UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09235
First Defined Portfolio Fund, LLC
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
Date of fiscal year end: December 31
Date of reporting period: June 30, 2010
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. Section 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
FOR THE SIX MONTHS ENDED JUNE 30, 2010
TABLE OF CONTENTS
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2010
Shareholder Letter .................................................. 1
Market Overview ..................................................... 2
Performance Summaries and Portfolio Components ...................... 4
Understanding Your Fund Expenses .................................... 20
Portfolios of Investments ........................................... 21
Statements of Assets and Liabilities ................................ 42
Statements of Operations ............................................ 44
Statements of Changes in Net Assets ................................. 46
Statements of Changes in Net Assets - Membership Interest Activity .. 48
Financial Highlights ................................................ 50
Notes to Financial Statements ....................................... 58
Additional Information .............................................. 64
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements within the meaning of
the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements regarding the goals,
beliefs, plans or current expectations of First Trust Advisors L.P. ("First
Trust" or the "Advisor") and its representatives, taking into account the
information currently available to them. Forward-looking statements include all
statements that do not relate solely to current or historical fact. For example,
forward-looking statements include the use of words such as "anticipate,"
"estimate," "intend," "expect," "believe," "plan," "may," "should," "would" or
other words that convey uncertainty of future events or outcomes.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the First Defined Portfolio Fund, LLC (the "Registrant") to be materially
different from any future results, performance or achievements expressed or
implied by the forward-looking statements. When evaluating the information
included in this report, you are cautioned not to place undue reliance on these
forward-looking statements, which reflect the judgment of the Advisor and its
representatives only as of the date hereof. We undertake no obligation to
publicly revise or update these forward-looking statements to reflect events and
circumstances that arise after the date hereof.
PERFORMANCE AND RISK DISCLOSURE
There is no assurance that any Portfolio (individually called a "Portfolio" and
collectively, the "Portfolios") of the Registrant will achieve its investment
objective. Each Portfolio is subject to market risk, which is the possibility
that the market values of securities owned by the Portfolio will decline and
that the value of the Portfolio shares may therefore be less than what you paid
for them. Accordingly, you can lose money investing in the Portfolios. See "Risk
Considerations" in the Notes to Financial Statements for a discussion of other
risks of investing in the Registrant.
Performance data quoted represents past performance, which is no guarantee of
future results, and current performance may be lower or higher than the figures
shown. For the most recent month-end performance figures, please visit
http://www.ftportfolios.com or speak with your financial advisor. Investment
returns and net asset value will fluctuate and Membership Interests, when sold,
may be worth more or less than their original cost.
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about each Portfolio and presents data and analysis that
provide insight into each Portfolio's performance and investment approach.
By reading the market overview and discussion of each Portfolio's performance by
First Trust, the Registrant's investment advisor, you may obtain an
understanding of how the market environment affected its performance. The
statistical information that follows may help you understand a Portfolio's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
First Trust are just that: informed opinions. They should not be considered to
be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The risks of investing in the
Portfolios are spelled out in the prospectus, the statement of additional
information, this report, and other regulatory filings.
SHAREHOLDER LETTER
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
JUNE 30, 2010
Dear Shareholders:
I am pleased to present you with the semi-annual report for your investment in
First Trust Defined Portfolio Fund, LLC ("the Registrant").
First Trust Advisors L.P. ("First Trust") has always believed that staying
invested in quality products and having a long-term horizon can help investors
reach their financial goals. While the past eighteen months have been
challenging, the markets have been recovering since the market lows of
2008-2009. Successful investors understand that the successes they have achieved
is typically because of their long-term investment perspective--through all
types of markets.
The report you hold gives detailed information about eight portfolios in the
Registrant over the six months ended June 30, 2010. It contains a market
overview and a performance analysis for the period. I encourage you to read this
document and discuss it with your financial advisor.
First Trust 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 may 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 23 years of experience as an
Equity and Fixed-Income Analyst and is a recipient of the Chartered Financial
Analyst ("CFA") designation. He is a graduate of the University of Illinois at
Champaign-Urbana with a B.S. in Physics. He is also a member of the Investment
Analysts Society of Chicago and the CFA Institute. Mr. Carey has appeared as a
guest on such programs as Bloomberg TV, CNBC and WBBM Radio and has been quoted
by several publications, including THE WALL STREET JOURNAL, THE WALL STREET
REPORTER, BLOOMBERG NEWS SERVICE, and REGISTERED REP.
MARKET OVERVIEW
STATE OF THE ECONOMY/INVESTING
The GDP growth rate for the second quarter of 2010 was 2.4%, slightly less than
the 2.6% consensus estimate from the Bloomberg survey. The U.S. economic
expansion is now one-year old. The economists polled in the most recent Blue
Chip Economic Indicators survey see the economy expanding by 3.1% in 2010, down
from 3.3% in June. So the notion of a "double-dip" scenario is not widely held.
We believe that the economy is being held back by too much legislation and
uncertainty over where taxes will be in 2011. Unless Congress passes new
legislation, the Bush tax cuts will expire at the close of 2010. The Federal
income tax system will then revert back to the rates levied at the end of the
Clinton Administration. Too much uncertainty, in our opinion, is not only bad
for the stock market but the labor market as well. The lack of any serious job
creation to date is stressing both Wall Street and Main Street.
The outlook for global growth is even better than in the U.S. The International
Monetary Fund (IMF) is forecasting a global GDP growth rate of 4.5% for 2010 and
4.25% for 2011. The strongest growth is expected to be in the emerging and
developing economies. The IMF is forecasting GDP growth of 6.8% in 2010 and 6.4%
in 2011 for these economies.
For those investors concerned about investing with the unemployment rate at such
a high level, they need not be. James W. Paulsen, Ph.D., and chief investment
strategist at Wells Capital Management, has provided some compelling data that
makes a case for investing in stocks when the U.S. unemployment rate is high.
Since January 1948 (monthly data), U.S. stocks have posted an annualized total
return of 20.43% for the highest quartile of unemployment rates, compared to an
annualized total return of 7.34% for the lowest three quarterlies.
The Stock Trader's Almanac provides data that shows there is some correlation
between stock performance and presidential cycles. During the last two years of
the 44 administrations since 1833, stocks have gained 719%, well above the 243%
gain during the first two years. The gain was 464% in the year prior to the
election (Year 3) and 255% in the election year (Year 4).
U.S. STOCKS AND BONDS
All of the major U.S. stock indices declined in the first half of 2010. The
Standard & Poor's 500 Index ("S&P 500"), Standard & Poor's MidCap 400 Index and
Standard & Poor's SmallCap 600 Index were down 6.6%, 1.4%, and 0.9%,
respectively, according to Bloomberg. All 10 major sectors in the S&P 500 posted
losses. The top-performing sector was Industrials, down 0.8%, while the poorest
showing came from Materials, down 12.9%. The year-over-year estimated earnings
growth rate for the companies in the S&P 500 Index is expected be 46.1% in 2010
and 13.9% in 2011, respectively, according to Standard & Poor's.
With respect to second quarter earnings, companies in the large-cap space posted
a stronger showing than the broader market. As of August 5, 79% of S&P 500
companies had beaten earnings expectations, up from 78% earlier in the reporting
season, according to Bespoke Investment Group. When you include all of the U.S.
companies that have reported, the beat rate has declined from 77% early on in
2010 to 68.5%. The lowest-quality companies usually outperform at the beginning
of a market upturn, but then yield to the top companies with better earnings.
The non-financial companies in the S&P 500 held a record $837 billion in cash
and equivalents at the close of the first quarter of 2010, according to Standard
& Poor's. That amount is up 25.8% from the first quarter of 2009.
In the U.S. bond market, all of the domestic groups performed well. The
top-performing group was a blend of investment-grade bonds. The Barclays Capital
U.S. Aggregate Index posted a total return of 5.33%. The next closest domestic
category was GNMAs, up 5.29%, as measured by the Barclays Capital GNMA 30 Year
Index. The Barclays Capital Municipal Bond: Long-Bond (22+) Index posted the
worst return, but was still up 4.49%.
Page 2
MARKET OVERVIEW - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
SEMI-ANNUAL REPORT
FOREIGN STOCKS AND BONDS
Riskier asset classes continued their domination in the overseas markets. The
top foreign story during the past six months was the sovereign debt crisis in
Greece and its government's need to impose severe austerity measures to curb its
unsustainable debt levels. The other European Union members interceded with a $1
trillion bailout package that, while not popular with many citizens, eventually
tempered investor fears of a possible contagion. The Barclays Capital Global
Emerging Markets Index of debt securities rose 2.73% (USD) in the first half of
2010, while the MSCI Emerging Markets Index of stocks declined 6.12% (USD). The
Barclays Capital Global Aggregate Index of higher quality debt returned -0.31%
(USD), while the MSCI World Index (excluding the U.S.) of stocks from developed
countries fell 12.06% (USD). The U.S. dollar appreciated 6.5% against a basket
of major currencies. The unexpected rally in the dollar was driven largely by
weakness in the Euro stemming from the debt crisis in Greece.
Page 3
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO
Over the six months ended June 30, 2010, the Target Managed VIP Portfolio posted
a total return of -7.25% versus -6.05% for the Russell 3000(R) Index over the
same period. The NAV decreased from $8.00 to $7.42 during the period.
Of the portfolio's 115 stocks, 35 advanced and 80 declined over the period. The
top three performing stocks, by contribution to return, were Baidu, Inc. ADR
(BIDU), Netflix, Inc. (NFLX) and Cognizant Technology Solutions Corp., (CTSH).
The worst-performing stocks, by percentage loss, were Microsoft Corp. (MSFT), BP
PLC (BP) and priceline.com, Inc. (PCLN).
The technology sector was the biggest contributor to relative performance over
the period due to solid stock selection. Stock selection in the consumer staples
and health care sectors also contributed positively to relative performance.
Energy stocks were the biggest detractors from relative performance due to their
underperformance. Financials, telecommunication services and utilities stocks
also hurt portfolio performance.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
Target Managed VIP
Target Dow Jones Russell 3000
Managed VIP Industrial Ave. Index
----------- --------------- ------------
Dec. 99 10000 10000 10000
12/31/00 10721 9528 9253
2001 10187 9010 8199
2002 8047 7657 6433
2003 10858 9823 8432
2004 12189 10345 9440
2005 13072 10522 10021
2006 14577 12526 11605
2007 15958 13639 12214
2008 8806 9284 7658
2009 9950 11390 9829
6/30/10 9229 10821 9235
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
Target Managed VIP Portfolio (a) 10/6/99 -7.25% 9.76% -5.26% 1.38% -2.74%
Dow Jones Industrial Avg. (b) -5.00% 18.94% 1.66% 1.69% 1.55%
Russell 3000 Index (c) -6.05% 15.72% -0.44% -0.89% 0.36%
(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 AverageSM 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
JUNE 30, 2010 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Cognizant Technology Solutions Corp., Class A 4.6%
Intuitive Surgical, Inc. 3.7
Infosys Technologies Ltd., ADR 3.7
Travelers (The) Cos., Inc. 3.6
Procter & Gamble (The) Co. 3.6
Merck & Co., Inc. 3.5
Microsoft Corp. 3.4
International Business Machines Corp. 3.4
Wal-Mart Stores, Inc. 3.2
AT&T, Inc. 3.1
----
Total 35.8%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Information Technology 21.2%
Consumer Discretionary 16.5
Health Care 15.8
Consumer Staples 13.1
Telecommunication Services 10.6
Financials 7.2
Energy 6.2
Industrials 6.1
Utilities 2.8
Materials 0.5
-----
Total 100.0%
=====
Page 5
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO
Over the six months ended June 30, 2010, The Dow(R) DART 10 Portfolio posted a
total return of -4.27% versus -5.00% for the Dow Jones Industrial Average(SM)
over the same period. The NAV decreased from $8.66 to $8.29 during the period.
Of the portfolio's 10 stocks, 2 advanced and 8 declined over the period. The top
three performing stocks, by contribution to return, were McDonald's Corp. (MCD),
EI du Pont de Nemours & Co. (DD) and Procter & Gamble (The) Co. (PG). The
worst-performing stocks, by percentage loss, were Exxon Mobil Corp. (XOM),
Chevron Corp. (CVX) and Verizon Communications, Inc. (VZ).
McDonald's (MCD) was the biggest contributor to positive portfolio performance
over the period as the company's value message continued to resonate with
consumers. EI du Pont de Nemours & Co. (DD) also performed well as the company
benefitted from an improving economy. Proctor & Gamble Co. (PG) posted strong
relative returns. Energy holdings Chevron (CVX) and Exxon Mobil (XOM) were the
worst performers in the portfolio as energy shares lagged in the first half on
concerns about the pace of global economic growth and the oil spill in the Gulf.
AT&T (T) and Verizon (VZ) also lagged on concerns about their long-term growth
opportunities.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
Dow DART 10LINE
Dow Jones
DART 10 Industrial Ave.
------- ---------------
Dec-99 10000 10000
12/31/00 10868 9528
2001 9262 9010
2002 7570 7657
2003 9078 9823
2004 9425 10345
2005 9121 10522
2006 11453 12526
2007 11529 13639
2008 8243 9284
2009 9392 11390
6/30/10 8991 10821
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
The Dow(R) DART 10 Portfolio 10/6/99 -4.27% 20.67% -0.45% -0.18% -1.73%
Dow Jones Industrial Avg. (a) -5.00% 18.94% 1.66% 1.69% 1.55%
(a) The Dow Jones Industrial AverageSM 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
JUNE 30, 2010 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
McDonald's Corp. 11.3%
E.I. du Pont de Nemours & Co. 11.0
Travelers (The) Cos., Inc. 10.6
Procter & Gamble (The) Co. 10.6
Merck & Co., Inc. 10.2
Wal-Mart Stores, Inc. 9.6
Chevron Corp. 9.4
AT&T, Inc. 9.2
Verizon Communications, Inc. 9.1
Exxon Mobil Corp. 9.0
-----
Total 100.0%
=====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Staples 20.1%
Energy 18.5
Telecommunication Services 18.3
Consumer Discretionary 11.3
Materials 11.0
Financials 10.6
Health Care 10.2
-----
Total 100.0%
=====
Page 7
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the six months ended June 30, 2010, The Dow(R) Target Dividend Portfolio
posted a total return of 0.38% versus -1.29% for the Dow Jones U.S. Select
Dividend Index(SM) over the same period. The NAV increased from $8.00 to $8.03
during the period.
