Target Triad Portfolio, 4th Quarter 2023 Series
This unit investment trust seeks above-average total return by adhering to a simple investment strategy; however, there is no assurance the objective will be met. The portfolio provides you with the
convenience of owning three distinct strategies in one investment. It invests in a fixed portfolio of stocks which are selected by applying pre-determined screens and factors. The portfolio is comprised
of the three strategies described below.
Target Growth Strategy – 60%
- Begin with all stocks traded on a U.S. exchange and screen for the following:
- Minimum market capitalization of $6 billion.
- Minimum three month average daily trading volume of $5 million.
- Minimum stock price of $5.
- Eliminate REITs, ADRs, regulated investment companies and limited partnerships.
- Select only those stocks with positive one year sales growth.
- Rank the remaining stocks on three factors:
- Sustainable growth rate.
- Change in return on assets.
- Recent 6-month price appreciation.
- Purchase an approximately equally weighted portfolio of the 30 stocks with the highest
combined ranking on the three factors, subject to a maximum of six stocks from any one of
the major GICS market sectors. The financials and real estate sectors are combined for the
sector limit purpose.
Target Diversified Dividend Strategy – 30%
- Begin with all stocks traded on a U.S. exchange and screen for the following:
- Minimum market capitalization of $250 million.
- Minimum three month average daily trading volume of $1.5 million.
- Minimum stock price of $5.
- Eliminate REITs, ADRs, regulated investment companies and limited partnerships.
- Select only those stocks with positive three year dividend growth.
- Give the remaining stocks a weighted ranking on three factors:
- Indicated dividend yield – 50%.
- Price to book – 25%.
- Payout ratio – 25%.
- Purchase an approximately equally weighted portfolio consisting of four stocks from each of
the major GICS market sectors with the highest combined ranking on the three factors. The
financials and real estate sectors are combined for the sector limit purpose.
NYSE® International Target 25 Strategy – 10%
- Begin with the stocks that comprise the NYSE International 100 IndexSM.
The index consists of the 100 largest non-U.S. stocks trading on the New York
Stock Exchange.
- Rank each stock on two factors:
- Price to book.
- Price to cash flow.
- Screen for liquidity by eliminating companies with average daily trading
volume below $300,000 for the prior three months.
- Purchase an approximately equally weighted portfolio of the 25 eligible
stocks with the best overall ranking on the two factors.
|
Not FDIC Insured • Not Bank Guaranteed • May Lose Value
|
| Standard Deviations* |
Average Annual Total Returns* |
|
S&P 500
Index |
Strategy |
S&P 500
Index |
Strategy |
| Since 1996 |
15.55% |
17.41% |
9.02% |
9.40% |
| 25 years |
15.67% |
17.50% |
7.63% |
8.03% |
| 20 years |
14.75% |
17.45% |
9.79% |
7.14% |
| 15 years |
16.31% |
18.92% |
8.79% |
3.31% |
| 10 years |
14.76% |
16.64% |
12.54% |
7.92% |
| 5 years |
18.68% |
20.96% |
9.41% |
3.48% |
| 3 years |
21.15% |
23.65% |
7.65% |
3.15% |
| *Through 12/30/22 |
| Annual Total Returns |
| Year |
S&P 500
Index |
Strategy
|
| 1996 |
22.89% |
22.03% |
| 1997 |
33.31% |
34.62% |
| 1998 |
28.55% |
27.34% |
| 1999 |
21.03% |
31.74% |
| 2000 |
-9.10% |
11.79% |
| 2001 |
-11.88% |
4.77% |
| 2002 |
-22.09% |
-11.71% |
| 2003 |
28.65% |
38.12% |
| 2004 |
10.87% |
18.38% |
| 2005 |
4.90% |
12.15% |
| 2006 |
15.76% |
17.43% |
| 2007 |
5.56% |
13.24% |
| 2008 |
-36.99% |
-47.61% |
| 2009 |
26.46% |
27.03% |
| 2010 |
15.08% |
16.23% |
| 2011 |
2.08% |
-8.46% |
| 2012 |
15.98% |
7.38% |
| 2013 |
32.36% |
33.06% |
| 2014 |
13.66% |
4.39% |
| 2015 |
1.38% |
-0.15% |
| 2016 |
11.93% |
4.67% |
| 2017 |
21.80% |
24.43% |
| 2018 |
-4.39% |
-16.04% |
| 2019 |
31.45% |
28.76% |
| 2020 |
18.39% |
10.15% |
| 2021 |
28.67% |
15.35% |
| 2022 |
-18.12% |
-13.61% |
| 9/29/23 |
13.04% |
9.32% |
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 0.195%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Strategy returns assume that dividends are reinvested semi-annually while index returns assume
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 stocks 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.
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.
NYSE and NYSE® International 100 Index (“Index”) are service/trademarks of ICE Data Indices, LLC or its
affiliates (“IDI”) and have been licensed for use by First Trust in connection with the Target Triad Portfolio. The
portfolio is not sponsored, endorsed, sold or promoted by IDI and IDI makes no representations or warranties
regarding the advisability of investing in the portfolio. IDI and its third party suppliers accept no liability in
connection with use of the Index or the portfolio. See the prospectus for a full copy of the disclaimer.