Michael P. O’Hare, Esq. |
Stradley Ronon Stevens & Young, LLP. |
2005 Market Street, Suite 2600 |
Philadelphia, PA 19103 |
As noted above, in order to avoid an interruption of investment management services with respect to the Target Funds, the Target Board terminated the existing investment advisory agreement between the Target Trust, on behalf of the Target Funds, and ARI, and approved the New Advisory Agreement with Tortoise, effective on the closing of the Transaction. Pursuant to a rule under the Investment Company Act of 1940, as amended, the New Advisory Agreement can only remain in effect for a period of up to 150 days, unless approved by Target Fund shareholders. As a result, in order to avoid any future disruption of the investment advisory services provided by Tortoise to the Target Funds, you are also being asked to approve the New Advisory Agreement.
The attached Proxy Statement/Prospectus has been prepared to give you information about the proposals. If you have any questions regarding the Reorganization or the New Advisory Agreement, please do not hesitate to call the Target Funds at (toll-free): 1-888-665-1414. If you were a shareholder of record of a Target Fund as of the close of business on September 3, 2019, the record date for the Meeting, you are entitled to vote on the proposals at the Meeting and at any adjournment thereof. While you are, of course, welcome to join us at the Meeting, we expect that most shareholders will cast their votes by filling out and signing the enclosed proxy card.
(1) | To approve an Agreement and Plan of Reorganization by and among the Target Trust, Managed Portfolio Series, Advisory Research, Inc. and Tortoise Capital Advisors, L.L.C., providing for: (i) the transfer of all of the assets of the Advisory Research MLP & Energy Income Fund to the Tortoise MLP & Energy Income Fund in exchange for (a) shares of the Tortoise MLP & Energy Income Fund with an aggregate net asset value per class equal to the aggregate net asset value of the corresponding class of shares of the Advisory Research MLP & Energy Income Fund, and (b) the Tortoise MLP & Energy Income Fund’s assumption of all of the liabilities of the Advisory Research MLP & Energy Income Fund, followed by (ii) the liquidating distribution by the Advisory Research MLP & Energy Income Fund to its shareholders of the shares of the Tortoise MLP & Energy Income Fund received in the exchange in proportion, on a class-by-class basis, to the shareholders’ respective holdings of shares of the Advisory Research MLP & Energy Income Fund. |
(2) | To approve an investment advisory agreement between the Target Trust, on behalf of the Advisory Research MLP & Energy Income Fund, and Tortoise Capital Advisors, L.L.C. |
(1) | To approve an Agreement and Plan of Reorganization by and among the Target Trust, Managed Portfolio Series, Advisory Research, Inc. and Tortoise Capital Advisors, L.L.C., providing for: (i) the transfer of all of the assets of the Advisory Research MLP & Energy Infrastructure Fund to the Tortoise MLP & Energy Infrastructure Fund in exchange for (a) Institutional Class shares of the Tortoise MLP & Energy Infrastructure Fund with an aggregate net asset value equal to the aggregate net asset value of the shares of the Advisory Research MLP & Energy Infrastructure Fund, and (b) the Tortoise MLP & Energy Infrastructure Fund’s assumption of all of the liabilities of the Advisory Research MLP & Energy Infrastructure Fund, followed by (ii) the liquidating distribution by the Advisory Research MLP & Energy Infrastructure Fund to its shareholders of the shares of the Tortoise MLP & Energy Infrastructure Fund received in the exchange in proportion to the shareholders’ respective holdings of shares of the Advisory Research MLP & Energy Infrastructure Fund. |
(2) | To approve an investment advisory agreement between the Target Trust, on behalf of the Advisory Research MLP & Energy Infrastructure Fund, and Tortoise Capital Advisors, L.L.C. |
Advisory Research MLP & Energy Income Fund Advisory Research MLP & Energy Infrastructure Fund each a series of Investment Managers Series Trust 235 West Galena Street Milwaukee, Wisconsin 53212 (414) 299-2295 | Tortoise MLP & Energy Income Fund Tortoise MLP & Energy Infrastructure Fund each a series of Managed Portfolio Series 615 East Michigan Street Milwaukee, Wisconsin 53202 (414) 287-3700 |
This Proxy Statement/Prospectus is provided in connection with the solicitation of proxies to be voted at a special joint meeting of shareholders (the “Meeting”) of the Advisory Research MLP & Energy Income Fund (the “Target Energy Income Fund”) and the Advisory Research MLP & Energy Infrastructure Fund (the “Target Energy Infrastructure Fund”) (each, a “Target Fund,” and together, the “Target Funds”), each of which is a series of Investment Managers Series Trust (the “Target Trust”). The Meeting is scheduled for November 6, 2019 at 11 a.m., Pacific Time, at the offices of Mutual Fund Administration, LLC, 2220 E. Route 66, Suite 226, Glendora, CA 91740. At the Meeting, you and other shareholders of the Target Funds will be asked to consider and vote upon the following proposals:
Proposals | Funds Voting on Proposal Separately |
1. To approve an Agreement and Plan of Reorganization by and among the Target Trust, Managed Portfolio Series, Advisory Research, Inc. and Tortoise Capital Advisors, L.L.C., providing for: (i) the transfer of all of the assets of the Target Fund to a corresponding acquiring fund in exchange for (a) shares of the acquiring fund with an aggregate net asset value per class equal to the aggregate net asset value of the corresponding class of shares of the Target Fund, and (b) the acquiring fund’s assumption of all of the liabilities of the Target Fund, followed by (ii) the liquidating distribution by the Target Fund to its shareholders of the shares of the acquiring fund received in the exchange in proportion, on a class-by-class basis, to the shareholders’ respective holdings of shares of the Target Fund (all of the foregoing being referred to as the “Reorganization”); and | Target Energy Income Fund Target Energy Infrastructure Fund |
2. To approve an investment advisory agreement (the “New Advisory Agreement”) between Tortoise Capital Advisors, L.L.C. (“Tortoise”) and the Target Trust, on behalf of each Target Fund. | Target Energy Income Fund Target Energy Infrastructure Fund |
Target Funds (series of the Target Trust) | Acquiring Funds (series of the Acquiring Trust) |
Advisory Research MLP & Energy Income Fund Class C Class A Class I | Tortoise MLP & Energy Income Fund (the “Acquiring Energy Income Fund”) C Class A Class Institutional Class |
Advisory Research MLP & Energy Infrastructure Fund Class I | Tortoise MLP & Energy Infrastructure Fund (the “Acquiring Energy Infrastructure Fund”) Institutional Class |
· | Prospectus dated April 1, 2019 for the Target Funds (“Target Funds Prospectus”) (File no. 811-21719); |
· | Statement of Additional Information dated April 1, 2019 for the Target Funds (“Target Funds SAI”) (File no. 811-21719); |
· | Prospectus dated September 13, 2019 for the Acquiring Funds (“Acquiring Funds Prospectus”) (File No. 811-22525); |
· | Statement of Additional Information dated September 13, 2019 for the Acquiring Funds relating to the Reorganization (“Acquiring Funds SAI”); |
· | The audited financial statements and related report of the independent public accounting firm included in the Target Funds’ Annual Report to Shareholders for the fiscal year ended November 30, 2018 (“Target Funds Annual Report”). The financial highlights for the Target Funds contained in the Target Funds Annual Report are included in this Proxy Statement/Prospectus as Exhibit C; and |
· | The Target Funds’ unaudited financial statements included in the Target Funds Semi-Annual Report to Shareholders for the fiscal period ended May 31, 2019 (the “Target Funds Semi-Annual Report”). The financial highlights for the Target Funds contained in the Target Funds Semi-Annual Report are included in this Proxy Statement/Prospectus as Exhibit C. |
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SUMMARY OF KEY INFORMATION | 7 |
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PROPOSAL 1: Approval of the Reorganization | 17 |
ADDITIONAL INFORMATION ABOUT THE FUNDS | 17 |
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As a result of the Reorganization (if approved by shareholders), a Target Fund shareholder will become a shareholder of the corresponding Acquiring Fund and will receive shares in the corresponding Acquiring Fund corresponding class having a total dollar value equal to the total dollar value of the shares such shareholder held in the Target Fund immediately prior to the Reorganization.
