Form N-14 8C/A TORTOISE PIPELINE & ENER

As filed with the Securities and Exchange Commission on February 19, 2021

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

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FORM N-14

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

☒		Pre-Effective Amendment No. 1
☐		Post-Effective Amendment No.

 (Check appropriate box or boxes)

 

TORTOISE PIPELINE & ENERGY FUND, INC.

(Exact name of registrant as specified in charter)

 

5100 W. 115th Place

Leawood, Kansas 66211

(Address of Principal Executive Offices)

 

Telephone Number: (913) 981-1020

(Area Code and Telephone Number)

 

P. Bradley Adams

5100 W. 115th Place

Leawood, Kansas 66211

(Name and Address of Agent for Service)

 

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Copies to:

 

Steven F. Carman

Rebecca C. Taylor

Husch Blackwell LLP

4801 Main Street, Suite 1000

Kansas City, Missouri 64112

Approximate Date of Proposed Offering: As soon as practicable after this Registration Statement is declared effective.

 

CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933

(4)	Previously paid

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

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EXPLANATORY NOTE

 

This Joint Proxy Statement/Prospectus is organized as follows:

 

, 2021

Dear Fellow Stockholders:

 

I want to share with you the details of an important Joint Proxy Statement/Prospectus that is enclosed and requires your action. It is being sent to you because you own shares of either Tortoise Pipeline & Energy Fund, Inc. (“TTP”) and/or Tortoise Energy Independence Fund, Inc. (“NDP”), each a Maryland corporation.

 

 

At the Meeting:

 

 

The Board f Directors of each Fund has recommended the merger because each Fund has the same investment objective and it is believed that the merger will benefit stockholders of the Funds. Some of the anticipated benefits of the merger include (i) expanded investment strategy to better capture opportunity around the global energy evolution, (ii) positive potential impact to support an increased distribution, (iii) the opportunity for improved trading relationship between net asset value and market price, (iv) operational cost savings through greater economies of scale and reduced management fees on a Managed Assets basis (although NDP shareholders are expected to see an increase of 0.05% in management fees on a net assets basis), (v) the opportunity for enhanced long-term market liquidity, (vi) greater financial flexibility through a larger balance sheet, (vii) access to more attractive leverage terms, and (viii) a wider range of leverage alternatives.

The Board of Directors of each Fund believes that each proposal is in the best interests of that Fund and its stockholders and unanimously recommends that you vote “FOR” each proposal.

 

The enclosed materials explain the proposals to be voted on at the Meeting in more detail, and I encourage you to review them carefully.  No matter how large or small your Fund holdings, your vote is extremely important.  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:

 

 

 

If you should have any questions about the Meeting agenda or voting, please call our proxy agent, AST Fund Solutions at (866) 796-1285. Representatives are available 9 a.m. to 9 p.m. Eastern time, Monday through Friday. Please note, at a reasonable time after the mailing has completed and our records indicate that you have not voted at that time, you may be contacted by AST Fund Solutions to confirm receipt of the proxy material and review your voting options.

We are concerned about your health and safety during the current coronavirus (COVID-19) pandemic, and we intend to monitor the recommendations of public health officials and governmental restrictions as the situation continues to evolve. If we decide to hold the Special Meeting at a different time, in a different location, or partially or entirely by means of remote communication (i.e., a virtual meeting), we will announce any such updates by means of a press release, which will be posted on our website at http://www.tortoiseecofin.com/proxy-information.  We encourage you to check the website prior to the Special Meeting if you plan to attend the Special Meeting. An announcement of any change will also be filed with the Securities and Exchange Commission via its EDGAR system.

 

On behalf of the Funds and your fellow stockholders, I thank you for your prompt vote on these important matters.

 

QUESTIONS AND ANSWERS

The anticipated positive impacts of the Merger are set forth below.  No assurance can be given that the anticipated positive impacts of the Merger will be achieved.  In addition, this Joint Proxy Statement/Prospectus serves as a prospectus of TTP in connection with the issuance of additional shares of common stock, par value $0.001 per share, of TTP (“TTP Common Shares”) in the Merger.  For information regarding the risks associated with an investment in TTP, see “Risk Factors and Special Considerations.”

 

 

Q: Why is the Merger being recommended by the Board of Directors?

 

 

	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:

 

We expect energy demand growth to continue as the population grows and emerging market countries use more energy per capita. We believe this demand will increasingly be met by electricity versus fossil fuel growth. This strategy will better capture the investment opportunity of increased energy demand being met by an increased electricity supply.  We believe that each Fund will benefit from the refined strategy consistent with the changes in the market and can be more easily pursued as a Combined Fund.

 

We expect that the Combined Fund will have a similar distribution policy as the standalone Funds currently have, with no adverse impact expected to the payment of quarterly distributions to the Combined Fund’s common stockholders. Additionally, we believe that there is potential for aggregate distribution growth going forward. 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 2^nd 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. Distributions could consist, at least in part, of return of capital and a return of capital will represent a return of the investor's original capital and not represent income or capital gains.

 

 

Our research suggests that funds with more exposure to global utilities and infrastructure, which we define as renewable and power infrastructure, tend to trade closer to NAV.

 

 

 

Additionally, 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% for the Combined Fund.

 

*Managed Assets defined as total assets (including any assets attributable to any leverage that may be outstanding) minus the sum of accrued liabilities other than (1) debt entered into for purposes of leverage and (2) the aggregate liquidation preference of any outstanding preferred stock.

See “Fees and Expenses for Common Stockholders of the Funds as of November 30, 2020” in this proxy statement/prospectus for more information about the pro forma management fees as a percentage of net assets.

 

The larger market capitalization of the Combined Fund may provide an opportunity for enhanced market liquidity over the long-term. Greater market liquidity may lead to a narrowing of bid-ask spreads and reduce price movements on a trade-to-trade basis. The table below illustrates the market capitalization of each Fund and on a pro forma basis.

 

Market capitalization ($ in millions)
TTP				NDP				Pro Forma Combined Fund
$	36.5			$	23.3			$	59.8

As of November 30, 2020. Assumes Merger occurred on November 30, 2020 with all else being equal.

 

 

 

		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	%

As of November 30, 2020. Assumes Merger occurred on November 30, 2020 with all else being equal.

 

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.

 

NDP common stockholders: Your outstanding NDP common shares will be multiplied by an exchange rate determined by dividing the NDP net asset value (“NAV”) per share by the TTP NAV per share (less in each case, the Merger costs for each of NDP and TTP).  No fractional TTP Common Shares will be issued in the Merger; instead NDP stockholders will receive cash in an amount equal to the value of the fractional TTP Common Shares that they would otherwise have received.

 

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:

 

The value of the total assets (the value of the securities held plus any cash or other assets, including interest, dividends or distributions accrued but not yet received)

 

 

 

 

 

Q: Will I have to pay any sales load, commission or other similar fees in connection with the Merger?

 

 

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.

 

 

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: 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.

 

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.

 

 

 

 

Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Meeting, you must obtain from the record holder a proxy issued in your name.  However, even if you plan to attend the Meeting, we urge you to authorize a proxy to vote your shares in advance of the Meeting.  That will ensure that your vote is counted should your plans change.

 

Q:   Who do I contact for further information?

 

A:   You may contact us toll-free at (866) 362-9331 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.

 

Your vote is very important. We encourage you as a stockholder to participate in your Fund’s governance by authorizing a proxy to vote your shares as soon as possible. If enough stockholders fail to cast their votes, your Fund may not be able to hold its meeting or the vote on each issue and will be required to incur additional solicitation costs in order to obtain sufficient stockholder participation.

 

 

Merger

 

For stockholders of NDP:

●

to consider and vote upon a proposal to approve the merger of NDP with and into TTP.

For stockholders of 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.

 

The Board of Directors of TTP and NDP unanimously recommends stockholders vote “FOR” each proposal involving their Fund.

 

Whether or not you expect to attend the Meeting , please authorize a proxy to vote your shares of stock by following the detailed instructions provided on your proxy or voting instruction card.

 

IN ORDER TO AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION, THE BOARDS OF DIRECTORS ASK THAT YOU VOTE PROMPTLY, NO MATTER HOW MANY SHARES OF STOCK YOU OWN.

The information contained in this Joint Proxy Statement/Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

JOINT PROXY STATEMENT/PROSPECTUS

TORTOISE PIPELINE & ENERGY FUND, INC.

TORTOISE ENERGY INDEPENDENCE FUND, INC.

5100 W. 115^th Place

Leawood, Kansas 66211

(913) 981-1020

JOINT SPECIAL MEETING OF STOCKHOLDERS

______________, 2021

 

 

Even if you plan to attend the Meeting, the Board of Directors of each of TTP and NDP requests that you authorize a proxy to vote your shares of stock as described in the enclosed proxy or voting instruction card so that your vote will be counted if you later decide not to attend the Meeting.  The approximate mailing date of this Joint Proxy Statement/Prospectus and accompanying form of proxy is                  , 2021.

 

MEETING

 

 

The purposes of the Meeting are:

 

Merger

 

For stockholders of NDP:

 

 

For stockholders of 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.

 

 

The following table presents information about the stockholders entitled to vote on each of the matters.  Each stockholder is entitled to one vote for each share of common stock and/or preferred stock owned by such stockholder.

 

The Agreement and Plan of Merger between TTP and NDP is sometimes referred to herein as the “Merger Agreement.”  TTP following the Merger is sometimes referred to herein as the “Combined Fund.”  The Board of Directors of each Fund has determined that including these proposals in one Joint Proxy Statement/Prospectus will reduce costs and is in the best interests of each Fund and its stockholders.

