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Corporate Investment Grade Laddered Portfolio, Series 26

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.

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 generally signifies that the quality of a particular bond is sufficient to provide reasonable assurance of the issuer’s ability to meet their obligations to bondholders. Investment-grade bonds generally are a high credit quality asset class with historically low default rates. 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.

What Is A Bond Ladder?

A bond ladder is a portfolio of fixed-income securities that mature at regular intervals across a chosen maturity range. The purpose of a laddered portfolio is to generate a more predictable income stream with the potential to minimize interest rate risk by holding both short-term and long-term securities. This portfolio is comprised of distinct groupings of corporate bond securities with maturities beginning approximately two years after the initial date of deposit.

Portfolio Summary

  • Potential for high current monthly income.

  • Diversified portfolio of investment grade corporate bonds.

  • Estimated weighted average maturity of approximately 5 to 7 years.

  • 2.50% up-front sales charge. In addition to the sales charge, the trust is subject to annual operating expenses and organization costs.

Portfolio Objectives

The objectives of this unit investment trust are to distribute high current monthly income and to preserve capital by investing in a laddered portfolio of investment-grade corporate bonds. There is, however, no assurance that the objectives will be achieved.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

You should carefully consider the portfolio's investment objectives, risks, and charges and expenses 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 associated with investment grade corporate bonds, including higher interest rates, economic recession, deterioration of the bond market or investors’ perception thereof, possible downgrades and defaults of interest and/or principal.

You should be aware that the portfolio is concentrated in stocks in the financials sector which involves additional risks, including limited diversification. The companies engaged in the financials sector are subject to the adverse effects of volatile interest rates, economic recession, decreases in the availability of capital, increased competition from new entrants in the field, and potential increased regulation.

Certain of the securities held by the trust is issued by a REIT. Companies involved in the real estate industry are subject to changes in the real estate market, vacancy rates and competition, volatile interest rates and economic recession.

Securities of non-U.S. issuers are subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting non-U.S. 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.

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.

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.

 

CUSIP identifiers have been provided by CUSIP Global Services, managed on behalf of the American Bankers Association by FactSet Research Systems Inc. and are not for use or dissemination in a manner that would serve as a substitute for any CUSIP service. The CUSIP Database, ©2024 CUSIP Global Services. "CUSIP" is a registered trademark of the American Bankers Association.

Fund Cusip Information
30335B587 (Cash)
30335B595 (Cash-Wrap)
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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, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
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