UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-09235
First Defined Portfolio Fund, LLC
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
Date of fiscal year end: December 31
Date of reporting period: December 31, 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
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2009
TABLE OF CONTENTS
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 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
Report of Independent Registered Public Accounting Firm ............. 64
Additional Information .............................................. 65
Board of Trustees and Officers ...................................... 67
Privacy Policy ...................................................... 71
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
ANNUAL REPORT
DECEMBER 31, 2009
Dear Shareholders:
The year 2009 was more positive for the U.S. and global markets, which eased the
minds of economists and investors alike. Many economists believe that the
recession that began in December 2007 ended in March 2009. In fact, the Dow
Jones Industrial Average's total return from March 9 (the statistical end of the
bear market) to December 31, 2009, was 61.59%. Of course, no one can guarantee
that this trend will continue, but the economy has continued to rise and most
investors have found it easier to open their financial statements since March.
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. We have always
believed that staying invested in quality products and having a long-term
perspective can help investors reach their financial goals.
The report you hold gives detailed information about eight portfolios in the
First Defined Portfolio Fund, LLC over the year ended December 31, 2009. It
contains a market overview and a performance analysis for the period. I
encourage you to read this document and discuss it with your financial advisor.
Since its inception, First Trust has been through many types of markets. We
remain committed to bringing you quality investment solutions regardless of the
inevitable volatility the market experiences. We offer a variety of products
that can fit many financial plans to help those investors seeking long-term
investment success. As well, we are committed to making available up-to-date
information about your investments so you and your financial advisor have
current information on your portfolio.
We continue to value our relationship with you, and we thank you for 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 U.S. ECONOMY
Data indicates that the recession that commenced in December 2007 may have ended
in March 2009, though no official word has come from the National Bureau of
Economic Research - the organization responsible for defining expansions and
contractions in the U.S. economy. The U.S. economy expanded by 2.2% the third
quarter of 2009. A survey of economists by Bloomberg found a consensus GDP
growth estimate of 4.5% for the fourth quarter of 2009. The ISM Manufacturing
Index closed December 2009 at a reading of 55.9 - above 50 indicates expansion.
That is a major advancement over its 32.9 index level in December 2008. With the
aid of government stimulus, such as the first-time homebuyer tax credit, we saw
the residential real estate market begin to stabilize. What we have not seen is
a ramp-up in lending. While interest rates have remained extremely low, banks
have yet to loosen lending standards in a meaningful way. Small businesses, in
particular, have found it very difficult to secure capital.
The overall tone of the U.S. economy has clearly been influenced by legislative
initiatives. The Obama Administration has spent a lot of political capital in
the areas of health care reform (coverage for the uninsured) and Cap and Trade
(regulate carbon emissions). Neither has been enacted into law. Despite decent
earnings, the performance of health care and utility stocks suffered the better
part of 2009 from the uncertainty over how said legislation would impact their
bottom line. Perhaps we can get some better guidance on these issues early on in
2010.
As we begin 2010, we can safely say that the economy is in far better shape than
a year ago, but some concerns linger. The Blue Chip Economic Indicators survey
of 52 economists conducted at the start of January 2010 forecasted a GDP growth
rate of 2.8%, compared to an estimated growth rate of -2.5% for 2009. High
productivity remained a key driver of the U.S. economy during the recession. The
Conference Board reported that U.S. productivity rose 2.5% in 2009 and is
projected to gain another 3.0% in 2010. Moving forward, three topics to keep an
eye on are the potential for rising interest rates, the direction of state
budget deficits ($193 billion estimated for fiscal 2010) and the ability of
companies involved in commercial real estate to rollover loans coming due ($300
billion targeted).
U.S. STOCKS AND BONDS
All of the major U.S. stock indices posted outsized returns in 2009. The S&P 500
Index, S&P MidCap 400 Index and S&P SmallCap 600 Index were up 26.5%, 37.4%, and
25.6%, respectively, according to Bloomberg. All 10 major sectors in the S&P 500
posted gains. The top-performing sector was Technology, up 59.9%, while the
poorest showing came from Telecommunications Services, up 2.6%. The
year-over-year estimated earnings growth rate for the companies in the S&P 500
Index is expected be 36.3% in 2010, vs. 12.7% in 2009, according to Standard &
Poor's. Bloomberg surveyed strategists from Wall Street's largest firms and
found the average 2010 price target for the S&P 500 Index is 1225, or a gain of
9.82%, according to Bespoke Investment Group. According to Ibbotson Associates,
from 1926 through 2009, the average annual total return for the S&P 500 Index
was 9.81%.
The bull market in stocks was accompanied by a sharp reduction in volatility.
The VIX Volatility Index ("VIX"), an index that measures the implied volatility
of S&P 500 Index options, plunged from a high of nearly 80 in October 2008, one
month after the Lehman Brothers bankruptcy, to 21.68 on December 31, 2009. The
VIX averaged 21.92 from 2000 through 2009. The higher the index value, the
greater the implied risk in the market. The last time the VIX fell below 20 for
an extended period of time was from May 2003 through July 2007. From
4/30/03-7/31/07, the S&P 500 Index posted a cumulative total return of 71.3%.
In the U.S. bond market, the top-performing group was high-yield corporate
bonds. The Barclays Capital U.S. Corporate High Yield Index posted a total
return of 58.21%. The next closest domestic category was municipal bonds, up
23.43%, as measured by the Barclays Capital Municipal Bond: Long Bond (22+)
Index. The Barclays Capital U.S. Treasury: Intermediate Index posted the worst
return, down 1.4%. It was the only major category in the red.
Page 2
MARKET OVERVIEW - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
FOREIGN STOCKS AND BONDS
Riskier asset classes dominated the overseas markets as well. The Barclays
Capital Global Emerging Markets Index of debt securities rose 35.61% (USD) in
2009, while the MSCI Emerging Markets Index of stocks gained 78.44% (USD). The
Barclays Capital Global Aggregate Index of higher quality debt returned 6.93%
(USD), while the MSCI World Index (excluding the U.S.) of stocks from developed
countries gained 34.29% (USD). The U.S. dollar boosted returns for U.S.
investors by declining 5.9% against a basket of major currencies.
Page 3
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO
Over the twelve months ended December 31, 2009, the Target Managed VIP Portfolio
posted a total return of 12.99% versus 28.36% for the Russell 3000(R) Index over
the same period. The NAV increased from $7.08 to $8.00 during the period.
Of the portfolio's 111 stocks, 70 advanced and 41 declined over the period. The
top three performing stocks, by contribution to return, were Microsoft Corp.
(MSFT), Deutsche Bank AG (DB) and BNP Paribas (BNP). The worst-performing
stocks, by percentage loss, were Gilead Sciences, Inc. (GILD), Amgen, Inc.
(AMGN) and Exxon Mobil Corp. (XOM).
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 to relative portfolio
performance as the sector trailed the overall market. Health care stocks were
the biggest detractors from relative performance due to both an overweight
position and underperformance. Information technology and consumer discretionary
stocks also hurt portfolio performance due to negative 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.
TARGET MANAGED VIP
Target Dow Jones Russell
Managed VIP Industrial Ave. 3000 Index
- ----------- --------------- ----------
10000 10000 10000
10721 9528 9253
10187 9010 8199
8047 7657 6433
10858 9823 8432
12189 10345 9440
13072 10522 10021
14577 12526 11605
15958 13639 12214
8806 9284 7658
9950 11390 9829
RETURN COMPARISON
PERIODS ENDED
DEC. 31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ---------------
Target Managed VIP
Portfolio (a) 10/6/99 12.99% -3.98% -0.05% -2.16%
Dow Jones Industrial
Avg.(SM) (b) 22.68% 1.94% 1.31% 2.13%
Russell 3000(R) Index (c) 28.36% 0.81% -0.18% 0.99%
(a) Effective April 30, 2002, based upon the determination of the Registrant'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.
(b) 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).
(c) 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).
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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Amgen, Inc. 7.9%
McDonald's Corp. 7.8
Microsoft Corp. 5.8
Johnson & Johnson 4.0
Caterpillar, Inc. 3.9
Gilead Sciences, Inc. 3.1
AT&T, Inc. 2.9
General Electric Co. 2.8
Exxon Mobil Corp. 2.6
BNP Paribas, ADR 2.0
----
Total 42.8%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Financials 19.7%
Health Care 19.4
Consumer Discretionary 16.4
Industrials 12.6
Information Technology 10.6
Energy 10.5
Telecommunication Services 4.1
Consumer Staples 3.8
Materials 1.5
Utilities 1.4
-----
Total 100.0%
=====
Page 5
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO
Over the twelve months ended December 31, 2009, The Dow(R) DART 10 Portfolio
posted a total return of 13.95% versus 22.68% for the Dow Jones Industrial
Average(SM) over the same period. The NAV increased from $7.60 to $8.66 during
the period.
Of the portfolio's 10 stocks, 7 advanced and 3 declined over the period. The top
three performing stocks, by contribution to return, were Walt Disney (The) Co.
(DIS), Alcoa, Inc. (AA) and Caterpillar, Inc. (CAT). The worst-performing
stocks, by percentage loss, were Exxon Mobil Corp. (XOM), General Electric Co.
(GE) and Kraft Foods, Inc. (KFT).
Walt Disney was the biggest contributor to portfolio performance in 2009. Alcoa
and Boeing both helped the portfolio as well as they benefitted from improving
economic conditions over the course of the year. Exxon Mobil was the biggest
drag on performance as the company's earnings declined as oil prices were well
below the prior year's highs. General Electric also hurt portfolio performance
as the stock fell amid concerns about the strength of its finance unit.
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.
DOW TARGET 10 LINE
Dow Jones
DART 10 Industrial Ave.
- ------- ---------------
10000 10000
10868 9528
9262 9010
7570 7657
9078 9823
9425 10345
9121 10522
11453 12526
11529 13639
8243 9284
9393 11390
RETURN COMPARISON
PERIODS ENDED
DEC. 31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ---------------
The Dow(R) DART 10 Portfolio 10/6/99 13.95% -0.07% -0.62% -1.40%
Dow Jones Industrial
Avg.(SM) (a) 22.68% 1.94% 1.31% 2.13%
(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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Alcoa, Inc. 13.1%
Walt Disney (The) Co. 12.4
Boeing (The) Co. 11.4
Caterpillar, Inc. 11.3
Bank of America Corp. 9.8
Kraft Foods, Inc., Class A 8.8
McDonald's Corp. 8.8
AT&T, Inc. 8.6
General Electric Co. 8.3
Exxon Mobil Corp. 7.5
-----
Total 100.0%
=====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Industrials 31.0%
Consumer Discretionary 21.2
Materials 13.1
Financials 9.8
Consumer Staples 8.8
Telecommunication Services 8.6
Energy 7.5
-----
Total 100.0%
=====
Page 7
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the twelve months ended December 31, 2009, The Dow(R) Target Dividend
Portfolio posted a total return of 14.12% versus 11.13% for the Dow Jones U.S.
Select Dividend Index(SM) over the same period. The NAV increased from $7.01 to
$8.00 during the period.
Of the portfolio's 20 stocks, 11 advanced and 9 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 (FBP), Zions Bancorp (ZION) and
F.N.B. Corp. (FNB).
Materials posted the best relative returns over the period due to solid stock
selection and an overweight position. Stock selection in the industrials sector
helped lead the group to the second best performance on a relative basis.
Financials was the biggest detractor from performance due to an overweight
position and adverse stock selection. A lack of consumer discretionary exposure
also hurt relative returns as the sector posted strong gains amidst improving
economic conditions.
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.
DOW TARGET DIVIDEND
The Dow Target Dow Jones
Dividend U.S. Select S&P 500
Portfolio Dividend Index Index
- -------------- -------------- -------
10000 10000 10000
9870 10529 10879
11660 12587 12597
11790 11938 13289
7010 8240 8372
8000 9157 10588
RETURN COMPARISON
PERIODS ENDED
DEC. 31, 2009
1 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN
--------- ------------ ---------------
The Dow(R) Target Dividend Portfolio 5/2/05 14.12% -4.67%
Dow Jones U.S. Select Dividend Index(SM) (a) 11.13% -1.87%
S&P 500(R) Index (b) 26.47% 1.23%
(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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
MeadWestvaco Corp. 11.5%
Eastman Chemical Co. 8.5
R.R. Donnelley & Sons Co. 7.1
Universal Corp. 6.5
Textron, Inc. 6.3
NiSource, Inc. 6.1
TECO Energy, Inc. 5.9
Timken (The) Co. 5.4
Pinnacle West Capital Corp. 4.9
Sensient Technologies Corp. 4.9
----
Total 67.1%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Materials 25.0%
Industrials 23.6
Financials 23.4
Utilities 21.5
Consumer Staples 6.5
-----
Total 100.0%
=====
Page 9
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2009, the Global Dividend Target 15
Portfolio posted a total return of 41.06% versus 29.99% for the Morgan Stanley
Capital International Developed Markets World Index over the same period. The
NAV increased from $13.71 to $19.34 during the period.
Of the portfolio's 15 stocks, 11 advanced and 4 declined over the period. The
top three performing stocks, by contribution to return, were CITIC Pacific Ltd.
(267 HK), GKN PLC (GKN LN) and BOC Hong Kong (Holdings) Ltd. (2388 HK). The
worst-performing stocks, by percentage loss, were BT Group PLC (BT/A LN),
General Electric Co. (GE) and Pfizer, Inc. (PFC).
Hong Kong stocks posted the best absolute returns over the period. On a sector
basis, financials, consumer discretionary, and industrials were the
best-performing sectors on a relative basis. Materials and telecommunication
services detracted from portfolio performance due to underperformance relative
to the benchmark sector.
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.
