UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-22652
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First Trust Variable Insurance Trust
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(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
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Date of fiscal year end: December 31
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Date of reporting period: June 30, 2017
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST TRUST VARIABLE INSURANCE TRUST
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2017
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TABLE OF CONTENTS
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FIRST TRUST VARIABLE INSURANCE TRUST
SEMI-ANNUAL REPORT
JUNE 30, 2017
Shareholder Letter.......................................................... 1
Portfolio Management........................................................ 2
Performance Summary and Portfolio Components
First Trust/Dow Jones Dividend & Income Allocation Portfolio........... 5
First Trust Multi Income Allocation Portfolio.......................... 7
First Trust Dorsey Wright Tactical Core Portfolio...................... 9
Understanding Your Fund Expenses............................................ 11
Portfolio of Investments
First Trust/Dow Jones Dividend & Income Allocation Portfolio........... 12
First Trust Multi Income Allocation Portfolio.......................... 37
First Trust Dorsey Wright Tactical Core Portfolio...................... 47
Statements of Assets and Liabilities........................................ 48
Statements of Operations.................................................... 49
Statements of Changes in Net Assets......................................... 50
Financial Highlights........................................................ 53
Notes to Financial Statements............................................... 56
Additional Information...................................................... 68
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor"), Energy Income Partners, LLC ("EIP" or a
"Sub-Advisor"), Stonebridge Advisors LLC ("Stonebridge" or a "Sub-Advisor") and
their representatives, taking into account the information currently available
to them. Forward-looking statements include all statements that do not relate
solely to current or historical fact. For example, forward-looking statements
include the use of words such as "anticipate," "estimate," "intend," "expect,"
"believe," "plan," "may," "should," "would" or other words that convey
uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
any series of the First Trust Variable Insurance Trust (the "Trust") to be
materially different from any future results, performance or achievements
expressed or implied by the forward-looking statements. When evaluating the
information included in this report, you are cautioned not to place undue
reliance on these forward-looking statements, which reflect the judgment of the
Advisor and/or Sub-Advisors and their representatives only as of the date
hereof. We undertake no obligation to publicly revise or update these
forward-looking statements to reflect events and circumstances that arise after
the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any series (individually called a "Fund" and
collectively the "Funds") of the Trust will achieve its investment objectives.
Each Fund is subject to market risk, which is the possibility that the market
values of securities owned by the Fund will decline and that the value of the
Fund shares may therefore be less than what you paid for them. Accordingly, you
can lose money by investing in a Fund. See "Risk Considerations" in the
Additional Information section of this report for a discussion of certain other
risks of investing in the Funds.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns and net asset value will fluctuate and Fund shares, when sold, may be
worth more or less than their original cost.
The Advisor may also periodically provide additional information on Fund
performance on each Fund's webpage at http://www.ftportfolios.com.
HOW TO READ THIS REPORT
This report contains information that may help you evaluate your investment in
each Fund. It includes details about each Fund and presents data and analysis
that provide insight into each Fund's performance.
The statistical information that follows may help you understand each Fund's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
First Trust and the Sub-Advisors are just that: informed opinions. They should
not be considered to be promises or advice. The opinions, like the statistics,
cover the period through the date on the cover of this report. The material
risks of investing in each Fund are spelled out in the prospectus, the statement
of additional information, this report and other Fund regulatory filings.
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SHAREHOLDER LETTER
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FIRST TRUST VARIABLE INSURANCE TRUST
SEMI-ANNUAL LETTER FROM THE CHAIRMAN AND CEO
JUNE 30, 2017
Dear Shareholders:
First Trust Advisors L.P. ("First Trust") is pleased to provide you with this
semi-annual report which contains detailed information and the financial
statements for your investment in the First Trust Variable Insurance Trust. We
encourage you to read this report and discuss it with your financial advisor.
Six months into the year, with the lion's share of it governed by President
Donald Trump's administration, the bull market in stocks continues. The
President's pro-growth, pro-U.S. policies, while slow in coming, have at least
created some optimism about the prospects for the U.S. economy, in our opinion.
From Donald Trump's election on November 8, 2016 through June 30, 2017, the S&P
500(R) Index (the "Index") posted a total return of 14.79%, according to
Bloomberg. During June, the Index closed its June 19, 2017 trading session at an
all-time high of 2,453.46.
The current bull market (measuring from March 9, 2009 through June 30, 2017) is
the second longest in history. While we are optimistic about the U.S. economy,
we are also well aware that no one can predict the future or know how an
administration will affect markets and the economy in the future. Therefore, we
stress the importance of maintaining a long-term perspective, as we have done
since First Trust's inception over 25 years ago.
Thank you for giving First Trust the opportunity to be a part of your investment
plan through the First Trust Variable Insurance Trust. We value our relationship
with you and will continue our relentless focus on bringing the types of
investments that we believe could help you reach your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
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PORTFOLIO MANAGEMENT
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FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017
ADVISOR
First Trust Advisors L.P. ("First Trust") is a registered investment advisor
based in Wheaton, IL and is the investment advisor to First Trust/Dow Jones
Dividend & Income Allocation Portfolio (the "Fund"). In this capacity, First
Trust is responsible for the selection and ongoing monitoring of the securities
in the Fund's portfolio and certain other services necessary for the management
of the Fund.
PORTFOLIO MANAGEMENT TEAM
Daniel J. Lindquist, Chairman of the Investment Committee and
Managing Director, First Trust
David G. McGarel, Chief Investment Officer, Chief Operating Officer and
Managing Director, First Trust
Jon C. Erickson, Senior Vice President, First Trust
Roger F. Testin, Senior Vice President, First Trust
Todd Larson, Vice President, First Trust
Chris A. Peterson, Senior Vice President, First Trust
Page 2
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PORTFOLIO MANAGEMENT (CONTINUED)
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FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017
ADVISOR
First Trust is a registered investment advisor based in Wheaton, IL and is the
investment advisor to First Trust Multi Income Allocation Portfolio (the
"Fund"). First Trust manages the Fund's fixed income investments, as well as a
portion of the Fund's equity investments.
SUB-ADVISORS
Stonebridge Advisors LLC ("Stonebridge" or a "Sub-Advisor") is a sub-advisor to
the Fund and is a registered investment advisor based in Wilton, CT. Stonebridge
specializes in the management of preferred securities and North American equity
income securities.
Energy Income Partners, LLC ("EIP" or a "Sub-Advisor"), is a sub-advisor to the
Fund and is a registered investment advisor based in Westport, CT. EIP was
founded in 2003 to provide professional asset management services in the area of
energy-related master limited partnerships ("MLPs") and other high-payout
securities such as pipeline companies, power utilities and Canadian income
equities.
PORTFOLIO MANAGEMENT TEAMS
FIRST TRUST
Daniel J. Lindquist, Chairman of the Investment Committee and
Managing Director, First Trust
David G. McGarel, Chief Investment Officer, Chief Operating Officer and
Managing Director, First Trust
Jon C. Erickson, Senior Vice President, First Trust
Roger F. Testin, Senior Vice President, First Trust
William Housey, Senior Vice President, First Trust
Chris A. Peterson, Senior Vice President, First Trust
Todd Larson, Vice President, First Trust
James Snyder, Senior Vice President, First Trust
Jeremiah Charles, Senior Vice President, First Trust
STONEBRIDGE
Scott Fleming, Portfolio Manager, President and Chief Investment Officer of
Stonebridge
Robert Wolf, Senior Portfolio Manager and Senior Vice President of Stonebridge
EIP
James J. Murchie, Portfolio Manager, Founder, Principal and CEO of EIP
Eva Pao, Co-Portfolio Manager, Principal of EIP
John Tysseland, Co-Portfolio Manager, Principal of EIP
Page 3
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PORTFOLIO MANAGEMENT (CONTINUED)
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FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017
ADVISOR
First Trust is a registered investment advisor based in Wheaton, IL and is the
investment advisor to First Trust Dorsey Wright Tactical Core Portfolio (the
"Fund"). In this capacity, First Trust is responsible for the selection and
ongoing monitoring of the securities in the Fund's portfolio and certain other
services necessary for the management of the Fund.
PORTFOLIO MANAGEMENT TEAM
Daniel J. Lindquist, Chairman of the Investment Committee and
Managing Director, First Trust
David G. McGarel, Chief Investment Officer, Chief Operating Officer and
Managing Director, First Trust
Jon C. Erickson, Senior Vice President, First Trust
Roger F. Testin, Senior Vice President, First Trust
Todd Larson, Vice President, First Trust
Chris A. Peterson, Senior Vice President, First Trust
Page 4
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
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FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
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RETURN COMPARISON PERIOD ENDED JUNE 30, 2017
1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION
PORTFOLIO - CLASS I 5/1/12 5.53% 10.71% 8.81% 8.55%
Blended Benchmark (a) 6.35% 10.19% 9.29% 8.83%
Bloomberg Barclays U.S. Corporate Investment-Grade Index (b) 3.80% 2.28% 3.96% 4.11%
Russell 3000(R) Index (c) 8.93% 18.51% 14.58% 13.42%
Secondary Blended Benchmark (d) 6.27% 9.69% 9.43% 8.97%
Dow Jones Equal Weight U.S. Issued Corporate Bond
Index(SM) (e) 3.51% 1.27% 4.07% 4.24%
Dow Jones U.S. Total Stock Market Index(SM) (f) 8.97% 18.51% 14.50% 13.33%
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1 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION
PORTFOLIO - CLASS II 5/1/14 5.73% 11.04% 8.13%
Blended Benchmark (a) 6.35% 10.19% 7.09%
Bloomberg Barclays U.S. Corporate Investment-Grade Index (b) 3.80% 2.28% 3.78%
Russell 3000(R) Index (c) 8.93% 18.51% 10.20%
Secondary Blended Benchmark (d) 6.27% 9.69% 7.27%
Dow Jones Equal Weight U.S. Issued Corporate Bond
Index(SM) (e) 3.51% 1.27% 3.93%
Dow Jones U.S. Total Stock Market Index(SM) (f) 8.97% 18.51% 10.12%
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(a) The Blended Benchmark returns are a 50/50 split between the Russell
3000(R) Index and the Bloomberg Barclays U.S. Corporate Investment-Grade
Index returns.
(b) Bloomberg Barclays U.S. Corporate Investment-Grade Index measures the
performance of investment grade U.S. corporate bonds. The index includes
all publicly issued, dollar-denominated corporate bonds with a minimum of
$250 million par outstanding that are investment grade-rated (Baa3/BBB- or
higher). The index excludes bonds having less than one year to final
maturity as well as floating rate bonds, non-registered private
placements, structured notes, hybrids, and convertible securities.
(Bloomberg). (The index reflects no deduction for fees, expenses or
taxes).
(c) The Russell 3000(R) Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg). (The index reflects
no deduction for fees, expenses or taxes).
(d) The Secondary Blended Benchmark return is a 50/50 split between the Dow
Jones U.S. Total Stock Market Index(SM) and the Dow Jones Equal Weight
U.S. Issued Corporate Bond Index(SM) returns.
(e) The Dow Jones Equal Weight U.S. Issued Corporate Bond Index(SM) measures
the return of readily tradable, high-grade U.S. corporate bonds. The index
includes an equally weighted basket of 96 recently issued investment-grade
corporate bonds with laddered maturities. (The index reflects no deduction
for fees, expenses or taxes).
(f) The Dow Jones U.S. Total Stock Market Index(SM) measures all U.S. equity
securities that have readily available prices. (The index reflects no
deduction for fees, expenses or taxes).
The returns for the Fund do not reflect the deduction of expenses associated
with variable products, such as mortality and expense risk charges, separate
account charges, and sales charges or the effect of taxes. These expenses would
reduce the overall returns shown.
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
May 1, 2012 - June 30, 2017
Bloomberg Dow Jones
First Trust/Dow Barclays U.S. Equal Weight Dow Jones
Jones Dividend & Corporate Russell Secondary U.S. Issued U.S. Total
Income Allocation Blended Investment-Grade 3000(R) Blended Corporate Bond Stock Market
Portfolio - Class I Benchmark Index Index Benchmark Index(SM) Index(SM)
5/1/2012 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000
6/30/2012 10,020 9,925 10,135 9,701 9,933 10,152 9,702
12/31/2012 10,438 10,495 10,636 10,331 10,519 10,677 10,322
6/30/2013 10,904 11,026 10,273 11,784 11,047 10,290 11,786
12/31/2013 11,770 12,055 10,472 13,798 12,088 10,523 13,777
6/30/2014 12,318 12,823 11,067 14,756 12,844 11,083 14,733
12/31/2014 12,951 13,269 11,254 15,531 13,336 11,336 15,493
6/30/2015 12,989 13,350 11,150 15,832 13,409 11,215 15,790
12/31/2015 12,962 13,286 11,177 15,606 13,402 11,315 15,559
6/30/2016 13,806 14,046 12,035 16,171 14,214 12,239 16,110
12/31/2017 14,484 14,554 11,859 17,592 14,672 11,975 17,521
6/30/2017 15,285 15,478 12,310 19,163 15,592 12,395 19,093
Page 5
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
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FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
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% OF TOTAL
TOP EQUITY HOLDINGS INVESTMENTS
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National Instruments Corp. 0.5%
IDEX Corp. 0.4
Wyndham Worldwide Corp. 0.4
Delta Air Lines, Inc. 0.4
Best Buy Co., Inc. 0.4
PS Business Parks, Inc. 0.4
FNF Group 0.4
Intuit, Inc. 0.4
First American Financial Corp. 0.4
Quest Diagnostics, Inc. 0.4
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Total 4.1%
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% OF TOTAL
TOP FIXED-INCOME HOLDINGS BY ISSUER INVESTMENTS
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Citigroup, Inc. 2.0%
Goldman Sachs Group (The), Inc. 1.9
Wells Fargo & Co. 1.7
JPMorgan Chase & Co. 1.5
Morgan Stanley 1.5
Bank of America Corp. 1.4
U.S. Government 1.1
Verizon Communications, Inc. 0.9
AT&T, Inc. 0.9
UnitedHealth Group, Inc. 0.8
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Total 13.7%
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% OF TOTAL
FIXED-INCOME
CREDIT QUALITY(1) INVESTMENTS
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AAA 4.9%
AA+ 1.6
AA 4.3
AA- 8.9
A+ 12.4
A 26.2
A- 14.8
BBB+ 8.5
BBB 11.3
BBB- 6.2
A-1 (short-term) 0.8
A-2 (short-term) 0.1
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Total 100.0%
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% OF TOTAL
SECTOR ALLOCATION INVESTMENTS
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Common Stocks:
Financials 15.7%
Industrials 13.3
Information Technology 8.1
Consumer Discretionary 7.2
Consumer Staples 6.0
Materials 2.8
Health Care 2.7
Energy 0.7
Real Estate 0.3
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Total Common Stocks 56.8
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Corporate Bonds & Notes:
Financials 14.4
Utilities 5.2
Energy 4.0
Information Technology 3.3
Industrials 3.3
Health Care 2.7
Consumer Discretionary 2.4
Consumer Staples 2.0
Telecommunication Services 1.8
Materials 0.7
Real Estate 0.0*
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Total Corporate Bonds & Notes 39.8
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Foreign Corporate Bonds & Notes:
Financials 0.9
Energy 0.5
Health Care 0.2
Materials 0.2
Telecommunication Services 0.1
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Total Foreign Corporate Bonds & Notes 1.9
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U.S. Government Bonds & Notes 1.1
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Commercial Paper:
Utilities 0.3
Energy 0.1
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Total Commercial Paper 0.4
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Total 100.0%
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* Amount is less than 0.1%.
(1) The credit quality information presented reflects the ratings assigned by
one or more nationally recognized statistical rating organizations
(NRSROs), including Standard & Poor's Ratings Group, a division of the
McGraw-Hill Companies, Inc., Moody's Investors Service, Inc., Fitch
Ratings or a comparably rated NRSRO. For situations in which a security is
rated by more than one NRSRO and ratings are not equivalent, the highest
ratings are used. Sub-investment grade ratings are those rated BB+/Ba1 or
lower. Investment grade ratings are those rated BBB-/Baa3 or higher. The
credit ratings shown relate to the creditworthiness of the issuers of the
underlying securities in the Fund, and not to the Fund or its shares.
Credit ratings are subject to change.
Page 6
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
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FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
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RETURN COMPARISON PERIOD ENDED JUNE 30, 2017
1 YEAR SINCE INCEPTION
INCEPTION SIX MONTH AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO - CLASS I 5/1/14 3.44% 4.93% 4.34%
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO - CLASS II 5/1/14 3.57% 5.29% 4.58%
Broad Blended Benchmark (a) 4.90% 6.92% 5.77%
Bloomberg Barclays U.S. Aggregate Bond Index (b) 2.27% -0.31% 2.67%
Russell 3000(R) Index (c) 8.93% 18.51% 10.20%
Multi Asset Class Blended Benchmark (d) 3.11% 5.16% 3.93%
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(a) The Broad Blended Benchmark return is split between the Bloomberg Barclays
U.S. Aggregate Bond Index (60%) and the Russell 3000(R) Index (40%).
(b) The Bloomberg Barclays U.S. Aggregate Bond Index represents the U.S.
investment grade fixed rate bond market, with index components for
government and corporate securities, mortgage pass-through securities, and
asset-backed securities. Bonds included in the index are U.S. dollar
denominated; have a fixed rate coupon; carry an investment-grade rating;
have at least one year to final maturity; and meet certain criteria for
minimum amount of outstanding par value. (The index reflects no deduction
for fees, expenses or taxes).
(c) The Russell 3000(R) Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg). (The index reflects
no deduction for fees, expenses or taxes).
(d) The Multi Asset Class Blended Benchmark is weighted to include nine
indexes: Russell 3000(R) Index (15%), BofA Merrill Lynch Fixed Rate
Preferred Securities Index (8%), Alerian MLP Index (15%), S&P U.S. REIT
Index (15%), BofA Merrill Lynch U.S. High Yield Index (8%), S&P/LSTA
Leveraged Loan Index (15%), Bloomberg Barclays U.S. Corporate
Investment-Grade Index (8%), BofA Merrill Lynch U.S. MBS Index (8%), and
BofA Merrill Lynch U.S. Inflation-Linked Treasury Index (8%).
The returns for the Fund do not reflect the deduction of expenses associated
with variable products, such as mortality and expense risk charges, separate
account charges, and sales charges or the effect of taxes. These expenses would
reduce the overall returns shown.
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
May 1, 2014 - June 30, 2017
First Trust Multi Broad Bloomberg
Income Allocation Blended Barclays U.S. Russell 3000(R) Multi Asset Class
Portfolio -- Class I Benchmark Aggregate Index Index Blended Benchmark
5/1/2014 $10,000 $10,000 $10,000 $10,000 $10,000
6/30/2014 10,320 10,245 10,096 10,470 10,334
12/31/2014 10,457 10,582 10,295 11,020 10,428
6/30/2015 10,383 10,667 10,284 11,234 10,278
12/31/2015 10,119 10,662 10,354 11,073 9,933
6/30/2016 10,900 11,168 10,904 11,474 10,744
12/31/2016 11,057 11,384 10,628 12,483 10,958
6/30/2017 11,437 11,942 10,869 13,598 11,299
Page 7
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
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FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
------------------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
------------------------------------------------------
First Trust Senior Loan Fund 14.9%
First Trust Preferred Securities and
Income ETF 9.2
iShares iBoxx $ Investment Grade Corporate
Bond ETF 6.9
First Trust Tactical High Yield ETF 6.0
iShares Floating Rate Bond ETF 1.3
Enterprise Products Partners, L.P. 1.3
First Trust Low Duration Opportunities ETF 1.2
TransCanada Corp. 0.8
TC Pipelines, L.P. 0.8
Spectra Energy Partners, L.P. 0.7
------------------------------------------------------
Total 43.1%
======
------------------------------------------------------
% OF TOTAL
SECTOR ALLOCATION INVESTMENTS
------------------------------------------------------
Exchange-Traded Funds 40.0%
------------------------------------------------------
Common Stocks:
Financials 3.3
Information Technology 3.3
Industrials 3.0
Energy 3.0
Health Care 2.9
Utilities 2.4
Consumer Discretionary 1.9
Consumer Staples 1.0
Materials 0.6
Telecommunication Services 0.3
------------------------------------------------------
Total Common Stocks 21.7
------------------------------------------------------
Real Estate Investment Trusts:
Financials 12.1
------------------------------------------------------
Total Real Estate Investment Trusts 12.1
------------------------------------------------------
Master Limited Partnerships:
Energy 8.2
Utilities 0.7
Materials 0.2
------------------------------------------------------
Total Master Limited Partnerships 9.1
------------------------------------------------------
U.S. Government Bonds & Notes 8.9
------------------------------------------------------
U.S. Government Agency Mortgage-Backed
Securities 8.0
------------------------------------------------------
Mortgage-Backed Securities 0.2
------------------------------------------------------
Asset-Backed Securities 0.0*
------------------------------------------------------
Total 100.0%
======
* Amount is less than 0.1%.
Page 8
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIOD ENDED JUNE 30, 2017
1 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO - CLASS I 10/30/15 7.35% 9.85% 4.57%
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO - CLASS II 10/30/15 7.60% 9.90% 4.73%
Broad Blended Benchmark (a) 6.48% 10.33% 8.27%
Bloomberg Barclays U.S. Aggregate Bond Index (b) 2.27% -0.31% 2.59%
S&P 500(R) Index (c) 9.34% 17.90% 12.02%
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(a) The Broad Blended Benchmark return is split between Bloomberg Barclays
U.S. Aggregate Bond Index (40%) and the S&P 500(R) Index (60%).
(b) The Bloomberg Barclays U.S. Aggregate Bond Index represents the U.S.
investment grade fixed rate bond market, with index components for
government and corporate securities, mortgage pass-through securities, and
asset-backed securities. Bonds included in the index are U.S. dollar
denominated; have a fixed rate coupon; carry an investment-grade rating;
have at least one year to final maturity; and meet certain criteria for
minimum amount of outstanding par value. (The index reflects no deduction
for fees, expenses or taxes).
(c) The S&P 500(R) Index is an unmanaged index of 500 stocks used to measure
large-cap U.S. stock market performance. (The index reflects no deduction
for fees, expenses or taxes).
The returns for the Fund do not reflect the deduction of expenses associated
with variable products, such as mortality and expense risk charges, separate
account charges, and sales charges or the effect of taxes. These expenses would
reduce the overall returns shown.
PERFORMANCE OF A $10,000 INITIAL INVESTMENT
October 30, 2015 - June 30, 2017
First Trust Dorsey Wright
Tactical Core Portfolio - Broad Blended Bloomberg Barclays S&P 500(R)
Class I Benchmark U.S. Aggregate Index Index
10/30/15 $10,000 $10,000 $10,000 $10,000
12/31/15 9,940 9,900 9,941 9,872
6/30/16 9,807 10,347 10,469 10,251
12/31/16 10,035 10,722 10,204 11,053
6/30/2017 10,773 11,417 10,436 12,085
Page 9
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2017 (UNAUDITED)
------------------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
------------------------------------------------------
First Trust Mid Cap Core AlphaDEX(R) Fund 10.4%
First Trust Small Cap Growth AlphaDEX(R)
Fund 10.3
First Trust Large Cap Growth AlphaDEX(R)
Fund 10.0
First Trust Dow Jones Internet Index Fund 10.0
First Trust NASDAQ-100-Technology Sector
Index Fund 9.9
First Trust Utilities AlphaDEX(R) Fund 8.7
First Trust Industrials/Producer Durables
AlphaDEX(R) Fund 8.5
First Trust Nasdaq Bank ETF 8.5
iShares Core U.S. Aggregate Bond ETF 5.5
SPDR Bloomberg Barclays Convertible
Securities ETF 3.5
------------------------------------------------------
Total 85.3%
======
Page 10
FIRST TRUST VARIABLE INSURANCE TRUST
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2017 (UNAUDITED)
As a shareholder of First Trust/Dow Jones Dividend & Income Allocation
Portfolio, First Trust Multi Income Allocation Portfolio or First Trust Dorsey
Wright Tactical Core Portfolio (each a "Fund" and collectively, the "Funds"),
you incur two types of costs: (1) transaction costs; and (2) ongoing costs,
including management fees; distribution and/or service (12b-1) fees, if any; and
other Fund expenses. This Example is intended to help you understand your
ongoing costs (in U.S. dollars) of investing in the Funds and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held through the six-month period ended June 30, 2017.
ACTUAL EXPENSES
The first three columns of the table below provide information about actual
account values and actual expenses. You may use the information in these
columns, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the third column under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during the
period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The next three columns of the table below provide information about hypothetical
account values and hypothetical expenses based on each Fund's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
each Fund's actual return. The hypothetical account values and expenses may not
be used to estimate the actual ending account balance or expenses you paid for
the period. You may use this information to compare the ongoing cost of
investing in the Funds and other funds. To do so, compare this 5% hypothetical
example with the 5% hypothetical examples that appear in the shareholder reports
of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the
hypothetical section of the table is useful in comparing ongoing costs only, and
will not help you determine the relative total costs of owning different funds.
In addition, if these transactional costs were included, your costs would have
been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
------------------------------------------ ------------------------------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING ANNUAL-
ACCOUNT ACCOUNT PERIOD ACCOUNT ACCOUNT PERIOD IZED
VALUE VALUE 1/1/2017- VALUE VALUE 1/1/2017- EXPENSE
1/1/2017 6/30/2017 6/30/2017 (a) 1/1/2017 6/30/2017 6/30/2017 (a) RATIO (b)
-------------- ---------- -------------- -------------- ---------- -------------- ----------
First Trust/Dow Jones Dividend &
Income Allocation Portfolio
Class I................... $1,000.00 $1,055.30 $ 6.12 $1,000.00 $1,018.84 $ 6.01 1.20%
Class II.................. $1,000.00 $1,057.30 $ 4.85 $1,000.00 $1,020.08 $ 4.76 0.95%
First Trust Multi Income
Allocation Portfolio
Class I................... $1,000.00 $1,034.40 $ 4.19 $1,000.00 $1,020.68 $ 4.16 0.83%
Class II.................. $1,000.00 $1,035.70 $ 2.93 $1,000.00 $1,021.92 $ 2.91 0.58%
First Trust Dorsey Wright Tactical
Core Portfolio
Class I................... $1,000.00 $1,073.50 $ 3.86 $1,000.00 $1,021.08 $ 3.76 0.75%
Class II.................. $1,000.00 $1,076.00 $ 2.57 $1,000.00 $1,022.32 $ 2.51 0.50%
(a) Expenses are equal to the annualized expense ratio as indicated in the
table, multiplied by the average account value over the period (January 1,
2017 through June 30, 2017), multiplied by 181/365 (to reflect the
one-half year period).
(b) The expense ratios reflect an expense cap. First Trust Multi Income
Allocation Portfolio expense ratios reflect an additional waiver. See Note
3 in the Notes to Financial Statements.
