UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-21539
First Trust Senior Floating Rate Income Fund II
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
Registrant’s telephone number, including area code: 630-765-8000
Date of fiscal year end: May 31
Date of reporting period: May 31, 2024
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
Item 1. Reports to Shareholders.
(a) | Following is a copy of the annual report transmitted to shareholders pursuant to Rule 30e-1 under the Act. |
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Fund Statistics | |
Symbol on New York Stock Exchange | FCT |
Common Share Price | $10.47 |
Common Share Net Asset Value (“NAV”) | $11.03 |
Premium (Discount) to NAV | ( )% |
Net Assets Applicable to Common Shares | $286,534,606 |
Current Monthly Distribution per Common Share(1) | $0.0970 |
Current Annualized Distribution per Common Share | $1.1640 |
Current Distribution Rate on Common Share Price(2) | 11.12 % |
Current Distribution Rate on NAV(2) | 10.55 % |
Performance | ||||
Average Annual Total Returns | ||||
1 Year Ended 5/31/24 | 5 Years Ended 5/31/24 | 10 Years Ended 5/31/24 | Inception (5/25/04) to 5/31/24 | |
Fund Performance(3) | ||||
NAV | 12.96 % | 5.25 % | 4.89 % | 4.55 % |
Market Value | 22.93 % | 6.99 % | 5.03 % | 4.04 % |
Index Performance | ||||
Morningstar® LSTA® US Leveraged Loan Index | 13.23 % | 5.47 % | 4.62 % | 4.93 % |
Credit Quality (S&P Ratings)(4) | % of Senior Loans and other Debt Securities(5) |
BBB- | 5.0% |
BB+ | 3.6 |
BB | 4.2 |
BB- | 8.1 |
B+ | 18.8 |
B | 37.8 |
B- | 16.5 |
CCC+ | 4.1 |
CCC- | 0.3 |
Not Rated | 1.6 |
Total | 100.0% |
Top 10 Issuers | % of Total Long-Term Investments(5) |
Nexstar Media, Inc. | 2.6% |
Clarivate Analytics PLC (Camelot) | 2.4 |
HUB International Limited | 2.4 |
BroadStreet Partners, Inc. | 2.3 |
CCC Intelligent Solutions, Inc. | 2.2 |
Dun & Bradstreet Corp. | 2.2 |
Alliant Holdings I LLC | 2.1 |
Edelman Financial Engines Center LLC | 2.1 |
1011778 BC ULC / New Red Finance, Inc. | 2.1 |
IRB Holding Corp. (Arby’s/Inspire Brands) | 2.0 |
Total | 22.4% |
Industry Classification | % of Total Long-Term Investments(5) |
Software | 19.0% |
Insurance | 18.2 |
Health Care Technology | 8.5 |
Hotels, Restaurants & Leisure | 6.7 |
Health Care Providers & Services | 6.6 |
Professional Services | 6.5 |
Media | 6.2 |
Commercial Services & Supplies | 4.6 |
Containers & Packaging | 4.4 |
Capital Markets | 2.3 |
Diversified Telecommunication Services | 2.0 |
Diversified Consumer Services | 1.9 |
Specialty Retail | 1.7 |
Health Care Equipment & Supplies | 1.6 |
Wireless Telecommunication Services | 1.4 |
Aerospace & Defense | 1.4 |
Automobile Components | 1.3 |
Machinery | 1.2 |
Financial Services | 1.0 |
Food Products | 0.8 |
Trading Companies & Distributors | 0.7 |
Electronic Equipment, Instruments & Components | 0.6 |
Pharmaceuticals | 0.6 |
Consumer Staples Distribution & Retail | 0.2 |
IT Services | 0.2 |
Construction & Engineering | 0.2 |
Building Products | 0.1 |
Leisure Products | 0.1 |
Life Sciences Tools & Services | 0.0* |
Total | 100.0% |
* | Amount is less than 0.1%. |
Average Annual Total Returns | ||||
1 Year Ended 5/31/24 | 5 Years Ended 5/31/24 | 10 Years Ended 5/31/24 | Inception (5/25/04) to 5/31/24 | |
Fund Performance(3) | ||||
NAV | 12.96 % | 5.25 % | 4.89 % | 4.55 % |
Market Value | 22.93 % | 6.99 % | 5.03 % | 4.04 % |
Index Performance | ||||
Morningstar® LSTA® US Leveraged Loan Index | 13.23 % | 5.47 % | 4.62 % | 4.93 % |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) – 107.3% | ||||
Aerospace & Defense – 1.5% | ||||
$398,647 | Transdigm, Inc., Term Loan J, 3 Mo. CME Term SOFR + 2.50%, 0.00% Floor | 8.56 % | 02/28/31 | $400,690 |
3,989,925 | Transdigm, Inc., Term Loan K, 3 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.06 % | 03/22/30 | 4,011,889 |
4,412,579 | ||||
Alternative Carriers – 0.7% | ||||
1,909,468 | Level 3 Financing, Inc., Term Loan B1, 1 Mo. CME Term SOFR + 6.56%, 0.00% Floor | 11.88 % | 04/16/29 | 1,857,855 |
Application Software – 17.4% | ||||
621,303 | Applied Systems, Inc., 2024 Term Loan, 3 Mo. CME Term SOFR + 3.50%, 0.00% Floor | 8.81 % | 02/23/31 | 627,491 |
7,136,335 | CCC Intelligent Solutions, Inc., Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.25%, 0.50% Floor | 7.69 % | 09/21/28 | 7,177,369 |
1,504,324 | ConnectWise LLC, Term Loan B, 3 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 9.06 % | 09/30/28 | 1,510,273 |
3,065,371 | Epicor Software Corp., Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.75% Floor | 8.58 % | 05/31/31 | 3,083,380 |
4,318,894 | Gainwell Acquisition Corp. (fka Milano), Term Loan B, 3 Mo. CME Term SOFR + CSA + 4.00%, 0.75% Floor | 9.41 % | 10/01/27 | 4,209,130 |
1,073,471 | Genesys Cloud Services Holding II LLC (f/k/a Greeneden), 2024 Incremental Term Loan, 1 Mo. CME Term SOFR + CSA + 3.75%, 0.75% Floor | 9.19 % | 12/01/27 | 1,084,318 |
3,064,760 | Genesys Cloud Services Holding II LLC (f/k/a Greeneden), Term Loan B, 1 Mo. CME Term SOFR + 3.50%, 0.75% Floor | 8.83 % | 12/01/27 | 3,090,213 |
5,497,090 | Informatica Corp., Initial Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.75%, 0.00% Floor | 8.19 % | 10/29/28 | 5,528,012 |
1,810,095 | Internet Brands, Inc. (Web MD/MH Sub I. LLC), 2023 New Term Loan B, 1 Mo. CME Term SOFR + 4.25%, 0.50% Floor | 9.58 % | 05/03/28 | 1,815,344 |
1,265,863 | Internet Brands, Inc. (Web MD/MH Sub I. LLC), 2nd Lien Term Loan, 1 Mo. CME Term SOFR + 6.25%, 0.00% Floor | 11.58 % | 02/23/29 | 1,266,458 |
49,896 | ION Trading Technologies Ltd., Term Loan B, 3 Mo. CME Term SOFR + CSA + 4.00%, 0.00% Floor | 9.34 % | 04/03/28 | 50,003 |
2,262,185 | LogMeIn, Inc. (GoTo Group, Inc.), First Lien First Out TL, 1 Mo. CME Term SOFR + CSA + 4.75%, 0.00% Floor | 10.17 % | 04/30/28 | 2,133,048 |
2,016,198 | LogMeIn, Inc. (GoTo Group, Inc.), First Lien Second Out TL, 1 Mo. CME Term SOFR + CSA + 4.75%, 0.00% Floor | 10.17 % | 04/30/28 | 1,250,043 |
1,915,806 | McAfee Corp. (Condor Merger Sub, Inc.), Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.50% Floor | 8.58 % | 03/01/29 | 1,919,762 |
355,701 | N-Able, Inc., Term Loan B, 3 Mo. CME Term SOFR + CSA + 2.75%, 0.50% Floor | 8.36 % | 07/19/28 | 357,035 |
1,302,004 | Open Text Corp. (GXS), 2024 Term Loan B, 1 Mo. CME Term SOFR + 2.25%, 0.50% Floor | 7.58 % | 01/31/30 | 1,312,094 |
618,089 | PowerSchool Holdings, Inc. (Severin), Extended Term Loan, 3 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 08/01/27 | 620,870 |
1,018,640 | Qlik Technologies (Project Alpha Intermediate Holding, Inc.), 2024 Refi Term Loan B, 2 Mo. CME Term SOFR + 3.75%, 0.50% Floor | 9.07 % | 10/28/30 | 1,026,647 |