GLOBAL DIVIDEND TARGET 15
Global
Dividend MSCI DTR
Target 15 World Index
- --------- -----------
10000 10000
10196 8682
9949 7221
8486 5785
11380 7701
14274 8834
15726 9672
21771 11613
24676 12663
14119 7507
19918 9759
RETURN COMPARISON
PERIODS ENDED
DEC. 31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ---------------
Global Dividend Target 15
Portfolio (a) 10/6/99 41.06% 6.89% 7.13% 6.65%
MSCI Developed Markets
World Index (b) 29.99% 2.01% -0.24% 1.06%
(a) Effective May 2, 2005, based upon the determination of the Registrant's
Board of Trustees, the Portfolio changed its name from the Global Target 15
Portfolio to the Global Dividend Target 15 Portfolio.
(b) 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).
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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
CITIC Pacific Ltd. 11.0%
Bank of East Asia (The) Ltd. 9.1
BOC Hong Kong (Holdings) Ltd. 8.9
Logica PLC 8.3
GKN PLC 7.9
Cathay Pacific Airways Ltd. 7.4
Alcoa, Inc. 6.6
ITV PLC 6.3
E.I. du Pont de Nemours & Co. 5.9
COSCO Pacific Ltd. 5.6
----
Total 77.0%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Industrials 28.3%
Financials 23.0
Consumer Discretionary 18.5
Materials 12.6
Information Technology 8.3
Telecommunication Services 4.8
Health Care 4.5
-----
Total 100.0%
=====
Page 11
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO
Over the twelve months ended December 31, 2009, the S&P(R) Target 24 Portfolio
posted a total return of 13.77% versus 26.47% for the Standard & Poor's 500
Index ("S&P 500") over the same period. The NAV increased from $6.97 to $7.93
during the period.
Of the portfolio's 24 stocks, 20 advanced and 4 declined over the period. The
top three performing stocks, by contribution to return, were Microchip
Technology, Inc. (MCHP), Altera Corp. (ALTR) and PepsiCo, Inc. (PEP). The
worst-performing stocks, by percentage loss, were Gilead Sciences, Inc. (GILD),
Lexmark International, Inc. (LKX) and Amgen, Inc. (AMGN).
Consumer staples stocks added to relative performance due to a positive
selection effect. However, a negative selection effect in health care and
information technology stocks led to relative underperformance. An underweight
position in the materials sector, which was the second best performing sector in
the S&P 500, also detracted from portfolio performance. Stock selection in the
consumer discretionary sector further weighed on 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.
S&P TARGET 24
S&P Target 24 S&P 500 Index
- ------------- -------------
10000 10000
8064 9090
6078 8009
5190 6239
6441 8029
7320 8902
7625 9339
7844 10815
8174 11409
5898 7188
6710 9090
RETURN COMPARISON
PERIODS ENDED
DEC. 31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ---------------
S&P(R) Target 24 Portfolio
(a) 10/6/99 13.77% -1.75% -3.92% -2.24%
S&P 500(R) Index (b) 26.47% 0.42% -0.95% 0.10%
(a) Effective April 30, 2002, based upon the determination of the Registrant'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.
(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 12
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Chevron Corp. 11.5%
PepsiCo, Inc. 9.8
Altera Corp. 9.3
Travelers (The) Co., Inc. 8.0
Microchip Technology, Inc. 7.3
Amgen, Inc. 7.3
McDonald's Corp. 6.6
Dover Corp. 4.8
Gilead Sciences, Inc. 4.7
W.W. Grainger, Inc. 4.6
----
Total 73.9%
====
% OF TOTAL
SECTOR INVESTMENTS
- --------------- -----------
Information Technology 19.5%
Consumer Staples 15.3
Energy 13.7
Financials 13.5
Health Care 13.1
Industrials 12.3
Consumer Discretionary 8.6
Utilities 4.0
-----
Total 100.0%
=====
Page 13
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2009, the NASDAQ(R) Target 15
Portfolio posted a total return of 16.94% versus 54.63% for the NASDAQ(R) 100
Index over the same period. The NAV increased from $6.08 to $7.11 during the
period.
Of the portfolio's 15 stocks, 11 advanced and 4 declined over the period. The
top three performing stocks, by contribution to return, were Check Point
Software Technologies (CHKP), Bed Bath & Beyond, Inc. (BBBY) and Microsoft Corp.
(MSFT). The worst-performing stocks, by percentage loss, were Cephalon, Inc.
(CEPH), Apollo Group, Inc. (APOL) and Gilead Sciences, Inc. (GILD).
An overweight in consumer discretionary stocks helped the portfolio but was
negated by negative stock selection. A significant underweight of the
information technology sector contributed the most to relative underperformance.
Poor stock selection in the health care sector also hurt 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.
NASDAQ TARGET 15
Nasdaq Nasdaq
Target 15 100 Index
- --------- ---------
10000 10000
8822 6317
6336 4257
4678 2659
6363 3976
6192 4403
6397 4486
6966 4813
8479 5739
4164 3353
4870 5185
RETURN COMPARISON
PERIODS ENDED DEC.
31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ------------------
NASDAQ(R) Target 15
Portfolio 10/6/99 16.94% -4.69% -6.94% -3.28%
NASDAQ(R) 100 Index (a) 54.63% 3.32% -6.35% -2.65%
(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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Microsoft Corp. 9.7%
Bed Bath & Beyond, Inc. 9.4
DIRECTV, Class A 9.1
Check Point Software Technologies Ltd. 8.7
Altera Corp. 7.8
Fastenal Co. 7.3
C.H. Robinson Worldwide, Inc. 6.8
Ross Stores, Inc. 6.5
Amgen, Inc. 6.0
Gilead Sciences, Inc. 5.2
----
Total 76.5%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Discretionary 29.8%
Information Technology 26.2
Industrials 23.6
Health Care 16.2
Consumer Staples 4.2
-----
Total 100.0%
=====
Page 15
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the twelve months ended December 31, 2009, the First Trust Target Focus
Four Portfolio posted a total return of 28.79% versus 26.47% for the S&P 500(R)
Index over the same period. The NAV increased from $3.23 to $4.16 during the
period.
Of the portfolio's 128 stocks, 86 advanced and 42 declined over the period. The
top three performing stocks, by contribution to return, were Temple-Inland, Inc.
(TIN), MeadWestvaco Corp. (MWV) and Advanced Medical Optics (EYE). The
worst-performing stocks, by percentage loss, were First BanCorp (FBP), Zions
Bancorporation (ZION) and F.N.B. Corp (FNB).
The portfolio outperformed due to positive stock selection in seven of the ten
S&P 500 sectors. The materials sector was the best performer on a relative basis
due to an overweight position and outperformance. A positive selection effect in
the energy and health care sectors also added to portfolio performance.
Financial stocks posted the worst relative contribution over the period due to a
combination of an overweight position and underperformance. An underweight in
technology also held back performance as the sector was the top performer in 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.
TARGET FOCUS FOUR
Target
Focus Four S&P 500 Index
- ---------- -------------
10000 10000
7360 9090
4737 8009
2991 6239
4096 8029
4561 8902
4588 9339
4772 10815
5044 11409
2833 7188
3649 9090
RETURN COMPARISON
PERIODS ENDED DEC.
31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ------------------
First Trust Target Focus Four
Portfolio (a) 10/6/99 28.79% -4.36% -9.59% -8.21%
S&P 500(R) Index (b) 26.47% 0.42% -0.95% 0.10%
(a) Effective November 19, 2007, based upon the determination of the
Registrant'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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Johnson & Johnson 6.3%
McDonald's Corp. 5.7
Amgen, Inc. 5.0
MeadWestvaco Corp. 3.1
Temple-Inland, Inc. 2.5
Eastman Chemical Co. 2.3
Timken (The) Co. 2.1
R.R. Donnelley & Sons Co. 1.9
Universal Corp. 1.7
Textron, Inc. 1.7
----
Total 32.3%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Health Care 16.0%
Materials 13.8
Consumer Discretionary 13.3
Financials 13.3
Energy 11.8
Industrials 11.0
Information Technology 8.9
Utilities 7.7
Consumer Staples 2.9
Telecommunication Services 1.3
-----
Total 100.0%
=====
Page 17
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the twelve months ended December 31, 2009, the Value Line(R) Target 25
Portfolio posted a total return of 7.12% versus 28.36% for the Russell 3000(R)
Index over the same period. The NAV increased from $2.67 to $2.86 during the
period.
Of the portfolio's 25 stocks, 14 advanced and 11 declined over the period. The
top three performing stocks, by contribution to return, were Netflix, Inc.
(NFLX), Dollar Tree, Inc. (DLTR) and AutoZone, Inc. (AZO). The worst-performing
stocks, by percentage loss, were Apollo Group, Inc. (APOL), Myriad Genetics,
Inc. (MYGN) and Spartan Stores, Inc. (SPTN).
An overweight position, combined with negative selection, caused the consumer
discretionary sector to be the worst-performing group in the portfolio. An
underweight in technology stocks, along with underperformance from the group,
also weighed on portfolio returns.
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.
VALUELINE TARGET 25
Value Line Russell
Target 25 3000 Index
- ---------- ----------
10000 10000
5707 9253
2541 8199
1451 6433
2045 8432
2486 9440
2976 10021
3062 11605
3619 12214
1635 7658
1751 9829
RETURN COMPARISON
PERIODS ENDED DEC.
31, 2009
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ------------ -------------- -------------- ------------------
Value Line(R) Target 25
Portfolio (a) 10/6/99 7.12% -6.77% -15.99% -11.51%
Russell 3000 Index (b) 28.36% 0.81% -0.18% 0.99%
(a) Effective April 30, 2002, based upon the determination of the Registrant'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.
(b) 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).
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 - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
AutoZone, Inc. 8.1%
Johnson & Johnson 7.6
McDonald's Corp. 7.1
Amgen, Inc. 6.9
Dollar Tree, Inc. 6.8
DeVry, Inc. 6.3
SAIC, Inc. 5.9
Family Dollar Stores, Inc. 5.8
ITT Educational Services, Inc. 5.7
Apollo Group, Inc., Class A 5.5
----
Total 65.7%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Discretionary 62.4%
Health Care 20.8
Information Technology 7.5
Materials 6.1
Consumer Staples 3.2
-----
Total 100.0%
=====
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
DECEMBER 31, 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 July 1, 2009 to December 31, 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
PAID EXPENSES
BEGINNING ENDING DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD (a) ACCOUNT ACCOUNT PERIOD (a)
VALUE VALUE 07/01/2009- VALUE VALUE 07/01/2009- EXPENSE
07/01/2009 12/31/2009 12/31/2009 07/01/2009 12/31/2009 12/31/2009 RATIO (b)
---------- ---------- ----------- ---------- ---------- ----------- ---------
Target Managed VIP Portfolio ..... $1,000.00 $1,183.40 $8.09 $1,000.00 $1,017.80 $7.48 1.47%
The Dow(R) DART 10 Portfolio ..... 1,000.00 1,260.60 8.38 1,000.00 1,017.80 7.48 1.47
The Dow(R) Target Dividend
Portfolio ..................... 1,000.00 1,406.00 8.91 1,000.00 1,017.80 7.48 1.47
Global Dividend Target 15
Portfolio ..................... 1,000.00 1,272.40 8.42 1,000.00 1,017.80 7.48 1.47
S&P(R) Target 24 Portfolio ....... 1,000.00 1,176.60 8.06 1,000.00 1,017.80 7.48 1.47
NASDAQ(R) Target 15 Portfolio .... 1,000.00 1,171.30 8.05 1,000.00 1,017.80 7.48 1.47
First Trust Target Focus
Four Portfolio ................ 1,000.00 1,280.00 7.87 1,000.00 1,018.30 6.97 1.37
Value Line(R) Target 25
Portfolio ..................... 1,000.00 1,067.20 7.66 1,000.00 1,017.80 7.48 1.47
(a) Expenses are equal to the Portfolio's annualized expense ratio multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 99.0%
AEROSPACE & DEFENSE - 0.6%
3,294 Aerovironment, Inc. (b) ...................... $ 95,789
1,372 American Science & Engineering, Inc. ......... 104,052
--------------
199,841
--------------
AIR FREIGHT & LOGISTICS - 0.6%
2,987 C.H. Robinson Worldwide, Inc. ................ 175,426
--------------
AIRLINES - 0.7%
3,277 Allegiant Travel Co. (b) ..................... 154,576
7,441 Hawaiian Holdings, Inc. (b) .................. 52,087
--------------
206,663
--------------
AUTOMOBILES - 1.5%
8,558 Daimler AG ................................... 456,141
--------------
BEVERAGES - 1.8%
1,329 Hansen Natural Corp. (b) ..................... 51,034
8,302 PepsiCo, Inc. ................................ 504,762
--------------
555,796
--------------
BIOTECHNOLOGY - 11.3%
43,308 Amgen, Inc. (b) .............................. 2,449,933
1,260 Cephalon, Inc. (b) ........................... 78,637
21,981 Gilead Sciences, Inc. (b) .................... 951,338
1,384 Myriad Genetics, Inc. (b) .................... 36,122
302 Myriad Pharmaceuticals, Inc. (b) ............. 1,519
--------------
3,517,549
--------------
CAPITAL MARKETS - 4.6%
11,830 Credit Suisse Group AG, ADR .................. 581,563
8,036 Deutsche Bank AG ............................. 569,833
3,852 Stifel Financial Corp. (b) ................... 228,192
4,128 SWS Group, Inc. .............................. 49,949
--------------
1,429,537
--------------
CHEMICALS - 0.2%
2,939 Innophos Holdings, Inc. ...................... 67,568
--------------
COMMERCIAL BANKS - 8.2%
26,899 Banco Bilbao Vizcaya Argentaria S.A., ADR..... 485,258
34,057 Banco Santander S.A., ADR .................... 559,897
15,278 BNP Paribas, ADR ............................. 613,564
5,047 Community Bank System, Inc. .................. 97,457
3,262 First Financial Bankshares, Inc. ............. 176,898
7,625 HSBC Holdings PLC, ADR ....................... 435,311
10,010 Old National Bancorp ......................... 124,424
4,299 S&T Bancorp, Inc. ............................ 73,126
--------------
2,565,935
--------------
COMMERCIAL SERVICES & SUPPLIES - 0.2%
1,994 Cintas Corp. ................................. 51,944
--------------
COMPUTERS & PERIPHERALS - 0.5%
5,763 Lexmark International, Inc., Class A (b) ..... 149,723
--------------
See Notes to Financial Statements
Page 21