Page 11
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS - 56.4%
AEROSPACE & DEFENSE - 2.3%
12,678 General Dynamics Corp........................................................ $ 2,511,512
11,850 Huntington Ingalls Industries, Inc........................................... 2,205,996
8,867 Lockheed Martin Corp......................................................... 2,461,568
9,981 Northrop Grumman Corp........................................................ 2,562,223
15,561 Raytheon Co.................................................................. 2,512,790
24,427 Rockwell Collins, Inc........................................................ 2,566,789
-------------
14,820,878
-------------
AIR FREIGHT & LOGISTICS - 0.7%
30,706 CH Robinson Worldwide, Inc................................................... 2,108,888
42,011 Expeditors International of Washington, Inc.................................. 2,372,781
-------------
4,481,669
-------------
AIRLINES - 0.4%
51,638 Delta Air Lines, Inc......................................................... 2,775,026
-------------
AUTO COMPONENTS - 0.4%
16,764 Lear Corp.................................................................... 2,381,829
-------------
BANKS - 2.5%
42,655 Banner Corp.................................................................. 2,410,434
62,987 Cathay General Bancorp....................................................... 2,390,357
91,634 CenterState Banks, Inc....................................................... 2,278,021
42,260 Commerce Bancshares, Inc..................................................... 2,401,636
59,856 First Interstate BancSystem, Inc............................................. 2,226,643
26,561 South State Corp............................................................. 2,276,278
46,082 U.S. Bancorp................................................................. 2,392,577
-------------
16,375,946
-------------
BEVERAGES - 1.1%
55,921 Coca-Cola (The) Co........................................................... 2,508,057
24,236 Dr. Pepper Snapple Group, Inc................................................ 2,208,142
21,216 PepsiCo, Inc................................................................. 2,450,236
-------------
7,166,435
-------------
BUILDING PRODUCTS - 0.8%
46,390 A.O. Smith Corp.............................................................. 2,613,149
39,002 Fortune Brands Home & Security, Inc.......................................... 2,544,490
-------------
5,157,639
-------------
CAPITAL MARKETS - 2.3%
6,186 BlackRock, Inc............................................................... 2,613,028
19,977 CME Group, Inc............................................................... 2,501,919
14,392 FactSet Research Systems, Inc................................................ 2,391,662
56,321 Franklin Resources, Inc...................................................... 2,522,618
39,642 Intercontinental Exchange, Inc............................................... 2,613,201
34,823 T. Rowe Price Group, Inc..................................................... 2,584,215
-------------
15,226,643
-------------
CHEMICALS - 1.5%
17,543 Air Products & Chemicals, Inc................................................ 2,509,701
17,908 International Flavors & Fragrances, Inc...................................... 2,417,580
5,235 NewMarket Corp............................................................... 2,410,613
7,651 Sherwin-Williams (The) Co.................................................... 2,685,195
-------------
10,023,089
-------------
Page 12 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
COMMERCIAL SERVICES & SUPPLIES - 0.8%
18,756 Cintas Corp.................................................................. $ 2,364,006
63,920 Rollins, Inc................................................................. 2,602,183
-------------
4,966,189
-------------
COMMUNICATIONS EQUIPMENT - 0.3%
70,216 Cisco Systems, Inc........................................................... 2,197,761
-------------
CONTAINERS & PACKAGING - 0.8%
30,827 AptarGroup, Inc.............................................................. 2,677,633
29,447 Avery Dennison Corp.......................................................... 2,602,232
-------------
5,279,865
-------------
DISTRIBUTORS - 0.4%
25,683 Genuine Parts Co............................................................. 2,382,355
-------------
ELECTRICAL EQUIPMENT - 1.5%
43,885 AMETEK, Inc.................................................................. 2,658,115
39,649 Emerson Electric Co.......................................................... 2,363,873
19,769 Hubbell, Inc................................................................. 2,237,258
15,242 Rockwell Automation, Inc..................................................... 2,468,594
-------------
9,727,840
-------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 2.4%
33,345 Amphenol Corp., Class A...................................................... 2,461,528
87,898 Corning, Inc................................................................. 2,641,335
65,416 FLIR Systems, Inc............................................................ 2,267,318
14,840 Littelfuse, Inc.............................................................. 2,448,600
72,889 National Instruments Corp.................................................... 2,931,596
31,834 TE Connectivity, Ltd......................................................... 2,504,699
-------------
15,255,076
-------------
EQUITY REAL ESTATE INVESTMENT TRUSTS - 0.8%
20,679 PS Business Parks, Inc....................................................... 2,737,693
10,841 Public Storage............................................................... 2,260,674
-------------
4,998,367
-------------
FOOD & STAPLES RETAILING - 1.1%
14,151 Costco Wholesale Corp........................................................ 2,263,170
30,233 CVS Health Corp.............................................................. 2,432,547
32,927 Wal-Mart Stores, Inc......................................................... 2,491,915
-------------
7,187,632
-------------
FOOD PRODUCTS - 2.2%
40,218 General Mills, Inc........................................................... 2,228,077
68,533 Hormel Foods Corp............................................................ 2,337,661
17,507 J&J Snack Foods Corp......................................................... 2,312,149
24,329 McCormick & Co., Inc......................................................... 2,372,321
22,855 Sanderson Farms, Inc......................................................... 2,643,181
38,458 Tyson Foods, Inc., Class A................................................... 2,408,624
-------------
14,302,013
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7%
27,748 Danaher Corp................................................................. 2,341,654
18,027 Stryker Corp................................................................. 2,501,787
-------------
4,843,441
-------------
See Notes to Financial Statements Page 13
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
HEALTH CARE PROVIDERS & SERVICES - 1.2%
29,104 Cardinal Health, Inc......................................................... $ 2,267,784
24,171 Quest Diagnostics, Inc....................................................... 2,686,848
14,471 UnitedHealth Group, Inc...................................................... 2,683,213
-------------
7,637,845
-------------
HOTELS, RESTAURANTS & LEISURE - 1.5%
37,458 Cheesecake Factory (The), Inc................................................ 1,884,138
14,904 Cracker Barrel Old Country Store, Inc........................................ 2,492,694
40,645 Starbucks Corp............................................................... 2,370,010
28,157 Wyndham Worldwide Corp....................................................... 2,827,244
-------------
9,574,086
-------------
HOUSEHOLD DURABLES - 0.4%
71,248 DR Horton, Inc............................................................... 2,463,043
-------------
HOUSEHOLD PRODUCTS - 0.7%
47,589 Church & Dwight Co., Inc..................................................... 2,468,917
26,414 Procter & Gamble (The) Co.................................................... 2,301,980
-------------
4,770,897
-------------
INDUSTRIAL CONGLOMERATES - 1.1%
12,404 3M Co........................................................................ 2,582,389
22,303 Carlisle Cos., Inc........................................................... 2,127,706
19,007 Honeywell International, Inc................................................. 2,533,443
-------------
7,243,538
-------------
INSURANCE - 10.3%
32,773 AFLAC, Inc................................................................... 2,545,807
29,125 Allstate (The) Corp.......................................................... 2,575,815
24,873 American Financial Group, Inc................................................ 2,471,630
19,995 Aon PLC...................................................................... 2,658,335
35,006 Argo Group International Holdings, Ltd....................................... 2,121,364
45,597 Aspen Insurance Holdings, Ltd................................................ 2,273,010
24,806 Assurant, Inc................................................................ 2,572,134
35,406 Axis Capital Holdings, Ltd................................................... 2,289,352
56,886 Brown & Brown, Inc........................................................... 2,450,080
17,419 Chubb, Ltd................................................................... 2,532,374
32,840 Cincinnati Financial Corp.................................................... 2,379,258
53,732 CNA Financial Corp........................................................... 2,619,435
10,150 Everest Re Group, Ltd........................................................ 2,584,088
60,419 First American Financial Corp................................................ 2,700,125
60,949 FNF Group.................................................................... 2,732,344
49,370 Hartford Financial Services (The) Group, Inc................................. 2,595,381
32,119 Marsh & McLennan Cos., Inc................................................... 2,503,997
37,605 Principal Financial Group, Inc............................................... 2,409,352
39,391 ProAssurance Corp............................................................ 2,394,973
60,574 Progressive (The) Corp....................................................... 2,670,708
18,690 Reinsurance Group of America, Inc............................................ 2,399,609
16,408 RenaissanceRe Holdings, Ltd.................................................. 2,281,532
30,807 Torchmark Corp............................................................... 2,356,736
19,689 Travelers Cos., Inc.......................................................... 2,491,249
42,088 Validus Holdings, Ltd........................................................ 2,187,313
Page 14 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
INSURANCE (CONTINUED)
33,603 W.R. Berkley Corp............................................................ $ 2,324,320
59,542 XL Group, Ltd................................................................ 2,607,940
-------------
66,728,261
-------------
IT SERVICES - 3.4%
19,797 Accenture PLC, Class A....................................................... 2,448,493
38,914 Amdocs, Ltd.................................................................. 2,508,397
23,179 Automatic Data Processing, Inc............................................... 2,374,920
34,927 Broadridge Financial Solutions, Inc.......................................... 2,639,084
13,630 International Business Machines Corp......................................... 2,096,703
25,491 Jack Henry & Associates, Inc................................................. 2,647,750
21,102 MasterCard, Inc., Class A.................................................... 2,562,838
40,293 Paychex, Inc................................................................. 2,294,283
26,705 Visa, Inc., Class A.......................................................... 2,504,395
-------------
22,076,863
-------------
MACHINERY - 2.8%
15,697 Cummins, Inc................................................................. 2,546,367
25,380 IDEX Corp.................................................................... 2,868,194
17,916 Illinois Tool Works, Inc..................................................... 2,566,467
29,184 Ingersoll-Rand PLC........................................................... 2,667,126
14,803 Parker-Hannifin Corp......................................................... 2,365,816
14,071 Snap-On, Inc................................................................. 2,223,218
37,997 Toro (The) Co................................................................ 2,632,812
-------------
17,870,000
-------------
MEDIA - 1.1%
96,593 Interpublic Group of (The) Cos., Inc......................................... 2,376,188
27,528 Omnicom Group, Inc........................................................... 2,282,071
20,929 Walt Disney (The) Co......................................................... 2,223,706
-------------
6,881,965
-------------
MORTGAGE REAL ESTATE INVESTMENT TRUSTS - 0.4%
293,728 MFA Financial, Inc........................................................... 2,464,378
-------------
MULTILINE RETAIL - 0.3%
43,001 Target Corp.................................................................. 2,248,522
-------------
OIL, GAS & CONSUMABLE FUELS - 0.7%
28,939 Exxon Mobil Corp............................................................. 2,336,245
29,959 Phillips 66.................................................................. 2,477,310
-------------
4,813,555
-------------
PAPER & FOREST PRODUCTS - 0.4%
31,771 Neenah Paper, Inc............................................................ 2,549,623
-------------
PERSONAL PRODUCTS - 0.4%
27,991 Estee Lauder (The) Cos., Inc., Class A....................................... 2,686,576
-------------
PHARMACEUTICALS - 0.8%
19,054 Johnson & Johnson............................................................ 2,520,653
69,374 Pfizer, Inc.................................................................. 2,330,273
-------------
4,850,926
-------------
See Notes to Financial Statements Page 15
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
PROFESSIONAL SERVICES - 1.1%
17,358 Equifax, Inc................................................................. $ 2,385,336
39,852 Exponent, Inc................................................................ 2,323,372
23,137 ManpowerGroup, Inc........................................................... 2,583,246
-------------
7,291,954
-------------
ROAD & RAIL - 0.7%
27,710 Landstar System, Inc......................................................... 2,371,976
22,406 Union Pacific Corp........................................................... 2,440,237
-------------
4,812,213
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.4%
29,462 Texas Instruments, Inc....................................................... 2,266,512
-------------
SOFTWARE - 1.2%
74,820 CA, Inc...................................................................... 2,579,045
20,461 Intuit, Inc.................................................................. 2,717,426
53,199 Oracle Corp.................................................................. 2,667,398
-------------
7,963,869
-------------
SPECIALTY RETAIL - 2.0%
48,287 Best Buy Co., Inc............................................................ 2,768,294
31,725 Foot Locker, Inc............................................................. 1,563,408
16,162 Home Depot (The), Inc........................................................ 2,479,251
36,030 Ross Stores, Inc............................................................. 2,080,012
30,011 TJX (The) Cos., Inc.......................................................... 2,165,894
34,412 Tractor Supply Co............................................................ 1,865,474
-------------
12,922,333
-------------
TEXTILES, APPAREL & LUXURY GOODS - 1.1%
26,429 Carter's, Inc................................................................ 2,350,860
42,586 NIKE, Inc., Class B.......................................................... 2,512,574
43,174 VF Corp...................................................................... 2,486,822
-------------
7,350,256
-------------
TOBACCO - 0.4%
33,229 Altria Group, Inc............................................................ 2,474,564
-------------
TRADING COMPANIES & DISTRIBUTORS - 1.0%
46,082 Fastenal Co.................................................................. 2,005,950
10,195 W.W. Grainger, Inc........................................................... 1,840,503
16,576 Watsco, Inc.................................................................. 2,556,019
-------------
6,402,472
-------------
TOTAL COMMON STOCKS.......................................................... 365,893,944
(Cost $324,992,587) -------------
Page 16 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES - 39.4%
AEROSPACE & DEFENSE - 1.0%
$ 100,000 Boeing (The) Co..................................... 1.65% 10/30/20 $ 99,123
250,000 Boeing (The) Co..................................... 2.35% 10/30/21 251,953
553,000 Boeing (The) Co..................................... 2.13% 03/01/22 552,335
175,000 Boeing (The) Co..................................... 1.88% 06/15/23 168,521
100,000 Boeing (The) Co..................................... 2.60% 10/30/25 98,582
175,000 Boeing (The) Co..................................... 2.25% 06/15/26 166,670
250,000 Boeing (The) Co..................................... 2.80% 03/01/27 248,679
308,000 Boeing (The) Co..................................... 3.38% 06/15/46 296,428
250,000 Boeing (The) Co..................................... 3.65% 03/01/47 251,088
300,000 Boeing Capital Corp................................. 4.70% 10/27/19 320,168
250,000 Lockheed Martin Corp................................ 3.55% 01/15/26 259,515
220,000 Lockheed Martin Corp................................ 4.70% 05/15/46 248,215
200,000 Northrop Grumman Corp............................... 5.05% 11/15/40 231,363
250,000 Rockwell Collins, Inc............................... 2.80% 03/15/22 252,580
250,000 Rockwell Collins, Inc............................... 3.20% 03/15/24 253,784
250,000 Rockwell Collins, Inc............................... 3.50% 03/15/27 254,017
250,000 Rockwell Collins, Inc............................... 4.35% 04/15/47 262,554
250,000 United Technologies Corp............................ 1.90% 05/04/20 250,532
250,000 United Technologies Corp............................ 2.30% 05/04/22 249,446
250,000 United Technologies Corp............................ 2.80% 05/04/24 251,003
250,000 United Technologies Corp............................ 3.13% 05/04/27 251,246
500,000 United Technologies Corp............................ 3.75% 11/01/46 490,879
500,000 United Technologies Corp............................ 4.05% 05/04/47 513,479
-------------
6,222,160
-------------
AIR FREIGHT & LOGISTICS - 0.8%
250,000 FedEx Corp.......................................... 2.30% 02/01/20 252,083
300,000 FedEx Corp.......................................... 3.20% 02/01/25 304,128
850,000 FedEx Corp.......................................... 3.30% 03/15/27 853,574
250,000 FedEx Corp.......................................... 4.75% 11/15/45 271,040
648,000 FedEx Corp.......................................... 4.55% 04/01/46 683,430
500,000 FedEx Corp.......................................... 4.40% 01/15/47 516,402
500,000 United Parcel Service, Inc. (a)..................... 1.56% 05/16/22 502,051
500,000 United Parcel Service, Inc.......................... 2.35% 05/16/22 501,991
545,000 United Parcel Service, Inc.......................... 2.45% 10/01/22 550,938
500,000 United Parcel Service, Inc.......................... 2.40% 11/15/26 483,496
500,000 United Parcel Service, Inc.......................... 3.40% 11/15/46 477,637
-------------
5,396,770
-------------
AIRLINES - 0.2%
385,000 Southwest Airlines Co............................... 2.75% 11/06/19 391,214
420,000 Southwest Airlines Co............................... 2.65% 11/05/20 425,330
250,000 Southwest Airlines Co............................... 3.00% 11/15/26 242,960
-------------
1,059,504
-------------
AUTOMOBILES - 0.0%
250,000 Ford Motor Co....................................... 5.29% 12/08/46 257,539
-------------
BANKS - 7.1%
1,400,000 Bank of America Corp................................ 2.60% 01/15/19 1,413,710
400,000 Bank of America Corp. (a)........................... 2.17% 04/01/19 403,791
100,000 Bank of America Corp................................ 2.63% 10/19/20 101,088
See Notes to Financial Statements Page 17
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BANKS (CONTINUED)
$ 600,000 Bank of America Corp................................ 2.63% 04/19/21 $ 603,200
725,000 Bank of America Corp................................ 5.70% 01/24/22 820,054
250,000 Bank of America Corp. (a)........................... 2.34% 10/21/22 253,990
250,000 Bank of America Corp................................ 2.50% 10/21/22 247,108
500,000 Bank of America Corp. (a)........................... 2.32% 01/20/23 505,841
500,000 Bank of America Corp. (a)........................... 2.88% 04/24/23 501,483
450,000 Bank of America Corp................................ 4.00% 04/01/24 471,958
100,000 Bank of America Corp................................ 4.00% 01/22/25 101,840
400,000 Bank of America Corp................................ 4.45% 03/03/26 417,045
950,000 Bank of America Corp................................ 3.50% 04/19/26 955,027
150,000 Bank of America Corp................................ 3.25% 10/21/27 145,263
250,000 Bank of America Corp................................ 4.18% 11/25/27 254,763
500,000 Bank of America Corp. (a)........................... 3.82% 01/20/28 509,289
500,000 Bank of America Corp. (a)........................... 3.71% 04/24/28 504,280
250,000 Bank of America Corp. (a)........................... 4.24% 04/24/38 260,489
225,000 Bank of America Corp................................ 5.88% 02/07/42 282,968
225,000 Bank of America Corp................................ 4.88% 04/01/44 252,888
250,000 Bank of America Corp. (a)........................... 4.44% 01/20/48 265,086
1,000,000 BB&T Corp........................................... 2.05% 05/10/21 992,744
500,000 BB&T Corp. (a)...................................... 1.95% 04/01/22 503,478
500,000 Citibank N.A. (a)................................... 1.61% 03/20/19 500,850
800,000 Citigroup, Inc...................................... 2.15% 07/30/18 802,726
300,000 Citigroup, Inc...................................... 2.50% 09/26/18 302,124
300,000 Citigroup, Inc...................................... 2.05% 06/07/19 300,334
1,000,000 Citigroup, Inc. (a)................................. 2.15% 06/07/19 1,009,595
1,000,000 Citigroup, Inc. (a)................................. 2.09% 01/10/20 1,007,584
500,000 Citigroup, Inc...................................... 2.45% 01/10/20 503,302
250,000 Citigroup, Inc...................................... 2.40% 02/18/20 251,503
600,000 Citigroup, Inc...................................... 2.70% 03/30/21 604,301
350,000 Citigroup, Inc...................................... 2.35% 08/02/21 347,156
1,000,000 Citigroup, Inc. (a)................................. 2.29% 12/08/21 1,010,134
250,000 Citigroup, Inc...................................... 2.90% 12/08/21 252,790
775,000 Citigroup, Inc...................................... 4.50% 01/14/22 834,219
500,000 Citigroup, Inc...................................... 2.75% 04/25/22 499,767
500,000 Citigroup, Inc. (a)................................. 2.28% 05/17/24 499,960
450,000 Citigroup, Inc...................................... 4.60% 03/09/26 473,048
300,000 Citigroup, Inc...................................... 3.40% 05/01/26 297,330
250,000 Citigroup, Inc...................................... 3.20% 10/21/26 243,421
300,000 Citigroup, Inc...................................... 4.30% 11/20/26 308,735
100,000 Citigroup, Inc...................................... 4.45% 09/29/27 104,130
500,000 Citigroup, Inc. (a)................................. 3.89% 01/10/28 508,735
500,000 Citigroup, Inc...................................... 4.13% 07/25/28 508,684
200,000 Citigroup, Inc...................................... 5.88% 01/30/42 252,943
100,000 Citigroup, Inc...................................... 6.68% 09/13/43 133,919
750,000 Citigroup, Inc...................................... 4.75% 05/18/46 790,421
500,000 Citigroup, Inc. (a)................................. 4.28% 04/24/48 513,732
600,000 HSBC Bank USA N.A................................... 4.88% 08/24/20 645,593
100,000 HSBC USA, Inc....................................... 1.50% 11/13/17 99,954
1,000,000 HSBC USA, Inc....................................... 1.63% 01/16/18 1,000,414
Page 18 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BANKS (CONTINUED)
$ 400,000 JPMorgan Chase & Co................................. 1.85% 03/22/19 $ 399,680
400,000 JPMorgan Chase & Co................................. 2.20% 10/22/19 401,413
150,000 JPMorgan Chase & Co................................. 2.55% 03/01/21 150,814
1,000,000 JPMorgan Chase & Co. (a)............................ 1.77% 03/09/21 1,000,360
550,000 JPMorgan Chase & Co................................. 4.63% 05/10/21 593,223
450,000 JPMorgan Chase & Co................................. 2.40% 06/07/21 449,398
1,000,000 JPMorgan Chase & Co. (a)............................ 2.16% 01/15/23 1,006,833
325,000 JPMorgan Chase & Co................................. 3.20% 01/25/23 331,612
250,000 JPMorgan Chase & Co. (a)............................ 2.78% 04/25/23 250,617
500,000 JPMorgan Chase & Co................................. 2.70% 05/18/23 494,918
250,000 JPMorgan Chase & Co. (a)............................ 2.38% 10/24/23 253,974
400,000 JPMorgan Chase & Co................................. 3.88% 02/01/24 419,590
850,000 JPMorgan Chase & Co................................. 3.30% 04/01/26 845,005
300,000 JPMorgan Chase & Co................................. 4.13% 12/15/26 311,343
250,000 JPMorgan Chase & Co................................. 3.63% 12/01/27 247,973
500,000 JPMorgan Chase & Co. (a)............................ 3.78% 02/01/28 511,922
500,000 JPMorgan Chase & Co. (a)............................ 3.54% 05/01/28 502,134
400,000 JPMorgan Chase & Co................................. 6.40% 05/15/38 536,962
100,000 JPMorgan Chase & Co................................. 4.85% 02/01/44 115,508
150,000 JPMorgan Chase & Co................................. 4.95% 06/01/45 167,731
500,000 JPMorgan Chase & Co. (a)............................ 4.26% 02/22/48 524,405
437,000 JPMorgan Chase Bank N.A............................. 6.00% 10/01/17 441,495
600,000 Wells Fargo & Co.................................... 6.00% 11/15/17 609,526
575,000 Wells Fargo & Co.................................... 2.13% 04/22/19 578,149
200,000 Wells Fargo & Co.................................... 2.15% 01/30/20 200,589
100,000 Wells Fargo & Co.................................... 2.55% 12/07/20 101,196
900,000 Wells Fargo & Co.................................... 3.00% 01/22/21 919,520
550,000 Wells Fargo & Co.................................... 2.50% 03/04/21 552,191
300,000 Wells Fargo & Co.................................... 2.10% 07/26/21 296,148
1,000,000 Wells Fargo & Co. (a)............................... 2.11% 02/11/22 1,008,982
1,000,000 Wells Fargo & Co. (a)............................... 2.26% 01/24/23 1,011,241
250,000 Wells Fargo & Co. (a)............................... 2.40% 10/31/23 254,628
425,000 Wells Fargo & Co.................................... 3.30% 09/09/24 431,495
550,000 Wells Fargo & Co.................................... 3.00% 04/22/26 537,777
100,000 Wells Fargo & Co.................................... 4.10% 06/03/26 103,663
250,000 Wells Fargo & Co.................................... 3.00% 10/23/26 243,733
200,000 Wells Fargo & Co.................................... 4.30% 07/22/27 209,740
500,000 Wells Fargo & Co. (a)............................... 3.58% 05/22/28 505,943
100,000 Wells Fargo & Co.................................... 4.90% 11/17/45 109,297
275,000 Wells Fargo & Co.................................... 4.40% 06/14/46 279,094
750,000 Wells Fargo & Co.................................... 4.75% 12/07/46 802,707
1,000,000 Wells Fargo Bank N.A. (a)........................... 1.70% 11/28/18 1,004,442
250,000 Wells Fargo Bank N.A................................ 1.75% 05/24/19 249,584
500,000 Wells Fargo Bank N.A. (a)........................... 1.87% 12/06/19 506,028
200,000 Wells Fargo Bank N.A................................ 5.95% 08/26/36 252,040
-------------
46,099,410
-------------
BEVERAGES - 1.1%
690,000 Anheuser-Busch Inbev Worldwide, Inc................. 2.65% 02/01/21 699,831
200,000 Anheuser-Busch Inbev Worldwide, Inc................. 2.50% 07/15/22 199,952
625,000 Anheuser-Busch Inbev Worldwide, Inc................. 3.30% 02/01/23 644,376
See Notes to Financial Statements Page 19
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BEVERAGES (CONTINUED)
$ 600,000 Anheuser-Busch Inbev Worldwide, Inc................. 3.65% 02/01/26 $ 619,268
875,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.70% 02/01/36 966,060
1,100,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.90% 02/01/46 1,246,472
250,000 Coca-Cola (The) Co.................................. 1.38% 05/30/19 249,085
150,000 Coca-Cola (The) Co.................................. 1.88% 10/27/20 149,789
250,000 Coca-Cola (The) Co.................................. 1.55% 09/01/21 245,164
975,000 Coca-Cola (The) Co.................................. 3.20% 11/01/23 1,012,636
100,000 Coca-Cola (The) Co.................................. 2.88% 10/27/25 100,690
100,000 Coca-Cola (The) Co.................................. 2.55% 06/01/26 97,068
250,000 Coca-Cola (The) Co.................................. 2.25% 09/01/26 237,654
550,000 Molson Coors Brewing Co............................. 4.20% 07/15/46 544,654
-------------
7,012,699
-------------
BIOTECHNOLOGY - 0.6%
350,000 AbbVie, Inc......................................... 2.50% 05/14/20 354,294
375,000 AbbVie, Inc......................................... 2.90% 11/06/22 378,993
250,000 AbbVie, Inc......................................... 3.60% 05/14/25 255,439
175,000 AbbVie, Inc......................................... 4.40% 11/06/42 179,964
300,000 AbbVie, Inc......................................... 4.70% 05/14/45 320,046
500,000 Amgen, Inc.......................................... 1.90% 05/10/19 500,695
500,000 Amgen, Inc.......................................... 2.20% 05/11/20 502,872
450,000 Amgen, Inc.......................................... 2.70% 05/01/22 453,075
500,000 Amgen, Inc.......................................... 2.65% 05/11/22 502,227
200,000 Amgen, Inc.......................................... 3.63% 05/22/24 208,938
100,000 Amgen, Inc.......................................... 2.60% 08/19/26 94,827
200,000 Amgen, Inc.......................................... 5.38% 05/15/43 227,292
100,000 Amgen, Inc.......................................... 4.40% 05/01/45 103,126
-------------
4,081,788
-------------
BUILDING PRODUCTS - 0.2%
450,000 Masco Corp.......................................... 3.50% 04/01/21 464,387
250,000 Masco Corp.......................................... 3.50% 11/15/27 248,351
250,000 Masco Corp.......................................... 4.50% 05/15/47 252,165
500,000 Owens Corning....................................... 4.30% 07/15/47 483,001
-------------
1,447,904
-------------
CAPITAL MARKETS - 3.5%
825,000 Goldman Sachs Group (The), Inc...................... 6.15% 04/01/18 851,629
1,000,000 Goldman Sachs Group (The), Inc. (a)................. 2.37% 04/30/18 1,007,743
300,000 Goldman Sachs Group (The), Inc...................... 2.00% 04/25/19 300,002
600,000 Goldman Sachs Group (The), Inc...................... 2.55% 10/23/19 606,885
700,000 Goldman Sachs Group (The), Inc. (a)................. 2.04% 12/13/19 704,384
500,000 Goldman Sachs Group (The), Inc...................... 2.30% 12/13/19 501,651
500,000 Goldman Sachs Group (The), Inc...................... 2.60% 04/23/20 504,972
500,000 Goldman Sachs Group (The), Inc. (a)................. 2.02% 12/27/20 501,037
700,000 Goldman Sachs Group (The), Inc...................... 2.63% 04/25/21 702,007
500,000 Goldman Sachs Group (The), Inc...................... 2.35% 11/15/21 493,780
497,000 Goldman Sachs Group (The), Inc. (a)................. 2.28% 04/26/22 500,986
500,000 Goldman Sachs Group (The), Inc...................... 3.00% 04/26/22 504,112
700,000 Goldman Sachs Group (The), Inc...................... 3.63% 01/22/23 723,388
250,000 Goldman Sachs Group (The), Inc. (a)................. 2.27% 06/05/23 250,332
Page 20 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
CAPITAL MARKETS (CONTINUED)
$ 250,000 Goldman Sachs Group (The), Inc. (a)................. 2.91% 06/05/23 $ 249,788
600,000 Goldman Sachs Group (The), Inc...................... 4.00% 03/03/24 628,643
150,000 Goldman Sachs Group (The), Inc...................... 3.50% 01/23/25 151,775
600,000 Goldman Sachs Group (The), Inc...................... 4.25% 10/21/25 621,277
550,000 Goldman Sachs Group (The), Inc...................... 3.75% 02/25/26 561,042
500,000 Goldman Sachs Group (The), Inc...................... 3.50% 11/16/26 497,939
750,000 Goldman Sachs Group (The), Inc...................... 3.85% 01/26/27 763,811
250,000 Goldman Sachs Group (The), Inc. (a)................. 3.69% 06/05/28 251,303
400,000 Goldman Sachs Group (The), Inc...................... 6.25% 02/01/41 523,594
50,000 Goldman Sachs Group (The), Inc...................... 4.75% 10/21/45 55,456
800,000 Morgan Stanley (a).................................. 2.00% 01/24/19 805,914
695,000 Morgan Stanley...................................... 2.50% 01/24/19 700,630
400,000 Morgan Stanley...................................... 2.65% 01/27/20 404,467
100,000 Morgan Stanley (a).................................. 1.98% 02/14/20 100,434
1,000,000 Morgan Stanley...................................... 2.50% 04/21/21 999,769
550,000 Morgan Stanley...................................... 5.50% 07/28/21 610,430
500,000 Morgan Stanley...................................... 2.63% 11/17/21 499,570
875,000 Morgan Stanley (a).................................. 2.34% 01/20/22 884,204
500,000 Morgan Stanley...................................... 2.75% 05/19/22 500,232
300,000 Morgan Stanley...................................... 3.75% 02/25/23 312,181
500,000 Morgan Stanley (a).................................. 2.55% 10/24/23 509,058
450,000 Morgan Stanley...................................... 3.88% 04/29/24 468,099
500,000 Morgan Stanley (a).................................. 2.37% 05/08/24 502,990
800,000 Morgan Stanley...................................... 3.88% 01/27/26 824,481
250,000 Morgan Stanley...................................... 4.35% 09/08/26 260,401
250,000 Morgan Stanley...................................... 3.63% 01/20/27 252,100
350,000 Morgan Stanley...................................... 6.38% 07/24/42 466,903
100,000 Morgan Stanley...................................... 4.30% 01/27/45 103,665
250,000 Morgan Stanley...................................... 4.38% 01/22/47 261,459
300,000 Nasdaq, Inc......................................... 3.85% 06/30/26 304,960
250,000 TD Ameritrade Holding Corp.......................... 3.30% 04/01/27 249,995
-------------
22,479,478
-------------
CHEMICALS - 0.4%
250,000 CF Industries, Inc. (b)............................. 3.40% 12/01/21 253,017
250,000 Chevron Phillips Chemical Co., LLC/Chevron Phillips
Chemical Co., L.P. (b)........................... 3.40% 12/01/26 254,468
525,000 Dow Chemical (The) Co............................... 8.55% 05/15/19 588,277
200,000 Dow Chemical (The) Co............................... 3.00% 11/15/22 204,094
75,000 Dow Chemical (The) Co............................... 4.63% 10/01/44 80,141
140,000 EI du Pont de Nemours & Co. (a)..................... 1.70% 05/01/20 140,900
