Edgar Filing: FIRST TRUST FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II

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/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
------------------------------------------------------------
(Exact name of registrant as specified in charter)

1001 Warrenville Road, Suite 300
LISLE, IL 60532
---------------------------------------------------
(Address of principal executive offices) (Zip code)

W. Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
LISLE, IL 60532
---------------------------------------------------
(Name and address of agent for service)

registrant's telephone number, including area code: 630-241-4141
-------------

Date of fiscal year end: MAY 31
-------
Date of reporting period: NOVEMBER 30, 2007
-----------------

Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.

A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.

ITEM 1. REPORTS TO STOCKHOLDERS.

The Report to Shareholders is attached herewith.

[GRAPHIC OMITTED]

SEMI-ANNUAL
REPORT

FOR THE SIX MONTHS ENDED
NOVEMBER 30, 2007

FIRST TRUST/
FOUR CORNERS
SENIOR FLOATING RATE
INCOME FUND II

[LOGO] FOUR CORNERS [LOGO] FIRST TRUST
CAPITAL MANAGEMENT ADVISORS L.P.

--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II (FCT)
SEMI-ANNUAL REPORT
NOVEMBER 30, 2007

Shareholder Letter ........................................................ 1
Portfolio Commentary ...................................................... 2
Portfolio Components ...................................................... 5
Portfolio of Investments .................................................. 6
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
Additional Information .................................................... 29

CAUTION REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933. 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/or Four Corners Capital
Management, LLC ("Four Corners" or the "Sub-Advisor") and their respective
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/Four Corners 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/or Sub-Advisor and their respective 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 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
may be worth more or less than their original cost.

HOW TO READ THIS REPORT

This report contains information that can help you evaluate your investment. 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 Michael P. McAdams and Robert I.
Bernstein of the Fund's Sub-Advisor, 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 Four
Corners 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 risks of investing in the Fund are
spelled out in the prospectus.

--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II (FCT)
SEMI-ANNUAL REPORT
NOVEMBER 30, 2007

Dear Shareholders:

We believe investment opportunities abound, both here and abroad, affording the
potential for exceptional returns for investors. At First Trust Advisors L.P.
("First Trust"), we realize that we must be mindful of the complexities of the
global economy and at the same time address the needs of our customers through
the types of investments we bring to market.

We are single-minded about providing a range of investment products, including
our family of closed-end funds, to help First Trust meet the challenge of
maximizing our customers' financial opportunities. Translating investment ideas
into products which can deliver performance over the long term while continuing
to support our current product line remains a focus for First Trust as we head
into the future.

The report you hold will give you detailed information about your investment in
First Trust/Four Corners Senior Floating Rate Income Fund II (the "Fund") for
the six month period ended November 30, 2007. I encourage you to read this
report and discuss it with your financial advisor.

First Trust is pleased that the Fund is a part of your financial portfolio and
we will continue to offer you current information about your investment, as well
as new opportunities in the financial marketplace, through your financial
advisor. We value our relationship with you and appreciate the opportunity to
assist you in achieving your financial goals.

Sincerely,

/s/ James A. Bowen

James A. Bowen
President of First Trust/Four Corners Senior Floating Rate Income Fund II
January 15, 2008

Page 1

--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II

The primary investment objective of the First Trust/Four Corners 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 secured
floating-rate corporate 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 six-month period ended November 30, 2007 was the most volatile period in the
senior secured floating-rate loan ("Senior Loan") market in recent years.
Despite record low default rates and minimal credit losses, the Senior Loan
benchmark index, the S&P/LSTA Leveraged Loan Index (the "Index"), registered two
of its three worst months ever during the six-month period. 1 As described in
more detail below, this negative and volatile performance was primarily caused
by the spillover impact from the sub-prime crisis on technical conditions in the
Senior Loan market as opposed to fundamental credit erosion. As a reminder, most
Senior Loans have minimal direct exposure to sub-prime mortgage assets.

Credit spreads had been generally tightening from 2002 until June 2007.
Sustained double-digit earnings growth during four years of economic expansion
contributed to investors' increased comfort with credit risk. This resulted in a
dramatic increase in demand for Senior Loans which drove down credit spreads and
loosened credit terms. When the sub-prime crisis began in the spring, Senior
Loan credit spreads were near all-time low levels. In addition, the supply of
credit products was also reaching an all-time high as private equity firms
sought to take advantage of favorable credit markets with commercial and
investment banks all too eager to provide committed Senior Loan and high-yield
bond financing for record amounts of mergers and acquisitions on
borrower-friendly terms.

The record amount of Senior Loan supply coincided with a swift and severe
decline in demand for Senior Loans primarily as a result of the sub-prime
crisis. Structured, securitized investment products such as collateralized loan
obligations ("CLOs") have in recent years been the main buyers of Senior Loans.
Over the past five years, approximately 60% of all Senior Loans have been
purchased by CLOs. 2 Many CLO investors invest in a variety of securitized
products, including mortgages and sub-prime mortgages. Despite the fact that
CLOs continue to perform quite well, there has been a dramatic global reduction
in demand for all structured product assets, including CLOs. This increase in
supply and decrease in demand created an imbalance that has resulted in a
dramatic decline in Senior Loan prices.

The reduced demand by CLOs for Senior Loans was, until recently, being partially
made up for by non-traditional Senior Loan investors such as hedge funds,
distressed investors, dislocation funds and equity-income funds. However, many
of these investors may be approaching or have reached their investable limits in
Senior Loans. We believe that these investors will continue to have incremental
demand for loans and thereby improve technical conditions in the short term.
However, we also believe that compared to historical periods, the increased role
of these investors will result in higher volatility for the foreseeable future.

PERFORMANCE ANALYSIS

FCT generated a total return of (14.86%) 3 including market price change and
dividends for the six-months ended November 30, 2007. The Fund's net asset value
("NAV") total return was (4.50%) 4 over the same period. The NAV return trailed
the Index return of (1.54%). The Fund's performance includes the negative impact
of leverage in a negative return environment as well as the negative impact of
fees, expenses, and un-invested cash balances which are not part of the
benchmark return. However, if there was a bright spot to the Fund's performance,
it came in the form of relative outperformance of its peers. FCT's NAV return
exceeded the peer group average of (5.12%), and the Fund was one of the top
performing "pure-play" funds 5 over the past six months as a result of its focus
on high credit quality versus some of it peers. The Fund's closing price on
November 30, 2007 was $15.34, which represented an 11.3% discount to its NAV,
compared to the Fund's discount to NAV of 0.5% six months earlier.

-------------
1 Since its inception in 1997.

2 According to Standard & Poor's "A Guide to the Loan Market-October 2007."

3 Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in Common
Share market price per share.

4 Total return based on NAV is the combination of reinvested dividend
distributions and reinvested capital gains distributions, if any, at
prices obtained by the Dividend Reinvestment Plan and changes in NAV per
share and does not reflect sales load.

5 A smaller subset (FCM, FCT, PPR, TLI and VVR) of the broad peer group,
which invest almost exclusively in senior loans. We refer to this smaller
subset as the "pure-play" senior loan closed-end funds, and we believe
that these funds are generally more comparable to FCT as the non-senior
loan holdings are routinely less than 5% of the fund.

Page 2

--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY - (CONTINUED)
--------------------------------------------------------------------------------

While credit spreads have widened significantly in the second half of 2007, the
underlying FCT portfolio is still made up primarily of Senior Loans purchased
during the last several years. The credit spreads on these Senior Loans are
generally below the spreads on Senior Loans which are being issued in the
current environment. As the Senior Loans in the Fund prepay, we will re-invest
the proceeds of these Senior Loans in newly issued Senior Loans that we expect
to be on better economic and structural terms than those which were issued prior
to the recent loan market correction.

The credit spread compression of recent years finally took its toll on the
Fund's dividend in September. The Fund, which had previously increased its
dividend 13 times, cut its dividend for the first time in October 2007 since its
inception in May 2004. The dividend distribution totaled $0.72 per Common Share
during the past six months, which represented a 5.3% decrease over the prior six
months ended May 31, 2007. Based on the Fund's current dividend, FCT's
distribution rate is 8.4% calculated on the Fund's share price and 7.5% based on
the Fund's NAV as of November 30, 2007, which was slightly lower than the pure
play peer group averages of 8.8% and 8.0%, respectively. The Fund saw its credit
spread decline by more than the market-wide spread decline, which we believe was
largely a result of our purposeful effort to avoid some of the wider spread and
higher risk Senior Loans that were being issued during the first half of the
year. This impacted dividends in the short-term, but should improve overall
performance in the long-term, in our opinion.

While we are disappointed with the Senior Loan market's heightened volatility
and poor market price performance, we do believe that the recent correction is
healthy and good for the market overall. Credit standards had been eroding
recently amid an excess of demand for Senior Loans compared to their supply, and
the correction has already resulted in new loans being issued on more favorable
economic and structural terms.

As discussed above, the Senior Loan market witnessed a marked increase in
volatility during the period covered by this report. The Fund's experience was
no different as both the Fund's price and NAV experienced unprecedented swings
and, at the end of the period, the Fund's discount to its NAV had widened to
near-record levels. During the period, the Fund's NAV fluctuated from a high of
$18.85 to a low of $17.25, a difference of $1.60 per Common Share, whereas the
market price of the Fund closed as high as $19.08 and as low as $14.81, a
difference of $4.27 per Common Share.

MANAGER Q&A

WHAT IS YOUR OVERALL MARKET OUTLOOK?

We believe that a cyclical slowing of the U.S. economy is probable but a
recession in the near term is unlikely. In general, U.S. corporations have
healthy balance sheets and high cash positions, and continue to perform to plan.
Inflation remains moderate, employment remains strong and the U.S. economy is
boosted by strong growth overseas and an improved trade balance. These factors
support our belief of a continued below-average default rate environment of
Senior Loans over the next 12 months. While higher energy prices and ongoing
problems in the U.S. housing market will weigh most heavily on loans in real
estate, building materials, retail and automotive sectors, our economic outlook
is supportive of slower but still positive economic and earnings growth.

WHAT IS YOUR OUTLOOK FOR THE SENIOR LOAN MARKET?

We expect that technical imbalances, rather than credit fundamentals, will be
the more immediate challenge to the Senior Loan market. The pipeline of new
Senior Loans that was committed to by commercial and investment banks (but has
yet to be distributed) exceeds $150 billion, a large number by any measure. Many
of these financing commitments were made in the first half of 2007, with the
expectation that the debt would be sold into a receptive market as the
transactions neared completion. The rapid change in the credit markets has
resulted in the banks having to hold loans with terms that are no longer
appealing to loan investors. The number and size of these commitments, combined
with their terms no longer being "market," will continue to weigh on the market
until these loans are distributed or otherwise removed from the supply overhang.

Likewise, there is no imminent solution to the demand reduction which resulted
from reduced CLO issuance. While non-traditional investors will likely continue
to see value in the Senior Loan market, the sheer magnitude of the new issue
pipeline, combined with the sharp reduction in demand, will continue to create a
supply-demand imbalance for the foreseeable future. We expect this imbalance to
result in increased and persistent price volatility in excess of historical
levels.

The average spread to maturity implied by current market prices approximates
L+400, which is historically high particularly in an environment of record low
default rates. While we do expect default rates to increase, we think that
current spread levels are very compelling for senior secured risk. It is also
worth reminding investors that Senior Loans generally hold one of the most
senior positions in the capital structure of a business entity (the "Borrower"),
are typically secured with specific collateral and have a claim on the assets
and/or stock of the Borrower. They are senior to the claims held by subordinated
debt holders and stockholders of the Borrower.

Page 3

--------------------------------------------------------------------------------
PORTFOLIO COMMENTARY - (CONTINUED)
--------------------------------------------------------------------------------

WHAT IS THE INVESTMENT STRATEGY AND PORTFOLIO COMPOSITION OF THE FUND CURRENTLY?

The investment strategy employed is designed to achieve the Fund's objectives
through entire economic and credit cycles. Many managers of Senior Loan-based
closed-end funds invest up to 20% or more of their portfolios in high-yield
bonds in order to boost yields in the short run. FCT, on the other hand, is a
"pure play" strategy that generally does not invest in high-yield bonds, and
focuses primarily on Senior Loans. In some market environments, the Fund's pure
play strategy will result in lower current dividends/yields than some other
Senior Loan-based closed-end funds with meaningful allocations to high-yield
bonds. However, we believe that our investment strategy can result in lower NAV
volatility and higher NAV returns while maintaining competitive
dividends/yields.

The Fund's investment strategy focuses on thorough fundamental credit analysis,
broad issuer and industry diversification, and a proactive sell discipline in
order to minimize risk. The Fund's portfolio is generally more heavily weighted
towards industry groups that we expect to exhibit lower earnings volatility, and
which we expect to provide high recoveries to senior lenders in circumstances
where earnings volatility does occur. The Fund is broadly diversified with over
200 positions across 30 industries. At November 30, 2007, the five largest
individual borrower exposures in total represented 10.9% of the Fund's
portfolio.

As mentioned in prior reports, the Fund is leveraged using both Auction Market
Preferred Shares and a revolving borrowing facility provided by an asset-backed
commercial paper conduit. The terms and conditions of the leverage provide the
Fund with the ability to borrow on a floating-rate basis. Since the income
generated by the Fund's Senior Loan investment portfolio is also floating rate,
the Fund is less exposed to interest rate risk than a closed-end fund with a
fixed-rate investment portfolio, and investors will generally benefit from
portfolio leverage (in a positive return environment) regardless of short-term
interest rates. At November 30, 2007, the portfolio leverage accounted for 38.6%
of the Fund's total managed assets.

SUB-ADVISOR

Four Corners Capital Management, LLC ("Four Corners") was founded in 2001 by a
team of investment professionals and an affiliate of Australia-based Macquarie
Bank, Ltd. ("Macquarie"). Four Corners currently manages approximately $4.0
billion of assets (as of November 30, 2007), with an emphasis on Senior Loans.
The experienced professionals at Four Corners specialize in structuring and
managing Senior Loan-based products for a global client base. With multiple
investment products, Four Corners' clients include institutional investors,
corporations, investment funds, high net-worth and retail investors. Four
Corners is an investment advisor registered under the Investment Advisors Act of
1940.

PORTFOLIO MANAGEMENT TEAM

MICHAEL P. MCADAMS, PRESIDENT AND CHIEF EXECUTIVE OFFICER

Mr. McAdams is responsible for overseeing Four Corners' investment and
distribution activities. He has more than 29 years of experience in investment
management and banking, all of which have been spent in leveraged finance. Prior
to founding Four Corners, Mr. McAdams was with ING Capital Advisors, LLC,
("ICA") from 1995 to 2001. Mr. McAdams was a Founder of ICA and held the titles
of President, Chief Executive Officer and Chief Investment Officer. Under his
leadership, ICA completed over one dozen structured transactions and had over $7
billion in assets under management. Prior to working at ICA, Mr. McAdams was
founding portfolio manager of the first retail senior floating rate loan fund,
the Pilgrim Prime Rate Trust (NYSE: PPR), which he managed from its inception in
1988 through 1995. Mr. McAdams was previously employed by National Bank of
Canada, where he was a member of one of the first teams to manage a
non-originated U.S. corporate loan portfolio. Mr. McAdams began his banking
career at Manufacturers Hanover Trust Company in New York. He received an MBA in
Finance/Accounting from the University of California Los Angeles and dual BAs in
Finance/Accounting and Eastern European Studies from California State University
at Fullerton. Mr. McAdams has been an active member of the Loan Syndication and
Trading Association and was its Chairman in 2001, its Vice Chairman in 2002 and
has been a Board Member and/or served on committees reporting to the Board since
1998. Mr. McAdams received the 2006 Credit Investment News Outstanding
Contribution award in the U.S. Loan Market.

ROBERT I. BERNSTEIN, CFA, CHIEF INVESTMENT OFFICER

Mr. Bernstein is responsible for managing Four Corners' investment process. He
has over 16 years of experience in leveraged finance including senior secured
loans, high-yield bonds and private equity investments. Mr. Bernstein was most
recently a partner of The Yucaipa Companies, a Los Angeles-based private equity
firm, where he completed M&A transactions and leveraged financings valued in
excess of $4 billion. Previously, Mr. Bernstein was a Vice President in Bankers
Trust's leveraged finance group, where he arranged senior loan and high-yield
bond financings for financial sponsors and corporate issuers. Mr. Bernstein also
worked in GE Capital's restructuring group, where he focused primarily on
asset-based loans to distressed borrowers. Mr. Bernstein received an MBA in
Finance from the University of Chicago and a BBA in Finance magna cum laude from
Hofstra University. He has earned the Chartered Financial Analyst designation.
Mr. Bernstein also served as an infantry officer in the U.S. Marine Corps.

Page 4

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO COMPONENTS (a)
NOVEMBER 30, 2007

S&P RATING BREAKDOWN

[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]

B+ 15.39%
BB 21.17%
BB- 23.38%
BB+ 11.57%
BBB- 4.88%
CCC+ 1.12%
Cash/Cash Equivalents 2.33%
NR 13.22%(b)
CCC- 0.03%
BBB 0.14%
B 6.04%
B- 0.73%

ECONOMIC INDUSTRY BREAKDOWN

[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]

Media 21.37%
Health Care Providers & Services 10.08%
Hotels, Restaurants & Leisure 8.28%
Oil & Gas 5.51%
Commercial Services & Supplies 4.84%
Electric Utilities 4.04%
Capital Markets 3.30%
Chemicals 3.22%
Specialty Retail 2.79%
Aerospace & Defense 2.69%
IT Consulting & Services 2.62%
Paper & Forest Products 2.61%
Real Estate 2.46%
Food Products 2.45%
Multi-Utilities 2.43%
Pharmaceuticals 2.07%
Containers & Packaging 2.04%
Internet Software & Services 2.02%
Food & Drug Retailing 1.80%
Wireless Telecommunication Services 1.62%
Diversified Financials 1.37%
Software 1.28%
Road & Rail 1.27%
Semiconductors Equipment & Products 1.09%
Electronic Equipment & Instruments 1.02%
Automobiles 0.96%
Insurance 0.81%
Computers & Peripherals 0.75%
Metals & Mining 0.66%
Diversified Consumer Services 0.66%
Energy Equipment & Services 0.51%
Machinery 0.32%
Construction & Engineering 0.28%
Auto Components 0.27%
Construction Materials 0.22%
Building Products 0.15%
Industrial Conglomerates 0.07%
Airlines 0.07%

(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets
applicable to Common Shareholders.

(b) The percentage of Senior Loan Interests not rated includes 8.45% of Senior
Loan Interests that were privately rated upon issuance. The rating
agencies do not provide ongoing surveillance on the private ratings.

NR Not rated.

See Notes to Financial Statements Page 5

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a)
NOVEMBER 30, 2007 (UNAUDITED)

PRINCIPAL RATINGS (b) STATED
VALUE DESCRIPTION MOODY'S S&P COUPON MATURITY (c) VALUE
------------- ------------------------------------------------ --------------- --------------- ------------ -------------

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - 160.7%

AEROSPACE & DEFENSE - 4.5%
$ 3,665,472 DAE Aviation Holdings, Inc. .................... B2 BB- 8.71%-9.08% 07/31/14 $ 3,624,235
1,334,528 DAE Aviation Holdings, Inc. .................... B2 BB- 7.71%-8.08% 07/13/09 1,330,358
2,338,197 GenCorp, Inc. .................................. Ba2 BB 7.08%-7.34% 04/30/13 2,221,287
1,701,250 Hexcel Corp. ................................... Ba1 BB+ 6.44%-7.06% 03/01/12 1,658,718
955,891 ILC Industries, Inc. ........................... NR(e) NR(e) 7.45% 02/24/12 917,655
836,196 Mid-Western Aircraft Systems, Inc. ............. Ba3 BBB- 6.90% 12/31/11 817,382
5,032,807 Robertson Aviation, LLC ........................ NR(e) NR(e) 8.09%-9.75% 04/19/13 4,957,315
1,000,000 Safenet, Inc. .................................. B1 B+ 7.75% 04/12/14 920,000
3,100,000 Vought Aircraft Industries, Inc. ............... Ba2 B 7.62% 12/22/10 3,019,918
-------------
19,466,868
-------------
AGRICULTURAL PRODUCTS - 2.1%
9,870,679 Dole Food Company, Inc. ........................ Ba3 BB- 6.94%-8.50% 04/12/13 9,256,229
-------------
AIRLINES - 0.1%
500,000 Delta Air Lines, Inc. .......................... Ba2 NR(e) 6.84%-7.32% 04/30/12 473,125
-------------
ALUMINUM - 0.4%
1,371,563 Novelis Corp. .................................. Ba2 BB 7.20% 07/06/14 1,298,413
623,438 Novelis, Inc. .................................. Ba2 BB 7.20% 07/06/14 590,188
-------------
1,888,601
-------------
APPAREL RETAIL - 1.4%
1,459,140 Hanesbrands, Inc. .............................. Ba2 BB 6.50%-6.82% 09/05/13 1,417,007
5,068,354 Neiman Marcus Group (The), Inc. ................ Ba3 BB+ 7.45% 04/06/13 4,866,887
-------------
6,283,894
-------------
APPLICATION SOFTWARE - 0.6%
2,815,385 Verint Systems ................................. NR B+ 7.47% 05/25/14 2,716,846
-------------
ASSET MANAGEMENT & CUSTODY BANKS - 1.7%
464,910 Gartmore Investment Management ................. Ba3 BB+ 6.90% 05/11/14 436,086
1,465,033 Grosvenor Capital Management
Holdings, LLP ............................... NR(e) NR(e) 6.69%-7.58% 12/05/13 1,411,926
3,932,868 LPL Holdings, Inc. ............................. B1 B 7.20% 06/30/14 3,755,889
2,000,000 Nuveen Investments, Inc. ....................... Ba3 BB- 7.66%-7.78% 11/13/14 1,971,428
-------------
7,575,329
-------------
AUTO PARTS & EQUIPMENT - 0.5%
1,000,000 Federal Mogul Corp.(m) ......................... NR NR(e) 6.55% 12/31/07 993,175
1,016,568 TRW Automotive, Inc. ........................... Baa3 BBB 6.19%-6.69% 02/09/14 988,250
-------------
1,981,425
-------------
AUTOMOBILE MANUFACTURERS - 1.6%
2,413,938 Ford Motor Company ............................. Ba3 B+ 8.70% 12/15/13 2,250,998
4,972,475 General Motors Corp. ........................... Ba3 BB- 7.62% 11/29/13 4,689,665
-------------
6,940,663
-------------
AUTOMOTIVE RETAIL - 0.8%
3,496,250 KAR Holdings, Inc. ............................. Ba3 B+ 7.45% 10/18/13 3,300,834
-------------

