First Trust Ultra Short Duration Municipal ETF (FUMB US) – Portfolio Construction Methodology

The investment process governing the actively managed First Trust Ultra Short Duration Municipal ETF focuses on USD tax-exempt municipal securities with portfolio duration targeted at <1 year to contain interest-rate sensitivity. At least 80% of net assets are invested in investment-grade munis at purchase across general obligation, revenue, notes, pre-refunded/escrowed and AMT/private-activity structures, including fixed, variable and floating-rate issues. Portfolio construction emphasizes diversification across ≥10 U.S. states, with a preference for essential-service and infrastructure-related credits in states exhibiting durable demographic and employment characteristics. Security selection applies fundamental credit work on pledged revenues, legal covenants and sector risk, alongside assessment of structure, coupon features and liquidity. Position sizing reflects issue size, trading depth and expected call behavior; tender-option receipts and other short-dated structures may be used to manage duration and liquidity. Rebalancing occurs as relative value shifts, credit views change, or to keep duration and quality parameters aligned. All holdings are USD. To explore FUMB in more depth, visit our ETF analytics platform for institutional-grade insights — including performance and risk metrics, correlations, sensitivities, and factor exposure: https://www.etfstrategy.com/etf/FUMB_US