FT Alternative Income ETF Portfolio, Series 1

The ETF Growth and Income Portfolio invests in exchange-traded funds (ETFs) that are diversified among several different equity and income asset classes. The portfolio seeks to provide investors with broad diversification by investing in ETFs which invest in common stocks of various market capitalizations, growth and value styles, sectors and countries as well as taxable bonds. Now, instead of using multiple investments to achieve both income and growth potential, investors may be able to fulfill their investment plans with a single diversified portfolio.

Investment Characteristics

• Commodities/Natural Resources – A unique asset class that responds differently than traditional asset classes to changing economic conditions. It offers the potential for attractive returns, reduced risk through diversification, and a hedge against rising inflation.


• Dividend-Paying Companies – Common stocks of companies that pay dividends to shareholders out of the companies’ profits or expected profits.


• Fixed Income – Debt securities that provide investors with the potential for regular, predetermined interest payments and the return of principal at maturity, making them "fixed" in their income stream. Think of them as loans you make to governments or corporations, who promise to pay you back with interest. Common examples include corporate bonds, government bonds, and U.S. Treasury securities.


• MLPs – MLPs are limited partnerships that are publicly traded on a U.S. securities exchange, which combine the tradability of common stocks with the corporate structure of a limited partnership. MLPs are traditionally high cash flow businesses that pay out a majority of that cash to investors.


• REITs – Real estate has historically been a good hedge against higher inflation. REITs have performed well in times when the economy improves and inflation and interest rates trend higher. Real estate rents tend to increase when prices rise, in part to many leases being tied to inflation. This supports REIT dividend growth and has the potential to provide a reliable stream of income even during inflationary periods.¹

Portfolio Objectives

This UIT seeks current monthly income, with capital appreciation as a secondary objective. There is, however, no assurance that the objectives of the portfolio will be achieved.

ETF Selection Characteristics

The ETFs selected for the portfolio are based on a number of factors including, but not limited to:

• A minimum market capitalization of $50,000,000.


• Prioritizing those ETFs with the highest dividend yield at time of portfolio selection.


• At least six months of trading history.


• Select ETFs with lower expense ratios while attempting to limit overlap of securities held by the ETFs.

What Is An Options Overwrite Strategy?

This strategy consists of ETFs writing (selling) call options that correspond to a common stock or equity index holding. A call option is a contractual obligation which gives the buyer of the option the right to purchase a certain number of shares of common stock from the writer (seller) of the option at a predetermined price (referred to as the “strike price” or the “exercise price”). If the strike price is reached, the buyer has the right to exercise the option at the option’s expiration date or at any time up until the option’s expiration.

You should be aware that a product which includes writing call options may not be suitable for all investors. It may not be appropriate for investors seeking above-average capital appreciation. Before investing, you should make sure you understand the risks of this type of product and whether it suits your current financial objectives.

¹ NAREIT

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.

Risk Considerations

An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning ETFs which invest in income and equity securities.

ETFs 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 ETFs 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, ETFs frequently trade at a discount from their net asset value in the secondary market.

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.

Commodity prices are subject to several factors including, price and supply fluctuations, excess capacity, economic recession, domestic and international politics, government regulations, volatile interest rates, consumer spending trends and overall capital spending levels.

Companies involved in the real estate industry are subject to changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession.

Investments in MLPs are subject to the risks generally applicable to companies in the energy and natural resources sectors, including commodity pricing risk, supply and demand risk, depletion risk and exploration risk. U.S. taxing authorities could challenge the trust’s treatment of the MLPs for federal income tax purposes. These tax risks could have a negative impact on the after-tax income available for distribution by the MLPs and/or the value of the trust’s investments.

Funds held by the trust may invest in derivatives such as swap agreements to gain inverse exposure to its target index. As such, the funds will be subject to credit risk with respect to the amount it expects to receive from counterparties to derivatives and repurchase agreements entered into by the funds. If a counterparty becomes bankrupt or otherwise fails to perform its obligations due to financial difficulties, the value of the trust’s investment in the funds may decline.

Companies in the precious metals industry are subject to risks associated with the exploration, development, and production of precious metals including competition for land, difficulties in obtaining required governmental approval to mine land, inability to raise adequate capital, increases in production costs and political unrest in nations where sources of precious metals are located. In addition, the price of gold and other precious metals is subject to wide fluctuations and may be influenced by limited markets, fabricator demand, expected inflation, return on assets, central bank demand and availability of substitutes.

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.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.

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.

Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.

A public health crisis, and the ensuing policies enacted by governments and central banks in response, could cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

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.

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.

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.

For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.