Balanced Income Portfolio, Series 63
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 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
Due to the fact that corporations are not obligated to share their earnings with stockholders, dividends
may be viewed as a sign of a company’s profitability as well as management's assessment of the future, in
our opinion. 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 10.16% average annual total return on the S&P 500 Index, from
1926 through 2017. 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.
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.
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.
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 cyber security.
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.
For a discussion of additional risks of investing in the trust see the "Risk Factors" section of the prospectus.
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.
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.