# EDGAR Filing Document

**Accession Number:** 0001400897
**File Stem:** 0001398344-26-002464
**Filing Date:** 2026-2
**Character Count:** 385950
**Document Hash:** 91a130d297676346cce1b4d4b602fbf5
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001398344-26-002464.hdr.sgml**: 20260209

**ACCESSION NUMBER**: 0001398344-26-002464

**CONFORMED SUBMISSION TYPE**: N-CSR

**PUBLIC DOCUMENT COUNT**: 32

**CONFORMED PERIOD OF REPORT**: 20251130

**FILED AS OF DATE**: 20260209

**DATE AS OF CHANGE**: 20260206

**EFFECTIVENESS DATE**: 20260209

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** NXG Cushing Midstream Energy Fund
- **CENTRAL INDEX KEY:** 0001400897

**ORGANIZATION NAME:**
- **EIN:** 000000000
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1130

**FILING VALUES:**
- **FORM TYPE:** N-CSR
- **SEC ACT:** 1940 Act
- **SEC FILE NUMBER:** 811-22072
- **FILM NUMBER:** 26609363

**BUSINESS ADDRESS:**
- **STREET 1:** 4925 GREENVILLE AVENUE
- **STREET 2:** SUITE 1310
- **CITY:** DALLAS
- **STATE:** TX
- **ZIP:** 75206
- **BUSINESS PHONE:** 214-692-6334

**MAIL ADDRESS:**
- **STREET 1:** 4925 GREENVILLE AVENUE
- **STREET 2:** SUITE 1310
- **CITY:** DALLAS
- **STATE:** TX
- **ZIP:** 75206

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** CUSHING MLP & INFRASTRUCTURE TOTAL RETURN FUND
- **DATE OF NAME CHANGE:** 20180315

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Cushing MLP & Infrastructure Total Return Fund
- **DATE OF NAME CHANGE:** 20180307

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Cushing MLP Total Return Fund
- **DATE OF NAME CHANGE:** 20070524

?xml version='1.0' encoding='ASCII'?

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

**FORM N-CSR**

**CERTIFIED SHAREHOLDER REPORT OF REGISTERED**

**MANAGEMENT INVESTMENT COMPANIES**

Investment Company Act file number **<u>811-22072</u>**

**<u>NXG Cushing Midstream Energy Fund</u>**

(Exact name of registrant as specified in charter)

**<u>4925 Greenville Avenue, Suite 1310</u>**

**<u>Dallas, TX 75206</u>**

(Address of principal executive offices) (Zip code)

**<u>John Musgrave</u>**

**<u>4925 Greenville Avenue, Suite 1310</u>**

**<u>Dallas, TX 75206</u>**

(Name and address of agent for service)

**<u>214-692-6334</u>**

Registrant's telephone number, including area code

Date of fiscal year end: **<u>November 30</u>**

Date of reporting period: **<u>November 30, 2025</u>**

**<u>Item 1. Reports to Stockholders.</u>**

(a) ---

| | |
|:---|:---|
| ![](fp0096655-1_i.jpg) | ![](fp0096655-1_ia.jpg) |
| ![](fp0096655-1_ib.jpg) | <br>**Annual Report**<br> November 30, 2025 |
| ![](fp0096655-1_ic.jpg) | **NXG Cushing<sup>®</sup>** **Midstream Energy Fund** <br>As permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Fund's shareholder reports are no longer sent by mail, unless you specifically request paper copies of the reports from the Fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports are made available on the Fund's website, and you will be notified by mail each time a report is posted and provided with a website link to access the report. <br>You may elect to receive all future reports in paper free of charge by contacting your financial intermediary or, if you invest directly with the Fund, calling 800-236-4424 to let the Fund know of your request. Your election to receive shareholder reports in paper will apply to all funds held in your account.  |
| ![](fp0096655-1_id.jpg) | <br>![](fp0096655-1_ie.jpg) |

---

---

| | | |
|:---|:---|:---|
| ![](fp0096655-1_ig.jpg) | ![](fp0096655-1_if.jpg) | **Investment Adviser** <br>NXG Investment Management<br> One Energy Square<br> 4925 Greenville Avenue<br> Suite 1310<br> Dallas, TX 75206<br> (214) 692-6334<br> (888) 777-2346<br> www.nxgim.com |

---

**Table of Contents**

---

| | |
|:---|:---|
| Shareholder Letter (Unaudited)  | 1 |
| Hypothetical Growth of a $10,000 Investment (Unaudited)  | 5 |
| Key Financial Data (Supplemental Unaudited Information)  | 6 |
| Allocation of Portfolio Assets (Unaudited)  | 7 |
| Schedule of Investments  | 8 |
| Statement of Assets & Liabilities  | 11 |
| Statement of Operations  | 12 |
| Statements of Changes in Net Assets  | 13 |
| Statement of Cash Flows  | 14 |
| Financial Highlights  | 15 |
| Notes to Financial Statements  | 16 |
| Report of Independent Registered Public Accounting Firm  | 26 |
| Trustees and Executive Officers (Unaudited)  | 27 |
| Certain Changes Occurring During the Prior Fiscal Year (Unaudited)  | 29 |
| Additional Information (Unaudited)  | 30 |

---

The NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Shareholder Letter (Unaudited)**<br>

Dear Fellow Shareholder,

For the twelve-month fiscal period ended November 30, 2025 (the "period"), the NXG Cushing<sup>®</sup> Midstream Energy Fund (the "Fund") delivered a Net Asset Value Total Return (calculated as the change in net asset value ("NAV") per share plus reinvested cash distributions from underlying Fund investments during the period) of +1.16%, compared to a total return of +15.00% for the S&P 500<sup>®</sup> Index (Total Return) ("S&P 500"). The Fund's Share Price Total Return (calculated as the change in market price per share plus reinvested cash distributions from underlying Fund investments paid during the period) was +1.26% for the period, differing from the Net Asset Value Total Return due to fluctuations in the discount of share price to NAV. The Fund's shares traded at a 4.76% discount to NAV as of the end of the period, compared to a 4.18% discount at the end of the Fund's last fiscal year. As measured by the Alerian Midstream Energy Select Index (Total Return) ("AMEI"), the performance of the midstream energy sector increased by +0.48% for the period.

***Industry Overview and Themes***

The 2025 fiscal period was defined by a distinct divergence between the broader macroeconomic environment and the specific fundamentals shaping energy markets. While volatility remained elevated throughout the year, driven by shifting trade policies, geopolitical tensions, and evolving central bank mandates, the midstream sector demonstrated remarkable durability. The year began with a wave of policy optimism, navigated through a mid-year shock from tariffs and commodity bifurcation, and concluded with a supported long-term growth thesis driven by artificial intelligence (AI) and data center power demand.

Markets began the fiscal year digesting a rapidly changing regulatory landscape. Optimism was initially fueled by the anticipated implementation of pro-energy reforms under the new administration, including the declaration of a national energy emergency and the reversal of restrictive regulations on fossil fuel development and LNG exports. These actions created a highly favorable backdrop for infrastructure approvals.

Volatility spiked in April following the administration's "Liberation Day" tariff package, which exceeded market expectations in both scope and severity. Despite nominal energy exemptions, the package reintroduced significant uncertainty that was reflected in widening credit spreads and pressure on risk assets.

The macroeconomic narrative shifted again by late summer as the worst tariff fears were allayed and the Federal Reserve pivoted decisively toward easier policy. With labor markets softening, the Fed moved toward monetary easing and initiated rate cuts. This turn provided a tailwind for capital-intensive sectors like infrastructure by signaling the potential for a lower cost of capital going forward.

A defining theme of 2025 was the decoupling of crude oil and natural gas fundamentals. The crude oil market faced headwinds as OPEC+ shifted its strategy from price support to market share defense, adding significant volume to supply quotas. This supply surge, combined with demand concerns, pushed WTI prices lower.

U.S. producers responded to this environment with renewed capital discipline. By pivoting to "maintenance mode" and reducing rig counts to protect balance sheets, they reshaped expectations to lower Permian crude throughput.

The investment thesis for natural gas infrastructure strengthened considerably during the same period. While near-term gas prices remained soft due to resilient production, the long-term demand outlook was validated by the structural expansion of AI-driven power consumption. This theme evolved from thesis to tangible opportunity over the course of the fiscal year.

Exponential growth in power consumption forecasts for AI data centers introduced a powerful, long-duration demand driver for the sector throughout 2025. We saw landmark announcements including multi-hundred-billion-dollar cloud computing contracts requiring gigawatts of new power capacity. Tens of billions in capital commitments followed for data centers, power generation, and grid infrastructure.

Midstream companies moved quickly to capitalize on this trend by securing long-term, fixed-price power purchase agreements and sanctioning new "power innovation projects". With natural gas poised to be the fuel source for a significant portion of these new AI-related projects, we believe the sector may be experiencing a technology-driven demand catalyst comparable in significance to the shale revolution.

Management teams also demonstrated a commitment to balance sheet discipline by pursuing these opportunities within free cash flow generation rather than returning to the capital-intensive models of the past. The sector's post-2020 transformation remains intact: balance sheets are historically strong, leverage is low, and companies are generating substantial positive free cash flow while selectively investing in high-return, contract-backed growth projects.

***Fund Performance and Strategy***

For the period, the Fund delivered a +1.16% total return, slightly outperforming the total return of +0.48% for the Fund's benchmark, the AMEI. Performance across subsectors was mixed, with a significant portion of the Fund's positive performance driven by non-benchmark allocations. Our core thematic positioning in this area focused on the multi-year buildout of U.S. power generation and grid infrastructure. We believe this trend is being accelerated by immense demand from AI, data centers, and broader electrification.

This thesis was best exemplified by our top contributors for the period, all of which drove performance on both an absolute and relative basis. Bloom Energy (BE) was our top contributor. Bloom Energy builds and sells modular solid oxide fuel cell systems that generate electricity on-site. These systems are designed to provide customers, such as data centers, with reliable and lower-emission power that can potentially be deployed faster than traditional grid upgrades. The stock surged over the last twelve months largely because investors view these systems as a direct solution to the exploding power needs of AI data centers, a view reinforced by a series of high-profile commercial agreements and a strengthening growth narrative.

Constellation Energy (CEG) and Talen Energy (TLN) were the next two largest contributors. Both companies delivered strong returns as they continued to execute across their baseload generation portfolios and advanced several long-term power agreements with data center customers. Other holdings in the independent power producer (IPP) space, including NRG Energy (NRG), also contributed positively.

Beyond direct power generation, our investments in the essential picks and shovels of this buildout also generated positive returns. Our position in GE Vernova (GEV), the Fund's fourth-best performer, provides exposure to the manufacturing of heavy equipment for the energy sector. GEV is a leader in gas-fired power generation and grid modernization while also supplying onshore and offshore wind generation equipment. This theme extended to key solar technology suppliers like First Solar (FSLR), our fifth-best performer, which provides the generation modules for new utility-scale solar projects.

On an absolute basis, our largest detractors were primarily within the Natural Gas Gathering & Processing subsector and other liquids-levered Large-Cap Diversified MLPs and C-Corps. These subsectors were weighed down by persistently low commodity prices and cautious investor sentiment toward liquids-exposed infrastructure. ONEOK, Inc. (OKE), Targa Resources Corp. (TRGP), Kinetik Holdings Inc. (KNTK), and Energy Transfer LP (ET) were among the largest absolute detractors to performance. All were negatively impacted by weak liquids prices which pressured company guidance and investor sentiment.

In relative terms, the Fund's underweight position in Enbridge Inc. (ENB) was a top detractor despite its positive absolute contribution. We believe the outperformance of select large-cap Canadian equities was largely attributable to their perception as yield proxies, as these names rallied strongly on the prospect of lower interest rates. Enbridge represents the largest constituent in the benchmark, and we remained underweight throughout the period.

CleanSpark, Inc. (CLSK) was another notable detractor on an absolute and relative basis. The company designs, builds, and operates large-scale, power-hungry data center infrastructure primarily for Bitcoin mining, though it is beginning to repurpose capacity toward AI and high-performance computing workloads. While the stock performed positively over the full period, our negative contribution was primarily driven by the timing of our specific trades during the year.

***Leverage***

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

Average leverage for the period was 32% of managed assets, compared to an average leverage ratio of 34% in the prior fiscal year.

***Closing***

We believe midstream companies generally exited 2025 structurally stronger than in prior cycles. The sector has transformed into a cash-generating, resilient asset class with fortified balance sheets and record free cash flow. With less cash flow now required for debt reduction, companies have increasingly prioritized shareholder returns through rising dividends and opportunistic buybacks while simultaneously pivoting to a new era of disciplined growth.

In our view, we are now witnessing the beginning of a new capital cycle. This is one defined not by "growth at any cost," but by high-return, contract-backed projects funded within free cash flow. Within this increasingly bifurcated market, we see two distinct opportunities: deep value in liquids-exposed operators where sentiment has turned overly bearish, and robust growth potential in natural gas infrastructure leveraged to AI and LNG themes.

While near-term disruptions from tariff headlines or OPEC+ actions may create volatility, they have not altered the sector's long-term investment case. Midstream assets are often viewed as durable, cash-generative investments supported by secular trends including electrification, reshoring, and the critical need for power reliability.

We believe the sector remains broadly misvalued relative to both its near-term growth prospects and the long-term utility of its assets. We remain confident that the combination of EBITDA growth, consistent capital returns, and the realization of AI-driven demand has the potential to drive attractive outcomes for long-term investors.

We truly appreciate your support and look forward to continuing to help you achieve your investment goals.

Sincerely,

![](fp0096655-1_3.jpg)

John Musgrave

Chief Executive Officer, President, Chief Investment Officer and Portfolio Manager

**The information provided herein represents the opinion of the Fund's portfolio managers and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice. The opinions expressed are as of the date of this report and are subject to change. Certain statements in this report are forward-looking in nature. Forward-looking statements are not guarantees of future performance and actual results may differ materially due to market, economic, and other conditions. The Fund undertakes no obligation to update or revise any forward-looking statements.** 

**The information in this report is not a complete analysis of every aspect of any market, sector, industry, security, or the Fund itself. Statements of fact are from sources considered reliable, but the Fund makes no representation or warranty as to their completeness or accuracy. Discussions of specific investments are for illustration only and are not intended as recommendations of individual investments. Fund holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security. Please refer to the Schedule of Investments for a complete list of Fund holdings.** 

**Past performance does not guarantee future results. Investment return, net asset value, and common share market price will fluctuate so that you may have a gain or loss when you sell shares. Since the Fund is a closed-end management investment company, shares of the Fund may trade at a discount or premium from net asset value. This characteristic is separate and distinct from the risk that net asset value could decrease as a result of investment activities and may be a greater risk to investors expecting to sell their shares after a short time. The Fund cannot predict whether shares will trade at, above, or below net asset value. The Fund should not be viewed as a vehicle for trading purposes. It is designed primarily for risk-tolerant long-term investors.** 

**An investment in the Fund involves risks. Leverage creates risks, which may adversely affect returns, including the likelihood of greater volatility of net asset value and market price of the Fund's common shares. The Fund is nondiversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund.** 

**The Fund will invest in energy companies, including Master Limited Partnerships (MLPs), which concentrate investments in the natural resources sector. Energy companies are subject to certain risks, including, but not limited to, the following: fluctuations in the prices of commodities; the highly cyclical nature of the natural resources sector may adversely affect the earnings or operating cash flows of the companies in which the Fund will invest; a significant decrease in the production of energy commodities could reduce the revenue, operating income, and operating cash flows of MLPs and other natural resources sector companies and, therefore, their ability to make distributions or pay dividends; and a sustained decline in demand for energy commodities could adversely affect the revenues and cash flows of energy companies. Holders of MLP units are subject to certain risks inherent in the structure of MLPs, including tax risks; the limited ability to elect or remove management or the general partner or managing member; limited voting rights and conflicts of interest between the general partner or managing member and its affiliates, on the one hand, and the limited partners or members, on the other hand. Damage to facilities and infrastructure of MLPs may significantly affect the value of an investment and may incur environmental costs and liabilities due to the nature of their business. Investors in MLP funds incur management fees from underlying MLP investments. Small- and mid-cap stocks are often more volatile and less liquid than large-cap stocks. Smaller companies generally face higher risks due to their limited product lines, markets, and financial resources. Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner. High yield securities have speculative characteristics and present a greater risk of loss than higher quality debt securities. These securities can also be subject to greater price volatility. An investment in the Fund will involve tax risks, including, but not limited to: The portion, if any, of a distribution received by the Fund as the holder of an MLP equity security that is offset by the MLP's tax deductions or losses generally will be treated as a return of capital to the extent of the Fund's tax basis in the MLP equity security, which will cause income or gain to be higher, or losses to be lower, upon the sale of the MLP security by the Fund. Changes in tax laws, regulations, or interpretations of those laws or regulations in the future could adversely affect the Fund or the energy companies in which the Fund will invest.** 

**The potential tax benefits of investing in MLPs depend on them being treated as partnerships for federal income tax purposes. If the MLP is deemed to be a corporation, then its income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the Fund, which could result in a reduction of the Fund's value.** 

**The Fund incurs operating expenses, including advisory fees, as well as leverage costs. Investment returns for the Fund are shown net of fees and expenses.** 

**The S&P 500 Index is an unmanaged index of common stocks that is frequently used as a general measure of stock market performance. The Alerian Midstream Energy Select Index is a capitalization-weighted index of North American energy infrastructure companies. Neither of these indices includes fees or expenses. It is not possible to invest directly in an index.** 

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Hypothetical Growth of a $10,000 Investment (Unaudited)**<br>

![](fp0096655-1_5.jpg)

---

| | | | |
|:---|:---|:---|:---|
| **AVERAGE ANNUAL RETURNS** | **AVERAGE ANNUAL RETURNS** | **AVERAGE ANNUAL RETURNS** | **AVERAGE ANNUAL RETURNS** |
| **November 30, 2025** | **1 Year** | **5 Year** | **10 Year** |
| NXG Cushing Midstream Energy Fund  | 1.84% | 21.59% | 7.42% |
| Alerian Midstream Energy Select Index  | 0.47% | 24.60% | 11.78% |
| S&P 500 Index (Total Return)  | 15.00% | 15.28% | 14.63% |

---

*Data for NXG Cushing Midstream Energy Fund (the "Fund") represents returns based on the change in the Fund's net asset value assuming the reinvestment of all dividends and distributions. These returns differ from the total investment return based on market value of the Fund's shares due to the difference between the Fund's net asset value of its shares outstanding (See page 15 for total investment return based on market value). Past performance is no guarantee of future results.* 

*The Alerian Midstream Energy Select Index is a capitalization-weighted index of North American energy infrastructure companies. The S&P 500 Index is an unmanaged index of common stocks that is frequently used as a general measure of stock market performance. You cannot invest directly in an index.* 

*The graph and table do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of the Fund shares.* 

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Key Financial Data (Supplemental Unaudited Information)**<br>

*The Information presented below regarding Distributable Cash Flow is supplemental non-GAAP financial information, which we believe is meaningful to understanding our operating performance. Supplemental non-GAAP measures should be read in conjunction with our full financial statements.* 

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year <br> Ended <br> 11/30/25** | **Fiscal Year <br> Ended <br> 11/30/24** | **Fiscal Year <br> Ended <br> 11/30/23** | **Fiscal Year <br> Ended <br> 11/30/22** | **Fiscal Year <br> Ended <br> 11/30/21** |
| **FINANCIAL DATA** |  |  |  |  |  |
| Total income from investments  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends received, net of foreign taxes withheld  | $14521217 | $10004873 | $6056720 | $6332521 | $6419908 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest  | 374414 | 301853 | 232693 | 136731 | 627 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other  | 0 | 1330 | 0 | 2418 | 0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total income from investments  | $14895631 | $10308056 | $6289413 | $6471670 | $6420535 |
| Adviser fees and operating expenses  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adviser fees, less expenses waived by Adviser  | $2621508 | $1684554 | $1029181 | $1153052 | $1033407 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating expenses <sup>(a)</sup>  | 1704234 | 1603862 | 642913 | 635617 | 584807 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest  | 3767083 | 2886880 | 1240463 | 728068 | 289809 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Adviser fees and operating expenses  | $8092825 | $6175296 | $2912557 | $2516737 | $1908023 |
| Distributable Cash Flow (DCF) <sup>(b)</sup>  | $6802806 | $4132760 | $3376856 | $3954933 | $4512512 |
| Distributions paid on common stock  | $25074711 | $15605455 | $11792081 | $5764151 | $3144083 |
| Distributions paid on common stock per share  | $5.71 | $5.40 | $5.40 | $2.64 | $1.44 |
| Distribution Coverage Ratio  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Before Adviser fee and operating expenses  | 0.6 x | 0.7 x | 0.5 x | 1.1 x | 2.0 x |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;After Adviser fee and operating expenses  | 0.3 x | 0.3 x | 0.3 x | 0.7 x | 1.4 x |
| **OTHER FUND DATA (end of fiscal year)** | **OTHER FUND DATA (end of fiscal year)** | **OTHER FUND DATA (end of fiscal year)** |  |  |  |
| Total Assets, end of fiscal year  | $257659834 | $243676008 | $106906471 | $122764805 | $115899449 |
| Unrealized appreciation  | $11108894 | $47238194 | $5957291 | $4027857 | $1484452 |
| Short-term borrowings  | $55315000 | $48315000 | $19315000 | $7315000 | $33715000 |
| Short-term borrowings as a percent of total assets  | 21% | 20% | 18% | 6% | 29% |
| Net Assets, end of fiscal year  | $201921895 | $194958809 | $84805681 | $93160415 | $80882596 |
| Net Asset Value per common share  | $43.26 | $48.54 | $38.81 | $42.67 | $37.04 |
| Market Value per share  | $41.19 | $46.50 | $35.04 | $35.24 | $31.67 |
| Market Capitalization  | $192258819 | $186776783 | $76560613 | $76942699 | $69147993 |
| Shares Outstanding  | 4667609 | 4016705 | 2184950 | 2183391 | 2183391 |

---

<sup>(a)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Excludes expenses related to capital raising.

<sup>(b)</sup> <sup></sup>"Net Investment Income, before Income Taxes" on the Statement of Operations is adjusted as follows to reconcile to Distributable Cash Flow: increased by the return of capital on MLP distributions.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Allocation of Portfolio Assets<sup>(1)</sup>** **(Unaudited)** <br>November 30, 2025<br> (Expressed as a Percentage of Total Investments)<br>

---

| | |
|:---|:---|
| Large Cap Diversified C Corps<sup>(2)(3)</sup>  | 24.9% |
| Utilities<sup>(2)(4)</sup>  | 15.8% |
| Natural Gas Gatherers & Processors<sup>(2)(3)</sup>  | 14.3% |
| Large Cap MLP<sup>(3)</sup>  | 14.1% |
| Engineering & Construction<sup>(2)</sup>  | 4.8% |
| Electrical Power Equipment<sup>(2)</sup>  | 4.0% |
| Crude Oil & Refined Products<sup>(2)(3)(4)</sup>  | 3.4% |
| Solar Equipment<sup>(2)</sup>  | 3.1% |
| Integrated Oil<sup>(2)</sup>  | 2.8% |
| Other Renewable Generation<sup>(2)</sup>  | 2.3% |
| Refiners<sup>(2)</sup>  | 2.1% |
| Coal<sup>(3)</sup>  | 1.8% |
| Upstream MLPs<sup>(3)</sup>  | 1.6% |
| Exploration & Production<sup>(2)</sup>  | 1.4% |
| Other C-Corps<sup>(2)</sup>  | 1.1% |
| Canadian Midstream<sup>(2)</sup>  | 1.1% |
| Cryptocurrency Miners<sup>(2)</sup>  | 0.8% |
| Short-Term Investments  | 0.6% |
|  | 100.0% |

---

<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Fund holdings and sector allocations are subject to change and there is no assurance that the Fund will continue to hold any particular security.

<sup>(2)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Common Stock

<sup>(3)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Master Limited Partnerships and Related Companies

<sup>(4)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Preferred Stock

---

| | |
|:---|:---|
| NXG Cushing<sup>®</sup> Midstream Energy Fund | NXG Cushing<sup>®</sup> Midstream Energy Fund |
| **Schedule of Investments** | **November 30, 2025**  |

---

---

| | | |
|:---|:---|:---|
| **Common Stock — 88.7%** | **Shares** | **Fair Value** |
| **Canadian Midstream — 1.4%** |  |  |
| Keyera Corp<sup>(3)(4)</sup>  | 90000 | $2907796 |
| **Crude Oil & Refined Products — 3.2%** |  |  |
| South Bow Corp<sup>(1)(3)</sup>  | 225000 | 6201000 |
| **Cryptocurrency Miners — 1.0%** |  |  |
| IREN Ltd<sup>(1)(2)(3)</sup>  | 40000 | 1912400 |
| **Electrical Power Equipment — 5.0%** |  |  |
| GE Vernova, Inc.<sup>(1)</sup>  | 17000 | 10196090 |
| **Engineering & Construction — 6.1%** |  |  |
| Quanta Services Inc<sup>(1)</sup>  | 9000 | 4183920 |
| MasTec Inc<sup>(2)</sup>  | 20000 | 4277600 |
| Primoris Services Corp  | 30000 | 3796800 |
|  |  | 12258320 |
| **Exploration & Production — 1.8%** |  |  |
| Viper Energy Inc<sup>(1)</sup>  | 100000 | 3653000 |
| **Integrated Oil — 3.5%** |  |  |
| Cenovus Energy Inc.<sup>(1)(3)</sup>  | 400000 | 7144000 |
| **Large Cap Diversified C Corps — 27.5%** |  |  |
| Cheniere Energy, Inc.<sup>(1)</sup>  | 30000 | 6253800 |
| Enbridge Inc<sup>(1)(3)</sup>  | 200000 | 9756000 |
| Kinder Morgan, Inc.<sup>(1)</sup>  | 400000 | 10928000 |
| TC Energy Corp<sup>(1)(3)</sup>  | 190000 | 10396800 |
| Williams Companies, Inc.<sup>(1)</sup>  | 300000 | 18279000 |
|  |  | 55613600 |
| **Natural Gas Gatherers & Processors — 9.0%** |  |  |
| DT Midstream, Inc.  | 90000 | 10931400 |
| Targa Resources Corporation<sup>(1)</sup>  | 41400 | 7257834 |
|  |  | 18189234 |
| **Other C-Corps — 1.5%** |  |  |
| EQT Corp<sup>(1)</sup>  | 50000 | 3043000 |
| **Other Renewable Generation — 3.0%** |  |  |
| Bloom Energy Corporation<sup>(1)(2)</sup>  | 55000 | 6008200 |
| **Refiners — 2.7%** |  |  |
| Phillips 66  | 40000 | 5478400 |
| **Solar Equipment — 3.9%** |  |  |
| First Solar Inc<sup>(1)(2)</sup>  | 20000 | 5458400 |
| Nextpower Inc<sup>(1)(2)</sup>  | 26000 | 2382120 |
|  |  | 7840520 |

---

See Accompanying Notes to the Financial Statements.

---

| | |
|:---|:---|
| NXG Cushing<sup>®</sup> Midstream Energy Fund | NXG Cushing<sup>®</sup> Midstream Energy Fund |
| **Schedule of Investments** | **November 30, 2025 — (Continued)** |

---

---

| | | |
|:---|:---|:---|
| **Common Stock — 88.7% (Continued)** | **Shares** | **Fair Value** |
| **Utilities — 19.1%** |  |  |
| Constellation Energy Corp<sup>(1)</sup>  | 27000 | $9837720 |
| NRG Energy Inc<sup>(1)</sup>  | 50000 | 8474500 |
| Talen Energy Corp<sup>(1)(2)</sup>  | 32000 | 12616640 |
| Vistra Corporation<sup>(1)</sup>  | 43000 | 7690980 |
|  |  | 38619840 |
| Total Common Stocks (Cost $171,863,751)  |  | $179065400 |
| **MLP Investments and Related Companies — 36.6%** | **Units** |  |
| Coal — 2.3%  |  |  |
| Alliance Resource Partners LP<sup>(1)</sup>  | 191000 | 4654670 |
| **Crude Oil & Refined Products — 1.0%** |  |  |
| Genesis Energy L.P.<sup>(1)</sup>  | 130000 | 2026700 |
| **Large Cap Diversified C Corps — 4.1%** |  |  |
| Plains GP Holdings, L.P.<sup>(1)</sup>  | 450000 | 8343000 |
| **Large Cap MLP — 18.0%** |  |  |
| Energy Transfer, L.P.<sup>(1)</sup>  | 1000000 | 16710000 |
| Enterprise Products Partners L.P.<sup>(1)</sup>  | 200000 | 6548000 |
| MPLX, L.P.<sup>(1)</sup>  | 240000 | 13039200 |
|  |  | 36297200 |
| **Natural Gas Gatherers & Processors — 9.2%** |  |  |
| Hess Midstream, L.P.<sup>(1)</sup>  | 200000 | 6736000 |
| Western Midstream Partners, L.P.<sup>(1)</sup>  | 300000 | 11799000 |
|  |  | 18535000 |
| **Upstream MLPs — 2.0%** |  |  |
| TXO Energy Partners, L.P.<sup>(1)</sup>  | 330000 | 4121700 |
| Total MLP Investments and Related Companies (Cost $69,955,143)  |  | $73978270 |
| **Preferred Stock — 1.2%** |  |  |
| **Crude Oil & Refined Products — 0.2%**  |  |  |
| NGL Energy Partners, L.P.<sup>(1)</sup>  | 20313 | $491574 |
| **Utilities — 1.0%** |  |  |
| NextEra Energy Capital Holdings, Inc.<sup>(1)</sup>  | 81000 | 1942380 |
| Total Preferred Stock (Cost $2,549,836)  |  | $2433954 |

---

See Accompanying Notes to the Financial Statements.

---

| | |
|:---|:---|
| NXG Cushing<sup>®</sup> Midstream Energy Fund | NXG Cushing<sup>®</sup> Midstream Energy Fund |
| **Schedule of Investments** | **November 30, 2025 — (Continued)** |

---

---

| | | |
|:---|:---|:---|
| **Short-Term Investments - Investment Companies — 0.8%** | **Shares** | **Fair Value**  |
| First American Government Obligations Fund - Class X, 3.92%<sup>(5)</sup>  | 825282 | $825282 |
| First American Treasury Obligations Fund - Class X, 3.91%<sup>(5)</sup>  | 825282 | 825282 |
| Total Short-Term Investments - Investment Companies (Cost $1,650,564)  |  | $1650564 |
| ***Total Investments — 127.3% (Cost $246,019,294)***  |  | $**257128188** |
| Liabilities in Excess of Other Assets — (27.3)%  |  | (55206293) |
| ***Net Assets Applicable to Common Stockholders — 100.0%***  |  | $201921895 |

---

<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;All or a portion of these securities are held as collateral pursuant to the loan agreements.

<sup>(2)</sup> &nbsp;&nbsp;&nbsp;&nbsp;No distribution or dividend was made during the period ended November 30, 2025. As such, it is classified as a non-income producing security as of November 30, 2025.

<sup>(3)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Foreign issued security. Foreign concentration is as follows: Canada 18.03% and Australia 0.95%. 

<sup>(4)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Securities purchased pursuant to Rule 144A of the Securities Act of 1933, as amended, and may be sold only to dealers in that program or other "qualified institutional buyers." These securities have been deemed to be liquid by the Fund's adviser under the supervision of the Board of Trustees. As of November 30, 2025, the value of these investments was $2,907,796 or 1.44% of total net assets. 

<sup>(5)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Rate reported is the current yield as of November 30, 2025.

