Municipal Income Select Closed-End Portfolio, Series 102
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
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
cer tain funds may be subject to federal income
taxes. In addition, a por tion of the income may
be subject to the alternative minimum tax.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
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 is to provide investors with the potential for monthly
tax-free income, there is no assurance the objective will be met.
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
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.
Certain of the closed-end funds 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. High-yield security prices tend to fluctuate
more than higher rated securities 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.
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.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.
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 security market or
investors’ perception thereof, possible downgrades and defaults
of interest and/or principal.
This UIT is a buy and hold strategy and investors should consider
their ability to hold the trust until maturity.
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 cyber security.