 

ADDITIONAL INFORMATION

 

This Joint Proxy Statement/Prospectus sets forth the information stockholders of each Fund should know before voting on the proposals for their Fund and constitutes an offering of common stock of TTP.  Please read it carefully and retain it for future reference. A Merger Statement of Additional Information, dated                   , 2021, relating to this Joint Proxy Statement/Prospectus (the “Merger Statement of Additional Information”) has been filed with the Securities and Exchange Commission (the “SEC”) and is incorporated herein by reference. Copies of each Fund’s most recent annual report and quarterly report can be obtained on a web site maintained by the Funds’ investment adviser, Tortoise Capital Advisors, L.L.C. (the “Adviser”) at www.cef.tortoiseecofin.com. In addition, each Fund will furnish, without charge, a copy of the Merger Statement of Additional Information, its most recent annual report and any more recent quarterly report to any stockholder upon request. Any such request should be directed to the Adviser by calling 866-362-9331 or by writing to the respective Fund at its principal executive offices at 5100 W. 115^th Place, Leawood, Kansas 66211.  The telephone number of the principal executive offices of the Funds is 913-981-1020.

 

The Funds are subject to certain informational requirements of the Securities Exchange Act of 1934 and in accordance therewith file reports, proxy statements, proxy materials and other information with the SEC. Materials filed with the SEC can be reviewed and downloaded from the SEC’s web site at www.sec.gov.

 

The currently outstanding shares of common stock of TTP are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “TTP” and will continue to be so listed subsequent to the Merger.  It is expected that the newly issued common stock of TTP issued in connection with the Merger will be listed on the NYSE.  The currently outstanding shares of common stock of NDP are also listed on the NYSE under the ticker symbol “NDP”.

 

This Joint Proxy Statement/Prospectus serves as a prospectus of TTP in connection with the issuance of common stock of TTP in the Merger. No person has been authorized to give any information or make any representation not contained in this Joint Proxy Statement/Prospectus and, if so given or made, such information or representation must not be relied upon as having been authorized. This Joint Proxy Statement/Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which, or to any person to whom, it is unlawful to make such offer or solicitation.

 

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the Funds’ shareholder reports will no longer be sent by mail, unless you specifically request paper copies of the reports. Instead, the reports will be made available on the Funds’ website (www.tortoiseecofin.com), and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from a Fund electronically anytime by contacting your financial intermediary (such as a broker-dealer or bank) or by contacting the Adviser by calling (866) 362-9331, or by sending an e-mail request to [email protected].

You may elect to receive all future reports in paper free of charge by contacting your financial intermediary (such as a broker-dealer or bank) or by contacting the Adviser by calling (866) 362-9331, or by sending an e-mail request to [email protected]. Your election to receive reports in paper will apply to all funds held in your account if you invest through your financial intermediary or all Funds held with the fund complex if you invest directly with a Fund.

 

THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

The date of this Joint Proxy Statement/Prospectus is                               , 2021.

 

 

The following is a summary of certain information contained elsewhere in this Joint Proxy Statement/Prospectus and is qualified in its entirety by reference to the more complete information contained in this Joint Proxy Statement/Prospectus and in the Merger Statement of Additional Information. Stockholders should read this entire Joint Proxy Statement/Prospectus carefully.

 

PROPOSAL 1: MERGER

 

The Merger

 

The Board of Directors of NDP, including the Directors who are not “interested persons” of NDP (as defined in Section 2(a)(19) of the Investment Company Act of 1940) (the “Independent Directors”), has unanimously approved the Merger Agreement, declared the Merger advisable and directed that the same be submitted to the NDP stockholders for consideration.  If the stockholders of NDP approve the Merger and the stockholders of TTP approve the Merger, including the issuance of additional shares of common stock of TTP (“TTP Common Shares”) (see “Proposal 2: Merger and Issuance of Additional TTP Common Shares in the Merger”), NDP will be merged with and into TTP in accordance with the Maryland General Corporation Law.  NDP’s assets and liabilities will be combined with the assets and liabilities of TTP and stockholders of NDP will become stockholders of TTP.  As a result of the Merger each share of common stock of NDP will convert into newly-issued TTP Common Shares.  The aggregate NAV of TTP Common Shares received by NDP common stockholders in the Merger will equal the aggregate NAV of NDP common stock held on the business day prior to closing of the Merger, less the costs of the Merger attributable to their common shares (although NDP common stockholders will receive cash in lieu of fractional TTP Common Shares).  NDP will cease its separate existence under Maryland law and terminate its registration under the Investment Company Act of 1940 (the “1940 Act”). TTP will continue to operate after the Merger as a registered, non-diversified, closed-end management investment company with the investment objectives and policies described in this Joint Proxy Statement/Prospectus.

 

If the Merger is not approved by stockholders of NDP, or if the Merger, including the issuance of TTP Common Shares is not approved by TTP’s stockholders, NDP and TTP will each continue to operate as a standalone Maryland corporation advised by the Adviser and will each continue its investment activities in the normal course.

 

Background and Reasons for the Proposed Merger

 

The proposed Merger will combine the assets of the Funds (each a non-diversified closed-end management investment company under the 1940 Act) by merging NDP with and into TTP. The Merger is expected to result in several benefits to TTP and NDP stockholders.

In unanimously approving the Merger, the Board of Directors of each Fund, including each Fund’s Independent Directors, determined that participation in the Merger is in the best interests of each Fund and its stockholders and that the interests of the stockholders of each Fund will not be diluted with respect to NAV as a result of the Merger. Before reaching these conclusions, the Board of Directors of each Fund engaged in a thorough review process relating to the proposed Merger. The Board of Directors of each Fund, including the Independent Directors, considered the Merger at numerous meetings held in 2020 and unanimously approved the Merger, declared the Merger advisable and directed that the Merger be submitted to the stockholders of each Fund on November 11, 2020.

The primary factors considered by the Board of Directors of each Fund with regard to the Merger included, but were not limited to, the following:

 

The Board of Directors of each Fund made its determination with regard to the Merger on the basis of each Director’s business judgment after consideration of all of the factors taken as a whole, though individual Directors may have placed different weight on various factors and assigned different degrees of materiality to various factors. See “Proposal 1: Merger—Reasons for the Merger.”

 

Fees and Expenses for Common Stockholders of the Funds as of November 30, 2020.

The following table and example contain information about the change in operating expenses expected as a result of the Merger. The table sets forth (i) the fees and expenses, including leverage costs, as a percentage of net assets as of November 30, 2020, for each Fund and (ii) the pro forma fees and expenses, including leverage costs, for the Combined Fund, assuming the Merger had taken place on November 30, 2020. The fees and expenses are presented as a percentage of net assets and not as a percentage of gross assets or managed assets. By showing expenses as a percentage of net assets, expenses are not expressed as a percentage of all of the assets in which a Fund may invest. The annual operating expenses for each Fund reflect fixed expenses for a trailing 12-month period and variable expenses assuming each Fund’s capital structure and asset levels as of November 30, 2020. The pro forma annual operating expenses are projections for a 12-month period, assuming each Fund’s capital structure and asset levels as of November 30, 2020. These pro forma projections include the change in operating expenses expected as a result of the Merger, assuming the Combined Fund’s capital structure and asset levels as of November 30, 2020.

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	%

Example:

The following example is intended to help you compare the costs of investing in TTP pro forma after the Merger with the costs of investing in TTP and NDP without the Merger. An investor would pay the following expenses on a $1,000 investment, assuming (1) the operating expense ratio for each Fund (as a percentage of net assets attributable to shares of common stock) set forth in the table above and (2) a 5% annual return throughout the period:

		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

 

Comparison of the Funds

 

TTP and NDP are each Maryland corporations registered as non-diversified, closed-end management investment companies under the 1940 Act.  Each Fund (i) is managed by the Adviser and (ii) has an investment objective of providing a high level of total return with an emphasis on current distributions.  Each Fund is also taxed as a RIC.  See “Proposal 1: Merger – Comparison of the Funds” for a more detailed comparison of the Funds.

 

Further Information Regarding the Merger

 

The parties believe that the Merger will be characterized for federal income tax purposes as a tax-free reorganization under Section 368(a) of the Code.  If the Merger so qualifies, in general, stockholders of NDP will recognize no gain or loss upon the receipt of TTP’s stock in connection with the Merger.  Additionally, if the Merger so qualifies, NDP will recognize no gain or loss as a result of the transfer of all of their assets and liabilities in exchange for shares of TTP and neither TTP nor its stockholders will recognize any gain or loss in connection with the Merger.  If the Merger so qualifies, the aggregate tax basis of TTP Common Shares received by stockholders of NDP should be the same as the aggregate tax basis of the common shares of NDP surrendered in exchange therefore (reduced by any amount of tax basis allocable to a fractional share of common stock for which cash is received).

 

The Board of Directors of NDP recommend that stockholders approve the Merger at the Meeting to be held on April 7, 2021. Stockholder approval of the Merger requires the affirmative vote of the holders of a majority of the issued and outstanding NDP common stock.

Subject to the requisite approval of the stockholders of NDP with regard to the Merger and the requisite approval of the stockholders of TTP with regard to the Merger, including the issuance of additional TTP Common Shares in connection with the Merger, it is expected that the closing date of the Merger (the “Closing Date”) will be after the close of business on or about April 16, 2021, but it may be at a different time as described herein.

The Board of Directors of NDP unanimously recommends NDP stockholders vote “FOR” the Merger.

