Stonebridge Preferred Income, Series 12
The Stonebridge Preferred Income Portfolio is a unit investment trust that is diversified across preferred
securities issued by companies that we believe have current attractive yields.
Portfolio Selection Process
First Trust Portfolios L.P. ("First Trust") selected a portfolio of preferred securities by collaborating with
Stonebridge Advisors LLC ("Stonebridge"). Stonebridge used relative value, fundamental credit and
market technical analyses to prepare a recommended portfolio of securities designed to meet the
objective of the trust. Attributes such as credit quality, yield, capital structure positioning, as well as
market technicals such as trading volumes, liquidity and pricing inefficiencies were considered in this
process. Stonebridge submitted its portfolio suggestions to First Trust who then chose the final portfolio.
What Are Preferred Securities?
- Preferred securities are best defined as fixed-income credit products with equity-like features.
- Preferred securities combine many of the characteristics of fixed-income securities — scheduled
dividend/interest payments, defined par amounts and credit ratings with certain characteristics of
equities — perpetual or long-dated terms, lower priority in the capital structure and quarterly
- Preferred securities typically have a yield advantage over common stocks as well as comparably rated
- Preferred securities are "senior securities" which have preference over common stocks, but not debt,
of an issuer.
Why Invest In Preferred Securities?
High Income Stream Potential - Current yields on preferred securities are attractive
relative to many other income-producing securities.
Historically Low Correlations - Preferred and hybrid securities have historically
exhibited low correlations to other income-producing asset classes. The numerous characteristics and
varying structures of preferreds allow for this asset class to be a potential beneficial allocation to a
diversified investment portfolio. Diversification does not guarantee a profit or protect against loss.
About Stonebridge Advisors LLC
- Stonebridge, an affiliate of First Trust, has an experienced investment team with an • average of 15 years
of broad investment experience in fixed income and equities in the areas of portfolio management,
trading, and research. Stonebridge's primary focus is in preferred and hybrid securities.
- Collectively, the Stonebridge investment team members have started two investment management
firms and managed multi-billion dollar portfolios. With the team's advanced portfolio management,
analytical and modeling capabilities, Stonebridge has created a selection of preferred securities
strategies to meet the needs of a wide range of clients.
This unit investment trust seeks a high rate of current income; 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 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.
An investment in this unmanaged unit investment trust should
be made with an understanding of the risks involved with
owning preferred stocks and trust preferred securities, such as
an economic recession, volatile interest rates and the possible
deterioration of either the financial condition of the issuers of
the trust preferred securities or the general condition of the
Certain of the securities held in the trust are "high-yield"
securities which are rated below investment grade. Investing in
high-yield securities should be viewed as speculative and you
should review your ability to assume the risks associated with
investments that use such securities. High-yield securities are
subject to numerous risks including higher interest rates,
economic recession, deterioration of the high yield 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.
You should be aware that the portfolio is concentrated in
preferred stocks and trust preferred securities issued by
companies in the financials sector which involves additional
risks, including limited diversification. The financials sector is
subject to the adverse effects of volatile interest rates,
economic recession, decreases in the availability of capital,
increased competition from new entrants in the field, and the
potential for increased regulation. Preferred stocks and trust
preferred securities are typically subordinated to bonds and
other debt instru ments 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.
An investment in a portfolio containing securities of
foreign issuers is subject to additional risks, including currency
fluctuations, political risks, withholding, the lack of adequate
financial information, and exchange control restrictions
impacting foreign issuers.
Certain of the securities in the portfolio are issued by Real Estate Investment Trusts (REITs). Companies involved in the real estate industry are subject to changes in the real estate market, vacancy
rates and competition, volatile interest rates and economic recession.
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.