Frequently Asked Questions

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1 Frequently Asked Questions 30 April 2013 Alerian 1717 McKinney Avenue Suite 1450 Dallas, TX

2 table contents of Master Limited Partnership (MLP) Basics What are Master Limited Partnerships (MLPs)? How many energy MLPs are there? How are MLPs structured? How is an MLP different than a C corporation? What are incentive distribution rights (IDRs)? What are the tax advantages of owning MLPs? How can the cash distributions from MLPs be tax-deferred? Are MLP distributions guaranteed? Is there a minimum amount of distributions that must be paid? Merits of Master Limited Partnerships Why own energy MLPs? How do energy MLPs compare to other asset classes? What is the growth trajectory of the MLP asset class? How have MLPs performed historically? What have MLPs yielded on a historical basis? What has been the historical distribution growth? How correlated are MLPs to the broader market? Can you explain the sharp pullbacks in MLP prices during and during August 2011? Investing in Master Limited Partnerships Can MLPs be held in an IRA? Can MLPs be held by foreign investors? Are institutions such as pensions invested in the space? Does an MLP unitholder have to pay state taxes in every state where the MLP operates? Is there a way to gain exposure to MLPs but avoid filing K-1s and state taxes? Can MLPs be used as an estate tax planning tool? Where can I find more information on MLPs? Pooled Investments in Master Limited Partnerships How can I invest in Alerian indices like the AMEI, AMZI, and ANGI? What is the difference between an MLP exchange traded fund (ETF) and exchange traded note (ETN)? What active management MLP products are available? Master Limited Partnership Risks Legislative: What is the likelihood that Congress would abolish the preferential tax treatment afforded to MLPs? Commodity Price: How correlated are MLPs to movements in crude or natural gas prices? Interest Rates: How have MLPs performed during periods of inflationary environments? Regulatory: What sort of governing bodies regulate MLPs? Industry: Is hydraulic fracking safe? How will that impact MLPs? Environmental Risks: How safe are natural gas and crude oil pipelines? What has been the historical safety record of MLPs? Alerian and the Alerian Index Series How do I buy the Alerian fund? How did the Alerian MLP Index (AMZ) become the benchmark for the MLP asset class? In general, what is the difference between Alerian s Index Series and other MLP indices? When was Alerian formed? Where did the name Alerian come from? How can I get in contact with Alerian? Evaluating Master Limited Partnerships How are MLPs generally valued? What is Distributable Cash Flow (DCF) and how is it calculated? Why are earnings per unit (EPU) or P/E negative for many MLPs? What is the difference between maintenance and growth capital expenditures?

3 MASTER LIMITED PARTNERSHIP (MLP) BASICS What are Master Limited Partnerships? Master Limited Partnerships, or MLPs, are engaged in the transportation, storage, processing, refining, marketing, exploration, production, and mining of minerals or natural resources. By confining 90% of their income to these specific qualifying activities, their units are able to trade on public securities exchanges exactly like the shares of a corporation, without entity level taxation. Most MLPs trade on the New York Stock Exchange (NYSE), NASDAQ, or other public exchanges. How many energy MLPs are there? As of April 30, 2013, there are 102 publicly traded energy MLPs with a combined market capitalization of approximately $400 billion. How are MLPs structured? MLPs have two classes of ownership, which are general partners (GPs) and limited partners (LPs). GPs manage the partnership s operations, receive incentive distribution rights (IDRs), and generally maintain a 2% economic stake in the partnership. LPs are not involved in the operations of the partnership and have limited liability, much like the shareholders of a publicly traded corporation. How is an MLP different than a C corporation? Unlike regular corporations, MLPs do not pay corporate-level tax. And whereas investors that own shares in a corporation are considered shareholders, MLP investors are considered unitholders that own interests (or units) in the MLP. Since the MLP itself does not pay corporate-level tax, income and deductions are passed through to the holders of their partnership interests. Instead of receiving a Form 1099 detailing dividends and distributions, an MLP investor is responsible for filing a partnership tax information return known as a Schedule K-1. What are incentive distribution rights (IDRs)? IDRs incentivize GPs to grow LP distributions by entitling GPs to receive a higher percentage of incremental cash distributions when the distribution to LP unitholders reaches certain thresholds. What are the tax advantages of owning MLPs? A unitholder s basis is