Of the portfolio's 20 stocks, 10 advanced and 10 declined over the period. The
top three performing stocks, by contribution to return, were F.N.B. Corp. (FNB),
United Bankshares, Inc. (UBSI) and New York Community Bancorp, Inc. (NYB). The
worst-performing stocks, by percentage loss, were People's United Financial,
Inc. (PBCT), Sempra Energy (SRE) and First Niagara Financial Group, Inc. (FNFG).
Financials were the biggest contributor to the portfolio's outperformance over
the first half of the year. In addition to the positive contribution from a
large overweight in the sector, the portfolio's concentration on small- to
mid-size banks helped as this group also outperformed over the period. Positive
stock selection in the utilities and materials sectors also contributed to the
portfolio's outperformance over the period.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
May 2, 2005-June 30, 2010
Dow Target Dividend
The Dow Dow Jones
Target U.S. Select
Dividend Dividend S&P 500
Portfolio Index Index
--------- ----------- -------
5-May 10000 10000 10000
5/2/05 9870 10529 10879
2006 11660 12587 12598
2007 11790 11938 13290
2008 7010 8240 8373
2009 8000 9157 10589
6/30/10 8031 9885 9039
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- ---------------
The Dow(R) Target Dividend
Portfolio 5/2/05 0.38% 41.13% -5.28% -4.16%
Dow Jones U.S. Select Dividend
Index(SM) (a) -1.29% 25.42% -2.71% -1.94%
S&P 500(R) Index (b) -6.65% 14.43% -0.79% -0.22%
(a) The Dow Jones U.S. Select Dividend IndexSM 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
JUNE 30, 2010 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
United Bankshares, Inc. 6.0%
F.N.B. Corp. 6.0
Astoria Financial Corp. 5.6
New York Community Bancorp, Inc. 5.4
Mercury General Corp. 5.4
BB&T Corp. 5.3
DTE Energy Co. 5.3
Kraft Foods, Inc., Class A 5.2
Cincinnati Financial Corp. 5.0
Sensient Technologies Corp. 5.0
----
Total 54.2%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Financials 56.9%
Utilities 28.5
Consumer Staples 9.6
Materials 5.0
-----
Total 100.0%
=====
Page 9
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the six months ended June 30, 2010, the Global Dividend Target 15 Portfolio
posted a total return of -7.76% versus -9.84% for the Morgan Stanley Capital
International Developed Markets World Index over the same period. The NAV
decreased from $19.34 to $17.84 during the period.
Of the portfolio's 15 stocks, 3 advanced and 12 declined over the period. The
top three performing stocks, by contribution to return, were HongKong Electric
Holdings Ltd. (6 HK), Kraft Foods, Inc. (KFT) and CNOOC Ltd. (883 HK). The
worst-performing stocks, by percentage loss, were Man Group PLC (EMG LN), Marks
& Spencer Group PLC (MKS LN) and Pfizer Inc. (PFC).
Hong Kong stocks posted the best returns in helping the portfolio to relative
outperformance over the period. U.K. stocks lagged over the period, presenting a
drag on relative performance. On a sector basis, the portfolio's energy and
utilities holdings fared well, while the portfolio's financial and industrial
holdings lagged the market.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
Global Target 15
Global MSCI DTR
Dividend World
Target 15 Index
--------- --------
Dec-99 10000 10000
12/31/00 10196 8682
2001 9949 7221
2002 8486 5785
2003 11380 7701
2004 14274 8834
2005 15726 8672
2006 21771 11613
2007 24676 12663
2008 14119 7507
2009 19918 9759
6/30/10 18373 8798
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
Global Dividend Target 15
Portfolio (a) 10/6/99 -7.76% 17.37% 4.88% 7.86% 5.54%
MSCI Developed Markets World
Index (b) -9.84% 10.20% 0.06% -1.02% 0.04%
(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
JUNE 30, 2010 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
CNOOC Ltd. 8.1%
Hongkong Electric Holdings Ltd. 8.0
Kraft Foods, Inc., Class A 7.5
Home Depot (The), Inc. 7.1
Bank of China Ltd. 7.1
Tate & Lyle PLC 7.0
Intel Corp. 6.9
PetroChina Co., Ltd., H Shares 6.8
Vodafone Group PLC 6.6
Industrial & Commercial Bank of China Ltd. 6.5
----
Total 71.6%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Financials 18.6%
Energy 14.9
Consumer Staples 14.5
Telecommunication Services 12.8
Consumer Discretionary 12.7
Utilities 8.0
Information Technology 6.9
Industrials 5.9
Health Care 5.7
-----
Total 100.0%
=====
Page 11
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO
Over the six months ended June 30, 2010, the S&P(R) Target 24 Portfolio posted a
total return of -9.08% versus -6.65% for the S&P 500(R) Index over the same
period. The NAV decreased from $7.93 to $7.21 during the period.
Of the portfolio's 24 stocks, 4 advanced and 20 declined over the period. The
top three performing stocks, by contribution to return, were TJX (The) Cos.,
Inc. Mead Johnson Nutrition Co. (MJN) and Questar Corp. (STR). The
worst-performing stocks, by percentage loss, were Baxter International, Inc.
(BAX), Franklin Resources, Inc. (BEN) and National Oilwell Varco, Inc. (NOV).
Stock selection in the technology sector was the biggest positive contributor to
portfolio performance over the period. Stock selection in consumer discretionary
also added to positive performance. Underperformance from the portfolio's
financial holdings, including asset managers T Rowe Price and Franklin
Resources, was the biggest drag on performance and led to overall portfolio
underperformance. Stock selection in the energy, health care and industrial
sectors also detracted from overall portfolio performance.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
S&P Target 24
S&P S&P
Target 24 500 Index
--------- ---------
Dec-99 10000 10000
12/31/00 8064 9090
2001 6078 8009
2002 5190 6239
2003 6441 8029
2004 7320 8902
2005 7625 9339
2006 7844 10815
2007 8174 11409
2008 5898 7188
2009 6710 9090
6/30/10 6101 8486
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
S&P(R) Target 24 Portfolio (a) 10/6/99 -9.08% 6.97% -2.59% -3.55% -3.00%
S&P 500(R) Index (b) -6.65% 14.43% -0.79% -1.59% -0.54%
(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
JUNE 30, 2010 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
International Business Machines Corp. 20.8%
Philip Morris International, Inc. 11.1
United Technologies Corp. 9.7
Franklin Resources, Inc. 7.6
Baxter International, Inc. 6.0
TJX (The) Cos., Inc. 5.5
National Oilwell Varco, Inc. 4.9
Stryker Corp. 4.8
T. Rowe Price Group, Inc. 4.3
Peabody Energy Corp. 3.7
----
Total 78.4%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Information Technology 22.3%
Financials 14.0
Consumer Staples 13.9
Health Care 12.3
Consumer Discretionary 11.6
Industrials 11.1
Energy 10.8
Utilities 4.0
-----
Total 100.0%
=====
Page 13
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO
Over the six months ended June 30, 2010, the NASDAQ(R) Target 15 Portfolio
posted a total return of -2.81% versus -6.17% for the NASDAQ 100 Index(R) over
the same period. The NAV decreased from $7.11 to $6.91 during the period.
Of the portfolio's 15 stocks, 4 advanced and 11 declined over the period. The
top three performing stocks, by contribution to return, were Baidu, Inc. ADR
(BIDU), Cognizant Technology Solutions Corp., Class A (CTSH) and Infosys
Technologies Ltd. ADR (INFY). The worst-performing stocks, by percentage loss,
were Microsoft Corp. (MSFT), Warner Chilocott PLC, Class A (WCRX) and
priceline.com, Inc. (PCLN).
Strong stock selection in the technology sector accounted for the portfolio's
outperformance over the period. Portfolio holdings Baidu, Inc., ADR, Cognizant
Technology Solutions Corp., Class A (CTSH) and Infosys Technologies (INFY) all
outperformed over the first six months of 2010. An overweight in industrial
companies also helped the portfolio's performance, though it was more than
offset by underperformance from the portfolio's holdings in the sector, led
primarily by Foster Wheeler AG (FWLT). Stock selection in the telecommunication
services and health care sectors also presented modest headwinds for the
portfolio.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
NASDAQ Target 15
Nasdaq Nasdaq
Target 15 100 Index
--------- ---------
Dec-99 10000 10000
12/31/00 8822 6317
2001 6336 4257
2002 4678 2659
2003 6363 3976
2004 6192 4403
2005 6397 4486
2006 6966 4813
2007 8479 5739
2008 4164 3353
2009 4870 5185
6/30/10 4733 4865
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
NASDAQ(R) Target 15 Portfolio 10/6/99 -2.81% 13.84% -4.08% -9.81% -3.38%
NASDAQ(R) 100 Index (a) -6.17% 18.53% 3.66% -7.09% -3.11%
(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
JUNE 30, 2010 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Baidu, Inc., ADR 12.6%
Cognizant Technology Solutions Corp., Class A 8.5
Infosys Technologies Ltd., ADR 8.3
Intuitive Surgical, Inc. 7.9
Cerner Corp. 6.9
Urban Outfitters, Inc. 6.5
Garmin Ltd. 6.4
Warner Chilcott PLC, Class A 6.2
Virgin Media, Inc. 6.2
priceline.com, Inc. 6.1
----
Total 75.6%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Information Technology 35.0%
Consumer Discretionary 29.3
Health Care 21.0
Industrials 8.7
Telecommunication Services 6.0
-----
Total 100.0%
=====
Page 15
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the six months ended June 30, 2010, the First Trust Target Focus Four
Portfolio posted a total return of -4.09% versus -6.65% for the S&P 500(R) Index
over the same period. The NAV decreased from $4.16 to $3.99 during the period.
Of the portfolio's 127 stocks, 42 advanced and 85 declined over the period. The
top three performing stocks, by contribution to return, were Netflix, Inc.
(NFLX), Cognizant Technology Solutions Corp. (CTSH) and F.N.B. Corp. (FNB). The
worst-performing stocks, by percentage loss, were Western Digital Corp. (WDC),
priceline.com, Inc. (PCLN) and Guess?, Inc. (GES).
The financial sector was overweight and outperformed the benchmark sector over
the period. This sector was responsible for a majority of the portfolio's
relative outperformance over the period. Stock selection in the health care and
utilities sectors also contributed positively to portfolio results. An
underweight in industrials, along with stock underperformance, was a drag on
relative results. Stock selection in the consumer discretionary sector also
presented a modest drag on relative results.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on portfolio
distributions or the redemption of shares.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
Focus Four
Target S&P
Focus Four 500 Index
---------- ---------
Dec-99 10000 10000
12/31/00 7360 9090
2001 4737 8009
2002 2991 6239
2003 4096 8029
2004 4561 8902
2005 4588 9339
2006 4772 10815
2007 5044 11409
2008 2833 7188
2009 3649 9090
6/30/10 3500 8486
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
First Trust Target Focus Four
Portfolio (a) 10/6/99 -4.09% 22.77% -5.05% -9.74% -8.20%
S&P 500(R) Index (b) -6.65% 14.43% -0.79% -1.59% -0.54%
(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
JUNE 30, 2010 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Cognizant Technology Solutions Corp., Class A 5.2%
Intuitive Surgical, Inc. 4.3
priceline.com, Inc. 2.7
New York Community Bancorp, Inc. 2.4
Mercury General Corp. 2.4
Western Digital Corp. 2.4
Netflix, Inc. 2.1
Trustmark Corp. 2.1
Urban Outfitters, Inc. 2.0
Universal Corp. 2.0
----
Total 27.6%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Financials 33.4%
Consumer Discretionary 16.4
Utilities 13.8
Information Technology 9.8
Health Care 8.0
Consumer Staples 5.9
Telecommunications Services 4.5
Energy 3.3
Industrials 2.6
Materials 2.3
-----
Total 100.0%
=====
Page 17
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the six months ended June 30, 2010, the Value Line(R) Target 25 Portfolio
posted a total return of -5.59% versus -6.05% for the Russell 3000(R) Index over
the same period. The NAV decreased from $2.86 to $2.70 during the period.
Of the portfolio's 25 stocks, 7 advanced and 18 declined over the period. The
top three performing stocks, by contribution to return, were Netflix, Inc.
(NFLX), Bare Escentuals, Inc. (BARE) and Deckers Outdoor Corp. (DECK). The
worst-performing stocks, by percentage loss, were Western Digital Corp. (WDC),
Guess?, Inc. (GES) and priceline.com, Inc. (PCLN).
A large overweight in consumer discretionary, along with positive stock
selection, resulted in relative outperformance over the period. The sector was
paced by strong returns from Netflix (NFLX) and Deckers Outdoor (DECK). The
Fund's acquisition of Bare Escentuals (BARE) at a significant premium during the
period led to outperformance from the portfolio's consumer staples holdings
since the stock was up almost 50% for the period. Stock selection in the health
care sector added to relative portfolio performance because our health care
holdings outperformed the benchmark sector holdings. Stock selection in the
technology sector, led by disk drive maker Western Digital (WDC), was a drag on
relative portfolio performance. Performance from the portfolio's materials
holdings also weighed on relative 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.
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 1999-June 30, 2010
Target 25
Value Line Russell
Target 25 3000 Index
---------- ----------
Dec-99 10000 10000
12/31/00 5707 9253
2001 2541 8199
2002 1451 6433
2003 2045 8432
2004 2486 9440
2005 2976 10021
2006 3062 11605
2007 3619 12214
2008 1635 7658
2009 1751 9829
6/30/10 1653 9235
RETURN COMPARISON PERIODS ENDED JUNE 30, 2010
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION SIX MONTHS ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
--------- ---------- ------------ -------------- -------------- ---------------
Value Line(R) Target 25 Portfolio (a) 10/6/99 -5.59% 0.75% -9.22% -17.36% -11.48%
Russell 3000 Index (b) -6.05% 15.72% -0.44% -0.89% 0.36%
(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
JUNE 30, 2010 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
- --------------- -----------
Netflix, Inc. 10.9%
Cognizant Technology Solutions Corp., Class A 8.9
Intuitive Surgical, Inc. 8.3
Urban Outfitters, Inc. 7.8
NII Holdings, Inc. 7.7
priceline.com, Inc. 6.4
Western Digital Corp. 5.4
Guess?, Inc. 5.2
Herbalife Ltd. 5.0
Tupperware Brands Corp. 4.5
----
Total 70.1%
====
% OF TOTAL
SECTOR INVESTMENTS
- ------ -----------
Consumer Discretionary 52.3%
Information Technology 17.7
Consumer Staples 11.6
Health Care 8.3
Telecommunication Services 7.7
Materials 2.4
-----
Total 100.0%
=====
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
JUNE 30, 2010 (UNAUDITED)
As a shareholder of the Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus Four Portfolio or Value Line (R) Target 25 Portfolio (the
"Portfolios"), you incur two types of costs: (1) transaction costs; and (2)
ongoing costs, including management fees, distribution and/or service fees, and
other Portfolio expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Portfolios and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period of January 1, 2010 to June 30, 2010.
