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 811-09235
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FIRST DEFINED PORTFOLIO FUND, LLC
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(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Name and address of agent for service)
registrant's telephone number, including area code: 630-241-4141
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: DECEMBER 31, 2007
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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.
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FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2007
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TABLE OF CONTENTS
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FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2007
Shareholder Letter ....................................................... 1
Market Overview .......................................................... 2
Performance Summary and Portfolio Components ............................. 3
Understanding Your Fund Expenses ......................................... 20
Portfolio of Investments ................................................. 21
Statements of Assets and Liabilities ..................................... 40
Statements of Operations ................................................. 42
Statements of Changes in Net Assets ...................................... 44
Statements of Changes in Net Assets - Capital Stock Activity ............. 46
Financial Highlights ..................................................... 48
Notes to Financial Statements ............................................ 56
Report of Independent Registered Public Accounting Firm .................. 62
Additional Information ................................................... 63
Board of Trustees and Officers ........................................... 66
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933. Forward-looking statements include
statements regarding the goals, beliefs, plans or current expectations of First
Trust Advisors L.P. ("First Trust" or the "Advisor") and its 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
the First Defined Portfolio Fund, LLC (the "Fund") 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 its 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 Portfolio (individually called a "Portfolio" and
collectively the "Portfolios") of the Fund will achieve its investment
objective. Each Portfolio is subject to market risk, which is the possibility
that the market values of securities owned by the Portfolio will decline and
that the value of the Portfolio shares may therefore be less than what you paid
for them. Accordingly, you can lose money investing in the Portfolio.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, net asset value and common share price will fluctuate and Fund shares
may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about each Portfolio and presents data and analysis that
provide insight into each Portfolio's performance and investment approach.
By reading the market overview and discussion of each Portfolio's performance by
First Trust you may obtain an understanding of how the market environment
affected its performance. The statistical information that follows may help you
understand a Portfolio'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 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 risks of investing in the
Portfolios are spelled out in the prospectus.
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SHAREHOLDER LETTER
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FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2007
Dear Shareholders:
We believe investment opportunities abound, both here and abroad, affording the
potential for exceptional returns for investors. At First Trust Advisors L.P.
("First Trust") we realize that we must be mindful of the complexities of the
global economy and at the same time address the needs of our customers through
the types of investments we bring to market.
The report you hold gives detailed information about eight Portfolios in the
First Defined Portfolio Fund, LLC over the twelve-month period ended December
31, 2007. I encourage you to read this report and discuss it with your financial
advisor.
First Trust is pleased to be a part of the investment solutions offered by
Prudential Annuities Life Assurance Corporation, formerly known as American
Skandia Life Assurance Corporation, and pleased to give you current information
about your investment. We value our relationship with you and appreciate the
opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of First Defined Portfolio Fund, LLC
Page 1
[PHOTO OMITTED]
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has over 21 years of experience as an
Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC and WBBM Radio and has been quoted
by several publications, including THE WALL STREET JOURNAL, THE WALL STREET
REPORTER, BLOOMBERG NEWS SERVICE, and REGISTERED REP.
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MARKET OVERVIEW
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Covers the 12-month period ended December 31, 2007.
U.S. STOCKS AND BONDS
U.S. stocks posted positive returns for the 12-month period ended December 31,
2007 as most major large-cap indices delivered gains in the 5.0% to 11.0% range.
Mid-cap stocks outpaced both large- and small-caps, though large-caps did manage
to eclipse small-caps, something they have struggled to do over the past eight
years. Corporate America continued to deliver better than expected earnings.
Sixty-five percent of companies exceeded their earnings estimates over the past
three quarters through the third quarter of 2007, according to SEEKINGALPHA.COM.
The percentage of firms topping their estimates since the end of 2001 fluctuated
between 59% (third quarter of 2002) and 73% (third quarter of 2006). It is clear
that corporate America remains cash rich. The nonfinancial companies alone in
the S&P 500(R) Index held $609.7 billion in cash and equivalents at the end of
December 2007, which is in the vicinity of the all-time high, according to
Standard & Poor's ("S&P"). This is encouraging news considering that over the
past eleven quarters through the third quarter of 2007, the 500 companies
combined spent $1.12 trillion on stock buybacks; $1.24 trillion on capital
expenditures; and $594 billion on stock dividends, according to S&P.
U.S. debt securities, with the exception of municipal bonds, also delivered
solid returns in 2007. Most of the major taxable investment-grade debt groups
returned between 5.0% and 9.0%, according to data from Lehman Brothers. The
top-performing group was Treasuries due, in large part, to the aggressive rate
cuts initiated by the Federal Reserve in September and October. It lowered the
Federal funds target rate by a combined 75 basis points. Treasury Bonds, as well
as other high-quality debt groups, also benefitted from a "flight to quality"
situation beginning in late July in response to the start of the subprime
mortgage meltdown.
FOREIGN STOCKS AND BONDS
The global growth story is not only driving foreign stock and bond valuations
higher but commodities as well. Some emerging markets, such as India and China,
are growing their economies at three to four times the pace of U.S. growth.
Foreign stocks and bonds of developed countries and emerging markets equities
outperformed U.S. stock and bond averages for the 12-month period ended December
2007. U.S. investors who owned foreign securities over that one-year period saw
their total returns enhanced by the 10% decline in the U.S. dollar against a
basket of major currencies created by the Federal Reserve. The drop in the
dollar accelerated in September-October of 2007 due to the reduction in the
Federal funds rate from 5.25% to 4.50%. The rate cuts were viewed by foreign
investors as potentially inflationary moving forward. In our opinion, the spike
in the price of gold bullion in September-October, a hard asset characterized as
an inflation-hedge, supports that claim.
STATE OF THE ECONOMY
Despite many challenges, the U.S. economy has remained resilient, in our
opinion. The economy has been bolstered by strength in the following areas: job
creation, personal income levels growing at roughly twice the rate of inflation,
high productivity and a strong manufacturing sector. Some of the areas of the
economy that have been a drag on growth are as follows: high price of oil,
housing slump, subprime foreclosures and tighter lending standards. In an effort
to mitigate these concerns, the Federal Reserve has cut short-term rates to make
capital more readily available. While lower rates will not necessarily help the
majority of homeowners with adjustable-rate mortgages resetting in 2008, lower
rates could act as a positive catalyst for the stock market. We believe this is
potentially good for the economy since rising stock prices could help offset
some of the decline in real estate values for homeowners. The consensus forecast
from the Blue Chip Economic Indicators newsletter released in December calls for
2.1% real Gross Domestic Product growth for the U.S. in 2008. The current
expansion entered its seventh year in December. The last two expansions lasted
7.7 and 10 years.
Page 2
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
TARGET MANAGED VIP PORTFOLIO
Over the twelve months ended December 31, 2007, the Target Managed VIP Portfolio
posted a total return of 9.47% versus 5.24% for the Russell 3000 Index. The NAV
increased from $11.72 to $12.83 during the period.
The portfolio of 110 stocks had 52 advancers and 58 decliners. The top three
performing stocks, by contribution to return, were Research In Motion Ltd.
(RIMM), Potash Corp. of Saskatchewan Inc. (POT) and Microsoft Corp. (MSFT). The
worst-performing stocks, by percentage loss, were Harley-Davidson Inc. (HOG),
Group 1 Automotive Inc. (GPI) and American Express Inc. (AXP).
The biggest contributor to the portfolio's performance over the twelve months
ended December 31, 2007 was the technology sector. Large-cap tech companies
Research In Motion, Microsoft and Oracle were the top technology contributors to
return. An underweight position in financials also helped portfolio performance
relative to the benchmark, the Russell 3000 Index, as it was the
worst-performing sector in the benchmark. Performance was hurt most by the
underperformance of the portfolio's energy holdings relative to the benchmark.
On an absolute basis, consumer discretionary was the biggest drag on
performance. The consumer discretionary sector was the second worst performer in
the benchmark for the period.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
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Target Managed
VIP Portfolio $10,000 $ 8,040 $ 8,620 $ 8,190 $ 6,470 $ 8,730 $ 9,800 $ 10,510 $ 11,720 $ 12,830
Dow Jones
Industrial Avg. (a) 10,000 10,896 10,382 9,816 8,343 10,700 11,271 11,465 13,648 14,860
Russell 3000
Index (b) 10,000 11,262 10,420 9,229 7,241 9,500 10,631 11,285 13,069 13,755
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RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (c) (SINCE INCEPTION) (c) TOTAL RETURN
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Target Managed VIP Portfolio 10/6/99 9.5% 28.3% 3.1% 14.7%
Dow Jones Industrial Avg. (a) 8.9 48.6 4.9 12.2
Russell 3000 Index (b) 5.2 37.5 3.9 13.7
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(a) The Dow Jones Industrial Average is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg)
(b) The Russell 3000 Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This portfolio represents
approximately 98% of the investable U.S. equity market. (Bloomberg)
(c) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the Dow(R) Target 5
Portfolio to the Target Managed VIP Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided
reflect the Portfolio performance prior to the name change and the change
of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 3
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Software 12.3%
Communications Equipment 10.4%
Diversified Telecommunication Services 9.9%
Oil, Gas & Consumable Fuels 8.7%
Chemicals 6.4%
Pharmaceuticals 5.9%
Machinery 5.4%
Computers & Peripherals 3.5%
Semiconductors & Semiconductor Equipment 3.2%
Commercial Banks 3.0%
Media 3.0%
Consumer Finance 2.7%
Specialty Retail 2.6%
Electric Utilities 2.0%
Wireless Telecommunication Services 1.8%
Beverages 1.7%
Commercial Services & Supplies 1.5%
Metals & Mining 1.4%
Multi-Utilities 1.3%
Automobiles 1.2%
Energy Equipment & Services 1.0%
Leisure Equipment & Products 1.0%
Aerospace & Defense 0.9%
IT Services 0.9%
Health Care Technology 0.8%
Electrical Equipment 0.8%
Construction & Engineering 0.7%
Hotels, Restaurants & Leisure 0.7%
Multiline Retail 0.6%
Air Freight & Logistics 0.6%
Food Products 0.5%
Electronic Equipment & Instruments 0.5%
Internet & Catalog Retail 0.4%
Health Care Providers & Services 0.4%
Real Estate Investment Trusts (REITs) 0.4%
Diversified Financial Services 0.4%
Internet Software & Services 0.3%
Household Durables 0.2%
Health Care Equipment & Supplies 0.2%
Building Products 0.2%
Containers & Packaging 0.1%
Airlines 0.1%
Personal Products 0.1%
Tobacco 0.1%
Textiles, Apparel & Luxury Goods 0.1%
Life Sciences Tools & Services 0.1%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 4
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
THE DOW(R) DART 10 PORTFOLIO
Over the twelve months ended December 31, 2007, the Dow(R) Dart 10 Portfolio
posted a total return of 0.66% versus 8.88% for the Dow Jones Industrial Average
over the same period. The NAV increased from $10.56 to $10.63 during the period.
The portfolio of 10 stocks had 6 advancers and 4 decliners. The top three
performing stocks, by contribution to return, were Intel Corp. (INTC), Exxon
Mobil Corp. (XOM) and Caterpillar Corp. (CAT). The worst-performing stocks, by
percentage loss, were Citigroup Inc. (C), Home Depot Inc. (HD), and General
Motors Corp. (GM).
Intel was the biggest contributor to portfolio performance over the twelve
months ended December 31, 2007 as it took market share from weaker competitors.
Exxon Mobil also posted strong gains as sustained global economic growth boosted
demand for oil, producing record profits for the firm. Portfolio performance was
hurt most by Citigroup and Home Depot. Citigroup was hurt by significant losses
related to subprime mortgages, while Home Depot shares lagged the overall market
as the slow down in housing affected earnings.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
The Dow(R)
DART 10 Portfolio $10,000 $ 9,220 $ 10,020 $ 8,540 $ 6,980 $ 8,370 $ 8,690 $ 8,410 $ 10,560 $ 10,630
Dow Jones
Industrial Avg. (a) 10,000 10,896 10,382 9,816 8,343 10,700 11,271 11,465 13,648 14,860
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RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
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The Dow(R) DART 10 Portfolio 10/6/99 0.7% 6.3% 0.7% 8.8%
Dow Jones Industrial Avg. (a) 8.9 48.6 4.9 12.2
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(a) The Dow Jones Industrial Average is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 5
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Semiconductor & Semiconductor Equipment 13.0%
Oil, Gas & Consumable Fuels 12.1%
Software 11.8%
Machinery 11.8%
Computers & Peripherals 11.1%
Industrial Conglomerates 10.7%
Chemicals 8.9%
Pharmaceuticals 8.7%
Specialty Retail 6.7%
Diversified Financial Services 5.2%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 6
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the twelve months ended December 31, 2007, the Dow(R) Target Dividend
Portfolio posted a total return of 1.12% versus -5.16% for the Dow Jones Select
Dividend Index(SM) Return. The NAV increased from $11.66 to $11.79 during the
period.
The portfolio of 20 stocks had 9 advancers and 11 decliners. The top three
performing stocks, by contribution to return, were Lyondell Chemical Co. (LYO),
FirstEnergy Corp. (FE) and Black Hills Corp. (BKH). The worst-performing stocks,
by percentage loss, were Huntington Bancshares Inc. (HBAN), Regions Financial
Corp. (RF) and Pinnacle West Capital Corp. (PNW).
The materials sector was the biggest contributor to portfolio performance for
the twelve months ended December 31, 2007. The sector was led by Lyondell, the
portfolio's best performing stock, which was acquired during the period.
Performance was held back by the portfolio's financial holdings. Financials were
the worst-performing sector over the period in the S&P 500(R) Index and the
portfolio's large weight in the sector impacted performance. Underperformance of
the portfolio's utilities holdings, relative to the benchmark sector, also
impacted performance.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
May 2, 2005-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
5/2/05 12/31/05 12/31/06 12/31/07
------- -------- -------- --------
The Dow(R) Target Dividend Portfolio $10,000 $ 9,870 $11,660 $11,790
Dow Jones Select Dividend Index(SM) (a) 10,000 10,529 12,587 11,938
S&P 500(R) Index (b) 10,000 10,879 12,597 13,289
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RETURN COMPARISON PERIOD ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION ANNUAL TOTAL RETURN
DATE TOTAL RETURN RETURN (SINCE INCEPTION)
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The Dow(R) Target Dividend Portfolio 5/2/05 1.1% 17.9% 6.4%
Dow Jones Select Dividend Index(SM) (a) -5.2 19.4 6.9
S&P 500(R) Index (b) 5.5 32.9 11.3
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(a) The Dow Jones Select Dividend Index(SM) is comprised of 100 of the highest
dividend yielding securities.
(b) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 7
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Multi-Utilities 23.4%
Electric Utilities 22.3%
Insurance 14.9%
Commercial Banks 11.8%
Gas Utilities 11.1%
Chemicals 6.0%
Paper & Forest Products 5.7%
Diversified Financial Services 4.8%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 8
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PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2007, the Global Dividend Target 15
Portfolio posted a total return of 13.34% versus 9.04% for the Morgan Stanley
Capital International Developed Markets World Index. The NAV increased from
$21.14 to $23.96 during the period.
The portfolio of 15 stocks had 10 advancers and 5 decliners. The top three
performing stocks, by contribution to return, were CNOOC Ltd. (883 HK), CITIC
Pacific Ltd. (267 HK) and Vodaphone Group (VOD LN). The worst-performing stocks,
by percentage loss, were Lloyds TSB Group PLC (LLOY LN), General Motors (GM) and
Hang Lung Properties Ltd. (101 HK).
The biggest contributors to the portfolio's outperformance were the Hang Sang
Index stocks, which included CNOOC & Citic, the portfolio's two best-performing
stocks over the period. The performance of the five Financial Times Industrial
Ordinary Share Index stocks was helped by a weakening U.S. dollar which boosted
returns when converted from pounds. Performance was hurt by General Motors, the
worst performer in the portfolio over the period.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Global Dividend
Target 15 Portfolio $10,000 $ 9,710 $9,900 $9,660 $8,240 $11,050 $13,860 $15,270 $21,140 $23,960
MSCI
Developed Markets
World Index (a) 10,000 11,411 9,908 8,241 6,602 8,788 10,081 11,038 13,252 14,450
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RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
- --------------------------------------------------------------------------------------------------------------
Global Dividend Target 15 Portfolio 10/6/99 13.3% 139.6% 11.2% 23.8%
MSCI Developed Markets World Index (a) 9.0 44.5 4.6 17.0
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(a) The Morgan Stanley Capital International Developed Markets World Index
("MSCI Developed Markets World Index") is based on the share prices of
approximately 1,600 companies listed on stock exchanges in the twenty-two
countries that make up the MSCI National Indices. (Bloomberg)
Effective May 2, 2005, based upon the determination of the Fund's Board of
Trustees, the Portfolio changed its name from the Global Target 15 Portfolio to
the Global Dividend Target 15 Portfolio.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 9
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Diversified Telecommunication Services 25.2%
Industrial Conglomerates 15.3%
Commercial Banks 11.1%
Oil, Gas & Consumable Fuels 10.9%
Wireless Telecommunication Services 8.0%
Electric Utilities 7.0%
Hotels, Restaurants & Leisure 6.3%
Auto Components 6.1%
Pharmaceuticals 5.2%
Automobiles 4.9%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 10
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
S&P(R) TARGET 24 PORTFOLIO
Over the twelve months ended December 31, 2007, the S&P(R) Target 24 Portfolio
posted a total return of 4.10% versus 5.49% for the S&P 500(R) Index over the
same period. The NAV increased from $9.28 to $9.66 during the period.