131,616 | RealPage, Inc., Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.00%, 0.50% Floor | 8.44 % | 04/24/28 | 130,069 |
3,050,397 | SolarWinds Holdings, Inc., 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.58 % | 02/05/27 | 3,074,800 |
2,055,627 | Solera Holdings, Inc. (Polaris Newco), Term Loan B, 3 Mo. CME Term SOFR + CSA + 4.00%, 0.50% Floor | 9.59 % | 06/04/28 | 2,059,297 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Application Software (Continued) | ||||
$2,323,767 | Ultimate Kronos Group (UKG, Inc.), 2024 Term Loan B, 1 Mo. CME Term SOFR + 3.50%, 0.00% Floor | 8.82 % | 02/10/31 | $2,343,995 |
4,055,720 | Veeam Software Holdings Ltd. (VS Buyer LLC), 2024 Initial Term Loan, 1 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.57 % | 04/01/31 | 4,089,951 |
49,759,602 | ||||
Asset Management & Custody Banks – 2.5% | ||||
460,992 | Alter Domus (Chrysaor Bidco SARL), Term Loan B, 1 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.84 % | 05/31/31 | 463,297 |
3,529,689 | Edelman Financial Engines Center LLC, Refinanced Second Lien Term Loan, 1 Mo. CME Term SOFR + 5.25%, 0.00% Floor | 10.58 % | 10/31/28 | 3,536,466 |
3,280,785 | Edelman Financial Engines Center LLC, Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.75% Floor | 8.94 % | 04/07/28 | 3,280,785 |
7,280,548 | ||||
Automotive Parts & Equipment – 1.4% | ||||
2,023,683 | Caliber Collision (Wand NewCo 3, Inc.), Term Loan B, 1 Mo. CME Term SOFR + 3.75%, 0.00% Floor | 9.08 % | 01/31/31 | 2,042,311 |
2,000,000 | Clarios Global, L.P. (Power Solutions), 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 05/06/30 | 2,014,380 |
4,056,691 | ||||
Automotive Retail – 1.2% | ||||
748,779 | Les Schwab Tire Centers (LS Group OpCo Acq. LLC), Term B Loan, 1 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 04/23/31 | 752,212 |
2,730,134 | Mavis Tire Express Services Topco Corp., 2024 Term Loan B, 1 Mo. CME Term SOFR + 3.75%, 0.75% Floor | 9.08 % | 05/04/28 | 2,750,788 |
3,503,000 | ||||
Broadcasting – 4.0% | ||||
308,813 | E.W. Scripps Co., Tranche B-3 Term Loan, 1 Mo. CME Term SOFR + CSA + 3.00%, 0.75% Floor | 8.44 % | 01/07/28 | 276,387 |
2,299,338 | Gray Television, Inc., Term Loan E, 1 Mo. CME Term SOFR + CSA + 2.50%, 0.00% Floor | 7.93 % | 01/02/26 | 2,292,164 |
3,101,009 | iHeartCommunications, Inc., Second Amendment Incremental Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.69 % | 05/01/26 | 2,411,810 |
6,412,128 | Nexstar Media, Inc., Incremental Term Loan B-4, 1 Mo. CME Term SOFR + CSA + 2.50%, 0.00% Floor | 7.94 % | 09/19/26 | 6,436,174 |
11,440 | Univision Communications, Inc., 2021 Replacement New First Lien Term Loan, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.75% Floor | 8.69 % | 03/15/26 | 11,458 |
11,427,993 | ||||
Building Products – 0.1% | ||||
260,840 | Hunter Douglas, Inc. (Solis), Term Loan B, 3 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.84 % | 02/25/29 | 260,235 |
134,431 | Miter Brands Acq. Holdco, Inc. (MIWD), 2024 Incremental Term Loan, 1 Mo. CME Term SOFR + 3.50%, 0.00% Floor | 8.83 % | 03/31/31 | 135,621 |
395,856 | ||||
Cable & Satellite – 0.1% | ||||
388,406 | Charter Communications Operating LLC, Term Loan B4, 3 Mo. CME Term SOFR + 2.00%, 0.00% Floor | 7.30 % | 12/07/30 | 386,490 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Casinos & Gaming – 1.2% | ||||
$677,497 | Caesars Entertainment, Inc. (f/k/a Eldorado Resorts), 2024 Term Loan B-1, 3 Mo. CME Term SOFR + 2.75%, 0.50% Floor | 8.10 % | 02/06/31 | $680,461 |
2,382,286 | Golden Nugget, Inc. (Fertitta Entertainment LLC), 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 3.75%, 0.50% Floor | 9.07 % | 01/29/29 | 2,392,220 |
544 | Scientific Games Holdings, L.P. (Scientific Games Lottery), Initial Dollar Term Loan, 2 Mo. CME Term SOFR + 3.25%, 0.50% Floor | 8.56 % | 04/04/29 | 546 |
213,604 | Scientific Games Holdings, L.P. (Scientific Games Lottery), Initial Dollar Term Loan, 3 Mo. CME Term SOFR + 3.25%, 0.50% Floor | 8.56 % | 04/04/29 | 214,490 |
3,287,717 | ||||
Commercial Printing – 1.2% | ||||
3,466,095 | Multi-Color Corp. (LABL, Inc.), Initial Dollar Term Loan, 1 Mo. CME Term SOFR + CSA + 5.00%, 0.50% Floor | 10.42 % | 10/29/28 | 3,441,867 |
Construction & Engineering – 0.2% | ||||
506,848 | APi Group DE, Inc., Term Loan B, 1 Mo. CME Term SOFR + 2.00%, 0.00% Floor | 7.33 % | 01/03/29 | 509,065 |
Diversified Support Services – 0.6% | ||||
1,641,750 | Consilio (Skopima Consilio Parent LLC), Initial Term Loan, 1 Mo. CME Term SOFR + CSA + 4.00%, 0.50% Floor | 9.44 % | 05/17/28 | 1,641,922 |
Education Services – 1.2% | ||||
3,399,251 | Ascensus Holdings, Inc. (Mercury), First Lien Term Loan, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 8.94 % | 08/02/28 | 3,408,820 |
Electronic Equipment & Instruments – 0.7% | ||||
1,347,367 | Chamberlain Group, Inc. (Chariot), Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.68 % | 11/03/28 | 1,350,001 |
856,494 | Verifone Systems, Inc., Term Loan B, 3 Mo. CME Term SOFR + CSA + 4.00%, 0.00% Floor | 9.60 % | 08/20/25 | 741,583 |
2,091,584 | ||||
Environmental & Facilities Services – 1.2% | ||||
245,211 | Allied Universal Holdco LLC, Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.75%, 0.50% Floor | 9.18 % | 05/15/28 | 245,519 |
3,219,404 | GFL Environmental, Inc., 2023 Refinancing Term Loan, 3 Mo. CME Term SOFR + 2.50%, 0.50% Floor | 7.83 % | 05/31/27 | 3,242,214 |
3,487,733 | ||||
Food Distributors – 0.3% | ||||
808,406 | US Foods, Inc., Incremental B-2019 Term Loan, 1 Mo. CME Term SOFR + CSA + 2.00%, 0.00% Floor | 7.44 % | 09/13/26 | 812,783 |
Health Care Facilities – 4.0% | ||||
2,838,264 | Ardent Health Services, Inc. (AHP Health Partners, Inc.), Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 8.94 % | 08/24/28 | 2,855,649 |
635,577 | Gentiva Health Services, Inc. (Kindred at Home/Charlotte Buyer), Initial Term B Loan, 1 Mo. CME Term SOFR + 5.25%, 0.50% Floor | 10.57 % | 02/11/28 | 640,452 |
829,453 | IVC Evidensia (IVC Acquisition Midco Ltd.), Facility B9, 3 Mo. CME Term SOFR + 5.50%, 0.50% Floor | 10.81 % | 12/06/28 | 832,911 |
4,759,349 | Select Medical Corp., Tranche B-1, 1 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 03/06/27 | 4,784,621 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Health Care Facilities (Continued) | ||||
$2,189,281 | Southern Veterinary Partners LLC, 2024 Term Loan B, 1 Mo. CME Term SOFR + 3.75%, 1.00% Floor | 9.08 % | 10/05/27 | $2,197,502 |
11,311,135 | ||||
Health Care Services – 3.5% | ||||
648,193 | Agiliti Health, Inc. (Universal Hospital Services), Term Loan B, 3 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.30 % | 05/01/30 | 647,992 |
2,596,880 | CHG Healthcare Services, Inc., Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.69 % | 09/30/28 | 2,608,786 |
