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
FIRST DEFINED PORTFOLIO FUND, LLC
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
WHEATON, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
WHEATON, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
-------------
Date of fiscal year end: DECEMBER 31
Date of reporting period: DECEMBER 31, 2008
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
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2008
TABLE OF CONTENTS
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2008
Shareholder Letter ................................................... 1
Market Overview ...................................................... 2
Performance Summaries and Portfolio Components ....................... 4
Understanding Your Fund Expenses ..................................... 20
Portfolios of Investments ............................................ 21
Statements of Assets and Liabilities ................................. 42
Statements of Operations ............................................. 44
Statements of Changes in Net Assets .................................. 46
Statements of Changes in Net Assets - Membership Interest Activity ... 48
Financial Highlights ................................................. 50
Notes to Financial Statements ........................................ 58
Report of Independent Registered Public Accounting Firm .............. 63
Additional Information ............................................... 64
Board of Trustees and Officers ....................................... 65
Privacy Policy ....................................................... 69
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
ANNUAL REPORT
DECEMBER 31, 2008
Dear Shareholders:
The year ended December 31, 2008 brought all sorts of challenges to investors.
Throughout 2008, the financial sector was plagued with failures in banking,
insurance and by brokerage firms. By year's end, after a meltdown in the credit
markets, historically high levels of volatility in the stock market, and the
resulting turmoil to the overall economy, the Dow Jones Industrial Average's
(the "Dow") total return was -31.92% (as of 12/31/08). In fact, 2008 was the
Dow's third worst calendar year since its inception in 1896. For the year, the
negative total return performance of the Dow was surpassed only by 1931 and
1907, two years in which the U.S. was also enduring major banking crises. Of the
thirty stocks in the Dow, only two were up in 2008.
Yet, regardless of the market, First Trust Advisors L.P. ("First Trust") has
always believed that in order to be successful in reaching your financial goals,
you should be invested for the long term. A long-term investor understands that
the market, from a historical perspective, has always experienced ups and downs.
But history has shown that the patient investor is typically rewarded over the
long term. While no one has the ability to predict when the markets will
recover, we believe that staying invested in quality products and having a
long-term perspective can help investors reach their financial goals.
The report you hold gives detailed information about eight portfolios in the
First Defined Portfolio Fund, LLC over the year ended December 31, 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 make available 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 22 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 the subprime mortgage meltdown, corresponding credit crunch,
historically low levels of consumer confidence and significant job losses pushed
the U.S. economy, which was already in recession, into a deeper one in the
fourth quarter of 2008. The recession actually commenced in December 2007,
according to the National Bureau of Economic Research (NBER). Perhaps the most
troublesome indicator at year-end was the acceleration in job losses. While the
U.S. lost 2.6 million jobs in 2008, 1.1 million of them came in the last two
months. A close second would be the ongoing deterioration of the housing market,
both in terms of declining home values and record-high foreclosure activity.
Filings surpassed 3 million in 2008, up 81% from 2007, according to
RealtyTrac.com. For the 12-month period ended October 2008, home prices were
down 18% nationwide, according to the S&P/Case-Shiller 20-city home price index.
Most economists acknowledge that a recovery cannot begin until home prices
stabilize.
At the present time, the government is in the midst of implementing a
three-pronged approach to addressing the challenges mentioned above. First, the
Federal Reserve Bank (the "Fed") has cut the federal funds target rate to an
all-time low of 0-0.25%. Second, the Treasury Department has already tapped
approximately one-half of the $700 billion appropriated to the Troubled Asset
Relief Program (TARP). It took just 77 days to invest the capital with a little
over half ($168 billion) disseminated across 116 banking institutions. The
incoming Obama Administration has stated that it intends to use some of the
remaining $350 billion from TARP to buy "toxic" securities from these troubled
institutions in an effort to free-up lending. Finally, the Obama Administration
is touting a fiscal stimulus package ("Recovery and Reinvestment Plan") totaling
as much as $825 billion that includes tax cuts and capital earmarked for
infrastructure projects with the goal of creating as many as 3 million new jobs
in the next few years. All in all, the government is throwing an unprecedented
amount of monetary/fiscal stimulus at the problem.
U.S. STOCKS AND BONDS
The major U.S. stock indices posted bear market returns across the board in
2008. The S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index were
down 37.0%, 36.2%, and 31.1%, respectively, according to Bloomberg. None of the
10 major sectors in the S&P 500 finished the year in positive territory. The top
performing sector was Consumer Staples (-15.4%), while the poorest performer was
Financials (-55.2%).
If we had to pick one word to sum up 2008 volatile would be as relevant as any.
The VIX Volatility Index ("VIX") reached an all-time high of 80.86 on 11/20/08.
The VIX stood at 40.00 on 12/31, down 50% from the high. So far this decade, the
average reading for the VIX has been 21.02, according to Bloomberg. If the VIX
can manage to work its way down into the 30s we could see higher stock prices,
according to Bespoke Investment Group.
All in all, U.S. stocks lost $6.9 trillion in 2008 and equity markets plunged by
more than $30 trillion globally. About the only securities to make money were
those "backed by the full faith and credit of the U.S. government." If there is
a silver lining for stocks heading into 2009 it very well could be the huge
amount of cash sitting on the sidelines. Americans were holding $8.85 trillion
in cash and equivalents (low-yielding) at the end of November 2008.
In the U.S. bond market, the only two groups that finished up for the year were
Treasuries and GNMAs. The Barclays Capital U.S. Treasury: Intermediate Index and
GNMA 30 Year Index posted total returns of 11.35% and 7.86%, respectively. At
the other end of the spectrum, the Barclays Capital U.S. Corporate High Yield
Index posted the poorest return declining 26.2%. In mid-December, the yield
spread between high yield corporates and Treasuries surpassed 20 percentage
points, an all-time high.
Page 2
MARKET OVERVIEW - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
FOREIGN STOCKS AND BONDS
The old adage says that when the U.S. sneezes the rest of the world catches a
cold. This was certainly the case in 2008. The U.S. recession not only derailed
the global growth story but the bull market in foreign stocks and most bonds as
well. As was the case in the U.S., the riskiest securities fared the worst. The
Barclays Capital Global Emerging Markets Index of debt securities fell 16.2%
(USD) in 2008, while on the equities front the MSCI Emerging Markets Index and
MSCI World Index (excluding the U.S.) returned -53.4% (USD) and -43.3% (USD),
respectively. The Barclays Capital Global Aggregate Index of higher quality
debt, however, returned 4.8% (USD).
Page 3
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (UNAUDITED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
TARGET MANAGED VIP PORTFOLIO
Over the year ended December 31, 2008, the Target Managed VIP Portfolio posted a
total return of -44.82% versus -37.30% for the Russell 3000(R) Index over the
same period. The NAV decreased from $12.83 to $7.08 during the period.
Of the Portfolio's 115 stocks, 4 advanced and 111 declined over the period. The
top three performing stocks, by contribution to return, were Apollo Group Inc.
(Cl A) (APOL), Anheuser-Busch (BUD), and Chubb Corp. (CB). The worst-performing
stocks, by percentage loss, were Microsoft Corp. (MSFT), Apple Inc. (AAPL), and
MEMC Electronic Materials Inc. (WFR).
The biggest relative contributor to the portfolio's performance over the period
was the energy sector. The portfolio benefitted from being underweight in the
sector. Consumer discretionary and consumer staples also helped relative
performance as both were underweight and outperformed the benchmark sector.
Information technology stocks were the biggest drag on both absolute and
relative performance of the portfolio. The portfolio held a large overweight
position in the sector, combined with performance that trailed the benchmark
sector. Poor performance from the portfolio's industrials holdings relative to
the benchmark sector also weighed on performance.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
Target Managed Vip Dow Jones Industrial Russell 3000(R)
Portfolio Average(SM) Index
- ------------------ -------------------- ------------------
Oct-99 10000 10000 10000
Dec-99 8040 10896 11262
Dec-00 8620 10382 10420
Dec-01 8190 9816 9229
Dec-02 6470 8343 7241
Dec-03 8730 10700 9500
Dec-04 9800 11271 10631
Dec-05 10510 11465 11285
Dec-06 11750 13648 13069
Dec-07 12830 14860 13755
Dec-08 7080 10116 8624
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (c) (SINCE INCEPTION) (c) TOTAL RETURN
--------- ------------ ---------- --------------------- --------------
Target Managed VIP Portfolio 10/6/99 -44.82% -29.20% -3.67% -4.10%
Dow Jones Industrial Avg.(SM) (a) -31.92 1.16 0.12 -1.12
Russell 3000(R) Index (b) -37.30 -13.76 -1.59 -1.92
(a) The Dow Jones Industrial Average(SM) is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg)
(b) The Russell 3000(R) Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This portfolio represents
approximately 98% of the investable U.S. equity market. (Bloomberg)
(c) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the Dow(R) Target 5
Portfolio to the Target Managed VIP Portfolio. The Portfolios primary
investment strategy was also changed. The performance figures provided
reflect the Portfolio performance prior to the name change and the change
of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 4
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ------------------------------------- -----------
Microsoft Corp. 7.6%
Apple, Inc. 4.8
International Business Machines Corp. 4.8
Walt Disney (The), Company 4.4
JPMorgan Chase & Company 4.0
Honeywell International, Inc. 3.3
Telefonica S.A., ADR 3.3
Exxon Mobil Corp. 3.2
Intel Corp. 2.9
Chubb (The), Corp. 2.8
-----
Total 41.1%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ------------------------------------- -----------
Information Technology 34.0%
Financials 15.4
Industrials 12.4
Telecommunication Services 9.8
Consumer Discretionary 8.6
Energy 6.5
Health Care 6.4
Materials 4.9
Consumer Staples 2.0
-----
Total 100.0%
=====
Page 5
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
THE DOW(R) DART 10 PORTFOLIO
Over the year ended December 31, 2008, The Dow(R) DART 10 Portfolio posted a
total return of -28.50% versus -31.92% for the Dow Jones Industrial Average(SM)
over the same period. The NAV decreased from $10.63 to $7.60 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 McDonald's Corp. (MCD),
E.I. DuPont de Nemours & Co. (DD), and 3M Co. (MMM). The worst-performing
stocks, by percentage loss, were Citigroup Inc. (C), Microsoft Corp. (MSFT), and
Honeywell International Inc. (HON).
McDonald's was the only portfolio holding to post a positive return for the
year, as the company's value message held up well in the challenging economic
environment. Exxon Mobil and Home Depot also held up well relative to the
broader market. Citigroup was the biggest drag on portfolio performance as the
banking giant came under considerable selling pressure as worries grew about its
ability to survive the market turmoil present for most of 2008. Honeywell and
Microsoft also posted returns that trailed the broader market.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
The Dow(R) Dart 10 Dow Jones Industrial
Portfolio Average(SM)
- -------------------- --------------------
Oct-99 10000 10000
Dec-99 9220 10896
Dec-00 10020 10382
Dec-01 8540 9816
Dec-02 6980 8343
Dec-03 8370 10700
Dec-04 8690 11271
Dec-05 8410 11465
Dec-06 10560 13648
Dec-07 10630 14860
Dec-08 7600 10116
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
--------- ------------ ---------- ----------------- --------------
The Dow(R) DART 10 Portfolio 10/6/99 -28.50% -24.00% -2.92% -1.91%
Dow Jones Industrial Avg.(SM) (a) -31.92 1.16 0.12 -1.12
(a) The Dow Jones Industrial Average(SM) is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 6
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ------------------------------------- -----------
McDonald's Corp. 14.9%
Home Depot (The),Inc. 12.3
Exxon Mobil Corp. 12.0
Pfizer, Inc. 11.0
International Business Machines Corp. 10.9
JPMorgan Chase & Company 10.4
Walt Disney (The), Company 10.0
Microsoft Corp. 7.7
Honeywell International, Inc. 7.6
Citigroup, Inc. 3.2
-----
Total 100.0%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ------------------------------------- -----------
Consumer Discretionary 37.2%
Information Technology 18.6
Financials 13.6
Energy 12.0
Health Care 11.0
Industrials 7.6
-----
Total 100.0%
=====
Page 7
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the year ended December 31, 2008, The Dow(R) Target Dividend Portfolio
posted a total return of -40.54% versus -30.98% for the Dow Jones U.S. Select
Dividend Index(SM) over the same period. The NAV decreased from $11.79 to $7.01
during the period.
Of the Portfolio's 20 stocks, 3 advanced and 17 declined over the period. The
top three performing stocks, by contribution to return, were First Niagara
Financial Group Inc. (FNFG), First Bancorp of Puerto Rico (FBP), and People's
United Financial Inc. (PBCT). The worst-performing stocks, by percentage loss,
were La-Z-Boy Inc. (LZB), Washington Mutual Inc. (WAMUQ), and Colonial BancGroup
Inc. (CNB).
Utilities had the best relative performance against the benchmark for 2008. An
underweight position in the sector was the main driver of the positive relative
contribution. Consumer discretionary stocks had the worst performance on a
relative basis. The portfolio was overweight consumer discretionary stocks and
underperformed the benchmark sector. An overweight in materials relative to the
benchmark also hurt performance as the sector faced significant headwinds in the
slowing economy of 2008.
GROWTH OF A $10,000 INITIAL INVESTMENT
May 2, 2005-Dec. 31, 2008
[GRAPH]
The Dow Target Dividend Dow Jones Select
Portfolio Dividend Index (SM) S&P 500(R) Index
- ----------------------- ---------------- ----------------
May-05 10000 10000 10000
Dec-05 9870 10529 10879
Dec-06 11660 12587 12597
Dec-07 11790 11938 13289
Dec-08 7010 8240 8372
RETURN COMPARISON PERIOD ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION ANNUAL TOTAL RETURN
DATE TOTAL RETURN RETURN (SINCE INCEPTION)
--------- ------------ ---------- ----------------
The Dow(R) Target Dividend Portfolio 5/2/05 -40.54% -29.90% -9.22%
Dow Jones Select Dividend Index(SM) (a) -30.98 -17.60 -5.14
S&P 500(R) Index (b) -37.00 -16.28 -4.72
(a) The Dow Jones Select Dividend Index(SM) is comprised of 100 of the highest
dividend yielding securities.
(b) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 8
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ------------------------------------- -----------
First BanCorp 12.7%
First Niagara Financial Group, Inc. 11.3
People's United Financial, Inc. 8.6
Umpqua Holdings Corp. 8.1
Sensient Technologies Corp. 7.0
DTE Energy Company 6.7
JPMorgan Chase & Company 6.1
Zenith National Insurance Corp. 6.0
RPM International, Inc. 5.5
NiSource, Inc. 4.9
-----
Total 76.9%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ------------------------------------- -----------
Financials 60.8%
Materials 15.5
Utilities 11.6
Consumer Discretionary 7.3
Consumer Staples 4.8
-----
Total 100.0%
=====
Page 9
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the year ended December 31, 2008, the Global Dividend Target 15 Portfolio
posted a total return of -42.78% versus -40.71% for the Morgan Stanley Capital
International Developed Markets World Index over the same period. The NAV
decreased from $23.96 to $13.71 during the period.
