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Virtual Economy Portfolio, Series 7

The lockdown of the U.S. and many economies around the world has prompted a real-time stress test of the long-predicted digital future. Many companies adapted to the shelter-in-place work environment and some may continue to change their operations even as the virus dissipates. 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 people staying at home during and even after the COVID-19 pandemic. 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. With the spread of COVID-19 digital media consumption has increased as people spend more time at home. Consumption is expected to increase across social media, over-the-top video and online gaming.1

  • Consumer Discretionary | This sector has felt the impact of the COVID-19 pandemic as people canceled trips and avoided leisure activities. The 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. Prior to the pandemic, the U.S. labor market was strong with healthy consumer balance sheets which may help this sector going forward.

  • Information Technology | Gartner forecasts worldwide IT spending to total approximately $4.5 trillion in 2022, an increase of 5.5% from 2021. In addition, global cloud revenue is anticipated to reach $474 billion in 2022, up from $408 billion in 2021.

1 emarketer

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.

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 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.

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.

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.

 

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2022 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

Fund Cusip Information
30324W329 (Cash)
30324W337 (Reinvest)
30324W345 (Cash-Fee)
30324W352 (Reinvest-Fee)
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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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