Registration No. 333-38119 April 27, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Post-Effective Amendment No. 2
to
FORM S-6
FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933
OF SECURITIES OF UNIT INVESTMENT TRUSTS
REGISTERED ON FORM N-8B-2
A. Exact name of trust:
American Skandia Life Assurance Corporation Separate Account F
B. Name of depositor:
American Skandia Life Assurance Corporation
C. Complete address of depositor's principal executive offices:
One Corporate Drive, Shelton, CT 06484
D. Name and complete address of agent for service:
Scott K. Richardson, Esq.
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, CT 06484
It is proposed that this filing will become effective
(check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on 5/1/2000 pursuant to paragraph (b)of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on ____________ pursuant to paragraph (a)(1) of rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
E. Title and amount of securities being registered:
Modified Single Premium Variable Life Insurance.
The Registrant elects to register an indefinite number of securities by
this registration statement in accordance with Rule 24f-2 under the
Investment Company Act of 1940.
F. Proposed maximum aggregate offering price to the public of the
securities being registered:
G. Amount of filing fee:
None
H. Approximate date of proposed public offering
As soon as practicable after the effective date of this Registration
Statement.
[ ] Check box if it is proposed that this filing will become effective
on ______________ at ____________ pursuant to Rule 487.
RECONCILIATION AND TIE BETWEEN
FORM N-8B-2 AND PROSPECTUS
ITEM NO. OF
FORM N-8B-2 CAPTION IN PROSPECTUS
1. Face page
2. Face page
3. Not applicable
4. Distribution of this Offering
5. The Separate Account
6. The Separate Account
7. Not Applicable
8. Not Applicable
9. Legal Proceedings
10. Face page; Variable Investment Options; The Separate
Account; Voting; Modification of the Separate
Account; Additional Tax Considerations; Loans;
Partial Withdrawals; Surrenders; Transfers and
Allocation Services; Safekeeping of the Assets
11. Face page; Variable Investment Options
12. Face page; Variable Investment Options
13. Costs; Variable Investment Options; Taxes;
Additional Tax Considerations
14. Buying a Policy - How do I buy a Policy?
15. Account Value and Cash Value; Buying a Policy - How
and When is my Premium Invested?
16. Buying a Policy - How and When is my Premium
Invested? Variable Investment Options
17. Partial Withdrawals; Surrenders; Reinstatement;
Account Value and Cash Value; Buying a Policy;
Pricing Transactions
18. Account Value and Cash Value; Variable Investment
Options; The Separate Account; Safekeeping of the
Assets
19. Reports
20. Voting; Safekeeping of the Assets
21. Loans
22. Not applicable
23. Safekeeping of the Assets
24. Not applicable
25. Regulation; The Insurance Company
26. Not applicable
27. The Insurance Company
28. Executive Officers and Directors
29. The Insurance Company
30. Not applicable
31. Not applicable
32. Not applicable
33. Not applicable
34. Not applicable
35. The Insurance Company; Regulation
36. Not applicable
37. Not applicable
38. Distribution of this Offering
39. Distribution of this Offering
40. Not applicable
41. The Insurance Company; Distribution of this Offering
42. Not applicable
43. Not applicable
44. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
45. Not applicable
46. Account Value and Cash Value; Pricing Transactions;
Additional Tax Considerations; Net Investment Factor
47. Variable Investment Options; The Separate Account
48. Face Page; The Insurance Company
49. Not applicable
50. The Separate Account; Safekeeping of the Assets
51. Face Page; The Insurance Company; Benefits at the
Insured's Death; Designations
52. Modification of the Separate Account
53. Additional Tax Considerations
54. Not applicable
55. Not applicable
56. Not applicable
57. Not applicable
58. Not applicable
59. Audited Consolidated Financial Statements of
American Skandia Life Assurance Corporation;
Financial Statements for American Skandia Life
Assurance Corporation Separate Account F
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
One Corporate Drive, Shelton, Connecticut 06484
This Prospectus describes a modified single premium variable life insurance
policy being offered by American Skandia Life Assurance Corporation ("we,"
"our," "us," "American Skandia," or "the Company"), One Corporate Drive, P.O.
Box 883, Shelton, Connecticut, 06484. The policy may be offered as individual
coverage or as an interest in a group policy. This Prospectus provides a
detailed discussion of matters you should consider before buying a policy. This
policy or certain of its investment options may not be available in all
jurisdictions. Various rights and benefits may differ between jurisdictions to
meet applicable law and/or regulations.
What is American Skandia offering? We are offering a type of cash value life
insurance called "modified single premium variable life insurance." Each of
these technical terms can be explained as follows:
|X| The coverage is called "life insurance" because a death benefit becomes
payable to a beneficiary upon the death of the insured person (if coverage
is issued on two insureds, the death benefit is payable upon the death of
the second of the insureds to die). It is "cash value" life insurance
because, in addition to a death benefit, it also provides living benefits
for the owner, such as the right to take withdrawals and the right to take
loans using the value of the policy as collateral.
|X| The coverage is called "modified single premium" because we do not accept
any premium other than the first unless we know about the additional
premium during the underwriting period or an additional amount is required
to keep the policy from being cancelled.
|X| The coverage is "variable" because you can allocate all or part of your
premium to variable investment options that invest in an underlying mutual
fund or a portfolio of an underlying mutual fund. The variable investment
options are sub-accounts of American Skandia Life Assurance Corporation
Separate Account F ("Account F"). The following underlying mutual funds or
portfolios of the following underlying mutual funds are currently being
offered: American Skandia Trust, The Alger American Fund, Montgomery
Variable Series, INVESCO Variable Investment Funds, Inc. and Evergreen
Variable Annuity Trust. The available portfolios of these underlying mutual
funds are listed on page 15. The performance of the variable investment
options is not guaranteed. You bear the investment risk if you allocate
funds to these investment options because the performance of these
investment options can decrease or increase. This can impact the death
benefit and the cash value of the Policy.
|X| The coverage also allows you to allocate all or part of your premium to a
fixed option to which we credit a fixed rate of interest. We guarantee the
rate of return on this option. These obligations are supported by our
general account. We bear the investment risk if you allocate funds to this
option.
|X| We believe this policy will be treated as a "modified endowment contract"
under the Internal Revenue Code (the "Code"). In general, the tax treatment
of a modified endowment contract's death benefit is similar to that of
death benefits under life insurance policies, while the tax treatment of
the contract's living benefits are similar to those of living benefits
under deferred annuities. This means that in most circumstances the
beneficiary owes no Federal income tax on the death proceeds. However, most
distributions from such a policy while the insured is alive, including
loans, withdrawals and surrender, are taxable to the owner, like
distributions from a deferred annuity before annuity payments begin. This
means that such distributions are deemed to come first from any gain in the
policy. Any gain is treated as ordinary income and may be subject to a 10%
tax penalty if taken before your age 59 1/2.
The variable life insurance policy described in this Prospectus is not a deposit
of or guaranteed by, any bank or bank subsidiary, and is not insured by the
Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other
agency. The Policy is subject to investment risks, including the possible loss
of the principal amount invested.
- --------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE
READ THIS PROSPECTUS AND THE CURRENT PROSPECTUSES FOR THE UNDERLYING FUNDS. KEEP
IT FOR FUTURE REFERENCE.
- --------------------------------------------------------------------------------
ASTr-PROS (05/2000) CALL 1-800-752-6342 FOR FURTHER INFORMATION
Prospectus Dated: May 1, 2000
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VLI
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<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Definitions........................................................................................................................4
Summary of Costs...................................................................................................................7
Description of the Offering........................................................................................................9
Purchasers......................................................................................................................9
Benefits at the Insured's Death................................................................................................10
Account Value and Cash Value...................................................................................................11
Cash Value Credits.............................................................................................................12
Costs..........................................................................................................................12
Buying a Policy................................................................................................................15
Variable Investment Options....................................................................................................17
Loans..........................................................................................................................25
Partial Withdrawals............................................................................................................26
Surrenders.....................................................................................................................27
Accelerated Death Benefit......................................................................................................27
Medically-Related Waiver.......................................................................................................28
Risks..........................................................................................................................28
Other Rights...................................................................................................................28
The Insurance Company..........................................................................................................28
The Separate Account...........................................................................................................29
Taxes..........................................................................................................................29
Available Information..........................................................................................................30
Miscellaneous Provisions And Additional Details...................................................................................30
Providing Services to You......................................................................................................30
Designations...................................................................................................................30
Net Investment Factor..........................................................................................................30
Allocation Programs............................................................................................................31
Limitations on Transfers.......................................................................................................31
Death During the Grace Period..................................................................................................31
Reinstatement..................................................................................................................32
Maturity.......................................................................................................................32
Pricing Transactions...........................................................................................................32
Delaying Transactions..........................................................................................................32
Voting.........................................................................................................................33
Transfers, Assignments, Pledges................................................................................................33
Reports........................................................................................................................33
Incontestability...............................................................................................................34
Suicide........................................................................................................................34
Misstatement...................................................................................................................34
Backdating.....................................................................................................................34
Policy Loans on Exchanges......................................................................................................34
Resolving Material Conflicts...................................................................................................34
Modification of the Separate Account...........................................................................................35
Entire Contract................................................................................................................35
Additional Tax Considerations..................................................................................................35
Safekeeping of the Assets......................................................................................................37
Regulation.....................................................................................................................38
Legal Matters..................................................................................................................38
Legal Proceedings..............................................................................................................38
Experts........................................................................................................................38
Distribution of this Offering..................................................................................................38
Illustrations..................................................................................................................40
Executive Officers and Directors...............................................................................................41
<PAGE>
Financial Statements for American Skandia Life Assurance Corporation Separate Account F............................................1
Appendix A Hypothetical Illustration of Accelerated Death Benefit.................................................................11
Appendix B Net Single Premium Factors for Determination of Required Death Benefits................................................12
Appendix C Guaranteed Monthly Maximum Cost of Insurance Charges...................................................................14
</TABLE>
<PAGE>
DEFINITIONS
The following are key terms used in this Prospectus. Other terms are defined in
this Prospectus as they appear.
ACCOUNT VALUE is the value of your allocation to each Sub-account and any Fixed
Allocation, plus any earnings and less any losses, distributions and charges
thereon, plus the value of any amounts in the Loan Account, plus any earnings
and less any distributions and charges thereon, all before assessment of any
contingent deferred sales charge, contingent deferred tax charge or Debt.
Account Value is determined separately for each Sub-account and each Fixed
Allocation, as well as for any amounts in the Loan Account, and then totaled to
determine the Account Value of your entire Policy.
AGE is the age of an Insured for purposes of this Policy. Initially, and for the
first Policy Year, it is the age last birthday of an Insured as of the Policy
Date. In each following Policy Year, it is the age last birthday of an Insured
as of the preceding Policy Anniversary. If there is more than one Insured, it is
the age of the younger Insured.
APPLICATION is the form or combination of forms you must submit to apply for a
Policy. If there are two Insureds, the Application must be completed for both
Insureds.
BENEFICIARY is a person or entity you designate for us to pay any Death
Proceeds. Unless otherwise specified, Beneficiary refers to all persons or
entities so designated.
CASH VALUE is the Account Value less any contingent deferred sales charge,
contingent deferred tax charge and Debt.
CASH VALUE CREDITS are amounts we credit to your Account Value. We credit these
amounts if your total Cash Value on a Policy Anniversary equals or exceeds a
Cash Value trigger.
CODE is the Internal Revenue Code of 1986, as amended from time to time, and the
regulations thereunder.
DEATH BENEFIT is the amount payable as a result of an Insured's death before any
reduction due to Debt and before addition of any interest due pursuant to law.
If there is a second Insured, the Death Benefit is payable upon the death of the
last surviving Insured.
DEATH PROCEEDS equals the Death Benefit less any reduction for Debt and after
addition of any interest due pursuant to law.
DEBT is the total of any outstanding loan and loan interest.
FACE AMOUNT is the Death Benefit as of the Policy Date.
FIXED ALLOCATION is an allocation of Account Value to our general account that
is credited a fixed rate of interest.
GROWTH is a portion of the Account Value. It equals (a) less (b) less (c),
where: (a) is the total current Account Value; (b) is any Debt; and (c) is the
Premium less any partial withdrawals treated as a withdrawal of Premium.
GUARANTEED MINIMUM DEATH BENEFIT is the minimum amount we guarantee is payable
as a result of the Insured's death, before any reduction for Debt, even if it is
higher than the Required Death Benefit.
IN WRITING is in a written form, in a manner we accept, that is satisfactory to
us and filed at our Office. We retain the right to specifically agree in advance
to accept communication regarding a specific matter by telephone or by some
other form of electronic transmission, in a manner we prescribe.
INSURED is the person(s) upon whose life coverage is issued and as a result of
whose death the Death Proceeds are payable. If there is more than one Insured,
Insured means the last surviving Insured, unless otherwise stated.
ISSUE DATE is the date we issue your Policy.
LOAN ACCOUNT is where we maintain Account Value as collateral for a loan to you
from us.
MATURITY DATE is the Policy Anniversary immediately following the Insured's 95th
birthday, or if there are two Insureds, immediately following the 95th birthday
of the younger Insured, or what would have been the younger Insured's 95th
birthday if the younger Insured predeceases the older Insured.
MONTHLY PROCESSING DAY/DATE is the Valuation Day each month when we deduct
charges from the Account Value. The first Monthly Processing Date is the Policy
Date. After that, the Monthly Processing Dates generally occur on the same day
of the month as the Policy Date. If the Monthly Processing Date occurs on a day
that is not a Valuation Day, the Monthly Processing Date that month will be the
next Valuation Day.
NET SINGLE PREMIUM is the amount that would be required, according to the Code
and the regulations based on the Code, to fund: (a) the Policy's Required Death
Benefit, assuming the current Required Death Benefit would not change; and (b)
future benefits and charges using assumptions about: (i) growth of Account Value
so that it would equal the current Required Death Benefit on the Maturity Date;
and (ii) charges, as provided pursuant to the Code. The Net Single Premium
depends on the attained age, gender (where permitted), tobacco usage class and
risk class of each Insured. The Net Single Premium changes as each Insured ages.
The applicable Net Single Premiums would change if required under the Code or
regulations based on the Code.
OFFICE is our administrative office: American Skandia Life Assurance
Corporation, P.O. Box 290698, Wethersfield, Connecticut 06129-0698.
OWNER is either an entity or person who may exercise the ownership rights
provided by a Policy. If we issue a certificate representing interests in a
group life insurance policy, the rights, benefits, and requirements of and the
events relating to an Owner, as described in this Prospectus, will be your
rights as participant in such group policy. Unless later changed, Owner refers
to all persons or entities designated as such in your Policy.
POLICY is the insurance contract or certificate we issue as evidence of our
commitment to pay the Death Proceeds upon the death of the Insured.
POLICY ANNIVERSARY is the anniversary of the Policy Date.
POLICY DATE is the effective date of your Policy.
POLICY YEARS are continuous 12-month periods that begin on the Policy Date and
each Policy Anniversary thereafter.
PORTFOLIO is a portfolio of an underlying mutual fund.
PREMIUM is the cash consideration you give to us for the rights, privileges and
benefits provided by a Policy according to its terms. This includes Premium paid
as of the Issue Date, as shown in the Policy, and any additional consideration
we choose to accept. Acceptance must occur before completion of the underwriting
for the Policy.
REQUIRED DEATH BENEFIT is the minimum amount due as a result of the Insured's
death pursuant to the applicable test we apply in accordance with the Code,
prior to any reduction for Debt.
SEPARATE ACCOUNT is our separate account to which we allocate assets in relation
to our obligations for benefits based on the variable investment options.
American Skandia Life Assurance Corporation Separate Account F (also referred to
as Separate Account F) is the separate account utilized for the Policy.
SUB-ACCOUNT is a division of the Separate Account.
UNIT is a measure used to calculate Account Value in a Sub-account.
UNIT PRICE is used for calculating: (a) the number of Units allocated to a
Sub-account; and (b) the value of transactions into or out of a Sub-account or
benefits based on Account Value in a Sub-account. Each Sub-account has its own
Unit Price, which will vary each Valuation Period to reflect the investment
experience of that Sub-account.
VALUATION DAY/DATE is every day the New York Stock Exchange is open for trading
or any other day that the Securities and Exchange Commission requires mutual
funds or unit investment trusts to be valued.
VALUATION PERIOD is the period of time between the close of business of the New
York Stock Exchange on successive Valuation Days.
"We," "us," "our," "American Skandia," or "the Company" means American Skandia
Life Assurance Corporation.
"You" or "your" means the Owner.
<PAGE>
SUMMARY OF COSTS
The following is a summary of the cost of the Policies being offered, or, in the
case of costs that vary from Policy to Policy, a short description of how such
costs are determined. All of these costs are described in more detail within
this Prospectus.
<TABLE>
<CAPTION>
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
COST AMOUNT DEDUCTED/ WHEN DEDUCTED
DESCRIPTION OF COST
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
<S> <C> <C> <C>
Mortality & Expense Risk 0.90% per year of the value of each Sub-account Daily
Charge
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
Administration Charge 0.25% per year of the value of each Sub-account Daily
- ------------------------------ ------------------ -------------------------- -------------------------- ----------------------------
Cost of Insurance Gender Age 20-69 Age 70-90 Monthly
------ --------- ---------
Male 0.55% No Tobacco Use 0.90% No Tobacco Use
(See Appendix C for 0.90% Tobacco Use 1.25% Tobacco Use (Pro-rata from the variable
information on guaranteed and fixed investment options
cost of insurance rates. in which you maintain Account
See the Prospectus for cost Value)
of insurance rates for
Policies issued with two
Insureds.)
Female 0.40% No Tobacco Use 0.75% No Tobacco Use
0.75% Tobacco Use 1.10% Tobacco Use
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
Sales Charge 0.40% per year of the Account Value Monthly for the 1st 10
Policy Years
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
Tax Charge 0.25% per year of the Account Value Monthly for the 1st 10
Policy Years
- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
Contingent Deferred Sales 1 2 3 4 5 6 7 8 9 10
Charge
Upon Surrender or Withdrawal
(Percentage of Premium
deducted in Policy Years 1
through 10)
- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
7.75 7.50 7.25 6.50 5.75 5.00 4.25 3.50 2.75 0
- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
Contingent Deferred Tax 1 2 3 4 5 6 7 8 9 10
Charge
- ------------------------------ ------ ------- ------ ------ ------ ------- ------ ------ ------ ------- ----------------------------
2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
Maintenance Fee $2.50 per month unless Account Value is greater than $75,000 Monthly
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
Transfer Fee $10.00 After the 12th transfer each
Policy Year
- ------------------------------ ------------------------------------------------------------------------ ----------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Underlying Mutual Fund Portfolio Annual Expenses
(as a percentage of the average net assets of the underlying Portfolios)
- ------------------------------------------------------------------------------------------------------------------------------------
Below are the investment management fees, other expenses, and the total annual
expenses for each Portfolio as of December 31, 1999. The total annual expenses
are the sum of the investment management fee, other expenses and any 12b-1 fees.
Each figure is stated as a percentage of the Portfolio's average daily net
assets. For certain of the Portfolios, a portion of the management fee is being
waived and/or other expenses are being partially reimbursed. "N/A" indicates
that no portion of the management fee and/or other expenses is being waived
and/or reimbursed. Any footnotes about expenses appear after the list of all the
Portfolios. Those Portfolios whose name includes the prefix "AST" are portfolios
of American Skandia Trust. The Portfolio information was provided by the
Portfolios and has not been independently verified by us. See the prospectuses
or statements of additional information of the Portfolios for further details.
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
Management Other Estimated Total Annual Fee Net
Fees Expenses Distribution Portfolio Waivers Annual
UNDERLYING PORTFOLIO and Service Operating and Fund
(12b-1) Expenses Expense Operating
Fees (1) Reimbursement Expenses
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
American Skandia Trust:
<S> <C> <C> <C> <C> <C> <C>
AST Founders Passport 1.00% 0.29% 0.00% 1.29% N/A 1.29%
AST AIM International Equity 0.87% 0.31% 0.04% 1.22% N/A 1.22%
AST Janus Overseas Growth 1.00% 0.23% 0.02% 1.25% N/A 1.25%
AST American Century International Growth 1.00% 0.50% 0.00% 1.50% N/A 1.50%
AST American Century International Growth II 1.00% 0.26% 0.02% 1.28% N/A 1.28%
AST MFS Global Equity (3) 1.00% 1.11% 0.00% 2.11% 0.36% 1.75%
AST Janus Small-Cap Growth 0.90% 0.18% 0.01% 1.09% N/A 1.09%
AST Kemper Small-Cap Growth 0.95% 0.19% 0.03% 1.17% N/A 1.17%
AST Lord Abbett Small Cap Value 0.95% 0.29% 0.00% 1.24% N/A 1.24%
AST T. Rowe Price Small Company Value 0.90% 0.21% 0.00% 1.11% N/A 1.11%
AST Janus Mid-Cap Growth (4) 1.00% 0.22% 0.04% 1.26% N/A 1.26%
AST Neuberger Berman Mid-Cap Growth 0.90% 0.23% 0.04% 1.17% N/A 1.17%
AST Neuberger Berman Mid-Cap Value 0.90% 0.23% 0.12% 1.25% N/A 1.25%
AST Alger All-Cap Growth(5) 0.95% 0.22% 0.06% 1.23% N/A 1.23%
AST T. Rowe Price Natural Resources 0.90% 0.26% 0.01% 1.17% N/A 1.17%
AST Alliance Growth 0.90% 0.21% 0.00% 1.11% N/A 1.11%
AST MFS Growth (3) 0.90% 0.45% 0.00% 1.35% N/A 1.35%
AST Marsico Capital Growth 0.90% 0.18% 0.04% 1.12% N/A 1.12%
AST JanCap Growth 0.90% 0.14% 0.01% 1.05% 0.04% 1.01%
AST Sanford Bernstein Managed Index 500 0.60% 0.19% 0.00% 0.79% N/A 0.79%
AST Cohen & Steers Realty 1.00% 0.27% 0.02% 1.29% N/A 1.29%
AST American Century Income & Growth 0.75% 0.23% 0.00% 0.98% N/A 0.98%
AST Alliance Growth and Income 0.75% 0.18% 0.08% 1.01% 0.01% 1.00%
AST MFS Growth with Income (3) 0.90% 0.33% 0.00% 1.23% N/A 1.23%
AST INVESCO Equity Income 0.75% 0.18% 0.04% 0.97% N/A 0.97%
AST AIM Balanced 0.74% 0.26% 0.02% 1.02% N/A 1.02%
AST American Century Strategic Balanced 0.85% 0.25% 0.00% 1.10% N/A 1.10%
AST T. Rowe Price Asset Allocation 0.85% 0.22% 0.00% 1.07% N/A 1.07%
AST T. Rowe Price Global Bond 0.80% 0.31% 0.00% 1.11% N/A 1.11%
AST Federated High Yield 0.75% 0.19% 0.00% 0.94% N/A 0.94%
AST PIMCO Total Return Bond 0.65% 0.17% 0.00% 0.82% N/A 0.82%
AST PIMCO Limited Maturity Bond 0.65% 0.21% 0.00% 0.86% N/A 0.86%
AST Money Market 0.50% 0.15% 0.00% 0.65% 0.05% 0.60%
The Alger American Fund:
Growth 0.75% 0.04% N/A 0.79% 0.00% 0.79%
MidCap Growth 0.80% 0.05% N/A 0.85% 0.00% 0.85%
Montgomery Variable Series:
Emerging Markets 1.25% 0.50% N/A 1.75% 0.00% 1.75%
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
Management Other Estimated Total Annual Fee Net
Fees Expenses Distribution Portfolio Waivers Annual
UNDERLYING PORTFOLIO and Service Operating and Fund
(12b-1) Expenses Expense Operating
Fees (1) Reimbursement Expenses
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
INVESCO Variable Investment Funds, Inc.:
<S> <C> <C> <C> <C> <C> <C>
Technology 0.75% 0.78% None 1.53% 0.21% 1.32%
Health Sciences 0.75% 2.11% None 2.86% 1.37% 1.49%
Financial Services 0.75% 1.75% None 2.50% 1.09% 1.41%
Telecommunications 0.75% 0.55% None 1.30% 0.02% 1.28%
Dynamics 0.75% 1.53% None 2.28% 0.99% 1.29%
Evergreen Variable Annuity Trust:
Global Leaders (6) 0.95% 0.25% N/A 1.20% 0.19% 1.01%
Special Equity (6) 1.36% 2.35% N/A 3.71% 2.68% 1.03%
- ------------------------------------------------- --------------- ------------- -------------- ------------- ------------ ----------
</TABLE>
1 American Skandia Trust (the "Trust") adopted a Distribution Plan (the
"Distribution Plan") under Rule 12b-1 of the Investment Company Act of 1940
to permit an affiliate of the Trust's Investment Manager to receive
brokerage commissions in connection with purchases and sales of securities
held by Portfolios of the Trust, and to use these commissions to promote
the sale of shares of such Portfolios. The staff of the Securities and
Exchange Commission takes the position that commission amounts received
under the Distribution Plan should be reflected as distribution expenses of
the Portfolios. The Portfolios would pay the same or comparable commission
amounts irrespective of the Distribution Plan; accordingly, total returns
for the Portfolios are not expected to be adversely affected. The
Distribution Fee estimates are derived from data regarding each Portfolio's
brokerage transactions, and the proportions of such transactions directed
to selling dealers, for the period ended December 31, 1999. However, it is
not possible to determine with accuracy actual amounts that will be
received under the Distribution Plan. Such amounts will vary based upon the
level of a Portfolio's brokerage activity, the proportion of such activity
directed under the Distribution Plan, and other factors.
2 The Investment Manager of American Skandia Trust has agreed to reimburse
and/or waive fees for certain Portfolios until at least October 17, 2000.
The caption "Total Annual Fund Operating Expenses" reflects the Portfolios'
fees and expenses before such waivers and reimbursements, while the caption
"Net Annual Fund Operating Expenses" reflects the effect of such waivers
and reimbursements.
3 These Portfolios commenced operations on October 18, 1999. "Other Expenses"
are based on estimated amounts for the fiscal year ending December 31,
2000.
4 This Portfolio commenced operations on May 1, 2000. "Other Expenses" are
based on estimated amounts for the fiscal year ending December 31, 2000.
5 This Portfolio commenced operations as of December 30, 1999. "Other
Expenses" shown are based on estimated amounts for the fiscal year ending
December 31, 2000.
6 These portfolios commenced operations on September 30, 1999. Expenses have
been estimated based upon current fund contracts.
DESCRIPTION OF THE OFFERING
This Policy is described using a "question and answer" format that assumes you,
the prospective purchaser, are asking the questions. The paragraphs are numbered
for your convenience.
PURCHASERS
[1] Who should buy this Policy? Life insurance can be bought to meet a number
of needs of individuals or entities, such as corporations or trusts.
Different types of life insurance are designed to address certain needs
more than others. This Policy may be appropriate for a number of persons or
entities, but it may be especially useful for persons addressing a range of
estate planning needs. Because of estate taxes, purchasers may want to
consider placing this type of coverage in a trust or transferring ownership
of the Policy in an effort to remove the asset from their estate. This
Policy may also be useful for persons seeking to make a sizable donation to
a charity or eligible non-profit organization, where the charity is named
both Owner and Beneficiary of the Policy, and the donor is named as the
Insured. You should carefully evaluate with your financial representative
whether this Policy is right for your specific needs in light of your
entire situation and your personal and financial goals. In particular, you
should evaluate the advantages and disadvantages of replacing any existing
life insurance or annuity coverage with this Policy. If you are seeking
specific tax consequences, you should consult with a competent tax advisor
as to whether and how your goals may best be achieved.
- --------------------------------------------------------------------------------
American Skandia offers several different types of variable life insurance
policies which your financial professional may be authorized to offer to you.
Each of these policies can be structured to address a particular life insurance
need that you may have. The features, benefits and charges may differ to some
degree between each policy we offer. Some of these differences can affect the
amount of your death benefit, the degree to which you can access some of the
policy's Cash Value through loans and withdrawals and the charges that you will
be subject to if you choose to surrender the policy. The compensation that we
pay for sales of these policies may also differ.
- --------------------------------------------------------------------------------
BENEFITS AT THE INSURED'S DEATH
[2] What benefits are due as a result of the Insured's death? The benefits
due as a result of the Insured's death are the Death Proceeds. If there
are joint Insureds, the benefits are due as a result of the death of
the last surviving Insured. The Death Proceeds are based on the Death
Benefit as of the date we receive all our requirements for paying a
death claim and are satisfied that the death claim can be paid. These
requirements include, but are not limited to, receipt of a valid death
certificate and information we need to make payments to all
Beneficiaries. We determine the Death Proceeds by first subtracting any
Debt from the Death Benefit. We then add any interest amount required
by law.
[3] What is the Death Benefit? The Death Benefit is the higher of the
Required Death Benefit and the Guaranteed Minimum Death Benefit, each
as of the date we receive due proof of death.
[4] What is the Required Death Benefit? The Required Death Benefit is the
minimum amount that must be payable at the Insured's death, before
reduction for any Debt, for the Policy to be treated as life insurance
under the Code. The Required Death Benefit is determined by treating
the Account Value as if it were a net single premium. We determine the
Required Death Benefit by dividing the Account Value by factors that
are determined as of the Policy Date. These factors vary by the
attained Age, gender (where permitted), tobacco usage class and risk
class of each Insured. When there are joint Insureds, the factors used
to determine the Required Death Benefit are based on an actuarial
derivation of the factor applicable for each Insured.
The following are representative examples of the factors on the Policy
Date for different Ages, genders and tobacco usage classes, as well as
the amount of the Required Death Benefit if the Account Value is
$100,000. These examples assume that the Insured is placed in the
preferred risk class (see "BUYING A POLICY - How do I buy a Policy?"
for a description of risk classes.)
Female, Age 55, not a tobacco user:
The factor is .400884. $100,000 divided by .400884 results in a
Required Death Benefit of $249,449.
Male, Age 60, a tobacco user:
The factor is .586632. $100,000 divided by .586632 results in a
Required Death Benefit of $170,465.
Female, Age 70, a tobacco user:
The factor is .637176. $100,000 divided by .637176 results in a
Required Death Benefit of $156,943.
Male, Age 75, not a tobacco user:
The factor is .736865. $100,000 divided by .736865 results in a
Required Death Benefit of $135,710.
As noted above, the factors depend on the gender (where permitted),
tobacco usage class, risk class and attained Age of each Insured. The
gender and risk class of the Insured does not change after the Policy
Date. Therefore, the only element that changes the factor after the
Policy Date is the aging of the Insured(s), unless the Insured(s)
applies for and we agree to a change in tobacco usage class.
See Appendix B for a table of the net single premium factors we use to
determine the Required Death Benefit and a description of how the
factors are used.
[5] What is the Guaranteed Minimum Death Benefit? We use the Guaranteed
Minimum Death Benefit to determine the Death Proceeds if the Guaranteed
Minimum Death Benefit is higher than the Required Death Benefit. The
Guaranteed Minimum Death Benefit is the minimum amount payable at the
Insured's death, before reduction for any Debt.
The Guaranteed Minimum Death Benefit under the following circumstances are:
|X| On the Policy Date: the Guaranteed Minimum Death Benefit equals the
Premium.
|X| After the Policy Date and until the first Policy Anniversary: the
Guaranteed Minimum Death Benefit is the Premium less every "reduction
due to a withdrawal," which is defined below.
|X| After the first Policy Anniversary but before the "target date": the
Guaranteed Minimum Death Benefit is the higher of the Premium less
every "reduction due to a withdrawal" and the highest "Anniversary
Value." "Target date" is the Policy Anniversary when the Insured is
Age 75. "Anniversary Value" is the Account Value on any Policy
Anniversary less every reduction due to a withdrawal since that Policy
Anniversary.
|X| On or after the "target date": the Guaranteed Minimum Death Benefit is
the higher of the Premium less every "reduction due to a withdrawal"
and the highest Anniversary Value, as defined above in (c), as of the
"target date," less every "reduction due to a withdrawal" after the
"target date."
|X| Insured is Age 75 or older on the Policy Date: the Guaranteed Minimum
Death Benefit is the Premium less every "reduction due to a
withdrawal."
|X| Policy is issued for two (2) Insureds: the Guaranteed Minimum Death
Benefit is based on the age of the younger Insured, or what would have
been the age of the younger Insured if the younger Insured predeceases
the older Insured.
