Interest Rate Hedge Portfolio, Series 138
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 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 an investment in a portfolio of common stocks and closed-end
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.
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
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 COVID-19 global pandemic has caused significant volatility and declines in global financial markets,
causing losses for investors. The development of vaccines has slowed the spread of the virus and allowed
for the resumption of “reasonably” normal business activity in the United States, although many countries
continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective
against emerging variants of the disease.
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.
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.