Of the Portfolio's 15 stocks, all declined over the period. The top three
performing stocks, by contribution to return, were Home Depot Inc. (HD), Verizon
Communications Inc. (VZ), and AT&T Inc. (T). The worst-performing stocks, by
percentage loss, were Citigroup Inc. (C), GKN PLC (306465), and General Motors
Corp. (GM).
The Hang Seng Index stocks held up the best in the portfolio over the period led
by two utilities, Cheung Kong Infrastructure & Hongkong Electric Holdings.
General Motors was the worst performer in the portfolio for 2008 as high gas
prices hurt sales of the company's highly profitable trucks and SUVs and the
company's financial situation rapidly deteriorated during the fourth quarter of
2008. Citigroup also hurt the portfolio's performance as the company's shares
sank under increasing write-offs amid deteriorating credit market conditions.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
Global Dividend Target 15 MSCI Developed Market
Portfolio World Index
- -------------------------- ---------------------
Oct-99 10000 10000
Dec-99 9710 11411
Dec-00 9900 9908
Dec-01 9660 8241
Dec-02 8240 6602
Dec-03 11050 8788
Dec-04 13860 10081
Dec-05 15270 11038
Dec-06 21140 13252
Dec-07 23960 14450
Dec-08 13710 8567
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
--------- ------------ ---------- ----------------- --------------
Global Dividend Target 15 Portfolio 10/6/99 -42.78% 37.10% 3.47% 4.41%
MSCI Developed Markets World Index (a) -40.71 -14.33 -1.66 -0.51
(a) The Morgan Stanley Capital International Developed Markets World Index
("MSCI Developed Markets World Index") is based on the share prices of
approximately 1,600 companies listed on stock exchanges in the twenty-two
countries that make up the MSCI National Indices. (Bloomberg)
Effective May 2, 2005, based upon the determination of the Fund's Board of
Trustees, the Portfolio changed its name from the Global Target 15 Portfolio to
the Global Dividend Target 15 Portfolio.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 10
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------------- -----------
Cheung Kong Infrastructure Holdings Ltd. 12.2%
Hongkong Electric Holdings Ltd. 11.9
Home Depot (The), Inc. 10.3
PCCW Ltd. 10.1
Pfizer, Inc. 9.2
Tate & Lyle PLC 7.9
Yue Yuen Industrial (Holdings) Ltd. 6.6
General Electric Company 5.2
Logica PLC 5.1
Ladbrokes PLC 5.0
-----
Total 83.5%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------------- -----------
Consumer Discretionary 26.3%
Utilities 24.1
Telecommunication Services 14.5
Health Care 9.2
Consumer Staples 7.9
Financials 7.7
Industrials 5.2
Information Technology 5.1
-----
Total 100.0%
=====
Page 11
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
S&P(R) TARGET 24 PORTFOLIO
Over the year ended December 31, 2008, the S&P(R) Target 24 Portfolio posted a
total return of -27.85% versus -37.00% for the S&P 500(R) Index over the same
period. The NAV decreased from $9.66 to $6.97 during the period.
Of the Portfolio's 24 stocks, 3 advanced and 21 declined over the period. The
top three performing stocks, by contribution to return, were Anheuser-Busch
(BUD), Apollo Group Inc. (Cl A) (APOL), and AutoZone Inc. (AZO). The
worst-performing stocks, by percentage loss, were MEMC Electronic Materials Inc.
(WFR), PepsiCo Inc. (PEP), and Lockheed Martin Corp. (LMT).
Financials were the biggest contributor to the portfolio's performance on a
relative basis, as the portfolio's holdings greatly outperformed the benchmark
sector. Outperformance from the energy and consumer discretionary sectors versus
their benchmark sectors also helped relative portfolio performance. Portfolio
performance was hurt by relative underperformance in the health care and
information technology sectors.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
S&P(R) Target 24
Portfolio S&P 500(R) Index
---------------- ----------------
Oct-99 10000 10000
Dec-99 11830 11115
Dec-00 9540 10104
Dec-01 7190 8903
Dec-02 6140 6935
Dec-03 7260 8920
Dec-04 8660 9895
Dec-05 9020 10381
Dec-06 9280 12021
Dec-07 9660 12681
Dec-08 6970 7989
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (b) (SINCE INCEPTION) (b) TOTAL RETURN
--------- ------------ ---------- --------------------- --------------
S&P(R) Target 24 Portfolio 10/6/99 -27.85% -30.30% -3.83% -1.77%
S&P 500(R) Index (a) -37.00 -20.11 -2.40 -2.18
(a) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the S&P(R) Target 10
Portfolio to the S&P(R) Target 24 Portfolio. The Portfolios primary
investment strategy was also changed. The performance figures provided
reflect the Portfolio performance prior to the name change and the change
of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 12
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------------- -----------
Exxon Mobil Corp. 15.3%
Chubb (The), Corp. 13.3
Lockheed Martin Corp. 9.3
Aon Corp. 9.2
PepsiCo, Inc. 8.9
Medco Health Solutions, Inc. 8.0
Express Scripts, Inc. 4.9
Altera Corp. 4.6
Apollo Group, Inc., Class A 4.1
Verizon Communications, Inc. 3.8
-----
Total 81.4%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------------- -----------
Financials 23.4%
Energy 15.9
Health Care 14.2
Industrials 12.4
Consumer Discretionary 10.7
Consumer Staples 9.7
Information Technology 9.5
Telecommunication Services 4.2
-----
Total 100.0%
=====
Page 13
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
NASDAQ(R) TARGET 15 PORTFOLIO
Over the year ended December 31, 2008, the NASDAQ(R) Target 15 Portfolio posted
a total return of -50.89% versus -41.56% for the NASDAQ(R) 100 Index over the
same period. The NAV decreased from $12.38 to $6.08 during the period.
Of the Portfolio's 15 stocks, 1 advanced and 14 declined over the period. The
top three performing stocks, by contribution to return, were Apollo Group Inc.
(Cl A) (APOL), Check Point Software Technologies Ltd. (CHKP), and American Eagle
Outfitters Inc. (AEO). The worst-performing stocks, by percentage loss, were
Intuitive Surgical Inc. (ISRG), Research In Motion Ltd. (RIMM), and Foster
Wheeler Ltd. (FWLT).
Consumer discretionary stocks, led by Apollo Group, were the biggest contributor
to the portfolio's performance on a relative basis against the benchmark.
Information technology also posted a positive relative contribution due largely
to an underweight position in the sector relative to the benchmark. Health care
was the biggest drag on relative performance due to poor performance from the
portfolio's holdings in the sector. Overweights in telecommunication services
and materials also hurt the portfolio's performance.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
NASDAQ(R) Target 15
Portfolio NASDAQ(R) 100 Index
------------------- -------------------
Oct-99 10000 10000
Dec-99 14600 14644
Dec-00 12880 9251
Dec-01 9250 6234
Dec-02 6830 3894
Dec-03 9290 5820
Dec-04 9040 6447
Dec-05 9340 6570
Dec-06 10170 7048
Dec-07 12380 8404
Dec-08 6080 4911
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
--------- ------------ ---------- ----------------- --------------
NASDAQ(R) Target 15 Portfolio 10/6/99 -50.89% -39.20% -5.24% -8.13%
NASDAQ(R) 100 Index (a) -41.56 -50.89 -7.40 -3.34
(a) The NASDAQ(R) 100 Index is a modified capitalization-weighted index of the
100 largest and most active non-financial domestic and international
issues listed on the NASDAQ(R). (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 14
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------------- -----------
Apollo Group, Inc., Class A 15.6%
Express Scripts, Inc. 12.1
Intel Corp. 8.8
Microsoft Corp. 8.6
Google, Inc., Class A 7.0
Apple, Inc. 6.8
Sigma-Aldrich Corp. 6.6
Intuitive Surgical, Inc. 6.0
Millicom International Cellular S.A. 5.6
Research In Motion Ltd. 5.6
-----
Total 82.7%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------------- -----------
Information Technology 44.3%
Consumer Discretionary 18.7
Health Care 18.1
Materials 9.2
Telecommunication Services 5.6
Industrial 4.1
------
Total 100.0%
=====
Page 15
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the year ended December 31, 2008, the First Trust Target Focus Four
Portfolio posted a total return of -43.83% versus -37.00% for the S&P 500(R)
Index over the same period. The NAV decreased from $5.75 to $3.23 during the
period.
Of the Portfolio's 129 stocks, 16 advanced and 113 declined over the period. The
top three performing stocks, by contribution to return, were First Bancorp of
Puerto Rico (FBP), First Niagara Financial Group Inc. (FNFG), and Alaska Air
Group Inc. (ALK). The worst-performing stocks, by percentage loss, were Apple
Inc. (AAPL), La-Z-Boy Inc. (LZB), and Nokia Corp. (ADR) (NOK).
The energy sector was the best performer on a relative basis due to an
underweight position in the sector. Underweight positions in health care and
industrials also led to positive relative contribution. Consumer discretionary
was the biggest drag on relative performance due to a combination of poor
performance relative to the benchmark and an overweight position in the sector.
An overweight position in materials also hurt performance as the sector came
under pressure during the second half of the year as global economic growth
slowed. Poor performance from the information technology sector also hurt the
portfolio's performance.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
First Trust Target
Focus Four Portfolio S&P 500(R) Index
---------------------- ----------------
Oct-99 10000 10000
Dec-99 11400 11115
Dec-00 8390 10104
Dec-01 5400 8903
Dec-02 3410 6935
Dec-03 4670 8920
Dec-04 5200 9895
Dec-05 5230 10381
Dec-06 5440 12021
Dec-07 5750 12681
Dec-08 3230 7989
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (SINCE INCEPTION) TOTAL RETURN
--------- ------------ ---------- ----------------- --------------
First Trust Target Focus Four Portfolio (a) 10/6/99 -43.83% -67.70% -11.50% -7.11%
S&P 500(R) Index (b) -37.00 -20.11 -2.40 -2.18
(a) Effective November 19, 2007, based upon determination of the Fund's Board
of Trustees, the Portfolio changed its name from the First Trust 10
Uncommon Values Portfolio to the First Trust Target Focus Four Portfolio.
The Portfolio's primary investment strategy was also changed. The
performance figures provided reflect the Portfolio performance prior to
the name change and the change of the primary investment strategy.
(b) The Standard & Poor's 500(R) Index is a capitalization-weighted index of
500 stocks. The index is designed to measure performance of the broad
domestic economy through changes in the aggregate market value of 500
stocks representing all major industries. (Bloomberg)
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 16
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------------- -----------
Telefonica S.A., ADR 5.7%
First BanCorp 5.0
Apple, Inc. 4.0
BHP Billiton Ltd., ADR 3.8
First Niagara Financial Group, Inc. 3.6
Nokia Oyj Corp., ADR 3.2
People's United Financial, Inc. 2.7
Umpqua Holdings Corp. 2.6
Sensient Technologies Corp. 2.2
DTE Energy Company 2.1
-----
Total 34.9%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------------- -----------
Financials 32.4%
Consumer Discretionary 12.3
Information Technology 12.0
Materials 11.6
Utilities 8.3
Telecommunication Services 8.0
Industrials 8.0
Energy 3.4
Consumer Staples 2.2
Health Care 1.8
-----
Total 100.0%
=====
Page 17
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the year ended December 31, 2008, the Value Line(R) Target 25 Portfolio
posted a total return of -54.82% versus -37.30% for the Russell 3000(R) Index
over the same period. The NAV decreased from $5.91 to $2.67 during the period.
Of the Portfolio's 26 stocks, 2 advanced and 24 declined over the period. The
top three performing stocks, by contribution to return, were Apollo Group Inc.
(Cl A) (APOL), Axsys Technologies Inc. (AXYS), and Cypress Semiconductor Corp.
(CY). The worst-performing stocks, by percentage loss, were Potash Corp. of
Saskatchewan Inc. (POT), Mosaic Co. (MOS), and Research In Motion Ltd. (RIMM).
Health care and telecommunication services both posted positive relative
contributions to return. Health care benefitted from an underweight position
relative to the benchmark while telecommunication services was overweight and
outperformed the benchmark sector. The portfolio also benefitted from its policy
of not holding financial companies as the sector was the worst performer in the
benchmark for 2008. The materials sector was the biggest drag on relative
performance. The portfolio had a large overweight position in this sector which
came under pressure as global economic growth slowed over the period.
Information technology also hurt portfolio returns as the portfolio suffered
from poor performance and an overweight position in the sector.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-Dec. 31, 2008
[GRAPH]
Value Line(R)
Target 25 Portfolio Russell 3000(R) index
--------------------- ---------------------
Oct-99 10000 10000
Dec-99 16330 11262
Dec-00 9320 10420
Dec-01 4150 9229
Dec-02 2370 7241
Dec-03 3340 9500
Dec-04 4060 10631
Dec-05 4860 11285
Dec-06 5000 13069
Dec-07 5910 13755
Dec-08 2670 8624
RETURN COMPARISON PERIODS ENDED DEC. 31, 2008
1 YEAR CUMULATIVE AVERAGE ANNUAL 5 YEAR
INCEPTION ANNUAL TOTAL TOTAL RETURN AVERAGE ANNUAL
DATE TOTAL RETURN RETURN (b) (SINCE INCEPTION) (b) TOTAL RETURN
--------- ------------ ---------- --------------------- --------------
Value Line(R) Target 25 Portfolio 10/6/99 -54.82% -73.30% -13.31% -4.38%
Russell 3000(R) Index (a) -37.30 -13.76 -1.59 -1.92
(a) The Russell 3000(R) Index is composed of 3000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg)
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the First Trust Internet
Portfolio to the Value Line(R) Target 25 Portfolio. The Portfolios primary
investment strategy was also changed. The performance figures provided
reflect the Portfolio performance prior to the name change and the change
of the primary investment strategy.
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges. These expenses would reduce the
overall returns shown.
