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TORTOISE PIPELINE & ENERGY FUND, INC. TORTOISE ENERGY INDEPENDENCE FUND,INC. | | |
• | Stockholders of NDP will be asked to consider and approve a proposal authorizing the merger of their Fund into TTP; and |
• | Stockholders of TTP will be asked to consider and approve the merger, including the issuance of additional common shares of TTP in connection with the merger. |
• | By touch-tone telephone; simply dial the toll-free number located on the enclosed proxy card. Please be sure to have your proxy card available at the time of the call; |
• | By internet; please log on to the voting website detailed on the enclosed proxy card. Again, please have your proxy card handy at the time you plan on voting; or |
• | By returning the enclosed proxy card in the postage-paid envelope. |
| | Sincerely, | |
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| | P. Bradley Adams | |
| | Chief Executive Officer Tortoise Pipeline & Energy Fund, Inc. Tortoise Energy Independence Fund, Inc. |
Q: | Why is the Merger being recommended by the Board of Directors? |
A: | The Board of Directors of each Fund has recommended the Merger given the Funds have the same investment objectives and it is believed that the Merger will benefit the stockholders of the Funds. Each Fund has an investment objective of providing a high level of total return with an emphasis on current distributions. Under normal circumstances, TTP invests at least 80% of its total assets (including assets obtained through leverage) in equity securities of pipeline and other energy infrastructure companies. Under normal circumstances, NDP invests at least 80% of its total assets (including assets obtained through leverage) in equity securities of North American energy companies, including at least 50% of its Total Assets in equity securities of upstream energy companies. The Combined Fund will expand on the current investment objective and strategy of TTP. The table below shows the portfolio mix of each Fund and on a pro forma basis. |
| | TTP | | | NDP | | | Pro Forma Combined Fund | |
Renewable and Power Infrastructure | | | 7% | | | 10% | | | 45% |
Energy Infrastructure | | | 93% | | | 39% | | | 55% |
Oil and Gas Producers | | | 0% | | | 51% | | | 0% |
Q: | What are the benefits of the proposed Merger? |
A: | After careful consideration, the Board of Directors of each Fund and the Funds’ investment adviser, Tortoise Capital Advisors, L.L.C. (the “Adviser”), believe that the Merger will benefit the stockholders of the Funds for the reasons noted below: |
• | Expanded investment strategy to better capture the opportunity around the global energy evolution |
• | Positive potential impact to distributions |
• | Opportunity for improved trading relationship between net asset value and market price |
• | Operating cost savings through greater economies of scale and reduced management fees |
• | Opportunity for enhanced long-term market liquidity |
| | Market capitalization ($ in millions) | |||||||
| | TTP | | | NDP | | | Pro Forma Combined Fund | |
| | $36.5 | | | $23.3 | | | $59.8 |
• | Leverage impact |
| | TTP | | | NDP | | | Pro Forma Combined Fund | |
Leverage ($ in millions) | | | $20.6 | | | $5.0 | | | $25.7 |
Leverage as % of total assets | | | 29.7% | | | 14.1% | | | 24.5% |
Q: | How will the Merger affect me? |
A: | TTP stockholders will remain stockholders of TTP. NDP stockholders will become stockholders of TTP. NDP will be merged with and into TTP, the assets and liabilities of NDP will be combined with the assets and liabilities of TTP and NDP will cease its separate existence under Maryland law. |
Q: | How many shares of TTP will stockholders own following the Merger? |
A: | TTP stockholders: Your currently issued and outstanding shares of common and preferred stock of TTP will remain outstanding. |
Q: | How will the net asset values utilized in calculating the exchange rate be determined? |
A: | The exchange rate will be determined based on each Fund’s respective net asset value per share as of the business day prior to the closing of the Merger. The net asset value of a share of common stock of each Fund will be calculated as follows: |
• | all liabilities (including accrued expenses and accumulated and unpaid distributions); |
• | accrued and unpaid interest payments on and the aggregate principal amount of any outstanding indebtedness; |
• | any distributions payable on the common stock; and |
• | the Fund’s share of the Merger costs; |
• | the total number of shares of common stock outstanding at such time. |
Q: | Will I have to pay any sales load, commission or other similar fees in connection with the Merger? |
A: | You will pay no sales loads or commissions in connection with the Merger. However, the Funds will bear equally with the Adviser the costs associated with the proposed Merger (whether the Merger is consummated or not) with a cap for the Funds of $125,000 in the aggregate. Costs specific to a particular Fund will be expensed to such Fund, while non-specific costs will be allocated on a pro rata basis based upon each Fund’s net assets. Costs related to the Merger are currently estimated to be $125,000 or 0.2% of net assets, which equates to $76,688 or $0.03 per share for TTP, $48,312 or $0.03 per share for NDP as of November 30, 2020. |
Q: | Is the Merger expected to be a taxable event for Fund stockholders? |
A: | No. The Merger is intended to qualify as tax-free for federal income tax purposes. This means it is expected that stockholders will recognize no gain or loss for federal income tax purposes as a result of the Merger, except that gain or loss may be recognized with respect to cash received in lieu of fractional TTP Common Shares. |
Q: | How will capital losses of NDP be treated in the merger? |
A: | Capital losses from NDP will retain their character (between short and long term) and carried over to the merged fund. The capital losses are available to offset capital gains generated in TTP; however, subject to limitations each year. |
Q: | Will management fees increase in connection with the Merger? |
A: | The contractual advisory fees for both Funds is 1.10% of each Fund’s Managed Assets, which will be reduced to 1.00% of Managed Assets following the Merger. Management fees, on a pro forma basis as a percentage of net assets assuming the Combined Fund’s capital structure and assets levels as of November 30, 2020, are projected to increase for NDP from 1.28% to 1.33%. |
Q: | Will total expenses increase in connection with the Merger? |
A: | The NDP shareholders will see an increase of approximately 0.43% in total annual expenses on a pro forma basis as a percentage of net assets, which includes an increase of 0.05% in management fees on a net assets basis. As a percentage of Managed Assets, NDP shareholders will see a slight increase of 0.02% in total annual expenses on a pro forma basis. |
Q: | Who do we expect to vote on the Merger? |
A: | Stockholders are being asked to vote on proposals relating to the Merger of the Funds. As laid out in the tables below, the proposals vary, depending on the Fund. |
TTP stockholders | | | | | |||||
Voting Proposals | | | Stockholders Entitled to Vote | ||||||
• | | | Approval of Merger of NDP into TTP, including the issuance of additional TTP Common Shares to NDP stockholders | | | • | | | Common and Preferred (voting as a class) |
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NDP stockholders | | | | | |||||
Voting Proposal | | | | | |||||
• | | | Approval of Merger of NDP into TTP | | | • | | | Common |
Q: | Why is the vote of TTP stockholders being solicited in connection with the Merger? |
A: | Although TTP will continue its legal existence and operations after the Merger, Maryland law and the rules of the NYSE (on which TTP’s common stock is listed) require TTP’s stockholders to approve the Merger and the issuance of additional TTP Common Shares, respectively, because the number of TTP Common Shares to be issued in the Merger will be, upon issuance, in excess of 20 percent of the number of shares of TTP common stock outstanding prior to the Merger. |
Q: | What happens if the stockholders of TTP do not approve the Merger, including the issuance of additional TTP Common Shares in connection with the Merger? |
A: | If the Merger, including the issuance of TTP Common Shares, is not approved, the Merger will not occur and TTP will continue its investment activities in the normal course. |
Q: | What happens if NDP stockholders do not approve the Merger? |
A: | If the Merger is not approved, then the Merger will not take place. As noted above, the Merger also requires the approval of TTP stockholders. |
Q: | What is the timetable for the Merger? |
A: | If the stockholder voting and other conditions to closing are satisfied, the Merger is expected to take effect on or about April 16, 2021 or as soon as practicable thereafter. |
Q: | When and where will the Meeting be held? |
A: | We intend to hold the Meeting on April 7, 2021, at 10 a.m. Central Time at 5100 W. 115th Place, Leawood, Kansas 66211. |
Q: | What other proposals are being considered at the Meeting? |
A: | No business may be transacted at the meeting other than the matters set forth in the notice of meeting accompanying this proxy statement and procedural matters relating thereto. |
Q: | How does the Board of Directors of my Fund suggest that I vote? |
A: | After careful consideration, the Board of Directors of each Fund recommends that you vote “FOR” each of the items proposed for your Fund. |
Q: | How do I vote my shares? |
A: | You may vote at the Meeting or you may authorize a proxy to vote your shares using one of the methods below or by following the instructions on your proxy card: |
• | By touch-tone telephone; simply dial the toll-free number located on the enclosed proxy card. Please be sure to have your proxy card available at the time of the call; |
• | By internet; please log on to the voting website detailed on the enclosed proxy card. Again, please have your proxy card handy at the time you plan on voting; or |
• | By returning the enclosed proxy card in the postage-paid envelope. |
Q: | Who do I contact for further information? |
Q: | Will anyone contact me? |
A: | You may receive a call from AST Fund Solutions, the proxy solicitor hired by your Fund, to verify that you received your proxy materials, to answer any questions you may have about the proposals and to encourage you to authorize your proxy. We recognize the inconvenience of the proxy solicitation process and would not impose it on you if we did not believe that the matters being proposed were important. Once your vote has been registered with the proxy solicitor, your name will be removed from the solicitor’s follow-up contact list. |
• | to consider and vote upon a proposal to approve the merger of NDP with and into TTP. |
• | to consider and vote upon a proposal to approve the merger of NDP with and into TTP, including the issuance of additional shares of common stock of TTP in connection therewith. |
| | By Order of the Board of Directors of each Fund, | |
| | ||
| | ||
| | Diane M. Bono | |
| | Secretary | |
| | Tortoise Pipeline & Energy Fund, Inc. Tortoise Energy Independence Fund, Inc. | |
| | ||
| | February 24, 2021 |
• | to consider and vote upon a proposal to approve the merger of NDP with and into TTP. |
• | to consider and vote upon a proposal to approve the merger of NDP with and into TTP, including the issuance of additional shares of common stock of TTP in connection therewith. |
Stockholders Entitled to Vote | | | Proposal |
NDP common stockholders | | | to consider and vote upon a proposal to approve the merger of NDP with and into TTP. |
| | ||
TTP common and preferred stockholders (voting as a class) | | | to consider and vote upon a proposal to approve the merger of NDP with and into TTP, including the issuance of additional shares of common stock of TTP in connection therewith. |
• | Each Fund has an investment objective of providing stockholders a high level of total return with an emphasis on current distributions. |
