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, 2015
--------------
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, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
ANNUAL
REPORT
FOR THE YEAR ENDED
MAY 31, 2015
FIRST TRUST
SENIOR FLOATING RATE
INCOME FUND II
(FCT)
FIRST TRUST
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
ANNUAL REPORT
MAY 31, 2015
Shareholder Letter.......................................................... 1
At a Glance................................................................. 2
Portfolio Commentary........................................................ 3
Portfolio of Investments.................................................... 5
Statement of Assets and Liabilities......................................... 17
Statement of Operations..................................................... 18
Statements of Changes in Net Assets......................................... 19
Statement of Cash Flows..................................................... 20
Financial Highlights........................................................ 21
Notes to Financial Statements............................................... 22
Report of Independent Registered Public Accounting Firm..................... 28
Additional Information...................................................... 29
Board of Trustees and Officers.............................................. 32
Privacy Policy.............................................................. 34
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
First Trust Senior Floating Rate Income Fund II (the "Fund") to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. When evaluating the information
included in this report, you are cautioned not to place undue reliance on these
forward-looking statements, which reflect the judgment of the Advisor and its
representatives only as of the date hereof. We undertake no obligation to
publicly revise or update these forward-looking statements to reflect events and
circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that the Fund will achieve its investment objectives. The
Fund is subject to market risk, which is the possibility that the market values
of securities owned by the Fund will decline and that the value of the Fund
shares may therefore be less than what you paid for them. Accordingly, you can
lose money by investing in the Fund. See "Risk Considerations" in the Additional
Information section of this report for a discussion of certain other risks of
investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares,
when sold, may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
the Fund. It includes details about the Fund and presents data and analysis that
provide insight into the Fund's performance and investment approach.
By reading the portfolio commentary by the portfolio management team of the
Fund, you may obtain an understanding of how the market environment affected the
Fund's performance. The statistical information that follows may help you
understand the Fund's performance compared to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by personnel of the
Advisor are just that: informed opinions. They should not be considered to be
promises or advice. The opinions, like the statistics, cover the period through
the date on the cover of this report. The material risks of investing in the
Fund are spelled out in the prospectus, the statement of additional information,
this report and other Fund regulatory filings.
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
MAY 31, 2015
Dear Shareholders:
Thank you for your investment in First Trust Senior Floating Rate Income Fund II
(the "Fund").
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
annual report, which contains detailed information about your investment for the
12 months ended May 31, 2015, including a portfolio commentary from the Fund's
management team, a performance analysis and a market and Fund outlook.
Additionally, First Trust has compiled the Fund's financial statements for you
to review. We encourage you to read this report and discuss it with your
financial advisor.
U.S. markets, fueled by accelerating growth and an accommodating Federal
Reserve, enjoyed a prosperous year in 2014, though the year was not as
prosperous for senior loan funds. Volatility in the U.S. and global markets,
particularly over the last six months, was created by a combination of economic
and global factors, including the continued conflict in the Middle East and a
sharp decline in oil prices. Another factor that has impacted markets is the
fact that many economists are predicting the Federal Reserve will begin to raise
interest rates this year. This volatility impacted senior loans over the
reporting period, and senior loans which retracted over the past several months
remain in positive territory (though past performance is no guarantee of future
performance).
As I have written previously, First Trust believes investors should maintain
perspective about the markets and have realistic expectations about their
investments. Markets will always go up and down, but we believe that having a
long-term investment horizon and being invested in quality products can help you
reach your goals.
Thank you for giving First Trust the opportunity to be a part of your investment
plan. We value the relationship and will continue to focus on our disciplined
investment approach and long-term perspective to help investors reach their
financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
"AT A GLANCE"
AS OF MAY 31, 2015 (UNAUDITED)
-------------------------------------------------------------------
FUND STATISTICS
-------------------------------------------------------------------
Symbol on New York Stock Exchange FCT
Common Share Price $13.77
Common Share Net Asset Value ("NAV") $14.71
Premium (Discount) to NAV (6.39)%
Net Assets Applicable to Common Shares $392,699,458
Current Monthly Distribution per Common Share (1) $0.0750
Current Annualized Distribution per Common Share $0.9000
Current Distribution Rate on Closing Common Share Price (2) 6.54%
Current Distribution Rate on NAV (2) 6.12%
-------------------------------------------------------------------
-------------------------------------------------------------------
COMMON SHARE PRICE & NAV (WEEKLY CLOSING PRICE)
-------------------------------------------------------------------
Common Share Price NAV
5/14 $14.00 $14.95
13.81 14.91
14.00 14.94
14.11 14.96
6/14 14.25 14.98
13.99 14.92
13.98 14.93
13.91 14.93
7/14 13.97 14.94
13.80 14.80
13.60 14.77
13.78 14.77
13.85 14.83
8/14 13.89 14.86
13.77 14.77
13.68 14.73
13.66 14.75
9/14 13.57 14.68
13.51 14.60
13.33 14.58
13.07 14.49
13.25 14.58
10/14 13.24 14.66
13.01 14.62
13.12 14.64
13.05 14.66
11/14 13.11 14.69
13.06 14.56
12.92 14.32
12.97 14.35
12/14 12.95 14.42
12.99 14.37
12.98 14.40
12.99 14.40
13.02 14.44
1/15 12.95 14.44
13.10 14.45
13.30 14.52
13.46 14.58
2/15 13.54 14.64
13.61 14.61
13.63 14.59
13.69 14.58
3/15 13.79 14.62
13.85 14.60
13.77 14.68
13.91 14.73
4/15 13.88 14.75
13.73 14.70
13.69 14.71
13.70 14.70
13.95 14.71
5/15 13.77 14.71
-------------------------------------------------------------------------------------------------------
PERFORMANCE
-------------------------------------------------------------------------------------------------------
Average Annual Total Return
-------------------------------------
1 Year Ended 5 Years Ended 10 Years Ended Inception (5/25/2004)
5/31/2015 5/31/2015 5/31/2015 5/31/2015
FUND PERFORMANCE (3)
NAV 4.68% 7.47% 4.28% 4.25%
Market Value 4.64% 8.17% 4.19% 3.20%
INDEX PERFORMANCE
S&P/LSTA Leveraged Loan Index 2.84% 5.47% 5.10% 5.03%
-------------------------------------------------------------------------------------------------------
-----------------------------------------------------
% OF TOTAL
CREDIT QUALITY (S&P RATINGS) (4) INVESTMENTS
-----------------------------------------------------
BBB 1.9%
BBB- 1.4
BB+ 3.5
BB 6.4
BB- 13.3
B+ 25.5
B 32.4
B- 8.1
CCC+ 3.0
CCC 1.7
NR 1.4
Privately rated securities (5) 1.4
------
Total 100.0%
======
-----------------------------------------------------
% OF TOTAL
TOP 10 ISSUERS INVESTMENTS
-----------------------------------------------------
BMC Software Finance, Inc. 2.3%
Amaya Holdings B.V. 2.2
Albertsons LLC 2.1
Caesars Growth Partners LLC 2.1
Dell, Inc. 1.9
Portillo's Holdings LLC 1.9
BJ's Wholesale Club, Inc. 1.9
Asurion LLC 1.8
Formula One (Delta 2 Lux S.A.R.L.) 1.8
InVentiv Health, Inc. 1.8
------
Total 19.8%
======
-----------------------------------------------------
% OF TOTAL
ASSET CLASSIFICATION INVESTMENTS
-----------------------------------------------------
Hotels, Restaurants & Leisure 10.8%
Health Care Providers & Services 10.2
Media 7.1
Software 5.0
Life Sciences Tools & Services 4.7
Food Products 4.7
Pharmaceuticals 4.3
Health Care Equipment & Supplies 4.2
Food & Staples Retailing 4.0
Specialty Retail 3.8
Insurance 3.7
Chemicals 3.1
Diversified Telecommunication Services 2.7
Professional Services 2.3
Diversified Consumer Services 2.2
Diversified Financial Services 2.2
Auto Components 2.0
Technology Hardware, Storage & Peripherals 1.9
Semiconductors & Semiconductor Equipment 1.7
IT Services 1.7
Commercial Services & Supplies 1.6
Containers & Packaging 1.5
Consumer Finance 1.5
Capital Markets 1.5
Aerospace & Defense 1.3
Machinery 1.3
Health Care Technology 1.2
Independent Power and Renewable
Electricity Producers 1.2
Road & Rail 1.1
Real Estate Management & Development 1.1
Real Estate Investment Trusts (REITs) 1.0
Oil, Gas & Consumable Fuels 0.9
Building Products 0.8
Electric Utilities 0.7
Electronic Equipment & Instruments 0.4
Diversified Business Services 0.4
Beverages 0.2
------
Total 100.0%
======
(1) Most recent distribution paid or declared through May 31, 2015. Subject to
change in the future.
(2) Distribution rates are calculated by annualizing the most recent
distribution paid or declared through the report date and then dividing by
Common Share Price or NAV, as applicable, as of May 31, 2015. Subject to
change in the future.
(3) 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 NAV per share for NAV
returns and changes in Common Share Price for market value returns. From
inception to October 12, 2010, Four Corners Capital Management, LLC served
as the Fund's Sub-Advisor. Effective October 12, 2010, the Leveraged
Finance Team of First Trust Advisors L.P. assumed the day-to-day
responsibility for management of the Fund's portfolio. 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.
(4) 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.
(5) Represents Senior Loans privately rated upon issuance. The rating agency
does not provide ongoing surveillance on the rating.
Page 2
--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
ANNUAL REPORT
MAY 31, 2015
INVESTMENT MANAGER
First Trust Advisors L.P. ("First Trust") was established in 1991 and is located
in Wheaton, Illinois. First Trust is a registered investment advisor which
offers customized portfolio management using its structured, quantitative
approach to security selection. As of May 31, 2015, First Trust managed or
supervised $119.87 billion in assets. The First Trust Leveraged Finance Team
began managing the First Trust Senior Floating Rate Income Fund II on October
12, 2010. The First Trust Leveraged Finance Team is comprised of 12 experienced
investment professionals specializing in below-investment grade securities. The
team is comprised of portfolio management, research, trading and operations. As
of May 31, 2015, the First Trust Leveraged Finance Team managed or supervised
approximately $1.62 billion in senior secured bank loans and high-yield bonds.
These assets are managed across various strategies, including a closed-end fund,
an open-end fund, four exchange-traded funds and a series of unit investment
trusts on behalf of retail and institutional clients.
PORTFOLIO MANAGEMENT TEAM
WILLIAM HOUSEY, CFA
SENIOR VICE PRESIDENT, SENIOR PORTFOLIO MANAGER
SCOTT D. FRIES, CFA
SENIOR VICE PRESIDENT, PORTFOLIO MANAGER
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II
The primary investment objective of First Trust Senior Floating Rate Income Fund
II ("FCT" or the "Fund") 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 portfolio of senior floating-rate loan interests
("senior loans"). There can be no assurance that the Fund's investment
objectives will be achieved. The Fund may not be appropriate for all investors.
MARKET RECAP
The last 12 months were generally positive for the senior loan market despite
the volatility towards the middle of the period in October and December. The
start of 2015 has been driven by oil showing signs of stability (at least for
now) after a nearly 50% decline in the second half of 2014, a market much more
willing to tolerate the current geopolitical climate, and strength in returns
across credit markets. Moreover, an incredibly strong undercurrent created by
some form of quantitative easing by central banks around the world is driving a
global search for yield. With low and negative yields becoming commonplace in
many countries and central banks furiously weakening currencies to stimulate
demand for their countries' goods and services, the U.S. finds itself standing
alone, with interest rate increases, not decreases, on the horizon and a strong
currency. The net result is that investors around the world are buying U.S.
fixed-income instruments at an extraordinary pace. We believe the combination of
this powerful technical demand for U.S. fixed-income securities, a healthy,
albeit slow growing, U.S. economy, and sound fundamentals (modest corporate
defaults) within corporate America should continue to support the performance of
fixed-income markets, including senior loans and high-yield bonds.
SENIOR LOAN MARKET
The S&P/LSTA Leveraged Loan Index returned 2.84% for the 12-month period ending
May 31, 2015. From a credit quality perspective, the returns were mixed. Lower
quality CCC rated issues returned 3.77% in the period, outperforming the returns
of higher quality B rated issues at 3.14% and nearly matching BB rated issues at
3.79%. The average price of loans in the market began the period at $99.01 and,
after bottoming at $95.92 at the end of December, loan prices ended the period
at $97.39. (Source: S&P/LCD)
CREDIT QUALITY/DEFAULT RATES
Default rates continue to remain low, as compared to long-term averages in
senior loans. We believe this is because corporate fundamentals remain healthy,
as evidenced by the fact that senior loan issuers that file their financial
results publicly grew cash flows by approximately 6% year-over-year in the first
quarter of 2015, which represents 23 straight quarters of cash flow growth.
PERFORMANCE ANALYSIS
The Fund outperformed the S&P/LSTA Leveraged Loan Index on a net asset value
("NAV") basis for the 12-month period. The Fund generated an NAV return of 4.68%
and a market price return of 4.64%. The Fund's discount to NAV ended the period
nearly unchanged from one year ago. At the start of the period, the Fund's
market price was at a 6.35% discount to NAV, and moved to a 6.39% discount to
NAV by the end of the period.
Page 3
--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
ANNUAL REPORT
MAY 31, 2015
From an income perspective, the monthly announced distribution rate began the
period at $0.07125 per share and ended at $0.075 per share. For some time now,
the consequence of robust demand for senior loans has been declining yields.
However, the volatility experienced in the fourth quarter of 2014 resulted in
senior loan spreads widening, creating opportunities to increase the income
generated by the Fund's holdings. At the $0.075 per share monthly distribution
rate, the annualized distribution rate at the end of May 2015 was 6.12% at NAV
and 6.54% at market price.
Contributing to the Fund's outperformance relative to the S&P/LSTA Leveraged
Loan Index over the period was the Fund's use of leverage and its issuer
selection. The use of leverage contributed positively to the Fund's performance
as the total return of senior loans exceeded the borrowing cost. Leverage at the
end of May was approximately 28.8% of managed assets. Performance across credit
quality was closely mixed and not a meaningful driver of performance; however,
we continue to remain underweight in issues rated CCC+ and below. At the end of
the period, the Fund held 4.7% of assets in issues rated CCC+ or below compared
to 7.0% for the S&P/LSTA Leveraged Loan Index.
