Dorsey Wright Relative Strength Top 50, Series 31
Dorsey, Wright & Associates (DWA) is a registered investment advisory firm whose business includes
- Professional management of equity
portfolios for investors.
- Investment research services for numerous
broker-dealers and large institutions around
The cornerstone of their approach is technical analysis, and in particular,
the law of supply and demand, which gives them the discipline to make timely
investment decisions. In their analysis, relative strength plays a very important
role. To put it simply, relative strength is a measure of a stock's performance
in relation to its peers. DWA believes it has refined its relative strength
investment approach, creating a valuable and robust tool for stock selection
that relies on unbiased, unemotional and objective data.
The Dorsey Wright Relative Strength Top 50 is a unit investment trust which
invests in stocks selected by DWA using their proprietary investment process
and is designed to be held over the fixed 15- month term of the trust.
Portfolio Selection Process
Through the selection process, DWA seeks to identify those companies that they
believe are technical leaders within the marketplace.
Identify the Universe
The first step in the selection process is to identify the universe of stocks
from which the portfolio is selected. DWA begins with the companies listed in
the S&P 900 Index.
Measure Relative Strength Ratings
All of the securities in the universe are scored on several measures of relative
strength. These measures rank securities based on intermediate-term price performance
relative to a broad market benchmark, and relative to the other securities in
the universe. Each security is given a score that allows DWA to determine where
it ranks relative to all other securities in the universe with no subjectivity.
Each security must meet a minimum relative strength ranking score to be eligible
for inclusion in the portfolio.
Determine the Portfolio's Sector Weighting Exposure
The next step in the process is to determine the portfolio's sector exposure.
The sector weightings are determined by a combination of current market weights
and the relative strength ranking of the securities within each sector. The
goal is to achieve a portfolio of high relative strength securities with an
overall sector weighting close to current market weights.
Select the Portfolio
The final step is to select the top 50 companies for the portfolio based on relative strength. The
stocks are equally-weighted within the portfolio.
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 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 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.
One of the securities held by the trust is
issued by a foreign entity. 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
Certain of the securities in the trust is issued by a Real Estate
Investment Trust (REIT). Companies involved in the real estate
industry are subject to changes in the real estate market,
vacancy rates and competition, volatile interest rates and
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.
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.
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.