Balanced Income Select Portfolio, Series 115
Although stocks have historically provided higher returns over the long-term than bonds or other fixed-income
securities, there are investors who don’t feel comfortable investing only in the stock market with
all of its potential volatility. The Balanced Income Select Portfolio offers investors a potentially lower-risk
alternative to investing solely in stocks. To accomplish this, the portfolio invests approximately 50% in
common stocks of companies which have above-average dividend yields and approximately 50% in
closed-end funds which invest primarily in U.S. and foreign taxable bonds. Because stocks and bonds
may react differently to changes in the economy and interest rates, diversifying assets in this manner has
the potential to reduce the overall volatility of the portfolio.
The Importance of Dividends
Corporations are not obligated to share their earnings with stockholders, so dividends may be
viewed as a sign of a company’s profitability as well as management’s assessment of the future.
Dividends have also had a significant impact on stock performance. Consider the historical
effect dividends have had on companies in the S&P 500 Index. According to Ibbotson Associates,
dividends have provided approximately 39% of the 10.46% average annual total return on the
S&P 500 Index, from 1926 through 2021. The S&P 500 Index is an unmanaged index of 500 stocks
used to measure large-cap U.S. stock market performance. The index cannot be purchased directly
by investors.
Why Closed-End Funds?
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.
Because they are not subjected to cash inflows and outflows, which can dilute income distributions over
time, closed-end funds can generally provide a more stable income stream than other managed fixed-income
investment products. However, as a result of bond calls, redemptions and advanced refundings,
which can dilute a fund’s income, stable income cannot be assured.
Portfolio Objectives
This unit investment trust seeks a high rate of monthly income and capital
appreciation; however, there is no assurance the objectives will be met.
Not FDIC Insured Not Bank Guaranteed May Lose Value |
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 an investment in a portfolio of common stocks and
closed-end funds.
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 employ the use of leverage which increases the volatility of such funds.
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.
All 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.
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.
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.
Risks associated with investing in non-U.S. securities may be more pronounced in emerging markets where the securities markets are substantially smaller, less developed, less liquid, less regulated, and more volatile than
the U.S. and developed non-U.S. markets.
Approximately one year after the United Kingdom officially departed the European Union (commonly referred to as “Brexit”), the United Kingdom and the European Union reached a trade agreement that became effective on
December 31, 2020. It is not currently possible to determine the extent of the impact the Brexit trade agreement may have on the portfolio’s investments and this certainly could negatively impact current and future economic
conditions in the United Kingdom and other countries, which could negatively impact the value of the portfolio’s investments.
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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.
The COVID-19 global pandemic has caused and may continue to cause significant volatility and declines in
global financial markets. While the U.S. has resumed “reasonably” normal business activity, many countries
continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective
against emerging variants of the disease.
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.
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.