UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-09235
-----------
First Defined Portfolio Fund, LLC
----------------------------------------------------------------
(Exact name of registrant as specified in charter)
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
----------------------------------------------------------------
(Address of principal executive offices) (Zip code)
W. Scott Jardine, Esq.
First Trust Portfolios L.P.
120 East Liberty Drive, Suite 400
Wheaton, IL 60187
----------------------------------------------------------------
(Name and address of agent for service)
registrant's telephone number, including area code: 630-765-8000
--------------
Date of fiscal year end: December 31
-------------
Date of reporting period: December 31, 2013
-------------------
Form N-CSR is to be used by management investment companies to file reports with
the Commission not later than 10 days after the transmission to stockholders of
any report that is required to be transmitted to stockholders under Rule 30e-1
under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may
use the information provided on Form N-CSR in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR,
and the Commission will make this information public. A registrant is not
required to respond to the collection of information contained in Form N-CSR
unless the Form displays a currently valid Office of Management and Budget
("OMB") control number. Please direct comments concerning the accuracy of the
information collection burden estimate and any suggestions for reducing the
burden to Secretary, Securities and Exchange Commission, 100 F Street, NE,
Washington, DC 20549. The OMB has reviewed this collection of information under
the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
The Report to Shareholders is attached herewith.
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2013
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013
Shareholder Letter........................................................... 1
Market Overview.............................................................. 2
Performance Summary and Portfolio Components................................. 4
Understanding Your Fund Expenses............................................. 20
Portfolio of Investments..................................................... 21
Statements of Assets and Liabilities......................................... 44
Statements of Operations..................................................... 46
Statements of Changes in Net Assets.......................................... 48
Statements of Changes in Net Assets - Membership Interest Activity........... 50
Financial Highlights......................................................... 52
Notes to Financial Statements................................................ 60
Report of Independent Registered Public Accounting Firm...................... 65
Additional Information....................................................... 66
Board of Trustees and Officers............................................... 68
Privacy Policy............................................................... 70
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
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 forwardlooking
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 by investing in the Portfolios. See
"Risk Considerations" in the Additional Information section of this report for a
discussion of certain other risks of investing in the Portfolios.
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 may help you evaluate your investment. It
includes details about each Portfolio and presents data and analysis that
provide insight into each Portfolio's performance and investment approach.
By reading the market overview and discussion of each Portfolio's performance by
First Trust, the Registrant's investment advisor, you may obtain an
understanding of how the market environment affected its performance. The
statistical information that follows may help you understand a Portfolio's
performance compared to that of relevant market benchmarks.
It is important to keep in mind that the opinions expressed by personnel of
First Trust are just that: informed opinions. They should not be considered to
be promises or advice. The opinions, like the statistics, cover the period
through the date on the cover of this report. The risks of investing in the
Portfolios are spelled out in the prospectus, the statement of additional
information, this report and other regulatory filings.
--------------------------------------------------------------------------------
SHAREHOLDER LETTER
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL LETTER FROM THE CHAIRMAN AND CEO
DECEMBER 31, 2013
Dear Shareholders:
Enclosed is the annual report for your investment in First Defined Portfolio
Fund, LLC (the "Registrant" or the "Fund").
Please be advised that the Board of Trustees of the Fund, on January 22, 2014,
approved the termination and liquidation of the Fund and its portfolios (the
"Portfolios"): 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 and Value Line(R) Target 25 Portfolio, which are scheduled
to cease normal operations on April 18, 2014 (the "Effective Date"). Following
the Effective Date, the Fund and the Portfolios are scheduled to terminate and
liquidate on April 25, 2014.
This is the last detailed report you will receive about your investment, and it
includes a detailed report about your investment, including a market overview, a
portfolio commentary and a performance analysis. Additionally, First Trust
Advisors L.P. ("First Trust") compiled the Fund's financial statements for you
to review. This report is intended to bring you up-to-date on your investment,
and I encourage you to read this document and discuss it with your financial
advisor.
As you are probably aware, the twelve months covered by this report saw
challenging economic and political issues in the U.S. However, the period was
still positive for the markets. In fact, the S&P 500 Index, as measured on a
total return basis, rose 32.39% during the twelve months ended December 31,
2013. Of course, past performance can never be an indicator of future
performance, but First Trust believes that staying invested in quality products
through up and down markets and having a long-term horizon can help investors as
they work toward their financial goals.
First Trust continues to offer a variety of products that we believe could fit
the financial plans for many investors seeking long-term investment success.
Your advisor can tell you about the other investments First Trust offers that
might fit your financial goals. We encourage you to discuss those goals with
your advisor regularly so that he or she can help keep you on track and help you
choose investments that match your goals.
First Trust will continue to make available up-to-date information about your
investments so you and your financial advisor are current on any First Trust
investments you own. We value our relationship with you, and thank you for the
opportunity to assist you in achieving your financial goals.
Sincerely,
/s/ James A. Bowen
James A. Bowen
Chairman of the Board of Trustees
Chief Executive Officer of First Trust Advisors L.P.
Page 1
--------------------------------------------------------------------------------
MARKET OVERVIEW
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013
ROBERT F. CAREY, CFA
SENIOR VICE PRESIDENT AND CHIEF MARKET STRATEGIST
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.
STATE OF THE ECONOMY/INVESTING
Various surveys of leading economists have shown that expectations for U.S. GDP
growth in 2014 target a growth rate of around 2.8%, up from 2.1% over the past
four quarters through Q3'13. As of the close of 2013, the U.S. economic recovery
turned 54 months old, or 4.5 years. Over the past 4.5 years, we have been
steadfast in our message to investors that the recovery is not only real, but
worth taking a stake in via common stocks. Three major U.S. stock indices (S&P
500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index) all closed 2013 at
or near record highs. From March 9, 2009 (market bottom) through December 31,
2013, the S&P 500, S&P 400 and S&P 600 posted cumulative total returns of
202.78%, 256.52% and 288.11%, respectively. With small-capitalization stocks
outperforming both mid- and large capitalization stocks, it would appear that
the traditional risk/reward relationship is in proper working order. We believe
that should be construed as a positive to any investor who lost confidence in
the markets following the financial crisis in 2008.
One of the biggest disappointments in this recovery to date is that too many
people are still out of work in the U.S. U.S. payrolls currently stand about 1.5
million below where they were in 2008, according to Bloomberg. If the labor
situation improves in 2014, there is a potential silver lining. Why is this so?
More workers should lead to greater consumption, in our opinion. Another
potential boost to consumption could come from consumer durable goods. Americans
have been holding onto their consumer durable goods (which typically last at
least three years) longer than at any point in the last 50 years, according to
MSN.com. This suggests there could be pent-up demand for these goods. The
average age of such items as furniture, appliances and jewelry is more than five
years old, the highest since at least 1962, according to the Bureau of Economic
Analysis.
U.S. STOCKS AND BONDS
For the second calendar year in a row, all of the major U.S. stock indices
posted double-digit total returns. The S&P 500 Index, S&P MidCap 400 Index and
S&P SmallCap 600 Index were up 32.39%, 33.50%, and 41.31%, respectively in 2013,
according to Bloomberg. All 10 major sectors in the S&P 500 posted double-digit
total returns as well in 2013. The gains ranged from 11.47% for the S&P 500
Telecommunication Services Index to 43.08% for the S&P 500 Consumer
Discretionary Index. Volatility eased further in 2013. The VIX Index averaged
14.25%, well below 2012's average of 17.82%, and significantly below its 10-year
average of 20.17%. The 2014 estimated earnings growth rates for the S&P 500, S&P
400 and S&P 600 were 13.31%, 22.57% and 34.92%, respectively, as of January 9,
2014, according to Standard & Poor's.
The S&P 500 has not experienced a 10% correction in 819 days, as of December 31,
2013, and even though we witnessed one in 2011, the market eventually rebounded
and moved on to set new all-time highs. Investors leery of committing capital to
the stock market at current levels should know, however, that the longest
stretch without a 10% correction was 2,553 days (October 11, 1990 - October 7,
1997), according to Bespoke Investment Group. This means that, while always a
possibility, a correction is not imminent, in our opinion.
Page 2
--------------------------------------------------------------------------------
MARKET OVERVIEW (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013
In the U.S. bond market, the top-performing major debt group in 2013 was
high-yield corporate bonds. The Barclays U.S. Corporate High Yield Index posted
a total return of 7.44%. The next closest domestic category was intermediate
investment-grade corporate bonds, up just 0.08%, as measured by the Barclays
Intermediate Corporate Index. The Barclays Municipal Bond: Long Bond (22+ Yr)
Index posted the weakest total return, down 6.01%. The 127 basis point rise in
the yield on the benchmark 10-year Treasury note in 2013 induced some selling
pressure in bond mutual funds. TrimTabs Investment Research reported that
investors liquidated a record $86 billion from U.S. bond mutual funds and ETFs
in 2013, according to Barron's. It topped the previous record of $62 billion set
in 1994.
FOREIGN STOCKS AND BONDS
Investors shied away from foreign debt securities in 2013. The Barclays Global
Emerging Markets Index of debt securities fell 2.66% (USD), while the Barclays
Global Aggregate Index of higher-quality debt declined by 2.60% (USD). Investors
seemed just as disinterested in emerging markets equities. The MSCI Emerging
Markets Index posted a total return of -2.60% (USD). On the other hand,
investors were attracted to stocks from developed nations. The MSCI World Index
(excluding the U.S.) posted a total return of 21.02% (USD). Over the past 12
months, the U.S. dollar rose just 0.33% against a basket of major currencies, as
measured by the U.S. Dollar Index (DXY). The dollar had little influence on
returns for U.S. investors in 2013, in our opinion.
Page 3
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO
Over the twelve months ended December 31, 2013, the Target Managed VIP Portfolio
posted a total return of 35.79% versus 33.55% for the Russell 3000(R) Index over
the same period. The Net Asset Value ("NAV") increased from $10.59 to $14.38
during the period.
The Portfolio outperformed the benchmark, primarily due to positive stock
selection in the Health Care, Information Technology and Financials sectors.
Performance also benefited from positive allocation effects in the Consumer
Discretionary, Health Care and Consumer Staples sectors. The Portfolio was
significantly overweight the Consumer Discretionary sector, which was the
top-performing sector in the benchmark. The top-contributing stocks were Yahoo!,
Inc. (YHOO), Gilead Sciences, Inc. (GILD) and Regeneron Pharmaceuticals, Inc.
(REGN).
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, 2003-Dec. 31, 2013
Target Managed VIP Dow Jones Industrial Russell 3000(R)
Portfolio (a) Avg.(SM)(b) Index (c)
Dec. 03 $10,000 $10,000 $10,000
Dec. 04 11,226 10,531 11,195
Dec. 05 12,039 10,712 11,884
Dec. 06 13,425 12,752 13,764
Dec. 07 14,696 13,884 14,485
Dec. 08 8,110 9,451 9,082
Dec. 09 9,164 11,595 11,658
Dec. 10 10,916 13,225 13,631
Dec. 11 10,733 14,334 13,771
Dec. 12 12,130 15,802 16,031
Dec. 13 16,472 20,487 21,359
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
-------------------------------------------------------------------------------------------------------------
Target Managed VIP Portfolio (a) 10/6/99 35.79% 15.22% 5.12% 2.58%
Dow Jones Industrial Avg.(SM) (b) 29.65% 16.72% 7.43% 5.67%
Russell 3000(R) Index (c) 33.55% 18.71% 7.88% 5.08%
-------------------------------------------------------------------------------------------------------------
(a) Effective April 30, 2002, based upon the determination of the Registrant's
Board of Trustees, the Portfolio changed its name from the Dow(R) Target 5
Portfolio to the Target Managed VIP Portfolio. The Portfolio's primary
investment strategy was also changed. The performance figures provided for
the periods prior to April 30, 2002, reflect the Portfolio's performance
prior to the name change and the change of the primary investment
strategy.
(b) The Dow Jones Industrial Average(SM) is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg). (The index reflects no deduction for fees, expenses or
taxes).
(c) The Russell 3000(R) Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This index represents approximately
98% of the investable U.S. equity market. (Bloomberg). (The index reflects
no deduction for fees, expenses or taxes).
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 4
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
TARGET MANAGED VIP PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Exxon Mobil Corp. 4.4%
Yahoo!, Inc. 4.2
Home Depot (The), Inc. 4.2
Oracle Corp. 3.5
UnitedHealth Group, Inc. 3.4
Regeneron Pharmaceuticals, Inc. 3.3
Travelers (The) Cos., Inc. 3.1
Gilead Sciences, Inc. 3.1
Pfizer, Inc. 3.0
Comcast Corp., Class A 3.0
----------------------------------------------
Total 35.2%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Consumer Discretionary 24.5%
Health Care 21.1
Information Technology 18.0
Financials 8.2
Energy 7.1
Industrials 6.4
Utilities 5.0
Telecommunication Services 4.8
Consumer Staples 2.9
Materials 2.0
----------------------------------------------
Total 100.0%
======
Page 5
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO
Over the twelve months ended December 31, 2013, The Dow(R) DART 10 Portfolio
posted a total return of 30.85% versus 29.65% for the Dow Jones Industrial
Average(SM) over the same period. The NAV increased from $12.06 to $15.78 during
the period.
The Portfolio slightly outperformed the Dow Jones Industrial Average(SM) for the
year. The Portfolio benefited from holding Hewlett-Packard Co. (HPQ) which was
up over 100% and American Express Co. (AXP) which was up over 50%. Some of the
performance was mitigated by holding International Business Machines Corp.
(IBM), AT&T, Inc. (T) and McDonald's Corp (MCD), which all underperformed the
benchmark.
All of the data on this page represents past performance which cannot be used to
predict future performance and the information in the table and graph does not
reflect the deduction of taxes that a shareholder would pay on Portfolio
distributions or the redemption of shares.
--------------------------------------------------------------------------------
GROWTH OF A $10,000 INITIAL INVESTMENT
Dec. 31, 2003-Dec. 31, 2013
The Dow(R) DART 10 Dow Jones Industrial
Portfolio Avg.(SM)(a)
Dec. 03 $10,000 $10,000
Dec. 04 10,382 10,531
Dec. 05 10,048 10,712
Dec. 06 12,616 12,752
Dec. 07 12,700 13,884
Dec. 08 9,080 9,451
Dec. 09 10,346 11,595
Dec. 10 12,079 13,225
Dec. 11 13,011 14,334
Dec. 12 14,408 15,802
Dec. 13 18,853 20,487
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
---------------------------------------------------------------------------------------------------------------
The Dow(R) DART 10 Portfolio 10/6/99 30.85% 15.73% 6.55% 3.25%
Dow Jones Industrial Avg.(SM) (a) 29.65% 16.72% 7.43% 5.67%
---------------------------------------------------------------------------------------------------------------
(a) The Dow Jones Industrial Average(SM) is a price-weighted average of 30
blue-chip stocks that are generally the leaders in their industry. It has
been a widely followed indicator of the stock market since October 1,
1928. (Bloomberg). (The index reflects no deduction for fees, expenses or
taxes).
The returns for the Portfolio do not reflect the deduction of expenses
associated with variable products, such as mortality and expense risk charges,
separate account charges, and sales charges or the effect of taxes. These
expenses would reduce the overall returns shown.
Page 6
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
THE DOW(R) DART 10 PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Hewlett-Packard Co. 15.5%
American Express Co. 12.2
UnitedHealth Group, Inc. 10.6
Intel Corp. 9.7
Travelers (The) Cos., Inc. 9.7
Pfizer, Inc. 9.4
Exxon Mobil Corp. 9.0
McDonald's Corp. 8.4
AT&T, Inc. 8.0
International Business Machines Corp. 7.5
----------------------------------------------
Total 100.0%
======
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Information Technology 32.8%
Financials 21.8
Health Care 20.0
Energy 9.0
Consumer Discretionary 8.4
Telecommunication Services 8.0
----------------------------------------------
Total 100.0%
======
Page 7
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO
Over the twelve months ended December 31, 2013, The Dow(R) Target Dividend
Portfolio posted a total return of 28.19% versus 29.06% for the Dow Jones U.S.
Select Dividend Index(SM) over the same period. The NAV increased from $10.43 to
$13.37 during the period.
