FIRST DEFINED PORTFOLIO MANAGEMENT FUND LLC, N-1A, 1999-02-16

FIRST DEFINED PORTFOLIO MANAGEMENT FUND LLC
N-1A, 1999-02-16

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As filed with the Securities and Exchange Commission on February 16, 1999

1933 Act Registration No. 333-
1940 Act Registration No. 811-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933[X]

Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. _____ [ ]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940[X]

Amendment No. _____

FIRST DEFINED PORTFOLIO FUND LLC
(Exact Name of Registrant as Specified in Charter)

1001 Warrenville Road, Suite 300, Lisle, Illinois 60532
(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, including Area Code: (630) 241-4141

with a copy to:
W. Scott Jardine, Esq. Eric F. Fess
Nike Securities L.P. Chapman and Cutler
1001 Warrenville Road, Suite 300 111 West Monroe Street
Lisle, Illinois 60532 Chicago, Illinois 60603
(Name and Address of Agent for Service)

Approximate date of proposed public offering: (Upon the effective date
of this Registration Statement)

It is proposed that this filing will become effective (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective
date for a previously filed post-effective amendment.

Title of Securities Being Registered: Membership interests

The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.

CONTENTS OF REGISTRATION STATEMENT

This Registration Statement comprises the following papers and contents:

The Facing Sheet

Part A-Prospectus

Part B-Statement of Additional Information

Part C-Other Information

Signatures

Index to Exhibits

Exhibits

FIRST DEFINED PORTFOLIO FUND LLC

________________, 1999

PROSPECTUS

This prospectus is intended for use in connection with variable annuity
policies offered by American Skandia Life Assurance Corporation
("American Skandia"). This prospectus provides important information
to help you evaluate whether one of the funds listed below may be right
for you.

The Dow (sm) Target 5 Portfolio
The Dow (sm) Target 10 Portfolio
Global Target 15 Portfolio
Target 10 Large Cap Portfolio
Target 15 Large Cap Portfolio
Target Small Cap Portfolio
10 Uncommon Values Portfolio

The Securities and Exchange Commission has not approved or disapproved
these securities or passed upon the adequacy of this prospectus. Any
representation to the contrary is a criminal offense.

Page 1

TABLE OF CONTENTS
PAGE

THE DOW (SM) TARGET 5 PORTFOLIO 3
Fund Overview 3
Fund Expenses 3
THE DOW (SM) TARGET 10 PORTFOLIO 4
Fund Overview 4
Fund Expenses 4
GLOBAL TARGET 15 PORTFOLIO 5
Fund Overview 5
Fund Expenses 5
TARGET 10 LARGE CAP PORTFOLIO 6
Fund Overview 6
Fund Expenses 6
TARGET 15 LARGE CAP PORTFOLIO 7
Fund Overview 7
Fund Expenses 7
TARGET SMALL CAP PORTFOLIO 9
Fund Overview 9
Fund Expenses 9
10 UNCOMMON VALUES PORTFOLIO 11
Fund Overview 11
Fund Expenses 11
FUND ORGANIZATION 12
FUND MANAGEMENT 12
MANAGEMENT FEES AND EXPENSES 12
FUND INVESTMENTS 13
HOW SECURITIES ARE SELECTED 13
DESCRIPTION OF INDICES 14
RISK FACTORS 14
INVESTMENT IN FUND INTERESTS 15
INTEREST REDEMPTION 15
DISTRIBUTIONS AND TAXES 16
12B-1 PLANS 16
NET ASSET VALUE 16
FUND SERVICE PROVIDERS 16
SHAREHOLDER INQUIRIES 17

Page 2

THE DOW (sm) TARGET 5 PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund seeks its objective by investing in common stocks issued by
companies that are expected to provide income and to have the potential
for capital appreciation. To select the stocks for the fund, the
investment adviser follows a disciplined investment strategy that
invests primarily in the common stocks of the five companies with the
lowest per share stock price of the ten companies in the Dow Jones
Industrial AverageSM ("DJIA") that have the highest dividend yields as
of the close of business on or about the applicable stock selection
date. The initial portfolio will primarily consists of the stocks
selected by the strategy on or about ________. Beginning January 1,
2000, the portfolio will be adjusted annually on or about January 1 in
accordance with the investment strategy. See "Description of Indices"
for a description of the DJIA.

Each year, on or about the annual stock selection date, the fund expects
to invest in the securities determined by the strategy in relatively
equal amounts. At that time, the percentage relationship among the
numbers of shares of each issuer held by the fund is established.
Through the next one-year period that percentage relationship will be
maintained as closely as practicable when the fund makes subsequent
purchases and sales of the securities.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

The principal risk of investing in the fund is market risk. Market risk
is the risk that a particular stock in the fund, the fund itself or
stocks in general may fall in value. As with any mutual fund investment,
loss of money is a risk of investing.

Because the fund is non-diversified, the fund is exposed to additional
market risk. A non-diversified fund may invest a relatively high
percentage of its assets in a limited number of issuers. Non-diversified
funds are more susceptible to any single political, regulatory or
economic occurrence and to the financial condition of individual issuers
in which it invests. The fund is also exposed to additional market risk
due to its policy of investing in accordance with an investment
strategy. As a result of this policy, securities held by the fund will
generally not be bought or sold in response to market fluctuations. The
fund's relative lack of diversity and limited management may subject
investors to greater market risk than other mutual funds.

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment

Maximum Sales Charge Imposed on Purchases NONE
Maximum Sales Charge Imposed on Reinvested Dividends NONE
Maximum Deferred Sales Charge NONE
Redemption Fees NONE
Exchange Fee NONE
Maximum Account Fee NONE

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

Example:
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

This example assumes that you invest $10,000 in the fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The example also assumes that your investment has a 5% return
each year and that the fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

1 year 3 years

____________________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through _________, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia Life Assurance Corporation
("American Skandia") for administrative costs. See "Management Fees and
Expenses."

$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

Page 3

THE DOW (sm) TARGET 10 PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

____________________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through ________, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia for administrative costs. See
"Management Fees and Expenses."

1 year 3 years
$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

Page 4

GLOBAL TARGET 15 PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund seeks its objective by investing in common stocks issued by
companies that are expected to provide income and to have the potential
for capital appreciation. To select the stocks for the fund, the
investment adviser follows a disciplined investment strategy that
invests primarily in the common stocks of the companies which are
components of the DJIA, the Financial Times Industrial Ordinary Share
Index ("FT Index") and the Hang Seng Index. The fund consists of common
stocks of the five companies with the lowest per share stock price of
the ten companies in each of the DJIA, FT Index and Hang Seng Index,
respectively, that have the highest dividend yield in the respective
index as of the close of business on or about the applicable stock
selection date. The initial portfolio will primarily consist of the
stocks selected by the strategy on or about _______. Beginning January
1, 2000, the portfolio will be adjusted annually on or about January 1
in accordance with the investment strategy. See "Description of
Indices" for a description of the DJIA, FT Index and Hang Seng Index.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

The principal risk of investing in the fund is market risk. Market risk
is the risk that a particular stock in the fund, the fund itself or
stocks in general may fall in value. The fund's investment in foreign
stock presents additional risk including currency risk. Foreign
companies may be affected by adverse political, diplomatic and economic
developments, changes in foreign currency exchange rates, taxes, less
publicly available information and other factors. As with any mutual
fund investment, loss of money is a risk of investing.

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

1 year 3 years
$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

_________________________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through ________, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia for administrative costs. See
"Management Fees and Expenses."

Page 5

TARGET 10 LARGE CAP PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund primarily consists of a portfolio of 10 common stocks selected
each year through the following three-step process from a pre-screened
subset of the stocks listed on the S&P 500 Index as of close of business
on or about the applicable stock selection date. The first step begins
by selecting the 250 largest companies based on market capitalization in
the S&P 500 Index. From the 250 companies identified in the first step,
the second step selects the 125 companies with the lowest price to sales
ratios. Finally, of the remaining companies, the 10 companies which had
the greatest 1-year stock price appreciation are selected for the fund.
The initial portfolio will primarily consist of the stocks selected by
the strategy on or about _______. Beginning January 1, 2000, the
portfolio will be adjusted annually on or about January 1 in accordance
with the investment strategy.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment
Maximum Sales Charge Imposed on Purchases NONE
Maximum Sales Charge Imposed on Reinvested Dividends NONE
Maximum Deferred Sales Charge NONE
Redemption Fees NONE
Exchange Fee NONE
Maximum Account Fee NONE

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management and Administrative Fee .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

Example

This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

______________________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through ________, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia for administrative costs. See
"Management Fees and Expenses."
each year and that the fund's operating expenses remain the same.
Although your actual costs may be higher or lower, based on these
assumptions your costs would be:

1 year 3 years

$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

Page 6

TARGET 15 LARGE CAP PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund seeks its objective by investing in common stocks issued by
companies that are expected to have the potential for capital
appreciation. To select the stocks for the fund, the investment adviser
follows a disciplined investment strategy that invests primarily in the
common stocks of fifteen companies selected from a pre-screened subset
of the stocks included in the Nasdaq-100 Index as of the close of
business on or about the applicable stock selection date. See
"Description of Indices" for a description of the Nasdaq-100 Index.

The fund primarily consists of a portfolio of fifteen common stocks
selected each year through the following multi-step process from a pre-
screened subset of the stocks listed on the Nasdaq-100 Index as of the
close of business on or about the applicable stock selection. The first
step begins by removing all known buyout candidates from the securities
in the index. The second step ranks each security by price appreciation
over the prior twelve-month period. The third step ranks the same
securities by price appreciation over the prior six-month period. The
combined effect of the second and third step is to select stocks which
have shown consistent growth over the past year. The fourth step ranks
each security by their ratio of cash flow per share to price. This is a
common indication of value. After ranking each of the securities in each
of the four criteria, the resulting four rankings are added up for each
security. Those fifteen securities with the lowest sums are selected for
the portfolio. The initial portfolio will primarily consist of the
stocks selected by the strategy on or about _______. Beginning January
1, 2000, the portfolio will be adjusted annually on or about January 1
in accordance with the investment strategy.

Each year, on or about the stock selection date, the fund expects to
invest in the securities determined by the strategy. These securities
will be weighted by market capitalization subject to the restriction
that no stock will comprise less than 1% or more than 25% of the
portfolio as of the stock selection date. At that time, the percentage
relationship among the numbers of shares of each issuer held by the fund
is established. Through the next one-year period that percentage
relationship will be maintained as closely as practicable when the fund
makes subsequent purchases and sales of the securities.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

The principal risk of investing in the fund is market risk. Market risk
is the risk that a particular stock in the fund, the fund itself or
stocks in general may fall in value. The fund's potential investment in
foreign stocks presents additional risk including currency risk.
Foreign companies may be affected by adverse political, diplomatic and
economic developments, changes in foreign currency exchange rates,
taxes, less publicly available information and other factors. As with
any mutual fund investment, loss of money is a risk of investing.

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
___________________ ______
Total Annual Fund Operating Expenses 1.37%

Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

_____________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through _______, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia for administrative costs. See
"Management Fees and Expenses."

Page 7

1 year 3 years
$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

Page 8

TARGET SMALL CAP PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average total return.

How the Fund Pursues its Objective

The fund seeks its objective by investing in common stocks issued by
companies that are expected to have the potential for capital
appreciation. To select the stocks for the fund, the investment adviser
follows a disciplined investment strategy that invests primarily in the
common stocks of small capitalization companies selected from a pre-
screened subset of the common stocks listed on the New York Stock
Exchange ("NYSE"), the American Stock Exchange ("AMEX") or The Nasdaq
Stock Market ("Nasdaq") as of the close of business on or about the
applicable stock selection each year.

The fund primarily consists of a portfolio of 40 common stocks selected
annually on or about the applicable stock selection date through the
following six-step process. The first step selects all U.S. registered
corporations which trade on the NYSE, AMEX or Nasdaq (excluding limited
partnerships, American Depositary Receipts and mineral and oil royalty
trusts). The second step selects only those companies which, based on
1997 dollars, have a market capitalization of between $150 million and
$1 billion and whose stock has an average daily dollar trading volume of
at least $500,000. The third step selects those stocks with positive
three-year sales growth. The fourth step selects those stocks whose most
recent annual earnings are positive. The fifth step eliminates any stock
whose price has appreciated by more than 75% in the last 12 months.
Finally, from this list, the 40 stocks with the greatest price
appreciation in the last 12 months are purchased on a relative market
capitalization basis (highest to lowest). In each of the above steps,
monthly and rolling quarterly data are used in place of annual figures
where possible. In addition, companies which, based on publicly
available information, are the subject of an announced business
combination which is expected to be concluded within six months of the
annual stock selection date, will be excluded from the fund. The initial
portfolio will primarily consist of the stocks selected by the strategy
on or about _______. Beginning January 1, 2000, the portfolio will be
adjusted annually on or about January 1 in accordance with the
investment strategy.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

The principal risk of investing in the fund is market risk. Market risk
is the risk that a particular stock in the fund, the fund itself or
stocks in general may fall in value. The fund's investment in small-cap
companies presents additional risk. The fund's potential investment in
foreign stocks presents additional risk including currency risk.
Foreign companies may be affected by adverse political, diplomatic and
economic developments, changes in foreign currency exchange rates,
taxes, less publicly available information and other factors. As with
any mutual fund investment, loss of money is a risk of investing.

Fund Expenses

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

_______________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through _______, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of average daily net
assets paid to reimburse American Skandia for administrative costs. See
"Management Fees and Expenses."

Page 9

Example

This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

1 year 3 years
$_______ $_______

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

Page 10

10 UNCOMMON VALUES PORTFOLIO

Fund Overview

Investment Objective

The fund seeks to provide above-average capital appreciation.

How the Fund Pursues its Objective

The fund seeks its objective by investing primarily in the ten common
stocks selected by the Investment Policy Committee of Lehman Brothers
Inc. ("Lehman Brothers") with the assistance of the Research Department
of Lehman Brothers which, in the opinion of Lehman Brothers, have the
greatest potential for capital appreciation during the next year. The
stocks included in the fund are adjusted annually on or about
________________ in accordance with the selections of Lehman Brothers.

Each year, on or about the annual stock selection date, the fund expects
to invest in the securities determined by Lehman Brothers in relatively
equal amounts. At that time, the percentage relationship among the
numbers of shares of each issuer held by the fund is established.
Through the next one-year period that percentage relationship will be
maintained as closely as practicable when the fund makes subsequent
purchases and sales of the securities.

The fund may also invest in futures, options, warrants, forward
contracts and repurchase agreements.

What are the Risks of Investing in the Fund?

Fund Expenses

Shareholder Fees (1)
Paid Directly from Your Investment

Annual Fund Operating Expenses (2)
Paid from Fund Assets

Management Fees .60%
12b-1 Fees .25%
Other Expenses (3) .52%
_____________________________________________________________________
Total Annual Fund Operating Expenses 1.37%

Example
This example is intended to help you compare the cost of investing in
the fund with the cost of investing in other mutual funds.

1 year 3 years
$_______ $_______

_________________

1 As a percentage of offering price.

2 The percentages shown are based on estimated amounts for the current
fiscal year and are reflected as percentages of average net assets.
Actual expenses may be greater or lesser than those shown. The
investment adviser has agreed to waive fees and reimburse expenses
through _______, 2000 in order to prevent Total Annual Fund Operating
Expenses (excluding brokerage expenses and extraordinary expenses) from
exceeding 1.37% of the average daily net asset value of the Fund.

3 Included in Other Expenses is a fee of .22% of daily net assets paid
to reimburse American Skandia for administrative costs. See "Management
Fees and Expenses."

You would pay the following expenses if you did not redeem your shares:

1 year 3 years
$_______ $_______

The fund is not advised or created by Lehman Brothers. Lehman Brothers'
only relationship to the fund is the licensing of certain trademarks and
tradenames of Lehman Brothers and of the "10 Uncommon Values" to First
Trust Advisors, L.P. ("First Trust") (the fund's investment adviser) on
behalf of the fund and the sale of research to First Trust.
Research is determined, composed and calculated by Lehman Brothers
without regard to First Trust or the fund.

Page 11

Fund Organization

Each fund is a series of the First Defined Portfolio Fund LLC (the
"Registrant"), a nondiversified open-end management investment company
registered under the Investment Company Act of 1940. Each fund
constitutes a separate mutual fund with its own investment objective and
policies. The Registrant is organized as a Delaware limited liability
company. Its Board of Managers is responsible for its overall management
and direction. The Board elects the Registrant's officers and approves
all significant agreements including those with the investment adviser,
custodian and fund accounting agent. Board members are elected by owners
of the Registrant's interests.

Under Delaware law, a limited liability company does not issue shares of
stock. Instead, ownership rights are contained in "membership
interests". Each interest of a fund represents an undivided interest in
the securities held in the fund's portfolio. The funds are not offered
directly to the public. Interests of the funds are sold only to American
Skandia Life Assurance Corporation Variable Account B ("Account B") to
fund the benefits of variable annuity policies (the "Policies") issued
by American Skandia Life Assurance Corporation ("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 beneficial rights in the Registrant's interests.

The following funds are the series of the Registrant: The Dow (sm) Target 5
Portfolio, The Dow (sm) Target 10 Portfolio, Global Target 15 Portfolio,
Target 10 Large Cap Portfolio, Target 15 Large Cap Portfolio, Target
Small Cap Portfolio and 10 Uncommon Values Portfolio. The funds seek
their investment objectives by investing their assets primarily in
accordance with a particular investment strategy. The funds' portfolios
are generally adjusted annually to reflect the strategies most recent
selections. (See "Fund Overview" for each fund for a description of the
investment strategies).

Fund Management

The overall management of the business and affairs of the funds is the
responsibility of the Board of Managers of the funds.

First Trust Advisors L.P. ("First Trust"), 1001 Warrenville Road, Lisle,
Illinois, 60532, is the investment adviser to the funds. In this capacity,
First Trust is responsible for the selection and ongoing monitoring of the
securities in the funds' portfolios, managing the funds' business
affairs and providing certain clerical, bookkeeping and other
administrative services.

First Trust is a limited partnership with one limited partner, Grace
Partners of Dupage L.P., and one general partner, Nike Securities
Corporation. Grace Partners of Dupage L.P. is a limited partnership
with one general partner, Nike Securities Corporation, and a number of
limited partners. Nike Securities Corporation is an Illinois
corporation controlled by Robert Donald Van Kampen. First Trust
discharges its responsibilities subject to the policies of the Board of
Managers of the funds.

First Trust has approximately $11 billion in assets under management or
supervision. First Trust serves as subadvisor for 6 mutual funds and is
also the portfolio supervisor of unit investment trusts sponsored by
Nike Securities L.P. ("Nike Securities"), some of which are
substantially similar to the funds. Nike Securities specializes in the
underwriting, trading and distribution of unit investment trusts and
other securities. Nike Securities is the sponsor and principal
underwriter of the funds' shares and has sponsored or underwritten
approximately $___ billion of investment company shares.