The portfolio of 24 stocks had 15 advancers and 9 decliners. The top three
performing stocks, by contribution to return, were Microsoft (MSFT), Coca-Cola
Co. (KO) and Exxon Mobil Corp. (XOM). The worst-performing stocks, by percentage
loss, were American Express Co. (AXP), Moody's Corp. (MCO) and Harley-Davidson
(HOG).
Consumer staples and industrials were the biggest contributors to performance
relative to the benchmark. Consumer staples were led by strong returns from
Coca-Cola, while Paccar led industrials. Information technology and utilities
also posted returns ahead of their respective benchmark sectors. The portfolio's
performance, relative to its benchmark, was hurt by the energy, health care and
financial sectors. Johnson & Johnson, a top two portfolio holding, trailed the
overall health care sector, while financial returns were hurt by the poor
performance of credit rating agency Moody's.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
S&P(R) Target 24
Portfolio $10,000 $11,830 $ 9,540 $7,190 $6,140 $7,620 $8,660 $ 9,020 $ 9,280 $ 9,660
S&P 500(R) Index (a) 10,000 11,115 10,104 8,903 6,935 8,920 9,895 10,381 12,021 12,681
- --------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (b) (SINCE INCEPTION)(b) TOTAL RETURN
- --------------------------------------------------------------------------------------------------------------
S&P(R) Target 24 Portfolio 10/6/99 4.1% -3.4% -0.4% 9.5%
S&P 500(R) Index (a) 5.5 26.8 2.9 12.8
- --------------------------------------------------------------------------------
(a) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the S&P(R) Target 10
Portfolio to the S&P(R) Target 24 Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided
reflect the Portfolio performance prior to the name change and the change
of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 11
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Software 17.7%
Consumer Finance 13.6%
Oil, Gas & Consumable Fuels 11.8%
Pharmaceuticals 11.5%
Beverages 10.7%
Machinery 6.0%
Media 5.2%
Electric Utilities 4.5%
Aerospace & Defense 3.5%
Electrical Equipment 3.4%
Real Estate Investment Trusts (REITs) 2.3%
Automobiles 2.2%
Diversified Financial Services 2.2%
Leisure Equipment & Products 1.4%
Food Products 1.0%
Electronic Equipment & Instruments 0.7%
Tobacco 0.6%
Health Care Providers & Services 0.6%
Life Sciences Tools & Services 0.5%
Energy Equipment & Services 0.4%
Computers & Peripherals 0.2%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 12
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
NASDAQ(R) TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2007, the NASDAQ(R) Target 15
Portfolio posted a total return of 21.73% versus 19.24% for the NASDAQ(R) 100
Index. The NAV increased from $10.17 to $12.38 during the period.
The portfolio of 15 stocks had 9 advancers and 6 decliners. The top three
performing stocks, by contribution to return, were Research In Motion Ltd.
(RIMM), Paccar Inc. (PCAR) and Millicom International Cellular S.A. (MICC). The
worst-performing stocks, by percentage loss, were American Eagle Outfitters Inc.
(AEO), Bed Bath & Beyond Inc. (BBBY) and Infosys Technologies Ltd. (INFY).
The biggest contributor to the portfolio's performance relative to the benchmark
was the telecommunication services sector, led by Millicom. Millicom was the
portfolio's second best performer by contribution to return. The industrials
sector was overweight and outperformed relative to its benchmark, positively
contributing to portfolio performance. The portfolio's performance was hurt by
its overweight position in information technology as the portfolio's holdings in
the sector underperformed relative to its benchmark. A minimal weighting in
health care also hurt performance relative to the benchmark.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
NASDAQ(R)
Target 15 Portfolio $10,000 $14,600 $12,880 $9,250 $6,830 $9,290 $9,040 $9,340 $10,170 $12,380
NASDAQ(R) 100
Index (a) 10,000 14,644 9,251 6,234 3,894 5,820 6,447 6,570 7,048 8,404
- --------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------
NASDAQ(R) Target 15 Portfolio 10/6/99 21.7% 23.8% 2.6% 12.6%
NASDAQ(R) 100 Index (a) 19.2 -16.0 -2.1 16.6
- --------------------------------------------------------------------------------
(a) The NASDAQ(R) 100 Index is a modified capitalization-weighted index of the
100 largest and most active non-financial domestic and international
issues listed on the NASDAQ(R). (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 13
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A PIE CHART IN THE PRINTED MATERIAL.]
Communications Equipment 23.1%
Software 20.0%
Semiconductors & Semiconductor Equipment 13.3%
Wireless Telecommunication Services 8.7%
Specialty Retail 8.4%
Machinery 7.9%
Hotels, Restaurants & Leisure 7.6%
Media 5.7%
IT Services 5.3%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 14
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY FIRST TRUST 10 UNCOMMON VALUES
PORTFOLIO)
Effective November 19, 2007, based upon the determination of the Fund's Board of
Trustees, the Portfolio changed its name from the First Trust 10 Uncommon Values
Portfolio to the First Trust Target Focus Four Portfolio. While the Portfolio's
primary investment strategy changed, its investment objective remained
consistent throughout the year. Since the Portfolio changed investment
strategies during the year, below is a summary of performance during the two
periods.
12/31/06 - 11/19/07 (First Trust 10 Uncommon Values Portfolio only)
Over the period December 31, 2006 to November 19, 2007, the First Trust 10
Uncommon Values Portfolio posted a total return of 3.49% versus 2.73% for the
S&P 500(R) Index. The NAV increased from $5.44 to $5.63 during the period.
The portfolio of 10 stocks had 7 advancers and 3 decliners. The top three
performing stocks, by contribution to return, were Exelon Corp. (EXC), United
Technologies Corp. (UTX) and Corning Inc. (GLW). The worst-performing stocks, by
percentage loss, were Capital One Financial Corp. (COF), Omnicare Inc. (OCR) and
Intuit Inc. (INTU).
Exelon was the biggest contributor to performance over the period 12/31/06 to
11/19/07. United Technologies and Corning also contributed positively to
returns. Capital One Financial was the biggest drag on portfolio performance as
the company was hurt by deteriorating credit market conditions. Omnicare also
held back portfolio performance.
11/19/07 - 12/31/07 (First Trust Target Focus Four Portfolio only)
Over the period November 19, 2007 to December 31, 2007, the First Trust Target
Focus Four Portfolio posted a total return of 2.13% versus 2.69% for the S&P
500(R) Index. The NAV increased from $5.63 to $5.75 during the period.
The portfolio of 121 stocks had 68 advancers and 53 decliners. The top three
performing stocks, by contribution to return, were Potash Corp. of Saskatchewan
Inc. (POT), Research In Motion Ltd. (RIMM) and NVIDIA Corp. (NVDA). The
worst-performing stocks, by percentage loss, were BT Group PLC (BT), DIRECTV
Group Inc. (DTV) and Lubrizol Corp. (LZ).
The materials sector was the biggest contributor to performance over the period
November 19, 2007 to December 31, 2007 on an absolute basis. Financials posted
returns ahead of the benchmark sector, also helping portfolio performance. The
energy sector was the biggest drag on performance relative to the benchmark as
the portfolio's holdings trailed the benchmark sector. Poor performance of the
portfolio's industrial holdings also weighed on portfolio performance.
The Portfolio posted a total return of 5.70% during the twelve months ended
December 31, 2007. For the year ended December 31, 2007 (combined First Trust
Target Focus Four Portfolio and First Trust 10 Uncommon Values Portfolio),
utilities were the biggest contributor to portfolio performance. The group
produced returns well ahead of the benchmark sector, led by Exelon, in addition
to having an overweight position. Strong returns from the materials and consumer
discretionary sectors relative to their benchmark sectors also added to
portfolio performance. Health care was the biggest drag on performance. The
portfolio was overweight the sector and the portfolio's holdings trailed the
benchmark sector. An underweight position in energy shares also hurt performance
relative to the benchmark as energy was the best-performing sector for the
period.
All of the data on this page and page 16 represents past performance, which
cannot be used to predict future returns that may be achieved by this portfolio.
Total return and share price will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than when purchased. Returns assume
reinvestment of dividends.
Page 15
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
Growth of a $10,000 Initial Investment October 6, 1999 - December 31, 2007.
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
First Trust Target
Focus Four
Portfolio $ 10,000 $ 11,400 $ 8,390 $ 5,400 $ 3,410 $ 4,670 $ 5,200 $ 5,230 $ 5,440 $ 5,750
S&P 500(R) Index (a) 10,000 11,115 10,104 8,903 6,935 8,920 9,895 10,381 12,021 12,681
- --------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
- -------------------------------------------------------------------------------------------------------------------------
First Trust Target Focus Four Portfolio (a) 10/6/99 5.7% -42.5% -6.5% 11.0%
S&P 500(R) Index (b) 5.5 26.8 2.9 12.8
- --------------------------------------------------------------------------------
(a) Effective November 19, 2007, based upon determination of the Fund's Board
of Trustees, the Portfolio changed its name from the First Trust 10
Uncommon Values Portfolio to the First Trust Target Focus Four Portfolio.
The Portfolio's primary investment strategy was also changed. The
performance figures provided reflect the Portfolio performance prior to
the name change and the change of the primary investment strategy.
(b) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 16
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
PORTFOLIO COMPONENTS (a)
Multi-Utilities 9.6%
Insurance 8.8%
Electric Utilities 8.7%
Chemicals 8.5%
Diversified Telecommunication Services 8.1%
Communications Equipment 7.9%
Oil, Gas & Consumable Fuels 5.2%
Commercial Banks 3.6%
Media 3.6%
Metals & Mining 3.4%
Semiconductor & Semiconductor Equipment 3.4%
Gas Utilities 3.3%
Electronic Equipment & Instruments 2.9%
Household Durables 2.3%
Automobiles 2.2%
Energy Equipment & Services 2.1%
Paper & Forest Products 1.9%
Leisure Equipment & Products 1.8%
Diversified Financial Services 1.7%
Specialty Retail 1.2%
Multiline Retail 1.2%
Wireless Telecommunication Services 0.9%
Aerospace & Defense 0.9%
Machinery 0.8%
Internet & Catalog Retail 0.8%
Airlines 0.7%
Thrifts & Mortgage Finance 0.6%
Trading Companies & Distributors 0.5%
Road & Rail 0.4%
Food Staples & Retailing 0.4%
Commercial Services & Supplies 0.4%
Health Care Equipment & Supplies 0.3%
Computers & Peripherals 0.3%
Pharmaceuticals 0.3%
Containers & Packaging 0.3%
Hotels, Restaurants & Leisure 0.2%
Personal Products 0.2%
Auto Components 0.2%
Capital Markets 0.2%
Textiles, Apparel & Luxury Goods 0.2%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 17
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the twelve months ended December 31, 2007, the Value Line(R) Target 25
Portfolio posted a total return of 18.20% versus 5.24% for the Russell 3000
Index. The NAV increased from $5.00 to $5.91 during the period.
The portfolio of 25 stocks had 11 advancers and 14 decliners. The top three
performing stocks, by contribution to return, were Potash Corp. of Saskatchewan
Inc. (POT), Research In Motion Ltd. (RIMM) and NVIDIA Corp. (NVDA). The
worst-performing stocks, by percentage loss, were Harley-Davidson Inc. (HOG),
American Eagle Outfitters Inc. (AEO) and Continental Airlines Inc. (CAL).
The biggest contributor to the portfolio's outperformance was the materials
sector, led by Potash, the portfolio's best-performing stock. Information
technology stocks were also a top contributor to portfolio performance, led by
Research in Motion and NVIDIA. The portfolio's performance was hurt by its
underweight position in the energy sector, which was the best-performing sector
in the benchmark over the period. Industrials also negatively impacted
performance due to the poor performance of Continental Airlines, a bottom three
performer in the portfolio.
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this portfolio. Total return
and share price will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than when purchased. Returns assume reinvestment of
dividends.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2007
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE GRAPH IN THE PRINTED MATERIAL.]
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07
------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Value Line(R)
Target 25 Portfolio $10,000 $16,330 $ 9,320 $4,150 $2,370 $3,340 $ 4,060 $ 4,860 $ 5,000 $ 5,910
Russell 3000 Index (a) 10,000 11,262 10,420 9,229 7,241 9,500 10,631 11,285 13,069 13,755
- --------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2007
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (b) (SINCE INCEPTION) (b) TOTAL RETURN
- -------------------------------------------------------------------------------------------------------------------
Value Line(R) Target 25 Portfolio 10/6/99 18.2% -40.9% -6.2% 20.0%
Russell 3000 Index (a) 5.2 37.5 3.9 13.7
- --------------------------------------------------------------------------------
(a) The Russell 3000 Index is composed of 3000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg)
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the First Trust Internet
Portfolio to the Value Line(R) Target 25 Portfolio. The Portfolio's
primary investment strategy was also changed. The performance figures
provided reflect the Portfolio performance prior to the name change and
the change of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 18
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
PORTFOLIO COMPONENTS (a)
[THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.]
Chemicals 22.1%
Communication Equipment 16.2%
Semiconductors & Semiconductors Equipment 8.4%
Leisure Equipment & Products 7.9%
Metals & Mining 6.7%
Media 5.7%
Specialty Retail 5.5%
Diversified Telecommunication Services 5.5%
Multiline Retail 4.7%
Automobiles 4.1%
Internet & Catalog Retail 2.8%
Engery Equipment & Services 2.1%
Health Care Equipment & Services 1.6%
Household Durables 1.4%
Commercial Services & Supplies 1.4%
Airlines 1.4%
Personal Products 1.2%
Containers & Packaging 0.8%
Textiles, Apparel & Luxury Goods 0.5%
(a) Percentages are based on total investments. Please note that the
percentages shown on the Portfolio of Investments are based on net assets.
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
DECEMBER 31, 2007 (UNAUDITED)
As a shareholder of the Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus Four Portfolio or Value Line(R) Target 25 Portfolio (the
"Portfolios"), you incur two types of costs: (1) transaction costs; and (2)
ongoing costs, including management fees, distribution and/or service fees, and
other Portfolio expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Portfolios 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 for the entire period of July 1, 2007 to December 31, 2007.
