The Board of Trustees of First Trust Dividend and Income Fund (NYSE: FAV), a closed-end fund managed by FTA, have approved the merger of FAV into First Trust High Income ETF, a series of First Trust Exchange-Traded Fund VI, and an actively managed exchange-traded fund (ETF) managed by FTA.
The merger has also been approved by the Board of Trustees of the Trust. FTHI will be the surviving fund.
Under the terms of the proposed transaction, which is expected to be tax-free, the assets of FAV would be transferred to, and the liabilities of FAV would be assumed by, FTHI, and shareholders of FAV would receive shares of FTHI with a value equal to the aggregate net asset value of the FAV shares held by them. It is currently expected that the transaction will be consummated no later than October 31, 2016, subject to requisite shareholder approvals 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 FAV and FTHI anticipate filing in the coming weeks. Upon completion of the proposed transaction, the investment objectives and strategies of FTHI will remain unchanged.
Bulldog Investors, the representative of the largest group of shareholders of FAV, has agreed to vote the shares of FAV for which it has the power to vote or direct the vote in favor of the proposed transaction subject to applicable law. Bulldog has also agreed to be bound by certain “standstill” covenants with respect to FAV and FTHI and the other First Trust closed-end funds.
FAV is a diversified, closed-end management investment company that seeks to provide a high level of current income. As a secondary objective, FAV seeks to provide capital appreciation. FAV seeks to achieve its investment objectives by investing at least 80 per cent of its managed assets in a diversified portfolio of dividend paying multi-cap equity securities, debt securities and senior secured floating rate loans that offer the potential for attractive income and/or capital appreciation. On an ongoing and consistent basis, FAV writes (sells) U.S. exchange-traded covered call options on a portion of FAV’s managed equity assets. FAV employs leverage, in the form of borrowings, in an effort to enhance FAV’s potential for income.
FTHI is an actively managed ETF that seeks to provide current income, with a secondary investment objective of capital appreciation. FTHI pursues these investment objectives by combining a stock portfolio with an index option strategy. FTHI invests primarily in US equity securities of all market capitalisations, favouring high dividend-paying common stocks. FTHI also utilises an options strategy in which it writes (sells) US exchange-traded covered call options on the S&P 500 index seeking to generate additional cash flow in the form of premiums on the options that may be distributed to shareholders on a monthly basis.
First Trust Advisors, the Fund’s investment advisor, along with its affiliate, First Trust Portfolios, 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 USD90 billion as of 29 February, 2016 through unit investment trusts, exchange-traded funds, closed-end funds, mutual funds and separate managed accounts