• | The Combined Fund would have an expanded investment strategy to better capture the opportunity around the global energy evolution. |
• | The expectation that the Combined Fund will have the ability to support an increased distribution. Assuming the merger is completed as proposed, the Adviser intends to recommend that the Board of Directors of the combined fund approve a distribution of not less than $0.1925 per TTP common share ($0.77 annualized) beginning the fiscal 2nd quarter of 2021, based on the combined fund’s expected distributions from investments, the lower anticipated operating expenses per share, and the expected costs of leverage. This would represent a 20.3% increase from TTP’s current quarterly distribution of $0.16 per share. |
• | The opportunity for an improved trading relationship between NAV and market price. |
• | The Merger may create the opportunity for enhanced market liquidity over the long-term. |
• | The expectation of cost savings at the Combined Fund through the reduction of duplicative fixed expenses and a reduction in variable expenses and a lower management fee as a result of the implementation of a reduced management fee following the Merger. Effective at the time of the Merger, the Adviser has agreed to a reduced management fee of 1.00% of Managed Assets from the current rate of 1.10% of Managed Assets for the Combined Fund. |
• | No gain or loss is expected to be recognized by stockholders of either Fund for U.S. federal income tax purposes as a result of the Merger (except with respect to any cash received in lieu of fractional TTP Common Shares), although the Internal Revenue Service may take a contrary position. |
• | The expectation that NDP stockholders should carry over to TTP the same aggregate tax basis (reduced by any amount of tax basis allocable to a fractional share of common stock for which cash is received) if the Merger is treated as tax-free as intended. |
• | The exchange will take place at the Funds’ relative NAV. |
• | Stockholder rights are expected to be preserved in the Combined Fund. |
• | The Adviser is expected to continue to manage the Combined Fund. |
• | The larger asset base of the Combined Fund may provider greater financial flexibility through a larger balance sheet, access to more attractive leverage terms and a wider range of leverage alternatives. |
• | The relative performance history of each Fund. |
Stockholder Transaction Expenses | | | TTP | | | NDP | | | Pro Forma Combined Fund (NDP into TTP)(1)(2) |
Maximum Sales Load (as a percentage of the offering price) imposed on purchases of common stock(3) | | | None | | | None | | | None |
Dividend Reinvestment and Cash Purchase Plan Fees | | | None | | | None | | | None |
Annual Expenses (as a percentage of net assets attributable to common stock as of November 30, 2020) | | | | | | | |||
Investment Management Fees | | | 1.57% | | | 1.28% | | | 1.33% |
Leverage Costs(4) | | | 2.20% | | | 0.20% | | | 1.42% |
Other Expenses(5) | | | 1.03% | | | 1.45% | | | 0.61% |
Total Annual Expenses(6) | | | 4.80% | | | 2.93% | | | 3.36% |
| | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | |
TTP | | | $48 | | | $144 | | | $240 | | | $485 |
NDP | | | $30 | | | $91 | | | $154 | | | $325 |
Pro Forma Combined Fund (NDP into TTP)(a) | | | $34 | | | $103 | | | $175 | | | $365 |
(a) | These figures assume that the Merger had taken place on November 30, 2020. These figures assume a change in the management fees paid to the Adviser effective at the time of the Merger from 1.10% to 1.00% of Managed Assets for the Combined Fund. As indicated in the table above, management fees, as a percentage of net assets, will increase for NDP from 1.28% to 1.33%. These figures also reflect the anticipated reduction in other operating expenses due to elimination of certain duplicative expenses as a result of the Merger. |
(1) | The pro forma annual operating expenses are projections for a 12-month period and do not include expenses to be borne by the Funds in connection with the Merger. |
(2) | Each Fund will bear expenses incurred in connection with the Merger (whether the Merger is consummated or not), including but not limited to, costs related to the preparation and distribution of materials distributed to each Fund’s Board of Directors, expenses incurred in connection with the preparation of the Merger Agreement and the registration statement on Form N-14, SEC filing fees and legal and accounting fees in connection with the Merger, legal fees incurred preparing each Fund’s Board materials, attending each Fund’s Board meetings, stock exchange fees, transfer agency fees and any similar expenses incurred in connection with the Merger. The Funds will share equally with the Adviser the costs associated with the Merger, with a cap for the Funds of $125,000 in the aggregate. Expenses specific to one or each of TTP or NDP are expensed as incurred while non-fund specific expenses are allocated on a pro rata basis based upon net assets. Expenses are estimated to be $76,688 for TTP and $48,312 for NDP, for a total of $125,000. Costs related to the Merger is currently estimated to be approximately 0.2% of net assets, which equates to $0.03 per share for TTP and $0.03 per share for NDP as of November 30, 2020. |
(3) | No sales load will be charged in connection with the issuance of the TTP Common Shares as part of the Merger. Shares of common stock are not available for purchase from the Funds but shares of TTP may be purchased on the NYSE through a broker-dealer subject to individually negotiated commission rates. Shares of common stock purchased in the secondary market may be subject to brokerage commissions or other charges. |
(4) | Leverage Costs in the table reflect the interest payable on outstanding senior notes, unsecured credit facilities and secured margin borrowing facility at borrowing rates as of November 30, 2020 expressed as a percentage of net assets as of November 30, 2020. The Pro Forma Combined Fund (NDP into TTP) Leverage Costs assumes the termination of NDP’s margin borrowing facility and subsequent increase in the unsecured credit facility of TTP to absorb the amount outstanding on the NDP margin borrowing facility at November 30, 2020. |
(5) | Other Expenses for each Fund reflect fixed expenses for a trailing 12-month period excluding premiums paid on redemption of leverage and variable expenses assuming each Fund’s capital structure and asset levels as of November 30, 2020. Other Expenses for the Pro Forma Combined Fund (NDP into TTP) are projections for a 12-month period, assuming each Fund’s capital structure and asset levels as of November 30, 2020. |
(6) | The table and example above present certain annual expenses stated as a percentage of net assets attributable to common shares. This results in a higher percentage than the percentage attributable to annual expenses stated as a percentage of Managed Assets. See “Compensation and Expenses” on page 24. |
• | Supply and Demand Risk. A decrease in the production of natural gas, NGLs, crude oil, coal, refined petroleum products or other energy commodities, or a decrease in the volume of such commodities available for transporting, storing, gathering, processing, distributing, exploring, developing, managing or producing may adversely impact the financial performance and profitability of energy infrastructure companies. Production declines and volume decreases could be caused by various factors, including depletion of resources, declines in estimates of proved reserves, labor difficulties, political events, OPEC actions, changes in commodity prices, declines in production from existing facilities, environmental proceedings, increased regulations, equipment failures and unexpected maintenance problems, failure to obtain necessary permits, unscheduled outages, unanticipated expenses, inability to successfully carry out new construction or acquisitions, import supply disruption, increased competition from alternative energy sources or related commodity prices and other events. Alternatively, a sustained decline in or varying demand for such commodities could also adversely affect the financial performance of energy infrastructure companies. Factors that could lead to a decline in demand include economic recession or other adverse economic conditions, higher fuel taxes or governmental regulations, increases in fuel economy, consumer shifts to the use of alternative fuel sources, changes in commodity prices or weather. |
• | Operating Risk. energy infrastructure companies are subject to many operating risks, including: equipment failure causing outages; structural, maintenance, impairment and safety problems; transmission or transportation constraints, inoperability or inefficiencies; dependence on a specified fuel source, including the transportation of fuel; changes in electricity and fuel usage; availability of competitively priced alternative energy sources; changes in generation efficiency and market heat rates; lack of sufficient capital to maintain facilities; significant capital expenditures to keep older assets operating efficiently; seasonality; changes in supply and demand for energy commodities; catastrophic and/or weather- related events such as fires, explosions, floods, earthquakes, hurricanes and similar occurrences; storage, handling, disposal and decommissioning costs; and environmental compliance. Breakdown or failure of a pipeline or other energy infrastructure company’s assets may prevent the company from performing under applicable sales agreements, which in certain situations, could result in termination of the agreement or incurring a liability for liquidated damages. A company’s ability to successfully and timely complete capital improvements to existing or other capital projects is contingent upon many variables. Should any such efforts be unsuccessful, a pipeline or other energy infrastructure company could be subject to additional costs and / or the write-off of its investment in the project or improvement. As a result of the above risks and other potential hazards associated with energy infrastructure companies, certain companies may become exposed to significant liabilities for which they may not have adequate insurance coverage. Any of the aforementioned risks or related regulatory and environmental risks could have a material adverse effect on the business, financial condition, results of operations and cash flows of energy infrastructure companies. |
• | Regulatory Risk. Energy infrastructure issuers are subject to regulation by various governmental authorities in various jurisdictions and may be adversely affected by the imposition of special tariffs and changes in tax laws, regulatory policies and accounting standards. Regulation exists in multiple aspects of their operations, including how facilities are constructed, maintained and operated, environmental and safety controls, and the prices they may charge for the products and services they provide. Various governmental authorities have the power to enforce compliance with these regulations and the permits issued under them, and violators are subject to administrative, civil and criminal penalties, including fines, injunctions or both. Stricter laws, regulations or enforcement policies could be enacted in the future which may increase compliance costs and may adversely affect the financial performance of energy infrastructure companies. Pipeline companies engaged in interstate pipeline transportation of natural gas, refined petroleum products and other products are subject to regulation by the Federal Energy Regulatory Commission (“FERC”) with respect to tariff rates these companies may charge for pipeline transportation services. An adverse determination by the FERC with respect to the tariff rates of a pipeline or other energy infrastructure company could have a material adverse effect on its business, financial condition, results of operations and cash flows and its ability to make cash distributions to its equity owners. Prices for certain electric power companies are regulated in the U.S. with the intention of protecting the public while ensuring that the rate of return earned by such companies is sufficient to attract growth capital and to provide appropriate services but do not provide any assurance as to achievement of earnings levels. We could become subject to the FERC’s jurisdiction if we are deemed to be a holding company of a public utility company or of a holding company of a public utility company, and we may be required to aggregate securities held by us or other funds and accounts managed by the Adviser and its affiliates, or be prohibited from buying certain securities or be forced to divest certain securities. |