The Portfolio slightly underperformed the Dow Jones U.S. Select Dividend Index,
primarily because of negative allocation and selection effect in the Industrials
sector. The Portfolio was over 5% underweight the Industrials sector, which was
the second best performing sector in the index. In addition, the Portfolio did
not hold the two best contributing Industrials stocks in the index, Lockheed
Martin Corp. (LMT) and Pitney Bowes, Inc. (PBI). The three largest detractors by
contribution were FirstEnergy Corp. (FE), Pinnacle West Capital Corp. (PNW) and
Universal Corp. (UVV). The three top contributing stocks were Northrop Grumman
Corp. (NOC), FirstMerit Corp. (BKH) and Black Hills Corp. (BKH).
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-Dec. 31, 2013
The Dow(R) Target Dow Jones U.S. Select S&P 500(R)
Dividend Portfolio Dividend Index(SM)(a) Index (b)
May 05 $10,000 $10,000 $10,000
Dec. 05 9,870 10,529 10,879
Dec. 06 11,660 12,587 12,598
Dec. 07 11,790 11,938 13,290
Dec. 08 7,010 8,240 8,373
Dec. 09 8,000 9,157 10,589
Dec. 10 9,321 10,835 12,184
Dec. 11 9,881 12,180 12,441
Dec. 12 10,432 13,501 14,432
Dec. 13 13,372 17,424 19,105
--------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN
-------------------------------------------------------------------------------------------------------------
The Dow(R) Target Dividend Portfolio 5/2/05 28.19% 13.78% 3.41%
Dow Jones U.S. Select Dividend Index(SM) (a) 29.06% 16.15% 6.61%
S&P 500(R) Index (b) 32.39% 17.94% 7.75%
-------------------------------------------------------------------------------------------------------------
(a) The Dow Jones U.S. Select Dividend Index(SM) is comprised of 100 of the
highest dividend-yielding securities (excluding REITs) in the Dow Jones
U.S. Index. (The index reflects no deduction for fees, expenses or taxes).
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
THE DOW(R) TARGET DIVIDEND PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Northrop Grumman Corp. 6.7%
FirstMerit Corp. 6.1
Black Hills Corp. 5.7
Commercial Metals Co. 5.5
Mondelez International, Inc., Class A 5.5
Allstate Corp. 5.3
Cincinnati Financial Corp. 5.3
First Niagara Financial Group, Inc. 5.3
United Bankshares, Inc. 5.1
New York Community Bancorp, Inc. 5.1
----------------------------------------------
Total 55.6%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Financials 56.4%
Utilities 17.1
Industrials 11.2
Consumer Staples 9.8
Materials 5.5
----------------------------------------------
Total 100.0%
======
Page 9
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2013, the Global Dividend Target 15
Portfolio posted a total return of 14.34% versus 24.10% for the Morgan Stanley
Capital International Developed Markets World Index over the same period. The
NAV increased from $24.61 to $28.14 during the period.
The Portfolio underperformed the benchmark for the year. The underperformance
can primarily be tied to selection effects in the Financials, Consumer
Discretionary and Industrials sectors. Three of the worst four performing stocks
came from the Hong Kong portion of the Portfolio. The three largest detractors
were RSA Insurance Group PLC (RSA LN), CITIC Pacific Ltd. (237 HK) and China
Construction Bank Corp., Class H (939 HK).
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, 2003-Dec. 31, 2013
Global Dividend MSCI Developed Markets
Target 15 Portfolio (a) World Index (b)
Dec. 03 $10,000 $10,000
Dec. 04 12,543 11,472
Dec. 05 13,819 12,560
Dec. 06 19,131 15,081
Dec. 07 21,683 16,443
Dec. 08 12,407 9,749
Dec. 09 17,503 12,672
Dec. 10 19,204 14,163
Dec. 11 17,765 13,378
Dec. 12 22,273 15,496
Dec. 13 25,467 16,029
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
---------------------------------------------------------------------------------------------------------------------
Global Dividend Target 15 Portfolio (a) 10/6/99 14.34% 15.47% 9.80% 7.54%
MSCI Developed Markets World Index (b) 24.10% 12.53% 4.83% 2.03%
---------------------------------------------------------------------------------------------------------------------
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
GLOBAL DIVIDEND TARGET 15 PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Hewlett-Packard Co. 11.9%
Vodafone Group PLC 9.1
General Electric Co. 8.0
Intel Corp. 7.5
Pfizer, Inc. 7.2
Man Group PLC 6.2
AT&T, Inc. 6.1
CITIC Pacific Ltd. 6.1
Bank of China Ltd. 6.0
Tesco PLC 5.9
----------------------------------------------
Total 74.0%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Financials 27.4%
Information Technology 19.4
Telecommunication Services 15.2
Industrials 14.1
Health Care 7.2
Consumer Staples 5.9
Energy 5.5
Consumer Discretionary 5.3
----------------------------------------------
Total 100.0%
======
Page 11
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO
Over the twelve months ended December 31, 2013, the S&P(R) Target 24 Portfolio
posted a total return of 42.17% versus 32.39% for the S&P 500(R) Index over the
same period. The NAV increased from $11.24 to $15.98 during the period.
The Portfolio outperformed the benchmark, primarily due to a positive stock
selection effect in the Information Technology sector. Both the Financials and
Industrials sectors also had positive stock selection effects. Eight out of the
ten GICS sectors had a positive allocation effect which also contributed to the
strong outperformance. The largest allocation effects were in the
Telecommunication Services and Utilities sectors, as the Portfolio held no
positions in these two underperforming sectors. The top-contributing stocks were
Yahoo!, Inc. (YHOO), Seagate Technology PLC (STX) and Amgen, Inc. (AMGN).
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, 2003-Dec. 31, 2013
S&P(R) Target 24 S&P 500(R)
Portfolio (a) Index (b)
Dec. 03 $10,000 $10,000
Dec. 04 11,365 11,088
Dec. 05 11,837 11,632
Dec. 06 12,178 13,470
Dec. 07 12,690 14,210
Dec. 08 9,147 8,952
Dec. 09 10,407 11,322
Dec. 10 12,416 13,028
Dec. 11 13,478 13,303
Dec. 12 14,752 15,431
Dec. 13 20,973 20,428
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
---------------------------------------------------------------------------------------------------------------------
S&P(R) Target 24 Portfolio (a) 10/6/99 42.17% 18.05% 7.69% 3.35%
S&P 500(R) Index (b) 32.39% 17.94% 7.40% 4.30%
---------------------------------------------------------------------------------------------------------------------
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
S&P(R) TARGET 24 PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Yahoo!, Inc. 17.0%
Amgen, Inc. 8.8
Exxon Mobil Corp. 8.5
Philip Morris International, Inc. 8.2
Seagate Technology PLC 7.6
Franklin Resources, Inc. 6.5
TJX (The) Cos., Inc. 6.0
Illinois Tool Works, Inc. 5.8
DIRECTV 5.4
Discover Financial Services 5.0
----------------------------------------------
Total 78.8%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Information Technology 24.6%
Financials 16.1
Consumer Discretionary 12.5
Health Care 12.1
Industrials 11.8
Energy 10.0
Consumer Staples 9.5
Materials 3.4
----------------------------------------------
Total 100.0%
======
Page 13
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO
Over the twelve months ended December 31, 2013, the NASDAQ(R) Target 15
Portfolio posted a total return of 48.82% versus 36.94% for the NASDAQ 100
Index(R) over the same period. The NAV increased from $10.61 to $15.79 during
the period.
The Portfolio outperformed the benchmark, primarily due to stock selection in
the Information Technology sector. There was also a positive selection effect in
the Health Care sector. Additionally, there were five significantly positive
allocation effects in the Consumer Discretionary, Health Care, Information
Technology, Consumer Staples and Industrials sectors. The top three contributing
stocks were Gilead Sciences, Inc. (GILD), Yahoo!, Inc. (YHOO) and Western
Digital Corp. (WDC).
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, 2003-Dec. 31, 2013
NASDAQ(R) NASDAQ(R) 100
Target 15 Portfolio Index (a)
Dec. 03 $10,000 $10,000
Dec. 04 9,731 11,074
Dec. 05 10,054 11,285
Dec. 06 10,947 12,107
Dec. 07 13,326 14,436
Dec. 08 6,545 8,435
Dec. 09 7,654 13,043
Dec. 10 9,979 15,671
Dec. 11 10,107 16,247
Dec. 12 11,420 19,227
Dec. 13 16,996 27,077
--------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
---------------------------------------------------------------------------------------------------------------------
NASDAQ(R) Target 15 Portfolio 10/6/99 48.82% 21.03% 5.45% 3.26%
NASDAQ(R) 100 Index (a) 36.94% 25.56% 10.46% 3.24%
---------------------------------------------------------------------------------------------------------------------
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
NASDAQ(R) TARGET 15 PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Gilead Sciences, Inc. 10.2%
Yahoo!, Inc. 10.2
Regeneron Pharmaceuticals, Inc. 8.1
Seagate Technology PLC 7.5
Western Digital Corp. 7.2
Comcast Corp., Class A 7.0
Mylan, Inc. 6.3
Sirius XM Holdings, Inc. 5.9
Mattel, Inc. 5.7
Symantec Corp. 5.7
----------------------------------------------
Total 73.8%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Information Technology 41.7%
Consumer Discretionary 33.8
Health Care 24.5
----------------------------------------------
Total 100.0%
======
Page 15
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
Over the twelve months ended December 31, 2013, the First Trust Target Focus
Four Portfolio posted a total return of 31.08% versus 32.39% for the S&P 500(R)
Index over the same period. The NAV increased from $5.02 to $6.58 during the
period.
The Portfolio slightly trailed the benchmark, primarily due to poor stock
selection in the Consumer Discretionary sector. Performance was aided by
positive allocation effects in the Consumer Discretionary, Information
Technology and Energy sectors. Additionally, the Portfolio benefited from
positive stock selection in the Industrials and Information Technology sectors
but it was not enough to overcome the underperformance from other areas of the
Portfolio. The top three contributing stocks to the Portfolio were Home Depot
(The), Inc. (HD), Regeneron Pharmaceuticals, Inc. (REGN) and Gap (The), Inc.
(GPS). The three largest detractors were FirstEnergy Corp. (FE), Petroleo
Brasilerio S.A., ADR (PBR) and Urban Outfitters, Inc. (URBN).
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, 2003-Dec. 31, 2013
First Trust Target S&P 500(R)
Focus Four Portfolio (a) Index (b)
Dec. 03 $10,000 $10,000
Dec. 04 11,135 11,088
Dec. 05 11,199 11,632
Dec. 06 11,649 13,470
Dec. 07 12,313 14,210
Dec. 08 6,916 8,952
Dec. 09 8,908 11,322
Dec. 10 10,599 13,028
Dec. 11 9,443 13,303
Dec. 12 10,749 15,431
Dec. 13 14,090 20,428
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
------------------------------------------------------------------------------------------------------------
First Trust Target Focus Four
Portfolio (a) 10/6/99 31.08% 15.29% 3.49% -2.90%
S&P 500(R) Index (b) 32.39% 17.94% 7.40% 4.30%
------------------------------------------------------------------------------------------------------------
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Home Depot (The), Inc. 7.7%
Regeneron Pharmaceuticals, Inc. 4.8
Gap (The), Inc. 3.5
Black Hills Corp. 2.4
Flowserve Corp. 2.2
Mercury General Corp. 2.0
Northrop Grumman Corp. 2.0
Universal Corp. 1.8
FirstMerit Corp. 1.8
Commercial Metals Co. 1.6
----------------------------------------------
Total 29.8%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Financials 27.7%
Consumer Discretionary 24.1
Industrials 12.8
Health Care 7.2
Utilities 6.3
Energy 5.4
Consumer Staples 5.0
Information Technology 4.8
Materials 4.6
Telecommunication Services 2.1
----------------------------------------------
Total 100.0%
======
Page 17
--------------------------------------------------------------------------------
PERFORMANCE SUMMARY AND PORTFOLIO COMPONENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO
Over the twelve months ended December 31, 2013, the Value Line(R) Target 25
Portfolio posted a total return of 31.38% versus 33.55% for the Russell 3000(R)
Index over the same period. The NAV increased from $3.41 to $4.48 during the
period.
The Portfolio slightly trailed the benchmark because of poor stock selection in
the Consumer Discretionary sector. Performance was buoyed by positive selection
in the Industrials and Information Technology sectors, but not enough to cause
this Portfolio to outperform. The top three contributing stocks were Regeneron
Pharmaceuticals, Inc. (REGN), Flowserve Corp. (FLS) and Gildan Activewear, Inc.
(GIL). The three largest detractors were Urban Outfitters, Inc. (URBN), American
Vanguard Corp. (AVD) and Macy's, Inc. (M).
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, 2003-Dec. 31, 2013
Value Line(R) Target 25 Russell 3000(R)
Portfolio (a) Index (b)
Dec. 03 $10,000 $10,000
Dec. 04 12,156 11,195
Dec. 05 14,551 11,884
Dec. 06 14,970 13,764
Dec. 07 17,695 14,485
Dec. 08 7,994 9,082
Dec. 09 8,563 11,658
Dec. 10 11,168 13,631
Dec. 11 8,414 13,771
Dec. 12 10,211 16,031
Dec. 13 13,415 21,359
--------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
RETURN COMPARISON PERIODS ENDED DEC. 31, 2013
1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION
INCEPTION ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL AVERAGE ANNUAL
DATE TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
------------------------------------------------------------------------------------------------------
Value Line(R) Target 25
Portfolio (a) 10/6/99 31.38% 10.91% 2.98% -5.48%
Russell 3000(R) Index (b) 33.55% 18.71% 7.88% 5.08%
------------------------------------------------------------------------------------------------------
(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
ANNUAL REPORT
DECEMBER 31, 2013 (UNAUDITED)
VALUE LINE(R) TARGET 25 PORTFOLIO (CONTINUED)
----------------------------------------------
% OF TOTAL
TOP 10 HOLDINGS INVESTMENTS
----------------------------------------------
Flowserve Corp. 9.0%
Regeneron Pharmaceuticals, Inc. 8.9
Home Depot (The), Inc. 7.4
Gap (The), Inc. 7.0
Gildan Activewear, Inc. 7.0
DR Horton, Inc. 6.3
Williams-Sonoma, Inc. 6.2
Lennar Corp., Class A 5.7
Urban Outfitters, Inc. 5.3
NewMarket Corp. 4.9
----------------------------------------------
Total 67.7%
=====
----------------------------------------------
% OF TOTAL
SECTOR INVESTMENTS
----------------------------------------------
Consumer Discretionary 62.0%
Industrials 14.8
Health Care 14.0
Materials 5.6
Information Technology 3.6
----------------------------------------------
Total 100.0%
======
Page 19
FIRST DEFINED PORTFOLIO FUND, LLC
UNDERSTANDING YOUR FUND EXPENSES
DECEMBER 31, 2013 (UNAUDITED)
As an Interest holder of the Target Managed VIP Portfolio, The Dow(R) DART 10
Portfolio, The Dow(R) Target Dividend Portfolio, Global Dividend Target 15
Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R) Target 15 Portfolio, First
Trust Target Focus Four Portfolio or Value Line (R) Target 25 Portfolio (the
"Portfolios"), you incur two types of costs: (1) transaction costs; and (2)
ongoing costs, including management fees, distribution and/or service fees, and
other Portfolio expenses. This Example is intended to help you understand your
ongoing costs (in dollars) of investing in the Portfolios and to compare these
costs with the ongoing costs of investing in other mutual funds.
The Example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period of July 1, 2013 to December 31, 2013.