adjusted upward by the amount of partnership income allocated and adjusted downward by the amount of cash distributions received. For most MLPs, cash distributions received exceeds allocated income. The difference between distributed cash and allocated income will be treated as return of capital to the unitholder and reduces the unitholder s basis in the units. Typically, % of MLP distributions are tax-deferred, with the remaining portion taxed at ordinary income rates in the current year. As long as the investor s adjusted basis remains above zero, taxes on the return of capital portion of the distribution are deferred until sale of units. If an investor s basis reaches zero, then future cash distributions will be taxed as capital gains in the current year. Upon sale of the MLP, the gain resulting from basis reductions is recaptured and taxed at ordinary income rates and any remaining gain is taxed at capital gain rates for investments held greater than one year. From an estate planning perspective, if units are passed along to heirs, upon death of the unitholder, the basis is stepped up to the fair market value of units on the date of death and prior distributions are not taxed. Are MLP distributions guaranteed? Is there a minimum amount of distributions that must be paid? MLP cash distributions are not guaranteed and depend on each partnership s ability to generate adequate cash flow. Unlike Real Estate Investment Trusts (REITs) that must distribute a certain percentage of their cash flow each quarter, the partnership agreements of individual MLPs determine how cash distributions will be made to general partners and limited partners. Generally speaking, partnership agreements mandate that the MLP distribute 100% of its distributable cash flow (DCF), less a discretionary reserve determined by the GP, to unitholders within 45 days after the end of a quarter. Page 1

4 MERITS OF MASTER LIMITED PARTNERSHIPS Why own energy MLPs? Thematically, MLPs represent an investment in the build-out of U.S. energy infrastructure over the next few decades. Energy infrastructure MLPs operate toll-road business models that benefit from inflation hedges built into their contracts, regional monopoly footprints, and inelastic long-term energy demand growth. Such business models allow MLPs to generate predictable cash flows and pay consistent and growing quarterly cash distributions. In addition, MLP returns have historically exhibited low correlation with the broader equities market. How do energy MLPs compare to other asset classes? The two most comparable asset classes to MLPs are Utilities and Real Estate Investment Trusts (REITs). Both Utilities and MLPs benefit from inelastic long-term energy demand growth. However, Utilities are subject to a more local and highly scrutinized regulatory body focused on returning cost savings to their constituents. The interstate pipelines owned by MLPs, on the other hand, are predominantly regulated at the federal level by the Federal Regulatory Energy Commission (FERC), where infrastructure assets are viewed as critical to energy security. The commercial buildings held inside REITs are viewed as hard assets with inherent tangible value. Similarly, the steel pipelines and storage tanks that transport and store the nation s energy, including that which heats and cools those buildings, are hard assets with associated permanent value. REIT rental income, however, tends to fluctuate with economic conditions and market demand, while MLPs benefit from inelastic energy demand and inflation-adjusted tariffs. What is the growth trajectory of the MLP asset class? Growth in the asset class will stem from additional organic projects, asset acquisitions from integrated majors, as well as the monetization of assets held in private hands. According to the Interstate Natural Gas Association of America, over the next two decades, roughly $200 billion will need to be spent on U.S. natural gas infrastructure development to meet growing and shifting energy demands. On the acquisition front, industry analysts estimate that at least $200 billion of midstream assets are housed at public and private corporate structures, all of which could eventually be acquired by MLPs. How have MLPs performed historically? MLPs, as measured by the Alerian MLP index (NYSE: AMZ), a composite of the 50 most prominent energy MLPs calculated using a float-adjusted, capitalization-weighted methodology, have returned 16.3% annualized on a total return basis from index inception (June 1, 2006) through April 30, One may not directly invest in an index. What have MLPs yielded on a historical basis? Since June 1, 2006 until April 30, 2013, the average yield on the AMZ was 7.1%. In 2012, the average yield on the AMZ was 6.3%. What has been the historical distribution growth? Weighted average distribution growth from June 1, 2006 until April 30, 2013 was 7%. annualized. How correlated* are MLPs to the broader