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
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FIRST DEFINED PORTFOLIO FUND, LLC
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(Exact name of registrant as specified in charter)
1001 Warrenville Road, Suite 300
LISLE, IL 60532
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(Address of principal executive offices) (Zip code)
Corporation Service Company
1013 Centre Road
WILMINGTON, DE 19805
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(Name and address of agent for service)
Registrant's telephone number, including area code: 630-241-4141
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Date of fiscal year end: DECEMBER 31, 2003
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Date of reporting period: DECEMBER 31, 2003
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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, 450 Fifth Street, NW,
Washington, DC 20549-0609. The OMB has reviewed this collection of information
under the clearance requirements of 44 U.S.C. ss. 3507.
ITEM 1. REPORTS TO STOCKHOLDERS.
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FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
FOR THE YEAR ENDED DECEMBER 31, 2003
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TABLE OF CONTENTS
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FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
Shareholder Letter ......................................................... 1
Market Overview ............................................................ 2
Performance Summaries ...................................................... 6
Portfolio of Investments ................................................... 17
Statements of Assets and Liabilities ....................................... 34
Statements of Operations ................................................... 36
Statements of Changes in Net Assets ........................................ 38
Statements of Changes in Net Assets - Capital Stock Activity ............... 40
Financial Highlights ....................................................... 42
Notes to Financial Statements .............................................. 53
Report of Independent Auditors ............................................. 57
Management ................................................................. 58
HOW TO READ THIS REPORT
This report contains information that can help you evaluate your investment. It
includes details about each portfolio and presents data and analysis that
provide insight into each portfolio's performance and investment approach.
By reading the letter from the Fund's President, James A. Bowen, together with
the market overview and discussion of each portfolio's performance, you will
obtain an understanding of how the market environment affected its performance.
The statistical information that follows can help you understand how a
portfolio's performance and characteristics compare to that of relevant market
benchmarks.
It is important to keep in mind that the opinions expressed by Mr. Bowen and
First Trust Advisors personnel 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. Of course, the risks of
investing in the fund are spelled out in the prospectus.
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SHAREHOLDER LETTER
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FIRST DEFINED PORTFOLIO FUND, LLC
ANNUAL REPORT
DECEMBER 31, 2003
Dear Shareholders:
It is my pleasure to report that 2003 was a profitable year for shareholders of
the First Defined Portfolio Fund, LLC (the "Fund"). I am particularly encouraged
by the fact that eight of the eleven portfolios in the Fund posted returns in
excess of 30%. The three-year bear market in stocks thankfully ran its course in
March. Investor sentiment, in our opinion, showed a marked improvement following
the successful completion in early May of the "major combat" phase by U.S. and
coalition forces in the war with Iraq.
The state of the U.S. economy improved a great deal as 2003 unfolded. We believe
that investors began to embrace the notion that the economic cycle was
transitioning from a recovery phase to an expansionary phase in early spring.
The combination of low interest rates/low inflation, a pickup in business
spending and tax reform helped to fuel economic growth.
The manufacturing sector, which was hit especially hard in the recession of
2001, roared back in the second-half of 2003. The ISM Index, which measures
manufacturing activity (a reading of 50 or above indicates expansion), surged
from 50.4 in June to 63.6 in December - a 20-year high. The housing market
remained robust despite warnings from some pundits to the contrary. Existing
home sales reached 6.1 million in 2003, a record high. Overall, the U.S. economy
grew by 3.1%.
A potential plus for investors in 2004 is that it will be President Bush's
fourth year in office. According to SmartMoney.com, from 1927 through 2002 -
encompassing 19 presidential election cycles - the S&P 500's average annual
total return was 12%. The average return in the fourth year of a president's
term has been 14%.
As always, our approach to investing on behalf of the First Defined Portfolio
Fund, LLC is based in the belief that a disciplined buy-and-hold philosophy best
suits the long-term investor. The companies selected for our defined sector
portfolios are researched and evaluated using database screening techniques,
fundamental analysis, and the judgement of our research analysts.
We believe that financial markets set the price of financial securities based
upon expectations for future cash flows. It is our contention that successful
investors tend to select stocks where management is able to exceed cash flow
expectations. Likewise, portfolios derived from indexes will continue to employ
unique quantitative strategies that combine historical evidence with common
sense to give investors an opportunity to obtain returns greater than that of
the actual indexes.
/S/ James A. Bowen
James A. Bowen
President of the First Defined
Portfolio Fund, LLC
February 13, 2004
Page 1
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OVERVIEW OF THE MARKET
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FIRST DEFINED PORTFOLIO FUND, LLC
2003 ANNUAL REPORT
The stock market rally was broad in scope in 2003 as evidenced by the fact that
seven of the top ten major sectors tracked by Standard and Poor's posted gains
in excess of 20%. Another good indicator of market breadth is to compare the
return of the S&P 500 Index, which is market cap weighted, to an equally
weighted version. In 2003, the return on the equally weighted version of the S&P
500 Index was 38.7%, vs. 28.7% for the market cap weighted index. From a
psychological standpoint, the Dow Jones Industrial Average surpassing the 10,000
barrier on December 11was also a positive for the market. The last time the
index was above 10,000 was May 24, 2002.
In addition to market breadth, two other indicators that showed that investors
and Corporate America were optimistic about the market in 2003 were margin debt
and stock splits. Margin debt reached $173 billion in December 2003, its highest
level in 15 months, according to CBSMarketWatch.com. Margin debt stood at $244
billion in January 2000 and peaked at $278.5 billion in March 2000, showing
there is a ways to go before the levels in recent years are reached. In 2003,
200 companies announced stock splits, up 7% from 2002, according to
StockSplits.net. It was the biggest year for splits since the 375 executed in
2000. Stock splits occur when the market has been trending up, which began in
the spring of 2003.
It appears that some significant pent-up buying power was built during the
three-year bear market in stocks. We believe that investors began to embrace the
notion that the economic cycle was transitioning from a recovery phase to an
expansionary phase right about the same time that the U.S. and coalition forces
were successfully completing the major combat phase in the war with Iraq. Some
other factors that helped push stocks higher in 2003 include: low interest
rates/inflation, lower cost of capital for businesses, pickup in business
spending, tax reform and a surge in corporate profits.
Historically, small-cap stocks often outperform large-caps in the first year of
a bull market. Small-caps delivered as advertised by outperforming large-caps in
2003. The S&P 600 Index, a small cap index, appreciated 38.8% in 2003, vs. a
28.7% gain posted by the S&P 500 Index. In 2003, value investing outpaced growth
investing, as measured by Standard & Poor's. The S&P Barra Value Index gained
31.8% while the S&P Barra Growth Index rose 25.7%.
The companies in the S&P 500 Index produced net income of $474 billion in 2003,
up from $179 billion in 2002, and higher than the $445 billion posted in 2000,
according to Thomson Financial. Profits jumped 17% in 2003, up from a 0.1% gain
in 2002. Profits in 2003 fell just shy of the 18% gain posted in 1999.
A year ago at this time we discussed the possibility that stock dividends could
be taxed at a lower rate in the future if Congress were to pass President Bush's
tax reform proposal into law. President Bush signed the Jobs & Growth Tax Relief
Reconciliation Act of 2003 into law on May 28, 2003. The new tax rate on
qualified stock dividends has been lowered through 2008 to 15% for taxpayers in
higher income tax brackets, and to 5% for those in the 10% and 15% tax brackets.
According to Standard & Poor's, out of the approximately 7,000 publicly-traded
companies tracked by S&P, 1,630 increased their dividend distributions in 2003,
a 14.4% increase over 2002. This was the best year for dividend increases since
1999.
DEFINED TARGET PORTFOLIOS
TARGET MANAGED VIP PORTFOLIO
The Target Managed VIP Portfolio achieved a total return of 34.9% in 2003, which
outperformed the Russell 3000 Index's total return of 31.1%. The NAV increased
from $6.47 to $8.73 during the calendar year. One hundred and six stocks
advanced and eleven declined. The top performing stocks were the following:
OmniVision Technology (+307.1%), Hovnanian Enterprises (+174.6%), Coach
(+129.3%), Sierra Health Services (+128.6%), Engineered Support System (+125.4%)
and Flagstar Bancorp (+102.5%). The stocks that performed the poorest were the
following: Koninklijke Ahold N.V. (-39.0%), First Health Group (-19.8%),
Coca-Cola (-16.5%), Biosite (-14.9%), Chattem (-12.9%) and FTI Consulting
(-12.7%).
DOW(SM) DART 10 PORTFOLIO
The Dow(SM) Dart 10 Portfolio's total return of 19.9% for 2003 lagged the Dow
Jones Industrial Average, which achieved a total return of 28.3% last year. The
NAV increased from $6.98 to $8.37 during the calendar year. Eight stocks
advanced and three declined. Medco Health Solutions, a spin-off of Merck,
brought the total number of stocks in the portfolio to 11. The
Page 2
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OVERVIEW OF THE MARKET - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
2003 ANNUAL REPORT
deal was executed in August 2003. The top performing stocks were the following:
Medco Health (+65.8%), J.P. Morgan Chase (+58.7%), General Motors (+50.3%),
Honeywell Int'l (+42.4%), Citigroup (+41.1%) and Altria (+40.8%). The stocks
that performed the poorest were the following: Eastman Kodak (-23.5%) and Merck
(-11.1%).
GLOBAL TARGET 15 PORTFOLIO
The Global Target 15 Portfolio slightly outperformed the Morgan Stanley Capital
International Developed Markets World Index in 2003, with a total return of
34.1% for this portfolio compared to 33.1% for its benchmark. The NAV increased
from $8.24 to $11.05 during the calendar year. Fourteen stocks advanced and one
declined. Four DJIA stocks advanced and one declined. All five of the stocks in
both the Financial Times Industrial Ordinary Share Index and Hang Seng Index
advanced. The top performing stocks were the following: Penninsular (+66.7%),
New World Development (+64.7%), BAE Systems (+61.3%), Reuters Group (+59.9%),
Citic Pacific (+59.4%) and J.P. Morgan Chase (+58.7%). The only stock that fell
was AT&T Corp. (-19.0%).
S&P TARGET 24 PORTFOLIO
The S&P Target 24 Portfolio performance was slightly behind that of the S&P 500
Index in 2003. Its total return was 24.1% compared to 28.7% for its benchmark.
The NAV increased from $6.14 to $7.62 during the calendar year. Twenty-one
stocks advanced and three declined. The top performing stocks were the
following: Cisco Systems (+85.0%), Zimmer Holdings (+69.6%), Starbucks (+62.7%),
Fortune Brands (+56.2%), IMS Health (+55.9%) and Apache Corp. (+50.2%). The
three stocks that fell were the following: Alltel (-5.9%), Colgate-Palmolive
(-2.8%) and Johnson & Johnson (-2.1%).
NASDAQ(R) TARGET 15 PORTFOLIO
The Nasdaq(R) Target 15 Portfolio ended 2003 with a total return of 36.0%, which
was significantly below the Nasdaq(R) 100 Index's total return of 49.5%. The NAV
increased from $6.83 to $9.29 during the calendar year. Thirteen stocks advanced
and two declined. The top performing stocks were the following: Gilead Sciences
(+71.4%), Symantec Corp. (+70.3%), American Power Conversion Corp. (+62.8%),
Apollo Group (+54.1%) and Henry Schein (+50.2%). The two stocks that fell were
First Health (-19.8%) and Lincare Holdings (-4.9%).
10 UNCOMMON VALUES PORTFOLIO
The 10 Uncommon Values Portfolio achieved a total return of 37.0% for 2003,
which was significantly ahead of the 28.7% results for the S&P 500 Index. The
NAV increased from $3.41 to $4.67 during the calendar year. In the first half of
2003, eight stocks advanced and two declined. In the second half of 2003, which
included the new 2003 selections, eight stocks advanced and two declined.
The top performing stocks in the FIRST HALF of 2003 were the following: Capital
One (+66.8%), Apollo Group (+43.6%) and McKesson (+31.3%). The two stocks that
declined in the FIRST HALF of 2003 were HEALTHSOUTH (-90.0%) and American
International Group (-1.5%). The top performing stocks in the SECOND HALF of
2003 were the following: Nextel Communications (+65.5%), Cisco Systems (+43.6%),
US Bancorp (+23.8%) and Harrah's (+21.5%). The two stocks that declined in the
SECOND HALF of 2003 were Amgen (-4.3%) and JetBlue Airways (-1.2%).
VALUE LINE(R) TARGET 25 PORTFOLIO
The Value Line(R) Target 25 Portfolio significantly outperformed the Russell
3000 Index in 2003. Its total return was 40.9% versus 31.1% for its benchmark.
The NAV increased from $2.37 to $3.34 during the calendar year. Twenty-one
stocks advanced and four declined. The top performing stocks were the following:
Hovnanian Enterprises (+174.6%), Coach (+129.3%), Chico's FAS (+95.4%),
Cognizant Technology Solutions (+89.6%), Western Digital (+84.5%) and GTECH
Holdings (+78.9%). The stocks that performed poorly were the following:
Coca-Cola (-16.5%), Biosite (-14.9%), Chattem (-12.9%) and Steris Corp. (-6.8%).
Page 3
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OVERVIEW OF THE MARKET - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
2003 ANNUAL REPORT
DEFINED SECTOR PORTFOLIOS
ENERGY PORTFOLIO
The Energy Portfolio's total return for 2003 was 31.7%. This performance was
better than that achieved by both of the indexes that make up its benchmark as
the Russell 1000 Integrated Oil Index was up 26.9% and the Russell 1000 Other
Energy Index was up 26.1% last year. The NAV increased from $10.78 to $14.20
during the calendar year. Twenty-three stocks advanced and two declined.
The following S&P group returns reflect how energy stocks fared in 2003:
Integrated Oil & Gas (+26.7%), Oil & Gas Equipment & Services (+24.7%),
Oil-Exploration & Production (+23.6%) and Oil & Gas Drilling (+6.7%).
Supply constraints have elevated the price of both oil and natural gas to
near-record levels. In 2003, OPEC has made it known that it may alter crude oil
production levels in an effort to keep the price of oil at the higher end of its
$22-$28 per barrel trading range.
The year-over-year estimated earnings growth rate for the companies in the S&P
ENERGY INDEX rose by 58% in 2003, according to Thomson First Call. This compares
to annual growth rates of -36.0% and -7.0% for 2002 and 2001, respectively.
The top performing stocks in 2003 were the following: PetroChina (+194.4%),
Patina \ Oil & Gas (+94.4%), Canadian Natural Resource (+71.4%), Marathon Oil
(+59.9%) and Petro-Canada (+59.5%). The only stocks that fell in 2003 were
Weatherford Int'l (-9.8%) and Tidewater (-2.0%).
FINANCIAL SERVICES PORTFOLIO
The Financial Services Portfolio's total return was 33.0% in 2003 and
outperformed the Russell 1000 Financial Services Index, which was up 30.5%. The
NAV increased from $10.00 to $13.30 during the calendar year. All thirty stocks
advanced. The following S&P group returns reflect how financial stocks fared in
2003: Diversified Financials (+42.7%), Banks (+26.7%), Property & Casualty
(+26.4%) and Insurance Brokers (+11.4%).
The U.S. securities industry rebounded strongly in 2003, with record profits
expected for the year, according to the Securities Industry Association (SIA).
The SIA recently revised its earlier estimate of $15 billion in 2003 pre-tax
profits to $22.5 billion, which is more than triple the $6.9 billion generated
last year and more than the previous record of $21 billion established in 2000.
In 2003, banks also enjoyed record profits ($54.9 billion) thanks largely to a
robust mortgage market, according to BUSINESSWEEK. The insurance industry has
improved following three challenging years. Companies have successfully
increased premiums - double-digit increases on some product lines. Financials
are the largest sector weighting in the S&P 500 Index at 20.7%.
PHARMACEUTICAL PORTFOLIO
The Pharmaceutical Portfolio was up in 2003 by 19.7% and outperformed the
Russell 1000 Healthcare Index's total return of 17.6%. The NAV increased from
$8.65 to $10.35 during the calendar year. Sixteen stocks within this portfolio
advanced and four declined.
Despite the concerns over rising health care costs, the Medicare reform bill was
passed by Congress in November. It did not include price controls. Drug stocks
have been performing better since the passage of the Medicare bill, which
contained a prescription drug benefit for seniors. The lack of price controls
was critical to this industry because companies collectively spend an estimated
$32 billion a year on R&D and spend $800 million on average to develop and
market new drugs, according to the Pharmaceutical Research and Manufacturers of
America (PhRMA).
The following S&P group returns reflect how health care stocks fared in 2003:
Biotechnology (+28.9%) and Pharmaceuticals (+8.8%).
The year-over-year earnings growth rate for the companies in the S&P HEALTH CARE
INDEX was 10% in 2003, according to Thomson First Call. This compares to annual
growth rates of 5.0% and 13.0% for 2002 and 2001, respectively.
Page 4
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OVERVIEW OF THE MARKET - (CONTINUED)
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FIRST DEFINED PORTFOLIO FUND, LLC
2003 ANNUAL REPORT
The top performing stocks in 2003 were the following: Barr Pharmaceuticals
(+77.3%), Teva Pharmaceutical Industries (+47.6%), Novo Nordisk A/S (+43.5%) and
AstraZeneca (+40.1%). The stocks that declined in 2003 were the following:
Biovail (-18.6%), Merck (-11.1%), Medimmune (-6.6%) and Johnson & Johnson
(-2.1%).
