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: June 30, 2009
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. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2009
TABLE OF CONTENTS
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2009
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
Additional Information ................................................... 64
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 "Registrant") 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 Registrant 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 Registrant.
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 Registrant's investment advisor, you may obtain an
understanding of how the market environment affected its performance. The
statistical information that follows may help you understand a Portfolio's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
First Trust are just that: informed opinions. They should not be considered to
be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The risks of investing in the
Portfolios are spelled out in the prospectus, the statement of additional
information, this report, and other regulatory filings.
SHAREHOLDER LETTER
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2009
Dear Shareholders:
2008 brought all sorts of challenges to investors. Throughout the year, the
financial sector was plagued with failures in banking, insurance and 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 a major banking crisis. Of the thirty stocks in the Dow, only two
were up in 2008. However, many economists believe the recession that began in
December, 2007 ended in March, 2009. In fact, the Dow's total return from March
9 (the statistical end of the bear market) to June 30, 2009, was 30.30%. Of
course, no one can predict that this trend will continue.
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 six-month period ended June 30, 2009.
It contains a market recap and a performance analysis for the period. I
encourage you to read this document and discuss it with your financial advisor.
First Trust is pleased to be a part of the investment solutions offered by
Prudential Annuities Life Assurance Corporation, formerly known as American
Skandia Life Assurance Corporation, and to give you current information about
your investment. We value our relationship with you and appreciate the
opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
President of First Defined Portfolio
Fund, LLC
Page 1
(PHOTO OF ROBERT F. CAREY)
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER
FIRST TRUST ADVISORS L.P.
Mr. Carey is responsible for the overall management of research and analysis of
the First Trust product line. Mr. Carey has over 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
Perhaps the best way to characterize the current economic climate is to say that
things are "less bad." The good news is less bad is a marked improvement over
six months ago when the prevailing sentiment was teetering on dire. The
government's monetary and fiscal initiatives, which we outlined in our last
discussion, proved effective in backstopping the U.S. financial system. This was
critical for the sake of the economy as well as the securities markets. Neither
one tends to function very well when confidence levels are extremely low. The
Conference Board's Consumer Confidence Index, for example, hit an all-time low
of 25.30 in February 2009, but rebounded to 49.30 this past June. The all-time
high was 144.70 in January 2000, which suggests that despite the huge rally in
stocks off their March 9th lows there are still plenty of skeptics to convert.
A consensus among economists, however, has been building for months in favor of
a second half economic recovery. In its July survey, the Blue Chip Economic
Indicators found that 65.4% of the economists polled believe the National Bureau
of Economic Research will declare the current recession, which began in December
2007, over in the third quarter. They are forecasting a gross domestic product
("GDP") growth rate of 1.0% (annualized) for the third quarter of 2009.
Economists are looking for 2.0% growth in 2010, including a 3.0% growth rate in
the fourth quarter of 2010. That represents a substantial turnaround from the
previous four quarters (third quarter 2008-second quarter 2009) of GDP output,
which ranged from -1.0% to -6.4%.
The capital markets were largely frozen from the second half of 2007 through
most of the first quarter of 2009. The success of the aforementioned government
initiatives, particularly the actions of the Federal Reserve, helped induce a
much needed thawing process. Any economic recovery depends on the ability of
corporations to secure capital to fund their operations. Statistics tracking new
corporate bond issuance show they are able to do so. Corporations issued a
record $903.0 billion worth of debt in the U.S. in the first half of 2009,
according to Thomson Reuters. Global corporate bond issuance set a record as
well with $1.791 trillion in sales, according to Standard & Poor's.
U.S. STOCKS AND BONDS
All of the major U.S. stock indices posted positive returns in the first half of
2009. The S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index were up
3.2%, 8.5%, and 0.7%, respectively, according to Bloomberg. Four of the 10 major
sectors in the S&P 500 posted gains. All are cyclical in nature. The
top-performing sector was Technology (+24.9%), while the poorest showing went to
Telecommunications Services (-3.9%).
The VIX Volatility Index ("VIX"), which we noted at year-end for being
excessively high, regressed back towards its mean over the first half of 2009.
The VIX stood at 40.00 on 12/31/08. Over the past decade, the average reading
for the VIX was 21.82, according to Bloomberg. We cited a prediction by Bespoke
Investment Group that said if the VIX could manage to work its way down into the
30s we could see higher stock prices. Well, not only did it trend into the 30s,
it closed June 2009 at 26.35. The S&P 500 posted a gain of 36.9% from its March
9th low through June 30.
In the U.S. bond market, the top-performing group by far was high-yield
corporate bonds. The Barclays Capital U.S. Corporate High Yield Index posted a
total return of 30.4%. The Barclays Capital U.S. Treasury: Intermediate Index
posted the worst return, declining 2.4%. In 2008, Treasuries were the
top-performing debt group, while high-yield corporate bonds ranked last. By
swapping positions one can deduce that investors may be comfortable with the
notion that an economic recovery is on the horizon.
Page 2
MARKET OVERVIEW - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
FOREIGN STOCKS AND BONDS
Like the U.S., the best-performing areas of the overseas markets were those that
carried the most inherent risk. The Barclays Capital Global Emerging Markets
Index of debt securities rose 18.3% (USD) in the first half of 2009, while the
MSCI Emerging Markets Index of stocks gained 35.7% (USD). The Barclays Capital
Global Aggregate Index of higher quality debt returned 1.5% (USD), while the
MSCI World Index (excluding the U.S.) of stocks from developed countries gained
just 9.4% (USD). The U.S. dollar boosted returns a bit for U.S. investors by
declining 2.1% against a basket of major currencies.
Page 3
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (UNAUDITED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
TARGET MANAGED VIP PORTFOLIO
Over the six months ended June 30, 2009, the Target Managed VIP Portfolio posted
a total return of -4.52% versus 4.21% for the Russell 3000(R) Index over the
same period. The NAV decreased from $7.08 to $6.76 during the period.
Of the Portfolio's 111 stocks, 43 advanced and 68 declined over the period. The
top three performing stocks, by contribution to return, were Microsoft Corp.
(MSFT), Credit Suisse Group AG (ADS) (CS) and Deutsche Bank AG (DB). The
worst-performing stocks, by percentage loss, were Amgen, Inc. (AMGN), General
Electric Co. (GE) and Caterpillar, Inc. (CAT).
The financials sector was the biggest contributor to relative performance over
the period due to an overweight position and outperformance. An underweight
position in consumer staples stocks also contributed positively to the
Portfolio's relative performance as the sector underperformed the overall
market. Information technology stocks were the biggest detractors from relative
performance due to both an underweight position and underperformance. The
information technology sector was the top performing sector in the benchmark for
the period. Health care, industrials and consumer discretionary stocks also hurt
Portfolio performance due to poor stock selection.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
managed vip dow jones russell 3000 index
- ----------- --------- ------------------
10000 10000 10000
8040 10896 11261.9
8620 10381.7 10420
8190 9815.9 9228.74
6470 8343 7240.81
8730 10700 9500
9800 11271 10631
10510 11465 11285
11750 13643 13068
12830 14860 13755
7080 10116 8624
6760 9913 8987
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION)(C) (SINCE INCEPTION)(C)
--------- ---------- ------------ -------------- -------------------- --------------------
Target Managed VIP Portfolio 10/6/99 -4.52% -38.38% -5.20% -32.40% -3.94%
Dow Jones Industrial Avg.(SM) (a) -2.01 -22.99 -1.68 -0.88 -0.09
Russell 3000(R) Index (b) 4.21 -26.55 -1.79 -10.13 -1.10
(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 index reflects no deduction for fees, expenses or taxes).
(b) The Russell 3000(R) Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg). (The index reflects
no deduction for fees, expenses or taxes).
(c) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the Dow(R) Target 5
Portfolio to the Target Managed VIP Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided for
the periods prior to April 30, 2002, reflect the Portfolio's 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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 4
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Amgen, Inc. 8.8%
McDonald's Corp. 8.4
Microsoft Corp. 5.3
Johnson & Johnson 4.2
Gilead Sciences, Inc. 3.9
Exxon Mobil Corp. 3.1
AT&T, Inc. 3.1
Caterpillar, Inc. 2.6
General Electric Company 2.6
Credit Suisse Group AG, ADR 2.1
----
Total 44.1%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Health Care 21.5%
Financials 18.4
Consumer Discretionary 17.1
Industrials 11.8
Energy 10.9
Information Technology 9.4
Telecommunication Services 4.1
Consumer Staples 3.8
Utilities 1.6
Materials 1.4
-----
Total 100.0%
=====
Page 5
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
THE DOW(R) DART 10 PORTFOLIO
Over the six months ended June 30, 2009, The Dow(R) DART 10 Portfolio posted a
total return of -9.61% versus -2.01% for the Dow Jones Industrial Average(SM)
over the same period. The NAV decreased from $7.60 to $6.87 during the period.
Of the Portfolio's 10 stocks, 2 advanced and 8 declined over the period. The top
three performing stocks, by contribution to return, were Bank of America Corp.
(BAC), Walt Disney Co. (DIS) and Home Depot Inc. (HD). The worst-performing
stocks, by percentage loss, were General Electric Co. (GE), Caterpillar, Inc.
(CAT) and Exxon Mobil Corp. (XOM).
Bank of America (BAC) was the biggest contributor to Portfolio performance over
the period covered by this report as the stock rebounded in the second quarter.
Walt Disney (DIS) also added positively to returns. General Electric (GE) was
the biggest drag on performance as the health of its finance unit was
questioned. Caterpillar Inc (CAT) also hurt Portfolio performance as the stock
fell amid concerns about the strength and timing of an economic recovery.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
dart 10 dow
- ------- -------
10000 10000
9220 10896
10020 10381.7
8540 9815.91
6980 8348
8370 10700
8690 11271
8410 11465
10560 13643
10630 14860
7600 10116
6870 9913
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION) (SINCE INCEPTION)
--------- ---------- ------------ -------------- ----------------- -----------------
The Dow(R) DART 10 Portfolio 10/6/99 -9.61% -24.67% -3.17% -31.30% -3.78%
Dow Jones Industrial Avg.(SM) (a) -2.01 -22.99 -1.68 -0.88 -0.09
(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 index reflects no deduction for fees, expenses or taxes).
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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 6
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Walt Disney (The), Company 11.3%
Boeing (The), Company 11.2
Bank of America Corp. 10.9
Alcoa, Inc. 10.5
Kraft Foods, Inc., Class A 10.4
McDonald's Corp. 10.1
Exxon Mobil Corp. 9.7
AT&T, Inc. 9.6
Caterpillar, Inc. 8.2
General Electric Company 8.1
-----
Total 100.0%
=====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Industrials 27.5%
Consumer Discretionary 21.4
Financials 10.9
Materials 10.5
Consumer Staples 10.4
Energy 9.7
Telecommunication Services 9.6
-----
Total 100.0%
=====
Page 7
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the six months ended June 30, 2009, The Dow(R) Target Dividend Portfolio
posted a total return of -18.83% versus -12.54% for the Dow Jones U.S. Select
Dividend Index(SM) over the same period. The NAV decreased from $7.01 to $5.69
during the period.
Of the Portfolio's 20 stocks, 4 advanced and 16 declined over the period. The
top three performing stocks, by contribution to return, were MeadWestvaco Corp.
(MWV), Eastman Chemical Co. (EMN) and NiSource, Inc. (NI). The worst-performing
stocks, by percentage loss, were First Bancorp of Puerto Rico (FBP), Zions
Bancorp (ZION) and Fulton Financial Corp. (FULT).
Materials posted the best relative returns over the period due to beneficial
stock selection and an overweight position. Stock selection made utilities the
second best-performing sector on a relative basis. The financial sector was the
biggest detractor from performance due to an overweight position and
underperformance relative to the benchmark. Industrials also hurt Portfolio
returns due to an overweight position and relative underperformance for the
first half of 2009.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
May 2, 2005-June 30, 2009
(PERFORMANCE GRAPH)
Dow Target Dividend Dow Jones Select S&P
- ------------------- ---------------- -----
10000 10000 10000
9870 10529 10879
11660 12582 12597
11790 11938 13289
7010 8240 8372
5690 7207 8639
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURNS TOTAL RETURN (SINCE INCEPTION) (SINCE INCEPTION)
--------- ---------- ------------ ----------------- -----------------
The Dow(R) Target Dividend Portfolio 5/2/05 -18.83% -34.07% -43.10% -12.66%
Dow Jones U.S. Select Dividend Index(SM) (a) -12.54 -23.19 -27.93 -7.56
S&P 500(R) Index (b) 3.16 -26.21 -13.61 -3.45
(a) The Dow Jones U.S. Select Dividend Index(SM) is comprised of 100 of the
highest dividend-yielding securities (excluding REITs) in the Dow Jones
U.S. Index.
(b) The S&P 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 index reflects no deduction for
fees, expenses or taxes).
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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 8
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
MeadWestvaco Corp. 9.2%
Eastman Chemical Company 7.5
Universal Corp. 6.6
NiSource, Inc. 6.4
TECO Energy, Inc. 6.1
Sensient Technologies Corp. 5.9
Pinnacle West Capital Corp. 5.7
American Electric Power Company, Inc. 5.4
Timken (The), Company 5.4
R.R. Donnelley & Sons Company 5.2
----
Total 63.4%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Financials 27.3%
Utilities 23.6
Materials 22.6
Industrials 19.9
Consumer Staples 6.6
-----
Total 100.0%
=====
Page 9
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the six months ended June 30, 2009, the Global Dividend Target 15 Portfolio
posted a total return of 10.87% versus 6.35% for the Morgan Stanley Capital
International Developed Markets World Index over the same period. The NAV
increased from $13.71 to $15.20 during the period.
