Angel Oak Financial Strategies Income Term Trust : Rights Offering & Prospectus

Angel Oak Financial Strategies Income Term Trust

Rights Offering

A Limited Opportunity for Common Shareholders

			Highlights of the Rights Offering
	Fund		Angel Oak Financial Strategies Income Term Trust (NYSE: FINS) (the "Trust")
	Subscription Period		September 20, 2021 (record date) to October 14, 2021 (expiration date) (unless extended)
	Offering Type		Transferable rights to subscribe for common shares
	Rights Symbol		NYSE: FINS RT
	Rights Ratio		One common share for every three rights held (1-for-3)
			➢ Opportunity for investors to buy common shares at a discount to market price
	Subscription Pricing		➢ Subscription price will be 92.5% of the average of the last reported sale price of a share on the
		NYSE on the expiration date and the four preceding trading days
			➢ Subscription price cannot be lower than 86% of NAV on the expiration date
			➢ Common shareholders on the record date will receive one right for each common share owned
			➢ Three rights are required to purchase one common share at the subscription price
			➢ The Trust will not issue fractional shares, so record date shareholders holding fewer than three
			common shares will be entitled to subscribe for one full common share
	Subscription Terms		➢ Record date common shareholders who fully exercise all rights initially issued to them are
			permitted to subscribe for additional common shares that were not subscribed for by other
			record date common shareholders at the subscription price ("over-subscription privilege").
			Over-subscription shares may only be acquired if there are unexercised rights. If over-
			subscription requests exceed the number of available shares (from unexercised rights), then
			the available shares will be allocated pro-rata
			➢ The proceeds of the offer are anticipated to be invested in attractive opportunities for
			enhancement of the Trust's distributions and/or net asset value ("NAV") appreciation potential
	Offering Rationale		➢ The Trust will seek to increase its diversification by expanding the non-bank financial debt
		and strategic allocations in an effort to reduce risk and volatility and enhance the Trust's
			returns as the sector offers non-correlated income from a niche investment universe which can
			provide excess yield on a risk-adjusted basis

Contact your financial adviser for more information

PLEASE READ THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND PROSPECTUS FOR MORE INFORMATION. These "Highlights of the Rights Offering" are qualified in their entirety by reference to the information included in the accompanying prospectus supplement and prospectus. Investors should consider the Trust's investment objectives, strategies, risks, and expenses before investing. The accompanying prospectus supplement and prospectus contain this and other information about the Trust, including risk factors that should be carefully considered before participating in the offer. The prospectus supplement and prospectus should be read carefully before investing. Although the prospectus supplement and prospectus accompany this brochure, you can also request a prospectus supplement and prospectus, at no charge, by calling the Information Agent at 1-888-293-6908.

(NOT PART OF THE PROSPECTUS)

Angel Oak Financial Strategies Income Term Trust (FINS)

WHY SHOULD I EXERCISE MY RIGHTS?

• The Advisor believes financial sector credit offers investors attractive investment opportunities
• • Niche market opportunities in community bank debt and small-capnon-bank financials could provide excess yield relative to broader corporate credit
  • Thoughtful security selection may offer opportunities to enhance total return as sector consolidation rebounds with economic recovery
• The Advisor believes targeting investments in the highly regulated financial sector creates protections for investors
• • Investment grade sector with high regulatory oversight and historically low default rates
  • Pandemic response has generally resulted in higher capital, reserve and liquidity levels

Commercial Bank Failure Rate1

5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%		1939														1967														1995
1935	1937	1941	1943	1945	1947	1949	1951	1953	1955	1957	1959	1961	1963	1965	1969	1971	1973	1975	1977	1979	1981	1983	1985	1987	1989	1991	1993	1997	1999	2001	2003	2005	2007	2009	2011	2013	2015	2017	2019	2021
									Failure Rate				Average Since 1935				Average Since 1980