• | Environmental Risk. Energy infrastructure company activities are subject to stringent environmental laws and regulation by many federal, state and local authorities, international treaties and foreign governmental authorities. Failure to comply with such laws and regulations or to obtain any necessary environmental permits pursuant to such laws and regulations could result in fines or other sanctions. Congress and other domestic and foreign governmental authorities have either considered or implemented various laws and regulations to restrict or tax certain emissions, particularly those involving air and water emissions. Existing environmental regulations could be revised or reinterpreted, new laws and regulations could be adopted or become applicable, and future changes in environmental laws and regulations could occur, which could impose additional costs on the operation of power plants. Energy infrastructure companies have made and will likely continue to make significant capital and other expenditures to comply with these and other environmental laws and regulations. Changes in, or new, environmental restrictions may force energy infrastructure companies to incur significant expenses or expenses that may exceed their estimates. There can be no assurance that such companies would be able to recover all or any increased environmental |
• | Price Volatility Risk. The volatility of energy commodity prices can affect certain energy infrastructure companies due to the impact of prices on the volume of commodities transported, stored, gathered, processed, distributed, developed or produced. Most pipeline companies are not subject to direct commodity price exposure because they do not own the underlying energy commodity. Nonetheless, the price of a pipeline company security can be adversely affected by the perception that the performance of all such entities is directly tied to commodity prices. However, the operations, cash flows and financial performance of other energy infrastructure companies in which we will invest may be more directly affected by energy commodity prices, especially those energy companies owning the underlying energy commodity. |
• | Terrorism Risk. Energy infrastructure companies, and the market for their securities, are subject to disruption as a result of terrorist activities, such as the terrorist attacks on the World Trade Center on September 11, 2001; war, such as the wars in Afghanistan and Iraq and their aftermaths; and other geopolitical events, including upheaval in the Middle East or other energy producing regions. The U.S. government has issued warnings that energy assets, specifically those related to energy infrastructure, production facilities, and transmission and distribution facilities, might be specific targets of terrorist activity. Such events have led, and in the future may lead, to short-term market volatility and may have long-term effects on companies in the energy infrastructure industry and markets. Such events may also adversely affect our business and financial condition. |
• | Natural Disaster Risk. Natural risks, such as earthquakes, flood, lightning, hurricanes and wind, are inherent risks in infrastructure company operations. For example, extreme weather patterns, such as Hurricane Ivan in 2004 and Hurricanes Katrina and Rita in 2005, the Tohuku earthquake and resulting tsunami in Japan in 2011, Hurricane Sandy in 2012 and Hurricane Harvey in 2017, or the threat thereof, could result in substantial damage to the facilities of certain companies located in the affected areas and significant volatility in the supply of energy and could adversely impact the prices of the securities in which we invest. This volatility may create fluctuations in commodity prices and earnings of energy infrastructure companies. |
• | Climate Change Regulation Risk. Climate change regulation could result in increased operations and capital costs for the companies in which we invest. Voluntary initiatives and mandatory controls have been adopted or are being discussed both in the United States and worldwide to reduce emissions of “greenhouse gases” such as carbon dioxide, a by-product of burning fossil fuels, which some scientists and policymakers believe contribute to global climate change. These measures and future measures could result in increased costs to certain companies in which we invest to operate and maintain facilities and administer and manage a greenhouse gas emissions program and may reduce demand for fuels that generate greenhouse gases and that are managed or produced by companies in which we invest. |
• | Renewable and power infrastructure companies are subject to many risks, including earnings variability based upon weather patterns in the locations where the company operates, the change in the demand for electricity, the cost to produce power, and the regulatory environment. Further, share prices are partly based on the interest rate environment, the sustainability and potential growth of the dividend, and the outcome of various rate cases undertaken by the company or a regulatory body. |
• | Because the Combined Fund will invest in renewable energy companies, the value of Combined Fund shares may be affected by events that adversely affect that industry, such as technology obsolescence, short product lifecycles, falling prices and profits, competition and general economic conditions, and may fluctuate more than that of a fund that does not concentrate in sustainable energy solutions companies. |
• | Pipeline companies are subject to varying demand for crude oil, natural gas, NGLs or refined products in the markets served by the pipeline; changes in the availability of products for transporting, gathering, processing or sale due to natural declines in reserves and production in the supply areas serviced by the company’s facilities; sharp decreases in crude oil or natural gas prices that cause producers to curtail production or reduce capital spending for exploration activities; and environmental regulation. Specifically, demand for gasoline, which accounts for a substantial portion of refined product transportation, depends on price, prevailing economic conditions in the markets served, and demographic and seasonal factors. |
• | Processing companies are subject to declines in production of natural gas fields, which utilize the processing facilities as a way to market the gas, prolonged depression in the price of natural gas, which curtails production due to lack of drilling activity and declines in the prices of NGL products and natural gas prices, resulting in lower processing margins. |
• | Integrated energy companies are impacted by declines in the demand for and prices of natural gas, crude oil and refined petroleum products. Reductions in prices for natural gas and crude oil can cause a given reservoir to become uneconomic for continued production earlier than it would if prices were higher. The operating margins and cash flows of integrated energy companies may fluctuate widely in response to a variety of factors, including global and domestic economic conditions, weather conditions, natural disasters, the supply and price of imported energy commodities, change in the level and relationship in crude oil and refined petroleum product pricing, political instability, conservation efforts and governmental regulation. The accuracy of any reserve estimate is a function of the quality of available data, the accuracy of assumptions regarding future commodity prices and costs, and engineering and geological interpretations and judgments. Due to natural declines in reserves and production, exploitation and production companies must economically find or acquire and develop additional reserves in order to maintain and grow their revenues and distributions. Integrated energy companies are also subject to risks related to operations (such as fires and explosions) as well as the potential environmental and regulatory risks of such events, which may adversely impact their business and financial condition. |
• | Renewable and power infrastructure companies are subject to many risks, including earnings variability based upon weather patterns in the locations where the company operates, the change in the demand for electricity, the cost to produce power, and the regulatory environment. Furthermore, share prices are partly based on the interest rate environment, the sustainability and potential growth of the dividend, and the outcome of various rate cases undertaken by the company or a regulatory body. |
• | the likelihood of greater volatility of NAV, market price and dividend rate of the common shares than a comparable portfolio without leverage; |
• | the risk that fluctuations in interest rates or dividend rates on any leverage that the Combined Fund must pay will reduce the return to the common shareholders; |
• | the effect of leverage in a declining market, which is likely to cause a greater decline in the NAV of the common shares than if the Combined Fund were not leveraged, which may result in a greater decline in the market price of the common shares; and |
• | leverage may increase operating costs, which may reduce total return. In addition, because the fee paid to the Adviser will be calculated on the basis of Managed Assets, the fees will increase when leverage is utilized, giving the Adviser an incentive to utilize leverage. Further, following the Merger, the total amount of Leverage will increase for the Combined Fund. We cannot assure you that the use of leverage will result in a higher yield on the common shares. |
• | Each Fund has an investment objective of providing stockholders a high level of total return with an emphasis on current distributions. |
• | The Combined Fund’s expanded investment strategy will better capture the opportunity around the global energy evolution. |
• | The expectation of a positive impact to distributions. |
• | The opportunity for an improved trading relationship between NAV and market price. |
• | The expectation of cost savings through the reduction of duplicative fixed expenses, a reduction in variable expenses and a lower effective management fee. |
• | The Merger may create the opportunity for enhanced market liquidity over the long-term. |
• | The larger asset base of the Combined Fund may provide greater financial flexibility. |
• | No gain or loss is expected to be recognized by stockholders of the Funds for U.S. federal income tax purposes as a result of the Merger. |
• | The expectation that NDP stockholders should carry over to TTP the same aggregate tax basis (reduced by any amount of tax basis allocable to a fractional share of common stock for which cash is received) if the Merger is treated as tax-free as intended. |
• | The exchange will take place at the Funds’ relative net asset values. |
• | Stockholder rights are expected to be preserved. |
• | The Adviser is expected to continue to manage the Combined Fund. |
• | The relative performance history of each Fund. |
• | issue senior securities, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | borrow money, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | make loans, except by the purchase of debt obligations, by entering into repurchase agreements or through the lending of portfolio securities and as otherwise permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | concentrate (invest 25% or more of total assets) our investments in any particular industry, except that we will concentrate our assets in the group of industries constituting the energy infrastructure sector; |