Of the Portfolio's 15 stocks, 7 advanced and 8 declined over the period. The top
three performing stocks, by contribution to return, were CITIC Pacific Ltd. (267
HK), Bank of East Asia Ltd. (23 HK) and BOC Hong Kong (Holdings) Ltd. (2388 HK).
The worst-performing stocks, by percentage loss, were BT Group PLC (BT/A LN),
ITV PLC (ITV LN) and General Electric Co. (GE).
Hong Kong stocks posted the best returns over the period covered, taking the top
three spots when measured by contribution to return U.S. stocks were the worst
performing as General Electric (GE), Pfizer (PFE) and Alcoa (AA) underperformed
over the period. On a sector basis, the Portfolio's financial and technology
holdings fared well, while the Portfolio's health care, materials and
telecommunication services holdings lagged the market.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
target 15 MSCI
- --------- -----
10000 10000
9710 11411
9900 9908
9660 8241
8240 6602
11050 8788
13860 10081
15270 11038
21140 13256
23960 14450
13710 8567
15200 9111
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION)(b) (SINCE INCEPTION)(b)
--------- ---------- ------------ -------------- -------------------- --------------------
Global Dividend Target
15 Portfolio 10/6/99 10.87% -23.27% 5.41% 52.00% 4.39%
MSCI Developed Markets
World Index (a) 6.35 -29.50 0.03 -8.89 -0.95
(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). (The index
reflects no deduction for fees, expenses or taxes).
(b) 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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 10
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
CITIC Pacific Ltd. 10.9%
Bank of East Asia (The) Ltd. 9.0
BOC Hong Kong (Holdings) Ltd. 8.9
GKN PLC 8.1
Logica PLC 7.5
Cathay Pacific Airways Ltd. 7.0
Ladbrokes PLC 6.5
COSCO Pacific Ltd. 6.3
E.I. du Pont de Nemours & Company 5.7
Bank of America Corp. 5.6
----
Total 75.5%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Industrials 28.3%
Financials 23.5
Consumer Discretionary 20.1
Materials 11.2
Information Technology 7.5
Health Care 4.7
Telecommunication Services 4.7
-----
Total 100.0%
=====
Page 11
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
S&P(R) TARGET 24 PORTFOLIO
Over the six months ended June 30, 2009, the S&P(R) Target 24 Portfolio posted a
total return of -3.30% versus 3.16% for the S&P 500(R) Index over the same
period. The NAV decreased from $6.97 to $6.74 during the period.
Of the Portfolio's 24 stocks, 12 advanced and 12 declined over the period. The
top three performing stocks, by contribution to return, were Microchip
Technology, Inc. (MCHP), Moody's Corp. (MCO) and Coach Inc. (COH). The
worst-performing stocks, by percentage loss, were Lexmark International Inc.
(LXK), Chevron Corp. (CVX) and Amgen, Inc. (AMGN).
Industrial stocks added the most to relative performance of this strategy in the
first half of 2009 due to beneficial stock selection. Stock selection, combined
with an overweight position in consumer staples, also added to performance.
Information technology was the worst-performing sector as stock selection hurt
relative performance. Poor performance from the financial, health care, and
consumer discretionary sectors also detracted from overall Portfolio
performance.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
S&P target 24 S&P 500 Index
- ------------- -------------
10000 10000
11830 11115
9540 10103.5
7190 8903.2
6140 6934.81
7260 8920
8660 9895
9020 10381
9280 12021
9660 12681
6970 7989
6747 8242
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION)(b) (SINCE INCEPTION)(b)
--------- ---------- ------------ -------------- -------------------- --------------------
S&P(R) Target 24 Portfolio 10/6/99 -3.30% -20.05% -3.56% -32.60% -3.97%
S&P 500(R) Index (a) 3.16 -26.21 -2.24 -17.58 -1.97
(a) The S&P 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 index reflects no deduction for
fees, expenses or taxes).
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the S&P(R) Target 10
Portfolio to the S&P(R) Target 24 Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided for
the periods prior to April 30,2002, reflect the Portfolio's 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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 12
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Chevron Corp. 11.6%
PepsiCo, Inc. 10.4
Amgen, Inc. 8.0
Altera Corp. 7.8
Travelers (The) Companies, Inc. 7.7
McDonald's Corp. 7.1
Microchip Technology, Inc. 6.7
Gilead Sciences, Inc. 6.0
W.W. Grainger, Inc. 4.6
Dover Corp. 4.5
----
Total 74.4%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Information Technology 16.6%
Consumer Staples 16.0
Health Care 15.0
Energy 13.5
Financials 13.3
Industrials 12.3
Consumer Discretionary 9.1
Utilities 4.2
-----
Total 100.0%
=====
Page 13
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
NASDAQ(R) TARGET 15 PORTFOLIO
Over the six months ended June 30, 2009, the NASDAQ(R) Target 15 Portfolio
posted a total return of -0.16% versus 22.40% for the NASDAQ 100 Index(R) over
the same period. The NAV decreased from $6.08 to $6.07 during the period.
Of the Portfolio's 15 stocks, 6 advanced and 9 declined over the period. The top
three performing stocks, by contribution to return, were Ross Stores, Inc.
(ROST), Bed Bath & Beyond Inc. (BBBY) and Microsoft Corp. (MSFT). The
worst-performing stocks, by percentage loss, were Cephalon Inc. (CEPH), Amgen
Inc. (AMGN) and Gilead Sciences Inc. (GILD).
Consumer discretionary holdings Bed Bath & Beyond, Inc. (BBBY) and Ross Stores
(ROST) were the best-performing stocks based on contribution to return for the
first half of 2009. Technology holdings Microsoft (MSFT) and Check Point
Software (CHKP) also performed well over the period. Holdings in the health care
sector were the biggest drag on performance for the period. Cephalon, Inc.
(CEPH), Amgen, Inc. (AMGN) and Gilead Sciences (GILD) were the bottom three
performers based on contribution to return over the period.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
NASDAQ target 15 Nasdaq 100
- ---------------- ----------
10000 10000
14600 14644
12880 9251.23
9250 6233.67
6830 3894.03
9290 5820
9040 6447
9340 6570
10170 7049
12380 8404
6080 4911
6070 6011
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION) (SINCE INCEPTION)
--------- ---------- ------------ -------------- ----------------- -----------------
NASDAQ(R) Target 15 Portfolio 10/6/99 -0.16% -39.24% -7.55% -39.30% -5.00%
NASDAQ(R) 100 Index (a) 22.40 -19.02 -0.03 -39.89 -5.09
(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 index reflects no deduction for
fees, expenses or taxes).
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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 14
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Microsoft Corp. 8.9%
Bed Bath & Beyond, Inc. 8.8
DIRECTV Group (The), Inc. 8.0
Check Point Software Technologies Ltd. 7.1
C.H. Robinson Worldwide, Inc. 7.1
Ross Stores, Inc. 7.0
Fastenal Company 6.9
Apollo Group, Inc., Class A 6.7
Amgen, Inc. 6.7
Altera Corp. 6.7
----
Total 73.9%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Discretionary 30.5%
Industrials 24.2
Information Technology 22.7
Health Care 18.6
Consumer Staples 4.0
-----
Total 100.0%
=====
Page 15
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the six months ended June 30, 2009, the First Trust Target Focus Four
Portfolio posted a total return of 0.62% versus 3.16% for the S&P 500(R) Index
over the same period. The NAV increased from $3.23 to $3.25 during the period.
Of the Portfolio's 128 stocks, 63 advanced and 65 declined over the period. The
top three performing stocks, by contribution to return, were Advanced Medical
Optics (EYE), Temple-Inland, Inc. (TIN) and MeadWestvaco Corp. (MWV). The
worst-performing stocks, by percentage loss, were Amgen, Inc. (AMGN), First
Bancorp of Puerto Rico (FBP) and Zions Bancorp (ZION).
The materials sector was overweight and outperformed the benchmark over the
period, thus helping relative returns of the Portfolio. Information technology
and energy stocks also added to Portfolio performance due to beneficial stock
selection. Financial stocks posted the worst relative contribution over the
period due to a combination of an overweight position and underperformance.
Consumer discretionary and industrial stocks posted negative relative returns
over the period as the holdings in those sectors lagged the benchmark.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
Target Focus Four Portfolio S&P 500 Index
- --------------------------- -------------
10000 10000
11400 11115
8390 10104
5400 8903.29
3410 6934.81
4670 8920
5200 9895
5230 10381
5440 12021
5750 12681
3230 7989
3250 8242
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION) (SINCE INCEPTION)
--------- ---------- ------------ --------------- ----------------- -----------------
First Trust Target Focus Four
Portfolio (a) 10/6/99 0.62% -32.29% -7.50% -67.50% -10.90%
S&P 500(R) Index (b) 3.16 -26.21 -2.24 -17.58 -1.97
(a) Effective November 19, 2007, based upon the determination of the Fund's
Board of Trustees, the Portfolio changed its name from the First Trust 10
Uncommon Values Portfolio to the First Trust Target Focus Four Portfolio.
The Portfolio's primary investment strategy was also changed. The
performance figures provided for the periods prior to November 19, 2007,
reflect the Portfolio's performance prior to the name change and the change
of the primary investment strategy.
(b) The S&P 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 index reflects no deduction for
fees, expenses or taxes).
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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 16
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Johnson & Johnson 7.1%
McDonald's Corp. 6.7
Amgen, Inc. 5.9
MeadWestvaco Corp. 2.3
Temple-Inland, Inc. 2.0
Timken (The), Company 1.9
Eastman Chemical Company 1.8
Universal Corp. 1.6
NiSource, Inc. 1.6
TECO Energy, Inc. 1.5
----
Total 32.4%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Health Care 17.3%
Consumer Discretionary 15.4
Financials 14.6
Materials 11.9
Energy 10.6
Information Technology 9.5
Industrials 9.0
Utilities 7.9
Consumer Staples 2.5
Telecommunication Services 1.3
-----
Total 100.0%
=====
Page 17
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the six months ended June 30, 2009, the Value Line(R) Target 25 Portfolio
posted a total return of 0.37% versus 4.21% for the Russell 3000(R) Index over
the same period. The NAV increased from $2.67 to $2.68 during the period.
Of the Portfolio's 25 stocks, 12 advanced and 13 declined over the period. The
top three performing stocks, by contribution to return, were Netflix Inc.
(NFLX), Family Dollar Stores, Inc. (FDO) and AutoZone, Inc. (AZO). The
worst-performing stocks, by percentage loss, were DeVry, Inc. (DV), Amgen, Inc.
(AMGN) and Apollo Group, Inc. (APOL).
Underweight positions in the consumer staples, industrials and
telecommunications services sectors added to relative performance over the
period covered by this report as those sectors underperformed the broader
market. An underweight position, combined with negative stock selection, led to
relative underperformance from the Portfolio's information technology holdings.
The information technology sector was the top performing sector in the benchmark
for the period. Stock selection in the consumer discretionary sector was also a
drag on relative performance.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Oct. 6, 1999-June 30, 2009
(PERFORMANCE GRAPH)
val line Internet Port Russell 3000 index
- ---------------------- ------------------
10000 10000
16330 11261.9
9320 10420
4150 9228.74
2370 7240.81
3340 9500
4060 10631
4860 11285
5000 13068
5910 13755
2670 8624
2680 8987
RETURN COMPARISON PERIODS ENDED JUNE 30, 2009
1 YEAR 5 YEAR CUMULATIVE AVERAGE ANNUAL
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL TOTAL RETURN TOTAL RETURN
DATE RETURN TOTAL RETURN TOTAL RETURN (SINCE INCEPTION)(b) (SINCE INCEPTION)(b)
--------- ---------- ------------ -------------- -------------------- --------------------
Value Line(R) Target 25
Portfolio 10/6/99 0.37% -53.47% -4.65% -73.20% -12.65%
Russell 3000(R) Index (a) 4.21 -26.55 -1.79 -10.13 -1.10
(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). (The index reflects
no deduction for fees, expenses or taxes).
(b) Effective April 30, 2002, based upon the determination of the Fund's Board
of Trustees, the Portfolio changed its name from the First Trust Internet
Portfolio to the Value Line(R) Target 25 Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided for
the periods prior to April 30, 2002, reflect the Portfolio's 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 or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 18
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (UNAUDITED) (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
AutoZone, Inc. 8.2%
Johnson & Johnson 7.1
McDonald's Corp. 6.9
Amgen, Inc. 6.8
Apollo Group, Inc., Class A 6.8
Dollar Tree, Inc. 6.3
ITT Educational Services, Inc. 6.3
Family Dollar Stores, Inc. 6.3
SAIC, Inc. 6.1
DeVry, Inc. 5.9
----
Total 66.7%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Discretionary 61.8%
Health Care 21.9
Information Technology 7.6
Materials 5.1
Consumer Staples 2.6
Industrials 1.0
-----
Total 100.0%
=====
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2009 (UNAUDITED)
As a shareholder of the Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus Four Portfolio or Value Line (R) Target 25 Portfolio (the
"Portfolios"), you incur two types of costs: (1) transaction costs; and (2)
ongoing costs, including management fees, distribution and/or service fees, and
other Portfolio expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Portfolios and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period of January 1, 2009 to June 30, 2009.
