Investment Grade Multi-Asset Income Long-Term, 30
Corporate Bond Basics
A corporate bond is a debt obligation issued by a corporation. Issuing bonds can be an alternative to offering
equity ownership by issuing stock. Payments to bondholders have priority over payments to stockholders.
Taxable Municipal Bond Basics
A taxable municipal bond is a fixed-income security issued by a local government entity that seeks to
raise money to finance private development. The municipality issues taxable municipal bonds when it
hopes to attract a business and the jobs it might bring to the area, especially when the business may be
otherwise unable to obtain financing. Taxable municipal bonds typically offer yields more comparable to
those of other taxable fixed-income securities, such as corporate bonds or bonds issued by U.S.
governmental agencies, than to those of tax-exempt municipals.
Why Investment Grade?
Within the bond market, there is a category of bonds considered “investment grade.” Investment grade
bonds are rated BBB/Baa or higher by major credit rating agencies. The designation of a bond as
investment grade is based upon an evaluation by a credit rating agency of the corporation’s credit
history and ability to repay obligations. This rating of investment grade generally signifies that a credit
rating agency considers the quality of a particular bond to be sufficient to provide reasonable assurance
of the issuer’s ability to meet their obligations to bondholders. There is, however, no assurance that the
securities selected for the trust will continue to receive an investment grade rating in the future or that
such rating will ensure an issuer’s ability to satisfy its obligations to bondholders.
Investment grade bonds generally are a high credit quality asset class with historically low default rates.
The chart to the right illustrates that the average default rates for investment grade bonds have been
significantly lower than for speculative grade bonds based on the most recent data available from
Moody’s Investors Service. Current default rates may vary from that of their historical averages and there
can be no assurance that the default rate for investment grade bonds will not rise in the future.
- A diversified portfolio of investment grade corporate bonds and taxable
- Estimated weighted average maturity of approximately 25 to 30 years.
- Minimum call protection of approximately 5 years.
- 3.50% up-front maximum sales charge. In addition to the sales charge, the trust is
subject to annual operating expenses and organization costs.
The objectives of this unit investment trust are to seek current income and capital
preservation; however, there is no assurance that the objectives will be achieved.
| 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 associated with
both investment grade corporate bonds and taxable municipal
bonds. These bonds are subject to numerous risks including
rising interest rates, economic recession, deterioration of the
corporate or municipal bond market, possible downgrades,
increased volatility, reduced liquidity and defaults of interest
Certain of the securities in the trust are covered by insurance
policies obtained by the issuers or underwriters of the bonds
from insurance companies. There can be no assurance that any
insurer will be able to satisfy its commitments in the event
claims are made in the future.
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
Certain of the securities in the trust are issued by Real Estate
Investment Trusts (REITs). Companies involved in the real estate
industry are subject to changes in the real estate market,
vacancy rates and competition, volatile interest rates and
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. The markets for credit
instruments, including corporate and municipal securities, have
experienced periods of extreme illiquidity and volatility.
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