Salient

Salient Midstream & MLP Fund (the "Fund") is a newly-organized, non-diversified, closed-end management investment company. The Fund's investment objective is to provide a high level of total return with an emphasis on making quarterly cash distributions ("Distributions") to common shareholders ("Common Shareholders"). There can be no assurance that the Fund will achieve its investment objective. The Fund seeks to provide its Common Shareholders with a tax-efficient vehicle to invest in a portfolio of Energy Companies that own midstream and other energy assets. The Fund's common stock is traded on the New York Stock Exchange under the symbol "SMM".
INVESTMENT OBJECTIVE
  • The Fund’s investment objective is to provide a high level of total return with an emphasis on making quarterly distributions to shareholders.
INVESTMENT STRATEGY
  • The Fund seeks to achieve its investment objective by investing at least 80% of its total assets in securities of MLPs and other energy companies.
INVESTMENT POLICIES
  • The Fund seeks to achieve its investment objective by investing at least 80% of its total assets in securities of Midstream Companies and MLPs.
  • Up to 50% of total assets in MLPs, including any C-Corp Subsidiary
  • Up to 10% of the Fund's total assets in equity securities of privately held companies
  • No more than 25% of total assets in debt securities of Energy Companies, of which all or a portion may be rated below investment grade and no more than 10% of the Fund's total assets may be invested in debt securities rated CCC+/Caa1 or lower
  • No more than 10% of total assets in any single issuer other than any C-Corp Subsidiary of the Fund
  • The Fund also intends to write uncovered call options, in an amount up to 10% of the value of total assets in its portfolio, and purchase put options as a part of its hedging strategy.
HEDGING & RISK MANAGEMENT
  • The Investment Adviser may use other risk management strategies with the intent to manage various risks including interest rate, commodity, credit and equity risk.
LEVERAGE
  • Leverage targeted at approximately 25% of total assets.
QUARTERLY DISTRIBUTIONS
  • The Fund intends to pay its common shareholders quarterly cash distributions. The Fund expects that it will declare a distribution approximately 45-60 days and pay a distribution no later than 90 days from the completion of the offering (May 24, 2012). The Fund anticipates fully investing the proceeds from the offering in approximately 3 to 6 months.
DISTRIBUTION REINVESTMENT
  • Unless investors and their advisors request otherwise, all quarterly distributions will be used to buy additional shares of the Fund. Systematic investing does not ensure profit, nor does it protect against loss in a declining market.
MANAGEMENT FEE
  • Base management fee of 1.00% (annualized) of the Fund's average monthly total assets after a contractual fee waiver of 0.20% in years one and two.
INVESTOR TAX REPORTING
  • A 1099. Reporting appropriate for retirement accounts.

Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.

NAV1
Share Price2
Premium/Discount3
8/22/14 $32.91 $29.94 -9.02%
8/15/14 $32.53 $29.35 -9.78%
8/8/14 $30.71 $28.06 -8.63%
8/1/14 $30.42 $27.99 -7.99%
7/31/14 $30.68 $27.81 -9.35%
7/25/14 $32.01 $29.09 -9.12%
7/18/14 $31.99 $28.71 -10.25%
7/11/14 $31.32 $29.02 -7.34%
7/3/14 $31.59 $29.35 -7.09%
6/30/14 $31.82 $29.60 -6.98%
6/27/14 $31.68 $29.26 -7.64%
6/20/14 $30.99 $27.76 -10.42%
6/13/14 $29.60 $27.07 -8.55%
6/6/14 $29.63 $26.75 -9.72%
5/30/14 $28.77 $26.88 -6.57%
5/23/14 $28.60 $26.55 -7.18%
5/16/14 $28.78 $26.55 -7.75%
5/9/14 $28.19 $26.64 -5.50%
5/2/14 $27.91 $26.70 -4.34%
4/30/14 $27.79 $26.10 -6.08%
4/25/14 $27.30 $25.61 -6.19%
4/17/14 $27.58 $25.20 -8.63%
4/11/14 $27.00 $24.93 -7.67%
4/4/14 $27.23 $24.47 -10.14%
3/31/14 $26.51 $24.27 -8.45%
3/28/14 $26.32 $24.29 -7.71%
3/21/14 $26.25 $23.83 -9.22%
3/14/14 $26.08 $24.04 -7.82%
3/7/14 $26.13 $24.45 -6.43%
2/28/14 $26.05 $24.64 -5.41%
2/21/14 $26.19 $24.44 -6.68%
2/14/14 $26.50 $24.28 -8.38%
2/7/14 $26.32 $24.16 -8.21%
1/31/14 $26.10 $23.93 -8.31%
1/24/14 $25.64 $24.02 -6.32%
1/17/14 $25.51 $24.26 -4.90%
1/10/14 $25.28 $23.47 -7.16%
1/3/14 $25.22 $23.66 -6.19%
Expand Performance Archive

1 NAV is the net asset value of the Fund on the date as referenced above and equals the value of all the Fund's assets (less liabilities) divided by the number of shares outstanding.

