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Value Line® Target Safety 30 Portfolio, Series 1

Who Is Value Line®?

Since its foundation in 1931,Value Line®, Inc. has grown to be an organization that stands at the forefront of the investment community. For more than 85 years, the Value Line® name has been synonymous with trust and integrity. They are best known for publishing The Value Line Investment Survey®, a stock analysis newsletter that is one of the most highly regarded and widely used independent investment research resources. The Value Line Investment Survey® is a comprehensive source of information on approximately 1,700 stocks in approximately 100 industries.

Waht Is The Value Line® Safety Rank?

Value Line® ranks approximately 1,700 stocks which represent approximately 90% of the trading volume on all U.S. stock exchanges. The Value Line® Safety Rank measures the total risk of a stock relative to the other stocks in the Value Line® universe. Value Line®bases their rankings from #1 through #5 on various factors including price stability and financial strength. Stocks rated #1 or #2 are less volatile than those rated #4 or #5.

Stocks with high safety ranks are often associated with large, financially sound companies, many of which regularly pay cash dividends. These same companies also often have somewhat more moderate growth prospects because their primary markets tend to be mature. Stocks with low safety ranks are often associated with companies that are smaller and/or have weaker than average finance


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Value Line® Target Safety 30 Portfolio

The Value Line® Target Safety 30 Portfolio is a unit investment trust that seeks to provide exposure to U.S. exchange-listed companies with strong balance sheets, above average dividend yields and historically low volatility by investing in 30 companies that Value Line® gives a #1 or #2 ranking for SafetyTM. The portfolio takes a total return approach to investing in dividend-paying companies rather than “chasing yield,” which has often harmed investors total return over the years. The stocks are selected by applying a disciplined investment strategy which adheres to pre-determined screens and factors. The portfolio seeks above-average capital appreciation; however, there is no assurance the objective will be met.

The strategy is based on these steps:

  • Begin with all stocks or ADRs that Value Line® gives a #1 and #2 ranking for SafetyTM;.
  • Eliminate business development companies, regulated investment companies, limited partnerships, real estate investment trusts and companies that do not trade on U.S. exchanges.
  • Select companies with a market capitalization greater than $1 billion and a three month average daily dollar volume greater than $5 million.
  • Select companies with an indicated dividend yield above 2%.
  • Eliminate companies that do not have positive free cash flow after subtracting dividends and those that do not have return on equity above 10%.
  • Rank all of the remaining companies on price volatility and price to cash flow. These rankings are separate, but equally weighted. Companies with lower price volatility and lower, but positive, price to cash flow receive higher rankings.
  • Purchase an approximately equally weighted portfolio of the 30 eligible stocks with the best overall ranking subject to a maximum of six stocks in any one of the major Global Industry Classification Standard (GICS®) market sectors. If, through the selection process, the stocks selected would cause the portfolio to exceed the six stocks in any one GICS sector limitation, the lowest ranked stock or stocks from that GICS sector will be replaced with the next highest ranked stock or stocks in any of the other GICS sectors. In the event of a tie, the stock with lower price to cash flow is selected.

If this strategy had been applied since 1996, investors would have realized higher total returns and lower standard deviation 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 Value Line® Target Safety 30 Portfolio.

Reasons To Consider Low-Volatility Dividend-Paying Stocks

  • History shows that, over the long-term, dividends provide a key component of total return. As interest rates remain low, investors are focusing their attention toward dividend paying stocks.
  • Historically, dividends have made up a significant portion of stock market total return. According to Ibbotson Associates, dividends have provided approximately 42% of the 10.04% average annual total return on the S&P 500 Index from January 1926 through December 2016.
  • Due to the fact that corporations are not obligated to share their earnings with stockholders, dividends may be viewed as a sign of a company’s profitability as well as management's assessment of the future, in our opinion.
  • We believe that companies that distribute dividends on a regular basis generally demonstrate financial strength and positive performance relative to their peers.
  • For investors focused on long-term investment objectives, one way to potentially mitigate the adverse effects of market movements is to invest in relatively low-volatility stocks. Typically, these stocks do not have as dramatic price fluctuations (relative to other stocks), but tend to change in value steadily over time.
  • History has shown that portfolios of low-beta and low-volatility stocks have produced higher risk-adjusted returns than portfolios of high-beta and high-volatility stocks, in most major markets studied.
Not FDIC Insured • Not Bank Guaranteed • May Lose Value

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Standard Deviations* Average Annual Total Returns*
S&P 500
Index
Strategy S&P 500
Index
Strategy
Since 1996 15.10% 12.34% 8.35% 10.73%
20 years 15.27% 12.43% 7.67% 10.40%
15 years 14.34% 11.28% 6.69% 9.06%
10 years 15.26% 12.08% 6.94% 8.39%
5 years 10.36% 9.26% 14.64% 14.85%
3 years 10.73% 9.23% 8.85% 10.32%
*Through 12/30/16


Annual Total Returns
Year S&P 500
Index
Strategy
1996 22.89% 17.51%
1997 33.31% 29.83%
1998 28.55% 13.99%
1999 21.03% 0.54%
2000 -9.10% 19.02%
2001 -11.88% 11.32%
2002 -22.09% -7.45%
2003 28.65% 19.15%
2004 10.87% 20.65%
2005 4.90% 5.36%
2006 15.76% 17.02%
2007 5.56% 1.01%
2008 -36.99% -24.76%
2009 26.46% 26.02%
2010 15.08% 7.52%
2011 2.08% 8.77%
2012 15.98% 11.65%
2013 32.36% 33.31%
2014 13.66% 12.85%
2015 1.38% 1.23%
2016 11.93% 17.53%
10/31/17 16.89% 8.78%

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.

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 1.85% and estimated annual operating expenses of 0.185%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Returns assume that dividends 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). A higher degree of variability indicates more volatility and therefore greater risk.

“Value Line,” “The Value Line Investment Survey,” “Timeliness,” and “Safety” are trademarks or registered trademarks of Value Line, Inc. (“Value Line”) and have been licensed for use for certain purposes by First Trust Portfolios L.P. and First Trust Advisors L.P. This product is not sponsored, endorsed, recommended, sold or promoted by Value Line and Value Line makes no representation regarding the advisability of investing in products utilizing such strategy. First Trust Portfolios L.P. and First Trust Advisors L.P. are not affiliated with any Value Line company.

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 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 which includes foreign securities should be made with an understanding of the additional risks involved, such as currency fluctuations, political risk, the lack of adequate financial information and exchange control restrictions impacting foreign issuers.

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.

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.

Although this unit investment trust terminates in approximately 15 months, the strategy is longterm. 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.

 
Fund Cusip Information
30305V548 (Cash)
30305V555 (Reinvest)
30305V563 (Cash-Fee)
30305V571 (Reinvest-Fee)
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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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