Tortoise Talk. January Tortoise Talk January Tortoise Capital Advisors, L.L.C.

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1 Tortoise Talk January 2015 Tortoise Talk January Tortoise Capital Advisors, L.L.C.

2 Despite declining commodity prices, opportunities remain The broad energy sector enjoyed strong performance for much of 2014, benefiting from the robust volumes of oil and natural gas being produced out of North American shales. However, energy stocks retreated significantly in the fourth quarter as investors reacted to falling crude oil prices. One factor pressuring oil prices was increasing global supply, particularly out of Libya, where production had recently resumed after being halted for some time due to political turmoil, and also increased production from the U.S. Other factors included slowing global demand growth and a strengthening U.S. dollar. Prices began moving lower after peaking in late July, then fell sharply in late November after the Organization of the Petroleum Exporting Countries (OPEC), unwilling to cede market share to North American shale producers, announced it would not cut its current crude oil production of 30 million barrels per day (MMbbl/d). As can be the case in the short term, the market did not necessarily decipher quality, and stocks across the value chain were affected. Upstream oil and gas producers were significantly impacted, but midstream MLPs and other pipeline companies also pulled back during the fourth quarter, albeit to a lesser extent, as their cash flows typically are not directly affected by commodity price volatility and tend to have steadier, fee-based revenues. Broad equity market performance was solid during the year, with the S&P 500 Index reaching record highs. However, performance was mixed across sectors, with utilities leading the market for the period, closely followed by consumer staples and health care. Energy was the only sector to deliver negative results for the year. Interest rates remained low, although in December, the Federal Open Market Committee suggested it may take a slightly less accommodative path for future monetary policy than it had previously expected, though not necessarily in the immediate future. The U.S. economy expanded, with upbeat economic data showing gains in manufacturing and consumer spending and, perhaps most significant, an unemployment rate that edged down to 5.6 percent in December, down 1.1 percent since the beginning of the year. 1 The global economy, however, slowed perceptibly, with weakness particularly in Europe and Asia total returns (%) S&P Select Sector Energy Index Tortoise North American Oil & Gas Producers Index SM Tortoise MLP Index Tortoise Midstream MLP Index Tortoise North American Pipeline Index SM S&P 500 Index 1 Periods reflect 12/31/ /31/2014. Source: Bloomberg. It is not possible to invest directly in an index. Please see index definitions on disclaimer page. Past performance is no guarantee of future results.

3 Page 2 The latter half of 2014 proved to be challenging for the energy sector. Some upstream oil and gas producers struggled not only with declining oil prices but additionally with pipeline takeaway capacity constraints, despite the pace of infrastructure build-out. As reflected in the performance chart on the previous page, oil and gas producers finished the year well into negative territory, a stark reversal of their 21.1 percent total return for MLPs had relatively strong performance during the first three quarters, however they pulled back in the fourth quarter, with the Tortoise MLP Index posting an 8.1 percent return for the year. Within MLPs, performance varied, as midstream MLPs dramatically outperformed upstream MLPs, marking their third consecutive year of relative outperformance. This year s performance disparity was pronounced, with the Tortoise Midstream MLP Index returning 15.4 percent for the year and the Tortoise Upstream MLP Index returning percent for the same period. Likewise, pipeline companies, as represented by the Tortoise North American Pipeline Index, SM posted a 15.6 percent return for the year. This relative outperformance by the midstream sector was driven largely by the fundamental attributes of midstream companies; they have access to essential, long-lived and scarce assets that fuel our economy and tend to offer recurring, fee-based revenues. During the year, the average MLP yield as represented by the Tortoise MLP Index was 5.5 percent, ending the year at 5.8 percent. MLPs underperformed other yield-oriented asset classes in 2014, such as real estate investment trusts (REITs) and utilities, as reflected by the FTSE NAREIT Equity REIT Index and the Dow Jones Utility Average Index, which generated 28.0 percent and 30.6 percent total returns, respectively. This is a sharp change from 2013, when MLPs significantly outperformed both REITs and utilities. Value chain overview Upstream: Progress despite challenges Despite declining oil prices in the second half of the year, robust North American oil and gas production continued in Crude oil Crude oil prices clearly ran the gamut in 2014, with West Texas Intermediate (WTI) starting the year at $98.42 per barrel (bbl), peaking at $ per bbl on July 23, and then falling dramatically to close the year at $53.27 per bbl, the lowest level since Despite this uncertain backdrop, North American crude oil production remained robust, averaging an estimated 8.7 MMbbl/d in 2014 and expected to increase to an annual average of 9.3 MMbbl/d in We expect drilling activity will decline in both newer and more mature tight oil basins. Strong production should continue in the Bakken shale in North Dakota, the Eagle Ford shale in South Texas and the Permian basin in West Texas, where we expect producers to focus more on the core areas and less on fringe areas under development. We think oil prices likely will remain high enough to support drilling in these key basins, although efficiencies will take on greater importance. In the face of this growth, petroleum imports have declined; the share of total U.S. liquid fuels consumption met by net imports fell to an estimated 27 percent in 2014, a dramatic decrease from 60 percent in The Energy Information Administration (EIA) expects the share of consumption met by imports will drop to 20 percent in 2016, which would bethe lowest level since 1968.

