First Trust Short Duration High Income Fund (FDHAX)
Investment Objective/Strategy - The First Trust Short Duration High Income Fund seeks to provide a high level of current income and as a secondary objective, capital appreciation. There can be no assurance the Fund's investment objectives will be achieved. Under normal market conditions, the Fund invests at least 80% of its net assets (including investment borrowings) in high yield debt securities and bank loans that are rated below-investment grade ("junk bonds") or unrated. The Fund may invest up to 15% of its net assets in non-U.S. securities denominated in non-U.S. currencies. The Fund may also invest in investment grade debt securities and convertible bonds.
There can be no assurance that the Fund's investment objectives will be achieved. The Fund may not be appropriate for all investors.
Fund Overview
TickerFDHAX
Fund TypeHigh Yield Bond and Loan Participation
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBNY Mellon Investment Servicing (US) Inc.
CUSIP33738F601
Share ClassClass A
Fiscal Year-End10/31
Inception Date11/1/2012
Minimum Investment Amount$2,500
Minimum Subsequent Investment Amount$50
Maximum Initial Sales Charge3.50%
Total Expense Ratio*1.39%
Net Expense Ratio*1.25%
* As of 3/1/2024
Pursuant to contract, First Trust has agreed to waive fees and/or pay fund expenses to prevent the net expense ratio of any class of shares of the fund from exceeding 1.00% per year, excluding 12b-1 distribution and service fees, acquired fund fees and expenses and certain other expenses as described in the prospectus, through 2/28/2025, and to not exceed 1.35% per year from 3/01/2025 through 2/28/2034. Net expense ratio shown above includes 12b-1 service fees, acquired fund fees and certain other expenses as described in the prospectus.
Current Fund Data (as of 12/24/2024)
Net Asset Value1$18.02
Total Net Assets$75,691,305
Outstanding Shares615,090
NAV 52-Week High/Low$18.24 / $17.81
Top 10 Issuers (as of 11/29/2024)10
Holding Percent
1011778 B.C. Unlimited Liability Company (Restaurant Brands) (aka Burger King/Tim Horton's) 2.92%
Open Text Corporation (GXS) 2.87%
Go Daddy Operating Co, LLC 2.86%
SS&C Technologies Holdings, Inc. 2.86%
HUB International Limited 2.84%
Post Holdings, Inc. 2.51%
United Rentals, Inc. 2.19%
Berry Global, Inc. 2.16%
VICI Properties 1, LLC 2.10%
Ultimate Software Group (UKG, Inc.) 1.78%
Asset Type Breakdown (as of 11/29/2024)10
Asset Percent
High Yield 70.21%
Senior Loan 29.79%
Portfolio Characteristics (as of 12/20/2024)
Weighted Average Effective Duration62.20 Years
Weighted Average Maturity4.75 Years
Weighted Average Price$96.42
Weighted Average Coupon6.81%
Weighted Average Yield-To-Maturity77.33%
Days to Reset811.62 Days
3-Month Term SOFR94.33%
Percent of Assets with Interest Rate Floors16.36%
Please note: Weighted average maturity excludes defaulted assets.
NAV History (Since Inception)
Past performance is not indicative of future results.
Distribution Information
Dividend FrequencyMonthly
Dividend per Share Amt (as of 12/26/2024)2$0.1012
30-Day SEC Yield (as of 11/29/2024)36.03%
Unsubsidized 30-Day SEC Yield (as of 11/29/2024)45.72%
Distribution Rate (as of 11/29/2024)56.70%
Top 10 Industries (as of 11/29/2024)10
Industry Percent
Software 17.71%
Insurance 12.37%
Hotels, Restaurants & Leisure 7.96%
Containers & Packaging 7.36%
IT Services 6.45%
Commercial Services & Supplies 5.42%
Media 5.09%
Health Care Technology 4.42%
Health Care Providers & Services 3.88%
Food Products 3.84%
Credit Quality Breakdown (as of 11/29/2024)10
Credit Quality Percent
BBB 0.65%
BBB- 6.45%
BB+ 2.82%
BB 13.27%
BB- 9.51%
B+ 12.89%
B 24.07%
B- 13.35%
CCC+ 9.24%
CCC 1.95%
CCC- 1.64%
CC 1.13%
NR 3.03%
The ratings are by S&P Global Ratings. 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.
Month End Performance (as of 11/29/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception11
Fund Performance *
Without Sales Charge 2.31% 6.77% 8.66% 4.15% 3.97% 3.70% 3.98%
With Sales Charge -1.26% 3.04% 4.88% 2.93% 3.22% 3.33% 3.67%
Index Performance **
ICE BofA US High Yield Constrained Index 2.22% 8.67% 12.66% 3.70% 4.55% 4.97% 5.25%
Morningstar® LSTA® US Leveraged Loan Index 2.42% 8.37% 10.10% 7.02% 6.07% 4.96% 4.87%
Blended Benchmark 2.32% 8.53% 11.39% 5.41% 5.35% 4.99% 5.08%
Bloomberg US Aggregate Bond Index -0.13% 2.93% 6.88% -1.95% -0.01% 1.52% 1.58%
Quarter End Performance (as of 9/30/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception11
Fund Performance *
Without Sales Charge 3.63% 5.70% 9.96% 3.61% 3.89% 3.71% 3.95%
With Sales Charge -0.01% 2.01% 6.10% 2.39% 3.14% 3.34% 3.64%
Index Performance **
ICE BofA US High Yield Constrained Index 5.32% 8.05% 15.69% 3.08% 4.53% 4.95% 5.27%
Morningstar® LSTA® US Leveraged Loan Index 2.09% 6.59% 9.62% 6.47% 5.74% 4.86% 4.79%
Blended Benchmark 3.70% 7.33% 12.65% 4.82% 5.18% 4.93% 5.06%
Bloomberg US Aggregate Bond Index 5.20% 4.45% 11.57% -1.39% 0.33% 1.84% 1.73%

