7TwelveTM Portfolio, Series 1
The 7Twelve™ Balanced Portfolio is a unit investment trust that invests in exchange-traded funds (ETFs)
that are diversified among multiple asset classes. Unlike a traditional two-asset 60% equities/40% fixed
income portfolio, the 7Twelve™ Balanced Portfolio invests in seven core asset groups, which are subdivided
into 12 equal asset classes, in an effort to enhance performance and reduce risk. This investing
approach attempts to generate equity-like returns with bond-like risk. Each investment asset adds an
important dimension to the portfolio because of the historically low correlation and behavior between
them. Approximately 65% of the portfolio is invested in equities and diversifying assets and
approximately 35% of the portfolio is invested in fixed income and cash equivalents.
Who is 7Twelve Advisors, LLC?
7Twelve Advisors, LLC, founded in 2008, is an institutional investment management and Registered
Investment Advisor (RIA) firm. Their mission is to create fully diversified investment portfolios for institutional
and individual investors, based on multi-asset, index-based and equally weighted global strategies.
This unit investment trust seeks above-average capital appreciation; however, there is
no assurance the objective will be met.
|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 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 ETFs which
invest in common stocks and taxable bonds.
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. Certain of the ETFs may employ the use of leverage, which increases the
volatility of such funds.
Certain of the ETFs invest in common stocks. 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..
An investment in a portfolio
which includes securities issued by foreign companies should be made with an understanding of
the additional risks involved with foreign issuers, such as currency fluctuations, political risk,
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 liquid, less regulated
and more volatile than the U.S. and developed foreign markets.
Certain of the ETFs invest in small-cap and mid-cap companies. 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.
Certain of the ETFs invest in investment grade securities. Investment grade securities
are subject to numerous risks including higher interest rates, economic recession,
deterioration of the investment grade security market or investors’ perception thereof,
possible downgrades and defaults of interest and/or principal.
Certain of the ETFs invest in Real Estate Investment Trusts (REITs). Companies involved
in the real estate industry are subject to changes in the real estate market, vacancy
rates and competition, volatile interest rates and economic recession.
Certain of the ETFs invest in money market or similar securities as a defensive measure
when the fund’s investment advisor anticipates unusual market or other conditions. If
market conditions improve while a fund has invested in these securities, the potential
gain from the market upswing may be reduced, limiting the fund’s opportunity to
achieve its investment objective.
Certain of the ETFs invest in securities of
foreign issuers which are 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
Certain of the ETFs invest in Treasury Inflation
Protected Securities (“TIPS”). TIPS are subject
to numerous risks including changes in
interest rates, economic recession and
deterioration of the bond market or investors’
Certain of the ETFs invest in U.S. Treasury
obligations which are subject to numerous
risks including higher interest rates, economic
recession and deterioration of the bond
market or investors’ perceptions thereof.
Certain of the ETFs invest in commodities.
Commodity prices are subject to several
factors including, price and supply
fluctuations, excess capacity, economic
recession, domestic and international politics,
government regulations, volatile interest
rates, consumer spending trends and overall
capital spending levels.
Certain of the ETFs held by the trust invest in
derivatives such as swap agreements to gain
inverse exposure to its target index. As such,
the ETFs will be subject to credit risk with
respect to the amount it expects to receive
from counterparties to derivatives and
repurchase agreements entered into by the
ETFs. If a counterparty becomes bankrupt or
otherwise fails to perform its obligations due
to financial difficulties, the value of the trust’s
investment in the ETFs may decline.
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
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.
For a discussion of additional risks of
investing in the trust see the “Risk Factors”
section of the prospectus.