ESG Impact Opportunity, Series 3
Environmental, social and governance (ESG) investing is a process for evaluating how companies’ ESG
practices may affect their stock return potential. This unit investment trust has been developed to provide
values-based investors control over where their investment dollars are allocated.
Investing With A Purpose
ESG is a set of criteria that investors can use to measure how well a company is managing its risks and
opportunities related to environmental, social, and governance issues.
Environmental criteria examine how a company performs as a steward of the natural
environment. Such criteria measure how well a company manages its impacts, as well as its actual performance
in curbing its own emissions, managing its water use and waste, and other environmental metrics.
Social criteria examine how a company manages its relationships with its employees, suppliers,
customers, and society in general. Social criteria include labor relations and human capital development,
supply chain management, human rights and community relations management.
Stakeholder governance criteria determine the quality of the company’s overall
management of ESG and its relationship with shareholders. They assess the quality of policies and
management systems to ensure that the company operates in an ethical manner, and that it maintains a
healthy leadership structure.
Who Is Sustainalytics
Sustainalytics is an independent ESG and corporate governance research and analysis firm supporting investors
around the world with the development and implementation of responsible investment strategies. Established
in 1992, Sustainalytics has been a trusted partner of responsible investors for over 25 years.
Sustainalytics collaborates with institutions within the capital markets, helping them turn vast quantities of
environmental, social and governance information into insightful, value-added analysis to enable more
informed investment decisions. Sustainalytics serves over 450 clients, across 24 countries, providing
them with comprehensive ESG and corporate governance research, ratings and analysis on more than 10,000
companies worldwide. Their vision, mission and their core values are listed below.
Sustainalytics believes it is imperative for the global economy to become more just and sustainable.
Sustainalytics’ mission is to provide the insights required for investors and companies to make more
informed decisions that lead to a more just and sustainable global economy.
Portfolio Selection Process
The ESG Impact Opportunity Portfolio is a unit investment trust which invests in companies using a comprehensive evaluation process based on Sustainalytics’ ESG metrics. Each company included in
the portfolio is assigned an ESG rating. The Sustainalytics ESG rating provides an assessment of issuers relative to peers within Sustainalytics’ 42 global industry peer groups. These ratings measure
how well issuers proactively manage the environmental, social and governance issues that are the most material to their business. Based on a structured, objective and transparent methodology,
ESG ratings provide an assessment on companies’ ability to mitigate risks and capitalize on opportunities. Sustainalytics’ analyst knowledge is a critical component of the ratings as the analyst
applies expertise based on extensive company and sector knowledge to assess indicators, and provides an opinion of the issuer’s performance on its key ESG issues. First Trust then evaluates each
company using fundamental investment factors to select companies for the portfolio which have strong characteristics, trade at attractive valuations, and in its opinion, are likely to exceed market
expectations of future cash flows.
This unit investment trust 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 objectives, risks, and
charges and expenses carefully before investing. Contact your financial advisor
or call First Trust Portfolios, L.P. 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.
An investment in a portfolio containing 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 available information.
One of the securities in the portfolio 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.
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 value of the securities held by the trusts may be subject to steep declines or increased
volatility due to changes in performance or perception of the issuers.
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.