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First Trust SSI Strategic Convertible Securities ETF (FCVT)
Investment Objective/Strategy - The First Trust SSI Strategic Convertible Securities ETF is an actively managed exchange-traded fund that seeks to deliver total return by investing, under normal market conditions, at least 80% of its net assets in a diversified portfolio of U.S. and non-U.S. convertible securities.
There can be no assurance that the Fund's investment objectives will be achieved.
Fund Overview
TickerFCVT
Fund TypeConvertible Securities
Investment AdvisorFirst Trust Advisors L.P.
Investor Servicing AgentBank of New York Mellon Corp
Portfolio Manager/Sub-AdvisorSSI Investment Management LLC
CUSIP33739Q507
ISINUS33739Q5071
Intraday NAVFCVTIV
Fiscal Year-End10/31
ExchangeNasdaq
Inception11/3/2015
Inception Price$25.00
Inception NAV$25.00
Expense Ratio*0.95%
* As of 3/1/2024
Current Fund Data (as of 3/1/2024)
Closing NAV1$33.58
Closing Market Price2$33.50
Bid/Ask Midpoint$33.53
Bid/Ask Discount0.15%
30-Day Median Bid/Ask Spread30.42%
Total Net Assets$82,273,929
Outstanding Shares2,450,002
Daily Volume130,942
Average 30-Day Daily Volume16,215
Closing Market Price 52-Week High/Low$33.58 / $29.38
Closing NAV 52-Week High/Low$33.66 / $29.60
Number of Holdings (excluding cash)128
Top Holdings (as of 3/1/2024)*
Holding Percent
PALO ALTO NETWORKS Convertible, 0.375%, due 06/01/2025 2.10%
LIBERTY MEDIA CORP Convertible, 2.375%, due 09/30/2053 2.04%
Wells Fargo & Company, Series L, 7.500% 1.80%
AKAMAI TECHNOLOGIES INC Convertible, 0.125%, due 05/01/2025 1.70%
Bank of America Corporation, Series L, 7.25% 1.58%
MICROSTRATEGY INC Convertible, 0%, due 02/15/2027 1.58%
ZILLOW GROUP INC Convertible, 2.75%, due 05/15/2025 1.57%
MONGODB INC Convertible, 0.25%, due 01/15/2026 1.55%
DEXCOM INC Convertible, 0.25%, due 11/15/2025 1.45%
UBER TECHNOLOGIES INC Convertible, 0%, due 12/15/2025 1.36%

* Excluding cash.  Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Fund Characteristics (as of 1/31/2024)
Weighted Average Effective Duration41.63 Years
Security Type Breakdown (as of 1/31/2024)
Percent
Convertible Bond 90.26%
Convertible Preferred 4.38%
Mandatory Preferred 2.71%
Cash & Equivalent 2.65%
Bid/Ask Premium/Discount (as of 3/1/2024)
  2023 Q1 2024 Q2 2024 Q3 2024
Days Traded at Premium 10 1 --- ---
Days Traded at Discount 240 41 --- ---
Top Sector Exposure (as of 1/31/2024)
Technology 28.98%
Health Care 17.58%
Consumer Discretionary 15.23%
Financials 12.67%
Industrials 6.20%
Media 4.40%
Utilities 3.38%
Transportation 3.12%
Materials 2.68%
Cash & Accrued Income 2.65%
Energy 1.58%
Consumer Staples 1.53%
Telecommunications 0.00%
Please note that percentage of 0.00 indicates an amount less than 0.01%.
Hypothetical Growth of $10,000 Since Inception (as of 3/1/2024) *


