Water Utility & Infrastructure Select Portfolio, Series 62
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
- By 2025, about 1.8 billion people will be living in regions or countries with absolute water scarcity,
according to The World Bank.
- 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 U.S. population is being served by government-owned water systems.2 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.3
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 Aqua America
3 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 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 the portfolio is concentrated in stocks in both the industrials and utilities sectors 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. The companies engaged in the
utilities sector are subject to certain risks, including price and supply fluctuations caused by international politics, energy conservation, taxes, and other regulatory policies of various governments.
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 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.
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.
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.
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.
The COVID-19 global pandemic has resulted in major disruptions to economies and markets around the world. Financial markets have experienced extreme volatility and severe losses, negatively impacting global economic
growth prospects. The duration of the COVID-19 outbreak and its effects cannot be determined with certainty and may exacerbate other political, social and economic risks.
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.