High-Yield Income Closed-End Portfolio, Series 90
One thing that has not changed over the years is the need for some investors to earn high current income. Investors willing to assume certain credit and market risks have the potential to earn a high level of current monthly income by investing in high-yield bonds. The High-Yield Income Closed-End Portfolio is comprised of a well-diversified pool of closed-end funds that invest in U.S. and foreign high-yield bonds.
Although subject to greater risks, high-yield bond investors have historically
received greater returns from their high-yield investments than investment grade
bond investors. Of course, there can be no assurance that high-yield securities
will outperform investment grade bonds in the future or that the default rate
on high-yield securities will not rise.
Closed-end funds are structured to generally provide a more stable income stream
than other managed fixed-income investment products because they are not subjected
to cash inflows and outflows, which can dilute dividends over time. However,
as a result of bond calls, redemptions and advanced refundings, which can dilute
a fund's income, the portfolio cannot guarantee consistent income. Although
one of the portfolio's objectives is to seek a high rate of current monthly
income, there is no assurance the objective will be met.
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.
This unit investment trust seeks a high rate of current monthly income, with capital appreciation as a secondary objective. There is, however, no assurance that the objectives will be achieved.
|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.
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 high-yield closed-end funds.
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.
Certain of the closed-end funds invest in floating-rate securities. A floating-rate security is an instrument in
which the interest rate payable on the obligation fluctuates on a periodic basis based upon changes in an
interest rate benchmark. As a result, the yield on such a security will generally decline in a falling interest
rate environment, causing the trust to experience a reduction in the income it receives from such securities.
Certain of the floating-rate securities pay interest based on LIBOR. Due to the uncertainty regarding the
future utilization of LIBOR and the nature of any replacement rate, the potential effect of a transition away
from LIBOR on a fund or the financial instruments in which the fund invests cannot yet be determined.
Investing in high-yield securities should be viewed as speculative and you should review your ability to
assume the risks associated with investments that utilize such bonds. 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 bonds and are affected by short-term credit developments to a greater degree.
Certain of the closed-end funds invest in limited duration bonds. Limited duration bonds are subject to
interest rate risk, which is the risk that the value of a security will fall if interest rates increase. While limited
duration bonds are generally subject to less interest rate sensitivity than longer duration bonds, there can be
no assurance that interest rates will not rise during the life of the trust.
Certain of the closed-end funds invest in senior loans. The yield on closed-end funds which invest in senior
loans will generally decline in a falling interest rate environment and increase in a rising interest rate
environment. Senior loans are generally below investment grade quality (high-yield securities or “junk”
bonds). An investment in senior loans involves the risk that the borrowers may default on their obligations
to pay principal or interest when due.
Certain of the closed-end funds invest in covenant-lite loans which contain fewer or no maintenance
covenants and may hinder the closed-end funds’ ability to reprice credit risk and mitigate potential loss
especially during a downturn in the credit cycle.
An investment which includes securities issued by foreign issuers should be made with an understanding of
the additional risks involved such as currency and interest rate fluctuations, nationalization or other adverse
political or economic developments, lack of liquidity of certain foreign markets, withholding, the lack of adequate
financial information, and exchange control restrictions impacting foreign issuers.
On January 31, 2020, the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”). Brexit has led to volatility in global financial markets, in particular those of the United Kingdom
and across Europe, and may also lead to weakening in political, regulatory, consumer, corporate and financial
confidence in the United Kingdom and Europe.
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.
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.
The recent outbreak of a respiratory disease designated as COVID-19 was first detected in China in December
2019. The global economic impact of the COVID-19 outbreak is impossible to predict but is expected to
disrupt manufacturing, supply chains and sales in affected areas and negatively impact global economic
growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global
financial markets, which have caused losses for investors. The impact of the COVID-19 outbreak may be short
term or may last for an extended period of time, and in either case could result in a substantial economic
downturn or recession.
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.
For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.