Innovative Technology, Series 38
Technologically innovative companies are those that create or use technology to create growth. Innovation from companies around the world continues to advance at a rapid pace. Cutting-edge
technologies, such as 5G and cloud computing, have the potential to revitalize the economy and spark sustained growth.
We believe an important factor of an economy’s ability to foster innovation is the amount its companies spend on research and development (R&D). By this measure, as shown in the chart, the U.S. was
projected to spend $679.4 billion in R&D in 2022. We believe that companies with a history of innovation that continue to effectively use R&D have the potential to outperform the overall market.
Access to Transforming Technologies
The Innovative Technology Portfolio provides access to companies in areas of the market we believe are
5G is the new mobile wireless system that is expected to transform our world. 5G runs on a higher frequency than 4G LTE and promises dramatically faster upload and download speeds, reduced
lag time and greater network capacity to handle a significantly higher number of connected devices.
Artificial Intelligence & Robotics
Artificial intelligence emphasizes the creation of
intelligent machines that work and react like humans. Robotics is the branch of technology that deals
with the design, construction, operation and application of robots.
Clean energy is developed from renewable, zero-emissions sources, as well as energy that is stored through energy efficiency measures. As opposed to coal and oil, clean energy does
not pollute the atmosphere. The clean energy industry generates hundreds of billions in economic activity and is anticipated to grow rapidly in the coming years.1
Offers more efficiency in computing by centralizing storage, memory,
processing and bandwidth at a lower cost and with greater flexibility.
Cybersecurity is used to protect computers, information and services from
unauthorized users and is applied to computing devices, as well as to networks and the Internet.
e-Commerce refers to the buying and selling of goods or services using the Internet. Worldwide retail e-commerce sales reached approximately $5.21 trillion in 2021 and were estimated
to reach $5.72 trillion in 2022. By 2026, sales are anticipated to reach $8.15 trillion.2
Internet Of Things
The interconnection via the Internet of computing devices embedded in
everyday objects, enabling them to send and receive data.
Social networking is changing the way businesses communicate with
customers, generate new revenue streams and reduce operating costs.
1 U.S. Department of Energy
This unit investment trust seeks above-average capital appreciation by investing in a
fixed portfolio of common stocks of companies we believe are technologically
innovative; 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 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 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
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
The COVID-19 global pandemic and the ensuing policies enacted by governments and central banks have
caused and may continue to cause significant volatility and uncertainty 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 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