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 7/1/2013- VALUE VALUE 7/1/2013 - EXPENSE
7/1/2013 12/31/2013 12/31/2013 7/1/2013 12/31/2013 12/31/2013 RATIO (b)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Target Managed VIP Portfolio .......... $1,000.00 $1,204.40 $8.17 $1,000.00 $1,017.80 $7.48 1.47%
The Dow(R) DART 10 Portfolio .......... 1,000.00 1,097.40 7.77 1,000.00 1,017.80 7.48 1.47
The Dow(R) Target Dividend Portfolio .. 1,000.00 1,111.40 7.82 1,000.00 1,017.80 7.48 1.47
Global Dividend Target 15 Portfolio ... 1,000.00 1,118.90 7.85 1,000.00 1,017.80 7.48 1.47
S&P(R) Target 24 Portfolio ............ 1,000.00 1,227.30 8.25 1,000.00 1,017.80 7.48 1.47
NASDAQ(R) Target 15 Portfolio ......... 1,000.00 1,237.50 8.29 1,000.00 1,017.80 7.48 1.47
First Trust Target Focus Four Portfolio 1,000.00 1,146.30 7.41 1,000.00 1,018.30 6.97 1.37
Value Line(R) Target 25 Portfolio ..... 1,000.00 1,151.70 7.97 1,000.00 1,017.80 7.48 1.47
(a) Expenses are equal to the Portfolio's annualized expense ratio multiplied
by the average account value over the period, multiplied by 184/365 (to
reflect the one half year period).
(b) These expense ratios reflect expense caps.
Page 20
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 98.8%
AEROSPACE & DEFENSE - 0.7%
1,362 Northrop Grumman Corp............................................................ $ 156,099
--------------
AUTO COMPONENTS - 0.2%
768 Dorman Products, Inc. (a)........................................................ 43,062
--------------
AUTOMOBILES - 1.5%
2,423 Daimler AG....................................................................... 210,607
1,158 Thor Industries, Inc............................................................. 63,957
1,569 Winnebago Industries, Inc. (a)................................................... 43,069
--------------
317,633
--------------
BEVERAGES - 0.1%
596 Coca-Cola Enterprises, Inc....................................................... 26,301
--------------
BIOTECHNOLOGY - 7.8%
2,871 Amgen, Inc....................................................................... 327,753
8,746 Gilead Sciences, Inc. (a)........................................................ 657,262
2,577 Regeneron Pharmaceuticals, Inc. (a).............................................. 709,294
--------------
1,694,309
--------------
BUILDING PRODUCTS - 0.6%
1,692 A.O. Smith Corp.................................................................. 91,266
1,136 Apogee Enterprises, Inc.......................................................... 40,794
--------------
132,060
--------------
CAPITAL MARKETS - 1.1%
4,211 Franklin Resources, Inc.......................................................... 243,101
--------------
CHEMICALS - 2.0%
863 American Vanguard Corp........................................................... 20,962
179 CF Industries Holdings, Inc...................................................... 41,714
392 FMC Corp......................................................................... 29,580
2,364 LyondellBasell Industries NV, Class A............................................ 189,782
289 NewMarket Corp................................................................... 96,570
294 Sherwin-Williams (The) Co........................................................ 53,949
--------------
432,557
--------------
COMMERCIAL BANKS - 1.8%
5,479 PrivateBancorp, Inc.............................................................. 158,507
2,917 ViewPoint Financial Group, Inc................................................... 80,072
6,353 Western Alliance Bancorp (a)..................................................... 151,583
--------------
390,162
--------------
COMMERCIAL SERVICES & SUPPLIES - 0.1%
3,695 InnerWorkings, Inc. (a).......................................................... 28,784
--------------
COMMUNICATIONS EQUIPMENT - 0.3%
5,445 Ixia (a)......................................................................... 72,473
--------------
COMPUTERS & PERIPHERALS - 2.4%
7,206 Seagate Technology PLC........................................................... 404,689
1,422 Western Digital Corp............................................................. 119,306
--------------
523,995
--------------
See Notes to Financial Statements Page 21
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
CONSTRUCTION & ENGINEERING - 0.3%
2,940 Aegion Corp. (a)................................................................. $ 64,357
--------------
CONSUMER FINANCE - 0.8%
3,292 Discover Financial Services...................................................... 184,187
--------------
DIVERSIFIED CONSUMER SERVICES - 1.1%
2,253 Carriage Services, Inc........................................................... 44,001
3,347 Grand Canyon Education, Inc. (a)................................................. 145,929
1,323 H&R Block, Inc. ................................................................. 38,420
--------------
228,350
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 3.8%
11,611 Deutsche Telekom AG, ADR......................................................... 200,406
12,115 Orange S.A., ADR................................................................. 149,620
3,062 Swisscom AG, ADR................................................................. 161,949
9,755 TeliaSonera AB, ADR.............................................................. 162,714
5,852 Vivendi S.A., ADR................................................................ 154,317
--------------
829,006
--------------
ELECTRIC UTILITIES - 2.4%
36,548 EDF S.A., ADR.................................................................... 256,202
31,847 Enel SpA, ADR.................................................................... 138,343
5,658 SSE PLC, ADR..................................................................... 128,776
--------------
523,321
--------------
ELECTRICAL EQUIPMENT - 0.4%
1,856 AZZ, Inc. ....................................................................... 90,684
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 0.4%
1,071 Badger Meter, Inc. .............................................................. 58,370
546 Rogers Corp. (a)................................................................. 33,579
--------------
91,949
--------------
FOOD & STAPLES RETAILING - 0.5%
1,561 Susser Holdings Corp. (a)........................................................ 102,230
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 2.1%
738 Becton, Dickinson & Co........................................................... 81,542
308 C.R. Bard, Inc................................................................... 41,254
2,053 Cyberonics, Inc. (a)............................................................. 134,492
2,722 Neogen Corp. (a)................................................................. 124,395
1,176 Sirona Dental Systems, Inc. (a).................................................. 82,555
--------------
464,238
--------------
HEALTH CARE PROVIDERS & SERVICES - 4.9%
2,306 AMN Healthcare Services, Inc. (a)................................................ 33,898
2,213 Gentiva Health Services, Inc. (a)................................................ 27,463
2,517 Hanger, Inc. (a)................................................................. 99,019
947 MWI Veterinary Supply, Inc. (a).................................................. 161,549
9,744 UnitedHealth Group, Inc.......................................................... 733,723
--------------
1,055,652
--------------
Page 22 See Notes to Financial Statements
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
HEALTH CARE TECHNOLOGY - 1.1%
3,770 Medidata Solutions, Inc. (a)..................................................... $ 228,349
--------------
HOTELS, RESTAURANTS & LEISURE - 3.2%
1,022 AFC Enterprises, Inc. (a)........................................................ 39,347
1,233 Domino's Pizza, Inc. ............................................................ 85,879
4,231 Interval Leisure Group, Inc. .................................................... 130,738
4,810 Krispy Kreme Doughnuts, Inc. (a)................................................. 92,785
2,154 Multimedia Games Holding Co., Inc. (a)........................................... 67,549
3,446 Papa John's International, Inc................................................... 156,448
4,461 Pinnacle Entertainment, Inc. (a)................................................. 115,941
--------------
688,687
--------------
HOUSEHOLD DURABLES - 1.4%
7,108 DR Horton, Inc. ................................................................. 158,651
3,456 Lennar Corp. , Class A........................................................... 136,719
--------------
295,370
--------------
HOUSEHOLD PRODUCTS - 0.1%
270 Clorox (The) Co.................................................................. 25,045
--------------
INSURANCE - 4.3%
3,166 Allstate Corp. .................................................................. 172,674
2,938 Horace Mann Educators Corp. ..................................................... 92,664
7,367 Travelers (The) Cos., Inc. ...................................................... 667,008
--------------
932,346
--------------
INTERNET SOFTWARE & SERVICES - 6.1%
7,518 eBay, Inc. (a)................................................................... 412,663
22,496 Yahoo!, Inc. (a)................................................................. 909,738
--------------
1,322,401
--------------
IT SERVICES - 2.4%
2,765 International Business Machines Corp. ........................................... 518,631
--------------
LEISURE EQUIPMENT & PRODUCTS - 0.7%
993 Arctic Cat, Inc.................................................................. 56,581
1,991 Mattel, Inc...................................................................... 94,732
--------------
151,313
--------------
MACHINERY - 3.0%
4,091 Flowserve Corp. ................................................................. 322,494
2,562 Illinois Tool Works, Inc. ....................................................... 215,413
2,871 TriMas Corp. (a)................................................................. 114,524
--------------
652,431
--------------
MEDIA - 5.5%
12,343 Comcast Corp., Class A........................................................... 641,404
2,926 DIRECTV (a)...................................................................... 202,158
841 Discovery Communications, Inc., Class A (a)...................................... 76,043
401 Liberty Global PLC, Class A (a).................................................. 35,685
300 Liberty Global PLC, Class C (a).................................................. 25,296
638 Liberty Media Corp., Class A (a)................................................. 93,435
30,119 Sirius XM Holdings, Inc. (a)..................................................... 105,115
638 Starz, Class A (a)............................................................... 18,655
--------------
1,197,791
--------------
See Notes to Financial Statements Page 23
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
MULTI-UTILITIES - 2.6%
7,166 E.ON SE, ADR..................................................................... $ 132,427
6,419 GDF Suez S.A., ADR............................................................... 151,938
2,317 National Grid PLC, ADR........................................................... 151,347
3,208 RWE AG, ADR...................................................................... 118,054
--------------
553,766
--------------
OIL, GAS & CONSUMABLE FUELS - 7.0%
3,183 BP PLC, ADR...................................................................... 154,726
2,707 Eni S.p.A., ADR.................................................................. 131,262
2,975 EPL Oil & Gas, Inc. (a).......................................................... 84,787
9,300 Exxon Mobil Corp. ............................................................... 941,160
232 Marathon Petroleum Corp. ........................................................ 21,281
429 Phillips 66...................................................................... 33,089
2,551 Total S.A., ADR.................................................................. 156,300
--------------
1,522,605
--------------
PERSONAL PRODUCTS - 0.1%
1,161 Medifast, Inc. (a)............................................................... 30,337
--------------
PHARMACEUTICALS - 5.6%
2,799 AstraZeneca PLC, ADR............................................................. 166,176
3,035 GlaxoSmithKline PLC, ADR......................................................... 162,039
2,382 Mylan, Inc. (a).................................................................. 103,379
21,086 Pfizer, Inc. .................................................................... 645,864
3,779 Prestige Brands Holdings, Inc. (a)............................................... 135,288
--------------
1,212,746
--------------
PROFESSIONAL SERVICES - 0.6%
3,900 On Assignment, Inc. (a).......................................................... 136,188
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 0.7%
2,644 Monolithic Power Systems, Inc. (a)............................................... 91,641
2,002 Ultratech, Inc. (a).............................................................. 58,058
--------------
149,699
--------------
SOFTWARE - 5.4%
1,926 Manhattan Associates, Inc. (a)................................................... 226,267
3,117 NetScout Systems, Inc. (a)....................................................... 92,232
19,860 Oracle Corp. .................................................................... 759,844
4,006 Symantec Corp. .................................................................. 94,461
--------------
1,172,804
--------------
SPECIALTY RETAIL - 9.8%
2,344 Asbury Automotive Group, Inc. (a)................................................ 125,967
10,344 Gap (The), Inc. ................................................................. 404,244
10,813 Home Depot (The), Inc. .......................................................... 890,342
1,699 Lithia Motors, Inc., Class A..................................................... 117,945
509 Lumber Liquidators Holdings, Inc. (a)............................................ 52,371
3,484 Stage Stores, Inc. .............................................................. 77,414
3,504 TJX (The) Cos., Inc. ............................................................ 223,310
3,153 Urban Outfitters, Inc. (a)....................................................... 116,976
2,125 Williams-Sonoma, Inc............................................................. 123,845
--------------
2,132,414
--------------
Page 24 See Notes to Financial Statements
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
TEXTILES, APPAREL & LUXURY GOODS - 0.9%
2,612 Gildan Activewear, Inc. ......................................................... $ 139,246
1,418 Movado Group, Inc................................................................ 62,406
--------------
201,652
--------------
TOBACCO - 1.4%
3,480 Philip Morris International, Inc. ............................................... 303,212
--------------
TRADING COMPANIES & DISTRIBUTORS - 0.6%
1,038 DXP Enterprises, Inc. (a)........................................................ 119,578
--------------
WIRELESS TELECOMMUNICATION SERVICES - 1.0%
5,246 Vodafone Group PLC, ADR.......................................................... 206,220
--------------
TOTAL INVESTMENTS - 98.8%........................................................ 21,448,095
(Cost $15,513,421) (b)
NET OTHER ASSETS AND LIABILITIES - 1.2%.......................................... 258,801
--------------
NET ASSETS - 100.0%.............................................................. $ 21,706,896
==============
-------------------------------------------------
(a) Non-income producing security.
(b) Aggregate cost for federal income tax purposes is $15,513,421. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$6,237,295 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$302,621.
ADR American Depositary Receipt
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 21,448,095 $ 21,448,095 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
See Notes to Financial Statements Page 25
THE DOW (R) DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 98.0%
COMPUTERS & PERIPHERALS - 15.2%
39,780 Hewlett-Packard Co............................................................... $ 1,113,045
--------------
CONSUMER FINANCE - 11.9%
9,603 American Express Co.............................................................. 871,280
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 7.9%
16,332 AT&T, Inc........................................................................ 574,233
--------------
HEALTH CARE PROVIDERS & SERVICES - 10.4%
10,104 UnitedHealth Group, Inc.......................................................... 760,831
--------------
HOTELS, RESTAURANTS & LEISURE - 8.2%
6,214 McDonald's Corp.................................................................. 602,945
--------------
INSURANCE - 9.5%
7,639 Travelers (The) Cos., Inc........................................................ 691,635
--------------
IT SERVICES - 7.4%
2,867 International Business Machines Corp............................................. 537,763
--------------
OIL, GAS & CONSUMABLE FUELS - 8.8%
6,395 Exxon Mobil Corp................................................................. 647,174
--------------
PHARMACEUTICALS - 9.2%
21,864 Pfizer, Inc...................................................................... 669,694
--------------
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 9.5%
26,900 Intel Corp....................................................................... 698,324
--------------
TOTAL INVESTMENTS - 98.0%........................................................ 7,166,924
(Cost $5,717,615) (a)
NET OTHER ASSETS AND LIABILITIES - 2.0%.......................................... 148,824
--------------
NET ASSETS - 100.0%.............................................................. $ 7,315,748
==============
-------------------------------------------------
(a) Aggregate cost for federal income tax purposes is $5,717,615. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$1,455,698 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was $6,389.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 7,166,924 $ 7,166,924 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
Page 26 See Notes to Financial Statements
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 98.1%
AEROSPACE & DEFENSE - 6.6%
10,280 Northrop Grumman Corp............................................................ $ 1,178,191
--------------
COMMERCIAL BANKS - 30.4%
23,787 BB&T Corp........................................................................ 887,731
65,110 F.N.B. Corp...................................................................... 821,688
87,310 First Niagara Financial Group, Inc............................................... 927,232
48,602 FirstMerit Corp.................................................................. 1,080,422
30,871 Trustmark Corp................................................................... 828,578
28,547 United Bankshares, Inc........................................................... 897,803
--------------
5,443,454
--------------
COMMERCIAL SERVICES & SUPPLIES - 4.4%
23,656 Republic Services, Inc........................................................... 785,379
--------------
ELECTRIC UTILITIES - 7.1%
16,665 FirstEnergy Corp................................................................. 549,612
13,584 Pinnacle West Capital Corp. ..................................................... 718,865
--------------
1,268,477
--------------
FOOD PRODUCTS - 5.3%
27,168 Mondelez International, Inc., Class A............................................ 959,030
--------------
INSURANCE - 15.2%
17,217 Allstate Corp.................................................................... 939,015
17,797 Cincinnati Financial Corp........................................................ 932,029
17,212 Mercury General Corp............................................................. 855,609
--------------
2,726,653
--------------
METALS & MINING - 5.4%
47,624 Commercial Metals Co............................................................. 968,196
--------------
MULTI-UTILITIES - 9.7%
19,191 Black Hills Corp................................................................. 1,007,719
22,921 Public Service Enterprise Group, Inc............................................. 734,389
--------------
1,742,108
--------------
THRIFTS & MORTGAGE FINANCE - 9.8%
53,034 New York Community Bancorp, Inc. ................................................ 893,623
57,332 People's United Financial, Inc. ................................................. 866,860
--------------
1,760,483
--------------
TOBACCO - 4.2%
13,923 Universal Corp. ................................................................. 760,196
--------------
TOTAL INVESTMENTS - 98.1%........................................................ 17,592,167
(Cost $14,470,317) (a)
NET OTHER ASSETS AND LIABILITIES - 1.9%.......................................... 335,427
--------------
NET ASSETS - 100.0%.............................................................. $ 17,927,594
==============
-------------------------------------------------
(a) Aggregate cost for federal income tax purposes is $14,470,317. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$3,269,664 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$147,814.