A "reduction due to a withdrawal" is a proportional reduction. It
equals the ratio by which the Account Value is reduced by a partial
withdrawal or a payment under the Accelerated Death Benefit provision,
described below in the section of the same name, multiplied by the
Guaranteed Minimum Death Benefit as of the effective date of such
partial withdrawal or payment. For example, if the Guaranteed Minimum
Death Benefit before a partial withdrawal is $100,000 and the Account
Value is $120,000, the Guaranteed Minimum Death Benefit after a $60,000
partial withdrawal (a 50% reduction in the Account Value) would be
$50,000 (a 50% reduction in the Guaranteed Minimum Death Benefit).
[6] What is the Face Amount? The Face Amount is the Required Death Benefit
on the Policy Date.
[7] How are Death Proceeds paid and to whom are they paid? We pay the Death
Proceeds as a lump sum or in accordance with the terms of whatever
settlement options we then make available to Beneficiaries. Generally,
Beneficiaries can choose a lump sum or one of the settlement options we
make available. However, you may choose the method of payment for your
Beneficiaries if you notify us In Writing before the Insured's death
how you want the Death Proceeds to be paid.
ACCOUNT VALUE AND CASH VALUE
[8] What is the Account Value? The Account Value is the value of a Policy
before any deduction for any contingent deferred sales charge,
contingent deferred tax charge or Debt. It is the total of the Account
Value allocated to each Sub-account and any Fixed Allocation plus any
Account Value in the Loan Account. You may allocate Account Value to
the variable investment options, which are each of the Sub-accounts of
the Separate Account, or to Fixed Allocations. Any portion of the
Account Value maintained in the Loan Account serves as collateral for
outstanding Policy loans.
[9] How do we determine the Account Value?
Variable Investment Options: On each Valuation Date, the Account Value
in any variable investment option you utilize equals the number of
Units you then maintain in that investment option multiplied by that
investment option's then current Unit Price. When you allocate all or a
portion of the Premium to an investment option or when you transfer
Account Value into a variable investment option, Units are purchased
using the then current Unit Price. When you take all or a portion of a
distribution or benefit from a variable investment option or you
transfer Account Value from a variable investment option, Units are
sold at the then current Unit Price in order to fund that distribution,
benefit or transfer.
Fixed Allocations: We credit a fixed rate of interest to Fixed
Allocations. From time to time we declare interest rates applicable to
new Fixed Allocations. If you make a Fixed Allocation, we credit the
rate then in effect to that Fixed Allocation until the next Policy
Anniversary. Once that Policy Anniversary is reached, we credit, for
the next Policy Year, the then current rate applicable to new Fixed
Allocations. This applies to all your Fixed Allocations then in effect.
During each subsequent Policy Year, the rate we credit for that Policy
Year is the one then in effect for new Fixed Allocations.
- --------------------------------------------------------------------------------
The Policy offered pursuant to this Prospectus includes Fixed Allocations. These
Fixed Allocations are not registered as a security with the Securities and
Exchange Commission under either the Securities Act of 1933 or the Investment
Company Act of 1940. The Fixed Allocations are not subject to these Acts.
Information about the Fixed Allocations is included in this Prospectus to help
with your understanding of the features of the Policy. The staff of the
Securities and Exchange Commission has not reviewed this information. However,
the information may be subject to certain generally applicable provisions of the
Federal securities laws regarding accuracy and completeness. The assets
supporting Fixed Allocations are held in American Skandia's general account.
- --------------------------------------------------------------------------------
[10] How does American Skandia determine the interest rate for Fixed
Allocations? We determine the interest rate applied to Fixed
Allocations based on our assessment of the earnings we expect to
achieve when investing to support these obligations, our costs,
competition, profit targets and other factors. We have sole discretion
to determine the rates. However, the interest rate will never be less
than 3.0% per year, compounded yearly.
[11] How does American Skandia determine the Account Value in the Loan
Account? We credit interest to Account Value in the Loan Account at a
rate determined by whether the loan is a "preferred" loan or a
"standard" loan. As of the date of this Prospectus, we currently credit
interest to Account Value in the Loan Account at the rate of 6.0% per
year, compounded yearly on "preferred" loans and 4.0% per year,
compounded yearly on "standard" loans. See the section entitled "Loans"
for a description of standard and preferred loans.
[12] What is the Cash Value? The Cash Value is the total Account Value less
any contingent deferred sales charge, contingent deferred tax charge
and Debt.
[13] Do I have to maintain a minimum Cash Value? The answer depends on
whether there is any Debt. You do not have to maintain a minimum Cash
Value if there is no Debt, except if you take a partial withdrawal. We
will inform you if, on a Monthly Processing Date, your Cash Value
equals or is less than zero. Such Monthly Processing Date will be the
beginning of the grace period. At that time we will also inform you of
the amount you can pay if you wish to reestablish any Cash Value. No
payment is required. The Policy remains in force with the Death Benefit
equal to the Guaranteed Minimum Death Benefit as of the beginning of
the grace period.
If there is any Debt, there must always be enough Cash Value so that
after we deduct any charges the Cash Value is more than zero. If the
Cash Value would be zero or less after we deduct charges, we send you a
notice giving you a 61-day "grace period" to send us a required amount.
If this amount is not paid by the end of the grace period, the Policy
ends without value.
CASH VALUE CREDITS
[14] What are Cash Value Credits? Cash Value Credits are amounts we credit
to your Account Value based on growth in your Policy's Cash Value. We
determine if your Policy is eligible for a Cash Value Credit on each
Policy Anniversary. If your Policy qualifies to receive Cash Value
Credits, we will credit 0.25% of your Policy's Cash Value to your
Account Value on the applicable Policy Anniversary. Your Policy's
eligibility for Cash Value Credit may change from year to year.
[15] How does my Policy qualify for Cash Value Credits? To qualify for Cash
Value Credits as of any Policy Anniversary, the Cash Value of your
Policy must equal or exceed 200% (2X) of the Premiums you have paid as
of the Policy Anniversary date you qualify. Whether your Cash Value
meets or exceeds the trigger depends on the investment performance of
the investment options, partial withdrawals, Debt and whether you pay
back any loans or loan interest. Please note, even if your Account
Value is greater than the Cash Value trigger, you may not have reached
the trigger amount, since the Cash Value may be less than the Account
Value due to the contingent deferred sales charge, the contingent
deferred tax charge and any Debt.
[16] Who pays for the Cash Value Credits, and how are they paid? We pay for
any Cash Value Credits out of our general account. Cash Value Credits
primarily reflect our return of a portion of the fixed annual charges
we deduct from the Separate Account on a daily basis for all Policy
Owners. For Policies that qualify to receive Cash Value Credits, the
Credits are provided as an alternative to lowering the fixed annual
charges.
We allocate any Cash Value Credits due on the applicable Policy
Anniversary to the variable investment options and Fixed Allocations in
which you then maintain Account Value. We make the allocations pro-rata
based on the Account Value in the variable investment options and any
Fixed Allocations on the applicable Policy Anniversary. No allocation
is made to the Loan Account. Cash Value Credits cannot be used to repay
Debt.
COSTS
[17] What kinds of charges are there for this Policy? The Policy has four
(4) different kinds of charges: (1) charges we assess daily against
assets maintained in the Separate Account, which only apply to the
Account Value you allocate to the variable investment options; (2)
charges we deduct monthly from the Account Value and which are due in
all Policy Years; (3) charges that we deduct monthly from the Account
Value only for the first ten Policy Years; and (4) "contingent"
charges, which are those charges that you only pay in certain specified
circumstances. There are also fees and expenses charged by the
Portfolios.
[18] What are the charges assessed against the Separate Account and when are
they paid? We assess a mortality and expense risk charge and an
administration charge against the assets in the Separate Account. The
mortality and expense risk charge is 0.90% per year. The mortality and
expense risk we assume is that charges and fees under the Policy will
be insufficient to meet our long-term costs and expenses in issuing,
administering and paying claims based on our obligations under the
Policy. The charge for the administrative expenses connected with
operating the Separate Account is 0.25% per year. We assess these
charges each Valuation Period against the daily value of each
Sub-account. We reserve the right to assess the Separate Account for
any taxes that may be attributed to it. Currently, no such charge for
taxes is assessed.
[19] What monthly charge applies in all Policy Years? We deduct the cost of
insurance charge. We take this charge from your Account Value, in
advance, each Monthly Processing Day. The charge is a percentage of
your then current Account Value.
[20] How much is the cost of insurance charge? The cost of insurance charge
is not a constant dollar amount, in part because it is a percentage of
your Account Value. The percentage of your Account Value that we charge
differs depending on four factors: (1) whether we issue the Policy for
only one Insured or for two; (2) the Age(s) of the Insured(s) as of the
Policy Date; (3) the gender of the Insured(s), where permitted; and (4)
the tobacco usage class(es) of the Insured(s). We reserve the right to
also have the percentage decrease based on the size of the Premium.
The actual charge is a monthly charge. The equivalent yearly cost of
insurance charges as of the Policy Date are shown below for a Policy
issued for one Insured. The charges will be different if we are
required by law to charge the same amount for males and females. For
purposes of this and the succeeding table, "Age" is as of the Policy
Date.
Gender Tobacco Usage Class Age 20-69 Age 70-90
----------------- ------------------------- ----------------- ----------------
Male No Tobacco Use 0.55% 0.90%
----------------- ------------------------- ----------------- ----------------
Female No Tobacco Use 0.40% 0.75%
----------------- ------------------------- ----------------- ----------------
Male Tobacco User 0.90% 1.25%
----------------- ------------------------- ----------------- ----------------
Female Tobacco User 0.75% 1.10%
----------------- ------------------------- ----------------- ----------------
If the Policy is issued for two Insureds, the yearly percentages of the
Account Value we deduct for the cost of insurance will depend on the
tobacco usage classes of the Insureds. The following are examples of
applicable charges as of the Policy Date. The charges will be different
if we are required by law to charge the same amount for males and
females.
<TABLE>
<CAPTION>
Gender (1st Insured) Tobacco Usage Class Gender (2nd Insured) Tobacco Usage Class Charge
- ------------------------- ------------------------- ------------------------- ------------------------- ------------
<S> <C> <C> <C> <C>
Male No Tobacco Use Female No Tobacco Use 0.25%
- ------------------------- ------------------------- ------------------------- ------------------------- ------------
Male Tobacco User Female Tobacco User 0.35%
- ------------------------- ------------------------- ------------------------- ------------------------- ------------
Male No Tobacco Use Female Tobacco User 0.30%
- ------------------------- ------------------------- ------------------------- ------------------------- ------------
Male Tobacco User Female No Tobacco Use 0.30%
- ------------------------- ------------------------- ------------------------- ------------------------- ------------
</TABLE>
[21] Is there a maximum cost of insurance charge? We monitor the cost of
insurance charge so that it never exceeds a guaranteed maximum charge.
We determine the guaranteed maximum as if we were charging you an
increasing amount based on the Insured's attained Age and were
assessing that charge on the difference between the Death Benefit and
the Account Value. If the percentages we otherwise would charge would
exceed the guaranteed maximum, we only charge the guaranteed maximum.
The guaranteed maximum cost of insurance charge depends on the tobacco
usage class and risk class of the Insured(s). Also, if required by law,
unisex charges will apply. We base the guaranteed maximum charges on
the sex distinct 1980 Commissioners Standard Ordinary Ultimate
Mortality Table, age last birthday unless unisex rates apply. See
Appendix C for a table of the maximum cost of insurance charges for
different age, gender and tobacco usage classes and a description of
how the charges will differ if the Insured is placed in a substandard
risk class.
[22] What monthly charges apply only for a specified number of Policy Years?
We deduct the tax charge and the sales charge for a specified number of
Policy Years.
[23] How much is the sales charge and when do I pay it? We deduct the sales
charge during the first ten (10) Policy Years. It is a percentage of
your Account Value and is the equivalent of 0.40% per year. We deduct
this charge from your Account Value each Monthly Processing Day. The
charge is a percentage of your then current Account Value. If you
surrender your Policy or take a partial withdrawal, we may deduct a
contingent deferred sales charge, as described below in response to the
question "How much is the contingent deferred sales charge and when
must I pay it?"
There are certain circumstances which may result in reduction or
elimination of the sales charge. These are exactly the same
circumstances that may result in reduction or elimination of the
contingent deferred sales charge, as described below in response to the
question "How much is the contingent deferred sales charge and when
must I pay it?"
[24] How much is the tax charge and when do I pay it? We deduct the tax
charge during the first ten (10) Policy Years. It is a percentage of
your Account Value and is the equivalent of 0.25% per year. We deduct
this charge from your Account Value each Monthly Processing Day. The
charge is a percentage of your then current Account Value. If you
surrender your Policy or take a partial withdrawal, we deduct a
contingent deferred tax charge, as described below in response to the
question "How much is the contingent deferred tax charge and when must
I pay it?"
[25] What are the contingent charges? The contingent charges are: (1) the
contingent deferred sales charge; (2) the contingent deferred tax
charge; (3) the maintenance fee; and (4) the transfer fee.
[26] How much is the contingent deferred sales charge and when must I pay
it? The contingent deferred sales charge is a percentage of the Premium
that is charged if you surrender or withdraw any amount: (a) during the
first nine (9) Policy Years; and (b) that, according to our rules, is a
withdrawal of Premium, not a withdrawal of Growth. It may be assessed
at the time of any partial withdrawal or surrender, unless the Policy
qualifies for a medically-related waiver of these charges, as discussed
in the section of this Prospectus entitled "Medically-Related Waiver."
The percentages are as follows:
<TABLE>
<CAPTION>
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Year 1 2 3 4 5 6 7 8 9 10+
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Percentage (%) 7.75 7.50 7.25 6.50 5.75 5.00 4.25 3.50 2.75 0
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
</TABLE>
From time to time, and to the extent permitted by law, we may reduce
the amount of the sales charge and the contingent deferred sales
charge, the period during which such charges apply, or both, when
Policies are sold to persons or groups of persons in a manner that
reduces sales expenses. We would consider such factors as: (a) the size
and type of group; (b) the amount of Premiums; and/or (c) other
transactions where sales expenses are likely to be reduced.
No sales charge or contingent deferred sales charge is imposed when, as
of the Policy Date, the Owner or the Insured of a Policy issued
pursuant to this Prospectus is: (a) any parent company, affiliate or
subsidiary of ours; (b) an officer, director, employee, retiree, sales
representative, or in the case of an affiliated broker-dealer,
registered representative of such company; (c) a director, officer or
trustee of any underlying mutual fund; (d) a director, officer or
employee of any investment manager, sub-advisor, transfer agent,
custodian, auditing, legal or administrative services provider that is
providing investment management, advisory, transfer agency,
custodianship, auditing, legal and/or administrative services to an
underlying mutual fund or any affiliate of such firm; (e) a director,
officer, employee or registered representative of a broker-dealer or
insurance agency that has a then current selling agreement with us
and/or with American Skandia Marketing, Incorporated; (f) a director,
officer, employee or authorized representative of any firm providing us
or our affiliates with regular legal, actuarial, auditing,
underwriting, claims, administrative, computer support, marketing,
office or other services; (g) the then current spouse of any such
person noted in (b) through (f) above; (h) the parents of such person
noted in (b) through (g) above; (i) such person's child(ren) or other
legal dependent under the age of 21; and (j) the siblings of any such
persons noted in (b) through (h) above.
[27] How much is the contingent deferred tax charge, and when must I pay it?
The contingent deferred tax charge is a percentage of the Premium that
is charged if you surrender or withdraw any amount: (a) during the
first nine (9) Policy Years; and (b) that, according to our rules, is a
withdrawal of Premium, not a withdrawal of Growth. It is assessed at
the time of any partial withdrawal or surrender, unless the Policy
qualifies for a medically-related waiver of these charges, as discussed
on the section of the Prospectus entitled "Medically-Related Waiver."
The percentages are as follows:
<TABLE>
<CAPTION>
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Policy Year 1 2 3 4 5 6 7 8 9 10+
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
Percentage (%) 2.25 2.00 1.75 1.50 1.25 1.00 0.75 0.50 0.25 0
- ---------------------- -------- -------- -------- -------- --------- -------- -------- -------- -------- --------
</TABLE>
[28] How much is the maintenance fee and when must I pay it? The maintenance
fee is $2.50 per month. We take the charge from your Account Value
monthly in advance. However, we will waive the maintenance fee on any
Monthly Processing Day if your Account Value is $75,000 or greater.
[29] How much is the transfer fee and when must I pay it? We charge $10.00
for every transfer after the 12th in each Policy Year. That includes
transfers into a Fixed Allocation and any transfers from a Fixed
Allocation unless the transfer occurs on a Policy Anniversary. It does
not include transfers made as part of any dollar cost averaging program
we offer. For this purpose, all transfers occurring during the same
Valuation Period are considered one transfer. We assess the transfer
fee at the time of any transfer which is subject to the fee.
[30] How are charges deducted from Account Value? We deduct charges from
your investment options pro-rata based on the Account Value in each
investment option. If you maintain Account Value in more than one Fixed
Allocation in a Policy Year, any applicable charges will be deducted on
a "last-in, first-out" basis, starting with the last Fixed Allocation
that was made prior to the Monthly Processing Date the deduction is
made. Upon surrender or withdrawal, we assess charges against the
investment options pro-rata in the same ratio as Account Value is being
withdrawn from such investment options.
[31] What charges do the Portfolios make? We do not assess any charges
against the Portfolios. However, each Portfolio charges a total annual
fee comprised of an investment management fee and operating expenses.
More detailed information about fees and charges can be found in the
prospectuses for the Portfolios.
BUYING A POLICY
[32] How do I buy a Policy? We have established certain underwriting
standards to determine insurability. We require you to submit an
Application to provide information that enables us to determine if our
standards have been met. We may require additional information,
including, but not limited to, some of the proposed Insured's medical
records and may also require the proposed Insured to take certain
medical tests. We evaluate this information to determine whether we can
issue a Policy. When we evaluate whether to issue a Policy, we will
also determine whether the proposed Insured is in the tobacco usage
class and/or must be placed in a substandard risk class. If the
proposed Insured meets our standards and we have received a Premium, we
will issue a Policy. When issued, your Policy will indicate if the
Insured is in the tobacco usage class and whether the Insured was
placed in a substandard risk class in order to issue the Policy. If our
standards are not met and we received a Premium, we will return an
amount equal to the Premium to you. No interest will be paid.
Age Restrictions: The Insured may not be less than Age 20 or older
than Age 90 on the Policy Date.
Tobacco Usage Class: The Insured's tobacco usage class is a factor used
to determine the cost of insurance charge. The Insured's tobacco usage
class is also used to determine the Net Single Premium Factor used to
calculate the Face Amount and the Required Death Benefit under the
Policy. If the Insured was included in the tobacco usage class on the
Policy's Issue Date and subsequently ceases to be a tobacco user after
the first Policy Year, the Insured may apply for a change in status.
Substandard Risk Class: If the Insured is placed in a substandard risk
class, the Net Single Premium Factor used to determine the Face Amount
and the Required Death Benefit under the Policy will be different than
for an Insured in the preferred risk class. For Insureds in a
substandard risk class, the change in the Net Single Premium Factors
will generally result in a lower Face Amount and Required Death Benefit
as compared to an Insured in the preferred risk class. NOTE: Where
allowed by law, Policies issued to Insured(s) in a substandard risk
class may not be eligible for certain benefits under the Policy.
To the extent permitted by law, we reserve the right to apply differing
standards of insurability to persons who may be part of a group or who
may qualify, for some other reason, as part of a different class. Such
classes may include, but are not limited to, persons seeking a Policy
who are applying all or a portion of proceeds from an insurance or
annuity contract, or proceeds of a redemption from another financial
product, such as mutual funds. One of the criteria we may apply in such
a situation is that such differing standards of insurability apply only
after maintaining funds in such policy, contract, or financial product
for a specified period of time.
[33] What is the Premium, and when do I pay it? The minimum Premium we
generally accept is $10,000. We may accept less under certain
circumstances. The maximum we accept without prior approval by our home
office is $500,000. If you are seeking a specific Face Amount, the
Premium will depend on the Insured's age, tobacco usage class, risk
class and gender, where permitted. We will determine the Face Amount
using the Premium as the Net Single Premium for the Insured's age,
tobacco usage class, risk class and gender, where permitted. You may
submit Premium with the Application if: (a) the Insured is not over age
80; and (b) the Insured meets certain medical underwriting criteria. If
any portion of the Premium is to be received as part of a replacement
of a life insurance, endowment or annuity policy then we must receive
all our requirements In Writing for all such replacements as of the
same date and any additional Premium amounts other than the proceeds of
such replacement must be received by us at our Office at the same time
as we receive such requirements In Writing. Replacements include
tax-free exchanges subject to our acceptance. We will immediately
return any Premium that should not have been submitted based on these
criteria. If we would not accept Premium with the Application or you
chose not to submit a Premium with the Application, we will notify you
if and when we have accepted the Application and agreed, subject to
submission of the Premium, to issue a Policy. We will not issue a
Policy until we receive Premium at our Office. We will not accept
Premium of which we were not informed at the time you submit the
Application to us.
You may choose to use our funds transfer authorization procedures as
part of buying a Policy. If you elect this procedure, you authorize us
to redeem funds from one or more financial institutions with which you
currently maintain funds and use those funds to pay Premium. You must
do so In Writing using a form that authorizes us to obtain such funds
only if and when we have determined that the Application meets our
standards for issuing a Policy. If you use this procedure, you must
provide us with all such authorizations simultaneously. If you wish to
also pay any additional amounts, we must receive such Premium amounts
at the same time we receive such authorizations.
The standards we apply in reviewing the Application may depend on
factors such as the proposed Insured's age and the amount of Premium to
be applied to the Policy. In certain cases, we may apply simplified
standards. However, the Premium amount you state in the Application may
be an estimate if you are planning: (a) to replace a life insurance,
endowment or annuity policy; (b) to exchange a life insurance or
endowment policy; or (c) to use our funds transfer authorization
procedures. If we used simplified standards based on a Premium estimate
but the actual amounts we receive to be applied as Premium exceed the
limits for such standards, we reserve the right, to the extent
permitted by law, to not issue a Policy and return such amounts
directly to you or, on your behalf, to the financial institution from
which the funds were obtained. We cannot guarantee such institution
will accept the return of such amounts.
[34] Do I have coverage while my Application is being reviewed? We may issue
you a temporary insurance agreement during the "underwriting period."
The "underwriting period" is the period between the time you first
apply for a Policy and the time we either issue the Policy or decide
not to issue one. A temporary insurance agreement may be issued if:
|X| the Application is completed in full;
|X| the Insured answers "no" to certain questions on the
Application (these are questions we use as indicators of
whether we will issue temporary insurance);
|X| the Insured is age 80 or younger; and
|X| a Premium is submitted with the Application.
If we issue a temporary insurance agreement and the Insured (both
Insureds if there are two Insureds) dies during the underwriting
period, the temporary insurance benefit will be payable if all the
conditions of the temporary insurance agreement are satisfied. The
underwriting period generally will not exceed 60 days. If the
Insured(s) die(s) during the underwriting period and no temporary
insurance agreement was in effect, no benefit is payable.
We will return any Premium submitted with the Application if we cannot
complete underwriting within 60 days from the date the Application is
signed. If you notify us promptly, we will continue the underwriting
process and notify you if and when you meet our standards for issuing a
Policy, at which time you may once again send us a Premium.
Temporary insurance ends 60 days after the Application is signed, even
if the underwriting period exceeds 60 days. In certain jurisdictions,
the underwriting period and the temporary insurance benefit is limited
to 45 days.
[35] What is the temporary insurance benefit? If the Insured dies while
temporary insurance is in effect, we pay the Beneficiary the lesser of
the Face Amount that would be in effect on the Policy Date if a Policy
had been issued or $250,000. This $250,000 maximum applies to all
temporary insurance then in effect with us. Premium amounts in excess
of this benefit are returned to you, without interest or earnings.
[36] How and when is my Premium invested? We invest the Premium on the Issue
Date. You can request that we allocate the Premium using one or more
variable investment options and/or a Fixed Allocation. However, we
initially invest the portion of the Premium that you indicate to us
that you want invested in variable investment options in the AST Money
Market Sub-account, unless you submit a "return waiver" In Writing
before the Issue Date, where permitted by law. A return waiver is an
election by you to invest as soon as possible in the variable
investment options of your choice. If you submit a "return waiver" and
then decide to return your Policy during the "free-look" period, you
may receive back less than the Premium. Generally, we transfer the
Account Value in the AST Money Market Sub-account to the variable
investment options you request as of the Valuation Date which is on or
immediately after the 15th day after the date we issue a Policy.
However, we will make the transfer as of a later date if your
"free-look" period is longer than 10 days to meet state law
requirements.
[37] What happens if I change my mind about buying a Policy? You have a
"free-look" period during which you can change your mind about buying a
Policy. The free-look period is never less than 10 days from the date
you receive your Policy. It may be longer depending on the applicable
state law and the circumstances of your purchase. If you return your
Policy to us within the free-look period, we generally will return the
greater the Premium paid or your Account Value plus any charges
deducted from your Account Value. However, if you have submitted a
"return waiver," we will return only your Account Value plus any
charges deducted from your Account Value. This may be more or less than
Premium paid.
VARIABLE INVESTMENT OPTIONS
[38] What are the investment objectives and policies of the variable
investment options? Each variable investment option is a Sub-account of
American Skandia Life Assurance Corporation Variable Account F. Each
Sub-account invests exclusively in one Portfolio. You should carefully
read the prospectus for any Portfolio in which you are interested. The
following chart classifies each of the Portfolios based on our
assessment of their investment style (as of the date of this
Prospectus). The chart also provides a short description of each
Portfolio's investment objective (in italics) and a short, summary
description of their key policies to assist you in determining which
Portfolios may be of interest to you. There is no guarantee that any
underlying mutual fund portfolio will meet its investment objective.
The name of the advisor/sub-advisor for each Portfolio appears next to
the description. Those portfolios whose name includes the prefix "AST"
are portfolios of American Skandia Trust. The investment manager for
AST is American Skandia Investment Services, Inc. ("ASISI"), an
affiliated company. However, a sub-advisor, as noted below, is engaged
to conduct day-to-day investment decisions.
Some of the Portfolios available as Sub-accounts under the Policy are
managed by the same portfolio advisor or sub-advisor as a retail mutual
fund that the Portfolio may have been modeled after at the Portfolio's
inception. Certain retail mutual funds may also have been modeled after
a Portfolio. While the investment objective and policies of the funds
may be substantially similar, the actual investments made by the funds
will differ to varying degrees. Differences in the performance of the
funds can be expected, and in some cases could be substantial. Details
about the investment objectives, policies, risks, costs and management
of the Portfolios are found in the prospectuses for the underlying
mutual funds.
<PAGE>
================================================================================
Effective January 19, 2000, the AST Janus Small-Cap Growth portfolio is no
longer offered as a Sub-account under the Policy, except as noted below. Owners
of Policies issued on or before January 18, 2000 with Account Value allocated to
the AST Janus Small-Cap Growth Sub-account will be allowed to allocate Account
Value, make subsequent premium payments or make transfers into the AST Janus
Small-Cap Growth Sub-account. Bank drafting, dollar cost averaging, asset
allocation and/or rebalancing program will be allowed to continue. However, no
changes involving the AST Janus Small-Cap Growth Sub-account may be made to such
programs.
Effective March 1, 2000, the AST Janus Overseas Growth portfolio is no longer
offered as a Sub-account under the Policy, except as noted below. Owners of
Policies issued on or before February 29, 2000 with Account Value allocated to
the AST Janus Overseas Growth Sub-account will be allowed to allocate Account
Value, make subsequent premium payments or make transfers into the AST Janus
Overseas Growth Sub-account. Bank drafting, dollar cost averaging, asset
allocation and rebalancing programs will be allowed to continue. However, no
changes involving the AST Janus Overseas Growth Sub-account may be made to such
programs.
The Portfolios may be offered as a Sub-account to Contract Owners at some future
date; however, at the present time, American Skandia has no intention to do so.
<TABLE>
<CAPTION>
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PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ------------------------------------------------------------------------------------------
- ------------------------------ ------------------------------------------------------------------------------------------
<S> <C> <C>
AST Money Market: seeks to maximize current J.P. Morgan Investment Management
CAPITAL income and maintain high levels of liquidity. Inc.
PRESERVATION The Portfolio attempts to accomplish its
objective by maintaining a dollar-weighted
average maturity of not more than 90 days and
by investing in securities which have effective
maturities of not more than 397 days.
- ------------------------------------------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond: seeks to Pacific Investment Management
SHORT-TERM BOND maximize total return consistent with Company
preservation of capital and prudent investment
management. The Portfolio will invest in a
diversified portfolio of fixed-income
securities of varying maturities. The average
portfolio duration of the Portfolio generally
will vary within a one- to three-year time
frame based on the Sub-advisor's forecast for
interest rates.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST PIMCO Total Return Bond: seeks to maximize Pacific Investment Management
LONG-TERM total return consistent with preservation of Company
BOND capital and prudent investment management. The
Portfolio will invest in a diversified
portfolio of fixed-income securities of varying
maturities. The average portfolio duration of
the Portfolio generally will vary within a
three- to six-year time frame based on the
Sub-advisor's forecast for interest rates.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST Federated High Yield: seeks high current Federated Investment Counseling
HIGH YIELD BOND income by investing primarily in a diversified
portfolio of fixed income securities. The
Portfolio will invest at least 65% of its
assets in lower-rated corporate fixed income
securities ("junk bonds"). These fixed income
securities may include preferred stocks,
convertible securities, bonds, debentures,
notes, equipment lease certificates and
equipment trust certificates. A fund that
invests primarily in lower-rated fixed income
securities will be subject to greater risk and
share price fluctuation than a typical fixed
income fund, and may be subject to an amount of
risk that is comparable to or greater than
many equity funds.
- ------------------------------ ----------------------------------------------------------------------------------------------------
GLOBAL BOND AST T. Rowe Price Global Bond: seeks to provide Rowe Price-Fleming International, Inc.
high current income and capital growth by
investing in high-quality foreign and U.S.
government bonds. The Portfolio will invest at
least 65% of its total assets in bonds issued
or guaranteed by the U.S. or foreign
governments or their agencies and by foreign
authorities, provinces and municipalities.
Corporate bonds may also be purchased. The
Sub-advisor bases its investment decisions on
fundamental market factors, currency trends,
and credit quality. The Portfolio generally
invests in countries where the combination of
fixed-income returns and currency exchange
rates appears attractive, or, if the currency
trend is unfavorable, where the Sub-advisor
believes that the currency risk can be
minimized through hedging. The Portfolio may
also invest up to 20% of its assets in the
aggregate in below investment-grade, high-risk
bonds ("junk bonds").
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ------------------------------------------------------------------------------------------
- ------------------------------ ------------------------------------------------------------------------------------------
ASSET ALLOCATION AST T. Rowe Price Asset Allocation: seeks a T. Rowe Price Associates, Inc.
high level of total return by investing
primarily in a diversified portfolio of fixed
income and equity securities. The Portfolio
normally invests approximately 60% of its total
assets in equity securities and 40% in fixed
income securities. The Sub-advisor concentrates
common stock investments in larger, more
established companies, but the Portfolio may
include small and medium-sized companies with
good growth prospects. The fixed income portion
of the Portfolio will be allocated among
investment grade securities, high yield or
"junk" bonds, foreign high quality debt
securities and cash reserves.
