Equity Closed-End Portfolio, Series 49
When it comes to investing for income, investors have several choices. Even
with all the options, there are those investors who do not want to give up the
growth potential offered by stocks in order to earn a high rate of current income.
The Equity Closed-End Portfolio has been developed to address this need. The
Equity Closed-End Portfolio is a unit investment trust that is comprised of
a pool of closed-end funds which invest in dividend-paying equity securities.
The Importance of Dividends
Due to the fact that corporations are not obligated to share their earnings with stockholders, dividends
may be viewed as a sign of a company’s profitability as well as management’s assessment of the future,
in our opinion. Dividends have had a significant impact on stock performance. Consider the historical
effect dividends have had on companies in the S&P 500 Index. According to Ibbotson Associates,
dividends have provided approximately 41% of the 10.16% average annual total return on the S&P 500
Index from 1926 through 2017. The S&P 500 Index is an unmanaged index of 500 stocks used to measure
large-cap U.S. stock market performance. The index cannot be purchased directly by investors.
Why Closed-End Funds?
Since closed-end funds maintain a relatively fixed pool of investment capital,
portfolio managers are better able to adhere to their investment philosophies
through greater flexibility and control. In addition, closed-end funds don't
have to manage fund liquidity to meet potentially large redemptions.
Because they are not subjected to cash inflows and outflows, which can dilute
distributions over time, closed-end funds can generally provide a more stable
income stream than other managed investment products. However, stable income
cannot be assured.
This unit investment trust seeks high current
income, with total return as a secondary
objective by investing in a well-diversified pool
of closed-end funds that invest in dividend-paying
equity securities; however, there is no
assurance the objectives 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 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 associated with an investment in a portfolio of closed-end
funds which invest in common stocks.
Closed-end funds 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, closed-end funds frequently
trade at a discount to their net asset value in the secondary market. Certain
closed-end funds employ the use of leverage, which increases the volatility
of such funds.
All of the closed-end funds invest in common stocks. Common stocks are subject
to 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.
Certain of the closed-end funds invest in options. Options are subject to various
risks including that their value may be adversely affected if the market for
the option becomes less liquid or smaller. In addition, options will be affected
by changes in the value and dividend rates of the stock subject to the option,
an increase in interest rates, a change in the actual and perceived volatility
of the stock market and the common stock and the remaining time to expiration.
All of the closed-end funds invest in securities of foreign issuers.
Foreign securities are subject to additional risks, including
currency fluctuations, political risks, 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 developed, less liquid, less regulated,
and more volatile than the U.S. and developed foreign markets.
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.
Certain of the closed-end funds invest in real estate investment
trusts (REITs). Companies involved in the real estate industry are
subject to changes in the real estate market, vacancy rates and
competition, volatile interest rates and economic recession.
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.
For a discussion of additional risks of investing in the trust see the "Risk Factors" section of the prospectus.
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 organizational costs.
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.