MLP Mutual Funds – Master Limited Partnerships | SteelPath

The MLP sector provided positive returns for the first quarter of 2012. We believe the
MLP sector’s fundamental outlook remains strong and expect MLP distribution
growth in 2012. We continue to expect robust acquisition activity within the sector
and are optimistic that demand for new energy infrastructure assets will continue to
increase, thus creating growth opportunities within the MLP space.

Read more about the Alpha Fund.

The MLP sector provided positive returns for the first quarter of 2012. We believe the
MLP sector’s fundamental outlook remains strong and expect MLP distribution
growth in 2012. We continue to expect robust acquisition activity within the sector
and are optimistic that demand for new energy infrastructure assets will continue to
increase, thus creating growth opportunities within the MLP space.

Read more about the Income Fund.

The MLP sector provided positive returns for the first quarter of 2012. We believe the
MLP sector’s fundamental outlook remains strong and expect MLP distribution
growth in 2012. We continue to expect robust acquisition activity within the sector
and are optimistic that demand for new energy infrastructure assets will continue to
increase, thus creating growth opportunities within the MLP space.

Read more about the Select 40 Fund.

• The Select 40 Fund posted strong performance relative to its benchmarks, the Lipper Equity Income Funds Index and the S&P 500 Index. The diversified nature of the portfolio allowed the fund to perform well based on strong sector selection including crude & refined products, transportation, as well as gathering & processing. Further, due to the Fund’s lower average position weightings, its exposure to certain MLPs that underperformed during the year had a less pronounced impact on total portfolio performance.

• Gathering & Processing outperformed based on strong Natural Gas Liquid prices and continued demand for gathering and processing infrastructure in growing liquids-rich plays.  Changes in production geography have increased demand for new infrastructure to satisfy producer demand.

• We believe MLPs will continue to gain investor attention as the sector offers an attractive distribution yield versus competing assets classes. MLPs also provide the opportunity to capture price appreciation fueled by distribution growth that is less correlated to the broader economy.

• The Income Fund underperformed its benchmarks, the Lipper Equity Income Funds Index and the S&P 500 Index. Large-cap names outperformed materially for the period followed by small-cap and mid-cap names that were able to tout attractive near-term distribution growth expectations. The Income Fund’s focus on slower growth names that generate higher levels of income resulted in less exposure to these large-cap names. Further, due to the Fund’s higher average position weighting relative to the AMZ Index, the Fund held greater exposure to certain MLPs that underperformed during the year.

• Individual name performance over the year varied dramatically with large-cap names outperforming materially followed by small-cap or mid-cap names that were able to tout attractive near-term distribution growth expectations. Left behind were those that reported any “bad news” or offered lower near-term distribution growth expectations. During the year, “bad news” was primarily derived from weakening natural gas storage fundamentals

• The Alpha Fund posted strong performance relative to its benchmarks, the Lipper Equity Income Funds Index and the S&P 500 Index. Performance primarily resulted from the portfolio’s focus on MLPs with relatively greater distribution growth prospects and the generally stronger performance of those types of entities throughout the year.

• Petroleum Transportation (which includes crude and refined products) outperformed for the year on strong demand for additional crude infrastructure in emerging shale plays. Partnerships with well positioned assets were able to build out gathering lines to meet producer needs or take advantage of burgeoning geographic spreads.
• The best performing stocks during the year were large-cap names that offered near term, substantial distribution growth potential.

• For the third quarter of 2011, the master limited partnership (“MLP”) asset class, as measured by the Alerian MLP Index (NYSE: AMZ)1, produced a loss of 7.0% on a total return basis and a loss of 8.4% on a price return basis. For comparison, the broader markets, as measured by the S&P 500 Index, produced a loss of 13.9% on a total return basis and a loss of 14.3% on a price return basis. Notably, MLPs outperformed many other equity asset classes.
• The third quarter of 2011 was a tumultuous period for MLPs and the broader market with volatility driven by the U.S. debt ceiling crisis in July, the U.S. credit rating downgrade in August, and seemingly constant worries about sovereign debt issues in the Eurozone that intensified in September.

• For the second quarter of 2011, the master limited partnership (“MLP”) sector, as measured by the Alerian MLP Index (NYSE: AMZ)1, produced a total return loss of 0.7% and a simple return loss of 2.2%. For comparison, the broader markets, as measured by the S&P 500 index, provided a total return gain of 0.1% and a simple return loss of 0.4%.

• Year to date (“YTD”), MLPs provided a total return gain of 5.2% versus the 6.0% total return provided by the broader markets, which represents 0.8% of underperformance. In fact, if considering only price performance, or simple return, MLPs have only gained 2.2% for the year and trail the broader market by 2.8%.

• Further, after dramatically outperforming the broader market for 2009 and the first half of 2010, MLPs underperformed the broader market on a last-twelve-months (“LTM”) basis by 7.6% on a simple return basis.  Of course, the sector’s healthy distribution levels narrow this underperformance considerably as LTM total return underperformance is only 2.8%

• During the first quarter of 2011, the Alerian MLP Index (NYSE: AMZ)1 produced a total return of 6.0% and a simple price return of 4.5%. This performance was in line with the performance of the broader market; the S&P 500 produced a total return of 5.9% during the first quarter of 2011.
• The first quarter of 2011 represents the ninth consecutive quarter of positive performance for the AMZ. In January, February and March, the AMZ produced returns of 3.0%, 3.5% and -0.6%, respectively.
• Despite a record year for MLP equity issuance in 2010, in the first quarter of 2011 MLPs issued $8.9 billion; compared with $3.6 billion raised in the first quarter of 2010.