There is no one individual primarily responsible for portfolio
management decisions for the funds. Investments are made under the
direction of a committee. For additional information concerning First
Trust, including a description of the services provided, see the
Statement of Additional Information.

Management Fees and Expenses

For providing management services, First Trust is paid an annual fund
management fee by each fund of 0.60% of average daily net assets.

Each fund pays for its own operating expenses such as custodial,
transfer agent, administrative, accounting and legal fees; brokerage
commissions; distribution and service fees; licensing fees (if
applicable); organizational expenses; extraordinary expenses; and its
portion of the Registrant's operating expenses.

Each fund also pays a administrative fee of 0.22% of average daily net
assets to cover expenses incurred by American Skandia in connection with
the administration of Account B and the Policies. See the Statement of
Additional Information for an additional discussion of fund expenses.

Page 12

Fund Investments

Equity Securities

Each fund invests primarily in equity securities. Eligible equity
securities include common stocks; warrants to purchase common stocks;
and securities convertible into common stocks, such as convertible bonds
and debentures. In addition, the Global Target 15 Portfolio, the Target
15 Large Cap Portfolio and the Target Small-Cap Portfolio may invest in
equity securities of foreign issuers, including depositary receipts that
represent foreign common stocks deposited with a custodian.

Short-Term Investments

Each fund may invest in cash equivalents or other short-term investments
including U.S. government securities, commercial paper, repurchase
agreements, money-market funds or similar fixed-income securities with
remaining maturities of one year or less. For more information on short-
term investments, see the Statement of Additional Information.

Futures and Options

Each fund may invest in various investment strategies designed to hedge
against changes in the values of securities the fund owns or expects to
purchase or to hedge against interest rate changes. The securities used
to implement these strategies include financial futures contracts,
options, forward contracts, options on financial futures and stock index
options.

Delayed Delivery Securities

Each fund may buy or sell securities on a when-issued or delayed-
delivery basis, paying for or taking delivery of the securities at a
later date, normally within 15 to 45 days of the trade. Such
transactions involve an element of risk because the value of the
securities to be purchased may decline before the settlement date.

How Securities Are Selected

To select securities for the funds, First Trust primarily follows a
disciplined investment strategy that invests in the common stocks
determined by the strategy. Beginning January 1, 2000, the portfolio of
each fund is adjusted annually on or about the funds' annual stock
selection date of January 1 (other than the 10 Uncommon Values Portfolio
which is adjusted each ________), in accordance with the applicable
investment strategy. On the annual stock selection date for a fund, a
percentage relationship among the number of securities in the fund will
be established. When additional assets are deposited into the fund,
additional securities will be purchased in such numbers that reflect as
nearly as practicable the percentage relationship of the number of
securities established on the annual stock selection date. First Trust
will likewise attempt to replicate the percentage relationship of
securities when selling securities for a fund. The percentage
relationship among the number of securities in a fund should therefore
remain relatively stable. However, given the fact that the market price
of such securities will vary throughout the year, the value of the
securities of each of the companies as compared to the total assets of a
fund will fluctuate during the year, above and below the proportion
established on the annual stock selection date. At the annual stock
selection date for a fund, new securities will be selected and a new
percentage relationship will be established among the number of
securities for the fund.

It is generally not possible for First Trust to purchase round lots
(usually 100 shares) of stocks in amounts that will precisely duplicate
the prescribed mix of securities. Also, it usually is impossible for a
fund to be 100% invested in the prescribed mix of securities at any
time. To the extent that a fund is not fully invested, the interests of

Page 13

variable annuity Policy owners may be diluted and total return may not
directly track the investment results of the prescribed mix of
securities. To minimize this effect, First Trust will generally try, as
much as practicable, to maintain a minimum cash position at all times.
Normally, the only cash items held by a fund are amounts expected to be
deducted as expenses and amounts too small to purchase additional round
lots of the securities.

Investment Limitations

The funds have adopted certain investment limitations (based on total
assets) that cannot be changed without interest holder approval and are
designed to limit your investment risk. Such limitations are described
in the Statement of Additional Information.

Hedging and Other Defensive and Temporary Investment Strategies

Although the funds have no present intentions to vary from their
investment strategies under any circumstances, the funds may invest up
to 100% of their assets in cash equivalents and shortterm investments as
a temporary defensive measure in response to adverse market conditions,
or to keep cash on hand fully invested. During these periods, a fund may
not be able to achieve its investment objective.

First Trust may also use various investment strategies designated to
hedge against changes in the value of securities a fund owns or expects
to purchase or to hedge against interest rate changes. These hedging
strategies include using financial futures contracts, options, options
on financial futures, or stock index options. The ability of a fund to
benefit from options and futures is largely dependent on First Trust's
ability to use such strategies successfully. A fund could lose money on
futures transactions or an option can expire worthless.

Each fund's investment objective may not be changed without interest
holder approval. The above investment policies may be changed by the
Board of Managers without interest holder approval unless otherwise
noted in this prospectus or the Statement of Additional Information.

Portfolio Turnover

A fund buys and sells portfolio securities in the normal course of its
investment activities. The proportion of the fund's investment portfolio
that is sold and replaced with new securities during a year is known as
the fund's portfolio turnover rate. The funds anticipate that their
annual portfolio turnover rate will generally be between 20% and 100%. A
turnover rate of 100% would occur, for example, if a fund sold and
replaced securities valued at 100% of its net assets within one year.
Active trading would result in the payment by the fund of increased
brokerage costs and could result in the payment by interest holders of
increased taxes on realized investment gains.

Description of Indices

The portfolios of certain of the funds consist of the common stocks of
companies listed on various indices. A description of certain of the
indices is provided below.

The Dow Jones Industrial Average (sm)

The stocks included in the DJIA are chosen by the editors of The Wall
Street Journal as representative of the broad market and of American
industry. The companies are major factors in their industries and their
stocks are widely held by individuals and institutional investors.

The Financial Times Industrial Ordinary Share Index

The FT Index is comprised of 30 common stocks chosen by the editors of
The Financial Times as representative of the British industry and
commerce. This index is an unweighted average of the share prices of
selected companies. These companies are highly capitalized and major
factors in their industries. In addition, their stocks are widely held
by individuals and institutional investors.

Page 19

The Hang Seng Index

The Hang Seng Index presently consists of 33 of the 358 stocks currently
listed on the Stock Exchange of Hong Kong Ltd. (the "Hong Kong Stock
Exchange"), and it includes companies intended to represent four major
market sectors: commerce and industry, finance, properties and
utilities. The Hang Seng Index is a recognized indicator of stock market
performance in Hong Kong. It is computed on an arithmetic basis,
weighted by market capitalization, and is therefore strongly influenced
by stocks with large market capitalizations. The Hang Seng Index
represents approximately 70% of the total market capitalization of the
stocks listed on the Hong Kong Stock Exchange.

The Nasdaq-100 Index

The Nasdaq-100 Index represents the largest and most active non-
financial domestic and international issues listed on the Nasdaq Stock
Market(r). The index is calculated based on a modified capitalization
weighted methodology. The Nasdaq Stock Market lists nearly 5,400
companies and trades more shares per day than any other major U.S. market.

The Standard & Poor's 500 Index

Widely regarded as the standard for measuring large-cap U.S. stock
market performance, the S&P 500 Index includes a representative sample
of leading U.S. companies in leading industries. The S&P 500 Index
consists of 500 stocks chosen for market size, liquidity and industry
group representation. It is a market-value weighted index with each
stocks' weight in the Index proportionate to its market value.

Except as previously described, the publishers of the indices have not
granted the funds or First Trust a license to use their respective
index. The funds are not designed so that prices will parallel or
correlate with the movements in any particular index or a combination of
indices and it is expected that their prices will not parallel or
correlate with such movements. The publishers of the indices have not
participated in any way in the creation of the funds or in the selection
of stocks in the funds.

Risk Factors

Risk is inherent in all investing. Investing in the funds involves risk,
including the risk that you may lose all or part of your investment.
There can be no assurance that a fund will meet its stated objective.
Before you invest, you should consider the following risks.

Market risk: Market risk is the risk that a particular stock, an
industry, a mutual fund or stocks in general may fall in value.

Small-cap company risk: Certain funds may invest in small capitalization
companies. Such companies may be more vulnerable to adverse general
market or economic developments, may be less liquid and may experience
greater price volatility than larger capitalization companies.
Accordingly, such companies are generally subject to greater market risk
than larger capitalization companies.

Inflation risk: Inflation risk is the risk that the value of assets or
income from investments will be less in the future as inflation
decreases the value of money. As inflation increases, the value of the
funds' assets can decline as can the value of the funds' distributions.

Foreign investment risk: Certain funds may invest in foreign securities.
Securities issued by foreign companies or governments present risks
beyond those of securities of U.S. issuers. Such companies may be
affected by adverse political, diplomatic, and economic developments,
changes in foreign currency exchange rates, taxes, less publicly
available information and other factors. Prices of foreign securities
also may be more volatile and they may be less liquid than U.S. stocks.

Concentration risk: Each fund is classified as "non-diversified." As a
result, each fund is only limited as to the percentage of its assets
which may be invested in the securities of any one issuer by its own
investment restrictions and by the diversification requirements imposed
by the Internal Revenue Code of 1986, as amended. Since each fund may
invest a relatively high percentage of its assets in a limited number of
issuers, each fund may be more susceptible to any single economic,

Page 20

political or regulatory occurrence and to the financial conditions of
the issuers in which it invests.

Limited management risk: The funds are exposed to additional market risk
due to their policy of investing in accordance with an investment
strategy. As a result of this policy, securities held by a fund will
generally not be bought or sold in response to market fluctuations. This
policy may subject investors to greater market risk than other mutual
funds.

Year 2000 Disclosure

First Trust and the funds' service providers each rely on computer
systems to manage the funds' investments, process transactions and
provide account maintenance. Because of the way computers historically
have stored dates, some of these systems currently may not be able to
correctly process activity occurring in the year 2000. First Trust is
working with the funds' service providers to adapt their systems to
address this "Year 2000" issue. First Trust and the funds expect, but
there can be no absolute assurance, that the necessary work will be
completed on a timely basis.

Investment in Fund Interests

Interests of the funds are sold only to Account B to fund the benefits
of the Policies issued by American Skandia. Account B purchases
interests of the funds in accordance with variable account allocation
instructions received from owners of the Policies. First Trust then uses
the proceeds to buy securities for the funds. Account B, as an interest
holder, has an ownership in the funds' investments.

The funds do not issue interest certificates. Individual investors may
not purchase or redeem interests in the funds directly; interests may be
purchased or redeemed only through the Policies. There are no minimum
investment requirements. All investments in a fund are credited to the
interest holder's account in the form of full and fractional interests
of the designated fund (rounded to the nearest 1/1000 of a share). For a
discussion of how Policy owners may purchase fund interests, please
refer to the prospectus for Account B. Owners of the Policies may direct
purchase or redemption instructions to American Skandia at ___________
(800) ______________.

The price received for purchase requests will depend on when the funds'
transfer agent receives the order. Orders received before the close of
trading on a business day will receive that day's closing price,
otherwise the next business day's price will be received. A business day
is any day the New York Stock Exchange is open for business and normally
ends at 4 p.m. New York time. See "Net Asset Value" for a discussion of
how interests are priced.

Interest Redemption

Each fund also offers to buy back (redeem) interests of the fund from
Account B at any time at net asset value. Account B will redeem
interests to make benefit or surrender payments under the terms of the
Policies. Redemptions are processed on any day on which the funds are
open for business and are effected at the net asset value next
determined after the redemption order, in proper form, is received by
the funds' transfer agent. The price received for redemption requests
will depend on when the funds' transfer agent receives the order. Orders
received before the close of trading on a business day will receive that
day's closing price, otherwise the next business day's price will be
received. For a discussion of how Policy owners may redeem interests,
please refer to the prospectus for Account B.

A fund may suspend the right of redemption only under the following
unusual circumstances:

* when the New York Stock Exchange is closed (other
than weekends and holidays) or trading is restricted;

* when an emergency exists, making disposal of
portfolio securities or the valuation of net assets not reasonably
practicable; or

* during any period when the SEC has by order
permitted a suspension of redemption for the protection of interest
holders.

Page 21

Distributions and Taxes

Automatic Reinvestment

All dividends received by a fund will be reinvested into additional fund
shares.

Taxes and Tax Reporting

The Registrant is a limited liability company with all of its interests
owned by a single entity (Account B). Accordingly, the Registrant as
part of the operations of American Skandia and is not taxed separately.
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. For a discussion of the tax status of the
variable annuity Policy, please refer to the prospectus for Account B.

Internal Revenue Service Diversification Requirements

The funds intend to comply with the diversification requirements
currently imposed by the Internal Revenue Service on separate accounts
of insurance companies as a condition of maintaining the tax deferred
status of the variable annuity Policies issued by Account B. First Trust
reserves the right to depart from the investment strategy of a fund in
order to meet these diversification requirements. See the Statement of
Additional Information for more specific information.

12b-1 Plans

Nike Securities serves as the selling agent and distributor of the
funds' shares. In this capacity, Nike Securities manages the offering of
the funds' interests and is responsible for all sales and promotional
activities. In order to reimburse Nike Securities for its costs in
connection with these activities, each fund has adopted a service plan
under Rule 12b-1 under the Investment Company Act of 1940. Nike
Securities uses the service fee to compensate American Skandia for
providing account services to Policy owners. These services may include
establishing and maintaining Policy owners' accounts, answering
inquiries, and providing other personal services to Policy owners.
Because these fees are paid out of the fund's assets on an on-going
basis, over time these fees will increase the cost of your investment.
In addition, the Plan allows First Trust to use a portion of its
advisory fee to compensate Nike Securities for other expenses, including
printing and distributing prospectuses to persons other than interest
holders or Policy owners, and the expenses of preparing, printing and
distributing advertising and sales literature and reports to Interest
holders and Policy owners used in connection with the sale of interests.

Net Asset Value

The price of fund interests is based on a fund's net asset value per
interest which is determined as of the close of trading (normally 4:00
p.m. eastern time) on each day the New York Stock Exchange is open for
business. Net asset value is calculated for each fund by taking the
market price of the fund's total assets, including interest or dividends
accrued but not yet collected, less all liabilities, and dividing by the
total number of interests outstanding. The result, rounded to the
nearest cent, is the net asset value per interest. All valuations are
subject to review by the funds' Board of Managers or its delegate.

In determining net asset value, expenses are accrued and applied daily
and securities and other assets for which market quotations are
available are valued at market value. Common stocks and other equity
securities are valued at the last sales price that day. Common stocks
and other equity securities not listed on a national securities exchange
or Nasdaq are valued at the most recent bid prices. The prices of
fixedincome securities are provided by a pricing service and based on
the mean between the bid and asked price. When price quotes are not
readily available the pricing service establishes fair market value
based on prices of comparable securities.

For funds that hold securities that trade primarily on foreign
exchanges, the net asset value of a fund's shares may change on days
when interest holders will not be able to purchase or redeem the fund's
interests.

Page 22

Fund Service Providers

The custodian of the assets of the funds is The Chase Manhattan Bank, 4
New York Plaza, New York, NY 100042413. Chase also provides certain
accounting services to the funds. The funds' transfer, shareholder
services and dividend paying agent, First Data Investor Services Group,
Inc., 4400 Computer Drive, Westborough, Massachusetts 01581, performs
bookkeeping, data processing and administrative services for the
operation of the funds and the maintenance of shareholder accounts.

Shareholder Inquiries

All inquiries regarding the funds should be directed to the fund at
[insert address and telephone number].

Page 23

FIRST DEFINED PORTFOLIO FUND LLC

Several additional sources of information are available to you. The
Statement of Additional Information (SAI), incorporated by reference
into this prospectus, contains detailed information on the funds'
policies and operation. The SAI and the prospectus are intended for use
in connection with variable annuity policies offered by American Skandia
Life Assurance Corporation. Call ____________ at ______________ to
request a free copy of the SAI or for other fund information.

You may also obtain this and other fund information directly from the
Securities and Exchange Commission (SEC). The SEC may charge a copying
fee for this information. Visit the SEC on-line at http://www.sec.gov or
in person at the SEC's Public Reference Room in Washington, D.C. Call
the SEC at (800) SEC-0330 for room hours and operation. You may also
request fund information by writing to the SEC's Public Reference
Section, Washington, D.C. 20549.

First Defined Portfolio Fund LLC
1001 Warrenville Road, Suite 300
Lisle, Illinois 60532
(800) 621-1675
www.nikesec.com

File No. 811-_________

Page 24

PART B

STATEMENT OF ADDITIONAL INFORMATION

________________, 1999

FIRST DEFINED PORTFOLIO FUND LLC

This Statement of Additional Information is not a prospectus. It
contains information in addition to and more detailed than set forth in
the Prospectus and should be read in conjunction with the First Defined
Portfolio Fund LLC Prospectus, dated ___________, 1999. The Prospectus
may be obtained by calling (800) 766-4683, or writing 1001 Warrenville
Road, Suite 300, Lisle, Illinois 60532.

TABLE OF CONTENTS
PAGE
GENERAL INFORMATION AND HISTORY 1
INVESTMENT POLICIES 1
DESCRIPTION OF PORTFOLIOS 8
DESCRIPTION OF INDICES 10
INVESTMENT RISKS 12
FUND MANAGEMENT 17
PERFORMANCE 18
PERFORMANCE DATA OF INVESTMENT STRATEGIES 19
INVESTMENT ADVISORY AND OTHER SERVICES 21
PURCHASES, REDEMPTIONS AND PRICING OF INTERESTS 23
12B-1 PLAN 24
ADDITIONAL INFORMATION 24
TAX STATUS 24
FINANCIAL STATEMENTS 25

General Information and History

First Defined Portfolio Fund LLC (the "Registrant") is a non-
diversified, open-end management series investment company organized as
a Delaware limited liability company on January 8, 1999. Currently, the
Registrant has seven series authorized and outstanding (each a "Fund").
Each series of the Registrant represents interests in a separate
portfolio of securities and other assets, with its own objectives and
policies. The seven series of the Registrant are: The DowSM Target 5
Portfolio, The DowSM Target 10 Portfolio, Global Target 15 Portfolio,
Target 10 Large Cap Portfolio, Target 15 Large Cap Portfolio, Target
Small Cap Portfolio and 10 Uncommon Values Portfolio. Interests of the
Funds are sold only to American Skandia Life Assurance Corporation
Variable Account B ("Account B") to fund the benefits of variable
annuity policies issued by American Skandia Life Assurance Corporation
("American Skandia").