market? From June 1, 2006 until April 30, 2013, MLPs exhibited a relatively weak 0.5 correlation to the S&P 500 Index, which is an index of 500 stocks chosen for market size, liquidity and industry grouping, among other factors. This compares to a correlation of 0.8 for REITs and 0.6 for the Utilities sector. One may not invest directly in an index. Can you explain the sharp pullbacks in MLP prices during and during August 2011? While MLPs have historically had a weak correlation to the broader markets, they are still equity securities and are not entirely immune to market forces. During , access to capital essentially froze as the financial crisis was unfolding. Since MLPs pay out a majority of their cash flow as distributions and primarily depend on the capital markets for the funding of new projects, MLP equities suffered. Even so, the majority of MLPs were able to maintain their distributions, some even growing. During August 2011, the pullback was primarily attributable to broader equity selling pressure from the United States government credit downgrade, and for a brief period, investor fears regarding the continuation of current MLP tax policy/status. *Correlation - a statistical measure of how two securities move in relation to each other Page 2

5 INVESTING IN MASTER LIMITED PARTNERSHIPS Can MLPs be held in an IRA? MLPs can be held directly in an IRA. However, partnership income not cash distributions may be considered unrelated business taxable income (UBTI) subject to unrelated business income tax (UBIT) if UBTI exceeds $1,000 in a year. The custodian of the IRA is responsible for filing IRS Form 990T and paying the taxes. More information can be found in IRS Publication 598, Tax on Unrelated Business Income of Exempt Organizations, or in the Internal Revenue Code, Section 512: Unrelated Business Taxable Income. Can MLPs be held by foreign investors? Foreign investors are required to file federal tax returns to report their share of an MLP s income, gains, losses, and deductions. Federal income taxes are paid at regular rates on their share of the MLP s net income. Additionally, taxes must be withheld at the highest applicable effective tax rate on MLP quarterly distributions. An investor can get credit back on excess withholdings by filing a U.S. federal tax return. Are institutions such as pensions invested in the space? Pensions and endowments have started to develop an interest in the asset class. Examples include the Missouri Teachers Association and the UT Investment Company (University of Texas at Austin). Pensions and endowments typically make an investment in MLPs as part of their asset allocation strategy (as opposed to a trading strategy) and tend to be longer-term investors. Is there a way to gain exposure to MLPs but avoid filing K-1s and state taxes? There are several publicly traded pooled investment products that handle the K-1s and state tax filings for the investor, and in return, distribute a Form 1099 to investors. Passively managed MLP products that track indices include exchange-traded funds and exchangetraded notes. A list of products that track the Alerian Index Series can be found at Actively managed MLP products include open-end funds and closed-end funds. Can MLPs be used as an estate tax planning tool? Yes. Upon death, the cost basis of a unitholder s MLP investment is reset (stepped up) to the price of the units on the date of transfer, thereby eliminating a taxable liability associated with the reduction in the original unitholder s cost basis. As always, investors should consult a tax or estate planning tax professional for advice. Where can I find more information on MLPs? The National Association of Publically Traded Partnerships (www. naptp.org) is the trade organization for MLPs. Their website includes several primers from sell-side research analysts and buyside institutions. Similar to Alerian, the NAPTP does not provide investment research on specific MLPs. Does an MLP unitholder have to pay state taxes in every state where the MLP operates? Yes. An MLP unitholder is responsible for paying state income taxes on the portion of income allocated to the unitholder for each individual state. In most cases, however, unless the unitholder owns a large position, the share of allocable income is small and the unitholder may not have to file in certain states due to minimum income limits. Additionally, some states in which MLPs operate do not have state income taxes, such as Texas and Wyoming. Page 3

