Senior Loan Closed-End and ETF Portfolio, Series 28

As interest rates remain low, these are challenging times to invest for income. In this environment, many investors are seeking alternative sources of income, including those which tend to be less rate sensitive than other segments of the bond market, such as senior loans.

We believe senior loans currently offer a compelling value given that the default rate in the senior loan market is well below its long-term average, the U.S. is experiencing slow but positive economic growth, and there continues to be strong investor demand for the asset class.

What Are Senior Loans?


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Senior loans are floating-rate secured debt extended to non-investment grade corporations which are backed by collateral, such as property, and are senior in the capital structure of a company. The capital structure is how a company finances its overall operations and growth by using different sources of funds such as long-term debt, short-term debt, common equity and preferred equity. Investors may find comfort in the fact that senior loans have a senior secured position in the capital structure, thereby having a claim not only on the cash flow of a given company, but also its assets. This added security has historically offered investors less volatility in relation to the junior parts of a given capital structure.

Diversification

We believe that senior loans can be used as an effective means to aid portfolio diversification because of their low correlation to other fixed-income asset classes. Correlation is a statistical measure that provides a way to evaluate the potential diversification benefits of combining different assets. The historical correlation between senior loans and other asset classes, including investment-grade corporate bonds and equities, is low. Because senior loans are not highly correlated with other asset classes, they can potentially decrease portfolio volatility, enhance overall return and provide meaningful diversification to an asset allocation strategy. It is important to note that diversification does not guarantee a profit or protect against loss.

Portfolio Objectives

This unit investment trust seeks current monthly income and capital appreciation by investing in a fixed portfolio of closed-end funds (CEFs) and exchange-traded funds (ETFs) that invest in senior loans; however, there is no assurance the objectives will be met.

Not FDIC Insured • Not Bank Guaranteed • May Lose Value

You should consider the portfolio's investment objective, 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 involved with owning CEFs and ETFs that invest in senior loan floating-rate securities.

CEFs and 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, CEFs 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 and CEFs frequently trade at a discount from their net asset value in the secondary market. Certain of the funds in which the portfolio invests employ the use of leverage, which increases the volatility of such funds.

The yield on CEFs and ETFs 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 (“high-yield” securities or “junk” bonds). Investing in such 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 high-yield securities 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.

All of the funds invest in covenant-lite loans which contain fewer or no maintenance covenants and may hinder the fund’s ability to reprice credit risk and mitigate potential loss especially during a downturn in the credit cycle.

Certain of the funds invest in common stocks. Common stocks are subject to certain 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.

All of the funds invest in floating-rate securities. A floating-rate security is an instrument in which the interest rate payable on the obligation fluctuates on a periodic basis based upon changes in an interest rate benchmark. As a result, the yield on such a security will generally decline in a falling interest rate environment, causing the trust to experience a reduction in the income it receives from such securities. Certain of the floatingrate securities pay interest based on LIBOR. Due to the uncertainty regarding the future utilization of LIBOR and the nature of any replacement rate, the potential effect of a transition away from LIBOR on a fund or the financial instruments in which the fund invests cannot yet be determined.

All 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.

All of the funds invest in securities issued by foreign issuers which are subject to certain risks including currency and interest rate fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers.

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.

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 cyber security.

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.