MLPs Were Game 1 MVPs; Expect a High-Scoring Game 2

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1 MLPs Were Game 1 MVPs; Expect a High-Scoring Game 2 Market Commentary November 215 We believe investors with high exposure to Master Limited Partnerships (MLPs) can expect that the reasons for the success of MLPs over the prior decade will now carry over to a much broader spectrum of energy infrastructure. We expect a great double-header. Game 1 (25 215): MLP Pipes In the past decade, the game-changing development of unconventional drilling led to the extraordinary rise of MLPs, which financed the pipelines to transport these vast new resources across continents. However, we believe that the pipe infrastructure is catching up to the resource boom and that this game is in its 7th inning. Game 2 (212+): Farms, Tankers, Grids and Stations In the next decade, we expect that a vast new array of unconventional and renewable technologies will lead to many new infrastructure needs, including vast solar and wind farms, distributed solar, smart grids, cross-oceanic liquefied natural gas (LNG) tankers, and repurposing of many traditional gasoline stations to provide electricity, natural gas and blended fuels. The Global Energy Revolution Is in Progress MLP investors may want to consider gradually shifting from the 7th inning of Game 1 of the global energy revolution to a Game 2 portfolio of companies. Similar to MLPs, we believe many of these companies will have toll road or REIT-like characteristics (as fixed routers of hard assets), yet the companies should also have high growth from a multi-decade secular expansion. Based on our views, financing the second phase of this broadening energy revolution will generally not be via tax-advantaged MLPs; however, most of the Game 2 investments can still benefit from many other forms of tax treatment that will eliminate or defer corporate taxes. F. Rowe Michels, CFA Director of Research, Portfolio Manager, Utilities Analyst Tradewinds Global Investors Rod Parsley Portfolio Manager, Energy Analyst Tradewinds Global Investors

2 Energy Revolution: The Early Innings of the Next Infrastructure Build Revolutionary Catalyst Shale: Fracking and Horizontal Drilling Wind, Solar, Other Renewables and Storage What Inning Are We In? Main Infrastructure Need Main Development Sponsors 7th Pipelines and Storage Exploration and Production (E&P s) 1st Wind and solar farms; new transmission smart grid; batteries; transoceanic Liquefied Natural Gas (LNG) and natural gas stations Utilities, especially Independent Power Producers (IPP s) and generators Main Financial Vehicle Tax Advantages Current Dividend Yield Master Limited Partnerships (MLPs) Generally no income tax and deferred taxes on distributions until partnership is sold 7.2% 1 YieldCo s, Private Equity, Other C Corporation (C Corp) Renewable Companies Generally no income taxes in near term Accelerated Cost Recovery System (ACRS) 4.3% 2 Dividend Growth Rate (to 218) What s Next? 7.% 1 Global transoceanic shipping of LNG. Many new uses for natural gas, especially in transportation 22.% 2 Further cost reductions, massive growth. Subsidies are replaced with legal mandates and cost parity, as solar, wind and battery costs continue to fall Data source: Bloomberg and Tradewinds as of 9/25/15. 1 Average based on top 5 companies in the Alerian MLP Index, based on Bloomberg consensus estimates. 2 YieldCo average based on top 5 companies by market capitalization. Past performance is no guarantee of future results. Different benchmarks, economic periods, methodologies and market conditions will produce different results. There is no assurance that any asset class or index will provide positive performance over time. The 7th Inning of a High Scoring Ball Game MLPs were among the prior decade s best investments, with a total return of 175% vs. 11% for the S&P 5 during the past five years. 3 MLPs were born out of need: the combination of horizontal drilling, fracking and other advanced lifting technologies led U.S. natural gas reserves to over 1 years of resource vs. less than 12 years in the mid-2s. Similarly, U.S. crude oil production increased 69% since However, this unconventional game-changer created the parallel need of getting these reserves from remote fracking areas (i.e., North Dakota, Texas, Pennsylvania) to the main urban demand centers. To finance this massive infrastructure build, the U.S. government gave huge tax breaks via Master Limited Partnerships. Nevertheless, we now see many reasons for MLPs being more in the latter stages of growth, and note several rising risks: 1. The Catch-Up of Infrastructure vs. Shale Boom We believe the MLP pipeline build is far from over in the United States, but that the law of large numbers implies decelerating growth. Just 1 years ago, pipelines were a significant bottleneck, but it is predicted that by 218 nearly all of the major low cost shale reserves will have the capability of selling to a vast network that connects nearly all major demand centers across the United States and Europe. Pipeline Growth Exceeds Natural Gas Consumption Cumulative growth of MMcf/d Regional (Cross State) Pipeline Capacity U.S. Natural Gas Consumption Data source: Tradewinds and U.S. Energy Information Administration, State to State Capacity, Series indexed to Increasing Commodities Exposure Although most MLPs are not directly tied to oil and gas prices, the need for future infrastructure is indirectly related to rig count in the short term, and Exploration and Production (E&P) capex in the long term. With the recent drop in oil prices, the U.S. rig count has dropped over 65% since September Data source: Bloomberg, 9/1/21 9/1/215, comparing the Alerian MLP Index to the S&P 5 Index. 4 Data source: Bloomberg, 12/31/25 12/31/24, crude oil data from OPRD USA Index based on BP Statistical Report. 5 Data source: Baker Hughes and Bloomberg as of September