Target Energy Income Fund Class A/Acquiring Energy Income Fund A Class | ||
Shareholder Fees (fees paid directly from your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) | 5.50% | 5.50% |
Maximum Deferred Sales Charge (Load) (as a percentage of the initial investment or the value of the investment at redemption, whichever is lower) | 1.00%(1) | 1.00%(2) |
Redemption Fee (as a percentage of amount redeemed within 90 days of purchase) | 2.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Management Fees | 1.00% | 1.00% |
Distribution and Service (Rule 12b-1) Fees | 0.25% | 0.25% |
Other Expenses | 0.16% | 0.09% |
Total Annual Fund Operating Expenses(5) | 1.41% | 1.34% |
(1) | For Class A Shares, no sales charge applies on investments of $1 million or more, but a contingent deferred sales charge (“CDSC”) of 1.00% will be imposed on certain redemptions of such shares within 18 months of the date of purchase. |
(2) | No sales charge is payable at the time of purchase on investments of $1 million or more, although the Fund may impose a Contingent Deferred Sales Charge (“CDSC”) of 1.00% on certain redemptions. If imposed, the CDSC applies to redemptions made within 18 months of purchase and will be assessed on an amount equal to the lesser of the initial value of the shares redeemed and the value of shares redeemed at the time of redemption |
(3) | The “Total Annual Fund Operating Expenses” for the Target Energy Income Fund reflect expenses for the fiscal period ended May 31, 2019 and, for the Acquiring Energy Income Fund, reflect estimated (pro forma) expenses as if the Reorganization had become effective at the beginning of the same fiscal period. |
Shareholder Fees (fees paid directly from your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) | None | None |
Maximum Deferred Sales Charge (Load) (as a percentage of the initial investment or the value of the investment at redemption, whichever is lower) | 1.00%(1) | 1.00%(2) |
Redemption Fee (as a percentage of amount redeemed within 90 days of purchase) | 2.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Management Fees | 1.00% | 1.00% |
Distribution and Service (Rule 12b-1) Fees | 1.00% | 1.00% |
Other Expenses | 0.16% | 0.09% |
Total Annual Fund Operating Expenses (3) | 2.16% | 2.09% |
(1) | Class C Shares of the Fund are subject to a CDSC of 1.00% on any shares sold within 12 months of purchasing them. |
(2) | The CDSC applies to redemptions made within 12 months of purchase and will be assessed on an amount equal to the lesser of the initial investment of the shares redeemed and the value of the shares redeemed at the time of redemption. |
(3) | The “Total Annual Fund Operating Expenses” for the Target Energy Income Fund reflect expenses for the fiscal period ended May 31, 2019 and, for the Acquiring Energy Income Fund, reflect estimated (pro forma) expenses as if the Reorganization had become effective at the beginning of the same fiscal period. |
Target Energy Income Fund Class I/Acquiring Energy Income Fund Institutional Class | ||
Shareholder Fees (fees paid directly from your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) | None | None |
Maximum Deferred Sales Charge (Load) (as a percentage of the initial investment or the value of the investment at redemption, whichever is lower) | None | None |
Redemption Fee (as a percentage of amount redeemed within 90 days) | 2.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Target Energy Income Fund | Acquiring Energy Income Fund (pro forma) |
Management Fees | 1.00% | 1.00% |
Distribution and Service (Rule 12b-1) Fees | None | None |
Other Expenses | 0.16% | 0.09% |
Total Annual Fund Operating Expenses(1) | 1.16% | 1.09% |
(1) | The “Total Annual Fund Operating Expenses” for the Target Energy Income Fund reflect expenses for the fiscal period ended May 31, 2019 and, for the Acquiring Energy Income Fund, reflect estimated (pro forma) expenses as if the Reorganization had become effective at the beginning of the same fiscal period. |
Target Energy Infrastructure Fund Class I/Acquiring Energy Infrastructure Fund Institutional Class | ||
Shareholder Fees (fees paid directly from your investment) | Target Energy Infrastructure Fund | Acquiring Energy Infrastructure Fund (PRO FORMA) |
Maximum Front-End Sales Charge (Load) Imposed on Purchases (as a percentage of the offering price) | None | None |
Maximum Deferred Sales Charge (Load) (as a percentage of the initial investment or the value of the investment at redemption, whichever is lower) | None | None |
Redemption Fee (as a percentage of amount redeemed within 90 days) | 2.00% | None |
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | Target Energy Infrastructure Fund | Acquiring Energy Infrastructure Fund (PRO FORMA) |
Management Fees | 0.75% | 0.75% |
Distribution and Service (Rule 12b-1) Fees | None | None |
Other Expenses | 0.17% | 0.16% |
Total Annual Fund Operating Expenses | 0.92% | 0.91% |
(1) | The “Total Annual Fund Operating Expenses” for the Target Energy Infrastructure Fund reflect expenses for the fiscal period ended May 31, 2019 and, for the Acquiring Energy Infrastructure Fund, reflect estimated (pro forma) expenses as if the Reorganization had become effective at the beginning of the same fiscal period. |
Target Energy Income Fund | One Year | Three Years | Five Years | Ten Years |
Class A | $686 | $972 | $1,279 | $2,148 |
Class C (assuming sale of all shares at the end of period) | $319 | $676 | $1,159 | $2,493 |
Class C (assuming no sale of shares) | $219 | $676 | $1,159 | $2,493 |
Class I Shares | $118 | $368 | $638 | $1,409 |
Acquiring Energy Income Fund | One Year | Three Years | Five Years | Ten Years |
A Class | $679 | $951 | $1,244 | $2,074 |
C Class (assuming sale of all shares at the end of period) | $312 | $655 | $1,124 | $2,421 |
C Class (assuming no sale of shares) | $212 | $655 | $1,124 | $2,421 |
Institutional Class | $111 | $347 | $601 | $1,329 |
Target Energy Infrastructure Fund | One Year | Three Years | Five Years | Ten Years |
Class I | $94 | $293 | $509 | $1,131 |
Acquiring Energy Infrastructure Fund | One Year | Three Years | Five Years | Ten Years |
Institutional Class | $93 | $290 | $504 | $1,120 |
Fund Assets | Management Fee |
Energy Income Fund | 1.00% |
Energy Infrastructure Fund | 0.75% |
SERVICE PROVIDER | TARGET FUNDS | ACQUIRING FUNDS |
Accounting Services/Administrator | UMB Fund Services, Inc./Mutual Fund Administration, LLC(1) | U.S. Bancorp Fund Services, LLC |
Transfer Agent | UMB Fund Services, Inc. | U.S. Bancorp Fund Services, LLC |
Custodian | UMB Bank, n.a. | U.S. Bank, National Association |
Independent Registered Accounting Firm | Tait, Weller & Baker LLP | Ernst & Young, LLP. |
(1) | UMB Fund Services, Inc. and Mutual Fund Administration act as co-administrators pursuant to a co-administration agreement. UMB Fund Services, Inc. acts as Target Funds’ fund accountant. |
Tortoise and ARI will bear the costs associated with the Reorganizations, Meeting, and solicitation of proxies. The Target Funds will not incur any expenses in connection with the Reorganizations.
