Blue Chip Stock Portfolio
Blue chip companies are widely regarded as front-runners in their respective industries. These companies often reside at the core of American business and market high-quality, essential products and services. Their products and services often remain in demand, even during periods of slow economic growth. Blue chips are nationally recognized companies that typically share these qualities: •Skilled management •Strong balance sheets •Highly liquid •Ability to generate earnings growth •Record of financial strength and profit growth One important advantage that blue chip companies enjoy over most companies is that they are usually very well capitalized, which has the potential to provide their stockholders with a greater degree of stability and consistent performance over time. According to the International Monetary Fund, U.S. GDP growth is estimated to be 1.6% in 2008 compared to overall global growth of 3.9%. In times like these, when the U.S. economy is experiencing slow economic growth, investors tend to gravitate toward less economically-sensitive companies. Because of their unique combination of historically-defensive market characteristics and global exposure, we believe that the Blue Chip Stock Portfolio represents an attractive opportunity for investors in light of current market conditions. The Blue Chip Stock Portfolio is diversified across many market segments and provides the opportunity to participate in global growth trends. Many blue chip companies today are finding more opportunities outside of the United States, where populations are growing rapidly and market penetration is lower. In 1950, about 66% of the world’s population lived in developing countries; in 1990, 80% did. By 2010, the figure may approach 82%.1 Realizing this, leading companies have been expanding into many untapped foreign markets where the growth rates in per capita income and spending are generally forecasted to outpace those of developed countries over the next decade.
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October 2008 Series
Large-cap stocks are at attractive price-toearnings (P/E) ratios on a historical basis, in our opinion. The chart shown below illustrates how much the P/E ratio of the S&P 500 Index has declined in recent years. As of October 2008, the P/E ratio of the S&P 500 Index, based on forward-looking earnings estimates for the next 12 months is 11.1, according to Bloomberg. 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.
S&P 500 Index P/E Ratio
30 25 20 15 10 5 0 ‘99 ‘00 ‘01 ‘02 ‘03 ‘04 ‘05 ‘06 ‘07 ‘08* Source: Baseline & Thomson First Call/Bloomberg *Estimated
Portfolio Objective
The objective of this unit investment trust is to provide investors the potential for aboveaverage capital appreciation; however, there is no assurance the objective will be met. The portfolio terminates approximately two years from the initial date of deposit.
Standard & Poor’s Industry Surveys
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 the number listed below 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. 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.
Not FDIC Insured • Not Bank Guaranteed • May Lose Value
BLOCFSOC1008
First Trust Portfolios L.P. Member SIPC • Member FINRA 1-800-621-1675 www.ftportfolios.com
Blue Chip Stock Portfolio
Portfolio Summary
Initial Offering Date: 10/16/2008 Initial Public Offering Price: $10.00 per Unit Estimated Net First Year Distribution per Unit:* $0.2278 Estimated Net Subsequent Year Distribution per Unit:* $0.2256 Portfolio Ending Date: 10/18/2010 CUSIPs: 30275V 205(c) 213(r) Fee Accounts CUSIPs: 30275V 221(c) 239(r) Ticker Symbol: FTBCHX *The estimated net annual distribution for the subsequent year is expected to be less than the amount for the first year because a portion of the securities included in the portfolio will be sold during the first year to pay for organization costs, the deferred sales charge and the creation and development fee. There is no guarantee that the issuers of the securities included in the portfolio will declare dividends in the future or that, if declared, they will either remain at current levels or increase over time.
October 2008 Series
Holdings Style Analysis
Large-Cap Growth Large-Cap Value 46.66% 53.34%
Holdings Sector Analysis
Consumer Discretionary Consumer Staples Energy Financials Health Care Industrials Information Technology Telecommunication Services Utilities 6.66% 13.31% 13.31% 13.33% 16.69% 13.34% 16.68% 3.34% 3.34%
Holdings
Ticker Company Name Price* Consumer Discretionary: BBY Best Buy Co., Inc. $24.58 NKE NIKE, Inc. 50.36 Consumer Staples: KR The Kroger Co. 24.56 PEP PepsiCo, Inc. 51.25 PG The Procter & Gamble Company 59.82 WMT Wal–Mart Stores, Inc. 50.05 Energy: CVX Chevron Corporation 59.98 COP ConocoPhillips 49.09 XOM Exxon Mobil Corporation 62.35 RIG Transocean Inc. 68.36 Financials: CB The Chubb Corporation 40.43 GS The Goldman Sachs Group, Inc. 113.15 JPM JPMorgan Chase & Co. 38.49 STT State Street Corporation 46.83 Health Care: ABT Abbott Laboratories 53.88 GENZ Genzyme Corporation (General Division) 63.98 JNJ Johnson & Johnson 60.54 MDT Medtronic, Inc. 40.84 PFE Pfizer Inc. 16.27 Industrials: CAT Caterpillar Inc. 42.06 GD General Dynamics Corporation 56.36 GE General Electric Company 19.25 UTX United Technologies Corporation 49.25 Information Technology: ADBE Adobe Systems Incorporated 25.94 CSCO Cisco Systems, Inc. 16.62 GOOG Google Inc. 339.55 HPQ Hewlett–Packard Company 38.61 ORCL Oracle Corporation 16.04 Telecommunication Services: T AT&T Inc. 24.62 Utilities: SO The Southern Company 32.59 *As of the close of business on 10/15/08. Market values are for reference only and are not indicative of your individual cost basis.
The style and sector characteristics of the portfolio are determined as of the initial date of deposit and may differ slightly from those indicated above due to the requirement that only whole shares be purchased for the portfolio and will likely vary thereafter due to market fluctuations in the underlying securities. For a complete description of these characteristics refer to the prospectus.
Sales Charges (based on a $10 public offering price)
Standard Accounts Transactional Sales Charges: Initial 1.00% Deferred 2.45% Creation & Development Fee: 0.50% Maximum Sales Charge: 3.95% Rollover purchases will receive a 1% discount off the public offering price. The rollover option is subject to modification, termination or suspension, without notice. The deferred sales charge will be deducted in three monthly installments commencing January 20, 2009. Fee/Wrap Accounts* Creation & Development Fee: 0.50% Maximum Sales Charge: 0.50% *Standard accounts sales charges apply to units purchased as an ineligible asset. The creation and development fee is a charge of $.05 per unit collected at the end of the initial offering period. If the price you pay exceeds $10 per unit, the creation and development fee will be less than 0.50%; if the price you pay is less than $10 per unit, the creation and development fee will exceed 0.50%.
Volume Discounts
If you invest at least $50,000, the maximum sales charge is reduced as follows: Initial Purchases $50,000 but less than $100,000 $100,000 but less than $250,000 $250,000 but less than $500,000 $500,000 but less than $1,000,000 $1,000,000 or more Maximum Sales Charge 3.70% 3.45% 3.10% 2.95% 2.45%