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First Trust Preferred Securities and Income Fund (FPEAX)
Investment Objective/Strategy - The First Trust Preferred Securities and Income Fund seeks to provide current income and total return by investing, under normal market conditions, at least 80% of its net assets (including investment borrowings) in preferred securities and other securities with similar economic characteristics.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerFPEAX
Fund TypePreferred Income
Investment AdvisorFirst Trust Advisors L.P.
Portfolio Manager/Sub-AdvisorStonebridge Advisors LLC
CUSIP33738A107
Share ClassClass A
Fiscal Year-End10/31
Inception Date2/25/2011
Minimum Investment Amount$2,500
Minimum Subsequent Investment Amount$50
Maximum Initial Sales Charge4.50%
Gross Expense Ratio*1.40%
Net Expense Ratio*1.40%
* As of 4/30/2014
Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of any class of shares of the fund from exceeding 1.15% per year, excluding 12b-1 distribution and service fees, through 2/28/2016, and to not exceed 1.50% per year from 3/01/2016 through 2/28/2025. Net expense ratio shown above includes 12b-1 distribution and service fees.
Current Fund Data (as of 7/22/2014)
Net Asset Value1$21.29
Total Net Assets$163,372,983
Outstanding Shares2,880,229
NAV 52-Week High/Low$21.50 / $19.96
Top 10 Holdings (as of 6/30/2014)5
Holding Percent
Aquarius + Investments PLC for Swiss Reinsurance Co., Ltd., 8.25% 2.93%
Endurance Specialty Holdings Ltd., Series B, 7.50% 2.70%
Liberty Mutual Group, Inc., 10.75% 2.50%
PNC Financial Services Group, Inc., Series P, 6.13% 2.40%
Aviva PLC, 8.25% 2.15%
CHS, Inc., Series 2, 7.10% 2.11%
Enel SpA, 8.75% 2.02%
Integrys Energy Group, 6.00% 1.94%
CoBank ACB, Series F, 6.25% 1.93%
Principal Financial Group, Series A, 5.56% 1.89%
Industry Breakdown (as of 6/30/2014)5
Industry Percent
Insurance 33.46%
Banks 29.51%
Capital Markets 13.74%
Diversified Financial Services 5.52%
Electric Utilities 5.04%
Multi-Utilities 4.71%
Food Products 3.37%
Diversified Telecommunication Services 1.68%
Real Estate Investment Trusts (REITS) 1.57%
Independent Power and Renewable Electricity Producers 1.40%
Security Type Breakdown (as of 6/30/2014)5
Security Percent
Fixed-to-Floating Rate Securities 60.27%
Fixed Rate Securities 36.60%
Floating Rate Securities 3.13%
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend FrequencyMonthly
Dividend per Share Amt2$0.0931
30-Day SEC Yield (as of 6/30/2014)34.25%
Distribution Rate (as of 6/30/2014)45.25%
Credit Quality Breakdown (as of 6/30/2014)5
  Credit Quality Percent
A 0.51%
A- 6.96%
BBB+ 16.48%
BBB 18.90%
BBB- 32.52%
BB+ 7.82%
BB 7.31%
BB- 3.83%
NR 5.67%
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.
Country Breakdown (as of 6/30/2014)5
Country Percent
United States 53.29%
United Kingdom 10.48%
Netherlands 8.77%
Bermuda 7.02%
Spain 3.15%
France 3.14%
Ireland 2.93%
Jersey 2.28%
Italy 2.02%
Brazil 1.85%
Luxembourg 1.64%
Chile 1.40%
Guernsey 1.34%
Germany 0.69%
Month End Performance (as of 6/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception6
Fund Performance *
Without Sales Charge 3.52% 9.02% 4.17% 7.11% N/A N/A 7.34%
With Sales Charge -1.14% 4.11% -0.52% 5.48% N/A N/A 5.87%
Index Performance **
BofA Merrill Lynch Fixed Rate Preferred Securities Index 4.03% 12.04% 7.57% 6.59% N/A N/A 7.02%
BofA Merrill Lynch U.S. Capital Securities Index 3.81% 7.98% 13.17% 9.87% N/A N/A 9.27%
Blended Index 3.92% 10.00% 10.36% 8.24% N/A N/A 8.17%
Quarter End Performance (as of 6/30/2014)
  3 Mos YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception6
Fund Performance *
Without Sales Charge 3.52% 9.02% 4.17% 7.11% N/A N/A 7.34%
With Sales Charge -1.14% 4.11% -0.52% 5.48% N/A N/A 5.87%
Index Performance **
BofA Merrill Lynch Fixed Rate Preferred Securities Index 4.03% 12.04% 7.57% 6.59% N/A N/A 7.02%
BofA Merrill Lynch U.S. Capital Securities Index 3.81% 7.98% 13.17% 9.87% N/A N/A 9.27%
Blended Index 3.92% 10.00% 10.36% 8.24% N/A N/A 8.17%

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

**Indexes are unmanaged and an investor cannot invest directly in an index.

The gross expense ratio for this share class is 1.40%. Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of any class of shares of the fund from exceeding 1.15% per year, excluding 12b-1 distribution and service fees, through 2/28/2016, and 1.50% per year from 3/01/2016 through 2/28/2025.

