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What is an MLP?

Master Limited Partnerships, or MLPs, are publicly traded equity securities of energy infrastructure companies with operations in the development, production, processing, refining, fractionation, transportation, storage and marketing of natural resources including crude oil, natural gas and natural gas liquids.

Units in a master limited partnership are similar to shares of a corporation and trade on national security exchanges.  They are structured as partnerships, and therefore, are not subject to corporate-level taxes.  MLPs pass through their income and expenses to partners, which allows them to avoid double taxation.  The majority of their cash flow is distributed to investors on a quarterly basis with much of that distribution effectively tax-deferred, making MLPs a tax-efficient investing tool.   In addition, as partnerships build new infrastructure or acquire new assets, these investments are accretive to cash flow and contribute to growing quarterly distributions to investors.  

The MLP sector has experienced rapid growth since the inception of our strategy.  In 2003, energy-related MLPs had a market capitalization of approximately $30 billion, while today the market capitalization has grown to nearly $400 billion.