S&P Dividend Aristocrats Target 25 Portfolio, 1st Quarter 2020 Series
The S&P Dividend Aristocrats Target 25 Portfolio in a unit investment trust which is based on the S&P 500 Dividend Aristocrats
Index and invests in companies from the index. The index consists of companies from the S&P 500 Index that have increased
dividends every year for at least 25 consecutive years. The index captures companies with a history of providing sustainable
dividend income and capital appreciation potential, both key factors in total return. The objective of the portfolio is to identify
companies with the potential to provide total return through a combination of dividend income and capital appreciation; however,
there is no assurance the objective will be met. The strategy is based on these steps:
- Begin with the stocks that comprise the S&P 500 Dividend Aristocrats Index. Regulated investment companies, limited
partnerships and business development companies are not eligible for selection.
- Rank each stock on three equally weighted factors:
- Debt-to-equity. Compares a company's long-term debt to their stockholder's equity. Higher
levels of this ratio are associated with higher risk, lower levels with lower risk.
- Price-to-cash flow. Measures the cost of a company's stock for every dollar of cash flow
generated. A lower, but positive, ratio indicates investors are paying less for the cash flow generated
which can be a sign of value.
- Return-on-assets. Compares a company's net income to its total assets. The ratio shows how
efficiently a company generates net income from its assets.
- Purchase an approximately equally weighted portfolio of the 25 stocks with the best overall
ranking on the three factors with a maximum of seven stocks from any one of the major Global
Industry Classification Standard (GICS) market sectors.
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 Dividend Aristocrats Target 25 Portfolio.
*Sources: Bloomberg and Compustat. All data as of 12/31/19. Years of dividend growth is calculated on the
local share price and based on calendar year. Data is for illustrative purposes only and is not indicative of any
actual investment. Dividend growth among the companies included in the portfolio may not necessarily
correlate with the overall performance of the trust. There is no guarantee that the issuers of the securities
included in a trust will declare dividends in the future or that, if declared, they will either remain at current
levels or increase over time. Past performance is no guarantee of future results.
Why Invest In Companies With A History Of Growing Dividends?
Quality | Companies that have been able to consistently grow their dividend have a tendency to be high
quality compared to those of the broader market in terms of earnings quality and leverage, in our opinion. A
company's ability to reliably increase its dividend for years, or even decades, can be an indication of its financial
strength or discipline.
Buffer Against Market Volatility | Dividend growth companies may be attractive to investors looking
for disciplined companies that can endure difficult market and economic environments. These companies typically
feature healthy balance sheets and consistent cash flows that provide plenty of capital to effectively operate their
business and fund a growing dividend.
Address The Potential Risks Associated With Rising Rates | Unlike high dividend yield
strategies which tend to be concentrated in companies from certain sectors that could come under pressure during
periods of rising rates, dividend growth strategies tend to be more diversified and able to provide increased exposure
to sectors that could become more desirable with improving economic activity and rising rates.
The S&P Dividend Aristocrats Target 25 Portfolio is a unit investment trust which is based on the S&P 500 Dividend Aristocrats Index. The objective of the S&P Dividend Aristocrats Target 25 Portfolio
is to identify companies with the potential to provide total return through a combination of dividend income and capital appreciation; however, there is no assurance the objective will be met.
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 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.
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 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.
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
You should be aware that the portfolio is
concentrated in stocks in both the consumer
products and industrials 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 industrials sector are subject to certain
risks, including a deterioration in the general
state of the economy, intense competition,
domestic and international politics, excess
capacity and changing spending trends.
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.
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.
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.
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.
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 plan.
The S&P 500 Dividend Aristocrats Index is a product of S&P Dow Jones Indices LLC or its affiliates
("SPDJI") and has been licensed for use by First Trust Portfolios L.P. Standard & Poor's® and S&P® are registered trademarks of Standard & Poor's Financial Services LLC ("S&P"); Dow Jones® is a
registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks
have been licensed for use by SPDJI and sublicensed for certain purposes by First Trust Portfolios
L.P. The S&P Dividend Aristocrats Target 25 Portfolio is not sponsored, endorsed, sold or promoted
by SPDJI, Dow Jones, S&P, their respective affiliates, and none of such parties make any
representation regarding the advisability of investing in such product nor do they have any liability
for any errors, omissions, or interruptions of the S&P 500 Dividend Aristocrats Index.