The year-over-year earnings growth rate for the companies in the S&P FINANCIALS
INDEX was 18% in 2003, according to Thomson First Call. This compares to annual
growth rates of 13.0 and -7.0% for 2002 and 2001, respectively.
The top performing stocks in 2003 were the following: Capital One (+106.6%),
Countrywide Financial (+96.9%), Doral Financial (+71.4%), Merrill Lynch
(+56.2%), Everest Re Group (+53.6%) and Morgan Stanley (+47.3%).
TECHNOLOGY PORTFOLIO
The Technology Portfolio was up substantially in 2003 but lagged the Russell
1000 Technology Index. This portfolio's total return was 46.6%, compared to
49.0% for its benchmark. The NAV increased from $3.39 to $4.97 during the
calendar year. All twenty-five stocks within the portfolio advanced.
The following S&P group returns reflect how technology stocks fared in 2003:
Communications-Equipment (+78.9%), Computers & Peripherals (+31.5%) and Software
& Services (+22.9%). The Philadelphia Semiconductor Index gained 76.0%.
The combination of an increase in business spending, declining prices on many
products and services and cost-cutting initiatives, in our opinion, helped boost
the sales and profits of technology companies in 2003. Tax reform contributed as
well by providing companies with accelerated depreciation incentives on
equipment purchased by the end of 2004.
The year-over-year earnings growth rate for the companies in the S&P INFORMATION
TECHNOLOGY INDEX rose an estimated 87% in 2003, according to Thompson First
Call. This compares to annual growth rates of 2.0% and -62.0% for 2002 and 2001,
respectively.
The top performing stocks in 2003 were the following: Veritas Software
(+137.0%), Broadcom (+125.9%), SAP AG (+113.9%), Intel (+106.4%), Electronic
Arts (+91.6%) and UTStarcom (+86.9%).
Page 5
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PERFORMANCE SUMMARY
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TARGET MANAGED VIP PORTFOLIO 1 DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Target Target Target
Managed Dow Jones Russell Managed Dow Jones Russell Managed Dow Jones Russell
Vip Industrial 3000 Vip Industrial 3000 Vip Industrial 3000
Portfolio Ave.** Index*** Portfolio Ave.** Index*** Portfolio Ave.** Index ***
--------- ---------- --------- --------- ---------- --------- --------- ---------- ---------
1999 2000 2001
-19.6% 9.0% 12.6% 7.2% -4.7% -7.5% -5.0% -5.5% -11.4%
Target Target
Managed Dow Jones Russell Managed Dow Jones Russell
Vip Industrial 3000 Vip Industrial 3000
Portfolio Ave.** Index*** Portfolio Ave.** Index***
--------- ---------- --------- --------- ---------- ---------
2002 2003
-21.0% -15.0% -21.5% 34.9% 28.3% 31.1%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
Target
Managed
VIP Dow Jones Russell
Portfolio Industrial Average** 3000 Index***
--------- -------------------- --------------
Oct 99 $10,000.00 $10,000.00 $10,000.00
Dec 99 $8,040.00 $10,896.00 $11,262.00
Dec 00 $8,620.00 $10,382.00 $10,420.00
Dec 01 $8,190.00 $9,816.00 $9,229.00
Dec 02 $6,470.00 $8,343.00 $7,241.00
Dec 03 $8,730.00 $10,700.00 $9,500.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Target Managed VIP Portfolio $10,000 $8,040 $8,620 $8,190 $6,470 $8,730
Dow Jones Industrial Avg.** 10,000 10,896 10,382 9,816 8,343 10,700
Russell 3000 Index*** 10,000 11,262 10,420 9,229 7,241 9,500
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ---------------------------------------------------------------------------------------------------------------------------
Target Managed VIP Portfolio 10/6/99 -12.7% -3.2% 34.9%
Dow Jones Industrial Avg.** 7.0 1.6 28.3
Russell 3000 Index*** -5.0 -1.2 31.1
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Dow Jones Industrial Average 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 Russell 3000 Index is composed of 3,000 large U.S. companies, as
determined by market capitalization. This portfolio represents
approximately 98% of the investable U.S. equity market. (Bloomberg)
1. Effective April 30, 2002, based upon the determination of the Fund's Board of
Trustees, the Fund changed its name from the DowSM Target 5 Portfolio to the
Target Managed VIP Portfolio. The Fund's primary investment strategy was also
changed. The performance figures provided reflect the Fund's performance prior
to the name change and the change of the primary investment strategy.
Page 6
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PERFORMANCE SUMMARY
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THE DOW(SM) DART 10 PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
DART 10 Dow Jones DART 10 Dow Jones
Portfolio Industrial Avg.** Portfolio Industrial Avg.**
---------- ----------------- ---------- -----------------
1999* 2000
-7.8% 9.0% 8.7% -4.7%
DART 10 Dow Jones DART 10 Dow Jones
Portfolio Industrial Avg.** Portfolio Industrial Avg.**
---------- ----------------- ---------- -----------------
2001 2002
-14.8% -5.5% -18.3% -15.0
DART 10 Dow Jones
Portfolio Industrial Avg.**
---------- -----------------
2003
%19.9% 28.3%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
DART 10 Portfolio Dow Jones Industrial Avg.**
----------------- ---------------------------
Oct 99 $10,000.00 $10,000.00
Dec 99 $9,220.00 $10,896.00
Dec 00 $10,020.00 $10,382.00
Dec 01 $8,540.00 $9,816.00
Dec 02 $6,980.00 $8,343.00
Dec 03 $8,370.00 $10,700.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
DART 10 Portfolio $10,000 $9,220 $10,020 $8,540 $6,980 $8,370
Dow Jones Industrial Avg.** 10,000 10,896 10,382 9,816 8,343 10,700
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ----------------------------------------------------------------------------------------------------------------------
DART 10 Portfolio 10/6/99 -16.3% -4.1% 19.9%
Dow Jones Industrial Avg.** 7.0 1.6 28.3
*The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
**The Dow Jones Industrial Average 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)
Page 7
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PERFORMANCE SUMMARY
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GLOBAL TARGET 15 PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Global Target MSCI World Global Target MSCI World
15 Portfolio Index** 15 Portfolio Index**
------------ ---------- ------------ ----------
1999* 2000
-2.9% 14.0% 2.0% -14.1%
Global Target MSCI World Global Target MSCI World
15 Portfolio Index** 15 Portfolio Index**
------------ ---------- ------------ ----------
2001 2002
-2.4% -17.8% -14.7% -19.9%
Global Target MSCI World
15 Portfolio Index**
------------ ----------
2003
34.1% 33.1%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
Global Target
15 Portfolio MSCI World Index**
------------- -----------------
Oct 99 $10,000.00 $10,000.00
Dec 99 $9,710.00 $11,395.00
Dec 00 $9,900.00 $9,794.00
Dec 01 $9,660.00 $8,048.00
Dec 02 $8,240.00 $6,502.00
Dec 03 $11,050.00 $8,650.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Global Target 15 Portfolio $10,000 $9,710 $9,900 $9,660 $8,240 $11,050
MSCI World Index** 10,000 11,395 9,794 8,048 6,502 8,650
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ----------------------------------------------------------------------------------------------------------------------------
Global Target 15 Portfolio 10/6/99 10.5% 2.4% 34.1%
MSCI World Index** -13.5 -3.4 33.1
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Morgan Stanley Capital International Developed Markets World Index
("MSCI") 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)
Page 8
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
S&P(R)TARGET 24 PORTFOLIO 1 DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
S&P Target S&P Target
24 Portfolio S&P 500 Index** 24 Portfolio S&P 500 Index**
------------ --------------- ------------ ---------------
1999* 2000
18.3% 11.2% -19.4% -9.1%
S&P Target S&P Target
24 Portfolio S&P 500 Index** 24 Portfolio S&P 500 Index**
------------ --------------- ------------ ---------------
2001 2002
-24.6% -16.9% -14.6% -22.1%
S&P Target
24 Portfolio S&P 500 Index**
------------ ---------------
2003
24.1% 28.7%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
S&P Target
24 Portfolio S&P 500 Index**
------------ ---------------
Oct 99 $10,000.00 $10,000.00
Dec 99 $11,830.00 $11,115.00
Dec 00 $9,540.00 $10,104.00
Dec 01 $7,190.00 $8,903.00
Dec 02 $6,140.00 $6,935.00
Dec 03 $7,260.00 $8,920.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
S&P Target 24 Portfolio $10,000 $11,830 $9,540 $7,190 $6,140 $7,620
S&P 500 Index** 10,000 11,115 10,104 8,903 6,935 8,920
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ---------------------------------------------------------------------------------------------------------------------------
S&P Target 24 Portfolio 10/6/99 -23.8% -6.2% 24.1%
S&P 500 Index** -10.8 -2.7 28.7
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Standard & Poor's 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)
1. Effective April 30, 2002, based upon the determination of the Fund's Board of
Trustees, the Fund changed its name from the S&PTarget 10 Portfolio to the S&P
Target 24 Portfolio. The Fund's primary investment strategy was also changed.
The performance figures provided reflect the Fund's performance prior to the
name change and the change of the primary investment strategy.
Page 9
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
NASDAQ(R)TARGET 15 PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
NASDAQ Target NASDAQ NASDAQ NASDAQ Target NASDAQ NASDAQ
15 Portfolio Composite Index** 100 Index*** 15 Portfolio Composite Index** 100 Index***
1999* 2000
46.0% 42.5% 46.4% -11.8% -39.2% -36.8%
NASDAQ Target NASDAQ NASDAQ NASDAQ Target NASDAQ NASDAQ
15 Portfolio Composite Index** 100 Index*** 15 Portfolio Composite Index** 100 Index***
2001 2002
-28.2% -20.8% -32.6% -26.2% -31.3% -37.5%
NASDAQ Target NASDAQ
15 Portfolio 100 Index***
2003
36.0% 49.5%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
NASDAQ Target
15 Portfolio NASDAQ Composite Index** NASDAQ 100 Index***
------------- ------------------------ -------------------
Oct 99 $10,000.00 $10,000.00 $10,000.00
Dec 99 $14,600.00 $14,251.00 $14,644.00
Dec 00 $12,880.00 $8,677.00 $9,251.00
Dec 01 $9,250.00 $6,864.00 $6,234.00
Dec 02 $6,830.00 $4,718.00 $3,894.00
Dec 03 $9,290.00 0.00 $5,820.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Nasdaq Target 15 Portfolio $10,000 $14,600 $12,880 $9,250 $6,830 $9,290
Nasdaq Composite Index** 10,000 14,251 8,667 6,864 4,718 --
Nasdaq 100 Index*** 10,000 14,644 9,251 6,234 3,894 5,820
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- --------------------------------------------------------------------------------------------------------------------------
Nasdaq Target 15 Portfolio 10/6/99 -7.1% -1.7% 36.0%
Nasdaq 100 Index*** -41.8 -12.0 49.5
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Nasdaq Composite Index is a broad-based capitalization-weighted index
of all Nasdaq National Market and SmallCap stocks. (Bloomberg) As of
December 31, 2003, this index is no longer used for the benchmark
comparison.
*** The Nasdaq 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. (Bloomberg)
Page 10
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
FIRST TRUST 10 UNCOMMON VALUES PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
10 Uncommon S&P 500 Nasdaq Composite 10 Uncommon S&P 500 Nasdaq Composite
Values Index** Index*** Values Index** Index***
----------- -------- ----------------- ----------- --------- ----------------
1999* 2000
14.0% 11.2% 42.5% -26.4% -9.1% -39.2%
10 Uncommon S&P 500 Nasdaq Composite 10 Uncommon S&P 500 Nasdaq Composite
Values Index** Index*** Values Index** Index***
----------- -------- ----------------- ----------- --------- ----------------
1999* 2000
-35.6% -16.9% -20.8% -36.9% -22.1% -31.3%
10 Uncommon S&P 500
Values Index**
----------- --------
2003
37.0% 28.7%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
First Trust NASDAQ
10 Uncommon Values S&P 500 Index** Composite Index***
------------------ --------------- ------------------
Oct 99 $10,000.00 $10,000.00 $10,000.00
Dec 99 $11,400.00 $11,115.00 $14,251.00
Dec 00 $8,390.00 $10,104.00 $8,667.00
Dec 01 $5,400.00 $8,903.00 $6,864.00
Dec 02 $3,410.00 $6,935.00 $4,718.00
Dec 03 $4,670.00 $8,920.00 0.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
First Trust 10 Uncommon Values $10,000 $11,400 $8,390 $5,400 $3,410 $4,670
S&P500 Index** 10,000 11,115 10,104 8,903 6,935 8,920
Nasdaq Composite Index*** 10,000 14,251 8,667 6,864 4,718 --
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ----------------------------------------------------------------------------------------------------------------------------
First Trust 10 Uncommon Values 10/6/99 -53.3% -16.4% 37.0%
S&P 500 Index.** -10.8 -2.7 28.7
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Standard & Poor's 500 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 Nasdaq Composite Index is a broad-based capitalization-weighted index
of all Nasdaq National Market and SmallCap stocks. (Bloomberg) As of
December 31, 2003, this index is no longer used for the benchmark
comparison.
Page 11
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
VALUE LINE TARGET 25 PORTFOLIO(1) DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Value Line Target Nasdaq Composite DJ Comp Internet Russell 3000
25 Portfolio Index** Index*** Index****
------------ ---------------- ---------------- ------------
1999*
63.3% 42.5% 59.1% 12.6%
Value Line Target Nasdaq Composite DJ Comp Internet Russell 3000
25 Portfolio Index** Index*** Index****
------------ ---------------- ---------------- ------------
2000
-42.9% -39.2% -66.0% -7.5%
Value Line Target Nasdaq Composite DJ Comp Internet Russell 3000
25 Portfolio Index** Index*** Index****
------------ ---------------- ---------------- ------------
2001
-55.5% -20.8% -54.4% -11.4%
Value Line Target Nasdaq Composite DJ Comp Internet Russell 3000
25 Portfolio Index** Index*** Index****
------------ ---------------- ---------------- ------------
2002
-42.9% -31.3% -38.9% -21.5%
Value Line Target Russell 3000
25 Portfolio Index****
------------ ----------------
2003
40.9% 31.1%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
Value
Line DJ
Target NASDAQ Comp Russell
25 Composite Internet 3000
Portfolio Index** Index*** Index ****
--------- --------- -------- ----------
Oct 99 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Dec 99 $16,330.00 $14,251.00 $15,905.00 $11,262.00
Dec 00 $9,320.00 $8,667.00 $5,403.00 $10,420.00
Dec 01 $4,150.00 $6,864.00 $2,465.00 $9,229.00
Dec 02 $2,370.00 $4,718.00 $1,507.00 $7,241.00
Dec 03 $3,340.00 0.00 0.00 $9,500.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Value Line Target 25 Portfolio $10,000 $16,330 $9,320 $4,150 $2,370 $3,340
Nasdaq Composite Index** 10,000 14,251 8,667 6,864 4,718 --
DJ Comp Internet Index*** 10,000 15,905 5,403 2,465. 1,507 --
Russell 3000 Index**** 10,000 11,262 10,420 9,229 7,241 9,500
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ---------------------------------------------------------------------------------------------------------------------------
Value Line Target 25 Portfolio 10/6/99 -66.6% -22.8% 40.9%
Russell 3000 Index **** -5.0 -1.2 31.1
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Nasdaq Composite Index is a broad-based capitalization-weighted index
of all Nasdaq National Market and SmallCap stocks. (Bloomberg) As of
December 31, 2003, this index is no longer used for the benchmark
comparison.
*** The Dow Jones Composite Internet Index is a modified
capitalization-weighted index. The index is intended to track performance
of companies that are involved in internet related activities. The index
consists of 40 stocks. (Bloomberg) As of December 31, 2003, this index is
no longer used for the benchmark comparison.
**** The Russell 3000 Index is composed of 3000 large U.S. companies, as
determined by market capitalization. This portfolio represents
approximately 98% of the investable U.S. equity market. (Bloomberg)
1. Effective April 30, 2002, based upon the determination of the Fund's Board of
Trustees, the Fund changed its name from the First Trust Internet Portfolio to
the Value Line(R) Target 25 Portfolio. The Fund's primary investment strategy
was also changed. The performance figures provided reflect the Fund's
performance prior to the name change and the change of the primary investment
strategy.
