Global Commodities Opportunity Portfolio, Series 34
The global commodities sector is made up of several separate markets including agriculture, metals and
mining, forest and paper products and energy. These commodities are the building blocks of every
economy in the world. Consider the following:
- According to the USDA, agricultural trade is projected to increase due to global economic growth, which
is estimated at approximately 3.0% average growth rate for the next decade. Import demand from
developing countries is further reinforced by population growth rates that remain above those in the
rest of the world.
- When economic activity accelerates, whether in the U.S. or abroad, the global demand for natural
resources grows. The resulting increase in the underlying commodity prices historically generates
higher profits for companies in the energy sector and translates into higher returns for investors.
- As of March 22, 2018, the S&P 500 Index was off 7.98% from its all-time high while the Thomson
Reuters/CoreCommodity - CRB Index (TR/CC CRB Index) was 58.77% off of its all-time high reached on
July 2, 2008. Should the economy continue to strengthen, we believe commodities have the potential
to benefit. The TR/CC CRB Index is comprised of a basket of 19 commodities and acts as a representative
indicator of today’s global commodity markets. The S&P 500 Index is an unmanaged index of 500 stocks
used to measure large-cap U.S. stock market performance. The indices cannot be purchased directly by
investors. Past performance is no guarantee of future results.
The growth of the global economy is increasingly important to the success of the companies in the
commodities sector. Typically, the demand for commodities increases along with living standards.
Because of this, we believe that the majority of the worldwide growth in demand for commodities will
come from developing countries.
Over the last several years there has been a dramatic shift in developing countries, such as China,
adopting more of the institutions and mechanisms of a market economy. This shift has been, and we
believe it will continue to be, significant to the sector.
According to the International Monetary Fund, global GDP growth is projected to be 3.9% in both 2018
and 2019, being led by developing economies where economic growth is projected to be 4.9% in 2018
and 5.0% in 2019.
This unit investment trust seeks above-average capital appreciation by investing in the
common stocks of domestic and foreign companies in the commodities sector;
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 an investment that is concentrated in
stocks of commodities companies in the energy and materials
sectors involves additional risks, including limited diversification.
The companies engaged in the energy sector are subject to price
and supply fluctuations caused by international politics, energy
conservation, taxes, price controls, and other regulatory policies of
various governments. The companies engaged in the materials
sector are subject to price and supply fluctuations, excess capacity,
economic recession, domestic and international politics,
government regulations, volatile interest rates, consumer spending
trends and overall capital spending levels. Commodity prices are
subject to several factors, including price and supply fluctuations,
excess capacity, economic recession, domestic and international
politics, government regulations, volatile interest rates, consumer
spending trends and overall capital spending levels.
An investment in a portfolio containing small-cap and mid-cap
companies is subject to additional risks, as the share prices of smallcap
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.
An investment in a portfolio which includes foreign securities should be made
with an understanding of the additional risks involved, such as currency fluctuations,
political risk, the lack of adequate financial information and exchange control
restrictions impacting foreign issuers. Risks associated with investing in foreign
securities may be more pronounced in emerging markets where the securities markets
are substantially smaller, less liquid, less regulated and more volatile than
the U.S. and developed foreign markets.
Certain securities held by the portfolio are issued by companies
in Europe. 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.
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.