Balanced Income Select Portfolio, Series 89
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 42% of the 9.99% average annual total return on the S&P 500 Index, from 1926 through
2018. 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.
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 advisor
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.
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.
Certain 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.
An investment in a portfolio which includes securities issued by
foreign companies should be made with an understanding of
the additional risks involved with foreign issuers, such as
currency fluctuations, political risk, withholding, the lack of
adequate financial information, and exchange control
restrictions impacting foreign issuers. Risks associated with
investing in foreign securities may be more pronounced in
emerging markets where the securities markets are
substantially smaller, less liquid, less regulated and more
volatile than the U.S. and developed foreign markets.
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.
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.
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
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.