ACTUAL EXPENSES
The first three columns of the table below provide information about actual
account values and actual expenses. You may use the information in these
columns, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the third column under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The next three columns of the table below provide information about hypothetical
account values and hypothetical expenses based on the Portfolio's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Portfolio's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Portfolio and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the hypothetical section of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
-------------------------------------------------- ----------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD (a) ACCOUNT ACCOUNT PERIOD (a)
VALUE VALUE 01/01/2009- VALUE VALUE 01/01/2009- EXPENSE
01/01/2009 06/30/2009 06/30/2009 01/01/2009 06/30/2009 06/30/2009 RATIO
---------- ---------- ----------- ---------- ---------- ----------- -------
Target Managed VIP
Portfolio .................... $1,000.00 $ 954.80 $7.12 $1,000.00 $1,017.50 $7.35 1.47%(b)
The Dow(R) DART 10 Portfolio .... 1,000.00 903.90 6.94 1,000.00 1,017.50 7.35 1.47(b)
The Dow(R) Target Dividend
Portfolio .................... 1,000.00 811.70 6.60 1,000.00 1,017.50 7.35 1.47(b)
Global Dividend Target 15
Portfolio .................... 1,000.00 1,108.70 7.69 1,000.00 1,017.50 7.35 1.47(b)
S&P(R) Target 24 Portfolio....... 1,000.00 967.00 7.17 1,000.00 1,017.50 7.35 1.47(b)
NASDAQ(R) Target 15 Portfolio ... 1,000.00 998.40 7.28 1,000.00 1,017.50 7.35 1.47(b)
First Trust Target Focus Four
Portfolio .................... 1,000.00 1,006.20 6.81 1,000.00 1,018.00 6.85 1.37(b)
Value Line(R) Target 25
Portfolio .................... 1,000.00 1,003.80 7.30 1,000.00 1,017.50 7.35 1.47(b)
(a) Expenses are equal to the Portfolio's annualized expense ratio multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------- ---------------
COMMON STOCKS - 99.1%
AEROSPACE & DEFENSE - 1.3%
3,353 Aerovironment, Inc. (b) .................... $ 103,474
1,397 American Science & Engineering, Inc. ....... 96,561
2,581 Axsys Technologies, Inc. (b) ............... 138,445
---------------
338,480
---------------
AIR FREIGHT & LOGISTICS - 0.6%
3,040 C.H. Robinson Worldwide, Inc. .............. 158,536
---------------
AIRLINES - 0.7%
3,335 Allegiant Travel Company (b) ............... 132,199
7,573 Hawaiian Holdings, Inc. (b) ................ 45,589
---------------
177,788
---------------
AUTOMOBILES - 1.2%
8,709 Daimler AG ................................. 315,875
---------------
BEVERAGES - 1.9%
1,351 Hansen Natural Corp. (b) ................... 41,638
8,451 PepsiCo, Inc. .............................. 464,467
---------------
506,105
---------------
BIOTECHNOLOGY - 13.0%
44,079 Amgen, Inc. (b) ............................ 2,333,542
1,283 Cephalon, Inc. (b) ......................... 72,682
22,373 Gilead Sciences, Inc. (b) .................. 1,047,951
1,408 Myriad Genetics, Inc. (b) .................. 50,195
347 Myriad Pharmaceuticals, Inc. (b) ........... 1,612
---------------
3,505,982
---------------
CAPITAL MARKETS - 4.8%
12,041 Credit Suisse Group AG, ADR ................ 550,635
8,179 Deutsche Bank AG ........................... 498,919
3,920 Stifel Financial Corp. (b) ................. 188,513
4,202 SWS Group, Inc. ............................ 58,702
---------------
1,296,769
---------------
CHEMICALS - 0.2%
2,991 Innophos Holdings, Inc. .................... 50,518
---------------
COMMERCIAL BANKS - 7.4%
27,377 Banco Bilbao Vizcaya Argentaria S.A., ADR .. 343,855
34,663 Banco Santander S.A., ADR .................. 419,422
15,550 BNP Paribas, ADR ........................... 504,287
5,136 Community Bank System, Inc. ................ 74,780
3,321 First Financial Bankshares, Inc. ........... 167,246
7,760 HSBC Holdings PLC, ADR ..................... 324,135
10,188 Old National Bancorp ....................... 100,046
4,375 S&T Bancorp, Inc. .......................... 53,200
---------------
1,986,971
---------------
COMMERCIAL SERVICES & SUPPLIES - 0.2%
2,029 Cintas Corp. ............................... 46,342
---------------
COMPUTERS & PERIPHERALS - 0.3%
5,865 Lexmark International, Inc., Class A (b) ... 92,960
---------------
See Notes to Financial Statements
Page 21
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
CONSUMER FINANCE - 0.6%
6,331 EZCORP, Inc., Class A (b) .................. $ 68,248
4,782 First Cash Financial Services, Inc. (b) .... 83,781
---------------
152,029
---------------
CONTAINERS & PACKAGING - 1.0%
7,132 Rock-Tenn Company, Class A ................. 272,157
---------------
DIVERSIFIED CONSUMER SERVICES - 2.1%
5,598 Apollo Group, Inc., Class A (b) ............ 398,130
1,188 DeVry, Inc. ................................ 59,448
637 ITT Educational Services, Inc. (b) ......... 64,120
219 Strayer Education, Inc. .................... 47,766
---------------
569,464
---------------
DIVERSIFIED FINANCIAL SERVICES - 0.3%
3,532 Moody's Corp. .............................. 93,068
---------------
DIVERSIFIED TELECOMMUNICATION
SERVICES - 4.1%
32,867 AT&T, Inc. ................................. 816,416
16,609 BT Group PLC, ADR .......................... 279,031
---------------
1,095,447
---------------
ELECTRIC UTILITIES - 0.4%
3,797 Southern Company ........................... 118,315
---------------
ENERGY EQUIPMENT & SERVICES - 0.1%
555 ENSCO International, Inc. .................. 19,353
---------------
FOOD & STAPLES RETAILING - 0.2%
1,047 Nash Finch Company ......................... 28,332
2,010 Spartan Stores, Inc. ....................... 24,944
---------------
53,276
---------------
FOOD PRODUCTS - 0.9%
1,936 Campbell Soup Company ...................... 56,957
6,688 TreeHouse Foods, Inc. (b) .................. 192,414
---------------
249,371
---------------
GAS UTILITIES - 0.4%
3,531 Laclede Group (The), Inc. .................. 116,982
---------------
HEALTH CARE EQUIPMENT & SUPPLIES - 1.0%
4,342 Cyberonics, Inc. (b) ....................... 72,207
5,460 Greatbatch, Inc. (b) ....................... 123,451
4,525 Merit Medical Systems, Inc. (b) ............ 73,758
---------------
269,416
---------------
HEALTH CARE PROVIDERS & SERVICES - 0.8%
4,571 Gentiva Health Services, Inc. (b) .......... 75,239
5,042 Hanger Orthopedic Group, Inc. (b) .......... 68,521
2,915 LHC Group, Inc. (b) ........................ 64,742
---------------
208,502
---------------
HEALTH CARE TECHNOLOGY - 0.2%
1,750 Computer Programs & Systems, Inc. .......... 67,043
---------------
See Notes to Financial Statements
Page 22
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
HOTELS, RESTAURANTS & LEISURE - 8.5%
38,973 McDonald's Corp. ........................... $ 2,240,558
923 Panera Bread Company, Class A (b) .......... 46,021
---------------
2,286,579
---------------
HOUSEHOLD PRODUCTS - 0.7%
2,762 Colgate-Palmolive Company .................. 195,384
---------------
INDUSTRIAL CONGLOMERATES - 2.6%
58,654 General Electric Company ................... 687,425
---------------
INSURANCE - 4.6%
30,913 Allianz SE, ADR ............................ 284,709
14,873 AXA S.A., ADR .............................. 281,992
2,340 Infinity Property & Casualty Corp. ......... 85,316
7,031 Swiss Reinsurance Company, ADR ............. 233,078
8,450 Travelers (The) Companies, Inc. ............ 346,788
---------------
1,231,883
---------------
INTERNET & CATALOG RETAIL - 0.4%
1,618 Netflix, Inc. (b) .......................... 66,888
3,577 PetMed Express, Inc. (b) ................... 53,762
---------------
120,650
---------------
IT SERVICES - 0.6%
5,551 CSG Systems International, Inc. (b) ........ 73,495
868 ManTech International Corp., Class A (b) ... 37,359
3,359 SAIC, Inc. (b) ............................. 62,309
---------------
173,163
---------------
LIFE SCIENCES TOOLS & SERVICES - 0.5%
6,755 Luminex Corp. (b) .......................... 125,238
---------------
MACHINERY - 3.4%
21,252 Caterpillar, Inc. .......................... 702,166
6,094 Dover Corp. ................................ 201,650
---------------
903,816
---------------
MEDIA - 1.7%
18,662 DIRECTV Group (The), Inc. (b) .............. 461,138
---------------
METALS & MINING - 0.2%
799 Compass Minerals International, Inc. ....... 43,873
---------------
MULTI-UTILITIES - 0.3%
1,173 Sempra Energy .............................. 58,216
1,031 TECO Energy, Inc. .......................... 12,300
---------------
70,516
---------------
MULTILINE RETAIL - 0.4%
1,523 Dollar Tree, Inc. (b) ...................... 64,118
1,818 Family Dollar Stores, Inc. ................. 51,449
---------------
115,567
---------------
OIL, GAS & CONSUMABLE FUELS - 10.7%
7,233 BP PLC, ADR ................................ 344,869
7,862 Chevron Corp. .............................. 520,858
See Notes to Financial Statements
Page 23
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
OIL, GAS & CONSUMABLE FUELS - (CONTINUED)
1,809 Clayton Williams Energy, Inc. (b) .......... $ 34,136
6,959 ENI SpA, ADR ............................... 329,926
996 EOG Resources, Inc. ........................ 67,648
11,805 Exxon Mobil Corp. .......................... 825,288
5,770 Goodrich Petroleum Corp. (b) ............... 141,884
20,170 StatoilHydro ASA, ADR ...................... 398,761
8,885 VAALCO Energy, Inc. (b) .................... 37,584
4,453 World Fuel Services Corp. .................. 183,597
---------------
2,884,551
---------------
PHARMACEUTICALS - 4.8%
1,885 Forest Laboratories, Inc. (b) .............. 47,332
19,595 Johnson & Johnson .......................... 1,112,996
9,903 Questcor Pharmaceuticals, Inc. (b) ......... 49,515
12,666 ViroPharma, Inc. (b) ....................... 75,109
---------------
1,284,952
---------------
PROFESSIONAL SERVICES - 0.5%
1,802 Dun & Bradstreet (The), Corp. .............. 146,340
---------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.6%
2,416 Public Storage ............................. 158,200
---------------
ROAD & RAIL - 1.1%
3,942 Arkansas Best Corp. ........................ 103,872
5,027 Genesee & Wyoming Inc., Class A (b) ........ 133,266
1,828 J.B. Hunt Transport Services, Inc. ......... 55,809
---------------
292,947
---------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.7%
26,867 Altera Corp. ............................... 437,395
13,244 Microchip Technology, Inc. ................. 298,652
---------------
736,047
---------------
SOFTWARE - 6.6%
3,936 Check Point Software Technologies Ltd. (b) 92,378
59,948 Microsoft Corp. ............................ 1,424,964
4,577 Quality Systems, Inc. ...................... 260,706
---------------
1,778,048
---------------
SPECIALTY RETAIL - 2.4%
1,219 AutoZone, Inc. (b) ......................... 184,203
4,713 Bed Bath & Beyond, Inc. (b) ................ 144,925
6,751 Hot Topic, Inc. (b) ........................ 49,350
1,872 Jos. A. Bank Clothiers, Inc. (b) ........... 64,509
2,350 Ross Stores, Inc. .......................... 90,710
1,371 Tractor Supply Company (b) ................. 56,650
15,762 Wet Seal (The), Inc., Class A (b) .......... 48,389
---------------
638,736
---------------
TEXTILES, APPAREL & LUXURY GOODS - 0.2%
1,623 Coach, Inc. ................................ 43,626
---------------
See Notes to Financial Statements
Page 24
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS - 1.5%
6,810 Beacon Roofing Supply, Inc. (b) ............... $ 98,473
2,695 Fastenal Company .............................. 89,393
2,508 W.W. Grainger, Inc. ........................... 205,355
---------------
393,221
---------------
WATER UTILITIES - 0.4%
3,222 California Water Service Group ................ 118,699
---------------
TOTAL INVESTMENTS - 99.1%
(Cost $29,961,718) (c) ........................ 26,651,348
NET OTHER ASSETS AND LIABILITIES - 0.9% ....... 234,369
---------------
NET ASSETS - 100.0% ........................... $ 26,885,717
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $1,064,289 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $4,374,659.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ----------- ----------- ------------
Total Investments* $26,651,348 $26,651,348 $-- $--
----------- ----------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 25
THE DOW(R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------- ---------------
COMMON STOCKS - 97.6%
AEROSPACE & DEFENSE - 10.9%
13,026 Boeing (The), Company ......................... $ 553,605
---------------
DIVERSIFIED FINANCIAL SERVICES - 10.6%
40,584 Bank of America Corp. ......................... 535,709
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 9.4%
19,035 AT&T, Inc. .................................... 472,829
---------------
FOOD PRODUCTS - 10.1%
20,203 Kraft Foods, Inc., Class A .................... 511,944
---------------
HOTELS, RESTAURANTS & LEISURE - 9.9%
8,703 McDonald's Corp. .............................. 500,335
---------------
INDUSTRIAL CONGLOMERATES - 7.9%
33,965 General Electric Company ...................... 398,070
---------------
MACHINERY - 8.0%
12,307 Caterpillar, Inc. ............................. 406,623
---------------
MEDIA - 11.0%
23,902 Walt Disney (The), Company .................... 557,634
---------------
METALS & MINING - 10.3%
50,264 Alcoa, Inc. ................................... 519,227
---------------
OIL, GAS & CONSUMABLE FUELS - 9.5%
6,837 Exxon Mobil Corp. ............................. 477,975
---------------
TOTAL INVESTMENTS - 97.6%
(Cost $5,675,145) (b) ......................... 4,933,951
NET OTHER ASSETS AND LIABILITIES - 2.4% ....... 118,929
---------------
NET ASSETS - 100.0% ........................... $ 5,052,880
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $4,036 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $745,230.
