European Target High Quality Dividend Portfolio, 4th Quarter 2019 Series
The European Target High Quality Dividend 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 strategy is based on these steps:
- Begin with the largest 500 stocks by market capitalization with a three month average daily trading volume greater than $2.5 million which, according to MSCI, are from the following countries: Austria, Belgium, Denmark, Finland, France, Germany, Ireland, Italy, The Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and United Kingdom as of two business days prior to the date of the prospectus.
- Exclude ADRs, GDRs, limited partnerships and unit shares*.
- Include only those stocks with three
consecutive years of dividend increases.
- Screen for quality on the following factors:
- Net debt/assets of less than 50%.
- Three-year dividend payout ratio of less than 50% of earnings.
- Positive free cash flow after dividends for the trailing 12 months.
- From the list of stocks which satisfy each prong of the previous step, purchase an approximately equally weighted portfolio of the 30 stocks with the highest dividend yield, subject to a maximum of nine stocks from any one of the major GICS market sectors and twelve stocks from any one country. If, based upon the above restrictions, a stock is disqualified, the remaining stock with the highest dividend yield which satisfies the restrictions will be selected.
If this strategy had been applied since 2004, investors would have realized higher total returns than by investing in the MSCI Europe 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 European Target High Quality Dividend 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.
*A unit share is a combination of securities bought and sold as one unit, (i.e., a preferred share with a warrant or common share attached).
This unit investment trust seeks above-average total return; however, there is no assurance the objective will be met.
|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 MSCI Europe 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 0.611%, plus organization costs, but not taxes or commissions
paid by the portfolio to purchase securities. Strategy returns assume that all
dividends are reinvested monthly 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 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 MSCI Europe Index in certain years and may produce negative results. The MSCI Europe Index is an unmanaged index designed to measure developed market equity performance in Europe. 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.
You should consider the portfolio's investment objective, 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.
Because the portfolio invests in securities issued by companies headquartered in Europe, France and Germany, the portfolio may
present more risks than a portfolio which is broadly diversified over several regions.
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.
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
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 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.