Target Energy Income Fund | Acquiring Energy Income Fund | |
Form of Organization | A series of the Target Trust, an open-end investment management company organized as a Delaware statutory trust. | A series of the Acquiring Trust, an open-end investment management company organized as a Delaware statutory trust. |
Share Classes | Class A Class C Class I | A Class C Class Institutional Class |
Net Assets as of May 31, 2019 | 829,151,546 | None |
Target Energy Income Fund | Acquiring Energy Income Fund |
Investment Advisor and Portfolio Managers | Investment Adviser: Advisory Research, Inc. As discussed in this Proxy Statement/Prospectus, Tortoise Capital Advisors, L.L.C. will become each Target Fund’s investment adviser upon its acquisition of ARI’s midstream energy asset management business. Portfolio Managers: James J. Cunnane and Quinn T. Kiley | Investment Adviser: Tortoise Capital Advisors, L.L.C. Portfolio Managers: Same |
Annual Operating Expenses as a Percentage of Average Net Assets for the Fiscal Year | The total operating expense ratios for the fiscal year ended November 30, 2018 were: Class A shares: 1.41% Class C shares: 2.16% Class I Shares: 1.16% | The total operating expense ratios presented on an estimated (pro forma) basis as if the reorganization had been effective during the fiscal period ended May 31, 2019 are: A Class shares: 1.34% C Class shares: 2.09% Institutional Class shares: 1.09% |
Investment Objectives | The investment objectives of the Target Energy Income Fund are primarily to seek current income and secondarily to seek long-term capital appreciation. | Same |
Principal Investment Strategies | Under normal market conditions, the Fund will invest at least 80% of its total assets in equity and debt securities of master limited partnerships (“MLPs”) focused in the energy infrastructure sector, and in equity and debt securities of other companies focused in the energy infrastructure sector. Companies focused in the energy infrastructure sector include MLP parent companies and other MLP affiliates (together with MLPs, “MLP Entities”), which may invest their assets in varying degrees in MLPs. Some of these parent companies and other affiliates primarily own equity interests in MLPs, while others may jointly own assets with MLPs, and still others may only invest small portions of their assets in equity interests of MLPs. The Fund’s investment adviser (the “Adviser”) considers the energy infrastructure sector to be comprised of companies that engage in one or more aspects of exploration, production, gathering, processing, refining, transmission, marketing, storage and delivery of energy products such as natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal; oilfield services, including drilling, cementing and stimulations; the generation, transmission and distribution of electricity; water and wastewater treatment, distribution and disposal; or the generation, transportation and sale of alternative, non-fossil fuel based energy sources including, but not limited to, biodiesel, ethanol, biomass, geothermal, hydroelectric, nuclear, solar or wind energy. The Adviser considers a company to be focused in the energy infrastructure sector if at least 50% of the company’s assets are utilized in one or more of these activities. The Fund will also invest in MLP Entities and other companies operating in the natural resources sector, which includes companies principally engaged in owning or developing non-energy natural resources (including timber and minerals) and industrial materials, or supplying goods or services to such companies. | Same, except that the Acquiring Energy Income Fund principal investment strategy will include disclosure that the Fund may invest in both sponsored and unsponsored ADRs. |
In addition to making direct investments in MLP equity units, the Adviser intends to invest the Fund’s remaining assets in such a way as to provide, in total, a high level of correlation with MLP equities. These other investments may include equity and debt securities of entities that own interests in MLPs or assets owned in common with MLPs. The Fund will also invest in securities of entities that operate in industries similar to MLPs, such as energy infrastructure, even though such entities have no direct affiliation with an MLP. The Fund will purchase securities across the capital structure of MLP Entities, including equity and debt securities of MLPs and their affiliates. The Fund may invest in equity securities of MLP Entities and other issuers without regard for their market capitalizations. The Adviser intends to allocate the Fund’s assets towards the mix of equity and debt securities it deems appropriate based upon its view of economic, market, and political conditions. As a result of this asset allocation the Fund’s portfolio may, at times, be significantly invested in either equity or debt securities, or both. The Fund’s investment in equity securities may include both common and preferred stock. The Fund’s investment in debt securities may include both investment grade debt securities and high yield debt securities (often called “junk bonds”), which are securities rated below investment grade (that is, rated Ba or lower by Moody’s Investors Service, Inc. (“Moody’s”) or BB or lower by Standard & Poor’s Ratings Group (“S&P”), comparably rated by another statistical rating organization, or, if unrated, determined by the Adviser to be of comparable credit quality). The Fund will only purchase debt securities which, at the time of acquisition, are rated at least B3 by Moody’s or B- by Standard & Poor’s or are comparably rated by another statistical rating organization, or, if unrated, are determined by the Adviser to be of comparable credit quality. The Fund may invest in debt securities of any maturity. |
The Fund may invest in foreign securities and U.S. dollar denominated foreign issuers. Such investments in securities of foreign issuers may include American Depository Receipts (“ADRs”) and Yankee bonds. ADRs are receipts that represent interests in foreign securities held on deposit by U.S. banks. Yankee bonds are bonds denominated in U.S. dollars that are publicly issued in the United States by foreign banks and corporations. In certain market environments, the Fund may, but is not required to, use various hedging techniques, such as the buying and selling of options, to seek to mitigate one or more risks associated with investments in MLPs and energy infrastructure assets including market risk and interest rate risk, which, among other factors, could adversely affect market valuations of specific securities or certain sectors of the energy MLP and energy infrastructure market place, or the Fund’s overall portfolio. The Fund may invest up to 15% of its net assets in securities that are not registered under the Securities Act of 1933 or that otherwise may not be sold in public offerings, which are commonly known as “restricted” securities. The Fund will typically acquire restricted securities in directly negotiated transactions. The Fund may invest in initial public offerings (“IPOs”), other investment companies including exchange-traded funds (“ETFs”), and exchange-traded notes (“ETNs”). ETFs are investment companies that generally seek to track the performance of specific indices, shares of which are traded on exchanges. The Fund will include ETFs that primarily invest in MLPs and/or other companies focused in the energy infrastructure sector for purposes of satisfying the Fund’s investment strategy of investing at least 80% of its total assets in equity and debt securities of MLPs focused in the energy infrastructure sector, and in equity and debt securities of other companies focused in the energy infrastructure sector. ETNs are unsecured debt securities issued by a bank that are linked to the total return of a market index. |
Target Energy Income Fund | Acquiring Energy Income Fund |
The Fund is “non-diversified” under the 1940 Act, which means that it may invest more of its assets in fewer issuers than “diversified” mutual funds. |
Management and Other Fees | Management Fee. The Fund pays a management fee to ARI on a monthly basis at an annualized rate of 1.00% of the Fund’s average daily net assets. Operating Expenses Limitation Agreement. ARI has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that the total annual fund operating expenses (excluding any taxes, leverage interest, brokerage commissions, dividend expenses on short sales, acquired fund fees and expenses (as determined in accordance with Form N-1A), expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) do not exceed 1.50%, 2.25% and 1.25% of the average daily net assets of the Fund’s Class A Shares, Class C Shares and Class I Shares, respectively. The agreement is in effect until March 31, 2020 and may be terminated before that date only by the Target Board. Other Fees. The Fund pays a separate fee for administration, fund accounting and transfer agency services. | Management Fee. Same Operating Expenses Limitation Agreement. Tortoise has agreed to reimburse the Fund for its operating expenses, in order to ensure that each Fund’s Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, leverage/borrowing interest, interest expense, dividends paid on short sales, brokerage commissions, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, or extraordinary expenses) do not exceed 1.25% of the Fund’s average daily net assets. The agreement is in effect until November 30, 2021 and may be terminated before that date with respect to the Fund only by the Acquiring Trust’s Board of Trustees (the “Acquiring Board”). Other Fees. Same |
Sales Charges | The Fund charges a maximum front-end sales charge of 5.50% on purchases of A Class shares. The Fund charges a CDSC of 1.00% on certain redemptions of A Class shares redeemed within 18 months of purchase if no front-end sales load was charged on the purchase. The Fund charges a 1.00% contingent deferred sales charge on redemptions of Class C shares made within 12 months of purchase. | Same. |
Distribution and Rule 12b-1 Fees | The Fund has adopted a Rule 12b-1 plan under which the Fund is authorized to pay an aggregate fee of up to 0.25% and 1.00% of the average daily net assets of Class A and Class C shares, respectively. | Same |
1940 Act Diversification | The Fund is non-diversified. | Same |
Target Energy Infrastructure Fund | Acquiring Energy Infrastructure Fund | |
Form of Organization | A series of the Target Trust, an open-end investment management company organized as a Delaware statutory trust. | A series of the Acquiring Trust, an open-end investment management company organized as a Delaware statutory trust. |
Share Classes | Class I | Institutional Class |
Net Assets as of May 31, 2019 | $154,928,685 | None |
Investment Advisor and Portfolio Managers | Investment Adviser: Advisory Research, Inc. As discussed in this Proxy Statement/Prospectus, Tortoise Capital Advisors, L.L.C. will become each Target Fund’s investment adviser upon its acquisition of ARI’s midstream energy asset management business. Portfolio Managers: James J. Cunnane, Jr. and Quinn T. Kiley | Investment Adviser: Tortoise Capital Advisors, L.L.C. Portfolio Managers: Same. |
Annual Operating Expenses as a Percentage of Average Net Assets for the Fiscal Year | The total operating expense ratios for the fiscal period ended May 31, 2019 were 0.92%. | The total operating expense ratios presented on an estimated (pro forma) basis as if the Reorganization had been effective during the fiscal period ended May 31, 2019 is 0.91%. |
Investment Objective | The investment objectives of the Target Energy Infrastructure Fund are primarily to seek current income and secondarily to seek long-term capital appreciation. | Same |