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
this 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 the Portfolio's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Portfolio'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 costs of
investing in the Portfolio 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 redemption fees. 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
ACCOUNT ACCOUNT PERIOD (a) ACCOUNT ACCOUNT PERIOD (a)
VALUE VALUE 07/01/2007- VALUE VALUE 07/01/2007- EXPENSE
07/01/2007 12/31/2007 12/31/2007 07/01/2007 12/31/2007 12/31/2007 RATIO
---------- ---------- ----------- ---------- ---------- ----------- ----------
Target Managed VIP Portfolio ............... $1,000.00 $1,022.30 $6.88 $1,000.00 $1,018.40 $6.87 1.35%
The Dow(R) DART 10 Portfolio ............... 1,000.00 950.80 7.23 1,000.00 1,017.80 7.48 1.47 (b)
The Dow(R) Target Dividend Portfolio ....... 1,000.00 972.00 6.76 1,000.00 1,018.35 6.92 1.36
Global Dividend Target 15 Portfolio ........ 1,000.00 982.00 6.94 1,000.00 1,018.20 7.07 1.39
S&P(R) Target 24 Portfolio ................. 1,000.00 1,019.00 7.48 1,000.00 1,017.80 7.48 1.47 (b)
NASDAQ(R) Target 15 Portfolio .............. 1,000.00 1,105.40 7.80 1,000.00 1,017.80 7.48 1.47 (b)
First Trust Target Focus Four Portfolio .... 1,000.00 961.50 6.77 1,000.00 1,018.30 6.97 1.37 (b)
Value Line(R) Target 25 Portfolio .......... 1,000.00 1,078.50 7.39 1,000.00 1,018.10 7.17 1.41
(a) Expenses are equal to each Portfolio's annualized expense ratio,
multiplied by the average account value over the period, multiplied by the
184 days in the most recent fiscal half-year, divided by 365 days in the
year (to reflect the one-half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 99.4%
AEROSPACE & DEFENSE - 0.9%
13,057 Ladish Co., Inc. (b) .............................. $ 563,932
13,756 Rockwell Collins, Inc. ............................ 990,019
------------
1,553,951
------------
AIR FREIGHT & LOGISTICS - 0.5%
35,739 Hub Group, Inc., Class A (b) ...................... 949,943
------------
AIRLINES - 0.1%
10,701 Continental Airlines, Inc., Class B (b) ........... 238,097
------------
AUTOMOBILES - 1.2%
44,347 Harley-Davidson, Inc. ............................. 2,071,448
------------
BEVERAGES - 1.7%
48,886 Coca-Cola (The), Company .......................... 3,000,134
------------
BUILDING PRODUCTS - 0.2%
14,500 American Woodmark Corp. ........................... 263,610
------------
CHEMICALS - 6.3%
11,325 Albemarle Corp. ................................... 467,156
110,769 E. I. du Pont de Nemours and Company .............. 4,883,805
5,830 OM Group, Inc. (b) ................................ 335,458
37,212 Potash Corp. of Saskatchewan, Inc. ................ 5,357,040
------------
11,043,459
------------
COMMERCIAL BANKS - 3.0%
33,224 Barclays PLC, ADR ................................. 1,341,253
25,769 Cascade Bancorp ................................... 358,704
21,127 HSBC Holdings PLC, ADR ............................ 1,768,541
42,714 Lloyds TSB Group PLC, ADR ......................... 1,608,182
11,540 Royal Bank of Scotland Group PLC, ADR (b) ......... 103,283
------------
5,179,963
------------
COMMERCIAL SERVICES & SUPPLIES - 1.5%
49,506 Cenveo, Inc. (b). ................................. 864,870
18,020 Clean Harbors, Inc. (b) ........................... 931,634
19,165 Kenexa Corp. (b). ................................. 372,184
10,889 Kimball International, Inc., Class B .............. 149,179
11,329 TeleTech Holdings, Inc. (b) ....................... 240,968
------------
2,558,835
------------
COMMUNICATIONS EQUIPMENT - 10.4%
247,487 Cisco Systems, Inc. (b) ........................... 6,699,473
32,765 Packeteer, Inc. (b) ............................... 201,832
98,480 Research In Motion Ltd. (b) ....................... 11,167,632
------------
18,068,937
------------
COMPUTERS & PERIPHERALS - 3.5%
56,007 International Business Machines Corp. ............. 6,054,357
1,381 Lexmark International, Inc., Class A (b) .......... 48,142
------------
6,102,499
------------
CONSTRUCTION & ENGINEERING - 0.7%
45,120 Quanta Services, Inc. (b) ......................... 1,183,949
------------
See Notes to Financial Statements. Page 21
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
CONSUMER FINANCE - 2.7%
73,541 American Express Company .......................... $ 3,825,603
26,105 First Cash Financial Services, Inc. (b) ........... 383,221
16,203 World Acceptance Corp. (b) ........................ 437,157
------------
4,645,981
------------
CONTAINERS & PACKAGING - 0.1%
9,842 Rock-Tenn Company, Class A ........................ 250,085
------------
DIVERSIFIED FINANCIAL SERVICES - 0.4%
16,957 Moody's Corp. ..................................... 605,365
------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 9.9%
130,560 BT Group PLC, ADR ................................. 7,039,795
23,873 Consolidated Communications Holdings, Inc. ........ 475,073
106,050 Deutsche Telekom AG, ADR .......................... 2,298,103
32,029 FairPoint Communications, Inc. .................... 417,017
69,898 France Telecom S.A., ADR .......................... 2,490,466
136,404 Koninklijke (Royal) KPN N.V., ADR ................. 2,475,733
64,121 Telecom Italia SpA, ADR ........................... 1,977,492
------------
17,173,679
------------
ELECTRIC UTILITIES - 2.0%
37,591 Enel SpA, ADR ..................................... 2,219,749
3,455 Entergy Corp. ..................................... 412,942
5,328 FirstEnergy Corp. ................................. 385,427
6,739 FPL Group, Inc. ................................... 456,769
------------
3,474,887
------------
ELECTRICAL EQUIPMENT - 0.8%
13,772 Rockwell Automation, Inc. ......................... 949,717
18,941 Superior Essex, Inc. (b) .......................... 454,584
------------
1,404,301
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
5,668 Agilent Technologies, Inc. (b) .................... 208,242
16,506 Rogers Corp. (b) .................................. 715,865
------------
924,107
------------
ENERGY EQUIPMENT & SERVICES - 1.0%
1,415 Baker Hughes, Inc. ................................ 114,756
3,330 Core Laboratories N.V. (b) ........................ 415,318
13,003 Gulf Island Fabrication, Inc. ..................... 412,325
15,944 NATCO Group, Inc., Class A (b) .................... 863,368
------------
1,805,767
------------
FOOD PRODUCTS - 0.5%
8,130 Campbell Soup Company ............................. 290,485
28,528 TreeHouse Foods, Inc. (b) ......................... 655,859
------------
946,344
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.2%
9,109 Immucor, Inc. (b) ................................. 309,615
------------
Page 22 See Notes to Financial Statements.
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE PROVIDERS & SERVICES - 0.4%
10,883 Air Methods Corp. (b) ............................. $ 540,559
2,106 Laboratory Corp. of America Holdings (b) .......... 159,066
------------
699,625
------------
HEALTH CARE TECHNOLOGY - 0.8%
26,548 Omnicell, Inc. (b) ................................ 714,938
33,077 Phase Forward, Inc. (b) ........................... 719,425
------------
1,434,363
------------
HOTELS, RESTAURANTS & LEISURE - 0.7%
15,609 Buffalo Wild Wings, Inc. (b) ...................... 362,441
28,074 Interstate Hotels & Resorts, Inc. (b) ............. 111,173
6,117 Wynn Resorts Ltd. ................................. 685,899
------------
1,159,513
------------
HOUSEHOLD DURABLES - 0.2%
12,943 Tempur-Pedic International, Inc. .................. 336,130
------------
INTERNET & CATALOG RETAIL - 0.4%
6,200 Priceline.com, Inc. (b) ........................... 712,132
------------
INTERNET SOFTWARE & SERVICES - 0.3%
40,463 Interwoven, Inc. (b) .............................. 575,384
------------
IT SERVICES - 0.9%
33,287 Infosys Technologies Ltd., ADR .................... 1,509,898
------------
LEISURE EQUIPMENT & PRODUCTS - 1.0%
18,669 Hasbro, Inc. ...................................... 477,553
66,177 Mattel, Inc. ...................................... 1,260,010
------------
1,737,563
------------
LIFE SCIENCES TOOLS & SERVICES - 0.1%
1,713 Waters Corp. (b) .................................. 135,447
------------
MACHINERY - 5.4%
88,583 Caterpillar, Inc. ................................. 6,427,582
53,491 PACCAR, Inc. ...................................... 2,914,190
------------
9,341,772
------------
MEDIA - 3.0%
207,745 DIRECTV Group (The), Inc. (b) ..................... 4,803,064
9,370 Liberty Global, Inc., Class A (b) ................. 367,210
------------
5,170,274
------------
METALS & MINING - 1.4%
11,908 Allegheny Technologies, Inc. ...................... 1,028,851
8,046 Brush Engineered Materials, Inc. (b) .............. 297,863
24,554 Metal Management, Inc. ............................ 1,117,944
------------
2,444,658
------------
MULTI-UTILITIES - 1.3%
26,459 National Grid Transco PLC, ADR .................... 2,208,003
------------
MULTILINE RETAIL - 0.6%
30,265 Nordstrom, Inc. ................................... 1,111,633
------------
See Notes to Financial Statements. Page 23
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
OIL, GAS & CONSUMABLE FUELS - 8.6%
28,864 BP PLC, ADR ....................................... $ 2,111,979
9,609 Chevron Corp. ..................................... 896,808
28,714 ENI SpA, ADR ...................................... 2,079,755
95,901 Exxon Mobil Corp. ................................. 8,984,965
44,477 PetroQuest Energy, Inc. (b) ....................... 636,021
54,935 VAALCO Energy, Inc. (b) ........................... 255,448
------------
14,964,976
------------
PERSONAL PRODUCTS - 0.1%
7,865 NBTY, Inc. (b) .................................... 215,501
------------
PHARMACEUTICALS - 5.8%
36,918 GlaxoSmithKline PLC, ADR .......................... 1,860,298
48,391 Johnson & Johnson ................................. 3,227,680
22,136 Noven Pharmaceuticals, Inc. (b) ................... 307,248
208,324 Pfizer, Inc. ...................................... 4,735,204
------------
10,130,430
------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.4%
6,999 Boston Properties, Inc. ........................... 642,578
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 3.2%
48,385 Atheros Communications (b) ........................ 1,477,678
8,494 Lam Research Corp. (b) ............................ 367,196
95,581 NVIDIA Corp. (b). ................................. 3,251,666
42,976 RF Micro Devices, Inc. (b) ........................ 245,393
18,328 Ultra Clean Holdings, Inc. (b) .................... 223,602
------------
5,565,535
------------
SOFTWARE - 12.2%
21,561 Ansoft Corp. (b) .................................. 557,352
12,304 Check Point Software Technologies Ltd. (b) ........ 270,196
365,455 Microsoft Corp. ................................... 13,010,198
310,998 Oracle Corp. (b) .................................. 7,022,335
35,746 Tyler Technologies, Inc. (b) ...................... 460,766
------------
21,320,847
------------
SPECIALTY RETAIL - 2.5%
40,049 American Eagle Outfitters, Inc. ................... 831,818
17,078 Bed Bath & Beyond, Inc. (b) ....................... 501,922
26,702 Buckle (The), Inc. ................................ 881,166
23,208 Charlotte Russe Holding, Inc. (b) ................. 374,809
22,137 Group 1 Automotive, Inc. .......................... 525,754
10,923 Guess?, Inc. ...................................... 413,872
28,832 Gymboree (The), Corp. (b) ......................... 878,223
------------
4,407,564
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.1%
7,621 Steven Madden Ltd. (b) ............................ 152,420
------------
TOBACCO - 0.1%
3,342 UST, Inc. ......................................... 183,142
------------
Page 24 See Notes to Financial Statements.
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
WIRELESS TELECOMMUNICATION SERVICES - 1.8%
4,382 Millicom International Cellular S.A. (b) .......... $ 516,813
69,771 Vodafone Group PLC, ADR ........................... 2,603,854
------------
3,120,667
------------
TOTAL INVESTMENTS - 99.4% ......................... 173,035,011
(Cost $154,965,694)
NET OTHER ASSETS AND LIABILITIES - 0.6% ........... 1,099,102
------------
NET ASSETS - 100.0% ............................... $174,134,113
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
See Notes to Financial Statements. Page 25
THE DOW(R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 99.2%
CHEMICALS - 8.9%
32,546 E. I. du Pont de Nemours and Company .............. $ 1,434,953
------------
COMPUTERS & PERIPHERALS - 11.0%
16,458 International Business Machines Corp. ............. 1,779,110
------------
DIVERSIFIED FINANCIAL SERVICES - 5.2%
28,555 Citigroup, Inc. ................................... 840,659
------------
INDUSTRIAL CONGLOMERATES - 10.6%
20,415 3M Company ........................................ 1,721,393
------------
MACHINERY - 11.7%
26,024 Caterpillar, Inc. ................................. 1,888,302
------------
OIL, GAS & CONSUMABLE FUELS - 11.9%
20,635 Exxon Mobil Corp. ................................. 1,933,293
------------
PHARMACEUTICALS - 8.6%
61,205 Pfizer, Inc. ...................................... 1,391,190
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 12.9%
78,140 Intel Corp. ....................................... 2,083,212
------------
SOFTWARE - 11.7%
53,224 Microsoft Corp. ................................... 1,894,774
------------
SPECIALTY RETAIL - 6.7%
40,160 Home Depot (The), Inc. ............................ 1,081,910
------------
TOTAL INVESTMENTS - 99.2% ......................... 16,048,796
(Cost $16,005,855)
NET OTHER ASSETS AND LIABILITIES - 0.8% ........... 123,113
------------
NET ASSETS - 100.0% ............................... $ 16,171,909
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
Page 26 See Notes to Financial Statements.
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 98.6%
CHEMICALS - 5.9%
90,664 Lubrizol (The) Corp. .............................. $ 4,910,362
------------
COMMERCIAL BANKS - 11.7%
192,208 Huntington Bancshares, Inc. ....................... 2,836,990
60,645 PNC Financial Services Group, Inc. ................ 3,981,344
120,914 Regions Financial Corp. ........................... 2,859,616
------------
9,677,950
------------
DIVERSIFIED FINANCIAL SERVICES - 4.7%
89,163 JPMorgan Chase & Company .......................... 3,891,965
------------
ELECTRIC UTILITIES - 21.9%
75,031 FirstEnergy Corp. ................................. 5,427,743
161,604 Northeast Utilities ............................... 5,059,821
89,998 Pinnacle West Capital Corp. ....................... 3,816,815
123,714 UniSource Energy Corp. ............................ 3,903,177
------------
18,207,556
------------
GAS UTILITIES - 10.9%
115,919 AGL Resources, Inc. ............................... 4,363,191
104,494 ONEOK, Inc. ....................................... 4,678,197
------------
9,041,388
------------
INSURANCE - 14.7%
99,531 Cincinnati Financial Corp. ........................ 3,935,456
68,421 Lincoln National Corp. ............................ 3,983,471
89,392 Unitrin, Inc. ..................................... 4,289,922
------------
12,208,849
------------
MULTI-UTILITIES - 23.1%
121,951 Black Hills Corp. ................................. 5,378,039
93,551 DTE Energy Company ................................ 4,112,502
181,758 Energy East Corp. ................................. 4,945,635
111,162 SCANA Corp. ....................................... 4,685,478
------------
19,121,654
------------
PAPER & FOREST PRODUCTS - 5.7%
150,233 MeadWestvaco Corp. ................................ 4,702,293
------------
TOTAL INVESTMENTS - 98.6% ......................... 81,762,017
(Cost $84,273,704)
NET OTHER ASSETS AND LIABILITIES - 1.4% ........... 1,138,109
------------
NET ASSETS - 100.0% ............................... $ 82,900,126
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
See Notes to Financial Statements. Page 27
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 98.7%
HONG KONG - 38.7%
3,785,849 BOC Hong Kong (Holdings) Ltd. (b) ................. $ 10,497,129
3,237,000 Cheung Kong Infrastructure Holdings Ltd. (b) ...... 12,015,717
2,925,378 Citic Pacific Ltd. (b) ............................ 16,173,354
11,113,000 CNOOC Ltd. (b) .................................... 18,662,880
16,859,000 PCCW Ltd. (b) ..................................... 9,964,363
------------
67,313,443
------------
UNITED KINGDOM - 30.4%
1,701,144 BT Group PLC (b) .................................. 9,189,681
1,776,494 Compass Group PLC (b) ............................. 10,840,102
1,860,485 GKN PLC (b) ....................................... 10,398,497
908,366 Lloyds TSB Group PLC (b) .......................... 8,553,813
3,671,836 Vodafone Group PLC (b) ............................ 13,783,782
------------
52,765,875
------------
UNITED STATES - 29.6%
288,344 AT&T, Inc. ........................................ 11,983,577
273,112 General Electric Company .......................... 10,124,262
334,296 General Motors Corp. .............................. 8,320,627
392,642 Pfizer, Inc. ...................................... 8,924,753
274,278 Verizon Communications, Inc. ...................... 11,983,206
------------
51,336,425
------------
TOTAL INVESTMENTS - 98.7% ......................... 171,415,743
(Cost $157,986,104)
NET OTHER ASSETS AND LIABILITIES - 1.3% ........... 2,325,606
------------
NET ASSETS - 100.0% ............................... $173,741,349
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Security is fair valued and value is determined in accordance with
procedures adopted by the Board of Trustees.
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Diversified Telecommunication Services .................... 24.8%
Industrial Conglomerates .................................. 15.0
Commercial Banks .......................................... 11.0
Oil, Gas & Consumable Fuels ............................... 10.8
Wireless Telecommunication Services ....................... 7.9
Electric Utilities ........................................ 6.9
Hotels, Restaurants & Leisure ............................. 6.3
Auto Components ........................................... 6.0
Pharmaceuticals ........................................... 5.2
Automobiles ............................................... 4.8
Net Other Assets and Liabilities .......................... 1.3
------------
100.0%
============
Page 28 See Notes to Financial Statements.