1,550,168 | DaVita, Inc., Tranche B-1 Term Loan, 1 Mo. CME Term SOFR + CSA + 1.75%, 0.00% Floor | 7.19 % | 08/12/26 | 1,552,478 |
2,582,510 | ExamWorks Group, Inc. (Electron Bidco), Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.00%, 0.50% Floor | 8.44 % | 11/01/28 | 2,595,242 |
387,142 | Radnet Management, Inc., Initial Term Loan B, 3 Mo. CME Term SOFR + 2.50%, 0.00% Floor | 7.83 % | 04/10/31 | 388,431 |
2,150,000 | Surgery Centers Holdings, Inc., Term Loan B, 1 Mo. CME Term SOFR + 3.50%, 0.00% Floor | 8.82 % | 12/19/30 | 2,164,287 |
9,957,216 | ||||
Health Care Supplies – 1.7% | ||||
4,755,748 | Medline Borrower, L.P. (Mozart), 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.75%, 0.50% Floor | 8.08 % | 10/21/28 | 4,792,771 |
Health Care Technology – 9.5% | ||||
4,801,375 | athenahealth, Inc. (Minerva Merger Sub, Inc.), Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.50% Floor | 8.58 % | 02/15/29 | 4,801,711 |
123,445 | Clario (fka eResearch Technology, Inc.), Term Loan B, 1 Mo. CME Term SOFR + 4.00%, 1.00% Floor | 9.32 % | 02/04/27 | 124,168 |
993,417 | Datavant Group (fka Ciox) (CT Technologies Intermediate Holdings, Inc.), New Term Loan B, 1 Mo. CME Term SOFR + CSA + 4.25%, 0.75% Floor | 9.69 % | 12/16/25 | 995,488 |
1,695,833 | Ensemble RCM LLC (Ensemble Health), 2024 Refi Loan, 3 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 08/01/29 | 1,707,721 |
393,107 | Mediware (Wellsky/Project Ruby Ultimate Parent Corp.), 2024 Incremental Term Loan, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.00% Floor | 8.94 % | 03/10/28 | 395,727 |
4,206,580 | Mediware (Wellsky/Project Ruby Ultimate Parent Corp.), Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.75% Floor | 8.69 % | 03/10/28 | 4,225,362 |
1,492,181 | R1 RCM Holdco, Inc., Term Loan B, 1 Mo. CME Term SOFR + 3.00%, 0.50% Floor | 8.33 % | 06/21/29 | 1,502,253 |
3,368,724 | Verscend Technologies, Inc. (Cotiviti), Floating Rate Loan, 3 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.56 % | 05/01/31 | 3,387,690 |
5,241,699 | Waystar Technologies, Inc., 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 4.00%, 0.00% Floor | 9.33 % | 10/22/29 | 5,264,632 |
773,189 | WS Audiology (Auris Lux III SARL), USD Term Loan B, 6 Mo. CME Term SOFR + 4.25%, 0.00% Floor | 9.99 % | 02/08/29 | 776,092 |
4,085,002 | Zelis Payments Buyer, Inc., Term Loan B-2, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.08 % | 09/28/29 | 4,107,633 |
27,288,477 | ||||
Hotels, Resorts & Cruise Lines – 0.3% | ||||
453,685 | Alterra Mountain Company, Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.58 % | 08/17/28 | 457,231 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Hotels, Resorts & Cruise Lines (Continued) | ||||
$393,979 | Wyndham Hotels & Resorts, Inc., 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 1.75%, 0.00% Floor | 7.07 % | 05/25/30 | $395,407 |
852,638 | ||||
Industrial Machinery & Supplies & Components – 1.3% | ||||
2,699,146 | Filtration Group Corp., 2021 Incremental Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 8.94 % | 10/21/28 | 2,716,231 |
123,490 | Gates Global LLC, Term Loan B-5, 1 Mo. CME Term SOFR + 2.25%, 0.50% Floor | 7.45 % | 06/04/31 | 124,018 |
367,238 | Madison IAQ LLC, Initial Term Loan, 1 Mo. CME Term SOFR + 2.75%, 0.50% Floor | 8.07 % | 06/21/28 | 368,455 |
610,979 | TK Elevator Newco GMBH (Vertical U.S. Newco, Inc.), 2024 USD Refi Loan, 3 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.79 % | 04/30/30 | 615,785 |
3,824,489 | ||||
Insurance Brokers – 18.8% | ||||
6,795,705 | Alliant Holdings I LLC, Term Loan B-6, 1 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.82 % | 11/06/30 | 6,830,770 |
5,053,588 | Amwins Group, Inc., Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.25%, 0.75% Floor | 7.69 % | 02/19/28 | 5,070,088 |
5,185,543 | AssuredPartners, Inc., 2024 Term Loan B5, 1 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.83 % | 02/14/31 | 5,230,709 |
937,317 | Baldwin Insurance Group Holdings LLC, Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.57 % | 05/27/31 | 940,832 |
7,223,119 | BroadStreet Partners, Inc., Term Loan B-4, 1 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.58 % | 06/14/31 | 7,262,485 |
18,835 | HUB International Ltd., 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.75% Floor | 8.58 % | 06/20/30 | 18,982 |
7,515,273 | HUB International Ltd., 2024 Refi Term Loan B, 3 Mo. CME Term SOFR + 3.25%, 0.75% Floor | 8.57 % | 06/20/30 | 7,573,817 |
130,896 | Hyperion Insurance Group Ltd. (aka - Howden Group), 2023 USD Term Loan, 1 Mo. CME Term SOFR + 4.00%, 0.50% Floor | 9.33 % | 04/18/30 | 131,763 |
1,591,858 | IMA Financial Group, Inc., 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 3.25%, 0.50% Floor | 8.59 % | 11/01/28 | 1,596,840 |
4,885,556 | OneDigital Borrower LLC, Term Loan B, 1 Mo. CME Term SOFR + CSA + 4.25%, 0.50% Floor | 9.68 % | 11/16/27 | 4,919,267 |
4,256,905 | Ryan Specialty Group LLC, 2024 Term Loan, 1 Mo. CME Term SOFR + 2.75%, 0.75% Floor | 8.08 % | 09/01/27 | 4,290,428 |
1,036,130 | Truist Insurance Holdings LLC (McGriff/Panther Escrow), Second Lien Term Loan, 2 Mo. CME Term SOFR + 4.75%, 0.00% Floor | 10.09 % | 05/06/32 | 1,061,386 |
2,704,947 | Truist Insurance Holdings LLC (McGriff/Panther Escrow), Term Loan B, 2 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.59 % | 05/06/31 | 2,726,194 |
1,703,900 | USI, Inc., 2029 Term Loan B, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.05 % | 11/22/29 | 1,709,583 |
4,369,898 | USI, Inc., 2030 Term Loan B, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.08 % | 09/29/30 | 4,385,892 |
53,749,036 | ||||
Integrated Telecommunication Services – 1.6% | ||||
3,327,768 | Numericable (Altice France SA or SFR), Term Loan B-11, 3 Mo. Synthetic USD LIBOR + 2.75%, 0.00% Floor | 8.34 % | 07/31/25 | 2,915,358 |
992,463 | Numericable (Altice France SA or SFR), Term Loan B-12, 3 Mo. Synthetic USD LIBOR + 3.69%, 0.00% Floor | 9.28 % | 01/31/26 | 836,770 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Integrated Telecommunication Services (Continued) | ||||
$938,678 | Zayo Group Holdings, Inc., Incremental Term Loan B-2, 1 Mo. CME Term SOFR + 4.25%, 0.50% Floor | 9.65 % | 03/09/27 | $826,290 |
4,578,418 | ||||
IT Consulting & Other Services – 0.2% | ||||
575,530 | CDK Global, Inc.(Central Parent, Inc.), Term Loan B, 3 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.58 % | 07/06/29 | 580,929 |
Leisure Products – 0.1% | ||||
199,731 | Amer Sports Company, Initial Term Loan B, 3 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.58 % | 02/16/31 | 201,229 |
Metal, Glass & Plastic Containers – 1.6% | ||||
622,094 | Berlin Packaging LLC, Term Loan B-7, 1 Mo. CME Term SOFR + CSA + 3.75%, 0.00% Floor | 9.06%-9.32% | 05/15/31 | 623,951 |
