First Trust Senior Floating Rate 2022 Target Term Fund (FIV)
  • 2020 Estimated Capital Gain Distributions
    First Trust Closed-End Funds are not expected to pay either a short-term or long-term capital gain distribution in December. Final determination of the source and tax status of all distributions paid in the current year are to be made after year-end and could differ from the expectations noted above. 
Investment Objective/Strategy - First Trust Senior Floating Rate 2022 Target Term Fund (the "Fund") is a diversified, closed-end management investment company. The investment objectives of the Fund are to seek a high level of current income and to return $9.85 per Common Share of beneficial interest of the Fund (the original net asset value ("NAV") per Common Share before deducting offering costs of $0.02 per Common Share) to the holders of Common Shares on or about February 1, 2022. The Fund, under normal market conditions, pursues its objectives by primarily investing at least 80% of its Managed Assets in a portfolio of senior secured floating-rate loans of any maturity. "Managed Assets" means the total asset value of the Fund minus the sum of its liabilities, other than the principal amount of borrowings. There can be no assurance that the Fund's investment objectives will be achieved. As a result of the sharp and sudden economic shock resulting from the unprecedented shut down of significant parts of the U.S. economy as a result of Covid-19 and the significant decline in the value of the Fund's assets in March of 2020, the Fund was required to sell assets and pay down outstanding indebtedness in order to remain in compliance with applicable limitations on leverage imposed on the Fund by applicable law. While the market for the Fund's assets has improved since such time, sales of the Fund's investments during the downturn had a negative impact on the Fund's NAV. In addition, due to the Federal Open Market Committee lowering the Federal Funds target rate to 0%-.25% from 1.50% - 1.75% in March 2020, LIBOR rates declined significantly which reduced the income earning potential of the Fund and its ability to increase NAV through withholding Fund income. As a result, based on current market conditions and expectations, the Fund believes that it is unlikely to achieve its objective of returning $9.85 per Common Share upon its termination. The ultimate NAV of the Fund that will be returned to shareholders upon termination of the Fund will be dependent on a number of factors including, but not limited to, the severity of the economic contraction, the level of income earned in the portfolio, default losses experienced in the portfolio, trading losses in the portfolio and the use of leverage. As indicated above, the recent decline in interest rates, with 3-month LIBOR falling to 0.30% as of June 30, 2020 from 1.45% as of March 31, 2020 has reduced the income generated by the portfolio. Moreover, the portfolio management team anticipates actively reducing the Fund's leverage and shifting the portfolio composition to shorter dated higher quality holdings as the Fund approaches its termination date. As a result of these actions, investors should anticipate periodic reductions in the Fund's distribution per share going forward.
There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Fund Overview
TickerFIV
Fund TypeLoan Participation
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBNY Mellon Investment Servicing (US) Inc.
CUSIP33740K101
Fiscal Year-End05/31
ExchangeNYSE
Inception12/21/2016
Inception Price$10.00
Inception NAV$9.85
Current Fund Data (as of 11/23/2020)
Closing NAV1$9.32
Closing Market Price2$8.69
Discount to Net Asset Value (NAV)6.76%
Total Managed Assets$472,020,159
Common Shares Outstanding35,831,569
Dividend FrequencyMonthly
Dividend Per Share Amt3$0.0153
Distribution Rate42.11%
Daily Volume108,743
Average 30-Day Daily Volume112,833
Closing Market Price 52-Week High/Low$9.37 / $5.60
Closing NAV 52-Week High/Low$9.70 / $6.80
Expense Ratios (as of 5/31/2020)
Annual ExpensesPercent of
Net Assets		Percent of
Managed
Assets
Management Fees1.16%0.85%
Other Expenses
0.25%
0.18%
Total Operating Expenses1.41%1.03%
 
