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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number: 811-22626

Salient Midstream & MLP Fund

(Exact name of registrant as specified in charter)

4265 San Felipe, 8^th Floor

Houston, TX 77027

(Address of principal executive offices) (Zip code)

 

		With a Copy To:
Gregory A. Reid, Principal Executive Officer Salient Midstream & MLP Fund 4265 San Felipe, 8th Floor Houston, TX 77027 (Name and address of agent for service)		George J. Zornada K&L Gates LLP State Street Financial Center One Lincoln St. Boston, MA 02111-2950 (617) 261-3231

Registrant’s telephone number, including area code: (713) 993-4001

Date of fiscal year end: November 30

Date of reporting period: November 30, 2017

Form N-CSR is to be used by management investment companies to file reports with the Commission, not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

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Item 1.

Report to Stockholders.

The following is a copy of the report transmitted to shareholders of the Salient Midstream & MLP Fund (the “Fund”), pursuant to Rule 30e-1 under the Investment Company Act of 1940, as amended (the “Act”) (17 CFR 270.30e-1).

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Shareholder Letter (Unaudited)			1
Report of Independent Registered Public Accounting Firm			6
Schedule of Investments			7
Statement of Assets, Liabilities and Shareholders’ Equity			10
Statement of Operations			11
Statements of Changes in Net Assets			12
Statement of Cash Flows			13
Financial Highlights			14
Notes to Financial Statements			15
Supplemental Information (Unaudited)			26
Privacy Policy (Unaudited)			32

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Shareholder Letter (Unaudited)

Dear Fellow Shareholders:¹

We are pleased to provide the annual report of the Salient Midstream & MLP Fund (the “Fund”) (NYSE: SMM) which contains updated data as of November 30, 2017.

As of November 30, 2017, the Fund had total gross assets of $276.9 million, net asset value of $11.23 per share and 17.7 million common shares outstanding. The Fund’s price per share was $10.22, which represents a 9.0% discount to its net asset value (“NAV”).²

The Fund’s investment allocation is shown in the pie chart below:

 

For illustrative purposes only.

Source: Salient Capital Advisors, LLC (“Adviser”), November 30, 2017.

Figures are based on the Fund’s gross assets.

* General Partners that are structured as C-Corporations for US federal tax purposes

 

 

¹ Certain statements in this letter are forward-looking statements. The forward-looking statements and other views expressed herein are those of the portfolio managers and the Fund as of the date of this letter. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. The Fund disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. There can be no assurance that the Fund will achieve its investment objectives. The value of the Fund will fluctuate with the value of the underlying securities. Historically, closed-end funds often trade at a discount to their net asset value.

² Past performance is not indicative of future results. Current performance may be higher or lower than the data shown. The data shown are unaudited. Returns do not reflect the deduction of taxes that shareholders may have to pay on Fund distributions or upon the sale of Fund shares.

 

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The Fund’s Top 10 holdings are shown below, as of November 30, 2017:¹

 

Company Name		Sector				% of Gross Assets
ONEOK, Inc.			Midstream Company				9.5	%
EMG Utica I Offshore Co-Investment, L.P.			MLP Affiliate				8.5	%
Targa Resources Corp.			Midstream Company				7.3	%
The Williams Companies, Inc.			MLP Affiliate				6.3	%
Enbridge Energy Management LLC			MLP Affiliate				6.0	%
Plains GP Holdings LP, Class A			MLP Affiliate				5.9	%
Macquarie Infrastructure Corp.			Other Energy & Infrastructure				5.8	%
SemGroup Corp., Class A			Midstream Company				4.8	%
Energy Transfer Partners LP			MLP				4.8	%
EnLink Midstream LLC			MLP General Partner				4.7	%
Total							63.6	%

For illustrative purposes only.

Current and future holdings are subject to change and risk. Figures are based on the Fund’s gross assets.

Source: Salient Capital Advisors, LLC (“Adviser”), November 30, 2017.

During the fiscal year (December 1, 2016 – November 30, 2017), the Fund’s NAV and market price total return were -14.9% and -17.1%, respectively, compared to -6.8% for the Alerian MLP Index (AMZ), during the same period.^2,3 Some of the top contributing investments held by the Fund during the fiscal year include NRG Yield, Inc., Class A (NYSE: NYLD/A), NRG Yield, Inc., Class C (NYSE: NYLD) and EMG Utica I Offshore Co-Investment, L.P. Top detractors to Fund performance include Enbridge Energy Management LLC (NYSE: EEQ), Plains GP Holdings LP, Class A (NYSE: PAGP) and Energy Transfer Partners LP (NYSE: ETP).

Performance Snapshot

as of November 30, 2017 (unaudited)

 

Price Per Share		Fiscal YTD Total Return*				Since Inception* (Annualized)
$11.23 (NAV)			-14.9	%			-2.6	%
$10.22 (Market Price)			-17.1	%			-4.2	%

Source: Salient Capital Advisors, LLC (“Adviser”), November 30, 2017.

For illustrative purposes only. All figures represent past performance and are not indicative of future results. No investment strategy can guarantee performance results.

* Total returns are based on changes in NAV or market price, respectively. Returns reflect the deduction of all Fund expenses, including management fees, operating expenses, and other Fund expenses. Returns do not reflect the deduction of brokerage commissions or taxes that investors may pay on distributions or the sale of shares. Total return assumes the reinvestment of all distributions. Inception date of the Fund was May 25, 2012.

 

 

¹ Fund shares do not represent a deposit or obligation of, and are not guaranteed or endorsed by, any bank or other insured depository institution, and are not federally insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other government agency. Data are based on total market value of Fund investments unless otherwise indicated. The data provided are for informational purposes only and are not intended for trading purposes.

² Alerian, November 30, 2017. “Alerian MLP Index”, “Alerian MLP Total Return Index”, “AMZ” and “AMZX” are trademarks of Alerian and their use is granted under a license from Alerian. Past performance is not indicative of how the index will perform in the future. The index reflects the reinvestment of dividends and income and does not reflect deductions for fees, expenses, or taxes. The index is unmanaged and not available for direct investment. Alerian MLP Index (AMZ) is a composite of some of the most prominent energy MLPs that provides investors with a comprehensive benchmark for this maturing asset class.

³ Past performance is not indicative of future results.

 

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Market Review

We have long maintained that there really should not be a strong correlation between crude oil prices and Master Limited Partnership (MLP) unit price performance.¹ This past fiscal year has somewhat affirmed that contention but not in a way that we would have preferred. 2017 was truly a year of transition for the MLP space as the traditional General Partner (GP)/Limited Partner (LP) structure seemingly fell from grace.² A new breed of MLP investor emerged and that investor appeared to prefer superior dividend/distribution coverage and sturdier balance sheets rather than distribution growth. We also witnessed industry leaders take their first steps towards weaning themselves from being at the mercy of the energy capital markets and begin transitioning to a more self-funded model.³

For the first three months of the fiscal year, crude oil prices had essentially flatlined at roughly $52/barrel (bbl).⁴ MLP investors appeared to appreciate the stability after what had been many months of volatility and the space traded higher (as measured by the Alerian MLP Index (AMZ or Index)). The Index posted a closing high of 337.93 on February 15, 2017, over 13% higher than where it had entered the fiscal year.⁵ The next four months saw volatility return to crude oil prices. For the most part, crude oil traded between a range of roughly $45-$55/bbl with a brief breakout to the downside for what proved to be the low for the fiscal year of $42.53 on June 21, 2017.⁴ At that point, crude oil was down nearly 14% for the reporting period while the AMZ had fallen 5.5% which seemed logical considering overall crude oil production had stabilized above 9 million barrels per day (mmbd).⁶ More production means more volumes/throughput which should go straight to the bottom line for MLPs, right? Unfortunately, that is not how the back half of the fiscal year unfolded. From the June 21^st low close, crude oil rallied 35% to finish November at $57.44/bbl, the highest level since June 2015 and 16% higher than where it was at the beginning of the fiscal year.⁴ MLPs, on the other hand, languished. The AMZ ended the reporting period down 6.8% for the fiscal year and was actually down 1.3% from where it was when crude oil had bottomed in June.⁵

We believe there are a number of reasons why MLPs did not follow crude oil prices higher over the last several months of the reporting period. For starters, crude oil prices began their rally in July as US inventory levels finally began to crack. Inventory levels had remained stubbornly high over the last 18 months which had a dampening effect on crude oil prices. Low prices persisted despite demand numbers that mostly ran higher than expectations both domestically and globally. When Hurricane Harvey hit the US Gulf Coast during the last week of August 2017, inventories were drawn to meet demand for both crude oil and refined products due to much of the US refining capacity being knocked offline due to the storm. Inventory levels fell below five-year averages which gave oil speculators confidence that the continued robust demand numbers would not get washed out by excess inventories.⁷ Crude oil began to consistently trade above $50/bbl and has remained at least that high ever since. However, the higher crude oil prices had very little impact on midstream operations.

