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American Heroes Portfolio, Series 3

Each year men and women in the military transition from active or reserve military status to veteran. As of December 2023, there were an estimated 17.8 million veterans in the United States.1 The American Heroes Portfolio is a unit investment trust which invests in companies chosen from the Veterans Select IndexSM. The companies in the index have been selected for their support of military veterans, service members and their families through the creation of employment opportunities and development of employment policies.

The Veterans Select IndexSM was designed by VETS Indexes LLC. The index measures the performance of publicly traded companies that support U.S. military veterans through employment. The eligible universe of companies is maintained and populated from a variety of sources, including annual rankings, survey and recognition programs. There are various selection criteria, such as company culture, policies and reservist accommodations to identify these companies. In addition, these companies manage their risks and opportunities related to environmental, social and governance (ESG) issues.

Index Selection Criteria

To be included in the Veterans Select IndexSM, a company must be publicly traded and:

Index Selection Criteria Chart

The composition of the portfolio will not be adjusted to reflect any subsequent changes in the index during the life of the portfolio. It is important to note that the performance of the portfolio is not intended or expected to mirror the index for several reasons, including the fact that there are sales charges and expenses associated with an investment in the portfolio that are not associated with the index.

Consider The Following

  • The veteran unemployment rate stood at 3.0% in January 2024 up from 2.5% in January 2023 and down from 3.5% in January 2022.2

  • • All branches of the military invest heavily in leadership development across all ranks, which is just one of many qualities military talent brings to the workplace. In addition, these skills are tested in incredibly demanding roles.3

  • Veterans receive world-class training from the U.S. Military. Research has shown that companies that take advantage of such talent may help their own bottom lines in the long run.4

Portfolio Objective

This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.

Portfolio Selection Process

The initial universe of stocks is chosen directly from the Veterans Select IndexSM.

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/earnings, price/cash flow, price/sales and price/book; technical factors such as price momentum and earnings surprises; and qualitative factors such as competitive advantages, new products and quality of management.

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 (EM). EM measures the return a company earns versus its cost of capital to determine if a company is generating wealth. The analysts use the estimated valuations calculated by the CFROI and EM methods to determine which companies are trading at an attractive market price relative to their estimated value. These companies are favored for inclusion in the portfolio over companies that do not.

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 approximately equally weighted stocks.

1,2U.S. Bureau of Labor Statistics
3Hiring Our Heroes, U.S. Chamber of Commerce Foundation
4Wilshire

The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. The index cannot be purchased directly by investors. Past performance is no guarantee of future results.

VETS INDEXESSM and Veterans Select IndexSM are service marks of VETS Indexes LLC and have been licensed for use by the Sponsor. The Trust is not sponsored, endorsed, sold or promoted by VETS Indexes LLC and VETS Indexes LLC makes no representation regarding the advisability of investing in the Trust.


Not FDIC Insured • Not Bank Guaranteed • May Lose Value

You should consider the portfolio's investment objective, 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 the portfolio is concentrated in stocks in the industrials sector making it subject to additional risks, including limited diversification. The companies engaged in the industrials sector are subject to certain risks, including a deterioration in the general state of the economy, intense competition, domestic and international politics, excess capacity and changing spending trends.

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.

Although this portfolio 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.

 
The information in the prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2024 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

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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, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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