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: JUNE 30, 2008
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Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2008
TABLE OF CONTENTS
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2008
Shareholder Letter ........................................................ 1
Market Overview ........................................................... 2
Performance Summaries and Portfolio Components ............................ 3
Understanding Your Fund Expenses .......................................... 11
Portfolios of Investments ................................................. 12
Statements of Assets and Liabilities ...................................... 34
Statements of Operations .................................................. 36
Statements of Changes in Net Assets ....................................... 38
Statements of Changes in Net Assets - Capital Stock Activity .............. 40
Financial Highlights ...................................................... 42
Notes to Financial Statements ............................................. 50
Additional Information .................................................... 56
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") 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 Portfolios. See "Risk
Considerations" in the Notes to Financial Statements for a discussion of other
risks of investing in the Fund.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns, and net asset value will fluctuate and Membership Interests, when sold,
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, the Fund's investment advisor, 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, the Statement of Additional
Information, this report, and other regulatory filings.
SHAREHOLDER LETTER
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2008
Dear Shareholders:
The first half of 2008 has been challenging for the financial markets and for
many investors. Yet, regardless of the market, First Trust Advisors L.P. ("First
Trust") believes that in order to be successful in reaching your financial
goals, you should be invested for the long-term. We also believe that investors
should seek professional help from a financial advisor who has been through many
types of markets, knows the range of investments available, and is committed to
bringing you investments suitable to your particular situation.
The report you hold gives detailed information about eight Portfolios in the
First Defined Portfolio Fund, LLC over the six-month period ended June 30, 2008.
It contains a market overview and a performance analysis for the period. I
encourage you to read this document 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 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 OF ROBERT F. CAREY)
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.
MARKET OVERVIEW
STATE OF THE ECONOMY
The combination of continued weakness in the residential housing market, higher
energy prices, falling dollar, rising inflation and substantial losses taken by
financial institutions on subprime-related mortgage debt pushed stock indices
down both domestically and abroad in the first half of 2008. These and other
factors also slashed economic growth in the U.S. in the past few quarters. The
following data reflects the sharp deterioration in real Gross Domestic Product
("GDP") growth: third quarter 2007 (+4.8%), fourth quarter 2007 (-0.2%); first
quarter 2008 (+0.9%) and second quarter 2008 (+1.9%). While technically not a
recessionary environment (two consecutive quarters of negative growth), this
climate has had a similar impact on equity valuations.
Had the Federal Reserve Bank not moved to aggressively lower short-term lending
rates (September 2007 through April 2008), the economy more than likely would
have slid into a full-fledged recession. Since it can take up to nine months for
a Fed rate action to impact the economy, we are encouraged by the fact that five
of the six rate cuts made by the Fed will reach the nine month mark in the
second half of 2008. All in all, during the period from September 2007 through
April 2008, the Fed lowered the federal funds target rate from 5.25% to 2.00%.
U.S. STOCKS AND BONDS
The major U.S. stock indices posted negative returns across the board in the
first half of 2008, but mid-caps managed to continue to outpace large- and
small-caps even on the way down. The S&P 500 Index, S&P 400 Index (Mid-Caps) and
S&P 600 Index (Small-Caps) were down 11.9%, 3.9% and 7.1%, respectively. Of the
10 major sectors in the S&P 500 Index, only two were in positive territory over
the six-month span: Energy (+8.9%) and Materials (+1.3%). Both benefitted from
the weakness in the U.S. dollar and rising inflation. Only 27 of the 130
subsectors that comprise the S&P 500 Index were up, indicating a very broad
sell-off. Even many of the most recognizable blue chip names were not spared.
At the midpoint of 2008, Standard & Poor's is reporting that earnings estimates
for all of 2008 favor growth stocks over value stocks. With respect to the S&P
500 Index, growth stocks are expected to post a 13% rise in 2008 earnings per
share ("EPS"), vs. a 2% rise for the value stocks in the index. With respect to
the S&P 400 Index, growth stocks are expected to post a 23% rise in 2008 EPS,
vs. a 7% rise for the value stocks in the index. With respect to the S&P 600
Index, growth stocks are expected to post a 14% rise in 2008 EPS, vs. a 3% rise
for the value stocks in the index.
In the U.S. bond market, a clear delineation existed between investment-grade
debt and speculative-grade debt during the first half of 2008. The
speculative-grade debt sold-off in light of the weakness in economic activity.
The Lehman Brothers U.S. Corporate High Yield Index posted a total return of
- -1.31% in the first half of 2008, compared to a gain of 2.38% for the Lehman
Brothers U.S. Treasury: Intermediate Index.
FOREIGN STOCKS AND BONDS
In the fourth quarter of 2007, there were some pundits touting the notion that
emerging countries were far enough along in their maturation process to decouple
from the U.S., allowing them to maintain superior growth rates irrespective of
the U.S.'s sluggishness. At the midpoint of 2008, we can comfortably proclaim
that we believe this notion to be false. We believe foreign economies are still
very much tethered to the economic climate in the U.S. The spike in inflation
alone resulting from the Federal Reserve's aggressive easing of monetary policy
and corresponding decline in the U.S. dollar significantly impacted those
countries that are big importers of natural resources, particularly oil and food
commodities. The International Monetary Fund's global GDP growth rate outlook
looks as follows: 5.0% (2007); 4.1% estimated (2008); and 3.9% estimated (2009).
The MSCI World (ex U.S.) and MSCI Emerging Markets indices declined by 9.31%
(USD) and 11.82% (USD) in the first half of 2008, according to Bloomberg.
Foreign bonds fared better than foreign equities. The Lehman Brothers Global
Aggregate Index and Global Emerging Markets Index returned 3.53% and 0.68%,
respectively, in the first half of 2008.
Page 2
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO
Over the six months ended June 30, 2008, the Target Managed VIP Portfolio posted
a total return of -14.50% versus -11.04% for the Russell 3000(R) Index over the
same period. The NAV decreased from $12.83 to $10.97 during the period.
Of the Portfolio's 115 stocks, 27 advanced and 88 declined over the period. The
top three performing stocks, by contribution to return, were Potash Corp. of
Saskatchewan (POT), BHP Billiton (BHP), and International Business Machines
(IBM). The worst-performing stocks, by percentage loss, were Microsoft (MSFT),
Apple (AAPL), and Nokia (NOK).
The biggest contributor to the portfolio's performance over the period was the
materials sector. The portfolio was overweight materials stocks (second best
performing sector in the benchmark) in addition to posting returns that beat the
benchmark sector. An underweight position in health care and slight
outperformance from the portfolio's financial holdings also contributed
positively to relative returns. An overweight position in technology was the
biggest drag on portfolio performance as the sector's return lagged the broader
market. An underweight position in energy (the best performing sector in the
benchmark), combined with performance that trailed the benchmark sector, weighed
on overall portfolio returns. An overweight in telecommunication services stocks
also led to relative underperformance.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ---------------------------------------- -----------
Microsoft Corp. 6.8%
Apple, Inc. 6.0
International Business Machines Corp. 4.2
Walt Disney (The), Company 3.8
Honeywell International, Inc. 3.2
JPMorgan Chase & Company 3.1
BHP Billiton Ltd., ADR 2.8
Research In Motion Ltd. 2.7
Intel Corp. 2.7
Google, Inc., Class A 2.6
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Total 37.9%
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% OF TOTAL
INDUSTRY INVESTMENTS
- ---------------------------------------- -----------
Information Technology 36.2%
Financials 15.2
Industrial 11.3
Telecommunication Services 7.7
Materials 7.6
Energy 6.7
Consumer Discretionary 6.7
Health Care 5.2
Consumer Staples 2.1
Utilities 1.3
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Total 100.0%
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Page 3
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO
Over the six months ended June 30, 2008, The Dow(R) DART 10 Portfolio posted a
total return of -14.21% versus -13.38% for the Dow Jones Industrial Average(SM)
over the same period. The NAV decreased from $10.63 to $9.12 during the period.
Of the Portfolio's 10 stocks, 1 advanced and 9 declined over the period. The top
three performing stocks, by contribution to return, were International Business
Machines (IBM), E.I. DuPont de Nemours (DD), and 3M (MMM). The worst-performing
stocks, by percentage loss, were Citigroup Inc. (C), Pfizer (PFE), and Microsoft
(MSFT).
IBM was the biggest contributor to portfolio performance over the period as its
global reach led to strong earnings gains. The financial sector weighed on
portfolio performance (Citigroup Inc. and JPMorgan Chase), as the sector
remained under pressure due to continued turmoil in the credit markets. Pfizer
also hurt performance as the company struggled to regain its growth momentum due
to patent expirations.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ---------------------------------------- -----------
International Business Machines Corp. 12.7%
Walt Disney (The), Company 11.3
McDonald's Corp. 11.1
Exxon Mobil Corp. 10.9
Home Depot (The), Inc. 10.3
Honeywell International, Inc. 9.7
JPMorgan Chase & Company 9.3
Pfizer, Inc. 9.0
Microsoft Corp. 9.0
Citigroup, Inc. 6.7
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Total 100.0%
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% OF TOTAL
INDUSTRY INVESTMENTS
- ---------------------------------------- -----------
Consumer Discretionary 32.7
Information Technology 21.6
Financials 16.1
Energy 10.9
Industrial 9.7
Health Care 9.0
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Total 100.0%
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Page 4
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the six months ended June 30, 2008, The Dow(R) Target Dividend Portfolio
posted a total return of -26.80% versus -21.40% for the Dow Jones U.S. Select
Dividend Index(SM) over the same period. The NAV decreased from $11.79 to $8.63
during the period.
Of the Portfolio's 20 stocks, 1 advanced and 19 declined over the period. The
top three performing stocks, by contribution to return, were Lubrizol (LZ),
First Niagara Financial Group (FNFG), and Energy East (EAS). The
worst-performing stocks, by percentage loss, were Washington Mutual (WM), South
Financial Group (TSFG), and Lee Enterprises (LEE).
The utilities sector was the best performing sector in the portfolio, but still
posted a modest loss over the period. The materials sector was the second best
performing sector, although returns lagged the benchmark sector performance.
Financials were the biggest drag on portfolio performance as the sector remained
under pressure over the period due to continued credit market turmoil. The
portfolio maintained a large weight in the financials sector (52.4% average
weight), which was the worst performing sector in the portfolio and benchmark.
Consumer discretionary stocks also posted poor returns relative to the
benchmark, hurting portfolio performance.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ---------------------------------------- -----------
First Niagara Financial Group, Inc. 7.4%
RPM International, Inc. 7.0
Sensient Technologies Corp. 6.8
La-Z-Boy, Inc. 6.7
NiSource, Inc. 6.6
DTE Energy Company 6.6
Superior Industries International, Inc. 6.4
People's United Financial, Inc. 6.2
Universal Corp. 6.0
First BanCorp 5.7
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Total 65.4%
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% OF TOTAL
INDUSTRY INVESTMENTS
- ---------------------------------------- -----------
Financials 46.9%
Materials 19.0
Consumer Discretionary 15.0
Utilities 13.1
Consumer Staples 6.0
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Total 100.0%
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Page 5
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the six months ended June 30, 2008, the Global Dividend Target 15 Portfolio
posted a total return of -17.32% versus -10.57% for the Morgan Stanley Capital
International Developed Markets World Index over the same period. The NAV
decreased from $23.96 to $19.81 during the period.
Of the Portfolio's 15 stocks, 3 advanced and 12 declined over the period. The
top three performing stocks, by contribution to return, were Cheung Kong
Infrastructure Holdings Ltd. (1038 HK), Hongkong Electric Holdings Ltd. (6 HK),
and PCCW Ltd. (8 HK). The worst performing stocks, by percentage loss, were
General Motors (GM), Citigroup Inc. (C), and Yue Yuen Industrial (551 HK).
