cushing-royalty_nq.htm
As filed with the Securities and Exchange Commission on April, 27, 2012



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  811-22593



Cushing Royalty & Income Fund
(Exact name of registrant as specified in charter)



8117 Preston Road Suite 440
Dallas, TX 75225
(Address of principal executive offices) (Zip code)



Jerry V. Swank
8117 Preston Road Suite 440
Dallas, TX 75225
(Name and address of agent for service)



214-692-6334
Registrant's telephone number, including area code



Date of fiscal year end: November 30


Date of reporting period:  February 29, 2012


 
 
 
 
Item 1. Schedule of Investments.
 
Cushing Royalty & Income Fund
            
SCHEDULE OF INVESTMENTS (Unaudited)
            
       
     
February 29, 2012
  
               
     
Shares
    
Fair Value
  
Master Limited Partnerships and Related Companies  - 8.3% (1)
            
Exploration and Production - 8.3% (1)
            
Canada - 1.6% (1)
            
ARC Resources LTD
     19,600     $ 507,530  
Baytex Energy Corporation
     8,600       496,650  
Canadian Oil Sands LTD
     21,400       512,498  
Crescent Point Energy Corporation
     16,100       764,452  
Penn West Petroleum LTD
     22,900       499,220  
Petrobakken Energy LTD-A
     30,900       504,195  
United States - 6.7% (1)
                
Breitburn Energy Partners, L.P.
     78,000       1,470,300  
EV Energy Partners, L.P.
     24,800       1,764,272  
Legacy Reserves, L.P.
     51,300       1,480,518  
Linn Energy, LLC
     52,900       2,018,135  
LRR Energy, L.P.
     31,000       625,890  
Memorial Production Partners, L.P
     37,799       702,305  
MID-CON Energy Partners, L.P.
     36,300       882,090  
Pioneer Southwest Energy Partners, L.P.
     45,900       1,249,398  
QR Energy, L.P.
     66,000       1,532,520  
Vanguard Natural Resources, LLC
     54,200       1,492,668  
Total Master Limited Partnerships and Related Companies (Cost $16,473,889)
           $ 16,502,642  
                   
US Royalty Trusts - 3.2% (1)
                
United States - 3.2% (1)
                
BP Prudhoe Bay Royalty Trust
     10,300     $ 1,262,471  
Chesapeake Granite Wash Trust
     26,600       739,214  
Dorchester Minerals, L.P.
     10,200       251,022  
Enduro Royalty Trust
     53,000       1,142,680  
MV Oil Trust
     18,300       767,685  
Permian Basin Royalty Trust
     45,100       998,063  
Sandridge Mississippian Trust
     15,300       488,988  
 
 
 
 
 
Sandridge Permian Trust
     27,000       654,750  
Total US Royalty Trusts (Cost $6,282,095)
           $ 6,304,873  
                   
Short-Term Investments - Investment Companies - 100.0% (1)
  
Shares
          
United States - 100.0% (1)
                
AIM Short-Term Treasury Portfolio Fund - Institutional Class, 0.02% (2)
     39,652,500     $ 39,652,500  
Fidelity Government Portfolio Fund - Institutional Class, 0.01% (2)
     39,652,500       39,652,500  
Fidelity Money Market Portfolio - Institutional Class, 0.21%
     39,652,500       39,652,500  
First American Government Obligations Fund - Class Z, 0.00% (2)
     39,652,500       39,652,500  
First American Treasury Obligations Fund - Class Z, 0.00% (2)
     39,652,500       39,652,500  
Total Short-Term Investments (Cost $198,262,500)
           $ 198,262,500  
                   
                   
Total Investments - 111.5% (1) (Cost $221,018,484)
           $ 221,070,015  
Liabilities in Excess of Other Assets - (11.5)% (1)
             (22,785,253 )
Net Assets Applicable to Common Stockholders - 100.0% (1)
           $ 198,284,762  
                   
                   
(1)
Calculated as a percentage of net assets applicable to common stockholders.
                
(2)
Rate reported is the current yield as of February 29, 2012.
                
 
 
Tax Basis

The cost basis of investments for federal income tax purposes at February 29, 2012 was as follows:
 
Cost of investments    $  221,018,484
Gross unrealized appreciation       91,296
Gross unrealized depreciation        (39,765)
Net unrealized appreciation    $  51,531
 
Fair Value Measurements
 
Various inputs that are used in determining the fair value of the Cushing Royalty & Income Fund’s (the “Fund”) investments are summarized in the three broad levels listed below:

·
Level 1 — quoted prices in active markets for identical securities
·
Level 2 — other significant observable inputs (including quoted prices for similar securities, 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 methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
These inputs are summarized in the three broad levels listed below.
 
         
Fair Value Measurements at Reporting Date Using
  
         
Quoted Prices in
          
Significant
  
         
Active Markets for
    
Significant Other
    
Unobservable
  
   
Fair Value at
    
Identical Assets
    
Observable Inputs
    
Inputs
  
Description
  
February 29, 2012
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
Assets
Equity Securities
                        
Master Limited
Partnerships and
Related
Companies (a)
   $ 16,502,642     $ 16,502,642     $ -     $ -  
US Royalty Trusts (a)
     6,304,873       6,304,873       -       -  
Total Equity Securities
     22,807,515       22,807,515       -       -  
Other
                                
Short-Term
  Investments
     198,262,500       198,262,500       -       -  
Total Other
     198,262,500       198,262,500       -       -  
Total
   $ 221,070,015     $ 221,070,015     $ -     $ -  


(a)  
All other industry classifications are identified in the Schedule of Investments.  The Fund did not hold Level 3 investments at any time during the period ended February 29, 2012.

There were no transfers between any levels during the period ended February 29, 2012.

Derivative Financial Instruments

The Fund did not hold any derivative financial instruments during the period ended February 29, 2012.

 
 
 
 
Item 2. Controls and Procedures.
 
(a)  
The Registrant’s President and Treasurer have concluded that the Registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940 (the “1940 Act”)) (17 CFR 270.30a-3(c)) are effective as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(d)).

(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) (17 CFR 270.30a-3(d)) that occurred during the Registrant's last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant's internal control over financial reporting.
 
Item 3. Exhibits.
 
Separate certifications for each principal executive officer and principal financial officer of the Registrant as required by Rule 30a-2(a) under the 1940 Act (17 CFR 270.30a-2(a)).  Filed herewith.
 

 
 
 
 
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.


(Registrant)  Cushing Royalty & Income Fund                                  

 
By (Signature and Title) /s/ Jerry V. Swank                                         
 Jerry V. Swank, President

Date       April 25, 2012                                                                            



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 (Signature and Title) /s/ Jerry V. Swank                                         
 Jerry V. Swank, President

Date      April 25, 2012                                                                            

 
By (Signature and Title) /s/ John H. Alban                                         
 John H. Alban, Treasurer

Date      April 25, 2012