Page 12
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
ENERGY PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
AMEX DB Russell 1000 Russell 1000
Energy S&P 500 Energy Integrated Oil Other Energy
Portfolio Index** Index*** Index+ Index++
- --------- -------- -------- -------------- -------------
1999*
12.3% 11.2% %1.5% 3.1% 6.2%
AMEX DB Russell 1000 Russell 1000
Energy S&P 500 Energy Integrated Oil Other Energy
Portfolio Index** Index*** Index+ Index++
- --------- -------- -------- -------------- -------------
2000
41.3% -9.1% 37.0% 12.6% 69.1%
AMEX DB Russell 1000 Russell 1000
Energy S&P 500 Energy Integrated Oil Other Energy
Portfolio Index** Index*** Index+ Index++
- --------- -------- -------- -------------- -------------
2001
-28.9% -16.9% -7.1% -10.6% -43.3%
AMEX DB Russell 1000 Russell 1000
Energy S&P 500 Energy Integrated Oil Other Energy
Portfolio Index** Index*** Index+ Index++
- --------- -------- -------- -------------- -------------
2002
-4.5% -22.1% -4.3% -12.7% -20.6%
Russell 1000 Russell 1000
Energy Integrated Oil Other Energy
Portfolio Index+ Index++
- --------- -------------- -------------
2003
31.7% 26.9% 26.1%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
S&P AMEX DB Russell 1000 Russell 1000
Energy 500 Energy Integrated Other Energy
Portfolio Index** Index*** Oil Index+ Index++
--------- ------- --------- ------------ ------------
Oct 99 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Dec 99 $11,230.00 $11,115.00 $10,146.00 $10,307.00 $10,617.00
Dec 00 $15,870.00 $10,104.00 $13,895.00 $11,601.00 $17,953.00
Dec 01 $11,290.00 $8,903.00 $12,908.00 $10,377.00 $10,174.00
Dec 01 $10,780.00 $6,935.00 $12,354.00 $9,061.00 $8,082.00
Dec 03 $14,200.00 0.00 0.00 $11,500.00 $10,190.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Energy Portfolio $10,000 $11,230 $15,870 $11,290 $10,780 $14,200
S&P500 Index** 10,000 11,115 10,104 8,903 6,935 --
Amex DB Energy Index*** 10,000 10,146 13,895 12,908 12,354 --
Russell 1000 Integrated Oil Index+ 10,000 10,307 11,601 10,377 9,061 11,500
Russell 1000 Other Energy Index++ 10,000 10,617 17,953 10,174 8,082 10,190
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ------------------------------------------------------------------------------------------------------------------------------
Energy Portfolio 10/6/99 42.0% 8.6% 31.7%
Russell 1000 Integrated Oil Index+ 15.0 3.3 26.9
Russell 1000 Other Energy Index++ 1.9 0.4 26.1
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Standard & Poor's 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) As of December 31, 2003,
this index is no longer used for the benchmark comparison.
*** The AMEX Deutsche Bank Energy Index is an equal dollar-weighted index of 30
widely held companies involved in producing and providing different energy
products. The industries represented by these companies are domestic and
international oil producers, refiners and transmitters, oil equipment and
drillers, and natural gas producers. (Bloomberg) As of December 31, 2003,
this index is no longer used for the benchmark comparison.
+ The Russell 1000 Integrated Oil Index is a capitalization-weighted index of
companies involved in all parts of the exploration, production, and
refining process. (Bloomberg)
++ The Russell 1000 Other Energy Index is a capitalization-weighted index of
companies in the energy-related businesses other than integrated oils.
(Bloomberg)
Page 13
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
FINANCIAL SERVICES PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Financial Services S&P 500 S&P Financials Russell 1000 Financial
Portfolio Index** Index*** Services Index****
------------------ ------- -------------- ----------------------
1999*
4.9% 11.2% 3.7% 3.9%
Financial Services S&P 500 S&P Financials Russell 1000 Financial
Portfolio Index** Index*** Services Index****
------------------ ------- -------------- ----------------------
2000
24.8% -9.1% 26.1% 26.2%
Financial Services S&P 500 S&P Financials Russell 1000 Financial
Portfolio Index** Index*** Services Index****
------------------ ------- -------------- ----------------------
2001
-10.8% -16.9% -8.9% -14.1%
Financial Services S&P 500 S&P Financials Russell 1000 Financial
Portfolio Index** Index*** Services Index****
------------------ ------- -------------- ----------------------
2002
-14.4% -22.1% -14.6% -15.3%
Financial Services Russell 1000 Financial
Portfolio Services Index****
------------------ ----------------------
2003
33.0% 30.5%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999 - DEC. 31, 2003
Russell 1000
Financial S&P S&P Financial
Services 500 Financials Services
Portfolio Index** Index*** Index ****
--------- ------- ---------- -----------
Oct 99 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Dec 99 $10,490.00 $11,115.00 $10,374.00 $10,389.00
Dec 00 $13,090.00 $10,104.00 $13,080.00 $13,115.00
Dec 01 $11,680.00 $8,903.00 $11,908.00 $11,268.00
Dec 02 $10,000.00 $6,935.00 $10,166.00 $9,544.00
Dec 03 $13,300.00 0.00 0.00 $12,730.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
-------- -------- -------- -------- -------- --------
Financial Services Portfolio $10,000 $10,490 $13,090 $11,680 $10,000 $13,300
S&P500 Index** 10,000 11,115 10,104 8,903 6,935 --
S&P Financials Index*** 10,000 10,374 13,080 11,908 10,166 --
Russell 1000 Financial Services Index**** 10,000 10,389 13,115 11,268 9,544 12,730
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ----------------------------------------------------------------------------------------------------------------------------
Financial Services Portfolio 10/6/99 33.0% 6.9% 33.0%
Russell 1000 Financial Services Index**** 27.3 5.9 30.5
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Standard & Poor's 500 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) As of December 31, 2003,
this index is no longer used for the benchmark comparison.
*** The Standard & Poor's Financials Index is a capitalization-weighted index
of all stocks designed to measure the performance of the financial sector
of the Standard & Poor's 500 Index. The index consists of 73 stocks.
(Bloomberg) As of December 31, 2003, this index is no longer used for the
benchmark comparison.
**** The Russell 1000 Financial Services Index is a capitalization-weighted
index of companies that provide financial services. (Bloomberg)
Page 14
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
PHARMACEUTICAL PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Phamaceutical S&P 500 AMEX Pharmaceutical Russell 1000
Portfolio Index** Index*** Healthcare Index****
------------- ---------- ------------------- --------------------
1999*
3.7% 11.2% -4.0% -2.2%
Phamaceutical S&P 500 AMEX Pharmaceutical Russell 1000
Portfolio Index** Index*** Healthcare Index****
------------- ---------- ------------------- --------------------
2000
30.6% -9.1% 29.5% 34.2%
Phamaceutical S&P 500 AMEX Pharmaceutical Russell 1000
Portfolio Index** Index*** Healthcare Index****
------------- ---------- ------------------- --------------------
2001
-10.9% -16.9% -13.6% -12.1%
Phamaceutical S&P 500 AMEX Pharmaceutical Russell 1000
Portfolio Index** Index*** Healthcare Index****
------------- ---------- ------------------- --------------------
2002
-28.3% -22.1% -20.2% -20.4%
Phamaceutical Russell 1000
Portfolio Healthcare Index****
------------- --------------------
2003
19.7% 17.6%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
S&P AMEX Russell 1000
Pharmaceutical 500 Pharmaceutical Healthcare
Portfolio Index** Index*** Index****
------------- ------- ------------- ------------
Oct 99 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Dec 99 $10,370.00 $11,115.00 $9,602.00 $9,776.00
Dec 00 $13,540.00 $10,104.00 $12,433.00 $13,121.00
Dec 01 $12,060.00 $8,903.00 $10,742.00 $11,535.00
Dec 02 $8,650.00 $6,935.00 $8,776.00 $9,178.00
Dec 03 $10,350.00 0.00 0.00 $10,560.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Pharmaceutical Portfolio $10,000 $10,370 $13,540 $12,060 $8,650 $10,350
S&P 500 Index** 10,000 11,115 10,104 8,903 6,935 --
AMEX Pharmaceutical Index*** 10,000 9,602 12,433 10,742 8,776 --
Russell 1000 Healthcare index**** 10,000 9,776 13,121 11,535 9,178 10,560
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- --------------------------------------------------------------------------------------------------------------------------
Pharmaceutical Portfolio 10/6/99 3.5% 0.8% 19.7%
Russell 1000 Healthcare Index**** 5.6 1.3 17.6
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Standard & Poor's 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) As of December 31, 2003,
this index is no longer used for the benchmark comparison.
*** The AMEX Pharmaceutical Index is a capitalization-weighted index designed
to represent a cross section of widely held, highly capitalized companies
involved in various phases of the pharmaceutical industry. The index
consists of 15 stocks. (Bloomberg) As of December 31, 2003, this index is
no longer used for the benchmark comparison.
**** The Russell 1000 Healthcare Index is a capitalization-weighted index of
companies involved in medical services or health care. (Bloomberg)
Page 15
- --------------------------------------------------------------------------------
PERFORMANCE SUMMARY
- --------------------------------------------------------------------------------
TECHNOLOGY PORTFOLIO DECEMBER 31, 2003
All of the data on this page represents past performance, which cannot be used
to predict future returns that may be achieved by this investment fund. Total
return and share price will fluctuate, so an investor's shares, when redeemed
may be worth more or less than when purchased. Returns assume reinvestment of
dividends.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
ANNUAL INVESTMENT RETURNS
Oct. 6, 1999-Dec. 31, 2003
Technology Nasdaq Composite MS High Tech Russell 1000
Portfolio Index** Index*** Technology Index****
- ---------- ---------------- ------------ --------------------
1999*
34.1% 42.5% 42.1% 32.2%
Technology Nasdaq Composite MS High Tech Russell 1000
Portfolio Index** Index*** Technology Index****
- ---------- ---------------- ------------ --------------------
2000
-23.6% -39.2% -27.3% -34.0%
Technology Nasdaq Composite MS High Tech Russell 1000
Portfolio Index** Index*** Technology Index****
- ---------- ---------------- ------------ --------------------
2001
-43.5% -20.8% -23.9% -29.9%
Technology Nasdaq Composite MS High Tech Russell 1000
Portfolio Index** Index*** Technology Index****
- ---------- ---------------- ------------ --------------------
2002
-41.5% -31.3% -43.1% -38.7%
Technology Russell 1000
Portfolio Technology Index****
- ---------- --------------------
2003
46.6% 49.0%
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
GROWTH OF A $10,000 INITIAL INVESTMENT
OCT. 6, 1999-DEC. 31, 2003
NASDAQ MS Russell 1000
Technology Composite High Tech Technology
Portfolio Index** Index*** Index****
---------- --------- --------- ------------
Oct 99 $10,000.00 $10,000.00 $10,000.00 $10,000.00
Dec 99 $13,410.00 $14,251.00 $14,213.00 $13,216.00
Dec 00 $10,250.00 $8,667.00 $10,330.00 $8,721.00
Dec 01 $5,790.00 $6,864.00 $7,857.00 $6,118.00
Dec 02 $3,390.00 $4,718.00 $4,469.00 $3,750.00
Dec 03 $4,970.00 0.00 0.00 $5,590.00
10/6/99 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03
------- -------- -------- -------- -------- --------
Technology Portfolio $10,000 $13,410 $10,250 $5,790 $3,390 $4,970
Nasdaq Composite Index** 10,000 14,251 8,667 6,864 4,718 --
MS High Tech Index*** 10,000 14,213 10,330 7,857 4,469 --
Russell 1000 Technology Index**** 10,000 13,216 8,721 6,118 3,750 5,590
RETURN COMPARISON PERIODS ENDED DEC. 31, 2003
CUMULATIVE AVERAGE ANNUAL 1 YEAR
INCEPTION TOTAL TOTAL RETURN ANNUAL
DATE RETURN (SINCE INCEPTION) TOTAL RETURN
- ---------------------------------------------------------------------------------------------------------------------------
Technology Portfolio 10/6/99 -50.3% -15.2% 46.6%
Russell 1000 Technology Index**** -44.1 -12.8 49.0
* The 1999 return applies to the time period from 10/6/1999 to 12/31/1999.
** The Nasdaq Composite Index is a broad-based capitalization-weighted index
of all Nasdaq National Market and SmallCap stocks. (Bloomberg) As of
December 31, 2003, this index is no longer used for the benchmark
comparison.
*** The Morgan Stanley High Tech Index is an equal dollar-weighted index of 35
stocks from 9 technology subsectors: computer services, design software,
server software, PC software, and new media, networking and telecom
equipment, server hardware, PC hardware and peripherals, specialized
systems, and semiconductors. (Bloomberg) As of December 31, 2003, this
index is no longer used for the benchmark comparison.
**** The Russell 1000 Technology Index is a capitalization-weighted index of
companies that serve the electronics and computer industries or that
manufacture products based on the latest applied science. (Bloomberg)
Page 16
TARGET MANAGED VIP PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 100.2%
BANKS - 11.4%
9,337 Abbey National PLC, Sponsored ADR ................ $ 177,510
10,001 ABN AMRO Holding NV, Sponsored ADR ............... 234,824
7,282 Bank of America Corp. ............................ 585,691
7,363 Credit Suisse Group, Sponsored ADR ............... 267,498
2,338 East-West Bancorp, Inc. .......................... 125,504
9,146 Fortis, Sponsored ADR ............................ 184,235
2,861 HSBC Holdings PLC, Sponsored ADR ................. 225,504
5,506 Lloyds TSB Group PLC, Sponsored ADR .............. 179,220
2,850 Texas Regional Bancshares, Inc. .................. 105,450
3,844 UCBH Holdings, Inc. .............................. 149,801
965 Union Planters Corp. ............................. 30,388
1,639 Wintrust Financial Corp. ......................... 73,919
-------------
2,339,544
-------------
RETAIL - 8.1%
3,805 Bed, Bath & Beyond, Inc.* ........................ 164,947
1,834 Brown Shoe Company, Inc. ......................... 69,563
8,954 Claire's Stores, Inc. ............................ 168,693
4,540 Fossil, Inc.* .................................... 127,165
2,298 Guitar Center, Inc.* ............................. 74,869
2,043 Lone Star Steakhouse & Saloon, Inc. .............. 47,357
3,518 Nu Skin Enterprises, Inc. - Class A .............. 60,123
2,451 P.F. Chang's China Bistro, Inc.* ................. 124,707
2,677 Panera Bread Company* ............................ 105,822
9,650 PETsMART, Inc. ................................... 229,670
10,770 Ross Stores, Inc. ................................ 284,651
1,298 Sharper Image Corp.* ............................. 42,380
5,070 Starbucks Corp.* ................................. 167,614
-------------
1,667,561
-------------
AUTO MANUFACTURERS - 8.0%
13,656 General Motors Corp. ............................. 729,230
40,804 Nissan Motor Company Ltd., Sponsored ADR ......... 916,458
-------------
1,645,688
-------------
PHARMACEUTICALS - 7.9%
12,795 Forest Laboratories, Inc.* ....................... 790,731
6,255 Gilead Sciences, Inc.* ........................... 363,666
8,008 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ................................. 454,133
-------------
1,608,530
-------------
INDUSTRIAL - 7.0%
1,961 A.O. Smith Corp. ................................. 68,733
5,987 American Power Conversion Corp. .................. 146,382
2,222 Ball Corp. ....................................... 132,365
3,628 Benchmark Electronics, Inc.* ..................... 126,291
2,405 Gentex Corp. ..................................... 106,205
22,468 Honeywell International, Inc. .................... 751,105
5,873 Lennox International, Inc. ....................... 98,079
-------------
1,429,160
-------------
See Notes to Financial Statements. Page 17
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - (CONTINUED)
FOOD, BEVERAGE & TOBACCO - 6.9%
15,628 Altria Group, Inc. ............................... $ 850,476
1,398 Anheuser-Busch Companies, Inc. ................... 73,647
8,019 British American Tobacco PLC, Sponsored ADR ...... 221,886
393 Coca-Cola Bottling Company Consolidated .......... 21,021
12,521 Koninklijke Ahold NV, Sponsored ADR .............. 97,163
1,211 Peet's Coffee & Tea, Inc.* ....................... 21,083
1,786 Whole Foods Market, Inc. ......................... 119,894
-------------
1,405,170
-------------
SOFTWARE & SERVICES - 5.5%
663 IMS Health, Inc. ................................. 16,482
67,171 Oracle Corp.* .................................... 886,657
1,632 Pixar, Inc.* ..................................... 113,082
4,032 Take-Two Interactive Software, Inc.* ............. 116,162
-------------
1,132,383
-------------
HEALTHCARE PRODUCTS - 5.4%
722 Biosite, Inc.* ................................... 20,902
1,350 Henry Schein, Inc.* .............................. 91,233
1,363 IDEXX Laboratories, Inc.* ........................ 63,080
16,359 Johnson & Johnson ................................ 845,106
1,819 Mentor Corp. ..................................... 43,765
456 Zimmer Holdings, Inc.* ........................... 32,102
-------------
1,096,188
-------------
COMMERCIAL SERVICES - 3.7%
5,383 Apollo Group, Inc. - Class A* .................... 366,044
1,729 Corinthian Colleges, Inc.* ....................... 96,063
472 Deluxe Corp. ..................................... 19,508
2,354 Dollar Thrifty Automotive Group, Inc.* ........... 61,063
3,211 First Health Group Corp.* ........................ 62,486
3,427 FTI Consulting, Inc.* ............................ 80,089
1,360 H&R Block, Inc. .................................. 75,303
-------------
760,556
-------------
CONSUMER DURABLES & APPAREL - 3.6%
3,348 Chico's FAS, Inc.* ............................... 123,709
6,734 Coach, Inc.* ..................................... 254,208
3,059 Gymboree Corp.* .................................. 52,707
10,195 Pacific Sunwear of California, Inc.* ............. 215,318
4,597 Quiksilver, Inc.* ................................ 81,505
-------------
727,447
-------------
INSURANCE - 3.5%
12,731 Aegon N.V. ....................................... 188,419
9,553 ING Groep NV, Sponsored ADR ...................... 223,636
1,813 LandAmerica Financial Group, Inc. ................ 94,747
490 MGIC Investment Corp. ............................ 27,901
10,970 Prudential PLC, Sponsored ADR .................... 187,038
-------------
721,741
-------------
Page 18 See Notes to Financial Statements.