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 98.4%
AEROSPACE & DEFENSE - 3.5%
7,618 Rockwell Collins, Inc. ............................ $ 548,267
------------
AUTOMOBILES - 2.2%
7,485 Harley-Davidson, Inc. ............................. 349,624
------------
BEVERAGES - 10.5%
27,074 Coca-Cola (The), Company .......................... 1,661,531
------------
COMPUTERS & PERIPHERALS - 0.2%
768 Lexmark International, Inc., Class A (b) .......... 26,772
3,764 Seagate Technology, Inc. (Escrow Shares) (b) (c) .. 0
------------
26,772
------------
CONSUMER FINANCE - 13.4%
40,734 American Express Company .......................... 2,118,983
------------
DIVERSIFIED FINANCIAL SERVICES - 2.1%
9,392 Moody's Corp. ..................................... 335,294
------------
ELECTRIC UTILITIES - 4.4%
1,913 Entergy Corp. ..................................... 228,642
2,948 FirstEnergy Corp. ................................. 213,258
3,735 FPL Group, Inc. ................................... 252,747
------------
694,647
------------
ELECTRICAL EQUIPMENT - 3.3%
7,629 Rockwell Automation, Inc. ......................... 526,096
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.7%
3,139 Agilent Technologies, Inc. (b) .................... 115,327
------------
ENERGY EQUIPMENT & SERVICES - 0.4%
785 Baker Hughes, Inc. ................................ 63,664
------------
FOOD PRODUCTS - 1.0%
4,503 Campbell Soup Company ............................. 160,892
------------
HEALTH CARE PROVIDERS & SERVICES - 0.6%
1,169 Laboratory Corp. of America Holdings (b) .......... 88,295
------------
LEISURE EQUIPMENT & PRODUCTS - 1.4%
11,170 Mattel, Inc. ...................................... 212,677
------------
LIFE SCIENCES TOOLS & SERVICES - 0.5%
950 Waters Corp. (b) .................................. 75,117
------------
MACHINERY - 5.9%
17,057 PACCAR, Inc. ...................................... 929,265
------------
MEDIA - 5.1%
35,059 DIRECTV Group (The), Inc. (b) ..................... 810,564
------------
OIL, GAS & CONSUMABLE FUELS - 11.6%
5,321 Chevron Corp. ..................................... 496,609
14,220 Exxon Mobil Corp. ................................. 1,332,272
------------
1,828,881
------------
PHARMACEUTICALS - 11.3%
26,804 Johnson & Johnson ................................. 1,787,827
------------
See Notes to Financial Statements. Page 29
S&P(R) TARGET 24 PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.3%
3,873 Boston Properties, Inc. ........................... $ 355,580
------------
SOFTWARE - 17.4%
77,046 Microsoft Corp. ................................... 2,742,838
------------
TOBACCO - 0.6%
1,852 UST, Inc. ......................................... 101,490
------------
TOTAL INVESTMENTS - 98.4% ......................... 15,533,631
(Cost $14,951,993)
NET OTHER ASSETS AND LIABILITIES - 1.6% ......... 255,606
------------
NET ASSETS - 100.0% ............................... $ 15,789,237
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Security is fair valued and value is determined in accordance with
procedures adopted by the Board of Trustees.
Page 30 See Notes to Financial Statements.
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 99.5%
COMMUNICATIONS EQUIPMENT - 22.9%
26,201 Cisco Systems, Inc. (b) ........................... $ 709,261
16,628 Research In Motion Ltd. (b) ....................... 1,885,615
------------
2,594,876
------------
HOTELS, RESTAURANTS & LEISURE - 7.6%
7,663 Wynn Resorts Ltd. ................................. 859,252
------------
IT SERVICES - 5.2%
13,057 Infosys Technologies Ltd., ADR .................... 592,266
------------
MACHINERY - 7.9%
16,407 PACCAR, Inc. ...................................... 893,853
------------
MEDIA - 5.7%
16,503 Liberty Global, Inc., Class A (b) ................. 646,753
------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 13.2%
11,869 Lam Research Corp. (b) ............................ 513,097
28,940 NVIDIA Corp. (b). ................................. 984,539
------------
1,497,636
------------
SOFTWARE - 19.9%
20,528 Check Point Software Technologies Ltd. (b) ........ 450,795
23,959 Microsoft Corp. ................................... 852,940
41,768 Oracle Corp. (b) .................................. 943,122
------------
2,246,857
------------
SPECIALTY RETAIL - 8.4%
18,929 American Eagle Outfitters, Inc. ................... 393,155
18,847 Bed Bath & Beyond, Inc. (b) ....................... 553,913
------------
947,068
------------
WIRELESS TELECOMMUNICATION SERVICES - 8.7%
8,315 Millicom International Cellular S.A. (b) .......... 980,671
------------
TOTAL INVESTMENTS - 99.5% ......................... 11,259,232
(Cost $10,351,039)
NET OTHER ASSETS AND LIABILITIES - 0.5% ........... 56,781
------------
NET ASSETS - 100.0% ............................... $ 11,316,013
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
See Notes to Financial Statements. Page 31
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY KNOWN AS FIRST TRUST
10 UNCOMMON VALUES PORTFOLIO)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - 97.6%
AEROSPACE & DEFENSE - 0.9%
1,022 Esterline Technologies Corp. (b) .................. $ 52,888
779 Triumph Group, Inc. ............................... 64,151
------------
117,039
------------
AIRLINES - 0.7%
1,415 Continental Airlines, Inc., Class B (b) ........... 31,484
4,748 Mesa Air Group, Inc. (b) .......................... 14,671
1,609 Skywest, Inc. ..................................... 43,202
------------
89,357
------------
AUTO COMPONENTS - 0.2%
2,739 Standard Motor Products, Inc. ..................... 22,350
------------
AUTOMOBILES - 2.1%
807 Daimler AG ........................................ 77,173
4,081 Harley-Davidson, Inc. ............................. 190,624
------------
267,797
------------
CAPITAL MARKETS - 0.2%
4,117 LaBranche & Company, Inc. (b). .................... 20,750
------------
CHEMICALS - 8.3%
1,499 Albemarle Corp. ................................... 61,834
3,768 Lubrizol (The) Corp. .............................. 204,075
771 OM Group, Inc. (b) ................................ 44,363
5,603 PolyOne Corp. (b). ................................ 36,868
4,924 Potash Corp. of Saskatchewan, Inc. ................ 708,859
------------
1,055,999
------------
COMMERCIAL BANKS - 3.5%
7,989 Huntington Bancshares, Inc. ....................... 117,918
621 Kookmin Bank, ADR ................................. 45,532
2,530 PNC Financial Services Group, Inc. ................ 166,095
5,026 Regions Financial Corp. ........................... 118,865
------------
448,410
------------
COMMERCIAL SERVICES & SUPPLIES - 0.4%
1,440 Kimball International, Inc., Class B .............. 19,728
1,499 TeleTech Holdings, Inc. (b). ...................... 31,884
------------
51,612
------------
COMMUNICATIONS EQUIPMENT - 7.7%
8,618 Research In Motion Ltd. (b) ....................... 977,281
------------
COMPUTERS & PERIPHERALS - 0.3%
6,269 Palm, Inc. ........................................ 39,745
------------
CONTAINERS & PACKAGING - 0.3%
1,301 Rock-Tenn Company, Class A ........................ 33,058
------------
Page 32 See Notes to Financial Statements.
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY KNOWN AS FIRST TRUST
10 UNCOMMON VALUES PORTFOLIO) - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES - 1.7%
1,121 ING Groep N.V., ADR ............................... $ 43,618
3,864 JPMorgan Chase & Company .......................... 168,664
------------
212,282
------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.9%
1,850 BCE, Inc. ......................................... 73,519
13,062 BT Group PLC, ADR ................................. 704,303
2,728 Deutsche Telekom AG, ADR .......................... 59,116
1,798 France Telecom S.A., ADR .......................... 64,063
2,007 Nippon Telegraph & Telephone Corp., ADR ........... 49,493
1,649 Telecom Italia SpA, ADR ........................... 50,855
------------
1,001,349
------------
ELECTRIC UTILITIES - 8.5%
3,119 FirstEnergy Corp. ................................. 225,628
2,190 Korea Electric Power Corp., ADR ................... 45,662
6,715 Northeast Utilities ............................... 210,247
3,378 Pepco Holdings, Inc. .............................. 99,077
3,741 Pinnacle West Capital Corp. ....................... 158,656
5,237 Sierra Pacific Resources .......................... 88,924
5,142 UniSource Energy Corp. ............................ 162,230
3,369 Westar Energy, Inc. ............................... 87,392
------------
1,077,816
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.9%
2,466 Agilysys, Inc. .................................... 37,286
2,768 Arrow Electronics, Inc. (b) ....................... 108,727
3,411 Avnet, Inc. (b) ................................... 119,283
2,572 CTS Corp. ......................................... 25,540
6,481 Vishay Intertechnology, Inc. (b) .................. 73,948
------------
364,784
------------
ENERGY EQUIPMENT & SERVICES - 2.0%
1,140 Bristow Group, Inc. (b). .......................... 64,581
440 Core Laboratories N.V. (b) ........................ 54,877
414 SEACOR Holdings, Inc. (b) ......................... 38,394
1,806 Tidewater, Inc. ................................... 99,077
------------
256,929
------------
FOOD STAPLES & RETAILING - 0.4%
1,484 Nash Finch Company ................................ 52,356
------------
GAS UTILITIES - 3.2%
4,819 AGL Resources, Inc. ............................... 181,387
1,279 Atmos Energy Corp. ................................ 35,863
4,344 ONEOK, Inc. ....................................... 194,481
------------
411,731
------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3%
1,204 Immucor, Inc. (b) ................................. 40,924
------------
See Notes to Financial Statements. Page 33
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY KNOWN AS FIRST TRUST
10 UNCOMMON VALUES PORTFOLIO) - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
HOTELS, RESTAURANTS & LEISURE - 0.2%
1,941 O'Charley's, Inc. ................................. $ 29,076
------------
HOUSEHOLD DURABLES - 2.2%
1,887 Beazer Homes USA, Inc. ............................ 14,020
2,531 Matsushita Electric Industrial Company Ltd., ADR .. 51,734
1,568 MDC Holdings, Inc. ................................ 58,220
871 Meritage Homes Corp. (b) .......................... 12,690
1,623 Ryland Group, Inc. ................................ 44,714
1,712 Tempur-Pedic International, Inc. .................. 44,461
2,764 Toll Brothers, Inc. (b) ........................... 55,446
------------
281,285
------------
INSURANCE - 8.6%
2,643 Aegon N.V. ........................................ 46,332
2,427 Allianz SE, ADR ................................... 51,574
2,447 American Financial Group, Inc. .................... 70,669
1,235 AXA SA, ADR ....................................... 49,042
4,137 Cincinnati Financial Corp. ........................ 163,577
1,797 Hanover Insurance Group (The), Inc. ............... 82,303
843 Infinity Property & Casualty Corp. ................ 30,457
2,843 Lincoln National Corp. ............................ 165,519
1,466 Manulife Financial Corp. .......................... 59,739
1,511 SCPIE Holdings, Inc. (b) .......................... 41,507
1,171 Sun Life Financial, Inc. .......................... 65,506
5,460 Unitrin, Inc. ..................................... 262,025
------------
1,088,250
------------
INTERNET & CATALOG RETAIL - 0.7%
821 Priceline.com, Inc. (b). .......................... 94,300
------------
LEISURE EQUIPMENT & PRODUCTS - 1.8%
2,470 Hasbro, Inc. ...................................... 63,183
1,881 Jakks Pacific, Inc. (b) ........................... 44,410
6,089 Mattel, Inc. ...................................... 115,934
------------
223,527
------------
MACHINERY - 0.8%
2,975 Timken Company .................................... 97,729
------------
MEDIA - 3.5%
19,110 DIRECTV Group (The), Inc. (b) ..................... 441,823
------------
METALS & MINING - 3.3%
1,576 Allegheny Technologies, Inc. ...................... 136,166
1,611 Barrick Gold Corp. ................................ 67,742
1,065 Brush Engineered Materials, Inc. (b) .............. 39,618
600 POSCO, ADR ........................................ 90,246
5,003 Worthington Industries, Inc. ...................... 89,454
------------
423,226
------------
Page 34 See Notes to Financial Statements.
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY KNOWN AS FIRST TRUST
10 UNCOMMON VALUES PORTFOLIO) - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
MULTI-UTILITIES - 9.3%
1,623 Avista Corp. ...................................... $ 34,959
7,448 Black Hills Corp. ................................. 328,457
3,890 DTE Energy Company ................................ 171,004
11,101 Energy East Corp. ................................. 302,058
2,824 PNM Resources, Inc. ............................... 60,575
3,471 Puget Energy, Inc. ................................ 95,210
4,622 SCANA Corp. ....................................... 194,817
------------
1,187,080
------------
MULTILINE RETAIL - 1.2%
4,004 Nordstrom, Inc. ................................... 147,067
------------
OIL, GAS & CONSUMABLE FUELS - 5.0%
1,126 Cimarex Energy Company ............................ 47,258
1,064 Encana Corp. ...................................... 72,309
739 ENI SpA, ADR ...................................... 53,526
2,696 Forest Oil Corp. (b). ............................. 137,065
980 Petroleo Brasileiro S.A., ADR ..................... 112,935
2,224 Pioneer Natural Resources Company ................. 108,620
1,435 Repsol YPF S.A., ADR .............................. 51,129
708 Royal Dutch Shell PLC, ADR ........................ 59,614
------------
642,456
------------
PAPER & FOREST PRODUCTS - 1.9%
3,366 Buckeye Technologies, Inc. (b). ................... 42,075
6,245 MeadWestvaco Corp. ................................ 195,468
------------
237,543
------------
PERSONAL PRODUCTS - 0.2%
1,039 NBTY, Inc. (b) .................................... 28,469
------------
PHARMACEUTICALS - 0.3%
1,693 Alpharma, Inc., Class A (b). ...................... 34,114
------------
ROAD & RAIL - 0.4%
4,089 Avis Budget Group, Inc. (b) ....................... 53,157
------------
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 3.3%
1,797 MKS Instruments, Inc. (b) ......................... 34,395
8,367 NVIDIA Corp. (b). ................................. 284,645
3,635 Pericom Semiconductor Corp. (b) ................... 67,975
2,507 Photronics, Inc. (b) .............................. 31,262
------------
418,277
------------
SPECIALTY RETAIL - 1.2%
3,504 American Eagle Outfitters, Inc. ................... 72,778
1,445 Guess?, Inc. ...................................... 54,751
1,405 Sonic Automotive, Inc., Class A ................... 27,201
------------
154,730
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.2%
1,009 Steven Madden Ltd. (b) ............................ 20,180
------------
See Notes to Financial Statements. Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (FORMERLY KNOWN AS FIRST TRUST
10 UNCOMMON VALUES PORTFOLIO) - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- --------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
THRIFTS & MORTGAGE FINANCE - 0.6%
563 Downey Financial Corp. ............................ $ 17,515
2,729 Flagstar Bancorp, Inc. ............................ 19,021
2,481 Fremont General Corp. ............................. 8,683
1,921 IndyMac Bancorp, Inc. ............................. 11,430
1,856 PMI Group (The), Inc. ............................. 24,648
------------
81,297
------------
TRADING COMPANIES & DISTRIBUTORS - 0.5%
3,441 United Rentals, Inc. (b). ......................... 63,177
------------
WIRELESS TELECOMMUNICATION SERVICES - 0.9%
3,136 NTT DoCoMo, Inc., ADR ............................. 51,430
1,793 Vodafone Group PLC, ADR ........................... 66,915
------------
118,345
------------
TOTAL INVESTMENTS - 97.6% ......................... 12,406,677
(Cost $12,382,460)
NET OTHER ASSETS AND LIABILITIES - 2.4% 301,164
------------
NET ASSETS - 100.0% ............................... $ 12,707,841
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
Page 36 See Notes to Financial Statements.