See Notes to Financial Statements Page 27
THE DOW(R) TARGET DIVIDEND PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 17,592,167 $ 17,592,167 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
Page 28 See Notes to Financial Statements
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (a) - 98.0%
CHINA - 22.0%
3,570,000 Bank of China Ltd., Class H...................................................... $ 1,643,595
1,979,000 China Construction Bank Corp., Class H........................................... 1,493,001
1,843,200 China Petroleum & Chemical Corp., Class H........................................ 1,504,647
2,234,000 Industrial & Commercial Bank of China Ltd., Class H.............................. 1,509,638
--------------
6,150,881
--------------
HONG KONG - 6.0%
1,095,000 CITIC Pacific Ltd................................................................ 1,674,778
--------------
UNITED KINGDOM - 30.1%
492,040 Ladbrokes PLC.................................................................... 1,457,673
1,197,357 Man Group PLC.................................................................... 1,685,357
776,434 RSA Insurance Group PLC.......................................................... 1,175,168
290,602 Tesco PLC........................................................................ 1,608,975
631,040 Vodafone Group PLC............................................................... 2,476,592
--------------
8,403,765
--------------
UNITED STATES - 39.9%
47,828 AT&T, Inc........................................................................ 1,681,633
77,966 General Electric Co.............................................................. 2,185,387
116,493 Hewlett-Packard Co. ............................................................. 3,259,474
78,776 Intel Corp. ..................................................................... 2,045,025
64,027 Pfizer, Inc. .................................................................... 1,961,147
--------------
11,132,666
--------------
TOTAL INVESTMENTS - 98.0%........................................................ 27,362,090
(Cost $23,954,492) (b)
NET OTHER ASSETS AND LIABILITIES - 2.0%.......................................... 568,813
--------------
NET ASSETS - 100.0%.............................................................. $ 27,930,903
==============
-------------------------------------------------
(a) Portfolio securities are categorized based upon their country of
incorporation.
(b) Aggregate cost for federal income tax purposes is $23,954,492. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$4,494,131 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$1,086,533.
See Notes to Financial Statements Page 29
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 27,362,090 $ 27,362,090 $ -- $ --
============ ============ ============ ============
*See Portfolio of Investments for country breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. As of December
31, 2013, the Portfolio transferred common stocks valued at $9,574,744 from
Level 2 to Level 1 of the fair value hierarchy. The common stocks that
transferred from Level 2 to Level 1 did so as a result of foreign equities that
are now being valued based on quoted prices that were previously fair valued
using a factor provided by a pricing service due to the change in value between
the foreign markets' close and the New York Stock Exchange close on December 31,
2012, exceeding a certain threshold. See Note 2A - Portfolio Valuation in the
Notes to Financial Statements.
INDUSTRY % OF NET ASSETS
------------------------------------------------------------------------
Commercial Banks 16.7%
Industrial Conglomerates 13.8
Computers & Peripherals 11.7
Wireless Telecommunication Services 8.9
Semiconductors & Semiconductor Equipment 7.3
Pharmaceuticals 7.0
Capital Markets 6.0
Diversified Telecommunication Services 6.0
Food & Staples Retailing 5.8
Oil, Gas & Consumable Fuels 5.4
Hotels, Restaurants & Leisure 5.2
Insurance 4.2
--------------------------------------------------------------------
TOTAL INVESTMENTS 98.0
NET OTHER ASSETS AND LIABILITIES 2.0
------
TOTAL 100.0%
======
Page 30 See Notes to Financial Statements
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 99.3%
AEROSPACE & DEFENSE - 4.2%
3,901 Northrop Grumman Corp. .......................................................... $ 447,094
--------------
BEVERAGES - 0.7%
1,707 Coca-Cola Enterprises, Inc....................................................... 75,330
--------------
BIOTECHNOLOGY - 8.8%
8,223 Amgen, Inc. ..................................................................... 938,738
--------------
CAPITAL MARKETS - 6.5%
12,063 Franklin Resources, Inc. ........................................................ 696,397
--------------
CHEMICALS - 3.3%
512 CF Industries Holdings, Inc. .................................................... 119,317
1,122 FMC Corp......................................................................... 84,666
842 Sherwin-Williams (The) Co. ...................................................... 154,507
--------------
358,490
--------------
COMPUTERS & PERIPHERALS - 7.5%
14,365 Seagate Technology PLC........................................................... 806,738
--------------
CONSUMER FINANCE - 4.9%
9,429 Discover Financial Services...................................................... 527,552
--------------
DIVERSIFIED CONSUMER SERVICES - 1.0%
3,789 H&R Block, Inc................................................................... 110,032
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 3.3%
2,114 Becton, Dickinson & Co........................................................... 233,576
883 C.R. Bard, Inc................................................................... 118,269
--------------
351,845
--------------
HOUSEHOLD PRODUCTS - 0.7%
773 Clorox (The) Co. ................................................................ 71,703
--------------
INSURANCE - 4.6%
9,068 Allstate Corp.................................................................... 494,569
--------------
INTERNET SOFTWARE & SERVICES - 16.9%
44,848 Yahoo!, Inc. (a)................................................................. 1,813,653
--------------
MACHINERY - 7.5%
2,386 Flowserve Corp................................................................... 188,089
7,340 Illinois Tool Works, Inc......................................................... 617,147
--------------
805,236
--------------
MEDIA - 5.4%
8,382 DIRECTV (a)...................................................................... 579,112
--------------
OIL, GAS & CONSUMABLE FUELS - 9.9%
8,972 Exxon Mobil Corp................................................................. 907,966
664 Marathon Petroleum Corp.......................................................... 60,909
1,230 Phillips 66...................................................................... 94,870
--------------
1,063,745
--------------
See Notes to Financial Statements Page 31
S&P(R) TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
SPECIALTY RETAIL - 6.0%
10,037 TJX (The) Cos., Inc.............................................................. $ 639,658
--------------
TOBACCO - 8.1%
9,968 Philip Morris International, Inc................................................. 868,512
--------------
TOTAL INVESTMENTS - 99.3%........................................................ 10,648,404
(Cost $7,863,671) (b)
NET OTHER ASSETS AND LIABILITIES - 0.7%.......................................... 79,463
--------------
NET ASSETS - 100.0%.............................................................. $ 10,727,867
==============
-------------------------------------------------
(a) Non-income producing security.
(b) Aggregate cost for federal income tax purposes is $7,863,671. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$2,784,733 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was $0.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 10,648,404 $ 10,648,404 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
Page 32 See Notes to Financial Statements
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 101.4%
BIOTECHNOLOGY - 18.5%
7,354 Gilead Sciences, Inc. (a)........................................................ $ 552,653
1,584 Regeneron Pharmaceuticals, Inc. (a).............................................. 435,980
--------------
988,633
--------------
COMPUTERS & PERIPHERALS - 14.9%
7,182 Seagate Technology PLC........................................................... 403,341
4,662 Western Digital Corp............................................................. 391,142
--------------
794,483
--------------
INTERNET SOFTWARE & SERVICES - 15.8%
5,343 eBay, Inc. (a)................................................................... 293,277
13,648 Yahoo!, Inc. (a)................................................................. 551,925
--------------
845,202
--------------
LEISURE EQUIPMENT & PRODUCTS - 5.8%
6,525 Mattel, Inc...................................................................... 310,460
--------------
MEDIA - 28.4%
7,283 Comcast Corp., Class A........................................................... 378,461
2,756 Discovery Communications, Inc., Class A (a)...................................... 249,197
1,317 Liberty Global PLC, Class A (a).................................................. 117,200
983 Liberty Global PLC, Class C (a).................................................. 82,886
2,089 Liberty Media Corp., Class A (a)................................................. 305,934
92,089 Sirius XM Holdings, Inc. (a)..................................................... 321,391
2,090 Starz, Class A (a)............................................................... 61,112
--------------
1,516,181
--------------
PHARMACEUTICALS - 6.4%
7,809 Mylan, Inc. (a).................................................................. 338,911
--------------
SOFTWARE - 11.6%
8,059 Oracle Corp...................................................................... 308,337
13,131 Symantec Corp.................................................................... 309,629
--------------
617,966
--------------
TOTAL INVESTMENTS - 101.4%....................................................... 5,411,836
(Cost $4,571,555) (b)
NET OTHER ASSETS AND LIABILITIES - (1.4%)........................................ (75,664)
--------------
NET ASSETS - 100.0%.............................................................. $ 5,336,172
==============
-------------------------------------------------
(a) Non-income producing security.
(b) Aggregate cost for federal income tax purposes is $4,571,555. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$849,137 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was $8,856.
See Notes to Financial Statements Page 33
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 5,411,836 $ 5,411,836 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
Page 34 See Notes to Financial Statements
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 97.6%
AEROSPACE & DEFENSE - 2.3%
820 AAR Corp......................................................................... $ 22,968
1,000 Northrop Grumman Corp. .......................................................... 114,610
--------------
137,578
--------------
AIRLINES - 1.1%
5,318 JetBlue Airways Corp. (a)........................................................ 45,469
1,206 SkyWest, Inc..................................................................... 17,885
--------------
63,354
--------------
AUTO COMPONENTS - 0.6%
391 Dorman Products, Inc. (a)........................................................ 21,924
759 Superior Industries International, Inc........................................... 15,658
--------------
37,582
--------------
AUTOMOBILES - 1.6%
489 Honda Motor Co., Ltd., ADR....................................................... 20,220
589 Thor Industries, Inc............................................................. 32,530
193 Toyota Motor Corp., ADR.......................................................... 23,531
799 Winnebago Industries, Inc. (a)................................................... 21,933
--------------
98,214
--------------
BIOTECHNOLOGY - 4.7%
1,033 Regeneron Pharmaceuticals, Inc. (a).............................................. 284,323
--------------
BUILDING PRODUCTS - 1.7%
861 A.O. Smith Corp.................................................................. 46,442
578 Apogee Enterprises, Inc. ........................................................ 20,756
965 Gibraltar Industries, Inc. (a)................................................... 17,940
1,387 Griffon Corp. ................................................................... 18,322
--------------
103,460
--------------
CHEMICALS - 1.4%
439 American Vanguard Corp. ......................................................... 10,664
147 NewMarket Corp................................................................... 49,120
681 OM Group, Inc. (a)............................................................... 24,795
--------------
84,579
--------------
COMMERCIAL BANKS - 11.1%
2,248 Banco Santander S.A., ADR........................................................ 20,389
2,314 BB&T Corp........................................................................ 86,358
6,335 F.N.B. Corp...................................................................... 79,948
8,495 First Niagara Financial Group, Inc............................................... 90,217
4,729 FirstMerit Corp.................................................................. 105,126
1,104 Hanmi Financial Corp............................................................. 24,166
3,366 Mitsubishi UFJ Financial Group, Inc., ADR........................................ 22,485
4,960 Mizuho Financial Group, Inc., ADR................................................ 21,626
497 Shinhan Financial Group Co., Ltd., ADR........................................... 22,713
2,459 Sumitomo Mitsui Financial Group, Inc., ADR....................................... 25,795
3,004 Trustmark Corp................................................................... 80,627
2,777 United Bankshares, Inc........................................................... 87,337
--------------
666,787
--------------
See Notes to Financial Statements Page 35
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
COMMERCIAL SERVICES & SUPPLIES - 1.8%
731 Mobile Mini, Inc. (a)............................................................ $ 30,103
2,302 Republic Services, Inc........................................................... 76,426
--------------
106,529
--------------
CONSTRUCTION & ENGINEERING - 0.7%
767 URS Corp. ....................................................................... 40,643
--------------
DIVERSIFIED CONSUMER SERVICES - 0.4%
1,146 Carriage Services, Inc........................................................... 22,381
--------------
DIVERSIFIED FINANCIAL SERVICES - 0.5%
1,942 ING Groep N.V., ADR (a).......................................................... 27,207
--------------
DIVERSIFIED TELECOMMUNICATION SERVICES - 1.4%
1,106 China Unicom (Hong Kong), Ltd., ADR.............................................. 16,656
847 Nippon Telegraph & Telephone Corp., ADR.......................................... 22,903
1,644 Orange S.A., ADR................................................................. 20,303
1,346 Telefonica S.A., ADR............................................................. 21,994
--------------
81,856
--------------
ELECTRIC UTILITIES - 2.6%
1,621 FirstEnergy Corp................................................................. 53,461
1,322 Pinnacle West Capital Corp. ..................................................... 69,960
1,463 PNM Resources, Inc............................................................... 35,287
--------------
158,708
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 2.5%
791 Arrow Electronics, Inc. (a)...................................................... 42,912
1,794 Ingram Micro, Inc., Class A (a).................................................. 42,087
877 Insight Enterprises, Inc. (a).................................................... 19,916
278 Rogers Corp. (a)................................................................. 17,097
437 SYNNEX Corp. (a)................................................................. 29,454
--------------
151,466
--------------
ENERGY EQUIPMENT & SERVICES - 2.4%
710 Exterran Holdings, Inc. (a)...................................................... 24,282
1,638 Patterson-UTI Energy, Inc. ...................................................... 41,474
2,144 Pioneer Energy Services Corp. (a)................................................ 17,174
1,476 Superior Energy Services, Inc. (a)............................................... 39,276
2,005 TETRA Technologies, Inc. (a)..................................................... 24,782
--------------
146,988
--------------
FOOD & STAPLES RETAILING - 0.4%
939 Spartan Stores, Inc. ............................................................ 22,799
--------------
FOOD PRODUCTS - 2.5%
2,643 Mondelez International, Inc., Class A............................................ 93,298
880 Post Holdings, Inc. (a).......................................................... 43,358
498 Seneca Foods Corp., Class A (a).................................................. 15,881
--------------
152,537
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 0.7%
599 Sirona Dental Systems, Inc. (a).................................................. 42,050
--------------
Page 36 See Notes to Financial Statements
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
HEALTH CARE PROVIDERS & SERVICES - 1.6%
1,308 Amedisys, Inc. (a)............................................................... $ 19,136
1,173 AMN Healthcare Services, Inc. (a)................................................ 17,243
991 Community Health Systems, Inc. (a)............................................... 38,917
1,066 PharMerica Corp. (a)............................................................. 22,919
--------------
98,215
--------------
HOTELS, RESTAURANTS & LEISURE - 1.1%
520 AFC Enterprises, Inc. (a)........................................................ 20,020
627 Domino's Pizza, Inc.............................................................. 43,671
--------------
63,691
--------------
HOUSEHOLD DURABLES - 3.0%
3,617 DR Horton, Inc................................................................... 80,731
1,758 Lennar Corp., Class A............................................................ 69,547
821 Universal Electronics, Inc. (a).................................................. 31,288
--------------
181,566
--------------
INSURANCE - 12.4%
89 Alleghany Corp. (a).............................................................. 35,596
1,675 Allstate Corp.................................................................... 91,354
757 American Financial Group, Inc. .................................................. 43,694
934 Aspen Insurance Holdings Ltd..................................................... 38,584
1,732 Cincinnati Financial Corp........................................................ 90,705
272 Everest Re Group, Ltd. .......................................................... 42,397
1,262 Fidelity National Financial, Inc., Class A....................................... 40,952
1,260 First American Financial Corp. .................................................. 35,532
807 HCC Insurance Holdings, Inc...................................................... 37,235
766 Horace Mann Educators Corp. ..................................................... 24,160
2,419 Mercury General Corp............................................................. 120,248
1,051 Protective Life Corp. ........................................................... 53,244
325 Safety Insurance Group, Inc...................................................... 18,297
820 StanCorp Financial Group, Inc.................................................... 54,325
590 Stewart Information Services Corp. .............................................. 19,039
--------------
745,362
--------------
INTERNET SOFTWARE & SERVICES - 0.8%
1,008 AOL, Inc. (a).................................................................... 46,993
--------------
IT SERVICES - 0.9%
277 CACI International, Inc., Class A (a)............................................ 20,282
1,163 ManTech International Corp., Class A............................................. 34,809
--------------
55,091
--------------
MACHINERY - 2.2%
1,658 Flowserve Corp................................................................... 130,700
--------------
MEDIA - 1.1%
1,652 Live Nation Entertainment, Inc. (a).............................................. 32,644
1,032 Scholastic Corp.................................................................. 35,098
--------------
67,742
--------------
See Notes to Financial Statements Page 37
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
METALS & MINING - 3.1%
1,057 ArcelorMittal.................................................................... $ 18,857
4,634 Commercial Metals Co............................................................. 94,209
246 Kaiser Aluminum Corp............................................................. 17,279
220 POSCO, ADR....................................................................... 17,160
492 Reliance Steel & Aluminum Co. ................................................... 37,313
--------------
184,818
--------------
MULTI-UTILITIES - 3.5%
2,697 Black Hills Corp................................................................. 141,620
2,230 Public Service Enterprise Group, Inc............................................. 71,449
--------------
213,069
--------------
OIL, GAS & CONSUMABLE FUELS - 2.8%
432 BP PLC, ADR...................................................................... 20,999
625 Canadian Natural Resources Ltd. ................................................. 21,150
206 China Petroleum & Chemical Corp., ADR............................................ 16,927
367 Eni S.p.A., ADR.................................................................. 17,796
934 Petroleo Brasileiro S.A., ADR.................................................... 12,871
260 Royal Dutch Shell PLC, ADR....................................................... 18,530
721 Statoil ASA, ADR................................................................. 17,398
552 Suncor Energy, Inc. ............................................................. 19,348
346 Total S.A., ADR.................................................................. 21,199
--------------
166,218
--------------
PROFESSIONAL SERVICES - 2.8%
918 FTI Consulting, Inc. (a)......................................................... 37,766
979 Heidrick & Struggles International, Inc. ........................................ 19,717
954 Kelly Services, Inc., Class A.................................................... 23,793
710 ManpowerGroup, Inc. ............................................................. 60,961
1,360 Navigant Consulting, Inc. (a).................................................... 26,112
--------------
168,349
--------------
REAL ESTATE INVESTMENT TRUSTS - 0.3%
2,713 Kite Realty Group Trust.......................................................... 17,824
--------------
SOFTWARE - 0.4%
226 Manhattan Associates, Inc. (a)................................................... 26,550
--------------
SPECIALTY RETAIL - 14.5%
1,982 Barnes & Noble, Inc. (a)......................................................... 29,631
5,264 Gap (The), Inc. ................................................................. 205,717
5,502 Home Depot (The), Inc............................................................ 453,035
259 Lumber Liquidators Holdings, Inc. (a)............................................ 26,649
4,538 Office Depot, Inc. (a)........................................................... 24,008
562 Stage Stores, Inc. .............................................................. 12,488
1,605 Urban Outfitters, Inc. (a)....................................................... 59,545
1,082 Williams-Sonoma, Inc............................................................. 63,059
--------------
874,132
--------------
TEXTILES, APPAREL & LUXURY GOODS - 1.2%
1,329 Gildan Activewear, Inc. ......................................................... 70,849
--------------
Page 38 See Notes to Financial Statements
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
THRIFTS & MORTGAGE FINANCE - 2.8%
5,160 New York Community Bancorp, Inc. ................................................ $ 86,946
5,578 People's United Financial, Inc. ................................................. 84,339
--------------
171,285
--------------
TOBACCO - 2.0%
4,168 Alliance One International, Inc. (a)............................................. 12,713
1,957 Universal Corp. ................................................................. 106,852
--------------
119,565
--------------
WIRELESS TELECOMMUNICATION SERVICES - 0.7%
1,236 NTT DoCoMo, Inc., ADR............................................................ 20,406
1,709 VimpelCom Ltd., ADR.............................................................. 22,115
--------------
42,521
--------------
TOTAL INVESTMENTS - 97.6%........................................................ 5,873,581
(Cost $4,629,039) (b)
NET OTHER ASSETS AND LIABILITIES - 2.4%.......................................... 146,743
--------------
NET ASSETS - 100.0%.............................................................. $ 6,020,324
==============
-------------------------------------------------
(a) Non-income producing security.