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

**Performance information for each listed index is for illustrative purposes only and does not represent actual fund performance. Indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

ICE BofA US High Yield Constrained Index - The Index tracks the performance of U.S. dollar denominated below investment grade corporate debt publicly issued in the U.S. domestic market but caps issuer exposure at 2%.

Morningstar® LSTA® US Leveraged Loan Index - The Index, formerly the S&P/LSTA Leveraged Loan Index, is a market value-weighted index that is designed to deliver comprehensive, precise coverage of the US leveraged loan market.

Blended Benchmark - The Benchmark consists of the following two indexes: 50% ICE BofA U.S. High Yield Constrained Index / 50% Morningstar® LSTA® US Leveraged Loan Index. The Blended Benchmark returns are calculated by using the monthly return of the two indices during each period shown above. At the beginning of each month the two indices are rebalanced to a 50-50 ratio to account for divergence from that ratio that occurred during the course of each month. The monthly returns are then compounded for each period shown above, giving the performance for the Blended Benchmark for each period shown above.

Bloomberg US Aggregate Bond Index - The Index covers the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS, ABS, and CMBS.
Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares.
2 Most recent distribution paid or declared to today's date. Subject to change in the future. There is no guarantee that the fund will declare dividends.
3 The 30-day SEC yield is calculated by dividing the net investment income per share earned during the most recent 30-day period by the maximum offering price per share on the last day of the period and includes the effects of fee waivers and expense reimbursements, if applicable.
4 The unsubsidized 30-day SEC yield is calculated the same as the 30-day SEC yield, however it excludes contractual fee waivers and expense reimbursements.
5 Distribution Rate is calculated by dividing the fund's most recent ordinary distribution paid or declared, on an annualized basis, by the NAV price. Distribution rates may vary.
6 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. It accounts for the likelihood of changes in the timing of cash flows in response to interest rate movements. Senior loans have an effective duration close to zero. For purposes of calculating an effective duration for senior loans, a duration of 0.25 is assumed.
7 The annualized return that would be earned on a debt security if held to maturity, weighted by the value of each debt security in the fund's portfolio. The calculation does not include the effect of fund fees and expenses.
8 The average number of days until the floating component of a loan resets.
9 Term SOFR Reference Rates provide an indicative, forward-looking measurement of SOFR rates, based on market expectations implied from leading derivatives markets. The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. The SOFR includes all trades in the Broad General Collateral Rate plus bilateral Treasury repurchase agreement (repo) transactions.
10 Market value information used in calculating the percentages is based upon trade date plus one recording of transactions, which can differ from regulatory financial reports (Forms N-CSR and N-PORT Part F) that are based on trade date recording of security transactions. Holdings are subject to change.
11 Inception Date is 11/1/2012

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

The Fund is subject to the following risks:

You could lose money by investing in a fund. An investment in a fund is not a deposit of a bank and is not insured or guaranteed. There can be no assurance that a fund’s objective(s) will be achieved. Please refer to each fund’s prospectus and Statement of Additional Information for additional details on a fund’s risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

Investments in bank loans are subject to the same risks as other debt securities, but the risks may be heightened because of limited public information available and because loan borrowers may be leveraged and tend to be more adversely affected by changes in market or economic conditions. The secondary market for bank loans may be subject to irregular trading activity, wide bid/ask spreads and extended trade settlement periods.

