Homebuilders Recovery Select Portfolio, 16
The housing bubble popped in 2008 as banks issued mortgages to many borrowers with
questionable credit, which in many cases has led to defaults and foreclosures. Lenders today take
a much closer look at borrowers' income history and their overall debt situation before approving
a mortgage loan.
Since December 2008, the Federal Reserve has kept interest rates very low in an effort to make capital more readily available. The federal funds rate is the central bank's key to stimulate the
economy and a low rate is believed to encourage spending by making it cheaper to borrow money. We believe that the current low interest rate environment may provide a stimulus for consumers
looking to purchase a home.
This unit investment trust seeks a high rate of current income; however, there is no assurance the
objective will be met.
Consider These Factors
- Home prices nationwide, including distressed sales, increased 7.1% in March 2017 • compared to March
2016. In addition, as of 12/30/16, the national foreclosure inventory declined to 0.09% compared to
3.3% at the peak of the residential foreclosure crisis in September 2010.1
- Builder confidence in the market for newly built, single-family homes stood at a level of 70 in May
2017.* Confidence levels have been above 50 for 35 consecutive months, which is consistent with a
modest and ongoing recovery, according to the National Association of Home Builders (NAHB)/Wells
Fargo Housing Market Index (HMI).
*The index gauges expectations for future sales. Any number over 50 indicates that more
builders view conditions as good than poor.
|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 common stocks, 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.
You should be aware that the portfolio is concentrated in stocks in both the consumer products and industrials sectors which involves additional risks,
including limited diversification. The companies engaged in the consumer products industry are subject to global competition, changing government
regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets. The
companies engaged in the construction industry are subject to competition, overcapacity, labor relations, a reduction in consumer spending, changing
consumer spending habits, unseasonable weather conditions, and severe fluctuations in the price of basic building materials.The companies engaged in
the industrials sector are subject to certain risks, including a deterioration in the general state of the economy, intense competition, domestic and
international politics, excess capacity and changing spending trends.
An investment in a portfolio containing equity 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.
An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and
certain mid-cap companies are often more volatile than those of larger companies due to several factors, including limited trading volumes, products,
financial resources, management inexperience and less publicly available information.
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.