(b) Aggregate cost for federal income tax purposes is $4,629,039. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$1,293,234 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$48,692.
ADR American Depositary Receipt
See Notes to Financial Statements Page 39
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 5,873,581 $ 5,873,581 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
COUNTRY ALLOCATION** % OF NET ASSETS
------------------------------------------------------------------------
United States 86.6%
Japan 2.6
Canada 1.8
Bermuda 1.7
Spain 0.7
France 0.7
South Korea 0.7
United Kindgom 0.7
Netherlands 0.4
Luxembourg 0.3
Italy 0.3
Norway 0.3
China 0.3
Hong Kong 0.3
Brazil 0.2
------------------------------------------------------------------------
TOTAL INVESTMENTS 97.6
NET OTHER ASSETS AND LIABILITIES 2.4
------
TOTAL 100.0%
======
** Portfolio securities are categorized based upon their country of
incorporation.
Page 40 See Notes to Financial Statements
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS - 98.0%
AUTO COMPONENTS - 2.1%
2,567 Dorman Products, Inc. (a)........................................................ $ 143,932
--------------
AUTOMOBILES - 4.3%
3,849 Thor Industries, Inc............................................................. 212,580
2,875 Winnebago Industries, Inc. (a)................................................... 78,919
--------------
291,499
--------------
BIOTECHNOLOGY - 8.8%
2,146 Regeneron Pharmaceuticals, Inc. (a).............................................. 590,665
--------------
BUILDING PRODUCTS - 5.6%
5,623 A.O. Smith Corp.................................................................. 303,304
2,081 Apogee Enterprises, Inc. ........................................................ 74,729
--------------
378,033
--------------
CHEMICALS - 5.5%
2,010 American Vanguard Corp. ......................................................... 48,823
961 NewMarket Corp................................................................... 321,118
--------------
369,941
--------------
DIVERSIFIED CONSUMER SERVICES - 1.2%
4,126 Carriage Services, Inc........................................................... 80,581
--------------
ELECTRONIC EQUIPMENT, INSTRUMENTS & COMPONENTS - 1.1%
1,199 Rogers Corp. (a)................................................................. 73,739
--------------
HEALTH CARE EQUIPMENT & SUPPLIES - 4.1%
3,908 Sirona Dental Systems, Inc. (a).................................................. 274,342
--------------
HEALTH CARE PROVIDERS & SERVICES - 0.9%
4,223 AMN Healthcare Services, Inc. (a)................................................ 62,078
--------------
HOTELS, RESTAURANTS & LEISURE - 5.3%
1,872 AFC Enterprises, Inc. (a)........................................................ 72,072
4,097 Domino's Pizza, Inc.............................................................. 285,356
--------------
357,428
--------------
HOUSEHOLD DURABLES - 11.8%
18,735 DR Horton, Inc. ................................................................. 418,165
9,582 Lennar Corp., Class A............................................................ 379,064
--------------
797,229
--------------
MACHINERY - 8.8%
7,570 Flowserve Corp................................................................... 596,743
--------------
SOFTWARE - 2.5%
1,423 Manhattan Associates, Inc. (a)................................................... 167,174
--------------
SPECIALTY RETAIL - 29.1%
11,846 Gap (The), Inc................................................................... 462,942
5,943 Home Depot (The), Inc............................................................ 489,346
1,900 Lumber Liquidators Holdings, Inc. (a)............................................ 195,491
2,286 Stage Stores, Inc. .............................................................. 50,795
9,431 Urban Outfitters, Inc. (a)....................................................... 349,890
7,063 Williams-Sonoma, Inc............................................................. 411,632
--------------
1,960,096
--------------
See Notes to Financial Statements Page 41
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS (CONTINUED)
DECEMBER 31, 2013
SHARES DESCRIPTION VALUE
----------- --------------------------------------------------------------------------------- --------------
COMMON STOCKS (CONTINUED)
TEXTILES, APPAREL & LUXURY GOODS - 6.9%
8,679 Gildan Activewear, Inc. ......................................................... $ 462,677
--------------
TOTAL INVESTMENTS - 98.0%........................................................ 6,606,157
(Cost $5,043,476) (b)
NET OTHER ASSETS AND LIABILITIES - 2.0%.......................................... 131,428
--------------
NET ASSETS - 100.0%.............................................................. $ 6,737,585
==============
-------------------------------------------------
(a) Non-income producing security.
(b) Aggregate cost for federal income tax purposes is $5,043,476. As of
December 31, 2013, the aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost was
$1,619,353 and the aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over value was
$56,672.
VALUATION INPUTS
A summary of the inputs used to value the Portfolio's investments as of December
31, 2013 is as follows (see Note 2A - Portfolio Valuation in the Notes to
Financial Statements):
LEVEL 2 LEVEL 3
TOTAL LEVEL 1 SIGNIFICANT SIGNIFICANT
VALUE AT QUOTED OBSERVABLE UNOBSERVABLE
12/31/2013 PRICES INPUTS INPUTS
------------ ------------ ------------ ------------
Common Stocks*....................................... $ 6,606,157 $ 6,606,157 $ -- $ --
============ ============ ============ ============
* See Portfolio of Investments for industry breakout.
All transfers in and out of the Levels during the period are assumed to be
transferred on the last day of the period at their current value. There were no
transfers between the Levels at December 31, 2013.
Page 42 See Notes to Financial Statements
This Page Left Blank Intentionally.
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 2013
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)................................... $ 21,448,095 $ 7,166,924 $ 17,592,167 $ 27,362,090
Cash........................................................ 290,297 174,817 360,177 566,565
Receivables:
Dividends................................................ 28,671 5,863 31,133 71,811
Membership Interests purchased........................... 948 1,024 -- 3,547
From investment advisor.................................. -- -- -- --
Prepaid expenses............................................ 331 112 281 443
------------ ----------- ------------ ------------
Total Assets............................................. 21,768,342 7,348,740 17,983,758 28,004,456
------------ ----------- ------------ ------------
LIABILITIES:
Payables:
Audit fees.............................................. 17,000 17,000 17,000 17,000
Membership Interest servicing fees...................... 16,648 5,679 14,147 22,459
Custodian fees.......................................... 15,266 3,666 5,573 11,284
Due to custodian........................................ -- -- -- --
Investment advisory fees................................ 466 1,585 8,094 11,032
12b-1 service fees...................................... 4,506 1,520 3,787 5,919
Printing fees........................................... 1,943 1,946 1,944 1,943
Administrative fees..................................... 2,776 713 1,554 3,458
Membership Interests redeemed........................... -- -- 3,643 --
Licensing fees.......................................... 2,395 726 -- --
Legal fees.............................................. 240 98 217 396
Other liabilities........................................... 206 59 205 62
------------ ----------- ------------ ------------
Total Liabilities........................................ 61,446 32,992 56,164 73,553
------------ ----------- ------------ ------------
NET ASSETS.................................................. $ 21,706,896 $ 7,315,748 $ 17,927,594 $ 27,930,903
============ =========== ============ ============
(1) Investments, at cost.................................... $ 15,513,421 $ 5,717,615 $ 14,470,317 $ 23,954,492
============ =========== ============ ============
NET ASSETS CONSIST OF:
Paid-in capital............................................. $ 15,772,222 $ 5,866,439 $ 14,805,744 $ 24,522,423
Net unrealized appreciation (depreciation) on investments and
foreign currency translation............................. 5,934,674 1,449,309 3,121,850 3,408,480
------------ ----------- ------------ ------------
NET ASSETS.................................................. $ 21,706,896 $ 7,315,748 $ 17,927,594 $ 27,930,903
============ =========== ============ ============
NET ASSET VALUE, offering price and redemption price of
Membership Interests outstanding (Net Assets/Membership
Interests outstanding)................................... $ 14.38 $ 15.78 $ 13.37 $ 28.14
============ =========== ============ ============
Number of Membership Interests outstanding.................. 1,509,552 463,674 1,341,045 992,572
============ =========== ============ ============
Page 44 See Notes to Financial Statements
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$10,648,404 $ 5,411,836 $ 5,873,581 $ 6,606,157
105,206 -- 167,563 162,747
17,434 2,871 5,107 3,926
-- -- 4,534 --
-- -- 8,580 207
141 73 96 107
------------ ------------ ------------ ------------
10,771,185 5,414,780 6,059,461 6,773,144
------------ ------------ ------------ ------------
17,000 17,000 17,000 17,000
7,911 4,344 4,687 5,235
6,702 6,236 11,565 6,439
-- 39,660 -- --
5,381 2,099 -- --
2,254 1,160 1,248 1,396
1,946 1,948 1,946 1,947
1,085 635 1,754 817
879 5,414 -- 780
-- -- 827 1,639
96 57 60 245
64 55 50 61
------------ ------------ ------------ ------------
43,318 78,608 39,137 35,559
------------ ------------ ------------ ------------
$ 10,727,867 $ 5,336,172 $ 6,020,324 $ 6,737,585
============ ============ ============ ============
$ 7,863,671 $ 4,571,555 $ 4,629,039 $ 5,043,476
============ ============ ============ ============
$ 7,943,134 $ 4,495,891 $ 4,775,782 $ 5,174,904
2,784,733 840,281 1,244,542 1,562,681
------------ ------------ ------------ ------------
$ 10,727,867 $ 5,336,172 $ 6,020,324 $ 6,737,585
============ ============ ============ ============
$ 15.98 $ 15.79 $ 6.58 $ 4.48
============ ============ ============ ============
671,377 337,842 915,531 1,502,363
============ ============ ============ ============
See Notes to Financial Statements Page 45
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2013
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
INVESTMENT INCOME:
Dividends................................................... $ 367,423 $ 199,011 $ 633,527 $ 1,381,680
Interest.................................................... 93 45 85 142
Foreign withholding tax on dividend income.................. (28,285) -- -- (43,776)
Other....................................................... 883 -- -- 1,300
------------ ----------- ------------ ------------
Total investment income.................................. 340,114 199,056 633,612 1,339,346
------------ ----------- ------------ ------------
EXPENSES:
Investment advisory fees.................................... 120,017 43,875 103,558 174,809
Membership Interest servicing fees.......................... 65,821 24,119 56,591 96,337
12b-1 service fees.......................................... 50,007 18,281 43,149 72,837
Audit fees.................................................. 17,271 17,271 17,271 17,271
Administrative fees......................................... 22,019 6,993 15,534 33,853
Custodian fees.............................................. 23,834 5,371 8,067 16,643
Licensing fees.............................................. 18,579 2,763 10,000 --
Trustees' fees and expenses................................. 4,539 4,201 4,463 4,843
Printing fees............................................... 3,319 3,274 3,309 3,360
Legal fees.................................................. 3,948 1,500 3,491 5,983
Other....................................................... 4,167 3,445 4,112 5,093
------------ ----------- ------------ ------------
Total expenses........................................... 333,521 131,093 269,545 431,029
Fees waived and expenses reimbursed by the investment
advisor (39,479) (23,598) (15,827) (2,745)
------------ ----------- ------------ ------------
Net expenses............................................. 294,042 107,495 253,718 428,284
------------ ----------- ------------ ------------
NET INVESTMENT INCOME (LOSS)................................ 46,072 91,561 379,894 911,062
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on:
Investments.............................................. 1,874,871 966,401 836,418 2,348,626
Foreign currency transactions............................ -- -- -- (5,707)
------------ ----------- ------------ ------------
Net realized gain (loss).................................... 1,874,871 966,401 836,418 2,342,919
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Investments.............................................. 4,180,051 865,917 2,988,979 637,008
Foreign currency translation............................. -- -- -- 203
------------ ----------- ------------ ------------
Net change in unrealized appreciation (depreciation)........ 4,180,051 865,917 2,988,979 637,211
------------ ----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)..................... 6,054,922 1,832,318 3,825,397 2,980,130
------------ ----------- ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.......................................... $ 6,100,994 $ 1,923,879 $ 4,205,291 $ 3,891,192
============ =========== ============ ============
Page 46 See Notes to Financial Statements
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$ 141,129 $ 35,149 $ 123,917 $ 56,239
52 33 37 28
-- -- (2,766) (561)
483 34 -- --
------------ ------------ ------------ ------------
141,664 35,216 121,188 55,706
------------ ------------ ------------ ------------
50,243 26,267 34,719 39,531
27,514 14,290 19,040 21,810
20,935 10,945 14,466 16,471
17,271 17,271 17,271 17,271
8,437 4,834 10,616 7,027
9,561 8,543 17,665 9,284
5,000 5,000 1,847 5,915
4,227 4,116 4,158 4,175
3,276 3,264 3,267 3,271
1,527 736 1,057 1,457
3,501 3,283 3,464 3,424
------------ ------------ ------------ ------------
151,492 98,549 127,570 129,636
(28,396) (34,195) (48,295) (32,783)
------------ ------------ ------------ ------------
123,096 64,354 79,275 96,853
------------ ------------ ------------ ------------
18,568 (29,138) 41,913 (41,147)
------------ ------------ ------------ ------------
594,475 832,876 599,724 1,166,082
-- -- -- --
------------ ------------ ------------ ------------
594,475 832,876 599,724 1,166,082
------------ ------------ ------------ ------------
2,388,479 814,577 920,256 668,839
-- -- -- --
------------ ------------ ------------ ------------
2,388,479 814,577 920,256 668,839
------------ ------------ ------------ ------------
2,982,954 1,647,453 1,519,980 1,834,921
------------ ------------ ------------ ------------
$ 3,001,522 $ 1,618,315 $ 1,561,893 $ 1,793,774
============ ============ ============ ============
See Notes to Financial Statements Page 47
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2013
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)................................ $ 46,072 $ 91,561 $ 379,894 $ 911,062
Net realized gain (loss).................................... 1,874,871 966,401 836,418 2,342,919
Net change in unrealized appreciation (depreciation)........ 4,180,051 865,917 2,988,979 637,211
------------ ----------- ------------ ------------
Net increase (decrease) in net assets resulting from
operations .............................................. 6,100,994 1,923,879 4,205,291 3,891,192