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
CONSUMER FINANCE - 0.7%
6,219 EZCORP, Inc., Class A (b) .................... $ 107,029
4,698 First Cash Financial Services, Inc. (b) ...... 104,248
--------------
211,277
--------------
CONTAINERS & PACKAGING - 1.1%
7,007 Rock-Tenn Co., Class A ....................... 353,223
--------------
DIVERSIFIED CONSUMER SERVICES - 1.6%
5,500 Apollo Group, Inc., Class A (b) .............. 333,190
1,167 DeVry, Inc. .................................. 66,204
625 ITT Educational Services, Inc. (b) ........... 59,975
216 Strayer Education, Inc. ...................... 45,898
--------------
505,267
--------------
DIVERSIFIED FINANCIAL SERVICES - 0.3%
3,470 Moody's Corp. ................................ 92,996
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 4.0%
32,291 AT&T, Inc. ................................... 905,117
16,319 BT Group PLC, ADR ............................ 354,775
--------------
1,259,892
--------------
ELECTRIC UTILITIES - 0.4%
3,730 Southern Co. ................................. 124,284
--------------
ENERGY EQUIPMENT & SERVICES - 0.1%
547 ENSCO International PLC, ADR ................. 21,847
--------------
FOOD & STAPLES RETAILING - 0.2%
1,029 Nash Finch Co. ............................... 38,166
1,974 Spartan Stores, Inc. ......................... 28,208
--------------
66,374
--------------
FOOD PRODUCTS - 1.0%
1,902 Campbell Soup Co. ............................ 64,287
6,571 TreeHouse Foods, Inc. (b) .................... 255,349
--------------
319,636
--------------
GAS UTILITIES - 0.4%
3,469 Laclede Group (The), Inc. .................... 117,148
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.9%
4,268 Cyberonics, Inc. (b) ......................... 87,238
5,365 Greatbatch, Inc. (b) ......................... 103,169
4,446 Merit Medical Systems, Inc. (b) .............. 85,763
--------------
276,170
--------------
HEALTH CARE PROVIDERS & SERVICES - 0.9%
4,491 Gentiva Health Services, Inc. (b) ............ 121,302
4,955 Hanger Orthopedic Group, Inc. (b) ............ 68,528
2,864 LHC Group, Inc. (b) .......................... 96,259
--------------
286,089
--------------
See Notes to Financial Statements
Page 22
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
HEALTH CARE TECHNOLOGY - 1.1%
1,719 Computer Programs & Systems, Inc.............. $ 79,160
4,497 Quality Systems, Inc.......................... 282,367
--------------
361,527
--------------
HOTELS, RESTAURANTS & LEISURE - 7.9%
38,290 McDonald's Corp............................... 2,390,828
906 Panera Bread Co., Class A (b)................. 60,675
--------------
2,451,503
--------------
HOUSEHOLD PRODUCTS - 0.7%
2,713 Colgate-Palmolive Co.......................... 222,873
--------------
INDUSTRIAL CONGLOMERATES - 2.8%
57,628 General Electric Co........................... 871,912
--------------
INSURANCE - 5.0%
30,372 Allianz SE, ADR............................... 378,131
14,614 AXA S.A., ADR................................. 346,059
2,299 Infinity Property & Casualty Corp............. 93,431
6,909 Swiss Reinsurance Co., ADR.................... 332,945
8,301 Travelers (The) Co., Inc...................... 413,888
--------------
1,564,454
--------------
INTERNET & CATALOG RETAIL - 0.5%
1,590 Netflix, Inc. (b)............................. 87,673
3,515 PetMed Express, Inc........................... 61,969
--------------
149,642
--------------
IT SERVICES - 0.7%
5,455 CSG Systems International, Inc. (b)........... 104,136
853 ManTech International Corp., Class A (b)...... 41,183
3,300 SAIC, Inc. (b)................................ 62,502
--------------
207,821
--------------
LIFE SCIENCES TOOLS & SERVICES - 0.3%
6,637 Luminex Corp. (b)............................. 99,090
--------------
MACHINERY - 4.6%
20,881 Caterpillar, Inc.............................. 1,190,008
5,987 Dover Corp.................................... 249,119
--------------
1,439,127
--------------
MEDIA - 2.0%
18,336 DIRECTV, Class A (b).......................... 611,506
--------------
METALS & MINING - 0.2%
784 Compass Minerals International, Inc........... 52,677
--------------
MULTI-UTILITIES - 0.2%
1,152 Sempra Energy................................. 64,489
1,015 TECO Energy, Inc.............................. 16,463
--------------
80,952
--------------
See Notes to Financial Statements
Page 23
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
MULTILINE RETAIL - 0.4%
1,497 Dollar Tree, Inc. (b) ........................ $ 72,305
1,786 Family Dollar Stores, Inc. ................... 49,704
--------------
122,009
--------------
OIL, GAS & CONSUMABLE FUELS - 10.3%
7,107 BP PLC, ADR .................................. 411,993
7,724 Chevron Corp. ................................ 594,671
1,778 Clayton Williams Energy, Inc. (b) ............ 62,301
6,837 ENI SpA, ADR ................................. 346,021
978 EOG Resources, Inc. .......................... 95,159
11,597 Exxon Mobil Corp. ............................ 790,799
5,669 Goodrich Petroleum Corp. (b) ................. 138,040
19,816 StatoilHydro ASA, ADR ........................ 493,617
8,729 VAALCO Energy, Inc. (b) ...................... 39,717
8,752 World Fuel Services Corp. .................... 234,466
--------------
3,206,784
--------------
PHARMACEUTICALS - 4.6%
1,851 Forest Laboratories, Inc. (b) ................ 59,436
19,253 Johnson & Johnson ............................ 1,240,086
9,729 Questcor Pharmaceuticals, Inc. (b) ........... 46,213
12,444 ViroPharma, Inc. (b) ......................... 104,405
--------------
1,450,140
--------------
PROFESSIONAL SERVICES - 0.5%
1,770 Dun & Bradstreet (The), Corp. ................ 149,335
--------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.6%
2,373 Public Storage ............................... 193,281
--------------
ROAD & RAIL - 1.1%
3,874 Arkansas Best Corp. .......................... 114,012
4,939 Genesee & Wyoming Inc., Class A (b) .......... 161,209
1,796 J.B. Hunt Transport Services, Inc. ........... 57,957
--------------
333,178
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 3.1%
26,399 Altera Corp. ................................. 597,409
13,012 Microchip Technology, Inc. ................... 378,129
--------------
975,538
--------------
SOFTWARE - 6.2%
3,867 Check Point Software Technologies Ltd. (b) ... 131,014
58,899 Microsoft Corp. .............................. 1,795,831
--------------
1,926,845
--------------
See Notes to Financial Statements
Page 24
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 2.3%
1,197 AutoZone, Inc. (b) ........................... $ 189,210
4,630 Bed Bath & Beyond, Inc. (b) .................. 178,857
6,633 Hot Topic, Inc. (b) .......................... 42,186
1,840 Jos. A. Bank Clothiers, Inc. (b) ............. 77,630
2,309 Ross Stores, Inc. ............................ 98,617
1,346 Tractor Supply Co. (b) ....................... 71,284
15,488 Wet Seal (The), Inc., Class A (b) ............ 53,434
--------------
711,218
--------------
TEXTILES, APPAREL & LUXURY GOODS - 0.2%
1,594 Coach, Inc. .................................. 58,229
--------------
TRADING COMPANIES & DISTRIBUTORS - 1.5%
6,690 Beacon Roofing Supply, Inc. (b) .............. 107,040
2,647 Fastenal Co. ................................. 110,221
2,466 W.W. Grainger, Inc. .......................... 238,783
--------------
456,044
--------------
WATER UTILITIES - 0.4%
3,165 California Water Service Group ............... 116,535
--------------
TOTAL INVESTMENTS - 99.0%.................... 30,822,546
(Cost $29,269,932) (c)
NET OTHER ASSETS AND LIABILITIES - 1.0% ...... 326,179
--------------
NET ASSETS - 100.0% .......................... $ 31,148,725
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $29,269,932. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$3,248,434 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$1,695,820.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* $30,822,546 $30,822,546 $-- $--
=========== =========== === ===
* 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)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 98.1%
AEROSPACE & DEFENSE - 11.1%
11,214 Boeing (The) Co............................... $ 607,014
--------------
DIVERSIFIED FINANCIAL SERVICES - 9.7%
34,937 Bank of America Corp.......................... 526,151
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 8.4%
16,388 AT&T, Inc..................................... 459,356
--------------
FOOD PRODUCTS - 8.7%
17,392 Kraft Foods, Inc., Class A.................... 472,715
--------------
HOTELS, RESTAURANTS & LEISURE - 8.6%
7,493 McDonald's Corp............................... 467,863
--------------
INDUSTRIAL CONGLOMERATES - 8.1%
29,238 General Electric Co........................... 442,371
--------------
MACHINERY - 11.1%
10,597 Caterpillar, Inc.............................. 603,923
--------------
MEDIA - 12.2%
20,577 Walt Disney (The) Co.......................... 663,608
--------------
METALS & MINING - 12.8%
43,269 Alcoa, Inc.................................... 697,496
--------------
OIL, GAS & CONSUMABLE FUELS - 7.4%
5,886 Exxon Mobil Corp.............................. 401,366
--------------
TOTAL INVESTMENTS - 98.1%...................... 5,341,863
(Cost $4,828,744) (b)
NET OTHER ASSETS AND LIABILITIES - 1.9%....... 105,160
--------------
NET ASSETS - 100.0%........................... $ 5,447,023
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for federal income tax purposes is $4,828,744. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $612,904
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $99,785.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* $5,341,863 $5,341,863 $-- $--
========== ========== === ===
* 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)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 97.8%
CHEMICALS - 13.1%
31,165 Eastman Chemical Co. ......................... $ 1,877,380
41,301 Sensient Technologies Corp. .................. 1,086,216
--------------
2,963,596
--------------
COMMERCIAL BANKS - 19.3%
35,741 BB&T Corp. ................................... 906,749
74,392 F.N.B. Corp. ................................. 505,122
86,352 First BanCorp. ............................... 198,610
102,674 Fulton Financial Corp. ....................... 895,317
120,504 Regions Financial Corp. ...................... 637,466
32,946 SunTrust Banks, Inc. ......................... 668,474
41,535 Zions Bancorporation ......................... 532,894
--------------
4,344,632
--------------
COMMERCIAL SERVICES & SUPPLIES - 7.0%
70,529 R.R. Donnelley & Sons Co. .................... 1,570,681
--------------
ELECTRIC UTILITIES - 9.4%
29,666 American Electric Power Co., Inc. ............ 1,032,080
29,750 Pinnacle West Capital Corp. .................. 1,088,255
--------------
2,120,335
--------------
INDUSTRIAL CONGLOMERATES - 6.1%
73,756 Textron, Inc. ................................ 1,387,350
--------------
MACHINERY - 9.9%
56,725 Briggs & Stratton Corp. ...................... 1,061,325
49,806 Timken (The) Co. ............................. 1,180,900
--------------
2,242,225
--------------
MULTI-UTILITIES - 11.7%
86,906 NiSource, Inc. ............................... 1,336,614
80,232 TECO Energy, Inc. ............................ 1,301,363
--------------
2,637,977
--------------
PAPER & FOREST PRODUCTS - 11.3%
88,939 MeadWestvaco Corp. ........................... 2,546,324
--------------
THRIFTS & MORTGAGE FINANCE - 3.7%
59,275 First Niagara Financial Group, Inc. .......... 824,515
--------------
TOBACCO - 6.3%
31,334 Universal Corp. .............................. 1,429,144
--------------
TOTAL INVESTMENTS - 97.8%.................... 22,066,779
(Cost $20,860,223) (b)
NET OTHER ASSETS AND LIABILITIES - 2.2% ...... 489,761
--------------
NET ASSETS - 100.0% .......................... $ 22,556,540
==============
- ---------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for federal income tax purposes is $20,860,223. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$3,265,910 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$2,059,354.
See Notes to Financial Statements
Page 27
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* $22,066,779 $22,066,779 $-- $--
=========== =========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 28
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 98.4%
HONG KONG - 41.4%
1,066,700 Bank of East Asia (The) Ltd. (b) ............. $ 4,190,594
1,834,849 BOC Hong Kong (Holdings) Ltd. (b) ............ 4,122,303
1,848,000 Cathay Pacific Airways Ltd. (b) (c) .......... 3,431,892
1,906,000 CITIC Pacific Ltd. (b) ....................... 5,090,587
2,022,000 COSCO Pacific Ltd. (b) ....................... 2,566,105
--------------
19,401,481
--------------
UNITED KINGDOM - 31.1%
1,024,631 BT Group PLC (b) ............................. 2,231,469
1,944,640 GKN PLC (b) (c) .............................. 3,642,249
3,449,802 ITV PLC (b) (c) .............................. 2,906,878
894,382 Ladbrokes PLC (b) ............................ 1,978,840
2,098,201 Logica PLC (b) ............................... 3,838,875
--------------
14,598,311
--------------
UNITED STATES - 25.9%
190,332 Alcoa, Inc. .................................. 3,068,152
153,674 Bank of America Corp. ........................ 2,314,330
81,031 E.I. du Pont de Nemours & Co. ................ 2,728,314
128,612 General Electric Co. ......................... 1,945,900
114,626 Pfizer, Inc. ................................. 2,085,047
--------------
12,141,743
--------------
TOTAL INVESTMENTS - 98.4%.................... 46,141,535
(Cost $45,017,137) (d)
NET OTHER ASSETS AND LIABILITIES - 1.6% ...... 743,569
--------------
NET ASSETS - 100.0% .......................... $ 46,885,104
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Security is fair valued in accordance with procedures adopted by the
Registrant's Board of Trustees.
