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First Trust Strategic High Income Fund II (FHY)
  • Important FHY Information
    Effective October 3, 2011, First Trust Strategic High Income Fund II (FHY) acquired the assets and assumed the liabilities of First Trust Strategic High Income Fund (FHI) and First Trust Strategic High Income Fund III (FHO) in exchange for shares of FHY pursuant to a reorganization. In addition, immediately after the respective reorganization, FHY effected a reverse split of its outstanding shares in which three outstanding FHY shares were converted into one FHY share. All share and per share data set forth below (including for periods prior to the reverse share split) have been adjusted to reflect the reverse share split. The results of FHI and FHO are only included from October 3, 2011, the effective date of the reorganizations.
Investment Objective/Strategy - First Trust Strategic High Income Fund II is a diversified, closed-end management investment company. The Fund's primary investment objective is to seek a high level of current income. The Fund seeks capital growth as a secondary objective. The Fund will seek 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).
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerFHY
Fund TypeHigh Yield Bond
Portfolio Manager/Sub-AdvisorBrookfield Investment Management Inc.
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBNY Mellon Investment Servicing (US) Inc.
CUSIP337353304
Fiscal Year-End10/31
ExchangeNYSE
Inception3/28/2006
Inception Price$60.00
Inception NAV$57.30
Current Fund Data (as of 8/22/2014)
Closing NAV1$17.27
Closing Share Price2$15.72
Discount to NAV8.98%
Total Managed Assets$197,397,187
Common Shares Outstanding8,458,869
Dividend FrequencyMonthly
Dividend Per Share Amt3$0.1200
Distribution Rate49.16%
Daily Volume28,136
Average 30-Day Daily Volume33,835
Closing Share Price 52-Week High/Low$16.35 / $14.95
Closing NAV 52-Week High/Low$17.63 / $16.94
Expense Ratios (as of 4/30/2014)
Annual ExpensesPercent of
Net Assets
Percent of
Managed
Assets
Management Fees1.24%0.91%
Other Expenses
0.65%
0.47%
Total Operating Expenses1.89%1.38%
 