Insurance Sector Net Annualized Impairment Rates2

2.50%

2.00%

1.50%

1.00%

0.50%

0.00%

aaa

aa

a

bbb

bb

b

ccc and below

Total

• The Advisor believes the portfolio's low duration profile helps insulate the Trust from rising interest rates3
• • The Trust has an average portfolio duration of 2.8 years
  • Asset class duration has historically been uncorrelated to interest rates
  • The Trust seeks an attractive distribution rate with limited interest rate sensitivity
• Additional capital may allow the Trust to diversify the portfolio and seek to reduce risk
• • Expanding the non-bank financial debt and strategic allocations could reduce risk and volatility of the portfolio
  • Non-bankfinancial investment opportunities across insurance, asset managers, financial services, REITs and BDCs4 could provide excess yield on a risk-adjusted basis
• The potential increase in allocation to strategic investments may offer potential tax advantages for investors
• • Most common and preferred equity dividends qualify as qualified dividend income, or are QDI-eligible, meaning dividends are taxed at the lower capital gains tax rate (typically 15%-20%) rather than as ordinary income

Source: MS Research and KBW Research

Notes:

1. FDIC as of 6/30/21
2. A.M. Best Company, Inc. as of June 12, 2019. US Property / Casualty and Life / Health, 2001 - 2018. 10 year holding company impairment rates annualized
3. Duration is a measure of the sensitivity of the price to a change in interest rates
4. Real estate investment trusts (REITs) and business development companies (BDCs)

Angel Oak Financial Strategies Income Term Trust (FINS)

ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST - OVERVIEW

• Angel Oak Financial Strategies Income Term Trust is a diversified, closed end-management investment company registered under the Investment Company Act of 1940
• The common shares of the Trust have an aggregate market cap of ~$274mm as of June 30, 2021
• The Trust seeks current income with a secondary objective of total return, by utilizing a financial sector debt-centric strategy, which exhibits low historical correlations to other areas of the market
• The Trust provides access to a niche market segment and focuses on high quality credit, with at least 50% of the Trust's portfolio rated investment grade or unrated but judged to be of investment grade quality by Angel Oak Capital Advisors
• The Trust is managed by a seasoned portfolio management team with extensive expertise in actively managing financial sector debt investments
• The Trust benefits from Angel Oak's extensive resources, including the proprietary credit and default risk model, BankSURFTM
• The Trust is advised by Angel Oak Capital Advisors, which has an AUM of $13.1bn as of June 30, 2021 with investments ranging across alternative credit assets including financials debt, RMBS, CMBS and CLOs1

Recent Total Returns (%)2

(%)

16						14.4
12	10.7					10.8
8	5.8
4
0
-1.6			-0.3
(4)
YTD 2021					1 Year
			FINS (Market Price)		FINS (NAV)			Index 3

	Portfolio by Sector4		Credit Quality4
	Common	Cash and		AA	AAA	A
Preferred	Equity		0.3%
Equivalents		0.5%	4.8%
Equity	0.6%	Other
0.3%	Unrated
2.2%			0.9%
				20.3%

Non-bank
Financials	BB
16.6%
3.3%

BBB

70.8%

Bank Debt

79.4%

Source: Company information

Notes:

1. Residential mortgage-backed securities (RMBS), commercial mortgage-backed securities (CMBS), and collateralized loan obligations (CLOs)
2. Data as of June 30, 2021. Past performance is no guarantee of future results. Investment return and net asset value and market price of common shares will fluctuate so that common shares, when sold, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
3. Index represents Bloomberg Barclays U.S. Aggregate Bond Index
4. Data as of June 30, 2021

Angel Oak Financial Strategies Income Term Trust (FINS)

HOW CAN I EXERCISE MY RIGHTS?

To exercise your rights, contact your broker, custodian or trust officer who can forward your instructions on your behalf. If you do not have a broker, custodian or trust officer, you should complete the subscription certificate and deliver it to the subscription agent, together with your payment, at one of the locations indicated on the subscription certificate or in the accompanying prospectus supplement and prospectus. For more information, contact the Trust's Information Agent, Georgeson, at 1-888-293-6908. Record date shareholders that decide not to exercise their rights may sell their rights as discussed below under "May I Sell My Rights?"

