Certain of the closed-end funds invest in subprime mortgage loans. Subprime mortgage loans are subject to numerous risks, including increased credit risks, higher interest rates, shifts in the market's perception of issuers and regulatory or tax changes adversely affecting the mortgage securities markets. Risks of investing in closed-end funds which hold subprime mortgage loans are similar to those which affect high-yield securities or "junk" bonds, which include less liquidity, greater volatility and an increased risk of default as compared to higher rated securities.
Closed-end funds are subject to various risks, including management's ability to meet the fund's investment objective, and to manage the fund's portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors' perceptions regarding the funds or their underlying investments change. Unlike open-end funds, which trade at prices based on a current determination of the fund's net asset value, closed-end funds frequently trade at a discount to their net asset value in the secondary market. Certain closed-end funds may employ the use of leverage which increases the volatility of such funds.
Risks associated with investing in foreign securities may be more pronounced in emerging markets where the securities markets are substantially smaller, less liquid, less regulated and more volatile than the U.S. and developed foreign markets.
An investment in securities of foreign issuers should be made with an understanding of the additional risks involved, such as currency fluctuations, political risk, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers.
Investment grade bonds are subject to numerous risks including higher interest rates, economic recession, deterioration of the investment grade bond market or investors' perception thereof, possible downgrades and defaults of interest and/or principal.
bonds are subject to interest rate risk, which is the risk that the value of
a security will fall if interest rates increase. While limited duration bonds
are generally subject to less interest rate sensitivity than longer duration
bonds, there can be no assurance that interest rates will rise during the life
of the trust.
The value of mortgage-backed securities will decline with increases
in interest rates.The value of mortgage-backed securities will also fluctuate
with changes in the general condition of the mortgage-backed securities market,
changes in inflation rates or when political or economic events affecting Ginnie
Preferred stocks are equity securities of the issuing company which pay income in the form of
dividends. Preferred stocks are typically subordinated to bonds and other debt instruments in a company�s capital structure, and therefore will be subject
to greater credit risk than those debt instruments.
The yield on senior loans will generally decline in a falling interest rate environment and increase in a rising interest rate environment. Senior loans are generally below investment grade quality ("junk"bonds). An investment in senior loans involves the risk that the borrowers may default on their obligations to pay principal or interest when due.
Subprime mortgage loans are
subject to numerous risks, including increased credit risks, higher interest rates, shifts in the market's
perception of issuers and regulatory or tax changes adversely affecting the mortgage securities markets.
The value of the securities held by the trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers.
You should carefully consider the trust's investment objectives, risks, and charges and expenses before investing. Contact your financial advisor or call First Trust Portfolios, L.P. at 1.800.621.1675 to request a prospectus, which contains this and other information about the trust. Read it carefully before you invest.
This product information does not constitute an offer to sell, or a solicitation of an offer to buy securities in any state to any person to whom it is not lawful to make such an offer. Sales of any of these securities must include prospectus delivery and the services of a retail broker/dealer duly licensed in the appropriate states.
Not FDIC Insured, Not Bank Guaranteed and May Lose Value.