Municipal Income Select Closed-End Portfolio, Series 122
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.
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
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.
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 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 security market or investors’ perception thereof, possible downgrades and defaults of interest and/
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.
This UIT is a buy and hold strategy and investors should consider
their ability to hold the trust until maturity.
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 COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic
growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.
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.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.