Richard Bernstein Advisors Quality Income Portfolio, Series 29
The Dividend Attraction
investors have treasured dividend-paying stocks for ages and recent performance has justified the
love. S&P Dow Jones indices announced that the indicated dividend net increases (increases less
decreases) for u.S. domestic common stocks increased $4.5 billion during Q4 2017, down from
$15.0 billion for Q3 2017 and $8.9 billion for Q4 2016. for full-year 2017, net dividend increases
rose 56.9% to $37.1 billion, compared to a $23.6 billion increase for full-year 2016. total dividend
increases were $49.6 billion, up from $43.9 billion; dividend decreases were $12.5 billion, down
from $20.2 billion for full-year 2016. Perhaps the hardest thing for an individual investor to do is
to weed out quality dividend-paying businesses from all the rest.
The Quality Income Approach
The Richard Bernstein Advisors Quality Income Portfolio is a unit investment trust (UIT) focused on
total return through a combination of dividend income and capital appreciation. A UIT is an
investment vehicle which consists of a professionally selected unmanaged portfolio of securities
which are held for a predetermined period of time. The value of the units of the trust will fluctuate
each day with the value of the underlying securities; therefore it is possible to lose money by
investing in the trust.
The stocks are selected for the trust by Richard Bernstein Advisors LLC (RBA) using their
comprehensive Quality Income strategy and held for approximately 15 months. This strategy
attempts to control the risks associated with investing in higher-yielding stocks, yet maintain
attractive current income. RBA believes risk actually increases as dividend yield increases, and that
simply investing in high-yield equities often leads to selecting stocks whose dividends are
subsequently cut or discontinued. RBA's strategy incorporates several layers of risk control in order
to attempt to minimize the probability of dividend cuts and the related underperformance.
RBA Portfolio Selection Process
The stock market is often far ahead of investors in predicting dividend cuts or omissions. Many stocks that offer extremely high dividend yields get there not by increasing their dividends, but by
virtue of their stock price dropping significantly, thus dramatically increasing their yield. In addition, there is typically a sound business reason for a stock to tumble and it usually involves business
problems for the company. In such circumstances, it is reasonable to expect a competent board of directors to cut dividends to conserve cash.
Because of this effect, RBA believes stocks with extremely high dividend yields should be viewed cautiously, because high dividend yields may simply reflect depressed stock prices in anticipation of
dividend cuts or omissions. RBA examines the security of dividends on the global high dividend yield universe by screening for debt levels and for consistency of earnings. This process generally
results in an unweighted portfolio of less than 100 stocks from the initial universe of several thousand.
RBA then uses a proprietary optimization method to weight the stocks. This final step attempts to reduce the volatility of the overall portfolio. Thus, the strategy attempts to reduce risk in two ways.
First, RBA screens for estimated dividend consistency. Second, RBA uses a proprietary weighting method which strives to reduce overall portfolio volatility. Of course, there can be no assurance that
these objectives will be achieved. In addition, there is no guarantee that the issuers of the securities included in the portfolio will declare dividends in the future or that, if declared, they will either
remain at current levels or increase over time.
|Richard Bernstein Advisors|
|RBA is a registered investment adviser focusing on longer term investment strategies
that combine top-down, macroeconomic analysis and quantitatively-driven portfolio
construction, utilizing Mr. Bernstein's widely recognized expertise in style investing and
|The firm's Chief Executive and Chief Investment Officer, Mr. Bernstein has over 35 years' experience on Wall Street, including most
recently as the Chief Investment Strategist at Merrill Lynch & Co. RBA acts as sub-advisor for mutual funds and also selects portfolios
for income-oriented Unit Investment Trusts sponsored by First Trust Portfolios L.P. Additionally, RBA runs exchange-traded fund
asset allocation portfolios and separately managed accounts and is the index provider for two exchange-traded funds. RBA has
approximately $6.5 billion in assets under management/under advisement as of December 31, 2017.
| 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, 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.
You should be aware that the portfolio is concentrated in stocks in the financials sector which
involves additional risks, including limited diversification. The companies engaged in the
financials sector are subject to the adverse effects of volatile interest rates, economic recession,
decreases in the availability of capital, increased competition from new entrants in the field, and
potential increased regulation.
Certain of the securities in the portfolio are issued by Real Estate
Investment Trusts (REITs). Companies involved in the real estate
industry are subject to changes in the real estate market,
vacancy rates and competition, volatile interest rates and
An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of
small-cap companies and certain mid-cap companies are often more volatile than those of larger companies due to several
factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available
One of the common stocks held by the trust is issued by a foreign entity. An investment in a
portfolio containing equity securities of foreign issuers is subject to additional risks, including
currency fluctuations, political risks, withholding, the lack of adequate financial information, and
exchange control restrictions impacting foreign issuers.
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.
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.
There may be tax consequences unless units are purchased in an IRA or other qualified plan.