MLP Closed-End Fund and Energy Portfolio, Series 63
The energy infrastructure of the United States provides the backbone of our economy and way of life.
Energy infrastructure includes an elaborate network of systems that transport, store, gather, process and
deliver crude oil, refined petroleum products, natural gas or electric power generation, including
renewable energy. The performance of companies in the energy infrastructure industry is not highly
correlated with the price of oil and other types of energy, but rather with the demand for energy. The
demand for energy generally increases steadily over time and is much less volatile than commodity
energy prices, which often results in steady, predictable cash flows for companies in these industries.1
1 Standard & Poor's
The MLP Closed-End Fund and Energy Portfolio is a professionally selected unit investment trust which
invests approximately 50% in closed-end funds that invest in master limited partnerships (MLPs) from
the energy infrastructure industry. Approximately 50% of the portfolio invests in common stocks of
MLPs are limited partnerships that are publicly traded on a U.S. securities exchange. They combine the
tradability of common stocks with the corporate structure of a limited partnership. MLPs are traditionally
high cash flow businesses that pay out a majority of that cash to investors. Investing in MLPs through
closed-end funds provides an efficient alternative to investing directly in MLPs. Unlike individual
partnership investments, a closed-end fund provides one Form 1099 per shareholder at the end of the
year, rather than multiple K-1s and potential state filings.
The common stocks held in the portfolio generate cash flow through the gathering, processing,
transportation, storage, and distribution of oil and natural gas.
With continuing geo-political and long-term supply concerns, we believe this investment may represent
an attractive alternative for investors seeking oil and gas exposure and high current income potential. Advantages include:
- High current income potential
- Capital appreciation potential
This unit investment trust seeks a high rate of current monthly income and growth of
principal; 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 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.
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.
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.
You should be aware that an investment that is concentrated in
stocks in the energy sector involves additional risks, including
limited diversification. The companies engaged in the energy
sector, which includes MLPs, are subject to certain risks,
including price and supply fluctuations caused by international
politics, energy conservation, taxes, price controls, and other
regulatory policies of various governments. Falling oil and gas
prices may negatively impact the profitability and business
prospects of certain energy companies. U.S. taxing authorities
could challenge the trust’s treatment of the MLPs for federal tax
purposes. These tax risks could have a negative impact on the
after-tax income available for distribution by the MLPs and/or
the value of the trust's investments.
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
An investment in foreign equities should be made with an
understanding of the additional risks involved with foreign
issuers, such as currency fluctuations, political risk, withholding,
the lack of adequate financial information, and exchange control
restrictions impacting foreign issuers.
A significant percentage of the common stocks held by the trust
are issued by companies headquartered in Canada and therefore
the portfolio may present more risks than a portfolio which is
broadly diversified over several regions.
For a discussion of additional risks of investing in the trust see
the “Risk Factors” section of the prospectus.
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.
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 cyber security.
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