Dividend Growers and Tax-Advantaged Income Portfolio, Series 23
Investors who are looking for income while still retaining growth potential have limited alternatives. The
Dividend Growers and Tax Advantaged Income 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 invests 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
41% of the 10.20% average annual total return on the S&P 500 Index, from 1926 through 2019.
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 of the trust’s investments in municipal securities may be subject to the alternative
minimum tax. In addition, distributions from the trust’s non-municipal investments and municipal
investments which are not tax-exempt will be subject to federal income taxes.
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.
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 of the funds in which the portfolio invests
employ the use of leverage, which increases the volatility of
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.
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.
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.
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
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 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.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.