Page 18
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- ----------------------------------------- -----------
Telefonica S.A., ADR 11.5%
BHP Billiton Ltd., ADR 10.1
Potash Corp. of Saskatchewan, Inc. 8.5
Southern Copper Corp. 7.7
Apple, Inc. 7.2
Nokia Oyj Corp., ADR 6.8
Apollo Group, Inc., Class A 6.7
Mosaic (The), Company 6.1
Research In Motion Ltd. 5.8
National Oilwell Varco, Inc. 4.5
-----
Total 74.9%
=====
% OF TOTAL
INDUSTRY INVESTMENTS
- ----------------------------------------- -----------
Materials 32.4%
Information Technology 25.7
Consumer Discretionary 14.2
Telecommunication Services 11.5
Industrials 9.1
Energy 4.5
Health Care 2.6
-----
Total 100.0%
=====
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
DECEMBER 31, 2008
As a shareholder of the Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus Four Portfolio or Value Line (R) Target 25 Portfolio (the
"Portfolios"), you incur two types of costs: (1) transaction costs; and (2)
ongoing costs, including management fees, distribution and/or service fees, and
other Portfolio expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Portfolios and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period of July 1, 2008 to December 31, 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 07/01/2008- VALUE VALUE 07/01/2008- EXPENSE
07/01/2008 12/31/2008 12/31/2008 07/01/2008 12/31/2008 12/31/2008 RATIO
----------- ---------- ----------- ---------- ---------- ----------- -------
Target Managed VIP Portfolio .............. $ 1,000.00 $ 645.40 $ 6.08 $ 1,000.00 $ 1,017.75 $ 7.46 1.47% (b)
The Dow(R) DART 10 Portfolio .............. 1,000.00 833.30 6.77 1,000.00 1,017.75 7.46 1.47 (b)
The Dow(R) Target Dividend Portfolio ...... 1,000.00 812.30 6.70 1,000.00 1,017.75 7.46 1.47 (b)
Global Dividend Target 15 Portfolio ....... 1,000.00 691.70 6.25 1,000.00 1,017.75 7.46 1.47 (b)
S&P(R) Target 24 Portfolio ................ 1,000.00 826.80 6.75 1,000.00 1,017.75 7.46 1.47 (b)
NASDAQ(R) Target 15 Portfolio ............. 1,000.00 608.60 5.94 1,000.00 1,017.75 7.46 1.47 (b)
First Trust Target Focus Four Portfolio ... 1,000.00 672.90 5.76 1,000.00 1,018.25 6.95 1.37 (b)
Value Line(R) Target 25 Portfolio ......... 1,000.00 463.50 5.41 1,000.00 1,017.75 7.46 1.47 (b)
(a) Expenses are equal to the fund's annualized expense ratio multiplied by
the average account value over the period, multiplied by 184/366 (to
reflect the one half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 99.7%
AEROSPACE & DEFENSE - 5.8%
2,773 Axsys Technologies, Inc. (b) ..................................... $ 152,127
32,849 Honeywell International, Inc. .................................... 1,078,433
7,502 Lockheed Martin Corp. ............................................ 630,768
-------------
1,861,328
-------------
BEVERAGES - 1.9%
11,062 PepsiCo, Inc. .................................................... 605,866
-------------
CAPITAL MARKETS - 0.2%
7,967 Janus Capital Group, Inc. ........................................ 63,975
-------------
CHEMICALS - 1.9%
6,716 Koppers Holdings, Inc. ........................................... 145,200
4,401 Mosaic (The), Company ............................................ 152,275
3,189 Potash Corp. of Saskatchewan, Inc. ............................... 233,499
1,809 Sigma-Aldrich Corp. .............................................. 76,412
-------------
607,386
-------------
COMMERCIAL BANKS - 4.0%
16,653 Barclays PLC, ADR ................................................ 163,199
7,988 HSBC Holdings PLC, ADR ........................................... 388,776
14,109 Intesa Sanpaolo, ADR ............................................. 304,331
17,766 Lloyds TSB Group PLC, ADR ........................................ 136,798
3,837 Royal Bank of Scotland Group PLC, ADR ............................ 58,668
23,070 Societe Generale, ADR ............................................ 239,928
-------------
1,291,700
-------------
COMMERCIAL SERVICES & SUPPLIES - 0.3%
5,817 GeoEye, Inc. (b) ................................................. 111,861
-------------
COMMUNICATIONS EQUIPMENT - 3.9%
30,557 Harmonic, Inc. (b) ............................................... 171,425
38,808 Nokia Oyj Corp., ADR ............................................. 605,405
11,722 Research In Motion Ltd. (b) ...................................... 475,679
-------------
1,252,509
-------------
COMPUTERS & PERIPHERALS - 10.0%
18,117 Apple, Inc. (b) .................................................. 1,546,286
18,257 International Business Machines Corp. ............................ 1,536,509
10,839 Novatel Wireless, Inc. (b) ....................................... 50,293
6,884 Stratasys, Inc. (b) .............................................. 74,003
3,356 Western Digital Corp. (b) ........................................ 38,426
-------------
3,245,517
-------------
CONSTRUCTION & ENGINEERING - 1.5%
1,564 Foster Wheeler Ltd. (b) .......................................... 36,566
1,222 Jacobs Engineering Group, Inc. (b) ............................... 58,778
6,987 Layne Christensen Company (b) .................................... 167,758
9,237 Perini Corp. (b) ................................................. 215,961
-------------
479,063
-------------
DIVERSIFIED CONSUMER SERVICES - 1.7%
7,132 Apollo Group, Inc., Class A (b) .................................. 546,454
-------------
See Notes to Financial Statements.
Page 21
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
DIVERSIFIED FINANCIAL SERVICES - 4.7%
25,072 Fortis, ADR ...................................................... $ 29,084
17,063 ING Groep N.V., ADR .............................................. 189,399
41,044 JPMorgan Chase & Company ......................................... 1,294,117
-------------
1,512,600
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 9.6%
12,399 BT Group PLC, ADR ................................................ 247,732
291 CenturyTel, Inc. ................................................. 7,953
30,536 Deutsche Telekom AG, ADR ......................................... 467,201
18,605 France Telecom S.A., ADR ......................................... 522,242
19,741 Premiere Global Services, Inc. (b) ............................... 169,970
4,861 Qwest Communications International, Inc. ......................... 17,694
21,488 Telecom Italia SpA, ADR .......................................... 349,180
15,925 Telefonica S.A., ADR ............................................. 1,073,186
7,637 Verizon Communications, Inc. ..................................... 258,894
-------------
3,114,052
-------------
ELECTRICAL EQUIPMENT - 0.9%
15,866 EnerSys (b) ...................................................... 174,526
2,713 Rockwell Automation, Inc. ........................................ 87,467
772 SunPower Corp., Class B (b) ...................................... 23,500
-------------
285,493
-------------
ELECTRONIC EQUIPMENT,INSTRUMENTS & COMPONENTS - 0.5%
3,085 FLIR Systems, Inc. (b) ........................................... 94,648
12,060 Methode Electronics, Inc. ........................................ 81,284
-------------
175,932
-------------
ENERGY EQUIPMENT & SERVICES - 0.6%
2,850 Bolt Technology Corp. (b) ........................................ 19,836
352 ENSCO International, Inc. ........................................ 9,993
6,049 NATCO Group, Inc., Class A (b) ................................... 91,824
3,541 National Oilwell Varco, Inc. (b) ................................. 86,542
-------------
208,195
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9%
2,866 Cynosure, Inc., Class A (b) ...................................... 26,166
806 Intuitive Surgical, Inc. (b) ..................................... 102,354
6,032 SurModics, Inc. (b) .............................................. 152,429
-------------
280,949
-------------
HEALTH CARE PROVIDERS & SERVICES - 4.8%
3,935 Air Methods Corp. (b) ............................................ 62,921
8,653 Amedisys, Inc. (b) ............................................... 357,715
3,168 Emergency Medical Services Corp., Class A (b) .................... 115,980
8,850 Express Scripts, Inc. (b) ........................................ 486,573
12,963 Medco Health Solutions, Inc. (b) ................................. 543,279
-------------
1,566,468
-------------
HOUSEHOLD DURABLES - 0.5%
4,594 Garmin Ltd. ...................................................... 88,067
4,871 Universal Electronics, Inc. (b) .................................. 79,008
-------------
167,075
-------------
See Notes to Financial Statements.
Page 22
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
HOUSEHOLD PRODUCTS - 0.2%
959 Clorox (The) Company ............................................. $ 53,282
-------------
INDUSTRIAL CONGLOMERATES - 0.1%
2,260 McDermott International, Inc. (b) ................................ 22,329
-------------
INSURANCE - 6.5%
37,590 Aegon N.V. ....................................................... 227,419
20,083 AmTrust Financial Services, Inc. ................................. 232,963
13,646 Aon Corp. ........................................................ 623,349
17,723 Chubb (The), Corp. ............................................... 903,873
7,888 eHealth, Inc. (b) ................................................ 104,753
-------------
2,092,357
-------------
INTERNET & CATALOG RETAIL - 0.2%
852 Priceline.com, Inc. (b) .......................................... 62,750
-------------
INTERNET SOFTWARE & SERVICES - 2.6%
252 Baidu.com, Inc., ADR (b) ......................................... 32,904
2,541 Google, Inc., Class A (b) ........................................ 781,739
9,618 TheStreet.Com, Inc. .............................................. 27,892
-------------
842,535
-------------
IT SERVICES - 1.4%
21,863 CyberSource Corp. (b) ............................................ 262,137
41,096 Sapient Corp. (b) ................................................ 182,466
-------------
444,603
-------------
LIFE SCIENCES TOOLS & SERVICES - 0.6%
4,827 Kendle International, Inc. (b) ................................... 124,150
2,397 Waters Corp. (b) ................................................. 87,850
-------------
212,000
-------------
MACHINERY - 2.8%
6,151 Columbus McKinnon Corp. (b) ...................................... 83,961
1,652 Dynamic Materials Corp. .......................................... 31,900
5,417 Middleby (The), Corp. (b) ........................................ 147,722
2,990 Parker Hannifin Corp. ............................................ 127,195
7,049 RBC Bearings, Inc. (b) ........................................... 142,954
10,688 Robbins & Myers, Inc. ............................................ 172,825
5,524 Sun Hydraulics Corp. ............................................. 104,072
6,220 Tennant Company .................................................. 95,788
-------------
906,417
-------------
MEDIA - 4.4%
62,009 Walt Disney (The), Company ....................................... 1,406,984
-------------
METALS & MINING - 3.0%
16,765 BHP Billiton Ltd., ADR ........................................... 719,218
3,515 Olympic Steel, Inc. .............................................. 71,601
8,922 Southern Copper Corp. ............................................ 143,287
3,326 Steel Dynamics, Inc. ............................................. 37,185
-------------
971,291
-------------
See Notes to Financial Statements.
Page 23
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
OIL,GAS & CONSUMABLE FUELS - 5.8%
9,091 ENI SpA, ADR ..................................................... $ 434,732
13,048 Exxon Mobil Corp. ................................................ 1,041,622
21,624 StatoilHydro ASA, ADR ............................................ 360,256
1,323 Valero Energy Corp. .............................................. 28,630
-------------
1,865,240
-------------
PROFESSIONAL SERVICES - 0.4%
4,778 ICF International, Inc. (b) ...................................... 117,395
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 6.8%
18,734 Altera Corp. ..................................................... 313,045
2,830 Cypress Semiconductor Corp. (b) .................................. 12,650
63,401 Intel Corp. ...................................................... 929,459
15,125 MEMC Electronic Materials, Inc. (b) .............................. 215,985
14,956 National Semiconductor Corp. ..................................... 150,607
6,925 Netlogic Microsystems, Inc. (b) .................................. 152,419
6,069 NVIDIA Corp. (b) ................................................. 48,977
9,365 Power Integrations, Inc. ......................................... 186,176
1,743 Sigma Designs, Inc. (b) .......................................... 16,558
46,854 TriQuint Semiconductor, Inc. (b) ................................. 161,178
-------------
2,187,054
-------------
SOFTWARE - 8.6%
11,546 EPIQ Systems, Inc. (b) ........................................... 192,934
10,042 JDA Software Group, Inc. (b) ..................................... 131,851
125,200 Microsoft Corp. .................................................. 2,433,888
10,179 Radiant Systems, Inc. (b) ........................................ 34,303
-------------
2,792,976
-------------
SPECIALTY RETAIL - 1.5%
1,382 AutoZone, Inc. (b) ............................................... 192,747
9,065 Best Buy Company, Inc. ........................................... 254,817
1,615 GameStop Corp., Class A (b) ...................................... 34,981
-------------
482,545
-------------
TEXTILES,APPAREL & LUXURY GOODS - 0.3%
625 Deckers Outdoor Corp. (b) ........................................ 49,919
2,354 Fossil, Inc. (b) ................................................. 39,312
-------------
89,231
-------------
TRADING COMPANY & DISTRIBUTORS - 0.7%
8,217 Kaman Corp. ...................................................... 148,974
8,542 Rush Enterprises, Inc., Class A (b) .............................. 73,205
-------------
222,179
-------------
WIRELESS TELECOMMUNICATION SERVICES - 0.1%
1,115 Millicom International Cellular S.A. ............................. 50,075
-------------
TOTAL INVESTMENTS - 99.7% ........................................ 32,197,666
(Cost $55,912,400) (c)
NET OTHER ASSETS AND LIABILITIES - 0.3% .......................... 83,528
-------------
NET ASSETS - 100.0% .............................................. $ 32,281,194
=============
See Notes to Financial Statements.
Page 24
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $55,912,400. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$160,006 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$23,874,740.
ADR American Depositary Receipt
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A-Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $32,197,666
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $32,197,666
===========
See Notes to Financial Statements.
Page 25
THE DOW(R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 97.5%
AEROSPACE & DEFENSE - 7.5%
16,075 Honeywell International, Inc. .................................... $ 527,742
-------------
COMPUTERS & PERIPHERALS - 10.6%
8,937 International Business Machines Corp. ............................ 752,138
-------------
DIVERSIFIED FINANCIAL SERVICES - 13.3%
33,584 Citigroup, Inc. .................................................. 225,349
22,739 JPMorgan Chase & Company ......................................... 716,961
-------------
942,310
-------------
HOTELS,RESTAURANTS & LEISURE - 14.5%
16,531 McDonald's Corp. ................................................. 1,028,063
-------------
MEDIA - 9.7%
30,342 Walt Disney (The), Company ....................................... 688,460
-------------
OIL,GAS & CONSUMABLE FUELS - 11.7%
10,357 Exxon Mobil Corp. ................................................ 826,799
-------------
PHARMACEUTICALS - 10.7%
42,960 Pfizer, Inc. ..................................................... 760,822
-------------
SOFTWARE - 7.5%
27,237 Microsoft Corp. .................................................. 529,487
-------------
SPECIALTY RETAIL - 12.0%
36,873 Home Depot (The), Inc ............................................ 848,816
-------------
TOTAL INVESTMENTS - 97.5% ........................................ 6,904,637
(Cost $8,975,955) (b)
NET OTHER ASSETS AND LIABILITIES - 2.5% .......................... 176,153
-------------
NET ASSETS - 100.0% .............................................. $ 7,080,790
=============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for federal income tax purposes is $8,975,955. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $73,915
and the aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value was $2,145,233.
