S&P Target SMid 60 Portfolio, 1st Quarter 2018 Series
S&P Target SMid 60 Strategy
S&P Target SMid 60 1Q '18 - Term 4/9/19 (S&P Target SMid 60 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 designed
to identify small and mid-capitalization stocks with improving fundamental performance
and market sentiment.
The strategy focuses on small and mid-size companies because
we believe they are more likely to be in an earlier stage of their economic
life cycle than mature large-cap companies. In addition, the ability to take
advantage of share price discrepancies is likely to be greater with smaller
stocks than with more widely followed large-cap stocks, in our opinion. The portfolio seeks
above-average total return; however, there is no assurance the objective will
Portfolio Selection Process
The strategy is based on these important steps:
- Begin with the stocks that comprise the S&P MidCap 400 and the S&P SmallCap
- Rank the stocks in each index by price-to-book value. Select the best quartile
from each index - 100 stocks from the S&P MidCap 400 Index and 150 stocks
from the S&P SmallCap 600 Index with the lowest, but positive, price-to-book
- Rank each stock on three factors:
- Price to cash flow
- 12 month change in return on assets
- 3 month price appreciation
- Eliminate any regulated investment companies, limited partnerships, business development
companies, and stocks with a market capitalization of less than $250 million and with an
average daily trading volume of less than $250,000.
- The 30 stocks from each index with the highest combined ranking on the three factors are selected for the portfolio.
- The stocks selected from the S&P MidCap 400 Index are given approximately
twice the weight of the stocks selected from the S&P SmallCap 600 Index.
As you can see in the adjacent charts, if this strategy had been applied since
1995, investors would have realized higher total returns than by investing in
the S&P 1000 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 S&P Target SMid 60 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
Not FDIC Insured Not Bank Guaranteed May Lose Value
||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 S&P 1000 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. Strategy returns assume that all dividends are reinvested semi-annually 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 S&P 1000 Index in certain years and may produce negative results.
The S&P 1000 Index is an unmanaged index of 1000 stocks used to measure small
and mid-cap U.S. stock market performance by combining the S&P MidCap 400 and
S&P SmallCap 600 indices. An 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 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 an investment that is concentrated in
stocks in the energy sector involves additional risks, including
limited diversification. The companies engaged in the energy
sector are subject to certain risks, including price and supply
fluctuations caused by international politics, energy
conservation, taxes, price controls, and other regulatory
policies of various governments. Falling oil and gas prices may
negatively impact the profitability and business prospects of
certain energy companies.
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
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.
Certain of the securities in the portfolio are issued by Real
Estate Investment Trusts (REITs). Companies involved in the real
estate industry are subject to changes in the real estate market,
vacancy rates and competition, volatile interest rates and
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.
"S&P", "S&P MidCap 400", "S&P SmallCap 600", and "Standard & Poor's" are trademarks of Standard & Poor's Financial Services LLC ("S&P") and have been licensed for use by First Trust Portfolios L.P.
The S&P Target SMid 60 Portfolio is not sponsored, endorsed, sold, or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in