SecProbe.io

CORRESP
1
filename1.htm

October
26, 2023

Kimberly
Browning

Megan
Miller

United
States Securities and Exchange Commission

100
F Street, NE

Washington,
D.C. 20549

Re:       NXG
Cushing Midstream Energy Fund –

Pre-Effective
Amendment No. 1 to Registration Statement

on Form N-2 (File No. 333-273954)

Dear
Ms. Browning and Ms. Miller:

We
are in receipt of the telephonic comments of the staff of the Securities and Exchange Commission (the “SEC”) regarding
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-2 (the “Registration Statement”) of NXG Cushing
Midstream Energy Fund (the “Fund”) that was filed with the SEC on September 26, 2023.

The
Fund has considered your comments and authorized us to make on its behalf the responses and changes to the Registration Statement
discussed below. For ease of reference, your comments are set forth below in bold font and are followed by the corresponding response.

Changes
to disclosure referenced below are reflected in Pre-Effective Amendment No. 2 to the Registration Statement being filed by the
Fund today via EDGAR. We have included page references where revised disclosure addressing a particular comment may be found.

Capitalized
terms not otherwise defined in this response letter have the meaning given to them in the Registration Statement.

Cover
Page and Prospectus Summary

1. See
                                         Division of Corporate Finance CD&I No. 123.05 and consider adding language to the
                                         effect that all filings filed by the Fund pursuant to the Securities Exchange Act of
                                         1934 after "the date of the initial registration statement and prior to effectiveness
                                         of the registration statement" shall be deemed to be incorporated by reference into
                                         the prospectus.”

The
Fund has added the suggested language.

2. Reference
                                         is made to Comment #5 in the original comments, revise disclosure on the cover page to
                                         state that the Fund’s 80% policy includes synthetic exposure through derivatives,
                                         and identify the instruments utilized by the Fund to obtain such synthetic exposure.

The
Fund has revised disclosure as requested.

3. Add
                                         disclosure to the cover page to clarify the types of securities in which the Fund will
                                         invest as part of its principal strategy (for example, equity or debt, U.S. or non-U.S.,
                                         market capitalization size).

The
Fund has added the requested disclosure.

4. If
                                         the Fund invests principally in junk bonds, add disclosure regarding junk bonds to the
                                         cover page.

The
Fund has added the requested disclosure.

5. Add
                                         an explanation of what “concentration” means in the prospectus summary.

The
Fund has added the requested disclosure.

6. Please
                                         explain how the Fund’s concentration policy can be reconciled with the Fund’s
                                         80% policy.

Upon
its inception in 2007, the Fund adopted a concentration policy to concentrate its investments in natural resources companies.
In addition, since inception the Fund has maintained an 80% policy to invest primarily in a particular type of natural resource
company. From inception through 2017, the Fund invested at least 80% of its assets in master-limited partnerships (“MLPs”),
which are a particular type of natural resources company that operates primarily in the midstream energy space. In response to
evolution in the midstream energy markets the Fund has twice modified its 80% policy. In 2017, the Fund modified its 80% policy
to invest at least 80% of its assets in MLPs and businesses that operate similarly to and have the economic characteristics of
MLP Investments but are organized and taxed as “C” corporations or as limited liability companies. And in 2023, the
Fund again modified its 80% policy to invest at least 80% of its assets in midstream energy companies. Accordingly, since inception,
the Fund has invested in accordance with its fundamental concentration policy to invest at least 25% of its assets in natural
resources companies, as well as its non-fundamental 80% policy to invest primarily in a specific type of natural resource company.

The
Fund notes that Section 8(b)(1)(E) of the 1940 Act requires a fund to disclose its policy with respect to “concentrating
investments in a particular industry or group of industries.” Likewise, Item 8(2)(b)(2) of Form N-2 requires a fund to disclose
“the identity of any particular industry or group of industries in which the Registrant proposes to concentrate.”
And the Instruction to that item states that “Concentration, for purposes of this item, is deemed 25 percent or more of
the value of the Registrant’s total assets invested or proposed to be invested in a particular industry or group of industries.”
The 1940 Act does not define “industry or group of industries” nor has the SEC done so, except to the extent of the
limited guidance in former Guide 19 to Form N-1, which stated that “[a] registrant may . . . select its own industry classifications,
but such classifications must be reasonable and should not be so broad that the primary economic characteristics of the companies
in a single class are materially different.” Although the guides have since been rescinded, we understand the Staff believes
Guide 19 is generally instructive with respect to industry concentration.

