California Municipal Income Closed-End And ETF Portfolio, Series 8
Americans deal with a number of different taxes in their everyday lives, perhaps none more
noticeable than individual income taxes. In fact, individual income taxes comprise the largest
component of Americans’ tax bill. By investing in federal tax-exempt municipal bonds, investors
have the potential for significant tax savings. For investors in higher tax brackets, municipals can
offer greater after-tax yields than taxable debt securities of similar maturities and credit quality,
including Treasuries and corporate bonds.
Portfolio Advantage
Diversification | Investing in both CEFs and ETFs provides an efficient way to achieve
diversification across municipal bonds. The broad range of funds in which the portfolio invests are
further diversified across hundreds of individual issues. It is important to note that diversification
does not guarantee a profit or protect against loss.
Portfolio Objective
This unit investment trust seeks monthly income that is exempt from federal and California state
income taxes by investing in a pool of closed-end funds (CEFs) and exchange-traded funds (ETFs) that
invest primarily in California municipal bonds. However, certain distributions paid by certain funds
may be subject to federal and California state income taxes. In addition, a portion of the income may
be subject to the alternative minimum tax. There is no assurance the objective will be met.
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 professional
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.
Risk Considerations
An investment in this unmanaged unit investment trust should be made with an understanding of the risks associated with an investment in a portfolio of CEFs and ETFs.
Closed-end funds and 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 the funds 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 and closed-end funds frequently trade at a discount from their net asset value in the secondary market. The funds employ the use of leverage which increases the volatility of such funds.
The portfolio is also subject to additional risks as a result of its concentration in bonds issued by California municipalities, including a deterioration of the economic factors affecting the state.
Investment grade securities are subject to numerous risks including higher interest rates, economic recession, deterioration of the investment grade bond market or investors’ perception thereof, possible downgrades and
defaults of interest and/or principal.
Municipal bonds are subject to numerous risks, including higher interest rates, economic recession, deterioration of the municipal bond market, possible downgrades and defaults of interest and/or principal.
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 cybersecurity.
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 could have a significant impact on certain investments as well as performance.
A public health crisis, and the ensuing policies enacted by governments and central banks in response,
could cause significant volatility and uncertainty in global financial markets, negatively impacting global
growth prospects.
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
organization costs.
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. The markets for credit instruments, including municipal securities,
have experienced periods of extreme illiquidity and volatility.
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.
For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.