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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 AgentBrown Brothers Harriman
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 Ratio0.95%
Current Fund Data (as of 10/23/2020)
Closing NAV1$42.23
Closing Market Price2$42.14
Bid/Ask Midpoint$42.14
Bid/Ask Discount0.22%
30-Day Median Bid/Ask Spread30.42%
Total Net Assets$249,161,111
Outstanding Shares5,900,002
Daily Volume38,853
Average 30-Day Daily Volume83,262
Closing Market Price 52-Week High/Low$42.55 / $24.64
Closing NAV 52-Week High/Low$42.77 / $26.01
Number of Holdings (excluding cash)146
Top Holdings (as of 10/23/2020)*
Holding Percent
TESLA INC Convertible, 2%, due 05/15/2024 4.21%
Broadcom Inc., Series A, 8.00%, Due 09/30/2022 2.30%
SQUARE INC Convertible, 0.50%, due 05/15/2023 1.96%
TESLA INC Convertible, 2.375%, due 03/15/2022 1.92%
INPHI CORP Convertible, 0.75%, due 04/15/2025 1.68%
SEA LTD Convertible, 2.375%, due 12/01/2025 1.65%
TELADOC HEALTH INC Convertible, 1.25%, due 06/01/2027 1.53%
WORKDAY INC Convertible, 0.25%, due 10/01/2022 1.33%
MICROCHIP TECHNOLOGY INC Convertible, 1.625%, due 02/15/2027 1.32%
TWILIO INC Convertible, 0.25%, due 06/01/2023 1.27%

* Excluding cash.  Holdings are subject to change.

NAV History (Since Inception)
Past performance is not indicative of future results.
Fund Characteristics (as of 9/30/2020)
Weighted Average Effective Duration41.09 Years
Security Type Breakdown (as of 9/30/2020)
Percent
Convertible Bond 88.95%
Mandatory Preferred 10.19%
Cash & Equivalent 0.86%
Convertible Preferred 0.00%
Please note that percentage of 0.00 indicates an amount less than 0.01%.
Bid/Ask Premium/Discount (as of 10/23/2020)
  2019 Q1 2020 Q2 2020 Q3 2020
Days Traded at Premium 85 20 12 23
Days Traded at Discount 167 42 51 41
Top Sector Exposure (as of 9/30/2020)
Information Technology 35.91%
Consumer Discretionary 24.61%
Health Care 15.77%
Communication Services 12.60%
Industrials 6.47%
Financials 1.48%
Materials 1.19%
Energy 1.11%
Cash & Equivalent 0.86%
Month End Performance (as of 9/30/2020)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 13.86% 23.04% 32.31% 14.57% N/A N/A 12.44%
After Tax Held 13.73% 22.53% 31.47% 13.70% N/A N/A 11.57%
After Tax Sold 8.21% 13.60% 19.05% 10.97% N/A N/A 9.44%
Market Price 13.99% 22.86% 31.42% 14.21% N/A N/A 12.35%
Index Performance **
ICE BofA All US Convertibles Index 13.93% 22.18% 31.20% 15.24% N/A N/A 12.99%
Quarter End Performance (as of 9/30/2020)
  3 Month YTD 1 Year 3 Year 5 Year 10 Year Since
Fund
Inception5
Fund Performance *
Net Asset Value (NAV) 13.86% 23.04% 32.31% 14.57% N/A N/A 12.44%
After Tax Held 13.73% 22.53% 31.47% 13.70% N/A N/A 11.57%
After Tax Sold 8.21% 13.60% 19.05% 10.97% N/A N/A 9.44%
Market Price 13.99% 22.86% 31.42% 14.21% N/A N/A 12.35%
Index Performance **
ICE BofA All US Convertibles Index 13.93% 22.18% 31.20% 15.24% N/A N/A 12.99%
3-Year Statistics (as of 9/30/2020)
  Standard Deviation Alpha Beta Sharpe Ratio Correlation
FCVT 15.65% -0.79 1.02 0.83 0.99
ICE BofA All US Convertibles Index 15.27% --- 1.00 0.88 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 based on the midpoint of the bid/ask spread on the stock exchange on which shares of the fund are listed for trading 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.

**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.

ETF Characteristics

The fund lists and principally trades its shares on The Nasdaq Stock Market LLC.

Investors buying or selling fund shares on the secondary market may incur customary brokerage commissions. Market prices may differ to some degree from the net asset value of the shares. Investors who sell fund shares may receive less than the share's net asset value. Shares may be sold throughout the day on the exchange through any brokerage account. However, unlike mutual funds, shares may only be redeemed directly from the fund by authorized participants, in very large creation/redemption units. If the 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 discount to the fund's net asset value and possibly face delisting.