2,220,668 | ProAmpac PG Borrower LLC, 2024 Refi Term Loan B, 3 Mo. CME Term SOFR + 4.00%, 0.75% Floor | 9.32%-9.33% | 09/15/28 | 2,238,156 |
937,872 | Tekni-Plex (Trident TPI Holdings, Inc.), Tranche B-6 Term Loan, 3 Mo. CME Term SOFR + 4.00%, 0.50% Floor | 9.30 % | 09/17/28 | 942,505 |
686,526 | TricorBraun, Inc., Initial Term Loan, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.69 % | 03/03/28 | 686,196 |
4,490,808 | ||||
Other Diversified Financial Services – 0.5% | ||||
1,492,000 | Worldpay (GTCR W Merger Sub LLC/Boost Newco LLC), Initial USD Term Loan, 3 Mo. CME Term SOFR + 3.00%, 0.50% Floor | 8.31 % | 12/31/30 | 1,500,184 |
Other Specialty Retail – 0.7% | ||||
2,189,725 | Petco Health and Wellness Company, Inc., Initial Term Loan B, 3 Mo. CME Term SOFR + CSA + 3.25%, 0.75% Floor | 8.82 % | 03/04/28 | 1,989,332 |
Packaged Foods & Meats – 0.9% | ||||
394,008 | Nomad Foods Ltd., Term Loan B-5, 6 Mo. CME Term SOFR + 2.50%, 0.50% Floor | 7.81 % | 11/08/29 | 395,578 |
1,473,591 | Shearer’s Foods LLC (Fiesta Purchaser, Inc.), Initial Term Loan B, 1 Mo. CME Term SOFR + 4.00%, 0.00% Floor | 9.33 % | 02/12/31 | 1,488,784 |
562,078 | Utz Quality Foods LLC, 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.08 % | 01/20/28 | 565,065 |
2,449,427 | ||||
Paper & Plastic Packaging Products & Materials – 3.3% | ||||
4,964,810 | Graham Packaging Company, L.P., Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.00%, 0.75% Floor | 8.44 % | 08/04/27 | 4,989,063 |
2,942,761 | Pactiv LLC/Evergreen Packaging LLC (fka Reynolds Group Holdings), 2024 Refi Term Loan B-4, 1 Mo. CME Term SOFR + 2.50%, 0.00% Floor | 7.82 % | 09/24/28 | 2,953,929 |
1,638,733 | Veritiv Corp. (Verde Purchaser LLC), Term Loan B, 3 Mo. CME Term SOFR + 5.00%, 0.00% Floor | 10.31 % | 12/02/30 | 1,643,649 |
9,586,641 | ||||
Pharmaceuticals – 0.6% | ||||
1,774,289 | Parexel International Corp. (Phoenix Newco), First Lien Term Loan, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.69 % | 11/15/28 | 1,786,585 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Property & Casualty Insurance – 1.6% | ||||
$4,445,701 | Sedgwick Claims Management Services, Inc., 2023 Term Loan B, 1 Mo. CME Term SOFR + 3.75%, 0.00% Floor | 9.08 % | 02/24/28 | $4,473,775 |
Research & Consulting Services – 7.3% | ||||
3,301,056 | AlixPartners, LLP, Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.50%, 0.50% Floor | 7.94 % | 02/04/28 | 3,315,399 |
7,782,419 | Clarivate Analytics PLC (Camelot), 2024 Term Loan B, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.08 % | 01/31/31 | 7,797,984 |
6,896,564 | Dun & Bradstreet Corp., 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 2.75%, 0.00% Floor | 8.07 % | 01/18/29 | 6,927,702 |
371,131 | Grant Thornton Advisors LLC, Term Loan B, 3 Mo. CME Term SOFR + 3.25%, 0.00% Floor | 8.60 % | 05/31/31 | 374,034 |
578,855 | J.D. Power (Project Boost Purchaser LLC), 2021 Incremental Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 8.94 % | 05/30/26 | 582,021 |
133,732 | J.D. Power (Project Boost Purchaser LLC), 2021 Incremental Term Loan B, 3 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 9.07 % | 05/30/26 | 134,464 |
987,080 | J.D. Power (Project Boost Purchaser LLC), Term Loan B, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.00% Floor | 8.94 % | 05/30/26 | 992,563 |
812,003 | Veritext Corp. (VT TopCo, Inc.), Initial Term Loan B, 1 Mo. CME Term SOFR + 3.50%, 0.50% Floor | 8.83 % | 08/12/30 | 817,078 |
20,941,245 | ||||
Restaurants – 5.7% | ||||
6,570,542 | 1011778 B.C. Unlimited Liability Company (Restaurant Brands) (aka Burger King/Tim Horton’s), Term B-5 Loan, 1 Mo. CME Term SOFR + 2.25%, 0.00% Floor | 7.58 % | 09/21/30 | 6,587,001 |
6,539,976 | IRB Holding Corp. (Arby’s/Inspire Brands), 2024 Replacement Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.75%, 0.75% Floor | 8.18 % | 12/15/27 | 6,572,970 |
3,147,602 | Whatabrands LLC, 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 2.75%, 0.50% Floor | 8.08 % | 08/03/28 | 3,156,038 |
16,316,009 | ||||
Security & Alarm Services – 1.6% | ||||
4,537,860 | Garda World Security Corp., 2024 Refi Term Loan, 3 Mo. CME Term SOFR + 4.25%, 0.00% Floor | 9.58 % | 02/01/29 | 4,587,209 |
Specialized Consumer Services – 0.9% | ||||
2,675,412 | Mister Car Wash Holdings, Inc., 2024 Refinancing Term Loan, 1 Mo. CME Term SOFR + 3.00%, 0.00% Floor | 8.33 % | 03/27/31 | 2,692,615 |
Specialized Finance – 0.6% | ||||
622,094 | Creative Planning Group (CPI Holdco), Initial Term Loan, 1 Mo. CME Term SOFR + 2.00%, 0.00% Floor | 7.32 % | 05/19/31 | 622,937 |
1,408,086 | Radiate Holdco LLC (Astound), Amendment No. 6 Term Loan, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.75% Floor | 8.69 % | 09/25/26 | 1,115,690 |
1,738,627 | ||||
Systems Software – 3.1% | ||||
1,494,017 | Gen Digital, Inc. (fka NortonLifeLock, Inc.), Term Loan B, 1 Mo. CME Term SOFR + CSA + 2.00%, 0.50% Floor | 7.43 % | 09/12/29 | 1,497,289 |
2,359,638 | Idera, Inc., Initial Term Loan, 3 Mo. CME Term SOFR + CSA + 3.75%, 0.75% Floor | 9.23 % | 03/02/28 | 2,369,313 |
1,543,166 | Proofpoint, Inc., 2024 Refi Term Loan, 1 Mo. CME Term SOFR + 3.00%, 0.50% Floor | 8.32 % | 08/31/28 | 1,549,246 |
Principal Value | Description | Rate (a) | Stated Maturity (b) | Value |
SENIOR FLOATING-RATE LOAN INTERESTS (c) (Continued) | ||||
Systems Software (Continued) | ||||
$2,981,260 | SS&C Technologies Holdings, Inc., Term Loan B8, 1 Mo. CME Term SOFR + 2.00%, 0.00% Floor | 7.32 % | 05/09/31 | $2,996,718 |
407,844 | SUSE (Marcel Bidco LLC), 2024 Refi Term Loan B, Daily CME Term SOFR + 4.00%, 0.50% Floor | 9.31%-9.33% | 11/09/30 | 411,223 |
8,823,789 | ||||
Trading Companies & Distributors – 0.8% | ||||
2,290,739 | SRS Distribution, Inc., 2021 Refinancing Term Loan, 1 Mo. CME Term SOFR + CSA + 3.50%, 0.50% Floor | 8.94 % | 06/04/28 | 2,307,806 |
111,601 | SRS Distribution, Inc., 2022 Refinancing Term Loan, 1 Mo. CME Term SOFR + CSA + 3.25%, 0.50% Floor | 8.59 % | 06/04/28 | 112,457 |
2,420,263 | ||||
Wireless Telecommunication Services – 1.6% | ||||
4,612,647 | SBA Senior Finance II LLC, 2024 Refi Term Loan B, 1 Mo. CME Term SOFR + 2.00%, 0.00% Floor | 7.33 % | 01/25/31 | 4,636,840 |
Total Senior Floating-Rate Loan Interests | 307,331,792 | |||
(Cost $307,334,995) | ||||
Principal Value | Description | Stated Coupon | Stated Maturity | Value |
CORPORATE BONDS AND NOTES (c) – 4.2% | ||||
Application Software – 0.1% | ||||
238,000 | GoTo Group, Inc. (d) | 5.50 % | 05/01/28 | 198,135 |
238,000 | GoTo Group, Inc. (d) | 5.50 % | 05/01/28 | 123,176 |
321,311 | ||||
Broadcasting – 1.7% | ||||
1,199,000 | iHeartCommunications, Inc. (d) | 5.25 % | 08/15/27 | 663,569 |