6 EVALUATING MASTER LIMITED PARTNERSHIPS How are MLPs generally valued? The most common valuation metrics for MLPs are Price-to- Distributable Cash Flow (P/DCF), Enterprise Value-to-EBITDA (EV/ EBITDA), Yield Spread to the 10-year Treasury, and the Dividend Discount Model. Generally, Price-to-Earnings (P/E) is not used, as it tends not to be the best representation of cash flow. Price-to-Distributable Cash Flow - A valuation ratio of a company s current share price compared to its distributable cash flow per unit. Enterprise Value-to-EBITDA - A valuation ratio of a company s enterprise value compared to earnings before interest, taxes, depreciation and amortization. Yield Spread - The difference between yields on differing yieldoriented instruments, calculated by deducting the yield of one instrument from another. Why are earnings per unit (EPU) or P/E negative for some MLPs? Due to accounting standards, there can be wide differences between an MLP s earnings per unit (EPU) and distribution per unit (DPU). In most cases, EPU tends to be less than DPU, due to non-cash items. Typical non-cash items include depreciation and amortization expenses, non-cash mark-to-market adjustments for derivative positions, equity income versus cash distributions from unconsolidated affiliates, and non-cash amortization of interest financing charges. What is the difference between maintenance and growth capital expenditures? In general, maintenance capital expenditures are expenditures spent to maintain long-term operating capacity or revenue levels, such as integrity spending, replacing compressors or valves, and general repairs. Growth capital expenditures are expenditures that increase capacity or generate new income opportunities. Dividend Discount Model - A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. Price-to-Earnings - A valuation ratio of a company s current share price compared to its per-share earnings. What is Distributable Cash Flow (DCF) and how is it calculated? Similar to how REITs define their cash flow from operations as Funds From Operations (FFO), MLPs use Distributable Cash Flow (DCF) as the primary measure of cash available to distribute to unitholders or to fund growth. Distributable cash flow is considered a non-gaap financial measure, or not a Generally Accepted Accounting Principle (GAAP) measure of liquidity or financial performance with set standards. Investors should understand that the definition and calculation of DCF may vary among partnerships, as ultimately, each MLP determines its definition of DCF in its partnership agreement. The calculation of DCF is typically net income, (+) depreciation, depletion, and amortization, (-) cash interest expense, (-) maintenance capital expenditures, (+/-) other non-cash items. Page 4

7 POOLED INVESTMENTS IN MLPS How can I invest in Alerian indices like the AMEI, AMZI, and ANGI? An investor cannot invest directly in an index. Several companies have investable products, such as exchange-traded funds or exchangetraded notes, which are designed to track Alerian indices. An investor should consider the vehicle that most appropriately fits his or her needs and risk tolerance. For more information about such products, please visit Alerian Energy Infrastructure Index (AMEI) - a composite of 30 core North American energy infrastructure companies that engage in the transportation, storage, and processing of energy commodities. Alerian MLP Infrastructure Index (AMZI) - comprised of 25 energy infrastructure MLPs that earn the majority of their cash flow from the transportation, storage, and processing of energy commodities. Alerian Natural Gas MLP Index (ANGI) - an equal-weighted composite of 20 natural gas infrastructure MLPs that earn the majority of their cash flow from the transportation, storage, and processing of natural gas and natural gas liquids. What is the difference between an MLP exchange-traded fund (ETF) and exchange-traded note (ETN)? ETNs and ETFs are passively managed options designed to track the performance of an underlying index. An ETF is a security that tracks an index, a commodity, or a basket of assets like an index fund, but trades like a stock on an exchange. An ETN is a senior, unescured, unsubordinated debt security issued by an underwriting bank. Some, but not all, of the differences are listed below. IRA / 401k Eligibility. The ETF is IRA and 401(k) eligible and does not generate unrelated business taxable income (UBTI). The ETN can be invested in IRAs and 401(k)s; however, no should-tax opinion (or official stance) has been obtained from a tax counsel by any of the current ETN issuers, meaning IRA and 401(k) eligibility has neither been confirmed nor denied. Credit Risk. An ETN is a senior unsecured obligation of the issuing bank, thereby exposing the investor to credit risk. Although the maturity of the available MLP ETNs is currently over ten years, credit exposure is limited to a one-week rolling basis. The minimum repurchase amount is 50,000 notes, and repurchases are available on at least a weekly basis. The ETF does not carry the credit risk of the product issuer, but similar to any equity investment, the ETF does carry the credit risk of the underlying companies. C Corporation Tax Election. Unlike a typical equity or bond mutual fund, which is treated as a Regulated Investment Company (RIC) for tax purposes, an MLP ETF is taxed as a C