Leverage Costs1.00%0.72%
 
Total Annual Expenses2.41%1.75%
 
Top 10 Issuers (as of 10/31/2020)8
Holding Percent
Asurion, LLC 4.48%
AlixPartners, LLP 3.51%
SolarWinds Holdings, Inc. 3.40%
Pharmaceutical Product Development, Inc. (PPDI/Jaguar) 3.30%
CHG Healthcare Services, Inc 3.00%
Multiplan Inc (MPH) 2.85%
CityCenter Holdings, LLC 2.84%
Bausch Health Companies Inc. (Valeant) 2.81%
Nexstar Broadcasting Inc 2.60%
Amwins Group, Inc. 2.52%
S&P Ratings (as of 10/31/2020)8
  S&P Rating Percent
BBB- 3.09%
BB+ 4.75%
BB 7.25%
BB- 15.88%
B+ 36.18%
B 21.10%
B- 7.80%
CCC+ 1.01%
CCC 1.15%
CCC- 0.81%
D 0.72%
NR 0.26%
The ratings are by Standard & Poor's except where otherwise indicated. A credit rating is an assessment provided by a nationally recognized statistical rating organization (NRSRO) of the creditworthiness of an issuer with respect to debt obligations except for those debt obligations that are only privately rated. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest). Investment grade is defined as those issuers that have a long-term credit rating of BBB- or higher. "NR" indicates no rating. The credit ratings shown relate to the creditworthiness of the issuers of the underlying securities in the Fund, and not to the Fund or its shares. Credit ratings are subject to change.
Portfolio Characteristics (as of 10/31/2020)8
Weighted Average Effective Duration50.37 Years
Weighted Average Maturity3.64 Years
Weighted Average Price$95.43
Weighted Average Coupon3.39%
Weighted Average Yield-To-Maturity65.96%
Percent of Assets with LIBOR Floors40.70%
Please note: Weighted average maturity excludes defaulted assets.
Market Price and NAV History (Since Inception)
Past performance is not indicative of future results.
% Premium/Discount (Since Inception)
Leverage Information (as of 11/23/2020)7
Total Net Assets with Leverage$472,020,159
Amount Attributable to Common Shares$334,020,159
Amount Attributable to Preferred Shares$0
Amount Attributable to Other Borrowings$138,000,000
Leverage (% of Total Adjusted Net Assets)29.24%
Asset Class (as of 10/31/2020)8
Asset Percent
First Lien Senior Secured Loans 98.81%
High Yield Bonds 0.48%
Second Lien Loans 0.46%
Other 0.25%
Maturity Date of Non-Loan Holdings (Long) (as of 10/31/2020)8
Year Percent
2025 65.55%
2026 34.45%
Industry Breakdown (as of 10/31/2020)8
Industry Percent
Software 16.85%
Health Care Providers & Services 16.16%
Hotels, Restaurants & Leisure 14.34%
Pharmaceuticals 11.94%
Insurance 6.15%
Media 5.47%
Diversified Financial Services 5.38%
Diversified Consumer Services 4.51%
Health Care Technology 2.64%
Food & Staples Retailing 2.48%
Food Products 2.40%
Containers & Packaging 2.32%
Auto Components 2.12%
Entertainment 1.79%
Commercial Services & Supplies 1.12%
Aerospace & Defense 0.75%
Oil, Gas & Consumable Fuels 0.73%
Professional Services 0.66%
Independent Power and Renewable Electricity Producers 0.58%
Semiconductors & Semiconductor Equipment 0.49%
Electric Utilities 0.39%
Household Durables 0.24%
Communications Equipment 0.18%
Diversified Telecommunication Services 0.15%
IT Services 0.10%
Specialty Retail 0.06%
Performance (as of 10/31/2020)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception9
Fund Performance *
Net Asset Value (NAV) 0.84% -3.71% -0.99% 1.90% N/A N/A 2.21%
Market Price 1.22% -5.66% -2.25% 0.50% N/A N/A 0.05%

*Total return is the combination of reinvested dividend, capital gain, and return of capital distributions, if any, at prices obtained by the Dividend Reinvestment Plan, and changes in the NAV and Market Price. The NAV total return takes into account the fund's total annual expenses and does not reflect sales load. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative. Past performance is not indicative of future results.