Also in August, two MLP bellwethers, Plains All-American Pipeline Partners, LP (PAA) and Energy Transfer Partners, LP (ETP), announced corporate actions which had negative implications for the MLP space. On August 7^th, PAA discussed another potential distribution cut when it reported its 2Q results.⁸ Two and a half weeks later on August 25^th, with a hurricane bearing down on Houston, PAA announced the results of its strategic review which included a 45% distribution cut effective with its 3Q17 distribution in November.⁹ PAA’s problems stem from fierce competition in its Supply & Logistics (S&L) segment, in particular within the Permian Basin.¹⁰ One week after PAA’s negative earnings surprise, and with its unit price just barely above its 52-week low, ETP announced a $1 billion overnight equity offering.¹¹ These actions shook investor confidence in the space as the sustainability of yields were called into question.¹²

 

 

¹ Master limited partnerships (MLPs) are publicly traded limited partnerships and limited liability companies that are treated as partnerships for federal income tax purposes.

² A general partnership (GP) is an arrangement by which partners conducting a business jointly have unlimited liability, which means their personal assets are liable to the partnership’s obligations. A limited partnership (LP) exists when two or more partners unite to jointly conduct a business in which one or more of the partners is liable only to the extent of the amount of money that partner has invested.

³ Capital Markets are markets for buying and selling equity and debt instruments.

⁴ Bloomberg, December 2017.

⁵ Alerian, December 2017.

⁶ Energy Information Administration, EIA, December 2017.

⁷ https://www.reuters.com/article/us-usa-oil-eia/u-s-crude-stocks-fall-as-exports-hit-new-record-eia-idUSKBN1C928A

⁸ http://ir.paalp.com/profiles/investor/ResLibraryView.asp?ResLibraryID=83838&GoTopage=2&Category=117&BzID=789&G=549

⁹ http://ir.paalp.com/profiles/investor/ResLibraryView.asp?ResLibraryID=84073&GoTopage=1&Category=117&BzID=789&G=549

¹⁰ The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas and the southeastern part of the U.S. state of New Mexico.

¹¹ http://ir.energytransfer.com/phoenix.zhtml?c=106094&p=irol-newsArticle&ID=2316686

¹² Yield is the income return on an investment, such as the interest or dividends received from holding a particular security.

 

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The “final” blow to MLP investors occurred in October. Investors were nonplussed when industry leader Enterprise Products Partners, L.P. (EPD) announced on the afternoon of October 12th that it was cutting its distribution growth rate in half, from roughly 5% to 2.5%.¹ EPD stated that it would likely be in a position to self-fund its expansion capital by the end of 2018 which would be a dramatic change from the traditional MLP model of funding distributions through operations and financing growth. Further muddying the waters, Genesis Energy, LP (GEL) announced earlier that same day that it was cutting its distribution by 31% in order to reduce its leverage which remained stubbornly above 5.0x debt/EBITDA (earnings before interest, tax, depreciation, and amortization).² GEL cut its distribution despite having sufficient cash flows to cover the previous distribution level.^3,4 It was a textbook example of a strategic distribution cut to achieve what the market was supposedly clamoring for—excess distribution coverage with a rapid reduction in debt on the balance sheet. When the smoke cleared, investors appeared unimpressed by either action as EPD ended October down 4.4% while GEL plummeted 9.7%.⁵ We believe that MLPs are, in fact, transitioning to a more self-funding model but that EPD’s move was not embraced by investors because the dollar amounts “saved” by its growth rate reduction amounted to roughly $100 million (mm)/year which is small potatoes for a company expected to generate over $5.5 billion in EBITDA this year.

While MLPs did not perform as well as we would have assumed or expected in fiscal year 2017, we do believe there are reasons to be encouraged as we head into 2018. Given the sector’s relative underperformance vs. the broader market in 2017 and investors likely using MLP losses to offset gains elsewhere, we are thankful that the losses were not greater. The Index had its best single-day performance (up 4.09%) in over 18 months on the last day of November to erase much of the decline for the month.⁶ The stellar performance on the final day came as the Organization of the Petroleum Exporting Countries (OPEC) agreed to extend its self-imposed production cuts throughout 2018.⁷ The existing production cut agreement had been set to expire at the end of March 2018. Even with crude oil sitting at a two-year high near $59/bbl, we are encouraged that OPEC extended its cuts. World crude demand continues to be robust with consensus estimates clustering around 1.5 mmbd growth expected for 2018.⁸ We view this as a positive development for MLP investors. As silly as it sounds, we think a simple change of calendar year could result in a positive move for the space and are preparing accordingly. We believe investors will continue to value solid distribution coverage (1.3x-1.4x) and sturdy balance sheets (< 4.5x leverage) above simple distribution/dividend growth potential.^9,10 The last 12 months have been frustrating for us as we believe that the stock prices have grossly lagged the rapidly improving fundamentals of the midstream universe.

We continue to believe in the resiliency of the domestic energy industry and appreciate your confidence in investing with us.

Summary

Our long-term investment philosophy remains focused on MLPs and Midstream Companies that have the potential to achieve above average distribution growth which, we believe, leads to potentially higher long-term returns for investors. Being disciplined and sticking to our focus on choosing quality names using our “bottom up” stock selection approach will be more important than ever going forward. We believe the industry will continue its recovery off of the lows set last February and expect investor sentiment to once again favor growth as the sector appears to be entering into a new expansionary phase. We are excited about the potential for 2018 to bring many opportunities to invest in what continues to be a rapidly evolving sector.

Please note that this letter, including the financial information herein, is made available to shareholders of the 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 letter.

Sincerely,

Gregory A. Reid

President

MLP Business, Salient Capital Advisors, LLC

 

 

¹ http://enterpriseproducts.com/investor/newsreleases?c=80547&p=RssLanding&cat=news&id=2306402&title=Enterprise+Declares+Quarterly+Distribution+Increase

² EBITDA (earnings before interest, taxes, depreciation and amortization) EBITDA is one indicator of a company’s financial performance and is used as a proxy for the earning potential of a business.

³ http://genesisenergy.com/wp-content/uploads/2017-10-12.pdf

⁴ Cash flows are incomings and outgoings of cash, representing the operating activities of an organization. In accounting, cash flow is the difference in amount of cash available at the beginning of a period (opening balance) and the amount at the end of that period (closing balance).

⁵ Bloomberg, December 2017.

⁶ Alerian, December 2017.

⁷ OPEC is a group consisting of 12 of the world’s major oil-exporting nations founded to coordinate the petroleum policies of its members, and to provide member states with technical and economic aid. https://www.bloomberg.com/news/articles/2017-11-30/opec-signals-oil-supply-cuts-will-be-extended-until-end-of-2018

⁸ EIA, December 2017.

⁹ Distribution coverage is the metric that gives us a sense of an MLP’s ability to make its distributions every quarter which is simply an MLP’s distributable cash flow divided by the total amount of distributions it paid out. A value of 1 is the ability to cover the distribution and >1 is considered over-coverage.

¹⁰ Leverage is the use of borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.

 

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Key Financial Data (Unaudited)

 

We supplement the reporting of our financial information determined under United States generally accepted accounting principles (“GAAP”) with certain non-GAAP financial measures: distributable cash flow and distributable cash flow coverage ratio. We believe these non-GAAP measures provide meaningful information to assist shareholders in understanding our financial results and assessing our performance. We pay distributions to our shareholders, funded in part by distributable cash flow generated from our portfolio investments. Distributable cash flow is the amount of income received by us from our portfolio investments less operating expenses, subject to certain adjustments as described below. Other companies with similar measures may calculate these measures differently, and as a result, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported net investment income. These non-GAAP financial measures reflect an additional way of viewing an aspect of our operations that, when viewed with our GAAP results and the below reconciliation to the corresponding GAAP financial measures, provide a more complete understanding of our Fund. We strongly encourage shareholders to review our financial statements in their entirety and not rely on any single financial measure.

The table below reconciles the non-GAAP financial measures, distributable cash flow and distributable cash flow coverage ratio, by starting with the most directly comparable GAAP financial measure, net investment income.

 

		Year Ended November 30, 2017
Net investment income		$	31,626
Reconciling items:
Return of capital of distributions(a)			13,813,807
Dividends paid in stock(b)			1,836,512
Option premium earnings(c)			1,772,704
Distributable cash flow (non-GAAP)		$	17,454,649
Distributions paid on common stock		$	17,297,109
Distributable cash flow coverage ratio (non-GAAP)			1.01

Reconciliation of distributable cash flow to GAAP

(a) GAAP recognizes that a significant portion of the cash distributions received from MLPs is characterized as a return of capital and therefore excluded from net investment income, whereas the distributable cash flow calculation includes the return of capital portion of such distributions.