2,129,000 | Nexstar Media, Inc. (d) | 5.63 % | 07/15/27 | 2,011,187 |
2,395,000 | Sirius XM Radio, Inc. (d) | 3.13 % | 09/01/26 | 2,242,844 |
4,917,600 | ||||
Cable & Satellite – 1.1% | ||||
2,137,000 | CCO Holdings LLC / CCO Holdings Capital Corp. (d) | 5.13 % | 05/01/27 | 2,043,879 |
1,465,000 | CSC Holdings LLC (d) | 7.50 % | 04/01/28 | 819,308 |
374,000 | CSC Holdings LLC (d) | 11.25 % | 05/15/28 | 302,155 |
3,165,342 | ||||
Casinos & Gaming – 0.4% | ||||
572,000 | Fertitta Entertainment LLC / Fertitta Entertainment Finance Co., Inc. (d) | 4.63 % | 01/15/29 | 514,965 |
572,000 | VICI Properties, L.P. / VICI Note Co., Inc. (d) | 4.25 % | 12/01/26 | 550,170 |
1,065,135 | ||||
Health Care Supplies – 0.1% | ||||
274,000 | Medline Borrower, L.P. / Medline Co-Issuer, Inc. (d) | 6.25 % | 04/01/29 | 274,398 |
Insurance Brokers – 0.1% | ||||
346,000 | AmWINS Group, Inc. (d) | 4.88 % | 06/30/29 | 318,362 |
Systems Software – 0.7% | ||||
2,000,000 | Boxer Parent Co., Inc. (d) | 9.13 % | 03/01/26 | 2,009,311 |
Total Corporate Bonds and Notes | 12,071,459 | |||
(Cost $12,863,540) |
Principal Value | Description | Stated Coupon | Stated Maturity | Value |
FOREIGN CORPORATE BONDS AND NOTES (c) – 0.6% | ||||
Application Software – 0.0% | ||||
$22,000 | Open Text Corp. (d) | 3.88 % | 02/15/28 | $20,237 |
Environmental & Facilities Services – 0.6% | ||||
1,554,000 | GFL Environmental, Inc. (d) | 3.75 % | 08/01/25 | 1,518,246 |
305,000 | GFL Environmental, Inc. (d) | 4.00 % | 08/01/28 | 279,172 |
1,797,418 | ||||
Total Foreign Corporate Bonds and Notes | 1,817,655 | |||
(Cost $1,817,633) |
Shares | Description | Value |
COMMON STOCKS (c) – 0.0% | ||
Pharmaceuticals – 0.0% | ||
150,392 | Akorn, Inc. (e) (f) (g) | 11,505 |
(Cost $1,724,086) | ||
RIGHTS (c) – 0.0% | ||
Life Sciences Tools & Services – 0.0% | ||
1 | New Millennium Holdco, Inc., Corporate Claim Trust, no expiration date (g) (h) (i) (j) | 0 |
1 | New Millennium Holdco, Inc., Lender Claim Trust, no expiration date (g) (h) (i) (j) | 0 |
Total Rights | 0 | |
(Cost $0) | ||
Total Investments – 112.1% | 321,232,411 | |
(Cost $323,740,254) | ||
Outstanding Loans – (10.8)% | (31,000,000 ) | |
Net Other Assets and Liabilities – (1.3)% | (3,697,805 ) | |
Net Assets – 100.0% | $286,534,606 |
(a) | Senior Floating-Rate Loan Interests (“Senior Loans”) in which the Fund invests pay interest at rates which are periodically predetermined by reference to a base lending rate plus a premium. These base lending rates are generally (i) the SOFR obtained from the U.S. Department of the Treasury’s Office of Financial Research or another major financial institution, (ii) the lending rate offered by one or more major European banks, such as the synthetic LIBOR, (iii) the prime rate offered by one or more United States banks or (iv) the certificate of deposit rate. Certain Senior Loans are subject to a SOFR or synthetic LIBOR floor that establishes a minimum SOFR or synthetic LIBOR rate. When a range of rates is disclosed, the Fund holds more than one contract within the same tranche with identical SOFR or synthetic LIBOR period, spread and floor, but different SOFR or synthetic LIBOR reset dates. |
(b) | Senior Loans generally are subject to mandatory and/or optional prepayment. As a result, the actual remaining maturity of Senior Loans may be substantially less than the stated maturities shown. |
(c) | All of these securities are available to serve as collateral for the outstanding loans. |
(d) | This security, sold within the terms of a private placement memorandum, is exempt from registration upon resale under Rule 144A of the Securities Act of 1933, as amended (the “1933 Act”), and may be resold in transactions exempt from registration, normally to qualified institutional buyers. Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be liquid by First Trust Advisors L.P. (the “Advisor”). Although market instability can result in periods of increased overall market illiquidity, liquidity for each security is determined based on security specific factors and assumptions, which require subjective judgment. At May 31, 2024, securities noted as such amounted to $13,889,114 or 4.8% of net assets. |
(e) | This issuer has filed for protection in bankruptcy court. |
(f) | Security received in a transaction exempt from registration under the 1933 Act. The security may be resold pursuant to an exemption from registration under the 1933 Act, typically to qualified institutional buyers (see Note 2D - Restricted Securities in the Notes to Financial Statements). |
(g) | Non-income producing security. |
(h) | This security is fair valued by the Advisor’s Pricing Committee in accordance with procedures approved by the Fund’s Board of Trustees, and in accordance with the provisions of the Investment Company Act of 1940 and rules thereunder, as amended. At May 31, 2024, securities noted as such are valued at $0 or 0.0% of net assets. |
(i) | Pursuant to procedures adopted by the Fund’s Board of Trustees, this security has been determined to be illiquid by the Advisor. |
(j) | This security’s value was determined using significant unobservable inputs (see Note 2A – Portfolio Valuation in the Notes to Financial Statements). |
Abbreviations throughout the Portfolio of Investments: | |
CME | – Chicago Mercantile Exchange |
CSA | – Credit Spread Adjustment |
LIBOR | – London Interbank Offered Rate |
SOFR | – Secured Overnight Financing Rate |
USD | – United States Dollar |
Valuation Inputs
Total Value at 5/31/2024 | Level 1 Quoted Prices | Level 2 Significant Observable Inputs | Level 3 Significant Unobservable Inputs | |
Senior Floating-Rate Loan Interests* | $307,331,792 | $— | $307,331,792 | $— |
Corporate Bonds and Notes* | 12,071,459 | — | 12,071,459 | — |
Foreign Corporate Bonds and Notes* | 1,817,655 | — | 1,817,655 | — |
Common Stocks* | 11,505 | — | 11,505 | — |
Rights* | — ** | — | — | — ** |
Total Investments | $321,232,411 | $— | $321,232,411 | $— ** |
* | See Portfolio of Investments for industry breakout. |
** | Investments are valued at $0. |
ASSETS: | |
Investments, at value | $ 321,232,411 |
Cash | 2,178,303 |
Receivables: | |
Investment securities sold | 19,956,189 |
Interest | 1,143,938 |
Prepaid expenses | 21,376 |
Unrealized appreciation on unfunded loan commitments | 3,182 |
Total Assets | 344,535,399 |
LIABILITIES: | |
Outstanding loans | 31,000,000 |
Payables: | |
Investment securities purchased | 26,416,604 |
Interest and fees on loans | 224,027 |
Investment advisory fees | 203,776 |
Audit and tax fees | 83,190 |
Shareholder reporting fees | 24,150 |
Administrative fees | 23,372 |
Legal fees | 8,849 |
Trustees’ fees and expenses | 8,617 |
Custodian fees | 3,572 |
Transfer agent fees | 1,714 |