ACTUAL EXPENSES
The first three columns of the table below provide information about actual
account values and actual expenses. You may use the information in these
columns, together with the amount you invested, to estimate the expenses that
you paid over the period. Simply divide your account value by $1,000 (for
example, an $8,600 account value divided by $1,000 = 8.6), then multiply the
result by the number in the third column under the heading entitled "Expenses
Paid During Period" to estimate the expenses you paid on your account during
this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The next three columns of the table below provide information about hypothetical
account values and hypothetical expenses based on the Portfolio's actual expense
ratio and an assumed rate of return of 5% per year before expenses, which is not
the Portfolio's actual return. The hypothetical account values and expenses may
not be used to estimate the actual ending account balance or expenses you paid
for the period. You may use this information to compare the ongoing costs of
investing in the Portfolio and other funds. To do so, compare this 5%
hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or redemption fees. Therefore, the hypothetical section of the
table is useful in comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In addition, if these
transactional costs were included, your costs would have been higher.
HYPOTHETICAL
ACTUAL EXPENSES (5% RETURN BEFORE EXPENSES)
------------------------------------- ------------------------------------------------
EXPENSES EXPENSES
BEGINNING ENDING PAID DURING BEGINNING ENDING PAID DURING
ACCOUNT ACCOUNT PERIOD (a) ACCOUNT ACCOUNT PERIOD (a)
VALUE VALUE 01/01/2010- VALUE VALUE 01/01/2010- EXPENSE
01/01/2010 06/30/2010 06/30/2010 01/01/2010 06/30/2010 06/30/2010 RATIO(b)
---------- ---------- ----------- ---------- ---------- ----------- --------
Target Managed VIP Portfolio ... $1,000.00 $ 927.50 $7.03 $1,000.00 $1,017.50 $7.35 1.47%
The Dow(R) DART 10 Portfolio ... 1,000.00 957.30 7.13 1,000.00 1,017.50 7.35 1.47
The Dow(R) Target Dividend
Portfolio ................... 1,000.00 1,003.80 7.30 1,000.00 1,017.50 7.35 1.47
Global Dividend Target 15
Portfolio ................... 1,000.00 922.40 7.01 1,000.00 1,017.50 7.35 1.47
S&P(R) Target 24 Portfolio ..... 1,000.00 909.20 6.96 1,000.00 1,017.50 7.35 1.47
NASDAQ(R) Target 15 Portfolio .. 1,000.00 971.90 7.19 1,000.00 1,017.50 7.35 1.47
First Trust Target Focus
Four Portfolio .............. 1,000.00 959.10 6.65 1,000.00 1,018.00 6.85 1.37
Value Line(R) Target 25
Portfolio ................... 1,000.00 944.10 7.09 1,000.00 1,017.50 7.35 1.47
(a) Expenses are equal to the Portfolio's annualized expense ratio multiplied
by the average account value over the period, multiplied by 181/365 (to
reflect the one half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ------------------------------------------------ ----------
COMMON STOCKS - 99.3%
AEROSPACE & DEFENSE - 1.9%
2,557 GeoEye, Inc. (b) ............................... $ 79,625
5,851 United Technologies Corp. ...................... 379,788
----------
459,413
----------
AUTO COMPONENTS - 0.1%
1,047 Fuel Systems Solutions, Inc. (b) ............... 27,170
----------
CAPITAL MARKETS - 2.3%
3,417 Franklin Resources, Inc. ....................... 294,511
15,991 GFI Group, Inc. ................................ 89,230
3,785 T. Rowe Price Group, Inc. ...................... 168,016
----------
551,757
----------
CHEMICALS - 0.5%
2,722 Koppers Holdings, Inc. ......................... 61,191
733 NewMarket Corp. ................................ 64,006
----------
125,197
----------
COMMERCIAL BANKS - 1.0%
21,855 Banco Santander S.A., ADR ...................... 229,478
----------
COMMERCIAL SERVICES & SUPPLIES - 0.2%
11,695 EnergySolutions, Inc. .......................... 59,528
----------
COMPUTERS & PERIPHERALS - 5.3%
6,537 International Business Machines Corp. .......... 807,189
7,884 Netezza Corp. (b) .............................. 107,853
837 Teradata Corp. (b) ............................. 25,512
10,627 Western Digital Corp. (b) ...................... 320,510
----------
1,261,064
----------
CONSTRUCTION & ENGINEERING - 0.1%
1,563 Foster Wheeler AG (b) .......................... 32,917
----------
DIVERSIFIED CONSUMER SERVICES - 0.3%
3,496 Lincoln Educational Services Corp. (b) ......... 71,983
----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 6.7%
30,689 AT&T, Inc. ..................................... 742,367
6,015 Cogent Communications Group, Inc. (b) .......... 45,594
24,513 Deutsche Telekom AG, ADR ....................... 286,067
14,228 France Telecom S.A., ADR ....................... 246,287
4,506 Neutral Tandem, Inc. (b) ....................... 50,693
4,320 Telefonica S.A., ADR ........................... 239,890
----------
1,610,898
----------
ELECTRICAL EQUIPMENT - 0.9%
6,237 Baldor Electric Co. ............................ 225,031
----------
ELECTRONIC EQUIPMENT & INSTRUMENTS - 0.5%
834 Amphenol Corp., Class A ........................ 32,760
3,508 ScanSource, Inc. (b) ........................... 87,454
----------
120,214
----------
See Notes to Financial Statements
Page 21
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ------------------------------------------ ----------
COMMON STOCKS - (CONTINUED)
ENERGY EQUIPMENT & SERVICES - 1.4%
1,655 FMC Technologies, Inc. (b) ............... $ 87,152
3,416 Hornbeck Offshore Services, Inc. (b) ..... 49,874
5,734 National Oilwell Varco, Inc. ............. 189,623
----------
326,649
----------
FOOD & STAPLES RETAILING - 3.9%
5,699 United Natural Foods, Inc. (b) ........... 170,286
16,006 Wal-Mart Stores, Inc. .................... 769,408
----------
939,694
----------
FOOD PRODUCTS - 1.7%
2,810 American Italian Pasta Co., Class A (b) .. 148,565
1,006 Mead Johnson Nutrition Co. ............... 50,421
4,302 TreeHouse Foods, Inc. (b) ................ 196,429
----------
395,415
----------
GAS UTILITIES - 0.2%
803 Questar Corp. ............................ 36,528
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 6.0%
2,854 Abaxis, Inc. (b) ......................... 61,161
5,707 Baxter International, Inc. ............... 231,932
2,815 Intuitive Surgical, Inc. (b) ............. 888,470
3,751 Stryker Corp. ............................ 187,775
2,877 Zoll Medical Corp. (b) ................... 77,967
----------
1,447,305
----------
HEALTH CARE PROVIDERS & SERVICES - 1.1%
3,492 HMS Holdings Corp. (b) ................... 189,336
5,249 Kindred Healthcare, Inc. (b) ............. 67,397
----------
256,733
----------
HEALTH CARE TECHNOLOGY - 1.6%
2,092 Cerner Corp. (b) ......................... 158,762
1,473 Computer Programs & Systems, Inc. ........ 60,275
7,569 MedAssets, Inc. (b) ...................... 174,692
----------
393,729
----------
HOTELS, RESTAURANTS & LEISURE - 1.4%
4,152 Bob Evans Farms, Inc. .................... 102,222
3,204 California Pizza Kitchen, Inc. (b) ....... 48,541
1,759 Peet's Coffee & Tea, Inc. (b) ............ 69,076
9,667 Texas Roadhouse, Inc. (b) ................ 121,998
----------
341,837
----------
HOUSEHOLD DURABLES - 1.5%
5,134 Garmin Ltd. .............................. 149,810
908 National Presto Industries, Inc. ......... 84,317
3,012 Tupperware Brands Corp. .................. 120,028
----------
354,155
----------
HOUSEHOLD PRODUCTS - 3.6%
14,162 Procter & Gamble (The) Co. ............... 849,437
----------
See Notes to Financial Statements
Page 22
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ---------------------------------------------------- ----------
COMMON STOCKS - (CONTINUED)
INSURANCE - 3.6%
17,293 Travelers (The) Cos., Inc. ......................... $ 851,680
----------
INTERNET & CATALOG RETAIL - 4.0%
2,673 Netflix, Inc. (b) .................................. 290,421
3,782 priceline.com, Inc. (b) ............................ 667,674
----------
958,095
----------
INTERNET SOFTWARE & SERVICES - 1.9%
6,772 Baidu, Inc., ADR (b) ............................... 461,038
----------
IT SERVICES - 8.6%
21,693 Cognizant Technology Solutions Corp., Class A (b) .. 1,085,952
14,711 Infosys Technologies Ltd., ADR ..................... 881,336
2,056 Unisys Corp. (b) ................................... 38,015
1,792 Wright Express Corp. (b) ........................... 53,222
----------
2,058,525
----------
LIFE SCIENCES TOOLS & SERVICES - 1.7%
2,335 Dionex Corp. (b) ................................... 173,864
7,687 PAREXEL International Corp. (b) .................... 166,654
881 Waters Corp. (b) ................................... 57,001
----------
397,519
----------
MACHINERY - 1.9%
3,891 Chart Industries, Inc. (b) ......................... 60,622
354 Flowserve Corp. .................................... 30,019
2,633 Joy Global, Inc. ................................... 131,887
2,424 Middleby (The) Corp. (b) ........................... 128,933
4,429 Robbins & Myers, Inc. .............................. 96,286
----------
447,747
----------
MEDIA - 1.0%
5,306 DISH Network Corp., Class A (b) .................... 96,304
8,504 Virgin Media, Inc. ................................. 141,932
----------
238,236
----------
MULTI-UTILITIES - 2.6%
6,668 National Grid PLC, ADR ............................. 245,582
2,242 Public Service Enterprise Group, Inc. .............. 70,242
1,055 Sempra Energy ...................................... 49,363
10,891 Veolia Environment, ADR ............................ 254,523
----------
619,710
----------
OIL, GAS & CONSUMABLE FUELS - 4.8%
6,238 BP PLC, ADR ........................................ 180,153
7,109 ENI SpA, ADR ....................................... 259,834
3,630 Peabody Energy Corp. ............................... 142,042
13,462 Repsol YPF S.A., ADR ............................... 270,586
5,981 Royal Dutch Shell PLC, ADR ......................... 300,366
----------
1,152,981
----------
See Notes to Financial Statements
Page 23
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------- ----------
COMMON STOCKS - (CONTINUED)
PERSONAL PRODUCTS - 1.3%
2,947 Herbalife Ltd. ................................ $ 135,709
2,998 NBTY, Inc. (b) ................................ 101,962
2,961 Nu Skin Enterprises, Inc., Class A ............ 73,818
----------
311,489
----------
PHARMACEUTICALS - 5.3%
8,537 GlaxoSmithKline PLC, ADR ...................... 290,343
23,452 Merck & Co., Inc. ............................. 820,116
6,422 Warner Chilcott PLC, Class A (b) .............. 146,743
----------
1,257,202
----------
PROFESSIONAL SERVICES - 0.1%
359 Dun & Bradstreet (The) Corp. .................. 24,096
----------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 0.3%
2,378 Plum Creek Timber Co., Inc. ................... 82,112
----------
SOFTWARE - 4.7%
21,590 Lawson Software, Inc. (b) ..................... 157,607
35,154 Microsoft Corp. ............................... 808,894
5,296 Progress Software Corp. (b) ................... 159,039
----------
1,125,540
----------
SPECIALTY RETAIL - 6.4%
2,541 Big 5 Sporting Goods Corp. .................... 33,389
3,478 Dress Barn (The), Inc. (b) .................... 82,811
1,662 DSW, Inc., Class A (b) ........................ 37,328
3,082 Genesco, Inc. (b) ............................. 81,087
4,401 Guess?, Inc. .................................. 137,487
3,825 Hibbett Sports, Inc. (b) ...................... 91,647
3,052 J. Crew Group, Inc. (b) ....................... 112,344
1,283 Jo-Ann Stores, Inc. (b) ....................... 48,125
2,449 Jos. A. Bank Clothiers, Inc. (b) .............. 132,221
7,081 Men's Wearhouse (The), Inc. ................... 130,007
5,098 TJX (The) Cos., Inc. .......................... 213,861
12,422 Urban Outfitters, Inc. (b) .................... 427,193
----------
1,527,500
----------
TEXTILES, APPAREL & LUXURY GOODS - 1.7%
3,882 Coach, Inc. ................................... 141,887
4,509 Culp, Inc. (b) ................................ 49,419
603 Deckers Outdoor Corp. (b) ..................... 86,151
1,594 Steven Madden Ltd. (b) ........................ 50,243
3,284 True Religion Apparel, Inc. (b) ............... 72,478
----------
400,178
----------
TOBACCO - 2.6%
777 Lorillard, Inc. ............................... 55,928
9,440 Philip Morris International, Inc. ............. 432,730
3,354 Universal Corp. ............................... 133,087
----------
621,745
----------
See Notes to Financial Statements
Page 24
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ --------------------------------------------- -----------
COMMON STOCKS - (CONTINUED)
TRADING COMPANIES & DISTRIBUTORS - 0.8%
5,722 WESCO International, Inc. (b) ............... $ 192,660
-----------
WIRELESS TELECOMMUNICATION SERVICES - 3.8%
12,200 NII Holdings, Inc. (b) ...................... 396,744
9,310 Syniverse Holdings, Inc. (b) ................ 190,390
15,705 Vodafone Group PLC, ADR ..................... 324,622
-----------
911,756
-----------
TOTAL INVESTMENTS - 99.3%
(Cost $25,807,400) (c) ...................... 23,755,941
NET OTHER ASSETS AND LIABILITIES - 0.7% ..... 171,480
-----------
NET ASSETS - 100.0% ......................... $23,927,421
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $1,080,331 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $3,131,790.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* .. $23,755,941 $23,755,941 $-- $--
=========== =========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 25
THE DOW(R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ------------------------------------------------------- ----------
COMMON STOCKS - 98.2%
CHEMICALS - 10.8%
16,235 E.I. du Pont de Nemours & Co. ......................... $ 561,569
----------
DIVERSIFIED TELECOMMUNICATION SERVICES - 18.0%
19,520 AT&T, Inc. ............................................ 472,189
16,542 Verizon Communications, Inc. .......................... 463,507
----------
935,696
----------
FOOD & STAPLES RETAILING - 9.4%
10,179 Wal-Mart Stores, Inc. ................................. 489,305
----------
HOTELS, RESTAURANTS & LEISURE - 11.1%
8,791 McDonald's Corp. ...................................... 579,063
----------
HOUSEHOLD PRODUCTS - 10.4%
9,009 Procter & Gamble (The) Co. ............................ 540,360
----------
INSURANCE - 10.4%
10,998 Travelers (The) Cos., Inc. ............................ 541,651
----------
OIL, GAS & CONSUMABLE FUELS - 18.1%
7,119 Chevron Corp. ......................................... 483,095
8,039 Exxon Mobil Corp. ..................................... 458,786
----------
941,881
----------
PHARMACEUTICALS - 10.0%
14,916 Merck & Co., Inc. ..................................... 521,612
----------
TOTAL INVESTMENTS - 98.2%
(Cost $5,518,730) (b) ................................. 5,111,137
NET OTHER ASSETS AND LIABILITIES - 1.8% ............... 90,877
----------
NET ASSETS - 100.0% ................................... $5,202,014
==========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $58,939 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $466,532.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* ........ $5,111,137 $5,111,137 $-- $--
========== ========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 26
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- ------------------------------------------------------ -----------
COMMON STOCKS - 99.4%
CHEMICALS - 5.0%
38,418 Sensient Technologies Corp. .......................... $ 996,179
-----------
COMMERCIAL BANKS - 21.8%
40,222 BB&T Corp. ........................................... 1,058,241
148,778 F.N.B. Corp. ......................................... 1,194,687
45,090 Trustmark Corp. ...................................... 938,774
49,906 United Bankshares, Inc. .............................. 1,194,750
-----------
4,386,452
-----------
ELECTRIC UTILITIES - 9.6%
39,059 Northeast Utilities .................................. 995,223
31,050 Unisource Energy Corp. ............................... 937,089
-----------
1,932,312
-----------
FOOD PRODUCTS - 5.2%
37,397 Kraft Foods, Inc., Class A ........................... 1,047,116
-----------
INSURANCE - 15.1%
33,673 Allstate Corp. ....................................... 967,425
38,911 Cincinnati Financial Corp. ........................... 1,006,628
25,883 Mercury General Corp. ................................ 1,072,592
-----------
3,046,645
-----------
MULTI-UTILITIES - 18.8%
23,182 DTE Energy Co. ....................................... 1,057,331
65,733 NiSource, Inc. ....................................... 953,128
22,644 PG&E Corp. ........................................... 930,668
18,075 Sempra Energy ........................................ 845,729
-----------
3,786,856
-----------
THRIFTS & MORTGAGE FINANCE - 19.6%
82,112 Astoria Financial Corp. .............................. 1,129,861
73,274 First Niagara Financial Group, Inc. .................. 918,123
70,852 New York Community Bancorp, Inc. ..................... 1,081,910
61,231 People's United Financial, Inc. ...................... 826,619
-----------
3,956,513
-----------
TOBACCO - 4.3%
22,023 Universal Corp. ...................................... 873,873
-----------
TOTAL INVESTMENTS - 99.4%
(Cost $20,730,989) (b) ............................... 20,025,946
NET OTHER ASSETS AND LIABILITIES - 0.6% .............. 119,905
-----------
NET ASSETS - 100.0% .................................. $20,145,851
===========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $345,033 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $1,050,076.
