )
    
    $
    0.66
    
    $
    0.30applicable to common stockholders resulting fromoperations per common share


| | *(1)* |  | *Warrants to purchase shares
      of common stock at $15.00 per share were outstanding during the years
      ended November 30, 2008 and 2007, but were not included in the computation
      of diluted earnings per share because the warrants exercise price was
      greater than the average market value of the common shares, and therefore,
      the effect would be anti-dilutive.*
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-22

---

15. Quarterly Financial Data
(Unaudited)

Summarized unaudited quarterly
financial data:

|                                |  | February 28, |           | May 31, |  | August 31, |            | November 30, |  | February 29, |            | May 31, |  | August 31, |            | November 30,
|------------------------------- |  | ------------ | --------- | ------- |  | ---------- | ---------- | ------------ |  | ------------ | ---------- | ------- |  | ---------- | ---------- | ------------
|                                |  | 2007         |           | 2007    |  | 2007       |            | 2007         |  | 2008         |            | 2008    |  | 2008       |            | 2008        
|Investmentincome                |  | $            | 391,635   |         |  | $          | 545,856    |              |  | $            | 802,674    |         |  | $          | 1,294,779  |             
|Basemanagementfees              |  |              | 380,067   |         |  |            | 468,012    |              |  |              | 512,894    |         |  |            | 565,086    |             
|Capital
      gain              |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|incentive fees (1)              |  |              | 487,627   |         |  |            | 1,008,867  |              |  |              | (170,648   | )       |  |            | (1,018,235 | )           
|All otherexpenses(2)            |  |              | 1,233,225 |         |  |            | 207,967    |              |  |              | 523,335    |         |  |            | 938,034    |             
|Expense reimbursement           |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|by Adviser                      |  |              | -         |         |  |            | -          |              |  |              | -          |         |  |            | (94,181    | )           
|Net
      expenses              |  | $            | 2,100,919 |         |  | $          | 1,684,846  |              |  | $            | 865,581    |         |  | $          | 390,704    |             
|Current and
      deferred      |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|tax benefit                     |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|(expense),net                   |  |              | (795,916  | )       |  |            | (2,128,190 | )            |  |              | 469,929    |         |  |            | (1,216,919 | )           
|Net realized gain
      (loss)  |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|on investments before           |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|current tax benefit             |  |              | -         |         |  |            | 13,712     |              |  |              | -          |         |  |            | 246,578    |             
|Unrealized
      gain (loss) on |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|investments before              |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|deferred tax
      expense      |  |              | 2,921,990 |         |  |            | 6,725,778  |              |  |              | (1,137,647 | )       |  |            | 2,051,767  |             
|Increase (decrease)
      in    |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|net assets resulting            |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|from operations                 |  | $            | 416,790   |         |  | $          | 3,472,310  |              |  | $            | (730,625   | )       |  | $          | 1,985,501  |             
|Basic per
      shareincrease   |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|(decrease)
      innet          |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|assets resulting                |  |              |           |         |  |            |            |              |  |              |            |         |  |            |            |             
|from operations                 |  | $            | 0.09      |         |  | $          | 0.39       |              |  | $            | (0.08      | )       |  | $          | 0.26       |             

| | (1) |  | Includes amounts accrued as a
      provision for capital gain incentive fees payable to the Adviser, net of
      amounts waived under the Expense Reimbursement and Partial Fee Waiver
      Agreement. The provision for capital gain incentive fees results from the
      increase or decrease in fair value and realized gains or losses on
      investments. Pursuant to the Investment Advisory Agreement, the capital
      gain incentive fee is paid annually only if there are realization events
      and only if the calculation defined in the agreement results in an amount
      due.
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) |  | The fiscal quarter ended
      February 28, 2007 includes $765,059 of non-recurring expenses related to
      the loss on redemption of the previously outstanding Series A Redeemable
      Preferred Stock. The Series A Redeemable Preferred Stock issuance was
      utilized as bridge financing to fund portfolio investments and was fully
      redeemed upon completion of the initial public
  offering.                                                                                                                                                                                       
| |    