The biggest contributors to the portfolio's performance over the period were the
Hang Sang Index stocks, which included the top three performing stocks by
contribution to return (Cheung Kong Infrastructure Holdings, Hongkong Electric
Holdings Ltd. & PCCW Ltd.). General Motors was the worst performer in the
portfolio over the period as high gas prices hurt sales of the company's trucks
and sport utility vehicles, their most profitable vehicles. Citigroup Inc. also
hurt portfolio performance as the company's shares sank under deteriorating
credit market conditions and increased write-offs.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ---------------------------------------- -----------
Cheung Kong Infrastructure Holdings Ltd. 9.3%
Hongkong Electric Holdings Ltd. 8.6
PCCW Ltd. 8.3
BOC Hong Kong (Holdings) Ltd. 7.8
LogicaCMG PLC 7.4
Tate & Lyle PLC 7.3
Home Depot (The), Inc. 7.1
Ladbrokes PLC 6.5
GKN PLC 6.4
Pfizer, Inc. 6.2
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Total 74.9%
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% OF TOTAL
INDUSTRY INVESTMENTS
- ---------------------------------------- -----------
Consumer Discretionary 29.0%
Utilities 17.8
Telecommunication Services 14.2
Financials 12.4
Information Technology 7.4
Consumer Staples 7.3
Health Care 6.1
Industrial 5.8
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Total 100.0%
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Page 6
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO
Over the six months ended June 30, 2008, the S&P(R) Target 24 Portfolio posted a
total return of -12.73% versus -11.91% for the S&P 500(R) Index over the same
period. The NAV decreased from $9.66 to $8.43 during the period.
Of the Portfolio's 24 stocks, 4 advanced and 20 declined over the period. The
top three performing stocks, by contribution to return, were Anheuser-Busch
(BUD), Altera (ALTR), and AutoZone (AZO). The worst-performing stocks, by
percentage loss, were MEMC Electronic Materials (WFR), PepsiCo (PEP), and Apollo
Group (APOL).
Financials were the biggest contributor to portfolio performance over the period
on a relative basis as the portfolio's holdings greatly outperformed the
benchmark sector. Outperformance from the industrial sector relative to the
benchmark sector also helped portfolio performance. Performance was hurt by
relative underperformance in the consumer discretionary and energy sectors.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ------------------------------- -----------
Exxon Mobil Corp. 13.2%
Chubb (The), Corp. 10.0
MEMC Electronic Materials, Inc. 9.1
Lockheed Martin Corp. 8.5
PepsiCo, Inc. 8.1
Aon Corp. 7.2
Medco Health Solutions, Inc. 7.0
Altera Corp. 4.5
Express Scripts, Inc. 4.4
Best Buy Company, Inc. 4.1
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Total 76.1%
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% OF TOTAL
INDUSTRY INVESTMENTS
- ------------------------------- -----------
Financials 19.6%
Consumer Staples 17.8
Information Technology 17.1
Energy 14.2
Health Care 13.2
Industrial 12.3
Telecommunication Services 3.4
Consumer Discretionary 2.4
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Total 100.0%
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Page 7
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO
Over the six months ended June 30, 2008, the NASDAQ(R) Target 15 Portfolio
posted a total return of -19.31% versus -11.68% for the NASDAQ 100 Index(R) over
the same period. The NAV decreased from $12.38 to $9.99 during the period.
Of the Portfolio's 15 stocks, 3 advanced and 12 declined over the period. The
top three performing stocks, by contribution to return, were Steel Dynamics
(STLD), Research In Motion (RIMM), and Sigma-Aldrich (SIAL). The
worst-performing stocks, by percentage loss, were Garmin (GRMN), NVIDIA (NVDA),
and Apollo Group (APOL).
Materials stocks, led by Steel Dynamics, were the best performing sector in the
portfolio over the period and the only sector to post a positive return.
Industrial stocks also performed well relative to the benchmark sector. The
portfolio's performance was hurt by the underperformance of its consumer
discretionary holdings relative to the benchmark. A large weighting in
information technology (47.8% average weight), although less than the benchmark
(63.2% average weight), hurt overall portfolio performance as the sector
underperformed the benchmark sector.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ------------------------------------- -----------
Research In Motion Ltd. 9.4%
Express Scripts, Inc. 8.1
Apple, Inc. 7.9
Millicom International Cellular S.A. 7.6
Intel Corp. 7.6
Foster Wheeler Ltd. 7.6
Intuitive Surgical, Inc. 7.5
Microsoft Corp. 7.2
Google, Inc., Class A 7.1
Steel Dynamics, Inc. 5.4
-----
Total 75.4%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ------------------------------------ -----------
Information Technology 49.5%
Health Care 15.6
Materials 10.3
Consumer Discretionary 9.4
Industrial 7.6
Telecommunication Services 7.6
-----
Total 100.0%
=====
Page 8
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the six months ended June 30, 2008, the First Trust Target Focus Four
Portfolio posted a total return of -16.52% versus -11.91% for the S&P 500(R)
Index over the same period. The NAV decreased from $5.75 to $4.80 during the
period.
Of the Portfolio's 128 stocks, 34 advanced and 94 declined over the period. The
top three performing stocks, by contribution to return, were Potash Corp. of
Saskatchewan (POT), BHP Billiton (BHP), and Mosaic Co. (MOS). The
worst-performing stocks, by percentage loss, were Nokia (NOK), Lee Enterprises
(LEE), and Washington Mutual (WM).
The health care sector was the biggest contributor to relative performance for
the period. In addition to performance that beat the benchmark sector, the
portfolio was underweight health care stocks (which lagged the overall market)
over the period. Materials also contributed positively to relative performance
as the portfolio was overweight the group (second best performing sector in the
benchmark) and produced returns ahead of the benchmark sector. An overweight
position in financials was the biggest drag on portfolio performance. The sector
was the worst performer in the benchmark as it remained under pressure over the
period due to the continued credit market turmoil. Poor performance from the
consumer discretionary and technology sectors also hurt overall portfolio
returns.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------- -----------
Apple, Inc. 5.3%
BHP Billiton Ltd., ADR 5.1
Telefonica S.A., ADR 4.6
Nokia Oyj Corp., ADR 3.4
Potash Corp. of Saskatchewan, Inc. 2.6
Research In Motion Ltd. 2.4
Mosaic (The), Company 2.3
First Niagara Financial Group, Inc. 1.9
First BanCorp 1.9
RPM International, Inc. 1.8
-----
Total 31.3%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------- -----------
Financials 23.7%
Materials 16.2
Information Technology 14.3
Consumer Discretionary 13.6
Industrial 10.1
Utilities 6.9
Telecommunication Services 6.1
Energy 5.0
Health Care 2.1
Consumer Staples 2.0
-----
Total 100.0%
=====
Page 9
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the six months ended June 30, 2008, the Value Line(R) Target 25 Portfolio
posted a total return of -2.54% versus -11.91% for the Russell 3000(R) Index
over the same period. The NAV decreased from $5.91 to $5.76 during the period.
Of the Portfolio's 25 stocks, 11 advanced and 14 declined over the period. The
top three performing stocks, by contribution to return, were Potash Corp. of
Saskatchewan (POT), Mosaic Co. (MOS), and BHP Billiton (BHP). The
worst-performing stocks, by percentage loss, were Garmin (GRMN), Nokia (NOK),
and Apple (AAPL).
The biggest contributor to the portfolio's outperformance over the period was
the materials sector, led by Potash Corp. of Saskatchewan and Mosaic Co., the
portfolio's top two performing stocks by contribution to return. An underweight
in health care and no financial exposure also helped relative returns. Poor
performance from the portfolio's consumer discretionary holdings was the biggest
drag on portfolio performance. An overweight in technology, along with
underperformance from the sector, also hurt relative performance.
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ---------------------------------- -----------
Potash Corp. of Saskatchewan, Inc. 12.2%
Mosaic (The), Company 11.7
BHP Billiton Ltd., ADR 9.2
Southern Copper Corp. 7.8
Research In Motion Ltd. 7.7
National-Oilwell Varco, Inc. 7.5
Apple, Inc. 6.5
Telefonica S.A., ADR 6.3
Nokia Oyj Corp., ADR 4.9
MEMC Electronic Materials, Inc. 3.4
-----
Total 77.2%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- -------------------------- -----------
Information Technology 26.8%
Industrial 24.7
Materials 24.1
Consumer Discretionary 8.2
Energy 7.5
Telecommunication Services 6.2
Health Care 2.5
-----
Total 100.0%
=====
Page 10
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2008 (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 January 1, 2008 to June 30, 2008.
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 01/01/2008- VALUE VALUE 01/01/2008- EXPENSE
01/01/2008 06/30/2008 06/30/2008 01/01/2008 06/30/2008 06/30/2008 RATIO
---------- ---------- ----------- ---------- ---------- ----------- -------
Target Managed VIP Portfolio ........... $1,000.00 $855.00 $6.64 $1,000.00 $1,017.70 $7.22 1.44%
The Dow(R) DART 10 Portfolio ........... 1,000.00 857.90 6.79 1,000.00 1,017.55 7.37 1.47(b)
The Dow(R) Target Dividend Portfolio ... 1,000.00 732.00 6.12 1,000.00 1,017.80 7.12 1.42
Global Dividend Target 15 Portfolio .... 1,000.00 826.80 6.63 1,000.00 1,017.60 7.32 1.46
S&P(R) Target 24 Portfolio ............. 1,000.00 872.70 6.84 1,000.00 1,017.55 7.37 1.47(b)
NASDAQ(R) Target 15 Portfolio .......... 1,000.00 806.90 6.60 1,000.00 1,017.55 7.37 1.47(b)
First Trust Target Focus Four
Portfolio ........................... 1,000.00 834.80 6.25 1,000.00 1,018.05 6.87 1.37(b)
Value Line(R) Target 25 Portfolio ...... 1,000.00 974.60 6.97 1,000.00 1,017.80 7.12 1.42
(a) Expenses are equal to each Portfolio's annualized expense ratio, multiplied
by the average account value over the period, multiplied by the 182 days in
the most recent fiscal half-year, divided by 366 days in the year (to
reflect the one-half year period).
(b) These expense ratios reflect expense caps.
Page 11
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - 100.0%
AEROSPACE & DEFENSE - 5.0%
4,923 Axsys Technologies, Inc. (b) .................... $ 256,193
58,349 Honeywell International, Inc. ................... 2,933,788
13,323 Lockheed Martin Corp. ........................... 1,314,447
-----------
4,504,428
-----------
BEVERAGES - 2.0%
9,013 Anheuser-Busch Companies, Inc. .................. 559,888
19,647 PepsiCo, Inc. ................................... 1,249,353
-----------
1,809,241
-----------
CAPITAL MARKETS - 0.4%
14,153 Janus Capital Group, Inc. ....................... 374,630
-----------
CHEMICALS - 3.4%
11,927 Koppers Holdings, Inc. .......................... 499,383
7,819 Mosaic (The), Company (b) ....................... 1,131,409
5,665 Potash Corp. of Saskatchewan, Inc. .............. 1,294,849
3,214 Sigma-Aldrich Corp. ............................. 173,106
-----------
3,098,747
-----------
COMMERCIAL BANKS - 5.2%
29,581 Barclays PLC, ADR ............................... 684,800
14,191 HSBC Holdings PLC, ADR .......................... 1,088,450
25,064 Intesa Sanpaolo, ADR ............................ 859,490
31,562 Lloyds TSB Group PLC, ADR ....................... 778,635
133,022 Royal Bank of Scotland Group PLC, ADR ........... 570,664
40,983 Societe Generale, ADR ........................... 714,022
-----------
4,696,061
-----------
COMMERCIAL SERVICES & SUPPLIES - 0.4%
10,335 GeoEye, Inc. (b) ................................ 183,033
8,489 ICF International, Inc. (b) ..................... 141,087
-----------
324,120
-----------
COMMUNICATIONS EQUIPMENT - 5.1%
54,273 Harmonic, Inc. (b) .............................. 516,136
68,933 Nokia Oyj Corp., ADR ............................ 1,688,859
20,827 Research In Motion Ltd. (b) ..................... 2,434,676
-----------
4,639,671
-----------
COMPUTERS & PERIPHERALS - 10.9%
32,184 Apple, Inc. (b) ................................. 5,388,889
32,434 International Business Machines Corp. ........... 3,844,402
19,254 Novatel Wireless, Inc. (b) ...................... 214,297
12,230 Stratasys, Inc. (b) ............................. 225,766
5,963 Western Digital Corp. (b) ....................... 205,902
-----------
9,879,256
-----------
CONSTRUCTION & ENGINEERING - 1.6%
2,774 Foster Wheeler Ltd. (b) ......................... 202,918
2,168 Jacobs Engineering Group, Inc. (b) .............. 174,958
12,412 Layne Christensen Company (b) ................... 543,521
16,407 Perini Corp. (b) ................................ 542,251
-----------
1,463,648
-----------
See Notes to Financial Statements.