During periods of falling interest rates if an issuer calls higher-yielding debt instruments, a fund may be forced to invest the proceeds at lower interest rates, likely resulting in a decline in the fund’s income.

A fund may be subject to the risk that a counterparty will not fulfill its obligations which may result in significant financial loss to a fund.

Covenant-lite loans contain fewer maintenance covenants than traditional loans and may not include terms that allow the lender to monitor the financial performance of the borrower and declare a default if certain criteria are breached. This may hinder a fund’s ability to mitigate problems and increase a fund’s exposure to losses on such investments.

An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due and the value of a security may decline as a result.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

Investments in debt securities subject the holder to the credit risk of the issuer and the value of debt securities will generally change inversely with changes in interest rates. In addition, debt securities generally do not trade on a securities exchange making them less liquid and more difficult to value.

Extension risk is the risk that, when interest rates rise, certain obligations will be paid off by the issuer (or other obligated party) more slowly than anticipated, causing the value of these debt securities to fall. Rising interest rates tend to extend the duration of debt securities, making their market value more sensitive to changes in interest rates.

Floating rate securities are structured so that the security’s coupon rate fluctuates based upon the level of a reference rate. As a result, the coupon on floating rate securities will generally decline in a falling interest rate environment, causing a fund to experience a reduction in the income it receives from the security. A floating rate security’s coupon rate resets periodically according to the terms of the security. Consequently, in a rising interest rate environment, floating rate securities with coupon rates that reset infrequently may lag behind the changes in market interest rates.

High yield securities, or “junk” bonds, are less liquid and are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, are considered to be highly speculative.

A fund’s income may decline when interest rates fall or if there are defaults in its portfolio.

As inflation increases, the present value of a fund’s assets and distributions may decline.

Interest rate risk is the risk that the value of the debt securities in a fund’s portfolio will decline because of rising interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities.

To the extent a fund invests in floating or variable rate obligations that use the London Interbank Offered Rate (“LIBOR”) as a reference interest rate, it is subject to LIBOR Risk. The United Kingdom’s Financial Conduct Authority, which regulates LIBOR, has ceased making LIBOR available as a reference rate over a phase-out period that began December 31, 2021. There is no assurance that any alternative reference rate, including the Secured Overnight Financing Rate (“SOFR”) will be similar to or produce the same value or economic equivalence as LIBOR or that instruments using an alternative rate will have the same volume or liquidity. The unavailability or replacement of LIBOR may affect the value, liquidity or return on certain fund investments and may result in costs incurred in connection with closing out positions and entering into new trades. Any potential effects of the transition away from LIBOR on a fund or on certain instruments in which a fund invests can be difficult to ascertain, and they may vary depending on a variety of factors, and they could result in losses to a fund.

Certain fund investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Illiquid securities may trade at a discount and may be subject to wide fluctuations in market value. The portfolio managers of an actively managed portfolio will apply investment techniques and risk analyses that may not have the desired result.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund. Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. For example, changes in governmental fiscal and regulatory policies, disruptions to banking and real estate markets, actual and threatened international armed conflicts and hostilities, and public health crises, among other significant events, could have a material impact on the value of the fund's investments.

A fund and a fund’s advisor may seek to reduce various operational risks through controls and procedures, but it is not possible to completely protect against such risks. The fund also relies on third parties for a range of services, including custody, and any delay or failure related to those services may affect the fund’s ability to meet its objective.

Prepayment risk is the risk that the issuer of a debt security will repay principal prior to the scheduled maturity date. Debt securities allowing prepayment may offer less potential for gains during a period of declining interest rates, as a fund may be required to reinvest the proceeds of any prepayment at lower interest rates.

Companies that issue loans tend to be highly leveraged and thus are more susceptible to the risks of interest deferral, default and/or bankruptcy. Loans are usually rated below investment grade but may also be unrated. As a result, the risks associated with these loans are similar to the risks of high-yield fixed income instruments. The senior loan market has seen a significant increase in loans with weaker lender protections which may impact recovery values and/or trading levels in the future.

A fund with significant exposure to a single asset class, country, region, industry, or sector may be more affected by an adverse economic or political development than a broadly diversified fund.

Securities of small- and mid-capitalization companies may experience greater price volatility and be less liquid than larger, more established companies.

A fund may hold securities or other assets that may be valued on the basis of factors other than market quotations. This may occur because the asset or security does not trade on a centralized exchange, or in times of market turmoil or reduced liquidity. Portfolio holdings that are valued using techniques other than market quotations, including “fair valued” assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. There is no assurance that a fund could sell or close out a portfolio position for the value established for it at any time.

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Not FDIC Insured • Not Bank Guaranteed • May Lose Value