Principal Investment Strategies | Under normal market conditions, the Fund will invest at least 80% of its total assets in equity and debt securities of MLPs focused in the energy infrastructure sector, and in equity and debt securities of other companies focused in the energy infrastructure sector. Companies focused in the energy infrastructure sector include MLP parent companies and other MLP affiliates (together with MLPs, “MLP Entities”), which may invest their assets in varying degrees in MLPs. Some of these parent companies and other affiliates primarily own equity interests in MLPs, while others may jointly own assets with MLPs, and still others may only invest small portions of their assets in equity interests of MLPs. The Adviser considers the energy infrastructure sector to be comprised of companies that engage in one or more aspects of exploration, production, gathering, processing, refining, transmission, marketing, storage and delivery of energy products such as natural gas, natural gas liquids (including propane), crude oil, refined petroleum products or coal; oilfield services, including drilling, cementing and stimulations; the generation, transmission and distribution of electricity; water and wastewater treatment, distribution and disposal; or the generation, transportation and sale of alternative, non-fossil fuel based energy sources including, but not limited to, biodiesel, ethanol, biomass, geothermal, hydroelectric, nuclear, solar or wind energy. The Adviser considers a company to be focused in the energy infrastructure sector if at least 50% of the company’s assets are utilized in one or more of these activities. The Fund will also invest in MLP Entities and other companies operating in the natural resources sector, which includes companies principally engaged in owning or developing non-energy natural resources (including timber and minerals) and industrial materials, or supplying goods or services to such companies. | Same, except that the Acquiring Energy Infrastructure Fund principal investment strategy will include disclosure that the Fund may invest in both sponsored and unsponsored ADRs. |
Target Energy Infrastructure Fund | Acquiring Energy Infrastructure Fund |
In addition to making direct investments in MLP equity units, the Adviser intends to invest the Fund’s remaining assets in such a way as to provide, in total, a high level of correlation with MLP equities. These other investments may include equity and debt securities of entities that own interests in MLPs or assets owned in common with MLPs. The Fund will also invest in securities of entities that operate in industries similar to MLPs, such as energy infrastructure, even though such entities have no direct affiliation with an MLP. The Fund will purchase securities across the capital structure of MLP Entities, including equity and debt securities of MLPs and their affiliates. The Fund may invest in equity securities of MLP Entities and other issuers without regard for their market capitalizations. The Adviser intends to allocate the Fund’s assets towards the mix of equity and debt securities it deems appropriate based upon its view of economic, market, and political conditions. As a result of this asset allocation the Fund’s portfolio may, at times, be significantly invested in either equity or debt securities, or both. The Fund’s investment in equity securities may include both common and preferred stock. The Fund’s investment in debt securities may include both investment grade debt securities and high yield debt securities (often called “junk bonds”), which are securities rated below investment grade (that is, rated Ba or lower by Moody’s or BB or lower by S&P, comparably rated by another statistical rating organization, or, if unrated, determined by the Adviser to be of comparable credit quality). The Fund will only purchase debt securities which, at the time of acquisition, are rated at least B3 by Moody’s or B- by Standard & Poor’s or are comparably rated by another statistical rating organization, or, if unrated, are determined by the Adviser to be of comparable credit quality. The Fund may invest in debt securities of any maturity. |
The Fund may invest in foreign securities and U.S. dollar denominated foreign issuers. Such investments in securities of foreign issuers may include ADRs and Yankee bonds. ADRs are receipts that represent interests in foreign securities held on deposit by U.S. banks. Yankee bonds are bonds denominated in U.S. dollars that are publicly issued in the United States by foreign banks and corporations. In certain market environments, the Fund may, but is not required to, use various hedging techniques, such as the buying and selling of options, to seek to mitigate one or more risks associated with investments in MLPs and energy infrastructure assets including market risk and interest rate risk, which, among other factors, could adversely affect market valuations of specific securities or certain sectors of the energy MLP and energy infrastructure market place, or the Fund’s overall portfolio. The Fund may invest up to 15% of its net assets in securities that are not registered under the Securities Act of 1933 or that otherwise may not be sold in public offerings, which are commonly known as “restricted” securities. The Fund will typically acquire restricted securities in directly negotiated transactions. The Fund may invest in IPOs, other investment companies including ETFs, and ETNs. ETFs are investment companies that generally seek to track the performance of specific indices, shares of which are traded on exchanges. The Fund will include ETFs that primarily invest in MLPs and/or other companies focused in the energy infrastructure sector for purposes of satisfying the Fund’s investment strategy of investing at least 80% of its total assets in equity and debt securities of MLPs focused in the energy infrastructure sector, and in equity and debt securities of other companies focused in the energy infrastructure sector. ETNs are unsecured debt securities issued by a bank that are linked to the total return of a market index. |
Target Energy Infrastructure Fund | Acquiring Energy Infrastructure Fund |
The Fund is “non-diversified” under the 1940 Act, which means that it may invest more of its assets in fewer issuers than “diversified” mutual funds. |
Management and Other Fees | Management Fee. The Fund pays a management fee to ARI on a monthly basis at an annualized rate of 0.75% of the Fund’s average daily net assets. Operating Expenses Limitation Agreement. ARI has contractually agreed to waive its fees and/or pay for operating expenses of the Fund to ensure that the total annual fund operating expenses (excluding any taxes, leverage interest, brokerage commissions, dividend expenses on short sales, acquired fund fees and expenses (as determined in accordance with Form N-1A), expenses incurred in connection with any merger or reorganization, and extraordinary expenses such as litigation expenses) do not exceed 1.00% of the average daily net assets of the Fund’s Class I Shares. The agreement is in effect until March 31, 2020 and may be terminated before that date only by the Target Board. Other Fees. The Fund pays a separate fee for administration, fund accounting and transfer agency services. | Management Fee. Same Operating Expenses Limitation Agreement. Tortoise has agreed to reimburse the Fund for its operating expenses, in order to ensure that each Fund’s Total Annual Fund Operating Expenses (excluding Rule 12b-1 fees, front-end or contingent deferred loads, taxes, leverage/borrowing interest, interest expense, dividends paid on short sales, brokerage commissions, acquired fund fees and expenses, expenses incurred in connection with any merger or reorganization, or extraordinary expenses) do not exceed 1.00% of the Fund’s average daily net assets. The agreement is in effect until November 30, 2021 and may be terminated before that date with respect to the Fund only by the Acquiring Board. Other Fees. Same |
Sales Charges | None | Same |
Distribution and Rule 12b-1 Fees | None | Same |
1940 Act Diversification | The Fund is non-diversified. | Same |
Fundamental Investment Policies | |
Target Funds | Acquiring Funds |
Issuing Senior Securities. Each Fund may not issue senior securities, borrow money or pledge its assets, except that (i) the Fund may borrow from banks in amounts not exceeding one-third of its net assets (including the amount borrowed); and (ii) this restriction shall not prohibit the Fund from engaging in options transactions or short sales and in investing in financial futures and reverse repurchase agreements. | Same |
Acting as Underwriter. Each Fund may not act as underwriter, except to the extent the Fund may be deemed to be an underwriter in connection with the sale of securities in its investment portfolio. | Same |
Diversifying Investments. Each Fund may not invest 25% or more of its total assets, calculated at the time of purchase, in any one sector (excluding securities issued by the U.S. Government, its agencies or instrumentalities), except that the Fund will concentrate (that is, invest 25% or more of its total assets) in the energy infrastructure sector. | Same, except that the Acquiring Funds will footnote this restriction with disclosure that the Acquiring Funds “consider the following industries as marking up the energy infrastructure sector: energy, materials, transportation and utilities.” |
Fundamental Investment Policies | |
Target Funds | Acquiring Funds |
Purchasing or Selling Real Estate. Each Fund may not purchase or sell real estate or interests in real estate or real estate limited partnerships (although the Fund may purchase and sell securities which are secured by real estate and securities of companies which invest or deal in real estate such as real estate investment trusts (REITs)). | Same |
Making Loans. Each Fund may not make loans of money, except (a) for purchases of debt securities consistent with the investment policies of the Fund, (b) by engaging in repurchase agreements, or (c) through the loan of portfolio securities in an amount up to 33 1/3% of the Fund’s net assets. | Same |
Investing in Commodities Futures, Options, Swaps and Precious Metals. Each Fund may not purchase or sell commodities, except that the Fund may purchase and sell futures contracts and options; may enter into foreign exchange contracts; may enter into swap agreements and other financial transactions not requiring the delivery of physical commodities; may purchase or sell precious metals directly, and may purchase or sell precious metal commodity contracts or options on such contracts in compliance with applicable commodities laws | Same |
Class A and Class C Shares of the Target Fund/A Class and C Class Shares of the Acquiring Fund | To Open Your Account | To Add to Your Account |
Direct Regular Accounts | $2,500 | $500 |
Direct Retirement Accounts | $2,500 | $500 |
Automatic Investment Plans | $2,500 | $100 |
Gift Account for Minors | $2,500 | $500 |
Class I Shares of the Target Fund/Institutional Class Shares of the Acquiring Fund | ||
All Accounts | $1,000,000 | $100,000 |
Class I Shares of the Target Fund/Institutional Class Shares of the Acquiring Fund | To Open Your Account | To Add to Your Account |
Direct Regular Accounts | $5,000,000 | $500 |
Direct Retirement Accounts | $5,000,000 | $500 |
Automatic Investment Plans | $5,000,000 | $100 |
Gift Account for Minors | $5,000,000 | $500 |
· | the terms of the Reorganization, including that the Reorganization is expected to constitute a “reorganization” within the meaning of Section 368(a) of the Code and each Target Fund and its shareholders are not expected to recognize gain or loss for U.S. federal income tax purposes in the Reorganization; |
· | that the investment objectives, principal investment strategies, policies and risks of each Target Fund are substantially similar as those of the corresponding Acquiring Fund; |
· | that Tortoise is an experienced provider of investment advisory services; |
· | that the portfolio managers of each Target Fund will continue as portfolio managers of the corresponding Acquiring Fund; |