(c) Non-income producing security.
(d) Aggregate cost for federal income tax purposes is $45,017,137. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$7,488,043 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$6,363,645.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A -Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
----------- ----------- ------------ ------------
Common Stocks:
Hong Kong $19,401,481 $ -- $19,401,481 $--
United Kingdom 14,598,311 -- 14,598,311 --
United States 12,141,743 12,141,743 -- --
----------- ----------- ----------- ---
Total Common Stocks $46,141,535 $12,141,743 $33,999,792 $--
=========== =========== =========== ===
See Notes to Financial Statements
Page 29
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Commercial Banks ...................................... 17.7%
Industrial Conglomerates .............................. 15.0
IT Services ........................................... 8.2
Auto Components ....................................... 7.8
Airlines .............................................. 7.3
Metals & Mining ....................................... 6.5
Media ................................................. 6.2
Chemicals ............................................. 5.8
Transportation Infrastructure ......................... 5.5
Diversified Financial Services ........................ 4.9
Diversified Telecommunication Services ................ 4.8
Pharmaceuticals ....................................... 4.5
Hotels, Restaurants & Leisure ......................... 4.2
Net Other Assets and Liabilities ...................... 1.6
-----
100.0%
=====
See Notes to Financial Statements
Page 30
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 98.3%
BEVERAGES - 9.6%
14,657 PepsiCo, Inc................................. $ 891,146
--------------
BIOTECHNOLOGY - 11.8%
11,711 Amgen, Inc. (b).............................. 662,491
9,902 Gilead Sciences, Inc. (b).................... 428,559
--------------
1,091,050
--------------
COMPUTERS & PERIPHERALS - 2.9%
10,169 Lexmark International, Inc., Class A (b)..... 264,191
--------------
DIVERSIFIED FINANCIAL SERVICES - 1.8%
6,126 Moody's Corp................................. 164,177
--------------
ELECTRIC UTILITIES - 2.4%
6,587 Southern Co.................................. 219,479
--------------
ENERGY EQUIPMENT & SERVICES - 0.4%
969 ENSCO International PLC, ADR................. 38,702
--------------
FOOD PRODUCTS - 1.2%
3,355 Campbell Soup Co............................. 113,399
--------------
HOTELS, RESTAURANTS & LEISURE - 6.5%
9,671 McDonald's Corp.............................. 603,857
--------------
HOUSEHOLD PRODUCTS - 4.2%
4,788 Colgate-Palmolive Co......................... 393,334
--------------
INSURANCE - 7.9%
14,651 Travelers (The) Co., Inc..................... 730,499
--------------
MACHINERY - 4.7%
10,566 Dover Corp................................... 439,651
--------------
MULTI-UTILITIES - 1.5%
2,032 Sempra Energy................................ 113,751
1,792 TECO Energy, Inc............................. 29,066
--------------
142,817
--------------
OIL, GAS & CONSUMABLE FUELS - 13.1%
13,633 Chevron Corp................................. 1,049,605
1,726 EOG Resources, Inc........................... 167,940
--------------
1,217,545
--------------
PHARMACEUTICALS - 1.1%
3,266 Forest Laboratories, Inc. (b)................ 104,871
--------------
PROFESSIONAL SERVICES - 2.8%
3,123 Dun & Bradstreet (The), Corp................. 263,488
--------------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 3.7%
4,189 Public Storage............................... 341,194
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 16.3%
37,372 Altera Corp.................................. 845,728
22,973 Microchip Technology, Inc.................... 667,595
--------------
1,513,323
--------------
See Notes to Financial Statements
Page 31
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 0.8%
492 AutoZone, Inc. (b) ........................... $ 77,771
--------------
TEXTILES, APPAREL & LUXURY GOODS - 1.1%
2,814 Coach, Inc. .................................. 102,795
--------------
TRADING COMPANIES & DISTRIBUTORS - 4.5%
4,352 W.W. Grainger, Inc. .......................... 421,404
--------------
TOTAL INVESTMENTS - 98.3%..................... 9,134,693
(Cost $8,175,978) (c)
NET OTHER ASSETS AND LIABILITIES - 1.7%....... 157,583
--------------
NET ASSETS - 100.0% .......................... $ 9,292,276
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $8,175,978. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$1,033,168 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was $74,453.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A -Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* $9,134,693 $9,134,693 $-- $--
========== ========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 32
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 95.3%
AIR FREIGHT & LOGISTICS - 6.4%
3,096 C.H. Robinson Worldwide, Inc. ................ $ 181,828
--------------
BEVERAGES - 4.0%
2,946 Hansen Natural Corp. (b) ..................... 113,126
--------------
BIOTECHNOLOGY - 15.4%
2,866 Amgen, Inc. (b) .............................. 162,130
2,138 Cephalon, Inc. (b) ........................... 133,433
3,217 Gilead Sciences, Inc. (b) .................... 139,232
--------------
434,795
--------------
COMMERCIAL SERVICES & SUPPLIES - 4.4%
4,824 Cintas Corp. ................................. 125,665
--------------
DIVERSIFIED CONSUMER SERVICES - 4.6%
2,134 Apollo Group, Inc., Class A (b) .............. 129,278
--------------
MEDIA - 8.7%
7,367 DIRECTV, Class A (b) ......................... 245,689
--------------
ROAD & RAIL - 4.6%
4,043 J.B. Hunt Transport Services, Inc. ........... 130,468
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 7.5%
9,305 Altera Corp. ................................. 210,572
--------------
SOFTWARE - 17.5%
6,899 Check Point Software Technologies Ltd. (b) ... 233,738
8,537 Microsoft Corp. .............................. 260,293
--------------
494,031
--------------
SPECIALTY RETAIL - 15.2%
6,518 Bed Bath & Beyond, Inc. (b) .................. 251,790
4,118 Ross Stores, Inc. ............................ 175,880
--------------
427,670
--------------
TRADING COMPANIES & DISTRIBUTORS - 7.0%
4,721 Fastenal Co. ................................. 196,582
--------------
TOTAL INVESTMENTS - 95.3%..................... 2,689,704
(Cost $2,056,578) (c)
NET OTHER ASSETS AND LIABILITIES - 4.7% 131,573
--------------
NET ASSETS - 100.0% .......................... $ 2,821,277
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $2,056,578. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was $671,256
and the aggregate gross unrealized depreciation for all securities in which
there was an excess of tax cost over value was $38,130.
See Notes to Financial Statements
Page 33
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* $2,689,704 $2,689,704 $-- $--
========== ========== === ===
* 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)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 98.9%
AUTOMOBILES - 0.9%
896 Daimler AG ................................... $ 47,757
1,604 Honda Motor Co., Ltd., ADR ................... 54,376
--------------
102,133
--------------
BIOTECHNOLOGY - 5.1%
9,723 Amgen, Inc. (b) .............................. 550,030
778 Myriad Genetics, Inc. (b) .................... 20,306
174 Myriad Pharmaceuticals, Inc. (b) ............. 875
--------------
571,211
--------------
BUILDING PRODUCTS - 0.4%
2,549 Gibraltar Industries, Inc. (b) ............... 40,096
1,730 NCI Building Systems, Inc. (b) ............... 3,131
--------------
43,227
--------------
CAPITAL MARKETS - 1.6%
1,241 Credit Suisse Group AG, ADR .................. 61,008
842 Deutsche Bank AG ............................. 59,706
6,448 LaBranche & Co., Inc. (b) .................... 18,312
2,428 UBS AG (b) ................................... 37,658
--------------
176,684
--------------
CHEMICALS - 4.6%
4,193 Eastman Chemical Co. ......................... 252,586
1,409 OM Group, Inc. (b) ........................... 44,229
9,805 PolyOne Corp. (b) ............................ 73,243
5,560 Sensient Technologies Corp. .................. 146,228
--------------
516,286
--------------
COMMERCIAL BANKS - 8.2%
1,348 Bank of Montreal ............................. 71,552
3,895 Barclays PLC, ADR ............................ 68,552
4,811 BB&T Corp. ................................... 122,055
10,012 F.N.B. Corp. ................................. 67,981
11,622 First BanCorp. ............................... 26,731
13,818 Fulton Financial Corp. ....................... 120,493
4,719 Lloyds Banking Group PLC, ADR ................ 15,431
8,618 National Bank of Greece S.A., ADR ............ 44,900
16,216 Regions Financial Corp. ...................... 85,783
2,382 Royal Bank of Scotland Group PLC, ADR (b) .... 22,367
3,607 Sterling Financial Corp. (b) ................. 2,236
4,434 SunTrust Banks, Inc. ......................... 89,966
978 Toronto-Dominion Bank (The) .................. 61,340
3,903 UCBH Holdings, Inc. .......................... 129
1,436 Wintrust Financial Corp. ..................... 44,214
5,587 Zions Bancorporation ......................... 71,681
--------------
915,411
--------------
COMMERCIAL SERVICES & SUPPLIES - 1.9%
9,491 R.R. Donnelley & Sons Co. .................... 211,365
--------------
See Notes to Financial Statements
Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
COMMUNICATIONS EQUIPMENT - 0.3%
1,162 Black Box Corp. .............................. $ 32,931
--------------
CONTAINERS & PACKAGING - 2.8%
739 Rock-Tenn Co., Class A ....................... 37,253
12,958 Temple-Inland, Inc. .......................... 273,543
--------------
310,796
--------------
DIVERSIFIED CONSUMER SERVICES - 2.3%
1,455 Apollo Group, Inc., Class A (b) .............. 88,144
654 DeVry, Inc. .................................. 37,101
350 ITT Educational Services, Inc. (b) ........... 33,586
4,366 Regis Corp. .................................. 67,979
122 Strayer Education, Inc. ...................... 25,924
--------------
252,734
--------------
DIVERSIFIED FINANCIAL SERVICES - 0.3%
3,767 ING Groep N.V., ADR (b) ...................... 36,954
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.3%
1,252 Nippon Telegraph & Telephone Corp., ADR ...... 24,714
2,117 Telecom Italia SpA, ADR ...................... 32,665
4,629 Vimpel-Communications, ADR ................... 86,053
--------------
143,432
--------------
ELECTRIC UTILITIES - 4.1%
3,991 American Electric Power Co., Inc. ............ 138,847
3,091 Great Plains Energy, Inc. .................... 59,934
2,974 Korea Electric Power Corp., ADR (b) .......... 43,242
6,095 NV Energy, Inc. .............................. 75,456
4,006 Pinnacle West Capital Corp. .................. 146,539
--------------
464,018
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS &
COMPONENTS - 5.2%
3,297 Avnet, Inc. (b) .............................. 99,437
2,300 Benchmark Electronics, Inc. (b) .............. 43,493
7,053 Brightpoint, Inc. (b) ........................ 51,840
2,924 Checkpoint Systems, Inc. (b) ................. 44,591
881 Hitachi, Ltd., ADR (b) ....................... 27,029
4,503 Ingram Micro, Inc., Class A (b) .............. 78,577
2,514 Synnex Corp. (b) ............................. 77,079
3,423 Tech Data Corp. (b) .......................... 159,717
--------------
581,763
--------------
ENERGY EQUIPMENT & SERVICES - 3.5%
2,861 Exterran Holdings, Inc. (b) .................. 61,368
1,834 Hornbeck Offshore Services, Inc. (b) ......... 42,696
9,639 ION Geophysical Corp. (b) .................... 57,063
4,008 Pride International, Inc. (b) ................ 127,895
250 Seahawk Drilling, Inc. (b) ................... 5,635
2,251 Unit Corp. (b) ............................... 95,668
--------------
390,325
--------------
See Notes to Financial Statements
Page 36
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
FOOD & STAPLES RETAILING - 0.9%
4,964 Great Atlantic & Pacific Tea (The) Co.,
Inc. (b) ..................................... $ 58,526
576 Nash Finch Co. ............................... 21,364
1,107 Spartan Stores, Inc. ......................... 15,819
--------------
95,709
--------------
FOOD PRODUCTS - 0.3%
940 TreeHouse Foods, Inc. (b) .................... 36,528
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.8%
1,723 Cooper (The) Co., Inc. ....................... 65,681
991 Greatbatch, Inc. (b) ......................... 19,057
--------------
84,738
--------------
HEALTH CARE PROVIDERS & SERVICES - 3.4%
3,302 Cross Country Healthcare, Inc. (b) ........... 32,723
4,827 Kindred Healthcare, Inc. (b) ................. 89,106
2,660 LifePoint Hospitals, Inc. (b) ................ 86,477
4,567 WellCare Health Plans, Inc. (b) .............. 167,883
--------------
376,189
--------------
HEALTH CARE TECHNOLOGY - 0.4%
963 Computer Programs & Systems, Inc. ............ 44,346
--------------
HOTELS, RESTAURANTS & LEISURE - 5.9%
10,130 McDonald's Corp. ............................. 632,517
508 Panera Bread Co., Class A (b) ................ 34,021
--------------
666,538
--------------
HOUSEHOLD DURABLES - 0.4%
1,583 Sony Corp., ADR .............................. 45,907
--------------
INDUSTRIAL CONGLOMERATES - 1.7%
9,927 Textron, Inc. ................................ 186,727
--------------
INSURANCE - 0.9%
3,184 Allianz SE, ADR .............................. 39,641
1,529 AXA S.A., ADR ................................ 36,207
2,957 Presidential Life Corp. ...................... 27,057
--------------
102,905
--------------
INTERNET & CATALOG RETAIL - 0.4%
892 Netflix, Inc. (b) ............................ 49,185
--------------
IT SERVICES - 0.7%
6,220 Ciber, Inc. (b) .............................. 21,459
477 ManTech International Corp., Class A (b) ..... 23,030
1,853 SAIC, Inc. (b) ............................... 35,096
--------------
79,585
--------------
See Notes to Financial Statements
Page 37
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
MACHINERY - 5.0%
2,325 Albany International Corp. ................... $ 52,219