250,000 EI du Pont de Nemours & Co.......................... 2.20% 05/01/20 251,459
250,000 Sherwin-Williams (The) Co........................... 2.75% 06/01/22 250,136
250,000 Sherwin-Williams (The) Co........................... 3.13% 06/01/24 251,646
250,000 Sherwin-Williams (The) Co........................... 3.45% 06/01/27 252,165
100,000 Westlake Chemical Corp.............................. 3.60% 08/15/26 99,441
250,000 Westlake Chemical Corp.............................. 5.00% 08/15/46 265,100
-------------
2,890,844
-------------
See Notes to Financial Statements Page 21
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
COMMUNICATIONS EQUIPMENT - 0.3%
$ 100,000 Cisco Systems, Inc.................................. 1.40% 09/20/19 $ 99,344
100,000 Cisco Systems, Inc.................................. 2.45% 06/15/20 101,648
800,000 Cisco Systems, Inc.................................. 2.20% 09/20/23 783,219
500,000 Cisco Systems, Inc.................................. 3.63% 03/04/24 529,326
100,000 Cisco Systems, Inc.................................. 2.95% 02/28/26 100,139
200,000 Cisco Systems, Inc.................................. 2.50% 09/20/26 192,017
225,000 Cisco Systems, Inc.................................. 5.90% 02/15/39 293,155
-------------
2,098,848
-------------
CONSTRUCTION MATERIALS - 0.1%
250,000 CRH America Finance, Inc. (b)....................... 3.40% 05/09/27 250,534
250,000 CRH America Finance, Inc. (b)....................... 4.40% 05/09/47 257,768
250,000 Vulcan Materials Co................................. 3.90% 04/01/27 257,430
250,000 Vulcan Materials Co................................. 4.50% 06/15/47 253,828
-------------
1,019,560
-------------
CONSUMER FINANCE - 2.4%
400,000 American Express Centurion Bank..................... 6.00% 09/13/17 403,278
450,000 American Express Co................................. 3.63% 12/05/24 461,206
800,000 American Express Credit Corp........................ 2.13% 07/27/18 803,296
200,000 American Express Credit Corp........................ 1.88% 11/05/18 200,348
297,000 American Express Credit Corp. (a)................... 1.82% 03/18/19 298,558
500,000 American Express Credit Corp........................ 1.70% 10/30/19 497,474
250,000 American Express Credit Corp........................ 2.20% 03/03/20 251,284
150,000 American Express Credit Corp........................ 2.60% 09/14/20 152,258
575,000 American Express Credit Corp........................ 2.25% 05/05/21 574,426
250,000 American Express Credit Corp. (a)................... 1.92% 03/03/22 251,863
250,000 American Express Credit Corp........................ 2.70% 03/03/22 252,465
500,000 American Express Credit Corp........................ 3.30% 05/03/27 500,211
500,000 Capital One Financial Corp. (a)..................... 2.17% 03/09/22 499,338
550,000 Capital One Financial Corp.......................... 3.75% 04/24/24 562,838
350,000 Capital One Financial Corp.......................... 3.75% 07/28/26 342,188
250,000 Capital One N.A..................................... 2.25% 09/13/21 245,611
1,000,000 Capital One N.A. (a)................................ 2.32% 01/30/23 1,006,416
300,000 Caterpillar Financial Services Corp. (a)............ 1.81% 01/10/20 301,912
500,000 Caterpillar Financial Services Corp................. 2.10% 01/10/20 503,506
1,039,000 Caterpillar Financial Services Corp................. 1.70% 08/09/21 1,016,304
250,000 Caterpillar Financial Services Corp................. 2.40% 06/06/22 249,530
150,000 Caterpillar Financial Services Corp................. 3.25% 12/01/24 153,930
400,000 Ford Motor Credit Co., LLC.......................... 2.88% 10/01/18 404,088
250,000 Ford Motor Credit Co., LLC.......................... 2.26% 03/28/19 250,787
500,000 Ford Motor Credit Co., LLC.......................... 1.90% 08/12/19 496,429
200,000 Ford Motor Credit Co., LLC (a)...................... 2.30% 01/09/20 201,488
200,000 Ford Motor Credit Co., LLC.......................... 2.68% 01/09/20 201,465
200,000 Ford Motor Credit Co., LLC.......................... 2.46% 03/27/20 200,305
500,000 Ford Motor Credit Co., LLC.......................... 2.43% 06/12/20 500,191
100,000 Ford Motor Credit Co., LLC.......................... 3.22% 01/09/22 100,994
250,000 Ford Motor Credit Co., LLC.......................... 3.34% 03/28/22 253,955
450,000 Ford Motor Credit Co., LLC.......................... 3.10% 05/04/23 445,193
725,000 Ford Motor Credit Co., LLC.......................... 4.38% 08/06/23 763,791
200,000 Ford Motor Credit Co., LLC.......................... 3.81% 01/09/24 202,788
Page 22 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
CONSUMER FINANCE (CONTINUED)
$ 350,000 Ford Motor Credit Co., LLC.......................... 4.13% 08/04/25 $ 356,647
100,000 General Motors Financial Co., Inc................... 2.40% 05/09/19 100,312
250,000 General Motors Financial Co., Inc................... 2.65% 04/13/20 251,329
250,000 General Motors Financial Co., Inc................... 3.20% 07/06/21 253,042
250,000 General Motors Financial Co., Inc. (a).............. 2.71% 01/14/22 255,079
200,000 General Motors Financial Co., Inc................... 5.25% 03/01/26 216,392
100,000 General Motors Financial Co., Inc................... 4.00% 10/06/26 99,612
250,000 General Motors Financial Co., Inc................... 4.35% 01/17/27 253,558
-------------
15,335,685
-------------
CONTAINERS & PACKAGING - 0.1%
200,000 International Paper Co.............................. 3.00% 02/15/27 192,878
150,000 International Paper Co.............................. 4.40% 08/15/47 151,601
-------------
344,479
-------------
DIVERSIFIED FINANCIAL SERVICES - 0.3%
250,000 Berkshire Hathaway Finance Corp. (a)................ 1.62% 01/10/20 251,356
175,000 Berkshire Hathaway, Inc............................. 2.20% 03/15/21 176,435
125,000 Berkshire Hathaway, Inc............................. 2.75% 03/15/23 126,753
425,000 Berkshire Hathaway, Inc............................. 3.13% 03/15/26 430,257
350,000 Diamond 1 Finance Corp./Diamond 2 Finance
Corp. (b)........................................ 3.48% 06/01/19 358,346
250,000 Diamond 1 Finance Corp./Diamond 2 Finance
Corp. (b)........................................ 4.42% 06/15/21 263,788
250,000 Voya Financial, Inc................................. 3.13% 07/15/24 247,262
-------------
1,854,197
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.8%
500,000 AT&T, Inc........................................... 2.30% 03/11/19 503,172
300,000 AT&T, Inc........................................... 2.45% 06/30/20 301,751
250,000 AT&T, Inc........................................... 2.80% 02/17/21 252,864
275,000 AT&T, Inc........................................... 3.88% 08/15/21 287,355
250,000 AT&T, Inc........................................... 3.20% 03/01/22 253,318
300,000 AT&T, Inc........................................... 3.00% 06/30/22 300,500
150,000 AT&T, Inc........................................... 3.60% 02/17/23 153,708
250,000 AT&T, Inc........................................... 3.80% 03/01/24 256,018
150,000 AT&T, Inc........................................... 3.90% 03/11/24 153,838
350,000 AT&T, Inc........................................... 3.40% 05/15/25 344,669
650,000 AT&T, Inc........................................... 4.13% 02/17/26 667,599
250,000 AT&T, Inc........................................... 5.25% 03/01/37 267,162
425,000 AT&T, Inc........................................... 4.80% 06/15/44 422,774
250,000 AT&T, Inc........................................... 4.35% 06/15/45 232,936
250,000 AT&T, Inc........................................... 4.75% 05/15/46 246,103
550,000 AT&T, Inc........................................... 5.65% 02/15/47 610,183
250,000 AT&T, Inc........................................... 5.70% 03/01/57 274,511
523,000 Verizon Communications, Inc. (a).................... 2.99% 09/14/18 532,557
450,000 Verizon Communications, Inc. (a).................... 2.04% 06/17/19 453,488
1,277,000 Verizon Communications, Inc. (b).................... 2.95% 03/15/22 1,287,275
100,000 Verizon Communications, Inc. (a).................... 2.25% 03/16/22 101,242
525,000 Verizon Communications, Inc......................... 5.15% 09/15/23 583,943
650,000 Verizon Communications, Inc......................... 3.50% 11/01/24 657,033
100,000 Verizon Communications, Inc......................... 2.63% 08/15/26 92,163
250,000 Verizon Communications, Inc......................... 4.13% 03/16/27 258,710
See Notes to Financial Statements Page 23
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
$ 231,000 Verizon Communications, Inc......................... 4.27% 01/15/36 $ 223,654
298,000 Verizon Communications, Inc......................... 4.13% 08/15/46 266,288
500,000 Verizon Communications, Inc......................... 4.86% 08/21/46 502,027
250,000 Verizon Communications, Inc......................... 4.52% 09/15/48 237,485
249,000 Verizon Communications, Inc......................... 5.01% 08/21/54 246,889
522,000 Verizon Communications, Inc......................... 4.67% 03/15/55 490,777
-------------
11,461,992
-------------
ELECTRIC UTILITIES - 3.8%
250,000 AEP Transmission Co., LLC........................... 3.10% 12/01/26 249,594
250,000 AEP Transmission Co., LLC........................... 4.00% 12/01/46 258,948
250,000 Alabama Power Co.................................... 2.45% 03/30/22 251,020
100,000 Alabama Power Co.................................... 3.75% 03/01/45 99,053
1,055,000 American Electric Power Co., Inc.................... 1.65% 12/15/17 1,055,209
250,000 American Electric Power Co., Inc.................... 2.95% 12/15/22 254,834
300,000 Appalachian Power Co................................ 4.40% 05/15/44 320,107
250,000 Baltimore Gas & Electric Co......................... 2.40% 08/15/26 236,906
250,000 Baltimore Gas & Electric Co......................... 3.50% 08/15/46 238,992
240,000 CenterPoint Energy Houston Electric LLC............. 2.25% 08/01/22 237,267
250,000 CenterPoint Energy Houston Electric LLC............. 2.40% 09/01/26 237,917
500,000 CenterPoint Energy Houston Electric LLC............. 3.00% 02/01/27 498,022
295,000 CenterPoint Energy Houston Electric LLC............. 4.50% 04/01/44 330,979
200,000 Commonwealth Edison Co.............................. 2.55% 06/15/26 192,671
300,000 Commonwealth Edison Co.............................. 3.40% 09/01/21 312,406
300,000 Commonwealth Edison Co.............................. 3.70% 03/01/45 296,077
400,000 Commonwealth Edison Co.............................. 3.65% 06/15/46 389,784
575,000 Constellation Energy Group, Inc..................... 5.15% 12/01/20 620,630
100,000 Duke Energy Carolinas LLC........................... 2.50% 03/15/23 100,282
250,000 Duke Energy Carolinas LLC........................... 2.95% 12/01/26 249,123
350,000 Duke Energy Carolinas LLC........................... 6.00% 01/15/38 463,448
50,000 Duke Energy Carolinas LLC........................... 3.75% 06/01/45 49,863
100,000 Duke Energy Carolinas LLC........................... 3.88% 03/15/46 102,223
200,000 Duke Energy Corp.................................... 2.10% 06/15/18 200,817
250,000 Duke Energy Corp.................................... 1.80% 09/01/21 244,286
300,000 Duke Energy Corp.................................... 3.55% 09/15/21 312,468
450,000 Duke Energy Corp.................................... 3.75% 09/01/46 429,345
500,000 Duke Energy Florida LLC............................. 3.20% 01/15/27 507,004
250,000 Duke Energy Florida LLC............................. 3.40% 10/01/46 233,087
100,000 Duke Energy Indiana LLC............................. 3.75% 05/15/46 98,827
250,000 Duke Energy Progress LLC............................ 3.70% 10/15/46 246,361
350,000 Entergy Corp........................................ 2.95% 09/01/26 335,811
250,000 Entergy Louisiana LLC............................... 3.12% 09/01/27 249,467
500,000 Exelon Corp......................................... 3.50% 06/01/22 511,384
200,000 Exelon Corp......................................... 2.45% 04/15/21 199,629
50,000 Exelon Corp......................................... 5.10% 06/15/45 56,244
250,000 Exelon Corp......................................... 4.45% 04/15/46 259,432
250,000 FirstEnergy Corp.................................... 2.85% 07/15/22 250,054
350,000 Florida Power & Light Co............................ 3.25% 06/01/24 362,333
210,000 Florida Power & Light Co............................ 4.05% 06/01/42 221,546
250,000 Great Plains Energy, Inc............................ 3.90% 04/01/27 253,405
Page 24 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
ELECTRIC UTILITIES (CONTINUED)
$ 410,000 Great Plains Energy, Inc............................ 4.85% 04/01/47 $ 423,551
100,000 Indiana Michigan Power Co........................... 4.55% 03/15/46 109,839
500,000 Indiana Michigan Power Co........................... 3.75% 07/01/47 487,779
410,000 Metropolitan Edison Co. (b)......................... 3.50% 03/15/23 417,162
125,000 Monongahela Power Co. (b)........................... 5.40% 12/15/43 152,382
150,000 Ohio Edison Co...................................... 6.88% 07/15/36 201,387
295,000 Pacific Gas & Electric Co........................... 5.63% 11/30/17 299,861
250,000 Pacific Gas & Electric Co........................... 3.50% 06/15/25 258,737
100,000 Pacific Gas & Electric Co........................... 2.95% 03/01/26 99,420
500,000 Pacific Gas & Electric Co........................... 3.30% 03/15/27 511,774
600,000 Pacific Gas & Electric Co........................... 4.30% 03/15/45 644,252
250,000 Pacific Gas & Electric Co........................... 4.25% 03/15/46 266,629
750,000 Pacific Gas & Electric Co........................... 4.00% 12/01/46 773,870
100,000 Public Service Electric & Gas Co.................... 1.90% 03/15/21 99,176
195,000 Public Service Electric & Gas Co.................... 2.38% 05/15/23 193,615
550,000 Public Service Electric & Gas Co.................... 2.25% 09/15/26 519,594
250,000 Public Service Electric & Gas Co.................... 3.00% 05/15/27 250,817
275,000 Public Service Electric & Gas Co.................... 3.95% 05/01/42 285,603
100,000 Public Service Electric & Gas Co.................... 3.80% 03/01/46 101,950
550,000 Southern (The) Co................................... 1.85% 07/01/19 548,134
815,000 Southern (The) Co................................... 2.35% 07/01/21 809,826
250,000 Southern (The) Co................................... 3.25% 07/01/26 245,037
425,000 Southern (The) Co................................... 4.40% 07/01/46 434,486
200,000 Southern California Edison Co....................... 3.50% 10/01/23 209,039
200,000 Southern California Edison Co....................... 3.60% 02/01/45 195,051
250,000 Southern California Edison Co....................... 4.00% 04/01/47 262,152
500,000 Southern Co. Gas Capital Corp....................... 4.40% 05/30/47 512,081
1,100,000 Southern Power Co................................... 1.85% 12/01/17 1,101,076
250,000 Southern Power Co................................... 4.95% 12/15/46 259,166
500,000 Southwestern Electric Power Co...................... 2.75% 10/01/26 480,190
100,000 Southwestern Electric Power Co...................... 6.20% 03/15/40 128,909
200,000 Virginia Electric & Power Co........................ 3.45% 02/15/24 206,735
450,000 Virginia Electric & Power Co........................ 2.95% 11/15/26 446,131
250,000 Virginia Electric & Power Co........................ 3.50% 03/15/27 257,577
475,000 Virginia Electric & Power Co........................ 4.45% 02/15/44 521,005
250,000 Virginia Electric & Power Co........................ 4.00% 11/15/46 258,884
-------------
24,989,732
-------------
ENERGY EQUIPMENT & SERVICES - 0.1%
250,000 Halliburton Co...................................... 5.00% 11/15/45 267,019
250,000 Nabors Industries, Inc. (b)......................... 5.50% 01/15/23 237,812
-------------
504,831
-------------
EQUITY REAL ESTATE INVESTMENT TRUSTS - 0.0%
250,000 American Tower Corp................................. 3.55% 07/15/27 248,415
-------------
FOOD & STAPLES RETAILING - 0.6%
600,000 CVS Health Corp..................................... 1.90% 07/20/18 601,713
150,000 CVS Health Corp..................................... 2.80% 07/20/20 152,822
600,000 CVS Health Corp..................................... 2.13% 06/01/21 593,237
700,000 CVS Health Corp..................................... 4.00% 12/05/23 740,428
See Notes to Financial Statements Page 25
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
FOOD & STAPLES RETAILING (CONTINUED)
$ 178,000 CVS Health Corp..................................... 3.88% 07/20/25 $ 185,386
150,000 CVS Health Corp..................................... 2.88% 06/01/26 145,646
675,000 CVS Health Corp..................................... 5.13% 07/20/45 776,834
250,000 Sysco Corp.......................................... 3.25% 07/15/27 246,671
325,000 Wal-Mart Stores, Inc................................ 3.30% 04/22/24 339,650
300,000 Wal-Mart Stores, Inc................................ 4.30% 04/22/44 333,092
-------------
4,115,479
-------------
FOOD PRODUCTS - 0.2%
500,000 Tyson Foods, Inc.................................... 3.55% 06/02/27 506,862
500,000 Tyson Foods, Inc.................................... 4.55% 06/02/47 528,552
-------------
1,035,414
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9%
250,000 Abbott Laboratories................................. 2.90% 11/30/21 253,048
250,000 Abbott Laboratories................................. 3.40% 11/30/23 256,278
600,000 Abbott Laboratories................................. 4.90% 11/30/46 663,520
500,000 Becton Dickinson and Co............................. 3.36% 06/06/24 501,894
750,000 Becton Dickinson and Co............................. 3.70% 06/06/27 753,890
500,000 Becton Dickinson and Co............................. 4.67% 06/06/47 521,896
300,000 Medtronic, Inc...................................... 2.50% 03/15/20 304,466
750,000 Medtronic, Inc...................................... 3.15% 03/15/22 776,635
600,000 Medtronic, Inc...................................... 3.50% 03/15/25 624,788
1,150,000 Medtronic, Inc...................................... 4.63% 03/15/45 1,297,415
-------------
5,953,830
-------------
HEALTH CARE PROVIDERS & SERVICES - 0.8%
750,000 UnitedHealth Group, Inc............................. 1.63% 03/15/19 745,427
275,000 UnitedHealth Group, Inc............................. 4.70% 02/15/21 297,281
100,000 UnitedHealth Group, Inc............................. 2.13% 03/15/21 99,804
550,000 UnitedHealth Group, Inc............................. 2.88% 12/15/21 562,510
100,000 UnitedHealth Group, Inc............................. 3.75% 07/15/25 105,435
250,000 UnitedHealth Group, Inc............................. 3.10% 03/15/26 251,574
500,000 UnitedHealth Group, Inc............................. 3.45% 01/15/27 514,726
500,000 UnitedHealth Group, Inc............................. 3.38% 04/15/27 511,543
150,000 UnitedHealth Group, Inc............................. 6.88% 02/15/38 213,462
573,000 UnitedHealth Group, Inc............................. 4.75% 07/15/45 659,795
500,000 UnitedHealth Group, Inc............................. 4.20% 01/15/47 528,800
500,000 UnitedHealth Group, Inc............................. 4.25% 04/15/47 534,393
-------------
5,024,750
-------------
HOTELS, RESTAURANTS & LEISURE - 0.2%
330,000 McDonald's Corp..................................... 2.10% 12/07/18 331,972
150,000 McDonald's Corp..................................... 3.70% 01/30/26 155,621
500,000 McDonald's Corp..................................... 3.50% 03/01/27 509,269
100,000 McDonald's Corp..................................... 4.88% 12/09/45 111,930
-------------
1,108,792
-------------
HOUSEHOLD DURABLES - 0.2%
250,000 DR Horton, Inc...................................... 4.38% 09/15/22 266,392
250,000 Newell Brands, Inc.................................. 3.15% 04/01/21 256,029
100,000 Newell Brands, Inc.................................. 4.00% 12/01/24 104,054
Page 26 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
HOUSEHOLD DURABLES (CONTINUED)
$ 350,000 Newell Brands, Inc.................................. 4.20% 04/01/26 $ 372,024
525,000 Newell Brands, Inc.................................. 5.50% 04/01/46 633,592
-------------
1,632,091
-------------
HOUSEHOLD PRODUCTS - 0.1%
250,000 Proctor & Gamble (The) Co........................... 1.70% 11/03/21 246,884
100,000 Proctor & Gamble (The) Co........................... 2.70% 02/02/26 99,764
250,000 Proctor & Gamble (The) Co........................... 2.45% 11/03/26 244,610
-------------
591,258
-------------
INDEPENDENT POWER AND RENEWABLE ELECTRICITY
PRODUCERS - 0.2%
250,000 NextEra Energy Capital Holdings, Inc................ 2.06% 09/01/17 250,126
250,000 NextEra Energy Capital Holdings, Inc................ 2.30% 04/01/19 251,254
525,000 NextEra Energy Capital Holdings, Inc................ 2.40% 09/15/19 528,860
500,000 NextEra Energy Capital Holdings, Inc................ 3.55% 05/01/27 508,969
-------------
1,539,209
-------------
INDUSTRIAL CONGLOMERATES - 0.2%
250,000 3M Co............................................... 1.63% 09/19/21 247,385
250,000 3M Co............................................... 2.25% 09/19/26 237,224
250,000 3M Co............................................... 3.13% 09/19/46 225,635
129,000 General Electric Co................................. 6.75% 03/15/32 177,086
425,000 General Electric Co................................. 4.50% 03/11/44 473,295
-------------
1,360,625
-------------
INSURANCE - 1.0%
300,000 AIG Global Funding (b).............................. 2.15% 07/02/20 299,916
400,000 American International Group, Inc................... 3.38% 08/15/20 414,223
200,000 American International Group, Inc................... 4.13% 02/15/24 211,466
100,000 American International Group, Inc................... 3.90% 04/01/26 102,487
50,000 American International Group, Inc................... 3.88% 01/15/35 48,625
300,000 American International Group, Inc................... 6.25% 05/01/36 376,430
250,000 Brighthouse Financial, Inc. (b)..................... 3.70% 06/22/27 247,473
250,000 Brighthouse Financial, Inc. (b)..................... 4.70% 06/22/47 247,792
490,000 Chubb INA Holdings, Inc............................. 2.30% 11/03/20 493,024
200,000 Chubb INA Holdings, Inc............................. 2.88% 11/03/22 203,601
350,000 Chubb INA Holdings, Inc............................. 3.35% 05/03/26 358,382
600,000 Chubb INA Holdings, Inc............................. 4.35% 11/03/45 659,546
100,000 MetLife, Inc........................................ 3.00% 03/01/25 100,400
150,000 MetLife, Inc........................................ 3.60% 11/13/25 155,751
300,000 MetLife, Inc........................................ 4.88% 11/13/43 339,899
170,000 MetLife, Inc........................................ 4.60% 05/13/46 187,512
325,000 Metropolitan Life Global Funding I (a) (b).......... 1.70% 12/19/18 326,477
500,000 Metropolitan Life Global Funding I (b).............. 2.65% 04/08/22 501,933
500,000 Metropolitan Life Global Funding I (b).............. 3.45% 12/18/26 513,109
200,000 Principal Financial Group, Inc...................... 3.10% 11/15/26 197,467
275,000 Prudential Financial, Inc........................... 4.60% 05/15/44 301,639
500,000 Travelers (The) Cos., Inc........................... 4.00% 05/30/47 512,820
-------------
6,799,972
-------------
See Notes to Financial Statements Page 27
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
IT SERVICES - 0.5%
$ 500,000 International Business Machines Corp................ 1.63% 05/15/20 $ 495,994
100,000 International Business Machines Corp................ 3.63% 02/12/24 104,619
600,000 Visa, Inc........................................... 2.20% 12/14/20 605,309
950,000 Visa, Inc........................................... 2.80% 12/14/22 967,939
550,000 Visa, Inc........................................... 3.15% 12/14/25 558,999
303,000 Visa, Inc........................................... 4.15% 12/14/35 328,921
450,000 Visa, Inc........................................... 4.30% 12/14/45 494,787
-------------
3,556,568
-------------
MACHINERY - 0.1%
490,000 Parker-Hannifin Corp. (b)........................... 3.25% 03/01/27 496,010
245,000 Parker-Hannifin Corp. (b)........................... 4.10% 03/01/47 257,114
-------------
753,124
-------------
MEDIA - 1.3%
500,000 CBS Corp............................................ 3.38% 02/15/28 491,130
610,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 4.91% 07/23/25 660,067
250,000 Charter Communications Operating LLC/Charter
Communications Operating Capital (b)............. 3.75% 02/15/28 246,845
750,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 6.48% 10/23/45 903,334
500,000 Charter Communications Operating LLC/Charter
Communications Operating Capital (b)............. 5.38% 05/01/47 530,972
200,000 Comcast Corp........................................ 3.15% 03/01/26 201,256
300,000 Comcast Corp........................................ 2.35% 01/15/27 281,930
100,000 Comcast Corp........................................ 4.60% 08/15/45 109,313
250,000 Comcast Corp........................................ 3.40% 07/15/46 228,258
250,000 Discovery Communications LLC........................ 3.80% 03/13/24 253,151
450,000 Discovery Communications LLC........................ 4.90% 03/11/26 477,817
329,000 Time Warner Cable LLC............................... 6.75% 07/01/18 344,285
100,000 Time Warner Cable LLC............................... 8.75% 02/14/19 110,033
200,000 Time Warner Cable LLC............................... 4.50% 09/15/42 190,999
100,000 Time Warner, Inc.................................... 2.95% 07/15/26 94,525
200,000 Time Warner, Inc.................................... 6.50% 11/15/36 246,810
50,000 Time Warner, Inc.................................... 4.85% 07/15/45 51,682
1,000,000 Walt Disney (The) Co................................ 0.88% 07/12/19 985,433
100,000 Walt Disney (The) Co................................ 2.15% 09/17/20 100,728
150,000 Walt Disney (The) Co................................ 3.00% 02/13/26 150,945
350,000 Walt Disney (The) Co................................ 1.85% 07/30/26 318,974
500,000 Walt Disney (The) Co................................ 2.95% 06/15/27 496,314
475,000 Walt Disney (The) Co................................ 4.13% 06/01/44 499,822
250,000 Walt Disney (The) Co................................ 3.00% 07/30/46 219,171
-------------
8,193,794
-------------
METALS & MINING - 0.1%
250,000 Glencore Funding LLC (b)............................ 4.13% 05/30/23 256,857
250,000 Glencore Funding LLC (b)............................ 4.00% 03/27/27 246,465
-------------
503,322
-------------
Page 28 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
MULTI-UTILITIES - 1.0%
$ 493,000 CMS Energy Corp..................................... 3.00% 05/15/26 $ 483,277
100,000 CMS Energy Corp..................................... 4.88% 03/01/44 111,888
95,000 Consolidated Edison Co. of New York, Inc............ 4.50% 12/01/45 104,779
335,000 Consolidated Edison Co. of New York, Inc............ 4.45% 03/15/44 367,705
100,000 Consolidated Edison Co. of New York, Inc............ 3.85% 06/15/46 101,071
500,000 Consolidated Edison Co. of New York, Inc............ 3.88% 06/15/47 508,067
250,000 Consolidated Edison Co. of New York, Inc............ 4.30% 12/01/56 261,345
250,000 Consolidated Edison, Inc............................ 2.00% 03/15/20 250,009
100,000 Consolidated Edison, Inc............................ 2.00% 05/15/21 98,532
500,000 Dominion Energy, Inc................................ 2.58% 07/01/20 502,942
250,000 Dominion Resources, Inc............................. 1.88% 01/15/19 249,546
250,000 Dominion Resources, Inc............................. 1.60% 08/15/19 248,011
200,000 Dominion Resources, Inc............................. 5.20% 08/15/19 213,052
250,000 Dominion Resources, Inc............................. 2.75% 01/15/22 251,621
495,000 Dominion Resources, Inc............................. 4.70% 12/01/44 537,856
250,000 NiSource Finance Corp............................... 3.49% 05/15/27 252,232
600,000 NiSource Finance Corp............................... 4.38% 05/15/47 621,235
250,000 Public Service Enterprise Group, Inc................ 1.60% 11/15/19 247,396
250,000 Public Service Enterprise Group, Inc................ 2.00% 11/15/21 244,620
500,000 Southern Co. Gas Capital Corp....................... 2.45% 10/01/23 485,757
500,000 Southern Co. Gas Capital Corp....................... 3.95% 10/01/46 479,293
-------------
6,620,234
-------------
OIL, GAS & CONSUMABLE FUELS - 3.9%
150,000 Anadarko Petroleum Corp............................. 5.55% 03/15/26 167,912
761,000 Anadarko Petroleum Corp............................. 6.45% 09/15/36 898,377
344,000 Anadarko Petroleum Corp............................. 6.60% 03/15/46 426,363
250,000 Boardwalk Pipelines L.P............................. 5.95% 06/01/26 278,866
750,000 Boardwalk Pipelines L.P............................. 4.45% 07/15/27 769,414
550,000 Chevron Corp........................................ 1.56% 05/16/19 548,548
175,000 Chevron Corp........................................ 2.19% 11/15/19 176,784
250,000 Chevron Corp. (a)................................... 1.43% 03/03/20 250,684
750,000 Chevron Corp........................................ 2.10% 05/16/21 748,147
182,000 Chevron Corp. (a)................................... 1.75% 03/03/22 183,682
550,000 Chevron Corp........................................ 2.57% 05/16/23 551,365
500,000 Chevron Corp........................................ 2.90% 03/03/24 504,498
150,000 Chevron Corp........................................ 3.33% 11/17/25 153,896
1,360,000 Chevron Corp........................................ 2.95% 05/16/26 1,351,384
500,000 Cimarex Energy Co................................... 3.90% 05/15/27 503,738
225,000 ConocoPhillips...................................... 6.50% 02/01/39 296,379
300,000 ConocoPhillips Co................................... 4.20% 03/15/21 318,341
250,000 ConocoPhillips Co................................... 5.95% 03/15/46 313,851
325,000 Devon Energy Corp................................... 3.25% 05/15/22 323,359
500,000 Enable Midstream Partners L.P....................... 4.40% 03/15/27 502,763
185,000 Enbridge Energy Partners L.P........................ 5.50% 09/15/40 194,428
400,000 Enbridge Energy Partners L.P........................ 7.38% 10/15/45 511,126
50,000 Energy Transfer Partners L.P........................ 4.15% 10/01/20 51,968
400,000 Energy Transfer Partners L.P........................ 3.60% 02/01/23 402,336
50,000 Energy Transfer Partners L.P........................ 4.05% 03/15/25 50,281
50,000 Energy Transfer Partners L.P........................ 4.75% 01/15/26 52,105
See Notes to Financial Statements Page 29
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
OIL, GAS & CONSUMABLE FUELS (CONTINUED)
$ 250,000 Energy Transfer Partners L.P........................ 4.20% 04/15/27 $ 250,421
175,000 Energy Transfer Partners L.P........................ 6.50% 02/01/42 196,106
50,000 Energy Transfer Partners L.P........................ 6.13% 12/15/45 54,307
250,000 Energy Transfer Partners L.P........................ 5.30% 04/15/47 248,255
250,000 EnLink Midstream Partners L.P....................... 5.45% 06/01/47 250,189
100,000 Exxon Mobil Corp.................................... 1.71% 03/01/19 100,244
500,000 Exxon Mobil Corp.................................... 2.22% 03/01/21 503,536
150,000 Exxon Mobil Corp.................................... 2.71% 03/06/25 149,092
200,000 Exxon Mobil Corp.................................... 3.04% 03/01/26 201,935
825,000 Exxon Mobil Corp.................................... 4.11% 03/01/46 872,506
220,000 Kinder Morgan Energy Partners L.P................... 3.50% 03/01/21 225,459
100,000 Kinder Morgan Energy Partners L.P................... 4.15% 02/01/24 102,939
175,000 Kinder Morgan Energy Partners L.P................... 6.95% 01/15/38 209,615
800,000 Kinder Morgan, Inc.................................. 3.05% 12/01/19 814,354
715,000 Kinder Morgan, Inc.................................. 4.30% 06/01/25 744,580
300,000 Kinder Morgan, Inc.................................. 5.55% 06/01/45 319,064
650,000 Kinder Morgan, Inc.................................. 5.05% 02/15/46 655,180
250,000 Marathon Oil Corp................................... 3.85% 06/01/25 244,440
259,000 Marathon Oil Corp................................... 5.20% 06/01/45 249,214
600,000 MPLX L.P............................................ 4.13% 03/01/27 603,208
500,000 MPLX L.P............................................ 5.20% 03/01/47 516,892
400,000 ONEOK Partners L.P.................................. 3.38% 10/01/22 404,122
500,000 ONEOK Partners L.P.................................. 4.90% 03/15/25 536,180
250,000 Phillips 66 Partners L.P............................ 3.55% 10/01/26 243,300
250,000 Phillips 66 Partners L.P............................ 4.90% 10/01/46 247,049
425,000 Pioneer Natural Resources Co........................ 3.95% 07/15/22 445,826
300,000 Plains All American Pipeline L.P./PAA Finance Corp.. 4.65% 10/15/25 308,010
250,000 Plains All American Pipeline L.P./PAA Finance Corp.. 4.50% 12/15/26 253,310
500,000 Sabine Pass Liquefaction LLC........................ 5.00% 03/15/27 532,629
250,000 Sabine Pass Liquefaction LLC (b).................... 4.20% 03/15/28 253,099
350,000 Spectra Energy Capital LLC.......................... 3.30% 03/15/23 351,744
100,000 Sunoco Logistics Partners Operations L.P............ 4.40% 04/01/21 105,162
350,000 Sunoco Logistics Partners Operations L.P............ 3.90% 07/15/26 344,064
500,000 TC PipeLines L.P.................................... 3.90% 05/25/27 499,919
250,000 Valero Energy Corp.................................. 3.40% 09/15/26 245,038
125,000 Valero Energy Corp.................................. 6.63% 06/15/37 154,850
500,000 Valero Energy Partners L.P.......................... 4.38% 12/15/26 512,057
300,000 Williams Partners L.P............................... 3.60% 03/15/22 306,816
250,000 Williams Partners L.P............................... 3.90% 01/15/25 253,145
95,000 Williams Partners L.P............................... 4.00% 09/15/25 96,912
250,000 Williams Partners L.P............................... 3.75% 06/15/27 247,965
625,000 Williams Partners L.P............................... 4.90% 01/15/45 628,159
270,000 Williams Partners L.P............................... 5.10% 09/15/45 280,771
-------------
25,292,258
-------------
PHARMACEUTICALS - 0.4%
250,000 Johnson & Johnson................................... 2.95% 03/03/27 253,300
250,000 Johnson & Johnson................................... 3.63% 03/03/37 261,966
250,000 Johnson & Johnson................................... 3.75% 03/03/47 259,735
125,000 Merck & Co., Inc.................................... 1.85% 02/10/20 125,289
Page 30 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
PHARMACEUTICALS (CONTINUED)
$ 300,000 Merck & Co., Inc.................................... 2.75% 02/10/25 $ 299,342
450,000 Merck & Co., Inc.................................... 3.70% 02/10/45 449,923
300,000 Pfizer, Inc......................................... 1.20% 06/01/18 299,479
100,000 Pfizer, Inc......................................... 1.45% 06/03/19 99,633
100,000 Pfizer, Inc......................................... 1.70% 12/15/19 100,195
100,000 Pfizer, Inc......................................... 1.95% 06/03/21 99,902
100,000 Pfizer, Inc......................................... 2.20% 12/15/21 100,253
-------------
2,349,017
-------------
ROAD & RAIL - 0.7%
425,000 CSX Corp............................................ 3.40% 08/01/24 439,805
350,000 CSX Corp............................................ 2.60% 11/01/26 338,304
250,000 CSX Corp............................................ 3.80% 11/01/46 245,784
200,000 CSX Corp............................................ 4.50% 08/01/54 210,626
250,000 CSX Corp............................................ 4.25% 11/01/66 247,702
100,000 Kansas City Southern................................ 4.95% 08/15/45 109,473
250,000 Norfolk Southern Corp............................... 2.90% 06/15/26 246,509
300,000 Ryder System, Inc................................... 2.65% 03/02/20 302,315
250,000 Ryder System, Inc................................... 2.25% 09/01/21 247,055
