Interest Rate Hedge Portfolio, Series 130
Like stock returns, economic growth, and inflation, interest rates are one of those variables that you can’t
control. As an investor, however, you can control how your investment dollars are allocated.
The Interest Rate Hedge Portfolio invests in common stocks of companies with a history of dividend
growth, as well as closed-end funds (CEFs) which invest in convertible securities, Treasury Inflation
Protected Securities (TIPS), master limited partnerships (MLPs), limited duration bonds and real estate
investment trusts (REITs).
This unit investment trust seeks above-average total return; however, there is no
assurance the objective will be met.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
You should carefully consider the portfolio investment objective, risks,
and charges and expenses 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 an investment in a portfolio of common stocks and closedend
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 the fund’s net asset value, closed-end funds
frequently trade at a discount to their net asset value in the secondary market. Certain of the closed-end
funds in the portfolio employ the use of leverage, which increases the volatility of such funds.
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 closed-end funds invest in convertible securities. Convertible securities are bonds, preferred
stocks and other securities that pay a fixed rate of interest (or dividends) and will repay principal at a fixed
date in the future. However, these securities may be converted into a specific number of common stocks at a
specified time. As such, an investment in convertible securities entails some of the risks associated with both
common stocks and bonds.
Certain of the closed-end funds invest in investment grade securities. Investment grade securities are subject
to numerous risks including higher interest rates, economic recession, deterioration of the investment
grade security market or investors’ perception thereof, possible downgrades and defaults of interest and/
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 rise during the life of the trust.
Certain of the closed-end funds invest in MLPs. MLPs are subject to the risks generally applicable to
companies in the energy and natural resources sectors, including commodity pricing risk, supply and
demand risk, depletion risk and exploration risk. U.S. taxing authorities could challenge the trust’s treatment
of the MLPs for federal income tax purposes. These tax risks could have a negative impact on the after-tax
income available for distribution by the MLPs and/or the value of the trust’s investments.
Certain of the closed-end funds invest in 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.
Certain of the closed-end funds invest in
TIPS. TIPS are subject to numerous risks
including changes in interest rates,
economic recession and deterioration of
the bond market or investors’ perception
Certain of the closed-end funds invest in U.S.
Treasury obligations which are subject to numerous risks including higher interest rates,
economic recession and deterioration of the bond market or investors’ perceptions thereof.
One of the common stocks held by the trust is issued by a foreign entity. An investment in a portfolio
containing securities of foreign issuers is subject to additional risks, including currency fluctuations, political
risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting
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.
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.
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.
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.
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.
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.