Tactical Income Portfolio, Series 62
As interest rates remain low, these are challenging times to invest for income. Like stock returns, economic growth, and inflation, interest rates are one of those variables that you can’t control. But, as an investor, you can control how your investment dollars are allocated.
This unit investment trust seeks current income, with total return as a secondary objective; however, there is no assurance that the objectives will be achieved.
The Tactical Income Portfolio is a unit investment trust that invests in a diversified portfolio of closed-end
funds (CEFs), common stocks and real estate investment trusts (REITs). The portfolio is weighted based
on the adjacent allocation.
- The multi-strategy segment of the portfolio
consists of CEFs which invest in income and preferred stock funds.
- While senior loans are generally loans which
have been made to companies whose debt is
typically rated below investment grade, they are
senior in the asset structure of a company and
historical recovery rates in the event of a default
tend to be much higher relative to junior high-yield
- The dividend-paying stocks and REITs are
selected by applying a disciplined investment
strategy which adheres to pre-determined
screens and factors. These screens and factors
are designed to identify companies that, in our
opinion, have above-average dividend yields
and trade at attractive valuations.
|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 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 employ the use of leverage, which increases the
volatility of such 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.
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. All of the floating-rate securities pay interest
based on LIBOR. Due to the uncertainty regarding the future utilization
of LIBOR and the nature of any replacement rate, the potential effect of
a transition away from LIBOR on a fund or the financial instruments in
which the fund invests cannot yet be determined.
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 that utilize such bonds. 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 bonds and are
affected by short-term credit developments to a greater degree.
Certain of the closed-end funds invest in preferred securities. Preferred
securities are equity securities of the issuing company which pay
income in the form of dividends. Preferred securities are typically
subordinated to bonds and other debt instruments in a company’s
capital structure, and therefore will be subject to greater credit risk
than those debt instruments.
Certain of the securities are issued by REITs. Companies involved in the real
estate industry are subject to changes in the real estate market, vacancy
rates, competition, volatile interest rates and economic recession.
Certain of the closed-end funds invest in senior loans. The yield on
closed-end funds which invest in senior loans will generally decline
in a falling interest rate environment and increase in a rising interest
rate environment. Senior loans are generally below investment grade
quality (“junk” bonds). An investment in senior loans involves the risk
that the borrowers may default on their obligations to pay principal or
interest when due.
Certain of the closed-end funds invest in covenant-lite loans which
contain fewer or no maintenance covenants and may hinder the
closed-end funds’ ability to reprice credit risk and mitigate potential
loss especially during a downturn in the credit cycle.
An investment in foreign securities should be made with
an understanding of the additional risks involved with foreign issuers, such as currency and interest rate
fluctuations, nationalization or other adverse political or economic developments, lack of liquidity of certain
foreign markets, 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 developed, less liquid, less
regulated, and more volatile than the U.S. and developed foreign markets.
On January 31, 2020, the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”). Brexit has led to volatility in global financial markets, in particular those of the United Kingdom
and across Europe, and may also lead to weakening in political, regulatory, consumer, corporate and financial
confidence in the United Kingdom and Europe.
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 recent outbreak of a respiratory disease designated as COVID-19 was first detected in China in December 2019. The global economic impact of the COVID-19 outbreak is impossible to predict but is expected to disrupt
manufacturing, supply chains and sales in affected areas and negatively impact global economic growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global financial markets, which
have caused losses for investors. The impact of the COVID-19 outbreak may be short term or may last for an extended period of time, and in either case could result in a substantial economic downturn or recession.
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.
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.
For a discussion of additional risks of investing in the trust see the “Risk Factors” section of