The Target VIP Portfolio, August 2010 Series

Target VIP Strategy Investing

What is a strategy?

A strategy answers the three basic questions of investing:

• What to buy?
• When to buy?
• When to sell?

Benefits of strategy investing:

• Removes emotion
• Consistently takes a long-term view
• Not swayed by media hype
• Eliminates difficult buy/sell decisions

Common obstacles to performance

• Holding cash
• Trading costs and other expenses
• Inflows/Outflows
• Emotion

Consider the benefits of the Target VIP portfolio
The Target VIP Portfolio is a unit investment trust which provides you with the convenience of owning six distinct strategies in one investment. It invests in a fixed portfolio of stocks which are selected by applying pre-determined screens and factors and holds the stocks for approximately 15 months.

The portfolio offers several important advantages:

• Complete transparency from the stock selection process to portfolio holdings and individual stock weightings;
• Automated buy and sell decisions helping to eliminate unwanted emotions from the investment process;
• No embedded capital gains. Capital gains taxes are paid only if there is a profit;
• No style drift from manager-driven trading;
• Low cash positions so more of your money is put to work;
• Diversification, discipline, and a periodic rebalancing opportunity helping to decrease volatility and potentially increase returns.

Keys to Strategy Investing

Diversify
We expect some strategies to perform better than others under different market conditions. That's why we believe it is important to diversify among different strategies. Target VIP consists of an approximately even weighting of six distinct strategies - each using factors or screens to select stocks designed specifically for their unique characteristics.The result is a portfolio that is diversified across stocks from all ten S&P sectors as well as various market capitalizations and growth and value styles.

Have Discipline
History has shown that bear markets are a normal occurrence. Although past performance is no guarantee of future results, history has also shown that equity investors have been rewarded for their patience over the long-term. The chart on the adjacent page illustrates this point using the hypothetical performance of the Target VIP Strategy.Of course, there is no guarantee that the performance of the strategy will be positive over any future time period.

Rebalance Annually
Studies have shown that rebalancing can provide benefits to your long-term investment plan by forcing you to add to underperforming assets and take from outperforming assets.With Target VIP, rebalancing is simple.When the portfolio terminates, investors have the option to reinvest their proceeds, at a reduced sales charge, into a new, rebalanced portfolio. In addition to rebalancing the individual component strategies back to their original one-sixth weighting, new stocks are also selected by reapplying the underlying strategies. It is important to note that rebalancing may cause a taxable event unless units of the portfolio are purchased in an IRA or other qualified plan.

Portfolio Selection Process

The Target VIP Portfolio seeks to provide the potential for above-average total return by adhering to a simple investment strategy; however, there is no assurance the objective will be met. On the initial date of deposit, the portfolio is approximately equally weighted among the six strategies described below.

The Nasdaq^® Target 15 Strategy

• Begin with the Nasdaq 100 Index^®. The index represents the largest and most active non-financial domestic and international issues listed on The Nasdaq Stock Market^®.
• Purchase a market cap-weighted portfolio of the 15 stocks with the best overall ranking on the following criteria:
• 12 month price appreciation
• 6 month price appreciation
• Return on assets
• Price to cash flow

The S&P Target 24 Strategy

• Begin with the companies listed in the S&P 500 Index.
• Select the eight largest sectors in the index based upon market capitalization.
• Purchase the three stocks from each sector with the best overall ranking on the following criteria:
• Trailing four quarters return on assets.
• Buyback yield. A measure of the percentage decrease in a company's outstanding common shares versus one year earlier.
• Bullish interest indicator. A comparison, over the past twelve months, between the number of a company's shares that traded in months when the stock price rose versus the number of shares that traded in months when the stock price fell.
• The stocks are weighted according to their market capitalization relative to their sector and relative to their peers within the sector.

The Dow^® DART 5 Strategy

• Rank the companies in the DJIA,^SM by a combination of dividend yield and the percentage reduction in the number of outstanding shares over the past 12 months and select the top ten.
• Rank the ten stocks based on the one year change in return on assets and purchase an approximately equally-weighted portfolio of the top five stocks.

The Target Small-Cap Strategy

• Identify U.S. companies with the following attributes:
• Trade on the NYSE Alternext US, Nasdaq, or NYSE. American Depositary Receipts are not included.
• Have positive earnings over the last year.
• Have market caps between $150 million and $1 billion and average daily trading volume of more than $500,000 (based on 1996 dollars).
• Select only companies with positive three-year sales growth.
• Eliminate any company whose stock has appreciated more than 75% in the last 12 months.
• Purchase a market cap-weighted portfolio of the 40 companies with the greatest price appreciation in the last 12 months.

The Value Line^® Target 25 Strategy

• Begin with the 100 stocks that Value Line^® currently gives a #1 ranking for Timeliness^TM (stocks of financial companies and companies whose shares are not listed on a U.S. exchange are not eligible for inclusion in the Value Line^® Target 25 Strategy). Value Line^® ranks approximately 1,700 stocks, only 100 of which are given their #1 ranking for Timeliness^TM. They base their rankings on a long-term trend of earnings, prices, recent earnings, price momentum, and earnings surprises.
• Purchase a market cap-weighted portfolio of the 25 stocks with the best overall ranking on the following criteria:
• 12 month price appreciation
• 6 month price appreciation
• Return on assets
• Price to cash flow

The European Target 20 Strategy

• Select the largest 120 companies domiciled in Europe.
• Purchase an equally-weighted portfolio of the 20 highest dividend-yielding companies.