• | underwrite securities issued by others, except to the extent that we may be considered an underwriter within the meaning of the Securities Act of 1933, as amended (the “1933 Act”), in the disposition of restricted securities held in our portfolio; |
• | purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, except that we may invest in securities or other instruments backed by real estate or securities of companies that invest in real estate or interests therein; and |
• | purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments, except that we may purchase or sell options and futures contracts or invest in securities or other instruments backed by physical commodities. |
• | Under normal circumstances, we will invest at least 80% of our Total Assets in equity securities of energy infrastructure companies which includes midstream energy infrastructure and renewable and power infrastructure companies; |
• | We may invest up to 50% of our Total Assets in securities issued by non-U.S. issuers (including Canadian issuers); |
• | We may invest up to 30% of our Total Assets in restricted securities that are ineligible for resale under Rule 144A under the 1933 Act, all of which may be illiquid securities, primarily through direct investments in securities of listed companies. For purposes of this limitation, “restricted securities” include (i) registered securities of public companies subject to a lock-up period, (ii) unregistered securities of public companies with registration rights, and (iii) unregistered securities of public companies that become freely tradable with the passage of time; |
• | We will not invest in privately held companies; |
• | We may invest up to 20% of our Total Assets in debt securities, including those rated below investment grade, commonly referred to as “junk bonds”; |
• | We will not invest more than 10% of our Total Assets in any single issuer; and |
• | We will not engage in short sales. |
• | The Funds differ in the types of leverage they have outstanding; |
• | The Combined Fund will pay the Adviser a fee equal to 1.00% of the Combined Fund’s average monthly Managed Assets compared with 1.10% for each Fund prior to the Merger; |
• | The Combined Fun on a pro form basis is estimated to have net assets of $78.3 million, compared with $48.1 million and $30.3 million for TTP and NDP, respectively, as of November 30, 2020; |
• | The common shares of the Fund will be listed under the symbol “TTP” and the “NDP” ticker symbol will be retired following the Merger. |
• | The Combined Fund will adopt an expanded strategy. Under normal circumstances, the Combined Fund will invest at least 80% of its total assets (including assets obtained through leverage) in equity securities of energy infrastructure companies, including renewable and power infrastructure companies. The Combined Fund may not (i) under normal circumstances, invest less than 80% of its total assets in equity securities issued by energy infrastructure companies, (ii) invest more than 50% of its total assets in non-U.S. issuers, (iii) invest more than 20% of its total assets in debt securities; (iv) invest more than 10% of its total assets in any single issuer or (v) engage in short sales. |
| | TTP | | | NDP | | | Combined Fund | |
Organization | | | Each Fund is a Maryland corporation registered as a non-diversified, closed-end management investment company under the 1940 Act. | ||||||
| | | | | | ||||
Fiscal Year End Date | | | November 30 for each Fund | ||||||
| | | | | | ||||
Investment Adviser | | | Tortoise Capital Advisors, L.L.C. is the investment adviser for each Fund. | ||||||
| | | | | | ||||
Investment Advisory Fee Structure | | | Each Fund pays the Adviser a fee equal on an annual basis to 1.10% of such Fund’s average monthly Managed Assets. | | | The Combined Fund will pay the Adviser quarterly, as compensation for the services rendered by it, a fee equal on an annual basis to 1.00% of the Combined Fund’s average monthly Managed Assets. | |||
| | | | | | ||||
Net Assets as of November 30, 2020 | | | $48.1 million | | | $30.3 million | | | $78.3 million (pro forma) |
| | | | | | ||||
Listing of Common Shares | | | NYSE under the symbol “TTP” | | | NYSE under the symbol “NDP” | | | NYSE under the symbol “TTP” |
| | | | | | ||||
Investment Objective | | | A high level of total return with an emphasis on current distributions paid to stockholders. | ||||||
| | | | | | ||||
Fundamental Investment Policies | | | Each of the Funds has identical fundamental investment policies. “See “Proposal 1: Merger—Investment Objective and Policies of the Combined Fund.” | ||||||
| | | | | | ||||
Nonfundamental Investment Policies | | | Under normal circumstances, TTP will invest at least 80% of its total assets (including assets obtained through leverage) in equity securities and pipeline and other energy infrastructure companies. TTP may not (i) under normal circumstances, invest less than 80% of its total assets in equity securities issued pipeline and other energy infrastructure companies, (ii) invest more than 30% of its total assets in non-U.S. issuers, (iii) invest more than 20% of its total assets in debt securities; (iv) invest more than 10% of its total assets in any single issuer or (v) engage in short sales. | | | Under normal circumstances, NDP will invest at least 80% of its total assets in equity securities of North American energy companies. NDP may not (i) under normal circumstances, invest less than 70% of its total assets in equity securities issued of upstream energy companies, (ii) invest more than 35% of its total assets in non-U.S. issuers, (iii) invest more than 20% of its total assets in debt securities; (iv) invest more than 10% of its total assets in any single issuer or (v) engage in short sales. | | | Under normal circumstances, the Combined Fund will invest at least 80% of its total assets (including assets obtained through leverage) in equity securities of energy infrastructure companies, including renewable and power infrastructure companies. The Combined Fund may not (i) under normal circumstances, invest less than 80% of its total assets in equity securities issued by energy infrastructure companies, (ii) invest more than 50% of its total assets in non-U.S. issuers, (iii) invest more than 20% of its total assets in debt securities; (iv) invest more than 10% of its total assets in any single issuer or (v) engage in short sales. |
| | TTP | | | NDP | | | Combined Fund | |
Tax Treatment | | | Each Fund is taxed as a regulated investment company. | ||||||
Leverage | | | Each Fund may borrow money, issue preferred stock or issue other senior securities to the extent permitted by the 1940 Act | ||||||
| | | | | | ||||
| | TTP has $6.1 million of Mandatory Redeemable Preferred Stock and $14.5 million of senior notes outstanding, and has entered into a $20.0 million 364 day evergreen credit facility. As of November 30, 2020, TTP had no balance outstanding under the credit facility. | | | NDP has no preferred stock or senior notes outstanding and has entered into a $12.0 million 179 day evergreen credit facility. As of November 30, 2020, NDP had $5.0 million outstanding under the credit facility. | | | The Combined Fund will have the same preferred stock and senior notes outstanding as TTP. Any outstanding balance on the NDP credit facility will be moved to the TTP credit facility on completion of the Merger. |
Annual Expenses (as a percentage of Managed Assets as of November 30, 2020) | | | TTP | | | NDP | | | Pro Forma Combined Fund (NDP into TTP)(a) |
Investment Management Fees | | | 1.10% | | | 1.10% | | | 1.00% |
Other Operating Expenses(b) | | | 0.72% | | | 1.24% | | | 0.46% |
Total Annual Operating Expenses | | | 1.82% | | | 2.34% | | | 1.46% |
Leverage Expenses(c) | | | 1.54% | | | 0.17% | | | 1.07% |
Total Annual Expenses | | | 3.36% | | | 2.51% | | | 2.53% |
| | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | |
TTP | | | $34 | | | $103 | | | $175 | | | $365 |
NDP | | | $25 | | | $78 | | | $133 | | | $284 |
Pro Forma Combined Fund (NDP into TTP)(d) | | | $26 | | | $79 | | | $135 | | | $287 |
(a) | The pro forma annual operating expenses are projections for a 12-month period and do not include expenses to be borne by the Funds in connection with the Merger. |
(b) | Other Expenses for each Fund reflect fixed expenses for a trailing 12-month period excluding premiums paid on redemption of leverage and variable expenses assuming each Fund’s capital structure and asset levels as of November 30, 2020. Other Expenses for the Pro Forma Combined Fund (NDP into TTP) are projections for a 12-month period, assuming each Fund’s capital structure and asset levels as of November 30, 2020. |
(c) | Leverage Costs in the table reflect the interest payable on outstanding senior notes, unsecured credit facilities and secured margin borrowing facility at borrowing rates as of November 30, 2020 expressed as a percentage of managed assets as of November 30, 2020. The Pro Forma Combined Fund (NDP into TTP) Leverage Costs assumes the termination of NDP’s margin borrowing facility and subsequent increase in the unsecured credit facility of TTP to absorb the amount outstanding on the NDP margin borrowing facility at November 30, 2020. |
(d) | These figures assume that the Merger had taken place on November 30, 2020. These figures also assume a change in the management fees paid to the Adviser effective at the time of the Merger from 1.10% to 1.00% of Managed Assets. These figures also reflect the anticipated reduction in other operating expenses due to elimination of certain duplicative expenses as a result of the Merger. |
Service | | | Provider |
Investment Adviser | | | Each Fund: Tortoise Capital Advisors, L.L.C. |
| | ||
Custodian | | | Each Fund: U.S. Bank, N.A. |
| | ||
Transfer Agent, Dividend Disbursing and Reinvestment Agent | | | Each Fund: Computershare Trust Company, N.A. |
| | ||
Administrator | | | Each Fund: U.S. Bancorp Fund Services, LLC |
| | ||
Fund Accounting | | | Each Fund: U.S. Bancorp Fund Services, LLC |
| | ||
Independent Registered Public Accounting Firm | | | Each Fund: Ernst & Young LLP |
| | ||
Fund Counsel | | | Each Fund: Husch Blackwell LLP |
| | TTP | | | NDP | | | Pro Forma (NDP into TTP) | |
| | (Unaudited) | | | (Unaudited) | | | (Unaudited) | |
Short-term debt: | | | | | | | |||
Revolving credit facility(1) | | | $— | | | $5,000,000 | | | $5,125,000 |
| | | | | | ||||
Long-term debt: | | | | | | | |||
Senior Notes(2) | | | 14,457,143 | | | — | | | 14,457,143 |
| | | | | | ||||
Preferred Stock: | | | | | | | |||
Mandatory Redeemable Preferred Shares(2) | | | 6,100,000 | | | — | | | 6,100,000 |
| | | | | | ||||
Net Assets Applicable to Common Stockholders Consist of | | | | | | | |||
Capital Stock, $0.001 par value per share(3) | | | 2,409 | | | 1,846 | | | 3,927(3) |
Additional paid-in capital | | | 185,570,919 | | | 222,058,506 | | | 407,504,425(3) |
Total distributable earnings (accumulated losses) | | | (137,464,992) | | | (191,753,405) | | | (329,218,397) |
Net assets applicable to common stockholders | | | $48,108,336 | | | $30,306,947 | | | $78,289,955 |
(1) | As of November 30, 2020, TTP had unsecured revolving credit facility and NDP had a secured revolving credit facility. The Pro Forma Combined Fund (NDP into TTP) assumes the termination of NDP’s credit facility and subsequent increase in the credit facility of TTP to absorb the amount outstanding on the NDP margin borrowing facility at November 30, 2020. |
(2) | None of these outstanding shares/notes are held by us or for our account. |