(b) Distributable cash flow includes the value of dividends paid-in-kind (i.e., stock dividends), whereas such amounts are not included in net investment income for GAAP purposes during the period received, but rather are recorded as unrealized gains upon receipt.

(c) We may sell covered call option contracts to generate income or to reduce our ownership of certain securities that we hold. In some cases, we are able to repurchase these call option contracts at a price less than the fee that we received, thereby generating a profit. The amount we received from selling call options, less the amount that we pay to repurchase such call option contracts is included in distributable cash flow. For GAAP purposes, “income” from call option contracts sold is not included in net investment income. See Note 2—Summary of Significant Accounting Policies and Practices for a full discussion of the GAAP treatment of option contracts.

 

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Report of Independent Registered Public Accounting Firm

 

The Shareholders and Board of Trustees

Salient Midstream & MLP Fund:

We have audited the accompanying statement of assets, liabilities and shareholders’ equity of Salient Midstream & MLP Fund (the “Fund”), including the schedule of investments, as of November 30, 2017, and the related statements of operations and cash flows for the year then ended, the statements of changes in net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian, investee and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the Fund as of November 30, 2017, the results of its operations and cash flows for the year then ended, the changes in its net assets for each of the years in the two-year period then ended, and the financial highlights for each of the years in the five-year period then ended in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Columbus, Ohio

January 23, 2018

 

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Schedule of Investments

Salient Midstream & MLP Fund

November 30, 2017

 

		Shares/Units				Fair Value
Master Limited Partnerships and Related Companies—137.6%
Gathering & Processing—36.0%
United States—36.0%
EMG Utica I Offshore Co—Investment, L.P.(a)(b)(c)(d)			16,000,000			$	23,531,312
Enable Midstream Partners LP(d)(e)			575,209				8,616,631
EnLink Midstream LLC(e)			782,916				13,074,697
Summit Midstream Partners LP(d)			182,798				3,464,022
Targa Resources Corp.(e)			463,810				20,129,354
Western Gas Partners LP(d)(e)			64,424				2,887,484
							71,703,500
Liquids Transportation & Storage—37.2%
Canada—6.5%
Enbridge, Inc.(e)			344,212				12,980,234
United States—30.7%
Enbridge Energy Management LLC (PIK rate 2.55%)(d)(e)(f)			1,233,842				16,656,867
Genesis Energy LP(d)(e)			351,573				7,548,272
MPLX LP(d)(g)			76,412				2,740,134
NGL Energy Partners LP(d)(e)(g)			348,369				4,354,613
Plains GP Holdings LP, Class A(d)(g)			798,227				16,435,494
SemGroup Corp., Class A(e)			552,967				13,271,208
							61,006,588
Marine Midstream—4.9%
Republic of the Marshall Islands—4.9%
Dynagas LNG Partners LP			330,800				4,429,412
Golar LNG Partners LP			261,338				5,224,147
							9,653,559
Natural Gas Pipelines & Storage—44.9%
United States—44.9%
DCP Midstream LP(d)(e)			85,031				2,987,989
Energy Transfer Equity LP(d)(e)			691,121				11,196,160
Energy Transfer Partners LP(d)(e)			792,710				13,166,913
Enterprise Products Partners LP(d)(e)			191,570				4,718,369
ONEOK, Inc.(e)			508,081				26,369,404
Tallgrass Energy GP LP(d)(e)			393,109				8,884,264
Tallgrass Energy Partners LP(d)(e)			107,246				4,710,244
The Williams Companies, Inc.(e)			600,110				17,433,196
							89,466,539
Oil Service & Other Specialty—0.2%
United States—0.2%
Martin Midstream Partners LP(d)			26,663				358,617

 

See accompanying Notes to Financial Statements.		7

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Schedule of Investments

Salient Midstream & MLP Fund

November 30, 2017

 

		Shares/Units				Fair Value
Other Energy & Infrastructure—14.4%
United States—14.4%
Macquarie Infrastructure Corp.(e)			239,405			$	15,987,466
NextEra Energy Partners LP(d)(e)			103,444				4,037,419
NRG Yield, Inc., Class A(d)(e)			250,466				4,711,266
NRG Yield, Inc., Class C(d)(e)			206,248				3,929,024
							28,665,175
Total Master Limited Partnerships and Related Companies (Cost $247,596,179)							273,834,212
Total Investments—137.6% (Cost $240,709,064)							273,834,212
Credit Facility—(38.7)%							(76,989,219	)
Other Assets and Liabilities(h)—1.1%							2,200,094
Total Net Assets Applicable to Common Shareholders—100.0%						$	199,045,087

 

All percentages disclosed are calculated by dividing the indicated amounts by net assets applicable to common shareholders.

(a) Securities determined to be illiquid under the procedures approved by the Fund’s Board of Trustees and represent 11.8% of net assets applicable to common shareholders.

(b) Securities have been fair valued in good faith using fair value procedures approved by the Board of Trustees and represent 11.8% of net assets applicable to common shareholders. See Notes to Financial Statements for further information.

(c) EMG Utica I Offshore Co-Investment, L.P. is a restricted security exempt from registration under the Securities Act of 1933. The security may be resold in transactions exempt from registration, normally to qualified institutional buyers. See footnote 2(g) in the Notes to Financial Statements for further information.

(d) Non-income producing security.

(e) All or a portion of these securities are held as collateral for the line of credit agreement. As of November 30, 2017, the total fair value of securities held as collateral for the line of credit agreement is $185,106,732.

(f) Distributions are paid-in-kind.

(g) All or a portion of these securities are held as collateral for the written call options. As of November 30, 2017, the total fair value of securities held as collateral for the written call options is $12,359,879.

(h) Includes cash which is being held as collateral for written options contracts.

Written Call Options:

 

Description		Counterparty				Exercise Price				Expiration Date				Number of Contracts				Notional Value				Fair Value				Unrealized Appreciation (Depreciation)
MPLX LP			Morgan Stanley			$	36.00				12/15/2017				535			$	1,918,510			$	(32,100	)		$	(8,855	)
NGL Energy Partners LP			Morgan Stanley				12.50				12/15/2017				1,393				1,741,250				(62,685	)			(3,511	)
NGL Energy Partners LP			Morgan Stanley				15.00				01/19/2018				1,045				1,306,250				(15,675	)			9,622
Plains GP Holdings LP			Morgan Stanley				21.00				12/15/2017				3,592				7,395,928				(98,780	)			(855	)
Plains GP Holdings LP			Morgan Stanley				22.00				12/15/2017				1,995				4,107,705				(14,963	)			13,382
																		$	16,469,643			$	(224,203	)		$	9,783

 

See accompanying Notes to Financial Statements.		8

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Schedule of Investments

Salient Midstream & MLP Fund

November 30, 2017

 

Salient Midstream & MLP Fund invested in the following industries as of November 30, 2017:

 

		Value				% of Total Investments
Gathering & Processing		$	71,703,500				26.2	%
Liquids Transportation & Storage			73,986,822				27.0	%
Marine Midstream			9,653,559				3.5	%
Natural Gas Pipelines & Storage			89,466,539				32.7	%
Oil Service & Other Specialty			358,617				0.1	%
Other Energy & Infrastructure			28,665,175				10.5	%
Total		$	273,834,212				100.0	%

Salient Midstream & MLP Fund invested in securities with exposure to the following countries as of November 30, 2017:

 

		Value				% of Total Investments
Canada		$	12,980,234				4.8	%
Republic of the Marshall Islands			9,653,559				3.5	%
United States			251,200,419				91.7	%
Total		$	273,834,212				100.0	%

 

See accompanying Notes to Financial Statements.		9

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Statement of Assets, Liabilities and Shareholders’ Equity

Salient Midstream & MLP Fund

November 30, 2017

 

Assets:
Investments, at value (cost $240,709,064)		$	273,834,212
Cash and cash equivalents			935,911
Deposit with broker for written options			18,401
Receivable for investments sold			1,614,490
Interest and dividends receivable			524,393
Prepaids and other assets			8,210
Total Assets			276,935,617
Liabilities:
Credit Facility			76,989,219
Written options, at fair value (premiums received $233,986)			224,203
Payable to Advisor			273,015
Interest payable			142,853
Line of credit commitment fees payable			12,334
Accounts payable and accrued expenses			248,906
Total Liabilities			77,890,530
Net Assets applicable to common shareholders		$	199,045,087
Net Assets Applicable to Common Shareholders:
Capital Stock, $0.01 par value; 17,722,449 shares issued and outstanding (unlimited shares authorized)		$	177,224
Paid-in capital			379,600,343
Accumulated net investment loss			(11,717,553	)
Accumulated net realized loss			(202,149,858	)
Net unrealized appreciation			33,134,931
Net assets applicable to common shareholders		$	199,045,087
Net Asset Value:
Net assets applicable to common shareholders		$	199,045,087
Common shares outstanding			17,722,449
Net asset value per common share outstanding		$	11.23