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ---------- ----------- ------------
Total Investments* $4,933,951 $4,933,951 $-- $--
---------- ---------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 26
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------- ---------------
COMMON STOCKS - 98.7%
CHEMICALS - 13.2%
30,117 Eastman Chemical Company ...................... $ 1,141,434
39,916 Sensient Technologies Corp. ................... 900,904
---------------
2,042,338
---------------
COMMERCIAL BANKS - 22.7%
34,542 BB&T Corp. .................................... 759,233
71,895 F.N.B. Corp. .................................. 445,030
83,453 First BanCorp ................................. 329,639
99,227 Fulton Financial Corp. ........................ 516,973
116,457 Regions Financial Corp. ....................... 470,486
31,839 SunTrust Banks, Inc. .......................... 523,752
40,141 Zions Bancorporation .......................... 464,030
---------------
3,509,143
---------------
COMMERCIAL SERVICES & SUPPLIES - 5.1%
68,163 R.R. Donnelley & Sons Company ................. 792,054
---------------
ELECTRIC UTILITIES - 11.0%
28,668 American Electric Power Company, Inc. ......... 828,219
28,752 Pinnacle West Capital Corp. ................... 866,873
---------------
1,695,092
---------------
INDUSTRIAL CONGLOMERATES - 4.5%
71,281 Textron, Inc. ................................. 688,575
---------------
MACHINERY - 10.1%
54,822 Briggs & Stratton Corp. ....................... 731,326
48,132 Timken (The), Company ......................... 822,095
---------------
1,553,421
---------------
MULTI-UTILITIES - 12.3%
83,990 NiSource, Inc. ................................ 979,323
77,540 TECO Energy, Inc. ............................. 925,052
---------------
1,904,375
---------------
PAPER & FOREST PRODUCTS - 9.1%
85,954 MeadWestvaco Corp. ............................ 1,410,505
---------------
THRIFTS & MORTGAGE FINANCE - 4.2%
57,284 First Niagara Financial Group, Inc. ........... 654,183
---------------
TOBACCO - 6.5%
30,284 Universal Corp. ............................... 1,002,703
---------------
TOTAL INVESTMENTS - 98.7% ..................... 15,252,389
(Cost $20,536,739) (b)
NET OTHER ASSETS AND LIABILITIES - 1.3% ....... 194,621
---------------
NET ASSETS - 100.0% ........................... $ 15,447,010
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $144,897 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $5,429,247.
See Notes to Financial Statements
Page 27
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ----------- ----------- ------------
Total Investments* $15,252,389 $15,252,389 $-- $--
----------- ----------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 28
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------------ ----------------------------------------------- ---------------
COMMON STOCKS - 99.0%
HONG KONG - 41.6%
1,032,700 Bank of East Asia (The) Ltd. .................. $ 3,151,370
1,774,849 BOC Hong Kong (Holdings) Ltd. ................. 3,109,963
1,789,000 Cathay Pacific Airways Ltd. ................... 2,465,333
1,844,000 CITIC Pacific Ltd. ............................ 3,811,689
1,954,000 COSCO Pacific Ltd. ............................ 2,201,065
---------------
14,739,420
---------------
UNITED KINGDOM - 32.0%
991,137 BT Group PLC .................................. 1,655,075
1,398,293 GKN PLC ....................................... 2,852,580
3,337,031 ITV PLC ....................................... 1,921,526
750,256 Ladbrokes PLC ................................. 2,271,147
2,029,612 Logica PLC .................................... 2,637,898
---------------
11,338,226
---------------
UNITED STATES - 25.4%
184,093 Alcoa, Inc. ................................... 1,901,681
148,638 Bank of America Corp. ......................... 1,962,022
78,373 E.I. du Pont de Nemours & Company ............. 2,007,916
124,398 General Electric Company ...................... 1,457,944
110,872 Pfizer, Inc. .................................. 1,663,080
---------------
8,992,643
---------------
TOTAL INVESTMENTS - 99.0%
(Cost $44,538,570) (b) ........................ 35,070,289
NET OTHER ASSETS AND LIABILITIES - 1.0% ....... 351,971
---------------
NET ASSETS - 100.0% ........................... $ 35,422,260
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $2,471,039 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $11,939,320.
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ----------- ----------- ------------
Total Investments* $35,070,289 $35,070,289 $-- $--
----------- ----------- --- ---
* See the Portfolio of Investments for country breakout.
See Notes to Financial Statements
Page 29
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Commercial Banks ......................... 17.7%
Industrial Conglomerates ................. 14.9
Auto Components .......................... 8.1
IT Services .............................. 7.4
Airlines ................................. 6.9
Hotels, Restaurants & Leisure ............ 6.4
Transportation Infrastructure ............ 6.2
Chemicals ................................ 5.7
Diversified Financial Services ........... 5.5
Media .................................... 5.4
Metals & Mining .......................... 5.4
Pharmaceuticals .......................... 4.7
Diversified Telecommunication Services ... 4.7
Net Other Assets and Liabilities ......... 1.0
-----
100.0%
=====
See Notes to Financial Statements
Page 30
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------- ---------------
COMMON STOCKS - 96.5%
BEVERAGES - 10.0%
13,092 PepsiCo, Inc. .............................. $ 719,536
---------------
BIOTECHNOLOGY - 13.4%
10,461 Amgen, Inc. (b) ............................ 553,805
8,846 Gilead Sciences, Inc. (b)................... 414,347
---------------
968,152
---------------
COMPUTERS & PERIPHERALS - 2.0%
9,085 Lexmark International, Inc., Class A (b) ... 143,997
3,764 Seagate Technology, Inc. (Escrow
Shares) (b) (c) ......................... 0
---------------
143,997
---------------
DIVERSIFIED FINANCIAL SERVICES - 2.0%
5,473 Moody's Corp. .............................. 144,214
---------------
ELECTRIC UTILITIES - 2.6%
5,884 Southern Company............................ 183,345
---------------
ENERGY EQUIPMENT & SERVICES - 0.4%
862 ENSCO International, Inc. .................. 30,058
---------------
FOOD PRODUCTS - 1.2%
2,996 Campbell Soup Company ...................... 88,142
---------------
HOTELS, RESTAURANTS & LEISURE - 6.9%
8,640 McDonald's Corp. ........................... 496,714
---------------
HOUSEHOLD PRODUCTS - 4.2%
4,277 Colgate-Palmolive Company .................. 302,555
---------------
INSURANCE - 7.5%
13,087 Travelers (The) Companies, Inc.............. 537,090
---------------
MACHINERY - 4.3%
9,439 Dover Corp.................................. 312,337
---------------
MULTI-UTILITIES - 1.5%
1,814 Sempra Energy .............................. 90,029
1,598 TECO Energy, Inc. .......................... 19,064
---------------
109,093
---------------
OIL, GAS & CONSUMABLE FUELS - 12.7%
12,177 Chevron Corp. .............................. 806,726
1,542 EOG Resources, Inc. ........................ 104,733
---------------
911,459
---------------
PHARMACEUTICALS - 1.0%
2,916 Forest Laboratories, Inc. (b) .............. 73,221
---------------
PROFESSIONAL SERVICES - 3.2%
2,790 Dun & Bradstreet (The), Corp. .............. 226,576
---------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 3.4%
3,740 Public Storage ............................. 244,895
---------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 14.0%
33,382 Altera Corp. ............................... 543,459
20,520 Microchip Technology, Inc................... 462,726
---------------
1,006,185
---------------
See Notes to Financial Statements
Page 31
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 0.9%
440 AutoZone, Inc. (b) ......................... $ 66,488
---------------
TEXTILES, APPAREL & LUXURY GOODS - 0.9%
2,515 Coach, Inc. ................................ 67,603
---------------
TRADING COMPANIES & DISTRIBUTORS - 4.4%
3,887 W.W. Grainger, Inc. ........................ 318,268
---------------
TOTAL INVESTMENTS - 96.5% .................. 6,949,928
(Cost $7,271,743) (d)
NET OTHER ASSETS AND LIABILITIES - 3.5% .... 253,289
---------------
NET ASSETS - 100.0% ........................ $ 7,203,217
===============
- ----------
(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
Registrant's Board of Trustees.
(d) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $166,786 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $488,601.
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ---------- ----------- ------------
Total Investments* $6,949,928 $6,949,928 $-- $--
---------- ---------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 32
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------- ---------------
COMMON STOCKS - 96.9%
AIR FREIGHT & LOGISTICS - 6.9%
3,516 C.H. Robinson Worldwide, Inc. .............. $ 183,359
---------------
BEVERAGES - 3.9%
3,345 Hansen Natural Corp. (b) ................... 103,093
---------------
BIOTECHNOLOGY - 18.0%
3,255 Amgen, Inc. (b) ............................ 172,320
2,427 Cephalon, Inc. (b) ......................... 137,490
3,654 Gilead Sciences, Inc. (b) .................. 171,153
---------------
480,963
---------------
COMMERCIAL SERVICES & SUPPLIES - 4.7%
5,478 Cintas Corp. ............................... 125,117
---------------
DIVERSIFIED CONSUMER SERVICES - 6.5%
2,423 Apollo Group, Inc., Class A (b) ............ 172,324
---------------
MEDIA - 7.7%
8,369 DIRECTV Group (The), Inc. (b) .............. 206,798
---------------
ROAD & RAIL - 5.3%
4,591 J.B. Hunt Transport Services, Inc. ......... 140,163
---------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 6.4%
10,568 Altera Corp. ............................... 172,047
---------------
SOFTWARE - 15.5%
7,835 Check Point Software Technologies
Ltd. (b) ................................ 183,887
9,696 Microsoft Corp. ............................ 230,474
---------------
414,361
---------------
SPECIALTY RETAIL - 15.3%
7,401 Bed Bath & Beyond, Inc. (b) ................ 227,581
4,678 Ross Stores, Inc. .......................... 180,571
---------------
408,152
---------------
TRADING COMPANIES & DISTRIBUTORS - 6.7%
5,363 Fastenal Company ........................... 177,891
---------------
TOTAL INVESTMENTS - 96.9% .................. 2,584,268
(Cost $2,275,145) (c)
NET OTHER ASSETS AND LIABILITIES - 3.1% .... 82,995
---------------
NET ASSETS - 100.0% ........................ $ 2,667,263
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $347,044 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $37,921.