Page 12
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
DIVERSIFIED CONSUMER SERVICES - 0.6%
12,668 Apollo Group, Inc., Class A (b) ................. $ 560,686
-----------
DIVERSIFIED FINANCIAL SERVICES - 5.0%
44,538 Fortis, ADR ..................................... 712,946
30,309 ING Groep N.V., ADR ............................. 956,249
82,545 JPMorgan Chase & Company ........................ 2,832,119
-----------
4,501,314
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.5%
22,022 BT Group PLC, ADR ............................... 874,934
522 CenturyTel, Inc. (b) ............................ 18,578
54,239 Deutsche Telekom AG, ADR ........................ 887,892
33,045 France Telecom S.A., ADR ........................ 979,123
35,068 Premiere Global Services, Inc. (b) .............. 511,291
8,634 Qwest Communications International, Inc. ........ 33,932
38,170 Telecom Italia SpA, ADR ......................... 761,873
28,287 Telefonica S.A., ADR ............................ 2,251,079
13,569 Verizon Communications, Inc. .................... 480,343
-----------
6,799,045
-----------
ELECTRICAL EQUIPMENT - 1.3%
28,178 EnerSys (b) ..................................... 964,533
4,818 Rockwell Automation, Inc. ....................... 210,691
-----------
1,175,224
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
5,480 FLIR Systems, Inc. (b) .......................... 222,324
21,420 Methode Electronics, Inc. ....................... 223,839
-----------
446,163
-----------
ENERGY EQUIPMENT & SERVICES - 1.4%
5,059 Bolt Technology Corp. (b) ....................... 114,182
622 ENSCO International, Inc. ....................... 50,220
10,746 NATCO Group, Inc., Class A (b) .................. 585,979
6,292 National-Oilwell Varco, Inc. (b) ................ 558,226
-----------
1,308,607
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.1%
5,093 Cynosure, Inc., Class A (b) ..................... 100,943
1,432 Intuitive Surgical, Inc. (b) .................... 385,781
10,716 SurModics, Inc. (b) ............................. 480,505
-----------
967,229
-----------
HEALTH CARE PROVIDERS & SERVICES - 3.5%
6,991 Air Methods Corp. (b) ........................... 174,775
15,370 Amedisys, Inc. (b) .............................. 774,955
5,627 Emergency Medical Services Corp., Class A (b) ... 127,339
15,720 Express Scripts, Inc. (b) ....................... 985,958
23,025 Medco Health Solutions, Inc. (b) ................ 1,086,780
-----------
3,149,807
-----------
See Notes to Financial Statements.
Page 13
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
HOUSEHOLD DURABLES - 0.6%
8,158 Garmin Ltd. ..................................... $ 349,489
8,658 Universal Electronics, Inc. (b) ................. 180,952
-----------
530,441
-----------
HOUSEHOLD PRODUCTS - 0.1%
1,701 Clorox (The) Company ............................ 88,792
-----------
INDUSTRIAL CONGLOMERATES - 0.3%
4,014 McDermott International, Inc. (b) ............... 248,426
-----------
INSURANCE - 4.7%
66,771 Aegon N.V. ...................................... 875,368
35,670 AmTrust Financial Services, Inc. ................ 449,442
24,241 Aon Corp. ....................................... 1,113,632
31,478 Chubb (The), Corp. .............................. 1,542,737
14,012 eHealth, Inc. (b) ............................... 247,452
-----------
4,228,631
-----------
INTERNET & CATALOG RETAIL - 0.2%
1,514 Priceline.com, Inc. (b) ......................... 174,806
-----------
INTERNET SOFTWARE & SERVICES - 2.9%
447 Baidu.com, Inc., ADR (b) ........................ 139,893
4,513 Google, Inc., Class A (b) ....................... 2,375,733
17,087 TheStreet.Com, Inc. ............................. 111,236
-----------
2,626,862
-----------
IT SERVICES - 1.2%
38,837 CyberSource Corp. (b) ........................... 649,743
72,998 Sapient Corp. (b) ............................... 468,647
-----------
1,118,390
-----------
LIFE SCIENCES TOOLS & SERVICES - 0.6%
8,572 Kendle International, Inc. (b) .................. 311,421
4,260 Waters Corp. (b) ................................ 274,770
-----------
586,191
-----------
MACHINERY - 3.5%
10,927 Columbus McKinnon Corp. (b) ..................... 263,122
2,936 Dynamic Materials Corp. ......................... 96,741
9,622 Middleby (The), Corp. (b) ....................... 422,502
5,312 Parker Hannifin Corp. ........................... 378,852
12,520 RBC Bearings, Inc. (b) .......................... 417,166
18,986 Robbins & Myers, Inc. ........................... 946,832
9,813 Sun Hydraulics Corp. ............................ 316,666
11,048 Tennant Company ................................. 332,213
-----------
3,174,094
-----------
MEDIA - 3.8%
110,148 Walt Disney (The), Company ...................... 3,436,618
-----------
See Notes to Financial Statements.
Page 14
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
METALS & MINING - 4.2%
29,779 BHP Billiton Ltd., ADR .......................... $ 2,536,873
6,244 Olympic Steel, Inc. ............................. 474,044
5,281 Southern Copper Corp. ........................... 563,113
5,909 Steel Dynamics, Inc. ............................ 230,865
-----------
3,804,895
-----------
OIL, GAS & CONSUMABLE FUELS - 5.3%
16,145 ENI SpA, ADR .................................... 1,198,443
23,182 Exxon Mobil Corp. ............................... 2,043,030
38,406 StatoilHydro ASA, ADR ........................... 1,435,616
2,352 Valero Energy Corp. ............................. 96,855
-----------
4,773,944
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 7.8%
33,276 Altera Corp. .................................... 688,813
4,852 Cypress Semiconductor Corp. (b) ................. 120,087
112,617 Intel Corp. ..................................... 2,419,013
26,865 MEMC Electronic Materials, Inc. (b) ............. 1,653,272
26,567 National Semiconductor Corp. .................... 545,686
12,302 Netlogic Microsystems, Inc. (b) ................. 408,426
10,781 NVIDIA Corp. (b) ................................ 201,820
16,634 Power Integrations, Inc. (b) .................... 525,801
3,096 Sigma Designs, Inc. (b) ......................... 43,003
83,229 TriQuint Semiconductor, Inc. (b) ................ 504,368
-----------
7,110,289
-----------
SOFTWARE - 7.6%
20,509 EPIQ Systems, Inc. (b) .......................... 291,228
17,837 JDA Software Group, Inc. (b) .................... 322,850
222,392 Microsoft Corp. ................................. 6,118,004
18,082 Radiant Systems, Inc. (b) ....................... 194,020
-----------
6,926,102
-----------
SPECIALTY RETAIL - 1.2%
2,455 AutoZone, Inc. (b) .............................. 297,080
16,100 Best Buy Company, Inc. .......................... 637,560
2,868 GameStop Corp., Class A (b) ..................... 115,867
-----------
1,050,507
-----------
TEXTILES, APPAREL & LUXURY GOODS - 0.3%
1,114 Deckers Outdoor Corp. (b) ....................... 155,069
4,182 Fossil, Inc. (b) ................................ 121,571
-----------
276,640
-----------
TRADING COMPANY & DISTRIBUTORS - 0.6%
14,594 Kaman Corp. ..................................... 332,159
15,171 Rush Enterprises, Inc., Class A (b) ............. 182,204
-----------
514,363
-----------
See Notes to Financial Statements.
Page 15
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
WIRELESS TELECOMMUNICATION SERVICES - 0.2%
1,978 Millicom International Cellular S.A. ............ $ 204,728
-----------
TOTAL INVESTMENTS - 100.0% ...................... 90,572,596
(Cost $100,392,246)
NET OTHER ASSETS AND LIABILITIES - 0.0% ......... (44,183)
-----------
NET ASSETS - 100.0% ............................. $90,528,413
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $90,572,596
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs
--
-----------
TOTAL $90,572,596
===========
See Notes to Financial Statements.
Page 16
THE DOW(R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ -------------------------------------------- ----------
COMMON STOCKS - 99.9%
AEROSPACE & DEFENSE - 9.7%
18,020 Honeywell International, Inc. .............. $ 906,046
----------
COMPUTERS & PERIPHERALS - 12.7%
10,018 International Business Machines Corp. ...... 1,187,434
----------
DIVERSIFIED FINANCIAL SERVICES - 16.0%
37,647 Citigroup, Inc. ............................ 630,964
25,491 JPMorgan Chase & Company ................... 874,596
----------
1,505,560
----------
HOTELS, RESTAURANTS & LEISURE - 11.1%
18,531 McDonald's Corp. ........................... 1,041,813
----------
MEDIA - 11.3%
34,014 Walt Disney (The), Company ................. 1,061,237
----------
OIL, GAS & CONSUMABLE FUELS - 10.9%
11,609 Exxon Mobil Corp. .......................... 1,023,101
----------
PHARMACEUTICALS - 9.0%
48,158 Pfizer, Inc. ............................... 841,320
----------
SOFTWARE - 8.9%
30,531 Microsoft Corp. ............................ 839,908
----------
SPECIALTY RETAIL - 10.3%
41,332 Home Depot (The), Inc....................... 967,994
----------
TOTAL INVESTMENTS - 99.9%................... 9,374,413
(Cost $10,943,826)
NET OTHER ASSETS AND LIABILITIES - 0.1%..... 10,335
----------
NET ASSETS - 100.0% ........................ $9,384,748
==========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $9,374,413
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
----------
TOTAL $9,374,413
==========
See Notes to Financial Statements.
Page 17
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------- -------------
COMMON STOCKS - 99.8%
AUTO COMPONENTS - 6.4%
142,554 Superior Industries International, Inc.... $ 2,406,312
-----------
CHEMICALS - 13.7%
127,725 RPM International, Inc. .................. 2,631,135
90,506 Sensient Technologies Corp. .............. 2,548,649
-----------
5,179,784
-----------
COMMERCIAL BANKS - 21.2%
196,158 Colonial BancGroup (The), Inc. ........... 867,018
336,670 First BanCorp. ........................... 2,134,488
110,064 KeyCorp .................................. 1,208,503
167,181 South Financial Group (The), Inc. ........ 655,350
172,385 Umpqua Holdings Corp. .................... 2,091,030
66,855 Wachovia Corp. ........................... 1,038,258
-----------
7,994,647
-----------
DIVERSIFIED FINANCIAL SERVICES - 4.0%
44,045 JPMorgan Chase & Company ................. 1,511,184
-----------
HOUSEHOLD DURABLES - 6.7%
327,775 La-Z-Boy, Inc. ........................... 2,507,479
-----------
INSURANCE - 5.5%
59,027 Zenith National Insurance Corp. .......... 2,075,389
-----------
MEDIA - 1.9%
179,144 Lee Enterprises, Inc. .................... 714,785
-----------
MULTI-UTILITIES - 13.1%
58,270 DTE Energy Company ....................... 2,472,979
138,017 NiSource, Inc. ........................... 2,473,265
-----------
4,946,244
-----------
PAPER & FOREST PRODUCTS - 5.2%
82,061 MeadWestvaco Corp. ....................... 1,956,334
-----------
THRIFTS & MORTGAGE FINANCE - 16.1%
215,659 First Niagara Financial Group, Inc. ...... 2,773,375
149,002 People's United Financial, Inc. .......... 2,324,431
199,161 Washington Mutual, Inc. .................. 981,864
-----------
6,079,670
-----------
TOBACCO - 6.0%
49,887 Universal Corp. .......................... 2,255,888
-----------
TOTAL INVESTMENTS - 99.8% ................ 37,627,716
(Cost $52,093,030)
NET OTHER ASSETS AND LIABILITIES - 0.2%... 90,025
-----------
NET ASSETS - 100.0% ...................... $37,717,741
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
See Notes to Financial Statements.