F-23

---

Company Officers and
Directors(Unaudited)November 30, 2008

|                              |  | Position(s)
      Held |  |                                                    |  | Number
      of     |  |                     
|----------------------------- |  | ---------------------- |  | -------------------------------------------------- |  | ------------------- |  | --------------------
|                              |  | With
      Company,    |  |                                                    |  | Portfolios
      in |  |                     
|                              |  | Term of
      Office   |  |                                                    |  | Fund
      Complex  |  | Other
      Board   
|                              |  | and Length
      of    |  | Principal
      Occupation During Past Five        |  | Overseen
      by   |  | Positions
      Held
|Name and Year of
      Birth* |  | Time Served            |  | Years                                              |  | Director1           |  | by Director         
|Independent
      Directors   |  |                        |  |                                                    |  |                     |  |                     
|                             
|Conrad S. Ciccotello          |  | Director since         |  | Tenured Associate Professor of Risk                |  | 6                   |  | None                
|(Born 1960)                   |  | 2005                   |  | Management and Insurance, Robinson                 |  |                     |  |                     
|                              |  |                        |  | College of Business, Georgia State                 |  |                     |  |                     
|                              |  |                        |  | University (faculty member since 1999);            |  |                     |  |                     
|                              |  |                        |  | Director of Graduate Personal Financial            |  |                     |  |                     
|                              |  |                        |  | Planning Programs; formerly, Editor,               |  |                     |  |                     
|                              |  |                        |  | Financial Services Review, (2001-2007)           |  |                     |  |                     
|                              |  |                        |  | (an academic journal dedicated to the study        |  |                     |  |                     
|                              |  |                        |  | of individual financial management);               |  |                     |  |                     
|                              |  |                        |  | formerly, faculty member, Pennsylvania             |  |                     |  |                     
|                              |  |                        |  | State University (1997-1999). Published            |  |                     |  |                     
|                              |  |                        |  | several academic and professional journal          |  |                     |  |                     
|                              |  |                        |  | articles about energy infrastructure and oil       |  |                     |  |                     
|                              |  |                        |  | and gas MLPs.                                      |  |                     |  |                     
|John R.
      Graham          |  | Director
      since   |  | Executive-in-Residence and Professor of            |  | 6                   |  | Kansas
      State  
|(Born
      1945)             |  | 2005                   |  | Finance
      (Part-time), College of Business     |  |                     |  | Bank                
|                              |  |                        |  | 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,
      investment and venture capital  |  |                     |  |                     
|                              |  |                        |  | company) and
      Owner of Graham Ventures        |  |                     |  |                     
|                              |  |                        |  | (a business
      services and venture capital     |  |                     |  |                     
|                              |  |                        |  | firm); Part-time
      Vice President Investments, |  |                     |  |                     
|                              |  |                        |  | FB Capital
      Management, Inc. (a registered    |  |                     |  |                     
|                              |  |                        |  | investment
      adviser), since 2007. Formerly,   |  |                     |  |                     
|                              |  |                        |  | CEO, Kansas Farm
      Bureau Financial            |  |                     |  |                     
|                              |  |                        |  | Services,
      including seven affiliated         |  |                     |  |                     
|                              |  |                        |  | insurance or
      financial service companies     |  |                     |  |                     
|                              |  |                        |  | (1979-2000).                                       |  |                     |  |                     
|Charles E. Heath              |  | Director since         |  | Retired in 1999. Formerly, Chief Investment        |  | 6                   |  | None                
|(Born 1942)                   |  | 2005                   |  | Officer, GE Capitals Employers                    |  |                     |  |                     
|                              |  |                        |  | Reinsurance Corporation (1989-1999);               |  |                     |  |                     
|                              |  |                        |  | Chartered Financial Analyst (CFA)                |  |                     |  |                     
|                              |  |                        |  | designation since
      1974.                      |  |                     |  |                     

| | (1) |  | This number includes Tortoise
      North American Energy Corporation (TYN), Tortoise Energy Infrastructure
      Corporation (TYG), Tortoise Energy Capital Corporation (TYY), two
      private companies and the Company. Our Adviser also serves as the
      investment adviser to TYN, TYG, TYY and two private investment
      companies.
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *   |  | The address of each director
      and officer is 11550 Ash Street, Suite 300, Leawood, Kansas
      66211.                                                                                                                                                                                                                                            
| |    

