Equity Closed-End Portfolio, Series 65
When it comes to investing for income, investors have several choices. Even with all the options, there
are those investors who do not want to give up the growth potential offered by stocks in order to earn a
high rate of current income. The Equity Closed-End Portfolio has been developed to address this need.
The Equity Closed-End Portfolio is a unit investment trust that is comprised of a pool of closed-end funds
which invest in dividend-paying equity securities.
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 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 40% of the
10.30% average annual total return on the S&P 500 Index from 1926 through 2020. 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 distributions over time,
closed-end funds can generally provide a more stable income stream than other managed investment
products. However, stable income cannot be assured.
This unit investment trust seeks high current income, with total return as a
secondary objective by investing in a well-diversified pool of closed-end funds that
invest in dividend-paying equity securities; 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 associated with an investment in a portfolio of closed-end
funds which invest in common stocks.
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.
All of the closed-end funds invest in common stocks. Common
stocks are subject to 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
Certain of the closed-end funds invest in options. Options are
subject to various risks including that their value may be
adversely affected if the market for the option becomes less
liquid or smaller. In addition, options will be affected by
changes in the value and dividend rates of the stock subject to
the option, an increase in interest rates, a change in the actual
and perceived volatility of the stock market and the common
stock and the remaining time to expiration.
Certain of the closed-end funds invest in securities of foreign issuers. Foreign securities are subject to
additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial
information, and exchange control restrictions impacting foreign issuers.
About 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.
The COVID-19 global pandemic has caused significant volatility and declines in global financial markets, causing losses for investors. The development of vaccines has slowed the spread of the virus and allowed for the
resumption of “reasonably” normal business activity in the United States, although 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
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.