500,000 Ryder System, Inc................................... 2.80% 03/01/22 502,280
300,000 Union Pacific Corp.................................. 3.75% 03/15/24 317,422
100,000 Union Pacific Corp.................................. 2.75% 03/01/26 98,866
250,000 Union Pacific Corp.................................. 3.00% 04/15/27 250,996
183,000 Union Pacific Corp.................................. 4.15% 01/15/45 192,403
225,000 Union Pacific Corp.................................. 4.05% 03/01/46 233,508
100,000 Union Pacific Corp.................................. 3.35% 08/15/46 93,469
250,000 Union Pacific Corp.................................. 4.00% 04/15/47 257,047
70,000 Union Pacific Corp.................................. 3.80% 10/01/51 68,739
-------------
4,402,303
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.6%
250,000 Applied Materials, Inc.............................. 3.30% 04/01/27 254,372
250,000 Applied Materials, Inc.............................. 4.35% 04/01/47 266,024
250,000 Intel Corp. (a)..................................... 1.26% 05/11/20 250,130
250,000 Intel Corp.......................................... 1.85% 05/11/20 250,173
100,000 Intel Corp.......................................... 1.70% 05/19/21 98,758
250,000 Intel Corp. (a)..................................... 1.53% 05/11/22 250,351
250,000 Intel Corp.......................................... 2.35% 05/11/22 250,752
100,000 Intel Corp.......................................... 3.10% 07/29/22 103,673
375,000 Intel Corp.......................................... 2.70% 12/15/22 380,082
500,000 Intel Corp.......................................... 2.88% 05/11/24 502,349
100,000 Intel Corp.......................................... 2.60% 05/19/26 96,772
250,000 Intel Corp.......................................... 3.15% 05/11/27 251,164
150,000 Intel Corp.......................................... 4.90% 07/29/45 174,700
300,000 Intel Corp.......................................... 4.10% 05/19/46 311,719
500,000 Intel Corp.......................................... 4.10% 05/11/47 518,960
-------------
3,959,979
-------------
SOFTWARE - 1.0%
250,000 Microsoft Corp...................................... 1.10% 08/08/19 247,113
250,000 Microsoft Corp...................................... 1.85% 02/06/20 250,732
150,000 Microsoft Corp...................................... 2.00% 11/03/20 150,611
See Notes to Financial Statements Page 31
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
SOFTWARE (CONTINUED)
$ 250,000 Microsoft Corp...................................... 1.55% 08/08/21 $ 244,752
800,000 Microsoft Corp...................................... 2.40% 02/06/22 808,037
150,000 Microsoft Corp...................................... 3.63% 12/15/23 159,029
250,000 Microsoft Corp...................................... 2.88% 02/06/24 254,289
200,000 Microsoft Corp...................................... 3.13% 11/03/25 204,285
100,000 Microsoft Corp...................................... 2.40% 08/08/26 96,354
250,000 Microsoft Corp...................................... 3.30% 02/06/27 257,827
100,000 Microsoft Corp...................................... 3.45% 08/08/36 100,267
250,000 Microsoft Corp...................................... 4.10% 02/06/37 269,823
275,000 Microsoft Corp...................................... 4.45% 11/03/45 306,745
350,000 Microsoft Corp...................................... 3.70% 08/08/46 347,257
250,000 Microsoft Corp...................................... 4.25% 02/06/47 271,360
100,000 Oracle Corp......................................... 2.25% 10/08/19 101,265
200,000 Oracle Corp......................................... 1.90% 09/15/21 198,361
100,000 Oracle Corp......................................... 2.50% 05/15/22 101,016
500,000 Oracle Corp......................................... 2.40% 09/15/23 493,935
250,000 Oracle Corp......................................... 3.40% 07/08/24 260,570
350,000 Oracle Corp......................................... 2.65% 07/15/26 336,248
50,000 Oracle Corp......................................... 3.85% 07/15/36 51,791
400,000 Oracle Corp......................................... 5.38% 07/15/40 487,518
350,000 Oracle Corp......................................... 4.00% 07/15/46 354,365
-------------
6,353,550
-------------
SPECIALTY RETAIL - 0.6%
500,000 Home Depot (The), Inc............................... 2.00% 04/01/21 498,863
770,000 Home Depot (The), Inc............................... 4.40% 04/01/21 830,346
100,000 Home Depot (The), Inc............................... 3.35% 09/15/25 103,948
550,000 Home Depot (The), Inc............................... 3.00% 04/01/26 553,554
250,000 Home Depot (The), Inc............................... 2.13% 09/15/26 234,003
100,000 Home Depot (The), Inc............................... 4.40% 03/15/45 109,791
500,000 Home Depot (The), Inc............................... 4.25% 04/01/46 537,792
500,000 Home Depot (The), Inc............................... 3.90% 06/15/47 508,197
250,000 Home Depot (The), Inc............................... 3.50% 09/15/56 227,204
250,000 Lowe's Cos., Inc.................................... 3.10% 05/03/27 249,172
-------------
3,852,870
-------------
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.8%
250,000 Apple, Inc. (a)..................................... 1.26% 02/08/19 250,307
250,000 Apple, Inc.......................................... 1.10% 08/02/19 247,405
250,000 Apple, Inc. (a)..................................... 1.38% 02/07/20 250,705
450,000 Apple, Inc.......................................... 2.85% 05/06/21 462,928
250,000 Apple, Inc.......................................... 1.55% 08/04/21 244,387
110,000 Apple, Inc. (a)..................................... 1.68% 02/09/22 111,190
375,000 Apple, Inc.......................................... 2.40% 05/03/23 372,351
250,000 Apple, Inc.......................................... 3.00% 02/09/24 254,013
500,000 Apple, Inc.......................................... 2.85% 05/11/24 502,879
100,000 Apple, Inc.......................................... 2.45% 08/04/26 95,737
250,000 Apple, Inc.......................................... 3.35% 02/09/27 255,890
500,000 Apple, Inc.......................................... 3.20% 05/11/27 506,464
100,000 Apple, Inc.......................................... 4.45% 05/06/44 109,063
100,000 Apple, Inc.......................................... 3.45% 02/09/45 94,211
Page 32 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS (CONTINUED)
$ 100,000 Apple, Inc.......................................... 4.65% 02/23/46 $ 112,367
500,000 Apple, Inc.......................................... 4.25% 02/09/47 531,663
50,000 Hewlett Packard Enterprise Co....................... 2.45% 10/05/17 50,128
50,000 Hewlett Packard Enterprise Co....................... 2.85% 10/05/18 50,443
100,000 Hewlett Packard Enterprise Co....................... 3.60% 10/15/20 103,188
150,000 Hewlett Packard Enterprise Co....................... 4.40% 10/15/22 159,202
125,000 Hewlett Packard Enterprise Co....................... 4.90% 10/15/25 131,267
50,000 Hewlett Packard Enterprise Co....................... 6.35% 10/15/45 53,021
-------------
4,948,809
-------------
TEXTILES, APPAREL & LUXURY GOODS - 0.1%
250,000 NIKE, Inc........................................... 2.38% 11/01/26 237,458
100,000 NIKE, Inc........................................... 3.88% 11/01/45 100,923
250,000 NIKE, Inc........................................... 3.38% 11/01/46 230,648
-------------
569,029
-------------
TRADING COMPANIES & DISTRIBUTORS - 0.0%
250,000 Air Lease Corp...................................... 2.63% 07/01/22 248,073
-------------
WATER UTILITIES - 0.1%
350,000 American Water Capital Corp......................... 4.00% 12/01/46 363,875
-------------
TOTAL CORPORATE BONDS AND NOTES.............................................. 255,934,060
(Cost $253,707,797) -------------
FOREIGN CORPORATE BONDS AND NOTES - 1.9%
BANKS - 0.5%
500,000 HSBC Holdings PLC (a)............................... 3.46% 03/08/21 527,225
700,000 HSBC Holdings PLC (a)............................... 2.85% 05/25/21 724,530
475,000 HSBC Holdings PLC................................... 2.65% 01/05/22 474,204
200,000 HSBC Holdings PLC (a)............................... 3.26% 03/13/23 203,922
625,000 HSBC Holdings PLC................................... 3.90% 05/25/26 645,851
350,000 HSBC Holdings PLC................................... 4.38% 11/23/26 363,865
200,000 HSBC Holdings PLC (a)............................... 4.04% 03/13/28 207,405
250,000 Royal Bank of Scotland PLC (a)...................... 3.50% 05/15/23 251,901
-------------
3,398,903
-------------
CAPITAL MARKETS - 0.2%
200,000 Credit Suisse AG.................................... 5.40% 01/14/20 214,897
500,000 Credit Suisse Group AG (b).......................... 3.57% 01/09/23 512,899
167,000 Deutsche Bank AG (a)................................ 2.61% 01/18/19 169,001
250,000 UBS Group Funding Switzerland AG (a) (b)............ 2.41% 05/23/23 253,958
-------------
1,150,755
-------------
DIVERSIFIED FINANCIAL SERVICES - 0.2%
444,000 GE Capital International Funding Co................. 4.42% 11/15/35 484,172
250,000 Shell International Finance, B.V.................... 2.88% 05/10/26 246,977
250,000 Shell International Finance, B.V.................... 2.50% 09/12/26 239,309
250,000 Shell International Finance, B.V.................... 4.00% 05/10/46 247,483
250,000 Shell International Finance, B.V.................... 3.75% 09/12/46 237,192
-------------
1,455,133
-------------
See Notes to Financial Statements Page 33
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
FOREIGN CORPORATE BONDS AND NOTES (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1%
$ 250,000 Telefonica Emisiones SAU............................ 4.10% 03/08/27 $ 258,802
500,000 Telefonica Emisiones SAU............................ 5.21% 03/08/47 541,973
-------------
800,775
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.1%
250,000 Medtronic Global Holdings SCA....................... 1.70% 03/28/19 250,222
250,000 Medtronic Global Holdings SCA....................... 3.35% 04/01/27 255,176
-------------
505,398
-------------
METALS & MINING - 0.2%
330,000 BHP Billiton Finance USA, Ltd....................... 5.00% 09/30/43 382,756
186,000 Rio Tinto Finance USA, Ltd.......................... 3.75% 06/15/25 195,969
350,000 Vale Overseas, Ltd.................................. 6.25% 08/10/26 378,438
-------------
957,163
-------------
OIL, GAS & CONSUMABLE FUELS - 0.5%
100,000 BP Capital Markets PLC.............................. 2.11% 09/16/21 99,174
100,000 BP Capital Markets PLC.............................. 3.12% 05/04/26 99,227
100,000 BP Capital Markets PLC.............................. 3.02% 01/16/27 97,411
500,000 Canadian Natural Resources, Ltd..................... 2.95% 01/15/23 496,643
100,000 Canadian Natural Resources, Ltd..................... 3.80% 04/15/24 101,349
500,000 Canadian Natural Resources, Ltd..................... 3.85% 06/01/27 496,962
500,000 Canadian Natural Resources, Ltd..................... 4.95% 06/01/47 509,420
100,000 Cenovus Energy, Inc. (b)............................ 5.40% 06/15/47 93,673
250,000 Enbridge, Inc....................................... 2.90% 07/15/22 249,790
250,000 Enbridge, Inc....................................... 4.25% 12/01/26 261,031
250,000 Enbridge, Inc....................................... 3.70% 07/15/27 250,335
250,000 Enbridge, Inc....................................... 5.50% 12/01/46 280,692
200,000 Petroleos Mexicanos (b)............................. 5.38% 03/13/22 210,800
-------------
3,246,507
-------------
PHARMACEUTICALS - 0.1%
300,000 Allergan Funding SCS................................ 3.45% 03/15/22 309,568
300,000 Allergan Funding SCS................................ 3.80% 03/15/25 310,807
-------------
620,375
-------------
TOTAL FOREIGN CORPORATE BONDS AND NOTES...................................... 12,135,009
(Cost $11,900,560) -------------
U.S. GOVERNMENT BONDS AND NOTES - 1.1%
1,380,000 U.S. Treasury Bond.................................. 3.00% 02/15/47 1,423,852
1,000,000 U.S. Treasury Note (c).............................. 0.88% 10/15/17 999,413
460,000 U.S. Treasury Note.................................. 1.25% 05/31/19 458,931
180,000 U.S. Treasury Note.................................. 1.50% 05/15/20 179,817
528,000 U.S. Treasury Note.................................. 1.88% 04/30/22 527,959
1,945,000 U.S. Treasury Note.................................. 1.75% 05/31/22 1,933,832
710,000 U.S. Treasury Note.................................. 2.00% 05/31/24 704,370
865,000 U.S. Treasury Note.................................. 2.38% 05/15/27 870,592
-------------
TOTAL U.S. GOVERNMENT BONDS AND NOTES........................................ 7,098,766
(Cost $7,126,091) -------------
Page 34 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
ANNUALIZED
PRINCIPAL YIELD ON DATE STATED
VALUE DESCRIPTION OF PURCHASE MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
COMMERCIAL PAPER - 0.4%
ELECTRIC UTILITIES - 0.3%
$ 2,200,000 Northern States Power Co............................ 1.20% 07/03/17 $ 2,199,780
-------------
OIL, GAS & CONSUMABLE FUELS - 0.1%
275,000 ONEOK Partners L.P.................................. 1.50% 07/03/17 274,966
-------------
TOTAL COMMERCIAL PAPER....................................................... 2,474,746
(Cost $2,474,830) -------------
TOTAL INVESTMENTS - 99.2%.................................................... 643,536,525
(Cost $600,201,865) (d)
NET OTHER ASSETS AND LIABILITIES - 0.8%...................................... 5,249,933
-------------
NET ASSETS - 100.0%.......................................................... $ 648,786,458
=============
-----------------------------
(a) Floating or variable rate security. The interest rate shown reflects the
rate in effect at June 30, 2017.
(b) This security, sold within the terms of a private placement memorandum, is
exempt from registration upon resale under Rule 144A under the Securities
Act of 1933, as amended, and may be resold in transactions exempt from
registration, normally to qualified institutional buyers. Pursuant to
procedures adopted by the Trust's Board of Trustees, this security has
been determined to be liquid by First Trust Advisors L.P., the Fund's
advisor. Although market instability can result in periods of increased
overall market illiquidity, liquidity for each security is determined
based on security-specific factors and assumptions, which require
subjective judgement. At June 30, 2017, securities noted as such amounted
to $9,227,944 or 1.42% of net assets.
(c) All or a portion of this security is segregated as collateral for open
futures contracts.
(d) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2017, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $48,544,676 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $5,210,016.
See Notes to Financial Statements Page 35
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2017
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
ASSETS TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*.................................... $365,893,944 $365,893,944 $ -- $ --
Corporate Bonds and Notes*........................ 255,934,060 -- 255,934,060 --
Foreign Corporate Bonds and Notes*................ 12,135,009 -- 12,135,009 --
U.S. Government Bonds and Notes................... 7,098,766 -- 7,098,766 --
Commercial Paper*................................. 2,474,746 -- 2,474,746 --
------------ ------------ ------------ ------------
Total Investments................................. 643,536,525 365,893,944 277,642,581 --
Futures Contracts**............................... 23,820 23,820 -- --
------------ ------------ ------------ ------------
Total............................................. $643,560,345 $365,917,764 $277,642,581 $ --
============ ============ ============ ============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Futures Contracts**............................... $ (23,875) $ (23,875) $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
** Includes accumulated appreciation/depreciation on futures contracts as
presented on the Statements of Operations. Only the current day's
variation margin is presented on the Statements of Assets and Liabilities.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at June 30, 2017.
OPEN FUTURES CONTRACTS AT JUNE 30, 2017 (see Note 2D - Futures Contracts in the
Notes to Financial Statements):
UNREALIZED
NUMBER OF EXPIRATION NOTIONAL APPRECIATION/
SHORT FUTURES CONTRACTS CONTRACTS MONTH VALUE (DEPRECIATION)
-------------------------------------------------- ------------ ------------ ------------ ------------
U.S. Treasury 5-Year Notes 40 Sep-2017 $ 4,713,438 $ 9,375
U.S. Treasury 10-Year Notes 13 Sep-2017 1,631,906 2,945
U.S. Treasury CME Ultra Long Term Bonds 8 Sep-2017 1,327,000 (23,875)
U.S. Treasury Ultra 10-Year Notes 92 Sep-2017 12,402,750 11,500
------------ ------------
Total Futures Contracts $ 20,075,094 $ (55)
============ ============
Page 36 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
EXCHANGE-TRADED FUNDS - 39.1%
CAPITAL MARKETS - 39.1%
4,448 First Trust Low Duration Opportunities ETF (a)............................... $ 231,785
89,310 First Trust Preferred Securities and Income ETF (a).......................... 1,787,093
59,975 First Trust Senior Loan Fund (a)............................................. 2,901,591
23,820 First Trust Tactical High Yield ETF (a)...................................... 1,170,991
390 iShares 20+ Year Treasury Bond ETF........................................... 48,797
100 iShares 3-7 Year Treasury Bond ETF........................................... 12,357
590 iShares 7-10 Year Treasury Bond ETF.......................................... 62,900
4,920 iShares Floating Rate Bond ETF............................................... 250,526
11,210 iShares iBoxx $ Investment Grade Corporate Bond ETF.......................... 1,350,917
1 Vanguard Mortgage-Backed Securities ETF...................................... 53
-------------
TOTAL EXCHANGE-TRADED FUNDS.................................................. 7,817,010
(Cost $7,729,397) -------------
COMMON STOCKS - 21.2%
AEROSPACE & DEFENSE - 0.8%
423 General Dynamics Corp........................................................ 83,796
486 Raytheon Co.................................................................. 78,479
-------------
162,275
-------------
BANKS - 1.7%
1,079 JPMorgan Chase & Co.......................................................... 98,621
1,477 U.S. Bancorp................................................................. 76,686
1,584 Webster Financial Corp....................................................... 82,716
1,301 Wells Fargo & Co............................................................. 72,088
-------------
330,111
-------------
CAPITAL MARKETS - 0.3%
165 BlackRock, Inc............................................................... 69,698
-------------
CHEMICALS - 0.6%
483 International Flavors & Fragrances, Inc...................................... 65,205
593 LyondellBasell Industries N.V., Class A...................................... 50,043
-------------
115,248
-------------
COMMUNICATIONS EQUIPMENT - 0.4%
2,326 Cisco Systems, Inc........................................................... 72,804
-------------
CONSUMER FINANCE - 0.4%
941 Capital One Financial Corp................................................... 77,745
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.3%
1,189 Verizon Communications, Inc.................................................. 53,101
-------------
ELECTRIC UTILITIES - 1.4%
457 Alliant Energy Corp.......................................................... 18,358
330 American Electric Power Co., Inc............................................. 22,925
138 Duke Energy Corp............................................................. 11,535
892 Edison International......................................................... 69,745
647 Emera, Inc. (CAD)............................................................ 24,053
571 Eversource Energy............................................................ 34,665
338 Fortis, Inc. (CAD)........................................................... 11,880
686 Hydro One Ltd. (CAD) (b)..................................................... 12,289
331 NextEra Energy, Inc.......................................................... 46,383
476 Southern (The) Co............................................................ 22,791
-------------
274,624
-------------
See Notes to Financial Statements Page 37
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
ELECTRICAL EQUIPMENT - 0.3%
898 Eaton Corp. PLC.............................................................. $ 69,891
-------------
ENERGY EQUIPMENT & SERVICES - 0.2%
589 Schlumberger Ltd............................................................. 38,780
-------------
FOOD & STAPLES RETAILING - 0.3%
695 CVS Health Corp.............................................................. 55,920
-------------
GAS UTILITIES - 0.3%
142 Atmos Energy Corp............................................................ 11,779
159 Chesapeake Utilities Corp.................................................... 11,917
286 New Jersey Resources Corp.................................................... 11,354
482 UGI Corp..................................................................... 23,334
-------------
58,384
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.2%
1,601 Abbott Laboratories.......................................................... 77,825
878 Medtronic PLC................................................................ 77,923
945 STERIS PLC................................................................... 77,017
-------------
232,765
-------------
HEALTH CARE PROVIDERS & SERVICES - 0.5%
592 Aetna, Inc................................................................... 89,883
-------------
HOTELS, RESTAURANTS & LEISURE - 0.8%
1,389 Carnival Corp................................................................ 91,077
1,034 Starbucks Corp............................................................... 60,293
-------------
151,370
-------------
INDUSTRIAL CONGLOMERATES - 1.1%
2,204 General Electric Co.......................................................... 59,530
636 Honeywell International, Inc................................................. 84,772
1,220 Siemens AG, ADR.............................................................. 84,363
-------------
228,665
-------------
INSURANCE - 0.8%
1,979 FNF Group.................................................................... 88,719
1,475 MetLife, Inc................................................................. 81,036
-------------
169,755
-------------
IT SERVICES - 0.8%
715 Accenture PLC, Class A....................................................... 88,431
898 Fidelity National Information Services, Inc.................................. 76,689
-------------
165,120
-------------
MACHINERY - 0.3%
382 Snap-on, Inc................................................................. 60,356
-------------
MULTI-UTILITIES - 0.7%
739 National Grid PLC, ADR....................................................... 46,424
814 Public Service Enterprise Group, Inc......................................... 35,010
256 SCANA Corp................................................................... 17,155
305 Sempra Energy................................................................ 34,389
187 WEC Energy Group, Inc........................................................ 11,478
-------------
144,456
-------------
Page 38 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS - 2.7%
585 Chevron Corp................................................................. $ 61,033
1,961 Enbridge Income Fund Holdings, Inc. (CAD).................................... 48,677
1,214 Enbridge, Inc................................................................ 48,329
892 Exxon Mobil Corp............................................................. 72,011
1,273 Inter Pipeline Ltd. (CAD).................................................... 24,934
2,546 Kinder Morgan, Inc........................................................... 48,781
1,594 TOTAL S.A., ADR.............................................................. 79,046
3,452 TransCanada Corp............................................................. 164,557
-------------
547,368
-------------
PHARMACEUTICALS - 1.2%
860 Eli Lilly & Co............................................................... 70,778
671 Johnson & Johnson............................................................ 88,767
881 Novartis AG, ADR............................................................. 73,537
-------------
233,082
-------------
ROAD & RAIL - 0.3%
608 Union Pacific Corp........................................................... 66,217
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.4%
334 Broadcom Ltd................................................................. 77,839
-------------
SOFTWARE - 0.9%
1,448 Microsoft Corp............................................................... 99,811
1,512 Oracle Corp.................................................................. 75,812
-------------
175,623
-------------
SPECIALTY RETAIL - 0.8%
623 Home Depot (The), Inc........................................................ 95,568
873 TJX (The) Cos., Inc.......................................................... 63,004
-------------
158,572
-------------
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.7%
569 Apple, Inc................................................................... 81,947
718 Western Digital Corp......................................................... 63,615
-------------
145,562
-------------
TEXTILES, APPAREL & LUXURY GOODS - 0.3%
1,105 NIKE, Inc., Class B.......................................................... 65,195
-------------
TOBACCO - 0.7%
959 Altria Group, Inc............................................................ 71,417
992 British American Tobacco PLC, ADR............................................ 67,992
-------------
139,409
-------------
TOTAL COMMON STOCKS.......................................................... 4,229,818
(Cost $3,756,852) -------------
REAL ESTATE INVESTMENT TRUSTS - 11.8%
DIVERSIFIED REITS - 1.9%
9,245 Lexington Realty Trust....................................................... 91,618
786 PS Business Parks, Inc....................................................... 104,058
3,837 STORE Capital Corp........................................................... 86,141
2,953 Washington Real Estate Investment Trust...................................... 94,201
-------------
376,018
-------------
See Notes to Financial Statements Page 39
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
HEALTH CARE REITS - 1.4%
1,273 National Health Investors, Inc............................................... $ 100,822
2,767 Omega Healthcare Investors, Inc.............................................. 91,366
4,757 Physicians Realty Trust...................................................... 95,806
-------------
287,994
-------------
HOTEL & RESORT REITS - 0.9%
2,965 Hospitality Properties Trust................................................. 86,430
5,003 Host Hotels & Resorts, Inc................................................... 91,405
-------------
177,835
-------------
INDUSTRIAL REITS - 1.0%
3,461 Duke Realty Corp............................................................. 96,735
1,749 Prologis, Inc................................................................ 102,561
-------------
199,296
-------------
OFFICE REITS - 1.0%
2,867 Corporate Office Properties Trust............................................ 100,431
1,854 Highwoods Properties, Inc.................................................... 94,016
-------------
194,447
-------------
RESIDENTIAL REITS - 1.9%
2,169 Apartment Investment & Management Co., Class A............................... 93,202
510 AvalonBay Communities, Inc................................................... 98,007
1,178 Equity LifeStyle Properties, Inc............................................. 101,708
938 Mid-America Apartment Communities, Inc....................................... 98,846
-------------
391,763
-------------
RETAIL REITS - 1.3%
2,148 National Retail Properties, Inc.............................................. 83,987
6,645 Retail Properties of America, Inc., Class A.................................. 81,135
563 Simon Property Group, Inc.................................................... 91,071
-------------
256,193
-------------
SPECIALIZED REITS - 2.4%
1,768 CyrusOne, Inc................................................................ 98,566
848 Digital Realty Trust, Inc.................................................... 95,782
1,269 EPR Properties............................................................... 91,203
1,205 Extra Space Storage, Inc..................................................... 93,990
1,814 QTS Realty Trust, Inc., Class A.............................................. 94,927
-------------
474,468
-------------
TOTAL REAL ESTATE INVESTMENT TRUSTS.......................................... 2,358,014
(Cost $2,175,772) -------------
Page 40 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
UNITS DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
MASTER LIMITED PARTNERSHIPS - 8.8%
CHEMICALS - 0.2%
1,515 Westlake Chemical Partners, L.P.............................................. $ 37,496
-------------
GAS UTILITIES - 0.2%
1,080 AmeriGas Partners, L.P....................................................... 48,784
-------------
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 0.4%
2,176 NextEra Energy Partners, L.P................................................. 80,490
-------------
OIL, GAS & CONSUMABLE FUELS - 8.0%
624 Alliance Resource Partners, L.P.............................................. 11,794
386 Buckeye Partners, L.P........................................................ 24,677
7,956 Enbridge Energy Partners, L.P................................................ 127,296
9,089 Enterprise Products Partners, L.P............................................ 246,130
1,134 EQT Midstream Partners, L.P.................................................. 84,630
3,951 Holly Energy Partners, L.P................................................... 128,328
1,892 Magellan Midstream Partners, L.P............................................. 134,843
983 NGL Energy Partners, L.P..................................................... 13,762
1,240 ONEOK Partners, L.P.......................................................... 63,327
1,981 Phillips 66 Partners, L.P.................................................... 97,901
5,386 Plains All American Pipeline, L.P............................................ 141,490
2,922 Shell Midstream Partners, L.P................................................ 88,537
3,399 Spectra Energy Partners, L.P................................................. 145,817
510 Tallgrass Energy Partners, L.P............................................... 25,546
2,728 TC PipeLines, L.P............................................................ 150,040
287 TransMontaigne Partners, L.P................................................. 12,054
2,532 Williams Partners, L.P....................................................... 101,559
-------------
1,597,731
-------------
TOTAL MASTER LIMITED PARTNERSHIPS............................................ 1,764,501
(Cost $1,605,471) -------------
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT BONDS AND NOTES - 8.8%
$ 68,858 U.S. Treasury Inflation Indexed Bond (c)............ 1.75% 01/15/28 76,830
44,413 U.S. Treasury Inflation Indexed Bond (c)............ 2.50% 01/15/29 53,463
7,436 U.S. Treasury Inflation Indexed Bond (c)............ 3.88% 04/15/29 10,086
24,932 U.S. Treasury Inflation Indexed Bond (c)............ 3.38% 04/15/32 34,298
23,755 U.S. Treasury Inflation Indexed Bond (c)............ 2.13% 02/15/40 29,594
37,737 U.S. Treasury Inflation Indexed Bond (c)............ 2.13% 02/15/41 47,227
33,327 U.S. Treasury Inflation Indexed Bond (c)............ 0.75% 02/15/42 31,773
36,795 U.S. Treasury Inflation Indexed Bond (c)............ 0.63% 02/15/43 33,920
33,361 U.S. Treasury Inflation Indexed Bond (c)............ 1.38% 02/15/44 36,351
33,537 U.S. Treasury Inflation Indexed Bond (c)............ 0.75% 02/15/45 31,512
29,925 U.S. Treasury Inflation Indexed Bond (c)............ 1.00% 02/15/46 29,933
11,142 U.S. Treasury Inflation Indexed Bond (c)............ 0.88% 02/15/47 10,825
24,944 U.S. Treasury Inflation Indexed Note (c)............ 1.38% 07/15/18 25,353
4,555 U.S. Treasury Inflation Indexed Note (c)............ 2.13% 01/15/19 4,705
94,850 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 04/15/19 94,927
24,047 U.S. Treasury Inflation Indexed Note (c)............ 1.88% 07/15/19 25,076
30,980 U.S. Treasury Inflation Indexed Note (c)............ 1.38% 01/15/20 32,126
75,173 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 04/15/20 75,318
52,693 U.S. Treasury Inflation Indexed Note (c)............ 1.25% 07/15/20 54,947
See Notes to Financial Statements Page 41
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT BONDS AND NOTES (CONTINUED)
$ 58,344 U.S. Treasury Inflation Indexed Note (c)............ 1.13% 01/15/21 $ 60,602
68,086 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 04/15/21 68,014
56,411 U.S. Treasury Inflation Indexed Note (c)............ 0.63% 07/15/21 57,847
63,627 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 01/15/22 63,571
23,123 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 04/15/22 23,027
63,793 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 07/15/22 63,752
62,496 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 01/15/23 61,965
61,987 U.S. Treasury Inflation Indexed Note (c)............ 0.38% 07/15/23 62,427
61,824 U.S. Treasury Inflation Indexed Note (c)............ 0.63% 01/15/24 62,746
60,959 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 07/15/24 59,919
62,969 U.S. Treasury Inflation Indexed Note (c)............ 0.25% 01/15/25 61,894
51,235 U.S. Treasury Inflation Indexed Note (c)............ 2.38% 01/15/25 58,406
60,830 U.S. Treasury Inflation Indexed Note (c)............ 0.38% 07/15/25 60,413
64,826 U.S. Treasury Inflation Indexed Note (c)............ 0.63% 01/15/26 65,284
33,877 U.S. Treasury Inflation Indexed Note (c)............ 2.00% 01/15/26 37,991
54,061 U.S. Treasury Inflation Indexed Note (c)............ 0.13% 07/15/26 52,186
55,669 U.S. Treasury Inflation Indexed Note (c)............ 0.38% 01/15/27 54,762
27,279 U.S. Treasury Inflation Indexed Note (c)............ 2.38% 01/15/27 31,817
-------------
TOTAL U.S. GOVERNMENT BONDS AND NOTES........................................ 1,744,887
(Cost $1,761,215) -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES - 7.8%
COLLATERALIZED MORTGAGE OBLIGATIONS - 4.3%
Fannie Mae REMICS
16 Series 1988-16, Class B.......................... 9.50% 06/25/18 16
529 Series 1988-30, Class D.......................... 9.50% 12/25/18 545
222 Series 1989-69, Class G.......................... 7.60% 10/25/19 230
679 Series 1989-82, Class G.......................... 8.40% 11/25/19 717
16,103 Series 1990-37, Class K.......................... 9.50% 04/25/20 16,763
2,498 Series 1990-109, Class J......................... 7.00% 09/25/20 2,628
1,122 Series 1992-24, Class Z.......................... 6.50% 04/25/22 1,198
19 Series 1992-44, Class ZQ......................... 8.00% 07/25/22 19
2,605 Series 1993-1, Class KA.......................... 7.90% 01/25/23 2,887
1,765 Series 1993-62, Class E.......................... 7.00% 04/25/23 1,919
615 Series 1993-119, Class H......................... 6.50% 07/25/23 668
4,031 Series 1993-178, Class PK........................ 6.50% 09/25/23 4,398
3,943 Series 1995-24, Class G.......................... 6.50% 04/25/23 4,243
2,295 Series 1999-56, Class Z.......................... 7.00% 12/18/29 2,580
43,166 Series 2002-9, Class MS, IO (d).................. 6.88% 03/25/32 8,660
1,907 Series 2002-67, Class PE......................... 5.50% 11/25/32 2,133
5,282 Series 2002-90, Class A1......................... 6.50% 06/25/42 6,135
61 Series 2003-9, Class EB.......................... 5.00% 02/25/18 61