Risk Considerations

The fund's shares will change in value and you could lose money by investing in the fund. The fund is subject to management risk because it is an actively managed portfolio. In managing the fund's investment portfolio, the advisor will apply investment techniques and risk analyses that may not have the desired result. There can be no assurance that the fund's investment objective will be achieved.

The fund is subject to market risk. Market risk is the risk that a particular security owned by the fund or shares of the fund in general may fall in value. Some of the securities held by the fund may be restricted or illiquid. The outbreak of the respiratory disease designated as COVID-19 in December 2019 has caused significant volatility and declines in global financial markets, which have caused losses for investors. The COVID-19 pandemic may last for an extended period of time, and will continue to impact the economy for the foreseeable future.

Certain of the fixed-income securities in the fund may not have the benefit of covenants which could reduce the ability of the issuer to meet its payment obligations and might result in increased credit risk.

An investment in a fund containing securities of non-U.S. issuers is 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 fund may invest in depositary receipts which may be less liquid than the underlying shares in their primary trading market.

The fund invests in equity securities and the value of the shares will fluctuate with changes in the value of these equity securities. Equity securities prices fluctuate for several reasons, including changes in investors' perceptions of the financial condition of an issuer or the general condition of the relevant stock market.

Convertible securities have characteristics of both equity and debt securities and, as a result, are exposed to certain additional risks. Mandatory convertible securities are a subset of convertible securities, the conversion of which into common stock is not optional, and the conversion price at maturity is based solely upon the market price of the underlying common stock, which may be significantly less than par or the price paid. Mandatory convertible securities generally are subject to a greater risk of loss of value than securities convertible at the option of the holder. Contingent convertible securities, under certain circumstances, may also provide for mandatory conversion. In addition, various contingent convertible securities may contain features that limit an investor's ability to convert the security unless certain conditions are met. The values of certain synthetic convertible securities will respond differently to market fluctuations than a traditional convertible security because such synthetic convertibles are composed of two or more separate securities or instruments, each with its own market value. In addition, if the value of the underlying common stock or the level of the index involved in the convertible component falls below the exercise price of the warrant or option, the warrant or option may lose all value. The issuer of the synthetic convertible security assumes the credit risk associated with the investment, rather than the issuer of the underlying equity security into which the instrument is convertible. Therefore, the fund is subject to the credit risk associated with the counterparty creating the synthetic convertible instrument. Synthetic convertible securities may also be subject to the risks associated with derivatives.

Preferred securities combine some of the characteristics of both common stocks and bonds. 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.

High yield securities, or "junk" bonds, are subject to greater market fluctuations and risk of loss than securities with higher ratings, and therefore, may be highly speculative. The market for high yield securities is smaller and less liquid than that for investment grade securities.

Exchange-traded notes (ETNs) are senior, unsecured, unsubordinated debt securities whose returns are linked to the performance of a particular market benchmark or strategy minus applicable fees. The value of an ETN may be influenced by time to maturity, level of supply and demand for the ETN, volatility and lack of liquidity in underlying assets, changes in the applicable interest rates, changes in the issuer's credit rating and economic, legal, political or geographic events that affect the referenced underlying asset.

The fund may be subject to credit risk, interest rate risk, and income risk. Credit risk is the risk that an issuer of a security will be unable or unwilling to make dividend, interest and/or principal payments when due and that the value of a security may decline as a result.

Interest rate risk is the risk that if interest rates rise, the prices of the fixed-rate instruments held by the fund may fall. Income risk is the risk that if interest rates fall, the income from the fund's portfolio will decline as the fund intends to hold floating-rate debt that will adjust lower with falling interest rates.

The use of options and other derivatives can lead to losses because of adverse movements in the price or value of the underlying asset, index or rate, which may be magnified by certain features of the derivatives. These risks are heightened when the fund's portfolio managers use derivatives to enhance the fund's returns or as a substitute for a position or security, rather than solely to hedge (or offset) the risk of a position or security held by the fund.

The fund may invest in the shares of other investment companies, and therefore, the fund's investment performance and risks may be related to the investment performance and risks of the underlying funds. In general, as a shareholder in other investment companies, the fund bears its ratable share of the underlying fund's expenses, and would be subject to duplicative expenses to the extent the fund invests in other investment companies.

The fund will, under most circumstances, effect a portion of creations and redemptions for cash, rather than in-kind securities. As a result, the fund may be less tax-efficient. The fund currently has fewer assets than larger funds, and like other relatively new funds, large inflows and outflows may impact the fund's market exposure for limited periods of time.

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.

The fund is classified as "non-diversified" and may invest a relatively high percentage of its assets in a limited number of issuers. As a result, the fund may be more susceptible to a single adverse economic or regulatory occurrence affecting one or more of these issuers, experience increased volatility and be highly concentrated in certain issuers.

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

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.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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