2 Share Price is the price that the Fund closed at on the New York Stock Exchange on the date as referenced above.

3 Premium/Discount is the percentage difference between the net asset value of the Fund and the share price. The premium/discount is based on last computed net asset value as referenced above. Shares of closed-end Funds frequently trade at a discount to their net asset value in the secondary market and the net asset value of the closed-end Fund shares may decrease.


Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.

Ex-Date
Record Date
Payable Date
$0.353 05/19/2014 05/21/2014 05/30/2014
$0.35 02/12/2014 02/17/2014 02/28/2014
$0.347 11/15/2013 11/19/2013 11/29/2013
$0.345 08/15/2013 08/19/2013 08/29/2013
$0.34 05/17/2013 05/21/2013 05/29/2013
$0.335 02/15/2013 02/19/2013 02/28/2013
$0.33 11/15/2012 11/19/2012 12/03/2012
$0.325 08/15/2012 08/17/2012 08/22/2012

The Fund distributions are comprised of distributable cash flow generated from its portfolio investments plus any realized capital gains.   The estimated tax character of the distributions is summarized below. 




  • Q2 2014 distribution: 45% ordinary income | 55% capital gain | 0% return of capital
  • Q1 2014 distribution: 42% ordinary income | 58% capital gain | 0% return of capital
  • 2013 distribution: 37% return of capital | 63% ordinary income
  • 2012 distributions: 100% return of capital

Investors in the Fund receive an annual 1099-DIV tax form, which provides the character of the distributions paid each year. These statements are provided annually in early February to the investors through their respective brokerage firms. Effective January 1, 2011, issuers of corporate securities are required to complete Internal Revenue Service Form 8937 to report organizational actions, including nontaxable distributions, that affect the basis of the securities involved in the organizational action. The information contained below is intended to satisfy the requirements of public reporting under section 1.6045B-1(a)(3) and (b)(4) of the Treasury Regulations. Note that the signed version of the completed forms have been submitted to the Internal Revenue Service.

Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.

Gregory A. Reid
Gregory A. ReidManaging Director
Ted Gardner
Ted Gardner, CFA
Portfolio Manager
John A Blaisdell
John A. Blaisdell
Chief Executive Officer & Managing Director
Lee Partridge, CFA
Lee Partridge, CFA
Chief Investment Officer & Managing Director
John E. Price
John E. Price
Chief Financial Officer & Managing Director
Paul Bachtold
Paul Bachtold
Chief Compliance Officer

Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.

A summary of certain risks associated with an investment in the Fund is set forth below. The summary is not complete and an investor should carefully review the more detailed risks applicable to the Fund set forth in the Fund's preliminary prospectus.

Closed-end funds frequently trade at a discount from their net asset value. The risk of loss due to this discount may be greater for initial investors expecting to sell their shares in a relatively short period after completion of the offering. An investment in the Fund is not appropriate for all investors and is not designed to be a complete investment program. The Fund is designed to be a long-term investment and not as a trading vehicle.

As the resources of the underlying MLPs deplete, production and cash flows steadily decline, which may decrease distribution rates to the fund.

As applicable, MLP Funds with international holdings are subject to currency fluctuation risk, differences in accounting principles, and country specific risks.

Given the energy sector focus of many MLPs, a sustained decline in the demand for energy products could adversely affect MLP revenues and cash flows.

The Fund is a newly-organized, non-diversified, closed-end management investment company and has no operating or public trading history. Being a newly-organized company, the Fund is subject to all of the business risks and uncertainties associated with any new business, including the risk that the Fund will not achieve its investment objective and that the value of an investment could decline substantially.

An investment in the Fund’s common shares is subject to investment risk, including the possible loss of the entire amount that you invest. An investment in the Fund’s common shares is not intended to constitute a complete investment program and should not be viewed as such. The value of the securities in which the Fund invests, like other market investments, may move up or down, sometimes rapidly and unpredictably. Your investment in the Fund’s common shares at any point in time may be worth less than your original investment, even after taking into account the reinvestment of distributions.