- ------------------------------ ----------------------------------------------------------------------------------------------------
BALANCED AST AIM Balanced: seeks to provide a A I M Capital Management, Inc.
well-diversified portfolio of stocks and bonds
that will produce both capital growth and
current income. The Portfolio attempts to meet
its objective by investing, normally, a minimum
of 30% and a maximum of 70% of its total assets
in equity securities and a minimum of 30% and a
maximum of 70% of its total assets in
non-convertible debt securities. The
Sub-advisor will primarily purchase equity
securities for growth of capital and debt
securities for income purposes.
----------------------------------------------------------------------------------------------------
AST American Century Strategic Balanced: seeks American Century Investment Management, Inc.
capital growth and current income. The
Sub-advisor intends to maintain approximately
60% of the Portfolio's assets in equity
securities and the remainder in bonds and other
fixed income securities. Both the Portfolio's
equity and fixed income investments will
fluctuate in value. The equity securities will
fluctuate depending on the performance of the
companies that issued them, general market and
economic conditions, and investor confidence.
The fixed income investments will be affected
primarily by rising or falling interest rates
and the credit quality of the issuers.
- ------------------------------ ----------------------------------------------------------------------------------------------------
EQUITY INCOME AST INVESCO Equity Income: seeks capital growth INVESCO Funds Group, Inc.
and current income while following sound
investment practices. The Portfolio seeks to
achieve its objective by investing in
securities that are expected to produce
relatively high levels of income and
consistent, stable returns. The Portfolio
normally will invest at least 65% of its assets
in dividend-paying common and preferred stocks
of domestic and foreign issuers. Up to 30% of
the Portfolio's assets may be invested in
equity securities that do not pay regular
dividends.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST Alliance Growth and Income: seeks long-term Alliance Capital Management L.P.
growth of capital and income while attempting
to avoid excessive fluctuations in market
value. The Portfolio normally will invest in
common stocks (and securities convertible into
common stocks). The Sub-advisor will take a
value-oriented approach, in that it will try to
keep the Portfolio's assets invested in
securities that are selling at reasonable
prices in relation to their value. The stocks
that the Portfolio will normally invest in are
those of seasoned companies that are expected
to show above-average growth and that the
Sub-advisor believes are in sound financial
condition.
---------------------------------------------------------------------------------------------------
AST American Century Income & Growth: seeks American Century Investment Management, Inc.
capital growth with current income as a
secondary objective. The Portfolio invests
primarily in common stocks that offer potential
GROWTH for capital growth, and may, consistent with
its investment objective, invest in stocks that
& offer potential for current income. The
INCOME Sub-advisor utilizes a quantitative management
technique with a goal of building an equity
portfolio that provides better returns than the
S&P 500 Index without taking on significant
additional risk and while attempting to create
a dividend yield that will be greater than the
S&P 500 Index.
----------------------------------------------------------------------------------------------------
AST MFS Growth with Income: seeks reasonable Massachusetts Financial Services Company
current income and long-term capital growth and
income. Under normal market conditions, the
Portfolio invests at least 65% of its total
assets in common stocks and related securities,
such as preferred stocks, convertible
securities and depositary receipts. The stocks
in which the Portfolio invests generally will
pay dividends. While the Portfolio may invest
in companies of any size, the Portfolio
generally focuses on companies with larger
market capitalizations that the Sub-advisor
believes have sustainable growth prospects and
attractive valuations based on current and
expected earnings or cash flow. The Portfolio
may invest up to 20% of its net assets in
foreign securities.
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ------------------------------------------------------------------------------------------
- ------------------------------ ------------------------------------------------------------------------------------------
REAL ESTATE AST Cohen & Steers Realty: seeks to maximize Cohen & Steers Capital Management,
(REIT) total return through investment in real estate Inc.
securities. The Portfolio pursues its
investment objective by seeking, with
approximately equal emphasis, capital growth
and current income. Under normal circumstances,
the Portfolio will invest substantially all of
its assets in the equity securities of real
estate companies, i.e., a company that derives
at least 50% of its revenues from the
ownership, construction, financing, management
or sale of real estate or that has at least 50%
of its assets in real estate. Real estate
companies may include real estate investment
trusts or REITs.
- ------------------------------ ----------------------------------------------------------------------------------------------------
MANAGED INDEX AST Sanford Bernstein Managed Index 500: seeks Sanford C. Bernstein & Co., Inc.
to outperform the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500(R)")
through stock selection resulting in different
weightings of common stocks relative to the
index. The Portfolio will invest primarily in
the common stocks of companies included in the
S&P 500(R). In seeking to outperform the S&P
500, the Sub-advisor starts with a portfolio of
stocks representative of the holdings of the
index. It then uses a set of fundamental
quantitative criteria that are designed to
indicate whether a particular stock will
predictably perform better or worse than the
S&P 500. Based on these criteria, the
Sub-advisor determines whether the Portfolio
should over-weight, under-weight or hold a
neutral position in the stock relative to the
proportion of the S&P 500 that the stock
represents. In addition, the Sub-advisor also
may determine that based on the quantitative
criteria, certain equity securities that are
not included in the S&P 500 should be held by
the Portfolio.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST Alliance Growth: seeks long-term capital Alliance Capital Management L.P.
growth. The Portfolio invests at least 85% of
its total assets in the equity securities of a
limited number of large, carefully selected,
high-quality U.S. companies that are judged
likely to achieve superior earnings growth.
Normally, about 40-60 companies will be
represented in the Portfolio, with the 25
companies most highly regarded by the
Sub-advisor usually constituting approximately
70% of the Portfolio's net assets. An emphasis
is placed on identifying companies whose
substantially above average prospective
earnings growth is not fully reflected in
current market valuations.
---------------------------------------------------------------------------------------------------
AST JanCap Growth: seeks growth of capital in a Janus Capital Corporation
manner consistent with the preservation of
capital. Realization of income is not a
significant investment consideration and any
income realized on the Portfolio's investments,
therefore, will be incidental to the
Portfolio's objective. The Portfolio will
pursue its objective by investing primarily in
common stocks of companies that the Sub-advisor
believes are experiencing favorable demand for
their products and services, and which operate
in a favorable competitive and regulatory
environment. The Sub-advisor generally takes a
"bottom up" approach to choosing investments
LARGE CAP for the Portfolio. In other words, the
EQUITY Sub-advisor seeks to identify individual
companies with earnings growth potential that
may not be recognized by the market at large.
----------------------------------------------------------------------------------------------------
AST Marsico Capital Growth: seeks capital Marsico Capital Management, LLC
growth. Income realization is not an investment
objective and any income realized on the
Portfolio's investments, therefore, will be
incidental to the Portfolio's objective. The
Portfolio will pursue its objective by
investing primarily in common stocks of larger,
more established companies. In selecting
investments for the Portfolio, the Sub-advisor
uses an approach that combines "top down"
economic analysis with "bottom up" stock
selection. The "top down" approach identifies
sectors, industries and companies that should
benefit from the trends the Sub-advisor has
observed. The Sub-advisor then looks for
individual companies with earnings growth
potential that may not be recognized by the
market at large. This is called "bottom up"
stock selection.
----------------------------------------------------------------------------------------------------
AST MFS Growth: seeks long-term capital growth Massachusetts Financial Services
and future income. Under normal market Company
conditions, the Portfolio invests at least 80%
of its total assets in common stocks and
related securities, such as preferred stocks,
convertible securities and depositary receipts,
of companies that the Sub-advisor believes
offer better than average prospects for
long-term growth. The Sub-advisor seeks to
purchase securities of companies that it
considers well-run and poised for growth. The
Portfolio may invest up to 35% of its net
assets in foreign securities.
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ------------------------------------------------------------------------------------------
- ------------------------------ ------------------------------------------------------------------------------------------
LARGE CAP The Alger American Fund - Growth: seeks Fred Alger Management, Inc.
EQUITY long-term capital appreciation. The Portfolio
(Cont.) focuses on growing companies that generally
have broad product lines, markets, financial
resources and depth of management. Under normal
circumstances, the Portfolio invests primarily
in the equity securities of large companies.
The Portfolio considers a large company to have
a market capitalization of $1 billion or
greater.
- ------------------------------ ----------------------------------------------------------------------------------------------------
NATURAL RESOURCES AST T. Rowe Price Natural Resources: seeks T. Rowe Price Associates, Inc.
long-term capital growth primarily through the
common stocks of companies that own or develop
natural resources (such as energy products,
precious metals, and forest products) and other
basic commodities. The Portfolio normally
invests primarily (at least 65% of its total
assets) in the common stocks of natural
resource companies whose earnings and tangible
assets could benefit from accelerating
inflation. The Portfolio looks for companies
that have the ability to expand production, to
maintain superior exploration programs and
production facilities, and the potential to
accumulate new resources.
- ------------------------------ ----------------------------------------------------------------------------------------------------
ALL-CAP AST Alger All-Cap Growth: seeks long-term Fred Alger Management, Inc.
EQUITY capital growth. The Portfolio invests primarily
in equity securities, such as common or
preferred stocks, that are listed on U.S.
exchanges or in the over-the-counter market.
The Portfolio may invest in the equity
securities of companies of all sizes, and may
emphasize either larger or smaller companies at
a given time based on the Sub-advisor's
assessment of particular companies and market
conditions.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST Janus Mid-Cap Growth: seeks long-term Janus Capital Corporation
capital growth. The Portfolio invests primarily
in common stocks, selected for their growth
potential, and normally invests at least 65% of
its equity assets in medium-sized companies. For
purposes of the Portfolio, medium-sized
companies are those whose market capitalizations
(measured at the time of investment) fall within
the range of companies in the Standard & Poor's
MidCap 400 Index. The Sub-advisor seeks to
identify individual companies with earnings
growth potential that may not be recognized by
the market at large.
----------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Growth: seeks Neuberger Berman Management Incorporated
capital growth. The Portfolio primarily invests
in the common stocks of mid-cap companies,
i.e., companies with equity market
capitalizations from $300 million to $10
billion at the time of investment. The
Portfolio is normally managed using a
growth-oriented investment approach. The
Sub-advisor looks for fast-growing companies
that are in new or rapidly evolving industries.
---------------------------------------------------------------------------------------------------
AST Neuberger Berman Mid-Cap Value: seeks Neuberger Berman Management Incorporated
capital growth. The Portfolio primarily invests
in the common stocks of mid-cap companies.
Under the Portfolio's value-oriented investment
approach, the Sub-advisor looks for
well-managed companies whose stock prices are
undervalued and that may rise in price before
other investors realize their worth. Factors
that the Sub-advisor may use to identify these
companies include strong fundamentals,
including a low price-to-earnings ratio,
consistent cash flow, and a sound track record
MID-CAP EQUITY through all phases of the market cycle.
---------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds - Dynamics: INVESCO Funds Group, Inc.
seeks securities that will increase in value
over the long term. The Portfolio invests in a
variety of securities which are believed to
present opportunities for capital growth -
primarily common stocks of companies traded on
U.S. securities exchanges, as well as
over-the-counter. The Portfolio also may invest
in preferred stocks and debt instruments that
are convertible into common stocks, as well as
in securities of foreign companies. In general,
the Portfolio invests in securities of
companies in industries that are growing
globally and usually avoids stocks of companies
in cyclical, mature or slow-growing industries
or economic sectors. The Portfolio seeks to
invest in stocks of leading companies in
attractive markets or industries, or emerging
leaders that have developed a new competitive
advantage.
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ----------------------------------------------------------------------------------------------------
- ------------------------------ ----------------------------------------------------------------------------------------------------
MID-CAP EQUITY The Alger American Fund - MidCap Growth: seeks Fred Alger Management, Inc.
(Cont.) long-term capital appreciation. The Portfolio
focuses on midsize companies with promising
growth potential. Under normal circumstances,
the Portfolio invests primarily in the equity
securities of companies having a market
capitalization within the range of companies in
the S&P MidCap 400 Index.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST Janus Small-Cap Growth: seeks capital Janus Capital Corporation
growth. The Portfolio pursues its objective by
normally investing at least 65% of its total
assets in the common stocks of small-sized
companies, i.e., those that have market
capitalizations of less than $1.5 billion or
annual gross revenues of less than $500
million. As a Portfolio that invests primarily
in smaller or newer issuers, the Portfolio may
be subject to greater risk of loss and share
price fluctuation than funds investing
primarily in larger or more established
issuers.
----------------------------------------------------------------------------------------------------
AST Kemper Small-Cap Growth: seeks maximum Scudder Kemper Investments, Inc.
growth of investors' capital from a portfolio
primarily of growth stocks of smaller
companies. At least 65% of the Portfolio's
total assets normally will be invested in the
equity securities of smaller companies, i.e.,
those having a market capitalization of $1.5
billion or less at the time of investment, many
of which would be in the early stages of their
life cycle. The Portfolio seeks attractive
areas for investment that arise from factors
such as technological advances, new marketing
methods, and changes in the economy and
population. Because of the Portfolio's focus on
the stocks of smaller growth companies,
investment in the Portfolio may involve
substantially greater than average share price
fluctuation and investment risk.
----------------------------------------------------------------------------------------------------
SMALL CAP AST Lord Abbett Small Cap Value: seeks Lord, Abbett & Co.
EQUITY long-term capital appreciation. The Portfolio
will seek its objective through investments
primarily in equity securities that are
believed to be undervalued in the marketplace.
The Portfolio primarily seeks companies that
are small-sized, based on the value of their
outstanding stock. Specifically, under normal
circumstances, at least 65% of the Portfolio's
total assets will be invested in common stocks
issued by smaller, less well-known companies
(with market capitalizations of less than $2
billion) selected on the basis of fundamental
investment analysis. The small capitalization
companies in which the Portfolio primarily
invests may offer significant appreciation
potential. However, smaller companies may carry
more risk than larger companies.
----------------------------------------------------------------------------------------------------
AST T. Rowe Price Small Company Value: seeks to T. Rowe Price Associates, Inc.
provide long-term capital growth by investing
primarily in small-capitalization stocks that
appear to be undervalued. The Portfolio will
normally invest at least 65% of its total
assets in stocks and equity-related securities
of small companies ($1 billion or less in
market capitalization). Reflecting a value
approach to investing, the Portfolio will seek
the stocks of companies whose current stock
prices do not appear to adequately reflect
their underlying value as measured by assets,
earnings, cash flow or business franchises.
Investing in small companies involves greater
risk of loss than is customarily associated
with more established companies.
----------------------------------------------------------------------------------------------------
Evergreen VA Special Equity: seeks capital Meridian Investment Company
growth. The Portfolio strives to provide a
return greater than broad stock market indices
such as the Russell 2000(R)Index by investing
principally in a diversified portfolio of
common stocks of domestic companies. The
Portfolio's investment advisor principally
chooses companies which it expects will
experience growth in earnings and price, and
which have small market capitalizations (under
$1 billion) and medium market capitalizations
(between $1 billion and $5 billion). The
Portfolio may also invest in companies that
have large market capitalizations (over $5
billion).
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ----------------------------------------------------------------------------------------------------
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST MFS Global Equity: seeks capital growth. Massachusetts Financial Services Company
Under normal market conditions, the Portfolio
invests at least 65% of its total assets in
common stocks and related securities, such as
preferred stock, convertible securities and
depositary receipts, of U.S. and foreign
issuers (including issuers in developing
countries). The Portfolio generally seeks to
purchase securities of companies with
relatively large market capitalizations
relative to the market in which they are
traded.
GLOBAL EQUITY ----------------------------------------------------------------------------------------------------
Evergreen VA Global Leaders: seeks to provide Evergreen Asset Management Corp.
investors with long-term capital growth. The
Portfolio normally invests as least 65% of its
assets in a diversified portfolio of U.S. and
non-U.S. equity securities of companies located
in the world's major industrialized countries.
The Portfolio will invest in no less than three
countries, which may include the U.S., but may
invest more than 25% of its total assets in one
country. The Portfolio invests only in the best
100 companies, which are selected by the
investment advisor based on qualitative and
quantitative criteria such as high return on
equity, consistent earnings growth and
established market presence.
- ------------------------------ ----------------------------------------------------------------------------------------------------
AST AIM International Equity: seeks capital A I M Capital Management, Inc.
growth. The Portfolio seeks to meet its
objective by investing, normally, at least 70%
of its assets in marketable equity securities
of foreign companies that are listed on a
recognized foreign securities exchange or
traded in a foreign over-the-counter market.
The Portfolio will normally invest in a
diversified portfolio that includes companies
from at least four countries outside the United
States, emphasizing countries of Western Europe
and the Pacific Basin.
----------------------------------------------------------------------------------------------------
AST American Century International Growth: American Century Investment Management, Inc.
seeks capital growth. The Portfolio will seek
to achieve its investment objective by
investing primarily in equity securities of
foreign companies that the Sub-advisor believes
will increase in value over time. Under normal
conditions, the Portfolio will invest at least
65% of its assets in equity securities of
issuers from at least three countries outside
of the United States. The Sub-advisor uses a
growth investment strategy it developed that
looks for companies with earnings and revenue
growth. The Sub-advisor will consider a number
of other factors in making investment
selections, including the prospects for
relative economic growth among countries or
regions, economic and political conditions,
expected inflation rates, currency exchange
fluctuations and tax considerations.
----------------------------------------------------------------------------------------------------
INTERNATIONAL EQUITY AST American Century International Growth II: American Century Investment Management, Inc.
The investment objective, policies and risks of
the Portfolio are substantially identical to
those of the AST American Century International
Growth Portfolio as described immediately
above.
----------------------------------------------------------------------------------------------------
AST Founders Passport: seeks capital growth. Founders Asset Management LLC
The Portfolio normally invests primarily in
equity securities issued by foreign companies
that have market capitalizations or annual
revenues of $1 billion or less. These
securities may represent companies in both
established and emerging economies throughout
the world. At least 65% of the Portfolio's
total assets normally will be invested in
foreign securities representing a minimum of
three countries. Foreign securities are
generally considered to involve more risk than
those of U.S. companies, and securities of
smaller companies are generally considered to
be riskier than those of larger companies.
----------------------------------------------------------------------------------------------------
AST Janus Overseas Growth: seeks long-term Janus Capital Corporation
growth of capital. The Portfolio pursues its
objective primarily through investments in
common stocks of issuers from at least five
different countries, excluding the United
States. Securities are generally selected
without regard to any defined allocation among
countries, geographic regions or industry
sectors, or other similar selection procedure.
- ----------------------------- -----------------------------------------------------------------------------------------------------
EMERGING MARKETS Montgomery Variable Series - Emerging Markets: Montgomery Asset Management, LLC
seeks capital appreciation, which under normal
conditions it seeks by investing at least 65%
of its total assets in equity securities of
companies in countries having emerging markets.
Under normal conditions, investments are
maintained in at least six emerging market
countries at all times and no more than 25% of
total assets are invested in any one emerging
market country.
- ------------------------------ ----------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------------------ ----------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Sector funds generally diversify their investments across particular economic
sectors. However, because those investments are limited to a comparatively
narrow segment of the economy, sector funds are generally not as diversified as
most mutual funds. Sector funds tend to be more volatile than other types of
funds. The value of fund shares may go up and down more rapidly than other
funds. Each sector of the economy may also have different regulatory or other
risk factors that can cause greater fluctuations in the share price. Please read
the prospectus for the underlying sector fund for further details about the
risks of the particular sector of the economy.
- ------------------------------ ----------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds - Financial INVESCO Funds Group, Inc.
Services: seeks capital appreciation. The
Portfolio normally invests at least 80% of its
assets in the equity securities of companies
involved in the financial services sector. This
sector includes, among others, banks (regional
and money-centers), insurance companies (life,
property and casualty, and multiline), and
investment and miscellaneous industries (asset
managers, brokerage firms, and
government-sponsored agencies). The investment
advisor seeks companies which it believes can
grow their revenues and earnings regardless of
the interest rate environment - although
securities prices of financial services
companies generally are interest
rate-sensitive.
SECTOR ----------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds - Health INVESCO Funds Group, Inc.
Sciences: seeks capital appreciation. The
Portfolio invests at least 80% of its assets in
the equity securities of companies that
develop, produce or distribute products or
services related to health care. These
industries include, but are not limited to,
medical equipment or supplies, pharmaceuticals,
health care facilities, and applied research
and development of new products or services.
The investment advisor attempts to blend
well-established healthcare firms with
faster-growing, more dynamic health care
companies, which have new products or are
increasing their market share of existing
products.
----------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds - Technology: INVESCO Funds Group, Inc.
seeks capital appreciation. The Portfolio
normally invests at least 80% of its assets in
the equity securities of companies engaged in
technology-related industries. These include,
but are not limited to, communications,
computers, video, electronics, oceanography,
office and factory automation, and robotics. A
core portion of the Portfolio's holdings are
invested in market-leading technology companies
which the investment advisor believes will
maintain or improve their market share
regardless of overall conditions.
----------------------------------------------------------------------------------------------------
INVESCO Variable Investment Funds - INVESCO Funds Group, Inc.
Telecommunications: seeks capital appreciation.
The Portfolio normally invests at least 80% of
its assets in the equity securities of
companies that are primarily engaged in the
design, development, manufacture, distribution,
or sale of communications services and
equipment, and companies that are involved in
developing, constructing, or operating
communications infrastructure projects
throughout the world, or in supplying equipment
or services to such companies. The
telecommunications sector includes companies
that offer telephone services, wireless
communications, satellite communications,
television and movie programming and
broadcasting. Normally, the Portfolio will
invest at least 65% of its assets in companies
located in at least three different countries,
although U.S. issuers will often dominate the
holdings.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
TRANSFERS AND ALLOCATION SERVICES
[39] May I transfer Account Value between investment options? You may
transfer Account Value between investment options, but there are
limits, as well as potential charges, which are discussed above in the
question "How much is the transfer fee, and when must I pay it?" We
permit the agent of record to make transfers on your behalf unless you
give us other instructions.
[40] Are there any limits on transfers? No transfers are permitted when the
Policy is in its "grace period." In order to maintain Account Value in
an investment option after transferring a portion of your Account Value
out of that investment option, we reserve the right to require that
there be at least $500.00 in such investment option after the transfer.
If, as a result of the transfer, there would be less than $500.00 in an
investment option, we reserve the right to transfer the remaining
Account Value pro rata to the investment option(s) that you were
transferring to. We retain the right to impose a limit of not more than
12 transfers per Policy Year, including transfers involving Fixed
Allocations. Unless such a limit is in effect, there is no limit on the
number of transfers that only involve variable investment options, or
the number of transfers from variable investment options to make Fixed
Allocations. However, we do limit each transfer from Fixed Allocations
that are to be effective on any day other than a Policy Anniversary to
the greater of 25% of the Account Value in your Fixed Allocations or
$1,000. If you make such a transfer from your Fixed Allocations, you
cannot make another such transfer until either 90 days has passed or
the next Policy Anniversary occurs. We also retain the right to refuse
or limit transfers, either for one Owner or a group of Owners, if we
believe there may be adverse consequences for other Owners.
[41] What are `allocation services'? Allocation services are programs that
automatically transfer Account Value between investment options. We may
waive or reduce the minimum amounts required for transfers noted above
when your Policy is participating in certain allocation programs,
including, but not limited to, static rebalancing programs. However,
any limitations on transfers from Fixed Allocations also apply if any
allocation services are being utilized.
[42] What allocation services does American Skandia provide? We support
dollar cost averaging and static rebalancing. Dollar cost averaging
allows you to systematically transfer an amount periodically from one
investment option to one or more other investment options. With static
rebalancing, you choose allocation percentages for the Sub-accounts
into which you allocate Account Value. However, over time the
performance of the variable investment options will differ, causing
your percentage allocations to shift. Periodically, we will "rebalance"
your allocations by transferring the appropriate amount from the
"overweighted" Sub-accounts to the "underweighted" Sub-accounts to
return your allocations to the percentages you request. We do not
currently make a charge for supporting dollar cost averaging or static
rebalancing.
LOANS
[43] When can I take a loan? We offer loans using Account Value as
collateral. We do not make loans available during the first Policy
Year. Starting after the first Policy Year, we allow one loan each
Policy Year. The Insured must be alive when you take a loan (if there
are two Insureds, at least one must be alive when a loan is taken).
Subject to our rules, on the Issue Date, we will establish a loan equal
to the outstanding indebtedness on previous life insurance exchanged
for a Policy.
[44] Is this type of loan tax-free? We treat loans as a distribution,
similar to a partial withdrawal, in that: (a) amounts are deemed to
come first from any gain in the Policy; (b) distributions of gain are
subject to income tax as ordinary income; and (c) if the distribution
occurs before the taxpayer's age 59 1/2, there may be an additional 10%
tax on any gain distributed.
[45] How much is available for a loan? The maximum amount available as a
loan is equal to 90% of your current Cash Value. The minimum amount you
may borrow is $500.
[46] What happens to the Account Value if I take a loan? When you take a
loan, we transfer Account Value equal to the amount of the loan into
the Loan Account. Account Value in the Loan Account is maintained in
our general account. Unless you give us different instructions, we move
Account Value from the variable investment options and the Fixed
Allocations in the same proportion as your Account Value in the
investment options on the Valuation Date we move such Account Value.
The impact of a loan on your Account Value may be positive or negative.
At the time a loan is taken, there is no impact. However, if the
interest rate credited to Account Value in the Loan Account is greater
than what would be earned in the investment options, the loan will have
a positive impact on your Account Value and on the Required Death
Benefit. If the interest rate credited to Account Value in the Loan
Account is less than what would be earned in the investment options,
the loan will have a negative impact on your Account Value and on the
Required Death Benefit.
[47] What are "preferred" loans and "standard" loans? We determine what
portion of a loan is a "preferred" loan and what portion is a
"standard" loan at the time you take the loan. Whether a loan is
"preferred" or "standard" depends on the source of the collateral to
support the loan. We consider the Account Value moved to the Loan
Account to come first from Growth. The portion of any outstanding loans
supported by Account Value drawn from Growth is treated as a preferred
loan. The portion of any outstanding loans supported by Account Value
drawn from other than Growth is treated as a standard loan. A loan
retains its character as "preferred" or "standard" until repaid.
[48] What is the interest rate charged on loans? We charge interest on
"preferred" and "standard" loans at the rate of 6.0% per year,
compounded yearly, in arrears. Each Policy Anniversary that the loan is
not repaid, we add an amount equal to any unpaid interest to your Debt.
[49] Does Account Value in the Loan Account earn interest? We currently
credit interest to Account Value in the Loan Account on "preferred"
loans at the rate of 6.0% per year, compounded yearly. We currently
credit interest to Account Value in the Loan Account on "standard"
loans at the rate of 4.0% per year, compounded yearly.
[50] Once a loan is taken, does American Skandia ever require more
`collateral' in the Loan Account? Yes. The Loan Account acts as
collateral for any loans from us. We monitor the Debt and the Account
Value in the Loan Account to assure that they are equal to each other.
Therefore, on each Policy Anniversary we equalize the Debt and the
Account Value in the Loan Account. If the Debt is larger due to
outstanding loan interest, we transfer Account Value equal to the
difference pro-rata from the investment options and add it to the Loan
Account.
We also match up the Debt and the Loan Account when you repay any
portion of the Debt. If the Account Value in the Loan Account then
exceeds the Debt, we transfer the excess pro-rata to the investment
options which you are utilizing at that time. Any amount then allocated
to the fixed option will be treated as a separate Fixed Allocation.
[51] When must I repay the loan? What happens at the Insured's death if I
have not repaid the loan? You are not required to repay the loan while
the Insured is alive, except when an amount is due to keep the Policy
in force or upon reinstatement. If there is any outstanding Debt when
Death Proceeds are due, we subtract the Debt from the Death Benefit as
part of the calculation of the Death Proceeds.
[52] What happens if I repay any portion of the loan? The amount of Debt is
reduced by the amount of any loan repayment. Loan repayments are used
to repay "standard loans first and "preferred" loans only after all
"standard" loans have been repaid. Loan repayments reduce the amount of
principal and loan interest proportionately based on the ratio between
principal and loan interest as of the Valuation Date the loan repayment
is applied. We allocate any loan repayment to the variable investment
and fixed options pro-rata based on the Account Value in each
investment option as of the Valuation Period we receive your loan
repayment. Any amount then allocated to the fixed option will be
treated as a separate Fixed Allocation.
PARTIAL WITHDRAWALS
[53] When can I make a partial withdrawal? We allow partial withdrawals
while the Insured is alive up to a maximum of 90% of the Cash Value,
except that, where permitted by law, you may not take a partial
withdrawal until after the end of the "free-look" period. You may not
make a partial withdrawal of less than $500.00.
[54] What happens to the Account Value if I take a partial withdrawal? When
you take a partial withdrawal, we reduce your Account Value by an
amount equal to the amount of the partial withdrawal. Unless you give
us different instructions, we take Account Value from the variable
investment options and the Fixed Allocations in the same proportion as
your Account Value in the investment options on the Valuation Date we
take such Account Value. If you have multiple Fixed Allocations,
amounts are taken on a "last in, first out" basis. Any Account Value in
the Loan Account is not available for a partial withdrawal.
[55] Is there a charge for a partial withdrawal? We charge any applicable
contingent deferred sales charge and contingent deferred tax charge on
the portion of any partial withdrawal that is not treated as a "free
withdrawal" or for which we waive such charges under the
medically-related waiver provision. We take these charges pro-rata from
the investment options from which we take the Account Value as a result
of the partial withdrawal.
[56] What amount can I take as a free withdrawal? In any Policy Year the
maximum amount you can take as a free withdrawal is the greater of
Growth or 10% of the Premium.
The following examples may help show what this means. For each
example, assume that the Premium was $50,000.
|X| Assume the Account Value as of the Valuation Day we process your
partial withdrawal is $60,000. You request a partial withdrawal of
$25,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the
greater of Growth, which is the current Account Value ($60,000) less
the Premium ($50,000), or $10,000, and 10% of the Premium, which is
$5,000. Therefore, we treat $10,000 as the free withdrawal portion of
this partial withdrawal. Assuming that this partial withdrawal request
occurs during the "surrender charge period," and there is no
subsequent Growth in that Policy Year, we would assess the then
applicable contingent deferred sales charge and contingent deferred
tax charge on $15,000, which is the portion of the partial withdrawal
that exceeds the free withdrawal amount. The contingent deferred sales
charge and contingent deferred tax charge would apply to the full
amount of any subsequent partial withdrawal you request during the
same Policy Year that was not eligible for a medically-related waiver.
|X| Assume the Account Value as of the Valuation Day we process your
partial withdrawal request for the "maximum free withdrawal amount" is
$47,000. Assume also that you have not requested any other partial
withdrawals during this Policy Year. The free withdrawal amount is the
greater of Growth, which is the current Account Value ($47,000) less
the Premium ($50,000), or $3,000, and 10% of the Premium, which is
$5,000. Therefore, the maximum free withdrawal amount is $5,000.
Assuming that this partial withdrawal request occurs during the
"surrender charge period," and there is no subsequent Growth in that
Policy Year, the contingent deferred sales charge and the contingent
deferred tax charge would apply to any subsequent surrender or partial
withdrawal that Policy Year that was not eligible for a
medically-related waiver.
[57] Does a partial withdrawal affect the Death Benefit? A partial
withdrawal reduces the Required Death Benefit. The Required Death
Benefit is reduced because the Account Value, which is used in
calculating the Required Death Benefit, has been reduced. It also
reduces the Guaranteed Minimum Death Benefit in the same proportion as
the Account Value is reduced by the partial withdrawal.
[58] Can I put back funds taken as a partial withdrawal? No.
SURRENDERS
[59] When can I surrender my Policy? You can surrender your Policy after the
end of the free-look period as long as the Insured is alive.
[60] What is paid out when a Policy is surrendered? If you surrender the
Policy, we will pay you the Cash Value.
ACCELERATED DEATH BENEFIT
[61] What is an accelerated death benefit? An accelerated death benefit is
pre-payment to the Owner of a portion of the Death Proceeds. The
maximum we will pay, before any reductions, is the lesser of 50% of the
Required Death Benefit or $250,000. The actual amount is reduced by a
12-month interest rate discount (currently 6.0%) and a pro-rata portion
of any Debt. We reserve the right to change the interest rate discount
percentage.