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------------------- ------------
COMMON STOCKS - 98.9%
AIRLINES - 1.3%
26,611 Continental Airlines, Inc., Class B (a) .......... $ 592,095
------------
AUTOMOBILES - 4.0%
38,023 Harley-Davidson, Inc. ............................ 1,776,054
------------
CHEMICALS - 21.9%
28,164 Albemarle Corp. .................................. 1,161,765
8,542 OM Group, Inc. (a) ............................... 491,507
55,306 Potash Corp. of Saskatchewan, Inc. ............... 7,961,852
------------
9,615,124
------------
COMMERCIAL SERVICES & SUPPLIES - 1.4%
14,333 Kimball International, Inc., Class B ............. 196,362
20,210 TeleTech Holdings, Inc. (a) ...................... 429,867
------------
626,229
------------
COMMUNICATIONS EQUIPMENT - 16.0%
62,059 Research In Motion Ltd. (a) ...................... 7,037,491
------------
CONTAINERS & PACKAGING - 0.8%
12,957 Rock-Tenn Company, Class A ....................... 329,237
------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 5.4%
43,998 BT Group PLC, ADR ................................ 2,372,372
------------
ENERGY EQUIPMENT & SERVICES - 2.1%
7,400 Core Laboratories N.V. (b) ....................... 922,928
------------
HEALTH CARE EQUIPMENT & SERVICES - 1.5%
20,017 Immucor, Inc. (b) ................................ 680,378
------------
HOUSEHOLD DURABLES - 1.4%
24,114 Tempur-Pedic International, Inc. ................. 626,240
------------
INTERNET & CATALOG RETAIL - 2.8%
10,737 Priceline.com, Inc. (b) .......................... 1,233,252
------------
LEISURE EQUIPMENT & PRODUCTS - 7.8%
46,427 Hasbro, Inc. ..................................... 1,187,603
118,730 Mattel, Inc. ..................................... 2,260,619
------------
3,448,222
------------
MEDIA - 5.7%
107,667 DIRECTV Group (The), Inc. (a) .................... 2,489,261
------------
METALS & MINING - 6.6%
29,263 Allegheny Technologies, Inc. ..................... 2,528,323
10,591 Brush Engineered Materials, Inc. (a) ............. 393,985
------------
2,922,308
------------
MULTILINE RETAIL - 4.6%
55,256 Nordstrom, Inc. .................................. 2,029,553
------------
PERSONAL PRODUCTS - 1.2%
19,558 NBTY, Inc. (b) ................................... 535,889
------------
See Notes to Financial Statements. Page 37
VALUE LINE(R) TARGET 25 PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2007
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------------------- ------------
COMMON STOCKS - (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 8.4%
107,987 NVIDIA Corp. (a) ................................. $ 3,673,718
------------
SPECIALTY RETAIL - 5.5%
65,896 American Eagle Outfitters, Inc. .................. 1,368,660
27,159 Guess?, Inc. ..................................... 1,029,054
------------
2,397,714
------------
TEXTILES, APPAREL & LUXURY GOODS - 0.5%
10,033 Steven Madden Ltd. (a) ........................... 200,660
------------
TOTAL INVESTMENTS - 98.9% ........................ 43,508,725
(Cost $36,346,168)
NET OTHER ASSETS AND LIABILITIES - 1.1% .......... 489,572
------------
NET ASSETS - 100.0% .............................. $ 43,998,297
============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
ADR American Depositary Receipt
Page 38 See Notes to Financial Statements.
This Page Left Blank Intentionally.
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2007
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ -------------
ASSETS:
Investments, at value (1) ......................................... $ 173,035,011 $ 16,048,796 $ 81,762,017 $ 171,415,743
Cash .............................................................. 1,102,309 201,010 3,367,158 5,811,551
Prepaid expenses .................................................. -- -- -- --
Receivables:
Dividends ...................................................... 365,822 -- 210,592 439,991
Dividend reclaim ............................................... 7,938 -- -- --
Interest ....................................................... 7,763 1,256 12,036 11,678
Membership Interest purchased .................................. -- -- -- --
------------- ------------ ------------ -------------
Total Assets ................................................ 174,518,843 16,251,062 85,351,803 177,678,963
------------- ------------ ------------ -------------
LIABILITIES:
Payables:
Investment advisory fees ....................................... 89,341 15,483 43,595 88,830
Membership Interest servicing fees ............................. 142,910 13,533 68,892 139,254
12b-1 service fees ............................................. 37,226 3,581 18,165 37,012
Custodian fees ................................................. 16,631 413 1,755 1,306
Administrative fees ............................................ 3,871 372 1,892 3,849
Audit fees ..................................................... 16,250 16,250 16,250 16,250
Legal fees ..................................................... 16,134 2,575 8,468 4,367
Printing fees .................................................. 4,277 4,277 4,277 4,277
Investment securities purchased ................................ 8,935 -- 2,232,928 3,065,359
Membership Interest redeemed ................................... 37,659 21,829 49,034 558,762
Accrued expenses and other payables ............................... 11,496 840 6,421 18,348
------------- ------------ ------------ -------------
Total Liabilities ........................................... 384,730 79,153 2,451,677 3,937,614
------------- ------------ ------------ -------------
NET ASSETS ........................................................ $ 174,134,113 $ 16,171,909 $ 82,900,126 $ 173,741,349
============= ============ ============ =============
(1) Investments, at cost .......................................... $ 154,965,694 $ 16,005,855 $ 84,273,704 $ 157,986,104
============= ============ ============ =============
NET ASSETS CONSIST OF:
Paid-in capital ................................................... $ 112,022,146 $ 12,067,830 $ 72,240,489 $ 128,362,706
Accumulated net investment income (loss) .......................... 2,547,115 1,036,781 4,169,657 7,629,905
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions .................................. 41,495,535 3,024,357 9,001,667 24,326,011
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions .................................. 18,069,317 42,941 (2,511,687) 13,422,727
------------- ------------ ------------ -------------
NET ASSETS ........................................................ $ 174,134,113 $ 16,171,909 $ 82,900,126 $ 173,741,349
============= ============ ============ =============
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) ......................................... $ 12.83 $ 10.63 $ 11.79 $ 23.96
============= ============ ============ =============
Number of Membership Interests outstanding ........................ 13,576,959 1,521,840 7,033,344 7,250,311
============= ============ ============ =============
Page 40 See Notes to Financial Statements.
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------- ------------ ------------- -------------
ASSETS:
Investments, at value (1) ......................................... $ 15,533,631 $ 11,259,232 $ 12,406,677 $ 43,508,725
Cash .............................................................. 212,631 207,384 533,689 445,402
Prepaid expenses .................................................. 1,417 -- -- --
Receivables:
Dividends ...................................................... 43,811 18,937 22,191 62,349
Dividend reclaim ............................................... -- -- -- --
Interest ....................................................... 835 655 3,357 759
Membership Interest purchased .................................. 47,704 -- 24,856 83,083
------------- ------------ ------------ -------------
Total Assets ................................................. 15,840,029 11,486,208 12,990,770 44,100,318
------------- ------------ ------------ -------------
LIABILITIES:
Payables:
Investment advisory fees ....................................... 9,721 7,325 5,678 22,375
Membership Interest servicing fees ............................. 12,481 9,636 5,105 34,527
12b-1 service fees ............................................. 3,369 2,423 1,960 9,323
Custodian fees ................................................. 1,044 1,049 561 2,621
Administrative fees ............................................ 350 252 204 970
Audit fees ..................................................... 16,250 16,250 16,250 16,250
Legal fees ..................................................... 2,252 949 509 3,726
Printing fees .................................................. 4,277 4,277 4,277 4,277
Investment securities purchased ................................ -- -- 246,981 --
Membership Interest redeemed ................................... -- 127,239 -- --
Accrued expenses and other payables ............................... 1,048 795 1,404 7,952
------------- ------------ ------------ -------------
Total Liabilities ............................................ 50,792 170,195 282,929 102,021
------------- ------------ ------------ -------------
NET ASSETS ........................................................ $ 15,789,237 $ 11,316,013 $ 12,707,841 $ 43,998,297
============= ============ ============ =============
(1) Investments, at cost .......................................... $ 14,951,993 $ 10,351,039 $ 12,382,460 $ 36,346,168
============= ============ ============ =============
NET ASSETS CONSIST OF:
Paid-in capital ................................................... $ 13,426,892 $ 11,470,094 $ 28,451,626 $ 26,787,821
Accumulated net investment income (loss) .......................... 131 (419,439) (223,659) (922,246)
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions .................................. 1,780,576 (642,835) (15,544,343) 10,970,165
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions .................................. 581,638 908,193 24,217 7,162,557
------------- ------------ ------------ -------------
NET ASSETS ........................................................ $ 15,789,237 $ 11,316,013 $ 12,707,841 $ 43,998,297
============= ============ ============ =============
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) ......................................... $ 9.66 $ 12.38 $ 5.75 $ 5.91
============= ============ ============ =============
Number of Membership Interests outstanding ........................ 1,633,671 914,132 2,208,296 7,448,564
============= ============ ============ =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements. Page 41
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2007
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ -------------
INVESTMENT INCOME:
Dividends ......................................................... $ 3,674,010 $ 521,242 $ 3,201,463 $ 6,270,022
Foreign withholding tax on dividend income ........................ (179,773) -- -- --
Interest .......................................................... 56,038 10,349 49,725 118,987
------------- ------------ ------------ -------------
Total investment income ........................................ 3,550,275 531,591 3,251,188 6,389,009
------------- ------------ ------------ -------------
EXPENSES:
Investment advisory fees .......................................... 1,136,286 128,494 570,530 971,823
Membership Interest servicing fees ................................ 614,162 69,410 308,531 524,702
12b-1 service fees ................................................ 473,452 53,539 237,721 404,926
Fund accounting fees .............................................. 104,160 11,779 52,304 89,084
Custodian fees .................................................... 78,475 21,785 31,484 109,954
Administration fees ............................................... 49,239 5,568 24,726 42,112
Audit fees ........................................................ 17,075 17,075 17,075 17,075
Legal fees ........................................................ 29,884 7,567 22,367 34,660
Printing fees ..................................................... 10,423 10,423 10,423 10,423
Trustees' fees and expenses ....................................... 15,061 1,701 7,658 11,060
Other ............................................................. 27,388 5,427 11,345 29,886
------------- ------------ ------------ -------------
Total expenses ................................................. 2,555,605 332,768 1,294,164 2,245,705
Fees waived or expenses reimbursed by the investment advisor ... -- (18,107) -- --
------------- ------------ ------------ -------------
Net expenses ...................................................... 2,555,605 314,661 1,294,164 2,245,705
------------- ------------ ------------ -------------
NET INVESTMENT INCOME (LOSS) ...................................... 994,670 216,930 1,957,024 4,143,304
------------- ------------ ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .................................................... 16,852,935 1,956,422 10,059,289 18,645,507
Foreign currency transactions .................................. -- -- -- 17,392
------------- ------------ ------------ -------------
Net realized gain (loss) .......................................... 16,852,935 1,956,422 10,059,289 18,662,899
------------- ------------ ------------ -------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................... (1,461,244) (2,105,131) (11,223,606) (7,345,890)
Foreign currency translation ................................... -- -- -- (10,309)
------------- ------------ ------------ -------------
Net change in unrealized appreciation (depreciation) .............. (1,461,244) (2,105,131) (11,223,606) (7,356,199)
------------- ------------ ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ........................... 15,391,691 (148,709) (1,164,317) 11,306,700
------------- ------------ ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $ 16,386,361 $ 68,221 $ 792,707 $ 15,450,004
============= ============ ============ =============
Page 42 See Notes to Financial Statements.
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------- ------------ ------------- -------------
INVESTMENT INCOME:
Dividends ......................................................... $ 288,664 $ 91,552 $ 162,262 $ 420,077
Foreign withholding tax on dividend income ........................ -- -- (347) (3,000)
Interest .......................................................... 9,526 11,806 5,440 18,889
------------- ------------ ------------ -------------
Total investment income ........................................ 298,190 103,358 167,355 435,966
------------- ------------ ------------ -------------
EXPENSES:
Investment advisory fees .......................................... 94,201 54,831 34,312 251,765
Membership Interest servicing fees ................................ 50,838 29,583 18,499 136,004
12b-1 service fees ................................................ 39,250 22,847 14,297 104,902
Fund accounting fees .............................................. 8,635 5,026 3,145 23,078
Custodian fees .................................................... 10,650 14,330 6,731 18,363
Administration fees ............................................... 4,082 2,376 1,487 10,910
Audit fees ........................................................ 17,075 17,075 17,075 17,075
Legal fees ........................................................ 598 715 583 5,621
Printing fees ..................................................... 10,423 10,423 10,423 10,423
Trustees' fees and expenses ....................................... 1,220 694 419 3,332
Other ............................................................. 6,894 3,127 3,721 9,355
------------- ------------ ------------ -------------
Total expenses ................................................. 243,866 161,027 110,692 590,828
Fees waived or expenses reimbursed by the investment advisor ... (13,114) (26,812) (31,897) --
------------- ------------ ------------ -------------
Net expenses ...................................................... 230,752 134,215 78,795 590,828
------------- ------------ ------------ -------------
NET INVESTMENT INCOME (LOSS) ...................................... 67,438 (30,857) 88,560 (154,862)
------------- ------------ ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .................................................... 616,434 1,513,814 691,356 807,899
Foreign currency transactions .................................. -- -- -- --
------------- ------------ ------------ -------------
Net realized gain (loss) .......................................... 616,434 1,513,814 691,356 807,899
------------- ------------ ------------ -------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................... (102,231) 70,115 (536,432) 6,072,635
Foreign currency translation ................................... -- -- -- --
------------- ------------ ------------ -------------
Net change in unrealized appreciation (depreciation) .............. (102,231) 70,115 (536,432) 6,072,635
------------- ------------ ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ........................... 514,203 1,583,929 154,924 6,880,534
------------- ------------ ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $ 581,641 $ 1,553,072 $ 243,484 $ 6,725,672
============= ============ ============ =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements. Page 43
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2007
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------- -------------
OPERATIONS:
Net investment income (loss) ..................................... $ 994,670 $ 216,930 $ 1,957,024 $ 4,143,304
Net realized gain (loss) ......................................... 16,852,935 1,956,422 10,059,289 18,662,899
Net change in unrealized appreciation (depreciation) ............. (1,461,244) (2,105,131) (11,223,606) (7,356,199)
------------- ------------ ------------- -------------
Net increase (decrease) in net assets resulting from operations .. 16,386,361 68,221 792,707 15,450,004
Net increase (decrease) in net assets from Membership
Interest transactions ......................................... (46,120,091) (11,850,865) (18,798,819) 29,454,975
------------- ------------ ------------- -------------
Net increase (decrease) in net assets ............................ (29,733,730) (11,782,644) (18,006,112) 44,904,979
NET ASSETS:
Beginning of period .............................................. 203,867,843 27,954,553 100,906,238 128,836,370
------------- ------------ ------------- -------------
End of period .................................................... $ 174,134,113 $ 16,171,909 $ 82,900,126 $ 173,741,349
============= ============ ============= =============
Accumulated net investment income (loss) at end of period ........ $ 2,547,115 $ 1,036,781 $ 4,169,657 $ 7,629,905
============= ============ ============= =============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2006
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------- -------------
OPERATIONS:
Net investment income (loss) ..................................... $ 1,011,630 $ 271,334 $ 1,743,800 $ 2,355,549
Net realized gain (loss) ......................................... 12,074,762 1,496,845 (991,444) 2,833,561
Net change in unrealized appreciation (depreciation) ............. 6,152,339 2,372,141 12,640,964 18,098,166
------------- ------------ ------------- -------------
Net increase (decrease) in net assets resulting from operations .. 19,238,731 4,140,320 13,393,320 23,287,276
Net increase (decrease) in net assets from Membership
Interest transactions ......................................... 1,736,753 12,203,112 29,074,615 68,758,271
------------- ------------ ------------- -------------
Net increase (decrease) in net assets ............................ 20,975,484 16,343,432 42,467,935 92,045,547
NET ASSETS:
Beginning of period .............................................. 182,892,359 11,611,121 58,438,303 36,790,823
------------- ------------ ------------- -------------
End of period .................................................... $ 203,867,843 $ 27,954,553 $ 100,906,238 $ 128,836,370
============= ============ ============= =============
Accumulated net investment income (loss) at end of period ........ $ 1,552,445 $ 819,851 $ 2,212,633 $ 3,486,601
============= ============ ============= =============
Page 44 See Notes to Financial Statements.