Leverage Costs0.57%0.42%
 
Total Annual Expenses2.46%1.80%
 
Leverage costs include interest, fees and any upfront/offering costs associated with borrowings by the Fund.
Leverage Information (as of 8/22/2014)6
Total Net Assets with Leverage$197,397,187
Amount Attributable to Common Shares$146,047,187
Amount Attributable to Preferred Shares$0
Amount Attributable to Other Borrowings$51,350,000
Leverage (% of Total Net Assets)26.01%
Credit Quality Breakdown for Bonds (as of 6/30/2014)7
  Credit Quality Percent
AAA 0.54%
AA- 0.55%
A- 1.07%
BBB- 2.46%
BB+ 5.00%
BB 11.34%
BB- 13.65%
B+ 7.76%
B 16.31%
B- 17.20%
CCC+ 14.04%
CCC 2.37%
CCC- 2.15%
CC 1.31%
C 1.03%
D 0.85%
NR 2.37%
The credit quality and ratings information presented above reflect the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs), including Standard & Poor's Rating Group, a division of the McGraw Hill Companies, Inc., Moody's Investors Service, Inc., Fitch Ratings, or a comparably rated NRSRO. For situations in which a security is rated by more than one NRSRO and the ratings are not equivalent, the highest ratings are used. Sub-investment grade ratings are those rated BB+/Ba1 or lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The credit ratings shown relate to the credit worthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Share Price and NAV History (Since Inception)
Past performance is not indicative of future results.
% Premium/Discount (Since Inception)
Cumulative Total Returns (as of 7/31/2014)5
Period Share Price NAV
3 Months -0.74% 0.95%
1 Year 7.30% 8.55%
3 Years 36.97% 35.02%
5 Years 99.91% 104.63%
Year to Date 2.42% 3.15%
Inception to Date -26.30% -15.25%
Calendar Year Returns (as of 12/31/2013)5
Period Share Price NAV
2007 -30.48% -22.81%
2008 -41.89% -36.77%
2009 -8.09% -17.06%
2010 11.72% 21.12%
2011 21.50% 13.41%
2012 19.41% 18.71%
2013 5.62% 10.63%
Average Annual Returns (as of 7/31/2014)5
Period Share Price NAV
3 Years 11.06% 10.53%
5 Years 14.86% 15.40%
Inception to Date -3.59% -1.96%
Asset Type Breakdown (as of 6/30/2014)7
  Asset Percent
Corporate Bonds and Notes 71.82%
Foreign Corporate Bonds and Notes 12.35%
Residential Mortgage-Backed Securities 6.45%
Manufactured Housing Loans 3.68%
Senior Floating-Rate Loan Interests 2.47%
Equity 1.95%
Commercial Mortgage-Backed Securities 1.24%
Collateralized Debt Obligations 0.04%
Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's common shares outstanding.
2 Fund shares are purchased and sold on an exchange at their share price rather than net asset value (NAV), which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount).
3 Most recent distribution paid or declared through today's date. Subject to change in the future.
4 Distribution rates are calculated by annualizing the most recent distribution paid or declared through today's date and then dividing by the most recent market price. The distribution consists of the sum of net investment income, net realized short-term capital gains, net realized long-term capital gains, and return of capital. Distribution rates may vary. Any distribution adjustment will not be reflected until after the declaration date for the next distribution. See the fund's 19a-1 Notices, if any, located under the "News & Literature" section of the website for estimates of distribution sources. Final determination of the source and tax status of all distributions paid in the current year will be made after year-end.
5 Total return is the combination of reinvested dividend income and reinvested capital gains distributions, at prices obtained by the Dividend Reinvestment Plan, if any, and changes in the NAV and Share Price. The NAV total return takes into account the fund's total annual expenses and does not reflect sales load. Past performance is not indicative of future results.
6 Leverage is a technique where a closed-end fund's manager borrows assets at one rate and invests the proceeds from the borrowed assets at another rate, seeking to increase yield and total return. Use of leverage can result in additional risk and cost, and can magnify the effect of any losses.
7 Market value information used in calculating the percentages is based upon trade date plus one recording of transactions, which can differ from regulatory financial reports (Forms N-CSR and N-Q) that are based on trade date recording of security transactions. Holdings are subject to change.

Risk Considerations

The Fund is subject to various risks, including: Investment and Market Risk, Management Risk, Sub-Advisor Risk, Value Investing Risk, Below-Investment Grade Securities Risk, Fixed-Income Securities Risk, Issuer Risk, Interest Rate Risk, Reinvestment Risk, Prepayment Risk, Mortgage-Backed Securities risk, Asset-Backed Securities Risk, Convertible Securities Risk, Municipal Securities Risk, Non-U.S. Securities Risk, Non-U.S. Government Securities Risk, Currency Risk, Distressed Securities Risk, Equity Securities Risk, Preferred Stock Risk, Inflation/Deflation Risk, Market Discount From Net Asset Value Risk, Leverage Risk, Derivatives Risk, Portfolio Turnover Risk, Market Disruption Risk, Illiquid/Restricted Securities Risk, Certain Affiliations, Anti-Takeover Provisions, and Secondary Market for the Fund's Shares.

Below-investment grade securities are commonly referred to as "high-yield" or "junk" bonds and are considered speculative with respect to the issuer's capacity to pay interest and repay principal and are susceptible to default or decline in market value due to adverse economic and business developments. The market values for high-yield securities tend to be very volatile, and these securities are less liquid than investment grade debt securities. For these reasons, your investment in the Fund is subject to the following specific risks: (a) increased price sensitivity to changing interest rates and to a deteriorating economic environment; (b) greater risk of loss due to default or declining credit quality; (c) adverse company specific events are more likely to render the issuer unable to make interest and/or principal payments; and (d) a negative perception of the high-yield market may depress the price and liquidity of high-yield securities.

The risks of investing in the Fund are spelled out in the prospectus, shareholder report and other regulatory filings.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
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