Net increase (decrease) in net assets from Membership
Interest transactions.................................... (2,783,240) (1,144,308) (1,921,694) (7,609,310)
------------ ----------- ------------ ------------
Net increase (decrease) in net assets....................... 3,317,754 779,571 2,283,597 (3,718,118)
NET ASSETS:
Beginning of period......................................... 18,389,142 6,536,177 15,643,997 31,649,021
------------ ----------- ------------ ------------
End of period............................................... $ 21,706,896 $ 7,315,748 $ 17,927,594 $ 27,930,903
============ =========== ============ ============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 2012
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)................................ $ 226,677 $ 72,572 $ 476,165 $ 907,319
Net realized gain (loss).................................... 450,530 523,119 1,235,662 (787,790)
Net change in unrealized appreciation (depreciation)........ 1,802,786 116,508 (808,234) 5,932,849
------------ ----------- ------------ ------------
Net increase (decrease) in net assets resulting from
operations............................................... 2,479,993 712,199 903,593 6,052,378
Net increase (decrease) in net assets from Membership
Interest transactions.................................... (4,104,172) (946,372) (7,000,511) 995,079
------------ ----------- ------------ ------------
Net increase (decrease) in net assets....................... (1,624,179) (234,173) (6,096,918) 7,047,457
NET ASSETS:
Beginning of period......................................... 20,013,321 6,770,350 21,740,915 24,601,564
------------ ----------- ------------ ------------
End of period............................................... $ 18,389,142 $ 6,536,177 $ 15,643,997 $ 31,649,021
============ =========== ============ ============
Page 48 See Notes to Financial Statements
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$ 18,568 $ (29,138) $ 41,913 $ (41,147)
594,475 832,876 599,724 1,166,082
2,388,479 814,577 920,256 668,839
------------ ------------ ------------ ------------
3,001,522 1,618,315 1,561,893 1,793,774
566,175 555,293 (1,345,228) (1,332,685)
------------ ------------ ------------ ------------
3,567,697 2,173,608 216,665 461,089
7,160,170 3,162,564 5,803,659 6,276,496
------------ ------------ ------------ ------------
$ 10,727,867 $ 5,336,172 $ 6,020,324 $ 6,737,585
============ ============ ============ ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$ 52,614 $ (13,126) $ 92,366 $ 56,740
481,797 401,440 (528,640) (1,555,791)
187,293 192,956 1,275,528 2,882,693
------------ ------------ ------------ ------------
721,704 581,270 839,254 1,383,642
(2,749,729) (1,822,177) (2,041,246) (2,242,040)
------------ ------------ ------------ ------------
(2,028,025) (1,240,907) (1,201,992) (858,398)
9,188,195 4,403,471 7,005,651 7,134,894
------------ ------------ ------------ ------------
$ 7,160,170 $ 3,162,564 $ 5,803,659 $ 6,276,496
============ ============ ============ ============
See Notes to Financial Statements Page 49
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2013
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
AMOUNT:
Sold........................................................ $ 1,378,279 $ 1,831,969 $ 3,140,233 $ 3,235,017
Redeemed.................................................... (4,161,519) (2,976,277) (5,061,927) (10,844,327)
------------ ----------- ------------ ------------
Net increase (decrease)..................................... $ (2,783,240) $(1,144,308) $ (1,921,694) $ (7,609,310)
============ =========== ============ ============
MEMBERSHIP INTEREST:
Sold........................................................ 110,719 131,412 263,971 123,398
Redeemed.................................................... (337,532) (209,504) (422,974) (416,935)
------------ ----------- ------------ ------------
Net increase (decrease)..................................... (226,813) (78,092) (159,003) (293,537)
============ =========== ============ ============
FIRST DEFINED PORTFOLIO FUND, LLC
STATEMENTS OF CHANGES IN NET ASSETS - MEMBERSHIP INTEREST ACTIVITY
FOR THE YEAR ENDED DECEMBER 31, 2012
THE DOW(R) GLOBAL
TARGET THE DOW(R) TARGET DIVIDEND
MANAGED VIP DART 10 DIVIDEND TARGET 15
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ----------- ------------ ------------
AMOUNT:
Sold........................................................ $ 1,426,483 $ 2,453,000 $ 13,404,424 $ 7,751,800
Redeemed.................................................... (5,530,655) (3,399,372) (20,404,935) (6,756,721)
------------ ----------- ------------ ------------
Net increase (decrease)..................................... $ (4,104,172) $ (946,372) $ (7,000,511) $ 995,079
============ =========== ============ ============
MEMBERSHIP INTEREST:
Sold........................................................ 139,952 211,056 1,322,448 340,327
Redeemed.................................................... (540,567) (291,123) (2,022,744) (307,703)
------------ ----------- ------------ ------------
Net increase (decrease)..................................... (400,615) (80,067) (700,296) 32,624
============ =========== ============ ============
Page 50 See Notes to Financial Statements
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$ 3,935,199 $ 5,050,426 $ 1,691,099 $ 139,941
(3,369,024) (4,495,133) (3,036,327) (1,472,626)
------------ ------------ ------------ ------------
$ 566,175 $ 555,293 $(1,345,228) $(1,332,685)
============ ============ ============ ============
288,146 373,632 285,970 36,452
(253,701) (333,967) (526,845) (374,479)
------------ ------------ ------------ ------------
34,445 39,665 (240,875) (338,027)
============ ============ ============ ============
FIRST TRUST
S&P(R) NASDAQ(R) TARGET VALUE LINE(R)
TARGET 24 TARGET 15 FOCUS FOUR TARGET 25
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ ------------
$ 2,639,871 $ 2,802,764 $ 736,999 $ 298,475
(5,389,600) (4,624,941) (2,778,245) (2,540,515)
------------ ------------ ------------ ------------
$ (2,749,729) $ (1,822,177) $ (2,041,246) $ (2,242,040)
============ ============ ============ ============
237,623 252,285 157,116 96,695
(495,013) (422,824) (590,528) (796,356)
------------ ------------ ------------ ------------
(257,390) (170,539) (433,412) (699,661)
============ ============ ============ ============
See Notes to Financial Statements Page 51
TARGET MANAGED VIP PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 10.59 $ 9.37 $ 9.53 $ 8.00 $ 7.08
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.03 0.12 0.05 0.07 0.06
Net realized and unrealized gain (loss) ....... 3.76 1.10 (0.21) 1.46 0.86
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 3.79 1.22 (0.16) 1.53 0.92
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 14.38 $ 10.59 $ 9.37 $ 9.53 $ 8.00
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 35.79% 13.02% (1.68)% 19.13% 12.99%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 21,707 $ 18,389 $ 20,013 $ 27,840 $ 31,149
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.67% 1.68% 1.69% 1.70% 1.66%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 0.23% 1.14% 0.55% 0.81% 0.82%
Portfolio turnover rate ....................... 70% 72% 89% 101% 111%
-----------------------------
(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.
Page 52 See Notes to Financial Statements
THE DOW(R) DART 10 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 12.06 $ 10.89 $ 10.11 $ 8.66 $ 7.60
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.18 0.12 0.17 0.20 0.14
Net realized and unrealized gain (loss) ....... 3.54 1.05 0.61 1.25 0.92
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 3.72 1.17 0.78 1.45 1.06
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 15.78 $ 12.06 $ 10.89 $ 10.11 $ 8.66
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 30.85% 10.74% 7.72% 16.74% 13.95%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 7,316 $ 6,536 $ 6,770 $ 6,797 $ 5,447
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.79% 1.88% 1.96% 2.09% 2.13%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 1.25% 1.04% 1.61% 2.24% 2.00%
Portfolio turnover rate ....................... 56% 77% 95% 104% 108%
-----------------------------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements Page 53
THE DOW(R) TARGET DIVIDEND PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 10.43 $ 9.88 $ 9.32 $ 8.00 $ 7.01
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.27 0.26 0.28 0.24 0.18
Net realized and unrealized gain (loss) ....... 2.67 0.29 0.28 1.08 0.81
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 2.94 0.55 0.56 1.32 0.99
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 13.37 $ 10.43 $ 9.88 $ 9.32 $ 8.00
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 28.19% 5.57% 6.01% 16.50% 14.12%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 17,928 $ 15,644 $ 21,741 $ 22,281 $ 22,557
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.56% 1.59% 1.58% 1.60% 1.67%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 2.20% 2.53% 2.92% 2.77% 2.83%
Portfolio turnover rate ....................... 65% 145% 107% 104% 109%
-----------------------------
(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.
Page 54 See Notes to Financial Statements
GLOBAL DIVIDEND TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 24.61 $ 19.63 $ 21.22 $ 19.34 $ 13.71
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.82 0.71 0.71 0.52 0.11
Net realized and unrealized gain (loss) ....... 2.71 4.27 (2.30) 1.36 5.52
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 3.53 4.98 (1.59) 1.88 5.63
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 28.14 $ 24.61 $ 19.63 $ 21.22 $ 19.34
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 14.34% 25.37% (7.49)% 9.72% 41.06%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 27,931 $ 31,649 $ 24,602 $ 36,489 $ 46,885
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.48% 1.51% 1.54% 1.53% 1.53%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 3.13% 3.17% 3.39% 2.69% 0.71%
Portfolio turnover rate ....................... 48% 59% 47% 123% 84%
-----------------------------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements Page 55
S&P(R) TARGET 24 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 11.24 $ 10.27 $ 9.46 $ 7.93 $ 6.97
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.03 0.07 0.02 0.04 0.07
Net realized and unrealized gain (loss) ....... 4.71 0.90 0.79 1.49 0.89
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 4.74 0.97 0.81 1.53 0.96
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 15.98 $ 11.24 $ 10.27 $ 9.46 $ 7.93
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 42.17% 9.45% 8.56% 19.29% 13.77%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 10,728 $ 7,160 $ 9,188 $ 9,496 $ 9,292
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.80% 1.89% 1.81% 1.95% 2.07%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... 0.22% 0.65% 0.16% 0.46% 0.97%
Portfolio turnover rate ....................... 98% 115% 161% 135% 142%
-----------------------------
(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.
Page 56 See Notes to Financial Statements
NASDAQ(R) TARGET 15 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 10.61 $ 9.39 $ 9.27 $ 7.11 $ 6.08
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. (0.09) (0.03) (0.10) 0.12 (0.04)
Net realized and unrealized gain (loss) ....... 5.27 1.25 0.22 2.04 1.07
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 5.18 1.22 0.12 2.16 1.03
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 15.79 $ 10.61 $ 9.39 $ 9.27 $ 7.11
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 48.82% 12.99% 1.29% 30.38% 16.94%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 5,336 $ 3,163 $ 4,403 $ 7,702 $ 2,821
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 2.25% 2.31% 2.01% 2.49% 2.93%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... (0.66)% (0.30)% (1.02)% 1.52% (0.68)%
Portfolio turnover rate ....................... 159% 132% 127% 100% 194%
-----------------------------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements Page 57
FIRST TRUST TARGET FOCUS FOUR PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 5.02 $ 4.41 $ 4.95 $ 4.16 $ 3.23
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. 0.04 0.07 0.04 0.04 0.03
Net realized and unrealized gain (loss) ....... 1.52 0.54 (0.58) 0.75 0.90
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 1.56 0.61 (0.54) 0.79 0.93
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 6.58 $ 5.02 $ 4.41 $ 4.95 $ 4.16
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 31.08% 13.83% (10.91)% 18.99% 28.79%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 6,020 $ 5,804 $ 7,006 $ 10,715 $ 11,204
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 2.20% 2.13% 2.08% 2.01% 2.29%
Ratio of expenses to average net assets ....... 1.37% 1.37% 1.37% 1.37% 1.37%
Ratio of net investment income (loss) to
average net assets ......................... 0.72% 1.42% 0.79% 0.95% 0.92%
Portfolio turnover rate ....................... 91% 82% 124% 110% 81%
-----------------------------
(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.
Page 58 See Notes to Financial Statements
VALUE LINE(R) TARGET 25 PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/13 12/31/12 12/31/11 12/31/10 12/31/09
---------- ---------- ---------- ---------- ----------
Net asset value, beginning of period .......... $ 3.41 $ 2.81 $ 3.73 $ 2.86 $ 2.67
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (a) .............. (0.02) 0.03 (0.04) (0.03) (0.02)
Net realized and unrealized gain (loss) ....... 1.09 0.57 (0.88) 0.90 0.21
---------- ---------- ---------- ---------- ----------
Total from investment operations .............. 1.07 0.60 (0.92) 0.87 0.19
---------- ---------- ---------- ---------- ----------
Net asset value, end of period ................ $ 4.48 $ 3.41 $ 2.81 $ 3.73 $ 2.86
========== ========== ========== ========== ==========
TOTAL RETURN (b) (c) .......................... 31.38% 21.35% (24.67)% 30.42% 7.12%
========== ========== ========== ========== ==========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $ 6,738 $ 6,276 $ 7,135 $ 12,602 $ 11,211
Ratio of expenses to average net assets without
fee waivers and expenses reimbursed ........ 1.97% 2.00% 1.81% 1.83% 1.80%
Ratio of expenses to average net assets ....... 1.47% 1.47% 1.47% 1.47% 1.47%
Ratio of net investment income (loss) to
average net assets ......................... (0.62)% 0.82% (1.10)% (0.82)% (0.63)%
Portfolio turnover rate ....................... 98% 107% 129% 103% 119%
-----------------------------
(a) Per Membership Interest values have been calculated using the average
share method.
(b) Total return is not annualized for periods less than one year. The returns
for the Portfolio do not reflect the deduction of expenses associated with
variable products, such as mortality and expense risk charges, and sales
charges. These expenses would reduce the overall returns shown.
(c) The total return would have been lower if certain fees had not been waived
and expenses reimbursed by the investment advisor.
See Notes to Financial Statements Page 59
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013
1. ORGANIZATION
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 ("U.S. GAAP") 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. If the NYSE closes early
on a valuation day, the NAV is determined as of that time. Domestic debt
securities and foreign securities are priced using data reflecting the earlier
closing of the principal markets for those securities. The NAV per Interest is
calculated by dividing the value of all assets of a Portfolio (including accrued
interest and dividends), less all liabilities (including accrued expenses,
dividends declared but unpaid, and any borrowings of the Portfolio) by the total
number of Interests outstanding.