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Statement of Assets & Liabilities** <br>November 30, 2025 <br>

---

| | |
|:---|:---|
| Assets  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments, at fair value (cost $246,019,294)  | $257128188 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends receivable  | 256480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid offering costs  | 171546 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other receivables  | 103620 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets  | 257659834 |
| Liabilities  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short-term borrowings  | 55315000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payable to Adviser, net of waiver  | 216884 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends payable  | 7347 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest expense  | 6043 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities  | 192665 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities  | 55737939 |
| Net assets applicable to common stockholders  | $201921895 |
| Components of Net Assets  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital stock, $0.001 par value; 4,667,609 shares issued and outstanding (unlimited shares authorized)  | 4668 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional paid-in capital  | 182038596 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accumulated net gains  | 19878631 |
| Net assets applicable to common stockholders  | $201921895 |
| Net asset value per common share outstanding (net assets applicable to common shares divided by common shares outstanding)  | $43.26 |

---

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Statement of Operations** <br>Fiscal Year Ended November 30, 2025<br>

---

| | |
|:---|:---|
| Investment Income |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends received, net of foreign taxes withheld of $337,877  | $14521217 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: return of capital on distributions  | (7380997) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividend income  | 7140220 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest income  | 374414 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Investment Income  | 7514634 |
| Expenses  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adviser fees  | 3276885 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Offering fees  | 802051 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trustees' fees  | 253627 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Professional fees  | 191041 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Administrator fees  | 173669 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reports to stockholders  | 89465 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fund accounting fees  | 53342 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insurance expense  | 42554 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Custodian fees and expenses  | 35515 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registration fees  | 32943 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transfer agent fees  | 30027 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Expenses before Interest expense  | 4981119 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest expense  | 3767083 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total Expenses  | 8748202 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Less: expense waived by Adviser  | (655377) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Expenses  | 8092825 |
| Net Investment Loss  | (578191) |
| Realized and Unrealized Gain (Loss) on Investments  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on investments  | 32481772 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on options  | 7968143 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on investments and options  | 40449915 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized appreciation/(depreciation) of investments  | (35954087) |
| Net Realized and Unrealized Gain on Investments  | 4495828 |
| Net Increase in Net Assets Applicable to Common Stockholders Resulting from Operations  | $3917637 |

---

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Statements of Changes in Net Assets**<br>

---

| | | |
|:---|:---|:---|
|  | **Fiscal Year <br> Ended <br> November 30, <br> 2025** | **Fiscal Year <br> Ended <br> November 30, <br> 2024** |
| Operations |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net investment loss  | $(578191) | $(1300018) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on investments and options  | 40449915 | 17998706 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized appreciation/(depreciation) of investments  | (35954087) | 41104204 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net increase in net assets applicable to common stockholders resulting from operations  | 3917637 | 57802892 |
| Distributions and Dividends to Common Stockholders  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributable earnings  | (19106042) | (10746349) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain  | (5968669) | (4859106) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return of capital  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total distributions and dividends to common stockholders  | (25074711) | (15605455) |
| Capital Share Transactions  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of 8,682 and 5,419 common shares from reinvestment of distributions to stockholders, respectively  | 432384 | 223269 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of 0 and 1,732,493 shares in connection with exercising a rights offering  |  | 63793373 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of 642,222 and 93,843 shares in connection with exercising a shelf offering  | 27687776 | 3939049 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net increase in net assets applicable to common stockholders from capital share transactions  | 28120160 | 67955691 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total increase in net assets applicable to common stockholders  | 6963086 | 110153128 |
| Net Assets  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of fiscal year  | 194958809 | 84805681 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of fiscal year  | $201921895 | $194958809 |

---

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Statement of Cash Flows** <br>Fiscal Year Ended November 30, 2025<br>

---

| | |
|:---|:---|
| OPERATING ACTIVITIES |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net Increase in Net Assets Applicable to Common Stockholders Resulting from Operations  | $3917637 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net increase in the net assets applicable to common stockholders resulting from operations to net cash used in operating activities  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net change in unrealized appreciation/depreciation of investments  | $35954087 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of investments  | (578760649) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sales of investments  | 373031065 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from option transactions, net  | 182737623 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Return of capital on distributions and dividends  | 7380997 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net realized gain on sales of investments  | (40449915) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net purchases of short-term investments  | (830488) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivable for investments sold  | 6844032 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends receivable  | (15109) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid offering costs  | 98052 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other receivables  | 26480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payable to Adviser, net of waiver  | 28168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued interest expense  | 6043 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued expenses and other liabilities  | 13530 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in operating activities  | (10018447) |
| FINANCING ACTIVITIES  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowing facility  | 104000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of borrowing facility  | (97000000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common stock issuance  | 27687776 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions and dividends paid to common stockholders  | (24669329) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by financing activities  | 10018447 |
| CHANGE IN CASH AND CASH EQUIVALENTS  |  |
| CASH AND CASH EQUIVALENTS: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning of fiscal year  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;End of fiscal year  | $— |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW AND NON-CASH INFORMATION  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid  | $3761040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of shares from re-investment of distributions  | $432384 |

---

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Financial Highlights**<br>

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Fiscal Year <br> Ended <br> November 30,<br> 2025** | **Fiscal Year <br> Ended <br> November 30,<br> 2024** | **Fiscal Year <br> Ended <br> November 30,<br> 2023** | **Fiscal Year <br> Ended <br> November 30,<br> 2022** | **Fiscal Year <br> Ended <br> November 30,<br> 2021** |
| **Per Common Share Data** <sup>(1)</sup> |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net Asset Value, beginning of fiscal year  | $48.54 | $38.81 | $42.67 | $37.04 | $27.32 |
| **Income from Investment Operations:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net investment loss  | (0.13) | (0.44) | (0.10) | (0.13) | (0.03) |
| &nbsp;&nbsp;&nbsp;Net realized and unrealized gain on investments  | 0.24 | 15.57 | 1.64 | 8.40 | 11.19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total increase from investment operations  | 0.11 | 15.13 | 1.54 | 8.27 | 11.16 |
| **Less Distributions and Dividends to Common Stockholders:** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net investment income  | (4.11) | (3.72) | (0.96) | (0.73) | (0.44) |
| &nbsp;&nbsp;&nbsp;Net realized gain  | (1.29) | (1.68) |  |  |  |
| &nbsp;&nbsp;&nbsp;Return of capital  |  |  | (4.44) | (1.91) | (1.00) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total distributions and dividends to common stockholders  | (5.40) | (5.40) | (5.40) | (2.64) | (1.44) |
| &nbsp;&nbsp;&nbsp;Net Asset Value, end of fiscal year  | $43.25 | $48.54 | $38.81 | $42.67 | $37.04 |
| &nbsp;&nbsp;&nbsp;Per common share fair value, end of fiscal year  | $41.19 | $46.50 | $35.04 | $35.24 | $31.67 |
| &nbsp;&nbsp;&nbsp;Total Investment Return Based on Fair Value <sup>(2)</sup>  | 1.26% | 51.64% | 15.49% | 20.17% | 63.55% |
| **Supplemental Data and Ratios** |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Net assets applicable to common stockholders, end of fiscal year (000's)  | $201922 | $194959 | $84806 | $93160 | $80883 |
| &nbsp;&nbsp;&nbsp;Ratio of expenses to average net assets after waiver <sup>(3)</sup>  | 4.32% | 5.09% | 3.52% | 2.88% | 2.47% |
| &nbsp;&nbsp;&nbsp;Ratio of net investment income (loss) to average net assets before waiver  | (0.66)% | (1.42)% | (0.66)% | (0.66)% | (0.41)% |
| &nbsp;&nbsp;&nbsp;Ratio of net investment income (loss) to average net assets after waiver  | (0.31)% | (1.07)% | (0.35)% | (0.33)% | (0.07)% |
| &nbsp;&nbsp;&nbsp;Portfolio turnover rate  | 147.69% | 141.29% | 161.58% | 142.52% | 114.06% |
| &nbsp;&nbsp;&nbsp;Total borrowings outstanding (in thousands)  | $55315 | $48315 | $19315 | $7315 | $33715 |
| &nbsp;&nbsp;&nbsp;Asset coverage, per $1,000 of indebtedness <sup>(4)</sup>  | $4650 | $5035 | $5391 | $13736 | $3399 |

---

<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Information presented relates to a common share outstanding for the entire fiscal year.

<sup>(2)</sup> &nbsp;&nbsp;&nbsp;&nbsp;The calculation assumes reinvestment of dividends at actual prices pursuant to the Fund's dividend reinvestment plan. Total investment return does not reflect brokerage commissions. 

<sup>(3)</sup> &nbsp;&nbsp;&nbsp;&nbsp;The ratio of expenses to average net assets before waiver was 4.67%, 5.42%, 3.83%, 3.21%, and 2.80% for fiscal years ended November 30, 2025, 2024, 2023, 2022, and 2021, respectively. 

<sup>(4)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Calculated by subtracting the Fund's total liabilities (not including borrowings) from the Fund's total assets and dividing by the total borrowings. 

See Accompanying Notes to the Financial Statements.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Notes to Financial Statements** <br>November 30, 2025<br>

**1. Organization** 

NXG Cushing<sup>®</sup> Midstream Energy Fund was formed as a Delaware statutory trust on May 23, 2007, and is a non-diversified, closed-end investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund is managed by Cushing<sup>®</sup> Asset Management, LP, d/b/a NXG Investment Management (the "Adviser"). The Fund's investment objective is to obtain a high after-tax total return from a combination of capital appreciation and current income. The Fund commenced operations on August 27, 2007. The Fund's common shares are listed on the New York Stock Exchange (the "Exchange") under the symbol "SRV."

The Fund represents a single operating segment. An operating segment is defined in U.S. Generally Accepted Accounting Principles ("U.S. GAAP") as a component of a public entity that engages in business activities from which it may recognize revenues and incur expenses, has operating results that are regularly reviewed by the public entity's chief operating decision maker ("CODM") to make decisions about resources to be allocated to the segment and assess its performance, and has discrete financial information available. The Fund's President is the CODM. The CODM monitors the operating results of the Fund as a whole and the pre-determined Fund's long term investment strategy, which is executed by the portfolio management group. The qualitative and quantitative information contained within the financial statements is used by the CODM to assess the segment's performance versus the Fund's comparative benchmark and to make resource allocation decisions. Segment assets are reflected on the Statement of Assets and Liabilities and segment expenses are listed on the Statement of Operations.

**2. Significant Accounting Policies** 

*A. Use of Estimates* 

The following is a summary of significant accounting policies, consistently followed by the Fund in preparation of the financial statements. The Fund is considered an investment company and accordingly, follows the investment company accounting and reporting guidance of the Financial Accounting Standards Board Accounting Standard Codification Topic 946, *Financial Services — Investment Companies*, which is part of U.S. Generally Accepted Accounting Principles.

The preparation of financial statements in conformity with U.S. GAAP 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 Board of Trustees has designated the Adviser as the "valuation designee" for the Fund pursuant to Rule 2a-5 under the 1940 Act. The valuation designee is responsible for making fair value determinations pursuant to valuation policies and procedures adopted by the Adviser and the Fund (the "Valuation Policy"). A committee of voting members comprised of senior personnel of the Adviser considers various pricing issues and establishes fair valuations of portfolio securities and other instruments held by the Fund in accordance with the Valuation Policy (the "Valuation Committee"). The Adviser as valuation designee is subject to monitoring and oversight by the Board of Trustees. As a general principle, the fair value of a portfolio instrument is the amount that an owner might reasonably expect to receive upon the instrument's current sale. A range of factors and analysis may be considered when determining fair value, including relevant market data, interest rates, credit considerations and/or issuer specific news. The Valuation Committee may consult with and receive input from third parties and will utilize a variety of market data including yields or prices of investments of comparable quality, type of issue, coupon, maturity, rating, indications of value from security dealers, evaluations of anticipated cash flows or collateral,

spread over U.S. Treasury obligations, and other information and analysis. In addition, the Valuation Committee may consider valuations provided by valuation firms retained to assist in the valuation of certain of the Fund's investments. Fair valuation involves subjective judgments. While the Fund's use of fair valuation is intended to result in calculation of net asset value that fairly reflects values of the Fund's portfolio securities as of the time of pricing, the Fund cannot guarantee that any fair valuation will, in fact, approximate the amount the Fund would actually realize upon the sale of the securities in question. It is possible that the fair value determined for a portfolio instrument may be materially different from the value that could be realized upon the sale of that instrument.

The valuation designee uses the following valuation methods to determine fair value as either fair value for investments for which market quotations are available, or if not available, the fair value, as determined in good faith pursuant to the Valuation Policy. The valuation of the portfolio securities of the Fund currently includes the following processes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The market value of each security listed or traded on any recognized securities exchange or automated quotation system will be the last reported sale price at the relevant valuation date on the composite tape or on the principal exchange on which such security is traded except those listed on the NASDAQ Global Market<sup>®</sup>, NASDAQ Global Select Market<sup>®</sup> and the NASDAQ Capital Market<sup>®</sup> exchanges (collectively, "NASDAQ"). Securities traded on NASDAQ will be valued at the NASDAQ Official Closing Price ("NOCP"). If no sale is reported on that date, the security will be valued at the last reported bid price. If the Valuation Committee determines that price is not representative of the actual market price, the Valuation Committee may determine the fair value of the security.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Securities not traded on a U.S. exchange or NASDAQ and foreign securities that are traded on foreign exchanges whose operations are similar to the U.S. over-the-counter market will be valued at prices supplied by a pricing service. If the Valuation Committee determines that price is not representative of the actual market price, the Valuation Committee may determine the fair value of the security.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Debt securities will be valued based on evaluated mean prices by an outside pricing service that employs a pricing model that takes into account bids, yield spreads, and/or other market data and specific security characteristics (*e.g.*, credit quality, maturity and coupon rate). If a price cannot be obtained from pricing services, quotes from market makers or brokers may be used. When possible, more than one market maker or broker should be utilized and the mean of bid and ask prices should be used.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;Private Placements in Public Entities ("PIPES") will be valued using the price of the publicly traded common stock as a baseline, deducting the discount realized on the original purchase and amortizing the difference over the restricted period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;Listed options on debt or equity securities are valued at the last sale price or, if there are no trades for the day, the mean of the closing bid price and ask price. Unlisted options on debt or equity securities are valued based upon their composite bid prices if held long, or their composite ask prices if held short. Futures are valued at the settlement price. Premiums for the sale of options written by an investment company registered under the 1940 Act (a "Registered Fund") will be included in the assets of such Registered Fund, and the market value of such options will be included as a liability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are as of the close of regular trading on the Exchange each day the Exchange is open for trading (or earlier as may be specified by the Registered Fund) and translated into U.S. dollar equivalents at the current prevailing market rates as quoted by a pricing service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) Foreign securities are valued using "fair value factors". Fair value factors consider daily trade activity and price changes for depositary receipts, exchange-traded funds, index futures, foreign currency exchange activity, or other relevant market data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) Over-the-counter options on foreign securities and currencies are fair valued by obtaining the "last available bid" from a single dealer that is either the writer or purchaser of the option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix)&nbsp;&nbsp;&nbsp;&nbsp;Swaps will be valued using market-based prices provided by pricing services or broker-dealer bid counterparty quotations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;Whenever trading in a listed security held in a portfolio is temporarily suspended, halted or delisted from an exchange, the security may be priced using the last closing price for a period of up to 5 business days. The Valuation Committee will continue to monitor the security during this period and, if there is a belief that the last closing price does not reflect the fair value of such security, then the value of such security will be determined by the Valuation Committee based on factors the Valuation Committee deems relevant. Whenever any such valuation determination is made, the Valuation Committee will monitor the market and other sources of information available to it in order to ascertain whether any change in circumstance would suggest a change in the value so determined.

The Fund may engage in short sale transactions. For financial statement purposes, an amount equal to the settlement amount, if any, is included in the Statement of Assets and Liabilities as a liability. The amount of the liability is subsequently marked-to-market to reflect the fair value of the short positions. Subsequent fluctuations in market prices of securities sold short may require purchasing the securities at prices which may differ from the fair value reflected on the Statement of Assets and Liabilities. When the Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale. A gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, will be recognized under the termination of a short sale. The Fund is also subject to the risk that it may be unable to reacquire a security to terminate a short position except at a price substantially in excess of the last quoted price. The Fund is liable for any distributions and dividends (collectively referred to as "Distributions") paid on securities sold short and such amounts, if any, are reflected as a Distribution expense in the Statement of Operations. The Fund's obligation to replace the borrowed security is secured by collateral deposited with the broker-dealer. The Fund also is required to segregate similar collateral to the extent, if any, necessary so that the value of both collateral amounts in the aggregate is at all times equal to at least 100% of the fair value of the securities sold short. The Fund did not participate in short selling activities for the fiscal year ended November 30, 2025.

*C. Security Transactions, Investment Income and Expenses* 

Security transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains and losses are reported on a high cost basis. Interest income is recognized on an accrual basis, including amortization of premiums and accretion of discounts. Distributions are recorded on the ex-dividend date. Distributions received from the Fund's investments in master limited partnerships ("MLPs") generally are comprised of ordinary income, capital gains and return of capital from the MLPs. The Fund records investment income on the ex-date of the distributions. For financial statement purposes, the Fund uses return of capital and income estimates to allocate the distribution income received. Such estimates are based on historical information available from each MLP and other industry sources. These estimates may subsequently be revised based on information received from the MLPs 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 Fund.

The Fund estimates the allocation of investment income and return of capital for the distributions received from its portfolio investments within the Statement of Operations. For the fiscal year ended November 30, 2025, the Fund has estimated approximately 51% of the distributions received from its portfolio investments to be return of capital.

Expenses are recorded on an accrual basis.

*D. Distributions to Shareholders* 

Distributions to common shareholders are recorded on the ex-dividend date. The character of distributions to common shareholders made during the year may differ from their ultimate characterization for federal income tax purposes. The Fund's distributions may include a return of capital to shareholders to the extent that distributions are in excess of the Fund's net investment income and net capital gains, determined in accordance with U.S. federal income tax regulations. Distributions that are treated for U.S. federal income tax purposes as a return of capital will reduce each shareholder's basis in his or her shares and, to the extent the return of capital exceeds such basis, will be treated as a gain to the shareholder from a sale of shares. Returns of shareholder capital may have the effect of reducing the Fund's assets and increasing the Fund's expense ratio. For the fiscal year ended November 30, 2024, the Fund's distributions were 69%, or $10,746,349, ordinary income, 31%, or $4,859,106, long-term capital gains, and 0%, return of capital. For the fiscal year ended November 30, 2025, the Fund's distributions were 76%, or $19,106,042, ordinary income, 24%, or $5,968,669, long-term capital gains, and 0% return of capital, return of capital. The final character of distributions paid for the fiscal year ended November 30, 2025 will be determined in early 2026.

*E. Federal Income Taxation* 

The Fund intends to qualify each year for special tax treatment afforded to a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended ("IRC"). In order to qualify as a RIC, the Fund must, among other things, satisfy income, asset diversification and distribution requirements. As long as it so qualifies, the Fund will not be subject to U.S. federal income tax to the extent that it distributes annually its investment company taxable income (which includes ordinary income and the excess of net short- term capital gain over net long-term capital loss) and its "net capital gain" (*i.e.*, the excess of net long-term capital gain over net short-term capital loss). The Fund intends to distribute at least annually substantially all of such income and gain. If the Fund retains any investment company taxable income or net capital gain, it will be subject to U.S. federal income tax on the retained amount at regular corporate tax rates. In addition, if the Fund fails to qualify as a RIC for any taxable year, it will be subject to U.S. federal income tax on all of its income and gains at regular corporate tax rates.

The Fund recognizes in the financial statements the impact of a tax position, if that position is more-likely- than-not to be sustained on examination by the taxing authorities, based on the technical merits of the position. Tax benefits resulting from such a position are measured as the amount that has a greater than fifty percent likelihood on a cumulative basis to be sustained on examination.

*F. Cash and Cash Equivalents* 

The Fund considers all highly liquid investments purchased with initial maturity equal to or less than three months to be cash equivalents.

*G. Cash Flow Information* 

The Fund makes distributions from investments, which include the amount received as cash distributions from MLPs, common stock dividends and interest payments. These activities are reported in the Statement of Changes in Net Assets, and additional information on cash receipts and payments is presented in the Statement of Cash Flows.

*H. Indemnification* 

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

*I. Derivative Financial Instruments* 

The Fund provides disclosure regarding derivatives and hedging activity to allow investors to understand how and why the Fund uses derivatives, how derivatives are accounted for, and how derivative instruments affect the Fund's results of operations and financial position.

The Fund occasionally purchases and sells ("writes") put and call equity options as a source of potential protection against a broad market decline. A purchaser of a put option has the right, but not the obligation, to sell the underlying instrument at an agreed upon price ("strike price") to the option seller. A purchaser of a call option has the right, but not the obligation, to purchase the underlying instrument at the strike price from the option seller. Options are settled for cash.

*Purchased Options* — Premiums paid by the Fund for purchased options are included in the Statement of Assets and Liabilities as an investment. The option is adjusted daily to reflect the fair value of the option and any change in fair value is recorded as unrealized appreciation or depreciation of investments. If the option is allowed to expire, the Fund will lose the entire premium paid and record a realized loss for the premium amount. Premiums paid for purchased options which are exercised or closed are added to the amounts paid or offset against the proceeds on the underlying investment transaction to determine the realized gain/loss or cost basis of the security.

*Written Options* — Premiums received by the Fund for written options are included in the Statement of Assets and Liabilities. The amount of the liability is adjusted daily to reflect the fair value of the written option and any change in fair value is recorded as unrealized appreciation or depreciation of options. Premiums received from written options that expire are treated as realized gains. The Fund records a realized gain or loss on written options based on whether the cost of the closing transaction exceeds the premium received. If a call option is exercised by the option buyer, the premium received by the Fund is added to the proceeds from the sale of the underlying security to the option buyer and compared to the cost of the closing transaction to determine whether there has been a realized gain or loss. If a put option is exercised by an option buyer, the premium received by the option seller reduces the cost basis of the purchased security.

Written uncovered call options subject the Fund to unlimited risk of loss. Written covered call options limit the upside potential of a security above the strike price. Put options written subject the Fund to risk of loss if the value of the security declines below the exercise price minus the put premium.

The Fund is not subject to credit risk on written options as the counterparty has already performed its obligation by paying the premium at the inception of the contract.

The Fund has adopted the disclosure provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification 815, Derivatives and Hedging ("ASC 815"). ASC 815 requires enhanced disclosures about the Fund's use of and accounting for derivative instruments and the effect of derivative instruments on the Fund's results of operations and financial position. Tabular disclosure regarding derivative fair value and gain/ loss by contract type (*e.g.*, interest rate contracts, foreign exchange contracts, credit contracts, etc.) is required and derivatives accounted for as hedging instruments under ASC 815 must be disclosed separately from those that do not qualify for hedge accounting. Even though the Fund may use derivatives in an attempt to achieve an economic hedge, the Fund's derivatives are not accounted for as hedging instruments under ASC 815 because investment companies account for their derivatives at fair value and record any changes in fair value in current period earnings.

The average monthly fair value of purchased options during the fiscal year ended November 30, 2025 was $12,562.

The average monthly fair value of written options during the fiscal year ended November 30, 2025 was $122,041.

The effect of derivative instruments on the Statement of Operations for the fiscal year ended November 30, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Liability Derivatives** | **Liability Derivatives** | **Liability Derivatives** | **Liability Derivatives** | **Liability Derivatives** |
| **Risk Exposure Category** | **Statement of Asset and Liabilities Location** | **Statement of Asset and Liabilities Location** | **Fair Value** | **Fair Value** |
| Equity Contracts  |  | Written options, at fair value | $|  |

---

---

| | | | |
|:---|:---|:---|:---|
| **Amount of Realized Gain on Derivatives Recognized in Income** | **Amount of Realized Gain on Derivatives Recognized in Income** | **Amount of Realized Gain on Derivatives Recognized in Income** | **Amount of Realized Gain on Derivatives Recognized in Income** |
| **Derivatives not accounted for as hedging instruments under ASC 815** | **Purchased <br> Options** | **Written <br> Options** | **Total** |
| Equity Contracts  | $373785 | $7594358 | $7968143 |

---

---

| | | | |
|:---|:---|:---|:---|
| **Amount of Unrealized Appreciation on Derivatives Recognized in Income** | **Amount of Unrealized Appreciation on Derivatives Recognized in Income** | **Amount of Unrealized Appreciation on Derivatives Recognized in Income** | **Amount of Unrealized Appreciation on Derivatives Recognized in Income** |
| **Derivatives not accounted for as hedging instruments under ASC 815** | **Purchased <br> Options** | **Written <br> Options** | **Total** |
| Equity Contracts  | $— | $— | $— |

---

*J. Recent Accounting Pronouncements* 

On December 14, 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, which establishes new income tax disclosure requirements and modifies or eliminates certain existing disclosure provisions. The amendments in the ASU are intended to address investor requests for more transparency about income tax information and to improve the effectiveness of income tax disclosures. ASU 2023-09 applies to all entities that are subject to ASC 740, Income Taxes. The guidance is effective for the Fund's fiscal year beginning December 1, 2025 and is applied on a prospective basis. The adoption of this guidance does not have an impact on the Fund's financial statements.

On 4 November 2024, the FASB issued ASU 2024-03, which requires a Public Business Entity ("PBE") to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items on the face of the income statement. The guidance addresses investors' requests for more detailed expense information, which they said is critical to understanding an entity's performance, assessing its prospects for future cash flows, and comparing its performance both over time and with that of other entities. The guidance is effective for the Fund's fiscal year beginning December 1, 2026 and is applied on a prospective basis. The adoption of this guidance does not have an impact on the Fund's financial statements.

**3. Concentrations of Risk** 

The Fund, under normal market conditions, invests at least 80% of its assets (net assets plus any borrowings for investment purposes) in a portfolio of midstream energy investments. Therefore, the Fund may be subject to more risks than if they were more broadly diversified over numerous industries and sectors of the economy. General changes in market sentiment towards companies in the sectors in which they invest may adversely affect the Fund, and the performance of such sectors may lag behind the broader market as a whole.

The Fund is also subject to MLP structure risk. Holders of MLP units are subject to certain risks inherent in the structure of MLPs, including (i) tax risks, (ii) the limited ability to elect or remove management or the general partner or managing member, (iii) limited voting rights, except with respect to extraordinary transactions, and (iv) conflicts of interest between the general partner or managing member and its affiliates, on the one hand, and the limited partners or members, on the other hand, including those arising from incentive distribution payments or corporate opportunities.

**4. Agreements and Related Party Transactions** 

The Fund has entered into an Investment Management Agreement with the Adviser (the "Agreement"). Under the terms of the Agreement, the Fund pays the Adviser a fee, payable at the end of each calendar month, at an annual rate equal to 1.25% of the average weekly value of the Fund's Managed Assets during such month for the services and facilities provided by the Adviser to the Fund. "Managed Assets" means the total assets of the Fund, minus all accrued expenses incurred in the normal course of operations other than liabilities or obligations attributable to investment leverage, including, without limitation, investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of shares of preferred stock or other similar preference securities and/or (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objective and policies. The Fund's Board of Trustees has approved a waiver of the advisory fees to be paid to the Adviser in the amount of 0.25% of the Fund's Managed Assets. The Adviser earned $3,276,885 and waived $655,377 in advisory fees for the fiscal year ended November 30, 2025. The Adviser will not recoup any of the waived expenses from the Fund.

The Fund has engaged U.S. Bancorp Fund Services, LLC, d/b/a U.S. Bancorp Global Fund Services ("Fund Services") to serve as the Fund's administrator. The Fund pays the administrator a monthly fee computed at an annual rate of 0.08% of the first $100,000,000 of the Fund's average daily net assets, 0.05% on the next $200,000,000 of average daily net assets and 0.04% on the balance of the Fund's average daily net assets, with a minimum annual fee of $45,000.

Fund Services serves as the Fund's transfer agent, dividend paying agent, and agent for the automatic dividend reinvestment plan.

U.S. Bank, N.A. serves as the Fund's custodian. The Fund pays the custodian a monthly fee computed at an annual rate of 0.004% of the Fund's average daily market value, with a minimum annual fee of $4,800.

Fees paid to trustees for their services to the Fund are reflected as Trustees' fees on the Statement of Operations.

**5. Income Taxes** 

It is the Fund's intention to continue to qualify as a RIC under Subchapter M of the IRC and distribute all of its taxable income. Accordingly, no provision for federal income taxes is required in its financial statements.

The Company follows ASC 740, Income Taxes ("ASC 740"). ASC 740 provides guidance for how uncertain tax positions should be recognized, measured, presented and disclosed in the financial statements. ASC 740 requires the Company to evaluate tax positions taken or expected to be taken in the course of preparing its consolidated financial statements to determine whether the tax positions are "more-likely-than-not" to be sustained by the applicable tax authority. Tax positions not deemed to meet the "more-likely-than-not" threshold are reserved and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

The amount and character of income and capital gain distributions to be paid, if any, are determined in accordance with federal income tax regulations, which may differ from U.S. generally accepted accounting principles. These differences are primarily due to differences in the timing of recognition of gains or losses on investments. Permanent book and tax basis differences resulted in the reclassifications of $620,925 to accumulated net gains and $620,925 from additional paid-in capital.

The following information is provided on a tax basis as of November 30, 2025:

---

| | |
|:---|:---|
| Cost of investments  | $241764177 |
| Gross unrealized appreciation  | 26309289 |
| Gross unrealized depreciation  | (10948736) |

---

---

| | |
|:---|:---|
| Net unrealized appreciation  | 15360553 |
| Undistributed ordinary income  |  |
| Undistributed long-term gains  | 15245820 |
| Other accumulated losses  | (10727742) |
| Accumulated net gains  | $19878631 |

---

As of November 30, 2025, for federal income tax purposes, capital loss carryforwards of $10,463,050 were available as shown in the table below, to the extent provided by the Internal Revenue Code, to offset future realized capital gains through the years indicated.

---

| | | |
|:---|:---|:---|
| **Fiscal year ended capital losses** | **Amount** | **Expiration** |
| November 30, 2020  | $10463050 | Annual Limit\* |
| Total  | $10463050 |  |

---

\* Losses acquired from The Cushing Energy Income Fund are subject to Sec. 382 annual limits of $188,142. 

The Fund utilized $188,142 of capital loss carryforward during the fiscal year ended November 30, 2025.

The Fund recognizes the tax benefits of uncertain tax positions only where the position is "more likely than not" to be sustained assuming examination by tax authorities. Management has analyzed the Fund's tax positions and has concluded that no liability for unrecognized tax benefits should be recorded related to uncertain tax positions taken on U.S. tax returns and state tax returns filed since inception of the Fund. No income tax returns are currently under examination. All tax years beginning with November 30, 2022 remain subject to examination by the tax authorities in the United States. Due to the nature of the Fund's investments, the Fund may be required to file income tax returns in several states. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next 12 months.

**6. Fair Value Measurements** 

Various inputs that are used in determining the fair value of the Fund's investments are summarized in the three broad levels listed below:

● Level 1 — quoted prices in active markets for identical securities

● Level 2 — other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, credit risk, etc.)

● Level 3 — significant unobservable inputs (including the Fund'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.

These inputs are summarized in the three levels listed below.

---

| | | | | |
|:---|:---|:---|:---|:---|
| | | **Fair Value Measurements at Reporting Date Using** | **Fair Value Measurements at Reporting Date Using** | **Fair Value Measurements at Reporting Date Using** |
| <br>**Description** | <br>**Fair Value at <br> November 30, <br> 2025** | **Quoted Prices in <br> Active Markets <br> for Identical <br> Assets <br> (Level 1)** | **Significant <br> Other <br> Observable <br> Inputs <br> (Level 2)** | **Significant <br> Unobservable <br> Inputs <br> (Level 3)** |
| **Assets**  |  |  |  |  |
| Equity Securities  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Common Stock<sup>(a)</sup>  | $179065400 | $179065400 | $— | $— |
| &nbsp;&nbsp;&nbsp;Master Limited Partnerships and Related Companies<sup>(a)</sup>  | 73978270 | 73978270 |  |  |
| &nbsp;&nbsp;&nbsp;Preferred Stock<sup>(a)</sup>  | 2433954 | 2433954 |  |  |
| Total Equity Securities  | 255477624 | 255477624 |  |  |
| Other  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Short-Term Investments — Investment Companies<sup>(a)</sup>  | 1650564 | 1650564 |  |  |
| Total Assets  | $257128188 | $257128188 | $— | $— |

---

<sup>(a)</sup> &nbsp;&nbsp;&nbsp;&nbsp;All other industry classifications are identified in the Schedule of Investments. The Fund did not hold Level 3 investments at any time during the fiscal year ended November 30, 2025.

**7. Investment Transactions** 

For the fiscal year ended November 30, 2025, the Fund purchased (at cost) and sold securities (proceeds) in the amount of 578,760,649 and $373,031,065 (excluding short-term securities), respectively. The Fund sold written options (proceeds) in the amount of $9,109,304.

**8. Common Shares** 

The Fund had unlimited common shares of beneficial interest authorized and 4,667,609 shares outstanding as of November 30, 2025. Transactions in common shares for the fiscal years ended November 30, 2024 and 2025 were as follows:

---

| | |
|:---|:---|
| Shares at November 30, 2023  | 2184950 |
| Shares issued through reinvestment of distributions | 5419 |
| Shares issued in connection with conducting a rights offering | 1732493 |
| Shares issued in connection with at-the-market offering | 93843 |
| Shares at November 30, 2024 | 4016705 |
| Shares issued through reinvestment of distributions  | 8682 |
| Shares issued in connection with at-the-market offering  | 642222 |
| Shares at November 30, 2025  | 4667609 |

---

On May 17, 2024, the Fund entered into a Distribution Agreement (the "Distribution Agreement") with Foreside Fund Services, LLC (the "Distributor"), pursuant to which the Fund may offer and sell up to 175,000 common shares, from time to time, through the Distributor, in transactions that are deemed to be "at-the-market" as defined in Rule 415 under the Securities Act of 1933. The minimum price on any day at which common shares may be sold will not be less than the then current net asset value per common share plus any commissions to be paid to the Distributor. For the fiscal year 2024, the Fund issued 93,843 shares, generating gross proceeds of $4 million under the Distribution Agreement. On January 13, 2025, the Fund amended the agreement to increase the offering capacity to 745,000 common shares, subject to the same pricing conditions. For the fiscal year ended November 30, 2025, the Fund issued 642,222 shares under the Distribution Agreement, generating gross proceeds of $27.6 million.

**9. Borrowing Facilities** 

The Fund maintains a margin account arrangement with Scotiabank™. The interest rate charged on margin borrowing is tied to the cost of funds for Scotiabank™, approximating SOFR plus 0.75%. Proceeds from the margin account arrangement are used to execute the Fund's investment objective.

The average principal balance and interest rate for the period during which the credit facilities were utilized during the fiscal year ended November 30, 2025 was $74,147,000 and 5.01%, respectively. As of November 30, 2025, the principal balance outstanding was $55,315,000 and accrued interest expense was $6,043.

**10. Subsequent Events** 

Subsequent to November 30, 2025, the Fund declared monthly distributions to common shareholders in the amounts of $0.4500 per share, payable on December 31, 2025 and January 30, 2026, to shareholders of record on December 2, 2025 and January 16, 2026, respectively. On December 31, 2025, the Fund paid a special distribution of $2.14 to shareholders of record on December 29, 2025 to meet its 2025 distribution requirements as a regulated investment company for U.S. federal income tax purposes.

Subsequent to November 30, 2025, the Fund completed a transferable rights offering (the "Offering"). The Offering commenced on November 17, 2025 and expired on December 11, 2025. Pursuant to the Offering, shareholders were entitled to subscribe for up to an aggregate of 1,555,870 common shares of beneficial interest, par value $0.001 per share, at a subscription price equal to 92.5% of the Fund's net asset value per share as of the close of trading on the New York Stock Exchange on the expiration date, which resulted in a subscription price of $39.89 per share. The Offering was oversubscribed, and common shares were allocated on a pro rata basis in accordance with the terms of the Offering.

Gross proceeds from the Offering were approximately $62.0 million, prior to the deduction of offering expenses. The Fund intends to invest the net proceeds of the Offering in accordance with its investment objective and policies.

There were no additional subsequent events through the date the financial statements were issued that would require adjustments to or additional disclosure in these financial statements.

NXG Cushing Midstream Energy Fund <br>**Report of Independent Registered Public Accounting Firm**<br>

To the Shareholders and the Board of Trustees of

NXG Cushing Midstream Energy Fund

**Opinion on the Financial Statements** 

We have audited the accompanying statement of assets and liabilities of NXG Cushing Midstream Energy Fund (the "Fund"), including the schedule of investments, as of November 30, 2025, the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, the financial highlights for each of the five years in the period then ended and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Fund at November 30, 2025, the results of its operations and its cash flows for the year then ended, the changes in its net assets for each of the two years in the period then ended and its financial highlights for each of the five years in the period then ended, in conformity with U.S. generally accepted accounting principles.

**Basis for Opinion** 

These financial statements are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of the Fund's internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2025, by correspondence with the custodian. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

![](fp0096655-1_26.jpg)

We have served as the auditor of one or more NXG investment companies since 2011.