MAY I SELL MY RIGHTS?

Yes. The rights will be admitted for trading on the NYSE under the symbol "FINS RT." Contact your broker, custodian or trust officer who can arrange for the sale of rights on your behalf. Sellers of rights through brokers, custodians or trust officers may incur traditional commissions payable by the seller. If you do not have a broker, custodian or trust officer, indicate your instructions on the subscription certificate and deliver it to the subscription agent. The rights are expected to trade on the NYSE through October 13, 2021, one business day prior to the expiration date of the offer, unless extended. The Trust cannot assure record date shareholders that a market for the rights will develop or that any minimum sale price can be obtained for the rights.

PLEASE READ THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND PROSPECTUS FOR MORE INFORMATION

These "Highlights of the Rights Offering" are qualified in their entirety by reference to the information included in the accompanying prospectus supplement and prospectus. Investors should consider the Trust's investment objective, risks, and charges and expenses before investing. The accompanying prospectus supplement and prospectus contains this and other information about the Trust, including risk factors that should be carefully considered before participating in the offer. The common shares may decline in value or even lose all of their value. The accompanying prospectus supplement and prospectus should be read carefully before investing.

CERTAIN RISKS. Investing in the Trust involves risks, including the risk that investors may receive little or no return on their investment or may lose part or all of their investment. Below is a summary of certain principal risks of investing in the Trust. For a more complete discussion of the risks of investing in the Trust, see "Risks Relating to the Offer" in the prospectus supplement and "Risks" in the prospectus. Investors should consider carefully the principal risks before investing in the Trust. An investment in the Trust is subject to investment and market risk, including the possible loss of an investor's entire investment. Before making an investment decision, a prospective investor should (i) consider the suitability of this investment with respect to his or her investment objectives and personal situation and (ii) consider factors such as his or her personal net worth, income, age, risk tolerance and liquidity needs.

TAXATION. The Trust has elected to be treated and has qualified, and intends to continue to qualify annually to be treated for U.S. federal income tax purposes, as a regulated investment company ("RIC") under Subchapter M of the Internal Revenue Code of 1986, as amended. Accordingly, the Trust generally will not pay corporate-level federal income taxes on any net ordinary income or capital gains that it currently distributes to its common shareholders. To qualify and maintain its qualification as a RIC for U.S. federal income tax purposes, the Trust must meet specified source-of-income and asset diversification requirements and distribute annually at least 90% of its net ordinary income and realized net short-term capital gains in excess of realized net long-term capital losses, if any. See "U.S. Federal Income Tax Considerations" in the accompanying prospectus supplement and prospectus.

DILUTION Record date shareholders who do not fully exercise their rights will, at the completion of the offer, own a smaller proportional interest in the Trust than owned prior to the offer. The completion of the offer will result in immediate voting dilution for such common shareholders. Further, both the sales load and the expenses associated with the offer will immediately reduce the net asset value of each outstanding common share. In addition, if the subscription price is less than the net asset value per common share as of the expiration date, the completion of this offer will result in an immediate dilution of the net asset value per common share for all existing common shareholders (i.e., will cause the net asset value per common share of the Trust to decrease). It is anticipated that existing common shareholders will experience immediate dilution even if they fully exercise their rights. Such dilution is not currently determinable because it is not known how many common shares will be subscribed for, what the net asset value per common share or market price of the Trust's common shares will be on the expiration date or what the subscription price per common share will be. Any such dilution could be substantial. If the subscription price is substantially less than the current net asset value per common share, this dilution could be substantial. The Trust will pay expenses associated with the offer, estimated at approximately $3,222,361, in connection with the offer. In addition, the Trust has agreed to pay a sales load equal to 3.75% of the subscription price per common share for each common share issued pursuant to the exercise of rights and the over-subscription privilege. The Trust, not investors, pays the sales load, which is ultimately thus borne by all common shareholders. All of the costs of the offer will be borne by the Trust's common shareholders. See "Summary of Fees and Expenses" in the accompanying prospectus supplement and prospectus for more information.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained herein constitute forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause the Trust's actual results or level of performance to be materially different from any future results or level of performance expressed or implied by such forward-looking statements. Such factors include, among others, those listed under "Risk Relating to the Offer" in the prospectus supplement and "Risks" in the prospectus. As a result of these and other factors, the Trust cannot give you any assurances as to its future results or level of performance, and neither the Trust nor any other person assumes responsibility for the accuracy and completeness of such statements. The Trust undertakes no obligation to publicly update or revise any forward-looking statements made herein.

