Income Dividend Equity Allocation (IDEA) Portfolio, Series 15
The Income Dividend Equity Allocation (IDEA) Portfolio is a unit investment trust which focuses on companies that have paid or increased their dividends over the last ten years and have market capitalizations that are greater than $1 billion.
The starting universe of securities which are eligible for inclusion in the portfolio are selected based on a proprietary rules-based model. The final portfolio of stocks are selected from this universe by a valueoriented portfolio management team from Confluence Investment Management LLC.
The companies selected for the portfolio have a tendency to be:
- Established companies that can generate
free cash flow;
- Companies that have management teams
committed to growing their dividends.
An investment approach which seeks growth
in dividends is especially important since
inflation can erode investment returns and
lower purchasing power. In addition, because
the portfolio has the potential to provide a
dividend growth rate which is higher than
inflation, real income to investors has the
potential to grow over time.
Dividend Contributions in Both Bull and Bear Markets
Over the last three bull and bear market
cycles, dividend yield contributed an
average of 15.17% of the total return of the
S&P 500 during up markets while
accounting for 41.10% of the total return
during bear markets.
In addition, dividends have historically been
both positive and relatively stable through
time. Wide swings in stock prices can be
partly attributed to speculation and market
sentiments; whereas dividend income has
historically been less subject to speculation. Over the past 28 years ending December 29, 2017, the
annualized standard deviation of price returns of the S&P 500 is 14.20% vs. 0.27% for the standard
deviation of dividend return over the same investment period.1
Standard Deviation is a measure of price variability (risk). A higher degree of variability indicates more volatility and therefore greater risk.
The securities included in the trust are selected by Confluence Investment Management LLC
using a comprehensive evaluation process. This process draws upon their extensive experience of
investing, on behalf of their clients, in a wide range of investments during various market cycles in
their attempt to provide attractive risk-adjusted returns to their clients.
This unit investment trust seeks above-average total return through a combination of capital
appreciation and dividend income; however, there is no assurance the objective will be met. The
portfolio terminates approximately two years from the initial date of deposit.
|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. 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 consumer products sector
which involves additional risks, including limited diversification. The companies engaged in the
consumer products industry are subject to global competition, changing government regulations
and trade policies, currency fluctuations, and the financial and political risks inherent in producing
products for foreign markets.
An investment in foreign securities should be made with an understanding of the additional risks involved with foreign issuers, such as 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.
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 information.
This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity. 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.