Dividend Growers and Tax-Advantaged Income Portfolio, Series 40

Investors who are looking for income while still retaining growth potential have limited alternatives. The Dividend Growers and Tax Advantaged Income Portfolio seeks to address this challenge by providing exposure to tax-exempt municipal bonds as well as companies with a history of dividend growth and the potential to increase their dividends over time. To gain this exposure, the portfolio invests in a combination of common stocks and exchange-traded funds (ETFs). Because stocks and bonds may react differently to changes in the economy and interest rates, diversifying assets in this manner has the potential to reduce the overall volatility of the portfolio.

The Importance of Dividends

Dividends have traditionally been one of the few constants in the world of investing, helping to buffer volatility in both good and bad markets. When markets decline, dividends have the potential to offset losses, and when markets rise, dividends have the potential to enhance returns. A dividend is a payment from a company’s earnings. Since corporations are not obligated to share their earnings with stockholders, dividends may be viewed as a sign of a company’s profitability as well as management’s assessment of the future.

Municipal Bond Basics

A municipal bond is a debt obligation of a state and/or local government entity which is used to help build America’s infrastructure by raising money to finance public projects such as new hospitals, schools and improved roads. In return, investors in tax-exempt municipal bonds receive earnings which are free from federal income taxes and, in some cases, state and local income taxes. Because of their low correlation to many other fixedincome and equity assets, municipal bonds can also provide diversification benefits within an investor’s portfolio. It is important to note that certain of the trust’s investments in municipal securities may be subject to the alternative minimum tax. In addition, distributions from the trust’s non-municipal investments and municipal investments which are not tax-exempt will be subject to federal income taxes.

Portfolio Objectives

This unit investment trust seeks current monthly income and capital appreciation; however, there is no assurance the objectives will be met.

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.

Risk Considerations
An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning common stocks and exchange-traded funds that invest in municipal bonds.

ETFs are subject to various risks, including management’s ability to meet the fund’s investment objective, and to manage the fund’s portfolio when the underlying securities are redeemed or sold, during periods of market turmoil and as investors’ perceptions regarding ETFs or their underlying investments change. Unlike open-end funds, which trade at prices based on a current determination of the fund’s net asset value, ETFs frequently trade at a discount from their net asset value in the secondary market.

Common stocks are subject to risks 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.

Certain of the funds invest in investment grade securities. Investment grade securities are subject to numerous risks including higher interest rates, economic recession, deterioration of the investment grade security market or investors’ perception thereof, possible downgrades and defaults of interest and/or principal.

Municipal bonds are subject to numerous risks, including higher interest rates, economic recession, deterioration of the municipal bond market, possible downgrades and defaults of interest and/or principal.

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.

Ongoing armed conflicts between Russia and Ukraine in Europe and among Israel, Hamas and other militant groups in the Middle East, have caused and could continue to cause significant market disruptions and volatility within the markets in Russia, Europe, the Middle East 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.

It is important to note that an investment can be made in the underlying funds directly rather than through the trust. These direct investments can be made without paying the trust’s sales charge, operating expenses and organizational costs.

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.

For a discussion of additional risks of investing in the trust see the “Risk Factors” section of the prospectus.