F-24

---

Company Officers and Directors(Unaudited)November 30, 2008(Continued)

|                                   |  | Position(s)
      Held    |  |                                                     |  | Number
      of     |  |                     
|---------------------------------- |  | ------------------------- |  | --------------------------------------------------- |  | ------------------- |  | --------------------
|                                   |  | With
      Company,       |  |                                                     |  | Portfolios
      in |  |                     
|                                   |  | Term of
      Office      |  |                                                     |  | Fund
      Complex  |  | Other
      Board   
|                                   |  | and Length
      of       |  | Principal
      Occupation During Past              |  | Overseen
      by   |  | Positions
      Held
|Name and Year of
      Birth*      |  | Time Served               |  | Five Years                                          |  | Director1           |  | by Director         
|Interested Directors and Officers2 |  |                           |  |                                                     |  |                    
|                                  
|H. Kevin Birzer                    |  | Director and              |  | Managing Director of our Adviser since              |  | 6                   |  | None                
|(Born 1959)                        |  | Chairman of the           |  | 2002; Member, Fountain Capital                      |  |                     |  |                     
|                                   |  | Board since 2005          |  | Management (1990-present); Vice                     |  |                     |  |                     
|                                   |  |                           |  | President, Corporate Finance Department,            |  |                     |  |                     
|                                   |  |                           |  | Drexel Burnham Lambert (1986-1989);                 |  |                     |  |                     
|                                   |  |                           |  | formerly, Vice President, F. Martin Koenig          |  |                     |  |                     
|                                   |  |                           |  | & Co., an investment management firm                |  |                     |  |                     
|                                   |  |                           |  | (1983-1986); CFA designation since
      1988.      |  |                     |  |                     
|Terry Matlack                      |  | Director and Chief        |  | Managing Director of our Adviser since              |  | 6                   |  | None                
|(Born 1956)                        |  | Financial Officer         |  | 2002; Full-time Managing Director, Kansas           |  |                     |  |                     
|                                   |  | since 2005;               |  | City Equity Partners, L.C. (KCEP)                 |  |                     |  |                     
|                                   |  | Assistant Treasurer       |  | (2001-2002);
      formerly, President,             |  |                     |  |                     
|                                   |  | from 2005 to April        |  | GreenStreet Capital, a private investment           |  |                     |  |                     
|                                   |  | 2008                      |  | firm (1998-2001); CFA designation since             |  |                     |  |                     
|                                   |  |                           |  | 1985.                                               |  |                     |  |                     
|David J.
      Schulte             |  | Chief
      Executive     |  | Managing Director
      of our Adviser since        |  | N/A                 |  | None                
|(Born
      1961)                  |  | Officer since
      2005; |  | 2002; Full-time
      Managing Director, KCEP       |  |                     |  |                     
|                                   |  | President
      2005-     |  | (1993-2002); CFA
      designation since 1992.      |  |                     |  |                     
|                                   |  | April 2007                |  |                                                     |  |                     |  |                     
|Zachary A. Hamel                   |  | Senior Vice               |  | Managing Director of our Adviser since              |  | N/A                 |  | None                
|(Born 1965)                        |  | President since           |  | 2002; Partner, Fountain Capital                     |  |                     |  |                     
|                                   |  | 2005; Secretary           |  | Management (1997-present); CFA                      |  |                     |  |                     
|                                   |  | from 2005 to April        |  | designation since 1998.                             |  |                     |  |                     
|                                   |  | 2007                      |  |                                                     |  |                     |  |                     
|Kenneth P.
      Malvey            |  | Senior
      Vice         |  | Managing Director
      of our Adviser since        |  | N/A                 |  | None                
|(Born
      1965)                  |  | President
      and       |  | 2002; Partner,
      Fountain Capital               |  |                     |  |                     
|                                   |  | Treasurer
      since     |  | Management
      (2002-present); formerly           |  |                     |  |                     
|                                   |  | 2005                      |  | Investment Risk
      Manager and member of         |  |                     |  |                     
|                                   |  |                           |  | Global Office of
      Investments, GE Capitals    |  |                     |  |                     
|                                   |  |                           |  | Employers
      Reinsurance Corporation (1996-      |  |                     |  |                     
|                                   |  |                           |  | 2002); CFA designation since
      1996.            |  |                     |  |                     
|Edward Russell                     |  | President since           |  | Senior Investment Professional of the               |  | N/A                 |  | None                
|(Born 1964)                        |  | April 2007                |  | Adviser since 2006; formerly with Stifel,           |  |                     |  |                     
|                                   |  |                           |  | Nicolaus & Company, Incorporated,                   |  |                     |  |                     
|                                   |  |                           |  | heading the Energy and Power group as a             |  |                     |  |                     
|                                   |  |                           |  | Managing Director
      (2003-2006)                 |  |                     |  |                     
|                                   |  |                           |  | responsible for all of the energy and power         |  |                     |  |                     
|                                   |  |                           |  | transactions, including all of the debt and         |  |                     |  |                     
|                                   |  |                           |  | equity transactions for the three closed-end        |  |                     |  |                     
|                                   |  |                           |  | publicly traded funds managed by the                |  |                     |  |                     
|                                   |  |                           |  | Adviser starting with the first public equity       |  |                     |  |                     
|                                   |  |                           |  | offering in February of 2004 and serving as         |  |                     |  |                     
|                                   |  |                           |  | Vice President-Investment Banking
      (1999-2003) |  |                     |  |                     

