Strategic Income Select Closed-End Portfolio, Series 52
The Multi-Sector Approach
The Strategic Income Select Closed-End Portfolio seeks a high rate of current monthly income and to
reduce some of the volatility typically associated with high-income investments. To accomplish this, the
portfolio is diversified across a broad range of closed-end funds. Because different sectors follow
different cycles and react differently to changes in global economies and interest rates, spreading assets
across a spectrum of closed-end funds has the potential to reduce the overall risk of the portfolio.
When selecting closed-end funds for this portfolio, we look at several factors including:
Discount | We favor 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.
Consistent Dividend | We favor funds which have a history of paying a consistent dividend.
Expense Ratio | We favor funds which have a lower than average expense ratio relative to
Diversification | We limit exposure to individual fund companies/managers.
Liquidity | We favor larger funds and more liquid funds.
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.
The portfolio offers investors diversification by investing in a broad range of
closed-end funds that are further diversified across hundreds of individual securities. Diversification does
not guarantee a profit or protect against loss.
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 dividends over time. However, stable income cannot be assured.
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.
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.
Certain of the closed-end funds invest in common stocks. Common stocks are subject to certain
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 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, which regulates LIBOR, will cease making LIBOR available as a reference rate over a phase-out
period that will begin immediately after December 31, 2021. 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.
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 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 closed-end funds invest in call options. Options are
subject to various risks including that their 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
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 closed-end funds invest in
senior loan securities. 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.
All of the closed-end funds invest in securities issued by
foreign issuers. Such securities are subject to certain risks, including currency and interest rate fluctuations,
nationalization or other 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 liquid, less regulated and more
volatile than the U.S. and developed foreign markets.
About one year after the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”), the United Kingdom and the European Union reached a trade agreement that became effective
on December 31, 2020. It is not currently possible to determine the extent of the impact the Brexit trade
agreement may have on the portfolio’s investments and this certainly 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
The COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic
growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.
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
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.
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