7,637 Briggs & Stratton Corp. ...................... 142,888
3,558 Terex Corp. (b) .............................. 70,484
9,784 Timken (The) Co. ............................. 231,979
3,921 Trinity Industries, Inc. ..................... 68,382
--------------
565,952
--------------
MEDIA - 0.4%
5,745 Live Nation, Inc. (b) ........................ 48,890
--------------
METALS & MINING - 3.2%
1,408 ArcelorMittal ................................ 64,416
438 Compass Minerals International, Inc. ......... 29,429
2,984 Reliance Steel & Aluminum Co. ................ 128,968
390 Rio Tinto PLC, ADR ........................... 84,002
2,116 RTI International Metals, Inc. (b) ........... 53,260
--------------
360,075
--------------
MULTI-UTILITIES - 3.5%
11,697 NiSource, Inc. ............................... 179,900
10,796 TECO Energy, Inc. ............................ 175,111
1,078 Veolia Environnement, ADR .................... 35,445
--------------
390,456
--------------
MULTILINE RETAIL - 0.6%
839 Dollar Tree, Inc. (b) ........................ 40,524
1,002 Family Dollar Stores, Inc. ................... 27,886
--------------
68,410
--------------
OIL, GAS & CONSUMABLE FUELS - 8.1%
2,219 Cimarex Energy Co. ........................... 117,540
3,665 Forest Oil Corp. (b) ......................... 81,546
5,973 Mariner Energy, Inc. (b) ..................... 69,347
3,055 Newfield Exploration Co. (b) ................. 147,343
1,436 Overseas Shipholding Group, Inc. ............. 63,112
2,603 Plains Exploration & Production Co. (b) ...... 71,999
10,995 Quicksilver Resources, Inc. (b) .............. 165,035
1,593 Repsol YPF S.A., ADR ......................... 42,469
2,753 Stone Energy Corp. (b) ....................... 49,692
1,767 Suncor Energy, Inc. .......................... 62,393
1,723 Swift Energy Co. (b) ......................... 41,283
--------------
911,759
--------------
PAPER & FOREST PRODUCTS - 3.1%
11,967 MeadWestvaco Corp. ........................... 342,615
--------------
PHARMACEUTICALS - 6.2%
10,808 Johnson & Johnson ............................ 696,143
--------------
PROFESSIONAL SERVICES - 1.3%
8,046 MPS Group, Inc. (b) .......................... 110,552
1,568 School Specialty, Inc. (b) ................... 36,676
--------------
147,228
--------------
See Notes to Financial Statements
Page 38
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (REITS) - 1.1%
4,167 Cedar Shopping Centers, Inc. ................. $ 28,336
6,249 DiamondRock Hospitality Co. .................. 52,929
4,603 Medical Properties Trust, Inc. ............... 46,030
--------------
127,295
--------------
SEMICONDUCTORS & SEMICONDUCTOR
EQUIPMENT - 2.6%
12,518 Fairchild Semiconductor International,
Inc. (b) ..................................... 125,055
10,542 Integrated Device Technology, Inc. (b) ....... 68,207
6,487 Intersil Corp., Class A ...................... 99,511
--------------
292,773
--------------
SPECIALTY RETAIL - 2.2%
517 AutoZone, Inc. (b) ........................... 81,722
5,355 Cabela's Inc. (b) ............................ 76,362
1,033 Jos. A. Bank Clothiers, Inc. (b) ............. 43,582
756 Tractor Supply Co. (b) ....................... 40,038
--------------
241,704
--------------
THRIFTS & MORTGAGE FINANCE - 1.0%
7,977 First Niagara Financial Group, Inc. .......... 110,960
--------------
TOBACCO - 1.7%
4,217 Universal Corp. .............................. 192,337
--------------
TRADING COMPANIES & DISTRIBUTORS - 0.6%
6,747 United Rentals, Inc. (b) 66,188
--------------
TOTAL INVESTMENTS - 98.9%..................... 11,080,412
(Cost $8,862,717) (c)
NET OTHER ASSETS AND LIABILITIES - 1.1% 123,984
--------------
NET ASSETS - 100.0% .......................... $ 11,204,396
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $8,862,717. As of
December 31, 2009, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$2,419,564 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$201,869.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A -Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* $11,080,412 $11,080,412 $-- $--
=========== =========== === ===
* 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)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - 99.1%
BIOTECHNOLOGY - 10.7%
13,550 Amgen, Inc. (b) .............................. $ 766,523
15,921 Myriad Genetics, Inc. (b) .................... 415,538
3,980 Myriad Pharmaceuticals, Inc. (b) ............. 20,019
--------------
1,202,080
--------------
CONTAINERS & PACKAGING - 2.8%
6,160 Rock-Tenn Co., Class A ....................... 310,526
--------------
DIVERSIFIED CONSUMER SERVICES - 21.8%
10,076 Apollo Group, Inc., Class A (b) .............. 610,404
12,268 DeVry, Inc. .................................. 695,964
6,563 ITT Educational Services, Inc. (b) ........... 629,785
2,407 Strayer Education, Inc. ...................... 511,463
--------------
2,447,616
--------------
FOOD & STAPLES RETAILING - 1.4%
2,344 Nash Finch Co. ............................... 86,939
4,504 Spartan Stores, Inc. ......................... 64,362
--------------
151,301
--------------
FOOD PRODUCTS - 1.8%
5,301 TreeHouse Foods, Inc. (b) .................... 205,997
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7%
4,024 Greatbatch, Inc. (b) ......................... 77,381
--------------
HEALTH CARE TECHNOLOGY - 1.6%
3,927 Computer Programs & Systems, Inc. ............ 180,838
--------------
HOTELS, RESTAURANTS & LEISURE - 10.0%
12,640 McDonald's Corp. ............................. 789,242
4,983 Panera Bread Co., Class A (b) ................ 333,712
--------------
1,122,954
--------------
INTERNET & CATALOG RETAIL - 4.9%
9,940 Netflix, Inc. (b) ............................ 548,092
--------------
IT SERVICES - 7.4%
3,553 ManTech International Corp., Class A (b) ..... 171,539
34,675 SAIC, Inc. (b) ............................... 656,745
--------------
828,284
--------------
METALS & MINING - 3.3%
5,500 Compass Minerals International, Inc. ......... 369,545
--------------
MULTILINE RETAIL - 12.6%
15,711 Dollar Tree, Inc. (b) ........................ 758,841
23,331 Family Dollar Stores, Inc. ................... 649,302
--------------
1,408,143
--------------
PHARMACEUTICALS - 7.6%
13,188 Johnson & Johnson ............................ 849,439
--------------
See Notes to Financial Statements
Page 40
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
DECEMBER 31, 2009
SHARES DESCRIPTION VALUE
- -------------- ---------------------------------------------- --------------
COMMON STOCKS - (CONTINUED)
SPECIALTY RETAIL - 12.5%
5,686 AutoZone, Inc. (b) ........................... $ 898,786
4,201 Jos. A. Bank Clothiers, Inc. (b) ............. 177,240
6,179 Tractor Supply Co. (b) ....................... 327,240
--------------
1,403,266
--------------
TOTAL INVESTMENTS - 99.1%.................... 11,105,462
(Cost $10,380,295) (c)
NET OTHER ASSETS AND LIABILITIES - 0.9% ...... 105,564
--------------
NET ASSETS - 100.0% .......................... $ 11,211,026
==============
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for federal income tax purposes is $10,380,295. As of
December 31, 2009, the aggregate gross unrealized appreciatioN for all
securities in which there was an excess of value over tax cost was
$1,045,808 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$320,641.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2009 is as follows (see Note 2A -Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/09 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* $11,105,462 $11,105,462 $-- $--
=========== =========== === ===
* 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
DECEMBER 31, 2009
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) ............................... $30,822,546 $ 5,341,863 $22,066,779 $ 46,141,535
Cash .................................................... 470,294 150,004 558,225 53,851
Prepaid expenses ........................................ 1,354 278 832 1,574
Receivables:
Dividends ............................................ 29,899 15,450 25,594 51,748
Interest ............................................. 9 3 11 13
Investment securities sold ........................... -- -- -- 749,239
From Investment Advisor .............................. -- -- -- --
----------- ----------- ----------- ------------
Total Assets ...................................... 31,324,102 5,507,598 22,651,441 46,997,960
----------- ----------- ----------- ------------
LIABILITIES:
Payables:
Membership Interests redeemed ........................ 78,853 27,997 34,098 123
Membership Interest servicing fees ................... 26,043 4,508 18,148 39,166
Audit fees ........................................... 17,000 17,000 17,000 17,000
Investment advisory fees ............................. 16,298 116 8,345 25,247
Licensing fees ....................................... 12,805 1,410 -- --
12b-1 service fees ................................... 6,702 1,160 4,750 10,116
Printing fees ........................................ 5,656 5,656 5,656 5,656
Legal fees ........................................... 4,473 785 3,076 6,475
Custodian fees ....................................... 4,284 1,232 1,723 4,205
Administrative fees .................................. 697 121 494 1,052
Other liabilities ....................................... 2,566 590 1,611 3,816
----------- ----------- ----------- ------------
Total Liabilities ................................. 175,377 60,575 94,901 112,856
----------- ----------- ----------- ------------
NET ASSETS .............................................. $31,148,725 $ 5,447,023 $22,556,540 $ 46,885,104
=========== =========== =========== ============
(1) Investments, at cost ................................ $29,269,932 $ 4,828,744 $20,860,223 $ 45,017,137
=========== =========== =========== ============
NET ASSETS CONSIST OF:
Paid-in capital ......................................... $12,984,638 $ 4,183,965 $31,310,853 $ 34,955,980
Accumulated net investment income (loss) ................ 3,423,499 1,287,946 5,923,526 11,104,725
Accumulated net realized gain (loss) on investments
and foreign currency transactions .................... 13,187,974 (538,007) (15,884,395) (302,600)
Net unrealized appreciation (depreciation) on
investments and foreign currency translation ......... 1,552,614 513,119 1,206,556 1,126,999
----------- ----------- ----------- ------------
NET ASSETS .............................................. $31,148,725 $ 5,447,023 $22,556,540 $ 46,885,104
=========== =========== =========== ============
NET ASSET VALUE, offering price and redemption price
of Membership Interests outstanding (Net Assets /
Membership Interests outstanding) .................... $ 8.00 $ 8.66 $ 8.00 $ 19.34
=========== =========== =========== ============
Number of Membership Interests outstanding .............. 3,895,966 629,014 2,819,005 2,423,696
=========== =========== =========== ============
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
- ----------- ----------- ------------ ------------
$ 9,134,693 $ 2,689,704 $ 11,080,412 $11,105,462
219,706 168,502 182,619 147,115
345 149 321 685
8,131 785 9,638 4,394
8 4 14 5
-- -- -- --
-- 1,784 921 --
- ----------- ----------- ------------ -----------
9,362,883 2,860,928 11,273,925 11,257,661
- ----------- ----------- ------------ -----------
33,351 11,983 25,469 117
7,166 2,307 8,734 9,301
17,000 17,000 17,000 17,000
1,089 -- -- 4,367
-- -- 2,748 3,203
1,947 589 2,336 2,359
5,656 5,656 5,656 5,656
1,153 385 1,424 1,736
2,200 1,237 4,639 1,585
202 61 243 245
843 433 1,280 1,066
- ----------- ----------- ------------ -----------
70,607 39,651 69,529 46,635
=========== =========== ============ ===========
$ 9,292,276 $ 2,821,277 $ 11,204,396 $11,211,026
=========== =========== ============ ===========
$ 8,175,978 $ 2,056,578 $ 8,862,717 $10,380,295
=========== =========== ============ ===========
$ 9,468,430 $ 7,330,748 $ 29,728,478 $14,859,709
81,712 (486,084) (27,300) (1,069,635)
(1,216,581) (4,656,513) (20,714,477) (3,304,215)
958,715 633,126 2,217,695 725,167
- ----------- ----------- ------------ -----------
$ 9,292,276 $ 2,821,277 $ 11,204,396 $11,211,026
=========== =========== ============ ===========
$ 7.93 $ 7.11 $ 4.16 $ 2.86
=========== =========== ============ ===========
1,171,405 396,581 2,691,563 3,925,506
=========== =========== ============ ===========
See Notes to Financial Statements
Page 43
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2009
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
INVESTMENT INCOME:
Dividends ............................................... $ 678,625 $ 185,519 $ 767,994 $ 809,696
Foreign withholding tax on dividend income .............. (30,083) -- (1,125) --
Interest ................................................ 200 56 124 335
------------ ----------- ------------ ------------
Total investment income .............................. 648,742 185,575 766,993 810,031
------------ ----------- ------------ ------------
EXPENSES:
Investment advisory fees ................................ 170,003 32,075 107,141 222,992
Membership Interest servicing fees ...................... 99,889 19,038 63,153 131,014
12b-1 service fees ...................................... 70,835 13,364 44,642 92,913
Licensing fees .......................................... 27,565 3,000 11,437 --
Custodian fees .......................................... 19,940 6,933 8,602 18,581
Audit fees .............................................. 17,719 17,719 17,719 17,719
Fund accounting fees .................................... 15,584 2,940 9,821 20,441
Legal fees .............................................. 12,303 2,190 8,575 15,893
Printing fees ........................................... 9,797 9,797 9,797 9,797
Trustees' fees and expenses ............................. 8,386 1,923 5,695 11,336
Administration fees ..................................... 7,367 1,390 4,643 9,663
Other ................................................... 11,032 3,478 6,173 17,756
------------ ----------- ------------ ------------
Total expenses ....................................... 470,420 113,847 297,398 568,105