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A-Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $ 6,904,637
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $ 6,904,637
===========
See Notes to Financial Statements.
Page 26
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 99.0%
AUTO COMPONENTS - 4.8%
93,085 Superior Industries International, Inc. .......................... $ 979,254
-------------
CHEMICALS - 12.4%
83,401 RPM International, Inc. .......................................... 1,108,399
59,099 Sensient Technologies Corp. ...................................... 1,411,284
-------------
2,519,683
-------------
COMMERCIAL BANKS - 28.4%
128,088 Colonial BancGroup (The), Inc. ................................... 265,142
230,627 First BanCorp .................................................... 2,569,185
71,870 KeyCorp .......................................................... 612,333
109,166 South Financial Group (The), Inc. ................................ 471,597
112,566 Umpqua Holdings Corp. ............................................ 1,628,830
44,672 Wachovia Corp. ................................................... 247,483
-------------
5,794,570
-------------
DIVERSIFIED FINANCIAL SERVICES - 6.1%
39,290 JPMorgan Chase & Company ......................................... 1,238,814
-------------
HOUSEHOLD DURABLES - 2.2%
204,049 La-Z-Boy, Inc. ................................................... 442,786
-------------
INSURANCE - 6.0%
38,542 Zenith National Insurance Corp. .................................. 1,216,771
-------------
MEDIA - 0.2%
116,980 Lee Enterprises, Inc. ............................................ 47,962
-------------
MULTI-UTILITIES - 11.5%
38,050 DTE Energy Company ............................................... 1,357,244
90,124 NiSource, Inc. ................................................... 988,660
-------------
2,345,904
-------------
PAPER & FOREST PRODUCTS - 2.9%
53,585 MeadWestvaco Corp. ............................................... 599,616
-------------
THRIFTS & MORTGAGE FINANCE - 19.7%
140,822 First Niagara Financial Group, Inc. .............................. 2,277,092
97,294 People's United Financial, Inc. .................................. 1,734,752
124,556 Washington Mutual, Inc. .......................................... 2,678
-------------
4,014,522
-------------
TOBACCO - 4.8%
32,574 Universal Corp. .................................................. 972,985
-------------
TOTAL INVESTMENTS - 99.0% ........................................ 20,172,867
(Cost $33,200,800) (b)
NET OTHER ASSETS AND LIABILITIES - 1.0% .......................... 195,884
-------------
NET ASSETS - 100.0% .............................................. $ 20,368,751
=============
See Notes to Financial Statements.
Page 27
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for federal income tax purposes is $33,200,800. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$1,088,453 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$14,116,386.
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A-Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $20,172,867
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $20,172,867
===========
See Notes to Financial Statements.
Page 28
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 98.7%
HONG KONG - 45.2%
1,539,849 BOC Hong Kong (Holdings) Ltd. (b) $ 1,762,494
1,151,000 Cheung Kong Infrastructure Holdings Ltd. (b) ..................... 4,346,596
753,000 Hongkong Electric Holdings Ltd. (b) .............................. 4,239,386
7,486,000 PCCW Ltd. (b) .................................................... 3,594,083
1,189,000 Yue Yuen Industrial (Holdings) Ltd. (b) .......................... 2,360,691
-------------
16,303,250
-------------
UNITED KINGDOM - 25.0%
775,504 BT Group PLC (b) ................................................. 1,559,622
751,442 GKN PLC (b) ...................................................... 1,046,261
664,284 Ladbrokes PLC (b) ................................................ 1,784,245
1,807,304 Logica PLC (b) ................................................... 1,816,903
482,978 Tate & Lyle PLC (b) .............................................. 2,814,166
-------------
9,021,197
-------------
UNITED STATES - 28.5%
144,449 Citigroup, Inc. .................................................. 969,253
113,307 General Electric Company ......................................... 1,835,573
167,230 General Motors Corp. ............................................. 535,136
158,580 Home Depot (The), Inc. ........................................... 3,650,512
184,755 Pfizer, Inc. ..................................................... 3,272,011
-------------
10,262,485
-------------
TOTAL INVESTMENTS - 98.7% ........................................ 35,586,932
(Cost $65,758,099) (c)
NET OTHER ASSETS AND LIABILITIES - 1.3% .......................... 476,565
-------------
NET ASSETS - 100.0% .............................................. $ 36,063,497
=============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) This security is fair valued in accordance with procedures adopted by the
Board of Trustees.
(c) Aggregate cost for federal income tax purposes is $65,758,099. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $0 and
the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $30,171,167.
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $10,262,485
Level 2 - Other Significant Observable Inputs 25,324,447
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $35,586,932
===========
See Notes to Financial Statements.
Page 29
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Electric Utilities ............................ 23.8%
Diversified Telecommunication Services ........ 14.3
Specialty Retail .............................. 10.1
Pharmaceuticals ............................... 9.1
Food Products ................................. 7.8
Textiles, Apparel & Luxury Goods .............. 6.5
Industrial Conglomerates ...................... 5.1
IT Services ................................... 5.0
Hotels, Restaurants & Leisure ................. 5.0
Commercial Banks .............................. 4.9
Auto Components ............................... 2.9
Diversified Financial Services ................ 2.7
Automobiles ................................... 1.5
Net Other Assets and Liabilities .............. 1.3
-----
100.0%
=====
See Notes to Financial Statements.
Page 30
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 106.8%
AEROSPACE & DEFENSE - 9.9%
9,140 Lockheed Martin Corp. ............................................ $ 768,491
-------------
BEVERAGES - 9.5%
13,480 PepsiCo, Inc. .................................................... 738,300
-------------
CAPITAL MARKETS - 1.0%
9,710 Janus Capital Group, Inc. ........................................ 77,971
-------------
COMPUTERS & PERIPHERALS - 0.0%
3,764 Seagate Technology, Inc. (Escrow Shares) (b) (c) ................. 0
-------------
DIVERSIFIED CONSUMER SERVICES - 4.4%
4,427 Apollo Group, Inc., Class A (b) .................................. 339,197
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 4.5%
355 CenturyTel, Inc. ................................................. 9,702
5,921 Qwest Communications International, Inc. ......................... 21,552
9,307 Verizon Communications, Inc. ..................................... 315,507
-------------
346,761
-------------
ELECTRICAL EQUIPMENT - 1.4%
3,306 Rockwell Automation, Inc. ........................................ 106,585
-------------
ENERGY EQUIPMENT & SERVICES - 0.1%
427 ENSCO International, Inc. ........................................ 12,123
-------------
HEALTH CARE PROVIDERS & SERVICES - 13.8%
7,436 Express Scripts, Inc. (b) ........................................ 408,831
15,796 Medco Health Solutions, Inc. (b) ................................. 662,010
-------------
1,070,841
-------------
HOUSEHOLD PRODUCTS - 0.8%
1,169 Clorox (The) Company ............................................. 64,950
-------------
INSURANCE - 24.0%
16,633 Aon Corp. ........................................................ 759,796
21,597 Chubb (The), Corp. ............................................... 1,101,447
-------------
1,861,243
-------------
LIFE SCIENCES TOOLS & SERVICES - 1.4%
2,922 Waters Corp. (b) ................................................. 107,091
-------------
MACHINERY - 2.0%
3,644 Parker Hannifin Corp. ............................................ 155,016
-------------
OIL,GAS & CONSUMABLE FUELS - 16.8%
15,902 Exxon Mobil Corp. ................................................ 1,269,457
1,615 Valero Energy Corp. .............................................. 34,949
-------------
1,304,406
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 10.2%
22,832 Altera Corp. ..................................................... 381,523
15,618 MEMC Electronic Materials, Inc. (b) .............................. 223,025
18,227 National Semiconductor Corp. ..................................... 183,546
-------------
788,094
-------------
See Notes to Financial Statements.
Page 31
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 7.0%
1,683 AutoZone, Inc. (b) ............................................... $ 234,728
11,049 Best Buy Company, Inc. ........................................... 310,587
-------------
545,315
-------------
TOTAL INVESTMENTS - 106.8% ....................................... 8,286,384
(Cost $9,979,264) (d)
NET OTHER ASSETS AND LIABILITIES - (6.8%). ....................... (528,321)
-------------
NET ASSETS - 100.0% .............................................. $ 7,758,063
=============
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) This security is fair valued in accordance with procedures adopted by the
Board of Trustees.
(d) Aggregate cost for federal income tax purposes is $9,979,264. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$120,179 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$1,813,059.
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A-Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $ 8,286,384
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $ 8,286,384
===========
See Notes to Financial Statements.
Page 32
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 97.7%
CHEMICALS - 6.5%
4,874 Sigma-Aldrich Corp. .............................................. $ 205,878
-------------
COMMUNICATIONS EQUIPMENT - 5.4%
4,249 Research In Motion Ltd. (b) ...................................... 172,424
-------------
COMPUTERS & PERIPHERALS - 6.7%
2,485 Apple, Inc. (b) .................................................. 212,095
-------------
CONSTRUCTION & ENGINEERING - 4.0%
5,446 Foster Wheeler Ltd. (b) .......................................... 127,327
-------------
DIVERSIFIED CONSUMER SERVICES - 15.3%
6,342 Apollo Group, Inc., Class A (b) .................................. 485,924
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 5.8%
1,464 Intuitive Surgical, Inc. (b) ..................................... 185,913
-------------
HEALTH CARE PROVIDERS & SERVICES - 11.8%
6,814 Express Scripts, Inc. (b) ........................................ 374,634
-------------
HOUSEHOLD DURABLES - 3.0%
5,007 Garmin Ltd. ...................................................... 95,984
-------------
INTERNET SOFTWARE & SERVICES - 10.6%
895 Baidu.com, Inc., ADR (b) ......................................... 116,860
710 Google, Inc., Class A (b) ........................................ 218,432
-------------
335,292
-------------
METALS & MINING - 2.5%
7,227 Steel Dynamics, Inc. ............................................. 80,798
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 12.2%
18,561 Intel Corp. ...................................................... 272,104
14,275 NVIDIA Corp. (b) ................................................. 115,199
-------------
387,303
-------------
SOFTWARE - 8.4%
13,749 Microsoft Corp. .................................................. 267,281
-------------
WIRELESS TELECOMMUNICATION SERVICES - 5.5%
3,880 Millicom International Cellular S.A. ............................. 174,251
-------------
TOTAL INVESTMENTS - 97.7% ........................................ 3,105,104
(Cost $3,836,535) (c)
NET OTHER ASSETS AND LIABILITIES - 2.3% .......................... 71,744
-------------
NET ASSETS - 100.0% .............................................. $ 3,176,848
=============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $3,836,535. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $72,165
and the aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value was $803,596.
ADR American Depositary Receipt
See Notes to Financial Statements.
Page 33
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $ 3,105,104
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $ 3,105,104
===========
See Notes to Financial Statements.
Page 34
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 98.2%
AEROSPACE & DEFENSE - 0.8%
686 Axsys Technologies, Inc. (b) ..................................... $ 37,634
-------------
AIRLINES - 1.4%
2,200 Alaska Air Group, Inc. (b) ....................................... 64,350
-------------
AUTO COMPONENTS - 1.5%
6,796 Superior Industries International, Inc. .......................... 71,494
-------------
AUTOMOBILES - 1.2%
342 Daimler AG ....................................................... 13,092
994 Honda Motor Company Ltd., ADR .................................... 21,212
315 Toyota Motor Corp., ADR .......................................... 20,614
-------------
54,918
-------------
CAPITAL MARKETS - 0.8%
545 Credit Suisse Group, ADR ......................................... 15,402
252 Deutsche Bank AG ................................................. 10,254
800 UBS AG (b) ....................................................... 11,440
-------------
37,096
-------------
CHEMICALS - 5.9%
1,090 Mosaic (The), Company ............................................ 37,714
788 Potash Corp. of Saskatchewan, Inc. ............................... 57,697
6,092 RPM International, Inc. .......................................... 80,963
4,310 Sensient Technologies Corp. ...................................... 102,923
-------------
279,297
-------------
COMMERCIAL BANKS - 12.6%
722 Allied Irish Banks PLC, ADR ...................................... 3,386
822 Barclays PLC, ADR ................................................ 8,056
457 Canadian Imperial Bank of Commerce ............................... 19,080
9,354 Colonial BancGroup (The), Inc. ................................... 19,363
1,373 Community Bank System, Inc. ...................................... 33,488
20,589 First BanCorp .................................................... 229,361
449 KB Financial Group, Inc., ADR (b) ................................ 11,764
5,249 KeyCorp .......................................................... 44,721
875 Lloyds TSB Group PLC, ADR ........................................ 6,738
3,573 Mitsubishi UFJ Financial Group, Inc., ADR ........................ 22,188
639 Royal Bank of Canada ............................................. 18,953
190 Royal Bank of Scotland Group PLC, ADR ............................ 2,905
7,975 South Financial Group (The), Inc. ................................ 34,452
8,220 Umpqua Holdings Corp. ............................................ 118,943
3,262 Wachovia Corp. ................................................... 18,071
-------------
591,469
-------------
COMMUNICATIONS EQUIPMENT - 4.4%
9,589 Nokia Oyj Corp., ADR ............................................. 149,588
1,394 Research In Motion Ltd. (b) ...................................... 56,569
-------------
206,157
-------------
See Notes to Financial Statements.
Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
COMPUTERS & PERIPHERALS - 4.2%
2,148 Apple, Inc. (b) ................................................... $ 183,332
1,029 Hutchinson Technology, Inc. (b) ................................... 3,581
831 Western Digital Corp. (b) ......................................... 9,515
-------------
196,428
-------------
CONSTRUCTION & ENGINEERING - 0.3%
302 Jacobs Engineering Group, Inc. (b) ................................ 14,526
-------------
DISTRIBUTORS - 0.2%
2,221 Audiovox Corp., Class A (b) ....................................... 11,127
-------------
DIVERSIFIED CONSUMER SERVICES - 0.7%
412 Apollo Group, Inc., Class A (b) ................................... 31,567
-------------
DIVERSIFIED FINANCIAL SERVICES - 2.1%
841 ING Groep N.V., ADR ............................................... 9,335
2,873 JPMorgan Chase & Company .......................................... 90,586
-------------
99,921
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.8%
1,508 Deutsche Telekom AG, ADR .......................................... 23,072
917 France Telecom S.A., ADR .......................................... 25,740
1,349 Nippon Telegraph & Telephone Corp., ADR ........................... 36,679
1,065 Telecom Italia SpA, ADR ........................................... 17,306
3,934 Telefonica S.A., ADR .............................................. 265,112
-------------
367,909
-------------
ELECTRIC UTILITIES - 2.9%
1,555 Idacorp, Inc. ..................................................... 45,795
1,563 Korea Electric Power Corp., ADR ................................... 18,146
3,210 NV Energy, Inc. ................................................... 31,747
2,097 Westar Energy, Inc. ............................................... 43,009
-------------
138,697
-------------
ELECTRICAL EQUIPMENT - 0.1%
200 SunPower Corp., Class B (b) ....................................... 6,088
-------------
ELECTRONIC EQUIPMENT,INSTRUMENTS & COMPONENTS - 1.5%
1,388 Arrow Electronics, Inc. (b) ....................................... 26,150
763 FLIR Systems, Inc. (b) ............................................ 23,409
8,262 Kemet Corp. (b) ................................................... 2,231
4,827 Vishay Intertechnology, Inc. (b) .................................. 16,508
-------------
68,298
-------------
ENERGY EQUIPMENT & SERVICES - 1.3%
878 National Oilwell Varco, Inc. (b) .................................. 21,458
983 Tidewater, Inc. ................................................... 39,585
-------------
61,043
-------------
FOOD PRODUCTS - 0.7%
1,176 TreeHouse Foods, Inc. (b) ......................................... 32,034
-------------
GAS UTILITIES - 0.5%
983 Atmos Energy Corp. ................................................ 23,297
-------------
See Notes to Financial Statements.
Page 36
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE EQUIPMENT & SUPPLIES - 0.3%
97 Intuitive Surgical, Inc. (b) ..................................... $ 12,318
-------------
HEALTH CARE PROVIDERS & SERVICES - 1.5%
2,218 Kindred Healthcare, Inc. (b) ..................................... 28,878
1,863 LifePoint Hospitals, Inc. (b) .................................... 42,551
-------------
71,429
-------------
HOTELS,RESTAURANTS & LEISURE - 1.0%
2,051 Bob Evans Farms, Inc. ............................................ 41,902
1,845 O'Charley's, Inc. ................................................ 3,690
-------------
45,592
-------------
HOUSEHOLD DURABLES - 2.6%
547 Garmin Ltd. ...................................................... 10,486
18,207 La-Z-Boy, Inc. ................................................... 39,509
735 Mohawk Industries, Inc. (b) ...................................... 31,583
524 National Presto Industries, Inc. ................................. 40,348
-------------
121,926
-------------
INDUSTRIAL CONGLOMERATES - 0.1%
557 McDermott International, Inc. (b) ................................ 5,503
-------------
INSURANCE - 9.8%
1,856 Aegon N.V. ....................................................... 11,229
1,540 Allianz SE, ADR .................................................. 16,678
1,881 American Financial Group, Inc. ................................... 43,037
546 Everest Re Group Ltd. ............................................ 41,572
1,210 Hanover Insurance Group (The), Inc. .............................. 51,994
1,944 HCC Insurance Holdings, Inc. ..................................... 52,002
1,564 Presidential Life Corp. .......................................... 15,468
744 Safety Insurance Group, Inc. ..................................... 28,317
1,200 Selective Insurance Group, Inc. .................................. 27,516
917 United Fire & Casualty Company ................................... 28,491
1,867 W.R. Berkley Corp. ............................................... 57,877
2,816 Zenith National Insurance Corp. .................................. 88,901
-------------
463,082
-------------
INTERNET & CATALOG RETAIL - 0.3%
209 Priceline.com, Inc. (b) .......................................... 15,393
-------------
LEISURE EQUIPMENT & PRODUCTS - 0.5%
1,169 Jakks Pacific, Inc. (b) .......................................... 24,116
-------------
MACHINERY - 0.2%
407 Dynamic Materials Corp. .......................................... 7,859
-------------
MEDIA - 0.7%
673 AH Belo Corp., Class A ........................................... 1,467
3,146 Belo Corp., Class A .............................................. 4,908
12,338 Lee Enterprises, Inc. ............................................ 5,059
1,563 Scholastic Corp. ................................................. 21,226
-------------
32,660
-------------
See Notes to Financial Statements.
Page 37
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
METALS & MINING - 4.5%
4,139 BHP Billiton Ltd., ADR ........................................... $ 177,563
2,208 Southern Copper Corp. ............................................ 35,460
-------------
213,023
-------------
MULTI-UTILITIES - 4.7%
1,274 Avista Corp. ..................................................... 24,690
2,776 DTE Energy Company ............................................... 99,020
6,587 NiSource, Inc. ................................................... 72,259
2,510 PNM Resources, Inc. .............................................. 25,301
-------------
221,270
-------------
MULTILINE RETAIL - 0.6%
2,803 Fred's Inc., Class A ............................................. 30,160
-------------
OIL,GAS & CONSUMABLE FUELS - 2.0%
1,311 Cimarex Energy Company ........................................... 35,109
447 ENI SpA, ADR ..................................................... 21,376
916 Repsol YPF S.A., ADR ............................................. 19,703
1,066 StatoilHydro ASA, ADR ............................................ 17,760
-------------
93,948
-------------
PAPER & FOREST PRODUCTS - 0.9%
3,912 MeadWestvaco Corp. ............................................... 43,775
-------------
PROFESSIONAL SERVICES - 1.5%
2,861 Kelly Services Inc., Class A ..................................... 37,222
791 School Specialty, Inc. (b) ....................................... 15,124
3,761 Spherion Corp. (b) ............................................... 8,312
1,517 Volt Information Sciences, Inc. (b) .............................. 10,968
-------------
71,626
-------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.2%
1,242 Colonial Properties Trust ........................................ 10,346
-------------
ROAD & RAIL - 1.9%
4,373 Avis Budget Group, Inc. (b) ...................................... 3,061
1,599 Kansas City Southern (b) ......................................... 30,461
3,176 Werner Enterprises, Inc. ......................................... 55,072
-------------
88,594
-------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 1.8%
2,069 Actel Corp. (b) .................................................. 24,249
2,061 Brooks Automation, Inc. (b) ...................................... 11,974
675 Cypress Semiconductor Corp. (b) .................................. 3,017
571 MEMC Electronic Materials, Inc. (b) .............................. 8,154
1,420 MKS Instruments, Inc. (b) ........................................ 21,002
2,189 Photronics, Inc. (b) ............................................. 4,269
9,480 RF Micro Devices, Inc. (b) ....................................... 7,394
429 Sigma Designs, Inc. (b) .......................................... 4,076
-------------
84,135
-------------
See Notes to Financial Statements.
Page 38
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 2.3%
3,198 Collective Brands, Inc. (b) ...................................... $ 37,481
398 GameStop Corp., Class A (b) ...................................... 8,621
2,126 Jo-Ann Stores, Inc. (b) .......................................... 32,932
2,391 Pep Boys-Manny, Moe & Jack (The) ................................. 9,875
1,411 Sonic Automotive, Inc., Class A .................................. 5,616
1,876 Stage Stores, Inc. ............................................... 15,477
-------------
110,002
-------------
TEXTILES,APPAREL & LUXURY GOODS - 0.5%
155 Deckers Outdoor Corp. (b) ........................................ 12,380
579 Fossil, Inc. (b) ................................................. 9,669
-------------
22,049
-------------
THRIFTS & MORTGAGE FINANCE - 6.3%
2,512 Corus Bankshares, Inc. ........................................... 2,788
10,284 First Niagara Financial Group, Inc. .............................. 166,292
774 FirstFed Financial Corp. (b) ..................................... 1,355
7,111 People's United Financial, Inc. .................................. 126,789
7,886 Washington Mutual, Inc. .......................................... 170
-------------
297,394
-------------
TOBACCO - 1.5%
2,380 Universal Corp. .................................................. 71,091
-------------
TRADING COMPANIES & DISTRIBUTORS - 1.6%
1,489 GATX Corp. ....................................................... 46,114
2,986 United Rentals, Inc. (b) ......................................... 27,232
-------------
73,346
-------------
TOTAL INVESTMENTS - 98.2% ........................................ 4,623,987
(Cost $6,891,396) (c)
NET OTHER ASSETS AND LIABILITIES - 1.8% .......................... 83,561
-------------
NET ASSETS - 100.0% .............................................. $ 4,707,548
=============
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $6,891,396. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $84,478
and the aggregate gross unrealized depreciation for all securities in
which there was an excess of tax cost over value was $2,351,887.
ADR American Depositary Receipt
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $ 4,623,987
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $ 4,623,987
===========
See Notes to Financial Statements.
Page 39
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - 103.9%
AEROSPACE & DEFENSE - 3.5%
9,748 Axsys Technologies, Inc. (b) ..................................... $ 534,775
-------------
CHEMICALS - 15.2%
27,673 Mosaic (The), Company ............................................ 957,486
18,392 Potash Corp. of Saskatchewan, Inc. ............................... 1,346,662
-------------
2,304,148
-------------
COMMUNICATIONS EQUIPMENT - 13.1%
68,460 Nokia Oyj Corp., ADR ............................................. 1,067,976
22,681 Research In Motion Ltd. (b) ...................................... 920,395
-------------
1,988,371
-------------
COMPUTERS & PERIPHERALS - 8.8%
13,271 Apple, Inc. (b) .................................................. 1,132,680
18,180 Western Digital Corp. (b) ........................................ 208,161
-------------
1,340,841
-------------
CONSTRUCTION & ENGINEERING - 3.2%
10,060 Jacobs Engineering Group, Inc. (b) ............................... 483,886
-------------
DIVERSIFIED CONSUMER SERVICES - 7.0%
13,870 Apollo Group, Inc., Class A (b) .................................. 1,062,719
-------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 12.0%
27,021 Telefonica S.A., ADR ............................................. 1,820,945
-------------
ELECTRICAL EQUIPMENT - 0.7%
3,744 SunPower Corp., Class B (b) ...................................... 113,967
-------------
ELECTRONIC EQUIPMENT,INSTRUMENTS & COMPONENTS - 2.2%
10,848 FLIR Systems, Inc. (b) ........................................... 332,817
-------------
ENERGY EQUIPMENT & SERVICES - 4.7%
29,208 National Oilwell Varco, Inc. (b) ................................. 713,844
-------------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.7%
3,199 Intuitive Surgical, Inc. (b) ..................................... 406,241
-------------
HOUSEHOLD DURABLES - 2.3%
18,198 Garmin Ltd. ...................................................... 348,856
-------------
INDUSTRIAL CONGLOMERATES - 1.2%
18,626 McDermott International, Inc. (b) ................................ 184,025
-------------
INTERNET & CATALOG RETAIL - 1.5%
3,127 Priceline.com, Inc. (b) .......................................... 230,304
-------------
MACHINERY - 0.7%
5,811 Dynamic Materials Corp. .......................................... 112,210
-------------
METALS & MINING - 18.5%
37,166 BHP Billiton Ltd., ADR ........................................... 1,594,421
75,227 Southern Copper Corp. ............................................ 1,208,146
-------------
2,802,567
-------------
See Notes to Financial Statements.
Page 40
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2008
SHARES DESCRIPTION VALUE
- ----------- ------------------------------------------------------------------ -------------
COMMON STOCKS - (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.6%
13,655 Cypress Semiconductor Corp. (b) .................................. $ 61,038
19,039 MEMC Electronic Materials, Inc. (b) .............................. 271,877
6,133 Sigma Designs, Inc. (b) .......................................... 58,264
-------------
391,179
-------------
SPECIALTY RETAIL - 1.9%
13,265 GameStop Corp., Class A (b) ...................................... 287,320
-------------
TEXTILES,APPAREL & LUXURY GOODS - 2.1%
2,207 Deckers Outdoor Corp. (b) ........................................ 176,273
8,285 Fossil, Inc. (b) ................................................. 138,359
-------------
314,632
-------------
TOTAL INVESTMENTS - 103.9% ....................................... 15,773,647
(Cost $31,119,230) (c)
NET OTHER ASSETS AND LIABILITIES - (3.9%). ....................... (587,260)
-------------
NET ASSETS - 100.0% .............................................. $ 15,186,387
=============
- ------------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $31,119,230. As of
December 31, 2008, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$270,371 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$15,615,954.
ADR American Depositary Receipt
SECURITY VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of December 31,
2008 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
VALUATION INPUTS INVESTMENTS
- ----------------------------------------------- -----------
Level 1 - Quoted Prices $15,773,647
Level 2 - Other Significant Observable Inputs --
Level 3 - Significant Unobservable Inputs --
-----------
TOTAL $15,773,647
===========
See Notes to Financial Statements.
Page 41
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2008
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) .......................................... $ 32,197,666 $ 6,904,637 $ 20,172,867 $ 35,586,932
Cash ............................................................... 230,266 214,596 269,282 450,338
Prepaid expenses ................................................... -- 68 124 168
Receivables:
Dividends ................................................... 54,944 10,620 39,837 142,554
Interest .................................................... 79 33 60 70
Membership Interests purchased .............................. -- -- -- --
From Investment Advisor ..................................... -- 751 -- --
Other assets ....................................................... -- 162 -- --
------------ ------------ ------------ ------------
Total Assets ............................................ 32,482,955 7,130,867 20,482,170 36,180,062
------------ ------------ ------------ ------------
LIABILITIES:
Payables:
Investment advisory fees .................................... 6,154 -- 9,708 3,696
Membership Interest servicing fees .......................... 27,283 5,194 16,915 30,585
12b-1 service fees .......................................... 6,680 1,467 4,120 7,550
Custodian fees .............................................. 13,126 1,897 3,141 17,005
Administrative fees ......................................... 695 153 428 785
Audit fees .................................................. 17,000 17,000 17,000 17,000
Legal fees .................................................. 4,816 927 2,465 6,561
Printing fees ............................................... 6,288 6,288 6,288 6,288
Membership Interests redeemed ............................... 114,460 15,139 50,761 21,562
Trustees' fees and expenses ................................. 1,048 -- 182 940
Accrued expenses and other payables ................................ 4,211 2,012 2,411 4,593
------------ ------------ ------------ ------------
Total Liabilities ....................................... 201,761 50,077 113,419 116,565
------------ ------------ ------------ ------------
NET ASSETS ......................................................... $ 32,281,194 $ 7,080,790 $ 20,368,751 $ 36,063,497
============ ============ ============ ============
(1) Investments, at cost ........................................... $ 55,912,400 $ 8,975,955 $ 33,200,800 $ 65,758,099
============ ============ ============ ============
NET ASSETS Consist Of:
Paid-in capital .................................................... $ 17,103,624 $ 6,167,269 $ 31,421,155 $ 35,316,585
Accumulated net investment income (loss) ........................... 3,191,264 1,180,954 5,419,028 10,841,025
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions .................................. 35,701,040 1,803,885 (3,443,499) 20,079,939
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions .................................. (23,714,734) (2,071,318) (13,027,933) (30,174,052)
------------ ------------ ------------ ------------
NET ASSETS ......................................................... $ 32,281,194 $ 7,080,790 $ 20,368,751 $ 36,063,497
============ ============ ============ ============
NET ASSET VALUE, Offering Price and Redemption Price Of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) ......................................... $ 7.08 $ 7.60 $ 7.01 $ 13.71
============ ============ ============ ============
Number of Membership Interests outstanding ......................... 4,559,018 932,106 2,907,342 2,630,949
============ ============ ============ ============
See Notes to Financial Statements.