3 3. Rising Leverage and Interest Rates as the Perfect Storm Throughout the past decade, we ve seen many MLPs relatively high leverage slowly increasing. For some MLPs, the increase in leverage (debt/equity) exceeded the growth in Dividend Per Share (DPS). Earlier this year, UBS research highlighted the risks of MLPs vs. possibly rising interest rates: More Tankers May Enable a Global Shift to Natural Gas Total Number of LNG Ships Data source: Clarksons, (estimated). 218 Est. MLPs without a strong growth profile should exhibit bond-like characteristics should interest rates increase. Hence, our fear of the perfect storm would be an environment where growth disappears and longer-term interest rates increase. A scenario where we could see that happening would be the collapse in commodity pricing causes a seizure in energy infrastructure capex spend resulting in a collapse in growth rates followed by an increase in interest rates. Given growth oriented MLPs need for capital wider credit spreads could negatively impact the group in four different ways: 1) Access to capital will become increasingly difficult; 2) returns will compress as cost of capital increases; 3) MLPs could become more reliant on equity funding; and 4) projects get pushed out. 6 Game 2: The Global Expansion of Natural Gas and Renewables We don t believe that pipeline MLPs were a one hit wonder, but rather the first of many new energy revolution players that are now coming up from the minors. The next leg of the natural gas renaissance will see a shift from U.S. domestic pipes to transoceanic shipping via LNG tankers and ports, enabling a global shift from coal and oil to natural gas. 7 Even further downstream, we expect many new uses for increasingly globally-abundant natural gas, particularly in the transportation sector. This will require retail distribution of compressed natural gas (as is already well underway in the U.S. for public service trucks and buses), and the service station infrastructure for these big engines will be increasingly available for autos. Critical to our view, these new technologies (i.e., solar, wind, natural gas for transportation, energy efficiency such as LED, etc.) are already competing in the big leagues vs. conventional energy on an unsubsidized basis. This competition of unconventional vs. conventional should continue to limit the upside in conventional fuel prices (i.e., oil and coal); conversely, low oil and coal prices will be a speed-bump on unconventional new build. Unconventional and renewables growth will be driven by further cost reductions as technologies continue to improve, and from scale manufacturing. Growth in Solar and Wind Led By Falling Prices Blended Average Solar PV Price ($/Watt) $12 $1 $8 $6 $4 $2 $ Solar PV Prices (Left Hand Side) 7, Solar PV Installations (Right Hand Side) 6, 5, 4, 3, 2, 1, Est. Data source: SEIA/GTM Research U.S. Solar Market Insight Q Price Per Kilowatt-Hour ( ) Wind Power Prices (Left Hand Side) Installed Wind Capacity (Right Hand Side) Data source: U.S. Department of Energy, The Clean Energy Economy in Three Charts, January 6, Solar PV Installations (Megawatts) Cumulative Wind Deployment (Gigawatts) 6 Source: UBS Global Research, Where the Puck is Going, January 6, Please also refer to our October 214 whitepaper, The Only Commodity in the World. 3