Fees waived or expenses reimbursed by the
investment advisor ................................ (53,913) (35,264) (34,903) (21,774)
------------ ----------- ------------ ------------
Net expenses ............................................ 416,507 78,583 262,495 546,331
------------ ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS) ............................ 232,235 106,992 504,498 263,700
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments .......................................... (22,513,066) (2,341,892) (12,440,896) (20,387,368)
Foreign currency transactions ........................ -- -- -- 4,826
------------ ----------- ------------ ------------
Net realized gain (loss) ................................ (22,513,066) (2,341,892) (12,440,896) (20,382,539)
------------ ----------- ------------ ------------
Net change in unrealized appreciation
(depreciation) on:
Investments .......................................... 25,267,348 2,584,437 14,234,489 31,295,565
Foreign currency translation ......................... -- -- -- 5,486
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) .... 25,267,348 2,584,437 14,234,489 31,301,051
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ................. 2,754,282 242,545 1,793,593 10,918,512
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................ $ 2,986,517 $ 349,537 $ 2,298,091 $ 11,182,212
============ =========== ============ ============
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
- ----------- ---------- ----------- -------------
$ 178,215 $ 21,953 $ 177,014 $ 105,623
-- -- (2,949) --
91 51 122 65
- ----------- ---------- ----------- ------------
178,306 22,004 174,187 105,688
- ----------- ---------- ----------- ------------
43,809 16,622 45,601 75,121
25,886 9,799 26,742 44,365
18,254 6,926 19,000 31,300
5,000 5,000 5,607 12,900
13,130 6,643 25,467 9,543
17,719 17,719 17,719 17,719
4,016 1,524 4,180 6,886
3,725 1,481 4,649 3,687
9,797 9,797 9,797 9,797
2,597 908 2,464 4,167
1,898 720 1,976 3,255
5,116 4,053 10,600 6,433
- ----------- ---------- ----------- ------------
150,947 81,192 173,802 225,173
(43,615) (40,468) (69,680) (41,127)
- ----------- ---------- ----------- ------------
107,332 40,724 104,122 184,046
- ----------- ---------- ----------- ------------
70,974 (18,720) 70,065 (78,358)
- ----------- ---------- ----------- ------------
(1,747,561) (967,614) (2,068,088) (15,352,910)
-- -- -- --
- ----------- ---------- ----------- ------------
(1,747,561) (967,614) (2,068,088) (15,352,910)
- ----------- ---------- ----------- ------------
2,651,595 1,364,557 4,485,104 16,070,750
-- -- -- --
- ----------- ---------- ----------- ------------
2,651,595 1,364,557 4,485,104 16,070,750
- ----------- ---------- ----------- ------------
904,034 396,943 2,417,016 717,840
- ----------- ---------- ----------- ------------
$ 975,008 $ 378,223 $ 2,487,081 $ 639,482
=========== ========== =========== ============
See Notes to Financial Statements
Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2009
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) ..................... $ 232,235 $ 106,992 $ 504,498 $ 263,700
Net realized gain (loss) ......................... (22,513,066) (2,341,892) (12,440,896) (20,382,539)
Net change in unrealized appreciation
(depreciation) ................................ 25,267,348 2,584,437 14,234,489 31,301,051
------------ ----------- ------------ ------------
Net increase (decrease) in net assets resulting
from operations ............................... 2,986,517 349,537 2,298,091 11,182,212
Net increase (decrease) in net assets from
Membership Interest transactions .............. (4,118,986) (1,983,304) (110,302) (360,605)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets ............ (1,132,469) (1,633,767) 2,187,789 10,821,607
NET ASSETS:
Beginning of period .............................. 32,281,194 7,080,790 20,368,751 36,063,497
------------ ----------- ------------ ------------
End of period .................................... $ 31,148,725 $ 5,447,023 $ 22,556,540 $ 46,885,104
============ =========== ============ ============
Accumulated net investment income (loss) at end of
period ........................................ $ 3,423,499 $ 1,287,946 $ 5,923,526 $ 11,104,725
============ =========== ============ ============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2008
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ----------- ------------ -------------
OPERATIONS:
Net investment income (loss) ..................... $ 644,149 $ 144,173 $ 1,249,371 $ 3,211,120
Net realized gain (loss) ......................... (5,794,495) (1,220,472) (12,445,166) (4,246,072)
Net change in unrealized appreciation
(depreciation) ................................ (41,784,051) (2,114,259) (10,516,246) (43,596,779)
------------- ----------- ------------ -------------
Net increase (decrease) in net assets resulting
from operations ............................... (46,934,397) (3,190,558) (21,712,041) (44,631,731)
Net increase (decrease) in net assets from
Membership Interest transactions .............. (94,918,522) (5,900,561) (40,819,334) (93,046,121)
------------- ----------- ------------ -------------
Net increase (decrease) in net assets ............ (141,852,919) (9,091,119) (62,531,375) (137,677,852)
NET ASSETS:
Beginning of period .............................. 174,134,113 16,171,909 82,900,126 173,741,349
------------- ----------- ------------ -------------
End of period .................................... $ 32,281,194 $ 7,080,790 $ 20,368,751 $ 36,063,497
============= =========== ============ =============
Accumulated net investment income (loss) at end of
period ........................................ $ 3,191,264 $ 1,180,954 $ 5,419,028 $ 10,841,025
============= =========== ============ =============
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
- ----------- ---------- ------------ -------------
$ 70,974 $ (18,720) $ 70,065 $ (78,358)
(1,747,561) (967,614) (2,068,088) (15,352,910)
2,651,595 1,364,557 4,485,104 16,070,750
- ----------- ---------- ----------- ------------
975,008 378,223 2,487,081 639,482
559,205 (733,794) 4,009,767 (4,614,843)
- ----------- ---------- ----------- ------------
1,534,213 (355,571) 6,496,848 (3,975,361)
7,758,063 3,176,848 4,707,548 15,186,387
- ----------- ---------- ----------- ------------
$ 9,292,276 $2,821,277 $11,204,396 $ 11,211,026
=========== ========== =========== ============
$ 81,712 $ (486,084) $ (27,300) $ (1,069,635)
=========== ========== =========== ============
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 YEAR ENDED DECEMBER 31, 2009
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- --------------- ------------
AMOUNT:
Sold ...................... $ 8,235,090 $ 1,591,888 $ 8,423,668 $ 14,800,807
Redeemed .................. (12,354,076) (3,575,192) (8,533,970) (15,161,412)
------------ ----------- ----------- ------------
Net increase (decrease) ... $ (4,118,986) $(1,983,304) $ (110,302) $ (360,605)
============ =========== =========== ============
MEMBERSHIP INTEREST:
Sold ...................... 1,168,321 224,581 1,282,194 876,371
Redeemed .................. (1,831,373) (527,673) (1,370,531) (1,083,624)
------------ ----------- ----------- ------------
Net increase (decrease) ... (663,052) (303,092) (88,337) (207,253)
============ =========== =========== ============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2008
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ --------------- -------------
AMOUNT:
Sold ...................... $ 20,087,877 $ 4,345,016 $ 17,805,841 $ 15,396,588
Redeemed .................. (115,006,399) (10,245,577) (58,625,175) (108,442,709)
------------- ------------ ------------ -------------
Net increase (decrease) ... $ (94,918,522) $ (5,900,561) $(40,819,334) $ (93,046,121)
============= ============ ============ =============
MEMBERSHIP INTEREST:
Sold ...................... 1,828,674 484,192 1,709,948 704,290
Redeemed .................. (10,846,615) (1,073,926) (5,835,950) (5,323,652)
------------- ------------ ------------ -------------
Net increase (decrease) ... (9,017,941) (589,734) (4,126,002) (4,619,362)
============= ============ ============ =============
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
- ----------- ----------- ------------ -------------
$ 4,597,520 $ 3,281,967 $ 7,865,703 $ 1,888,882
(4,038,315) (4,015,761) (3,855,936) (6,503,725)
- ----------- ----------- ----------- -----------
$ 559,205 $ (733,794) $ 4,009,767 $(4,614,843)
=========== =========== =========== ===========
657,704 574,064 2,380,561 689,948
(598,650) (700,303) (1,144,602) (2,460,967)
- ----------- ----------- ----------- -----------
59,054 (126,239) 1,235,959 (1,771,019)
=========== =========== =========== ===========
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
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
---------- -------- -------- -------- --------
Net asset value, beginning of period ....... $ 7.08 $ 12.83 $ 11.72 $ 10.51 $ 9.80
------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............... 0.06(a) 0.08(a) 0.07(a) 0.06 0.03
Net realized and unrealized gain (loss) .... 0.86 (5.83) 1.04 1.15 0.68
------- ------- -------- -------- --------
Total from investment operations ........... 0.92 (5.75) 1.11 1.21 0.71
------- ------- -------- -------- --------
Net asset value, end of period ............. $ 8.00 $ 7.08 $ 12.83 $ 11.72 $ 10.51
======= ======= ======== ======== ========
TOTAL RETURN (b) ........................... 12.99%(c) (44.82)%(c) 9.47% 11.51% 7.24%(c)
======= ======= ======== ======== ========
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ....... $31,149 $32,281 $174,134 $203,868 $182,892
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed .............................. 1.66% 1.51% 1.35% 1.37% 1.48%
Ratio of expenses to average net assets .... 1.47% 1.47% 1.35% 1.37% 1.47%
Ratio of net investment income (loss)
to average net assets ................... 0.82% 0.75% 0.53% 0.54% 0.26%
Portfolio turnover rate .................... 111% 155% 88% 94% 76%
- ----------
(a) Per Membership Interest values have been calculated using the average share
method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 50
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
-------- -------- -------- -------- --------
Net asset value, beginning of period ........ $ 7.60 $ 10.63 $ 10.56 $ 8.41 $ 8.69
------ ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) ............ 0.14 0.13 0.11 0.14 0.14
Net realized and unrealized gain (loss) ..... 0.92 (3.16) (0.04) 2.01 (0.42)
------ ------- ------- ------- --------
Total from investment operations ............ 1.06 (3.03) 0.07 2.15 (0.28)
------ ------- ------- ------- --------
Net asset value, end of period .............. $ 8.66 $ 7.60 $ 10.63 $ 10.56 $ 8.41
====== ======= ======= ======= ========
TOTAL RETURN (b) ............................ 13.95%(c) (28.50)%(c) 0.66%(c) 25.56% (3.22)%(c)
====== ======= ======= ======= ========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
DATA:
Net assets, end of period (in 000's) ........ $5,447 $ 7,081 $16,172 $27,955 $11,611
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................... 2.13% 1.81% 1.56% 1.47% 1.59%
Ratio of expenses to average net assets ..... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets .................... 2.00% 1.42% 1.01% 1.47% 1.66%
Portfolio turnover rate ..................... 108% 105% 98% 82% 145%
- ----------
(a) Per Membership Interest values have been calculated using the average share
method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 51
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/09 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) (b) ............ 0.18 0.28 0.25 0.23 0.12
Net realized and unrealized gain (loss) ..... 0.81 (5.06) (0.12) 1.56 (0.25)
------- ------- ------- -------- -------
Total from investment operations ............ 0.99 (4.78) 0.13 1.79 (0.13)
------- ------- ------- -------- -------
Net asset value, end of period .............. $ 8.00 $ 7.01 $ 11.79 $ 11.66 $ 9.87
======= ======= ======= ======== =======
TOTAL RETURN (c) ............................ 14.12%(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) ........ $22,557 $20,369 $82,900 $100,906 $58,438
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................... 1.67% 1.47% 1.36% 1.37% 1.52%(e)
Ratio of expenses to average net assets ..... 1.47% 1.47% 1.36% 1.37% 1.47%(e)
Ratio of net investment income (loss)
to average net assets .................... 2.83% 2.76% 2.06% 2.11% 2.00%(e)
Portfolio turnover rate ..................... 109% 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
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05(a)
-------- -------- -------- -------- --------
Net asset value, beginning of period ........ $ 13.71 $ 23.96 $ 21.14 $ 15.27 $ 13.86
------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) ............ 0.11 0.72 0.60 0.63 0.35
Net realized and unrealized gain (loss) ..... 5.52 (10.97) 2.22 5.24 1.06
------- ------- -------- -------- -------
Total from investment operations ............ 5.63 (10.25) 2.82 5.87 1.41
------- ------- -------- -------- -------
Net asset value, end of period .............. $ 19.34 $ 13.71 $ 23.96 $ 21.14 $ 15.27
======= ======= ======== ======== =======
TOTAL RETURN (c) ............................ 41.06%(d) (42.78)%(d) 13.34% 38.44% 10.17%(d)
======= ======= ======== ======== =======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $46,885 $36,063 $173,741 $128,836 $36,791
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................... 1.53% 1.53% 1.39% 1.47% 1.61%
Ratio of expenses to average net assets ..... 1.47% 1.47% 1.39% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ....................... 0.71% 3.47% 2.56% 3.45% 2.49%
Portfolio turnover rate ..................... 84% 105% 60% 33% 70%
- ----------
(a) Effective May 2, 2005, based upon the determination of the Registrant's
Board of Trustees, the Portfolio changed its name from the Global Target 15
Portfolio to the Global Dividend Target 15 Portfolio.
