California Municipal Income Select Closed-End Portfolio, Series 59
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. On average, Americans had to work a full 46 days in 2016 just to earn enough
money to pay for them.1
Tax Freedom Day, the day on which Americans have earned enough money to pay all federal, state and
local taxes for the year, was one day earlier in 2016 than in 2015. Americans paid more in taxes in 2016
than they spent on food, clothing and shelter combined.2 These examples are based
on an overall average tax rate for the nation which is calculated by dividing the nation's total tax
payments by the nation's income as projected by the Tax Foundation for 2016.
1,2 The Tax Foundation
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 seeks 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, California
state and/or local income taxes by investing in
a pool of closed-end funds that invest primarily
in California municipal bonds. However, certain
distributions paid by certain funds may be
subject to federal and California state income
taxes. In addition, a portion of the income may
be subject to the alternative minimum tax.
|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 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.
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 bond market or investors'
perception thereof, possible downgrades and defaults of interest
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. The portfolio is also subject to additional risks as a result of its concentration in bonds issued by California municipalities, including a deterioration of the economic factors affecting the state.
This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity.
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.
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.
For a discussion of additional risks of investing in the trust see the "Risk Factors" section of the prospectus.