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, 2019
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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, 2019
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TABLE OF CONTENTS
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FIRST TRUST VARIABLE INSURANCE TRUST
SEMI-ANNUAL REPORT
JUNE 30, 2019
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.......................... 40
First Trust Dorsey Wright Tactical Core Portfolio...................... 50
Statements of Assets and Liabilities........................................ 51
Statements of Operations.................................................... 52
Statements of Changes in Net Assets......................................... 53
Financial Highlights........................................................ 56
Notes to Financial Statements............................................... 59
Additional Information...................................................... 72
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
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 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/or 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, 2019
Dear Shareholders:
One thing we can all agree on and expect: headline news coming out of
Washington, DC continues to influence the financial markets. As January 2019
unfolded, the longest partial government shutdown in U.S. history was wrapping
up while we were beginning to learn about President Trump's approach to
international trade policy. By June's end, trade talks with China were
reengaging and the threat of 5% tariffs on Mexican imports was averted.
Investors breathed a collective sigh of relief and, once again, the free market
began to rally.
At the Markets' close on June 28, 2019, U.S. equities, as indicated by the S&P
500(R) Index, returned 7.05% for the month of June, and 18.54% for the calendar
year-to-date. Bonds, as measured by the Bloomberg Barclays U.S. Aggregate Bond
Index, returned 1.26% and 6.11%, respectively, for the same periods. The 10-Year
U.S. Treasury Note yield fell from over 3% in late 2018 to just above 2% for the
six-month period ended June 30, 2019 and the Federal Reserve has clearly
indicated that another rate cut is on the way.
Despite the ongoing bluster of the news cycle, the economy is doing well and
productivity growth, due to deregulation and lower taxes on corporate profits,
has improved over the last two years.
o The Consumer Confidence Index of 121.5 for June remains strong.
o The U.S. inflation rate hovers near 2%, on average, as it has for
the last decade.
o June's unemployment rate of 3.7% barely moved from May's 3.6%, the
lowest level since December of 1969.
Before you reach for the antacids due to the latest political equivocation, keep
a balanced perspective in view. Remember, no one can predict the inevitable and
expected market fluctuations. Speak periodically with your investment
professional who can provide insight when it comes to investing and discovering
opportunities when they arise.
Thank you for giving First Trust the opportunity to be a part of your financial
plan. We value our relationship with you.
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, 2019
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, Senior Vice President, First Trust
Chris A. Peterson, Senior Vice President, First Trust
Eric Maisel, 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, 2019
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, YieldCos, and energy
infrastructure real estate investment trusts ("REITs").
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, Senior 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, 2019
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, Senior 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, 2019 (UNAUDITED)
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RETURN COMPARISON PERIOD ENDED JUNE 30, 2019
1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
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FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION
PORTFOLIO - CLASS I 5/1/12 14.08% 9.34% 7.67% 8.40%
Blended Benchmark (a) 14.40% 10.30% 7.29% 8.74%
Bloomberg Barclays U.S. Corporate Investment-Grade Index (b) 9.85% 10.72% 4.08% 4.30%
Russell 3000(R) Index (c) 18.71% 8.98% 10.19% 12.98%
Secondary Blended Benchmark (d) 14.85% 10.74% 7.48% 8.90%
Dow Jones Equal Weight U.S. Issued Corporate Bond
Index(SM) (e) 10.85% 11.86% 4.32% 4.48%
Dow Jones U.S. Total Stock Market Index(SM) (f) 18.70% 8.88% 10.12% 12.90%
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1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL AVERAGE TOTAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
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FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION
PORTFOLIO - CLASS II 5/1/14 14.18% 9.59% 7.95% 8.18%
Blended Benchmark (a) 14.40% 10.30% 7.29% 7.64%
Bloomberg Barclays U.S. Corporate Investment-Grade Index (b) 9.85% 10.72% 4.08% 4.17%
Russell 3000(R) Index (c) 18.71% 8.98% 10.19% 10.83%
Secondary Blended Benchmark (d) 14.85% 10.74% 7.48% 7.82%
Dow Jones Equal Weight U.S. Issued Corporate Bond
Index(SM) (e) 10.85% 11.86% 4.32% 4.38%
Dow Jones U.S. Total Stock Market Index(SM) (f) 18.70% 8.88% 10.12% 10.77%
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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, 2019
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
12/31/2017 16,436 16,531 12,621 21,309 16,643 12,691 21,228
6/30/2018 16,306 16,529 12,208 21,995 16,638 12,239 21,916
12/31/2018 15,628 15,936 12,304 20,191 16,042 12,350 20,101
6/30/2019 17,828 18,231 13,516 23,969 18,424 13,690 23,860
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, 2019 (UNAUDITED)
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% OF TOTAL
TOP EQUITY HOLDINGS INVESTMENTS
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Erie Indemnity Co., Class A 0.5%
HEICO Corp. 0.5
Tetra Tech, Inc. 0.5
Walt Disney (The) Co. 0.5
Broadridge Financial Solutions, Inc. 0.4
UniFirst Corp. 0.4
Allegion PLC 0.4
Northrop Grumman Corp. 0.4
Gentex Corp. 0.4
TE Connectivity, Ltd. 0.4
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Total 4.4%
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% OF TOTAL
TOP FIXED-INCOME HOLDINGS BY ISSUER INVESTMENTS
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U.S. Government 2.6%
Bank of America Corp. 1.8
Citigroup, Inc. 1.6
JPMorgan Chase & Co. 1.5
Goldman Sachs Group (The), Inc. 1.3
Morgan Stanley 1.1
Wells Fargo & Co. 0.8
UnitedHealth Group, Inc. 0.8
Duke Energy Corp. 0.8
AT&T, Inc. 0.7
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Total 13.0%
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% OF TOTAL
FIXED-INCOME
CREDIT QUALITY(1) INVESTMENTS
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AAA 7.4%
AA+ 1.5
AA 6.5
AA- 8.7
A+ 15.3
A 17.4
A- 16.4
BBB+ 9.2
BBB 12.7
BBB- 4.8
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 15.4%
Industrials 13.7
Information Technology 7.9
Consumer Discretionary 5.9
Health Care 4.1
Consumer Staples 3.5
Materials 2.6
Communication Services 1.2
Real Estate 1.1
Utilities 0.7
Energy 0.4
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Total Common Stocks 56.5
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Corporate Bonds & Notes:
Financials 11.0
Utilities 5.5
Health Care 4.2
Energy 3.4
Industrials 3.2
Information Technology 3.1
Consumer Staples 2.9
Communication Services 2.7
Consumer Discretionary 1.0
Materials 0.8
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Total Corporate Bonds & Notes 37.8
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Foreign Corporate Bonds & Notes:
Financials 1.3
Energy 0.5
Communication Services 0.4
Health Care 0.3
Materials 0.3
Industrials 0.2
Utilities 0.0*
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Total Foreign Corporate Bonds & Notes 3.0
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U.S. Government Bonds & Notes 2.7
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Commercial Paper:
Utilities 0.0*
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Total Commercial Paper 0.0*
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Total 100.0%
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* Amount is less than 0.1%.
(1) The credit quality and ratings 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 rating is 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, 2019 (UNAUDITED)
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RETURN COMPARISON PERIOD ENDED JUNE 30, 2019
1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION SIX MONTH ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
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FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO - CLASS I 5/1/14 11.08% 7.19% 3.82% 4.33%
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO - CLASS II 5/1/14 11.20% 7.46% 4.08% 4.58%
Broad Blended Benchmark (a) 11.23% 8.81% 6.00% 6.30%
Bloomberg Barclays U.S. Aggregate Bond Index (b) 6.11% 7.87% 2.95% 3.04%
Russell 3000(R) Index (c) 18.71% 8.98% 10.19% 10.83%
Multi Asset Class Blended Benchmark (d) 12.19% 7.31% 3.93% 4.47%
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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%), ICE BofAML Fixed Rate Preferred
Securities Index (8%), Alerian MLP Index (15%), S&P U.S. REIT Index (15%),
ICE BofAML U.S. High Yield Index (8%), S&P/LSTA Leveraged Loan Index
(15%), Bloomberg Barclays U.S. Corporate Investment-Grade Index (8%), ICE
BofAML U.S. MBS Index (8%), and ICE BofAML 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, 2019
First Trust Multi Broad Bloomberg Barclays
Income Allocation Blended U.S. Aggregate Russell 3000(R) Multi Asset Class
Portfolio - Class I Benchmark Bond 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
12/31/2017 11,725 12,556 11,004 15,121 11,585
6/30/2018 11,611 12,601 10,826 15,608 11,681
12/31/2018 11,205 12,328 11,006 14,328 11,173
6/30/2019 12,447 13,712 11,678 17,009 12,535
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, 2019 (UNAUDITED)
------------------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
------------------------------------------------------
First Trust Senior Loan Fund 13.8%
First Trust Tactical High Yield ETF 9.0
First Trust Preferred Securities and
Income ETF 6.8
iShares iBoxx $ Investment Grade Corporate
Bond ETF 5.9
iShares MBS ETF 5.1
First Trust Institutional Preferred
Securities and Income ETF 2.3
Enterprise Products Partners, L.P. 1.7
Invesco Bulletshares 2020 Corporate
Bond ETF 1.4
Magellan Midstream Partners, L.P. 1.1
TC Energy Corp. 1.0
------------------------------------------------------
Total 48.1%
======
------------------------------------------------------
% OF TOTAL
SECTOR ALLOCATION INVESTMENTS
------------------------------------------------------
Exchange-Traded Funds 44.7%
------------------------------------------------------
Common Stocks:
Information Technology 4.0
Energy 4.0
Health Care 3.2
Utilities 3.2
Financials 2.1
Consumer Staples 1.9
Industrials 1.9
Consumer Discretionary 1.8
Materials 0.7
Communication Services 0.4
------------------------------------------------------
Total Common Stocks 23.2
------------------------------------------------------
U.S. Government Bonds & Notes 10.2
------------------------------------------------------
Real Estate Investment Trusts:
Financials 8.8
Total Real Estate Investment Trusts 8.8
Master Limited Partnerships:
Energy 6.9
Utilities 0.6
Materials 0.3
------------------------------------------------------
Total Master Limited Partnerships 7.8
------------------------------------------------------
U.S. Government Agency Mortgage-Backed
Securities 5.2
------------------------------------------------------
Mortgage-Backed Securities 0.1
------------------------------------------------------
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, 2019 (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIOD ENDED JUNE 30, 2019
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 16.55% 2.56% 6.58%
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO - CLASS II 10/30/15 16.68% 2.73% 6.83%
Broad Blended Benchmark (a) 13.64% 9.87% 8.72%
Bloomberg Barclays U.S. Aggregate Bond Index (b) 6.11% 7.87% 3.17%
S&P 500(R) Index (c) 18.54% 10.42% 12.22%
------------------------------------------------------------------------------------------------------------------------------------
(a) The Broad Blended Benchmark return is split between the 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, 2019
First Trust Dorsey Wright Broad Bloomberg Barclays
Tactical Core Portfolio - Blended U.S. Aggregate S&P 500(R)
Class I Benchmark Bond 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
6/30/17 10,773 11,417 10,436 12,085
12/31/17 11,791 12,246 10,565 13,465
6/30/18 12,317 12,368 10,394 13,822
12/31/18 10,838 11,957 10,567 12,875
6/30/19 12,632 13,588 11,213 15,262
Page 9
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
SEMI-ANNUAL REPORT
JUNE 30, 2019 (UNAUDITED)
------------------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
------------------------------------------------------
First Trust Large Cap Growth AlphaDEX(R)
Fund 10.4%
First Trust Mid Cap Growth AlphaDEX(R)
Fund 10.2
First Trust Small Cap Growth AlphaDEX(R)
Fund 9.8
First Trust NASDAQ-100-Technology Sector
Index Fund 9.3
First Trust Technology AlphaDEX(R) Fund 9.3
First Trust Dow Jones Internet Index Fund 9.2
First Trust Utilities AlphaDEX(R) Fund 8.5
First Trust NYSE Arca Biotechnology Index
Fund 8.3
iShares Core U.S. Aggregate Bond ETF 6.1
SPDR Portfolio Intermediate Term Corporate
Bond ETF 3.5
------------------------------------------------------
Total 84.6%
======
Page 10
FIRST TRUST VARIABLE INSURANCE TRUST
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2019 (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, 2019.
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 1/1/2019- VALUE VALUE 1/1/2019- EXPENSE
1/1/2019 6/30/2019 6/30/2019 (a) 1/1/2019 6/30/2019 6/30/2019 (a) RATIO (b)
--------- --------- ------------- --------- --------- ------------- ----------
First Trust/Dow Jones Dividend &
Income Allocation Portfolio
Class I ....................... $1,000.00 $1,140.80 $ 6.37 $1,000.00 $1,018.84 $ 6.01 1.20%
Class II ...................... $1,000.00 $1,141.80 $ 5.04 $1,000.00 $1,020.08 $ 4.76 0.95%
First Trust Multi Income Allocation
Portfolio (c)
Class I ....................... $1,000.00 $1,110.80 $ 4.34 $1,000.00 $1,020.68 $ 4.16 0.83%
Class II ...................... $1,000.00 $1,112.00 $ 3.04 $1,000.00 $1,021.92 $ 2.91 0.58%
First Trust Dorsey Wright Tactical
Core Portfolio (c)
Class I ....................... $1,000.00 $1,165.50 $ 4.08 $1,000.00 $1,021.03 $ 3.81 0.76%
Class II ...................... $1,000.00 $1,166.80 $ 2.74 $1,000.00 $1,022.27 $ 2.56 0.51%
(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,
2019 through June 30, 2019), multiplied by 181/365 (to reflect the
six-month 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.
(c) Annualized expense ratio and expenses paid during the six-month period do
not include fees and expenses of the underlying funds in which the Fund
invests.
Page 11
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS - 56.2%
AEROSPACE & DEFENSE - 2.5%
18,964 General Dynamics Corp........................................................ $ 3,448,034
33,839 HEICO Corp................................................................... 4,527,997
46,420 Hexcel Corp.................................................................. 3,754,450
15,495 Huntington Ingalls Industries, Inc........................................... 3,482,346
11,908 Northrop Grumman Corp........................................................ 3,847,594
17,632 Raytheon Co.................................................................. 3,065,852
-------------
22,126,273
-------------
AIR FREIGHT & LOGISTICS - 0.7%
42,298 Expeditors International of Washington, Inc.................................. 3,208,726
49,597 Forward Air Corp............................................................. 2,933,663
-------------
6,142,389
-------------
AUTO COMPONENTS - 0.8%
155,241 Gentex Corp.................................................................. 3,820,481
23,656 Lear Corp.................................................................... 3,294,571
-------------
7,115,052
-------------
BANKS - 4.1%
40,705 Bank of Hawaii Corp.......................................................... 3,374,852
59,265 Banner Corp.................................................................. 3,209,200
94,674 Cathay General Bancorp....................................................... 3,399,743
55,294 Commerce Bancshares, Inc..................................................... 3,298,840
33,072 Cullen/Frost Bankers, Inc.................................................... 3,097,523
229,641 First Horizon National Corp.................................................. 3,428,540
80,622 First Interstate BancSystem, Inc., Class A................................... 3,193,437
87,121 First Merchants Corp......................................................... 3,301,886
26,172 PNC Financial Services Group (The), Inc...................................... 3,592,892
66,619 US Bancorp................................................................... 3,490,836
70,697 Zions Bancorp N.A............................................................ 3,250,648
-------------
36,638,397
-------------
BEVERAGES - 0.8%
18,309 Constellation Brands, Inc., Class A.......................................... 3,605,774
26,196 PepsiCo, Inc................................................................. 3,435,082
-------------
7,040,856
-------------
BUILDING PRODUCTS - 0.7%
35,393 Allegion PLC................................................................. 3,912,696
60,211 AO Smith Corp................................................................ 2,839,551
-------------
6,752,247
-------------
CAPITAL MARKETS - 3.4%
7,513 BlackRock, Inc............................................................... 3,525,851
75,079 Charles Schwab (The) Corp.................................................... 3,017,425
96,873 Franklin Resources, Inc...................................................... 3,371,181
70,019 Houlihan Lokey, Inc.......................................................... 3,117,946
42,164 Intercontinental Exchange, Inc............................................... 3,623,574
35,510 Northern Trust Corp.......................................................... 3,195,900
39,925 Raymond James Financial, Inc................................................. 3,375,659
61,443 SEI Investments Co........................................................... 3,446,952
32,065 T Rowe Price Group, Inc...................................................... 3,517,851
-------------
30,192,339
-------------
Page 12 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
CHEMICALS - 1.9%
16,812 Air Products & Chemicals, Inc................................................ $ 3,805,732
32,557 Celanese Corp................................................................ 3,509,645
42,309 Eastman Chemical Co.......................................................... 3,292,909
38,183 LyondellBasell Industries N.V., Class A...................................... 3,288,702
28,443 PPG Industries, Inc.......................................................... 3,319,583
-------------
17,216,571
-------------
COMMERCIAL SERVICES & SUPPLIES - 2.0%
15,885 Cintas Corp.................................................................. 3,769,352
77,136 Rollins, Inc................................................................. 2,766,868
53,874 Tetra Tech, Inc.............................................................. 4,231,803
20,914 UniFirst Corp................................................................ 3,943,753
30,895 Waste Management, Inc........................................................ 3,564,356
-------------
18,276,132
-------------
COMMUNICATIONS EQUIPMENT - 0.7%
59,463 Cisco Systems, Inc........................................................... 3,254,410
121,284 Juniper Networks, Inc........................................................ 3,229,793
-------------
6,484,203
-------------
CONTAINERS & PACKAGING - 0.3%
32,304 Packaging Corp. of America................................................... 3,079,217
-------------
DIVERSIFIED CONSUMER SERVICES - 0.8%
4,700 Graham Holdings Co., Class B................................................. 3,243,141
79,959 Service Corp. International.................................................. 3,740,482
-------------
6,983,623
-------------
ELECTRIC UTILITIES - 0.7%
16,607 NextEra Energy, Inc.......................................................... 3,402,110
74,452 OGE Energy Corp.............................................................. 3,168,677
-------------
6,570,787
-------------
ELECTRICAL EQUIPMENT - 0.8%
38,694 AMETEK, Inc.................................................................. 3,514,963
39,850 Eaton Corp PLC............................................................... 3,318,708
-------------
6,833,671
-------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 1.6%
33,994 Amphenol Corp., Class A...................................................... 3,261,384
33,313 CDW Corp..................................................................... 3,697,743
50,982 Dolby Laboratories, Inc., Class A............................................ 3,293,437
39,757 TE Connectivity, Ltd......................................................... 3,807,926
-------------
14,060,490
-------------
ENTERTAINMENT - 0.4%
28,914 Walt Disney (The) Co......................................................... 4,037,551
-------------
EQUITY REAL ESTATE INVESTMENT TRUSTS - 1.1%
20,472 PS Business Parks, Inc....................................................... 3,450,146
14,742 Public Storage............................................................... 3,511,102
109,308 Weingarten Realty Investors.................................................. 2,997,226
-------------
9,958,474
-------------
FOOD PRODUCTS - 1.7%
71,724 Hormel Foods Corp............................................................ 2,907,691
33,904 Ingredion, Inc............................................................... 2,796,741
See Notes to Financial Statements Page 13
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
FOOD PRODUCTS (CONTINUED)
20,211 J&J Snack Foods Corp......................................................... $ 3,252,960
20,490 Lancaster Colony Corp........................................................ 3,044,814
64,311 Mondelez International, Inc., Class A........................................ 3,466,363
-------------
15,468,569
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1%
3,654 Atrion Corp.................................................................. 3,115,912
39,484 Baxter International, Inc.................................................... 3,233,740
16,252 Stryker Corp................................................................. 3,341,086
-------------
9,690,738
-------------
HEALTH CARE PROVIDERS & SERVICES - 1.5%
10,030 Chemed Corp.................................................................. 3,619,225
12,069 Humana, Inc.................................................................. 3,201,906
35,702 Quest Diagnostics, Inc....................................................... 3,634,820
12,983 UnitedHealth Group, Inc...................................................... 3,167,982
-------------
13,623,933
-------------
HOTELS, RESTAURANTS & LEISURE - 1.7%
65,625 Cheesecake Factory (The), Inc................................................ 2,869,125
19,865 Cracker Barrel Old Country Store, Inc........................................ 3,391,551
26,430 Darden Restaurants, Inc...................................................... 3,217,324
73,582 International Speedway Corp., Class A........................................ 3,303,096
51,622 Texas Roadhouse, Inc......................................................... 2,770,553
-------------
15,551,649
-------------
HOUSEHOLD DURABLES - 0.4%
77,583 DR Horton, Inc............................................................... 3,346,155
-------------
HOUSEHOLD PRODUCTS - 0.3%
18,947 WD-40 Co..................................................................... 3,013,331
-------------
INDUSTRIAL CONGLOMERATES - 1.1%
15,452 3M Co........................................................................ 2,678,450
20,200 Honeywell International, Inc................................................. 3,526,718
9,387 Roper Technologies, Inc...................................................... 3,438,082
-------------
9,643,250
-------------
INSURANCE - 7.1%
64,209 Aflac, Inc................................................................... 3,519,295
34,087 Allstate (The) Corp.......................................................... 3,466,307
33,369 American Financial Group, Inc................................................ 3,419,321
72,258 Assured Guaranty, Ltd........................................................ 3,040,617
108,789 Brown & Brown, Inc........................................................... 3,644,431
80,039 Employers Holdings, Inc...................................................... 3,383,249
17,983 Erie Indemnity Co., Class A.................................................. 4,572,717
87,835 Fidelity National Financial, Inc............................................. 3,539,750
62,338 First American Financial Corp................................................ 3,347,551
64,569 Hartford Financial Services Group (The), Inc................................. 3,597,785
34,189 Marsh & McLennan Cos., Inc................................................... 3,410,353
63,964 Principal Financial Group, Inc............................................... 3,704,795
44,533 Progressive (The) Corp....................................................... 3,559,523
22,612 Reinsurance Group of America, Inc............................................ 3,528,150
50,733 Selective Insurance Group, Inc............................................... 3,799,394
39,175 Torchmark Corp............................................................... 3,504,596
23,407 Travelers (The) Cos., Inc.................................................... 3,499,815
56,840 WR Berkley Corp.............................................................. 3,747,461
-------------
64,285,110
-------------
Page 14 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
IT SERVICES - 3.1%
18,238 Accenture PLC, Class A....................................................... $ 3,369,835
20,097 Automatic Data Processing, Inc............................................... 3,322,637
30,961 Broadridge Financial Solutions, Inc.......................................... 3,953,101
23,138 Jack Henry & Associates, Inc................................................. 3,098,641
13,635 Mastercard, Inc., Class A.................................................... 3,606,867
45,229 MAXIMUS, Inc................................................................. 3,280,912
40,029 Paychex, Inc................................................................. 3,293,986
20,555 Visa, Inc., Class A.......................................................... 3,567,320
-------------
27,493,299
-------------
LIFE SCIENCES TOOLS & SERVICES - 0.3%
39,940 Agilent Technologies, Inc.................................................... 2,982,320
-------------
MACHINERY - 3.4%
32,122 Alamo Group, Inc............................................................. 3,209,952
20,335 Cummins, Inc................................................................. 3,484,199
64,830 Graco, Inc................................................................... 3,253,169
22,367 Illinois Tool Works, Inc..................................................... 3,373,167
29,739 Ingersoll-Rand PLC........................................................... 3,767,039
38,278 Lincoln Electric Holdings, Inc............................................... 3,151,045
47,114 PACCAR, Inc.................................................................. 3,376,189
20,512 Snap-on, Inc................................................................. 3,397,608
46,636 Toro (The) Co................................................................ 3,119,948
-------------
30,132,316
-------------
MEDIA - 0.8%
152,803 Interpublic Group of (The) Cos., Inc......................................... 3,451,819
43,984 Omnicom Group, Inc........................................................... 3,604,489
-------------
7,056,308
-------------
METALS & MINING - 0.4%
35,568 Reliance Steel & Aluminum Co................................................. 3,365,444
-------------
MORTGAGE REAL ESTATE INVESTMENT TRUSTS - 0.7%
441,593 MFA Financial, Inc........................................................... 3,170,638
