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January Effect Portfolio, Series 9

An important part of many investors' overall strategy is to minimize taxes. As the end of the year approaches, investors with securities in taxable accounts typically review their portfolio for potential tax losses. Historically, when tax-motivated selling pressures occur in December, closed-end fund (CEF) discounts can widen further.

Portfolio Objectives

This unit investment trust seeks current income, with total return as a secondary objective. There is, however, no assurance that the objectives will be achieved.

Portfolio Selection Criteria

The January Effect Portfolio is a unit investment trust which invests in CEFs that we believe may benefit once tax-motivated selling pressures abate after the end of the year. The trust invests in taxable CEFs which meet the following criteria:

  • Price Decline – Price decline of 10% or greater from each CEF's 2019 high at the time the portfolio is selected.


  • Discount to NAV – We select funds which are trading at a discount to net asset value and we favor those which are trading at a greater discount relative to their peers.


  • Liquidity – A fund's overall size must be considered, as well as its average trading volume. We favor larger funds and funds with higher trading volume.


  • Dividend Yield – We look for funds with higher dividend yields relative to comparable funds, as well as those that have shown a relatively stable payment level over time.


  • Diversification – In order to cover the broadest scope of the market, we diversify among fund companies and categories. Diversification does not guarantee a profit or protect against loss.
  • 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 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 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. Shares of closed-end funds frequently trade at a discount to their net asset value in the secondary market and the net asset value of closed-end fund shares may decrease. Certain closedend funds may employ the use of leverage which increases the volatility of such funds.

    Certain of the closed-end funds invest in common stocks. Common stocks are subject to risks, such as an economic recession and the possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.

    Certain of the closed-end funds invest in convertible securities. Convertible securities are bonds, preferred stocks and other securities that pay a fixed rate of interest (or dividends) and will repay principal at a fixed date in the future. However, these securities may be converted into a specific number of common stocks at a specified time. As such, an investment in convertible securities entails some of the risks associated with both common stocks and bonds.

    Certain of the closed-end funds invest in high-yield securities or "junk" bonds. 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.

    Certain of the closed-end funds invest in Master Limited Partnerships (MLPs). Investments in MLPs are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. U.S. taxing authorities could challenge the trust’s treatment of the MLPs for federal income tax purposes. These tax risks could have a negative impact on the after-tax income available for distribution by the MLPs and/or the value of the trust’s investments.

    Certain of the closed-end funds invest in call options. An option’s value may be adversely affected if the market for the option becomes less liquid or smaller. In addition, options will be affected by changes in the value and dividend rates of the stock subject to the option, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the common stock and the remaining time to expiration.

    Certain of the closed-end funds invest in senior loans. The yield on closed-end 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.

    Certain of the closed-end funds invest in covenant-lite loans which 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.

    Certain of the closed-end funds invest in securities issued by foreign issuers. Such securities are subject to risks, including currency and interest rate fluctuations, adverse political or economic developments, lack of liquidity of certain foreign markets, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers. Risks associated with investing in foreign securities may be more pronounced in emerging markets where the securities markets are substantially smaller, less developed, less liquid, less regulated, and more volatile than the U.S. and developed foreign markets.

    An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and certain mid-cap companies are often more volatile than those of larger companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.

    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.

    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.

    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.

    For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.

 
Fund Cusip Information
30312H508 (Cash)
30312H516 (Reinvest)
30312H524 (Cash-Fee)
30312H532 (Reinvest-Fee)
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial advisors are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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