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SMid Biotechnology Portfolio, Series 4

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.

1 DOEgenomes.org

2,3 Biotechnology Innovation Organization


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 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

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 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.

Fund Cusip Information
30310G445 (Cash)
30310G452 (Reinvest)
30310G460 (Cash-Fee)
30310G478 (Reinvest-Fee)
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The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA and the Internal Revenue Code. First Trust has no knowledge of and has not been provided any information regarding any investor. Financial advisors must determine whether particular investments are appropriate for their clients. First Trust believes the financial advisor is a fiduciary, is capable of evaluating investment risks independently and is responsible for exercising independent judgment with respect to its retirement plan clients.
First Trust Portfolios L.P.  Member SIPC and FINRA.
First Trust Advisors L.P.
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