PROPOSAL 2: MERGER AND ISSUANCE OF ADDITIONAL TTP COMMON SHARES

The Board of Directors of TTP recommends that stockholders of TTP approve the Merger, including the issuance of additional TTP Common Shares in connection with the Merger, at the Meeting to be held on April 7, 2021. Stockholder approval of the Merger, including the issuance of additional TTP Common Shares, requires the affirmative vote of the holders of a majority of the issued and outstanding TTP common and preferred stock (voting as a class). Subject to the requisite approval of the stockholders of TTP with regard to the Merger, including the issuance of additional TTP Common Shares, and the requisite approval the stockholders of NDP with regard to the Merger, it is expected that the Closing Date will be after the close of business on or about April 16, 2021, but it may be at a different time as described herein. For additional information about the Merger, including a comparison of TTP and NDP, the reasons for the Merger and the U.S. Federal income tax consequences of the Merger, see “Proposal 1: Merger.”

 

The Board of Directors of TTP unanimously recommends TTP stockholders vote “FOR” the Merger, including the issuance of additional TTP Common Shares in connection therewith.

 

 

You should carefully consider the following risks of the Combined Fund before voting.  References to “we” “us” or “our” below are references to the Combined Fund.

 

Risks Associated With an Investment in the Combined Fund

 

Rising interest rates could limit the capital appreciation of equity units of energy infrastructure companies as a result of the increased availability of alternative investments at competitive yields. Rising interest rates may increase the cost of capital for companies operating in this sector. A higher cost of capital or an inflationary period may lead to inadequate funding, which could limit growth from acquisition or expansion projects, the ability of such entities to make or grow dividends or distributions or meet debt obligations, the ability to respond to competitive pressures, all of which could adversely affect the prices of their securities.

Concentration Risk. Our strategy of concentrating in energy infrastructure investments means that our performance will be closely tied to the performance of the energy infrastructure sector, which includes midstream, upstream and downstream energy industries. For further information about investments we may make in energy infrastructure companies, see “Investment Objective and Principal Investment Strategies - Energy Infrastructure Companies.” Our concentration in these investments may present more risk than if we were broadly diversified over numerous industries and sectors of the economy. A downturn in these investments would have a greater impact on us than on a fund that does not concentrate in such investments. At times, the performance of these investments may lag the performance of other industries or the market as a whole. Risks inherent in the business of energy infrastructure companies include:

 

 

 

 

 

Commodity prices fluctuate for several reasons, including changes in global and domestic market and economic conditions, the impact of weather on demand, levels of domestic production and imported commodities, energy conservation, domestic and foreign governmental regulation, political instability, conservation efforts, and taxation and the availability of local, intrastate and interstate transportation systems.  Volatility of commodity prices may also make it more difficult for energy companies to raise capital to the extent the market perceives that their performance may be directly or indirectly tied to commodity prices. Historically, energy commodity prices have been cyclical and exhibited significant volatility which may adversely impact other energy infrastructure companies in which we invest.

 

 

 

 

Industry Specific Risk. Energy infrastructure companies are subject to specific risks, including:

 

 

 

 

 

 

 

MLP Risks. An investment in MLP securities involves some risks that differ from the risks involved in an investment in the common stock of a corporation. Holders of MLP units have limited control and voting rights on matters affecting the partnership. Holders of units issued by an MLP are exposed to a remote possibility of liability for all of the obligations of that MLP in the event that a court determines that the rights of the holders of MLP units to vote to remove or replace the general partner of that MLP, to approve amendments to that MLP’s partnership agreement, or to take other action under the partnership agreement of that MLP would constitute “control” of the business of that MLP, or a court or governmental agency determines that the MLP is conducting business in a state without complying with the partnership statute of that state.

Holders of MLP units are also exposed to the risk that they will be required to repay amounts to the MLP that are wrongfully distributed to them. In addition, the value of our investment in an MLP will depend largely on the MLP’s treatment as a partnership for U.S. federal income tax purposes. If an MLP does not meet current legal requirements to maintain partnership status, or if it is unable to do so because of tax law changes, it would be treated as a corporation for U.S. federal income tax purposes. In that case, the MLP would be obligated to pay income tax at the entity level and distributions received by us generally would be taxed as dividend income. As a result, there could be a material reduction in our cash flow and there could be a material decrease in the value of our common shares.

Equity Securities Risk. Equity securities can be affected by macroeconomic and other factors affecting the stock market in general, expectations about changes in interest rates, investor sentiment toward such entities, changes in a particular issuer’s financial condition, or unfavorable or unanticipated poor performance of a particular issuer. Prices of equity securities of individual entities also can be affected by fundamentals unique to the company or partnership, including size, earnings power, coverage ratio and characteristics and features of different classes of securities. Equity securities are susceptible to general stock market fluctuations and to volatile increases and decreases in value. The equity securities we hold may experience sudden, unpredictable drops in value or long periods of decline in value. In addition, by writing covered call options, capital appreciation potential will be limited on a portion of our investment portfolio.

Foreign Securities Risk.  Investments in securities (including ADRs) of foreign issuers involve risks not ordinarily associated with investments in securities and instruments of U.S. issuers. For example, foreign companies are not generally subject to uniform accounting, auditing and financial standards and requirements comparable to those applicable to U.S. companies. Foreign securities exchanges, brokers and companies may be subject to less government supervision and regulation than exists in the U.S. Dividend and interest income may be subject to withholding and other foreign taxes, which may adversely affect the net return on such investments. The Combined Fund may not be able to pass through to its shareholders any foreign income tax credits as a result of any foreign income taxes it pays. There may be difficulty in obtaining or enforcing a court judgment abroad. In addition, it may be difficult to effect repatriation of capital invested in certain countries. With respect to certain countries, there are risks of expropriation, confiscatory taxation, political or social instability or diplomatic developments that could affect the Combined Fund’s assets held in foreign countries. Furthermore, foreign companies operate and serve customers in many parts of the world, and encounter a variety of political and legal risks unique to those jurisdictions. Local economic conditions may vary and may have a meaningful influence on the outcome of business activities. Some of these risks are impacted by regional inflation, economic cycles, currency volatility, sovereign debt markets, local economic environments, and regional trade patterns. There may be less publicly available information about a foreign company than there is regarding a U.S. company, and many foreign companies are not subject to accounting, auditing, and financial reporting standards, regulatory framework and practices comparable to those in the U.S. Foreign securities markets may have substantially less volume than U.S. securities markets and some foreign company securities are less liquid than securities of otherwise comparable U.S. companies. Foreign markets also have different clearance and settlement procedures that could cause the Combined Fund to encounter difficulties in purchasing and selling securities on such markets and may result in the Combined Fund missing attractive investment opportunities or experiencing a loss. In addition, a portfolio that includes securities issued by foreign issuers can expect to have a higher expense ratio because of the increased transaction costs in foreign markets and the increased costs of maintaining the custody of such foreign securities. When investing in securities issued by foreign issuers, there is also the risk that the value of such an investment or the Fund’s income, measured in U.S. dollars, will decrease because of unfavorable changes in currency exchange rates. The Combined Fund may, but does not currently intend to, hedge its exposure to foreign currencies.

Liquidity Risk. We may invest in securities of any market capitalization and may be exposed to liquidity risk when trading volume, lack of a market maker, or legal restrictions impair our ability to sell particular securities or close call option positions at an advantageous price or a timely manner. We may invest in mid-cap and small-cap companies, which may not have the management experience, financial resources, product diversification and competitive strengths of large-cap companies. Analysts and other investors may follow these companies less actively and therefore information about these companies may not be as readily available as that for large-cap companies. Therefore, their securities may be more volatile and less liquid than the securities of larger, more established companies. In the event certain securities experience limited trading volumes, the prices of such securities may display abrupt or erratic movements at times. In addition, it may be more difficult for us to buy and sell significant amounts of such securities without an unfavorable impact on prevailing market prices. As a result, these securities may be difficult to sell at a favorable price at the times when we believe it is desirable to do so. Investment of our capital in securities that are less actively traded (or over time experience decreased trading volume) may restrict our ability to take advantage of other market opportunities or to sell those securities. This also may affect adversely our ability to make required interest payments on our debt securities and distributions on any of our preferred stock, to redeem such securities, or to meet asset coverage requirements.

Non-Diversification Risk. We are classified as “non-diversified” under the 1940 Act. As a result, we can invest a greater portion of our assets in obligations of a single issuer than a “diversified” fund. We may therefore be more susceptible than a diversified fund to being adversely affected by any single corporate, economic, political or regulatory occurrence. We intend to maintain our status as a RIC under Subchapter M of the Code, and thus we intend to satisfy the diversification requirements of Subchapter M, including its less stringent diversification requirements that apply to the percentage of our total assets that are represented by cash and cash items (including receivables), U.S. government securities, the securities of other regulated investment companies and certain other securities.

Performance and Distribution Risk. We may not be able to achieve operating results that will allow us to make distributions at a specific level or to increase the amount of these distributions from time to time. We cannot assure you that you will receive distributions at a particular level or at all. Dividends and distributions on equity securities are not fixed but are declared at the discretion of the issuer’s board of directors. If stock market volatility declines, the level of premiums from writing covered call options will likely decrease as well. Payments to close-out written call options will reduce amounts available for distribution from gains earned in respect of call option expiration or close out. The equity securities in which we invest may not appreciate or may decline in value. Net realized and unrealized gains on the securities investments will be determined primarily by the direction and movement of the applicable securities markets and our holdings. Any gains that we do realize on the disposition of any securities may not be sufficient to offset losses on other securities or option transactions. A significant decline in the value of the securities in which we invest may negatively impact our ability to pay distributions or cause you to lose all or a part of your investment.