MARKET AND FUND OUTLOOK
Credit markets appear well positioned for the intermediate term, in our opinion.
We believe the combination of strong technical tailwinds created by global
central bank policy, attractive valuations within the credit markets, a
below-average default rate environment, modest but healthy economic growth and
sound corporate fundamentals provides a firm backdrop for returns in the periods
ahead. We continue to believe that steadily improving economic data (GDP growth
of approximately 2.5%-3% and improving unemployment) will provide the Fed the
motivation it requires to begin the process of raising interest rates later this
year, likely driving greater demand for senior loans.
Based on current valuations, we believe senior loans, given their senior-secured
position in the capital structure and floating interest rate, are well
positioned as we move through 2015. While headline risk, ranging from oil price
volatility to geopolitical turmoil, may continue to influence risk sentiment,
and is important to monitor, we believe investors will be well served to stay
the course given that these concerns are not likely to result in derailing the
U.S. economy from its current trajectory. Moreover, while lower interest rates
proved to be a rather substantial tailwind to fixed-income securities in 2014,
the risk of raising rates on traditional fixed-income securities has only
increased, in our opinion. We believe there remains a substantial asymmetry in
the risk vs. reward equation for long-duration fixed-income securities (those
with the most rate sensitivity). As a result, even modestly increasing interest
rates can present challenges for traditional fixed-income investors.
In summary, we believe that credit markets offer compelling opportunities today,
principally within an actively managed framework where risk can be appropriately
managed. As we evaluate new investment opportunities, decisions will continue to
be rooted in our rigorous bottom-up credit analysis and focus on the
opportunities that we believe offer the best risk and reward balance. Despite
the many distractions that ebb and flow every quarter, we remain firmly focused
on finding value in the senior loan market.
Page 4
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS - 132.9%
AEROSPACE & DEFENSE - 1.9%
$ 1,889,148 DynCorp International, Inc., Term Loan.......................... 6.25% 07/07/16 $ 1,871,824
300,000 Science Applications International Corp. (SAIC),
Tranche B Incremental Loan................................... 3.75% 04/21/22 301,218
2,878,763 Transdigm, Inc., Term Loan C.................................... 3.75% 02/28/20 2,870,847
794,000 Transdigm, Inc., Tranche D Term Loan............................ 3.75% 06/04/21 792,467
1,489,091 Wencor Group LLC (Jazz Acquisition, Inc.),
Term Loan (First Lien)....................................... 4.50% 06/19/21 1,477,923
-------------
7,314,279
-------------
AGRICULTURAL PRODUCTS - 1.0%
3,861,470 Jimmy Sanders, Inc. (Pinnacle Operating Corp.),
Refinancing Term Loan........................................ 4.75% 11/15/18 3,854,249
-------------
ALTERNATIVE CARRIERS - 0.8%
1,000,000 Level 3 Financing, Inc., Tranche B 2020 Term Loan............... 4.00% 01/15/20 999,380
2,250,000 Level 3 Financing, Inc., Tranche B-II 2022 Term Loan............ 3.50% 05/31/22 2,242,125
-------------
3,241,505
-------------
APPAREL RETAIL - 0.6%
992,500 J.C. Penney Corp., Inc., Term Loan.............................. 5.00% 06/20/19 988,600
1,231,289 Neiman Marcus Group Inc., Other Term Loan....................... 4.25% 10/25/20 1,231,289
-------------
2,219,889
-------------
APPLICATION SOFTWARE - 1.8%
1,000,000 Epicor Software Corp., Term Loan B.............................. 4.75% 05/31/22 1,000,940
3,378,474 Infor (US), Inc., Tranche B-5 Term Loan......................... 3.75% 06/03/20 3,360,973
1,630,963 Mitchell International, Inc., Initial Term Loan................. 4.50% 10/13/20 1,634,698
1,395,678 Triple Point Technologies, Inc., Term Loan...................... 5.25% 07/10/20 1,270,067
-------------
7,266,678
-------------
ASSET MANAGEMENT & CUSTODY BANKS - 2.0%
800,000 American Beacon Advisors, Inc., Term Loan B..................... 5.50% 04/30/22 808,000
1,329,750 Guggenheim Partners Investment Management Holdings LLC,
Initial Term Loan............................................ 4.25% 07/22/20 1,335,840
929,816 Mondrian Investment Partners Ltd. (MIPL Group Ltd.),
Term Loan B.................................................. 4.00% 03/05/20 929,816
4,875,000 Victory Capital Holdings (VCH Holdings LLC),
Initial Term Loan............................................ 7.00% 10/29/21 4,899,375
-------------
7,973,031
-------------
AUTO PARTS & EQUIPMENT - 2.1%
704,059 Affinia Group, Inc., Tranche B-2 Term Loan...................... 4.75% 04/27/20 704,059
893,250 Cooper Standard Holdings (CS Intermediate Holdco 2 LLC),
Term Loan.................................................... 4.00% 04/04/21 893,697
882,829 Gates Global LLC, Initial Dollar Term Loan...................... 4.25% 07/06/21 878,751
2,679,750 Henniges Automotive Holdings, Inc., Term Loan B................. 5.50% 06/03/21 2,686,449
1,710,625 Remy International, Inc., Term B Loan 2013...................... 4.25% 03/05/20 1,710,625
1,453,519 Tower Automotive Holdings USA LLC,
Initial Term Loan (2014)..................................... 4.00% 04/23/20 1,450,495
-------------
8,324,076
-------------
See Notes to Financial Statements Page 5
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
BROADCASTING - 4.6%
$ 4,986,742 Clear Channel Communications, Inc., Tranche D Term Loan......... 6.94% 01/30/19 $ 4,656,370
1,750,000 Clear Channel Communications, Inc., Tranche E Term Loan......... 7.69% 07/30/19 1,657,303
2,798,370 Cumulus Media Holdings, Inc., Term Loan......................... 4.25% 12/23/20 2,639,786
2,154,733 Media General, Inc., Term Loan B2............................... 4.25% 07/31/20 2,163,351
1,059,804 Mission Broadcasting, Inc. (Nexstar Broadcasting Group, Inc.),
Term B-2 Loan................................................ 3.75% 10/01/20 1,060,471
1,201,834 Nexstar Broadcasting Group, Inc. (Mission Broadcasting, Inc.),
Term Loan B-2................................................ 3.75% 09/30/20 1,202,591
1,104,505 Tribune Co., Initial Term Loan.................................. 4.00% 12/27/20 1,104,847
979,813 Univision Communications, Inc., 2013 Incremental Term Loan...... 4.00% 03/01/20 978,128
2,803,785 Univision Communications, Inc., Replacement First-Lien
Term Loan.................................................... 4.00% 03/01/20 2,798,767
-------------
18,261,614
-------------
BUILDING PRODUCTS - 1.1%
425,357 Hillman Group, Inc., Initial Term Loan.......................... 4.50% 06/30/21 426,157
1,310,160 Quikrete Holdings, Inc., Initial Loan (First Lien).............. 4.00% 09/28/20 1,310,160
294,737 Quikrete Holdings, Inc., Initial Loan (Second Lien)............. 7.00% 03/26/21 296,211
2,218,748 Unifrax Holding Co., New Term Dollar Loan....................... 4.25% 11/28/18 2,210,427
-------------
4,242,955
-------------
CABLE & SATELLITE - 0.3%
995,000 Mediacom LLC, Tranche G Term Loan............................... 3.75% 06/30/21 994,065
-------------
CASINOS & GAMING - 6.7%
9,258,750 Amaya Holdings B.V., Initial Term B Loan (First Lien)........... 5.00% 08/01/21 9,240,233
2,750,000 Amaya Holdings B.V., 2nd Lien TL................................ 8.00% 07/31/22 2,783,220
8,078,584 Caesars Growth Partners LLC, Term B Loan (First Lien)........... 6.25% 05/08/21 7,267,817
2,883,477 CityCenter Holdings LLC, Term B Loan............................ 4.25% 10/16/20 2,892,127
1,753,455 ROC Finance LLC, Funded Term B Loan............................. 5.00% 06/20/19 1,726,417
2,426,979 Station Casinos, Inc., B Term Loan.............................. 4.25% 03/02/20 2,431,542
-------------
26,341,356
-------------
COAL & CONSUMABLE FUELS - 0.5%
2,688,494 Arch Coal, Inc., Term Loan...................................... 6.25% 05/16/18 1,887,323
-------------
COMMERCIAL PRINTING - 0.3%
1,233,333 Southern Graphic, Inc., Term Loan............................... 4.25% 10/17/19 1,233,333
-------------
COMPUTER HARDWARE - 2.7%
10,466,822 Dell, Inc., Term B Loan......................................... 4.50% 04/29/20 10,471,218
-------------
CONSTRUCTION MACHINERY & HEAVY TRUCKS - 0.3%
1,153,253 Navistar, Inc., Tranche B Term Loan............................. 5.75% 08/17/17 1,156,136
-------------
CONSUMER FINANCE - 2.1%
5,236,406 Altisource Solutions S.A.R.L., Term B Loan...................... 4.50% 12/09/20 4,712,765
550,000 Black Knight IP Holding Co. LLC, Term Loan B.................... 3.75% 05/22/22 552,409
3,188,395 Walter Investment Management Corp., Tranche B Term Loan......... 4.75% 12/18/20 3,013,034
-------------
8,278,208
-------------
DATA PROCESSING & OUTSOURCED SERVICES - 1.9%
2,969,507 Harland Clarke Holdings Corp., Tranche B-2 Term Loan............ 5.53% 06/30/17 2,970,754
3,721,875 Interactive Data Corp., Term Loan............................... 4.75% 05/02/21 3,732,110
887,561 Sungard Availability Services Capital, Inc., Term Loan B........ 6.00% 03/29/19 832,089
-------------
7,534,953
-------------
Page 6 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
DISTILLERS & VINTNERS - 0.3%
$ 992,500 Winebow Holdings, Inc., Loan (First Lien)....................... 4.75% 07/01/21 $ 983,508
-------------
DIVERSIFIED CHEMICALS - 1.0%
1,191,009 Gemini HDPE LLC, Advance........................................ 4.75% 08/06/21 1,194,975
400,000 Ineos US Finance LLC, 2022 Dollar Term Loan..................... 4.25% 03/31/22 400,284
2,339,027 Univar, Inc., Term B Loan....................................... 5.00% 06/30/17 2,335,004
-------------
3,930,263
-------------
DIVERSIFIED SUPPORT SERVICES - 0.5%
1,993,482 SMG Holdings, Inc., Term Loan................................... 4.50% 02/27/20 1,993,482
-------------
EDUCATION SERVICES - 0.1%
249,375 Bright Horizons Family Solutions, Inc., Term B-1 Loan........... 4.50% 01/30/20 250,310
-------------
ELECTRIC UTILITIES - 1.0%
4,241,410 TXU (Texas Competitive Electric Holdings Co. LLC),
2014 Term Loan (Non-Extending) (d) (e)....................... 4.67% 10/10/14 2,544,846
2,250,000 TXU (Texas Competitive Electric Holdings Co. LLC), 2017
Term Loan (Extending) (d) (e)................................ 4.67% 10/10/17 1,366,875
-------------
3,911,721
-------------
ELECTRONIC EQUIPMENT & INSTRUMENT - 0.5%
2,071,818 Zebra Technologies Corp., Term Loan B........................... 4.75% 10/27/21 2,094,608
-------------
ENVIRONMENTAL & FACILITIES SERVICES - 0.9%
498,750 PSSI (Packers Holdings LLC), Term B Loan........................ 5.00% 12/02/21 501,244
1,694,000 ServiceMaster Co., Initial Term Loan............................ 4.25% 07/01/21 1,698,235
1,580,000 WTG Holdings III Corp. (EWT Holdings III Corp.),
Term Loan (First Lien)....................................... 4.75% 01/15/21 1,578,025
-------------
3,777,504
-------------
HEALTH CARE EQUIPMENT - 4.3%
3,427,434 Alere, Inc., B Term Loan........................................ 4.25% 06/30/17 3,433,158
1,486,380 Biomet, Inc., Dollar Term B-2 Loan.............................. 3.68% 07/25/17 1,484,730
2,795,067 Carestream Health, Inc. (Onex Carestream Finance L.P.),
Term Loan (First Lien 2013).................................. 5.00% 06/07/19 2,795,934
3,300,000 DJO Finance LLC (ReAble Therapeutics Finance LLC),
Initial Term Loan............................................ 4.25% 06/08/20 3,305,148
5,661,885 Kinetic Concepts, Inc., Dollar Term E-1 Loan.................... 4.50% 05/04/18 5,699,027
-------------
16,717,997
-------------
HEALTH CARE FACILITIES - 5.5%
5,133,333 21st Century Oncology, Inc., Tranche B Term Loan................ 6.50% 04/30/22 5,120,500
1,100,690 Acadia Healthcare Co., Inc., Tranche B Term Loan................ 4.25% 02/11/22 1,109,980
2,394,000 Capella Healthcare, Inc., Initial Term Loan..................... 5.25% 12/31/21 2,399,985
2,407,656 CHS/Community Health Systems, Inc., Incremental 2021
Term H Loan.................................................. 4.00% 01/27/21 2,411,797
1,375,000 Concentra, Inc. (MJ Acquisition Corp.), Term Loan B............. 4.00% 06/01/22 1,373,281
398,995 Kindred Healthcare, Inc., New Term Loan......................... 4.25% 04/09/21 400,391
851,836 Select Medical Corp., Series E Tranche B Term Loan.............. 3.75% 06/01/18 852,543
498,750 Surgery Centers Holdings, Inc., Initial Term Loan
(First Lien)................................................. 5.25% 11/03/20 500,620
1,000,000 Surgical Care Affiliates LLC, Initial Term Loan................. 4.25% 03/17/22 1,002,500
857,143 Tenet Healthcare Corp., Secured Bridge (f)...................... 5.25% 04/01/23 853,929
2,571,429 Tenet Healthcare Corp., Unsecured Bridge Loan (f)............... 6.75% 04/01/24 2,558,571