| | *(1)* |  | *This number includes the
      Company, TYN, TYG, TYY and two private companies. Our Adviser also serves
      as the investment adviser to TYN, TYG, TYY and two private investment
      companies.*
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | *(2)* |  | *As a result of their
      respective positions held with the Adviser or its affiliates, these
      individuals are considered interested persons within the meaning of the
      1940 Act.*       
| | ***   |  | *The address of each director
      and officer is 11550 Ash Street, Suite 300, Leawood, Kansas
      66211.*                                                                                          
| |      

F-25

---

ADDITIONAL
INFORMATION(Unaudited)

Director and Officer Compensation

The Company does not compensate any of
its directors who are interested persons or any of its officers. For the year
ended November 30, 2008, the aggregate compensation paid by the Company to the
independent directors was $84,000. The Company did not pay any special
compensation to any of its directors or officers.

Forward-Looking
Statements

This report contains forward-looking
statements. By their nature, all forward-looking statements involve risk and
uncertainties, and actual results could differ materially from those
contemplated by the forward-looking statements.

Certifications

The Companys Chief Executive Officer
submitted to the New York Stock Exchange in 2008 the annual CEO certification as
required by Section 303A.12(a) of the NYSE Listed Company Manual.

The Company has filed with the SEC the
certification of its Chief Executive Officer and Chief Financial Officer
required by Section 302 of the Sarbanes-Oxley Act.

Proxy Voting Policies

A description of the policies and
procedures that the Company uses to determine how to vote proxies relating to
portfolio securities owned by the Company is available to stockholders (i)
without charge, upon request by calling the Company at (913) 981-1020 or
toll-free at (866) 362-9331 and on the Companys Web site atwww.tortoiseadvisors.com/tto.cfm; and (ii) on the SECs Web site atwww.sec.gov.

Privacy Principles

The Company is committed to maintaining
the privacy of its stockholders and safeguarding their non-public personal
information. The following information is provided to help you understand what
personal information the Company collects, how the Company protects that
information and why, in certain cases, the Company may share information with
select other parties.

