High Dividend Equity Portfolio, Series 56
Dividends have traditionally been one of the few constants in the world of investing, helping to buffer volatility in both good and bad markets. When markets decline, dividends have the potential to
offset losses, and when markets rise, dividends have the potential to enhance returns.
A dividend is a payment from a company’s earnings. Since corporations are not obligated to share their earnings with stockholders, dividends may be viewed as a sign of a company’s profitability as
well as management’s assessment of the future.
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 S&P 1500 Index and
eliminate those companies that do not meet our investment criteria. These criteria are designed
to identify well-capitalized companies with above-average dividend yields and the ability to
sustain current dividend levels.
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 | 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 total return through a combination of
capital appreciation and dividend income; however, there is no assurance the
objective will be met.
The S&P 1500 Index is an unmanaged index of 1500 companies representing the large-cap, mid-cap and small-cap segments of the U.S. equity market. The index cannot be purchased directly by investors.
|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 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.
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.
Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. issuers.
An investment in a portfolio containing mid-cap companies is subject to additional risks, as the share prices of 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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.
The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks
have caused and may continue to cause significant volatility and uncertainty in global financial
markets. While the U.S. has resumed “reasonably” normal business activity, 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.