Cyclical Strength Portfolio, Series 31
Cyclical industries are those whose income, value, or earnings fluctuate widely according to variations in
the economy. Profits and share prices of companies in cyclical industries tend to follow the ups and
downs of the economy.
Portfolio Selection Process
Through our selection process we seek to find the stocks that we believe have the best prospects for above-average capital appreciation.
Identify the Universe
begin by selecting stocks of companies listed on
a U.S. securities exchange in the following five
sectors: consumer discretionary, energy,
industrials, information technology, and
Screen For Financial Strength
We then evaluate companies
based on multiple factors. These factors are
designed to identify those stocks which exhibit
strong fundamental characteristics and to
eliminate those that do not meet our
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 capital appreciation; 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 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.
You should be aware that the portfolio is concentrated in stocks in
both the industrials and information technology sectors which involves
additional risks, including limited diversification. The companies
engaged in the industrials sector are subject to certain risks,
including a deterioration in the general state of the economy, intense
competition, domestic and international politics, excess capacity and
changing spending trends. The companies engaged in the information
technology sector are subject to fierce competition, high research and
development costs, and their products and services may be subject
to rapid obsolescence. Technology company stocks, especially those
which are Internet-related, may experience extreme price and volume
fluctuations that are often unrelated to their operating performance.
One of the common stocks held by the trust is issued by a foreign entity.
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.
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
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 cybersecurity.
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 and negatively impact global economic growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global financial markets, which
have caused losses for investors. The impact of the COVID-19 outbreak may be short term or may last for an extended period of time, and in either case could result in a substantial economic downturn or recession.
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.