Dallas, Texas

January 29, 2026

NXG Cushing Midstream Energy Fund <br>**Trustees and Executive Officers (Unaudited)**<br>

**Board of Trustees** 

The Board of Trustees of the Fund provides broad oversight over the operations and affairs of the Fund and protects the interests of shareholders. The Board of Trustees of the Fund has overall responsibility for monitoring the operations of the Fund and for supervising the services provided by the Investment Adviser and other organizations. The officers of the Fund are responsible for managing the day-to-day operations of the Fund.

The names and ages of the Trustees and officers of the Fund, the year each was first elected or appointed to office, their principal business occupations during the last five years, the number of funds overseen by each Trustee and other directorships or trusteeships during the last five years are shown below. The business address of the Fund, its Trustees and officers is One Energy Square, 4925 Greenville Avenue, Suite 1310, Dallas, Texas 75206.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and <br> Year of Birth** | **Position(s) Held <br> With the Fund** | **Term of <br> Office and <br> Length <br> of Time <br> Served<sup>(1)</sup>** | **Principal Occupations <br> During Past Five Years** | **Number of <br> Portfolios <br> in Fund <br> Complex<sup>(2)</sup>** **<br> Overseen <br> by Trustee** | **Other Directorships Held by Trustee <br> During the Past Five Years** |
| **Independent Trustees** | **Independent Trustees** |  |  |  |  |
| Brian R. Bruce<br> (1955) | Chair of the Board | Trustee <br> since 2007 | Retired. Previously, Chief Executive Officer, Hillcrest Asset Management, LLC (2008–2022) (registered investment adviser). | 2 | CM Advisers Family of Funds (2 series) (2003-2020). |
| Andrea N. Mullins <br> (1967) | Trustee and Chair of Audit Committee | Trustee <br> since 2021 | Private Investor; Independent Contractor, SWM Advisors (2014-present) | 2 | Valued Advisers Trust (14 portfolios) (2013-present); Angel Oak Family of Funds (9 portfolios) (2019-present). |
| John H. Alban\* (1963) | Trustee | Trustee since April 2023 | Retired. Previously, Chief Executive Officer (2019-2022) and Chief Operating Officer (2010-2022) of the Adviser; Chief Executive Officer and President of funds in the Fund Complex (2021-2022). | 2 | None. |
| **Interested Trustee** | **Interested Trustee** |  |  |  |  |
| John Musgrave\*\* <br>(1982)  | Trustee, Chief Executive Officer and President | Trustee since January 2025 | Chief Executive Officer and President (2023-Present), Co-Chief Investment Officer (2016-2023), Managing Director (2016-2023), Chief Investment Officer (2023-present) and Portfolio Manager (2007-Present) of the Investment Adviser. | 2 | None. |

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<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Each Trustee serves a two-year term concurrent with the class of Trustees for which he serves.

● Brian R. Bruce and John H. Alban, as Class I Trustees, are expected to stand for re-election at the Fund's 2026 annual meeting of shareholders.

● Andrea N. Mullins, as Class II Trustee, is expected to stand for re-election at the Fund's 2027 annual meeting of shareholders.

● John Musgrave as Class III Trustee, is expected to stand for re-election at the Fund's 2028 annual meeting of shareholders.

<sup>(2)</sup> <sup></sup>The "Fund Complex" includes each other registered investment company for which the Investment Adviser serves as investment adviser. As of the date of this report, there are two funds (including the Fund) in the "Fund Complex."

\*<sup></sup> Mr. Alban is an "interested person" of the Fund, as defined under the 1940 Act, by virtue of his position as Chief Executive Officer and Chief Operating Officer of the Investment Adviser prior to November 30, 2022.

\*\*<sup></sup> Mr. Musgrave is an "interested person" of the Fund, as defined under the 1940 Act, by virtue of his position as Chief Executive Officer and President, Chief Investment Officer and Portfolio Manager of the Investment Adviser.

**Executive Officers** 

The following information relates to the executive officers of the Funds who are not Trustees. The officers of the Fund were appointed by the Board of Trustees and will serve until their respective successors are chosen and qualified.

---

| | | |
|:---|:---|:---|
| **Name and <br> Year of Birth** | **Position** | **Principal Occupation During the Past Five Years** |
| John Musgrave <br> (1982) | Chief Executive Officer and President | Chief Executive Officer and President (2023-Present), Co-Chief Investment Officer (2016-2023), Managing Director (2016-2023), Chief Investment Officer (2023-present) and Portfolio Manager (2007-Present) of the Investment Adviser. |
| Blake R. Nelson <br>(1986) | Chief Financial Officer and Treasurer | Chief Financial Officer (2021-present) and Controller (2013-2021) of the Adviser. Previously, fund accountant at JD Clark & Company (2011-2013). Mr. Nelson is a Certified Public Accountant. |
| Brad Mead <br> (1990) | Chief Compliance Officer and Secretary | Chief Compliance Officer of the Adviser and funds in the fund complex (2024-present); Senior Compliance Consult at Cloudbreak Compliance Group (2023 -2024); Senior Manager, Manager, and Senior Associate of Compliance at IQEQ (2020-2023); Senior Associate and Associate of Compliance at Blue River Partners LLC (2018-2020). |

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NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Certain Changes Occurring During the Prior Fiscal Year (Unaudited)** <br>

The following information is a summary of certain changes during the most recent fiscal year. This information may not reflect all of the changes that have occurred since you purchased shares of the Fund.

**Change in Non-Fundamental Investment Policies** 

None.

NXG Cushing<sup>®</sup> Midstream Energy Fund <br>**Additional Information (Unaudited)** <br>November 30, 2025<br>

**SUMMARY OF FUND EXPENSES** 

The following table contains information about the costs and expenses that common shareholders will bear directly or indirectly. The table is based on the capital structure of the Fund as of November 30, 2025 (except as noted below). The purpose of the table and the example below is to help you understand the fees and expenses that you, as a holder of common shares, would bear directly or indirectly.

---

| | |
|:---|:---|
| **Shareholder transaction expenses** |  |
| Sales load (as a percentage of estimated offering price)  | —%<sup>(1)</sup> |
| Offering expenses borne by the Fund (as a percentage of estimated offering price)  | —%<sup>(1)</sup> |
| Dividend reinvestment plan fees (per transaction sales fee)  | $15.00<sup>(2)</sup> |

---

---

| | |
|:---|:---|
| **Annual Expenses** | **Percentage of Net Assets Attributable to Common Shares** **<sup>(3)</sup>** |
| Management fees<sup>(4)(5)</sup>  | 1.59% |
| Interest payments on borrowed funds<sup>(6)</sup>  | 1.27% |
| Other expenses<sup>(7)</sup>  | 0.84% |
| Total annual expenses<sup>(5)</sup>  | 3.70% |

---

<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;If common shares to which this Report relates are sold to or through underwriters, the Prospectus Supplement will set forth any applicable sales load and the estimated offering expenses borne by the Fund.

<sup>(2)</sup> &nbsp;&nbsp;&nbsp;&nbsp;There will be no brokerage charges with respect to common shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with open-market purchases. In addition, participants who request a sale of shares through the Plan Agent are subject to a $15.00 per transaction sales fee and pay a brokerage commission of $0.12 per share sold. The Fund's transfer agent serves as Plan Agent. Fees paid by the Fund to the transfer agent are included in "Other Expenses" below, which are ultimately borne by common shareholders. For additional information, see "Additional Information (Unaudited)—Distribution Reinvestment Plan." 

<sup>(3)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Based upon net assets attributable to common shares as of November 30, 2025.

<sup>(4)</sup> &nbsp;&nbsp;&nbsp;&nbsp;The Fund pays the Investment Adviser an annual fee, payable monthly, in an amount equal to 1.25% of the Fund's average weekly Managed Assets. The fee shown above is based upon outstanding leverage of 21.51% of the Fund's Managed Assets (or 27.39% of the Fund's net assets attributable to common shares). If leverage of more than 21.51% of the Fund's Managed Assets (or 27.39% of the Fund's net assets attributable to common shares) is used, the management fees, as a percentage of net assets attributable to common shares would be higher than as shown above. 

<sup>(5)</sup> &nbsp;&nbsp;&nbsp;&nbsp;The Investment Adviser has contractually agreed to waive a portion of the management fee in the amount equal to 0.25% of the Fund's Managed Assets through November 12, 2026. The Fund's annual expenses after giving effect to such management fee waiver are: 

---

| | |
|:---|:---|
| **Annual Expenses** | **Percentage of Net Assets Attributable to Common Shares** **<sup>(3)</sup>** |
| Management fees<sup>(4)</sup>  | 1.59% |
| Interest payments on borrowed funds<sup>(6)</sup>  | 1.27% |
| Other expenses<sup>(7)</sup>  | 0.84% |
| Total annual expenses  | 3.70% |
| Fee Waiver  | (0.32)% |
| Total annual expenses after fee waiver  | 3.38% |

---

<sup>(6)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Based upon the Fund's outstanding borrowings as of November 30, 2025 of $55.315 million and the interest rate as of November 30, 2025, of 4.62%. 

<sup>(7)</sup> "Other expenses" are estimated based upon those incurred during the fiscal period ended November 30, 2025. Other expenses do not include expense related to realized or unrealized investment gains or losses. See "Additional Information (Unaudited)—Management of the Fund—Fund Expenses." 

**EXAMPLE** 

As required by relevant SEC regulations, the following example illustrates the expenses that you would pay on a $1,000 investment in common shares, assuming (1) Total annualized expenses of 3.70% of net assets attributable to common shares and (2) a 5% annual return\*:

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **1 Year** | **3 Years** | **5 Years** | **10 Years** |
| Total expenses incurred  | $37 | $113 | $191 | $395 |

---

\* **The example should not be considered a representation of future expenses or returns. Actual expenses may be greater or less than those shown.** Moreover, the Fund's actual rate of return may be greater or less than the hypothetical 5% return shown in the example. The example assumes that all distributions are reinvested at net asset value. 

**MARKET AND NET ASSET VALUE INFORMATION** 

The Fund's currently outstanding common shares are, and the common shares offered by this Report, will be, subject to notice of issuance, listed on the New York Stock Exchange (the "NYSE"). The Fund's common shares commenced trading on the NYSE on August 27, 2007.

Historically, the common shares have generally traded at a discount to the Fund's net asset value per share. Shares of closed-end investment companies frequently trade at a discount to net asset value. The Fund's net asset value will be reduced immediately following an offering of the common shares due to the costs of such offering, which will be borne entirely by the Fund. The sale of common shares by the Fund (or the perception that such sales may occur) may have an adverse effect on prices of common shares in the secondary market. An increase in the number of common shares available may put downward pressure on the market price for common shares. See "Additional Information (Unaudited)—Risks—Market Discount From Net Asset Value."

The following table sets forth, for each of the periods indicated, the high and low closing market prices for the common shares on the NYSE, the net asset value per common share and the premium or discount to net asset value per common share at which the common shares were trading.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Market Price** | **Market Price** | **Corresponding Net Asset <br> Value Per Common Share** | **Corresponding Net Asset <br> Value Per Common Share** | **Corresponding Premium <br> (Discount) as a Percentage <br> of Net Asset Value** | **Corresponding Premium <br> (Discount) as a Percentage <br> of Net Asset Value** |
| ***Fiscal Quarter Ended*** | **High** | **Low** | **High** | **Low** | **High** | **Low** |
| November 30, 2025 | $45.95 | $40.18 | $43.63 | $41.74 | 5.32% | (3.74)% |
| August 31, 2025 | $44.44 | $40.40 | $43.39 | $41.07 | 2.42% | -1.63% |
| May 31, 2025 | $44.84 | $35.86 | $43.92 | $35.23 | 2.09% | 1.79% |
| February 28, 2025 | $49.61 | $41.20 | $48.52 | $41.89 | 2.25% | -1.65% |
| November 30, 2024 | $47.20 | $40.07 | $44.20 | $43.15 | 6.79% | -7.14% |
| August 31, 2024 | $43.60 | $39.06 | $41.86 | $39.21 | 4.16% | -0.38% |
| May 31, 2024 | $45.03 | $37.94 | $41.55 | $39.35 | 8.38% | -3.59% |
| February 29, 2024 | $37.86 | $32.51 | $37.71 | $36.14 | 0.40% | -10.04% |

---

As of November 30, 2025, the net asset value of the Fund's common shares was $43.26 per common share, and the last reported sale price for the Fund's common shares on the NYSE was $41.19 per common share, representing a discount to net asset value of (4.79)%. The Fund cannot predict whether its common shares will trade in the future at a premium to or discount from net asset value, or the level of any premium or discount. Shares of closed-end investment companies frequently trade at a discount from net asset value. As of November 30, 2025, 4,667,609 common shares of the Fund were outstanding.

**Capitalization** 

The following information regarding the Fund's authorized shares is as of November 30, 2025:

---

| | | | |
|:---|:---|:---|:---|
| **Title of Class** | **Amount Authorized** | **Amount Held<br> by Fund<br> for its <br> own Account** | **Amount<br> Outstanding<br> Exclusive of <br> Amounts held<br> by Fund**  |
| Common Shares of <br> Beneficial Interest | Unlimited | None | 4,667,609 |

---

**INVESTMENT OBJECTIVE AND POLICIES** 

**Investment Objective** 

The Fund's investment objective is to obtain a high after-tax total return from a combination of capital appreciation and current income. There can be no assurance that the Fund's investment objective will be achieved.

**Principal Investment Policies** 

The Fund seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of Managed Assets (as defined in this report) in a portfolio of midstream energy investments (the "80% policy"). For purposes of the Fund's 80% policy, midstream energy investments are investments that offer economic exposure to securities of midstream energy companies, which are companies that provide midstream energy services, including the gathering, transporting, processing, fractionation, storing, refining and distribution of natural resources, such as natural gas, natural gas liquids, crude oil refined petroleum products, biofuels, carbon sequestration, solar, and wind. The Fund considers a company to be a midstream energy company if at least 50% of its assets, income, sales or profits are committed to or derived from midstream energy services.

The Fund invests in equity and debt securities of midstream energy companies, and invests in U.S. and non-U.S. securities and in issuers of any market capitalization size.

As an alternative to holding investments directly, the Fund may obtain investment exposure through derivatives transactions intended to replicate, modify or replace the economic attributes associated with investment in securities in which the Fund is permitted to invest directly. To the extent that the Fund invests in synthetic investments with economic characteristics similar to investments in midstream energy companies, the market value (or, if market value is unavailable, the fair value) of such investments will be counted for purposes of the Fund's policy of investing at least 80% of its Managed Assets in a portfolio of midstream energy investments. For a discussion of derivative instruments in which the Fund may invest, see "Additional Information (Unaudited)—Additional Investment Practices—Strategic Transactions."

The Fund has previously qualified, and intends to continue to qualify, to be treated as a regulated investment company ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code"). The Fund pursues its investment objective by generally investing in MLPs up to the maximum extent permitted of a RIC under the Code. Accordingly, the Fund will, as of the end of each fiscal quarter, invest no more than 25% of Managed Assets in securities of MLPs and other entities that are "qualified publicly traded partnerships" under the Code.

The Fund generally seeks to invest no more than 10% of Managed Assets in any one issue and no more than 15% of Managed Assets in any one issuer, in each case, determined at the time of investment. For purposes of this limit, with respect to an investment in an MLP, an "issuer" includes both an issuer and its controlling general partner, managing member or sponsor, and an "issue" is a class of an issuer's securities or a derivative security that tracks that class of securities.

The Fund seeks attractive investment opportunities by investing in initial public offerings ("IPOs") and secondary market issuances, private investment in public equity ("PIPE") transactions and privately negotiated transactions, including pre-acquisition and pre-IPO equity issuances and investments in private companies.

Generally, no more than 50% of the Fund's portfolio will be in PIPE or other private or restricted securities at the time of investment. "Restricted securities" are securities that are unregistered, held by control persons of the issuer or are subject to contractual restrictions on resale. The Fund will typically acquire restricted securities in directly negotiated transactions. The Fund's investments in restricted securities may include privately issued securities of both public and private issuers.

The Fund invests up to 20% of its Managed Assets in investments other than midstream energy investments, including equity securities of issuers other than midstream energy companies.

The Fund's investments in non-U.S. securities include securities of issuers in emerging markets. The Fund's investments in non-U.S. securities also includes non-U.S. securities represented by American Depositary Receipts ("ADRs"), which are certificates evidencing ownership of shares of a non-U.S. issuer that are issued by depositary banks and generally trade on an established market in the United States or elsewhere.

The Fund invests, without limitation, in debt securities rated, at the time of investment, at least (i) B3 by Moody's Investors Service, Inc. ("Moody's"), (ii) B- by Standard & Poor's Ratings Services ("S&P") or Fitch Ratings ("Fitch"), or (iii) a comparable rating by another rating agency, and invests no more than 5% of its Managed Assets in debt securities rated below B3 by Moody's, B- by S&P or Fitch or a comparable rating by another rating agency. Therefore, the Fund may invest in below investment grade debt securities. A debt security is considered below investment grade if it is rated below Baa3- by Moody's or below BBB- by S&P or Fitch or a comparable rating by another rating agency. Below investment grade debt securities are often referred to as "high yield" securities or "junk bonds." Below investment grade debt securities are regarded as having predominantly speculative characteristics with respect to capacity to pay interest and to repay principal. Debt securities in which the Fund invests may be of any maturity.

The credit quality policies noted above apply only at the time a security is purchased, and the Fund is not required to dispose of a security in the event that a rating agency downgrades its assessment of the credit characteristics of a particular issue. In determining whether to retain or sell such a security, the Investment Adviser may consider such factors as the Investment Adviser's assessment of the credit quality of the issuer of such security, the price at which such security could be sold and the rating, if any, assigned to such security by other rating agencies. Rating agencies are private services that provide ratings of the credit quality of debt obligations. Ratings assigned by a rating agency are not absolute standards of credit quality and do not evaluate market risks or the liquidity of securities. Rating agencies may fail to make timely changes in credit ratings; and an issuer's current financial condition may be better or worse than a rating indicates. To the extent that the issuer of a security pays a rating agency for the analysis of its security, an inherent conflict of interest may exist that could affect the reliability of the rating. See "Appendix A: Description of Securities Ratings" in the Fund's Statement of Additional Information (the "SAI").

As used in this report (except as noted below), "Managed Assets" means the total assets of the Fund, minus all accrued expenses incurred in the normal course of operations other than liabilities or obligations attributable to investment leverage, including, without limitation, investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of shares of preferred stock ("preferred shares") or other similar preference securities and/or (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objective and policies. Solely for purposes of the Fund's 80% policy, "Managed Assets" means net assets, plus the amount of any borrowings for investment purposes.

As an alternative to holding investments directly, the Fund may obtain investment exposure through derivatives transactions intended to replicate, modify or replace the economic attributes associated with investment in securities in which the Fund is permitted to invest directly. To the extent that the Fund invests in synthetic investments with economic characteristics similar to investments in midstream energy companies, the market value (or, if market value is unavailable, the fair value) of such investments will be counted for purposes of the

Fund's policy of investing at least 80% of its Managed Assets in a portfolio of midstream energy investments. For a discussion of derivative instruments in which the Fund may invest, see "Additional Information (Unaudited)—Investment Objective and Policies—Additional Investment Practices—Strategic Transactions."

The Fund's investment objective and percentage parameters, including its 80% policy, are not fundamental policies of the Fund and may be changed without shareholder approval. Shareholders, however, will be notified in writing of any change at least 60 days prior to effecting any such change.

**Midstream Energy Companies** 

Midstream energy companies' operations are often referred to in the context of the following business segments:

● *Pipeline Investments*. Pipeline investments are common carrier transporters of natural gas, natural gas liquids (primarily propane, ethane, butane and natural gasoline), crude oil or refined petroleum products (gasoline, diesel fuel and jet fuel). Pipeline investments may also operate ancillary businesses such as storage and marketing of such products. Revenue is derived from capacity and transportation fees. Historically, in the Investment Adviser's view, pipeline output has been less exposed to cyclical economic forces due in large part to its low cost structure and government-regulated nature. In addition, pipeline investments do not have much direct commodity price exposure (as opposed to indirect exposure) because they do not own the product being shipped.

● *Processing Investments*. Processing investments include gatherers and processors of natural gas as well as providers of natural gas liquid transportation, fractionation and storage services. Revenue is typically derived from providing services to natural gas producers, which require treatment or processing before their natural gas commodity can be marketed to utilities and other end user markets. Revenue for the processor is often fee based, although it is not uncommon to have some participation in the prices of the natural gas and natural gas liquids commodities for a portion of revenue.

● *Exploration and Production Investments ("E&P Investments")*. E&P Investments include midstream energy investments that are engaged in the exploration, development, production and acquisition of crude oil and natural gas properties. E&P Investment cash flows generally depend on the volume of crude oil and natural gas produced and the realized prices received for crude oil and natural gas sales.

● *Propane Investments*. Propane investments include midstream energy investments that are distributors of propane to end-users for space and water heating. Revenue is typically derived from the resale of the commodity at a margin over wholesale cost. The ability to maintain margin is often a key to profitability. Propane serves approximately 3% of the household energy needs in the United States, largely for homes beyond the geographic reach of natural gas distribution pipelines. Approximately 70% of annual cash flow can be earned during the winter heating season (October through March).

● *Coal Investments*. Coal investments include midstream energy investments that own, lease and manage coal reserves. Revenue is typically derived from production and sale of coal or from royalty payments related to leases to coal producers. Electricity generation is the primary use of coal in the United States. Demand for electricity and supply of alternative fuels to generators are usually the primary drivers of coal demand. Coal investments are subject to operating and production risks, such as: the company or a lessee meeting necessary production volumes; federal, state and local laws and regulations that may limit the ability to produce coal; the company's ability to manage production costs and pay mining reclamation costs; and the effect on demand that the Environmental Protection Agency's ("EPA") standards set in the Clean Air Act have on coal end-users.

● *Marine Shipping Investments*. Marine shipping investments include midstream energy investments that are primarily marine transporters of natural gas, natural gas liquids, crude oil or refined petroleum products. Marine shipping investments typically derive revenue from charging customers for the transportation of these products utilizing the midstream energy investments' vessels. Transportation

services are typically provided pursuant to a charter or contract, the terms of which vary depending on, for example, the length of use of a particular vessel, the amount of cargo transported, the number of voyages made, the parties operating a vessel or other factors.

**MLPs** 

The Fund has previously qualified, and intends to continue to qualify, to be treated as a RIC under the Code. The Fund intends to pursue its investment objective by generally investing in MLPs up to the maximum extent permitted of a RIC under the Code. Accordingly, the Fund will, as of the end of each fiscal quarter, invest no more than 25% of Managed Assets in securities of MLPs and other entities that are "qualified publicly traded partnerships" under the Code.

MLPs are formed as limited partnerships or limited liability companies and taxed as partnerships for U.S. federal income tax purposes. The securities issued by many MLPs are listed and traded on a U.S. exchange. An MLP typically issues general partner and limited partner interests, or managing member and member interests. The general partner or managing member manages and often controls, has an ownership stake in, and may receive incentive distribution payments from, the MLP. If publicly-traded, to be treated as a partnership for U.S. federal income tax purposes, an MLP must derive at least 90% of its gross income for each taxable year from qualifying sources as described in Section 7704 of the Code.

These qualifying sources include natural resources-based activities such as the exploration, development, mining, production, processing, refining, transportation, storage and certain marketing of mineral or natural resources. The general partner or managing member may be structured as a private or publicly-traded corporation or other entity. The general partner or managing member typically controls the operations and management of the entity and has an up to 2% general partner or managing member interest in the entity plus, in many cases, ownership of some percentage of the outstanding limited partner or member interests. The limited partners or members, through their ownership of limited partner or member interests, provide capital to the entity, are intended to have no role in the operation and management of the entity and receive cash distributions. Due to their structure as partnerships for U.S. federal income tax purposes and the expected character of their income, MLPs generally do not pay federal income taxes. Thus, unlike investors in corporate securities, direct MLP investors are generally not subject to double taxation (i.e., corporate level tax and tax on corporate distributions). MLPs in which the Fund invests may be able to offset a significant portion of their income with tax deductions, such as accelerated depreciation. As a result, such MLPs may make cash distributions to their limited partners in excess of the amount of their taxable income allocable to their limited partners. The portion, if any, of the cash distributions received by the Fund with respect to its investment in the equity securities of an MLP that exceeds the Fund's allocable share of the MLP's net taxable income will not be treated as taxable income to the Fund, but rather will be treated as a tax deferred return of capital to the extent of the Fund's basis in such MLP equity securities.

MLPs are typically structured such that common units and general partner interests have first priority to receive the minimum quarterly distribution ("MQD"). Common and general partner interests also accrue arrearages in distributions to the extent the MQD is not paid. Once common units and general partner interests have been paid, subordinated units generally receive distributions; however, subordinated units generally do not accrue arrearages. The subordinated units are normally owned by the owners or affiliates of the general partner and convert on a one for one basis into common units, generally in three to five years after the MLP's initial public offering or after certain distribution levels have been exceeded. Distributable cash in excess of the MQD is distributed to both common and subordinated units generally on a pro rata basis. The general partner is also normally eligible to receive incentive distributions if the general partner operates the business in a manner which results in payment of per unit distributions that exceed threshold levels above the MQD. As the general partner increases cash distributions to the limited partners, the general partner receives an increasingly higher percentage of the incremental cash distributions. A common arrangement provides that the general partner can reach a tier where it receives 50% of every incremental dollar distributed by the MLP. These incentive

distributions encourage the general partner to increase the partnership's cash flow and raise the quarterly cash distribution by pursuing steady cash flow investment opportunities, streamlining costs and acquiring assets. Such results benefit all security holders of the MLP.

Equity securities issued by MLPs typically consist of common and subordinated units (which represent the limited partner or member interests) and a general partner or managing member interest.

● *Common Units*. The common units of many MLPs are listed and traded on national securities exchanges, including the NYSE, the NYSE American and the NASDAQ Stock Market (the "NASDAQ"). The Fund will typically purchase such common units through open market transactions and underwritten offerings, but may also acquire common units through direct placements and privately negotiated transactions. Holders of MLP common units typically have very limited control and voting rights. Holders of such common units are typically entitled to receive the MQD, including arrearage rights, from the issuer. Generally, an MLP must pay (or set aside for payment) the MQD to holders of common units before any distributions may be paid to subordinated unit holders. In addition, incentive distributions are typically not paid to the general partner or managing member unless the quarterly distributions on the common units exceed specified threshold levels above the MQD. In the event of a liquidation, common unit holders are intended to have a preference to the remaining assets of the issuer over holders of subordinated units. Master limited partnerships also issue different classes of common units that may have different voting, trading, and distribution rights. The Fund may invest in different classes of common units.

● *Subordinated Units*. Subordinated units, which, like common units, represent limited partner or member interests, are not typically listed on an exchange or publicly traded. The Fund will typically purchase outstanding subordinated units through negotiated transactions directly with holders of such units or newly-issued subordinated units directly from the issuer. Holders of such subordinated units are generally entitled to receive a distribution only after the MQD and any arrearages from prior quarters have been paid to holders of common units. Holders of subordinated units typically have the right to receive distributions before any incentive distributions are payable to the general partner or managing member. Subordinated units generally do not provide arrearage rights. Most MLP subordinated units are convertible into common units after the passage of a specified period of time or upon the achievement by the issuer of specified financial goals. Master limited partnerships also issue different classes of subordinated units that may have different voting, trading, and distribution rights. The Fund may invest in different classes of subordinated units.

● *General Partner or Managing Member Interests*. The general partner or managing member interest in MLPs or limited liability companies is typically retained by the original sponsors of an MLP or limited liability company, such as its founders, corporate partners and entities that sell assets to the MLP or limited liability company. The holder of the general partner or managing member interest can be liable in certain circumstances for amounts greater than the amount of the holder's investment in the general partner or managing member. General partner or managing member interests often confer direct board participation rights in, and in many cases control over the operations of, the MLP. General partner or managing member interests can be privately held or owned by publicly traded entities. General partner or managing member interests receive cash distributions, typically in an amount of up to 2% of available cash, which is contractually defined in the partnership or limited liability company agreement. In addition, holders of general partner or managing member interests typically receive incentive distribution rights, which provide them with an increasing share of the entity's aggregate cash distributions upon the payment of per common unit distributions that exceed specified threshold levels above the MQD. Due to the incentive distribution rights, GP MLPs have higher distribution growth prospects than their underlying MLPs, but quarterly incentive distribution payments would also decline at a greater rate than the decline rate in quarterly distributions to common and subordinated unit holders in the event of a reduction in the MLP's quarterly distribution. The ability of the limited

partners or members to remove the general partner or managing member without cause is typically very limited. In addition, some MLPs permit the holder of incentive distribution rights to reset, under specified circumstances, the incentive distribution levels and receive compensation in exchange for the distribution rights given up in the reset.

● *I-Shares*. I-Shares represent an ownership interest issued by an MLP affiliate. The MLP affiliate uses the proceeds from the sale of I-Shares to purchase limited partnership interests in the MLP in the form of I-units. Thus, I-Shares represent an indirect limited partner interest in the MLP. I-units have features similar to MLP common units in terms of voting rights, liquidation preference and distribution. I-Shares differ from MLP common units primarily in that instead of receiving cash distributions, holders of I-Shares will receive distributions of additional I-Shares in an amount equal to the cash distributions received by common unit holders. I-Shares are traded on the NYSE or the AMEX. For purposes of the Fund's 80% policy, securities that are derivatives of interests in MLPs are I-Shares or other derivative securities that have economic characteristics of MLP securities.

For purposes of the Fund's limit on investment in any single issuer, with respect to an investment in an MLP, an "issuer" includes both an issuer and its controlling general partner, managing member or sponsor, and an "issue" is a class of an issuer's securities or a derivative security that tracks that class of securities.

**Preferred Stock** 

Preferred stock generally has a preference as to distributions and upon liquidation over an issuer's common stock but ranks junior to other income securities in an issuer's capital structure. Preferred stock generally pays distributions in cash (or additional shares of preferred stock) at a defined rate but, unlike interest payments on other income securities, preferred stock distributions are payable only if declared by the issuer's board of directors. distributions on preferred stock may be cumulative, meaning that, in the event the issuer fails to make one or more distribution payments on the preferred stock, no distributions may be paid on the issuer's common stock until all unpaid preferred stock distributions have been paid. Preferred stock also may provide that, in the event the issuer fails to make a specified number of distribution payments, the holders of the preferred stock will have the right to elect a specified number of directors to the issuer's board. Preferred stock also may be subject to optional or mandatory redemption provisions.

**Convertible Securities** 

A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock or other equity security of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the distribution paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible income securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers, but lower yields than comparable nonconvertible securities. The value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security's investment value. Convertible securities rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. Convertible securities may be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument.

**ADDITIONAL INVESTMENT POLICIES** 

In addition to holding the portfolio investments described above, the Fund may, but is not required to, use the following investment practices:

**Strategic Transactions.** 

The Fund may, but is not required to, use various investment strategies as described below ("Strategic Transactions"). Strategic Transactions may be used for a variety of purposes including hedging, risk management, portfolio management or to earn income. Any or all of the investment techniques described herein may be used at any time and there is no particular strategy that dictates the use of one technique rather than another, as the use of any Strategic Transaction by the Fund is a function of numerous variables including market conditions. The Fund complies with applicable regulatory requirements when implementing Strategic Transactions, including the Rule 18f-4 under the 1940 Act (the "Derivatives Rule"). Although the Investment Adviser seeks to use Strategic Transactions to further the Fund's investment objective, no assurance can be given that the use of Strategic Transactions will achieve this result.

*General Risks of Derivatives* 

Strategic Transactions may involve the purchase and sale of derivative instruments. A derivative is a financial instrument the value of which depends upon (or derives from) the value of another asset, security, interest rate, or index. Derivatives may relate to a wide variety of underlying instruments, including equity and debt securities, indexes, interest rates, currencies and other assets. Certain derivative instruments which the Fund may use and the risks of those instruments are described in further detail below. The Fund may in the future also utilize derivatives techniques, instruments and strategies that may be newly developed or permitted as a result of regulatory changes, consistent with the Fund's investment objective and policies. Such newly developed techniques, instruments and strategies may involve risks different than or in addition to those described herein. No assurance can be given that any derivatives strategy employed by the Fund will be successful.

The risks associated with the use of derivatives are different from, and possibly greater than, the risks associated with investing directly in the instruments underlying such derivatives. Derivatives are highly specialized instruments that require investment techniques and risk analyses different from other portfolio investments. The use of derivative instruments requires an understanding not only of the underlying instrument but also of the derivative itself. Certain risk factors generally applicable to derivative transactions are described below.

● Derivatives are subject to the risk that the market value of the derivative itself or the market value of underlying instruments will change in a way adverse to the Fund's interests. The Fund bears the risk that the Investment Adviser may incorrectly forecast future market trends and other financial or economic factors or the value of the underlying security, index, interest rate or currency when establishing a derivatives position for the Fund.

● Derivatives may be subject to pricing or "basis" risk, which exists when a derivative becomes extraordinarily expensive (or inexpensive) relative to historical prices or corresponding instruments. Under such market conditions, it may not be economically feasible to initiate a transaction or liquidate a position at an advantageous time or price.

● Many derivatives are complex and often valued subjectively. Improper valuations can result in increased payment requirements to counterparties or a loss of value to the Fund.

● Using derivatives as a hedge against a portfolio investment presents the risk that the derivative will have imperfect correlation with the portfolio investment, which could result in the Fund incurring substantial losses. This correlation risk may be greater in the case of derivatives based on an index or other basket of securities, as the portfolio securities being hedged may not duplicate the components of the underlying index or the basket may not be of exactly the same type of obligation as those

underlying the derivative. The use of derivatives for "cross hedging" purposes (using a derivative based on one instrument as a hedge on a different instrument) may also involve greater correlation risks.

● While using derivatives for hedging purposes can reduce the Fund's risk of loss, it may also limit the Fund's opportunity for gains or result in losses by offsetting or limiting the Fund's ability to participate in favorable price movements in portfolio investments.

● Derivatives transactions for non-hedging purposes involve greater risks and may result in losses which would not be offset by increases in the value of portfolio securities or declines in the cost of securities to be acquired. In the event that the Fund enters into a derivatives transaction as an alternative to purchasing or selling the underlying instrument or in order to obtain desired exposure to an index or market, the Fund will be exposed to the same risks as are incurred in purchasing or selling the underlying instruments directly.