See Notes to Financial Statements Page 7
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
HEALTH CARE FACILITIES (CONTINUED)
$ 2,866,794 United Surgical Partners International, Inc.,
New Tranche B Term Loan...................................... 4.75% 04/03/19 $ 2,866,794
-------------
21,450,891
-------------
HEALTH CARE SERVICES - 7.1%
3,000,000 Air Medical Group Holdings, Inc., Initial Term Loan............. 4.50% 04/28/22 2,986,080
2,906,748 CareCore National LLC, Term Loan................................ 5.50% 03/05/21 2,921,282
400,000 CHG Healthcare Services, Inc., Term Loan (First Lien)........... 4.25% 11/19/19 401,500
3,250,000 Curo Health Services Holdings, Inc., Term B Loan (First Lien)... 6.50% 02/07/22 3,273,010
4,166,392 Envision Healthcare Corp. (Emergency Medical Services Corp.),
Initial Term Loan............................................ 4.00% 05/25/18 4,170,100
4,729,991 Healogics, Inc. (CDRH Parent, Inc.), Initial Term Loan
(First Lien)................................................. 5.25% 07/01/21 4,732,971
1,906,275 Heartland Dental Care LLC, Incremental Term Loan................ 5.50% 12/21/18 1,903,892
1,741,884 National Veterinary Associates (NVA Holdings, Inc.),
Term Loan (First Lien)....................................... 4.75% 08/14/21 1,743,330
5,740,733 U.S. Renal Care, Inc., Tranche B-2 Term Loan (First Lien)....... 4.25% 07/03/19 5,745,497
-------------
27,877,662
-------------
HEALTH CARE SUPPLIES - 1.1%
1,978,704 BSN Medical Luxembourg Holding S.A.R.L.,
New Term Loan B1............................................. 4.00% 06/08/19 1,976,725
2,252,561 Sage Products Holdings III LLC, Term Loan B..................... 5.00% 12/13/19 2,252,561
-------------
4,229,286
-------------
HEALTH CARE TECHNOLOGY - 1.6%
1,191,000 Connolly Holdings, Inc., Term Loan B............................ 4.50% 05/14/21 1,193,239
748,750 Healthport Technologies LLC (CT Technologies Intermediate
Holdings, Inc.), Initial Term Loan........................... 5.25% 12/01/21 749,686
582,597 MedAssets, Inc., Term B Loan.................................... 4.00% 12/13/19 581,868
3,917,668 Truven Health Analytics, Inc. (VCPH Holding Corp.),
Term Loan B.................................................. 4.50% 05/31/19 3,919,314
-------------
6,444,107
-------------
HOMEFURNISHING RETAIL - 0.6%
2,198,794 Serta Simmons Holdings LLC, Term Loan B......................... 4.25% 10/01/19 2,205,676
-------------
HOTELS, RESORTS & CRUISE LINES - 1.3%
2,181,084 Extended Stay America (ESH Hospitality, Inc.), Term Loan........ 5.00% 06/24/19 2,219,253
695,547 La Quinta Intermediate Holdings LLC, Initial Term Loan.......... 4.00% 04/14/21 696,765
1,995,000 Norwegian Cruise Lines (NCL Corp.), Term B Loan................. 4.00% 11/19/21 2,002,481
-------------
4,918,499
-------------
HYPERMARKETS & SUPER CENTERS - 5.5%
11,476,000 Albertsons LLC, Term B-4 Loan................................... 5.50% 08/25/21 11,541,528
2,500,000 BJ's Wholesale Club, Inc., 2013 (November) Replacement
Loan (Second Lien)........................................... 8.50% 03/26/20 2,525,000
7,499,188 BJ's Wholesale Club, Inc., New 2013 (November)
Replacement Loan (First Lien)................................ 4.50% 09/26/19 7,520,711
-------------
21,587,239
-------------
Page 8 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 1.6%
$ 1,365,000 Calpine Corp., Term Loan........................................ 4.00% 10/09/19 $ 1,365,764
2,000,000 Calpine Corp., Term Loan........................................ 3.50% 05/27/22 1,994,780
2,542,373 FREIF North American Power I LLC, Term Loan B................... 4.75% 03/27/22 2,558,263
457,627 FREIF North American Power I LLC, Term Loan C................... 4.75% 03/27/22 460,487
-------------
6,379,294
-------------
INDUSTRIAL MACHINERY - 1.5%
1,197,000 Douglas Dynamics LLC, Term Loan B............................... 5.25% 12/02/21 1,205,978
589,208 Filtration Group Corp., Initial Term Loan (Second Lien)......... 8.25% 11/22/21 590,858
4,032,002 Filtration Group Corp., Term Loan (First Lien).................. 4.25% 11/20/20 4,040,791
-------------
5,837,627
-------------
INSURANCE BROKERS - 4.8%
3,299,807 Amwins Group LLC, New Incremental Term Loan..................... 5.25% 09/06/19 3,323,533
3,350,651 Confie Seguros Holding II Co., Term B Loan (First Lien)......... 5.75% 11/09/18 3,353,433
2,063,250 Cooper Gay Swett & Crawford Ltd., Term Loan (First Lien)........ 5.00% 04/16/20 1,918,823
2,567,070 HUB International Ltd., Initial Term Loan (New)................. 4.00% 10/02/20 2,556,904
400,000 Hyperion Finance S.A.R.L., Initial Term Loan.................... 5.50% 04/29/22 402,500
2,658,097 National Financial Partners Corp., 2014 Specified
Refinancing Term Loan........................................ 4.50% 07/01/20 2,662,749
4,839,182 USI, Inc. (Compass Investors, Inc.), Initial Term Loan.......... 4.25% 12/27/19 4,837,149
-------------
19,055,091
-------------
INTEGRATED TELECOMMUNICATION SERVICES - 2.9%
2,955,000 Cincinnati Bell, Inc., Tranche B Term Loan...................... 4.00% 09/10/20 2,959,610
1,950,296 Hawaiian Telcom Communications, Inc., Term Loan................. 5.00% 06/06/19 1,957,005
3,382,522 Numericable U.S. LLC, Dollar Denominated Tranche B-1 Loan....... 4.50% 05/21/20 3,390,978
2,926,342 Numericable U.S. LLC, Dollar Denominated Tranche B-2 Loan....... 4.50% 05/21/20 2,933,658
-------------
11,241,251
-------------
IT CONSULTING & OTHER SERVICES - 0.4%
1,522,590 Sirius Computer Solutions, Inc. (SCS Holdings I, Inc.),
Term Loan B.................................................. 6.25% 12/07/18 1,536,872
-------------
LEISURE FACILITIES - 0.5%
1,980,000 Planet Fitness Holdings LLC, Term Loan.......................... 4.75% 03/31/21 1,980,000
-------------
LIFE SCIENCES TOOLS & SERVICES - 5.5%
2,387,576 Immucor, Inc., Term B-2 Loan.................................... 5.00% 08/19/18 2,396,529
529,164 InVentiv Health, Inc., Term B-3 Loan............................ 7.75% 05/15/18 528,005
7,626,842 InVentiv Health, Inc., Term B-4 Loan............................ 7.75% 05/15/18 7,645,909
1,588,000 Millennium Laboratories LLC, Tranche B Term Loan................ 5.25% 04/16/21 1,089,765
5,624,167 Ortho-Clinical Diagnostics, Inc., Initial Term Loan............. 4.75% 06/30/21 5,543,797
2,280,833 Pharmaceutical Product Development, Inc., 2013 Term Loan........ 4.00% 12/05/18 2,283,251
2,200,000 Sterigenics International (STHI Intermediate Holding Corp.),
Initial Term Loan............................................ 4.25% 05/06/22 2,200,000
-------------
21,687,256
-------------
MANAGED HEALTH CARE - 0.3%
1,295,455 MultiPlan, Inc. (MPH Acquisition Holdings LLC),
Initial Term Loan............................................ 3.75% 03/31/21 1,292,449
-------------
See Notes to Financial Statements Page 9
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
METAL & GLASS CONTAINERS - 1.0%
$ 396,000 Ardagh Holdings USA, Inc. (Ardagh Packaging Finance S.A.),
New Term Loan................................................ 4.00% 12/17/19 $ 396,297
2,143,077 Berlin Packaging LLC, Initial Term Loan (First Lien)............ 4.50% 10/01/21 2,143,077
597,000 Mauser Holdings GmBH (CD&R Millennium Holdco 6 S.A.R.L),
Initial Dollar Term Loan (First Lien)........................ 4.50% 07/31/21 597,376
710,526 PODS, Inc., Initial Term Loan (First Lien)...................... 5.25% 02/02/22 717,632
-------------
3,854,382
-------------
MOVIES & ENTERTAINMENT - 3.3%
1,197,000 Creative Artists Agency LLC (CAA Holdings LLC),
Initial Term Loan............................................ 5.50% 12/17/21 1,207,103
9,932,949 Formula One (Delta 2 Lux S.A.R.L.), Facility B3 (USD)........... 4.75% 07/30/21 9,927,585
1,978,484 WME IMG Worldwide, Inc., Term Loan (First Lien)................. 5.25% 05/06/21 1,978,978
-------------
13,113,666
-------------
OIL & GAS EXPLORATION & PRODUCTION - 0.5%
1,000,000 American Energy Marcellus Holdings LLC, Initial Loan
(First Lien)................................................. 5.25% 08/04/20 758,330
1,888,889 American Energy Marcellus Holdings LLC, Initial Loan
(Second Lien)................................................ 8.50% 08/04/21 1,256,111
-------------
2,014,441
-------------
OIL & GAS STORAGE & TRANSPORTATION - 0.2%
1,000,000 Fieldwood Energy LLC, Closing Date Loan (Second Lien)........... 8.38% 09/30/20 816,560
-------------
OTHER DIVERSIFIED FINANCIAL SERVICES - 1.9%
4,683,538 First Data Corp., 2021 Extended Dollar Term Loan................ 4.18% 03/24/21 4,696,418
2,780,000 iPayment, Inc., Term Loan....................................... 6.75% 05/08/17 2,759,150
-------------
7,455,568
-------------
PACKAGED FOODS & MEATS - 5.4%
3,915,015 Blue Buffalo Co. Ltd., Term B-3 Loan............................ 3.75% 08/08/19 3,912,587
2,939,445 Boulder Brands, Inc. (GFA Brands, Inc.),
Term Loan B (July 2014)...................................... 4.50% 07/09/20 2,945,882
1,635,766 Del Monte Foods, Inc., Initial Loan (First Lien)................ 4.25% 02/18/21 1,560,521
4,053,723 Ferrara Candy Co. (Candy Intermediate Holdings, Inc.),
Initial Term Loan............................................ 7.50% 06/18/18 4,058,790
1,860,938 Hearthside Food Solutions LLC, Term Loan........................ 4.50% 06/02/21 1,866,371
1,729,524 JBS USA LLC, Term Loan B........................................ 3.75% 05/25/18 1,725,200
5,205,662 New HB Acquisition LLC, Term B Loan............................. 6.75% 04/09/20 5,270,733
-------------
21,340,084
-------------
PAPER PACKAGING - 1.1%
598,069 Exopack Holding Corp., Term Loan B.............................. 4.50% 05/08/19 599,313
3,898,686 Reynolds Group Holdings, Inc., Incremental U.S. Term Loan....... 4.50% 12/01/18 3,912,565
-------------
4,511,878
-------------
Page 10 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
PHARMACEUTICALS - 5.7%
$ 2,103,068 Akorn, Inc., Loan............................................... 4.50% 04/16/21 $ 2,106,349
1,000,000 Amneal Pharmaceuticals LLC, Second Incremental Term Loan........ 4.50%-5.75% 11/01/19 1,003,440
1,984,085 Amneal Pharmaceuticals LLC, Term Loan B......................... 5.00% 11/01/19 1,994,005
2,315,834 Catalent Pharma Solutions, Inc., Dollar Term Loan............... 4.25% 05/20/21 2,323,662
1,000,000 Concordia Healthcare Corp., Initial Term Loan................... 4.75% 04/21/22 1,007,500
1,040,000 Horizon Pharma, Inc., Term Loan B............................... 4.50% 04/30/21 1,045,200
5,198,853 Par Pharmaceutical Cos., Inc., Term B-2 Loan.................... 4.00% 09/30/19 5,196,045
1,995,000 Par Pharmaceutical Cos., Inc., Term B-3 Loan.................... 4.25% 09/30/19 1,998,332
1,389,500 Patheon, Inc (JLL/Delta Dutch Newco B.V.), Initial Dollar
Term Loan.................................................... 4.25% 03/11/21 1,383,539
511,676 Valeant Pharmaceuticals International, Inc., Series C-2
Tranche B Term Loan.......................................... 3.50% 12/11/19 511,942
2,950,000 Valeant Pharmaceuticals International, Inc., Series F-1
Tranche B Term Loan.......................................... 4.00% 04/01/22 2,956,372
1,040,921 Valeant Pharmaceuticals International, Inc., Term Loan BD....... 3.50% 02/13/19 1,039,911
-------------
22,566,297
-------------
194,886 Cunningham Lindsey U.S., Inc., Initial Loan (Second Lien)....... 9.25% 06/10/20 189,040
2,839,135 Cunningham Lindsey U.S., Inc., Initial Term Loan (First Lien)... 5.00% 12/10/19 2,789,449
1,200,000 Sedgwick Claims Management Services, Inc., Initial Loan
(Second Lien)................................................ 6.75% 02/28/22 1,181,256
-------------
4,159,745
-------------
PUBLISHING - 1.0%
2,079,000 Cengage Learning Acquisitions, Inc., Term Loan.................. 7.00% 03/31/20 2,083,823
1,980,000 Mergermarket USA, Inc., 2014 Incremental Term Loan.............. 4.50% 02/04/21 1,952,775
-------------
4,036,598
-------------
REAL ESTATE OPERATING COMPANIES - 1.4%
5,563,303 ClubCorp Club Operations, Inc., Term Loan B..................... 4.25% 07/24/20 5,573,038
-------------
REAL ESTATE SERVICES - 0.1%
490,047 Realogy Corp., Initial Term B Loan 2014......................... 3.75% 03/05/20 490,507
-------------
RESEARCH & CONSULTING SERVICES - 3.2%
3,104,400 Acosta, Inc., Term Loan B....................................... 4.25% 09/26/21 3,111,105
3,888,750 Advantage Sales & Marketing, Inc., Initial Term Loan
(First Lien)................................................. 4.25% 07/23/21 3,885,717
1,806,069 Information Resources, Inc., Term Loan.......................... 4.75% 09/30/20 1,816,598
3,638,250 TransUnion LLC, 2014 Replacement Term Loan...................... 4.00% 04/09/21 3,624,607
-------------
12,438,027
-------------
RESTAURANTS - 5.4%
4,043,644 Burger King Corp., Term Loan B.................................. 3.75% 12/12/21 4,045,342
