Market Strength Allocation Opportunity Portfolio, Series 3
Determining which areas of the market provide the best investment opportunities
can be a daunting task and sometimes economic climates break with tradition,
making investment decisions even more arduous. These situations have historically
offered opportunities for patient shareholders to increase their exposure in
Our goal with the Market Strength Allocation Opportunity
Portfolio is to invest in undervalued companies with strong market positions
that have the following qualities:
- Strong balance sheets;
- Skilled management;
- Highly liquid;
- Ability to generate earnings growth; and
- Record of financial strength and profit growth.
The objective of this unit investment trust is to provide investors the potential
for above-average capital appreciation; however, there is no assurance the objective
will be met. The portfolio terminates approximately two years from the initial
date of deposit.
Portfolio Selection Process
This unit investment trust will invest in a diversified portfolio of common
stocks of companies that exhibit financial strength from five distinct segments
of the market. The five market segments will be weighted based on the adjacent
Through our selection process we seek to find the companies that we believe have the best
prospects for above-average capital appreciation.
Identify the universe
The first step in our selection process is to identify each universe from which
we will select the stocks for the five market segments. Each universe contains
stocks selected specifically for each component of the allocation.
Screen for financial strength
The next step in our process is to evaluate companies based on multiple factors.These
factors are designed to identify those stocks which exhibit strong fundamental
characteristics and to eliminate those that do not meet our investment criteria.
Examine historical financial results
The next step in our process is to look for those companies that have earned
a net cash flow return on investment that is above the average of their peers.Historically,
companies that have increased their cash flows at a higher rate have rewarded
shareholders with superior total returns.
Select companies with attractive valuations
The final step in our process is to select companies based on the fundamental
analysis of our team of research analysts.The stocks selected for the portfolio
are those that meet our investment objective, trade at attractive valuations
and, in our opinion, are likely to exceed market expectations of future cash
|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 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.
You should be aware that the portfolio is concentrated in stocks in both the consumer
products and information technology sectors 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. 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 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. Risks associated with investing in foreign
securities may be more pronounced in emerging markets where the securities markets
are substantially smaller, less liquid, less regulated and more volatile than
the U.S. and developed 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.
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 trust may be subject to steep declines
or increased volatility due to changes in performance or perception of the issuers.