· | that the advisory fees to be paid to Tortoise by each Acquiring Fund under the Acquiring Fund’s investment advisory agreement would be the same as those paid to ARI under the corresponding Target Fund’s investment advisory agreement; |
· | that the expected total annual operating expenses of each Acquiring Fund are lower than the total annual operating expenses of the corresponding Target Fund; |
· | that Tortoise had agreed to enter into an expense limitation agreement comparable to each Target Fund’s current expense limitation agreement that would cap the corresponding Acquiring Fund’s investment advisory fee and operating expenses at levels no higher than the corresponding Target Fund’s current expense cap for at least a two-year period from the date of the Reorganization; |
· | that based on the estimated pro forma expense ratios for each Acquiring Fund, each Acquiring Fund is expected to operate below the expense limits under the waiver agreement; |
· | that no sales loads, commissions or other transactional fees would be imposed on a Target Fund’s shareholders in connection with the Reorganization; |
· | that the Reorganization would allow Target Fund shareholders who wish to continue to invest in a mutual fund managed in substantially the same manner as the Target Fund to do so; |
· | that neither Reorganization would result in the dilution of shareholders’ interests; |
· | that ARI and Tortoise will bear the costs of each proposed Reorganization; |
· | the satisfactory experience and background of the Acquiring Trust’s independent trustees; |
· | the types of services expected to be provided to each Acquiring Fund by Tortoise and the other service providers retained by the Acquiring Trust; |
· | that each proposed Reorganization will be submitted to the shareholders of the Target Fund for their approval; and |
· | that shareholders of a Target Fund who do not wish to become shareholders of the corresponding Acquiring Fund may redeem their Target Fund shares before the Reorganization. |
· | the Acquiring Funds Registration Statement on Form N-14 under the 1933 Act shall be on file with the SEC and shall be effective, and no stop-order suspending the effectiveness of the Registration Statement shall have been issued; |
· | the shareholders of the applicable Target Fund shall have approved the Plan; |
· | each Acquiring Fund and corresponding Target Fund shall have each delivered an officer’s certificate certifying that all representations, covenants and warranties of or with respect to the Fund made in the Plan are true and correct in all material respects at and as of the effective date of the Plan, except as they may be affected by the transactions contemplated by the Plan; |
· | Each Target Fund and the corresponding Acquiring Fund receive a satisfactory opinion of tax counsel substantially to the effect that the applicable Reorganization is expected to be a “reorganization” within the meaning of Section 368(a) of the Code, as described in more detail in “U.S. Federal Income Tax Considerations” below. |
· | The acquisition by the Acquiring Fund of all of the assets of the corresponding Target Fund in exchange for the Acquiring Fund shares and the assumption by the corresponding Acquiring Fund of the liabilities of the corresponding Target Fund, followed by the distribution by the Target Fund to its shareholders of the Acquiring Fund shares in complete liquidation of the Target Fund, will qualify as a reorganization within the meaning of Section 368(a) of the Code, and the Target Fund and Acquiring Fund each will be a “party to the reorganization” within the meaning of Section 368(b) of the Code. |
· | No gain or loss will be recognized by the Target Fund upon the transfer of all of its assets to, and assumption of its liabilities by, the corresponding Acquiring Fund in exchange solely for the Acquiring Fund shares pursuant to Sections 361(a) and 357(a) of the Code. |
· | No gain or loss will be recognized by the Acquiring Fund upon the receipt by it of all of the assets of the corresponding Target Fund in exchange solely for the Acquiring Fund shares and the assumption by the Acquiring Fund of the liabilities of the corresponding Target Fund pursuant to Section 1032(a) of the Code. |
· | No gain or loss will be recognized by the Target Fund upon the distribution of the Acquiring Fund shares to its shareholders in complete liquidation of the Target Fund pursuant to Section 361(c)(1) of the Code. |
· | The tax basis of each asset of the Target Fund received by the corresponding Acquiring Fund will be the same as the tax basis of such asset to the Target Fund immediately prior to the exchange pursuant to Section 362(b) of the Code. |
· | The holding period of each asset of the Target Fund received by the corresponding Acquiring Fund will include the periods during which such asset was held by the Target Fund pursuant to Section 1223(2) of the Code. |
· | No gain or loss will be recognized by the shareholders of the Target Fund upon the exchange of their Target Fund shares for the Acquiring Fund shares (including fractional shares to which they may be entitled), pursuant to Section 354(a) of the Code. |
· | The aggregate tax basis of the Acquiring Fund shares received by each shareholder of the Target Fund (including fractional shares to which they may be entitled) will be the same as the aggregate tax basis of the shareholder’s Target Fund shares exchanged therefor pursuant to Section 358(a)(1) of the Code. |
· | The holding period of the Acquiring Fund shares received by each shareholder of the Target Fund (including fractional shares to which they may be entitled) will include the shareholder’s holding period of the Target Fund shares surrendered in exchange therefor, provided that such Target Fund shares were held as a capital asset on the date of the Reorganization pursuant to Section 1223(1) of the Code. |
· | The taxable year of the Target Fund will not end as a result of the Reorganization. The Acquiring Fund, subject to applicable limitations, will succeed to and take into account, as of the date of the transfer as defined in Section 1.381(b)-1(b) of the regulations issued by the United States Department of the Treasury, the items of the Target Fund described in Section 381(c) of the Code as if there had been no Reorganization. |
Not Subject to Expiration | |||
Short-Term | Long-Term | Total | |
Target Energy Income Fund | $115,764,490 | $94,673,911 | $210,438,401 |
Target Energy Infrastructure Fund | $60,234,340 | $30,908,675 | $91,143,015 |
James J. Cunnane | Chief Investment Officer and Director |
Susan L. Steiner | Chief Compliance Officer |
Laura M. Moret | Chief Legal Officer |
Matthew K. Swaim | Chair of Executive Committee and Director |
H. Kevin Birzer | Chief Executive Officer/Director | |
Gary Henson | President/Director | |
Michelle Johnston | Chief Financial Officer/ Director | |
Diane Bono | Chief Compliance Officer | |
Connie Savage | Chief Operating Officer | |
Matthew Sallee | Director | |
Brent Newcomb | Chief Development Officer/ Director |
Name of Fund | Advisory Compensation |
Tortoise Power and Energy Infrastructure Fund, Inc. | 0.95% of the fund’s average monthly managed assets |
· | The Target Energy Income Fund’s annualized total returns for the three- and five-year periods were above the Alerian MLP Index returns and the peer group and Fund Universe median returns. The Fund’s annualized total return for the one-year period was below the peer group and Fund Universe median returns and the Index return by 4.66%, 4.57%, and 5.48%, respectively. In 2017 and 2018 the Fund had a four-star rating from Morningstar. The Trustees considered Tortoise’s explanation that the Fund’s underperformance during the one-year period was due to the Fund’s security selection and allocation to fixed income securities. In particular, Tortoise explained that, unlike the Fund, the funds in the peer group do not invest in fixed income securities and that the Index’s performance during the one-year period were driven by the outperformance of a select few MLPs. |
· | The Target Energy Infrastructure Fund’s annualized total returns for the three-year and five-year periods were above the Alerian MLP Index returns and the peer group and Fund Universe median returns. The Target Energy Infrastructure Fund’s annualized total return for the one-year period was below the peer group and Fund Universe median returns and the Index return by 3.89%, 3.81%, and 4.79%, respectively. In 2018, the Fund had a four-star rating from Morningstar. The Trustees considered Tortoise’s explanation that the Fund’s underperformance during the one-year period was due to the Fund’s security selection and allocation to fixed income securities. In particular, Tortoise explained that, unlike the Fund, the funds in the peer group do not invest in fixed income securities and that the Index’s performance during the one-year period were driven by the outperformance of a select few MLPs. |
· | The Target Energy Income Fund’s annual investment advisory fee was the same as the peer group and Fund Universe medians. The Trustees noted that the advisory fee paid by the Target Energy Income Fund was higher than the advisory fee paid by the Target Energy Infrastructure Fund, but noted that the Target Energy Income Fund has a lower minimum investment than the Target Energy Infrastructure Fund and therefore has more complex cash management issues. The Trustees also observed that the Target Energy Income Fund’s advisory fee is higher than that of separate accounts managed by Tortoise using similar strategies as the Target Energy Income Fund, but considered that management of mutual fund assets requires compliance with certain requirements under the 1940 Act that do not apply to the separate accounts managed by Tortoise. The Trustees also noted that the Target Energy Income Fund’s advisory fee was within the range of advisory fees paid by other open-end, closed-end and private funds managed by Tortoise using similar strategies as the Target Energy Income Fund. The annual total expenses paid by the Target Energy Income Fund for the period ended March 31, 2019 were lower than the peer group and Fund Universe medians. |
· | The Target Energy Infrastructure Fund’s annual investment advisory fee was lower than the peer group and Fund Universe medians. The Trustees noted that the Target Energy Infrastructure Fund’s advisory fee was within the range of the advisory fees that Tortoise charges separate accounts using similar strategies as the Target Energy Infrastructure Fund. The Trustees also considered that the Target Energy Infrastructure Fund’s advisory fee was within the range of advisory fees paid by other open-end, closed-end and private funds managed by Tortoise using similar strategies as the Target Energy Income Fund. The annual total expenses paid by the Target Energy Infrastructure Fund for the period ended March 31, 2019 were lower than the peer group median and Fund Universe median. |
Fund | Shares Outstanding |
Target Energy Income Fund | 106,842,706 |
Target Energy Infrastructure Fund | 11,878,764 |
The following table shows the capitalization of each Target Fund as of September 3, 2019, and of the corresponding Acquiring Fund on a pro forma combined basis (unaudited) as of the same date, giving effect to the proposed Reorganization. The following is an example of the number of shares of each Acquiring Fund that would have been exchanged for the shares of the corresponding Target Fund if the Reorganization had been consummated on September 3, 2019, and does not necessarily reflect the number of shares or value of shares that will actually be received if the Reorganization occurs on the Closing Date. The capitalizations of the Target Funds and the Acquiring Funds are likely to be different on the Closing Date as a result of daily share purchase, redemption, and market activity.
