Last year was pretty good, in terms of the performance of the broad master limited partnership (MLP) sectors-pipeline and other midstream, propane distribution, coal, shipping and E&P-and it was especially good for the closed-end funds investing in those MLP sectors. Looking at 2006 total returns (unit or share-price appreciation plus reinvested cash distributions), the average share price for MLPs was up 29.7% versus the prior year while their average net asset value (NAV) increased 19.9%. For the five closed-end funds that focus almost exclusively on MLPs-the likes of Tortoise North American Energy Corp. (TYN) and the Fiduciary/Claymore MLP Opportunity Fund (FMO)-returns were even better, with average share prices climbing 34.8% and NAV total returns rising 25.6%. Comparatively, on a total return basis, the S&P 500 Index was up just 15.6% in 2006 versus the prior year. That's great, but in the investment business, past is not necessarily prologue. Therefore, the key question remains: Will such market momentum for energy-related MLPs carry into 2007? The answer, at least from one securities researcher, is a qualified "yes." Translation: The road ahead could get a little bumpy. For more on this, see the April issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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