Generally, the Company does not receive
any non-public personal information relating to its stockholders, although
certain non-public personal information of its stockholders may become available
to them. The Company does not disclose any non-public personal information about
its stockholders or a former stockholder to anyone, except as required by law or
as is necessary in order to service stockholder accounts (for example, to a
transfer agent).

The Company restricts access to
non-public personal information about its stockholders to employees of its
Adviser with a legitimate business need for the information. The Company
maintains physical, electronic and procedural safeguards designed to protect the
non-public personal information of its stockholders.

Automatic Dividend Reinvestment Plan

If a stockholders shares of common
stock (common shares) of the Company are registered directly with the Company
or with a brokerage firm that participates in the Automatic Dividend
Reinvestment Plan (the Plan) through the facilities of the Depository Trust
Company and such stockholders account is coded dividend reinvestment by such
brokerage firm, all distributions are automatically reinvested for stockholders
by the Plan Agent, Computershare Trust Company, Inc. (the Agent) in additional
common shares (unless a stockholder is ineligible or elects
otherwise).

The Company will use primarily
newly-issued shares of the Companys common stock to implement the Plan, whether
its shares are trading at a premium or discount to net asset value (NAV).
However, the Company reserves the right to instruct the Agent to purchase shares
in the open market in connection with the Companys obligations under the Plan.
The number of newly issued shares will be determined by dividing the total
dollar amount of the distribution payable to the participant by the closing
price per share of the Companys common stock on the NYSE on the distribution
payment date, or the average of the reported bid and asked prices if no sale is
reported for that day. If distributions are reinvested in shares purchased on
the open market, then the number of shares received by a stockholder shall be
determined by dividing the total dollar amount of the distribution payable to
such stockholder by the weighted average price per share (including brokerage
commissions and other related costs) for all shares purchased by the Agent on
the open-market in connection with such distribution. Such open-market purchases
will be made by the Agent as soon as practicable, but in no event more than 30
days after the distribution payment date.

F-26

---

There will be no brokerage charges with
respect to shares issued directly by us as a result of distributions payable
either in shares or in cash. However, each participant will pay a pro rata share
of brokerage commissions incurred with respect to the Plan Agents open-market
purchases in connection with the reinvestment of distributions. If a participant
elects to have the Plan Agent sell part or all of his or her common shares and
remit the proceeds, such participant will be charged his or her pro rata share
of brokerage commissions on the shares sold plus a $15.00 transaction fee. The
automatic reinvestment of distributions will not relieve participants of any
federal, state or local income tax that may be payable (or required to be
withheld) on such distributions.

Participation in the Plan is completely
voluntary and may be terminated at any time without penalty by giving notice in
writing to the Agent at the address set forth below, or by contacting the Agent
as set forth below; such termination will be effective with respect to a
particular distribution if notice is received prior to the record date for such
distribution.

Additional information about the Plan
may be obtained by writing to Computershare Trust Company, N.A., P.O. Box 43078,
Providence, Rhode Island 02940-3078, by contacting them by phone at (312)
588-4990, or by visiting their Web site at www.computershare.com.

Board Approval of the Investment
Advisory Agreement

The Board of Directors, including all
of the independent Directors, most recently reviewed and approved the renewal of
the Investment Advisory Agreement on November 10, 2008.

In approving the renewal of the
Investment Advisory Agreement, the independent Directors of the Company
requested and received extensive data and information from the Adviser
concerning the Company and the services provided to it by the Adviser under the
Investment Advisory Agreement. In addition, the independent Directors requested
and received data and information from the Adviser, which also included
information from independent, third-party sources regarding the factors
considered in their evaluation.