Each Portfolio's investments are valued daily at market value or, in absence of
market value with respect to any portfolio securities, at fair value in
accordance with valuation procedures adopted by the Registrant's Board of
Trustees, and in accordance with provisions of the 1940 Act. Market quotations
and prices used to value each Portfolio's investments are primarily obtained
from third party pricing services. Each Portfolio's securities will be valued as
follows:
Common stocks and other equity securities listed on any national or
foreign exchange (excluding the NASDAQ(R) Stock Market LLC ("NASDAQ") and
the London Stock Exchange Alternative Investment Market ("AIM")) are
valued at the last sale price on the exchange on which they are
principally traded or, for NASDAQ and AIM securities, the official closing
price. Securities traded on more than one securities exchange are valued
at the last sale price or official closing price, as applicable, at the
close of the securities exchange representing the principal market for
such securities.
Securities traded in an over-the-counter market are valued at the mean of
the bid and asked prices, if available, and otherwise at the closing bid
price.
Short-term investments that mature in less than 60 days when purchased are
valued at amortized cost.
Certain securities may not be able to be priced by pre-established pricing
methods. Such securities may be valued by the Registrant's Board of Trustees or
its delegate at fair value. These securities generally include, but are not
limited to, restricted securities (securities which may not be publicly sold
without registration under the Securities Act of 1933, as amended) for which a
pricing service is unable to
Page 60
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013
provide a market price; securities whose trading has been formally suspended; a
security whose market price is not available from a pre-established pricing
source; a security with respect to which an event has occurred that is likely to
materially affect the value of the security after the market has closed but
before the calculation of each Portfolio's NAV or make it difficult or
impossible to obtain a reliable market quotation; and a security whose price, as
provided by the pricing service, does not reflect the security's "fair value."
As a general principle, the current "fair value" of a security would appear to
be the amount which the owner might reasonably expect to receive for the
security upon its current sale. The use of fair value prices by each Portfolio
generally results in prices used by the Portfolios that may differ from current
market quotations or official closing prices on the applicable exchange. A
variety of factors may be considered in determining the fair value of such
securities, including, but not limited to, the following:
1) the type of security;
2) the size of the holding;
3) the initial cost of the security;
4) transactions in comparable securities;
5) price quotes from dealers and/or pricing services;
6) relationships among various securities;
7) information obtained by contacting the issuer, analysts, or the
appropriate stock exchange;
8) an analysis of the issuer's financial statements; and
9) the existence of merger proposals or tender offers that might affect
the value of the security.
If the securities in question are foreign securities, the following additional
information may be considered:
1) the value of similar foreign securities traded on other foreign
markets;
2) ADR trading of similar securities;
3) foreign currency exchange activity;
4) the trading prices of financial products that are tied to baskets of
foreign securities;
5) factors relating to the event that precipitated the pricing problem;
6) whether the event is likely to recur; and
7) whether the effects of the event are isolated or whether they affect
entire markets, countries or regions.
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:
o Level 1 - Level 1 inputs are quoted prices in active markets for
identical investments. An active market is a market in which
transactions for the investment occur with sufficient frequency and
volume to provide pricing information on an ongoing basis.
o Level 2 - Level 2 inputs are observable inputs, either directly or
indirectly, and include the following:
o Quoted prices for similar investments in active markets.
o Quoted prices for identical or similar investments in markets
that are non-active. A non-active market is a market where
there are few transactions for the investment, 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.
o Inputs other than quoted prices that are observable for the
investment (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities,
prepayment speeds, loss severities, credit risks, and default
rates).
o Inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
o Level 3 - Level 3 inputs are unobservable inputs. Unobservable
inputs may reflect the reporting entity's own assumptions about the
assumptions that market participants would use in pricing the
investment.
The inputs or methodology used for valuing investments are not necessarily an
indication of the risk associated with investing in those investments. A summary
of the inputs used to value each Portfolio's investments as of December 31,
2013, is included with the 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, including amortization of premiums and accretion of
discounts.
Page 61
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013
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 investments" on the Statements of
Operations. Unrealized appreciation of $882 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.
D. DIVIDENDS AND DISTRIBUTIONS TO INTEREST HOLDERS:
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 Portfolios are not currently
taxable when left to accumulate within a variable annuity contract. As such, no
distributions have been paid by any of the Portfolios and no federal or state
income tax provision is required.
F. EXPENSES:
Expenses that are directly related to one of the Portfolios are charged directly
to that Portfolio. General expenses of the Registrant with the exception of
audit and printing fees, which are allocated evenly among the Portfolios, are
generally allocated to all the Portfolios based upon the average net assets of
each Portfolio.
The Registrant has entered into an Administrative Services Agreement (the
"Agreement") with Prudential whereby Prudential provides certain Membership
Interests servicing reasonably necessary for the operations of the Portfolios
other than the management services provided by First Trust Advisors L.P. ("First
Trust") pursuant to the Investment Advisory and Management Agreement. As
compensation for the services rendered under the Agreement, Prudential is paid
fees at an annual rate of 0.30% of average daily net assets from the Portfolios.
These fees are included in "Membership Interest servicing fees" on the
Statements of Operations.
First Trust has entered into various licensing agreements, which allow First
Trust to use certain trademarks and trade names of the applicable licensors (see
Licensing Information in the Additional Information section of this report). The
Portfolios are sub-licensees to these license agreements and are required to pay
licensing fees, which are shown on the Statements of Operations.
3. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust, the investment advisor to the Portfolios, is a limited partnership
with one limited partner, Grace Partners of DuPage L.P., and one general
partner, The Charger Corporation. The Charger Corporation is an Illinois
corporation controlled by James A. Bowen, Chief Executive Officer of First
Trust. First Trust provides each Portfolio with discretionary investment
services and certain administrative services necessary for the management of the
Portfolios. For its investment advisory and management services, First Trust is
entitled to a monthly fee calculated at an annual rate of 0.60% of each
Portfolio's average daily net assets.
For the period September 30, 2004 through December 31, 2014, First Trust has
contractually agreed to waive fees and reimburse expenses of the Portfolios to
limit the total annual fund operating expenses (excluding taxes, interest, all
brokerage commissions, other normal charges incident to the purchase and sale of
portfolio securities, 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. Expenses reimbursed and fees waived by First Trust under the
Fee Waiver, Expense Reimbursement and Recovery Agreement are subject to recovery
by First Trust for up to three years from the date the fee or expense was
incurred, but no reimbursement payment will be made by the Portfolio if it
results in the Portfolio exceeding an expense ratio equal to the expense cap in
place at the time the expenses or fees were reimbursed or waived by First Trust.
Page 62
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013
These amounts would be included in "Expenses previously waived or reimbursed" on
the Statements of Operations. The advisory fee waivers and expense
reimbursements for the year ended December 31, 2013 and the expenses borne by
First Trust subject to recovery from each Portfolio at December 31, 2013 were as
follows:
EXPENSES BORNE BY FIRST TRUST SUBJECT TO RECOVERY
-------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
FEES EXPENSES DECEMBER DECEMBER DECEMBER
WAIVED REIMBURSED 31, 2011 31, 2012 31, 2013 TOTAL
---------- ---------- ---------- ---------- ---------- ----------
Target Managed VIP
Portfolio............................ $ 39,479 $ -- $ 56,401 $ 41,448 $ 39,479 $ 137,328
The Dow(R) Dart 10
Portfolio............................ 23,598 -- 27,884 28,385 23,598 79,867
The Dow(R) Target Dividend
Portfolio............................ 15,827 -- 22,017 21,677 15,827 59,521
Global Dividend Target 15
Portfolio............................ 2,745 -- 22,253 11,173 2,745 36,171
S&P(R) Target 24
Portfolio............................ 28,396 -- 32,445 34,343 28,396 95,184
NASDAQ(R) Target 15
Portfolio............................ 26,267 7,928 32,132 37,272 34,195 103,599
First Trust Target Focus Four
Portfolio............................ 34,719 13,576 73,400 49,375 48,295 171,070
Value Line(R) Target 25
Portfolio............................ 32,783 -- 34,798 36,694 32,783 104,275
BNY Mellon Investment Servicing (US) Inc. ("BNYM IS") serves as the Portfolios'
administrator, fund accountant and transfer agent in accordance with certain fee
arrangements. As administrator and fund accountant, BNYM IS is responsible for
providing certain administrative and accounting services to each Portfolio,
including maintaining the Portfolios' books of account, records of the
Portfolios' securities transactions, and certain other books and records. As
transfer agent, BNYM IS is responsible for maintaining shareholder records for
each Portfolio. The Bank of New York Mellon ("BNYM") serves as the Portfolios'
custodian in accordance with certain fee arrangements. As custodian, BNYM is
responsible for custody of the Portfolios' assets.
Each Trustee who is not an officer or employee of First Trust, any sub-advisor
or any of their affiliates ("Independent Trustees") is paid a fixed annual
retainer of $125,000 per year and an annual per fund fee of $4,000 for each
closed-end fund or other actively managed fund and $1,000 for each index fund in
the First Trust Fund Complex. The Portfolios are considered to be index funds
for this purpose. The fixed annual retainer is allocated pro rata among each
fund in the First Trust Fund Complex based on net assets.
Additionally, the Lead Independent Trustee is paid $15,000 annually, the
Chairman of the Audit Committee is paid $10,000 annually, and each of the
Chairmen of the Nominating and Governance Committee and the Valuation Committee
is paid $5,000 annually to serve in such capacities, with such compensation
allocated pro rata among each fund in the First Trust Fund Complex based on net
assets. Trustees are reimbursed for travel and out-of-pocket expenses in
connection with all meetings. The Lead Independent Trustee and each Committee
Chairman served two-year terms until December 31, 2013, before rotating to serve
as Chairman of another Committee or as Lead Independent Trustee. After December
31, 2013, the Lead Independent Trustee and Committee Chairmen will rotate every
three years. The officers and "Interested" Trustee receive no compensation from
the funds for acting in such capacities.
4. DISTRIBUTION PLAN
The Registrant, on behalf of each Portfolio, has adopted a 12b-1 Service Plan
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which provides that
Interests of each of the Portfolios will be subject to an annual service fee.
First Trust Portfolios L.P. ("FTP") serves as the selling agent and distributor
of Interests of the Portfolios. In this capacity, FTP manages the offering of
the Portfolios' Interests and is responsible for all sales and promotional
activities. The Plan reimburses FTP for its costs in connection with these
activities. FTP also uses the service fee to compensate Prudential for providing
account services to policy owners. These services include establishing and
maintaining policy owner accounts, answering inquiries, and providing personal
services to policy owners. Each Portfolio may spend up to 0.25% per year of the
average daily net assets of its Interests as a service fee under the Plan. In
addition, the Plan permits First Trust to use a portion of its advisory fee to
compensate FTP for expenses incurred in connection with the sale and
distribution of a Portfolio's Interests including, without limitation, expenses
of preparing, printing and distributing prospectuses to persons other than
Interest holders or policy owners, as well as compensating its sales force,
printing and distributing advertising and
Page 63
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013
sales literature and reports to Interest holders and policy owners used in
connection with the sale of a Portfolio's Interests, certain other expenses
associated with the distribution of the Portfolios, and any distribution-related
expenses that may be authorized by the Registrant's Board of Trustees.
During the year ended December 31, 2013, 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 investment securities, excluding
short-term investments, for the year ended December 31, 2013, were as follows:
PURCHASES SALES
------------- -------------
Target Managed VIP Portfolio $13,686,314 $16,287,932
The Dow(R) DART 10 Portfolio 4,004,308 5,144,239
The Dow(R) Target Dividend Portfolio 10,926,728 12,577,964
Global Dividend Target 15 Portfolio 13,734,803 20,041,441
S&P(R) Target 24 Portfolio 8,700,235 8,061,192
NASDAQ(R) Target 15 Portfolio 7,360,487 6,724,480
First Trust Target Focus Four Portfolio 5,132,532 6,417,746
Value Line(R) Target 25 Portfolio 6,336,775 7,726,366
6. MEMBERSHIP INTERESTS
The Registrant has authorized an unlimited number of Membership 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. 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
there was the following subsequent event:
As approved by the Board of Trustees of the Registrant at a meeting on January
22, 2014, 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 and Value Line(R) Target 25 Portfolio (collectively, the
"Portfolios"), each a series of the Registrant, are scheduled to cease normal
operations on April 18, 2014 (the "Effective Date"). Following the Effective
Date, the Registrant and the Portfolios will terminate and liquidate on April
25, 2014. The Portfolios expect to distribute termination proceeds on or prior
to April 25, 2014.
Page 64
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
TO THE BOARD OF TRUSTEES AND MEMBER OF FIRST DEFINED PORTFOLIO FUND, LLC:
We have audited the accompanying statements of assets and liabilities of First
Defined Portfolio Fund, LLC (the "Registrant"), comprised of Target Managed VIP
Portfolio, The Dow(R) DART 10 Portfolio, The Dow(R) Target Dividend Portfolio,
Global Dividend Target 15 Portfolio, S&P(R) Target 24 Portfolio, NASDAQ(R)
Target 15 Portfolio, First Trust Target Focus Four Portfolio, and Value Line(R)
Target 25 Portfolio (collectively, the "Portfolios"), including the portfolios
of investments, as of December 31, 2013, and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended. These financial statements and
financial highlights are the responsibility of the Portfolios' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
The Registrant is not required to have, nor were we engaged to perform, an audit
of its internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the
Registrant's internal control over financial reporting. Accordingly, we express
no such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. Our procedures
included confirmation of securities owned as of December 31, 2013 by
correspondence with the Portfolios' custodian and brokers. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the Portfolios listed above included in the First Defined Portfolio Fund,
LLC, as of December 31, 2013, and the results of their operations for the year
then ended, the changes in their net assets for each of the two years in the
period then ended, and the financial highlights for each of the five years in
the period then ended, in conformity with accounting principles generally
accepted in the United States of America.
/s/ Deloitte & Touche LLP
Chicago, Illinois
February 11, 2014
Page 65
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013 (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 the Registrant 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 SEC
for the first and third quarters of each fiscal year on Form N-Q. The
Registrant's Forms N-Q are available (1) by calling (800) 988-5891; (2) on the
Registrant's website located at http://www.ftportfolios.com; (3) on the SEC's
website at http://www.sec.gov; and (4) for review and copying at the SEC's
Public Reference Room ("PRR") in Washington, DC. Information regarding the
operation of the PRR may be obtained by calling (800) SEC-0330.
LICENSING INFORMATION
"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 registered trademarks of Standard & Poor's
Financial Services LLC ("S&P"), and "Dow Jones Industrial Average(SM),"
"DJIA(SM)," "The Dow Jones Select Dividend Index(SM)," "Dow Industrials(SM),"
"The Dow(R)," "Dow 30(SM)," and "The Dow 10(SM)" and Dow Jones are registered
trademarks of Dow Jones Trademark Holdings LLC ("Dow Jones") and have been
licensed for use by S&P Dow Jones Indices LLC and sublicensed for certain
purposes by FTP 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 and S&P(R) Target 24 Portfolio are sponsored, endorsed, sold or
promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P, or their respective
affiliates, and neither S&P Dow Jones Indices LLC, Dow Jones, S&P, or their
respective affiliates make any representation regarding the advisability of
investing in such product(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.
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.
Page 66
--------------------------------------------------------------------------------
ADDITIONAL INFORMATION (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013 (UNAUDITED)
MARKET RISK: The principal risk of investing in the Portfolios is market risk.
Market risk is the risk that a particular stock in a Portfolio, the Portfolio
itself or stocks in general may fall in value. As with any mutual fund
investment, loss of money is a risk of investing. Shares are subject to market
fluctuations caused by such factors as economic, political, regulatory or market
developments, changes in interest rates and perceived trends in stock prices.
Overall stock values could decline generally or could underperform other
investments.
NON-U.S. SECURITIES INVESTMENT RISK: The Portfolios may invest in non-U.S.
securities. Investing in securities of non-U.S. companies and non-U.S.
governments involves special risks and considerations not typically associated
with investing in the securities of U.S. companies and the U.S. government.
These risks include re-valuation of currencies and future adverse political and
economic developments. These risks are heightened for investments in emerging
market countries. Moreover, securities of many non-U.S. companies and non-U.S.
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the U.S. government.
NON-DIVERSIFICATION RISK: Each Portfolio is classified as "non-diversified" and
is limited as to the percentage of its assets which may be invested in
securities of any one issuer only by its own investment restrictions and
diversification requirements. A Portfolio may therefore invest a relatively high
percentage of its assets in a limited number of issuers. This does expose each
Portfolio to greater market fluctuations than is experienced by a diversified
fund. Each Portfolio is more susceptible to any single economic, political or
regulatory occurrence and to the financial conditions of the issuers in which it
invests.