Page 18
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $37,627,716
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $37,627,716
===========
See Notes to Financial Statements.
Page 19
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ---------- ------------------------------------------- -----------
COMMON STOCKS - 99.3%
HONG KONG - 39.0%
2,756,849 BOC Hong Kong (Holdings) Ltd. ............. $ 7,301,136
2,061,000 Cheung Kong Infrastructure Holdings Ltd.... 8,722,667
1,347,000 Hongkong Electric Holdings Ltd. ........... 8,058,916
12,913,000 PCCW Ltd. ................................. 7,816,755
2,132,000 Yue Yuen Industrial (Holdings) Ltd. ....... 5,063,905
-----------
36,963,379
-----------
UNITED KINGDOM - 33.2%
1,389,131 BT Group PLC .............................. 5,531,067
1,346,029 GKN PLC ................................... 5,978,775
1,189,906 Ladbrokes PLC ............................. 6,085,216
3,237,357 LogicaCMG PLC ............................. 6,964,136
865,140 Tate & Lyle PLC ........................... 6,849,777
-----------
31,408,971
-----------
UNITED STATES - 27.1%
258,747 Citigroup, Inc. ........................... 4,336,600
202,964 General Electric Company .................. 5,417,109
299,553 General Motors Corp. ...................... 3,444,860
284,059 Home Depot (The), Inc. .................... 6,652,662
330,947 Pfizer, Inc. .............................. 5,781,644
-----------
25,632,875
-----------
TOTAL INVESTMENTS - 99.3% ................. 94,005,225
(Cost $118,233,314)
NET OTHER ASSETS AND LIABILITIES - 0.7% ... 703,716
-----------
NET ASSETS - 100.0% ....................... $94,708,941
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $94,005,225
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $94,005,225
===========
See Notes to Financial Statements.
Page 20
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Electric Utilities ...................... 17.7%
Diversified Telecommunication Services... 14.2
Commercial Banks ........................ 7.7
IT Services ............................. 7.4
Food Products ........................... 7.2
Specialty Retail ........................ 7.0
Hotels, Restaurants & Leisure ........... 6.4
Auto Components ......................... 6.3
Pharmaceuticals ......................... 6.1
Industrial Conglomerates ................ 5.7
Textiles, Apparel & Luxury Goods ........ 5.3
Diversified Financial Services .......... 4.6
Automobiles ............................. 3.7
Net Other Assets and Liabilities ........ 0.7
-----
100.0%
=====
See Notes to Financial Statements.
Page 21
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ --------------------------------------------------------- -----------
COMMON STOCKS - 99.9%
AEROSPACE & DEFENSE - 8.5%
9,457 Lockheed Martin Corp. ................................... $ 933,028
-----------
BEVERAGES - 11.7%
6,399 Anheuser-Busch Companies, Inc. .......................... 397,506
13,947 PepsiCo, Inc. ........................................... 886,890
-----------
1,284,396
-----------
CAPITAL MARKETS - 2.4%
10,049 Janus Capital Group, Inc. ............................... 265,997
-----------
COMPUTERS & PERIPHERALS - 0.0%
3,764 Seagate Technology, Inc. (Escrow Shares) (b) (c) ........ 0
-----------
DIVERSIFIED CONSUMER SERVICES - 1.9%
4,580 Apollo Group, Inc., Class A (b) ......................... 202,711
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.4%
368 CenturyTel, Inc. (b) .................................... 13,097
6,126 Qwest Communications International, Inc. ................ 24,075
9,633 Verizon Communications, Inc. ............................ 341,008
-----------
378,180
-----------
ELECTRICAL EQUIPMENT - 1.4%
3,421 Rockwell Automation, Inc. ............................... 149,600
-----------
ENERGY EQUIPMENT & SERVICES - 0.3%
440 ENSCO International, Inc. ............................... 35,526
-----------
HEALTH CARE PROVIDERS & SERVICES - 11.4%
7,697 Express Scripts, Inc. (b) ............................... 482,756
16,346 Medco Health Solutions, Inc. (b) ........................ 771,531
-----------
1,254,287
-----------
HOUSEHOLD PRODUCTS - 0.6%
1,208 Clorox (The) Company .................................... 63,058
-----------
INSURANCE - 17.2%
17,209 Aon Corp. ............................................... 790,581
22,347 Chubb (The), Corp. ...................................... 1,095,226
-----------
1,885,807
-----------
LIFE SCIENCES TOOLS & SERVICES - 1.8%
3,024 Waters Corp. (b) ........................................ 195,048
-----------
MACHINERY - 2.5%
3,772 Parker Hannifin Corp. ................................... 269,019
-----------
OIL, GAS & CONSUMABLE FUELS - 13.8%
16,458 Exxon Mobil Corp. ....................................... 1,450,444
1,672 Valero Energy Corp. ..................................... 68,853
-----------
1,519,297
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 17.0%
23,625 Altera Corp. ............................................ 489,038
16,161 MEMC Electronic Materials, Inc. (b) ..................... 994,548
18,862 National Semiconductor Corp. ............................ 387,425
-----------
1,871,011
-----------
See Notes to Financial Statements.
Page 22
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ --------------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 6.0%
1,741 AutoZone, Inc. (b) ...................................... $ 210,678
11,430 Best Buy Company, Inc. .................................. 452,628
-----------
663,306
-----------
TOTAL INVESTMENTS - 99.9% ............................... 10,970,271
(Cost $11,981,083)
NET OTHER ASSETS AND LIABILITIES - 0.1% ................. 5,740
-----------
NET ASSETS - 100.0% ..................................... $10,976,011
===========
- ----------
(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.
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $10,970,271
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs
--
-----------
TOTAL $10,970,271
===========
See Notes to Financial Statements.
Page 23
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ---------------------------------------------------------- ----------
COMMON STOCKS - 100.9%
CHEMICALS - 5.0%
6,136 Sigma-Aldrich Corp. ...................................... $ 330,485
----------
COMMUNICATIONS EQUIPMENT - 9.5%
5,349 Research In Motion Ltd. (b) .............................. 625,298
----------
COMPUTERS & PERIPHERALS - 8.0%
3,127 Apple, Inc. (b) .......................................... 523,585
----------
CONSTRUCTION & ENGINEERING - 7.6%
6,856 Foster Wheeler Ltd. (b) .................................. 501,516
----------
DIVERSIFIED CONSUMER SERVICES - 5.4%
7,985 Apollo Group, Inc., Class A (b) .......................... 353,416
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 7.5%
1,840 Intuitive Surgical, Inc. (b) ............................. 495,696
----------
HEALTH CARE PROVIDERS & SERVICES - 8.2%
8,575 Express Scripts, Inc. (b) ................................ 537,824
----------
HOUSEHOLD DURABLES - 4.1%
6,304 Garmin Ltd. .............................................. 270,063
----------
INTERNET SOFTWARE & SERVICES - 12.5%
1,126 Baidu.com, Inc., ADR (b) ................................. 352,393
891 Google, Inc., Class A (b) ................................ 469,040
----------
821,433
----------
METALS & MINING - 5.4%
9,096 Steel Dynamics, Inc. ..................................... 355,381
----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 12.8%
23,367 Intel Corp. .............................................. 501,923
17,973 NVIDIA Corp. (b) ......................................... 336,455
----------
838,378
----------
SOFTWARE - 7.2%
17,310 Microsoft Corp. .......................................... 476,198
----------
WIRELESS TELECOMMUNICATION SERVICES - 7.7%
4,884 Millicom International Cellular S.A. ..................... 505,495
----------
TOTAL INVESTMENTS - 100.9% ............................... 6,634,768
(Cost $ 7,673,326)
NET OTHER ASSETS AND LIABILITIES - (0.9%) ................ (55,926)
----------
NET ASSETS - 100.0% ...................................... $6,578,842
==========
- ----------
(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 24
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $6,634,768
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
----------
TOTAL $6,634,768
==========
See Notes to Financial Statements.
Page 25
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- -----------
COMMON STOCKS - 100.3%
AIRLINES - 0.5%
3,557 Alaska Air Group, Inc. (b).................... $ 54,564
-----------
AUTO COMPONENTS - 1.7%
10,997 Superior Industries International, Inc........ 185,629
-----------
AUTOMOBILES - 1.2%
552 Daimler AG.................................... 34,042
1,612 Honda Motor Company Ltd., ADR................. 54,856
504 Toyota Motor Corp., ADR....................... 47,376
-----------
136,274
-----------
CAPITAL MARKETS - 0.9%
886 Credit Suisse Group, ADR...................... 40,145
411 Deutsche Bank AG.............................. 35,079
1,299 UBS AG (b).................................... 26,837
-----------
102,061
-----------
CHEMICALS - 8.5%
1,760 Mosaic (The), Company (b)..................... 254,672
1,273 Potash Corp. of Saskatchewan, Inc............. 290,970
9,855 RPM International, Inc........................ 203,013
6,977 Sensient Technologies Corp.................... 196,472
-----------
945,127
-----------
COMMERCIAL BANKS - 9.2%
1,169 Allied Irish Banks PLC, ADR................... 35,994
1,329 Barclays PLC, ADR............................. 30,766
738 Canadian Imperial Bank of Commerce............ 40,546
15,133 Colonial BancGroup (The), Inc................. 66,888
2,220 Community Bank System, Inc.................... 45,776
33,304 First BanCorp................................. 211,147
8,491 KeyCorp....................................... 93,231
723 Kookmin Bank, ADR............................. 42,303
1,418 Lloyds TSB Group PLC, ADR..................... 34,982
5,781 Mitsubishi UFJ Financial Group, Inc., ADR..... 50,873
1,032 Royal Bank of Canada.......................... 46,099
5,981 Royal Bank of Scotland Group PLC, ADR......... 25,658
12,899 South Financial Group (The), Inc.............. 50,564
13,299 Umpqua Holdings Corp.......................... 161,317
5,277 Wachovia Corp................................. 81,952
-----------
1,018,096
-----------
COMMERCIAL SERVICES & SUPPLIES - 1.7%
4,627 Kelly Services Inc., Class A.................. 89,440
1,285 School Specialty, Inc. (b).................... 38,203
6,082 Spherion Corp. (b)............................ 28,099
2,453 Volt Information Sciences, Inc. (b)........... 29,215
-----------
184,957
-----------
See Notes to Financial Statements.
Page 26
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
COMMUNICATIONS EQUIPMENT - 5.8%
15,508 Nokia Oyj Corp., ADR.......................... $ 379,946
2,252 Research In Motion Ltd. (b)................... 263,259
-----------
643,205
-----------
COMPUTERS & PERIPHERALS - 5.9%
3,480 Apple, Inc. (b)............................... 582,691
1,667 Hutchinson Technology, Inc. (b)............... 22,405
1,344 Western Digital Corp. (b)..................... 46,408
-----------
651,504
-----------
CONSTRUCTION & ENGINEERING - 0.4%
488 Jacobs Engineering Group, Inc. (b)............ 39,382
-----------
DISTRIBUTORS - 0.3%
3,594 Audiovox Corp., Class A (b)................... 35,293
-----------
DIVERSIFIED CONSUMER SERVICES - 0.3%
670 Apollo Group, Inc., Class A (b)............... 29,654
-----------
DIVERSIFIED FINANCIAL SERVICES - 1.8%
1,363 ING Groep N.V., ADR........................... 43,003
4,643 JPMorgan Chase & Company...................... 159,301
-----------
202,304
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 6.1%
2,438 Deutsche Telekom AG, ADR...................... 39,910
1,485 France Telecom S.A., ADR...................... 44,001
2,183 Nippon Telegraph & Telephone Corp., ADR....... 53,047
1,719 Telecom Italia SpA, ADR....................... 34,311
6,364 Telefonica S.A., ADR.......................... 506,447
-----------
677,716
-----------
ELECTRIC UTILITIES - 2.2%
2,512 Idacorp, Inc.................................. 72,572
2,532 Korea Electric Power Corp., ADR............... 36,790
5,193 Sierra Pacific Resources...................... 66,003
3,391 Westar Energy, Inc............................ 72,940
-----------
248,305
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 2.1%
2,245 Arrow Electronics, Inc. (b)................... 68,966
1,233 FLIR Systems, Inc. (b)........................ 50,023
13,364 Kemet Corp. (b)............................... 43,299
7,810 Vishay Intertechnology, Inc. (b).............. 69,275
-----------
231,563
-----------
ENERGY EQUIPMENT & SERVICES - 2.1%
1,416 National-Oilwell Varco, Inc. (b).............. 125,628
1,589 Tidewater, Inc................................ 103,333
-----------
228,961
-----------
FOOD PRODUCTS - 0.4%
1,902 TreeHouse Foods, Inc. (b)..................... 46,143
-----------
See Notes to Financial Statements.