4 Conclusion: Revolution Happening Holistic Approach Needed Whether you are playing baseball or investing, it is always difficult to move on from something that has been on a big winning streak. In June and July 215, MLP markets had their worst two consecutive months since the 28 financial crisis. We view this downturn as an early sign of various speedbumps and risks for MLP growth going forward. We encourage investors to diversify from high MLP exposure to the first innings of the next game of the U.S. energy renaissance, which we find is now expanding globally and is marked by many new game-changing technologies. Tradewinds investment philosophy relies on a holistic global approach that reflects both: Conventional Energy and Utilities that are prepared to capitalize on these secular changes by having clean balance sheets (that are not dependent on fuel price recovery) and that are often investing in these new technologies to service their existing clients. Indeed, we believe the world will never completely run out of, or stop using, oil and coal. Unconventional Fuels and Renewables focusing not on the start-ups and science projects, but rather the sustainable business models and infrastructure companies that will grow regardless of the technology winners. Similar to the precedent of MLPs, we believe the broadening energy revolution infrastructure can provide an attractive total return, with higher growth initially and shifting to higher dividends over time. The Energy Revolution Future Using a YieldCo Proxy MLP TAM Enterprise Value (EV): $1,245B Current MLP EV value: $58 billion 47% of TAM Total Available Market (TAM) MLP Conservative TAM: $35.3B, 5% of Potential TAM YieldCo Potential YieldCo TAM EV $6.3T YIELDCO total available market could eventually dwarf the current MLP market, since many energy revolution technologies do not qualify for MLP tax treatment. Source: RBC Capital Markets estimates, YieldCo Primer, April 3, 215 Note: Images are not drawn to scale. Current YieldCo EV = $32B, 1% of Conservative Total Available Market (TAM), 1% of Potential TAM. To recap, our energy revolution view is that the sector is now undergoing more change than at any time in the past century. 4 As was the case 1 years ago, we believe very few foresaw the fracking-led MLP revolution (but congratulations to those who did!), and many are skeptical about a broader energy revolution that is just beginning. We d prefer to be in the early innings, which is inherently more growthy as we believe growing dividend yields will outperform in a rising interest rate environment. Those who enjoyed Game 1 are in for a great double-header. Noting these similarities, Wall Street has coined the term YieldCo for some of the U.S. companies that are particularly focused on owning the operating assets of renewables companies (i.e., solar, wind, transmission and electricity storage). These companies are structured as C corporations rather than MLPs from a tax-regulatory standpoint. According to RBC Capital Markets, the YieldCo (as a proxy for many energy revolution investments) total available market could eventually dwarf the current MLP market. Tradewinds investment approach is mostly agnostic to the financial-tax structure, rather focusing on sustainable energy providers (low cost producers and natural monopolies) that are growing cash flows rapidly by being early adopters. 8 These are companies that may not be initially publicly offered as YieldCo s per se. 8 Please also refer to our February 215 whitepaper, The Global Energy Revolution. 4

5 For more information, please contact your financial advisor and visit nuveen.com. GLOSSARY Accelerated Cost Recovery System (ACRS) is a system of depreciation introduced by the Economic Recovery Tax Act of ACRS depreciation is based on recovery periods instead of useful life. These periods were predetermined by the IRS. The Alerian MLP Index is the leading gauge of large- and mid-cap energy Master Limited Partnerships (MLPs). The float-adjusted, capitalization-weighted index includes 5 prominent companies and captures approximately 75% of available market capitalization. C Corporation (C Corp) is a legal structure that businesses can choose to organize themselves under in order to limit their owners legal and financial liabilities. C corporations are legally considered separate entities from their owners. In a C corporation, income is taxed at the corporate level and is taxed again when it is distributed to owners. RISKS AND OTHER IMPORTANT CONSIDERATIONS The statements contained herein reflect the opinions of Tradewinds Global Investors, LLC ( Tradewinds ) as of the date written. Certain statements are forward-looking and/or based on current expectations, projections, and information currently available to Tradewinds. Such statements may or may not be accurate over the long-term. While we believe we have a reasonable basis for our comments and we have confidence in our opinions, actual results may differ from those we anticipate. We cannot assure future results and disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. Statistical data or references thereto were taken from sources which we deem to be reliable, but their accuracy cannot be guaranteed. It is important to remember that there are risks inherent in any investment and there is no assurance that any investment or asset class will provide positive performance over time. Dividend yield is one component of performance and should not be the only consideration for investment. Dividends are not guaranteed and will fluctuate. A portfolio concentrated in a single market sector may present more risk than a portfolio broadly diversified over several sectors. There are certain risks specific to the energy Enterprise Value is a measure of a company s value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. Liquefied Natural Gas (LNG) is natural gas (predominantly methane, CH4) that has been converted to liquid form for ease of storage or transport. Master Limited Partnership (MLP) is a limited partnership that is publicly traded on an exchange. Solar Photovolatic (Solar PV) are solar cells that convert sunlight directly into electricity. The S&P 5 Index is an unmanaged index generally considered representative of the U.S. stock market. sector, including the potential adverse effect of state and federal regulation, increasing costs of natural resources, commodity price risk, supply and demand risk, depletion risk and exploration risk. Stocks of small companies and mid-cap companies are often more volatile than those of larger companies as a result of several factors such as limited trading volumes, products or financial resources, management inexperience and less publicly available information. Non-U.S. investing presents additional risks such as the potential for adverse political, currency, economic, social or regulatory developments in a country including lack of liquidity, excessive taxation, and differing legal and accounting standards. These risks are magnified in emerging and frontier markets. In addition, while we believe investing in companies with less liquidity has the potential to add alpha on the upside, such names are also more subject to price volatility on the downside. This commentary should not be construed as investment advice with respect to any particular security, asset class, or strategy. Past performance does not guarantee future results. Tradewinds Global Investors, LLC, is a registered investment advisor and subsidiary of Nuveen Investments, Inc. GPE-TENERGY-915P INV-Y-11/16 Nuveen Investments 333 West Wacker Drive Chicago, IL nuveen.com