237,278 Two Harbors Investment Corp.................................................. 3,006,312
-------------
6,176,950
-------------
OIL, GAS & CONSUMABLE FUELS - 0.3%
33,733 Phillips 66.................................................................. 3,155,385
-------------
PERSONAL PRODUCTS - 0.3%
42,315 Inter Parfums, Inc........................................................... 2,813,524
-------------
PHARMACEUTICALS - 1.1%
22,965 Johnson & Johnson............................................................ 3,198,565
75,592 Pfizer, Inc.................................................................. 3,274,646
31,890 Zoetis, Inc.................................................................. 3,619,196
-------------
10,092,407
-------------
PROFESSIONAL SERVICES - 0.4%
55,620 Exponent, Inc................................................................ 3,255,995
-------------
ROAD & RAIL - 1.4%
29,348 Landstar System, Inc......................................................... 3,169,290
17,178 Norfolk Southern Corp........................................................ 3,424,091
19,201 Union Pacific Corp........................................................... 3,247,081
See Notes to Financial Statements Page 15
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
ROAD & RAIL (CONTINUED)
94,008 Werner Enterprises, Inc...................................................... $ 2,921,769
-------------
12,762,231
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.2%
10,677 Broadcom, Inc................................................................ 3,073,481
59,783 Intel Corp................................................................... 2,861,812
17,934 Lam Research Corp............................................................ 3,368,723
60,380 Maxim Integrated Products, Inc............................................... 3,611,932
23,695 Monolithic Power Systems, Inc................................................ 3,217,307
30,267 Texas Instruments, Inc....................................................... 3,473,441
-------------
19,606,696
-------------
SOFTWARE - 0.4%
12,280 Intuit, Inc.................................................................. 3,209,132
-------------
SPECIALTY RETAIL - 1.5%
45,178 Best Buy Co., Inc............................................................ 3,150,262
16,731 Home Depot (The), Inc........................................................ 3,479,546
34,483 Ross Stores, Inc............................................................. 3,417,955
60,335 TJX (The) Cos., Inc.......................................................... 3,190,515
-------------
13,238,278
-------------
TEXTILES, APPAREL & LUXURY GOODS - 0.7%
31,852 Carter's, Inc................................................................ 3,106,844
30,816 Columbia Sportswear Co....................................................... 3,086,531
-------------
6,193,375
-------------
TOBACCO - 0.3%
55,900 Altria Group, Inc............................................................ 2,646,865
-------------
TRADING COMPANIES & DISTRIBUTORS - 0.7%
38,815 MSC Industrial Direct Co., Inc., Class A..................................... 2,882,402
22,418 Watsco, Inc.................................................................. 3,666,015
-------------
6,548,417
-------------
TOTAL COMMON STOCKS.......................................................... 504,859,949
(Cost $442,251,320) -------------
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES - 37.6%
AEROSPACE & DEFENSE - 0.8%
$ 500,000 Boeing (The) Co..................................... 3.45% 11/01/28 526,334
250,000 Boeing (The) Co..................................... 3.50% 03/01/39 250,285
308,000 Boeing (The) Co..................................... 3.38% 06/15/46 295,360
250,000 Boeing (The) Co..................................... 3.65% 03/01/47 252,269
500,000 Boeing (The) Co..................................... 3.63% 03/01/48 501,965
500,000 General Dynamics Corp............................... 3.38% 05/15/23 522,918
500,000 General Dynamics Corp............................... 3.50% 05/15/25 533,170
500,000 General Dynamics Corp............................... 3.75% 05/15/28 547,724
250,000 Lockheed Martin Corp................................ 3.55% 01/15/26 265,912
248,000 Lockheed Martin Corp................................ 4.09% 09/15/52 276,342
250,000 Northrop Grumman Corp............................... 2.08% 10/15/20 249,690
Page 16 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
AEROSPACE & DEFENSE (CONTINUED)
$ 500,000 Northrop Grumman Corp............................... 2.55% 10/15/22 $ 501,232
250,000 Northrop Grumman Corp............................... 2.93% 01/15/25 254,801
500,000 Northrop Grumman Corp............................... 3.25% 01/15/28 513,722
500,000 Northrop Grumman Corp............................... 4.03% 10/15/47 534,199
750,000 United Technologies Corp............................ 3.35% 08/16/21 766,818
250,000 United Technologies Corp............................ 3.65% 08/16/23 262,000
250,000 United Technologies Corp............................ 3.95% 08/16/25 269,808
-------------
7,324,549
-------------
AIR FREIGHT & LOGISTICS - 1.0%
850,000 FedEx Corp.......................................... 3.30% 03/15/27 872,213
500,000 FedEx Corp.......................................... 4.20% 10/17/28 546,205
648,000 FedEx Corp.......................................... 4.55% 04/01/46 663,824
550,000 FedEx Corp.......................................... 4.40% 01/15/47 548,698
500,000 FedEx Corp.......................................... 4.05% 02/15/48 481,535
500,000 FedEx Corp.......................................... 4.95% 10/17/48 546,844
1,000,000 United Parcel Service, Inc.......................... 2.05% 04/01/21 998,677
500,000 United Parcel Service, Inc.......................... 2.35% 05/16/22 503,204
545,000 United Parcel Service, Inc.......................... 2.45% 10/01/22 551,026
500,000 United Parcel Service, Inc.......................... 2.50% 04/01/23 505,729
250,000 United Parcel Service, Inc.......................... 2.80% 11/15/24 255,724
500,000 United Parcel Service, Inc.......................... 2.40% 11/15/26 494,401
250,000 United Parcel Service, Inc.......................... 3.05% 11/15/27 258,636
500,000 United Parcel Service, Inc.......................... 3.40% 03/15/29 529,044
500,000 United Parcel Service, Inc.......................... 3.40% 11/15/46 478,521
500,000 United Parcel Service, Inc.......................... 4.25% 03/15/49 549,316
-------------
8,783,597
-------------
AIRLINES - 0.1%
420,000 Southwest Airlines Co............................... 2.65% 11/05/20 421,843
250,000 Southwest Airlines Co............................... 3.00% 11/15/26 250,054
-------------
671,897
-------------
AUTO COMPONENTS - 0.1%
250,000 Lear Corp........................................... 4.25% 05/15/29 252,765
250,000 Lear Corp........................................... 5.25% 05/15/49 247,691
-------------
500,456
-------------
AUTOMOBILES - 0.1%
250,000 General Motors Co................................... 5.00% 10/01/28 262,786
250,000 General Motors Co................................... 5.95% 04/01/49 262,333
-------------
525,119
-------------
BANKS - 5.9%
600,000 Bank of America Corp................................ 2.63% 04/19/21 603,940
500,000 Bank of America Corp. (a)........................... 2.37% 07/21/21 499,543
250,000 Bank of America Corp. (a)........................... 2.33% 10/01/21 249,745
500,000 Bank of America Corp. (a)........................... 2.74% 01/23/22 502,362
250,000 Bank of America Corp................................ 2.50% 10/21/22 250,728
500,000 Bank of America Corp. (a)........................... 2.88% 04/24/23 505,488
500,000 Bank of America Corp. (a)........................... 2.82% 07/21/23 505,270
1,207,000 Bank of America Corp. (a)........................... 3.00% 12/20/23 1,229,828
250,000 Bank of America Corp. (a)........................... 3.55% 03/05/24 259,312
See Notes to Financial Statements Page 17
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BANKS (CONTINUED)
$ 450,000 Bank of America Corp................................ 4.00% 04/01/24 $ 479,849
500,000 Bank of America Corp. (a)........................... 3.86% 07/23/24 525,462
500,000 Bank of America Corp. (a)........................... 3.46% 03/15/25 519,333
500,000 Bank of America Corp. (a)........................... 3.09% 10/01/25 512,708
250,000 Bank of America Corp. (a)........................... 3.37% 01/23/26 258,162
400,000 Bank of America Corp................................ 4.45% 03/03/26 431,807
950,000 Bank of America Corp................................ 3.50% 04/19/26 995,665
500,000 Bank of America Corp. (a)........................... 3.56% 04/23/27 522,368
150,000 Bank of America Corp................................ 3.25% 10/21/27 153,813
250,000 Bank of America Corp................................ 4.18% 11/25/27 265,056
500,000 Bank of America Corp. (a)........................... 3.82% 01/20/28 529,691
500,000 Bank of America Corp. (a)........................... 3.71% 04/24/28 525,779
500,000 Bank of America Corp. (a)........................... 3.59% 07/21/28 521,744
1,091,000 Bank of America Corp. (a)........................... 3.42% 12/20/28 1,123,581
250,000 Bank of America Corp. (a)........................... 3.97% 03/05/29 267,419
500,000 Bank of America Corp. (a)........................... 4.27% 07/23/29 546,532
500,000 Bank of America Corp. (a)........................... 3.97% 02/07/30 536,381
250,000 Bank of America Corp. (a)........................... 4.24% 04/24/38 272,626
500,000 Bank of America Corp. (a)........................... 4.08% 04/23/40 534,153
225,000 Bank of America Corp................................ 5.88% 02/07/42 299,424
250,000 Bank of America Corp. (a)........................... 4.44% 01/20/48 284,337
500,000 Bank of America Corp. (a)........................... 3.95% 01/23/49 528,096
500,000 Bank of America Corp. (a)........................... 4.33% 03/15/50 558,247
250,000 Citibank N.A........................................ 3.40% 07/23/21 255,401
500,000 Citibank N.A. (a)................................... 3.17% 02/19/22 506,379
500,000 Citibank N.A. (a)................................... 2.84% 05/20/22 503,944
500,000 Citigroup, Inc...................................... 2.45% 01/10/20 500,142
250,000 Citigroup, Inc...................................... 2.40% 02/18/20 250,038
600,000 Citigroup, Inc...................................... 2.70% 03/30/21 603,286
350,000 Citigroup, Inc...................................... 2.35% 08/02/21 349,892
250,000 Citigroup, Inc...................................... 2.90% 12/08/21 252,687
775,000 Citigroup, Inc...................................... 4.50% 01/14/22 814,974
500,000 Citigroup, Inc...................................... 2.75% 04/25/22 504,769
500,000 Citigroup, Inc...................................... 2.70% 10/27/22 504,424
500,000 Citigroup, Inc. (a)................................. 2.88% 07/24/23 506,722
250,000 Citigroup, Inc. (a)................................. 4.04% 06/01/24 264,416
500,000 Citigroup, Inc. (a)................................. 3.35% 04/24/25 516,856
450,000 Citigroup, Inc...................................... 4.60% 03/09/26 487,276
300,000 Citigroup, Inc...................................... 3.40% 05/01/26 310,780
250,000 Citigroup, Inc...................................... 3.20% 10/21/26 255,185
300,000 Citigroup, Inc...................................... 4.30% 11/20/26 318,868
350,000 Citigroup, Inc...................................... 4.45% 09/29/27 377,418
500,000 Citigroup, Inc. (a)................................. 3.89% 01/10/28 529,398
1,000,000 Citigroup, Inc. (a)................................. 3.67% 07/24/28 1,044,449
500,000 Citigroup, Inc...................................... 4.13% 07/25/28 530,024
500,000 Citigroup, Inc. (a)................................. 3.52% 10/27/28 516,109
250,000 Citigroup, Inc. (a)................................. 4.08% 04/23/29 268,774
500,000 Citigroup, Inc. (a)................................. 3.98% 03/20/30 534,472
500,000 Citigroup, Inc. (a)................................. 3.88% 01/24/39 519,886
200,000 Citigroup, Inc...................................... 5.88% 01/30/42 264,470
100,000 Citigroup, Inc...................................... 6.68% 09/13/43 138,925
Page 18 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BANKS (CONTINUED)
$ 750,000 Citigroup, Inc...................................... 4.75% 05/18/46 $ 849,576
500,000 Citigroup, Inc. (a)................................. 4.28% 04/24/48 560,506
500,000 Citigroup, Inc...................................... 4.65% 07/23/48 582,590
250,000 Citizens Bank N.A................................... 3.25% 02/14/22 254,944
250,000 Comerica, Inc....................................... 4.00% 02/01/29 268,801
600,000 HSBC Bank USA N.A................................... 4.88% 08/24/20 616,713
250,000 Huntington National Bank (The)...................... 3.55% 10/06/23 261,891
150,000 JPMorgan Chase & Co................................. 2.55% 03/01/21 150,571
550,000 JPMorgan Chase & Co................................. 4.63% 05/10/21 572,732
450,000 JPMorgan Chase & Co................................. 2.40% 06/07/21 451,360
325,000 JPMorgan Chase & Co................................. 3.20% 01/25/23 333,729
500,000 JPMorgan Chase & Co. (a)............................ 3.21% 04/01/23 510,555
250,000 JPMorgan Chase & Co. (a)............................ 2.78% 04/25/23 252,575
500,000 JPMorgan Chase & Co................................. 2.70% 05/18/23 505,473
400,000 JPMorgan Chase & Co................................. 3.88% 02/01/24 425,063
250,000 JPMorgan Chase & Co. (a)............................ 3.56% 04/23/24 259,336
250,000 JPMorgan Chase & Co. (a)............................ 3.80% 07/23/24 262,337
850,000 JPMorgan Chase & Co................................. 3.30% 04/01/26 879,137
300,000 JPMorgan Chase & Co................................. 4.13% 12/15/26 321,147
250,000 JPMorgan Chase & Co................................. 3.63% 12/01/27 257,852
500,000 JPMorgan Chase & Co. (a)............................ 3.78% 02/01/28 530,475
500,000 JPMorgan Chase & Co. (a)............................ 3.54% 05/01/28 520,877
500,000 JPMorgan Chase & Co. (a)............................ 3.51% 01/23/29 520,240
250,000 JPMorgan Chase & Co. (a)............................ 4.01% 04/23/29 269,893
500,000 JPMorgan Chase & Co. (a)............................ 4.20% 07/23/29 547,117
500,000 JPMorgan Chase & Co. (a)............................ 3.70% 05/06/30 527,624
400,000 JPMorgan Chase & Co................................. 6.40% 05/15/38 552,597
250,000 JPMorgan Chase & Co. (a)............................ 3.88% 07/24/38 262,467
100,000 JPMorgan Chase & Co................................. 4.85% 02/01/44 119,241
150,000 JPMorgan Chase & Co................................. 4.95% 06/01/45 178,361
500,000 JPMorgan Chase & Co. (a)............................ 4.26% 02/22/48 551,827
500,000 JPMorgan Chase & Co. (a)............................ 4.03% 07/24/48 536,960
750,000 JPMorgan Chase & Co. (a)............................ 3.96% 11/15/48 796,984
500,000 JPMorgan Chase & Co. (a)............................ 3.90% 01/23/49 524,973
500,000 JPMorgan Chase Bank N.A. (a)........................ 2.60% 02/01/21 500,611
250,000 JPMorgan Chase Bank N.A. (a)........................ 3.09% 04/26/21 251,443
333,000 JPMorgan Chase Bank N.A., 3 Mo. LIBOR + 0.29% (b)... 2.87% 02/01/21 333,202
250,000 JPMorgan Chase Bank N.A., 3 Mo. LIBOR + 0.34% (b)... 2.93% 04/26/21 250,345
500,000 Regions Bank........................................ 2.75% 04/01/21 502,140
500,000 Regions Financial Corp.............................. 3.80% 08/14/23 523,472
200,000 Wells Fargo & Co.................................... 2.15% 01/30/20 199,829
100,000 Wells Fargo & Co.................................... 2.55% 12/07/20 100,313
900,000 Wells Fargo & Co.................................... 3.00% 01/22/21 908,494
550,000 Wells Fargo & Co.................................... 2.50% 03/04/21 551,384
300,000 Wells Fargo & Co.................................... 2.10% 07/26/21 298,476
500,000 Wells Fargo & Co.................................... 2.63% 07/22/22 503,800
425,000 Wells Fargo & Co.................................... 3.30% 09/09/24 440,075
550,000 Wells Fargo & Co.................................... 3.00% 04/22/26 556,496
100,000 Wells Fargo & Co.................................... 4.10% 06/03/26 106,139
250,000 Wells Fargo & Co.................................... 3.00% 10/23/26 252,816
200,000 Wells Fargo & Co.................................... 4.30% 07/22/27 216,253
See Notes to Financial Statements Page 19
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BANKS (CONTINUED)
$ 500,000 Wells Fargo & Co. (a)............................... 3.58% 05/22/28 $ 522,449
100,000 Wells Fargo & Co.................................... 4.90% 11/17/45 116,303
275,000 Wells Fargo & Co.................................... 4.40% 06/14/46 297,354
750,000 Wells Fargo & Co.................................... 4.75% 12/07/46 856,145
250,000 Wells Fargo Bank N.A. (a)........................... 3.33% 07/23/21 252,434
1,000,000 Wells Fargo Bank N.A................................ 3.63% 10/22/21 1,028,591
200,000 Wells Fargo Bank N.A................................ 5.95% 08/26/36 255,613
-------------
53,069,114
-------------
BEVERAGES - 0.9%
875,000 Anheuser-Busch Cos., LLC/Anheuser-Busch InBev
Worldwide, Inc................................... 4.70% 02/01/36 961,337
1,100,000 Anheuser-Busch Cos., LLC/Anheuser-Busch InBev
Worldwide, Inc................................... 4.90% 02/01/46 1,226,648
337,000 Anheuser-Busch Inbev Finance, Inc................... 2.65% 02/01/21 338,862
562,000 Anheuser-Busch Inbev Finance, Inc................... 3.30% 02/01/23 580,459
200,000 Anheuser-Busch Inbev Worldwide, Inc................. 2.50% 07/15/22 201,693
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 3.50% 01/12/24 261,298
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.15% 01/23/25 270,986
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.75% 01/23/29 284,029
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.90% 01/23/31 288,749
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.38% 04/15/38 264,322
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.60% 04/15/48 268,020
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 5.55% 01/23/49 306,812
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 4.75% 04/15/58 264,818
250,000 Anheuser-Busch Inbev Worldwide, Inc................. 5.80% 01/23/59 313,800
150,000 Coca-Cola (The) Co.................................. 1.88% 10/27/20 149,708
975,000 Coca-Cola (The) Co.................................. 3.20% 11/01/23 1,020,769
250,000 Constellation Brands, Inc........................... 3.20% 02/15/23 255,768
250,000 Constellation Brands, Inc........................... 4.10% 02/15/48 247,349
500,000 Constellation Brands, Inc........................... 5.25% 11/15/48 580,016
-------------
8,085,443
-------------
BIOTECHNOLOGY - 0.5%
350,000 AbbVie, Inc......................................... 2.50% 05/14/20 350,025
250,000 AbbVie, Inc......................................... 3.38% 11/14/21 254,332
375,000 AbbVie, Inc......................................... 2.90% 11/06/22 377,763
250,000 AbbVie, Inc......................................... 3.75% 11/14/23 260,458
250,000 AbbVie, Inc......................................... 3.60% 05/14/25 258,504
250,000 AbbVie, Inc......................................... 4.25% 11/14/28 267,481
275,000 AbbVie, Inc......................................... 4.40% 11/06/42 271,574
300,000 AbbVie, Inc......................................... 4.70% 05/14/45 305,905
250,000 AbbVie, Inc......................................... 4.88% 11/14/48 263,540
450,000 Amgen, Inc.......................................... 2.70% 05/01/22 454,669
500,000 Amgen, Inc.......................................... 2.65% 05/11/22 503,992
200,000 Amgen, Inc.......................................... 3.63% 05/22/24 210,214
100,000 Amgen, Inc.......................................... 2.60% 08/19/26 98,542
500,000 Amgen, Inc.......................................... 3.20% 11/02/27 511,163
350,000 Amgen, Inc.......................................... 4.40% 05/01/45 372,391
-------------
4,760,553
-------------
Page 20 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
BUILDING PRODUCTS - 0.0%
$ 250,000 Owens Corning....................................... 4.30% 07/15/47 $ 211,371
-------------
CAPITAL MARKETS - 2.4%
500,000 Goldman Sachs Bank USA.............................. 3.20% 06/05/20 504,345
500,000 Goldman Sachs Group (The), Inc...................... 2.60% 04/23/20 501,031
700,000 Goldman Sachs Group (The), Inc...................... 2.63% 04/25/21 702,605
500,000 Goldman Sachs Group (The), Inc...................... 2.35% 11/15/21 499,696
500,000 Goldman Sachs Group (The), Inc...................... 3.00% 04/26/22 504,906
500,000 Goldman Sachs Group (The), Inc. (a)................. 2.88% 10/31/22 504,272
700,000 Goldman Sachs Group (The), Inc...................... 3.63% 01/22/23 726,714
250,000 Goldman Sachs Group (The), Inc. (a)................. 2.91% 06/05/23 252,823
500,000 Goldman Sachs Group (The), Inc. (a)................. 2.91% 07/24/23 505,108
500,000 Goldman Sachs Group (The), Inc...................... 3.63% 02/20/24 522,019
600,000 Goldman Sachs Group (The), Inc...................... 4.00% 03/03/24 637,082
150,000 Goldman Sachs Group (The), Inc...................... 3.50% 01/23/25 155,289
500,000 Goldman Sachs Group (The), Inc. (a)................. 3.27% 09/29/25 512,066
600,000 Goldman Sachs Group (The), Inc...................... 4.25% 10/21/25 636,755
550,000 Goldman Sachs Group (The), Inc...................... 3.75% 02/25/26 574,556
500,000 Goldman Sachs Group (The), Inc...................... 3.50% 11/16/26 512,744
750,000 Goldman Sachs Group (The), Inc...................... 3.85% 01/26/27 784,510
250,000 Goldman Sachs Group (The), Inc. (a)................. 3.69% 06/05/28 258,404
500,000 Goldman Sachs Group (The), Inc. (a)................. 3.81% 04/23/29 523,012
500,000 Goldman Sachs Group (The), Inc. (a)................. 4.22% 05/01/29 536,691
500,000 Goldman Sachs Group (The), Inc. (a)................. 4.02% 10/31/38 517,388
500,000 Goldman Sachs Group (The), Inc. (a)................. 4.41% 04/23/39 541,854
400,000 Goldman Sachs Group (The), Inc...................... 6.25% 02/01/41 537,112
400,000 Morgan Stanley...................................... 2.65% 01/27/20 400,514
1,000,000 Morgan Stanley...................................... 2.50% 04/21/21 1,002,207
550,000 Morgan Stanley...................................... 5.50% 07/28/21 584,539
500,000 Morgan Stanley...................................... 2.63% 11/17/21 503,216
500,000 Morgan Stanley...................................... 2.75% 05/19/22 505,441
500,000 Morgan Stanley...................................... 3.13% 01/23/23 511,635
300,000 Morgan Stanley...................................... 3.75% 02/25/23 313,599
500,000 Morgan Stanley (a).................................. 3.74% 04/24/24 521,549
450,000 Morgan Stanley...................................... 3.88% 04/29/24 477,261
800,000 Morgan Stanley...................................... 3.88% 01/27/26 851,101
250,000 Morgan Stanley...................................... 4.35% 09/08/26 268,297
250,000 Morgan Stanley...................................... 3.63% 01/20/27 262,618
500,000 Morgan Stanley (a).................................. 3.59% 07/22/28 521,044
500,000 Morgan Stanley (a).................................. 3.77% 01/24/29 524,993
500,000 Morgan Stanley (a).................................. 4.43% 01/23/30 553,565
500,000 Morgan Stanley (a).................................. 3.97% 07/22/38 524,645
500,000 Morgan Stanley (a).................................. 4.46% 04/22/39 551,729
350,000 Morgan Stanley...................................... 6.38% 07/24/42 489,273
100,000 Morgan Stanley...................................... 4.30% 01/27/45 109,997
250,000 Morgan Stanley...................................... 4.38% 01/22/47 278,691
-------------
21,706,896
-------------
CHEMICALS - 0.5%
500,000 Celanese US Holdings LLC............................ 3.50% 05/08/24 513,624
200,000 Dow Chemical (The) Co............................... 3.00% 11/15/22 202,884
See Notes to Financial Statements Page 21
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
CHEMICALS (CONTINUED)
$ 250,000 Dow Chemical (The) Co. (c).......................... 3.15% 05/15/24 $ 255,148
250,000 Dow Chemical (The) Co. (c).......................... 4.80% 05/15/49 270,009
500,000 DuPont de Nemours, Inc.............................. 4.21% 11/15/23 535,574
500,000 DuPont de Nemours, Inc.............................. 4.49% 11/15/25 553,703
500,000 DuPont de Nemours, Inc.............................. 4.73% 11/15/28 566,656
500,000 DuPont de Nemours, Inc.............................. 5.32% 11/15/38 588,075
500,000 DuPont de Nemours, Inc.............................. 5.42% 11/15/48 608,377
250,000 Huntsman International LLC.......................... 4.50% 05/01/29 258,227
-------------
4,352,277
-------------
COMMUNICATIONS EQUIPMENT - 0.2%
800,000 Cisco Systems, Inc.................................. 2.20% 09/20/23 803,474
500,000 Cisco Systems, Inc.................................. 3.63% 03/04/24 533,862
100,000 Cisco Systems, Inc.................................. 2.95% 02/28/26 103,180
200,000 Cisco Systems, Inc.................................. 2.50% 09/20/26 201,427
225,000 Cisco Systems, Inc.................................. 5.90% 02/15/39 307,887
250,000 Motorola Solutions, Inc............................. 4.60% 05/23/29 261,712
-------------
2,211,542
-------------
CONSTRUCTION MATERIALS - 0.0%
250,000 Vulcan Materials Co................................. 4.50% 06/15/47 241,261
-------------
CONSUMER FINANCE - 1.6%
250,000 American Express Co................................. 2.20% 10/30/20 249,755
250,000 American Express Co................................. 3.00% 02/22/21 252,816
250,000 American Express Co................................. 2.50% 08/01/22 251,681
250,000 American Express Co................................. 3.70% 08/03/23 262,604
250,000 American Express Co................................. 3.40% 02/22/24 260,994
500,000 American Express Co................................. 3.00% 10/30/24 512,900
450,000 American Express Co................................. 3.63% 12/05/24 472,826
250,000 American Express Co................................. 4.20% 11/06/25 273,257
250,000 American Express Credit Corp........................ 2.20% 03/03/20 249,791
150,000 American Express Credit Corp........................ 2.60% 09/14/20 150,592
575,000 American Express Credit Corp........................ 2.25% 05/05/21 575,353
250,000 American Express Credit Corp........................ 2.70% 03/03/22 252,765
500,000 Capital One Financial Corp.......................... 3.30% 10/30/24 513,234
250,000 Capital One Financial Corp.......................... 4.25% 04/30/25 268,118
500,000 Capital One Financial Corp.......................... 3.80% 01/31/28 517,219
500,000 Capital One N.A..................................... 2.65% 08/08/22 502,839
250,000 Caterpillar Financial Services Corp................. 1.85% 09/04/20 249,173
1,039,000 Caterpillar Financial Services Corp................. 1.70% 08/09/21 1,028,413
1,000,000 Caterpillar Financial Services Corp................. 2.55% 11/29/22 1,012,600
500,000 Caterpillar Financial Services Corp................. 2.85% 05/17/24 510,177
500,000 Discover Bank....................................... 3.35% 02/06/23 512,039
250,000 Discover Bank....................................... 4.65% 09/13/28 273,646
500,000 Ford Motor Credit Co., LLC.......................... 2.98% 08/03/22 494,894
250,000 Ford Motor Credit Co., LLC.......................... 5.58% 03/18/24 268,525
500,000 Ford Motor Credit Co., LLC.......................... 3.82% 11/02/27 478,494
500,000 Ford Motor Credit Co., LLC.......................... 5.11% 05/03/29 511,091
250,000 General Motors Financial Co., Inc................... 2.65% 04/13/20 249,969
250,000 General Motors Financial Co., Inc................... 2.45% 11/06/20 249,230
250,000 General Motors Financial Co., Inc................... 3.20% 07/06/21 252,277
Page 22 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
CONSUMER FINANCE (CONTINUED)
$ 500,000 General Motors Financial Co., Inc................... 4.20% 11/06/21 $ 515,015
250,000 General Motors Financial Co., Inc................... 3.55% 07/08/22 254,571
250,000 General Motors Financial Co., Inc................... 5.10% 01/17/24 267,516
250,000 General Motors Financial Co., Inc................... 3.50% 11/07/24 249,690
200,000 General Motors Financial Co., Inc................... 5.25% 03/01/26 214,704
