ClearBridge Energy MLP Total Return Fund (CTR)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED

MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number 811-22693

ClearBridge Energy MLP Total Return Fund Inc.

(Exact name of registrant as specified in charter)

620 Eighth Avenue, 49th Floor, New York, NY 10018

(Address of principal executive offices) (Zip code)

Robert I. Frenkel, Esq.

Legg Mason & Co., LLC

100 First Stamford Place

Stamford, CT 06902

(Name and address of agent for service)

Registrant’s telephone number, including area code: (888)-777-0102

Date of fiscal year end: November 30

Date of reporting period: August 31, 2017

 

 

 


 

ITEM 1. SCHEDULE OF INVESTMENTS.


CLEARBRIDGE ENERGY MLP TOTAL RETURN FUND INC.

FORM N-Q

AUGUST 31, 2017


CLEARBRIDGE ENERGY MLP TOTAL RETURN FUND INC.

 

Schedule of investments (unaudited)    August 31, 2017

 

SECURITY

   SHARES/UNITS      VALUE  
MASTER LIMITED PARTNERSHIPS - 124.3%      

Diversified Energy Infrastructure - 29.1%

     

Energy Transfer Partners LP

     2,241,037      $ 42,602,114  

Enterprise Products Partners LP

     2,305,873        60,114,109  

Genesis Energy LP

     1,194,610        31,896,087  

Plains GP Holdings LP, Class A Shares

     428,465        9,631,893  
     

 

 

 

Total Diversified Energy Infrastructure

        144,244,203  
     

 

 

 

Gathering/Processing - 25.8%

     

Antero Midstream Partners LP

     242,379        8,185,139  

Blueknight Energy Partners LP

     323,480        1,860,010  

DCP Midstream LP

     500,638        16,075,486  

Dominion Energy Midstream Partners LP

     365,680        10,476,732  

Enable Midstream Partners LP

     1,101,501        16,401,350  

EnLink Midstream Partners LP

     1,399,830        22,719,241  

Hess Midstream Partners LP

     233,000        4,906,980  

Noble Midstream Partners LP

     203,800        9,817,046  

Rice Midstream Partners LP

     563,839        11,699,659  

Summit Midstream Partners LP

     370,930        7,808,076  

Western Gas Partners LP

     351,010        17,929,591  
     

 

 

 

Total Gathering/Processing

        127,879,310  
     

 

 

 

General Partner - 1.0%

     

Tallgrass Energy GP LP

     185,570        4,988,122  
     

 

 

 

Global Infrastructure - 8.4%

     

Brookfield Infrastructure Partners LP

     938,293        41,406,870  
     

 

 

 

Liquids Transportation & Storage - 32.9%

     

Buckeye Partners LP

     607,890        34,765,229  

Delek Logistics Partners LP

     364,688        11,432,969  

Enbridge Energy Partners LP

     1,372,810        20,907,896  

Holly Energy Partners LP

     197,340        6,441,178  

Magellan Midstream Partners LP

     577,580        38,923,116  

NuStar Energy LP

     456,210        18,471,943  

PBF Logistics LP

     628,112        13,724,247  

Plains All American Pipeline LP

     837,736        18,145,362  
     

 

 

 

Total Liquids Transportation & Storage

        162,811,940  
     

 

 

 

Natural Gas Transportation & Storage - 11.2%

     

Spectra Energy Partners LP

     84,000        3,723,720  

TC Pipelines LP

     234,335        12,330,707  

Williams Partners LP

     1,002,432        39,495,821  
     

 

 

 

Total Natural Gas Transportation & Storage

        55,550,248  
     

 

 

 

Oil/Refined Products - 8.0%

     

Andeavor Logistics LP

     22,000        1,094,500  

MPLX LP

     536,040        18,396,893  

Shell Midstream Partners LP

     260,790        7,216,059  

VTTI Energy Partners LP

     657,153        12,748,768  
     

 

 

 

Total Oil/Refined Products

        39,456,220  
     

 

 

 

Propane - 2.7%

     

AmeriGas Partners LP

     153,370        6,654,724  

Suburban Propane Partners LP

     281,767        6,976,551  
     

 

 

 

Total Propane

        13,631,275  
     

 

 

 

Refining - 1.2%

     

Western Refining Logistics LP

     222,690        5,789,940  
     

 

 

 

 

See Notes to Schedule of Investments.

 

1


CLEARBRIDGE ENERGY MLP TOTAL RETURN FUND INC.