4 Page 3 While falling oil prices have been challenging in the short term, particularly for upstream oil and gas producers, this is not the first time we have seen short-term volatility in the energy sector. Consistent with our investment philosophy, we believe that investments in quality companies, when combined with long-term fundamentals, will continue to create opportunity. The overarching reality is that although currently there is a global oil supply/demand imbalance, we believe that the laws of economics ultimately will prevail. Lower prices may discourage short-term production growth but may also spur demand. We anticipate this will drive prices in the other direction, and the cycle will continue. We think that over the long term, prices will return to a range that is economical for production to continue broadly. Natural gas Natural gas production also has remained robust, with volumes in 2014 reaching an estimated average of 70.1 billion cubic feet per day (Bcf/d) for the lower 48 states, 2 setting the highest monthly production average on record. Natural gas production is expected to grow by an estimated annual rate of 3.1 percent in 2015, 2 with the Marcellus being the predominant U.S. natural gas basin in this low-price environment. Build-out of Marcellus infrastructure should, in our view, support rising natural gas production volumes in 2015 and beyond. U.S. natural gas inventories were drawn down to 11-year lows during the harsh 2013/2014 winter. Aggressive injection activity over the summer and fall brought storage levels back up, and working inventories on Jan. 2 were 9 percent above the level at the same time one year ago and 2 percent lower than the previous five-year average ( ). 2 However, the EIA expects that natural gas demand over the winter will be met even if the U.S. experiences another colder-than-normal season, due to increased production and new pipeline projects. Natural gas price fluctuations were significant in 2014, driven largely by seasonal demand. Natural gas opened the year at $4.34 per million British thermal units (MMBtu) and peaked at $7.92 per MMBtu on March 4 as freezing temperatures gripped much of the nation. Natural gas prices began to decline as inventory levels recovered due to mild summer weather and a relatively mild 2014/2015 winter thus far across much of the nation, closing the year at $2.99 per MMBtu. Crude oil & natural gas prices $110 $8 WTI crude oil price $ per barrel $100 $90 $80 $70 $60 $7 $6 $5 $4 $3 Henry Hub natural gas price $ per MMBtu $50 $2 Dec 13 Feb 14 Apr 14 Jun 14 Aug 14 Oct 14 Dec 14 Source: Bloomberg. Note: MMBtu = million British thermal units

5 Page 4 Midstream: Greater pipeline takeaway capacity still a need Midstream pipeline companies own and operate essential, long-lived assets and generally have steady, recurring, fee-based cash flows. Pipelines carry a variety of products, so it s important to note that different types of pipelines will be more affected by lower crude oil prices than others. Natural gas pipeline companies should be the least affected as their performance isn t directly tied to crude oil prices and natural gas production is still on the rise, though we continue to monitor re-contracting rates. Crude oil pipelines earn fees based on the volumes they transport, so the price of oil does not directly affect these companies either. However, if the price of oil remains low, it is possible that volumes may be affected over time. In this scenario, companies transporting from areas with higher breakeven prices will be more affected than others. While lower crude oil prices may be a headwind for some energy companies, we expect it to benefit refined product pipeline companies, as we see the potential for increased consumer demand thanks to lower prices at the pump. Midstream asset characteristics Asset class fundamentals Essential assets Long-lived Recurring revenues Inelastic demand High barriers to entry Monopolistic Operating characteristics Scarce assets that fuel our economy Economic lives > 50 years Fee-based long-term contracts Commodities used for daily needs Capital-intensive construction Regulatory protection The volume and location of oil and natural gas being produced out of North American shales, in particular the premier fields highlighted previously, are driving pipeline companies to build additional infrastructure. In spite of lower crude oil prices, the project backlog continues to be robust with an estimated approximate $135 billion in projects through The visible growth from projects underway provides clarity to cash flows and growth potential in 2015 and into These capital expenditures are supported largely by shipper commitments, including crude oil projects to debottleneck along the Gulf Coast refining complex and to add capacity out of the Permian basin. Additionally, there are natural gas projects to relieve takeaway constraints in the Northeast. We believe new natural gas projects will continue at a fairly constant pace, but new crude oil-related projects will continue at a slower clip if prices remain low.

