Target Dividend Blend Portfolio, 4th Quarter 2023 Series
The Target Dividend Blend Portfolio is a unit investment trust which seeks to provide broad equity diversification and dividend income by investing in
common stocks across various market capitalizations, growth and value styles, sectors and countries. The trust invests in a fixed portfolio of stocks which
are selected by applying pre-determined screens and factors and holds the stocks for approximately 15 months. The trust seeks above-average total
return; however, there is no assurance the objective will be met. The trust is comprised of the two strategies described below.
Target High Quality Dividend Strategy – 50%
- Begin with the 1,000 stocks with the largest market capitalization as of two business days
prior to the initial date of deposit which trade on a U.S. exchange, excluding REITs, ADRs,
regulated investment companies and limited partnerships.
- Select only those stocks that meet the following criteria:
- Minimum three month average daily trading volume of $2.5 million.
- Three consecutive years of dividend increases.
- Screen for quality on the following factors:
- Net debt/assets of less than 50%.
- Three-year payout ratio of less than 50% of earnings.
- Positive free cash flow after dividends for the trailing 12 months.
- Purchase an approximately equally weighted portfolio of the 30 stocks with the highest
dividend yield, subject to a maximum of nine stocks from any one of the major GICS® market
sectors. The financials and real estate sectors are combined for the sector limit purpose.
Target Global Dividend Leaders Strategy – 50%
- Establish three distinct universes as of two business days prior to the initial date of deposit
which consist of the following: domestic equity, international equity, and U.S. REITs (including
- Regulated investment companies and limited partnerships are excluded from all universes.
REITs (including mortgage REITs) are also excluded from the domestic and international
- Select the stocks in each universe that meet the following criteria:
- Market capitalization greater than $1 billion.
- Three month average daily trading volume greater than $1 million.
- Current indicated dividend yield greater than twice that of the S&P
500 Index at the time of selection.
- Rank the selected stocks within each universe on three equally
- Price to cash flow.
- Return on assets.
- 3, 6, and 12-month price appreciation.
- Select the 20 stocks within each universe with the best overall combined rankings. The
domestic and international equity universes are subject to a maximum of four stocks from
any one of the major GICS® market sectors. The financials and real estate sectors are combined for
the sector limit purpose. If a universe has less than 20 eligible securities, all eligible
securities are selected.
- The universes are approximately weighted as shown below. Stocks are approximately equally weighted within their universe.
- 40% domestic equity.
- 40% international equity.
- 20% REITs.
Not FDIC Insured Not Bank Guaranteed May Lose Value
||Average Annual Total Returns*
||Russell 3000 Index
||Russell 3000 Index
|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 Russell 3000 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 all dividends received during a year 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 Russell 3000 Index in certain years and may produce negative results.
The Russell 3000 Index is an unmanaged index used to measure the performance of the largest 3000 U.S. stocks based on total market capitalization. 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.
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.
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 economic recession.
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. Risks associated with investing in non-U.S. securities may be more pronounced in emerging
markets where the securities markets are substantially smaller, less developed, less liquid, less regulated,
and more volatile than the U.S. and developed non-U.S. 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.
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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, 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.