Balanced Income Equity
and ETF Portfolio, Series 62
The Balanced Income Equity and ETF Portfolio
is a unit investment trust which offers investors
a potentially lower-risk alternative to investing
solely in stocks. To accomplish this, the portfolio
invests approximately 50% in common stocks
of dividend-paying companies and
approximately 50% in exchange-traded funds
(ETFs) which invest primarily in fixed-income
securities. 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.
What is Asset Allocation?
Asset allocation is the process of developing a diversified investment portfolio by combining different
assets in varying proportions. The asset allocation decision may be one of the most important decisions
you can make as an investor. Effective diversification requires combining various types of securities that
may behave differently during changing economic or market conditions. Diversifying your portfolio
among stocks and bonds makes you less dependent on the performance of any single asset class.
The Importance of Dividends
- History shows that, over the long-term, dividends provide a key component of total return.
- 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.
- We believe that companies that distribute dividends on a regular basis generally demonstrate
financial strength and positive performance relative to their peers.
What is an ETF?
ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single
transaction throughout the trading day. ETFs combine the characteristics of a mutual
fund with the convenience and trading flexibility of stocks. Below is a list of other ETF features.
Diversification | ETFs hold a basket of securities which helps to mitigate single security risk. It is
important to note that diversification does not guarantee a profit or protect against loss.
Transparency | ETF holdings are available daily so investors know what they own.
Tax Efficiency | The ETF structure allows for increased tax efficiency.
Fully Invested | Unlike a traditional mutual fund, ETFs do not need to hold cash in order to
satisfy investor redemptions which allows them to better adhere to their investment objective.
This unit investment trust seeks current monthly income and capital appreciation. There is, however,
no assurance that the objectives will be achieved. The portfolio terminates approximately two years
from the initial date of deposit.
| 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 ETFs.
ETFs 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 ETFs 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, ETFs frequently trade
at a discount from their net asset value in the secondary market.
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.
Certain of the ETFs 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 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 and developing 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.
The United Kingdom’s official departure from the European Union (commonly referred to as “Brexit”) led to volatility in global financial markets, in particular those of the United Kingdom and across Europe, and the weakening in political, regulatory, consumer, corporate and financial confidence in the United Kingdom and Europe. It is not currently possible to determine the extent of the impact that Brexit may have on the portfolio’s investments and this uncertainty 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 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 ongoing effects of the COVID-19 global pandemic, or the potential impacts of any future public health crisis, may cause significant volatility and uncertainty in global financial markets. While vaccines have been developed, there is no guarantee that vaccines will be effective against future 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
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.