https://www.sec.gov/Archives/edgar/data/914243/000091424319000040/tfgtarb-mergerarbreorganiz.htm 1 tfgtarb-mergerarbreorganiz.htm 497
February 15, 2019
TOUCHSTONE FUNDS GROUP TRUST
Touchstone Arbitrage Fund
Touchstone Merger Arbitrage Fund
(the "Funds")
Supplement to the Prospectus, Summary Prospectuses, and Statement of Additional Information
dated January 30, 2019
IMPORTANT NOTICE REGARDING CHANGES TO THE FUNDS
Proposed Reorganization
At a meeting of the Board of Trustees (the "Board") of Touchstone Funds Group Trust (the "Trust") held on February 12, 2019, Touchstone Advisors, Inc. ("Touchstone") proposed, and the Board approved, the reorganization of the Touchstone Merger Arbitrage Fund (the "Merger Arbitrage Fund"), a series of the Trust, into the Touchstone Arbitrage Fund (the "Arbitrage Fund" or the "Acquiring Fund"), also a series of the Trust (the "Reorganization") (each, a "Fund" and together, the "Funds"). In making its decision, the Board considered the recommendation of Touchstone, the Funds’ investment advisor, that the Reorganization was advisable to provide potential efficiencies and economies of scale for the Funds. The Reorganization does not require approval by shareholders.
Pursuant to an Agreement and Plan of Reorganization, the Merger Arbitrage Fund will transfer all of its assets and liabilities to the Acquiring Fund. Immediately after the Reorganization, shareholders of the Merger Arbitrage Fund will own shares of a substantially similar share class of the Acquiring Fund that are equal in value to the shares of the Merger Arbitrage Fund that they held immediately prior to the closing of the Reorganization (although the number of shares and the net asset value per share may be different). Shareholders of the Merger Arbitrage Fund will not pay any sales load, commission, or other similar fee in connection with the Acquiring Fund shares received in the Reorganization. Expenses associated with the Reorganization will be borne by Touchstone.
Effective as of the close of business on May 8, 2019, all classes of the Merger Arbitrage Fund will be closed to investments by new investors, except that the Merger Arbitrage Fund may continue to accept new investors from certain existing institutional relationships and systematic contributions from defined contribution and similar plans. It is anticipated that the Reorganization will be completed as of the close of business on or about May 10, 2019. It is also intended that the Reorganization will qualify as a tax-free reorganization under the Internal Revenue Code of 1986, as amended, which means that generally no gain or loss will be recognized for federal income tax purposes by the Merger Arbitrage Fund or its shareholders as a direct result of the Reorganization. However, on or about May 8, 2019, the Merger Arbitrage Fund may make net investment income capital gains distributions to shareholders. Shareholders of the Merger Arbitrage Fund should consult their tax advisors regarding the effect of the Reorganization and income and capital gains distributions on their particular tax situation.
Change in Name, Sub-Advisor, Investment Goal & Investment Strategy of the Arbitrage Fund
At the same Board meeting, the Board approved the following changes to the Arbitrage Fund, which will take effect on or about May 11, 2019 following the Reorganization: a name change for the Arbitrage Fund to the Touchstone Credit Opportunities II Fund ("Credit Opportunities II Fund"), the appointment of Ares Capital Management II LLC ("Ares") as sub-advisor to the Fund, and the changes to the Fund's investment goal and principal investment strategy as detailed herein (together, the "Repurposing"). Seth Brufsky, Jason Duko, and Kapil Singh will serve as the Credit Opportunities II Fund's portfolio managers upon the appointment of Ares on or about May 11, 2019. The Fund's current sub-advisor, Longfellow Investment Management ("Longfellow"), will continue to serve as sub-advisor through May 10, 2019. The Repurposing does not require shareholder approval.
Effective May 11, 2019, all references to Longfellow as sub-advisor of the Fund in the summary prospectus, prospectus, and Statement of Additional Information ("SAI") are deleted and replaced with Ares and all references to the Touchstone Arbitrage Fund are deleted and replaced with Touchstone Credit Opportunities II Fund. Ares also serves as sub-
advisor to the Touchstone Credit Opportunities Fund, a series of Touchstone Strategic Trust. As the sub-advisor, Ares will make investment decisions for the Credit Opportunities II Fund and will also ensure compliance with the Fund's investment policies and guidelines. As of December 31, 2018, Ares managed approximately $131 billion in assets.
The following changes to the Fund's investment goal and principal investment strategy will be made in connection with the Repurposing, which will take effect on or about May 11, 2019 following the Reorganization:...