See Notes to Financial Statements
Page 33
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ---------- ----------- ------------
Total Investments* $2,584,268 $2,584,268 $-- $--
---------- ---------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 34
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - 97.5%
AEROSPACE & DEFENSE - 0.3%
430 Axsys Technologies, Inc. (b) ................................. $ 23,065
---------------
AUTOMOBILES - 0.9%
765 Daimler AG ................................................... 27,746
1,371 Honda Motor Company Ltd., ADR ................................ 37,524
---------------
65,270
---------------
BIOTECHNOLOGY - 6.1%
8,314 Amgen, Inc. (b) .............................................. 440,143
665 Myriad Genetics, Inc. (b) .................................... 23,707
161 Myriad Pharmaceuticals, Inc. (b) ............................. 746
---------------
464,596
---------------
BUILDING PRODUCTS - 0.3%
2,179 Gibraltar Industries, Inc. ................................... 14,970
1,479 NCI Building Systems, Inc. (b) ............................... 3,905
---------------
18,875
---------------
CAPITAL MARKETS - 1.9%
1,060 Credit Suisse Group AG, ADR .................................. 48,474
719 Deutsche Bank AG ............................................. 43,859
5,513 LaBranche & Company, Inc. (b) ................................ 23,706
2,077 UBS AG (b) ................................................... 25,360
---------------
141,399
---------------
CHEMICALS - 4.0%
3,585 Eastman Chemical Company ..................................... 135,872
1,204 OM Group, Inc. (b) ........................................... 34,940
8,386 PolyOne Corp. (b) ............................................ 22,726
4,754 Sensient Technologies Corp. .................................. 107,298
---------------
300,836
---------------
COMMERCIAL BANKS - 9.1%
1,152 Bank of Montreal ............................................. 48,557
3,329 Barclays PLC, ADR ............................................ 61,387
4,113 BB&T Corp. ................................................... 90,404
8,562 F.N.B. Corp. ................................................. 52,999
9,936 First BanCorp ................................................ 39,247
11,816 Fulton Financial Corp. ....................................... 61,561
4,035 Lloyds TSB Group PLC, ADR .................................... 19,247
7,367 National Bank of Greece S.A., ADR ............................ 40,445
13,865 Regions Financial Corp. ...................................... 56,015
2,038 Royal Bank of Scotland Group PLC, ADR (b) .................... 26,025
3,084 Sterling Financial Corp. ..................................... 8,974
3,792 SunTrust Banks, Inc. ......................................... 62,378
836 Toronto-Dominion Bank (The) .................................. 43,230
3,666 UCBH Holdings, Inc. .......................................... 4,619
1,229 Wintrust Financial Corp. ..................................... 19,762
4,777 Zions Bancorporation ......................................... 55,222
---------------
690,072
---------------
COMMERCIAL SERVICES & SUPPLIES - 1.2%
8,115 R.R. Donnelley & Sons Company ................................ 94,296
---------------
See Notes to Financial Statements
Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
COMMUNICATIONS EQUIPMENT - 0.4%
994 Black Box Corp. .............................................. $ 33,269
---------------
CONTAINERS & PACKAGING - 2.2%
632 Rock-Tenn Company, Class A ................................... 24,117
11,080 Temple-Inland, Inc. .......................................... 145,370
---------------
169,487
---------------
DIVERSIFIED CONSUMER SERVICES - 3.1%
1,246 Apollo Group, Inc., Class A (b) .............................. 88,615
560 DeVry, Inc. .................................................. 28,022
299 ITT Educational Services, Inc. (b) ........................... 30,097
3,732 Regis Corp. .................................................. 64,974
103 Strayer Education, Inc. ...................................... 22,465
---------------
234,173
---------------
DIVERSIFIED FINANCIAL SERVICES - 0.4%
2,687 ING Groep N.V., ADR .......................................... 27,246
---------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.2%
1,071 Nippon Telegraph & Telephone Corp., ADR ...................... 21,795
1,810 Telecom Italia SpA, ADR ...................................... 24,906
3,957 Vimpel-Communications, ADR (b) ............................... 46,574
---------------
93,275
---------------
ELECTRIC UTILITIES - 4.3%
3,412 American Electric Power Company, Inc. ........................ 98,573
2,643 Great Plains Energy, Inc. .................................... 41,099
2,544 Korea Electric Power Corp., ADR (b) .......................... 29,256
5,212 NV Energy, Inc. .............................................. 56,237
3,423 Pinnacle West Capital Corp. .................................. 103,203
---------------
328,368
---------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 5.3%
2,819 Avnet, Inc. (b) .............................................. 59,283
1,968 Benchmark Electronics, Inc. (b) .............................. 28,339
6,031 Brightpoint, Inc. (b) ........................................ 37,814
2,500 Checkpoint Systems, Inc. (b) ................................. 39,225
753 Hitachi, Ltd., S.A., ADR ..................................... 23,320
3,851 Ingram Micro, Inc., Class A (b) .............................. 67,393
2,150 Synnex Corp. (b) ............................................. 53,729
2,927 Tech Data Corp. (b) .......................................... 95,742
---------------
404,845
---------------
ENERGY EQUIPMENT & SERVICES - 3.0%
2,447 Exterran Holdings, Inc. (b) .................................. 39,250
1,568 Hornbeck Offshore Services, Inc. (b) ......................... 33,540
8,242 ION Geophysical Corp. (b) .................................... 21,182
3,204 Pride International, Inc. (b) ................................ 80,292
1,923 Unit Corp. (b) ............................................... 53,017
---------------
227,281
---------------
FOOD & STAPLES RETAILING - 0.6%
4,244 Great Atlantic & Pacific Tea Company (The), Inc. (b) ......... 18,037
492 Nash Finch Company ........................................... 13,314
See Notes to Financial Statements
Page 36
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
FOOD & STAPLES RETAILING - (CONTINUED)
947 Spartan Stores, Inc. ......................................... $ 11,752
---------------
43,103
---------------
FOOD PRODUCTS - 0.3%
803 TreeHouse Foods, Inc. (b) .................................... 23,102
---------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7%
1,474 Cooper Companies (The), Inc. ................................. 36,452
847 Greatbatch, Inc. (b) ......................................... 19,151
---------------
55,603
---------------
HEALTH CARE PROVIDERS & SERVICES - 2.7%
2,824 Cross Country Healthcare, Inc. (b) ........................... 19,401
4,126 Kindred Healthcare, Inc. (b) ................................. 51,039
2,274 LifePoint Hospitals, Inc. (b) ................................ 59,693
3,906 Wellcare Health Plans, Inc. (b) .............................. 72,222
---------------
202,355
---------------
HEALTH CARE TECHNOLOGY - 0.4%
825 Computer Programs & Systems, Inc. ............................ 31,606
---------------
HOTELS, RESTAURANTS & LEISURE - 6.8%
8,662 McDonald's Corp. ............................................. 497,978
435 Panera Bread Company, Class A (b) ............................ 21,689
---------------
519,667
---------------
HOUSEHOLD DURABLES - 0.5%
1,355 Sony Corp., ADR .............................................. 35,040
---------------
INDUSTRIAL CONGLOMERATES - 1.1%
8,488 Textron, Inc. ................................................ 81,994
---------------
INSURANCE - 0.9%
2,722 Allianz SE, ADR .............................................. 25,070
1,308 AXA S.A., ADR ................................................ 24,800
2,528 Presidential Life Corp. ...................................... 19,137
---------------
69,007
---------------
INTERNET & CATALOG RETAIL - 0.4%
762 Netflix, Inc. (b) ............................................ 31,501
---------------
IT SERVICES - 0.8%
5,319 Ciber, Inc. (b) .............................................. 16,489
408 ManTech International Corp., Class A (b) ..................... 17,560
1,584 SAIC, Inc. (b) ............................................... 29,383
---------------
63,432
---------------
MACHINERY - 4.4%
1,987 Albany International Corp. ................................... 22,612
6,529 Briggs & Stratton Corp. ...................................... 87,097
3,042 Terex Corp. (b) .............................................. 36,717
8,365 Timken (The), Company ........................................ 142,874
3,352 Trinity Industries, Inc. ..................................... 45,654
---------------
334,954
---------------
See Notes to Financial Statements
Page 37
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
MEDIA - 0.3%
4,911 Live Nation, Inc. (b) ........................................ $ 23,867
---------------
METALS & MINING - 3.2%
1,204 ArcelorMittal ................................................ 39,828
376 Compass Minerals International, Inc. ......................... 20,646
2,552 Reliance Steel & Aluminum Company ............................ 97,971
334 Rio Tinto PLC, ADR ........................................... 54,733
1,809 RTI International Metals, Inc. (b) ........................... 31,965
---------------
245,143
---------------
MULTI-UTILITIES - 3.3%
10,001 NiSource, Inc. ............................................... 116,612
9,231 TECO Energy, Inc. ............................................ 110,126
922 Veolia Environnement, ADR .................................... 27,236
---------------
253,974
---------------
MULTILINE RETAIL - 0.7%
716 Dollar Tree, Inc. (b) ........................................ 30,144
857 Family Dollar Stores, Inc. ................................... 24,253
---------------
54,397
---------------
OIL, GAS & CONSUMABLE FUELS - 7.4%
1,896 Cimarex Energy Company ....................................... 53,733
3,136 Forest Oil Corp. (b) ......................................... 46,789
5,106 Mariner Energy, Inc. (b) ..................................... 59,996
2,612 Newfield Exploration Company (b) ............................. 85,334
1,229 Overseas Shipholding Group, Inc. ............................. 41,835
1,338 Petro-Canada ................................................. 51,406
2,225 Plains Exploration & Production Company (b) .................. 60,876
9,402 Quicksilver Resources, Inc. (b) .............................. 87,345
1,362 Repsol YPF S.A., ADR ......................................... 30,454
2,355 Stone Energy Corp. (b) ....................................... 17,474
1,474 Swift Energy Company (b) ..................................... 24,542
---------------
559,784
---------------
PAPER & FOREST PRODUCTS - 2.2%
10,233 MeadWestvaco Corp. ........................................... 167,924
---------------
PHARMACEUTICALS - 6.9%
9,241 Johnson & Johnson ............................................ 524,889
---------------
PROFESSIONAL SERVICES - 1.1%
6,879 MPS Group, Inc. (b) .......................................... 52,556
1,340 School Specialty, Inc. (b) ................................... 27,081
---------------
79,637
---------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.0%
3,565 Cedar Shopping Centers, Inc. ................................. 16,114
5,342 DiamondRock Hospitality Company .............................. 33,441
3,936 Medical Properties Trust, Inc. ............................... 23,892
---------------
73,447
---------------
See Notes to Financial Statements
Page 38
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 2.6%
10,703 Fairchild Semiconductor International, Inc. (b) .............. $ 74,814
9,013 Integrated Device Technology, Inc. (b) ....................... 54,439
5,546 Intersil Corp., Class A ...................................... 69,713
---------------
198,966
---------------
SPECIALTY RETAIL - 2.4%
442 AutoZone, Inc. (b) ........................................... 66,791
4,578 Cabela's Inc. (b) ............................................ 56,309
885 Jos. A. Bank Clothiers, Inc. (b) ............................. 30,497
647 Tractor Supply Company (b) ................................... 26,734
---------------
180,331
---------------
THRIFTS & MORTGAGE FINANCE - 1.0%
6,820 First Niagara Financial Group, Inc. .......................... 77,884
---------------
TOBACCO - 1.6%
3,606 Universal Corp. .............................................. 119,395
---------------
TRADING COMPANIES & DISTRIBUTORS - 0.5%
5,767 United Rentals, Inc. (b) ..................................... 37,428
---------------
TOTAL INVESTMENTS - 97.5% .................................... 7,404,783
(Cost $7,332,377) (c)
NET OTHER ASSETS AND LIABILITIES - 2.5% ...................... 191,989
---------------
NET ASSETS - 100.0% .......................................... $ 7,596,772
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $633,457 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $561,051.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ---------- ----------- ------------
Total Investments* $7,404,783 $7,404,783 $-- $--
---------- ---------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 39
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - 99.2%
AEROSPACE & DEFENSE - 1.0%
2,338 Axsys Technologies, Inc. (b) ................................. $ 125,410
---------------
BIOTECHNOLOGY - 12.3%
15,555 Amgen, Inc. (b) .............................................. 823,482
18,277 Myriad Genetics, Inc. (b) .................................... 651,575
4,569 Myriad Pharmaceuticals, Inc. (b) ............................. 21,247
---------------
1,496,304
---------------
CONTAINERS & PACKAGING - 2.2%
7,073 Rock-Tenn Company, Class A ................................... 269,906
---------------
DIVERSIFIED CONSUMER SERVICES - 23.8%
11,565 Apollo Group, Inc., Class A (b) .............................. 822,503
14,083 DeVry, Inc. .................................................. 704,713
7,533 ITT Educational Services, Inc. (b) ........................... 758,272
2,765 Strayer Education, Inc. ...................................... 603,074
---------------
2,888,562
---------------
FOOD & STAPLES RETAILING - 1.1%
2,692 Nash Finch Company ........................................... 72,845
5,170 Spartan Stores, Inc. ......................................... 64,160
---------------
137,005
---------------
FOOD PRODUCTS - 1.5%
6,085 TreeHouse Foods, Inc. (b) .................................... 175,065
---------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9%
4,620 Greatbatch, Inc. (b) ......................................... 104,458
---------------
HEALTH CARE TECHNOLOGY - 1.4%
4,509 Computer Programs & Systems, Inc. ............................ 172,740
---------------
HOTELS, RESTAURANTS & LEISURE - 9.2%
14,510 McDonald's Corp. ............................................. 834,180
5,719 Panera Bread Company, Class A (b) ............................ 285,149
---------------
1,119,329
---------------
INTERNET & CATALOG RETAIL - 3.9%
11,413 Netflix, Inc. (b) ............................................ 471,813
---------------
IT SERVICES - 7.5%
4,080 ManTech International Corp., Class A (b) ..................... 175,603
39,806 SAIC, Inc. (b) ............................................... 738,401
---------------
914,004
---------------
METALS & MINING - 2.9%
6,314 Compass Minerals International, Inc. ......................... 346,702
---------------
MULTILINE RETAIL - 12.5%
18,036 Dollar Tree, Inc. (b) ........................................ 759,316
26,784 Family Dollar Stores, Inc. ................................... 757,987
---------------
1,517,303
---------------
PHARMACEUTICALS - 7.1%
15,141 Johnson & Johnson ............................................ 860,009
---------------
See Notes to Financial Statements
Page 40
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2009 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------------- -------------------------------------------------------------- ---------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 11.9%
6,527 AutoZone, Inc. (b) ........................................... $ 986,295
4,823 Jos. A. Bank Clothiers, Inc. (b) ............................. 166,201
7,093 Tractor Supply Company (b) ................................... 293,083
---------------
1,445,579
---------------
TOTAL INVESTMENTS - 99.2%
(Cost $12,045,275) (c) ....................................... 12,044,189
NET OTHER ASSETS AND LIABILITIES - 0.8% ...................... 98,823
---------------
NET ASSETS - 100.0% .......................................... $ 12,143,012
===============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2009, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $580,319 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $581,405.
