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Electric and Future Vehicle and Technology Portfolio, Series 1

The automobile industry is undergoing fundamental transformations as consumers shift away from traditional fuel-powered vehicles to all-electric and hybrid electric vehicles. With the price of gasoline rising; an increasingly global focus on sustainability concerns around oil dependence; advances in the technologies behind vehicle and battery materials to improve drivable range; and growing access to vehicle charging stations via infrastructural initiatives, there may be continued demand for electric and autonomous vehicle technologies as these innovative technologies grow and evolve. This unit investment trust (UIT) provides exposure to companies that are engaged in the development and sales of electric and autonomous vehicle technologies.

Consider The Following

  • The global electric vehicle (EV) market size is expected to reach $803 billion by 2027 with a compound annual growth rate (CAGR) of more than 20% from 2019-2027.1

  • The LMC Automotive consulting firm had estimated that new fully EV sales in the U.S. will approach 400,000 at year-end 2021, nearly double the total for 2020. They expect EV sales to top 730,000 in 2022 and eclipse the two million mark by 2025.1

  • It is projected that 25% of new cars sold will be battery-powered by 2030, increasing to over 80% by 2050.1

1,3 Statista
2 USA Today

Portfolio Objective

This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.

Portfolio Selection Process

The initial universe of stocks is selected from the S-Network Electric & Future Vehicle Ecosystem Index. Next we examine the historical financial results of the stocks from the initial universe. The stocks are then evaluated using fundamental factors such as sales, earnings and cash flow growth; valuation factors such as price/earnings, price/cash flow, price/sales and price/book; technical factors such as price momentum and earnings surprises; and qualitative factors such as competitive advantages, new products and quality of management.

An estimated value is calculated for each of the companies utilizing a Cash Flow Return on Investment (CFROI) method. A secondary valuation is also made employing a concept called Economic Margin. The companies which currently trade at an attractive market price relative to their estimated value are favored over companies that do not.

Our selection process attempts to find the stocks with the best prospects for above-average capital appreciation by identifying those that meet our investment objectives, trade at attractive valuations, and, in our opinion, are likely to exceed market expectations of future cash flows.

The final portfolio is selected by a team of equity analysts and consists of 25 approximately equally weighted stocks.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

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 information technology sector which involves additional risks, including limited diversification. 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. There is no assurance that the projections stated herein will be realized.

The automotive industry can be highly cyclical, and companies in the industry may suffer periodic operating losses. The industry can be significantly affected by labor relations and fluctuating component prices. While most of the major automotive manufacturers are large companies, others may be non-diversified in both product line and customer base and may be more vulnerable to events that negatively impact the industry.

Electric vehicle technology is a relatively new technology and is subject to risks associated with a developing industry including intense competition, delays or other complications with production, rapid product obsolescence, increased government regulation, market volatility, and uncertainty of the ability of new products to penetrate established industries, among other factors. Many electric vehicle companies are heavily dependent on patent protection, and the expiration of a company’s patent may adversely affect that company’s profitability. Electric vehicle companies are also subject to competitive forces that may result in price discounting, may be thinly capitalized and susceptible to product obsolescence.

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.

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.

The COVID-19 global pandemic has caused significant volatility and declines in global financial markets, causing losses for investors. The development of vaccines has slowed the spread of the virus and allowed for the resumption of “reasonably” normal business activity in the United States, although many countries continue to impose lockdown measures. Additionally, there is no guarantee that vaccines will be effective against emerging 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.

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.

 
The information in the prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. The prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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