[62] When will American Skandia make such a payment? We will make such a
payment one time, where allowed by law, based on the Owner's request.
The Insured may not request such a payment unless the Insured is also
the Owner. We only make the payment if we receive all our requirements.
Our requirements include, but are not limited to, proof satisfactory to
us In Writing that the Insured (the last surviving Insured if there are
two Insureds) became terminally ill, as defined in your Policy: (a) at
least 30 days after the Issue Date; or (b) as a result of an accident
that occurred after the Issue Date. To the extent permitted by law, we
will change our procedures in relation to this benefit or the
definition of terminally ill or any other applicable term in order to
maintain the tax-free status of any amounts paid out under this
provision.
[63] What happens to the remaining benefits if American Skandia makes such a
payment? Any such payment reduces the Account Value, the Premium, the
Guaranteed Minimum Death Benefit and any Debt in the same ratio as the
Required Death Benefit is reduced as of the Valuation Period such a
payment is made. You should consult a tax advisor on the tax
consequences of such a payment. Please refer to Appendix A for a
hypothetical illustration of the accelerated death benefit provision.
MEDICALLY-RELATED WAIVER
[64] What is a medically-related waiver? A medically-related waiver is a
waiver of the contingent deferred sales charge and the contingent
deferred tax charge that would otherwise apply to a partial withdrawal
or surrender. A medically-related waiver is available by rider to the
Policy and is currently at no charge to you.
[65] When would American Skandia waive these charges? We will waive the
contingent deferred sales charge and contingent deferred tax charge,
where allowed by law, if you provide us with all of our requirements.
Our requirements include, but are not limited to proof satisfactory to
us In Writing that the Insured (the last surviving Insured if there is
more than one Insured) has continuously been confined to a long term
care facility, such as a nursing home or a hospital, as defined in the
rider, and that such confinement started after the Issue Date.
[66] Are there any restrictions on medically-related waivers? We will only
consider providing this benefit on amounts up to $500,000. The $500,000
maximum will apply regardless of when taken, on any life insurance
policy or annuity contract issued by American Skandia where the Insured
under this Policy is named as the Insured, Owner or Annuitant under the
other policy or contract. NOTE: Where allowed by law, Policies issued
to an Insured(s) in a substandard risk class may not be eligible for a
medically-related waiver.
[67] What happens to the remaining benefits if American Skandia makes such a
payment in connection with a partial withdrawal? A partial withdrawal
for which we grant a medically-related waiver has the same impact on
the remaining benefits that results from any other partial withdrawal.
We simply do not deduct the contingent deferred sales charge and
contingent deferred tax charge that otherwise would apply.
RISKS
[68] What are the risks, and who takes the risks? We bear the risk that, for
all the Policies we issue, when considered together, our expenses
exceed our charges, including the expense of providing the difference
at death between the Account Value and the Death Benefit. We also bear
the investment and reinvestment risk in providing interest crediting
guarantees -- to Fixed Allocations and to the Loan Account, as well as
for any settlement options that assume a fixed rate of return. We --
also bear the risk in guaranteeing the Guaranteed Minimum Death Benefit
if your Policy lapses and you do not have any Debt. You bear the
investment risk when allocating Account Value to any variable
investment option, since that will affect the amount available for any
loans, partial withdrawals or surrender. Any irrevocable beneficiary
bears the risk as to the Death Proceeds, which are affected by
investment performance of the investment options, the age at which the
Insured dies, any loan or withdrawal activity by the Owner prior to the
Insured's death or payment of an accelerated death benefit.
OTHER RIGHTS
[69] Do I have any other rights if I buy a Policy? There are certain other
ownership rights you may exercise under a Policy. You may name one or
more Beneficiaries. You may make that designation "irrevocable," which
means it cannot be changed. If you do not designate the Beneficiary as
irrevocable, you retain the right to change the Beneficiary before the
Insured dies. However, all Beneficiary designations are subject to our
acceptance, to the extent permitted by law. You also may transfer,
pledge or assign your Policy, which may trigger a currently taxable
event. You should only transfer, pledge or assign your Policy after
consulting with a competent tax advisor. You may exercise voting rights
in relation to the applicable Portfolios. Some of these rights may be
limited depending on the usage of your Policy, especially if we permit
it to be held in connection with certain retirement plans designed to
be "qualified" plans under the Code.
THE INSURANCE COMPANY
[70] Who is American Skandia? American Skandia Life Assurance Corporation is
organized as a stock insurance company domiciled in Connecticut. The
predecessor company of American Skandia was originally incorporated on
May 21, 1969. We are licensed as a life insurer in all 50 states and
the District of Columbia. We are a wholly owned subsidiary of American
Skandia, Inc. (formerly American Skandia Investment Holding
Corporation) whose indirect parent is Skandia Insurance Company Ltd.
Skandia Insurance Company Ltd. is part of a group of companies whose
predecessor began operations in 1855. Two of our affiliates, American
Skandia Marketing, Incorporated, and American Skandia Information
Services and Technology Corporation, may provide certain administrative
functions for us. We may also engage various independent firms to
provide various administrative functions for us. Another affiliate,
American Skandia Investment Services, Incorporated, currently acts as
the investment manager to American Skandia Trust, one of the underlying
mutual funds whose Portfolios are available as variable investment
options. We currently engage Skandia Investment Management, Inc., an
affiliate whose indirect parent is Skandia Insurance Company Ltd., as
investment manager for our general account. We are under no obligation
to engage or continue to engage any investment manager.
THE SEPARATE ACCOUNT
[71] What supports American Skandia's obligation to me if I buy a Policy?
The benefits provided by the Policy are our obligations. The assets
supporting our obligations equaling the Account Value allocated to the
variable investment options are held in our Separate Account F. We
maintain assets in our general account to support our obligations: (1)
equal to the Account Value allocated to the fixed option; (2) equal to
the Account Value in the Loan Account; (3) for any settlement option;
and (4) for any other obligation we may have in relation to a Policy.
The Separate Account was established under the laws of Connecticut.
Assets in the Separate Account may support obligations created in
relation to the Policies described in this Prospectus or other policies
we offer. We are the legal owner of the assets in the Separate Account.
Income, gains and losses, whether or not realized, are credited or
charged to the Separate Account according to the terms of the Policies
and any other policies supported by the assets in the Separate Account
without regard to our other income, gains or losses or to the income,
gains or losses in any other of our separate accounts. We will maintain
assets in the Separate Account with a total market value at least equal
to the reserves and other liabilities we must maintain in relation to
the life insurance policies supported by such assets. These assets may
only be charged with liabilities that arise from such life insurance
policies.
Separate Account F is registered with the U.S. Securities and Exchange
Commission (the "SEC") under the Investment Company Act of 1940 as a
unit investment trust, which is a type of investment company. This does
not involve any supervision by the SEC of the investment policies,
management or practices of the Separate Account or of us. The Separate
Account meets the definition of "separate account" under the federal
securities law.
The only Sub-accounts available to you are those offered in this
Prospectus. These Sub-accounts are available as investment options for
other policies we offer. Sub-accounts are permitted to invest in
Portfolios we consider suitable. The Portfolios in which the
Sub-accounts invest are available to Sub-accounts of other separate
accounts, including separate accounts we use in relation to a number of
variable annuities. Separate accounts of other insurers and of various
qualified retirement plans may also invest in the Portfolios.
TAXES
[72] What are the taxes associated with the Policy? The following are some
brief summary answers to questions about Federal income taxes. Federal
and state tax laws, as well as the interpretations of those laws,
change. In addition, we do not know your particular circumstances,
which is one of a number of reasons we cannot give you tax advice. You
should consult a professional tax advisor for tax advice for your
particular situation. You should also be sure to read the "Additional
Tax Considerations" section appearing later in this Prospectus, which
includes, but is not limited to, information regarding estate and gift
taxes.
[73] Is gain in the Policy taxed every year? Under most circumstances, any
gain in the Policy is not taxed currently. However, if you assign or
pledge the Policy, we expect to report any gain in the Policy as then
currently taxable as ordinary income. In addition, except in the case
of a partial assignment as of the Policy Date, we expect to report gain
in the Policy as currently taxable in each tax year the assignment
remains in effect.
[74] How are amounts that I receive before the Insured's death taxed?
Amounts you receive as a partial withdrawal, a loan or if you surrender
the Policy are deemed for income tax purposes to come first from any
gain in the Policy. Any gain is taxed as ordinary income. Any portion
of these types of distributions representing gain in the Policy may be
subject to a 10% tax penalty if taken before your age 59 1/2.
[75] Will my Beneficiary pay taxes on the Death Proceeds? Under most
circumstances, the Beneficiary does not pay any income tax on the Death
Proceeds.
AVAILABLE INFORMATION
[76] How can I find out more about this offer? You first should review the
rest of this Prospectus for additional information. This Prospectus is
part of the registration statement we filed with the Securities and
Exchange Commission regarding this offering. Additional information on
American Skandia and this offering is available in that registration
statement and accompanying exhibits. You may obtain copies of these
materials at the prescribed rates from the SEC's Public Reference
Section, 450 Fifth Street N.W., Washington, D.C., 20549. You may
inspect and copy the registration statement and the accompanying
exhibits at the SEC's public reference facilities at the above address,
Room 1024, and at the SEC's Regional Offices, 7 World Trade Center, New
York, NY, and the Everett McKinley Dirksen Building, 219 South Dearborn
Street, Chicago, IL. These documents, as well as documents incorporated
by reference, may also be obtained through the SEC's Internet Website
(http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
MISCELLANEOUS PROVISIONS AND ADDITIONAL DETAILS
The following sections provide additional information you should consider before
purchasing a Policy.
PROVIDING SERVICES TO YOU
You can reach us by telephone at 1-888-554-3348 or through our Internet Website
at http://www.americanskandia.com. We may require that you provide us with
proper identification before we release information about your Policy or accept
instructions received over the phone, the Internet or via any other electronic
means. We may require that you provide your Social Security or tax
identification number. We also may require you to present the personal
identification number ("PIN") we provide you after we issue a Policy. To the
extent permitted by law or regulation, neither we nor any person authorized by
us will be responsible for any claim, loss, liability or expense in connection
with a transaction, including but not limited to a transfer between investment
options, over the phone, the Internet or via any other electronic means.
However, this will only be the case if we or such authorized person acted: (a)
in good faith reliance that you authorized the transaction; and (b) on
reasonable procedures to identify you or your designee though a number of
verification methods. These methods may include recording phone conversations,
requesting Social Security or tax identification numbers, PINs, confirming
electronic mail addresses, or similar means. We may be liable for losses due to
unauthorized or fraudulent instructions should we not follow such reasonable
procedures.
We may require that you submit forms In Writing for certain transactions. We
require the written consent of all joint Owners for any transaction for which we
require the Owner's written consent.
DESIGNATIONS
Certain designations apply to a Policy - the Owner, the Insured and the
Beneficiary. All designations are subject to our rules and our acceptance. We
assume all designations, other than the Insured, are revocable unless you tell
us otherwise. You should consult with a competent tax advisor on the income tax,
estate and inheritance tax implications of various designations. You should also
consult with a competent legal advisor as to the implications of certain
designations in relation to an estate, bankruptcy and community property, where
applicable, as well as other matters.
We assume the Insured(s) is/are the Owner(s) unless you tell us otherwise. If
you name more than one Owner, all rights reserved to Owners are then held as
joint tenants with rights of survivorship unless you provide alternative
instructions. Naming someone to be the Owner other than the payor of the Premium
may have gift, estate or other tax implications.
We assume the Beneficiary is you or your estate unless you tell us otherwise.
You may name more than one primary and more than one contingent Beneficiary.
NET INVESTMENT FACTOR
For each Sub-account the initial Unit Price was $10.00. The Unit Price for each
subsequent Valuation Period is the net investment factor for that Valuation
Period, multiplied by the Unit Price for the immediately preceding Valuation
Period. The net investment factor is (1) divided by (2), less (3), where:
(1) is the net result of:
(a) the net asset value per share of the underlying Portfolio at the
end of the current Valuation Period plus the per share amount of
any dividend or capital gain distribution declared and unpaid
(accrued) by the Portfolio; plus or minus
(b) any per share charge or credit during the Valuation Period as a
provision for taxes attributable to the operation or maintenance
of that Sub-account.
(2) is the net result of:
(a) the net asset value per share of the underlying Portfolio at the
end of the preceding Valuation Period plus the per share amount
of any dividend or capital gain distribution declared and unpaid
(accrued) by the Portfolio; plus or minus
(b) any per share charge or credit during the preceding Valuation
Period as a provision for taxes attributable to the operation or
maintenance of the Sub-account.
(3) is the mortality and expense risk charges and the administration charge.
ALLOCATION PROGRAMS
We may provide administrative support for various programs that automatically
transfer Account Value between certain investment options at scheduled times.
These include dollar cost averaging and static rebalancing (periodic rebalancing
of Account Values between investment options to conform to preset percentages).
However, we only offer to support such allocation programs according to our
rules. While we are offering to support these programs as of the date of this
Prospectus, we do not guarantee to support these programs at all times.
We may also provide administrative support for various allocation programs that
may be made available by your financial professional. These may include various
asset allocation and market timing programs. In connection with such programs,
we may support periodic withdrawals from your Policy to pay your financial
professional. We only offer to support such programs according to our rules.
These rules may include, but are not limited to, receipt of your authorization
In Writing permitting a financial professional to make transfers between
investment options on your behalf, or to enroll your Policy in one of the
allocation programs for which we provide administrative support. We permit the
agent of record to make transfers on your behalf unless you give us other
instructions.
Any financial professional you authorize may or may not be appointed by us as
our agent for the sale of Policies. However, we do not engage any agent of
record or any third parties to offer investment allocation services of any type,
so that persons or firms offering such services do so independent from any
agency relationship they may have with us for the sale of Policies. We therefore
take no responsibility for the investment allocations and transfers transacted
on your behalf by such third parties, in accordance with any allocation programs
employed by such third parties or any investment allocation recommendations made
by such third parties. While we offer support for a number of these programs as
of the date of this Prospectus, we do not support all such programs and do not
guarantee to always continue support for those programs we currently support or
may support in the future. We do not charge you for the administrative support
we provide to these third parties.
LIMITATIONS ON TRANSFERS
We retain the right to refuse transfers, either for one Owner or a group of
Owners, if we believe that: (a) excessive trading or a specific transfer request
or group of transfer requests may have a detrimental effect on Unit Prices or
the share prices of the Portfolios; or (b) we are informed by one or more of the
Portfolios that the purchase or redemption of shares is to be restricted because
of excessive trading or a specific transfer or group of transfers is deemed to
have a detrimental effect on the share prices of affected Portfolios. Without
limiting the above, the most likely scenario where either of the above could
occur would be if the aggregate amount of a trade or trades represented a
relatively large proportion of the total assets of a particular Portfolio. Under
such a circumstance, we will process transfers according to our rules then in
effect and provide notice if your transfer request was denied. If a transfer
request is denied, a new transfer request may be required.
DEATH DURING THE GRACE PERIOD
We deduct the unpaid charges from the Death Benefit when calculating the Death
Proceeds, if the Insured dies during a grace period. For more information on the
grace period, please refer to the response to the question "Do I have to
maintain a minimum Cash Value?"
REINSTATEMENT
You may apply for reinstatement of the Policy if it lapses. We must receive this
application In Writing at our Office within three years of the date the lapse
occurred as measured from the end of the grace period. We may require evidence
of insurability satisfactory to us. In order to reinstate your Policy, you also
must pay us a reinstatement amount, including any applicable charges.
MATURITY
A Policy "matures" as of the Policy Anniversary on which the Insured is Age 95.
If there are two Insureds, a Policy "matures" as of the Policy Anniversary on
which the younger Insured is Age 95 or would have been Age 95 if the younger
Insured is then deceased. We will pay out the Cash Value once the Policy
matures. The Policy will then end, and we will not have any more obligations
under the Policy. We may provide a rider, where permitted by law, that allows
the Policy to mature at a later date if there is adequate guidance available to
us regarding the tax treatment of all Policies if we were to permit extension of
the maturity date. Should we permit such extension of the maturity, we advise
you to seek tax advice regarding your specific circumstances should you want the
Policy to mature at a later date. If the Policy is no longer treated as life
insurance after any extension of maturity, gain in the Policy may be taxable to
you in the year of the original maturity and all or a portion of the Death
Proceeds may be taxable to the beneficiary.
PRICING TRANSACTIONS
We "price" charges, transfers, distributions and payments on the date indicated
below. If such transactions are scheduled to occur on other than a Valuation
Day, we price such transactions as of the following Valuation Period:
|X| "Scheduled" transactions such as monthly deductions, transfers and
distributions are "priced" according to the Unit Price next computed after
the date such transactions are scheduled to occur. However, if a
transaction is "scheduled" to occur on a day other than a Valuation Day,
such transaction will be processed and priced on the next Valuation Day
following the scheduled transaction. "Scheduled" transactions include, but
are not limited to, all charges deducted on a Monthly Processing Date,
equalization of Debt and the Account Value in the Loan Account on a Policy
Anniversary, transfers under a dollar cost averaging program or transfers
previously scheduled with us at our Office as part of any rebalancing,
asset allocation or similar program, or any program of scheduled
distributions.
|X| "Unscheduled" transactions such as transfers, loans or partial withdrawals
that are not subject to any medical waiver are "priced" according to the
Unit Price next computed after we receive the request for such transactions
at our Office. "Unscheduled" transfers include any transfers processed in
conjunction with any market timing program, or transfers not previously
scheduled with us at our Office pursuant to any rebalancing, asset
allocation or similar program which you employ or you authorize to be
employed on your behalf. "Unscheduled" transfers received pursuant to an
authorization to accept transfer instructions using voice or data
transmission over the phone are priced as of the Valuation Period we
receive the request at our Office for such transactions. We price
unscheduled payments sent to us as of the date we receive such amounts at
our Office. These include loan repayments, payments to keep a Policy in
effect during a grace period or a reinstatement payment.
|X| We price surrenders, withdrawals subject to a medical waiver, accelerated
death benefit payments and payment of Death Proceeds as of the date we
receive at our Office all materials we require for such transactions and
such materials are satisfactory to us.
DELAYING TRANSACTIONS
We may defer any distribution or transfer from a Fixed Allocation or any payment
under a fixed settlement option for a period not to exceed the lesser of six (6)
months or the period permitted by law. If we defer a distribution or transfer
from any Fixed Allocation or any payment under a settlement option for more than
thirty days, or less where required by law, we pay interest at the minimum rate
required by law but not less than 3% per year on the amount deferred. We may
defer payment of proceeds of any distribution from any Sub-account or any
transfer from a Sub-account for a period not to exceed seven (7) calendar days
from the date the transaction is effected. This is a delay in payment only, and
is not a delay in the pricing of any such distribution or transfer. Any deferral
period begins on the date such distribution or transfer would otherwise have
been transacted.
All procedures, including distributions, based on the valuation of the
Sub-accounts may be postponed during the period: (1) the New York Stock Exchange
is closed (other than customary holidays or weekends) or trading on the New York
Stock Exchange is restricted as determined by the SEC; (2) the SEC permits
postponement and so orders; or (3) the SEC determines that an emergency exists
making valuation or disposal of securities not reasonably practical.
VOTING
You have voting rights in relation to Account Value maintained in the
Sub-accounts. You do not have voting rights in relation to Account Value
maintained in any Fixed Allocations, in the Loan Account or in relation to fixed
payments under a settlement option.
We will vote shares of the Portfolios in which the Sub-accounts invest in the
manner directed by Owners, unless we, in our sole discretion, determine that we
are required by law or regulation to vote otherwise. Owners have voting rights
equal to the number of shares represented by the Sub-account Units attributable
to their Policy.
We will vote the shares attributable to assets held in the Sub-accounts solely
for us rather than on behalf of Owners, or any share as to which we have not
received instructions, in the same manner and proportion as the shares for which
we have received instructions. We will do so separately for each Sub-account
from various classes that may invest in the same underlying mutual fund
portfolio.
The number of votes for a Portfolio will be determined as of the record date for
such Portfolio as chosen by its board of trustees or board of directors, as
applicable. We will furnish Owners with proper forms and proxies to enable them
to instruct us how to vote.
You may instruct us how to vote on the following matters: (a) changes to the
board of trustees or board of directors, as applicable; (b) changing the
independent accountant; (c) approval of changes to the investment advisory
agreement or adoption of a new investment advisory agreement; (d) any change in
the fundamental investment policy; and (e) any other matter requiring a vote of
the shareholders.
With respect to approval of changes to the investment advisory agreement,
approval of a new investment advisory agreement or any change in fundamental
investment policy, only Owners maintaining Account Value as of the record date
in a Sub-account investing in the applicable Portfolio will instruct us how to
vote on the matter, pursuant to the requirements of Rule 18f-2 under the
Investment Company Act of 1940.
TRANSFERS, ASSIGNMENTS, PLEDGES
Generally, your rights in a Policy may be transferred, assigned or pledged at
any time. These transactions may be subject to income taxes and certain penalty
taxes. You may transfer, assign or pledge your rights to another person at any
time, prior to the death upon which the Death Benefit is payable. You must
request a transfer or provide us a copy of the assignment In Writing. A transfer
or assignment is subject to our acceptance. We will not be deemed to know of or
be obligated under any assignment prior to our receipt and acceptance thereof.
We assume no responsibility for the validity or sufficiency of any assignment.
REPORTS
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at http://www.americanskandia.com
or any other electronic means. We send a confirmation statement to you each time
an unscheduled transaction is made affecting Account Value. Such transactions
will generally include changes in investment allocation or transfers among
investment options, loans and loan repayments, partial surrenders or
withdrawals, and any charges associated with such unscheduled transactions. We
also send quarterly statements detailing the activity affecting your Policy
during the prior quarter, including all scheduled and unscheduled transactions.
To the extent permitted by law, some types of scheduled transactions will only
be confirmed on a quarterly basis. Such transactions will generally include
those pre-authorized charges deducted on the Monthly Processing Date. You may
request additional reports. We reserve the right to charge up to $50 for each
such additional report. You should review the information in these statements
carefully. You must report all errors or corrections to us at our Office
immediately to assure proper crediting to your Policy. For transactions that are
confirmed immediately, we assume all transactions are accurate unless you notify
us otherwise within 10 days after the date of the transaction. For transactions
that are only confirmed on the quarterly statement, we assume all transactions
are accurate unless you notify us within 10 days of the end of the calendar
quarter. We may also send you or make available electronically through our
Internet Website an annual report and a semi-annual report containing financial
statements for the applicable Sub-accounts, as of December 31 and June 30,
respectively.
INCONTESTABILITY
We may not contest the validity of a Policy after it has been in effect during
the Insured's lifetime for two years from the Issue Date. If there are two
Insureds, this applies to the lifetime of either Insured. If the Policy is
reinstated, to the extent permitted by law, we may not contest the validity of a
Policy after it has been in effect for two years from the date of the
reinstatement.
SUICIDE
If an Insured commits suicide within two years of the Issue Date (or whatever
maximum period is permitted under law) or the date of a reinstatement if allowed
by law, the Death Benefit will be the greater of: (a) Premium paid less any
outstanding Debt and any partial withdrawals; or (b) the Cash Value. All other
requirements as to calculation and payment of Death Proceeds will apply.
MISSTATEMENT
We will adjust the amount of the Death Proceeds to conform to the facts if the
age or gender of an Insured is incorrectly stated. We will do so as specified in
the Policy and as permitted by law.
BACKDATING
Depending on your Age at the time you apply for a Policy, it may be advantageous
to have the Policy Date be earlier than the Issue Date. This is known as
"backdating." Doing so may enable you to qualify for lower cost of insurance
charges. We only permit backdating if: (a) doing so will qualify you for a lower
cost of insurance charge; and (b) the Policy Date is no earlier than the date
the Application is signed and in no case more than 90 days before the Issue
Date. If you elect backdating, on the Issue Date we will deduct charges that
would have been deducted as of the Policy Date and any Monthly Processing Dates
between the Policy Date and the Issue Date. To the extent permitted by law, we
do not guarantee any increase in the Account Value for the period between the
Policy Date and the Issue Date. However, we also reserve the right, to the
extent permitted by law, to credit you a fixed rate of interest for such period.
POLICY LOANS ON EXCHANGES
Subject to our rules, we will establish a loan on a Policy that you purchase as
part of an exchange that is not subject to current taxation in accordance with
Section 1035 of the Code. The amount of the loan will be equal to the loan that
was in effect before you surrendered your prior policy. Under our rules we will,
among other things, increase the Account Value as of the Policy Date by the
amount of the loan and allocate that portion of the increased Account Value to
the Loan Account as collateral for the loan. By increasing the Account Value,
there will be a corresponding increase in the Face Amount and the Required Death
Benefit. In addition, for purposes of determining the Guaranteed Minimum Death
Benefit, we will deem the "Premium" to be the amounts paid plus the loan amount
as of the Policy Date. Any contingent deferred sales charge and contingent
deferred tax charge will be based on the actual amounts received, not such
amounts plus the amount of the loan. All charges that are calculated as a
percentage of your Account Value will increase because the Account Value will be
increased by the amount of the loan. Loans established as part of a 1035
exchange will be treated as "preferred" loans (See "Loans" for a complete
description).
RESOLVING MATERIAL CONFLICTS
The Portfolios may be available to registered separate accounts offering either
or both life and annuity contracts of insurance companies not affiliated with
us. We also may offer life insurance policies and/or annuity contracts that
offer different variable investment options from those offered under this
Policy, but which invest in the same Portfolios. It is possible that differences
might arise between our Separate Account F and one or more accounts of other
insurance companies which offer a Portfolio as a Sub-account. It is also
possible that differences might arise between a Sub-account offered under this
Policy and variable investment options offered under different life insurance
policies or annuities we offer, even though such different variable investment
options invest in the same Portfolio. In some cases, it is possible that the
differences could be considered "material conflicts." Such a "material conflict"
could also arise due to changes in the law (such as state insurance law or
Federal tax law) which affect either these different life and annuity separate
accounts or differing life insurance policies and annuities. It could also arise
by reason of differences in voting instructions of persons with voting rights
under our policies and/or annuities and those of other companies, persons with
voting rights under annuities and those with rights under life policies, or
persons with voting rights under one of our life policies or annuities with
those under other life policies or annuities we offer. It could also arise for
other reasons. We will monitor events so we can identify how to respond to such
conflicts. If such a conflict occurs, we will take the necessary action to
protect persons with voting rights under our life policies or annuities
vis-a-vis those with rights under life policies or annuities offered by other
insurance companies. We will also take the necessary action to treat equitably
persons with voting rights under this Policy and any persons with voting rights
under any other life policy or annuity we offer.
MODIFICATION OF THE SEPARATE ACCOUNT
We reserve the right to do any or all of the following: (a) combine any
Sub-account(s) with any other Sub-account(s); (b) combine Separate Account F or
a portion thereof with other separate accounts; (c) deregister Separate Account
F under the Investment Company Act of 1940; (d) operate Separate Account F as a
management investment company under the Investment Company Act of 1940 or in any
other form permitted by law; (e) make changes required by any change in the
Securities Act of 1933, the Securities Exchange Act of 1934 or the Investment
Company Act of 1940; (f) make changes that are necessary to maintain the tax
status of your Policy under the Code; and (g) make changes required by any
change in other Federal or state laws relating to life insurance policies in
general or variable life insurance policies in particular.
We also may make additional Sub-accounts available to you from time to time.
These Sub-accounts will invest in Portfolios we believe to be suitable for the
Policy. We may or may not make a new Sub-account available to invest in any new
portfolio of one of the current underlying mutual funds should such a portfolio
be made available to Separate Account F.
We may eliminate Sub-accounts, combine two or more Sub-accounts or substitute
one or more new underlying mutual funds or portfolios for the one in which a
Sub-account is invested. Substitutions may be necessary if we believe a
Portfolio no longer suits the purpose of the Policy. This may happen due to a
change in laws or regulations, or a change in the investment objectives or
restrictions of a Portfolio, or because the Portfolio is no longer available for
investment, or for some other reason. We would obtain prior approval from the
insurance department of our state of domicile, if so required by law, before
making such a substitution, combination, deletion or addition. We also would
obtain prior approval from the SEC so long as required by law, and any other
required approvals before making such a substitution, combination, deletion or
addition.
ENTIRE CONTRACT
For any Policy issued, the entire contract between you and us includes the
Policy form and any of the following which may be attached to the Policy: riders
or endorsements, the copy of any Application and endorsements. All statements
made in any Application are deemed to be representations and not warranties. No
statement is used to void a Policy or defend a claim unless it is contained in
any Application attached to the Policy.
Only our President, one of our Vice Presidents or our Secretary may change or
waive any provisions of a Policy. Any change or waiver must be In Writing. To
the extent permitted by law, we are not bound by any promises or representations
made by or to any other person.
ADDITIONAL TAX CONSIDERATIONS
The following is a brief summary of certain Federal tax laws as they are
currently interpreted. No one can be certain that the laws or interpretations
will remain unchanged or that agencies or courts will always agree as to how the
tax law or regulations are to be interpreted. This discussion is not intended as
tax advice. You may wish to consult a professional tax advisor for tax advice as
to your particular situation.
Our taxation: We are taxed as a life insurance company under Part I, subchapter
L, of the Code.
Treatment as "life insurance": The Policy was designed to qualify as a life
insurance contract under the Code. All terms and provisions of the Policy shall
be construed in a manner which is consistent with that design. In order to
qualify as a life insurance contract for federal income tax purposes and to
receive the tax treatment normally accorded life insurance under federal tax
law, a policy must satisfy certain requirements established by the Code. We
believe the Policy satisfies the applicable requirements. If we determine that a
Policy does not satisfy the applicable requirements, we may take appropriate
action to conform the Policy to the applicable requirements. This action may
require making certain changes to your Policy which could include the return of
a portion of your premium and the earnings thereon and the imposition of higher
cost of insurance charges in the future. We will notify you before making any
such changes.
Treatment as a "modified endowment contract": Under most circumstances, taxes on
any gain in the Policy are `deferred' and not taxed every year. Unless your
Policy is established as part of an eligible exchange of a life insurance policy
entered into before June 21, 1988, amounts you receive as a partial withdrawal,
a loan or as a surrender are taxed in the same manner as distributions from a
deferred annuity before annuity payments begin. This means that these types of
distributions are deemed to come first from any gain in the policy and that any
gain is treated as ordinary income. It also means that distributions of gain may
be subject to a 10% tax penalty if taken before age 59 1/2. Under most
circumstances, the Beneficiary will not pay any income tax on the Death
Proceeds.
Assignment: If you assign or pledge any portion of the Policy, the transaction
is treated as a distribution subject to taxation as ordinary income. The tax
penalty noted above may apply. In addition, except in the case of a partial
assignment as of the Policy Date, we expect to report gain in the Policy as
currently taxable in each tax year the assignment remains in effect.
Gifts: If you give your Policy as a gift to an entity for which you are not the
taxpayer or to anyone other than your spouse (or former spouse incident to a
divorce), the gift is treated for tax purposes as a distribution.
Aggregation rules: You may purchase more than one life insurance policy from us
in the same calendar year that is treated under the Code as a "modified
endowment contract," including the Policy described in this Prospectus. If you
do, all such policies are subject to "aggregation rules." Under these rules, all
of these policies must be treated as one modified endowment contract when
determining the portion of any distribution or deemed distribution which is
currently taxable. It is also possible that these aggregation rules may apply to
any annuity contracts you purchase from us in the same calendar year as you
purchase a Policy.
