First Trust Advisors L.P. (“FTA”) announced today that its
Leveraged Finance Investment Team, portfolio manager for the First
Trust Senior Floating Rate Income Fund II (NYSE: FCT) and First
Trust Senior Floating Rate 2022 Target Term Fund (NYSE: FIV) (each
a “Fund” or collectively, the “Funds”), will release an update on
the market and the Funds for financial advisors and investors. The
update will be available Friday, February 15, 2019, at 5:00 P.M.
Eastern Time until 11:59 P.M. Eastern Time on Monday, March 18,
2019. To listen to the update, follow these instructions:
-- Dial: (888) 203-1112; International (719) 457-0820; and
Passcode # 1767787 and PIN # 6305. The update will be available
from Friday, February 15, 2019, at 5:00 P.M. Eastern Time until
11:59 P.M. Eastern Time on Monday, March 18, 2019.
FCT is a diversified, closed-end management investment company
whose primary investment objective is to seek a high level of
current income. As a secondary objective, the Fund attempts to
preserve capital. The Fund pursues its objectives by investing in a
professionally managed portfolio of senior secured floating rate
corporate loans (“Senior Loans”). The Fund invests in below
investment grade Senior Loans. This involves the risk that
borrowers may default on obligations, or that lenders may have
difficulty liquidating the collateral securing the loans, or
difficulty enforcing their rights under the terms of the Senior
Loans. Senior loans are subject to credit risk and the potential
for non-payment of scheduled principal or interest payments, which
may result in a reduction of the Fund’s net asset value (“NAV”).
The Fund utilizes leverage. The use of leverage for investment
purposes increases both investment opportunity and investment risk.
In the event of a default on one or more loans or other
interest-bearing instruments held by the Fund, the use of leverage
can magnify the effect of any losses.
FIV is a diversified, closed-end management investment company.
The Fund’s investment objectives are to seek a high level of
current income and to return $9.85 per common share of beneficial
interest (“Common Share”) of the Fund (the original net asset value
(“Original 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 “Termination Date”). The Fund will
attempt to strike a balance between the two objectives, seeking to
provide as high a level of current income as is consistent with the
Fund’s overall credit performance, on the one hand, and its
objective of returning the Original NAV on or about the Termination
Date on the other. However, as the Fund approaches the Termination
Date, its monthly distributions are likely to decline, and there
can be no assurance that the Fund will achieve either of its
investment objectives or that the Fund’s investment strategies will
be successful. Under normal market conditions, the Fund will seek
to achieve its investment objectives by investing at least 80% of
its Managed Assets in senior, secured floating-rate loans (“Senior
Loans”) of any maturity. Senior Loans are made to U.S. and non-U.S.
corporations, partnerships and other business entities which
operate in various industries and geographical regions. Senior
Loans are typically rated below investment grade. As it nears the
Termination Date, the Fund may invest in higher credit quality
instruments with maturities extending beyond the Termination Date
to seek to improve the liquidity of its portfolio and reduce
investment risk. Investing in higher credit quality instruments may
reduce the amount available for distribution to Common
Shareholders.
FTA is a federally registered investment advisor and serves as
the Funds’ investment advisor. FTA and its affiliate First Trust
Portfolios L.P. (“FTP”), a FINRA registered broker-dealer, are
privately-held companies that provide a variety of investment
services. FTA has collective assets under management or supervision
of approximately $113 billion as of December 31, 2018 through unit
investment trusts, exchange-traded funds, closed-end funds, mutual
funds and separate managed accounts. FTA is the supervisor of the
First Trust unit investment trusts, while FTP is the sponsor. FTP
is also a distributor of mutual fund shares and exchange-traded
fund creation units. FTA and FTP are based in Wheaton,
Illinois.
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. There can be no assurance that the Fund’s
investment objectives will be achieved. The Fund may not be
appropriate for all investors.
Principal Risk Factors: The Funds are subject to various risks
including: the Funds 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 a fund, and such defaults could reduce a
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.
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 Funds 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. If the Funds’ Borrowings have
floating dividend or interest rates, its costs of leverage will
increase as rates increase. In this situation, the Funds 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 Funds.
FIV’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. Because second lien loans
are second to first lien loans, they present a greater degree of
investment risk. Specifically, these loans are subject to the
additional risk that the cash flow of the Borrower and property
securing the loan may be insufficient to meet scheduled payments
after giving effect to those loans with a higher priority. In
addition, loans that have a lower than first lien priority on
collateral of the Borrower generally 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 FIV 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.
Use of leverage can result in additional risk and cost, and can
magnify the effect of any losses.
The risks of investing in each Fund are spelled out in the
prospectus, shareholder reports, and other regulatory filings.
The information presented is not intended to constitute an
investment recommendation for, or advice to, any specific person.
By providing this information, First Trust is not undertaking to
give advice in any fiduciary capacity within the meaning of ERISA
and the Internal Revenue Code. First Trust has no knowledge of and
has not been provided any information regarding any investor.
Financial advisors must determine whether particular investments
are appropriate for their clients. First Trust believes the
financial advisor is a fiduciary, is capable of evaluating
investment risks independently and is responsible for exercising
independent judgment with respect to its retirement plan
clients.
Each Fund’s daily New York Stock Exchange closing price and
daily net asset value, as well as other information are available
at www.ftportfolios.com or by calling 1-800-988-5891.
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version on businesswire.com: https://www.businesswire.com/news/home/20190213005806/en/
JEFF MARGOLIN - (630) 915-6784
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