Financial reporting fees | 771 |
Other liabilities | 2,151 |
Total Liabilities | 58,000,793 |
NET ASSETS | $286,534,606 |
NET ASSETS consist of: | |
Paid-in capital | $ 346,155,528 |
Par value | 259,834 |
Accumulated distributable earnings (loss) | (59,880,756 ) |
NET ASSETS | $286,534,606 |
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) | $11.03 |
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized) | |
Investments, at cost | $323,740,254 |
INVESTMENT INCOME: | ||
Interest | $ 30,616,276 | |
Total investment income | 30,616,276 | |
EXPENSES: | ||
Interest and fees on loans | 3,774,352 | |
Investment advisory fees | 2,567,282 | |
Administrative fees | 217,230 | |
Legal fees | 203,057 | |
Audit and tax fees | 82,431 | |
Shareholder reporting fees | 79,212 | |
Trustees’ fees and expenses | 34,389 | |
Listing expense | 25,695 | |
Transfer agent fees | 20,208 | |
Financial reporting fees | 9,250 | |
Custodian fees | 8,001 | |
Other | 23,849 | |
Total expenses | 7,044,956 | |
NET INVESTMENT INCOME (LOSS) | 23,571,320 | |
NET REALIZED AND UNREALIZED GAIN (LOSS): | ||
Net realized gain (loss) on investments | (1,083,282 ) | |
Net change in unrealized appreciation (depreciation) on: | ||
Investments | 9,600,988 | |
Unfunded loan commitments | 32,903 | |
Net change in unrealized appreciation (depreciation) | 9,633,891 | |
NET REALIZED AND UNREALIZED GAIN (LOSS) | 8,550,609 | |
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS | $ 32,121,929 |
Year Ended 5/31/2024 | Year Ended 5/31/2023 | |
OPERATIONS: | ||
Net investment income (loss) | $ 23,571,320 | $ 20,042,020 |
Net realized gain (loss) | (1,083,282 ) | (18,246,359 ) |
Net change in unrealized appreciation (depreciation) | 9,633,891 | 12,180,168 |
Net increase (decrease) in net assets resulting from operations | 32,121,929 | 13,975,829 |
DISTRIBUTIONS TO SHAREHOLDERS FROM: | ||
Investment operations | (23,583,385 ) | (20,337,430 ) |
Return of capital | (6,661,278 ) | (2,696,843 ) |
Total distributions to shareholders | (30,244,663 ) | (23,034,273 ) |
Total increase (decrease) in net assets | 1,877,266 | (9,058,444 ) |
NET ASSETS: | ||
Beginning of period | 284,657,340 | 293,715,784 |
End of period | $ 286,534,606 | $ 284,657,340 |
COMMON SHARES: | ||
Common Shares at end of period | 25,983,388 | 25,983,388 |
Cash flows from operating activities: | ||
Net increase (decrease) in net assets resulting from operations | $32,121,929 | |
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash provided by operating activities: | ||
Purchases of investments | (675,554,975 ) | |
Sales, maturities and paydown of investments | 696,924,370 | |
Net amortization/accretion of premiums/discounts on investments | (1,068,754 ) | |
Net realized gain/loss on investments | 1,083,282 | |
Net change in unrealized appreciation/depreciation on investments and unfunded loan commitments | (9,633,891 ) | |
Changes in assets and liabilities: | ||
Increase in interest receivable | (43,376 ) | |
Increase in prepaid expenses | (141 ) | |
Increase in interest and fees payable on loans | 112,277 | |
Decrease in investment advisory fees payable | (9,185 ) | |
Increase in audit and tax fees payable | 13,311 | |
Decrease in legal fees payable | (3,700 ) | |
Decrease in shareholder reporting fees payable | (462 ) | |
Decrease in administrative fees payable | (1,593 ) | |
Increase in custodian fees payable | 1,357 | |
Increase in transfer agent fees payable | 102 | |
Increase in trustees’ fees and expenses payable | 939 | |
Decrease in other liabilities payable | (2,013 ) | |
Cash provided by operating activities | $43,939,477 | |
Cash flows from financing activities: | ||
Distributions to Common Shareholders from investment operations | (23,583,385 ) | |
Distributions to Common Shareholders from return of capital | (6,661,278 ) | |
Repayment of borrowings | (124,000,000 ) | |
Proceeds from borrowings | 107,000,000 | |
Cash used in financing activities | (47,244,663 ) | |
Decrease in cash | (3,305,186 ) | |
Cash at beginning of period | 5,483,489 | |
Cash at end of period | $2,178,303 | |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest and fees | $3,662,075 |
Year Ended May 31, | |||||
2024 | 2023 | 2022 | 2021 | 2020 | |
Net asset value, beginning of period | $ 10.96 | $ 11.30 | $ 12.70 | $ 12.46 | $ 13.70 |
Income from investment operations: | |||||
Net investment income (loss) | 0.91 (a) | 0.78 | 0.56 | 0.55 | 0.67 |
Net realized and unrealized gain (loss) | 0.32 | (0.23 ) | (0.99 ) | 0.90 | (0.97 ) |
Total from investment operations | 1.23 | 0.55 | (0.43 ) | 1.45 | (0.30 ) |
Distributions paid to shareholders from: | |||||
Net investment income | (0.90 ) | (0.79 ) | (0.57 ) | (0.56 ) | (0.69 ) |
Return of capital | (0.26 ) | (0.10 ) | (0.40 ) | (0.69 ) | (0.25 ) |
Total distributions paid to Common Shareholders | (1.16 ) | (0.89 ) | (0.97 ) | (1.25 ) | (0.94 ) |
Common Share repurchases | — | — | — | 0.04 | — |
Net asset value, end of period | $ | $10.96 | $11.30 | $12.70 | $12.46 |
Market value, end of period | $ | $9.56 | $10.90 | $12.60 | $11.12 |
Total return based on net asset value (b) | 12.96 % | 6.01 % | (3.64 )% | 13.51 % | (1.38 )% |
Total return based on market value (b) | 22.93 % | (4.14 )% | (6.31 )% | 26.18 % | 0.65 % |
Ratios to average net assets/supplemental data: | |||||
Net assets, end of period (in 000’s) | $ 286,535 | $ 284,657 | $ 293,716 | $ 329,619 | $ 332,267 |
Ratio of total expenses to average net assets | 2.45 % | 2.08 % | 1.67 % | 1.70 % | 2.35 % |
Ratio of total expenses to average net assets excluding interest expense | 1.14 % | 1.13 % | 1.24 % | 1.30 % | 1.26 % |
Ratio of net investment income (loss) to average net assets | 8.20 % | 6.97 % | 4.64 % | 4.37 % | 4.98 % |
Portfolio turnover rate | 98 % | 67 % | 45 % | 78 % | 64 % |
Indebtedness: | |||||
Total loans outstanding (in 000’s) | $ 31,000 | $ 48,000 | $ 116,000 | $ 136,000 | $ 119,000 |
Asset coverage per $1,000 of indebtedness (c) | $ 10,243 | $ 6,930 | $ 3,532 | $ 3,424 | $ 3,792 |
(a) | Based on average shares outstanding. |
(b) | Total return is based on 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 net asset value per share for net asset value returns and changes in Common Share Price for market value returns. Total returns do not reflect sales load and are not annualized for periods of less than one year. Past performance is not indicative of future results. |
(c) | Calculated by subtracting the Fund’s total liabilities (not including the loans outstanding) from the Fund’s total assets, and dividing by the outstanding loans balance in 000’s. |
(1)The terms “security” and “securities” used throughout the Notes to Financial Statements include Senior Loans.
