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Value Line® Target Safety 30 Portfolio, 3rd Quarter 2024 Series

Who Is Value Line®?

Since its foundation in 1931, Value Line®, Inc. has grown to be an organization that stands at the forefront of the investment community. For more than 90 years, the Value Line® name has been synonymous with trust and integrity. They are best known for publishing The Value Line Investment Survey®, a stock analysis newsletter that is one of the most highly regarded and widely used independent investment research resources. The Value Line Investment Survey® is a comprehensive source of information on approximately 1,700 stocks in approximately 100 industries.

What Is The Value Line® Safety Rank?

Value Line® ranks approximately 1,700 stocks which represent approximately 90% of the trading volume on all U.S. stock exchanges. The Value Line® Safety Rank measures the total risk of a stock relative to the other stocks in the Value Line® universe. Value Line® bases their SafetyTM rankings from #1 through #5 on various factors including price stability and financial strength. Stocks rated #1 or #2 tend to be less volatile than those rated #4 or #5.

Stocks with high safety ranks are often associated with large, financially sound companies, many of which regularly pay cash dividends. These same companies also often have somewhat more moderate growth prospects because their primary markets tend to be mature. Stocks with low safety ranks are often associated with companies that are smaller and/or have weaker than average finances.


VALUE LINE® SAFETY™ RANKING SYSTEM Chart

The Strategy

The Value Line® Target Safety 30 Portfolio is a unit investment trust that seeks to provide exposure to U.S. exchange-listed companies with strong balance sheets, above-average dividend yields and low volatility by investing in 30 companies that Value Line® gives a #1 or #2 ranking for SafetyTM. The stocks are selected by applying a disciplined investment strategy which adheres to pre-determined screens and factors. The portfolio seeks above-average capital appreciation; however, there is no assurance the objective will be met.

The strategy is based on these steps:

  • Begin with all stocks or ADRs that Value Line® gives a #1 and #2 ranking for SafetyTM.

  • Eliminate business development companies, regulated investment companies, limited partnerships, real estate investment trusts and companies that do not trade on U.S. exchanges.

  • Select companies with a market capitalization greater than $1 billion and a three month average daily dollar volume greater than $5 million.

  • Select companies with an indicated dividend yield above 2%.

  • Eliminate companies that do not have positive free cash flow after subtracting dividends and those that do not have return on equity above 10%.

  • Rank all of the remaining companies on price volatility and price to cash flow. These rankings are separate, but equally weighted. Companies with lower price volatility and lower, but positive, price to cash flow receive higher rankings.

  • Purchase an approximately equally weighted portfolio of the 30 eligible stocks with the best overall ranking subject to a maximum of six stocks in any one of the major Global Industry Classification Standard (GICS®) market sectors. If, through the selection process, the stocks selected would cause the portfolio to exceed the six stocks in any one GICS® sector limitation, the lowest ranked stock or stocks from that GICS® sector will be replaced with the next highest ranked stock or stocks in any of the other GICS® sectors. In the event of a tie, the stock with lower price to cash flow is selected. If the sector maximum of six stocks does not result in a 30 stock portfolio, the sector restriction will be relaxed to seven stocks. If this too does not result in a 30 stock portfolio it will be relaxed to eight stocks, then nine, and finally a maximum of ten stocks in an any one of the major GICS® market sectors. Should a 30 stock portfolio not exist at the ten stock maximum, the next highest eligible dividend yielding names will be added until 30 eligible stocks are selected subject to a maximum of ten stocks in any one sector.

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 Value Line® Target Safety 30 Portfolio.

Reasons To Consider Low-Volatility Dividend-Paying Stocks

  • Due to the fact that corporations are not obligated to share their earnings with stockholders, dividends may be viewed as a sign of a company’s profitability as well as management's assessment of the future, in our opinion.

  • We believe that companies that distribute dividends on a regular basis generally demonstrate financial strength and positive performance relative to their peers.

  • For investors focused on long-term investment objectives, one way to potentially mitigate the adverse effects of market movements is to invest in relatively low-volatility stocks. Typically, these stocks do not have as dramatic price fluctuations (relative to other stocks), but tend to change in value steadily over time.

  • History has shown that portfolios of low-beta and low-volatility stocks have produced higher risk-adjusted returns than portfolios of high-beta and high-volatility stocks, in most major markets studied.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

Mountain Chart

Standard Deviations* Average Annual Total Returns*
S&P 500
Index
Strategy S&P 500
Index
Strategy
Since 1996 15.52% 13.13% 9.59% 9.57%
25 years 15.37% 13.21% 7.55% 8.34%
20 years 14.88% 12.68% 9.68% 8.39%
15 years 15.36% 13.32% 13.95% 10.38%
10 years 15.18% 13.74% 12.01% 7.15%
5 years 18.51% 16.94% 15.66% 6.60%
3 years 17.53% 14.03% 9.97% 6.40%
*Through 12/29/23


Annual Total Returns
Year S&P 500
Index
Strategy
1996 22.89% 17.65%
1997 33.31% 29.99%
1998 28.55% 14.12%
1999 21.03% 0.67%
2000 -9.10% 19.18%
2001 -11.88% 11.46%
2002 -22.09% -7.34%
2003 28.65% 19.31%
2004 10.87% 20.80%
2005 4.90% 5.49%
2006 15.76% 17.16%
2007 5.56% 1.13%
2008 -36.99% -24.66%
2009 26.46% 26.20%
2010 15.08% 7.65%
2011 2.08% 8.90%
2012 15.98% 11.79%
2013 32.36% 33.46%
2014 13.66% 12.99%
2015 1.38% 1.36%
2016 11.93% 17.66%
2017 21.80% 14.47%
2018 -4.39% -6.09%
2019 31.45% 22.20%
2020 18.39% -6.49%
2021 28.67% 12.55%
2022 -18.12% 3.89%
2023 26.24% 3.02%
6/28/24 15.28% -0.26%

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 S&P 500 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 0.185%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Returns assume that dividends are reinvested monthly. 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 S&P 500 Index in certain years and may produce negative results.

The S&P 500 Index is an unmanaged index of 500 companies used to measure large-cap U.S. stock market performance. 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 objectives, 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.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. 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.

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.

“Value Line”, “The Value Line Investment Survey”, “Timeliness,” and “Safety” are trademarks or registered trademarks of Value Line, Inc. (“Value Line”) and have been licensed for use for certain purposes by First Trust Portfolios L.P. This product is not sponsored, endorsed, recommended, sold or promoted by Value Line and Value Line makes no representation regarding the advisability of investing in products utilizing such strategy. First Trust Portfolios L.P. is not affiliated with any Value Line company.

 

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.

Fund Cusip Information
30335W524 (Cash)
30335W532 (Reinvest)
30335W540 (Cash-Fee)
30335W557 (Reinvest-Fee)
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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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