Month End Performance (as of 1/31/2024)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 11.23% -1.50% 1.65% -5.40% 8.42% N/A 8.01%
After Tax Held 10.92% -1.55% 0.90% -7.82% 6.45% N/A 6.46%
After Tax Sold 6.65% -0.89% 0.97% -4.43% 6.24% N/A 5.99%
Market Price 11.86% -1.47% 1.91% -5.51% 8.46% N/A 7.98%
Index Performance **
ICE BofA All US Convertibles Index 10.29% -1.26% 5.44% -2.18% 10.18% N/A 9.43%
Quarter End Performance (as of 12/29/2023)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 7.57% 6.83% 6.83% -4.06% 10.18% N/A 8.30%
After Tax Held 7.27% 6.04% 6.04% -6.51% 8.18% N/A 6.73%
After Tax Sold 4.48% 4.03% 4.03% -3.46% 7.65% N/A 6.21%
Market Price 7.87% 6.72% 6.72% -4.16% 10.23% N/A 8.26%
Index Performance **
ICE BofA All US Convertibles Index 6.79% 12.99% 12.99% -0.78% 11.96% N/A 9.70%
3-Year Statistics (as of 1/31/2024)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FCVT 13.24% -3.21 1.02 -0.53 0.98
ICE BofA All US Convertibles Index 12.79% --- 1.00 -0.29 1.00
Standard Deviation is a measure of price variability (risk). Alpha is an indication of how much an investment outperforms or underperforms on a risk-adjusted basis relative to its benchmark.Beta is a measure of price variability relative to the market. Sharpe Ratio is a measure of excess reward per unit of volatility. Correlation is a measure of the similarity of performance.

*Performance data quoted represents past performance. Past performance is not a guarantee of future results and current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and shares when sold or redeemed, may be worth more or less than their original cost.

After Tax Held returns represent return after taxes on distributions. Assumes shares have not been sold. After Tax Sold returns represent the return after taxes on distributions and the sale of fund shares. Returns do not represent the returns you would receive if you traded shares at other times. Market Price returns are determined by using the midpoint of the national best bid offer price ("NBBO") as of the time that the fund's NAV is calculated. Returns are average annualized total returns, except those for periods of less than one year, which are cumulative.

After-tax returns are calculated using the historical highest individual federal marginal income tax rates and do not reflect the impact of state and local taxes. Actual after-tax returns depend on the investor’s tax situation and may differ from those shown. The after-tax returns shown are not relevant to investors who hold their fund shares through tax-deferred arrangements such as 401(k) plans or individual retirement accounts.

**Performance information for each listed index is for illustrative purposes only and does not represent actual fund performance. Indexes do not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Indexes are unmanaged and an investor cannot invest directly in an index.

ICE BofA All US Convertibles Index - The Index measures the return of all U.S. convertibles.

Footnotes
1 The NAV represents the fund's net assets (assets less liabilities) divided by the fund's outstanding shares.
2 Fund shares are purchased and sold on an exchange at their market price rather than net asset value (NAV), which may cause the shares to trade at a price greater than NAV (premium) or less than NAV (discount).
3 The median bid-ask spread is calculated by identifying the national best bid and national best offer ("NBBO") for the fund as of the end of each 10 second interval during each trading day of the last 30 calendar days and dividing the difference between each such bid and offer by the midpoint of the NBBO. The median of those values is identified and that value is expressed as a percentage rounded to the nearest hundredth.
4 A measure of a bond's sensitivity to interest rate changes that reflects the change in a bond's price given a change in yield. It accounts for the likelihood of changes in the timing of cash flows in response to interest rate movements.
5 Inception Date is 11/3/2015

You should consider the fund's investment objectives, risks, and charges and expenses carefully before investing. You can download a prospectus or summary prospectus, or contact First Trust Portfolios L.P. at 1-800-621-1675 to request a prospectus or summary prospectus which contains this and other information about the fund. The prospectus or summary prospectus should be read carefully before investing.

Risk Considerations

You could lose money by investing in a fund. An investment in a fund is not a deposit of a bank and is not insured or guaranteed. There can be no assurance that a fund's objective(s) will be achieved. Investors buying or selling shares on the secondary market may incur customary brokerage commissions. Please refer to each fund's prospectus and Statement of Additional Information for additional details on a fund's risks. The order of the below risk factors does not indicate the significance of any particular risk factor.

Unlike mutual funds, shares of the fund may only be redeemed directly from a fund by authorized participants in very large creation/redemption units. If a fund's authorized participants are unable to proceed with creation/redemption orders and no other authorized participant is able to step forward to create or redeem, fund shares may trade at a premium or discount to a fund's net asset value and possibly face delisting and the bid/ask spread may widen.