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------ ------------ ------------- -------------
OPERATIONS:
Net investment income (loss) ..................................... $ 67,438 $ (30,857) $ 88,560 $ (154,862)
Net realized gain (loss) ......................................... 616,434 1,513,814 691,356 807,899
Net change in unrealized appreciation (depreciation) ............. (102,231) 70,115 (536,432) 6,072,635
------------ ------------ ------------- -------------
Net increase (decrease) in net assets resulting from operations .. 581,641 1,553,072 243,484 6,725,672
Net increase (decrease) in net assets from Membership
Interest transactions ......................................... (849,064) 2,445,352 6,730,425 (6,502,992)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets ............................ (267,423) 3,998,424 6,973,909 222,680
NET ASSETS:
Beginning of period .............................................. 16,056,660 7,317,589 5,733,932 43,775,617
------------ ------------ ------------- -------------
End of period .................................................... $ 15,789,237 $ 11,316,013 $ 12,707,841 $ 43,998,297
============ ============ ============= =============
Accumulated net investment income (loss) at end of period ........ $ 131 $ (419,439) $ (223,659) $ (922,246)
============ ============ ============= =============
FIRST TRUST
S&P(R) NASDAQ(R) 10 UNCOMMON VALUE LINE(R)
TARGET 24 TARGET 15 VALUES TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------ ------------ ------------- -------------
OPERATIONS:
Net investment income (loss) ..................................... $ (65,939) $ (73,951) $ 72,492 $ (427,260)
Net realized gain (loss) ......................................... 600,055 401,679 (305,030) 5,648,868
Net change in unrealized appreciation (depreciation) ............. (176,427) 226,687 487,348 (4,223,703)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets resulting from operations .. 357,689 554,415 254,810 997,905
Net increase (decrease) in net assets from Membership
Interest transactions ......................................... (2,350,331) 211,629 (1,525,206) (11,294,704)
------------ ------------ ------------- -------------
Net increase (decrease) in net assets ............................ (1,992,642) 766,044 (1,270,396) (10,296,799)
NET ASSETS:
Beginning of period .............................................. 18,049,302 6,551,545 7,004,328 54,072,416
------------ ------------ ------------- -------------
End of period .................................................... $ 16,056,660 $ 7,317,589 $ 5,733,932 $ 43,775,617
============ ============ ============= =============
Accumulated net investment income (loss) at end of period ........ $ (67,307) $ (388,582) $ (312,219) $ (767,384)
============ ============ ============= =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements. Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2007
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------------- -------------
AMOUNT:
Sold ........................ $ 33,198,995 $ 9,054,867 $ 31,501,103 $ 110,666,005
Redeemed .................... (79,319,086) (20,905,732) (50,299,922) (81,211,030)
------------ ------------ --------------- -------------
Net increase (decrease) ..... $(46,120,091) $(11,850,865) $ (18,798,819) $ 29,454,975
============ ============ =============== =============
MEMBERSHIP INTEREST:
Sold ........................ 2,637,071 835,612 2,623,494 4,715,978
Redeemed .................... (6,457,536) (1,960,550) (4,245,542) (3,559,590)
------------ ------------ --------------- -------------
Net increase (decrease) ..... (3,820,465) (1,124,938) (1,622,048) 1,156,388
============ ============ =============== =============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2006
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------------- -------------
AMOUNT:
Sold ........................ $ 57,979,776 $ 25,748,489 $ 71,866,833 $ 82,240,730
Redeemed .................... (56,243,023) (13,545,377) (42,792,218) (13,482,459)
------------ ------------ --------------- -------------
Net increase (decrease) ..... $ 1,736,753 $ 12,203,112 $ 29,074,615 $ 68,758,271
============ ============ =============== =============
MEMBERSHIP INTEREST:
Sold ........................ 5,322,595 2,633,412 6,615,423 4,474,962
Redeemed .................... (5,325,032) (1,367,662) (3,879,344) (790,977)
------------ ------------ --------------- -------------
Net increase (decrease) ..... (2,437) 1,265,750 2,736,079 3,683,985
============ ============ =============== =============
Page 46 See Notes to Financial Statements.
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO(a) PORTFOLIO
------------ ------------ ------------ -------------
AMOUNT:
Sold ........................ $ 6,366,206 $ 12,131,317 $ 9,181,905 $ 14,539,574
Redeemed .................... (7,215,270) (9,685,965) (2,451,480) (21,042,566)
------------ ------------ ------------ -------------
Net increase (decrease) ..... $ (849,064) $ 2,445,352 $ 6,730,425 $ (6,502,992)
============ ============ ============ =============
MEMBERSHIP INTEREST:
Sold ........................ 669,130 1,062,892 1,579,259 2,574,667
Redeemed .................... (765,671) (868,175) (424,625) (3,878,165)
------------ ------------ ------------ -------------
Net increase (decrease) ..... (96,541) 194,717 1,154,634 (1,303,498)
============ ============ ============ =============
FIRST TRUST
S&P(R) NASDAQ(R) 10 UNCOMMON VALUE LINE(R)
TARGET 24 TARGET 15 VALUES TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO(a) PORTFOLIO
------------ ------------ ------------ -------------
AMOUNT:
Sold ........................ $ 5,588,648 $ 2,758,286 $ 649,604 $ 14,735,448
Redeemed .................... (7,938,979) (2,546,657) (2,174,810) (26,030,152)
------------ ------------ ------------ -------------
Net increase (decrease) ..... $ (2,350,331) $ 211,629 $ (1,525,206) $ (11,294,704)
============ ============ ============ =============
MEMBERSHIP INTEREST:
Sold ........................ 615,057 278,599 120,859 2,947,802
Redeemed .................... (885,077) (260,692) (405,925) (5,316,022)
------------ ------------ ------------ -------------
Net increase (decrease) ..... (270,020) 17,907 (285,066) (2,368,220)
============ ============ ============ =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements. Page 47
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
---------- ---------- ----------- ----------- ----------
Net asset value, beginning of period ............... $ 11.72 $ 10.51 $ 9.80 $ 8.73 $ 6.47
---------- ---------- ----------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 0.07 (a) 0.06 0.03 0.01 (a) 0.02
Net realized and unrealized gain (loss) ............ 1.04 1.15 0.68 1.06 2.24
---------- ---------- ----------- ----------- ----------
Total from investment operations ................... 1.11 1.21 0.71 1.07 2.26
---------- ---------- ----------- ----------- ----------
Net asset value, end of period ..................... $ 12.83 $ 11.72 $ 10.51 $ 9.80 $ 8.73
========== ========== =========== =========== ==========
TOTAL RETURN (b) ................................... 9.47% 11.51% 7.24% 12.26% 34.93%
========== ========== =========== =========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $ 174,134 $ 203,868 $ 182,892 $ 108,473 $ 20,488
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ............................. 1.35% 1.37% 1.48% 2.07% 1.69%
Ratio of operating expenses to average
net assets ...................................... 1.35% 1.37% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets ...................................... 0.53% 0.54% 0.26% 0.14% 0.41%
Portfolio turnover rate ............................ 88% 94% 76% 43% 72%
- ----------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
Page 48 See Notes to Financial Statements.
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
---------- ---------- ----------- ----------- ----------
Net asset value, beginning of period ............... $ 10.56 $ 8.41 $ 8.69 $ 8.37 $ 6.98
---------- ---------- ----------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 0.11 (a) 0.14 (a) 0.14 (a) 0.15 (a) 0.22
Net realized and unrealized gain (loss) ............ (0.04) 2.01 (0.42) 0.17 1.17
---------- ---------- ----------- ----------- ----------
Total from investment operations ................... 0.07 2.15 (0.28) 0.32 1.39
---------- ---------- ----------- ----------- ----------
Net asset value, end of period ..................... $ 10.63 $ 10.56 $ 8.41 $ 8.69 $ 8.37
========== ========== =========== =========== ==========
TOTAL RETURN (b) ................................... 0.66% 25.56% (3.22)% 3.82% 19.91%
========== ========== =========== =========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $ 16,172 $ 27,955 $ 11,611 $ 12,749 $ 4,268
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ............................. 1.56% 1.47% 1.59% 2.33% 3.27%
Ratio of operating expenses to average
net assets ...................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets ...................................... 1.01% 1.47% 1.66% 1.84% 2.37%
Portfolio turnover rate ............................ 98% 82% 145% 57% 78%
- ----------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
See Notes to Financial Statements. Page 49
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 (a)
---------- ---------- ------------
Net asset value, beginning of period ............... $ 11.66 $ 9.87 $ 10.00
---------- ---------- ------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................. 0.25 (b) 0.23 (b) 0.12 (b)
Net realized and unrealized gain (loss) ............ (0.12) 1.56 (0.25)
---------- ---------- ------------
Total from investment operations ................... 0.13 1.79 (0.13)
---------- ---------- ------------
Net asset value, end of period ..................... $ 11.79 $ 11.66 $ 9.87
========== ========== ============
TOTAL RETURN (c) ................................... 1.12% 18.14% (1.30)%
========== ========== ============
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............... $ 82,900 $ 100,906 $ 58,438
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ............................. 1.36% 1.37% 1.52%(d)
Ratio of operating expenses to average net assets .. 1.36% 1.37% 1.47%(d)
Ratio of net investment income to average
net assets ...................................... 2.06% 2.11% 2.00%(d)
Portfolio turnover rate ............................ 83% 78% 18%
- ----------
(a) The Portfolio commenced operations on May 2, 2005.
(b) Per Membership Interest values have been calculated using the average
share method.
(c) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
(d) Annualized.
Page 50 See Notes to Financial Statements.
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 (a) 12/31/04 12/31/03
---------- ---------- ------------ ----------- ----------
Net asset value, beginning of period .............. $ 21.14 $ 15.27 $ 13.86 $ 11.05 $ 8.24
---------- ---------- ------------ ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.60 (b) 0.63 (b) 0.35 (b) 0.27 (b) 0.33
Net realized and unrealized gain (loss) ........... 2.22 5.24 1.06 2.54 2.48
---------- ---------- ------------ ----------- ----------
Total from investment operations .................. 2.82 5.87 1.41 2.81 2.81
---------- ---------- ------------ ----------- ----------
Net asset value, end of period .................... $ 23.96 $ 21.14 $ 15.27 $ 13.86 $ 11.05
========== ========== ============ =========== ==========
TOTAL RETURN (c) .................................. 13.34% 38.44% 10.17% 25.43% 34.10%
========== ========== ============ =========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .............. $ 173,741 $ 128,836 $ 36,791 $ 22,618 $ 3,050
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ............................ 1.39% 1.47% 1.61% 2.67% 4.51%
Ratio of operating expenses to average
net assets ..................................... 1.39% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets ..................................... 2.56% 3.45% 2.49% 2.18% 3.36%
Portfolio turnover rate ........................... 60% 33% 70% 49% 66%
- ----------
(a) Effective May 2, 2005, based upon the determination of the Fund's Board of
Trustees, the Portfolio changed its name from the Global Target 15
Portfolio to the Global Dividend Target 15 Portfolio.
(b) Per Membership Interest values have been calculated using the average
share method.
(c) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
See Notes to Financial Statements. Page 51
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net asset value, beginning of period ............................. $ 9.28 $ 9.02 $ 8.66 $ 7.62 $ 6.14
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ..................................... 0.04 (a) (0.04) 0.02 (0.03) 0.03
Net realized and unrealized gain (loss) .......................... 0.34 0.30 0.34 1.07 1.45
-------- -------- -------- -------- --------
Total from investment operations ................................. 0.38 0.26 0.36 1.04 1.48
-------- -------- -------- -------- --------
Net asset value, end of period ................................... $ 9.66 $ 9.28 $ 9.02 $ 8.66 $ 7.62
======== ======== ======== ======== ========
TOTAL RETURN (b) ................................................. 4.10% 2.88% 4.16% 13.65% 24.10%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............................. $ 15,789 $ 16,057 $ 18,049 $ 14,158 $ 5,554
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................................... 1.55% 1.56% 1.58% 2.37% 2.89%
Ratio of operating expenses to average
net assets .................................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets ......................................... 0.43% (0.40)% 0.20% (0.51)% 0.46%
Portfolio turnover rate .......................................... 115% 106% 113% 104% 84%
- ----------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
Page 52 See Notes to Financial Statements.
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net asset value, beginning of period ........................ $ 10.17 $ 9.34 $ 9.04 $ 9.29 $ 6.83
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ......................................... (0.04) (a) (0.11) (a) (0.07) (a) (0.10) (a) (0.14)
Net realized and unrealized gain (loss) ..................... 2.25 0.94 0.37 (0.15) 2.60
-------- -------- -------- -------- --------
Total from investment operations ............................ 2.21 0.83 0.30 (0.25) 2.46
-------- -------- -------- -------- --------
Net asset value, end of period .............................. $ 12.38 $ 10.17 $ 9.34 $ 9.04 $ 9.29
======== ======== ======== ======== ========
TOTAL RETURN (b) ............................................ 21.73% 8.89% 3.32% (2.69)% 36.02%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........................ $ 11,316 $ 7,318 $ 6,552 $ 7,028 $ 5,073
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ...................................... 1.76% 1.84% 1.83% 2.52% 2.96%
Ratio of operating expenses to average
net assets ............................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment loss to average
net assets ............................................... (0.34)% (1.08)% (0.80)% (1.20)% (1.34)%
Portfolio turnover rate ..................................... 161% 92% 175% 117% 83%
- ----------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
See Notes to Financial Statements. Page 53
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 (a) 12/31/06 12/31/05 12/31/04 12/31/03
------------ -------- -------- -------- --------
Net asset value, beginning of period ...................... $ 5.44 $ 5.23 $ 5.20 $ 4.67 $ 3.41
------------ -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .............................. 0.09 (b) 0.06 (b) (0.01) (b) (0.02) (0.01)
Net realized and unrealized gain (loss) ................... 0.22 0.15 0.04 0.55 1.27
------------ -------- -------- -------- --------
Total from investment operations .......................... 0.31 0.21 0.03 0.53 1.26
------------ -------- -------- -------- --------
Net asset value, end of period ............................ $ 5.75 $ 5.44 $ 5.23 $ 5.20 $ 4.67
============ ======== ======== ======== ========
TOTAL RETURN (c) .......................................... 5.70% 4.02% 0.58% 11.35% 36.95%
============ ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ...................... $ 12,708 $ 5,734 $ 7,004 $ 9,803 $ 9,487
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed .................................... 1.92% 1.79% 1.69% 1.61% 2.36%
Ratio of operating expenses to average
net assets ............................................. 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss)
to average net assets .................................. 1.54% 1.14% (0.16)% (0.11)% (0.29)%
Portfolio turnover rate ................................... 130% 87% 92% 123% 117%
- ----------
(a) Effective on or about November 19, 2007, the Portfolio changed its name
from First Trust 10 Uncommon Values Portfolio to First Trust Target Focus
Four Portfolio. The Portfolio's investment strategy was also changed. The
performance figures provided reflect the Portfolio's performance prior to
the name change and the change in investment strategy. See Footnote 1.
(b) Per Membership Interest values have been calculated using the average
share method.
(c) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
Page 54 See Notes to Financial Statements.
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
-------- -------- -------- -------- --------
Net asset value, beginning of period ........................... $ 5.00 $ 4.86 $ 4.06 $ 3.34 $ 2.37
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................................ (0.02) (a) (0.04) (0.02) (a) (0.04) (a) (0.02)
Net realized and unrealized gain (loss) ........................ 0.93 0.18 0.82 0.76 0.99
-------- -------- -------- -------- --------
Total from investment operations ............................... 0.91 0.14 0.80 0.72 0.97
-------- -------- -------- -------- --------
Net asset value, end of period ................................. $ 5.91 $ 5.00 $ 4.86 $ 4.06 $ 3.34
======== ======== ======== ======== ========
TOTAL RETURN (b) ............................................... 18.20% 2.88% 19.70% 21.56% 40.93%
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........................... $ 43,998 $ 43,776 $ 54,072 $ 21,765 $ 4,936
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ......................................... 1.41% 1.41% 1.49% 2.28% 3.36%
Ratio of operating expenses to average
net assets .................................................. 1.41% 1.41% 1.47% 1.47% 1.47%
Ratio of net investment loss to average
net assets .................................................. (0.37)% (0.88)% (0.45)% (1.13)% (0.92)%
Portfolio turnover rate ........................................ 110% 124% 97% 87% 74%
- ----------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The total
return would have been lower if certain fees had not been waived and
expenses reimbursed by the investment advisor and administrator. The
returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk
charges, and sales charges. These expenses would reduce the overall
returns shown.
See Notes to Financial Statements. Page 55
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NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
1. FUND DESCRIPTION
First Defined Portfolio Fund, LLC (the "Registrant" or "Fund") was organized as
a Delaware limited liability company on January 8, 1999 under the laws of the
State of Delaware. The Registrant is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"), as a non-diversified, open-end management investment company. The
Registrant offers eight managed investment Portfolios as follows: Target Managed
VIP Portfolio, The Dow(R) DART 10 Portfolio, The Dow(R) Target Dividend
Portfolio, Global Dividend Target 15 Portfolio, S&P(R) Target 24 Portfolio,
NASDAQ(R) Target 15 Portfolio, First Trust Target Focus Four Portfolio (formerly
known as "First Trust 10 Uncommon Values Portfolio"), and Value Line(R) Target
25 Portfolio (each a "Portfolio," and collectively, the "Portfolios"). Under
Delaware law, a limited liability company does not issue shares of stock.
Instead, ownership rights are contained in Portfolio Membership Interests (each
an "Interest," and collectively, the "Interests"). Each Interest represents an
undivided interest in the net assets of the applicable Portfolio. Membership
Interests are not offered directly to the public. Membership Interests are sold
only to Prudential Annuities Life Assurance Corporation Variable Account B
("Account B"), a separate account of Prudential Annuities Life Assurance
Corporation ("Prudential"), to fund the benefits of variable annuity policies
(the "Policies") issued by Prudential. Account B is the sole member of the
Registrant. Account B's variable annuity owners who have Policy values allocated
to any of the Portfolios have indirect rights to the Membership Interests. On
January 1, 2008, American Skandia Life Assurance Corporation, a Prudential
Financial Company, legally changed its name to Prudential Annuities Life
Assurance Corporation. Accordingly, the name of American Skandia Life Assurance
Corporation Variable Account B was changed to Prudential Annuities Life
Assurance Corporation Variable Account B.