Footnotes
1 The fund's NAV is calculated by dividing the value of all the fund's assets, less all liabilities, by the total number of common shares outstanding.
2 Fund shares are purchased and sold on an exchange at their market 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 to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
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 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. It accounts for the likelihood of changes in the timing of cash flows in response to interest rate movements.
6 The annualized return that would be earned on a debt security if held to maturity, weighted by the value of each debt security in the fund's portfolio. The calculation does not include the effect of fund fees and expenses.
7 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.
8 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-PORT Part F) that are based on trade date recording of security transactions. Holdings are subject to change.
9 Inception Date is 12/21/2016

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 outbreak of the respiratory disease designated as COVID-19 in December 2019 has caused significant volatility and declines in global financial markets, which have caused losses for investors. The COVID-19 pandemic may last for an extended period of time, and will continue to impact the economy for the foreseeable future.

The fund will typically invest in senior loans rated below investment grade, which are commonly referred to as "junk" or "high yield" securities and considered speculative because of the credit risk of their issuers. Such issuers are more likely than investment grade issuers to default on their payments of interest and principal owed to the fund, and such defaults could reduce the fund's NAV and income distributions. An economic downturn would generally lead to a higher non-payment rate, and a senior loan may lose significant market value before a default occurs. Moreover, any specific collateral used to secure a senior loan may decline in value or become illiquid, which would adversely affect the senior loan's value.

The senior loan market has seen an increase in loans with weaker lender protections which may impact recovery values and/or trading levels in the future.

Senior Loans are structured as floating rate instruments in which the interest rate payable on the obligation fluctuates with interest rate changes. As a result, the yield on Senior Loans will generally decline in a falling interest rate environment, causing the fund to experience a reduction in the income it receives from a Senior Loan. In addition, the market value of Senior Loans may fall in a declining interest rate environment and may also fall in a rising interest rate environment if there is a lag between the rise in interest rates and the reset. Many Senior Loans have a minimum base rate, or floor (typically, a "LIBOR floor"), which will be used if the actual base rate is below the minimum base rate. To the extent the fund invests in such Senior Loans, the fund may not benefit from higher coupon payments during periods of increasing interest rates as it otherwise would from investments in Senior Loans without any floors until rates rise to levels above the LIBOR floors. As a result, the fund may lose some of the benefits of incurring leverage. Specifically, if the fund's Borrowings have floating dividend or interest rates, its costs of leverage will increase as rates increase. In this situation, the fund will experience increased financing costs without the benefit of receiving higher income. This in turn may result in the potential for a decrease in the level of income available for dividends or distributions to be made by the fund.

The fund's limited term may cause it to invest in lower-yielding securities or hold the proceeds of securities sold near the end of its term in cash or cash equivalents, which may adversely affect the performance of the fund or the fund's ability to maintain its dividend.

A second lien loan may have a claim on the same collateral pool as the first lien or it may be secured by a separate set of assets. Second lien loans are typically secured by a second priority security interest or lien on specified collateral securing the Borrower's obligation under the interest and present a greater degree of investment risk. These loans are also subject to the risk that Borrower cash flow and property securing the loan may be insufficient to meet scheduled payments after giving effect to those loans with a higher priority. These loans also have greater price volatility than those loans with a higher priority and may be less liquid. However, second lien loans often pay interest at higher rates than first lien loans reflecting such additional risks.

Because the assets of the fund will be liquidated in connection with its termination, the fund may be required to sell portfolio securities when it otherwise would not, including at times when market conditions are not favorable, or at a time when a particular security is in default or bankruptcy, or otherwise in severe distress, which may cause the fund to lose money. Although the fund has an investment objective of returning Original NAV to Common Shareholders on or about the Termination Date, the fund may not be successful in achieving this objective. The return of Original NAV is not an express or implied guarantee obligation of the fund. There can be no assurance that the fund will be able to return Original NAV to Common Shareholders, and such return is not backed or otherwise guaranteed by the Advisor or any other entity.

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