Strategic Income Closed-End Portfolio, Series 102
The Multi-Sector Approach
The Strategic Income Closed-End Portfolio seeks to provide investors a high rate of current monthly income and diversification across various fixed income securities. To accomplish this, the portfolio is diversified across a broad range of closed-end funds that invest in U.S. and foreign taxable bonds. Because different sectors within the taxable debt market follow different cycles and react differently to changes in global economies and interest rates, spreading assets across this spectrum of securities has the potential to reduce the overall risk of the portfolio.
Closed-End Features
Portfolio Control
Unlike open-end mutual funds, closed-end funds maintain a relatively fixed pool
of investment capital. This allows portfolio managers to better adhere to their
investment philosophies through greater flexibility and control. In addition,
closed-end funds don't have to manage fund liquidity to meet potentially large
redemptions.
Diversification
The portfolio offers investors diversification by investing in a broad range
of taxable debt closed-end funds that are further diversified across hundreds
of individual issues. Diversification does not guarantee a profit or protect
against loss.
Income Distributions
Closed-end funds are structured to generally provide a more stable income stream than other
managed investment products because they are not subjected to cash inflows and outflows,
which can dilute distributions over time. However, stable income cannot be assured.
Portfolio Objectives
This unit investment trust seeks a high rate of current monthly income, with capital
appreciation as a secondary objective. There is, however, no assurance that the
objectives of the portfolio will be achieved.
Not FDIC Insured Not Bank Guaranteed May Lose Value |
You should consider the portfolio's investment objectives, risks, and
charges and expenses carefully before investing. Contact your financial professional
or call First Trust Portfolios L.P. at 1.800.621.1675 to request a prospectus,
which contains this and other information about the portfolio. Read it carefully
before you invest.
Risk Considerations
An investment in this unmanaged
unit investment trust should be made with an understanding of the
risks associated with an investment in a portfolio of closed-end funds.
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
from their net asset value in the secondary market. Certain closed-end
funds in which the portfolio invests employ the use of leverage, which
increases the volatility of such funds.
A floating-rate security is an instrument in which the interest rate payable on the obligation fluctuates on a periodic basis based upon changes in an interest rate benchmark. As a result, the yield on such a security will generally
decline in a falling interest rate environment, causing the trust to experience a reduction in the income it receives from such securities.
Investing in high-yield securities should be viewed as speculative and you should review your ability to assume the risks associated with investments which utilize such securities. High-yield securities are subject to numerous
risks, including higher interest rates, economic recession, deterioration of the junk bond market, possible downgrades and defaults of interest and/or principal. High-yield security prices tend to fluctuate more than higher
rated securities and are affected by short-term credit developments to a greater degree.
Investment grade securities are subject to numerous risks including higher interest rates, economic recession, deterioration of the investment grade security market or investors’ perception thereof, possible downgrades and
defaults of interest and/or principal.
Preferred securities are equity securities of the issuing company which pay income in the form of dividends. Preferred securities 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 funds which invest in 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.
Covenant-lite loans contain fewer or no maintenance covenants and may hinder the closed-end funds’ ability to reprice credit risk and mitigate potential loss especially during a downturn in the credit cycle.
Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.
As the use of Internet technology has become
more prevalent in the course of business, the
trust has become more susceptible to
potential operational risks through breaches in
cybersecurity.
Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant
groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility
within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions
resulting from those hostilities could have a significant impact on certain investments as well as performance.
A public health crisis, and the ensuing policies enacted by governments and central banks in response,
could cause significant volatility and uncertainty in global financial markets, negatively impacting global
growth prospects.
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.
It is important to note that an investment can
be made in the underlying funds directly
rather than through the trust. These direct
investments can be made without paying the
trust’s sales charge, operating expenses and
organizational costs.
This UIT is a buy and hold strategy and
investors should consider their ability to hold
the trust until maturity. There may be tax
consequences unless units are purchased in an
IRA or other qualified plan.
For a discussion of additional risks of
investing in the trust see the “Risk Factors”
section of the prospectus.