ETF Growth and Income Portfolio, December 2024
The ETF Growth and Income Portfolio invests in exchange-traded funds (ETFs) that are diversified among several different equity and income asset classes. The portfolio seeks to provide investors with broad diversification by investing in ETFs which invest in common stocks of various market capitalizations, growth and value styles, sectors and countries as well as taxable bonds. Now, instead of using multiple investments to achieve both income and growth potential, investors may be able to fulfill their investment plans with a single diversified portfolio.
What is Asset Allocation?
Asset allocation is the process of developing a diversified investment portfolio by combining different assets in varying proportions. A portfolio's long-term performance is determined primarily by the distribution of dollars among asset classes. The asset allocation decision is one of the most important decisions you will make as an investor. Studies have found that an asset allocation policy is the number one factor in determining both the return and the risk of an investment portfolio.*
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.
Portfolio Objectives
This unit investment trust seeks income and
above-average capital appreciation by
investing in a diversified portfolio of ETFs;
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 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 involved with owning ETFs which invest in common stocks and taxable bonds.
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.
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.
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.
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.
U.S. Treasury obligations are subject to numerous risks
including higher interest rates, economic recession and deterioration of the bond market or investors’
perceptions thereof.
Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. 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.
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.
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.
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.
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.