Target Triad Portfolio, August 2010 Series

Target Triad Portfolio

Finding the right mix of investments is a key factor to successful investing. Because different investments often react differently to economic and market changes, diversifying among low-correlated investments primarily helps to reduce volatility and also has the potential to enhance your returns. The Target Triad Portfolio has been developed for this purpose.

The Target Triad Portfolio is a unit investment trust which provides you with the convenience of owning three distinct strategies in one investment. It invests in a fixed portfolio of stocks which are selected by applying pre-determined screens and factors and holds the stocks for approximately 15 months. The portfolio offers several important advantages:

• Complete transparency from the stock selection process, to portfolio holdings and individual stock weightings;
• Automated buy decisions helping to eliminate unwanted emotions from the investment process;
• No embedded capital gains. Capital gains taxes are paid only if there is a profit;
• No style drift from manager-driven trading;
• Low cash positions so more of your money is put to work;
• Diversification, discipline, and a periodic rebalancing opportunity helping to decrease volatility and potentially increase returns.

As you can see in the adjacent charts, if this strategy had been applied since 1996, investors would have realized higher total returns than by investing in the S&P 500 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 Triad Portfolio.

Keys to Strategy Investing

Diversify
We expect some strategies to perform better than others under different market conditions.That's why we believe it is important to diversify among different strategies.Target Triad consists of three distinct strategies - each using factors or screens to select stocks designed specifically for their unique characteristics.The result is a portfolio that is diversified across sectors, growth and value styles and countries.

Have Discipline
History has shown that bear and bull markets are a normal occurrence. Although past performance is no guarantee of future results, history has also shown that equity investors have been rewarded for their patience over the long-term.The chart on the adjacent page illustrates this point based on applying the hypothetical strategy over one year and three year periods.Of course, there is no guarantee that the performance of the strategy or the trust will be positive over any future time period.

Rebalance Annually
Studies have shown that rebalancing can provide benefits to your long-term investment plan. Rebalancing is simple with Target Triad. When the portfolio terminates, investors have the option to reinvest their proceeds, at a reduced sales charge, into a new, rebalanced portfolio. In addition to rebalancing the individual component strategies back to their original weighting, new stocks are also selected by reapplying the underlying strategies. It is important to note that rebalancing may cause a taxable event unless units of the portfolio are purchased in an IRA or other qualified plan.

Portfolio Selection Process

The Target Triad Portfolio seeks to provide the potential for above-average total return by adhering to a simple investment strategy; however, there is no assurance the objective will be met. The portfolio is comprised of the three strategies described below.

Target Growth Strategy - 60%

• Begin with all stocks traded on a U.S. exchange and screen for the following:
• Minimum market capitalization of $6 billion.
• Minimum three month average daily trading volume of $5 million.
• Minimum stock price of $5.
• Eliminate REITs, American Depositary Receipts, Registered Investment Companies and Limited Partnerships.
• Select only those stocks with positive one year sales growth.
• Rank the remaining stocks on three factors:
• Sustainable growth rate.
• Change in return on assets.
• Recent price appreciation.
• Purchase an approximately equally-weighted portfolio of the 30 stocks with the highest combined ranking on the three factors, subject to a maximum of six stocks from any one of the ten major market sectors.

Target Diversified Dividend Strategy - 30%

• 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, American Depositary Receipts, Registered 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 ten major market sectors with the highest combined ranking on the three factors.

NYSE^® International Target 25 Strategy - 10%

• Begin with the stocks that comprise the NYSE International 100 Index^SM. The index consists of the 100 largest non-U.S. stocks trading on the New York Stock Exchange.
• Rank each stock on two factors:
• Price to book
• Price to cash flow
• Screen for liquidity by eliminating companies with average daily trading volume below $300,000 for the prior three months.
• Purchase an approximately equally-weighted portfolio of the 25 eligible stocks with the best overall ranking on the two factors.

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 S&P 500 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.

Strategy performance is hypothetical and not representative of the portfolio or any prior series since none existed during all of the periods shown. Strategy returns reflect a sales charge of 2.95% in the first year, 1.95% in subsequent years, estimated annual operating expenses of 0.178%, 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 S&P 500 Index in certain years and may produce negative results.

The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The index cannot be purchased directly by investors.

Standard Deviation is a measure of price variability (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.

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 certain risks, including global competition, changing government regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets.

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 companies is subject to additional risks, as the share prices of small-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.

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.

NYSE^® is a registered service mark of, and NYSE International 100 Index^SM is a service mark of, New York Stock Exchange, Inc. ("NYSE") and have been licensed for use for certain purposes by First Trust Portfolios L.P. The Target Triad Portfolio, based on the NYSE International 100 Index^SM, is not sponsored, endorsed, sold, or promoted by NYSE and NYSE makes no representation regarding the advisability of investing in such products.