 

See accompanying Notes to Financial Statements.		10

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Statement of Operations

Salient Midstream & MLP Fund

Year Ended November 30, 2017

 

Investment Income:
Distributions from master limited partnerships		$	7,213,570
Less return of capital on distributions			(7,213,570	)
Net distributions from master limited partnerships			—
Dividends from master limited partnership related companies			13,459,376
Less return of capital on dividends			(6,600,237	)
Net dividends from master limited partnership related companies			6,859,139
Interest Income			20,040
Foreign taxes withheld			(48,628	)
Total Investment Income			6,830,551
Operating Expenses:
Investment management fees			3,955,250
Sub-advisory fees			160,000
Administration fees			168,401
Custodian fees			26,219
Interest expense			1,733,903
Commitment fees			56,820
Professional fees			349,207
Transfer agent fees			16,067
Compliance fees			93,944
Other expenses			239,114
Total Expenses			6,798,925
Net Investment Income			31,626
Realized and Unrealized Gain (Loss):
Net realized gain on investments			1,426,384
Net realized gain on written options			1,772,704
Net realized gain on foreign currency			2,588
Net realized gain, before income taxes			3,201,676
Tax benefit			(1,122,218	)
Net realized gain, net of income taxes			4,323,894
Change in unrealized appreciation/depreciation on:
Investments			(42,695,629	)
Written options			64,480
Change in unrealized appreciation/depreciation from investments and written options			(42,631,149	)
Net realized and unrealized loss from investments and written options			(38,307,255	)
Net Decrease in Net Assets Applicable to Common Shareholders Resulting from Operations		$	(38,275,629	)

 

See accompanying Notes to Financial Statements.		11

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Statements of Changes in Net Assets

Salient Midstream & MLP Fund

 

		Year Ended November 30, 2017				Year Ended November 30, 2016(1)
Operations:
Net investment income		$	31,626			$	2,034,909
Net realized gain/(loss), net of income taxes			4,323,894				(87,148,644	)
Change in unrealized appreciation/depreciation			(42,631,149	)			107,742,930
Net increase/(decrease) in net assets applicable to common shareholders resulting from operations			(38,275,629	)			22,629,195
Distributions:
Net investment income			—				(2,034,909	)
In excess of net investment income			—				(17,557,820	)
From return of capital			(17,297,109	)			(575,417	)
Total distributions to common shareholders			(17,297,109	)			(20,168,146	)
Net increase/(decrease) in net assets applicable to common shareholders		$	(55,572,738	)		$	2,461,049
Net Assets:
Beginning of period			254,617,825				252,156,776
End of period		$	199,045,087			$	254,617,825
Accumulated net investment loss		$	(11,717,553	)		$	(23,412,633	)

 

(1) For the year ended November 30, 2016, Salient Midstream & MLP Fund presented information on a consolidated basis. See Note 1 for additional information.

 

See accompanying Notes to Financial Statements.		12

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Statement of Cash Flows

Salient Midstream & MLP Fund

For the Year Ended November 30, 2017

 

Cash flows from operating activities:
Net decrease in net assets resulting from operations		$	(38,275,629	)
Adjustments to reconcile net decrease in net assets resulting from operations to net cash provided by operating activities
Purchase of investments			(77,621,415	)
Proceeds from disposition of investments			109,122,127
Premiums from written options			3,167,236
Proceeds paid to cover written options			(695,411	)
Premiums paid on exercised written options			(614,249	)
Amortization of premium and accretion of discount on investments			(604	)
Net realized gain on investments			(1,426,384	)
Net realized gain on written options			(1,772,704	)
Change in unrealized appreciation/depreciation from investments			42,695,629
Change in unrealized appreciation/depreciation from written options			(64,480	)
Change in operating assets and liabilities:
Deposit with broker for written options			62,103
Interest and dividends receivable			(236,522	)
Tax refund receivable			390,000
Prepaids and other assets			(5,573	)
Interest payable			26,842
Payable to Advisor			(55,142	)
Line of credit commitment fees payable			1,116
Tax Liability			(3,526,230	)
Accounts payable and accrued expenses			(125,919	)
Net cash provided by operating activities			31,044,791
Cash flows from financing activities:
Advances from credit facility			32,950,000
Repayments on credit facility			(46,350,000	)
Distributions paid to common shareholders, net of reinvestments			(17,297,109	)
Net cash used in financing activities			(30,697,109	)
Net increase in cash and cash equivalents			347,682
Cash and cash equivalents at beginning of year			588,229
Cash and cash equivalents at end of year		$	935,911
Supplemental schedule of cash activity:
Cash paid for interest during the year		$	1,591,050
Cash paid for line of credit commitment fees during the year			44,486
Cash paid for taxes during the year			2,014,176
Supplemental schedule of non-cash activity:
Distributions received in kind			1,836,512

 

See accompanying Notes to Financial Statements.		13

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Financial Highlights

Salient Midstream & MLP Fund

 

		Year Ended November 30, 2017				Year Ended November 30, 2016(1)				Year Ended November 30, 2015(1)				Year Ended November 30, 2014(1)				Year Ended November 30, 2013(1)
Per Common Share Data:(2)
Net Asset Value, beginning of period		$	14.37			$	14.23			$	27.80			$	24.29			$	19.40
Income/(loss) from operations:
Net investment income/(loss)(3)			0.00	(4)			0.11				0.09				(0.19	)			(0.11	)
Net realized and unrealized gain/(loss) from investments			(2.16	)			1.17				(11.99	)			5.15				6.37
Net increase (decrease) resulting from operations			(2.16	)			1.28				(11.90	)			4.96				6.26
Distributions paid from:
Net investment income			—				(0.11	)			(0.09	)			—				—
In excess of net investment income			—				(1.00	)			(1.28	)			(1.14	)			(0.86	)
Net realized gains			—				—				(0.20	)			—				—
Return of capital			(0.98	)			(0.03	)			(0.10	)			(0.31	)			(0.51	)
Net Asset Value, end of period		$	11.23			$	14.37			$	14.23			$	27.80			$	24.29
Per common share market value, end of period		$	10.22			$	13.40			$	12.82			$	26.20			$	22.78
Total investment return based on market value(5)			(17.08	)%			16.97	%			(46.45	)%			21.30	%			23.79	%
Ratios to Average Net Assets:
Net investment income/(loss)			0.01	%			1.01	%			0.41	%			(0.66	)%			(0.47	)%
Gross operating expenses (including tax expense/benefit)			2.40	%			2.34	%			(1.90	)%			3.34	%			5.44	%
Net operating expenses (including tax expense/benefit)			2.40	%			2.34	%			(1.90	)%			3.21	%(6)			5.14	%(6)
Net operating expenses (excluding tax benefit/expense)			2.87	%			3.09	%			2.72	%			2.44	%(6)			2.25	%(6)
Supplemental Data:
Net assets applicable to common shareholders, end of period (in 000s)		$	199,045			$	254,618			$	252,157			$	492,670			$	230,757
Average net assets (000s)		$	236,834			$	201,307			$	396,335			$	280,809			$	214,892
Portfolio turnover			23.72	%			93.44	%			28.64	%			46.39	%(7)			74.87	%
Asset coverage per $1,000 unit of senior indebtedness(8)		$	3,585			$	3,817			$	3,284			$	3,354			$	3,187
Short-term borrowings, end of period (000s)		$	76,989			$	90,389			$	110,400			$	209,300			$	105,500

 

(1) At and prior to November 30, 2016, Salient Midstream & MLP Fund presented information on a consolidated basis. See Note 1 for additional information.

(2) Information presented relates to a common share outstanding for periods indicated.

(3) Per share net investment income/(loss) has been calculated using the average daily shares method.

(4) Amount represents less than $0.01 per share.

(5) Total investment return is calculated assuming a purchase of common shares at the current market price on the first day of the period and a sale at the closing market price on the last day of the period reported (excluding brokerage commissions). Dividends and distributions are assumed for the purpose of this calculation to be reinvested at prices obtained under the DRIP.

(6) The amount includes an investment adviser waiver representing 0.13% and 0.30% for the periods ended November 30, 2014 and November 30, 2013, respectively, to the expense ratios. Without this waiver, the expense ratios would be higher.

(7) In connection with the reorganization of Salient MLP & Energy Infrastructure Fund into Salient Midstream & MLP Fund, no purchases or sales occurred in an effort to realign the combined fund’s portfolio after the merger, and therefore none have been excluded from the portfolio turnover calculation. The value of investments acquired in the reorganization, which has been excluded from purchases in the portfolio turnover calculation, is $337,519,725.