Exchanges: Section 1035 of the Code permits certain income tax-free exchanges of
life insurance policies. You must comply with various requirements for such
exchanges to be treated as tax-free, which include, but are not limited to: (a)
the need for the insured to be the same individual or individuals before and
after the exchange; (b) the need for the owner(s) to be the same before and
after the exchange; and (c) the need to have the Debt on a Policy as of the date
all premium is received equal to any outstanding indebtedness on the life
insurance exchanged for the Policy. If you exchange a life insurance policy
considered entered into before June 21, 1988 and which is not a modified
endowment contract, we believe the new policy generally will not be treated as a
modified endowment contract if no additional premium is paid. For those Policies
not treated as modified endowment contracts, we believe that loans are not
treated as distributions and withdrawals are deemed to come first from your
investment in the policy. In addition, we believe that the aggregation rules as
well as the tax treatment of assignments, pledges and gifts, noted above, would
not apply. However, we cannot guarantee this tax treatment and advise you to
consult your tax advisor before exchanging any existing life insurance policy.
On November 22, 1999, the Internal Revenue Service issued an acquiescence in the
decision of the United States Tax Court in Conway v. Commissioner (111 T.C. 350
(1998)) that a taxpayer's partial surrender of an annuity contract and direct
transfer of the resulting proceeds for the purchase of a new annuity contract
qualifies as a non-taxable exchange under Section 1035 of the Internal Revenue
Code. "Acquiescence" means that the IRS accepts the holding of the Court in a
case and that the IRS will follow it in disposing of cases with the same
controlling facts. Prior to the Conway decision, industry practice has been to
treat a partial surrender of account value as fully taxable to the extent of any
gain in the contract for tax reporting purposes and to "step-up" the basis in
the contract accordingly. However with the IRS' acquiescence in the Conway
decision, partial surrenders may be treated in the same way as tax-free 1035
exchanges of entire contracts, therefore avoiding current taxation of any gains
in the contract as well as the 10% IRS tax penalty on pre-age 59 1/2
withdrawals. The IRS reserved the right to treat transactions it considers
abusive as ineligible for this favorable partial 1035 exchange treatment. We do
not know what transactions may be considered abusive. For example, we do not
know how the IRS may view early withdrawals after a partial exchange.
While the principles expressed in the Conway decision appear applicable to
partial exchanges from life insurance, there is no guidance from the Internal
Revenue Service as to whether it concurs with non-recognition treatment under
Section 1035 of the Code for such transaction. In addition, please be cautioned
that no specific guidance has been provided as to the impact of such a
transaction for the remaining life insurance policy, particulary as to the
subsequent methods to be used to test for compliance under the Code for both the
definition of life insurance and the definition of a modified endowment contract
As of the date of this Prospectus, we continue to report partial surrenders of
life insurance policies as subject to current taxation to the extent of any
gain. However, we may change our reporting procedures to treat certain of these
transactions as partial 1035 exchanges. Should we do so, we reserve the right to
report transactions that may have been designed to receive partial 1035 exchange
treatment as partial surrenders subject to current taxation if we, as a
reporting and withholding agent, believe that we would be expected to deem a
transaction to be abusive.
Transfers between investment options: Transfers between investment options are
not subject to taxation. The Treasury Department may promulgate guidelines under
which a variable life insurance policy will not be treated as life insurance for
tax purposes if persons with ownership rights have excessive control over the
investments underlying such a policy. Such guidelines may or may not address the
number of investment options or the number of transfers between investment
options offered. It is not known whether such guidelines, if in fact
promulgated, would have retroactive effect. It is also not known what effect, if
any, such guidelines may have on transfers between the investment options of the
Policy offered pursuant to this Prospectus. We will take any action, including
modifications to your Policy or the Sub-accounts, required to comply with such
guidelines if promulgated.
Generation skipping transfers: Under the Code certain taxes may be due when all
or part of a life insurance policy is transferred to or a death benefit is paid
to an individual two or more generations younger than the policy holder. These
generation-skipping transfers generally include those subject to federal estate
or gift tax rules. There is an aggregate $1.01 million exemption from tax on all
such transfers. We may be required to determine whether a transaction is a
direct skip as defined in the Code and the amount of the resulting tax. We will
deduct from your Policy or from any applicable payment treated as a direct skip
any amount of tax we are required to pay. You should consult with competent tax
counsel for more information on generation skipping transfers.
Diversification: Section 817(h) of the Code provides that a variable life
insurance policy, in order to qualify as life insurance, must have an
"adequately diversified" segregated asset account (including investments in a
mutual fund by the segregated asset account of insurance companies). The
Treasury Department's regulations prescribe the diversification requirements for
variable life insurance policy. We believe the underlying mutual fund portfolios
should comply with the terms of these regulations.
Withholding: Section 3405 of the Code provides for Federal income tax
withholding on the portion of a distribution which is includible in the gross
income of the recipient. Amounts to be withheld depend upon the nature of the
distribution. However, under most circumstances a recipient may elect not to
have income taxes withheld or have income taxes withheld at a different rate by
filing a completed election form with us. A withholding form may be required.
Accelerated Death Benefits: Payments of amounts that otherwise would be payable
to the Beneficiary as a result of an Insured's death can qualify for the same
tax-free treatment as death benefits if certain requirements are met. These
include requirements regarding the terminal illness of the Insured. We believe
payments under the provisions of the accelerated death benefit of the Policy
will meet the requirements of the Code and the regulations in order to qualify
as tax-free payments. A qualified tax advisor should be consulted as to any
federal gift and estate tax consequences of an Owner's exercise of the
Accelerated Death Benefit provision and payment of the proceeds under this
provision to the Insured or other parties.
Extending the Policy's Maturity: We believe that a Policy will continue to be
treated as life insurance and as a modified endowment contract under the Code if
you extend the Policy's maturity under any extended maturity rider we may offer
in the future. However, this tax treatment is not certain, so you should consult
your tax advisor before taking this step. If the Policy is not treated as life
insurance after any extension of maturity, gain in the Policy may no longer be
taxed deferred, and all or a portion of the Death Proceeds may be taxable to the
Beneficiary.
Survivorship Policies: The Code does not directly address how certain features
of a policy paying on the death of a surviving insured should be treated. We
believe such a policy should be treated as other life insurance policies, but
there is some uncertainty as to whether that is the case. If the surviving
Insured is an Owner, the Death Proceeds payable as a result of the death of the
last surviving Insured generally will be treated as part of the Owner's estate
for purposes of the Federal estate tax. If the surviving Insured was not an
Owner, the replacement cost of the Policy would be included in the estate of the
Owner upon his or her death and Death Proceeds payable as a result of the death
of the surviving Insured are includible in the person's estate if the proceeds
are payable to or for the benefit of that person's estate or if the surviving
Insured held incidents of ownership in the Policy within three years prior to
death.
Substandard Risk Classes: The Code provides limited guidance on the proper tax
treatment of policies issued on a substandard basis (i.e. those in a substandard
risk class). The Code limits the amount we can charge for mortality costs and
other expenses we use when we calculate whether your Policy qualifies as life
insurance under the Code. We are required to base our calculations on reasonable
mortality and other charges reasonably expected to be paid. We believe that the
charges used for your Policy should meet the current requirement for
"reasonableness." However, the IRS and the Department of Treasury recently
indicated that they expect to issue guidance in 2000 on reasonable mortality
charges in connection with life insurance policies. Accordingly, we reserve the
right to make changes to the current and guaranteed mortality charges and
factors used to determine the Minimum Required Death Benefit, if new regulations
or guidance is issued that requires a change to ensure that your Policy
qualifies as life insurance under the Code. This could result in a change in
your Death Benefit and/or the return of a portion of your premiums and the
earnings thereon. We will continue to monitor this situation.
Other Taxes: Amounts received or deemed received from a Policy that may be
subject to Federal income tax also may be subject to state income taxes. The
fair market value of a Policy or the Death Proceeds may be included under
certain circumstances in an estate for purposes of state inheritance taxes or
Federal estate taxes. Federal estate and gift taxes are integrated for various
purposes. An unlimited marital deduction may apply for purposes of Federal
estate and gift taxes, which would allow deferral of taxes until the death of
the surviving spouse.
SAFEKEEPING OF THE ASSETS
We maintain the assets of the Separate Account and those in our general account.
The assets of the Separate Account are segregated from those in our general
account.
REGULATION
We are organized as a Connecticut stock life insurance company, and are subject
to Connecticut law governing insurance companies. We are regulated and
supervised by the Connecticut Commissioner of Insurance. By March 1 of every
year, we must prepare and file an annual statement, in a form prescribed by the
Connecticut Insurance Department, which covers our operations for the preceding
calendar year, and must prepare and file our statement of financial condition as
of December 31 of such year. The Commissioner and his or her agents have the
right at all times to review or examine our books and assets. A full examination
of our operations will be conducted periodically according to the rules and
practices of the National Association of Insurance Commissioners ("NAIC"). We
are subject to the insurance laws and various Federal and state securities laws
and regulations and to regulatory agencies, such as the Securities and Exchange
Commission and the Connecticut Banking Department, which administer those laws
and regulations.
We can be assessed up to prescribed limits for policyholder losses incurred by
insolvent insurers under the insurance guaranty fund laws of most states. We
cannot predict or estimate the amount any such future assessments we may have to
pay. However, the insurance guaranty laws of most states provide for deferring
payment or exempting a company from paying such an assessment if it would
threaten such insurer's financial strength.
Several states, including Connecticut, regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates. Under such laws, inter-company transactions, such as dividend
payments to parent companies and transfers of assets, may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.
Currently, the federal government does not directly regulate the business of
insurance. However, federal legislative, regulatory and judicial decisions and
initiatives often have significant effects on our business. Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance companies; (b) the tax treatment of insurance products; (c)
the securities laws, particularly as they relate to insurance and annuity
products; (d) the "business of insurance" exemption from many of the provisions
of the anti-trust laws; and (e) any initiatives directed toward improving the
solvency of insurance companies. We would also be affected by federal
initiatives that have impact on the ownership of or investment in United States
companies by foreign companies or investors.
LEGAL MATTERS
The General Counsel of American Skandia Life Assurance Corporation has passed on
the legal matters relating to the offering of these Policies.
LEGAL PROCEEDINGS
As of the date of this Prospectus, neither we nor American Skandia Marketing,
Incorporated were involved in any litigation outside of the ordinary course of
business, and know of no material claims.
EXPERTS
The consolidated financial statements of American Skandia Life Assurance
Corporation at December 31, 1999 and 1998, and for each of the three years in
the period ended December 31, 1999, and the financial statements of American
Skandia Life Assurance Corporation Variable Account F at December 31, 1999 and
for the periods ended December 31, 1999 and 1998, appearing in this Prospectus
and Registration Statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon such reports given upon the authority of such firm
as experts in accounting and auditing.
William H. Strong, Vice President, FSA, MAAA, has approved the hypothetical
illustration included in this Prospectus and Registration Statement. We have
included them relying on his opinion that they are reasonable.
DISTRIBUTION OF THIS OFFERING
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia, Inc. acts as the principal underwriter of the Policies. ASM
was incorporated under the laws of the State of Delaware on September 8, 1987.
ASM acts as the distributor of a number of annuity and life insurance products
we offer and both American Skandia Trust and American Skandia Advisor Funds,
Inc., a family of retail mutual funds. ASM also acts as an introducing
broker-dealer through which it receives a portion of brokerage commissions in
connection with purchases and sales of securities held by portfolios of American
Skandia Trust which are offered as underlying investment options under the
Policy. ASM, Inc.'s principal business address is One Corporate Drive, Shelton,
Connecticut 06484. ASM is a broker-dealer registered with the SEC under the 1934
Act and a member of the National Association of Securities Dealers, Inc.
("NASD").
ASM will enter into distribution agreements with certain broker-dealers
registered under the Securities and Exchange Act of 1934 or with entities which
may otherwise offer the Policies that are exempt from such registration. In
addition, ASM may offer Policies directly to potential purchasers. Generally,
the maximum initial commission to be paid on premiums received is 8.5%. However,
we may pay higher amounts under certain situations. In addition, a portion of
compensation may be paid from time to time based on all or a portion of either
the Account Value or the Cash Value. We reserve the right to base commissions
from time-to-time on the investment options chosen by Owners, including
investment options that may be deemed our "affiliates" or "affiliates" of ASM
under the Investment Company Act of 1940.
We may pay an on-going service fee in relation to providing certain statistical
information upon request by Owners about the investment options and the
Portfolios. We may make the fee payable to the service providers based on either
the Account Value or Cash Value of Policies. Under most circumstances, we will
engage the broker-dealer of record for your Policy, or the entity of record if
such entity could offer Policies without registration as a broker-dealer (i.e.
certain banks), to be your resource for the statistical information, and to be
available upon your request to both provide and explain such information to you.
The broker-dealer of record or the entity of record is the firm which sold you
the Policy, unless later changed. Some portion of the fee we pay for this
service may be payable to your representative.
From time to time, as permitted by law, we may promote the sale of our products
such as the Policies offered pursuant to this Prospectus through programs of
non-cash rewards to registered representatives of participating broker-dealers.
We may withdraw or alter such promotions at any time.
To the extent permitted, we may advertise certain information regarding the
performance of the investment options that does not take into consideration the
effect of either the cost of insurance charges, the contingent deferred sales
charge, the contingent tax charge or the maintenance fee. This performance
information may help you review the performance of the investment options and
provide a basis for comparison between the Policy's investment options. This
information may be less useful when comparing the performance of the investment
options with the performance of investment options provided in other variable
life policies because each plan of life insurance will have its own applicable
charges. This information is even less useful in comparing performance to that
of any savings or investment vehicle, rather than variable life insurance.
Performance information on the Sub-accounts is based on past performance only
and is no indication of future performance. Actual performance will depend on
the type, quality and, for some of the Sub-accounts, the maturities of the
investments held by the Portfolios and upon prevailing market conditions and the
response of the Portfolios to such conditions. Actual performance will also
depend on changes in the expenses of the Portfolios. Such changes are reflected,
in turn, in the Sub-accounts which invest in such Portfolios. In addition, the
charges deducted from your Account Value and those assessed against each
Sub-account will affect performance.
Certain of the Portfolios existed prior to the inception of the Sub-accounts
available under the Policy. To the extent permitted by applicable law,
performance quoted in advertising regarding such Sub-accounts may indicate
periods during which the Portfolios have been in existence but prior to the
inception of the Sub-account(s) or the initial offering of the Policies. Such
performance is considered hypothetical historical performance because the
Sub-accounts did not exist during the period the performance was achieved. Such
hypothetical historical performance is calculated using the same assumptions
employed in calculating historical performance since inception of the
Sub-accounts. Any such historical performance will be based on assumptions.
These include assumptions regarding: (a) the Age, tobacco usage class, risk
class and gender, where applicable, of an Insured or Insureds; (b) the Premium
and Policy Date; and (c) assumptions about a lack of transfers, loans, loan
repayments and withdrawals during the period for which performance is quoted.
American Skandia Life Assurance Corporation may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay Death Proceeds, make payments under any settlement options or administer
Policies. Such rankings and ratings do not reflect or relate to the performance
of Separate Account F or the underlying Portfolios.
ILLUSTRATIONS
It is impossible to illustrate exactly how a Policy will perform in the future.
However, you may better understand how a Policy works, and may be able to better
compare a Policy with other life insurance plans, using hypothetical
illustrations based on the personal characteristics of the Insured(s) as well as
certain assumptions about the future. The Company will furnish, upon request and
at no charge, a personalized hypothetical illustrations based on: (a) the Age(s)
of the Insured(s); (b) the tobacco usage class and expected risk class(es) of
the Insured(s); (c) the gender of the Insured(s), where permitted; (d) the Face
Amount you seek or the amount of Premium you intend to pay; and (e) applicable
cost of insurance charges. Where applicable, the Company will also furnish upon
request an illustration for a Policy that is not affected by the sex of the
Insured.
When requested, personalized hypothetical illustrations provided by the Company
will be based, as appropriate, on the methodology and format of the hypothetical
illustrations that the Company has included in its registration statement for
the Policy. Please refer to the section of the Prospectus entitled "How can I
find out more about this offer?" The hypothetical illustrations show the changes
in the Death Benefit, Account Value and Cash Value over time based on certain
assumptions, including:
|X| Hypothetical average annual gross rates of return in the Portfolios of
0%, 6% and 12%. To the extent permitted by NASD rules and other
applicable laws and regulations, we may also provide personalized
hypothetical illustrations based on actual historical performance of
one or more of the Portfolios.
|X| Hypothetical constant expense ratios of 1.15% for the Portfolios, which
is the average of the actual total annual expenses for all available
Portfolios as of December 31, 1999. The total annual expenses for the
underlying mutual funds are shown in the section entitled "Summary of
Costs - Underlying Mutual Fund Portfolio Annual Expenses." The 0.98%
hypothetical expense ratio, when deducted from the hypothetical average
annual gross rates of return equals a hypothetical average annual net
rate of return of -1.15%, 4.85% and 10.85%, respectively. To the extent
permitted by NASD rules and other applicable laws and regulations, we
may also provide personalized hypothetical illustrations based on
different assumptions of underlying mutual fund expenses.
|X| The mortality and expense risk charge assessed against the assets in
the Separate Account at an annualized rate of 0.90%. The charge for
administrative expenses connected with operating the Separate Account
is 0.25% per year.
|X| The cost of insurance charges under the Policy that differ by gender,
tobacco usage class and attained age, as well as all other charges that
apply.
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding work experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
Name/ Position with American Skandia
<S> <C> <C> <C> <C>
Age Life Assurance Corporation Principal Occupation
- --- -------------------------- --------------------
Patricia J. Abram Senior Vice President Senior Vice President
48 and National Sales Manager,
Variable Life:
American Skandia
Marketing, Incorporated
Ms. Abram joined us in 1998. She previously held the position of Senior Vice
President, Chief Marketing Officer with Mutual Service Corporation. Ms. Abram
was employed there since 1982.
Lori Allen Vice President Vice President:
30 American Skandia Life
Assurance Corporation
Kimberly Anderson Vice President Vice President,
33 National Sales Manager/
Qualified Plans:
American Skandia Marketing, Incorporated
Robert M. Arena Vice President Vice President:
31 American Skandia Life
Assurance Corporation
Mr. Arena joined us in 1995. He previously held an internship position with KPMG
Peat Marwick in 1994 and the position of Group Sales Representative with Paul
Revere Insurance from October, 1990 to August, 1993.
Gordon C. Boronow President and President and
47 Deputy Chief Executive Officer Deputy Chief Executive Officer:
Director (since July, 1991) American Skandia Life
Assurance Corporation
Robert W. Brinkman Senior Vice President Senior Vice President,
35 National Sales Manager:
American Skandia
Marketing, Incorporated
Malcolm M. Campbell Director (since July, 1991) Director of Operations and
44 Chief Actuary, Assurance and
Financial Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi Chief Executive Senior Executive Vice President and
55 Officer and Member of Executive Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Carl Cavaliere Vice President Vice President:
37 American Skandia Life
Assurance Corporation
Mr. Cavaliere joined us in 1998. He previously held the position of Director of
Operations with Aetna, Inc. since 1989.
Y.K. Chan Senior Vice President Senior Vice President
42 and Chief Information Officer:
American Skandia Information
Services and Technology Corporation
Mr. Chan joined us in 1999. He previously held the position of Chief Information
Officer with E.M. Warburg Pincus from January 1995 until April 1999 and the
position of Vice President, Client Server Application Development with Scudder,
Stevens and Clark from January 1991 until January 1995.
Lucinda C. Ciccarello Vice President Vice President, Mutual Funds:
41 American Skandia
Marketing, Incorporated
Ms. Ciccarello joined us in 1997. She previously held the position of Assistant
Vice President with Phoenix Duff & Phelps since 1984.
Lincoln R. Collins Senior Vice President Senior Vice President:
39 Director (since February, 1996) American Skandia Life
Assurance Corporation
Tim Cronin Vice President Vice President:
34 American Skandia Life
Assurance Corporation
Mr. Cronin joined us in 1998. He previously held the position of Manager/Client
Investor with Columbia Circle Investors since 1995.
Henrik Danckwardt Director (since July, 1991) Director of Finance
46 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Harold Darak Vice President Vice President:
39 American Skandia Life
Assurance Corporation
Mr. Darak joined us in 1999. He previously held the position of
Consultant/Senior Manager with Deloitte & Touche since 1998 and the positions of
Second Vice President with The Guardian since 1996 and The Travelers from
October, 1982 until December, 1995.
Wade A. Dokken Deputy Chief Executive Officer DCEO and COO:
40 and Chief Operating Officer American Skandia Life
Director (since July, 1991) Assurance Corporation
Elaine C. Forsyth Vice President Vice President:
38 American Skandia Life
Assurance Corporation
Larisa Gromyko Director, Insurance Compliance Director, Insurance Compliance:
53 American Skandia Life
Assurance Corporation
Maureen Gulick Director, Business Operations Director, Business Operations:
37 American Skandia Life
Assurance Corporation
Berthann Jones Vice President Vice President:
45 American Skandia Life
Assurance Corporation
Ms. Jones joined us in 1997. She previously held the position of Vice
President/Trust Officer with Ridgefield Bank since 1996 and Manager with Wright
Investors Service since 1993.
Ian Kennedy Senior Vice President Senior Vice President,
52 Customer Service:
American Skandia
Marketing, Incorporated
Mr. Ian Kennedy joined us in 1998. He previously was self-employed since 1996
and held the position of Vice President, Customer Service with SunLife of Canada
from September, 1968 to August, 1995.
T. Richard Kennedy General Counsel and General Counsel:
65 Director (since March, 2000) American Skandia Life
Assurance Corporation
Mr. T. Richard Kennedy joined us in 1999. He previously was Managing Partner
with the law firm of Werner & Kennedy.
N. David Kuperstock Vice President Vice President:
48 American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
47 Chief Financial Officer, Chief Financial Officer:
Director (since September, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since October, 1994) Director - Marketing and Sales,
45 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Senior Vice President, Senior Vice President,
38 Treasurer and Treasurer and
Corporate Controller Corporate Controller:
American Skandia Life
Assurance Corporation
Mr. Monroe joined us in 1996. He previously held positions of Assistant Vice
President at Allmerica Financial since 1994.
Michael A. Murray Senior Vice President Vice President,
31 National Sales Manager:
American Skandia
Marketing, Incorporated
Brian O'Connor Vice President Vice President,
35 National Sales Manager,
Internal Wholesaling:
American Skandia
Marketing, Incorporated
M. Patricia Paez Vice President Chief of Staff:
39 American Skandia, Inc.
Polly Rae Vice President Vice President:
37 American Skandia Life
Assurance Corporation
Rebecca Ray Vice President Vice President:
44 American Skandia Life
Assurance Corporation
Ms. Ray joined us in 1999. She previously held the position of First Vice
President with Prudential Securities since 1997 and Vice President with Merrill
Lynch since 1995.
Rodney D. Runestad Vice President Vice President:
50 American Skandia Life
Assurance Corporation
Hayward L. Sawyer Senior Vice President Executive Vice President
55 National Sales Manager:
American Skandia
Marketing, Incorporated
Lisa Shambelan Vice President Vice President:
34 American Skandia Life
Assurance Corporation
Karen Stockla Vice President Vice President,
33 Intellectual Resources Department:
American Skandia Life
Assurance Corporation
Ms. Stockla joined us in 1998. She previously held the position of Manager,
Application Development with Citizens Utilities Company since 1996 and HRIS Tech
Support Representative with Yale New Haven Hospital since 1993.
William H. Strong Vice President Vice President:
56 American Skandia Life
Assurance Corporation
Mr. Strong joined us in 1997. He previously held the position of Vice President
with American Financial Systems from June 1994 to October 1997 and the position
of Actuary with Connecticut Mutual Life from June 1965 to June 1994.
Leslie S. Sutherland Vice President Vice President,
46 National Key Accounts Manager:
American Skandia
Marketing, Incorporated
Amanda C. Sutyak Vice President Vice President:
42 Director (since July, 1991) American Skandia Life
Assurance Corporation
Christian A. Thwaites Senior Vice President Senior Vice President,
42 National Marketing Director:
American Skandia
Marketing, Incorporated
Mr. Thwaites joined us in 1996. He previously held the position of consultant
with Monitor Company since October 1995 and Vice President with Aetna, Inc.
since 1995.
Mary Toumpas Vice President Vice President and
48 Compliance Director:
American Skandia
Marketing, Incorporated
Ms. Toumpas joined us in 1997. She previously held the position of Assistant
Vice President with Chubb Life/Chubb Securities since 1973.
Bayard F. Tracy Senior Vice President and Senior Vice President,
52 Director (since September, 1994) National Sales Manager:
American Skandia
Marketing, Incorporated
Deborah G. Ullman Senior Vice President Senior Vice President and
45 Chief Operating Officer:
American Skandia
Marketing, Incorporated
Ms. Ullman joined us in 1998. She previously held the position of Vice President
with Aetna, Inc. since 1977.
Jeffrey M. Ulness Vice President Vice President:
39 American Skandia Life
Assurance Corporation
Derek Winegard Vice President Vice President:
41 American Skandia Life
Assurance Corporation
Mr. Winegard joined us in 1999. He previously held the position of Senior Vice
President with Trust Consultants, Inc. since 1991.
Brett M. Winson Senior Vice President and Senior Vice President,
44 Director (since March 2000) Intellectual Resource Development
American Skandia, Inc.
Mr. Winson joined us in 1998. He previously held the position of Senior Vice
President with Sakura Bank, Ltd. since 1990.
</TABLE>
<PAGE>
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the consolidated statements of financial condition of American
Skandia Life Assurance Corporation (the "Company" which is a wholly-owned
subsidiary of Skandia Insurance Company Ltd.) as of December 31, 1999 and 1998,
and the related consolidated statements of income, shareholder's equity, and
cash flows for each of the three years in the period ended December 31, 1999.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of American Skandia
Life Assurance Corporation at December 31, 1999 and 1998, and the consolidated
results of their operations and cash flows for each of the three years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States.
/s/Ernst & Young LLP
Hartford, Connecticut
February 11, 2000,
except for Note 18 as to which the date is March 22, 2000
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Consolidated Statements of Financial Condition
(in thousands)
<TABLE>
<CAPTION>
As of December 31,
1999 1998
--------------- ----------------
ASSETS
Investments:
<S> <C> <C>
Fixed maturities - at amortized cost $ 3,360 $ 8,289
Fixed maturities - at fair value 198,165 141,195
Investment in mutual funds - at fair value 16,404 8,210
Derivative instruments 189 -
Policy loans 1,270 569
-------------- --------------
Total investments 219,388 158,263
Cash and cash equivalents 89,212 77,525
Accrued investment income 4,054 2,880
Deferred acquisition costs 1,087,705 721,507
Reinsurance receivable 4,062 4,191
Receivable from affiliates - 1,161
Income tax receivable - deferred 51,726 38,861
State insurance licenses 4,263 4,413
Fixed assets 3,305 328
Other assets 4,533 3,744
Separate account assets 29,381,166 17,835,400
--------------- ----------------
Total assets $ 30,849,414 $ 18,848,273
=============== ================
</TABLE>
LIABILITIES AND SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
<S> <C> <C>
Liabilities:
Reserve for future contractowner benefits $ 11,215 $ 37,508
Policy reserves 29,912 25,545
Drafts outstanding 51,059 28,941
Accounts payable and accrued expenses 158,590 91,827
Income tax payable 24,268 6,657
Payable to affiliates 68,736 -
Future fees payable to parent 576,034 368,978
Short-term borrowing 10,000 10,000
Surplus notes 179,000 193,000
Separate account liabilities 29,381,166 17,835,400
--------------- ----------------
Total Liabilities 30,489,980 18,597,856
--------------- ----------------
Shareholder's equity:
Common stock, $100 and $80 par value, 25,000 shares authorized,
issued and outstanding 2,500 2,000
Additional paid-in capital 215,879 179,889
Retained earnings 141,162 64,993
Accumulated other comprehensive income (107) 3,535
--------------- ----------------
Total Shareholder's equity 359,434 250,417
--------------- ----------------
Total liabilities and shareholder's equity $ 30,849,414 $ 18,848,273
=============== ================
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Consolidated Statements of Operations
(in thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998 1997
-------------- ------------- -------------
REVENUES
<S> <C> <C> <C>
Annuity and life insurance charges and fees $ 289,989 $ 186,211 $ 121,158
Fee income 83,243 50,839 27,593
Net investment income 10,441 11,130 8,181
Premium income 1,278 874 920
Net realized capital gains 578 99 87
Other 1,832 387 75
-------------- ------------- -------------
Total revenues 387,361 249,540 158,014
-------------- ------------- -------------
EXPENSES
Benefits:
Annuity and life insurance benefits 612 558 2,033
Change in annuity and life insurance policy reserves 3,078 1,053 37
Cost of minimum death benefit reinsurance 2,945 5,144 4,545
Return credited to contractowners (1,639) (8,930) (2,018)
-------------- ------------- -------------
4,996 (2,175) 4,597
Expenses:
Underwriting, acquisition and other insurance
expenses 206,350 167,790 90,496
Interest expense 69,502 41,004 24,895
-------------- ------------- -------------
275,852 208,794 115,391
-------------- ------------- -------------
Total benefits and expenses 280,848 206,619 119,988
-------------- ------------- -------------
Income from operations before income tax 106,513 42,921 38,026
Income tax expense 30,344 8,154 10,478
-------------- ------------- -------------
Net income $ 76,169 $ 34,767 $ 27,548
============== ============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Consolidated Statements of Shareholder's Equity
(in thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998 1997
-------------- -------------- --------------
Common stock:
<S> <C> <C> <C>
Beginning balance $ 2,000 $ 2,000 $ 2,000
Increase in par value 500 - -
-------------- -------------- --------------
Ending balance 2,500 2,000 2,000
-------------- -------------- --------------
Additional paid in capital:
Beginning balance 179,889 151,527 122,250
Transferred to common stock (500) - -
Additional contributions 36,490 28,362 29,277
-------------- -------------- --------------
Ending balance 215,879 179,889 151,527
-------------- -------------- --------------
Retained earnings:
Beginning balance 64,993 30,226 2,678
Net income 76,169 34,767 27,548
-------------- -------------- --------------
Ending balance 141,162 64,993 30,226
-------------- -------------- --------------
Accumulated other comprehensive income:
Beginning balance 3,535 668 (584)
Other comprehensive income (3,642) 2,867 1,252
-------------- -------------- --------------
Ending Balance (107) 3,535 668
-------------- -------------- --------------
Total shareholder's equity $ 359,434 $ 250,417 $ 184,421
============== ============== ==============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
For the Year Ended December 31,
1999 1998 1997
-------------- ------------- --------------
Cash flow from operating activities:
<S> <C> <C> <C>
Net income $ 76,169 34,767 $ 27,548
Adjustments to reconcile net income to net
cash used in operating activities:
Amortization and depreciation 1,495 251 223
Deferred tax expense (10,903) (14,242) (9,631)
Change in unrealized losses on derivatives 3,749 - -
Increase in policy reserves 4,367 1,130 3,176
Change in receivable from/payable to affiliates 69,897 166 (1,321)
Change in income tax payable 17,611 7,704 (2,172)
Increase in other assets (789) (1,173) (415)
Increase in accrued investment income (1,174) (438) (483)
Decrease/(increase) in reinsurance receivable 129 2,152 (268)
Increase in deferred acquisition costs (366,198) (174,804) (190,969)
Increase in accounts payable and accrued expenses 66,763 20,637 5,719
Increase in drafts outstanding 22,118 9,663 6,245
Change in foreign currency translation, net 701 (22) (34)
Realized capital gain (578) (99) (87)
-------------- ------------- --------------
Net cash used in operating activities (116,643) (114,308) (162,469)
-------------- ------------- --------------
Cash flow from investing activites:
Purchase of fixed maturity investments (99,250) (31,828) (28,905)
Proceeds from sale and maturity of fixed
maturity investments 36,226 4,049 10,755
Purchase of derivatives (4,974) - -
Purchase of shares in mutual funds (17,703) (7,158) (5,595)
Proceeds from sale of shares in mutual funds 14,657 6,086 1,415
Purchase of fixed assets (3,178) (18) (189)
Increase in policy loans (701) 118 (528)
-------------- ------------- --------------
Net cash used in investing activities (74,923) (28,751) (23,047)
-------------- ------------- --------------
Cash flow from financing activities:
Capital contribution from parent 22,490 8,362 29,277
Increase in future fees payable to parent 207,056 135,944 185,922
Net withdrawals from contractowner accounts (26,293) (5,696) 6,959
-------------- ------------- --------------
Net cash provided by financing activities 203,253 138,610 222,158
-------------- ------------- --------------
Net increase/(decrease) in cash and cash
equivalents 11,687 (4,449) 36,642
Cash and cash equivalents at beginning of year 77,525 81,974 45,332
-------------- ------------- --------------
Cash and cash equivalent at end of year $ 89,212 77,525 $ 81,974
============== ============= ==============
Income taxes paid $ 23,637 14,651 $ 22,308
============== ============= ==============
Interest paid $ 69,697 35,588 $ 16,916
============== ============= ==============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements
December 31, 1999
1. ORGANIZATION AND OPERATION
American Skandia Life Assurance Corporation (the "Company") is a
wholly-owned subsidiary of American Skandia, Inc. ("ASI", formerly known as
American Skandia Investment Holding Corporation) whose ultimate parent is
Skandia Insurance Company Ltd., a Swedish Corporation.
