S&P/Drucker Institute Corporate Effectiveness, Series 4

The S&P/Drucker Institute Corporate Effectiveness Portfolio is a unit investment trust (UIT) which is based on two innovative measures – the Drucker Institute corporate effectiveness score and the S&P Dow Jones Indices (DJI) quality score. Together these two measures form the S&P/Drucker Institute Corporate Effectiveness Index which was created to identify a company’s capacity for creating value while managing risk based on a core set of principles advanced by the late Peter Drucker. The objective of the portfolio is above-average capital appreciation; however, there is no assurance the objective will be met.

Peter Drucker/The Drucker Institute

Peter Drucker was an American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation. Mr. Drucker is widely regarded as “the man who invented management,” and is one of the best-known and most widely influential thinkers and writers on the subject of management theory and practice.

The Drucker Institute is a social enterprise based at Claremont Graduate University in California. It was founded by Peter Drucker to carry forward his ideas and ideals. Its mission is strengthening organizations to strengthen society. Since 2007, the Drucker Institute has worked with thousands of leaders from major corporations, nonprofit organizations, and government agencies to help make them more effective – that is, as Drucker defined it, “doing the right things well.”

S&P/Drucker Institute Corporate Effectiveness Index

The S&P/Drucker Institute Corporate Effectiveness Index is designed to track stocks in the S&P 500 Index that consistently rank highly on proprietary management criteria. The index uses an innovative construction process that considers both financial and intangible management performance. The Drucker Institute believes these companies create value through excellence in customer satisfaction, employee engagement and development, innovation, social responsibility, and high-quality financial metrics. The index was constructed to identify companies that exhibit both excellence and consistency in how they create and sustain value. Together with SPDJI’s quality factor, the Drucker Institute’s company ranking system offers an index-based approach to measure corporate effectiveness. The best of these companies, based on rankings by the Drucker Institute, are published annually in a special section of The Wall Street Journal as the “Management Top 250.” Although the index includes environmental, social and governance (ESG) indicators, it puts ESG ratings in place alongside the Drucker Institute’s four other dimensions of corporate management. The index is a transparent and thorough expression of Peter Drucker’s holistic management principles as applied in an investment instrument.

Portfolio Selection Process/Score Definitions

The S&P/Drucker Institute Corporate Effectiveness Portfolio invests in 50 equally weighted common stocks of companies that rank highest in the S&P/Drucker Institute Corporate Effectiveness Index. Companies are evaluated based on several criteria as defined below:

• Drucker Institute Score: The average of the scores for the four non-financial Drucker
  Institute dimensions of corporate performance.
• S&P Quality Score: Identified using three attributes of equal importance – return on equity, balance sheet accruals and leverage.
• Combined Score: Calculated by weighting the Drucker Institute score at 67% and the S&P quality score at 33%.
• Consistency Score: Represents the average of the percent ranks for the Drucker Institute components and the S&P quality score.

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.

You should carefully consider the portfolio's investment objectives, risks, and charges and expenses 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 information technology sector which involves additional risks, including limited diversification. The companies engaged in the information technology sector are subject to fierce competition, high research and development costs, and their products and services may be subject to rapid obsolescence. Technology company stocks, especially those which are Internet-related, may experience extreme price and volume fluctuations that are often unrelated to their operating performance.

One of the common stocks held by the trust is issued by a real estate investment trust (REIT). Companies involved in the real estate industry are subject to changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession.

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.

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.

The COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.

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 S&P/Drucker Institute Corporate Effectiveness Index (SPDICE) is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”) and has been licensed for use by First Trust Portfolios L.P. Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”), and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust Portfolios L.P. The S&P/Drucker Institute Corporate Effectiveness Portfolio is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any representation regarding the advisability of investing in such products nor do they have any liability for any errors, omissions, or interruptions of SPDICE. "Peter F. Drucker” is a registered trademark of The Drucker 1996 Literary Works Trust, and has been licensed for use by SPDJI and sublicensed by First Trust Portfolios L.P. The Drucker 1996 Literary Works Trust is not a sponsor of and has not approved, authorized, reviewed or been involved in any aspect of this or any other product based on the Drucker Institute’s company rankings.