 

Schedule of investments (unaudited) (cont’d)    August 31, 2017

 

SECURITY

         SHARES/UNITS      VALUE  

Shipping - 4.0%

       

Golar LNG Partners LP

       334,310      $ 7,348,134  

KNOT Offshore Partners LP

       522,011        12,293,359  
       

 

 

 

Total Shipping

          19,641,493  
       

 

 

 

TOTAL MASTER LIMITED PARTNERSHIPS
(Cost - $558,967,358)

          615,399,621  
       

 

 

 
           SHARES         
COMMON STOCKS - 17.2%        
ENERGY - 15.2%        

Oil, Gas & Consumable Fuels - 15.2%

       

ONEOK Inc.

       707,264        38,305,418  

SemGroup Corp., Class A Shares

       445,505        11,449,479  

Targa Resources Corp.

       573,670        25,568,472  
       

 

 

 

TOTAL ENERGY

          75,323,369  
       

 

 

 
INDUSTRIALS - 2.0%        

Transportation Infrastructure - 2.0%

       

Macquarie Infrastructure Corp.

       134,930        10,049,586  
       

 

 

 

TOTAL COMMON STOCKS
(Cost - $67,320,513)

          85,372,955  
       

 

 

 

TOTAL INVESTMENTS BEFORE SHORT-TERM INVESTMENTS
(Cost - $626,287,871)

          700,772,576  
       

 

 

 
     RATE               
SHORT-TERM INVESTMENTS - 2.9%        

State Street Institutional Treasury Money Market Fund, Premier Class
(Cost - $14,255,177)

     0.910     14,255,177        14,255,177  
       

 

 

 

TOTAL INVESTMENTS** - 144.4%
(Cost - $640,543,048)

          715,027,753  

Mandatory Redeemable Preferred Stock, at Liquidation Value - (2.8)%

          (14,000,000

Liabilities in Excess of Other Assets - (41.6)%

          (205,972,051
       

 

 

 

TOTAL NET ASSETS APPLICABLE TO COMMON
SHAREHOLDERS - 100.0%

        $ 495,055,702  
       

 

 

 

 

** The entire portfolio is subject to lien, granted to the lender and Senior Note holders, to the extent of the borrowing outstanding and any additional expenses.

This Schedule of Investments is unaudited and is intended to provide information about the Fund’s investments as of the date of the schedule. Other information regarding the Fund is available in the Fund’s most recent annual or semi-annual shareholder report.

 

See Notes to Schedule of Investments.

 

2


Notes to Schedule of Investments (unaudited)

 

1. Organization and significant accounting policies

ClearBridge Energy MLP Total Return Fund Inc. (the “Fund”) was incorporated in Maryland on April 10, 2012 and is registered as a non-diversified, closed-end management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”). The Board of Directors authorized 100 million shares of $0.001 par value common stock. The Fund’s investment objective is to provide a high level of total return, consisting of cash distributions and capital appreciation. The Fund seeks to achieve its objective by investing primarily in master limited partnerships (“MLPs”) in the energy sector. There can be no assurance that the Fund will achieve its investment objective.

Under normal market conditions, the Fund will invest at least 80% of its Managed Assets in MLPs in the energy sector (the “80% policy”). For purposes of the 80% policy, the Fund considers investments in MLPs to include investments that offer economic exposure to public and private MLPs in the form of equity securities of MLPs, securities of entities holding primarily general partner or managing member interests in MLPs, securities that are derivatives of interests in MLPs, including I-Shares, exchange-traded funds that primarily hold MLP interests and debt securities of MLPs. Energy entities are engaged in the business of exploring, developing, producing, gathering, transporting, processing, storing, refining, distributing, mining or marketing of natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal. “Managed Assets” means net assets plus the amount of any borrowings and assets attributable to any preferred stock of the Fund that may be outstanding.

The following are significant accounting policies consistently followed by the Fund and are in conformity with U.S. generally accepted accounting principles (“GAAP”).

(a) Investment valuation. Equity securities for which market quotations are available are valued at the last reported sales price or official closing price on the primary market or exchange on which they trade. The valuations for fixed income securities (which may include, but are not limited to, corporate, government, municipal, mortgage-backed, collateralized mortgage obligations and asset-backed securities) and certain derivative instruments are typically the prices supplied by independent third party pricing services, which may use market prices or broker/dealer quotations or a variety of valuation techniques and methodologies. The independent third party pricing services use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads, default rates and quoted prices for similar securities. Short-term fixed income securities that will mature in 60 days or less are valued at amortized cost, unless it is determined that using this method would not reflect an investment’s fair value. Investments in open-end funds are valued at the closing net asset value per share of each fund on the day of valuation. When the Fund holds securities or other assets that are denominated in a foreign currency, the Fund will normally use the currency exchange rates as of 4:00 p.m. (Eastern Time). If independent third party pricing services are unable to supply prices for a portfolio investment, or if the prices supplied are deemed by the manager to be unreliable, the market price may be determined by the manager using quotations from one or more broker/dealers or at the transaction price if the security has recently been purchased and no value has yet been obtained from a pricing service or pricing broker. When reliable prices are not readily available, such as when the value of a security has been significantly affected by events after the close of the exchange or market on which the security is principally traded, but before the Fund calculates its net asset value, the Fund values these securities as determined in accordance with procedures approved by the Fund’s Board of Directors.

