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| Investment Objective/Strategy -
First Trust/FIDAC Mortgage Income Fund is a diversified, closed-end management investment company. The Fund's primary investment objective is to seek a high level of current income. As a secondary objective, the Fund will seek to preserve capital. The Fund will pursue its objectives by investing primarily in mortgage-backed securities representing part ownership in a pool of either residential or commercial mortgage loans that, in the opinion of the Fund's investment sub-advisor, offer an attractive combination of credit quality, yield and maturity. |
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| There can be no assurance that the Fund's investment objectives will be achieved. |
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Fund Overview
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| Ticker |
FMY |
| Fund Type |
Fixed Income |
| Investment Advisor |
First Trust Advisors L.P. |
| Portfolio Manager/Sub-Advisor |
Fixed Income Discount Advisory Company |
| Investor Servicing Agent |
BNY Mellon Investment Servicing (US) Inc. |
| CUSIP |
33734E103 |
| Fiscal Year-End |
10/31 |
| Exchange |
NYSE |
| Inception |
5/25/2005 |
| Inception Price |
$20.00 |
| Inception NAV |
$19.10 |
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| Share Price and NAV History (Since Inception) |
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Past performance is not indicative of future results.
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Current Fund Data (as of 9/1/2010)
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| Closing Share Price |
$20.08 |
| Closing NAV |
$19.10 |
| Premium to NAV |
5.13% |
| Total Managed Assets |
$94,427,784 |
| Common Shares Outstanding |
4,052,014 |
| Dividend Frequency |
Monthly |
| Dividend per Share Amt1 |
$0.1600 |
| Distribution Rate2 |
9.56% |
| Daily Volume |
14,593 |
| Average 30-Day Daily Volume |
28,633 |
| Closing Share Price 52-Week High/Low |
$20.65 / $17.30 |
| Closing NAV 52-Week High/Low |
$20.30 / $18.91 |
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Expense Ratios (as of 4/30/2010)
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| Annual Expenses |
Percent of
Net Assets |
Percent of
Managed
Assets |
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| Management Fees |
1.25% |
1.00% |
| Other Expenses |
0.84% |
0.67% |
| Total Operating Expenses |
2.09% |
1.67% |
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| Leverage Costs |
0.05% |
0.04% |
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| Total Annual Expenses |
2.14% |
1.71% |
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Leverage costs include interest, fees and any upfront/offering costs associated with borrowings by the Fund.
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Leverage Information (as of
9/1/2010
)3
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| Total Net Assets with Leverage |
$94,427,784 |
| Amount Attributable to Common Shares |
$77,404,784 |
| Amount Attributable to Preferred Shares |
$0 |
| Amount Attributable to Other Borrowings |
$17,023,000 |
| Leverage (% of Total Net Assets) |
18.03% |
| Credit Quality (as of 7/31/2010)5 |
| Credit Quality |
Percent (%) |
| AAA |
64.60 |
| AA+ |
1.50 |
| AA |
6.00 |
| AA- |
3.60 |
| A |
0.30 |
| A- |
0.40 |
| BBB+ |
0.50 |
| BBB |
2.90 |
| BBB- |
2.00 |
| BB |
1.80 |
| BB- |
4.80 |
| B+ |
1.80 |
| CCC |
8.70 |
| CCC- |
1.10 |
The credit quality information presented reflects the ratings assigned by one or more nationally recognized statistical rating organizations (NRSROs). For situations in which a security is rated by more than one NRSRO and ratings are not equivalent, the ratings are averaged.