On December 11, 2006, the Board of Trustees approved the liquidation of the
First Trust Energy Portfolio, First Trust Financial Services Portfolio, First
Trust Pharmaceutical Portfolio and First Trust Technology Portfolio
(collectively, the "Sector Portfolios"). The Sector Portfolios were terminated
and liquidated by resolution of the Board of Trustees of the Fund as of March
16, 2007.
On November 19, 2007, the First Trust 10 Uncommon Values Portfolio changed its
name and investment strategy. The new name is First Trust Target Focus Four
Portfolio and the investment strategy of the Portfolio is as follows:
The Portfolio seeks to achieve its objective by investing in the common
stocks of companies which are selected by applying four separate uniquely
specialized strategies (the "Focus Four Strategy") as described below.
Each year, on or about the annual stock selection date (December 31), the
Portfolio expects to invest in the securities determined by the Focus Four
Strategy. At the annual stock selection date, the percentage relationship
among the number of shares of each issuer held by the Portfolio is
established. Through the next one-year period that percentage relationship
will be maintained as closely as practicable when the Portfolio makes
subsequent purchases and sales of the securities.
The Portfolio may also invest in futures, options, warrants, forward
contracts and repurchase agreements.
The Focus Four Strategy is derived from four unique strategies developed
by the quantitative group at First Trust Advisors L.P. ("First Trust"),
the Portfolio's investment advisor. The Focus Four Strategy adheres to a
disciplined investment process that targets four distinct areas of the
market. The Focus Four Strategy seeks to achieve above-average capital
appreciation. The following table lists the four strategies utilized by
the Focus Four Strategy and the approximate weights assigned to each:
STRATEGY WEIGHTS
---------------------------------------------------------------
o The Dow(R) Target Dividend Strategy 30%
o Value Line(R) Target 25 Strategy 30%
o S&P Target SMid 60 Strategy 30%
o NYSE(R) International Target 25 Strategy 10%
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America 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.
Page 56
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NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of each Interest 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. The NAV is calculated by
dividing the value of all assets of a Portfolio (including accrued interest and
dividends), less all liabilities (including accrued expenses and dividends
declared but unpaid), by the total number of Interests outstanding.
Each Portfolio's investments are valued at market value or, in the absence of
market value with respect to any portfolio securities, at fair value according
to procedures adopted by the Board of Trustees of the Registrant. Portfolio
securities listed on any exchange other than the NASDAQ National Market
("NASDAQ") are valued at the last sale price on the business day as of which
such value is being determined. If there has been no sale on such day, the
securities are valued at the mean of the most recent bid and asked prices on
such day. Securities traded on the NASDAQ are valued at the NASDAQ Official
Closing Price as determined by NASDAQ. Portfolio securities traded on more than
one securities exchange are valued at the last sale price on the business day as
of which such value is being determined at the close of the exchange
representing the principal market for such securities. Portfolio securities
traded in the over-the-counter market, but excluding securities trading on the
NASDAQ, are valued at the closing bid prices. Short-term investments that mature
in less than 60 days are valued at amortized cost.
Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the NYSE. Occasionally, events affecting the value of such securities may occur
between such times and the close of the NYSE that will not always be reflected
in such securities' value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures adopted by the Registrant's Board of
Trustees. All securities and other assets of a Portfolio denominated in foreign
currencies will be converted to U.S. dollars using exchange rates in effect at
the time of valuation.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income on such securities
is not accrued until settlement date. Each Portfolio maintains liquid assets
with a current value at least equal to the amount of its when-issued or
delayed-delivery purchase commitments. At December 31, 2007, the Portfolios had
no when-issued or delayed-delivery purchase commitments.
C. FOREIGN CURRENCY:
The books and records of the Portfolios 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 investment securities and items of income and expense are
translated on the respective dates of such transactions. Unrealized gains and
losses which result from changes in foreign currency exchange rates have been
included in the "Net change in unrealized appreciation (depreciation) on foreign
currency translation" 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. The portion
of foreign currency gains and losses related to fluctuation in exchange rates
between the initial purchase trade date and subsequent sale trade date is
included in the "Realized gain (loss) on foreign currency transactions" on the
Statements of Operations. Unrealized depreciation of $4,544 from dividends
receivable in foreign currencies are included in "Dividends receivable" and
unrealized depreciation of $2,368 from investment securities purchased in
foreign currencies are included in "Investment securities purchased payable" on
the Statement of Assets and Liabilities for the Global Dividend Target 15
Portfolio.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income and net realized long-term and
short-term capital gains of all Portfolios may be paid with such frequency
(monthly or otherwise) as the Board of Trustees may determine from time to time.
Currently all distributions paid by a Portfolio will be reinvested by the
Portfolio.
Page 57
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
E. INCOME TAXES:
The Registrant is a limited liability company with all of its Interests owned by
a single entity (Account B). Accordingly, the Registrant is treated as part of
the operations of Prudential and is not taxed separately. The Registrant intends
to continue to comply with the provisions of Section 817(h) of the Internal
Revenue Code, which impose certain diversification requirements upon variable
contracts that are based on segregated asset accounts. Under current tax law,
interest, dividend income, and capital gains of the Registrant are not currently
taxable when left to accumulate within a variable annuity contract. As such, no
federal or state income tax provision is required.
As of December 31, 2007, the costs of investments for federal income tax
purposes and accumulated net unrealized appreciation (depreciation) on
investments were as follows:
NET UNREALIZED GROSS GROSS
APPRECIATION UNREALIZED UNREALIZED
COST (DEPRECIATION) APPRECIATION (DEPRECIATION)
-------------- -------------- -------------- --------------
Target Managed VIP Portfolio .............. $ 154,965,694 $ 18,069,317 $ 29,516,120 $ (11,446,803)
The Dow(R) Dart 10 Portfolio .............. 16,005,855 42,941 1,560,165 (1,517,224)
The Dow(R) Target Dividend Portfolio ...... 84,273,704 (2,511,687) 3,910,156 (6,421,843)
Global Dividend Target 15 Portfolio ....... 157,986,104 13,429,639 21,326,569 (7,896,930)
S&P(R) Target 24 Portfolio ................ 14,951,993 581,638 1,443,074 (861,436)
NASDAQ(R) Target 15 Portfolio ............. 10,351,039 908,193 1,529,220 (621,027)
First Trust Target Focus Four Portfolio ... 12,382,460 24,217 321,172 (296,955)
Value Line(R) Target 25 Portfolio ......... 36,346,168 7,162,557 11,715,529 (4,552,972)
F. EXPENSES:
Expenses that are directly related to one of the Portfolios are charged directly
to that Portfolio. General expenses of the Registrant with the exception of
audit and printing fees, which are allocated evenly among the Portfolios, are
generally allocated to all the Portfolios based upon the average net assets of
each Portfolio.
The Fund has entered into an Administrative Services Agreement (the "Agreement")
with Prudential whereby Prudential provides certain Membership Interests
servicing reasonably necessary for the operations of the Portfolios other than
the management services provided by First Trust pursuant to the Investment
Advisory and Management Agreement.
As compensation for the services rendered under the Agreement, Prudential is
paid fees at an annual rate of 0.30% of average daily net assets from the
Portfolios. These fees are included in "Membership Interest servicing fees" on
the Statements of Operations.
G. ACCOUNTING PRONOUNCEMENT:
In September 2006, Statement of Financial Accounting Standards No. 157 Fair
Value Measurements ("SFAS 157") was issued by the Federal Accounting Standards
Board and is effective for fiscal years beginning after November 15, 2007. SFAS
157 defines fair value, establishes a framework for measuring fair value and
expands disclosures about fair value measurements. At this time, management is
evaluating the implications of SFAS 157 and its impact on the Portfolios'
financial statements, if any, has not been determined.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Portfolios pursuant to an Investment
Advisory and Management Agreement. First Trust provides each Portfolio with
discretionary investment services and certain administrative services necessary
for the management of the Portfolios. For its investment advisory and management
services, First Trust is entitled to a monthly fee calculated at an annual rate
of 0.60% of each Portfolio's average daily net assets.
For the period September 30, 2004 through December 31, 2008, First Trust has
contractually agreed to waive fees and reimburse expenses of the Portfolios to
limit the total annual fund operating expenses (excluding brokerage expense and
extraordinary expenses) to 1.37% for the First Trust Target Focus Four Portfolio
(formerly known as "First Trust 10 Uncommon Values Portfolio") and 1.47% for
each of the other Portfolios' average daily net assets. First Trust has entered
into an agreement with the Registrant that allows First Trust to recover from
the Portfolios any fees waived or expenses reimbursed during the three year
period after the date of the waiver or
Page 58
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
reimbursement. This agreement has been extended through December 31, 2008.
However, First Trust's ability to recover such amounts is limited to the extent
that it would not exceed the amount waived or reimbursed during such period. To
the extent that the actual expense ratio of a particular Portfolio is less than
such Portfolio's applicable expense cap, First Trust may recover a portion of
the previously waived or reimbursed amount equal to the amount that the expense
cap exceeds the actual expense ratio. These amounts would be included in
"Expenses previously waived or reimbursed" on the Statements of Operations. The
fees recovered, fees waived and expenses reimbursed by First Trust for the year
ended December 31, 2007, are as follows:
FEES RECOVERED FEES WAIVED EXPENSES REIMBURSED
-------------- ----------- -------------------
Target Managed VIP Portfolio .............. $ -- $ -- $ --
The Dow(R) Dart 10 Portfolio. ............. -- 18,107 --
The Dow(R) Target Dividend Portfolio ...... -- -- --
Global Dividend Target 15 Portfolio ....... -- -- --
S&P(R) Target 24 Portfolio ................ -- 13,114 --
NASDAQ(R) Target 15 Portfolio ............. -- 26,812 --
First Trust Target Focus Four Portfolio ... -- 31,897 --
Value Line(R) Target 25 Portfolio ......... -- -- --
PFPC Inc. ("PFPC") serves as the Registrant's administrator. In addition, PFPC
also provides certain fund accounting, administration and transfer agency
services in accordance with certain fee arrangements.
PFPC Trust Company serves as the custodian to the Portfolios.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid an annual retainer
of $10,000 per trust for the first 14 trusts of the First Trust Fund Complex and
an annual retainer of $7,500 per trust for each subsequent trust added to the
First Trust Fund Complex. The annual retainer is allocated equally among each of
the trusts. No additional meeting fees are paid in connection with board or
committee meetings.
Additionally, the Lead Independent Trustee is paid $10,000 annually and the
Audit Committee Chairman is paid $5,000 annually, with such compensation paid by
the trusts in the First Trust Fund Complex and divided among those trusts.
Trustees are also reimbursed by the trusts in the First Trust Fund Complex for
travel and out-of-pocket expenses in connection with all meetings. Prior to
January 1, 2007, the Fund paid each Independent Trustee an annual retainer of
$10,000, which included compensation for all board and committee meetings.
Effective January 1, 2008, each of the chairmen of the Nominating and Governance
Committee and the Valuation Committee will be paid $2,500 annually to serve in
such capacities with such compensation paid by the trusts in the First Trust
Fund Complex and divided among those trusts. Also effective January 1, 2008,
each committee chairman will serve two years before rotating to serve as a
chairman of another committee.
4. DISTRIBUTION PLAN
The Registrant, on behalf of each Portfolio, has adopted a 12b-1 Service Plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which provides that
Interests of each of the Portfolios will be subject to an annual service fee.
First Trust Portfolios L.P. ("FTP") serves as the selling agent and distributor
of Interests of the Portfolios. In this capacity, FTP manages the offering of
the Portfolios' Interests and is responsible for all sales and promotional
activities. The Plan reimburses FTP for its costs in connection with these
activities. FTP also uses the service fee to compensate Prudential for providing
account services to policy owners. These services include establishing and
maintaining policy owner accounts, answering inquiries, and providing personal
services to policy owners. Each Portfolio may spend up to 0.25% per year of the
average daily net assets of its Interests 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 sales and
distribution of a Portfolio's Interest including, without limitation, expenses
of preparing, printing and distributing prospectuses to persons other than
Interest holders or policy owners, as well as compensating its sales force,
printing and distributing advertising and sales literature and reports to
Interest holders and policy owners used in connection with the sale of a
Portfolio's Interests, certain other expenses associated with the distribution
of the Portfolios, and any distribution-related expenses that may be authorized
by the Board of Trustees.
Page 59
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NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
During the year ended December 31, 2007, all service fees received by FTP were
paid to Prudential, 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 Board of Trustees 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.
5. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government and short-term investments, for the year ended December 31, 2007, was
as follows:
PURCHASES SALES
--------------- ---------------
Target Managed VIP Portfolio ............. $ 166,571,580 $ 208,121,669
The Dow(R) DART 10 Portfolio ............. 20,621,320 31,929,053
The Dow(R) Target Dividend Portfolio ..... 77,724,965 94,713,834
Global Dividend Target 15 Portfolio ...... 130,025,046 96,860,827
S&P(R) Target 24 Portfolio ............... 17,927,582 18,849,251
NASDAQ(R) Target 15 Portfolio ............ 17,079,557 14,641,892
First Trust Target Focus Four Portfolio .. 14,230,189 7,703,096
Value Line(R) Target 25 Portfolio ........ 46,430,207 54,002,091
6. MEMBERSHIP INTERESTS
The Registrant has authorized an unlimited number of Membership Interests
without par value of one or more series.
7. INDEMNIFICATION
The Fund has a variety of indemnification obligations under contracts with its
service providers. The Fund's maximum exposure under these arrangements is
unknown. However, the Fund has not had prior claims or losses pursuant to these
contracts and expects the risk of loss to be remote.
8. RISK CONSIDERATIONS
NON-U.S. SECURITIES INVESTMENT RISK: The Portfolios may invest in non-U.S.
securities. Investing in securities of non-U.S. companies and non-U.S.
governments involves special risks and considerations not typically associated
with investing in the securities of U.S. companies and the U.S. government.
These risks include re-valuation of currencies and future adverse political and
economic developments. These risks are heightened for investments in emerging
market countries. Moreover, securities of many non-U.S. companies and non-U.S.
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the U.S. government.
NON-DIVERSIFICATION RISK: Each Portfolio is classified as "non-diversified" and
is limited as to the percentage of its assets which may be invested in
securities of any one issuer only by its own investment restrictions and
diversification requirements. A Portfolio may therefore invest a relatively high
percentage of its assets in a limited number of issuers. This does expose each
Portfolio to greater market fluctuations than is experienced by a diversified
fund. Each Portfolio is more susceptible to any single economic, political or
regulatory occurrence and to the financial conditions of the issuer in which it
invests.
INVESTMENT STRATEGY RISK: Each Portfolio is also exposed to additional market
risk due to its policy of investing in accordance with an investment strategy.
As a result of this policy, securities held by the Portfolios will generally not
be bought or sold in response to market fluctuations and the securities may be
issued by companies concentrated in a particular industry. Each Portfolio's
relative lack of diversity, possible concentration in a particular industry and
passive management style may subject investors to greater market risk than other
mutual funds.
Page 60
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NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007
SMALL CAP COMPANY RISK: The Target Managed VIP Portfolio and Value Line(R)
Target 25 Portfolio invest in small cap stocks, which presents additional risk.
Small cap stocks are more vulnerable to market conditions, less liquid and
generally experience greater price volatility than larger capitalization
companies.
MARKET RISK: The principal risk of investing in the Portfolios is market risk.
Market risk is the risk that a particular stock in a Portfolio, the Portfolio
itself or stocks in general may fall in value. Shares are subject to market
fluctuations caused by such factors as economic, political, regulatory or market
developments, changes in interest rates and perceived trends in stock prices.
Overall stock values could decline generally or could underperform other
investments.
9. CHANGE IN PUBLIC ACCOUNTANTS
At a meeting held on March 12, 2007, the Board of Trustees of the Fund selected
Deloitte & Touche LLP ("Deloitte"), 111 South Wacker Drive, Chicago, Illinois
60601, to serve as the Fund's independent registered public accounting firm for
the fiscal year ending December 31, 2007. Deloitte audited each Portfolio's
financial statements and performed other related audit services. Ernst & Young
LLP ("E&Y"), 200 Clarendon Street, Boston, Massachusetts 02116, served as the
Fund's independent registered public accounting firm for the fiscal years ended
December 31, 1999 through December 31, 2006. E&Y audited each Portfolio's
financial statements and performed other related audit services.