VALUATION INPUTS
A summary of inputs used to value the Portfolio's investments as of June 30,
2009 is as follows (See Note 2A- Portfolio Valuation in the Notes to Financial
Statements):
LEVEL 2 LEVEL 3
TOTAL MARKET LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
06/30/09 PRICE INPUTS INPUTS
------------ ----------- ----------- ------------
Total Investments* $12,044,189 $12,044,189 $-- $--
----------- ----------- --- ---
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 41
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2009 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ------------ -----------
ASSETS:
Investments, at value (1) ................................... $26,651,348 $4,933,951 $ 15,252,389 $35,070,289
Cash ........................................................ 461,855 137,038 358,894 421,215
Prepaid expenses ............................................ 1,496 443 7,501 1,778
Receivables:
Dividends ............................................. 16,352 9,255 18,873 38,285
Dividend reclaims ..................................... 3,213 -- -- --
Interest .............................................. 26 6 10 39
Membership Interests purchased ........................ -- -- 6,794 --
From Investment Advisor ............................... -- -- -- --
----------- ---------- ------------ -----------
Total Assets ....................................... 27,134,290 5,080,693 15,644,461 35,531,606
----------- ---------- ------------ -----------
LIABILITIES:
Payables:
Investment advisory fees .............................. 15,421 985 9,288 23,905
Membership Interest servicing fees .................... 21,605 4,277 12,631 26,690
12b-1 service fees .................................... 5,515 1,081 3,296 7,319
Custodian fees ........................................ 12,534 2,289 3,739 18,344
Administrative fees ................................... 574 112 343 761
Audit fees ............................................ 8,124 8,124 8,124 8,124
Legal fees ............................................ 4,315 604 2,163 8,041
Printing fees ......................................... 5,089 5,089 5,089 5,089
Licensing fees ........................................ 3,602 946 -- --
Investment securities purchased ....................... -- -- 150,706 --
Membership Interests redeemed ......................... 166,448 2,999 -- 6,204
Trustees' fees and expenses ........................... 868 -- 44 605
Accrued expenses and other payables ......................... 4,478 1,307 2,028 4,264
----------- ---------- ------------ -----------
Total Liabilities .................................. 248,573 27,813 197,451 109,346
----------- ---------- ------------ -----------
NET ASSETS .................................................. $26,885,717 $5,052,880 $ 15,447,010 $35,422,260
=========== ========== ============ ===========
(1) Investments, at cost .................................... $29,961,718 $5,675,145 $ 20,536,739 $44,538,570
=========== ========== ============ ===========
NET ASSETS CONSIST OF:
Paid-in capital ............................................. $13,707,725 $5,023,439 $ 30,665,925 $32,881,195
Accumulated net investment income (loss) .................... 3,345,981 1,251,614 5,718,236 10,983,273
Accumulated net realized gain (loss) on investments sold and
foreign currency transactions ............................ 13,142,381 (480,979) (15,652,801) 1,026,067
Net unrealized appreciation (depreciation) on investments and
foreign currency translation ............................. (3,310,370) (741,194) (5,284,350) (9,468,275)
----------- ---------- ------------ -----------
NET ASSETS .................................................. $26,885,717 $5,052,880 $ 15,447,010 $35,422,260
=========== ========== ============ ===========
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets /
Membership Interests outstanding) ..................... $ 6.76 $ 6.87 $ 5.69 $ 15.20
=========== ========== ============ ===========
Number of Membership Interests outstanding .................. 3,979,238 735,255 2,713,447 2,330,240
=========== ========== ============ ===========
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
- ----------- ----------- ------------ -------------
$ 6,949,928 $ 2,584,268 $ 7,404,783 $12,044,189
237,978 98,011 436,933 143,040
3,077 2,743 482 1,103
685 832 3,665 4,743
-- -- 208 --
10 5 14 5
37,804 263 42,333 --
-- 345 1,106 --
- ----------- ----------- ------------ -----------
7,229,482 2,686,467 7,889,524 12,193,080
- ----------- ----------- ------------ -----------
1,955 -- -- 8,336
4,980 2,158 5,054 10,702
1,435 541 1,517 2,462
3,875 2,835 17,986 4,164
149 56 158 256
8,124 8,124 8,124 8,124
105 138 1,596 176
5,089 5,089 5,089 5,089
-- -- 1,605 4,311
-- -- 250,887 --
-- -- -- 4,756
-- 7 -- 132
553 256 736 1,560
- ----------- ----------- ------------ -----------
26,265 19,204 292,752 50,068
- ----------- ----------- ------------ -----------
$ 7,203,217 $ 2,667,263 $ 7,596,772 $12,143,012
=========== =========== ============ ===========
$ 7,271,743 $ 2,275,145 $ 7,332,377 $12,045,275
=========== =========== ============ ===========
$ 8,671,048 $ 7,599,087 $ 28,365,699 $16,523,738
44,320 (474,269) (64,744) (1,032,731)
(1,190,336) (4,766,678) (20,776,589) (3,346,909)
(321,815) 309,123 72,406 (1,086)
- ----------- ----------- ------------ -----------
$ 7,203,217 $ 2,667,263 $ 7,596,772 $12,143,012
=========== =========== ============ ===========
$ 6.74 $ 6.07 $ 3.25 $ 2.68
=========== =========== ============ ===========
1,068,990 439,717 2,340,890 4,529,283
=========== =========== ============ ===========
See Notes to Financial Statements
Page 43
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
INVESTMENT INCOME:
Dividends ........................................................ $ 366,006 $ 108,963 $ 407,799 $ 354,310
Foreign withholding tax on dividend income ....................... (22,869) -- (538) --
Interest ......................................................... 89 29 52 137
------------ ----------- ------------ ------------
Total investment income ....................................... 343,226 108,992 407,313 354,447
------------ ----------- ------------ ------------
EXPENSES:
Investment advisory fees ......................................... 76,942 15,646 44,125 86,612
Membership Interest servicing fees ............................... 46,025 9,521 26,433 51,937
12b-1 service fees ............................................... 32,060 6,519 18,385 36,088
Licensing fees ................................................... 15,125 1,487 4,959 --
Custodian fees ................................................... 13,013 3,579 4,556 18,295
Audit fees ....................................................... 8,842 8,842 8,842 8,842
Fund accounting fees ............................................. 7,053 1,434 4,045 7,939
Legal fees ....................................................... 7,047 1,110 4,173 10,078
Printing fees .................................................... 5,385 5,385 5,385 5,385
Trustees' fees and expenses ...................................... 4,738 1,038 2,651 5,227
Administration fees .............................................. 3,334 678 1,912 3,753
Other ............................................................ 6,847 2,126 3,523 8,776
------------ ----------- ------------ ------------
Total expenses ................................................ 226,411 57,365 128,989 242,932
Fees waived or expenses reimbursed by the investment advisor .. (37,902) (19,033) (20,884) (30,733)
------------ ----------- ------------ ------------
Net expenses ..................................................... 188,509 38,332 108,105 212,199
------------ ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS) ..................................... 154,717 70,660 299,208 142,248
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ................................................... (22,558,659) (2,284,864) (12,209,302) (19,069,093)
Foreign currency transactions ................................. -- -- -- 15,221
------------ ----------- ------------ ------------
Net realized gain (loss) ......................................... (22,558,659) (2,284,864) (12,209,302) (19,053,872)
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................... 20,404,364 1,330,124 7,743,583 20,702,886
Foreign currency translation .................................. -- -- -- 2,891
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) ............. 20,404,364 1,330,124 7,743,583 20,705,777
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) .......................... (2,154,295) (954,740) (4,465,719) 1,651,905
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ..................................... $ (1,999,578) $ (884,080) $ (4,166,511) $ 1,794,153
============ =========== ============ ============
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
- ----------- ----------- ----------- -------------
$ 79,735 $ 13,252 $ 69,687 $ 56,564
-- -- (1,608) --
41 22 51 33
- ----------- ----------- ----------- ------------
79,776 13,274 68,130 56,597
- ----------- ----------- ----------- ------------
18,855 8,236 15,551 40,021
10,975 4,866 8,962 24,315
7,856 3,432 6,480 16,675
2,480 2,480 2,033 7,935
7,388 3,983 21,672 6,523
8,842 8,842 8,842 8,842
1,728 755 1,425 3,669
1,361 791 3,198 152
5,385 5,385 5,385 5,385
1,172 531 802 2,642
817 357 674 1,734
2,253 1,828 4,994 3,623
- ----------- ----------- ----------- ------------
69,112 41,486 80,018 121,516
(22,918) (21,307) (44,509) (23,465)
- ----------- ----------- ----------- ------------
46,194 20,179 35,509 98,051
- ----------- ----------- ----------- ------------
33,582 (6,905) 32,621 (41,454)
- ----------- ----------- ----------- ------------
(1,721,316) (1,077,779) (2,130,200) (15,395,604)
-- -- -- --
- ----------- ----------- ----------- ------------
(1,721,316) (1,077,779) (2,130,200) (15,395,604)
- ----------- ----------- ----------- ------------
1,371,065 1,040,554 2,339,815 15,344,497
-- -- -- --
- ----------- ----------- ----------- ------------
1,371,065 1,040,554 2,339,815 15,344,497
- ----------- ----------- ----------- ------------
(350,251) (37,225) 209,615 (51,107)
- ----------- ----------- ----------- ------------
$ (316,669) $ (44,130) $ 242,236 $ (92,561)
=========== =========== =========== ============
See Notes to Financial Statements
Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2009 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
OPERATIONS:
Net investment income (loss) ..................................... $ 154,717 $ 70,660 $ 299,208 $ 142,248
Net realized gain (loss) ......................................... (22,558,659) (2,284,864) (12,209,302) (19,053,872)
Net change in unrealized appreciation (depreciation) ............. 20,404,364 1,330,124 7,743,583 20,705,777
------------ ----------- ------------ ------------
Net increase (decrease) in net assets resulting from operations .. (1,999,578) (884,080) (4,166,511) 1,794,153
Net increase (decrease) in net assets from Membership Interest
transactions .................................................. (3,395,899) (1,143,830) (755,230) (2,435,390)
------------ ----------- ------------ ------------
Total net increase (decrease) in net assets ...................... (5,395,477) (2,027,910) (4,921,741) (641,237)
NET ASSETS:
Beginning of period .............................................. 32,281,194 7,080,790 20,368,751 36,063,497
------------ ----------- ------------ ------------
End of period .................................................... $ 26,885,717 $ 5,052,880 $ 15,447,010 $ 35,422,260
============ =========== ============ ============
Accumulated net investment income (loss) at end of period ........ $ 3,345,981 $ 1,251,614 $ 5,718,236 $ 10,983,273
============ =========== ============ ============
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)
------------- ----------- ------------ -------------
Total 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
============= =========== ============ =============
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
- ----------- ----------- ------------ -------------
$ 33,582 $ (6,905) $ 32,621 $ (41,454)
(1,721,316) (1,077,779) (2,130,200) (15,395,604)
1,371,065 1,040,554 2,339,815 15,344,497
- ----------- ----------- ----------- ------------
(316,669) (44,130) 242,236 (92,561)
(238,177) (465,455) 2,646,988 (2,950,814)
- ----------- ----------- ----------- ------------
(554,846) (509,585) 2,889,224 (3,043,375)
7,758,063 3,176,848 4,707,548 15,186,387
- ----------- ----------- ----------- ------------
$ 7,203,217 $ 2,667,263 $ 7,596,772 $ 12,143,012
=========== =========== =========== ============
$ 44,320 $ (474,269) $ (64,744) $ (1,032,731)
=========== =========== =========== ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------- ----------- ------------ -------------
$ 10,607 $ (47,925) $ 126,294 $ (69,031)
(1,249,596) (3,046,064) (3,102,046) 1,078,530
(2,274,518) (1,639,624) (2,291,626) (22,508,140)
- ----------- ----------- ----------- ------------
(3,513,507) (4,733,613) (5,267,378) (21,498,641)
(4,517,667) (3,405,552) (2,732,915) (7,313,269)
- ----------- ----------- ----------- ------------
(8,031,174) (8,139,165) (8,000,293) (28,811,910)
15,789,237 11,316,013 12,707,841 43,998,297
- ----------- ----------- ----------- ------------
$ 7,758,063 $ 3,176,848 $ 4,707,548 $ 15,186,387
=========== =========== =========== ============
$ 10,738 $ (467,364) $ (97,365) $ (991,277)
=========== =========== =========== ============
See Notes to Financial Statements
Page 47
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE SIX MONTHS ENDED JUNE 30, 2009 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ -------------
AMOUNT:
Sold .......... $ 3,678,905 $ 843,663 $ 3,469,368 $ 5,212,718
Redeemed ...... (7,074,804) (1,987,493) (4,224,598) (7,648,108)
------------ ----------- ------------ -------------
Net increase
(decrease)... $ (3,395,899) $(1,143,830) $ (755,230) $ (2,435,390)
============ =========== ============ =============
MEMBERSHIP
INTEREST:
Sold .......... 563,574 128,343 596,772 370,032
Redeemed ...... (1,143,354) (325,194) (790,667) (670,741)
------------ ----------- ------------ -------------
Net increase
(decrease)... (579,780) (196,851) (193,895) (300,709)
============ =========== ============ =============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
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
------------- ------------ ------------ -------------
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)
============= ============ ============ =============
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
- ----------- ----------- ------------ -------------
$ 2,130,656 $ 2,583,907 $ 4,289,211 $ 1,206,514
(2,368,833) (3,049,362) (1,642,223) (4,157,328)
- ----------- ----------- ------------ ------------
$ (238,177) $ (465,455) $ 2,646,988 $ (2,950,814)
=========== =========== ============ ============
325,778 468,470 1,455,023 440,544
(369,139) (551,573) (569,737) (1,607,786)
- ----------- ----------- ------------ ------------
(43,361) (83,103) 885,286 (1,167,242)
=========== =========== ============ ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET FOCUS VALUE LINE(R)
TARGET 24 TARGET 15 FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------ ----------- ------------ -------------
$ 8,851,343 $ 4,469,246 $ 14,326,922 $ 12,955,700
(13,369,010) (7,874,798) (17,059,837) (20,268,969)
- ------------ ----------- ------------ ------------
$ (4,517,667) $(3,405,552) $ (2,732,915) $ (7,313,269)
============ =========== ============ ============
1,119,789 598,329 2,885,841 2,809,127
(1,641,109) (989,641) (3,638,533) (4,561,166)
- ------------ ----------- ------------ ------------
(521,320) (391,312) (752,692) (1,752,039)
============ =========== ============ ============
See Notes to Financial Statements
Page 49
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
---------- -------- -------- -------- -------- --------
Net asset value, beginning of period ............ $ 7.08 $ 12.83 $ 11.72 $ 10.51 $ 9.80 $ 8.73
---------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................... 0.04(a) 0.08(a) 0.07(a) 0.06 0.03 0.01(a)
Net realized and unrealized gain (loss) ......... (0.36) (5.83) 1.04 1.15 0.68 1.06
---------- -------- -------- -------- -------- --------
Total from investment operations ................ (0.32) (5.75) 1.11 1.21 0.71 1.07
---------- -------- -------- -------- -------- --------
Net asset value, end of period .................. $ 6.76 $ 7.08 $ 12.83 $ 11.72 $ 10.51 $ 9.80
========== ======== ======== ======== ======== ========
TOTAL RETURN (b) ................................ (4.52)%(c) (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) ............ $ 26,886 $ 32,281 $174,134 $203,868 $182,892 $108,473
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed .......................... 1.77%(d) 1.51% 1.35% 1.37% 1.48% 2.07%
Ratio of operating expenses to average
net assets ................................... 1.47%(d) 1.47% 1.35% 1.37% 1.47% 1.47%
Ratio of net investment income to average
net assets ................................... 1.21%(d) 0.75% 0.53% 0.54% 0.26% 0.14%
Portfolio turnover rate ......................... 111% 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.