6 Page 5 Midstream projections 2015e e Approximately $135 billion in pipeline and related projects Canada $43.0 billion Bakken $8.4 billion Rockies/Niobrara $4.4 billion Mid-Continent $15.6 billion Highlighted flows Marcellus/Utica $17.2 billion Crude oil Gas Natural gas liquids Permian/Eagle Ford $7.8 billion Gulf Region $17.5 billion Source: Tortoise Capital Advisors as of 12/31/2014. Note: Total capital investment also includes miscellaneous other projects totaling approximately $22 billion. The projections on this page are based on industry estimates and are no guarantee of future outcomes. Downstream: Potential beneficiaries in a lower commodity price environment The crude oil and natural gas production outlined earlier has been driving success for many companies within the downstream, particularly those related to exports. While liquefied natural gas (LNG) manufacturers are pushing to speed U.S. government approval of LNG exports, capacity to export to Mexico is expanding, with new pipeline projects expected to add to Mexico s imports. Power companies, including YieldCos (utility and power companies with a high yield and visible growth component) also are benefiting from long-term contracts for power generation. Meanwhile, a lower commodity price environment can be beneficial for some downstream companies. Petrochemical companies in the U.S. should continue to benefit from low-cost feedstocks and the ability to export. However, they have lost some relative advantages versus their international counterparts in the short term, due to naphtha price declines resulting in closer parity with U.S.-based ethane feedstocks. Although they have retreated in the short term, refiners also stand to benefit from increasing refined product demand as a result of lower prices. In addition, many refiners are expanding both their midstream and chemical businesses through organic growth projects, which we believe should support visible earnings growth. Capital markets underpin infrastructure build-out Capital markets have remained supportive of sector growth, with MLP and pipeline companies raising more than $12 billion in equity and more than $14 billion in debt offerings during the fourth quarter, bringing the totals for equity and debt raised during 2014 to approximately $55 billion and $53 billion, respectively. There were 18 MLP IPOs during the year, with seven of them occurring in the final quarter of the year.

7 Page 6 MLP and pipeline company debt & equity offerings 2010 $ $ $61 Equity Debt 2013 $ $108 $0 $20 $40 $60 $80 $100 $120 $ in billions Source: Company filings. Includes equity issued to sponsors. Merger and acquisition activity Merger and acquisition (M&A) activity was healthy in 2014, continuing a positive trend made possible by continued low interest rates and a strengthening economy. Against this positive backdrop, many companies are restructuring to unlock value. MLP and pipeline transactions totaling approximately $185 billion were announced during the year, the largest of which was Kinder Morgan Inc. s $76 billion acquisition of three affiliates, consolidating four publicly traded pipeline companies into one entity. Largest announced transactions in 2014 Size Acquirer Seller ~$76 billion* Consolidation $41 billion** merger Combination of two midstream MLPs $10.9 billion** Source: Company filings. *Completed. **Announced. Looking forward, we anticipate that lower oil prices may drive heightened M&A activity. Lower oil prices can lead to slower capital spending by oil and gas exploration companies through delaying or scaling back drilling. Such a trend could correspondingly slow revenues for oilfield services providers, creating an economic backdrop that could drive consolidation among providers looking to benefit through economies of scale.