(unaudited) | Target Energy Income Fund(1) | Pro Forma Adjustments(2) | Acquiring Energy Income Fund (pro $forma)(2) | ||
Aggregate Net Assets | $750,519,291 | $0 | $750,519,291 | ||
Shares Outstanding – Class A/A Class | 7,300,562 | - | 7,300,562 | ||
Net Asset Value Per Share – Class A/A Class | $7.14 | $0 | $7.14 | ||
Net Assets – Class A/A Class | $52,094,090 | $0 | $52,094,090 | ||
Shares Outstanding – Class C/C Class | 6,932,639 | - | 6,932,639 | ||
Net Asset Value Per Share – Class C/C Class | $7.16 | $0 | $7.16 | ||
Net Assets – Class C/C Class | $49,632,495 | $0 | $49,632,495 | ||
Shares Outstanding – Class I/Institutional Class | 92,609,505 | - | 92,609,505 | ||
Net Asset Value Per Share – Class I/Institutional Class | $7.01 | $0 | $7.01 | ||
Net Assets – Class I/Institutional Class | $648,792,708 | $0 | $648,792,708 | ||
(1) The Target Energy Income Fund will be the accounting survivor for financial statement purposes. (2) No adjustments to reflect the costs of the Reorganization are reflected, Tortoise and ARI are bearing the costs associated with the Energy Income Fund reorganization. | |||||
(unaudited) | Target Energy Infrastructure Fund(1) | Pro Forma Adjustments | Acquiring Energy Infrastructure Fund (pro forma)(2) | ||
Aggregate Net Assets | $80,564,500 | $0 | $80,564,500 | ||
Shares Outstanding –Class I/Institutional Class | 11,878,764 | - | 11,878,764 | ||
Net Asset Value Per Share – Class I/Institutional Class | $6.78 | $0 | $6.78 | ||
Net Assets – Class I/Institutional Class | $80,564,500 | $0 | $80,564,500 | ||
(1) The Target Energy Infrastructure Fund will be the accounting survivor for financial statement purposes. (2) No adjustments to reflect the costs of the Reorganization are reflected, Tortoise and ARI are bearing the costs associated with the Energy Infrastructure Fund reorganization. |
Name and Address | % Ownership | Type of Ownership(1) |
Merrill Lynch Pierce Fenner and Smith For the sole benefit of its customers Jacksonville, FL 32246 | 58.30% | Record |
Charles Schwab & Co., Inc. Attn Mutual Funds San Francisco, CA 94104 | 8.68% | Record |
UBS WM USA Weehawken, NJ 07086 | 8.50% | Record |
Name and Address | % Ownership | Type of Ownership(1) |
Merrill Lynch Pierce Fenner and Smith For the sole benefit of its customers Jacksonville, FL 32246 | 45.58% | Record |
UBS WM USA Weehawken, NJ 07086 | 17.85% | Record |
Pershing LLC Jersey City, NJ 07399 | 9.22% | Record |
Charles Schwab & Co., Inc. Attn Mutual Funds San Francisco, CA 94104 | 7.70% | Record |
Name and Address | % Ownership | Type of Ownership(1) |
Merrill Lynch Pierce Fenner and Smith For the sole benefit of its customers Jacksonville, FL 32246 | 34.33% | Record |
Charles Schwab & Co., Inc. Attn Mutual Funds San Francisco, CA 94104 | 19.59% | Record |
UBS WM USA Weehawken, NJ 07086 | 11.66% | Record |
National Financial Services LLC FEBO New York, NY 10281 | 9.40% | Record |
RBC Capital Markets LLC Minneapolis, MN 55402 | 6.13% | Record |
Name and Address | % Ownership | Type of Ownership(1) |
T. Rowe Price Retirement Plan Services FBO Owings Mills, MD 21117 | 62.21% | Record |
Charles Schwab & Co., Inc. Attn Mutual Funds San Francisco, CA 94104 | 19.23% | Record |
JP Morgan Securities For the exclusive benefit of its customers Brooklyn, NY 11245 | 6.10% | Record |
Name and Address | % Ownership | Jurisdiction | Type of Ownership(1) |
Merrill Lynch Pierce Fenner and Smith For the sole benefit of its customers Jacksonville, FL 32246 | 36.70% | Florida | Record |
Name and Address | % Ownership | Jurisdiction | Type of Ownership(1) |
T. Rowe Price Retirement Plan Services FBO Owings Mills, MD 21117 | 62.21% | Maryland | Record |
8. | FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUNDS AND THE TARGET FUNDS |
Target Fund (Share Class | Corresponding Acquiring Fund (Share Class) |
Advisory Research MLP & Energy Income Fund (Class A) (Class C) (Class I) | Tortoise MLP & Energy Income Fund (A Class) (C Class) (Institutional Class) |
Advisory Research MLP & Energy Infrastructure Fund (Class I) | Tortoise MLP & Energy Infrastructure Fund (Institutional Class) |
Class A
| For the 6 months ended May 31, 2019 (Unaudited) | For the Year Ended November 30, | ||||||||
|
| 2018 |
| 2017 |
| 2016 |
| 2015 |
| 2014 |
Net asset value, beginning of period | $7.56 | $8.57 |
| $9.87 |
| $9.35 |
| $13.93 |
| $12.44 |
Income from Investment Operations: |
|
|
|
|
|
|
|
|
|
|
Net investment income1 | 0.07 | 0.06 |
| 0.09 |
| 0.20 |
| 0.21 |
| 0.18 |
Net realized and unrealized gain (loss) | 0.20 | (0.36) |
| (0.69) |
| 1.04 |
| (4.10) |
| 2.18 |
Total from investment operations | 0.27 | (0.30) |
| (0.60) |
| 1.24 |
| (3.89) |
| 2.36 |
|
|
|
|
|
|
|
|
|
|
|
Less distributions: |
|
|
|
|
|
|
|
|
|
|
From net investment income | (0.36) | (0.42) |
| (0.16) |
| (0.24) |
| (0.21) |
| (0.09) |
From net realized gain | – | – |
| – |
| – |
| – |
| (0.53) |
From return of capital | – | (0.29) |
| (0.54) |
| (0.48) |
| (0.48) |
| (0.25) |
Total distributions | (0.36) | (0.71) |
| (0.70) |
| (0.72) |
| (0.69) |
| (0.87) |
|
|
|
|
|
|
|
|
|
|
|
Redemption fee proceeds1 | –2 | –2 |
| –2 |
| –2 |
| –2 |
| –2 |
|
|
|
|
|
|
|
|
|
|
|
Net asset value, end of period | $7.47 | $7.56 |
| $8.57 |
| $9.87 |
| $9.35 |
| $13.93 |
|
|
|
|
|
|
|
|
|
|
|
Total return3 | 3.62%4 | (3.95%) |
| (6.26%) |
| 14.74% |
| (28.82%) |
| 19.05% |
|
|
|
|
|
|
|
|
|
|
|
Ratios and Supplemental Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net assets, end of period (in thousands) | $54,372 | $55,436 |
| $62,135 |
| $54,418 |
| $82,726 |
| $86,863 |
|
|
|
|
|
|
|
|
|
|
|
Ratio of expenses to average net assets: |
|
|
|
|
|
|
|
|
|
|
Before fees waived/recovered | 1.41%5 | 1.41% |
| 1.39% |
| 1.40% |
| 1.40% |
| 1.40% |
After fees waived/recovered | 1.41%5 | 1.41% |
| 1.39% |
| 1.40% |
| 1.40% |
| 1.43% |
Ratio of net investment income to average net assets: |
|
|
|
|
|
|
|
|
|
|
Before fees waived/recovered | 1.89%5 | 0.74% |
| 0.98% |
| 2.36% |
| 1.68% |
| 1.30% |
After fees waived/recovered | 1.89%5 | 0.74% |
| 0.98% |
| 2.36% |
| 1.68% |
| 1.27% |
|
|
|
|
|
|
|
|
|
|
|
Portfolio turnover rate | 36%4 | 55% |
| 30% |
| 65% |
| 37% |
| 38% |
1. | Calculated based on average shares outstanding for the period. |
2. | Amount represents less than $0.01 per share. |
3. | Total returns would have been lower/higher had expenses not been waived/recovered by the predecessor investment adviser. Returns shown include Rule 12b-1 fees of up to 0.25% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns shown do not include payment of sales load of 5.50% of offering price which is reduced on sales of $50,000 or more, or a CDSC of 1.00% on certain shares sold within 18 months. If the sales charges were included, total returns would be lower. |
4. | Not annualized. |
5. | Annualized. |
Class C