(d) Annualized.
See Notes to Financial Statements
Page 50
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
---------- -------- -------- -------- -------- --------
Net asset value, beginning of period ........... $ 7.60 $ 10.63 $ 10.56 $ 8.41 $ 8.69 $ 8.37
---------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ................... 0.09(a) 0.13(a) 0.11(a) 0.14(a) 0.14(a) 0.15(a)
Net realized and unrealized gain (loss) ........ (0.82) (3.16) (0.04) 2.01 (0.42) 0.17
---------- -------- -------- -------- -------- --------
Total from investment operations ............... (0.73) (3.03) 0.07 215 (0.28) 0.32
---------- -------- -------- -------- -------- --------
Net asset value, end of period ................. $ 6.87 $ 7.60 $ 10.63 $ 10.56 $ 8.41 $ 8.69
========== ======== ======== ======== ======== ========
TOTAL RETURN (b) ............................... (9.61)%(c) (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) ........... $ 5,053 $ 7,081 $ 16,172 $ 27,955 $ 11,611 $ 12,749
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ......................... 2.20%(d) 1.81% 1.56% 1.47% 1.59% 2.33%
Ratio of operating expenses to average
net assets .................................. 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income to average
net assets .................................. 2.71%(d) 1.42% 1.01% 1.47% 1.66% 1.84%
Portfolio turnover rate ........................ 103% 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.
(d) Annualized.
See Notes to Financial Statements
Page 51
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR PERIOD
06/30/09 ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 (a)
----------- -------- -------- -------- ------------
Net asset value, beginning of period .......... $ 7.01 $ 11.79 $ 11.66 $ 9.87 $ 10.00
------- ------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.11(b) 0.28(b) 0.25(b) 0.23(b) 0.12(b)
Net realized and unrealized gain (loss) ....... (1.43) (5.06) (0.12) 1.56 (0.25)
------- ------- ------- -------- -------
Total from investment operations .............. (1.32) (4.78) 0.13 1.79 (0.13)
------- ------- ------- -------- -------
Net asset value, end of period ................ $ 5.69 $ 7.01 $ 11.79 $ 11.66 $ 9.87
======= ======= ======= ======== =======
TOTAL RETURN (c) .............................. (18.83)%(d) (40.54)%(d) 1.12% 18.14% (1.30)%(d)
======= ======= ======= ======== =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $15,447 $20,369 $82,900 $100,906 $58,438
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 1.75%(e) 1.47% 1.36% 1.37% 1.52%(e)
Ratio of operating expenses to average net
assets ..................................... 1.47%(e) 1.47% 1.36% 1.37% 1.47%(e)
Ratio of net investment income to average net
assets ..................................... 4.07%(e) 2.76% 2.06% 2.11% 2.00%(e)
Portfolio turnover rate ....................... 111% 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) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(e) Annualized.
See Notes to Financial Statements
Page 52
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 (a) 12/31/04
----------- -------- -------- -------- ------------ --------
Net asset value, beginning of period .......... $ 13.71 $ 23.96 $ 21.14 $ 15.27 $ 13.86 $ 11.05
------- ------- -------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.06(b) 0.72(b) 0.60(b) 0.63(b) 0.35(b) 0.27(b)
Net realized and unrealized gain (loss) ....... 1.43 (10.97) 2.22 5.24 1.06 2.54
------- ------- -------- -------- ------- -------
Total from investment operations .............. 1.49 (10.25) 2.82 5.87 1.41 2.81
------- ------- -------- -------- ------- -------
Net asset value, end of period ................ $ 15.20 $ 13.71 $ 23.96 $ 21.14 $ 15.27 $ 13.86
======= ======= ======== ======== ======= =======
TOTAL RETURN (c) .............................. 10.87%(d) (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) .......... $35,422 $36,063 $173,741 $128,836 $36,791 $22,618
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 1.68%(e) 1.53% 1.39% 1.47% 1.61% 2.67%
Ratio of operating expenses to average net
assets ..................................... 1.47%(e) 1.47% 1.39% 1.47% 1.47% 1.47%
Ratio of net investment income to average net
assets ..................................... 0.99%(e) 3.47% 2.56% 3.45% 2.49% 2.18%
Portfolio turnover rate ....................... 88% 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.
(e) Annualized.
See Notes to Financial Statements
Page 53
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period .......... $ 6.97 $ 9.66 $ 9.28 $ 9.02 $ 8.66 $ 7.62
------ ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.03(a) 0.01 0.04(a) (0.04) 0.02 (0.03)
Net realized and unrealized gain (loss) ....... (0.26) (2.70) 0.34 0.30 0.34 1.07
------ ------- ------- ------- ------- -------
Total from investment operations .............. (0.23) (2.69) 0.38 0.26 0.36 1.04
------ ------- ------- ------- ------- -------
Net asset value, end of period ................ $ 6.74 $ 6.97 $ 9.66 $ 9.28 $ 9.02 $ 8.66
====== ======= ======= ======= ======= =======
TOTAL RETURN (b) .............................. (3.30)%(c) (27.85)%(c) 4.10%(c) 2.88%(c) 4.16%(c) 13.65%
====== ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $7,203 $ 7,758 $15,789 $16,057 $18,049 $14,158
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 2.20%(d) 1.83% 1.55% 1.56% 1.58% 2.37%
Ratio of operating expenses to average net
assets ..................................... 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 1.07%(d) 0.10% 0.43% (0.40)% 0.20% (0.51)%
Portfolio turnover rate ....................... 128% 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.
(d) Annualized.
See Notes to Financial Statements
Page 54
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
----------- -------- -------- -------- -------- ----------
Net asset value, beginning of period .......... $ 6.08 $ 12.38 $ 10.17 $ 9.34 $ 9.04 $ 9.29
------ ------- ------- ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. (0.01)(a) (0.07)(a) (0.04)(a) (0.11)(a) (0.07)(a) (0.10)(a)
Net realized and unrealized gain (loss) ....... 0.00 (6.23) 2.25 0.94 0.37 (0.15)
------ ------- ------- ------ ------ ------
Total from investment operations .............. (0.01) (6.30) 2.21 0.83 0.30 (0.25)
------ ------- ------- ------ ------ ------
Net asset value, end of period ................ $ 6.07 $ 6.08 $ 12.38 $10.17 $ 9.34 $ 9.04
====== ======= ======= ====== ====== ======
TOTAL RETURN (b) .............................. (0.16)%(c) (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) .......... $2,667 $ 3,177 $11,316 $7,318 $6,552 $7,028
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 3.02%(d) 2.13% 1.76% 1.84% 1.83% 2.52%
Ratio of operating expenses to average net
assets ..................................... 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment loss to average net
assets ..................................... (0.50)%(d) (0.79)% (0.34)% (1.08)% (0.80)% (1.20)%
Portfolio turnover rate ....................... 182% 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.
(d) Annualized.
See Notes to Financial Statements
Page 55
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07(a) 12/31/06 12/31/05 12/31/04
----------- ---------- ------------ -------- -------- --------
Net asset value, beginning of period ............. $ 3.23 $ 5.75 $ 5.44 $ 5.23 $ 5.20 $ 4.67
------ -------- ------- ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ..................... 0.02(b) 0.07(b) 0.09(b) 0.06(b) (0.01)(b) (0.02)
Net realized and unrealized gain (loss) .......... 0.00(c) (2.59) 0.22 0.15 0.04 0.55
------ -------- ------- ------ ------ ------
Total from investment operations ................. 0.02 (2.52) 0.31 0.21 0.03 0.53
------ -------- ------- ------ ------ ------
Net asset value, end of period ................... $ 3.25 $ 3.23 $ 5.75 $ 5.44 $ 5.23 $ 5.20
====== ======== ======= ====== ====== ======
TOTAL RETURN (d) ................................. 0.62%(e) (43.83)%(e) 5.70%(e) 4.02%(e) 0.58%(e) 11.35%
====== ======== ======= ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $7,597 $ 4,708 $12,708 $5,734 $7,004 $9,803
Ratio of operating expenses to average net assets
without fee waivers and expenses
reimbursed .................................... 3.09%(f) 2.97% 1.92% 1.79% 1.69% 1.61%
Ratio of operating expenses to average net
assets ........................................ 1.37%(f) 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss) to average
net assets .................................... 1.26%(f) 1.40% 1.54% 1.14% (0.16)% (0.11)%
Portfolio turnover rate .......................... 90% 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) Amount represents less than $0.01 per Membership Interest.
(d) 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.
(e) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
(f) Annualized.
See Notes to Financial Statements
Page 56
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/09 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/08 12/31/07 12/31/06 12/31/05 12/31/04
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period .......... $ 2.67 $ 5.91 $ 5.00 $ 4.86 $ 4.06 $ 3.34
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. (0.01)(a) (0.01)(a) (0.02)(a) (0.04) (0.02)(a) (0.04)(a)
Net realized and unrealized gain (loss) ....... 0.02 (3.23) 0.93 0.18 0.82 0.76
------- ------- ------- ------- ------- -------
Total from investment operations .............. 0.01 (3.24) 0.91 0.14 0.80 0.72
------- ------- ------- ------- ------- -------
Net asset value, end of period ................ $ 2.68 $ 2.67 $ 5.91 $ 5.00 $ 4.86 $ 4.06
======= ======= ======= ======= ======= =======
TOTAL RETURN (b) .............................. 0.37%(c) (54.82)%(c) 18.20% 2.88% 19.70%(c) 21.56%
======= ======= ======= ======= ======= =======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $12,143 $15,186 $43,998 $43,776 $54,072 $21,765
Ratio of operating expenses to average net
assets without fee waivers and expenses
reimbursed ................................. 1.82%(d) 1.51% 1.41% 1.41% 1.49% 2.28%
Ratio of operating expenses to average net
assets ..................................... 1.47%(d) 1.47% 1.41% 1.41% 1.47% 1.47%
Ratio of net investment loss to average net
assets ..................................... (0.62)%(d) (0.22)% (0.37)% (0.88)% (0.45)% (1.13)%
Portfolio turnover rate ....................... 108% 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.
(d) Annualized.
See Notes to Financial Statements
Page 57
NOTES TO FINANCIAL STATEMENTS
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
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.