4,064,433 Focus Brands, Inc., Refinancing Term Loan (First Lien).......... 4.25% 02/21/18 4,068,254
1,450,000 Focus Brands, Inc., Term Loan (Second Lien)..................... 10.25% 08/21/18 1,457,250
3,250,000 Portillo's Holdings LLC, Second Lien Term Loan.................. 8.00% 08/01/22 3,254,063
7,065,088 Portillo's Holdings LLC, Term B Loan (First Lien)............... 4.75% 08/02/21 7,073,919
1,279,286 Red Lobster Management LLC, Initial Term Loan
(First Lien)................................................. 6.25% 07/28/21 1,288,880
-------------
21,187,708
-------------
See Notes to Financial Statements Page 11
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
RETAIL REITS - 0.9%
$ 1,050,000 Capital Automotive LLC, Term Loan (Second Lien)................. 6.00% 04/30/20 $ 1,066,621
2,512,889 Capital Automotive LLC, Tranche B-1 Term Loan Facility.......... 4.00% 04/10/19 2,523,092
-------------
3,589,713
-------------
SECURITY & ALARM SERVICES - 0.2%
180,583 Garda World Security Corp., Term B Delayed Draw Loan............ 4.00% 11/06/20 180,132
705,917 Garda World Security Corp., Term Loan B......................... 4.00% 11/08/20 704,152
-------------
884,284
-------------
SEMICONDUCTORS - 2.4%
2,590,550 Avago Technologies Cayman Ltd., Term Loan....................... 3.75% 05/06/21 2,592,416
5,292,506 Freescale Semiconductor, Inc., Tranche B-4 Term Loan............ 4.25% 02/28/20 5,305,685
1,477,500 Freescale Semiconductor, Inc., Tranche B-5 Term Loan............ 5.00% 01/15/21 1,487,842
-------------
9,385,943
-------------
SPECIALIZED CONSUMER SERVICES - 2.7%
8,874,080 Asurion LLC, Incremental Tranche B-1 Term Loan.................. 5.00% 05/24/19 8,902,921
1,058,824 Asurion LLC, Term Loan (Second Lien)............................ 8.50% 03/03/21 1,083,314
660,321 Expert Global Solutions, Inc. (NCO Group, Inc.),
Term B Advance (First Lien).................................. 8.50% 04/03/18 660,321
-------------
10,646,556
-------------
SPECIALIZED FINANCE - 1.1%
2,513,605 AlixPartners LLP, 2014 January Replacement
Term B-2 Loan (First Lien)................................... 4.00% 07/10/20 2,512,046
1,868,001 Duff & Phelps Corp., Initial Term Loan.......................... 4.50% 04/23/20 1,872,279
-------------
4,384,325
-------------
SPECIALIZED REITS - 0.4%
1,750,000 Communication Sales & Leasing, Inc., Term Loan.................. 5.00% 10/24/22 1,743,437
-------------
SPECIALTY CHEMICALS - 3.1%
674,616 A.I. Chem (Allnex (Luxembourg) & Cy S.C.A.),
Tranche B-1 Term Loan........................................ 4.50% 10/03/19 676,302
350,026 A.I. Chem (Allnex (Luxembourg) & Cy S.C.A.),
Tranche B-2 Term Loan........................................ 4.50% 10/03/19 350,901
517,241 ANGUS Chemicals Co. (Aruba Investments, Inc.),
Initial USD Term Loan........................................ 5.25% 02/02/22 520,474
1,216,033 Axalta Coating Systems U.S. Holdings, Inc., Refinanced
Term B Loan.................................................. 3.75% 02/01/20 1,215,340
1,800,000 Chemours Co., Term Loan B....................................... 3.75% 05/12/22 1,801,350
995,000 Emerald Performance Materials LLC, Initial Term Loan
(First Lien)................................................. 4.50% 07/30/21 996,244
1,818,558 NuSil Technology LLC, Term Loan................................. 5.25% 04/07/17 1,806,064
989,637 Omnova Solutions, Inc., Term B-1 Loan........................... 4.25% 05/31/18 989,024
591,111 Platform Specialty Products Corp. (fka: Macdermid, Inc.),
Tranche B-2 Term Loan........................................ 4.75% 06/07/20 593,942
1,532,119 Polymer Group, Inc., Initial Loan............................... 5.25% 12/19/19 1,537,865
1,000,000 SIG Combibloc Group, Term Loan B................................ 4.25% 03/13/22 1,004,220
533,333 Trinseo Materials Operating S.C.A., Term Loan B................. 4.25% 11/05/21 534,443
-------------
12,026,169
-------------
Page 12 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED
VALUE DESCRIPTION RATE (b) MATURITY (c) VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
SENIOR FLOATING-RATE LOAN INTERESTS (CONTINUED)
SPECIALTY STORES - 4.1%
$ 4,650,000 Dollar Tree, Inc., Initial Term B Loan.......................... 4.25% 03/09/22 $ 4,692,641
6,738,462 PetSmart, Inc., Tranche B-1 Loan................................ 4.25% 03/11/22 6,757,262
1,116,071 Toys "R" Us-Delaware, Inc., Canadian FILO TL.................... 8.25% 10/24/19 1,104,911
1,383,929 Toys "R" Us-Delaware, Inc., FILO Term Loan...................... 8.25% 10/24/19 1,370,089
139,347 Toys "R" Us-Delaware, Inc., Term B-2 Loan....................... 5.25% 05/25/18 112,058
2,037,418 Toys "R" Us-Delaware, Inc., Term B4 Loan........................ 9.75% 04/25/20 1,917,475
-------------
15,954,436
-------------
SYSTEMS SOFTWARE - 5.1%
557,212 Applied Systems, Inc., Initial Term Loan (First Lien)........... 4.25%-5.50% 01/25/21 557,769
539,155 Applied Systems, Inc., Initial Term Loan (Second Lien).......... 7.50% 01/24/22 541,851
500,000 Blue Coat Systems, Inc., First Lien Term Loan................... 4.50% 05/20/22 500,625
12,522,111 BMC Software Finance, Inc., Initial US Term Loan................ 5.00% 09/10/20 12,291,204
1,975,000 Compuware Corp., Term Loan B.................................... 6.25% 12/15/19 1,941,267
4,017,786 Vertafore, Inc., 2013 Refinancing Term Loan..................... 4.25% 10/03/19 4,026,144
-------------
19,858,860
-------------
TIRES & RUBBER - 0.5%
1,785,714 Goodyear Tire & Rubber Co., Loan (Second Lien).................. 4.75% 04/30/19 1,797,304
-------------
TRUCKING - 1.6%
2,234,286 Hertz Corp., Tranche B-1 Term Loan.............................. 4.00% 03/11/18 2,234,688
2,646,000 SIRVA Worldwide, Inc., Loan..................................... 7.50% 03/27/19 2,659,230
1,307,122 Swift Transportation Co. LLC, Tranche B Loan.................... 3.75% 06/09/21 1,309,030
-------------
6,202,948
-------------
TOTAL SENIOR FLOATING-RATE LOAN INTERESTS.................................................... 522,009,935
(Cost $527,103,445) -------------
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
CORPORATE BONDS AND NOTES - 5.1%
AUTO PARTS & EQUIPMENT - 0.2%
250,000 American Axle & Manufacturing, Inc.............................. 6.25% 03/15/21 265,625
500,000 MPG Holdco I, Inc. (g).......................................... 7.38% 10/15/22 537,500
-------------
803,125
-------------
CABLE & SATELLITE - 0.5%
2,000,000 CCO Holdings LLC/CCO Holdings Capital Corp...................... 5.75% 01/15/24 2,065,000
-------------
CASINOS & GAMING - 1.0%
4,900,000 Caesars Growth Properties Holdings LLC/Caesars Growth
Properties Finance, Inc. (g)................................. 9.38% 05/01/22 4,030,250
-------------
HEALTH CARE EQUIPMENT - 0.5%
1,800,000 Kinetic Concepts, Inc./KCI USA, Inc............................. 12.50% 11/01/19 1,971,000
-------------
HEALTH CARE FACILITIES - 1.1%
350,000 CHS/Community Health Systems, Inc............................... 6.88% 02/01/22 374,503
1,000,000 Select Medical Corp............................................. 6.38% 06/01/21 1,010,000
800,000 Tenet Healthcare Corp........................................... 6.00% 10/01/20 858,000
2,250,000 Vantage Oncology LLC/Vantage Oncology Finance Co. (g)........... 9.50% 06/15/17 2,227,500
-------------
4,470,003
-------------
See Notes to Financial Statements Page 13
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
------------ ---------------------------------------------------------------- ----------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
LIFE SCIENCES TOOLS & SERVICES - 1.0%
$ 2,500,000 Crimson Merger Sub, Inc. (g).................................... 6.63% 05/15/22 $ 2,203,125
461,100 inVentiv Health, Inc. (g) (h)................................... 10.00% 08/15/18 480,697
500,000 inVentiv Health, Inc. (g)....................................... 11.00% 08/15/18 492,500
750,000 inVentiv Health, Inc. (g)....................................... 11.00% 08/15/18 729,375
-------------
3,905,697
-------------
OIL & GAS EXPLORATION & PRODUCTION - 0.1%
500,000 American Energy-Permian Basin LLC / AEPB
Finance Corp. (g) (i)........................................ 6.78% 08/01/19 341,875
-------------
PHARMACEUTICALS - 0.2%
620,000 Valeant Pharmaceuticals International, Inc. (Canada) (g)........ 5.38% 03/15/20 647,900
-------------
SECURITY & ALARM SERVICES - 0.3%
1,000,000 Garda World Security Corp. (Canada) (g)......................... 7.25% 11/15/21 985,000
-------------
SPECIALTY CHEMICALS - 0.2%
850,000 Hexion, Inc..................................................... 6.63% 04/15/20 805,375
-------------
TOTAL CORPORATE BONDS AND NOTES.............................................................. 20,025,225
(Cost $21,114,141) -------------
SHARES DESCRIPTION VALUE
------------ --------------------------------------------------------------------------------------------- -------------
WARRANTS - 0.0%
BROADCASTING - 0.0%
1,449 Cumulus Media, Inc. (f) (j) (k).............................................................. 1,725
-------------
TOTAL WARRANTS............................................................................... 1,725
(Cost $0) -------------
COMMON STOCKS - 0.0%
DIVERSIFIED CHEMICALS - 0.0%
20 LyondellBasell Industries N.V., Class A...................................................... 2,022
-------------
TOTAL COMMON STOCKS.......................................................................... 2,022
(Cost $0) -------------
TOTAL INVESTMENTS - 138.0%................................................................... 542,038,907
(Cost $548,217,586) (l) -------------
OUTSTANDING LOAN - (40.5%)................................................................... (159,000,000)
NET OTHER ASSETS AND LIABILITIES - 2.5%...................................................... 9,660,551
-------------
NET ASSETS - 100.0%.......................................................................... $ 392,699,458
=============
Page 14 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
-----------------------------
(a) All or a portion of the securities are available to serve as collateral on
the outstanding loan.
(b) 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 lending rate offered by one or more major European
banks, such as the London Interbank Offered Rate ("LIBOR"), (ii) the prime
rate offered by one or more United States banks or (iii) the certificate
of deposit rate. Certain Senior Loans are subject to a LIBOR floor that
establishes a minimum LIBOR rate. The interest rate shown reflects the
rate in effect at May 31, 2015. When a range of rates is disclosed the
Fund holds more than one contract within the same tranche at varying
rates.
(c) 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.
(d) This issuer has filed for protection in federal bankruptcy court.
(e) This issuer is in default but interest is still being accrued by the Fund
and paid by the issuer.
(f) This security is fair valued by the Pricing Committee of First Trust
Advisors L.P. (the "Advisor") in accordance with procedures adopted by the
Fund's Board of Trustees, and in accordance with the provisions of the
Investment Company Act of 1940, as amended. At May 31, 2015, securities
noted as such are valued at $3,414,225 or 0.87% of net assets.
(g) This security, sold within the terms of a private placement memorandum, is
exempt from registration upon resale under Rule 144A under the Securities
Act of 1933, as amended, 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 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, 2015,securities
noted as such amounted to $12,675,722 or 3.23% of net assets.
(h) These notes are Payment-in-Kind ("PIK") Toggle Notes ("Notes") whereby the
issuer may, at its option, elect to pay interest on the Notes (1) entirely
in cash or (2) entirely in PIK interest. Interest paid in cash will accrue
at the rate of 10% per annum ("Cash Interest Rate") and PIK interest will
accrue on the Notes at a rate per annum equal to the Cash Interest Rate
plus 2%. For the year ended May 31, 2015, the Fund received $26,100 in PIK
interest.
(i) Floating rate security. The interest rate shown reflects the rate in
effect at May 31, 2015.
(j) This security is restricted and cannot be offered for public sale without
first being registered under the Securities Act of 1933, as amended. Prior
to registration, restricted securities may only be resold in transactions
exempt from registration (See Note 2D - Restricted Securities in the Notes
to Financial Statements).
(k) Non-income producing security.
(l) Aggregate cost for federal income tax purposes is $548,680,487. As of May
31, 2015, the aggregate gross unrealized appreciation for all securities
in which there was an excess of value over tax cost was $2,308,588 and the
aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value was $8,950,168.
