HOMEBUILDERS RECOVERY SELECT PORTFOLIO
SERIES 16
The housing bubble popped in 2008 as banks issued mortgages to many borrowers with questionable credit, which in many cases has led to defaults and foreclosures. Lenders today take a much
closer look at borrowers’ income history and their overall debt situation before approving a mortgage loan.
Since December 2008, the Federal Reserve has kept interest rates very low in an effort to make capital more readily available. The federal funds rate is the central bank’s key to stimulate the
economy and a low rate is believed to encourage spending by making it cheaper to borrow money. We believe that the current low interest rate environment may provide a stimulus for consumers
looking to purchase a home.
HOUSING STARTS
NEW HOME INVENTORIES
(THOUSANDS, ANNUAL RATE)
(THOUSANDS)
2400
PORTFOLIO SUMMARY
Initial Date of Deposit:
600
7/10/2017
Initial Public Offering Price:
$10.00 per Unit
Portfolio Ending Date:
2000
500
1600
400
7/10/2019
CUSIPs:
30302T 744(c) 751(r)
Fee Accounts CUSIPs:
30302T 769(c) 777(r)
Ticker Symbol:
FGBMUX
Average = 1.1 Million
300
PORTFOLIO OBJEC TIVE
800
200
The objective of this unit investment trust is to seek above-average capital
appreciation by investing in the common stocks of companies involved in the home
building industry; however, there is no assurance the objective will be met.
400
100
1200
'04
'07
'10
'13
5/17
'04
'07
'10
'13
5/17
Source: Census Bureau
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 the number listed below to request a
prospectus, which contains this and other information about the portfolio.
Read it carefully before you invest.
CONSIDER THESE FAC TORS
• Home prices nationwide, including distressed sales, increased 6.9% in April 2017 compared to April 2016.
In addition, as of 12/30/16, the national foreclosure inventory declined to 0.09% compared to 3.3% at
the peak of the residential foreclosure crisis in September 2010.1
• Builder confidence in the market for newly built, single-family homes stood at a level of 67 in June
2017.* Confidence levels have been above 50 for 36 consecutive months, which is consistent with a
modest and ongoing recovery, according to the National Association of Home Builders (NAHB)/Wells
Fargo Housing Market Index (HMI).
*The index gauges expectations for future sales. Any number over 50 indicates that more builders view conditions as
good than poor.
1
CoreLogic
RISK CONSIDERATIONS
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 both the
consumer products and industrials sectors
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. The
companies engaged in the construction
industry are subject to competition,
overcapacity, labor relations, a reduction
in consumer spending, changing
consumer spending habits, unseasonable
weather conditions, and severe
fluctuations in the price of basic building
materials. The companies engaged in the
industrials sector are subject to certain
risks, including a deterioration in the
general state of the economy, intense
competition, domestic and international
politics, excess capacity and changing
spending trends.
One of the securities in the portfolio 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.
PLEASE SEE THE REVERSE SIDE FOR ADDITIONAL RISK CONSIDERATIONS
First Trust Portfolios L.P. | Member SIPC | Member FINRA
1-800-621-1675 | www.ftportfolios.com
SERIES 16
HOMEBUILDERS RECOVERY SELECT PORTFOLIO
HOLDINGS
TICKER COMPANY NAME
BUILDING PRODUCTS (24%)
AOS
A.O. Smith Corporation
ALLE
Allegion Public Limited Company
AMWD
American Woodmark Corporation
BLDR
Builders FirstSource, Inc.
LII
Lennox International Inc.
OC
Owens Corning
CONSTRUCTION MATERIALS (4%)
EXP
Eagle Materials Inc.
HOME FURNISHINGS (4%)
MHK
Mohawk Industries, Inc.
HOME IMPROVEMENT RETAIL (8%)
HD
The Home Depot, Inc.
LOW
Lowe’s Companies, Inc.
HOMEBUILDING (48%)
CAA
CalAtlantic Group, Inc.
CCS
Century Communities, Inc.
DHI
D.R. Horton, Inc.
IBP
Installed Building Products, Inc.
LEN
Lennar Corporation
LGIH
LGI Homes, Inc.
MTH
Meritage Homes Corporation
NVR
NVR, Inc.
PHM
PulteGroup, Inc.
TMHC
Taylor Morrison Home Corporation
TOL
Toll Brothers, Inc.
TPH
TRI Pointe Group, Inc.
HOUSEHOLD APPLIANCES (4%)
WHR
Whirlpool Corporation
INDUSTRIAL MACHINERY (4%)
SWK
Stanley Black & Decker, Inc.
SPECIALTY CHEMICALS (4%)
SHW
The Sherwin-Williams Company
SALES CHARGES (BASED ON A $10 PUBLIC OFFERING PRICE)
PRICE*
$57.25
81.22
97.75
15.59
186.22
65.88
92.31
245.75
152.23
77.15
35.89
25.45
35.79
53.05
53.48
41.91
42.70
2,497.79
24.94
24.40
40.41
13.47
192.11
144.91
Initial 0.00%
Deferred 2.25%
0.50%
2.75%
Creation & Development Fee:
Maximum Sales Charge:
The deferred sales charge will be deducted in three monthly installments commencing 10/20/17.
When the public offering price is less than or equal to $10.00 per unit, there will be no initial sales charge. If
the price exceeds $10.00 per unit, you will pay an initial sales charge.
FEE/WRAP ACCOUNTS
Maximum Sales Charge:
0.50%
The maximum sales charge for investors in fee accounts consists of the creation and development fee.
Investors in fee accounts are not assessed any transactional sales charges. Standard accounts sales charges
apply to units purchased as an ineligible asset.
The creation and development fee is a charge of $.050 per unit collected at the end of the initial offering
period. If the price you pay exceeds $10 per unit, the creation and development fee will be less than 0.50%;
if the price you pay is less than $10 per unit, the creation and development fee will exceed 0.50%.
In addition to the sales charges listed, UITs are subject to annual operating expenses and organization costs.
HOLDINGS ST YLE ANALYSIS
l Large-Cap Growth
l Large-Cap Value
l Mid-Cap Growth
l Mid-Cap Value
l Small-Cap Growth
l Small-Cap Value
12%
8%
20%
28%
16%
16%
HOLDINGS SEC TOR ANALYSIS
l Consumer Discretionary
l Industrials
l Materials
64%
28%
8%
352.03
*As of the close of business on 7/7/17. Market values are for reference only and are not indicative of your
individual cost basis.
ADDITIONAL RISK CONSIDERATIONS
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.
NOT FDIC INSURED | NOT BANK GUARANTEED | MAY LOSE VALUE
STANDARD ACCOUNTS
Transactional Sales Charges:
The style and sector characteristics of the portfolio are determined as of the initial date of deposit and may
differ slightly from those indicated above due to the requirement that only whole shares be purchased for
the portfolio and will likely vary thereafter due to market fluctuations in the underlying securities. For a
complete description of these characteristics refer to the prospectus.
The information presented is not intended to constitute an investment recommendation for, or
advice to, any specific person. By providing this information, First Trust is not undertaking to give
advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First
Trust has no knowledge of and has not been provided any information regarding any investor.
Financial advisors must determine whether particular investments are appropriate for their clients.
First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks
independently and is responsible for exercising independent judgment with respect to its retirement
plan clients.
HM2YFS160717