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - (CONTINUED)
TELECOMMUNICATIONS - 3.3%
328 ALLTEL Corp. ..................................... $ 15,278
149 CenturyTel, Inc. ................................. 4,860
13,055 Cisco Systems, Inc.* ............................. 317,106
8,974 France Telecom SA, Sponsored ADR ................. 256,567
3,489 SBC Communications, Inc. ......................... 90,958
-------------
684,769
-------------
OIL & GAS - 3.3%
1,601 Apache Corp. ..................................... 129,841
1,667 BJ Services Company* ............................. 59,845
2,020 ENI SPA, Sponsored ADR ........................... 191,860
3,395 Patina Oil & Gas Corp. ........................... 166,321
1,000 Rowan Companies, Inc.* ........................... 23,170
4,352 Unit Corp.* ...................................... 102,490
-------------
673,527
-------------
BASIC MATERIALS - 2.8%
11,930 DuPont (E.I.) de Nemours ......................... 547,468
1,521 Steel Technologies, Inc. ......................... 26,906
-------------
574,374
-------------
HOME BUILDERS - 2.4%
3,135 Hovnanian Enterprises, Inc. - Class A* ........... 272,933
1,350 Meritage Corp.* .................................. 89,519
289 NVR, Inc.* ....................................... 134,674
-------------
497,126
-------------
HEALTH CARE EQUIPMENT & SERVICES - 2.2%
1,879 AMERIGROUP Corp.* ................................ 80,139
2,429 Covance, Inc.* ................................... 65,097
3,286 Lincare Holdings, Inc.* .......................... 98,679
2,402 Merit Medical Systems, Inc.* ..................... 53,469
3,005 Sierra Health Services, Inc.* .................... 82,487
2,750 STERIS Corp.* .................................... 62,150
-------------
442,021
-------------
INTERNET - 2.1%
2,310 GTECH Holdings Corp. ............................. 114,322
9,228 Symantec Corp.* .................................. 319,750
-------------
434,072
-------------
UTILITIES - 1.9%
6,165 Enel SPA, Sponsored ADR .......................... 210,535
6,816 Scottish Power PLC, Sponsored ADR ................ 185,259
-------------
395,794
-------------
TRANSPORTATION - 1.9%
3,066 Landstar System, Inc.* ........................... 116,631
3,568 United Parcel Service, Inc. ...................... 265,994
-------------
382,625
-------------
See Notes to Financial Statements. Page 19
TARGET MANAGED VIP PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - (CONTINUED)
HOUSEHOLD PRODUCTS - 1.7%
1,234 Chattem, Inc.* ................................... $ 22,088
894 Colgate-Palmolive Company ........................ 44,745
1,960 Fortune Brands, Inc. ............................. 140,120
3,202 Toro Company ..................................... 148,573
-------------
355,526
-------------
SAVINGS & LOAN - 1.5%
5,732 Brookline Bancorp, Inc. .......................... 87,929
7,025 First Niagara Financial Group, Inc. .............. 104,743
5,677 Flagstar Bancorp, Inc. ........................... 121,601
-------------
314,273
-------------
TECHNOLOGY HARDWARE & EQUIPMENT - 1.5%
1,017 Cognizant Technology Solutions Corp.* ............ 46,416
4,665 Dell, Inc.* ...................................... 158,423
7,852 Western Digital Corp.* ........................... 92,575
-------------
297,414
-------------
AIRLINES - 1.2%
4,850 Ryanair Holdings PLC, Sponsored ADR* ............. 245,604
-------------
MEDIA - 1.2%
10,075 Vivendi Universal SA, Sponsored ADR .............. 244,621
-------------
AEROSPACE/DEFENSE EQUIPMENT - 0.9%
1,148 Curtiss-Wright Corp. ............................. 51,671
2,330 Engineered Support Systems, Inc. ................. 128,290
-------------
179,961
-------------
SEMICONDUCTORS - 0.6%
2,400 OmniVision Technologies, Inc.* ................... 132,600
-------------
CONSUMER GOODS - 0.3%
1,095 Thor Industries, Inc. ............................ 61,561
-------------
ENERGY EQUIPMENT & SERVICES - 0.3%
2,692 Headwaters, Inc.* ................................ 52,817
-------------
TEXTILES - 0.1%
1,214 Angelica Corp. ................................... 26,708
-------------
TOTAL COMMON STOCKS .............................. 20,529,361
-------------
(Cost $15,871,299)
TOTAL INVESTMENTS - 100.2% ....................... 20,529,361
(Cost $15,871,299)
NET OTHER ASSETS & LIABILITIES - (0.2%) .......... (41,135)
-------------
NET ASSETS - 100.0% .............................. $ 20,488,226
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
Page 20 See Notes to Financial Statements.
THE DOW SM DART 10 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 100.1%
DIVERSIFIED FINANCIAL SERVICES - 24.8%
10,302 Citigroup, Inc. .................................. $ 500,059
15,139 J.P. Morgan Chase & Company ...................... 556,056
-------------
1,056,115
-------------
INDUSTRIAL - 18.8%
10,224 Eastman Kodak Company ............................ 262,450
16,164 Honeywell International, Inc. .................... 540,363
-------------
802,813
-------------
AUTO MANUFACTURERS - 12.3%
9,823 General Motors Corp. ............................. 524,548
-------------
FOOD, BEVERAGE & TOBACCO - 11.2%
8,774 Altria Group, Inc. ............................... 477,481
-------------
BASIC MATERIALS - 9.2%
8,584 DuPont (E.I.) de Nemours ......................... 393,920
-------------
HEALTHCARE PRODUCTS - 8.2%
6,755 Johnson & Johnson ................................ 348,963
-------------
TELECOMMUNICATIONS - 8.1%
13,319 SBC Communications, Inc. ......................... 347,226
-------------
PHARMACEUTICALS - 7.5%
767 Medco Health Solutions, Inc.* .................... 26,070
6,392 Merck & Company, Inc. ............................ 295,311
-------------
321,381
-------------
TOTAL COMMON STOCKS .............................. 4,272,447
-------------
(Cost $3,944,170)
TOTAL INVESTMENTS - 100.1% ....................... 4,272,447
(Cost $3,944,170)
NET OTHER ASSETS & LIABILITIES - (0.1%) .......... (4,355)
-------------
NET ASSETS - 100.0% .............................. $ 4,268,092
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
See Notes to Financial Statements. Page 21
GLOBAL TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.2%
HONG KONG - 34.8%
90,019 Cheung Kong Infrastructure Holdings Ltd. ......... $ 201,753
84,000 Citic Pacific Ltd. ............................... 214,230
159,680 Hang Lung Properties Ltd. ........................ 204,649
146,000 MTR Corp. Ltd. ................................... 192,758
305,955 New World Development Company Ltd. ............... 246,305
-------------
1,059,695
-------------
UNITED KINGDOM - 34.2%
77,860 BAE Systems PLC .................................. 234,510
46,282 GKN PLC .......................................... 221,215
57,923 Peninsular & Oriental Steam Navigation
Company ....................................... 238,490
53,393 Reuters Group PLC ................................ 224,617
78,661 Royal & Sun Alliance Insurance Group PLC ......... 124,270
-------------
1,043,102
-------------
UNITED STATES - 30.2%
5,879 AT&T Corp. ....................................... 119,344
6,252 General Electric Company ......................... 193,687
6,817 Honeywell International, Inc. .................... 227,892
6,386 J.P. Morgan Chase & Company ...................... 234,558
5,617 SBC Communications, Inc. ......................... 146,435
-------------
921,916
-------------
TOTAL COMMON STOCKS .............................. 3,024,713
-------------
(Cost $2,527,128)
TOTAL INVESTMENTS - 99.2% ........................ 3,024,713
(Cost $2,527,128)
NET OTHER ASSETS & LIABILITIES - 0.8% ............ 25,035
-------------
NET ASSETS - 100.0% .............................. $ 3,049,748
=============
- ------------------------------------------------------------------------------
INDUSTRY DIVERSIFICATION AS A PERCENTAGE OF NET ASSETS:
Industrial ....................................... 35.5%
Transportation ................................... 14.2
Diversified Financial Services ................... 7.7
Aerospace/Defense Equipment ...................... 7.7
Technology Hardware & Equipment .................. 7.4
Automobile & Components .......................... 7.2
Real Estate ...................................... 6.7
Telecommunications ............................... 4.8
Insurance ........................................ 4.1
Telecommunications Services & Equipment .......... 3.9
Net Other Assets and Liabilities ................. 0.8
-------------
100.0
=============
Page 22 See Notes to Financial Statements.
S&P TARGET 24 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.7%
BANKS - 19.7%
12,932 Bank of America Corp. ............................ $ 1,040,121
1,709 Union Planters Corp. ............................. 53,816
-------------
1,093,937
-------------
TELECOMMUNICATIONS - 13.7%
586 ALLTEL Corp. ..................................... 27,296
258 CenturyTel, Inc. ................................. 8,416
23,199 Cisco Systems, Inc.* ............................. 563,503
6,199 SBC Communications, Inc. ......................... 161,608
-------------
760,823
-------------
HEALTHCARE PRODUCTS - 12.6%
12,385 Johnson & Johnson ................................ 639,809
807 Zimmer Holdings, Inc.* ........................... 56,813
-------------
696,622
-------------
RETAIL - 10.6%
6,760 Bed, Bath & Beyond, Inc.* ........................ 293,046
9,001 Starbucks Corp.* ................................. 297,573
-------------
590,619
-------------
TRANSPORTATION - 8.5%
6,340 United Parcel Service, Inc. ...................... 472,647
-------------
FOOD, BEVERAGE & TOBACCO - 8.3%
6,100 Altria Group, Inc. ............................... 331,962
2,487 Anheuser-Busch Companies, Inc. ................... 131,015
-------------
462,977
-------------
OIL & GAS - 6.8%
2,838 Apache Corp. ..................................... 230,162
2,967 BJ Services Company* ............................. 106,515
1,785 Rowan Companies, Inc.* ........................... 41,359
-------------
378,036
-------------
HOUSEHOLD PRODUCTS - 5.9%
1,588 Colgate-Palmolive Company ........................ 79,479
3,479 Fortune Brands, Inc. ............................. 248,714
-------------
328,193
-------------
TECHNOLOGY HARDWARE & EQUIPMENT - 5.1%
8,287 Dell, Inc.* ...................................... 281,427
-------------
SOFTWARE & SERVICES - 4.6%
1,181 IMS Health, Inc. ................................. 29,359
16,889 Oracle Corp.* .................................... 222,935
3,764 Seagate Technology, Inc. (Escrow Shares)* ........ 0
-------------
252,294
-------------
See Notes to Financial Statements. Page 23
S&P TARGET 24 PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - (CONTINUED)
COMMERCIAL SERVICES - 3.0%
834 Deluxe Corp. ..................................... $ 34,469
2,423 H&R Block, Inc. .................................. 134,162
-------------
168,631
-------------
INSURANCE - 0.9%
870 MGIC Investment Corp. ............................ 49,538
-------------
TOTAL COMMON STOCKS .............................. 5,535,744
-------------
(Cost $4,708,295)
TOTAL INVESTMENTS - 99.7% ........................ 5,535,744
(Cost $4,708,295)
NET OTHER ASSETS & LIABILITIES - 0.3% ............ 18,385
-------------
NET ASSETS - 100.0% .............................. $ 5,554,129
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
Page 24 See Notes to Financial Statements.
NASDAQ(R) TARGET 15 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 100.8%
SOFTWARE & SERVICES - 25.4%
84,820 Oracle Corp.* .................................... $ 1,119,624
2,401 Pixar, Inc.* ..................................... 166,365
-------------
1,285,989
-------------
PHARMACEUTICALS - 23.7%
9,203 Gilead Sciences, Inc.* ........................... 535,063
11,779 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ................................. 667,987
-------------
1,203,050
-------------
COMMERCIAL SERVICES - 12.4%
7,918 Apollo Group, Inc. - Class A* .................... 538,424
4,724 First Health Group Corp.* ........................ 91,929
-------------
630,353
-------------
INTERNET - 9.3%
13,573 Symantec Corp.* .................................. 470,304
-------------
INDUSTRIAL - 7.3%
8,813 American Power Conversion Corp. .................. 215,478
3,545 Gentex Corp. ..................................... 156,547
-------------
372,025
-------------
AIRLINES - 7.1%
7,133 Ryanair Holdings PLC, Sponsored ADR* ............. 361,215
-------------
RETAIL - 6.6%
6,263 PETsMART, Inc. ................................... 149,059
6,988 Ross Stores, Inc. ................................ 184,693
-------------
333,752
-------------
FOOD, BEVERAGE & TOBACCO - 3.5%
2,629 Whole Foods Market, Inc. ......................... 176,485
-------------
HEALTH CARE & EQUIPMENT SERVICES - 2.9%
4,834 Lincare Holdings, Inc.* .......................... 145,165
-------------
HEALTHCARE PRODUCTS - 2.6%
1,983 Henry Schein, Inc.* .............................. 134,011
-------------
TOTAL COMMON STOCKS .............................. 5,112,349
-------------
(Cost $3,720,366)
TOTAL INVESTMENTS - 100.8% ....................... 5,112,349
(Cost $3,720,366)
NET OTHER ASSETS & LIABILITIES - (0.8%) .......... (39,514)
-------------
NET ASSETS - 100.0% .............................. $ 5,072,835
=============
- --------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
See Notes to Financial Statements. Page 25
FIRST TRUST 10 UNCOMMON VALUES PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 100.6%
TELECOMMUNICATIONS - 26.8%
48,307 Cisco Systems, Inc.* ............................. $ 1,173,377
48,918 Nextel Communications, Inc. - Class A* ........... 1,372,639
-------------
2,546,016
-------------
BANKS - 10.3%
32,959 U.S. Bancorp ..................................... 981,519
-------------
ENTERTAINMENT - 10.3%
19,549 Harrah's Entertainment, Inc. ..................... 972,954
-------------
UTILITIES - 9.5%
13,595 Exelon Corp. ..................................... 902,164
-------------
TECHNOLOGY HARDWARE & EQUIPMENT - 9.3%
38,326 Hewlett-Packard Company .......................... 880,348
-------------
PHARMACEUTICALS - 8.9%
14,817 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ................................. 840,272
-------------
OIL & GAS - 8.8%
15,003 Burlington Resources, Inc. ....................... 830,866
-------------
AIRLINES - 8.6%
30,907 JetBlue Airways Corp.* ........................... 819,654
-------------
BIOTECHNOLOGY - 8.1%
12,436 Amgen, Inc.* ..................................... 768,545
-------------
TOTAL COMMON STOCKS .............................. 9,542,338
-------------
(Cost $8,311,237)
TOTAL INVESTMENTS - 100.6% ....................... 9,542,338
(Cost $8,311,237)
NET OTHER ASSETS & LIABILITIES - (0.6%) .......... (55,575)
-------------
NET ASSETS - 100.0% .............................. $ 9,486,763
=============
- --------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
Page 26 See Notes to Financial Statements.
VALUE LINE(R) TARGET 25 PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.6%
AUTO MANUFACTURERS - 24.0%
52,787 Nissan Motor Company Ltd., Sponsored ADR ......... $ 1,185,596
-------------
PHARMACEUTICALS - 22.4%
17,875 Forest Laboratories, Inc.* ....................... 1,104,675
-------------
CONSUMER DURABLES & APPAREL - 12.5%
4,709 Chico's FAS, Inc.* ............................... 173,997
9,481 Coach, Inc.* ..................................... 357,908
4,141 Pacific Sunwear of California, Inc.* ............. 87,458
-------------
619,363
-------------
RETAIL - 8.2%
7,596 PETsMART, Inc. ................................... 180,785
8,478 Ross Stores, Inc. ................................ 224,073
-------------
404,858
-------------
HOME BUILDERS - 5.8%
1,118 Hovnanian Enterprises, Inc. - Class A* ........... 97,333
407 NVR, Inc.* ....................................... 189,662
-------------
286,995
-------------
TECHNOLOGY HARDWARE & EQUIPMENT - 4.0%
1,434 Cognizant Technology Solutions Corp.* ............ 65,448
11,073 Western Digital Corp.* ........................... 130,551
-------------
195,999
-------------
INDUSTRIAL - 3.8%
3,128 Ball Corp. ....................................... 186,335
-------------
HEALTHCARE PRODUCTS - 3.6%
1,014 Biosite, Inc.* ................................... 29,356
1,918 IDEXX Laboratories, Inc.* ........................ 88,765
2,552 Mentor Corp. ..................................... 61,401
-------------
179,522
-------------
HEALTH CARE EQUIPMENT & SERVICES - 3.6%
3,419 Covance, Inc.* ................................... 91,629
3,866 STERIS Corp.* .................................... 87,372
-------------
179,001
-------------
INTERNET - 3.3%
3,251 GTECH Holdings Corp. ............................. 160,892
-------------
COMMERCIAL SERVICES - 2.7%
2,427 Corinthian Colleges, Inc.* ....................... 134,844
-------------
CONSUMER GOODS - 1.8%
1,545 Thor Industries, Inc. ............................ 86,860
-------------
HOUSEHOLD PRODUCTS - 1.7%
1,736 Chattem, Inc.* ................................... 31,074
1,130 Toro Company ..................................... 52,432
-------------
83,506
-------------
See Notes to Financial Statements. Page 27
VALUE LINE(R) TARGET 25 PORTFOLIO - (CONTINUED)
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - (CONTINUED)
BASIC MATERIALS - 0.8%
2,141 Steel Technologies, Inc. ......................... $ 37,874
-------------
TEXTILES - 0.8%
1,708 Angelica Corp. ................................... 37,576
-------------
FOOD, BEVERAGE & TOBACCO - 0.6%
555 Coca-Cola Bottling Company Consolidated .......... 29,687
-------------
TOTAL COMMON STOCKS .............................. 4,913,583
-------------
(Cost $3,580,180)
TOTAL INVESTMENTS - 99.6% ........................ 4,913,583
(Cost $3,580,180)
NET OTHER ASSETS & LIABILITIES - 0.4% ............ 21,957
-------------
NET ASSETS - 100.0% .............................. $ 4,935,540
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
Page 28 See Notes to Financial Statements.