Page 6 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

BROADCASTING & CABLE TV - 21.1%
$ 1,990,000 Cequel Communications, LLC ..................... B1 B+ 6.66%-8.50% 11/05/13 $ 1,858,389
16,500,000 Charter Communications
Operating, LLC .............................. B1 B+ 6.99% 03/06/14 15,354,521
3,400,000 Citadel Broadcasting Corp. ..................... Ba3 BB- 6.46%-6.83% 06/12/14 3,085,500
10,835,000 CSC Holdings, Inc. ............................. Ba2 BB 6.42% 03/29/13 10,255,523
936,762 Cumulus Media, Inc. ............................ Ba3 B 6.41%-7.45% 06/07/14 884,303
1,313,182 DIRECTV Holdings, LLC .......................... Baa3 BBB- 6.32% 04/13/13 1,295,856
6,000,000 Gray Television, Inc. .......................... Ba3 B+ 6.73% 12/31/14 5,644,998
4,432,500 LBI Media, Inc. ................................ Ba1 B+ 6.31% 03/31/12 4,233,038
2,984,991 NEP II, Inc. ................................... NR(e) NR(e) 7.45% 02/16/14 2,832,010
6,930,000 PanAmSat Corp. ................................. Ba2 BB 6.71% 12/03/13 6,746,847
3,500,000 Raycom Media, Inc. ............................. NR NR 6.38% 06/25/14 3,325,000
2,500,000 Sirius Satellite Radio, Inc. ................... B1 B 7.06% 12/20/12 2,362,500
6,982,500 Tribune Company ................................ Ba2 BB 8.24% 05/17/14 6,053,828
1,500,000 Univision Communications, Inc. (f) ............. B3 CCC+ 7.32% 03/29/09 1,468,125
18,362,416 Univision Communications, Inc. ................. Ba3 B+ 7.07%-7.21% 09/29/14 16,816,907
637,584 Univision Communications, Inc. (g) ............. Ba3 B+ 1.00% (i) 09/29/14 583,920
9,000,000 UPC Distribution Holding B.V. .................. Ba3 B 7.13% 12/31/14 8,471,250
997,468 Young Broadcasting, Inc. ....................... Ba3 B 7.19%-7.75% 11/03/12 942,608
-------------
92,215,123
-------------
BUILDING MATERIALS - 0.2%
1,000,000 South Edge, LLC ................................ NR(e) NR(e) 6.88% 10/31/09 890,000
-------------
CASINOS & GAMING - 11.0%
1,099,606 Cannery Casino Resorts, LLC .................... B2 BB 7.20% 05/18/13 1,039,128
897,638 Cannery Casino Resorts, LLC (g) ................ B2 BB 2.25%(i)-7.97% 05/18/13 848,268
3,433,698 CCM Merger, Inc. ............................... Ba3 BB- 7.02%-7.72% 10/21/12 3,313,518
2,270,892 Fontainebleau Resorts
Las Vegas, LLC .............................. B1 B+ 8.95% 06/06/14 2,134,638
229,108 Fontainebleau Resorts
Las Vegas, LLC (g) .......................... B1 B+ 2.00% (i) 06/06/14 215,362
1,573,091 Golden Nugget, Inc. ............................ B1 BB- 6.69%-6.80% 06/14/14 1,490,504
898,909 Golden Nugget, Inc. (g) ........................ B1 BB- 1.50% (i) 06/30/14 851,716
1,488,750 Great Canadian Gaming Corp. .................... Ba2 BB 6.39% 02/14/14 1,447,809
958,636 Green Valley Ranch Gaming, LLC ................. B1 BB- 7.08%-7.20% 02/16/14 913,101
992,500 Greenwood Racing, Inc. ......................... B2 BB- 7.08% 11/28/11 942,875
821,471 Isle of Capri Casinos, Inc. .................... Ba3 BB+ 6.57%-6.74% 11/30/13 769,615
176,471 Isle of Capri Casinos, Inc. (g) ................ Ba3 BB+ 0.50% (i) 11/30/13 165,331
11,172,000 Las Vegas Sands, LLC ........................... Ba3 BB 6.95% 05/23/14 10,541,039
2,800,000 Las Vegas Sands, LLC (g) ....................... Ba3 BB 0.75% (i) 05/23/14 2,641,864
1,000,000 Penn National Gaming, Inc. ..................... Ba2 BBB- 6.60%-6.95% 10/03/12 987,031
7,000,000 Seminole Tribe of Florida (g) .................. NR(e) NR(e) 6.44%-7.13% 03/05/14 6,855,627
6,000,000 VML US Finance, LLC ............................ B1 BB- 7.45% 05/25/13 5,730,000
2,142,857 WIMAR LANDCO, LLC .............................. B2 BB- 7.45% 07/03/08 2,067,857
5,526,799 WIMAR OPCO, LLC ................................ Ba3 BB- 7.45% 01/03/12 5,327,315
-------------
48,282,598
-------------

See Notes to Financial Statements Page 7

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

COMPUTER HARDWARE - 1.2%
$ 5,762,698 Activant Solutions, Inc. ....................... B1 B+ 6.94%-7.50% 05/02/13 $ 5,402,530
-------------
CONSTRUCTION & ENGINEERING - 0.5%
2,828,571 Standard Pacific Corp. ......................... Ba3 BB- 6.66% 05/05/13 2,022,429
-------------
CONSTRUCTION MATERIALS - 0.4%
1,782,703 John Maneely Co. ............................... B3 B+ 8.13%-8.50% 12/08/13 1,589,789
-------------
DIVERSIFIED CHEMICALS - 4.1%
3,000,000 Brenntag Holding GmbH
& Company KG (f) ............................ Caa1 CCC+ 9.39% 06/23/15 2,823,750
1,374,545 Brenntag Holding GmbH
& Company KG ................................ B1 B+ 7.39% 01/18/14 1,303,527
5,625,455 Brenntag Holding GmbH
& Company KG ................................ B1 B+ 7.39% 12/23/13 5,334,804
6,222,102 Huntsman International, LLC .................... Ba1 BB+ 6.53% 04/19/14 6,093,342
2,468,750 Lyondell Chemical Company ...................... Ba2 BB 6.32% 08/16/13 2,446,805
-------------
18,002,228
-------------
DIVERSIFIED COMMERCIAL & PROFESSIONAL SERVICES - 4.1%
987,500 Acosta, Inc. ................................... NR(e) NR(e) 7.08% 07/28/13 942,240
983,578 Advantage Sales & Marketing, Inc. .............. NR(e) NR(e) 6.67%-7.20% 03/29/13 939,317
2,303,018 Affinion Group, Inc. ........................... Ba2 BB 7.27%-7.48% 10/17/12 2,208,979
6,982,500 Clarke American Corp. .......................... B1 BB- 7.70% 04/04/14 6,375,023
3,000,000 First Data Corp. ............................... Ba3 BB- 7.96% 09/24/14 2,838,375
500,000 Itron, Inc. .................................... Ba3 B+ 6.83%-7.20% 04/18/14 486,875
981,955 N.E.W. Holdings I, LLC ......................... NR(e) NR(e) 7.39%-8.22% 05/22/14 919,355
3,235,000 RSC Equipment Rental ........................... Ba2 BB 6.95%-7.00% 11/30/12 3,170,300
-------------
17,880,464
-------------
DIVERSIFIED METALS & MINING - 0.7%
2,947,500 Alpha Natural Resources, LLC ................... B1 BB- 6.95% 10/26/12 2,883,637
-------------
EDUCATION SERVICES - 1.3%
1,936,818 Education Management, LLC ...................... B2 B+ 7.00% 06/01/13 1,833,199
4,062,292 PRO-QUEST-CSA, LLC ............................. Ba3 BB- 7.31%-7.87% 02/09/14 3,950,579
-------------
5,783,778
-------------
ELECTRIC UTILITIES - 6.6%
5,985,000 Calpine Corp. (m) .............................. NR(e) NR(e) 7.45% 03/29/09 5,825,757
7,973,196 Covanta Energy Corp. ........................... Ba2 BB 6.44%-7.06% 02/09/14 7,621,044
795,076 Mirant North America, LLC ...................... Ba3 BB 6.57% 01/03/13 766,917
11,454,035 NRG Energy, Inc. ............................... Ba1 BB 6.85%-6.95% 02/01/13 10,889,924
2,082,913 Riverside Energy Center, LLC ................... B1 B 9.21% 06/24/11 2,069,026
1,449,116 Rocky Mountain Energy
Center, LLC ................................. B1 B 9.21% 06/24/11 1,439,455
-------------
28,612,123
-------------
ENVIRONMENTAL & FACILITIES SERVICES - 1.3%
5,811,033 Energy Solutions, LLC .......................... NR(e) NR(e) 6.94%-7.66% 06/07/13 5,636,702
-------------

Page 8 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

FOOD DISTRIBUTORS - 0.8%
$ 847,826 B&G Foods, Inc. ................................ Ba2 BB- 7.06% 02/23/13 $ 826,630
861,667 Birds Eye Foods ................................ NR(e) NR(e) 6.95% 03/22/13 815,352
1,990,000 Dean Foods Company ............................. Ba3 BB 6.95% 04/02/14 1,888,464
-------------
3,530,446
-------------
FOOD RETAIL - 2.2%
9,715,317 SUPERVALU, Inc. ................................ Ba3 BB- 6.17% 06/02/12 9,498,073
-------------
FOREST PRODUCTS - 3.8%
17,420,263 Georgia-Pacific Corp. .......................... Ba2 BB+ 6.83%-7.47% 12/20/12 16,522,806
-------------
HEALTH CARE EQUIPMENT - 1.1%
5,000,000 Biomet, Inc. ................................... B1 BB- 8.20% 09/25/13 4,930,680
-------------
HEALTH CARE FACILITIES - 4.2%
4,972,475 HCA, Inc. ...................................... Ba3 BB 7.45% 11/17/13 4,755,317
6,965,000 Health Management
Associates, Inc. ............................ Ba2 BB- 6.57%-6.95% 02/28/14 6,520,013
511,777 Lifepoint Hospitals, Inc. ...................... Ba2 BB 6.72% 04/15/12 487,833
5,869,920 Select Medical Corp. ........................... Ba2 BB- 7.00%-7.20% 02/24/12 5,556,860
834,516 USP Domestic Holdings, Inc. .................... Ba3 B 7.38% 04/19/14 788,618
161,290 USP Domestic Holdings, Inc. (g) ................ Ba3 B 1.25%(i)-7.43% 04/19/14 152,419
-------------
18,261,060
-------------
HEALTH CARE SERVICES - 9.4%
12,664,733 CHS/Community
Health Systems, Inc. ........................ Ba3 BB 7.07%-7.33% 07/25/14 12,099,139
835,267 CHS/Community
Health Systems, Inc. (g) .................... Ba3 BB 0.50% (i) 07/25/14 797,965
10,611,970 DaVita, Inc. ................................... Ba1 BB+ 6.27%-6.88% 10/05/12 10,182,662
8,134,335 Fresenius Medical Care AG ...................... Ba1 BBB- 6.44%-6.97% 03/31/13 7,843,825
918,571 HealthCare Partners, LLC ....................... Ba3 BB+ 6.58% 10/31/13 893,311
1,985,000 Healthways, Inc. ............................... Ba2 BB+ 6.70% 12/01/13 1,910,563
1,477,500 Quintiles Transnational Corp. .................. B1 BB 7.20% 03/31/13 1,423,941
6,343,351 U.S. Oncology Holdings, Inc. ................... Ba2 BB- 7.73%-7.95% 08/20/11 6,089,617
-------------
41,241,023
-------------
INDEPENDENT POWER PRODUCERS & ENERGY TRADERS - 3.6%
795,000 Broadway Gen Funding, LLC ...................... B1 BB- 7.19% 05/01/14 780,094
4,500,000 Dynegy Holdings, Inc. .......................... Ba1 BB- 6.31% 04/12/13 4,204,688
5,500,000 NRG Holdings, Inc. (g) ......................... B2 B- 0.50% (i) 06/08/14 5,278,037
5,500,000 Texas Competitive Electric Holdings
Company, LLC ................................ Ba3 B+ 8.40% 10/10/14 5,404,260
-------------
15,667,079
-------------
INDUSTRIAL CONGLOMERATES - 0.1%
565,018 Mueller Water Products, Inc. ................... Ba3 BB+ 6.57%-6.95% 05/24/14 537,238
-------------