Page 42
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) ..........................................$ 8,286,384 $ 3,105,104 $ 4,623,987 $ 15,773,647
Cash ............................................................... 250,574 97,835 106,782 232,306
Prepaid expenses ................................................... 73 27 57 181
Receivables:
Dividends ................................................... 12,721 723 4,836 --
Interest .................................................... 33 11 32 37
Membership Interests purchased .............................. -- 970 774 --
From Investment Advisor ..................................... 2,013 2,943 14,065 --
Other assets ....................................................... 200 -- 26 --
------------ ------------ ------------ ------------
Total Assets ............................................ 8,551,998 3,207,613 4,750,559 16,006,171
------------ ------------ ------------ ------------
LIABILITIES:
Payables:
Investment advisory fees .................................... -- -- -- 1,088
Membership Interest servicing fees .......................... 5,389 2,691 3,517 11,902
12b-1 service fees .......................................... 1,598 661 906 3,126
Custodian fees .............................................. 2,128 2,888 15,059 2,848
Administrative fees ......................................... 166 69 94 325
Audit fees .................................................. 17,000 17,000 17,000 17,000
Legal fees .................................................. 594 170 145 3,888
Printing fees ............................................... 6,288 6,288 6,288 6,288
Membership Interests redeemed ............................... 759,624 -- -- 771,526
Trustees' fees and expenses ................................. -- -- -- 97
Accrued expenses and other payables ................................ 1,148 998 2 1,696
------------ ------------ ------------ ------------
Total Liabilities ....................................... 793,935 30,765 43,011 819,784
------------ ------------ ------------ ------------
NET ASSETS .........................................................$ 7,758,063 $ 3,176,848 $ 4,707,548 $ 15,186,387
============ ============ ============ ============
(1) Investments, at cost ...........................................$ 9,979,264 $ 3,836,535 $ 6,891,396 $ 31,119,230
============ ============ ============ ============
NET ASSETS Consist Of:
Paid-in capital ....................................................$ 8,909,225 $ 8,064,542 $ 25,718,711 $ 19,474,552
Accumulated net investment income (loss) ........................... 10,738 (467,364) (97,365) (991,277)
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions .................................. 530,980 (3,688,899) (18,646,389) 12,048,695
Net unrealized appreciation (depreciation) on investments and
foreign currency transactions .................................. (1,692,880) (731,431) (2,267,409) (15,345,583)
------------ ------------ ------------ ------------
NET ASSETS .........................................................$ 7,758,063 $ 3,176,848 $ 4,707,548 $ 15,186,387
============ ============ ============ ============
NET ASSET VALUE, Offering Price and Redemption Price Of
Membership Interests outstanding (Net Assets / Membership
Interests outstanding) .........................................$ 6.97 $ 6.08 $ 3.23 $ 2.67
============ ============ ============ ============
Number of Membership Interests outstanding ......................... 1,112,351 522,820 1,455,604 5,696,525
============ ============ ============ ============
See Notes to Financial Statements.
Page 43
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2008
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
INVESTMENT INCOME:
Dividends .......................................................... $ 2,060,293 $ 292,053 $ 1,915,718 $ 4,555,583
Foreign withholding tax on dividend income ......................... (168,201) -- (8,661) --
Interest ........................................................... 9,803 1,274 7,676 14,140
------------ ------------ ------------ ------------
Total investment income ..................................... 1,901,895 293,327 1,914,733 4,569,723
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees ........................................... 510,912 60,584 270,389 553,163
Membership Interest servicing fees ................................. 280,875 33,373 148,294 304,872
12b-1 service fees ................................................. 212,880 25,243 112,662 230,485
Fund accounting fees ............................................... 46,833 5,553 24,780 50,706
Custodian fees ..................................................... 117,036 13,909 33,972 127,285
Administration fees ................................................ 22,139 2,625 11,714 23,970
Audit fees ......................................................... 17,500 17,500 17,500 17,500
Legal fees ......................................................... 29,821 3,856 13,301 46,063
Printing fees ...................................................... 11,759 11,759 11,759 11,759
Trustees' fees and expenses ........................................ 11,169 1,335 5,582 13,554
Other .............................................................. 27,806 7,444 15,589 32,433
------------ ------------ ------------ ------------
Total expenses ................................................. 1,288,730 183,181 665,542 1,411,790
Fees waived or expenses reimbursed by the investment advisor ... (30,984) (34,027) (180) (53,187)
------------ ------------ ------------ ------------
Net expenses ....................................................... 1,257,746 149,154 665,362 1,358,603
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ....................................... 644,149 144,173 1,249,371 3,211,120
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .................................................... (5,794,495) (1,220,472) (12,445,166) (4,107,884)
Foreign currency transactions .................................. -- -- -- (138,188)
------------ ------------ ------------ ------------
Net realized gain (loss) ........................................... (5,794,495) (1,220,472) (12,445,166) (4,246,072)
------------ ------------ ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................... (41,784,051) (2,114,259) (10,516,246) (43,600,806)
Foreign currency translation ................................... -- -- -- 4,027
------------ ------------ ------------ ------------
Net change in unrealized appreciation (depreciation) ............... (41,784,051) (2,114,259) (10,516,246) (43,596,779)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................ (47,578,546) (3,334,731) (22,961,412) (47,842,851)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ...................................... $(46,934,397) $ (3,190,558) $(21,712,041) $(44,631,731)
============ ============ ============ ============
See Notes to Financial Statements
Page 44
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
INVESTMENT INCOME:
Dividends ..........................................................$ 159,340 $ 41,616 $ 260,491 $ 411,288
Foreign withholding tax on dividend income ......................... -- (1,797) (13,807) (28,935)
Interest ........................................................... 2,582 1,692 2,955 5,649
------------ ------------ ------------ ------------
Total investment income ..................................... 161,922 41,511 249,639 388,002
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fees ........................................... 61,637 36,498 54,188 186,455
Membership Interest servicing fees ................................. 34,008 20,200 29,952 102,763
12b-1 service fees ................................................. 25,682 15,207 22,578 77,689
Fund accounting fees ............................................... 5,650 3,345 4,967 17,092
Custodian fees ..................................................... 21,099 14,673 109,542 17,920
Administration fees ................................................ 2,671 1,581 2,348 8,080
Audit fees ......................................................... 17,500 17,500 17,500 17,500
Legal fees ......................................................... 4,304 2,507 4,574 18,611
Printing fees ...................................................... 11,759 11,759 11,759 11,759
Trustees' fees and expenses ........................................ 1,268 815 1,217 4,089
Other .............................................................. 2,964 5,250 8,883 7,652
------------ ------------ ------------ ------------
Total expenses ................................................. 188,542 129,335 267,508 469,610
Fees waived or expenses reimbursed by the investment advisor ... (37,227) (39,899) (144,163) (12,577)
------------ ------------ ------------ ------------
Net expenses ....................................................... 151,315 89,436 123,345 457,033
------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS) ....................................... 10,607 (47,925) 126,294 (69,031)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .................................................... (1,249,596) (3,046,064) (3,102,046) 1,078,530
Foreign currency transactions .................................. -- -- -- --
------------ ------------ ------------ ------------
Net realized gain (loss) ........................................... (1,249,596) (3,046,064) (3,102,046) 1,078,530
------------ ------------ ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Investments .................................................... (2,274,518) (1,639,624) (2,291,626) (22,508,140)
Foreign currency translation ................................... -- -- -- --
------------ ------------ ------------ ------------
Net change in unrealized appreciation (depreciation) ............... (2,274,518) (1,639,624) (2,291,626) (22,508,140)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ............................ (3,524,114) (4,685,688) (5,393,672) (21,429,610)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ......................................$ (3,513,507) $ (4,733,613) $ (5,267,378) $(21,498,641)
============ ============ ============ ============
See Notes to Financial Statements
Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2008
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) ....................................... $ 644,149 $ 144,173 $ 1,249,371 $ 3,211,120
Net realized gain (loss) ........................................... (5,794,495) (1,220,472) (12,445,166) (4,246,072)
Net change in unrealized appreciation (depreciation) ............... (41,784,051) (2,114,259) (10,516,246) (43,596,779)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations .... (46,934,397) (3,190,558) (21,712,041) (44,631,731)
Net increase (decrease) in net assets from Membership Interest
transactions ................................................... (94,918,522) (5,900,561) (40,819,334) (93,046,121)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets .............................. (141,852,919) (9,091,119) (62,531,375) (137,677,852)
NET ASSETS:
Beginning of period ................................................ 174,134,113 16,171,909 82,900,126 173,741,349
------------- ------------- ------------- -------------
End of period ...................................................... $ 32,281,194 $ 7,080,790 $ 20,368,751 $ 36,063,497
============= ============= ============= =============
Accumulated net investment income (loss) at end of period .......... $ 3,191,264 $ 1,180,954 $ 5,419,028 $ 10,841,025
============= ============= ============= =============
FIRST DEFINED PORTFOLIO FUND,LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31,2007
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- ------------- -------------
OPERATIONS:
Net investment income (loss) ....................................... $ 994,670 $ 216,930 $ 1,957,024 $ 4,143,304
Net realized gain (loss) ........................................... 16,852,935 1,956,422 10,059,289 18,662,899
Net change in unrealized appreciation (depreciation) ............... (1,461,244) (2,105,131) (11,223,606) (7,356,199)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting from operations .... 16,386,361 68,221 792,707 15,450,004
Net increase (decrease) in net assets from Membership Interest
transactions ................................................... (46,120,091) (11,850,865) (18,798,819) 29,454,975
------------- ------------- ------------- -------------
Net increase (decrease) in net assets .............................. (29,733,730) (11,782,644) (18,006,112) 44,904,979
NET ASSETS:
Beginning of period ................................................ 203,867,843 27,954,553 100,906,238 128,836,370
------------- ------------- ------------- -------------
End of period ...................................................... $ 174,134,113 $ 16,171,909 $ 82,900,126 $ 173,741,349
============= ============= ============= =============
Accumulated net investment income (loss) at end of period .......... $ 2,547,115 $ 1,036,781 $ 4,169,657 $ 7,629,905
============= ============= ============= =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements.
Page 46
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) ....................................... $ 10,607 $ (47,925) $ 126,294 $ (69,031)
Net realized gain (loss) ........................................... (1,249,596) (3,046,064) (3,102,046) 1,078,530
Net change in unrealized appreciation (depreciation) ............... (2,274,518) (1,639,624) (2,291,626) (22,508,140)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting from operations .... (3,513,507) (4,733,613) (5,267,378) (21,498,641)
Net increase (decrease) in net assets from Membership Interest
transactions ................................................... (4,517,667) (3,405,552) (2,732,915) (7,313,269)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets .............................. (8,031,174) (8,139,165) (8,000,293) (28,811,910)
NET ASSETS:
Beginning of period ................................................ 15,789,237 11,316,013 12,707,841 43,998,297
------------ ------------ ------------ -------------
End of period ...................................................... $ 7,758,063 $ 3,176,848 $ 4,707,548 $ 15,186,387
============ ============ ============ ============
Accumulated net investment income (loss) at end of period .......... $ 10,738 $ (467,364) $ (97,365) $ (991,277)
============ ============ ============ ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------ ------------ ------------ -------------
OPERATIONS:
Net investment income (loss) .......................................$ 67,438 $ (30,857) $ 88,560 $ (154,862)
Net realized gain (loss) ........................................... 616,434 1,513,814 691,356 807,899
Net change in unrealized appreciation (depreciation) ............... (102,231) 70,115 (536,432) 6,072,635
------------ ------------ ------------ -------------
Net increase (decrease) in net assets resulting from operations .... 581,641 1,553,072 243,484 6,725,672
Net increase (decrease) in net assets from Membership Interest
transactions ................................................... (849,064) 2,445,352 6,730,425 (6,502,992)
------------ ------------ ------------ -------------
Net increase (decrease) in net assets .............................. (267,423) 3,998,424 6,973,909 222,680
NET ASSETS:
Beginning of period ................................................ 16,056,660 7,317,589 5,733,932 43,775,617
------------ ------------ ------------ -------------
End of period ......................................................$ 15,789,237 $ 11,316,013 $ 12,707,841 $ 43,998,297
============ ============ ============ ============
Accumulated net investment income (loss) at end of period ..........$ 131 $ (419,439) $ (223,659) $ (922,246)
============ ============ ============ ============
See Notes to Financial Statements.
Page 47
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2008
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------- --------------- -------------
AMOUNT:
Sold ......................... $ 20,087,877 $ 4,345,016 $ 17,805,841 $ 15,396,588
Redeemed ..................... (115,006,399) (10,245,577) (58,625,175) (108,442,709)
------------- ------------- --------------- -------------
Net increase (decrease) ...... $ (94,918,522) $ (5,900,561) $ (40,819,334) $ (93,046,121)
============= ============= =============== =============
MEMBERSHIP INTEREST:
Sold ......................... 1,828,674 484,192 1,709,948 704,290
Redeemed ..................... (10,846,615) (1,073,926) (5,835,950) (5,323,652)
------------- ------------- --------------- -------------
Net increase (decrease) ...... (9,017,941) (589,734) (4,126,002) (4,619,362)
============= ============= =============== =============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST 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
============= ============= =============== =============
- ----------
(a) Effective November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio.
See Notes to Financial Statements.