Investment Policies

Generally

The Prospectus describes the investment objectives and strategies of
each of the Funds. Each Fund is also subject to the following
fundamental policies which may not be changed without approval of the
holders of a majority of the outstanding voting interests of the Fund:

(1) A Fund may not issue senior securities, except as permitted
under the Investment Company Act of 1940.

(2) A Fund may not borrow money, except that a Fund may (i) borrow
money from banks for temporary or emergency purposes (but not for
leverage or the purchase of investments) and (ii) engage in other
transactions permissible under the Investment Company Act of 1940 that
may involve a borrowing (such as, obtaining short-term credits as are

Page 1

necessary for the clearance of transactions, engaging in delayed-
delivery transactions, or purchasing certain futures, forward contracts
and options), provided that the combination of (i) and (ii) shall not
exceed 331/3% of the value of the Fund's total assets (including the
amount borrowed), less the Fund's liabilities (other than borrowings).

(3) A Fund will not underwrite the securities of other issuers
except to the extent a Series may be considered an underwriter under the
Securities Act of 1933 in connection with the purchase and sale of
portfolio securities.

(4) A Fund will not purchase or sell real estate or interests
therein, unless acquired as a result of ownership of securities or other
instruments (but this shall not prohibit a Fund from purchasing or
selling securities or other instruments backed by real estate or of
issuers engaged in real estate activities).

(5) A Fund may not make loans to other persons, except through (i)
the purchase of debt securities permissible under the Fund's investment
policies, (ii) repurchase agreements, or (iii) the lending of portfolio
securities, provided that no such loan of portfolio securities may be
made by a Fund if, as a result, the aggregate of such loans would exceed
331/3% of the value of the Fund's total assets.

(6) A Fund may not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other instruments
(but this shall not prevent a Fund from purchasing or selling options,
futures contracts or other derivative instruments, or from investing in
securities or other instruments backed by physical commodities).

(7) A Fund may not pledge, mortgage or hypothecate any of its
assets except as may be necessary in connection with permissible
borrowings or investments and then such pledging, mortgaging, or
hypothecating may not exceed 331/3% of the Fund's total assets at the
time of the borrowing or investment.

The foregoing fundamental policies may not be changed without the
affirmative vote of the majority of the outstanding voting interests of
the Registrant (or of a particular Fund, if appropriate). The Investment
Company Act of 1940 ("1940 Act") defines a majority vote as the vote of
the lesser of (i) 67% of the voting interests represented at a meeting
at which more than 50% of the outstanding interests are represented or
(ii) more than 50% of the outstanding voting interests. With respect to
the submission of a change in an investment policy to the holders of
outstanding voting interests of a particular Fund, such matter shall be
deemed to have been effectively acted upon with respect to such Fund if
a majority of the outstanding voting interests of such Fund vote for the
approval of such matter, notwithstanding that (1) such matter has not
been approved by the holders of a majority of the outstanding voting
interests of any other Fund affected by such matter, and (2) such matter
has not been approved by the vote of a majority of the outstanding
voting Registrant interests. In addition to the foregoing fundamental
policies, the Funds are also subject to the following strategies and
policies which, unless otherwise noted, are non-fundamental restrictions
and policies which may be changed by the Board of Managers.

Warrants

Each Fund may invest in warrants. Warrants acquired by a Fund entitle it
to buy common stock from the issuer at a specified price and time. They
do not represent ownership of the securities but only the right to buy
them. Warrants are subject to the same market risks as stocks, but may
be more volatile in price. A Fund's investment in warrants will not
entitle it to receive dividends or exercise voting rights and will
become worthless if the warrants cannot be profitably exercised before
their expiration date.

Securities Lending

Each Fund may also lend portfolio securities to broker-dealers and
financial institutions to realize additional income. As a fundamental
policy, a Fund will not lend its portfolio securities or other assets,
if as a result, more than 33 1/3% of the Fund's total assets, including
collateral received, would be lent to broker-dealers or other parties.
Such loans will be secured continuously by collateral at least equal to
the value of the securities lent by "marking to market" daily. The Fund
will continue to receive the equivalent of the interest or dividends
paid by the issuer of the securities lent and will retain the right to
call, upon notice, the lent securities. The Fund may also receive
interest on the investment of the collateral or a fee from the borrower
as compensation for the loan. Securities loaned by a Fund remain
subject to fluctuations in market value. A Fund may pay reasonable
finders, custodian and administrative fees in connection with a loan.
As with other extensions of credit, there are risks of delay in recovery

Page 2

or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans will be made only to firms
deemed by First Trust to be of good standing.

During the period that a Fund seeks to enforce its rights against the
borrower, the collateral and the securities loaned remain subject to
fluctuations in market value. A Fund may also incur expenses in
enforcing its rights. If a Series has sold a loaned security, it may not
be able to settle the sale of the security and may incur potential
liability to the buyer of the security on loan for its costs to cover
the purchase.

Illiquid Securities

Each Fund may invest in illiquid securities (i.e., securities that are
not readily marketable). For purposes of this restriction, illiquid
securities include, but are not limited to, restricted securities
(securities the disposition of which is restricted under the federal
securities laws), securities that may only be resold pursuant to Rule
144A under the Securities Act of 1933, as amended (the "Securities
Act"), but that are deemed to be illiquid; and repurchase agreements
with maturities in excess of seven days. However, a Fund will not
acquire illiquid securities if, as a result, such securities would
comprise more than 15% of the value of the Fund's net assets. The Board
of Managers or its delegates has the ultimate authority to determine, to
the extent permissible under the federal securities laws, which
securities are liquid or illiquid for purposes of this 15% limitation.
The Board of Managers has delegated to First Trust the daytoday
determination of the illiquidity of any equity or fixedincome security,
although it has retained oversight and ultimate responsibility for such
determinations. Although no definitive liquidity criteria are used, the
Board of Managers has directed First Trust to look to such factors as
(i) the nature of the market for a security (including the institutional
private resale market; the frequency of trades and quotes for the
security; the number of dealers willing to purchase or sell the
security; and the amount of time normally needed to dispose of the
security, the method of soliciting offers and the mechanics of
transfer), (ii) the terms of certain securities or other instruments
allowing for the disposition to a third party or the issuer thereof
(e.g., certain repurchase obligations and demand instruments), and (iii)
other permissible relevant factors.

Restricted securities may be sold only in privately negotiated
transactions or in a public offering with respect to which a
registration statement is in effect under the Securities Act. Where
registration is required, a Fund may be obligated to pay all or part of
the registration expenses and a considerable period may elapse between
the time of the decision to sell and the time a Fund may be permitted to
sell a security under an effective registration statement. If, during
such a period, adverse market conditions were to develop, a Fund might
obtain a less favorable price than that which prevailed when it decided
to sell. Illiquid securities will be priced at fair value as determined
in good faith by the Board of Managers or its delegate. If, through the
appreciation of illiquid securities or the depreciation of liquid
securities, a Fund should be in a position where more than 15% of the
value of its net assets are invested in illiquid securities, including
restricted securities which are not readily marketable, the affected
Fund will take such steps as is deemed advisable, if any, to protect
liquidity.

Security-related Issuers

Each Fund is seeking exemptive relief from the Securities and Exchange
Commission to allow the Funds to invest more than 5% of their assets in
the securities of any issuer that derives more than 15 percent of its
gross revenue from "securities related activities" (as defined in Rule
12d3-1 under the Investment Company Act of 1940). Until such relief is
received, despite any investment strategy, the Funds will not be able to
invest more than 5% of their assets in such issuers.

Money Market Funds

Each Fund may invest in shares of money market funds to the extent
permitted by the Investment Company Act of 1940.

Temporary Investments

Each Fund may, without limit as to percentage of assets, purchase U.S.
government securities or shortterm debt securities to keep cash on hand
fully invested or for temporary defensive purposes. Short-term debt
securities are securities from issuers having a longterm debt rating of
at least A or higher by Standard & Poor's Ratings Group ("S&P"), Moody's
Investors Service, Inc. ("Moody's") or Fitch IBCA, Inc. ("Fitch"), or A-
or higher by Duff & Phelps, Inc. ("D&P") and having a maturity of one
year or less.

Page 3

Short-term debt income securities are defined to include, without
limitation, the following:

(1) Each Fund may invest in U.S. government securities, including
bills, notes and bonds differing as to maturity and rates of interest,
which are either issued or guaranteed by the U.S. Treasury or by U.S.
government agencies or instrumentalities. U.S. government agency
securities include securities issued by (a) the Federal Housing
Administration, Farmers Home Administration, ExportImport Bank of United
States, Small Business Administration, and the Government National
Mortgage Association, whose securities are supported by the full faith
and credit of the United States; (b) the Federal Home Loan Banks,
Federal Intermediate Credit Banks, and the Tennessee Valley Authority,
whose securities are supported by the right to the agency to borrow from
the U.S. Treasury; (c) the Federal National Mortgage Association, whose
securities are supported by the discretionary authority of the U.S.
government to purchase certain obligations of the agency or
instrumentality; and (d) the Student Loan Marketing Association, whose
securities are supported only by its credit. While the U.S. government
provides financial support to such U.S. government-sponsored agencies or
instrumentalities, no assurance can be given that it always will do so
since it is not so obligated by law. The U.S. government, its agencies,
and instrumentalities do not guarantee the market value of their
securities, and consequently, the value of such securities may fluctuate.

(2) Each Fund may invest in certificates of deposit issued against
funds deposited in a bank or savings and loan association. Such
certificates are for a definite period of time, earn a specified rate of
return, and are normally negotiable. If such certificates of deposit are
non-negotiable, they will be considered illiquid securities and be
subject to a Fund's 15% restriction on investments in illiquid
securities. Pursuant to the certificate of deposit, the issuer agrees to
pay the amount deposited plus interest to the bearer of the certificate
on the date specified thereon. Under current FDIC regulations, the
maximum insurance payable as to any one certificate of deposit is
$100,000; therefore; certificates of deposit purchased by a Fund may not
be fully insured.

(3) Each Fund may invest in bankers' acceptances which are short-
term credit instruments used to finance commercial transactions.
Generally, an acceptance is a time draft drawn on a bank by an exporter
or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on
its maturity date. The acceptance may then be held by the accepting bank
as an asset or it may be sold in the secondary market at the going rate
of interest for a specific maturity.

(4) Each Fund may invest in repurchase agreements which involve
purchases of debt securities. In such an action, at the time the Fund
purchases the security, it simultaneously agrees to resell and redeliver
the security to the seller, who also simultaneously agrees to buy back
the security at a fixed price and time. This assures a predetermined
yield for a Fund during its holding period since the resale price is
always greater than the purchase price and reflects an agreed-upon
market rate. The period of these repurchase agreements will usually be
short, from overnight to one week, and at no time will a Fund invest in
repurchase agreements for more than one year. Such actions afford an
opportunity for a Fund to invest temporarily available cash. A Fund may
enter into repurchase agreements only with respect to obligations of the
U.S. government, its agencies or instrumentalities; certificates of
deposits; or bankers acceptances in which the Fund may invest. The risk
to a Fund is limited to the ability of the seller to pay the agreed-upon
sum on the repurchase date; in the event of default, the repurchase
agreement provides that the affected Series is entitled to sell the
underlying collateral. If the value of the collateral declines after the
agreement is entered into, however, and if the seller defaults under a
repurchase agreement when the value of the underlying collateral is less
than the repurchase price, a Fund could incur a loss of both principal
and interest. The Fund, however, intends to enter into repurchase
agreements only with financial institutions believed by First Trust to
present minimal credit risks in accordance with criteria established by
the Fund's Board of Managers. First Trust will review and monitor the
creditworthiness of such institutions under the Board of Managers. The
portfolio manager monitors the value of the collateral at the time the
action is entered into and at all times during the term of the
repurchase agreement. The portfolio manager does so in an effort to
determine that the value of the collateral always equals or exceeds the
agreed-upon repurchase price to be paid to a Fund. If the seller were to
be subject to a federal bankruptcy proceeding, the ability of a Fund to
liquidate the collateral could be delayed or impaired because of certain
provisions of the bankruptcy laws.

(5) Each Fund may invest in bank time deposits, which are monies
kept on deposit with banks or savings and loan associations for a stated
period of time at a fixed rate of interest. There may be penalties for
the early withdrawal of such time deposits, in which case the yields of
these investments will be reduced.

Page 4

(6) Each Fund may invest in commercial paper, which are short-term
unsecured promissory notes, including variable rate master demand notes
issued by corporations to finance their current operations. Master
demand notes are direct lending arrangements between a Fund and a
corporation. There is no secondary market for the notes. However, they
are redeemable by the Fund at any time. The portfolio manager will
consider the financial condition of the corporation (e.g., earning
power, cash flow, and other liquidity ratios) and will continuously
monitor the corporation's ability to meet all of its financial
obligations, because a Fund's liquidity might be impaired if the
corporation were unable to pay principal and interest on demand. A Fund
may only invest in commercial paper rated A-1 or better by S&P, Prime-1
or higher by Moody's, Duff 2 or higher by D&P or Fitch 2 or higher by
Fitch.

Hedging Strategies

General Description of Hedging Strategies

A Fund may engage in hedging activities. First Trust may cause a Fund to
utilize a variety of financial instruments, including options, futures
contracts (sometimes referred to as "futures"), and options on future
contracts to attempt to hedge the Fund's holdings.

Hedging or derivative instruments on securities generally are used to
hedge against price movements in one or more particular securities
positions that a Fund owns or intends to acquire. Such instruments may
also be used to "lockin" realized but unrecognized gains in the value of
portfolio securities. Hedging instruments on stock indices, in contrast,
generally are used to hedge against price movements in broad equity
market sectors in which a Series has invested or expects to invest.
Hedging strategies, if successful, can reduce the risk of loss by wholly
and partially offsetting the negative effect of unfavorable price
movements in the investments being hedged. However, hedging strategies
can also reduce the opportunity for gain by offsetting the positive
effect of favorable price movements in the hedged investments. The use
of hedging instruments is subject to applicable regulations of the
Securities and Exchange Commission (the "SEC"), the several options and
futures exchanges upon which they are traded, the Commodity Futures
Trading Commission (the "CFTC") and various state regulatory
authorities. In addition, a Fund's ability to use hedging instruments
will be limited by tax considerations.

General Limitations on Futures and Options Transactions

The Registrant has filed a notice of eligibility for exclusion from the
definition of the term "commodity pool operator" with the CFTC and the
National Futures Association, which regulate trading in the futures
markets. Pursuant to Section 4.5 of the regulations under the Commodity
Exchange Act (the "CEA"), the notice of eligibility for a Fund includes
the representation that the Fund will use futures contracts and related
options solely for bona fide hedging purposes within the meaning of CFTC
regulations. A Fund will not enter into futures and options transactions
if the sum of the initial margin deposits and premiums paid for
unexpired options exceeds 5% of a Fund's total assets. In addition, a
Fund will not enter into futures contracts and options transactions if
more than 30% of its net assets would be committed to such instruments.

The foregoing limitations are not fundamental policies of a Fund and may
be changed without shareholder approval as regulatory agencies permit.
Various exchanges and regulatory authorities have undertaken reviews of
options and futures trading in light of market volatility. Among the
possible actions that have been presented are proposals to adopt new or
more stringent daily price fluctuation limits for futures and options
transactions and proposals to increase the margin requirements for
various types of futures transactions.

Asset Coverage for Futures and Options Positions

Each Fund will comply with the regulatory requirements of the SEC and
the CFTC with respect to coverage of options and futures positions by
registered investment companies and, if the guidelines so require, will
set aside cash, U.S. government securities, high grade liquid debt
securities and/or other liquid assets permitted by the SEC and CFTC in a
segregated custodial account in the amount prescribed. Securities held
in a segregated account cannot be sold while the futures or options
position is outstanding, unless replaced with other permissible assets,
and will be markedtomarket daily.

Stock Index Options

A Fund may purchase stock index options, sell stock index options in
order to close out existing positions, and/or write covered options on
stock indexes for hedging purposes. Stock index options are put options
and call options on various stock indexes. In most respects, they are
identical to listed options on common stocks. The primary difference
between stock options and index options occurs when index options are
exercised. In the case of stock options, the underlying security, common

Page 5

stock, is delivered. However, upon the exercise of an index option,
settlement does not occur by delivery of the securities comprising the
index. The option holder who exercises the index option receives an
amount of cash if the closing level of the stock index upon which the
option is based is greater than, in the case of a call, or less than, in
the case of a put, the exercise price of the option. This amount of cash
is equal to the difference between the closing price of the stock index
and the exercise price of the option expressed in dollars times a
specified multiple.

A stock index fluctuates with changes in the market values of the stock
included in the index. For example, some stock index options are based
on a broad market index, such as the Standard & Poor's 500 or the Value
Line Composite Index or a narrower market index, such as the Standard &
Poor's 100. Indexes may also be based on an industry or market segment,
such as the AMEX Oil and Gas Index or the Computer and Business
Equipment Index. Options on stock indexes are currently traded on the
following exchanges: the Chicago Board of Options Exchange, the New York
Stock Exchange, the American Stock Exchange, the Pacific Stock Exchange,
and the Philadelphia Stock Exchange.

A Fund's use of stock index options is subject to certain risks.
Successful use by a Fund of options on stock indexes will be subject to
the ability of First Trust to correctly predict movements in the
directions of the stock market. This requires different skills and
techniques than predicting changes in the prices of individual
securities. In addition, a Fund's ability to effectively hedge all or a
portion of the securities in its portfolio, in anticipation of or during
a market decline through transactions in put options on stock indexes,
depends on the degree to which price movements in the underlying index
correlate with the price movements of the securities held by a Fund.
Inasmuch as a Fund's securities will not duplicate the components of an
index, the correlation will not be perfect. Consequently, each Fund will
bear the risk that the prices of its securities being hedged will not
move in the same amount as the prices of its put options on the stock
indexes. It is also possible that there may be a negative correlation
between the index and a Fund's securities which would result in a loss
on both such securities and the options on stock indexes acquired by the
Fund.

The hours of trading for options may not conform to the hours during
which the underlying securities are traded. To the extent that the
options markets close before the markets for the underlying securities,
significant price and rate movements can take place in the underlying
markets that cannot be reflected in the options markets. The purchase of
options is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary
portfolio securities transactions. The purchase of stock index options
involves the risk that the premium and transaction costs paid by a Fund
in purchasing an option will be lost as a result of unanticipated
movements in prices of the securities comprising the stock index on
which the option is based.

Certain Considerations Regarding Options

There is no assurance that a liquid secondary market on an options
exchange will exist for any particular option, or at any particular
time, and for some options no secondary market on an exchange or
elsewhere may exist. If a Fund is unable to close out a call option on
securities that it has written before the option is exercised, the Fund
may be required to purchase the optioned securities in order to satisfy
its obligation under the option to deliver such securities. If a Fund is
unable to effect a closing sale transaction with respect to options on
securities that it has purchased, it would have to exercise the option
in order to realize any profit and would incur transaction costs upon
the purchase and sale of the underlying securities.