(8) Calculated by subtracting the Fund’s total liabilities (not including borrowings) from the Fund’s total assets and dividing by the total number of senior indebtedness units, where one unit equals $1,000 of senior indebtedness.

 

See accompanying Notes to Financial Statements.		14

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Notes to Financial Statements

November 30, 2017

 

 

		15

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Notes to Financial Statements, continued

November 30, 2017

 

 

		16

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Notes to Financial Statements, continued

November 30, 2017

 

 

		17

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Notes to Financial Statements, continued

November 30, 2017

 

 

The restricted securities held at November 30, 2017 are identified below and are also presented in the Fund’s Schedule of Investments.

 

Security		% of Net Assets				Acquisition Date				Shares/Units				Cost				Fair Value
EMG Utica I Offshore Co-Investment, L.P.*			11.8	%			2/22/2013				16,000,000			$	16,000,000			$	23,531,312
Total Restricted Securities			11.8	%										$	16,000,000			$	23,531,312

 

* EMG Utica has been deemed illiquid by the Advisor based on procedures approved by the Board.

 

 

		18

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Notes to Financial Statements, continued

November 30, 2017

 

 

		19

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Notes to Financial Statements, continued

November 30, 2017

 

 

		20

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Notes to Financial Statements, continued

November 30, 2017

 

 

The following is a summary categorization of the Fund’s investments based upon the three levels defined above as of November 30, 2017. The breakdown by category of equity securities is disclosed in the Schedule of Investments.

 

		Level 1								Level 2				Level 3				Investments Valued at NAV as a Practical Expedient*				Total
		Investment Securities				Other Financial Instruments^				Investment Securities				Investment Securities				Investment Securities				Investment Securities				Other Financial Instruments^
Master Limited Partnerships and Related Companies
Gathering & Processing		$	48,172,188			$	—			$	—			$	—			$	23,531,312			$	71,703,500			$	—
Other			202,130,712				—				—				—				—				202,130,712				—
Written Options			—				(224,203	)			—				—				—				—				(224,203	)
Total		$	250,302,900			$	(224,203	)		$	—			$	—			$	23,531,312			$	273,834,212			$	(224,203	)

 

^ Other financial instruments include any derivative instruments not reflected in the Schedule of Investments as investment securities, such as written call options. These investments are generally presented in the Schedule of Investments at the unrealized gain or loss on the investment.

* In accordance with ASC Subtopic 820-10, certain investments that are measured at fair value using the NAV (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliations of the fair value hierarchy to the amounts presented in the Statement of Assets, Liabilities and Shareholders’ Equity.

There were no transfers between Levels 1, 2, or 3 for the year ended November 30, 2017, except for the transfer which was due to the investment being measured at fair value using the NAV (or its equivalent) practical expedient as of November 30, 2017 and no longer being classified in the fair value hierarchy.

 

		21

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Notes to Financial Statements, continued

November 30, 2017

 

The following is a reconciliation of Level 3 investments based on the inputs used to determine fair value:

 

Investments in Securities		Balance as of November 30, 2016				Purchases				Sales Proceeds				Change in Unrealized Appreciation (Depreciation)				Transfer Out of Level 3				Balance as of November 30, 2017
Master Limited Partnerships and Related Companies
Gathering & Processing		$	24,762,000			$	—			$	—			$	(1,230,688	)		$	(23,531,312	)		$	—
Total		$	24,762,000			$	—			$	—			$	(1,230,688	)		$	(23,531,312	)		$	—

 

 

		22

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Notes to Financial Statements, continued

November 30, 2017

 

The tax character of dividends paid to shareholders during the tax year ended in 2017 was as follows:

 

Ordinary Income		Net Long Term Capital Gains		Total Taxable Distributions		Tax Return of Capital		Total Distributions Paid
$—		$—		$—		$17,297,109		$17,297,109

The tax character of dividends paid to shareholders during the tax year ended in 2016 was as follows:

 

Ordinary Income		Net Long Term Capital Gains		Total Taxable Distributions		Tax Return of Capital		Total Distributions Paid
$19,592,729		$—		$19,592,729		$575,417		$20,168,146

 

 

		23

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November 30, 2017

 

 

		24

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November 30, 2017

 

 

		25

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Supplemental Information (Unaudited)

November 30, 2017

 

Trustees and Officers

The Fund’s operations are managed under the direction and oversight of the Board. Each Trustee serves for an indefinite term or until he or she reaches mandatory retirement as established by the Board. The Board appoints the officers of the Fund who are responsible for the Fund’s day-to-day business decisions based on policies set by the Board. The officers serve at the pleasure of the Board.

Trustee and Officer Fees

The Fund pays each Trustee who is not an “interested person” of the Advisor, as defined in the 1940 Act (the “Independent Trustees”) an annual retainer of $6,000, paid quarterly, an annual Board meeting fee of $2,000, a fee of $667 per informal Board meeting, a fee of $333 per telephonic Board meeting, an annual fee of $375 for membership on the audit committee and valuation committee, an annual fee of $500 for membership on the compliance committee, an annual fee of $2,000 for the audit committee chair and compliance committee chair, and an annual fee of $2,400 for the valuation committee chair. The Lead Independent Trustee receives an annual fee of $6,000, paid quarterly. There are currently six Independent Trustees. In the interest of retaining Independent Trustees of the highest quality, the Board intends to periodically review such compensation and may modify it as the Board deems appropriate. The Fund’s Chief Compliance Officer (the “CCO”) is employed by the Advisor. The Fund has agreed to pay the Advisor approximately $84,000 per year as (i) an allocated portion of the compensation of an officer or employee of the Advisor to serve as CCO for the Fund (plus the cost of reasonable expenses related to the performance of the CCO’s duties, including travel expenses), and (ii) an allocation of the expenses of other officers or employees of the Advisor who serve in other compliance capacities for the Fund. The Board approves annually an allocation of such costs among such personnel.

The table below shows each Trustee and executive officer’s full name, address, and year of birth, the position held with the Trust, the length of time served in that position, his principal occupation during the past five years, and other directorships held by such Trustee. The address of each Trustee and officer is c/o Salient Midstream & MLP Fund, 4265 San Felipe, Suite 800, Houston, Texas 77027.

Interested Trustees*

 

Name and Year of Birth		Position(s) Held		Principal Occupation(s) During the Past 5 Years		Number of Portfolios in Fund Complex Overseen by Trustee(1)				Other Directorships During Past 5 Years**
John A. Blaisdell* Year of Birth: 1960		Trustee (since inception)		Managing Director of Salient (since 2002).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Salient MF Trust (investment company) (four funds) (since 2012); Forward Funds (investment company) (fourteen funds) (since 2015).
Gregory A. Reid* Year of Birth: 1965		Trustee, President and Chief Executive Officer (since inception)		President, MLP Complex, Salient, since 2011; Managing Partner (Houston), Telemus Capital Partners (2007 to 2010); Merrill Lynch Private Banking Group (1997 to 2007).			1			None.

 

		26

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Supplemental Information, continued (Unaudited)

November 30, 2017

 

Independent Trustees

 

Name and Year of Birth		Position(s) Held		Principal Occupation(s) During the Past 5 Years		Number of Portfolios in Fund Complex Overseen by Trustee(1)				Other Directorships During Past 5 Years**
Karin B. Bonding, CFA Year of Birth: 1939		Trustee (since inception)		Lecturer, University of Virginia (1996 to 2015); President of CapitalMarkets Institute, Inc. (retired) (fee-only financial planner and investment advisor) (1996 to 2016).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2010); The Endowment PMF Funds (investment companies) (three funds) (since 2010); Brandes Investment Trust (investment companies) (four funds) (2006 to 2012); Credit Suisse Alternative Capital Funds (investment companies) (six funds) (2005 to 2010); Salient MF Trust (investment company) (four funds) (since 2012); Forward Funds (investment company) (fourteen funds) (since 2015).
Jonathan P. Carroll Year of Birth: 1961		Trustee (since inception)		President, Lazarus Capital LLC (Investment company) (since 2006); President, Lazarus Energy Holdings, LLC (Investment holding company) (since 2006); President and CEO of Blue Dolphin Energy Company (since 2012); private investor (since 1988).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); LRR Energy, L.P. (LRE) (energy company) (2014 to 2015); Blue Dolphin Energy Company (BDCO) (energy company) (since 2014); Salient MF Trust (investment company) (four funds) (since 2012); Forward Funds (investment company) (fourteen funds) (since 2015).
Dr. Bernard A. Harris, Jr. Year of Birth: 1956		Trustee (since inception)		Chief Executive Officer and Managing Partner, Vesalius Ventures, Inc. (venture investing) (since 2002); President of The Space Agency (marketing) (since 1999); President of The Harris Foundation (non-profit) (since 1998); clinical scientist, flight surgeon and astronaut for NASA (1986 to 1996).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2009); Babson Funds (eleven funds) (since 2011); Monebo Technologies Inc. (since 2009); The National Math and Science Initiative, and Space Agency (since 2008); Communities in Schools (since 2007); American Telemedicine Association (2007 to 2014); U.S. Physical Therapy, Inc. (since 2005); Houston Technology Center (2004 to 2016); Houston Angel Network (since 2004); The Harris Foundation, Inc. (since 1998); Salient MF Trust (investment company) (four funds) (since 2012); Forward Funds (investment company) (fourteen funds) (since 2015).

