European Deep Value Dividend Portfolio, Series 27
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 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.
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 consumer products sector which
involves 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.
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.
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.
On January 31, 2020, the United Kingdom officially departed the European Union (commonly referred to as
“Brexit”). Brexit has led to volatility in global financial markets, in particular those of the United Kingdom
and across Europe, and may also lead to weakening in political, regulatory, consumer, corporate and financial
confidence in the United Kingdom and Europe.
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.
Local, regional or global events such as war, acts of terrorism, spread of infectious diseases or other public
health issues, recessions, or other events could have a significant negative impact on the portfolio and its
investments. Such events may affect certain geographic regions, countries, sectors and industries more
significantly than others. The recent outbreak of a respiratory disease designated as COVID-19 was first
detected in China in December 2019. The global economic impact of the COVID-19 outbreak is impossible to
predict but is expected to disrupt manufacturing, supply chains and sales in affected areas, negatively impact
global economic growth prospects, and could result in a substantial economic downturn or recession.
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.