See Notes to Financial Statements
Page 27
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks* ........ $20,025,946 $20,025,946 $-- $--
=========== =========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 28
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- --------- ---------------------------------------------------- -----------
COMMON STOCKS - 98.2%
CHINA - 20.0%
4,708,000 Bank of China Ltd. (b) ............................. $ 2,375,202
3,018,000 Industrial & Commercial Bank of China Ltd. (b) ..... 2,193,651
2,072,000 PetroChina Co., Ltd., H Shares (b) ................. 2,291,770
-----------
6,860,623
-----------
HONG KONG - 15.9%
1,606,000 CNOOC Ltd. (b) ..................................... 2,729,687
453,000 Hongkong Electric Holdings Ltd. (b) ................ 2,698,203
-----------
5,427,890
-----------
UNITED KINGDOM - 29.5%
428,065 BAE Systems PLC (b) ................................ 1,992,306
505,178 Man Group PLC (b) .................................. 1,674,615
383,230 Marks & Spencer Group PLC (b) ...................... 1,887,947
351,257 Tate & Lyle PLC (b) ................................ 2,346,904
1,071,280 Vodafone Group PLC (b) ............................. 2,207,361
-----------
10,109,133
-----------
UNITED STATES - 32.8%
87,245 AT&T, Inc. ......................................... 2,110,457
84,818 Home Depot (The), Inc. ............................. 2,380,841
119,999 Intel Corp. ........................................ 2,333,981
89,881 Kraft Foods, Inc., Class A ......................... 2,516,668
133,555 Pfizer, Inc. ....................................... 1,904,494
-----------
11,246,441
-----------
TOTAL INVESTMENTS - 98.2%
(Cost $38,127,051) (c) ............................. 33,644,087
NET OTHER ASSETS AND LIABILITIES - 1.8% ............ 601,871
-----------
NET ASSETS - 100.0% ................................ $34,245,958
===========
- ----------
(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) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $299,994 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $4,782,958.
See Notes to Financial Statements
Page 29
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks:
China ................. $ 6,860,623 $ -- $ 6,860,623 $--
Hong Kong ............. 5,427,890 -- 5,427,890 --
United Kingdom ........ 10,109,133 -- 10,109,133 --
United States ......... 11,246,441 11,246,441 -- --
----------- ----------- ----------- ---
Total Common Stocks ...... $33,644,087 $11,246,441 $22,397,646 $--
=========== =========== =========== ===
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Oil, Gas & Consumable Fuels ......................... 14.7%
Food Products ....................................... 14.2
Commercial Banks .................................... 13.3
Electric Utilities .................................. 7.9
Specialty Retail .................................... 6.9
Semiconductors & Semiconductor Equipment ............ 6.8
Wireless Telecommunication Services ................. 6.4
Diversified Telecommunication Services .............. 6.2
Aerospace & Defense ................................. 5.8
Pharmaceuticals ..................................... 5.6
Multiline Retail .................................... 5.5
Capital Markets ..................................... 4.9
Net Other Assets and Liabilities .................... 1.8
-----
100.0%
=====
See Notes to Financial Statements
Page 30
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ---------------------------------------------------------- ----------
COMMON STOCKS - 98.9%
AEROSPACE & DEFENSE - 9.6%
9,332 United Technologies Corp.................................. $ 605,740
----------
CAPITAL MARKETS - 11.8%
5,456 Franklin Resources, Inc................................... 470,253
6,070 T. Rowe Price Group, Inc.................................. 269,447
----------
739,700
----------
COMPUTERS & PERIPHERALS - 21.2%
10,470 International Business Machines Corp...................... 1,292,836
1,361 Teradata Corp. (b)........................................ 41,483
----------
1,334,319
----------
ELECTRONIC EQUIPMENT & INSTRUCTION - 0.8%
1,349 Amphenol Corp., Class A................................... 52,989
----------
ENERGY EQUIPMENT & SERVICES - 7.1%
2,684 FMC Technologies, Inc. (b)................................ 141,339
9,163 National Oilwell Varco, Inc............................... 303,020
----------
444,359
----------
FOOD PRODUCTS - 1.3%
1,625 Mead Johnson Nutrition Co................................. 81,445
----------
GAS UTILITIES - 0.9%
1,237 Questar Corp.............................................. 56,271
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 10.7%
9,110 Baxter International, Inc................................. 370,230
6,004 Stryker Corp.............................................. 300,560
----------
670,790
----------
INTERNET & CATALOG RETAIL - 2.4%
859 priceline.com, Inc. (b)................................... 151,648
----------
LIFE SCIENCES TOOLS & SERVICES - 1.5%
1,420 Waters Corp. (b).......................................... 91,874
----------
MACHINERY - 0.8%
560 Flowserve Corp............................................ 47,488
----------
MULTI-UTILITIES - 3.0%
3,527 Public Service Enterprise Group, Inc...................... 110,501
1,726 Sempra Energy............................................. 80,760
----------
191,261
----------
OIL, GAS & CONSUMABLE FUELS - 3.7%
5,855 Peabody Energy Corp....................................... 229,106
----------
PROFESSIONAL SERVICES - 0.6%
518 Dun & Bradstreet (The) Corp............................... 34,768
----------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.1%
3,860 Plum Creek Timber Co., Inc................................ 133,286
----------
SPECIALTY RETAIL - 5.4%
8,140 TJX (The) Cos., Inc....................................... 341,473
----------
TEXTILES, APPAREL & LUXURY GOODS - 3.6%
6,177 Coach, Inc................................................ 225,769
----------
See Notes to Financial Statements
Page 31
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ---------------------------------------------------------- ----------
COMMON STOCKS - (CONTINUED)
TOBACCO - 12.4%
1,269 Lorillard, Inc............................................ $ 91,343
15,065 Philip Morris International, Inc.......................... 690,580
----------
781,923
----------
TOTAL INVESTMENTS - 98.9%
(Cost $6,962,910) (c)..................................... 6,214,209
NET OTHER ASSETS AND LIABILITIES - 1.1%................... 69,745
----------
NET ASSETS - 100.0%....................................... $6,283,954
==========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $62,429 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $811,130.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* .. $6,214,209 $6,214,209 $-- $--
========== ========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 32
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ---------------------------------------------------------- ----------
COMMON STOCKS - 97.3%
CONSTRUCTION & ENGINEERING - 2.9%
4,335 Foster Wheeler AG (b)..................................... $ 91,295
----------
HEALTH CARE EQUIPMENT & SUPPLIES - 7.7%
768 Intuitive Surgical, Inc. (b).............................. 242,396
----------
HEALTH CARE TECHNOLOGY - 6.7%
2,767 Cerner Corp. (b).......................................... 209,988
----------
HOUSEHOLD DURABLES - 6.2%
6,709 Garmin Ltd................................................ 195,769
----------
INTERNET & CATALOG RETAIL - 5.9%
1,051 priceline.com, Inc. (b)................................... 185,544
----------
INTERNET SOFTWARE & SERVICES - 12.3%
5,646 Baidu, Inc., ADR (b)...................................... 384,380
----------
IT SERVICES - 16.3%
5,168 Cognizant Technology Solutions Corp., Class A (b)......... 258,710
4,217 Infosys Technologies Ltd., ADR............................ 252,640
----------
511,350
----------
MACHINERY - 5.5%
3,453 Joy Global, Inc........................................... 172,961
----------
MEDIA - 10.1%
7,037 DISH Network Corp., Class A............................... 127,721
11,267 Virgin Media, Inc......................................... 188,046
----------
315,767
----------
PHARMACEUTICALS - 6.0%
8,258 Warner Chilcott PLC, Class A (b).......................... 188,695
----------
SOFTWARE - 5.6%
7,589 Microsoft Corp............................................ 174,623
----------
SPECIALTY RETAIL - 6.3%
5,725 Urban Outfitters, Inc. (b)................................ 196,883
----------
WIRELESS TELECOMMUNICATION SERVICES - 5.8%
5,592 NII Holdings, Inc. (b).................................... 181,852
----------
TOTAL INVESTMENTS - 97.3%
(Cost $3,108,491) (c)..................................... 3,051,503
NET OTHER ASSETS AND LIABILITIES - 2.7%................... 84,153
----------
NET ASSETS - 100.0%....................................... $3,135,656
==========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $161,464 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $218,452.