See Notes to Financial Statements Page 15
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
PORTFOLIO OF INVESTMENTS (a) (CONTINUED)
MAY 31, 2015
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of May 31, 2015
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
INVESTMENTS 5/31/2015 PRICES INPUTS INPUTS
------------------------------------------------- ------------- ------------ ------------ ------------
Senior Floating--Rate Loan Interests:
Health Care Facilities $ 21,450,891 $ -- $ 18,038,391 $ 3,412,500
Other Industry Categories* 500,559,044 -- 500,559,044 --
------------- ------------ ------------ ------------
Total Senior Floating--Rate Loan Interests 522,009,935 -- 518,597,435 3,412,500
Corporate Bonds and Notes* 20,025,225 -- 20,025,225 --
Warrants* 1,725 -- 1,725 --
Common Stocks* 2,022 2,022 -- --
------------- ------------ ------------ ------------
TOTAL INVESTMENTS $ 542,038,907 $ 2,022 $538,624,385 $ 3,412,500
============= ============ ============ ============
All transfers in and out of the levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between levels at May 31, 2015.
Level 3 Senior Floating-Rate Loan Interests are valued by the Advisor's Pricing
Committee. Level 3 securities are valued using a recent transaction price. The
values are based on unobservable and non-quantitative inputs. The Fund's Board
of Trustees has adopted valuation procedures that are utilized by the Pricing
Committee to oversee the day-to-day valuation of the Fund's investments. The
Advisor's Pricing Committee, through the Fund's accounting agent, monitors daily
pricing via tolerance checks and stale and unchanged price reviews. The
Advisor's Pricing Committee also reviews monthly back testing of pricing service
prices by comparing sales prices of Fund investments to prior day pricing
service prices. Additionally, the Advisor's Pricing Committee reviews periodic
information from the Fund's third-party pricing service that compares secondary
market trade prices to their daily valuations.
The following table presents the Fund's investments measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the period
presented:
BEGINNING BALANCE AT MAY 31, 2014
Senior Floating-Rate Loan Interests $ 4,067,775
Common Stocks -- +
Net Realized Gain (Loss)
Senior Floating-Rate Loan Interests (19,281)
Common Stocks -- **
Net Change in Unrealized Appreciation/Depreciation
Senior Floating-Rate Loan Interests (56,136)
Common Stocks -- **
Purchases
Senior Floating-Rate Loan Interests 3,412,500
Common Stocks --
Sales
Senior Floating-Rate Loan Interests (3,992,358)
Common Stocks -- **
Transfers In
Senior Floating-Rate Loan Interests --
Common Stocks --
Transfers Out
Senior Floating-Rate Loan Interests --
Common Stocks --
------------
ENDING BALANCE AT MAY 31, 2015
Senior Floating-Rate Loan Interests 3,412,500
Common Stocks --
------------
Total Level 3 holdings $ 3,412,500
============
There was no net change in unrealized appreciation (depreciation) from Level 3
investments held as of May 31, 2015.
* See the Portfolio of Investments for the industry breakout. Industry
categories are only shown separately if they include holdings in two or
more levels or have holdings in only Level 3.
** Value is less than $1.
+ Investment is valued at $0.
Page 16 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2015
ASSETS:
Investments, at value
(Cost $548,217,586)......................................................................... $542,038,907
Cash........................................................................................... 10,485,374
Receivables:
Investment securities sold.................................................................. 17,349,539
Interest.................................................................................... 3,691,114
Dividends................................................................................... 16
Prepaid expenses............................................................................... 20,791
------------
Total Assets................................................................................ 573,585,741
------------
LIABILITIES:
Outstanding loan............................................................................... 159,000,000
Payables:
Investment securities purchased............................................................. 21,214,988
Investment advisory fees.................................................................... 353,974
Interest and fees on loan................................................................... 90,416
Administrative fees......................................................................... 78,682
Audit and tax fees.......................................................................... 75,200
Printing fees............................................................................... 30,678
Custodian fees.............................................................................. 23,163
Legal fees.................................................................................. 9,000
Trustees' fees and expenses................................................................. 3,499
Transfer agent fees......................................................................... 2,938
Financial reporting fees.................................................................... 771
Other liabilities.............................................................................. 2,974
------------
Total Liabilities........................................................................... 180,886,283
------------
NET ASSETS..................................................................................... $392,699,458
============
NET ASSETS CONSIST OF:
Paid-in capital................................................................................ $501,164,162
Par value...................................................................................... 266,970
Accumulated net investment income (loss)....................................................... 888,380
Accumulated net realized gain (loss) on investments............................................ (103,441,375)
Net unrealized appreciation (depreciation) on investments...................................... (6,178,679)
------------
NET ASSETS..................................................................................... $392,699,458
============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share)........................... $ 14.71
============
Number of Common Shares outstanding (unlimited number of Common Shares has been authorized).... 26,696,982
============
See Notes to Financial Statements Page 17
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 2015
INVESTMENT INCOME:
Interest....................................................................................... $ 29,473,416
Dividends...................................................................................... 60
Other.......................................................................................... 482,954
------------
Total investment income..................................................................... 29,956,430
------------
EXPENSES:
Investment advisory fees....................................................................... 4,202,431
Interest and fees on loan...................................................................... 1,617,277
Administrative fees............................................................................ 428,851
Printing fees.................................................................................. 109,036
Audit and tax fees............................................................................. 79,370
Custodian fees................................................................................. 72,933
Legal fees..................................................................................... 36,747
Transfer agent fees............................................................................ 30,236
Trustees' fees and expenses.................................................................... 21,373
Financial reporting fees....................................................................... 9,250
At the market offering costs (a)............................................................... (53,131)
Other.......................................................................................... 66,605
------------
Total expenses.............................................................................. 6,620,978
------------
NET INVESTMENT INCOME (LOSS)................................................................... 23,335,452
------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments..................................................... (846,861)
Net change in unrealized appreciation (depreciation) on investments......................... (6,404,484)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)........................................................ (7,251,345)
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................................ $ 16,084,107
============
(a) See Note 6 in the Notes to Financial Statements.
Page 18 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE FOR THE
YEAR YEAR
ENDED ENDED
5/31/2015 5/31/2014
-------------- --------------
OPERATIONS:
Net investment income (loss)........................................................ $ 23,335,452 $ 22,346,018
Net realized gain (loss)............................................................ (846,861) (2,548,773)
Net change in unrealized appreciation (depreciation)................................ (6,404,484) 94,645
-------------- --------------
Net increase (decrease) in net assets resulting from operations..................... 16,084,107 19,891,890
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................... (22,405,442) (25,186,591)
-------------- --------------
Total distributions to shareholders................................................. (22,405,442) (25,186,591)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from Common Shares sold through at the market offerings.................... -- 3,035,923
Proceeds from Common Shares reinvested.............................................. -- 454,722
-------------- --------------
Net increase (decrease) in net assets resulting from capital transactions........... -- 3,490,645
-------------- --------------
Total increase (decrease) in net assets............................................. (6,321,335) (1,804,056)
NET ASSETS:
Beginning of period................................................................. 399,020,793 400,824,849
-------------- --------------
End of period....................................................................... $ 392,699,458 $ 399,020,793
============== ==============
Accumulated net investment income (loss) at end of period........................... $ 888,380 $ (333,526)
============== ==============
CAPITAL TRANSACTIONS WERE AS FOLLOWS:
Common Shares at beginning of period................................................ 26,696,982 26,470,348
Common Shares sold through at the market offerings.................................. -- 196,487
Common Shares issued as reinvestment under the Dividend Reinvestment Plan........... -- 30,147
-------------- --------------
Common Shares at end of period...................................................... 26,696,982 26,696,982
============== ==============
See Notes to Financial Statements Page 19
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MAY 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase (decrease) in net assets resulting from operations..................... $ 16,084,107
Adjustments to reconcile net increase (decrease) in net assets resulting from
operations to net cash provided by operating activities:
Purchases of investments...................................................... (376,427,345)
Sales, maturities and paydowns of investments................................. 398,585,691
Net amortization/accretion of premiums/discounts on investments............... (711,852)
Net realized gain/loss on investments......................................... 846,861
Net change in unrealized appreciation/depreciation on investments............. 6,404,484
CHANGES IN ASSETS AND LIABILITIES:
Increase in interest receivable............................................... (549,773)
Increase in dividends receivable.............................................. (16)
Decrease in prepaid expenses.................................................. 51,421
Decrease in interest and fees on loan payable................................. (48,940)
Decrease in investment advisory fees payable.................................. (8,466)
Decrease in offering cost payable............................................. (92,925)
Increase in audit and tax fees payable........................................ 1,000
Decrease in legal fees payable................................................ (998)
Increase in printing fees payable............................................. 1,676
Increase in administrative fees payable....................................... 8,600
Increase in custodian fees payable............................................ 9,246
Decrease in transfer agent fees payable....................................... (2,106)
Decrease in Trustees' fees and expenses payable............................... (350)
Increase in other liabilities payable......................................... 470
--------------
CASH PROVIDED BY OPERATING ACTIVITIES............................................... $ 44,150,785
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Common Shareholders.......................................... (22,405,442)
Proceeds from borrowing....................................................... 55,000,000
Repayment of borrowing........................................................ (70,000,000)
--------------
CASH USED IN FINANCING ACTIVITIES................................................... (37,405,442)
--------------
Increase in cash.................................................................... 6,745,343
Cash at beginning of period......................................................... 3,740,031
--------------
CASH AT END OF PERIOD............................................................... $ 10,485,374
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest and fees................................... $ 1,666,217
==============
Page 20 See Notes to Financial Statements
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
5/31/2015 5/31/2014 5/31/2013 5/31/2012 5/31/2011 (a)
--------- --------- --------- --------- -------------
Net asset value, beginning of period.................. $ 14.95 $ 15.14 $ 14.49 $ 14.76 $ 13.96
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss).......................... 0.87 0.84 1.01 0.91 0.73
Net realized and unrealized gain (loss)............... (0.27) (0.08) 0.64 (0.31) 0.77
--------- --------- --------- --------- ---------
Total from investment operations...................... 0.60 0.76 1.65 0.60 1.50
--------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income................................. (0.84) (0.95) (1.03) (0.87) (0.70)
--------- --------- --------- --------- ---------
Total distributions to Common Shareholders............ (0.84) (0.95) (1.03) (0.87) (0.70)
--------- --------- --------- --------- ---------
Premium from shares sold in at Common Share
offering........................................... -- 0.00 (b) 0.03 -- --
--------- --------- --------- --------- ---------
Net asset value, end of period........................ $ 14.71 $ 14.95 $ 15.14 $ 14.49 $ 14.76
========= ========= ========= ========= =========
Market value, end of period........................... $ 13.77 $ 14.00 $ 15.37 $ 14.34 $ 14.82
========= ========= ========= ========= =========
TOTAL RETURN BASED ON NET ASSET VALUE (c)............. 4.68% 5.35% 11.92% (4.45)% 11.19%
========= ========= ========= ========= =========
TOTAL RETURN BASED ON MARKET VALUE (c)................ 4.64% (2.82)% 14.80% (2.95)% 23.20%
========= ========= ========= ========= =========
-----------------------------
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON SHAREHOLDERS:
Ratio of total expenses to average net assets......... 1.69% 1.80% 1.85% 1.88% 1.98%
Ratio of total expenses to average net assets excluding
interest expense................................... 1.28% 1.36% 1.38% 1.33% 1.31%
Ratio of net investment income (loss) to average
net assets......................................... 5.96% 5.60% 6.77% 6.38% 5.09%
Portfolio turnover rate............................... 63% 90% 125% 63% 95%
Net assets, end of period (in 000's).................. $ 392,699 $ 399,021 $ 400,825 $ 367,172 $ 373,902
Ratio of total expenses to total average Managed
Assets (d)......................................... 1.18% 1.25% 1.30% 1.31% 1.39%
Ratio of total expenses to total average Managed
Assets excluding interest expense (d).............. 0.89% 0.96% 0.97% 0.93% 0.92%
INDEBTEDNESS:
Total loan outstanding (in 000's)..................... $ 159,000 $ 174,000 $ 174,000 $ 158,000 $ 160,000
Asset coverage per $1,000 of indebtedness (e)......... $ 3,470 $ 3,293 $ 3,304 $ 3,324 $ 3,337
------------------------------
(a) From inception to October 12, 2010, Four Corners Capital Management, LLC
served as the Fund's Sub-Advisor. Effective October 12, 2010, the
Leveraged Finance Team of First Trust Advisors L.P. assumed the day-to-day
responsibility for management of the Fund's portfolio.
(b) Amount is less than $0.01.
(c) 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 less than one year. Past performance is not
indicative of future results.
(d) Managed Assets are calculated by taking the Fund's total asset value,
including assets attributable to the principal amount of borrowings, minus
the sum of the Fund's liabilities, other than the principal amount of
borrowings.
(e) Calculated by taking the Fund's total assets less the Fund's total
liabilities, not including the loan outstanding, and dividing by the
outstanding loan balance in 000's.
Page 21 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
1. ORGANIZATION
First Trust Senior Floating Rate Income Fund II (the "Fund") is a diversified,
closed-end management investment company organized as a Massachusetts business
trust on March 25, 2004, and is registered with the Securities and Exchange
Commission ("SEC") under the Investment Company Act of 1940, as amended (the
"1940 Act"). The Fund trades under the ticker symbol FCT on the New York Stock
Exchange ("NYSE").
The Fund's 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 these objectives by investing in a portfolio of senior
floating-rate loan interests ("Senior Loans").(1) There can be no assurance that
the Fund will achieve its investment objectives. Investing in Senior Loans
involves credit risk and, during periods of generally declining credit quality,
it may be particularly difficult for the Fund to achieve its secondary
investment objective. The Fund may not be appropriate for all investors.
2. SIGNIFICANT ACCOUNTING POLICIES
The Fund, which is an investment company within the scope of Financial
Accounting Standards Board ("FASB") Accounting Standards Update 2013-08, follows
accounting and reporting guidance under FASB Accounting Standards Codification
Topic 946, "Financial Services-Investment Companies."
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America ("U.S. GAAP") requires
management to make estimates and assumptions that affect the reported amounts
and disclosures in the financial statements. Actual results could differ from
those estimates.
