FT Strategic Fixed Income ETF, Series 9
The FT Strategic Fixed Income ETF Portfolio is a unit investment trust which seeks to provide
investors with income and diversification across fixed income asset classes. To accomplish this, the
portfolio invests in a broad range of exchange-traded funds (ETFs) which are further diversified
among U.S. and foreign fixed income securities. This trust is designed to complement a well-diversified
fixed income allocation within an investor’s investment plans by potentially enhancing
the overall return profile for investors with a suitable risk tolerance. This portfolio may also be a
complement to an equity income or dividend strategy given the high correlation between many
of the fixed income positions and equities.
The portfolio consists of actively-managed fixed income First Trust® ETFs advised by First Trust
Advisors L.P. (FTA), an affiliate of the trust’s sponsor. FTA is the largest sponsor of actively-managed
fixed income ETFs and has $32.98 billion in actively-managed ETF AUM, as of 2/28/2023. The ETFs
included in the portfolio are actively managed and have been selected by the First Trust Advisors
Model Investment Committee through a dynamic approach. Asset classes in the portfolio include,
but are not limited to, convertible securities, government bonds, high-yield bonds, investment grade
corporate bonds, mortgage-backed securities, preferred securities, senior loans, and ultra-short
maturity bonds. The fixed-income ETFs selected for the portfolio are based on the following factors:
- A minimum market capitalization of $50,000,000
- At least six months of trading history
- Current valuations
- Underlying fund holdings’ credit ratings
- Fund exposure to different fixed-income asset types
What is an ETF
ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single
transaction throughout the trading day. ETFs combine the characteristics of a mutual fund with
the convenience and trading flexibility of stocks. Below is a list of other ETF features.
Diversification |
ETFs hold a basket of securities which helps to mitigate single security risk. It
is important to note that diversification does not guarantee a profit or protect against loss.
Transparency |
ETF holdings are available daily so investors know what they own.
Tax Efficiency |
The ETF structure allows for increased tax efficiency.
Fully Invested |
Unlike a traditional mutual fund, ETFs do not need to hold cash in order to
satisfy investor redemptions which allows them to better adhere to their investment objective.
Portfolio Objective
This unit investment trust seeks a high rate of current monthly income by investing in a diversified
portfolio of fixed income ETFs; however, there is no assurance the objective will be met.
| 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 involved with owning ETFs and fixed income securities.
ETFs 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 ETFs 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, ETFs
frequently trade at a discount from their net asset value in the secondary market.
Certain of the 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 ETFs invest in floating-rate securities. 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.
Certain of the floating-rate securities pay interest based on LIBOR. The United Kingdom’s Financial Conduct
Authority (“FCA”), which regulates LIBOR, intends to cease making LIBOR available as a reference rate over
a phase-out period that began in early 2022. However, subsequent announcements by the FCA, the LIBOR
administrators, and other regulators indicate that it is possible that the most widely used LIBOR rates may
continue until mid-2023. The unavailability or replacement of LIBOR may affect the value, liquidity or return
on certain portfolio investments. Any potential effects of the transition away from LIBOR can be difficult to
ascertain, and they may vary depending on a variety of factors and they could result in losses to the portfolio.
All of the 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.
All of the funds invest in investment grade securities. 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.
Certain of the funds invest in limited duration bonds. Limited duration 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 not rise during the life of the trust.
Certain of the funds invest in mortgage-backed securities. Rising interest rates tend to extend the
duration of mortgage-backed securities, making them more sensitive to changes in interest rates, and may
reduce the market value of the securities. In addition, mortgage-backed securities are subject to prepayment
risk, the risk that borrowers may pay off their mortgages sooner than expected, particularly when interest
rates decline.
Certain of the funds invest in preferred securities. Preferred securities are sensitive to changes in interest rates
and the market price generally falls with rising interest rates. Preferred securities are more likely to be called
for redemption in a declining interest rate environment. Preferred securities are typically subordinated to
bonds and other debt instruments in a company’s capital structure, in terms of priority to corporate income,
and therefore will be subject to greater credit risk than those debt instruments.
Certain of the funds invest in senior loans. 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.
Certain of the funds invest in covenant-lite loans which contain fewer or no maintenance covenants and
may hinder the funds’ ability to reprice credit risk and mitigate potential loss especially during a downturn
in the credit cycle.
Certain of the funds invest in U.S. Treasury obligations which are subject to numerous risks including higher
interest rates, economic recession and deterioration of the bond market or investors’ perceptions thereof.
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.
The United Kingdom’s official departure from the European Union (commonly referred to as “Brexit”) led to
volatility in global financial markets, in particular those of the United Kingdom and across Europe, and the
weakening in political, regulatory, consumer, corporate and financial confidence in the United Kingdom and
Europe. It is not currently possible to determine the extent of the impact that Brexit may have on the portfolio’s
investments and this uncertainty could negatively impact current and future economic conditions in the
United Kingdom and other countries, which could negatively impact the value of the portfolio’s investments.
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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market
disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions
resulting from those hostilities could have a significant impact on certain investments as well as performance.
The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have caused
and may continue to cause significant volatility and uncertainty in global financial markets. While the U.S.
has resumed “reasonably” normal business activity, many countries continue to impose lockdown measures.
Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.
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 organization costs.
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.
Although this portfolio terminates in approximately 15 months, the strategy is long-term. Investors should
consider their ability to pursue investing in successive portfolios, if available. 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