The writing and purchasing of options is a highly specialized activity
which involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. Imperfect
correlation between the options and securities markets may detract from
the effectiveness of attempted hedging. Options transactions may result
in significantly higher transaction costs and portfolio turnover for the
Fund.

Futures Contracts

Each Fund may enter into futures contracts (hereinafter referred to as
"Futures" or "Futures Contracts"), including index Futures as a hedge
against movements in the equity markets, in order to hedge against
changes on securities held or intended to be acquired by a Fund or for
other purposes permissible under the CEA. Each Fund's hedging may
include sales of Futures as an offset against the effect of expected
declines in stock prices and purchases of Futures as an offset against
the effect of expected increases in stock prices. The Fund will not
enter into Futures Contracts which are prohibited under the CEA and
will, to the extent required by regulatory authorities, enter only into
Futures Contracts that are traded on national futures exchanges and are
standardized as to maturity date and underlying financial instrument.
The principal interest rate Futures exchanges in the United States are

Page 6

the Board of Trade of the City of Chicago and the Chicago Mercantile
Exchange. Futures exchanges and trading are regulated under the CEA by
the CFTC.

An interest rate futures contract provides for the future sale by one
party and purchase by another party of a specified amount of a specific
financial instrument (e.g., a debt security) or currency for a specified
price at a designated date, time and place. An index Futures Contract is
an agreement pursuant to which the parties agree to take or make
delivery of an amount of cash equal to the difference between the value
of the index at the close of the last trading day of the contract and
the price at which the index Futures Contract was originally written.
Transaction costs are incurred when a Futures Contract is bought or sold
and margin deposits must be maintained. A Futures Contract may be
satisfied by delivery or purchase, as the case may be, of the instrument
or by payment of the change in the cash value of the index. More
commonly, Futures Contracts are closed out prior to delivery by entering
into an offsetting transaction in a matching Futures Contract. Although
the value of an index might be a function of the value of certain
specified securities, no physical delivery of those securities is made.
If the offsetting purchase price is less than the original sale price, a
gain will be realized. Conversely, if the offsetting sale price is more
than the original purchase price, a gain will be realized; if it is
less, a loss will be realized. The transaction costs must also be
included in these calculations. There can be no assurance, however, that
a Fund will be able to enter into an offsetting transaction with respect
to a particular Futures Contract at a particular time. If a Fund is not
able to enter into an offsetting transaction, the Fund will continue to
be required to maintain the margin deposits on the Futures Contract.

Margin is the amount of funds that must be deposited by each Fund with
its custodian in a segregated account in the name of the futures
commission merchant in order to initiate Futures trading and to maintain
the Fund's open positions in Futures Contracts. A margin deposit is
intended to ensure the Fund's performance of the Futures Contract. The
margin required for a particular Futures Contract is set by the exchange
on which the Futures Contract is traded and may be significantly
modified from time to time by the exchange during the term of the
Futures Contract. Futures Contracts are customarily purchased and sold
on margins that may range upward from less than 5% of the value of the
Futures Contract being traded.

If the price of an open Futures Contract changes (by increase in the
case of a sale or by decrease in the case of a purchase) so that the
loss on the Futures Contract reaches a point at which the margin on
deposit does not satisfy margin requirements, the broker will require an
increase in the margin. However, if the value of a position increases
because of favorable price changes in the Future Contract so that the
margin deposit exceeds the required margin, the broker will pay the
excess to the respective Fund. In computing daily net asset value, each
Fund will mark to market the current value of its open Futures
Contracts. Each Fund expects to earn interest income on their margin
deposits.

Because of the low margin deposits required, Futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a Futures Contract may result in immediate and substantial
loss, as well as gain, to the investor. For example, if at the time of
purchase, 10% of the value of the Futures Contract is deposited as
margin, a subsequent 10% decrease in the value of the Futures Contract
would result in a total loss of the margin deposit, before any deduction
for the transaction costs, if the account were then closed out. A 15%
decrease would result in a loss equal to 150% of the original margin
deposit, if the Future Contracts were closed out. Thus, a purchase or
sale of a Futures Contract may result in losses in excess of the amount
initially invested in the Futures Contract. However, a Fund would
presumably have sustained comparable losses if, instead of the Futures
Contract, it had invested in the underlying financial instrument and
sold it after the decline.

Most United States Futures exchanges limit the amount of fluctuation
permitted in Futures Contract prices during a single trading day. The
day limit establishes the maximum amount that the price of a Futures
Contract may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been
reached in a particular type of Futures Contract, no trades may be made
on that day at a price beyond that limit. The daily limit governs only
price movement during a particular trading day and therefore does not
limit potential losses, because the limit may prevent the liquidation of
unfavorable positions. Futures Contract prices have occasionally moved
to the daily limit for several consecutive trading days with little or
no trading, thereby preventing prompt liquidation of Futures positions
and subjecting some Futures traders to substantial losses.

There can be no assurance that a liquid market will exist at a time when
a Fund seeks to close out a Futures position. The Fund would continue to
be required to meet margin requirements until the position is closed,
possibly resulting in a decline in the Fund's net asset value. In
addition, many of the contracts discussed above are relatively new

Page 7

instruments without a significant trading history. As a result, there
can be no assurance that an active secondary market will develop or
continue to exist.

A public market exists in Futures Contracts covering a number of
indexes, including, but not limited to, the Standard & Poor's 500 Index,
the Standard & Poor's 100 Index, the Nasdaq 100 Index, the Value Line
Composite Index and the New York Stock Exchange Composite Index.

Options on Futures

Each Fund may also purchase or write put and call options on Futures
Contracts and enter into closing transactions with respect to such
options to terminate an existing position. A futures option gives the
holder the right, in return of the premium paid, to assume a long
position (call) or short position (put) in a Futures Contract at a
specified exercise price prior to the expiration of the option. Upon
exercise of a call option, the holder acquires a long position in the
Futures Contract and the writer is assigned the opposite short position.
In the case of a put option, the opposite is true. Prior to exercise or
expiration, a futures option may be closed out by an offsetting purchase
or sale of a futures option of the same series.

A Fund may use options on Futures Contracts in connection with hedging
strategies. Generally, these strategies would be applied under the same
market and market sector conditions in which the Fund use put and call
options on securities or indexes. The purchase of put options on Futures
Contracts is analogous to the purchase of puts on securities or indexes
so as to hedge a Funds' securities holdings against the risk of
declining market prices. The writing of a call option or the purchasing
of a put option on a Futures Contract constitutes a partial hedge
against declining prices of a securities which are deliverable upon
exercise of the Futures Contract. If the futures price at expiration of
a written call option is below the exercise price, a Fund will retain
the full amount of the option premium which provides a partial hedge
against any decline that may have occurred in the Fund's holdings of
securities. If the futures price when the option is exercised is above
the exercise price, however, the Fund will incur a loss, which may be
offset, in whole or in part, by the increase in the value of the
securities held by the Fund that were being hedged. Writing a put option
or purchasing a call option on a Futures Contract serves as a partial
hedge against an increase in the value of the securities the Fund
intends to acquires.

As with investments in Futures Contracts, each Fund is required to
deposit and maintain margin with respect to put and call options on
Futures Contracts written by it. Such margin deposits will vary
depending on the nature of the underlying Futures Contract (and the
related initial margin requirements), the current market value of the
option, and other futures positions held by the Fund. Each Fund will set
aside in a segregated account at the Fund's custodian liquid assets,
such as cash, U.S. government securities or other high grade liquid debt
obligations equal in value to the amount due on the underlying
obligation. Such segregated assets will be markedtomarket daily, and
additional assets will be placed in the segregated account whenever the
total value of the segregated account falls below the amount due on the
underlying obligation.

The risks associated with the use of options on Futures Contracts
include the risk that a Fund may close out its position as a writer of
an option only if a liquid secondary market exists for such options,
which cannot be assured. A Fund's successful use of options on Futures
Contracts depends on First Trust's ability to correctly predict the
movement in prices of Futures Contracts and the underlying instruments,
which may prove to be incorrect. In addition, there may be imperfect
correlation between the instruments being hedged and the Futures
Contract subject to the option. For additional information, see "Futures
Contracts." Certain characteristics of the futures market might increase
the risk that movements in the prices of futures contracts or options on
futures contracts might not correlate perfectly with movements in the
prices of the investments being hedged. For example, all participants in
the futures and options on futures contracts markets are subject to
daily variation margin calls and might be compelled to liquidate futures
or options on futures contracts positions whose prices are moving
unfavorably to avoid being subject to further calls. These liquidations
could increase the price volatility of the instruments and distort the
normal price relationship between the futures or options and the
investments being hedged. Also, because of initial margin deposit
requirements in markets, there might be increased participation by
speculators in the futures markets. This participation also might cause
temporary price distortions. In addition, activities of large traders in
both the futures and securities markets involving arbitrage, "program
trading," and other investment strategies might result in temporary
price distortions.

Foreign Currency Transactions. The Global Target 15 Portfolio, Target
15 Large Cap Portfolio and Target Small Cap Portfolio may engage in
foreign currency forward contracts, options, and futures transactions.
Such Funds may enter into foreign currency transactions for hedging and
other permissible risk management purposes only. Foreign currency

Page 8

futures and options contracts are traded in the U.S. on regulated
exchanges such as the Chicago Mercantile Exchange, the Mid-America
Commodities Exchange, and the Philadelphia Stock Exchange. If the Funds
invest in a currency futures or options contract, they must make a
margin deposit to secure performance of such contract. With respect to
investments in currency futures contracts, the Funds may also be
required to make a variation margin deposit because the value of futures
contracts fluctuates from purchase to maturity. In addition, the Funds
may segregate assets to cover its futures contracts obligations.

Risks and Special Considerations Concerning Derivatives

In addition to the foregoing, the use of derivative instruments involves
certain general risks and considerations as described below.

(1) Market Risk. Market risk is the risk that the value of the
underlying assets may go up or down. Adverse movements in the value of
an underlying asset can expose a Fund to losses. Market risk is the
primary risk associated with derivative transactions. Derivative
instruments may include elements of leverage and, accordingly,
fluctuations in the value of the derivative instrument in relation to
the underlying asset may be magnified. The successful use of derivative
instruments depends upon a variety of factors, particularly the
portfolio manager's ability to predict movements of the securities,
currencies, and commodities markets, which may require different skills
than predicting changes in the prices of individual securities. There
can be no assurance that any particular strategy adopted will succeed. A
decision to engage in a derivative transaction will reflect the
portfolio manager's judgment that the derivative transaction will
provide value to a Fund and its shareholders and is consistent with a
Fund's objectives, investment limitations, and operating policies. In
making such a judgment, the portfolio manager will analyze the benefits
and risks of the derivative transactions and weigh them in the context
of a Fund's overall investments and investment objective.

(2) Credit Risk. Credit risk is the risk that a loss be sustained
as a result of the failure of a counterparty to comply with the terms of
a derivative instrument. The counterparty risk for exchangetraded
derivatives is generally less than for privatelynegotiated or OTC
derivatives, since generally a clearing agency, which is the issuer or
counterparty to each exchangetraded instrument, provides a guarantee of
performance. For privatelynegotiated instruments, there is no similar
clearing agency guarantee. In all transactions, a Fund will bear the
risk that the counterparty will default, and this could result in a loss
of the expected benefit of the derivative transactions and possibly
other losses to the Fund. The Fund will enter into transactions in
derivative instruments only within counterparties that First Trust
reasonably believes are capable of performing under the contract.

(3) Correlation Risk. Correlation risk is the risk that there
might be an imperfect correlation, or even no correlation, between price
movements of a derivative instrument and price movements of investments
being hedged. When a derivative transaction is used to completely hedge
another position, changes in the market value of the combined position
(the derivative instrument plus the position being hedged) result from
an imperfect correlation between the price movements of the two
instruments. With a perfect hedge, the value of the combined position
remains unchanged with any change in the price of the underlying asset.
With an imperfect hedge, the value of the derivative instrument and its
hedge are not perfectly correlated. For example, if the value of a
derivative instrument used in a short hedge (such as writing a call
option, buying a put option or selling a futures contract) increased by
less than the decline in value of the hedged investments, the hedge
would not be perfectly correlated. This might occur due to factors
unrelated to the value of the investments being hedged, such as
speculative or other pressures on the markets in which these instruments
are traded. The effectiveness of hedges using instruments on indices
will depend, in part, on the degree of correlation between price
movements in the index and the price movements in the investments being
hedged.

(4) Liquidity Risk. Liquidity risk is the risk that a derivative
instrument cannot be sold, closed out, or replaced quickly at or very
close to its fundamental value. Generally, exchange contracts are very
liquid because the exchange clearinghouse is the counterparty of every
contract. OTC transactions are less liquid than exchangetraded
derivatives since they often can only be closed out with the other party
to the transaction. A Fund might be required by applicable regulatory
requirements to maintain assets as "cover," maintain segregated
accounts, and/or make margin payments when it takes positions in
derivative instruments involving obligations to third parties (i.e.,
instruments other than purchase options). If a Fund is unable to close
out its positions in such instruments, it might be required to continue
to maintain such assets or accounts or make such payments until the
position expires, matures, or is closed out. These requirements might
impair a Fund's ability to sell a security or make an investment at a
time when it would otherwise be favorable to do so, or require that the
Fund sell a portfolio security at a disadvantageous time. A Fund's
ability to sell or close out a position in an instrument prior to
expiration or maturity depends upon the existence of a liquid secondary

Page 9

market or, in the absence of such a market, the ability and willingness
of the counterparty to enter into a transaction closing out the
position. Due to liquidity risk, there is no assurance that any
derivatives position can be sold or closed out at a time and price that
is favorable to a Fund.

(5) Legal Risk. Legal risk is the risk of loss caused by the
unenforceability of a party's obligations under the derivative. While a
party seeking price certainty agrees to surrender the potential upside
in exchange for downside protection, the party taking the risk is
looking for a positive payoff. Despite this voluntary assumption of
risk, a counterparty that has lost money in a derivative transaction may
try to avoid payment by exploiting various legal uncertainties about
certain derivative products.

(6) Systemic or "Interconnection" Risk. Systemic or
interconnection risk is the risk that a disruption in the financial
markets will cause difficulties for all market participants. In other
words, a disruption in one market will spill over into other markets,
perhaps creating a chain reaction. Much of the OTC derivatives market
takes place among the OTC dealers themselves, thus creating a large
interconnected web of financial obligations. This interconnectedness
raises the possibility that a default by one large dealer could create
losses for other dealers and destabilize the entire market for OTC
derivative instruments.

Insurance Law Restrictions

In connection with the Registrant's agreement to sell shares to Account
B, American Skandia and First Trust may enter into agreements, required
by certain state insurance departments, under which First Trust may
agree to use its best efforts to assure and to permit American Skandia
to monitor each Fund for compliance with the investment restrictions and
limitations prescribed by state insurance laws and regulations
applicable to the investment of separate account assets in shares of
mutual funds. If a Fund failed to comply with such restrictions or
limitations, American Skandia would take appropriate action which might
include ceasing to make investments in the Fund or withdrawing from the
state imposing the limitation. Such restrictions and limitations are not
expected to have a significant impact on the Registrant's operations.

Description of Portfolios

As described in the Funds' Prospectus, the portfolio of the DowSM Target
5 Portfolio consists primarily of common stocks of the five companies
with the lowest per share stock price of the ten companies in the Dow
Jones Industrial AverageSM ("DJIA") that have the highest dividend
yields as of the date specified in the prospectus (the "Stock Selection
Date"). The portfolio of the DowSM Target 10 Portfolio consists
primarily of the common stocks of the ten companies in the DJIA that
have the highest dividend yields as of the Stock Selection Date. The
portfolio of the Global Target 15 Portfolio consists primarily of common
stocks of the five companies with the lowest per share stock price of
the ten companies in each of the DJIA, the Financial Times Industrial
Ordinary Share Index ("FT Index") and the Hang Seng Index, respectively,
that have the highest dividend yield in the respective index as of the
Stock Selection Date. The portfolio of the Target 10 Large Cap Portfolio
consists primarily of the common stocks of the ten companies selected
from a prescreened subset of the stocks included in the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index") as of the Stock
Selection Date. The portfolio of the 10 Uncommon Values is primarily the
ten common stocks selected annually by the Investment Policy Committee
of Lehman Brothers, Inc. with the assistance of the Research Department
of Lehman Brothers which, in the opinion of Lehman Brothers, have the
greatest potential for capital appreciation during the next year. The
portfolio of the Target Small Cap Portfolio consists primarily of the
common stocks of small capitalization companies selected from a pre-
screened subset of the common stocks listed on the New York Stock
Exchange, the American Stock Exchange or the Nasdaq Stock Market.
Finally, the Target 15 Large Cap Portfolio consists primarily of the
common stocks of fifteen companies selected from a pre-screened subset
of the stocks included in the Nasdaq-100 Index as of the Stock Selection
Date. Each year, as discussed in the Prospectus, the portfolio of each
Fund is adjusted in accordance with its investment strategy. See "Fund
Overview" in the Prospectus for the relevant Fund for a more detailed
description of its investment strategy.

The yield for each equity security contained in the Dow Target 5
Portfolio, Dow Target 10 Portfolio, Target 10 Large Cap Portfolio,
Target 15 Large Cap Portfolio and the securities based on the DJIA in
the Global Target 15 Portfolio is calculated by annualizing the last
quarterly or semi-annual ordinary dividend declared and dividing the
result by the market value of such equity security as of the close of
business on the Stock Selection Date. The yield for each equity security
listed on the FT Index or the Hang Seng Index in the Global Target 15

Page 10

Portfolio is calculated by adding together the most recent interim and
final dividend declared and dividing the result by the market value of
such equity security as of the close of business on the Stock Selection
Date.

In addition, the publishers of the S&P 500 Index, FT Index and the Hang
Seng Index are not affiliated with First Trust and have not participated
in the creation of the Fund or the selection of the equity securities
included therein. There is, of course, no guarantee that the objective
of any Fund will be achieved.

Any changes in the components of any of the respective indices or in the
composition of the stocks listed on the New York Stock Exchange,
American Stock Exchange or Nasdaq Stock Market made after the respective
Stock Selection Date will not cause a change in the identity of the
common stocks included in the applicable Fund, including any additional
equity securities deposited thereafter until the next Stock Selection
Date when the portfolio of the each Fund will be adjusted in accordance
with its investment strategy.