The
Fund has sought to clarify its interpretation of its concentration policy by adding disclosure clarifying that for purposes of
such investment policy, the Fund considers the natural resources industry to be the industry or group of related industries that
constitute the natural resources sector.

    2

In
addition, the Fund has revised disclosure throughout the Registration Statement to eliminate any references to midstream energy
as a sector, and to clarify in discussing its concentration that the Fund concentrates in natural resources companies, and more
specifically in a particular type of natural resource company: midstream energy companies.

The
Fund respectfully submits that its fundamental concentration policy to concentrate in natural resources companies, and its non-fundamental
80% policy to invest primarily in midstream energy companies, which are a particular type of natural resources company, are not
contradictory and would not result in investor confusion. Investors understand the Fund to be a fund that invests, in accordance
with its name, primarily in midstream energy companies, which are a particular type of company operating within the industry or
group of related industries that make up the natural resources sector.

Summary
of Fund Expenses

7. Please
                                         consider removing footnote 5 and moving such disclosure to the body of prospectus.

The
Fund notes that Form N-2 does not address the presentation of fee and expense waivers in the fee table. However, Form N-1A is
instructive and provides that a fee waiver can be reflected as a line item in the fee table if it will reduce fund operating expenses
for no less than one year from the effective date of the registration statement. (See Instruction 3(e) to Item 3 of Form N-1A).
This instruction does not provide that a fund with a fee waiver of less than one year is prohibited from providing supplemental
information regarding the effect of such waiver outside of the line items of the fee table. The Fund believes that investors will
benefit from receiving such supplemental information in a footnote to the fee table. As noted in Response #8 below, the Fund confirms
that the presentation of the supplemental information is in a smaller font that the fee table and is indented to clearly present
it as part of the footnote. In addition, as noted in Response #22, the expense example has been calculated without giving effect
to the waiver for any portion of the period covered by the example.

8. Revise
                                         footnote 5 to ensure that tabular information appears in a smaller font than the fee
                                         table and is presented as being part of the footnote.

The
Fund confirms that footnote 5, including the tabular information contained therein, is presented in the same font as the rest
of the footnotes, which is a smaller font than the fee table and that the tabular information contained in footnote 5 is indented
to make it clear that it is a part of the footnote.

9. Revise
                                         footnote 5 to clarify that the waiver is contractual.

The
Fund has revised footnote 5 as requested.

10. Please
                                         correct the footnote to the net assets attributable to common shareholders column in
                                         the tabular information in footnote 5.

The
Fund has corrected the footnote as noted.

    3

10. Reference
                                         is made to Comment #27 in the original comments. Please add footnote disclosure to the
                                         fee table to clarify that dividend reinvestment plan fees paid by the Fund are included
                                         in other expenses and ultimately borne by common shareholders.

The
Fund has added the requested footnote disclosure.

11. Please
                                         explain the calculation of the management fee as a percentage of net assets attributable
                                         to common shareholders.

The Fund has recalculated the management fee and other line items of the fee table in accordance with the disclosure regarding the calculation
of such items set forth in the footnotes to the fee table.

12. Please
                                         file the current fee waiver agreement as an exhibit to the Registration Statement.

The
Fund has filed the current fee waiver agreement as exhibit (g)(2) to the Registration Statement.

13. Please
                                         discuss in the body of the Prospectus the terms of the fee waiver in accordance with
                                         Item 20.1(c)(3) of Form N-2.

The
Fund has added the requested disclosure.

