MLP Closed-End Fund Portfolio, Series 31
Energy infrastructure provides the backbone of our economy and way of life. Energy infrastructure
includes an elaborate network of systems that transport, store, gather, process and deliver crude oil,
refined petroleum products, natural gas or electric power, including renewable energy. The performance
of companies in the energy infrastructure industry is not highly correlated with the price of oil and other
types of energy, but rather with the demand for energy. The demand for energy generally increases
steadily over time and is much less volatile than commodity energy prices, which often results in steady,
predictable cash flows for companies in these industries.1
The MLP Closed-End Portfolio is a professionally selected unit investment trust which invests in closed-end
funds that invest in master limited partnerships (MLPs) from the energy infrastructure industry.
MLPs are limited partnerships that are publicly traded on a U.S. securities exchange, which combine the
tradeability of common stocks with the corporate structure of a limited partnership. MLPs are
traditionally high cash flow businesses that pay out a majority of that cash to investors. Investing in
MLPs through closed-end funds provides an efficient alternative to investing directly in MLPs. Unlike
individual partnership investments, a closed-end fund provides one Form 1099 per shareholder at the
end of the year, rather than multiple K-1s and potential state filings.
Many oil and gas shale formations are located outside traditional production basins which
require infrastructure to transport the oil and gas to market. This has led to billions of dollars of
investment and a boom in financing infrastructure through MLPs.2
1 Standard & Poor’s
2 Oil & Gas Financial Journal
This unit investment trust seeks high current monthly income, with capital
appreciation as a secondary objective; however, there is no assurance that the
objectives will be achieved.
|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 closed-end funds. Closedend
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.
You should be aware that an investment in closed-end funds that
invest in stocks in the energy sector involves additional risks, including
limited diversification. The companies engaged in the energy sector,
which includes MLPs, are subject to certain risks, including price
and supply fluctuations caused by international politics, energy
conservation, taxes, price controls, and other regulatory policies of
All of the closed-end funds invest in common stocks. 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.
All of the closed-end funds invest in MLPs. Investments in 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.
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
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.
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 recent outbreak of a respiratory disease designated as COVID-19 was first detected in China in December 2019. The global economic impact of the COVID-19 outbreak is impossible to predict but is expected to disrupt
manufacturing, supply chains and sales in affected areas and negatively impact global economic growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global financial markets, which
have caused losses for investors. The impact of the COVID-19 outbreak may be short term or may last for an extended period of time, and in either case could result in a substantial economic downturn or recession.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.