100,000 General Motors Financial Co., Inc................... 4.00% 10/06/26 100,919
250,000 General Motors Financial Co., Inc................... 4.35% 01/17/27 254,879
250,000 General Motors Financial Co., Inc................... 3.85% 01/05/28 244,721
500,000 Synchrony Financial................................. 4.38% 03/19/24 523,921
500,000 Synchrony Financial................................. 5.15% 03/19/29 539,252
-------------
14,822,460
-------------
CONTAINERS & PACKAGING - 0.2%
350,000 International Paper Co.............................. 4.40% 08/15/47 341,902
250,000 WRKCo, Inc.......................................... 3.00% 09/15/24 252,585
250,000 WRKCo, Inc.......................................... 3.38% 09/15/27 250,628
500,000 WRKCo, Inc.......................................... 3.90% 06/01/28 514,481
250,000 WRKCo, Inc.......................................... 4.90% 03/15/29 273,535
250,000 WRKCo, Inc.......................................... 4.20% 06/01/32 258,494
-------------
1,891,625
-------------
DIVERSIFIED FINANCIAL SERVICES - 0.3%
250,000 Berkshire Hathaway Finance Corp..................... 4.20% 08/15/48 280,064
500,000 Berkshire Hathaway Finance Corp..................... 4.25% 01/15/49 563,630
125,000 Berkshire Hathaway, Inc............................. 2.75% 03/15/23 127,105
425,000 Berkshire Hathaway, Inc............................. 3.13% 03/15/26 440,328
250,000 Dell International LLC/EMC Corp. (c)................ 4.42% 06/15/21 257,691
250,000 Dell International LLC/EMC Corp. (c)................ 4.00% 07/15/24 256,718
500,000 Dell International LLC/EMC Corp. (c)................ 4.90% 10/01/26 522,098
250,000 Dell International LLC/EMC Corp. (c)................ 5.30% 10/01/29 263,675
250,000 Dell International LLC/EMC Corp. (c)................ 8.35% 07/15/46 316,028
-------------
3,027,337
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.2%
300,000 AT&T, Inc........................................... 2.45% 06/30/20 299,934
250,000 AT&T, Inc........................................... 3.20% 03/01/22 255,416
250,000 AT&T, Inc........................................... 3.80% 03/01/24 263,167
150,000 AT&T, Inc........................................... 3.90% 03/11/24 158,373
350,000 AT&T, Inc........................................... 3.40% 05/15/25 360,095
650,000 AT&T, Inc........................................... 4.13% 02/17/26 691,976
545,000 AT&T, Inc........................................... 4.10% 02/15/28 577,137
500,000 AT&T, Inc........................................... 4.35% 03/01/29 539,001
462,000 AT&T, Inc........................................... 4.30% 02/15/30 494,923
250,000 AT&T, Inc........................................... 5.25% 03/01/37 280,983
500,000 AT&T, Inc........................................... 4.85% 03/01/39 537,602
425,000 AT&T, Inc........................................... 4.80% 06/15/44 449,292
250,000 AT&T, Inc........................................... 4.35% 06/15/45 250,344
250,000 AT&T, Inc........................................... 4.75% 05/15/46 264,428
550,000 AT&T, Inc........................................... 5.65% 02/15/47 646,235
250,000 AT&T, Inc........................................... 5.70% 03/01/57 294,745
100,000 Verizon Communications, Inc......................... 2.63% 08/15/26 99,437
250,000 Verizon Communications, Inc......................... 4.13% 03/16/27 272,131
See Notes to Financial Statements Page 23
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES (CONTINUED)
$ 250,000 Verizon Communications, Inc......................... 3.88% 02/08/29 $ 268,388
1,119,000 Verizon Communications, Inc. (c).................... 4.02% 12/03/29 1,212,606
231,000 Verizon Communications, Inc......................... 4.27% 01/15/36 250,588
298,000 Verizon Communications, Inc......................... 4.13% 08/15/46 311,566
750,000 Verizon Communications, Inc......................... 4.86% 08/21/46 874,471
250,000 Verizon Communications, Inc......................... 4.52% 09/15/48 280,532
249,000 Verizon Communications, Inc......................... 5.01% 08/21/54 298,482
272,000 Verizon Communications, Inc......................... 4.67% 03/15/55 308,895
-------------
10,540,747
-------------
ELECTRIC UTILITIES - 3.9%
500,000 AEP Texas, Inc...................................... 2.40% 10/01/22 501,864
500,000 AEP Texas, Inc...................................... 3.80% 10/01/47 507,067
500,000 AEP Texas, Inc...................................... 4.15% 05/01/49 541,880
750,000 AEP Transmission Co., LLC........................... 3.10% 12/01/26 762,717
250,000 AEP Transmission Co., LLC........................... 4.00% 12/01/46 261,971
500,000 AEP Transmission Co., LLC........................... 3.75% 12/01/47 514,380
500,000 AEP Transmission Co., LLC........................... 4.25% 09/15/48 549,464
250,000 Alabama Power Co.................................... 2.45% 03/30/22 251,185
250,000 Alabama Power Co.................................... 3.70% 12/01/47 253,422
250,000 American Electric Power Co., Inc.................... 2.95% 12/15/22 254,000
500,000 American Electric Power Co., Inc.................... 3.20% 11/13/27 510,653
300,000 Appalachian Power Co................................ 4.40% 05/15/44 326,786
250,000 Appalachian Power Co................................ 4.50% 03/01/49 281,178
500,000 Atlantic City Electric Co........................... 4.00% 10/15/28 549,287
250,000 Baltimore Gas & Electric Co......................... 2.40% 08/15/26 245,059
250,000 Baltimore Gas & Electric Co......................... 3.50% 08/15/46 247,371
250,000 Baltimore Gas & Electric Co......................... 3.75% 08/15/47 255,741
240,000 CenterPoint Energy Houston Electric LLC............. 2.25% 08/01/22 239,623
250,000 CenterPoint Energy Houston Electric LLC............. 2.40% 09/01/26 245,350
500,000 CenterPoint Energy Houston Electric LLC............. 3.00% 02/01/27 510,205
295,000 CenterPoint Energy Houston Electric LLC............. 4.50% 04/01/44 339,588
250,000 CenterPoint Energy Houston Electric LLC............. 3.95% 03/01/48 267,352
500,000 CenterPoint Energy Houston Electric LLC............. 4.25% 02/01/49 567,492
500,000 Cleveland Electric Illuminating (The) Co. (c)....... 3.50% 04/01/28 508,083
500,000 Cleveland Electric Illuminating (The) Co. (c)....... 4.55% 11/15/30 551,006
300,000 Commonwealth Edison Co.............................. 3.40% 09/01/21 306,648
200,000 Commonwealth Edison Co.............................. 2.55% 06/15/26 199,097
250,000 Commonwealth Edison Co.............................. 2.95% 08/15/27 253,732
250,000 Commonwealth Edison Co.............................. 3.70% 08/15/28 268,934
300,000 Commonwealth Edison Co.............................. 3.70% 03/01/45 305,569
400,000 Commonwealth Edison Co.............................. 3.65% 06/15/46 407,068
500,000 Commonwealth Edison Co.............................. 3.75% 08/15/47 518,997
250,000 Commonwealth Edison Co.............................. 4.00% 03/01/48 271,675
500,000 Commonwealth Edison Co.............................. 4.00% 03/01/49 537,970
100,000 Duke Energy Carolinas LLC........................... 2.50% 03/15/23 100,966
500,000 Duke Energy Carolinas LLC........................... 3.05% 03/15/23 514,182
250,000 Duke Energy Corp.................................... 1.80% 09/01/21 247,338
300,000 Duke Energy Corp.................................... 3.55% 09/15/21 306,781
500,000 Duke Energy Corp.................................... 2.40% 08/15/22 500,024
Page 24 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
ELECTRIC UTILITIES (CONTINUED)
$ 250,000 Duke Energy Corp.................................... 3.15% 08/15/27 $ 253,818
500,000 Duke Energy Corp.................................... 3.40% 06/15/29 511,778
950,000 Duke Energy Corp.................................... 3.75% 09/01/46 927,769
500,000 Duke Energy Corp.................................... 3.95% 08/15/47 506,355
500,000 Duke Energy Corp.................................... 4.20% 06/15/49 526,982
87,500 Duke Energy Florida LLC............................. 2.10% 12/15/19 87,359
500,000 Duke Energy Florida LLC............................. 3.20% 01/15/27 516,196
250,000 Duke Energy Florida LLC............................. 3.80% 07/15/28 269,572
250,000 Duke Energy Florida LLC............................. 3.40% 10/01/46 244,493
250,000 Duke Energy Florida LLC............................. 4.20% 07/15/48 277,401
500,000 Duke Energy Progress LLC............................ 3.45% 03/15/29 527,607
250,000 Duke Energy Progress LLC............................ 3.70% 10/15/46 254,365
250,000 Duke Energy Progress LLC............................ 3.60% 09/15/47 249,924
575,000 Exelon Corp......................................... 5.15% 12/01/20 592,719
200,000 Exelon Corp......................................... 2.45% 04/15/21 200,011
500,000 Exelon Corp......................................... 3.50% 06/01/22 512,427
250,000 Exelon Corp......................................... 4.45% 04/15/46 266,444
210,000 Florida Power & Light Co............................ 4.05% 06/01/42 229,899
250,000 Florida Power & Light Co............................ 3.95% 03/01/48 274,014
500,000 Florida Power & Light Co............................ 3.99% 03/01/49 549,197
250,000 Indiana Michigan Power Co........................... 3.85% 05/15/28 268,533
100,000 Indiana Michigan Power Co........................... 4.55% 03/15/46 112,601
500,000 Indiana Michigan Power Co........................... 3.75% 07/01/47 506,693
250,000 Indiana Michigan Power Co........................... 4.25% 08/15/48 275,527
500,000 Jersey Central Power & Light Co. (c)................ 4.30% 01/15/26 537,324
410,000 Metropolitan Edison Co. (c)......................... 3.50% 03/15/23 423,128
500,000 Metropolitan Edison Co. (c)......................... 4.30% 01/15/29 545,549
500,000 Oncor Electric Delivery Co., LLC (c)................ 2.75% 06/01/24 509,702
250,000 PECO Energy Co...................................... 3.70% 09/15/47 256,941
500,000 PECO Energy Co...................................... 3.90% 03/01/48 527,475
100,000 Public Service Electric & Gas Co.................... 1.90% 03/15/21 99,708
500,000 Public Service Electric & Gas Co.................... 3.25% 09/01/23 519,154
550,000 Public Service Electric & Gas Co.................... 2.25% 09/15/26 534,350
250,000 Public Service Electric & Gas Co.................... 3.00% 05/15/27 254,712
500,000 Public Service Electric & Gas Co.................... 3.65% 09/01/28 536,457
250,000 Public Service Electric & Gas Co.................... 3.20% 05/15/29 258,921
275,000 Public Service Electric & Gas Co.................... 3.95% 05/01/42 296,842
100,000 Public Service Electric & Gas Co.................... 3.80% 03/01/46 105,569
500,000 Public Service Electric & Gas Co.................... 3.60% 12/01/47 512,287
250,000 Public Service Electric & Gas Co.................... 4.05% 05/01/48 273,713
250,000 Public Service Electric & Gas Co.................... 3.85% 05/01/49 268,446
250,000 Southern (The) Co................................... 3.25% 07/01/26 254,104
500,000 Southwestern Electric Power Co...................... 2.75% 10/01/26 487,556
100,000 Southwestern Electric Power Co...................... 6.20% 03/15/40 128,491
500,000 Tampa Electric Co................................... 4.45% 06/15/49 558,423
500,000 Virginia Electric & Power Co........................ 2.75% 03/15/23 507,429
200,000 Virginia Electric & Power Co........................ 3.45% 02/15/24 208,498
450,000 Virginia Electric & Power Co........................ 2.95% 11/15/26 457,907
250,000 Virginia Electric & Power Co........................ 3.50% 03/15/27 263,661
475,000 Virginia Electric & Power Co........................ 4.45% 02/15/44 537,284
See Notes to Financial Statements Page 25
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
ELECTRIC UTILITIES (CONTINUED)
$ 250,000 Virginia Electric & Power Co........................ 4.00% 11/15/46 $ 264,409
250,000 Virginia Electric & Power Co........................ 3.80% 09/15/47 257,091
500,000 Virginia Electric & Power Co........................ 4.60% 12/01/48 576,678
-------------
34,685,198
-------------
ELECTRICAL EQUIPMENT - 0.1%
250,000 Rockwell Automation, Inc............................ 3.50% 03/01/29 265,895
250,000 Rockwell Automation, Inc............................ 4.20% 03/01/49 279,427
-------------
545,322
-------------
ENERGY EQUIPMENT & SERVICES - 0.0%
250,000 Halliburton Co...................................... 5.00% 11/15/45 273,168
-------------
ENTERTAINMENT - 0.2%
150,000 TWDC Enterprises 18 Corp............................ 3.00% 02/13/26 156,252
350,000 TWDC Enterprises 18 Corp............................ 1.85% 07/30/26 339,501
500,000 TWDC Enterprises 18 Corp............................ 2.95% 06/15/27 522,307
475,000 TWDC Enterprises 18 Corp............................ 4.13% 06/01/44 541,271
-------------
1,559,331
-------------
FOOD & STAPLES RETAILING - 0.7%
250,000 Walmart, Inc........................................ 3.13% 06/23/21 255,540
1,000,000 Walmart, Inc........................................ 2.35% 12/15/22 1,011,903
250,000 Walmart, Inc........................................ 3.40% 06/26/23 262,930
325,000 Walmart, Inc........................................ 3.30% 04/22/24 341,887
500,000 Walmart, Inc........................................ 2.85% 07/08/24 516,933
500,000 Walmart, Inc........................................ 2.65% 12/15/24 511,171
250,000 Walmart, Inc........................................ 3.55% 06/26/25 267,335
500,000 Walmart, Inc........................................ 3.05% 07/08/26 524,218
250,000 Walmart, Inc........................................ 3.70% 06/26/28 273,041
500,000 Walmart, Inc........................................ 3.25% 07/08/29 527,613
250,000 Walmart, Inc........................................ 3.95% 06/28/38 278,885
1,000,000 Walmart, Inc........................................ 3.63% 12/15/47 1,070,766
250,000 Walmart, Inc........................................ 4.05% 06/29/48 286,851
-------------
6,129,073
-------------
FOOD PRODUCTS - 0.7%
500,000 Conagra Brands, Inc................................. 3.80% 10/22/21 514,100
500,000 Conagra Brands, Inc................................. 4.30% 05/01/24 530,770
500,000 Conagra Brands, Inc................................. 4.60% 11/01/25 544,728
500,000 Conagra Brands, Inc................................. 4.85% 11/01/28 555,016
500,000 Conagra Brands, Inc................................. 5.30% 11/01/38 543,356
500,000 Conagra Brands, Inc................................. 5.40% 11/01/48 549,576
500,000 Mars, Inc. (c)...................................... 2.70% 04/01/25 510,531
500,000 Mars, Inc. (c)...................................... 3.20% 04/01/30 519,996
500,000 Mars, Inc. (c)...................................... 3.95% 04/01/49 538,783
250,000 Nestle Holdings, Inc. (c)........................... 3.10% 09/24/21 255,280
250,000 Nestle Holdings, Inc. (c)........................... 3.35% 09/24/23 260,786
250,000 Nestle Holdings, Inc. (c)........................... 3.50% 09/24/25 265,665
250,000 Nestle Holdings, Inc. (c)........................... 3.90% 09/24/38 272,768
250,000 Nestle Holdings, Inc. (c)........................... 4.00% 09/24/48 277,618
250,000 Tyson Foods, Inc.................................... 4.55% 06/02/47 261,892
-------------
6,400,865
-------------
Page 26 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
GAS UTILITIES - 0.2%
$ 500,000 CenterPoint Energy Resources Corp................... 3.55% 04/01/23 $ 515,508
500,000 CenterPoint Energy Resources Corp................... 4.00% 04/01/28 533,017
500,000 Piedmont Natural Gas Co., Inc....................... 3.50% 06/01/29 523,840
500,000 Southern Co. Gas Capital Corp....................... 4.40% 05/30/47 529,663
-------------
2,102,028
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.8%
250,000 Abbott Laboratories................................. 2.90% 11/30/21 254,237
350,000 Abbott Laboratories................................. 3.40% 11/30/23 365,153
282,000 Abbott Laboratories................................. 3.75% 11/30/26 305,148
1,100,000 Abbott Laboratories................................. 4.90% 11/30/46 1,361,204
550,000 Becton Dickinson and Co............................. 3.36% 06/06/24 566,848
522,000 Becton Dickinson and Co............................. 3.70% 06/06/27 545,534
800,000 Becton Dickinson and Co............................. 4.67% 06/06/47 897,572
250,000 Boston Scientific Corp.............................. 3.45% 03/01/24 261,111
250,000 Boston Scientific Corp.............................. 3.75% 03/01/26 266,115
250,000 Boston Scientific Corp.............................. 4.00% 03/01/29 270,669
250,000 Boston Scientific Corp.............................. 4.55% 03/01/39 276,675
250,000 Boston Scientific Corp.............................. 4.70% 03/01/49 287,325
750,000 Medtronic, Inc...................................... 3.15% 03/15/22 771,340
600,000 Medtronic, Inc...................................... 3.50% 03/15/25 636,809
201,000 Medtronic, Inc...................................... 4.63% 03/15/45 243,817
-------------
7,309,557
-------------
HEALTH CARE PROVIDERS & SERVICES - 1.9%
250,000 Anthem, Inc......................................... 4.55% 03/01/48 272,776
500,000 Cigna Corp. (c)..................................... 3.20% 09/17/20 504,725
500,000 Cigna Corp. (c)..................................... 3.40% 09/17/21 509,916
500,000 Cigna Corp. (c)..................................... 3.75% 07/15/23 520,920
500,000 Cigna Corp. (c)..................................... 4.13% 11/15/25 532,894
500,000 Cigna Corp. (c)..................................... 4.80% 08/15/38 539,852
750,000 CVS Health Corp..................................... 3.13% 03/09/20 753,025
750,000 CVS Health Corp..................................... 3.35% 03/09/21 760,667
600,000 CVS Health Corp..................................... 2.13% 06/01/21 596,218
500,000 CVS Health Corp..................................... 3.70% 03/09/23 517,421
700,000 CVS Health Corp..................................... 4.00% 12/05/23 733,111
500,000 CVS Health Corp..................................... 4.10% 03/25/25 527,699
178,000 CVS Health Corp..................................... 3.88% 07/20/25 186,013
150,000 CVS Health Corp..................................... 2.88% 06/01/26 147,210
500,000 CVS Health Corp..................................... 4.30% 03/25/28 527,689
350,000 CVS Health Corp..................................... 4.78% 03/25/38 365,692
1,000,000 CVS Health Corp..................................... 5.05% 03/25/48 1,066,760
250,000 HCA, Inc............................................ 4.13% 06/15/29 257,508
250,000 HCA, Inc............................................ 5.13% 06/15/39 260,736
250,000 HCA, Inc............................................ 5.25% 06/15/49 260,917
500,000 UnitedHealth Group, Inc............................. 1.95% 10/15/20 498,065
275,000 UnitedHealth Group, Inc............................. 4.70% 02/15/21 284,070
100,000 UnitedHealth Group, Inc............................. 2.13% 03/15/21 99,847
550,000 UnitedHealth Group, Inc............................. 2.88% 12/15/21 558,336
500,000 UnitedHealth Group, Inc............................. 2.38% 10/15/22 501,670
250,000 UnitedHealth Group, Inc............................. 3.50% 02/15/24 262,252
See Notes to Financial Statements Page 27
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
HEALTH CARE PROVIDERS & SERVICES (CONTINUED)
$ 100,000 UnitedHealth Group, Inc............................. 3.75% 07/15/25 $ 106,892
250,000 UnitedHealth Group, Inc............................. 3.70% 12/15/25 266,464
250,000 UnitedHealth Group, Inc............................. 3.10% 03/15/26 257,694
500,000 UnitedHealth Group, Inc............................. 3.45% 01/15/27 526,551
500,000 UnitedHealth Group, Inc............................. 3.38% 04/15/27 522,563
500,000 UnitedHealth Group, Inc............................. 2.95% 10/15/27 508,945
250,000 UnitedHealth Group, Inc............................. 3.88% 12/15/28 272,952
150,000 UnitedHealth Group, Inc............................. 6.88% 02/15/38 217,146
573,000 UnitedHealth Group, Inc............................. 4.75% 07/15/45 679,592
500,000 UnitedHealth Group, Inc............................. 4.20% 01/15/47 547,285
500,000 UnitedHealth Group, Inc............................. 4.25% 04/15/47 550,644
250,000 UnitedHealth Group, Inc............................. 3.75% 10/15/47 256,644
250,000 UnitedHealth Group, Inc............................. 4.45% 12/15/48 288,301
-------------
17,047,662
-------------
HOTELS, RESTAURANTS & LEISURE - 0.1%
250,000 McDonald's Corp..................................... 3.35% 04/01/23 259,654
250,000 McDonald's Corp..................................... 3.80% 04/01/28 268,662
100,000 McDonald's Corp..................................... 4.88% 12/09/45 114,966
250,000 McDonald's Corp..................................... 4.45% 09/01/48 274,554
-------------
917,836
-------------
HOUSEHOLD PRODUCTS - 0.2%
250,000 Procter & Gamble (The) Co........................... 1.70% 11/03/21 248,368
500,000 Procter & Gamble (The) Co........................... 2.15% 08/11/22 502,982
250,000 Procter & Gamble (The) Co........................... 2.45% 11/03/26 250,813
500,000 Procter & Gamble (The) Co........................... 2.85% 08/11/27 518,640
250,000 Procter & Gamble (The) Co........................... 3.50% 10/25/47 266,845
-------------
1,787,648
-------------
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS - 0.2%
500,000 NextEra Energy Capital Holdings, Inc................ 2.80% 01/15/23 503,848
500,000 NextEra Energy Capital Holdings, Inc................ 3.15% 04/01/24 514,406
500,000 NextEra Energy Capital Holdings, Inc................ 3.55% 05/01/27 522,434
500,000 NextEra Energy Capital Holdings, Inc................ 3.50% 04/01/29 520,524
-------------
2,061,212
-------------
INDUSTRIAL CONGLOMERATES - 0.3%
250,000 3M Co............................................... 2.75% 03/01/22 254,211
250,000 3M Co............................................... 3.25% 02/14/24 261,341
500,000 Baker Hughes a GE Co., LLC/Baker Hughes Co-Obligor,
Inc.............................................. 2.77% 12/15/22 505,730
500,000 Baker Hughes a GE Co., LLC/Baker Hughes Co-Obligor,
Inc.............................................. 3.34% 12/15/27 503,849
500,000 Baker Hughes a GE Co., LLC/Baker Hughes Co-Obligor,
Inc.............................................. 4.08% 12/15/47 484,830
425,000 General Electric Co................................. 4.50% 03/11/44 413,010
-------------
2,422,971
-------------
INSURANCE - 0.6%
300,000 AIG Global Funding (c).............................. 2.15% 07/02/20 299,233
400,000 American International Group, Inc................... 3.38% 08/15/20 404,458
200,000 American International Group, Inc................... 4.13% 02/15/24 212,072
100,000 American International Group, Inc................... 3.90% 04/01/26 104,744
250,000 American International Group, Inc................... 4.25% 03/15/29 268,777
300,000 American International Group, Inc................... 6.25% 05/01/36 375,102
Page 28 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
INSURANCE (CONTINUED)
$ 500,000 Aon Corp............................................ 3.75% 05/02/29 $ 521,585
250,000 CNA Financial Corp.................................. 3.90% 05/01/29 263,130
750,000 Marsh & McLennan Cos., Inc.......................... 4.38% 03/15/29 828,153
250,000 Marsh & McLennan Cos., Inc.......................... 4.90% 03/15/49 296,550
300,000 MetLife, Inc........................................ 4.88% 11/13/43 357,113
275,000 Prudential Financial, Inc........................... 4.60% 05/15/44 316,959
500,000 Travelers (The) Cos., Inc........................... 4.00% 05/30/47 553,807
250,000 Travelers (The) Cos., Inc........................... 4.05% 03/07/48 277,798
500,000 Travelers (The) Cos., Inc........................... 4.10% 03/04/49 565,349
-------------
5,644,830
-------------
IT SERVICES - 1.1%
500,000 Fiserv, Inc......................................... 2.75% 07/01/24 505,033
500,000 Fiserv, Inc......................................... 3.20% 07/01/26 511,129
500,000 Fiserv, Inc......................................... 3.50% 07/01/29 515,001
500,000 Fiserv, Inc......................................... 4.40% 07/01/49 528,249
500,000 International Business Machines Corp................ 2.85% 05/13/22 508,718
500,000 International Business Machines Corp................ 3.00% 05/15/24 513,846
500,000 International Business Machines Corp................ 3.30% 05/15/26 518,736
500,000 International Business Machines Corp................ 3.50% 05/15/29 523,770
500,000 International Business Machines Corp................ 4.15% 05/15/39 535,132
500,000 International Business Machines Corp................ 4.25% 05/15/49 539,567
600,000 Visa, Inc........................................... 2.20% 12/14/20 601,127
500,000 Visa, Inc........................................... 2.15% 09/15/22 502,287
950,000 Visa, Inc........................................... 2.80% 12/14/22 973,405
550,000 Visa, Inc........................................... 3.15% 12/14/25 577,448
250,000 Visa, Inc........................................... 2.75% 09/15/27 255,196
303,000 Visa, Inc........................................... 4.15% 12/14/35 348,714
450,000 Visa, Inc........................................... 4.30% 12/14/45 533,784
500,000 Visa, Inc........................................... 3.65% 09/15/47 538,340
-------------
9,529,482
-------------
MACHINERY - 0.1%
250,000 Parker-Hannifin Corp................................ 2.70% 06/14/24 253,306
250,000 Parker-Hannifin Corp................................ 3.25% 06/14/29 259,837
250,000 Parker-Hannifin Corp................................ 4.00% 06/14/49 265,688
250,000 Wabtec Corp......................................... 4.40% 03/15/24 264,856
250,000 Wabtec Corp......................................... 4.95% 09/15/28 268,279
-------------
1,311,966
-------------
MEDIA - 1.3%
610,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 4.91% 07/23/25 662,763
250,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 5.05% 03/30/29 276,392
750,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 6.48% 10/23/45 884,985
250,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 5.38% 05/01/47 264,221
500,000 Charter Communications Operating LLC/Charter
Communications Operating Capital................. 5.75% 04/01/48 553,859
600,000 Comcast Corp........................................ 3.30% 10/01/20 608,352
See Notes to Financial Statements Page 29
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
MEDIA (CONTINUED)
$ 600,000 Comcast Corp........................................ 3.45% 10/01/21 $ 617,558
575,000 Comcast Corp........................................ 3.70% 04/15/24 610,684
550,000 Comcast Corp........................................ 3.95% 10/15/25 593,854
250,000 Comcast Corp........................................ 3.55% 05/01/28 263,454
350,000 Comcast Corp........................................ 4.15% 10/15/28 386,075
100,000 Comcast Corp........................................ 4.60% 08/15/45 113,827
250,000 Comcast Corp........................................ 3.40% 07/15/46 240,134
500,000 Comcast Corp........................................ 4.00% 08/15/47 527,935
250,000 Comcast Corp........................................ 4.00% 03/01/48 264,862
400,000 Comcast Corp........................................ 4.70% 10/15/48 469,153
250,000 Comcast Corp........................................ 4.95% 10/15/58 305,597
250,000 Discovery Communications LLC........................ 2.95% 03/20/23 252,452
250,000 Discovery Communications LLC........................ 3.95% 03/20/28 257,594
500,000 Discovery Communications LLC........................ 4.13% 05/15/29 521,207
250,000 Discovery Communications LLC........................ 5.00% 09/20/37 261,559
275,000 Discovery Communications LLC........................ 5.20% 09/20/47 291,115
500,000 Discovery Communications LLC........................ 5.30% 05/15/49 538,874
500,000 Fox Corp. (c)....................................... 3.67% 01/25/22 516,898
500,000 Fox Corp. (c)....................................... 4.03% 01/25/24 532,174
250,000 Fox Corp. (c)....................................... 4.71% 01/25/29 279,911
250,000 Fox Corp. (c)....................................... 5.48% 01/25/39 295,510
250,000 Fox Corp. (c)....................................... 5.58% 01/25/49 306,298
-------------
11,697,297
-------------
METALS & MINING - 0.1%
500,000 Glencore Funding LLC (c)............................ 3.00% 10/27/22 504,070
250,000 Glencore Funding LLC (c)............................ 4.13% 03/12/24 259,734
-------------
763,804
-------------
MULTILINE RETAIL - 0.1%