A. PORTFOLIO VALUATION
The net asset value ("NAV") of the Common Shares of the Fund is determined daily
as of the close of regular trading on the NYSE, normally 4:00 p.m. Eastern time,
on each day the NYSE is open for trading. If the NYSE closes early on a
valuation day, the NAV is determined as of that time. Domestic debt securities
and foreign securities are priced using data reflecting the earlier closing of
the principal markets for those securities. The Fund's NAV per Common Share is
calculated by dividing the value of all assets of the Fund (including accrued
interest and dividends), less all liabilities (including accrued expenses,
dividends declared but unpaid and any borrowings of the Fund), by the total
number of Common Shares outstanding.
The Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Pricing Committee of the Fund's
investment advisor, First Trust Advisors L.P. ("First Trust" or the "Advisor"),
in accordance with valuation procedures adopted by the Fund's Board of Trustees,
and in accordance with provisions of the 1940 Act. Investments valued by the
Advisor's Pricing Committee, if any, are footnoted as such in the footnotes to
the Portfolio of Investments. The Fund's investments are valued as follows:
The Senior Loans in which the Fund invests are not listed on any
securities exchange or board of trade. Senior Loans are typically bought
and sold by institutional investors in individually negotiated private
transactions that function in many respects like an over-the-counter
secondary market, although typically no formal market-makers exist. This
market, while having grown substantially since its inception, generally
has fewer trades and less liquidity than the secondary market for other
types of securities. Some Senior Loans have few or no trades, or trade
infrequently, and information regarding a specific Senior Loan may not be
widely available or may be incomplete. Accordingly, determinations of the
fair market value of Senior Loans may be based on infrequent and dated
information. Because there is less reliable, objective data available,
elements of judgment may play a greater role in valuation of Senior Loans
than for other types of securities. Typically, Senior Loans are fair
valued using information provided by a third-party pricing service. The
third-party pricing service primarily uses over-the-counter pricing from
dealer runs and broker quotes from indicative sheets to value the Senior
Loans.
Common stocks and other equity securities listed on any national or
foreign exchange (excluding The NASDAQ(R) Stock Market, LLC ("NASDAQ") and
the London Stock Exchange Alternative Investment Market ("AIM")) are
valued at the last sale price on the exchange on which they are
principally traded or, for NASDAQ and AIM securities, the official closing
price. Securities traded on more than one securities exchange are valued
at the last sale price or official closing price, as applicable, at the
close of the securities exchange representing the principal market for
such securities.
(1) The terms "security" and "securities" used throughout the Notes to
Financial Statements include Senior Loans.
Page 22
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
Corporate bonds, corporate notes and other debt securities are valued on
the basis of valuations provided by dealers who make markets in such
securities or by an independent pricing service approved by the Fund's
Board of Trustees, which may use the following valuation inputs when
available:
1) benchmark yields;
2) reported trades;
3) broker/dealer quotes;
4) issuer spreads;
5) benchmark securities;
6) bids and offers; and
7) reference data including market research publications.
Fixed-income and other debt securities having a remaining maturity of 60
days or less when purchased are fair valued at cost adjusted for
amortization of premiums and accretion of discounts (amortized cost),
provided the Advisor's Pricing Committee has determined that the use of
amortized cost is an appropriate reflection of fair value given market and
issuer-specific conditions existing at the time of the determination.
Factors that may be considered in determining the appropriateness of the
use of amortized cost include, but are not limited to, the following:
1) the credit conditions in the relevant market and changes thereto;
2) the liquidity conditions in the relevant market and changes thereto;
3) the interest rate conditions in the relevant market and changes
thereto (such as significant changes in interest rates);
4) issuer-specific conditions (such as significant credit
deterioration); and
5) any other market-based data the Advisor's Pricing Committee
considers relevant. In this regard, the Advisor's Pricing Committee
may use last-obtained market-based data to assist it when valuing
portfolio securities using amortized cost.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Fund's Board of Trustees or its
delegate, the Advisor's Pricing Committee, at fair value. These securities
generally include, but are not limited to, restricted securities (securities
which may not be publicly sold without registration under the Securities Act of
1933, as amended (the "1933 Act")) for which a pricing service is unable to
provide a market price; securities whose trading has been formally suspended; a
security whose market or fair value price is not available from a
pre-established pricing source; a security with respect to which an event has
occurred that is likely to materially affect the value of the security after the
market has closed but before the calculation of the Fund's NAV or make it
difficult or impossible to obtain a reliable market quotation; and a security
whose price, as provided by the pricing service, does not reflect the security's
fair value. As a general principle, the current fair value of a security would
appear to be the amount which the owner might reasonably expect to receive for
the security upon its current sale. When fair value prices are used, generally
they will differ from market quotations or official closing prices on the
applicable exchanges. A variety of factors may be considered in determining the
fair value of such securities, including, but not limited to, the following:
1) the fundamental business data relating to the borrower/issuer;
2) an evaluation of the forces which influence the market in which
these securities are purchased and sold;
3) the type, size and cost of a security;
4) the financial statements of the borrower/issuer;
5) the credit quality and cash flow of the borrower/issuer, based on
the Advisor's or external analysis;
6) the information as to any transactions in or offers for the
security;
7) the price and extent of public trading in similar securities (or
equity securities) of the borrower/issuer, or comparable companies;
8) the coupon payments;
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the borrower/issuer, including any ability
to obtain money or resources from a parent or affiliate and an
assessment of the borrower's/issuer's management;
11) the prospects for the borrower's/issuer's industry, and multiples
(of earnings and/or cash flows) being paid for similar businesses in
that industry;
12) borrower's/issuer's competitive position within the industry;
13) borrower's/issuer's ability to access additional liquidity through
public and/or private markets; and
14) other relevant factors.
The Fund is subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
Page 23
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value the Fund's investments as of May 31, 2015, is
included with the Fund's Portfolio of Investments.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME
Security transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Interest income is recorded on the accrual basis. Market premiums and discounts
are amortized over the expected life of each respective borrowing.
Securities purchased or sold on a when-issued, delayed-delivery or forward
purchase commitment basis may have extended settlement periods. The value of the
security so purchased is subject to market fluctuations during this period. Due
to the nature of the Senior Loan market, the actual settlement date may not be
certain at the time of the purchase or sale for some of the Senior Loans.
Interest income on such Senior Loans is not accrued until settlement date. The
Fund maintains liquid assets with a current value at least equal to the amount
of its when-issued, delayed delivery or forward purchase commitments. The Fund
had no when-issued, delayed-delivery, or forward purchase commitments as of May
31, 2015.
C. UNFUNDED LOAN COMMITMENTS
The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund is obligated to fund these loan commitments at the
borrower's discretion. The Fund had no unfunded delayed draw loan commitments as
of May 31, 2015.
D. RESTRICTED SECURITIES
The Fund invests in restricted securities, which are securities that may not be
offered for public sale without first being registered under the 1933 Act. Prior
to registration, restricted securities may only be resold in transactions exempt
from registration under Rule 144A under the 1933 Act, normally to qualified
institutional buyers. As of May 31, 2015, the Fund held restricted securities as
shown in the following table. The Fund does not have the right to demand that
such securities be registered. These securities are valued according to the
valuation procedures as stated in the Portfolio Valuation footnote (Note 2A) and
are not expressed as a discount to the carrying value of a comparable
unrestricted investment. There are no unrestricted investments with the same
maturity date and yield for this issuer.
% OF
NET ASSETS
APPLICABLE
ACQUISITION PRINCIPAL VALUE CURRENT TO COMMON
SECURITY DATE VALUE/SHARES PER SHARE CARRYING COST VALUE SHARES
-----------------------------------------------------------------------------------------------------------------
Cumulus Media, Inc. - Warrants 6/29/09 1,449 $ 1.19 $ -- $ 1,725 0.00% *
* Amount is less than 0.01%.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
The Fund will distribute to holders of its Common Shares monthly dividends of
all or a portion of its net income after the payment of interest and dividends
in connection with leverage, if any. Distributions of any net long-term capital
gains earned by the Fund are distributed at least annually. Distributions will
automatically be reinvested into additional Common Shares pursuant to the Fund's
Dividend Reinvestment Plan unless cash distributions are elected by the
shareholder.
Distributions from net investment income and realized capital gains are
determined in accordance with income tax regulations, which may differ from U.S.
GAAP. Certain capital accounts in the financial statements are periodically
adjusted for permanent differences in order to reflect their tax character.
These permanent differences are primarily due to the varying treatment of income
and gain/loss on significantly modified portfolio securities held by the Fund
and have no impact on net assets or net asset value per share. Temporary
differences, which arise from recognizing certain items of income, expense and
gain/loss in different periods for financial statement and tax purposes, will
reverse
Page 24
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
at some time in the future. Permanent differences incurred during the fiscal
year ended May 31, 2015, resulting in book and tax accounting differences, have
been reclassified at year end to reflect an increase in accumulated net
investment income (loss) of $291,896, a decrease in accumulated net realized
gain (loss) on investments of $344,881, and an increase to paid-in capital of
$52,985. Net assets were not affected by these reclassifications.
The tax character of distributions paid during the fiscal years ended May 31,
2015 and 2014 is as follows:
Distributions paid from: 2015 2014
------------- -------------
Ordinary income................................ $ 22,405,442 $ 25,186,591
As of May 31, 2015, the components of distributable earnings and net assets on a
tax basis were as follows:
Undistributed ordinary income.................. $ 1,091,262
Undistributed capital gains.................... --
-------------
Total undistributed earnings................... 1,091,262
Accumulated capital and other losses........... (103,181,356)
Net unrealized appreciation (depreciation)..... (6,641,580)
-------------
Total accumulated earnings (losses)............ (108,731,674)
Other.......................................... --
Paid-in capital................................ 501,431,132
-------------
Net assets..................................... $ 392,699,458
=============
F. INCOME TAXES
The Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. Accordingly, no
provision has been made for federal and state income taxes. However, due to the
timing and amount of distributions, the Fund may be subject to an excise tax of
4% of the amount by which approximately 98% of the Fund's taxable income exceeds
the distributions from such taxable income for the calendar year.
Under the Regulated Investment Company Modernization Act of 2010 (the "Act"),
net capital losses arising in taxable years after December 31, 2010, may be
carried forward indefinitely, and their character is retained as short-term
and/or long-term losses. Previously, net capital losses were carried forward for
up to eight years and treated as short-term losses. As a transition rule, the
Act requires that post-enactment net capital losses be used before pre-enactment
net capital losses. At May 31, 2015, for federal income tax purposes, the Fund
had capital loss carryforwards available that are shown in the following table,
to the extent provided by regulation, to offset future capital gains through the
years indicated. To the extent that these loss carryforwards are used to offset
future capital gains, it is probable that the capital gains offset will not be
distributed to the Fund shareholders.
CAPITAL LOSS AVAILABLE THROUGH
----------------------------------------------------------------- POST-EFFECTIVE TOTAL CAPITAL
2016 2017 2018 2019 (NO EXPIRATION) LOSS AVAILABLE
------------------------------------------------------------------------------------------------------
$ 422,155 $ 25,585,953 $ 68,278,827 $ 4,665,052 $ 3,397,798 $ 102,349,785
The Fund is subject to certain limitations under the U.S. tax rules on the use
of capital loss carryforwards and net unrealized built-in losses. These
limitations apply when there has been a 50% change in ownership.
Certain losses realized during the current fiscal year may be deferred and
treated as occurring the first day of the following fiscal year for federal
income tax purposes. For the fiscal year ended May 31, 2015, the Fund incurred
and elected to defer net ordinary and capital losses as follows:
Qualified Late Year Losses:
Ordinary Losses $ --
Capital Losses 831,571
The Fund is subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2012, 2013,
2014 and 2015 remain open to federal and state audit. As of May 31, 2015,
management has evaluated the application of these standards to the Fund and has
determined that no provision for income tax is required in the Fund's financial
statements for uncertain tax positions.
G. EXPENSES
The Fund will pay all expenses directly related to its operations.
Page 25
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
First Trust, the investment advisor to the Fund, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust is responsible for the selection and ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and providing certain
administrative services necessary for the management of the Fund. For these
investment management services, First Trust is entitled to a monthly fee
calculated at an annual rate of 0.75% of the Fund's Managed Assets (the average
daily total asset value of the Fund minus the sum of the Fund's liabilities
other than the principal amount of borrowings). First Trust also provides fund
reporting services to the Fund for a flat annual fee in the amount of $9,250.
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as the Fund's
administrator, fund accountant and transfer agent in accordance with certain fee
arrangements. As administrator and fund accountant, BNYM IS is responsible for
providing certain administrative and accounting services to the Fund, including
maintaining the Fund's books of account, records of the Fund's securities
transactions, and certain other books and records. As transfer agent, BNYM IS is
responsible for maintaining shareholder records for the Fund. The Bank of New
York Mellon ("BNYM") serves as the Fund's custodian in accordance with certain
fee arrangements. As custodian, BNYM is responsible for custody of the Fund's
assets.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated pro rata among each fund in the First Trust Fund
Complex based on net assets. Each Independent Trustee is also paid an annual per
fund fee that varies based on whether the fund is a closed-end or other actively
managed fund, or is an index fund.
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Trustees are reimbursed for travel and out-of-pocket expenses in connection with
all meetings. The Lead Independent Trustee and Committee Chairmen rotate every
three years. The officers and "Interested" Trustee receive no compensation from
the Fund for acting in such capacities.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investments, excluding short-term
investments, for the year ended May 31, 2015, were $355,473,820 and
$373,069,853, respectively.
5. BORROWINGS
The Fund has a Revolving Credit and Security Agreement (the "Credit Facility")
with Liberty Street Funding LLC as conduit lender and The Bank of Nova Scotia as
secondary lender and agent for the secured parties under the agreement. The
Credit Facility provides for a secured line of credit for the Fund, where Fund
assets are pledged against advances made to the Fund. Under the terms of the
Credit Facility, the loans under the Credit Facility bear interest for each
settlement period at a rate per annum based on the commercial paper rate of the
conduit lender. Effective July 11, 2014, the Credit Facility was amended,
whereby the expiration date of the Credit Facility was extended until July 10,
2015 and the total commitment was reduced from $190,000,000 to $185,000,000. The
Credit Facility may be renewed annually. Under the requirements of the 1940 Act,
the Fund, immediately after any such borrowings, must have "asset coverage" of
at least 300% (33-1/3% of the Fund's total assets after borrowings). The Fund
pays a utilization fee at a per annum rate of 0.3625% (prior to July 11, 2014,
the per annum rate was 0.35%) of the daily average of the aggregate outstanding
principal amount of the advances during the prior calendar month, and a
commitment fee at a per annum rate of the product of (i) 0.3625% (prior to July
11, 2014, the per annum rate was 0.35%) of the daily average of the total
commitment in effect (or if terminated, the aggregate outstanding principal
amount of the advances funded or maintained) during the preceding calendar month
and (ii) 1.02.
