Target Small-Cap Portfolio, 2nd Quarter 2012 Series
Target Small-Cap 2Q '12 - Term 7/9/13 (Target Small-Cap 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 U.S. companies which trade on the NYSE, the NYSE Amex or Nasdaq (excluding limited partnerships, ADRs and mineral and oil royalty trusts) and screen for the following:
- Positive earnings over the last year.
- Market capitaliztion between $150 million and $1 billion and average daily
trading volume of more than $500,000 (based on 1996 dollars).
- Select only companies with positive three-year sales growth.
- Eliminate any company whose stock has appreciated more than 75% in the last
- Identify and purchase a market cap-weighted portfolio of the 40 companies
with the greatest price appreciation in the last 12 months.
If this strategy had been applied since 1979, investors would have realized
higher total returns than by investing in the Russell 2000 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 Small-Cap 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
| Standard Deviations*
|| Average Annual Total Returns*
|Annual Total Returns
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 indices.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 and a breakpoint sales charge of 1.40% in 2007 and 2008, estimated annual operating expenses of 0.187%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Strategy returns assume that all dividends are reinvested semi-annually while index returns assume dividends are reinvested when they are received.
Actual portfolio performance will vary from that of investing in the strategy
stocks because it may not be weighted the same as the strategy stocks and may
not be fully invested at all times. It is important to note that the strategy
may underperform the Russell 2000 Index in certain years and may produce negative
The Russell 2000 Index is an unmanaged market-capitalization weighted index
of the smallest 2000 stocks within the Russell 3000 Index, designed to track
the performance of the small-cap portion of the U.S. market.
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.
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 consumer products and technology sectors which involves additional risks, including limited diversification. The companies engaged in the consumer products sector 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. The companies engaged in the technology sector are subject to fierce competition, extreme price and volume fluctuations, and their products and services may be subject to rapid obsolescence. Technology company stocks have experienced extreme price and volume fluctuations that are often unrelated to their operating performance.
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
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.