500,000 Target Corp......................................... 3.38% 04/15/29 530,881
-------------
MULTI-UTILITIES - 1.1%
650,000 CenterPoint Energy, Inc............................. 3.60% 11/01/21 667,966
600,000 CenterPoint Energy, Inc............................. 3.85% 02/01/24 629,048
500,000 CenterPoint Energy, Inc............................. 4.25% 11/01/28 540,623
200,000 Consolidated Edison Co. of New York, Inc............ 3.80% 05/15/28 216,311
335,000 Consolidated Edison Co. of New York, Inc............ 4.45% 03/15/44 369,533
185,000 Consolidated Edison Co. of New York, Inc............ 3.85% 06/15/46 190,769
500,000 Consolidated Edison Co. of New York, Inc............ 3.88% 06/15/47 515,909
500,000 Consolidated Edison Co. of New York, Inc............ 4.13% 05/15/49 539,841
250,000 Consolidated Edison Co. of New York, Inc............ 4.30% 12/01/56 269,449
250,000 Consolidated Edison, Inc............................ 2.00% 03/15/20 249,219
100,000 Consolidated Edison, Inc............................ 2.00% 05/15/21 99,542
1,000,000 Dominion Energy, Inc................................ 2.58% 07/01/20 998,768
250,000 Dominion Energy, Inc................................ 2.75% 01/15/22 251,950
495,000 Dominion Energy, Inc................................ 4.70% 12/01/44 552,061
390,000 NiSource, Inc....................................... 2.65% 11/17/22 392,710
750,000 NiSource, Inc....................................... 3.65% 06/15/23 777,476
250,000 NiSource, Inc....................................... 3.49% 05/15/27 258,820
500,000 NiSource, Inc....................................... 4.38% 05/15/47 535,552
250,000 NiSource, Inc....................................... 3.95% 03/30/48 249,683
Page 30 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
MULTI-UTILITIES (CONTINUED)
$ 250,000 Public Service Enterprise Group, Inc................ 2.00% 11/15/21 $ 247,757
500,000 Public Service Enterprise Group, Inc................ 2.65% 11/15/22 501,486
500,000 Public Service Enterprise Group, Inc................ 2.88% 06/15/24 507,015
250,000 WEC Energy Group, Inc............................... 3.10% 03/08/22 254,213
-------------
9,815,701
-------------
OIL, GAS & CONSUMABLE FUELS - 3.4%
250,000 Andeavor Logistics L.P./Tesoro Logistics Finance
Corp............................................. 4.25% 12/01/27 264,534
500,000 Boardwalk Pipelines L.P............................. 4.80% 05/03/29 522,308
1,000,000 BP Capital Markets America, Inc..................... 3.80% 09/21/25 1,068,012
500,000 BP Capital Markets America, Inc..................... 3.41% 02/11/26 524,433
100,000 BP Capital Markets America, Inc..................... 3.12% 05/04/26 101,989
500,000 BP Capital Markets America, Inc..................... 3.94% 09/21/28 545,065
750,000 BP Capital Markets America, Inc..................... 4.23% 11/06/28 830,938
750,000 Chevron Corp........................................ 2.10% 05/16/21 750,899
550,000 Chevron Corp........................................ 2.57% 05/16/23 558,909
500,000 Chevron Corp........................................ 2.90% 03/03/24 516,840
150,000 Chevron Corp........................................ 3.33% 11/17/25 158,525
1,360,000 Chevron Corp........................................ 2.95% 05/16/26 1,404,789
250,000 Cimarex Energy Co................................... 4.38% 03/15/29 266,028
225,000 ConocoPhillips...................................... 6.50% 02/01/39 316,375
400,000 Energy Transfer Operating L.P....................... 3.60% 02/01/23 409,098
150,000 Energy Transfer Operating L.P....................... 4.20% 09/15/23 157,364
500,000 Energy Transfer Operating L.P....................... 4.50% 04/15/24 532,411
250,000 Energy Transfer Operating L.P....................... 4.20% 04/15/27 260,028
250,000 Energy Transfer Operating L.P....................... 4.95% 06/15/28 273,563
250,000 Energy Transfer Operating L.P....................... 5.25% 04/15/29 279,570
250,000 Energy Transfer Operating L.P....................... 5.80% 06/15/38 278,602
250,000 Energy Transfer Operating L.P....................... 5.30% 04/15/47 261,186
250,000 Energy Transfer Operating L.P....................... 6.00% 06/15/48 285,770
250,000 Energy Transfer Operating L.P....................... 6.25% 04/15/49 296,623
500,000 Enterprise Products Operating LLC................... 3.50% 02/01/22 513,475
500,000 Enterprise Products Operating LLC................... 4.15% 10/16/28 544,691
500,000 Enterprise Products Operating LLC................... 3.13% 07/31/29 502,133
500,000 Enterprise Products Operating LLC................... 4.80% 02/01/49 555,664
500,000 Enterprise Products Operating LLC................... 4.20% 01/31/50 513,464
500,000 Exxon Mobil Corp.................................... 2.22% 03/01/21 501,544
150,000 Exxon Mobil Corp.................................... 2.71% 03/06/25 153,330
200,000 Exxon Mobil Corp.................................... 3.04% 03/01/26 207,449
220,000 Kinder Morgan Energy Partners L.P................... 3.50% 03/01/21 223,488
175,000 Kinder Morgan Energy Partners L.P................... 6.95% 01/15/38 224,672
500,000 Kinder Morgan, Inc.................................. 3.15% 01/15/23 508,966
715,000 Kinder Morgan, Inc.................................. 4.30% 06/01/25 764,399
500,000 Kinder Morgan, Inc.................................. 4.30% 03/01/28 536,363
650,000 Kinder Morgan, Inc.................................. 5.05% 02/15/46 709,366
500,000 Kinder Morgan, Inc.................................. 5.20% 03/01/48 565,653
250,000 Marathon Oil Corp................................... 4.40% 07/15/27 265,474
450,000 Marathon Petroleum Corp............................. 3.80% 04/01/28 457,778
250,000 Midwest Connector Capital Co., LLC (c).............. 3.63% 04/01/22 256,249
250,000 Midwest Connector Capital Co., LLC (c).............. 3.90% 04/01/24 260,333
250,000 Midwest Connector Capital Co., LLC (c).............. 4.63% 04/01/29 268,165
See Notes to Financial Statements Page 31
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
OIL, GAS & CONSUMABLE FUELS (CONTINUED)
$ 250,000 MPLX L.P............................................ 3.38% 03/15/23 $ 255,921
500,000 MPLX L.P............................................ 4.00% 03/15/28 518,287
500,000 MPLX L.P............................................ 4.80% 02/15/29 551,162
500,000 MPLX L.P............................................ 5.20% 03/01/47 538,231
500,000 MPLX L.P............................................ 5.50% 02/15/49 568,715
400,000 ONEOK Partners L.P.................................. 3.38% 10/01/22 406,578
250,000 ONEOK, Inc.......................................... 4.55% 07/15/28 271,600
250,000 ONEOK, Inc.......................................... 4.35% 03/15/29 267,419
250,000 ONEOK, Inc.......................................... 5.20% 07/15/48 275,886
250,000 Phillips 66......................................... 4.88% 11/15/44 280,646
300,000 Plains All American Pipeline L.P./PAA Finance Corp.. 4.65% 10/15/25 320,204
500,000 Sabine Pass Liquefaction LLC........................ 5.00% 03/15/27 548,662
250,000 Sabine Pass Liquefaction LLC........................ 4.20% 03/15/28 263,399
350,000 Sunoco Logistics Partners Operations L.P............ 3.90% 07/15/26 357,699
500,000 Sunoco Logistics Partners Operations L.P............ 4.00% 10/01/27 515,585
500,000 Sunoco Logistics Partners Operations L.P............ 5.40% 10/01/47 531,873
500,000 TC PipeLines L.P.................................... 3.90% 05/25/27 509,386
250,000 Transcontinental Gas Pipe Line Co., LLC............. 4.00% 03/15/28 261,155
500,000 Transcontinental Gas Pipe Line Co., LLC............. 4.60% 03/15/48 531,373
500,000 Valero Energy Corp.................................. 4.35% 06/01/28 533,755
500,000 Valero Energy Corp.................................. 4.00% 04/01/29 523,936
300,000 Williams (The) Cos., Inc............................ 3.60% 03/15/22 307,958
250,000 Williams (The) Cos., Inc............................ 3.90% 01/15/25 262,361
250,000 Williams (The) Cos., Inc............................ 3.75% 06/15/27 258,340
625,000 Williams (The) Cos., Inc............................ 4.90% 01/15/45 655,928
270,000 Williams (The) Cos., Inc............................ 5.10% 09/15/45 292,073
500,000 Williams (The) Cos., Inc............................ 4.85% 03/01/48 535,610
-------------
30,540,257
-------------
PHARMACEUTICALS - 0.9%
145,000 Bristol-Myers Squibb Co. (c)........................ 2.55% 05/14/21 146,096
500,000 Bristol-Myers Squibb Co. (c)........................ 2.60% 05/16/22 506,541
500,000 Bristol-Myers Squibb Co. (c)........................ 2.90% 07/26/24 512,065
500,000 Bristol-Myers Squibb Co. (c)........................ 3.20% 06/15/26 519,933
500,000 Bristol-Myers Squibb Co. (c)........................ 3.40% 07/26/29 523,930
500,000 Bristol-Myers Squibb Co. (c)........................ 4.13% 06/15/39 540,196
500,000 Merck & Co., Inc.................................... 2.90% 03/07/24 516,927
300,000 Merck & Co., Inc.................................... 2.75% 02/10/25 309,189
500,000 Merck & Co., Inc.................................... 3.40% 03/07/29 532,645
500,000 Merck & Co., Inc.................................... 3.90% 03/07/39 546,127
500,000 Merck & Co., Inc.................................... 4.00% 03/07/49 556,638
250,000 Pfizer, Inc......................................... 3.00% 09/15/21 255,087
250,000 Pfizer, Inc......................................... 2.80% 03/11/22 254,510
500,000 Pfizer, Inc......................................... 3.20% 09/15/23 520,090
250,000 Pfizer, Inc......................................... 2.95% 03/15/24 257,911
250,000 Pfizer, Inc......................................... 3.45% 03/15/29 264,866
250,000 Pfizer, Inc......................................... 4.10% 09/15/38 276,205
250,000 Pfizer, Inc......................................... 3.90% 03/15/39 270,692
500,000 Pfizer, Inc......................................... 4.20% 09/15/48 564,149
250,000 Pfizer, Inc......................................... 4.00% 03/15/49 272,960
-------------
8,146,757
-------------
Page 32 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
ROAD & RAIL - 0.7%
$ 500,000 CSX Corp............................................ 4.25% 03/15/29 $ 557,353
250,000 CSX Corp............................................ 3.80% 11/01/46 253,501
200,000 CSX Corp............................................ 4.50% 08/01/54 219,007
250,000 CSX Corp............................................ 4.25% 11/01/66 258,151
250,000 Norfolk Southern Corp............................... 3.65% 08/01/25 263,825
250,000 Norfolk Southern Corp............................... 2.90% 06/15/26 253,958
500,000 Norfolk Southern Corp............................... 3.80% 08/01/28 539,429
750,000 Norfolk Southern Corp............................... 4.15% 02/28/48 807,100
500,000 Norfolk Southern Corp............................... 4.10% 05/15/49 533,913
250,000 Ryder System, Inc................................... 3.50% 06/01/21 255,125
250,000 Ryder System, Inc................................... 2.25% 09/01/21 249,288
500,000 Ryder System, Inc................................... 2.80% 03/01/22 504,773
500,000 Ryder System, Inc................................... 3.65% 03/18/24 523,115
300,000 Union Pacific Corp.................................. 3.75% 03/15/24 317,063
250,000 Union Pacific Corp.................................. 3.00% 04/15/27 255,369
183,000 Union Pacific Corp.................................. 4.15% 01/15/45 193,601
225,000 Union Pacific Corp.................................. 4.05% 03/01/46 236,757
250,000 Union Pacific Corp.................................. 4.10% 09/15/67 250,391
-------------
6,471,719
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.3%
100,000 Intel Corp.......................................... 1.70% 05/19/21 99,271
250,000 Intel Corp.......................................... 2.35% 05/11/22 252,082
100,000 Intel Corp.......................................... 3.10% 07/29/22 103,146
375,000 Intel Corp.......................................... 2.70% 12/15/22 381,808
500,000 Intel Corp.......................................... 2.88% 05/11/24 514,993
100,000 Intel Corp.......................................... 2.60% 05/19/26 100,755
300,000 Intel Corp.......................................... 4.10% 05/19/46 328,660
500,000 Intel Corp.......................................... 4.10% 05/11/47 549,277
163,000 Intel Corp.......................................... 3.73% 12/08/47 170,721
-------------
2,500,713
-------------
SOFTWARE - 0.7%
800,000 Microsoft Corp...................................... 2.40% 02/06/22 808,695
150,000 Microsoft Corp...................................... 3.63% 12/15/23 159,708
250,000 Microsoft Corp...................................... 2.88% 02/06/24 259,208
200,000 Microsoft Corp...................................... 3.13% 11/03/25 210,713
100,000 Microsoft Corp...................................... 2.40% 08/08/26 100,591
500,000 Microsoft Corp...................................... 3.30% 02/06/27 531,741
100,000 Microsoft Corp...................................... 3.45% 08/08/36 105,977
250,000 Microsoft Corp...................................... 4.10% 02/06/37 285,654
275,000 Microsoft Corp...................................... 4.45% 11/03/45 330,251
350,000 Microsoft Corp...................................... 3.70% 08/08/46 378,848
950,000 Microsoft Corp...................................... 4.25% 02/06/47 1,121,001
200,000 Oracle Corp......................................... 1.90% 09/15/21 199,056
100,000 Oracle Corp......................................... 2.50% 05/15/22 101,108
500,000 Oracle Corp......................................... 2.40% 09/15/23 501,035
250,000 Oracle Corp......................................... 3.40% 07/08/24 262,180
350,000 Oracle Corp......................................... 2.65% 07/15/26 351,894
400,000 Oracle Corp......................................... 5.38% 07/15/40 507,663
350,000 Oracle Corp......................................... 4.00% 07/15/46 375,837
-------------
6,591,160
-------------
See Notes to Financial Statements Page 33
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
SPECIALTY RETAIL - 0.8%
$ 500,000 Home Depot (The), Inc............................... 2.00% 04/01/21 $ 499,964
770,000 Home Depot (The), Inc............................... 4.40% 04/01/21 797,035
500,000 Home Depot (The), Inc............................... 3.25% 03/01/22 516,203
550,000 Home Depot (The), Inc............................... 3.00% 04/01/26 569,834
1,000,000 Home Depot (The), Inc............................... 2.80% 09/14/27 1,015,215
500,000 Home Depot (The), Inc............................... 3.90% 12/06/28 550,708
500,000 Home Depot (The), Inc............................... 4.25% 04/01/46 564,978
500,000 Home Depot (The), Inc............................... 3.90% 06/15/47 541,985
500,000 Home Depot (The), Inc............................... 4.50% 12/06/48 591,070
250,000 Home Depot (The), Inc............................... 3.50% 09/15/56 247,196
500,000 Lowe's Cos., Inc.................................... 3.65% 04/05/29 522,527
500,000 Lowe's Cos., Inc.................................... 4.55% 04/05/49 537,637
-------------
6,954,352
-------------
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS - 0.8%
450,000 Apple, Inc.......................................... 2.85% 05/06/21 456,734
250,000 Apple, Inc.......................................... 1.55% 08/04/21 247,664
250,000 Apple, Inc.......................................... 2.10% 09/12/22 250,726
250,000 Apple, Inc.......................................... 2.40% 01/13/23 252,331
375,000 Apple, Inc.......................................... 2.40% 05/03/23 378,983
250,000 Apple, Inc.......................................... 3.00% 02/09/24 258,393
500,000 Apple, Inc.......................................... 2.85% 05/11/24 515,407
500,000 Apple, Inc.......................................... 2.75% 01/13/25 511,515
100,000 Apple, Inc.......................................... 2.45% 08/04/26 99,747
250,000 Apple, Inc.......................................... 3.35% 02/09/27 262,731
500,000 Apple, Inc.......................................... 3.20% 05/11/27 521,775
250,000 Apple, Inc.......................................... 2.90% 09/12/27 256,163
500,000 Apple, Inc.......................................... 3.00% 11/13/27 515,033
100,000 Apple, Inc.......................................... 4.45% 05/06/44 115,255
100,000 Apple, Inc.......................................... 4.65% 02/23/46 118,770
600,000 Apple, Inc.......................................... 4.25% 02/09/47 675,462
250,000 Apple, Inc.......................................... 3.75% 09/12/47 262,388
250,000 Apple, Inc.......................................... 3.75% 11/13/47 263,069
500,000 Hewlett Packard Enterprise Co. (c).................. 2.10% 10/04/19 499,331
100,000 Hewlett Packard Enterprise Co....................... 3.60% 10/15/20 101,335
500,000 Hewlett Packard Enterprise Co....................... 3.50% 10/05/21 512,099
-------------
7,074,911
-------------
TOBACCO - 0.3%
250,000 Altria Group, Inc................................... 3.49% 02/14/22 257,198
250,000 Altria Group, Inc................................... 3.80% 02/14/24 260,784
250,000 Altria Group, Inc................................... 4.40% 02/14/26 267,723
250,000 Altria Group, Inc................................... 4.80% 02/14/29 269,172
250,000 Altria Group, Inc................................... 5.80% 02/14/39 281,397
250,000 Altria Group, Inc................................... 5.95% 02/14/49 285,749
250,000 Altria Group, Inc................................... 6.20% 02/14/59 285,339
250,000 BAT Capital Corp.................................... 3.22% 08/15/24 251,819
250,000 BAT Capital Corp.................................... 3.56% 08/15/27 248,920
250,000 BAT Capital Corp.................................... 4.39% 08/15/37 237,322
500,000 Philip Morris International, Inc.................... 2.88% 05/01/24 507,810
-------------
3,153,233
-------------
Page 34 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
CORPORATE BONDS AND NOTES (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS - 0.1%
$ 250,000 Air Lease Corp...................................... 2.75% 01/15/23 $ 250,103
250,000 Air Lease Corp...................................... 3.25% 03/01/25 251,725
-------------
501,828
-------------
WATER UTILITIES - 0.1%
250,000 American Water Capital Corp......................... 3.45% 06/01/29 260,153
250,000 American Water Capital Corp......................... 4.15% 06/01/49 270,788
-------------
530,941
-------------
TOTAL CORPORATE BONDS AND NOTES.............................................. 337,727,947
(Cost $322,075,373) -------------
FOREIGN CORPORATE BONDS AND NOTES - 3.0%
BANKS - 0.9%
400,000 Banco Santander S.A................................. 2.71% 06/27/24 400,760
400,000 Banco Santander S.A................................. 3.31% 06/27/29 403,323
500,000 Bank of Montreal.................................... 2.90% 03/26/22 507,847
500,000 Bank of Montreal.................................... 3.30% 02/05/24 518,971
500,000 Barclays PLC (a).................................... 4.61% 02/15/23 517,601
500,000 Barclays PLC (a).................................... 3.93% 05/07/25 509,237
250,000 Cooperatieve Rabobank U.A. (c)...................... 3.88% 09/26/23 263,898
475,000 HSBC Holdings PLC................................... 2.65% 01/05/22 477,029
200,000 HSBC Holdings PLC (a)............................... 3.26% 03/13/23 203,822
500,000 HSBC Holdings PLC (a)............................... 3.95% 05/18/24 523,388
200,000 HSBC Holdings PLC (a)............................... 3.80% 03/11/25 208,503
625,000 HSBC Holdings PLC................................... 3.90% 05/25/26 653,398
350,000 HSBC Holdings PLC................................... 4.38% 11/23/26 369,944
200,000 HSBC Holdings PLC (a)............................... 4.04% 03/13/28 210,258
500,000 HSBC Holdings PLC (a)............................... 4.58% 06/19/29 547,256
250,000 HSBC Holdings PLC (a)............................... 3.97% 05/22/30 261,353
1,000,000 Royal Bank of Canada................................ 2.80% 04/29/22 1,016,144
500,000 Royal Bank of Canada................................ 3.70% 10/05/23 526,541
250,000 Royal Bank of Scotland Group PLC (a)................ 3.50% 05/15/23 252,919
-------------
8,372,192
-------------
CAPITAL MARKETS - 0.1%
500,000 Credit Suisse Group AG (c).......................... 3.57% 01/09/23 510,736
500,000 Credit Suisse Group AG (a) (c)...................... 3.87% 01/12/29 515,881
-------------
1,026,617
-------------
COMMERCIAL SERVICES & SUPPLIES - 0.1%
500,000 Waste Connections, Inc.............................. 3.50% 05/01/29 520,960
-------------
DIVERSIFIED FINANCIAL SERVICES - 0.2%
444,000 GE Capital International Funding Co. Unlimited Co... 4.42% 11/15/35 440,188
500,000 Shell International Finance, B.V.................... 3.50% 11/13/23 525,389
500,000 Shell International Finance, B.V.................... 3.88% 11/13/28 547,596
250,000 Shell International Finance, B.V.................... 4.00% 05/10/46 275,568
250,000 Shell International Finance, B.V.................... 3.75% 09/12/46 265,095
-------------
2,053,836
-------------
See Notes to Financial Statements Page 35
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
FOREIGN CORPORATE BONDS AND NOTES (CONTINUED)
DIVERSIFIED TELECOMMUNICATION SERVICES - 0.1%
$ 250,000 Telefonica Emisiones S.A............................ 5.52% 03/01/49 $ 290,015
250,000 TELUS Corp.......................................... 4.60% 11/16/48 275,636
250,000 TELUS Corp.......................................... 4.30% 06/15/49 266,542
-------------
832,193
-------------
ELECTRIC UTILITIES - 0.0%
250,000 Enel Finance International N.V. (c)................. 4.25% 09/14/23 262,714
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.0%
250,000 Medtronic Global Holdings SCA....................... 3.35% 04/01/27 265,892
-------------
INTERACTIVE MEDIA & SERVICES - 0.1%
250,000 Tencent Holdings, Ltd. (c).......................... 3.28% 04/11/24 255,540
250,000 Tencent Holdings, Ltd. (c).......................... 3.58% 04/11/26 256,506
-------------
512,046
-------------
MACHINERY - 0.1%
500,000 Ingersoll-Rand Luxembourg Finance S.A............... 3.50% 03/21/26 516,807
500,000 Ingersoll-Rand Luxembourg Finance S.A............... 4.50% 03/21/49 539,795
-------------
1,056,602
-------------
METALS & MINING - 0.2%
250,000 Anglo American Capital PLC (c)...................... 3.63% 09/11/24 255,548
250,000 Anglo American Capital PLC (c)...................... 4.00% 09/11/27 251,191
250,000 Anglo American Capital PLC (c)...................... 4.50% 03/15/28 259,484
330,000 BHP Billiton Finance USA, Ltd....................... 5.00% 09/30/43 413,958
-------------
1,180,181
-------------
OIL, GAS & CONSUMABLE FUELS - 0.5%
500,000 Canadian Natural Resources, Ltd..................... 2.95% 01/15/23 505,289
500,000 Canadian Natural Resources, Ltd..................... 3.85% 06/01/27 519,553
250,000 Enbridge, Inc....................................... 2.90% 07/15/22 253,780
500,000 Eni S.p.A. (c)...................................... 4.00% 09/12/23 521,338
500,000 Eni S.p.A. (c)...................................... 4.75% 09/12/28 547,548
250,000 Saudi Arabian Oil Co. (c)........................... 3.50% 04/16/29 253,446
500,000 Total Capital S.A................................... 3.88% 10/11/28 550,124
500,000 TransCanada PipeLines, Ltd.......................... 4.25% 05/15/28 540,987
500,000 TransCanada PipeLines, Ltd.......................... 5.10% 03/15/49 580,202
-------------
4,272,267
-------------
PAPER & FOREST PRODUCTS - 0.1%
500,000 Celulosa Arauco y Constitucion S.A. (c)............. 4.25% 04/30/29 527,250
500,000 Celulosa Arauco y Constitucion S.A. (c)............. 5.50% 04/30/49 528,125
-------------
1,055,375
-------------
PHARMACEUTICALS - 0.3%
500,000 GlaxoSmithKline Capital PLC......................... 2.88% 06/01/22 508,905
500,000 GlaxoSmithKline Capital PLC......................... 3.00% 06/01/24 515,774
500,000 Takeda Pharmaceutical Co., Ltd. (c)................. 3.80% 11/26/20 509,238
500,000 Takeda Pharmaceutical Co., Ltd. (c)................. 4.00% 11/26/21 517,539
250,000 Takeda Pharmaceutical Co., Ltd. (c)................. 4.40% 11/26/23 268,040
250,000 Takeda Pharmaceutical Co., Ltd. (c)................. 5.00% 11/26/28 283,556
-------------
2,603,052
-------------
Page 36 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
FOREIGN CORPORATE BONDS AND NOTES (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS - 0.0%
$ 250,000 AerCap Ireland Capital DAC/AerCap Global Aviation
Trust............................................ 3.50% 01/15/25 $ 251,639
-------------
WIRELESS TELECOMMUNICATION SERVICES - 0.3%
250,000 America Movil S.A.B. de C.V......................... 3.63% 04/22/29 259,450
250,000 America Movil S.A.B. de C.V......................... 4.38% 04/22/49 272,538
250,000 Vodafone Group PLC.................................. 3.75% 01/16/24 261,564
250,000 Vodafone Group PLC.................................. 4.13% 05/30/25 266,024
250,000 Vodafone Group PLC.................................. 4.38% 05/30/28 270,478
500,000 Vodafone Group PLC.................................. 4.88% 06/19/49 527,492
500,000 Vodafone Group PLC.................................. 5.13% 06/19/59 534,977
-------------
2,392,523
-------------
TOTAL FOREIGN CORPORATE BONDS AND NOTES...................................... 26,658,089
(Cost $25,348,078) -------------
U.S. GOVERNMENT BONDS AND NOTES - 2.6%
1,508,000 U.S. Treasury Bond.................................. 3.00% 02/15/49 1,656,503
500,000 U.S. Treasury Note (d).............................. 1.38% 09/30/19 498,974
475,000 U.S. Treasury Note.................................. 2.63% 08/31/20 478,951
800,000 U.S. Treasury Note.................................. 2.88% 10/31/20 810,515
1,925,000 U.S. Treasury Note.................................. 2.50% 01/31/21 1,945,340
540,000 U.S. Treasury Note.................................. 2.50% 02/28/21 546,128
305,000 U.S. Treasury Note.................................. 2.25% 03/31/21 307,406
970,000 U.S. Treasury Note.................................. 2.13% 05/31/21 976,688
1,190,000 U.S. Treasury Note.................................. 2.88% 11/15/21 1,221,540
895,000 U.S. Treasury Note.................................. 2.50% 02/15/22 912,708
1,115,000 U.S. Treasury Note.................................. 2.38% 03/15/22 1,134,970
1,675,000 U.S. Treasury Note.................................. 2.25% 04/15/22 1,698,784
1,030,000 U.S. Treasury Note.................................. 2.13% 05/15/22 1,041,688
1,450,000 U.S. Treasury Note.................................. 1.75% 06/15/22 1,452,181
1,300,000 U.S. Treasury Note.................................. 2.13% 03/31/24 1,321,887
2,080,000 U.S. Treasury Note.................................. 2.25% 04/30/24 2,127,409
1,425,000 U.S. Treasury Note.................................. 2.00% 05/31/24 1,441,894
3,935,000 U.S. Treasury Note.................................. 2.38% 05/15/29 4,066,884
-------------
TOTAL U.S. GOVERNMENT BONDS AND NOTES........................................ 23,640,450
(Cost $23,342,155) -------------
ANNUALIZED
PRINCIPAL YIELD ON DATE STATED
VALUE DESCRIPTION OF PURCHASE MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
COMMERCIAL PAPER - 0.0%
MULTI-UTILITIES - 0.0%
352,000 CenterPoint Energy, Inc............................. 2.52% 07/01/19 351,927
(Cost $352,000) -------------
TOTAL INVESTMENTS - 99.4%.................................................... 893,238,362
(Cost $813,368,926) (e)
NET OTHER ASSETS AND LIABILITIES - 0.6%...................................... 5,823,814
-------------
NET ASSETS - 100.0%.......................................................... $ 899,062,176
=============
See Notes to Financial Statements Page 37
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
FUTURES CONTRACTS (see Note 2E - Futures Contracts in the Notes to Financial
Statements):
UNREALIZED
APPRECIATION
NUMBER OF EXPIRATION NOTIONAL (DEPRECIATION)/
FUTURES CONTRACTS POSITION CONTRACTS DATE VALUE VALUE
--------------------------------------- ------------ ------------ ------------ ------------- ---------------
U.S. Treasury 5-Year Notes Short 6 Sep 2019 $ (708,937) $ (2,625)
U.S. Treasury 10-Year Notes Short 5 Sep 2019 (639,844) (3,359)
U.S. Treasury Ultra 10-Year Notes Short 130 Sep 2019 (17,956,250) (115,781)
U.S. Treasury CME Ultra Long Term Bonds Short 6 Sep 2019 (1,065,375) (4,641)
------------- ---------------
Total Futures Contracts $ (20,370,406) $ (126,406)
============= ===============
-----------------------------
(a) Fixed-to-floating or fixed-to-variable rate security. The interest rate
shown reflects the fixed rate in effect at June 30, 2019. At a
predetermined date, the fixed rate will change to a floating rate or a
variable rate.