An investment in a Business Development Company ("BDC") may present a greater risk of loss due to the company's youth, limited track record, limited product line, use of leverage, or small market share. These companies may also have issues related to liquidity or capital resources which may result in a greater risk of default on fixed income securities or non-payment of dividends on stock. Additionally, the BDC's shares may trade at a market price above or below its net asset value, or an active market may not develop for its shares which may result in losses to the fund.

During periods of falling interest rates if an issuer calls higher-yielding debt instruments, a fund may be forced to invest the proceeds at lower interest rates, likely resulting in a decline in the fund's income.

A fund that effects all or a portion of its creations and redemptions for cash rather than in-kind may be less tax-efficient.

Contingent convertible securities ("CoCos") may provide for mandatory conversion into common stock of the issuer under certain circumstances. Since the common stock of the issuer may not pay a dividend, investors in these instruments could experience a reduced income rate, potentially to zero; and conversion would deepen the subordination of the investor, hence worsening standing in a bankruptcy.

A convertible security is exposed to risks associated with both equity and debt securities. The value of convertibles may rise and fall with the market value of the underlying stock or vary with changes in interest rates and credit quality of the issuer.

A fund may be subject to the risk that a counterparty will not fulfill its obligations which may result in significant financial loss to a fund.

An issuer or other obligated party of a debt security may be unable or unwilling to make dividend, interest and/or principal payments when due and the value of a security may decline as a result.

Ratings assigned by a credit rating agency are opinions of such entities, not absolute standards of credit quality and they do not evaluate risks of securities. Any shortcomings or inefficiencies in the process of determining credit ratings may adversely affect the credit ratings of the securities held by a fund and their perceived or actual credit risk.

Changes in currency exchange rates and the relative value of non-US currencies may affect the value of a fund's investments and the value of a fund's shares.

Current market conditions risk is the risk that a particular investment, or shares of the fund in general, may fall in value due to current market conditions. As a means to fight inflation, the Federal Reserve and certain foreign central banks have raised interest rates and expect to continue to do so, and the Federal Reserve has announced that it intends to reverse previously implemented quantitative easing. Recent and potential future bank failures could result in disruption to the broader banking industry or markets generally and reduce confidence in financial institutions and the economy as a whole, which may also heighten market volatility and reduce liquidity. 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 have and could continue to have a significant impact on certain fund investments as well as fund performance and liquidity. The COVID-19 global pandemic, or any future public health crisis, 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, negatively impacting global growth prospects.

A fund is susceptible to operational risks through breaches in cyber security. Such events could cause a fund to incur regulatory penalties, reputational damage, additional compliance costs associated with corrective measures and/or financial loss.

Investments in debt securities subject the holder to the credit risk of the issuer and the value of debt securities will generally change inversely with changes in interest rates. In addition, debt securities generally do not trade on a securities exchange making them less liquid and more difficult to value.

Depositary receipts may be less liquid than the underlying shares in their primary trading market and distributions may be subject to a fee. Holders may have limited voting rights, and investment restrictions in certain countries may adversely impact their value.

The use of derivatives instruments involves different and possibly greater risks than investing directly in securities including counterparty risk, valuation risk, volatility risk, and liquidity risk. Further, losses because of adverse movements in the price or value of the underlying asset, index or rate may be magnified by certain features of the derivatives.

Equity securities may decline significantly in price over short or extended periods of time, and such declines may occur in the equity market as a whole, or they may occur in only a particular country, company, industry or sector of the market.

Exchange- traded notes ("ETNs") are unsecured debt obligations whose valuation may be impacted by a downgrade in the issuer's credit rating. Additionally, the value of the ETN may be affected by time to maturity, the level of supply and demand for the ETN, volatility and lack of liquidity of the underlying market, changes in interest rates, and other economic or political events that affect the underlying market or assets.

Extension risk is the risk that, when interest rates rise, certain obligations will be paid off by the issuer (or other obligated party) more slowly than anticipated, causing the value of these debt securities to fall. Rising interest rates tend to extend the duration of debt securities, making their market value more sensitive to changes in interest rates.

High yield securities, or "junk" bonds, are less liquid and are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, are considered to be highly speculative.

A fund's income may decline when interest rates fall or if there are defaults in its portfolio.