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. A
majority of each Portfolio's assets are valued using market information supplied
by third parties. In the event that market quotations are not readily available,
the pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, the Registrant's Board of Trustees has
designated First Trust Advisors L.P. ("First Trust") to use a fair value method
to value each Portfolio's securities and investments. Additionally, if events
occur after the close of the principal markets for particular securities (e.g.,
domestic debt and foreign securities), but before each Portfolio values its
assets, that could materially affect NAV, First Trust may use a fair value
method to value each Portfolio's securities and investments. The use of fair
value pricing by each Portfolio is governed by valuation procedures adopted by
the Registrant's Board of Trustees, and in accordance with the provisions of the
1940 Act.
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
Page 58
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
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.
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 Registrant's Board of Trustees. All securities and other assets of the
Portfolios 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. 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)
In April 2009, FASB issued FASB Staff Position No. 157-4, "Determining Fair
Value when the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" ("FSP
157-4"). FSP 157-4 is effective for fiscal years and interim periods ending
after June 15, 2009. FSP 157-4 provides additional guidance for estimating fair
value in accordance with FAS 157, when the volume and level of activity for the
asset or liability have significantly decreased. FSP 157-4 also includes
guidance on identifying circumstances that indicate a transaction is not
orderly. FSP 157-4 requires entities to describe the inputs and valuation
techniques used to measure fair value and changes in those techniques and
related inputs during the period. FSP 157-4 expands the three-level hierarchy
disclosure and the Level 3 roll-forward disclosure for each major security type
as described in paragraph 19 of FAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities".
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 June 30, 2009 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 $6 from dividends
receivable in foreign currencies is included in "Dividends receivable" on the
Statement of Assets and Liabilities for the Global Dividend Target 15 Portfolio.
Page 59
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
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.
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.
3. INVESTMENT ADVISORY FEE, AFFILIATED TRANSACTIONS AND OTHER FEE ARRANGEMENTS
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, 2010, 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 six months
ended June 30, 2009, are as follows:
EXPENSES BORNE BY
FEES EXPENSES ADVISOR SUBJECT TO
RECOVERED FEES WAIVED REIMBURSED REIMBURSEMENT
--------- ----------- ---------- ------------------
Target Managed VIP Portfolio .............. $-- $37,902 $ -- $ 68,886
The Dow(R) Dart 10 Portfolio .............. -- 15,646 3,387 71,167
The Dow(R) Target Dividend Portfolio ...... -- 20,884 -- 21,064
Global Dividend Target 15 Portfolio ....... -- 30,733 -- 83,920
S&P(R) Target 24 Portfolio ................ -- 18,855 4,063 87,322
NASDAQ(R) Target 15 Portfolio ............. -- 8,236 13,071 112,988
First Trust Target Focus Four Portfolio ... -- 15,551 28,958 246,964
Value Line(R) Target 25 Portfolio ......... -- 23,465 -- 36,042
Page 60
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
PNC Global Investment Servicing (U.S.) Inc., an indirect, majority-owned
subsidiary of The PNC Financial Services Group, Inc., serves as the Registrant's
Administrator, Fund Accountant and Transfer Agent in accordance with certain fee
arrangements.
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 subsequent trust in 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, the Audit
Committee Chairman is paid $5,000 annually, and 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. 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. The Lead Independent
Trustee and each Committee chairman will serve two-year terms ending December
31, 2009, before rotating to serve as a chairman of another committee or as Lead
Independent Trustee. 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 six months ended June 30, 2009, 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 six months ended June 30, 2009,
was as follows:
PURCHASES SALES
----------- -----------
Target Managed VIP Portfolio ............. $28,500,325 $31,857,281
The Dow(R) DART 10 Portfolio ............. 5,288,071 6,303,810
The Dow(R) Target Dividend Portfolio ..... 16,446,655 16,901,414
Global Dividend Target 15 Portfolio ...... 25,812,568 27,963,005
S&P(R) Target 24 Portfolio ............... 8,210,658 9,144,519
NASDAQ(R) Target 15 Portfolio ............ 4,932,239 5,415,849
First Trust Target Focus Four Portfolio .. 7,304,410 4,637,657
Value Line(R) Target 25 Portfolio ........ 14,549,910 18,224,075
Page 61
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
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. In 2008 and early 2009,
securities markets were significantly negatively affected by the financial
crises that initially resulted from the downturn in the subprime mortgage market
in the U.S. The impact of the financial crises on securities markets has proven
to be significant and may be long lasting and may have a substantial impact on
the value of the Portfolios. As with any mutual fund investment, loss of money
is a risk of investing. 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 issuers 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.
FINANCIALS SECTOR RISK: The Portfolios may invest in securities of companies in
the financial sector. The downturn in the U.S. and world economies has adversely
affected banks, thrifts, credit and capital markets, companies involved in the
insurance industry and other companies in the financial sectors.
Page 62
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
9. SUBSEQUENT EVENT
Management has evaluated the impact of all subsequent events on the Portfolios
through August 21, 2009, the date the financial statements were issued, and has
determined that there were no subsequent events requiring recognition or
disclosure in the financial statements.
Page 63
ADDITIONAL INFORMATION
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Registrant uses to
determine how to vote proxies and information on how each Portfolio voted
proxies relating to portfolio securities during the most recent 12-month period
ended June 30 is available (1) without charge, upon request, by calling (800)
988-5891; (2) on the Registrant's website located at
http://www.ftportfolios.com; and (3) on the Securities and Exchange Commission's
website at http://www.sec.gov.
PORTFOLIO HOLDINGS
The Registrant files its complete schedule of portfolio holdings with the
Securities and Exchange Commission ("SEC") for the first and third quarters of
each fiscal year on Form N-Q. The Registrant's Forms N-Q are available (1) by
calling (800) 988-5891; (2) on the Registrant's website located at
http://www.ftportfolios.com; (3) on the SEC's website at http://www.sec.gov; and
(4) for review and copying at the SEC's Public Reference Room ("PRR") in
Washington, DC. Information regarding the operation of the PRR may be obtained
by calling (800) SEC-0330.
ADVISORY AGREEMENT
BOARD CONSIDERATIONS REGARDING CONTINUATION OF INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
The Board of Trustees of First Defined Portfolio Fund, LLC (the "Registrant"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Advisory and Management Agreement (the "Advisory Agreement") between
the Registrant, on behalf of eight Portfolios of the Registrant (each a
"Portfolio" and collectively, the "Portfolios"), and First Trust Advisors L.P.
(the "Advisor") at a meeting held on March 1-2, 2009. The Board determined that
the terms of the Advisory Agreement are fair and reasonable and that the
Advisory Agreement continues to be in the best interests of the Registrant and
each Portfolio.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment company boards have
fulfilled their duties; and the factors to be considered by the Board in voting
on such agreements. To assist the Board in its evaluation of the Advisory
Agreement for each Portfolio, the Independent Trustees received a report from
the Advisor in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The report, among other
things, outlined the services provided by the Advisor to each Portfolio
(including the relevant personnel responsible for these services and their
experience); the advisory fees for each Portfolio as compared to fees charged by
investment advisors to comparable funds and as compared to fees charged to other
clients of the Advisor; expenses of each Portfolio as compared to expense ratios
of comparable funds; the nature of expenses incurred in providing services to
each Portfolio and the potential for economies of scale, if any; financial data
on the Advisor; any fall out benefits to the Advisor; and information on the
Advisor's compliance program. The Independent Trustees also met separately with
their independent legal counsel to discuss the information provided by the
Advisor. The Board applied its business judgment to determine whether the
arrangement between the Registrant and the Advisor is a reasonable business
arrangement from each Portfolio's perspective as well as from the perspective of
its interest holders.
In reviewing the Advisory Agreement, the Board considered the nature, quality
and extent of services provided by the Advisor to each Portfolio under the
Advisory Agreement. The Board considered that the Advisor is responsible for the
overall management and administration of the Registrant and each Portfolio. The
Board considered the compliance program that had been developed by the Advisor
and noted the enhancements made by the Advisor to the compliance program in
2008. In light of the information presented and the considerations made, the
Board concluded that the nature, quality and extent of services provided to the
Registrant and each Portfolio by the Advisor under the Advisory Agreement have
been and are expected to remain satisfactory and that the Advisor has managed
each Portfolio consistent with its investment objective and policies.
The Board considered the advisory fees paid by each Portfolio under the Advisory
Agreement, noting that the annual fees for each Portfolio are 0.60% of average
daily net assets. The Board considered that the Advisor agreed to waive fees and
reimburse expenses of each Portfolio through December 31, 2010 in order to
prevent total annual operating expenses (excluding extraordinary expenses and
brokerage fees) from exceeding 1.47% of average daily net assets (1.37% for the
First Trust Target Focus Four Portfolio). The Board noted that the Advisor may
seek restitution from each Portfolio for fees waived and reimbursed through
December 31, 2010; however, such restitution is limited to the extent that it
would not cause a Portfolio to exceed its current expense limitations. The Board
also considered
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ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
the advisory fees paid to the Advisor by similar funds, and noted that the
Advisor does not provide advisory services to institutional clients that have
investment objectives and policies similar to the Portfolios', other than to
registered investment companies. The Board noted that the Advisor does provide
retail separate managed account investment advisory services to a variety of
accounts that have investment objectives and policies similar to the Portfolios'
and noted the Advisor's standard fee for such services. In addition, the Board
received data prepared by Lipper Inc. ("Lipper"), an independent source, showing
the management fees and expense ratios of each Portfolio as compared to the
management fees and expense ratios of a peer group selected by Lipper. The Board
discussed with representatives of the Advisor the limitations of each peer
group, including that (i) pure index funds were included in many of the peer
groups; (ii) many peer funds had a different Lipper Investment
Classification/Objective relative to the corresponding Portfolio; (iii) three
peer funds were used in multiple peer groups and had a considerable impact on
the comparisons; and (iv) many of the peer funds are substantially larger than
the Portfolios. The Board reviewed the Lipper materials, but based on its
discussions with the Advisor, the Board determined that the Lipper data was of
limited value for purposes of its consideration of the renewal of the Advisory
Agreement.
The Board also considered performance information for each Portfolio, noting
that, similar to almost all other funds, each Portfolio's performance was
impacted by the severe market downturn in 2008. The Board noted that the
performance information included each Portfolio's quarterly performance report,
which is part of the process that the Board has established for monitoring each
Portfolio's performance on an ongoing basis. The Board determined that this
process continues to be effective for reviewing each Portfolio's performance. In
addition to the Board's ongoing review of performance, the Board also received
data prepared by Lipper comparing each Portfolio's performance to the peer group
selected by Lipper, as well as to a broader peer universe and to a benchmark.
The Board reviewed the Lipper materials, but for similar reasons to those
described above, the Board determined that the performance data provided by
Lipper was of limited value. In addition, because each Portfolio is
non-diversified and generally invests in a relatively small number of issuers,
the Board considered the difficulties of comparing each Portfolio to a broad
peer universe. The Board also noted the differences between each Portfolio and
its benchmark index. The Board noted that changes in the Portfolios' benchmarks
and investment policies over the years affected the utility of comparisons with
peer universe and benchmark performance and noted that each Portfolio's
investment results were consistent with its investment objective. Based on the
information provided and the Board's ongoing review of each Portfolio's
performance, and taking into account the historic market events of 2008, the
Board concluded that each Portfolio's performance was reasonable.
On the basis of all the information provided on the fees, expenses and
performance of each Portfolio, the Board concluded that the advisory fees for
each Portfolio were reasonable and appropriate in light of the nature, quality
and extent of services provided by the Advisor to each Portfolio under the
Advisory Agreement.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and had noted that the advisory fee is not structured to pass the
benefits of any economies of scale on to the shareholders as each Portfolio's
assets grow. The Board concluded that the advisory fee for each Portfolio
reflects an appropriate level of sharing of any economies of scale. The Board
also considered the costs of the services provided and profits realized by the
Advisor from serving as investment manager to variable annuity products for the
twelve months ended December 31, 2008, as set forth in the materials provided to
the Board. The Board noted the inherent limitations in the profitability
analysis, and concluded that the Advisor's profitability appeared to be not
excessive in light of the services provided to the Registrant and each
Portfolio. In addition, the Board considered and discussed any ancillary
benefits derived by the Advisor from its relationship with the Registrant and
the Portfolios and noted that the typical fall out benefits to the Advisor such
as soft dollars are not present. The Board concluded that any other fall out
benefits received by the Advisor or its affiliates would appear to be limited.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Advisory Agreement continue to be fair and reasonable and that the continuation
of the Advisory Agreement is in the best interests of the Registrant and each
Portfolio. No single factor was determinative in the Board's analysis.
LICENSING INFORMATION
"Dow Jones Industrial Average(SM)," "DJIA(SM)," "The Dow Jones U.S. 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
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ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2009 (UNAUDITED)
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.
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(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, FUND ACCOUNTANT & TRANSFER AGENT
PNC Global Investment Servicing (U.S.) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, PA 19153
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Defined Portfolio Fund, LLC
By (Signature and Title)* /s/ James A. Bowen
--------------------------------------
James A. Bowen, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
Date August 24, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James A. Bowen
--------------------------------------
James A. Bowen, Chairman of the Board,
President and Chief Executive Officer
(principal executive officer)
Date August 24, 2009
By (Signature and Title)* /s/ Mark R. Bradley
---------------------------------------
Mark R. Bradley, Treasurer, Controller,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date August 24, 2009
* Print the name and title of each signing officer under his or her
signature.