Page 27
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
GAS UTILITIES - 0.4%
1,589 Atmos Energy Corp............................. $ 43,809
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.4%
155 Intuitive Surgical, Inc. (b).................. 41,757
-----------
HEALTH CARE PROVIDERS & SERVICES - 1.7%
3,591 Kindred Healthcare, Inc. (b).................. 103,277
3,012 LifePoint Hospitals, Inc. (b)................. 85,240
-----------
188,517
-----------
HOTELS, RESTAURANTS & LEISURE - 1.1%
3,319 Bob Evans Farms, Inc.......................... 94,923
2,986 O'Charley's, Inc.............................. 30,039
-----------
124,962
-----------
HOUSEHOLD DURABLES - 3.1%
881 Garmin Ltd.................................... 37,742
23,522 La-Z-Boy, Inc................................. 179,943
1,192 Mohawk Industries, Inc. (b)................... 76,407
848 National Presto Industries, Inc............... 54,425
-----------
348,517
-----------
INDUSTRIAL CONGLOMERATES - 0.5%
904 McDermott International, Inc. (b)............. 55,949
-----------
INSURANCE - 7.0%
3,005 Aegon N.V..................................... 39,396
2,494 Allianz SE, ADR............................... 43,520
3,046 American Financial Group, Inc................. 81,481
887 Everest Re Group Ltd.......................... 70,703
1,955 Hanover Insurance Group (The), Inc............ 83,088
3,145 HCC Insurance Holdings, Inc................... 66,485
2,529 Presidential Life Corp........................ 38,997
1,205 Safety Insurance Group, Inc................... 42,958
1,942 Selective Insurance Group, Inc................ 36,432
1,485 United Fire & Casualty Company................ 39,991
3,021 W.R. Berkley Corp............................. 72,987
4,554 Zenith National Insurance Corp................ 160,119
-----------
776,157
-----------
INTERNET & CATALOG RETAIL - 0.3%
340 Priceline.com, Inc. (b)....................... 39,256
-----------
LEISURE EQUIPMENT & PRODUCTS - 0.4%
1,886 Jakks Pacific, Inc. (b)....................... 41,209
-----------
MACHINERY - 0.7%
1,109 Axsys Technologies, Inc. (b).................. 57,712
659 Dynamic Materials Corp........................ 21,714
-----------
79,426
-----------
See Notes to Financial Statements.
Page 28
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
MEDIA - 1.8%
1,091 AH Belo Corp., Class A........................ $ 6,219
5,090 Belo Corp., Class A........................... 37,208
19,964 Lee Enterprises, Inc.......................... 79,656
2,530 Scholastic Corp. (b).......................... 72,510
-----------
195,593
-----------
METALS & MINING - 6.3%
6,697 BHP Billiton Ltd., ADR........................ 570,518
1,190 Southern Copper Corp.......................... 126,890
-----------
697,408
-----------
MULTI-UTILITIES - 4.3%
2,066 Avista Corp................................... 44,336
4,494 DTE Energy Company............................ 190,725
10,651 NiSource, Inc................................. 190,866
4,064 PNM Resources, Inc............................ 48,605
-----------
474,532
-----------
MULTILINE RETAIL - 0.5%
4,530 Fred's Inc., Class A.......................... 50,917
-----------
OIL, GAS & CONSUMABLE FUELS - 2.9%
2,123 Cimarex Energy Company........................ 147,909
725 ENI SpA, ADR.................................. 53,817
1,484 Repsol YPF S.A., ADR.......................... 58,277
1,727 StatoilHydro ASA, ADR......................... 64,555
-----------
324,558
-----------
PAPER & FOREST PRODUCTS - 1.4%
6,330 MeadWestvaco Corp............................. 150,907
-----------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.4%
2,008 Colonial Properties Trust..................... 40,200
-----------
ROAD & RAIL - 2.4%
7,073 Avis Budget Group, Inc. (b)................... 59,201
2,593 Kansas City Southern (b)...................... 114,066
5,137 Werner Enterprises, Inc....................... 95,445
-----------
268,712
-----------
SEMICONDUCTOR & SEMICONDUCTOR EQUIPMENT - 2.7%
3,349 Actel Corp. (b)............................... 56,431
3,335 Brooks Automation, Inc. (b)................... 27,581
1,092 Cypress Semiconductor Corp. (b)............... 27,027
923 MEMC Electronic Materials, Inc. (b)........... 56,801
2,298 MKS Instruments, Inc. (b)..................... 50,326
3,543 Photronics, Inc. (b).......................... 24,943
15,337 RF Micro Devices, Inc. (b).................... 44,477
695 Sigma Designs, Inc. (b)....................... 9,654
-----------
297,240
-----------
See Notes to Financial Statements.
Page 29
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 2.4%
5,172 Collective Brands, Inc. (b)................... $ 60,150
645 GameStop Corp., Class A (b)................... 26,058
3,442 Jo-Ann Stores, Inc. (b)....................... 79,269
3,868 Pep Boys-Manny, Moe & Jack (The).............. 33,729
2,280 Sonic Automotive, Inc., Class A............... 29,389
3,042 Stage Stores, Inc............................. 35,500
-----------
264,095
-----------
TEXTILES, APPAREL & LUXURY GOODS - 0.6%
250 Deckers Outdoor Corp. (b)..................... 34,800
938 Fossil, Inc. (b).............................. 27,268
-----------
62,068
-----------
THRIFTS & MORTGAGE FINANCE - 4.5%
4,068 Corus Bankshares, Inc......................... 16,923
16,638 First Niagara Financial Group, Inc............ 213,965
1,249 FirstFed Financial Corp. (b).................. 10,042
11,498 People's United Financial, Inc................ 179,369
15,364 Washington Mutual, Inc........................ 75,745
-----------
496,044
-----------
TOBACCO - 1.6%
3,850 Universal Corp................................ 174,097
-----------
TRADING COMPANIES & DISTRIBUTORS - 1.8%
2,405 GATX Corp..................................... 106,614
4,831 United Rentals, Inc. (b)...................... 94,736
-----------
201,350
-----------
TOTAL INVESTMENTS - 100.3%
(Cost $12,754,117)............................ 11,098,018
NET OTHER ASSETS AND LIABILITIES - (0.3%)..... (35,086)
-----------
NET ASSETS - 100.0%........................... $11,062,932
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $11,098,018
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $11,098,018
===========
See Notes to Financial Statements.
Page 30
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - 99.9%
CHEMICALS - 23.9%
32,598 Mosaic (The), Company (b) ....................... $ 4,716,931
21,666 Potash Corp. of Saskatchewan, Inc. .............. 4,952,198
-----------
9,669,129
-----------
COMMUNICATIONS EQUIPMENT - 12.6%
80,644 Nokia Oyj Corp., ADR ............................ 1,975,778
26,716 Research In Motion Ltd. (b) ..................... 3,123,100
-----------
5,098,878
-----------
COMPUTERS & PERIPHERALS - 8.3%
15,633 Apple, Inc. (b) ................................. 2,617,589
21,417 Western Digital Corp. (b) ....................... 739,529
-----------
3,357,118
-----------
CONSTRUCTION & ENGINEERING - 2.4%
11,851 Jacobs Engineering Group, Inc. (b) .............. 956,376
-----------
DIVERSIFIED CONSUMER SERVICES - 1.8%
16,339 Apollo Group, Inc., Class A (b) ................. 723,164
-----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 6.2%
31,829 Telefonica S.A., ADR ............................ 2,532,952
-----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 1.3%
12,780 FLIR Systems, Inc. (b) .......................... 518,485
-----------
ENERGY EQUIPMENT & SERVICES - 7.5%
34,407 National-Oilwell Varco, Inc. (b) ................ 3,052,589
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.5%
3,767 Intuitive Surgical, Inc. (b) .................... 1,014,830
-----------
HOUSEHOLD DURABLES - 2.3%
21,437 Garmin Ltd. ..................................... 918,361
-----------
INDUSTRIAL CONGLOMERATES - 3.3%
21,942 McDermott International, Inc. (b) ............... 1,357,990
-----------
INTERNET & CATALOG RETAIL - 1.0%
3,684 Priceline.com, Inc. (b) ......................... 425,355
-----------
MACHINERY - 2.0%
11,485 Axsys Technologies, Inc. (b) .................... 597,679
6,847 Dynamic Materials Corp. ......................... 225,609
-----------
823,288
-----------
METALS & MINING - 17.0%
43,781 BHP Billiton Ltd., ADR .......................... 3,729,703
29,539 Southern Copper Corp. ........................... 3,149,744
-----------
6,879,447
-----------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 4.6%
15,713 Cypress Semiconductor Corp. (b) ................. 388,897
22,428 MEMC Electronic Materials, Inc. (b) ............. 1,380,219
7,224 Sigma Designs, Inc. (b) ......................... 100,341
-----------
1,869,457
-----------
See Notes to Financial Statements.
Page 31
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2008 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 1.6%
15,625 GameStop Corp., Class A (b) ..................... $ 631,250
-----------
TEXTILES, APPAREL & LUXURY GOODS - 1.6%
2,599 Deckers Outdoor Corp. (b) ....................... 361,781
9,761 Fossil, Inc. (b) ................................ 283,752
-----------
645,533
-----------
TOTAL INVESTMENTS - 99.9%
(Cost $ 38,364,107) .......................... 40,474,202
NET OTHER ASSETS AND LIABILITIES - 0.1% ......... 22,675
-----------
NET ASSETS - 100.0% ............................. $40,496,877
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
ADR American Depositary Receipt
Summary of inputs used to value the Portfolio's net assets as of June 30, 2008
is as follows (See Note 2A Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS IN SECURITIES
- ---------------- -------------------------
Level 1 - Quoted Prices $40,474,202
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $40,474,202
===========
See Notes to Financial Statements.
Page 32
This Page Left Blank Intentionally.