14. Reference
                                         is made to Comment #31 in the original comments. State that nothing in the Declaration
                                         of Trust modifying, restricting or eliminating the duties or liabilities of trustees
                                         or other Fiduciary Covered Persons (i.e., officers, members of any advisory board, investment
                                         adviser or advisers, or depositor) covered by the waiver provisions in the Declaration
                                         of Trust shall apply to or in any way limit state law fiduciary duties of loyalty and
                                         care.

The
Fund is organized as a Delaware statutory trust. Section 3806 of the Delaware Statutory Trust Act (“DSTA”) provides
that “[t]o the extent that, at law or in equity, a trustee or beneficial owner or other person has duties (including fiduciary
duties) to a statutory trust or to another trustee or beneficial owner or to another person that is a party to or is otherwise
bound by a governing instrument, the trustee’s or beneficial owner’s or other person’s duties may be expanded
or restricted or eliminated by provisions in the governing instrument; provided, that the governing instrument may not eliminate
the implied contractual covenant of good faith and fair dealing.” As state law fiduciary duties with respect to trustees
of a Delaware statutory trust are defined by both common law and the governing instrument, the Fund respectfully submits that
it would be inaccurate to say that provisions of the Declaration of Trust do not apply to state law fiduciary duties.

However,
the Trust respectfully submits that the language in question contained in Article IX, Section 9(b)(vii) is not intended to be
a waiver of fiduciary duties, either under state or federal law. Instead, Section 9 is intended to clarify that provisions of
non-DSTA trust law – a body of law not traditionally associated with business enterprises – shall not apply to the
Trust. That is evidenced by both clause (a) of Section 9, which states that Section 3540 of Title 12 of the Delaware Code (Section
12 of the Delaware Code being titled “Decedents’ Estates and Fiduciary Relations” and Section 3540 relates to
powers and duties of certain trustees in such context) and clause (b) of Section 9, which begins with the statement that statutory
and common law provisions of Delaware law other than the DSTA shall not apply to the Trust. The purpose of Article IX,
Section 9 is not to abrogate the fiduciary duties applicable to a trustee of a Delaware statutory trust, but to clarify that it
those duties that shall apply, and not the duties that may be applicable in the context of various other forms of non-business
trust.

    4

15. Reference
                                         is made to Comments #32 and #33 in the original comments. Please delete from the disclosure
                                         that the Fund is aware of the Staff’s view.

In
original Comments #32 and #33, you asked us to revise the relevant provisions of the Declaration of Trust to state that they do
not apply to claims arising under the federal securities laws. The Fund is an existing entity in operation since 2007 and the
Declaration of Trust cannot be amended without a vote of shareholders. Therefore, we have included disclosure that we are aware
of the Staff’s view that the applicable provisions do not apply to claims arising under the federal securities laws.

The
Fund respectfully submits that it would be inaccurate for the Fund to disclose flatly that such provisions do not apply, as that
is not the language of the Declaration of Trust. The Fund is organized as a Delaware statutory trust, and as such is governed
by the DSTA. Section 3816 of the DSTA provides that “[a] beneficial owner’s right to bring a derivative action may
be subject to such additional standards and restrictions, if any, as are set forth in the governing instrument of the statutory
trust, including, without limitation, the requirement that beneficial owners owning a specified beneficial interest in the statutory
trust join in the bringing of the derivative action.” The Fund is not aware of any judicial precedent, rule adopted by the
Commission or public pronouncement by the Commission to the effect that the federal securities laws preempt state derivative demand
procedures, including in a proceeding arising under the federal securities laws brought in state court. To the contrary, the Fund
notes that in Kamen v. Kemper Fin. Svcs., Inc. (500 U.S. 90, 500 U.S. 97 (1991)), the U.S. Supreme Court considered the
demand requirements in a derivative action founded on the Investment Company Act of 1940, as amended, and held that federal courts
should abide by the procedural rules governing derivative actions of a fund’s state of incorporation.

To
be clear, the Fund is not disputing the substance of the Staff’s position, but merely seeking to craft disclosure that accurately
reconciles such position with the existing language of the Fund’s governing documents and applicable law.

16. Reference
                                         is made to Comment #32 in the original comments. Please include all requested disclosure.

T