REIT Growth & Income Select, Series 62
A Real Estate Investment Trust (REIT) is a company that buys, develops and/or manages income-producing real estate such as apartments, shopping centers, offices and warehouses. In short, a REIT
is a corporation that pools the capital of many investors to purchase one or more forms of real estate. In September 2016, equity REITs moved from the Financials sector of the Global Industry
Classification Standard (GICS®) to a new, stand-alone Real Estate sector. This change reflected the growth in size and importance of real estate in the economy. The total equity market capitalization
of listed U.S. Equity REITs has grown from $5.55 billion in 1990 to approximately $1.334 trillion as of June 2022.1
This unit investment trust seeks dividend income and capital appreciation; however,
there is no assurance the objectives will be met.
Investing in REITs
Income - REITs are currently required to distribute at least 90% of their income annually as
dividends to shareholders. Historically, this has made REITs a significantly higher source of income versus
other equities and competitive with traditional fixed income investments. It should be noted that
dividends paid by REITs are generally not eligible for the reduced tax rates for qualified dividend income.
Diversification - The portfolio invests in a number of REITs offering diversification among
properties and regions. This type of diversification may help to reduce some of the fluctuations in the
real estate market as a result of economic downturns or changes in supply and demand in a specific
region or type of property. Diversification does not guarantee a profit or protect against a loss.
Asset Allocation - A study by Ibbotson Associates found that adding REITs to a portfolio of
stocks, bonds, and cash is a key factor for portfolio diversification.2 We believe this makes a compelling
case for the use of REITs to reduce risks in a variety of investment portfolios.
Liquidity - Compared to traditional, privately-held real estate, which may be difficult to sell, the
REITs in which this portfolio invests are traded on major stock exchanges, making them highly liquid.
Additionally, units of the portfolio may be redeemed on any business day at the redemption price.
Skilled Management - REIT investors also gain the advantage of skilled management since
REIT management teams tend to be experts within their specific type of property or geographic location.
|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 owning common stocks, 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.
You should be aware that the portfolio is concentrated in REITs which involves additional risks, including limited diversification. Companies involved in the real estate industry are subject to changes in the real estate market,
vacancy rates and competition, volatile interest rates and economic recession.
An investment in a portfolio containing small-cap and mid-cap companies is subject to additional risks, as the share prices of small-cap companies and certain mid-cap companies are often more volatile than those of larger
companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.
Large capitalization companies may grow at a slower rate than the overall market.
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.
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 COVID-19 global pandemic has caused and may continue to cause significant volatility and declines in global financial markets. While the U.S. has resumed “reasonably” normal business activity, many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging variants of the disease.
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.