The Company develops long-term savings and retirement products which are
distributed through its affiliated broker/dealer company, American Skandia
Marketing, Incorporated ("ASM"). The Company currently issues variable life
insurance and variable, fixed, market value adjusted and immediate annuities
for individuals, groups and qualified pension plans.
The Company has 99.9% ownership in Skandia Vida, S.A. de C.V. ("Skandia
Vida") which is a life insurance company domiciled in Mexico. Skandia Vida
had total shareholder's equity of $4,592,000 and $4,724,000 as of December
31, 1999, and 1998, respectively. The Company considers Mexico an emerging
market and has invested in the Skandia Vida operations with the expectation
of generating profits from long-term savings products in future years. As
such, Skandia Vida has generated net losses of $2,523,000, $2,514,000 and
$1,438,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Reporting
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. Intercompany
transactions and balances have been eliminated in consolidation.
Certain reclassifications have been made to prior year amounts to
conform with the current year presentation.
B. New Accounting Pronouncements
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Software Developed or Obtained for Internal Use. The SOP, which has been
adopted prospectively as of January 1, 1999, requires the capitalization
of certain costs incurred in connection with developing or obtaining
internal use software. Prior to the adoption of SOP 98-1, the Company
expensed all internal use software related costs as incurred. The
Company has identified and capitalized $3,035,000 of costs associated
with internal use software during 1999 and is amortizing the applicable
costs on a straight-line basis over a three year period. At December 31,
1999, the unamortized balance was $2,920,000 and is included in fixed
assets.
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards 133, "Accounting for
Derivative Instruments and Hedging Activities" (FAS 133). Subsequently,
in July 1999, FASB issued FAS 137 "Deferral of the Effective Date of
FASB Statement 133". The adoption date was delayed to fiscal years
beginning after June 15, 2000. The Company is currently evaluating the
potential impact on its financial position.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
C. Investments
The Company has classified its fixed maturity investments as either
held-to-maturity or available-for-sale. Investments classified as
held-to-maturity are investments that the Company has the ability and
intent to hold to maturity. Such investments are carried at amortized
cost. Those investments which are classified as available-for-sale are
carried at fair value and changes in unrealized gains and losses are
reported as a component of other comprehensive income.
The Company has classified its mutual fund investments held in support
of a deferred compensation plan are available-for-sale. Such investments
are carried at fair value and changes in unrealized gains and losses are
reported as a component of other comprehensive income.
Derivative instruments are recorded consistent with hedged items. The
Company hedges the market value fluctuations of the guaranteed minimum
death benefit ("GMDB") exposure embedded in its policy reserves and as
such, the portion of the derivative instrument which constitutes an
effective hedge is carried at market value. The cost associated with the
portion of the instrument which is not considered an effective hedge is
amortized to investment income over the life of the instrument.
Policy loans are carried at their unpaid principal balances.
Realized gains and losses on disposal of investments are determined by
the specific identification method and are included in revenues.
D. Derivative Instruments
During the second quarter of 1999, the Company's agreement to reinsure
substantially all of its exposure on its GMDB liability was terminated
and the business was recaptured, as the reinsurer had recently announced
its intention to exit this market. In response, the Company instituted a
hedge program to effectively manage the market risk associated with GMDB
reserve fluctuations using put options. The cash invested in the put
options is at risk to the extent that the value of the underlying index
is less than the strike price at the exercise date. This would be offset
by a corresponding decrease in the hedged GMDB exposure.
E. Cash Equivalents
The Company considers all highly liquid time deposits, commercial paper
and money market mutual funds purchased with a maturity of three months
or less to be cash equivalents.
F. Fair Values of Financial Instruments
The methods and assumptions used to determine the fair value of
financial instruments are as follows:
Fair values of fixed maturities with active markets are based on quoted
market prices. For fixed maturities that trade in less active markets,
fair values are obtained from an independent pricing service.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
F. Fair Values of Financial Instruments (continued)
Fair values of investments in mutual funds are based on quoted market
prices.
The fair value of the portion of the derivative instrument which
constitutes an effective hedge is determined based on current value of
the underlying index.
The carrying value of cash and cash equivalents approximates fair value
due to the short-term nature of these investments.
The carrying value of short-term borrowing approximates fair value due
to the short-term nature of these liabilities.
Fair values of certain financial instruments, such as future fees
payable to parent and surplus notes are not readily determinable and are
excluded from fair value disclosure requirements.
G. State Insurance Licenses
Licenses to do business in all states have been capitalized and
reflected at the purchase price of $6,000,000 less accumulated
amortization. The cost of the licenses is being amortized on a straight
line basis over 40 years.
H. Income Taxes
The Company is included in the consolidated federal income tax return
and combined state income tax return of an upstream company, Skandia AFS
Development Holding Corporation and certain of its subsidiaries. In
accordance with the tax sharing agreement, the federal and state income
tax provisions are computed on a separate return basis as adjusted for
consolidated items such as net operating loss carryforwards.
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes.
I. Recognition of Revenue and Contract Benefits
Revenues for variable annuity contracts consist of charges against
contractowner account values for mortality and expense risks,
administration fees, surrender charges and an annual maintenance fee per
contract. Benefit reserves for variable annuity contracts represent the
account value of the contracts and are included in the separate account
liabilities.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
I. Recognition of Revenue and Contract Benefits (continued)
Revenues for market value adjusted fixed annuity contracts consist of
separate account investment income reduced by benefit payments and
changes in reserves in support of contractowner obligations, all of
which are included in return credited to contractowners. Benefit
reserves for these contracts represent the account value of the
contracts, and are included in the general account reserve for future
contractowner benefits to the extent in excess of the separate account
liabilities.
Revenues for immediate annuity contracts without life contingencies
consist of net investment income. Revenues for immediate annuity
contracts with life contingencies consist of single premium payments
recognized as annuity considerations when received. Benefit reserves for
these contracts are based on the Society of Actuaries 1983 Table-a with
assumed interest rates that vary by issue year. Assumed interest rates
ranged from 6.25% to 8.25% at December 31, 1999 and 1998.
Revenues for variable life insurance contracts consist of charges
against contractowner account values for mortality and expense risk
fees, cost of insurance fees, taxes and surrender charges. Certain
contracts also include charges against premium to pay state premium
taxes. Benefit reserves for variable life insurance contracts represent
the account value of the contracts and are included in the separate
account liabilities.
J. Deferred Acquisition Costs
The costs of acquiring new business, which vary with and are primarily
related to the production of new business, are being deferred net of
reinsurance. These costs include commissions, costs of contract
issuance, and certain selling expenses that vary with production. These
costs are being amortized generally in proportion to expected gross
profits from surrender charges, policy and asset based fees and
mortality and expense margins. This amortization is adjusted
retrospectively and prospectively when estimates of current and future
gross profits to be realized from a group of products are revised.
Details of the deferred acquisition costs and related amortization for
the years ended December 31, are as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $721,507 $546,703 $355,734
-------- -------- --------
Acquisition costs deferred
during the year 450,059 261,432 243,476
Acquisition costs amortized
during the year (83,861) (86,628) (52,507)
--------- -------- --------
366,198 174,804 190,969
------- ------- -------
Balance at end of year $1,087,705 $721,507 $546,703
========== ======== ========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
K. Reinsurance
The Company cedes reinsurance under modified co-insurance arrangements.
These reinsurance arrangements provide additional capacity for growth in
supporting the cash flow strain from the Company's variable annuity and
variable life insurance business. The reinsurance is effected under
quota share contracts.
As noted in Note 2D, the Company reinsured its exposure to market
fluctuations associated with its GMDB liability in 1999, 1998 and the
beginning of 1997. Under this reinsurance agreement, the Company ceded
premiums of $2,945,000, $5,144,000 and $4,545,000; received claim
reimbursements of $242,000, $9,000 and $46,000; and, recorded
increases/(decreases) in reserves of ($2,763,000), ($323,000) and
$918,000 in each of the three years, respectively.
At December 31, 1999 and 1998, in accordance with the provisions of a
modified coinsurance agreement, the Company accrued $41,000 and
$1,976,000, respectively, for amounts receivable from favorable
reinsurance experience on a block of variable annuity business.
L. Translation of Foreign Currency
The financial position and results of operations of the Company's
Mexican subsidiary are measured using local currency as the functional
currency. Assets and liabilities of the subsidiary are translated at the
exchange rate in effect at each year-end. Statements of income and
shareholder's equity accounts are translated at the average rate
prevailing during the year. Translation adjustments arising from the use
of differing exchange rates from period to period are reported as a
component of other comprehensive income.
M. Separate Accounts
Assets and liabilities in Separate Accounts are included as separate
captions in the consolidated statements of financial condition. Separate
Account assets consist principally of long term bonds, investments in
mutual funds, short-term securities and cash and cash equivalents, all
of which are carried at fair value. The investments are managed
predominately through the Company's investment advisory affiliate,
American Skandia Investment Services, Inc. ("ASISI"), utilizing various
fund managers as sub-advisors. The remaining investments are managed by
independent investment firms. The contractowner has the option of
directing funds to a wide variety of mutual funds. The investment risk
on the variable portion of a contract is borne by the contractowner. A
fixed option with a minimum guaranteed interest rate is also available.
The Company is responsible for the credit risk associated with these
investments.
Included in Separate Account liabilities are $896,205,000 and
$771,195,000 at December 31, 1999 and 1998, respectively, relating to
annuity contracts for which the contractowner is guaranteed a fixed rate
of return. Separate Account assets of $896,205,000 and $771,195,000 at
December 31, 1999 and 1998, respectively, consisting of long term bonds,
short term securities, transfers due from the general account and cash
and cash equivalents which are held in support of these annuity
contracts, pursuant to state regulation.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
N. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates
and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. The more
significant estimates and assumptions are related to deferred
acquisition costs and involve policy lapses, investment return and
maintenance expenses. Actual results could differ from those estimates.
3. COMPREHENSIVE INCOME
The components of comprehensive income, net of tax, for the years ended
December 31, 1998, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Net income $76,169 $34,767 $27,548
Other comprehensive income:
Unrealized investment gains/(losses) on
available for sale securities (3,082) 2,751 1,288
Reclassification adjustment for realized
losses/(gains) included in investment income (1,016) 138 (14)
------- --------- ---------
Net unrealized gains/(losses) on securities (4,098) 2,889 1,274
Foreign currency translation 456 (22) (22)
--------- ---------- ----------
Other comprehensive income (3,642) 2,867 1,252
--------- -------- --------
Comprehensive income $72,527 $37,634 $28,800
======= ======= =======
</TABLE>
The components of accumulated other comprehensive income, net of tax, as of
December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
---- ----
<S> <C> <C>
Unrealized investment gains ($255) $3,843
Foreign currency translation 148 (308)
------ -------
Accumulated other comprehensive income ($107) $3,535
====== ======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
4. INVESTMENTS
The amortized cost, gross unrealized gains/losses and estimated fair value
of available-for-sale and held-to-maturity fixed maturities and investments
in mutual funds as of December 31, 1999 and 1998 are shown below. All
securities held at December 31, 1999 and 1998 were publicly traded.
Investments in fixed maturities as of December 31, 1999 consisted of the
following:
<TABLE>
<CAPTION>
(in thousands) Held-to-Maturity
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
U.S. Government
obligations $1,105 $ - $ (1) $1,104
Corporate securities 2,255 - (15) 2,240
----- ---- ----- -------
Totals $3,360 $ - $(16) $3,344
====== ==== ===== ======
(in thousands) Available-for-Sale
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Government
obligations $ 81,183 $ - $ (678) $ 80,505
Obligations of
state and political
subdivisions 253 (3) 250
Corporate securities 121,859 - (4,449) 117,410
--------- ---- ------ ---------
Totals $203,295 $ - $ (5,130) $198,165
======== ==== ========= ========
The amortized cost and fair value of fixed maturities, by contractual
maturity, at December 31, 1999 are shown below.
(in thousands) Held-to-Maturity Available-for-Sale
---------------- ------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
Due in one year or less $3,107 $3,097 $ - $ -
Due after one through five years 253 247 130,284 128,250
Due after five through ten years - - 73,011 69,915
---------- ---------- ---------- ----------
Total $3,360 $3,344 $203,295 $198,165
====== ====== ======== ========
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
4. INVESTMENTS (continued)
Investments in fixed maturities as of December 31, 1998 consisted of the
following:
<TABLE>
<CAPTION>
(in thousands) Held-to-Maturity
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government
obligations $3,774 $57 $- $3,831
Obligations of
state and political
subdivisions - - - -
Corporate
securities 4,515 34 - 4,549
------- ---- --- -------
Totals $8,289 $91 $ - $8,380
====== === === ======
(in thousands) Available for Sale
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
U.S. Government
obligations $ 17,399 $ 678 $ - $ 18,077
Obligations of
state and political
subdivisions 253 7 - 260
Corporate
securities 117,774 5,160 (76) 122,858
--------- ------- ------- ----------
Totals $135,426 $5,845 $ (76) $141,195
======== ====== ====== ========
Proceeds from sales of fixed maturities during 1999, 1998 and 1997 were
$32,196,000, $999,000, and $5,056,000, respectively. Proceeds from
maturities during 1999, 1998 and 1997 were $4,030,000, $3,050,000, and
$5,700,000, respectively.
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
4. INVESTMENTS (continued)
The cost, gross unrealized gains/losses and fair value of investments in
mutual funds at December 31, 1999 and 1998 are shown below:
<TABLE>
<CAPTION>
(in thousands) Gross Gross
Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C> <C>
1999 $11,667 $4,763 $ (26) $16,404
======= ====== ====== =======
1998 $8,068 $416 $ (274) $8,210
====== ==== ======= ======
Net realized investment gains (losses) were as follows for the years ended
December 31:
(in thousands) 1999 1998 1997
------ ---- ----
Fixed maturities:
Gross gains $ 253 $ - $ 10
Gross losses (228) (1) -
Investment in mutual funds:
Gross gains 990 281 116
Gross losses (437) (181) (39)
------- ------ ------
Totals $ 578 $ 99 $ 87
====== ===== =====
</TABLE>
<TABLE>
<CAPTION>
5. NET INVESTMENT INCOME
The sources of net investment income for the years ended December 31, 1999,
1998 and 1997 were as follows:
(in thousands) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Fixed maturities $ 9,461 $ 8,534 $6,617
Cash and cash equivalents 2,159 1,717 1,153
Investment in mutual funds 32 1,013 554
Policy loans 31 45 28
Derivative Instruments (1,036) - -
--------- ---------- ---------
Total investment income 10,647 11,309 8,352
Investment expenses 206 179 171
---------- ---------- --------
Net investment income $10,441 $11,130 $8,181
======= ======= ======
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
6. INCOME TAXES
The significant components of income tax expense for the years ended
December 31 were as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Current tax expense $41,248 $22,384 $20,108
Deferred tax benefit (10,904) (14,230) (9,630)
-------- -------- ---------
Total income tax expense $30,344 $ 8,154 $10,478
======= ======== =======
</TABLE>
The tax effects of significant items comprising the Company's deferred
tax balance as of December 31, 1999 and 1998, are as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998
---- ----
Deferred tax liabilities:
<S> <C> <C>
Deferred acquisition costs ($321,873) ($210,731)
Payable to reinsurers (26,733) (25,585)
Policy fees (1,146) (859)
Net unrealized gains (80) (2,069)
------------ -----------
Total (349,832) (239,244)
-------- ---------
Deferred tax assets:
Net separate account liabilities 333,521 225,600
Future contractowner benefits 3,925 13,128
Other reserve differences 39,645 25,335
Deferred compensation 18,844 9,619
Surplus notes interest 5,030 3,375
Foreign exchange translation 137 166
Other 456 882
----------- ------------
Total 401,558 278,105
-------- ---------
Income tax receivable - deferred $ 51,726 $ 38,861
========= =========
</TABLE>
Management believes that based on the taxable income produced in the
current year and the continued growth in annuity products, the Company
will produce sufficient taxable income in the future to realize its
deferred tax asset.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
6. INCOME TAXES (continued)
The income tax expense was different from the amount computed by applying
the federal statutory tax rate of 35% to pre-tax income from continuing
operations as follows:
<TABLE>
<CAPTION>
(in thousands) 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
Income (loss) before taxes
Domestic $109,036 $45,435 $39,464
Foreign (2,523) (2,514) (1,438)
---------- --------- ---------
Total 106,513 42,921 38,026
Income tax rate 35% 35% 35%
--------- --------- ---------
Tax expense at federal
statutory income tax rate 37,280 15,022 13,309
Tax effect of:
Dividend received deduction (9,572) (9,085) (4,585)
Losses of foreign subsidiary 883 880 503
Meals and entertainment 664 487 340
State income taxes 1,071 673 577
Other 18 177 334
--------- -------- -------
Income tax expense $ 30,344 $ 8,154 $10,478
========= ======== =======
</TABLE>
7. RECEIVABLE FROM/PAYABLE TO AFFILIATES
Certain operating costs (including personnel, rental of office space,
furniture, and equipment) have been charged to the Company at cost by
American Skandia Information Services and Technology Corporation ("ASIST"),
an affiliated company; and likewise, the Company has charged operating costs
to ASISI. The total cost to the Company for these items was $11,136,000,
$7,722,000, and $5,572,000 for the years ended December 31, 1999, 1998 and
1997, respectively. Income received for these items was $3,919,000,
$1,355,000 and $3,225,000 for the years ended December 31, 1999, 1998 and
1997, respectively.
The Company had a $10 million short-term loan payable to ASI at December 31,
1999 and 1998. The total interest expense thereon to the Company was
$585,000, $622,000 and $642,000 for the years ended December 31, 1999, 1998
and 1997 respectively, of which $182,000 was payable as of December 31, 1999
and 1998.
Beginning in 1999, the Company was reimbursed by ASM for certain
distribution related costs associated with the sales of business through an
investment firm where ASM serves as an introducing broker dealer. Under this
agreement, the expenses reimbursed in 1999 were $1,441,000. As of December
31,1999, amounts receivable under this agreement were $245,000.
As of December 31,1999, the Company had received $71,000,000 from ASI in
advance of the sale of certain rights to receive future fees and contract
charges. This sale is expected to be completed in the first quarter of 2000.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
8. FUTURE FEES PAYABLE TO PARENT
In a series of transactions with ASI, the Company sold certain rights to
receive future fees and contract charges expected to be realized on variable
portions of designated blocks of deferred annuity contracts. The effective
dates and issue periods these transactions cover are as follows:
<TABLE>
<CAPTION>
Closing Effective Contract Issue
Transaction Date Date Period
<S> <C> <C> <C> <C> <C>
1996-1 12/16/96 9/1/96 1/1/94 - 6/30/96
1997-1 7/23/97 6/1/97 3/1/96 - 4/30/97
1997-2 12/30/97 12/1/97 5/1/95 - 12/31/96
1997-3 12/30/97 12/1/97 5/1/96 - 10/31/97
1998-1 6/30/98 6/1/98 1/1/97 - 5/31/98
1998-2 11/10/98 10/1/98 5/1/97 - 8/31/98
1998-3 12/30/98 12/1/98 7/1/96 - 10/31/98
1999-1 6/23/99 6/1/99 4/1/94 - 4/30/99
1999-2 12/14/99 10/1/99 11/1/98 - 7/31/99
</TABLE>
In connection with these transactions, ASI issued collateralized notes in a
private placement which are secured by the rights to receive future fees and
charges purchased from the Company.
Under the terms of the Purchase Agreements, the rights sold provide for ASI
to receive a percentage (80% or 100% depending on the underlying commission
option) of future mortality and expense charges and contingent deferred
sales charges, after reinsurance, expected to be realized over the remaining
surrender charge period of the designated contracts (6 to 8 years).
The Company did not sell the right to receive future fees and charges after
the expiration of the surrender charge period.
The proceeds from the sales have been recorded as a liability and are being
amortized over the remaining surrender charge period of the designated
contracts using the interest method. The present values of the transactions
as of the respective effective date were as follows:
<TABLE>
<CAPTION>
Present
(in thousands) Transaction Discount Rate Value
----------- ------------- -----
<S> <C> <C> <C>
1996-1 7.5% $50,221
1997-1 7.5% 58,767
1997-2 7.5% 77,552
1997-3 7.5% 58,193
1998-1 7.5% 61,180
1998-2 7.0% 68,573
1998-3 7.0% 40,128
1999-1 7.5% 120,632
1999-2 7.5% 145,078
</TABLE>
Payments representing fees and charges in the aggregate amount of
$131,420,000, $69,226,000 and $22,250,000 were made by the Company to
the Parent for the years ended December 31, 1999, 1998 and 1997,
respectively. Related interest expense of $52,840,000, $22,978,000 and
$6,842,000 has been included in the statement of income for the years
ended December 31, 1999, 1998 and 1997, respectively.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
8. FUTURE FEES PAYABLE TO PARENT (continued)
Expected payments of future fees payable to ASI as of December 31, 1999 are
as follows:
<TABLE>
<CAPTION>
Year Ended
(in thousands) December 31, Amount
----------- ------
<S> <C> <C>
2000 $103,975
2001 107,262
2002 106,491
2003 97,550
2004 78,512
2005 51,839
2006 25,712
2007 4,693
---------
Total $576,034
</TABLE>
The Commissioner of the State of Connecticut has approved the sale of
future fees and charges; however, in the event that the Company becomes
subject to an order of liquidation or rehabilitation, the Commissioner
has the ability to stop the payments due to the Parent under the
Purchase Agreement subject to certain terms and conditions.
9. LEASES
The Company leases office space under a lease agreement established in
1989 with ASIST. The lease expense for 1999, 1998 and 1997 was
$5,003,000, $3,588,000 and $2,428,000 respectively. Future minimum
lease payments per year and in aggregate as of December 31, 1999 are as
follows:
(in thousands) 2000 $ 7,004
2001 7,004
2002 6,854
2003 6,756
2004 6,929
2005 and thereafter 51,865
--------
Total $86,412
=======
10. RESTRICTED ASSETS
To comply with certain state insurance departments' requirements, the
Company maintains cash, bonds and notes on deposit with various states.
The carrying value of these deposits amounted to $4,868,000 and
$3,747,000 as of December 31, 1999, and 1998, respectively. These
deposits are required to be maintained for the protection of
contractowners within the individual states.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
11. RETAINED EARNINGS AND DIVIDEND RESTRICTIONS
On November 8, 1999, the Board of Directors authorized the Company to
increase the par value of its capital stock from $80 per share to $100
per share in order to comply with minimum capital levels as required by
the California Department of Insurance. This transaction resulted in a
corresponding decrease in paid in and contributed surplus of $500,000
and had no effect on capital and surplus.
Statutory basis shareholder's equity was $286,385,000 and $285,553,000
at December 31, 1999 and 1998, respectively.
The statutory basis net loss was $17,672,000, $13,152,000 and
$8,970,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
Under various state insurance laws, the maximum amount of dividends
that can be paid to shareholders without prior approval of the state
insurance department is subject to restrictions relating to statutory
surplus and net gain from operations. At December 31, 1999, no amounts
may be distributed without prior approval.
12. EMPLOYEE BENEFITS
The Company has a 401(k) plan for which substantially all employees are
eligible. Under this plan, the Company contributes 3% of salary for all
participating employees and matches employee contributions at a 50%
level up to an additional 3% Company contribution. Company
contributions to this plan on behalf of the participants were
$3,164,000, $2,115,000 and $1,220,000 for the years ended December 31,
1999, 1998 and 1997, respectively.
The Company has a deferred compensation plan, which is available to the
internal field marketing staff and certain officers. Company
contributions to this plan on behalf of the participants were $193,000,
$342,000 and $270,000 for the years ended December 31, 1999, 1998 and
1997, respectively.
The Company and an affiliate cooperatively have a long-term incentive
program under which units are awarded to executive officers and other
personnel. The Company also has a profit sharing program which benefits
all employees below the officer level. These programs consist of
multiple plans with new plans instituted each year. Generally,
participants must remain employed by the Company or its affiliates at
the time such units are payable in order to receive any payments under
the program. The accrued liability representing the value of these
units was $42,619,000 and $21,372,000 as of December 31, 1999 and 1998,
respectively. Payments under this plan were $4,079,000, $2,407,000 and
$1,119,000 for the years ended December 31, 1999, 1998, and 1997,
respectively.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
13. REINSURANCE
The effect of reinsurance for the years ended December 31, 1999, 1998
and 1997 is as follows:
(in thousands) 1999
----
<TABLE>
<CAPTION>
Annuity and Life Annuity and Life
Insurance Insurance Return Credited
Charges and Fees Policy Reserves to Contractowners
<S> <C> <C> <C>
Gross $326,670 $315 ($1,397)
Ceded (36,681) 2,763 (242)
-------- ------ --------
Net $289,989 $3,078 ($1,639)
======== ====== ========
1998
----
Annuity and Life Annuity and Life
Insurance Insurance Return Credited
Charges and Fees Policy Reserves to Contractowners
Gross $215,425 $ 691 ($8,921)
Ceded (29,214) 362 (9)
-------- ------ --------
Net $186,211 $1,053 ($8,930)
======== ====== ========
1997
----
Annuity and life Annuity and Life
Insurance Insurance Return Credited
Charges and Fees Policy Reserves to Contractowners
Gross $144,417 $955 ($1,972)
Ceded (23,259) (918) (46)
-------- ----- --------
Net $121,158 $ 37 ($2,018)
======== ===== ========
</TABLE>
Such ceded reinsurance does not relieve the Company of its obligations
to policyholders. The Company remains liable to its policyholders for
the portion reinsured to the extent that any reinsurer does not meet
its obligations assumed under the reinsurance agreements.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
14. SURPLUS NOTES
The Company has issued surplus notes to its Parent in exchange for cash.
Surplus notes outstanding as of December 31, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
(in thousands)
Interest for the
Interest 1999 1998 Years Ended December 31,
Issue Date Rate Amount Amount 1999 1998 1997
---------- ---- ------ ------ ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
December 29, 1993 6.84% - - - 1,387 1,387
February 18, 1994 7.28% 10,000 10,000 738 738 738
March 28, 1994 7.90% 10,000 10,000 801 801 801
September 30, 1994 9.13% 15,000 15,000 1,389 1,389 1,389
December 28, 1994 9.78% - 14,000 1,308 1,388 1,388
December 19, 1995 7.52% 10,000 10,000 762 762 762
December 20, 1995 7.49% 15,000 15,000 1,139 1,139 1,139
December 22, 1995 7.47% 9,000 9,000 682 682 682
June 28, 1996 8.41% 40,000 40,000 3,411 3,411 3,411
December 30, 1996 8.03% 70,000 70,000 5,698 5,699 5,699
Total $179,000 $193,000 $15,928 $17,396 $17,396
======== ======== ======= ======= =======
</TABLE>
The surplus note for $14,000,000 dated December 28, 1994 was converted
to additional paid-in capital on December 10, 1999. A surplus note for
$20,000,000 dated December 29, 1993 was converted to additional paid-in
capital on December 31, 1998. All surplus notes mature seven years from
the issue date.
Payment of interest and repayment of principal for these notes is
subject to certain conditions and require approval by the Insurance
Commissioner of the State of Connecticut. At December 31, 1999 and
1998, $14,372,000 and $9,644,000, respectively, of accrued interest on
surplus notes was not approved for payment under these criteria.
15. SHORT-TERM BORROWING
The Company had a $10 million short-term loan payable to the Parent at
December 31, 1999 and 1998. The total interest expense to the Company
was $585,000, $622,000 and $642,000 and for the years ended December
31, 1999, 1998 and 1997, respectively, of which $197,000 and $182,000
was payable as of December 31, 1999 and 1998, respectively.
16. CONTRACT WITHDRAWAL PROVISIONS
Approximately 99% of the Company's separate account liabilities are
subject to discretionary withdrawal by contractowners at market value
or with market value adjustment. Separate account assets which are
carried at fair value are adequate to pay such withdrawals which are
generally subject to surrender charges ranging from 10% to 1% for
contracts held less than 10 years.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
17. SEGMENT REPORTING
During 1998, to complement its annuity products, the Company launched
specific marketing and operational activities towards the release of
variable life insurance and qualified retirement plan annuity products.
Assets under management and sales for the products other than variable
annuities have not been significant enough to warrant full segment
disclosures as required by SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information."
18. SUBSEQUENT EVENT
On March 22, 2000, the Company sold certain rights to receive future
fees and contract charges expected to be received on variable portions
of deferred annuity contracts issued between August 1, 1999 and January
31, 2000. This transaction is the latest in a series of agreements with
ASI, as described in Note 8.
This transaction has an effective date of March 22, 2000. The present
value as of this date, discounted at 7.5%, was $171,781,000.
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
19. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table summarizes information with respect to the
operations of the Company on a quarterly basis:
<TABLE>
<CAPTION>
(in thousands) Three months Ended
------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
1999
Premiums and other insurance
<S> <C> <C> <C> <C>
revenues $78,412 $88,435 $97,955 $111,540
Net investment income 2,654 2,842 2,735 2,210
Net realized capital gains 295 25 206 52
---------- ----------- ---------- -----------
Total revenues 81,361 91,302 100,896 113,802
Benefits and expenses 64,107 67,803 71,597 77,341
-------- -------- -------- --------
Pre-tax net income 17,254 23,499 29,299 36,461
Income taxes 3,844 7,142 7,898 11,460
--------- --------- --------- -------
Net income $ 13,410 $ 16,357 $ 21,401 $25,001
======== ======== ======== =======
1998
Premiums and other insurance
revenues $50,593 $57,946 $62,445 $67,327
Net investment income 3,262 2,410 2,469 2,989
Net realized capital gains (losses) 156 13 (46) (24)
---------- ----------- ----------- -----------
Total revenues 54,011 60,369 64,868 70,292
Benefits and expenses 46,764 42,220 48,471 69,164
-------- -------- -------- --------
Pre-tax net income 7,247 18,149 16,397 1,128
Income taxes 1,175 4,174 2,223 582
--------- --------- -------- ---------
Net income $ 6,072 $13,975 $14,174 $ 546
======== ======= ======= ========
1997
Premiums and other insurance
revenues $30,186 $34,056 $41,102 $44,402
Net investment income 1,369 2,627 2,031 2,154
Net realized capital gains 20 43 21 3
----------- ----------- ----------- ------------
Total revenues 31,575 36,726 43,154 46,559
Benefits and expenses 18,319 30,465 31,179 40,025
-------- -------- -------- --------
Pre-tax net income 13,256 6,261 11,975 6,534
Income taxes 4,260 2,614 3,354 250
--------- --------- --------- ----------
Net income $ 8,996 $ 3,647 $ 8,621 $ 6,284
======== ======== ======== ========
</TABLE>
<PAGE>
FINANCIAL STATEMENTS FOR
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION SEPARATE ACCOUNT F
<PAGE>
American Skandia Life
Assurance Corporation
Variable Account F
Year ended December 31, 1999 and
for the period from June 26, 1998
through December 31, 1998
<PAGE>
Independent Auditor's Report
To the Contractowners of
American Skandia Life Assurance Corporation
Variable Account F and the
Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying statement of assets and contractowners' equity
of the thirty-eight sub-accounts of American Skandia Life Assurance Corporation
Variable Account F, referred to in Note 1, as of December 31, 1999 and 1998, and
the related statement of operations for the year ended December 31, 1999 and
statements of changes in net assets for the year ended December 31, 1999 and the
period from June 26, 1998 through December 31, 1998. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the thirty-eight sub-accounts
of American Skandia Life Assurance Corporation Variable Account F, referred to
in Note 1, at December 31, 1999 and 1998, and the results of its operations for
the year ended December 31, 1999 and its changes in net assets for the year
ended December 31, 1999 and the period June 26, 1998 through December 31, 1998
in conformity with accounting principles generally accepted in the United
States.
