Balanced Income Equity
and ETF Opportunity Portfolio, Series 5
The Balanced Income Equity and ETF Opportunity Portfolio is a unit investment trust which offers investors a potentially lower-risk alternative to investing solely in stocks. To accomplish this, the
portfolio invests approximately 50% in common stocks of dividend-paying companies and approximately 50% in exchange-traded funds (ETFs) which invest primarily in fixed-income securities.
Because stocks and bonds may react differently to changes in the economy and interest rates, diversifying assets in this manner has the potential to reduce the overall volatility of the portfolio.
What is Asset Allocation?
Asset allocation is the process of developing
a diversified investment portfolio by
combining different assets in varying
proportions. The asset allocation decision may
be one of the most important decisions you
can make as an investor.
Effective diversification requires combining
various types of securities that may behave
differently during changing economic or
market conditions. Diversifying your portfolio
among stocks and bonds makes you less
dependent on the performance of any single
The Importance of Dividends
- History shows that, over the long-term, dividends provide a key component of total return. As interest
rates remain low, investors are turning their attention to dividend paying stocks.
- Corporations are not obligated to share their earnings with stockholders, so dividends may be
viewed as a sign of a company’s profitability as well as management’s assessment of the future.
- We believe that companies that distribute dividends on a regular basis generally demonstrate
financial strength and positive performance relative to their peers.
What is an ETF?
ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single
transaction throughout the trading day. ETFs combine the characteristics of a mutual
fund with the convenience and trading flexibility of stocks. Below is a list of other ETF features.
Diversification – ETFs hold a basket of securities which helps to mitigate single security risk. It is
important to note that diversification does not guarantee a profit or protect against loss.
- Transparency – ETF holdings are available daily so investors know what they own.
- Tax Efficiency – The ETF structure allows for increased tax efficiency.
- Fully Invested – Unlike a traditional mutual fund, ETFs do not need to hold cash in order to satisfy
investor redemptions which allows them to better adhere to their investment objective.
This unit investment trust seeks current monthly income and capital appreciation. There is, however,
no assurance that the objectives will be achieved. The portfolio terminates approximately two years
from the initial date of deposit.
| 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 an investment in a portfolio of common stocks and ETFs.
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.
ETFs 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 ETFs 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, ETFs frequently trade at a discount
from their net asset value in the secondary market. Certain of the ETFs may employ the use of leverage which increases the volatility of such funds.
An investment in a portfolio
which includes securities issued by foreign companies should be made with an understanding of
the additional risks involved with foreign issuers, such as currency fluctuations, political risk,
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.
All of the ETFs 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.
All of the ETFs 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 shortterm
credit developments to a greater degree.
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.
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
Although this portfolio terminates in
approximately 15 months, the strategy is
long-term. Investors should consider their
ability to pursue investing in successive
portfolios, if available. There may be tax
consequences unless units are purchased in an
IRA or other qualified plan.
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
in cyber security.;
For a discussion of additional risks of investing in the trust see the "Risk
Factors" section of the prospectus.