For the year ended May 31, 2015, the average amount outstanding under the Credit
Facility was $168,772,603. The high and low annual interest rates for the loan
under the Credit Facility funded by the conduit lender during the year ended May
31, 2015, were 0.232% and 0.199%, respectively, with a weighted average interest
rate of 0.210%. The annual interest rate in effect for the loan at May 31, 2015,
was 0.232%.
6. COMMON SHARE OFFERINGS
On November 21, 2012, the Fund and the Advisor entered into a sales agreement
with JonesTrading Institutional Services, LLC ("JonesTrading") whereby the Fund
may offer and sell up to 3,000,000 Common Shares from time to time through
JonesTrading as agent for the offer and sale of the Common Shares. Effective
August 22, 2013, the sales agreement with JonesTrading was amended and as a
result, the Fund may offer and sell up to 4,225,967 Common Shares. Sales of
Common Shares pursuant to the sales agreement may be made in negotiated
transactions or transactions that are deemed to be "at the market" as defined in
Rule 415 under the 1933 Act, including sales made directly on the NYSE or sales
made through a market maker other than on an exchange, at an offering price
equal to or in excess of the net asset value per share of the Fund's Common
Shares at the time such Common Shares are initially sold. The Fund used the net
proceeds from the sale of the Common Shares in accordance with its investment
objectives and policies. Sales of Common Shares made under the sales agreement
will be made pursuant to a "shelf" registration statement on Form N-2 (the
"Registration Statement") that will require the Fund to obtain effectiveness
Page 26
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015
from the SEC on an annual basis. The Registration Statement has not been
effective since September 2014, and therefore Common Shares have not been
offered under the sales agreement since that time. Any future sales of Common
Shares under the sales agreement will be made pursuant to an effective
Registration Statement. Transactions related to offerings under such sales
agreement are as follows:
NET PROCEEDS
COMMON RECEIVED IN
SHARES NET PROCEEDS NET ASSET VALUE EXCESS OF NET
SOLD RECEIVED OF SHARES SOLD ASSET VALUE
----------- ------------ --------------- --------------
Year Ended 5/31/15 -- $ -- $ -- $ --
Year Ended 5/31/14 196,487 3,035,923 2,952,237 83,686
Year Ended 5/31/13 1,029,480 16,309,080 15,524,292 784,788
Estimated offering costs of $235,169 related to the November 21, 2012 offering
were recorded as a prepaid asset and were amortized to expense by the Fund on a
straight line basis over a one year period. Additionally, on August 23, 2013,
estimated offering costs of $175,000 related to the offering were recorded as a
prepaid asset and were amortized to expense by the Fund on a straight line basis
over a one year period. During the year ended May 31, 2015, it was determined
that actual offering costs were less than the estimated offering costs by
$92,925. Therefore, offering costs were reduced by that amount in the year ended
May 31, 2015, as reflected in the "At the market offering costs" line item on
the Statement of Operations.
7. INDEMNIFICATION
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events to the Fund through
the date the financial statements were issued, and has determined that there
were the following subsequent events:
Effective July 10, 2015, the Credit Facility was amended whereby the expiration
date was extended until July 8, 2016 and the total commitment was reduced from
$185,000,000 to $180,000,000.
On June 22, 2015, the Fund declared a distribution of $0.075 per share to Common
Shareholders of record on July 6, 2015, payable July 15, 2015.
On July 20, 2015, the Fund declared a distribution of $0.075 per share to Common
Shareholders of record on August 5, 2015, payable August 17, 2015.
Page 27
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF FIRST TRUST SENIOR FLOATING RATE
INCOME FUND II:
We have audited the accompanying statement of assets and liabilities of First
Trust Senior Floating Rate Income Fund II (the "Fund"), including the portfolio
of investments, as of May 31, 2015, and the related statements of operations and
cash flows for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of May 31, 2015 by correspondence with the Fund's
custodian, brokers, and agent banks; where replies were not received, we
performed other auditing procedures. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
First Trust Senior Floating Rate Income Fund II as of May 31, 2015, the results
of its operations and its cash flows for the year then ended, the changes in its
net assets for each of the two years in the period then ended, and the financial
highlights for each of the five years in the period then ended, in conformity
with accounting principles generally accepted in the United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
July 23, 2015
Page 28
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
DIVIDEND REINVESTMENT PLAN
If your Common Shares are registered directly with the Fund or if you hold your
Common Shares with a brokerage firm that participates in the Fund's Dividend
Reinvestment Plan (the "Plan"), unless you elect, by written notice to the Fund,
to receive cash distributions, all dividends, including any capital gain
distributions, on your Common Shares will be automatically reinvested by BNY
Mellon Investment Servicing (US) Inc. (the "Plan Agent"), in additional Common
Shares under the Plan. If you elect to receive cash distributions, you will
receive all distributions in cash paid by check mailed directly to you by the
Plan Agent, as the dividend paying agent.
If you decide to participate in the Plan, the number of Common Shares you will
receive will be determined as follows:
(1) If Common Shares are trading at or above net asset value ("NAV") at
the time of valuation, the Fund will issue new shares at a price equal to
the greater of (i) NAV per Common Share on that date or (ii) 95% of the
market price on that date.
(2) If Common Shares are trading below NAV at the time of valuation, the
Plan Agent will receive the dividend or distribution in cash and will
purchase Common Shares in the open market, on the NYSE or elsewhere, for
the participants' accounts. It is possible that the market price for the
Common Shares may increase before the Plan Agent has completed its
purchases. Therefore, the average purchase price per share paid by the
Plan Agent may exceed the market price at the time of valuation, resulting
in the purchase of fewer shares than if the dividend or distribution had
been paid in Common Shares issued by the Fund. The Plan Agent will use all
dividends and distributions received in cash to purchase Common Shares in
the open market within 30 days of the valuation date except where
temporary curtailment or suspension of purchases is necessary to comply
with federal securities laws. Interest will not be paid on any uninvested
cash payments.
You may elect to opt-out of or withdraw from the Plan at any time by giving
written notice to the Plan Agent, or by telephone at (866) 340-1104, in
accordance with such reasonable requirements as the Plan Agent and the Fund may
agree upon. If you withdraw or the Plan is terminated, you will receive a
certificate for each whole share in your account under the Plan, and you will
receive a cash payment for any fraction of a share in your account. If you wish,
the Plan Agent will sell your shares and send you the proceeds, minus brokerage
commissions.
The Plan Agent maintains all Common Shareholders' accounts in the Plan and gives
written confirmation of all transactions in the accounts, including information
you may need for tax records. Common Shares in your account will be held by the
Plan Agent in non-certificated form. The Plan Agent will forward to each
participant any proxy solicitation material and will vote any shares so held
only in accordance with proxies returned to the Fund. Any proxy you receive will
include all Common Shares you have received under the Plan.
There is no brokerage charge for reinvestment of your dividends or distributions
in Common Shares. However, all participants will pay a pro rata share of
brokerage commissions incurred by the Plan Agent when it makes open market
purchases.
Automatically reinvesting dividends and distributions does not mean that you do
not have to pay income taxes due upon receiving dividends and distributions.
Capital gains and income are realized although cash is not received by you.
Consult your financial advisor for more information.
If you hold your Common Shares with a brokerage firm that does not participate
in the Plan, you will not be able to participate in the Plan and any dividend
reinvestment may be effected on different terms than those described above.
The Fund reserves the right to amend or terminate the Plan if in the judgment of
the Board of Trustees the change is warranted. There is no direct service charge
to participants in the Plan; however, the Fund reserves the right to amend the
Plan to include a service charge payable by the participants. Additional
information about the Plan may be obtained by writing BNY Mellon Investment
Servicing (US) Inc., 301 Bellevue Parkway, Wilmington, Delaware 19809.
--------------------------------------------------------------------------------
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies and information on how the Fund voted proxies relating to
portfolio investments during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Fund's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website located at
http://www.sec.gov.
Page 29
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
PORTFOLIO HOLDINGS
The Fund files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Fund's Forms N-Q
are available (1) by calling (800) 988-5891; (2) on the Fund's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
NYSE CERTIFICATION INFORMATION
In accordance with Section 303A-12 of the New York Stock Exchange ("NYSE")
Listed Company Manual, the Fund's President has certified to the NYSE that, as
of September 17, 2014, he was not aware of any violation by the Fund of NYSE
corporate governance listing standards. In addition, the Fund's reports to the
SEC on Forms N-CSR, N-CSRS, and N-Q contain certifications by the Fund's
principal executive officer and principal financial officer that relate to the
Fund's public disclosure in such reports and are required by Rule 30a-2 under
the 1940 Act.
SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
The Annual Meeting of Shareholders for the Fund was held on September 15, 2014
(the "meeting"). At the meeting, Trustees Thomas R. Kadlec and Richard E.
Erickson were elected as Class I Trustees for a three-year term expiring at the
Fund's annual meeting of shareholders in 2017. The number of votes cast in favor
of Mr. Kadlec was 22,986,353, the number of votes against Mr. Kadlec was
466,661, and the number of broker non-votes was 3,243,968. The number of votes
cast in favor of Mr. Erickson was 22,984,117, the number of votes against Mr.
Erickson was 468,897, and the number of broker non-votes was 3,243,968. Niel B.
Nielson, James A. Bowen and Robert F. Keith are current and continuing Trustees.
Mr. Nielson is currently the Class II Trustee of the Fund for a term expiring at
the Fund's annual meeting shareholders in 2015. Messrs. Bowen and Keith are
currently the Class III Trustees of the Fund for a term expiring at the Fund's
annual meeting of shareholders in 2016.
TAX INFORMATION
Of the ordinary income (including short-term capital gain) distributions made by
the Fund during the year ended May 31, 2015, none qualify for the corporate
dividends received deduction available to corporate shareholders or as qualified
dividend income.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some, but not all,
of the risks that should be considered for the Fund. For additional information
about the risks associated with investing in the Fund, please see the Fund's
prospectus and statement of additional information, as well as other Fund
regulatory filings.
INVESTMENT AND MARKET RISK: An investment in the Fund's Common Shares is subject
to investment risk, including the possible loss of the entire principal
invested. An investment in Common Shares represents an indirect investment in
the securities owned by the Fund. The value of these securities, like other
market investments, may move up or down, sometimes rapidly and unpredictably.
Common Shares at any point in time may be worth less than the original
investment, even after taking into account the reinvestment of Fund dividends
and distributions. Security prices can fluctuate for several reasons including
the general condition of the securities markets, or when political or economic
events affecting the issuers occur. When the Advisor or Sub-Advisor determines
that it is temporarily unable to follow the Fund's investment strategy or that
it is impractical to do so (such as when a market disruption event has occurred
and trading in the securities is extremely limited or absent), the Fund may take
temporary defensive positions.
HIGH-YIELD SECURITIES RISK: The Senior Loans in which the Fund invests are
generally rated below investment grade by one or more rating agencies and are
considered to be "high-yield" securities. High-yield securities should be
considered speculative as their low ratings indicate a quality of less than
investment grade, and therefore carry an increased risk of default as compared
to investment grade issues. Because high-yield securities are generally
subordinated obligations and are perceived by investors to be riskier than
higher rated securities, their prices tend to fluctuate more than higher rated
securities and are affected by short-term credit developments to a greater
degree. High-yield securities are subject to greater market fluctuations and
risk of loss than securities with higher investment ratings. A reduction in an
issuer's creditworthiness may result in the bankruptcy of an issuer or the
default by an issuer on the interest and principal payments. The market for
high-yield securities is smaller and less liquid than that for investment grade
securities.
LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. If the income and gains from the securities and
investments purchased with such proceeds do not cover the cost of leverage, the
Common Shares' return will be less than if leverage had not been used. The Fund
borrowed pursuant to a leverage borrowing program, which constitutes a
substantial lien and burden by reason of their prior claim against the income of
the Fund and against the net assets of the Fund in liquidation. The rights of
lenders to receive payments of interest on and repayments of principal on any
borrowings made by the Fund under a leverage borrowing program are senior to the
rights of holders of Common Shares, with respect to the payment of dividends or
upon liquidation. If the Fund is not in compliance with certain Credit Facility
provisions, the Fund may not be permitted to declare dividends or other
distributions, including dividends and
Page 30
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
distributions with respect to Common Shares or purchase Common Shares. The use
of leverage by the Fund increases the likelihood of greater volatility of NAV
and market price of the Common Shares. Leverage also increases the risk that
fluctuations in interest rates on borrowings and short-term debt that the Fund
may pay will reduce the return to the Common Shareholders or will result in
fluctuations in the dividends paid on the Common Shares.
SENIOR LOAN RISK: In the event a borrower fails to pay scheduled interest or
principal payments on a Senior Loan held by the Fund, the Fund will experience a
reduction in its income and a decline in the market value of the Senior Loan,
which will likely reduce dividends and lead to a decline in the net asset value
of the Fund's Common Shares. If the Fund acquires a Senior Loan from another
lender, for example, by acquiring a participation, the Fund may also be subject
to credit risks with respect to that lender. Although Senior Loans may be
secured by specific collateral, the value of the collateral may not equal the
Fund's investment when the Senior Loan is acquired or may decline below the
principal amount of the Senior Loan subsequent to the Fund's investment. Also,
to the extent that collateral consists of stock of the borrower or its
subsidiaries or affiliates, the Fund bears the risk that the stock may decline
in value, be relatively illiquid, and/or may lose all or substantially all of
its value, causing the Senior Loan to be under collateralized. Therefore, the
liquidation of the collateral underlying a Senior Loan may not satisfy the
issuer's obligation to the Fund in the event of non-payment of scheduled
interest or principal, and the collateral may not be readily liquidated.