UBS Securities LLC is acting as Dealer Manager in connection with the Offer

Information Agent

Georgeson

1-888-293-6908

(NOT PART OF THE PROSPECTUS)

September 20, 2021

PROSPECTUS SUPPLEMENT

(To prospectus dated September 9, 2021)

5,076,333 Shares

ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST

Issuable Upon Exercise of Transferable Subscription Rights to Acquire Common Shares

We are issuing transferable subscription rights (the "Rights") to our Common Shareholders (as defined below) of record as of the close of business on September 20, 2021 (the "Record Date"), to purchase additional common shares of beneficial interest, par value $0.001 per share (the "Common Shares"). The holders of Common Shares (the "Common Shareholders") of record on the Record Date ("Record Date Shareholders") will receive one Right for each outstanding Common Share owned on the Record Date. The Rights entitle the holders to purchase one new Common Share for every three Rights held (1 for 3). Record Date Shareholders who fully exercise their Rights will be entitled to subscribe, subject to certain limitations and subject to allotment, for additional Common Shares covered by any unexercised Rights. Any Record Date Shareholder that owns fewer than three Common Shares as of the close of business on the Record Date is entitled to subscribe for one full Common Share in the offering. See "Description of the Rights Offering" for a complete discussion of the terms of the offering.

The offer will expire at 5:00 p.m., New York City time, on October 14, 2021, unless extended as described in this prospectus supplement (the "Expiration Date"). The subscription price per Common Share (the "Subscription Price") will be determined based upon a formula equal to 92.5% of the average of the last reported sales price of a Common Share on the NYSE on the Expiration Date, as such date may be extended from time to time, and each of the four (4) immediately preceding trading days (the "Formula Price"). If, however, the Formula Price is less than 86% of the net asset value ("NAV") per Common Share at the close of trading on the NYSE on the Expiration Date, the Subscription Price will be 86% of the Fund's NAV per Common Share at the close of trading on the NYSE on the Expiration Date.

Rights holders will not know the Subscription Price at the time of exercise and will be required initially to pay for both the Common Shares subscribed for pursuant to the primary subscription and, if eligible, any additional Common Shares subscribed for pursuant to the over-subscription privilege at the estimated Subscription Price of $16.87 per Common Share and, except in limited circumstances, will not be able to rescind their subscription.

Angel Oak Financial Strategies Income Term Trust (the "Fund") is a non-diversified,closed-end management investment company. The Fund seeks current income with a secondary objective of total return. There can be no assurance that the Fund will achieve its investment objective. Under normal circumstances, the Fund will invest at least 80% of the value of its net assets plus the amount of any borrowings for investment purposes in securities of financial institutions, which may include, but are not limited to, banks, thrifts, finance companies, business development companies ("BDCs") that invest primarily in loans, commercial mortgage and residential mortgage real estate investment trusts ("REITs"), brokerage and advisory firms, insurance companies and financial holding companies. In pursuing its investment objective, the Fund invests primarily in debt issued by financial institutions, including subordinated debt ("sub-debt"), unrated debt, senior debt and high yield securities (also known as "junk bonds"). The Fund may also invest in common equity, preferred equity, convertible securities, warrants and trust-preferred securities ("TruPS") of these institutions.