Page 48
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 ......................... $ 8,851,343 $ 4,469,246 $ 14,326,922 $ 12,955,700
Redeemed ..................... (13,369,010) (7,874,798) (17,059,837) (20,268,969)
------------ ------------ --------------- ------------
Net increase (decrease) ...... $ (4,517,667) $ (3,405,552) $ (2,732,915) $ (7,313,269)
============ ============ =============== ============
MEMBERSHIP INTEREST:
Sold ......................... 1,119,789 598,329 2,885,841 2,809,127
Redeemed ..................... (1,641,109) (989,641) (3,638,533) (4,561,166)
------------ ------------ --------------- ------------
Net increase (decrease) ...... (521,320) (391,312) (752,692) (1,752,039)
============ ============ =============== ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO (a) PORTFOLIO
------------ ------------ --------------- ------------
AMOUNT:
Sold ......................... $ 6,366,206 $ 12,131,317 $ 9,181,905 $ 14,539,574
Redeemed ..................... (7,215,270) (9,685,965) (2,451,480) (21,042,566)
------------ ------------ --------------- ------------
Net increase (decrease) ...... $ (849,064) $ 2,445,352 $ 6,730,425 $ (6,502,992)
============ ============ =============== ============
MEMBERSHIP INTEREST:
Sold ......................... 669,130 1,062,892 1,579,259 2,574,667
Redeemed ..................... (765,671) (868,175) (424,625) (3,878,165)
------------ ------------ --------------- ------------
Net increase (decrease) ...... (96,541) 194,717 1,154,634 (1,303,498)
============ ============ =============== ============
See Notes to Financial Statements.
Page 49
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
-------------- ---------- --------- ------------- -------------
Net asset value, beginning of period .......... $ 12.83 $ 11.72 $ 10.51 $ 9.80 $ 8.73
-------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.08(a) 0.07(a) 0.06 0.03 0.01(a)
Net realized and unrealized gain (loss) ....... (5.83) 1.04 1.15 0.68 1.06
-------- --------- --------- --------- ---------
Total from investment operations .............. (5.75) 1.11 1.21 0.71 1.07
-------- --------- --------- --------- ---------
Net asset value, end of period ................ $ 7.08 $ 12.83 $ 11.72 $ 10.51 $ 9.80
-------- --------- --------- --------- ---------
TOTAL RETURN (b) .............................. (44.82)%(c) 9.47% 11.51% 7.24%(c) 12.26%(c)
======== ========= ========= ========= =========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 32,281 $ 174,134 $ 203,868 $ 182,892 $ 108,473
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.51% 1.35% 1.37% 1.48% 2.07%
Ratio of operating expenses to average
net assets .................................... 1.47% 1.35% 1.37% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................... 0.75% 0.53% 0.54% 0.26% 0.14%
Portfolio turnover rate ....................... 155% 88% 94% 76% 43%
- ----------
(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) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 50
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period ......... $ 10.63 $ 10.56 $ 8.41 $ 8.69 $ 8.37
-------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.13(a) 0.11(a) 0.14(a) 0.14(a) 0.15(a)
Net realized and unrealized gain (loss) ...... (3.16) (0.04) 2.01 (0.42) 0.17
-------- -------- -------- -------- --------
Total from investment operations ............. (3.03) 0.07 2.15 (0.28) 0.32
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 7.60 $ 10.63 $ 10.56 $ 8.41 $ 8.69
======== ======== ======== ======== ========
TOTAL RETURN (b) ............................. (28.50)%(c) 0.66%(c) 25.56% (3.22)%(c) 3.82%(c)
======== ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ......... $ 7,081 $ 16,172 $ 27,955 $ 11,611 $ 12,749
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed .......................... 1.81% 1.56% 1.47% 1.59% 2.33%
Ratio of operating expenses to average
net assets ................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets ................................... 1.42% 1.01% 1.47% 1.66% 1.84%
Portfolio turnover rate ...................... 105% 98% 82% 145% 57%
- ----------
(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) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 51
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
12/31/08 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 ......................... 0.28(b) 0.25(b) 0.23(b) 0.12(b)
Net realized and unrealized gain (loss) ....... (5.06) (0.12) 1.56 (0.25)
-------- --------- --------- --------
Total from investment operations .............. (4.78) 0.13 1.79 (0.13)
-------- --------- --------- --------
Net asset value, end of period ................ $ 7.01 $ 11.79 $ 11.66 $ 9.87
======== ========= ========= ========
TOTAL RETURN (c) .............................. (40.54)%(e) 1.12% 18.14% (1.30)%(e)
======== ========= ========= ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 20,369 $ 82,900 $ 100,906 $ 58,438
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.47% 1.36% 1.37% 1.52%(d)
Ratio of operating expenses to average
net assets .................................... 1.47% 1.36% 1.37% 1.47%(d)
Ratio of net investment income to average
net assets .................................... 2.76% 2.06% 2.11% 2.00%(d)
Portfolio turnover rate ....................... 172% 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.
See Notes to Financial Statements.
Page 52
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05(a) 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period .......... $ 23.96 $ 21.14 $ 15.27 $ 13.86 $ 11.05
-------- --------- --------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.72(b) 0.60(b) 0.63(b) 0.35(b) 0.27(b)
Net realized and unrealized gain (loss) ....... (10.97) 2.22 5.24 1.06 2.54
-------- --------- --------- -------- --------
Total from investment operations .............. (10.25) 2.82 5.87 1.41 2.81
-------- --------- --------- -------- --------
Net asset value, end of period ................ $ 13.71 $ 23.96 $ 21.14 $ 15.27 $ 13.86
======== ========= ========= ======== ========
TOTAL RETURN (c) .............................. (42.78)%(d) 13.34% 38.44% 10.17%(d) 25.43%(d)
======== ========= ========= ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 36,063 $ 173,741 $ 128,836 $ 36,791 $ 22,618
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.53% 1.39% 1.47% 1.61% 2.67%
Ratio of operating expenses to average
net assets .................................... 1.47% 1.39% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................... 3.47% 2.56% 3.45% 2.49% 2.18%
Portfolio turnover rate ....................... 105% 60% 33% 70% 49%
- ----------
(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) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 53
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period .......... $ 9.66 $ 9.28 $ 9.02 $ 8.66 $ 7.62
------- -------- -------- --------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.01 0.04(a) (0.04) 0.02 (0.03)
Net realized and unrealized gain (loss) ....... (2.70) 0.34 0.30 0.34 1.07
------- -------- -------- --------- --------
Total from investment operations .............. (2.69) 0.38 0.26 0.36 1.04
------- -------- -------- --------- --------
Net asset value, end of period ................ $ 6.97 $ 9.66 $ 9.28 $ 9.02 $ 8.66
======= ======== ======== ========= ========
TOTAL RETURN (b) .............................. 27.85)%(c) 4.10%(c) 2.88%(c) 4.16%(c) 13.65%(c)
======= ======== ======== ========= ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 7,758 $ 15,789 $ 16,057 $ 18,049 $ 14,158
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.83% 1.55% 1.56% 1.58% 2.37%
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets ......................... 0.10% 0.43% (0.40)% 0.20% (0.51)%
Portfolio turnover rate ....................... 202% 115% 106% 113% 104%
- ----------
(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) The total return would have been lower if certain fees had not been
waived and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 54
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period .......... $ 12.38 $ 10.17 $ 9.34 $ 9.04 $ 9.29
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ........................... (0.07)(a) (0.04)(a) (0.11)(a) (0.07)(a) (0.10)(a)
Net realized and unrealized gain (loss) ....... (6.23) 2.25 0.94 0.37 (0.15)
-------- -------- ------- ------- -------
Total from investment operations .............. (6.30) 2.21 0.83 0.30 (0.25)
-------- -------- ------- ------- -------
Net asset value, end of period ................ $ 6.08 $ 12.38 $ 10.17 $ 9.34 $ 9.04
======== ======== ======= ======= =======
TOTAL RETURN (b) .............................. (50.89)%(c) 21.73%(c) 8.89%(c) 3.32%(c) (2.69)%(c)
======== ======== ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 3,177 $ 11,316 $ 7,318 $ 6,552 $ 7,028
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 2.13% 1.76% 1.84% 1.83% 2.52%
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment loss to average
net assets .................................... (0.79)% (0.34)% (1.08)% (0.80)% (1.20)%
Portfolio turnover rate ....................... 181% 161% 92% 175% 117%
- ----------
(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) The total return would have been lower if certain fees had not been
waived and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 55
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07(a) 12/31/06 12/31/05 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period .......... $ 5.75 $ 5.44 $ 5.23 $ 5.20 $ 4.67
-------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.07(b) 0.09(b) 0.06(b) (0.01)(b) (0.02)
Net realized and unrealized gain (loss) ....... (2.59) 0.22 0.15 0.04 0.55
-------- -------- ------- ------- -------
Total from investment operations .............. (2.52) 0.31 0.21 0.03 0.53
-------- -------- ------- ------- -------
Net asset value, end of period ................ 3.23 $ 5.75 $ 5.44 $ 5.23 $ 5.20
======== ======== ======= ======= =======
TOTAL RETURN (c) .............................. (43.83)%(d) 5.70%(d) 4.02%(d) 0.58%(d) 11.35%(d)
======== ======== ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 4,708 $ 12,708 $ 5,734 $ 7,004 $ 9,803
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 2.97% 1.92% 1.79% 1.69% 1.61%
Ratio of operating expenses to average
net assets .................................... 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss)
to average net assets ......................... 1.40% 1.54% 1.14% (0.16)% (0.11)%
Portfolio turnover rate ....................... 248% 130% 87% 92% 123%
- ----------
(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 both
prior to and after the name change and the change in investment strategy.
(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) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 56
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
-------------- ------------- ------------ -------------- -------------
Net asset value, beginning of period .......... $ 5.91 $ 5.00 $ 4.86 $ 4.06 $ 3.34
--------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ........................... (0.01)(a) (0.02)(a) (0.04) (0.02)(a) (0.04)(a)
Net realized and unrealized gain (loss) ....... (3.23) 0.93 0.18 0.82 0.76
--------- -------- -------- -------- --------
Total from investment operations .............. (3.24) 0.91 0.14 0.80 0.72
--------- -------- -------- -------- --------
Net asset value, end of period ................ $ 2.67 $ 5.91 $ 5.00 $ 4.86 $ 4.06
========= ======== ======== ======== ========
TOTAL RETURN (b) .............................. (54.82)%(c) 18.20% 2.88% 19.70%(c) 21.56%(c)
========= ======== ======== ======== ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 15,186 $ 43,998 $ 43,776 $ 54,072 $ 21,765
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.51% 1.41% 1.41% 1.49% 2.28%
Ratio of operating expenses to average
net assets .................................... 1.47% 1.41% 1.41% 1.47% 1.47%
Ratio of net investment loss to average
net assets .................................... (0.22)% (0.37)% (0.88)% (0.45)% (1.13)%
Portfolio turnover rate ....................... 142% 110% 124% 97% 87%
- ----------
(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) The total return would have been lower if certain fees had not been
waived and expenses reimbursed by the investment advisor.
See Notes to Financial Statements.
Page 57
NOTES TO FINANCIAL STATEMENTS
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
1. FUND DESCRIPTION
First Defined Portfolio Fund, LLC (the "Registrant") 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. Interests are
not offered directly to the public. 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 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 daily 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") and the London Stock Exchange Alternative Investment Market
("AIM") are valued at the last sale price on the business day as of which such
value is being determined. Securities listed on the NASDAQ or the AIM are valued
at the official closing price on the business day as of which such value is
being determined. If there has been no sale on such day, or no official closing
price in the case of securities traded on the NASDAQ or the AIM, the securities
are valued at the mean of the most recent bid and ask prices on such day.
Portfolio securities traded on more than one securities exchange are valued at
the last sale price or official closing price, as applicable, 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 and the AIM, are valued at the closing bid prices. Short-term investments
that mature in less than 60 days when purchased are valued at amortized cost.
Page 58
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
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 the computation of the value of such securities. If events materially
affecting the value of such securities occur during such period, these
securities will be valued at their fair value according to procedures adopted by
the Fund's Board of Trustees. All securities and other assets of the Fund
initially expressed 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 Measurements" ("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' investments as of December 31, 2008
is included within each Portfolio's Portfolio of Investments.
B. SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis.
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 "Net realized gain (loss) on foreign currency transactions" on
the Statements of Operations. Unrealized depreciation of $2,885 from dividends
receivable in foreign currencies are included in "Dividends receivable" 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 59
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
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 pursuant to the
Investment Advisory and Management Agreement. As compensation for the services
rendered under the Agreement, Prudential is paid fees at an annual rate of 0.30%
of average daily net assets from the Portfolios. These fees are included in
"Membership Interest servicing fees" on the Statements of Operations.
G. ACCOUNTING PRONOUNCEMENT:
In March 2008, FASB released Statement of Financial Accounting Standards 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 Registrant'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. However, First
Trust's ability to recover such amounts is limited to the extent that it would
not exceed the amount waived or reimbursed during such period. To the extent
that the actual expense ratio of a particular Portfolio is less than such
Portfolio's applicable expense cap, First Trust may recover a portion of the
previously waived or reimbursed amount equal to the amount that the expense cap
exceeds the actual expense ratio. These amounts would be included in "Expenses
previously waived or reimbursed" on the Statements of Operations. The fees
recovered, fees waived and expenses reimbursed by First Trust for the year ended
December 31, 2008, are as follows:
EXPENSES BORNE BY
FEES EXPENSES ADVISOR SUBJECT TO
RECOVERED FEES WAIVED REIMBURSED REIMBURSEMENT
---------- ----------- ---------- ------------------
Target Managed VIP Portfolio ........... $ -- $ 30,984 $ -- $ 30,984
The Dow(R) DART 10 Portfolio ........... -- 34,027 -- 52,134
The Dow(R) Target Dividend Portfolio ... -- 180 -- 180
Global Dividend Target 15 Portfolio .... -- 53,187 -- 53,187
S&P(R) Target 24 Portfolio ............. -- 37,227 -- 64,404
NASDAQ(R) Target 15 Portfolio .......... -- 36,498 3,401 91,681
First Trust Target Focus Four
Portfolio ............................. -- 54,188 89,975 202,455
Value Line(R) Target 25 Portfolio ...... -- 12,577 -- 12,577
PNC Global Investment Servicing (U.S.) Inc. ("PNC G.I.S."), formerly known as
PFPC Inc., an indirect, majority-owned subsidiary of the PNC Financial Services
Group, Inc., serves as the Registrant's Administrator, Fund Accountant, Transfer
Agent and Board Administrator in accordance with certain fee arrangements.
Page 60
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
PFPC Trust Company, also 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 additional 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.
The officers and "Interested" Trustee receive no compensation from the
Registrant for serving in such capacities.
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 year ended December 31, 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.
5. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government and short-term investments, for the year ended December 31, 2008, was
as follows:
PURCHASES SALES
------------- -------------
Target Managed VIP Portfolio .......... $ 134,835,636 $ 228,094,435
The Dow(R) DART 10 Portfolio .......... 10,731,367 16,540,795
The Dow(R) Target Dividend Portfolio .. 79,084,281 117,712,019
Global Dividend Target 15 Portfolio ... 97,166,690 185,286,811
S&P(R) Target 24 Portfolio ............ 20,867,898 24,591,032
NASDAQ(R) Target 15 Portfolio ......... 11,066,631 14,535,071
First Trust Target Focus Four
Portfolio ............................ 21,807,500 24,196,518
Value Line(R) Target 25 Portfolio ..... 44,164,514 50,469,984
Page 61
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008
6. MEMBERSHIP INTERESTS
The Registrant has authorized an unlimited number of Interests without par value
of one or more series.
