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
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
- 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.
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.
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.
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
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