Electric Utilities, Infrastructure & Technology, Series 1

America’s electrical grid was built when our electricity needs were simpler and our demand for power was much lower. A rise in domestic electricity consumption combined with aging infrastructure has compelled experts to critically examine the capacities and limitations of the current grid. As our homes and businesses incorporate ever-increasing numbers of electronic devices with expanded technological capabilities, our utilities need to learn about and respond to changing electrical demand in real time. A shift is underway toward a new and improved electric power grid that makes this real-time learning possible–a system that is designed to provide energy efficiency, reduced environmental impact and improved consumer choice: the smart grid.

Integrating nuclear energy with smart grid technology has the potential to increase energy efficiency, reliability, and sustainability. By leveraging the strengths of both, the growing demands for energy can be addressed while minimizing environmental impacts.

Consider The Following

• Electricity demand is increasing about twice as fast as overall energy use and is anticipated to increase by more than half between 2022 and 2040.¹ The surge in demand is driven partly by data centers for artificial intelligence and high performance computing. Nuclear energy is the only clean source capable of continuous, around-the-clock operations. It is one of the few options that can ensure grid reliability at the scale required.^2,3


• Uranium is a vital component for the production of nuclear fuel. The energy in one uranium fuel pellet creates as much energy as one ton of coal, 149 gallons of oil, or 17,000 cubic feet of natural gas.⁴


• Nuclear energy generates more electricity with less land than all other renewable energy sources. For example, a wind farm would require 140,000 acres to generate the same amount of electricity as a 1,000 megawatt reactor, over 170 times the land needed for a nuclear reactor.⁵


• Nuclear is the largest source of clean power in the U.S. and produces nearly half of the nation’s emissions-free electricity. This avoids more than 471 million metric tons of carbon yearly, the equivalent of removing 100 million cars off the road.⁶

¹ World Nuclear Association
^2,4,5 NEI - Nuclear Fuel
^3,6 Office of Nuclear Energy - U.S. Department of Energy

Portfolio Selection Process

The portfolio is selected from an initial universe of electric utility, infrastructure, and technology companies as well as others that have devoted material resources or made material commitments to the development and sale of electricity technologies.

Next, we examine the historical financial results of the stocks from the initial universe. The stocks are then evaluated using fundamental factors such as sales, earnings and cash flow growth; valuation factors such as price to earnings, price to cash flow, price to sales and price to book; technical factors such as price momentum and earnings surprises; and qualitative factors such as competitive advantages, new products and quality of management.

An estimated value is calculated for each of the companies utilizing a Cash Flow Return on Investment (CFROI) method. A secondary valuation is also made employing a concept called Economic Margin. The companies which currently trade at an attractive market price relative to their estimated value are favored over companies that do not.

The selection process attempts to find the common stocks with the best prospects for aboveaverage capital appreciation by identifying those that meet the trust’s investment objective, trade at attractive valuations, and, in sponsor’s opinion, are likely to exceed market expectations of future cash flows.

The final portfolio is comprised of 40 approximately equally weighted stocks.

Portfolio Objective

This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.

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.

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 both the industrials and information technology sectors which involves additional risks, including limited diversification. The companies engaged in the industrials sector are subject to certain risks, including a deterioration in the general state of the economy, intense competition, domestic and international politics, excess capacity and changing spending trends. 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.

Smart grid companies can be negatively affected by high costs of research and development, high capital requirements for implementation, government regulations, limited ability of industrial and utility companies to implement new technologies and uncertainty of the ability of new products to penetrate established industries.

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 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.

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.

Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East 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 ongoing effects of the COVID-19 global pandemic, or the potential impacts of any future public health crisis, may cause significant volatility and uncertainty in global financial markets. While vaccines have been developed, there is no guarantee that vaccines will be effective against future 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.