 

		27

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Supplemental Information, continued (Unaudited)

November 30, 2017

 

Name and Year of Birth		Position(s) Held		Principal Occupation(s) During the Past 5 Years		Number of Portfolios in Fund Complex Overseen by Trustee(1)				Other Directorships During Past 5 Years**
Richard C. Johnson Year of Birth: 1937		Trustee (since inception)		Former Senior Partner (retired), Baker Botts LLP (law firm); Managing Partner, Baker Botts (1998 to 2002); practiced law at Baker Botts (1966 to 2002) (1972 to 2002 as a partner).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Salient MF Trust (investment company) (four funds) (2012-2017); Forward Funds (investment company) (fourteen funds) (2015-2017).
G. Edward Powell Year of Birth: 1936		Trustee, Lead Independent Trustee (since inception)		Principal of Mills & Stowell (private equity) (2002 to 2010); Managing Partner, PriceWaterhouse & Co. (Houston office, 1982 to 1994).			1			The Salient Private Access Funds (investment companies) (four funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Therapy Track, LLC (2009 to 2012); ESI Energy Services International, Inc. (2004 to 2013).
Scott E. Schwinger Year of Birth: 1965		Trustee (since inception)		President, The McNair Group (management), (since 2006); Senior Vice President and Chief Financial Officer, the Houston Texans (professional football team) (1999).			19			The Salient Private Access Funds (investment companies) (four funds) (since 2004); The Endowment PMF Funds (investment companies) (three funds) (since 2014); Houston Technology Center (2013-2017); The Make-A-Wish Foundation (since 2008); Nine Energy Services (since 2017); Salient MF Trust (investment company) (four funds) (since 2012); Forward Funds (investment company) (fourteen funds) (since 2015).

 

* This person’s status as an “interested” Trustee arises from his affiliation with the Advisor.

** This column includes only directorships of companies required to report to the SEC under the Securities Exchange Act of 1934 (i.e., public companies) or other investment companies registered under the 1940 Act.

(1) The Fund Complex for the purposes of this table consists of 18 open-end funds in the Salient MF Trust and the Forward Funds (each, a “Trust”), with the series of each Trust being advised by either the Advisor or an affiliate of the Advisor; and 1 public closed-end fund advised by either the Advisor or an affiliate of the Advisor.

 

		28

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Supplemental Information, continued (Unaudited)

November 30, 2017

 

Officers of the Fund Who Are Not Trustees

 

Name and Year of Birth		Position(s) with the Fund		Principal Occupation(s) During Past 5 Years
Paul A. Bachtold Year of Birth: 1973		Chief Compliance Officer (since inception)		Chief Compliance Officer and Secretary, Forward Securities, LLC (since 2016); Chief Compliance Officer, Forward Management, LLC (since 2015); Chief Compliance Officer, The Salient Private Access Funds (four funds) (since 2010); Chief Compliance Officer, The Endowment PMF Funds (three funds) (since 2014); Chief Compliance Officer, Salient (since 2010); Consultant, Chicago Investment Group (compliance consulting) (2009 to 2010); US Compliance Manager, Barclays Global Investors (2005 to 2008).
Barbara H. Tolle Year of Birth: 1949		Treasurer and Principal Financial Officer (since 2017)		Treasurer and Principal Financial Officer, Salient MF Trust (since 2017); Treasurer, The Salient Private Access Funds (four funds) (since 2017); Treasurer, The Endowment PMF Funds (three funds) (since 2017); Treasurer and Principal Financial Officer, Forward Funds (since 2006); Vice President, Director of Fund Accounting and Operations, Forward Management, LLC (since 2006); Vice President and Director, Fund Accounting and Administration, PFPC Inc. (1998 to 2006).
Kristen Bayazitoglu Year of Birth: 1981		Vice President (Since 2017)		Chief Operating Officer of Asset Management, Salient Partners, L.P. (since 2017); Vice President, The Salient Private Access Funds (four funds) (since 2017); Vice President, The Endowment PMF Funds (three funds) (since 2017); Vice President of Operations, Salient Partners, L.P. (March 2012 – June 2017).
Steve Leonhardt Year of Birth: 1959		Vice President (Since 2017)		Vice President of Salient (since 2017); Vice President, The Salient Private Access Funds (four funds) (since 2017); Vice President, The Endowment PMF Funds (three funds) (since 2017); Controller of Stifel Financial Corp. (2015-2017); self-employed (2013-2015); Vice President of Charles Schwab Investment Management (2009-2013).
John E. Price Year of Birth: 1967		Vice President (Since 2017)		Managing Director, Chief Financial Officer and Treasurer, Salient Capital Advisors, LLC (since 2011); Partner, Salient Partners, L.P. (since 2003); Chief Financial Officer and Treasurer, Salient Partners, L.P. (since 2005); Chief Financial Officer and Treasurer, Salient Trust Co., LTA (since 2005); Chief Financial Officer and Treasurer, Forward Management, LLC (since 2015); Chief Financial Officer and Treasurer (Salient Advisors, L.P. (since 2006); Chief Financial Officer and Treasurer, Endowment Advisers, L.P. (since 2004); Interim Principal Financial Officer, The Salient Private Access Funds (four funds) (since 2017); Interim Principal Financial Officer, The Endowment PMF Funds (three funds) (since 2017).
Jeremy L. Radcliffe Year of Birth: 1974		Secretary (since inception).		President, Forward Securities, LLC (since 2015); Managing Director of Salient (since 2002).

 

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Supplemental Information, continued (Unaudited)

November 30, 2017

 

Form N-Q Filings

The Fund files a complete schedule of portfolio holdings with the SEC for the first and third quarters of each fiscal year on Form N-Q. The Fund’s Form N-Q is available on the SEC website at http://www.sec.gov. The Fund’s Form N-Q may be reviewed and copied at the SEC Public Reference Room in Washington, DC and information regarding operation of the Public Reference Room may be obtained by calling (800) SEC-0330.

Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of the 1933 Act and the Securities Exchange Act of 1934. By their nature, all forward-looking statements involve risks and uncertainties, and actual results could differ materially from those contemplated by the forward-looking statements. Several factors that could materially affect the Fund’s actual results are the performance of the portfolio of investments held by it, the conditions in the U.S. and international financial, petroleum and other markets, the price at which shares of the Fund will trade in the public markets and other factors discussed in filings with the SEC.

Proxy Voting Policies

A description of the policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available (i) without charge, upon request by calling (800) 809-0525; and (ii) on the SEC website at http://www.sec.gov. Information regarding how the Fund voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 of any year will be made available on or around August 30 of that year (i) without charge, upon request by calling (800) 809-0525; and (ii) on the SEC website at http://www.sec.gov.

Statement of Additional Information

The Statement of Additional Information (“SAI”) includes additional information about the Fund’s Trustees and is available upon request without charge by calling (800) 809-0525 or by visiting the SEC website at http://www.sec.gov.

Certifications

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

Board Consideration of the Investment Management Agreement

At an in-person meeting of the Board held on October 18, 2017, the Board, including the Trustees who are not “interested persons” as that term is defined in the Investment Company Act of 1940, as amended (the “Independent Trustees”), considered and approved the continuation of the Investment Management Agreement (the “Advisory Agreement”) between the Fund and the Advisor. In preparation for review of this agreement, the Board requested the Advisor to provide detailed information which the Board determined to be reasonably necessary to evaluate the agreement. The Independent Trustees held a telephonic meeting of the Board on October 6, 2017 (the “Pre-15(c) Meeting”) to review and discuss materials from the Advisor, and also met in-person among themselves prior to the October 18, 2017 meeting to review and discuss the response materials of the Advisor in support of the consideration of the Advisory Agreement. At the request of the Independent Trustees, the Advisor made presentations regarding the materials and responded to questions from the Independent Trustees relating to, among other things, portfolio management, the Fund’s investment program, Fund and Advisor compliance programs, Fund performance including benchmarks and comparisons to other funds, Fund fee levels, other portfolios (including fees) managed by the Advisor and its affiliates and the Advisor’s profitability (including revenue of the Advisor across all its funds). The Board, including the Independent Trustees, also took into consideration information furnished for the Board’s review and consideration throughout the year at regular Board meetings. The Independent Trustees were assisted at all times by independent counsel.