8 Page 7 Regulatory corner Numerous events rivaled for Washington s attention in 2014, pushing energy regulation out of the first line of focus. Nonetheless, some regulatory events in energy made headlines. In December, the Commerce Department told energy companies that they should consider exporting ultra-light oil (also called condensate) without formal permission. This comes on the heels of the Department s approval in June to allow two companies to export the product. In November, the House passed a bill to approve the Keystone XL oil pipeline, but a week later the Senate defeated it in a vote. While this project has become a politically sensitive topic and receives a lot of media attention, we do not feel that it is a game changer for the domestic energy landscape. This topic is on the Senate agenda in early However, if the project is approved, it likely will be vetoed by President Obama. The Internal Revenue Service (IRS) recently issued its first private letter ruling (PLR) in many months. Last April, it temporarily stopped issuing PLRs that energy companies often use when creating MLPs. The IRS indicated the pause in ruling was to ensure the letter rulings are consistent and to determine if there was an opportunity to give broader guidance to the industry. In more recent regulatory news, the Obama Administration in January announced measures to slash U.S. emissions of methane from the oil and gas industry. The new rules focus on methane emissions at new and modified oil and gas production sources. It is not immediately clear how many of the nation s more than 500 gas processing facilities and an estimated 1.1 million active oil and gas wells would be considered existing under the new rules. The Environmental Protection Agency will issue a proposed rule this summer, which is expected to be finalized in early Concluding remarks Despite recent volatility, it is particularly noteworthy that North America is now a major, relevant global energy player, enabling the U.S. to better control its national security, with significant production potential for generations to come, though at a slower pace in the near term. In our view, the long-term investment opportunity in North American energy production remains compelling, although there will be volatility as the global supply/demand equation rebalances. We believe the current market presents long-term investment opportunities across the value chain. In the upstream, we believe strategically located producers operating in the higher-producing, lower-cost basins should continue to produce in a low-price environment. The stable attributes of midstream companies, particularly those focusing on transporting natural gas and refined products, may be more resilient to commodity price volatility. And some areas of the downstream, such as refineries and petrochemical companies, could benefit from lower commodity prices. We believe that owning a portfolio of assets diversified by both location and product can be beneficial in times of volatility. We remain optimistic about current and developing opportunities in North American energy. ¹ Department of Labor, Dec Energy Information Administration, Jan. 2015

9 Page 8 Disclaimer This commentary contains certain statements that may include forward-looking statements. All statements, other than statements of historical fact, included herein are forward-looking statements. Although Tortoise Capital Advisors believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect, Actual events could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this publication. Tortoise Capital Advisors does not assume a duty to update these forward-looking statements. The views and opinions in this commentary are as of the date of publication and are subject to change. This material should not be relied upon as investment or tax advice and is not intended to predict or depict performance of any investment. This publication is provided for information only and shall not constitute an offer to sell or a solicitation of an offer to buy any securities. The Tortoise MLP Index is a float-adjusted, capitalization-weighted index of energy MLPs. The Midstream Sub Index is comprised of all constituents included in the following sub sector indices: Crude Oil Pipelines, Gathering & Processing, Natural Gas Pipelines, and Refined Products Pipelines. The Upstream Sub Index is comprised of all constituents included in the Coal and Oil & Gas Production sub sector indices. The Tortoise North American Pipeline Index SM is a float-adjusted, capitalization-weighted index of pipeline companies (MLPs, corporations, LLCs) domiciled in the U.S. or Canada. The Tortoise North American Oil and Gas Producers Index SM is a floatadjusted, capitalization-weighted index of North American companies engaged primarily in the production of crude oil, condensate, natural gas or natural gas liquids (NGLs). The S&P 500 Index is a market-value weighted index of equity securities. The S&P Select Sector Energy Index is a modified market capitalization-based index of S&P 500 companies in the energy sector involved in the development or production of energy products. The FTSE NAREIT Equity Index is an unmanaged, capitalization-weighted index of all U.S. equity real estate investment trusts. The Dow Jones Utility average Index is an unmanaged, price-weighted index composed of 15 utility companies listed on the New York Stock Exchange. Each index, The Tortoise MLP Index, The Tortoise North American Pipeline Index SM and The Tortoise North American Oil and Gas Producers Index SM, is the exclusive property of Tortoise Capital Advisors, L.L.C., which has contracted with S&P Opco, LLC (as subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to calculate and maintain the Index. S&P is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and, these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Tortoise Capital Advisors, L.L.C. Neither S&P Dow Jones Indices, SPFS, Dow Jones nor any of their affiliates sponsor and promote the Index and none shall liable for any errors or omissions in calculating the Index.

10 Contact us As always, we look forward to hearing from you. For additional information, please call or visit About Tortoise Capital Advisors Tortoise Capital Advisors, L.L.C. is an investment manager specializing in listed energy investments. Tortoise has the longest tenure of managing registered MLP funds and pioneered the first listed MLP fund in As of Dec. 31, 2014, Tortoise had approximately $17.3 billion of assets under management in NYSE-listed closed-end investment companies, open-end funds, private funds and other accounts. About Montage Investments Montage Investments provides institutional-caliber investments to investors and the financial professionals who serve them. Through a family of independent asset managers, unified by deep market insight and fundamental research, Montage offers alternative investment solutions across the spectrum of asset classes and strategies that include mutual funds, closed-end funds and separate accounts. Collectively, Montage Investments managed approximately $25 billion as of Dec. 31,