● The use of certain derivatives transactions involves the risk of loss resulting from the insolvency or bankruptcy of the other party to the contract (the "counterparty") or the failure by the counterparty to make required payments or otherwise comply with the terms of the contract. In the event of default by a counterparty, the Fund may have contractual remedies pursuant to the agreements related to the transaction.

● Liquidity risk exists when a particular derivative is difficult to purchase or sell. If a derivative transaction is particularly large or if the relevant market is illiquid, the Fund may be unable to initiate a transaction or liquidate a position at an advantageous time or price.

● Certain derivatives transactions, including over-the-counter ("OTC") options, swaps, forward contracts, certain options on foreign currencies and other OTC derivatives, are not entered into or traded on exchanges or in markets regulated by the U.S. Commodity Futures Trading Commission ("CFTC") or the SEC. Instead, such OTC derivatives are entered into directly by the counterparties and may be traded only through financial institutions acting as market makers. OTC derivatives transactions can only be entered into with a willing counterparty. Where no such counterparty is available, the Fund will be unable to enter into a desired transaction. There also may be greater risk that no liquid secondary market in the trading of OTC derivatives will exist, in which case the Fund may be required to hold such instruments until exercise, expiration or maturity. Many of the protections afforded to exchange participants will not be available to participants in OTC derivatives transactions. OTC derivatives transactions are not subject to the guarantee of an exchange or clearinghouse and as a result the Fund would bear greater risk of default by the counterparties to such transactions.

● The Fund may be required to make physical delivery of portfolio securities underlying a derivative in order to close out a derivatives position or to sell portfolio securities at a time or price at which it may be disadvantageous to do so in order to obtain cash to close out or to maintain a derivatives position.

● As a result of the structure of certain derivatives, adverse changes in the value of the underlying instrument can result in a losses substantially greater than the amount invested in the derivative itself. Certain derivatives have the potential for unlimited loss, regardless of the size of the initial investment.

● Certain derivatives, including certain OTC options and swap agreements, may be considered illiquid.

● Certain derivative transactions may give rise to a form of leverage. Leverage associated with derivative transactions may cause the Fund to sell portfolio securities when it may not be advantageous to do so to satisfy its obligations or may cause the Fund to be more volatile than if the Fund had not been leveraged.

● Derivatives transactions conducted outside the United States may not be conducted in the same manner as those entered into on U.S. exchanges, and may be subject to different margin, exercise, settlement or expiration procedures. Many of the risks of OTC derivatives transactions are also applicable to derivatives transactions conducted outside the United States. Derivatives transactions conducted outside the United States are subject to the risk of governmental action affecting the trading in, or the prices of, foreign securities, currencies and other instruments The value of such positions could be adversely affected by foreign political and economic factors; lesser availability of data on which to make trading decisions; delays the Fund's ability to act upon economic events occurring in foreign markets; and less liquidity than U.S. markets.

● Currency derivatives are subject to additional risks. Currency derivatives transactions may be negatively affected by government exchange controls, blockages, and manipulations. Currency exchange rates may be influenced by factors extrinsic to a country's economy. There is no systematic reporting of last sale information with respect to foreign currencies. As a result, the available information on which trading in currency derivatives will be based may not be as complete as comparable data for other transactions. Events could occur in the foreign currency market which will not be reflected in currency derivatives until the following day, making it more difficult for the Fund to respond to such events in a timely manner.

● Legislation regarding regulation of the financial sector could potentially limit or completely restrict the ability of the Fund to use certain derivative instruments as a part of its investment strategy, increase the costs of using these instruments or make them less effective. Limits or restrictions applicable to the counterparties with which the Fund engages in derivatives transactions could also prevent the Fund from using these instruments or affect the pricing or other factors relating to these instruments, or may change the availability of certain investments. There can be no assurance that future legislation or regulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to utilize certain derivatives transactions or achieve its investment objective.

● The Investment Adviser has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act pursuant to CFTC Rule 4.5. Accordingly, the Investment Adviser is currently not subject to registration or regulation as a commodity pool operator under the Commodity Exchange Act with respect to the Fund. If the Investment Adviser was unable to claim the exclusion with respect to the Fund, the Investment Adviser would become subject to registration and regulation as a commodity pool operator, which would subject the Investment Adviser and the Fund to additional registration and regulatory requirements and increased operating expenses. The Fund intends to limit its investments such that the Investment Adviser may continue to claim the exclusion with respect to the Fund, which may limit the Fund's ability to use certain Strategic Transactions, including futures, options on futures and swaps.

*Options* 

An option is a contract that gives the holder of the option the right, but not the obligation, to buy from (in the case of a call option) or sell to (in the case of a put option) the seller of the option (the "option writer") the underlying security at a specified fixed price (the "exercise price") prior to a specified date (the "expiration date"). The buyer of the option pays to the option writer the option premium, which represents the purchase price of the option.

Exchange-traded options are issued by a regulated intermediary such as the Options Clearing Corporation ("OCC"), which guarantees the performance of the obligations of the parties to such option. OTC options are purchased from or sold to counterparties through direct bilateral agreement between the counterparties. Certain options, such as options on individual securities, are settled through physical delivery of the underlying security, whereas other options, such as index options, are settled in cash in an amount based on the value of the underlying instrument multiplied by a specified multiplier.

<u>Writing Options</u>. The Fund may write call and put options. As the writer of a call option, the Fund receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to deliver the underlying security upon payment of the exercise price. If the option expires without being exercised the Fund is not required to deliver the underlying security but retains the premium received.

The Fund may write call options that are "covered." A call option on a security is covered if (a) the Fund owns the security underlying the call or has an absolute and immediate right to acquire that security without additional cash consideration upon conversion or exchange of other securities held by the Fund; or (b) the Fund has purchased a call on the underlying security, the exercise price of which is equal to or less than the exercise price of the call written.

Selling call options involves the risk that the Fund may be required to sell the underlying security at a disadvantageous price, below the market price of such security, at the time the option is exercised. As the writer of a covered call option, the Fund gives up the opportunity during the option's life to profit from increases in the market value of the security covering the call option above the sum of the premium and the strike price of the call, but the Fund retains the risk of loss should the price of the underlying security decline.

The Fund may also write uncovered call options (i.e., where the Fund does not own the underlying security or index). Similar to a naked short sale, writing an uncovered call creates the risk of an unlimited loss, in that the price of the underlying security could theoretically increase without limit, thus increasing the cost of buying those securities to cover the call option if it is exercised before it expires. There can be no assurance that the securities necessary to cover the call option will be available for purchase. Purchasing securities to cover an uncovered call option can itself cause the price of the securities to rise, further exacerbating the loss.

The Fund may write put options. As the writer of a put option, the Fund receives the premium from the purchaser of the option and has the obligation, upon exercise of the option, to pay the exercise price and receive delivery of the underlying security. If the option expires without being exercised, the Fund is not required to receive the underlying security in exchange for the exercise price but retains the option premium.

The Fund may write put options that are "covered." A put option on a security is covered if the Fund has purchased a put on the same security as the put written, the exercise price of which is equal to or greater than the exercise price of the put written.

Selling put options involves the risk that the Fund may be required to buy the underlying security at a disadvantageous price, above the market price of such security, at the time the option is exercised. While the Fund's potential gain in writing a covered put option is limited to the premium received, the Fund's risk of loss is equal to the entire value of the underlying security, offset only by the amount of the premium received.

The Fund may also write uncovered put options. The seller of an uncovered put option theoretically could lose an amount equal to the entire aggregate exercise price of the option if the underlying security were to become valueless.

The Fund may close out an options position which it has written through a closing purchase transaction. The Fund would execute a closing purchase transaction with respect to a call option written by purchasing a call option on the same underlying security and having the same exercise price and expiration date as the call option written by the Fund. The Fund would execute a closing purchase transaction with respect to a put option written by purchasing a put option on the same underlying security and having the same exercise price and expiration date as the put option written by the Fund. A closing purchase transaction may or may not result in a profit to the Fund. The Fund could close out its position as an option writer only if a liquid secondary market exists for options of that series and there is no assurance that such a market will exist with respect to any particular option.

The writer of an option generally has no control over the time when the option is exercised and the option writer is required to deliver or acquire the underlying security. Once an option writer has received an exercise notice, it cannot effect a closing purchase transaction in order to terminate its obligation under the option. Thus, the use

of options may require the Fund to buy or sell portfolio securities at inopportune times or for prices other than the current market values of such securities, may limit the amount of appreciation the Fund can realize on an investment, or may cause the Fund to hold a security that it might otherwise sell.

<u>Purchasing Options</u>. The Fund may purchase call and put options. As the buyer of a call option, the Fund pays the premium to the option writer and has the right to purchase the underlying security from the option writer at the exercise price. If the market price of the underlying security rises above the exercise price, the Fund could exercise the option and acquire the underlying security at a below market price, which could result in a gain to the Fund, minus the premium paid. As the buyer of a put option, the Fund pays the premium to the option writer and has the right to sell the underlying security to the option writer at the exercise price. If the market price of the underlying security declines below the exercise price, the Fund could exercise the option and sell the underlying security at an above market price, which could result in a gain to the Fund, minus the premium paid. The Fund may buy call and put options whether or not it holds the underlying securities.

As a buyer of a call or put option, the Fund may sell put or call options that it has purchased at any time prior to such option's expiration date through a closing sale transaction. The principal factors affecting the market value of a put or a call option include supply and demand, interest rates, the current market price of the underlying security in relation to the exercise price of the option, the volatility of the underlying security, the underlying security's dividend policy, and the time remaining until the expiration date. A closing sale transaction may or may not result in a profit to the Fund. The Fund's ability to initiate a closing sale transaction is dependent upon the liquidity of the options market and there is no assurance that such a market will exist with respect to any particular option. If the Fund does not exercise or sell an option prior to its expiration date, the option expires and becomes worthless.

<u>OTC Options</u>. Unlike exchange-traded options, which are standardized with respect to the underlying instrument, expiration date, contract size and strike price, the terms of OTC options generally are established through negotiation between the parties to the options contract. This type of arrangement allows the purchaser and writer greater flexibility to tailor the option to their needs. OTC options are available for a greater variety of securities or baskets of securities, and in a wider range of expiration dates and exercise prices than exchange-traded options. However, unlike exchange-traded options, which are issued and guaranteed by a regulated intermediary, such as the OCC, OTC options are entered into directly with the counterparty. Unless the counterparties provide for it, there is no central clearing or guaranty function for an OTC option. Therefore, OTC options are subject to the risk of default or non-performance by the counterparty. Accordingly, the Investment Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the option will be satisfied. There can be no assurance that a continuous liquid secondary market will exist for any particular OTC option at any specific time. As a result, the Fund may be unable to enter into closing sale transactions with respect to OTC options.

<u>Index Options</u>. Call and put options on indices operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on an index give the holder the right to receive, upon exercise of the option, an amount of cash determined by reference to the value of the underlying index. The underlying index may be a broad-based index or a narrower market index. Unlike options on securities, all settlements are in cash. The settlement amount, which the writer of an index option must pay to the holder of the option upon exercise, is generally equal to the difference between the fixed exercise price of the option and the value of the underlying index, multiplied by a specified multiplier. The multiplier determines the size of the investment position the option represents. Gain or loss to the Fund on index options transactions will depend on price movements in the underlying securities market generally or in a particular segment of the market rather than price movements of individual securities. As with other options, the Fund may close out its position in index options through closing purchase transactions and closing sale transactions provided that a liquid secondary market exists for such options.

Index options written by the Fund may be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position. The Fund may cover call options written on an index by owning securities whose price changes, in the opinion of the Investment Adviser, are expected to correlate to those of the underlying index.

<u>Foreign Currency Options</u>. Options on foreign currencies operate similarly to options on securities. Rather than the right to buy or sell a single security at a specified price, options on foreign currencies give the holder the right to buy or sell foreign currency for a fixed amount in U.S. dollars. Options on foreign currencies are traded primarily in the OTC market, but may also be traded on United States and foreign exchanges. The value of a foreign currency option is dependent upon the value of the underlying foreign currency relative to the U.S. dollar. The price of the option may vary with changes in the value of either or both currencies and has no relationship to the investment merits of a foreign security. Options on foreign currencies are affected by all of those factors which influence foreign exchange rates and foreign investment generally. As with other options, the Fund may close out its position in foreign currency options through closing purchase transactions and closing sale transactions provided that a liquid secondary market exists for such options. Foreign currency options written by the Fund may be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position.

<u>Additional Risks of Options Transactions</u>. The risks associated with options transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Options are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of options requires an understanding not only of the underlying instrument but also of the option itself. Options may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

● The exercise of options written or purchased by the Fund could cause the Fund to sell portfolio securities, thus increasing the Fund's portfolio turnover.

● The Fund pays brokerage commissions each time it writes or purchases an option or buys or sells an underlying security in connection with the exercise of an option. Such brokerage commissions could be higher relative to the commissions for direct purchases of sales of the underlying securities.

● The Fund's options transactions may be limited by limitations on options positions established by the exchanges on which such options are traded.

● The hours of trading for exchange listed options may not coincide with the hours during which the underlying securities are traded. To the extent that the options markets close before the markets for the underlying securities, significant price and rate movements can take place in the underlying securities that cannot be reflected in the options markets.

● Index options based upon a narrower index of securities may present greater risks than options based on broad market indexes, as narrower indexes are more susceptible to rapid and extreme fluctuations as a result of changes in the values of a small number of securities.

● The Fund is subject to the risk of market movements between the time that an option is exercised and the time of performance thereunder, which could increase the extent of any losses suffered by the Fund in connection with options transactions.

*Futures Contracts* 

A futures contract is a standardized agreement between two parties to buy or sell a specific quantity of an underlying instrument at a specific price at a specific future time (the "settlement date"). Futures contracts may be based on a specified equity security (securities futures), a specified debt security or reference rate (interest rate futures), the value of a specified securities index (index futures) or the value of a foreign currency (forward contracts and currency futures). The value of a futures contract tends to increase and decrease in tandem with

the value of the underlying instrument. The buyer of a futures contract agrees to purchase the underlying instrument on the settlement date and is said to be "long" the contract. The seller of a futures contract agrees to sell the underlying instrument on the settlement date and is said to be "short" the contract. Futures contracts differ from options in that they are bilateral agreements, with both the purchaser and the seller equally obligated to complete the transaction. Futures contracts call for settlement only on the expiration date and cannot be "exercised" at any other time during their term.

Depending on the terms of the particular contract, futures contracts are settled through either physical delivery of the underlying instrument on the settlement date (such as in the case of securities futures and interest rate futures based on a specified debt security) or by payment of a cash settlement amount on the settlement date (such as in the case of futures contracts relating to interest rates, foreign currencies and broad-based securities indexes). In the case of cash settled futures contracts, the settlement amount is equal to the difference between the reference instrument's price on the last trading day of the contract and the reference instrument's price at the time the contract was entered into. Most futures contracts, particularly futures contracts requiring physical delivery, are not held until the settlement date, but instead are offset before the settlement date through the establishment of an opposite and equal futures position (buying a contract that had been sold, or selling a contract that had been purchased). All futures transactions (except currency forward contracts) are effected through a clearinghouse associated with the exchange on which the futures are traded.

The buyer and seller of a futures contract are not required to deliver or pay for the underlying commodity unless the contract is held until the settlement date. However, both the buyer and seller are required to deposit "initial margin" with a futures commodities merchant when the futures contract is entered into. Initial margin deposits are typically calculated as a percentage of the contract's market value. If the value of either party's position declines, the party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The process is known as "marking-to-market." Upon the closing of a futures position through the establishment of an offsetting position, a final determination of variation margin will be made and additional cash will be paid by or released to the Fund.

<u>Currency Forward Contracts and Currency Futures</u>. A foreign currency forward contract is a negotiated agreement between two parties to exchange specified amounts of two or more currencies at a specified future time at a specified rate. The rate specified by the forward contract can be higher or lower than the spot rate between the currencies that are the subject of the contract. Settlement of a foreign currency forward contract for the purchase of most currencies typically must occur at a bank based in the issuing nation. Currency futures are similar to currency forward contracts, except that they are traded on an exchange and standardized as to contract size and delivery date. Most currency futures call for payment or delivery in U.S. dollars. Unanticipated changes in currency prices may result in losses to the Fund and poorer overall performance for the Fund than if it had not entered into forward contracts.

<u>Options on Futures Contracts</u>. Options on futures contracts are similar to options on securities except that options on futures contracts give the purchasers the right, in return for the premium paid, to assume a position in a futures contract (a long position in the case of a call option and a short position in the case of a put option) at a specified exercise price at any time prior to the expiration of the option. Upon exercise of the option, the parties will be subject to all of the risks associated with futures transactions and subject to margin requirements. As the writer of options on futures contracts, the Fund would also be subject to initial and variation margin requirements on the option position.

Options on futures contracts written by the Fund may be covered in a manner similar to the covering of other types of options, by holding an offsetting financial position. The Fund may cover an option on a futures contract by purchasing or selling the underlying futures contract. In such instances the exercise of the option will serve to close out the Fund's futures position.

<u>Additional Risks of Futures Transactions</u>. The risks associated with futures contract transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Futures are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of futures requires an understanding not only of the underlying instrument but also of the futures contract itself. Futures may be subject to the risk factors generally applicable to derivatives transactions described herein, and may also be subject to certain additional risk factors, including:

● The risk of loss in buying and selling futures contracts can be substantial. Small price movements in the commodity underlying a futures position may result in immediate and substantial loss (or gain) to the Fund.

● Buying and selling futures contracts may result in losses in excess of the amount invested in the position in the form of initial margin. In the event of adverse price movements in the underlying commodity, security, index, currency or instrument, the Fund would be required to make daily cash payments to maintain its required margin. The Fund may be required to sell portfolio securities in order to meet daily margin requirements at a time when it may be disadvantageous to do so. The Fund could lose margin payments deposited with a futures commodities merchant if the futures commodities merchant breaches its agreement with the Fund, becomes insolvent or declares bankruptcy.

● Most exchanges limit the amount of fluctuation permitted in futures contract prices during any single trading day. Once the daily limit has been reached in a particular futures contract, no trades may be made on that day at prices beyond that limit. If futures contract prices were to move to the daily limit for several trading days with little or no trading, the Fund could be prevented from prompt liquidation of a futures position and subject to substantial losses. The daily limit governs only price movements during a single trading day and therefore does not limit the Fund's potential losses.

● Index futures based upon a narrower index of securities may present greater risks than futures based on broad market indexes, as narrower indexes are more susceptible to rapid and extreme fluctuations as a result of changes in value of a small number of securities.

*Swap Contracts and Related Derivative Instruments* 

A swap contract is an agreement between two parties pursuant to which the parties exchange payments at specified dates on the basis of a specified notional amount, with the payments calculated by reference to specified securities, indexes, reference rates, currencies or other instruments. Most swap agreements provide that when the period payment dates for both parties are the same, the payments are made on a net basis (i.e., the two payment streams are netted out, with only the net amount paid by one party to the other). The Fund's obligations or rights under a swap contract entered into on a net basis will generally be equal only to the net amount to be paid or received under the agreement, based on the relative values of the positions held by each counterparty. Swap agreements are not entered into or traded on exchanges and there is no central clearing or guaranty function for swaps. Therefore, swaps are subject to the risk of default or non-performance by the counterparty. Accordingly, the Investment Adviser must assess the creditworthiness of the counterparty to determine the likelihood that the terms of the swap will be satisfied.

Swap agreements allow for a wide variety of transactions. For example, fixed rate payments may be exchanged for floating rate payments, U.S. dollar denominated payments may be exchanged for payments denominated in foreign currencies, and payments tied to the price of one security, index, reference rate, currency or other instrument may be exchanged for payments tied to the price of a different security, index, reference rate, currency or other instrument. Swap contracts are typically individually negotiated and structured to provide exposure to a variety of particular types of investments or market factors. Swap contracts can take many different forms and are known by a variety of names. To the extent consistent with the Fund's investment objectives and policies,

the Fund is not limited to any particular form or variety of swap contract. The Fund may utilize swaps to increase or decrease their exposure to the underlying instrument, reference rate, foreign currency, market index or other asset. The Fund may also enter into related derivative instruments including caps, floors and collars.

<u>Interest Rate Swaps, Caps, Floors and Collars</u>. Interest rate swaps consist of an agreement between two parties to exchange their respective commitments to pay or receive interest (e.g., an exchange of floating rate payments for fixed rate payments). Interest rate swaps are generally entered into on a net basis.

The Fund may also buy or sell interest rate caps, floors and collars. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a specified notional amount from the party selling the interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments of interest on a specified notional amount from the party selling the interest rate floor. A collar is a combination of a cap and a floor that preserves a certain return within a predetermined range of interest rate of values. Caps, floors and collars may be less liquid that other types of swaps.

<u>Index Swaps</u>. An index swap consists of an agreement between two parties in which a party exchanges a cash flow based on a notional amount of a reference index for a cash flow based on a different index or on another specified instrument or reference rate. Index swaps are generally entered into on a net basis.

<u>Currency Swaps</u>. A currency swap consists of an agreement between two parties to exchange cash flows on a notional amount of two or more currencies based on the relative value differential among them, such as exchanging a right to receive a payment in foreign currency for the right to receive U.S. dollars. Currency swap agreements may be entered into on a net basis or may involve the delivery of the entire principal value of one designated currency in exchange for the entire principal value of another designated currency. In such cases, the entire principal value of a currency swap is subject to the risk that the counterparty will default on its contractual delivery obligations.

<u>Credit Default Swaps</u>. The Fund may enter into credit default swap contracts and options thereon. A credit default swap consists of an agreement between two parties in which the "buyer" agrees to pay to the "seller" a periodic stream of payments over the term of the contract and the seller agrees to pay the buyer the par value (or other agreed-upon value) of a referenced debt obligation upon the occurrence of a credit event with respect to the issuer of the referenced debt obligation. Generally, a credit event means bankruptcy, failure to pay, obligation acceleration or modified restructuring. The Fund may be either the buyer or seller in a credit default swap. As the buyer in a credit default swap, the Fund would pay to the counterparty the periodic stream of payments. If no default occurs, the Fund would receive no benefit from the contract. As the seller in a credit default swap, the Fund would receive the stream of payments but would be subject to exposure on the notional amount of the swap, which it would be required to pay in the event of default. The use of credit default swaps could result in losses to the Fund if the Investment Adviser fails to correctly evaluate the creditworthiness of the issuer of the referenced debt obligation.

<u>Inflation Swaps</u>. Inflation swap agreements are contracts in which one party agrees to pay the cumulative percentage increase in a price index, such as the Consumer Price Index, over the term of the swap (with some lag on the referenced inflation index), and the other party pays a compounded fixed rate. Inflation swap agreements may be used to protect the net asset value of the Fund against an unexpected change in the rate of inflation measured by an inflation index. The value of inflation swap agreements is expected to change in response to changes in real interest rates. Real interest rates are tied to the relationship between nominal interest rates and the rate of inflation. If nominal interest rates increase at a faster rate than inflation, real interest rates may rise, leading to a decrease in value of an inflation swap agreement.

<u>Swaptions</u>. An option on a swap agreement, also called a "swaption," is an option that gives the buyer the right, but not the obligation, to enter into a swap on a future date in exchange for paying a market based "premium." A receiver swaption gives the owner the right to receive the total return of a specified asset, reference rate, or

index. A payer swaption gives the owner the right to pay the total return of a specified asset, reference rate, or index. Swaptions also include options that allow an existing swap to be terminated or extended by one of the counterparties.

<u>General Risks of Swaps</u>. The risks associated with swap transactions are different from, and possibly greater than, the risks associated with investing directly in the underlying instruments. Swaps are highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of swaps requires an understanding not only of the underlying instrument but also of the swap contract itself. Swap transactions may be subject to the risk factors generally applicable to derivatives transactions described above, and may also be subject to certain additional risk factors, including:

● Swap agreements are not traded on exchanges and not subject to government regulation like exchange-traded derivatives. As a result, parties to a swap agreement are not protected by such government regulations as participants in transactions in derivatives traded on organized exchanges.

● In addition to the risk of default by the counterparty, if the creditworthiness of a counterparty to a swap agreement declines, the value of the swap agreement would be likely to decline, potentially resulting in losses.

● The swaps market is a relatively new market and is largely unregulated. It is possible that further developments in the swaps market, including potential governmental regulation, could adversely affect the Fund's ability to utilize swaps, terminate existing swap agreements or realize amounts to be received under such agreements.

*Structured Products* 

The Fund also may invest a portion of its assets in structured notes and other types of structured investments (referred to collectively as "structured products"). A structured note is a derivative security for which the amount of principal repayment and/or interest payments is based on the movement of one or more "factors." These factors include, but are not limited to, currency exchange rates, interest rates (such as the prime lending rate or SOFR), referenced bonds and stock indices. The cash flow or rate of return on a structured note may be determined by applying a multiplier to the rate of total return on the referenced factor. Application of a multiplier is comparable to the use of financial leverage, a speculative technique. Leverage magnifies the potential for gain and the risk of loss. As a result, a relatively small decline in the value of the referenced factor could result in a relatively large loss in the value of a structured note.

Investments in structured notes involve risks including interest rate risk, credit risk and market risk. Where the Fund's investments in structured notes are based upon the movement of one or more factors, including currency exchange rates, interest rates, referenced bonds and stock indices, depending on the factor used and the use of multipliers or deflators, changes in interest rates and movement of the factor may cause significant price fluctuations. Additionally, changes in the reference factor may cause the interest rate on the structured note to be reduced to zero and any further changes in the reference factor may then reduce the principal amount payable on maturity. Structured notes may be less liquid than other types of securities and more volatile than the reference factor underlying the note.

Generally, structured investments are interests in entities organized and operated for the purpose of restructuring the investment characteristics of underlying investment interests or securities. These investment entities may be structured as trusts or other types of pooled investment vehicles. This type of restructuring generally involves the deposit with or purchase by an entity of the underlying investments and the issuance by that entity of one or more classes of securities backed by, or representing interests in, the underlying investments. The cash flow or rate of return on the underlying investments may be apportioned among the newly issued securities to create different investment characteristics, such as varying maturities, credit quality, payment priorities and interest rate provisions. The Fund may have the right to receive payments to which it is entitled only from the structured investment, and generally does not have direct rights against the issuer. Holders of structured investments bear

risks of the underlying investment and are subject to counterparty risk. While certain structured investment vehicles enable the investor to acquire interests in a pool of securities without the brokerage and other expenses associated with directly holding the same securities, investors in structured investment vehicles generally pay their share of the investment vehicle's administrative and other expenses.

Certain structured products may be thinly traded or have a limited trading market and may have the effect of increasing the Fund's illiquidity to the extent that the Fund, at a particular point in time, may be unable to find qualified buyers for these securities.

*Combined Transactions* 

Combined transactions involve entering into multiple derivatives transactions (such as multiple options transactions, including purchasing and writing options in combination with each other; multiple futures transactions; and combinations of options, futures, forward and swap transactions) instead of a single derivatives transaction in order to customize the risk and return characteristics of the overall position. Combined transactions typically contain elements of risk that are present in each of the component transactions. The Fund may enter into a combined transaction instead of a single derivatives transaction when, in the opinion of the Investment Adviser, it is in the best interest of the Fund to do so. Because combined transactions involve multiple transactions, they may result in higher transaction costs and may be more difficult to close out.

*Regulatory Matters* 

The Derivatives Rule permits the Fund to enter into derivatives transactions and certain other transactions notwithstanding the restrictions on the issuance of "senior securities" under Section 18 of the 1940 Act. The Derivatives Rule requires registered investment companies that enter into derivatives transactions and certain other transactions that create future payment or delivery obligations to, among other things, (i) comply with a value-at-risk leverage limit, and (ii) adopt and implement a derivatives risk management program, unless the Fund qualifies as a "limited derivatives user," which the Derivatives Rule defines as a fund that limits its derivatives exposure (excluding certain derivative transactions used to hedge currency and interest rate risks) to 10% of its net assets. The Derivatives Rule requires a limited derivatives user to adopt policies and procedures to manage its aggregate derivatives risk. The Fund currently qualifies, and intends to continue to qualify, as a limited derivatives user and has adopted policies and procedures designed to manage its derivatives risk in accordance with the Derivatives Rule. In the event that the Fund no longer qualifies as a limited derivatives user, the Fund will comply with the value-at-risk leverage limit and adopt and implement a derivatives risk management program in accordance with the Derivatives Rule.

In addition, each of the exchanges and other trading facilitates on which options are traded has established limitations on the maximum number of put or call options on a given underlying security that may be written by a single investor or group of investors acting in concert, regardless of whether the options are written on different exchanges or through one or more brokers. These position limits may restrict the number of listed options which the Fund may write. Option positions of all investment companies advised by the Investment Adviser are combined for purposes of these limits. An exchange may order the liquidation of positions found to be in excess of these limits and may impose certain other sanctions or restrictions.

*Other Investment Companies* 

The Fund invests in securities of other closed-end or open-end investment companies (including ETFs) that invest primarily in companies in which the Fund is permitted to invest directly to the extent permitted by the 1940 Act. The Fund may invest in other investment companies during periods when it has large amounts of uninvested cash, such as the period shortly after the Fund receives the proceeds of the offering of its Securities, during periods when there is a shortage of attractive midstream energy company securities available in the market, or when the Investment Adviser believes share prices of other investment companies offer attractive values. The Fund invests in investment companies that are advised by the Investment Adviser or its affiliates only to the extent permitted by applicable law and/or pursuant to exemptive relief from the SEC.

As a stockholder in an investment company, the Fund will bear its ratable share of that investment company's expenses, and would remain subject to payment of the Fund's management fees and other expenses with respect to assets so invested. Common shareholders would therefore be subject to duplicative expenses to the extent the Fund invests in other investment companies. The Investment Adviser will take expenses into account when evaluating the investment merits of an investment in an investment company relative to other available investments. To the extent that the Fund invests in investment companies that invest primarily in midstream energy companies, such investments will be counted for purposes of the Fund's 80% policy.

*Exchange-Traded Notes* 

Exchange-traded notes ("ETNs"), which are typically unsecured, unsubordinated debt securities that trade on a securities exchange and are designed to replicate the returns of market benchmarks minus applicable fees. To the extent that the Fund invests in ETNs that are designed to replicate indices comprised primarily of midstream energy companies, such investments will be counted for purposes of the Fund's 80% policy.

*New Securities and Other Investment Techniques* 

New types of securities and other investment and hedging practices are developed from time to time. The Investment Adviser expects, consistent with the Fund's investment objective and policies, to invest in such new types of securities and to engage in such new types of investment practices if the Investment Adviser believes that these investments and investment techniques may assist the Fund in achieving its investment objective. In addition, the Investment Adviser may use investment techniques and instruments that are not specifically described herein.

*Use of Arbitrage and Other Strategies* 

The Fund may use short sales, arbitrage and other strategies to try to generate additional return. As part of such strategies, the Fund may engage in paired long-short trades to arbitrage pricing disparities in securities issued by midstream energy companies, write (or sell) covered call options on the securities of midstream energy companies or other securities held in its portfolio, write (or sell) uncovered call options on the securities of midstream energy companies, purchase call options or enter into swap contracts to increase its exposure to midstream energy companies, or sell securities short. With a long position, the Fund purchases a stock outright, but with a short position, it would sell a security that it does not own and must borrow to meet its settlement obligations. The Fund will realize a profit or incur a loss from a short position depending on whether the value of the underlying stock decreases or increases, respectively, between the time the stock is sold and when the Fund replaces the borrowed security. To increase its exposure to certain issuers, the Fund may purchase call options or use swap agreements. The Fund expects to use these strategies on a limited basis. See "Additional Information (Unaudited)—Risks—Short Sales Risk" and "—Strategic Transactions Risk."

*Lending of Portfolio Securities.* 

The Fund may lend its portfolio securities to broker-dealers and banks. Any such loan must be continuously secured by collateral in cash or cash equivalents maintained on a current basis in an amount at least equal to 102% of the value of the securities loaned. The Fund would continue to receive the equivalent of the interest or distributions paid by the issuer on the securities loaned and would also receive an additional return that may be in the form of a fixed fee or a percentage of the collateral. The Fund may pay reasonable fees for services in arranging these loans. The Fund would have the right to call the loan and obtain the securities loaned at any time on notice of not more than five (5) business days. The Fund would not have the right to vote the securities during the existence of the loan but would call the loan to permit voting of the securities, if, in the Investment Adviser's judgment, a material event requiring a shareholder vote would otherwise occur before the loans were repaid. In the event of bankruptcy or other default of the borrower, the Fund could experience both delays in liquidating the loan collateral or recovering the loaned securities and losses, including (a) possible decline in the

value of the collateral or in the value of the securities loaned during the period while the Fund seeks to enforce its rights to the collateral or loaned securities, (b) possible subnormal levels of income and lack of access to income during this period, and (c) expenses of enforcing its rights.

*Temporary Defensive Investments* 

When adverse market, economic, political or other conditions dictate a more defensive investment strategy, the Fund may, on a temporary basis, hold cash or invest a portion or all of its assets in money-market instruments, including obligations of the U.S. government, its agencies or instrumentalities, other high-quality debt securities, including prime commercial paper, repurchase agreements and bank obligations, such as bankers' acceptances and certificates of deposit. Under normal market conditions, the potential for capital appreciation on these securities will tend to be lower than the potential for capital appreciation on other securities that may be owned by the Fund. In taking such a defensive position, the Fund would temporarily not be pursuing its principal investment strategies and may not achieve its investment objective.

**Portfolio Turnover** 

Portfolio turnover rate is not considered a limiting factor in the Investment Adviser's execution of investment decisions. The Fund anticipates that its annual portfolio turnover rate may vary greatly from year to year. For the fiscal years ended November 30, 2025 and November 30, 2024, the Fund's portfolio turnover rate was approximately [147.69]% and 141.29%, respectively. A higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by the Fund.

**Investment Restrictions** 

The Fund operates under the following restrictions that constitute fundamental policies that, except as otherwise noted, cannot be changed without the affirmative vote of the holders of a majority of the outstanding voting securities of the Fund voting together as a single class, which is defined by the 1940 Act as the lesser of (i) 67% or more of the Fund's voting securities present at a meeting, if the holders of more than 50% of the Fund's outstanding voting securities are present or represented by proxy; or (ii) more than 50% of the Fund's outstanding voting securities. Except as otherwise noted, all percentage limitations set forth below apply immediately after a purchase or initial investment and any subsequent change in any applicable percentage resulting from market fluctuations does not require any action. These restrictions provide that the Fund shall not:

● Purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, provided that this restriction does not prevent the Fund from investing in issuers which invest, deal or otherwise engage in transactions in real estate or interests in real estate, or investing in securities that are secured by real estate or interests in real estate.

