Strategic Income Select Closed-End Portfolio, Series 62
The Multi-Sector Approach
The Strategic Income Select Closed-End Portfolio seeks a high rate of current monthly income and to
reduce some of the volatility typically associated with high-income investments. To accomplish this, the
portfolio is diversified across a broad range of closed-end funds. Because different sectors follow
different cycles and react differently to changes in global economies and interest rates, spreading assets
across a spectrum of closed-end funds has the potential to reduce the overall risk of the portfolio.
When selecting closed-end funds for this portfolio, we look at several factors including:
Discount | We favor funds which are trading at a discount to net asset value and we favor those
which are trading at a greater discount relative to their peers.
Consistent Dividend | We favor funds which have a history of paying a consistent dividend.
Expense Ratio | We favor funds which have a lower than average expense ratio relative to
Diversification | We limit exposure to individual fund companies/managers.
Liquidity | We favor larger funds and more liquid funds.
Unlike open-end mutual funds, closed-end funds maintain a relatively
fixed pool of investment capital. This allows portfolio managers to better 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.
The portfolio offers investors diversification by investing in a broad range of
closed-end funds that are further diversified across hundreds of individual securities. Diversification does
not guarantee a profit or protect against loss.
Closed-end funds are structured to generally provide a more
stable income stream than other managed investment products because they are not subjected to cash
inflows and outflows, which can dilute dividends over time. However, stable income cannot be assured.
This unit investment trust seeks a high rate of current monthly income, with capital
appreciation as a secondary objective. There is, however, no assurance that the
objectives of the portfolio will be achieved.
| 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 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 from their net asset value in the secondary market. Certain
closed-end funds in which the portfolio invests employ the use of leverage, which increases the
volatility of such funds.
Certain of the closed-end funds invest in common stocks. 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 closed-end funds invest in floating-rate securities. A floating-rate security is an instrument in which the interest rate payable on the obligation fluctuates on a periodic basis based upon changes in an interest rate
benchmark. As a result, the yield on such a security will generally decline in a falling interest rate environment, causing the trust to experience a reduction in the income it receives from such securities. Certain of the floatingrate
securities pay interest based on LIBOR. The United Kingdom’s Financial Conduct Authority (“FCA”), which regulates LIBOR, intends to cease making LIBOR available as a reference rate over a phase-out period that began in
early 2022. However, subsequent announcements by the FCA, the LIBOR administrators, and other regulators indicate that it is possible that the most widely used LIBOR rates may continue until mid-2023. The unavailability
or replacement of LIBOR may affect the value, liquidity or return on certain portfolio investments. Any potential effects of the transition away from LIBOR can be difficult to ascertain, and they may vary depending on a variety
of factors and they could result in losses to the portfolio.
Certain 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.
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
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
The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have
caused and may continue to cause significant volatility and uncertainty 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
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