A fund may be a constituent of one or more indices or models which could greatly affect a fund's trading activity, size and volatility.

As inflation increases, the present value of a fund's assets and distributions may decline.

Information technology companies are subject to certain risks, including rapidly changing technologies, short product life cycles, fierce competition, aggressive pricing and reduced profit margins, loss of patent, copyright and trademark protections, cyclical market patterns, evolving industry standards and regulation and frequent new product introductions.

Interest rate risk is the risk that the value of the debt securities in a fund's portfolio will decline because of rising interest rates. Interest rate risk is generally lower for shorter term debt securities and higher for longer-term debt securities.

Certain fund investments may be subject to restrictions on resale, trade over-the-counter or in limited volume, or lack an active trading market. Illiquid securities may trade at a discount and may be subject to wide fluctuations in market value.

The portfolio managers of an actively managed portfolio will apply investment techniques and risk analyses that may not have the desired result.

Market risk is the risk that a particular security, or shares of a fund in general may fall in value. Securities are subject to market fluctuations caused by such factors as general economic conditions, political events, regulatory or market developments, changes in interest rates and perceived trends in securities prices. Shares of a fund could decline in value or underperform other investments as a result. In addition, local, regional or global events such as war, acts of terrorism, spread of infectious disease or other public health issues, recessions, natural disasters or other events could have significant negative impact on a fund.

A fund faces numerous market trading risks, including the potential lack of an active market for fund shares due to a limited number of market makers. Decisions by market makers or authorized participants to reduce their role or step away in times of market stress could inhibit the effectiveness of the arbitrage process in maintaining the relationship between the underlying values of a fund's portfolio securities and a fund's market price.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, lack of liquidity, lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

A fund and a fund's advisor may seek to reduce various operational risks through controls and procedures, but it is not possible to completely protect against such risks. The fund also relies on third parties for a range of services, including custody, and any delay or failure related to those services may affect the fund's ability to meet its objective.

Preferred securities combine some of the characteristics of both common stocks and bonds. Preferred stocks are typically subordinated to other debt instruments in terms of priority to corporate income, and therefore will be subject to greater credit risk than those debt instruments.

The market price of a fund's shares will generally fluctuate in accordance with changes in the fund's net asset value ("NAV") as well as the relative supply of and demand for shares on the exchange, and a fund's investment advisor cannot predict whether shares will trade below, at or above their NAV.

Prepayment risk is the risk that the issuer of a debt security will repay principal prior to the scheduled maturity date. Debt securities allowing prepayment may offer less potential for gains during a period of declining interest rates, as a fund may be required to reinvest the proceeds of any prepayment at lower interest rates.

A fund may be unable to sell a restricted security on short notice or only sell them at a price below current value.

A fund with significant exposure to a single asset class, country, region, industry, or sector may be more affected by an adverse economic or political development than a broadly diversified fund.

Securities of small- and mid-capitalization companies may experience greater price volatility and be less liquid than larger, more established companies.

Trading on an exchange may be halted due to market conditions or other reasons. There can be no assurance that a fund's requirements to maintain the exchange listing will continue to be met or be unchanged.

A fund may hold securities or other assets that may be valued on the basis of factors other than market quotations. This may occur because the asset or security does not trade on a centralized exchange, or in times of market turmoil or reduced liquidity. Portfolio holdings that are valued using techniques other than market quotations, including "fair valued" assets or securities, may be subject to greater fluctuation in their valuations from one day to the next than if market quotations were used. There is no assurance that a fund could sell or close out a portfolio position for the value established for it at any time.

Warrants and rights do not include the right to dividends, voting, or to the assets of the issuer and the value of the warrants and rights does not necessarily change with the value of the underlying securities. The market for warrants and rights may be limited.

Zero coupon bonds do not pay interest on a current basis, they may be highly volatile, and they do not produce cash flow. A fund could be forced to liquidate zero coupon bond securities at an inopportune time to generate cash to distribute to shareholders as required by tax laws.

First Trust Advisors L.P. (FTA) is the adviser to the First Trust fund(s). FTA is an affiliate of First Trust Portfolios L.P., the distributor of the fund(s).

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2024 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value
 
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 professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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