● Concentrate the Fund's investments in a particular "industry," as that term is used in the 1940 Act, and as interpreted, modified or otherwise permitted by regulatory authority having jurisdiction from time to time; provided, however, that the Fund will, in normal circumstances, invest more than 25% of its assets in the natural resources industry, including MLPs operating in such industry, and may invest to an unlimited degree in securities issued or guaranteed by the U.S. Government or any of its agencies or instrumentalities.

● Borrow money or issue senior securities, except to the extent permitted by the 1940 Act, or any rules, exemptions or interpretations under the 1940 Act that may be adopted, granted or issued by the SEC or its staff.

● Make loans to other persons except (a) through the lending of the Fund's portfolio securities, (b) through the purchase of debt obligations, loan participations and/or engaging in direct corporate loans in accordance with the Fund's investment objective and policies, and (c) to the extent the entry into

a repurchase agreement is deemed to be a loan. The Fund may also make loans to other investment companies to the extent permitted by the 1940 Act, or any rules, exemptions or interpretations under the 1940 Act that may be adopted, granted or issued by the SEC or its staff.

● Act as an underwriter except to the extent that, in connection with the disposition of portfolio securities, the Fund may be deemed to be an underwriter under applicable securities laws.

● Purchase or sell physical commodities and commodity contracts, except that it may: (i) enter into futures contracts and options on commodities in accordance with applicable law; and (ii) purchase or sell physical commodities that it acquires as a result of ownership of securities or other instruments. The Fund will not consider stock index, currency and other financial futures contracts, swaps or hybrid instruments to be commodities for purposes of this investment policy.

The rest of the Fund's investment policies, including the Fund's investment objective and percentage parameters described herein, are not fundamental policies of the Fund and may be changed without shareholder approval.

With respect to investment restriction #2 above:

● the Fund invests more than 25% of its assets (which for purposes of such limitation means the total assets of the Fund) in issuers in the natural resources industry, which for purposes of investment restriction #2 includes the industry or group of related industries that make up the natural resources sector. Midstream energy companies, including MLPs, in which the Fund invests operate in the industry or group of related industries that make up the natural resources sector;

● "normal circumstances" as used in investment restriction #2 above means all times except for when adverse market, economic, political or other conditions dictate a more defensive investment strategy, during which the Fund may, on a temporary basis, hold cash or invest a portion or all of its assets in money-market instruments, including obligations of the U.S. government, its agencies or instrumentalities, and other high-quality debt securities.

**Use of Leverage** 

The Fund generally seeks to increase income and total return by utilizing leverage. The Fund may utilize leverage through the indebtedness, including through the issuance of commercial paper or notes and other forms of borrowing, or the issuance of preferred shares. The Fund may utilize leverage through indebtedness or preferred shares to the maximum extent permitted by the 1940 Act. Under current market conditions, the Fund currently intends to utilize leverage principally through indebtedness. The amount of indebtedness outstanding is expected to vary over time, but will not exceed 331/3% of the Fund's Managed Assets (i.e., 50% of its net assets attributable to the Fund's common shares), including the proceeds of such leverage.

The costs associated with the issuance and use of leverage will be borne by the holders of the common shares. Leverage is a speculative technique and investors should note that there are special risks and costs associated with leverage. There can be no assurance that a leveraging strategy will be successful during any period in which it is employed. The use of leverage creates risks and involves special considerations. See "Additional Information (Unaudited)—Risks—Leverage Risk." To the extent that the Fund uses leverage, it expects to utilize hedging techniques such as swaps and caps on a portion of its leverage to mitigate potential interest rate risk. See "Additional Information (Unaudited)—Risks—Interest Rate Hedging Risk."

*Indebtedness* 

Delaware trust law and the Fund's governing documents authorize the Fund, without prior approval of its common shareholders, to borrow money. In this regard, the Fund may issue notes or other evidence of indebtedness (including bank borrowings or commercial paper) and may secure any such borrowings by mortgaging, pledging or otherwise subjecting as security its assets. In connection with any borrowing, the Fund may be required to maintain minimum average balances with the lender or to pay a commitment or other fee to maintain a line of credit. Any such requirements will increase the cost of borrowing over the stated interest rate.

The rights of the Fund's lenders to receive interest on and repayment of principal of borrowings will be senior to those of the Fund's common shareholders, and the terms of any such borrowings may contain provisions which limit certain of the Fund's activities, including the payment of distributions to the Fund's common shareholders in certain circumstances. A borrowing will likely be ranked senior or equal to all of the Fund's other existing and future borrowings.

Certain types of borrowings may result in the Fund being subject to covenants in credit agreements relating to asset coverage and portfolio composition requirements. The Fund may be subject to certain restrictions on investments imposed by guidelines of one or more rating agencies, which may issue ratings for indebtedness issued by the Fund.

These guidelines may impose asset coverage or portfolio composition requirements that are more stringent than those imposed by the 1940 Act. It is not anticipated that these covenants or guidelines will impede the Investment Adviser from managing the Fund's portfolio in accordance with the Fund's investment objective and policies.

The Fund may secure any borrowings by mortgaging, pledging or otherwise subjecting as security its assets. Except as set forth below, under the requirements of the 1940 Act the Fund, immediately after any issuance of indebtedness, must have "asset coverage" of at least 300% (331/3% of Managed Assets, or 50% of its net assets attributable to the Fund's common shares). With respect to indebtedness, asset coverage means the ratio which the value of the Fund's total assets, less all liabilities and indebtedness not represented by senior securities (as defined in the 1940 Act), bears to the aggregate amount of such borrowing represented by senior securities issued by the Fund.

Under the 1940 Act, the Fund may not declare any distribution or other distribution on any class of its shares, or purchase any such shares, unless its aggregate indebtedness has, at the time of the declaration of any such distribution or distribution, or at the time of any such purchase, an asset coverage of at least 300% after declaring the amount of such distribution, distribution or purchase price, as the case may be. Furthermore, the 1940 Act (in certain circumstances) grants the Fund's lenders certain voting rights in the event of default in the payment of interest on or repayment of principal. Such restrictions do not apply with respect to evidence of indebtedness in consideration of a loan, extension or renewal thereof that is privately arranged and not intended for public distribution.

With the use of borrowings, there is a risk that the interest rates paid by the Fund on the amount it borrows will be higher than the return on the Fund's investments.

The Fund may also borrow money as a temporary measure for extraordinary or emergency purposes, including the payment of distributions and the settlement of securities transactions that otherwise might require untimely dispositions of its securities. Temporary borrowings not exceeding 5% of the Fund's total assets are not subject to the "asset coverage" limitation under the 1940 Act.

The Fund currently utilizes indebtedness pursuant to a borrowing arrangement with Scotiabank<sup>TM</sup> (the "Loan Agreements"). The interest rate charged on such indebtedness approximates 1-month SOFR plus 1.00%. The Fund's indebtedness under the Loan Agreements is collateralized by portfolio assets which are maintained by the Fund in a separate account with the Fund's custodian for the benefit of the lender, which collateral exceeds the amount borrowed. In the event of a default by the Fund under the Loan Agreements, the lender has the right to sell such collateral assets to satisfy the Fund's obligation to the lender. The Loan Agreements include usual and customary covenants. These covenants impose on the Fund asset coverage requirements, collateral requirements, investment strategy requirements, and certain financial obligations. As of November 30, 2025, the principal balance outstanding was approximately $55.315 million, which represented 21.51% of the Fund's Managed Assets (or approximately 27.39% of its net assets attributable to the Fund's common shares).

*Preferred Shares* 

The Fund's Second Amended and Restated Agreement and Declaration of Trust (the "Declaration of Trust") provides that the Fund's Board of Trustees may authorize and issue preferred shares with rights as determined by the Board of Trustees, by action of the Board of Trustees without prior approval of the holders of the common shares. Common shareholders have no preemptive right to purchase any preferred shares that might be issued. Any such preferred share offering would be subject to the limits imposed by the 1940 Act. Under the 1940 Act, the Fund is not permitted to issue preferred shares unless immediately after such issuance the value of its total assets is at least 200% of the liquidation value of the outstanding preferred shares (i.e., the liquidation value may not exceed 50% of the Fund's total assets). In addition, the Fund is not permitted to declare any cash distribution or other distribution on its common shares unless, at the time of such declaration, the value of its total assets is at least 200% of such liquidation value. If the Fund issues preferred shares, it intends, to the extent possible, to purchase or redeem them from time to time to the extent necessary in order to maintain asset coverage on such preferred shares of at least 200%. In addition, as a condition to obtaining ratings on the preferred shares, the terms of any preferred shares issued are expected to include asset coverage maintenance provisions which will require the redemption of the preferred shares in the event of non-compliance by the Fund and may also prohibit distributions and other distributions on the Fund's common shares in such circumstances. In order to meet redemption requirements to maintain asset coverage or otherwise, the Fund may have to liquidate portfolio securities. Such liquidations and redemptions would cause the Fund to incur related transaction costs and could result in capital losses to the Fund. If the Fund has preferred shares outstanding, two of its Trustees will be elected by the holders of preferred shares, voting as a separate class. The Fund's remaining Trustees will be elected by holders of its common shares and preferred shares voting together as a single class. In the event the Fund fails to pay distributions on its preferred shares for two years, holders of preferred shares would be entitled to elect a majority of the Fund's Trustees.

*Certain Portfolio Transactions* 

The Fund may engage in certain derivatives transactions that have economic characteristics similar to leverage. The Derivatives Rule permits the Fund to enter into derivatives transactions and certain other transactions notwithstanding the restrictions on the issuance of "senior securities" under Section 18 of the 1940 Act. The Derivatives Rule requires registered investment companies that enter into derivatives transactions and certain other transactions that create future payment or delivery obligations to, among other things, (i) comply with a value-at-risk leverage limit, and (ii) adopt and implement a derivatives risk management program, unless the Fund qualifies as a "limited derivatives user," which the Derivatives Rule defines as a fund that limits its derivatives exposure (excluding certain derivative transactions used to hedge currency and interest rate risks) to 10% of its net assets. The Derivatives Rule requires a limited derivatives user to adopt policies and procedures to manage its aggregate derivatives risk. The Fund currently qualifies, and intends to continue to qualify, as a limited derivatives user and has adopted policies and procedures designed to manage its derivatives risk in accordance with the Derivatives Rule. In the event that the Fund no longer qualifies as a limited derivatives user, the Fund will comply with the value-at-risk leverage limit and adopt and implement a derivatives risk management program in accordance with the Derivatives Rule.

*Effects of Leverage* 

As of November 30, 2025, the Fund had outstanding indebtedness of approximately $55.315 million, which represented 21.51% of the Fund's Managed Assets (or approximately 27.39% of its net assets attributable to the Fund's common shares). The interest rate charged on such indebtedness as of November 30, 2025 was 4.62%. Assuming that the Fund's leverage costs remain as described above, then the incremental income generated by the Fund's portfolio (net of estimated expenses including expenses related to the leverage) must exceed approximately 0.99% to cover such interest specifically related to the borrowing. These numbers are merely estimates used for illustration. Actual interest rates may vary frequently and in the future may be significantly higher or lower than the rate estimated above.

The following table is designed to assist the investor in understanding the effects of leverage by illustrating the effect on the return to a holder of the Fund's common shares of leverage in the amount of approximately 331/3% of the Fund's Managed Assets (*i.e.,* 50% of its net assets attributable to the Fund's common shares), assuming hypothetical annual returns of the Fund's portfolio of minus 10% to plus 10%. As the table shows, leverage generally increases the return to holders of common shares when portfolio return is positive and greater than the cost of leverage and decreases the return when the portfolio return is negative or less than the cost of leverage. The figures appearing in the table are hypothetical and actual returns may be greater or less than those appearing in the table.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| Assumed portfolio total return (net of expenses)  | (10.00)% | (5.00)% | 0.00% | 5.00% | 10.00% |
| Common share total return  | (17.31)% | (9.81)% | (2.31)% | 5.19% | 12.69% |

---

Common share total return is composed of two elements: distributions on common shares paid by the Fund (the amount of which is largely determined by the Fund's net investment income after paying distributions or interest on its outstanding leverage) and gains or losses on the value of the securities the Fund owns. As required by SEC rules, the table above assumes that the Fund is more likely to suffer capital losses than to enjoy capital appreciation. For example, to assume a total return of 0%, the Fund must assume that the distributions it receives on its investments are entirely offset by losses in the value of those securities.

During the time in which the Fund is utilizing leverage, the amount of the fees paid to the Investment Adviser for investment advisory services will be higher than if the Fund did not utilize such leverage because the fees paid will be calculated based on the Fund's Managed Assets, which may create a conflict of interest between the Investment Adviser and the common shareholders. Because the Fund's leverage costs will be borne by the Fund at a specified rate, only the Fund's common shareholders will bear the cost associated with such leverage.

**RISKS** 

**Investment and Market Risk** 

An investment in common shares of the Fund is subject to investment risk, including the possible loss of the entire principal amount that you invest. An investment in the common shares of the Fund represents an indirect investment in the securities owned by the Fund. The value of those securities may fluctuate, sometimes rapidly and unpredictably, particularly under current economic, financial, labor, and health conditions. The value of the securities owned by the Fund may decline due to general market conditions that are not specifically related to a particular issuer, such as real or perceived economic conditions, changes in interest or currency rates or changes in investor sentiment or market outlook generally. At any point in time, your common shares may be worth less than your original investment, including the reinvestment of Fund dividends and distributions.

**Common Stock Risk** 

The Fund will have exposure to common stocks. Although common stocks have historically generated higher average total returns than fixed-income securities over the long-term, common stocks also have experienced significantly more volatility in those returns and may significantly under-perform relative to fixed income securities during certain periods. An adverse event, such as an unfavorable earnings report, may depress the value of a particular common stock held by the Fund. Also, the price of common stocks is sensitive to general movements in the stock market and a drop in the stock market may depress the price of common stocks to which the Fund has exposure. Common stock prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market, or when political or economic events affecting the issuers occur. In addition, common stock prices may be particularly sensitive to rising interest rates, as the cost of capital rises and borrowing costs increase. At times, stock markets can be volatile and stock prices can change substantially. While broad market measures of common stocks have historically generated higher average returns than income securities, common stocks have also experienced significantly more volatility in those returns. Common stock in which the Fund invests is

structurally subordinated to preferred stock, bonds and other debt instruments in a company's capital structure in terms of priority to corporate income and are therefore inherently more risky than preferred stock or debt instruments of such issuers.

**Concentration Risk** 

The Fund's investments will be concentrated in issuers in the industry or group of industries that make up the natural resources sector. The Fund has adopted a fundamental investment restriction to invest at least 25% of its total assets in natural resources companies. In addition, in accordance with the Fund's 80% policy, the Fund invests at least 80% of its net assets plus borrowings for investment purposes in midstream energy investments. Midstream energy companies are a specific type of natural resources company. Because the Fund will be concentrated, it may be subject to more risks than if it were more broadly diversified over numerous industries and sectors of the economy. General changes in market sentiment towards companies in the natural resources sector, or midstream energy companies specifically, may adversely affect the Fund, and the performance of the natural resources sector, or midstream energy companies specifically, may lag behind the broader market as a whole. Also, the Fund's concentration in the natural resources sector, and midstream energy companies specifically, may subject the Fund to a variety of risks associated with that sector. See "Additional Information (Unaudited)—Risks—Midstream Energy Company Risks."

**Midstream Energy Company Risks** 

Midstream energy companies are subject to certain risks, including, but not limited to, the following:

*Commodity Price Risk*. Midstream energy companies may be affected by fluctuations in the prices of commodities, including, for example, natural gas, natural gas liquids and crude oil, in the short- and long-term. Natural resources commodity prices have been very volatile in the past and such volatility is expected to continue. Fluctuations in commodity prices can result from changes in general economic conditions or political circumstances (especially of key energy-consuming countries); market conditions; weather patterns; domestic production levels; volume of imports; energy conservation; domestic and foreign governmental regulation; international politics; policies of the Organization of Petroleum Exporting Countries ("OPEC"); taxation; tariffs; and the availability and costs of local, intrastate and interstate transportation methods. Midstream energy companies engaged in crude oil and natural gas exploration, development or production, natural gas gathering and processing, crude oil refining and transportation and coal mining or sales may be directly affected by their respective natural resources commodity prices. The volatility of, and interrelationships between, commodity prices can also indirectly affect certain other midstream energy companies due to the potential impact on the volume of commodities transported, processed, stored or distributed. Some midstream energy companies that own the underlying energy commodity may be unable to effectively mitigate or manage direct margin exposure to commodity price levels. The natural resources sector as a whole may also be impacted by the perception that the performance of natural resources sector companies is directly linked to commodity prices. The prices of companies' securities can be adversely affected by market perceptions that their performance and distributions or distributions are directly tied to commodity prices. High commodity prices may drive further energy conservation efforts and a slowing economy may adversely impact energy consumption which may adversely affect the performance of midstream energy companies.

Prices of oil and other energy commodities have experienced significant volatility during recent years and may continue to experience relatively high volatility for a prolonged period. Companies engaged in crude oil and natural gas exploration, development or production, natural gas gathering and processing, crude oil refining and transportation and coal mining or sales may be directly affected by their respective natural resources commodity prices. The volatility of commodity prices may also indirectly affect certain companies engaged in the transportation, processing, storage or distribution of such commodities. Some companies that own the underlying commodities may be unable to effectively mitigate or manage direct margin exposure to commodity price levels. The natural resources sector as a whole may also be impacted by the perception that the performance of natural resources sector companies is directly linked to commodity prices. As a result, many

companies in which the Fund invests may have been and may continue to be adversely impacted by volatility of prices of energy commodities. Reductions in production of oil and other energy commodities may lag decreases in demand or declines in commodity prices, resulting in global oversupply in such commodities. Slower global growth may lower demand for oil and other energy commodities and increased exports by certain countries may increase supply, exacerbating oversupply of such commodities and further reducing commodity prices. Continued volatility of commodity prices could further erode such companies' growth prospects and negatively impact such companies' ability to sustain attractive distribution levels.

*Cyclicality Risk.* The operating results of companies in the broader natural resources sector are cyclical, with fluctuations in commodity prices and demand for commodities driven by a variety of factors. The highly cyclical nature of the natural resources sector may adversely affect the earnings or operating cash flows of the midstream energy companies in which the Fund invests.

*Supply Risk.* The profitability of midstream energy companies, particularly those involved in processing, gathering and pipeline transportation, may be materially impacted by the volume of natural gas or other energy commodities available for transportation, processing, storage or distribution. A significant decrease in the production of natural gas, crude oil, coal or other energy commodities, due to the decline of production from existing resources, import supply disruption, depressed commodity prices or otherwise, would reduce the revenue, operating income and operating cash flows of midstream energy companies and, therefore, their ability to make distributions or pay dividends. The volume of production of energy commodities and the volume of energy commodities available for transportation, storage, processing or distribution could be affected by a variety of factors, including depletion of resources; depressed commodity prices; catastrophic events; labor relations; increased environmental or other governmental regulation; equipment malfunctions and maintenance difficulties; import volumes; international politics; policies of OPEC; and increased competition from alternative energy sources.

*Demand Risk.* A sustained decline in demand for coal, natural gas, natural gas liquids, crude oil and refined petroleum products could adversely affect a midstream energy company's revenues and cash flows. Factors that could lead to a sustained decrease in market demand include a recession or other adverse economic conditions, an increase in the market price of the underlying commodity that is not, or is not expected to be, merely a short-term increase, higher taxes or other regulatory actions that increase costs, or a shift in consumer demand for such products. Demand may also be adversely affected by consumer sentiment with respect to global warming and by state or federal legislation intended to promote the use of alternative energy sources.

*Depletion Risk*. Companies engaged in the exploration, development, management or production of energy commodities face the risk that commodity reserves are depleted over time. Such companies seek to increase their reserves through expansion of their current businesses, acquisitions, further development of their existing sources of energy commodities, exploration of new sources of energy commodities or by entering into long-term contracts for additional reserves; however, there are risks associated with each of these potential strategies. If such companies fail to acquire additional reserves in a cost-effective manner and at a rate at least equal to the rate at which their existing reserves decline, their financial performance may suffer. Additionally, failure to replenish reserves could reduce the amount and affect the tax characterization of the distributions paid by such companies.

*Risks Related to Expansions and Acquisitions.* Midstream energy companies employ a variety of means to increase cash flow, including increasing utilization of existing facilities, expanding operations through new construction or development activities, expanding operations through acquisitions, or securing additional long-term contracts. Thus, some midstream energy companies may be subject to construction risk, development risk, acquisition risk or other risks arising from their specific business strategies. Midstream energy companies that attempt to grow through acquisitions may not be able to effectively integrate acquired operations with their existing operations. In addition, acquisition or expansion projects may not perform as anticipated. A significant slowdown in merger and acquisition activity in the natural resources sector could reduce the growth rate of cash flows received by the Fund from midstream energy companies that grow through acquisitions.

*Competition Risk*. The natural resources sector is highly competitive. The midstream energy companies in which the Fund invests face substantial competition from other companies, many of which will have greater financial, technological, human and other resources, in acquiring natural resources assets, obtaining and retaining customers and contracts and hiring and retaining qualified personnel. Larger companies may be able to pay more for assets and may have a greater ability to continue their operations during periods of low commodity prices. To the extent that the midstream energy companies in which the Fund invests are unable to compete effectively, their operating results, financial position, growth potential and cash flows may be adversely affected, which could in turn adversely affect the results of the Fund.

*Weather Risk.* Extreme weather conditions could result in substantial damage to the facilities of certain midstream energy companies located in the affected areas and significant volatility in the supply of natural resources, commodity prices and the earnings of midstream energy companies and could therefore adversely affect their securities.

*Interest Rate Risk.* The prices of the equity and debt securities of the midstream energy companies the Fund expects to hold in its portfolio are susceptible in the short-term to a decline when interest rates rise. Rising interest rates could limit the capital appreciation of securities of certain midstream energy companies as a result of the increased availability of alternative investments with comparable yields. Rising interest rates could adversely impact the financial performance of midstream energy companies by increasing their cost of capital. This may reduce their ability to execute acquisitions or expansion projects in a cost-effective manner.

*Business Segment Specific Risk.* Midstream energy companies are also subject to risks that are specific to the particular business segment of the natural resources sector in which they operate.

Pipelines. Pipeline companies are subject to the demand for natural gas, natural gas liquids, crude oil or refined products in the markets they serve, changes in the availability of products for gathering, transportation, processing or sale due to natural declines in reserves and production in the supply areas serviced by the companies' facilities, sharp decreases in crude oil or natural gas prices that cause producers to curtail production or reduce capital spending for exploration activities, and environmental regulation. Demand for gasoline, which accounts for a substantial portion of refined product transportation, depends on price, prevailing economic conditions in the markets served, and demographic and seasonal factors. Companies that own interstate pipelines that transport natural gas, natural gas liquids, crude oil or refined petroleum products are subject to regulation by the Federal Energy Regulatory Commission ("FERC") with respect to the tariff rates they may charge for transportation services. An adverse determination by FERC with respect to the tariff rates of such a company could have a material adverse effect on its business, financial condition, results of operations and cash flows of those companies and their ability to pay cash distributions or dividends. In addition, FERC has a tax allowance policy, which permits such companies to include in their cost of service an income tax allowance to the extent that their owners have an actual or potential tax liability on the income generated by them. If FERC's income tax allowance policy were to change in the future to disallow a material portion of the income tax allowance taken by such interstate pipeline companies, it would adversely impact the maximum tariff rates that such companies are permitted to charge for their transportation services, which would in turn adversely affect the results of operations and cash flows of those companies and their ability to pay cash distributions or dividends to their unit holders or shareholders.

Gathering and Processing. Gathering and processing companies are subject to natural declines in the production of oil and natural gas fields, which utilize their gathering and processing facilities as a way to market their production, prolonged declines in the price of natural gas or crude oil, which curtails drilling activity and therefore production and declines in the prices of natural gas liquids and refined petroleum products, which cause lower processing margins. In addition, some gathering, and processing contracts subject the gathering or processing company to direct commodities price risk.

Exploration and Production. Exploration, development and production companies are particularly vulnerable to declines in the demand for and prices of crude oil and natural gas. Reductions in prices for crude oil and natural gas can cause a given reservoir to become uneconomic for continued production earlier than it would if prices were higher, resulting in the plugging and abandonment of, and cessation of production from, that reservoir. In addition, lower commodity prices not only reduce revenues but also can result in substantial downward adjustments in reserve estimates. The accuracy of any reserve estimate is a function of the quality of available data, the accuracy of assumptions regarding future commodity prices and future exploration and development costs and engineering and geological interpretations and judgments. Different reserve engineers may make different estimates of reserve quantities and related revenue based on the same data. Actual oil and gas prices, development expenditures and operating expenses will vary from those assumed in reserve estimates, and these variances may be significant. Any significant variance from the assumptions used could result in the actual quantity of reserves and future net cash flow being materially different from those estimated in reserve reports. In addition, results of drilling, testing and production and changes in prices after the date of reserve estimates may result in downward revisions to such estimates. Substantial downward adjustments in reserve estimates could have a material adverse effect on a given exploration and production company's financial position and results of operations. In addition, due to natural declines in reserves and production, exploration and production companies must economically find or acquire and develop additional reserves in order to maintain and grow their revenues and distributions.

Propane. Propane companies are subject to earnings variability based upon weather patterns in the locations where they operate and increases in the wholesale price of propane which reduce profit margins. In addition, propane companies are facing increased competition due to the growing availability of natural gas, fuel oil and alternative energy sources for residential heating.

Coal. Coal companies are subject to declines in the demand for and prices of coal. Demand variability can be based on weather conditions, the strength of the domestic economy, the level of coal stockpiles in their customer base, and the prices of competing sources of fuel for electric generation. They are also subject to supply variability based on geological conditions that reduce the productivity of mining operations, the availability of regulatory permits for mining activities and the availability of coal that meets the standards of the federal Clean Air Act of 1990, as amended (the "Clean Air Act"). Demand and prices for coal may also be affected by current and proposed regulatory limitations on emissions from coal-fired power plants and the facilities of other coal end users. Such limitations may reduce demand for the coal produced and transported by coal companies. Certain coal companies could face declining revenues if they are unable to acquire additional coal reserves or other mineral reserves that are economically recoverable.

*Marine Shipping*. Marine shipping companies are subject to supply of and demand for, and level of consumption of, natural gas, liquefied natural gas, crude oil, refined petroleum products and liquefied petroleum gases in the supply areas and market areas they serve, which affect the demand for marine shipping services and therefore charter rates. Shipping companies' vessels and cargoes are also subject to the risk of being damaged or lost due to marine disasters, extreme weather, mechanical failures, grounding, fire, explosions, collisions, human error, piracy, war and terrorism. Some vessels may also require replacement or significant capital improvements earlier than otherwise required due to changing regulatory standards. Shipping companies or their ships may be chartered in any country and the Fund's investments in such issuers may be subject to risks similar to risks related to investments in non-U.S. securities.

*Cash Flow Risk.* The Fund will derive substantially all of its cash flow from investments in equity securities of midstream energy companies. The amount of cash that the Fund has available to distribute to shareholders will depend on the ability of the midstream energy companies in which the Fund has an interest to make distributions or pay dividends to their investors and the tax character of those distributions or dividends. The Fund will likely have no influence over the actions of the companies in which it invests with respect to the payment of distributions or dividends. The amount of cash that any individual midstream energy company can distribute to its investors, including the Fund, will depend on the amount of cash it generates from operations,

which will vary from quarter to quarter depending on factors affecting the natural resources sector generally and the particular business lines of the issuer. Available cash will also depend on the midstream energy company's operating costs, capital expenditures, debt service requirements, acquisition costs (if any), fluctuations in working capital needs and other factors. With respect to the Fund's investments in MLPs, the cash that an MLP will have available for distribution will also depend on the incentive distributions payable to its general partner or managing member in connection with distributions paid to its equity investors.

*Regulatory Risk*. The profitability of midstream energy companies could be adversely affected by changes in the regulatory environment. Midstream energy companies are subject to significant foreign, federal, state and local regulation in virtually every aspect of their operations, including with respect to how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for the products and services they provide. Such regulation can change over time in both scope and intensity. For example, a particular by-product may be declared hazardous by a regulatory agency and unexpectedly increase production costs. 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 which would likely increase compliance costs and may adversely affect the financial performance of midstream energy companies.

Midstream energy companies may be adversely affected by future regulatory requirements. While the nature of such regulations cannot be predicted at this time, they may impose additional costs or limit certain operations by midstream energy companies.

Specifically, the operations of wells, gathering systems, pipelines, refineries and other facilities are subject to stringent and complex federal, state and local environmental laws and regulations. These include, for example:

● the federal Clean Air Act and comparable state laws and regulations that impose obligations related to air emissions.

● the federal Clean Water Act and comparable state laws and regulations that impose obligations related to discharges of pollutants into regulated bodies of water.

● the federal Resource Conservation and Recovery Act ("RCRA") and comparable state laws and regulations that impose requirements for the handling and disposal of waste from facilities; and

● the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), also known as "Superfund," and comparable state laws and regulations that regulate the cleanup of hazardous substances that may have been released at properties currently or previously owned or operated by midstream energy companies or at locations to which they have sent waste for disposal.

Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial requirements, and the issuance of orders enjoining future operations. Certain environmental statutes, including RCRA, CERCLA, the federal Oil Pollution Act and analogous state laws and regulations, impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances have been disposed or otherwise released. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other waste products into the environment.

There is an inherent risk that midstream energy companies may incur environmental costs and liabilities due to the nature of their businesses and the substances they handle. For example, an accidental release from wells or gathering pipelines could subject them to substantial liabilities for environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage,

and fines or penalties for related violations of environmental laws or regulations. Moreover, the possibility exists that stricter laws, regulations or enforcement policies could significantly increase the compliance costs of midstream energy companies, and the cost of any remediation that may become necessary. Midstream energy companies may not be able to recover these costs from insurance.

Proposals for voluntary initiatives and mandatory controls are being discussed both in the United States and worldwide to reduce emissions of "greenhouse gases" such as carbon dioxide, a by-product of burning fossil fuels, and methane, the major constituent of natural gas, which many scientists and policymakers believe contribute to global climate change. These measures, if adopted, could result in increased costs to certain companies in which the Fund invests to operate and maintain natural resources facilities and administer and manage a greenhouse gas emissions program.

In the wake of a Supreme Court decision holding that the EPA has some legal authority to deal with climate change under the Clean Air Act, the federal government announced on May 14, 2007 that the EPA and the Departments of Transportation, Energy, and Agriculture would jointly write regulations to cut gasoline use and control greenhouse gas emissions from cars and trucks. These measures if adopted could reduce demand for energy or raise prices, which may adversely affect the total return of certain of the Fund's investments.

*Environmental Risk*. There is an inherent risk that midstream energy companies may incur environmental costs and liabilities due to the nature of their businesses and the substances they handle. For example, an accidental release from wells or gathering pipelines could subject them to substantial liabilities for environmental cleanup and restoration costs, claims made by neighboring landowners and other third parties for personal injury and property damage, and fines or penalties for related violations of environmental laws or regulations. Moreover, the possibility exists that stricter laws, regulations or enforcement policies could significantly increase the compliance costs of midstream energy companies, and the cost of any remediation that may become necessary. Midstream energy companies may not be able to recover these costs from insurance.

In the wake of a Supreme Court decision holding that the EPA has some legal authority to deal with climate change under the Clean Air Act, the EPA and the Department of Transportation jointly wrote regulations to cut gasoline use and control greenhouse gas emissions from cars and trucks. These measures, and other programs addressing greenhouse gas emissions, could reduce demand for energy or raise prices, which may adversely affect the total return of certain of the Fund's investments.

The types of regulations described above can change over time in both scope and intensity, may have adverse effects on midstream energy companies and may be implemented in unforeseen manners on an "emergency" basis in response to catastrophes or other events.

*Affiliated Party Risk*. Certain midstream energy companies are dependent on their parents or sponsors for a majority of their revenues. Any failure by a midstream energy company's parents or sponsors to satisfy their payments or obligations would impact the midstream energy company's revenues and cash flows and ability to make distributions. Moreover, the terms of a midstream energy company's transactions with its parent or sponsor are typically not arrived at on an arm's-length basis and may not be as favorable to the midstream energy company as a transaction with a non-affiliate.

*Catastrophe Risk*. The operations of midstream energy companies are subject to many hazards inherent in the exploration for, and development, production, gathering, transportation, processing, storage, refining, distribution, mining or marketing of, coal, natural gas, natural gas liquids, crude oil, refined petroleum products or other hydrocarbons, including: damage to production equipment, pipelines, storage tanks or related equipment and surrounding properties or other adverse impacts resulting from hurricanes, tornadoes, floods, fires, climate conditions, extreme weather events and other natural disasters and the responses thereto or acts of terrorism; inadvertent damage from construction or other equipment; leaks of natural gas, natural gas liquids, crude oil, refined petroleum products or other hydrocarbons; and fires and explosions. Since the September 11th terrorist attacks, the U.S. government has issued warnings that energy assets, specifically U.S. pipeline infrastructure, may be targeted in future terrorist attacks. These dangers give rise to risks of substantial losses as a result of loss

or destruction of commodity reserves; damage to or destruction of property, facilities and equipment; pollution and environmental damage; and personal injury or loss of life. Any occurrence of such catastrophic events could bring about a limitation, suspension or discontinuation of the operations of midstream energy companies. Midstream energy companies may not be fully insured against all risks inherent in their business operations and therefore accidents and catastrophic events could adversely affect such companies' operations, financial conditions and ability to pay distributions to shareholders.

*Legislation Risk*. The elimination of certain tax incentives widely used by oil and gas companies and imposition of such fees could adversely affect the natural sector generally or specific midstream energy companies in which the Fund invests.

*Technology Risk*. Some midstream energy companies are focused on developing new technologies and are strongly influenced by technological changes. Technology development efforts by midstream energy companies may not result in viable methods or products. Midstream energy companies may bear high research and development costs, which can limit their ability to maintain operations during periods of organizational growth or instability. Some midstream energy companies may be in the early stages of operations and may have limited operating histories and smaller market capitalizations on average than companies in other sectors. As a result of these and other factors, the value of investments in such midstream energy companies may be considerably more volatile than that in more established segments of the economy.

