S&P Target SMid 60 Portfolio, 1st Quarter 2025 Series

The Strategy

This unit investment trust 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 seeks 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 be met.

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 600 Indices.


• 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 ratio.


• 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.

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.

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 0.195%, 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 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.

You should be aware that the portfolio is concentrated in stocks in the financials sector which involves additional risks, including limited diversification. The companies engaged in the financials sector are subject to the adverse effects of volatile interest rates, economic recession, decreases in the availability of capital, increased competition from new entrants in the field, and potential increased regulation.

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.

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.

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.

A public health crisis, and the ensuing policies enacted by governments and central banks in response, could cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

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.

The S&P MidCap 400 and the S&P SmallCap 600 Indices are products of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and have 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 Target SMid 60 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 MidCap 400 and the S&P SmallCap 600 Indices.