Capital Strength Opportunity Portfolio, Series 5
Our goal with the Capital Strength Opportunity Portfolio is to choose well-capitalized companies with
strong market positions. One important advantage that well-capitalized companies enjoy over others is
that they have the potential to provide their stockholders with a greater degree of stability and
performance over time.
Through our selection process,we seek to find companies with the following
- Well-capitalized with strong balance sheets;
- Skilled management;
- High liquidity;
- Ability to generate earnings growth; and
- Record of financial strength and profit growth.
This unit investment trust seeks above-average capital appreciation; however, there is
no assurance the objective will be met.
Why Cash Matters
Companies with large cash positions tend to be mature companies that dominate
their industries. A company with a significant amount of cash on its balance
sheet is attractive for many reasons.Cash enables companies to bypass the credit
markets and provides the means to:
- Make strategic cash financed mergers and acquisitions;
- Begin to pay dividends or increase dividend payments to boost returns;
- Repurchase undervalued shares;
- Reinvest cash to grow its business;
- Improve its debt rating, thus reducing its cost of capital; and
- Fund research and development projects, even in a down market.
Portfolio Selection Process
Through our selection process we seek to find the stocks that we believe have
the best prospects for above-average total return.
Identify the Universe
The first step in our selection process is to identify the universe of stocks
from which we will select the portfolio.We begin with the companies listed in
the S&P 500 Index and eliminate those companies that do not meet our investment
Examine Historical Financial Results
The next step in our process is to look for those companies that have earned
a net cash flow return on investment that is above the average of their peers.Historically,
companies that have increased their cash flows at a higher rate have rewarded
shareholders with superior total returns.
Select Companies with Attractive Valuations
The final step in our process is to select companies based on the fundamental
analysis of our team of research analysts.The stocks selected for the portfolio
are those that meet our investment objectives, trade at attractive valuations
and, in our opinion, are likely to exceed market expectations of future cash
|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 owning common stocks, 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.
You should be aware that the portfolio is concentrated in stocks
in the information technology sector which involves additional
risks, including limited diversification. The companies engaged
in the information technology sector are subject to fierce
competition, high research and development costs, and their
products and services may be subject to rapid obsolescence.
Technology company stocks, especially those which are Internetrelated,
may experience extreme price and volume fluctuations
that are often unrelated to their operating performance.
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.
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.
Although this portfolio terminates in approximately 15 months, the strategy is long-term.
Investors should consider their ability to pursue investing in successive portfolios, if available.
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.