(b) Floating or variable rate security.
(c) 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 "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, 2019, securities noted as such amounted to
$25,752,744 or 2.9% of net assets.
(d) All or a portion of this security is segregated as collateral for open
futures contracts.
(e) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $91,051,106 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $11,308,076. The net unrealized appreciation
was $79,743,030. The amounts presented are inclusive of derivative
contracts.
LIBOR London Interbank Offered Rate
Page 38 See Notes to Financial Statements
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
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
6/30/2019 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*.................................... $504,859,949 $504,859,949 $ -- $ --
Corporate Bonds and Notes*........................ 337,727,947 -- 337,727,947 --
Foreign Corporate Bonds and Notes*................ 26,658,089 -- 26,658,089 --
U.S. Government Bonds and Notes................... 23,640,450 -- 23,640,450 --
Commercial Paper*................................. 351,927 -- 351,927 --
------------ ------------ ------------ ------------
Total Investments................................. $893,238,362 $504,859,949 $388,378,413 $ --
============ ============ ============ ============
LIABILITIES TABLE
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
6/30/2019 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Futures Contracts**............................... $ (126,406) $ (126,406) $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
** Includes cumulative appreciation (depreciation) on futures contracts as
reported in the Futures Contracts table. The current day's variation
margin is presented on the Statements of Assets and Liabilities.
See Notes to Financial Statements Page 39
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
EXCHANGE-TRADED FUNDS -- 43.7%
CAPITAL MARKETS -- 43.7%
32,480 First Trust Institutional Preferred Securities and Income ETF (a)............ $ 630,762
1,000 First Trust Low Duration Opportunities ETF (a)............................... 51,680
98,090 First Trust Preferred Securities and Income ETF (a).......................... 1,901,965
82,000 First Trust Senior Loan Fund (a)............................................. 3,863,840
52,050 First Trust Tactical High Yield ETF (a)...................................... 2,504,125
18,522 Invesco Bulletshares 2020 Corporate Bond ETF................................. 393,778
130 iShares 7-10 Year Treasury Bond ETF.......................................... 14,302
455 iShares 20+ Year Treasury Bond ETF........................................... 60,428
13,164 iShares iBoxx $ Investment Grade Corporate Bond ETF.......................... 1,637,207
13,150 iShares MBS ETF.............................................................. 1,414,940
1 Vanguard Mortgage-Backed Securities ETF...................................... 53
-------------
TOTAL EXCHANGE-TRADED FUNDS.................................................. 12,473,080
(Cost $12,294,027) -------------
COMMON STOCKS -- 22.7%
AEROSPACE & DEFENSE -- 0.3%
406 Raytheon Co.................................................................. 70,595
-------------
AIR FREIGHT & LOGISTICS -- 0.3%
843 United Parcel Service, Inc., Class B......................................... 87,057
-------------
BANKS -- 1.5%
1,246 JPMorgan Chase & Co.......................................................... 139,303
559 M&T Bank Corp................................................................ 95,069
1,676 U.S. Bancorp................................................................. 87,822
2,028 Webster Financial Corp....................................................... 96,878
-------------
419,072
-------------
BEVERAGES -- 0.7%
637 Diageo PLC, ADR.............................................................. 109,768
764 PepsiCo, Inc................................................................. 100,183
-------------
209,951
-------------
BIOTECHNOLOGY -- 0.2%
805 AbbVie, Inc.................................................................. 58,540
-------------
CAPITAL MARKETS -- 0.3%
160 BlackRock, Inc............................................................... 75,088
-------------
CHEMICALS -- 0.7%
454 Ecolab, Inc.................................................................. 89,638
340 International Flavors & Fragrances, Inc...................................... 49,331
757 LyondellBasell Industries N.V., Class A...................................... 65,200
-------------
204,169
-------------
COMMUNICATIONS EQUIPMENT -- 0.4%
2,185 Cisco Systems, Inc........................................................... 119,585
-------------
CONSUMER FINANCE -- 0.3%
1,070 Capital One Financial Corp................................................... 97,092
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES -- 0.4%
2,105 Verizon Communications, Inc.................................................. 120,259
-------------
Page 40 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
ELECTRIC UTILITIES -- 2.4%
827 Alliant Energy Corp.......................................................... $ 40,589
447 American Electric Power Co., Inc............................................. 39,340
485 Emera, Inc. (CAD)............................................................ 19,818
528 Eversource Energy............................................................ 40,001
2,367 Exelon Corp.................................................................. 113,474
1,473 Fortis, Inc. (CAD)........................................................... 58,164
599 NextEra Energy, Inc.......................................................... 122,711
3,317 OGE Energy Corp.............................................................. 141,171
1,859 PPL Corp..................................................................... 57,648
1,040 Xcel Energy, Inc............................................................. 61,870
-------------
694,786
-------------
ELECTRICAL EQUIPMENT -- 0.3%
1,103 Eaton Corp. PLC.............................................................. 91,858
-------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS -- 0.7%
844 CDW Corp..................................................................... 93,684
1,203 TE Connectivity Ltd.......................................................... 115,223
-------------
208,907
-------------
FOOD & STAPLES RETAILING -- 0.8%
1,496 Sysco Corp................................................................... 105,797
1,067 Walmart, Inc................................................................. 117,893
-------------
223,690
-------------
GAS UTILITIES -- 0.1%
192 Atmos Energy Corp............................................................ 20,267
188 New Jersey Resources Corp.................................................... 9,357
-------------
29,624
-------------
HEALTH CARE EQUIPMENT & SUPPLIES -- 1.3%
1,444 Abbott Laboratories.......................................................... 121,440
2,101 Koninklijke Philips N.V...................................................... 91,562
961 STERIS PLC................................................................... 143,074
-------------
356,076
-------------
HEALTH CARE PROVIDERS & SERVICES -- 0.6%
1,470 CVS Health Corp.............................................................. 80,100
329 UnitedHealth Group, Inc...................................................... 80,279
-------------
160,379
-------------
HOTELS, RESTAURANTS & LEISURE -- 0.6%
1,708 Carnival Corp................................................................ 79,507
504 McDonald's Corp.............................................................. 104,661
-------------
184,168
-------------
INDUSTRIAL CONGLOMERATES -- 0.3%
516 Honeywell International, Inc................................................. 90,088
-------------
INTERNET & DIRECT MARKETING RETAIL -- 0.3%
742 Expedia Group, Inc........................................................... 98,708
-------------
IT SERVICES -- 1.2%
715 Accenture PLC, Class A....................................................... 132,111
995 Fidelity National Information Services, Inc.................................. 122,067
See Notes to Financial Statements Page 41
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
COMMON STOCKS (CONTINUED)
IT SERVICES (CONTINUED)
9,411 Infosys Ltd., ADR............................................................ $ 100,698
-------------
354,876
-------------
MACHINERY -- 0.3%
454 Parker-Hannifin Corp......................................................... 77,185
-------------
MULTI-UTILITIES -- 0.6%
1,974 Public Service Enterprise Group, Inc......................................... 116,111
149 Sempra Energy................................................................ 20,479
237 WEC Energy Group, Inc........................................................ 19,759
-------------
156,349
-------------
OIL, GAS & CONSUMABLE FUELS -- 3.9%
610 Chevron Corp................................................................. 75,908
1,196 ConocoPhillips............................................................... 72,956
2,581 Enbridge, Inc................................................................ 93,122
2,658 Equitrans Midstream Corp..................................................... 52,389
9,639 Kinder Morgan, Inc........................................................... 201,262
1,162 ONEOK, Inc................................................................... 79,957
5,414 TC Energy Corp............................................................... 268,101
1,360 TOTAL S.A., ADR.............................................................. 75,874
7,034 Williams (The) Cos., Inc..................................................... 197,233
-------------
1,116,802
-------------
PERSONAL PRODUCTS -- 0.4%
1,680 Unilever PLC, ADR............................................................ 104,110
-------------
PHARMACEUTICALS -- 1.1%
2,107 Bristol-Myers Squibb Co...................................................... 95,552
915 Eli Lilly & Co............................................................... 101,373
1,443 Merck & Co., Inc............................................................. 120,996
-------------
317,921
-------------
ROAD & RAIL -- 0.4%
647 Union Pacific Corp........................................................... 109,414
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 0.3%
313 Broadcom, Inc................................................................ 90,100
-------------
SOFTWARE -- 0.8%
1,011 Microsoft Corp............................................................... 135,434
2,524 Open Text Corp............................................................... 103,989
-------------
239,423
-------------
SPECIALTY RETAIL -- 0.4%
528 Home Depot (The), Inc........................................................ 109,808
-------------
TECHNOLOGY HARDWARE, STORAGE & PERIPHERALS -- 0.4%
558 Apple, Inc................................................................... 110,439
-------------
TEXTILES, APPAREL & LUXURY GOODS -- 0.4%
1,218 NIKE, Inc., Class B.......................................................... 102,251
-------------
TOTAL COMMON STOCKS.......................................................... 6,488,370
(Cost $5,602,694) -------------
Page 42 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT BONDS AND NOTES -- 10.0%
$ 52,362 U.S. Treasury Inflation Indexed Bond (b)............ 2.50% 01/15/29 $ 63,030
26,422 U.S. Treasury Inflation Indexed Bond (b)............ 3.88% 04/15/29 35,317
8,781 U.S. Treasury Inflation Indexed Bond (b)............ 3.38% 04/15/32 12,041
35,464 U.S. Treasury Inflation Indexed Bond (b)............ 2.13% 02/15/40 45,430
54,603 U.S. Treasury Inflation Indexed Bond (b)............ 2.13% 02/15/41 70,419
55,180 U.S. Treasury Inflation Indexed Bond (b)............ 0.75% 02/15/42 55,461
50,676 U.S. Treasury Inflation Indexed Bond (b)............ 0.63% 02/15/43 49,196
51,307 U.S. Treasury Inflation Indexed Bond (b)............ 1.38% 02/15/44 58,297
52,406 U.S. Treasury Inflation Indexed Bond (b)............ 0.75% 02/15/45 51,913
46,368 U.S. Treasury Inflation Indexed Bond (b)............ 1.00% 02/15/46 48,648
41,280 U.S. Treasury Inflation Indexed Bond (b)............ 0.88% 02/15/47 42,115
41,445 U.S. Treasury Inflation Indexed Bond (b)............ 1.00% 02/15/48 43,652
19,292 U.S. Treasury Inflation Indexed Bond (b)............ 1.00% 02/15/49 20,429
12,002 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 04/15/20 11,879
72,637 U.S. Treasury Inflation Indexed Note (b)............ 1.25% 07/15/20 73,134
85,498 U.S. Treasury Inflation Indexed Note (b)............ 1.13% 01/15/21 86,196
97,024 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 04/15/21 96,159
88,424 U.S. Treasury Inflation Indexed Note (b)............ 0.63% 07/15/21 89,009
95,841 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 01/15/22 95,282
95,606 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 04/15/22 94,892
96,662 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 07/15/22 96,415
92,982 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 01/15/23 92,498
99,777 U.S. Treasury Inflation Indexed Note (b)............ 0.63% 04/15/23 100,992
93,322 U.S. Treasury Inflation Indexed Note (b)............ 0.38% 07/15/23 94,123
93,078 U.S. Treasury Inflation Indexed Note (b)............ 0.63% 01/15/24 94,743
33,431 U.S. Treasury Inflation Indexed Note (b)............ 0.50% 04/15/24 33,863
91,679 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 07/15/24 91,572
129,449 U.S. Treasury Inflation Indexed Note (b)............ 0.25% 01/15/25 129,665
44,053 U.S. Treasury Inflation Indexed Note (b)............ 2.38% 01/15/25 49,252
88,348 U.S. Treasury Inflation Indexed Note (b)............ 0.38% 07/15/25 89,369
116,132 U.S. Treasury Inflation Indexed Note (b)............ 0.63% 01/15/26 118,988
37,976 U.S. Treasury Inflation Indexed Note (b)............ 2.00% 01/15/26 42,278
76,746 U.S. Treasury Inflation Indexed Note (b)............ 0.13% 07/15/26 76,268
101,541 U.S. Treasury Inflation Indexed Note (b)............ 0.38% 01/15/27 102,380
28,507 U.S. Treasury Inflation Indexed Note (b)............ 2.38% 01/15/27 32,942
79,382 U.S. Treasury Inflation Indexed Note (b)............ 0.38% 07/15/27 80,163
122,228 U.S. Treasury Inflation Indexed Note (b)............ 0.50% 01/15/28 124,289
58,541 U.S. Treasury Inflation Indexed Note (b)............ 1.75% 01/15/28 65,669
84,483 U.S. Treasury Inflation Indexed Note (b)............ 0.75% 07/15/28 88,077
103,212 U.S. Treasury Inflation Indexed Note (b)............ 0.88% 01/15/29 108,704
-------------
TOTAL U.S. GOVERNMENT BONDS AND NOTES........................................ 2,854,749
(Cost $2,795,989) -------------
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
REAL ESTATE INVESTMENT TRUSTS -- 8.6%
DIVERSIFIED REITS -- 1.1%
1,974 Liberty Property Trust....................................................... 98,779
638 PS Business Parks, Inc....................................................... 107,522
2,935 STORE Capital Corp........................................................... 97,413
-------------
303,714
-------------
See Notes to Financial Statements Page 43
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
HEALTH CARE REITS -- 1.0%
1,282 National Health Investors, Inc............................................... $ 100,034
2,656 Omega Healthcare Investors, Inc.............................................. 97,608
5,316 Physicians Realty Trust...................................................... 92,711
-------------
290,353
-------------
HOTEL & RESORT REITS -- 0.3%
3,965 Hospitality Properties Trust................................................. 99,125
-------------
INDUSTRIAL REITS -- 1.1%
3,138 Duke Realty Corp............................................................. 99,192
1,329 Prologis, Inc................................................................ 106,453
3,297 STAG Industrial, Inc......................................................... 99,701
-------------
305,346
-------------
OFFICE REITS -- 0.6%
2,202 Highwoods Properties, Inc.................................................... 90,943
1,105 SL Green Realty Corp......................................................... 88,809
-------------
179,752
-------------
RESIDENTIAL REITS -- 1.1%
1,956 Apartment Investment & Management Co., Class A............................... 98,035
963 Camden Property Trust........................................................ 100,528
895 Mid-America Apartment Communities, Inc....................................... 105,395
-------------
303,958
-------------
RETAIL REITS -- 1.3%
1,853 National Retail Properties, Inc.............................................. 98,228
1,381 Realty Income Corp........................................................... 95,248
7,901 Retail Properties of America, Inc., Class A.................................. 92,916
591 Simon Property Group, Inc.................................................... 94,418
-------------
380,810
-------------
SPECIALIZED REITS -- 2.1%
493 American Tower Corp.......................................................... 100,794
3,076 CubeSmart.................................................................... 102,861
1,823 CyrusOne, Inc................................................................ 105,224
850 Digital Realty Trust, Inc.................................................... 100,121
1,243 EPR Properties............................................................... 92,715
953 Extra Space Storage, Inc..................................................... 101,113
-------------
602,828
-------------
TOTAL REAL ESTATE INVESTMENT TRUSTS.......................................... 2,465,886
(Cost $2,229,309) -------------
UNITS DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
MASTER LIMITED PARTNERSHIPS -- 7.6%
CHEMICALS -- 0.3%
3,362 Westlake Chemical Partners, L.P.............................................. 82,672
-------------
INDEPENDENT POWER AND RENEWABLE ELECTRICITY PRODUCERS -- 0.6%
3,393 NextEra Energy Partners, L.P................................................. 163,712
-------------
OIL, GAS & CONSUMABLE FUELS -- 6.7%
2,035 Alliance Resource Partners, L.P.............................................. 34,554
2,587 BP Midstream Partners, L.P................................................... 40,047
Page 44 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
UNITS DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
MASTER LIMITED PARTNERSHIPS (CONTINUED)
OIL, GAS & CONSUMABLE FUELS (CONTINUED)
14,328 Energy Transfer, L.P......................................................... $ 201,738
16,291 Enterprise Products Partners, L.P............................................ 470,321
4,854 Holly Energy Partners, L.P................................................... 133,485
4,665 Magellan Midstream Partners, L.P............................................. 298,560
1,764 MPLX, L.P.................................................................... 56,783
3,499 Phillips 66 Partners, L.P.................................................... 172,676
7,674 Plains All American Pipeline, L.P............................................ 186,862
3,661 Shell Midstream Partners, L.P................................................ 75,856
1,560 Tallgrass Energy, L.P........................................................ 32,932
5,960 TC PipeLines, L.P............................................................ 224,215
-------------
1,928,029
-------------
TOTAL MASTER LIMITED PARTNERSHIPS............................................ 2,174,413
(Cost $2,003,982) -------------
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 5.1%
COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.0%
Fannie Mae REMICS
$ 31 Series 1989-82, Class G.......................... 8.40% 11/25/19 31
569 Series 1990-109, Class J......................... 7.00% 09/25/20 575
352 Series 1992-24, Class Z.......................... 6.50% 04/25/22 363
7 Series 1992-44, Class ZQ......................... 8.00% 07/25/22 7
1,213 Series 1993-1, Class KA.......................... 7.90% 01/25/23 1,295
900 Series 1993-62, Class E.......................... 7.00% 04/25/23 958
301 Series 1993-119, Class H......................... 6.50% 07/25/23 318
2,136 Series 1993-178, Class PK........................ 6.50% 09/25/23 2,277
1,927 Series 1995-24, Class G.......................... 6.50% 04/25/23 2,021
1,507 Series 1999-56, Class Z.......................... 7.00% 12/18/29 1,677
29,366 Series 2002-9, Class MS, IO, 1 Mo. LIBOR x -1 +
8.10% (c)..................................... 5.70% 03/25/32 6,090
1,302 Series 2002-67, Class PE......................... 5.50% 11/25/32 1,458
4,170 Series 2002-90, Class A1......................... 6.50% 06/25/42 4,780
2,865 Series 2003-14, Class AQ......................... 3.50% 03/25/33 2,940
4,506 Series 2003-41, Class OA......................... 4.00% 05/25/33 4,648
36,611 Series 2004-10, Class ZB......................... 6.00% 02/25/34 41,145
472 Series 2004-92, Class S, IO, 1 Mo. LIBOR x -1 +
6.70% (c)..................................... 4.30% 08/25/34 3
7 Series 2005-46, Class LW......................... 5.00% 06/25/20 7
16,502 Series 2005-68, Class BC......................... 5.25% 06/25/35 16,586
14,368 Series 2005-79, Class NF, 1 Mo.
LIBOR + 0.41% (d)............................. 2.81% 09/25/35 14,380
34,989 Series 2007-10, Class Z.......................... 6.00% 02/25/37 38,831
55,967 Series 2009-86, Class IP, IO..................... 5.50% 10/25/39 10,805
40,000 Series 2010-45, Class EB......................... 5.00% 05/25/40 48,169
83,566 Series 2011-99, Class CZ......................... 4.50% 10/25/41 95,476
2,259 Series 2012-35, Class PL......................... 2.00% 11/25/41 2,237
847 Series 2013-14, Class QE......................... 1.75% 03/25/43 823
85,772 Series 2013-31, Class NT......................... 3.00% 04/25/43 87,316
Fannie Mae REMIC Trust
12,380 Series 2007-W8, Class 1A5 (e).................... 6.36% 09/25/37 13,864
See Notes to Financial Statements Page 45
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED)
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Fannie Mae Trust
$ 4,458 Series 2004-W8, Class 3A......................... 7.50% 06/25/44 $ 5,190
FHLMC - GNMA
233 Series 1993-5, Class HA.......................... 7.50% 02/25/23 246
620 Series 1994-27, Class D.......................... 7.00% 03/25/24 667
Freddie Mac REMICS
78 Series 1989-84, Class F.......................... 9.20% 10/15/20 78
243 Series 1991-1074, Class I........................ 6.75% 05/15/21 243
374 Series 1991-1078, Class GZ....................... 6.50% 05/15/21 376
367 Series 1992-1250, Class J........................ 7.00% 05/15/22 383
10,485 Series 1992-1401, Class Q, 1 Mo.
LIBOR + 0.60% (d)............................. 2.99% 10/15/22 10,542
18,151 Series 1993-1487, Class P, IO, 1 Mo.
LIBOR x -1 + 9.50% (c)........................ 7.11% 03/15/23 1,740
3,461 Series 1994-1673, Class FB, 10 Yr. U.S.
Treasury Yield Curve - 0.50% (d).............. 1.87% 02/15/24 3,460
195 Series 1996-1807, Class G........................ 9.00% 10/15/20 200
56 Series 1996-1847, Class LL....................... 7.50% 04/15/26 62
11,908 Series 1998-2033, Class IA, IO................... 7.00% 02/15/28 1,433
2,884 Series 1999-2130, Class KB....................... 6.38% 03/15/29 3,213
42,552 Series 1999-2174, Class PN....................... 6.00% 07/15/29 46,737
9,539 Series 2001-2277, Class B........................ 7.50% 01/15/31 11,341
111 Series 2003-2559, Class PB....................... 5.50% 08/15/30 111
46,000 Series 2003-2676, Class LL....................... 5.50% 09/15/33 52,110
23,340 Series 2004-2768, Class PW....................... 4.25% 03/15/34 25,358
5,000 Series 2004-2778, Class MM....................... 5.25% 04/15/34 5,667
138 Series 2005-2922, Class QE....................... 5.00% 05/15/34 138
7 Series 2005-2958, Class QJ....................... 4.00% 04/15/20 7
28,001 Series 2006-3114, Class GI, IO, 1 Mo.
LIBOR x -1 + 6.60% (c)........................ 4.21% 02/15/36 4,654
37,133 Series 2006-3199, Class DS, IO, 1 Mo.