corporation. Equity and bond mutual funds are allowed to make the RIC election because the securities in which they invest (stocks and bonds) are taxable entities. Because MLPs themselves have no entity-level tax, the IRS requires any open-end or closed-end fund that invests more than 25% of its assets in MLPs to be taxed as a C corporation. Corporate Taxes and Tracking Error. An MLP ETF must accrue deferred income taxes for any future tax liability associated with (1) the portion of MLP distributions from underlying securities considered to be a tax-deferred return of capital and (2) capital appreciation or depreciation of the underlying securities. The net asset value (NAV) of the fund will be reduced (or enhanced) by this deferred tax liability (or asset). An MLP ETN is not subject to corporate taxes. Taxation of Quarterly Distributions. The quarterly distribution for an ETN is treated as a coupon and taxed at ordinary income rates. The quarterly distribution for an ETF will typically be similar to that of its underlying companies, or 70%-100% return of capital. The remaining taxable portion of the distribution will be taxed at qualified dividend rates. Treatment at Sale. As an aside, upon sale of securities, a direct investment in an MLP would require an investor to recapture the portion of distributions considered tax-deferred return of capital at ordinary income rates. In an MLP ETF, the entire deferred portion will be taxed at capital gain rates. Separately, ETNs are treated as prepaid forward or executory contracts for US federal income tax purposes. Gains or losses are recognized upon the sale, redemption, or maturity of the ETN and are treated as capital gains or losses. What active management MLP products are available? Actively managed products include MLP mutual funds and closedend funds. When making an investment decision between an MLP closed-end fund or mutual fund, it is important to consider the investment team, their track record, and total fees of the fund. Both are IRA and 401(k) eligible; however, the shares of a closed-end fund trade throughout the day, whereas mutual funds only trade at the end of the day. Some MLP mutual funds may choose to employ leverage, whereas others may not. The benefits of leverage include higher returns in an upward market; however, leverage also increases overall volatility to the net asset value of the fund. Page 5

8 RISKS APPLICABLE TO THE ALPS ALERIAN ENERGY INFRASTRUCTURE PORTFOLIO Legislative: What is the likelihood that Congress will abolish the preferential tax treatment afforded to MLPs? Most MLP industry analysts view a change in MLP tax status as unlikely, as MLPs are an integral part of domestic energy infrastructure. Moreover, MLPs have already experienced tax reform. In 1987, Congress created Section 7704 in the tax code to define and limit publicly traded partnerships to those with specific qualifying income sources, mitigating the probability that something similar to Halloween 2006 for Canadian Income Trusts will occur. On February 1, 2013, the staff of the Congressional Joint Committee on Taxation (JCT) released its annual list of tax expenditures. For energy and natural resource publicly traded partnerships, the total revenue loss over five years ( ) is estimated to be $7 billion, equating to $1.4 billion per year. This amount, if collected, would likely have a de minimis impact on the trillion-plus dollar U.S. deficit. Commodity Price: How correlated are MLP unit prices to movements in natural gas prices? Since MLPs typically do not take ownership of the commodity that is being transported, MLPs have historically had a low correlation to commodity prices. Over the past 15 years, the correlation between MLPs and both crude oil and natural gas has been statistically insignificant. However, external factors related to commodity price movements may indirectly affect MLPs, such as producers shutting in natural gas production due to oversupply. Another indirect fundamental risk may be from demand destruction given high commodity prices or the proliferation of alternative energy sources. Despite these risks, the demand for petroleum products and natural gas is largely inelastic in the near term. Interest Rates: How have MLPs performed during inflationary periods? On a day-to-day basis, there is generally no correlation between interest rates and MLP yields. Over the past three decades, MLPs have benefited from a trend of declining interest rates. However, there have been three notable periods in which drastic interest rate movements (1994, 1999, and 2004) have resulted in shortterm weakness in the asset class. The most notable surge in interest rates occurred in 1994 when the Federal Reserve began tightening monetary policy after three years of relatively low interest rates, raising the federal funds rate from 3.25% to 5.5% in the span of less than a year, thereby causing 10-Year Treasury rates to increase dramatically. During