In addition, the 1940 Act may limit our ability to make distributions in certain circumstances. Restrictions and provisions in any future credit facilities and our debt securities may also limit our ability to make distributions. For federal income tax purposes, we are required to distribute substantially all of our net investment income each year both to reduce our federal income tax liability and to avoid a potential excise tax. If our ability to make distributions on our common shares is limited, such limitations could, under certain circumstances, impair our ability to maintain our qualification for taxation as a RIC, which would have adverse consequences for our stockholders. See “Certain U.S. Federal Income Tax Considerations.”

Quarterly Results Risk. We could experience fluctuations in our operating results due to a number of factors, including the return on our investments, the level of our expenses, variations in and the timing of the recognition of realized and unrealized gains or losses on our investments and written call options, the level of call premium we receive by writing covered calls, the degree to which we encounter competition in our markets and general economic conditions. As a result of these factors, results for any period should not be relied upon as being indicative of performance in future periods.

Restricted Securities Risk. 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. Restricted securities (including Rule 144A securities) are less liquid than securities traded in the open market because of statutory and contractual restrictions on resale. Such securities are, therefore, unlike securities that are traded in the open market, which can be expected to be sold immediately if the market is adequate. This lack of liquidity may create special risks for us. However, we could sell such securities in private transactions with a limited number of purchasers or in public offerings under the 1933 Act.

Restricted securities are subject to statutory and contractual restrictions on their public resale, which may make it more difficult to value them, may limit our ability to dispose of them and may lower the amount we could realize upon their sale. To enable us to sell our holdings of a restricted security not registered under the 1933 Act, we may have to cause those securities to be registered. The expenses of registering restricted securities may be determined at the time we buy the securities. When we must arrange registration because we wish to sell the security, a considerable period may elapse between the time the decision is made to sell the security and the time the security is registered so that we could sell it. We would bear the risks of any downward price fluctuation during that period.

Portfolio Turnover Risk. We may, but under normal market conditions do not intend to, engage in frequent and active trading of portfolio securities to achieve our investment objective. However, annual portfolio turnover as a result of our purchases and sales of equity securities and call options may exceed 100%, which is higher than many other investment companies and would involve greater trading costs to us and may result in greater realization of taxable capital gains.

Hedging and Derivatives Risk. In addition to writing call options as part of the investment strategy, we may invest in derivative instruments for hedging or risk management purposes. Our use of derivatives could enhance or decrease the cash available to us for payment of distributions or interest, as the case may be. Derivatives can be illiquid, may disproportionately increase losses and have a potentially large negative impact on our performance. Derivative transactions, including options on securities and securities indices and other transactions in which we may engage (such as forward currency transactions, futures contracts and options thereon, and total return swaps), may subject us to increased risk of principal loss due to unexpected movements in stock prices, changes in stock volatility levels, interest rates and foreign currency exchange rates and imperfect correlations between our securities holdings and indices upon which derivative transactions are based. We also will be subject to credit risk with respect to the counterparties to any over-the-counter derivatives contracts we purchased. If a counterparty becomes bankrupt or otherwise fails to perform its obligations under a derivative contract, we may experience significant delays in obtaining any recovery under the derivative contract in a bankruptcy or other reorganization proceeding. We may obtain only a limited recovery or may obtain no recovery in such circumstances. In addition, if the counterparty to a derivative transaction defaults, we would not be able to use the anticipated net receipts under the derivative to offset our cost of financial leverage.

Interest rate transactions will expose us to certain risks that differ from the risks associated with our portfolio holdings. There are economic costs of hedging reflected in the price of interest rate swaps, floors, caps and similar techniques, the costs of which can be significant, particularly when long-term interest rates are substantially above short-term rates. In addition, our success in using hedging instruments is subject to our Adviser’s ability to predict correctly changes in the relationships of such hedging instruments to our leverage risk, and there can be no assurance that our Adviser’s judgment in this respect will be accurate. Consequently, the use of hedging transactions might result in a poorer overall performance, whether or not adjusted for risk, than if we had not engaged in such transactions. There is no assurance that the interest rate hedging transactions into which we enter will be effective in reducing our exposure to interest rate risk. Hedging transactions are subject to correlation risk, which is the risk that payment on our hedging transactions may not correlate exactly with our payment obligations on senior securities. To the extent there is a decline in interest rates, the value of certain derivatives could decline, and result in a decline in our net assets.

Tax Risk. We intend to elect to be treated, and to qualify each year, as a “regulated investment company” under the Code. To maintain our qualification for federal income tax purposes as a RIC under the Code, we must meet certain source-of-income, asset diversification and annual distribution requirements. If for any taxable year we fail to qualify for the special federal income tax treatment afforded to regulated investment companies, all of our taxable income will be subject to federal income tax at regular corporate rates (without any deduction for distributions to our stockholders) and our income available for distribution will be reduced. For additional information on the requirements imposed on RICs and the consequences of a failure to qualify, see “Certain U.S. Federal Income Tax Considerations” below.

Anti-Takeover Provisions Risks. Maryland law and our Charter and Bylaws include provisions that could delay, defer or prevent other entities or persons from acquiring control of us, causing us to engage in certain transactions or modifying our structure. These provisions may be regarded as “anti-takeover” provisions. Such provisions could limit the ability of common stockholders to sell their shares at a premium over the then-current market prices by discouraging a third party from seeking to obtain control of us. See “Certain Provisions in Our Charter and Bylaws.”

 

Additional Risks to Common Stockholders of the Combined Fund

 

 

●

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.

 

Additional Risks to Senior Security Holders of the Combined Fund

 

 

General Risks Associated with an Investment in a Closed-End Fund

 

PROPOSAL 1

 

 

The Merger seeks to combine two similar and compatible Funds. Each Fund (i) is managed by the Adviser and (ii) has an investment objective of providing a high level of total return with an emphasis on current distributions.  Each Fund is also taxed as a RIC. This Merger will also permit the Combined Fund to pursue this investment objective and an expanded strategy in a larger fund that will give the portfolio exposure to what the Adviser believes are the best growth and value opportunities in renewables and midstream energy companies globally.

 

The Merger

 

The Board of Directors of NDP, including the Independent Directors of NDP, has unanimously approved the Merger, declared the Merger advisable and directed that the same be submitted to the NDP stockholders for consideration.  If the stockholders of NDP approve the Merger and the stockholders of TTP approve the Merger, including the issuance of additional TTP Common Shares (see “Proposal 2: Merger and Issuance of Additional TTP Common Shares in the Merger”), NDP will be merged with and into TTP in accordance with the Maryland General Corporation Law.  NDP’s assets and liabilities will be combined with the assets and liabilities of TTP and stockholders of NDP will become stockholders of TTP.  As a result of the Merger each share of common stock of NDP will convert into newly-issued TTP Common Shares.  The aggregate NAV of TTP Common Shares received by NDP common stockholders in the Merger will equal the aggregate NAV of NDP common stock held on the business day prior to closing of the Merger, less the costs of the Merger attributable to their common shares (although NDP common stockholders will receive cash in lieu of fractional TTP Common Shares).  NDP will cease its separate existence under Maryland law and terminate its registration under the Investment Company Act of 1940 (the “1940 Act”). TTP will continue to operate after the Merger as a registered, non-diversified, closed-end management investment company with the investment objectives and policies described in this Joint Proxy Statement/Prospectus.

 

If the Merger is not approved by stockholders of NDP, or if the Merger, including the issuance of TTP Common Shares is not approved by TTP’s stockholders, NDP and TTP will continue to each operate as a standalone Maryland corporation advised by the Adviser and will each continue its investment activities in the normal course.

 

REASONS FOR THE MERGER

 

The Board of Directors of each Fund believes that the Merger will benefit stockholders of the Funds, based on a number of factors. The factors considered by the Board of Directors of each Fund with regard to the Merger include, but are not limited to, the following:

The Merger will permit the Combined Fund to pursue its same investment objective with an expanded investment strategy. We will seek to provide stockholders an efficient vehicle to invest in a portfolio consisting primarily of equity securities of energy infrastructure companies. Under normal circumstances, we will invest at least 80% of total assets (including assets obtained through leverage) in equity securities of energy infrastructure companies. We consider a company to be an energy infrastructure company if at least 50% of its assets, revenues or cash flows are derived from energy infrastructure operations or ownership. Energy infrastructure operations use a network of pipeline assets to transport, store, gather and/or process crude oil, refined petroleum products (including biodiesel and ethanol), natural gas or natural gas liquids. The Adviser will add additional renewable and power infrastructure companies to the investment strategy, representing approximately 45% of the portfolio initially, and we expect that to grow over time. Renewable and power infrastructure companies use asset systems to provide electric power generation (including renewable energy), transmission and distribution. The Adviser will also expand its investment universe capturing opportunities from securities that trade on exchanges outside of North America. Under normal circumstances, the Adviser plans to invest at least 10% of the portfolio in securities that trade on non-North American (U.S., Canada, and Mexico) stock exchanges.

We expect energy demand growth to continue as the population grows and emerging market countries use more energy per capita. We believe this demand will increasingly be met by electricity versus fossil fuel growth. This strategy will better capture the investment opportunity of increased energy demand being met by an increased electricity supply.

We expect that the Combined Fund will have a similar distribution policy as the standalone Funds currently have, with no adverse impact expected to the payment of quarterly distributions to the Combined Fund’s common stockholders. Additionally, we believe that there is potential for aggregate distribution growth going forward. 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 2^nd 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.

Our research suggests that funds with more exposure to global utilities and infrastructure, which we define as renewable and power infrastructure, tend to trade closer to NAV.