The Independent Trustees met in executive session without the presence of Advisor personnel, along with independent counsel. After the executive session was adjourned, the meeting was reconvened and the other attendees rejoined the meeting. The Independent Trustees reported that the extensive prior discussions among themselves and with independent counsel, including during the Pre-15(c) call, and their reviews of the Advisor’s response materials, left them satisfied that the Advisor had responded to requests. The Independent Trustees further reported that they had concluded that the Advisory Agreement enables the Fund’s shareholders to obtain high quality services at a cost that is appropriate, reasonable, and in the interests of investors. The Independent Trustees also reported that they took into account many factors, including overall down energy and MLP markets, the Fund’s leverage and fee structure, and believed management has taken reasonable steps in managing the Fund related to the energy markets. They stated that in light of the Advisor’s efforts prudent exercise of judgment warranted renewal

 

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Supplemental Information, continued (Unaudited)

November 30, 2017

 

of the advisory fee. It also was noted that the Board’s decision to renew the Advisory Agreement was not based on any single factor, but rather was based on a comprehensive consideration of all the information provided to the Board at its meetings throughout the year. Upon consideration of these and other factors, the Board also determined:

The nature, extent and quality of the advisory services provided. With respect to the Advisory Agreement, the Board considered: the specialized expertise required to manage the Fund’s strategy, personnel and staffing at the Advisor, the background and experience of key investment personnel; the Advisor’s focus on analysis of complex asset categories; the Advisor’s disciplined investment approach and commitment to investment principles; the Advisor’s significant investment in and commitment to personnel, including hiring and extensive training; the Advisor’s significant compliance, risk oversight and tax reporting efforts; and, the Advisor’s oversight of and interaction with service providers.

The Board concluded that the nature, extent and quality of the management and advisory service provided were appropriate and thus supported a decision to renew the Advisory Agreement. The Board also concluded that the Advisor would be able to provide during the coming year quality of investment management and related services, and that these services are appropriate in scope and extent in light of the Fund’s operations, the competitive landscape and investor needs.

The investment performance of the Fund. The Board evaluated the comparative information provided by the Advisor regarding the Fund’s investment performance, distributions and information on the performance of other investment funds and indices, including the relevance of various indices. The Board also considered the various performance reports received throughout the year. The Board noted the drawdown in the MLP and energy markets and declines in energy prices during the year. On the basis of the Trustees’ assessment, the Trustees concluded that the Advisor, although faced with declines in the Fund’s area of investment focus during the year, was capable of generating a level of investment performance that is appropriate in light of the Fund’s investment objective, policies and strategies and competitive with comparable funds.

The cost of advisory service provided and the level of profitability. In analyzing the cost of services and profitability of the Advisor, the Board considered the revenues earned and expenses incurred by the Advisor. The Board took into account the significant investment by and cost to the Advisor in appropriate personnel and service infrastructure to support the operations and management of the Fund. On the basis of the Board’s review of the fees charged by the Advisor for investment advisory and related services, the specialized nature of the Fund’s investment program, the Fund’s use of leverage, the Advisor’s financial information and the costs associated with managing the Fund, the Board concluded that the level of investment management fees and the Advisor’s profitability are reasonable in light of the services provided, the management fees and overall expense ratios of comparable investment companies, and the anticipated profitability of the relationship between the Fund and the Advisor.

The extent to which economies of scale would be realized as the Fund grows and whether fee levels reflect these economies of scale for the benefit of Fund investors. While noting that the management fees will not decrease as the level of Fund assets increase, the Board concluded that as a closed-end fund of a relatively fixed-scale the management fees reflect the Fund’s complex operations, the current markets for the MLP asset category, the economic environment for the Advisor, including its continued investment relating to support and monitoring of the Fund, and the competitive nature of the investment company market as relevant to the Fund. The Board noted that it would have the opportunity to periodically re-examine the matter of economies of scale, as well as the appropriateness of management fees payable to the Advisor.

Benefits (such as soft dollars) to the Advisor from its relationship with the Fund. The Board concluded that other benefits derived by the Advisor from its relationship with the Fund, to the extent such benefits are identifiable or determinable, are reasonable and fair, result from the provision of appropriate services to the Fund and investors therein, and are consistent with industry practice and the best interests of the Fund and its partners. In this regard, the Board noted that although the Advisor may in the future use soft dollars, it has not done so to date and has not realized “soft dollar” benefits from its relationship with the Fund.

Other considerations. The Board determined that the Advisor has made a continuing and substantial commitment both to the recruitment of high quality personnel, monitoring and investment decision-making, and maintained and expanded the financial, compliance and operational resources reasonably necessary to manage the Fund in a professional manner that is consistent with the best interests of the Fund and its investors. The Trustees also concluded that the Advisor continues to make a significant entrepreneurial commitment to the management and success of the Fund.

 

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Privacy Policy (Unaudited)

 

The Fund recognizes the importance of securing personal financial information. It is our policy to safeguard any personal and financial information that may be entrusted to us. The following is a description of the Fund’s policy regarding disclosure of nonpublic personal information.

We collect nonpublic personal information as follows:

We collect information about our investors, including, but not limited to, the investor’s name, address, telephone number, e-mail address, social security number and date of birth. We collect that information from subscription agreements, other forms of correspondence that we receive from investors, from personal conversations and from affiliated entities as permitted by law.

We receive information about investor transactions with us, including, but not limited to, account number, account balance, investment amounts, withdrawal amounts and other financial information.

We are permitted by law to disclose nonpublic information we collect, as described above, to the Fund’s service providers, including the Fund’s investment advisor, sub-advisors, servicing agent, independent administrator, custodian, legal counsel, accountant and auditor. We do not disclose any nonpublic information about our current or former investors to nonaffiliated third parties, except as required or permitted by law. We restrict access to investor nonpublic personal information to those persons who require such information to provide products or services to investors. We maintain physical, electronic and procedural safeguards that comply with federal standards to guard investors’ nonpublic personal information.

If an investor’s investment relationship with the Fund involves a financial intermediary, including, but not limited to, a broker-dealer, bank or trust company, the privacy policy of such investor’s financial intermediary would govern how any nonpublic personal information would be shared by them with nonaffiliated third parties.

 

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4265 San Felipe

8th Floor

Houston, Texas 77027

800-809-0525

www.salientpartners.com

 

Salient Midstream & MLP Fund

NYSE: SMM

 

			11/17

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Item 2.

Code of Ethics.

(a) The Registrant has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. This code of ethics is included as Exhibit 12(a)(1).

(b) During the period covered by the report, with respect to the registrant’s code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions; there have been no amendments to, nor any waivers granted from, a provision that relates to any element of the code of ethics definition enumerated in paragraph (b) of this Item 2.

 

Item 3.

Audit Committee Financial Expert.

The Registrant’s board of trustees has determined that there is at least one audit committee financial expert serving on its audit committee. G. Edward Powell is the “audit committee financial expert” and is considered to be “independent” as each term is defined in Item 3 of Form N-CSR.

 

Item 4.

Principal Accountant Fees and Services.

 

		2017				2016
Audit Fees		$	87,938			$	64,000
Audit-Related Fees			0				0
Tax Fees			0				0
All Other Fees			0				0

(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.

The audit committee may delegate its authority to pre-approve audit and permissible non-audit services to one or more members of the committee. Any decision of such members to pre-approve services shall be presented to the full audit committee at its next regularly scheduled meeting.

(2) Disclose the percentage of services described in each of paragraphs (b) through (d) of this item that were approved by the audit committee pursuant to paragraph (c) (7)(i)(c) of Rule 2-01 of Regulation S-X.

 

2017		2016
0%			0	%

(f) Not applicable.

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(g) Disclose the aggregate non-audit fees billed by the registrant’s accountant for services rendered to registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant.

 

2017		2016
$0		$0

(h) Not applicable.

 

Item 5.

Audit Committee of Listed Registrants.

(a) The Registrant has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (15 U.S.C 78c(a)(58)(A)), and is comprised of Jonathan P. Carroll, Dr. Bernard A. Harris, Jr., G. Edward Powell, and Scott E. Schwinger.

 

Item 6.

Investments.

(a) Schedule of Investments as of the close of the reporting period is included in the report to the shareholders filed under Item 1 of Form N-CSR.

(b) Not applicable.

 

Item 7.

Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.