For the 6 months ended May 31, 2019 (Unaudited) | For the Year Ended November 30, | |||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||
Net asset value, beginning of period | $7.59 | $8.60 | $9.90 | $9.37 | $13.96 | $12.46 | ||||
Income from Investment Operations: | ||||||||||
Net investment income1 | 0.04 | –2 | 0.02 | 0.14 | 0.12 | 0.07 | ||||
Net realized and unrealized gain (loss) | 0.19 | (0.37) | (0.69) | 1.04 | (4.12) | 2.18 | ||||
Total from investment operations | 0.23 | (0.37) | (0.67) | 1.18 | (4.00) | 2.25 | ||||
Less distributions: | ||||||||||
From net investment income | (0.33) | (0.38) | (0.14) | (0.21) | (0.17) | –2 | ||||
From net realized gain | – | – | – | – | – | (0.53) | ||||
From return of capital | – | (0.26) | (0.49) | (0.44) | (0.42) | (0.22) | ||||
Total distributions | (0.33) | (0.64) | (0.63) | (0.65) | (0.59) | (0.75) | ||||
Redemption fee proceeds1 | –2 | –2 | –2 | –2 | –2 | –2 | ||||
Net asset value, end of period | $7.49 | $7.59 | $8.60 | $9.90 | $9.37 | $13.96 | ||||
Total return3 | 3.07%4 | (4.64%) | (6.95%) | 13.89% | (29.40%) | 18.12% | ||||
Ratios and Supplemental Data: | ||||||||||
Net assets, end of period (in thousands) | $52,442 | $55,341 | $68,541 | $92,873 | $98,460 | $115,033 | ||||
Ratio of expenses to average net assets: | ||||||||||
Before fees waived/recovered | 2.16%5 | 2.16% | 2.14% | 2.15% | 2.15% | 2.15% | ||||
After fees waived/recovered | 2.16%5 | 2.16% | 2.14% | 2.15% | 2.15% | 2.18% | ||||
Ratio of net investment income to average net assets: | ||||||||||
Before fees waived/recovered | 1.14%5 | (0.01%) | 0.23% | 1.61% | 0.93% | 0.55% | ||||
After fees waived/recovered | 1.14%5 | (0.01%) | 0.23% | 1.61% | 0.93% | 0.52% | ||||
Portfolio turnover rate | 36% | 55% | 30% | 65% | 37% | 38% |
1. | Calculated based on average shares outstanding for the period. |
2. | Amount represents less than $0.01 per share. |
3. | Total returns would have been lower/higher had expenses not been waived/recovered by the Advisor. Returns shown include Rule 12b-1 fees of up to 1.00% and do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. Returns shown do not include payment of Contingent Deferred Sales Charge (“CDSC”) of 1.00% on any shares sold within 12 months. If the sales charge was included, total returns would be lower. |
4. | Not annualized. |
5. | Annualized. |
For the 6 months ended May 31, 2019 (Unaudited) | For the Year Ended November 30, | |||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||
Net asset value, beginning of period | $7.43 | $8.42 | $9.70 | $9.20 | $13.70 | $12.24 | ||||
Income from Investment Operations: | ||||||||||
Net investment income1 | 0.08 | 0.08 | 0.11 | 0.23 | 0.24 | 0.21 | ||||
Net realized and unrealized gain (loss) | 0.19 | (0.35) | (0.68) | 1.01 | (4.03) | 2.14 | ||||
Total from investment operations | 0.27 | (0.27) | (0.57) | 1.24 | (3.79) | 2.35 | ||||
Less distributions: | ||||||||||
From net investment income | (0.37) | (0.43) | (0.16) | (0.25) | (0.22) | (0.11) | ||||
From net realized gain | – | – | – | – | – | (0.53) | ||||
From return of capital | – | (0.29) | (0.55) | (0.49) | (0.49) | (0.25) | ||||
Total distributions | (0.37) | (0.72) | (0.71) | (0.74) | (0.71) | (0.89) | ||||
Redemption fee proceeds1 | –2 | –2 | –2 | –2 | –2 | –2 | ||||
Net asset value, end of period | $7.33 | $7.43 | $8.42 | $9.70 | $9.20 | $13.70 | ||||
Total return3 | 3.60%4 | (3.66%) | (6.03%) | 14.93% | (28.59%) | 19.32% | ||||
Ratios and Supplemental Data: | ||||||||||
Net assets, end of period (in thousands) | $722,338 | $748,415 | $735,670 | $733,365 | $592,034 | $594,964 | ||||
Ratio of expenses to average net assets: | ||||||||||
Before fees waived/recovered | 1.16%5 | 1.16% | 1.14% | 1.15% | 1.15% | 1.15% | ||||
After fees waived/recovered | 1.16%5 | 1.16% | 1.14% | 1.15% | 1.15% | 1.18% | ||||
Ratio of net investment income to average net assets: | ||||||||||
Before fees waived/recovered | 2.14%5 | 0.99% | 1.23% | 2.61% | 1.93% | 1.55% | ||||
After fees waived/recovered | 2.14%5 | 0.99% | 1.23% | 2.61% | 1.93% | 1.52% | ||||
Portfolio turnover rate | 36%4 | 55% | 30% | 65% | 37% | 38% |
1. Calculated based on average shares outstanding for the period. 2. Amount represents less than $0.01 per share. 3. Total returns would have been lower/higher had expenses not been waived/recovered by the Advisor. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 4. Not annualized. 5. Annualized. |
Class I
For the 6 months ended May 31, 2019 (Unaudited) | For the Year Ended November 30, | |||||||||
2018 | 2017 | 2016 | 2015 | 2014 | ||||||
Net asset value, beginning of period | $7.24 | $8.23 | $9.51 | $9.31 | $13.97 | $12.45 | ||||
Income from Investment Operations: | ||||||||||
Net investment income1 | 0.09 | 0.11 | 0.13 | 0.25 | 0.26 | 0.23 | ||||
Net realized and unrealized gain (loss) | 0.22 | (0.38) | (0.69) | 0.68 | (4.20) | 2.23 | ||||
Total from investment operations | 0.31 | (0.27) | (0.56) | 0.93 | (3.94) | 2.46 | ||||
Less distributions: | ||||||||||
From net investment income | (0.37) | (0.48) | (0.27) | (0.25) | (0.20) | (0.40) | ||||
From net realized gain | - | - | - | - | - | (0.37) | ||||
From return of capital | - | (0.24) | (0.45) | (0.48) | (0.52) | (0.17) | ||||
Total distributions | (0.37) | (0.72) | (0.72) | (0.73) | (0.72) | (0.94) | ||||
Redemption fee proceeds1 | –2 | –2 | –2 | –2 | –2 | – | ||||
Net asset value, end of period | $7.18 | $7.24 | $8.23 | $9.51 | $9.31 | $13.97 | ||||
Total return3 | 4.24%4 | (3.71%) | (6.13%) | 11.45% | (29.18%) | 20.18% | ||||
Ratios and Supplemental Data: | ||||||||||
Net assets, end of period (in thousands) | $154,929 | $265,892 | $328,540 | $432,631 | $429,246 | $167,417 | ||||
Ratio of expenses to average net assets: | ||||||||||
Before fees waived/recovered | 0.92%5 | 0.93% | 0.90% | 0.90% | 0.94% | 1.18% | ||||
After fees waived/recovered | 0.92%5 | 0.93% | 0.90% | 0.94% | 1.00% | 1.00% | ||||
Ratio of net investment income to average net assets: | ||||||||||
Before fees waived/recovered | 2.38%5 | 1.32% | 1.42% | 3.01% | 2.23% | 1.49% | ||||
After fees waived/recovered | 2.38%5 | 1.32% | 1.42% | 2.97% | 2.17% | 1.67% | ||||
Portfolio turnover rate | 43%4 | 73% | 28% | 71% | 29% | 34% |
1. Calculated based on average shares outstanding for the period. 2. Amount represents less than $0.01 per share. 3. Total returns would have been lower/higher had expenses not been waived/recovered by the Advisor. Returns shown do not reflect the deduction of taxes that a shareholder would pay on Fund distributions or the redemption of Fund shares. 4. Not Annualized. 5. Annualized. |
BETWEEN
INVESTMENT MANAGERS SERIES TRUST
THE TRUST: INVESTMENT MANAGERS SERIES TRUST on behalf of each Fund | |||
By: | |||
Name: Rita Dam | |||
Title: Treasurer | |||
THE ADVISOR: TORTOISE CAPITAL ADVISORS, L.L.C. | |||
By: | |||
Name: | |||
Title: | |||
Fund | Advisor Fee | Effective Date |
