SMid Biotechnology Portfolio, Series 3
U.S. drug approvals hit a 21-year high of 46 in 2017, according to Reuters. A growing share of new
medicines are coming from younger biotechnology companies. In addition, mergers and acquisitions
(M&A) activity is expected to rise in 2018 due to corporate tax cuts and the repatriation of cash held
offshore. The SMid Biotechnology Portfolio invests in small and mid-cap biotechnology companies that
we believe have the potential for growth at a faster rate because they are more likely to be in an earlier
stage of their economic life cycle than mature large-cap biotechnology companies.
While biotechnology has already had a significant impact on the diagnosis, treatment and prevention of
diseases, we believe further advances could potentially bring about radically new approaches to health
care. We are in a new era in medical research and health care made possible by the exponential growth in
knowledge of gene structure and function. The Human Genome Project has opened new doors to
breakthrough research. At the start of the project in 1990, scientists had discovered fewer than 100 human
disease genes. After completion of the project, more than 1,400 disease genes had been identified.1
Consider the following factors:
- More than 250 biotechnology health care products and vaccines are currently available • to patients,
many for previously untreatable diseases2
- Biotechnology is becoming more involved in the agriculture sector. Agricultural biotechnology benefits
farmers, consumers and the environment by increasing yields and farm income, decreasing pesticide
applications and improving soil and water quality, and providing healthful foods for consumers. More
than 13.3 million farmers globally use agricultural biotechnology.3
- We believe the outlook for long-term investing remains quite encouraging due to promising drug
launches, cost-cutting efforts, an aging population, increasing health care spending, increased merger
& acquisition activity and expansion into emerging markets.
2,3 Biotechnology Innovation Organization
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 objective, 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.
|Not FDIC Insured Not Bank Guaranteed May Lose Value
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 biotechnology and pharmaceutical companies in the health care sector which involves
additional risks, including limited diversification. The companies engaged in the biotechnology and pharmaceutical industries are subject to fierce
competition, substantial research and development costs, governmental regulations, pricing constraints, and their products and services may be subject
to rapid obsolescence. Biotechnology and pharmaceutical stocks have experienced extreme price and volume fluctuations that are often unrelated to
their operating performance. In addition, implementation of the Health Care and Education Affordability Reconciliation Act of 2010 continues to have
significant implications for companies in the health care sector.
An investment in a portfolio containing small-cap and mid-cap
companies is subject to additional risks, as the share prices of smallcap
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.
An investment in a portfolio containing
equity securities of foreign issuers is subject
to additional risks, including currency
fluctuations, political risks, withholding,
the lack of adequate financial information,
and exchange control restrictions
impacting foreign issuers. Risks associated
with investing in foreign securities may
be more pronounced in emerging markets
where the securities markets are
substantially smaller, less liquid, less
regulated and more volatile than the U.S.
and developed foreign markets.
Although this portfolio terminates in
approximately 15 months, the strategy is
long-term. Investors should consider their
ability to pursue investing in successive
portfolios, if available. There may be tax
consequences unless units are purchased in
an IRA or other qualified plan.
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 cyber security.
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.