Page 61
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
- --------------------------------------------------------------------------------
TO THE INTEREST HOLDERS AND BOARD OF TRUSTEES OF FIRST DEFINED PORTFOLIO FUND,
LLC:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of First Defined Portfolio Fund, LLC, comprised
of Target Managed VIP Portfolio, The Dow(R) Dart 10 Portfolio, The Dow(R)
Target Dividend Portfolio, Global Dividend Target 15 Portfolio, S&P(R) Target
24 Portfolio, NASDAQ(R) Target 15 Portfolio, First Trust Target Focus Four
Portfolio (formerly, First Trust 10 Uncommon Values Portfolio), and Value Line
(R) Target 25 Portfolio (collectively, the "Fund") as of December 31, 2007, and
the related statements of operations and changes in net assets and the financial
highlights for the year then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits. The Fund's financial statements and financial highlights
for the periods ended prior to December 31, 2007 were audited by other auditors
whose report, dated February 15, 2007, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. The Fund
is not required to have, nor were we engaged to perform, audits of their
internal control over financial reporting. Our audits included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Fund's internal control over
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. Our procedures included confirmation
of securities owned as of December 31, 2007, by correspondence with the Fund's
custodian and brokers. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of December 31, 2007, the results of its operations, changes in its net
assets, and financial highlights for the year then ended in conformity with
accounting principles generally accepted in the United States of America.
/s/ DELOITTE & TOUCHE LLP
Chicago, Illinois
February 20, 2008
Page 62
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ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Registrant uses to
determine how to vote proxies and information on how each Portfolio 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 Registrant's website located at
http://www.ftportfolios.com; and (3) on the Securities and Exchange Commission's
website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Registrant files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Registrant's Forms N-Q are available (1) by
calling (800) 988-5891; (2) on the Registrant's website located at
http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov; and
(4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
SUBMISSION OF MATTERS TO A VOTE OF INTEREST HOLDERS
A Special Meeting of Interest holders of the Fund was held on April 23, 2007,
and adjourned until April 30, 2007. At the Special Meeting, Trustees Bowen,
Erickson, Kadlec, Keith and Nielson were elected for an indefinite term.
Prudential voted its Interests in the same proportion as votes received from
policy owners that are indirectly invested in the Fund. The number of votes cast
in favor of James A. Bowen was 43,522,955, the number of votes withheld was
385,278 and the number of abstentions was 0. The number of votes cast in favor
of Niel B. Nielson was 43,522,955, the number of votes withheld was 385,278 and
the number of abstentions was 0. The number of votes cast in favor of Richard E.
Erickson was 43,522,955, the number of votes withheld was 385,278 and the number
of abstentions was 0. The number of votes cast in favor of Thomas R. Kadlec was
43,522,955, the number of votes withheld was 385,278 and the number of
abstentions was 0. The number of votes cast in favor of Robert F. Keith was
43,522,955, the number of votes withheld was 385,278 and the number of
abstentions was 0.
Also at the Special Meeting of Interest holders of the Fund, Interest holders of
the First Trust Value Line(R) Target 25 Portfolio approved a change in the
Portfolio's fundamental investment policy to provide that the Portfolio may
invest more than 25% of its assets in the securities of issuers in any single
industry if the applicable investment strategy for the Portfolio selects
securities in a manner that results in such a concentration. Prudential votes
its Interests in the same proportion as votes received from Policy owners that
are indirectly invested in the Portfolio. The number of votes cast in favor of
the change in fundamental investment policy was 8,262,212, the number of votes
cast against was 0, the number of abstentions was 0, and the number of broker
non-votes was 0.
LICENSING INFORMATION
"Dow Jones Industrial Average(SM)," "DJIA(SM)," "The Dow Jones Select Dividend
Index(SM)," "Dow Industrials(SM)," "The Dow(R)," "Dow 30(SM)," and "The Dow
10(SM)" are service marks or registered trademarks, as applicable, of Dow Jones
& Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust on behalf of the Fund. None of the Portfolios,
including, and in particular, Target Managed VIP Portfolio, The Dow(R) Target
Dividend Portfolio, The Dow(R) DART 10 Portfolio and the First Trust Target
Focus Four Portfolio, are endorsed, sold, or promoted by Dow Jones, and Dow
Jones makes no representation regarding the advisability of investing in such
products
"The NASDAQ-100(R)", "NASDAQ-100 Index(R)", "NASDAQ Stock Market(R)" and
"NASDAQ(R)" are registered trademarks of the Nasdaq Stock Market, Inc. (which
with its affiliates are the "Corporations") and have been licensed for use by
First Trust on behalf of the Fund. The NASDAQ(R) Target 15 Portfolio and the
Target Managed VIP Portfolio have not been passed on by the Corporations as to
their legality or suitability. The NASDAQ(R) Target 15 Portfolio and the Target
Managed VIP Portfolio are not issued, endorsed, sponsored, managed, sold or
promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO
LIABILITY WITH RESPECT TO THE FUND.
Page 63
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ADDITIONAL INFORMATION - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500",
"500" "S&P MidCap 400", "Standard & Poor's MidCap 400", "S&P SmallCap 600" and
"Standard & Poor's SmallCap 600" are trademarks of The McGraw Hill Companies,
Inc. and have been licensed for use by First Trust on behalf of the Fund. The
S&P(R) Target 24 Portfolio, the Target Managed VIP Portfolio and the First
Trust Target Focus Four Portfolio are not sponsored, endorsed, sold or promoted
by Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the S&P(R) Target 24 Portfolio, the Target Managed
VIP Portfolio or the First Trust Target Focus Four Portfolio. Please see the
Statement of Additional Information which sets forth certain additional
disclaimers and limitations on behalf of Standard & Poor's.
"Value Line(R)", "The Value Line Investment Survey," and "Value Line Timeliness
(TM) Ranking System" are trademarks of Value Line Securities, Inc. or Value Line
Publishing, Inc. that have been licensed to First Trust on behalf of the Fund.
The Target Managed VIP Portfolio, the Value Line(R) Target 25 Portfolio and the
First Trust Target Focus Four Portfolio are not sponsored, recommended, sold or
promoted by Value Line Publishing, Inc., Value Line, Inc. or Value Line
Securities, Inc. ("VALUE LINE"). Value Line makes no representation regarding
the advisability of investing in the Target Managed VIP Portfolio, the Value
Line(R) Target 25 Portfolio or the First Trust Target Focus Four Portfolio.
"NYSE(R)" and "NYSE International 100 Index(R)" are registered trademarks of
NYSE Group, Inc. and have been licensed for use for certain purposes by First
Trust. The First Trust Target Focus Four Portfolio, based in part on the NYSE
International 100 Index(R), is not sponsored, endorsed, sold or promoted by
NYSE Group, Inc. or any of its affiliates, and NYSE Group, Inc. and its
affiliates make no representation regarding the advisability of investing in
such product. NYSE Group, Inc. has no relationship to the First Trust Target
Focus Four Portfolio or First Trust other than the licensing of NYSE
International 100 Index(R) and its registered trademarks for use in connection
with the First Trust Target Focus Four Portfolio.
PRIVACY POLICY
The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") consider your privacy an important priority in maintaining our
relationship. We are committed to protecting the security and confidentiality of
your personal information.
SOURCES OF INFORMATION
We may collect nonpublic personal information about you from the following
sources:
o Information we receive from you or your broker-dealer, investment advisor
or financial representative through interviews, applications, agreements
or other forms;
o Information about your transactions with us, our affiliates or others;
o Information we receive from your inquiries by mail, e-mail or telephone;
and
o Information we collect on our website through the use of "cookies." For
example, we may identify the pages on our website that your browser
requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. The permitted uses
include the disclosure of such information to unaffiliated companies for the
following reasons:
Page 64
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ADDITIONAL INFORMATION - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your personal
information as described above to unaffiliated financial service providers
and other companies that perform administrative or other services on our
behalf, such as transfer agents, custodians and trustees, or that assist
us in the distribution of investor materials such as trustees, banks,
financial representatives and printers.
o We may release information we have about you if you direct us to do so, if
we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund. Please note,
however, that the California Financial Information Privacy Act contains an "opt
out" mechanism that California consumers may use to prevent us from sharing
nonpublic personal information with affiliates.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, the Fund restricts access to
your nonpublic personal information to those individuals who need to know that
information to provide products or services to you. We maintain physical,
electronic and procedural safeguards to protect your nonpublic personal
information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time; however, if we do change
it, we will tell you promptly.
For questions about our policy, or for additional copies of this notice, please
contact us at (800) 621-1675.
Page 65
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
NAME, ADDRESS, DATE OFFICE AND THE FIRST TRUST TRUSTEESHIPS
OF BIRTH AND POSITION LENGTH OF PRINCIPAL OCCUPATIONS FUND COMPLEX OR DIRECTORSHIPS
WITH THE FUND SERVICE DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
- --------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Indefinite Term Physician; President, 58 None
c/o First Trust Advisors L.P. Wheaton Orthopedics;
1001 Warrenville Road, o 8 years served Co-owner and Co-Director
Suite 300 (January 1996 to May 2007),
Lisle, IL 60532 Sports Med Center for
D.O.B.: 04/51 Fitness; Limited Partner,
Gundersen Real Estate
Partnership; Limited
Partner, Sportsmed LLC
Thomas R. Kadlec, Trustee o Indefinite Term Senior Vice President and 58 None
c/o First Trust Advisors L.P. Chief Financial Officer (May
1001 Warrenville Road, o 3 years, 9 months 2007 to Present), Vice
Suite 300 served President and Chief
Lisle, IL 60532 Financial Officer (1990 to
D.O.B.: 11/57 May 2007), ADM Investor
Services, Inc. (Futures
Commission Merchant);
President (May 2005 to
Present), ADM Derivatives,
Inc.; Registered
Representative (2000 to
Present), Segerdahl &
Company, Inc., a FINRA
member (Broker-Dealer)
Robert F. Keith, Trustee o Indefinite Term President (2003 to Present), 58 None
c/o First Trust Advisors L.P. Hibs Enterprises (Financial
1001 Warrenville Road, o 8 months served and Management Consulting);
Suite 300 President (2001 to 2003),
Lisle, IL 60532 Aramark Service Master
D.O.B.: 11/56 Management; President and
Chief Operating Officer
(1998 to 2003), Service
Master Management Services
Niel B. Nielson, Trustee o Indefinite Term President (June 2002 to 58 Director of Covenant
c/o First Trust Advisors L.P. Present), Covenant College Transport Inc.
1001 Warrenville Road, o 8 years served
Suite 300
Lisle, IL 60532
D.O.B.: 03/54
Page 66
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
NUMBER OF
TERM OF PORTFOLIOS IN OTHER
NAME, ADDRESS, DATE OFFICE AND THE FIRST TRUST TRUSTEESHIPS
OF BIRTH AND POSITION LENGTH OF PRINCIPAL OCCUPATIONS FUND COMPLEX OR DIRECTORSHIPS
WITH THE FUND SERVICE DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
- --------------------------------------------------------------------------------------------------------------------------------
James A. Bowen 1, Trustee, o Indefinite Term President, First Trust 58 Trustee of Wheaton
President, Chairman of the Advisors L.P. and First College
Board and CEO o 8 years served Trust Portfolios L.P.;
1001 Warrenville Road, Chairman of the Board of
Suite 300 Directors, BondWave LLC
Lisle, IL 60532 (Software Development
D.O.B.: 09/55 Company/Broker-Dealer) and
Stonebridge Advisors LLC
(Investment Advisor)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES 2
- ------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley Treasurer, Controller, Chief o Indefinite term Chief Financial Officer, First Trust Advisors
1001 Warrenville Road, Financial Officer and Chief L.P. and First Trust Portfolios L.P.; Chief
Suite 300 Accounting Officer o 8 years served Financial Officer, BondWave LLC (Software
Lisle, IL 60532 Development Company/Broker-Dealer) and
D.O.B.: 11/57 Stonebridge Advisors LLC (Investment Advisor)
Susan M. Brix Assistant Vice President o Indefinite term Representative, First Trust Portfolios L.P.;
1001 Warrenville Road, Assistant Portfolio Manager, First Trust
Suite 300 o 8 years served Advisors L.P.
Lisle, IL 60532
D.O.B.: 01/66
Kelley A. Christensen Vice President o Indefinite term Assistant Vice President, First Trust
1001 Warrenville Road, Advisors L.P. and First Trust Portfolios L.P.
Suite 300 o 1 year served
Lisle, IL 60532
D.O.B.: 09/70
James M. Dykas Assistant Treasurer o Indefinite term Senior Vice President (April 2007 to
1001 Warrenville Road, Present), Vice President (January 2005 to
Suite 300 o 2 years served April 2007), First Trust Advisors L.P. and
Lisle, IL 60532 First Trust Portfolios L.P.; Executive
D.O.B.: 01/66 Director (December 2002 to January 2005),
Vice President (December 2000 to December
2002), Van Kampen Asset Management and Morgan
Stanley Investment Management
- ----------
1 Mr. Bowen is deemed an "interested person" of the Fund due to his position
as President of First Trust Advisors L.P., investment advisor of the Fund.
2 The term "Officer" means the president, secretary, treasurer, controller
or any other officer who performs a policy making function.
Page 67
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BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2007 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES 2 - (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------
W. Scott Jardine Secretary and Chief o Indefinite term General Counsel, First Trust Advisors L.P.
1001 Warrenville Road, Compliance Officer and First Trust Portfolios L.P.; Secretary,
Suite 300 o 8 years served as BondWave LLC (Software Development
Lisle, IL 60532 Secretary, 3 years 6 Company/Broker-Dealer) and Stonebridge
D.O.B.: 05/60 months served as Advisors LLC (Investment Advisor)
Chief Compliance
Officer
Daniel J. Lindquist Vice President o Indefinite term Senior Vice President (September 2005 to
1001 Warrenville Road, Present), Vice President (April 2004 to
Suite 300 o 2 years served September 2005), First Trust Advisors L.P.
Lisle, IL 60532 and First Trust Portfolios L.P.; Chief
D.O.B.: 02/70 Operating Officer (January 2004 to April
2004), Mina Capital Management, LLC; Chief
Operating Officer (April 2000 to January
2004), Samaritan Asset Management Services,
Inc.
Kristi A. Maher Assistant Secretary o Indefinite term Deputy General Counsel (May 2007 to Present),
1001 Warrenville Road, Assistant General Counsel (March 2004 to May
Suite 300 o 3 years, 6 months 2007), First Trust Advisors L.P. and First
Lisle, IL 60532 served Trust Portfolios L.P.; Associate (December
D.O.B.: 12/66 1995 to March 2004), Chapman and Cutler LLP
Roger F. Testin Vice President o Indefinite term Senior Vice President, First Trust Advisors
1001 Warrenville Road, L. P. and First Trust Portfolios L.P. (August
Suite 300 o 6 years served 2001 to present); Analyst (1998-2001), Dolan
Lisle, IL 60532 Capital Management
D.O.B.: 06/66
Page 68
[LOGO] FIRSTTRUST
ADVISORS L.P.
INVESTMENT ADVISOR
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, IL 60532
ADMINISTRATOR, CUSTODIAN,
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PFPC 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
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES -- The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal accountant for
the audit of the Registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements were $150,000 for 2006 and $149,900 for 2007.
(b) AUDIT-RELATED FEES -- The aggregate fees billed in each of the last
two fiscal years, for assurance and related services by the principal accountant
that are reasonably related to the performance of the audit of the Registrant's
financial statements and are not reported under paragraph (a) of this Item were
$0 for 2006 and $0 for 2007.
1
(c) TAX FEES (REGISTRANT) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the Registrant
were $ $0 for 2006 and $0 for 2007.
(d) ALL OTHER FEES (REGISTRANT) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the Registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2006 and $0 for 2007.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph
(c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services
Pre-Approval Policy, the Audit Committee (the "COMMITTEE") is responsible for
the pre-approval of all audit services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Registrant by its
independent auditors. The Chairman of the Committee authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the
independent auditor's engagements for non-audit services with the Registrant's
adviser (not including a sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser) and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, if the
engagement relates directly to the operations and financial reporting of the
Registrant, subject to the DE MINIMIS exceptions for non-audit services
described in Rule 2-01 of Regulation S-X. If the independent auditor has
provided non-audit services to the Registrant's adviser (other than any
sub-adviser whose role is primarily portfolio management and is sub-contracted
with or overseen by another investment adviser) and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to its
policies, the Committee will consider whether the provision of such non-audit
services is compatible with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
(b) Not Applicable
(c) Not Applicable
(d) Not Applicable
2
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the Registrant for 2006 were $0 for the Registrant and $0 for the
Registrant's investment adviser and for 2007 were $0 for the Registrant
and $0 for the Registrant's investment adviser.
(h) Not Applicable. The registrant's independent auditors do not currently
provide non-audit services to the registrant's investment adviser or
any of entity controlling, controlled by, or under common control with
the adviser that provide ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
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.
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.
3
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(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 DEFINED PORTFOLIO FUND, LLC
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Date FEBRUARY 26, 2008
----------------------------------------------------------------------------
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 A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President
and Chief Executive Officer
(principal executive officer)
Date FEBRUARY 26, 2008
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date FEBRUARY 26, 2008
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.