LIBOR x -1 + 7.15% (c)........................ 4.76% 08/15/36 7,053
32,512 Series 2006-3237, Class CB....................... 5.50% 07/15/36 33,803
11,000 Series 2010-3626, Class ME....................... 5.00% 01/15/40 12,734
9,391 Series 2010-3758, Class M........................ 4.50% 10/15/38 9,553
7,021 Series 2010-3775, Class KZ....................... 4.00% 08/15/25 7,348
4,662 Series 2012-3994, Class AE....................... 1.63% 02/15/22 4,636
21,150 Series 2013-4178, Class ZN....................... 3.50% 03/15/43 23,317
694 Series 2013-4253, Class TD....................... 2.00% 07/15/40 694
Freddie Mac Strips
12,454 Series 1994-169, Class IO, IO.................... 8.50% 03/01/23 1,216
Government National Mortgage Association
30,830 Series 2002-92, Class PB......................... 5.50% 12/20/32 33,049
7,579 Series 2006-16, Class OP, PO..................... (f) 03/20/36 6,808
55,000 Series 2007-35, Class NE......................... 6.00% 06/16/37 64,513
5,555 Series 2009-29, Class TA......................... 4.50% 03/16/39 5,758
293 Series 2009-81, Class PA......................... 5.50% 02/16/38 296
2,406 Series 2009-102, Class MA........................ 4.00% 06/16/39 2,428
1,097 Series 2010-121, Class PQ........................ 3.00% 02/20/39 1,099
45,365 Series 2010-164, Class LE........................ 3.00% 10/20/38 45,398
23,111 Series 2011-136, Class GB........................ 2.50% 05/20/40 23,173
Page 46 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES (CONTINUED)
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Government National Mortgage Association (Continued)
$ 24,020 Series 2013-20, Class KI, IO..................... 5.00% 01/20/43 $ 4,085
-------------
859,997
-------------
PASS-THROUGH SECURITIES -- 2.1%
Federal Home Loan Mortgage Corporation
15,174 Pool A47829...................................... 4.00% 08/01/35 15,780
6,725 Pool C01252...................................... 6.50% 11/01/31 7,688
49,327 Pool G01731...................................... 6.50% 12/01/29 55,865
29,888 Pool G06358...................................... 4.00% 04/01/41 31,556
2,699 Pool O20138...................................... 5.00% 11/01/30 2,904
18,807 Pool U90316...................................... 4.00% 10/01/42 19,855
Federal National Mortgage Association
17,027 Pool 890383...................................... 4.00% 01/01/42 17,965
22,234 Pool AA9393...................................... 4.50% 07/01/39 23,880
18,946 Pool AD0659...................................... 6.00% 02/01/23 19,574
10,151 Pool AE0050...................................... 5.50% 12/01/22 10,463
25,392 Pool AL0791...................................... 4.00% 02/01/41 26,790
44,501 Pool AU4289...................................... 4.00% 09/01/43 46,951
6,808 Pool MA0561...................................... 4.00% 11/01/40 7,183
31,053 Pool MA1028...................................... 4.00% 04/01/42 32,765
Government National Mortgage Association
9,706 Pool 3428........................................ 5.00% 08/20/33 10,474
20,921 Pool 3500........................................ 5.50% 01/20/34 22,897
7,481 Pool 3711........................................ 5.50% 05/20/35 8,192
25,019 Pool 667422...................................... 5.00% 10/15/39 27,533
10,314 Pool 706201...................................... 5.50% 04/20/39 11,062
12,680 Pool 736558...................................... 5.00% 02/15/40 13,760
23,924 Pool 759248...................................... 4.00% 02/15/41 25,392
88,298 Pool 769055...................................... 3.75% 07/15/41 91,694
49,651 Pool 770005...................................... 4.00% 11/15/33 53,025
15,905 Pool MA3525...................................... 5.50% 03/20/46 17,318
-------------
600,566
-------------
TOTAL U.S. GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES...................... 1,460,563
(Cost $1,436,886) -------------
MORTGAGE-BACKED SECURITIES -- 0.1%
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.1%
Credit Suisse First Boston Mortgage Securities Corp.
299 Series 2004-6, Class 2A1......................... 4.75% 09/25/19 1
MASTR Alternative Loan Trust
692 Series 2004-10, Class 2A1........................ 5.50% 10/25/19 691
122 Series 2005-1, Class 5A1......................... 5.50% 01/25/20 125
MASTR Asset Securitization Trust
4,666 Series 2004-1, Class 5A4......................... 5.50% 02/25/34 4,945
RAAC Trust
139 Series 2005-SP1, Class 2A1....................... 5.25% 09/25/34 140
Structured Asset Mortgage Investments Trust
7,113 Series 1999-1, Class 2A (g)...................... 6.67% 06/25/29 7,035
See Notes to Financial Statements Page 47
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
PRINCIPAL STATED STATED
VALUE DESCRIPTION COUPON MATURITY VALUE
----------- ---------------------------------------------------- --------- ------------ -------------
MORTGAGE-BACKED SECURITIES (CONTINUED)
COLLATERALIZED MORTGAGE OBLIGATIONS (CONTINUED)
Wells Fargo Mortgage Backed-Securities Trust
$ 677 Series 2006-17, Class A4......................... 5.50% 11/25/21 $ 677
-------------
TOTAL MORTGAGE-BACKED SECURITIES............................................. 13,614
(Cost $13,730) -------------
ASSET-BACKED SECURITIES -- 0.1%
California Republic Auto Receivables Trust
12,174 Series 2016-1, Class A4.......................... 2.24% 10/15/21 12,167
-------------
TOTAL ASSET-BACKED SECURITIES................................................ 12,167
(Cost $12,096) -------------
TOTAL INVESTMENTS -- 97.9%................................................... 27,942,842
(Cost $26,388,713) (h)
NET OTHER ASSETS AND LIABILITIES -- 2.1%..................................... 610,956
-------------
NET ASSETS -- 100.0%......................................................... $ 28,553,798
=============
-----------------------------
(a) Investment in an affiliated fund.
(b) 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.
(c) Inverse floating rate security
(d) Floating or variable rate security.
(e) Weighted Average Coupon security. Coupon is based on the blended interest
rate of the underlying holdings, which may have different coupons. The
coupon may change in any period.
(f) Zero coupon security.
(g) Collateral Strip Rate security. Coupon is based on the weighted net
interest rate of the investment's underlying collateral. The interest rate
resets periodically.
(h) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $1,847,305 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $293,176. The net unrealized appreciation was
$1,554,129.
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.
LIBOR London Interbank Offered Rate
PO Principal-Only Security
Page 48 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
JUNE 30, 2019 (UNAUDITED)
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
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
6/30/2019 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Exchange-Traded Funds*............................ $ 12,473,080 $ 12,473,080 $ -- $ --
Common Stocks*.................................... 6,488,370 6,488,370 -- --
U.S. Government Bonds and Notes................... 2,854,749 -- 2,854,749 --
Real Estate Investment Trusts*.................... 2,465,886 2,465,886 -- --
Master Limited Partnerships*...................... 2,174,413 2,174,413 -- --
U.S. Government Agency Mortgage-Backed
Securities..................................... 1,460,563 -- 1,460,563 --
Mortgage-Backed Securities........................ 13,614 -- 13,614 --
Asset-Backed Securities........................... 12,167 -- 12,167 --
------------ ------------ ------------ ------------
Total Investments................................. $ 27,942,842 $ 23,601,749 $ 4,341,093 $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
See Notes to Financial Statements Page 49
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
PORTFOLIO OF INVESTMENTS
JUNE 30, 2019 (UNAUDITED)
SHARES DESCRIPTION VALUE
----------- ----------------------------------------------------------------------------- -------------
EXCHANGE-TRADED FUNDS - 97.6%
CAPITAL MARKETS - 97.6%
8,613 First Trust BICK Index Fund (a).............................................. $ 231,087
15,795 First Trust Brazil AlphaDEX(R) Fund (a)...................................... 249,561
15,387 First Trust Developed Markets ex-US AlphaDEX(R) Fund (a)..................... 830,744
31,303 First Trust Dow Jones Internet Index Fund (a) (b)............................ 4,501,997
23,472 First Trust Emerging Markets AlphaDEX(R) Fund (a)............................ 591,494
5,696 First Trust Germany AlphaDEX(R) Fund (a)..................................... 238,150
72,764 First Trust Large Cap Growth AlphaDEX(R) Fund (a)............................ 5,118,947
110,982 First Trust Mid Cap Growth AlphaDEX(R) Fund (a).............................. 5,019,716
53,486 First Trust NASDAQ-100-Technology Sector Index Fund (a)...................... 4,572,518
28,885 First Trust NYSE Arca Biotechnology Index Fund (a) (b)....................... 4,068,163
103,297 First Trust Small Cap Growth AlphaDEX(R) Fund (a)............................ 4,803,311
5,003 First Trust Switzerland AlphaDEX(R) Fund (a)................................. 256,504
68,626 First Trust Technology AlphaDEX(R) Fund (a).................................. 4,566,374
145,929 First Trust Utilities AlphaDEX(R) Fund (a)................................... 4,189,622
26,809 iShares Core U.S. Aggregate Bond ETF......................................... 2,985,182
36,045 SPDR Blackstone/GSO Senior Loan ETF.......................................... 1,666,000
15,665 SPDR Bloomberg Barclays High Yield Bond ETF.................................. 1,706,545
34,433 SPDR Nuveen Bloomberg Barclays Municipal Bond ETF............................ 1,726,471
49,678 SPDR Portfolio Intermediate Term Corporate Bond ETF.......................... 1,735,253
-------------
TOTAL INVESTMENTS - 97.6%.................................................... 49,057,639
(Cost $45,313,576) (c)
NET OTHER ASSETS AND LIABILITIES - 2.4%...................................... 1,218,403
-------------
NET ASSETS - 100.0%.......................................................... $ 50,276,042
=============
-----------------------------
(a) Investment in an affiliated fund.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes approximates the aggregate
cost for federal income tax purposes. As of June 30, 2019, the aggregate
gross unrealized appreciation for all investments in which there was an
excess of value over tax cost was $4,155,385 and the aggregate gross
unrealized depreciation for all investments in which there was an excess
of tax cost over value was $411,322. The net unrealized appreciation was
$3,744,063.
-----------------------------
VALUATION INPUTS
A summary of the inputs used to value the Fund's investments as of June 30, 2019
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
6/30/2019 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Exchange-Traded Funds*............................ $ 49,057,639 $ 49,057,639 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
Page 50 See Notes to Financial Statements
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2019 (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 - Unaffiliated.................................... $ 893,238,362 $ 18,990,470 $ 9,819,451
Investments, at value - Affiliated...................................... -- 8,952,372 39,238,188
Cash and cash equivalents............................................... 3,787,963 733,973 1,330,090
Receivables:
Interest............................................................. 3,289,650 13,641 --
Dividends............................................................ 778,779 17,256 --
Investment securities sold........................................... 423,559 6 --
Fund shares sold..................................................... 82,349 18,738 1,279
Reclaim.............................................................. -- 2,690 --
From investment advisor.............................................. -- 251 6,031
Prepaid expenses........................................................ 3,781 64 140
--------------- --------------- ---------------
Total Assets......................................................... 901,604,443 28,729,461 50,395,179
--------------- --------------- ---------------
LIABILITIES:
Payables:
Investment securities purchased...................................... 1,388,095 91,692 --
Investment advisory fees............................................. 424,687 -- --
12b-1 service fees (Class I)......................................... 180,725 5,792 10,078
Administrative service fees.......................................... 144,613 9,366 8,080
Accounting and administration fees................................... 80,029 7,036 84
Fund shares redeemed................................................. 76,838 8,956 59,928
Licensing fees....................................................... 70,504 -- 12,149
Custodian fees....................................................... 66,262 5,728 793
Shareholder reporting fees........................................... 47,384 5,861 6,025
Legal fees........................................................... 23,229 805 1,486
Audit and tax fees................................................... 18,057 31,646 14,360
Transfer agent fees.................................................. 13,398 4,737 4,710
Commitment fees...................................................... 4,073 1,648 --
Variation margin..................................................... 3,094 -- --
Financial reporting fees............................................. 771 -- 918
Trustees' fees and expenses.......................................... 306 5 185
Other liabilities....................................................... 202 2,391 341
--------------- --------------- ---------------
Total Liabilities.................................................... 2,542,267 175,663 119,137
--------------- --------------- ---------------
NET ASSETS.............................................................. $ 899,062,176 $ 28,553,798 $ 50,276,042
=============== =============== ===============
NET ASSETS CONSIST OF:
Paid-in capital......................................................... $ 809,841,331 $ 26,947,593 $ 46,501,587
Accumulated distributable earnings (loss)............................... 89,220,845 1,606,205 3,774,455
--------------- --------------- ---------------
NET ASSETS.............................................................. $ 899,062,176 $ 28,553,798 $ 50,276,042
=============== =============== ===============
Investments, at cost - Unaffiliated..................................... $ 813,368,926 $ 17,460,975 $ 9,514,609
=============== =============== ===============
Investments, at cost - Affiliated....................................... $ -- $ 8,927,738 $ 35,798,967
=============== =============== ===============
CLASS I SHARES:
NET ASSETS.............................................................. $ 898,839,060 $ 28,400,770 $ 50,170,797
=============== =============== ===============
NET ASSET VALUE, per share.............................................. $ 13.97 $ 11.16 $ 11.97
=============== =============== ===============
Number of Shares outstanding............................................ 64,360,044 2,544,768 4,192,826
=============== =============== ===============
CLASS II SHARES:
NET ASSETS.............................................................. $ 223,116 $ 153,028 $ 105,245
=============== =============== ===============
NET ASSET VALUE, per share.............................................. $ 14.00 $ 11.16 $ 11.97
=============== =============== ===============
Number of Shares outstanding............................................ 15,940 13,713 8,795
=============== =============== ===============
See Notes to Financial Statements Page 51
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2019 (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................................................................ $ 6,495,316 $ 58,859 $ 8,538
Dividends - Unaffiliated................................................ 6,207,022 202,060 145,463
Dividends - Affiliated.................................................. -- 219,781 82,851
Foreign withholding tax on dividend income.............................. -- (2,802) --
--------------- --------------- ---------------
Total investment income.............................................. 12,702,338 477,898 236,852
--------------- --------------- ---------------
EXPENSES:
Investment advisory fees................................................ 2,507,774 80,234 82,014
12b-1 distribution and service fees (Class I)........................... 1,044,798 33,243 58,457
Administrative service fees............................................. 835,947 26,636 46,805
Accounting and administration fees...................................... 248,593 12,250 26,033
Licensing fees.......................................................... 140,075 -- 23,433
Custodian fees.......................................................... 94,401 9,778 4,228
Shareholder reporting fees.............................................. 59,876 10,601 11,709
Transfer agent fees..................................................... 47,664 26,934 27,036
Legal fees.............................................................. 24,889 560 1,120
Commitment fees......................................................... 24,724 9,960 --
Audit and tax fees...................................................... 14,484 25,439 11,229
Trustees' fees and expenses............................................. 8,986 8,098 8,295
Financial reporting fees................................................ 4,625 -- 4,587
Other................................................................... 6,715 137 432
--------------- --------------- ---------------
Total expenses....................................................... 5,063,551 243,870 305,378
Fees waived and expenses reimbursed by the investment advisor........ (48,382) (133,068) (127,618)
--------------- --------------- ---------------
Net expenses............................................................ 5,015,169 110,802 177,760
--------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS)............................................ 7,687,169 367,096 59,092
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments - Unaffiliated........................................... 10,201,054 131,687 (30,390)
Investments - Affiliated............................................. -- (17,508) 72,902
Futures.............................................................. (1,404,549) -- --
Foreign currency transactions........................................ -- 4 --
--------------- --------------- ---------------
Net realized gain (loss)................................................ 8,796,505 114,183 42,512
--------------- --------------- ---------------
Net change in unrealized appreciation (depreciation) on:
Investments - Unaffiliated........................................... 91,978,554 1,809,885 477,401
Investments - Affiliated............................................. -- 464,882 6,027,854
Futures.............................................................. 290,149 -- --
Foreign currency translation......................................... -- 1 --
--------------- --------------- ---------------
Net change in unrealized appreciation (depreciation).................... 92,268,703 2,274,768 6,505,255
--------------- --------------- ---------------
NET REALIZED AND UNREALIZED GAIN (LOSS)................................. 101,065,208 2,388,951 6,547,767
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS...................................................... $ 108,752,377 $ 2,756,047 $ 6,606,859
=============== =============== ===============
Page 52 See Notes to Financial Statements
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS
FIRST TRUST/DOW JONES DIVIDEND
& INCOME ALLOCATION PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2019 ENDED
(UNAUDITED) 12/31/2018
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 7,687,169 $ 11,802,416
Net realized gain (loss)............................................................. 8,796,505 33,480,402
Net change in unrealized appreciation (depreciation)................................. 92,268,703 (86,358,578)
-------------- --------------
Net increase (decrease) in net assets resulting from operations...................... 108,752,377 (41,075,760)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM INVESTMENT OPERATIONS:
Class I.............................................................................. (40,016,445) (13,489,067)
Class II............................................................................. (10,172) (1,119)
-------------- --------------
Total distributions to shareholders.................................................. (40,026,617) (13,490,186)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 50,280,408 142,387,501
Proceeds from shares reinvested...................................................... 40,026,039 13,489,949
Cost of shares redeemed.............................................................. (27,630,607) (71,173,469)
-------------- --------------
Net increase (decrease) in net assets resulting from capital transactions............ 62,675,840 84,703,981
-------------- --------------
Total increase (decrease) in net assets.............................................. 131,401,600 30,138,035
NET ASSETS:
Beginning of period.................................................................. 767,660,576 737,522,541
-------------- --------------
End of period........................................................................ $ 899,062,176 $ 767,660,576
============== ==============
See Notes to Financial Statements Page 53
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST MULTI INCOME
ALLOCATION PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2019 ENDED
(UNAUDITED) 12/31/2018
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 367,096 $ 495,965
Net realized gain (loss)............................................................. 114,183 36,443
Net change in unrealized appreciation (depreciation)................................. 2,274,768 (1,646,906)
-------------- --------------
Net increase (decrease) in net assets resulting from operations...................... 2,756,047 (1,114,498)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM INVESTMENT OPERATIONS:
Class I.............................................................................. (344,509) (516,531)
Class II............................................................................. (2,056) (2,977)
-------------- --------------
Total distributions to shareholders.................................................. (346,565) (519,508)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 2,784,692 10,062,438
Proceeds from shares reinvested...................................................... 345,055 516,827
Cost of shares redeemed.............................................................. (1,578,635) (4,594,392)
-------------- --------------
Net increase (decrease) in net assets resulting from capital transactions............ 1,551,112 5,984,873
-------------- --------------
Total increase (decrease) in net assets.............................................. 3,960,594 4,350,867
NET ASSETS:
Beginning of period.................................................................. 24,593,204 20,242,337
-------------- --------------
End of period........................................................................ $ 28,553,798 $ 24,593,204
============== ==============
Page 54 See Notes to Financial Statements
FIRST TRUST VARIABLE INSURANCE TRUST
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FIRST TRUST DORSEY WRIGHT
TACTICAL CORE PORTFOLIO
--------------------------------
SIX MONTHS
ENDED YEAR
6/30/2019 ENDED
(UNAUDITED) 12/31/2018
-------------- --------------
OPERATIONS:
Net investment income (loss)......................................................... $ 59,092 $ 149,095
Net realized gain (loss)............................................................. 42,512 730,920
Net change in unrealized appreciation (depreciation)................................. 6,505,255 (5,148,691)
-------------- --------------
Net increase (decrease) in net assets resulting from operations...................... 6,606,859 (4,268,676)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS FROM INVESTMENT OPERATIONS:
Class I.............................................................................. (821,756) (155,085)
Class II............................................................................. (1,830) (618)
-------------- --------------
Total distributions to shareholders.................................................. (823,586) (155,703)
-------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold............................................................ 8,812,686 24,115,334
Proceeds from shares reinvested...................................................... 823,586 155,703
Cost of shares redeemed.............................................................. (3,504,990) (4,021,112)
-------------- --------------
Net increase (decrease) in net assets resulting from capital transactions............ 6,131,282 20,249,925
-------------- --------------
Total increase (decrease) in net assets.............................................. 11,914,555 15,825,546
NET ASSETS:
Beginning of period.................................................................. 38,361,487 22,535,941
-------------- --------------
End of period........................................................................ $ 50,276,042 $ 38,361,487
============== ==============
See Notes to Financial Statements Page 55
FIRST TRUST/DOW JONES DIVIDEND & INCOME ALLOCATION PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
6/30/2019 -------------------------------------------------------------------
(UNAUDITED) 2018 2017 2016 2015 2014
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 12.82 $ 13.73 $ 12.85 $ 11.94 $ 12.41 $ 11.37
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.12 0.21 0.18 0.14 0.16 0.15
Net realized and unrealized gain (loss).. 1.68 (0.88) 1.54 1.25 (a) (0.15) 0.99
--------- --------- --------- --------- --------- ---------
Total from investment operations......... 1.80 (0.67) 1.72 1.39 0.01 1.14
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.11) (0.21) (0.18) (0.13) (0.27) (0.10)
Net realized gain........................ (0.54) (0.03) (0.66) (0.35) (0.21) --
--------- --------- --------- --------- --------- ---------
Total distributions...................... (0.65) (0.24) (0.84) (0.48) (0.48) (0.10)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 13.97 $ 12.82 $ 13.73 $ 12.85 $ 11.94 $ 12.41
========= ========= ========= ========= ========= =========
TOTAL RETURN (b) (c)..................... 14.08% (4.92)% 13.47% 11.74% (a) 0.09% 10.04%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 898,839 $ 767,616 $ 737,320 $ 543,951 $ 243,244 $ 195,128
Ratio of total expenses to average net
assets................................ 1.21% (d) 1.22% 1.23% 1.29% 1.34% 1.43%
Ratio of net expenses to average net
assets................................ 1.20% (d) 1.20% 1.20% 1.20% 1.20% 1.20%
Ratio of net investment income (loss) to
average net assets.................... 1.84% (d) 1.56% 1.35% 1.29% 1.35% 1.40%
Portfolio turnover rate.................. 42% 76% 71% 96% 81% 65%
CLASS II SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2019 ----------------------------------------------------- ENDED
(UNAUDITED) 2018 2017 2016 2015 12/31/2014 (e)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 12.85 $ 13.75 $ 12.87 $ 11.95 $ 12.43 $ 11.63
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.15 (f) 0.25 (f) 0.14 0.19 0.17 0.14
Net realized and unrealized gain (loss).. 1.67 (0.88) 1.61 1.24 (a) (0.14) 0.77
--------- --------- --------- --------- --------- ---------
Total from investment operations......... 1.82 (0.63) 1.75 1.43 0.03 0.91
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.13) (0.24) (0.21) (0.16) (0.30) (0.11)
Net realized gain........................ (0.54) (0.03) (0.66) (0.35) (0.21) --
--------- --------- --------- --------- --------- ---------
Total distributions...................... (0.67) (0.27) (0.87) (0.51) (0.51) (0.11)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 14.00 $ 12.85 $ 13.75 $ 12.87 $ 11.95 $ 12.43
========= ========= ========= ========= ========= =========
TOTAL RETURN (b) (c)..................... 14.18% (4.60)% 13.75% 12.07% (a) 0.25% 7.82%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 223 $ 44 $ 202 $ 17 $ 16 $ 11
Ratio of total expenses to average net
assets................................ 0.97% (d) 0.97% 1.00% 1.04% 1.09% 1.21% (d)
Ratio of net expenses to average net
assets................................ 0.95% (d) 0.95% 0.95% 0.95% 0.95% 0.95% (d)
Ratio of net investment income (loss) to
average net assets.................... 2.20% (d) 1.79% 1.88% 1.53% 1.64% 1.69% (d)
Portfolio turnover rate.................. 42% 76% 71% 96% 81% 65%
-----------------------------
(a) 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.
(b) 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.
(c) Total returns would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(d) Annualized.
(e) The Fund's Class II shares were seeded on April 30, 2014, and commenced
operations on May 1, 2014.
(f) Based on average shares outstanding.
Page 56 See Notes to Financial Statements
FIRST TRUST MULTI INCOME ALLOCATION PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2019 ----------------------------------------------------- ENDED
(UNAUDITED) 2018 2017 2016 2015 12/31/2014 (a)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 10.17 $ 10.89 $ 10.54 $ 9.86 $ 10.39 $ 10.00
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.14 0.23 0.24 0.20 0.19 0.07
Net realized and unrealized gain (loss).. 0.99 (0.71) 0.39 0.71 (0.53) (b) 0.39
--------- --------- --------- --------- --------- ---------
Total from investment operations......... 1.13 (0.48) 0.63 0.91 (0.34) 0.46
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.13) (0.24) (0.25) (0.23) (0.19) (0.07)
Net realized gain........................ (0.01) -- (0.03) -- -- --
--------- --------- --------- --------- --------- ---------
Total from distributions................. (0.14) (0.24) (0.28) (0.23) (0.19) (0.07)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 11.16 $ 10.17 $ 10.89 $ 10.54 $ 9.86 $ 10.39
========= ========= ========= ========= ========= =========
TOTAL RETURN (c) (d)..................... 11.08% (4.44)% 6.04% 9.27% (3.24)% (b) 4.57%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 28,401 $ 24,451 $ 20,083 $ 17,965 $ 12,257 $ 6,894
Ratio of total expenses to average net
assets (e)............................ 1.83% (f) 2.09% 2.17% 2.22% 2.60% 6.00% (f)
Ratio of net expenses to average net
assets (e)............................ 0.83% (f) 0.83% 0.83% 0.83% 0.90% 1.20% (f)
Ratio of net investment income (loss) to
average net assets.................... 2.74% (f) 2.29% 2.24% 2.10% 2.17% 2.35% (f)
Portfolio turnover rate.................. 18% 40% 46% 46% 93% 15%
CLASS II SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2019 ----------------------------------------------------- ENDED
(UNAUDITED) 2018 2017 2016 2015 12/31/2014 (a)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 10.17 $ 10.88 $ 10.54 $ 9.86 $ 10.39 $ 10.00
--------- --------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.16 0.26 0.27 0.20 0.24 0.04
Net realized and unrealized gain (loss).. 0.98 (0.70) 0.38 0.74 (0.55) (b) 0.43
--------- --------- --------- --------- --------- ---------
Total from investment operations......... 1.14 (0.44) 0.65 0.94 (0.31) 0.47
--------- --------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.14) (0.27) (0.28) (0.26) (0.22) (0.08)
Net realized gain........................ (0.01) -- (0.03) -- -- --
--------- --------- --------- --------- --------- ---------
Total from distributions................. (0.15) (0.27) (0.31) (0.26) (0.22) (0.08)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period........... $ 11.16 $ 10.17 $ 10.88 $ 10.54 $ 9.86 $ 10.39
========= ========= ========= ========= ========= =========
TOTAL RETURN (c) (d)..................... 11.20% (4.11)% 6.22% 9.53% (3.01)%(b) 4.74%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 153 $ 142 $ 159 $ 156 $ 100 $ 105
Ratio of total expenses to average net
assets (e)............................. 1.58% (f) 1.83% 1.92% 1.99% 2.31% 14.44% (f)
Ratio of net expenses to average net
assets (e)............................. 0.58% (f) 0.58% 0.58% 0.58% 0.67% 0.95% (f)
Ratio of net investment income (loss)
to average net assets.................. 2.98% (f) 2.49% 2.49% 2.34% 2.32% 0.54% (f)
Portfolio turnover rate.................. 18% 40% 46% 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) The Fund indirectly bears its proportionate share of fees and expenses
incurred by the underlying funds in which the Fund invests. This ratio
does not include these indirect fees and expenses.