Borrower | Principal Value | Commitment Amount | Value | Unrealized Appreciation (Depreciation) |
Alter Domus (Chrysaor Bidco SARL), Term Loan | $ 34,093 | $ 34,093 | $ 34,263 | $ 170 |
Epicor Software Corp., Term Loan | 359,655 | 358,756 | 361,768 | 3,012 |
$392,849 | $396,031 | $3,182 |
Security | Acquisition Date | Shares | Current Price | Carrying Cost | Value | % of Net Assets |
Akorn, Inc. | 10/15/2020 | 150,392 | $0.08 | $1,724,086 | $11,505 | 0.00 %* |
* Amount is less than 0.01%. |
Distributions paid from: | 2024 | 2023 |
Ordinary income | $23,583,385 | $20,337,430 |
Capital gains | — | — |
Return of capital | 6,661,278 | 2,696,843 |
Undistributed ordinary income | $— |
Undistributed capital gains | — |
Total undistributed earnings | — |
Accumulated capital and other losses | (57,373,687 ) |
Net unrealized appreciation (depreciation) | (2,507,069 ) |
Total accumulated earnings (losses) | (59,880,756 ) |
Other | — |
Paid-in capital | 346,415,362 |
Total net assets | $286,534,606 |
Tax Cost | Gross Unrealized Appreciation | Gross Unrealized (Depreciation) | Net Unrealized Appreciation (Depreciation) |
$323,742,662 | $2,054,427 | $(4,564,678) | $(2,510,251) |
NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE |
Assumed Portfolio Total Return (Net of Expenses) | -10 % | -5 % | 0 % | 5 % | 10 % |
Common Share Total Return | -11.89 % | -6.35 % | -0.80 % | 4.74 % | 10.28 % |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal Occupations During Past 5 Years | Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
INDEPENDENT TRUSTEES | ||||
Richard E. Erickson, Trustee (1951) | • Three Year Term • Since Fund Inception | Retired; Physician, Edward-Elmhurst Medical Group (2021 to September 2023); Physician and Officer, Wheaton Orthopedics (1990 to 2021) | 271 | None |
Thomas R. Kadlec, Trustee (1957) | • Three Year Term • Since Fund Inception | Retired; President, ADM Investor Services, Inc. (Futures Commission Merchant) (2010 to July 2022) | 271 | Director, National Futures Association; Formerly, Director of ADM Investor Services, Inc., ADM Investor Services International, ADMIS Hong Kong Ltd., ADMIS Singapore, Ltd., and Futures Industry Association |
Denise M. Keefe, Trustee (1964) | • Three Year Term • Since 2021 | Senior Vice President, Advocate Health, Continuing Health Division (Integrated Healthcare System) (2023 to present); Executive Vice President, Advocate Aurora Health (Integrated Healthcare System) (2018 to 2023) | 271 | Director and Board Chair of Advocate Home Health Services, Advocate Home Care Products and Advocate Hospice; Director and Board Chair of Aurora At Home (since 2018); Director of Advocate Physician Partners Accountable Care Organization; Director of RML Long Term Acute Care Hospitals; Director of Senior Helpers (2021 to 2024); and Director of MobileHelp (2022 to 2024) |
Robert F. Keith, Trustee (1956) | • Three Year Term • Since June 2006 | President, Hibs Enterprises (Financial and Management Consulting) | 271 | Formerly, Director of Trust Company of Illinois |
Niel B. Nielson, Trustee (1954) | • Three Year Term • Since Fund Inception | Senior Advisor (2018 to Present), Managing Director and Chief Operating Officer (2015 to 2018), Pelita Harapan Educational Foundation (Educational Products and Services) | 271 | None |
Name, Year of Birth and Position with the Fund | Term of Office and Year First Elected or Appointed(1) | Principal Occupations During Past 5 Years | Number of Portfolios in the First Trust Fund Complex Overseen by Trustee | Other Trusteeships or Directorships Held by Trustee During Past 5 Years |
INDEPENDENT TRUSTEES | ||||
Bronwyn Wright, Trustee (1971) | • Three Year Term • Since 2023 | Independent Director to a number of Irish collective investment funds (2009 to Present); Various roles at international affiliates of Citibank (1994 to 2009), including Managing Director, Citibank Europe plc and Head of Securities and Fund Services, Citi Ireland (2007 to 2009) | 247 | None |
INTERESTED TRUSTEE | ||||
James A. Bowen(2), Trustee and Chairman of the Board (1955) | • Three Year Term • Since Fund Inception | Chief Executive Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chairman of the Board of Directors, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) | 271 | None |
Name and Year of Birth | Position and Offices with Fund | Term of Office and Length of Service | Principal Occupations During Past 5 Years |
OFFICERS(3) | |||
James M. Dykas (1966) | President and Chief Executive Officer | • Indefinite Term • Since 2016 | Managing Director and Chief Financial Officer, First Trust Advisors L.P. and First Trust Portfolios L.P.; Chief Financial Officer, BondWave LLC (Software Development Company) and Stonebridge Advisors LLC (Investment Advisor) |
Derek D. Maltbie (1972) | Treasurer, Chief Financial Officer and Chief Accounting Officer | • Indefinite Term • Since 2023 | Senior Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., July 2021 to Present. Previously, Vice President, First Trust Advisors L.P. and First Trust Portfolios L.P., 2014 to 2021. |
W. Scott Jardine (1960) | Secretary and Chief Legal Officer | • Indefinite Term • Since Fund Inception | General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P.; Secretary and General Counsel, BondWave LLC; Secretary, Stonebridge Advisors LLC |
Daniel J. Lindquist (1970) | Vice President | • Indefinite Term • Since September 2005 | Managing Director, First Trust Advisors L.P. and First Trust Portfolios L.P. |
Kristi A. Maher (1966) | Chief Compliance Officer and Assistant Secretary | • Indefinite Term • Chief Compliance Officer Since January 2011 • Assistant Secretary Since Fund Inception | Deputy General Counsel, First Trust Advisors L.P. and First Trust Portfolios L.P. |
FUND ACCOUNTANT, AND
CUSTODIAN
PUBLIC ACCOUNTING FIRM
(b) | Not applicable to the Registrant. |
Item 2. Code of Ethics.
(a) | The First Trust Senior Floating Rate Income Fund II (“Registrant”), as of the end of the period covered by this report, has adopted a code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party. |
(c) | There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the Registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, and that relates to any element of the code of ethics description. |
(d) | The Registrant, during the period covered by this report, has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the Registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item’s instructions. |
(e) | Not applicable to the Registrant. |
(f) | A copy of the code of ethics that applies to the Registrant’s principal executive officer, principal financial officer, principal accounting officer or controller is filed as an exhibit pursuant to Item 13(a)(1). |
Item 3. Audit Committee Financial Expert.
As of the end of the period covered by the report, the Registrant’s Board of Trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified to serve as audit committee financial experts serving on its audit committee and that each of them is “independent,” as defined by Item 3 of Form N-CSR.
Item 4. Principal Accountant Fees and Services.
(a) | Audit Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for the audit of the Registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements were $59,000 for the fiscal year ended 2023 and $59,000 for the fiscal year ended 2024. |
(b) | Audit-Related Fees (Registrant) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
Audit-Related Fees (Investment Advisor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
Audit-Related Fees (Distributor) -- The aggregate fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the Registrant’s financial statements and are not reported under paragraph (a) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
(c) | Tax Fees (Registrant) -- The aggregate fees billed for professional services rendered by the principal accountant for tax return review and debt instrument tax analysis and reporting were $14,070 for the fiscal year ended 2023 and $14,267 for the fiscal year ended 2024. These fees were for tax consultation and/or tax return preparation and professional services rendered for PFIC (Passive Foreign Investment Company) Identification Services. |
Tax Fees (Investment Advisor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant’s advisor and distributor $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
Tax Fees (Distributor) -- The aggregate fees billed for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning to the Registrant’s distributor were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
(d) | All Other Fees (Registrant) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant, other than the services reported in paragraphs (a) through (c) of this Item $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024. |
All Other Fees (Investment Advisor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant’s investment advisor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
All Other Fees (Distributor) -- The aggregate fees billed for products and services provided by the principal accountant to the Registrant’s distributor, other than the services reported in paragraphs (a) through (c) of this Item were $0 for the fiscal year ended 2023 and $0 for the fiscal year ended 2024.
(e)(1) Disclose the audit committee’s pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval Policy, the Audit Committee (the “Committee”) is responsible for the pre-approval of all audit services and permitted non-audit services (including the fees and terms thereof) to be performed for the Registrant by its independent auditors. The Chairman of the Committee is authorized to give such pre-approvals on behalf of the Committee up to $25,000 and report any such pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent auditor’s engagements for non-audit services with the Registrant’s advisor (not including a sub-advisor whose role is primarily portfolio management and is sub-contracted or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant, if the engagement relates directly to the operations and financial reporting of the Registrant, subject to the de minimis exceptions for non-audit services described in Rule 2-01 of Regulation S-X. If the independent auditor has provided non-audit services to the Registrant’s advisor (other than any sub-advisor whose role is primarily portfolio management and is sub-contracted with or overseen by another investment advisor) and any entity controlling, controlled by or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to its policies, the Committee will consider whether the provision of such non-audit services is compatible with the auditor’s independence.