Past performance is no guarantee of future results and the actual current performance of the portfolio may be lower or higher than the hypothetical performance of the strategy. Hypothetical returns for the strategy in certain years were significantly higher than the returns of the S&P 500 Index. Hypothetical strategy returns were the result of certain market factors and events which may not be replicated in the future. You can obtain performance information which is current through the most recent month-end by calling First Trust Portfolios L.P. at 1-800-621-1675 option 2. Investment return and principal value of the portfolio will fluctuate causing units of the portfolio, when redeemed, to be worth more or less than their original cost.

Strategy performance is hypothetical and not representative of the portfolio or any prior series since none existed during all of the periods shown. Strategy returns reflect a sales charge of 2.95% in the first year, 1.95% in subsequent years, estimated annual operating expenses of 0.359%, plus organization costs, but not taxes or commissions paid by the portfolio to purchase securities. Returns assume that all dividends received during a year are reinvested monthly. Actual portfolio performance will vary from that of investing in the strategy stocks because it may not be invested equally in these stocks and may not be fully invested at all times. It is important to note that the strategy may underperform the index in certain years and may produce negative results.

The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance. The index cannot be purchased directly by investors.

Standard Deviation is a measure of price variability (risk).

You should consider the portfolio's investment objectives, risks, and charges and expenses carefully before investing. Contact your financial advisor or call First Trust Portfolios, L.P. at 1-800-621-1675 to request a prospectus, which contains this and other information about the portfolio. Read it carefully before you invest.

Risk Considerations:

An investment in this unmanaged unit investment trust should be made with an understanding of the risks involved with owning common stocks, such as an economic recession and the possible deterioration of either the financial condition of the issuers of the equity securities or the general condition of the stock market.

You should be aware that the portfolio is concentrated in stocks in the consumer products and technology sectors which involves additional risks, including limited diversification. The companies engaged in the consumer products industry are subject to certain risks, including global competition, changing government regulations and trade policies, currency fluctuations, and the financial and political risks inherent in producing products for foreign markets. The companies engaged in the technology sector are subject to fierce competition, high research and development costs, and their products and services may be subject to rapid obsolescence. Technology company stocks, especially those which are Internet-related, may experience extreme price and volume fluctuations that are often unrelated to their operating performance. There is no assurance that the projections stated herein will be realized.

An investment in a portfolio containing equity securities of foreign issuers is subject to additional risks, including currency fluctuations, political risks, withholding, the lack of adequate financial information, and exchange control restrictions impacting foreign issuers. Risks associated with investing in foreign securities may be more pronounced in emerging markets where the securities markets are substantially smaller, less liquid, less regulated and more volatile than the U.S. and developed foreign markets.

An investment in a portfolio containing small-cap companies is subject to additional risks, as the share prices of small-cap companies are often more volatile than those of larger companies due to several factors, including limited trading volumes, products, financial resources, management inexperience and less publicly available information.

The value of the securities held by the trust may be subject to steep declines or increased volatility due to changes in performance or perception of the issuers.

The Dow Jones Industrial Average,^SM is a product of Dow Jones Indexes, a licensed trademark of CME Group Index Services LLC ("CME"), and has been licensed for use. "Dow Jones^®", "The Dow^®", "Dow Jones Industrial Average^SM" and "Dow Jones Indexes" are service marks of Dow Jones Trademark Holdings, LLC ("Dow Jones"), and have been licensed to CME and have been sublicensed for use for certain purposes by First Trust. The Target VIP Portfolio, based on the Dow Jones Industrial Average^SM, is not sponsored, endorsed, sold or promoted by Dow Jones, CME or their respective affiliates and none of them makes any representation regarding the advisability of investing in such products.

"S&P", "S&P 500", and "Standard & Poor's" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use by First Trust Portfolios L.P. The Target VIP Portfolio, which contains the S&P Target 24 Strategy, is not sponsored, endorsed, sold, or promoted by Standard & Poor's and Standard & Poor's makes no representation regarding the advisability of investing in such products.

The Nasdaq 100^®, Nasdaq 100 Index^®, and Nasdaq^® are trade or service marks of The NASDAQ OMX Group, Inc. (which with its affiliates are the Corporations) and are licensed for use by First Trust Portfolios L.P. The Nasdaq^® Target 15 Strategy has not been passed on by the Corporations as to its legality or suitability. The Nasdaq^® Target 15 Strategy is not issued, endorsed, sold, or promoted by the Corporations. The Corporations make no warranties and bear no liability with respect to the portfolio.

"Value Line," "The Value Line Investment Survey," and "Value Line Timeliness^TM Ranking System" are registered trademarks of Value Line Securities, Inc. or Value Line Publishing, Inc. that have been licensed to First Trust Portfolios L.P.and/or First Trust Advisors L.P. This product is not sponsored, recommended, sold or promoted by Value Line Publishing, Inc., Value Line, Inc. or Value Line Securities, Inc.First Trust Portfolios L.P. and First Trust Advisors L.P. are not affiliated with any Value Line company.