U.S. Infrastructure Portfolio, Series 40

A sound infrastructure is fundamental to the quality of life and the economic growth and development of a community. Infrastructure assets help provide products and services that have become essential to everyday life such as water and wastewater systems, roads, railways, airports, utilities, hospitals, schools and communications systems. The U.S., while considered to be a world leader in many aspects, lags other developed regions, especially Europe, when it comes to the condition of its aging infrastructure. This unit investment trust (UIT) invests in companies that provide products or services that aid the development and maintenance of our country’s infrastructure system as well as companies that tend to benefit from an increasing economic growth rate.

The Aging of America

Infrastructure funding gaps in the U.S. are immense in comparison to the rest of the world. An estimated $9.1 trillion is needed for all categories covered in the Infrastructure Report Card (at right) to reach a state of good repair. To close the nearly $4.4 trillion 10-year investment gap, meet future need, and restore our global competitive advantage, the U.S. must increase investment from all levels of government and the private sector.

• The U.S. has more than 623,000 bridges of which 6.8% are considered structurally deficient, meaning they are in “poor” condition. In addition, approximately 45% of the bridges are at least 50 years old. To bring the nation’s bridges into a state of good repair, an additional $373 billion is needed over the next 10 years.

• The growing wear and tear to our nation’s roads has left approximately 39% of our public roadways in poor or mediocre condition, an improvement from 43% in 2020.

• Our nation continues to under invest in school facilities, leaving an estimated $85 billion per year gap in funding. Critical needs include water upgrades to remove lead and the installation of cooling systems.

• There are nearly 1.9 million miles of conveyance pipes across the nation. Annual capital needs for stormwater and wastewater are estimated to be $99 billion with a funding gap of $69 billion, which means only 30% of needs are being met.

• Public transit is essential to the nation’s transportation network. The nation’s transit programs will require an estimated $20.3 billion per year through 2038 to achieve a state of good repair.

Source: American Society of Civil Engineers

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 industrials sector 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.

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.

A public health crisis, and the ensuing policies enacted by governments and central banks in response, could cause significant volatility and uncertainty in global financial markets, negatively impacting global growth prospects.

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.