(3) | Reflects the capitalization adjustments giving the effect of the transfer of shares of TTP which NDP stockholders will receive as if the Merger had taken place on November 30, 2020. The expenses related to a resulting merger of TTP and NDP are estimated to be $76,688 for TTP and $48,312 for NDP, for a total of $125,000. The foregoing should not be relied upon to reflect the number of shares of TTP that will actually be received on or after such date. |
Issuer - Title of Class | | | Amount Authorized | | | Amount Held by the Fund for its Account | | | Amount Outstanding |
TTP – Preferred Stock(1) | | | $6,100,000 | | | 0 | | | $6,100,000 |
TTP – Common Stock | | | $100,000,000 | | | 0 | | | $2,409,128 |
TTP – Notes: Series D(2) | | | $16,000,000 | | | 0 | | | $10,514,286 |
Series H(3) | | | $6,000,000 | | | 0 | | | $3,942,857 |
NDP – Common Stock | | | $100,000,000 | | | 0 | | | $1,845,997 |
(1) | The TTP preferred stock consists of Series B Mandatory Redeemable Preferred (“MRP”) Shares which have a mandatory redemption date of December 13, 2024 and pay distributions at an annual rate of 6.57%. Each share has a liquidation preference of $25.00. |
(2) | The TTP Series D notes mature December 15, 2021 and bear a fixed interest rate of 4.08%. |
(3) | The TTP Series H notes mature December 13, 2024 and bear a fixed interest rate of 3.97%. |
• | market conditions; |
• | the timing of our investments in portfolio securities; |
• | the securities comprising our portfolio; |
• | changes in interest rates (including changes in the relationship between short-term rates and long-term rates); |
• | the amount and timing of the use of borrowings and other leverage by us; |
• | the effects of leverage on our common stock (discussed above under “Leverage”); |
• | the timing of the investment of offering proceeds and leverage proceeds in portfolio securities; and |
• | our net assets and operating expenses. |
• | one-tenth or more but less than one-third; |
• | one-third or more but less than a majority; or |
• | a majority or more of all voting power. |
| | | | Sales Price(2) | | | High Sales Price to NAV(3) | | | Low Sales Price to NAV(3) | |||||
Quarter Ended | | | NAV(1)(2) | | | High | | | Low | | |||||
Fiscal Year Ended November 30, 2019 | | | | | | | | | | | |||||
First Quarter | | | | | | | | | | | |||||
TTP | | | $65.20 | | | $63.32 | | | $46.48 | | | -2.9% | | | -28.7% |
NDP | | | $60.56 | | | $82.16 | | | $50.32 | | | 35.7% | | | -16.9% |
Second Quarter | | | | | | | | | | | |||||
TTP | | | $62.72 | | | $62.20 | | | $56.08 | | | -0.8% | | | -10.6% |
NDP | | | $47.52 | | | $74.64 | | | $59.20 | | | 57.1% | | | 24.6% |
Third Quarter | | | | | | | | | | | |||||
TTP | | | $57.28 | | | $59.68 | | | $47.48 | | | 4.2% | | | -17.1% |
NDP | | | $35.36 | | | $61.76 | | | $29.44 | | | 74.7% | | | -16.7% |
Fourth Quarter | | | | | | | | | | | |||||
TTP | | | $51.88 | | | $54.56 | | | $45.72 | | | 5.2% | | | -11.9% |
NDP | | | $33.36 | | | $37.20 | | | $29.04 | | | 11.5% | | | -12.9% |
Fiscal Year Ended November 30, 2020 | | | | | | | | | | | |||||
First Quarter | | | | | | | | | | | |||||
TTP | | | $44.20 | | | $54.16 | | | $39.44 | | | 22.5% | | | -10.8% |
NDP | | | $24.48 | | | $35.76 | | | $21.76 | | | 46.1% | | | -11.1% |
Second Quarter | | | | | | | | | | | |||||
TTP | | | $20.26 | | | $41.40 | | | $8.40 | | | 104.3% | | | -58.5% |
NDP | | | $16.02 | | | $22.24 | | | $6.88 | | | 38.8% | | | -57.1% |
Third Quarter | | | | | | | | | | | |||||
TTP | | | $18.86 | | | $19.86 | | | $13.28 | | | 5.3% | | | -29.6% |
NDP | | | $15.78 | | | $14.93 | | | $10.96 | | | -5.4% | | | -30.5% |
Fourth Quarter | | | | | | | | | | | |||||
TTP | | | $19.97 | | | $16.01 | | | $11.30 | | | -19.8% | | | -43.4% |
NDP | | | $16.42 | | | $13.47 | | | $9.63 | | | -18.0% | | | -41.4% |
(1) | NAV is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period. |
(2) | Historical per share information has been adjusted to reflect impact of 1 for 4 reverse stock split in TTP and 1 for 8 reverse stock split in NDP effected on May 1, 2020. |
(3) | Calculated as the respective high or low sales price divided by NAV. |
| | Based on Net Asset Value | | | Based on Market Price | |||||||||||||||||||||||||
| | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | | Inception(a) | | | 1 Year | | | 3 Years | | | 5 Years | | | 10 Years | | | Inception(a) | |
TTP(b) | | | -58.62% | | | -29.66% | | | -16.95% | | | N/A | | | -8.96% | | | -64.69% | | | -33.67% | | | -19.51% | | | N/A | | | -12.14% |
NDP(b) | | | -48.97% | | | -38.89% | | | -24.58% | | | N/A | | | -17.16% | | | -54.88% | | | -43.27% | | | -26.04% | | | N/A | | | -20.16% |
(a) | TTP and NDP commenced investment operations on July 2011 and July 2012, respectively. |
(b) | Total investment return is calculated assuming a purchase of common stock at NAV or the closing price at the beginning of the period reported and a sale at the ending NAV or closing price at November 30, 2020 (excluding broker commissions). The calculation also assumes reinvestment of distributions at actual prices pursuant to each Fund’s dividend reinvestment plan. |
| | Year Ended November 30, 2020 | | | Year Ended November 30, 2019 | | | Year Ended November 30, 2018 | | | Year Ended November 30, 2017 | | | Year Ended November 30, 2016 | |
Per Common Share Data(1)(2) | | | | | | | | | | | |||||
Net Asset Value, beginning of year | | | $51.88 | | | $65.16 | | | $75.28 | | | $93.68 | | | $78.84 |
Income (Loss) from Investment Operations | | | | | | | | | | | |||||
Net investment income (loss)(3) | | | (0.12) | | | (0.48) | | | (0.60) | | | (0.20) | | | 0.16 |
Net realized and unrealized gain (loss)(3) | | | (30.17) | | | (7.24) | | | (3.00) | | | (11.68) | | | 21.20 |
Total income (loss) from investment operations | | | (30.29) | | | (7.72) | | | (3.60) | | | (11.88) | | | 21.36 |
Distributions to Common Stockholders | | | | | | | | | | | |||||
From net investment income | | | — | | | — | | | (0.16) | | | (0.20) | | | (1.52) |
From net realized gains from investment transactions | | | — | | | — | | | — | | | (1.00) | | | (5.00) |
From return of capital | | | (1.62) | | | (5.56) | | | (6.36) | | | (5.32) | | | — |
Total distributions to common stockholders | | | (1.62) | | | (5.56) | | | (6.52) | | | (6.52) | | | (6.52) |
Net Asset Value, end of year | | | $19.97 | | | $51.88 | | | $65.16 | | | $75.28 | | | $93.68 |
Per common share market value, end of year | | | $15.15 | | | $46.08 | | | $57.32 | | | $68.04 | | | $86.20 |
Total investment return based on market value(4) | | | (64.69)% | | | (11.10)% | | | (7.03)% | | | (14.18)% | | | 34.89 |
| | | | | | | | | | ||||||
Supplemental Data and Ratios | | | | | | | | | | | |||||
Net assets applicable to common stockholders, end of year (000's) | | | $48,108 | | | $129,887 | | | $163,202 | | | $188,517 | | | $234,539 |
Average net assets (000's) | | | $70,052 | | | $157,017 | | | $188,518 | | | $219,359 | | | $192,888 |
| | | | | | | | | | ||||||
Ratio of Expenses to Average Net Assets | | | | | | | | | | | |||||
Advisory fees | | | 1.67% | | | 1.54% | | | 1.51% | | | 1.43% | | | 1.48 |
Other operating expenses | | | 0.75 | | | 0.35 | | | 0.32 | | | 0.26 | | | 0.29 |
Total operating expenses, before fee waiver | | | 2.42 | | | 1.89 | | | 1.83 | | | 1.69 | | | 1.77 |
Fee waiver | | | — | | | — | | | — | | | (0.00) | | | (0.07) |
Total operating expenses | | | 2.42 | | | 1.89 | | | 1.83 | | | 1.69 | | | 1.70 |
Leverage expenses | | | 2.66 | | | 1.62 | | | 1.40 | | | 1.06 | | | 1.23 |
Total expenses | | | 5.08% | | | 3.51% | | | 3.23% | | | 2.75% | | | 2.93% |
| | | | | | | | | | ||||||
Ratio of net investment income (loss) to average net assets before fee waiver | | | (0.97)% | | | (0.79)% | | | (0.80)% | | | (0.21)% | | | 0.12% |
Ratio of net investment income (loss) to average net assets after fee waiver | | | (0.97)% | | | (0.79)% | | | (0.80)% | | | (0.21)% | | | 0.19% |
Portfolio turnover rate | | | 35.61% | | | 21.31% | | | 14.27% | | | 24.23% | | | 90.22% |
Credit facility borrowings, end of year (000's) | | | — | | | $11,800 | | | $19,800 | | | $19,300 | | | $16,600 |
Senior notes, end of year (000's) | | | $14,457 | | | $34,000 | | | $34,000 | | | $34,000 | | | $34,000 |
Preferred stock, end of year (000's) | | | $6,100 | | | $16,000 | | | $16,000 | | | $16,000 | | | $16,000 |
Per common share amount of senior notes outstanding, end of year | | | $6.00 | | | $13.58 | | | $13.58 | | | $13.58 | | | $13.56 |
Per common share amount of net assets, excluding senior notes, end of year | | | $25.97 | | | $65.46 | | | $78.74 | | | $88.86 | | | $107.24 |
| | Year Ended November 30, 2020 | | | Year Ended November 30, 2019 | | | Year Ended November 30, 2018 | | | Year Ended November 30, 2017 | | | Year Ended November 30, 2016 | |
Asset coverage, per $1,000 of principal amount of senior notes and credit facility borrowings(5) | | | $4,750 | | | $4,185 | | | $4,331 | | | $4,837 | | | $5,951 |
Asset coverage ratio of senior notes and credit facility borrowings(5) | | | 475% | | | 419% | | | 433% | | | 484% | | | 595% |
Asset coverage, per $25 liquidation value per share of mandatory redeemable preferred stock(6) | | | $84 | | | $78 | | | $83 | | | $93 | | | $113 |
Asset coverage ratio of preferred stock(6) | | | 334% | | | 310% | | | 334% | | | 372% | | | 452% |
(1) | Information presented relates to a share of common stock outstanding for the entire year. |
(2) | During the year ended November 30, 2020, the Fund effected the following reverse stock split: May 1, 2020, 1 for 4. All historical per share information has been retroactively adjusted to reflect this reverse stock split. |
(3) | The per common share data for the years ended November 30, 2019, 2018, 2017, and 2016, do not reflect the change in estimate of investment income and return of capital, for the respective year. See Note 2C to the financial statements for further disclosure. |
(4) | Total investment return is calculated assuming a purchase of common stock at the beginning of the year and a sale at the closing price on the last day of the year reported (excluding brokerage commissions). The calculation also assumes reinvestment of distributions at actual prices pursuant to TTP's dividend reinvestment plan. |
(5) | Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the year divided by senior notes and credit facility borrowings outstanding at the end of the year. |
(6) | Represents value of total assets less all liabilities and indebtedness not represented by senior notes, credit facility borrowings and preferred stock at the end of the year divided by senior notes, credit facility borrowings and preferred stock outstanding at the end of the year. |
| | Year Ended November 30, 2020 | | | Year Ended November 30, 2019 | | | Year Ended November 30, 2018 | | | Year Ended November 30, 2017 | | | Year Ended November 30, 2016 | |
Per Common Share Data(1)(2) | | | | | | | | | | | |||||
Net Asset Value, beginning of year | | | $33.36 | | | $72.16 | | | $103.04 | | | $135.60 | | | $124.24 |
Income (Loss) from Investment Operations | | | | | | | | | | | |||||
Net investment loss(3) | | | — | | | (0.80) | | | (2.32) | | | (1.60) | | | (0.96) |
Net realized and unrealized gain (loss)(3) | | | (16.14) | | | (29.36) | | | (14.56) | | | (16.96) | | | 26.32 |
Total income (loss) from investment operations | | | (16.14) | | | (30.16) | | | (16.88) | | | (18.56) | | | 25.36 |
Distributions to Common Stockholders | | | | | | | | | | | |||||
From return of capital | | | (0.80) | | | (8.64) | | | (14.00) | | | (14.00) | | | (14.00) |
Total distributions to common stockholders | | | (0.80) | | | (8.64) | | | (14.00) | | | (14.00) | | | (14.00) |
Net Asset Value, end of year | | | $16.42 | | | $33.36 | | | $72.16 | | | $103.04 | | | $135.60 |
Per common share market value, end of year | | | $12.63 | | | $29.04 | | | $72.00 | | | $99.12 | | | $126.80 |
Total investment return based on market value(4) | | | (54.88)% | | | (52.35)% | | | (15.10)% | | | (11.04)% | | | 36.27% |
| | | | | | | | | | ||||||
Supplemental Data and Ratios | | | | | | | | | | | |||||
Net assets applicable to common stockholders, end of year (000's) | | | $30,307 | | | $61,550 | | | $132,488 | | | $187,889 | | | $246,088 |