It is estimated that the Combined Fund will see an aggregate cost savings of approximately $500,000 annually through operating cost savings and greater economies of scale. Each Fund incurs both fixed expenses (e.g., board fees, printing fees, legal and auditing services) and variable expenses (e.g., administrative, fund accounting and custodial services). Many of these fixed expenses are duplicative and there will also be an opportunity to reduce variable expenses over time in a Combined Fund by taking advantage of lower fees associated with higher asset levels and greater combined economies of scale.

Effective at the time of the Merger, the Combined Fund will implement a reduced management fee for the Combined Fund. Currently, TTP and NDP each have an annual management fee of 1.10%, respectively based on each Fund’s average monthly Managed Assets. Upon completion 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% for the Combined Fund.

Following the Merger, a larger market capitalization of the Combined Fund may provide an opportunity for enhanced market liquidity over the long-term. Greater market liquidity may lead to a narrowing of bid-ask spreads and reduce price movements on a trade-to-trade basis. As of November 30, 2020 , TTP’s and NDP’s market capitalization was approximately $36.5 million and $23.3 million, respectively. If the Merger closed on November 30, 2020, all else being equal, the aggregate market capitalization of the Combined Fund would be approximately $59.8 million, a market capitalization significantly larger than that of both Funds prior to the Merger.

As of November 30, 2020, TTP and NDP had total leverage outstanding of $20.6 million and $5.0 million, respectively, representing 29.7% and 14.1% of total assets, respectively. If the Merger had closed on November 30, 2020, all else being equal, the total leverage of the Combined Fund would have been $25.7 million, representing 24.5% of total assets. The larger asset base of the Combined Fund may provide (i) greater financial flexibility through a larger balance sheet, (ii) access to more attractive leverage terms and (iii) a wider range of leverage alternatives.

The Merger is intended to qualify as tax-free for federal income tax purposes. Stockholders of TTP and NDP are not expected to recognize any gain or loss for federal income tax purposes as a result of the Merger (except with respect to cash received in lieu of fractional TTP Common Shares). See “Material U.S. Federal Income Tax Consequences of the Merger.”

Based on the intended tax treatment of the Merger, the aggregate tax basis of TTP Common Shares received by a stockholder of NDP should be the same as the aggregate tax basis of the common shares of NDP surrendered in exchange therefore (reduced by any amount of tax basis allocable to a fractional share of common stock for which cash is received). See “Material U.S. Federal Income Tax Consequences of the Merger.”

The aggregate net asset value of the TTP shares that NDP stockholders will receive in the Merger is expected to equal the aggregate net asset value that NDP stockholders owned immediately prior to the Merger. No fractional common shares of TTP will be issued to stockholders in connection with the Merger, and NDP stockholders will receive cash in lieu of such fractional shares.

Each of the Funds involved in the Merger is organized as Maryland corporations. Common stockholders of each of TTP and NDP have substantially similar voting rights as well as rights with respect to the payment of dividends and distribution of assets upon liquidation of their respective Fund and have no preemptive, conversion, or exchange rights.

The Funds will retain consistency of management. Stockholders of the Combined Fund may benefit from the continuing experience and expertise of the Adviser and its commitment to the investment style and strategies to be used in managing the assets of the Combined Fund.

As part of the consideration for the Merger, the Board of Directors of each Fund reviewed and evaluated the relative performance history of each Fund over different time periods compared to each other as well as other comparable Funds.

Considering the reasons outlined above and other reasons, the Board of Directors of each Fund unanimously concluded that consummation of the Merger is advisable and in the best interests of each Fund and its stockholders. The approval determination was made on the basis of each Director’s business judgment after consideration of all of the factors taken as a whole, though individual Directors may have placed different weight on various factors and assigned different degrees of materiality to various factors.

INVESTMENT OBJECTIVES AND POLICIES OF THE COMBINED FUND

 

Investment Objective

 

The Combined Fund’s investment objective is to seek a high level of total return with an emphasis on current distributions paid to stockholders. For purposes of its investment objective, total return includes capital appreciation of its common stock, and all distributions received from the Combined Fund, regardless of the tax character of the distributions.  The Combined Fund cannot guarantee that it will achieve its investment objective.  The Merger will permit the Combined Fund to pursue its same investment objective with an expanded investment strategy. For a comparison of the Funds, see “Proposal 1: Merger – Comparison of the Funds.”  References to “we” “us” or “our” below are references to the Combined Fund.

 

Energy Infrastructure Industry

 

 

We may invest up to 25% of our total assets in securities of MLPs. 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.

 

The Combined Fund also may invest in other securities, consistent with our investment objective and fundamental and nonfundamental policies.

 

We may invest in equity and debt securities of energy infrastructure companies that are organized and/or taxed as partnerships or corporations to the extent consistent with our investment objective. We also may invest in securities of general partners or other affiliates of MLPs and private companies operating energy infrastructure assets.

 

Investment Process

 

Under normal circumstances, we invest at least 80% of our total assets (including assets obtained through leverage) in securities of energy infrastructure companies. The Adviser seeks to invest in securities that offer a combination of quality, growth and yield intended to result in superior total returns over the long run. The Adviser’s securities selection process includes a comparison of quantitative, qualitative, and relative value factors. Although the Adviser intends to use research provided by broker-dealers and investment firms, primary emphasis will be placed on proprietary analysis and valuation models conducted and maintained by the Adviser’s in-house investment analysts. To determine whether a company meets its criteria, the Adviser generally will look for a strong record of dividend growth, an appropriate level of leverage, and a healthy payout ratio with respect to dividends, along with a management team that has a proven track record.

 

Investment Policies

 

We seek to achieve our investment objective by investing primarily in securities that the Adviser believes offer attractive distribution rates and capital appreciation potential. We also may invest in other securities set forth below if the Adviser expects to achieve our objective with such investments.

 

The following are our fundamental investment limitations set forth in their entirety. We may not:

 

 

 

 

 

 

 

 

Our policy of investing at least 80% of our total assets (including assets obtained through leverage) in securities of energy infrastructure companies is nonfundamental and may be changed by the Board of Directors without stockholder approval, provided that stockholders receive at least 60 days’ prior written notice of any change.

 

We have adopted the following additional nonfundamental policies:

 

 

 

 

 

 

 

 

Unless otherwise stated, these investment restrictions apply at the time of purchase and we will not be required to reduce a position due solely to market value fluctuations.

 

As used in the bullets above, the term “total assets” includes assets to be obtained through anticipated leverage for the purpose of each nonfundamental investment policy. During the period in which we are investing the net proceeds of an offering, we may deviate from our investment policies with respect to the net proceeds of the offering by investing the net proceeds in cash, cash equivalents, securities issued or guaranteed by the U.S. Government or its instrumentalities or agencies, high quality, short-term money market instruments, short-term debt securities, certificates of deposit, bankers’ acceptances and other bank obligations, commercial paper rated in the highest category by a rating agency or other liquid fixed income securities.

 

Investment Securities

 

The types of securities in which we may invest include, but are not limited to, the following:

 

Equity Securities. Equity investments generally represent an equity ownership interest, or the right to acquire an ownership interest, in an issuer. Different types of equity securities provide different voting and dividend rights and priority in the event of an issuer’s bankruptcy. An adverse event, such as unfavorable earnings report, may depress the value of a particular equity investment that we hold. In addition, prices of equity investments are sensitive to general movements in the stock market, and a drop in the stock market may depress the price of equity investments we own. Equity investment prices fluctuate for several reasons, including changes in investors’ perceptions of the financial condition of an issuer or rising interest rates, which increases borrowing costs and the costs of capital. We currently expect that such equity investments will include the following:

 

 

Common Units of MLPs. As a RIC, we may invest no more than 25% of our total assets in securities of MLPs. An MLP is a publicly traded company organized as a limited partnership or LLC and treated as a partnership for federal income tax purposes. MLP common units represent an equity ownership interest in a partnership and provide limited voting rights. MLP common unit holders have a limited role in the partnership’s operations and management. Some energy infrastructure companies in which we may invest have been organized as LLCs, which are treated in the same manner as MLPs for federal income tax purposes. Common units of an LLC represent an equity ownership in an LLC. Interests in common units of an MLP or LLC entitle the holder to a share of the company’s success through distributions and/or capital appreciation. Unlike MLPs, LLC common unit holders typically have voting rights.

 

Equity Securities of MLP Affiliates. In addition to securities of MLPs, we may also invest in equity securities issued by MLP affiliates, such as MLP I-Shares and common shares of corporations that own MLP general partner interests. I-Shares represent an indirect ownership interest in MLP common units issued by an MLP affiliate, which is typically a publicly traded LLC. The I-Share issuer’s assets consist exclusively of I-units. I-Shares differ from MLP common units primarily in that instead of receiving cash distributions, holders of I-Shares receive distributions in the form of additional I-Shares. Issuers of MLP I-Shares are corporations and not partnerships for tax purposes; however, the MLP does not allocate income or loss to the I-Share issuer. Because the issuers of MLP I-Shares are not partnerships for tax purposes, MLP I-Shares are not subject to the 25% limitation regarding investments in MLPs and other entities treated as qualified publicly traded partnerships. MLP affiliates also include the publicly traded equity securities of LLCs that own, directly or indirectly, general partner interests of MLPs. General partner interests often confer direct board participation rights and in many cases, operating control, over the MLP.

 

Other Equity Securities. We may also invest in all types of publicly traded equity securities, including but not limited to, preferred equity, convertible securities, depository receipts, limited partner interests, rights and warrants of underlying equity securities, exchange traded funds, limited liability companies and REITs.