this period, MLP prices traded downwards and exhibited a strong inverse correlation with interest rates. Regulatory: What sort of governing bodies regulate MLPs? Similar to Utilities, though not to the same extent, MLPs are regulated by several organizations. Interstate pipelines are regulated by the Federal Energy Regulatory Commission (FERC). Pipeline safety is overseen by the Pipeline and Hazardous Materials Safety Administration (PHMSA). Intrastate pipelines are regulated at the state level by organizations such as the Texas Railroad Commission. Any material change in regulatory requirements or standards could impact MLPs and their assets. Industry: Is hydraulic fracking safe? How will that impact MLPs? Hydraulic fracturing takes place via cement-sealed pipelines well below the water table. Environmentalists express concerns about drinking water contamination while industry experts cite a 62- year history of commercial use of hydraulic fracturing in the United States without a major environmental incident. The Environmental Protection Agency, an objective third party, is completing a focused study on the issue, and expects to release a draft report of results in late The development of hydraulic fracturing in the US shale plays increases the volumes transported on MLP-owned pipelines. However, as MLPs do not participate in the actual fracturing process, their exposure to increased fracturing regulation remains limited. Environmental Risks: How safe are natural gas and crude oil pipelines? What has been the historical safety record of MLPs? Natural gas and crude oil pipelines have averaged significant incidents each year for the past 20 years, according to the Pipeline and Hazardous Materials Safety Administration. However, a 2009 study by the American Petroleum Institute shows that the number of spills per 1,000 miles has dropped by 60% in the previous 10 years and the number of barrels released per 1,000 miles has dropped 42% in the same time period. The falling number of incidents per pipeline mile is due to increased maintenance and technology that enables more accurate and frequent monitoring of pipelines. For instance, the use of smart pipeline integrity guides (PIGs) to monitor any degradation in pipeline materials has become more and more widespread. Page 6

9 ALERIAN AND THE ALERIAN INDEX SERIES How do I buy the Alerian fund? Alerian is an indexing company and does not own a fund. We are in the business of creating indices that are most relevant to a variety of stakeholders. In turn, we license our indices to various companies that create investable products, such as exchange-traded funds and exchange-traded notes. For more information about such products, please visit In general, what is the difference between the Alerian Index Series and other MLP indices? Transparency. Alerian aims to provide unbiased MLP benchmarks that are both investable and replicable for stakeholders. Alerian does not use a black box system to select constituents, instead preferring a rules-based methodology. Alerian believes that it is important for the methodology that stands behind each of its indices to be completely transparent and available so that stakeholders can replicate the process used to design, construct, and maintain each of the indices. Alerian uses only publicly available data (press releases, SEC filings, etc.) to create the indices and all of the methodology guides are available on our website. How did the Alerian MLP Index (AMZ) become the benchmark for the MLP asset class? The AMZ was launched on June 1, 2006 as the sector s first real- time benchmark. We have been very fortunate to enjoy the continued support of the sector s various stakeholders, including the MLPs themselves, research analysts, buy-side asset managers, and national media, among others. When was Alerian formed? Alerian was formed in Alerian s original offices were in the Big Apple (New York, NY) until we moved to the Big D (Dallas, Texas) in Where did the name Alerian come from? Alerian is the name of our founder s friend. We wish we had a more interesting story to tell than that. How can I get in contact with Alerian? Please index@alerian.com or feel free to call us at Consistent Methodology. Methodology is consistently and uniformly applied for special and quarterly rebalancings. Page 7