7. INDEMNIFICATION
The Registrant has a variety of indemnification obligations under contracts with
its service providers. The Registrant's maximum exposure under these
arrangements is unknown. However, the Registrant 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.
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.
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 diversification, 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 stocks of larger
capitalization companies.
Page 62
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Member and Board of Trustees of First Defined Portfolio Fund, LLC:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of First Defined Portfolio Fund, LLC, comprised
of Target Managed VIP Portfolio, The Dow(R) DART 10 Portfolio, The Dow(R) Target
Dividend Portfolio, Global Dividend Target 15 Portfolio, S&P(R) Target 24
Portfolio, NASDAQ(R) Target 15 Portfolio, First Trust Target Focus Four
Portfolio and Value Line(R) Target 25 Portfolio (the "Portfolios"), as of
December 31, 2008, the related statements of operations for the year ended, and
the statements of changes in net assets and the financial highlights for each of
the two years in the period then ended. These financial statements and financial
highlights are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The Portfolios' financial highlights
for the periods ended prior to December 31, 2007 were audited by other auditors
whose report, dated February 15, 2007, expressed an unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Portfolios are not required to have, nor were we engaged to perform, an
audit of their internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Portfolios'
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of December 31, 2008, by
correspondence with the Portfolios' custodian. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Portfolios as of December 31, 2008, the results of their operations for the year
ended, and changes in their net assets, and the financial highlights for each of
the two years in the period then ended, in conformity with accounting principles
generally accepted in the United States of America.
- -s- Deloitte & Touche LLP
- -------------------------
Chicago, Illinois
February 16, 2009
Page 63
ADDITIONAL INFORMATION
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 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.
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 Registrant. 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 Registrant. 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 REGISTRANT.
"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 Registrant.
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 Registrant. 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 64
BOARD OF TRUSTEES AND OFFICERS
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008 (UNAUDITED)
BOARD OF TRUSTEES AND OFFICERS
Information pertaining to the Trustees and officers of the Registrant is set
forth below. The statement of additional information includes additional
information about the Trustees and is available without charge, upon request, by
calling (800) 988-5891.
NUMBER OF
PORTFOLIOS IN OTHER
NAME, ADDRESS, THE FIRST TRUST TRUSTEESHIPS OR
DATE OF BIRTH AND TERM OF OFFICE AND PRINCIPAL OCCUPATIONS FUND COMPLEX DIRECTORSHIPS
POSITION WITH THE FUND LENGTH OF SERVICE DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ----------------------------- ------------------- -------------------------- ------------------- ------------------------
INDEPENDENT TRUSTEES
- ----------------------------- ------------------- -------------------------- ------------------- ------------------------
Richard E. Erickson, Trustee - Indefinite Term Physician; President, 60 None
c/o First Trust Advisors L.P. - 9 Years Served Wheaton Orthopedics;
120 E. Liberty Drive, Co-owner and Co-Director
Suite 400 (January 1996 to May
Wheaton, IL 60187 2007), Sports Med Center
D.OB.: 04/51 for Fitness; Limited
Partner, Gundersen Real
Estate Limited
Partnership; Member,
Sportsmed LLC
Thomas R. Kadlec, Trustee - Indefinite Term Senior Vice President and 60 Director of ADM
c/o First Trust Advisors L.P. - 4 Years, 9 Months Chief Financial Officer Investor Services, Inc.
120 E. Liberty Drive, Served (May 2007 to Present), and Director of Archer
Suite 400 Vice President and Chief Financial Services, Inc.
Wheaton, IL 60187 Financial Officer (1990 to
D.O.B.: 11/57 May 2007), ADM
Investor Services, Inc.
(Futures Commission
Merchant); President
(May 2005 to Present),
ADM Derivatives, Inc.;
Registered Representative
(2000 to Present),
Segerdahl & Company,
Inc., a FINRA member
(Broker-Dealer)
Robert F. Keith, Trustee - Indefinite Term President (2003 to 60 None
c/o First Trust Advisors L.P. - 1 Year, 8 Months Present), Hibs Enterprises
120 E. Liberty Drive, Served (Financial and
Suite 400 Management Consulting);
Wheaton, IL 60187 President (2001 to 2003),
D.O.B.: 11/56 Aramark Service Master
Management Services
LP; President and Chief
Operating Officer (1998
to 2003), ServiceMaster
Management Services LP
Page 65
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008 (UNAUDITED)
NUMBER OF
PORTFOLIOS IN OTHER
NAME, ADDRESS, THE FIRST TRUST TRUSTEESHIPS OR
DATE OF BIRTH AND TERM OF OFFICE AND PRINCIPAL OCCUPATIONS FUND COMPLEX DIRECTORSHIPS
POSITION WITH THE FUND LENGTH OF SERVICE DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ----------------------------- ------------------- -------------------------- ------------------- ------------------------
INDEPENDENT TRUSTEES (CONTINUED)
- ----------------------------- ------------------- -------------------------- ------------------- ------------------------
Niel B. Nielson, Trustee - Indefinite Term President (June 2002 to 60 Director of Covenant
c/o First Trust Advisors L.P. - 8 Years Served Present), Covenant Transport Inc.
120 E. Liberty Drive, College
Suite 400
Wheaton, IL 60187
D.O.B.: 03/54
INTERESTED TRUSTEE
James A. Bowen(1), Trustee, - Indefinite Term President, First Trust 60 Trustee of Wheaton
President, Chairman of the - 8 Years Served Advisors L.P. and First College
Board and CEO Trust Portfolios L.P.;
120 E. Liberty Drive, Chairman of the Board of
Suite 400 Directors, BondWave LLC
Wheaton, IL 60187 (Software Development
D.O.B.: 09/55 Company/Broker-
Dealer/Investment
Advisor) and Stonebridge
Advisors LLC (Investment
Advisor)
NAME,ADDRESS, POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- --------------------- ----------------------- ------------------ ----------------------------
OFFICERS WHO ARE NOT TRUSTEES(2)
- --------------------- ----------------------- ------------------ ----------------------------
Mark R. Bradley Treasurer, Controller, - Indefinite Term Chief Financial Officer,
120 E. Liberty Drive, Chief Financial Officer - Since Fund First Trust Advisors L.P.
Suite 400 and Chief Accounting Inception and First Trust Portfolios
Wheaton, IL 60187 Officer L.P.; Chief Financial
D.O.B.: 11/57 Officer, BondWave LLC
(Software Development
Company/Broker-
Dealer/Investment Advisor)
and Stonebridge Advisors
LLC (Investment Advisor)
- ----------
(1) Mr. Bowen is deemed an "interested person" of the Fund due to his position
as President of First Trust Advisors L.P., investment advisor of the Fund.
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 66
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008 (UNAUDITED)
NAME,ADDRESS, POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- --------------------- ----------------------- ------------------ -----------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(2) - (CONTINUED)
- --------------------- ----------------------- ------------------ -----------------------------------------------------
James M. Dykas Assistant Treasurer - Indefinite Term Senior Vice President (April 2007 to
120 E. Liberty Drive, - Since December Present), Vice President (January 2005
Suite 400 2005 to April 2007), First Trust Advisors
Wheaton, IL 60187 L.P. and First Trust Portfolios L.P.;
D.O.B.: 01/66 Executive Director (December 2002 to
January 2005), Vice President
(December 2000 to December 2002),
Van Kampen Asset Management and
Morgan Stanley Investment
Management
Christopher R. Fallow Assistant Vice - Indefinite Term Assistant Vice President (August 2006
120 E. Liberty Drive, President - Since December to Present), Associate (January 2005
Suite 400 2006 to August 2006), First Trust Advisors
Wheaton, IL 60187 L.P. and First Trust Portfolios L.P.;
D.O.B.: 04/79 Municipal Bond Trader (July 2001 to
January 2005), BondWave LLC
(Software Development
Company/Broker-Dealer/Investment
Advisor)
W. Scott Jardine Secretary and Chief - Indefinite Term General Counsel, First Trust Advisors
120 E. Liberty Drive, Compliance Officer - Since Fund L.P. and First Trust Portfolios L.P.;
Suite 400 Inception Secretary, BondWave LLC (Software
Wheaton, IL 60187 Development Company/Broker-
D.O.B.: 05/60 Dealer/Investment Advisor) and
Stonebridge Advisors LLC
(Investment Advisor)
Daniel J. Lindquist Vice President - Indefinite Term Senior Vice President (September
120 E. Liberty Drive, - Since December 2005 to Present), Vice President (April
Suite 400 2005 2004 to September 2005), First Trust
Wheaton, IL 60187 Advisors L.P. and First Trust
D.O.B.: 02/70 Portfolios L.P.; Chief Operating Officer
(January 2004 to April 2004), Mina Capital Management,
LLC; Chief Operating Officer (April 2000 to January
2004), Samaritan Asset Management Services, Inc.
- ----------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 67
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008 (UNAUDITED)
NAME,ADDRESS, POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- --------------------- ----------------------- ------------------ -----------------------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(2)
- --------------------- ----------------------- ------------------ -----------------------------------------------------
Coleen D. Lynch Assistant Vice - Indefinite Term Assistant Vice President (January
120 E. Liberty Drive, President - Since July 2008 2008 to Present), First Trust Advisors
Suite 400 L.P. and First Trust Portfolios L.P.;
Wheaton, IL 60187 Vice President (May 1998 to January
D.O.B.: 07/58 2008), Van Kampen Asset
Management and Morgan Stanley
Investment Management
Kristi A. Maher Assistant Secretary - Indefinite Term Deputy General Counsel (May 2007 to
120 E. Liberty Drive, - Since July 2004 Present), Assistant General Counsel
Suite 400 (March 2004 to May 2007), First Trust
Wheaton, IL 60187 Advisors L.P. and First Trust
D.O.B.: 12/66 Portfolios L.P.; Associate (December
1995 to March 2004), Chapman and
Cutler LLP
- ----------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 68
PRIVACY POLICY
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2008 (UNAUDITED)
PRIVACY POLICY
The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") consider your privacy an important priority in maintaining our
relationship. We are committed to protecting the security and confidentiality of
your personal information.
SOURCES OF INFORMATION
We may collect nonpublic personal information about you from the following
sources:
- Information we receive from you or your broker-dealer, investment
adviser or financial representative through interviews,
applications, agreements or other forms;
- Information about your transactions with us, our affiliates or
others;
- Information we receive from your inquiries by mail, e-mail or
telephone; and
- Information we collect on our website through the use of "cookies."
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. The permitted uses
include the disclosure of such information to unaffiliated companies for the
following reasons:
- In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives and
printers.
- We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund. Please note,
however, that the California Financial Information Privacy Act contains an "opt
out" mechanism that California consumers may use to prevent us from sharing
nonpublic personal information with affiliates.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, the Fund restricts access to
your nonpublic personal information to those individuals who need to know that
information to provide products or services to you. We maintain physical,
electronic and procedural safeguards to protect your nonpublic personal
information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time; however, if we do change
it, we will tell you promptly.
For questions about our policy, or for additional copies of this notice, please
contact us at (800) 621-1675.
Page 69
(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
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.
(a) The registrant, as of the end of the period covered by this report, has
adopted a code of ethics that applies to the registrant's principal
executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions,
regardless of whether these individuals are employed by the registrant
or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, and that relates to any element of
the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are employed
by the registrant or a third party, that relates to one or more of the
items set forth in paragraph (b) of this item's instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES -- The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal accountant for
the audit of the Registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements were $149,900 for 2007 and $130,000 for 2008.
(b) AUDIT-RELATED FEES (REGISTRANT) -- The aggregate fees billed in
each of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the Registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for 2007 and $0 for 2008.
AUDIT-RELATED FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were $0 for 2007 and $0 for 2008.
(c) TAX FEES (REGISTRANT) -- The aggregate fees billed in each of the
last two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning to the Registrant
were $0 for 2007 and $0 for 2008.
TAX FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The aggregate fees
billed in each of the last two fiscal years for professional services rendered
by the principal accountant for tax compliance, tax advice, and tax planning to
the registrant's adviser and distributor were $0 for 2007 and $0 for 2008.
(d) ALL OTHER FEES (REGISTRANT) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the Registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2007 and $0 for 2008.
ALL OTHER FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The
aggregate fees billed in each of the last two fiscal years for products and
services provided by the principal accountant to the registrant's investment
adviser and distributor, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2007 and $0 for 2008.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services
Pre-Approval Policy, the Audit Committee (the "COMMITTEE") is responsible for
the pre-approval of all audit services and permitted non-audit services
(including the fees and terms thereof) to be performed for the Registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the
independent auditor's engagements for non-audit services with the Registrant's
adviser (not including a sub-adviser whose role is primarily portfolio
management and is sub-contracted or overseen by another investment adviser) and
any entity controlling, controlled by or under common control with the
investment adviser that provides ongoing services to the Registrant, if the
engagement relates directly to the operations and financial reporting of the
Registrant, subject to the DE MINIMIS exceptions for non-audit services
described in Rule 2-01 of Regulation S-X. If the independent auditor has
provided non-audit services to the Registrant's adviser (other than any
sub-adviser whose role is primarily portfolio management and is sub-contracted
with or overseen by another investment adviser) and any entity controlling,
controlled by or under common control with the investment adviser that provides
ongoing services to the Registrant that were not pre-approved pursuant to its
policies, the Committee will consider whether the provision of such non-audit
services is compatible with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b) through
(d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the
pre-approval exceptions included in paragraph (c)(7)(i)(c) or paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than fifty percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by
another investment adviser), and any entity controlling, controlled by,
or under common control with the adviser that provides ongoing services
to the registrant for 2007 were $0 for the registrant, $7,000 for the
registrant's investment adviser and $13,225 for the registrant's
distributor, and for 2008 were $0 for the registrant, $12,143 for the
registrant's investment adviser and $46,363 for the registrant's
distributor.
(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered
to the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted with
or overseen by another investment adviser), and any entity controlling,
controlled by, or under common control with the investment adviser that
provides ongoing services to the registrant that were not pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is
compatible with maintaining the principal accountant's independence.
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) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) FIRST DEFINED PORTFOLIO FUND, LLC
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date 2/26/09
----------------------------------------------------------------------------
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 2/26/09
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date 2/26/09
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.