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
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) ................................... $ 90,572,596 $ 9,374,413 $ 37,627,716 $ 94,005,225
Cash ........................................................ -- -- -- --
Prepaid expenses ............................................ 4,112 384 2,058 5,660
Receivables:
Dividends ................................................ 46,603 -- 128,926 552,407
Dividend reclaim ......................................... 11,000 -- -- --
Interest ................................................. 292 85 104 287
Investment securities sold ............................... 2,992,187 99,619 822,576 1,999,563
Investment advisory fees ................................. -- -- -- --
Other assets ................................................ -- -- 298 --
------------ ----------- ------------ ------------
Total Assets .......................................... 93,626,790 9,474,501 38,581,678 96,563,142
------------ ----------- ------------ ------------
LIABILITIES:
Payables
Due to custodian ......................................... 2,322,264 11,086 578,779 1,318,013
Investment advisory fees ................................. 50,818 3,422 22,210 52,552
Membership Interest servicing fees ....................... 85,003 8,979 41,751 89,057
12b-1 service fees ....................................... 21,174 2,148 9,254 21,897
Custodian fees ........................................... 5,792 3,255 1,763 4,718
Administrative fees ...................................... 2,202 223 962 2,277
Audit fees ............................................... 8,054 8,054 8,054 8,054
Legal fees ............................................... 24,086 2,290 12,010 15,862
Printing fees ............................................ 5,113 5,113 5,113 5,113
Membership Interests redeemed ............................ 566,742 42,330 180,934 325,051
Trustees' fees and expenses .............................. 2,116 157 1,070 --
Accrued expenses and other payables ......................... 5,013 2,696 2,037 11,607
------------ ----------- ------------ ------------
Total Liabilities ..................................... 3,098,377 89,753 863,937 1,854,201
------------ ----------- ------------ ------------
NET ASSETS .................................................. $ 90,528,413 $ 9,384,748 $ 37,717,741 $ 94,708,941
============ =========== ============ ============
(1) Investments, at cost .................................... $100,392,246 $10,943,826 $ 52,093,030 $118,233,314
============ =========== ============ ============
NET ASSETS CONSIST OF:
Paid-in capital ............................................. $ 51,466,775 $ 7,239,662 $ 44,922,434 $ 74,557,635
Accumulated net investment income (loss) .................... 3,079,709 1,102,263 5,048,159 9,457,511
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions ............................ 45,801,579 2,612,236 2,212,462 34,919,022
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions ............................ (9,819,650) (1,569,413) (14,465,314) (24,225,227)
------------ ----------- ------------ ------------
NET ASSETS .................................................. $ 90,528,413 $ 9,384,748 $ 37,717,741 $ 94,708,941
============ =========== ============ ============
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) ................................... $ 10.97 $ 9.12 $ 8.63 $ 19.81
============ =========== ============ ============
Number of Membership Interests outstanding .................. 8,251,543 1,028,849 4,373,007 4,779,714
============ =========== ============ ============
See Notes to Financial Statements.
Page 34
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
ASSETS:
Investments, at value (1) ................................... $ 10,970,271 $ 6,634,768 $ 11,098,018 $ 40,474,202
Cash ........................................................ 94,146 -- -- 119,663
Prepaid expenses ............................................ 389 308 178 1,108
Receivables:
Dividends ................................................ 8,600 930 15,631 960
Dividend reclaim ......................................... -- -- 937 1,728
Interest ................................................. 87 86 104 --
Investment securities sold ............................... -- 149,204 708,443 --
Investment advisory fees ................................. 2,204 -- 42,901 --
Other assets ................................................ -- 15 -- --
------------ ----------- ------------ ------------
Total Assets .......................................... 11,075,697 6,785,311 11,866,212 40,597,661
------------ ----------- ------------ ------------
LIABILITIES:
Payables
Due to custodian ......................................... -- 14,553 688,674 --
Investment advisory fees ................................. -- 3,607 -- 20,763
Membership Interest servicing fees ....................... 9,115 5,461 9,269 30,742
12b-1 service fees ....................................... 2,420 1,503 2,709 8,651
Custodian fees ........................................... 195 558 460 2,450
Administrative fees ...................................... 252 156 282 900
Audit fees ............................................... 8,054 8,054 8,054 8,054
Legal fees ............................................... 2,766 1,256 662 5,299
Printing fees ............................................ 5,113 5,113 5,113 5,113
Membership Interests redeemed ............................ 70,155 165,719 88,000 12,048
Trustees' fees and expenses .............................. 106 -- -- 8
Accrued expenses and other payables ......................... 1,510 489 57 6,756
------------ ----------- ------------ ------------
Total Liabilities ..................................... 99,686 206,469 803,280 100,784
------------ ----------- ------------ ------------
NET ASSETS .................................................. $ 10,976,011 $ 6,578,842 $ 11,062,932 $ 40,496,877
============ =========== ============ ============
(1) Investments, at cost .................................... $ 11,981,083 $ 7,673,326 $ 12,754,117 $ 38,364,107
============ =========== ============ ============
NET ASSETS CONSIST OF:
Paid-in capital ............................................. $ 10,580,744 $ 8,986,504 $ 29,400,845 $ 25,035,859
Accumulated net investment income (loss) .................... 1,414 (449,277) (141,540) (967,472)
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions ............................ 1,404,665 (919,827) (16,540,274) 14,318,395
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions ............................ (1,010,812) (1,038,558) (1,656,099) 2,110,095
------------ ----------- ------------ ------------
NET ASSETS .................................................. $ 10,976,011 $ 6,578,842 $ 11,062,932 $ 40,496,877
============ =========== ============ ============
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) ................................... $ 8.43 $ 9.99 $ 4.80 $ 5.76
============ =========== ============ ============
Number of Membership Interests outstanding .................. 1,301,423 658,780 2,305,373 7,025,434
============ =========== ============ ============
See Notes to Financial Statements.
Page 35
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
INVESTMENT INCOME:
Dividends ................................................... $ 1,487,632 $ 155,028 $ 1,300,674 $ 2,714,340
Foreign withholding tax on dividend income .................. (140,829) -- (2,443) --
Interest .................................................... 7,175 835 6,067 12,923
------------ ----------- ------------ ------------
Total investment income .................................. 1,353,978 155,863 1,304,298 2,727,263
------------ ----------- ------------ ------------
EXPENSES:
Investment advisory fees .................................... 338,665 36,595 179,101 368,234
Membership Interest servicing fees .......................... 184,628 19,991 97,513 199,981
12b-1 service fees .......................................... 141,110 15,248 74,625 153,431
Fund accounting fees ........................................ 31,044 3,354 16,412 33,755
Custodian fees .............................................. 66,739 9,932 20,008 73,214
Administration fees ......................................... 14,675 1,586 7,758 15,957
Audit fees .................................................. 8,554 8,554 8,554 8,554
Legal fees .................................................. 11,726 153 5,590 15,633
Printing fees ............................................... 5,217 5,217 5,217 5,217
Trustees' fees and expenses ................................. 6,829 795 3,511 6,412
Other ....................................................... 12,197 5,478 7,507 19,269
------------ ----------- ------------ ------------
Total expenses ........................................... 821,384 106,903 425,796 899,657
Fees waived or expenses reimbursed by the investment
advisor ............................................... -- (16,522) -- --
------------ ----------- ------------ ------------
Net expenses ................................................ 821,384 90,381 425,796 899,657
------------ ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS) ................................ 532,594 65,482 878,502 1,827,606
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .............................................. 4,306,044 (412,121) (6,789,205) 10,680,412
Foreign currency transactions ............................ -- -- -- (87,401)
------------ ----------- ------------ ------------
Net realized gain (loss) .................................... 4,306,044 (412,121) (6,789,205) 10,593,011
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Investments .............................................. (27,888,967) (1,612,354) (11,953,627) (37,657,727)
Foreign currency translation ............................. -- -- -- 9,773
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) ........ (27,888,967) (1,612,354) (11,953,627) (37,647,954)
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ..................... (23,582,923) (2,024,475) (18,742,832) (27,054,943)
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ................................ $(23,050,329) $(1,958,993) $(17,864,330) $(25,227,337)
============ =========== ============ ============
See Notes to Financial Statements.
Page 36
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------ ------------
INVESTMENT INCOME:
Dividends .......................................... $ 88,086 $ 25,963 $ 164,007 $ 238,008
Foreign withholding tax on dividend income ......... -- (1,797) (10,457) (20,563)
Interest ........................................... 1,979 1,296 2,208 4,889
----------- ----------- ------------ ------------
Total investment income ......................... 90,065 25,462 155,758 222,334
----------- ----------- ------------ ------------
EXPENSES:
Investment advisory fees ........................... 36,113 22,564 32,419 112,940
Membership Interest servicing fees ................. 19,668 12,247 17,416 61,073
12b-1 service fees ................................. 15,047 9,401 13,508 47,059
Fund accounting fees ............................... 3,310 2,068 2,972 10,353
Custodian fees ..................................... 10,728 7,707 49,865 9,048
Administration fees ................................ 1,565 978 1,404 4,894
Audit fees ......................................... 8,554 8,554 8,554 8,554
Legal fees ......................................... 920 592 431 2,664
Printing fees ...................................... 5,217 5,217 5,217 5,217
Trustees' fees and expenses ........................ 648 349 311 1,664
Other .............................................. 76 2,223 3,505 4,094
----------- ----------- ------------ ------------
Total expenses .................................. 101,846 71,900 135,602 267,560
Fees waived or expenses reimbursed by the
investment advisor ........................... (13,064) (16,600) (61,963) --
----------- ----------- ------------ ------------
Net expenses ....................................... 88,782 55,300 73,639 267,560
----------- ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS) ....................... 1,283 (29,838) 82,119 (45,226)
----------- ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ..................................... (375,911) (276,992) (995,931) 3,348,230
Foreign currency transactions ................... -- -- -- --
----------- ----------- ------------ ------------
Net realized gain (loss) ........................... (375,911) (276,992) (995,931) 3,348,230
----------- ----------- ------------ ------------
Net change in unrealized appreciation (depreciation)
on:
Investments ..................................... (1,592,450) (1,946,751) (1,680,316) (5,052,462)
Foreign currency translation .................... -- -- -- --
----------- ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) (1,592,450) (1,946,751) (1,680,316) (5,052,462)
----------- ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............ (1,968,361) (2,223,743) (2,676,247) (1,704,232)
----------- ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ....................... $(1,967,078) $(2,253,581) $ (2,594,128) $ (1,749,458)
=========== =========== ============ ============
See Notes to Financial Statements.
Page 37
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
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) .................. $ 532,594 $ 65,482 $ 878,502 $ 1,827,606
Net realized gain (loss) ...................... 4,306,044 (412,121) (6,789,205) 10,593,011
Net change in unrealized appreciation
(depreciation) ............................. (27,888,967) (1,612,354) (11,953,627) (37,647,954)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations ............................ (23,050,329) (1,958,993) (17,864,330) (25,227,337)
Net increase (decrease) in net assets from
Membership Interest transactions ........... (60,555,371) (4,828,168) (27,318,055) (53,805,071)
------------ ----------- ------------ ------------
Total increase (decrease) in net assets ....... (83,605,700) (6,787,161) (45,182,385) (79,032,408)
NET ASSETS:
Beginning of period ........................... 174,134,113 16,171,909 82,900,126 173,741,349
------------ ----------- ------------ ------------
End of period ................................. $ 90,528,413 $ 9,384,748 $ 37,717,741 $ 94,708,941
============ =========== ============ ============
Accumulated net investment income (loss) at
end of period .............................. $ 3,079,709 $ 1,102,263 $ 5,048,159 $ 9,457,511
============ =========== ============ ============
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
------------ ------------ ------------ ------------
Total 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
============ ============ ============ ============
See Notes to Financial Statements.
Page 38
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------ -------------
OPERATIONS:
Net investment income (loss) .................. $ 1,283 $ (29,838) $ 82,119 $ (45,226)
Net realized gain (loss) ...................... (375,911) (276,992) (995,931) 3,348,230
Net change in unrealized appreciation
(depreciation) ............................. (1,592,450) (1,946,751) (1,680,316) (5,052,462)
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations ............................ (1,967,078) (2,253,581) (2,594,128) (1,749,458)
Net increase (decrease) in net assets from
Membership Interest transactions ........... (2,846,148) (2,483,590) 949,219 (1,751,962)
----------- ----------- ----------- -----------
Total increase (decrease) in net assets ....... (4,813,226) (4,737,171) (1,644,909) (3,501,420)
NET ASSETS:
Beginning of period ........................... 15,789,237 11,316,013 12,707,841 43,998,297
----------- ----------- ----------- -----------
End of period ................................. $10,976,011 $ 6,578,842 $11,062,932 $40,496,877
=========== =========== =========== ===========
Accumulated net investment income (loss) at
end of period .............................. $ 1,414 $ (449,277) $ (141,540) $ (967,472)
=========== =========== =========== ===========
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO 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)
----------- ----------- ----------- -----------
Total 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)
=========== =========== =========== ===========
See Notes to Financial Statements.
