European Deep Value Dividend Portfolio, Series 31
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 market-capitalization,
the ratio of each stock’s current price to its estimated current year earnings, its dividend
payout and dividend yield ratios. 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 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 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.
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
You should be aware that the portfolio is concentrated in stocks in the financials sector making it subject to
additional risks, including limited diversification. 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.
Because the portfolio is concentrated in companies headquartered in Germany and Europe, it may present
more risks than a portfolio which is broadly diversified over several regions.
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.
About one year after the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”), the United Kingdom and the European Union reached a trade agreement that became effective
on December 31, 2020. It is not currently possible to determine the extent of the impact the Brexit trade
agreement may have on the portfolio’s investments and this certainly could negatively impact current and
future economic conditions in the United Kingdom and other countries, which could negatively impact the
value of the portfolio’s investments.
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.
Large capitalization companies may grow at a slower rate than the overall market.
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 caused significant volatility and declines in global financial markets, causing losses for investors. The development of vaccines has slowed the spread of the virus and allowed for the
resumption of “reasonably” normal business activity in the United States, although many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging
variants of the disease.
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.
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.