WHEATON, Ill.--(BUSINESS WIRE)--First Trust Advisors L.P. (“FTA”) announced today that the Board of Trustees of First Trust Strategic High Income Fund II (NYSE: FHY), a closed-end fund managed by FTA, and First Trust High Income Long/Short Fund (NYSE: FSD), another closed-end fund managed by FTA, approved the merger of FHY into FSD. FSD will be the surviving fund.
Under the terms of the proposed transaction, which is expected to be tax-free, the assets of FHY would be transferred to, and the liabilities of FHY would be assumed by, FSD, and shareholders of FHY would receive shares of FSD with a value equal to the aggregate net asset value of the FHY shares held by them. It is currently expected that the transaction will be consummated later this year, subject to requisite shareholder approval and satisfaction of applicable regulatory requirements and approvals and customary closing conditions. There is no assurance when or whether such approvals, or any other approvals required for the transaction, will be obtained. More information on the proposed transaction will be contained in proxy materials that will be filed in the coming weeks. Upon completion of the proposed transaction, the investment objectives and strategies of FSD will remain unchanged.
FHY is a diversified, closed-end management investment company that seeks to provide a high level of current income. As a secondary objective, the Fund seeks to provide capital growth. The Fund seeks to achieve its investment objectives by investing in a diversified portfolio of below-investment grade and investment grade debt securities, and equity securities that the investment sub-advisor believes offer attractive yield and/or capital appreciation potential. The Fund may invest up to 100% of its managed assets in below-investment grade debt securities (commonly referred to as “high-yield” or “junk” bonds).
FSD is a diversified, closed-end management investment company that seeks to provide current income. The Fund has a secondary objective of capital appreciation. The Fund seeks to achieve its investment objectives by investing, under normal market conditions, a majority of its assets in a diversified portfolio of U.S. and foreign (including emerging markets) high yield corporate fixed-income securities of varying maturities that are rated below-investment grade at the time of purchase.
First Trust Advisors L.P., the Funds’ investment advisor, along with its affiliate, First Trust Portfolios L.P., are privately-held companies which provide a variety of investment services, including asset management and financial advisory services, with collective assets under management or supervision of approximately $124 billion as of January 31, 2018 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts.
Brookfield Investment Management Inc. (“Brookfield”) serves as FHY’s investment sub-advisor. Brookfield is a wholly-owned subsidiary of Brookfield Asset Management, a global alternative asset manager with over $265 billion in assets under management as of September 30, 2017. Brookfield Asset Management has over a 100-year history of owning and operating assets with a focus on property, renewable power, infrastructure and private equity. Brookfield Asset Management’s public market activities are conducted by Brookfield, a registered investment advisor, with over $16 billion of assets under management as of September 30, 2017.
MacKay Shields LLC (“MacKay”) serves as FSD’s investment sub-advisor. MacKay is an indirect wholly-owned subsidiary of New York Life Insurance Company and a wholly-owned subsidiary of New York Life Investment Management Holdings LLC. MacKay is a multi-product, fixed income investment management firm with approximately $97.2 billion in assets under management as of November 30, 2017. MacKay manages fixed income strategies for high-net worth individuals, institutional clients and mutual funds, including unconstrained bond, global high yield, high yield, high yield active core, municipal high yield, short duration high yield, low volatility high yield, municipal short term, core investment grade, municipal investment grade, core plus, core plus opportunities, convertibles, emerging markets credit, and bank loans.
Additional Information about the Proposed Merger and Where to Find It
This press release is not intended to, and shall not, constitute an offer to purchase or sell shares of FHY or FSD; nor is this press release intended to solicit a proxy from any shareholder. The solicitation of the purchase or sale of securities or of proxies to effect the transaction may only be made by a final, effective Registration Statement, which includes a definitive Proxy Statement/Prospectus, after the Registration Statement is declared effective by the SEC.
This press release references a Registration Statement, which includes a Proxy Statement/Prospectus, to be filed by FSD and FHY. This Registration Statement has yet to be filed with the SEC. After the Registration Statement is filed with the SEC, it may be amended or withdrawn and the Proxy Statement/Prospectus will not be distributed to shareholders of FHY unless and until the Registration Statement is declared effective by the SEC.
FHY, FSD, FTA, FTP and their respective trustees, officers and employees, and other persons may be deemed to be participants in the solicitation of proxies with respect to the proposed merger. Investors and shareholders may obtain more detailed information regarding the direct and indirect interests of FHY’s, FSD’s, FTA’s and FTP’s respective directors, trustees, officers and employees by reading the Proxy Statement/Prospectus regarding the proposed merger when it is filed with the SEC.
Investors and security holders of FHY are urged to read the Proxy Statement/Prospectus and other documents filed with the SEC carefully in their entirety when they become available because they will contain important information about the proposed merger. Investors should consider the investment objectives, risks, charges and expenses of FHY and FSD carefully. The Proxy Statement/Prospectus will contain information with respect to the investment objectives, risks, charges and expenses of the funds and other important information about FHY and FSD. The Proxy Statement/Prospectus will constitute neither an offer to sell securities, nor will it constitute a solicitation of an offer to buy securities, in any state where such offer or sale is not permitted.
Investors may obtain free copies of the Registration Statement and Proxy Statement/Prospectus and other documents (when they become available) filed with the SEC at the SEC’s web site at www.sec.gov. In addition, free copies of the Proxy Statement/Prospectus and other documents filed with the SEC may also be obtained after the Registration Statement becomes effective by calling FTA toll-free at (800) 621-1675.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
The Funds’ daily closing New York Stock Exchange prices and net asset values per share as well as other information can be found at www.ftportfolios.com or by calling 1-800-988-5891.
FORWARD LOOKING STATEMENTS
Certain statements made in this news release that are not historical facts are referred to as “forward-looking statements” under the U.S. federal securities laws. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements due to numerous factors. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements, which generally are not historical in nature. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ from the historical experience of FTA and the funds managed by FTA and its present expectations or projections. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made. FTA, FHY and FSD undertake no responsibility to update publicly or revise any forward-looking statements.