FIRST TRUST ENERGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 100.0%
OIL & GAS - 100.0%
1,507 Apache Corp. ..................................... $ 122,218
2,533 BJ Services Company* ............................. 90,935
2,507 Canadian Natural Resources Ltd. .................. 126,453
1,327 ChevronTexaco Corp. .............................. 114,639
1,730 ConocoPhillips ................................... 113,436
1,849 Devon Energy Corp. ............................... 105,874
2,568 EnCana Corp. ..................................... 101,282
1,200 ENI SPA, Sponsored ADR ........................... 113,976
2,557 Exxon Mobil Corp. ................................ 104,837
3,773 Marathon Oil Corp. ............................... 124,848
2,430 Nabors Industries Ltd.* .......................... 100,845
2,557 Newfield Exploration Company* .................... 113,889
2,784 Noble Corp.* ..................................... 99,611
2,339 Patina Oil & Gas Corp. ........................... 114,588
3,000 Patterson-UTI Energy, Inc.* ...................... 98,760
2,429 Petro-Canada ..................................... 119,798
3,160 PetroChina Company Ltd., Sponsored ADR ........... 180,278
2,593 Precision Drilling Corp.* ........................ 113,262
2,030 Royal Dutch Petroleum Company .................... 106,352
3,111 Tidewater, Inc. .................................. 92,957
1,315 Total SA, Sponsored ADR .......................... 121,651
2,673 Valero Energy Corp. .............................. 123,867
5,537 Varco International, Inc.* ....................... 114,228
2,370 Weatherford International Ltd.* .................. 85,320
4,764 XTO Energy, Inc. ................................. 134,821
-------------
2,838,725
-------------
TOTAL COMMON STOCKS .............................. 2,838,725
-------------
(Cost $2,210,002)
TOTAL INVESTMENTS - 100.0% ....................... 2,838,725
(Cost $2,210,002)
NET OTHER ASSETS & LIABILITIES - 0.0% ............ 286
-------------
NET ASSETS - 100.0% .............................. $ 2,839,011
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
See Notes to Financial Statements. Page 29
FIRST TRUST FINANCIAL SERVICES PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.3%
DIVERSIFIED FINANCIAL SERVICES - 37.0%
1,795 Bear Stearns Companies, Inc. ..................... $ 143,510
2,602 Capital One Financial Corp. ...................... 159,477
3,143 Citigroup, Inc. .................................. 152,561
2,452 Countrywide Financial Corp. ...................... 185,984
4,119 Doral Financial Corp. ............................ 132,961
1,934 Fannie Mae ....................................... 145,166
1,994 Lehman Brothers Holdings, Inc. ................... 153,977
2,790 MBIA, Inc. ....................................... 165,252
6,763 MBNA Corp. ....................................... 168,061
3,011 Merrill Lynch & Company, Inc. .................... 176,595
3,058 Morgan Stanley ................................... 176,966
-------------
1,760,510
-------------
BANKS - 29.5%
1,693 Bank of America Corp. ............................ 136,168
4,125 Charter One Financial, Inc. ...................... 142,519
3,484 Commerce Bancshares, Inc. ........................ 170,786
3,282 Popular, Inc. .................................... 147,493
5,035 SouthTrust Corp. ................................. 164,795
2,267 SunTrust Banks, Inc. ............................. 162,090
3,233 TCF Financial Corp. .............................. 166,014
5,427 U.S. Bancorp ..................................... 161,616
2,647 Wells Fargo & Company ............................ 155,882
-------------
1,407,363
-------------
INSURANCE - 26.6%
4,206 AFLAC, Inc. ...................................... 152,173
3,951 Allstate Corp. ................................... 169,972
2,139 AMBAC Financial Group, Inc. ...................... 148,425
2,456 American International Group, Inc. ............... 162,784
1,702 Everest Re Group, Ltd. ........................... 143,989
4,562 MetLife, Inc. .................................... 153,603
5,943 Old Republic International Corp. ................. 150,715
3,807 Radian Group, Inc. ............................... 185,591
-------------
1,267,252
-------------
SAVINGS & LOAN - 6.2%
1,665 Golden West Financial Corp. ...................... 171,811
3,095 Washington Mutual, Inc. .......................... 124,172
-------------
295,983
-------------
TOTAL COMMON STOCKS .............................. 4,731,108
-------------
(Cost $3,919,216)
TOTAL INVESTMENTS - 99.3% ........................ 4,731,108
(Cost $3,919,216)
NET OTHER ASSETS & LIABILITIES - 0.7% ............ 31,845
-------------
NET ASSETS - 100.0% .............................. $ 4,762,953
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
Page 30 See Notes to Financial Statements.
FIRST TRUST PHARMACEUTICAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.4%
PHARMACEUTICALS - 81.3%
4,549 Abbott Laboratories .............................. $ 211,983
4,878 AstraZeneca PLC, Sponsored ADR ................... 235,998
3,623 Aventis SA, Sponsored ADR ........................ 240,060
2,946 Barr Pharmaceuticals, Inc.* ...................... 226,695
4,508 Biovail Corp.* ................................... 96,877
7,300 Bristol-Myers Squibb Company ..................... 208,780
3,657 Forest Laboratories, Inc.* ....................... 226,002
4,932 GlaxoSmithKline PLC, Sponsored ADR ............... 229,930
2,887 Lilly (Eli) & Company ............................ 203,043
3,542 Merck & Company, Inc. ............................ 163,640
5,017 Novartis AG, Sponsored ADR ....................... 230,230
5,783 Novo Nordisk A/S, Sponsored ADR .................. 236,872
5,876 Pfizer, Inc. ..................................... 207,599
6,785 Sanofi-Synthelabo SA, Sponsored ADR .............. 256,134
3,391 Teva Pharmaceutical Industries Ltd.,
Sponsored ADR ................................. 192,304
4,396 Wyeth ............................................ 186,610
-------------
3,352,757
-------------
BIOTECHNOLOGY - 13.2%
3,036 Amgen, Inc.* ..................................... 187,625
5,895 Biogen Idec, Inc.* ............................... 216,818
5,429 MedImmune, Inc.* ................................. 137,896
-------------
542,339
-------------
HEALTHCARE PRODUCTS - 4.9%
3,909 Johnson & Johnson ................................ 201,939
-------------
TOTAL COMMON STOCKS .............................. 4,097,035
-------------
(Cost $3,920,086)
TOTAL INVESTMENTS - 99.4% ........................ 4,097,035
(Cost $3,920,086)
NET OTHER ASSETS & LIABILITIES - 0.6% ............ 23,870
-------------
NET ASSETS - 100.0% .............................. $ 4,120,905
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
See Notes to Financial Statements. Page 31
FIRST TRUST TECHNOLOGY PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 2003
MARKET
SHARES VALUE
- ------------ -------------
COMMON STOCKS - 99.7%
TECHNOLOGY HARDWARE & EQUIPMENT - 29.2%
1,489 Affiliated Computer Services, Inc.* .............. $ 81,091
2,079 Dell, Inc.* ...................................... 70,603
3,093 Hewlett-Packard Company .......................... 71,046
956 Lexmark International, Inc.* ..................... 75,180
3,839 Seagate Technology* .............................. 72,557
2,630 SunGard Data Systems, Inc.* ...................... 72,877
2,201 Synopsys, Inc.* .................................. 74,306
2,387 VERITAS Software Corp.* .......................... 88,701
-------------
606,361
-------------
SOFTWARE & SERVICES - 23.4%
2,071 Adobe Systems, Inc. .............................. 81,390
1,856 Electronic Arts, Inc.* ........................... 88,680
1,450 Intuit, Inc.* .................................... 76,720
2,512 Microsoft Corp. .................................. 69,180
5,704 Oracle Corp.* .................................... 75,293
2,250 SAP AG, Sponsored ADR ............................ 93,510
-------------
484,773
-------------
SEMICONDUCTORS - 22.8%
4,345 Applied Materials, Inc.* ......................... 97,545
2,764 Broadcom Corp., - Class A* ....................... 94,225
3,295 Intel Corp. ...................................... 106,099
1,920 Maxim Integrated Products, Inc. .................. 95,616
1,882 Novellus Systems, Inc.* .......................... 79,138
-------------
472,623
-------------
TELECOMMUNICATIONS SERVICES & EQUIPMENT - 11.5%
3,993 Nokia Corp., Sponsored ADR ....................... 67,881
1,819 QUALCOMM, Inc. ................................... 98,098
1,936 UTStarcom, Inc.* ................................. 71,767
-------------
237,746
-------------
INTERNET - 8.1%
3,594 Check Point Software Technologies Ltd.* .......... 60,451
3,126 Symantec Corp.* .................................. 108,316
-------------
168,767
-------------
TELECOMMUNICATIONS - 4.7%
3,992 Cisco Systems, Inc.* ............................. 96,966
-------------
TOTAL COMMON STOCKS .............................. 2,067,236
-------------
(Cost $1,742,193)
TOTAL INVESTMENTS - 99.7% ........................ 2,067,236
(Cost $1,742,193)
NET OTHER ASSETS & LIABILITIES - 0.3% ............ 5,921
-------------
NET ASSETS - 100.0% .............................. $ 2,073,157
=============
- ------------------------------------------------------------------------------
* Non-income producing security.
ADR American Depository Receipt
Page 32 See Notes to Financial Statements.
This Page Left Blank Intentionally.
STATEMENTS OF ASSETS AND LIABILITIES
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- -----------
ASSETS:
Investments, at market value
(See Portfolios of Investments)(a): ................................ $ 20,529,361 $ 4,272,447 $ 3,024,713 $ 5,535,744
------------ ------------ ----------- -----------
Cash .................................................................. 55,762 20,082 42,893 42,266
Dividends receivable .................................................. 15,779 8,525 2,647 6,454
Interest receivable ................................................... 11 3 8 7
Receivable for investment securities sold ............................. -- -- -- --
Receivable for membership interest sold ............................... -- -- -- --
Receivable from advisor ............................................... 1,603 9,843 10,676 8,557
------------ ------------ ----------- -----------
Total Assets ..................................................... 20,602,516 4,310,900 3,080,937 5,593,028
------------ ------------ ----------- -----------
LIABILITIES:
Due to custodian ...................................................... -- -- -- --
Payable for membership interest redeemed .............................. 64,718 14,568 8,147 10,366
Investment advisory fee payable ....................................... 9,960 2,193 1,567 2,858
Payable to adminstrator ............................................... 893 893 907 893
Distribution fees payable ............................................. -- -- -- --
Trustees' fee payable ................................................. 1,272 4,958 2,707 3,647
Accrued audit fees .................................................... 9,001 9,001 9,001 9,001
Membership interest servicing fee payable ............................. 15,720 3,334 2,646 4,284
Printing fees payable ................................................. 1,598 1,598 1,598 1,598
Custodian fee payable ................................................. 2,420 533 510 693
Accrued expenses and other payables ................................... 8,708 5,730 4,106 5,559
------------ ------------ ----------- -----------
Total Liabilities ................................................ 114,290 42,808 31,189 38,899
------------ ------------ ----------- -----------
NET ASSETS ............................................................ $ 20,488,226 $ 4,268,092 $ 3,049,748 $ 5,554,129
============ ============ =========== ===========
(a) Investments, at cost .............................................. $ 15,871,299 $ 3,944,170 $ 2,527,128 $ 4,708,295
============ ============ =========== ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net investment loss) . $ 87,661 $ 204,774 $ 245,304 $ 8,364
Accumulated net realized loss on investments sold and foreign
currency transactions: ............................................. (1,172,012) (1,078,796) (201,249) (1,505,010)
Net unrealized appreciation of investments and foreign currency
transactions ....................................................... 4,658,062 328,277 497,585 827,449
Paid-in capital ....................................................... 16,914,515 4,813,837 2,508,108 6,223,326
------------ ------------ ----------- -----------
Total Net Assets ...................................................... $ 20,488,226 $ 4,268,092 $ 3,049,748 $ 5,554,129
============ ============ =========== ===========
NET ASSET VALUE, offering price and redemption price of
Membership Interest outstanding .................................... $ 8.73 $ 8.37 $ 11.05 $ 7.62
============ ============ =========== ===========
Number of Membership Interests outstanding ............................ 2,347,921 510,115 275,956 728,749
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
ASSETS:
Investments, at market value
(See Portfolios of Investments)(a): ................................ $ 5,112,349 $ 9,542,338 $ 4,913,583 $ 2,838,725
------------ ------------ ------------ -----------
Cash .................................................................. -- -- 43,177 23,982
Dividends receivable .................................................. 205 13,245 919 454
Interest receivable ................................................... 2 7 14 6
Receivable for investment securities sold ............................. -- 30,012 -- --
Receivable for membership interest sold ............................... -- 19,141 -- --
Receivable from advisor ............................................... 8,638 11,442 9,794 11,306
------------ ------------ ------------ -----------
Total Assets ..................................................... 5,121,194 9,616,185 4,967,487 2,874,473
------------ ------------ ------------ -----------
LIABILITIES:
Due to custodian ...................................................... 3,287 42,305 -- --
Payable for membership interest redeemed .............................. 15,774 -- 175 14,463
Investment advisory fee payable ....................................... 2,663 4,849 2,553 1,435
Payable to adminstrator ............................................... 893 893 893 893
Distribution fees payable ............................................. -- 1,887 -- --
Trustees' fee payable ................................................. 5,693 44,253 6,044 1,389
Accrued audit fees .................................................... 9,001 9,001 9,001 9,001
Membership interest servicing fee payable ............................. 3,864 13,479 4,561 2,384
Printing fees payable ................................................. 1,598 1,598 1,598 1,598
Custodian fee payable ................................................. 663 826 826 539
Accrued expenses and other payables ................................... 4,923 10,331 6,296 3,760
------------ ------------ ------------ -----------
Total Liabilities ................................................ 48,359 129,422 31,947 35,462
------------ ------------ ------------ -----------
NET ASSETS ............................................................ $ 5,072,835 $ 9,486,763 $ 4,935,540 $ 2,839,011
============ ============ ============ ===========
(a) Investments, at cost .............................................. $ 3,720,366 $ 8,311,237 $ 3,580,180 $ 2,210,002
============ ============ ============ ===========
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net investment loss) . $ (202,320) $ (360,801) $ (69,698) $ (7,945)
Accumulated net realized loss on investments sold and foreign
currency transactions: ............................................. (3,548,587) (18,024,513) (1,485,834) (281,623)
Net unrealized appreciation of investments and foreign currency
transactions ....................................................... 1,391,983 1,231,101 1,333,403 628,723
Paid-in capital ....................................................... 7,431,759 26,640,976 5,157,669 2,499,856
------------ ------------ ------------ -----------
Total Net Assets ...................................................... $ 5,072,835 $ 9,486,763 $ 4,935,540 $ 2,839,011
============ ============ ============ ===========
NET ASSET VALUE, offering price and redemption price of
Membership Interest outstanding .................................... $ 9.29 $ 4.67 $ 3.34 $ 14.20
============ ============ ============ ===========
Number of Membership Interests outstanding ............................ 545,788 2,031,345 1,476,784 199,906
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
ASSETS:
Investments, at market value
(See Portfolios of Investments)(a): ................................ $ 4,731,108 $ 4,097,035 $ 2,067,236
----------- ------------ ------------
Cash .................................................................. 51,571 44,135 18,421
Dividends receivable .................................................. 5,272 4,734 248
Interest receivable ................................................... 12 13 6
Receivable for investment securities sold ............................. -- -- --
Receivable for membership interest sold ............................... -- -- --
Receivable from advisor ............................................... 9,227 9,940 11,978
----------- ------------ ------------
Total Assets ..................................................... 4,797,190 4,155,857 2,097,889
----------- ------------ ------------
LIABILITIES:
Due to custodian ...................................................... -- -- --
Payable for membership interest redeemed .............................. 8,487 7,191 973
Investment advisory fee payable ....................................... 2,439 2,081 1,073
Payable to adminstrator ............................................... 893 893 893
Distribution fees payable ............................................. -- -- --
Trustees' fee payable ................................................. 2,066 4,261 3,853
Accrued audit fees .................................................... 9,001 9,001 9,001
Membership interest servicing fee payable ............................. 3,209 3,324 1,966
Printing fees payable ................................................. 1,598 1,598 1,598
Custodian fee payable ................................................. 620 530 550
Accrued expenses and other payables ................................... 5,924 6,073 4,825
----------- ------------ ------------
Total Liabilities ................................................ 34,237 34,952 24,732
----------- ------------ ------------
NET ASSETS ............................................................ $ 4,762,953 $ 4,120,905 $ 2,073,157
=========== ============ ============
(a) Investments, at cost .............................................. $ 3,919,216 $ 3,920,086 $ 1,742,193
=========== ============ ============
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net investment loss) . $ 21,442 $ (47,144) $ (73,579)
Accumulated net realized loss on investments sold and foreign
currency transactions: ............................................. (353,385) (858,876) (1,710,268)
Net unrealized appreciation of investments and foreign currency
transactions ....................................................... 811,892 176,949 325,043
Paid-in capital ....................................................... 4,283,004 4,849,976 3,531,961
----------- ------------ ------------
Total Net Assets ...................................................... $ 4,762,953 $ 4,120,905 $ 2,073,157
=========== ============ ============
NET ASSET VALUE, offering price and redemption price of
Membership Interest outstanding .................................... $ 13.30 $ 10.35 $ 4.97
=========== ============ ============
Number of Membership Interests outstanding ............................ 357,983 397,991 417,110
=========== ============ ============
Page 34-35 See Notes to Financial Statements.