ADR American Depositary Receipt
See Notes to Financial Statements
Page 33
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* .. $3,051,503 $3,051,503 $-- $--
========== ========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 34
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------------- ---------
COMMON STOCKS - 99.1%
AEROSPACE & DEFENSE - 0.9%
751 Esterline Technologies Corp. (b) .................... $ 35,635
628 Triumph Group, Inc. ................................. 41,844
----------
77,479
----------
AIRLINES - 0.3%
1,800 SkyWest, Inc. ....................................... 21,996
----------
AUTO COMPONENTS - 0.2%
656 Fuel Systems Solutions, Inc. (b) .................... 17,023
----------
AUTOMOBILES - 0.4%
694 Daimler AG (b) ...................................... 35,082
----------
BUILDING PRODUCTS - 0.3%
2,487 Griffon Corp. (b) ................................... 27,506
----------
CAPITAL MARKETS - 1.0%
752 Credit Suisse Group AG, ADR ......................... 28,147
519 Deutsche Bank AG .................................... 29,147
2,377 UBS AG (b) .......................................... 31,424
----------
88,718
----------
CHEMICALS - 2.0%
463 NewMarket Corp. ..................................... 40,429
5,194 Sensient Technologies Corp. ......................... 134,680
----------
175,109
----------
COMMERCIAL BANKS - 13.3%
708 Bank of Montreal .................................... 38,430
2,110 Barclays PLC, ADR ................................... 33,528
5,438 BB&T Corp. .......................................... 143,074
1,572 Community Bank System, Inc. ......................... 34,631
20,115 F.N.B. Corp. ........................................ 161,523
646 HSBC Holdings PLC, ADR .............................. 29,451
3,240 International Bancshares Corp. ...................... 54,076
11,266 Lloyds Banking Group PLC, ADR (b) ................... 35,600
7,473 Mitsubishi UFJ Financial Group, Inc., ADR ........... 34,077
10,295 Mizuho Financial Group, Inc., ADR ................... 33,459
7,128 National Bank of Greece S.A., ADR (b) ............... 15,468
2,994 PacWest Bancorp ..................................... 54,820
3,900 Royal Bank of Scotland Group PLC, ADR (b) ........... 47,190
1,754 S&T Bancorp, Inc. ................................... 34,659
598 Toronto-Dominion Bank (The) ......................... 38,816
8,807 Trustmark Corp. ..................................... 183,362
6,746 United Bankshares, Inc. ............................. 161,499
1,007 Wintrust Financial Corp. ............................ 33,573
----------
1,167,236
----------
COMMUNICATIONS EQUIPMENT - 0.3%
1,064 Black Box Corp. ..................................... 29,675
----------
COMPUTERS & PERIPHERALS - 2.3%
6,786 Western Digital Corp. (b) ........................... 204,666
----------
See Notes to Financial Statements
Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------------- ---------
COMMON STOCKS - (CONTINUED)
CONSTRUCTION & ENGINEERING - 0.6%
1,372 URS Corp. (b) ....................................... $ 53,988
--------
CONSUMER FINANCE - 0.7%
3,204 AmeriCredit Corp. (b) ............................... 58,377
--------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.5%
2,842 China Unicom (Hong Kong), Ltd., ADR ................. 37,799
2,504 Deutsche Telekom AG, ADR ............................ 29,222
1,852 Nippon Telegraph & Telephone Corp., ADR ............. 37,670
2,390 Telecom Italia SpA, ADR ............................. 26,314
--------
131,005
--------
ELECTRIC UTILITIES - 7.0%
3,123 Great Plains Energy, Inc. ........................... 53,153
2,905 Hawaiian Electric Industries, Inc. .................. 66,176
1,898 IDACORP, Inc. ....................................... 63,146
5,280 Northeast Utilities ................................. 134,534
4,915 NV Energy, Inc. ..................................... 58,046
4,831 PNM Resources, Inc. ................................. 54,011
4,200 Unisource Energy Corp. .............................. 126,756
2,787 Westar Energy, Inc. ................................. 60,227
--------
616,049
--------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 0.5%
1,305 Tech Data Corp. (b) ................................. 46,484
--------
ENERGY EQUIPMENT & SERVICES - 1.3%
794 Bristow Group, Inc. (b) ............................. 23,344
1,456 Gulf Island Fabrication, Inc. ....................... 22,597
1,906 Pride International, Inc. (b) ....................... 42,580
406 SEACOR Holdings, Inc. (b) ........................... 28,688
--------
117,209
--------
FOOD PRODUCTS - 1.6%
5,057 Kraft Foods, Inc., Class A .......................... 141,596
--------
GAS UTILITIES - 0.6%
2,067 Atmos Energy Corp. .................................. 55,892
--------
HEALTH CARE EQUIPMENT & SUPPLIES - 5.4%
1,171 Intuitive Surgical, Inc. (b) ........................ 369,591
3,721 Symmetry Medical, Inc. (b) .......................... 39,219
1,129 Teleflex, Inc. ...................................... 61,282
--------
470,092
--------
HEALTH CARE PROVIDERS & SERVICES - 2.6%
3,187 Kindred Healthcare, Inc. (b) ........................ 40,921
1,864 LifePoint Hospitals, Inc. (b) ....................... 58,530
1,329 Molina Healthcare, Inc. (b) ......................... 38,275
2,500 Omnicare, Inc. ...................................... 59,250
2,721 Res-Care, Inc. (b) .................................. 26,285
--------
223,261
--------
See Notes to Financial Statements
Page 36
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------------- ---------
COMMON STOCKS - (CONTINUED)
HOTELS, RESTAURANTS & LEISURE - 0.3%
2,375 Marcus Corp. ........................................ $ 22,468
--------
HOUSEHOLD DURABLES - 1.3%
1,265 Sony Corp., ADR ..................................... 33,750
1,935 Tupperware Brands Corp. ............................. 77,110
--------
110,860
--------
INSURANCE - 9.3%
4,554 Allstate Corp. ...................................... 130,836
2,447 American Financial Group, Inc. ...................... 66,852
1,551 AXA S.A., ADR ....................................... 23,653
5,260 Cincinnati Financial Corp. .......................... 136,076
1,353 Delphi Financial Group, Inc., Class A ............... 33,027
1,854 First American Financial Corp. ...................... 23,509
2,035 Manulife Financial Corp. ............................ 29,670
5,055 Mercury General Corp. ............................... 209,479
565 ProAssurance Corp. (b) .............................. 32,069
843 Safety Insurance Group, Inc. ........................ 31,208
1,309 Tower Group, Inc. ................................... 28,183
2,725 Unitrin, Inc. ....................................... 69,760
--------
814,322
--------
INTERNET & CATALOG RETAIL - 4.8%
1,709 Netflix, Inc. (b) ................................... 185,683
1,351 priceline.com, Inc. (b) ............................. 238,506
--------
424,189
--------
INTERNET SOFTWARE & SERVICES - 0.3%
3,658 InfoSpace, Inc. (b) ................................. 27,508
--------
IT SERVICES - 6.2%
9,038 Cognizant Technology Solutions Corp., Class A (b) ... 452,442
1,854 CoreLogic, Inc. ..................................... 32,742
1,312 Unisys Corp. (b) .................................... 24,259
1,163 Wright Express Corp. (b) ............................ 34,541
--------
543,984
--------
MEDIA - 0.6%
2,018 Scholastic Corp. .................................... 48,674
--------
METALS & MINING - 0.2%
801 ArcelorMittal ....................................... 21,435
--------
MULTI-UTILITIES - 6.1%
3,136 DTE Energy Co. ...................................... 143,033
8,888 NiSource, Inc. ...................................... 128,876
3,062 PG&E Corp. .......................................... 125,848
2,442 Sempra Energy ....................................... 114,261
1,113 Veolia Environnement, ADR ........................... 26,011
--------
538,029
--------
OIL, GAS & CONSUMABLE FUELS - 1.9%
1,142 EnCana Corp. ........................................ 34,648
3,978 Patriot Coal Corp. (b) .............................. 46,741
See Notes to Financial Statements
Page 37
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------------- ---------
COMMON STOCKS - (CONTINUED)
OIL, GAS & CONSUMABLE FUELS - (CONTINUED)
1,377 Repsol YPF S.A., ADR ................................ $ 27,678
2,681 Southern Union Co. .................................. 58,607
--------
167,674
--------
PERSONAL PRODUCTS - 2.3%
1,868 Herbalife Ltd. ...................................... 86,021
1,911 NBTY, Inc. (b) ...................................... 64,993
1,919 Nu Skin Enterprises, Inc., Class A .................. 47,841
--------
198,855
--------
PROFESSIONAL SERVICES - 0.5%
4,290 On Assignment, Inc. (b) ............................. 21,579
1,261 School Specialty, Inc. (b) .......................... 22,786
--------
44,365
--------
REAL ESTATE INVESTMENT TRUSTS (REITS) - 2.0%
1,931 BioMed Realty Trust, Inc. ........................... 31,070
2,614 Extra Space Storage, Inc. ........................... 36,335
2,596 Hospitality Properties Trust ........................ 54,776
1,450 National Retail Properties, Inc. .................... 31,088
1,438 Parkway Properties, Inc. ............................ 20,952
--------
174,221
--------
SPECIALTY RETAIL - 7.0%
1,592 Big 5 Sporting Goods Corp. .......................... 20,919
2,154 Cabela's, Inc. (b) .................................. 30,457
2,235 Dress Barn (The), Inc. (b) .......................... 53,215
1,040 DSW, Inc., Class A (b) .............................. 23,358
1,028 Group 1 Automotive, Inc. (b) ........................ 24,189
2,827 Guess?, Inc. ........................................ 88,315
1,967 J. Crew Group, Inc. (b) ............................. 72,405
823 Jo-Ann Stores, Inc. (b) ............................. 30,871
3,400 Rent-A-Center, Inc. (b) ............................. 68,884
2,386 Stage Stores, Inc. .................................. 25,482
5,177 Urban Outfitters, Inc. (b) .......................... 178,037
--------
616,132
--------
TEXTILES, APPAREL & LUXURY GOODS - 1.7%
2,826 Culp, Inc. (b) ...................................... 30,973
379 Deckers Outdoor Corp. (b) ........................... 54,148
2,424 Iconix Brand Group, Inc. (b) ........................ 34,833
997 Steven Madden Ltd. (b) .............................. 31,425
--------
151,379
--------
THRIFTS & MORTGAGE FINANCE - 6.8%
11,103 Astoria Financial Corp. ............................. 152,777
9,907 First Niagara Financial Group, Inc. ................. 124,135
13,837 New York Community Bancorp, Inc. .................... 211,291
8,278 People's United Financial, Inc. ..................... 111,753
--------
599,956
--------
See Notes to Financial Statements
Page 38
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------ ----------------------------------------------------- ---------
COMMON STOCKS - (CONTINUED)
TOBACCO - 2.0%
4,301 Universal Corp. ..................................... $ 170,664
----------
WIRELESS TELECOMMUNICATION SERVICES - 3.0%
5,059 NII Holdings, Inc. (b) .............................. 164,519
2,624 NTT DoCoMo, Inc., ADR ............................... 39,570
1,789 Telephone & Data Systems, Inc. ...................... 54,368
----------
258,457
----------
TOTAL INVESTMENTS - 99.1%
(Cost $9,102,024) (c) ............................... 8,691,615
NET OTHER ASSETS AND LIABILITIES - 0.9% ............. 80,615
----------
NET ASSETS - 100.0% ................................. $8,772,230
==========
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $382,860 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $793,269.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
----------- ----------- ----------- ------------
Common Stocks*.. $ 8,691,615 $ 8,691,615 $-- $--
=========== =========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 39
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a)
JUNE 30, 2010 (UNAUDITED)
SHARES DESCRIPTION VALUE
- ------- -------------------------------------------------------- -----------
COMMON STOCKS - 99.3%
AUTO COMPONENTS - 0.8%
3,061 Fuel Systems Solutions, Inc. (b) ....................... $ 79,433
-----------
CHEMICALS - 2.4%
2,644 NewMarket Corp. ........................................ 230,874
-----------
COMPUTERS & PERIPHERALS - 5.4%
17,542 Western Digital Corp. (b) .............................. 529,067
-----------
HEALTH CARE EQUIPMENT & SUPPLIES - 8.3%
2,564 Intuitive Surgical, Inc. (b) ........................... 809,250
-----------
HOUSEHOLD DURABLES - 4.5%
11,012 Tupperware Brands Corp. ................................ 438,828
-----------
INTERNET & CATALOG RETAIL - 17.1%
9,753 Netflix, Inc. (b) ...................................... 1,059,663
3,506 priceline.com, Inc. (b) ................................ 618,949
-----------
1,678,612
-----------
IT SERVICES - 12.2%
17,242 Cognizant Technology Solutions Corp., Class A (b) ...... 863,135
7,464 Unisys Corp. (b) ....................................... 138,009
6,627 Wright Express Corp. (b) ............................... 196,822
-----------
1,197,966
-----------
PERSONAL PRODUCTS - 11.5%
10,626 Herbalife Ltd. ......................................... 489,327
10,882 NBTY, Inc. (b) ......................................... 370,097
10,942 Nu Skin Enterprises, Inc., Class A ..................... 272,784
-----------
1,132,208
-----------
SPECIALTY RETAIL - 23.6%
5,989 Big 5 Sporting Goods Corp. ............................. 78,695
12,721 Dress Barn (The), Inc. (b) ............................. 302,887
3,919 DSW, Inc., Class A (b) ................................. 88,021
16,063 Guess?, Inc. ........................................... 501,808
11,189 J. Crew Group, Inc. (b) ................................ 411,867
4,680 Jo-Ann Stores, Inc. (b) ................................ 175,547
22,082 Urban Outfitters, Inc. (b) ............................. 759,400
-----------
2,318,225
-----------
TEXTILES, APPAREL & LUXURY GOODS - 5.9%
10,626 Culp, Inc. (b) ......................................... 116,461
2,154 Deckers Outdoor Corp. (b) .............................. 307,742
4,769 Steven Madden Ltd. (b) ................................. 150,319
-----------
574,522
-----------
WIRELESS TELECOMMUNICATION SERVICES - 7.6%
22,908 NII Holdings, Inc. (b) ................................. 744,968
-----------
TOTAL INVESTMENTS - 99.3%
(Cost $10,156,732) (c) ................................. 9,733,953
NET OTHER ASSETS AND LIABILITIES - 0.7% ................ 69,685
-----------
NET ASSETS - 100.0% .................................... $ 9,803,638
===========
See Notes to Financial Statements
Page 40
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (a) - (CONTINUED)
JUNE 30, 2010 (UNAUDITED)
- ----------
(a) All percentages shown in the Portfolio of Investments are based on net
assets.
(b) Non-income producing security.
(c) Aggregate cost for financial reporting purposes, which approximates the
aggregate cost for federal income tax purposes. As of June 30, 2010, the
aggregate gross unrealized appreciation for all securities in which there
was an excess of value over tax cost was $972,315 and the aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over value was $1,395,094.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of June 30,
2010 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
06/30/10 PRICES INPUTS INPUTS
---------- ---------- ----------- ------------
Common Stocks* .... $9,733,953 $9,733,953 $-- $--
========== ========== === ===
* See the Portfolio of Investments for industry breakout.