Average net assets (000's) | | | $37,057 | | | $94,144 | | | $176,481 | | | $209,940 | | | $212,528 |
| | | | | | | | | |
| | Year Ended November 30, 2020 | | | Year Ended November 30, 2019 | | | Year Ended November 30, 2018 | | | Year Ended November 30, 2017 | | | Year Ended November 30, 2016 | |
Ratio of Expenses to Average Net Assets | | | | | | | | | | | |||||
Advisory fees | | | 1.40% | | | 1.52% | | | 1.50% | | | 1.43% | | | 1.42% |
Other operating expenses | | | 1.18 | | | 0.51 | | | 0.32 | | | 0.26 | | | 0.29 |
Total operating expenses, before fee waiver | | | 2.58 | | | 2.03 | | | 1.82 | | | 1.69 | | | 1.71 |
Fee waiver | | | — | | | — | | | — | | | (0.01) | | | (0.13) |
Total operating expenses | | | 2.58 | | | 2.03 | | | 1.82 | | | 1.68 | | | 1.58 |
Leverage expenses | | | 0.66 | | | 1.30 | | | 0.99 | | | 0.56 | | | 0.37 |
Total expenses | | | 3.24% | | | 3.33% | | | 2.81% | | | 2.24% | | | 1.95% |
| | | | | | | | | | ||||||
Ratio of net investment income (loss) to average net assets before fee waiver | | | 0.03% | | | (1.58)% | | | (2.40)% | | | (1.41)% | | | (0.98)% |
Ratio of net investment income (loss) to average net assets after fee waiver | | | 0.03% | | | (1.58)% | | | (2.40)% | | | (1.40)% | | | (0.85)% |
Portfolio turnover rate | | | 72.19% | | | 182.52% | | | 143.77% | | | 64.88% | | | 47.03% |
Credit facility borrowings, end of year (000's) | | | $5,000 | | | $26,500 | | | $57,100 | | | $64,500 | | | $63,800 |
Asset coverage, per $1,000 of principal amount of credit facility borrowings(5) | | | $7,061 | | | $3,323 | | | $3,320 | | | $3,913 | | | $4,857 |
Asset coverage ratio of credit facility borrowings(5) | | | 706% | | | 332% | | | 332% | | | 391% | | | 486% |
(1) | Information presented relates to a share of common stock outstanding for the entire year. |
(2) | During the year ended November 30, 2020, the Fund effected the following reverse stock split: May 1, 2020, 1 for 8. All historical per share information has been retroactively adjusted to reflect this reverse stock split. |
(3) | The per common share data for the years ended November 30, 2019, 2018, 2017, and 2016 do not reflect the change in estimate of investment income and return of capital, for the respective year. See Note 2C to the financial statements for further disclosure. |
(4) | Total investment return is calculated assuming a purchase of common stock at the beginning of the year and a sale at the closing price on the last day of the year reported (excluding brokerage commissions). The calculation also assumes reinvestment of distributions at actual prices pursuant to NDP's dividend reinvestment plan. |
(5) | Represents value of total assets less all liabilities and indebtedness not represented by credit facility borrowings at the end of the year divided by credit facility borrowings outstanding at the end of the year. |
Year | | | Title of Security | | | Total Principal Amount/Liquidation Preference Outstanding | | | Asset Coverage per $1,000 of Principal Amount | | | Asset Coverage per Share ($ 25,000 Liquidation Preference) | | | Average Estimated Fair Value Per $25,000 Denomination or per Share Amount |
2011 | | | Notes | | | | | | | | | ||||
| | Series A, B C and D | | | $24,500,000 | | | $11,296 | | | | | $24,468,617 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $8,000,000 | | | | | $212,896 | | | $7,961,945 | ||
| | | | $32,500,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2012 | | | Notes | | | | | | | | | ||||
| | Series A, B C and D | | | $49,000,000 | | | $5,093 | | | | | $50,262,209 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $102,362 | | | $16,658,901 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $16,600,000 | | | $5,093 | | | | | |||
| | | | $81,600,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2013 | | | Notes | | | | | | | | | ||||
| | Series A, B C and D | | | $49,000,000 | | | $5,492 | | | | | $50,047,881 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $112,098 | | | $16,637,226 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $22,200,000 | | | $5,492 | | | | | |||
| | | | $87,200,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2014 | | | Notes | | | | | | | | | ||||
| | Series A, B C and D | | | $49,000,000 | | | $5,893 | | | | | $50,549,147 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $121,422 | | | $16,929,123 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $26,000,000 | | | $5,893 | | | | | |||
| | | | $91,000,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2015 | | | Notes | | | | | | | | | ||||
| | Series A, C, E, F, D and G | | | $54,000,000 | | | $4,010 | | | | | $55,208,857 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $81,802 | | | $16,615,541 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $16,900,000 | | | $4,010 | | | | | |||
| | | | $86,900,000 | | | | | | | |||||
| | | | | | | | | |
Year | | | Title of Security | | | Total Principal Amount/Liquidation Preference Outstanding | | | Asset Coverage per $1,000 of Principal Amount | | | Asset Coverage per Share ($ 25,000 Liquidation Preference) | | | Average Estimated Fair Value Per $25,000 Denomination or per Share Amount |
2016 | | | Notes | | | | | | | | | ||||
| | Series C, F, D and G | | | $34,000,000 | | | $5,951 | | | | | $35,021,593 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $113,040 | | | $16,496,612 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $16,600,000 | | | $5,951 | | | | | |||
| | | | $66,600,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2017 | | | Notes | | | | | | | | | ||||
| | Series C, F, D and G | | | $34,000,000 | | | $4,835 | | | | | $34,813,775 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $92,968 | | | $16,275,897 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $19,300,000 | | | $4,835 | | | | | |||
| | | | $69,300,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2018 | | | Notes | | | | | | | | | ||||
| | Series C, F, D and G | | | $34,000,000 | | | $4,330 | | | | | $34,414,330 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series A | | | $16,000,000 | | | | | $83,435 | | | $16,146,702 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $19,800,000 | | | $4,330 | | | | | |||
| | | | $69,800,000 | | | | | | | |||||
2019 | | | Notes | | | | | | | | | ||||
| | Series F, D, G and H | | | $34,000,000 | | | $4,182 | | | | | $35,329,524 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series B | | | $16,000,000 | | | | | $77,481 | | | $17,269,292 | ||
| | Borrowings | | | | | | | | | |||||
| | Unsecured Revolving Credit Facility | | | $11,800,000 | | | $4,182 | | | | | |||
| | | | $61,800,000 | | | | | | | |||||
| | | | | | | | | | ||||||
2020 | | | Notes | | | | | | | | | ||||
| | Series D and H | | | $14,457,143 | | | $4,746 | | | | | $15,408,983 | ||
| | Preferred Shares | | | | | | | | | |||||
| | Series B | | | $6,100,000 | | | | | $83,440 | | | $7,336,487 | ||
| | | | $20,557,143 | | | | | | |
Year | | | Title of Security | | | Total Principal Amount Outstanding | | | Asset Coverage per $1,000 of Principal Amount |
2012 | | | Unsecured Revolving Credit Facility | | | $49,000,000 | | | $7,728 |
2013 | | | Unsecured Revolving Credit Facility | | | $56,300,000 | | | $7,829 |
2014 | | | Unsecured Revolving Credit Facility | | | $56,200,000 | | | $6,880 |
2015 | | | Unsecured Revolving Credit Facility | | | $61,800,000 | | | $4,647 |
2016 | | | Unsecured Revolving Credit Facility | | | $63,800,000 | | | $4,857 |
2017 | | | Unsecured Revolving Credit Facility | | | $64,500,000 | | | $3,913 |
2018 | | | Secured Revolving Credit Facility | | | $57,100,000 | | | $3,320 |
2019 | | | Secured Revolving Credit Facility | | | $26,500,000 | | | $3,323 |
2020 | | | Secured Revolving Credit Facility | | | $5,000,000 | | | $7,061 |
• | NDP will no longer exist, and |
• | TTP will be the surviving corporation |
• | deregister as an investment company under the 1940 Act, |
• | cease its separate existence under Maryland law, |
• | remove its common shares from listing on the NYSE, and |
• | withdraw from registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
• | The Merger will constitute a tax-free reorganization within the meaning of Section 368(a)(1)(A) of the Code, and the Funds will each be a party to a reorganization within the meaning of Section 368(b) of the Code. |
• | No gain or loss will be recognized by NDP as a result of the Merger or upon the conversion of NDP Common Shares to TTP Common Shares. |
• | No gain or loss will be recognized by TTP as a result of the Merger or upon the conversion of NDP Common Shares to TTP Common Shares. |
• | The aggregate tax basis of the assets of NDP received by TTP will be the same as the aggregate tax basis of such assets to NDP immediately prior to the Merger. |
• | The holding period of the assets of NDP received by TTP will include the holding period of those assets in the hands of NDP immediately prior to the Merger. |
• | No gain or loss will be recognized by the stockholders of NDP upon their conversion of NDP common shares for TTP’s Common Shares, except to the extent such stockholders are paid in cash in lieu of fractional shares of TTP Common Shares. |
• | The aggregate adjusted tax basis of the TTP Common Shares received by each stockholder of NDP (including fractional shares that of) pursuant to the Merger will be the same as the aggregate tax basis of the NDP common shares held by NDP stockholder immediately prior to the Merger. |
• | The holding period of the TTP Common Shares received by the stockholders of NDP (including that of fractional shares purchased by TTP) will include the holding period of NDP common shares converted in the Merger, provided that NDP common shares were held as a capital asset as of the Closing of the Merger. |
• | The payment of cash to the stockholders of NDP in lieu of fractional shares of TTP Common Shares will be treated as though such fractional shares were distributed as part of the Merger and then redeemed by TTP with the result that the former stockholders of NDP will generally have a capital gain or loss to the extent the cash distribution differs from such stockholder’s basis allocable to the fractional shares of NDP Common Stock. |
• | a citizen or individual resident of the United States (including certain former citizens and former long-term residents); |
• | a corporation or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or the trust has made a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
| | TTP Common Shares | | | NDP Common Shares | |
Independent Directors** | | | | | ||
Rand Berney | | | 858.00(1) | | | 1,192.00 |
Conrad Ciccotello | | | 1,045.88 | | | 662.00 |
Alexandra Herger | | | 0 | | | 125.00 |
Jennifer Paquette | | | 172.00 | | | 104.00 |
| | | | |||
Interested Directors and Officers | | | | | ||
H. Kevin Birzer | | | 2,075.00 | | | 993.00 |
P. Bradley Adams | | | 148.50(2) | | | 207.00(3) |
Brian A. Kessens | | | 750.00(4) | | | 375.00(4) |
Robert J. Thummel, Jr. | | | 62.00 | | | 375.00 |
Shobana Gopal | | | 222.20 | | | 119.00 |
Diane Bono | | | 0 | | | 0 |
Courtney Gengler | | | 0 | | | 0 |
Directors and Officers as a Group (for TTP and NDP)(5) | | | 5,271.58 | | | 3,777.00 |
| | TTP Common Shares | | | NDP Common Shares | |
Independent Directors** | | | | | ||
Rand Berney | | | * | | | * |
Conrad Ciccotello | | | * | | | * |
Alexandra Herger | | | * | | | * |
Jennifer Paquette | | | * | | | * |
| | * | | | * | |
Interested Directors and Officers | | | | | ||
H. Kevin Birzer | | | * | | | * |
P. Bradley Adams | | | * | | | * |
Brian A. Kessens | | | * | | | * |
Robert J. Thummel, Jr. | | | * | | | * |
Shobana Gopal | | | * | | | * |
Diane Bono | | | * | | | * |
Courtney Gengler | | | * | | | * |
Directors and Officers as a Group ( for TTP and NDP) | | | * | | | * |
* | Indicates less than 1%. |
(1) | Mr. Berney holds these shares jointly with his wife. |
(2) | Includes 41.21 shares held by Mr. Adams as sole trustee of a joint trust for Mr. Adams and his wife and 40.23 shares held by his wife. |
(3) | Includes 27 shares held by Mr. Adams as sole trustee of a joint trust for Mr. Adams and his wife. |