**Risks Associated with an Investment in IPOs** 

Securities purchased by the Fund in initial public offerings ("IPOs") are often subject to the general risks associated with investments in companies with small market capitalizations, and typically to a heightened degree. Securities issued in IPOs have no trading history, and information about the companies may be available for very limited periods. In addition, the prices of securities sold in an IPO may be highly volatile. At any particular time or from time to time, the Fund may not be able to invest in IPOs, or to invest to the extent desired, because, for example, only a small portion (if any) of the securities being offered in an IPO may be available to the Fund. In addition, under certain market conditions, a relatively small number of companies may issue securities in IPOs. The investment performance of the Fund during periods when it is unable to invest significantly or at all in IPOs may be lower than during periods when the Fund is able to do so. IPO securities may be volatile, and the Fund cannot predict whether investments in IPOs will be successful.

**Risks Associated with an Investment in PIPE Transactions** 

In private investment in public equity ("PIPE") transactions, the Fund purchases securities directly from a publicly traded company in a private placement transaction, typically at a discount to the market price of the company's common stock. Because the sale of the securities is not registered under the Securities Act of 1933, as amended (the "Securities Act"), the securities are "restricted" and cannot be immediately resold by the investors into the public markets. Accordingly, the company typically agrees as part of the PIPE deal to register the restricted securities with the SEC. PIPE securities may be deemed illiquid.

**Privately Held Company Risk** 

Investing in privately held companies involves risk. For example, privately held companies are not subject to SEC reporting requirements, are not required to maintain their accounting records in accordance with generally accepted accounting principles and are not required to maintain effective internal controls over financial reporting. As a result, the Investment Adviser may not have timely or accurate information about the business, financial condition and results of operations of the privately held companies in which the Fund invests. In addition, the securities of privately held companies are generally illiquid, and entail the risks described under "—Liquidity Risk" below.

**MLP Risks** 

An investment in MLP units involves some risks that differ from an investment in the common stock of a corporation. As compared to common stockholders of a corporation, holders of MLP units have more limited control and limited rights to vote on matters affecting the partnership. In addition, there are certain tax risks associated with an investment in MLP units and conflicts of interest may exist between common unit holders and the general partner, including those arising from incentive distribution payments.

A portion of the benefit the Fund derives from its investment in equity securities of MLPs is a result of MLPs generally being treated as partnerships for U.S. federal income tax purposes. Partnerships generally do not pay U.S. federal income tax at the partnership level. Rather, each partner of a partnership, in computing its U.S. federal income tax liability, will include its allocable share of the partnership's income, gains, losses, deductions and expenses. A change in current tax law, or a change in the business of a given MLP, could result in an MLP being treated as a corporation for U.S. federal income tax purposes, which would result in such MLP being required to pay U.S. federal income tax on its taxable income. The classification of an MLP as a corporation for U.S. federal income tax purposes would have the effect of reducing the amount of cash available for distribution by the MLP and causing any such distributions received by the Fund to be treated as dividend income to the extent of the MLP's current or accumulated earnings and profits. Thus, if any of the MLPs owned by the Fund were treated as corporations for U.S. federal income tax purposes, the after-tax return to the Fund with respect to its investment in such MLPs would be materially reduced, which could cause a decline in the value of the common shares. Recently, a number of MLPs have reduced, suspended or eliminated their distributions. In addition, changes in tax laws or regulations, or future interpretations of such laws or regulations, could adversely affect the Fund or the MLP investments in which the Fund invests.

To the extent that the Fund invests in the equity securities of an MLP treated as a partnership under the Code, the Fund will be a partner in such MLP. Accordingly, the Fund will be required to include in its taxable income the Fund's allocable share of the income, gains, losses, deductions and credits recognized by each such MLP, regardless of whether the MLP distributes cash to the Fund. Historically, MLPs have been able to offset a significant portion of their income with tax deductions. The Fund will recognize taxable income on its allocable share of an MLP's income and gains that is not offset by the MLP's tax deductions, losses and credits. The portion, if any, of a distribution received by the Fund from an MLP that is offset by the MLP's tax deductions, losses or credits is essentially treated as a return of capital. However, those distributions will reduce the Fund's adjusted tax basis in the equity securities of the MLP, which will result in an increase in the amount of gain (or decrease in the amount of loss) that will be recognized by the Fund for tax purposes upon the sale of any such equity securities and may increase the amount of income or gain that will be recognized by the Fund upon subsequent distributions in respect of such equity securities. The percentage of an MLP's income and gains that is offset by tax deductions, losses and credits will fluctuate over time for various reasons. For example, a significant slowdown in acquisition activity or capital spending by MLPs held in the Fund's portfolio could result in a reduction of accelerated depreciation generated by new acquisitions, which may result in a decrease in the portion of the MLP's distributions that is offset by tax deductions.

Because of the Fund's investments in equity securities of MLPs, the Fund's earnings and profits may be calculated using accounting methods that are different from those used for calculating taxable income. Because of these differences, the Fund may make distributions out of its current or accumulated earnings and profits, which will be treated as dividends, in years in which the Fund's distributions exceed its taxable income.

Adverse developments in the natural resources sector may result in MLPs seeking to restructure debt or file for bankruptcy. Limited partners in such MLPs, such as the Fund, may owe taxes on debt that is forgiven in a bankruptcy or an out-of-court restructuring, as cancellation of debt income, which creates a tax liability for investors without an associated cash distribution. While an MLP facing a debt restructuring may seek to implement structures that would limit the tax liability associated with the debt restructuring, there can be no assurance that such structures could be successfully implemented or would not have other adverse impacts on the Fund as an investor in the MLP.

*MLP Subordinated Units*. Master limited partnership subordinated units are not typically listed on an exchange or publicly traded. Holders of MLP subordinated units are entitled to receive a distribution only after the MQD has been paid to holders of common units, but prior to payment of incentive distributions to the general partner or managing member. Master limited partnership subordinated units generally do not provide arrearage rights. Most MLP subordinated units are convertible into common units after the passage of a specified period of time or upon the achievement by the MLP of specified financial goals.

*General Partner and Managing Member Interests*. General partner and managing member interests are not publicly traded, though they may be owned by publicly traded entities such as GP MLPs. A holder of general partner or managing member interests can be liable in certain circumstances for amounts greater than the amount of the holder's investment. In addition, while a general partner or managing member's incentive distribution rights can mean that general partners and managing members have higher distribution growth prospects than their underlying MLPs, these incentive distribution payments would decline at a greater rate than the decline rate in quarterly distributions to common or subordinated unit holders in the event of a reduction in the MLP's quarterly distribution. A general partner or managing member interest can be redeemed by the MLP if the MLP unit holders choose to remove the general partner, typically by a supermajority vote of the limited partners or members.

**Liquidity Risk** 

The investments made by the Fund may be illiquid and consequently the Fund may not be able to sell such investments at prices that reflect the Investment Adviser's assessment of their value, the amount paid for such investments by the Fund or at prices approximating the value at which the Fund is carrying the securities on its books. Furthermore, the nature of the Fund's investments may require a long holding period prior to profitability.

Although the equity securities of the companies in which the Fund invests generally trade on major stock exchanges, certain securities may trade less frequently, particularly those with smaller capitalizations. Securities with limited trading volumes may display volatile or erratic price movements. Investment of the Fund's capital in securities that are less actively traded or over time experience decreased trading volume may restrict the Fund's ability to take advantage of other market opportunities.

Unregistered securities are securities that cannot be sold publicly in the United States without registration under the Securities Act, unless an exemption from such registration is available. Restricted securities may be more difficult to value, and the Fund may have difficulty disposing of such assets either in a timely manner or for a reasonable price. In order to dispose of an unregistered security, the Fund, where it has contractual rights to do so, may have to cause such security to be registered. A considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that the Fund could sell it. Contractual restrictions on the resale of securities vary in length and scope and are generally the result of a negotiation between the issuer and acquirer of the securities. The Fund would, in either case, bear the risks of any downward price fluctuation during that period. The difficulties and delays associated with selling restricted securities could result in the Fund's inability to realize a favorable price upon disposition of such securities, and at times might make disposition of such securities impossible.

**Equity Securities Risk** 

Master limited partnership common units and other equity securities of midstream energy companies can be affected by macroeconomic, political, global and other factors affecting the stock market in general, expectations of interest rates, investor sentiment towards midstream energy companies or the natural resources sector, changes in a particular company's financial condition, or the unfavorable or unanticipated poor performance of a particular midstream energy company. Prices of common units and other equity securities of individual midstream energy companies can also be affected by fundamentals unique to the partnership or company, including earnings power and coverage ratios.

**Small-Cap and Mid-Cap Company Risk** 

Investing in the securities of companies with small or medium-sized market capitalizations ("small-cap" and "mid-cap" companies, respectively) presents some particular investment risks. Small-cap and mid-cap midstream energy companies may have limited product lines and markets, as well as shorter operating histories, less experienced management and more limited financial resources than larger midstream energy companies and may be more vulnerable to adverse general market or economic developments. Stocks of these midstream energy companies may be less liquid than those of larger midstream energy companies and may experience greater price fluctuations than larger midstream energy companies. In addition, small-cap or mid-cap company securities may not be widely followed by investors, which may result in reduced demand.

**Risks Associated with Canadian Royalty Trusts and Canadian E&P Companies** 

With respect to investments in royalty trusts, potential growth may be sacrificed because revenue is passed on to a royalty trust's unitholders (such as the Fund), rather than reinvested in the business. Royalty trusts generally do not guarantee minimum distributions or even return of capital. If the assets underlying a royalty trust do not perform as expected, the royalty trust may reduce or even eliminate distributions. The declaration of such distributions generally depends upon various factors, including the operating performance and financial condition of the royalty trust and general economic conditions.

Unlike U.S. royalty trusts, Canadian royalty trusts and E&P companies may engage in the acquisition, development and production of natural gas and crude oil to replace depleting reserves. They may have employees, issue new shares, borrow money, acquire additional properties, and manage the resources themselves. As a result, Canadian royalty trusts and Canadian E&P companies are exposed to commodity risk and production and reserve risk, as well as operating risk.

**Canadian Risk** 

The Canadian economy is very dependent on the demand for, and supply and price of, natural resources. The Canadian market is relatively concentrated in issuers involved in the production and distribution of natural resources. There is a risk that any changes in the natural resources sector could have an adverse impact on the Canadian economy. The Canadian economy is dependent on the economy of the United States as a key trading partner. Reduction in spending on Canadian products and services or changes in the U.S. economy may cause an impact in the Canadian economy. The Canadian economy may be significantly affected by the U.S. economy, given that the United States is Canada's largest trading partner and foreign investor. Since the implementation of the North American Free Trade Agreement ("NAFTA") in 1994, total two-way merchandise trade between the United States and Canada has more than doubled. To further this relationship, all three NAFTA countries entered into The Security and Prosperity Partnership of North America in March 2005, which addressed economic and security related issues, and the US-Mexico-Canada Agreement, which replaced NAFTA effective July 1, 2020. These agreements may further affect Canada's dependency on the U.S. economy. Past periodic demands by the Province of Quebec for sovereignty have significantly affected equity valuations and foreign currency movements in the Canadian market.

**Non-U.S. Securities Risk** 

Investing in non-U.S. securities involves certain risks not involved in domestic investments, including, but not limited to: fluctuations in foreign exchange rates; future foreign economic, financial, political and social developments; different legal systems; the possible imposition of exchange controls or other foreign governmental laws or restrictions, including expropriation; lower trading volume; much greater price volatility and illiquidity of certain non-U.S. securities markets; different trading and settlement practices; less governmental supervision; changes in currency exchange rates; high and volatile rates of inflation; fluctuating interest rates; less publicly available information; and different accounting, auditing and financial recordkeeping standards and requirements.

Certain non-U.S. countries, especially emerging market countries, historically have experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rate fluctuations, large amounts of external debt, balance of payments and trade difficulties and extreme poverty and unemployment. Many of these countries are also characterized by political uncertainty and instability. The cost of servicing external debt will generally be adversely affected by rising international interest rates because many external debt obligations bear interest at rates that are adjusted based upon international interest rates. In addition, with respect to certain foreign countries, there is a risk of: the possibility of expropriation or nationalization of assets; confiscatory taxation; difficulty in obtaining or enforcing a court judgment; restrictions on currency repatriation; economic, political or social instability; and diplomatic developments that could affect investments in those countries.

Changes in foreign currency exchange rates may affect the value of securities denominated or quoted in currencies other than the U.S. dollar and the unrealized appreciation or depreciation of investments. Currencies of certain countries may be volatile and therefore may affect the value of securities denominated in such currencies, which means that the Fund's net asset value or current income could decline as a result of changes in the exchange rates between foreign currencies and the U.S. dollar. Certain investments in non-U.S. securities also may be subject to foreign withholding taxes. Dividend income from non-U.S. corporations may not be eligible for the reduced U.S. income tax rate currently available for qualified dividend income. These risks often are heightened for investments in smaller, emerging capital markets. In addition, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as: growth of gross domestic product; rates of inflation; capital reinvestment; resources; self-sufficiency; and balance of payments position.

Investing in securities of issuers based in underdeveloped emerging markets entails all of the risks of investing in securities of non-U.S. issuers to a heightened degree. "Emerging market countries" generally include every nation in the world except developed countries, that is the United States, Canada, Japan, Australia, New Zealand and most countries located in Western Europe. These heightened risks include: greater risks of expropriation, confiscatory taxation, nationalization, and less social, political and economic stability; the smaller size of the market for such securities and a lower volume of trading, resulting in lack of liquidity and an increase in price volatility; and certain national policies that may restrict the Fund's investment opportunities including restrictions on investing in issuers or industries deemed sensitive to relevant national interests. As a result of these potential risks, the Investment Adviser may determine that, notwithstanding otherwise favorable investment criteria, it may not be practicable or appropriate to invest in a particular country.

**Interest Rate Risk** 

Interest rate risk is the risk that fixed rate securities such as preferred and debt securities will decline in value because of increases in market interest rates. When market interest rates rise, the market value of such securities generally will fall. Longer-term fixed rate securities are generally more sensitive to interest rate changes. Greater sensitivity to changes in interest rates typically corresponds to increased volatility and increased risk. The Fund's investment in such securities means that the net asset value and market price of, and distributions on, common shares will tend to decline if the market interest rates rise. Duration is a measure of sensitivity to changes in interest rates and reflects a variety of factors, including the maturity and variability, if any, of the interest rate and the call potential of the security. For this reason, duration should not be confused with maturity. If a portfolio has a duration of three years and interest rates increase by 1%, then, all else being equal, the portfolio would decline in value by approximately 3%. Any interest rate increases in the future could cause the value of the Fund to decrease.

The risk of loss on preferred securities due to rising market interest rates may be exacerbated by extension risk, which is the risk of a preferred security's expected maturity and duration lengthening, and therefore the interest rate risk that it presents increasing, if and when market interest rates rise. Extension risk is caused by the fact that preferred securities are typically callable by the issuer, and callable fixed rate securities are more likely to be called in a lower market interest rate environment (because the issuer can refinance those securities at low current market rates); conversely, callable fixed rate securities become less likely to be called if market interest rates rise. Because rising market interest rates reduce the likelihood that an issuer will exercise its right to call a

preferred security, such an interest rate rise causes the duration of that security, and therefore its interest rate risk going forward, to increase, thus increasing, in an accelerating manner, the degree to which any further interest rate rise will cause the security to lose value.

Additionally, the costs associated with any leverage used by the Fund are likely to increase when interest rates rise. Accordingly, the market price of the Fund's common shares may decline when interest rates rise.

**Interest Rate Hedging Risk** 

The Fund may from time-to-time hedge against interest rate risk resulting from the Fund's portfolio holdings and any leverage it may incur. Interest rate transactions the Fund may use for hedging purposes will expose the Fund to certain risks that differ from the risks associated with its portfolio holdings. There are economic costs of hedging reflected in the price of interest rate swaps, caps and similar techniques, the cost of which can be significant. In addition, the Fund's success in using hedging instruments is subject to the Investment Adviser's ability to correctly predict changes in the relationships of such hedging instruments to the Fund's leverage risk, and there can be no assurance that the Investment Adviser's judgment in this respect will be accurate. Depending on the state of interest rates in general, the Fund's use of interest rate hedging instruments could enhance or decrease investment company taxable income available to the holders of its common shares. To the extent there is a decline in interest rates, the value of interest rate swaps or caps could decline, and result in a decline in the net asset value of the Fund's common shares. In addition, if the counterparty to an interest rate swap or cap defaults, the Fund would not be able to use the anticipated net receipts under the interest rate swap or cap to offset its cost of leverage.

**Arbitrage Risk** 

A part of the Investment Adviser's investment operations may involve spread positions between two or more securities, or derivatives positions including commodities hedging positions, or a combination of the foregoing. The Investment Adviser's trading operations also may involve arbitraging between two securities or commodities, between the security, commodity and related options or derivatives markets, between spot and futures or forward markets, and/or any combination of the above. To the extent the price relationships between such positions remain constant, no gain or loss on the positions will occur. These offsetting positions entail substantial risk that the price differential could change unfavorably, causing a loss to the position. Certain derivatives transactions have economic characteristics similar to leverage.

**Leverage Risk** 

The Fund may use leverage through the issuance of indebtedness or the issuance of preferred shares. The use of leverage magnifies both the favorable and unfavorable effects of price movements in the investments made by the Fund. Insofar as the Fund employs leverage in its investment operations, the Fund will be subject to increased risk of loss. In addition, the Fund will pay (and the holders of common shares will bear) all costs and expenses relating to the issuance and ongoing maintenance of leverage, including higher advisory fees. Similarly, any decline in the net asset value of the Fund's investments will be borne entirely by the holders of common shares. Therefore, if the market value of the Fund's portfolio declines, the leverage will result in a greater decrease in net asset value to the holders of common shares than if the Fund were not leveraged. This greater net asset value decrease will also tend to cause a greater decline in the market price for the common shares.

Leverage creates a greater risk of loss, as well as potential for more gain, for the Fund's common shares than if leverage is not used. Preferred shares or debt issued by the Fund would have complete priority upon distribution of assets over common shares. Depending on the type of leverage involved, the Fund's use of leverage may require the approval of its Board of Trustees. The Fund expects to invest the net proceeds derived from any leveraging according to the investment objective and policies described in this Report. So long as the Fund's portfolio is invested in securities that provide a higher rate of return than the distribution rate or interest rate of the leverage instrument or other borrowing arrangements, after taking its related expenses into consideration,

the leverage will cause the Fund's common shareholders to receive a higher rate of income than if it were not leveraged. There is no assurance that any Fund will continue to utilize leverage or, if leverage is utilized, that it will be successful in enhancing the level of the Fund's total return. The net asset value of the Fund's common shares will be reduced by the fees and issuance costs of any leverage.

Leverage creates risk for holders of the Fund's common shares, including the likelihood of greater volatility of net asset value and market price of the shares. Risk of fluctuations in distribution rates or interest rates on leverage instruments or other borrowing arrangements may affect the return to the holders of the Fund's common shares. To the extent the return on securities purchased with funds received from the use of leverage exceeds the cost of leverage (including increased expenses to the Fund), the Fund's returns will be greater than if leverage had not been used. Conversely, if the return derived from such securities is less than the cost of leverage (including increased expenses to the Fund), the Fund's returns will be less than if leverage had not been used, and therefore, the amount available for distribution to the Fund's common shareholders will be reduced. In the latter case, the Investment Adviser in its best judgment nevertheless may determine to maintain the Fund's leveraged position if it expects that the benefits to the Fund's common shareholders of so doing will outweigh the current reduced return. Under normal market conditions, the Fund anticipates that it will be able to invest the proceeds from leverage at a higher rate than the costs of leverage (including increased expenses to the Fund), which would enhance returns to the Fund's common shareholders. The fees paid to the Investment Adviser will be calculated on the basis of the Fund's Managed Assets, which include proceeds from leverage instruments and other borrowings. During periods in which the Fund uses leverage, the investment management fee payable to the Investment Adviser will be higher than if the Fund did not use a leveraged capital structure. Consequently, the Fund and the Investment Adviser may have differing interests in determining whether to leverage the Fund's assets. The Board of Trustees will monitor the Fund's use of leverage and this potential conflict.

**Securities Lending Risk** 

The Fund may lend its portfolio securities (up to a maximum of one-third of Managed Assets) to banks or dealers which meet the creditworthiness standards established by the Board of Trustees of the Fund. Securities lending is subject to the risk that loaned securities may not be available to the Fund on a timely basis and the Fund may, therefore, lose the opportunity to sell the securities at a desirable price. Any loss in the market price of securities loaned by the Fund that occurs during the term of the loan would be borne by the Fund and would adversely affect the Fund's performance. In addition, there may be delays in recovery, or no recovery, of securities loaned or even a loss of rights in the collateral should the borrower of the securities fail financially while the loan is outstanding. These risks may be greater for non-U.S. securities.

**Non-Diversification Risk** 

The Fund is a non-diversified, closed-end management investment company under the 1940 Act. Accordingly, the Fund invests a greater portion of its assets in a more limited number of issuers than a diversified fund. An investment in the Fund may present greater risk to an investor than an investment in a diversified portfolio because changes in the financial condition or market assessment of a single issuer may cause greater fluctuations in the value of the Fund's shares.

**Valuation Risk** 

Market prices may not be readily available for certain of the Fund's investments, and the value of such investments will ordinarily be determined based on fair valuations determined by the Investment Adviser pursuant to procedures adopted by the Board of Trustees and the Investment Adviser as valuation designee. Restrictions on resale or the absence of a liquid secondary market may adversely affect the Fund's ability to determine such investment's net asset value. The sale price of securities that are not readily marketable may be lower or higher than the Fund's most recent determination of their fair value.

In addition, the value of these securities typically requires more reliance on the judgment of the Investment Adviser than that required for securities for which there is an active trading market. Due to the difficulty in valuing these securities and the absence of an active trading market for these investments, the Fund may not be able to realize these securities' true value or may have to delay their sale in order to do so.

When determining the fair value of an asset, the Investment Adviser seeks to determine the price that the Fund might reasonably expect to receive from the current sale of that asset in an arm's length transaction. Fair value pricing, however, involves judgments that are inherently subjective and inexact, since fair valuation procedures are used only when it is not possible to be sure what value should be attributed to a particular asset or when an event will affect the market price of an asset and to what extent. As a result, there can be no assurance that fair value pricing will reflect actual market value, and it is possible that the fair value determined for a security will be materially different from the value that actually could be or is realized upon the sale of that asset.

**Portfolio Turnover Risk** 

Portfolio turnover rate is not considered a limiting factor in the Investment Adviser's execution of investment decisions. The Fund anticipates that its annual portfolio turnover rate may vary greatly from year to year. A higher portfolio turnover rate results in correspondingly greater brokerage commissions and other transactional expenses that are borne by the Fund. High portfolio turnover may result in an increased realization of net short-term capital gains or capital losses by the Fund.

**Strategic Transactions Risk** 

The Fund's use of Strategic Transactions may involve the purchase and sale of derivative instruments. The Fund may purchase and sell exchange-listed and over the counter put and call options on securities, indices and other instruments, enter into forward contracts, purchase and sell futures contracts and options thereon, enter into swap, cap, floor or collar transactions, purchase structured investment products and enter into transactions that combine multiple derivative instruments. Strategic Transactions often have risks similar to the securities underlying the Strategic Transactions. However, the use of Strategic Transactions also involves risks that are different from, and possibly greater than, the risks associated with other portfolio investments. Strategic Transactions may involve the use of highly specialized instruments that require investment techniques and risk analyses different from those associated with other portfolio investments. The use of derivative instruments has risks, including the imperfect correlation between the value of the derivative instruments and the underlying assets, the possible default of the counterparty to the transaction or illiquidity of the derivative investments. Furthermore, the ability to successfully use these techniques depends on the Investment Adviser's ability to predict pertinent market movements, which cannot be assured. Thus, the use of Strategic Transactions may result in losses greater than if they had not been used, may require the Fund to sell or purchase portfolio securities at inopportune times or for prices other than current market values, may limit the amount of appreciation the Fund can realize on an investment or may cause the Fund to hold a security that it might otherwise sell. In addition, amounts paid by the Fund as premiums and cash, or other assets held in margin accounts with respect to Strategic Transactions, are not otherwise available to the Fund for investment purposes. It is possible that government regulation of various types of derivative instruments, including regulations enacted pursuant to the Dodd-Frank Act, which was signed into law in July 2010, may impact the availability, liquidity and cost of derivative instruments. There can be no assurance that such regulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to implement certain Strategic Transactions or to achieve their investment objectives. Although the Investment Adviser seeks to use Strategic Transactions to further the Fund's investment objective, no assurance can be given that the use of Strategic Transactions will achieve this result.

**Convertible Instrument Risk** 

A convertible instrument is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed number of common shares of the same or a different issuer within a particular period of time at a specified price or formula. Convertible debt instruments have characteristics of both fixed income and equity investments. Convertible instruments are subject both to the stock market risk associated

with equity securities and to the credit and interest rate risks associated with fixed-income securities. As the market price of the equity security underlying a convertible instrument falls, the convertible instrument tends to trade on the basis of its yield and other fixed-income characteristics. As the market price of such equity security rises, the convertible security tends to trade on the basis of its equity conversion features. Some convertible instruments have varying conversion values. Convertible instruments are typically issued at prices that represent a premium to their conversion value. Accordingly, the value of a convertible instrument increases (or decreases) as the price of the underlying equity security increases (or decreases). If a convertible instrument held by the Fund is called for redemption, the Fund will be required to permit the issuer to redeem the instrument, or convert it into the underlying stock, and will hold the stock to the extent the Investment Adviser determines that such equity investment is consistent with the investment objective of that Fund.

**Counterparty Risk** 

The Fund will be subject to credit risk with respect to the counterparties to the derivative contracts entered into by the Fund. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract due to financial difficulties, the Fund may experience significant delays in obtaining any recovery under the derivative contract in bankruptcy or other reorganization proceedings. The Fund may obtain only a limited recovery, or may obtain no recovery, in such circumstances.

**Short Sales Risk** 

Short selling involves selling securities which may or may not be owned and borrowing the same securities for delivery to the purchaser, with an obligation to replace the borrowed securities at a later date. Short selling allows the short seller to profit from declines in market prices to the extent such declines exceed the transaction costs and the costs of borrowing the securities. A naked short sale creates the risk of an unlimited loss because the price of the underlying security could theoretically increase without limit, thus increasing the cost of buying those securities to cover the short position. There can be no assurance that the securities necessary to cover a short position will be available for purchase. Purchasing securities to close out the short position can itself cause the price of the securities to rise, further exacerbating the loss.

The Fund's obligation to replace the borrowed security will be secured by collateral deposited with the broker-dealer, usually cash, U.S. government securities or other liquid securities similar to those borrowed. The Fund also will be required to segregate similar collateral to the extent, if any, necessary so that the value of both collateral amounts in the aggregate is at all times equal to at least 100% of the current market value of the security sold short. Depending on arrangements made with the broker-dealer from which the Fund borrowed the security regarding repaying amounts received by the Fund on such security, the Fund may not receive any payments (including interest) on the Fund's collateral deposited with such broker-dealer.

**Inflation Risk** 

Inflation risk is the risk that the value of assets or income from investment will be worth less in the future as inflation decreases the value of money. As inflation increases, the real value of the Fund's common shares and distributions can decline.

**Deflation Risk** 

Deflation risk is the risk that prices throughout the economy decline over time, which may have an adverse effect on the market valuation of companies, their assets and their revenues. In addition, deflation may have an adverse effect on the creditworthiness of issuers and may make issuer default more likely, which may result in a decline in the value of the Fund's portfolio.

**Debt Securities Risk** 

Debt securities are subject to many of the risks described elsewhere in this section. In addition, they are subject to credit risk, prepayment risk and, depending on their quality, other special risks.

*Credit Risk*. An issuer of a debt security may be unable to make interest payments and repay principal. A Fund could lose money if the issuer of a debt obligation is, or is perceived to be, unable or unwilling to make timely principal and/or interest payments, or to otherwise honor its obligations. The downgrade of a security may further decrease its value.

*Prepayment Risk*. Certain debt instruments, particularly below investment grade securities, may contain call or redemption provisions which would allow the issuer of the debt instrument to prepay principal prior to the debt instrument's stated maturity. This is also sometimes known as prepayment risk. Prepayment risk is greater during a falling interest rate environment as issuers can reduce their cost of capital by refinancing higher yielding debt instruments with lower yielding debt instruments. An issuer may also elect to refinance its debt instruments with lower yielding debt instruments if the credit standing of the issuer improves. To the extent debt securities in the Fund's portfolio are called or redeemed, that Fund may be forced to reinvest in lower yielding securities.

**Preferred Stock Risk** 

Preferred stocks combine some of the characteristics of both common stocks and debt securities. Preferred stocks generally pay a fixed rate of return and are sold on the basis of current yield, like debt securities. However, because they are equity securities, preferred stock provides equity ownership of a company, and the income is paid in the form of distributions. Preferred stocks typically have a yield advantage over common stocks as well as comparably rated fixed income investments. Preferred stocks are typically subordinated to bonds and other debt instruments in a company's capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Unlike interest payments on debt securities, preferred stock distributions are payable only if declared by the issuer's board of directors. Preferred stocks also may be subject to optional or mandatory redemption provisions. Convertible preferred stocks have risks similar to convertible securities as described above in "—Convertible Instrument Risk."

**Below Investment Grade Securities (Junk Bonds) Risk** 

Below investment grade and unrated debt securities generally pay a premium above the yields of U.S. government securities or debt securities of investment grade issuers because they are subject to greater risks than those securities. These risks, which reflect their speculative character, include the following: greater yield and price volatility; greater credit risk and risk of default; potentially greater sensitivity to general economic or industry conditions; potential lack of attractive resale opportunities (illiquidity); and additional expenses to seek recovery from issuers who default. Debt securities rated below investment grade are commonly known as "junk bonds" and are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions.

The prices of these below investment grade and unrated debt securities are more sensitive to negative developments, such as a decline in the issuer's revenues, downturns in profitability in the natural resources sector or a general economic downturn, than are the prices of higher-grade securities. Below investment grade and unrated debt securities tend to be less liquid than investment grade securities and the market for below investment grade and unrated debt securities could contract further under adverse market or economic conditions. In such a scenario, it may be more difficult for the Fund to sell these securities in a timely manner or for as high a price as could be realized if such securities were more widely traded. The market value of below investment grade and unrated debt securities may be more volatile than the market value of investment grade securities and generally tends to reflect the market's perception of the creditworthiness of the issuer and short-term market developments to a greater extent than investment grade securities, which primarily reflect fluctuations in general levels of interest rates. In the event of a default by a below investment grade or unrated debt security held in the Fund's portfolio in the payment of principal or interest, the Fund may incur additional expense to the extent the Fund is required to seek recovery of such principal or interest.

**Other Investment Companies Risk** 

Investments in investment company securities are subject to the risks of the purchased investment company's portfolio securities. In addition, Fund shareholders will bear not only their proportionate share of the expenses of the Fund (including operating expenses and the fees of the investment adviser), but also will indirectly bear similar expenses of the underlying investment company in which the Fund invests. Certain investments company securities, including other closed-end funds and ETFs, may trade at market prices that differ from the net asset value of the particular fund. In addition, the securities of other investment companies may also be leveraged and will therefore be subject to the same leverage risks described herein. As described in the section entitled "—Leverage Risk," the net asset value and market value of leveraged shares will be more volatile and the yield to stockholders will tend to fluctuate more than the yield generated by unleveraged shares. Other investment companies may have investment policies that differ from those of the Fund and the value of such investments will be dependent upon the investment and research abilities of persons other than the Investment Adviser.

**ETN and ETF Risk** 

An exchange-traded note ("ETN") or exchange-traded fund ("ETF") that is based on a specific index may not be able to replicate and maintain exactly the composition and relative weighting of securities in the index. An ETN or ETF also incurs certain expenses not incurred by its applicable index. The market value of an ETN or ETF share may differ from its net asset value; the share may trade at a premium or discount to its net asset value, which may be due to, among other things, differences in the supply and demand in the market for the share and the supply and demand in the market for the underlying assets of the ETN or ETF. In addition, certain securities that are part of the index tracked by an ETN or ETF may, at times, be unavailable, which may impede the ETN's or ETF's ability to track its index. An ETF that uses leverage can, at times, be relatively illiquid, which can affect whether its share price approximates net asset value. As a result of using leverage, an ETF is subject to the risk of failure in the futures and options markets it uses to obtain leverage and the risk that a counterparty will default on its obligations, which can result in a loss to the Fund. If the Fund invests in ETFs, the Fund's shareholders will bear not only their proportionate share of the expenses of the Fund, but also will indirectly bear similar expenses of the underlying ETF. Although an ETN is a debt security, it is unlike a typical bond, in that there are no periodic interest payments and principal is not protected.

**Investment Management Risk** 

The Fund's portfolio is subject to investment management risk because it will be actively managed. The Investment Adviser will apply investment techniques and risk analyses in making investment decisions for the Fund, but there can be no guarantee that they will produce the desired results.

The decisions with respect to the management of the Fund are made exclusively by the Investment Adviser, subject to the oversight of the Board of Trustees. Investors have no right or power to take part in the management of the Fund. The Investment Adviser also is responsible for all of the trading and investment decisions of the Fund. In the event of the withdrawal or bankruptcy of the Investment Adviser, generally the affairs of the Fund will be wound-up, and its assets will be liquidated.

**Dependence on Key Personnel of the Investment Adviser** 

The Fund is dependent upon the Investment Adviser's key personnel for its future success and upon their access to certain individuals and investments in the natural resources sector. In particular, the Fund will depend on the diligence, skill and network of business contacts of the personnel of the Investment Adviser and its portfolio managers, who will evaluate, negotiate, structure, close and monitor the Fund's investments. The portfolio managers have equity interests and other financial incentives to remain with the firm. The Fund will also depend on the senior management of the Investment Adviser. The departure of a member or members of the Investment Adviser's senior management could have a material adverse effect on the Fund's ability to achieve

its investment objective. In addition, the Fund can offer no assurance that the Investment Adviser will remain its investment adviser, or that the Fund will continue to have access to the Investment Adviser's natural resources sector contacts and deal flow.