Factors Considered

The independent Directors considered
and evaluated all the information provided by the Adviser. The independent
Directors did not identify any single factor as being all-important or
controlling, and each independent Director may have attributed different levels
of importance to different factors.In deciding to renew the agreement, the
independent Directors decision was based on the following factors:

Nature, Extent and Quality of
Services Provided. The independent
Directors considered information regarding the history, qualification and
background of the Adviser and the individuals responsible for the Advisers
investment program, the adequacy of the number of Adviser personnel and other
Adviser resources and plans for growth, use of affiliates of the Adviser, and
the particular expertise with respect to energy infrastructure companies, MLP
markets and financing (including private financing). The independent Directors
concluded that the unique nature of the fund and the specialized expertise of
the Adviser in the niche market of MLPs made it uniquely qualified to serve as
the adviser. Further, the independent Directors recognized that the Advisers
commitment to a long-term investment horizon correlated well to the investment
strategy of the Company.

Investment Performance of the
Company and the Adviser, Costs of the Services To Be Provided and Profits To Be
Realized by the Adviser and its Affiliates from the Relationship, and Fee
Comparisons.The independent Directors
reviewed and evaluated information regarding the Companys performance
(including quarterly, last twelve months, and from inception) and the
performance of the other Adviser accounts (including other investment
companies), and information regarding the nature of the markets during the
performance period, with a particular focus on the MLP sector. The independent
Directors also considered the Companys performance as compared to comparable
closed-end funds for the relevant periods.

The Adviser provided detailed
information concerning its cost of providing services to the Company, its
profitability in managing the Company, its overall profitability, and its
financial condition. The independent Directors have reviewed with the Adviser
the methodology used to prepare this financial information. This financial
information regarding the Adviser is considered in order to evaluate the
Advisers financial condition, its ability to continue to provide services under
the Investment Advisory Agreement, and the reasonableness of the current
management fee, and was, to the extent possible, evaluated in comparison to
other closed-end funds with similar investment objectives and strategies.

F-27

---

The independent Directors considered
and evaluated information regarding fees charged to, and services provided to,
other investment companies advised by the Adviser (including the impact of any
fee waiver or reimbursement arrangements and any expense reimbursement
arrangements), fees charged to separate institutional accounts by the Adviser,
and comparisons of fees of closed-end funds with similar investment objectives
and strategies, including other MLP investment companies, to the Company. The
independent Directors noted that the fee charged to the Company, including the
base management fee (1.5 percent of the Companys Managed Assets), and the
incentive fee, is below the average of the fees charged in comparable closed-end
MLP funds. The independent Directors also considered the Advisers contractual
agreement to reimburse certain expenses incurred by the Company for the period
beginning January 1, 2009 and ending December 31, 2009. The independent
Directors concluded that the fees and expenses that the Company is paying under
the Advisory Agreement are reasonable given the quality of services provided
under the Advisory Agreement and that such fees and expenses are comparable to,
and in many cases lower than, the fees charged by advisers to comparable
funds.

Economies of Scale.The independent Directors considered
information from the Adviser concerning whether economies of scale would be
realized as the Company grows, and whether fee levels reflect any economies of
scale for the benefit of the Companys stockholders. The independent Directors
concluded that economies of scale are difficult to measure and predict overall.
Accordingly, the independent Directors reviewed other information, such as
year-over-year profitability of the Adviser generally, the profitability of its
management of the Company specifically, and the fees of competitive funds not
managed by the Adviser over a range of asset sizes. The independent Directors
concluded the Adviser is appropriately sharing any economies of scale through
its competitive fee structure and through reinvestment in its business to
provide shareholders additional content and services.

Collateral Benefits Derived by
the Adviser.The independent Directors
reviewed information from the Adviser concerning collateral benefits it receives
as a result of its relationship with the Company. They concluded that the
Adviser generally does not use the Companys or shareholder information to
generate profits in other lines of business, and therefore does not derive any
significant collateral benefits from them. Although the Adviser may receive
research from brokers with whom it places trades on behalf of clients, the
Adviser does not have soft dollar arrangements or understandings with such
brokers regarding receipt of research in return for commissions.

The independent Directors did not, with
respect to their deliberations concerning their approval of the continuation of
the Investment Advisory Agreement, consider the benefits the Adviser may derive
from relationships the Adviser may have with brokers through soft dollar
arrangements because the Adviser does not employ any such arrangements in
rendering its advisory services to the Company. Although the Adviser may receive
research from brokers with whom it places trades on behalf of clients, the
Adviser does not have soft dollar arrangements or understandings with such
brokers regarding the receipt of research in return for commissions.

