Digital World Leaders Strategy Portfolio, Series 5
The tasks we do on a daily basis continue to shift to digital sources. This phenomenon is occurring
worldwide, not just here in the United States. In fact, a lot of countries outside of the United States are
significantly further along in terms of their transition to a digital economy. Every day, the world
population shifts more of its workload and daily tasks to online or computerized sources.
This change is broad based and affects any number of industries. Shopping, content dissemination,
human interaction, and advertising have all seen significant transitions to online mediums over the last
decade and we believe that we are still in the early stages of this digital transformation.
This shift in global behavior is typically dominated by large scale companies that tend to be first when
bringing a new service or product to market. These companies tend to have the resources to evolve,
transform, and acquire as technology changes and consumer demand alters. The majority of these
companies provide comprehensive mega‐platforms that offer consumers the bulk of the services they
require with one convenient payment. As this trend develops and consumers become accustomed, these
companies may have a potential advantage over others and according to Pence Capital Management, LLC,
these companies are anticipated to dominate their industries.
This unit investment trust seeks above-average capital appreciation; however, there is
no assurance the objective will be met.
About Pence Capital Management, LLC
Pence Capital Management, LLC is a registered investment advisory firm based in Newport Beach,
California. The firm uses its proprietary research to identify and deliver actionable investment insights. The
firm is led by Colonel (ret) E. Dryden Pence III, a Harvard-educated economist with 34 years of experience
in the financial industry. His formal training and knowledge in economics combined with his career of
more than 26 years in Army Intelligence, Special Operations and Psychological Warfare, gives the firm a
unique understanding of human behavior and its effects on the economy and the markets. The Digital
World Leaders Strategy Portfolio is based on the firm’s expertise in portfolio construction.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
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 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.
You should be aware that the portfolio is concentrated in stocks in the communication services, consumer discretionary and information technology sectors which involves additional risks, including limited diversification. The
companies engaged in the communication services sector are subject to rapidly changing technology, rapid product obsolescence, loss of patent protection, cyclical market patterns, governmental regulation, evolving industry
standards and frequent new product introductions. Certain companies may be particularly susceptible to cybersecurity threats, which could have an adverse effect on their business. The companies engaged in the consumer
discretionary sector are subject to global competition, changing government regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets. The
companies engaged in the information technology sector are subject to fierce competition, high research and development costs, and their products and services may be subject to rapid obsolescence. Technology company
stocks, especially those which are Internet-related, may experience extreme price and volume fluctuations that are often unrelated to their operating performance.ay
experience extreme price and volume fluctuations that are often unrelated to their operating performance.
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. Risks associated with investing in foreign 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 foreign markets.
Large capitalization companies may grow at a slower rate than the overall market.
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.
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.
The recent outbreak of a respiratory disease designated as COVID-19 was first detected in China in December 2019. The global economic impact of the COVID-19 outbreak is impossible to predict but is expected to disrupt
manufacturing, supply chains and sales in affected areas and negatively impact global economic growth prospects. The COVID-19 outbreak has also caused significant volatility and declines in global financial markets, which
have caused losses for investors. The impact of the COVID-19 outbreak may be short term or may last for an extended period of time, and in either case could result in a substantial economic downturn or recession.
Although this portfolio terminates in
approximately 15 months, the strategy is
long-term. Investors should consider their
ability to pursue investing in successive
portfolios, if available. There may be tax
consequences unless units are purchased
in an IRA or other qualified plan.