4,869 Series 2003-14, Class AQ......................... 3.50% 03/25/33 4,960
6,914 Series 2003-41, Class OA......................... 4.00% 05/25/33 7,198
146 Series 2003-92, Class HP......................... 4.50% 09/25/18 148
10,827 Series 2004-10, Class ZB......................... 6.00% 02/25/34 12,808
4,379 Series 2004-76, Class CL......................... 4.00% 10/25/19 4,414
4,620 Series 2004-92, Class S, IO (d).................. 5.48% 08/25/34 242
863 Series 2005-46, Class LW......................... 5.00% 06/25/20 878
93 Series 2005-48, Class MD......................... 5.00% 04/25/34 93
9,465 Series 2005-68, Class BC......................... 5.25% 06/25/35 9,801
Page 42 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED)
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Fannie Mae REMICS (Continued)
$ 3,800 Series 2005-70, Class KJ......................... 5.50% 09/25/34 $ 3,867
21,614 Series 2005-79, Class NF (d)..................... 1.63% 09/25/35 21,701
50 Series 2005-120, Class NF (d).................... 1.32% 01/25/21 50
83,521 Series 2007-10, Class Z.......................... 6.00% 02/25/37 93,611
84,696 Series 2009-86, Class IP, IO..................... 5.50% 10/25/39 15,191
898 Series 2011-38, Class AH......................... 2.75% 05/25/20 901
3,430 Series 2012-35, Class PL......................... 2.00% 11/25/41 3,396
1,203 Series 2013-14, Class QE......................... 1.75% 03/25/43 1,153
53,604 Series 2013-31, Class NT......................... 3.00% 04/25/43 55,630
Fannie Mae REMIC Trust
22,082 Series 2007-W8, Class 1A5 (d).................... 6.33% 09/25/37 23,262
Fannie Mae Trust
6,621 Series 2004-W8, Class 3A......................... 7.50% 06/25/44 7,785
FHLMC - GNMA
490 Series 1993-5, Class HA.......................... 7.50% 02/25/23 534
1,122 Series 1994-27, Class D.......................... 7.00% 03/25/24 1,238
Freddie Mac REMICS
1,057 Series 1988-23, Class F.......................... 9.60% 04/15/20 1,097
804 Series 1989-84, Class F.......................... 9.20% 10/15/20 850
4,072 Series 1991-1074, Class I........................ 6.75% 05/15/21 4,210
2,510 Series 1991-1078, Class GZ....................... 6.50% 05/15/21 2,617
738 Series 1992-1250, Class J........................ 7.00% 05/15/22 749
25,727 Series 1992-1401, Class Q (d).................... 1.76% 10/15/22 25,996
40,467 Series 1993-1487, Class P, IO (d)................ 8.34% 03/15/23 5,966
6,826 Series 1994-1673, Class FB (d)................... 1.77% 02/15/24 6,797
1,188 Series 1996-1807, Class G........................ 9.00% 10/15/20 1,275
87 Series 1996-1847, Class LL....................... 7.50% 04/15/26 99
18,706 Series 1998-2033, Class IA, IO................... 7.00% 02/15/28 2,483
149 Series 1998-2056, Class TD....................... 6.50% 05/15/18 150
4,694 Series 1999-2130, Class KB....................... 6.38% 03/15/29 5,293
64,289 Series 1999-2174, Class PN....................... 6.00% 07/15/29 71,175
10,515 Series 2001-2277, Class B........................ 7.50% 01/15/31 12,502
4,039 Series 2002-2542, Class ES....................... 5.00% 12/15/17 4,086
493 Series 2003-2559, Class PB....................... 5.50% 08/15/30 504
2,552 Series 2003-2590, Class NV....................... 5.00% 03/15/18 2,571
1,893 Series 2003-2649, Class KA....................... 4.50% 07/15/18 1,909
28,000 Series 2003-2676, Class LL....................... 5.50% 09/15/33 31,278
23,372 Series 2004-2768, Class PW....................... 4.25% 03/15/34 25,432
2,000 Series 2004-2778, Class MM....................... 5.25% 04/15/34 2,211
1,241 Series 2004-2780, Class JA....................... 4.50% 04/15/19 1,270
779 Series 2005-2922, Class QE....................... 5.00% 05/15/34 795
20,817 Series 2005-2953, Class LZ....................... 6.00% 03/15/35 26,067
37,754 Series 2005-2958, Class QJ....................... 4.00% 04/15/20 38,476
38,981 Series 2006-3114, Class GI, IO (d)................ 5.44% 02/15/36 8,376
54,142 Series 2006-3199, Class DS, IO (d)................ 5.99% 08/15/36 10,802
3,819 Series 2006-3237, Class CB....................... 5.50% 07/15/36 4,033
23,161 Series 2010-3758, Class M........................ 4.50% 10/15/38 24,158
6,482 Series 2010-3775, Class KZ....................... 4.00% 08/15/25 6,762
9,065 Series 2011-3824, Class FA (d)................... 1.31% 03/15/26 9,067
See Notes to Financial Statements Page 43
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED)
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Freddie Mac REMICS (Continued)
$ 824 Series 2011-3972, Class NW....................... 3.00% 08/15/37 $ 833
3,215 Series 2012-3994, Class AE....................... 1.63% 02/15/22 3,203
2,534 Series 2012-4097, Class DC....................... 1.50% 06/15/41 2,449
19,722 Series 2013-4178, Class ZN....................... 3.50% 03/15/43 18,288
3,538 Series 2013-4253, Class TD....................... 2.00% 07/15/40 3,544
Freddie Mac Strips
25,146 Series 1994-169, Class IO, IO.................... 8.50% 03/01/23 4,589
Government National Mortgage Association
15,127 Series 1999-30, Class S, IO (d).................. 7.43% 08/16/29 3,082
44,048 Series 2002-92, Class PB......................... 5.50% 12/20/32 49,012
10,870 Series 2006-16, Class OP, PO..................... (e) 03/20/36 10,003
55,000 Series 2007-35, Class NE......................... 6.00% 06/16/37 65,182
9,454 Series 2009-29, Class TA......................... 4.50% 03/16/39 9,908
293 Series 2009-81, Class PA......................... 5.50% 02/16/38 304
811 Series 2009-93, Class PB......................... 3.00% 12/16/38 813
8,835 Series 2009-102, Class MA........................ 4.00% 06/16/39 9,088
4,189 Series 2010-44, Class NK......................... 4.00% 10/20/37 4,222
274 Series 2010-117, Class MA........................ 2.50% 09/16/23 275
3,826 Series 2010-121, Class PQ........................ 3.00% 02/20/39 3,862
3,721 Series 2011-136, Class GB........................ 2.50% 05/20/40 3,739
36,388 Series 2013-20, Class KI, IO..................... 5.00% 01/20/43 6,667
-------------
862,780
-------------
PASS-THROUGH SECURITIES - 3.5%
Federal Home Loan Mortgage Corporation
18,704 Pool A47829...................................... 4.00% 08/01/35 19,751
10,021 Pool C01252...................................... 6.50% 11/01/31 11,205
74,708 Pool G01731...................................... 6.50% 12/01/29 84,321
35,679 Pool G06358...................................... 4.00% 04/01/41 37,950
99 Pool G11418...................................... 6.50% 07/01/17 99
4,480 Pool O20138...................................... 5.00% 11/01/30 4,898
25,541 Pool U90316...................................... 4.00% 10/01/42 27,092
Federal National Mortgage Association
6,807 Pool 745121...................................... 5.50% 12/01/18 6,875
7,798 Pool 888366...................................... 7.00% 04/01/37 9,106
21,370 Pool 890383...................................... 4.00% 01/01/42 22,644
29,995 Pool AA9393...................................... 4.50% 07/01/39 32,567
47,992 Pool AD0659...................................... 6.00% 02/01/23 51,197
25,204 Pool AE0050...................................... 5.50% 12/01/22 26,703
13,669 Pool AH1568...................................... 4.50% 12/01/40 14,805
34,709 Pool AL0791...................................... 4.00% 02/01/41 36,878
32,544 Pool AS9194...................................... 4.50% 12/01/44 35,158
61,731 Pool AU4289...................................... 4.00% 09/01/43 65,347
9,020 Pool MA0561...................................... 4.00% 11/01/40 9,529
43,794 Pool MA1028...................................... 4.00% 04/01/42 46,227
Government National Mortgage Association
14,083 Pool 3428........................................ 5.00% 08/20/33 15,674
18,353 Pool 3500........................................ 5.50% 01/20/34 20,561
10,604 Pool 3711........................................ 5.50% 05/20/35 11,859
14,718 Pool 706201...................................... 5.50% 04/20/39 16,311
Page 44 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED)
PASS-THROUGH SECURITIES (CONTINUED)
Government National Mortgage Association (Continued)
$ 19,224 Pool 736558...................................... 5.00% 02/15/40 $ 21,221
35,358 Pool 759248...................................... 4.00% 02/15/41 37,740
29,493 Pool MA3525...................................... 5.50% 03/20/46 32,933
-------------
698,651
-------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES...................... 1,561,431
(Cost $1,545,841) -------------
MORTGAGE-BACKED SECURITIES - 0.2%
COLLATERALIZED MORTGAGE OBLIGATIONS - 0.2%
Credit Suisse First Boston Mortgage Securities Corp.
1,594 Series 2004-4, Class 1A3......................... 5.75% 08/25/34 1,614
8,445 Series 2004-6, Class 2A1......................... 4.75% 09/25/19 8,561
JP Morgan Resecuritization Trust
3,517 Series 2009-7, Class 5A1 (d) (f)................. 6.00% 02/27/37 3,521
MASTR Alternative Loan Trust
3,856 Series 2004-10, Class 2A1........................ 5.50% 10/25/19 3,951
1,610 Series 2005-1, Class 5A1......................... 5.50% 01/25/20 1,650
MASTR Asset Securitization Trust
7,201 Series 2004-1, Class 5A4......................... 5.50% 02/25/34 7,409
RAAC Trust
2,104 Series 2005-SP1, Class 2A1....................... 5.25% 09/25/34 2,139
Structured Asset Mortgage Investments Trust
10,317 Series 1999-1, Class 2A (d)...................... 8.91% 06/25/29 10,376
Structured Asset Securities Corp. Mortgage
Pass-Through Certificates
853 Series 2004-21XS, Class 2A6A..................... 5.24% 12/25/34 868
WAMU Mortgage Pass-Through Certificates
241 Series 2002-S8, Class 2A7........................ 5.25% 01/25/18 241
Wells Fargo Alternative Loan Trust
291 Series 2007-PA5, Class 2A1....................... 6.00% 11/25/22 292
Wells Fargo Mortgage Backed-Securities Trust
2,045 Series 2006-17, Class A4......................... 5.50% 11/25/21 2,081
-------------
TOTAL MORTGAGE-BACKED SECURITIES............................................. 42,703
(Cost $42,107) -------------
ASSET-BACKED SECURITIES - 0.0%
AFC Home Equity Loan Trust
738 Series 1997-4, Class 1A2 (d)..................... 1.73% 12/22/27 716
Bear Stearns Asset Backed Securities Trust
3,130 Series 2005-SD1, Class 1A3 (d)................... 1.62% 08/25/43 3,139
-------------
TOTAL ASSET-BACKED SECURITIES................................................ 3,855
(Cost $3,682) -------------
TOTAL INVESTMENTS - 97.7%.................................................... 19,522,219
(Cost $18,620,337) (g)
NET OTHER ASSETS AND LIABILITIES - 2.3%...................................... 461,514
-------------
NET ASSETS - 100.0%.......................................................... $ 19,983,733
=============
See Notes to Financial Statements Page 45
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2017 (UNAUDITED)
-----------------------------
(a) Investment in an affiliated fund.
(b) This security is restricted in the U.S. and cannot be offered for public
sale without first being registered under the Securities Act of 1933, as
amended. This security is not restricted on the foreign exchange where it
trades freely without any additional registration. As such, it does not
require the additional disclosure required of restricted securities.
(c) Security whose principal value is adjusted in accordance with changes to
the country's Consumer Price Index. Interest is calculated on the basis of
the current adjusted principal value.
(d) Floating or variable rate security. The interest rate shown reflects the
rate in effect at June 30, 2017.
(e) Zero coupon security.
(f) This security, sold within the terms of a private placement memorandum, is
exempt from registration upon resale under Rule 144A under the Securities
Act of 1933, as amended, and may be resold in transactions exempt from
registration, normally to qualified institutional buyers. Pursuant to
procedures adopted by the Trust's Board of Trustees, this security has
been determined to be liquid by First Trust Advisors L.P., the Fund's
advisor. Although market instability can result in periods of increased
overall market illiquidity, liquidity for each security is determined
based on security-specific factors and assumptions, which require
subjective judgment. At June 30, 2017, securities noted as such amounted
to $3,521 or 0.02% of net assets.
(g) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2017, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $1,071,852 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $169,970.
ADR American Depositary Receipt
CAD Canadian Dollar - Security is denominated in Canadian Dollars and is
translated into U.S. Dollars based upon the current exchange rate.
IO Interest-Only Security - Principal amount shown represents par value on
which interest payments are based.
PO Principal-Only Security
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2017
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Exchange-Traded Funds*............................ $ 7,817,010 $ 7,817,010 $ -- $ --
Common Stocks*.................................... 4,229,818 4,229,818 -- --
Real Estate Investment Trusts*.................... 2,358,014 2,358,014 -- --
Master Limited Partnerships*...................... 1,764,501 1,764,501 -- --
U.S. Government Bonds and Notes................... 1,744,887 -- 1,744,887 --
U.S. Government Agency Mortgage-Backed
Securities..................................... 1,561,431 -- 1,561,431 --
Mortgage-Backed Securities........................ 42,703 -- 42,703 --
Asset-Backed Securities........................... 3,855 -- 3,855 --
------------ ------------ ------------ ------------
Total Investments................................. $ 19,522,219 $ 16,169,343 $ 3,352,876 $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at June 30, 2017.
Page 46 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2017 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
EXCHANGE-TRADED FUNDS - 97.3%
CAPITAL MARKETS - 97.3%
2,979 First Trust BICK Index Fund (a).............................................. $ 77,156
2,245 First Trust Chindia ETF (a).................................................. 78,777
4,697 First Trust Developed Markets ex-US AlphaDEX(R) Fund (a)..................... 259,556
15,453 First Trust Dow Jones Internet Index Fund (a) (b)............................ 1,464,017
7,977 First Trust Emerging Markets AlphaDEX(R) Fund (a)............................ 186,981
1,816 First Trust Germany AlphaDEX(R) Fund (a)..................................... 78,724
35,130 First Trust Industrials/Producer Durables AlphaDEX(R) Fund (a)............... 1,242,197
26,823 First Trust Large Cap Growth AlphaDEX(R) Fund (a)............................ 1,469,096
25,781 First Trust Mid Cap Core AlphaDEX(R) Fund (a)................................ 1,528,813
46,994 First Trust Nasdaq Bank ETF (a).............................................. 1,242,051
23,279 First Trust NASDAQ-100-Technology Sector Index Fund (a)...................... 1,452,377
39,251 First Trust Small Cap Growth AlphaDEX(R) Fund (a)............................ 1,509,201
1,682 First Trust Switzerland AlphaDEX(R) Fund (a)................................. 82,166
46,833 First Trust Utilities AlphaDEX(R) Fund (a)................................... 1,272,453
7,346 iShares Core U.S. Aggregate Bond ETF......................................... 804,461
10,462 SPDR Bloomberg Barclays Convertible Securities ETF........................... 519,124
12,624 SPDR Bloomberg Barclays High Yield Bond ETF.................................. 469,613
12,981 SPDR Bloomberg Barclays Intermediate Term Corporate Bond ETF................. 446,676
10,385 SPDR Wells Fargo Preferred Stock ETF......................................... 467,013
-------------
TOTAL INVESTMENTS - 97.3%.................................................... 14,650,452
(Cost $13,565,397) (c)
NET OTHER ASSETS AND LIABILITIES - 2.7%...................................... 409,012
-------------
NET ASSETS - 100.0%.......................................................... $ 15,059,464
=============
-----------------------------
(a) Investment in an affiliated fund.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2017, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $1,097,174 and the aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over value was $12,119.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2017
is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2017 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Exchange-Traded Funds*............................ $ 14,650,452 $ 14,650,452 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between Levels at June 30, 2017.
See Notes to Financial Statements Page 47
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2017 (UNAUDITED)
FIRST TRUST/DOW
JONES DIVIDEND FIRST TRUST FIRST TRUST
& INCOME MULTI INCOME DORSEY WRIGHT
ALLOCATION ALLOCATION TACTICAL CORE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------
ASSETS:
Investments, at value................................................... $ 643,536,525 $ 13,430,759 $ 2,706,887
Investments in affiliated funds, at value............................... -- 6,091,460 11,943,565
Cash and cash equivalents............................................... 4,720,458 489,094 386,749
Foreign currency, at value.............................................. -- 99 --
Receivables:
Interest............................................................. 2,218,212 13,063 --
Fund shares sold..................................................... 1,100,608 8,850 63,781
Investment securities sold........................................... 744,860 98 --
Dividends............................................................ 433,674 17,760 1,502
Variation margin..................................................... 50,531 -- --
From investment advisor.............................................. -- 32,191 11,412
Reclaim.............................................................. -- 1,056 --
Prepaid expenses........................................................ 2,224 107 48
--------------- --------------- ---------------
Total Assets......................................................... 652,807,092 20,084,537 15,113,944
--------------- --------------- ---------------
LIABILITIES:
Payables:
Investment securities purchased...................................... 3,211,305 17,337 4,266
Investment advisory fees............................................. 286,491 -- --
12b-1 service fees (Class I)......................................... 132,156 4,016 2,989
Administrative service fees.......................................... 105,728 3,239 2,418
Licensing fees....................................................... 96,910 -- 3,456
Custodian fees....................................................... 47,074 3,214 3,005
Accounting and administration fees................................... 43,345 8,150 4,463
Printing fees........................................................ 35,159 3,743 1,997
Transfer agent fees.................................................. 22,276 12,620 13,400
Audit and tax fees................................................... 17,246 31,199 13,766
Fund shares redeemed................................................. 13,155 9,799 3
Commitment fees...................................................... 6,458 4,308 --
Legal fees........................................................... 1,324 134 2,269
Financial reporting fees............................................. 771 -- 466
Trustees' fees and expenses.......................................... 63 -- 653
Other liabilities....................................................... 1,173 3,045 1,329
--------------- --------------- ---------------
Total Liabilities.................................................... 4,020,634 100,804 54,480
--------------- --------------- ---------------
NET ASSETS.............................................................. $ 648,786,458 $ 19,983,733 $ 15,059,464
=============== =============== ===============
NET ASSETS CONSIST OF:
Paid-in capital......................................................... $ 590,185,697 $ 19,309,318 $ 14,025,711
Accumulated net investment income (loss)................................ 986,888 32,704 29,429
Accumulated net realized gain (loss) on investments, futures and foreign
currency transactions................................................ 14,279,268 (260,174) (80,731)
Net unrealized appreciation (depreciation) on investments, futures and
foreign currency translation......................................... 43,334,605 901,885 1,085,055
--------------- --------------- ---------------
NET ASSETS.............................................................. $ 648,786,458 $ 19,983,733 $ 15,059,464
=============== =============== ===============
Investments, at cost.................................................... $ 600,201,865 $ 12,592,925 $ 2,669,365
=============== =============== ===============
Investments in affiliated funds, at cost................................ $ -- $ 6,027,412 $ 10,896,032
=============== =============== ===============
Foreign currency, at cost............................................... $ -- $ 99 $ --
=============== =============== ===============
CLASS I SHARES:
NET ASSETS.............................................................. $ 648,768,356 $ 19,823,954 $ 15,005,478
=============== =============== ===============
NET ASSET VALUE, PER SHARE.............................................. $ 13.39 $ 10.80 $ 10.57
=============== =============== ===============
Number of Shares outstanding............................................ 48,439,876 1,835,459 1,419,312
=============== =============== ===============
CLASS II SHARES:
NET ASSETS.............................................................. $ 18,102 $ 159,779 $ 53,986
=============== =============== ===============
NET ASSET VALUE, PER SHARE.............................................. $ 13.42 $ 10.80 $ 10.56
=============== =============== ===============
Number of Shares outstanding............................................ 1,349 14,795 5,114
=============== =============== ===============
Page 48 See Notes to Financial Statements
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2017 (UNAUDITED)
FIRST TRUST/DOW
JONES DIVIDEND FIRST TRUST FIRST TRUST
& INCOME MULTI INCOME DORSEY WRIGHT
ALLOCATION ALLOCATION TACTICAL CORE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- --------------- ---------------
INVESTMENT INCOME:
Interest................................................................ $ 3,905,553 $ 40,417 $ 839
Dividends............................................................... 3,672,088 130,876 37,213
Dividends from affiliated funds......................................... -- 127,814 44,680
Foreign withholding tax on dividend income.............................. -- (1,796) --
--------------- --------------- ---------------
Total investment income.............................................. 7,577,641 297,311 82,732
--------------- --------------- ---------------
EXPENSES:
Investment advisory fees................................................ 1,786,280 56,150 22,214
12b-1 distribution and service fees (Class I)........................... 744,261 23,199 15,802
Administrative service fees............................................. 595,418 18,592 12,642
Accounting and administration fees...................................... 184,542 26,735 26,033
Licensing fees.......................................................... 97,637 -- 6,347
Custodian fees.......................................................... 87,108 5,750 5,955
Transfer agent fees..................................................... 44,901 25,516 24,788
Printing fees........................................................... 39,605 3,405 3,466
Legal fees.............................................................. 37,361 1,072 1,233
Commitment fees......................................................... 17,505 11,975 --
Audit and tax fees...................................................... 14,411 25,614 11,371
Trustees' fees and expenses............................................. 8,883 8,280 8,558
Financial reporting fees................................................ 4,625 -- 4,588
Other................................................................... 7,043 4,376 1,070
--------------- --------------- ---------------
Total expenses....................................................... 3,669,580 210,664 144,067
Fees waived or expenses reimbursed by the investment advisor......... (96,969) (133,187) (96,734)
--------------- --------------- ---------------
Net expenses............................................................ 3,572,611 77,477 47,333
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS)............................................ 4,005,030 219,834 35,399
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.......................................................... 14,865,208 114,435 (779)
Investments in affiliated funds...................................... -- (7,888) (63,230)
Futures.............................................................. (268,321) -- --
Foreign currency transactions........................................ -- (18) --
--------------- --------------- ---------------
Net realized gain (loss)................................................ 14,596,887 106,529 (64,009)
--------------- --------------- ---------------
Net change in unrealized appreciation (depreciation) on:
Investments.......................................................... 13,730,423 207,400 84,235
Investments in affiliated funds...................................... -- 104,878 809,921
Futures.............................................................. (5,930) -- --
Foreign currency translation......................................... -- 2 --
--------------- --------------- ---------------
Net change in unrealized appreciation (depreciation).................... 13,724,493 312,280 894,156
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................................. 28,321,380 418,809 830,147
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS...................................................... $ 32,326,410 $ 638,643 $ 865,546
=============== =============== ===============
See Notes to Financial Statements Page 49
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST/DOW JONES DIVIDEND
& INCOME ALLOCATION PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2017 ENDED
(UNAUDITED) 12/31/2016
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 4,005,030 $ 4,865,769
Net realized gain (loss)............................................................. 14,596,887 8,387,278
Net increase from payment by the advisor............................................. -- 1,000
Net change in unrealized appreciation (depreciation)................................. 13,724,493 27,976,372
------------ ------------
Net increase (decrease) in net assets resulting from operations...................... 32,326,410 41,230,419
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class I.............................................................................. (3,218,863) (4,438,978)
Class II............................................................................. (113) (208)
------------ ------------
(3,218,976) (4,439,186)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class I.............................................................................. (4,899,718) (10,878,302)
Class II............................................................................. (138) (458)
------------ ------------
(4,899,856) (10,878,760)
------------ ------------
Total distributions to shareholders.................................................. (8,118,832) (15,317,946)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 101,445,794 269,075,333
Proceeds from shares reinvested...................................................... 8,118,670 15,317,510
Cost of shares redeemed.............................................................. (28,954,142) (9,596,894)
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions............ 80,610,322 274,795,949
------------ ------------
Total increase (decrease) in net assets.............................................. 104,817,900 300,708,422
NET ASSETS:
Beginning of period.................................................................. 543,968,558 243,260,136
------------ ------------
End of period........................................................................ $648,786,458 $543,968,558
============ ============
Accumulated net investment income (loss) at end of period............................ $ 986,888 $ 200,834
============ ============
Page 50 See Notes to Financial Statements
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST MULTI INCOME
ALLOCATION PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2017 ENDED
(UNAUDITED) 12/31/2016
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 219,834 $ 314,186
Net realized gain (loss)............................................................. 106,529 (117,782)
Net change in unrealized appreciation (depreciation)................................. 312,280 1,064,389
------------ ------------
Net increase (decrease) in net assets resulting from operations...................... 638,643 1,260,793
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class I.............................................................................. (185,417) (363,323)
Class II............................................................................. (1,713) (3,315)
------------ ------------
Total distributions to shareholders.................................................. (187,130) (366,638)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 2,729,380 6,360,314
Proceeds from shares reinvested...................................................... 185,959 364,038
Cost of shares redeemed.............................................................. (1,504,179) (1,854,130)
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions............ 1,411,160 4,870,222
------------ ------------
Total increase (decrease) in net assets.............................................. 1,862,673 5,764,377
NET ASSETS:
Beginning of period.................................................................. 18,121,060 12,356,683
------------ ------------
End of period........................................................................ $ 19,983,733 $ 18,121,060
============ ============
Accumulated net investment income (loss) at end of period............................ $ 32,704 $ --
============ ============
See Notes to Financial Statements Page 51
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST DORSEY WRIGHT
TACTICAL CORE PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2017 ENDED
(UNAUDITED) 12/31/2016
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 35,399 $ 98,407
Net realized gain (loss)............................................................. (64,009) 72,877
Net change in unrealized appreciation (depreciation)................................. 894,156 242,750
------------ ------------
Net increase (decrease) in net assets resulting from operations...................... 865,546 414,034
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME:
Class I.............................................................................. (5,952) (96,102)
Class II............................................................................. (89) (572)
------------ ------------
(6,041) (96,674)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET REALIZED GAIN:
Class I.............................................................................. -- (97,931)
Class II............................................................................. -- (477)
------------ ------------
-- (98,408)
------------ ------------
Total distributions to shareholders (6,041) (195,082)
------------ ------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 4,283,081 13,236,943
Proceeds from shares reinvested...................................................... 6,041 195,082
Cost of shares redeemed.............................................................. (499,156) (8,731,398)
------------ ------------
Net increase (decrease) in net assets resulting from capital transactions............ 3,789,966 4,700,627
------------ ------------
Total increase (decrease) in net assets.............................................. 4,649,471 4,919,579
NET ASSETS:
Beginning of period.................................................................. 10,409,993 5,490,414
------------ ------------
End of period........................................................................ $ 15,059,464 $ 10,409,993
============ ============
Accumulated net investment income (loss) at end of period............................ $ 29,429 $ 71
============ ============
Page 52 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS FOR THE
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2017 --------------------------------------------------------- ENDED
(UNAUDITED) 2016 2015 2014 2013 12/31/2012 (a)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value, beginning of period..... $ 12.85 $ 11.94 $ 12.41 $ 11.37 $ 10.31 $ 10.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.09 0.14 0.16 0.15 0.14 0.15
Net realized and unrealized gain (loss).. 0.62 1.25 (b) (0.15) 0.99 1.17 0.29
-------- -------- -------- -------- -------- --------
Total from investment operations......... 0.71 1.39 0.01 1.14 1.31 0.44
-------- -------- -------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income................... (0.07) (0.13) (0.27) (0.10) (0.09) (0.07)
Net realized gain........................ (0.10) (0.35) (0.21) -- (0.16) (0.04)
Return of capital........................ -- -- -- -- -- (0.02)
-------- -------- -------- -------- -------- --------
Total from distributions................. (0.17) (0.48) (0.48) (0.10) (0.25) (0.13)
-------- -------- -------- -------- -------- --------
Net asset value, end of period........... $ 13.39 $ 12.85 $ 11.94 $ 12.41 $ 11.37 $ 10.31
======== ======== ======== ======== ======== ========
TOTAL RETURN (c) (d)..................... 5.53% 11.74% (b) 0.09% 10.04% 12.75% 4.38%
======== ======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $648,768 $543,951 $243,244 $195,128 $106,079 $ 32,176
Ratio of total expenses to average net
assets................................ 1.23% (e) 1.29% 1.34% 1.43% 1.65% 2.69% (e)
Ratio of net expenses to average net
assets................................ 1.20% (e) 1.20% 1.20% 1.20% 1.20% 1.20% (e)
Ratio of net investment income (loss)
to average net assets................. 1.35% (e) 1.29% 1.35% 1.40% 1.27% 2.25% (e)
Portfolio turnover rate.................. 36% 96% 81% 65% 73% 34%
CLASS II SHARES
SIX MONTHS FOR THE
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2017 --------------------------- ENDED
(UNAUDITED) 2016 2015 12/31/2014 (f)
------------ ------------ ------------ ------------
Net asset value, beginning of period..... $ 12.87 $ 11.95 $ 12.43 $ 11.63
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.10 0.19 0.17 0.14
Net realized and unrealized gain (loss).. 0.63 1.24 (b) (0.14) 0.77
-------- -------- -------- --------
Total from investment operations......... 0.73 1.43 0.03 0.91
-------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.08) (0.16) (0.30) (0.11)
Net realized gain........................ (0.10) (0.35) (0.21) --
-------- -------- -------- --------
Total from distributions................. (0.18) (0.51) (0.51) (0.11)
-------- -------- -------- --------
Net asset value, end of period........... $ 13.42 $ 12.87 $ 11.95 $ 12.43
======== ======== ======== ========
TOTAL RETURN (c) (d)..................... 5.73% 12.07% (b) 0.25% 7.82%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 18 $ 17 $ 16 $ 11
Ratio of total expenses to average net
assets................................ 0.97% (e) 1.04% 1.09% 1.21% (e)
Ratio of net expenses to average net
assets................................ 0.95% (e) 0.95% 0.95% 0.95% (e)
Ratio of net investment income (loss)
to average net assets................. 1.60% (e) 1.53% 1.64% 1.69% (e)
Portfolio turnover rate.................. 36% 96% 81% 65%
-----------------------------
(a) The Fund's Class I shares were seeded on April 12, 2012, and commenced
operations on May 1, 2012.
