Municipal Advantage Closed-End and ETF Portfolio, Series 54
Americans deal with a number of different taxes in their everyday lives, perhaps none more noticeable
than individual income taxes. In fact, individual income taxes comprise the largest component of
Americans’ tax bill. Tax Freedom Day is the day on which Americans have earned enough money to pay
all federal, state and local taxes for the year. On average, Americans have to work a full 42 days in 2019
just to earn enough money to pay for these taxes.1
Investing in both closed-end funds and exchange-traded funds provides an
efficient way to achieve diversification across municipal bonds. The broad range of closed-end funds and
exchange-traded funds in which the portfolio invests are further diversified across hundreds of individual
issues. It is important to note that diversification does not guarantee a profit or protect against loss.
The trust seeks monthly income that is exempt from federal income taxes by investing
in a well-diversified pool of closed-end funds and exchange-traded funds that invest
in tax-exempt municipal bonds.
It is important to note that certain distributions paid by certain funds may be subject
to federal income taxes and may be subject to the alternative minimum tax.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
You should consider the portfolio's investment objective, 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 associated with an investment in a
portfolio of closed-end funds and exchange-traded funds (ETFs).
Closed-end funds and 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 the funds or their
underlying investments change. Shares of closed-end funds and
ETFs frequently trade at a discount to their net asset value in the
secondary market and the net asset value may decrease. Based
on current publicly available information, none of the funds
selected for the portfolio are reporting the use of structural
leverage. However, certain or all of these funds may have utilized
structural leverage in the past and may elect to utilize structural
leverage in the future. Structural leverage creates a systematic
level of additional investment exposure through a fund’s issuance
of preferred shares or debt securities, or through borrowing
money. Funds which employ structural leverage are more volatile
than those that do not. Certain of the funds report effective
leverage, which results from a fund’s investment in derivative
instruments that are inherently leveraged.
Certain of the closed-end funds and 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 that
utilize such bonds. 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 bonds and are affected
by short-term credit developments to a greater degree.
Municipal bonds are subject to numerous risks, including higher
interest rates, economic recession, deterioration of the
municipal bond market, possible downgrades and defaults of
interest and/or principal.
All of the funds invest primarily in investment grade securities.
Investment grade securities are subject to numerous risks
including higher interest rates, economic recession,
deterioration of the investment grade bond market or investors’
perception thereof, possible downgrades and defaults of interest
This UIT is a buy and hold strategy and investors should consider
their ability to hold the trust until maturity.
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 cyber security.
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. The markets for credit
instruments, including municipal securities, have experienced
periods of extreme illiquidity and volatility.
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.