Tax-Advantaged Municipal Closed-End Portfolio, Series 54
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 44 days in 2018
just to earn enough money to pay for these taxes.1
Another tax that is increasingly impacting
more taxpayers is the alternative minimum
tax (AMT). AMT was originally aimed at
ensuring that wealthy individuals, trusts,
estates and corporations pay at least some
income tax. However, unlike regular income
tax, AMT is not indexed for inflation. Because
of this, millions of middle income taxpayers
now find themselves subject to this
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 seek monthly tax-free income, there is no assurance
the objective will be met.
This unit investment trust seeks monthly
income that is exempt from federal income
taxes and to reduce exposure to AMT by
investing in a diversified pool of closed-end
funds that invest in tax-exempt municipal
bonds. It is important to note that certain
distributions paid by certain funds may be
subject to federal income taxes and AMT.
| Not FDIC Insured Not Bank Guaranteed May Lose Value
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. Certain
closed-end funds may 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.
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.
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.
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.
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.
For a discussion of additional risks of investing in the trust see the "Risk Factors" section of the prospectus.
This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity.