European Deep Value Dividend Portfolio, Series 23
The European Deep Value Dividend Portfolio is a unit investment trust that invests in 30 European
companies that have low estimated current year price-to-earnings (P/E) ratios in addition to above-average
dividend yields. We believe these companies may offer long-term investors an opportunity for
capital appreciation and dividend income based on these factors.
The Importance of P/E Ratios
The P/E ratio is considered the most common measure of
a stock’s value. Stocks that have high P/E ratios tend to be considered a higher risk investment than
those with low P/E ratios, since a high P/E ratio often signifies high earnings growth expectations.
The Importance of Dividends
Corporations are not obligated to share their earnings with
stockholders. So, in our opinion, dividends may be viewed as a sign of a company’s profitability as well
as management’s assessment of the future. We believe that companies that have shown a solid history
of distributing dividends to shareholders are a wise choice for prudent investors to consider as part of
their overall investment plan.
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
We begin with the companies listed in the STOXX Europe 600 Index.
Screen the Universe
We then evaluate the companies in the universe based on the ratio of
each stock’s current price to its estimated current year earnings and also its dividend payout ratio. These
screens are designed to identify stocks with a low P/E ratio and the ability to sustain its dividend yield.
Select the Portfolio
The final step is to select the 30 highest dividend-yielding stocks
for the portfolio subject to a maximum of approximately 30% in a single sector. The stocks are
approximately equally weighted within the portfolio.
This unit investment trust seeks above-average total return through a combination of
capital appreciation and dividend income; 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.
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.
You should be aware that the portfolio is
concentrated in stocks in both the
consumer products and financials sectors
making it subject to 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 financials sector are subject to the
adverse effects of volatile interest rates,
economic recession, decreases in the
availability of capital, increased
competition from new entrants in the
field, and potential increased regulation.
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.
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.
Because the portfolio is concentrated in companies
headquartered in Europe and the United Kingdom, it may
present more risks than a portfolio which is broadly diversified
over several regions.
The United Kingdom vote to leave the European Union and other
recent rapid political and social change throughout Europe make
the extent and nature of future economic development in
Europe and the effect on securities issued by European issuers
difficult to predict.
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.