(b) First Trust/Dow Jones Dividend & Income Allocation Portfolio received a
reimbursement from the Advisor in the amount of $1,000 in connection with
a trade error, which represents less than $0.01 per share. Since the
Advisor reimbursed the Fund, there was no effect on the total return.
(c) Total return is based on the combination of reinvested dividends, capital
gain and return of capital distributions, if any. Total return is not
annualized for periods of less than one year. The returns for the Fund do
not reflect the deduction of expenses associated with variable products,
such as mortality and expense risk charges, separate account charges, and
sales charges or the effect of taxes. These expenses would reduce the
overall returns above.
(d) Total returns would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(e) Annualized.
(f) The Fund's Class II shares were seeded on April 30, 2014, and commenced
operations on May 1, 2014.
See Notes to Financial Statements Page 53
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS FOR THE
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2017 --------------------------- ENDED
(UNAUDITED) 2016 2015 12/31/2014 (a)
------------ ------------ ------------ ------------
Net asset value, beginning of period..... $ 10.54 $ 9.86 $ 10.39 $ 10.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.12 0.20 0.19 0.07
Net realized and unrealized gain (loss).. 0.24 0.71 (0.53) (b) 0.39
-------- -------- -------- --------
Total from investment operations......... 0.36 0.91 (0.34) 0.46
-------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.10) (0.23) (0.19) (0.07)
-------- -------- -------- --------
Total from distributions................. (0.10) (0.23) (0.19) (0.07)
-------- -------- -------- --------
Net asset value, end of period........... $ 10.80 $ 10.54 $ 9.86 $ 10.39
======== ======== ======== ========
TOTAL RETURN (c) (d)..................... 3.44% 9.27% (3.24)% (b) 4.57%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 19,824 $ 17,965 $ 12,257 $ 6,894
Ratio of total expenses to average net
assets................................ 2.25% (e) 2.22% 2.60% 6.00% (e)
Ratio of net expenses to average net
assets................................ 0.83% (e) 0.83% 0.90% 1.20% (e)
Ratio of net investment income (loss)
to average net assets................. 2.35% (e) 2.10% 2.17% 2.35% (e)
Portfolio turnover rate.................. 20% 46% 93% 15%
CLASS II SHARES
SIX MONTHS FOR THE
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2017 --------------------------- ENDED
(UNAUDITED) 2016 2015 12/31/2014 (a)
------------ ------------ ------------ ------------
Net asset value, beginning of period..... $ 10.54 $ 9.86 $ 10.39 $ 10.00
-------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.14 0.20 0.24 0.04
Net realized and unrealized gain (loss).. 0.24 0.74 (0.55) (b) 0.43
-------- -------- -------- --------
Total from investment operations......... 0.38 0.94 (0.31) 0.47
-------- -------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.12) (0.26) (0.22) (0.08)
-------- -------- -------- --------
Total from distributions................. (0.12) (0.26) (0.22) (0.08)
-------- -------- -------- --------
Net asset value, end of period........... $ 10.80 $ 10.54 $ 9.86 $ 10.39
======== ======== ======== ========
TOTAL RETURN (c) (d)..................... 3.57% 9.53% (3.01)% (b) 4.74%
======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 160 $ 156 $ 100 $ 105
Ratio of total expenses to average net
assets................................ 1.99% (e) 1.99% 2.31% 14.44% (e)
Ratio of net expenses to average net
assets................................ 0.58% (e) 0.58% 0.67% 0.95% (e)
Ratio of net investment income (loss)
to average net assets................. 2.58% (e) 2.34% 2.32% 0.54% (e)
Portfolio turnover rate.................. 20% 46% 93% 15%
-----------------------------
(a) The Fund's Class I and Class II shares were seeded on April 30, 2014, and
commenced operations on May 1, 2014.
(b) First Trust Multi Income Allocation Portfolio received a reimbursement
from the Advisor in the amount of $5,471 in connection with a trade error,
which represents less than $0.01 per share. Since the Advisor reimbursed
the Fund, there was no effect on the total return.
(c) Total return is based on the combination of reinvested dividends, capital
gain and return of capital distributions, if any. Total return is not
annualized for periods of less than one year. The returns for the Fund do
not reflect the deduction of expenses associated with variable products,
such as mortality and expense risk charges, separate account charges, and
sales charges or the effect of taxes. These expenses would reduce the
overall returns above.
(d) Total returns would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(e) Annualized.
Page 54 See Notes to Financial Statements
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS
ENDED YEAR FOR THE
6/30/2017 ENDED PERIOD ENDED
(UNAUDITED) 12/31/2016 12/31/2015 (a)
------------ ------------ ------------
Net asset value, beginning of period..... $ 9.85 $ 9.94 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.02 0.09 0.01
Net realized and unrealized gain (loss).. 0.70 0.01 (0.07)
-------- -------- --------
Total from investment operations......... 0.72 0.10 (0.06)
-------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.00) (b) (0.09) --
Net realized gain........................ -- (0.10) --
-------- -------- --------
Total from distributions................. (0.00) (0.19) --
-------- -------- --------
Net asset value, end of period........... $ 10.57 $ 9.85 $ 9.94
======== ======== ========
TOTAL RETURN (c) (d)..................... 7.35% 0.95% (0.60)%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 15,005 $ 10,360 $ 5,440
Ratio of total expenses to average net
assets................................ 2.08% (e) 2.13% 11.71% (e)
Ratio of net expenses to average net
assets................................ 0.75% (e) 0.83% 0.79% (e)
Ratio of net investment income (loss)
to average net assets................. 0.56% (e) 0.98% 1.54% (e)
Portfolio turnover rate.................. 9% 265% --%
CLASS II SHARES
SIX MONTHS
ENDED YEAR FOR THE
6/30/2017 ENDED PERIOD ENDED
(UNAUDITED) 12/31/2016 12/31/2015 (a)
------------ ------------ ------------
Net asset value, beginning of period..... $ 9.83 $ 9.95 $ 10.00
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.04 0.11 0.01
Net realized and unrealized gain (loss).. 0.71 (0.02) (0.06)
-------- -------- --------
Total from investment operations......... 0.75 0.09 (0.05)
-------- -------- --------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.02) (0.11) --
Net realized gain........................ -- (0.10) --
-------- -------- --------
Total from distributions................. (0.02) (0.21) --
-------- -------- --------
Net asset value, end of period........... $ 10.56 $ 9.83 $ 9.95
======== ======== ========
TOTAL RETURN (c) (d)..................... 7.60% 0.88% (0.50)%
======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 54 $ 50 $ 50
Ratio of total expenses to average net
assets................................ 48.71% (e) 57.64% 37.40% (e)
Ratio of net expenses to average net
assets................................ 0.50% (e) 0.57% 0.51% (e)
Ratio of net investment income (loss)
to average net assets................. 0.75% (e) 1.13% 0.86% (e)
Portfolio turnover rate.................. 9% 265% --%
-----------------------------
(a) The Fund's Class I and Class II shares were seeded on October 29, 2015,
and commenced operations on October 30, 2015.
(b) Amount is less than $0.01 per share.
(c) Total return is based on the combination of reinvested dividends, capital
gain and return of capital distributions, if any. Total return is not
annualized for periods of less than one year. The returns for the Fund do
not reflect the deduction of expenses associated with variable products,
such as mortality and expense risk charges, separate account charges, and
sales charges or the effect of taxes. These expenses would reduce the
overall returns above.
(d) Total returns would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(e) Annualized.
See Notes to Financial Statements Page 55
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NOTES TO FINANCIAL STATEMENTS
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
1. ORGANIZATION
First Trust Variable Insurance Trust (the "Trust") is an open-end management
investment company organized as a Massachusetts business trust on December 14,
2011 and is registered with the Securities and Exchange Commission (the "SEC")
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
currently offers shares of three series (each a "Fund" and collectively, the
"Funds"), First Trust/Dow Jones Dividend & Income Allocation Portfolio ("First
Trust Dow Jones"), which commenced investment operations on May 1, 2012, First
Trust Multi Income Allocation Portfolio ("First Trust Multi Income"), which
commenced investment operations on May 1, 2014, and First Trust Dorsey Wright
Tactical Core Portfolio ("First Trust Dorsey Wright"), which commenced
investment operations on October 30, 2015. Each Fund's shares are sold only to
variable insurance accounts (each an "Account") to fund the benefits of the
variable annuity and variable life insurance contracts (each a "Contract" and
collectively the "Contracts") issued by life insurance companies writing
variable annuity contracts and variable life insurance contracts with which the
Trust has a contract (each a "Participating Insurance Company").
First Trust Dow Jones' investment objective is to seek to provide total return
by allocating among dividend-paying stocks and investment-grade bonds. First
Trust Dow Jones seeks to achieve its investment objective by investing, under
normal market conditions, approximately 40-60% of its net assets in equity
securities and approximately 40-60% of its net assets in fixed-income securities
at the time of purchase. The equity portion of the portfolio will be derived
from a quantitative process that seeks to provide total return through investing
generally in dividend paying stocks included in the Dow Jones U.S. Total Stock
Market Index(SM). First Trust Advisors L.P. ("First Trust" or the "Advisor")
reserves the right to over-weight, under-weight or exclude certain securities
from the Fund that would otherwise be selected pursuant to the quantitative
process in certain instances.
First Trust Dow Jones' fixed-income component seeks to provide income and
preserve capital through investing in a diversified investment-grade bond
portfolio. Investment-grade bonds are those bonds rated "BBB-" or higher by
Standard & Poor's Ratings Group or Fitch Ratings, Inc. or "Baa3" or higher by
Moody's Investors Service, Inc. at the time of purchase. Under normal market
conditions, at the time of purchase approximately 80% of the net assets of the
Fund allocated to corporate bonds are invested in: investment-grade bonds
included in the Dow Jones Equal Weight U.S. Issued Corporate Bond Index(SM) (the
"Bond Index"(1)) and other investment-grade bonds of issuers whose securities
are included in the Bond Index; and investment-grade bonds of issuers included
in the Dow Jones Composite Average. The Fund may also invest in U.S. government
and agency securities, including mortgage-backed securities. The Fund may, at
certain times, also hold exchange-traded funds ("ETFs") that invest in
investment-grade corporate bonds and U.S. government bonds in lieu of investing
directly in bonds.
First Trust Multi Income's investment objective is to maximize current income,
with a secondary objective of capital appreciation. First Trust Multi Income
seeks to achieve its objectives through diversified exposure to nine income
generating asset classes: dividend paying stocks, preferred stocks, energy
infrastructure companies and master limited partnerships ("MLPs"), real estate
investment trusts ("REITs"), high yield or "junk" bonds, floating rate loans,
corporate bonds, mortgage-backed securities and Treasury Inflation Protected
Securities ("TIPS"). The Fund is actively managed by First Trust and
implementing the strategy involves multiple portfolio managers.
The Advisor tactically adjusts allocation weights in a manner deemed to offer
attractive levels of total return relative to the level of expected risk. The
Advisor intends to adjust asset allocation weights quarterly but may do so more
or less frequently depending upon market conditions. The maximum weight of any
asset class, at the time of adjustment, is 20%. The minimum weight of any asset
class, at the time of adjustment, is 5%.
First Trust Multi Income may, at certain times, invest in ETFs that generally
provide exposure to the nine asset classes in lieu of investing directly in such
asset classes. Certain of the ETFs may be advised by First Trust. As a result,
First Trust will also earn advisory fees on the underlying ETFs.
In general, the U.S. dollar-denominated fixed-income securities in which First
Trust Multi Income invests may be issued by U.S. and non-U.S. issuers, of any
credit quality, including high yield securities. The high yield securities in
which the Fund invests are rated below investment-grade at the time of purchase
or unrated and deemed by the Advisor to be of comparable quality, commonly
referred to as "junk" bonds. The Fund also invests in the equity securities of
domestic and foreign issuers listed on a U.S. or foreign securities exchange and
non-U.S. securities that are listed on a U.S. securities exchange in the form of
American Depository Receipts ("ADRs") and Global Depository Receipts ("GDRs").
The Fund may invest in equity securities issued by small, mid- or large
capitalization companies.
-----------------------------
(1) Prior to April 30, 2013, the Dow Jones Equal Weight U.S. Issued Corporate
Bond Index(SM) was known as the Dow Jones Corporate Bond Index(SM).
Page 56
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
First Trust Dorsey Wright's investment objective is to provide total return.
First Trust Dorsey Wright seeks to achieve its investment objective by
investing, under normal market conditions, at least 80% of its net assets
(including investment borrowings) in ETFs and cash and cash equivalents that
comprise the Dorsey Wright Tactical Tilt Moderate Core Index. It is expected
that a majority of the ETFs in which the Fund invests will be advised by First
Trust.
Each Fund offers two classes of shares: Class I and Class II. Each class
represents an interest in the same portfolio of investments but with a different
combination of service (12b-1) fees, eligibility requirements and other
features.
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds are each considered an investment company and follow accounting and
reporting guidance under Financial Accounting Standards Board Accounting
Standards Codification Topic 946, "Financial Services-Investment Companies." The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of the financial statements. The preparation of
financial statements in accordance with accounting principles generally accepted
in the United States of America ("U.S. GAAP") requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION
The net asset value ("NAV") for each class of shares in each Fund is determined
daily as of the close of regular trading on the New York Stock Exchange
("NYSE"), normally 4:00 p.m. Eastern time, on each day the NYSE is open for
trading. If the NYSE closes early on a valuation day, the NAV is determined as
of that time. Domestic debt securities and foreign securities are priced using
data reflecting the earlier closing of the principal markets for those
securities. The NAV for each class is calculated by dividing the value of each
Fund's total assets attributable to such class (including accrued interest and
dividends), less all liabilities attributable to such class (including accrued
expenses, dividends declared but unpaid, and any borrowings of each Fund) by the
total number of shares of the class outstanding. Differences in the NAV of each
class of each Fund's shares are generally expected to be due to the daily
expense accruals of the specified service (12b-1) fees, if any, and transfer
agency costs applicable to such class of shares and the resulting differential
in the dividends that may be paid on each class of shares.
Each Fund's investments are valued daily at market value or, in the absence of
market value with respect to any portfolio securities, at fair value. Market
value prices represent last sale or official closing prices from a national or
foreign exchange (i.e., a regulated market) and are primarily obtained from
third-party pricing services. Fair value prices represent any prices not
considered market value prices and are either obtained from a third-party
pricing service or are determined by the Advisor's Pricing Committee, in
accordance with valuation procedures adopted by the Trust's Board of Trustees
(the "Board"), and in accordance with provisions of the 1940 Act. Investments
valued by the Advisor's Pricing Committee, if any, are footnoted as such in the
footnotes to the Portfolio of Investments. Each Fund's investments are valued as
follows:
Common stocks, preferred stocks, MLPs, ETFs, REITs and other equity
securities listed on any national or foreign exchange (excluding The
Nasdaq Stock Market LLC ("Nasdaq") and the London Stock Exchange
Alternative Investment Market ("AIM")) are valued at the last sale price
on the exchange on which they are principally traded or, for Nasdaq and
AIM securities, the official closing price. Securities traded on more than
one securities exchange are valued at the last sale price or official
closing price, as applicable, at the close of the securities exchange
representing the principal market for such securities.
Securities traded in an over-the-counter market are fair valued at the
mean of their most recent bid and asked price, if available, and otherwise
at their closing bid price.
Corporate bonds, corporate notes, U.S. government securities and other
debt securities are fair valued on the basis of valuations provided by
dealers who make markets in such securities or by a third-party pricing
service approved by the Trust's Board, which may use the following
valuation inputs when available:
1) benchmark yields;
2) reported trades;
3) broker/dealer quotes;
4) issuer spreads;
5) benchmark securities;
6) bids and offers; and
7) reference data including market research publications.
Page 57
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
Exchange-traded futures contracts are valued at the closing price in the
market where such contracts are principally traded. If no closing price is
available, exchange-traded futures contracts are fair valued at the mean
of their most recent bid and asked price, if available, and otherwise at
their closing bid price.
Commercial paper, fixed income and other debt securities having a
remaining maturity of 60 days or less when purchased are fair valued at
cost adjusted for amortization of premiums and accretion of discounts
(amortized cost), provided the Advisor's Pricing Committee has determined
that the use of amortized cost is an appropriate reflection of fair value
given market and issuer-specific conditions existing at the time of the
determination. Factors that may be considered in determining the
appropriateness of the use of amortized cost include, but are not limited
to, the following:
1) the credit conditions in the relevant market and changes thereto;
2) the liquidity conditions in the relevant market and changes thereto;
3) the interest rate conditions in the relevant market and changes
thereto (such as significant changes in interest rates);
4) issuer-specific conditions (such as significant credit
deterioration); and
5) any other market-based data the Advisor's Pricing Committee
considers relevant. In this regard, the Advisor's Pricing Committee
may use last-obtained market-based data to assist it when valuing
portfolio securities using amortized cost.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Trust's Board or its delegate, the
Advisor's Pricing Committee, at fair value. These securities generally include,
but are not limited to, restricted securities (securities which may not be
publicly sold without registration under the Securities Act of 1933, as amended)
for which a third-party pricing service is unable to provide a market or fair
value price; securities whose trading has been formally suspended; a security
whose market or fair value price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of a Fund's NAV or make it difficult or impossible to
obtain a reliable market quotation; and a security whose price, as provided by
the third-party pricing service, does not reflect the security's fair value. As
a general principle, the current fair value of a security would appear to be the
amount which the owner might reasonably expect to receive for the security upon
its current sale. When fair value prices are used, generally they will differ
from market quotations or official closing prices on the applicable exchanges. A
variety of factors may be considered in determining the fair value of such
securities.
Fair valuation of a debt security will be based on the consideration of all
available information, including, but not limited to, the following:
1) the fundamental business data relating to the issuer;
2) an evaluation of the forces which influence the market in which
these securities are purchased and sold;
3) the type, size and cost of security;
4) the financial statements of the issuer;
5) the credit quality and cash flow of the issuer, based on the
Advisor's or external analysis;
6) the information as to any transactions in or offers for the
security;
7) the price and extent of public trading in similar securities (or
equity securities) of the issuer/borrower, or comparable companies;
8) the coupon payments;
9) the quality, value and salability of collateral, if any, securing
the security;
10) the business prospects of the issuer, including any ability to
obtain money or resources from a parent or affiliate and an
assessment of the issuer's management (for corporate debt only);
11) the prospects for the issuer's industry, and multiples (of earnings
and/or cash flows) being paid for similar businesses in that
industry (for corporate debt only); and
12) other relevant factors.
Fair valuation of an equity security will be based on the consideration of all
available information, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or third-party pricing services;
6) relationships among various securities;
Page 58
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) closed-end fund trading of similar securities;
4) foreign currency exchange activity;
5) the trading prices of financial products that are tied to baskets of
foreign securities;
6) factors relating to the event that precipitated the pricing problem;
7) whether the event is likely to recur; and
8) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
The Funds are subject to fair value accounting standards that define fair value,
establish the framework for measuring fair value and provide a three-level
hierarchy for fair valuation based upon the inputs to the valuation as of the
measurement date. The three levels of the fair value hierarchy are as follows:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, the prices are
not current, or price quotations vary substantially either
over time or among market makers, or in which little
information is released publicly.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodologies used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Fund's investments as of June 30, 2017, is
included with each Fund's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. Amortization of premiums and accretion of discounts are
recorded using the effective interest method.
Distributions received from a Fund's investments in MLPs generally are comprised
of return of capital and investment income. A Fund records estimated return of
capital and investment income based on historical information available from
each MLP. These estimates may subsequently be revised based on information
received from the MLPs after their tax reporting periods are concluded.
Distributions received from a Fund's investments in REITs may be comprised of
return of capital, capital gains and investment income. The actual character of
the amounts received during the year is not known until after the REITs' fiscal
year end. A Fund records the character of distributions received from REITs
during the year based on estimates available. The characterization of
distributions received by a Fund may subsequently be revised based on
information received from the REITs after their tax reporting periods are
concluded.
C. CASH AND CASH EQUIVALENTS
Normally, the Funds invest substantially all of their assets to meet their
investment objectives. The Funds may invest the remainder of their assets in
securities with maturities of less than one year or cash equivalents, or they
may hold cash. The investment in such instruments is not a principal investment
strategy of First Trust Dow Jones or First Trust Multi Income. The percentage of
Page 59
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
each Fund's net assets invested in such holdings varies and depends on several
factors, including market conditions. For temporary defensive purposes and
during periods of high cash inflows or outflows, the Funds may depart from their
principal investment strategies and invest part or all of their assets in these
securities, or they may hold cash.
D. FUTURES CONTRACTS
First Trust Dow Jones purchases or sells (i.e., is long or short) futures
contracts to hedge against changes in interest rates (interest rate risk).
Futures contracts are agreements between the Fund and a counterparty to buy or
sell a specific quantity of an underlying instrument at a specified price and at
a specified date. Depending on the terms of the contract, futures contracts are
settled either through physical delivery of the underlying instrument on the
settlement date or by payment of a cash settlement amount on the settlement
date. Open futures contracts can also be closed out prior to settlement by
entering into an offsetting transaction in a matching futures contract. If the
Fund is not able to enter into an offsetting transaction, the Fund will continue
to be required to maintain margin deposits on the futures contract. When the
contract is closed or expires, the Fund records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened and
the value at the time it was closed or expired. This gain or loss is included in
"Net realized gain (loss) on Futures" on the Statements of Operations.
Upon entering into a futures contract, the Fund must deposit funds, called
margin, with its custodian in the name of the clearing broker equal to a
specified percentage of the current value of the contract. Open futures contacts
are marked-to-market daily with the change in value recognized as a component
of, "Net change in unrealized appreciation (depreciation) on Futures" on the
Statements of Operations. Pursuant to the contract, the Fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
value of the contract. Such receipts or payments are known as variation margin
and are included in "Variation margin payable or receivable" on the Statements
of Assets and Liabilities. If market conditions change unexpectedly, the Fund
may not achieve the anticipated benefits of the futures contract and may realize
a loss. The use of futures contracts involves the risk of imperfect correlation
in movements in the price of the futures contracts, interest rates and the
underlying instruments.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income of each Fund, if any, are declared and
paid semi-annually. Each Fund distributes its net realized capital gains, if
any, to shareholders at least annually. All dividends payable by each Fund will
be reinvested in the Fund.
Distributions from income and capital gains are determined in accordance with
income tax regulations, which may differ from U.S. GAAP. Certain capital
accounts in the financial statements are periodically adjusted for permanent
differences in order to reflect their tax character. These permanent differences
are primarily due to the varying treatment of income and gain/loss on portfolio
securities held by the Funds and have no impact on net assets or NAV per share.
Temporary differences, which arise from recognizing certain items of income,
expense and gain/loss in different periods for financial statement and tax
purposes, will reverse at some point in the future.
The tax character of distributions paid by each applicable Fund during the year
ended December 31, 2016 was as follows:
DISTRIBUTIONS PAID DISTRIBUTIONS PAID DISTRIBUTIONS PAID
FROM ORDINARY FROM CAPITAL FROM RETURN
INCOME GAINS OF CAPITAL
------------------ ------------------- ------------------
First Trust Dow Jones $ 8,174,962 $ 7,142,984 $ --
First Trust Multi Income 366,638 -- --
First Trust Dorsey Wright 195,082 -- --
As of December 31, 2016, the components of distributable earnings on a tax basis
for each Fund were as follows:
UNDISTRIBUTED ACCUMULATED CAPITAL NET UNREALIZED
ORDINARY AND OTHER APPRECIATION
INCOME GAIN (LOSS) (DEPRECIATION)
------------------ ------------------- ------------------
First Trust Dow Jones $ 200,834 $ 4,874,576 $ 29,317,773
First Trust Multi Income -- (60,259) 283,161
First Trust Dorsey Wright -- -- 174,248
F. INCOME TAXES
Each Fund intends to continue to qualify as a regulated investment company by
complying with the requirements under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), which includes distributing
substantially all of their net investment income and net realized gains to
shareholders. Each Fund intends to comply with the provisions of Section 817(h)
Page 60
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
of the Internal Revenue Code, which impose certain diversification requirements
upon variable contracts that are based on segregated asset accounts.
Accordingly, no provision has been made for federal and state income taxes.
However, due to the timing and amount of distributions, each Fund may be subject
to an excise tax of 4% of the amount by which approximately 98% of the Fund's
taxable income exceeds the distributions from such taxable income for the
calendar year.
The Funds are subject to accounting standards that establish a minimum threshold
for recognizing, and a system for measuring, the benefits of a tax position
taken or expected to be taken in a tax return. Taxable years ended 2013, 2014,
2015 and 2016 remain open to federal and state audit for First Trust Dow Jones.
Taxable years ended 2014, 2015 and 2016 remain open to federal and state audit
for First Trust Multi Income. Also, taxable years ended 2015 and 2016 remain
open to federal and state audit for First Trust Dorsey Wright. As of June 30,
2017, management has evaluated the application of these standards to the Funds
and has determined that no provision for income tax is required in the Funds'
financial statements for uncertain tax positions.
Each Fund intends to utilize provisions of the federal income tax laws which
allow it to carry realized capital losses forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
Each Fund is subject to certain limitations under U.S. tax rules on the use of
capital loss carryforwards and net unrealized built-in losses. These limitations
apply when there has been a 50% change in ownership. At December 31, 2016, for
federal income tax purposes, the Funds had capital loss carryforward available,
to the extent provided by regulations, to offset capital gains as follows:
NON-EXPIRING
CAPITAL LOSS
CARRYFORWARDS
---------------
First Trust Dow Jones $ --
First Trust Multi Income 60,259
First Trust Dorsey Wright --
During the taxable year ended December 31, 2016, the following Funds utilized
capital loss carryforwards in the following amounts:
CAPITAL LOSS
CARRYFORWARD
UTILIZED
---------------
First Trust Dow Jones $ --
First Trust Multi Income 53,421
First Trust Dorsey Wright --
G. EXPENSES
Each Fund will pay all expenses directly related to its operations.
Each Participating Insurance Company performs certain administrative services
for the Funds, their Accounts and the Contracts. Each Fund pays an
administrative services fee of 0.20% of average daily net assets to cover
expenses incurred by Participating Insurance Companies in connection with these
services.
First Trust has entered into various licensing agreements, which allow First
Trust to use certain trademarks and trade names of the applicable licensors (see
Licensing Information in the Additional Information section of this report). The
Trust, on behalf of First Trust Dow Jones and First Trust Dorsey Wright, is a
sub-licensee to these license agreements and is required to pay licensing fees,
which are shown on the Statements of Operations.
H. FOREIGN CURRENCY
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period.
Purchases and sales of investments and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses on assets and liabilities, other than investments in securities, which
result from changes in foreign currency exchange rates have been included in
"Net change in unrealized appreciation (depreciation) on foreign currency
translation" on the Statements of Operations. Unrealized gains and losses on
investments in securities which result from changes in foreign exchange rates
are included with fluctuations arising from changes in market price and are
shown in "Net change in unrealized appreciation (depreciation) on investments"
on the Statements of Operations. Net realized foreign currency gains and losses
include the effect of changes in exchange rates between trade date and
settlement date on investment security transactions, foreign currency
transactions and interest and dividends received and are shown in "Net realized
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
gain (loss) on foreign currency transactions" on the Statements of Operations.
The portion of foreign currency gains and losses related to fluctuation in
exchange rates between the initial purchase settlement date and subsequent sale
trade date is included in "Net realized gain (loss) on investments" on the
Statements of Operations.
I. INTEREST-ONLY SECURITIES
An interest-only security ("IO Security") is the interest-only portion of a
mortgage-backed security that receives some or all of the interest portion of
the underlying mortgage-backed security and little or no principal. A reference
principal value called a notional value is used to calculate the amount of
interest due to the IO Security. IO Securities are sold at a deep discount to
their notional principal amount. Generally speaking, when interest rates are
falling and prepayment rates are increasing, the value of an IO Security will
fall. Conversely, when interest rates are rising and prepayment rates are
decreasing, generally the value of an IO Security will rise. These securities,
if any, are identified on the Portfolio of Investments.
J. PRINCIPAL-ONLY SECURITIES
A principal-only security ("PO Security") is the principal-only portion of a
mortgage-backed security that does not receive any interest, is priced at a deep
discount to its redemption value and ultimately receives the redemption value.
Generally speaking, when interest rates are falling and prepayment rates are
increasing, the value of a PO Security will rise. Conversely, when interest
rates are rising and prepayment rates are decreasing, generally the value of a
PO Security will fall. These securities, if any, are identified on the Portfolio
of Investments.
K. NEW AND AMENDED FINANCIAL REPORTING RULES AND FORMS
On October 13, 2016, the SEC adopted new rules and forms, and amended existing
rules and forms. The new and amended rules and forms are intended to modernize
the reporting of information provided by funds and to improve the quality and
type of information that funds provide to the SEC and investors. The new and
amended rules and forms will be effective for the First Trust funds, including
the Funds, for reporting periods beginning on and after June 1, 2018. Management
is evaluating the new and amended rules and forms to determine the impact to the
Funds.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust, the investment advisor to the Funds, is a limited partnership with
one limited partner, Grace Partners of DuPage L.P., and one general partner, The
Charger Corporation. The Charger Corporation is an Illinois corporation
controlled by James A. Bowen, Chief Executive Officer of First Trust. First
Trust provides each Fund with discretionary investment services and certain
administrative services necessary for the management of the Funds. For its
investment advisory and management services, First Trust is entitled to a
monthly fee calculated at an annual rate of 0.60% of the average daily net
assets for both First Trust Dow Jones and First Trust Multi Income, and 0.35% of
the average daily net assets for First Trust Dorsey Wright. First Trust also
provides fund reporting services to First Trust Dow Jones and First Trust Dorsey
Wright for a flat annual fee in the amount of $9,250 per Fund.
First Trust Multi Income and First Trust have retained Energy Income Partners,
LLC ("EIP") and Stonebridge Advisors LLC ("Stonebridge") (collectively the
"Sub-Advisors"), affiliates of First Trust, to serve as investment sub-advisors.
In this capacity, the Sub-Advisors provide recommendations to the Advisor
regarding the selection and on-going monitoring of certain securities in First
Trust Multi Income's investment portfolio. EIP acts as sub-advisor for, and
manages on a discretionary basis the investment and reinvestment of, only the
assets of First Trust Multi Income allocated to EIP by the Advisor and furnishes
an investment program in respect of and makes investment decisions only with
respect to the portion of First Trust Multi Income's investment portfolio
allocated to it by the Advisor. EIP, an affiliate of the Advisor, has been
retained by First Trust Multi Income and the Advisor to provide recommendations
regarding the selection and ongoing monitoring of the MLP, MLP affiliate and
energy infrastructure securities in First Trust Multi Income's investment
portfolio and to exercise discretion only with respect to assets of First Trust
Multi Income allocated to EIP. Stonebridge serves as a non-discretionary
sub-advisor. Stonebridge has been retained by First Trust Multi Income and the
Advisor to provide recommendations regarding the selection and ongoing
monitoring of the preferred and hybrid securities in First Trust Multi Income's
investment portfolio.
