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Target Diversified Dividend Portfolio, 2nd Quarter 2017 Series

The Strategy

Target Divsd. Dvd. 2Q '17 - Term 7/9/18 (Target Diversified Dividend Portfolio) is a unit investment trust which invests in a fixed portfolio of stocks for approximately 15 months. The stocks are selected by applying a disciplined investment strategy which adheres to pre-determined screens and factors. The portfolio seeks above-average total return; however, there is no assurance the objective will be met.

The strategy is based on these steps:

  • Begin with all stocks traded on a U.S. exchange and screen for the following:
    • Minimum market capitalization of $250 million.
    • Minimum three month average daily trading volume of $1.5 million.
    • Minimum stock price of $5.

  • Eliminate REITs, ADRs, regulated investment companies and limited partnerships.
  • Select only those stocks with positive three year dividend growth.
  • Give the remaining stocks a weighted ranking on three factors:
    • Indicated dividend yield -50%.
    • Price-to-book -25%.
    • Payout ratio -25%.

  • Purchase an approximately equally weighted portfolio consisting of four stocks from each of the major GICS market sectors with the highest combined ranking on the three factors. The financials and real estate sectors are combined for the sector limit purpose.

If this strategy had been applied since 1995, investors would have realized higher total returns than by investing in the Russell 3000 Index. It is important to note that the past performance of the strategy is hypothetical and it is not indicative of the future performance of the Target Diversified Dividend Portfolio. Although this unit investment trust 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.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

Mountain Chart


Standard Deviations* Average Annual Total Returns*
Russell 3000
Index
Strategy Russell 3000
Index
Strategy
Since 1995 15.15% 16.66% 9.61% 11.78%
20 years 15.60% 17.13% 7.85% 10.86%
15 years 14.75% 17.24% 7.09% 7.66%
10 years 15.80% 18.66% 7.06% 4.92%
5 years 10.64% 12.56% 14.65% 8.88%
3 years 11.03% 13.30% 8.42% 1.62%
*Through 12/30/16

Annual Total Returns
Year Russell 3000
Index
Strategy
1995 36.57% 26.90%
1996 21.63% 14.99%
1997 31.67% 25.99%
1998 24.11% 12.96%
1999 20.96% 17.57%
2000 -7.30% 19.84%
2001 -11.43% 29.64%
2002 -21.53% -10.40%
2003 31.02% 47.10%
2004 11.93% 20.53%
2005 6.10% 1.98%
2006 15.67% 15.42%
2007 5.16% -3.85%
2008 -37.32% -37.06%
2009 28.29% 40.85%
2010 16.93% 20.21%
2011 1.00% 3.15%
2012 16.41% 10.76%
2013 33.55% 31.62%
2014 12.53% 5.18%
2015 0.48% -13.02%
2016 12.70% 15.87%
05/31/17 7.95% -2.33%

Past performance is no guarantee of future results and the actual current performance of the portfolio may be lower or higher than the hypothetical performance of the strategy. Hypothetical returns for the strategy in certain years were significantly higher than the returns of the Russell 3000 Index. Hypothetical strategy returns were the result of certain market factors and events which may not be replicated in the future. You can obtain performance information which is current through the most recent month-end by calling First Trust Portfolios L.P. at 1-800-621-1675 option 2. Investment return and principal value of the portfolio will fluctuate causing units of the portfolio, when redeemed, to be worth more or less than their original cost.

Simulated strategy returns are hypothetical, meaning that they do not represent actual trading, and, thus, may not reflect material economic and market factors, such as liquidity constraints, that may have had an impact on actual decision making. The hypothetical performance is the retroactive application of the strategy designed with the full benefit of hindsight. Strategy returns reflect a sales charge of 2.95% in the first year, 1.95% in subsequent years, estimated annual operating expenses of 0.187%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Returns assume that all dividends received during a year are reinvested monthly. Actual portfolio performance will vary from that of investing in the strategy stocks because it may not be invested equally in these stocks and may not be fully invested at all times. It is important to note that the strategy may underperform the Russell 3000 Index in certain years and may produce negative results.

The Russell 3000 Index is an unmanaged index used to measure the performance of the largest 3000 U.S. stocks based on total market capitalization. The index cannot be purchased directly by investors.

Standard Deviation is a measure of price variability (risk). A higher degree of variability indicates more volatility and therefore greater risk.

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.

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.

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.

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.

 
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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