The Blended benchmark consists of 50% BofA Merrill Lynch Fixed Rate Preferred Securities Index and 50% BofA Merrill Lynch U.S. Capital Securities Index.

The BofA Merrill Lynch Fixed Rate Preferred Securities Index tracks the performance of fixed-rate US dollar denominated preferred securities issued in the US domestic market.

The BofA Merrill Lynch U.S. Capital Securities Index is a subset of the BofA Merrill Lynch US Corporate Index including all fixed-to-floating rate, perpetual callable and capital securities.

Indexes are unmanaged and an investor cannot invest directly in an index.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's shares outstanding.
2 Most recent distribution paid or declared through today's date. Subject to change in the future.
3 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period.
4 Distribution rate is calculated by dividing the most recent annualized distribution paid or declared by the Net Asset Value. Distribution rates may vary.
5 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.
6 Inception Date is 2/25/2011

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus or summary prospectus, or contact First Trust Portfolios L.P. at 1-800-621-1675 to request a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

The Fund is subject to the following risks:

Market Risk. Market risk is the risk that a particular security owned by the Fund or shares of the Fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as economic, political, regulatory or market developments, changes in interest rates and perceived trends in stock prices. Overall stock values could decline generally or could underperform other investments. Companies with smaller market capitalizations are generally subject to additional market risk. Preferred Securities Risk. Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred securities are typically subordinated to bonds and other debt instruments in a company's capital structure, in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments. Preferred securities are also subject to credit risk, interest rate risk and income risk. Credit Risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and principal payments when due and the related risk that the value of a security may decline because of concerns about the issuer's ability to make such payments. Interest Rate Risk. If interest rates rise, the prices of fixed-rate preferred securities and other fixed-rate debt securities held by the Fund will fall. Income Risk. If interest rates fall, the income from the Fund's portfolio will decline as the Fund invests the proceeds from new share sales, or from matured or called debt securities, at interest rates that are below the portfolio's current earnings rate.Illiquid Securities Risk. Illiquid securities involve the risk that the securities will not be able to be sold at the time desired by the Fund or at prices approximately the value at which the Fund is carrying the securities on its books. Non-Diversification Risk. The Fund is classified as "non-diversified" under the Investment Company Act of 1940, as amended (the "1940 Act"). As a result, the Fund is only limited as to the percentage of its assets which may be invested in the securities of any one issuer by the diversification requirements imposed by the Internal Revenue Code of 1986, as amended (the "Code"). The Fund may invest a relatively high percentage of its assets in a limited number of issuers. A non-diversified fund is more exposed to risks posed by any single political, regulatory or economic occurrence affecting individual issuers in which it invests as well as the financial condition of such issuers. The Fund's relative lack of diversity may subject investors to greater market risk than other mutual funds. Concentration Risk. The Fund intends to invest at least 25% of its net assets in the securities of financial companies. A fund concentrated in a single industry or sector is likely to present more risks than a fund that is broadly diversified over several industries or sectors. Compared to the broad market, an individual sector may be more strongly affected by changes in the economic climate, broad market shifts, moves in a particular dominant stock, or regulatory changes. Financial Company Risk. The Fund invests in the securities of companies in the financials sector which may include banks, thrifts, brokerage firms, broker/dealers, investment banks, finance companies, REITs and companies involved in the insurance industry. Financial companies are especially subject to the adverse effects of economic recession; currency exchange rates; government regulation; decreases in the availability of capital; volatile interest rates; portfolio concentrations in geographic markets and in commercial and residential real estate loans; and competition from new entrants in their fields of business. REIT Risk. Investing in REITs involves risks related to their structure and focus, which include, but are not limited to, dependency upon management skills, limited diversification, the risks of locating and managing financing for projects, heavy cash flow dependency, possible default by borrowers, the costs and potential losses of self-liquidation of one or more holdings, the risk of a possible lack of mortgage funds and associated interest rate risks, overbuilding, property vacancies, increases in property taxes and operating expenses, changes in zoning laws, losses due to environmental damages, changes in neighborhood values and appeal to purchases, the possibility of failing to maintain exemptions from registration under the 1940 Act and, in many cases, relatively small market capitalization, which may result in less market liquidity and greater price volatility. Fund Shareholders indirectly pay REIT fees and expenses. Non U.S. Securities Risk. The Fund invests in securities of non U.S. issuers. Such securities are subject to higher volatility than securities of domestic issuers due to possible adverse political, social or economic developments; restrictions on foreign investment or exchange of securities; lack of liquidity; currency exchange rates; excessive taxation; government seizure of assets; different legal or accounting standards; and less government supervision and regulation of exchanges in foreign countries.

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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