Investors should note that each Fund's investment criteria is applied
and will in the future be applied to the equity securities selected for
inclusion in the Fund as of the applicable Stock Selection Date.
Additional equity securities which were originally selected through this
process may be purchased throughout the year, as investors may continue
to invest in the Fund, even though the yields on these equity securities
may have changed subsequent to the previous Stock Selection Date. These
equity securities may no longer be included in the index, or may not
meet a Fund's selection criteria at that time, and therefore, such
equity securities would no longer be chosen for inclusion in the Fund if
the selection process were to be performed again at that time.
Accordingly, the equity securities selected and the percentage
relationship among the number of shares will not change for purchases or
sales by a Fund until the next annual Stock Selection Date.

Licensing Arrangements with Dow Jones & Company, Inc. and Lehman
Brothers, Inc.

"Dow Jones Industrial Average (sm)", "DJIA (sm)", "Dow Industrials (sm)",
"Dow 30 (sm)," "The Dow (sm)" and "The Dow 10 (sm)" are service marks of
Dow Jones & Company, Inc. ("Dow Jones") and have been licensed for use for
Certain purposes by First Trust. None of the Funds, including, and in
particular, The Dow (sm) Target 5 Portfolio and The Dow (sm) Target 10
Portfolio, are endorsed, sold, or promoted by Dow Jones, and Dow Jones
makes no representation regarding the advisability of investing in such
products.

As noted in the Prospectus, the objective of the 10 Uncommon Value
Portfolio is to provide the potential for aboveaverage capital
appreciation by investing the Fund's portfolio in the ten common stocks
selected by the Investment Policy Committee of Lehman Brothers Inc. with
the assistance of the Research Department of Lehman Brothers Inc. which,
in the opinion of Lehman Brothers Inc., have the greatest potential for
capital appreciation during the next year. The selection was based upon
a determination by Lehman Brothers Inc. that the selected stocks are
deemed to have an above-average appreciation potential against the S&P
500 Index over the 12 months following the selection of the portfolio.
The stocks included in this Fund are adjusted annually in accordance
with the new selections of Lehman Brothers for subsequent years. Lehman
Brothers Inc. is one of the leading global investment banks serving
institutional, corporate, government and high net worth individual
clients and customers. Lehman Brothers' business includes capital
raising for clients through securities underwriting and direct
placements;' corporate finance and strategic advisory services; merchant
banking; securities sales and trading; research; and the trading of
foreign exchange, derivative products and certain commodities. The Fund
is not sponsored, advised, or created by Lehman Brothers Inc. Lehman
Brothers Inc.'s only relationship to First Trust is the licensing of
certain trademarks and tradenames of Lehman Brothers Inc. and of the "10
Uncommon Values" and the sale to First Trust of research which is
determined, composed and calculated by Lehman Brothers Inc. without
regard to First Trust or the Fund. In addition, Lehman Brothers Inc. may
also receive fees for brokerage services provided to this Fund as well
as unit investment trusts sponsored by Nike Securities L.P. Lehman
Brothers Inc., in its general securities business acts, as agent or
principal in connection with the purchase and sale of equity securities,
including the equity securities held in the Fund and may act as a market
maker in certain of the equity securities.

Description of Indices

As described above, certain Funds invest in stocks included in the DJIA,
S&P 500 Index, the FT Index, the Hang Seng Index and the Nasdaq Index.
The following is a description of these indices.

Page 11

The Dow Jones Industrial Average (sm)

The DJIA was first published in The Wall Street Journal in 1896.
Initially consisting of just 12 stocks, the DJIA expanded to 20 stocks
in 1916 and to its present size of 30 stocks on October 1, 1928. The
stocks are chosen by the editors of The Wall Street Journal as
representative of the broad market and of American industry. The
companies are major factors in their industries and their stocks are
widely held by individuals and institutional investors. Changes in the
components of the DJIA are made entirely by the editors of The Wall
Street Journal without consultation with the companies, the stock
exchange or any official agency. For the sake of continuity, changes are
made rarely. Most substitutions have been the result of mergers, but
from time to time, changes may be made to achieve a better
representation. The components of the DJIA may be changed at any time
for any reason. Any changes in the components of the DJIA made after the
Stock Selection Date will not cause a change in the identity of the
equity securities involved in the applicable Fund, including any equity
securities deposited in a Fund, except when the Fund is periodically
adjusted. The following is a list of the companies which currently
comprise the DJIA.

AT&T Corporation Hewlett-Packard Co.
Allied Signal International Business Machines Corporation
Aluminum Company of America International Paper Company
American Express Company Johnson & Johnson
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing Company
Citigroup J.P. Morgan & Company, Inc.
Coca-Cola Company Philip Morris Companies, Inc.
Walt Disney Company Proctor & Gamble Company
E.I. du Pont de Nemours & Company Sears, Roebuck & Company
Eastman Kodak Company Union Carbide Corporation
Exxon Corporation United Technologies Corporation
General Electric Company Wal-Mart Stores, Inc.
General Motors Corporation
Goodyear Tire & Rubber Company

The Funds are not sponsored, endorsed, sold or promoted by Dow Jones.
Dow Jones makes no representation or warranty, express or implied, to a
Fund's interest holders or any member of the public regarding the
advisability of purchasing a Fund. Dow Jones' only relationship to the
Funds, American Skandia, or First Trust is the licensing of certain
copyrights, trademarks, servicemarks and service names of Dow Jones. Dow
Jones has no obligation to take the needs of American Skandia, First
Trust or variable annuity owners into consideration in determining,
composing or calculating the DJIA. Dow Jones is not responsible for and
has not participated in the determination of the terms and conditions of
the Funds, including the pricing of the Funds' interests or the amount
payable under variable annuity contracts. Dow Jones has no obligation or
liability in connection with the administration or marketing of the Fund
or any variable annuity contracts.

DOW JONES DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE
DOW JONES INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN AND DOW
JONES SHALL HAVE NO LIABILITY FOR ANY ERRORS, OMISSION, OR INTERRUPTIONS
THEREIN. DOW JONES MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS
TO BE OBTAINED BY A FUND, AMERICAN SKANDIA, FIRST TRUST OR VARIABLE
ANNUITY OWNERS OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE DOW
JONES INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED THEREIN. DOW JONES MAKES
NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL WARRANTIES
OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE DOW JONES INDUSTRIAL AVERAGESM OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL DOW
JONES HAVE ANY LIABILITY FOR ANY LOST PROFITS OR INDIRECT, PUNITIVE,
SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

Page 12

The Financial Times Industrial Ordinary Share Index

The FT Index began as the Financial News Industrial Ordinary Share Index
in London in 1935 and became the Financial Times Industrial Ordinary
Share Index in 1947. The Financial Times Ordinary Index is calculated by
FTSE International Ltd. ("FTSE"). All copyright in the Index constituent
list vests in FTSE. The FT Index is comprised of 30 common stocks chosen
by the editors of The Financial Times as representative of the British
industry and commerce. This index is an unweighted average of the share
prices of selected companies, which are highly capitalized, major
factors in their industries and their stocks are widely held by
individuals and institutional investors. Changes in the components of
the FT Index are made entirely by the editors of The Financial Times
without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely.
However, on December 16, 1997, Diageo PLC and Scottish Power PLC
replaced Guinness PLC and Grand Metropolitan PLC. Most substitutions
have been the result of mergers or because of poor share performance,
but from time to time, changes may be made to achieve a better
representation. The components of the FT Index may be changed at any
time for any reason. The following stocks are currently represented in
the FT Index:

ASDA Group Glaxo Wellcome Plc
Allied Domecq Plc Granada Group Plc
BG Plc Guest Keen & Nettlefolds (GKN) Plc
BOC Group Imperial Chemical Industries Plc
BTR Plc Lloyds TSB Group Plc
Blue Circle Industries Plc Lucas Varity Plc
Boots Company Plc Marks & Spencer Plc
British Airways Plc National Westminster Bank
British Petroleum Plc Peninsular & Oriental Steam Navigation
British Telecommunications PLC Company
Cadbury Schweppes Plc Reuters Holdings
Courtaulds Plc Royal & Sun Alliance Insurance Group
Diageo Plc Scottish Power Plc
EMI Group Plc SmithKline Beecham
General Electric Company Plc Tate & Lyle Plc
Vodafone Plc

The Hang Seng Index

The Hang Seng Index was first published in 1969 and presently consists
of 33 of the 358 stocks currently listed on the Stock Exchange of Hong
Kong Ltd. (the "Hong Kong Stock Exchange"), and it includes companies
intended to represent four major market sectors: commerce and industry,
finance, properties and utilities. The Hang Seng Index is a recognized
indicator of stock market performance in Hong Kong. It is computed on an
arithmetic basis, weighted by market capitalization, and is therefore
strongly influenced by stocks with large market capitalizations. The
Hang Seng Index represents approximately 70% of the total market
capitalization of the stocks listed on the Hong Kong Stock Exchange. On
January 27, 1998, China Telecom Ltd. and Shanghai Industrial Holdings
Ltd. were added to the Hang Seng Index replacing Shun Tak Holdings Ltd.
and South China Morning Post Holdings Ltd. The Hang Seng Index is
currently comprised of the companies on the following list:

Amoy Properties Ltd. Hong Kong and China Gas
Bank of East Asia Hong Kong Electric Holdings Ltd.
Cathay Pacific Airways Hong Kong & Shanghai Hotels, Limited
Cheung Kong Hong Kong Telecommunications Ltd.
Cheung Kong Infrastructure Hopewell Holdings
Holdings Ltd. Hutchison Whampoa
China Light & Power Hysan Development Company Ltd.
China Resources Enterprise Ltd. New World Development Co. Ltd.
China Telecom Ltd. Shanghai Industrial Holdings Ltd.
Citic Pacific Shangri-La Asia Ltd.
First Pacific Company Ltd. Sino Land Co. Ltd.
Great Eagle Holdings Ltd. Sun Hung Kai Properties Ltd.
Guangdong Investment Swire Pacific (A)
HSBC Holdings Plc Television Broadcasts

Page 13

Hang Lung Development Company Wharf Holdings Ltd.
Hang Seng Bank Wheelock & Co.
Henderson Investment Ltd.
Henderson Land Development Co. Ltd.

Except as previously described, neither the publishers of the S&P 500
Index, DJIA, FT Index nor the Hang Seng Index have granted the Funds,
American Skandia, or First Trust a license to use their respective
Index. The Funds are not designed so that prices will parallel or
correlate with the movements in any particular index or a combination
thereof and it is expected that their prices will not parallel or
correlate with such movements. The publishers of the S&P 500 Index,
DJIA, FT Index and the Hang Seng Index have not participated in any way
in the creation of the Funds or in the selection of stocks in the Funds
and have not approved any information related thereto.

The Nasdaq - 100 Index

The Nasdaq - 100 Index represents the largest and most active non-
financial domestic and international issues listed on the Nasdaq Stock
Market(r). The index is calculated based on a modified capitalization
weighted methodology. The Nasdaq Stock Market lists nearly 5,400
companies and trades more shares per day than any other major U.S. market.

The Standard & Poor's 500 Index

Investment Risks

Generally

An investment in a Fund should be made with an understanding of the
risks which an investment in common stocks entails, including the risk
that the financial condition of the issuers of the equity securities or
the general condition of the common stock market may worsen and the
value of the equity securities and therefore the value of a Fund may
decline. A Fund may not be an appropriate investment for those who are
unable or unwilling to assume the risks involved generally with an
equity investment. The past market and earnings performance of any of
the equity securities included in a Fund is not predictive of their
future performance. Common stocks are especially susceptible to general
stock market movements and to volatile increases and decreases of value
as market confidence in and perceptions of the issuers change. These
perceptions are based on unpredictable factors including expectations
regarding government, economic, monetary and fiscal policies, inflation
and interest rates, economic expansion or contraction, and global or
regional political economic or banking crises. First Trust cannot
predict the direction or scope of any of these factors. Shareholders of
common stocks have rights to receive payments from the issuers of those
common stocks that are generally subordinate to those of creditors of,
or holders of debt obligations or preferred stocks of, such issuers.
Shareholders of common stocks of the type held by a Fund have a right to
receive dividends only when and if, and in the amounts, declared by the
issuer's board of directors and have a right to participate in amounts
available for distribution by the issuer only after all other claims on
the issuer have been paid or provided for. Common stocks do not
represent an obligation of the issuer and, therefore, do not offer any
assurance of income or provide the same degree of protection of capital
as do debt securities. The issuance of additional debt securities or
preferred stock will create prior claims for payment of principal,
interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common
stock or the rights of holders of common stock with respect to assets of
the issuer upon liquidation or bankruptcy. The value of common stocks is
subject to market fluctuations for as long as the common stocks remain
outstanding, and thus the value of the equity securities in a Fund will
fluctuate over the life of the Fund and may be more or less than the
price at which they were purchased by such Fund. The equity securities
held in a Fund may appreciate or depreciate in value (or pay dividends)
depending on the full range of economic and market influences affecting
these securities, including the impact of the Fund's purchase and sale
of the equity securities and other factors.

Holders of common stocks incur more risk than holders of preferred
stocks and debt obligations because common stockholders, as owners of
the entity, have generally inferior rights to receive payments from the
issuer in comparison with the rights of creditors of, or holders of debt
obligations or preferred stocks issued by, the issuer. Cumulative

Page 14

preferred stock dividends must be paid before common stock dividends and
any cumulative preferred stock dividend omitted is added to future
dividends payable to the holders of cumulative preferred stock.
Preferred stockholders are also generally entitled to rights on
liquidation which are senior to those of common stockholders.

First Trust shall not be liable in any way for any default, failure or
defect in any equity security held in a Series' portfolio.

Year 2000

There is concern that some computer systems used today are unable to
process and calculate date-related information because they are not
programmed to distinguish between the year 2000 and the year 1900. This
is commonly known as the "Year 2000 Problem."

Each Fund relies entirely on outside service providers for the
processing of its business. To the extent that a service provider
utilizes computers to process a Fund's business, the smooth operation of
a Fund depends on the ability of those computers to continue to function
properly.

The Registrant has contacted each of its service providers to ascertain
the service provider's state of readiness for the year 2000. Each of the
service providers has indicated to the Registrant that, at this time, it
is either Year 2000 compliant or that it has identified its systems
which are not currently Year 2000 compliant and that it intends to make
such systems compliant before December 31, 1999. The Registrant intends
to continue to monitor the Year 2000 status of its service providers.

Based on the information currently available, the Registrant does not
anticipate any material impact on the delivery of services to and by the
Registrant. However, since the Registrant must rely on the information
provided to it by its service providers, there can be no assurance that
the steps taken by the service providers in preparation for the Year
2000 will be sufficient to avoid any adverse impact on the Registrant.

The Year 2000 Problem is expected to impact corporations, which may
involve issuers of the equity securities contained in a Fund, to varying
degrees based upon various factors, including, but not limited to, their
industry sector and degree of technological sophistication. First Trust
is not able to predict what impact, if any, the Year 2000 Problem will
have on issuers of the equity securities contained in a Fund.

Legislation

At any time after the date of the Prospectus, legislation may be enacted
that could negatively affect the equity securities in a Fund or the
issuers of the equity securities. Changing approaches to regulation,
particularly with respect to the environment or with respect to the
petroleum industry, may have a negative impact on certain companies
represented in a Fund. There can be no assurance that future
legislation, regulation or deregulation will not have a material adverse
effect on a Fund or will not impair the ability of the issuers of the
equity securities held in a Series to achieve their business goals.

Liquidity

Whether or not the equity securities in a Fund are listed on a
securities exchange, the principal trading market for the equity
securities may be in the over-the-counter market. As a result, the
existence of a liquid trading market for the equity securities may
depend on whether dealers will make a market in the equity securities.

There can be no assurance that a market will be made for any of the
equity securities, that any market for the equity securities will be
maintained or that there will be sufficient liquidity of the equity
securities in any markets made. The price at which the equity securities
held in a Fund may be sold to meet transfers, partial withdrawals or
surrenders and the value of a Fund will be adversely affected if trading
markets for the equity securities are limited or absent.

Lack of Diversification

Each Fund is classified as "non-diversified" and therefore a Fund is
only limited as to the percentage of its assets which may be invested in
securities of any one issuer by its own investment restrictions and by
diversification requirements imposed by the Internal Revenue Code of
1986, as amended. A Fund may therefore invest a relatively high
percentage of its assets in a limited number of issuers. This can expose
each Series to potentially greater market fluctuations than might be

Page 15

experienced by a diversified fund. Each Series may be more susceptible
to any single economic, political or regulatory occurrence and to the
financial conditions of the issuer in which it invests. For example, an
investment in the Dow Target 5 Portfolio may subject an investor to
additional risk due to the relative lack of diversity in its portfolio
since the portfolio contains only five stocks. Therefore, the Dow Target
5 Portfolio may be subject to greater market risk than other Series
which may contain a more diversified portfolio of securities. A Series
is not designed to be a complete investment program for an investor.
Variable annuity Policy owners, in light of their own financial
situations and goals, should consider other additional funding options
in order to diversify the allocations of their Policy assets.

Investment Strategy Risks

The equity securities selected for the Funds (other than the Target
Small Cap Portfolio, the Target 10 Large Cap Portfolio, the Target 15
Portfolio Large Cap and the 10 Uncommon Values Portfolio) generally
share attributes that have caused them to have lower prices or higher
yields relative to other stocks in their respective index or Exchange.
The equity securities may, for example, be experiencing financial
difficulty, or be out of favor in the market because of weak
performance, poor earnings forecasts or negative publicity; or they may
be reacting to general market cycles. There can be no assurance that the
market factors that caused the relatively low prices and high dividend
yields of the equity securities will change, that any negative
conditions adversely affecting the stock prices will not deteriorate,
that the dividend rates on the equity securities will be maintained or
that share prices will not decline further during the life of the Funds,
or that the equity securities will continue to be included in the
respective indices or Exchanges. Investing in stocks with the highest
dividend yields amounts to a contrarian strategy because these shares
are often out of favor. Such strategy may be effective in achieving the
respective Strategy-based Fund's investment objective because regular
dividends are common for established companies and dividends have often
accounted for a substantial portion of the total return on stocks of the
index as a group. However, there is no guarantee that either a Fund's
objective will be achieved or that a Fund will provide for capital
appreciation in excess of such Series' expenses. Because of the
contrarian nature of such Funds and the attributes of the common stocks
which caused inclusion in the portfolio, such Funds may not be
appropriate for investors seeking either preservation of capital or high
current income. In addition, the strategies of the Dow Target 5
Portfolio, the Dow Target 10 Portfolio, the Target Small Cap Portfolio
and the Global Target 15 Portfolio have underperformed their respective
index or indices in certain years.

Equity securities in a Fund from time to time may be sold under certain
circumstances described in the Prospectus. Each Fund, however, is not
actively managed and equity securities in a Fund will not be sold to
take advantage of market fluctuations or changes in anticipated rates of
appreciation or depreciation or if the equity securities no longer meet
the criteria by which they were selected for a Fund. However, equity
securities will be sold on or about each annual Stock Selection Date in
accordance with its stock selection strategy.