10 disclaimers Copyright. No Unauthorized Redistribution. Alerian All rights reserved. This document, in whole or in part, may not be redistributed, reproduced, and/or photocopied without prior written permission. This Document Is Impersonal and Not a Solicitation. In jurisdictions where Alerian or its affiliates do not have the necessary licenses, this document does not constitute an offering of any security, product, or service. Alerian receives compensation in connection with licensing its indices to third parties. All information provided by Alerian in this document is impersonal and not customized to the specific needs of any entity, person, or group of persons. Alerian and its affiliates do not endorse, manage, promote, sell, or sponsor any investment fund or other vehicle that is offered by third parties and that seeks to provide an investment return linked to or based on the returns of any Alerian index. No Advisory Relationship. Alerian is not an investment advisor, and Alerian and its affiliates make no representation regarding the advisability of investing in any investment fund or other vehicle. This document should not be construed to provide advice of any kind, including, but not limited to, tax and legal. You Must Make Your Own Investment Decision. It is not possible to invest directly in an index. Index performance does not reflect the deduction of any fees or expenses. Past performance is not a guarantee of future returns. You should not make a decision to invest in any investment fund or other vehicle based on the statements set forth in this document, and are advised to make an investment in any investment fund or other vehicle only after carefully evaluating the risks associated with investment in the investment fund or other vehicle, as detailed in the offering memorandum or similar document prepared by or on behalf of the issuer. This document does not contain, and does not purport to contain, the level of detail necessary to give sufficient basis to an investment decision. The addition, removal, or inclusion of a security in any Alerian index is not a recommendation to buy, sell, or hold that security, nor is it investment advice. No Warranties. The accuracy and/or completeness of any Alerian index, any data included therein, or any data from which it is based is not guaranteed by Alerian, and it shall have no liability for any errors, omissions, or interruptions therein. Alerian makes no warranties, express or implied, as to results to be obtained from use of information provided by Alerian and used in this service, and Alerian expressly disclaims all warranties of suitability with respect thereto. Limitation of Liability. While Alerian believes that the information provided in this document is reliable, Alerian shall not be liable for any claims or losses of any nature in connection with the use or misuse of the information in this document, including but not limited to, lost profits or punitive or consequential damages, even if Alerian has been advised of the possibility of same. Research May Not Be Current. This document has been prepared solely for informational purposes based on information generally available to the public from sources believed to be reliable. Alerian makes no representation as to the accuracy or completeness of this document, the content of which may change without notice. Alerian expressly disclaims any obligation to update the contents of this document to reflect developments in the energy MLP sector. The methodology involves rebalancings and maintenance of indices that are made periodically throughout the year and may not, therefore, reflect real-time information. Policies and Procedures. Analytic services and products provided by Alerian are the result of separate activities designed to preserve the independence and objectivity of each analytic process. Alerian has established policies and procedures to maintain the confidentiality of material nonpublic information received during each analytic process. Alerian and its affiliates provide a wide range of services to, or relating to, many organizations, and may receive fees or other economic benefits from these organizations. An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call or visit www. alpsfunds.com. Read the prospectus carefully before investing. The ALPS Alerian Energy Infrastructure Portfolio invests primarily in energy infrastructure companies which may be adversely affected by changes in worldwide energy prices, exploration, production spending, government regulation, changes in exchange rates and depletion of natural resources. If an MLP in the portfolio is deemed a corporation rather than a partnership for federal income tax purposes, then the income would be subject to federal taxation at the entity level, reducing the amount of cash available for distribution to the fund which could result in a reduction of the fund s value. The ALPS Alerian Energy Infrastructure Portfolio is new and has limited operating history. The ALPS Alerian Energy Infrastructure Portfolio is not suitable for all investors. Subject to investment risks, including possible loss of the principal amount invested. Not FDIC Insured No Bank Guarantee May Lose Value The ALPS Alerian Energy Infrastructure Portfolio Fund is a series of Financial Investors Trust. ALPS Portfolio Solutions Distributor, Inc. is the distributor for the ALPS Alerian Energy Infrastructure Portfolio. ALPS Portfolio Solutions Distributor,Inc. is not affiliated with Alerian. Page 8

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