Municipal Income Opportunities Closed-End Portfolio, Series 85
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. By investing in federal tax-exempt municipal bonds, investors
have the potential for significant tax savings. For investors in higher tax brackets, municipals can
offer greater after-tax yields than taxable debt securities of similar maturities and credit quality,
including Treasuries and corporate bonds.
Projected U.S. Government Revenues Fiscal Year 2023
As you can see in the chart below, in 2023, individual income taxes are estimated to total up to
$2.31 trillion versus corporate income taxes at $412 billion.SS
Since closed-end funds maintain a relatively fixed pool of investment capital, portfolio managers are better able to adhere to their investment philosophies through greater flexibility and control. In addition, closed-end funds don't have to manage fund liquidity to meet potentially large redemptions.
Closed-end funds are structured to generally provide a more stable income stream than other managed fixed-income investment products because they are not subjected to cash inflows and outflows, which can dilute dividends over time. However, as a result of bond calls, redemptions and advanced refundings, which can dilute a fund's income, the portfolio cannot guarantee consistent income. Although the portfolio's objective seeks monthly tax-free income, there is no assurance the objective will be met.
This unit investment trust seeks monthly
income that is exempt from federal income
taxes by investing in a well-diversified pool of
closed-end funds that invest in municipal
bonds. However, certain distributions paid by
certain funds may be subject to federal income
taxes. In addition, a portion of the income 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 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 associated with an investment in a portfolio of closed-end
funds which invest in municipal bonds.
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 a current determination of the
fund’s net asset value, closed-end funds frequently trade at a
discount to their net asset value in the secondary market. All of
the closed-end funds employ the use of leverage, which
increases the volatility of such funds.
All 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 bond market or investors’
perception thereof, possible downgrades and defaults of interest
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.
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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.
The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have
caused and may continue to cause significant volatility and uncertainty in global financial markets. While
the U.S. has resumed “reasonably” normal business activity, many countries continue to impose lockdown
measures. Additionally, there is no guarantee that vaccines will be effective against emerging variants of
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.
Although this portfolio terminates in approximately 15 months,
the strategy is long-term. Investors should consider their ability
to pursue investing in successive portfolios, if available.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.