(4) | Held with his wife. |
(5) | For TTP, total excludes shares held by Mr. Thummel, who is not an officer of TTP. For NDP, total excludes shares held by Mr. Kessens, who is not an officer of NDP. |
(6) | Based on the following shares outstanding as of December 31, 2020: 2,340,395 shares of TTP common stock and 1,845,997 shares of NDP common stock. |
Name and Address | | | Number of TTP Preferred Shares * | | | Percent of Class |
Prudential Financial, Inc.(*) 751 Broad Street Newark, NJ 07102-377 | | | 244,000 | | | 100% |
(*) | Information is based on a Schedule 13G filed January 4, 2019 reporting sole voting and dispositive power as a parent holding company of PGIM, Inc. which beneficially owns 640,000 shares and The Prudential Insurance Company of America which has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the identified shares. |
• | By touch-tone telephone; simply dial the toll-free number located on the enclosed proxy card. Please be sure to have your proxy card available at the time of the call; |
• | By internet; please log on to the voting website detailed on the enclosed proxy card. Again, please have your proxy card handy at the time you plan on voting; or |
• | By returning the enclosed proxy card in the postage-paid envelope. |
| | By Order of the Board of Directors | |
| | ||
| | /s/ Diane M. Bono | |
| | ||
| | Diane M. Bono | |
| | Secretary |
1. | BASIC TRANSACTION |
2. | REPRESENTATIONS AND WARRANTIES |
3. | EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE ACQUIRED FUND |
4. | COVENANTS |
5. | CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE ACQUIRED FUND |
6. | CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND |
7. | FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF ACQUIRING FUND AND ACQUIRED FUND |
8. | INDEMNIFICATION |
9. | BROKER FEES AND EXPENSES |
10. | COOPERATION FOLLOWING EFFECTIVE DATE |
11. | ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES |
12. | TERMINATION AND WAIVERS |
13. | TRANSFER RESTRICTION |
14. | MATERIAL PROVISIONS |
15. | AMENDMENTS |
16. | NOTICES |
17. | ENFORCEABILITY; HEADINGS; COUNTERPARTS; GOVERNING LAW; SEVERABILITY; ASSIGNMENT; LIMITATION OF LIABILITY |
| | TORTOISE ENERGY INDEPENDENCE FUND, INC. | |||||||
| | | | | | ||||
| | By: | | | /s/ P. Bradley Adams | ||||
| | | | Name: | | | P. Bradley Adams | ||
| | | | Title: | | | Chief Executive Officer | ||
| | | | | |
| | TORTOISE PIPELINE & ENERGY FUND, INC. | |||||||
| | | | ||||||
| | By: | | | /s/ P. Bradley Adams | ||||
| | | | Name: | | | P. Bradley Adams | ||
| | | | Title: | | | Chief Executive Officer |
• | issue senior securities, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | borrow money, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | make loans, except by the purchase of debt obligations, by entering into repurchase agreements or through the lending of portfolio securities and as otherwise permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | concentrate (invest 25% or more of total assets) its investments in any particular industry, except that it will concentrate its assets in the group of industries constituting the energy infrastructure sector; |
• | underwrite securities issued by others, except to the extent that it may be considered an underwriter within the meaning of the Securities Act of 1933, as amended (the “1933 Act”), in the disposition of restricted securities held in its portfolio; |
• | purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, except that it may invest in securities or other instruments backed by real estate or securities of companies that invest in real estate or interests therein; and |
• | purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments, except that it may purchase or sell options and futures contracts or invest in securities or other instruments backed by physical commodities. |
• | issue senior securities, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | borrow money, except as permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | make loans, except by the purchase of debt obligations, by entering into repurchase agreements or through the lending of portfolio securities and as otherwise permitted by the 1940 Act and the rules and interpretive positions of the SEC thereunder; |
• | concentrate (invest 25% or more of total assets) its investments in any particular industry, except that it will concentrate its assets in the group of industries constituting the energy sector; |
• | underwrite securities issued by others, except to the extent that it may be considered an underwriter within the meaning of the 1933 Act, in the disposition of restricted securities held in its portfolio; |
• | purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, except that it may invest in securities or other instruments backed by real estate or securities of companies that invest in real estate or interests therein (including REITs); and |
• | purchase or sell physical commodities unless acquired as a result of ownership of securities or other instruments, except that it may purchase or sell options and futures contracts or invest in securities or other instruments backed by physical commodities. |
• | We may invest up to 30% of our total assets in securities of non-U.S. issuers (including Canadian issuers), which may include securities issued by companies organized and/or having securities traded on an exchange outside the U.S. or may be securities of U.S. companies that are denominated in the currency of a different country; |
• | We may invest up to 30% of our total assets in unregistered or otherwise restricted securities, primarily through direct investments in securities of listed companies. For purposes of this limitation, “restricted securities” include (i) registered securities of public companies subject to a lock-up period, (ii) unregistered securities of public companies with registration rights, and (iii) unregistered securities of public companies that become freely tradable with the passage of time; |
• | We will not invest in privately held companies; |
• | We may invest up to 20% of our total assets in debt securities, including those rated below investment grade, commonly referred to as “junk bonds”; |
• | We will not invest more than 10% of our total assets in any single issuer; and |
• | We will not engage in short sales. |
• | Under normal circumstances, we will invest at least 80% of our Total Assets in equity securities of North American energy companies, including at least 50% of our Total Assets in equity securities of upstream energy companies; |
• | We may invest up to 35% of our Total Assets in securities of non-U.S. issuers (including Canadian issuers). An issuer of a security generally will be considered to be a non-U.S. issuer if it is organized under the laws of, or maintains its principal place of business in, a country other than the United States; |
• | We may invest up to 30% of our Total Assets in restricted securities that are ineligible for resale under Rule 144A under the 1933 Act, all of which may be illiquid securities, primarily through direct investments in securities of listed companies. For purposes of this limitation, “restricted securities” include (i) registered securities of public companies subject to a lock-up period, (ii) unregistered securities of public companies with registration rights, and (iii) unregistered securities of public companies that become freely tradable with the passage of time; |
• | We will not invest in privately held companies; |
• | We may invest up to 20% of our Total Assets in debt securities, including those rated below investment grade, commonly referred to as “junk bonds”; |
• | We will not invest more than 10% of our Total Assets in any single issuer; and |
• | We will not engage in short sales. |
• | Under normal circumstances, we will invest at least 80% of our Total Assets in equity securities of energy infrastructure companies, which includes midstream energy infrastructure and renewable and power infrastructure companies; |
• | We may invest up to 50% of our Total Assets in securities issued by non-U.S. issuers (including Canadian issuers); |
• | We may invest up to 30% of our Total Assets in restricted securities that are ineligible for resale under Rule 144A under the 1933 Act, all of which may be illiquid securities, primarily through direct investments in securities of listed companies. For purposes of this limitation, “restricted securities” include (i) registered securities of public companies subject to a lock-up period, (ii) unregistered securities of public companies with registration rights, and (iii) unregistered securities of public companies that become freely tradable with the passage of time; |
• | We will not invest in privately held companies; |
• | We may invest up to 20% of our Total Assets in debt securities, including those rated below investment grade, commonly referred to as “junk bonds”; |
• | We will not invest more than 10% of our Total Assets in any single issuer; and |
• | We will not engage in short sales. |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Director(1) | | | Other Public Company Directorships Held |
Independent Directors | | | | | | | | | ||||
Conrad S. Ciccotello (Born 1960) | | | Director of TTP and NDP since inception | | | Professor and the Director, Reiman School of Finance, University of Denver (faculty member since 2017); Senior Consultant to the finance practice of Charles River Associates, which provides economic, financial, and management consulting services (since May 2020); Associate Professor and Chairman of the Department of Risk Management and Insurance, Director of the Asset and Wealth Management Program, Robinson College of Business, Georgia State University (faculty member from 1999 to 2017); Investment Consultant to the University System of Georgia for its defined contribution retirement plan (2008-2017); Formerly Faculty Member, Pennsylvania State University (1997-1999); Published a number of academic and professional journal articles on investment company performance and structure, with a focus on MLPs. | | | 7 | | | Director of TYG, NTG, TPZ and TEAF since inception. CorEnergy Infrastructure Trust, Inc.; Peachtree Alternative Strategies Fund |
| | | | | | | | |||||
Rand C. Berney (Born 1955) | | | Director of TTP and NDP. | | | Executive-in-Residence, College of Business Administration, Kansas State University since 2012; Formerly Senior Vice President of Corporate Shared Services of ConocoPhillips from April 2009 to | | | 6 | | | Director of TYG, NTG and TPZ since January 1, 2014; Director of TEAF since inception. |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Director(1) | | | Other Public Company Directorships Held |
| | | | 2012, Vice President and Controller of ConocoPhillips from 2002 to April 2009, and Vice President and Controller of Phillips Petroleum Company from 1997 to 2002; Member of the Oklahoma Society of CPAs, the Financial Executive Institute, American Institute of Certified Public Accountants, the Institute of Internal Auditors and the Institute of Management Accountants. | | | | | ||||
| | | | | | | | |||||
Alexandra A. Herger (Born 1957) | | | Director of TTP and NDP since January 1, 2015. | | | Retired in 2014; Previously interim vice president of global exploration for Marathon Oil in 2014 prior to her retirement and director of international exploration and new ventures for Marathon Oil from 2008 to 2014; Held various positions with Shell Exploration and Production Co. between 2002 and 2008; Member of the Society of Exploration Geophysicists, the American Association of Petroleum Geologists, the Houston Geological Society and the Southeast Asia Petroleum Exploration Society; Member of the 2010 Leadership Texas/Foundation for Women’s Resources since 2010; Director of Panoro Energy ASA, an international independent oil and gas company listed on the Oslo Stock Exchange; Director of Tethys Oil (Stockholm), and member of PGS (Oslo) nomination committee. | | | 6 | | | Director of TYG, NTG and TPZ since January 1, 2015; Director of TEAF since inception. |
