First Trust/Highland Capital Fund Floating Rate Income Fund II completes merger and other matters

TORONTO, Aug. 18 /CNW/ - First Trust/Highland Capital Floating Rate Income Fund ("Fund I") and First Trust/Highland Capital Floating Rate Income Fund II ("Fund II" and together with Fund I, the "Funds") completed the previously announced merger today resulting in combined assets under management of Fund II of $28.9 million. Pursuant to the merger, Fund II acquired all of the assets of Fund I and issued units to Fund I in consideration therefor. The units of Fund II issued pursuant to the merger were distributed to unitholders of Fund I upon the redemption of their units. The units began trading on the Toronto Stock Exchange today. Fund I was terminated immediately after the merger. The exchange of units of Fund I for units of Fund II occurred at an exchange ratio of 0.449719 units.

In addition to the foregoing, the declaration of trust of Fund II was amended and restated to (i) change the redemption policy of the Fund to, among other things, cap redemptions in 2010 and 2011; (ii) amend the termination provisions of the Fund and (iii) allow for certain additional securities offerings, all as more fully described in the information circular relating to the meetings dated June 15, 2009 a copy of which is available at www.sedar.com.

First Trust/Highland Capital Floating Rate Senior Loan Trust (the "SLT"), the fund to which Fund II gains exposure pursuant to a forward purchase agreement, also announced that its declaration of trust was amended and restated today to amend its investment restrictions, among other things. A copy of the amended and restated declaration of trust is available at www.sedar.com.

Also effective as of today, at the request of the counterparty, the forward currency hedge between the counterparty and Fund II was amended so that it will terminate on November 13, 2009. In addition, the SLT announced a similar change to its forward currency hedge. FT (NSI) Management Co., the manager of Fund II and the SLT, is seeking alternatives to hedge its foreign currency exposure but there can be no assurance that alternative arrangements will be made on substantially similar terms or at all.

Contacts

regarding the foregoing
please contact: Fraser Howell
President
First Defined Portfolio Management Co. at (416) 865-8054