FT Income Portfolio, Series 5
Finding the right mix of investments is a key factor to successful investing. Because different investments
often react differently to economic and market changes, the FT Income Portfolio has been developed to
capture both equity and fixed income market dynamics. The FT Income Portfolio is a unit investment trust
which consists of exchange-traded funds (ETFs) advised by First Trust Advisors L.P., an affiliate of the trust’s
sponsor. The portfolio is diversified across both stocks and bonds through First Trust® ETFs that employ
varying investment strategies. By not solely focusing on equities and incorporating a fixed income
component, the portfolio seeks to maximize income while providing capital appreciation potential.
Using a disciplined investment strategy, the FT Income Portfolio includes both equity characteristics and
diverse asset class exposures. The equity portion of the portfolio consists of First Trust® ETFs that invest in
common stocks of companies of various market capitalizations, growth and value styles, sectors and
countries. The fixed income portion of the portfolio consists of First Trust® ETFs that invest in varied asset
classes to diversify risk exposure.
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 monthly income and capital appreciation by investing in a diversified
portfolio of First Trust® ETFs; however, 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 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 ETFs which invest in fixed
income, equity securities and options.
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.
Certain of the ETFs invest in common stocks. 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
Certain of the ETFs 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
Certain 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 short-term
credit developments to a greater degree.
Certain 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 market or investors’
perception thereof, possible downgrades and defaults of
interest and/or principal.
Certain of the ETFs invest in senior loans. The yield on ETFs
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 (“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 ETFs invest in covenant-lite loans which contain
fewer or no maintenance covenants and may hinder the ETF’s
ability to reprice credit risk and mitigate potential loss
especially during a downturn in the credit cycle.
Certain of the ETFs invest in securities of foreign issuers which
are subject to additional risks, including currency fluctuations,
political risks, withholding, the lack of adequate financial
information, and exchange control restrictions impacting
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.
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.
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.
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.