Conclusions of the Independent
Directors

As a result of this process, the
independent Directors, assisted by the advice of legal counsel that is
independent of the Adviser, taking into account all of the factors discussed
above and the information provided by the Adviser, unanimously concluded that
the Investment Advisory Agreement between the Company and the Adviser is fair
and reasonable in light of the services provided and should be renewed.

Board Approval of the
Administration Agreement

The administration agreement was
originally approved by the Companys Board of Directors on November 13, 2006.
The administration agreement provides that unless terminated earlier the
agreement will continue in effect until December 31, 2007, and from year-to-year
thereafter provided such continuance is approved at least annually by (i) the
Companys Board of Directors and (ii) a majority of the Companys directors who
are not parties to the administration agreement or interested persons (as
defined in the Investment Company Act of 1940) of any such party. The Companys
Board of Directors, including all of the independent Directors, most recently
reviewed and approved the continuation of the administration agreement on
November 10, 2008.

F-28

---

Board Approval of the
Sub-Advisory Agreement

Our Board of Directors, including a
majority of the independent Directors, most recently reviewed and approved the
renewal of the sub-advisory agreement on November 10, 2008.

In considering the renewal of the
sub-advisory agreement, our Board of Directors evaluated information provided by
the Adviser and legal counsel and considered various factors,
including:

Services. The Board of Directors reviewed the nature, extent and
quality of the investment advisory services proposed to be provided to the
Adviser by Kenmont and found them to be consistent with the services provided by
the Adviser.

Experience of Management Team and
Personnel.The Board of Directors
considered the extensive experience of Kenmont with respect to the specific
types of investment proposed and concluded that Kenmont would provide valuable
assistance to the Adviser in providing potential investment opportunities.

Provisions of Sub-Advisory
Agreement.The Board of Directors
considered the extent to which the provisions of the sub-advisory agreement
could potentially expose the Company to liability and concluded that its terms
adequately protected the Company from such risk.

Conclusions of the Independent
Directors

As a result of this process, the
independent Directors, assisted by the advice of legal counsel that is
independent of the Adviser, taking into account all of the factors discussed
above and the information provided by the Adviser, unanimously concluded that
the Sub-Advisory Agreement between the Company and Kenmont is fair and
reasonable in light of the services provided and should be renewed.

F-29

---

TORTOISE CAPITAL RESOURCES
CORPORATION

SIGNATURES

Pursuant to the requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



**TORTOISE
      CAPITAL RESOURCES CORPORATION**(Registrant)


By:
    /s/David J. Schulte**David J.
      Schulte****Chief Executive
      Officer**


February 12, 2009

POWER OF ATTORNEY

Know all people by these presents, that
each person whose signature appears below constitutes and appoints David J.
Schulte and Terry C. Matlack, and each of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any amendments to this Annual Report on Form 10-K,
and to file the same, with all exhibits thereto, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he or she might or could do in person, herby
confirming all that said attorneys-in-fact and agents or either of them, or his
or their substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the company and in the capacities indicated on
February 12, 2009.

|Signature               |  | Capacity                                          
|----------------------- |  | --------------------------------------------------
|                        |  |                                                   
|/s/Terry C. Matlack     |  | Chief Financial Officer and
      Director        
|                        |  | (Principal Financial and Accounting
      Officer)
|                        |  |                                                   
|/s/David J. Schulte     |  | Chief Executive Officer                           
|                        |  | (Principal Executive Officer)                     
|                        |  |                                                   
|/s/Conrad S. Ciccotello |  | Director                                          
|                        |  |                                                   
|/s/John R. Graham       |  | Director                                          
|                        |  |                                                   
|/s/Charles E. Heath     |  | Director                                          
|                        |  |                                                   
|/s/H. Kevin Birzer      |  | Director                                          

F-30

---