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S&P Dividend Aristocrats Buy-Write, Series 3

The S&P Dividend Aristocrats Buy-Write Portfolio invests in a fixed portfolio of common stocks which are selected from the S&P 500 Dividend Aristocrats Index. The index consists of companies from the S&P 500 Index that have increased dividends every year for at least 25 consecutive years. Simultaneously, the portfolio sells a Long-Term Equity AnticiPation Securities (LEAPS®) call option against each position. The writing (selling) of a call option generates income in the form of a premium paid by the option buyer. The portfolio invests this income in U.S. Treasury notes and the interest received from the notes is paid to unit holders periodically.

You should be aware that a product which includes writing call options may not be suitable for all investors. It may not be appropriate for investors seeking above-average capital appreciation. Before investing, you should make sure you understand the risks of this type of product, and whether it suits your current financial objectives.

Why Invest In Companies With A History Of Growing Dividends?

QUALITY | Companies that have been able to consistently grow their dividend have a tendency to be high quality compared to those of the broader market in terms of earnings quality and leverage, in our opinion. A company’s ability to reliably increase its dividend for years, or even decades, can be an indication of its financial strength or discipline.

BUFFER AGAINST MARKET VOLATILITY | Dividend growth companies may be attractive to investors looking for disciplined companies that can endure difficult market and economic environments. These companies typically feature healthy balance sheets and consistent cash flows that provide plenty of capital to effectively operate their business and fund a growing dividend.

ADDRESS THE POTENTIAL RISKS ASSOCIATED WITH RISING RATES | Unlike high dividend yield strategies which tend to be concentrated in companies from certain sectors that could come under pressure during periods of rising rates, dividend growth strategies tend to be more diversified and able to provide increased exposure to sectors that could become more desirable with improving economic activity and rising rates.

Illustrative Market Scenarios

STOCK PRICES INCREASE ABOVE THE LEAPS’ EXERCISE PRICE | The LEAPS are exercised and the underlying stock shares are sold at the strike price. Profits are limited to the premium income received from writing the LEAPS, dividends received from the common stocks prior to their sale from the portfolio, interest received from the U.S. Treasury Obligations, plus the difference between each common stock’s initial price and their strike price. Investors will forgo any dividends paid on the common stocks subsequent to their sale from the portfolio and any gain in the underlying stock price after the stock is sold. It is important to note that writing covered calls limits the appreciation potential of the underlying common stocks.

STOCK PRICES REMAIN STABLE | The LEAPS expire worthless and the portfolio still owns the common stock shares. Profits are limited to the premium income received from writing the LEAPS, plus dividends from the stocks, as well as interest received from the U.S. Treasury Obligations.

ST0CK PRICES DECREASE | The LEAPS expire worthless and the portfolio still owns the common stock shares. The break even on the stocks is lowered by the premium income received from writing the LEAPS. In addition, the portfolio will receive dividends from the common stocks, and interest from the U.S. Treasury Obligations.

Portfolio Objectives

This unit investment trust seeks income, with capital appreciation as a secondary objective. There is, however, no assurance that the objectives will be achieved.


Not FDIC Insured • Not Bank Guaranteed • May Lose Value

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.

“Standard & Poor’s”, “S&P”, “S&P 500” and “S&P Dividend Aristocrats” are trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and the trademarks have been licensed for use by S&P Dow Jones Indices LLC (“SPDJI”) and sublicensed for certain purposes by First Trust Portfolios L.P. The S&P Dividend Aristocrats Buy-Write Portfolio is not sponsored, endorsed, sold, or promoted by SPDJI, S&P or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product.

Risk Considerations:
An investment in this unmanaged unit investment trust should be made with the understanding of the risks involved with common stocks, LEAPS, and U.S. Treasury notes.

Common stocks are subject to 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.

The value of the LEAPS is deducted from the value of the portfolio assets when determining the value of a unit. As the value of the LEAPS increases, it has a more negative impact on the value of the units. The value of the LEAPS will also be affected by changes in the value and dividend rates of the underlying stocks, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the stocks and the remaining time to expiration. Additionally, the value of the LEAPS does not increase or decrease at the same rate as the underlying stock. However, as the LEAPS approach their expiration date, their value increasingly moves with the price of the stock.

The value of U.S. Treasury notes will be adversely affected by decreases in bond prices and increases in interest rates.

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 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.

Options are subject to various risks including that their value may be adversely affected if the market for the option becomes less liquid or smaller. In addition, options will be affected by changes in the value and dividend rates of the stock subject to the option, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the common stock and the remaining time to expiration.

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 cyber security.

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.

This UIT is a buy and hold strategy and investors should consider their ability to hold the trust until maturity. There may be tax consequences unless units are purchased in an IRA or other qualified plan.

 
Fund Cusip Information
30310H104 (Cash)
30310H112 (Cash-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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