Covered Call Select Closed-End Portfolio, Series 64
The Covered Call Select Closed-End Portfolio is a unit investment trust which
invests in closed-end funds whose investments are diversified among common stocks.
These closed-end funds, on an ongoing and consistent basis, will sell covered
call options to seek a more controlled risk/reward outcome.
This unit investment trust seeks income and, to a lesser extent, capital appreciation; however, there is no assurance the objectives will be met.
What is a Covered Call Option?
A call option is a contractual obligation which gives the buyer of the option the right to purchase a certain number of shares of common stock from the writer (seller) of the option at a predetermined price. If the predetermined price is reached, the buyer has the right, depending on the type of option, to exercise the option at the option's expiration date or at any time up until the option's expiration. Though call options can be used for many investment purposes, they are typically used as a tool to potentially enhance returns, offer a current yield to investors, and provide limited downside protection.
An option is considered "covered" when a closed-end fund owns the
equity securities against which the options are sold. You should be aware that
a product which includes closed-end funds utilizing covered call strategies
may not be suitable for all investors. It may not be appropriate for investors
seeking above average capital appreciation. Before investing, you should make
sure you understand the risks of this type of product and whether it suits
your current financial objectives.
Closed-End Fund Features
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, unlike open-end funds,
closed-end funds don't have to manage fund liquidity to meet potentially large
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, the portfolio
cannot guarantee consistent income.
|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 closed-end
funds which invest in common stocks and options.
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.
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.
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. Certain closed-end
funds may employ the use of leverage which increases the volatility of such
An investment in a portfolio containing equity securities of foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign 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.
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 the prospectus.