Health Care Select Portfolio, Series 77

The health care industry has been responsible for several discoveries that have led to new drugs and products designed to better serve the masses, especially the aging population. These discoveries have improved the quality of life and the life expectancy of millions. More recent research, relating to areas such as genomics, is providing avenues of growth never before imagined. Debilitating diseases, previously untreatable, are now often manageable or even curable. From 2023-2032, it is projected that health care spending will grow at an average rate of 5.6% annually, outpacing the projected average GDP growth of 4.3% per year over the same period. As a result, the health care spending share of GDP is expected to increase to 19.7% in 2032, up from 17.3% in 2022.¹

Medical Products & Supplies

The global medical device market is projected to reach approximately $886.8 billion by 2032, up from an estimated $518.5 billion in 2023.² The increase in hospital admissions, surgical and diagnostic procedures; the shift toward home healthcare services; the rising number of hospitals, especially in emerging countries; and the growing prevalence of chronic diseases and aging populations are fueling this trend. The development of less invasive and more portable devices has helped to eliminate the need for extensive inpatient hospital stays and is contributing to the increased adoption of home healthcare services. We believe that further advances may also serve to keep costs down and create demand for medical products, devices and supplies.

Biotechnology & Pharmaceuticals

A variety of new and improved medicines have expanded the options for doctors and patients, allowing previously untreatable or poorly treated illnesses to be treated effectively and giving patients and physicians new opportunities to prevent and manage disease. Managed care providers encourage the use of pharmaceuticals because they are a relatively inexpensive and less invasive form of treatment. In the last decade, biopharmaceutical companies have invested more than $1 trillion in research and development. Currently, there are approximately 8,000 medicines in clinical development around the world. Of these, nearly 70% have the potential to be first-in-class treatments, which represents an entirely new approach to treating a disease.³

¹ CMS.gov
² Fortune Business Insights
³ PhRMA

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 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 health care sector which involves additional risks, including limited diversification. The companies engaged in the health care sector are subject to fierce competition, high research and development costs, governmental regulations, loss of patent protection, and changing consumer spending trends. In addition, health crises, such as a pandemic outbreak, can severely impact the health care industry in particular.

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 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.