**Conflicts of Interest with the Investment Adviser** 

Conflicts of interest may arise because the Investment Adviser and its affiliates generally will be carrying on substantial investment activities for other clients, including, but not limited to, other client accounts and funds managed or advised by the Investment Adviser, in which the Fund will have no interest. The Investment Adviser or its affiliates may have financial incentives to favor certain of such accounts over the Fund. Any of their proprietary accounts and other customer accounts may compete with the Fund for specific trades. The Investment Adviser or its affiliates may buy or sell securities for the Fund which differ from securities bought or sold for other accounts and customers, even though their investment objectives and policies may be similar to the Fund's. Situations may occur when the Fund could be disadvantaged because of the investment activities conducted by the Investment Adviser and its affiliates for their other accounts. Such situations may be based on, among other things, legal or internal restrictions on the combined size of positions that may be taken for the Fund and the other accounts, limiting the size of the Fund's position, or the difficulty of liquidating an investment for the Fund and the other accounts where the market cannot absorb the sale of the combined position. Notwithstanding these potential conflicts of interest, the Fund's Board of Trustees and officers have a fiduciary obligation to act in the Fund's best interest.

The Fund's investment opportunities may be limited by affiliations of the Investment Adviser or its affiliates with midstream energy companies. In addition, to the extent that the Investment Adviser sources and structures private investments in midstream energy companies, certain employees of the Investment Adviser may become aware of actions planned by midstream energy companies, such as acquisitions that may not be announced to the public. It is possible that the Fund could be precluded from investing in a company about which the Investment Adviser has material non-public information; however, it is the Investment Adviser's intention to ensure that any material non-public information available to certain of the Investment Adviser's employees not be shared with those employees responsible for the purchase and sale of publicly traded securities.

The Investment Adviser manages several other client accounts and funds. Some of these other client accounts and funds have investment objectives that are similar to or overlap with the Fund. Furthermore, the Investment Adviser may at some time in the future manage additional client accounts and investment funds with the same investment objective as the Fund.

The Investment Adviser and its affiliates generally will be carrying on substantial investment activities for other clients' accounts and funds in which the Fund will have no interest. Investment decisions for the Fund are made independently from those of such other clients; however, from time to time, the same investment decision may be made for more than one fund or account. When two or more clients advised by the Investment Adviser or its affiliates seek to purchase or sell the same publicly traded securities, the securities actually purchased or sold will be allocated among the clients on a good faith equitable basis by the Investment Adviser in its discretion in accordance with the clients' various investment objectives and procedures adopted by the Investment Adviser and approved by the Fund's Board of Trustees. In some cases, this system may adversely affect the price or size of the position the Fund may obtain.

The Fund's investment opportunities may be limited by investment opportunities that the Investment Adviser is evaluating for other clients' accounts and funds. To the extent a potential investment is appropriate for the Fund and one or more of the Investment Adviser's other client accounts or funds, the Investment Adviser will need to fairly allocate that investment to the Fund or another client account or fund, or both, depending on its allocation procedures and applicable law related to combined or joint transactions. There may occur an attractive limited investment opportunity suitable for the Fund in which the Fund cannot invest under the particular allocation method being used for that investment.

Under the 1940 Act, the Fund and such other client accounts or funds managed or advised by the Investment Adviser may be precluded from co-investing in certain private placements of securities. Except as permitted by law or positions of the staff of the SEC, the Investment Adviser will not co-invest its other clients' assets in private transactions in which the Fund invests. To the extent the Fund is precluded from co-investing, the Investment Adviser will allocate private investment opportunities among its clients, including but not limited to the Fund and its other client accounts and funds, based on allocation policies that take into account several suitability factors, including the size of the investment opportunity, the amount each client has available for investment and the client's investment objectives. These allocation policies may result in the allocation of investment opportunities to another client account or fund managed or advised by the Investment Adviser rather than to the Fund.

The management fees payable to the Investment Adviser are based on the value of the Fund's Managed Assets, as periodically determined. A portion of the Fund's Managed Assets may be illiquid securities acquired in private transactions for which market quotations will not be readily available. Although the Fund and the Investment Adviser as valuation designee have adopted valuation procedures designed to determine valuations of illiquid securities in a manner that reflects their fair value, there typically is a range of possible prices that may be established for each individual security. See "—Valuation Risk."

Skadden, Arps, Slate, Meagher & Flom LLP, counsel to the Fund, also represents the Investment Adviser. Such counsel does not purport to represent the separate interests of the investors and has assumed no obligation to do so. Accordingly, the investors have not had the benefit of independent counsel in the structuring of the Fund or determination of the relative interests, rights and obligations of the Investment Adviser and the investors.

**Reliance on Service Providers** 

The Fund relies upon service providers to perform certain functions, which may include functions that are integral to the operations and financial performance of the Fund. Fees and expenses of these service providers are borne by the Fund, and therefore indirectly by common shareholders. Failure by any service provider to carry out its obligations to the Fund in accordance with the terms of its appointment, to exercise due care and skill, or to perform its obligations to the Fund at all as a result of insolvency, bankruptcy or other causes could have a material adverse effect on the Fund's performance and ability to achieve its investment objective. The termination of the Fund's relationship with any service provider, or any delay in appointing a replacement for such service provider, could materially disrupt the business of that Fund and could have a material adverse effect on the Fund's performance and ability to achieve its investment objective.

**Technology Risk** 

As the use of Internet technology has become more prevalent, the Fund and its service providers and markets generally have become more susceptible to potential operational risks related to intentional and unintentional events that may cause the Fund or a service provider to lose proprietary information, suffer data corruption or lose operational capacity. There can be no guarantee that any risk management systems established by the Fund, its service providers, or issuers of the securities in which the Fund invests to reduce technology and cyber security risks will succeed, and the Fund cannot control such systems put in place by service providers, issuers or other third parties whose operations may affect the Fund.

**Cyber Security Risk** 

As the use of technology has become more prevalent in the course of business, the Fund has become potentially more susceptible to operational and informational security risks resulting from breaches in cyber security. A breach in cyber security refers to both intentional and unintentional cyber events that may, among other things, cause the Fund to lose proprietary information, suffer data corruption and/or destruction, lose operational capacity, result in the unauthorized release or other misuse of confidential information, or otherwise disrupt normal business operations. In addition, cyber security breaches involving the Fund's third-party service providers (including but not limited to advisers, administrators, transfer agents, custodians, distributors and

other third parties), trading counterparties or issuers in which the Fund invests in can also subject the Fund to many of the same risks associated with direct cyber security breaches. Like with operational risk in general, the Fund has established risk management systems and business continuity plans designed to reduce the risks associated with cyber security. However, there are inherent limitations in these plans and systems, including that certain risks may not have been identified, in large part because different or unknown threats may emerge in the future. As such, there is no guarantee that such efforts will succeed, especially because the Fund does not directly control the cyber security systems of issuers in which the Fund invests, trading counterparties or third-party service providers to the Fund. There is also a risk that cyber security breaches may not be detected. The Fund and its shareholders could be negatively impacted as a result.

**Tax Risks** 

The Fund has elected to be treated, and intends to continue to qualify to be treated, as a RIC under section 851 of the Code. In order to continue to qualify as a RIC, the Fund must, among other things, satisfy income, asset diversification and distribution requirements. As long as the Fund so qualifies, it will generally not be subject to U.S. federal income tax to the extent that it distributes annually the Fund taxable income and gains. There can be no assurance that the Fund will qualify as a RIC for any given year.

**Distributions Risk** 

The Fund's net investment income can vary significantly over time; however, the Fund seeks to maintain a more stable monthly distribution per share. The distributions paid by the Fund for any particular month may be more or less than the amount of net investment income for that monthly period. The Fund may distribute more than the entire amount of the net investment income earned in a particular period, in which case all or a portion of a distribution may be a return of capital. **The Fund's distributions have historically included, and may in the future include, a significant portion of return of capital. For the fiscal year ended November 30, 2025 the Fund's distributions were comprised of approximately 69% ordinary income, 31% long-term capital gain, and 0% return of capital. Accordingly, shareholders should not assume that the source of a distribution from the Fund is net income or profit, and the Fund's distributions should not be used as a measure of performance or confused with yield or income.** 

Return of capital is the return of a portion of the shareholder's original investment up to the amount of the common shareholder's tax basis in their common shares, which would reduce such tax basis. Although a return of capital may not be taxable, it will generally increase the common shareholder's potential gain, or reduce the common shareholder's potential loss, on any subsequent sale or other disposition of common shares. In any given year, there can be no guarantee the Fund's investment returns will exceed the amount of distributions. To the extent the amount of distributions paid to shareholders in cash exceeds the total net investment returns of the Fund, the assets of the Fund will decline, which may have the effect of increasing the Fund's expense ratio. In addition, in order to make such distributions, the Fund may have to sell a portion of its investment portfolio at a time when independent investment judgment might not dictate such action. Shareholders should not assume that the source of a distribution from the Fund is net income or profit, and the Fund's distributions should not be used as a measure of performance or confused with yield or income.

**Market Discount from Net Asset Value** 

Shares of closed-end investment companies frequently trade at a discount from their net asset value, which is a risk separate and distinct from the risk that the Fund's net asset value could decrease as a result of its investment activities. Although the value of the Fund's net assets is generally considered by market participants in determining whether to purchase or sell common shares, whether investors will realize gains or losses upon the sale of common shares will depend entirely upon whether the market price of common shares at the time of sale is above or below the investor's purchase price for common shares. Because the market price of common shares will be determined by factors such as net asset value, distribution and distribution levels (which are dependent, in part, on expenses), supply of and demand for common shares, stability of distributions or distributions, trading volume of common shares, general market and economic conditions and other factors

beyond the control of the Fund, the Fund cannot predict whether common shares will trade at, below or above net asset value or at, below or above the initial public offering price. Common shares of the Fund are designed primarily for long-term investors; investors in common shares should not view their Fund as a vehicle for trading purposes.

**Recent Market, Economic and Social Developments Risk** 

The occurrence of events similar to those in recent years, such as localized wars, instability, new and ongoing pandemics, epidemics or outbreaks of infectious diseases in certain parts of the world, natural/environmental disasters in certain parts of the world, terrorist attacks in the United States and around the world, trade or tariff arrangements, social and political discord, debt crises, sovereign debt downgrades, increasingly strained relations between the United States and a number of foreign countries, including traditional allies, historical adversaries and the international community generally, new and continued political unrest in various countries, the exit or potential exit of one or more countries from the EU or the EMU, continued changes in the balance of political power among and within the branches of the U.S. government, and government shutdowns, among others, may result in market volatility, may have long-term effects on the United States and worldwide financial markets, and may cause further economic uncertainties in the United States and worldwide.

The consequences of the ongoing conflicts between Russia and Ukraine and between Israel and Hamas, including international sanctions, the potential impact on inflation and increased disruption to supply chains may impact our portfolio companies, result in an economic downturn or recession either globally or locally in the U.S. or other economics, reduce business activity, spawn additional conflicts (whether in the form of traditional military action, reignited "cold" wars or in the form a virtual warfare such as cyberattacks) with similar and perhaps wider ranging impacts and consequences and have an adverse impact on the Fund's returns and net asset value. The current contentious domestic political environment, as well as political and diplomatic events within the United States and abroad, such as the U.S. government's inability at times to agree on a long-term budget and deficit reduction plan, may in the future result in additional government shutdowns, which could have a material adverse effect on the Fund's investments and operations. In addition, the Fund's ability to raise additional capital in the future through the sale of securities could be materially affected by a government shutdown. Additional and/or prolonged U.S. government shutdowns may affect investor and consumer confidence and may adversely impact financial markets and the broader economy, perhaps suddenly and to a significant degree.

Uncertainty and periods of volatility still remain, and risks to a robust resumption of growth persist. Federal Reserve policy, including with respect to certain interest rates, may adversely affect the value, volatility and liquidity of dividend and interest paying securities. Market volatility, dramatic changes to interest rates and/or a return to unfavorable economic conditions may lower the Fund's performance or impair the Fund' ability to achieve its investment objective.

The occurrence of any of the above events could have a significant adverse impact on the value and risk profile of the Fund's portfolio. It is not known how long the securities markets may be affected by similar events, and the effects of similar events in the future on the U.S. economy and securities markets cannot be predicted. There can be no assurance that similar events and other market disruptions will not have other material and adverse implications.

The current political climate has intensified concerns about a potential trade war between China and the U.S., as each country has imposed tariffs on the other country's products. These actions may trigger a significant reduction in international trade, the oversupply of certain manufactured goods, substantial price reductions of goods and possible failure of individual companies and/or large segments of China's export industry, which could have a negative impact on our performance. U.S. companies that source material and goods from China and those that make large amounts of sales in China would be particularly vulnerable to an escalation of trade tensions. Uncertainty regarding the outcome of the trade tensions and the potential for a trade war could cause the U.S. dollar to decline against safe haven currencies, such as the Japanese yen and the euro. Events such as

these and their consequences are difficult to predict and it is unclear whether further tariffs may be imposed or other escalating actions may be taken in the future. Any of these effects could have a material adverse effect on the business, financial condition and results of operations of the Fund.

**Legislation and Regulatory Risks** 

At any time after the date of this Report, legislation may be enacted that could negatively affect the companies in which the Fund invests. Changing approaches to regulation may also have a negative impact on companies in which the Fund invests. In addition, legislation or regulation may change the way in which the Fund is regulated. There can be no assurance that future legislation, regulation or deregulation will not have a material adverse effect on the Fund or will not impair the ability of the Fund to achieve its investment objective.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which was signed into law in July 2010, resulted in significant revisions to the U.S. financial regulatory framework. The Dodd-Frank Act covers a broad range of topics, including, among many others: a reorganization of federal financial regulators; the creation of a process designed to ensure financial system stability and the resolution of potentially insolvent financial firms; the enactment of new rules for derivatives trading; the creation of a consumer financial protection watchdog; the registration and regulation of managers of private funds; the regulation of rating agencies; and the enactment of new federal requirements for residential mortgage loans. The regulation of various types of derivative instruments pursuant to the Dodd-Frank Act may adversely affect the Fund or its counterparties.

The SEC and its staff are also reportedly engaged in various initiatives and reviews that seek to improve and modernize the regulatory structure governing investment companies. These efforts appear to be focused on risk identification and controls in various areas, including embedded leverage through the use of derivatives and other trading practices, cybersecurity, liquidity, enhanced regulatory and public reporting requirements and the evaluation of systemic risks. Any new rules, guidance or regulatory initiatives resulting from these efforts could increase the Fund's expenses and impact its returns to shareholders or, in the extreme case, impact or limit the Fund's use of various portfolio management strategies or techniques and adversely impact the Fund.

Changes enacted by the current or a future presidential administration could significantly impact the regulation of financial markets in the U.S. Certain changes can, and have, been effectuated through executive order. It is not possible to predict what, if any, actions will be taken or, if taken, their effect on the economy, securities markets or the financial stability of the U.S. The Fund may be affected by governmental action in ways that are not foreseeable, and there is a possibility that such actions could have a significant adverse effect on the Fund and the Fund's ability to achieve its investment objective.

Additional risks arising from the differences in expressed policy preferences among the various constituencies in the branches of the U.S. government has led in the past, and may lead in the future, to short-term or prolonged policy impasses, which could, and has, resulted in shutdowns of the U.S. federal government. U.S. federal government shutdowns, especially prolonged shutdowns, could have a significant adverse impact on the economy in general and could impair the ability of issuers to raise capital in the securities markets. Any of these effects could have a material adverse effect on the Fund's net asset value.

In addition, the rules dealing with the U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Treasury Department. The effect of any changes to the Code is uncertain, both in terms of the direct effect on the taxation of an investment in the Fund's shares and their indirect effect on the value of the Fund's assets, shares or market conditions generally.

In addition, the U.S. government has proposed and adopted multiple regulations that could have a long-lasting impact on the Fund and on the closed-end fund industry in general. Such regulations, could, among other things, restrict the Fund's ability to engage in transactions, and/or increase overall expenses of the Fund.

**SOFR Risk** 

SOFR is intended to be a broad measure of the cost of borrowing funds overnight in transactions that are collateralized by U.S. Treasury securities. SOFR is calculated based on transaction-level data collected from various sources. For each trading day, SOFR is calculated as a volume-weighted median rate derived from such data. SOFR is calculated and published by the Federal Reserve Bank of New York ("FRBNY"). If data from a given source required by the FRBNY to calculate SOFR is unavailable for any day, then the most recently available data for that segment will be used, with certain adjustments. If errors are discovered in the transaction data or the calculations underlying SOFR after its initial publication on a given day, SOFR may be republished at a later time that day. Rate revisions will be effected only on the day of initial publication and will be republished only if the change in the rate exceeds one basis point.

Because SOFR is a financing rate based on overnight secured funding transactions, it differs fundamentally from LIBOR. LIBOR was intended to be an unsecured rate that represents interbank funding costs for different short-term maturities or tenors. It was a forward-looking rate reflecting expectations regarding interest rates for the applicable tenor. Thus, LIBOR was intended to be sensitive, in certain respects, to bank credit risk and to term interest rate risk. In contrast, SOFR is a secured overnight rate reflecting the credit of U.S. Treasury securities as collateral. Thus, it is largely insensitive to credit-risk considerations and to short-term interest rate risks. SOFR is a transaction-based rate, and it has been more volatile than other benchmark or market rates, such as three-month LIBOR, during certain periods. For these reasons, among others, there is no assurance that SOFR, or rates derived from SOFR, will perform in the same or similar way as LIBOR would have performed at any time, and there is no assurance that SOFR-based rates will be a suitable substitute for LIBOR. SOFR has a limited history, having been first published in April 2018. The future performance of SOFR, and SOFR-based reference rates, cannot be predicted based on SOFR's history or otherwise. Levels of SOFR in the future, including following the discontinuation of LIBOR, may bear little or no relation to historical levels of SOFR, LIBOR or other rates.

**Terrorism, Market Disruption, and Catastrophe Risk** 

Terrorist attacks, catastrophes, pandemics and other geopolitical events have led to, and may in the future lead to, increased short-term market volatility and may have long-term effects on U.S. and world economies and markets. Global political and economic instability could affect the operations of companies in which the Fund invests in unpredictable ways, including through disruptions of natural resources supplies and markets and the resulting volatility in commodity prices. The operation of infrastructure assets in which the Fund invests is subject to many hazards including damage to equipment and surrounding properties caused by hurricanes, tornadoes, floods, fires and other natural disasters or by acts of terrorism; inadvertent damage from construction or other equipment; leaks; and fires and explosions. The U.S. government has issued warnings that infrastructure assets may be future targets of terrorist activities. In addition, changes in the insurance markets have made certain types of insurance more difficult, if not impossible, to obtain and have generally resulted in increased premium costs.

**Not a Complete Investment Program** 

The Fund is intended for investors seeking a high level of total return with an emphasis on current income. The Fund is not meant to provide a vehicle for those who wish to exploit short-term swings in the stock market and is intended for long-term investors. An investment in shares of the Fund should not be considered a complete investment program. Each shareholder should take into account their Fund's investment objective as well as the shareholder's other investments when considering an investment in the Fund.

**Anti-Takeover Provisions in the Fund's Agreement and Declaration of Trust and By-Laws** 

The Fund's Declaration of Trust and By-Laws include provisions that could have the effect of limiting the ability of other entities or persons to acquire control of the Fund or to change the composition of its Board of Trustees. For example, the Declaration of Trust limits the ability of persons to beneficially own (within the meaning of Section 382 of the Code) more than 4.99% of the outstanding common shares of the Fund. This

restriction was adopted in order to reduce the risk of the Fund undergoing an "ownership change" within the meaning of Section 382 of the Code, which would limit the Fund's ability to use a capital loss carryforward and certain unrealized losses (if such tax attributes exist).

In addition, as a Delaware statutory trust, the Fund is subject to the control share acquisition statute (the "Control Share Statute") contained in Subchapter III of the Delaware Statutory Trust Act (the "DSTA"), which became automatically applicable to listed closed-end funds, such as the Fund, upon its effective date of August 1, 2022 (the "Effective Date"). The Control Share Statute provides that an acquirer of shares above a series of voting power thresholds has no voting rights under the DSTA or the governing documents of the Fund with respect to shares acquired in excess of that threshold (i.e., the "control shares") unless approved by shareholders.

The limitations of the Fund's Declaration of Trust and the Control Share Statute could have the effect of depriving shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging a third party from seeking to obtain control over the Fund and may reduce market demand for the Fund's common shares, which could have the effect of increasing the likelihood that the Fund's common shares trade at a discount to net asset value and increasing the amount of any such discount.

**NET ASSET VALUE** 

The Fund will determine the net asset value of its common shares as of the close of regular session trading on the New York Stock Exchange (normally 4:00 p.m. Eastern Time) on each day on which there is a regular trading session on the NYSE. The Fund calculates net asset value per common share by subtracting liabilities (including accrued expenses or distributions) from the total assets of the Fund (the value of the securities plus cash or other assets, including interest accrued but not yet received) and dividing the result by the total number of outstanding common shares of the Fund.

The Board of Trustees has designated the Investment Adviser as the "valuation designee" for the Fund pursuant to Rule 2a-5 under the 1940 Act. The valuation designee is responsible for making fair value determinations pursuant to valuation policies and procedures adopted by the Investment Adviser and the Fund (the "Valuation Policy"). A committee of voting members comprised of senior personnel of the Investment Adviser considers various pricing issues and establishes fair valuations of portfolio securities and other instruments held by the Fund in accordance with the Valuation Policy (the "Valuation Committee"). The Investment Adviser as valuation designee is subject to monitoring and oversight by the Board of Trustees. As a general principle, the fair value of a portfolio instrument is the amount that an owner might reasonably expect to receive upon the instrument's current sale. A range of factors and analysis may be considered when determining fair value, including relevant market data, interest rates, credit considerations and/or issuer specific news. The Valuation Committee may consult with and receive input from third parties and will utilize a variety of market data including yields or prices of investments of comparable quality, type of issue, coupon, maturity, rating, indications of value from security dealers, evaluations of anticipated cash flows or collateral, spread over U.S. Treasury obligations, and other information and analysis. In addition, the Valuation Committee may consider valuations provided by valuation firms retained to assist in the valuation of certain of the Fund's investments. Fair valuation involves subjective judgments. While the Fund's use of fair valuation is intended to result in calculation of net asset value that fairly reflects values of the Fund's portfolio securities as of the time of pricing, the Fund cannot guarantee that any fair valuation will, in fact, approximate the amount the Fund would actually realize upon the sale of the securities in question. It is possible that the fair value determined for a portfolio instrument may be materially different from the value that could be realized upon the sale of that instrument.

The valuation designee uses the following valuation methods to determine fair value as either fair value for investments for which market quotations are available, or if not available, the fair value, as determined in good faith pursuant to the Valuation Policy. The valuation of the portfolio securities of the Fund currently includes the following processes:

● The market value of each security listed or traded on any recognized securities exchange or automated quotation system will be the last reported sale price at the relevant valuation date on the composite tape or on the principal exchange on which such security is traded except those listed on the NASDAQ Global Market<sup>®</sup>, NASDAQ Global Select Market<sup>®</sup> and the NASDAQ Capital Market<sup>®</sup> exchanges (collectively, "NASDAQ"). Securities traded on NASDAQ will be valued at the NASDAQ Official Closing Price ("NOCP"). If no sale is reported on that date, the security will be valued at the last reported bid price. If the Valuation Committee (the "Committee") determines that price is not representative of the actual market price, the Committee may determine the fair value of the security.

● Securities not traded on a U.S. exchange or NASDAQ and foreign securities that are traded on foreign exchanges whose operations are similar to the U.S. over-the-counter market will be valued at prices supplied by a pricing service. If the Committee determines that price is not representative of the actual market price, the Committee may determine the fair value of the security.

● Debt securities will be valued based on evaluated mean prices by an outside pricing service that employs a pricing model that takes into account bids, yield spreads, and/or other market data and specific security characteristics (e.g., credit quality, maturity and coupon rate). If a price cannot be obtained from pricing services, quotes from market makers or brokers may be used. When possible, more than one market maker or broker should be utilized and the mean of bid and ask prices should be used.

● Private Placements in Public Entities ("PIPES") will be valued using the price of the publicly traded common stock as a baseline, deducting the discount realized on the original purchase and amortizing the difference over the restricted period.

● Listed options on debt or equity securities are valued at the last sale price or, if there are no trades for the day, the mean of the closing bid price and ask price. Unlisted options on debt or equity securities are valued based upon their composite bid prices if held long, or their composite ask prices if held short. Futures are valued at the settlement price. Premiums for the sale of options written by an investment company registered under the 1940 Act (a "Registered Fund") will be included in the assets of such Registered Fund, and the market value of such options will be included as a liability.

● For valuation purposes, quotations of foreign portfolio securities, other assets and liabilities and forward contracts stated in foreign currency are as of the close of regular trading on the Exchange each day the Exchange is open for trading (or earlier as may be specified by the Registered Fund) and translated into U.S. dollar equivalents at the current prevailing market rates as quoted by a pricing service.

● Foreign securities are valued using "fair value factors". Fair value factors consider daily trade activity and price changes for depositary receipts, exchange-traded funds, index futures, foreign currency exchange activity, or other relevant market data.

● Over-the-counter options on foreign securities and currencies are fair valued by obtaining the "last available bid" from a single dealer that is either the writer or purchaser of the option.

● Swaps will be valued using market-based prices provided by pricing services or broker-dealer bid counterparty quotations.

Whenever trading in a listed security held in a portfolio is temporarily suspended, halted or delisted from an exchange, the security may be priced using the last closing price for a period of up to 5 business days. The Committee will continue to monitor the security during this period and, if there is a belief that the last closing price does not reflect the fair value of such security, then the value of such security will be determined by

the Committee based on factors the Committee deems relevant. Whenever any such valuation determination is made, the Committee will monitor the market and other sources of information available to it in order to ascertain whether any change in circumstance would suggest a change in the value so determined.

**MANAGEMENT OF THE FUND** 

**Board of Trustees** 

The Board of Trustees of the Fund provides broad oversight over the operations and affairs of the Fund and protects the interests of shareholders. The Board of Trustees of the Fund has overall responsibility for monitoring the operations of the Fund and for supervising the services provided by the Investment Adviser and other organizations. The officers of the Fund are responsible for managing the day-to-day operations of the Fund.

The names and ages of the Trustees and officers of the Fund, the year each was first elected or appointed to office, their principal business occupations during the last five years, the number of funds overseen by each Trustee and other directorships or trusteeships during the last five years are shown below. The business address of the Fund, its Trustees and officers is One Energy Square, 4925 Greenville Avenue, Suite 1310, Dallas, Texas 75206.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and <br> Year of Birth** | **Position(s) Held <br> With the Fund** | **Term of <br> Office and <br> Length <br> of Time <br> Served<sup>(1)</sup>** | **Principal Occupations <br> During Past Five Years** | **Number of <br> Portfolios <br> in Fund <br> Complex<sup>(2)</sup>** **<br> Overseen <br> by Trustee** | **Other Directorships Held by Trustee <br> During the Past Five Years** |
| **Independent Trustees** | **Independent Trustees** |  |  |  |  |
| Brian R. Bruce<br> (1955) | Chair of the Board | Trustee <br> since 2007; Chair since 2023 | Retired. Previously, Chief Executive Officer, Hillcrest Asset Management, LLC (2008–2022) (registered investment adviser). | 2 | CM Advisers Family of Funds (2 series) (2003-2020). |
| Andrea N. Mullins <br> (1967) | Trustee and Chair of Audit Committee | Trustee <br> since 2021 | Private Investor; Independent Contractor, SWM Advisors (2014-present). | 2 | Valued Advisers Trust (14 portfolios) (2013-present); Angel Oak Family of Funds (9 portfolios) (2019-present). |
| John H. Alban\*<br> (1963) | Trustee | Trustee since April 2023 | Retired. Previously, Chief Executive Officer (2019-2022) and Chief Operating Officer (2010-2022) of the Adviser; Chief Executive Officer and President of funds in the Fund Complex (2021-2022). | 2 | None. |
| **Interested Trustee** | **Interested Trustee** |  |  |  |  |
| John Musgrave\*\* <br>(1982)  | Trustee, Chief Executive Officer and President | Trustee since January 2025 | Chief Executive Officer and President (2023-Present), Co-Chief Investment Officer (2016-2023), Managing Director (2016-2023), Chief Investment Officer (2023-present) and Portfolio Manager (2007-Present) of the Investment Adviser. | 2 | None. |

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<sup>(1)</sup> &nbsp;&nbsp;&nbsp;&nbsp;Each Trustee serves a two-year term concurrent with the class of Trustees for which he serves.

● Brian R. Bruce and John H. Alban, as Class I Trustees, are expected to stand for re-election at the Fund's 2026 annual meeting of shareholders.

● Andrea N. Mullins, as Class II Trustee, is expected to stand for re-election at the Fund's 2027 annual meeting of shareholders.

● John Musgrave, as Class III Trustee, is expected to stand for re-election at the Fund's 2028 annual meeting of shareholders.

<sup>(2)</sup> <sup></sup>The "Fund Complex" includes each other registered investment company for which the Investment Adviser serves as investment adviser. As of the date of this report, there are two funds (including the Fund) in the "Fund Complex."

\* Mr. Alban is an "interested person" of the Fund, as defined under the 1940 Act, by virtue of his position as Chief Executive Officer and Operating Officer of the Investment Adviser prior to November 30, 2022.

\*\* Mr. Musgrave is an "interested person" of the Fund, as defined under the 1940 Act, by virtue of his positions as Chief Executive Officer and President, Chief Investment Officer and Portfolio Manager of the Investment Adviser.

**Executive Officers** 

The following information relates to the executive officers of the Funds who are not Trustees. The officers of the Fund were appointed by the Board of Trustees and will serve until their respective successors are chosen and qualified.

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| | | |
|:---|:---|:---|
| **Name and <br> Year of Birth** | **Position** | **Principal Occupation During the Past Five Years** |
| John Musgrave <br>(1982) | Chief Executive Officer and President | Chief Executive Officer and President (2023-Present), Co-Chief <br>Investment Officer (2016-2023), Managing Director (2016-2023), <br>Chief Investment Officer (2023-present) and Portfolio Manager <br>(2007-Present) of the Investment Adviser. |
| Blake R. Nelson <br>(1986) | Chief Financial Officer and Treasurer | Chief Financial Officer (2021-present) and Controller (2013-2021) of the Adviser. Previously, fund accountant at JD Clark & Company (2011-2013). Mr. Nelson is a Certified Public Accountant. |
| Brad Mead <br> (1990) | Chief Compliance Officer and Secretary | Chief Compliance Officer (2024-present) of the Investment Adviser. Previously, Senior Compliance Consultant at Cloudbreak Compliance (2023-2024), Compliance Manager (2021-2023) at IQEQ, and Compliance Associate (2018-2020) at Blue River Partners. |

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**Investment Adviser** 

Subject to the overall supervision of the Board of Trustees, the Fund is managed by Cushing<sup>®</sup> Asset Management, LP d/b/a NXG Investment Management, whose principal business address is One Energy Square, 4925 Greenville Avenue, Suite 1310, Dallas, Texas 75206. The Investment Adviser is a wholly-owned investment advisory subsidiary of Swank Capital. The Investment Adviser was founded in 2003 and serves as investment adviser to registered and unregistered funds. As of December 31, 2025, the Investment Adviser managed approximately $1.6 billion in assets.

The Investment Adviser acts as the investment adviser to the Fund pursuant to an investment management agreement (the "Investment Management Agreement"). Pursuant to the Investment Management Agreement, the Fund has agreed to pay the Investment Adviser a fee, payable at the end of each calendar month, at an annual rate equal to 1.25% of the average weekly value of the Fund's Managed Assets during such month (the "Management Fee") for the services and facilities provided by the Investment Adviser to the Fund. For purposes of the Management Fee, "Managed Assets" means the total assets of the Fund, minus all accrued expenses incurred in the normal course of operations other than liabilities or obligations attributable to investment leverage, including, without limitation, investment leverage obtained through (i) indebtedness of any type (including, without limitation, borrowing through a credit facility or the issuance of debt securities), (ii) the issuance of shares of preferred stock or other similar preference securities and/or (iii) the reinvestment of collateral received for securities loaned in accordance with the Fund's investment objective and policies.

Pursuant to a fee waiver agreement by and between the Fund and the Investment Adviser, the Investment Adviser has contractually agreed to waive a portion of the management fee in an amount equal to 0.25% of the Fund's Managed Assets through November 12, 2026.

Because the Management Fee is based upon a percentage of the Fund's Managed Assets, the Management Fee will be higher if the Fund employs leverage. Therefore, the Investment Adviser will have a financial incentive to use leverage, which may create a conflict of interest between the Investment Adviser and the Fund's common shareholders.

Pursuant to the Investment Management Agreement, the Investment Adviser is responsible for managing the portfolio of the Fund in accordance with its stated investment objective and policies, making investment decisions for the Fund, placing orders to purchase and sell securities on behalf of the Fund and managing the other business and affairs of the Fund, all subject to the supervision and direction of the Fund's Board of

Trustees. In addition, the Investment Adviser furnishes offices, necessary facilities and equipment on behalf of the Fund; provides personnel, including certain officers required for the Fund's administrative management; and pays the compensation of all officers and Trustees of the Fund who are its affiliates.

In addition to the Management Fee, the Fund pays all other costs and expenses of its operations, including the compensation of its Trustees (other than those affiliated with the Investment Adviser); the fees and expenses of the Fund's administrator, the custodian and transfer and distribution disbursing agent; legal fees; leverage expenses (if any); rating agency fees (if any); listing fees and expenses; fees of independent auditors; expenses of repurchasing shares; expenses of preparing, printing and distributing shareholder reports, notices, proxy statements and reports to governmental agencies; and taxes, if any.

A discussion regarding the basis for the approval of the Investment Management Agreement by the Board of Trustees is available in the Fund's semi-annual report to shareholders for the period ended May 31, 2025.

**Advisory Fees Paid** 

The following summarizes the investment advisory fees, less any fees waived by the Investment Adviser, paid pursuant to the investment advisory fee agreement in effect during the last three fiscal years ended November 30:

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| | | |
|:---|:---|:---|
| **2025** | **2024** | **2023** |
| $25171282 | $1684554 | $1029181 |

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**Portfolio Management** 

John Musgrave, Trustee, Chief Executive Officer and President of the Fund and Chief Executive Officer and President and Chief Investment Officer of the Investment Adviser, and Todd Sunderland, Chief Risk Officer and Chief Operating Officer of the Investment Adviser, are primarily responsible for the day-to-day management of the Fund's portfolio.

Mr. Musgrave has been Chief Executive Officer and President and Chief Investment Officer of the Investment Adviser since 2023 and a Portfolio Manager of the Investment Adviser since 2007.

Mr. Sunderland has been Chief Risk Officer and Chief Operating Officer of the Investment Adviser since December 1, 2022. Mr. Sunderland joined the Investment Adviser in 2007.