Page 39
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY
FOR THE SIX MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ --------------- ------------
AMOUNT:
Sold .................... $ 14,393,359 $ 2,015,447 $ 10,918,631 $ 12,982,170
Redeemed ................ (74,948,730) (6,843,615) (38,236,686) (66,787,241)
------------ ------------ ------------ ------------
Net increase (decrease).. $(60,555,371) $ (4,828,168) $(27,318,055) $(53,805,071)
============ ============ ============ ============
MEMBERSHIP INTEREST:
Sold .................... 1,257,055 194,019 930,177 558,744
Redeemed ................ (6,582,471) (687,010) (3,590,514) (3,029,341)
------------ ------------ ------------ ------------
Net increase (decrease).. (5,325,416) (492,991) (2,660,337) (2,470,597)
============ ============ ============ ============
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
============ ============ ============ ============
See Notes to Financial Statements.
Page 40
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- ------------ ------------
AMOUNT:
Sold ....................
Redeemed ................
$ 5,058,261 $ 1,999,767 $10,497,617 $ 10,325,584
Net increase (decrease).. (7,904,409) (4,483,357) (9,548,398) (12,077,546)
----------- ----------- ----------- ------------
MEMBERSHIP INTEREST: $(2,846,148) $(2,483,590) $ 949,219 $ (1,751,962)
Sold .................... =========== =========== =========== ============
Redeemed ................
585,379 187,403 1,947,856 1,860,305
Net increase (decrease).. (917,627) (442,755) (1,850,779) (2,283,435)
----------- ----------- ----------- ------------
(332,248) (255,352) 97,077 (423,130)
=========== =========== =========== ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO 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)
=========== =========== ============ ============
See Notes to Financial Statements.
Page 41
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
----------- --------- -------- -------- -------- --------
Net asset value, beginning of period ............. $ 12.83 $ 11.72 $ 10.51 $ 9.80 $ 8.73 $ 6.47
------- -------- -------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.05(a) 0.07(a) 0.06 0.03 0.01(a) 0.02
Net realized and unrealized gain (loss) .......... (1.91) 1.04 1.15 0.68 1.06 2.24
------- -------- -------- -------- -------- -------
Total from investment operations ................. (1.86) 1.11 1.21 0.71 1.07 2.26
------- -------- -------- -------- -------- -------
Net asset value, end of period ................... $ 10.97 $ 12.83 $ 11.72 $ 10.51 $ 9.80 $ 8.73
======= ======== ======== ======== ======== =======
TOTAL RETURN (b) ................................. (14.50)% 9.47% 11.51% 7.24%(d) 12.26%(d) 34.93%(d)
======= ======== ======== ======== ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $90,528 $174,134 $203,868 $182,892 $108,473 $20,488
Ratio of operating expenses to average net assets
without fee waivers and expenses reimbursed ... 1.44%(c) 1.35% 1.37% 1.48% 2.07% 1.69%
Ratio of operating expenses to average net
assets .................................... 1.44%(c) 1.35% 1.37% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................... 0.94%(c) 0.53% 0.54% 0.26% 0.14% 0.41%
Portfolio turnover rate .......................... 115% 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 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.
(c) Annualized.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 42
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ............. $ 10.63 $ 10.56 $ 8.41 $ 8.69 $ 8.37 $ 6.98
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.05(a) 0.11(a) 0.14(a) 0.14(a) 0.15(a) 0.22
Net realized and unrealized gain (loss) .......... (1.56) (0.04) 2.01 (0.42) 0.17 1.17
------- ------- ------- ------- ------- ------
Total from investment operations ................. (1.51) 0.07 2.15 (0.28) 0.32 1.39
------- ------- ------- ------- ------- ------
Net asset value, end of period ................... $ 9.12 $ 10.63 $ 10.56 $ 8.41 $ 8.69 $ 8.37
======= ======= ======= ======= ======= ======
TOTAL RETURN (b) ................................. (14.21)%(d) 0.66%(d) 25.56% (3.22)%(d) 3.82%(d) 19.91%(d)
======= ======= ======= ======= ======= ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $ 9,385 $16,172 $27,955 $11,611 $12,749 $4,268
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.74%(c) 1.56% 1.47% 1.59% 2.33% 3.27%
Ratio of operating expenses to average
net assets .................................... 1.47%(c) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................... 1.07%(c) 1.01% 1.47% 1.66% 1.84% 2.37%
Portfolio turnover rate .......................... 74% 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 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.
(c) Annualized.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 43
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR PERIOD
06/30/08 ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05(a)
----------- -------- -------- -----------
Net asset value, beginning of period ............. $ 11.79 $ 11.66 $ 9.87 $ 10.00
------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.16(b) 0.25(b) 0.23(b) 0.12(b)
Net realized and unrealized gain (loss) .......... (3.32) (0.12) 1.56 (0.25)
------- ------- -------- -------
Total from investment operations ................. (3.16) 0.13 1.79 (0.13)
------- ------- -------- -------
Net asset value, end of period ................... $ 8.63 $ 11.79 $ 11.66 $ 9.87
======= ======= ======== =======
TOTAL RETURN (c) ................................. (26.80)% 1.12% 18.14% (1.30)%(e)
======= ======= ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $37,718 $82,900 $100,906 $58,438
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.42%(d) 1.36% 1.37% 1.52%(d)
Ratio of operating expenses to average
net assets .................................... 1.42%(d) 1.36% 1.37% 1.47%(d)
Ratio of net investment income to average
net assets .................................... 2.93%(d) 2.06% 2.11% 2.00%(d)
Portfolio turnover rate .......................... 125% 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 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.
(e) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 44
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05(a) 12/31/04 12/31/03
----------- -------- -------- ----------- -------- --------
Net asset value, beginning of period ............. $ 23.96 $ 21.14 $ 15.27 $ 13.86 $ 11.05 $ 8.24
------- -------- -------- ------- -------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.33(b) 0.60(b) 0.63(b) 0.35(b) 0.27(b) 0.33
Net realized and unrealized gain (loss) .......... (4.48) 2.22 5.24 1.06 2.54 2.48
------- -------- -------- ------- -------- ------
Total from investment operations ................. (4.15) 2.82 5.87 1.41 2.81 2.81
------- -------- -------- ------- -------- ------
Net asset value, end of period ................... $ 19.81 $ 23.96 $ 21.14 $ 15.27 $ 13.86 $11.05
======= ======== ======== ======= ======== ======
TOTAL RETURN (c) ................................. (17.32)% 13.34% 38.44% 10.17%(e) 25.43%(e) 34.10%(e)
======= ======== ======== ======= ======== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $94,709 $173,741 $128,836 $36,791 $ 22,618 $3,050
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.46%(d) 1.39% 1.47% 1.61% 2.67% 4.51%
Ratio of operating expenses to average
net assets .................................... 1.46%(d) 1.39% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................... 2.97%(d) 2.56% 3.45% 2.49% 2.18% 3.36%
Portfolio turnover rate .......................... 78% 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 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.
(e) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 45
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period........... $ 9.66 $ 9.28 $ 9.02 $ 8.66 $ 7.62 $ 6.14
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................... --(a) 0.04(a) (0.04) 0.02 (0.03) 0.03
Net realized and unrealized gain (loss)........ (1.23) 0.34 0.30 0.34 1.07 1.45
------- ------- ------- ------- ------- -------
Total from investment operations............... (1.23) 0.38 0.26 0.36 1.04 1.48
------- ------- ------- ------- ------- -------
Net asset value, end of period................. $ 8.43 $ 9.66 $ 9.28 $ 9.02 $ 8.66 $ 7.62
======= ======= ======= ======= ======= =======
TOTAL RETURN (b)............................... (12.73)%(d) 4.10%(d) 2.88%(d) 4.16%(d) 13.65%(d) 24.10%(d)
======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........... $10,976 $15,789 $16,057 $18,049 $14,158 $ 5,554
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed.................................. 1.69%(c) 1.55% 1.56% 1.58% 2.37% 2.89%
Ratio of operating expenses to average net
assets...................................... 1.47%(c) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets.......................... 0.02%(c) 0.43% (0.40)% 0.20% (0.51)% 0.46%
Portfolio turnover rate........................ 146% 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 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.
(c) Annualized.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 46
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period........... $ 12.38 $ 10.17 $ 9.34 $ 9.04 $ 9.29 $ 6.83
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss............................ (0.04)(a) (0.04)(a) (0.11)(a) (0.07)(a) (0.10)(a) (0.14)
Net realized and unrealized gain (loss)........ (2.35) 2.25 0.94 0.37 (0.15) 2.60
------- ------- ------ ------ ------ ------
Total from investment operations............... (2.39) 2.21 0.83 0.30 (0.25) 2.46
------- ------- ------ ------ ------ ------
Net asset value, end of period................. $ 9.99 $ 12.38 $10.17 $ 9.34 $ 9.04 $ 9.29
======= ======= ====== ====== ====== ======
TOTAL RETURN (b)............................... (19.31)%(d) 21.73%(d) 8.89%(d) 3.32%(d) (2.69)%(d) 36.02%(d)
======= ======= ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........... $ 6,579 $11,316 $7,318 $6,552 $7,028 $5,073
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed.................................. 1.91%(c) 1.76% 1.84% 1.83% 2.52% 2.96%
Ratio of operating expenses to average net
assets...................................... 1.47%(c) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment loss to average net
assets...................................... (0.79)%(c) (0.34)% (1.08)% (0.80)% (1.20)% (1.34)%
Portfolio turnover rate........................ 118% 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 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.
(c) Annualized.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 47
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07(a) 12/31/06 12/31/05 12/31/04 12/31/03
----------- ----------- -------- -------- -------- --------
Net asset value, beginning of period........... $ 5.75 $ 5.44 $ 5.23 $ 5.20 $ 4.67 $ 3.41
------- ------- ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)................... 0.04(b) 0.09(b) 0.06(b) (0.01)(b) (0.02) (0.01)
Net realized and unrealized gain (loss)........ (0.99) 0.22 0.15 0.04 0.55 1.27
------- ------- ------ ------ ------ ------
Total from investment operations............... (0.95) 0.31 0.21 0.03 0.53 1.26
------- ------- ------ ------ ------ ------
Net asset value, end of period................. $ 4.80 $ 5.75 $ 5.44 $ 5.23 $ 5.20 $ 4.67
======= ======= ====== ====== ====== ======
TOTAL RETURN (c)............................... (16.52)%(e) 5.70%(e) 4.02%(e) 0.58%(e) 11.35%(e) 36.95%(e)
======= ======= ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........... $11,063 $12,708 $5,734 $7,004 $9,803 $9,487
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed.................................. 2.52%(d) 1.92% 1.79% 1.69% 1.61% 2.36%
Ratio of operating expenses to average net
assets...................................... 1.37%(d) 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss) to
average net assets.......................... 1.52%(d) 1.54% 1.14% (0.16)% (0.11)% (0.29)%
Portfolio turnover rate........................ 168% 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 below.
(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 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.
(e) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
INVESTMENT STRATEGY CHANGE
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., 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
- -------- -------
- - The Dow(R) Target Dividend Strategy 30%
- - Value Line(R) Target 25 Strategy 30%
- - S&P Target SMid 60 Strategy 30%
- - NYSE(R) International Target 25 Strategy 10%
See Notes to Financial Statements.
Page 48
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/08 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/07 12/31/06 12/31/05 12/31/04 12/31/03
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period........... $ 5.91 $ 5.00 $ 4.86 $ 4.06 $ 3.34 $ 2.37
------- ------- ------- ------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss............................ (0.01)(a) (0.02)(a) (0.04) (0.02)(a) (0.04)(a) (0.02)
Net realized and unrealized gain (loss)........ (0.14) 0.93 0.18 0.82 0.76 0.99
------- ------- ------- ------- ------- ------
Total from investment operations............... (0.15) 0.91 0.14 0.80 0.72 0.97
------- ------- ------- ------- ------- ------
Net asset value, end of period................. $ 5.76 $ 5.91 $ 5.00 $ 4.86 $ 4.06 $ 3.34
======= ======= ======= ======= ======= ======
TOTAL RETURN (b)............................... (2.54)% 18.20% 2.88% 19.70%(d) 21.56%(d) 40.93%(d)
======= ======= ======= ======= ======= ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's)........... $40,497 $43,998 $43,776 $54,072 $21,765 $4,936
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 1.42%(c) 1.41% 1.41% 1.49% 2.28% 3.36%
Ratio of operating expenses to average net
assets...................................... 1.42%(c) 1.41% 1.41% 1.47% 1.47% 1.47%
Ratio of net investment loss to average net
assets...................................... (0.24)%(c) (0.37)% (0.88)% (0.45)% (1.13)% (0.92)%
Portfolio turnover rate........................ 112% 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 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.