CREDIT RISK: Credit risk is the risk that an issuer of a security h--eld by the
Fund will be unable or unwilling to make dividend, interest and/or principal
payments when due and the related risk that the value of a security may decline
because of concerns about the issuer's ability to make such payments. Credit
risk may be heightened for the Fund because it invests a substantial portion of
its net assets in "high yield" or "junk" debt; such securities involve greater
risks, including the possibility of dividend or interest deferral, default or
bankruptcy, and are regarded as predominantly speculative with respect to the
issuer's capacity to pay dividends or interest and repay principal. Credit risk
is heightened for loans in which the Fund invests because companies that issue
such loans tend to be highly leveraged and thus are more susceptible to the
risks of interest deferral, default and/or bankruptcy.
INTEREST RATE RISK: The Fund's portfolio is also subject to interest rate risk.
Interest rate risk is the risk that fixed-income securities will decline in
value because of changes in market interest rates. Investments in debt
securities with long-term maturities may experience significant price declines
if long-term interest rates increase.
PRE-PAYMENT RISK: Loans are subject to pre-payment risk. The degree to which
borrowers prepay loans, whether as a contractual requirement or at their
election, may be affected by general business conditions, the financial
condition of the borrower and competitive conditions among loan investors, among
others. As such, prepayments cannot be predicted with accuracy. Upon a
prepayment, either in part or in full, the actual outstanding debt on which the
Fund derives interest income will be reduced. The Fund may not be able to
reinvest the proceeds received on terms as favorable as the prepaid loan.
LIQUIDITY RISK: The Fund invests a substantial portion of its assets in
lower-quality debt issued by companies that are highly leveraged. Lower-quality
debt tends to be less liquid than higher-quality debt. Moreover, smaller debt
issues tend to be less liquid than larger debt issues. If the economy
experiences a sudden downturn, or if the debt markets for such companies become
distressed, the Fund may have particular difficulty selling its assets in
sufficient amounts, at reasonable prices and in a sufficiently timely manner -
to raise the cash necessary to meet any potentially heavy redemption requests by
Fund shareholders.
Page 31
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
NUMBER OF
PORTFOLIOS IN THE OTHER
TERM OF OFFICE FIRST TRUST TRUSTEESHIPS OR
AND FUND COMPLEX DIRECTORSHIPS
NAME, ADDRESS, DATE OF BIRTH LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY HELD BY
AND POSITION WITH THE FUND SERVICE(1) DURING PAST 5 YEARS TRUSTEE TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Three Year Term Physician; President, Wheaton Orthopedics; 114 None
c/o First Trust Advisors L.P. Limited Partner, Gundersen Real Estate
120 E. Liberty Drive, o Since Fund Limited Partnership; Member, Sportsmed LLC
Suite 400 Inception
Wheaton, IL 60187
D.O.B.: 04/51
Thomas R. Kadlec, Trustee o Three Year Term President (March 2010 to Present), Senior 114 Director of
c/o First Trust Advisors L.P. Vice President and Chief Financial Officer ADM Investor
120 E. Liberty Drive, o Since Fund (May 2007 to March 2010), ADM Investor Services, Inc.
Suite 400 Inception Services, Inc.(Futures Commission Merchant) and ADM Investor
Wheaton, IL 60187 Services
D.O.B.: 11/57 International,
and Futures
Industry
Association
Robert F. Keith, Trustee o Three Year Term President (2003 to Present), Hibs 114 Director of
c/o First Trust Advisors L.P. Enterprises (Financial and Management Trust Company
120 E. Liberty Drive, o Since June 2006 Consulting) of Illinois
Suite 400
Wheaton, IL 60187
D.O.B.: 11/56
Niel B. Nielson, Trustee o Three Year Term Managing Director and Chief Operating 114 Director of
c/o First Trust Advisors L.P. Officer (January 2015 to Present), Pelita Covenant
120 E. Liberty Drive, o Since Fund Harapan Education Foundation (Educational Transport Inc.
Suite 400 Inception Products and Services); President and Chief (May 2003 to
Wheaton, IL 60187 Executive Officer (June 2012 to September May 2014)
D.O.B.: 03/54 2014), Servant Interactive LLC (Educational
Products and Services); President and Chief
Executive Officer (June 2012 to September
2014), Dew Learning LLC (Educational
Products and Services); President (June
2002 to June 2012), Covenant College
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(2), Trustee o Three Year Term Chief Executive Officer (December 2010 to 114 None
and Chairman of the Board Present), President (until December 2010),
120 E. Liberty Drive, o Since Fund First Trust Advisors L.P. and First Trust
Suite 400 Inception Portfolios L.P.; Chairman of the Board of
Wheaton, IL 60187 Directors, BondWave LLC (Software
D.O.B.: 09/55 Development Company/Investment Advisor) and
Stonebridge Advisors LLC (Investment Advisor)
(1) Currently, Niel B. Nielson, as Class II Trustee, is serving as trustee
until the Fund's 2015 annual meeting of shareholders. James A. Bowen and
Robert F. Keith, as Class III Trustees, are serving as trustees until the
Fund's 2016 annual meeting of shareholders. Thomas R. Kadlec and Richard
E. Erickson, as Class I Trustees, are serving as trustees until the Fund's
2017 annual meeting of shareholders .
(2) Mr. Bowen is deemed an "interested person" of the Fund due to his position
of Chief Executive Officer of First Trust Advisors L.P., investment
advisor of the Fund.
Page 32
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS(3)
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley President and Chief o Indefinite term Chief Operations Officer (December 2010 to
120 E. Liberty Drive, Executive Officer Present) and Chief Financial Officer, First
Suite 400 Trust Advisors L.P. and First Trust Portfolios
Wheaton, IL 60187 o Since January 2012 L.P.; Chief Financial Officer, BondWave LLC
D.O.B.: 11/57 (Software Development Company/Investment
Advisor) and Stonebridge Advisors LLC
(Investment Advisor)
James M. Dykas Treasurer, Chief Financial o Indefinite term Controller (January 2011 to Present) Senior
120 E. Liberty Drive, Officer and Chief Vice President (April 2007 to Present),
Suite 400 Accounting Officer o Since January 2012 First Trust Advisors L.P. and First Trust
Wheaton, IL 60187 Portfolios L.P.
D.O.B.: 01/66
W. Scott Jardine Secretary and Chief o Indefinite term General Counsel, First Trust Advisors L.P. and
120 E. Liberty Drive, Legal Officer First Trust Portfolios L.P.; Secretary and
Suite 400 o Since Fund Inception General Counsel, BondWave LLC (Software
Wheaton, IL 60187 Development Company/Investment Advisor);
D.O.B.: 05/60 Secretary of Stonebridge Advisors LLC
(Investment Advisor)
Daniel J. Lindquist Vice President o Indefinite term Managing Director (July 2012 to Present),
120 E. Liberty Drive, Senior Vice President (September 2005 to
Suite 400 o Since December 2005 Present), First Trust Advisors L.P. and First
Wheaton, IL 60187 Trust Portfolios L.P.
D.O.B.: 02/70
Kristi A. Maher Chief Compliance Officer o Indefinite term Deputy General Counsel, First Trust Advisors
120 E. Liberty Drive, and Assistant Secretary L.P. and First Trust Portfolios L.P.
Suite 400 o Chief Compliance Officer
Wheaton, IL 60187 since January 2011
D.O.B.: 12/66
o Assistant Secretary
since Fund Inception
(3) Officers of the Fund have an indefinite term. The term "officer" means the
president, vice president, secretary, treasurer, controller or any other
officer who performs a policy making function.
Page 33
--------------------------------------------------------------------------------
PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST TRUST SENIOR FLOATING RATE INCOME FUND II (FCT)
MAY 31, 2015 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
PRIVACY ONLINE
We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
Page 34
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR,
FUND ACCOUNTANT &
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
(a) The 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 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.
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 each of the last
two fiscal years 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 $89,000 for 2014
and $70,000 for 2015.
(b) AUDIT-RELATED FEES (REGISTRANT) -- The aggregate fees billed in each of
the last two fiscal years, 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 2014 and $0 for 2015.
AUDIT-RELATED FEES (INVESTMENT ADVISER) -- The aggregate fees billed in
each of the last two fiscal years of the registrant 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 2014 and
$0 for 2015.
(c) TAX FEES (REGISTRANT) -- The aggregate fees billed in each of the last two
fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the
registrant were $5,200 for 2014 and $5,200 for 2015. These fees were for
tax consultation and tax preparation.
TAX FEES (INVESTMENT ADVISER) -- The aggregate fees billed in each of the
last two fiscal years of the registrant for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax
planning to the registrant's adviser were $0 for 2014 and $0 for 2015.
(d) ALL OTHER FEES (REGISTRANT) -- The aggregate fees billed in each of the
last two fiscal years 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 were $0 for 2014 and $0 for 2015.
ALL OTHER FEES (INVESTMENT ADVISER) -- The aggregate fees billed in each
of the last two fiscal years for products and services provided by the
principal accountant to the Registrant's investment adviser, other than
services reported in paragraphs (a) through (c) of this Item were $0 for
2014 and $0 for 2015.
(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 adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
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 adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser 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 adviser 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:
(b) 0%
(c) 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 adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
Registrant for 2014 were $5,200 and $36,800 for the Registrant and the
Registrant's investment adviser, respectively, and for 2015 were $5,200
and $12,700 for the Registrant and the Registrant's investment adviser,
respectively.
(h) The Registrant's audit committee of its Board of Trustees determined that
the provision of non-audit services that were rendered to the Registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the investment adviser 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.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
(a) The registrant has a separately designated standing audit committee
consisting of all the independent trustees of the registrant. The members
of the audit committee are: Thomas R. Kadlec, Niel B. Nielson, Richard E.
Erickson and Robert F. Keith.
ITEM 6. INVESTMENTS.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
The Proxy Voting Policies are attached herewith.
ITEM 8. 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, 2015
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. Scott Fries assists Mr.
Housey and is also a Senior Credit Analyst assigned to certain industries. The
Portfolio Managers are supported in their portfolio management activities by the
First Trust Advisors Leveraged Finance investment staff, including a team of
credit analysts, a designated trader and operations personnel. Senior Credit
Analysts are assigned industries and Associate Credit Analysts support the
Senior Credit Analysts. All credit analysts, operations personnel and portfolio
managers report to Mr. Housey.
William Housey, CFA
Senior Vice President, Senior Portfolio Manager
Mr. Housey joined First Trust in June 2010 as the Senior Portfolio Manager for
the Leveraged Finance Investment Team and has 18 years of investment experience.
Mr. Housey is a Senior Vice President of First Trust. Prior to joining First
Trust, Mr. Housey was at Morgan Stanley/Van Kampen Funds, Inc. for 11 years and
served as Executive Director and Co-Portfolio Manager. Mr. Housey has extensive
experience in portfolio management of both leveraged and unleveraged credit
products, including bank loans, high yield bonds, credit derivatives and
corporate restructurings. Mr. Housey received a BS in Finance from Eastern
Illinois University and an MBA in Finance and Management and Strategy from
Northwestern University's Kellogg School of Business. He holds the FINRA Series
7, Series 52 and Series 63 licenses and the Chartered Financial Analyst
designation. He is a member of the CFA Institute and the CFA Society of Chicago.
Scott D. Fries, CFA
Vice President, Portfolio Manager
Mr. Fries Scott D. Fries, CFA, joined First Trust in June 2010 as a Portfolio
Manager in the Leveraged Finance Investment Team and has 20 years of investment
industry experience. Mr. Fries is a Senior Vice President of First Trust. Prior
to joining First Trust, Mr. Fries spent 15 years at Morgan Stanley/Van Kampen
Funds, Inc, where he most recently served as Executive Director and Co-Portfolio
Manager of Institutional Separately Managed Accounts. Mr. Fries received a BA in
International Business from Illinois Wesleyan University and an MBA in Finance
from DePaul University. Mr. Fries holds the Chartered Financial Analyst
designation. He is a member of the CFA Institute and the CFA Society of Chicago.
(a)(2) Other Accounts Managed by Portfolio Manager(s) or Management Team Member
and Potential Conflicts of Interest
INFORMATION PROVIDED AS OF MAY 31, 2015
Name of Portfolio Total # of # of Accounts Managed for Total Assets for which
Manager or Team Accounts Total which Advisory Fee is Based Advisory Fee is Based on
Member Type of Accounts Managed* Assets on Performance Performance
-------------------- ------------------ ----------- --------- --------------------------- -------------------------
1. William Housey, Registered 8 $1.6B 0 $0
CFA Investment
Companies:
Other Pooled 12 $59 0 $0
Investment million
Vehicles:
Other Accounts: 0 $0 0 $0
2. Scott Fries, CFA Registered 8 $1.6B 0 $0
Investment
Companies:
Other Pooled 12 $59 0 $0
Investment million
Vehicles:
Other Accounts: 0 $0 0 $0
* Information excludes the registrant.
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 Leveraged Finance 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 Leveraged Finance
Team currently 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 Leveraged Finance 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 L.P. Leveraged Finance 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, 2015
The compensation structure for the Leveraged Finance Investment Team of First
Trust is based upon a fixed salary as well as a discretionary bonus determined
by the management of First Trust.
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 based upon an individual's overall contribution to the
success of the firm and the profitability of the firm. Salaries and bonuses for
members of the First Trust Advisors L.P. Leveraged Finance Team are not based
upon criteria such as performance of the Registrant and are not directly tied to
the value of assets of the Fund.
(A)(4) DISCLOSURE OF SECURITIES OWNERSHIP AS OF MAY 31, 2015
-------------------------------- ---------------------------------------
Name of Portfolio Manager or Dollar ($) Range of Fund Shares
Team Member Beneficially Owned
-------------------------------- ---------------------------------------
William Housey $10,001 - $50,000 (1,000 shares)
-------------------------------- ---------------------------------------
Scott Fries $0 (0 shares)
-------------------------------- ---------------------------------------
(B) Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. 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 Trustees, 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 11. 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 registrant's second fiscal quarter
of 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 12. 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) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(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.
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/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: July 15, 2015
-----------------
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/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: July 15, 2015
-----------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: July 15, 2015
-----------------
*Print the name and title of each signing officer under his or her signature.