(b) Per Membership Interest values have been calculated using the average share
method.
(c) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 53
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
-------- -------- -------- -------- --------
Net asset value, beginning of period ........ $ 6.97 $ 9.66 $ 9.28 $ 9.02 $ 8.66
------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ................ 0.07(a) 0.01 0.04(a) (0.04) 0.02
Net realized and unrealized gain (loss) ..... 0.89 (2.70) 0.34 0.30 0.34
------ ------- ------- ------- -------
Total from investment operations ............ 0.96 (2.69) 0.38 0.26 0.36
------ ------- ------- ------- -------
Net asset value, end of period .............. $ 7.93 $ 6.97 $ 9.66 $ 9.28 $ 9.02
====== ======= ======= ======= =======
TOTAL RETURN (b) (c) ........................ 13.77% (27.85)% 4.10% 2.88% 4.16%
====== ======= ======= ======= =======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $9,292 $ 7,758 $15,789 $16,057 $18,049
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................... 2.07% 1.83% 1.55% 1.56% 1.58%
Ratio of expenses to average net assets ..... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ....................... 0.97% 0.10% 0.43% (0.40)% 0.20%
Portfolio turnover rate ..................... 142% 202% 115% 106% 113%
- ----------
(a) Per Membership Interest values have been calculated using the average share
method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 54
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
-------- -------- -------- -------- --------
Net asset value, beginning of period ........ $ 6.08 $ 12.38 $ 10.17 $ 9.34 $ 9.04
------ ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) ............ (0.04) (0.07) (0.04) (0.11) (0.07)
Net realized and unrealized gain (loss) ..... 1.07 (6.23) 2.25 0.94 0.37
------ ------- ------- ------ ------
Total from investment operations ............ 1.03 (6.30) 2.21 0.83 0.30
------ ------- ------- ------ ------
Net asset value, end of period .............. $ 7.11 $ 6.08 $ 12.38 $10.17 $ 9.34
====== ======= ======= ====== ======
TOTAL RETURN (b)(c) ......................... 16.94% (50.89)% 21.73% 8.89% 3.32%
====== ======= ======= ====== ======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $2,821 $ 3,177 $11,316 $7,318 $6,552
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................... 2.93% 2.13% 1.76% 1.84% 1.83%
Ratio of expenses to average net assets ..... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ....................... (0.68)% (0.79)% (0.34)% (1.08)% (0.80)%
Portfolio turnover rate ..................... 194% 181% 161% 92% 175%
- ----------
(a) Per Membership Interest values have been calculated using the average share
method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 55
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07(a) 12/31/06 12/31/05
-------- -------- ----------- -------- --------
Net asset value, beginning of period ....... $ 3.23 $ 5.75 $ 5.44 $ 5.23 $ 5.20
------- ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) ........... 0.03 0.07 0.09 0.06 (0.01)
Net realized and unrealized gain (loss) .... 0.90 (2.59) 0.22 0.15 0.04
------- ------- ------- ------ ------
Total from investment operations ........... 0.93 (2.52) 0.31 0.21 0.03
------- ------- ------- ------ ------
Net asset value, end of period. ............ $ 4.16 $ 3.23 $ 5.75 $ 5.44 $ 5.23
======= ======= ======= ====== ======
TOTAL RETURN (c) (d) ....................... 28.79% (43.83)% 5.70% 4.02% 0.58%
======= ======= ======= ====== ======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ....... $11,204 $ 4,708 $12,708 $5,734 $7,004
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ..................... 2.29% 2.97% 1.92% 1.79% 1.69%
Ratio of expenses to average net assets .... 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss)
to average net assets ................... 0.92% 1.40% 1.54% 1.14% (0.16)%
Portfolio turnover rate .................... 81% 248% 130% 87% 92%
- ----------
(a) Effective on November 19, 2007, the Portfolio changed its name from First
Trust 10 Uncommon Values Portfolio to First Trust Target Focus Four
Portfolio. The Portfolio's investment strategy was also changed. The
performance figures provided reflect the Portfolio's performance both prior
to and after the name change and the change in investment strategy.
(b) Per Membership Interest values have been calculated using the average share
method.
(c) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(d) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 56
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
-------- -------- -------- -------- --------
Net asset value, beginning of period ....... $ 2.67 $ 5.91 $ 5.00 $ 4.86 $ 4.06
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............... (0.02)(a) (0.01)(a) (0.02)(a) (0.04) (0.02)(a)
Net realized and unrealized gain (loss) .... 0.21 (3.23) 0.93 0.18 0.82
------- ------- ------- ------- -------
Total from investment operations ........... 0.19 (3.24) 0.91 0.14 0.80
------- ------- ------- ------- -------
Net asset value, end of period ............. $ 2.86 $ 2.67 $ 5.91 $ 5.00 $ 4.86
======= ======= ======= ======= =======
TOTAL RETURN (b) ........................... 7.12%(c) (54.82)%(c) 18.20% 2.88% 19.70%(c)
======= ======= ======= ======= =======
RATIOS TO AVERAGE NET
ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ....... $11,211 $15,186 $43,998 $43,776 $54,072
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ..................... 1.80% 1.51% 1.41% 1.41% 1.49%
Ratio of expenses to average net assets .... 1.47% 1.47% 1.41% 1.41% 1.47%
Ratio of net investment income (loss)
to average net assets.................... (0.63)% (0.22)% (0.37)% (0.88)% (0.45)%
Portfolio turnover rate .................... 119% 142% 110% 124% 97%
- ----------
(a) Per Membership Interest values have been calculated using the average share
method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements
Page 57
NOTES TO FINANCIAL STATEMENTS
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009
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 a Portfolio values its assets,
that could materially affect NAV, First Trust may use a fair value method to
value such 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 asked 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
DECEMBER 31, 2009
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.
The Portfolios are subject to fair value accounting standards that define fair
value, establish the framework for measuring fair value and provide a
three-level hierarchy for fair valuation based upon the inputs to the valuation
as of the measurement date. The three levels of the fair value hierarchy are as
follows:
- Level 1 - Level 1 inputs are quoted prices in active markets for
identical securities. An active market is a market in which
transactions for the security occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
- Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
- Quoted prices for similar securities in active markets.
- Quoted prices for identical or similar securities in markets that
are non-active. A non-active market is a market where there are
few transactions for the security, the prices are not current, or
price quotations vary substantially either over time or among
market makers, or in which little information is released
publicly.
- Inputs other than quoted prices that are observable for the
security (for example, interest rates and yield curves observable
at commonly quoted intervals, volatilities, prepayment speeds,
loss severities, credit risks, and default rates).
- Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
- Level 3 - Level 3 inputs are unobservable inputs. Unobservable inputs
reflect the reporting entity's own assumptions about the assumptions
that market participants would use in pricing the security.
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 each Portfolio's investments as of December 31,
2009, is included with 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 appreciation of $433 from dividends
receivable in foreign currencies is included in "Dividends receivable" and
unrealized appreciation of $2,168 from investment securities sold in foreign
currencies is included in "Investment securities sold" 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
DECEMBER 31, 2009
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.
First Trust has entered into various licensing agreements, which allow First
Trust to use certain trademarks and trade names of the applicable licensors (see
Licensing Information in the Additional Information section of this report). The
Portfolios are sub-licensees to these license agreements and are required to pay
licensing fees, which are shown on the Statement of Operations.
G. ACCOUNTING PRONOUNCEMENT:
In January 2010, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") No. 2010-06 "Improving Disclosures about
Fair Value Measurements". ASU 2010-06 amends FASB Accounting Standards
Codification Topic 820, Fair Value Measurements and Disclosures, to require
additional disclosures regarding fair value measurements. Certain disclosures
required by ASU No. 2010-06 are effective for interim and annual reporting
periods beginning after December 15, 2009, and other required disclosures are
effective for fiscal years beginning after December 15, 2010, and for interim
periods within those fiscal years. Management is currently evaluating the impact
ASU No. 2010-06 will have on its financial statement disclosures.
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
Page 60
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009
be included in "Expenses previously waived or reimbursed" on the Statements of
Operations. The advisory fee waivers and expense reimbursements for the period
ended December 31, 2009 and the expenses borne by the Advisor subject to
reimbursement by each Portfolio at December 31, 2009 were as follows:
EXPENSES BORNE
BY ADVISOR SUBJECT TO REIMBURSEMENT
-----------------------------------------
YEAR YEAR YEAR
ENDED ENDED ENDED
FEES EXPENSES DECEMBER DECEMBER DECEMBER
WAIVED REIMBURSED 31, 2007 31, 2008 31, 2009 TOTAL
------- ---------- -------- -------- -------- --------
Target Managed VIP
Portfolio ............. $53,913 $ -- $ -- $ 30,984 $ 53,913 $ 84,897
The Dow(R) Dart 10
Portfolio ............. 32,075 3,189 18,107 34,027 35,264 87,398
The Dow(R) Target Dividend
Portfolio ............. 34,903 -- -- 180 34,903 35,083
Global Dividend Target 15
Portfolio ............. 21,774 -- -- 53,187 21,774 74,961
S&P(R) Target 24
Portfolio ............. 43,615 -- 13,114 37,227 43,615 93,956
NASDAQ(R) Target 15
Portfolio ............. 16,622 23,846 26,812 39,899 40,468 107,179
First Trust Target Focus
Four Portfolio ........ 45,601 24,079 31,897 144,163 69,680 245,740
Value Line(R) Target 25
Portfolio ............. 41,127 -- -- 12,577 41,127 53,704
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 served two-year terms which ended on
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 sale 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
Page 61
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009
expenses associated with the distribution of the Portfolios, and any
distribution-related expenses that may be authorized by the Registrant's Board
of Trustees.
During the year ended December 31, 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 year ended December 31, 2009, was
as follows:
PURCHASES SALES
----------- -----------
Target Managed VIP Portfolio ................... $30,915,911 $34,852,787
The Dow(R) DART 10 Portfolio ................... 5,612,973 7,418,085
The Dow(R) Target Dividend Portfolio ........... 19,243,403 19,143,084
Global Dividend Target 15 Portfolio ............ 31,263,101 30,671,276
S&P(R) Target 24 Portfolio ..................... 10,236,366 10,239,752
NASDAQ(R) Target 15 Portfolio .................. 5,232,503 6,044,846
First Trust Target Focus Four Portfolio ........ 10,128,732 5,962,821
Value Line(R) Target 25 Portfolio .............. 14,875,663 20,138,702
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.
Page 62
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009
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.
9. SUBSEQUENT EVENT
Management has evaluated the impact of all subsequent events on the Portfolios
through February 24, 2010, the date the financial statements were issued, and
has determined that there was a subsequent event as follows:
On February 2, 2010, The PNC Financial Services Group, Inc. ("PNC") entered into
a Stock Purchase Agreement (the "Stock Purchase Agreement") with The Bank of New
York Mellon Corporation ("BNY Mellon"). Upon the terms and subject to the
conditions set forth in the Stock Purchase Agreement, which has been approved by
the board of directors of each company, PNC will sell to BNY Mellon (the "Stock
Sale") 100% of the issued and outstanding shares of PNC Global Investment
Servicing Inc., an indirect, wholly-owned subsidiary of PNC ("GIS").
The Stock Sale includes PNC Global Investment Servicing (U.S.) Inc. and PFPC
Trust Company and PNC has indicated that it is expected to close in the third
quarter of 2010.
Page 63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Trustees and Members of First Defined Portfolio Fund, LLC:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of First Defined Portfolio Fund, LLC (the
"Fund"), comprised of Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus FoUR Portfolio and Value Line(R) Target 25 Portfolio (the
"Portfolios"), as of December 31, 2009, the related statements of operations for
the year ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
three years in the period then ended. These financial statements and financial
highlights are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits. The Portfolios' financial statements
and financial highlights for the periods ended prior to December 31, 2007 were
audited by other auditors whose report, dated February 15, 2007, expressed an
unqualified opinion.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Fund is not required to have, nor were we engaged to perform, an audit of
their internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Fund's
internal control over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of December 31, 2009, by
correspondence with the Portfolios' custodian. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Portfolios as of December 31, 2009, the results of their operations for the year
ended, and changes in their net assets for each of the two years in the period
then ended, and the financial highlights for each of the three years in the
period then ended, in conformity with accounting principles generally accepted
in the United States of America.
(DELOITTE & TOUCHE LLP)
Chicago, Illinois
February 24, 2010
Page 64
ADDITIONAL INFORMATION
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 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.
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 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 OMX Group, 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 Standard & Poor's Financial
Services LLC and have been licensed for use by First Trust on behalf of the
Registrant. The S&P(R) Target 24 Portfolio, the Target Managed VIP Portfolio and
the First Trust Target Focus Four Portfolio are not sponsored, endorsed, sold or
promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the S&P(R) Target 24 Portfolio, the
Target Managed VIP Portfolio or the FirsT Trust Target Focus Four Portfolio.
Please see the Statement of Additional Information which sets forth certain
additional disclaimers and limitations on behalf of Standard & Poor's.
"Value Line(R)", "The Value Line Investment Survey," and "Value Line
Timeliness(TM) Ranking System" are trademarks of Value Line Securities, Inc. or
Value Line Publishing, Inc. that have been licensed to First Trust on behalf of
the Registrant. The Target Managed VIP Portfolio, the Value Line(R) Target 25
Portfolio and the First Trust Target Focus Four Portfolio are not sponsored,
recommended, sold or promoted by Value Line Publishing, Inc., Value Line, Inc.
or Value Line Securities, Inc. ("Value Line"). Value Line makes no
representation regarding the advisability of investing in the Target Managed VIP
Portfolio, the Value Line(R) Target 25 Portfolio or the First Trust Target Focus
Four Portfolio.