/s/Ernst & Young LLP
Hartford, Connecticut
February 11, 2000
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARAIBLE ACCOUNT F
STATEMENT OF ASSETS AND CONTRACTOWNERS' EQUITY
AS OF DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investment in mutual funds at market value ( Note 2 ):
American Skandia Trust ( AST ):
<S> <C> <C> <C>
AIM International Equity Portfolio - 7,322 shares ( cost $229,735) $ 250,628
AIM Balanced Portfolio - 20,329 shares ( cost $277,085) 309,816
American Century Income & Growth Portfolio - 40,224 shares ( cost $588,004) 629,510
Lord Abbett Growth & Income Portfolio - 53,071 shares ( cost $1,180,721) 1,247,172
Lord Abbett Small Cap Value Portfolio - 8,289 shares ( cost $83,224) 90,102
JanCap Growth Portfolio - 137,105 shares ( cost $6,102,520) 7,569,537
Money Market Portfolio - 4,389,667 shares ( cost $4,389,616) 4,389,616
Neuberger & Berman Midcap Value Portfolio - 21,447 shares ( cost $268,264) 285,555
Neuberger & Berman Midcap Growth Portfolio - 20,529 shares ( cost $380,293) 493,309
Federated High Yield Portfolio - 50,212 shares ( cost $594,454) 598,526
T. Rowe Price Asset Allocation Portfolio - 13,235 shares ( cost $236,080) 249,620
T. Rowe Price International Bond Portfolio - 904 shares ( cost $8,642) 8,682
T. Rowe Price International Equity Portfolio - 4,426 shares ( cost $62,418) 73,773
T. Rowe Price Natural Resources Portfolio - 4,122 shares ( cost $54,996) 54,241
T. Rowe Price Small Company Value Portfolio - 13,393 shares ( cost $149,119) 152,547
Janus Small Cap Growth Portfolio - 45,828 shares ( cost $1,310,759) 1,952,725
PIMCO Total Return Bond Portfolio - 79,436 shares ( cost $870,727) 872,996
PIMCO Limited Maturity Bond Portfolio - 91,450 shares ( cost $977,329) 990,402
INVESCO Equity Income Portfolio - 45,130 shares ( cost $814,964) 841,672
Oppenheimer Large-Cap Growth - 16,870 shares ( cost $254,787) 319,694
Janus Overseas Growth Portfolio - 60,678 shares ( cost $1,090,941) 1,523,012
American Century Strategic Balanced Portfolio - 20,123 shares ( cost $289,165) 307,889
American Century International Growth Portfolio - 5,129 shares ( cost $99,221) 114,884
Marsico Capital Growth Portfolio - 178,129 shares ( cost $3,111,708) 3,854,716
Cohen & Steers Realty Portfolio - 5,464 shares ( cost $43,996) 45,679
Bankers Trust Enhanced 500 Portfolio - 119,699 shares ( cost $1,643,395) 1,790,690
Kemper Small Cap Portfolio - 996 shares ( cost $14,116) 15,521
MFS Growth Portfolio - 2,373 shares ( cost $24,455) 26,820
MFS Growth with Income Portfolio - 1,301 shares ( cost $13,395) 13,687
Founders Passport Portfolio - 5,466 shares ( cost $109,523) 134,616
The Alger American Fund ( AAF ):
Growth Portfolio - 26,382 shares ( cost $1,477,593) 1,698,442
Midcap Growth Portfolio - 25,890 shares ( cost $735,767) 834,440
INVESCO Variable Investment Funds ( INVESCO ):
VIF Technology Fund - 4,439 shares ( cost $139,242) 164,817
VIF Financial Sevices Fund - 1,841 shares ( cost $20,226) 20,435
VIF Telecommunications Fund - 3,340 shares ( cost $50,656) 54,939
VIF Health Sciences Fund - 1,202 shares ( cost $18,828) 19,252
VIF Dynamics Fund - 1,224 shares ( cost $21,290) 23,131
Montgomery Variable Series ( Montgomery ):
Emerging Markets Portfolio - 4,954 shares ( cost $42,998) 53,796
------------------
Total Invested Assets $ 32,076,889
Receivable from American Skandia Life Assurance Corporation 621,595
------------------
Total Receivables $ 621,595
------------------
Total Assets $ 32,698,484
==================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LIABILITIES
<TABLE>
<CAPTION>
Payable to American Skandia Skandia Trust $ 358,740
Payable to Alger American Fund 231,857
Payable to INVESCO Variable Investment Funds 30,816
Payable to Montgomery Variable Series 182
-----------------
Total Liabilities $ 621,595
NET ASSETS
Unit
Contractowners' Equity Units Value
<S> <C> <C> <C> <C>
AST - AIM International Equity 15,981 15.68 $ 250,628
AST - AIM Balanced 25,161 12.31 309,816
AST - American Century Income & Growth 50,924 12.36 629,510
AST - Lord Abbett Growth & Income 107,121 11.64 1,247,172
AST - Lord Abbett Small Cap Value 9,327 9.66 90,102
AST - JanCap Growth 370,764 20.42 7,569,537
AST - Money Market 415,524 10.56 4,389,616
AST - Neuberger & Berman Midcap Value 27,998 10.20 285,555
AST - Neuberger & Berman Midcap Growth 30,953 15.94 493,309
AST - Federated High Yield 60,603 9.88 598,526
AST - T. Rowe Price Asset Allocation 21,411 11.66 249,620
AST - T. Rowe Price International Bond 869 9.99 8,682
AST - T. Rowe Price International Equity 5,714 12.91 73,773
AST - T. Rowe Price Natural Resources 5,222 10.39 54,241
AST - T. Rowe Price Small Company Value 17,849 8.55 152,547
AST - Janus Small Cap Growth 80,027 24.40 1,952,725
AST - PIMCO Total Return Bond 84,718 10.30 872,996
AST - PIMCO Limited Maturity Bond 94,215 10.51 990,402
AST - INVESCO Equity Income 74,726 11.26 841,672
AST - Oppenheimer Large-Cap Growth 21,389 14.95 319,694
AST - Janus Overseas Growth 90,760 16.78 1,523,012
AST - American Century Strategic Balanced 25,191 12.22 307,889
AST - American Century International Growth 7,482 15.35 114,884
AST - Marsico Capital Growth 229,882 16.77 3,854,716
AST - Cohen & Steers Realty 5,079 8.99 45,679
AST - Bankers Trust Enhanced 135,113 13.25 1,790,690
AST - Kemper Small Cap 1,007 15.41 15,521
AST - MFS Growth 2,379 11.27 26,820
AST - MFS Growth & Income 1,304 10.49 13,687
AST - Founders Passport 7,962 16.91 134,616
AAF - Growth 104,744 16.22 1,698,442
AAF - Midcap Growth 56,139 14.86 834,440
INVESCO - VIF Technology 10,257 16.07 164,817
INVESCO - VIF Financial Services 1,753 11.66 20,435
INVESCO - VIF Telecommunications 3,713 14.80 54,939
INVESCO - VIF Health Sciences 1,677 11.48 19,252
INVESCO - VIF Dynamics 1,706 13.56 23,131
Montgomery Emerging Markets 4,434 12.13 53,796
-----------------
Total Contractowners' Equity $ 32,076,889
-----------------
Total Contractowners' Equity $ 32,698,484
=================
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Class 6 Sub-account Investing In:
--------------------------------------------------------------
AST-
AST-AIM American Century
International AST-AIM Income &
Total Equity Balanced Growth
--------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 188 $ - $ 100 $ 88
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (2,518) (608) (925) (985)
--------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (2,330) (608) (825) (897)
--------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 664,260 605,337 47,592 11,331
Cost of Securities Sold 615,697 557,480 48,290 9,927
--------------------------------------------------------
Net Gain (Loss) 48,563 47,857 (698) 1,404
Capital Gain Distributions Received 3,006 2,178 332 496
--------------------------------------------------------
NET REALIZED GAIN (LOSS) 51,569 50,035 (366) 1,900
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 5,419 4,520 212 687
End of Period 95,128 20,893 32,730 41,505
--------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 89,709 16,373 32,518 40,818
--------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 138,948 $ 65,800 $ 31,327 $ 41,821
========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
-------------------------------------------------------------------
AST-Lord Abbett AST-Lord Abbett AST AST Money
Growth & Income Small Cap Value JanCap Growth Market
-------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 763 $ - $ - $ 88,879
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (4,005) (304) (19,842) (19,379)
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (3,242) (304) (19,842) 69,500
---------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 166,596 24,638 1,100,494 11,537,061
Cost of Securities Sold 160,789 24,197 962,581 11,537,061
---------------------------------------------------------
Net Gain (Loss) 5,807 441 137,913 -
Capital Gain Distributions Received 3,616 - 13,702 -
---------------------------------------------------------
NET REALIZED GAIN (LOSS) 9,423 441 151,615 -
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 5,115 284 47,984 -
End of Period 66,445 6,878 1,467,017 -
---------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 61,330 6,594 1,419,033 -
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 67,511 $ 6,731 $ 1,550,806 $ 69,500
=========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------
------------------------------------------------------------------
AST-T.
AST-Neuberger AST-Neuberger Rowe Price
& Berman & Berman AST-Federated Asset
Midcap Value Midcap Growth High Yield Allocation
------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 1,111 $ - $ 4,034 $ 1,341
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (1,219) (1,125) (2,985) (1,295)
-------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (108) (1,125) 1,049 46
-------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 269,759 67,778 936,952 54,648
Cost of Securities Sold 282,916 62,719 946,380 52,389
-------------------------------------------------------
Net Gain (Loss) (13,157) 5,059 (9,428) 2,259
Capital Gain Distributions Received 982 3,144 355 19
-------------------------------------------------------
NET REALIZED GAIN (LOSS) (12,175) 8,203 (9,073) 2,278
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 1,610 4,007 709 306
End of Period 17,291 113,016 4,070 13,540
-------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 15,681 109,009 3,361 13,234
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 3,398 $ 116,087 $ (4,663) $ 15,558
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
-----------------------------------------------------------------
AST-T. AST-T. AST-T. AST-T.
Rowe Price Rowe Price Rowe Price Rowe Price
International International Natural Small
Bond Equity Resources Company Value
----------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 950 $ - $ 184 $ 292
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (119) (206) (339) (858)
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS) 831 (206) (155) (566)
---------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 14,026 271,684 290,585 1,302,962
Cost of Securities Sold 16,098 268,340 285,614 1,301,479
---------------------------------------------------------
Net Gain (Loss) (2,072) 3,344 4,971 1,483
Capital Gain Distributions Received 305 - 1,515 -
---------------------------------------------------------
NET REALIZED GAIN (LOSS) (1,767) 3,344 6,486 1,483
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 591 - (131) 630
End of Period 40 11,355 (756) 3,427
---------------------------------------------------------
NET UNREALIZED GAIN (LOSS) (551) 11,355 (625) 2,797
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (1,487) $ 14,493 $ 5,706 $ 3,714
=========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------
------------------------------------------------------------------
AST-PIMCO AST-PIMCO Limited AST-INVESCO
AST-Janus Total Maturity Equity
Small Cap Growth Return Bond Bond Income
------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ 8,853 $ 3,812 $ 1,786
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (3,100) (5,596) (5,388) (3,123)
----------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (3,100) 3,257 (1,576) (1,337)
----------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 398,426 826,933 281,920 20,315
Cost of Securities Sold 344,292 845,343 282,053 19,268
----------------------------------------------------------
Net Gain (Loss) 54,134 (18,410) (133) 1,047
Capital Gain Distributions Received - 6,539 - 2,769
----------------------------------------------------------
NET REALIZED GAIN (LOSS) 54,134 (11,871) (133) 3,816
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 64 (102) 40 2,780
End of Period 641,965 2,269 13,073 26,706
----------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 641,901 2,371 13,033 23,926
----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 692,935 $ (6,243) $ 11,324 $ 26,405
==========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------------------------------
----------------------------------------------------------------
AST - AST-American AST-American
Oppenheimer AST-Janus Century Century
Large-Cap Overseas Strategic International
Growth Growth Balanced Growth
----------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ 18 $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (666) (4,321) (866) (532)
-------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (666) (4,321) (848) (532)
-------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 17,203 624,332 19,622 717,465
Cost of Securities Sold 13,941 518,913 19,031 683,656
-------------------------------------------------------
Net Gain (Loss) 3,262 105,419 591 33,809
Capital Gain Distributions Received 762 - - 211
-------------------------------------------------------
NET REALIZED GAIN (LOSS) 4,024 105,419 591 34,020
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 536 8,726 109 595
End of Period 64,908 432,071 18,724 15,664
-------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 64,372 423,345 18,615 15,069
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 67,730 $ 524,443 $ 18,358 $ 48,557
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
-----------------------------------------------------------------
AST-Kemper
AST-Cohen & AST-Bankers Small Cap
AST-Marsico Steers Trust Jan. 4* thru
Capital Growth Realty Enhanced 500 Dec. 31, 1999
-----------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ 189 $ 94 $ 98 $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (9,420) (224) (3,813) (25)
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (9,231) (130) (3,715) (25)
---------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 672,797 14,292 153,939 17,126
Cost of Securities Sold 586,132 14,575 152,658 12,634
---------------------------------------------------------
Net Gain (Loss) 86,665 (283) 1,281 4,492
Capital Gain Distributions Received 226 - 664 -
---------------------------------------------------------
NET REALIZED GAIN (LOSS) 86,891 (283) 1,945 4,492
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period 25,284 94 1,569 -
End of Period 743,008 1,684 147,293 1,404
---------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 717,724 1,590 145,724 1,404
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 795,384 $ 1,177 $ 143,954 $ 5,871
=========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
---------------------------------------------------------------------
AST-MFS AST-MFS
Growth Growth & Income
Oct. 18* thru Oct. 18* thru AST-Founders AAF
Dec. 31, 1999 Dec. 31, 1999 Passport Growth
---------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ 142
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (7) (2) (69) (4,266)
----------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (7) (2) (69) (4,124)
----------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 79 1 27,883 154,238
Cost of Securities Sold 75 1 22,512 148,590
----------------------------------------------------------
Net Gain (Loss) 4 - 5,371 5,648
Capital Gain Distributions Received - - - 9,717
----------------------------------------------------------
NET REALIZED GAIN (LOSS) 4 - 5,371 15,365
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - 7,016
End of Period 2,365 293 25,093 220,849
----------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 2,365 293 25,093 213,833
----------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 2,362 $ 291 $ 30,395 $ 225,074
==========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
-----------------------------------------------------------------
INVESCO VIF INVESCO VIF
INVESCO VIF Financial Tele-
Technology Services communications
AAF Oct. 18* thru Oct. 18* thru Oct. 18* thru
Midcap Growth Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1999
-----------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C> <C>
Dividends $ - $ - $ - $ -
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (1,253) (33) (3) (4)
---------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (1,253) (33) (3) (4)
---------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 76,711 7,926 360 256
Cost of Securities Sold 79,711 6,424 384 194
---------------------------------------------------------
Net Gain (Loss) (3,000) 1,502 (24) 62
Capital Gain Distributions Received 3,565 - - -
---------------------------------------------------------
NET REALIZED GAIN (LOSS) 565 1,502 (24) 62
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - - -
End of Period 98,673 25,574 210 4,283
---------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 98,673 25,574 210 4,283
---------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 97,985 $ 27,043 $ 183 $ 4,341
=========================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------
---------------------------------------------------------------------
INVESCO INVESCO
VIF Health Sciences VIF Dynamics Montgomery
Oct. 18* thru Oct. 18* thru Emerging
Dec. 31, 1999 Dec. 31, 1999 Markets
---------------------------------------------------------------------
INVESTMENT INCOME:
Income
<S> <C> <C> <C>
Dividends $ - $ - $ 5
Expenses
Mortality and Expense Risk Charges and Administrative Fees (Note 6) (15) (7) (164)
-------------------------------------------------------
NET INVESTMENT INCOME (LOSS) (15) (7) (159)
-------------------------------------------------------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales 166,592 17,700 25,032
Cost of Securities Sold 167,862 17,502 22,475
-------------------------------------------------------
Net Gain (Loss) (1,270) 198 2,557
Capital Gain Distributions Received 3 4 -
-------------------------------------------------------
NET REALIZED GAIN (LOSS) (1,267) 202 2,557
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period - - -
End of Period 424 1,841 10,798
-------------------------------------------------------
NET UNREALIZED GAIN (LOSS) 424 1,841 10,798
-------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (858) $ 2,036 $ 13,196
=======================================================
- ------------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT F
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------------
AST - AIM International
- -----------------------------------------------------------------------------------------------------------------------------------
Total Equity Portfolio
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ 15,648 $ (2,480) $ (608) $ (82)
Net Realized Gain (Loss) 519,209 141 50,035 (8)
Net Unrealized Gain (Loss) On Investments 4,183,388 113,235 16,373 4,520
--------- ------- ------ -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 4,718,245 110,896 65,800 4,430
--------- ------- ------ -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 35,637 1,188,246 35,637 22,372
Net Transfers Between Sub-accounts - - - -
Surrenders 122,464 (4,132) 122,464 (75)
------- ------ ------- ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 158,101 1,184,114 158,101 22,297
------- --------- ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,876,346 1,295,010 223,901 26,727
--------- --------- ------- ------
NET ASSETS:
Beginning of Period 1,295,010 - 26,727 -
--------- ------
End of Period $ 6,171,356 $ 1,295,010 $ 250,628 $ 26,727
=========== =========== ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - AIM Balanced AST - American Century
Portfolio Income & Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (825) $ (6) $ (897) $ (35)
Net Realized Gain (Loss) (366) 1 1,900 -
Net Unrealized Gain (Loss) On Investments 32,518 212 40,818 687
------ --- ------ ---
Net Increase (Decrease) In Net Assets Resulting
From Operations 31,327 207 41,821 652
------ --- ------ ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 184,679 1,019 160,648 7,500
Net Transfers Between Sub-accounts - - - -
Surrenders 89,789 2,795 418,921 (32)
------ ----- ------- ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 274,468 3,814 579,569 7,468
------- ----- ------- -----
TOTAL INCREASE (DECREASE) IN NET ASSETS 305,795 4,021 621,390 8,120
------- ----- ------- -----
NET ASSETS:
Beginning of Period 4,021 - 8,120 -
----- -----
End of Period $ 309,816 $ 4,021 $ 629,510 $ 8,120
========= ======= ========= =======
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Lord Abbett AST - Lord Abbett
Growth & Income Small Cap Value
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (3,242) $ (119) $ (304) $ (56)
Net Realized Gain (Loss) 9,423 11 441 (18)
Net Unrealized Gain (Loss) On Investments 61,330 5,115 6,594 284
------ ----- ----- ---
Net Increase (Decrease) In Net Assets Resulting
From Operations 67,511 5,007 6,731 210
------ ----- ----- ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 575,012 24,411 46,463 11,500
Net Transfers Between Sub-accounts - - - -
Surrenders 543,676 31,555 25,242 (44)
------- ------ ------ ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 1,118,688 55,966 71,705 11,456
--------- ------ ------ ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,186,199 60,973 78,436 11,666
--------- ------ ------ ------
NET ASSETS:
Beginning of Period 60,973 - 11,666 -
------ ------
End of Period $ 1,247,172 $ 60,973 $ 90,102 $ 11,666
=========== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST AST
JanCap Growth Money Market
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (19,842) $ (940) $ 69,500 $ 603
Net Realized Gain (Loss) 151,615 (23) - -
Net Unrealized Gain (Loss) On Investments 1,419,033 47,984 - -
--------- ------
Net Increase (Decrease) In Net Assets Resulting
From Operations 1,550,806 47,021 69,500 603
--------- ------ ------ ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 2,106,542 243,116 16,273,464 361,161
Net Transfers Between Sub-accounts - - - -
Surrenders 3,610,343 11,709 (11,984,872) (330,240)
--------- ------ ----------- --------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 5,716,885 254,825 4,288,592 30,921
--------- ------- --------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 7,267,691 301,846 4,358,092 31,524
--------- ------- --------- ------
NET ASSETS:
Beginning of Period 301,846 - 31,524 -
------- ------
End of Period $ 7,569,537 $ 301,846 $ 4,389,616 $ 31,524
=========== ========= =========== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Neuberger & Berman AST - Neuberger & Berman
Midcap Value Midcap Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (108) $ (93) $ (1,125) $ (44)
Net Realized Gain (Loss) (12,175) (10) 8,203 (5)
Net Unrealized Gain (Loss) On Investments 15,681 1,610 109,009 4,007
------ ----- ------- -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 3,398 1,507 116,087 3,958
----- ----- ------- -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 173,443 19,250 136,608 15,580
Net Transfers Between Sub-accounts - - - -
Surrenders 68,136 19,821 201,212 19,864
------ ------ ------- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 241,579 39,071 337,820 35,444
------- ------ ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 244,977 40,578 453,907 39,402
------- ------ ------- ------
NET ASSETS:
Beginning of Period 40,578 - 39,402 -
------ ------
End of Period $ 285,555 $ 40,578 $ 493,309 $ 39,402
========= ======== ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Federated AST - T. Rowe Price
High Yield Asset Allocation
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ 1,049 $ (61) $ 46 $ (7)
Net Realized Gain (Loss) (9,073) 2 2,278 -
Net Unrealized Gain (Loss) On Investments 3,361 709 13,234 306
----- --- ------ ---
Net Increase (Decrease) In Net Assets Resulting
From Operations (4,663) 650 15,558 299
------ --- ------ ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 322,899 50,634 102,551 7,500
Net Transfers Between Sub-accounts - - - -
Surrenders 229,080 (74) 123,775 (63)
------- --- ------- ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 551,979 50,560 226,326 7,437
------- ------ ------- -----
TOTAL INCREASE (DECREASE) IN NET ASSETS 547,316 51,210 241,884 7,736
------- ------ ------- -----
NET ASSETS:
Beginning of Period 51,210 - 7,736 -
------ -----
End of Period $ 598,526 $ 51,210 $ 249,620 $ 7,736
========= ======== ========= =======
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - T. Rowe Price AST - T. Rowe Price
International Bond International Equity
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Apr. 15* thru
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C>
Net Investment Income (Loss) $ 831 $ (41) $ (206)
Net Realized Gain (Loss) (1,767) 1 3,344
Net Unrealized Gain (Loss) On Investments (551) 591 11,355
---- --- ------
Net Increase (Decrease) In Net Assets Resulting
From Operations (1,487) 551 14,493
------ --- ------
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 57 14,873 30,103
Net Transfers Between Sub-accounts - - -
Surrenders (5,273) (39) 29,177
------ --- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions (5,216) 14,834 59,280
------ ------ ------
TOTAL INCREASE (DECREASE) IN NET ASSETS (6,703) 15,385 73,773
------ ------ ------
NET ASSETS:
Beginning of Period 15,385 - -
------
End of Period $ 8,682 $ 15,385 $ 73,773
======= ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - T. Rowe Price AST - T. Rowe Price
Natural Resources Small Company Value
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (155) $ (53) $ (566) $ (29)
Net Realized Gain (Loss) 6,486 1 1,483 -
Net Unrealized Gain (Loss) On Investments (625) (131) 2,797 630
---- ---- ----- ---
Net Increase (Decrease) In Net Assets Resulting
From Operations 5,706 (183) 3,714 601
----- ---- ----- ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 21,568 12,121 38,295 2,500
Net Transfers Between Sub-accounts - - - -
Surrenders 14,961 68 78,616 28,821
------ -- ------ ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 36,529 12,189 116,911 31,321
------ ------ ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 42,235 12,006 120,625 31,922
------ ------ ------- ------
NET ASSETS:
Beginning of Period 12,006 - 31,922 -
------ ------
End of Period $ 54,241 $ 12,006 $ 152,547 $ 31,922
======== ======== ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
* Date Operations Commenced.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Janus AST - PIMCO
Small Cap Growth Total Return Bond
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (3,100) $ (22) $ 3,257 $ (50)
Net Realized Gain (Loss) 54,134 (5) (11,871) (1)
Net Unrealized Gain (Loss) On Investments 641,901 64 2,371 (102)
------- -- ----- ----
Net Increase (Decrease) In Net Assets Resulting
From Operations 692,935 37 (6,243) (153)
------- -- ------ ----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 474,440 4,000 411,251 24,874
Net Transfers Between Sub-accounts - - - -
Surrenders 781,328 (15) 443,317 (50)
------- --- ------- ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 1,255,768 3,985 854,568 24,824
--------- ----- ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,948,703 4,022 848,325 24,671
--------- ----- ------- ------
NET ASSETS:
Beginning of Period 4,022 - 24,671 -
----- ------
End of Period $ 1,952,725 $ 4,022 $ 872,996 $ 24,671
=========== ======= ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
</TABLE>
* Date Operations Commenced.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - PIMCO Limited AST - INVESCO
Maturity Bond Equity Income
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (1,576) $ (53) $ (1,337) $ (55)
Net Realized Gain (Loss) (133) - 3,816 1
Net Unrealized Gain (Loss) On Investments 13,033 40 23,926 2,780
------ -- ------ -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 11,324 (13) 26,405 2,726
------ --- ------ -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 824,393 33,954 355,509 14,357
Net Transfers Between Sub-accounts - - - -
Surrenders 120,802 (58) 382,501 60,174
------- --- ------- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 945,195 33,896 738,010 74,531
------- ------ ------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 956,519 33,883 764,415 77,257
------- ------ ------- ------
NET ASSETS:
Beginning of Period 33,883 - 77,257 -
------ ------
End of Period $ 990,402 $ 33,883 $ 841,672 $ 77,257
========= ======== ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Oppenheimer AST - Janus
Large-Cap Growth Overseas Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (666) $ (36) $ (4,321) $ (153)
Net Realized Gain (Loss) 4,024 (3) 105,419 (22)
Net Unrealized Gain (Loss) On Investments 64,372 536 423,345 8,726
------ --- ------- -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 67,730 497 524,443 8,551
------ --- ------- -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 165,636 6,000 397,728 41,825
Net Transfers Between Sub-accounts - - - -
Surrenders 79,855 (24) 479,014 71,451
------ --- ------- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 245,491 5,976 876,742 113,276
------- ----- ------- -------
TOTAL INCREASE (DECREASE) IN NET ASSETS 313,221 6,473 1,401,185 121,827
------- ----- --------- -------
NET ASSETS:
Beginning of Period 6,473 - 121,827 -
----- -------
End of Period $ 319,694 $ 6,473 $ 1,523,012 $ 121,827
========= ======= =========== =========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - American Century AST - American Century
Strategic Balanced International Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended Year Ended
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (848) $ (2) $ (532) $ (37)
Net Realized Gain (Loss) 591 - 34,020 (9)
Net Unrealized Gain (Loss) On Investments 18,615 109 15,069 595
------ --- ------ ---
Net Increase (Decrease) In Net Assets Resulting
From Operations 18,358 107 48,557 549
------ --- ------ ---
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 151,426 1,743 53,185 7,500
Net Transfers Between Sub-accounts - - - -
Surrenders 136,019 236 (14,766) 19,859
------- --- ------- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 287,445 1,979 38,419 27,359
------- ----- ------ ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 305,803 2,086 86,976 27,908
------- ----- ------ ------
NET ASSETS:
Beginning of Period 2,086 - 27,908 -
----- ------
End of Period $ 307,889 $ 2,086 $ 114,884 $ 27,908
========= ======= ========= ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Marsico AST - Cohen & Steers
Capital Growth Realty
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Jun. 26* thru Year Ended Oct. 15* thru
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (9,231) $ (972) $ (130) $ (4)
Net Realized Gain (Loss) 86,891 (719) (283) -
Net Unrealized Gain (Loss) On Investments 717,724 25,284 1,590 94
------- ------ ----- --
Net Increase (Decrease) In Net Assets Resulting
From Operations 795,384 23,593 1,177 90
------- ------ ----- --
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 1,322,074 211,055 16,286 1,890
Net Transfers Between Sub-accounts - - - -
Surrenders 1,438,822 63,788 26,121 115
--------- ------ ------ ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 2,760,896 274,843 42,407 2,005
--------- ------- ------ -----
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,556,280 298,436 43,584 2,095
--------- ------- ------ -----
NET ASSETS:
Beginning of Period 298,436 - 2,095 -
------- -----
End of Period $ 3,854,716 $ 298,436 $ 45,679 $ 2,095
=========== ========= ======== =======
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - Bankers Trust AST - Kemper AST - MFS
Enhanced 500 Small Cap Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended Oct. 29* thru Jan. 4* thru Oct. 18* thru
Dec. 31, 1999 Dec. 31, 1998 Dec. 31, 1999 Dec. 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (3,715) $ (41) $ (25) $ (7)
Net Realized Gain (Loss) 1,945 940 4,492 4
Net Unrealized Gain (Loss) On Investments 145,724 1,569 1,404 2,365
------- ----- ----- -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 143,954 2,468 5,871 2,362
------- ----- ----- -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 524,687 20,388 5,911 -
Net Transfers Between Sub-accounts - - - -
Surrenders 1,102,793 (3,600) 3,739 24,458
--------- ------ ----- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 1,627,480 16,788 9,650 24,458
--------- ------ ----- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 1,771,434 19,256 15,521 26,820
--------- ------ ------ ------
NET ASSETS:
Beginning of Period 19,256 - - -
------
End of Period $ 1,790,690 $ 19,256 $ 15,521 $ 26,820
=========== ======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AST - MFS AST - Founders AAF
Growth & Income Passport Growth
- -----------------------------------------------------------------------------------------------------------------------------------
Oct. 18* thru Mar. 18* thru Year Ended Jun. 26* thru
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1998
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (2) $ (69) $ (4,124) $ (92)
Net Realized Gain (Loss) - 5,371 15,365 7
Net Unrealized Gain (Loss) On Investments 293 25,093 213,833 7,016
--- ------ ------- -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 291 30,395 225,074 6,931
--- ------ ------- -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 1,390 14,334 840,338 27,123
Net Transfers Between Sub-accounts - - - -
Surrenders 12,006 89,887 599,050 (74)
------ ------ ------- ---
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 13,396 104,221 1,439,388 27,049
------ ------- --------- ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 13,687 134,616 1,664,462 33,980
------ ------- --------- ------
NET ASSETS:
Beginning of Period - - 33,980 -
------
End of Period $ 13,687 $ 134,616 $ 1,698,442 $ 33,980
======== ========= =========== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
AAF - MidCap INVESCO INVESCO INVESCO
Growth VIF Technology VIF Financial ServiVIF Telecommunications
- -----------------------------------------------------------------------------------------------------------------------------------
Mar. 18* thru Oct. 18* thru Oct. 18* thru Oct. 18* thru
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C> <C>
Net Investment Income (Loss) $ (1,253) $ (33) $ (3) $ (4)
Net Realized Gain (Loss) 565 1,502 (24) 62
Net Unrealized Gain (Loss) On Investments 98,673 25,574 210 4,283
------ ------ --- -----
Net Increase (Decrease) In Net Assets Resulting
From Operations 97,985 27,043 183 4,341
------ ------ --- -----
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 533,286 27,734 16,465 1,363
Net Transfers Between Sub-accounts - - - -
Surrenders 203,169 110,040 3,787 49,235
------- ------- ----- ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 736,455 137,774 20,252 50,598
------- ------- ------ ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 834,440 164,817 20,435 54,939
------- ------- ------ ------
NET ASSETS:
Beginning of Period - - - -
End of Period $ 834,440 $ 164,817 $ 20,435 $ 54,939
========= ========= ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
- -----------------------------------------------------------------------------------------------------------------------------------
INVESCO INVESCO Montgomery
VIF Health ScienceVIF Dynamics Emerging Markets
- -----------------------------------------------------------------------------------------------------------------------------------
Oct. 18* thru Oct. 18* thru Mar. 18* thru
Dec. 31, 1999 Dec. 31, 1999 Dec. 31, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
<S> <C> <C> <C>
Net Investment Income (Loss) $ (15) $ (7) $ (159)
Net Realized Gain (Loss) (1,267) 202 2,557
Net Unrealized Gain (Loss) On Investments 424 1,841 10,798
--- ----- ------
Net Increase (Decrease) In Net Assets Resulting
From Operations (858) 2,036 13,196
---- ----- ------
CAPITAL SHARE TRANSACTIONS:
Transfers of Life VLI Fund Deposits 16,103 224 29,118
Net Transfers Between Sub-accounts - - -
Surrenders 4,007 20,871 11,482
----- ------ ------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions 20,110 21,095 40,600
------ ------ ------
TOTAL INCREASE (DECREASE) IN NET ASSETS 19,252 23,131 53,796
------ ------ ------
NET ASSETS:
Beginning of Period - - -
End of Period $ 19,252 $ 23,131 $ 53,796
======== ======== ========
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
* Date Operations Commenced.