An investment in MLP units involves risks that differ from a similar investment in equity securities, such as common stock, of a corporation. Holders of MLP units have the rights typically afforded to limited partners in a limited partnership. 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. There are certain tax risks associated with an investment in MLP units. Additionally, conflicts of interest may exist among common unit holders, subordinated unit holders and the general partner or managing member of an MLP.

Certain risks inherent in investing in Midstream Companies and MLPs include changes in the supply and demand for natural resources, depletion of reserves, changes in governmental regulations, changes in commodity prices, inability to consummate acquisitions or realize the benefits therefrom, dependency on affiliates, the occurrence of significant natural or man-made catastrophes, terrorist activities, government instability and the occurrence of extreme weather conditions.

The Fund may purchase and sell derivative investments such as exchange-listed and over-the-counter put and call options on securities, equity, fixed income, interest rate and currency indices, and other financial instruments, and enter into various interest rate transactions such as swaps or credit default swaps. The Fund also may purchase derivative investments that combine features of these instruments. The use of derivatives has risks, including high price volatility, government intervention, non-performance by the counterparty and the imperfect correlation between the value of such instruments and the underlying assets, the possible default of the other party to the transaction or illiquidity of the derivative investments. Furthermore, the ability to successfully use these techniques depends on Salient Capital Advisors, LLC’s ability to predict pertinent market movements, which cannot be assured. The use of derivatives 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 the Fund might otherwise sell. In addition, amounts paid by the Fund as premiums and cash or other assets held in margin accounts with respect to derivative transactions are not otherwise available to the Fund for investment purposes.

The Fund currently expects to write covered call options on portfolio positions, in an amount up to 30% of the value of total assets in its portfolio, with the purpose of generating realized gains. The Fund also intends to write uncovered call options, in an amount up to 10% of the value of total assets in its portfolio, and purchase put options as part of its hedging strategy. As the writer of a covered call option, during the option’s life the Fund gives up the opportunity 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 seller of an uncovered call option assumes the risk of a theoretically unlimited loss as a result of an increase in the market price of the underlying security above the exercise price of the option. The buyer of a put or call option assumes the risk of losing its entire premium invested in the option.

A short sale 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 the securities that were sold short to cover the short position. There can be no assurance that the securities necessary to cover a short position will be available for purchase. The Fund intends to limit its use of short sales to 30% of the value of total assets in the portfolio.

Under normal market conditions, the Fund intends to leverage instruments in an amount that represents approximately 25% of its total assets (which represents approximately 33% of net assets), including proceeds from such leverage instruments. However, as market conditions develop, the Fund may use leverage instruments in amounts that represent greater than 25% leverage to the extent permitted by the Investment Company Act of 1940, as amended (the “1940 Act”). Any subsidiary C corporations used by the Fund will comply with the 1940 Act restrictions on borrowing and will be included in the Fund’s leverage calculations. Leverage instruments will have seniority over the common shares and may be secured by the assets of the Fund. The Fund currently anticipates leveraging its assets through borrowings from banks and other financial institutions. The Fund currently anticipates that it will enter into at least one credit facility in an amount up to 33 1/3% of total assets. Although the use of leverage by the Fund may create an opportunity for increased return for common shareholders, it also results in additional risks and can magnify the effect of any losses. There is no assurance that the Fund’s use of leverage will be successful.

Although the Fund currently intends to invest the proceeds from the sale of the common shares within three months after the closing of this offering, such investments may be delayed if suitable investments are unavailable at the time. The trading market and volumes for the Midstream Companies and MLPs in which the Fund intends to invest may at times be less liquid than the market for other securities.

A substantial portion of the cash flow received by the Fund is derived from its investment in equity securities of Midstream Companies and MLPs. The amount of cash that any such company has available to pay its equity holders in the form of distributions/dividends depends on the amount of cash flow generated from such company’s operations.

The yields for equity securities of MLPs and certain Midstream MLPs and Midstream Companies are susceptible to fluctuations in interest rates, and the prices of such equity securities may decline when interest rates rise. Rising interest rates could adversely impact the financial performance of energy companies by increasing their cost of capital. Interest rates are at or near historic lows, and as a result they are likely to rise over time.

Global financial markets and economic conditions have been, and continue to be, volatile due to a variety of factors. As a result, the cost of raising capital in the debt and equity capital markets has increased while the ability to raise capital from those markets has diminished. If funding is not available when needed, or is available only on unfavorable terms, Midstream Companies and MLPs may not be able to meet their obligations as they come due. Moreover, without adequate funding, Midstream Companies and MLPs may be unable to execute their growth strategies, complete future acquisitions, take advantage of other business opportunities or respond to competitive pressures, any of which could have a material adverse effect on their revenues and results of operations.

