Kayne Anderson Fund Advisors

KMF - Midstream/Energy Fund

KMF - Fact Sheet

Fact Sheet

Overview
as of 10/31/14
Symbol
KMF
Exchange
NYSE
CUSIP
48661E108
Inception Date
11/24/2010
   
NAV updates1
Thursdays &
month end
   
Total Assets
$1.3 billion
Leverage
$0.4 billion
   
Quarterly Distribution2 ($/share)
$0.4875
   
% of portfolio assets with Call Options
1.9%
Objective

KMF is a closed-end fund whose investment objective is to provide a high level of total return with an emphasis on making quarterly cash distributions to its stockholders. KMF invests principally in securities of companies in the Midstream/Energy Sector, consisting of: (a) Midstream MLPs, (b) Midstream Companies, (c) Other MLPs and (d) Other Energy Companies. KMF anticipates that the majority of its investments will consist of equity investments in Midstream MLPs and Midstream Companies.

Investment Merits
Midstream Opportunities

- Opportunity to invest across the full value chain for the Midstream Sector through investments in Midstream Master Limited Partnerships ("MLPs") and Midstream Companies.
- Midstream Sector generates attractive risk-adjusted returns and has stable characteristics.
- Development of "unconventional reserves" is changing the North American energy industry, driving the need for new Midstream assets and creating significant growth opportunities for the Midstream sector.

Attractive Fund Structure

- KMF issues a Form 1099 (no K-1).
- Suitable for IRAs, foundations and tax-exempt accounts, because unlike direct holdings in MLPs, KMF does not generate unrelated business taxable income (UBTI).
- KMF is a Regulated Investment Company (RIC) and, as such, does not pay income taxes at the fund level.

Access to Private Investments

KMF provides access to private investment opportunities not available to retail investors.

Portfolio
as of 10/31/14
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Top 10 Holdings
as of 10/31/14
Kinder Morgan Management, LLC
9.5%
The Williams Companies, Inc.
8.2%
Enbridge Energy Management, L.L.C
7.3%
Plains GP Holdings, L.P.
4.8%
ONEOK, Inc.
3.9%
Kinder Morgan, Inc.
3.9%
Golar LNG Partners LP
3.5%
Regency Energy Partners LP
3.1%
Energy Transfer Partners, L.P.
2.0%
Plains All American Pipeline, L.P.
2.0%
48.2%

For the full portfolio, please see the Schedule of Investments in our most recent quarterly or annual report

Quarterly Distributions per Share
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View the complete Distribution History for KMF.

Information on Tax Character of Distributions

Our distributions are generally taxable as ordinary income (a portion of which may be qualified dividends) or capital gains. Distributions of our ordinary income plus net short-term capital gains in excess of net long-term capital losses will be taxable as ordinary income to the extent of our current or accumulated earnings and profits. If our distributions exceed our current or accumulated earnings and profits, the distributions will be treated as a return of capital to our common stockholders to the extent of each stockholder’s basis in our common stock, and then the amount distributed in excess of such stockholder’s basis would be taxed as a capital gain. Common stockholders will receive a Form 1099 from us and will recognize ordinary income only to the extent of our current and accumulated earnings and profits. Because the cash distributions received from the MLPs in our portfolio are expected to exceed the earnings and profits associated with owning such MLPs, a portion of our distributions may be paid from sources other than our current and accumulated earnings and profits. The table below summarizes the tax character of our distributions since inception.

Year Ordinary
dividends
Qualified
dividends
Capital gains
distrib.
  Nondividend
distrib.
(Return of Capital)
  Total
2011 79% 21% -   -                          100%
2012 51% 26% 23%   -                          100%
2013 28% 36% 36%   -                          100%
2014E4 44%  26%  30%    -                          100%

Sample Form 1099-DIV for each year can be found at www.kaynefunds.com/kmf/tax-information.

Total Return (NAV plus distributions)
11/24/10 to 10/31/14
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Share Price and NAV History
11/24/10 to 10/31/14
[image]
Premium/Discount to NAV
11/24/10 to 10/31/14
[image]
Calendar Year Returns
as of 10/31/14
 
2011
2012 
2013 
2014 YTD
NAV and distributions3
20.8%
10.6% 
38.5% 
17.1%
NAV only
12.9%
3.8% 
31.0% 
12.8%
Share price and distributions3
6.8%
23.0% 
26.4% 
13.9%
Share price only
-0.2%
15.4% 
19.5% 
9.7%
Returns (Not annualized)
as of 10/31/14
 
3 Mo.
6 Mo.
1-Yr 
2-Yr 
3-Yr
Since Inception
NAV and distributions3
-0.7%
9.1%
24.5%
56.5% 
95.0%
120.0%
NAV only
-1.9%
6.4%
18.2%
40.4% 
63.8%
75.6%
Share price and distributions3
-1.1%
9.2%
21.1%
45.8% 
88.4%
89.2%
Share price only
-2.4%
6.6%
15.0%
30.7% 
58.2%
51.0%
Growth of Hypothetical $10,000 Investment
Date
NAV and Distrib
Share Price
and Distrib
Inception (11/24/10)
$10,000
 $10,000
12/31/10
10,149
10,000
12/31/11
12.262
10,680
12/31/12
13,557
13,134
12/31/13
18,780
16,604
10/31/14
22,000
18,916

 

This table illustrates the growth of a hypothetical $10,000 investment in the fund's common shares beginning on the inception date with all distributions reinvested through the Dividend Reinvestment Program (DRIP). Ending values as of the dates shown in the table. Performance does not reflect transaction fees or broker commissions. Past performance is no guarantee of future results.

1) Weekly NAVs are calculated as of close of business on Thursdays and posted to our website on Fridays after the market closes at KMF NAV. Month-end NAVs are issued via press release and posted to the website within a few days of the end of the month.
2) Payable on 10/24/14 (ex-date 10/15/14) for the quarter ended 8/31/14.
3) Assumes that distributions have been reinvested through the Dividend Reinvestment Program (DRIP).
4) This estimate is based on our estimated earnings and profits for fiscal 2014, which includes actual results for the first nine months of the fiscal year and does not include a projection for any gains or losses on the sale of securities during the last three months of fiscal 2014. The final determination of the tax character of our distributions will be made after our fiscal year-end when we can determine our actual earnings and profits for the full year. The final tax status of our distributions is dependent on our earnings and profits (including gains and losses on the sale of securities) for the remainder of our fiscal year and and may differ substantially from this preliminary information.


This material shall not constitute an offer to sell or a solicitation to buy, nor shall there be any sale of the securities in any jurisdiction in which such offer or sale is not permitted. Past performance is not a guarantee of future results. An investment in the fund could suffer loss. Current performance may be lower or higher than that shown based on market fluctuations from the end of the reported period. Before making an investment in the fund, you should consider the investment objective, risks, charges and expenses of the fund, which, together with and other important information are included in the fund's most recent prospectus and other filings with the SEC. There can be no assurance that the fund's investment objectives will be attained. Shares of closed-end funds frequently trade at a market price that is below their net asset value. Leverage creates risks which may adversely affect return, including the likelihood of greater volatility of net asset value and market price of common shares, and fluctuations in dividend rates on any preferred shares.

NOT FDIC INSURED
NOT BANK GUARANTEED
MAY LOSE VALUE

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