See Notes to Financial Statements
Page 41
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 2010 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ------------ -----------
ASSETS:
Investments, at value (1) .......................... $23,755,941 $5,111,137 $ 20,025,946 $33,644,087
Cash ............................................... 215,175 116,698 153,642 409,984
Prepaid expenses ................................... 2,000 380 6,352 2,801
Receivables:
Dividends ....................................... 62,596 5,042 79,153 467,355
Interest ........................................ 17 11 8 25
From Investment Advisor ......................... -- 2,400 -- --
----------- ---------- ------------ -----------
Total Assets ................................. 24,035,729 5,235,668 20,265,101 34,524,252
----------- ---------- ------------ -----------
LIABILITIES:
Payables:
Membership Interests redeemed ................... 55,664 12,181 74,517 214,553
Membership Interest servicing fees .............. 22,196 4,125 18,604 30,532
Audit fees ...................................... 8,532 8,532 8,532 8,532
Licensing fees .................................. 5,447 1,360 -- --
12b-1 service fees .............................. 5,241 1,034 4,425 7,373
Custodian fees .................................. 4,368 1,506 1,385 608
Printing fees ................................... 3,816 3,816 3,816 3,816
Legal fees ...................................... 512 187 128 165
Administrative fees ............................. 545 107 460 767
Investment advisory fees ........................ 460 -- 5,908 10,478
Other liabilities .................................. 1,527 806 1,475 1,470
----------- ---------- ------------ -----------
Total Liabilities ............................ 108,308 33,654 119,250 278,294
----------- ---------- ------------ -----------
NET ASSETS ......................................... $23,927,421 $5,202,014 $ 20,145,851 $34,245,958
=========== ========== ============ ===========
(1) Investments, at cost ........................... $25,807,400 $5,518,730 $ 20,730,989 $38,127,051
=========== ========== ============ ===========
NET ASSETS CONSIST OF:
Paid-in capital .................................... $ 7,716,912 $4,186,357 $ 28,610,382 $25,815,147
Accumulated net investment income (loss) ........... 3,553,357 1,349,614 6,255,303 11,859,241
Accumulated net realized gain (loss) on
investments and foreign currency transactions ... 14,708,611 73,636 (14,014,791) 1,050,842
Net unrealized appreciation (depreciation) on
investments and foreign currency translation .... (2,051,459) (407,593) (705,043) (4,479,272)
----------- ---------- ------------ -----------
NET ASSETS ......................................... $23,927,421 $5,202,014 $ 20,145,851 $34,245,958
=========== ========== ============ ===========
NET ASSET VALUE, offering price and redemption
price of Membership Interests outstanding (Net
Assets / Membership Interests outstanding) ...... $ 7.42 $ 8.29 $ 8.03 $ 17.84
=========== ========== ============ ===========
Number of Membership Interests outstanding ......... 3,222,554 627,567 2,508,189 1,919,301
=========== ========== ============ ===========
See Notes to Financial Statements
Page 42
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------- ----------- ------------ -------------
$6,214,209 $ 3,051,503 $ 8,691,615 $ 9,733,953
108,986 102,113 147,276 122,123
3,042 2,786 733 840
15,683 -- 17,516 3,750
5 4 6 6
750 3,213 2,047 --
- ---------- ----------- ------------ -----------
6,342,675 3,159,619 8,859,193 9,860,672
- ---------- ----------- ------------ -----------
34,457 7,215 53,987 26,821
6,274 2,537 8,934 9,156
8,532 8,532 8,532 8,532
-- -- 2,545 2,342
1,368 702 1,930 2,188
3,256 674 6,153 1,753
3,816 3,816 3,816 3,816
145 135 70 369
142 73 201 227
-- -- -- 1,512
731 279 795 318
- ---------- ----------- ------------ -----------
58,721 23,963 86,963 57,034
- ---------- ----------- ------------ -----------
$6,283,954 $ 3,135,656 $ 8,772,230 $ 9,803,638
========== =========== ============ ===========
$6,962,910 $ 3,108,491 $ 9,102,024 $10,156,732
========== =========== ============ ===========
$7,169,602 $ 7,719,500 $ 27,714,659 $14,007,384
99,354 (494,099) 22,577 (1,131,208)
(236,301) (4,032,757) (18,554,597) (2,649,759)
(748,701) (56,988) (410,409) (422,779)
- ---------- ----------- ------------ -----------
$6,283,954 $ 3,135,656 $ 8,772,230 $ 9,803,638
========== =========== ============ ===========
$ 7.21 $ 6.91 $ 3.99 $ 2.70
========== =========== ============ ===========
871,959 453,902 2,201,065 3,631,998
========== =========== ============ ===========
See Notes to Financial Statements
Page 43
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ----------- -----------
INVESTMENT INCOME:
Dividends ........................................................ $ 356,690 $ 100,222 $ 508,021 $ 1,073,597
Foreign withholding tax on dividend income ....................... (14,779) -- -- (22,106)
Interest ......................................................... 100 35 102 121
----------- --------- ----------- -----------
Total investment income ....................................... 342,011 100,257 508,123 1,051,612
----------- --------- ----------- -----------
EXPENSES:
Investment advisory fees ......................................... 86,593 15,751 71,978 121,264
Membership Interest servicing fees ............................... 50,178 9,125 41,264 70,370
12b-1 service fees ............................................... 36,080 6,563 29,991 50,527
Custodian fees ................................................... 14,917 3,382 5,567 9,883
Licensing fees ................................................... 12,691 1,034 5,326 --
Audit fees ....................................................... 8,532 8,532 8,532 8,532
Fund accounting fees ............................................. 7,938 1,444 6,598 11,116
Legal fees ....................................................... 6,354 1,275 5,696 8,054
Printing fees .................................................... 5,357 5,357 5,357 5,357
Trustees' fees and expenses ...................................... 3,999 782 4,139 5,372
Administration fees .............................................. 3,753 682 3,119 5,255
Other ............................................................ 7,168 3,908 4,439 9,685
----------- --------- ----------- -----------
Total expenses ................................................ 243,560 57,835 192,006 305,415
Fees waived or expenses reimbursed by the investment advisor .. (31,407) (19,246) (15,660) (8,319)
----------- --------- ----------- -----------
Net expenses ..................................................... 212,153 38,589 176,346 297,096
----------- --------- ----------- -----------
NET INVESTMENT INCOME (LOSS) ..................................... 129,858 61,668 331,777 754,516
----------- --------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments ................................................... 1,520,637 611,643 1,869,604 1,352,548
Foreign currency transactions ................................. -- -- -- 894
----------- --------- ----------- -----------
Net realized gain (loss) ......................................... 1,520,637 611,643 1,869,604 1,353,442
----------- --------- ----------- -----------
Net change in unrealized appreciation (depreciation) on:
Investments ................................................... (3,604,073) (920,712) (1,911,599) (5,607,362)
Foreign currency translation .................................. -- -- -- 1,091
----------- --------- ----------- -----------
Net change in unrealized appreciation (depreciation) ............. (3,604,073) (920,712) (1,911,599) (5,606,271)
----------- --------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) .......................... (2,083,436) (309,069) (41,995) (4,252,829)
----------- --------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS .. $(1,953,578) $(247,401) $ 289,782 $(3,498,313)
=========== ========= =========== ===========
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
- ----------- --------- ----------- -------------
$ 78,211 $ 14,846 $ 128,381 $ 20,607
-- -- (2,480) --
38 28 40 46
- ----------- --------- ----------- -----------
78,249 14,874 125,941 20,653
- ----------- --------- ----------- -----------
24,738 9,343 33,313 33,561
14,524 5,301 19,555 19,580
10,307 3,893 13,880 13,984
6,433 3,145 12,439 4,359
2,477 2,477 3,560 4,749
8,532 8,532 8,532 8,532
2,268 856 3,054 3,077
1,964 812 2,674 2,621
5,357 5,357 5,357 5,357
1,246 419 1,611 1,511
1,072 405 1,444 1,454
3,185 3,477 4,792 4,033
- ----------- --------- ----------- -----------
82,103 44,017 110,211 102,818
(21,496) (21,128) (34,147) (20,592)
- ----------- --------- ----------- -----------
60,607 22,889 76,064 82,226
- ----------- --------- ----------- -----------
17,642 (8,015) 49,877 (61,573)
- ----------- --------- ----------- -----------
980,280 623,756 2,159,880 654,456
-- -- -- --
- ----------- --------- ----------- -----------
980,280 623,756 2,159,880 654,456
- ----------- --------- ----------- -----------
(1,707,416) (690,114) (2,628,104) (1,147,946)
-- -- -- --
- ----------- --------- ----------- -----------
(1,707,416) (690,114) (2,628,104) (1,147,946)
- ----------- --------- ----------- -----------
(727,136) (66,358) (468,224) (493,490)
- ----------- --------- ----------- -----------
$ (709,494) $ (74,373) $ (418,347) $ (555,063)
=========== ========= =========== ===========
See Notes to Financial Statements
Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ---------- ----------- -----------
OPERATIONS:
Net investment income (loss) ..................... $ 129,858 $ 61,668 $ 331,777 $ 754,516
Net realized gain (loss) ......................... 1,520,637 611,643 1,869,604 1,353,442
Net change in unrealized appreciation
(depreciation) ................................ (3,604,073) (920,712) (1,911,599) (5,606,271)
----------- ---------- ----------- -----------
Net increase (decrease) in net assets resulting
from operations ............................... (1,953,578) (247,401) 289,782 (3,498,313)
Net increase (decrease) in net assets from
Membership Interest transactions .............. (5,267,726) 2,392 (2,700,471) (9,140,833)
----------- ---------- ----------- -----------
Net increase (decrease) in net assets ............ (7,221,304) (245,009) (2,410,689) (12,639,146)
NET ASSETS:
Beginning of period .............................. 31,148,725 5,447,023 22,556,540 46,885,104
----------- ---------- ----------- -----------
End of period .................................... $23,927,421 $5,202,014 $20,145,851 $34,245,958
=========== ========== =========== ===========
Accumulated net investment income (loss) at end of
period ........................................ $ 3,553,357 $1,349,614 $ 6,255,303 $11,859,241
=========== ========== =========== ===========
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
============ =========== ============ ============
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
- ----------- ---------- ------------ -------------
$ 17,642 $ (8,015) $ 49,877 $ (61,573)
980,280 623,756 2,159,880 654,456
(1,707,416) (690,114) (2,628,104) (1,147,946)
- ----------- ---------- ----------- -----------
(709,494) (74,373) (418,347) (555,063)
(2,298,828) 388,752 (2,013,819) (852,325)
- ----------- ---------- ----------- -----------
(3,008,322) 314,379 (2,432,166) (1,407,388)
9,292,276 2,821,277 11,204,396 11,211,026
- ----------- ---------- ----------- -----------
$ 6,283,954 $3,135,656 $ 8,772,230 $ 9,803,638
=========== ========== =========== ===========
$ 99,354 $ (494,099) $ 22,577 $(1,131,208)
=========== ========== =========== ===========
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)
=========== ========== =========== ============
See Notes to Financial Statements
Page 47
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE SIX MONTHS ENDED JUNE 30, 2010 (UNAUDITED)
GLOBAL
TARGET THE DOW(R) THE DOW(R) DIVIDEND
MANAGED VIP DART 10 TARGET DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------- ----------- --------------- ------------
AMOUNT:
Sold ..................... $ 1,718,969 $ 1,164,254 $ 5,810,840 $ 1,743,440
Redeemed ................. (6,986,695) (1,161,862) (8,511,311) (10,884,273)
----------- ----------- ----------- ------------
Net increase (decrease) .. $(5,267,726) $ 2,392 $(2,700,471) $ (9,140,833)
=========== =========== =========== ============
MEMBERSHIP INTEREST:
Sold ..................... 208,669 132,746 681,863 91,624
Redeemed ................. (882,081) (134,193) (992,679) (596,019)
----------- ----------- ----------- ------------
Net increase (decrease) .. (673,412) (1,447) (310,816) (504,395)
=========== =========== =========== ============
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)
============ =========== =========== ============
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
- ----------- ---------- ------------ -------------
$ 932,669 $1,092,681 $ 1,857,870 $ 749,457
(3,231,497) (703,929) (3,871,689) (1,601,782)
- ----------- ---------- ----------- -----------
$(2,298,828) $ 388,752 $(2,013,819) $ (852,325)
=========== ========== =========== ===========
117,523 151,100 416,755 248,024
(416,969) (93,779) (907,253) (541,532)
- ----------- ---------- ----------- -----------
(299,446) 57,321 (490,498) (293,508)
=========== ========== =========== ===========
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)
=========== =========== =========== ===========
See Notes to Financial Statements
Page 49
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 8.00 $ 7.08 $ 12.83 $ 11.72 $ 10.51 $ 9.80
------- ------- ------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............. 0.04(a) 0.06(a) 0.08(a) 0.07(a) 0.06 0.03
Net realized and unrealized gain (loss) .. (0.62) 0.86 (5.83) 1.04 1.15 0.68
------- ------- ------- -------- -------- --------
Total from investment operations ......... (0.58) 0.92 (5.75) 1.11 1.21 0.71
------- ------- ------- -------- -------- --------
Net asset value, end of period ........... $ 7.42 $ 8.00 $ 7.08 $ 12.83 $ 11.72 $ 10.51
======= ======= ======= ======== ======== ========
TOTAL RETURN (b) ......................... (7.25)%(c) 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) ..... $23,927 $31,149 $32,281 $174,134 $203,868 $182,892
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 1.69%(d) 1.66% 1.51% 1.35% 1.37% 1.48%
Ratio of expenses to average net assets .. 1.47%(d) 1.47% 1.47% 1.35% 1.37% 1.47%
Ratio of net investment income (loss)
to average net assets ................. 0.90%(d) 0.82% 0.75% 0.53% 0.54% 0.26%
Portfolio turnover rate .................. 95% 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.
(d) Annualized.
See Notes to Financial Statements
Page 50
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 8.66 $ 7.60 $ 10.63 $ 10.56 $ 8.41 $ 8.69
------ ------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) ......... 0.10 0.14 0.13 0.11 0.14 0.14
Net realized and unrealized gain (loss) .. (0.47) 0.92 (3.16) (0.04) 2.01 (0.42)
------ ------ ------- ------- ------- -------
Total from investment operations ......... (0.37) 1.06 (3.03) 0.07 2.15 (0.28)
------ ------ ------- ------- ------- -------
Net asset value, end of period ........... $ 8.29 $ 8.66 $ 7.60 $ 10.63 $ 10.56 $ 8.41
====== ====== ======= ======= ======= =======
TOTAL RETURN (b) ......................... (4.27)%(c) 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) ..... $5,202 $5,447 $ 7,081 $16,172 $27,955 $11,611
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 2.20%(d) 2.13% 1.81% 1.56% 1.47% 1.59%
Ratio of expenses to average net assets .. 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets ................. 2.35%(d) 2.00% 1.42% 1.01% 1.47% 1.66%
Portfolio turnover rate .................. 89% 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.
(d) Annualized.
