FT Income Portfolio, Series 8
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 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 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.
All 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 stock market.
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 be determined.
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 mortgage-backed securities. Rising
interest rates tend to extend the duration of mortgage-backed
securities, making them more sensitive to changes in interest rates,
and may reduce the market value of the securities. In addition,
mortgage-backed securities are subject to prepayment risk, the risk
that borrowers may pay off their mortgages sooner than expected,
particularly when interest rates decline.
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 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.
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.
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.
Local, regional or global events such as war, acts of terrorism, spread
of infectious diseases or other public health issues, recessions, or other
events could have a significant negative impact on the portfolio and
its investments. Such events may affect certain geographic regions,
countries, sectors and industries more significantly than others. 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,
negatively impact global economic growth prospects, and could result
in a substantial economic downturn or recession.
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.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.