Water Utility & Infrastructure Select Portfolio, Series 52
The water industry is comprised of many companies that provide products and services geared toward the collection, conveyance, treatment and monitoring/analysis of water and wastewater for multiple purposes. Water is by far the most stable of all commodities due to the constant demand and uninterrupted supply. In the developing world, dirty water is a major health problem. In developed countries, demand is ever-increasing while water infrastructure is falling apart. The fact is, clean and cheap water is no longer something we can take for granted. The Water Utility and Infrastructure Select Portfolio invests in common stocks of companies that provide products and services related to the water industry.
This unit investment trust seeks above-average capital appreciation; however, there is no assurance the objective will be met.
The ever-increasing population and demands from industrial output continue
to strain the aging water infrastructure. This has placed pressure on governments
to rehabilitate their water infrastructure systems and raise the standards for
quality and enforcement.
Consider the following:
- Some water, wastewater, and stormwater systems have been in the ground for
more than 100 years. Estimates suggest that hundreds of billions of dollars
may be required to restore them and it would be the single largest public
works endeavor in our nation's history.1
- Today, about 1.6 billion people live with “absolute water scarcity,” and that’s expected to rise to 2.8
billion people in less than 10 years, according to The World Bank.2
- By 2030, global demand for water could exceed supplies by 40% unless there are major advances in
allocating and using water more efficiently, according to the United Nations Global Environmental
- Approximately 1.1 billion people worldwide lack access to water, and another 2.7 billion find water
scarce for at least one month of the year, according to World Wildlife Fund.
The majority of the population is being served by government-owned water systems.3 The bulk of these systems tend to be small (serving less than 3,300 customers) and typically do not have the capital resources to meet the challenge of maintaining the system as well as making necessary improvements.4 The current environment may provide an opportunity for privately-owned utilities, which together currently serve only a small percentage of the population, to acquire these smaller systems for prices that provide a very high return on invested capital and allow for significant economies of scale.
1 American Society of Civil Engineers
2 Nasdaq Global Information Services
3 Aqua America
4 Environmental Protection Agency
| Not FDIC Insured Not Bank Guaranteed May Lose Value
You should consider the portfolio's investment objectives, 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.
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 making it subject to 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.
An investment in a portfolio containing
water utilities & infrastructure companies
involves additional risks, including the
imposition of rate caps, increased
competition due to deregulation, the
difficulty in obtaining an adequate return
on invested capital or in financing large
construction programs, the limitations on
operations and increased costs and delays
attributable to environmental
considerations, and an increased focus on
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.
Certain of the securities held by the trust are issued by foreign entities. An investment in foreign
equities should be made with an understanding of the additional risks involved with foreign
issuers, such as currency fluctuations, political risk, withholding, the lack of adequate financial
information, and exchange control restrictions impacting foreign issuers.
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.
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.
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.