Small Capitalization Companies

Certain or all of the equity securities in the Target Small Cap
Portfolio and the 10 Uncommon Values Portfolio may be small cap company
stocks. While, historically, small cap company stocks have outperformed
the stocks of large companies, the former have customarily involved more
investment risk as well. Small cap companies may have limited product
lines, markets or financial resources; may lack management depth or
experience; and may be more vulnerable to adverse general market or
economic developments than large companies. Some of these companies may
distribute, sell or produce products which have recently been brought to
market and may be dependent on key personnel.

The prices of small company securities are often more volatile than
prices associated with large company issues, and can display abrupt or
erratic movements at times, due to limited trading volumes and less
publicly available information. Also, because small cap companies
normally have fewer shares outstanding and these shares trade less
frequently than large companies, it may be more difficult for a Fund
which contain these equity securities to buy and sell significant
amounts of such shares without an unfavorable impact on prevailing
market prices. The securities of small companies are often traded over-
the-counter and may not be traded in the volumes typical of a national
securities exchange.

Page 16

Litigation

Certain of the issuers of equity securities in certain Funds may be
involved in the manufacture, distribution and sale of tobacco products.
Pending litigation proceedings against such issuers in the United States
and abroad cover a wide range of matters including product liability and
consumer protection. Damages claimed in such litigation alleging
personal injury (both individual and class actions), and in health cost
recovery cases brought by governments, labor unions and similar entities
seeking reimbursement for health care expenditures, aggregate many
billions of dollars.

In November 1998, certain companies in the U.S. tobacco industry,
including Philip Morris, entered into a negotiated settlement with
several states which would result in the resolution of significant
litigation and regulatory issues affecting the tobacco industry
generally. The proposed settlement, while extremely costly to the
tobacco industry, would significantly reduce uncertainties facing the
industry and increase stability in business and capital markets. Future
litigation and/or legislation could adversely affect the value,
operating revenues and financial position of tobacco companies.

To the best of First Trust's knowledge, other than tobacco litigation,
there is no litigation pending as of the date of this Statement of
Additional Information with respect to any equity security which might
reasonably be expected to have a material adverse effect on a Fund. At
any time after the date of this Statement of Additional Information,
litigation may be instituted on a variety of grounds with respect to the
equity securities held in a Fund portfolio. First Trust is unable to
predict whether any such litigation will be instituted, or if
instituted, whether such litigation might have a material adverse effect
on the Fund.

Foreign Issuers

Since certain of the portfolio securities included in the Global Target
15 Portfolio, Target 15 Large Cap Portfolio and Target Small Cap
Portfolio may consist of common stocks of foreign issuers, an investment
in such Fund involves certain investment risks that are different in
some respects from an investment in a fund which invests entirely in
common stocks of domestic issuers. These investment risks include the
possible imposition of future political or governmental restrictions
which might adversely affect the payment or receipt of dividends on the
relevant portfolio securities, the possibility that the financial
condition of the issuers of the portfolio securities may become impaired
or that the general condition of the relevant stock market may
deteriorate, the limited liquidity and relatively small market
capitalization of the relevant securities market, the imposition of
expropriation or confiscatory taxation, economic uncertainties, the lack
of the quantity and quality of publicly available information concerning
the foreign issuers as such issuers are generally not subject to the
same reporting and accounting requirements as domestic issuers, and the
effect of foreign currency devaluations, such as the current global
currency crisis, and fluctuations on the value of the common stocks and
dividends of foreign issuers in terms of U.S. dollars. In addition,
fixed brokerage commissions and other transaction costs on foreign
securities exchanges are generally higher than in the United States and
there is generally less government supervision and regulation of
exchanges, brokers and issuers in foreign countries than there is in the
United States.

On the basis of the best information available to First Trust at the
present time, none of the portfolio securities in such Funds are
currently subject to exchange control restrictions under existing law
which would materially interfere with payment to such Funds of dividends
due on, or proceeds from the sale of, the foreign portfolio securities.
The adoption of such restrictions or other legal restrictions could
adversely impact the marketability of the foreign portfolio securities
and may impair the ability of such Funds to satisfy its obligation to
redeem shares or could cause delays or increase the costs associated
with the purchase and sale of the foreign portfolio securities and
correspondingly affect the price of its shares.

The purchase and sale of the foreign portfolio securities will generally
be effected only in foreign securities markets. Although First Trust
does not believe that the Global Target 15 Portfolio, Target 15 Large
Cap Portfolio and Target Small Cap Portfolio will encounter obstacles in
acquiring or disposing of the foreign portfolio securities, investors
should be aware that in certain situations it may not be possible to
purchase or sell a foreign portfolio security in a timely manner for any
number of reasons, including lack of liquidity in the relevant market,
the unavailability of a seller or purchaser of the foreign portfolio
securities, and restrictions on such purchases or sales by reason of
federal securities laws or otherwise. An investment in such Funds will
also be subject to the risks of currency fluctuations associated with
investments in foreign equity securities trading in non-U.S. currencies.

Page 17

The information provided below details certain important factors which
impact the economies of both the United Kingdom and Hong Kong. This
information has been extracted from various governmental and private
publications, but no representation can be made as to its accuracy.
Furthermore, no representation is made that any correlation exists
between the economies of the United Kingdom and Hong Kong and the value
of the equity securities held by the Global Target 15 Portfolio.

United Kingdom. The emphasis of the United Kingdom's economy is in the
private services sector, which includes the wholesale and retail sector,
banking, finance, insurance and tourism. Services as a whole account for
a majority of the United Kingdom's gross national product and make a
significant contribution to the country's balance of payments. The
portfolio of the Global Target 15 Portfolio may contain common stocks of
British companies engaged in such industries as banking, chemicals,
building and construction, transportation, telecommunications and
insurance. Many of these industries may be subject to government
regulation, which may have a materially adverse effect on the
performance of their stock. In the first quarter of 1998, gross domestic
product (GDP) of the United Kingdom grew to a level 3.0% higher than in
the first quarter of 1997; however, the overall rate of GDP growth has
slowed since the third quarter of 1997. The slowdown largely reflects a
deteriorating trade position and higher indirect taxes. The average
quarterly rate of GDP growth in the United Kingdom (as well as in Europe
generally) has been decelerating since 1994. The United Kingdom is a
member of the European Union (the "EU"), which was created through the
formation of the Maastricht Treaty on European Union in late 1993. It is
expected that the Treaty will have the effect of eliminating most
remaining trade barriers between the 15 member nations and make Europe
one of the largest common markets in the world. However, the effective
implementation of the treaty provisions and the rate at which trade
barriers are eliminated is uncertain at this time. Furthermore, the
recent rapid political and social change throughout Europe make the
extent and nature of future economic development in the United Kingdom
and Europe and the impact of such development upon the value of the
portfolio securities issued by United Kingdom companies held in the
Global Target 15 Portfolio impossible to predict.

A majority of the EU members converted their existing sovereign
currencies to a common currency (the "euro") on January 1, 1999. The
United Kingdom did not participate in the conversion on January 1, 1999
and First Trust is unable to predict if or when the United Kingdom will
convert to the euro. Moreover, it is not possible to accurately predict
the effect of the current political and economic situation upon long-
term inflation and balance of trade cycles and how these changes, as
well as the implementation of a common currency throughout a majority of
EU countries, would affect the currency exchange rate between the U.S.
dollar and the British pound sterling. In addition, United Kingdom
companies with significant markets or operations in other European
countries (whether or not such countries are participating) face
strategic challenges as these entities adapt to a single trans-national
currency. The euro conversion may have a material impact on revenues,
expenses or income from operations; increase competition due to the
increased price transparency of EU markets; affect issuers' currency
exchange rate risk and derivatives exposure; disrupt currency contracts;
cause issuers to increase spending on information technology updates
required for the conversion; and result in potential adverse tax
consequences. First Trust is unable to predict what impact, if any, the
euro conversion will have on any of the portfolio securities issued by
United Kingdom companies in the Global Target 15 Portfolio.

Hong Kong. Hong Kong, established as a British colony in the 1840's,
reverted to Chinese sovereignty effective July 1, 1997. On such date,
Hong Kong became a Special Administrative Region ("SAR") of China. Hong
Kong's new constitution is the Basic Law (promulgated by China in 1990).
Prior to July 1, 1997, the Hong Kong government followed a laissez-faire
policy toward industry. However, Hong Kong's recent economic data has
not been encouraging. The full impact of the Asian financial crisis, as
well as current international economic instability, is likely to
continue to have a negative impact on the Hong Kong economy in the near
future.

Although China has committed by treaty to preserve for 50 years the
economic and social freedoms enjoyed in Hong Kong prior to the
reversion, the continuation of the economic system in Hong Kong after
the reversion will be dependent on the Chinese government, and there can
be no assurances that the commitment made by China regarding Hong Kong
will be maintained. Prior to the reversion, legislation was enacted in
Hong Kong designed to extend democratic voting procedures for Hong
Kong's legislature. China has expressed disagreement with this
legislation, which it states is in contravention of the principles
evidenced in the Basic Law of the Hong Kong SAR. The National Peoples'
Congress of China has passed a resolution to the effect that the
Legislative Council and certain other councils and boards of the Hong
Kong Government were to be terminated on June 30, 1997. Such bodies have
subsequently been reconstituted in accordance with China's
interpretation of the Basic Law. Any increase in uncertainty as to the
future economic and political status of Hong Kong could have a
materially adverse effect on the value of the Global Target 15
Portfolio. First Trust is unable to predict the level of market
liquidity or volatility which may occur as a result of the reversion to

Page 18

sovereignty, both of which may negatively impact such Fund and the value
of its shares.

China currently enjoys a most favored nation status ("MFN Status") with
the United States. MFN Status is subject to annual review by the
President of the United States and approval by Congress. As a result of
Hong Kong's reversion to Chinese control, U.S. lawmakers have suggested
that they may review China's MFN status on a more frequent basis.
Revocation of the MFN status would have a severe effect on China's trade
and thus could have a materially adverse effect on the value of the
Global Target 15 Portfolio. The performance of certain companies listed
on the Hong Kong Stock Exchange is linked to the economic climate of
China. The renewal of China's MFN Status in May of 1996 has helped to
reduce the uncertainty for Hong Kong in conducting Sino-U.S. trade, and
the signing of the agreement on copyright protection between the U.S.
and Chinese governments in June of 1996 averted a trade war that would
have affected Hong Kong's re-export trade. In 1997, China and the United
States reached a four-year bilateral agreement on textiles, again
avoiding a Sino-U.S. trade war. More recently, the currency crisis which
has affected a majority of Asian markets since mid-1997 has forced Hong
Kong leaders to address whether or devalue the Hong Kong dollar or
maintain its peg to the U.S. dollar. During the volatile markets of
1998, the Hong Kong Monetary Authority (the "HKMA") acquired the common
stock of certain Hong Kong issuers listed on the Hong Kong Stock
Exchange in a an effort to stabilize the Hong King dollar and thwart
currency speculators. Government intervention may hurt Hong Kong's
reputation as a free market and increases concerns that authorities are
not willing to let Hong Kong's currency system function autonomously.
This may undermine confidence in the Hong Kong dollar's peg to the U.S.
Dollar. Any downturn in economic growth or increase in the rate of
inflation in China or Hong Kong could have a materially adverse effect
on the value of the Global Target 15 Portfolio.

Securities prices on the Hong Kong Stock Exchange, and specifically the
Hang Seng Index, can be highly volatile and are sensitive to
developments in Hong Kong and China, as well as other world markets. For
example, the Hang Seng Index declined by approximately 31% in October,
1997 as a result of speculation that the Hong Kong dollar would become
the next victim of the Asian currency crisis, and in 1989, the Hang Seng
Index dropped 1,216 points (approximately 58%) in early June following
the events at Tiananmen Square. The Hang Seng Index gradually climbed
subsequent to the events at Tiananmen Square but fell by 181 points on
October 13, 1989 (approximately 6.5%) following a substantial fall in
the U.S. stock markets. During 1994, the Hang Seng Index lost
approximately 31% of its value. From January through August of 1998,
during a period marked by international economic instability and a
global currency crisis, the Hang Seng Index declined by nearly 27%. The
Hang Seng Index is subject to change, and delisting of any issuers may
have an adverse impact on the performance of the Global Target 15
Portfolio, although delisting would not necessarily result in the
disposal of the stock of these companies, nor would it prevent such Fund
from purchasing additional equity securities of these companies. In
recent years, a number of companies, comprising approximately 10% of the
total capitalization of the Hang Seng Index, have delisted. In addition,
as a result of Hong Kong's reversion to Chinese sovereignty, an
increased number of Chinese companies could become listed on the Hong
Kong Stock Exchange, thereby changing the composition of the stock
market and, potentially, the composition of the Hang Seng Index.

Exchange Rate. The Global Target 15 Portfolio, Target 15 Large Cap
Portfolio and Target Small Cap Portfolio may be comprised substantially
of equity securities that are principally traded in foreign currencies
and as such, involve investment risks that are substantially different
from an investment in a fund which invests in securities that are
principally traded in United States dollars. The United States dollar
value of each Fund's portfolios and of the distributions from the
portfolios will vary with fluctuations in the United States dollar
foreign exchange rates for the relevant currencies. Most foreign
currencies have fluctuated widely in value against the United States
dollar for many reasons, including supply and demand of the respective
currency, the rate of inflation in the respective economies compared to
the United States, the impact of interest rate differentials between
different currencies on the movement of foreign currency rates, the
balance of imports and exports of goods and services, the soundness of
the world economy and the strength of the respective economy as compared
to the economies of the United States and other countries.

Exchange rate fluctuations are partly dependent on a number of economic
factors including economic conditions within countries, the impact of
actual and proposed government policies on the value of currencies,
interest rate differentials between the currencies and the balance of
imports and exports of goods and services and transfers of income and
capital from one country to another. These economic factors are
influenced primarily by a particular country's monetary and fiscal
policies (although the perceived political situation in a particular
country may have an influence as well--particularly with respect to
transfers of capital). Investor psychology may also be an important

Page 19

determinant of currency fluctuations in the short run. Moreover,
institutional investors trying to anticipate the future relative
strength or weakness of a particular currency may sometimes exercise
considerable speculative influence on currency exchange rates by
purchasing or selling large amounts of the same currency or currencies.
However, over the long term, the currency of a country with a low rate
of inflation and a favorable balance of trade should increase in value
relative to the currency of a country with a high rate of inflation and
deficits in the balance of trade.

The following table sets forth, for the periods indicated, the range of
fluctuation concerning the equivalent U.S. dollar rates of exchange and
end of month equivalent U.S. dollar rates of exchange for the United
Kingdom pound sterling and the Hong Kong dollar:

Foreign Exchange Rates
Range of Fluctuations in Foreign Currencies

United Kingdom
Annual Pound Sterling/ Hong Kong/
Period U.S. Dollar U.S. Dollar
______ ______________ ___________
1983 0.616-0.707 6.480-8.700
1984 0.671-0.864 7.774-8.050
1985 0.672-0.951 7.729-7.990
1986 0.643-0.726 7.768-7.819
1987 0.530-0.680 7.751-7.822
1988 0.525-0.601 7.764-7.912
1989 0.548-0.661 7.775-7.817
1990 0.504-0.627 7.740-7.817
1991 0.499-0.624 7.716-7.803
1992 0.498-0.667 7.697-7.781
1993 0.630-0.705 7.722-7.766
1994 0.610-0.684 7.723-7.750
1995 0.610-0.653 7.726-7.763
1996 0.583-0.670 7.732-7.742
1997 0.584-0.633 7.708-7.751
1998 0.584-0.620 7.735-7.749

Source: Bloomberg L.P.

First Trust will estimate current exchange rates for the relevant
currencies based on activity in the various currency exchange markets.
However, since these markets are volatile and are constantly changing,
depending on the activity at any particular time of the large
international commercial banks, various central banks, large multi-
national corporations, speculators and other buyers and sellers of
foreign currencies, and since actual foreign currency transactions may
not be instantly reported, the exchange rates estimated by First Trust
may not be indicative of the amount in United States dollars a Fund
would receive had the Fund sold any particular currency in the market.
The foreign exchange transactions of a Fund will be conducted by the
Fund with foreign exchange dealers acting as principals on a spot (i.e.,
cash) buying basis. Although foreign exchange dealers trade on a net
basis, they do realize a profit based upon the difference between the
price at which they are willing to buy a particular currency (bid price)
and the price at which they are willing to sell the currency (offer
price).

Fund Management

The officers of the Registrant manage its day to day operations and are
responsible to the Registrant's Board of Managers. The management of the
Fund, including general supervision of the duties performed for the Fund
under the Investment Advisory and Management Agreement, is the
responsibility of its Board of Managers. The Managers set broad policies
for each Fund and choose the Registrant's officers. The following is a
list of the Managers and officers of the Registrant and a statement of
their present positions and principal occupations during the past five
years, with those Managers who are "interested persons" (as such term is
defined in the Investment Company Act of 1940) of the Registrant
indicated by an asterisk. The mailing address of the officers and
Managers, unless otherwise noted, is 1001 Warrenville Road, Suite 300,
Lisle, Illinois 60532.

Page 20

<TABLE>
<CAPTION>
Principal Occupations
Name, Age and Address Position and Offices with Registrant During Past 5 Years
_____________________ ____________________________________ _____________________
<S> <C> <C>
[

]
</TABLE>

The following table sets forth compensation estimated to be paid by the
Registrant to each of the Managers who are not designated "interested
persons" during the Registrant's fiscal year ending ____________. The
Registrant has no retirement or pension plans. The officers and Managers
who are "interested persons" as designated above serve without any
compensation from the Registrant.

Estimated Aggregate
Compensation From Funds
Name of Manager and Fund Complex
________________________________________________________________
____________________ $
____________________ $
____________________ $
____________________ $____________
Total $

*Based on the estimated compensation to be paid to the independent
trustees for the one year period ending [__________________] for
services to the Registrant. Currently, the Registrant is the only
investment company in the Fund Complex.

Disinterested Managers will be paid $_________ for each meeting they
attend.

As of _________________, 1999, Account B owned all shares of the
Registrant (with __________ shares outstanding). To the extent required
by applicable law, American Skandia will solicit voting instructions
from owners of variable annuity Policies. All interests in each Fund
will be voted by American Skandia in accordance with voting instructions
received from such variable Policy owners. American Skandia will vote
all of the interests which it is entitled to vote in the same proportion
as the voting instructions given by variable Policy owners, on the
issues presented.

Performance

A Fund may quote its total return and yield in reports to shareholders,
sales literature, and advertisements. These performance measures are
described below. Performance advertised for a Fund may or may not
reflect the effect of any charges that are imposed under a variable
annuity Policy that is funded by the Registrant. Such charges, described
in the variable annuity prospectus, will have the effect of reducing a
Fund's performance.