 

Non-U.S. Securities. We may invest up to 50% of our total assets in securities issued by non-U.S. issuers (including Canadian issuers). These securities may be 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.

 

Restricted Securities. 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. For purposes of the foregoing, a registered security subject to such a lock-up period will no longer be considered a “restricted security” upon expiration of the lock-up period, an unregistered security of a public company with registration rights will no longer be considered a “restricted security” when such securities become registered, and an unregistered security of a public company that becomes freely tradable with the passage of time will no longer be considered a “restricted security” upon the elapse of the requisite time period.

 

An issuer may be willing to offer the purchaser more attractive features with respect to securities issued in direct investments because it has avoided the expense and delay involved in a public offering of securities. Adverse conditions in the public securities markets also may preclude a public offering of securities.

 

Restricted securities obtained by means of direct investments are less liquid than securities traded in the open market because of statutory and contractual restrictions on resale. Such securities are, therefore, unlike securities that are traded in the open market, which can be expected to be sold immediately if the market is adequate. This lack of liquidity creates special risks for us. However, we could sell such securities in private transactions with a limited number of purchasers or in public offerings under the 1933 Act.

 

Debt Securities. We may invest up to 20% of our total assets in debt securities, including securities rated below investment grade, commonly referred to as “junk bonds.” Our debt securities may have fixed or variable principal payments and various types of interest rate and reset terms, including fixed rate, floating rate, adjustable rate, zero coupon, contingent, deferred and payment in kind features, and may include securities that are or are not exchange traded. To the extent that we invest in below investment grade debt securities, such securities will be rated, at the time of investment, at least B- by S&P or B3 by Moody’s or a comparable rating by at least one other rating agency or, if unrated, determined by the Adviser to be of comparable quality. If a security satisfies our minimum rating criteria at the time of purchase and is subsequently downgraded below such rating, we will not be required to dispose of such security. If a downgrade occurs, the Adviser will consider what action, including the sale of such security, is in the best interest of us and our stockholders.  We currently have no specific maturity policy with respect to debt securities.

Temporary Investments and Defensive Investments. Pending investment of offering or leverage proceeds, we may invest offering proceeds in money market mutual funds, cash, cash equivalents, securities issued or guaranteed by the U.S. Government or its instrumentalities or agencies, short-term money market instruments, short-term debt securities, certificates of deposit, bankers’ acceptances and other bank obligations, commercial paper or other liquid debt securities. We may invest in these instruments on a temporary basis to meet working capital needs, including, but not limited to, for collateral in connection with certain investment techniques, to hold a reserve pending payment of distributions, and to facilitate the payment of expenses and settlement of trades.

 

Under adverse market or economic conditions, we may invest 100% of our total assets in these securities. The yield on these securities may be lower than the returns on pipeline and other energy infrastructure companies or yields on lower rated fixed income securities. To the extent we invest in these securities for defensive purposes, we may not achieve our investment objective.

 

A more detailed description of the Combined Fund’s investment policies and restrictions and more detailed information about the Combined Fund’s portfolio investments are contained in the Merger Statement of Additional Information.

 

COMPARISON OF THE FUNDS

Each Fund, including the Combined Fund following the Merger, (i) is a Maryland corporation registered as non-diversified, closed-end management investment company under the 1940 Act, (ii) is managed by the Adviser, (iii) pays a similar investment advisory fee, (iv) has an investment objective of providing a high level of total return with an emphasis on current distributions, (v) seeks to achieve that objective by investing primarily in energy investments, (vi) has nearly identical fundamental investment policies and similar nonfundamental investment policies and (vii) is taxed as a RIC. 

 

MANAGEMENT OF THE FUNDS

 

Directors and Officers

Each Fund’s business and affairs are managed under the direction of its Board of Directors. Accordingly, each Fund’s Board of Directors provides broad supervision over its affairs, including supervision of the duties performed by the Adviser.  Each Fund’s officers are responsible for its day-to-day operations. The names, ages and addresses of each of the Fund’s directors and officers, together with their principal occupations and other affiliations during the past five years, are set forth in the Merger Statement of Additional Information. Each director and officer will hold office until his successor is duly elected and qualified, or until he resigns or is removed in the manner provided by law. Unless otherwise indicated, the address of each director and officer is 5100 W. 115th Place, Leawood, Kansas 66211. Each Fund’s Board of Directors consists of a majority of directors who are not interested persons (as defined in the 1940 Act) of the Adviser or its affiliates.

Investment Adviser

Pursuant to investment advisory agreements, the Adviser provides each Fund with investment research and advice and furnishes it with an investment program consistent with its investment objective and policies, subject to the supervision of its Board of Directors.  The Adviser determines which portfolio securities will be purchased or sold, arranges for the placing of orders for the purchase or sale of portfolio securities, selects brokers or dealers to place those orders, maintains books and records with respect to each Fund’s securities transactions and reports to its Board of Directors on its investments and performance.

The Adviser is located at 5100 W. 115th Place, Leawood, Kansas 66211.  The Adviser specializes in managing portfolios of investments in MLPs and other energy companies.  The Adviser was formed in October 2002 to provide portfolio management services to institutional and high-net worth investors seeking professional management of their MLP investments.  As of November 30, 2020, the Adviser had approximately $6.6 billion of client assets under management. The Adviser’s Investment Committee is comprised of five seasoned portfolio managers.

As of January 31, 2021, our Adviser had 66 employees, including the five members of the investment committee of the Adviser.

The Merger Statement of Additional Information provides additional information about the compensation structure of, the other accounts managed by, and the ownership of TTP’s securities by the portfolio managers listed above.

Compensation and Expenses

Tortoise Pipeline & Energy Fund, Inc.  Under its advisory agreement, TTP pays the Adviser quarterly, as compensation for the services rendered by the Adviser, a fee equal on an annual basis to 1.10% of its average monthly Managed Assets. Managed Assets means the total assets of the Fund (including any assets attributable to leverage that may be outstanding) minus accrued liabilities other than debt entered into for the purpose of leverage and the aggregate liquidation preference of any outstanding preferred stock. Because the management fees paid to the Adviser are based upon a percentage of our Managed Assets, fees paid to the Adviser will be higher if we are leveraged; thus, the Adviser will have an incentive to use leverage. The Adviser intends to use leverage only when it believes it will serve the best interests of our stockholders. TTP’s average monthly Managed Assets are determined for the purpose of calculating the management fee by taking the sum of the daily Managed Assets for the month divided by the number of days in the month. The fees are payable for each calendar quarter within five days after the end of that quarter.

 

The advisory agreement has a term ending on December 31, 2021 and may be continued from year to year thereafter as provided in the 1940 Act.  The continuation of the advisory agreement was most recently approved by the Board of Directors in November 2020.  A discussion regarding the basis of the Board of Directors’ decision to approve the continuation of the advisory agreement will be available in TTP’s Annual Report to stockholders for the fiscal year ended November 30, 2020.

 

Tortoise Energy Independence Fund, Inc.  Under its advisory agreement, NDP pays the Adviser quarterly, as compensation for the services rendered by the Adviser, a fee equal on an annual basis to 1.10% of its average monthly Managed Assets. Managed Assets means the total assets of the Fund (including any assets attributable to leverage that may be outstanding) minus accrued liabilities other than debt entered into for the purpose of leverage and the aggregate liquidation preference of any outstanding preferred stock. Because the management fees paid to the Adviser are based upon a percentage of our Managed Assets, fees paid to the Adviser will be higher if we are leveraged; thus, the Adviser will have an incentive to use leverage. The Adviser intends to use leverage only when it believes it will serve the best interests of our stockholders. NDP’s average monthly Managed Assets are determined for the purpose of calculating the management fee by taking the sum of the daily Managed Assets for the month divided by the number of days in the month. The fees are payable for each calendar quarter within five days after the end of that quarter.

 

The advisory agreement has a term ending on December 31, 2021 and may be continued from year to year thereafter as provided in the 1940 Act.  The continuation of the advisory agreement was most recently approved by the Board of Directors in November 2020.  A discussion regarding the basis of the Board of Directors’ decision to approve the continuation of the advisory agreement will be available in NDP’s Annual Report to stockholders for the fiscal year ended November 30, 2020.

 

Combined Fund.  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.

 

The table and example presented below contain information about the change in operating expenses expected as a result of the Merger as a percentage of Managed Assets as of November 30, 2020. Managed Assets means the total assets (including any assets attributable to leverage) minus accrued liabilities other than (1) debt entered into for the purpose of leverage and (2) the aggregate liquidation preference of any outstanding preferred shares. The annual operating expenses for each Fund reflect fixed expenses for a trailing 12-month period and variable expenses assuming each Fund’s capital structure and asset levels as of November 31, 2020. The annual operating 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. These projections for the Pro Forma Combined Fund (NDP into TTP) include the change in operating expenses expected as a result of the Merger, assuming each Fund’s capital structure and asset levels as of November 30, 2020.