(f) Annualized.
See Notes to Financial Statements Page 57
FIRST TRUST DORSEY WRIGHT TACTICAL CORE PORTFOLIO
FINANCIAL HIGHLIGHTS (CONTINUED)
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
CLASS I SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2019 --------------------------------------- ENDED
(UNAUDITED) 2018 2017 2016 12/31/2015 (a)
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 10.45 $ 11.41 $ 9.85 $ 9.94 $ 10.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.01 0.04 0.06 0.09 0.01
Net realized and unrealized gain (loss).. 1.71 (0.95) 1.66 0.01 (0.07)
--------- --------- --------- --------- ---------
Total from investment operations......... 1.72 (0.91) 1.72 0.10 (0.06)
--------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.02) (0.03) (0.06) (0.09) --
Net realized gain........................ (0.18) (0.02) (0.10) (0.10) --
--------- --------- --------- --------- ---------
Total from distributions................. (0.20) (0.05) (0.16) (0.19) --
--------- --------- --------- --------- ---------
Net asset value, end of period........... $ 11.97 $ 10.45 $ 11.41 $ 9.85 $ 9.94
========= ========= ========= ========= =========
TOTAL RETURN (b) (c)..................... 16.55% (8.00)% 17.50% 0.95% (0.60)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 50,171 $ 38,277 $ 22,477 $ 10,360 $ 5,440
Ratio of total expenses to average net
assets (d)............................ 1.25% (e) 1.40% 1.85% 2.13% 11.71% (e)
Ratio of net expenses to average net
assets (d)............................ 0.76% (e) 0.74% 0.75% 0.83% 0.79% (e)
Ratio of net investment income (loss)
to average net assets................. 0.25% (e) 0.48% 0.76% 0.98% 1.54% (e)
Portfolio turnover rate.................. 16% 70% 31% 265% --%
CLASS II SHARES
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31, PERIOD
6/30/2019 --------------------------------------- ENDED
(UNAUDITED) 2018 2017 2016 12/31/2015 (a)
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period..... $ 10.44 $ 11.40 $ 9.83 $ 9.95 $ 10.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)............. 0.03 0.07 0.10 0.11 0.01
Net realized and unrealized gain (loss).. 1.71 (0.95) 1.66 (0.02) (0.06)
--------- --------- --------- --------- ---------
Total from investment operations......... 1.74 (0.88) 1.76 0.09 (0.05)
--------- --------- --------- --------- ---------
DISTRIBUTIONS PAID TO SHAREHOLDERS FROM:
Net investment income.................... (0.03) (0.06) (0.09) (0.11) --
Net realized gain........................ (0.18) (0.02) (0.10) (0.10) --
--------- --------- --------- --------- ---------
Total distributions...................... (0.21) (0.08) (0.19) (0.21) --
--------- --------- --------- --------- ---------
Net asset value, end of period........... $ 11.97 $ 10.44 $ 11.40 $ 9.83 $ 9.95
========= ========= ========= ========= =========
TOTAL RETURN (b) (c)..................... 16.68% (7.77)% 17.94% 0.88% (0.50)%
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)..... $ 105 $ 84 $ 59 $ 50 $ 50
Ratio of total expenses to average net
assets (d)............................ 26.94% (e) 32.62% 46.41% 57.64% 37.40% (e)
Ratio of net expenses to average net
assets (d)............................ 0.51% (e) 0.49% 0.50% 0.57% 0.51% (e)
Ratio of net investment income (loss)
to average net assets................. 0.50% (e) 0.73% 0.93% 1.13% 0.86% (e)
Portfolio turnover rate.................. 16% 70% 31% 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) 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.
(c) Total returns would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(d) The Fund indirectly bears its proportionate share of fees and expenses
incurred by the underlying funds in which the Fund invests. This ratio
does not include these indirect fees and expenses.
(e) Annualized.
Page 58 See Notes to Financial Statements
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (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 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. Under normal market conditions, at the time of purchase
at least 80% of the Fund's net assets (including investment borrowings) will be
invested in securities of issuers included in a Dow Jones index. 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 portfolio 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 debt
portfolio. Investment-grade debt securities are those long-term debt securities
rated "BBB-" or higher by Standard & Poor's Financial Services LLC or Fitch,
Inc. or "Baa3" or higher by Moody's Investors Service, Inc., and those
short-term debt securities rated "A-3" or higher by Standard & Poor's Financial
Services LLC, "F3" or higher by Fitch, Inc. or "Prime 3" or higher by Moody's
Investor 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 debt will be invested in investment-grade debt securities
included in the Dow Jones Equal Weight U.S. Issued Corporate Bond Index(SM) (the
"Bond Index") and other investment-grade debt securities of issuers whose
securities are included in the Bond Index; and investment-grade debt securities
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 debt securities and U.S. government bonds
in lieu of investing directly in such securities.
First Trust Multi Income's primary 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")
(collectively, "Depository Receipts"). The Fund may invest in equity securities
issued by small, mid or large capitalization companies.
First Trust Dorsey Wright's investment objective is to seek 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.
Page 59
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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 ("FASB")
Accounting Standards Codification ("ASC") 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 the 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.
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.
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
Commercial paper, fixed income and other debt securities having a
remaining maturity of sixty 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 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 the 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;
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.
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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 or exchange-traded 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, 2019, 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
daily 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 are not known until after the REITs' fiscal
year end. A Fund records the character of distributions received from the REITs
during the year based on estimates available. The characterization of
distributions received by a Fund may be subsequently revised based on
information received from the REITs after their tax reporting periods conclude.
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
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.
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
D. 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
included 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 included in "Net
realized gain (loss) on foreign currency transactions" on the Statements of
Operations. The portion of foreign currency gains and losses related to
fluctuations 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.
E. 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
contracts 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.
F. 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.
G. 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.
H. 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.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
Distributions from income and capital gains are determined in accordance with
federal 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 time in the future.
The tax character of distributions paid by each Fund during the year ended
December 31, 2018, was as follows:
Distributions paid Distributions paid Distributions paid
from Ordinary from Capital from Return
Income Gains of Capital
------------------ ------------------ ------------------
First Trust Dow Jones $ 12,292,691 $ 1,197,495 $ --
First Trust Multi Income 519,508 -- --
First Trust Dorsey Wright 120,457 35,246 --
As of December 31, 2018, 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 $ 9,665,609 $ 23,223,342 $ (12,393,866)
First Trust Multi Income 22,357 (21,051) (804,583)
First Trust Dorsey Wright 15,619 737,450 (2,761,887)
I. 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, which includes distributing substantially all of its net
investment income and net realized gains to shareholders. 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 each 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 2015, 2016,
2017 and 2018 remain open to federal and state audit for First Trust Dow Jones,
First Trust Multi Income and First Trust Dorsey Wright. As of June 30, 2019,
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.
The Funds intend to utilize provisions of the federal income tax laws, which
allow them to carry a realized capital loss forward indefinitely following the
year of the loss and offset such loss against any future realized capital gains.
The Funds are 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.
During the taxable year ended December 31, 2018, the Funds had capital loss
carryforwards in the following amounts:
Capital Loss
Available
---------------
First Trust Dow Jones $ --
First Trust Multi Income 21,051
First Trust Dorsey Wright --
J. 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.
Page 64
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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.
K. NEW ACCOUNTING PRONOUNCEMENTS
On March 30, 2017, the FASB issued Accounting Standards Update ("ASU") 2017-08
"Premium Amortization on Purchased Callable Debt Securities," which amends the
amortization period for certain purchased callable debt securities held at a
premium by shortening such period to the earliest call date. The new guidance
requires an entity to amortize the premium on a callable debt security within
its scope to the earliest call date, unless the guidance for considering
estimated prepayments is applied. If the call option is not exercised at the
earliest call date, the yield is reset to the effective yield using the payment
terms of the security. If the security has more than one call date and the
premium was amortized to a call price greater than the next call price, any
excess of the amortized cost basis over the amount repayable at the next call
date will be amortized to that date. If there are no other call dates, any
excess of the amortized cost basis over the par amount will be amortized to
maturity. Discounts on purchased callable debt securities will continue to be
amortized to the security's maturity date. ASU 2017-08 is effective for public
business entities for fiscal years, and interim periods within those fiscal
years, beginning after December 15, 2018. Earlier adoption is permitted for all
entities, including adoption in an interim period. If an entity early adopts the
ASU in an interim period, any adjustments must be reflected as of the beginning
of the fiscal year that includes that interim period. Management is still
assessing the impact of the adoption of ASU 2017-08 on the financial statements
but does not expect it to have a material impact.
On August 28, 2018, the FASB issued ASU 2018-13, "Disclosure Framework - Changes
to the Disclosure Requirements for Fair Value Measurement," which amends the
fair value measurement disclosure requirements of ASC 820. The amendments of ASU
2018-13 include new, eliminated, and modified disclosure requirements of ASC
820. In addition, the amendments clarify that materiality is an appropriate
consideration of entities when evaluating disclosure requirements. The ASU is
effective for fiscal years beginning after December 15, 2019, including interim
periods therein. Early adoption is permitted for any eliminated or modified
disclosures upon issuance of this ASU. The Funds have early adopted ASU 2018-13
for these financial statements, which did not result in a material impact.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
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.
In addition First Trust Multi Income and First Trust Dorsey Wright incur their
respective pro rata share of fees and expenses attributable to each Fund's
investments in other investment companies ("acquired fund fees and expenses").
The total of net expenses and acquired fund fees and expenses represents each
Fund's total net annual operating expenses.
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 ongoing 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 nondiscretionary
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
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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.
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. FTCP also owns, through a wholly-owned
subsidiary, a 51% ownership interest in Stonebridge.
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 annual
operating expenses of Class I shares and Class II shares (excluding interest
expense, brokerage commissions and other trading expenses, acquired fund fees
and expenses, if any, taxes and extraordinary expenses) from exceeding 1.20% and
0.95% (each an "Expense Cap"), respectively, of each Fund's average daily net
assets per year at least until May 1, 2020. 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% (each an "Expense Cap"),
respectively, of the Fund's average daily net assets per year at least until May
1, 2020. For 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 Caps. However,
total net annual fund expenses may be higher or lower than the Expense Caps.
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 (i) the Expense Cap in place
for the most recent fiscal year for which such expense limitation was in place,
(ii) the Expense Cap in place at the time the fees were waived, or (iii) the
current 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, 2019, and the expenses borne and fees waived by First Trust subject to
recovery from the applicable Fund at June 30, 2019, 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 2016 2017 2018 2019 TOTAL
------------ ------------ ------------ ------------ ------------ ------------ ----------
First Trust Dow Jones $ 48,382 $ -- $ 200,535 $ 203,355 $ 186,633 $ 48,382 $ 638,905
First Trust Multi Income 80,234 3,356 71,236 189,257 192,140 83,590 536,223
First Trust Dorsey Wright 82,014 45,604 83,566 199,184 230,266 127,618 640,634
During the six months ended June 30, 2019, 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, 2020. During the six
months ended June 30, 2019, First Trust reimbursed First Trust Multi Income
$49,478 of fees that are not subject to recovery.
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.
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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.
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, 2019 DECEMBER 31, 2018
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 3,612,830 $ 50,095,643 10,329,682 $142,354,467
Class II 12,981 184,765 2,415 33,034
------------ ------------ ------------ ------------
Total Sales 3,625,811 $ 50,280,408 10,332,097 $142,387,501
============ ============ ============ ============
Dividend Reinvestment:
Class I 2,885,108 $ 40,016,445 1,031,910 $ 13,489,067
Class II 690 9,594 68 882
------------ ------------ ------------ ------------
Total Dividend Reinvestment 2,885,798 $ 40,026,039 1,031,978 $ 13,489,949
============ ============ ============ ============
Redemptions:
Class I (1,994,005) $(27,613,910) (5,216,581) $(70,989,205)
Class II (1,163) (16,697) (13,771) (184,264)
------------ ------------ ------------ ------------
Total Redemptions (1,995,168) $(27,630,607) (5,230,352) $(71,173,469)
============ ============ ============ ============
Capital transactions for First Trust Multi Income were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2019 DECEMBER 31, 2018
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 253,912 $ 2,784,278 935,128 $ 10,021,784
Class II 41 414 3,916 40,654
------------ ------------ ------------ ------------
Total Sales 253,953 $ 2,784,692 939,044 $ 10,062,438
============ ============ ============ ============
Dividend Reinvestment:
Class I 30,760 $ 344,509 50,041 $ 516,531
Class II 49 546 30 296
------------ ------------ ------------ ------------
Total Dividend Reinvestment 30,809 $ 345,055 50,071 $ 516,827
============ ============ ============ ============
Redemptions:
Class I (144,120) $ (1,574,220) (425,750) $ (4,546,268)
Class II (402) (4,415) (4,510) (48,124)
------------ ------------ ------------ ------------
Total Redemptions (144,522) $ (1,578,635) (430,260) $ (4,594,392)
============ ============ ============ ============
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
Capital transactions for First Trust Dorsey Wright were as follows:
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2019 DECEMBER 31, 2018
SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------
Sales:
Class I 757,309 $ 8,805,961 2,028,796 $ 24,081,320
Class II 608 6,725 2,825 34,014
------------ ------------ ------------ ------------
Total Sales 757,917 $ 8,812,686 2,031,621 $ 24,115,334
============ ============ ============ ============
Dividend Reinvestment:
Class I 68,594 $ 821,756 14,641 $ 155,085
Class II 153 1,830 57 618
------------ ------------ ------------ ------------
Total Dividend Reinvestment 68,747 $ 823,586 14,698 $ 155,703
============ ============ ============ ============
Redemptions:
Class I (297,736) $ (3,504,764) (348,389) $ (4,020,869)
Class II (20) (226) (20) (243)
------------ ------------ ------------ ------------
Total Redemptions (297,756) $ (3,504,990) (348,409) $ (4,021,112)
============ ============ ============ ============
5. 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, 2019, were as follows:
Purchases Sales
--------------- ---------------
First Trust Dow Jones $ 329,826,848 $ 306,698,750
First Trust Multi Income 5,236,153 4,226,798
First Trust Dorsey Wright 12,196,228 7,425,579
Cost of purchases and proceeds from sales of U.S. Government investment
securities, excluding short-term investments, for the six months ended June 30,
2019, were as follows:
Purchases Sales
--------------- ---------------
First Trust Dow Jones $ 52,597,544 $ 44,750,399
First Trust Multi Income 1,092,672 405,956
First Trust Dorsey Wright -- --
6. DERIVATIVE TRANSACTIONS
The following table presents the type of derivatives held by First Trust Dow
Jones at June 30, 2019, 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, 2019.
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 Unrealized appreciation Unrealized depreciation
on futures contracts* $ -- on futures contracts* $ 126,406
* Includes cumulative appreciation (depreciation) on futures contracts as
reported in the Portfolio of Investments. The current day's variation margin is
reported within the Statements of Assets and Liabilities.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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, 2019, on derivative 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 EXPOSURE
Net realized gain (loss) on futures $(1,404,549)
Net change in unrealized appreciation (depreciation) on futures 290,149
During the six months ended June 30, 2019, the notional value of futures
contracts opened and closed were $42,896,399 and $36,943,813, respectively.
First Trust Dow Jones does not have the right to offset financial assets and
liabilities related to futures contracts on the Statements of Assets and
Liabilities.
7. 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,
2019, and for the six month period then ended are:
CHANGE IN
UNREALIZED REALIZED
SHARES AT VALUE AT APPRECIATION GAIN VALUE AT DIVIDEND
SECURITY NAME 6/30/2019 12/31/2018 PURCHASES SALES (DEPRECIATION) (LOSS) 6/30/2019 INCOME
---------------------- ----------- ----------- ----------- ------------ --------------- ----------- ----------- ------------
First Trust
Institutional
Preferred
Securities and
Income ETF 32,480 $ 430,829 $ 163,058 $ -- $ 36,875 $ -- $ 630,762 $ 15,823
First Trust Low
Duration
Opportunities ETF 1,000 102,100 10,252 (61,577) 469 436 51,680 1,081
First Trust Preferred
Securities
and Income Fund 98,090 1,279,835 490,001 (15) 132,144 -- 1,901,965 51,543
First Trust Senior
Loan Fund 82,000 3,620,661 343,156 (218,803) 136,770 (17,944) 3,863,840 85,492
First Trust Tactical
High Yield ETF 52,050 1,456,279 889,222 -- 158,624 -- 2,504,125 65,842
----------- ----------- ------------ --------------- ----------- ----------- ------------
$ 6,889,704 $ 1,895,689 $ (280,395) $ 464,882 $ (17,508) $ 8,952,372 $ 219,781
=========== =========== ============ =============== =========== =========== ============
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
Amounts relating to these investments in First Trust Dorsey Wright at June 30,
2019, and for the six month period then ended are:
CHANGE IN
UNREALIZED REALIZED
SHARES AT VALUE AT APPRECIATION GAIN VALUE AT DIVIDEND
SECURITY NAME 6/30/2019 12/31/2018 PURCHASES SALES (DEPRECIATION) (LOSS) 6/30/2019 INCOME
---------------------- ----------- ----------- ----------- ------------ --------------- ----------- ----------- ------------
First Trust BICK Index
Fund 8,613 $ 211,855 $ 29,222 $ (27,156) $ 17,432 $ (266) $ 231,087 $ 991
First Trust Brazil
AlphaDEX(R) Fund 15,795 188,392 30,675 (5,534) 36,020 8 249,561 3,311
First Trust Developed
Markets ex-US
AlphaDEX(R) Fund 15,387 662,064 115,487 (14,118) 65,169 2,142 830,744 9,617
First Trust Dow Jones
Internet Index Fund 31,303 3,274,413 657,765 (237,416) 706,193 101,042 4,501,997 --
First Trust Emerging
Markets AlphaDEX(R)
Fund 23,472 521,391 79,990 (59,081) 37,352 11,842 591,494 8,107
First Trust Germany
AlphaDEX(R) Fund 5,696 178,425 43,210 (3,872) 19,786 601 238,150 4,557
First Trust Health
Care AlphaDEX(R)
Fund -- 3,280,760 721,616 (4,242,754) 463,689 (223,311) -- --
First Trust Large Cap
Growth AlphaDEX(R)
Fund 72,764 3,686,880 656,793 (133,083) 874,359 33,998 5,118,947 15,007
First Trust Mid Cap
Growth AlphaDEX(R)
Fund 110,982 3,490,476 874,140 (303,788) 969,731 (10,843) 5,019,716 --
First Trust NASDAQ-100-
Technology Sector
Index Fund 53,486 3,430,728 521,968 (282,799) 800,422 102,199 4,572,518 13,954
First Trust NYSE Arca
Biotechnology Index
Fund 28,885 3,104,379 837,889 (308,109) 464,610 (30,606) 4,068,163 --
First Trust Small Cap
Growth AlphaDEX(R)
Fund 103,297 3,417,640 931,691 (157,944) 577,068 34,856 4,803,311 --
First Trust Switzerland
AlphaDEX(R) Fund 5,003 191,844 36,479 (6,867) 34,005 1,043 256,504 4,973
First Trust Technology
AlphaDEX(R) Fund 68,626 3,351,271 576,244 (294,554) 883,216 50,197 4,566,374 10,660
First Trust Utilities
AlphaDEX(R) Fund 145,929 -- 4,110,820 -- 78,802 -- 4,189,622 11,674
----------- ----------- ------------ --------------- ----------- ----------- ------------
$28,990,518 $10,223,989 $ (6,077,075) $ 6,027,854 $ 72,902 $39,238,188 $ 82,851
=========== =========== ============ =============== =========== =========== ============
8. 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.
First Trust Portfolios L.P. ("FTP"), an affiliate of First Trust, serves as the
selling agent and distributor of shares of the Funds. FTP uses the service fee
to compensate each Participating Insurance Company for providing account
services to Contract 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.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
During the six months ended June 30, 2019, 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.
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 (the "BNYM Line of Credit") with BNYM 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, 2019.
10. INDEMNIFICATION
The Trust, on behalf of the Funds, 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.
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ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (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 at www.ftportfolios.com; and (3) on the Securities and
Exchange Commission's ("SEC") website at www.sec.gov.
PORTFOLIO HOLDINGS
Each Fund files portfolio holdings information for each month in a fiscal
quarter within 60 days after the end of the relevant fiscal quarter on Form
N-PORT. Portfolio holdings information for the third month of each fiscal
quarter will be publicly available on the SEC's website at www.sec.gov. Each
Fund's complete schedule of portfolio holdings for the second and fourth
quarters of each fiscal year is included in the semi-annual and annual reports
to shareholders, respectively, and is filed with the SEC on Form N-CSR. The
semi-annual and annual report for each Fund is available to investors within 60
days after the period to which it relates. Each Fund's Forms N-PORT and Forms
N-CSR are available on the SEC's website listed above.
LICENSING INFORMATION
The DOW JONES EQUAL WEIGHT U.S. ISSUED CORPORATE BOND INDEX(SM), the DOW JONES
U.S. TOTAL STOCK MARKET INDEX(SM) and the DOW JONES COMPOSITE AVERAGE are
products of S&P Dow Jones Indices LLC or its affiliates ("SPDJI") and have been
licensed for use by First Trust Advisors L.P. Standard & Poor's(R) and S&P(R)
are registered trademarks of Standard & Poor's Financial Services LLC ("S&P");
Dow Jones(R) is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow
Jones"); and these trademarks have been licensed for use by SPDJI and
sublicensed for certain purposes by First Trust Advisors L.P. The First
Trust/Dow Jones Dividend & Income Allocation Portfolio is not sponsored,
endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective
affiliates, and none of such parties make any representation regarding the
advisability of investing in such product(s) nor do they have any liability for
any errors, omissions, or interruptions of the DOW JONES EQUAL WEIGHT U.S.
ISSUED CORPORATE BOND INDEX(SM), the DOW JONES U.S. TOTAL STOCK MARKET INDEX(SM)
or the DOW JONES COMPOSITE AVERAGE.
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.
BANK LOAN RISKS. Investments in bank loans are subject to the same risks as
investments in other types of debt securities, including credit risk, interest
rate risk, liquidity risk and valuation risk that may be heightened because of
the limited public information available regarding bank loans and because loan
borrowers may be leveraged and tend to be more adversely affected by changes in
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
market or economic conditions. If the Fund holds a bank loan through another
financial institution or relies on a financial institution to administer the
loan, its receipt of principal and interest on the loan may be subject to the
credit risk of that financial institution. It is possible that any collateral
securing a loan may be insufficient or unavailable to the Fund, and that the
Fund's rights to collateral may be limited by bankruptcy or insolvency laws.
Additionally, there is no central clearinghouse for loan trades and the loan
market has not established enforceable settlement standards or remedies for
failure to settle. As such, the secondary market for bank loans may be subject
to irregular trading activity, wide bid/ask spreads and extended trade
settlement periods (in some cases longer than 7 days) which may cause the Fund
to be unable to realize the full value of its investment. In addition, bank
loans are generally not registered with the Securities Exchange Commission under
the Securities Act of 1933, as amended, and may not be considered "securities,"
and the Fund may not be entitled to rely on the anti-fraud protections of the
federal securities laws.
CALL RISK. Some debt securities may be redeemed, or "called," at the option of
the issuer before their stated maturity date. In general, an issuer will call
its debt securities if they can be refinanced by issuing new debt securities
which bear a lower interest rate. The Fund is subject to the possibility that
during periods of falling interest rates an issuer will call its high yielding
debt securities. The Fund would then be forced to invest the proceeds at lower
interest rates, likely resulting in a decline in the Fund's income.
CONCENTRATION RISK. To the extent that the Fund invests a large percentage of
its assets in a single asset class or the securities of issuers within the same
country, state, region, industry or sector, an adverse economic, business or
political development may affect the value of the Fund's investments more than
if the Fund were more broadly diversified. A concentration makes the Fund more
susceptible to any single occurrence and may subject the Fund to greater market
risk than a fund that is not so concentrated.
CONVERTIBLE SECURITIES RISK. The Fund may invest in ETFs that hold convertible
securities. A convertible security has characteristics of both equity and debt
securities and, as a result, is exposed to risks that are typically associated
with both types of securities. The value of convertible securities may rise and
fall with the market value of the underlying stock or, like a debt security,
vary with changes in interest rates and the credit quality of the issuer. A
convertible security tends to perform more like a stock when the underlying
stock price is high relative to the conversion price and more like a debt
security when the underlying stock price is low relative to the conversion
price.
COUNTERPARTY RISK. Fund transactions involving a counterparty are subject to the
risk that the counterparty will not fulfill its obligation to the Fund.
Counterparty risk may arise because of the counterparty's financial condition
(i.e., financial difficulties, bankruptcy, or insolvency), market activities and
developments, or other reasons, whether foreseen or not. A counterparty's
inability to fulfill its obligation may result in significant financial loss to
the Fund. The Fund may be unable to recover its investment from the counterparty
or may obtain a limited recovery, and/or recovery may be delayed.
COVENANT-LITE LOAN RISK. Covenant-lite loans contain fewer maintenance
covenants, or no maintenance covenants at all, than traditional loans and may
not include terms that allow the lender to monitor the financial performance of
the borrower and declare a default if certain criteria are breached. This may
hinder the Fund's ability to reprice credit risk associated with the borrower
and reduce the Fund's ability to restructure a problematic loan and mitigate
potential loss. As a result, the Fund's exposure to losses on such investments
is increased, especially during a downturn in the credit cycle.
CREDIT RISK. An issuer or other obligated party of a debt security may be unable
or unwilling to make dividend, interest and/or principal payments when due. In
addition, the value of a debt security may decline because of concerns about the
issuer's ability or unwillingness to make such payments.
CURRENCY RISK. Changes in currency exchange rates affect the value of
investments denominated in a foreign currency, and therefore the value of such
investments in the Fund's portfolio. The Fund's net asset value could decline if
a currency to which the Fund has exposure depreciates against the U.S. dollar or
if there are delays or limits on repatriation of such currency. Currency
exchange rates can be very volatile and can change quickly and unpredictably. As
a result, the value of an investment in the Fund may change quickly and without
warning.