See Notes to Financial Statements Page 9

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

INDUSTRIAL MACHINERY - 0.5%
$ 1,496,250 Edwards (Cayman Islands II)
Limited ..................................... B1 BB 7.08% 05/31/14 $ 1,361,588
530,000 Invensys International Holdings
Ltd./BTR Dunlop Finance, Inc. ............... Ba3 B+ 7.24% 01/15/11 524,700
470,000 Invensys International Holdings
Ltd./BTR Dunlop Finance, Inc. ............... Ba3 B+ 6.90% 12/15/10 458,250
-------------
2,344,538
-------------
INSURANCE BROKER - 0.2%
814,951 HUB International Holdings, Inc. ............... B2 B+ 8.20% 06/13/14 773,185
182,863 HUB International Holdings, Inc. (g) ........... B2 B+ 1.38%(i)-7.32% 06/13/14 173,491
-------------
946,676
-------------
INTERNET RETAIL - 0.5%
2,429,519 Sabre Holdings Corp. ........................... B1 B+ 6.96% 09/30/14 2,233,778
-------------
INTERNET SOFTWARE & SERVICES - 2.8%
3,000,000 Cellnet Technology, Inc. (f) ................... NR(e) NR 9.45% 10/22/11 2,891,250
1,058,242 Open Solutions, Inc. ........................... Ba3 BB- 7.28% 01/23/14 996,732
8,805,863 SunGard Data Systems, Inc. ..................... Ba3 BB 6.90% 02/28/14 8,483,903
-------------
12,371,885
-------------
INVESTMENT BANKING & BROKERAGE - 0.4%
1,534,394 Ameritrade Holding Corp. ....................... Ba1 BB 6.32% 12/31/12 1,490,280
-------------
IT CONSULTING & OTHER SERVICES - 4.3%
3,299,319 Alion Science and Technology Corp. ............. Ba3 BB- 7.32%-7.33% 02/06/13 3,134,353
648,940 Apptis (DE), Inc. .............................. B1 B+ 8.06%-9.75% 12/20/12 606,759
7,875,773 DynCorp International, LLC ..................... Ba2 BB 7.25% 06/28/12 7,390,098
976,262 iPayment, Inc. ................................. NR(e) NR(e) 6.69%-7.20% 05/10/13 890,839
5,940,113 West Corp. ..................................... B1 BB- 7.16%-7.47% 10/24/13 5,657,957
1,312,814 Wyle Laboratories, Inc. ........................ NR(e) B+ 7.42% 01/28/11 1,279,993
-------------
18,959,999
-------------
LEISURE FACILITIES - 2.2%
4,443,750 Cedar Fair, LP. ................................ Ba3 BB 6.82% 08/30/12 4,176,014
989,950 London Area and Waterfront
Finance, LLC ................................ NR(e) NR(e) 8.20% 03/08/12 970,151
3,655,838 Six Flags, Inc. ................................ B1 B 7.03%-7.25% 04/30/15 3,375,939
995,000 Town Sports International, LLC ................. Ba2 BB 7.50% 02/27/14 915,400
-------------
9,437,504
-------------
LEISURE PRODUCTS - 0.2%
1,000,000 LodgeNet Entertainment Corp. ................... B1 B+ 7.20% 04/04/14 950,000
-------------
LIFE & HEALTH INSURANCE - 1.1%
3,960,017 Conseco, Inc. .................................. Ba3 B+ 6.81% 10/10/13 3,630,017
1,331,342 Multiplan Merger Corp. ......................... B1 B+ 7.32% 04/12/13 1,285,162
-------------
4,915,179
-------------

Page 10 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

MANAGED HEALTH CARE - 1.3%
$ 3,032,146 IASIS Healthcare Corp. ......................... Ba2 B+ 6.69%-7.20% 03/15/14 $ 2,872,958
953,895 IASIS Healthcare Corp. (g) ..................... Ba2 B+ 1.00%(i)-7.72% 03/15/14 903,816
1,945,646 Vanguard Health Systems, Inc. .................. Ba3 B+ 7.45% 09/23/11 1,877,548
-------------
5,654,322
-------------
METAL & GLASS CONTAINERS - 1.8%
832,689 Captive Plastics, Inc. ......................... NR(e) NR(e) 7.95% 08/16/11 807,708
7,181,250 Owens-Illinois Group, Inc. ..................... Ba2 BB+ 6.15% 06/14/13 6,992,742
-------------
7,800,450
-------------
MOVIES & ENTERTAINMENT - 5.0%
4,814,250 AMC Entertainment, Inc. ........................ Ba1 BB- 6.53% 01/26/13 4,586,324
1,367,520 Deluxe Entertainment
Services Group, Inc. ........................ B1 B 7.45% 05/11/13 1,278,630
4,987,500 Discovery Communications
Holding, LLC ................................ NR(e) NR 7.20% 05/14/14 4,827,900
2,000,000 National CineMedia, LLC ........................ B1 B+ 7.46% 02/13/15 1,888,438
9,621,440 WMG Acquisition Corp. .......................... Ba2 BB- 7.02%-7.15% 03/01/11 9,200,504
-------------
21,781,796
-------------
MULTI - UTILITIES - 0.4%
1,996,870 KGEN, LLC ...................................... Ba3 BB 7.00% 02/08/14 1,897,027
-------------
OFFICE SERVICES & SUPPLIES - 1.2%
2,917,897 Emdeon Business Services, LLC .................. B1 BB- 7.20% 11/16/13 2,815,771
1,050,147 Pike Electric, Inc. ............................ NR(e) NR(e) 6.19% 04/18/10 1,034,395
1,475,882 Pike Electric, Inc. ............................ NR(e) NR(e) 6.19% 07/01/12 1,453,744
-------------
5,303,910
-------------
OIL & GAS EQUIPMENT & SERVICES - 0.9%
3,783,613 Targa Resources, Inc. .......................... Ba3 B+ 6.91%-7.20% 10/31/12 3,698,482
-------------
OIL & GAS EXPLORATION & PRODUCTION - 3.1%
7,940,384 ATP Oil & Gas Corp. ............................ NR NR 8.29%-8.89% 04/14/10 7,821,279
1,400,973 SemCrude, LP ................................... Ba2 B+ 6.78% 03/16/11 1,351,939
4,365,298 Vulcan Energy Corp. ............................ Ba2 BB 6.38% 08/12/11 4,256,165
-------------
13,429,383
-------------
OIL & GAS REFINING, MARKETING & TRANSPORTATION - 4.8%
877,778 Alon USA, Inc. ................................. B1 BB 7.07% 06/22/13 849,250
109,722 Alon USA, Inc. (g) ............................. B1 BB 7.07% 06/22/13 106,156
222,997 Calumet Lubricants Company, LP ................. B1 BB- 9.08%-9.23% 12/09/12 216,307
6,890,593 Eagle Rock Gas Gathering &
Processing, Ltd. ............................ NR NR 9.25% 12/03/12 6,718,328
4,000,000 Energy Transfer Equity, LP ..................... Ba2 NR 6.65% 02/08/12 3,880,000
4,000,000 Enterprise GP Holdings, LP ..................... Ba2 BB- 7.49% 11/08/14 3,970,000
5,557,500 Western Refining Company, LP ................... B1 BB+ 6.56% 05/30/14 5,330,571
-------------
21,070,612
-------------

See Notes to Financial Statements Page 11

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

OIL & GAS STORAGE & TRANSPORTATION - 1.2%
$ 5,608,854 Kinder Morgan, Inc. ............................ Ba2 BB- 6.33% 05/30/14 $ 5,323,156
-------------
PACKAGED FOODS & MEATS - 1.9%
7,101,636 OSI Group, LLC ................................. NR(e) NR(e) 7.20% 09/02/11 6,888,587
574,549 THL Food Products Company ...................... Ba3 BB- 6.50%-6.77% 11/21/10 563,776
992,500 Weight Watchers International, Inc. ............ Ba1 BB+ 6.75% 01/26/14 965,738
-------------
8,418,101
-------------
PAPER PACKAGING - 1.6%
495,691 Boise Cascade, LLC ............................. Ba2 BB+ 6.34%-6.72% 04/30/14 487,388
1,741,250 Graham Packaging Holdings Company .............. B1 B+ 7.50%-8.00% 10/07/11 1,666,704
3,000,000 Graphic Packaging International, Inc. .......... Ba2 BB- 6.69%-7.23% 05/16/14 2,899,689
1,960,000 Pregis Corp. ................................... Ba2 BB- 7.45% 10/12/12 1,881,600
-------------
6,935,381
-------------
PAPER PRODUCTS - 0.5%
2,418,750 Domtar Corp. ................................... Ba1 BB+ 6.03% 03/07/14 2,313,363
-------------
PHARMACEUTICALS - 3.4%
3,990,000 Cardinal Health 409, Inc. ...................... Ba3 BB- 7.45% 04/10/14 3,788,006
1,966,667 Graceway Pharmaceuticals, LLC .................. Ba3 BB 7.95% 05/03/12 1,864,400
8,457,500 Royalty Pharma Finance Trust ................... Baa2 BBB- 6.39% 04/16/13 8,358,826
562,364 Steifel Laboratories, Inc. ..................... B1 BB- 7.50% 12/28/13 545,493
430,136 Stiefel Laboratories, Inc. (g) ................. B1 BB- 7.50% 12/28/13 417,232
-------------
14,973,957
-------------
PUBLISHING - 8.9%
181,845 Cenveo Corp. (g) ............................... Ba2 BB 6.99% 06/21/13 172,525
5,357,771 Cenveo Corp. ................................... Ba2 BB 6.99% 06/21/13 5,083,186
624,907 Dex Media West, Inc. ........................... Ba1 BB+ 6.33%-6.38% 03/09/10 610,847
1,494,565 Gatehouse Media, Inc. (g) ...................... B1 BB- 7.07%-7.25% 08/28/14 1,325,893
4,005,435 Gatehouse Media, Inc. .......................... B1 BB- 7.07% 08/28/14 3,553,393
9,925,000 Idearc, Inc. ................................... Ba2 BBB- 7.20% 11/17/14 9,490,781
1,975,000 Media News Group, Inc. ......................... Ba2 BB- 7.14% 08/02/13 1,856,500
3,934,997 Media News Group, Inc. ......................... Ba2 BB- 6.64% 12/30/10 3,664,466
995,006 Readers Digest Association
(The), Inc. ................................. B1 B+ 7.38%-7.58% 03/02/14 900,896
5,572,876 RH Donnelley, Inc. ............................. Ba1 BB+ 6.46%-7.22% 06/30/11 5,398,265
3,483,699 Riverdeep Interactive Learning
USA, Inc. ................................... B1 B 7.95% 12/20/13 3,452,491
1,703,555 WCP Exposition Services
Operating Company, LLC ...................... NR NR 8.70% 08/29/11 1,626,895
950,000 Wenner Media, LLC .............................. NR(e) NR(e) 6.95% 10/02/13 912,000
1,000,000 Yell Group, PLC ................................ Ba3 BB- 6.82% 10/27/12 972,083
-------------
39,020,221
-------------
RAILROADS - 0.3%
1,500,000 Railamerica Transportation Corp. ............... NR NR 7.12% 08/14/08 1,466,250
-------------

