Municipal Income and Dividend Growers Portfolio, Series 12
Investors who are looking for income while still retaining growth potential have limited alternatives. The
Municipal Income and Dividend Growers Portfolio seeks to address this challenge by providing exposure
to tax-exempt municipal bonds as well as companies with a history of dividend growth and the potential
to increase their dividends over time. To gain this exposure, the portfolio will invest in a combination of
common stocks, closed-end funds and exchange-traded funds (ETFs). Because stocks and bonds may
react differently to changes in the economy and interest rates, diversifying assets in this manner has the
potential to reduce the overall volatility of the portfolio.
The Importance of Dividends
Corporations are not obligated to share their earnings
with stockholders so, in our opinion, dividends may be viewed as a sign of a company's profitability as
well as management's assessment of the future. In fact, dividends have historically been one of the few
constants in the world of investing, contributing nearly half of the stock market's total returns
historically. According to Ibbotson Associates, dividends have provided approximately 42% of the 10.04%
average annual total return on the S&P 500 Index, from 1926 through 2016. The S&P 500 Index is an
unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The index
cannot be purchased directly by investors. Past performance is no guarantee of future results.
Municipal Bond Basics
A municipal bond is a debt obligation of a state and/or local government entity which is used to help build America's infrastructure by raising money to finance public projects such as new hospitals, schools and improved roads. In return, investors in tax-exempt municipal bonds receive earnings which are free from federal income taxes and, in some cases, state and local income taxes. Because of their low correlation to many other fixed-income and equity assets, municipal bonds can also provide diversification benefits within an investor's portfolio. It is important to note that certain distributions paid by certain funds held in the portfolio may be subject to federal income taxes and may be subject to the alternative minimum tax.
This unit investment trust seeks current monthly income and capital appreciation; 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 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 owning common stocks and closed-end funds and exchange-traded funds that invest in municipal bonds.
Common stocks are subject to 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.
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.
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 ETFs, closed-end funds 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 and closed-end funds frequently trade at a
discount from their net asset value in the secondary market. Certain
closed-end funds in which the portfolio invests may employ the use
of leverage, which increases the volatility of such funds.
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 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.
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 foreign issuers.
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.
Certain of the closed-end funds and 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 security market
or investors' perception thereof, possible downgrades and
defaults of interest and/or principal.
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.
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.
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.