Strategic Income Advantage Opportunity, Closed-End Portfolio, Series 20
The Multi-Sector Approach
The Strategic Income Advantage Opportunity Closed-End Portfolio seeks to provide a high rate of current
monthly income and to reduce some of the volatility typically associated with high-income investments.
To accomplish this, the portfolio is diversified across a broad range of closed-end funds that invest in U.S.
and foreign common stocks and taxable bonds. Because different sectors follow different cycles and
react differently to changes in global economies and interest rates, spreading assets across this spectrum
of closed-end funds has the potential to reduce the overall risk of the portfolio. In addition, based on
current publicly available information, none of the closed-end funds selected for the portfolio are
reporting the use of structural leverage.
Unlike open-end mutual funds, closed-end funds maintain a relatively
fixed pool of investment capital. This allows portfolio managers to better 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.
The portfolio offers investors diversification by investing in a broad range of
closed-end funds that are further diversified across hundreds of individual securities. Diversification does
not guarantee a profit or protect against loss.
Closed-end funds are structured to generally provide a more
stable income stream than other managed investment products because they are not subjected to cash
inflows and outflows, which can dilute dividends over time. However, stable income cannot be assured.
This unit investment trust seeks a high rate of current monthly income, with capital appreciation as a
secondary objective. There is, however, no assurance that the objectives of the portfolio 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 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.
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.
Based on current publicly available information, none of the closed-end funds selected for the portfolio
are reporting the use of structural leverage. Structural leverage creates a systematic level of additional
investment exposure through a closed-end fund’s issuance of preferred shares or debt securities, or through
borrowing money. Closed-end funds which employ structural leverage are more volatile than those that do
not. However, certain or all of these closed-end funds may have utilized structural leverage in the past and
may elect to utilize structural leverage in the future.
Certain of the closed-end funds invest in common stocks. Common stocks are subject to certain 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.
Certain of the closed-end funds invest in convertible securities. Convertible securities are bonds, preferred
stocks and other securities that pay a fixed rate of interest (or dividends) and will repay principal at a fixed
date in the future. However, these securities may be converted into a specific number of common stocks at a
specified time. As such, an investment in convertible securities entails some of the risks associated with both
common stocks and bonds.
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.
Certain 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 and/or principal.
Certain of the closed-end funds invest in options. Options are subject to various risks including that their
value may be adversely affected if the market for the option becomes less liquid or smaller. In addition,
options will be affected by changes in the value and dividend rates of the stock subject to the option, an
increase in interest rates, a change in the actual and perceived volatility of the stock market and the common
stock and the remaining time to expiration.
All of the closed-end funds invest in securities issued by
foreign issuers. Such securities are subject to certain risks, including currency and interest rate fluctuations,
nationalization or other adverse political or economic developments, lack of liquidity of certain foreign
markets, withholding, the lack of adequate financial information, and exchange control restrictions
impacting foreign issuers. Risks associated with investing in foreign securities may be more pronounced in
emerging markets where the securities markets are substantially smaller, less developed, less liquid, less
regulated, and more volatile than the U.S. and developed foreign markets.
On January 31, 2020, the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”). Brexit has led to volatility in global financial markets, in particular those of the United Kingdom
and across Europe, and may also lead to weakening in political, regulatory, consumer, corporate and financial
confidence in the United Kingdom and Europe.
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.
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.
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.
For a discussion of additional risks of investing in the trust see the “Risk Factors” section of