For the services provided and the expenses assumed pursuant to the investment
sub-advisory agreement, First Trust will pay EIP a sub-advisory fee equal to 40%
monthly in arrears of any remaining monthly investment management fee paid to
the Advisor for the average daily net assets allocated to EIP after First
Trust's waiver of any of its investment management fee to comply with the
then-current expense cap, as defined below. For the services provided and the
expenses assumed pursuant to the investment sub-advisory agreement, First Trust
will pay Stonebridge a portfolio management fee equal to an annual rate of 0.20%
of the Fund's average daily net assets allocated to Stonebridge.
Page 62
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
During the year ended December 31, 2016, First Trust Dow Jones received a
reimbursement from the Advisor of $1,000 in connection with a trade error.
First Trust has agreed to waive fees and/or pay First Trust Dow Jones' and First
Trust Multi Income's expenses to the extent necessary to prevent the operating
expenses of Class I shares and Class II shares (excluding interest expense,
brokerage commissions and other trading expenses, acquired fund fees and
expenses, taxes and extraordinary expenses) from exceeding 1.20% and 0.95% (the
"Expense Cap"), respectively, of each Fund's average daily net assets per year
at least until May 1, 2018. First Trust has agreed to waive fees and/or pay
First Trust Dorsey Wright's expenses to the extent necessary to prevent the
operating expenses of Class I shares and Class II shares (excluding interest
expense, brokerage commissions and other trading expenses, taxes and
extraordinary expenses) from exceeding 1.30% and 1.05%, respectively, of each
Fund's average daily net assets per year at least until May 1, 2018. In First
Trust Dorsey Wright, because acquired fund fees and expenses are estimated,
First Trust will periodically adjust the amount of the fee waiver and expense
reimbursement in order to attempt to meet the Expense Cap. However, total net
annual fund expense may be higher or lower than the Expense Cap.
Expenses borne and fees waived by First Trust are subject to reimbursement by
each Fund for up to three years from the date the fee or expense was incurred by
the Fund, but no reimbursement payment will be made by the Fund at any time if
it would result in the Fund's expenses exceeding the Expense Cap. These amounts,
if any, are included in "Expenses previously waived or reimbursed" on the
Statements of Operations.
The advisory fee waivers and expense reimbursements for the six months ended
June 30, 2017, and the expenses borne by First Trust subject to recovery from
the applicable Fund at June 30, 2017, are included in the table below.
FEES WAIVED OR EXPENSES BORNE BY FIRST TRUST SUBJECT TO RECOVERY
--------------------------------------------------------------------------------------------------
SIX MONTHS YEAR YEAR SIX MONTHS
ENDED ENDED ENDED ENDED
FEES EXPENSES DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30,
WAIVED REIMBURSED 2014 2015 2016 2017 TOTAL
------------ ------------ ------------ ------------ ------------ ---------- ----------
First Trust Dow Jones $ 96,969 $ -- $ 222,688 $ 347,277 $ 338,513 $ 96,969 $1,005,447
First Trust Multi Income 56,150 42,411 47,445 151,967 152,851 98,561 450,824
First Trust Dorsey Wright 22,214 74,520 -- 48,180 157,770 96,734 302,684
During the six months ended June 30, 2017, First Trust did not recover any fees
that were previously waived or reimbursed.
First Trust agreed to waive and/or reimburse the acquired fund fees and expenses
of the shares of investment companies held by First Trust Multi Income up to
0.37% of the Fund's average daily net assets through May 1, 2018. During the six
months ended June 30, 2017, First Trust reimbursed First Trust Multi Income
$34,626 of fees that are not subject to recovery.
First Trust Capital Partners, LLC ("FTCP"), an affiliate of First Trust, owns,
through a wholly-owned subsidiary, a 15% ownership interest in each of EIP and
EIP Partners, LLC, an affiliate of EIP. Stonebridge is a majority-owned
affiliate of FTCP.
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as First Trust Dow
Jones', First Trust Multi Income's and First Trust Dorsey Wright's transfer
agent in accordance with certain fee arrangements. As transfer agent, BNYM IS is
responsible for maintaining shareholder records for the Funds. BNYM IS is a
subsidiary of The Bank of New York Mellon Corporation, a financial holding
company.
The Bank of New York Mellon ("BNYM") serves as First Trust Dow Jones' and First
Trust Multi Income's administrator, fund accountant and custodian in accordance
with certain fee arrangements. As administrator and fund accountant, BNYM is
responsible for providing certain administrative and accounting services to the
Funds, including maintaining the Funds' books of account, records of the Funds'
securities transactions, and certain other books and records. As custodian, BNYM
is responsible for custody of each Fund's assets. BNYM is a subsidiary of The
Bank of New York Mellon Corporation, a financial holding company.
Brown Brothers Harriman & Co. ("BBH") serves as First Trust Dorsey Wright's
administrator, fund accountant and custodian. As custodian, BBH is responsible
for custody of the Fund's assets. As administrator and fund accountant, BBH is
responsible for providing certain administrative and accounting services to the
Fund, including maintaining the Fund's books of account, records of the Fund's
securities transactions, and certain other books and records.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer that is allocated equally among each fund in the First Trust Fund
Complex. Each Independent Trustee is also paid an annual per fund fee that
varies based on whether the fund is a closed-end or other actively managed fund,
or is an index fund.
Page 63
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
Additionally, the Lead Independent Trustee and the Chairmen of the Audit
Committee, Nominating and Governance Committee and Valuation Committee are paid
annual fees to serve in such capacities, with such compensation allocated pro
rata among each fund in the First Trust Fund Complex based on net assets.
Independent Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and Committee
Chairmen rotate every three years. The officers and "Interested" Trustee receive
no compensation from the Trust for acting in such capacities.
4. CAPITAL SHARE TRANSACTIONS
Capital transactions for First Trust Dow Jones were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2017 DECEMBER 31, 2016
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 7,693,195 $101,445,794 21,522,285 $269,075,266
Class II -- -- 5 67
------------ ------------ ------------ ------------
Total Sales: 7,693,195 $101,445,794 21,522,290 $269,075,333
============ ============ ============ ============
Dividend Reinvestment:
Class I 604,961 $ 8,118,581 1,224,785 $ 15,317,280
Class II 7 89 18 230
------------ ------------ ------------ ------------
Total Dividend Reinvestment: 604,968 $ 8,118,670 1,224,803 $ 15,317,510
============ ============ ============ ============
Redemptions:
Class I (2,202,532) $(28,954,122) (782,373) $ (9,596,410)
Class II (2) (20) (42) (484)
------------ ------------ ------------ ------------
Total Redemptions: (2,202,534) $(28,954,142) (782,415) $ (9,596,894)
============ ============ ============ ============
Capital transactions for First Trust Multi Income were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2017 DECEMBER 31, 2016
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 253,232 $ 2,729,380 607,792 $ 6,311,829
Class II -- -- 4,618 48,485
------------ ------------ ------------ ------------
Total Sales: 253,232 $ 2,729,380 612,410 $ 6,360,314
============ ============ ============ ============
Dividend Reinvestment:
Class I 17,248 $ 185,417 34,761 $ 363,323
Class II 50 542 68 715
------------ ------------ ------------ ------------
Total Dividend Reinvestment: 17,298 $ 185,959 34,829 $ 364,038
============ ============ ============ ============
Redemptions:
Class I (140,108) $ (1,503,974) (180,072) $ (1,854,107)
Class II (19) (205) (2) (23)
------------ ------------ ------------ ------------
Total Redemptions: (140,127) $ (1,504,179) (180,074) $ (1,854,130)
============ ============ ============ ============
Page 64
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
Capital transactions for First Trust Dorsey Wright were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2017 DECEMBER 31, 2016
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 415,605 $ 4,283,081 1,367,166 $ 13,236,943
Class II -- -- -- --
------------ ------------ ------------ ------------
Total Sales: 415,605 $ 4,283,081 1,367,166 $ 13,236,943
============ ============ ============ ============
Dividend Reinvestment:
Class I 562 $ 5,952 19,542 $ 194,032
Class II 8 89 106 1,050
------------ ------------ ------------ ------------
Total Dividend Reinvestment: 570 $ 6,041 19,648 $ 195,082
============ ============ ============ ============
Redemptions:
Class I (48,859) $ (499,156) (881,838) $ (8,731,398)
Class II -- -- -- --
------------ ------------ ------------ ------------
Total Redemptions: (48,859) $ (499,156) (881,838) $ (8,731,398)
============ ============ ============ ============
5. DERIVATIVE TRANSACTIONS
The following table presents the types of derivatives held by First Trust Dow
Jones at June 30, 2017, the primary underlying risk exposure and the location of
these instruments as presented on the Statements of Assets and Liabilities.
First Trust Multi Income and First Trust Dorsey Wright did not hold any
derivative instruments as of June 30, 2017.
ASSET DERIVATIVES LIABILITY DERIVATIVES
---------------------------------------- ----------------------------------------
DERIVATIVE STATEMENTS OF ASSETS STATEMENTS OF ASSETS
INSTRUMENT RISK EXPOSURE AND LIABILITIES LOCATION VALUE AND LIABILITIES LOCATION VALUE
---------- ------------------ --------------------------- ---------- --------------------------- ----------
Futures Interest Rate Risk Variation Margin Receivable $ 50,531 Variation Margin Payable $ --
The following table presents the amount of net realized gain (loss) and change
in net unrealized appreciation (depreciation) recognized for the six months
ended June 30, 2017, on derivatives instruments held by First Trust Dow Jones,
as well as the primary underlying risk exposure associated with each instrument.
STATEMENTS OF OPERATIONS LOCATION INTEREST RATE RISK
-------------------------------------------------------------------
Net realized gain (loss) on futures $ (268,321)
Net change in unrealized gain (loss) on futures (5,930)
During the six months ended June 30, 2017, the amount of notional values of
futures contracts opened and closed were $46,887,796 and $42,274,210,
respectively.
First Trust Dow Jones does not have the right to offset financial assets and
financial liabilities related to futures contracts on the Statements of Assets
and Liabilities.
Page 65
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
6. AFFILIATED TRANSACTIONS
First Trust Multi Income and First Trust Dorsey Wright invest in securities of
affiliated funds. Dividend income and realized gains and losses from affiliated
funds are presented on the Statements of Operations. Each Fund's investment
performance and risks are directly related to the investment performance and
risks of the affiliated funds.
Amounts relating to these investments in First Trust Multi Income at June 30,
2017, and for the period then ended are as follows:
SHARE ACTIVITY
------------------------------------------------
BALANCE AT BALANCE AT VALUE AT DIVIDEND REALIZED
SECURITY NAME 12/31/2016 PURCHASES SALES 6/30/2017 6/30/2017 INCOME GAIN (LOSS)
------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- -----------
First Trust Low Duration
Opportunities ETF 600 9,472 (5,624) 4,448 $ 231,785 $ 2,036 $ 476
First Trust Preferred Securities
and Income ETF 64,727 25,473 (890) 89,310 1,787,093 44,649 348
First Trust Senior Loan Fund 59,444 3,681 (3,150) 59,975 2,901,591 49,686 (1,756)
First Trust Tactical High Yield ETF 25,954 1,596 (3,730) 23,820 1,170,991 31,443 (6,956)
-------------------------------------
$ 6,091,460 $ 127,814 $ (7,888)
=====================================
Amounts relating to these investments in First Trust Dorsey Wright at June 30,
2017, and for the period then ended are as follows:
SHARE ACTIVITY
------------------------------------------------
BALANCE AT BALANCE AT VALUE AT DIVIDEND REALIZED
SECURITY NAME 12/31/2016 PURCHASES SALES 6/30/2017 6/30/2017 INCOME GAIN (LOSS)
------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- -----------
First Trust BICK Index Fund -- 2,979 -- 2,979 $ 77,156 $ 183 $ --
First Trust Brazil AlphaDEX(R) Fund 3,508 1,042 (4,550) -- -- 370 1,727
First Trust Chindia ETF 1,666 579 -- 2,245 78,777 246 --
First Trust Developed Markets ex-US
AlphaDEX(R) Fund 2,576 2,121 -- 4,697 259,556 1,446 --
First Trust Dow Jones Internet Index Fund 11,472 3,981 -- 15,453 1,464,017 -- --
First Trust Emerging Markets AlphaDEX(R)
Fund 5,922 2,055 -- 7,977 186,981 1,790 --
First Trust Energy AlphaDEX(R) Fund 60,848 11,590 (72,438) -- -- 2,521 (65,044)
First Trust Germany AlphaDEX(R) Fund 1,348 468 -- 1,816 78,724 1,095 --
First Trust Industrials/Producer Durables
AlphaDEX(R) Fund 26,079 9,051 -- 35,130 1,242,197 2,993 --
First Trust Large Cap Growth AlphaDEX(R)
Fund 19,913 6,910 -- 26,823 1,469,096 2,669 --
First Trust Latin America AlphaDEX(R) Fund 2,700 713 (3,413) -- -- 357 87
First Trust Mid Cap Core AlphaDEX(R) Fund 19,138 6,643 -- 25,781 1,528,813 5,064 --
First Trust Nasdaq Bank ETF -- 46,994 -- 46,994 1,242,051 4,009 --
First Trust NASDAQ-100-Technology
Sector Index Fund 17,281 5,998 -- 23,279 1,452,377 4,832 --
First Trust Small Cap Growth AlphaDEX(R)
Fund 29,139 10,112 -- 39,251 1,509,201 -- --
First Trust Switzerland AlphaDEX(R) Fund 1,248 434 -- 1,682 82,166 1,297 --
First Trust Utilities AlphaDEX(R) Fund 34,767 12,066 -- 46,833 1,272,453 15,808 --
-------------------------------------
$11,943,565 $ 44,680 $ (63,230)
=====================================
7. 12B-1 SERVICE PLAN
The Trust has adopted a plan (the "Plan") pursuant to Rule 12b-1 under the 1940
Act, which provides that Class I shares of each of the Funds will be subject to
an annual service fee.
Page 66
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
First Trust Portfolios L.P. ("FTP"), an affiliate of First Trust, serves as the
distributor of shares of the Funds. FTP uses the service fee to compensate each
Participating Insurance Company for providing account services to policy owners.
These services include establishing and maintaining Contract owners' accounts,
supplying information to Contract owners, delivering Fund materials to Contract
owners, answering inquiries, and providing other personal services to Contract
owners. Each Fund may spend up to 0.25% per year of the average daily net assets
of its Class I shares as a service fee under the Plan. In addition, the Plan
permits First Trust to use a portion of its advisory fee to compensate FTP for
expenses incurred in connection with the sale of a Fund's Class I shares
including, without limitation, compensation of its sales force, expenses of
printing and distributing the Prospectus to persons other than Contract owners,
expenses of preparing, printing and distributing advertising and sales
literature and reports to Contract owners used in connection with the sale of a
Fund's Class I Shares, certain other expenses associated with the servicing of
Class I shares of a Fund, and any service-related expenses that may be
authorized from time to time by the Board.
During the six months ended June 30, 2017, all service fees received by FTP were
paid to the Participating Insurance Companies, with no portion of such fees
retained by FTP. The Plan may be renewed from year to year if approved by a vote
of the Trust's Board and a vote of the Independent Trustees, who have no direct
or indirect financial interest in the Plan, cast in person at a meeting called
for the purpose of voting on the Plan.
8. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of investment securities, excluding
U.S. Government securities and short-term investments, for the six months ended
June 30, 2017, were as follows:
PURCHASES SALES
--------------- ---------------
First Trust Dow Jones $ 270,071,636 $ 176,373,246
First Trust Multi Income 4,247,795 3,319,123
First Trust Dorsey Wright 4,896,514 1,180,106
Cost of purchases and proceeds from sales of U.S. Government investment
securities, excluding short-term investments, for the six months ended June 30,
2017, were as follows:
PURCHASES SALES
--------------- ---------------
First Trust Dow Jones $ 34,086,787 $ 32,591,399
First Trust Multi Income 867,453 414,575
First Trust Dorsey Wright -- --
9. BORROWINGS
The Trust, on behalf of First Trust Dow Jones and First Trust Multi Income,
along with First Trust Series Fund and First Trust Exchange-Traded Fund IV, has
a $200 million Credit Agreement with BNYM (the "BNYM Line of Credit") to be a
liquidity backstop during periods of high redemption volume. A commitment fee of
0.15% of the daily amount of the excess of the commitment amount over the
outstanding principal balance of the loans will be charged by BNYM, which First
Trust will allocate amongst the funds that have access to the BNYM Line of
Credit. These fees are reflected in the Statements of Operations in the
Commitment fees line item. To the extent that either fund accesses the BNYM Line
of Credit, there would also be an interest fee charged. Neither First Trust Dow
Jones or First Trust Multi Income drew on the BNYM Line of Credit during the six
months ended June 30, 2017.
10. INDEMNIFICATION
The Trust has a variety of indemnification obligations under contracts with its
service providers. The Trust's maximum exposure under these arrangements is
unknown. However, the Trust has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
11. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Funds
through the date the financial statements were issued, and has determined that
there were no subsequent events requiring recognition or disclosure in the
financial statements that have not already been disclosed.
Page 67
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Trust uses to determine
how to vote proxies and information on how the Trust voted proxies relating to
portfolio securities during the most recent 12-month period ended June 30 is
available (1) without charge, upon request, by calling (800) 988-5891; (2) on
the Trust's website located at http://www.ftportfolios.com; and (3) on the
Securities and Exchange Commission's ("SEC") website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Trust files its complete schedule of portfolio holdings with the SEC for the
first and third quarters of each fiscal year on Form N-Q. The Trust's Form N-Qs
are available (1) by calling (800) 988-5891; (2) on the Trust's website located
at http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov;
and (4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
LICENSING INFORMATION
Standard & Poor's and S&P are registered trademarks of Standard & Poor's
Financial Services LLC ("S&P") and Dow Jones is a registered trademark of Dow
Jones Trademark Holdings LLC ("Dow Jones"). The trademarks have been licensed to
S&P Dow Jones Indices LLC and have been sublicensed for use for certain purposes
by First Trust Advisors L.P. ("First Trust"). The DOW JONES EQUAL WEIGHT U.S.
ISSUED CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND
DOW JONES COMPOSITE AVERAGE are products of S&P Dow Jones Indices LLC and has
been licensed for use by First Trust. The First Trust/Dow Jones Dividend &
Income Allocation Portfolio is not sponsored, endorsed, sold or promoted by S&P
Dow Jones Indices LLC, Dow Jones, S&P, or any of their respective affiliates
(collectively, "S&P Dow Jones Indices"). Neither S&P Dow Jones Indices nor its
affiliates make any representation or warranty, express or implied, to the
owners of the First Trust/Dow Jones Dividend & Income Allocation Portfolio or
any member of the public regarding the advisability of investing in securities
generally or in the First Trust/Dow Jones Dividend & Income Allocation Portfolio
particularly or the ability of the DOW JONES EQUAL WEIGHT U.S. ISSUED CORPORATE
BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND DOW JONES
COMPOSITE AVERAGE to track general market performance. S&P Dow Jones Indices
only relationship to First Trust with respect to the DOW JONES EQUAL WEIGHT U.S.
ISSUED CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND
DOW JONES COMPOSITE AVERAGE is the licensing of the Index and certain
trademarks, service marks and/or trade names of S&P Dow Jones Indices. The DOW
JONES EQUAL WEIGHT U.S. ISSUED CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL
STOCK MARKET INDEX(SM) AND DOW JONES COMPOSITE AVERAGE is determined, composed
and calculated by S&P Dow Jones Indices without regard to First Trust or the
First Trust/Dow Jones Dividend & Income Allocation Portfolio. S&P Dow Jones
Indices has no obligation to take the needs of First Trust or the owners of the
First Trust/Dow Jones Dividend & Income Allocation Portfolio into consideration
in determining, composing or calculating the DOW JONES EQUAL WEIGHT U.S. ISSUED
CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND DOW
JONES COMPOSITE AVERAGE. Neither S&P Dow Jones Indices nor its affiliates are
responsible for and have not participated in the determination of the prices,
and amount of the First Trust/Dow Jones Dividend & Income Allocation Portfolio
or the timing of the issuance or sale of the First Trust/Dow Jones Dividend &
Income Allocation Portfolio or in the determination or calculation of the
equation by which the First Trust/Dow Jones Dividend & Income Allocation
Portfolio is to be managed. S&P Dow Jones Indices has no obligation or liability
in connection with the administration, marketing or trading of the First
Trust/Dow Jones Dividend & Income Allocation Portfolio. There is no assurance
that investment products based on the DOW JONES EQUAL WEIGHT U.S. ISSUED
CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND DOW
JONES COMPOSITE AVERAGE will accurately track index performance or provide
positive investment returns. S&P Dow Jones Indices LLC is not an investment
advisor. Inclusion of a security within an index is not a recommendation by S&P
Dow Jones Indices to buy, sell, or hold such security, nor is it considered to
be investment advice.
NEITHER S&P DOW JONES INDICES NOR ITS AFFILIATES GUARANTEES THE ADEQUACY,
ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE DOW JONES EQUAL WEIGHT U.S.
ISSUED CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND
DOW JONES COMPOSITE AVERAGE OR ANY DATA RELATED THERETO OR ANY COMMUNICATION,
INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING
ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT
BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS
THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND
EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY FIRST TRUST, OWNERS
OF THE FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO, OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE DOW JONES EQUAL WEIGHT U.S. ISSUED
CORPORATE BOND INDEX(SM), DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM) AND DOW
JONES COMPOSITE AVERAGE OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES
INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING
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LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY
OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE.
THERE ARE NO THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN
S&P DOW JONES INDICES AND FIRST TRUST, OTHER THAN THE LICENSORS OF S&P DOW JONES
INDICES.
The First Trust Dorsey Wright Tactical Core Portfolio (the "Portfolio") is not
sponsored, endorsed, sold or promoted by Dorsey Wright & Associates, LLC
("Licensor"). Licensor makes no representation or warranty, express or implied,
to the owners of the Portfolio or any member of the public regarding the
advisability of trading in the Portfolio. Licensor's only relationship to First
Trust Advisors L.P. ("First Trust") is the licensing of certain trademarks and
trade names of Licensor and of the Dorsey Wright Tactical Tilt Moderate Core
Index which is determined, composed and calculated by Licensor without regard to
First Trust or the Portfolio, Licensor has no obligation to take the needs of
First Trust or the owners of the Portfolio into consideration in determining,
composing or calculating Dorsey Wright Tactical Tilt Moderate Core Index.
Licensor is not responsible for and has not participated in the determination of
the timing of, prices at, or quantities of the Portfolio to be listed or in the
determination or calculation of the equation by which the Portfolio are to be
converted into cash. Licensor has no obligation or liability in connection with
the administration, marketing or trading of the Portfolio.
LICENSOR DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE DORSEY
WRIGHT TACTICAL TILT MODERATE CORE OR ANY DATA INCLUDED THEREIN AND LICENSOR
SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN.
LICENSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY
FIRST TRUST, OWNERS OF THE FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DORSEY WRIGHT TACTICAL TILT
MODERATE CORE INDEX OR ANY DATA INCLUDED THEREIN. LICENSOR MAKES NO EXPRESS OR
IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH RESPECT TO THE DORSEY WRIGHT
TACTICAL TILT MODERATE CORE INDEX OR ANY DATA INCLUDED THEREIN, WITHOUT LIMITING
ANY OF THE FOREGOING, IN NO EVENT SHALL LICENSOR HAVE ANY LIABILITY FOR ANY LOST
PROFITS OR INDIRECT, PUNITIVE, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST
PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES. THERE ARE NO
THIRD PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN LICENSOR AND
FIRST TRUST.
RISK CONSIDERATIONS
Risks are inherent in all investing. The following summarizes some of the risks
that should be considered for the Funds. For additional information about the
risks associated with investing in the Funds, please see the Funds' prospectuses
and statements of additional information, as well as other regulatory filings.
AFFILIATED FUND RISK. The First Trust Multi Income Allocation Portfolio and the
First Trust Dorsey Wright Tactical Core Portfolio invest in securities of
affiliated ETFs, which involves additional expenses that would not be present in
a direct investment in such affiliated ETFs. Furthermore, the Funds' investment
performance and risks are directly related to the investment performance and
risks of the affiliated ETFs.
CALL RISK. If an issuer calls higher-yielding debt instruments held by the
Funds, performance could be adversely impacted.
CONVERTIBLE SECURITIES RISK. The ETFs in which the First Trust Multi Income
Allocation Portfolio and the First Trust Dorsey Wright Tactical Core Portfolio
invest may invest in convertible securities. Convertible securities have
characteristics of both equity and debt securities and, as a result, are exposed
to certain additional risks. The market values of convertible securities tend to
decline as interest rates increase and, conversely, to increase as interest
rates decline.
However, a convertible security's market value also tends to reflect the market
price of the common stock of the issuing company, particularly when the stock
price is greater than the convertible security's conversion price (i.e., the
predetermined price or exchange ratio at which the convertible security can be
converted or exchanged for the underlying common stock). Convertible securities
are also exposed to the risk that an issuer is unable to meet its obligation to
make dividend or principal payments when due as a result of changing financial
or market conditions. Convertible securities generally offer lower interest or
dividend yields than non-convertible debt securities of similar credit quality
because of their potential for capital appreciation.
CREDIT RISK. The Funds are subject to credit risk. Credit risk is the risk that
an issuer of a security will be unable or unwilling to make dividend, interest
and/or principal payments when due and the related risk that the value of a
security may decline because of concerns about the issuer's ability to make such
payments.
CURRENCY RISK. The ETFs in which the First Trust Multi Income Allocation
Portfolio and the First Trust Dorsey Wright Tactical Core Portfolio invest may
hold investments that are denominated in non-U.S. currencies, or in securities
that provide exposure to such currencies, currency exchange rates or interest
rates denominated in such currencies. Changes in currency exchange rates and the
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relative value of non-U.S. currencies will affect the value of the Funds'
investment and the value of your Fund shares. Currency exchange rates can be
very volatile and can change quickly and unpredictably. As a result, the value
of an investment in the Funds may change quickly and without warning and you may
lose money.
DEPOSITORY RECEIPTS RISK. The First Trust Multi Income Allocation Portfolio and
the First Trust Dorsey Wright Tactical Core Portfolio invest in equity
securities in the form of Depositary Receipts, which may be less liquid than the
underlying securities in their primary trading market. Any distributions paid to
the holders of Depositary Receipts are usually subject to a fee charged by the
depositary. Holders of Depositary Receipts may have limited voting rights, and
investment restrictions in certain countries may adversely impact the value of
Depositary Receipts because such restrictions may limit the ability to convert
the securities into Depositary Receipts and vice versa. Such restrictions may
cause the securities of the underlying issuer to trade at a discount or premium
to the market price of the Depositary Receipts.
DIVIDEND RISK. The Funds are subject to dividend risk. There is no guarantee
that the issuers of the Funds' equity securities will declare dividends in the
future or that, if declared, they will either remain at current levels or
increase over time.
ENERGY INFRASTRUCTURE COMPANIES RISK. The First Trust Multi Income Allocation
Portfolio invests in energy infrastructure companies. These companies
principally include publicly-traded MLPs and limited liability companies taxed
as partnerships, MLP affiliates, Canadian income trusts and their successor
companies, pipeline companies, utilities, and other companies that derive at
least 50% of their revenues from operating or providing services in support of
infrastructure assets such as pipeline, power transmission and petroleum and
natural gas storage in the petroleum, natural gas and power generation
industries. The Fund invests in energy infrastructure companies and is subject
to certain risks inherent in investing in these types of securities. Energy
infrastructure companies may be directly affected by energy commodity prices,
especially those companies that own the underlying energy commodity. A decrease
in the production or availability of natural gas, natural gas liquids, crude
oil, coal or other energy commodities or a decrease in the volume of such
commodities available for transportation, processing, storage or distribution
may adversely impact the financial performance of energy infrastructure
companies. Energy infrastructure companies are subject to significant federal,
state and local government regulation in virtually every aspect of their
operations, including how facilities are constructed, maintained and operated,
environmental and safety controls, and the prices they may charge for products
and services. Various governmental authorities have the power to enforce
compliance with these regulations and the permits issued under them and
violators are subject to administrative, civil and criminal penalties, including
civil fines, injunctions or both. Stricter laws, regulations or enforcement
policies could be enacted in the future which would likely increase compliance
costs and may adversely affect the financial performance of energy
infrastructure companies. Natural disasters, such as hurricanes in the Gulf of
Mexico, also may impact energy infrastructure companies.
Certain energy infrastructure companies in the utilities industry are subject to
imposition of rate caps, increased competition due to deregulation, difficulty
in obtaining an adequate return on invested capital or in financing large
construction projects, limitations on operations and increased costs and delays
attributable to environmental considerations, and the capital market's ability
to absorb utility debt. In addition, taxes, government regulation, international
politics, price and supply fluctuations, volatile interest rates and energy
conservation may cause difficulties for these companies. Such issuers have been
experiencing certain of these problems to varying degrees.
EQUITY SECURITIES RISK. Because the Funds and the ETFs in which the First Trust
Multi Income Allocation Portfolio and the First Trust Dorsey Wright Tactical
Core Portfolio invest hold equity securities, the value of the Funds' shares
will fluctuate with changes in the value of these equity securities. Equity
securities prices fluctuate for several reasons, including changes in investors'
perceptions of the financial condition of an issuer or the general condition of
the relevant stock market, such as market volatility, or when political or
economic events affecting the issuers occur. In addition, common stock prices
may be particularly sensitive to rising interest rates, as the cost of capital
rises and borrowing costs increase. The equity markets have experienced recent
volatility that may lead to sharp declines in the value of the underlying ETFs
and the Funds.
ETF RISK. An ETF trades like common stock and represents a portfolio of
securities. The risks of owning an ETF generally reflect the risks of owning the
underlying securities, although lack of liquidity in an ETF could result in it
being more volatile. ETFs have management fees and other operating expenses that
increase their costs. In general, as a shareholder in other investment
companies, the Funds bear their ratable share of the underlying fund's expenses,
and are subject to duplicative expenses to the extent a Fund invests in other
ETFs.
FINANCIAL COMPANIES RISK. Financial companies are especially subject to the
adverse effects of economic recession, currency exchange rates, government
regulation, decreases in the availability of capital, volatile interest rates,
portfolio concentrations in geographic markets and in commercial and residential
real estate loans, and competition from new entrants in their fields of
business.
FIXED INCOME SECURITIES RISK. An investment in the Funds involves risk
associated with an investment in fixed income securities including the risk that
certain of the securities in the Funds may not have the benefit of covenants
that would prevent the issuer from engaging in capital restructurings or
borrowing transactions in connection with corporate acquisitions, leveraged
buyouts or restructurings. This limitation could reduce the ability of the
issuer to meet its payment obligations and might result in increased credit
risk. In addition, certain of the securities may be redeemed or prepaid by the
issuer, resulting in lower interest payments by the Funds and reduced
distributions to shareholders.
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FLOATING RATE LOAN RISK. The Funds and the ETFs in which the First Trust Multi
Income Allocation Portfolio and the First Trust Dorsey Wright Tactical Core
Portfolio invest may invest in floating rate loans, which may include high yield
securities, or "junk" loans. An investment in floating rate loans subjects the
Funds to credit risk, which is heightened for loans in which the Funds invest
because companies that issue such loans tend to be highly leveraged and thus are
more susceptible to the risks of interest deferral and/or bankruptcy. The loans
are usually rated below investment grade but may also be unrated. An economic
downturn would generally lead to a higher non-payment rate, and a loan may lose
significant market value before a default occurs. Moreover, any specific
collateral used to secure a loan may decline in value or become illiquid, which
would adversely affect the loan's value. Loans are subject to a number of risks
described elsewhere in this report, including liquidity risk and the risk of
investing in below investment grade debt instruments. Floating rate loans are
subject to prepayment risk. The degree to which borrowers prepay loans, whether
as a contractual requirement or at their election, may be affected by general
business conditions, the financial condition of the borrower and competitive
conditions among loan investors, among others. Floating rate loans may also not
be considered "securities" under the 1940 Act and therefore prevent the Funds
from relying on the anti-fraud provisions of the Act.