(c) Annualized.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor and administrator.
See Notes to Financial Statements.
Page 49
NOTES TO FINANCIAL STATEMENTS
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
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 (each a "Portfolio,"
and collectively, the "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
Value Line(R) Target 25 Portfolio
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.
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.
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
Page 50
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
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.
In September 2006, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standard No. 157, Fair Value Measurement ("FAS 157")
effective for fiscal years beginning after November 15, 2007. This standard
clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the
use of fair value measurements. FAS 157 became effective for the Portfolios as
of January 1, 2008, the beginning of the Registrant's current fiscal year. The
three levels of the fair value hierarchy under FAS 157 are described below:
- Level 1 - quoted prices in active markets for identical securities
- Level 2 - other significant observable inputs (including quoted prices
for similar securities, interest rates, prepayment speeds,
credit risk, etc.)
- Level 3 - significant unobservable inputs (including the Portfolio's
own assumptions in determining the fair value of
investments)
The inputs or methodology used for valuing securities are not necessarily an
indication of the risk associated with investing in those securities. A summary
of the inputs used to value the Portfolios' net assets as of June 30, 2008 is
included with each Portfolios' Schedule of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
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 appreciation of $381 from dividends
receivable in foreign currencies are included in "Dividends receivable" and
unrealized appreciation of $572 from investment securities purchased in foreign
currencies are included in "Investment securities sold" 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.
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.
Page 51
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
As of June 30, 2008, 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............... $100,392,246 $(9,819,650) $5,637,416 $(15,457,066)
The Dow(R) Dart 10 Portfolio............... 10,943,826 (1,569,413) 239,244 (1,808,657)
The Dow(R) Target Dividend Portfolio....... 52,093,030 (14,465,314) 160,644 (14,625,958)
Global Dividend Target 15 Portfolio........ 118,233,314 (24,228,089) 1,704,891 (25,932,980)
S&P(R) Target 24 Portfolio................. 11,981,083 (1,010,812) 152,412 (1,163,224)
NASDAQ(R) Target 15 Portfolio.............. 7,673,326 (1,038,558) 215,958 (1,254,516)
First Trust Target Focus Four Portfolio.... 12,754,117 (1,656,099) 409,148 (2,065,247)
Value Line(R) Target 25 Portfolio.......... 38,364,107 2,110,095 7,084,945 (4,974,850)
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 Registrant 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 Advisors L.P. ("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" in the
Statements of Operations.
G. ACCOUNTING PRONOUNCEMENT:
In March 2008, FASB released Statement of Financial Accounting Standard No. 161,
"Disclosures about Derivative Instruments and Hedging Activities" ("FAS 161").
FAS 161 requires qualitative disclosures about objectives and strategies for
using derivatives, quantitative disclosures about fair value amounts of and
gains and losses on derivative instruments, and disclosures about
credit-risk-related contingent features in derivative agreements. The
application of FAS 161 is required for fiscal years beginning after November 15,
2008 and interim periods within those fiscal years. Management is currently
evaluating the impact the adoption of FAS 161 will have on the Fund's financial
statement disclosures, if any.
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, 2009, 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
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 reimbursement. This agreement
has been extended through December 31, 2009. 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
Page 52
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
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 six
months ended June 30, 2008, are as follows:
FEES RECOVERED FEES WAIVED EXPENSES REIMBURSED
-------------- ----------- -------------------
Target Managed VIP Portfolio ................. $ -- $ -- $ --
The Dow(R) Dart 10 Portfolio ................. -- 16,522 --
The Dow(R) Target Dividend Portfolio ......... -- -- --
Global Dividend Target 15 Portfolio .......... -- -- --
S&P(R) Target 24 Portfolio ................... -- 13,064 --
NASDAQ(R) Target 15 Portfolio ................ -- 16,600 --
First Trust Target Focus Four Portfolio ...... -- 32,419 29,544
Value Line(R) Target 25 Portfolio ............ -- -- --
PNC Global Investment Servicing (U.S.) Inc. ("PNC G.I.S."), formerly known as
PFPC Inc., serves as the Registrant's administrator. In addition, PNC G.I.S.
also provides certain fund accounting, administration and transfer agency
services in accordance with certain fee arrangements.
PFPC Trust Company, an indirect, majority-owned subsidiary of the PNC Financial
Services Group, Inc., 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. Effective
January 1, 2008, each of the chairmen of the Nominating and Governance Committee
and the Valuation Committee are 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, the Lead
Independent Trustee and each Committee chairman will serve two-year terms.
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 Interests 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 Registrant's Board of Trustees.
During the six months ended June 30, 2008, 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 Registrant's 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.
Page 53
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
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 six months ended June 30, 2008,
was as follows:
PURCHASES SALES
------------- ------------
Target Managed VIP Portfolio ................. $134,586,446 $193,465,794
The Dow(R) DART 10 Portfolio ................. 9,092,385 13,742,292
The Dow(R) Target Dividend Portfolio ......... 75,346,685 100,738,151
Global Dividend Target 15 Portfolio .......... 97,166,690 147,599,892
S&P(R) Target 24 Portfolio ................... 17,559,392 20,154,391
NASDAQ(R) Target 15 Portfolio ................ 9,052,565 11,453,287
First Trust Target Focus Four Portfolio ...... 19,022,325 17,644,809
Value Line(R) Target 25 Portfolio ............ 42,456,749 43,787,041
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
Risks are inherent in all investing. The following summarizes some of the risks
that should be considered for the Portfolios. For additional information about
the risks associated with investing in the Portfolios, please see the
Portfolios' prospectus and statement of additional information, as well as other
regulatory filings.
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.
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.
Page 54
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
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.
Page 55
ADDITIONAL INFORMATION
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (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.
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING CONTINUATION OF INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
The Board of Trustees of First Defined Portfolio Fund, LLC (the "Company"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Advisory and Management Agreement (the "Advisory Agreement") between
the Company, on behalf of eight portfolios of the Company (each a "Fund" and
collectively, the "Funds"), and First Trust Advisors L.P. (the "Advisor") at a
meeting held on March 3, 2008. The Board determined that the terms of the
Advisory Agreement are fair and reasonable and that the Advisory Agreement
continues to be in the best interests of the Company and each Fund.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisers with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Advisory
Agreement for each Fund, the Independent Trustees received a report from the
Advisor in advance of the Board meeting responding to a request for information
from counsel to the Independent Trustees. The report, among other things,
outlined the services provided by the Advisor to each Fund (including the
relevant personnel responsible for these services and their experience); the
advisory fees for each Fund as compared to fees charged by investment advisors
to comparable funds and as compared to fees charged to other clients of the
Advisor; expenses of each Fund as compared to expense ratios of comparable
funds; the nature of expenses incurred in providing services to each Fund and
the potential for economies of scale, if any; financial data on the Advisor; any
fall out benefits to the Advisor; and information on the Advisor's compliance
program. The Independent Trustees also met separately with their independent
legal counsel to discuss the information provided by the Advisor. The Board
applied its business judgment to determine whether the arrangement between the
Company and the Advisor is a reasonable business arrangement from each Fund's
perspective as well as from the perspective of its interest holders.
In reviewing the Advisory Agreement, the Board considered the nature, quality
and extent of services provided by the Advisor to each Fund under the Advisory
Agreement. The Board considered that the Advisor is responsible for the overall
management and administration of the Company and each Fund and noted the
compliance program that had been developed by the Advisor. In light of the
information presented and the considerations made, the Board concluded that the
nature, quality and extent of services provided to the Company and each Fund by
the Advisor under the Advisory Agreement have been and are expected to remain
satisfactory and that the Advisor has managed each Fund consistent with its
investment objective and policies.
The Board considered the advisory fees paid by each Fund under the Advisory
Agreement, noting that the annual fees for each Fund are 0.60% of average daily
net assets. The Board reviewed data prepared by Lipper Inc. ("Lipper"), an
independent source, showing the management fees and expense ratios of each Fund
as compared to the management fees and expense ratios of a peer group selected
by Lipper. The Board discussed with representatives of the Advisor the
limitations of each peer group, including that many peer funds had a different
Lipper Investment Classification/Objective relative to the corresponding Fund,
that the S&P Target 24 Portfolio, First Trust Target Focus Four Portfolio and
Nasdaq Target 15 Portfolio were included in the same peer group with only three
other peer funds and
Page 56
ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (UNAUDITED)
that two peer funds were used in multiple peer groups. The Board considered that
the Advisor has agreed to waive fees and reimburse expenses of each Fund through
December 31, 2009 in order to prevent total annual operating expenses (excluding
extraordinary expenses and brokerage fees) from exceeding 1.47% of average daily
net assets (1.37% for the First Trust Target Focus Four Portfolio). The Board
noted that the Advisor may seek restitution from each Fund for fees waived and
reimbursed through December 31, 2009; however, such restitution is limited to
the extent that it would not cause a Fund to exceed its current expense
limitations. The Board also considered the advisory fees paid to the Advisor by
similar funds, and noted that the Advisor does not provide advisory services to
institutional clients that have investment objectives and policies similar to
the Funds', other than to registered investment companies. The Board noted that
the Advisor does provide retail separate managed account investment advisory
services to a variety of accounts that have investment objectives and policies
similar to the Funds' and noted the Advisor's standard fee for such services.
The Board considered each Fund's long-term and short-term performance for the
periods ended September 30, 2007 as compared to the performance of a relevant
benchmark index and to a performance universe selected by Lipper. The Board also
considered performance data provided by the Advisor. Because each Fund is
non-diversified and generally invests in a relatively small number of issuers,
the Board considered the difficulties of comparing each Fund to a broad peer
universe. The Board also noted the differences between each Fund and its
benchmark index. The Board noted that changes in the Funds' benchmarks and
investment policies over the years affected the utility of comparisons with peer
universe and benchmark performance and noted that each Fund's investment results
were consistent with its investment objective. After considering the information
presented, the Board concluded that overall performance for the Funds was
satisfactory.
On the basis of all the information provided on the fees, expenses and
performance of each Fund, the Board concluded that the advisory fees for each
Fund were reasonable and appropriate in light of the nature, quality and extent
of services provided by the Advisor to each Fund under the Advisory Agreement.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure but had not identified any economies of scale realized by the
Funds. The Board concluded that the advisory fee for each Fund reflects an
appropriate level of sharing of any economies of scale. The Board also
considered the costs of the services provided and profits realized by the
Advisor from serving as investment manager to variable annuity products for the
twelve months ended December 31, 2007, as set forth in the materials provided to
the Board. The Board noted the inherent limitations in the profitability
analysis, and concluded that the Advisor's profitability appeared to be not
excessive in light of the services provided to the Company and each Fund. In
addition, the Board considered and discussed any ancillary benefits derived by
the Advisor from its relationship with the Funds and noted that the Advisor does
not utilize soft dollars in managing the Funds and therefore the typical fall
out benefits are not present. The Board concluded that any other fall out
benefits received by the Advisor or its affiliates would appear to be
attenuated.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Advisory Agreement continue to be fair and reasonable and that the continuation
of the Advisory Agreement is in the best interests of the Company and each Fund.
No single factor was determinative in the Board's analysis.
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 57
ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2008 (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.
Page 58
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
1001 Warrenville Road
Lisle, IL 60532
ADMINISTRATOR,
FUND ACCOUNTANT,
TRANSFER AGENT &
BOARD ADMINISTRATOR
PNC Global Investment Servicing (U.S.) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, PA 19153
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.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these controls
and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR
270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities
Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17
CFR 270.30a-3(d)) that occurred during the registrant's second fiscal
quarter of the period covered by this report that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) FIRST 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 AUGUST 20, 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 AUGUST 20, 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 AUGUST 20, 2008
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.