Page 12 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

REAL ESTATE MANAGEMENT & DEVELOPMENT - 2.0%
$ 2,125,000 LNR Property Corp. ............................. B2 BB 7.63% 07/12/09 $ 2,018,750
3,500,000 LNR Property Corp. ............................. B2 BB 7.63% 07/12/11 3,342,500
992,443 Mattamy Funding Partnership .................... NR(e) NR(e) 7.38% 04/11/13 927,935
1,485,000 Shea Capital I, LLC ............................ NR(e) NR(e) 7.20% 10/27/11 1,254,825
1,000,000 Tishman Speyer Real Estate D.C.
Area Portfolio, LP .......................... Ba2 BB- 6.42% 12/27/12 962,500
-------------
8,506,510
-------------
RETAIL REITS - 2.1%
6,046,709 Capital Automotive, LP ......................... Ba1 BB+ 6.47% 12/16/10 5,915,464
1,394,737 General Growth Properties, Inc. ................ Ba2 BB+ 5.92% 02/24/10 1,357,835
2,000,000 Macerich Partnership (The), LP ................. NR(e) NR(e) 6.25% 04/26/10 1,970,000
-------------
9,243,299
-------------
SEMICONDUCTORS - 1.8%
8,436,250 Freescale Semiconductors, Inc. ................. Baa3 BB+ 7.33% 12/01/13 7,859,776
-------------
SPECIALIZED CONSUMER SERVICES - 1.8%
3,000,000 Nielsen Finance, LLC ........................... Ba3 B+ 6.92%-7.15% 08/09/13 2,841,249
5,330,205 RMK Acquisition Corporation .................... Ba3 BB- 7.20% 01/26/14 5,082,350
-------------
7,923,599
-------------
SPECIALIZED FINANCE - 1.8%
3,000,000 J.G. Wentworth, LLC ............................ B2 B+ 7.45% 04/04/14 2,797,500
5,396,875 Peach Holdings, Inc. ........................... B2 B 8.95% 11/21/13 5,207,983
-------------
8,005,483
-------------
SPECIALTY CHEMICALS - 1.2%
5,482,500 Celanese Holdings, LLC ......................... Ba3 BB 6.46%-6.98% 04/02/14 5,245,688
-------------
SPECIALTY STORES - 2.4%
1,206,625 Dollarama Group, LP ............................ Ba1 BB- 6.71% 11/18/11 1,167,410
4,524,838 Harbor Freight Tools USA, Inc. ................. NR(e) NR(e) 6.94% 02/12/13 4,300,482
1,989,950 Michael Stores, Inc. ........................... B2 B 6.94%-7.63% 10/31/13 1,823,065
3,482,500 Yankee Candle Company
(The), Inc. ................................. Ba3 BB- 7.20% 02/06/14 3,260,492
-------------
10,551,449
-------------
SYSTEMS SOFTWARE - 1.5%
4,904,068 Dealer Computer ................................ Ba2 BB 7.20% 10/26/12 4,738,554
1,884,107 Intergraph Corp. ............................... B1 BB- 6.82%-7.08% 05/29/14 1,815,808
-------------
6,554,362
-------------
TECHNOLOGY DISTRIBUTORS - 1.7%
3,233,999 H3C Holdings Limited ........................... Ba2 BB 8.14% 09/28/12 3,072,299
4,542,500 Sensata Technologies Finance
Company, LLC ................................ NR(e) NR(e) 6.64%-6.76% 04/27/13 4,299,153
-------------
7,371,452
-------------

See Notes to Financial Statements Page 13

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) - (CONTINUED)

TRUCKING - 1.8%
$ 3,370,978 Hertz (The) Corp. .............................. Ba1 BB+ 6.41%-7.00% 12/21/12 $ 3,301,935
3,912,500 OshKosh Truck Corp. ............................ Ba3 BBB- 7.45% 12/06/13 3,771,117
794,855 Swift Transportation ........................... B1 BB- 7.94% 05/10/14 672,895
-------------
7,745,947
-------------
WIRELESS TELECOMMUNICATION SERVICES - 2.7%
1,000,000 Asurion Corp. .................................. NR(e) NR(e) 7.88% 07/03/14 964,375
1,241,400 Clearwire Corp. (g) ............................ NR NR 10.81%-11.70% 07/03/12 1,208,813
758,600 Clearwire Corp. ................................ NR NR 10.69% 07/03/12 738,687
1,492,500 Crown Castle Operating Company ................. Ba3 BB+ 6.64%-6.73% 01/09/14 1,416,276
4,750,000 Intelsat (Bermuda) Ltd. (h) .................... B2 B 7.21% 02/01/14 4,639,167
2,793,000 Windstream Corp. ............................... Baa3 BBB- 6.71% 07/17/13 2,734,522
-------------
11,701,840
-------------

TOTAL SENIOR FLOATING-RATE TERM LOAN INTERESTS (d) ................................................ 702,719,275
(Cost $736,295,663) -------------

SENIOR FLOATING RATE NOTES - 0.7%

BROADCASTING & CABLE TV - 0.3%
1,500,000 Paxson Communications Corp. (j) ................ B1 CCC+ 8.49% 01/15/12 1,473,750
-------------
ELECTRICAL COMPONENTS & EQUIPMENT - 0.1%
650,000 NXP B.V. (j) ................................... Ba3 BB+ 7.99% 10/15/13 614,250
-------------
LEISURE FACILITIES - 0.3%
1,225,000 HRP Myrtle Beach (j) ........................... B2 B+ 9.89% 04/01/12 1,188,250
-------------

TOTAL SENIOR FLOATING RATE NOTES .................................................................. 3,276,250
(Cost $3,377,250) -------------

NOTES - 0.0%

HOMEBUILDING - 0.0%
727,273 TOUSA, Inc. (j) (l) ............................ C C 1.00% 07/01/15 32,000
-------------

TOTAL NOTES ....................................................................................... 32,000
(Cost $445,969) -------------

SHARES DESCRIPTION VALUE
------------- ------------------------------------------------ -------------

PREFERRED STOCKS - 0.0%

HOMEBUILDING - 0.0%
4,273 TOUSA, Inc. (8.0%, Series A Convertible Payment-in-Kind Preferred Stock) (j) ...................... 188,000
-------------

TOTAL PREFERRED STOCKS ............................................................................ 188,000
(Cost $2,563,636) -------------

Page 14 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

SHARES DESCRIPTION VALUE
------------- ------------------------------------------------ -------------

COMMON STOCKS AND RIGHTS - 0.0%

OTHER DIVERSIFIED FINANCIAL SERVICES - 0.0%
690 Atkins Nutritionals Holdings - Common Stock ....................................................... $ 0
690 Atkins Nutritionals Holdings - Rights ............................................................. 0
-------------
0
-------------

TOTAL COMMON STOCKS AND RIGHTS .................................................................... 0
(Cost $36,260) -------------

CLOSED-END FUNDS - 0.2%

ASSET MANAGEMENT & CUSTODY BANKS - 0.2%
113,300 ING Prime Rate Trust .............................................................................. 744,381
-------------

TOTAL CLOSED-END FUNDS ............................................................................ 744,381
(Cost $711,030) --------------

PRINCIPAL STATED
AMOUNT DESCRIPTION COUPON MATURITY VALUE
------------- ------------------------------------------------ --------------- ------------ -------------

SHORT-TERM INVESTMENTS - 3.7%

COMMERCIAL PAPER - 3.7%
$ 16,000,000 Ebbets Funding, LLC ........................... 7.00% 12/03/07 15,995,422
-------------

TOTAL COMMERCIAL PAPER ........................................................................... 15,995,422
(Cost $15,995,422) -------------

TOTAL INVESTMENTS - 165.3% ....................................................................... 722,955,328
(Cost $759,425,230) (k)

NET OTHER ASSETS AND LIABILITIES - (2.4)%......................................................... (10,623,995)

LOAN OUTSTANDING - (40.0)% ....................................................................... (175,000,000)
AUCTION MARKET PREFERRED SHARES, AT LIQUIDATION VALUE - (22.9)% .................................. (100,000,000)
-------------
NET ASSETS APPLICABLE TO COMMON SHARES - 100.0%. ................................................. $ 437,331,333
=============

----------------------------
(a) All percentages shown in the Portfolio of Investments are based on
net assets applicable to Common Shares.

(b) Ratings below Baa3 by Moody's Investors Service, Inc. or BBB- by
Standard & Poor's Ratings Group are considered to be below
investment grade.

(c) Senior Loans generally are subject to mandatory and/or optional
prepayment. Prepayments of Senior Loans may occur because of the
mandatory prepayment conditions or because there may be significant
economic incentives for a borrower to optionally prepay. As a
result, the actual remaining maturity of Senior Loans may be
substantially less than the stated maturities shown. Senior Loans
generally have maturities that range from five to eight years;
however, the Fund estimates that refinancing and prepayments result
in an average maturity of the Senior Loans held in its portfolio to
be approximately 18-30 months.

(d) Senior Loans in which the Fund invests generally 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 Inter-Bank Offered Rate ("LIBOR"), (ii) the prime
rate offered by one or more major United States banks or (iii) the
certificate of deposit rate.

(e) This Senior Loan Interest was privately rated upon issuance. The
rating agency does not provide ongoing surveillance on the rating.

(f) This issue is secured by a second lien on the issuer's assets.

(g) Delayed Draw Loan (See Note 2E)

See Notes to Financial Statements Page 15

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
NOVEMBER 30, 2007 (UNAUDITED)

(h) This issue is unsecured.

(i) Represents commitment fee rate on delayed draw loans.

(j) Securities are restricted and cannot be offered for public sale
without first being registered under the Securities Act of 1933, as
amended (See Note 2F).

(k) Aggregate cost for federal income tax and financial reporting
purposes.

(l) This security is a Senior Subordinated Payment-in-Kind Election Note
whereby 1.00% of interest per annum will be paid in cash and 13.75%
of interest per annum shall be paid by the issuer, at its option (i)
entirely in cash, (ii) entirely in Payment-in-Kind interest or (iii)
a combination thereof. Interest is paid semi-annually and the first
interest payment date is January 15, 2008.

(m) This borrower has filed for protection in federal bankruptcy court.

NR Not rated

CREDIT DEFAULT SWAP CONTRACTS OUTSTANDING

The Fund maintains $6,250,000 in cash or cash equivalents for the following
credit default swap contracts outstanding as of November 30, 2007:

UNREALIZED
REFERENCE BUY/SELL (PAY)/RECEIVE APPRECIATION/
ENTITY PROTECTION COUNTER-PARTY NOTIONAL AMOUNT FIXED RATE EXPIRATION DATE (DEPRECIATION)
--------------- ---------- --------------- --------------- ------------- --------------- --------------

B&G Foods, Inc. Sell Lehman Brothers $ 2,250,000 1.27% 06/20/2012 $ (61,869)
Dresser, Inc. Sell Lehman Brothers 4,000,000 1.65% 06/20/2012 (130,805)
--------------- --------------
$ 6,250,000 $ (192,674)
=============== ==============

Page 16 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
STATEMENT OF ASSETS AND LIABILITIES
NOVEMBER 30, 2007 (UNAUDITED)