"NYSE(R)" and "NYSE International 100 Index(R)" are registered trademarks of
NYSE Group, Inc. and have been licensed for use for certaIN purposes by First
Trust. The First Trust Target Focus Four Portfolio, based in part on the NYSE
International 100 Index(R), is not sponsored, endorsed, sold or promoted by NYSE
Group, Inc. or any of its affiliates, and NYSE Group, Inc. and its affiliates
make no representation regarding the advisability of investing in such product.
NYSE Group, Inc. has no relationship to the First Trust Target Focus Four
Portfolio or First Trust other than the licensing of NYSE International 100
Index(R) and its registered trademarks for use in connection with the First
Trust Target Focus Four Portfolio.
Page 65
ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
CHANGE IN INVESTMENT POLICY
On December 14, 2009 the Board of Trustees of the Registrant approved a change
in investment policy for The Dow DART 10 Portfolio, The Dow Target Dividend
Portfolio, the Global Dividend Target 15 Portfolio, the S&P Target 24 Portfolio,
the NASDAQ Target 15 Portfolio, the First Trust Target Focus Four Portfolio, and
the Value Line Target 25 Portfolio. The approved change provides that in seeking
the investment objective for each portfolio, "First Trust reserves the right to
over-weight, under-weight or exclude certain companies from the Portfolio". This
investment policy is non-fundamental and therefore may be changed by approval of
the Board of Trustees without shareholder approval. The investment policy change
will become effective on or about May 7, 2010.
Page 66
BOARD OF TRUSTEES AND OFFICERS
FIRST DEFINED PORTFOLIO FUND, LLC DECEMBER 31, 2009 (UNAUDITED)
Information pertaining to the Trustees and officers of the Registrant is set
forth below. The statement of additional information includes additional
information about the Trustees and is available without charge, upon request, by
calling (800) 988-5891.
NUMBER OF
PORTFOLIOS
IN THE FIRST
TRUST FUND OTHER
NAME, ADDRESS, DATE COMPLEX TRUSTEESHIPS
OF BIRTH AND POSITION TERM OF OFFICE AND PRINCIPAL OCCUPATIONS 0VERSEEN BY OR DIRECTORSHIPS
WITH THE FUND LENGTH OF SERVICE DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ----------------------------------- ----------------------- ----------------------------- ------------ ---------------------
INDEPENDENT TRUSTEES
Richard E. Erickson, Trustee c/o - Indefinite Physician; President, Wheaton 61 None
First Trust Advisors L.P. 120 E. - Since Fund Inception Orthopedics; Co-owner and
Liberty Drive, Suite 400 Wheaton, Co-Director (January 1996 to
IL 60187 D.OB.: 04/51 May 2007), Sports Med Center
for Fitness; Limited Partner,
Gundersen Real Estate
Partnership; Limited Partner,
Sportsmed LLC
Thomas R. Kadlec, Trustee c/o First - Indefinite Senior Vice President and 61 Director of ADM
Trust Advisors L.P. 120 E. Liberty - Since March 2004 Chief Financial Officer Investor Service, Inc.
Drive, Suite 400 Wheaton, IL 60187 (May 2007 to Present), Vice and ADM Investor
D.O.B.: 11/57 President and Chief Financial Services International
Officer (1990 to May 2007),
ADM Investor Services, Inc.
(Futures Commission Merchant)
Robert F. Keith, Trustee c/o First - Indefinite President (2003 to Present), 61 None
Trust Advisors L.P. 120 E. Liberty - Since April 2007 Hibs Enterprises (Financial
Drive, Suite 400 Wheaton, IL 60187 and Management Consulting)
D.O.B.: 11/56
Page 67
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
NUMBER OF
PORTFOLIOS
IN THE FIRST
TRUST FUND OTHER
NAME, ADDRESS, DATE COMPLEX TRUSTEESHIPS
OF BIRTH AND POSITION TERM OF OFFICE AND PRINCIPAL OCCUPATIONS 0VERSEEN BY OR DIRECTOR SHIPS
WITH THE FUND LENGTH OF SERVICE DURING PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ----------------------------------- ----------------------- ----------------------------- ------------ ---------------------
INDEPENDENT TRUSTEES (Continued)
Niel B. Nielson, Trustee c/o - Indefinite President (June 2002 to 61 Director of
First Trust Advisors L.P. 120 E. - Since Fund Inception Present), Covenant College Covenant Transport
Liberty Drive, Suite 400 Wheaton, Inc.
IL 60187 D.O.B.: 03/54
INTERESTED TRUSTEE
James A. Bowen(1), Trustee, - Indefinite President, First Trust 61 Trustee of Wheaton
President, Chairman of the Board - Since Fund Inception Advisors L.P. and First Trust College
and CEO 120 E. Liberty Drive, Portfolios L.P.; Chairman of
Suite 400 Wheaton, IL 60187 the Board of Directors,
D.O.B.: 09/55 BondWave LLC (Software
Development
Company/Investment Advisor)
and Stonebridge Advisors LLC
(Investment Advisor)
NAME, ADDRESS, AND POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- ------------------------------ -------------------------------- ----------------------- --------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(2)
Mark R. Bradley 120 E. Liberty Treasurer, Controller, Chief - Indefinite Term Chief Financial Officer, First
Drive, Suite 400 Wheaton, IL Financial Officer and Chief - Since Fund Inception Trust Advisors L.P. and First
60187 D.O.B.: 11/57 Accounting Officer Trust Portfolios L.P.; Chief
Financial Officer, BondWave LLC
(Software Development
Company/Investment Advisor) and
Stonebridge Advisors LLC
(Investment Advisor)
- ----------
(1) Mr. Bowen is deemed an "interested person" of the Registrant due to his
position as President of First Trust Advisors L.P., investment advisor of
the Fund.
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 68
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
POSITION AND OFFICES
NAME, ADDRESS, AND WITH FUND TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
DATE OF BIRTH LENGTH OF SERVICE DURING PAST 5 YEARS
- ------------------------------ -------------------------------- ----------------------- --------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(2) -- (CONTINUED)
Susan M. Brix 120 E. Liberty Assistant Vice President - Indefinite Term Representative, First Trust Portfolios
Drive, Suite 400 Wheaton, IL - Since Fund Inception L.P.; Assistant Portfolio Manager,
60187 D.O.B.: 01/60 First Trust Advisors L.P.
Erin E. Chapman 120 E. Liberty Assistant Secretary - Indefinite Term Assistant General Counsel (October
Drive, Suite 400 Wheaton, IL - Since June 2009 2007 to Present), Associate Counsel
60187 D.O.B.: 08/76 (March 2006 to October 2007), First
Trust Advisors L.P. and First Trust
Portfolios L. P.; Associate Attorney
(November 2003 to March 2006), Doyle &
Bolotin, Ltd.
James M. Dykas 120 E. Liberty Assistant Treasurer - Indefinite Term Senior Vice President (April 2007 to
Drive, Suite 400 Wheaton, IL - Since December 2005 Present), Vice President (January 2005
60187 D.O.B.: 01/66 to April 2007), First Trust Advisors
L.P. and First Trust Portfolios L.P.
W. Scott Jardine 120 E. Secretary and Chief Compliance - Indefinite Term General Counsel, First Trust Advisors
Liberty Drive, Suite 400 Officer - Since Fund Inception L.P., First Trust Portfolios L.P. and
Wheaton, IL 60187 D.O.B.: BondWave LLC (Software Development
05/60 Company/Investment Advisor); Secretary
of Stonebridge Advisors LLC
(Investment Advisor)
- ----------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 69
BOARD OF TRUSTEES AND OFFICERS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
NAME, ADDRESS, AND POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
DATE OF BIRTH WITH FUND LENGTH OF SERVICE DURING PAST 5 YEARS
- ------------------------------ -------------------------------- ----------------------- --------------------------------------
OFFICERS WHO ARE NOT TRUSTEES(2) - (CONTINUED)
Daniel J. Lindquist 120 E. Vice President - Indefinite Term Senior Vice President (September 2005
Liberty Drive, Suite 400 - Since December 2005 to Present), Vice President (April
Wheaton, IL 60187 D.O.B.: 2004 to September 2005), First Trust
02/70 Advisors L.P. and First Trust
Portfolios L.P.
Coleen D. Lynch 120 E. Liberty Assistant Vice President - Indefinite Term Assistant Vice President (January 2008
Drive, Suite 400 Wheaton, IL - Since July 2008 to Present), First Trust Advisors L.P.
60187 D.O.B.: 07/58 and First Trust Portfolios L.P.; Vice
President (May 1998 to January 2008),
Van Kampen Asset Management and Morgan
Stanley Investment Management
Kristi A. Maher 120 E. Liberty Assistant Secretary and Deputy - Indefinite Term Deputy General Counsel (May 2007 to
Drive, Suite 400 Wheaton, IL Chief Compliance Officer - Assistant Secretary Present), Assistant General Counsel
60187 D.O.B.: 12/66 since July 2004 (March 2004 to May 2007), First Trust
- Deputy Chief Advisors L.P. and First Trust
Compliance Officer Portfolios L.P.
since November 2009
Roger F. Testin 120 E. Liberty Vice President - Indefinite Term Senior Vice President, First Trust
Drive, Suite 400 Wheaton, IL - Since September 2001 Advisors L.P. and First Trust
60187 D.O.B.: 06/66 Portfolios L.P.
- ----------
(2) The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
Page 70
PRIVACY POLICY
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2009 (UNAUDITED)
PRIVACY POLICY
The open-end and closed-end funds advised by First Trust Advisors L.P. (each a
"Fund") value our relationship with you and consider your privacy an important
priority in maintaining that relationship. We are committed to protecting the
security and confidentiality of your personal information.
I. SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
A. Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews, applications, agreements
or other forms;
B. Information about your transactions with us, our affiliates or others;
C. Information we receive from your inquiries by mail, e-mail or telephone;
and
D. Information we collect on our website through the use of "cookies". For
example, we may identify the pages on our website that your browser requests or
visits.
II. INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
III. DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
A. In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your personal
information as described above to unaffiliated financial service providers and
other companies that perform administrative or other services on our behalf,
such as transfer agents, custodians and trustees, or that assist us in the
distribution of investor materials such as trustees, banks, financial
representatives, proxy services, solicitors and printers.
B. We may release information we have about you if you direct us to do so,
if we are compelled by law to do so, or in other legally limited circumstances
(for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information with affiliates of the Fund.
IV. CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, we restrict access to your
nonpublic personal information to those individuals who need to know that
information to provide products or services to you. We maintain physical,
electronic and procedural safeguards to protect your nonpublic personal
information.
V. POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to WWW.FTPORTFOLIOS.COM, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822
Page 71
This Page Left Blank Intentionally.
(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.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by the
registrant or a third party.
(c) During the period covered by this report, the code of ethics that
applies to the registrant's principal executive officer, principal
financial officer, principal accounting officer or controller, or
persons performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and that
relates to any element of the code of ethics description was amended
to name W. Scott Jardine as the Compliance Coordinator for the
implementation and administration of the aforementioned code. The
amended code of ethics is provided as an exhibit puruant to Item
12(a)(1).
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial officer,
principal accounting officer or controller, or persons performing
similar functions, regardless of whether these individuals are
employed by the registrant or a third party, that relates to one or
more of the items set forth in paragraph (b) of this item's
instructions.
(e) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES -- The aggregate fees billed for each of the last two fiscal
years for professional services rendered by the principal accountant for the
audit of the registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements were $130,000.00 for 2008 and $136,000.00 for 2009.
(b) AUDIT-RELATED FEES (REGISTRANT)-- The aggregate fees billed in each of
the last two fiscal years, for assurance and related services by the principal
accountant that are reasonably related to the performance of the audit of the
registrant's financial statements and are not reported under paragraph (a) of
this Item were $0 for 2008 and $0 for 2009.
AUDIT-RELATED FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The aggregate
fees billed in each of the last two fiscal years for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are
not reported under paragraph (a) of this Item were $0 for 2008 and $0 for 2009.
(c) TAX FEES (REGISTRANT) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were
$0 for 2008 and $0 for 2009.
TAX FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The aggregate fees billed in
each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning to the
registrant's adviser and distributor were $0 for 2008 and $0 for 2009.
(d) ALL OTHER FEES (REGISTRANT) -- The aggregate fees billed in each of the
last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2008 and $0 for 2009.
ALL OTHER FEES (INVESTMENT ADVISER AND DISTRIBUTOR) -- The aggregate fees billed
in each of the last two fiscal years for products and services provided by the
principal accountant to the registrant's investment adviser and distributor,
other than the services reported in paragraphs (a) through (c) of this Item were
$0 for 2008 and $0 for 2009.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "COMMITTEE") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the DE MINIMIS exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b)0%
(c)0%
(d)0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the registrant's accountant
for services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is primarily
portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under
common control with the adviser that provides ongoing services to the
registrant for 2008 were $0 for the registrant, $12,143.00 for the
registrant's investment adviser and $46,363.00 for the registrant's
distributor, and for 2009 were $0 for the registrant, $36,000.00 for the
registrant's investment adviser and $37,300.00 for the registrant's
distributor.
(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the
registrant last provided disclosure in response to the requirements of Item
407(c)(2)(iv) of Regulation S-K (17 CFR 229.407) (as required by Item 22(b)(15)
of Schedule 14A (17 CFR 240.14a-101)), or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Defined Portfolio Fund, LLC
By (Signature and Title)* /s/ James A. Bowen
----------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date 2/19/10
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James A. Bowen
----------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date 2/19/10
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief Accounting Officer
(principal financial officer)
Date 2/19/10
* Print the name and title of each signing officer under his or her
signature.