Global Commodities Opportunity Portfolio, Series 54

Commodities are a unique asset class that respond differently than traditional asset classes to changing economic conditions. They offer potential for attractive returns, reduced risk through diversification, and a hedge against rising inflation. The global commodity sector is made up of several separate markets including agriculture, metals and energy. These commodities are the building blocks of every economy in the world.

• In every decade going back to 1960, with the exception of the 2010s, commodities have appreciated by at least 60% or more. Commodity prices hit multi-decade lows in April of 2020, dropping to levels last seen in the late nineties.¹ However, commodities have seen a turnaround posting a total return of 18.79% from 2020 through 8/30/2024. Of course, past performance is no guarantee of future results.


• Commodities may offer a degree of protection from the effects of inflation because commodities prices usually rise when inflation is rising. As demand for goods and services increases, the price of goods and services usually increases as well as the price of the raw materials (commodities) used to produce those goods and services. Historically, bonds are negatively correlated to inflation and equities have close to zero correlation. Commodities, however, have exhibited a higher positive correlation with inflation.

Opportunity For Meaningful Diversification*

Diversification has long been recognized as a helpful way to mitigate volatility. Effective diversification requires combining assets with low correlations—that is, those that have performed differently over varying market conditions. We believe commodities can be used as an effective means to aid portfolio diversification because of their historically low correlation to investment-grade corporate bonds and equities.² Because commodities are not highly correlated with traditional asset classes, they can potentially decrease portfolio volatility, enhance overall return and provide meaningful diversification to an asset allocation strategy. It is important to note that diversification does not guarantee a profit or protect against loss.

Portfolio Objective

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.

Portfolio Selection Process

An initial universe of stocks is created by identifying companies with exposure to global commodities through participation in the agriculture, energy or materials sector. Only U.S.-listed common stocks and ADRs that have adequate liquidity for investment are eligible for selection.

Next we examine the historical financial results of the stocks from the initial universe. The stocks are then evaluated using fundamental factors such as sales, earnings and cash flow growth; valuation factors such as price to earnings, price to cash flow, price to sales and price to book; and technical factors such as price momentum and earnings surprises.

An estimated value is calculated for each of the companies utilizing a Cash Flow Return on Investment (CFROI) method. A secondary valuation is also made employing a concept called Economic Margin. The companies which currently trade at an attractive market price relative to their estimated value are favored over companies that do not.

The final portfolio is then selected by a team of equity analysts who evaluate each stock by examining the stock’s relative valuation and other qualitative factors such (third party) analyst ratings, competitive advantages and quality of management.

Our selection process attempts to find the stocks with the best prospects for above-average capital appreciation by identifying those that meet our investment objectives, trade at attractive valuations, and, in our opinion, are likely to exceed market expectations of future cash flows.

The final portfolio is comprised of 30 equally weighted global commodities stocks.

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.

Risk Considerations
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 both the energy and materials sectors which involves additional risks, including limited diversification. The companies engaged in the energy sector are subject to certain risks, including price and supply fluctuations caused by international politics, energy conservation, taxes, price controls, and other regulatory policies of various governments. Falling oil and gas prices may negatively impact the profitability and business prospects of certain energy companies. The companies engaged in the materials sector, including companies within the precious metals industry, 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.

A significant percentage of the securities held by the portfolio are issued by companies in Europe, which may present more risks than a portfolio which is broadly diversified over several regions.

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.

Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East 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 ongoing effects of the COVID-19 global pandemic, or the potential impacts of any future public health crisis, may cause significant volatility and uncertainty in global financial markets. While vaccines have been developed, there is no guarantee that vaccines will be effective against future 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.