(e)(2) The percentage of services described in each of paragraphs (b) through (d) for the Registrant and the Registrant’s investment advisor and distributor of this Item that were approved by the audit committee pursuant to the pre-approval exceptions included in paragraph (c)(7)(i)(C) or paragraph(C)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
Registrant: | Advisor and Distributor: | ||
(b) 0% | (b) 0% | ||
(c) 0% | (c) 0% | ||
(d) 0% | (d) 0% |
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the Registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than fifty percent. |
(g) | The aggregate non-audit fees billed by the Registrant’s accountant for services rendered to the Registrant, and rendered to the Registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the advisor that provides ongoing services to the Registrant for the fiscal year ended 2023 were $14,070 for the Registrant, $31,000 for the Registrant’s investment advisor and $0 for the Registrant’s distributor; and for the fiscal year ended 2024 were $14,267 for the Registrant, $28,600 for the Registrant’s investment advisor and $0 for the Registrant’s distributor. |
(h) | The Registrant’s audit committee of its Board of Trustees has determined that the provision of non-audit services that were rendered to the Registrant’s investment advisor (not including any sub-advisor whose role is primarily portfolio management and is subcontracted with or overseen by another investment advisor), and any entity controlling, controlled by, or under common control with the investment advisor that provides ongoing services to the Registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
(i) Not applicable to the Registrant.
(j) Not applicable to the Registrant.
Item 5. Audit Committee of Listed Registrants.
(a) | The Registrant has a separately designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 consisting of all the independent directors of the Registrant. The audit committee of the Registrant is comprised of: Richard E. Erickson, Thomas R. Kadlec, Denise M. Keefe, Robert F. Keith, Niel B. Nielson and Bronwyn Wright. |
(b) | Not applicable to the Registrant. |
Item 6. Investments.
(a) | The Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included in the Registrant’s Annual Report, which is included as Item 1 of this Form N-CSR. |
(b) | Not applicable to the Registrant. |
Item 7. Financial Statements and Financial Highlights for Open-End Management Investment Companies.
(a) Not applicable to the Registrant.
(b) Not applicable to the Registrant.
Item 8. Changes in and Disagreements with Accountants for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 9. Proxy Disclosures for Open-End Management Investment Companies.
Not applicable to the Registrant.
Item 10. Remuneration Paid to Directors, Officers, and Others of Open-End Management Investment Companies
Not applicable to the Registrant.
Item 11. Statement Regarding Basis for Approval of Investment Advisory Contract.
There were no approvals of an investment advisory contract during the Registrant’s most recent fiscal half-year.
Item 12. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies.
The Proxy Voting Policies are attached herewith.
Item 13. Portfolio Managers of Closed-End Management Investment Companies.
(a)(1) Identification of Portfolio Manager(s) or Management Team Members and Description of Role of Portfolio Manager(s) or Management Team Members
Information provided as of May 31, 2024
The First Trust Advisors Leveraged Finance Investment team manages a portfolio comprised primarily of U.S. dollar denominated, senior secured floating-rate loans. The Portfolio Managers are responsible for directing the investment activities within the Fund. William Housey is the Senior Portfolio Manager and has primary responsibility for investment decisions. Jeffrey Scott assists Mr. Housey and there are also Senior Credit Analysts assigned to certain industries. The Portfolio Managers are supported in their portfolio management activities by the First Trust Advisors Leveraged Finance investment team, including a team of credit analysts, designated traders, and operations personnel. Senior Credit Analysts are assigned industries and Associate Credit Analysts support the Senior Credit Analysts. All credit analysts, operations personnel, designated traders, and portfolio managers report to Mr. Housey.
(a)(2) Other Accounts Managed by Portfolio Manager(s) or Management Team Member and Potential Conflicts of Interest
Information provided as of May 31, 2024
Name of Portfolio Manager or Team Member | Type of Accounts | Total # of Accounts Managed* | Total Assets | # of Accounts Managed for which Advisory Fee is Based on Performance | Total Assets for which Advisory Fee is Based on Performance |
William Housey | Registered Investment Companies | 7 | $5.768B | 0 | 0 |
Jeffrey Scott | Registered Investment Companies | 7 | $5.768B | 0 | 0 |
Potential Conflicts of Interests
Potential conflicts of interest may arise when a portfolio manager of the Registrant has day-to-day management responsibilities with respect to one or more other funds or other accounts. The First Trust Advisors Leveraged Finance Investment Team adheres to its trade allocation policy utilizing a pro-rata methodology to address this conflict.
First Trust and its affiliate, First Trust Portfolios L.P. (“FTP”'), have in place a joint Code of Ethics and Insider Trading Policies and Procedures that are designed to (a) prevent First Trust personnel from trading securities based upon material inside information in the possession of such personnel and (b) ensure that First Trust personnel avoid actual or potential conflicts of interest or abuse of their positions of trust and responsibility that could occur through such activities as front running securities trades for the Registrant. Personnel are required to have duplicate confirmations and account statements delivered to First Trust and FTP compliance personnel who then compare such trades to trading activity to detect any potential conflict situations. In addition to the personal trading restrictions specified in the Code of Ethics and Insider Trading Policies and Procedures, employees in the First Trust Advisors Leveraged Finance Investment Team are prohibited from buying or selling equity securities (including derivative instruments such as options, warrants and futures) and corporate bonds for their personal account and in any accounts over which they exercise control. Employees in the First Trust Advisors Leveraged Finance Investment Team are also prohibited from engaging in any personal transaction while in possession of material non-public information regarding the security or the issuer of the security. First Trust and FTP also maintain a restricted list of all issuers for which the First Trust Advisors Leveraged Finance Investment Team has material non-public information in its possession and all transactions executed for a product advised or supervised by First Trust or FTP are compared daily against the restricted list.
(a)(3) Compensation Structure of Portfolio Manager(s) or Management Team Members
Information provided as of May 31, 2024
The compensation structure for internal portfolio managers is based upon a fixed salary as well as a discretionary bonus determined by the management of FTA. Salaries are determined by management and are based upon an individual’s position and overall value to the firm. Bonuses are also determined by management and are generally based upon an individual’s or team’s overall contribution to the success of the firm, assets under management and the profitability of the firm. Certain internal portfolio managers have an indirect ownership stake in the firm and will therefore receive their allocable share of ownership related distributions.
(a)(4) Disclosure of Securities Ownership as of May 31, 2024
Name of Portfolio Manager or Team Member | Dollar ($) Range of Fund Shares Beneficially Owned |
William Housey | $50,001-$100,000 |
Jeffrey Scott | $10,001-$50,000 |
(b) | Not applicable to the Registrant. |
Item 14. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
No reportable purchases for the period covered by this report.
Item 15. Submission of Matters to a Vote of Security Holders.
There have been no material changes to the procedures by which the shareholders may recommend nominees to the Registrant’s board of directors, where those changes were implemented after the Registrant last provided disclosure in response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)), or this Item.
Item 16. Controls and Procedures.
(a) | The Registrant’s principal executive and principal financial officers, or persons performing similar functions, have concluded that the Registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
(b) | There were no changes in the Registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting. |
Item 17. Disclosure of Securities Lending Activities for Closed-End Management Investment Companies.
The Registrant did not engage in any securities lending activity and no services were provided by the securities lending agent to the Registrant during its most recent fiscal year.
Item 18. Recovery of Erroneously Awarded Compensation.
(a) | Not applicable to the Registrant. |
(b) | Not applicable to the Registrant. |
Item 19. Exhibits.
(a)(1) | Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. |
(a)(2) | Not applicable to the Registrant. |
(a)(3) | The certifications required by Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2022 are attached hereto. |
(a)(4) | Not applicable to the Registrant. |
(a)(5) | Not applicable to the Registrant. |
(b) | Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
(c) | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies as required by Item 12 is attached hereto. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) | First Trust Senior Floating Rate Income Fund II |
By (Signature and Title)* | /s/ James M. Dykas | |
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Date: | August 8, 2024 |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By (Signature and Title)* | /s/ James M. Dykas | |
James M. Dykas, President and Chief Executive Officer (principal executive officer) |
Date: | August 8, 2024 |
By (Signature and Title)* | /s/ Derek D. Maltbie | |
Derek D. Maltbie, Treasurer, Chief Financial Officer and Chief Accounting Officer (principal financial officer) |
Date: | August 8, 2024 |
* Print the name and title of each signing officer under his or her signature.