INVESTMENT STRATEGY RISK: Each Portfolio is also exposed to additional market
risk due to its policy of investing in accordance with an investment strategy.
As a result of this policy, securities held by the Portfolios will generally not
be bought or sold in response to market fluctuations and the securities may be
issued by companies concentrated in a particular industry. Each Portfolio's
relative lack of diversification, possible concentration in a particular
industry and passive management style may subject investors to greater market
risk than other mutual funds.
SMALL CAP COMPANY RISK: The Target Managed VIP Portfolio and Value Line(R)
Target 25 Portfolio invest in small cap stocks, which presents additional risk.
Small cap stocks are more vulnerable to market conditions, less liquid and
generally experience greater price volatility than stocks of larger
capitalization companies.
Page 67
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013 (UNAUDITED)
Information pertaining to the Trustees and officers of the Registrant is set
forth below. The statement of additional information includes additional
information about the Trustees and is available without charge, upon request, by
calling (800) 988-5891.
NUMBER OF OTHER
PORTFOLIOS IN TRUSTEESHIPS OR
THE FIRST TRUST DIRECTORSHIPS
NAME, ADDRESS, TERM OF OFFICE FUND COMPLEX HELD BY TRUSTEE
DATE OF BIRTH AND AND LENGTH OF PRINCIPAL OCCUPATIONS OVERSEEN BY DURING PAST
POSITION WITH THE REGISTRANT SERVICE DURING PAST 5 YEARS TRUSTEE 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES
------------------------------------------------------------------------------------------------------------------------------------
Richard E. Erickson, Trustee o Indefinite Term Physician; President, Wheaton Orthopedics; 105 None
c/o First Trust Advisors L.P. Limited Partner, Gundersen Real Estate
120 East Liberty Drive, o Since Inception Limited Partnership; Member, Sportsmed,
Suite 400 LLC
Wheaton, IL 60187
D.O.B.: 04/51
Thomas R. Kadlec, Trustee o Indefinite Term President (March 2010 to Present), Senior 105 Director of ADM
c/o First Trust Advisors L.P. Vice President and Chief Financial Officer Investor Services,
120 East Liberty Drive, o Since March 2004 (May 2007 to March 2010), ADM Investor Inc. and ADM
Suite 400 Services, Inc. (Futures Commission Merchant) Investor Services
Wheaton, IL 60187 International
D.O.B.: 11/57
Robert F. Keith, Trustee o Indefinite Term President (2003 to Present), Hibs Enterprises 105 Director of Trust
c/o First Trust Advisors L.P. (Financial and Management Consulting) Company of
120 East Liberty Drive, o Since April 2007 Illinois
Suite 400
Wheaton, IL 60187
D.O.B.: 11/56
Niel B. Nielson, Trustee o Indefinite Term President and Chief Executive Officer (June 105 Director of
c/o First Trust Advisors L.P. 2012 to Present), Dew Learning LLC Covenant
120 East Liberty Drive, o Since Inception (Educational Products and Services); President Transport Inc.
Suite 400 (June 2002 to June 2012), Covenant College
Wheaton, IL 60187
D.O.B.: 03/54
------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEE
------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen(1), Trustee and o Indefinite Term Chief Executive Officer (December 2010 105 None
Chairman of the Board to Present), President (until December
120 East Liberty Drive, o Since Inception 2010), First Trust Advisors L.P. and First
Suite 400 Trust Portfolios L.P.; Chairman of the
Wheaton, IL 60187 Board of Directors, BondWave LLC
D.O.B.: 09/55 (Software Development Company/
Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
-----------------------------
(1) Mr. Bowen is deemed an "interested person" of the Registrant due to his
position as Chief Executive Officer of First Trust Advisors L.P.,
investment advisor of the Registrant.
Page 68
--------------------------------------------------------------------------------
BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013 (UNAUDITED)
NAME, ADDRESS POSITION AND OFFICES TERM OF OFFICE AND PRINCIPAL OCCUPATIONS
AND DATE OF BIRTH WITH REGISTRANT LENGTH OF SERVICE DURING PAST 5 YEARS
------------------------------------------------------------------------------------------------------------------------------------
OFFICERS (2)
------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley President and Chief o Indefinite Term Chief Operating Officer (December 2010 to Present)
120 E. Liberty Drive, Executive Officer and Chief Financial Officer, First Trust Advisors
Suite 400 o Since January 2012 L.P. and First Trust Portfolios L.P.; Chief Financial
Wheaton, IL 60187 Officer, BondWave LLC (Software Development
D.O.B.: 11/57 Company/Investment Advisor) and Stonebridge
Advisors LLC (Investment Advisor)
James M. Dykas Treasurer, Chief Financial o Indefinite Term Controller (January 2011 to Present), Senior Vice
120 E. Liberty Drive, Officer and Chief President (April 2007 to January 2011), Vice
Suite 400 Accounting Officer o Since January 2012 President (January 2005 to April 2007), First Trust
Wheaton, IL 60187 Advisors L.P. and First Trust Portfolios L.P.
D.O.B.: 01/66
W. Scott Jardine Secretary and Chief o Indefinite Term General Counsel, First Trust Advisors L.P. and First
120 E. Liberty Drive, Legal Officer Trust Portfolios L.P.; Secretary and General Counsel,
Suite 400 o Since Inception BondWave LLC (Software Development Company/
Wheaton, IL 60187 Investment Advisor); Secretary of Stonebridge
D.O.B.: 05/60 Advisors LLC (Investment Advisor)
Daniel J. Lindquist Vice President o Indefinite Term Managing Director (July 2012 to Present), Senior
120 E. Liberty Drive, Vice President (September 2005 to July 2012),
Suite 400 o Since December 2005 First Trust Advisors L.P. and First Trust Portfolios
Wheaton, IL 60187 L.P.
D.O.B.: 02/70
Kristi A. Maher Chief Compliance Officer o Indefinite Term Deputy General Counsel, First Trust Advisors L.P.
120 E. Liberty Drive, and Assistant Secretary and First Trust Portfolios L.P.
Suite 400 o Chief Compliance
Wheaton, IL 60187 Officer Since
D.O.B.: 12/66 January 2011
o Assistant Secretary
Since July 2004
Roger F. Testin Vice President o Indefinite Term Senior Vice President, First Trust Advisors L.P. and
120 E. Liberty Drive, First Trust Portfolios L.P.
Suite 400 o Since September 2001
Wheaton, IL 60187
D.O.B.: 06/66
-----------------------------
(2) Officers of the Registrant have an indefinite term. The term "officer"
means the president, vice president, secretary, treasurer, controller or
any other officer who performs a policy making function.
Page 69
--------------------------------------------------------------------------------
PRIVACY POLICY
--------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2013 (UNAUDITED)
PRIVACY POLICY
First Trust values our relationship with you and considers your privacy an
important priority in maintaining that relationship. We are committed to
protecting the security and confidentiality of your personal information.
SOURCES OF INFORMATION
We collect nonpublic personal information about you from the following sources:
o Information we receive from you and your broker-dealer, investment
advisor or financial representative through interviews,
applications, agreements or other forms;
o Information about your transactions with us, our affiliates or
others;
o Information we receive from your inquiries by mail, e-mail or
telephone; and
o Information we collect on our website through the use of "cookies".
For example, we may identify the pages on our website that your
browser requests or visits.
INFORMATION COLLECTED
The type of data we collect may include your name, address, social security
number, age, financial status, assets, income, tax information, retirement and
estate plan information, transaction history, account balance, payment history,
investment objectives, marital status, family relationships and other personal
information.
DISCLOSURE OF INFORMATION
We do not disclose any nonpublic personal information about our customers or
former customers to anyone, except as permitted by law. In addition to using
this information to verify your identity (as required under law), the permitted
uses may also include the disclosure of such information to unaffiliated
companies for the following reasons:
o In order to provide you with products and services and to effect
transactions that you request or authorize, we may disclose your
personal information as described above to unaffiliated financial
service providers and other companies that perform administrative or
other services on our behalf, such as transfer agents, custodians
and trustees, or that assist us in the distribution of investor
materials such as trustees, banks, financial representatives, proxy
services, solicitors and printers.
o We may release information we have about you if you direct us to do
so, if we are compelled by law to do so, or in other legally limited
circumstances (for example to protect your account from fraud).
In addition, in order to alert you to our other financial products and services,
we may share your personal information within First Trust.
PRIVACY ONLINE
We allow third-party companies, including AddThis (a social media sharing
service), to collect certain anonymous information when you visit our website.
These companies may use non-personally identifiable information during your
visits to this and other websites in order to provide advertisements about goods
and services likely to be of greater interest to you. These companies typically
use a cookie, third party web beacon or pixel tags, to collect this information.
To learn more about this behavioral advertising practice, you can visit
www.networkadvertising.org.
CONFIDENTIALITY AND SECURITY
With regard to our internal security procedures, First Trust restricts access to
your nonpublic personal information to those First Trust employees who need to
know that information to provide products or services to you. We maintain
physical, electronic and procedural safeguards to protect your nonpublic
personal information.
POLICY UPDATES AND INQUIRIES
As required by federal law, we will notify you of our privacy policy annually.
We reserve the right to modify this policy at any time, however, if we do change
it, we will tell you promptly. For questions about our policy, or for additional
copies of this notice, please go to www.ftportfolios.com, or contact us at
1-800-621-1675 (First Trust Portfolios) or 1-800-222-6822 (First Trust
Advisors).
Page 70
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
FIRST TRUST
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
The Bank of New York Mellon
101 Barclay Street, 20th Floor
New York, NY 10286
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
[BLANK BACK COVER]
ITEM 2. CODE OF ETHICS.
(a) The registrant, as of the end of the period covered by this report,
has adopted a code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party.
(c) There have been no amendments, during the period covered by this
report, to a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, and
that relates to any element of the code of ethics description.
(d) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the
registrant's principal executive officer, principal financial
officer, principal accounting officer or controller, or persons
performing similar functions, regardless of whether these
individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of
this item's instructions.
(e) Not applicable.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
As of the end of the period covered by the report, the Registrant's board of
trustees has determined that Thomas R. Kadlec and Robert F. Keith are qualified
to serve as audit committee financial experts serving on its audit committee and
that each is "independent," as defined by Item 3 of Form N-CSR.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees -- The aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal accountant for
the audit of the registrant's annual financial statements or services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements were $136,000.00 for 2012 and $136,000.00 for 2013.
(b) Audit-Related Fees (Registrant) -- The aggregate fees billed in each
of the last two fiscal years, for assurance and related services by the
principal accountant that are reasonably related to the performance of the audit
of the registrant's financial statements and are not reported under paragraph
(a) of this Item were $0 for 2012 and $0 for 2013.
Audit-Related Fees (Investment Adviser and Distributor) -- The aggregate
fees billed in each of the last two fiscal years for assurance and related
services by the principal accountant that are reasonably related to the
performance of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item were $0 for 2012 and $0 for 2013.
(c) Tax Fees (Registrant) -- The aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal accountant
for tax compliance, tax advice, and tax planning to the registrant were $0 for
2011 and $0 for 2012.
Tax Fees (Investment Adviser and Distributor) -- The aggregate fees billed
in each of the last two fiscal years for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning to the
registrant's adviser and distributor were $0 for 2012 and $0 for 2013.
(d) All Other Fees (Registrant) -- The aggregate fees billed in each of
the last two fiscal years for products and services provided by the principal
accountant to the registrant, other than the services reported in paragraphs (a)
through (c) of this Item were $0 for 2011 and $0 for 2013.
All Other Fees (Investment Adviser and Distributor) -- The aggregate fees
billed in each of the last two fiscal years for products and services provided
by the principal accountant to the registrant's investment adviser and
distributor, other than the services reported in paragraphs (a) through (c) of
this Item were $0 for 2012 and $0 for 2013.
(e)(1) Disclose the audit committee's pre-approval policies and procedures
described in paragraph (c)(7) of Rule 2-01 of Regulation S-X.
Pursuant to its charter and its Audit and Non-Audit Services Pre-Approval
Policy, the Audit Committee (the "Committee") is responsible for the
pre-approval of all audit services and permitted non-audit services (including
the fees and terms thereof) to be performed for the registrant by its
independent auditors. The Chairman of the Committee is authorized to give such
pre-approvals on behalf of the Committee up to $25,000 and report any such
pre-approval to the full Committee.
The Committee is also responsible for the pre-approval of the independent
auditor's engagements for non-audit services with the registrant's adviser (not
including a sub-adviser whose role is primarily portfolio management and is
sub-contracted or overseen by another investment adviser) and any entity
controlling, controlled by or under common control with the investment adviser
that provides ongoing services to the registrant, if the engagement relates
directly to the operations and financial reporting of the registrant, subject to
the de minimis exceptions for non-audit services described in Rule 2-01 of
Regulation S-X. If the independent auditor has provided non-audit services to
the registrant's adviser (other than any sub-adviser whose role is primarily
portfolio management and is sub-contracted with or overseen by another
investment adviser) and any entity controlling, controlled by or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to its policies, the Committee
will consider whether the provision of such non-audit services is compatible
with the auditor's independence.
(e)(2) The percentage of services described in each of paragraphs (b)
through (d) for the registrant and the registrant's investment adviser of this
Item that were approved by the audit committee pursuant to the pre-approval
exceptions included in paragraph (c)(7)(i)(c) or paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X are as follows:
(b) 0%
(c) 0%
(d) 0%
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was less than fifty
percent.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's investment
adviser (not including any sub-adviser whose role is primarily portfolio
management and is subcontracted with or overseen by another investment adviser),
and any entity controlling, controlled by, or under common control with the
adviser that provides ongoing services to the registrant for 2012 were $0 for
the registrant, $4,120 for the registrant's investment adviser and $65,135 for
the registrant's distributor and for 2013 were $0 for the registrant, $38,000
for the registrant's investment adviser and $58,100 for the registrant's
distributor.
(h) The registrant's audit committee of its Board of Trustees has
determined that the provision of non-audit services that were rendered to the
registrant's investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen by another
investment adviser), and any entity controlling, controlled by, or under common
control with the investment adviser that provides ongoing services to the
registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal accountant's
independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. INVESTMENTS.
(a) Schedule of Investments in securities of unaffiliated issuers as of the
close of the reporting period is included as part of the report to
shareholders filed under Item 1 of this form.
(b) Not applicable.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There have been no material changes to the procedures by which the shareholders
may recommend nominees to the registrant's board of directors, where those
changes were implemented after the registrant last provided disclosure in
response to the requirements of Item 407(c)(2)(iv) of Regulation S-K (17 CFR
229.407) (as required by Item 22(b)(15) of Schedule 14A (17 CFR 240.14a-101)),
or this Item.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive and principal financial
officers, or persons performing similar functions, have concluded
that the registrant's disclosure controls and procedures (as defined
in Rule 30a-3(c) under the Investment Company Act of 1940, as
amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of
a date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph, based on their evaluation
of these controls and procedures required by Rule 30a-3(b) under the
1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b)
under the Securities Exchange Act of 1934, as amended (17 CFR
240.13a-15(b) or 240.15d-15(b)).
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the 1940 Act
(17 CFR 270.30a-3(d)) that occurred during the registrant's second
fiscal quarter of the period covered by this report that has
materially affected, or is reasonably likely to materially affect,
the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Code of ethics, or any amendment thereto, that is the subject of
disclosure required by Item 2 is attached hereto.
(a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and
Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Rule 30a-2(b) under the 1940 Act and
Section 906 of the Sarbanes- Oxley Act of 2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) First Defined Portfolio Fund, LLC
----------------------------------------------------
By (Signature and Title)* /s/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: February 11, 2014
-----------------------
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/ Mark R. Bradley
----------------------------------------
Mark R. Bradley, President and
Chief Executive Officer
(principal executive officer)
Date: February 11, 2014
-----------------------
By (Signature and Title)* /s/ James M. Dykas
----------------------------------------
James M. Dykas, Treasurer,
Chief Financial Officer and
Chief Accounting Officer
(principal financial officer)
Date: February 11, 2014
-----------------------
* Print the name and title of each signing officer under his or her signature.