Tortoise MLP & Energy Infrastructure Fund | 0.75% | ___________ |
Tortoise MLP & Energy Income Fund | 1.00% | ___________ |
Tortoise MLP & Equity Fund | 0.85% | ___________ |
PAGE | |
3 | |
INCORPORATION OF DOCUMENTS BY REFERENCE INTO THE STATEMENT OF ADDITIONAL INFORMATION | 3 |
PRO FORMA FINANCIAL INFORMATION | 3 |
Target Funds (series of Investment Managers Series Trust) | Acquiring Funds (series of Managed Portfolio Series) |
Advisory Research MLP & Energy Income Fund | Tortoise MLP & Energy Income Fund |
Advisory Research MLP & Energy Infrastructure Fund | Tortoise MLP & Energy Infrastructure Fund |
· | Statement of Additional Information dated April 1, 2019 for the Target Funds (the “Target Funds SAI”) (File No. 811-21719) |
· | Statement of Additional Information dated September 13, 2019 for the Acquiring Funds (“Acquiring Funds SAI”) (File No. 811-22525) |
· | The audited financial statements and related report of the independent public accounting firm included in the Target Funds’ Annual Report to Shareholders for the fiscal year ended November 30, 2018 (“Target Funds Annual Report”). Only the audited financial statements and related report of the independent registered public accounting firm included in the Target Funds Annual Report are incorporated herein by reference and no other parts of the Target Funds Annual Report are incorporated by reference. |
· | The Target Funds’ unaudited financial statements included in the Target Funds Semi-Annual Report to Shareholders for the fiscal period ended May 31, 2019 (the “Target Funds Semi-Annual Report”) (File No. 811-09038). Only the financial statements included in the Target Funds Semi-Annual Report are incorporated herein by reference and no other part of the Semi-Annual Report is incorporated by reference. |
Table of Contents - SAI
(1) | (a) | Certificate of Trust – incorporated herein by reference to Registrant’s Registration Statement on Form N-1A filed on February 4, 2011 | |
(1) | (b) | Amended and Restated Agreement and Declaration of Trust – incorporated herein by reference from Post-Effective Amendment No. 314 to Registrant’s Registration Statement on Form N-1A filed on October 24, 2017 | |
(2) | Amended and Restated Bylaws – incorporated herein by reference to Registrant’s Registration Statement on Form N-1A filed on May 5, 2011 | ||
(3) | Not applicable. | ||
(4) | Form of Agreement and Plan of Reorganization is attached as Exhibit B to the Proxy Statement/Prospectus contained in this Registration Statement. | ||
(5) | Instruments Defining Rights of Security Holders – incorporated by reference to the Amended and Restated Agreement and Declaration of Trust and Amended and Restated Bylaws filed on May 5, 2011 | ||
(6) | (a) | (i) | Investment Advisory Agreement between the Trust, and Tortoise Advisors, L.L.C. – incorporated herein by reference from Post-Effective Amendment No. 351 to Registrant’s Registration Statement on Form N-1A filed on March 28, 2018 |
(ii) | Amendment to the Investment Advisory Agreement between the Trust, on behalf of the Tortoise MLP & Energy Income Fund and Tortoise MLP & Energy Infrastructure Fund, and Tortoise Advisors, L.L.C. – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | ||
(6) | (b) | Operating Expenses Limitation Agreement between the Trust, on behalf of the Tortoise MLP & Energy Income Fund and Tortoise MLP & Energy Infrastructure Fund, and Tortoise Capital Advisors, L.L.C. – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | |
(7) | (a) | (i) | Distribution Agreement between the Trust and Quasar Distributors, LLC – incorporated herein by reference from Post-Effective Amendment No. 351 to Registrant’s Registration Statement on Form N-1A filed on March 28, 2018 |
(ii) | Distribution Agreement between the Trust, on behalf of the Tortoise MLP & Energy Income Fund and Tortoise MLP & Energy Infrastructure Fund and Quasar Distributors, LLC – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 |
(8) | Not applicable. | ||
(9) | (a) | Custody Agreement between the Trust and U.S. Bank National Association – incorporated herein by reference to Registrant’s Registration Statement on Form N-1A filed on May 5, 2011 | |
(b) | Amendment to the Custody Agreement between the Trust and U.S. Bank National Association – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | ||
(10) | Amended and Restated Rule 12b-1 Plan – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | ||
(11) | Opinion and Consent of Counsel by Stradley Ronon Stevens & Young LLP for the Tortoise MLP & Energy Income Fund and Tortoise MLP & Energy Infrastructure Fund - filed herewith | ||
(12) | Opinion and Consent of Stradley Ronon Stevens & Young LLP regarding tax matters – to be filed by amendment | ||
(13) | (a) | Fund Administration Servicing Agreement between the Trust and U.S. Bancorp Fund Services, LLC – incorporated herein by reference to Registrant’s Registration Statement on Form N-1A filed on May 5, 2011 | |
(i) | Amendment to the Fund Administration Servicing Agreement between the Trust and U.S. Bancorp Fund Services, LLC – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | ||
(b) | Transfer Agent Servicing Agreement between the Trust and U.S. Bancorp Fund Services, LLC – incorporated herein by reference to Registrant’s Registration Statement on Form N-1A filed on May 5, 2011 | ||
(i) | Amendment to the Transfer Agent Servicing Agreement between the Trust and U.S. Bancorp Fund Services, LLC – incorporated herein by reference from Post-Effective Amendment No. 434 to Registrant’s Registration Statement on Form N-1A filed on September 12, 2019 | ||
(14) | Consent of Independent Registered Public Accounting Firm is filed herewith |
(15) | Not applicable. | ||
(16) | Power of Attorneys for Robert J. Kern, David A. Massart, Leonard M. Rush and David M. Swanson dated November 18, 2015 – incorporated herein by reference from Post-Effective Amendment No. 217 to Registrant’s Registration Statement on Form N-1A filed on March 24, 2016 | ||
(17) | Form of Proxy Card is filed herewith. |
Signature | Title | ||
Robert J. Kern* | Trustee | ||
Robert J. Kern | |||
David A. Massart* | Trustee | ||
David A. Massart | |||
Leonard M. Rush* | Trustee | ||
Leonard M. Rush | |||
David M. Swanson* | Trustee | ||
David M. Swanson | |||
/s/ Brian R. Wiedmeyer | President and Principal Executive Officer | ||
Brian R. Wiedmeyer | |||
/s/ Ryan L. Roell | Treasurer, Principal Financial Officer and Principal Accounting Officer | ||
Ryan L. Roell | |||
*By: | /s/ Brian R. Wiedmeyer | ||
Brian R. Wiedmeyer, Attorney-In-Fact pursuant to Power of Attorney |
Exhibit Number | Description |
(11) | Opinion and Consent of Counsel by Stradley Ronon Stevens & Young LLP for the Tortoise MLP & Energy Income Fund and Tortoise MLP & Energy Infrastructure Fund |
(14) | Consent of Independent Registered Public Accounting Firm |
(17) | Form of Proxy Card |