Balanced Income Select Portfolio, Series 96
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 41% of the 10.20% average annual total return on the
S&P 500 Index, from 1926 through 2019. 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
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 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.
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 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.
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
On January 31, 2020, the United Kingdom officially departed the
European Union (commonly referred to as “Brexit”). Brexit has led to
volatility in global financial markets, in particular those of the United
Kingdom and across Europe, and may also lead to weakening in
political, regulatory, consumer, corporate and financial confidence in
the United Kingdom and Europe.
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 recent outbreak of a respiratory disease designated as COVID-19 was first detected in China in December
2019. The global economic impact of the COVID-19 outbreak is impossible to predict but is expected to
disrupt manufacturing, supply chains and sales in affected areas and negatively impact global economic
growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global
financial markets, which have caused losses for investors. The impact of the COVID-19 outbreak may be short
term or may last for an extended period of time, and in either case could result in a substantial economic
downturn or recession.
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.