New York Tax Exempt Municipal Income Trust, Series 62

Municipal Bond Basics

A municipal bond is a debt obligation of a state and/or local government entity which is used to help build infrastructure by raising money to finance public projects such as new hospitals, schools and improved roads. In return, in most states investors in municipal bonds issued in their state receive earnings which are free from federal, state and/or local income taxes. Because of their low correlation to many other fixed-income and equity assets, municipal bonds can also provide diversification benefits within an investor's portfolio. Additionally, municipal bonds generally are a high credit quality asset class with historically low default rates and relatively low volatility.Of course, given the current economic environment, there can be no assurance that the default rate for municipal bonds will not rise or that volatility will not increase.

Municipal Bond Benefits Include:

  • Tax exempt regular income
  • Generally high credit quality
  • Low correlation with other asset classes
  • Historically low default rates and relatively low volatility

Yield Comparison

Current New York municipal yield spreads are at historic levels relative to Treasuries which makes this opportunity attractive in the current environment in our opinion.


A Tax-Free Fixed Income Unit Investment Trust

Portfolio Objectives

The objectives of this unit investment trust are to distribute income that is exempt from federal, New York state and/or local income taxes and to preserve capital by investing in a portfolio of investment grade municipal bonds issued by New York or Puerto Rico.There is, however, no assurance that the objectives will be achieved.

Portfolio Summary

  • Monthly income which is exempt from federal, New York state and/or local income taxes
  • Investment grade bonds
  • Diversification among various sectors within the state of New York
  • Bonds are exempt from the alternative minimum tax

Tax-Advantaged Income

Municipal bonds provide investors with significant tax savings. For investors in higher tax brackets, municipals can offer greater after-tax yields than taxable debt securities of similar maturities and credit quality, including Treasuries and corporate bonds.Taxable-equivalent yields represent the amount of pre-tax return an investor would need to earn in a taxable investment in order to equal that of a tax-exempt investment. The chart to the right illustrates the taxable equivalent yield for New York state residents at four different federal income tax levels using a municipal bond with a 4.50% yield as an example. As you can see, if an investor is in the 25% federal tax bracket, the 4.50% yield has a taxable equivalent yield of 6.44%. In other words, an investor would need to get a 6.44% yield from a taxable bond to equal the 4.50% payout of the tax-free municipal bond.


Professional Portfolio Selection

The municipal bonds included in the trust are selected by the MacKay Municipal Managers team of MacKay Shields LLC using a comprehensive evaluation process.Their investment process draws upon extensive Wall Street proprietary trading and risk management experience which includes all facets of the municipal market.

MacKay believes that exceptional long-term performance can be achieved with a relative value, research-driven approach.This approach is based on fundamental, bottom-up research on the credit and the structure of each bond resulting in superior security selection. In selecting municipal bonds for the trust, the team consider the following factors.

Investment Process

Sector Analysis

  • Evaluate the national political and economic environment
  • Analyze municipal market technicals and fundamentals
  • Review rating agency and street research

Security Analysis

  • Evaluate the local political and economic environment
  • Review financial documents and tax issues
  • Create models to stress cash flow
  • Determine the value of collateral
  • Assess management
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.

Risk Considerations:
An investment in this unmanaged unit investment trust should be made with an understanding of the risks associated with an investment in municipal bonds.Municipal bonds are subject to numerous risks including rising interest rates, economic recession, deterioration of the municipal bond market, possible downgrades, increased volatility, reduced liquidity and defaults of interest and/or principal.

Due to the current state of the economy, 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.The markets for credit instruments, including municipal securities, have experienced periods of extreme illiquidity and volatility.

Certain of the securities in the trust are covered by insurance policies obtained by the issuers or underwriters of the bonds from insurance companies. There can be no assurance that any insurer will be able to satisfy its commitments in the event claims are made in the future.

Because most of the securities in the portfolio are issued by municipalities in New York, the portfolio may present more risks than a portfolio which is broadly diversified over several regions.

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 COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.