Virtual Economy Portfolio, Series 8
Over the last couple of years, the U.S. and many economies around the world experienced
a real-time stress test of the long-predicted digital future as many companies adapted to the
shelter-in-place work environment. This reality has prompted some companies to change their
operations going forward. The Virtual Economy Portfolio is a unit investment trust that invests in
companies that we believe will have the potential to benefit from the increased practice of living
and working in a more digital world. The portfolio is mainly represented in the communication
services, consumer discretionary and information technology sectors.
Consider The Following
- Communication Services | This sector includes media and entertainment companies. The
gap between traditional media and digital media consumption continues to widen as people
devote less time to analog formats (television, radio, or print) and more time to digital formats
(mobile, computers, and other connected devices). It is estimated that, in 2023, adults in the
U.S. will spend an average of eight hours and 20 minutes per day on digital media, an increase
of one hour and 31 minutes from 2019.1
- Consumer Discretionary | This sector is dominated by companies that produce products
and services that consumers often do without when they are under financial stress or worried
about the state of the economy. This sector felt the impact of the pandemic as people canceled
trips and avoided leisure activities. However, after two years of summer holidays lost to COVID
restrictions, the summer of 2022 is anticipated to be the busiest since the pandemic began.
In fact, global hotel occupancy levels for April and May 2022 exceeded pre-pandemic levels.2
- Information Technology | Gartner forecasts worldwide IT spending to total approximately
$4.4 trillion in 2022, an increase of 4.0% from 2021. In addition, global end-user spending on
public cloud services is anticipated to reach $494.7 billion in 2022, up from $410.9 billion in
2021. End-user spending is projected to reach nearly $600 billion in 2023.
1 emarketer
2 Amadeus Hospitality
Portfolio Objective
This unit investment trust seeks above-average capital appreciation; however, there is no
assurance the objective will be met.
Portfolio Selection Process
An initial universe of virtual economy stocks is selected by First Trust Analysts. At the time of
portfolio selection, the stocks have adequate liquidity for investment and trade on a major U.S.
stock exchange.
Next, we evaluate each stock by examining the stock’s relative valuation and other qualitative
factors such as competitive advantages, new products and quality of management.
Our selection process attempts to find the stocks with the best prospects for 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 comprised of 30 approximately equally weighted Virtual Economy stocks.
| 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 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.
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.
An investment in a portfolio containing mid-cap companies is subject to additional risks, as the share prices of 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.
In February 2022, Russia invaded Ukraine which has caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, and the United States. The hostilities and sanctions resulting from those hostilities could have a significant impact on certain investments as well as performance.
The COVID-19 global pandemic has caused and may continue to cause significant volatility and declines in global financial markets. While the U.S. has resumed “reasonably” normal business activity, 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.
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.