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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 11/26/2014)
Closing NAV1$16.38
Closing Share Price2$15.33
Discount to NAV6.41%
Total Managed Assets$197,410,786
Common Shares Outstanding8,458,869
Dividend FrequencyMonthly
Dividend Per Share Amt3$0.1200
Distribution Rate49.39%
Daily Volume24,603
Average 30-Day Daily Volume22,446
Closing Share Price 52-Week High/Low$16.35 / $14.74
Closing NAV 52-Week High/Low$17.63 / $16.26
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 11/26/2014)6
Total Net Assets with Leverage$197,410,786
Amount Attributable to Common Shares$138,560,786
Amount Attributable to Preferred Shares$0
Amount Attributable to Other Borrowings$58,850,000
Leverage (% of Total Net Assets)29.81%
Credit Quality Breakdown for Bonds (as of 10/31/2014)7
  Credit Quality Percent
AAA 0.54%
AA- 0.57%
BBB- 3.01%
BB+ 5.51%
BB 15.64%
BB- 11.28%
B+ 8.62%
B 17.42%
B- 15.13%
CCC+ 10.15%
CCC 3.50%
CCC- 1.66%
CC 1.91%
C 1.08%
D 0.81%
NR 3.17%
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 10/31/2014)5
Period Share Price NAV
3 Months 2.38% -0.55%
1 Year 6.99% 4.03%
3 Years 41.58% 35.51%
5 Years 92.37% 90.04%
Year to Date 4.85% 2.58%
Inception to Date -24.56% -15.72%
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 10/31/2014)5
Period Share Price NAV
3 Years 12.29% 10.66%
5 Years 13.98% 13.70%
Inception to Date -3.23% -1.97%
Asset Type Breakdown (as of 10/31/2014)7
  Asset Percent
Corporate Bonds and Notes 71.43%
Foreign Corporate Bonds and Notes 13.92%
Residential Mortgage-Backed Securities 5.69%
Manufactured Housing Loans 3.84%
Equity 1.94%
Senior Floating-Rate Loan Interests 1.90%
Commercial Mortgage-Backed Securities 1.23%
Collateralized Debt Obligations 0.05%
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

Investment return and market value of an investment in the fund will fluctuate. Shares, when sold, may be worth more or less than their original cost.

The debt securities in which the fund invests are subject to certain risks, including issuer risk, reinvestment risk, prepayment risk, credit risk, and interest rate risk. Issuer risk is the risk that the value of fixed-income securities may decline for a number of reasons which directly relate to the issuer. Reinvestment risk is the risk that income from the fund's portfolio will decline if the fund invests the proceeds from matured, traded or called bonds at market interest rates that are below the fund portfolio's current earnings rate. Prepayment risk is the risk that, upon a prepayment, the actual outstanding debt on which the fund derives interest income will be reduced. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and that the value of a security may decline as a result. Interest rate risk is the risk that fixed-income securities will decline in value because of changes in market interest rates. Residential mortgage-backed securities may have less potential for capital appreciation than comparable fixed-income securities due to the likelihood of increased prepayments of mortgages as interest rates decline.

The fund invests in non-investment grade debt instruments, commonly referred to as "high-yield securities". High yield securities are subject to greater market fluctuations and risk of loss than securities with higher ratings. Lower-quality debt tends to be less liquid than higher-quality debt.

The fund invests in securities of non-U.S. issuers which are subject to higher volatility than securities of U.S. issuers. Risks may be heightened for securities of companies located in, or with significant operations in, emerging market countries. Because the fund invests in non-U.S. securities, you may lose money if the local currency of a non-U.S. market depreciates against the U.S. dollar.

Use of leverage can result in additional risk and cost, and can magnify the effect of any losses.

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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