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First Trust High Income Long/Short Fund (FSD)
Investment Objective/Strategy - First Trust High Income Long/Short Fund is a diversified, closed-end management investment company. The Fund's primary investment objective is to provide current income. The Fund has a secondary objective of capital appreciation. The Fund will seek to achieve its investment objectives by investing, under normal market conditions, a majority of its assets in a diversified portfolio of U.S. and foreign (including emerging markets) high-yield corporate fixed-income securities of varying maturities that are rated below-investment grade at the time of purchase. The Fund's investments in below-investment grade fixed-income 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.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerFSD
Fund TypeHigh Yield Bond
Investment AdvisorFirst Trust Advisors L.P.
Portfolio Manager/Sub-AdvisorMacKay Shields LLC
Investor Servicing AgentBNY Mellon Investment Servicing (US) Inc.
CUSIP33738E109
Fiscal Year-End10/31
ExchangeNYSE
Inception9/27/2010
Inception Price$20.00
Inception NAV$19.10
Current Fund Data (as of 7/23/2014)
Closing NAV1$19.99
Closing Share Price2$17.87
Discount to NAV10.61%
Total Net Assets$720,700,917
Common Shares Outstanding36,056,159
Dividend FrequencyMonthly
Dividend Per Share Amt3$0.1065
Distribution Rate47.15%
Daily Volume88,795
Average 30-Day Daily Volume75,634
Closing Share Price 52-Week High/Low$18.16 / $16.93
Closing NAV 52-Week High/Low$20.18 / $18.94
Expense Ratios (as of 4/30/2014)
Annual ExpensesPercent of
Net Assets
Percent of
Managed
Assets
Management Fees1.01%1.01%
Other Expenses
0.25%
0.25%
Total Operating Expenses1.26%1.26%
 
Leverage Costs0.44%0.44%
 
Total Annual Expenses1.70%1.70%
 
Leverage costs include the interest expense on investments sold short.
Leverage Information6
The Fund currently uses proceeds received from short sales to buy additional assets, thereby leveraging the Fund.
Industry Breakdown (as of 6/30/2014)7
  Industry Percent
Services 16.50%
Banking 11.55%
Basic Industry 11.19%
Energy 11.12%
Insurance 8.76%
Healthcare 6.35%
Capital Goods 5.89%
Financial Services 5.86%
Automotive 5.80%
Telecommunications 5.43%
Technology & Electronics 3.84%
Consumer Non-Cyclical 2.43%
Media 2.22%
Utility 1.31%
Asset Backed 1.20%
Collateralized Mortgage Obligations 0.51%
Real Estate 0.04%
Portfolio Statistics (as of 6/30/2014)7
Largest Position as % of Total Investments2.14%
Average Position Size as % of Total Investments0.44%
Wtd. Avg. Effective Maturity (Years)4.76
Wtd. Avg. Duration3.83
Wtd. Avg. Yield-to-Worst5.80
Gross Assets123.88%
Net Long Positions102.15%
Shorts Positions***-21.73%
NOTE: Portfolio Statistics are exclusive of cash and other assets and liabilities.
***As of month end 6/30/2014, 92.95% of the short position exposure was in U.S. Treasury Securities and 7.05% was in Corporate Bond Securities.
Share Price and NAV History (Since Inception)
Past performance is not indicative of future results.
% Premium/Discount (Since Inception)
Cumulative Total Returns (as of 6/30/2014)5
Period Share Price NAV
3 Months 4.26% 2.87%
1 Year 11.58% 14.25%
3 Years 24.41% 33.41%
Year to Date 8.69% 6.01%
Inception to Date 22.38% 42.28%
Calendar Year Returns (as of 12/31/2013)5
Period Share Price NAV
2011 -7.84% -3.99%
2012 29.31% 23.89%
2013 2.59% 9.36%
Average Annual Returns (as of 6/30/2014)5
Period Share Price NAV
3 Years 7.55% 10.09%
Inception to Date 5.52% 9.84%
Credit Quality Breakdown for Bonds (as of 6/30/2014)7
  Credit Quality Percent
BBB- and above 18.95%
BB 38.64%
B 32.23%
CCC+ and below 9.44%
NR 0.74%
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.
Percentages of credit quality are based on the Fixed-Income Investments Long positions only; Short positions are excluded.
Asset Type Breakdown (as of 6/30/2014)7
Asset Percent
Corporate Bonds and Notes 59.72%
Capital Preferred Securities 17.04%
Foreign Corporate Bonds and Notes 16.09%
Senior Floating-Rate Loan Interests 3.11%
Common Stocks 1.57%
Asset-Backed Securities 1.20%
Mortgage Backed 0.51%
Foreign Sovereign Bonds and Notes 0.43%
Warrants 0.33%
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 risks.  It is designed for long-term investing and not as a vehicle for trading. Shares of closed-end investment companies frequently trade at a discount from their net asset value ("NAV"). The Fund cannot predict whether or when its common shares will trade at, below or above NAV or at, below or above the initial public offering price.

Below investment-grade securities are commonly referred to as high-yield securities 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 generally less liquid than investment-grade securities.

The Fund is subject to various risks, including investment and market risk, management risk, current economic conditions-credit crisis liquidity and volatility risk, fixed-income securities risk, which includes issuer risk, interest rate risk, prepayment risk and reinvestment risk, credit and below-investment grade securities risk, short-selling risk, valuation risk, credit rating agency risk, non-U.S. securities risk, emerging markets risk, preferred stock risk, credit-linked notes risk, leverage risk, derivatives risk, credit default swaps risk, U.S. government securities risk, non-U.S. government debt securities risk, distressed securities risk, counterparty and prime brokerage risk, market discount from net asset value risk, government intervention in financial markets risk, illiquid/restricted securities risk, market disruption and geopolitical risk, REIT risk, inflation/deflation risk, portfolio turnover risk, loan participations and assignments risk, asset-backed, mortgage-backed or mortgage-related securities agreements risk, anti-takeover provisions risk, common stock risk, currency risk, temporary defensive strategies risk and secondary market risk for the Fund's common shares.

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
 
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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