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Earnings Leaders Portfolio, Series 3

Choosing stocks can be a difficult task for an individual investor as many do not have access to the necessary resources it takes to do in-depth research and analysis. When evaluating stocks, analysts use many different metrics to assess equity securities while also taking into account the markets and current economic conditions. The Earnings Leaders Portfolio is a unit investment trust (UIT) that seeks to identify companies that are consistently profitable and those that will continue to grow their profits even among economic uncertainty.

The Importance Of Earnings Growth

When evaluating a company, one key metric to consider is earnings growth. Earnings growth refers to the percentage increase in a company’s net income or earnings over a specific time period. This metric is used to evaluate a company’s financial performance and to determine the potential the company has for future success. A company with consistent and strong earnings demonstrates its ability to generate higher profits and are often viewed more favorably as positive earnings growth indicates a healthy and sustainable business.

Portfolio Selection Process

Through our selection process, we seek to find the stocks that we believe have the best prospects for above-average capital appreciation.

Identify the Universe | The first step in the selection process is to identify the universe of stocks from which the portfolio is selected. We begin with the largest 500 liquid and currently profitable U.S. stocks.

Screen for Profitabilty | The next step in our process is to look for those companies that are anticipated to be profitable in the current fiscal year.*

Screen for Growth | Next, we select those companies that are projected to have greater than 15% year-over-year earnings growth in each of the next two fiscal years.*

Rank on Multiple Factors | The final step in our process is to rank companies on a combination of factors based on the company’s profitability, fundamental momentum, and expected stability of future earnings.

Select the Portfolio | The final step is to select an approximately equally weighted portfolio of the 25 stocks with the best overall rankings, allowing no more than approximately 40% of the portfolio in any one sector.

*According to Capital IQ and based on consensus non-GAAP (Generally Accepted Accounting Principles) estimates. Non-GAAP earnings are earnings measures that are not prepared using GAAP and are not required for external reporting or other public disclosures. There is no assurance that consensus estimates will be met.


Portfolio Objective

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

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 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.

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.

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.

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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