Cyclical Strength Portfolio, Series 20
Cyclical industries are those whose income, value, or earnings fluctuate widely according to variations in the economy. Profits and share prices of companies in cyclical industries tend to follow the ups and downs of the economy. When the economy is thriving, companies which sell or operate such things as cars, airlines, hotels and expensive restaurants tend to perform well.
Portfolio Selection Process
Through our selection process we seek to find the stocks that we believe have the best prospects for above-average capital appreciation.
Identify the Universe
The first step in our selection process is to identify the universe of stocks from which we will select the portfolio. To establish the universe, we select stocks of companies listed on a U.S. securities exchange in the following five sectors: consumer discretionary, energy, industrials, information technology, and materials.
Screen For Financial Strength
The next step in our process is to evaluate companies based on multiple factors. These factors are designed to identify those stocks which exhibit strong fundamental characteristics and to eliminate those that do not meet our investment criteria.
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 for the Portfolio
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 objective, trade at attractive valuations and, in our opinion, are likely to exceed market expectations of future cash flows.
This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
You should consider the portfolio's investment objective, 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 consumer products, industrials and information
technology sectors which involves additional risks, including
limited diversification. The companies engaged in the consumer
products industry are subject to global competition, changing
government regulations and trade policies, currency
fluctuations, and the financial and political risks inherent in
producing products for foreign markets. The companies engaged
in the industrials sector are subject to certain risks, including a
deterioration in the general state of the economy, intense
competition, domestic and international politics, excess capacity
and changing spending trends. 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 Internet-related,
may experience extreme price and volume fluctuations that are
often unrelated to their operating performance.
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 available information.
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.
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.
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.