See Notes to Financial Statements
Page 51
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR PERIOD
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05 (a)
----------- -------- -------- -------- -------- ------------
Net asset value, beginning of period ..... $ 8.00 $ 7.01 $ 11.79 $ 11.66 $ 9.87 $ 10.00
------- ------- ------- ------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) ......... 0.12 0.18 0.28 0.25 0.23 0.12
Net realized and unrealized gain (loss) .. (0.09) 0.81 (5.06) (0.12) 1.56 (0.25)
------- ------- ------- ------- -------- -------
Total from investment operations ......... 0.03 0.99 (4.78) 0.13 1.79 (0.13)
------- ------- ------- ------- -------- -------
Net asset value, end of period ........... $ 8.03 $ 8.00 $ 7.01 $ 11.79 $ 11.66 $ 9.87
======= ======= ======= ======= ======== =======
TOTAL RETURN (c) ......................... 0.38%(d) 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) ..... $20,146 $22,557 $20,369 $82,900 $100,906 $58,438
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 1.60%(e) 1.67% 1.47% 1.36% 1.37% 1.52%(e)
Ratio of expenses to average net assets .. 1.47%(e) 1.47% 1.47% 1.36% 1.37% 1.47%(e)
Ratio of net investment income (loss)
to average net assets ................. 2.77%(e) 2.83% 2.76% 2.06% 2.11% 2.00%(e)
Portfolio turnover rate .................. 91% 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
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05(a)
----------- -------- -------- -------- -------- -----------
Net asset value, beginning of period ..... $ 19.34 $ 13.71 $ 23.96 $ 21.14 $ 15.27 $ 13.86
------- ------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) ......... 0.35 0.11 0.72 0.60 0.63 0.35
Net realized and unrealized gain (loss) .. (1.85) 5.52 (10.97) 2.22 5.24 1.06
------- ------- ------- -------- -------- -------
Total from investment operations ......... (1.50) 5.63 (10.25) 2.82 5.87 1.41
------- ------- ------- -------- -------- -------
Net asset value, end of period ........... $ 17.84 $ 19.34 $ 13.71 $ 23.96 $ 21.14 $ 15.27
======= ======= ======= ======== ======== =======
TOTAL RETURN (c) ......................... (7.76)%(d) 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) ..... $34,246 $46,885 $36,063 $173,741 $128,836 $36,791
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 1.51%(e) 1.53% 1.53% 1.39% 1.47% 1.61%
Ratio of expenses to average net assets .. 1.47%(e) 1.47% 1.47% 1.39% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets ................. 3.73%(e) 0.71% 3.47% 2.56% 3.45% 2.49%
Portfolio turnover rate .................. 114% 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.
(e) Annualized.
See Notes to Financial Statements
Page 53
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 7.93 $ 6.97 $ 9.66 $ 9.28 $ 9.02 $ 8.66
------ ------ ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............. 0.02(a) 0.07(a) 0.01 0.04(a) (0.04) 0.02
Net realized and unrealized gain (loss) .. (0.74) 0.89 (2.70) 0.34 0.30 0.34
------ ------ ------- ------- ------- -------
Total from investment operations ......... (0.72) 0.96 (2.69) 0.38 0.26 0.36
------ ------ ------- ------- ------- -------
Net asset value, end of period ........... $ 7.21 $ 7.93 $ 6.97 $ 9.66 $ 9.28 $ 9.02
====== ====== ======= ======= ======= =======
TOTAL RETURN (b) (c) ..................... (9.08)% 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) ..... $6,284 $9,292 $ 7,758 $15,789 $16,057 $18,049
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 1.99%(d) 2.07% 1.83% 1.55% 1.56% 1.58%
Ratio of expenses to average net assets .. 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets .................... 0.43%(d) 0.97% 0.10% 0.43% (0.40)% 0.20%
Portfolio turnover rate .................. 114% 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.
(d) Annualized.
See Notes to Financial Statements
Page 54
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ..... $ 7.11 $ 6.08 $ 12.38 $ 10.17 $ 9.34 $ 9.04
------ ------ ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) ......... (0.02) (0.04) (0.07) (0.04) (0.11) (0.07)
Net realized and unrealized gain (loss) .. (0.18) 1.07 (6.23) 2.25 0.94 0.37
------ ------ ------- ------- ------ ------
Total from investment operations ......... (0.20) 1.03 (6.30) 2.21 0.83 0.30
------ ------ ------- ------- ------ ------
Net asset value, end of period ........... $ 6.91 $ 7.11 $ 6.08 $ 12.38 $10.17 $ 9.34
====== ====== ======= ======= ====== ======
TOTAL RETURN (b) (c) ..................... (2.81)% 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) ..... $3,136 $2,821 $ 3,177 $11,316 $7,318 $6,552
Ratio of expenses to average net assets
without fee waivers and expenses
reimbursed ............................ 2.83%(d) 2.93% 2.13% 1.76% 1.84% 1.83%
Ratio of expenses to average net assets .. 1.47%(d) 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss)
to average net assets ................. (0.51)%(d) (0.68)% (0.79)% (0.34)% (1.08)% (0.80)%
Portfolio turnover rate .................. 99% 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.
(d) Annualized.
See Notes to Financial Statements
Page 55
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 (a) 12/31/06 12/31/05
----------- -------- -------- ------------ -------- --------
Net asset value, beginning of period ............. $ 4.16 $ 3.23 $ 5.75 $ 5.44 $ 5.23 $ 5.20
------ ------- ------- ------- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (b) ................. 0.02 0.03 0.07 0.09 0.06 (0.01)
Net realized and unrealized gain (loss) .......... (0.19) 0.90 (2.59) 0.22 0.15 0.04
------ ------- ------- ------- ------ ------
Total from investment operations ................. (0.17) 0.93 (2.52) 0.31 0.21 0.03
------ ------- ------- ------- ------ ------
Net asset value, end of period ................... $ 3.99 $ 4.16 $ 3.23 $ 5.75 $ 5.44 $ 5.23
====== ======= ======= ======= ====== ======
TOTAL RETURN (c) (d) ............................. (4.09)% 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) ............. $8,772 $11,204 $ 4,708 $12,708 $5,734 $7,004
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.99%(e) 2.29% 2.97% 1.92% 1.79% 1.69%
Ratio of expenses to average net assets .......... 1.37%(e) 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss)
to average net assets ......................... 0.90%(e) 0.92% 1.40% 1.54% 1.14% (0.16)%
Portfolio turnover rate .......................... 92% 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.
(e) Annualized.
See Notes to Financial Statements
Page 56
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
06/30/10 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 12/31/09 12/31/08 12/31/07 12/31/06 12/31/05
----------- -------- -------- -------- -------- --------
Net asset value, beginning of period ............. $ 2.86 $ 2.67 $ 5.91 $ 5.00 $ 4.86 $ 4.06
------ ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ..................... (0.02)(a) (0.02)(a) (0.01)(a) (0.02)(a) (0.04) (0.02)(a)
Net realized and unrealized gain (loss) .......... (0.14) 0.21 (3.23) 0.93 0.18 0.82
------ ------- ------- ------- ------- -------
Total from investment operations ................. (0.16) 0.19 (3.24) 0.91 0.14 0.80
------ ------- ------- ------- ------- -------
Net asset value, end of period ................... $ 2.70 $ 2.86 $ 2.67 $ 5.91 $ 5.00 $ 4.86
====== ======= ======= ======= ======= =======
TOTAL RETURN (b) ................................. (5.59)%(c) 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) ............. $9,804 $11,211 $15,186 $43,998 $43,776 $54,072
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.84%(d) 1.80% 1.51% 1.41% 1.41% 1.49%
Ratio of expenses to average net assets .......... 1.47%(d) 1.47% 1.47% 1.41% 1.41% 1.47%
Ratio of net investment income (loss)
to average net assets ......................... (1.10)%(d) (0.63)% (0.22)% (0.37)% (0.88)% (0.45)%
Portfolio turnover rate .......................... 99% 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.
(d) Annualized.
See Notes to Financial Statements
Page 57
NOTES TO FINANCIAL STATEMENTS
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
1. FUND DESCRIPTION
First Defined Portfolio Fund, LLC (the "Registrant") was organized as a Delaware
limited liability company on January 8, 1999 under the laws of the State of
Delaware. The Registrant is registered with the Securities and Exchange
Commission under the Investment Company Act of 1940, as amended (the "1940
Act"), as a non-diversified, open-end management investment company.
The Registrant offers eight managed investment Portfolios (each a "Portfolio,"
and collectively, the "Portfolios") as follows:
Target Managed VIP Portfolio
The Dow(R) DART 10 Portfolio
The Dow(R) Target Dividend Portfolio
Global Dividend Target 15 Portfolio
S&P(R) Target 24 Portfolio
NASDAQ(R) Target 15 Portfolio
First Trust Target Focus Four Portfolio
Value Line(R) Target 25 Portfolio
Under Delaware law, a limited liability company does not issue shares of stock.
Instead, ownership rights are contained in Portfolio Membership Interests (each
an "Interest" and collectively, the "Interests"). Each Interest represents an
undivided interest in the net assets of the applicable Portfolio. Interests are
not offered directly to the public. Interests are sold only to Prudential
Annuities Life Assurance Corporation Variable Account B ("Account B"), a
separate account of Prudential Annuities Life Assurance Corporation
("Prudential"), to fund the benefits of variable annuity policies (the
"Policies") issued by Prudential. Account B is the sole member of the
Registrant. Account B's variable annuity owners who have Policy values allocated
to any of the Portfolios have indirect rights to the Interests.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements. The
preparation of financial statements in accordance with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts and disclosures in
the financial statements. Actual results could differ from those estimates.
A. PORTFOLIO VALUATION:
The net asset value ("NAV") of each Interest is determined daily as of the close
of regular trading on the New York Stock Exchange ("NYSE"), normally 4:00 p.m.
Eastern time, on each day the NYSE is open for trading. The NAV is calculated by
dividing the value of all assets of a Portfolio (including accrued interest and
dividends), less all liabilities (including accrued expenses and dividends
declared but unpaid), by the total number of Interests outstanding.
Each Portfolio's investments are valued daily at market value or, in the absence
of market value with respect to any portfolio securities, at fair value
according to procedures adopted by the Board of Trustees of the Registrant. A
majority of each Portfolio's assets are valued using market information supplied
by third parties. In the event that market quotations are not readily available,
the pricing service does not provide a valuation for a particular asset, or the
valuations are deemed unreliable, the Registrant's Board of Trustees has
designated First Trust Advisors L.P. ("First Trust") to use a fair value method
to value each Portfolio's securities and investments. Additionally, if events
occur after the close of the principal markets for particular securities (e.g.,
domestic debt and foreign securities), but before 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") or 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
JUNE 30, 2010 (UNAUDITED)
being determined at the close of the exchange representing the principal market
for such securities. Portfolio securities traded in the over-the-counter market,
but excluding securities trading on the NASDAQ or 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 June 30, 2010, 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 $3,693 from dividends
receivable in foreign currencies is included in "Dividends receivable" on the
Statement of Assets and Liabilities for the Global Dividend Target 15 Portfolio.
Page 59
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income and net realized long-term and
short-term capital gains of all Portfolios may be paid with such frequency
(monthly or otherwise) as the Board of Trustees may determine from time to time.
Currently all distributions paid by a Portfolio will be reinvested by the
Portfolio.
E. INCOME TAXES:
The Registrant is a limited liability company with all of its Interests owned by
a single entity (Account B). Accordingly, the Registrant is treated as part of
the operations of Prudential and is not taxed separately. The Registrant intends
to continue to comply with the provisions of Section 817(h) of the Internal
Revenue Code, which impose certain diversification requirements upon variable
contracts that are based on segregated asset accounts. Under current tax law,
interest, dividend income, and capital gains of the Registrant are not currently
taxable when left to accumulate within a variable annuity contract. As such, no
federal or state income tax provision is required.
F. EXPENSES:
Expenses that are directly related to one of the Portfolios are charged directly
to that Portfolio. General expenses of the Registrant with the exception of
audit and printing fees, which are allocated evenly among the Portfolios, are
generally allocated to all the Portfolios based upon the 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 under 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 currently 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 the Registrant's financial
statement disclosures, if any.
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 successive periods from September 30, 2004 through December 31, 2011, 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 to the extent that the actual expense ratio of a particular
Portfolio is less than such Portfolio's applicable expense cap at the time of
the waiver or reimbursement. These amounts
Page 60
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
would be included in "Expenses previously waived or reimbursed" on the
Statements of Operations. The advisory fee waivers and expense reimbursements
for the six months ended June 30, 2010 and the expenses borne by First Trust
subject to reimbursement by each Portfolio for the periods indicated were as
follows:
EXPENSES BORNE BY FIRST TRUST SUBJECT TO REIMBURSEMENT
----------------------------------------------------------
SIX
MONTHS
YEAR ENDED YEAR ENDED YEAR ENDED ENDED
FEES EXPENSES DECEMBER DECEMBER DECEMBER JUNE 30,
WAIVED REIMBURSED 31, 2007 31, 2008 31, 2009 2010 TOTAL
------- ---------- ---------- ---------- ---------- -------- --------
Target Managed VIP
Portfolio ................. $31,407 $ -- $ -- $ 30,984 $53,913 $31,407 $116,304
The Dow(R) Dart 10
Portfolio ................. 15,751 3,495 14,895 34,027 35,264 19,246 103,432
The Dow(R) Target Dividend
Portfolio ................. 15,660 -- -- 180 34,903 15,660 50,743
Global Dividend Target 15
Portfolio ................. 8,319 -- -- 53,187 21,774 8,319 83,280
S&P(R) Target 24
Portfolio ................. 21,496 -- 4,691 37,227 43,615 21,496 107,029
NASDAQ(R) Target 15
Portfolio ................. 9,343 11,785 13,765 39,899 40,468 21,128 115,260
First Trust Target Focus
Four Portfolio ............ 33,313 834 17,967 144,163 69,680 34,147 265,957
Value Line(R) Target 25
Portfolio ................. 20,592 -- -- 12,577 41,127 20,592 74,296
PNC Global Investment Servicing (U.S.) Inc., an indirect, wholly-owned
subsidiary of The PNC Financial Services Group, Inc. ("PNC"), 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 PNC, serves
as the custodian to the Portfolios.
On July 1, 2010, PNC sold the outstanding stock of PNC Global Investment
Servicing Inc. to The Bank of New York Mellon Corporation. At the closing of the
sale, PNC Global Investment Servicing (U.S.) Inc. changed its name to BNY Mellon
Investment Servicing (US) Inc. PFPC Trust Company will not change its name until
a later date to be announced.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid an annual retainer
of $10,000 per trust for the first 14 trusts of the First Trust Fund Complex and
an annual retainer of $7,500 per trust for each subsequent trust in the First
Trust Fund Complex. The annual retainer is allocated equally among each of the
trusts. No additional meeting fees are paid in connection with board or
committee meetings.