The Fund's SAI provides additional information about the portfolio manager's compensation, other accounts managed by the portfolio managers and the portfolio managers' ownership of securities of the Fund.

**Fund Expenses** 

The Fund pays all costs and expenses of its operations (in addition to the Management Fee), including fund administration and fund accounting fees, custodian fees, transfer agency fees, administration fees, legal fees, expenses of its independent registered public accounting firm, expenses of pricing services or valuation agents, expenses of preparing, printing and distributing shareholder reports, notices, proxy statements and reports to governmental agencies, listing fees and taxes, if any. Fund expenses are indirectly borne by common shareholders.

**Cautionary Note Regarding Forward-Looking Statements** 

This report contains "forward-looking statements" as defined under the U.S. federal securities laws. Generally, the words "believe," "expect," "intend," "estimate," "anticipate," "project," "will" and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to materially differ from the Fund's historical experience and its present expectations or projections indicated in any forward-looking statements. These risks include, but are not limited to, changes in economic and political conditions; regulatory and legal changes; MLP industry risk; leverage risk; valuation risk; interest rate risk; tax risk; and other risks discussed

in the Fund's filings with the SEC. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. The Fund undertakes no obligation to update or revise any forward-looking statements made herein. There is no assurance that the Fund's investment objective will be attained.

**Proxy Voting Policies** 

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities owned by the Fund and information regarding how the Fund voted proxies relating to the portfolio of securities during the 12-month period ended June 30 are available to stockholders without charge, upon request by calling the Fund toll-free at (800) 236-4424 and on the Fund's website at www.nxgim.com. Information regarding how the Fund voted proxies relating to the portfolio of securities during the 12-month period ended June 30 are also available to stockholders without charge on the SEC's website at www.sec.gov.

**Form N-PORT** 

The Fund files its complete schedule of portfolio holdings for each month of each fiscal year with the SEC on Form N-PORT. The Fund's Form N-PORT for the third month of each Fund's fiscal quarter and statement of additional information are available without charge by visiting the SEC's website at www.sec.gov. You may obtain information on the operation of the Public Reference Room by calling (800) SEC-0330.

**Certifications** 

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

The Fund 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.

**Distribution and Dividend Reinvestment Plan** 

Unless the registered owner of common shares elects to receive cash by contacting the Plan Agent, all distributions declared for your common shares of the Fund (including capital gain distributions and return of capital distributions) will be automatically reinvested by U.S. Bank Global Fund Services (the "Plan Agent"), agent for shareholders in administering the Fund's dividend reinvestment plan (the "Plan"), in additional common shares of the Fund. If a registered owner of common shares elects not to participate in the Plan, you will receive all distributions in cash paid by check mailed directly to you (or, if the shares are held in street or other nominee name, then to such nominee) by the Plan Agent, as distribution disbursing agent. You may elect not to participate in the Plan and to receive all distributions in cash by sending written instructions or by contacting the Plan Agent, as distribution disbursing agent, at the address set out below. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by contacting the Plan Agent before the distribution record date; otherwise such termination or resumption will be effective with respect to any subsequently declared distribution. Some brokers may automatically elect to receive cash on your behalf and may reinvest that cash in additional common shares of the Fund for you.

Whenever the Fund declares a distribution payable in cash, non-participants in the Plan will receive cash and participants in the Plan will receive the equivalent in common shares. The common shares will be acquired by the Plan Agent for the participants' accounts, depending upon the circumstances described below, either (i) through receipt of additional unissued but authorized common shares from the Fund ("newly-issued common shares") or (ii) by purchase of outstanding common shares on the open market ("open-market purchases") on the New York Stock Exchange or elsewhere.

If, on the payment date for any distribution, the market price per common share plus estimated brokerage commissions is greater than the net asset value per common share (such condition being referred to in this Report as "market premium"), the Plan Agent will invest the distribution amount in newly-issued common shares, including fractions, on behalf of the participants. The number of newly-issued common shares to be credited to each participant's account will be determined by dividing the dollar amount of the distribution by the

net asset value per common share on the payment date; provided that, if the net asset value per common share is less than 95% of the market price per common share on the payment date, the dollar amount of the distribution will be divided by 95% of the market price per common share on the payment date.

If, on the payment date for any distribution, the net asset value per common share is greater than the market value per common share plus estimated brokerage commissions (such condition being referred to in this Report as "market discount"), the Plan Agent will invest the distribution amount in common shares acquired on behalf of the participants in open-market purchases.

In the event of a market discount on the payment date for any distribution, the Plan Agent will have until the last business day before the next date on which the common shares trade on an "ex-distribution" basis or 120 days after the payment date for such distribution, whichever is sooner (the "last purchase date"), to invest the distribution amount in common shares acquired in open-market purchases. The period during which open-market purchases can be made will exist only from the payment date of each distribution through the date before the "ex-distribution" date of the following distribution. If, before the Plan Agent has completed its open-market purchases, the market price of a common share exceeds the net asset value per common share, the average per common share purchase price paid by the Plan Agent may exceed the net asset value of the common shares, resulting in the acquisition of fewer common shares than if the distribution had been paid in newly-issued common shares on the distribution payment date. Because of the foregoing difficulty with respect to open market purchases, if the Plan Agent is unable to invest the full distribution amount in open market purchases during the purchase period or if the market discount shifts to a market premium during the purchase period, the Plan Agent may cease making open-market purchases and may invest the uninvested portion of the distribution amount in newly-issued common shares at the net asset value per common share at the close of business on the last purchase date; provided that, if the net asset value per common share is less than 95% of the market price per common share on the payment date, the dollar amount of the distribution will be divided by 95% of the market price per common share on the payment date.

The Plan Agent maintains all shareholders' accounts in the Plan and furnishes written confirmation of all transactions in the accounts, including information needed by shareholders for tax records. Common shares in the account of each Plan participant will be held by the Plan Agent on behalf of the Plan participant, and each shareholder proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent or its designee will forward all proxy solicitation materials to participants and vote proxies for shares held under the Plan in accordance with the instructions of the participants.

In the case of shareholders such as banks, brokers or nominees which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of common shares certified from time to time by the record shareholder's name and held for the account of beneficial owners who participate in the Plan.

There will be no brokerage charges with respect to common shares issued directly by the Fund. However, each participant will pay a pro rata share of brokerage commissions incurred in connection with open-market purchases. 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. Accordingly, any taxable distribution received by a participant that is reinvested in additional common shares will be subject to federal (and possibly state and local) income tax even though such participant will not receive a corresponding amount of cash with which to pay such taxes.

In addition, participants who request a sale of shares through the Plan Agent are subject to a $15.00 per transaction sales fee and pay a brokerage commission of $0.12 per share sold.

To the extent that reinvested distributions are invested in newly-issued common shares (which occurs when a market premium exists on the payment date for any distribution) the reinvestment of distributions will increase the Managed Assets of the Fund, and thus the Management Fee paid to the Investment Adviser.

The Fund reserves the right to amend or terminate the Plan. There is no direct service charge to participants in the Plan; however, the Fund reserves the right to amend the Plan to include a service charge payable by the participants. The Fund will provide written notice to participants at least 60 days in advance of implementing any such amendment.

For more information about the Plan you may contact the Plan Agent in writing at PO Box 708, Milwaukee, Wisconsin 53201-0701, or by calling the Plan Agent.

**Privacy Policy** 

In order to conduct its business, the Fund collects and maintains certain nonpublic personal information about its stockholders of record with respect to their transactions in shares of the Fund's securities. This information includes the stockholder's address, tax identification or Social Security number, share balances, and dividend elections. We do not collect or maintain personal information about stockholders whose share balances of our securities are held in "street name" by a financial institution such as a bank or broker.

We do not disclose any nonpublic personal information about you, the Fund's other stockholders or the Fund's former stockholders to third parties unless necessary to process a transaction, service an account, or as otherwise permitted by law.

To protect your personal information internally, we restrict access to nonpublic personal information about the Fund's stockholders to those employees who need to know that information to provide services to our stockholders. We also maintain certain other safeguards to protect your nonpublic personal information.

**Other Information for Stockholders** 

Notice is hereby given in accordance with Section 23(c) of the Investment Company Act of 1940, as amended, that the Fund from time to time may purchase its common shares of beneficial interest in the open market.

This report is sent to stockholders of NXG Cushing<sup>®</sup> Midstream Energy Fund for their information. It is not a prospectus, circular or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in this report.

The Fund does not make available copies of its Statement of Additional Information because the Fund's shares are not continuously offered, which means that the Statement of Additional Information has not been updated after completion of the Fund's prior offerings and the information contained in such Statement of Additional Information may have become outdated.

The Fund makes available performance and certain other on its website at www.nxgim.com. Investors and others are advised to periodically check the website for updated performance information and the release of other material information about the Fund. This reference to the Fund's website is intended to allow investors public access to information regarding the Fund and does not, and is not intended to, incorporate the Fund's website in this report.

**NXG Cushing**<sup>®</sup> **Midstream Energy Fund**<br>

---

| |
|:---|
| <u><u>**TRUSTEES**</u></u> <br>Brian R. Bruce <br> Andrea N. Mullins<br> John M. Musgrave<br> John H. Alban |
| <u><u>**EXECUTIVE OFFICERS**</u></u> <br>John Musgrave<br> *Chief Executive Officer and President* <br>Blake R. Nelson<br> *Chief Financial Officer and Treasurer* <br>Brad Mead<br> *Chief Compliance Officer and Secretary* |
| <u><u>**INVESTMENT ADVISER**</u></u> <br>Cushing<sup>®</sup> Asset Management <br> d/b/a NXG Investment Management<br> One Energy Square<br> 4925 Greenville Avenue<br> Suite 1310<br> Dallas, TX 75206 |
| <u><u>**ADMINISTRATOR**</u></u> <br>U.S. Bancorp Fund Services, LLC, <br> d/b/a U.S. Bancorp Global Fund Services <br> 615 East Michigan Street, 3rd Floor <br> Milwaukee, WI 53202  |

---

---

| |
|:---|
| <u><u>**CUSTODIAN**</u></u> <br>U.S. Bank, N.A. <br> 1555 N. River Center Drive, Suite 302 <br> Milwaukee, WI 53212  |
| <u><u>**TRANSFER AGENT**</u></u> <br>U.S. Bancorp Fund Services, LLC, <br> d/b/a U.S. Bancorp Global Fund Services <br> 615 East Michigan Street, 3rd Floor <br> Milwaukee, WI 53202  |
| <u><u>**LEGAL COUNSEL**</u></u> <br>Skadden, Arps, Slate, Meagher & Flom LLP <br> 320 South Canal Street<br> Chicago, IL 60606 |
| <u><u>**INDEPENDENT REGISTERED**</u> <u>**PUBLIC ACCO**</u><u>**UNTING FIRM**</u></u> <br>Ernst & Young LLP <br> 2323 Victory Avenue, Suite 2000 <br> Dallas, TX 75219  |

---

**NOT FDIC INSURED \| NOT BANK GUARANTEED \| MAY LOSE VALUE**

---

| | |
|:---|:---|
| <br>![](fp0096655-1_90.jpg) | <br>![](fp0096655-1_90.jpg) |
| **NXG Cushing<sup>®</sup>** **Midstream Energy Fund** | **NXG Cushing<sup>®</sup>** **Midstream Energy Fund** |
| <br>![](fp0096655-1_90a.jpg)  | <br>![](fp0096655-1_90a.jpg)  |
| ![](fp0096655-1_90b.jpg) | **Investment Adviser** <br>NXG Investment Management<br> One Energy Square<br> 4925 Greenville Avenue<br> Suite 1310<br> Dallas, TX 75206<br> (214) 692-6334<br> (888) 777-2346<br> www.nxgim.com |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Not applicable.

**<u>Item 2. Code of Ethics.</u>**

The registrant has adopted a code of ethics that applies to the registrant's principal executive officer and principal financial officer. The registrant has not made any substantive amendments to its code of ethics during the period covered by this report. The registrant has not granted any waivers from any provisions of the code of ethics during the period covered by this report.

*The registrant undertakes to provide to any person without charge, upon request, a copy of its code of ethics by mail when they call the registrant at 1-888-777-2346.*

**<u>Item 3. Audit Committee Financial Expert.</u>**

The registrant's board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. Ms. Andrea N. Mullins is the "audit committee financial expert" and is considered to be "independent" as each term is defined in Item 3 of Form N-CSR.

**<u>Item 4. Principal Accountant Fees and Services.</u>**

The registrant has engaged its principal accountant to perform audit services, audit-related services, tax services and other services during the past two fiscal years. "Audit services" refer to performing an audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years. "Audit-related services" refer to the assurance and related services by the principal accountant that are reasonably related to the performance of the audit. "Tax services" refer to professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning. There were no "Other services" provided by the principal accountant. The following table details the aggregate fees billed or expected to be billed for each of the last two fiscal years for audit fees, audit-related fees, tax fees and other fees by the principal accountant.

---

| | | |
|:---|:---|:---|
| | FYE 11/30/2025 | FYE 11/30/2024 |
| (a) Audit Fees | 72500 | 72500 |
| (b) Audit-Related Fees | 73614 | 47500 |
| (c) Tax Fees | 21000 | 21000 |
| (d) All Other Fees |  |  |

---

(e)(1) The audit committee has adopted pre-approval policies and procedures that require the audit committee to pre-approve all audit and non-audit services of the registrant, including services provided to any entity affiliated with the registrant.

(e)(2) The percentage of fees billed by **<u>Ernst & Young LLP</u>** applicable to non-audit services pursuant to waiver of pre-approval requirement were as follows:

---

| | | |
|:---|:---|:---|
| | FYE 11/30/2025 | FYE 11/30/2024 |
| Audit-Related Fees | 0% | 0% |
| Tax Fees | 0% | 0% |
| All Other Fees | 0% | 0% |

---

(f) N/A

(g) The following table indicates the non-audit fees billed or expected to be billed by the registrant's accountant for services to the registrant and to the registrant's investment adviser (and any other controlling entity, etc.—not sub-adviser) for the last two years.

 

<u>Non-Audit Related Fees</u> <u>FYE 11/30/2025</u> <u>FYE 11/30/2024</u> <br> Registrant 21,000 21,000 <br> <u>Registrant's Investment Adviser</u> <u>None</u> <u>None</u>

(h) The audit committee of the board of trustees/directors has considered whether the provision of non-audit services that were rendered to the registrant's investment adviser is compatible with maintaining the principal accountant's independence and has concluded that the provision of such non-audit services by the accountant has not compromised the accountant's independence.

The registrant has not been identified by the U.S. Securities and Exchange Commission as having filed an annual report issued by a registered public accounting firm branch or office that is located in a foreign jurisdiction where the Public Company Accounting Oversight Board is unable to inspect or completely investigate because of a position taken by an authority in that jurisdiction.

The registrant is not a foreign issuer.

**<u>Item 5. Audit Committee of Listed Registrants.</u>**

(a) The registrant is an issuer as defined in Rule 10A-3 under the Securities Exchange Act of 1934, (the "Act") and has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Act. The independent members of the committee are as follows: Andrea N. Mullins, Brian R. Bruce, and John H. Alban.

(b) Not applicable

**<u>Item 6. Investments.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;(a) Schedule of Investments is included as part of the report to shareholders
filed under Item 1 of this Form.

&nbsp;&nbsp;&nbsp;&nbsp;(b) Not Applicable.

**<u>Item 7. Financial Statements and Financial Highlights for Open-End Investment Companies.</u>**

Not applicable to closed-end investment companies.

**<u>Item 8. Changes in and Disagreements with Accountants for Open-End Investment Companies.</u>**

Not applicable to closed-end investment companies.

**<u>Item 9. Proxy Disclosure for Open-End Investment Companies.</u>**

Not applicable to closed-end investment companies.

**<u>Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Investment Companies.</u>**

Not applicable to closed-end investment companies.

**<u>Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.</u>**

See Item 1(a).

**<u>Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.</u>**

![](fp0096655-3_01.jpg)

**Proxy Voting Policy**

Cushing<sup>®</sup> Asset Management, LP d/b/a NXG Investment Management (the "***Investment Manager***") serves as the investment adviser and general partner, respectively, of certain investment accounts and pooled investment vehicles (each a "***Client***" and collectively, the "***Clients***"). Through these relationships the Investment Manager is sometimes delegated the right to vote, on behalf of the Clients, proxies received from companies, the securities of which are owned by the Clients.

**Purpose**

The Investment Manager follows this proxy voting policy (the "***Policy***") to ensure that proxies the Investment Manager votes, on behalf of each Client, are voted in accordance with the best interest of that Client. The Policy establishes a mechanism to (i) ensure the voting determination is based upon accurate and complete information, and (ii) address any conflicts of interests between the Investment Manager and the Client. Further, the Policy establishes how records of proxy votes are maintained and verified and how Clients may obtain information on proxies voted in relation to the securities held in their account.

**Determination of Vote** 

The Investment Manager determines how to vote after studying the proxy materials and any other materials that may be necessary or beneficial to voting. The Investment Manager votes in a manner that the Investment Manager believes reasonably furthers the best interests of the Client and is consistent with each Client's applicable investment objective and strategies as set forth in the relevant investment management documents. Where multiple Clients are involved in a proxy voting decision, the Investment Manager shall consider whether it should have different voting recommendations for certain Clients, depending upon their unique investment objective and strategies.

The major proxy-related issues generally fall within six categories: corporate governance, takeover defenses, compensation plans, capital structure, social responsibility, and environmental protection. The Investment Manager will cast votes for these matters on a case-by-case basis. The Investment Manager will generally vote in favor of matters which follow an agreeable corporate strategic direction, support an ownership structure that enhances shareholder value without diluting management's accountability to shareholders and/or present compensation plans that are commensurate with enhanced management performance and market practices. In evaluating environmental and social responsibility proxy questions, the Investment Manager will consider current and expected industry practices, with a bias towards enhancing the long-term value of the investment.

There may be occasions where the Investment Manager determines that it is in the best interest of its Clients to refrain from voting a proxy including, for example, (i) the case where the Investment Manager determines that the cost to the Client of voting the proxy exceeds the expected benefit to the Client or (ii) the case where the Investment Manager has a short planned time period for holding the security and does not anticipate holding the security on the date of the relevant vote. Under such circumstances, the Investment Manager shall document its decision not to vote the proxy, including a description of why such determination is in the best interest of each affected Client.

**Resolution of any Conflicts of Interest**

If a proxy vote creates a material conflict between the interests of the Investment Manager and a Client, the Investment Manager will resolve the conflict before voting the proxies. The Investment Manager will either disclose the conflict to the Client and obtain the Client's consent or take other steps designed to ensure that a decision to vote the proxy was based on the Investment Manager's determination of the Client's best interest.

**Records**

The Investment Manager maintains records of (i) all proxy statements and materials the Investment Manager receives on behalf of Clients; (ii) all proxy votes that are made on behalf of the Clients; (iii) all documents that were material to a proxy vote; (iv) all written requests from Clients regarding voting history; and (v) all responses (written and oral) to Clients' requests. Such records are available to the Clients (and beneficial owners of a Client that is an investment vehicle) upon request.

On at least an annual basis, the Investment Manager shall conduct a review of its proxy votes on behalf of Clients to determine whether the Investment Manager's voting determinations were consistent with the Policy.

**Questions and Requests**

This document is a summary of the Investment Manager's proxy voting process. Clients may obtain, free of charge, a full copy of the policies and procedures and/or a record of proxy votes. Any questions or requests should be directed to:

---

| |
|:---|
| NXG Investment Management |
| Attention: Chief Compliance Officer |
| One Energy Square |
| 4925 Greenville Avenue t |
| Suite 1310 |
| Dallas, Texas 75206 |
| Telephone: (214) 635-1674 |

---

Amended as of: December 31, 2024

**<u>Item 13. Portfolio Managers of Closed-End Management Investment Companies.</u>**

[insert text as applicable]

**<u>Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.</u>**

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| | | | | |
|:---|:---|:---|:---|:---|
| ***Period*** | ***(a)<br> Total Number of Shares (or Units) Purchased*** | ***(b)<br> Average Price Paid per Share (or Unit)*** | ***(c)<br> Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs*** | ***(d)<br> Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs*** |
| Month #1 06/01/25-06/30/25 | 0 | 0 | 0 | 0 |
| Month #2 07/01/25-07/31/25 | 0 | 0 | 0 | 0 |
| Month #3 08/01/25-08/31/25 | 0 | 0 | 0 | 0 |
| Month #4 09/01/25-09/30/25 | 0 | 0 | 0 | 0 |
| Month #5 10/01/25-10/31/25 | 0 | 0 | 0 | 0 |
| Month #6 11/01/25-11/30/25 | 0 | 0 | 0 | 0 |
| Total | 0 | 0 | 0 | 0 |

---

\* Footnote the date each plan or program was announced, the dollar amount (or share or unit amount) approved, the expiration date (if any) of each plan or program, each plan or program that expired during the covered period, each plan or program registrant plans to terminate or let expire.

**<u>Item 15. Submission of Matters to a Vote of Security Holders.</u>**

There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant's board of trustees.

**<u>Item 16. Controls and Procedures.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;(a) The Registrant's President/Principal Executive Officer and Principal Financial Officer have reviewed the Registrant's disclosure
controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the "Act")) as of a date
within 90 days of the filing of this report, as required by Rule 30a-3(b) under the Act and Rules 13a-15(b) or 15d-15(b) under
the Securities Exchange Act of 1934. Based on their review, such officers have concluded that the disclosure controls and procedures are
effective in ensuring that information required to be disclosed in this report is appropriately recorded, processed, summarized and reported
and made known to them by others within the Registrant and by the Registrant's service provider.

&nbsp;&nbsp;&nbsp;&nbsp;(b) There were no changes in the Registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Act) that
occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Registrant's
internal control over financial reporting.

**<u>Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies</u>**

The registrant did not engage in securities lending activities during the fiscal year reported on this Form N-CSR.

**<u>Item 18. Recovery of Erroneously Awarded Compensation.</u>**

(a) Not Applicable

(b) Not Applicable

**<u>Item 19. Exhibits.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;*(a)* [(1) *Any code of ethics or amendment thereto, that is the subject of the disclosure required by Item 2, to the extent that the registrant intends to satisfy Item 2 requirements through filing an exhibit.* Filed herewith.](fp0096655-3_ex99code.htm)

 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) Any policy required by the listing standards adopted pursuant to Rule 10D-1 under the Exchange Act (17 CFR 240.10D-1) by the registered national securities exchange or registered national securities association upon which the registrant's securities are listed. Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[(3) *A separate certification for each principal executive officer and principal financial officer of the registrant as required by Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)).* Filed herewith.](fp0096655-3_ex99cert.htm)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4) *Any written solicitation to purchase securities under Rule 23c-1 under the Act sent or given during the period covered by the report by or on behalf of the registrant to 10 or more persons.* Not Applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5) There was no change in the registrant's independent public accountant for the period covered by this report.

&nbsp;&nbsp;&nbsp;&nbsp;*(b)* [*Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* Furnished herewith.](fp0096655-3_ex99906cert.htm)

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

---

| | |
|:---|:---|
| (Registrant) | NXG Cushing Midstream Energy Fund |
| By (Signature and Title)\* | /s/ John Musgrave |
|  | John Musgrave, Principal Executive Officer |
| Date | February 6, 2026 |

---

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

---

| | |
|:---|:---|
| By (Signature and Title)\* | /s/ John Musgrave |
|  | John Musgrave, Principal Executive Officer |
| Date | February 6, 2026 |
| By (Signature and Title)\* | /s/ Blake R. Nelson |
|  | Blake R. Nelson, Principal Financial Officer |
| Date | February 6, 2026 |

---

*\** *Print the name and title of each signing officer under his or her signature.*

## Ex-99.Code

EX.99.CODE ETH

**CUSHING REGISTERED FUNDS**

**CODE OF ETHICS FOR PRINCIPAL EXECUTIVES AND SENIOR FINANCIAL**

**OFFICER OF THE FUND (CODE OF CONDUCT)**

**Introduction**

Each of the Cushing Funds listed in Appendix 1 (each, a "Fund") is committed to achieving and maintaining the highest ethical standards and to conducting its business with the highest level of integrity. This Code of Ethics for Principal Executive and Senior Financial Officer of the Fund (Code of Conduct) (this "Code") applies to the principal executive officer and senior financial officer of the Fund (each, a "Covered Person, and collectively, the "Covered Persons").

**Objective**

This Code is intended to promote:

● honest and ethical conduct;

● compliance with applicable laws, and SEC rules and regulations;

● prompt reporting of unethical or illegal conduct; and

● accountability for adherence to this Code.

**Conflicts of Interest**

A "conflict of interest" occurs when a Covered Person's private interest interferes with the interests of, or his/her service to, the Fund. For example, a conflict of interest would arise if a Covered Person, or a member of his/her family, receives improper personal benefits as a result of his/her position with the Fund.

Certain conflicts of interest arise out of the relationships between Covered Persons and the Fund and already are subject to conflict of interest provisions in the Investment Company Act of 1940 (the "1940 Act"). Other conflicts of interest are covered by the Code, even if such conflicts of interest are not subject to provisions in the 1940 Act. The following list provides examples of conflicts of interest under the Code, but Covered Persons should keep in mind that these examples are not exhaustive. The overarching principle is that the personal interest of a Covered Person should not be placed improperly before the interest of the Fund.

Each Covered Person must not:

● use his/her personal influence or personal relationships improperly to influence investment decisions or financial reporting by the Fund such that the Covered Person or a member of his/her family would benefit personally to the detriment of the Fund;

● cause the Fund to take action, or fail to take action, for the individual personal benefit of the Covered Person or a member of his/her family rather than for the benefit of the Fund; and

● use material non-public knowledge of portfolio transactions made or contemplated for the Fund to trade personally or cause others to trade personally in contemplation of the market effect of such transactions.

There are some conflicts of interest that may arise for Covered Persons under the following circumstances:<sup>1</sup>

● service as a trustee on the board of any public or private company;

● the receipt of any non-nominal gifts from any person or company with which the Fund has current or prospective business dealings;

● the receipt of any entertainment from any company with which the Fund has current or prospective business dealings, unless such entertainment is business-related, reasonable in cost, appropriate as to time and place, and not so frequent as to raise any question of impropriety;

● any ownership interest in, or any consulting or employment relationship with, any of the Fund's service providers, other than the Adviser, its principal underwriter, administrator or any affiliated person and the service provider of which such Covered Person is an employee; and

● a direct or indirect financial interest in commissions, transaction charges or spreads paid by the Fund for effecting portfolio transactions or for selling or repurchasing shares other than an interest arising from the Covered Person's employment, such as compensation or equity ownership.

With respect to corporate opportunities, each Covered Person must not:

● take for himself/herself personally opportunities, including investment opportunities, discovered through the use of his/her position with the Fund, or through the use of the Fund's property or information;

● use the Fund's property, information, or position for his/her personal gain or the gain of his/her family member; or

● compete, or prepare to compete, with the Fund.

<sup>1</sup> Any activity or relationship that would present a conflict for a Covered Person would likely also present a conflict for the Covered Person if a member of the Covered Person' s family engages in such an activity or has such a relationship.

**Public Disclosure and Compliance**

● Each Covered Person should be familiar with the disclosure requirements generally applicable to the Fund (such general disclosure requirements are discussed in the Compliance Manual under the heading "General Ongoing Disclosure Requirements");

● Each Covered Person must be familiar with the Fund's Disclosure Controls and Procedures incorporated by reference in Appendix 2 of the Manual.

● Each Covered Person should not knowingly misrepresent, or cause others to misrepresent, facts about the Fund to others, whether within or outside the Fund, including to the Fund's trustees and auditors, and to governmental regulators and self- regulatory organizations;

● Each Covered Person should, to the extent appropriate within his/her area of responsibility, consult with other officers and employees of the Fund and the Fund's Investment Adviser with the goal of promoting full, fair, accurate, timely and understandable disclosure in the reports and documents the Fund files with, or submits to, the SEC and in other public communications made by the Fund; and

● It is the responsibility of each Covered Person to promote compliance with the standards and restrictions imposed by applicable laws, rules and regulations.

● Each Covered Person shall promote compliance with applicable SEC rules governing communications with shareholders and the public, including Rule 206(4)-1 under the Investment Advisers Act of 1940, to the extent applicable, and shall not approve or cause to be disseminated any Fund communication that is materially misleading or inconsistent with the Fund's filings or shareholder reports.

**Accountability and Reporting Violations**

Each Covered Person must:

● upon adoption of the Code (or thereafter as applicable, upon becoming a Covered Person), affirm in writing to the Board that he has received, read, and understands the Code;

● annually thereafter affirm to the Board that he has complied with the requirements of the Code;

● not retaliate against any employee or Covered Person or their affiliated persons for reports of potential violations that are made in good faith;

● notify the Chief Compliance Officer of the Fund promptly if he knows of any violation of this Code. Reports may be made confidentially and, to the extent permitted by applicable policy, anonymously. If a potential violation involves the Chief Compliance Officer, the Covered Person may report the matter directly to the Chief Executive Officer. Failure to do so is itself a violation of this Code; and

● report at least annually any change in his/her affiliations from the prior year.

The Chief Compliance Officer is responsible for applying this Code to specific situations in which questions are presented under it and has the authority to interpret this Code in any particular situation. However, notwithstanding the foregoing, the Audit Committee is responsible for granting waivers and determining sanctions, as appropriate, and any approvals, interpretations or waivers sought by the Covered Persons will be considered by the Audit Committee.

The Fund will follow these procedures in investigating and enforcing this Code:

● the Chief Compliance Officer will take any action he considers appropriate to investigate any actual or potential violations reported to him;

● if, after such investigation, the Chief Compliance Officer believes that no violation has occurred, the Chief Compliance Officer will meet with the person reporting the violation for the purposes of informing such person of the reason for not taking action;

● any matter that the Chief Compliance Officer believes is a violation will be reported to the Audit Committee;

● if the Audit Committee concurs that a violation has occurred, it will inform and make a recommendation to the Board, which will consider appropriate action, which may include review of, and appropriate modifications to, applicable policies and procedures, the imposition of remedial measures such as targeted training or enhanced monitoring, notification to appropriate personnel of the Fund's Service Provider of which such Covered Person is an employee or its board; a recommendation to such Service Provider to dismiss the Covered Person; or dismissal of the Covered Person as an officer of the Fund;

● the Audit Committee will be responsible for granting waivers, as appropriate; and

● any changes to or waivers of this Code will, to the extent required, be disclosed as provided by SEC rules.

The Audit Committee, in determining whether waivers should be granted and whether violations have occurred, and the Chief Compliance Officer, in rendering decisions and interpretations and in conducting investigations of potential violations under the Code, may, at their discretion, consult with such other persons as they may determine to be appropriate, including, but not limited to, the Fund's Investment Adviser, outside counsel, Service Provider, independent auditors or other consultants, subject to any requirement to seek pre-approval from the Audit Committee for the retention of independent auditors to perform permissible non-audit services.

**Waivers**

A Covered Person may request a waiver of any of the provisions of this Code by submitting a written request for such waiver to the Audit Committee setting forth the basis for such request and explaining how the waiver would be consistent with the standards of conduct described in this Code. The Audit Committee must review such request and make a determination thereon in writing, which will be binding.

In determining whether to waive any provisions of this Code, the Audit Committee must consider whether the proposed waiver is consistent with honest and ethical conduct.

The Chief Compliance Officer must submit an annual report to the Board regarding any waivers granted.

**Confidentiality**

All reports and records prepared or maintained pursuant to this Code will be considered confidential and will be maintained and protected accordingly. Except as otherwise required by law or this Code, such matters will not be disclosed to anyone other than the Board and its counsel, the Investment Adviser and its counsel, the Service Provider of which such Covered Person is an employee or independent auditors or other consultants.

**Amendments**

Any amendments to this Code must be approved or ratified by a majority vote of the Fund's Board, including a majority of independent trustees.

**Internal Use**

The Code is intended solely for the internal use by the Fund and does not constitute an admission, by or on behalf of any person, as to any fact, circumstance, or legal conclusion.

Amended: December 22, 2025

**Appendix 1**

*Reaffirmed as of: December 22, 2025*

 

**<u>Closed-End Funds</u>**

NXG Cushing Midstream Energy Fund (NYSE: SRV) NXG NextGen Infrastructure Income Fund (NYSE: NXG)

## Ex-99.Cert

EX.99.CERT

**<u>CERTIFICATIONS</u>**

I, John Musgrave, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this report on Form N-CSR of NXG Cushing Midstream Energy Fund;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required
to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined
in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based
on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period
covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | February 6, 2026 | /s/ John Musgrave |
|  |  | John Musgrave<br> Principal Executive Officer |

---

EX.99.CERT

**<u>CERTIFICATIONS</u>**

I, Blake R. Nelson, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this report on Form N-CSR of NXG Cushing Midstream Energy Fund;

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period
covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required
to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined
in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report
based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period
covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control
over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information;
and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | February 6, 2026 | /s/ Blake R. Nelson |
|  |  | Blake R. Nelson<br> Principal Financial Officer |

---

## Exhibit 99.906

EX.99.906CERT

**<u>Certification Pursuant to Section 906 of the Sarbanes-Oxley Act</u>**

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of the NXG Cushing Midstream Energy Fund, does hereby certify, to such officer's knowledge, that the report on Form N-CSR of the NXG Cushing Midstream Energy Fund for the year ended November 30, 2025 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as applicable, and that the information contained in the Form N-CSR fairly presents, in all material respects, the financial condition and results of operations of the NXG Cushing Midstream Energy Fund for the stated period.

---

| | |
|:---|:---|
| /s/ John Musgrave | /s/ Blake R. Nelson |
| John Musgrave<br> Principal Executive Officer<br> NXG Cushing Midstream Energy Fund | Blake R. Nelson<br> Principal Financial Officer,<br> NXG Cushing Midstream Energy Fund |

---

Dated: <u>February 6, 2026</u>

This statement accompanies this report on Form N-CSR pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed as filed by NXG Cushing Midstream Energy Fund for purposes of Section 18 of the Securities Exchange Act of 1934.

## Ex-99.Ind

**Consent of Independent Registered Public Accounting Firm**

We consent to the incorporation by reference of our report dated January 29, 2026, with respect to the financial statements and financial highlights of NXG Cushing Midstream Energy Fund included in the Annual Report (Form N-CSR) for the year ended November 30, 2025, into this Registration Statement (Form N-2, File No. 333-286482), filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP<br>

Dallas, Texas<br> February 6, 2026