Example:

The following example is intended to help you compare the costs of investing in TTP pro forma after the Merger with the costs of investing in TTP and NDP without the Merger. An investor would pay the following expenses on a $1,000 investment, assuming (1) the operating expense ratio for each Fund (as a percentage of managed assets attributable to shares of common stock) set forth in the table above and (2) a 5% annual return throughout the period:

The Funds bear all expenses not specifically assumed by the Adviser incurred in their operations and will bear the expenses related to all future offerings. Expenses the Funds bear generally include, but are not limited to, the following: (1) expenses of maintaining and continuing their existence and related overhead, including, to the extent services are provided by personnel of their Adviser or its affiliates, office space and facilities and personnel compensation, training and benefits; (2) their registration under the 1940 Act; (3) commissions, spreads, fees and other expenses connected with the acquisition, holding and disposition of securities and other investments including placement and similar fees in connection with direct placements entered into on their behalf; (4) auditing, accounting and legal expenses; (5) taxes and interest; (6) governmental fees; (7) expenses of listing their shares with a stock exchange, and expenses of issue, sale, repurchase and redemption (if any) of their interests, including expenses of conducting tender offers for the purpose of repurchasing common stock; (8) expenses of registering and qualifying them and their shares under federal and state securities laws and of preparing and filing registration statements and amendments for such purposes; (9) expenses of communicating with stockholders, including website expenses and the expenses of preparing, printing and mailing press releases, reports and other notices to stockholders and of meetings of stockholders and proxy solicitations therefor; (10) expenses of reports to governmental officers and commissions; (11) insurance expenses; (12) association membership dues; (13) fees, expenses and disbursements of custodians and subcustodians for all services to them (including without limitation safekeeping of funds, securities and other investments, keeping of books, accounts and records, and determination of NAVs); (14) fees, expenses and disbursements of transfer agents, dividend and interest paying agents, stockholder servicing agents and registrars for all services to them; (15) compensation and expenses of their directors who are not members of the Adviser’s organization; (16) pricing and valuation services employed by them; (17) all expenses incurred in connection with leveraging of their assets through a line of credit or other indebtedness or issuing and maintaining notes or preferred stock; (18) all expenses incurred in connection with offerings of their common and preferred stock and debt securities; and (19) such non-recurring items as may arise, including expenses incurred in connection with litigation, proceedings and claims and their obligation to indemnify their directors, officers and stockholders with respect thereto.

 

Legal Proceedings

 

There are no material pending legal proceedings against the Funds or the Adviser.

 

Other Service Providers

 

The professional service providers for the Funds are as follows:

 

 

CAPITALIZATION

 

 

		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.

OUTSTANDING SECURITIES OF THE FUNDS

 

The tables below set forth the outstanding securities of TTP and NDP as of November 30, 2020.

 

 

 

 

AUTOMATIC DIVIDEND REINVESTMENT PLAN

General

All references to “we” “us” or “our” below are references to TTP.  Our Automatic Dividend Reinvestment and Cash Purchase Plan (the “Plan”) allows participating common stockholders to reinvest distributions in additional shares of our common stock and allows participants to purchase additional shares of our common stock through additional optional cash investments in amounts from a minimum of $100 to a maximum of $5,000 per month. Shares of common stock will be issued by us under the Plan when our common stock is trading at a premium to NAV. If our common stock is trading at a discount to NAV, shares distributed under the Plan will be purchased on the open market at market price. Shares of common stock issued directly from us under the Plan will be acquired at the greater of (1) NAV at the close of business on the payment date of the distribution or on the day preceding the relevant cash purchase investment date or (2) 95% of the market price per common share on the distribution payment date or on the day preceding the relevant cash purchase investment date. See below for more details about the Plan.

 

Automatic Dividend Reinvestment

 

If a stockholder’s shares are registered directly with us or with a brokerage firm that participates in our Plan, all distributions are automatically reinvested for stockholders by the Plan Agent, Computershare Trust Company, N.A. (the “Plan Agent”), in additional shares of our common stock (unless a stockholder is ineligible or elects otherwise). Stockholders who elect not to participate in the Plan will receive all distributions payable in cash paid by check mailed directly to the stockholder of record (or, if the shares are held in street or other nominee name, then to such nominee) by the Plan Agent, as dividend paying agent. Such stockholders may elect not to participate in the Plan and to receive all distributions in cash by sending written, telephone or Internet instructions to the Plan Agent, as dividend paying agent, at the address set forth below. Participation in the Plan is completely voluntary and may be terminated or resumed at any time without penalty by giving notice in writing to the Plan Agent; such termination will be effective with respect to a particular distribution if notice is received prior to the record date for such distribution.

 

Whenever we declare a distribution payable either in shares or in cash, non-participants in the Plan will receive cash, and participants in the Plan will receive the amount set forth below in shares of common stock. The shares are acquired by the Plan Agent for the participant’s account, depending upon the circumstances described below, either (i) through receipt of additional common stock directly from us (“Additional Common Stock”) or (ii) by purchase of outstanding common stock on the open market (“open-market purchases”) on the NYSE or elsewhere. If, on the payment date, the NAV per share of our common stock is equal to or less than the market price per share of common stock plus estimated brokerage commissions (such condition being referred to herein as “market premium”), the Plan Agent will receive Additional Common Stock from us for each participant’s account. The number of shares of Additional Common Stock to be credited to the participant’s account will be determined by dividing the dollar amount of the distribution by the greater of (i) the NAV per share of common stock on the payment date, or (ii) 95% of the market price per share of common stock on the payment date.

 

If, on the payment date, the NAV per share of common stock exceeds the market price plus estimated brokerage commissions (such condition being referred to herein as “market discount”), the Plan Agent will invest the distribution amount in shares acquired in open-market purchases as soon as practicable but not later than thirty (30) days following the payment date. We expect to declare and pay quarterly distributions. The weighted average price (including brokerage commissions) of all common stock purchased by the Plan Agent as Plan Agent will be the price per share of common stock allocable to each participant.

 

The Plan Agent maintains all stockholders’ accounts in the Plan and furnishes written confirmation of each acquisition made for the participant’s account as soon as practicable, but in no event later than 60 days after the date thereof. Shares in the account of each Plan participant may be held by the Plan Agent in non-certificated form in the Plan Agent’s name or that of its nominee, and each stockholder’s proxy will include those shares purchased or received pursuant to the Plan. The Plan Agent will forward all proxy solicitation materials to participants and vote proxies for shares held pursuant to the Plan first in accordance with the instructions of the participants, and then with respect to any proxies not returned by such participant, in the same proportion as the Plan Agent votes the proxies returned by the participants.

 

There are no brokerage charges with respect to shares issued directly by us as a result of distributions payable either in shares or in cash. However, each participant will pay a pro rata share of brokerage commissions incurred with respect to the Plan Agent’s open-market purchases in connection with the reinvestment of distributions. If a participant elects to have the Plan Agent sell part or all of his or her common stock and remit the proceeds, such participant will be charged his or her pro rata share of brokerage commissions on the shares sold plus a $15.00 transaction fee.

 

The automatic reinvestment of distributions will not relieve participants of any federal, state or local income tax that may be payable (or required to be withheld) on such distributions. See “Certain Federal Income Tax Matters.”

 

Stockholders participating in the Plan may receive benefits not available to stockholders not participating in the Plan. If the market price plus commissions of our shares of common stock is higher than the NAV, participants in the Plan will receive shares of our common stock at less than they could otherwise purchase such shares and will have shares with a cash value greater than the value of any cash distribution they would have received on their shares. If the market price plus commissions is below the NAV, participants will receive distributions of shares of common stock with a NAV greater than the value of any cash distribution they would have received on their shares. However, there may be insufficient shares available in the market to make distributions in shares at prices below the NAV. Also, because we do not redeem our common stock, the price on resale may be more or less than the NAV. See “Certain Federal Income Tax Matters” for a discussion of the federal income tax consequences of the Plan.

 

General

 

Experience under the Plan may indicate that changes are desirable. Accordingly, we reserve the right to amend or terminate the Plan if in the judgment of the Board of Directors such a change is warranted. The Plan may be terminated by the Plan Agent or us upon notice in writing mailed to each participant at least 60 days prior to the effective date of the termination. Upon any termination, the Plan Agent will cause a certificate or certificates to be issued for the full shares held by each participant under the Plan and cash adjustment for any fraction of a share of common stock at the then current market value of common stock to be delivered to him or her. If preferred, a participant may request the sale of all of the common stock held by the Plan Agent in his or her Plan account in order to terminate participation in the Plan. If such participant elects in advance of such termination to have the Plan Agent sell part or all of his or her shares, the Plan Agent is authorized to deduct from the proceeds a $15.00 transaction fee plus a $0.05 fee per share for the transaction. If a participant has terminated his or her participation in the Plan but continues to have common stock registered in his or her name, he or she may re-enroll in the Plan at any time by notifying the Plan Agent in writing at the address below. The terms and conditions of the Plan may be amended by the Plan Agent or by us at any time. Any such amendments to the Plan may be made by mailing to each participant appropriate written notice at least 30 days prior to the effective date of the amendment, except, when necessary or appropriate to comply with applicable law or the rules or policies of the SEC or any other regulatory authority, such prior notice does not apply. The amendment shall be deemed to be accepted by each participant unless, prior to the effective date thereof, the Plan Agent receives notice of the termination of the participant’s account under the Plan. Any such amendment may include an appointment by the Plan Agent of a successor Plan Agent, subject to our prior written approval of the successor Plan Agent.

 

All correspondence concerning the Plan should be directed to Computershare Trust Company, N.A., P.O. Box 30170, College Station, TX 77842-3170.

 

GOVERNING LAW

 

Each Fund is organized as a corporation under the laws of the State of Maryland. TTP was organized on July 19, 2011 and commenced operations in October 2011.  NDP was organized on April 11, 2012 and commenced operations in July 2012.

 

Each Fund is also subject to federal securities laws, including the 1940 Act and the rules and regulations promulgated by the SEC thereunder, and applicable state securities laws. Each Fund is registered as a non-diversified, closed-end management investment company under the 1940 Act.