Additionally, the Lead Independent Trustee is paid $10,000 annually, the Audit
Committee Chairman is paid $5,000 annually, and each of the Chairmen of the
Nominating and Governance Committee and the Valuation Committee are paid $2,500
annually to serve in such capacities, with such compensation paid by the trusts
in the First Trust Fund Complex and divided among those trusts. Trustees are
also reimbursed by the trusts in the First Trust Fund Complex for travel and
out-of-pocket expenses in connection with all meetings. The Lead Independent
Trustee and each Committee chairman will serve two-year terms ending on December
31, 2011, 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
Page 61
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
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 expenses associated with the distribution
of the Portfolios, and any distribution-related expenses that may be authorized
by the Registrant's Board of Trustees.
During the six months ended June 30, 2010, all service fees received by FTP were
paid to Prudential, with no portion of such fees retained by FTP. The Plan may
be renewed from year to year if approved by a vote of the Registrant's Board of
Trustees and a vote of the Independent Trustees, who have no direct or indirect
financial interest in the Plan, cast in person at a meeting called for the
purpose of voting on the Plan.
5. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government and short-term investments, for the six months ended June 30, 2010,
was as follows:
PURCHASES SALES
----------- -----------
Target Managed VIP Portfolio ............. $26,769,459 $31,619,135
The Dow(R) DART 10 Portfolio ............. 4,666,684 4,573,430
The Dow(R) Target Dividend Portfolio ..... 20,948,241 22,915,695
Global Dividend Target 15 Portfolio ...... 45,359,989 53,602,623
S&P(R) Target 24 Portfolio ............... 9,141,513 11,268,354
NASDAQ(R) Target 15 Portfolio ............ 3,388,600 2,960,443
First Trust Target Focus Four Portfolio .. 9,895,748 11,816,321
Value Line(R) Target 25 Portfolio ........ 10,756,344 11,634,363
6. MEMBERSHIP INTERESTS
The Registrant is authorized to issue 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. 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.
Page 62
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
NON-U.S. SECURITIES INVESTMENT RISK: The Portfolios may invest in non-U.S.
securities. Investing in securities of non-U.S. companies and non-U.S.
governments involves special risks and considerations not typically associated
with investing in the securities of U.S. companies and the U.S. government.
These risks include re-valuation of currencies and future adverse political and
economic developments. These risks are heightened for investments in emerging
market countries. Moreover, securities of many non-U.S. companies and non-U.S.
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the U.S. government.
NON-DIVERSIFICATION RISK: Each Portfolio is classified as "non-diversified" and
is limited as to the percentage of its assets which may be invested in
securities of any one issuer only by its own investment restrictions and
diversification requirements. A Portfolio may therefore invest a relatively high
percentage of its assets in a limited number of issuers. This does expose each
Portfolio to greater market fluctuations than is experienced by a diversified
fund. Each Portfolio is more susceptible to any single economic, political or
regulatory occurrence and to the financial conditions of the issuers in which it
invests.
INVESTMENT STRATEGY RISK: Each Portfolio is also exposed to additional market
risk due to its policy of investing in accordance with an investment strategy.
As a result of this policy, securities held by the Portfolios will generally not
be bought or sold in response to market fluctuations and the securities may be
issued by companies concentrated in a particular industry. Each Portfolio's
relative lack of diversification, possible concentration in a particular
industry and passive management style may subject investors to greater market
risk than other mutual funds.
SMALL CAP COMPANY RISK: The Target Managed VIP Portfolio and Value Line(R)
Target 25 Portfolio invest in small cap stocks, which presents additional risk.
Small cap stocks are more vulnerable to market conditions, less liquid and
generally experience greater price volatility than stocks of larger
capitalization companies.
FINANCIALS SECTOR RISK: The Portfolios may invest in securities of companies in
the financial sector. The downturn in the U.S. and world economies has adversely
affected banks, thrifts, credit and capital markets, companies involved in the
insurance industry and other companies in the financial sectors.
9. SUBSEQUENT EVENTS
Management has evaluated the impact of all subsequent events on the Portfolios
through the date the financial statements were issued, and has determined that
besides those subsequent events already disclosed there was the following
subsequent event:
On August 24, 2010, members of the Robert Donald Van Kampen family entered into
a Stock Purchase Agreement to sell 100% of the common stock of The Charger
Corporation to James A. Bowen, the President of First Trust. The transaction is
expected to be completed by September 21, 2010 and is subject to normal closing
conditions. The consummation of the transaction will be deemed to be "an
assignment" (as defined in the 1940 Act) of the Investment Advisory and
Management Agreement between the Registrant and First Trust, and will result in
the automatic termination of the agreement. Prior to consummation of the
transaction, it is anticipated that the Board of Trustees of the Registrant will
consider an interim investment management agreement and a new ongoing investment
management agreement with First Trust, which will contain terms substantially
identical to the existing Investment Advisory and Management Agreement. If
approved by the Board of Trustees of the Registrant, the new ongoing investment
management agreement will be presented for shareholder approval.
Page 63
ADDITIONAL INFORMATION
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (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.
BOARD CONSIDERATIONS REGARDING CONTINUATION OF INVESTMENT ADVISORY AND
MANAGEMENT AGREEMENT
The Board of Trustees of First Defined Portfolio Fund, LLC (the "Registrant"),
including the Independent Trustees, unanimously approved the continuation of the
Investment Advisory and Management Agreement (the "Advisory Agreement") between
the Registrant, on behalf of eight portfolios of the Registrant (each a
"Portfolio" and collectively, the "Portfolios"), and First Trust Advisors L.P.
(the "Advisor") at a meeting held on March 21-22, 2010. The Board determined
that the terms of the Advisory Agreement are fair and reasonable and that the
Advisory Agreement continues to be in the best interests of the Registrant and
each Portfolio.
To reach this determination, the Board considered its duties under the
Investment Company Act of 1940, as amended (the "1940 Act"), as well as under
the general principles of state law in reviewing and approving advisory
contracts; the requirements of the 1940 Act in such matters; the fiduciary duty
of investment advisors with respect to advisory agreements and compensation; the
standards used by courts in determining whether investment Registrant boards
have fulfilled their duties; and the factors to be considered by the Board in
voting on such agreements. To assist the Board in its evaluation of the Advisory
Agreement for each Portfolio, the Independent Trustees received a report from
the Advisor in advance of the Board meeting responding to a request for
information from counsel to the Independent Trustees. The report, among other
things, outlined the services provided by the Advisor to each Portfolio
(including the relevant personnel responsible for these services and their
experience); the advisory fees for each Portfolio as compared to fees charged by
investment advisors to comparable Portfolios and as compared to fees charged to
other clients of the Advisor; expenses of each Portfolio as compared to expense
ratios of comparable Portfolios; the nature of expenses incurred in providing
services to each Portfolio and the potential for economies of scale, if any;
financial data on the Advisor; any fall out benefits to the Advisor; and
information on the Advisor's compliance program. The Independent Trustees also
met separately with their independent legal counsel to discuss the information
provided by the Advisor. The Board applied its business judgment to determine
whether the arrangement between the Registrant and the Advisor is a reasonable
business arrangement from each Portfolio's perspective as well as from the
perspective of its interest holders.
In reviewing the Advisory Agreement, the Board considered the nature, quality
and extent of services provided by the Advisor to each Portfolio under the
Advisory Agreement. The Board considered that the Advisor is responsible for the
overall management and administration of the Registrant and each Portfolio. The
Board considered the compliance program that had been developed by the Advisor
and noted the enhancements made by the Advisor to the compliance program in
2009. In light of the information presented and the considerations made, the
Board concluded that the nature, quality and extent of services provided to the
Registrant and each Portfolio by the Advisor under the Advisory Agreement have
been and are expected to remain satisfactory and that the Advisor has managed
each Portfolio consistent with its investment objective and policies.
The Board considered the advisory fees paid by each Portfolio under the Advisory
Agreement, noting that the annual fees for each Portfolio are 0.60% of average
daily net assets. The Board considered that the Advisor agreed to waive fees and
reimburse expenses of each Portfolio through December 31, 2011 in order to
prevent total annual operating expenses (excluding extraordinary expenses and
brokerage fees) from exceeding 1.47% of average daily net assets (1.37% for the
First Trust Target Focus Four Portfolio). The Board noted that the Advisor may
seek restitution from each Portfolio for fees waived and reimbursed through
December 31, 2011; however, such restitution is limited to the extent that it
would not cause a Portfolio to exceed the expense limitation in place at the
time the fees were waived or reimbursed by the Advisor. The Board also
considered the advisory fees charged by the Advisor to similar funds and other
non-
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ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
fund clients, and noted that the Advisor does not provide advisory services to
institutional clients that have investment objectives and policies similar to
the Portfolios', other than to registered investment Registrants. The Board
noted that the Advisor does provide retail separate managed account investment
advisory services to a variety of accounts that have investment objectives and
policies similar to the Portfolios' and noted the Advisor's standard fee for
such services, while also considering the differences in services provided to
the Portfolios. In addition, the Board received data prepared by Lipper Inc.
("Lipper"), an independent source, showing the management fees and expense
ratios of each Portfolio as compared to the management fees and expense ratios
of a peer group selected by Lipper. The Board discussed with representatives of
the Advisor the limitations of each peer group, including that (i) pure index
funds were included in many of the peer groups; (ii) many peer funds had a
different Lipper Investment Classification/Objective relative to the
corresponding Portfolio; and (iii) many of the peer funds are substantially
larger than the Portfolios. The Board reviewed the Lipper materials, but based
on its discussions with the Advisor, the Board determined that the Lipper data
was of limited value for purposes of its consideration of the renewal of the
Advisory Agreement.
The Board also considered performance information for each Portfolio, noting
that the performance information included each Portfolio's quarterly performance
report, which is part of the process that the Board has established for
monitoring each Portfolio's performance on an ongoing basis. The Board
determined that this process continues to be effective for reviewing each
Portfolio's performance. In addition to the Board's ongoing review of
performance, the Board also received data prepared by Lipper comparing each
Portfolio's performance to the peer group selected by Lipper, as well as to a
broader peer universe and to a benchmark. The Board reviewed the Lipper
materials, but for similar reasons to those described above, the Board
determined that the performance data provided by Lipper was of limited value. In
addition, because each Portfolio is non-diversified and generally invests in a
relatively small number of issuers, the Board considered the difficulties of
comparing each Portfolio to a broad peer universe. The Board also noted the
differences between each Portfolio and its benchmark index. The Board noted that
changes in the Portfolios' benchmarks and investment policies over the years
affected the utility of comparisons with peer universe and benchmark performance
over longer-term periods and noted that each Portfolio's investment results were
consistent with its investment objective. Based on the information provided and
the Board's ongoing review of each Portfolio's performance, the Board concluded
that each Portfolio's performance was reasonable.
On the basis of all the information provided on the fees, expenses and
performance of each Portfolio, the Board concluded that the advisory fees for
each Portfolio were reasonable and appropriate in light of the nature, quality
and extent of services provided by the Advisor to each Portfolio under the
Advisory Agreement.
The Board noted that the Advisor has continued to invest in personnel and
infrastructure and considered whether fee levels reflect any economies of scale
for the benefit of shareholders. The Board concluded that the advisory fee for
each Portfolio reflects an appropriate level of sharing of any economies of
scale at current asset levels. The Board also considered the costs of the
services provided and profits realized by the Advisor from serving as investment
advisor to each Portfolio for the twelve months ended December 31, 2009, as set
forth in the materials provided to the Board, noting that the Advisor estimated
that it incurred a loss in providing services to each Portfolio in 2009. In
addition, the Board considered and discussed any ancillary benefits derived by
the Advisor from its relationship with the Registrant and the Portfolios and
noted that the typical fall out benefits to the Advisor such as soft dollars are
not present. The Board concluded that any other fall out benefits received by
the Advisor or its affiliates would appear to be limited.
Based on all of the information considered and the conclusions reached, the
Board, including the Independent Trustees, determined that the terms of the
Advisory Agreement continue to be fair and reasonable and that the continuation
of the Advisory Agreement is in the best interests of the Registrant and each
Portfolio. No single factor was determinative in the Board's analysis.
LICENSING INFORMATION
"Dow Jones Industrial Average(sm)," "DJIA(sm)," "The Dow Jones U.S. Select
Dividend Index(sm)," "Dow Industrials(sm)," "The Dow(R)," "Dow 30(sm)," and "The
Dow 10(sm)" are service marks or registered trademarks, as applicable, of Dow
Jones & Company, Inc. ("Dow Jones") and have been licensed for use for certain
purposes by First Trust on behalf of the Registrant. None of the Portfolios,
including, and in 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.
Page 65
ADDITIONAL INFORMATION - (CONTINUED)
FIRST DEFINED PORTFOLIO FUND, LLC
JUNE 30, 2010 (UNAUDITED)
"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.
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(FIRST TRUST LOGO)
INVESTMENT ADVISOR
First Trust Advisors L.P.
120 E. Liberty Drive, Suite 400
Wheaton, IL 60187
ADMINISTRATOR, FUND ACCOUNTANT & TRANSFER AGENT
BNY Mellon Investment Servicing (US) Inc.
301 Bellevue Parkway
Wilmington, DE 19809
CUSTODIAN
PFPC Trust Company
8800 Tinicum Boulevard
Philadelphia, PA 19153
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
111 S. Wacker Drive
Chicago, IL 60606
LEGAL COUNSEL
Chapman and Cutler LLP
111 W. Monroe Street
Chicago, IL 60603
ITEM 2. CODE OF ETHICS.
Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial officers,
or persons performing similar functions, have concluded that the
registrant's disclosure controls and procedures (as defined in Rule
30a-3(c) under the Investment Company Act of 1940, as amended (the
"1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within
90 days of the filing date of the report that includes the disclosure
required by this paragraph, based on their evaluation of these
controls and procedures required by Rule 30a-3(b) under the 1940 Act
(17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the
Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or
240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Defined Portfolio Fund, LLC
By (Signature and Title)* /s/ James A. Bowen
------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date August 19, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /s/ James A. Bowen
------------------------------------------------------
James A. Bowen, Chairman of the Board, President and
Chief Executive Officer
(principal executive officer)
Date August 19, 2010
By (Signature and Title)* /s/ Mark R. Bradley
------------------------------------------------------
Mark R. Bradley, Treasurer, Chief Financial Officer
and Chief Accounting Officer
(principal financial officer)
Date August 19, 2010
* Print the name and title of each signing officer under his or her
signature.