STATEMENTS OF OPERATIONS
FIRST DEFINED PORTFOLIO FUND, LLC
FOR THE YEAR ENDED DECEMBER 31, 2003
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- -----------
INVESTMENT INCOME:
Dividends ............................................................. $ 295,163 $ 153,343 $ 128,178 $ 94,069
Foreign withholding tax on dividend income ............................ -- -- (5,004) --
Interest .............................................................. 11 3 8 7
------------ ------------ ----------- -----------
Total investment income ............................................... 295,174 153,346 123,182 94,076
------------ ------------ ----------- -----------
EXPENSES:
Investment advisory fee ............................................... 96,148 23,990 15,309 29,301
Administration fee .................................................... 14,500 14,500 14,500 14,500
Fund accounting fee ................................................... 25,000 25,000 25,000 25,000
Distribution fee ...................................................... 10,010 3,155 1,735 3,762
Trustees' fees and expenses ........................................... 9,128 3,710 2,641 4,327
Legal fees ............................................................ 6,595 6,595 6,595 6,595
Audit fees ............................................................ 9,001 9,001 9,001 9,001
Custodian fees ........................................................ 17,681 15,793 15,743 15,953
Membership interest servicing fee ..................................... 63,351 23,148 19,398 27,375
Printing fees ......................................................... 2,963 2,963 2,963 2,963
Other ................................................................. 10,827 2,984 2,191 2,501
Fees waived by administrator .......................................... (7,327) (7,327) (7,327) (7,327)
Fees waived and expenses reimbursed by investment advisor ............. (26,657) (64,737) (70,241) (62,163)
------------ ------------ ----------- -----------
Total expenses ........................................................ 231,220 58,775 37,508 71,788
------------ ------------ ----------- -----------
NET INVESTMENT INCOME/(LOSS) .......................................... 63,954 94,571 85,674 22,288
------------ ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ANDFOREIGNCURRENCY:
Realized gain/(loss) from:
Securities ............................................................ (797,463) (668,362) (286,598) (785,702)
Foreign currency transactions ......................................... -- -- 1,520 --
Change in unrealized appreciation/(depreciation) of:
Securities ............................................................ 5,670,826 1,279,321 977,307 1,820,713
Foreign currency translation of other assets and liabilities in
foreign currencies ................................................. -- -- (183) --
------------ ------------ ----------- -----------
Net realized and unrealized gain on investments ....................... 4,873,363 610,959 692,046 1,035,011
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................................... $ 4,937,317 $ 705,530 $ 777,720 $ 1,057,299
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
INVESTMENT INCOME:
Dividends .............................................................$ 5,837 $ 81,614 $ 20,751 $ 35,388
Foreign withholding tax on dividend income ............................ -- -- -- --
Interest .............................................................. 2 7 14 6
------------ ------------ ------------ -----------
Total investment income ............................................... 5,839 81,621 20,765 35,394
------------ ------------ ------------ -----------
EXPENSES:
Investment advisory fee ............................................... 27,883 45,196 22,829 14,504
Administration fee .................................................... 14,500 14,500 14,500 14,500
Fund accounting fee ................................................... 25,000 25,000 25,000 25,000
Distribution fee ...................................................... 3,417 18,824 2,546 1,940
Trustees' fees and expenses ........................................... 3,806 4,593 3,042 2,671
Legal fees ............................................................ 6,595 6,595 6,595 6,595
Audit fees ............................................................ 9,001 9,001 9,001 9,001
Custodian fees ........................................................ 15,923 16,086 16,086 15,801
Membership interest servicing fee ..................................... 26,808 36,723 22,594 19,006
Printing fees ......................................................... 2,963 2,963 2,963 2,963
Other ................................................................. 1,779 (1,853) 2,627 1,468
Fees waived by administrator .......................................... (7,327) (7,327) (7,327) (7,327)
Fees waived and expenses reimbursed by investment advisor ............. (62,035) (67,104) (64,526) (70,588)
------------ ------------ ------------ -----------
Total expenses ........................................................ 68,313 103,197 55,930 35,534
------------ ------------ ------------ -----------
NET INVESTMENT INCOME/(LOSS) .......................................... (62,474) (21,576) (35,165) (140)
------------ ------------ ------------ -----------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ANDFOREIGNCURRENCY:
Realized gain/(loss) from:
Securities ............................................................ (1,113,734) (795,708) (312,578) 38,188
Foreign currency transactions ......................................... -- -- -- --
Change in unrealized appreciation/(depreciation) of:
Securities ............................................................ 2,580,780 3,165,923 1,711,467 650,877
Foreign currency translation of other assets and liabilities in
foreign currencies ................................................. -- -- -- --
------------ ------------ ------------ -----------
Net realized and unrealized gain on investments ....................... 1,467,046 2,370,215 1,398,889 689,065
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ....................................................$ 1,404,572 $ 2,348,639 $ 1,363,724 $ 688,925
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
INVESTMENT INCOME:
Dividends ............................................................. $ 74,398 $ 43,110 $ 4,412
Foreign withholding tax on dividend income ............................ -- -- --
Interest .............................................................. 12 13 6
----------- ------------ ------------
Total investment income ............................................... 74,410 43,123 4,418
----------- ------------ ------------
EXPENSES:
Investment advisory fee ............................................... 23,928 21,960 10,584
Administration fee .................................................... 14,500 14,500 14,500
Fund accounting fee ................................................... 25,000 25,000 25,000
Distribution fee ...................................................... 2,952 2,764 1,243
Trustees' fees and expenses ........................................... 3,588 3,376 2,051
Legal fees ............................................................ 6,595 6,595 6,595
Audit fees ............................................................ 9,001 9,001 9,001
Custodian fees ........................................................ 15,880 15,790 15,811
Membership interest servicing fee ..................................... 24,475 22,761 16,672
Printing fees ......................................................... 2,963 2,963 2,963
Other ................................................................. 2,474 2,545 772
Fees waived by administrator .......................................... (7,327) (7,327) (7,327)
Fees waived and expenses reimbursed by investment advisor ............. (65,207) (66,126) (71,935)
----------- ------------ ------------
Total expenses ........................................................ 58,822 53,802 25,930
----------- ------------ ------------
NET INVESTMENT INCOME/(LOSS) .......................................... 15,588 (10,679) (21,512)
----------- ------------ ------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS ANDFOREIGNCURRENCY:
Realized gain/(loss) from:
Securities ............................................................ (229,418) (290,592) (32,819)
Foreign currency transactions ......................................... -- -- --
Change in unrealized appreciation/(depreciation) of:
Securities ............................................................ 1,354,540 937,548 728,464
Foreign currency translation of other assets and liabilities in
foreign currencies ................................................. -- -- --
----------- ------------ ------------
Net realized and unrealized gain on investments ....................... 1,125,122 646,956 695,645
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS .................................................... $ 1,140,710 $ 636,277 $ 674,133
=========== ============ ============
See Notes to Financial Statements. Pages 36-37
STATEMENTS OF CHANGES IN NET ASSETS
FIRST DEFINED PORTFOLIO FUND, LLC
FOR THE YEAR ENDED DECEMBER 31, 2003
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- -----------
Net investment income/(loss) .......................................... $ 63,954 $ 94,571 $ 85,674 $ 22,288
Net realized gain/(loss) from investments sold and foreign currency
transactions ........................................................ (797,463) (668,362) (285,078) (785,702)
Net change in unrealized appreciation of securities
and foreign currency transactions during the year ................... 5,670,826 1,279,321 977,124 1,820,713
------------ ------------ ----------- -----------
Net increase in net assets resulting from operations .................. 4,937,317 705,530 777,720 1,057,299
Net increase/(decrease) in net assets from membership
interest transactions ............................................... 3,494,703 (655,981) (69,364) (270,588)
------------ ------------ ----------- -----------
Net increase in net assets ............................................ 8,432,020 49,549 708,356 786,711
NET ASSETS:
Beginning of year ..................................................... 12,056,206 4,218,543 2,341,392 4,767,418
------------ ------------ ----------- -----------
End of year ........................................................... $ 20,488,226 $ 4,268,092 $ 3,049,748 $ 5,554,129
============ ============ =========== ===========
Undistributed net investment income/(accumulated net
investment loss) at end of year ..................................... $ 87,661 $ 204,774 $ 245,304 $ 8,364
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
Net investment income/(loss) .......................................... $ (62,474) $ (21,576) $ (35,165) $ (140)
Net realized gain/(loss) from investments sold and foreign currency
transactions ........................................................ (1,113,734) (795,708) (312,578) 38,188
Net change in unrealized appreciation of securities
and foreign currency transactions during the year ................... 2,580,780 3,165,923 1,711,467 650,877
------------ ------------ ------------ -----------
Net increase in net assets resulting from operations .................. 1,404,572 2,348,639 1,363,724 688,925
Net increase/(decrease) in net assets from membership
interest transactions ............................................... (436,823) 386,444 595,660 (236,606)
------------ ------------ ------------ -----------
Net increase in net assets ............................................ 967,749 2,735,083 1,959,384 452,319
NET ASSETS:
Beginning of year ..................................................... 4,105,086 6,751,680 2,976,156 2,386,692
------------ ------------ ------------ -----------
End of year ........................................................... $ 5,072,835 $ 9,486,763 $ 4,935,540 $ 2,839,011
============ ============ ============ ===========
Undistributed net investment income/(accumulated net
investment loss) at end of year ..................................... $ (202,320) $ (360,801) $ (69,698) $ (7,945)
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
Net investment income/(loss) .......................................... $ 15,588 $ (10,679) $ (21,512)
Net realized gain/(loss) from investments sold and foreign currency
transactions ........................................................ (229,418) (290,592) (32,819)
Net change in unrealized appreciation of securities
and foreign currency transactions during the year ................... 1,354,540 937,548 728,464
----------- ------------ ------------
Net increase in net assets resulting from operations .................. 1,140,710 636,277 674,133
Net increase/(decrease) in net assets from membership
interest transactions ............................................... (73,592) 28,590 (77,913)
----------- ------------ ------------
Net increase in net assets ............................................ 1,067,118 664,867 596,220
NET ASSETS:
Beginning of year ..................................................... 3,695,835 3,456,038 1,476,937
----------- ------------ ------------
End of year ........................................................... $ 4,762,953 $ 4,120,905 $ 2,073,157
=========== ============ ============
Undistributed net investment income/(accumulated net
investment loss) at end of year ..................................... $ 21,442 $ (47,144) $ (73,579)
=========== ============ ============
STATEMENTS OF CHANGES IN NET ASSETS
FIRST DEFINED PORTFOLIO FUND, LLC
FOR THE YEAR ENDED DECEMBER 31, 2002
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO(A) PORTFOLIO PORTFOLIO PORTFOLIO(B)
------------ ------------ ----------- -----------
Net investment income/(loss) .......................................... $ 3,954 $ 71,093 $ 73,266 $ (5,369)
Net realized loss from investments sold and foreign currency
transactions ....................................................... (395,174) (493,357) (36,037) (186,949)
Net change in unrealized appreciation/(depreciation) of securities
and foreign currency transactions during the year .................. (973,021) (653,771) (470,911) (754,323)
------------ ------------ ----------- -----------
Net decrease in net assets resulting from operations .................. (1,364,241) (1,076,035) (433,682) (946,641)
Net increase/(decrease) in net assets from membership
interest transactions .............................................. 11,294,401 1,230,239 484,492 2,252,584
------------ ------------ ----------- -----------
Net increase/(decrease) in net assets ................................. 9,930,160 154,204 50,810 1,305,943
NET ASSETS:
Beginning of year ..................................................... 2,126,046 4,064,339 2,290,582 3,461,475
------------ ------------ ----------- -----------
End of year ........................................................... $ 12,056,206 $ 4,218,543 $ 2,341,392 $ 4,767,418
============ ============ =========== ===========
Undistributed net investment income/(accumulated net
investment loss) at end of year .................................... $ 23,707 $ 110,203 $ 159,630 (13,924)
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO(C) PORTFOLIO
------------ ------------ ------------ -----------
Net investment income/(loss) .......................................... $ (62,001) $ (76,886) $ (19,089) $ (4,065)
Net realized loss from investments sold and foreign currency
transactions ....................................................... (1,246,818) (3,423,955) (236,139) (229,047)
Net change in unrealized appreciation/(depreciation) of securities
and foreign currency transactions during the year .................. (323,053) (1,060,945) (345,912) 33,158
------------ ------------ ------------ -----------
Net decrease in net assets resulting from operations .................. (1,631,872) (4,561,786) (601,140) (199,954)
Net increase/(decrease) in net assets from membership
interest transactions .............................................. 943,998 (1,956,925) 3,077,867 517,628
------------ ------------ ------------ -----------
Net increase/(decrease) in net assets ................................. (687,874) (6,518,711) 2,476,727 317,674
NET ASSETS:
Beginning of year ..................................................... 4,792,960 13,270,391 499,429 2,069,018
------------ ------------ ------------ -----------
End of year ........................................................... $ 4,105,086 $ 6,751,680 $ 2,976,156 2,386,692
============ ============ ============ ===========
Undistributed net investment income/(accumulated net
investment loss) at end of year .................................... $ (139,846) $ (339,225) $ (34,533) $ (7,805)
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
Net investment income/(loss) .......................................... $ 7,275 $ (18,077) $ (23,606)
Net realized loss from investments sold and foreign currency
transactions ....................................................... (111,600) (641,479) (501,496)
Net change in unrealized appreciation/(depreciation) of securities
and foreign currency transactions during the year .................. (629,377) (703,251) (506,433)
----------- ------------ ------------
Net decrease in net assets resulting from operations .................. (733,702) (1,362,807) (1,031,535)
Net increase/(decrease) in net assets from membership
interest transactions .............................................. 1,307,576 1,042,020 769,896
----------- ------------ ------------
Net increase/(decrease) in net assets ................................. 573,874 (320,787) (261,639)
NET ASSETS:
Beginning of year ..................................................... 3,121,961 3,776,825 1,738,576
----------- ------------ ------------
End of year ........................................................... $ 3,695,835 $ 3,456,038 $ 1,476,937
=========== ============ ============
Undistributed net investment income/(accumulated net
investment loss) at end of year .................................... $ 5,854 $ (36,465) $ (52,067)
=========== ============ ============
<FN>
- -------------------------------
(a) Formerly Dow Target 5 Portfolio
(b) Formerly S&P Target 10 Portfolio
(c) Formerly First Trust Internet Portfolio
</FN>
Page 38-39 See Notes to Financial Statements.
STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY
FIRST DEFINED PORTFOLIO FUND, LLC
FOR THE YEAR ENDED DECEMBER 31, 2003
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ----------- -----------
AMOUNT:
Sold .................................................................. $ 6,491,231 $ 528,931 $ 442,713 $ 856,597
Redeemed .............................................................. (2,996,528) (1,184,912) (512,077) (1,127,185)
------------ ------------ ----------- -----------
Net increase/(decrease) ............................................... $ 3,494,703 $ (655,981) $ (69,364) $ (270,588)
============ ============ =========== ===========
MEMBERSHIP INTERESTS:
Sold .................................................................. 932,821 74,736 50,396 127,183
Redeemed .............................................................. (449,605) (168,888) (58,625) (174,880)
------------ ------------ ----------- -----------
Net increase/(decrease) ............................................... 483,216 (94,152) (8,229) (47,697)
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ ------------ ------------ -----------
AMOUNT:
Sold .................................................................. $ 376,708 $ 2,798,926 $ 944,839 $ 501,970
Redeemed .............................................................. (813,531) (2,412,482) (349,179) (738,576)
------------ ------------ ------------ -----------
Net increase/(decrease) ............................................... $ (436,823) $ 386,444 $ 595,660 $ (236,606)
============ ============ ============ ===========
MEMBERSHIP INTERESTS:
Sold .................................................................. 46,943 669,416 348,544 43,452
Redeemed .............................................................. (102,521) (620,367) (130,122) (64,944)
------------ ------------ ------------ -----------
Net increase/(decrease) ............................................... (55,578) 49,049 218,422 (21,492)
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
AMOUNT:
Sold .................................................................. $ 752,422 $ 743,179 $ 221,143
Redeemed .............................................................. (826,014) (714,589) (299,056)
----------- ------------ ------------
Net increase/(decrease) ............................................... $ (73,592) $ 28,590 $ (77,913)
=========== ============ ============
MEMBERSHIP INTERESTS:
Sold .................................................................. 64,632 77,273 53,103
Redeemed .............................................................. (76,407) (78,898) (72,099)
----------- ------------ ------------
Net increase/(decrease) ............................................... (11,775) (1,625) (18,996)
=========== ============ ============
STATEMENTS OF CHANGES IN NET ASSETS - CAPITAL STOCK ACTIVITY
FIRST DEFINED PORTFOLIO FUND, LLC
FOR THE YEAR ENDED DECEMBER 31, 2002
TARGET THE DOW(SM) GLOBAL S&P
MANAGED VIP DART 10 TARGET 15 TARGET 24
PORTFOLIO(A) PORTFOLIO PORTFOLIO PORTFOLIO(B)
------------ ------------ ----------- -----------
AMOUNT:
Sold .................................................................. $ 12,855,619 $ 3,235,054 $ 1,592,177 $ 4,173,128
Redeemed .............................................................. (1,561,218) (2,004,815) (1,107,685) (1,920,544)
------------ ------------ ----------- -----------
Net increase/(decrease) ............................................... $ 11,294,401 $ 1,230,239 $ 484,492 $ 2,252,584
============ ============ =========== ===========
MEMBERSHIP INTERESTS:
Sold .................................................................. 1,853,224 392,472 168,300 590,853
Redeemed .............................................................. (248,098) (264,153) (121,163) (295,740)
------------ ------------ ----------- -----------
Net increase/(decrease) ............................................... 1,605,126 128,319 47,137 295,113
============ ============ =========== ===========
FIRST TRUST
NASDAQ(R) 10 UNCOMMON VALUE LINE(R) FIRST TRUST
TARGET 15 VALUES TARGET 25 ENERGY
PORTFOLIO PORTFOLIO PORTFOLIO(C) PORTFOLIO
------------ ------------ ------------ -----------
AMOUNT:
Sold .................................................................. $ 2,621,776 $ 2,371,843 $ 3,563,808 $ 1,780,037
Redeemed .............................................................. (1,677,778) (4,328,768) (485,941) (1,262,409)
------------ ------------ ------------ -----------
Net increase/(decrease) ............................................... $ 943,998 $ (1,956,925) $ 3,077,867 $ 517,628
============ ============ ============ ===========
MEMBERSHIP INTERESTS:
Sold .................................................................. 305,610 556,259 1,306,088 157,085
Redeemed .............................................................. (222,515) (1,033,295) (168,102) (18,924)
------------ ------------ ------------ -----------
Net increase/(decrease) ............................................... 83,095 (477,036) 1,137,986 38,161
============ ============ ============ ===========
FIRST TRUST
FINANCIAL FIRST TRUST FIRST TRUST
SERVICES PHARMACEUTICAL TECHNOLOGY
PORTFOLIO PORTFOLIO PORTFOLIO
----------- ------------ ------------
AMOUNT:
Sold .................................................................. $ 2,640,274 $ 2,791,401 $ 1,634,092
Redeemed .............................................................. (1,332,698) (1,749,381) (864,196)
----------- ------------ ------------
Net increase/(decrease) ............................................... $ 1,307,576 $ 1,042,020 $ 769,896
=========== ============ ============
MEMBERSHIP INTERESTS:
Sold .................................................................. 226,267 271,323 341,050
Redeemed .............................................................. (123,839) (184,772) (205,423)
----------- ------------ ------------
Net increase/(decrease) ............................................... 102,428 86,551 135,627
=========== ============ ============
<FN>
- ---------------------------
(a) Formerly Dow Target 5 Portfolio
(b) Formerly S&P Target 10 Portfolio
(c) Formerly First Trust Internet Portfolio
</FN>
See Notes to Financial Statements. Pages 40-41
FINANCIAL HIGHLIGHTS
TARGET MANAGED VIP PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02(A) 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 6.47 $ 8.19 $ 8.62 $ 8.04 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) .................... 0.02 (0.00)++# 0.18++ 0.06 0.05
Net realized and unrealized gain/(loss) on
investments ................................... 2.24 (1.72) (0.61) 0.52 (2.01)
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 2.26 (1.72) (0.43) 0.58 (1.96)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 8.73 $ 6.47 $ 8.19 $ 8.62 $ 8.04
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 34.93% (21.00)% (4.99)% 7.21% (19.60)%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 20,488 $ 12,056 $ 2,126 $ 262 $ 80
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income to average
net assets .................................... 0.41% 0.06% 2.20% 2.45% 2.28%**
Portfolio turnover rate ......................... 72.28% 78.53% 47.95% 54.04% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 1.69% 2.73% 12.69% 74.48% 215.88%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
# Amount represents less than $0.01 per share.
(a) Effective April 30, 2002, based upon the determination of the Fund's Board of Trustees, the
Fund changed its name from the Dow(SM) Target 5 Portfolio to the Target Managed VIP Portfolio.
The Fund's primary investment strategy was also changed. The performance figures provided
include the Fund's performance prior to the name change and the change of the primary
investment strategy.
</FN>
Page 42 See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
THE DOW(SM) DART10 PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 6.98 $ 8.54 $ 10.02 $ 9.22 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.22 0.12++ 0.14++ 0.05 0.02
Net realized and unrealized gain/(loss) on
investments ................................... 1.17 (1.68) (1.62) 0.75 (0.80)
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 1.39 (1.56) (1.48) 0.80 (0.78)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 8.37 $ 6.98 $ 8.54 $ 10.02 $ 9.22
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 19.91% (18.27)% (14.77)% 8.68% (7.80)%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 4,268 $ 4,219 $ 4,064 $ 1,110 $ 101
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income to average
net assets .................................... 2.37% 1.52% 1.53% 1.19% 1.01%**
Portfolio turnover rate ......................... 78.12% 76.19% 38.16% 33.59% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 3.27% 3.13% 5.59% 14.84% 182.94%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
See Notes to Financial Statements. Page 43
FINANCIAL HIGHLIGHTS
GLOBAL TARGET 15 PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 8.24 $ 9.66 $ 9.90 $ 9.71 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.33 0.25++ 0.26++ 0.15 0.06
Net realized and unrealized gain/(loss) on
investments ................................... 2.48 (1.67) (0.50) 0.04 (0.35)
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 2.81 (1.42) (0.24) 0.19 (0.29)
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 11.05 $ 8.24 $ 9.66 $ 9.90 $ 9.71
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 34.10% (14.70)% (2.42)% 1.96% (2.90)%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 3,050 $ 2,341 $ 2,291 $ 1,853 $ 252
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income to average
net assets .................................... 3.36% 2.73% 2.77% 5.93% 2.77%**
Portfolio turnover rate ......................... 65.57% 56.92% 105.85% 20.39% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 4.51% 4.50% 6.73% 14.89% 51.39%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
Page 44 See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
S&P TARGET 24 PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02(A) 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 6.14 $ 7.19 $ 9.54 $ 11.83 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment gain/(loss) ...................... 0.03 (0.01) (0.01)++ (0.03) (0.02)
Net realized and unrealized gain/(loss) on
investments ................................... 1.45 (1.04) (2.34) (2.26) 1.85
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 1.48 (1.05) (2.35) (2.29) 1.83
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 7.62 $ 6.14 $ 7.19 $ 9.54 $ 11.83
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 24.10% (14.60)% (24.63)% (19.36)% 18.30%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 5,554 $ 4,767 $ 3,461 $ 1,501 $ 273
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income/(loss) to
average net assets ............................ 0.46% (0.10)% (0.07)% (0.71)% (1.04)%**
Portfolio turnover rate ......................... 84.37% 199.84% 95.30% 64.22% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 2.89% 2.96% 5.67% 10.85% 96.12%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
(a) Effective April 30, 2002, based upon the determination of the Fund's Board of Trustees, the
Fund changed its name from the S&P Target 10 Portfolio to the S&P Target 24 Portfolio. The
Fund's primary investment strategy was also changed. The performance figures provided include
the Fund's performance prior to the name change and the change of the primary investment
strategy.
</FN>
See Notes to Financial Statements. Page 45
FINANCIAL HIGHLIGHTS
NASDAQ(R) TARGET 15 PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 6.83 $ 9.25 $ 12.88 $ 14.60 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................. (0.14) (0.08) (0.13)++ (0.16) (0.05)++
Net realized and unrealized gain/(loss) on
investments ................................... 2.60 (2.34) . (3.50) (1.56) 4.65
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 2.46 (2.42) (3.63) (1.72) 4.60
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 9.29 $ 6.83 $ 9.25 $ 12.88 $ 14.60
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 36.02% (26.16)% (28.18)% (11.78)% 46.00%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 5,073 $ 4,105 $ 4,793 $ 2,688 $ 410
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment loss to average
net assets .................................... (1.34)% (1.25)% (1.31)% (1.46)% (1.44)%**
Portfolio turnover rate ......................... 83.41% 97.68% 63.71% 72.40% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 2.96% 3.03% 4.32% 5.47% 90.16%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
Page 46 See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FIRST TRUST 10 UNCOMMON VALUES PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 3.41 $ 5.40 $ 8.39 $ 11.40 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................. (0.01) (0.03)++ (0.07) (0.02) (0.02)
Net realized and unrealized gain/(loss) on
investments ................................... 1.27 (1.96) (2.92) (2.99) 1.42
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 1.26 (1.99) (2.99) (3.01) 1.40
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 4.67 $ 3.41 $ 5.40 $ 8.39 $ 11.40
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 36.95% (36.85)% (35.64)% (26.40)% 14.00%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 9,487 $ 6,752 $ 13,270 $ 22,123 $ 125
Ratio of operating expenses to average
net assets .................................... 1.37% 1.37% 1.37% 1.37% 1.47%**
Ratio of net investment loss to average
net assets .................................... (0.29)% (0.78)% (1.00)% (1.15)% (0.65)%**
Portfolio turnover rate ......................... 117.04% 105.51% 149.77% 98.80% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 2.36% 2.29% 2.28% 2.47% 144.82%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
See Notes to Financial Statements. Page 47
FINANCIAL HIGHLIGHTS
VALUE LINE(R) TARGET 25 PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02(A) 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 2.37 $ 4.15 $ 9.32 $ 16.33 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................. (0.02) (0.03)++ (0.06) (0.03) (0.04)
Net realized and unrealized gain/(loss) on
investments ................................... 0.99 (1.75) (5.11) (6.98) 6.37
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 0.97 (1.78) (5.17) (7.01) 6.33
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 3.34 $ 2.37 $ 4.15 $ 9.32 $ 16.33
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 40.93% (42.89)% (55.47)% (42.93)% 63.30%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 4,936 $ 2,976 $ 499 $ 1,131 $ 187
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment loss to average
net assets .................................... (0.92)% (1.22)% (1.42)% (1.40)% (1.37)%**
Portfolio turnover rate ......................... 74.04% 48.99% 209.84% 71.51% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 3.36% 6.72% 19.43% 16.73% 136.02%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
(a) Effective April 30, 2002, based upon the determination of the Fund's Board of Trustees, the
Fund changed its name from the First Trust Internet Portfolio to the ValueLine(R) Target 25
Portfolio. The Fund's primary investment strategy was also changed. The performance figures
provided include the Fund's performance prior to the name change and the change of the primary
investment strategy.
</FN>
Page 48 See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FIRST TRUST ENERGY PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 10.78 $ 11.29 $ 15.87 $ 11.23 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment gain/(loss) ...................... 0.00# (0.02)++ (0.04)++ (0.02) (0.01)
Net realized and unrealized gain/(loss) on
investments ................................... 3.42 (0.49) (4.54) 4.66 1.24
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 3.42 (0.51) (4.58) 4.64 1.23
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 14.20 $ 10.78 $ 11.29 $ 15.87 $ 11.23
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 31.73% (4.52)% (28.86)% 41.32% 12.30%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 2,839 $ 2,387 $ 2,069 $ 498 $ 114
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income/(loss) to
average net assets ............................ (0.01)% (0.16)% (0.29)% (0.50)% (0.50)%**
Portfolio turnover rate ......................... 32.18% 55.39% 113.79% 28.14% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 4.69% 4.66% 10.87% 44.00% 111.63%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
# Amount represents less than $0.01 per share.
</FN>
See Notes to Financial Statements. Page 49
FINANCIAL HIGHLIGHTS
FIRST TRUST FINANCIAL SERVICES PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 10.00 $ 11.68 $ 13.09 $ 10.49 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment gain/(loss) ...................... 0.04 0.02 (0.00)++# (0.01) (0.00)#
Net realized and unrealized gain/(loss) on
investments ................................... 3.26 (1.70) (1.41) 2.61 0.49
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 3.30 (1.68) (1.41) 2.60 0.49
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 13.30 $ 10.00 $ 11.68 $ 13.09 $ 10.49
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 33.00% (14.38)% (10.77)% 24.79% 4.90%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 4,763 $ 3,696 $ 3,122 $ 1,031 $ 130
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment income/(loss) to
average net assets ............................ 0.39% 0.18% (0.01)% (0.17)% (0.19)%**
Portfolio turnover rate ......................... 52.32% 29.62% 127.11% 154.13% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 3.29% 3.37% 6.72% 13.62% 115.60%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
# Amount represents less than $0.01 per share.
</FN>
Page 50 See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
FIRST TRUST PHARMACEUTICAL PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ........... $ 8.65 $ 12.06 $ 13.54 $ 10.37 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................ (0.03) (0.03) (0.09)++ (0.03) (0.02)
Net realized and unrealized gain/(loss) on
investments .................................. 1.73 (3.38) (1.39) 3.20 0.39
----------- ----------- ----------- ----------- -----------
Total from investment operations ............... 1.70 (3.41) (1.48) 3.17 0.37
----------- ----------- ----------- ----------- -----------
Net asset value, end of period ................. $ 10.35 $ 8.65 $ 12.06 $ 13.54 $ 10.37
=========== =========== =========== =========== ===========
TOTAL RETURN+ .................................. 19.65% (28.28)% (10.93)% 30.57% 3.70%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........... $ 4,121 $ 3,456 $ 3,777 $ 1,267 $ 135
Ratio of operating expenses to average
net assets ................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment loss to average
net assets ................................... (0.29)% (0.49)% (0.73)% (0.61)% (0.79)%**
Portfolio turnover rate ........................ 44.85% 72.48% 50.46% 88.46% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed .......................... 3.48% 3.64% 5.96% 13.46% 147.68%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
See Notes to Financial Statements. Page 51
FINANCIAL HIGHLIGHTS
FIRST TRUST TECHNOLOGY PORTFOLIO
FOR A MEMBERSHIP INTEREST OUTSTANDING THROUGHOUT EACH PERIOD.
YEAR YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED ENDED
12/31/03 12/31/02 12/31/01 12/31/00 12/31/99*
----------- ----------- ----------- ----------- -----------
Net asset value, beginning of period ............ $ 3.39 $ 5.79 $ 10.25 $ 13.41 $ 10.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss ............................. (0.06) (0.06)++ (0.09)++ (0.10) (0.03)
Net realized and unrealized gain/(loss) on
investments ................................... 1.64 (2.34) (4.37) (3.06) 3.44
----------- ----------- ----------- ----------- -----------
Total from investment operations ................ 1.58 (2.40) (4.46) (3.16) 3.41
----------- ----------- ----------- ----------- -----------
Net asset value, end of period .................. $ 4.97 $ 3.39 $ 5.79 $ 10.25 $ 13.41
=========== =========== =========== =========== ===========
TOTAL RETURN+ ................................... 46.61% (41.45)% (43.51)% (23.56)% 34.10%
=========== =========== =========== =========== ===========
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $ 2,073 $ 1,477 $ 1,739 $ 1,046 $ 162
Ratio of operating expenses to average
net assets .................................... 1.47% 1.47% 1.47% 1.47% 1.47%**
Ratio of net investment loss to average
net assets .................................... (1.22)% (1.37)% (1.38)% (1.42)% (1.38)%**
Portfolio turnover rate ......................... 33.81% 60.86% 185.60% 98.66% --
Ratio of operating expenses to average
net assets without fee waivers and
expenses reimbursed ........................... 5.96% 6.23% 9.38% 11.39% 115.26%**
<FN>
- --------------------------------------------------
* The Fund commenced operations on October 6, 1999.
** Annualized.
+ Total return is not annualized for periods less than one year. The total return would have been
lower if certain fees had not been waived and expenses reimbursed by the investment advisor.
++ Per share values have been calculated using the average share method.
</FN>
Page 52 See Notes to Financial Statements.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
1. SIGNIFICANT ACCOUNTING POLICIES
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 eleven managed investment portfolios that may be divided into
two general categories: Target Managed VIP Portfolio, the DowSM DART 10
Portfolio, Global Target 15 Portfolio, S&P Target 24 Portfolio, NASDAQ Target 15
Portfolio, First Trust 10 Uncommon Values Portfolio, and Value Line(R) Target 25
Portfolio, (the "Strategy Funds"); and First Trust Energy Portfolio, First Trust
Financial Services Portfolio, First Trust Pharmaceutical Portfolio, and First
Trust Technology Portfolio, (the "Sector Funds"), (each, a "Fund," collectively,
the "Funds"). Under Delaware law, a limited liability company does not issue
shares of stock. Instead, ownership rights are contained in membership interests
(each, an "Interest," collectively, the "Interests"). Each Interest represents
an undivided interest in the net assets of a Fund's portfolio. Fund Interests
are not offered directly to the public. Fund Interests are sold only to American
Skandia Life Assurance Corporation Variable Account B ("Account B"), a
Prudential Financial Company, to fund the benefits of variable annuity policies
(the "Policies") issued by American Skandia. Account B is the sole member of the
Registrant. Account B's variable annuity owners who have Policy values allocated
to any of the Funds have indirect rights to the Registrant's Interest. The
following is a summary of significant accounting policies consistently followed
by the Funds in the preparation of their financial statements. The preparation
of financial statements in accordance with accounting principles generally
accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts and disclosures in the
financial statements. Actual results could differ from those estimates.
PORTFOLIO VALUATION:
Generally, a Fund's investments are valued at market value or, in the absence of
market value with respect to any portfolio securities, at fair value as
determined under the direction of, the Board of Trustees of the Registrant.
Portfolio securities for which the primary market is a domestic or foreign
exchange, or which are traded over-the-counter and quoted on the NASDAQ System,
are valued at the last sale price or the NASDAQ Official Close Price ("NOCP") on
the day of valuation or, if there was no sale that day, at the mean between the
most recent bid and ask prices. Portfolio securities not quoted on the NASDAQ
System that are actively traded in the over-the-counter market, including listed
securities for which the primary market is believed to be over-the-counter, are
valued at the closing bid price provided by the principal market makers.