A closed-end management investment company that is filing an annual report on this Form N-CSR must, unless it invests exclusively in non-voting securities, describe the policies and procedures that it uses to determine how to vote proxies relating to portfolio securities, including the procedures that the company uses when a vote presents a conflict between the interests of its shareholders, on the one hand, and those of the company’s investment adviser; principal underwriter; or any affiliated person (as defined in section 2(a)(3) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(3)) and the rules thereunder) of the company, its investment adviser, or its principal underwriter, on the other. Include any policies and procedures of the company’s investment adviser, or any other third party, that the company uses, or that are used on the company’s behalf, to determine how to vote proxies relating to portfolio securities.

 

Item 8.

Portfolio Managers of Closed-End Management Investment Companies.

Greg A. Reid and Frank T. Gardner III (the “portfolio managers”) are primarily responsible for the day-to-day management of the registrant’s portfolio.

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(a)(1) The following table provides biographical information about the registrant’s portfolio managers as of the date of this filing:

 

Name		Position(s) Held With Registrant and Length of Time Served		Principal Occupation During Past 5 Years
Greg A. Reid		Trustee, President and Chief Executive Officer (since inception)		President, MLP Complex, Salient, since 2011; Managing Partner (Houston), Telemus Capital Partners, 2007-2010; Merrill Lynch Private Banking Group, 1997-2007.
Frank T. Gardner III		Managing Director and Portfolio Manager since 2012.		Portfolio Manager for Salient Advisors, LLC since 2012. Director of Research for Salient Capital Advisors, LLC from 2010 to 2015. Portfolio Manager for Telemus Capital Partners from 2007 to 2010.

(a)(2) The following table provides information about the other accounts managed on a day-to-day basis by the portfolio managers as of November 30, 2017:

 

Name		Number of Accounts				Total Assets of Accounts				Number of Accounts Subject to a Performance Fee				Total Assets of Accounts Subject to a Performance Fee
Greg A. Reid
Registered investment companies			1			$	1,313M				0			$	—
Other pooled investment companies			7			$	1,349M				2			$	168M
Other accounts			375			$	1,860M				2			$	48M
Frank T. Gardner III
Registered investment companies			1			$	1,313M				0			$	—
Other pooled investment companies			7			$	1,349M				2			$	168M
Other accounts			375			$	1,860M				2			$	48M

Conflicts of Interest with the Investment Adviser

Conflicts of interest may arise because Salient Partners, LP (“Salient”) and its affiliates generally carry on substantial investment activities for other clients in which we will have no interest. Salient or its affiliates may have financial incentives to favor certain of such accounts over us. Any of their proprietary accounts and other customer accounts may compete with us for specific trades. Salient or its affiliates may buy or sell securities for us which differ from securities bought or sold for other accounts and customers, although their investment objectives and policies may be similar to ours. Situations may occur when we could be disadvantaged because of the investment activities conducted by Salient or 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 us and the other accounts, thereby limiting the size of our position, or the difficulty of liquidating an investment for us and the other accounts where the market cannot absorb the sale of the combined position.

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Our investment opportunities may be limited by affiliations of Salient or its affiliates with MLPs and Energy Infrastructure Companies. In addition, to the extent that Salient sources and structures private investments in MLPs and Energy Infrastructure Companies, certain employees of Salient may become aware of actions planned by these companies, such as acquisitions, that may not be announced to the public. Although Salient maintains procedures to ensure that any material non-public information available to certain Salient employees not be shared with those employees responsible for the purchase and sale of publicly traded securities, it is possible that we could be precluded from investing in a company about which Salient has material non-public information.

The Advisor also manages other funds that invest primarily in MLPs (collectively “Affiliated Funds”) and some of the Affiliated Funds have investment objectives that are similar to or overlap with ours. In particular, certain Affiliated Funds invest in MLPs and Midstream Energy Infrastructure Companies. Furthermore, the Advisor may at some time in the future, manage other investment funds with the same investment objective as ours.

Investment decisions for us are made independently from those of Salient’s 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 Salient or its affiliates seek to purchase or sell the same publicly traded securities, the securities actually purchased or sold are allocated among the clients on a good faith equitable basis by Salient in its discretion in accordance with the clients’ various investment objectives and procedures adopted by Salient and approved by our Board of Trustees. In some cases, this system may adversely affect the price or size of the position that we may obtain. In other cases, however, our ability to participate in volume transactions may produce better execution for us.

We and our affiliates, including Affiliated Funds, may be precluded from co-investing in private placements of securities, including in any portfolio companies that we control. Except as permitted by law, Salient will not co-invest its other clients’ assets in the private transactions in which we invest. Salient will allocate private investment opportunities among its clients, including us, based on allocation policies that take into account several suitability factors, including the size of the investment opportunity, the amount of funds that each client has available for investment and the client’s investment objectives. These allocation policies may result in the allocation of investment opportunities to an Affiliated Fund rather than to us. The policies contemplate that Salient will exercise discretion, based on several factors relevant to the determination, in allocating the entirety, or a portion, of such investment opportunities to an Affiliated Fund, in priority to other prospectively interested advisory clients, including us. In this regard, when applied to specified investment opportunities that would normally be suitable for us, the allocation policies may result in certain Affiliated Funds having greater priority than us to participate in such opportunities depending on the totality of the considerations, including, among other things, our available capital for investment, our existing holdings, applicable tax and diversification standards to which we may then be subject and the ability to efficiently liquidate a portion of our existing portfolio in a timely and prudent fashion in the time period required to fund the transaction.

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The investment management fee paid to our Adviser is based on the value of our assets, as periodically determined. A significant percentage of our assets may be illiquid securities acquired in private transactions for which market quotations will not be readily available. Although we will adopt valuation procedures designed to determine valuations of illiquid securities in a manner that reflects their fair value, there typically is a range of prices that may be established for each individual security. Senior management of our Adviser, our Board of Trustees and its Valuation Committee, and a third-party valuation firm might participate in the valuation of our securities.

(a)(3) As of November 30, 2017:

Compensation

Messrs. Gardner and Reid are compensated by the Adviser through partnership distributions from Salient based on the amount of assets they manage, and they receive a portion of the advisory fees applicable to those accounts, which, with respect to certain amounts, as noted above, are based in part on the performance of those accounts. Some of the other accounts managed by Messrs. Gardner and Reid have investment strategies that are similar to ours. However, Salient manages potential conflicts of interest by allocating investment opportunities in accordance with its allocation policies and procedures. Messrs. Gardner and Reid did not own any of the Fund’s equity securities prior to this offering; however, through their limited partner interests in the parent company of the adviser, which owned all the Fund’s outstanding shares as of April 23, 2012 (with a value of approximately $100,000), Messrs. Gardner and Reid could be deemed to indirectly own a portion of the Fund’s securities.

(a)(4) As of November 30, 2017:

Securities Beneficially Owned in the Registrant by Portfolio Managers

The following table provides information about the dollar range of equity securities in the registrant beneficially owned by the portfolio managers:

 

Portfolio Manager		Aggregate Dollar Range of Beneficial Ownership in the Registrant
Greg A. Reid		$	—
Frank T. Gardner III		$	—

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Item. 9.

Purchase of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.

 

Period		(a) Total Number of Shares (or Units) Purchased				(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
December 1, 2016 through December 31, 2016			—			N/A		N/A		N/A
January 1, 2017 through January 31, 2017			—			N/A		N/A		N/A
February 1, 2017 through February 28, 2017			—			N/A		N/A		N/A
March 1, 2017 through March 31, 2017			—			N/A		N/A		N/A
April 1, 2017 through April 30, 2017			—			N/A		N/A		N/A
May 1, 2017 through May 31, 2017			—			N/A		N/A		N/A
June 1, 2017 through June 30, 2017			—			N/A		N/A		N/A
July 1, 2017 through July 31, 2017			—			N/A		N/A		N/A
August 1, 2017 through August 31, 2017			—			N/A		N/A		N/A
September 1, 2017 through September 30, 2017			—			N/A		N/A		N/A
October 1, 2017 through October 31, 2017			—			N/A		N/A		N/A
November 1, 2017 through November 30, 2017			—			N/A		N/A		N/A
Total

 

Item 10.

Submission of Matters to a Vote of Security Holders.

No material changes to the procedures by which the shareholders may recommend nominees to the registrant’s Board of Trustees have been implemented after the registrant’s last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.

 

Item 11.

Controls and Procedures.

The registrant’s principal executive officer and principal financial officer, or persons performing similar functions, have concluded, based on their evaluation of the registrant’s disclosure controls and procedures as conducted within 90 days of the filing date of this report, that these disclosure controls and procedures are adequately designed and are operating effectively to ensure that information required to be disclosed by the registrant on Form N-CSR is (i) accumulated and communicated to the investment company’s management, including its certifying officers, to allow timely decisions regarding required disclosure; and (ii) recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

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There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR 270.30a-3(d)) that occurred during the second fiscal quarter of 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.

 

Item 12.

Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.

Not applicable

 

Item 13.

Exhibits.

 

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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.

 

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.