ASSETS:
Investments, at value
(Cost $759,425,230) ................................................................ $ 722,955,328
Cash .................................................................................. 3,213,829
Cash segregated as collateral for open credit default swaps ........................... 261,000
Prepaid expenses ...................................................................... 1,095
Receivables:
Interest ........................................................................ 7,111,759
Investment securities sold ...................................................... 5,137,108
Dividends ....................................................................... 21,775
-------------
Total Assets ................................................................. 738,701,894
-------------
LIABILITIES:
Payables:
Outstanding loan ................................................................ 175,000,000
Investment securities purchased ................................................. 24,624,671
Interest and fees due on loan ................................................... 819,410
Investment advisory fees ........................................................ 441,240
Unrealized depreciation on open credit default swap contracts ................... 192,674
Accumulated unpaid dividends on Auction Market Preferred Shares ................. 94,998
Legal fees ...................................................................... 66,711
Administrative fees ............................................................. 29,680
Custodian fees .................................................................. 27,843
Printing fees ................................................................... 25,361
Audit fees ...................................................................... 21,673
Trustees' fees and expenses ..................................................... 7,134
Transfer agent fees ............................................................. 6,575
Accrued expenses and other liabilities ................................................ 12,591
-------------
Total Liabilities ............................................................ 201,370,561
-------------
NET ASSETS INCLUDING AUCTION MARKET PREFERRED SHARES .................................. $ 537,331,333
=============
AUCTION MARKET PREFERRED SHARES:
($0.01 par value, 4,000 shares issued with liquidation preference of $25,000
per share, unlimited number of Auction Market Preferred Shares has been
authorized) ........................................................................ 100,000,000
-------------
NET ASSETS (APPLICABLE TO COMMON SHAREHOLDERS) ........................................ $ 437,331,333
=============
NET ASSETS CONSIST OF:
Paid-in capital ....................................................................... 480,451,257
Par value ............................................................................. 252,919
Accumulated net investment income (loss) .............................................. 1,414,490
Accumulated net realized gain (loss) on investments sold and swap
transactions ....................................................................... (8,124,757)
Net unrealized appreciation (depreciation) on investments and swap
transactions ....................................................................... (36,662,576)
-------------
NET ASSETS (APPLICABLE TO COMMON SHAREHOLDERS) ........................................ $ 437,331,333
=============
NET ASSET VALUE, per Common Share (par value $0.01 per Common Share) .................. $ 17.29
=============
Number of Common Shares outstanding (unlimited number of Common Shares has
been authorized) ................................................................... 25,291,939
=============

See Notes to Financial Statements Page 17

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2007 (UNAUDITED)

INVESTMENT INCOME:
Interest .............................................................................. $ 27,721,045
Dividends ............................................................................. 597,682
Other ................................................................................. 60,819
-------------
Total investment income ......................................................... 28,379,546
-------------
EXPENSES:
Interest and fees on loan ............................................................. 5,146,634
Investment advisory fees .............................................................. 2,733,140
Administration fees ................................................................... 183,267
Auction Market Preferred Shares commission fees ....................................... 127,016
Legal fees ............................................................................ 92,559
Custodian fees ........................................................................ 49,758
Printing fees ......................................................................... 34,870
Audit fees ............................................................................ 23,904
Trustees' fees and expenses ........................................................... 20,348
Transfer agent fees ................................................................... 19,064
Other ................................................................................. 70,665
-------------
Total expenses .................................................................. 8,501,225
-------------
NET INVESTMENT INCOME ................................................................. 19,878,321
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments ............................................... (3,419,234)
-------------
Net change in unrealized appreciation (depreciation) on:
Investments ........................................................................ (36,019,076)
Credit default swaps ............................................................... (205,525)
-------------
Net change in unrealized appreciation (depreciation) .................................. (36,224,601)
-------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................................... (39,643,835)
-------------
AUCTION MARKET PREFERRED SHARE DIVIDENDS .............................................. (2,790,833)
-------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ....................... $ (22,556,347)
=============

Page 18 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
STATEMENTS OF CHANGES IN NET ASSETS

SIX MONTHS
ENDED YEAR
11/30/2007 ENDED
(UNAUDITED) 5/31/2007
------------- -------------

OPERATIONS:
Net investment income (loss) ................................................... $ 19,878,321 $ 41,894,713
Net realized gain (loss) ....................................................... (3,419,234) 1,198,415
Net change in unrealized appreciation (depreciation) ........................... (36,224,601) (2,423,188)
Distributions to Preferred Shareholders from:
Net investment income ....................................................... (2,790,833) (5,228,963)
------------- -------------
Net increase (decrease) in net assets resulting from operations applicable
to Common Shareholders ...................................................... (22,556,347) 35,440,977
------------- -------------
DISTRIBUTIONS TO COMMON SHAREHOLDERS FROM:
Net investment income .......................................................... (18,281,013) (37,787,747)
------------- -------------
Total distributions to Common Shareholders ..................................... (18,281,013) (37,787,747)
------------- -------------
CAPITAL TRANSACTIONS:
Proceeds from 19,171 Common Shares reinvested .................................. -- 360,793
------------- -------------
Total capital transactions ..................................................... -- 360,793
------------- -------------
Net increase (decrease) in net assets applicable to Common Shareholders ........ (40,837,360) (1,985,977)

NET ASSETS (APPLICABLE TO COMMON SHAREHOLDERS):
Beginning of period ............................................................ 478,168,693 480,154,670
------------- -------------
End of period .................................................................. $ 437,331,333 $ 478,168,693
============= =============
Accumulated net investment income (loss) at end of period ...................... $ 1,414,490 $ 2,608,015
============= =============

See Notes to Financial Statements Page 19

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2007 (UNAUDITED)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net decrease in net assets resulting from operations .............................. $ (22,556,347)
Adjustments to reconcile net increase in net assets resulting from operations
to net cash provided by operating activities:
Purchases of investments ....................................................... (1,678,990,258)
Sales and maturities of investments ............................................ 1,693,777,568
Net amortization/accretion of premium/discount on investments .................. 6,083
Net realized loss on investments ............................................... 3,419,234
Net change in unrealized appreciation (depreciation) on investments ............ 36,019,076
CHANGES IN ASSETS AND LIABILITIES:
Net change in unrealized appreciation (depreciation) on credit default swaps ... 205,525
Decrease in cash segregated as collateral for open credit default swaps ........ 1,989,000
Decrease in dividends receivable ............................................... 14,946
Increase in interest receivable ................................................ (1,195,095)
Decrease in prepaid expenses ................................................... 22,221
Decrease in receivable for investment securities sold .......................... 5,845,895
Decrease in payable for investment securities purchased ........................ (54,628,995)
Increase in interest and fees due on loan ...................................... 63,030
Decrease in unpaid dividends on Auction Market Preferred Shares ................ (86,872)
Decrease in investment advisory fees payable ................................... (23,990)
Decrease in audit fees payable ................................................. (39,096)
Increase in legal fees payable ................................................. 24,859
Decrease in printing fees payable .............................................. (48,367)
Increase in transfer agent fees payable ........................................ 1,953
Decrease in administrative fees payable ........................................ (1,502)
Increase in custodian fees payable ............................................. 8,712
Increase in Trustees' fees and expenses payable ................................ 51
Increase in accrued expenses and other liabilities ............................. 4,638
-----------------
CASH USED IN OPERATING ACTIVITIES ................................................. $ (16,167,731)
--------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholders from net investment income ....................... (18,281,013)
Repayments of loan ............................................................. (195,000,000)
Issuances of loan .............................................................. 229,000,000
-----------------
CASH PROVIDED BY FINANCING ACTIVITIES ............................................. 15,718,987
--------------
Decrease in cash .................................................................. (448,744)
Cash at beginning of period ....................................................... 3,662,573
--------------
Cash at end of period ............................................................. $ 3,213,829
==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest .......................................... $ 5,083,604
==============

Page 20 See Notes to Financial Statements

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
FINANCIAL HIGHLIGHTS
FOR A COMMON SHARE OUTSTANDING THROUGHOUT EACH PERIOD

SIX MONTHS
ENDED YEAR YEAR YEAR PERIOD
11/30/2007 ENDED ENDED ENDED ENDED
(UNAUDITED) 5/31/2007 5/31/2006 5/31/2005 5/31/2004(a)
----------- ---------- ---------- ---------- ------------

Net asset value, beginning of period ................. $ 18.91 $ 19.00 $ 18.94 $ 19.04 $ 19.10(b)
----------- ---------- ---------- ---------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ......................... 0.79 1.66 1.48 0.95 (0.00)(m)
Net realized and unrealized gain (loss) on
investments ....................................... (1.58) (0.05) 0.04 (0.02) (0.02)
Distributions paid to AMP (c)
Shareholders from:
Net investment income ............................. (0.11) (0.21) (0.16) (0.07) --
----------- ---------- ---------- ---------- ------------
Total from investment operations ..................... (0.90) 1.40 1.36 0.86 (0.02)
----------- ---------- ---------- ---------- ------------
DISTRIBUTIONS PAID TO COMMON SHAREHOLDERS FROM:
Net investment income ............................. (0.72) (1.50) (1.28) (0.91) --
Net realized gain ................................. -- -- (0.02) -- --
----------- ---------- ---------- ---------- ------------
Total distributions to Common Shareholders ........... (0.72) (1.50) (1.30) (0.91) --
----------- ---------- ---------- ---------- ------------
Dilutive impact from the offering of AMP Shares (d) .. -- -- -- (0.05) --
----------- ---------- ---------- ---------- ------------
Common Share offering costs charged to paid-in
capital ........................................... -- -- -- -- (0.04)
----------- ---------- ---------- ---------- ------------
Net asset value, end of period ....................... $ 17.29 $ 18.91 $ 19.00 $ 18.94 $ 19.04
=========== ========== ========== ========== ============
Market value, end of period .......................... $ 15.34 $ 18.81 $ 17.61 $ 17.89 $ 20.01
=========== ========== ========== ========== ============
TOTAL RETURN BASED ON NET ASSET VALUE (e)(f) ......... (4.50)% 8.04% 8.06% 4.38% (0.31)%
=========== ========== ========== ========== ============
TOTAL RETURN BASED ON MARKET VALUE (f)(g) ............ (14.86)% 15.95% 6.03% (6.20)% 0.05%
=========== ========== ========== ========== ============

------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS AVAILABLE TO COMMON
SHAREHOLDERS:
Ratio of total expenses to average net assets ........ 3.75%(h) 3.55% 3.08% 2.02% --
Ratio of total expenses to average net assets
excluding interest expense ........................ 1.48%(h) 1.45% 1.45% 1.30% 1.44%(h)
Ratio of net investment income (loss) to average
net assets ........................................ 8.76%(h) 8.80% 7.77% 5.01% (0.76)%(h)
Ratio of net investment income (loss) to average
net assets net of AMP dividends (i) ............... 7.53%(h) 7.70% 6.93% 4.59% N/A
SUPPLEMENTAL DATA:
Portfolio turnover rate .............................. 20% 78% 81% 115% 0%
Net assets, end of period (in 000's) ................. $ 437,331 $ 478,169 $ 480,155 $ 478,785 $ 437,945
Ratio of total expenses to total average Managed
Assets ............................................ 2.33%(h) 2.26% 1.97% 1.43% N/A
Ratio of total expenses to total average Managed
Assets excluding interest expense ................. 0.92%(h) 0.92% 0.93% 0.92% 1.44%(h)
SENIOR SECURITIES:
Total AMP Shares outstanding ......................... 4,000 4,000 4,000 4,000 N/A
Liquidation and market value per AMP share (j) ....... $ 25,024 $ 25,045 $ 25,040 $ 25,031 N/A
Asset coverage per share (k) ......................... $ 178,107 $ 179,792 $ 189,289 $ 191,446 N/A
Loan outstanding (in 000's) .......................... $ 175,000 $ 141,000 $ 177,000 $ 187,000 N/A
Asset coverage per $1,000 of loan outstanding (l) .... $ 4,071 $ 5,100 $ 4,278 $ 4,095 N/A

------------------------------------------------------
(a) Initial seed date of May 18, 2004. The Fund commenced operations on May
25, 2004.

(b) Net of sales load of $0.90 per Common Share on initial offering.

(d) The expenses associated with the offering of the AMP Shares had a $(0.05)
impact on the Common Share NAV.

(e) Total return based on net asset value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in net
asset value per share and does not reflect sales load.

(f) Total return is not annualized for periods less than one year.

(g) Total return based on market value is the combination of reinvested
dividend distributions and reinvested capital gains distributions, if any,
at prices obtained by the Dividend Reinvestment Plan and changes in Common
Share market price per share, all based on Common Share market price per
share.