Standardized average annual total return and non-standardized total
return measure both the net investment income generated by, and the
effect of any realized and unrealized appreciation or depreciation of,
the underlying investments of a Fund. Yield is a measure of the net
investment income per interest earned over a specific one month or 30-
day period expressed as a percentage of the net asset value.

A Fund's standardized average annual total return quotation is computed
in accordance with a standardized method prescribed by rules of the
Securities and Exchange Commission. The standardized average annual
total return for a Fund for a specific period is found by first taking a
hypothetical $1,000 investment ("initial investment") in the Fund's
interests on the first day of the period, adjusting to deduct the
applicable charges, if any, and computing the "redeemable value" of that
investment at the end of the period. The redeemable value is then
divided by the initial investment, and this quotient is taken to the Nth

Page 21

root (N representing the number of years in the period) and 1 is
subtracted from the result, which is then expressed as a percentage. The
calculation assumes that all income and capital gains dividends paid by
a Fund have been reinvested at net asset value on the reinvestment dates
during the period.

The standardized average annual total return quotations will be current
to the last day of the calendar quarter preceding the date on which an
advertisement is submitted for publication. The standardized average
annual total return will be based on rolling calendar quarters and will
cover at least periods of one, five and ten years, or a period covering
the time the Fund has been in existence, if it has not been in existence
for one of the prescribed periods.

Non-standardized total return may also be advertised. The non-
standardized total return is not subject to a prescribed formula. Non-
standardized total return may be for periods other than those required
to be presented or may otherwise differ from standardized average annual
total return. Non-standardized total return for a specific period is
calculated by first taking an investment ("initial investment") in the
Fund's interests on the first day of the period and computing the "end
value" of that investment at the end of the period. The total return
percentage is then determined by subtracting the initial investment from
the ending value and dividing the remainder by the initial investment
and expressing the result as a percentage. The calculation assumes that
all income and capital gains dividends paid by the Series have been
reinvested at net asset value on the reinvestment dates during the
period. Non-standardized total return may also be shown as the increased
dollar value of the hypothetical investment over the period.

Quotations of standardized average annual total return and non-
standardized total return are based upon historical earnings and is not
intended to indicate future performance.

The yield for a Fund is computed in accordance with a standardized
method prescribed by the rules of the SEC. Under that method, yield is
computed by dividing the net investment income per interest earned
during the specified one month or 30-day period by the offering price
per interest on the last day of the period, according to the following
formula:

Yield equals:
2 times [(((a minus b)divided by cd) + 1) to the 6th power minus 1]

Where:

a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of interests outstanding during the period
that were entitled to receive dividends; and
d = the offering price (net asset value) per interest on the last day of
the period.

In computing the yield, a Fund follows certain standardized accounting
practices specified by SEC rules. These practices are not necessarily
consistent with those that a Fund uses to prepare annual and interim
financial statements in accordance with generally accepted accounting
principles.

A Fund's performance quotations are based upon historical results and
are not necessarily representative of future performance. A Fund's
interests are sold at net asset value. Returns and net asset value will
fluctuate. Factors affecting a Fund's performance include general market
conditions, operating expenses and investment management. Interests of a
Fund are redeemable at the then current net asset value, which may be
more or less than original cost.

The performance of the Funds may be compared to the performance of other
mutual funds, mutual fund indices [or annuity indices] with similar
objectives and policies as reported by Lipper Analytical Services, Inc.
("Lipper") or CDA Investment Technologies, Inc. ("CDA"). Lipper and CDA
performance calculations are based upon changes in net asset value with
all dividends reinvested and do not include the effect of any sales
charges. The Fund's performance may also be compared to that of the
Consumer Price Index or various unmanaged stock and bond indices
including, but not limited to, Salomon Brothers Broad Investment Grade
Index, Lehman Brothers High Yield Index, Lehman Brothers Aggregate Bond
Index, Lehman Brothers Intermediate Government/Corporate Bond Index,
Salomon Brothers Treasury Index, S&P MidCap 400 Index, Morgan Stanley
Capital International World Index, Morgan Stanley Capital International
Europe and Australia, Far East Equity Index, Russell 2000 Index, Russell
MidCap Index, and S&P 500 Stock Index. There are differences and
similarities between the investments which a Fund may purchase and the
investments by the market indicators.

Page 22

From time to time, a Fund also may quote information from publications
including, but not limited to, the following: Morningstar, Inc., The
Wall Street Journal, Money Magazine, Forbes, Barron's, The New York
Times, USA Today, Institutional Investor and Registered Representative.
Also, investors may want to compare the historical returns of various
investments, performance indices of those investments or economic
indicators, including but not limited to stocks, bonds, certificates of
deposit and other bank products, money market funds and U.S. Treasury
obligations. Certain of these alternative investments may offer fixed
rates of return and guaranteed principal, and may be insured. Economic
indicators may include, without limitation, indicators of market rate
trends and cost of funds, such as Federal Home Loan Bank Board 11th
District Cost of Funds Index (COFI). A Fund may also advertise its
portfolio at any given time. A Fund may also periodically advertise tax-
deferred compounding charts and other hypothetical illustrations.

Performance Data of Investment Strategies

As of the date of this Statement of Additional Information, the Funds
had not yet commenced investment operations. However, certain aspects of
the investment strategies can be demonstrated using historical data.

The following tables and charts show hypothetical performance and
information for the strategies employed by the Funds noted below and the
actual performance of the S&P 500 Index, the FT Index, the Hang Seng
Index, the DJIA, the Ibbotson Small Cap Index and a combination of the
FT Index, Hang Seng Index and the DJIA (the "Cumulative Index Returns").
All of the figures set forth below have been adjusted to take into
account the effect of currency exchange rate fluctuations of the U.S.
dollar, where applicable (i.e., returns are stated in U.S. dollar
terms). The Cumulative Index Returns are calculated by adding one-third
of the total returns of each of the FT Index, the Hang Seng Index and
the DJIA. It should be noted that in calculating hypothetical
performance information for the Target Small-Cap Strategy, companies
which, based on publicly available information at the time the
respective strategy is applied, were the subject of an announced
business combination expected to have been completed within six months
of the calculation were excluded from the respective Strategy Stocks.
The returns shown in the following tables and graphs are not guarantees
of future performance and should not be used as a predictor of returns
to be expected in connection with a Fund's portfolio. Both stock prices
(which may appreciate or depreciate) and dividends (which may be
increased, reduced or eliminated) will affect the returns. The Dow
Target 5 Portfolio, the Dow Target 10 Portfolio, the Target Small Cap
Portfolio and the Global Target 15 Portfolio have underperformed their
respective index or indices in certain years. Accordingly, there can be
no assurance that a Fund's portfolio will outperform its respective
index (or combination thereof, where applicable).

The following table compares the hypothetical performance of the Ten
Highest Dividend Yielding Stocks Strategy for the DJIA; the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks Strategies for
the DJIA; a combination of the Five Lowest Priced Stocks of the Ten
Highest Dividend Yielding Stocks Strategies in the FT Index, Hang Seng
Index and the DJIA (the "Combined 15 Strategy"); the Target Small-Cap
Strategy Stocks; the Target 10 Large Cap Strategy and the Target 15
Large Cap Strategy; and the performance of the S&P 500 Index, the FT
Index, the Hang Seng Index, the DJIA, the Ibbotson Small-Cap Index and
the Cumulative Index Returns in each of the 20 years listed below, as of
December 31 in each of those years (and as of the most recent quarter).

An investor in a Fund would not necessarily realize as high a total
return on an investment in the stocks upon which the hypothetical
returns are based for the following reasons: the total return figures
shown do not reflect brokerage commissions, expenses or taxes; the Funds
are established at different times of the year; and the Funds may not be
fully invested at all times or equally weighted in all stocks comprising
a strategy. Further, the returns also do not reflect the deduction of
any insurance fees or charges which are imposed by American Skandia in
connection with the sale of variable annuity policies. Investors should
refer to the prospectus for Account B for a description of those fees
and charges which have a detrimental effect on the performance of the
Funds. If the above-mentioned charges were reflected in the hypothetical
returns, the returns would be lower than those presented here.

These figures are for calendar years; the Funds may use different 12-
month periods.

Page 23

<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURN(2)
Strategy Total Returns Index Total Returns
_______________________________________ _____________________________________________
10 Highest 5 Lowest
Dividend Priced of the
Yielding 10 Highest
Stocks (1) Stocks (1)
________________ ____________
Target Target Target Ibbotson
Combined Small- 10 Large 15 Large S&P Hang Small- Cumulative
15 Cap Cap Cap 500 FT Seng Cap Index
Year DJIA DJIA Strategy Strategy Strategy Strategy Index Index Index DJIA Index Returns (3)
____ ____ _____ ________ ________ _________ ________ ______ _______ _______ _____ ________ ___________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1979 13.01% 9.84% 44.70% 40.78% 43.17% - 18.22% 3.59% 77.99% 10.60% 43.46% 30.73%
1980 27.90% 41.69% 52.51% 61.97% 54.15% - 32.11% 31.77% 65.48% 21.90% 38.88% 39.72%
1981 7.46% 3.19% 0.03% -9.46% -10.59% - -4.92% -5.30% -12.34% -3.61% 13.88% -7.08%
1982 27.12% 43.37% -2.77% 51.26% 38.21% - 21.14% 0.42% -48.01% 26.85% 28.01% -6.91%
1983 39.07% 36.38% 15.61% 31.04% 20.01% - 22.28% 21.94% -2.04% 25.82% 39.67% 15.24%
1984 6.22% 11.12% 29.88% -1.10% 16.34% - 6.22% 2.15% 42.61% 1.29% -6.67% 15.35%
1985 29.54% 38.34% 54.06% 50.81% 43.49% - 31.77% 54.74% 50.95% 33.28% 24.66% 46.32%
1986 35.63% 30.89% 38.11% 23.35% 21.81% 22.95% 18.31% 24.36% 51.16% 27.00% 6.85% 34.18%
1987 5.59% 10.69% 17.52% 14.94% 9.16% 14.10% 5.33% 37.13% -6.84% 5.66% -9.30% 11.99%
1988 24.57% 21.47% 24.26% 23.19% 20.35% -0.59% 16.64% 9.00% 21.04% 16.03% 22.87% 15.36%
1989 26.97% 10.55% 15.98% 26.10% 39.62% 37.33% 31.35% 20.07% 10.59% 32.09% 10.18% 20.92%
1990 -7.82% -15.74% 3.19% 1.08% -5.64% -5.39% -3.30% 11.03% 11.71% -0.73% -21.56% 7.34%
1991 34.20% 62.03% 40.40% 59.55% 24.64% 109.27% 30.40% 8.77% 50.68% 24.19% 44.63% 27.88%
1992 7.69% 22.90% 26.64% 27.81% 24.66% -0.15% 7.62% -3.13% 34.73% 7.39% 23.35% 12.99%
1993 27.08% 34.01% 65.65% 22.47% 42.16% 28.55% 9.95% 19.22% 124.95% 16.87% 20.98% 53.68%
1994 4.21% 8.27% -7.26% 2.11% 8.17% 10.50% 1.34% 1.97% -29.34% 5.03% 3.11% -7.45%
1995 36.85% 30.50% 13.45% 41.65% 25.26% 53.80% 37.22% 16.21% 27.52% 36.67% 34.66% 26.80%
1996 28.35% 26.20% 21.00% 34.96% 26.61% 60.03% 22.82% 18.35% 37.86% 28.71% 17.62% 28.31%
1997 21.68% 19.97% -6.38% 16.66% 61.46% 35.15% 33.21% 14.78% -17.69% 24.82% 22.78% 7.30%
1998 10.59% 12.36% 13.50% 1.85% 53.85% 123.10% 28.57% 12.32% -2.60% 18.03% -7.38% 9.25%
</TABLE>

(1) The Target Small-Cap Strategy Stocks, Target 10 Large Cap Strategy
Stocks, and Target 15 Large Cap Strategy Stocks for any given period
were selected by applying the respective strategy as of the beginning of
the period. The Ten Highest Dividend Yielding Stocks and the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks for any given
period were selected by ranking the dividend yields for each of the
stocks as of the beginning of the period and dividing by the stock's
market value on the first trading day on the exchange where that stock
principally trades in the given period. The Combined 15 Strategy merely
averages the Total Return of the stocks which comprise the Five Lowest
Priced Stocks of the Ten Highest Dividend Yielding Stocks in the FT
Index, Hang Seng Index and the DJIA, respectively.

(2) Total Return represents the sum of the percentage change in market
value of each group of stocks between the first trading day of a period
and the total dividends paid on each group of stocks during the period
divided by the opening market value of each group of stocks as of the
first trading day of a period. Total Return does not take into
consideration any sales charges, commissions, expenses or taxes. Total
Return assumes that all dividends are reinvested semi-annually (with the
exception of the FT Index and the Hang Seng Index from 12/31/78 through
12/31/86, during which time annual reinvestment was assumed), and all
returns are stated in terms of the United States dollar. Based on the
year-by-year returns contained in the table, over the 13 years listed
for the Target 15 Large Cap Strategy the average annual total return is
32.79%; in addition, over the 20 full years listed above, the Target
Small-Cap Strategy achieved an average annual total return of 24.39%,
the Target 10 Large Cap Strategy achieved an average annual total return
of 26.40%, the Ten Highest Dividend Yielding Stocks in the DJIA achieved
an average annual total return of 19.57%, and the Five Lowest Priced
Stocks of the Ten Highest Dividend Yielding Stocks in the DJIA and
Combined 15 Strategy achieved an average annual total return of 21.70%
and 21.32%, respectively. In addition, over this period, each individual
strategy achieved a greater average annual total return than that of its
corresponding index, the S&P 500 Index, Ibbotson Small-Cap Index, the
DJIA or a combination of the FT Index, Hang Seng Index and DJIA, which
were 17.61%, 16.00%, 17.28% and 17.94%, respectively. For the seven year
period between January 1, 1972 and December 31, 1978, the Ten Highest
Dividend Yielding Stocks in the DJIA achieved an annual total return of
23.76% in 1972, -1.02% in 1974, 56.10% in 1975, 35.18% in 1976, -1.95%
in 1977 and 0.03% in 1978; the Five Lowest Priced Stocks of the Ten
Highest Dividend Yielding Stocks in the DJIA achieved an annual total

Page 24

return of 22.92% in 1972, 20.01% in 1973, -5.40% in 1974, 65.77% in
1975, 40.96% in 1976, 5.49% in 1977 and 1.23% in 1978; the DJIA achieved
an annual total return of 18.38% in 1972, -13.20% in 1973, 23.64% in
1974, 44.46% in 1975, 22.80% in 1976, -12.91% in 1977 and 2.66% in 1978;
the S&P 500 Index achieved an annual total return of 18.89% in 1972, -
14.57% in 1973, -26.33% in 1974, 36.84% in 1975, 23.64% in 1976 and -
7.25% in 1977 and 6.49% in 1978; the Target Small-Cap Strategy Stocks
achieved an annual total return of 12.66% in 1972, -25.02% in 1973, -
34.85% in 1974, 40.13% in 1975, 45.70% in 1976, 16.22% in 1977 and
17.53% in 1978; and the Ibbotson Small-Cap Index achieved an annual
total return of 4.43% in 1972, 30.90% in 1973, -19.95% in 1974, 52.82%
in 1975, 57.38% in 1976, 25.38% in 1977 and 23.46% in 1978. Although
each Fund seeks to achieve a better performance than its respective
index as a whole, there can be no assurance that a Fund will achieve a
better performance.

(3) Cumulative Index Returns represent the average of the annual returns
of the stocks contained in the FT Index, Hang Seng Index and DJIA.
Cumulative Index Returns do not represent an actual index.

The chart above represents past performance. There can be no assurance
that any Fund will outperform the DJIA or any other index shown.
Investors should not rely on the preceding financial information as an
indication of the past or future performance of a Fund.

Investment Advisory and Other Services

Investment Adviser

First Trust Advisors L.P., 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, is the investment adviser to the Funds. As investment
adviser, First Trust provides the Funds with professional investment
supervision and management and permits any of its officers or employees
to serve without compensation as Managers or officers of the Registrant
if elected to such positions. First Trust provides each Fund with
discretionary investment services and certain administrative services
necessary with the management of the portfolios. Specifically, First
Trust is responsible for supervising and directing the investments of
each Fund in accordance with each Fund's investment objective, program,
and restrictions as provided in the Prospectus and this Statement of
Additional Information. First Trust is responsible for effecting all
security transactions on behalf of each Fund. First Trust is also
responsible for compliance with the provisions of Section 817(h) of the
Internal Revenue Code of 1986, as amended ("Code"), applicable to each
Fund (relating to the diversification requirements applicable to
investments in underlying variable annuity contracts).

First Trust Advisors L.P. (First Trust) is an Illinois limited
partnership formed in 1991 and an investment adviser registered with the
SEC under the Investment Advisers Act of 1940. First Trust is a limited
partnership with one limited partner, Grace Partners of Dupage L.P., and
one general partner, Nike Securities Corporation. Grace Partners of
Dupage L.P. is a limited partnership with one general partner, Nike
Securities Corporation, and a number of limited partners. Nike
Securities Corporation is an Illinois corporation controlled by Robert
Donald Van Kampen.

First Trust is also Subadviser to 6 mutual funds and is the portfolio
supervisor of certain unit investment trusts sponsored by Nike
Securities L.P. ("Nike Securities") which are substantially similar to
the Funds in that they have the same investment objectives and
strategies as the various Funds but have a life of approximately one
year. Nike Securities specializes in the underwriting, trading and
distribution of unit investment trusts and other securities. Nike
Securities, an Illinois limited partnership formed in 1991, acts as
sponsor for successive series of The First Trust Combined Series, The
First Trust Special Situations Trust, the First Trust Insured Corporate
Trust, The First Trust of Insured Municipal Bonds and The First Trust
GNMA. First Trust introduced the first insured unit investment trust in
1974 and to date more than $11 billion in First Trust unit investment
trusts have been deposited.

First Trust acts as investment adviser to the Funds pursuant to an
Investment Advisory and Management Agreement. The Investment Advisory
and Management Agreement continues in effect for each Fund from year to
year after its initial two-year term so long as its continuation is
approved at least annually by (i) a majority of the Managers who are not
parties to such agreement or interested persons of any such party except
in their capacity as Managers of the Registrant, and (ii) the interest
holders of each Series or the Board of Managers. It may be terminated at
any time upon 60 days notice by either party, or by a majority vote of
the outstanding interests of a Fund with respect to that Fund, and will
terminate automatically upon assignment. Additional Funds may be subject
to a different agreement. The Investment Advisory and Management
Agreement provides that First Trust, its directors, officers, employees,
and certain other persons performing specific functions for the Fund
will only be liable to a Fund for losses resulting from willful

Page 25

misfeasance, bad faith, gross negligence, or reckless disregard of its
obligations and duties under the agreement. As compensation for its
services, each Series pays First Trust a fee as described in the
Prospectus.

