Aerospace & Defense Portfolio, Series 40
As the name implies, the aerospace and defense industry serves two main markets:
Aerospace | Largely comprised of companies involved in the production, sale, and service of
commercial aircraft. Air travel increased substantially in 2022 with average daily checkpoint
travel numbers of approximately 2.1 million compared to an average of 1.6 million in 2021.1 This
recovery in air travel is leading to increased aircraft orders.2
Defense | Dependent on a nation’s need for military weapons and systems designed to operate
on land, sea, and in the air. The United States military is unquestionably the dominant force in
the world. Defense spending is expected to increase around the globe, as nations continue to
strengthen their militaries in response to heightened geopolitical tensions.3
2,3 Deloitte, 2023 Aerospace and Defense Industry Outlook
This unit investment trust seeks above-average capital appreciation; however, there is
no assurance the objective will be met.
| Not FDIC Insured Not Bank Guaranteed May Lose Value
You should carefully consider the portfolio's investment objectives,
risks, and charges and expenses 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 an investment that is concentrated in stocks in the industrials sector 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 involved in the aerospace and defense industries are subject to fierce competition, consolidation, adverse political and government developments, substantial research and development costs, limited numbers
of potential customers and excess capacity and spending trends. Their products and services may be subject to rapid obsolescence.
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.
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 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.