CYBER SECURITY RISK. The Fund is susceptible to operational risks through
breaches in cyber security. A breach in cyber security refers to both
intentional and unintentional events that may cause the Fund to lose proprietary
information, suffer data corruption or lose operational capacity. Such events
could cause the Fund to incur regulatory penalties, reputational damage,
additional compliance costs associated with corrective measures and/or financial
loss. Cyber security breaches may involve unauthorized access to the Fund's
digital information systems through "hacking" or malicious software coding but
may also result from outside attacks such as denial-of-service attacks through
efforts to make network services unavailable to intended users. In addition,
cyber security breaches of the issuers of securities in which the Fund invests
or the Fund's third-party service providers, such as its administrator, transfer
agent, custodian, or sub-advisor, as applicable, or issuers in which the Fund
invests, can also subject the Fund to many of the same risks associated with
direct cyber security breaches. Although the Fund has established risk
management systems designed to reduce the risks associated with cyber security,
there is no guarantee that such efforts will succeed, especially because the
Fund does not directly control the cyber security systems of issuers or
third-party service providers.
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
DEBT SECURITIES RISK. Investments in debt securities subject the holder to the
credit risk of the issuer. Credit risk refers to the possibility that the issuer
or other obligor of a security will not be able or willing to make payments of
interest and principal when due. Generally, the value of debt securities will
change inversely with changes in interest rates. To the extent that interest
rates rise, certain underlying obligations may be paid off substantially slower
than originally anticipated and the value of those securities may fall sharply.
During periods of falling interest rates, the income received by the Fund may
decline. If the principal on a debt security is prepaid before expected, the
prepayments of principal may have to be reinvested in obligations paying
interest at lower rates. Debt securities generally do not trade on a securities
exchange making them generally less liquid and more difficult to value than
common stock.
DEPOSITARY RECEIPTS RISK. Depositary receipts may be less liquid than the
underlying shares 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 equity shares into depositary receipts and vice versa. Such restrictions may
cause the equity shares of the underlying issuer to trade at a discount or
premium to the market price of the depositary receipts.
DIVIDENDS RISK. The Fund's investment in dividend-paying securities could cause
the Fund to underperform similar funds that invest without consideration of an
issuer's track record of paying dividends. Companies that issue dividend-paying
securities are not required to continue to pay dividends on such securities.
Therefore, there is the possibility that such companies could reduce or
eliminate the payment of dividends in the future.
EMERGING MARKETS RISK. Investments in securities issued by companies operating
in emerging market countries involve additional risks relating to political,
economic, or regulatory conditions not associated with investments in securities
and instruments issued by U.S. companies or by companies operating in other
developed market countries. Investments in emerging markets securities are
generally considered speculative in nature and are subject to the following
heightened risks: smaller market capitalization of securities markets which may
suffer periods of relative illiquidity; significant price volatility;
restrictions on foreign investment; possible repatriation of investment income
and capital; rapid inflation; and currency convertibility issues. Emerging
market countries also often have less uniformity in accounting and reporting
requirements, unsettled securities laws, unreliable securities valuation and
greater risk associated with custody of securities. Furthermore, investors may
be required to register the proceeds of sales and future economic or political
crises could lead to price controls, forced mergers, expropriation or
confiscatory taxation, seizure, nationalization or creation of government
monopolies.
ENERGY INFRASTRUCTURE COMPANIES RISK. Energy infrastructure companies are
subject to risks specific to the energy and energy-related industries. This
includes but is not limited to: fluctuations in commodity prices impacting the
volume of energy commodities transported, processed, stored or distributed;
reductions in volumes of natural gas or other energy commodities being available
for transporting, processing, storing or distributing; slowdowns in new
construction and acquisitions limiting growth potential; reduced demand for oil,
natural gas and petroleum products, particularly for a sustained period of time;
depletion of natural gas reserves or other commodities; rising interest rates
resulting in higher costs of capital, increased operating costs; counterparties
to contracts defaulting or going bankrupt; and an inability to execute
acquisitions or expansion projects in a cost-effect manner; extreme weather
events and environmental hazards; and threats of attack by terrorists on energy
assets. Energy infrastructure companies may also face counterparty risk, such
that long-term contracts may be declared void if the counterparty to those
contracts enters bankruptcy proceedings. In addition, 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 the energy
infrastructure companies.
Certain energy infrastructure companies in the utilities industry are subject to
the imposition of rate caps, increased competition due to deregulation, the
difficulty in obtaining an adequate return on invested capital or in financing
large construction projects, the 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 in
varying degrees.
EQUITY SECURITIES RISK. The value of the Fund's shares will fluctuate with
changes in the value of the equity securities in which it invests. 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 equity market, such as market volatility, or when political or
economic events affecting an issuer occur. Common stock prices may be
particularly sensitive to rising interest rates, as the cost of capital rises
and borrowing costs increase. Equity securities may decline significantly in
price over short or extended periods of time, and such declines may occur in the
equity market as a whole, or they may occur in only a particular country,
company, industry or sector of the market.
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ETF RISK. Under certain market conditions, the Fund may invest in ETFs. The
Fund's investment in shares of ETFs subjects it to the risks of owning the
securities underlying the ETF, as well as the same structural risks faced by an
investor purchasing shares of the Fund, including authorized participant
concentration risk, market maker risk, premium/discount risk and trading issues
risk. As a shareholder in another ETF, the Fund bears its proportionate share of
the ETF's expenses, subjecting Fund shareholders to duplicative expenses.
EXTENSION RISK. Extension risk is the risk that, when interest rates rise,
certain obligations will be paid off by the issuer (or other obligated party)
more slowly than anticipated, causing the value of these debt securities to
fall. Rising interest rates tend to extend the duration of debt securities,
making their market value more sensitive to changes in interest rates. The value
of longer-term debt securities generally changes more in response to changes in
interest rates than shorter-term debt securities. As a result, in a period of
rising interest rates, securities may exhibit additional volatility and may lose
value.
FINANCIAL COMPANIES RISK. Financial companies, such as retail and commercial
banks, insurance companies and financial services companies, are especially
subject to the adverse effects of economic recession, currency exchange rates,
extensive government regulation, decreases in the availability of capital,
volatile interest rates, portfolio concentrations in geographic markets,
industries or products (such as commercial and residential real estate loans),
competition from new entrants and blurred distinctions in their fields of
business.
FLOATING RATE DEBT INSTRUMENTS RISK. Investments in floating rate debt
instruments are subject to the same risks as investments in other types of debt
securities, including credit risk, interest rate risk, liquidity risk and
valuation risk. Floating rate debt instruments include debt securities issued by
corporate and governmental entities, as well bank loans, mortgage-backed
securities and asset-backed securities. Floating rate debt instruments are
structured so that the security's coupon rate fluctuates based upon the level of
a reference rate. Most commonly, the coupon rate of a floating rate debt
instrument is set at the level of a widely followed interest rate, plus a fixed
spread. As a result, the coupon on floating rate debt instrument will generally
decline in a falling interest rate environment, causing the Fund to experience a
reduction in the income it receives from the instrument. A floating rate debt
instrument's coupon rate resets periodically according to its terms.
Consequently, in a rising interest rate environment, floating rate debt
instruments with coupon rates that reset infrequently may lag behind the changes
in market interest rates. Floating rate debt instruments may also contain terms
that impose a maximum coupon rate the issuer will pay, regardless of the level
of the reference rate. To the extent the Fund invests in floating rate loans,
such instruments may be subject to legal or contractual restrictions on resale,
may trade infrequently, and their value may be impaired when the Fund needs to
liquidate such securities. It is possible that the collateral securing a
floating rate loan may be insufficient or unavailable to the Fund, and that the
Fund's rights to collateral may be limited by bankruptcy or insolvency laws.
Additionally, floating rate loans may not be considered "securities" under
federal securities laws, and purchasers, such as the Fund, therefore may not be
entitled to rely on the anti-fraud protections of the federal securities laws.
HIGH YIELD SECURITIES RISK. High yield securities, or "junk" bonds, are subject
to greater market fluctuations, are less liquid and provide a greater risk of
loss than investment grade securities, and therefore, are considered to be
highly speculative. In general, high yield securities may have a greater risk of
default than other types of securities and could cause income and principal
losses for the Fund.
INCOME RISK. The Fund's income may decline when interest rates fall or if there
are defaults in its portfolio. This decline can occur because the Fund may
subsequently invest in lower-yielding securities as debt securities in its
portfolio mature, are near maturity or are called, or the Fund otherwise needs
to purchase additional debt securities.
INDEX PROVIDER RISK. There is no assurance that the Index Provider will compile
the Index accurately, or that the Index will be determined, maintained,
constructed, reconstituted, rebalanced, composed, calculated or disseminated
accurately. To correct any such error, the Index Provider may carry out an
unscheduled rebalance or other modification of the Index constituents or
weightings, which may increase the Fund's costs. The Index Provider does not
provide any representation or warranty in relation to the quality, accuracy or
completeness of data in the Index, and it does not guarantee that the Index will
be calculated in accordance with its stated methodology. Losses or costs
associated with any Index Provider errors generally will be borne by the Fund
and its shareholders.
INDUSTRIALS COMPANIES RISK. Industrials companies convert unfinished goods into
finished durables used to manufacture other goods or provide services. Examples
of industrials companies include companies involved in the production of
electrical equipment and components, industrial products, manufactured housing
and telecommunications equipment, as well as defense and aerospace companies.
General risks of industrials companies include the general state of the economy,
exchange rates, commodity prices, intense competition, consolidation, domestic
and international politics, government regulation, import controls, excess
capacity, consumer demand and spending trends. In addition, industrials
companies may also be significantly affected by overall capital spending levels,
economic cycles, rapid technological changes, delays in modernization, labor
relations, environmental liabilities, governmental and product liability and
e-commerce initiatives.
INFLATION RISK. Inflation risk is the risk that the value of assets or income
from investments will be less in the future as inflation decreases the value of
money. As inflation increases, the present value of the Fund's assets and
distributions may decline.
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INFLATION-INDEXED SECURITIES RISK. Inflation-indexed debt securities, such as
TIPS, are subject to the same risks as other types of debt securities, including
credit risk, interest rate risk, liquidity risk and valuation risk. The
principal amount of an inflation-indexed security typically increases with
inflation and decreases with deflation, as measured by a specified index.
Although the holders of TIPS receive no less than the par value of the security
at maturity, if the Fund purchases TIPS in the secondary market whose principal
values have previously been adjusted upward and there is a period of subsequent
declining inflation rates, the Fund may receive at maturity less than it
invested and incur a loss.
INTEREST RATE RISK. Interest rate risk is the risk that the value of the debt
securities in the Fund's portfolio will decline because of rising market
interest rates. Interest rate risk is generally lower for shorter term debt
securities and higher for longer-term debt securities. The Fund may be subject
to a greater risk of rising interest rates than would normally be the case due
to the current period of historically low rates and the effect of potential
government fiscal policy initiatives and resulting market reaction to those
initiatives. Duration is a reasonably accurate measure of a debt security's
price sensitivity to changes in interest rates and a common measure of interest
rate risk. Duration measures a debt security's expected life on a present value
basis, taking into account the debt security's yield, interest payments and
final maturity. In general, duration represents the expected percentage change
in the value of a security for an immediate 1% change in interest rates. For
example, the price of a debt security with a three-year duration would be
expected to drop by approximately 3% in response to a 1% increase in interest
rates. Therefore, prices of debt securities with shorter durations tend to be
less sensitive to interest rate changes than debt securities with longer
durations. As the value of a debt security changes over time, so will its
duration.
LIBOR RISK. In 2012, regulators in the United States and the United Kingdom
alleged that certain banks, including some banks serving on the panel for U.S.
dollar LIBOR, engaged in manipulative acts in connection with their submissions
to the British Bankers Association. Manipulation of the LIBOR rate-setting
process would raise the risk to the Fund of being adversely impacted if the Fund
received a payment based upon LIBOR and such manipulation of LIBOR resulted in
lower resets than would have occurred had there been no manipulation. In 2017,
the head of the United Kingdom's Financial Conduct Authority announced a desire
to phase out the use of LIBOR by the end of 2021. There remains uncertainty
regarding the future utilization of LIBOR and the nature of any replacement
rate. As such, the potential effect of a transition away from LIBOR on the Fund
or the financial instruments in which the Fund invests cannot yet be determined.
LIQUIDITY RISK. The Fund may hold certain investments that may be subject to
restrictions on resale, trade over-the-counter or in limited volume, or lack an
active trading market. Accordingly, the Fund may not be able to sell or close
out of such investments at favorable times or prices (or at all), or at the
prices approximating those at which the Fund currently values them. Illiquid
securities may trade at a discount from comparable, more liquid investments and
may be subject to wide fluctuations in market value.
MANAGEMENT RISK. The Fund is subject to management risk because it is an
actively managed portfolio. In managing the Fund's investment portfolio, the
portfolio managers will apply investment techniques and risk analyses that may
not produce the desired result. There can be no guarantee that the Fund will
meet its investment objective.
MARKET RISK. Market risk is the risk that a particular security, or shares of
the Fund in general, may fall in value. Securities 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. Shares of the Fund could decline in value or underperform other
investments.
MLP RISK. Investments in securities of MLPs involve certain risks different from
or in addition to the risks of investing in common stocks. MLP common units can
be affected by macro-economic factors and other factors unique to the
partnership or company and the industry or industries in which the MLP operates.
Certain MLP securities may trade in relatively low volumes due to their smaller
capitalizations or other factors, which may cause them to have a high degree of
price volatility and illiquidity. The structures of MLPs create certain risks,
including, for example, risks related to the limited ability of investors to
control an MLP and to vote on matters affecting the MLP, risks related to
potential conflicts of interest between an MLP and the MLP's general partner,
the risk that an MLP will generate insufficient cash flow to meet its current
operating requirements, the risk that an MLP will issue additional securities or
engage in other transactions that will have the effect of diluting the interests
of existing investors, and risks related to the general partner's right to
require unit-holders to sell their common units at an undesirable time or price.
On March 15, 2018, the Federal Energy Regulatory Commission ("FERC") changed its
long-standing tax allowance policy which no longer permits MLPs to include in
their cost of service an income tax allowance. This has had a negative impact on
the performance of some MLPs affected by this decision. This policy change and
any similar policy changes in the future could adversely impact an MLP's
business, financial condition, results of operations and cash flows and ability
to pay cash distributions or dividends.
MLP TAX RISK. The Fund's ability to meet its investment objective relies in part
upon the level of taxable income it receives from the MLPs in which it invests,
a factor over which the Fund has no control. The benefit the Fund derives from
its investment in MLPs is largely dependent on their being treated as
partnerships for U.S. federal income tax purposes. Partnerships do not pay U.S.
federal income tax at the partnership level. Rather, each partner is allocated a
share of the partnership's income, gains, losses, deductions and expenses. A
change in current tax law or a change in the underlying business mix of a given
MLP could result in an MLP being treated as a corporation for U.S. federal
income tax purposes, which would result in the MLP being required to pay
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U.S. federal income tax (as well as state and local income taxes) on its taxable
income at the applicable corporate tax rate. This would have the effect of
reducing the amount of cash available for distribution by an MLP and could
result in a significant reduction in the value of the Fund's investment. The
classification of an MLP as a corporation for U. S. federal income tax purposes
would have the effect of reducing the amount of cash available for distribution
by the MLP and causing any such distributions received by the Fund to be taxed
as dividend income to the extent of the MLP's current or accumulated earnings
and profits. To the extent a distribution received by the Fund from an MLP is
treated as a return of capital, the Fund's adjusted tax basis in the interests
of the MLP may be reduced, which will result in an increase in the amount of
income or gain (or decrease in the amount of loss) that will be recognized by
the Fund for tax purposes upon the sale of any such interests or upon subsequent
distributions in respect of such interests. Furthermore, any return of capital
distribution received from an MLP may require the Fund to restate the character
of its distributions and amend any shareholder tax reporting previously issued.
MORTGAGE-RELATED SECURITIES RISK. Mortgage-related securities are subject to the
same risks as investments in other types of debt securities, including credit
risk, interest rate risk, liquidity risk and valuation risk. However, these
investments make the Fund more susceptible to adverse economic, political or
regulatory events that affect the value of real estate. Mortgage-related
securities are also significantly affected by the rate of prepayments and
modifications of the mortgage loans underlying those securities, as well as by
other factors such as borrower defaults, delinquencies, realized or liquidation
losses and other shortfalls. Mortgage-related securities are particularly
sensitive to prepayment risk, given that the term to maturity for mortgage loans
is generally substantially longer than the expected lives of those securities.
As the timing and amount of prepayments cannot be accurately predicted, the
timing of changes in the rate of prepayments of the mortgage loans may
significantly affect the Fund's actual yield to maturity on any mortgage-related
securities. Along with prepayment risk, mortgage-related securities are
significantly affected by interest rate risk.
NON-CORRELATION RISK. The Fund's return may not match the return of the Index
for a number of reasons. The Fund incurs operating expenses not applicable to
the Index, and may incur costs in buying and selling securities, especially when
rebalancing the Fund's portfolio holdings to reflect changes in the composition
of the Index. In addition, the Fund's portfolio holdings may not exactly
replicate the securities included in the Index or the ratios between the
securities included in the Index.
NON-DIVERSIFICATION RISK. The Fund is classified as "non-diversified" under the
1940 Act. As a result, the Fund is only limited as to the percentage of its
assets which 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 Fund may invest a relatively high percentage of its assets in a
limited number of issuers. As a result, the Fund 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 RISK. 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 securities exchanges in foreign
countries.
PASSIVE INVESTMENT RISK. The Fund is not actively managed. The Fund invests in
securities included in or representative of the Index regardless of investment
merit. The Fund generally will not attempt to take defensive positions in
declining markets. In the event that the Index is no longer calculated, the
Index license is terminated or the identity or character of the Index is
materially changed, the Fund will seek to engage a replacement index.
PREFERRED SECURITIES RISK. Preferred securities combine some of the
characteristics of both common stocks and bonds. Preferred securities are
typically subordinated to bonds and other debt securities in a company's capital
structure in terms of priority to corporate income, subjecting them to greater
credit risk than those debt securities. Generally, holders of preferred
securities have no voting rights with respect to the issuing company unless
preferred dividends have been in arrears for a specified number of periods, at
which time the preferred security holders may obtain limited rights. In certain
circumstances, an issuer of preferred securities may defer payment on the
securities and, in some cases, redeem the securities prior to a specified date.
Preferred securities may also be substantially less liquid than other
securities, including common stock.
PREPAYMENT RISK. Prepayment risk is the risk that the issuer of a debt security
will repay principal prior to the scheduled maturity date. Debt securities
allowing prepayment may offer less potential for gains during a period of
declining interest rates, as the Fund may be required to reinvest the proceeds
of any prepayment at lower interest rates. These factors may cause the value of
an investment in the Fund to change.
REIT RISK. REITs typically own and operate income-producing real estate, such as
residential or commercial buildings, or real-estate related assets, including
mortgages. As a result, investments in REITs are 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 sector. 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
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portfolio securities. REITs may have also a relatively small market
capitalization which may result in their shares experiencing less market
liquidity and greater price volatility than larger companies. Increases in
interest rates typically lower the present value of a REIT's future earnings
stream, and may make financing property purchases and improvements more costly.
Because the market price of REIT stocks may change based upon investors'
collective perceptions of future earnings, the value of the Fund will generally
decline when investors anticipate or experience rising interest rates.
SMALL FUND RISK. The Fund currently has fewer assets than larger funds, and like
other smaller funds, large inflows and outflows may impact the Fund's 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. If the
Fund fails to attract a large amount of assets, shareholders of the Fund may
incur higher expenses as the Fund's fixed costs would be allocated over a
smaller number of shareholders.
SMALLER COMPANIES RISK. Small and/or mid capitalization 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, fewer 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.
TBA TRANSACTIONS RISK. The Fund may purchase securities in TBA Transactions. In
such a transaction, the purchase price of the securities is typically fixed at
the time of the commitment, but delivery and payment can take place a month or
more after the date of the commitment. At the time of delivery of the
securities, the value may be more or less than the purchase or sale price.
Purchasing securities in a TBA Transaction may give rise to investment leverage
and may increase the Fund's volatility. Default by, or bankruptcy of, a
counterparty to a TBA Transaction would expose the Fund to possible losses
because of an adverse market action, expenses or delays in connection with the
purchase or sale of the pools specified in such transaction.
U.S. GOVERNMENT SECURITIES RISK. U.S. government securities are subject to
interest rate risk but generally do not involve the credit risks associated with
investments in other types of debt securities. As a result, the yields available
from U.S. government securities are generally lower than the yields available
from other debt securities. U.S. government securities are guaranteed only as to
the timely payment of interest and the payment of principal when held to
maturity. While securities issued or guaranteed by U.S. federal government
agencies (such as Ginnie Mae) are backed by the full faith and credit of the
U.S. Department of the Treasury, securities issued by government sponsored
entities (such as Fannie Mae and Freddie Mac) are solely the obligation of the
issuer and generally do not carry any guarantee from the U.S. government.
VALUATION RISK. Unlike publicly traded securities that trade on national
securities exchanges, there is no central place or exchange for trading most
debt securities. Debt securities generally trade on an "over-the-counter"
market. Due to the lack of centralized information and trading, the valuation of
debt securities may carry more uncertainty and risk than that of publicly traded
securities. Accordingly, determinations of the fair value of debt securities may
be based on infrequent and dated information. Also, because the available
information is less reliable and more subjective, elements of judgment may play
a greater role in valuation of debt securities than for other types of
securities.
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. (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"). 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 approved the
continuation of the Agreements for a one-year period ending June 30, 2020 at a
meeting held on June 2, 2019. 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 nature, 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
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JUNE 30, 2019 (UNAUDITED)
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 18, 2019 and June 2, 2019, 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, submitted on behalf of 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 (the "Expense Group") and a
broad peer universe of funds (the "Expense Universe"), each assembled by
Broadridge Financial Solutions, Inc. ("Broadridge"), an independent source, and
as compared to fees charged to other clients of the Advisor and the Sub-Advisor;
the expense ratio of each Fund as compared to expense ratios of the funds in
each Fund's Expense Group and Expense Universe; performance information for each
Fund, including comparisons of each Fund's performance to that of one or more
relevant benchmark indexes and to that of a performance group of funds and a
broad performance universe of funds (the "Performance Universe"), each assembled
by Broadridge; 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 the meeting held on April
18, 2019, 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 2, 2019 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 Funds' perspective. 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. 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.
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,
policies and restrictions. 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 18, 2019 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 reviewed the materials provided by the Sub-Advisors and
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. In addition to the written
materials provided by the Sub-Advisors, at the June 2, 2019 meeting, the Board
also received a presentation from representatives of each Sub-Advisor discussing
the services that the Sub-Advisor provides to the Fund. In considering each
Sub-Advisor's management of the First Trust Multi Income Allocation Portfolio,
the Board noted the background and experience of each Sub-Advisor's 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, policies and restrictions.
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 fee rates payable 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 agreed to
extend the current expense caps for Class I and Class II shares of each Fund at
least until May 1, 2021. The Board noted that expenses borne or advisory fees
waived by the Advisor 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. The
Board also noted that the Advisor had extended through May 1, 2020 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
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Board received and reviewed information for each Fund showing the advisory fee
rates and expense ratios of the peer funds in the Expense Group, as well as
advisory and unitary 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
Expense Group, the Board, at the April 18, 2019 meeting, discussed with
Broadridge its methodology for assembling peer groups. Based on the information
provided, the Board noted that the advisory fee payable by First Trust/Dow Jones
Dividend & Income Allocation Portfolio was above the median advisory fee of the
peer funds in the Fund's Expense Group, that the advisory fee payable by First
Trust Multi Income Allocation Portfolio was above the median advisory fee of the
peer funds in the Fund's Expense Group and that the advisory fee payable by
First Trust Dorsey Wright Tactical Core Portfolio was below the median advisory
fee of the peer funds in the Fund's Expense 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/Dow Jones Dividend & Income Allocation
Portfolio was above the median net expense ratio of the peer funds in the Fund's
Expense Group, the net expense ratio of First Trust Multi Income Allocation
Portfolio was below the median net expense ratio of the peer funds in the Fund's
Expense Group and the net expense ratio of First Trust Dorsey Wright Tactical
Core Portfolio was equal to the median net expense ratio of the peer funds in
the Fund's Expense 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,
2018 to the performance of the funds in the Fund's Performance Universe and to
that of a blended benchmark index. Based on the information provided, the Board
noted that First Trust/Dow Jones Dividend & Income Allocation Portfolio (Class I
shares) outperformed the Performance Universe median for the one-, three- and
five-year periods ended December 31, 2018. The Board also noted that First
Trust/Dow Jones Dividend & Income Allocation Portfolio outperformed the blended
benchmark index for the three- and five-year periods ended December 31, 2018 but
underperformed the blended benchmark index for the one-year period ended
December 31, 2018. The Board noted that First Trust Multi Income Allocation
Portfolio (Class I shares) outperformed the Performance Universe median for the
one-year period ended December 31, 2018 but underperformed the Performance
Universe median for the three-year period ended December 31, 2018. The Board
also noted that First Trust Multi Income Allocation Portfolio underperformed the
blended benchmark index for the one- and three-year periods ended December 31,
2018. The Board noted that First Trust Dorsey Wright Tactical Core Portfolio
(Class I shares) underperformed the Performance Universe median for the one- and
three-year periods ended December 31, 2018. The Board also noted that First
Trust Dorsey Wright Tactical Core Portfolio underperformed the blended benchmark
index for the one- and three-year periods ended December 31, 2018.
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 believes its expenses will
likely increase over the next twelve months as the Advisor continues to hire
personnel and build infrastructure, including technology, to improve the
services to the Funds. 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, 2018 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 sub-advisory services to the Fund and noted
Stonebridge's hiring of additional personnel in the past year 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
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ADDITIONAL INFORMATION (CONTINUED)
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FIRST TRUST VARIABLE INSURANCE TRUST
JUNE 30, 2019 (UNAUDITED)
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 in nature, and that Energy Income Partners has made recent
investments in personnel and infrastructure and anticipates that its expenses
will continue to rise due to additions to personnel and system upgrades. 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.
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FIRST TRUST
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 East 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
240 Greenwich Street 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 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. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT
INVESTMENT COMPANIES.
Not applicable.
ITEM 13. 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 26, 2019
-----------------
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 26, 2019
-----------------
By (Signature and Title)* /s/ Donald P. Swade
----------------------------------------
Donald P. Swade, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: August 26, 2019
-----------------
* Print the name and title of each signing officer under his or her signature.