(h) Annualized.

(i) Ratio reflects income net of operating expenses and distributions to AMP
Shareholders.

(j) Includes accumulated and unpaid distributions to AMP Shareholders.

(k) Calculated by subtracting the Fund's total liabilities (not including the
AMP Shares, unpaid dividends on AMP Shares, and loan outstanding) from the
Fund's total assets, and dividing by the number of AMP Shares outstanding.

(l) Calculated by subtracting the Fund's total liabilities (not including the
AMP Shares, unpaid dividends on AMP Shares, and loan outstanding) from the
Fund's total assets, and dividing by the outstanding loan balance.

(m) Amount represents less than $0.01 per Common Share.

N/A Not Applicable

See Notes to Financial Statements Page 21

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

1. FUND DESCRIPTION

First Trust/Four Corners 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 through investment in a portfolio of senior
secured floating-rate corporate loans ("Senior Loans"). There can be no
assurance that the Fund will achieve its investment objectives. Investment 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 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 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 Fund's Common Shares 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. Domestic debt securities and foreign
securities are priced using data reflecting the earlier closing of the principal
markets for those securities. The NAV per Common Share is calculated by
subtracting the Fund's liabilities (including accrued expenses, dividends
payable and any borrowings of the Fund) and the liquidation value of any
outstanding Preferred Shares from the Fund's Total Assets (the value of
securities and other investments the Fund holds plus cash or other assets,
including interest accrued but not yet received), and dividing the result 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 according
to procedures adopted by the Fund's Board of Trustees. A majority of the Fund's
assets are valued using market information supplied by third parties. In the
event that market quotations are not readily available, the pricing service does
not provide a valuation for a particular asset, or the valuations are deemed
unreliable, First Trust Advisors L.P. ("First Trust") may use a fair value
method to value the Fund's securities and investments. Additionally, if events
occur after the close of the principal market for particular securities (e.g.,
domestic debt and foreign securities), but before the Fund values its assets,
that could materially affect NAV, First Trust may use a fair value method to
value the Fund's securities and investments. The use of fair value pricing by
the Fund is governed by valuation procedures adopted by the Fund's Board of
Trustees, and in accordance with the provisions of the 1940 Act.

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 in the past several years, 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 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 valued
using information provided by an independent third party pricing service. If the
pricing service cannot or does not provide a valuation for a particular Senior
Loan or such valuation is deemed unreliable, First Trust may value such Senior
Loan at a fair value according to procedures adopted by the Fund's Board of
Trustees, and in accordance with the provisions of the 1940 Act.

Portfolio securities listed on any exchange other than the NASDAQ National
Market ("NASDAQ") are valued at the last sale price on the business day as of
which such value is being determined. If there has been no sale on such day, the
securities are valued at the mean of the most recent bid and asked prices on
such day. Securities traded on the NASDAQ are valued at the NASDAQ Official
Closing Price as determined by NASDAQ. Portfolio securities traded on more than
one securities exchange are valued at the last sale price on the business

Page 22

--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

day as of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities traded on the
NASDAQ, are valued at the closing bid prices. Short-term investments that mature
in less than 60 days are valued at amortized cost.

B. CREDIT DEFAULT SWAPS:

The Fund may enter into credit default swap contracts for hedging purposes or to
gain exposure to a credit in which the Fund may otherwise invest. A credit
default swap contract is an agreement between two parties to exchange the credit
risk of an issuer. The Fund may be either the buyer or seller in a credit
default swap transaction. The "buyer" in a credit default swap contract is
obligated to pay the "seller" a periodic stream of payments over the term of the
contract provided that no event of default on the underlying reference
obligation has occurred. If an event of default occurs, the seller must pay the
buyer the full notional value, or "par value", of the reference obligation. In
exchange, the seller receives the par value of securities of the reference
obligor. An event of default may be a grace period extension, obligation
acceleration, repudiation/moratorium, or restructuring.

If the Fund is a buyer and no event of default occurs, the Fund will have made a
series of periodic payments and recover nothing of monetary value. However, if
an event of default occurs, the Fund (if the "buyer") will receive the full
notional value, or "par value" of the reference obligation. Buying a credit
default swap contract involves the risk that the contract may expire worthless
and the credit risk that the seller may fail to satisfy its payment obligations
to the Fund in the event of default. If the Fund is a seller and no event of
default occurs, the Fund will have received a periodic stream of payments over
the term of the contract and paid nothing of monetary value. However, if an
event of default occurs, the Fund (if the "seller") must pay the buyer the full
notional value, or "par value," of the reference obligation. In exchange, the
Fund receives the par value of securities of the reference obligor. Selling a
credit default swap contract involves greater risks than if the Fund had
invested in the reference obligation directly. The Fund will segregate assets in
the form of cash and/or cash equivalents in an amount equal to the aggregate
market value of the credit default swap contracts of which it is a seller.
Additionally, the Fund maintains liquid assets for the full notional amount of
the credit default swap contracts of which it is a seller. The Fund may only
enter into such transactions with counterparties rated A- or higher.

Credit default swap contracts are marked to market daily based upon quotations
from brokers or market makers and the change in value, if any, is recorded as
unrealized appreciation (depreciation). For a credit default swap contract sold
by the Fund, payment of the agreed upon amount made by the Fund in the event of
default of the referenced debt obligation is recorded as the cost of the
reference debt obligation purchased/received.

C. REPURCHASE AGREEMENTS:

The Fund engages in repurchase agreement transactions. Under the terms of a
typical repurchase agreement, the Fund takes possession of an underlying debt
obligation subject to an obligation of the seller to repurchase, and the Fund to
resell, the obligation at an agreed-upon price and time, thereby determining the
yield during the Fund's holding period. This arrangement results in a fixed rate
of return that is not subject to market fluctuations during the Fund's holding
period. The value of the collateral is at all times at least equal to the total
amount of the repurchase obligation, including interest. In the event of
counterparty default, the Fund has the right to use the collateral to offset
losses incurred. There is potential loss to the Fund in the event the Fund is
delayed or prevented from exercising its rights to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. The Fund reviews the value of the collateral and the creditworthiness of
those banks and dealers with which the Fund enters into repurchase agreements to
evaluate potential risks.

D. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:

Securities 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.

Page 23

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
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 or
delayed-delivery purchase commitments. At November 30, 2007, the Fund had no
when-issued or delayed-delivery purchase commitments.

E. UNFUNDED LOAN COMMITMENTS:

The Fund may enter into certain credit agreements, all or a portion of which may
be unfunded. The Fund had unfunded delayed draw loan commitments of
approximately $12,249,870 as of November 30, 2007. The Fund is obligated to fund
these loan commitments at the borrower's discretion. Net unrealized depreciation
of $531,311 from these commitments is included in "Accrued expenses and other
liabilities" on the Statement of Assets and Liabilities.

F. RESTRICTED SECURITIES:

The Fund invests in restricted securities, which are securities that can not 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. The Fund held restricted
securities at November 30, 2007 as shown in the following table. The Fund does
not have the right to demand that such securities be registered. These
securities are valued using market quotations 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
security. There are no unrestricted securities with the same maturity dates and
yields for these issuers.

% OF
NET ASSETS
CARRYING APPLICABLE
ACQUISITION PRINCIPAL VALUE PER CURRENT 11/30/07 TO COMMON
SECURITY DATE VALUE/SHARES SHARE 11/30/07 CARRYING COST VALUE SHAREHOLDERS
----------------------------------------------------------------------------------------------------------------------

HRP Myrtle Beach 03/23/06 1,225,000 $ 97.00 $ 1,225,000 $ 1,188,250 0.27%
NXP B.V. 10/05/06 650,000 94.50 652,250 614,250 0.14%
Paxson Communications Corp. 12/19/05 1,500,000 98.25 1,500,000 1,473,750 0.34%
TOUSA, Inc.-Notes 7/31/07 727,273 4.40 445,969 32,000 0.01%
TOUSA, Inc.-Preferred Stock 7/31/07 4,273 4.40 2,563,636 188,000 0.04%
----------- ----------- -----
$ 6,386,855 $ 3,496,250 0.80%
=========== =========== =====

G. 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 the financing associated with leverage. If the Fund
recognizes a long-term capital gain, it will be required to allocate such gain
between the Common Shares and Auction Market Preferred Shares ("AMP Shares")
issued by the Fund in proportion to the total dividends paid for the year.
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 income and capital gains are determined in accordance with
income tax regulations, which may differ from accounting principles generally
accepted in the United States of America. These differences are primarily due to
differing treatments of income and gains on various investment securities held
by the Fund, timing differences and differing characterization of distributions
made by the Fund.

The tax character of distributions paid during the fiscal year ended May 31,
2007 is as follows:

2007
------------
Distributions paid from:
Ordinary Income ................................. $ 43,016,710

As of May 31, 2007, the components of distributable earnings on a tax basis are
as follows:

Undistributed Ordinary Income ................... $ 2,802,736
Net Unrealized Appreciation (Depreciation) ...... $ (1,102,866)

Page 24

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

H. 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, and by distributing substantially all of its net investment
income and net realized gains to shareholders. Accordingly, no provision has
been made for federal or state income taxes.

In June 2006, Financial Accounting Standards Board ("FASB") Interpretation No.
48, Accounting for Uncertainty in Income Taxes, an interpretation of FASB
Statement 109 ("FIN 48"), was issued and is effective for fiscal years beginning
after December 15, 2006. This Interpretation prescribes a minimum threshold for
financial statement recognition of the benefit of a tax position taken or
expected to be taken in a tax return. As of November 30, 2007, management has
evaluated the application of FIN 48 to the Fund, and has determined that there
is no material impact resulting from the adoption of this Interpretation on the
Fund's financial statements.

Certain capital losses realized after October 31 may be deferred and treated as
occurring on the first day of the following fiscal year. For the fiscal year
ended May 31, 2007, the Fund has elected to defer capital losses occurring
between November 1, 2006 and May 31, 2007 in the amount of $69,023.

As of May 31, 2007, the Fund had a capital loss carryforward for federal income
tax purpose of $3,984,460, expiring on May 31, 2014.

I. EXPENSES:

The Fund pays all expenses directly related to its operations.

J. ACCOUNTING PRONOUNCEMENT:

In September 2006, Statement of Financial Accounting Standards No. 157 Fair
Value Measurements ("SFAS 157") was issued by the FASB and is effective for
fiscal years beginning after November 15, 2007. SFAS 157 defines fair value,
establishes a framework for measuring fair value and expands disclosures about
fair value measurements. At this time, management is evaluating the implications
of SFAS 157 and its impact on the Fund's financial statements if any, has not
been determined.

3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS

First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage, L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Fund pursuant to an Investment Management
Agreement. First Trust is responsible for the ongoing monitoring of the Fund's
investment portfolio, managing the Fund's business affairs and certain
administrative services necessary for the management of the Fund. For these
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 gross asset value of
the Fund (which includes assets attributable to the Fund's AMP Shares, and the
principal amount of borrowings) minus the sum of the Fund's accrued and unpaid
dividends on any outstanding AMP Shares and accrued liabilities.

Four Corners Capital Management, LLC ("Four Corners" or the "Sub-Advisor")
serves as the Fund's investment sub-advisor and manages the Fund's portfolio
subject to First Trust's supervision. Four Corners receives an annual portfolio
management fee of 0.38% of Managed Assets that is paid monthly by First Trust
from its investment advisory fee.

PFPC Inc. ("PFPC"), an indirect, majority-owned subsidiary of The PNC Financial
Services Group, Inc., serves as the Fund's Administrator and Transfer Agent in
accordance with certain fee arrangements. PFPC Trust Company, also an indirect,
majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as
the Fund's Custodian in accordance with certain fee arrangements.