| | | | | | | | |||||
Jennifer Paquette (Born 1962) | | | Director of TTP and NDP since May 18, 2018. | | | Retired in 2017; Previously Chief Investment Officer of the Public Employees’ Retirement Association of Colorado (“Colorado PERA”) from 2003 to 2017; Held various positions within Colorado PERA from 1999 to 2003 and 1995 to 1996; Formerly Vice-President Institutional Account Executive at Merrill Lynch, Pierce, Fenner & Smith from 1991 to 1994; Vice-President, Portfolio Manager and Analyst at Alliance Capital Management from 1987 to | | | 6 | | | Director of TYG, NTG and TPZ since May 18, 2018; Director of TEAF since inception. |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Director(1) | | | Other Public Company Directorships Held |
| | | | 1991; Portfolio Assistant and Assistant at Mitchell Hutchins Asset Management from 1985 to 1987. CFA charterholder. | | | | |
Interested Directors and Officers(2) | | | | | | | | | ||||
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Officer(1) | | | Other Public Company Directorships Held |
| | | | | | | | |||||
H. Kevin Birzer (Born 1959) | | | Director and Chairman of the Board since its inception | | | Member of the Board of Directors of the Adviser; Managing Director of the Adviser and member of the Investment Committee of the Adviser since 2002; Chartered Financial Analyst (“CFA”) charterholder. | | | 6 | | | Director of TYG, NTG, TPZ and TEAF since inception. |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Officer(1) | | | Other Public Company Directorships Held | |||
| | | | | | | | | |||||||
P. Bradley Adams (Born 1960) | | | Chief Executive Officer of TTP and NDP since June 30, 2015; Principal Financial Officer and Treasurer of each of TTP and NDP since May 2017; Chief Financial Officer of each of TTP and NDP from its inception to June 30, 2015. | | | Chief Executive Officer of TYG, NTG and TPZ since June 30, 2015; Principal Financial Officer and Treasurer of each of TYG, NTG and TPZ since May 2017; Chief Financial Officer of NTG from 2010 to June 30, 2015, and of each of TYG and TPZ from 2011 to June 30, 2015; Chief Executive Officer and Principal Financial Officer of TEAF since its inception in March 2019. Managing Director of the Adviser since January 2013; Director of Financial Operations of the Adviser from 2005 to January 2013; Chief Executive Officer and Principal Financial Officer of TSIFX since its inception in March 2018 | | | 7 | | | None | |||
| | | | | | | |||||||||
Brian A. Kessens (Born 1975) | | | President of TTP since June 30, 2015. | | | President of TPZ since June 30, 2015. Senior Portfolio Manager of the Adviser since February 2019; | | | 2 | | | None |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Officer(1) | | | Other Public Company Directorships Held | |||
| | | | Managing Director of the Adviser since January 2015 and a member of the Investment Committee of the Adviser since June 30, 2015; Portfolio Manager of the Adviser from July 2013 to January 2019; Senior Investment Analyst of the Adviser from June 2012 to July 2013; CFA charterholder. | | | | | |||||||
| | | | | | | |||||||||
Robert J. Thummel, Jr. (Born 1972)) | | | President of NDP since June 30, 2015. | | | Senior Portfolio Manager of the Adviser since February 2019; Managing Director of the Adviser since January 2014 and a member of the Investment Committee of the Adviser since June 30, 2015; Portfolio Manager of the Adviser from July 2013 to January 2019; Senior Investment Analyst of the Adviser from June 2012 to July 2013. | | | 1 | | | None | |||
| | | | | | | |||||||||
Shobana Gopal (Born 1962) | | | Vice President of TTP and NDP since June 30, 2015. | | | Vice President of TYG, NTG and TPZ since June 30, 2015, and of TEAF since its inception in March 2019. Director, Tax of the Adviser since January 2013; Tax Analyst of the Adviser from September 2006 through December 2012; Vice President of TSIFX since its inception in March 2018. | | | 7 | | | None | |||
| | | | | | | | | |||||||
Courtney Gengler (Born 1986) | | | Vice President of TTP and NDP since June 2020; Assistant Treasurer of TTP and NDP since May 2017. | | | Vice President of TYG, NTG, TPZ and TEAF since June 2020; Assistant Treasurer of TYG, NTG and TPZ since May 2017 and of TEAF since its inception. Director- Financial Operations of the Adviser since January 2020; Vice President-Accounting and Financial Reporting from 2017 to 2020. | | | 6 | | | None | | ||
| | | | | | | |||||||||
Diane Bono (Born 1958) | | | Chief Compliance Officer of each of TTP and NDP | | | Chief Compliance Officer of TYG since 2006 and of each of NTG, TPZ and TEAF since its inception; Secretary of TYG, NTG and TPZ | | | 7 | | | None | |
Name and Age* | | | Position(s) Held With TTP and NDP and Length of Time Served | | | Principal Occupation During Past Five Years | | | Number of Portfolios in Fund Complex Overseen by Officer(1) | | | Other Public Company Directorships Held | |||
| | since its inception; Secretary of TTP and NDP since May 2013. | | | since May 2013 and of TEAF since its inception in March 2019. Managing Director of the Adviser since January 2018; Chief Compliance Officer of the Adviser since June 2006; Chief Compliance Officer and Secretary of TSIFX since its inception in March 2018. | | | | | |
(1) | As of November 30, 2020, for each executive officer, the Fund Complex included Tortoise Energy Infrastructure Corporation (“TYG”), Tortoise Power and Energy Infrastructure Fund, Inc. (“TPZ”), Tortoise Midstream Energy Fund, Inc. (“NTG”), TTP, NDP and Tortoise Essential Assets Income Term Fund (“TEAF”) and for Mr. Adams and Mses. Bono and Gopal, the Fund Complex also includes Ecofin Tax-Advantaged Social Impact Fund, Inc. (“TSIFX”), for which they serve as officers. |
(2) | As a result of their respective positions held with our Adviser or its affiliates, these individuals are considered “interested persons” within the meaning of the 1940 Act. |
* | The address of each director and officer is 5100 W. 115th Place, Leawood, Kansas 66211. |
Name and Position With the Fund | | | Aggregate Compensation From TTP | | | Aggregate Compensation from NDP | | | Aggregate Compensation From the Company and Fund Complex Paid to Directors* |
Independent Directors | | | | | | | |||
Conrad S. Ciccotello | | | $23,933 | | | $23,483 | | | $167,522 |
Rand C. Berney | | | $23,933 | | | $23,483 | | | $146,800 |
Alexandra A. Herger | | | $22,933 | | | $22,483 | | | $140,800 |
Jennifer Paquette | | | $22,933 | | | $22,483 | | | $140,800 |
| | | | | | ||||
Interested Directors | | | | | | | |||
H. Kevin Birzer | | | $0 | | | $0 | | | $0 |
* | For Mr. Ciccotello, also includes TSIFX for FYE September 30, 2020. |
Name of Director | | | Aggregate Dollar Range of Company Securities Beneficially Owned By Director*** | | | Aggregate Dollar Range of Equity Securities in all Registered Investment Companies Overseen by Director in Family of Investment Companies* |
Independent Directors | | | | | ||
Conrad S. Ciccotello | | | $10,001-$50,000 | | | Over $100,000 |
Rand C. Berney | | | $10,001-$50,000 | | | Over $100,000 |
Alexandra A. Herger | | | None | | | $1-$10,000 |
Jennifer Paquette | | | $1-$10,000 | | | $10,001-$50,000 |
Interested Directors | | | | | ||
H. Kevin Birzer | | | $10,001-$50,000 | | | Over $100,000 |
* | Includes the Company, TYG, TPZ, NTG, TTP, NDP and TEAF. Amounts based on the closing price of each of TYG’s, TPZ’s, NTG’s, TTP’s, NDP’s and TEAF’s common shares on the New York Stock Exchange on December 31, 2020. For Mr. Ciccotello, also includes TSIFX, based upon the reported per share net asset value at December 31, 2020. |
*** | As of December 31, 2020, the officers and directors of the Company, as a group, owned less than 1% of any class of the Company’s outstanding shares of stock. |
Name and Address | | | Number of TTP Preferred Shares * | | | Percent of Class |
Prudential Financial, Inc. (*) 751 Broad Street Newark, NJ 07102-377 | | | 244,000 | | | 100% |
Name of Manager | | | Number of Accounts | | | Total Assets of Accounts | | | Number of Accounts Paying a Performance Fee | | | Total Assets of Accounts Paying a Performance Fee |
Brian A. Kessens | | | | | | | | | ||||
Registered investment companies | | | 9 | | | $1,273,553,546 | | | — | | | $— |
Other pooled investment vehicles | | | 5 | | | $246,043,324 | | | — | | | $— |
Other accounts | | | 448 | | | $2,561,394,715 | | | 12 | | | $1,016,857,186 |
James R. Mick | | | | | | | | | ||||
Registered investment companies | | | 7 | | | $907,931,752 | | | — | | | $— |
Other pooled investment vehicles | | | 5 | | | $246,043,324 | | | — | | | $— |
Other accounts | | | 448 | | | $2,561,394,715 | | | 12 | | | $1,016,857,186 |
Matthew G.P. Sallee | | | | | | | | | ||||
Registered investment companies | | | 8 | | | $986,345,802 | | | — | | | $— |
Other pooled investment vehicles | | | 5 | | | $246,043,324 | | | — | | | $— |
Other accounts | | | 448 | | | $2,561,394,715 | | | 12 | | | $1,016,857,186 |
Robert J. Thummel, Jr. | | | | | | | | | ||||
Registered investment companies | | | 7 | | | $907,931,752 | | | — | | | $— |
Other pooled investment vehicles | | | 5 | | | $246,043,324 | | | — | | | $— |
Other accounts | | | 448 | | | $2,561,394,715 | | | 12 | | | $1,016,857,186 |
Stephen Pang | | | | | | | | | ||||
Registered investment companies | | | 7 | | | $907,931,752 | | | — | | | $— |
Other pooled investment vehicles | | | 5 | | | $246,043,324 | | | — | | | $— |
Other accounts | | | 448 | | | $2,561,394,715 | | | 12 | | | $1,016,857,186 |
Nicholas S. Holmes | | | | | | | | | ||||
Registered investment companies | | | 7 | | | $921,319,563 | | | — | | | $— |
Other pooled investment vehicles | | | 6 | | | $253,579,851 | | | - | | | $- |
Other accounts | | | 449 | | | $2,561,492,167 | | | 12 | | | $1,016,857,186 |
Name of Manager | | | Aggregate Dollar Range of Company Securities Beneficially Owned by Manager | |||
| | TTP | | | NDP | |
| | | | |||
Brian A. Kessens | | | $10,001-$50,000 | | | $1-$10,000 |
James R. Mick | | | $1-$10,000 | | | None |
Matthew G.P. Sallee | | | $1-$10,000 | | | $1-$10,000 |
Robert J. Thummel, Jr. | | | $1-$10,000 | | | $1-$10,000 |
Stephen Pang | | | None | | | None |
Nicholas S. Holmes | | | None | | | None |
• | a citizen or individual resident of the United States (including certain former citizens and former long-term residents); |
• | a corporation or other entity treated as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or |
• | a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons have the authority to control all of its substantial decisions or the trust has made a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
| | Increase (Decrease) | ||||
Expense Category | | | Dollar Amount | | | Percentage |
Interest expense (1) | | | $(3,841) | | | (0.00)%(2) |
Advisory fees(3) | | | (103,972) | | | (0.13)% |
Fund administration fees(4) | | | (18,411) | | | (0.02)% |
Fund accounting fees(4) | | | (20,464) | | | (0.03)% |
Professional fees(4) | | | (152,285) | | | (0.19)% |
Directors’ fees(4) | | | (109,923) | | | (0.14)% |
Registration fees(4) | | | (24,450) | | | (0.03)% |
Stockholder communication fees(4) | | | (16,590) | | | (0.02)% |
Transfer agent fees(4) | | | (13,425) | | | (0.02)% |
Custody fees(4) | | | (9,600) | | | (0.01)% |
Other expenses(4) | | | (30,354) | | | (0.04)% |
Total pro forma expense adjustment | | | (503,314) | | | (0.63)% |
(1) | Reflects the impact of the termination of NDP’s credit facility and subsequent increase in the credit facility of TTP to absorb the amount outstanding on the NDP credit facility. |
(2) | Rounds to less than (0.01)%. |
(3) | Reflects the impact of applying the revised Advisory fee schedule (which is effective at the time of the Merger) to the Pro Forma Combined Fund’s average managed Assets. |
(4) | Reflects the anticipated reduction of certain duplicative expenses eliminated as a result of the Merger. |
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