Common Stock

 

General.  Our Charter authorizes us to issue up to 100,000,000 shares of common stock, $0.001 par value per share. The Board of Directors may, without any action by the stockholders, amend our Charter from time to time to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that we have authority to issue. Additionally, the Charter authorizes our Board of Directors, without any action by our stockholders, to classify and reclassify any unissued common stock and preferred stock into other classes or series of stock from time to time by setting or changing the terms, preferences, conversion or other rights, voting powers, restrictions, limitations as to distributions, qualifications and terms and conditions of redemption for each class or series. Although there is no present intention of doing so, we could issue a class or series of stock that could delay, defer or prevent a transaction or a change in control of us that might otherwise be in the stockholders’ best interests. Under Maryland law, stockholders generally are not liable for our debts or obligations.

 

All common stock offered pursuant to this prospectus will be, upon issuance, duly authorized, fully paid and nonassessable. All outstanding common stock offered pursuant to this prospectus will be of the same class and will have identical rights, as described below. Holders of shares of common stock are entitled to receive distributions when authorized by the Board of Directors and declared by us out of assets legally available for the payment of distributions. Holders of common stock have no preference, conversion, exchange, sinking fund, redemption or appraisal rights and have no preemptive rights to subscribe for any of our securities. All shares of common stock have equal distribution, liquidation and other rights.

 

Distributions.  We expect to pay quarterly cash distributions to our common stockholders. We expect that the source of the cash payments will constitute investment company taxable income, as well as long-term capital gains or return of capital from such investments. Investment company taxable income includes, among other items, dividends, operational income from MLPs, interest and net short-term capital gains, less expenses. Long-term capital gains reflect the realized market price received in the sale of an investment security in excess of its cost basis, less net capital losses, including any capital loss carryforwards. Since, as a RIC, we may invest up to 25% of our total assets in MLPs, a portion of distributions received from our investments may be sourced as return of capital. This may be due to a variety of factors, including that the MLP may have significant non-cash deductions, such as accelerated depreciation. However, since we may only invest up to 25% of our Total Assets in MLPs, our Adviser does not anticipate a significant portion of our distributions to stockholders will be characterized as return of capital; rather, it expects the significant sources of such distributions to be investment company taxable income and net capital gain. Our Board of Directors has adopted a policy of declaring what it believes to be sustainable distributions. It is expected that we will declare and pay a distribution to holders of common stock at the end of each fiscal quarter. There is no assurance that we will continue to make regular distributions.

 

 

 

 

 

 

 

 

 

Consequently, we cannot guarantee any particular yield on our common stock, and the yield for any given period is not an indication or representation of future yields on the common stock.

 

Market.  Our common stock trades on the NYSE under the ticker symbol “TTP.” Common stock issued pursuant to this Joint Proxy Statement/Prospectus will trade on the NYSE.

 

Transfer Agent, Dividend Paying Agent and Automatic Dividend Reinvestment and Cash Purchase Plan Agent.  Computershare Trust Company, N.A., P.O. Box 30170 College Station, TX 77842-3170, serves as the transfer agent and the Automatic Dividend Reinvestment and Cash Purchase Plan agent and Computershare, Inc. serves as the dividend paying agent for our common stock.

 

CERTAIN PROVISIONS IN EACH FUND’S CHARTER AND BYLAWS

The following description of certain provisions of the Charter and Bylaws of each Fund is only a summary.  The Charter and Bylaws of each Fund include provisions that could delay, defer or prevent other entities or persons from acquiring control of the Fund, causing it to engage in certain transactions or modifying its structure. Further, these provisions can have the effect of depriving stockholders of the opportunity to sell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of a Fund. These provisions, all of which are summarized below, may be regarded as “anti-takeover” provisions.

Classification of the Board of Directors; Election of Directors

The Charter of each Fund provides that the number of directors may be established only by the Board of Directors pursuant to the Bylaws, but may not be less than the minimum number required by the Maryland General Corporation Law (“MGCL”), which is one. The Bylaws provide that the number of directors may not be greater than nine. Subject to any applicable limitations of the 1940 Act, any vacancy may be filled, at any regular meeting or at any special meeting called for that purpose, only by a majority of the remaining directors, even if those remaining directors do not constitute a quorum. Pursuant to each Fund’s Charter, the Board of Directors is divided into three classes: Class I, Class II and Class III. Upon the expiration of their current terms, directors of each class will be elected to serve for three-year terms and until their successors are duly elected and qualified. Each year only one class of directors will be elected by the stockholders. The classification of the Board of Directors should help to assure the continuity and stability of the strategies and policies determined by the Board of Directors.

The classified Board provision could have the effect of making the replacement of incumbent directors more time-consuming and difficult. At least two annual meetings of stockholders, instead of one, will generally be required to effect a change in a majority of the Board of Directors. Thus, the classified Board provision could increase the likelihood that incumbent directors will retain their positions. The staggered terms of directors may delay, defer or prevent a change in control of the Board of Directors, even though a change in control might be in the best interests of the stockholders.

Removal of Directors

The Charter of each Fund provides that, subject to the rights of holders of one or more classes of preferred stock, a director may be removed only for cause and only by the affirmative vote of at least two-thirds of the votes entitled to be cast in the election of directors. This provision, when coupled with the exclusive power of the Board of Directors to fill vacant directorships, may preclude stockholders from removing incumbent directors, except for cause and by a substantial affirmative vote, and filling the vacancies created by the removal with nominees of stockholders.

Approval of Extraordinary Corporate Action; Amendment of Charter and Bylaws

Under Maryland law, a Maryland corporation generally cannot dissolve, amend its charter, merge, convert, sell all or substantially all of its assets, engage in a share exchange or engage in similar transactions outside the ordinary course of business, unless declared advisable by the Board of Directors and approved by the affirmative vote of stockholders entitled to cast at least two-thirds of the votes entitled to be cast on the matter. However, a Maryland corporation may provide in its charter for stockholder approval of these matters by a lesser percentage, but not less than a majority of all of the votes entitled to be cast on the matter.  The Charter of each Fund generally provides for approval of Charter amendments and extraordinary transactions by the stockholders entitled to cast at least a majority of the votes entitled to be cast on the matter.  The Charter of each Fund also provides that certain Charter amendments and any proposal for conversion, whether by merger or otherwise, from a closed-end company to an open-end company or any proposal for liquidation or dissolution requires the approval of stockholders entitled to cast at least 80 percent of the votes entitled to be cast on such matter. However, if such amendment or proposal is approved by at least two-thirds of a Fund’s continuing directors (in addition to the approval by the Fund’s Board of Directors otherwise required), such amendment or proposal may be approved by stockholders entitled to cast a majority of the votes entitled to be cast on such a matter. The “continuing directors” are defined in each Fund’s Charter as the directors named in the Charter as well as those directors whose nomination for election by the stockholders or whose election by the directors to fill vacancies is approved by a majority of the continuing directors then on the Board of Directors.

The Charter and Bylaws of each Fund provide that its Board of Directors will have the exclusive power to make, alter, amend or repeal any provision of its Bylaws.

Advance Notice of Director Nominations and New Business

Control Share Acquisitions

Certain provisions of the MGCL provide that a holder of control shares of a Maryland corporation acquired in a control share acquisition has no voting rights with respect to the control shares except to the extent approved by the affirmative vote of two-thirds of the votes entitled to be cast on the matter, which is referred to as the Control Share Acquisition Act (the “Control Share Acquisition Act”). Shares owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one of the following ranges of voting power:

The requisite shareholder approval must be obtained each time an acquirer crosses one of the thresholds of voting power set forth above. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained shareholder approval or shares acquired directly from the corporation. A control share acquisition means the acquisition of issued and outstanding control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of shareholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any shareholders meeting.

If voting rights are not approved at the meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquirer or if a meeting of shareholders is held at which the voting rights of the shares are considered and not approved, as of the date of such meeting. If voting rights for control shares are approved at a shareholder meeting and the acquirer becomes entitled to vote a majority of the shares entitled to vote, all other shareholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquirer in the control share acquisition.

ADDITIONAL INFORMATION ABOUT SHARES OF COMMON STOCK OF THE FUNDS

 

Purchase and Sale

 

Investors typically purchase and sell shares of common stock of TTP through a registered broker-dealer on the NYSE, thereby incurring a brokerage commission set by the broker-dealer. Alternatively, investors in TTP may purchase or sell shares of common stock through privately negotiated transactions with existing stockholders.  Shares of common stock of NDP are listed on the NYSE under the ticker symbols “NDP”.

 

Common Stock Price Data

 

The following table lists the high and low sales prices for the common stock of each Fund, as reported on the New York Stock Exchange, and the closing sales price as a percentage of NAV for its two previous fiscal years. On November 30, 2020, the closing sales price of each Fund’s common stock on the New York Stock Exchange was $15.15 per share for TTP and $12.63 per share for NDP.

 

						Sales Price(2)								High Sales				Low Sales
Quarter Ended		NAV(1)(2)				High				Low				Price to NAV(3)				Price to NAV(3)
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	%

 

 

 

 

As of November 30, 2020, the NAV per share of common stock of TTP was $19.97 and the market price per share of common stock of TTP was $15.15, representing a discount to NAV of approximately 24.1%.  As of November 30, 2020, the NAV per share of common stock of NDP was $16.42 and the market price per share of common stock of NDP was $12.63, representing a discount to NAV of approximately 23.1%.

 

 

Performance Information

 

The performance table below illustrates the past performance of an investment in each Fund by setting forth the average total returns for the Funds. A Fund’s past performance does not necessarily indicate how such Fund will perform in the future.

 

Average Annual Total Returns as of November 30, 2020

		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	%

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