Deutsche Bank Trust Company Americas, a wholly-owned subsidiary of Deutsche Bank
AG ("Auction Agent"), serves as the Fund's AMP Share transfer agent, registrar,
dividend disbursing agent and redemption agent.

Effective January 1, 2007, the Trustees approved a revised compensation plan.
Under the revised plan, each Trustee who is not an officer or employee of First
Trust, any sub-advisor or any of their affiliates ("Independent Trustees") is
paid an annual retainer of $10,000 per trust for the first 14 trusts of the
First Trust Fund Complex and an annual retainer of $7,500 per trust of each
subsequent trust added to the First Trust Fund Complex. The annual retainer is
allocated equally among each of the trusts. No additional meeting fees are paid
in connection with board or committee meetings.

Page 25

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

Additionally, Thomas R. Kadlec is paid $10,000 annually to serve as the Lead
Independent Trustee and Niel B. Nielson is paid $5,000 annually to serve as the
chairman of the Audit Committee, with such compensation paid by the trusts in
the First Trust Fund Complex and divided among those trusts. Independent
Trustees are also reimbursed by the trusts in the First Trust Fund Complex for
travel and out-of-pocket expenses in connection with all meetings. Prior to
January 1, 2007, the trusts paid each Trustee who is not an officer or employee
of First Trust, any sub-advisor or any of their affiliates an annual retainer of
$10,000, which included compensation for all board and committee meetings.
Effective January 1, 2008, each of the chairmen of the Nominating and Governance
Committee and Valuation Committee will be paid $2,500 to serve in such
capacities with such compensation paid by the trusts in First Trust Fund Complex
and divided among those trusts. Also effective January 1, 2008, each committee
chairman will serve two years before rotating to serve as a chairman of another
committee.

4. PURCHASES AND SALES OF SECURITIES

Cost of purchases and proceeds from sales of investment securities, excluding
short-term investments, for the six months ended November 30, 2007, were
$378,068,348 and $339,687,015, respectively.

As of November 30, 2007, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $47,475 and
the aggregate gross unrealized depreciation for all securities in which there
was an excess of tax cost over value was $36,517,377.

5. COMMON SHARES

As of November 30, 2007, 25,291,939 of $0.01 par value Common Shares were
issued. An unlimited number of Common Shares have been authorized under the
Fund's Dividend Reinvestment Plan.

COMMON SHARE TRANSACTIONS WERE AS FOLLOWS:

SIX MONTHS ENDED YEAR ENDED
NOVEMBER 30, 2007 MAY 31, 2007
----------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------- ------ ------ ---------

Issued as reinvestment of dividends
under the Dividend Reinvestment Plan ..... -- $ -- 19,171 $ 360,793
------- ------ ------ ---------
-- $ -- 19,171 $ 360,793
======= ====== ====== =========

6. AUCTION MARKET PREFERRED SHARES

The Fund's Declaration of Trust authorizes the issuance of an unlimited number
of preferred shares of beneficial interest, par value $0.01 per share, in one or
more classes or series, with rights as determined by the Board of Trustees
without the approval of Common Shareholders. As of November 30, 2007, the Fund
has 2,000 Series A and 2,000 Series B AMP Shares outstanding at a liquidation
value of $25,000 per share.

The Fund is required to meet certain asset coverage tests with respect to the
AMP Shares. If the Fund fails to maintain Eligible Assets having an aggregated
Discounted Value at least equal to the AMP Shares Basic Maintenance Amount as of
any Valuation Date and the failure is not cured on or before the related Asset
Coverage Cure Date, the Fund will be required in certain circumstances to redeem
certain AMP Shares.

An auction of the Series A AMP Shares is generally held every 7 days and an
auction of the Series B AMP Shares is generally held every 28 days. Existing
shareholders may submit an order to hold, bid or sell such shares at par value
on each auction date.

The annual dividend rate in effect as of November 30, 2007 was 5.30% and 5.25%
for the Series A 7 day and Series B 28 day auctions, respectively. The dividend
rate, as set by the auction process, is generally expected to vary with
short-term interest rates. The high and low annual dividend rates during the six
months ended November 30, 2007, for the Series A 7 day auction were 6.25% and
5.02%, respectively, and the average dividend rate was 5.40%. The high and low
annual dividend rates during the six months ended November 30, 2007, for the
Series B 28 day auction were 6.50% and 5.25%, respectively, and the average
dividend rate was 5.58%. These rates may vary in a manner not related directly
to the income received on the Fund's assets, which could have either a
beneficial or detrimental impact on net investment income and gains available to
Common Shareholders.

Page 26

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

Under Emerging Issues Task Force (EITF) promulgating Topic D-98, Classification
and Measurement of Redeemable Securities, which was issued on July 19, 2001,
preferred securities that are redeemable for cash or other assets are to be
classified outside of permanent equity to the extent that the redemption is at a
fixed or determinable price and at the option of the holder or upon the
occurrence of an event that is not solely within the control of the issuer.
Subject to guidance of the EITF, the Fund's AMP Shares are classified outside of
permanent equity (net assets attributable to Common Shares) in the accompanying
financial statements.

7. REVOLVING CREDIT FACILITY

The Fund has entered into a 364-Day Revolving Credit Facility ("Credit
Facility") with various lenders and Citicorp North America Inc., as agent, to be
used as leverage for the Fund. The Credit Facility has an expiration date of
July 28, 2008. 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
requirements of the 1940 Act, the Fund, immediately after any such borrowings,
must have an "asset coverage" of at least 300% (33-1/3% of the Fund's total
assets after borrowings). The total commitment under the Credit Facility is
$195,000,000. For the six months ended November 30, 2007, the average amount
outstanding was $174,808,743. The high and low annual interest rates during the
six months ended November 30, 2007, were 5.75% and 5.13%, respectively, with a
weighted average interest rate of 5.38%. The annual interest rate in effect at
November 30, 2007 was 5.19%. The Fund also pays additional borrowing costs,
which include an administration fee of 0.02%, a program fee of 0.18% and a
liquidity fee of 0.10% per year. Such expenses are included in "Interest and
fees on loan" on the Statement of Operations.

8. RISK CONSIDERATIONS

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 bond market, or when political or economic events
affecting the issuers occur.

LOWER GRADE DEBT INSTRUMENTS: The Senior Loans in which the Fund invests are
generally lower grade. These lower grade debt instruments may become the subject
of bankruptcy proceedings or otherwise subsequently default as to the repayment
of principal and/or payment of interest or be downgraded to ratings in the lower
rating categories. Lower grade debt instruments tend to be less liquid than
higher grade debt instruments.

LEVERAGE RISK: The use of leverage results in additional risks and can magnify
the effect of any losses. The Fund borrowed pursuant to a leverage borrowing
program, through the issuance of Preferred Shares, 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 and the holders of Preferred Shares, with
respect to the payment of dividends or upon liquidation. The Fund may not be
permitted to declare dividends or other distributions, including dividends and
distributions with respect to Common Shares or Preferred Shares or purchase
Common Shares or Preferred 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. 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.

Page 27

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

9. 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.

10. SUBSEQUENT EVENTS

On November 20, 2007, the Fund declared a dividend of $0.1078 per share, which
represents a dividend from net investment income to Common Shareholders of
record December 5, 2007, payable December 12, 2007.

On December 20, 2007, the Fund declared a dividend of $0.1078 per share, which
represents a dividend from net investment income to Common Shareholders of
record December 31, 2007, payable January 15, 2008.

Page 28

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (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 PFPC
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 PFPC Inc., 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 (800) 331-1710, in
accordance with such reasonable requirements as the Plan Agent and 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 PFPC 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 votes proxies relating to
portfolio securities 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 website located at http://www.sec.gov.

Page 29

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

PORTFOLIO HOLDINGS

The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("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 August 13, 2007, 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.

BY-LAW AMENDMENTS

On December 10, 2006, the Board of Trustees of the Fund approved certain changes
to the By-Laws of the Fund that may have the effect of delaying or preventing a
change of control of the Fund including the implementation of a staggered Board
of Trustees. These changes were not required to be, and were not, approved by
the Fund's shareholders. To receive a copy of the revised By-Laws, investors may
call the Fund at (800) 988-5891.

SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS

The Joint Annual Meeting of Shareholders of the First Trust/Four Corners Senior
Floating Rate Income Fund and First Trust/Four Corners Senior Floating Rate
Income Fund II was held on September 10, 2007. At the Annual Meeting, holders of
Common and Preferred Shares of First Trust/Four Corners Senior Floating Rate
Income Fund II voting together elected James A. Bowen for a three-year term,
Trustee Niel B. Nielson for a two-year term and Trustee Richard E. Erickson for
a one-year term. Holders of Preferred Shares elected Trustee Thomas R. Kadlec
and Trustee Robert F. Keith each for one-year terms. The number of votes cast in
favor of James A. Bowen was 23,766,772, the number of votes withheld was 166,890
and the number of abstentions was 1,362,278. The number of votes cast in favor
of Niel B. Nielson was 23,747,738, the number of votes withheld was 185,924 and
the number of abstentions was 1,362,278. The number of votes cast in favor of
Richard E. Erickson was 23,754,041, the number of votes withheld was 179,621 and
the number of abstentions was 1,362,278. The number of votes cast in favor of
Thomas R. Kadlec was 3,188, no votes were withheld and the number of abstentions
was 812. The number of votes cast in favor of Robert F. Keith was 3,188, no
votes were withheld and the number of abstentions was 812.

The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") consider your privacy an important priority in maintaining our
relationship. We are committed to protecting the security and confidentiality of
your personal information.

SOURCES OF INFORMATION

We may collect nonpublic personal information about you from the following
sources:

o Information we receive from you or 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.

Page 30

--------------------------------------------------------------------------------
ADDITIONAL INFORMATION - (CONTINUED)
--------------------------------------------------------------------------------

FIRST TRUST/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II
NOVEMBER 30, 2007 (UNAUDITED)

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. The permitted uses
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 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 with affiliates of the Fund. Please note,
however, that the California Financial Information Privacy Act contains an "opt
out" mechanism that California consumers may use to prevent us from sharing
nonpublic personal information with affiliates.

CONFIDENTIALITY AND SECURITY

With regard to our internal security procedures, the Fund restricts access to
your nonpublic personal information to those individuals 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
contact us at (800) 621-1675.

Page 31

This Page Left Blank Intentionally.

[LOGO] FIRST TRUST
ADVISORS L.P.

INVESTMENT ADVISOR
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, IL 60532

INVESTMENT SUB-ADVISOR
Four Corners Capital Management, LLC
515 South Flower Street, Suite 1600
Los Angeles, CA 90071

ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PFPC Inc.
301 Bellevue Parkway
Wilmington, DE 19809

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

ITEM 2. CODE OF ETHICS.

Not applicable.

ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.

Not applicable.

ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Not applicable.

ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.

Not applicable.

ITEM 6. SCHEDULE OF INVESTMENTS.

Schedule of Investments in securities of unaffiliated issuers as of the close of
the reporting period is included as part of the report to shareholders filed
under Item 1 of this form.

ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.

Not applicable.

ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.

(a) Not applicable.

(b) There has been no change, as of the date of this filing, in any of the
portfolio managers identified in response to paragraph (a)(1) of this Item
in the Registrant's most recently filed annual report on Form N-CSR.

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 directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.

ITEM 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) Not applicable.

(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/FOUR CORNERS SENIOR FLOATING RATE INCOME FUND II

By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)

Date JANUARY 24, 2008
----------------------------------------------------------------------------

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.

Date JANUARY 24, 2008
----------------------------------------------------------------------------

By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief Financial
Officer and Chief Accounting Officer
(principal financial officer)

Date JANUARY 24, 2008
----------------------------------------------------------------------------

* Print the name and title of each signing officer under his or her signature.