FUND OF FUNDS RISK. The First Trust Multi Income Allocation Portfolio and the
First Trust Dorsey Wright Tactical Core Portfolio invest in securities of other
ETFs, which involves additional expenses that would not be present in a direct
investment in such ETFs. Furthermore, the Funds' investment performance and
risks are directly related to the investment performance and risks of the
underlying ETFs in which the Funds invest.
HIGH YIELD SECURITIES RISK. The First Trust Multi Income Allocation Portfolio
and the First Trust Dorsey Wright Tactical Core Portfolio invest in high yield
securities, or "junk" bonds, which are subject to greater market fluctuations
and risk of loss than securities with higher ratings, and therefore, may be
highly speculative. These securities are issued by companies that may have
limited operating history, narrowly focused operations, and/or other impediments
to the timely payment of periodic interest and principal at maturity. If the
economy slows down or dips into recession, the issuers of high yield securities
may not have sufficient resources to continue making timely payment of periodic
interest and principal at maturity. The market for high yield securities is
generally smaller and less liquid than that for investment grade securities.
High yield securities are generally not listed on a national securities exchange
but trade in the over-the-counter markets. Due to the smaller, less liquid
market for high yield securities, the bid-offer spread on such securities is
generally greater than it is for investment grade securities and the purchase or
sale of such securities may take longer to complete.
ILLIQUID SECURITIES RISK. Some of the securities held by the First Trust Multi
Income Allocation Portfolio may be illiquid. Illiquid securities involve the
risk that the securities will not be able to be sold at the time desired by the
Fund or at prices approximately the value at which the Fund is carrying the
securities on its books.
INCOME RISK. Income from the Funds' fixed income investments could decline
during periods of falling interest rates.
INDEX CONSTITUENT RISK. The Funds may be a constituent of one or more indices.
As a result, the Funds may be included in one or more index-tracking ETFs or
mutual funds. Being a component security of such a vehicle could greatly affect
the trading activity involving a Fund, the size of the Fund and the market
volatility of the Fund. Inclusion in an index could significantly increase
demand for a Fund and removal from an index could result in outsized selling
activity in a relatively short period of time. As a result, a Fund's NAV could
be negatively impacted and the Fund's market price may be significantly below
the Fund's net asset value during certain periods. In addition, index rebalances
may potentially result in increased trading activity. To the extent buying or
selling activity increases, a Fund can be exposed to increased brokerage costs
and adverse tax consequences and the market price of the Fund can be negatively
affected.
INDEX REBALANCE RISK. Pursuant to the methodology that the Funds' index
providers use to calculate and maintain the Fund's underlying index, the Fund
may own a significant portion of the First Trust ETF's included in the Funds.
Such ETFs may be removed from the underlying index in the event that it does not
comply with the eligibility requirements of the underlying index. As a result, a
Fund may be forced to sell shares of certain First Trust ETFs at inopportune
times or for prices other than at current market values or may elect not to sell
such shares on the day that they are removed from the underlying index, due to
market conditions or otherwise. Due to these factors, the variation between a
Fund's annual return and the return of the underlying index may increase
significantly. Apart from scheduled rebalances, the index provider may carry out
additional ad hoc rebalances to the underlying index to, for example, correct an
error in the selection of constituents. When a Fund in turn rebalances its
portfolio, any transaction costs and market exposure arising from such portfolio
rebalancing will be borne by the Fund and its shareholders. Unscheduled
rebalances may also expose a Fund to additional tracking error risk. Therefore,
errors and additional ad hoc rebalances carried out by the index provider may
increase a Fund's costs and market exposure.
INTEREST RATE RISK. Interest rate risk is the risk that the value of the
fixed-income securities in the Funds will decline because of rising market
interest rates. Interest rate risk is generally lower for shorter term
investments and higher for longer term investments. Mortgage-related securities
are particularly subject to the risk that interest rate volatility may adversely
impact the valuation and price of such securities. Additionally, the return on
the floating rate loans in which the Funds may invest will decline during a
period of falling interest rates.
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INVESTMENT COMPANIES RISK. The Funds may invest in the shares of other
investment companies, and therefore, the Funds' investment performance and risks
may be related to the investment performance and risks of the underlying funds.
In general, as a shareholder in other investment companies, the Funds bear their
ratable share of the underlying Fund's expenses, and would be subject to
duplicative expenses to the extent the Funds invest in other investment
companies.
LIQUIDITY RISK. The First Trust Multi Income Allocation Portfolio and the First
Trust Dorsey Wright Tactical Core Portfolio invest a portion of their assets in
other funds which invest in lower-quality debt issued by companies that are
highly leveraged. Lower-quality debt tends to be less liquid than higher-quality
debt. Moreover, smaller debt issues tend to be less liquid than larger debt
issues. If the economy experiences a sudden downturn, or if the debt markets for
such companies become distressed, the Funds may have particular difficulty
selling their assets in sufficient amounts, at reasonable prices and in a
sufficiently timely manner to raise the cash necessary to meet any potentially
heavy redemption requests by shareholders.
LOAN PREPAYMENT RISK. Loans are subject to prepayment risk. The degree to which
borrowers prepay loans, whether as a contractual requirement or at their
election, may be affected by general business conditions, the financial
condition of the borrower and competitive conditions among loan investors, among
others. As such prepayments cannot be predicted with accuracy. Upon a
prepayment, either in part or in full, the actual outstanding debt on which the
Funds derive interest income will be reduced. The Funds may not be able to
reinvest the proceeds received on terms as favorable as the prepaid loan.
LOAN RISK. An investment in loans subjects the Funds to credit risk, which is
heightened for loans in which the Funds invest because companies that issue such
loans tend to be highly leveraged and thus are more susceptible to the risks of
interest deferral, default and/or bankruptcy. The loans are usually rated below
investment grade but may also be unrated. An economic downturn would generally
lead to a higher non-payment rate, and a loan may lose significant market value
before a default occurs. Moreover, any specific collateral used to secure a loan
may decline in value or become illiquid, which would adversely affect the loan's
value. Unlike the securities markets, there is no central clearinghouse for loan
trades, and the loan market has not established enforceable settlement standards
or remedies for failure to settle. Therefore, portfolio transactions in loans
may have uncertain settlement time periods. Loans are subject to a number of
risks described elsewhere in this report, including liquidity risk and the risk
of investing in below investment grade debt instruments.
MANAGEMENT RISK. The Funds are subject to management risk because they have
actively managed portfolios. The Advisor will apply investment techniques and
risk analyses in making investment decisions for the Funds, but there can be no
guarantee that the Funds will achieve their investment objectives.
MARKET RISK. Market risk is the risk that a particular security owned by a Fund
or shares of the Funds in general may fall in value. Shares are subject to
market fluctuations caused by such factors as economic, political, regulatory or
market developments, changes in interest rates and perceived trends in
securities prices. Overall Fund share values could decline generally or could
underperform other investments.
MLP RISK. The First Trust Multi Income Allocation Portfolio's investment in MLP
units involves risks which differ from an investment in common stock of a
corporation. Holders of MLP units have limited control and voting rights on
matters affecting the partnership. In addition, there are certain tax risks
associated with an investment in MLP units and conflicts of interest may exist
between common unit holders and the general partner, including those arising
from incentive distribution payments. In addition, there is the risk that an MLP
could be, contrary to its intention, taxed as a corporation, resulting in
decreased returns from such MLP.
MLP TAX RISK. With respect to First Trust Multi Income Allocation Portfolio, the
Fund's ability to meet its investment objectives depends, in part, on the level
of taxable income and distributions it receives from the MLP and MLP-related
entities in which the Fund invests, a factor over which the Fund has no control.
The benefit the Fund derives from its investment in MLPs is dependent on the
MLPs being treated as partnerships for federal income tax purposes. As a
partnership, an MLP has no income tax liability at the entity level. If, as a
result of a change in an MLP's business, an MLP were treated as a corporation
for federal income tax purposes, such MLP would be obligated to pay federal
income tax on its income at the applicable corporate tax rate. If an MLP was
classified as a corporation for federal income tax purposes, the amount of cash
available for distribution with respect to its units would be reduced and any
such distributions received by the Fund would be taxed entirely as dividend
income if paid out of the earnings of the MLP. Therefore, treatment of an MLP as
a corporation for federal income tax purposes would result in a material
reduction in the after-tax return to the Fund, likely causing a substantial
reduction in the value of the shares of a Fund.
MORTGAGE SECURITIES RISK. The ETFs in which the First Trust Multi Income
Allocation Portfolio and the First Trust Dorsey Wright Tactical Core Portfolio
invest in mortgage-related securities, including mortgage-backed securities,
which may make the Funds more susceptible to adverse economic, political or
regulatory events that affect the value of real estate. The First Trust/Dow
Jones Dividend & Income Allocation Portfolio and First Trust Multi Income
Allocation Portfolio may invest in such securities. Changes in local, state and
federal policies could negatively impact the mortgage-related securities market,
which include various government initiated and sponsored homeowner assistance
programs and eminent domain issues. Mortgage related securities may also face
liquidity issues when a Fund seeks to sell such securities, but is unable to
find buyers at a bid-ask spread to make the transaction feasible. These
securities are also subject to the risk that the underlying borrowers may
default on their mortgages, resulting in a non-payment of principal and
interest. Finally, the mortgage-related securities market may be negatively
impacted by regulatory changes including those that are related to the mandate
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or existence of the government-sponsored enterprises, Fannie Mae, Freddie Mac
and Ginnie Mae. Mortgage-related securities are subject to prepayment risk. The
degree to which borrowers prepay loans, whether as a contractual requirement or
at their election, may be affected by general business conditions, the financial
condition of the borrower and competitive conditions among loan investors, among
others. As such, prepayments cannot be predicted with accuracy.
Upon a prepayment, either in part or in full, the actual outstanding debt on
which a Fund derives interest income will be reduced. In declining interest rate
environments, the extent to which borrowers prepay a mortgage generally
increases, which increase reinvestment risk, or the risk that the proceeds
received are not reinvested on terms as favorable as the prepaid loan.
Conversely, mortgage-related securities are subject to the risk that the rate of
mortgage prepayments decreases, which extends the average life of a security and
increases the interest rate risk exposure.
MUNICIPAL BONDS RISK. Certain of the ETFs in which the First Trust Dorsey Wright
Tactical Core Portfolio invests may invest in municipal bonds. In addition to
being subject to credit, income and interest rate risk (as described in the
prospectus), municipal bonds are subject to tax risk. Interest income from
municipal bonds is normally not subject to regular federal income tax, but
income from municipal bonds held by the underlying ETFs could be declared
taxable because of, among other things, unfavorable changes in tax laws, adverse
interpretations by the Internal Revenue Service or state tax authorities or
noncompliant conduct of a bond issuer. Consequently, the attractiveness of
municipal bonds in relation to other investment alternatives is affected by
changes in federal income tax rates or changes in the tax-exempt status of
interest income from municipal bonds.
NON-CORRELATION RISK. The Funds' returns may not match the return of an Index
for a number of reasons. For example, the Funds incur operating expenses not
applicable to the Indexes, and may incur costs in buying and selling securities,
especially when rebalancing the Funds' portfolio holdings to reflect changes in
the composition of the Indexes. In addition, the Funds' portfolio holdings may
not exactly replicate the securities included in the Indexes or the ratios
between the securities included in the Indexes.
NON-DIVERSIFICATION RISK. The First Trust Dorsey Wright Tactical Core Portfolio
is classified as "non-diversified" under the 1940 Act. As a result, the First
Trust Dorsey Wright Tactical Core Portfolio is only limited as to the percentage
of its assets that may be invested in the securities of any one issuer by the
diversification requirements imposed by the Internal Revenue Code of 1986, as
amended (the "Code"). The First Trust Dorsey Wright Tactical Core Portfolio may
invest a relatively high percentage of its assets in a limited number of
issuers. As a result, the First Trust Dorsey Wright Tactical Core Portfolio may
be more susceptible to a single adverse economic or regulatory occurrence
affecting one or more of these issuers, experience increased volatility and be
highly invested in certain issuers.
NON-U.S. SECURITIES AND EMERGING MARKETS RISK. The First Trust Multi Income
Allocation Portfolio and the First Trust Dorsey Wright Tactical Core Portfolio
invest in securities of non-U.S. issuers. Non-U.S. securities are subject to
higher volatility than securities of domestic issuers due to possible adverse
political, social or economic developments; restrictions on foreign investment
or exchange of securities; lack of liquidity; currency exchange rates; excessive
taxation; government seizure of assets; different legal or accounting standards
and less government supervision and regulation of exchanges in foreign
countries. These risks may be heightened for securities of companies located in,
or with significant operations in, emerging market countries.
PREFERRED SECURITIES RISK. The First Trust Multi Income Allocation Portfolio may
invest in preferred securities and certain of the ETFs held by the First Trust
Multi Income Allocation Portfolio and the First Trust Dorsey Wright Tactical
Core Portfolio invest in preferred securities. Preferred securities combine some
of the characteristics of both common stocks and bonds. Preferred securities are
typically subordinated to bonds and other debt instruments in a company's
capital structure in terms of priority to corporate income, and therefore will
be subject to greater credit risk than those debt instruments. Preferred
securities are also subject to credit risk, interest rate risk and income risk.
REIT RISK. The First Trust Multi Income Allocation Portfolio invests in REITs,
and as a result, the Fund is subject to the risks associated with investing in
real estate, which may include, but are not limited to, fluctuations in the
value of underlying properties; defaults by borrowers or tenants; market
saturation; changes in general and local operating expenses; and other economic,
political or regulatory occurrences affecting companies in the real estate
industry. In addition to risks related to investments in real estate generally,
investing in REITs involves certain other risks related to their structure and
focus, which include, but are not limited to, dependency upon management skills,
limited diversification, the risks of locating and managing financing for
projects, heavy cash flow dependency, possible default by borrowers, the costs
and potential losses of self-liquidation of one or more holdings, the risk of a
possible lack of mortgage funds and associated interest rate risks,
overbuilding, property vacancies, increases in property taxes and operating
expenses, changes in zoning laws, losses due to environmental damages, changes
in neighborhood values and appeal to purchases, the possibility of failing to
maintain exemptions from registration under the 1940 Act and, in many cases,
relatively small market capitalization, which may result in less market
liquidity and greater price volatility. REITs are also subject to the risk that
the real estate market may experience an economic downturn generally, which may
have a material effect on the real estate in which the REITs invest and their
underlying portfolio securities.
SMALL FUND RISK. The Funds currently have fewer assets than larger funds, and
like other relatively smaller funds, large inflows and outflows may impact the
Funds' market exposure for limited periods of time. This impact may be positive
or negative, depending on the direction of market movement during the period
affected.
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SMALLER COMPANY RISK. The Funds and certain of the ETFs in which the First Trust
Multi Income Allocation Portfolio and the First Trust Dorsey Wright Tactical
Core Portfolio invest in small- and mid-capitalization companies. Such companies
may be more vulnerable to adverse general market or economic developments, and
their securities may be less liquid and may experience greater price volatility
than larger, more established companies as a result of several factors,
including limited trading volumes, products or financial resources, management
inexperience and less publicly available information. Accordingly, such
companies are generally subject to greater market risk than larger, more
established companies.
TIPS RISK. The First Trust Multi Income Allocation Portfolio invests in TIPs.
TIPS are inflation-indexed fixed-income securities issued by the U.S. Department
of Treasury and are subject to the same risks as other fixed income investments.
In a falling inflationary environment, both interest payments and the value of
the TIPS will decline.
BOARD CONSIDERATIONS REGARDING APPROVAL OF CONTINUATION OF
INVESTMENT MANAGEMENT AND INVESTMENT SUB-ADVISORY AGREEMENTS
The Board of Trustees (the "Board") of First Trust Variable Insurance Trust (the
"Trust"), including the Independent Trustees, unanimously approved the
continuation of the Investment Management Agreement (the "Advisory Agreement")
with First Trust Advisors L.P. ("First Trust" or the "Advisor") on behalf of
each of First Trust/Dow Jones Dividend & Income Allocation Portfolio, First
Trust Multi Income Allocation Portfolio and First Trust Dorsey Wright Tactical
Core Portfolio (each a "Fund" and together the "Funds"); the Investment
Sub-Advisory Agreement (the "Stonebridge Sub-Advisory Agreement") among the
Trust, on behalf of First Trust Multi Income Allocation Portfolio, the Advisor
and Stonebridge Advisors LLC ("Stonebridge"); and the Investment Sub-Advisory
Agreement (the "Energy Income Partners Sub-Advisory Agreement") among the Trust,
on behalf of First Trust Multi Income Allocation Portfolio, the Advisor and
Energy Income Partners, LLC ("Energy Income Partners") for a one-year period
ending June 30, 2018 at a meeting held on June 12, 2017. The Stonebridge
Sub-Advisory Agreement and the Energy Income Partners Sub-Advisory Agreement are
collectively referred to as the "Sub-Advisory Agreements." Stonebridge and
Energy Income Partners are individually referred to as a "Sub-Advisor" and are
collectively referred to as the "Sub-Advisors." The Sub-Advisory Agreements
together with the Advisory Agreement are referred to as the "Agreements." The
Board determined that the continuation of the Advisory Agreement is in the best
interests of each Fund and the continuation of the Sub-Advisory Agreements is in
the best interests of First Trust Multi Income Allocation Portfolio in light of
the extent and quality of the services provided and such other matters as the
Board considered to be relevant in the exercise of its reasonable business
judgment.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. At meetings held on April 24, 2017 and June 12, 2017, the
Board, including the Independent Trustees, reviewed materials provided by the
Advisor and each of the Sub-Advisors responding to requests for information from
counsel to the Independent Trustees that, among other things, outlined the
services provided by the Advisor to the Funds and by the Sub-Advisors to First
Trust Multi Income Allocation Portfolio (including the relevant personnel
responsible for these services and their experience); the advisory fee rate
payable by each Fund and the sub-advisory fee rates for First Trust Multi Income
Allocation Portfolio as compared to fees charged to a peer group of funds
provided by Management Practice, Inc. ("MPI"), an independent source (the "MPI
Peer Group"), and as compared to fees charged to other clients of the Advisor
and the Sub-Advisor; expenses of each Fund as compared to expense ratios of the
funds in the Fund's MPI Peer Group; performance information for each Fund; the
nature of expenses incurred in providing services to the Funds and the potential
for economies of scale, if any; financial data on the Advisor and each
Sub-Advisor; any fall out benefits to the Advisor and its affiliate, First Trust
Portfolios L.P. ("FTP"), and the Sub-Advisors; and information on the Advisor's
and each Sub-Advisor's compliance program. The Board reviewed initial materials
with the Advisor at a special meeting held on April 24, 2017, prior to which the
Independent Trustees and their counsel met separately to discuss the information
provided by the Advisor and each of the Sub-Advisors. Following the April
meeting, independent legal counsel on behalf of the Independent Trustees
requested certain clarifications and supplements to the materials provided, and
the information provided in response to those requests was considered at an
executive session of the Independent Trustees and independent legal counsel held
prior to the June 12, 2017 meeting, as well as at the meeting held that day. The
Board applied its business judgment to determine whether the arrangements
between the Trust and the Advisor continue to be reasonable business
arrangements from the perspective of the Funds and the Funds' shareholders.
Similarly, the Board applied its business judgment to determine whether the
arrangements among the Trust, the Advisor and each of the Sub-Advisors continue
to be reasonable business arrangements from the perspective of First Trust Multi
Income Allocation Portfolio and the Fund's shareholders. The Board determined
that, given the totality of the information provided with respect to the
Agreements, the Board had received sufficient information to renew the
Agreements. The Board considered that shareholders chose to invest or remain
invested in the Funds knowing that the Advisor manages the Funds and knowing
that the Sub-Advisors serve as such for First Trust Multi Income Allocation
Portfolio and knowing the advisory fee.
Page 74
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
In reviewing the Agreements, the Board considered the nature, extent and quality
of the services provided by the Advisor and each Sub-Advisor under the
Agreements. With respect to the Advisory Agreement, the Board considered that
the Advisor is responsible for the overall management and administration of the
Trust and the Funds and reviewed all of the services provided by the Advisor to
the Funds, including oversight of the Sub-Advisors for First Trust Multi Income
Allocation Portfolio, as well as the background and experience of the persons
responsible for such services. The Board noted that the Advisor oversees the
Sub-Advisors' management of First Trust Multi Income Allocation Portfolio's
investments, including portfolio risk monitoring and performance review. In
reviewing the services provided, the Board noted the compliance program that had
been developed by the Advisor and considered that it includes a robust program
for monitoring the Advisor's, the Sub-Advisors' and the Funds' compliance with
the 1940 Act, as well as each Fund's compliance with its investment objective
and policies. The Board also considered a report from the Advisor with respect
to its risk management functions related to the operation of the Funds. Finally,
as part of the Board's consideration of the Advisor's services, the Advisor, in
its written materials and at the April 24, 2017 meeting, described to the Board
the scope of its ongoing investment in additional infrastructure and personnel
to maintain and improve the quality of services provided to the Funds and the
other funds in the First Trust Fund Complex. With respect to the Sub-Advisory
Agreements for First Trust Multi Income Allocation Portfolio, the Board
considered the services that each Sub-Advisor provides to the Fund, noting that
Energy Income Partners is responsible for the day-to-day management of a portion
of the Fund's investments and that Stonebridge serves in a non-discretionary
capacity for a portion of the Fund's investments. The Board noted the background
and experience of each Sub-Advisor's portfolio management team and the Board's
prior meetings with members of each portfolio management team. In light of the
information presented and the considerations made, the Board concluded that the
nature, extent and quality of the services provided to the Funds by the Advisor
and to First Trust Multi Income Allocation Portfolio by the Sub-Advisors under
the Agreements have been and are expected to remain satisfactory and that the
Advisor and, for First Trust Multi Income Allocation Portfolio, the
Sub-Advisors, have managed the Funds consistent with each Fund's respective
investment objectives and policies.
The Board considered the advisory fee rate payable by each Fund under the
Advisory Agreement and, for First Trust Multi Income Allocation Portfolio,
considered the sub-advisory fees paid under the Sub-Advisory Agreements for the
services provided, noting that the sub-advisory fees are paid by the Advisor
from its advisory fee. The Board considered that the Advisor had agreed to
extend the current expense caps for Class I and Class II shares of each Fund at
least until May 1, 2019. The Board noted that expenses borne or advisory fees
waived by First Trust are subject to reimbursement by the applicable Fund for up
to three years from the date the expense was incurred or advisory fee was
waived, but no reimbursement payment would be made by the Fund if it would
result in the Fund exceeding an expense ratio equal to the expense cap in place
at the time of the reimbursement or at the time the expenses were borne or
advisory fees were waived by First Trust. The Board also noted that the Advisor
had extended through May 1, 2018 its agreement to reduce the advisory fee
payable by First Trust Multi Income Allocation Portfolio in the amount of 0.37%
of the Fund's average daily net assets. The Board received and reviewed
information for each Fund showing the advisory fee rates and expense ratios of
the peer funds in the MPI Peer Group, as well as advisory fee rates charged by
the Advisor and the Sub-Advisors to other fund and non-fund clients, as
applicable. With respect to each Fund's MPI Peer Group, the Board discussed with
representatives of the Advisor how the MPI Peer Group was assembled. Based on
the information provided, the Board noted that the advisory fee payable by First
Trust/Dow Jones Dividend & Income Allocation Portfolio was equal to the median
advisory fee of the peer funds in the Fund's MPI Peer Group, that the advisory
fee payable by First Trust Multi Income Allocation Portfolio was below the
median advisory fee of the peer funds in the Fund's MPI Peer Group and that the
advisory fee payable by First Trust Dorsey Wright Tactical Core Portfolio was
above the median advisory fee of the peer funds in the Fund's MPI Peer Group.
The Board also noted that with respect to the total (net) expense ratio of each
Fund's Class I shares, the net expense ratio of First Trust Multi Income
Allocation Portfolio was below the median expense net ratio of the peer funds in
the Fund's MPI Peer Group and the net expense ratio of each of First Trust/Dow
Jones Dividend & Income Allocation Portfolio and First Trust Dorsey Wright
Tactical Core Portfolio was above the median net expense ratio of the peer funds
in the Fund's MPI Peer Group. With respect to fees charged to other clients, the
Board considered differences between the Funds and other clients that limited
their comparability. In considering the advisory fee rates overall, the Board
also considered the Advisor's statement that it seeks to meet investor needs
through innovative and value-added investment solutions and the Advisor's
description of its long-term commitment to each Fund.
The Board considered performance information for the Funds. The Board noted the
process it has established for monitoring the Funds' performance and portfolio
risk on an ongoing basis, which includes quarterly performance reporting from
the Advisor for the Funds and the Sub-Advisors for First Trust Multi Income
Allocation Portfolio. The Board determined that this process continues to be
effective for reviewing the Funds' performance. The Board received and reviewed
information comparing each Fund's performance for periods ended December 31,
2016 to the performance of the Fund's MPI Peer Group and to that of benchmark
indexes, including one or more blended benchmarks. Based on the information
provided, the Board noted that First Trust/Dow Jones Dividend & Income
Allocation Portfolio (Class I shares) outperformed the MPI Peer Group average
for the one- and three year periods ended December 31, 2016. The Board noted
that First Trust Multi Income Allocation Portfolio (Class I shares) outperformed
the MPI Peer Group average for the one-year period ended December 31, 2016. The
Board noted that First Trust Dorsey Wright Tactical Core Portfolio (Class I
shares) underperformed the MPI Peer Group average for the one-year period ended
December 31, 2016.
Page 75
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2017 (UNAUDITED)
On the basis of all the information provided on the fees, expenses and
performance of the Funds and the ongoing oversight by the Board, the Board
concluded that the advisory fee for each Fund and the sub-advisory fees for
First Trust Multi Income Allocation Portfolio continue to be reasonable and
appropriate in light of the nature, extent and quality of the services provided
by the Advisor to each Fund under the Advisory Agreement and provided to First
Trust Multi Income Allocation Portfolio by the Sub-Advisors under the
Sub-Advisory Agreements.
The Board considered information and discussed with the Advisor whether there
were any economies of scale in connection with providing advisory services to
each Fund and noted the Advisor's statement that it expects its expenses to
increase over the next twelve months as the Advisor continues to make
investments in personnel and infrastructure. The Board considered the revenues
and allocated costs (including the allocation methodology) of the Advisor in
serving as investment advisor to each Fund for the twelve months ended December
31, 2016 and the estimated profitability level for each Fund calculated by the
Advisor based on such data, as well as complex-wide and product-line
profitability data for the same period. The Board noted the inherent limitations
in the profitability analysis and concluded that, based on the information
provided, the Advisor's profitability level for each Fund was not unreasonable.
The Board considered that the Advisor had identified as a fall out benefit to
the Advisor and FTP their exposure to investors and brokers who, absent their
exposure to the Funds, may have had no dealings with the Advisor or FTP. The
Board also considered the majority ownership interest of an affiliate of the
Advisor in Stonebridge and the investment by an affiliate of the Advisor in
Energy Income Partners and potential fall-out benefits to the Advisor from such
interests. The Board noted that FTP is compensated for services provided to the
Funds through Rule 12b 1 distribution and service fees payable by Class I
shares, and that the Advisor receives compensation from the Funds for providing
fund reporting services pursuant to a separate Fund Reporting Services
Agreement. The Board also noted that the Advisor does not utilize soft dollars
in connection with its management of the Funds' portfolios. The Board concluded
that the character and amount of potential fall-out benefits to the Advisor were
not unreasonable.
With respect to the Stonebridge Sub-Advisory Agreement, the Board considered
Stonebridge's expenses in providing services to the Fund and noted Stonebridge's
recent hiring of additional personnel and commitment to add additional resources
if assets increase. The Board did not review the profitability of Stonebridge
with respect to the Fund. The Board noted that the Advisor pays Stonebridge from
its advisory fee, and its understanding that the First Trust Multi Income
Allocation Portfolio's sub-advisory fee rate was the product of an arm's length
negotiation. The Board concluded that the profitability analysis for the Advisor
was more relevant. The Board considered fall-out benefits that may be realized
by Stonebridge from its relationship with First Trust Multi Income Allocation
Portfolio, including potential fall-out benefits to Stonebridge from the
ownership interest of an affiliate of the Advisor in Stonebridge. The Board
noted that Stonebridge does not provide trade execution services on behalf of
First Trust Multi Income Allocation Portfolio. The Board concluded that the
character and amount of potential fall-out benefits to Stonebridge were not
unreasonable.
With respect to the Energy Income Partners Sub-Advisory Agreement, the Board
considered that Energy Income Partners' investment services expenses are
primarily fixed, and that Energy Income Partners has made recent investments in
personnel and infrastructure and expects its expenses to increase over the next
twelve months as it continues to make invests in personnel and infrastructure.
The Board did not review the profitability of Energy Income Partners with
respect to the Fund. The Board noted that the Advisor pays Energy Income
Partners from its advisory fee, and its understanding that the First Trust Multi
Income Allocation Portfolio's sub-advisory fee rate was the product of an arm's
length negotiation. The Board concluded that the profitability analysis for the
Advisor was more relevant. The Board considered fall-out benefits that may be
realized by Energy Income Partners from its relationship with First Trust Multi
Income Allocation Portfolio, including the potential fall-out benefits to Energy
Income Partners from the ownership interest of an affiliate of the Advisor in
Energy Income Partners. The Board noted that Energy Income Partners does not
provide trade execution services on behalf of First Trust Multi Income
Allocation Portfolio. The Board concluded that the character and amount of
potential fall-out benefits to Energy Income Partners were not unreasonable.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, unanimously determined that the terms
of the Agreements continue to be fair and reasonable and that the continuation
of the Agreements is in the best interests of the applicable Funds. No single
factor was determinative in the Board's analysis.
Page 76
FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
INVESTMENT SUB-ADVISORS
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
Energy Income Partners, LLC Stonebridge Advisors LLC
10 Wright Street 10 Westport Road, Suite C101
Westport, CT 06880 Wilton, CT 06897
ADMINISTRATOR, FUND
ACCOUNTANT, & CUSTODIAN
FIRST TRUST/DOW JONES DIVIDEND & INCOME FIRST TRUST DORSEY WRIGHT
ALLOCATION PORTFOLIO TACTICAL CORE PORTFOLIO
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO Brown Brothers Harriman & Co.
The Bank of New York Mellon 50 Post Office Square
101 Barclay Street, 20th Floor Boston, MA 02110
New York, NY 10286
TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers, or
persons performing similar functions, have concluded that the registrant's
disclosure controls and procedures (as defined in Rule 30a-3(c) under the
Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR
270.30a-3(c))) are effective, as of a date within 90 days of the filing
date of the report that includes the disclosure required by this
paragraph, based on their evaluation of these controls and procedures
required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and
Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as
amended (17 CFR 240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR
270.30a-3(d)) that occurred during the registrant's second fiscal quarter
of the period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section
302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and Section
906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Trust Variable Insurance Trust
-------------------------------------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: August 21, 2017
-------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, President and
Chief Executive Officer
(principal executive officer)
Date: August 21, 2017
-------------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: August 21, 2017
-------------------
* Print the name and title of each signing officer under his or her signature.