Equity securities are sensitive to general movements in the stock market and a drop in the stock market may depress the price of securities to which the Fund has exposure.

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

Securities purchased in 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.

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, Salient Capital Advisors, LLC 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.

Securities with limited trading volumes may display volatile or erratic price movements. Therefore, it may be more difficult for the Fund to buy and sell significant amounts of such securities without an unfavorable impact on prevailing market prices.

Interest rate transactions that the Fund may use for hedging purposes will expose the Fund to certain risks that differ from the risks associated with its portfolio holdings. The Fund’s success in using hedging instruments is subject to Salient Capital Advisors, LLC’s ability to predict correctly changes in the relationships of such hedging instruments to its interest rate risk, and there can be no assurance that Salient Capital Advisors, LLC’s judgment in this respect will be accurate.

The focus of the Fund’s portfolio on companies within the Midstream Sector may present more risks than if its portfolio were broadly diversified over numerous sectors of the economy.

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 common shares and distributions can decline.

The Fund anticipates that its annual portfolio turnover rate will range between 30% and 50%, excluding the turnover from its hedging program, but the 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.

The Fund’s portfolio is subject to management risk because it is actively managed. Salient Capital Advisors, LLC applies investment techniques and risk analyses in making investment decisions for us, but there can be no guarantee that they will produce the desired results. The Fund depends upon Salient Capital Advisors, LLC’s key personnel for its future success and upon their access to certain individuals and investments in the Midstream Sector. The departure of any of Salient Capital Advisors, LLC’s portfolio managers or the senior management of Salient Capital Advisors, LLC could have a material adverse effect on Salient Capital Advisors, LLC’s ability to achieve the Fund’s investment objective. In addition, the Fund can offer no assurance that Salient Capital Advisors, LLC will remain its investment adviser or that the Fund will continue to have access to Salient Capital Advisors, LLC’s industry contacts and deal flow.

Conflicts of interest may arise because Salient Capital Advisors, LLC and its affiliates generally carry on substantial investment activities for other clients in which the Fund will have no interest. Salient Capital Advisors, LLC 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.

From time to time, the Fund may “control” or may be an “affiliate” of one or more of its portfolio companies which, depending on Securities and Exchange Commission interpretations, may result in restrictions being imposed on the size of positions that may be taken for the Fund or on the type of investments that the Fund could make.

There are a limited number of other companies, including other publicly traded investment companies and private funds, which may serve as alternatives to the Fund for investment in a portfolio of companies in the Midstream Sector.

Market prices may not be readily available for any restricted or unregistered investments in public companies or investments in private companies made by the Fund. 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’ carrying value or may have to delay their sale in order to do so.

The Fund may invest in unregistered or otherwise restricted securities. 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.

Overall risk can be reduced by investing in securities from a diversified pool of issuers, while overall risk is increased by investing in securities of a small number of issuers. Credit, market and other risks associated with its investment strategies or techniques may be more pronounced for the Fund than for a fund that is more “diversified.”

Provisions of the Declaration of Trust and Bylaws could have the effect of discouraging, delaying, deferring or preventing a transaction or a change in control that might otherwise be in the best interests of the Fund’s common shareholders. As a result, these provisions may deprive the Fund’s common shareholders of opportunities to sell common shares at a premium over the then current market price of common shares.

Shares of closed-end management investment companies frequently trade at prices lower than their net asset value, which is commonly referred to as “trading at a discount.” The risk of loss due to this discount may be greater for initial investors expecting to sell their shares in a relatively short period after completion of the offering. An investment in the Fund is not appropriate for all investors and is not designed to be a complete investment program. The Fund is designed to be a long-term investment and not as a trading vehicle.

Legal and regulatory changes may materially adversely affect the Fund. The regulation of the U.S. and non-U.S. securities and futures markets and investment funds such as the Fund has undergone substantial change in recent years and such change may continue.

The Fund’s ability to meet its investment objective will depend, in part, on the level of taxable income and distributions the Fund receives from the equity securities in which the Fund invests, a factor over which the Fund has no control. If an MLP were treated as a corporation for U.S. federal income tax purposes, such MLP would be obligated to pay U.S. federal income tax on its income at the corporate tax rate. The amount of cash available for distribution by the MLP would be reduced and distributions received by the Fund would be taxed under U.S. federal income tax laws applicable to corporate dividends (as dividend income, return of capital, or capital gain).

Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.

 

 

Investment Advisory Services for the Salient Midstream & MLP Fund are offered through Salient Capital Advisors, LLC, a subsidiary of Salient Partners, L.P. The information contained herein does not constitute an offering of any security, product, service or fund.