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| Cumulative Total Returns
(as of 7/31/2010)4
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| Period |
Share Price (%) |
NAV (%) |
| 3 Months |
8.26 |
-1.92 |
| 1 Year |
22.82 |
15.36 |
| 3 Years |
52.73 |
32.92 |
| 5 Years |
45.58 |
45.68 |
| Year to Date |
12.39 |
3.00 |
| Inception to date |
41.07 |
46.14 |
| Calendar Year Returns
(as of 12/31/2009)4
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| Period |
Share Price (%) |
NAV (%) |
| 2006 |
12.33 |
5.19 |
| 2007 |
9.62 |
7.69 |
| 2008 |
4.63 |
-5.68 |
| 2009 |
19.84 |
32.32 |
| Average Annual Returns
(as of 7/31/2010)4
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| Period |
Share Price (%) |
NAV (%) |
| 3 Years |
15.16 |
9.95 |
| 5 Years |
7.80 |
7.82 |
| Inception to date |
6.86 |
7.59 |
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Asset Classification |
Percent (%) |
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U.S. Govt. Agency & Non-Agency Collateralized Mortgage Obligations |
73.20 |
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U.S. Government Agency MBS |
26.80 |
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Security Type |
Percent (%) |
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Fixed Rate Securities |
55.20 |
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Adjustable Rate Securities |
30.80 |
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Interest Only Securities |
14.00 |
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| Footnotes
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| 1 |
Most recent distribution paid or declared through today's date. Subject to change in the future. |
| 2 |
Distribution rates are calculated by annualizing the most recent distribution paid or declaration through today's date and then dividing by the most recent market price. Any distribution adjustment will not be reflected until after the declaration date for the next distribution. The distribution rate may include realized short-term capital gains and/or a return of capital. Final determination of the source and tax status of all distributions paid in the current year will be made after year-end. |
| 3 |
The Fund utilizes leverage through the use of reverse repurchase agreements. A reverse repurchase agreement, although structured as a sale and repurchase obligation, acts as a financing under which the Fund pledges its assets as collateral to secure a short-term loan. Generally, the other party to the agreement makes the loan in an amount equal to a percentage of the market value of the pledged collateral. At the maturity of the reverse repurchase agreement, the Fund will be required to repay the loan and will correspondingly receive back its collateral. While used as collateral, the assets continue to pay principal and interest which are for the benefit of the Fund. |
| 4 |
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 does not reflect sales load. Past performance is not indicative of future results. |
| 5 |
Information is based upon trade date plus one recording of security transactions. Therefore, trades on the last day of the period are not reflected. |
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Risk Considerations
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The Fund is subject to various risks, including: Investment and Market Risk, Management Risk, Credit Risk, Prepayment Risk, Reinvestment Risk, Interest Rate Risk, Floating Rate CMOs/Inverse Floating Rate CMOs Risk, Tax Risk Relating to Investments in Certain REMICs, Bond Market Risk, Economic Sector Risk, Inflation Risk, U.S. Government Securities Risk, Government Agency Risk, Asset-Backed Securities Risk, Market Discount From Net Asset Value, Leverage Risk, Interest Rate Transactions Risk, Derivatives Risk, Illiquid/Restricted Securities Risk, Portfolio Turnover Risk, Market Disruption Risk, Certain Affiliations, Anti-Takeover Provisions, Secondary Market for the Fund's Shares.
Subordinated Debt Risk: The Fund may invest a portion of its Managed Assets in subordinated classes of MBS, including debt obligations issued by private originators or issuers backed by residential mortgage loans and multi-class debt or pass-through or paythrough securities backed by a mortgage loan or pool of mortgage loans on commercial real estate. Such subordinated classes are subject to a greater degree of non-payment risk than are senior classes of the same issuer or agency.
Prepayment Risk: If borrowers prepay their mortgage loans at rates that are faster than expected, this results in prepayments that are faster than expected on MBS. These faster than expected prepayments may adversely affect the Fund's profitability, particularly if the Fund is forced to invest prepayments it receives in lower yielding securities. Moreover, the Fund may also acquire MBS that are less affected by prepayments. While the Fund will seek to minimize prepayment risk to the extent practical, the Fund must balance prepayment risk against other risks and the potential returns of each investment in selecting investments. No strategy can completely insulate the Fund from prepayment risk.
Interest Rate Risk: The Fund may also invest in MBS which are interest-only ("IO") securities and principal-only ("PO") securities.
Generally speaking, when interest rates are falling and prepayment rates are increasing, the value of a PO security will rise and the value
of an IO security will fall. Conversely, when interest rates are rising and prepayment rates are decreasing, generally the value of a PO
security will fall and the value of an IO security will rise.
The risks of investing in the Fund are spelled out in the prospectus, shareholder report and other regulatory filings.
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