Securities for which quotations are not readily available are valued at fair
value as determined under the direction of the Board of Trustees. Short-term
investments that mature in 60 days or less are valued at amortized cost.
Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the New York Stock Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the New York Stock
Exchange that will not be reflected in the computation of a Fund's net asset
value. If events materially affecting the value of such securities occur during
such period, these securities will be valued at their fair value according to
procedures decided upon in good faith by First Trust Advisors L.P. ("First
Trust") under the direction of the Board of Trustees. All securities and other
assets of a Fund initially expressed in foreign currencies will be converted to
U.S. dollars using exchange rates in effect at the time of valuation.
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.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate assets of
the Fund with a current value at least equal to the amount of its when-issued
purchase commitments.
FOREIGN CURRENCY:
The books and records of the Funds 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 unrealized appreciation/(depreciation) of investments and net
other assets.
Page 53
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
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 realized gains and losses on investment securities sold.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income and net realized long-term and short-term
capital gains of all Funds may be paid with such frequency (monthly or
otherwise) as the Board of Trustees may determine from time to time. Currently
all dividends paid by a Fund will be reinvested by the Fund.
FEDERAL 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 American Skandia and is not taxed separately. The Registrant
intends to comply with the provisions of Section 817(h) of the Internal Revenue
Code, which imposes certain diversification requirements upon variable contracts
that are based on segregated asset accounts. Under current tax law, interest,
dividend income, and capital gains of the Registrant are not currently taxable
when left to accumulate within a variable annuity contract. As such, no federal
income tax provision is required.
EXPENSES:
Expenses that are directly related to one of the Funds are charged directly to
that Fund. General expenses of the Registrant are allocated to all the Funds
based upon the average net assets of each Fund.
2. INVESTMENT ADVISORY FEE AND OTHER AFFILIATED TRANSACTIONS
First Trust is a limited partnership with one limited partner, Grace Partners of
DuPage L.P., and one general partner, The Charger Corporation. First Trust
serves as investment advisor to the Funds pursuant to an Investment Advisory and
Management Agreement. First Trust provides each Fund 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 Fund's average daily net assets.
From time to time First Trust may waive a portion or all of the fees otherwise
payable to it and/or reimburse expenses. First Trust has voluntarily undertaken
to waive its fees and reimburse expenses through September 30, 2004, so that
total expenses do not exceed 1.47% of each Fund's average daily net assets.
However, with respect to First Trust 10 Uncommon Values Portfolio, First Trust
has agreed to waive fees and reimburse expenses through September 30, 2004, so
that total expenses do not exceed 1.37% of the average daily net asset value of
the Fund. The fees waived and reimbursed, for the year ended December 31, 2003,
by the advisor, are as follows:
FEES WAIVED EXPENSES REIMBURSED
------------- -------------------
Target Managed VIP Portfolio ............... $26,318 $ 339
The Dow(SM) DART 10 Portfolio ................ 23,989 40,748
Global Target 15 Portfolio ................. 15,309 54,932
S&P Target 24 Portfolio .................... 29,301 32,862
NASDAQ Target 15 Portfolio ................. 27,883 34,152
First Trust 10 Uncommon Values Portfolio ... 45,185 21,919
Value Line(R)Target 25 Portfolio ........... 22,829 41,697
First Trust Energy Portfolio ............... 14,504 56,084
First Trust Financial Services Portfolio ... 23,928 41,279
First Trust Pharmaceutical Portfolio ....... 21,960 44,166
First Trust Technology Portfolio ........... 10,584 61,351
Page 54
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
PFPC, Inc. ("PFPC"), serves as the Registrant's administrator. In addition, PFPC
also provides certain fund accounting, custody administration and transfer
agency services in accordance with certain fee arrangements. During 2003, PFPC
agreed to a 30% reduction in the minimum fees for administrative and accounting
services charged to the First Defined Portfolio Fund, LLC. This was agreed to
because of the new closed-end funds started by First Trust during the year, for
which PFPC also provided these services.
Effective December 4, 2003, PFPC Trust Company serves as the Fund's custodian.
Prior to December 4, 2003, J.P. Morgan Chase & Company served as the custodian
to the Funds.
No officer or employee of First Trust or First Trust Portfolios L.P. ("FTP")
received any compensation from the Registrant for serving as an officer or
Trustee of the Registrant. The Registrant pays each Trustee who is not an
officer or employee of First Trust or FTP or any of their affiliates $15,000 per
annum plus $125 per portfolio per regularly scheduled meeting attended, $500 per
committee meeting attended and reimbursement for travel and out-of-pocket
expenses.
3. DISTRIBUTION PLAN
The Registrant, on behalf of each Fund, 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 Funds will be subject to an annual service fee.
FTP serves as the selling agent and distributor of Interests of the Funds. In
this capacity, FTP manages the offering of the Funds' 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 American Skandia 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 Fund
may spend up to 0.25% per year, of the average daily net assets of its
Interests, as a service fee under the Plan. In addition, the Plan permits First
Trust to use a portion of its advisory fee to compensate FTP for expenses
incurred in connection with the sales and distribution of a Fund's Interest
including, without limitation, expenses of preparing, printing and distributing
prospectuses to persons other than Interest holders or policy owners, as well as
compensating its sales force, printing and distributing advertising and sales
literature and reports to Interest holders and policy owners used in connection
with the sale of a Fund's Interests, certain other expenses associated with the
distribution of the Funds, and any distribution-related expenses that may be
authorized by the Board of Trustees.
Payments under the Plan were suspended on May 1, 2003 for all the Funds with the
exception of the First Trust 10 Uncommon Values Portfolio. During 2003, all
service fees received by First Trust, were paid to American Skandia, with no
portion of such fees retained by First Trust. The Plan may be renewed from year
to year if approved by a vote of the Board of Trustees and a vote of the
non-interested 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.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
Government and short-term investments, for the year ended December 31, 2003,
were as follows:
PURCHASES SALES
----------- ----------
Target Managed VIP Portfolio ............... $14,854,048 $11,251,510
The Dow(SM) DART 10 Portfolio ................ 3,111,914 3,620,642
Global Target 15 Portfolio ................. 1,701,723 1,704,556
S&P Target 24 Portfolio .................... 4,109,760 4,375,955
NASDAQ Target 15 Portfolio ................. 3,868,402 4,367,168
First Trust 10 Uncommon Values Portfolio ... 9,247,167 8,911,108
Value Line(R)Target 25 Portfolio ........... 3,370,560 2,807,297
First Trust Energy Portfolio ............... 782,365 1,069,593
First Trust Financial Services Portfolio ... 2,082,668 2,185,050
First Trust Pharmaceutical Portfolio ....... 1,635,099 1,666,195
First Trust Technology Portfolio ........... 594,275 725,452
Page 55
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
5. MEMBERSHIP INTERESTS
The Registrant has authorized an unlimited number of Membership Interests
without par value of one or more series.
6. CONCENTRATION OF RISK
The Funds may invest in foreign securities. Investing in securities of foreign
companies and foreign 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 foreign
companies and foreign 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.
Each Fund may invest up to 15% of its net assets in illiquid securities,
including securities that are not readily marketable, securities that are
restricted as to disposition under Federal securities law or otherwise,
repurchase agreements maturing in more than seven days, interest only and
principal only mortgage-backed securities, certain options traded in the
over-the-counter market and the securities to which such options relate. In
purchasing securities, which cannot be sold by a Fund without registration under
the Securities Act of 1933, as amended, a Fund will endeavor to obtain the right
to registration at the expense of the issuer. There generally will be a lapse of
time between the decision by a Fund to sell any such security and the
registration of the security permitting the sale. During any such period, the
security will be subject to market fluctuations.
Each Fund 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 Fund may
therefore invest a relatively high percentage of its assets in a limited number
of issuers. This does expose each Fund to greater market fluctuations than is
experienced by a diversified fund. Each Fund is more susceptible to any single
economic, political or regulatory occurrence and to the financial conditions of
the issuer in which it invests.
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PROXY VOTING POLICIES AND PROCEDURES
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling (800)-988-5891 and (2) on the Securities and
Exchange Commission's website at http://www.sec.gov, when required to be filed
pursuant to applicable regulations.
Page 56
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REPORT OF INDEPENDENT AUDITORS
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TO THE INTEREST HOLDERS AND BOARD OF TRUSTEES OF FIRST DEFINED PORTFOLIO FUND,
LLC:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the First Defined Portfolio Fund, LLC (the
"Funds", comprising respectively, Target Managed VIP Portfolio, The DowSM Dart
10 Portfolio, Global Target 15 Portfolio, S&P Target 24 Portfolio, NASDAQ Target
15 Portfolio, First Trust 10 Uncommon Values Portfolio, First Trust Energy
Portfolio, First Trust Financial Services Portfolio, Value Line(R) Target 25
Portfolio, First Trust Pharmaceutical Portfolio, and First Trust Technology
Portfolio) as of December 31, 2003, 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
four years in the period then ended and for the period from October 6, 1999
(commencement of operations) to December 31, 1999. These financial statements
and financial highlights are the responsibility of the Funds' 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
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 respective portfolios constituting the First Defined Portfolio Fund, LLC
as of December 31, 2003, 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 four years in the
period then ended and for the period from October 6, 1999 to December 31, 1999
in conformity with accounting principles generally accepted in the United
States.
[GRAPHIC OMITTED]
ERNST AND YOUNG LLP
Boston, Massachusetts
February 4, 2004
Page 57
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MANAGEMENT
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
BOARD OF TRUSTEES AND OFFICERS
(UNAUDITED)
Information pertaining to the Trustees and officers* of the Trust is set forth
below. The Statement of Additional Information (SAI) includes additional
information about the Trustees and is available without charge, upon request, by
calling (800) 621-1675.
NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, DOB, ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
DISINTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Richard Erickson, Trustee o Indefinite term Physician, Sportsmed/ 14 portfolios Trustee, First Trust
D.O.B. 04/51 o 4 years served Wheaton Orthopedics Value Line(R) Dividend
327 Gundersen Drive Fund, First Trust/Four
Carol Stream, IL 60188 Corners Senior
Floating Rate Income
Fund and First Trust
Value Line(R) 100 Fund
Niel Nielson, Trustee o Indefinite term President, Covenant 14 portfolios Director of Good News
D.O.B. 03/54 o 4 years served College (June 2002-Present) Publishers; Trustee,
14049 Scenic Highway Pastor (1997 to June 2002), First Trust Value
Lookout Mt, GA 30750 College Church in Wheaton Line(R)Dividend Fund,
First Trust/Four
Corners Senior
Floating Rate Income
Fund and First Trust
Value Line(R)100 Fund
- ------------------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
James A. Bowen, Trustee o Indefinite term President, First Trust 14 portfolios Chairman of the Board
President, Chairman of the o 4 years served Advisors and First Trust of Directors, BondWave
Board and CEO Portfolios; Chairman of the LLC
D.O.B. 09/55 Board, BondWave LLC
1001 Warrenville Road
Suite 300
Lisle, IL 60532
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT TRUSTEES
- ------------------------------------------------------------------------------------------------------------------------------------
Robert F. Carey, Vice o Indefinite term Senior Vice President, N/A N/A
President o 4 years served First Trust Advisors and
D.O.B. 07/63 First Trust Portfolios
1001 Warrenville Road
Suite 300
Lisle, IL 60532
Page 58
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MANAGEMENT - (CONTINUED)
- --------------------------------------------------------------------------------
FIRST DEFINED PORTFOLIO FUND, LLC
DECEMBER 31, 2003
BOARD OF TRUSTEES AND OFFICERS (CONTINUED)
(UNAUDITED)
NUMBER OF OTHER
PORTFOLIOS TRUSTEESHIPS/
NAME, DOB, ADDRESS AND TERM OF OFFICE AND PRINCIPAL OCCUPATION(S) IN FUND COMPLEX DIRECTORSHIPS
POSITION(S) WITH THE FUND LENGTH OF TIME SERVED DURING PAST 5 YEARS OVERSEEN BY TRUSTEE HELD BY TRUSTEE
- ------------------------------------------------------------------------------------------------------------------------------------
OFFICER(S) WHO ARE NOT TRUSTEES - (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
Mark R. Bradley, Treasurer, o Indefinite term Chief Financial N/A N/A
Controller, Chief Financial o 4 years served Officer, Managing
Officer, Chief Accounting Director, First
Officer Trust Advisors and
D.O.B. 11/57 First Trust
1001 Warrenville Road Portfolios; Chief
Suite 300 Financial Officer,
Lisle, IL 60532 BondWave LLC
W. Scott Jardine, Secretary o Indefinite term General Counsel, N/A N/A
D.O.B. 05/60 o 4 years served First Trust Advisors
1001 Warrenville Road and First Trust
Suite 300 Portfolios;
Lisle, IL 60532 Secretary, BondWave
LLC
Roger Testin o Indefinite term Senior Vice N/A N/A
Vice President o 2 years served President, First
D.O.B. 06/66 Trust Advisors;
1001 Warrenville Road Analyst, Dolan
Suite 300 Capital Management;
Lisle, IL 60532 Investment
Supervisor, Zurich
Kemper Investments
Susan M. Brix o Indefinite term Representative, N/A N/A
Assistant Vice President o 4 years served First Trust
D.O.B. 01/60 Portfolios;
1001 Warrenville Road Assistant Portfolio
Suite 300 Manager, First Trust
Lisle, IL 60532 Advisors
<FN>
- ------------
* The term "officer" means the president, vice president, secretary,
treasurer, controller or any other officer who performs a policy making
function.
</FN>
Page 59
This Page Left Blank Intentionally.
This Page Left Blank Intentionally.
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.
(b) 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.
(c) The registrant has not granted any waivers, including an implicit
waiver, from a provision of the code of ethics that applies to the registrant's
principal executive officer, principal financial officer, principal accounting
officer or controller, or persons performing similar functions, regardless of
whether these individuals are employed by the registrant or a third party, that
relates to one or more of the items set forth in paragraph (b) of this item's
instructions.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
During the period covered by this report, Registrant's Board of
Trustees has determined that it does not have an "audit committee financial
expert" serving on its Audit Committee. While Registrant believes that each of
the members of its Audit Committee has sufficient knowledge of accounting
principles and financial statements to serve on the Audit Committee, none has
the requisite experience to qualify as an "audit committee financial expert," as
such term is defined by the Securities and Exchange Commission. The Board of
Trustees appointed such a person for election to the Board and its Audit
Committee at the March 8, 2004 Board meeting. At this meeting, the Registrant
appointed Thomas Kadlec to the Board and determined that he is qualified to
serve as the audit committee financial expert and that he is independent.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) AUDIT FEES -- The aggregate fees billed for each of the last two
fiscal years ending December 31, 2003 and 2002, 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 for those fiscal
years are $108,000 and $98,296, respectively.
(b) AUDIT RELATED FEES -- The aggregate fees billed in each of the last
two fiscal years ending December 31, 2003 and 2002, 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 are $0 and $0, respectively.
(c) TAX FEES -- The aggregate fees billed in each of the last two
fiscal years ending December 31, 2003 and 2002, for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax
planning are $0 and $0, respectively.
(d) ALL OTHER FEES -- The aggregate fees billed in each of the last two
fiscal years ending December 31, 2003 and 2002, for products and services
provided by the principal accountant, other than the services reported in
paragraphs (a) through (c) of this Item are $0 and $0, respectively.
(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, 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 and shall
report any such pre-approval to the full Committee.
The Committee is also responsible for the approval of the independent
auditor's engagements for non-audit services with the registrant's management
(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 Fund's management (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 Fund
that were not pre-approved pursuant to the DE MINIMIS exception, 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) of this Item that were approved by the audit committee pursuant to
paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows:
(b) Not Applicable.
(c) Not Applicable.
(d) Not Applicable.
The percentage of services described in each of paragraphs (b) through
(d) of this Item that were approved by the audit committee pursuant to paragraph
(c)(7)(ii) of Rule 2-01 of Regulation S-X are as follows:
(b) Not Applicable.
(c) Not Applicable.
(d) Not Applicable.
(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 each of
the last two fiscal years ending December 31, 2003 and 2002 of the registrant
was $0 and $0, respectively.
(h) Not applicable. The registrant's independent auditors do not
currently provide non-audit services to the registrant's investment adviser or
any of its control affiliates that provide ongoing services to the registrant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED].
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR
CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT
INVESTMENT COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
ITEM 10. 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 last fiscal half-year (the
registrant's second fiscal half-year in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
ITEM 11. 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 Section 302 of the Sarbanes-Oxley Act of
2002 are attached hereto.
(a)(3) Not applicable.
(b) Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 are attached hereto.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
(registrant) FIRST DEFINED PORTFOLIO FUND, LLC
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, President, Chairman & Chief Executive
Officer
(principal executive officer)
Date MARCH 10, 2004
----------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By (Signature and Title)* /S/ JAMES A. BOWEN
-------------------------------------------------------
James A. Bowen, President, Chairman & Chief Executive
Officer
(principal executive officer)
Date MARCH 10, 2004
----------------------------------------------------------------------------
By (Signature and Title)* /S/ MARK R. BRADLEY
-------------------------------------------------------
Mark R. Bradley, Treasurer, Controller, Chief
Financial Officer and Chief
Accounting Officer
(principal financial officer)
Date MARCH 10, 2004
----------------------------------------------------------------------------
* Print the name and title of each signing officer under his or her signature.