Target Diversified Dividend 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 is based on these steps:
- 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.
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 Target Diversified
Dividend Portfolio.
Portfolio Objective
This unit investment trust seeks above-average total
return; however, there is no assurance the objective will
be met.
| Not FDIC Insured • Not Bank Guaranteed • May Lose Value |
| Average Annual Total Returns* |
|
Russell 3000
Index |
Strategy |
| Since 1995 |
10.37% |
10.54% |
| 25 years |
7.74% |
9.06% |
| 20 years |
9.65% |
6.68% |
| 15 years |
13.82% |
10.14% |
| 10 years |
11.46% |
5.32% |
| 5 years |
15.14% |
11.20% |
| 3 years |
8.52% |
12.90% |
| *Through 12/29/23 |
| Annual Total Returns |
| Year |
Russell 3000
Index |
Strategy |
| 1995 |
36.57% |
28.09% |
| 1996 |
21.63% |
14.91% |
| 1997 |
31.67% |
25.90% |
| 1998 |
24.11% |
12.89% |
| 1999 |
20.96% |
17.47% |
| 2000 |
-7.30% |
19.75% |
| 2001 |
-11.43% |
29.55% |
| 2002 |
-21.53% |
-10.45% |
| 2003 |
31.02% |
46.97% |
| 2004 |
11.93% |
20.46% |
| 2005 |
6.10% |
1.91% |
| 2006 |
15.67% |
15.35% |
| 2007 |
5.16% |
-3.92% |
| 2008 |
-37.32% |
-37.10% |
| 2009 |
28.29% |
40.71% |
| 2010 |
16.93% |
20.14% |
| 2011 |
1.00% |
3.08% |
| 2012 |
16.41% |
10.70% |
| 2013 |
33.55% |
31.54% |
| 2014 |
12.53% |
5.11% |
| 2015 |
0.48% |
-13.08% |
| 2016 |
12.70% |
15.79% |
| 2017 |
21.10% |
6.56% |
| 2018 |
-5.24% |
-12.43% |
| 2019 |
30.99% |
25.95% |
| 2020 |
20.88% |
-6.17% |
| 2021 |
25.63% |
24.84% |
| 2022 |
-19.21% |
-2.95% |
| 2023 |
25.91% |
18.78% |
| 9/30/24 |
20.61% |
-1.01% |
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.
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. Risks associated with investing in non-U.S. securities may be more pronounced in emerging and developing 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.
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.