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FT Equity Allocation ETF Model, 4th Qtr 2021

Finding the right mix of investments is a key factor to successful investing. Because different investments often react differently to economic and market changes, diversifying among low-correlated investments, which generally experience unrelated performance, primarily helps to reduce volatility and also has the potential to enhance your returns. The FT Equity Allocation ETF Model Portfolio is a unit investment trust which seeks to provide broad equity diversification by investing approximately 70% in exchange-traded funds (ETFs) advised by First Trust Advisors L.P., an affiliate of the trust’s sponsor, that invest in common stocks across various market capitalizations, growth and value styles, sectors and countries. The remaining 30% of the portfolio invests in narrowly focused First Trust® ETFs that invest in common stocks of companies from several different sectors, countries and/or themes that we believe will outperform the overall market over the life of the trust. The ETFs included in the portfolio are selected by the First Trust Advisors Model Investment Committee through a dynamic approach.

Core and Satellite Approach

For decades, investors have implemented asset allocation strategies designed around a core and satellite approach. This is a strategy of investing in broad based equity asset classes included in 70% of the trust as described above, which serve as the core investments of the portfolio, and enhancing them with positions that are concentrated in specific market segments included in 30% of the Trust as described above, which serve as the satellite investments of the portfolio. The goal of the core and satellite approach is to balance broad diversification while seeking risk-controlled, enhanced performance. We use this approach to construct the FT Equity Allocation ETF Model Portfolio.

What is an ETF?

ETFs offer investors the opportunity to buy and sell an entire basket of securities with a single transaction throughout the trading day. ETFs combine the characteristics of a mutual fund with the convenience and trading flexibility of stocks. Below is a list of other ETF features.

  • Diversification - ETFs hold a basket of securities which helps to mitigate single security risk. It is important to note that diversification does not guarantee a profit or protect against loss.


  • Transparency - ETF holdings are available daily so investors know what they own.


  • Tax Efficiency - The ETF structure allows for increased tax efficiency.


  • Fully Invested - Unlike a traditional mutual fund, ETFs do not need to hold cash in order to satisfy investor redemptions which allows them to better adhere to their investment objective.
Not FDIC Insured • Not Bank Guaranteed • May Lose Value

Portfolio Objective

This unit investment trust seeks above-average capital appreciation by investing in a diversified portfolio of First Trust® equity ETFs; however, there is no assurance the objective will be met.

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 ETFs which invest in common stocks.

ETFs are subject to various risks, including management’s ability to meet the fund’s investment objective, and to manage the fund’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding ETFs or their underlying investments change. Unlike open-end funds, which trade at prices based on a current determination of the fund’s net asset value, ETFs frequently trade at a discount from their net asset value in the secondary market.

Common stocks are subject to risks 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.

Certain of the ETFs invest in securities issued by foreign issuers. Such securities are subject to certain risks, including currency and interest rate fluctuations, nationalization or other adverse political or economic developments, lack of liquidity of certain foreign markets, 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.

About one year after the United Kingdom officially departed the European Union (commonly referred to as “Brexit”), the United Kingdom and the European Union reached a trade agreement that became effectiveon December 31, 2020. It is not currently possible to determine the extent of the impact the Brexit tradeagreement may have on the portfolio’s investments and this certainly could negatively impact current andfuture economic conditions in the United Kingdom and other countries, which could negatively impact the value of the portfolio’s investments.

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 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.

It is important to note that an investment can be made in the underlying funds directly rather than through the trust. These direct investments can be made without paying the trust’s sales charge, operating expenses and organizational costs.

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.

For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.

 
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.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
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