Income Allocation Closed-End Portfolio, August 2010 Series

The Multi-Sector Approach

The Income Allocation Closed-End Aug. '10 (The Income Allocation Closed-End Portfolio) is a unit investment trust which is designed to enable investors who are seeking a high rate of current monthly income to reduce some of the volatility typically associated with high-income investments.To accomplish this, the portfolio is diversified across a broad range of closed-end funds, including general equity funds, highyield bond funds, investment grade bond funds, loan participation funds, specialized equity funds, U.S.Government bond funds, and world equity and income funds. Because different sectors follow different cycles and react differently to changes in global economies and interest rates, spreading assets across this spectrum of securities has the potential to reduce the overall risk of the portfolio.

Closed-End Advantages

Portfolio Control
Unlike open-end mutual funds, closed-end funds maintain a relatively fixed pool of investment capital. This allows portfolio managers to better adhere to their investment philosophies through greater flexibility and control. In addition, closed-end funds don't have to manage fund liquidity to meet potentially large redemptions.

Diversification
The portfolio offers investors diversification by investing in a broad range of closed-end funds that are further diversified across hundreds of individual issues. Diversification does not guarantee a profit or protect against loss.

Income Distributions
Closed-end funds are structured to generally provide a more stable income stream than other managed fixed-income investment products because they are not subjected to cash inflows and outflows, which can dilute dividends over time. However, as a result of bond calls, redemptions and advanced refundings, which can dilute a fund's income, the portfolio cannot guarantee consistent income.

Portfolio Objectives

This unit investment trust is comprised of a diversified pool of equity and taxable bond closed-end funds that invest in U.S. and foreign secutiries.The trust seeks to distribute a high rate of current monthly income, with the potential for capital appreciation as a secondary objective.There is, however, no assurance that the objectives will be achieved.

Although this portfolio terminates in approximately 15 months, the strategy is longterm. Investors should consider their ability to pursue investing in successive portfolios, if available.There may be tax consequences unless units are purchased in an IRA or other qualified plan.

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.

Risk Considerations:
An investment in this unmanaged unit investment trust should be made with an understanding of the risks associated with an investment in a portfolio of closed-end funds.

Closed-end funds 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 the funds 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, closed-end funds frequently trade at a discount to their net asset value in the secondary market. Certain closed-end funds may employ the use of leverage which increases the volatility of such funds.

Certain of the closed-end funds invest in common stocks. 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 closed-end funds invest in options. Options are subject to various risks including that their value may be adversely affected if the market for the option becomes less liquid or smaller. In addition, options will be affected by changes in the value and dividend rates of the stock subject to the option, an increase in interest rates, a change in the actual and perceived volatility of the stock market and the common stock and the remaining time to expiration.

Certain of the closed-end funds invest in senior secured floating rate loans. The yield on closed-end funds which invest in senior loans will generally decline in a falling interest rate environment and increase in a rising interest rate environment. Senior loans are generally below investment grade quality (�junk� bonds). An investment in senior loans involves the risk that the borrowers may default on their obligations to pay principal or interest when due.

Certain of the closed-end funds invest in high-yield securities or "junk"bonds. Investing in high-yield securities should be viewed as speculative and you should review your ability to assume the risks associated with investments which utilize such securities. High-yield securities are subject to numerous risks, including higher interest rates, economic recession, deterioration of the junk bond market, possible downgrades and defaults of interest and/or principal. High-yield security prices tend to fluctuate more than higher rated securities and are affected by short-term credit developments to a greater degree.

Certain of the closed-end funds invest in investment grade bonds. Investment grade bonds are subject to numerous risks including higher interest rates, economic recession, deterioration of the investment grade bond market or investors� perception thereof, possible downgrades and defaults of interest and/or principal.

Certain of the closed-end funds invest in securities issued by foreign issuers. Such securities are subject to certain risks, including currency and interest rate fluctuations, nationalization or other adverse political or economic developments, lack of liquidity of certain foreign markets, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers. Risks associated with investing in foreign securities may be more pronounced in emerging markets where the securities markets are substantially smaller, less developed, less liquid, less regulated, and more volatile than the U.S. and developed foreign markets.

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.