Nike Securities serves as the principal underwriter of the shares of the
Fund pursuant to a "best efforts" arrangement as provided by a
distribution agreement with the Fund, dated [______________]
("Distribution Agreement"). Pursuant to the Distribution Agreement, the
Fund appointed Nike Securities to be its agent for the distribution of
the Funds' shares on a continuous offering basis. Nike Securities sells
shares to Account B. Pursuant to the Distribution Agreement, Nike
Securities, at its own expense, finances certain activities incident to
the sale and distribution of the interests of the Series of the Fund,
including printing and distribution of prospectuses and statements of
additional information to other than existing shareholders and the
printing and distributing of sales literature and advertising. Nike
Securities also receives compensation pursuant to a Rule 12b1 plan
adopted by the Fund and described herein under "Rule 12b1 Plan."

Custodian and Transfer Agent

The custodian has custody of all securities and cash of the Registrant
maintained in the United States and attends to the collection of
principal and income and payment for and collection of proceeds of
securities bought and sold by the Fund. The Chase Manhattan Bank, 4 New
York Plaza, New York, NY 10004-2413, acts as custodian for each Fund.
First Data Investor Services Group, Inc, 4400 Computer Drive,
Westborough, Massachusetts 01581, is the transfer agent and dividend-
paying agent for each Fund and also serves as administrator to the
Registrant providing certain clerical, bookkeeping and administrative
services necessary for the operation of the Registrant and maintenance
of shareholder accounts.

Independent Accountants

The Funds' independent accountants, Ernst & Young LLP, 233 S. Wacker
Dr., Chicago, Illinois 60606-6301, audit and report on the Funds' annual
financial statements, and perform other professional accounting,
auditing and advisory services when engaged to do so by the Funds.

Series Transactions and Brokerage

First Trust is responsible for decisions to buy and sell securities for
each Fund and for the placement of a Fund's securities business, the
negotiation of the commissions to be paid on brokered transactions, the
prices for principal trades in securities, and the allocation of
portfolio brokerage and principal business. It is the policy of First
Trust to seek the best execution at the best security price available
with respect to each transaction, and with respect to brokered
transactions in light of the overall quality of brokerage and research
services provided to the respective adviser and its advisees. The best
price to the Fund means the best net price without regard to the mix
between purchase or sale price and commission, if any. Purchases may be
made from underwriters, dealers, and, on occasion, the issuers.
Commissions will be paid on a Fund's futures and options transactions,
if any. The purchase price of portfolio securities purchased from an
underwriter or dealer may include underwriting commissions and dealer
spreads. A Fund may pay mark-ups on principal transactions. In selecting
broker/dealers and in negotiating commissions, First Trust considers,
among other things, the firm's reliability, the quality of its execution
services on a continuing basis and its financial condition. Fund
portfolio transactions may be effected with broker/dealers who have
assisted investors in the purchase of policies. The selection of a
brokerdealer may take into account the sale of products sponsored or
advised by First Trust and/or its affiliates.

Section 28(e) of the Securities Exchange Act of 1934 ("Section 28(e)")
permits an investment adviser, under circumstances, to cause an account
to pay a broker or dealer who supplies brokerage and research services a
commission for effecting a transaction in excess of the amount of
commission another broker or dealer would have charged for effecting the
transaction. Brokerage and research services include (a) furnishing
advice as to the value of securities, the advisability of investing,
purchasing or selling securities, and the availability of securities or
purchasers or sellers of securities, (b) furnishing analyses and reports
concerning issuers, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts; and (c) effecting
securities transactions and performing functions incidental thereto
(such as clearance, settlement, and custody).

In light of the above, in selecting brokers, First Trust considers
investment and market information and other research, such as economic,
securities and performance measurement research, provided by such
brokers, and the quality and reliability of brokerage services,
including execution capability, performance, and financial

Page 26

responsibility. Accordingly, the commissions charged by any such broker
may be greater than the amount another firm might charge if First Trust
determines in good faith that the amount of such commissions is
reasonable in relation to the value of the research information and
brokerage services provided by such broker to First Trust or the
Registrant. First Trust believes that the research information received
in this manner provides the Funds with benefits by supplementing the
research otherwise available to the Funds. The Investment Advisory and
Management Agreement provides that such higher commissions will not be
paid by the Funds unless the adviser determines in good faith that the
amount is reasonable in relation to the services provided. The
investment advisory fees paid by the Funds to First Trust under the
Investment Advisory and Management Agreement are not reduced as a result
of receipt by First Trust of research services.

First Trust places portfolio transactions for other advisory accounts
advised by it, research services furnished by firms through which the
Funds effects their securities transactions may be used by First Trust
in servicing all of its accounts; not all of such services may be used
by First Trust in connection with a Fund. First Trust believes it is not
possible to measure separately the benefits from research services to
each of the accounts (including the Funds) advised by it. Because the
volume and nature of the trading activities of the accounts are not
uniform, the amount of commissions in excess of those charged by another
broker paid by each account for brokerage and research services will
vary. However, First Trust believes such costs to the Funds will not be
disproportionate to the benefits received by the Funds on a continuing
basis. First Trust seeks to allocate portfolio transactions equitably
whenever concurrent decisions are made to purchase or sell securities by
the Funds and another advisory account. In some cases, this procedure
could have an adverse effect on the price or the amount of securities
available to the Funds. In making such allocations between the Funds and
other advisory accounts, the main factors considered by First Trust are
the respective investment objectives, the relative size of portfolio
holding of the same or comparable securities, the availability of cash
for investment and the size of investment commitments generally held.

Code of Ethics

To mitigate the possibility that a Fund will be adversely affected by
personal trading of employees, the Registrant and First Trust have
adopted Codes of Ethics under Rule 17j-1 of the Investment Company Act
of 1940. These Codes contain policies restricting securities trading in
personal accounts of the portfolio managers and others who normally come
into possession of information on portfolio transactions.

Purchases, Redemptions and Pricing of Interests

Account B may purchase interests of the Funds at their net asset value.
Interests are purchased using premiums received on Policies issued by
Account B. Account B is funded by interests of the Registrant.

All investments in the Registrant are credited to the interest holder's
account in the form of full and fractional interests of the designated
Fund (rounded to the nearest 1/1000 of an interest). The Registrant does
not issue interest certificates.

As stated in the Prospectus, the net asset value ("NAV") of Fund's
interests is determined once each day on which the New York Stock
Exchange (the "NYSE") is open ("Business Day") at the close of the
regular trading session of the Exchange (normally 4:00 p.m., Eastern
Time, Monday through Friday). The NAV of Fund's interests is not
determined on the days the NYSE is closed, which days generally are New
Year's Day, Martin Luther King Jr. holiday, President's Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.

The per interest NAV of a Fund is determined by dividing the total value
of the securities and other assets, less liabilities, by the total
number of interests outstanding. A Fund's net assets value may not be
calculated on days during which the Fund receives no orders to purchase
shares and no shares are tendered for redemption. In determining NAV,
securities listed on the national securities exchanges, the Nasdaq Stock
Market and foreign exchanges are valued at the closing prices on such
markets; however, securities traded on a national securities exchange,
Nasdaq, or foreign exchanges for which there were no transactions on a
given day are valued at their most recent bid prices. Securities that
are traded on the over-the-counter market are valued at their closing
bid prices. Foreign securities and currencies are converted to U.S.
dollars using exchange rates in effect at the time of valuation. A Fund
will determine the market value of individual securities held by it, by
using prices provided by one or more professional pricing services which
may provide market prices to other funds, or, as needed, by obtaining
market quotations from independent broker-dealers. Short-term securities
maturing within 60 days are valued on the amortized cost basis.

Page 27

Securities for which quotations are not readily available, and other
assets, are valued at fair value determined in good faith under
procedures established by and under the supervision of the Managers.

Trading in securities on European and Far Eastern securities exchanges
and over-the-counter markets is normally completed well before the close
of business on each Business Day. In addition, European and Far Eastern
securities trading generally or in a particular country or countries may
not take place on all Business Days. Furthermore, trading takes place in
Japanese markets on certain Saturdays and in various foreign markets on
days which are not Business Days and on which a Fund's net asset value
is not calculated. A Fund calculates net asset value per interest, and
therefore effects sales, redemptions and repurchases of its interests,
as of the close of the NYSE once on each day on which the NYSE is open.
Such calculation does not take place contemporaneously with the
determination of the prices of the majority of the foreign portfolio
securities used in such calculation.

The Registrant may suspend the right of redemption for any Fund only
under the following unusual circumstances: (a) when the New York Stock
Exchange is closed (other than weekends and holidays) or trading is
restricted; (b) when an emergency exists, making disposal of portfolio
securities or the valuation of net assets not reasonably practicable; or
(c) during any period when the Securities and Exchange Commission has by
order permitted a suspension of redemption for the protection of
interest holders.

12b-1 Plan

The Registrant has adopted a plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, which provides that interests
of the Funds will be subject to an annual service fee.

Nike Securities serves as selling agent and distributor of the interests
of the Funds. In this capacity, Nike Securities manages the offering of
the Funds' interests and is responsible for all sales and promotional
activities. In order to reimburse Nike Securities for its costs in
connection with these activities, each Fund Series has adopted a service
plan under Rule 12b-1 under the Investment Company Act of 1940. Nike
Securities 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 other personal services to policy owners. Each Fund may
spend up to .25 of 1% 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 Nike
Securities for expenses incurred in connection with the sales and
distribution of a Fund's interests including, without limitation,
expenses of printing and distributing prospectuses to persons other than
interest holders or policy owners, expenses of preparing, printing and
distributing advertising and sales literature and reports to interests
holders and policy owners used in connection with the sale of a Fund's
interests, certain other expenses associated with the distribution of
interests of the Funds, and any distribution-related expenses that may
be authorized from time to time by the Board of Managers.

Under the Registrant's Plan, the Registrant will report quarterly to the
Board of Managers for its review all amounts expended per Series under
the Plan. The Plan may be terminated at any time with respect to any
Fund, without the payment of any penalty, by a vote of a majority of the
Managers who are not "interested persons" and who have no direct or
indirect financial interest in the Plan or by vote of a majority of the
outstanding voting securities of such Fund. The Plan may be renewed
from year to year if approved by a vote of the Board of Managers and a
vote of the non-interested Managers 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. The Plan may be continued only if
the Managers who vote to approve such continuance conclude, in the
exercise of reasonable business judgment and in light of their fiduciary
duties under the applicable law, that there is a reasonable likelihood
that the Plan will benefit a Fund and its shareholders. The Plan may
not be amended to increase materially the cost which a Fund may bear
under the Plan without the approval of the interest holders of the
affected Fund, and any other material amendments of the Plan must be
approved by the non-interested Managers by a vote cast in person at a
meeting called for the purpose of considering such amendments. During
the continuance of the Plan, the selection and nomination of the non-
interested managers of the Registrant will be committed to the
discretion of the non-interested managers then in office.

Page 28

Additional Information

Voting Rights

Interest holders are entitled to one vote for each interest held.
Interest holders may vote on the election of Managers and on other
matters submitted to meetings of interest holders. In regard to
termination, sale of assets, or change of investment restrictions, the
right to vote is limited to the holders of interests of the particular
Fund affected by the proposal. When a majority is required, it means the
lesser of 67% or more of the interests present at a meeting when the
holders of more than 50% of the outstanding interests are present or
represented by proxy, or more than 50% of the outstanding interests.

To the extent required by applicable law, American Skandia will solicit
voting instructions from owners of variable annuity Policies. All
interests in each Fund will be voted by American Skandia in accordance
with voting instructions received from such variable Policy owners.
American Skandia will vote all of the interests which it is entitled to
vote in the same proportion as the voting instructions given by variable
Policy owners, on the issues presented.

Each issued and outstanding interest in a Fund is entitled to
participate equally in dividends and distributions declared by its
corresponding Fund, and in the net assets of the Fund remaining upon
liquidations or dissolution after outstanding liabilities are satisfied.
The interests of each Fund, when issued, are fully paid and
nonassessable. They have no preemptive, conversion, cumulative dividend
or similar rights. They are freely transferable. Interests in a Fund do
not have cumulative rights. This means that owners of more than half of
the Registrant's interests voting for election of Managers can elect all
the Managers if they so choose. Then, the remaining interest owners
would not be able to elect any Managers.

Shareholder Inquiries

All inquiries regarding the Registrant should be directed to the
Registrant at (800) 766-4683 or by writing the Registrant at
___________________________.

Tax Status

The Registrant is not a "regulated investment company" under Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"). The
Registrant nonetheless does not pay federal income tax on its interest,
dividend income or capital gains. As a limited liability company whose
interests are sold only to Account B, the Registrant is disregarded as
an entity for purposes of federal income taxation. American Skandia,
through Account B, is treated as owning the assets of the Funds directly
and its tax obligations thereon are computed pursuant to Subchapter L of
the Code (which governs the taxation of insurance companies). Under
current tax law, interest, dividend income and capital gains of the
Registrant are not taxable to the Registrant, and are not currently
taxable to American Skandia or to Policy owners, when left to accumulate
within a variable annuity Policy. Tax disclosure relating to the
variable annuity Policies that offer the Registrant as an investment
alternative is contained in the prospectuses for those Policies.

Section 817(h) of the Code imposes certain diversification standards on
the underlying assets of segregated asset accounts that fund contracts
such as the variable annuity Policies (that is, the assets of the
Funds). Failure to satisfy those standards would result in imposition of
Federal income tax on a variable annuity Policy owner with respect to
the increase in the value of the variable annuity Policy. Section
817(h)(2) provides that a segregated asset account that funds contracts
such as the variable annuity Policies is treated as meeting the
diversification standards if, as of the close of each calendar quarter,
the assets in the account meet the diversification requirements for a
regulated investment company and no more than 55% of those assets
consist of cash, cash items, U.S. Government securities and securities
of other regulated investment companies.

The Treasury Regulations amplify the diversification standards set forth
in Section 817(h) and provide an alternative to the provision described
above. Under the regulations, an investment portfolio will be deemed
adequately diversified if (i) no more than 55% of the value of the total
assets of the portfolio is represented by any one investment; (ii) no
more than 70% of such value is represented by any two investments; (iii)
no more than 80% of such value is represented by any three investments;

Page 29

and (iv) no more than 90% of such value is represented by any four
investments. For purposes of these Regulations, all securities of the
same issuer are treated as a single investment, but each United States
government agency or instrumentality shall be treated as a separate
issuer.

Each Fund will be managed with the intention of complying with these
diversification requirements. It is possible that, in order to comply
with these requirements, less desirable investment decisions may be made
which could affect the investment performance of a Fund.

Financial Statements

To be filed by pre-effective amendment.

Page 30

FIRST DEFINED PORTFOLIO FUND LLC

PART C
OTHER INFORMATION

Note: Items 23-30 have been answered with respect to all investment
portfolios (Funds) of the Registrant.

Item 23. Exhibits

Exhibit
Number Description
_______ ___________
(a)(1) Certificate of Formation of the Registrant, attached hereto

(a)(2) Operating Agreement of the Registrant, to be filed by Amendment

(b) Not Applicable

(d) Investment Advisory and Management Agreement between
Registrant and First Trust Advisors L.P., to be filed by Amendment.

(e) Fund Participation Agreement between Registrant, [American
Skandia Life Assurance Corporation] and [American Skandia Life
Assurance Corporation Variable Account B], to be filed by Amendment

(f) Not Applicable

(g) Custodian Contract, to be filed by Amendment

(h) Transfer Agency and Service Agreement between Registrant and
First Data Investor Services Group, Inc., to be filed by Amendment

(i) Opinion of counsel, to be filed by Amendment

(j) Consent of independent auditors, to be filed by Amendment

(k) Not Applicable

(l) Not Applicable

(m) 12b-1 Plan, to be filed by Amendment

(n) Not Applicable

(o) Not Applicable

Item 24. Persons controlled by or under Common Control with Registrant

Not Applicable

Item 25. Business and Other Connections of the Investment Adviser

To be Supplied by Amendment

Item 26. Indemnification

Page 1

To be Supplied by Amendment

Item 27. Principal Underwriters

To be Supplied by Amendment

Item 28. Location of Accounts and Records

First Trust Advisors L.P., 1001 Warrenville Road, Suite 300, Lisle,
Illinois 60532, maintains the Registrant's organizational documents,
minutes of meetings, contracts of the Registrant and all advisory
material of the investment adviser.

The Chase Manhattan Bank, 4 New York Plaza, New York, New York 10004-
2413, maintains all general and subsidiary ledgers, journals, trial
balances, records of all portfolio purchase sand sales, and all other
requirement records not maintained by First Trust Advisors L.P., or
First Data Investor Services Group, Inc.

First Data Investor Services Group, Inc., 4400 Computer Drive,
Westborough, Massachusetts 01581, maintains all the required records
in its capacity as transfer, dividend payment and interest holder
service agent for the Registrant.

Item 29. Management Services

Not Applicable

Item 30. Undertakings

Not Applicable

Page 2

SIGNATURES

Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Registrant has duly caused this Registration Statement
to be signed on its behalf by the undersigned, duly authorized, in the
City of Lisle and the State of Illinois on the 8th day of February, 1999.

FIRST DEFINED PORTFOLIO FUND LLC

By: /s/ James A Bowen
___________________________________
James A. Bowen
Sole Managing Board Member

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following person in
the capacity and on the date indicated.

/s/ James A. Bowen
______________________________________
James A. Bowen
Sole Managing Board Member

February 8, 1999

Page 3

EXHIBIT LIST

Exhibit
Number Description
_______ ___________
(a)(1) Certificate of Formation of First Defined Portfolio Management
Fund LLC

Page 4

Exhibit (a)(1)

CERTIFICATE OF FORMATION
OF
FIRST DEFINED PORTFOLIO MANAGEMENT FUND LLC

The undersigned, an authorized natural person, for the purpose of
forming a limited liability company, under the provisions and subject to
the requirements of the State of Delaware (particularly Chapter 18,
Title 6 of the Delaware Code and the acts amendatory thereof and
supplemental thereto, and known, identified, and referred to as the
"Delaware Limited Liability Company Act"), hereby certifies that:

FIRST, The name of the limited liability company (hereinafter called the
"limited liability company") is: FIRST DEFINED PORTFOLIO MANAGEMENT FUND
LLC

SECOND, The address of the registered office and the name and address of
the registered agent of the limited liability company required to be
maintained by Section 18-104 of the Delaware Limited Liability Company
Act are Corporation Service Company Center, 1013 Centre Road,
Wilmington, Delaware 19805.

Executed on January 8, 1999

/s/ W. SCOTT JARDINE
_______________________________
W. Scott Jardine,
Authorized Person

Page 5