The Board of Directors is responsible for the valuation process and has delegated the supervision of the daily valuation process to the Legg Mason North Atlantic Fund Valuation Committee (the “Valuation Committee”). The Valuation Committee, pursuant to the policies adopted by the Board of Directors, is responsible for making fair value determinations, evaluating the effectiveness of the Fund’s pricing policies, and reporting to the Board of Directors. When determining the reliability of third party pricing information for investments owned by the Fund, the Valuation Committee, among other things, conducts due diligence reviews of pricing vendors, monitors the daily change in prices and reviews transactions among market participants.

The Valuation Committee will consider pricing methodologies it deems relevant and appropriate when making fair value determinations. Examples of possible methodologies include, but are not limited to, multiple of earnings; discount from market of a similar freely traded security; discounted cash-flow analysis; book value or a multiple thereof; risk premium/yield analysis; yield to maturity; and/or fundamental investment analysis. The Valuation Committee will also consider factors it deems relevant and appropriate in light of the facts and circumstances. Examples of possible factors include, but are not limited to, the type of security; the issuer’s financial statements; the purchase price of the security; the discount from market value of unrestricted securities of the same class at the time of purchase; analysts’ research and observations from financial institutions; information regarding any transactions or offers with respect to the security; the existence of merger proposals or tender offers affecting the security; the price and extent of public trading in similar securities of the issuer or comparable companies; and the existence of a shelf registration for restricted securities.

 

3


Notes to Schedule of Investments (unaudited) (continued)

 

For each portfolio security that has been fair valued pursuant to the policies adopted by the Board of Directors, the fair value price is compared against the last available and next available market quotations. The Valuation Committee reviews the results of such back testing monthly and fair valuation occurrences are reported to the Board of Directors quarterly.

The Fund uses valuation techniques to measure fair value that are consistent with the market approach and/or income approach, depending on the type of security and the particular circumstance. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable securities. The income approach uses valuation techniques to discount estimated future cash flows to present value.

GAAP establishes a disclosure hierarchy that categorizes the inputs to valuation techniques used to value assets and liabilities at measurement date. These inputs are summarized in the three broad levels listed below:

 

   

Level 1 – quoted prices in active markets for identical investments

 

   

Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

 

   

Level 3 – significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

The inputs or methodologies used to value securities are not necessarily an indication of the risk associated with investing in those securities.

The following is a summary of the inputs used in valuing the Fund’s assets carried at fair value:

 

ASSETS

 

DESCRIPTION

   QUOTED PRICES
(LEVEL 1)
     OTHER SIGNIFICANT
OBSERVABLE INPUTS
(LEVEL 2)
     SIGNIFICANT
UNOBSERVABLE
INPUTS
(LEVEL 3)
     TOTAL  

Long-Term Investments†:

 

Master Limited Partnerships

   $ 615,399,621        —          —        $ 615,399,621  

Common Stocks

     85,372,955        —          —          85,372,955  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Long-Term Investments

     700,772,576        —          —          700,772,576  
  

 

 

    

 

 

    

 

 

    

 

 

 

Short-Term Investments†

     14,255,177        —          —          14,255,177  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total Investments

   $ 715,027,753        —          —        $ 715,027,753  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

See Schedule of Investments for additional detailed categorizations.

 

4


 

ITEM 2. CONTROLS AND PROCEDURES.

 

  (a) The registrant’s principal executive officer and principal financial officer have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a- 3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”)) are effective as of a date within 90 days of the filing date of this report that includes the disclosure required by this paragraph, based on their evaluation of the disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act and 15d-15(b) under the Securities Exchange Act of 1934.

 

  (b) There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the registrant’s last fiscal quarter that have materially affected, or are likely to materially affect the registrant’s internal control over financial reporting.

 

ITEM 3. EXHIBITS.

Certifications pursuant to Rule 30a-2(a) under the Investment Company Act of 1940, as amended, are attached hereto.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ClearBridge Energy MLP Total Return Fund Inc.

 

By   /s/    JANE TRUST        
  Jane Trust
  Chief Executive Officer

Date:

 

October 25, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By   /s/    JANE TRUST        
  Jane Trust
  Chief Executive Officer

Date:

 

October 25, 2017

By   /s/    RICHARD F. SENNETT        
  Richard F. Sennett
  Principal Financial Officer

Date:

 

October 25, 2017