- -------------------------------------------------------------------------------
<PAGE>
American Skandia Life Assurance Corporation
Variable Account F
Notes to Financial Statements
December 31, 1999
- --------------------------------------------------------------------------------
1. ORGANIZATION
American Skandia Life Assurance Corporation Variable Account F (the
"Account") is a separate investment account of American Skandia Life
Assurance Corporation ("American Skandia" or "Company"). The Account is
registered with the SEC under the Investment Company Act of 1940 as a unit
investment trust. The Account commenced operations June 25, 1998.
As of December 31, 1999, the Account consisted of forty-two sub-accounts.
These financial statements report on all forty-two sub-accounts offered in
American Skandia's AS Trophy Single Premium Variable Life Insurance
Product. Each of the forty-two sub-accounts invests only in a single
corresponding portfolio of either The Alger American Fund, American Skandia
Trust, or Montgomery Variable Series (the "Trusts"). Fred Alger Management,
Inc. is the advisor for The Alger American Fund. American Skandia
Investments Services, Incorporated, an affiliate, is the investment manager
for the American Skandia Trust, while AIM Capital Management, Inc., Lord
Abbett & Co., Janus Capital Corporation, J.P. Morgan Inc., Neuberger Berman
Management, Incorporated, Federated Investment Counseling, T. Rowe Price
Associates, Inc., Rowe Price-Fleming International, Inc., Founders Asset
Management, LLC, Pacific Investment Management Company, INVESCO Funds Group
Inc., OpphenheimerFunds, Inc., American Century Investments Management,
Inc., Marsico Capital Management, LLC, Cohen & Steers Capital Management,
Inc., and Bankers Trust Company are the subadvisors. Montgomery Asset
Management L.P. is the investment advisor for the Montgomery Variable
Series.
The investment advisors are paid fees for their services by the respective
Trusts.
American Skandia's AS Trophy Single Premium Variable Life Insurance Policy
is marketed through American Skandia Marketing, Inc., an affiliate.
During 1999, the following sub-accounts incurred a name change: AST AIM
International Equity (formerly AST Putnam International Equity); AST AIM
Balanced (formerly AST Putnam Balanced); AST Janus Small Cap Growth
(formerly AST Founders Capital Appreciation) and AST American Century
Income & Growth (formerly AST Putnam Growth & Income).
2. VALUATION OF INVESTMENTS
The market value of the investments in the sub-accounts is based on the net
asset values of the Trust shares held at the end of the current period.
Transactions are accounted for on the trade date and dividend income is
recognized on an accrual basis. Realized gains and losses on sales of
investments are determined on a first-in first-out basis.
3. ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires that management make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates.
4. INCOME TAXES
American Skandia does not expect to incur any federal income tax liability
on earnings, or realized capital gains attributable to the Account;
therefore, no charges for federal income taxes are currently deducted from
the Account. If American Skandia incurs income taxes attributable to the
Account, or determines that such taxes will be incurred, it may make a
charge for such taxes against the Account.
Under current laws, American Skandia may incur state and local income taxes
(in addition to premium tax) in several states. The Company does not
anticipate that these will be significant. However, American Skandia may
make charges to the Account in the event that the amount of these taxes
changes.
5. DIVERSIFICATION REQUIREMENTS
Section 817(h) of the Internal Revenue Code provides that a variable
annuity contract, in order to qualify as an annuity, must have an
"adequately diversified" segregated asset account (including investments
in a mutual fund by the segregated asset account of the insurance
companies). If the diversification requirements under the Internal Revenue
Code are not met and the annuity is not treated as an annuity, the
taxpayer will be subject to income tax on the annual gain in the contract.
The Treasury Department's regulations prescribe the diversification
requirements for variable annuity contracts. The Company believes the
underlying mutual fund portfolios complied with the terms of these
regulations.
6. CONTRACT CHARGES
The following contract charges are paid to American Skandia, which provides
administrative services to the Account:
Mortality and Expense Risk Charges - Charged daily against the Account at
an annual rate of .90% of the net assets.
Administrative Fees - Charged daily against the Account at an annual rate
of .15% of the net assets.
Contingent Deferred Sales Charges are computed as set forth in the American
Skandia's AS Trophy Single Premium Variable Life Insurance Policy
prospectus.
7. YEAR 2000 COMPLIANCE (UNAUDITED)
The Company's computer support is provided by its affiliate American
Skandia Information Services and Technology Corporation.
The Company has experienced no significant errors or disruptions in
computer service, interfaces with computer systems of investment manager,
sub-advisors, third party administrators, vendors and other business
partners on or after January 1, 2000.
American Skandia engaged external information technology specialists to
review the operating systems and internally developed software. The costs
associated with these assessments and Year 2000 related remediation were
allocated across the American Skandia Group. No cost were allocated to the
Separate Accounts.
American Skandia continues to review new and existing systems and has
contingency plans in place as part of its Business Continuity Plan. The
plan involves virtually all aspects of the business and will continue to be
a focus of management beyond the Year 2000 event.
APPENDIX A
HYPOTHETICAL ILLUSTRATION OF ACCELERATED DEATH BENEFIT
The following are hypothetical illustrations of the impact of payments made to
the Insured under the accelerated death benefit provision of the Policy. The
first hypothetical illustration assumes the Insured is a female, age 45 and is
in the preferred risk class as of the Policy Date. The second hypothetical
illustration assumes the Insured is a male, age 65 and is in the preferred risk
class as of the Policy Date. The following other assumptions apply to both
hypothetical illustrations:
1. The Premium paid was $20,000.
2. The Accelerated Death Benefit provision is exercised as of the 10th
Policy Anniversary.
3. The investment options in which Account Value was allocated have grown
at a hypothetical average annual net rate of return of 8% since the
Issue Date.
4. There have been no loans or loan repayments.
5. No amounts have been withdrawn.
6. 50% of the maximum available amount is taken pursuant to the
accelerated death benefit provision.
7. The 12-month interest rate discount used in the calculation of the
benefit assumes interest at 6% per year, compounded yearly.
The following are various policy values immediate before and after the
accelerated death benefit is paid:
<TABLE>
<CAPTION>
------------------------- -------------------------
Female Age 45 Male Age 65
(No Tobacco) (No Tobacco)
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
<S> <C> <C>
Account Value Before the Accelerated Death Benefit is $34,224 $33,708
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value Before the Accelerated Death Benefit is Paid $34,224 $33,708
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan Before the $30,802 $30,337
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Death Benefit Before the Accelerated Death Benefit is $85,371 $45,746
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit Before the $34,224 $33,708
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Amount Paid as the Accelerated Death Benefit $20,135 $10,789
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Account Value After the Accelerated Death Benefit is $25,668 $25,281
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Cash Value After the Accelerated Death Benefit is Paid $25,668 $25,281
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Maximum Amount Available For a Loan After the $23,101 $22,753
Accelerated Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Death Benefit After the Accelerated Death Benefit is $64,028 $34,310
Paid
-------------------------------------------------------- ------------------------- -------------------------
-------------------------------------------------------- ------------------------- -------------------------
Guaranteed Minimum Death Benefit After the Accelerated $25,668 $25,281
Death Benefit is Paid
-------------------------------------------------------- ------------------------- -------------------------
</TABLE>
<PAGE>
APPENDIX B
<TABLE>
<CAPTION>
NET SINGLE PREMIUM FACTORS FOR DETERMINATION OF REQUIRED DEATH BENEFITS
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
20 .145794 .179648 .128227 .145820 .142304 .172989
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 .150168 .184901 .132462 .150638 .146645 .178153
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 .154741 .190376 .136853 .155637 .151184 .183526
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 .159531 .196117 .141415 .160816 .155930 .189151
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 .164555 .202134 .146147 .166184 .160898 .195038
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 .169822 .208454 .151056 .171748 .166090 .201206
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 .175351 .215097 .156150 .177516 .171531 .207673
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 .181135 .222053 .161428 .183482 .177215 .214429
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 .187175 .229318 .166906 .189661 .183143 .221476
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 .193474 .236889 .172585 .196055 .189316 .228812
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 .200035 .244756 .178464 .202666 .195738 .236424
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 .206860 .252916 .184560 .209495 .202417 .244318
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 .213944 .261368 .190875 .216560 .209349 .252490
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 .221291 .270109 .197419 .223864 .216536 .260939
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 .228895 .279132 .204192 .231403 .223975 .269663
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 .236761 .288437 .211198 .239179 .231667 .278659
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 .244894 .298015 .218438 .247196 .239618 .287922
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 .253298 .307862 .225900 .255421 .247832 .297442
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 .261963 .317956 .233579 .263842 .256297 .307199
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 .270894 .328294 .241477 .272450 .265020 .317188
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 .280099 .338865 .249599 .281240 .274006 .327396
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 .289568 .349652 .257933 .290189 .283246 .337811
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 .299311 .360652 .266484 .299295 .292748 .348423
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 .309334 .371859 .275263 .308570 .302519 .359236
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 .319639 .383267 .284285 .318028 .312566 .370243
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 .330230 .394864 .293562 .327683 .322892 .381435
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 .341103 .406652 .303095 .337537 .333493 .392815
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 .352264 .418644 .312891 .347598 .344380 .404397
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 .363716 .430831 .322953 .357876 .355551 .416178
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 .375463 .443211 .333288 .368370 .367012 .428145
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 .387504 .455776 .343896 .379072 .378764 .440301
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 .399832 .468510 .354772 .389982 .390796 .452625
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 .412433 .481383 .365917 .401101 .403100 .465093
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
53 .425290 .494362 .377317 .412407 .415657 .477675
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 .438381 .507408 .388968 .423887 .428450 .490336
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 .451696 .520502 .400884 .435558 .441470 .503062
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 .465218 .533636 .413071 .447432 .454705 .515849
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 .478941 .546812 .425551 .459541 .468157 .528704
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 .492871 .560033 .438358 .471935 .481836 .541635
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 .506993 .573308 .451517 .484649 .495733 .554659
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 .521284 .586632 .465025 .497695 .509832 .567772
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 .535723 .599969 .478863 .511045 .524108 .580940
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 .550287 .613272 .492991 .524640 .538534 .594113
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 .564927 .626483 .507352 .538390 .553060 .607226
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 .579602 .639551 .521878 .552212 .567644 .620226
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 .594281 .652440 .536544 .566075 .582253 .633078
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 .608944 .665153 .551348 .579988 .596866 .645783
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 .623584 .677704 .566315 .593989 .611486 .658364
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 .638205 .690127 .581486 .608159 .626126 .670866
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 .652797 .702445 .596895 .622553 .640782 .683321
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 .667333 .714642 .612535 .637176 .655433 .695722
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 .681762 .726681 .628356 .651974 .670031 .708034
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 .696014 .738497 .644271 .666812 .684505 .720184
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 .709994 .750004 .660165 .681560 .698753 .732078
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 .723624 .761135 .675927 .696097 .712698 .743646
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 .736865 .771831 .691482 .710345 .726295 .754831
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 .749724 .782071 .706791 .724284 .739544 .765615
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 .762229 .791908 .721863 .737937 .752472 .776060
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 .774433 .801434 .736726 .751362 .765131 .786252
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 .786390 .810733 .751401 .764609 .777570 .796281
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 .798116 .819847 .765881 .777687 .789804 .806185
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 .809588 .828771 .780117 .790566 .801808 .815960
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 .820755 .837465 .794038 .803191 .813528 .825567
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 .831544 .845863 .807562 .815500 .824891 .834946
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 .841909 .853936 .820645 .827387 .835853 .844050
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 .851863 .861731 .833298 .838880 .846430 .852923
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 .861489 .869377 .845592 .850070 .856706 .861680
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 .870930 .877089 .857651 .861099 .866821 .870505
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 .880405 .885052 .869655 .872184 .876986 .879589
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 .890224 .893507 .881864 .883606 .887492 .889179
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 .900787 .902897 .894634 .895774 .898724 .899698
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 .912663 .913849 .908493 .909137 .911231 .911680
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 .926694 .927262 .924224 .924501 .925827 .925965
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 .944200 .944411 .943053 .943115 .943789 .943791
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
94 .967326 .967355 .967034 .967034 .967219 .967199
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
The Required Death Benefit is determined by treating the Account Value as if it
were a net single premium. We determine the Required Death Benefit by dividing
the Account Value by the net single premium factors that are determined for your
Policy as of the Policy Date. These factors vary by the attained Age, gender
(where permitted), tobacco usage class and risk class of each Insured. The
factors shown above are applicable for Insureds in the preferred risk class. The
factors for other risk classes are available upon request. Factors for joint
life cases depend upon a standard insurance industry method used to derive the
applicable factor for both Insureds.
- --------------------------------------------------------------------------------
<PAGE>
APPENDIX C
<TABLE>
<CAPTION>
GUARANTEED MONTHLY MAXIMUM COST OF INSURANCE CHARGES
(Per $1,000 of Net Amount at Risk)
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
20 0.1401 0.1935 0.0842 0.0976 0.1293 0.1743
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
21 0.1384 0.1935 0.0859 0.0992 0.1276 0.1752
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
22 0.1359 0.1902 0.0867 0.1017 0.1259 0.1727
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
23 0.1326 0.1869 0.0884 0.1042 0.1234 0.1702
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
24 0.1293 0.1818 0.0900 0.1067 0.1217 0.1668
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
25 0.1251 0.1760 0.0917 0.1092 0.1184 0.1626
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
26 0.1226 0.1727 0.0942 0.1134 0.1167 0.1610
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
27 0.1209 0.1710 0.0959 0.1167 0.1159 0.1601
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
28 0.1201 0.1710 0.0984 0.1209 0.1159 0.1610
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
29 0.1201 0.1735 0.1017 0.1259 0.1167 0.1643
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
30 0.1209 0.1777 0.1042 0.1318 0.1176 0.1685
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
31 0.1234 0.1835 0.1076 0.1368 0.1201 0.1743
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
32 0.1268 0.1910 0.1109 0.1426 0.1234 0.1818
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
33 0.1318 0.2011 0.1151 0.1501 0.1284 0.1910
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
34 0.1376 0.2127 0.1201 0.1585 0.1343 0.2019
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
35 0.1443 0.2269 0.1259 0.1677 0.1409 0.2153
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
36 0.1518 0.2437 0.1343 0.1818 0.1485 0.2311
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
37 0.1618 0.2646 0.1443 0.1986 0.1585 0.2512
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
38 0.1727 0.2880 0.1551 0.2178 0.1693 0.2737
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
39 0.1844 0.3147 0.1668 0.2386 0.1810 0.2997
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
40 0.1986 0.3457 0.1810 0.2637 0.1952 0.3289
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
41 0.2136 0.3791 0.1960 0.2905 0.2102 0.3616
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
42 0.2295 0.4160 0.2111 0.3172 0.2261 0.3959
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
43 0.2470 0.4561 0.2261 0.3440 0.2428 0.4335
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
44 0.2662 0.5005 0.2412 0.3708 0.2612 0.4746
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
45 0.2880 0.5475 0.2579 0.3992 0.2821 0.5181
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
46 0.3114 0.5961 0.2754 0.4285 0.3038 0.5626
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
47 0.3365 0.6490 0.2946 0.4587 0.3281 0.6104
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
48 0.3641 0.7061 0.3147 0.4913 0.3540 0.6632
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
49 0.3942 0.7682 0.3373 0.5274 0.3825 0.7195
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
50 0.4285 0.8372 0.3624 0.5659 0.4151 0.7825
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
51 0.4679 0.9154 0.3900 0.6070 0.4520 0.8532
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
52 0.5131 1.0039 0.4218 0.6540 0.4947 0.9331
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
53 0.5651 1.1042 0.4570 0.7061 0.5433 1.0232
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
54 0.6230 1.2139 0.4930 0.7590 0.5970 1.1211
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
55 0.6876 1.3314 0.5316 0.8136 0.6565 1.2249
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
56 0.7582 1.4558 0.5701 0.8675 0.7203 1.3339
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
57 0.8330 1.5871 0.6079 0.9180 0.7876 1.4481
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
58 0.9163 1.7254 0.6456 0.9676 0.8616 1.5668
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
59 1.0098 1.8742 0.6884 1.0207 0.9441 1.6940
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
60 1.1143 2.0402 0.7388 1.0839 1.0376 1.8368
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
61 1.2308 2.2279 0.8010 1.1632 1.1430 1.9993
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
62 1.3652 2.4400 0.8784 1.2654 1.2654 2.1852
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
63 1.5176 2.6774 0.9735 1.3897 1.4050 2.3946
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
64 1.6872 2.9378 1.0806 1.5286 1.5608 2.6242
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
65 1.8733 3.2146 1.1962 1.6754 1.7322 2.8673
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
66 2.0752 3.5051 1.3162 1.8249 1.9159 3.1205
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
67 2.2920 3.8070 1.4388 1.9695 2.1110 3.3796
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
68 2.5282 4.1248 1.5659 2.1161 2.3228 3.6490
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
69 2.7908 4.4708 1.7076 2.2758 2.5573 3.9410
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
70 3.0886 4.8542 1.8742 2.4648 2.8234 4.2653
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
<PAGE>
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
Male Male Female Female Unisex Unisex
Attained No Tobacco Use Tobacco User No Tobacco Use Tobacco User No Tobacco Use Tobacco User
Age
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
71 3.4298 5.2869 2.0777 2.7049 3.1309 4.6355
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
72 3.8253 5.7785 2.3279 2.9998 3.4904 5.0610
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
73 4.2749 6.3264 2.6285 3.3519 3.9010 5.5381
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
74 4.7716 6.9307 2.9757 3.7549 4.3571 6.0658
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
75 5.3054 7.5807 3.3649 4.1972 4.8498 6.6334
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
76 5.8727 8.2501 3.7879 4.6698 5.3744 7.2163
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
77 6.4695 8.9272 4.2435 5.1659 5.9269 7.8075
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
78 7.1000 9.6169 4.7391 5.6933 6.5124 8.4100
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
79 7.7848 10.3436 5.2913 6.2710 7.1504 9.0487
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
80 8.5472 11.1328 5.9234 6.9226 7.8639 9.7476
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
81 9.4095 12.0089 6.6558 7.6677 8.6746 10.5307
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
82 10.3922 12.9898 7.5074 8.5225 9.6030 11.4151
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
83 11.4945 14.0624 8.4777 9.5196 10.6478 12.4038
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
84 12.6988 15.1933 9.5594 10.6131 11.7941 13.4616
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
85 13.9806 16.3456 10.7444 11.7893 13.0226 14.5634
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
86 15.3265 17.4918 12.0280 13.0418 14.3218 15.6927
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
87 16.7180 18.6836 13.4123 14.3609 15.6828 16.8797
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
88 18.1509 19.9424 14.9028 15.7562 17.1061 18.1427
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
89 19.6476 21.2120 16.5166 17.2301 18.6128 19.4508
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
90 21.2331 22.5117 18.2733 18.8930 20.2310 20.8698
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
91 22.9495 23.8839 20.2227 20.7186 22.0046 22.4143
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
92 24.8700 25.5022 22.4528 22.7883 24.0145 24.2183
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
93 27.2013 27.6222 25.1486 25.2821 26.4618 26.4965
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
94 30.4289 30.5976 28.7360 28.7360 29.8106 29.6898
-------------- ---------------- ----------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
- --------------------------------------------------------------------------------
We base the guaranteed maximum cost of insurance charges on the sex distinct
1980 Commissioners Standard Ordinary Ultimate Mortality Table, age last birthday
unless unisex rates apply. If unisex charges apply, a unisex variation of that
table is used. The amounts shown are per $1,000 amount at risk. The guaranteed
maximum cost of insurance charge depends on the tobacco usage class and risk
class of each Insured(s). The charges shown above are applicable for Insureds in
the preferred risk class. The guaranteed maximum cost of insurance charges for
other risk classes are available upon request. Cost of insurance charges for
joint life cases are determined using a standard insurance industry method used
to derive the applicable charge based on the applicable cost of insurance charge
for both Insureds. Guaranteed maximum cost of insurance charges for specific
proposed joint Insureds are available upon request.
- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
at
P.O. Box 883
Shelton, Connecticut 06484
or
[email protected]
Issued by: Serviced at:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION ASSURANCE CORPORATION
One Corporate Drive P.O. Box 883
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 1-800-752-6342
http://www.americanskandia.com http://www.americanskandia.com
Distributed by:
AMERICAN SKANDIA MARKETING, INCORPORATED
One Corporate Drive
Shelton, Connecticut 06484
Telephone: 203-926-1888
http://www.americanskandia.com
PART II - OTHER INFORMATION
CONTENTS OF REGISTRATION STATEMENT
This registration statement comprises the following papers and
documents:
The facing sheet.
The prospectus consisting of 112 pages.
Representations and Undertakings.
The signatures.
Written consents of the following persons:
Counsel FILED HEREWITH
Ernst & Young LLP FILED HEREWITH
Corporate Actuary FILED HEREWITH
The following exhibits which correspond to those required by paragraph A
of the instructions for exhibits to Form N-8B-2:
1. A.
(1) Resolution of the Board of Directors of the
Company are incorporated by reference to
Registration Statement No. 333-38119 filed via
EDGAR October 17, 1997.
(2) Not applicable.
(3) Distributing contracts:
(a) Principal Underwriting Agreement
incorporated by reference to Registration
Statement No. 333-38119 filed via EDGAR
October 17, 1997.
(b) Form of Revised Dealer Agreement being
filed via EDGAR with Post-Effective Amendment
No. 7 to Registration Statement No. 33-87010.
(c) Not applicable.
(4) Not applicable.
(5) Form of Modified Single Premium Variable Life
Insurance Policy
(a) Single Life version incorporated by
reference to Pre-effective Amendment No. 1 to
Registration Statement No. 333-38119, filed
via EDGAR March 4, 1998.
(b) Last Survivor version incorporated by
reference to Pre-effective Amendment No. 1 to
Registration Statement No. 333-38119, filed
via EDGAR March 4, 1998.
(6) Articles of Incorporation and By-laws of
American Skandia Life Assurance Corporation,
incorporated by reference to Pre-Effective
Amendment No. 2 to Registration Statement No.
33-19363, filed July 27, 1988. Filed via EDGAR
with Post-Effective Amendment No. 6 to
Registration Statement No. 33-87010, filed
March 2, 1998.
(7) Not applicable.
(8) Not applicable.
(9) Other material contracts. Not applicable
(10) Form of Application for Modified Single
Premium Variable Life Insurance Policy. Filed
via EDGAR with Pre-Effective Amendment No. 2
to this Registration Statement No. 333-38119,
filed April 29, 1998.
(11) Memorandum describing transfer and redemption
procedures is incorporated by reference to
Initial Registration Statement No. 333-38119
filed October 17, 1997.
(12) Hypothetical Illustrations of Death Benefits,
Account values and Cash Values
FILED HEREWITH
2. Opinion and Consent of Counsel. FILED HEREWITH
3. No financial statements are to be omitted from the prospectus
pursuant to instruction 1(b) or 1(c) of the instructions as to the
prospectus.
4. Not applicable.
5. Financial Data Schedules. FILED HEREWITH
6. Not applicable.
7. Opinion and Consent of certifying actuary. FILED HEREWITH
8. Opinion and Consent of Ernst & Young LLP FILED HEREWITH
9. a) Powers of Attorney are incorporated by reference to
Registration Statement No. 333-38119 filed via EDGAR October 17,
1997.
b) Directors Kennedy and Winson filed via EDGAR with
Post-Effective Amendment No. 4 to Registration Statement No.
333-25733.
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities Exchange
Act of 1934, the undersigned registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents, and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority conferred
in that section.
RULE 484 UNDERTAKING ON INDEMNIFICATION
Article XIII of the By-laws of American Skandia Life Assurance Corporation, a
Connecticut corporation, (the "Corporation") provides for indemnification of its
officers, directors, and employees as follows:
SECTION 1. Proceedings Other Than by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigate
(other than an action by or in the right of the Corporation) by reason of the
fact that he, or the person whose representative he is, is or was a shareholder,
director, officer, employee or agent of the Corporation, or is or was serving
solely at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines,
penalties, and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if the person is
successful on the merits in the defense of the proceeding or as provided in
Section 3 hereof, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation, and
with respect to any criminal action or proceeding, the person had no reasonable
cause to believe his conduct was unlawful or if upon application to the court as
provided in Section 5 hereof, the court shall have determined that in view of
all the circumstances such person is fairly and reasonably entitled to be
indemnified, and then for such amount as the court shall determine; except that,
in connection with an alleged claim based upon his purchase or sale of
securities of the Corporation or of another enterprise, which he serves or
served at the request of the Corporation, the Corporation shall only indemnify
such person after the court shall have determined, on application as provided in
Section 5 hereof, that in view of all the circumstances such person is fairly
and reasonably entitled to be indemnified, and then for such amount as the court
shall determine. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendre or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Corporation or of the participants and
beneficiaries of such employee benefit plan or trust and consistent with the
provisions of such employee benefit plan or trust, or, with respect to any
criminal action or proceeding, that he had reasonable cause to believe that his
conduct was unlawful.
SECTION 2. Proceedings by or in the Right of the Corporation.
The Corporation shall indemnify any person who was or is a party or threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, by or in the right of the Corporation, to procure a judgment in its
favor by reason of the fact that he, or the person whose legal representative he
is, is or was a shareholder, director, officer, employee or agent of the
Corporation, or is or was serving solely at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or enterprise, against expenses (including attorney fees)
actually and reasonably incurred by him in connection with such proceeding in
relation to matters as to which such person, or the person whose legal
representative his is, is finally adjudged not to have breached his duty to the
Corporation, or where the court, on application as provided in Section 6 hereof,
shall have determined that in view or all the circumstances such person is
fairly and reasonably entitled to be indemnified, and then for such amount as
the court shall determine. The Corporation shall not so indemnify any such
person for amounts paid to the Corporation, to a plaintiff or to counsel for a
plaintiff in settling or otherwise disposing of a proceeding, with or without
court approval; or for expenses incurred in defending a proceeding which is
settled or otherwise disposed of without court approval.
SECTION 3. Determination of Right of Indemnification.
The conclusion provided for in Section 1 hereof may be reached by any of the
following: (1) The Board of Directors of the Corporation by a consent in writing
signed by a majority of those directors who were not parties to such proceeding;
(2) independent legal counsel selected by a consent in writing signed by a
majority of those directors who were not parties to such proceeding; (3) in the
case of any employee or agent who is not an officer or director of the
Corporation, the Corporation's general counsel; or (4) the shareholders of the
Corporation by the affirmative vote of at least a majority of the voting power
of shares not owned by parties to such proceeding, represented at an annual or
special meeting of shareholders, duly called with notice of such purpose stated.
Such person shall also be entitled to apply to a court for such conclusion, upon
application as provided in Section 5 hereof, even though the conclusion reached
by any of the foregoing shall have been adverse to him or to the person whose
legal representative he is.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
REPRESENTATION AND UNDERTAKING
The Registrant and the Company hereby make the following representations and
undertakings:
(a) This filing is made pursuant to Rules 6c-3 and 6e-3(T) under the Investment
Company Act of 1940 (the "Act"). The Registrant and the Company elect to be
governed by Rule 6e-3(T)(b)(13)(i)(A) under the Act with respect to the Policies
described in the prospectus. The Policies are designed in such a way as to
qualify for the exemptive relief from various provisions of the Act afforded by
Rule 6e-3(T).
(b) The Company is relying on Paragraph (b)(13)(iii)(F) of Rule 6e-3(T) for the
deduction of the mortality and expense risk charges ("risk charges")assumed by
the Company under the Policies. The Company represents that the risk charges are
reasonable in relation to all of the risks assumed by the issuer under the
Policies. (Paragraph (b)(13)(iii)(F)(2)(ii)). Actuarial memoranda demonstrating
the reasonableness of these charges are maintained by the Company, and will be
made available to the Securities and Exchange Commission (the "Commission") on
request. (Paragraph (b)(13)(iii)(F)(3).
(c) The Company has concluded that there is a reasonable likelihood that the
distribution financing arrangement of the separate account will benefit the
separate account and the contractholders and will keep and make available to the
Commission on request a memorandum setting forth the basis for this
representation. (Paragraph (b)(13)(iii)(F)(4)(ii)(A).
(d) The Company represents that the separate account will invest only in
management investment companies which have undertaken to have a board of
directors, a majority of whom are not interested persons of the company,
formulate and approve any plan under Rule 12b-1 to finance distribution
expenses. (Paragraph (b)(13)(iii)(F)(4)(ii)(B)(2).
(e) Pursuant to Rule 26(e) under the Act, the Company hereby represents that the
fees and charges deducted under the Policy described in the Prospectus, in the
aggregate, are reasonable in relation to the services rendered, the expenses
expected to be incurred, and the risks assumed by the Company.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, and its seal to be
hereunto affixed and attested, all in the City of Shelton, State of Connecticut,
on this the 27th day of April, 2000.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
SEPARATE ACCOUNT F
(Registrant)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Depositor)
By:/s/Lincoln R. Collins Attest: /s/Kathleen A. Chapman
Lincoln R. Collins, Kathleen A. Chapman,
Senior Vice President Assistant Corporate Secretary
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, 04/27/2000
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer)
/s/Thomas M. Mazzaferro Executive Vice President and 04/27/2000
Thomas M. Mazzaferro Chief Financial Officer
(Principal Accounting Officer)
/s/David R. Monroe Senior Vice President, Treasurer 04/27/2000
David R. Monroe and Corporate Controller
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
- ---------------- ------------------ --------------------
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
- ------------------ ----------------- ---------------
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro* Gunnar Moberg* Bayard F. Tracy*
- --------------------- -------------- ----------------
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom* C. Ake Svensson* Lincoln R. Collins*
- ------------------ ---------------- -------------------
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
T. Richard Kennedy** Brett M. Winson**
- -------------------- -----------------
T. Richard Kennedy Brett M. Winson
*/**By: /s/Kathleen A. Chapman
------------------------------
Kathleen A. Chapman
*Pursuant to Powers of Attorney filed with Initial
Registration Statement No. 333-38119.
**Pursuant to Power of Attorney filed with Post-Effective Amendment No. 4 to
Registration Statement No. 333-25733
EXHIBIT 12
HYPOTHETICAL ILLUSTRATIONS OF DEATH BENEFITS, ACCOUNT VALUES AND CASH VALUES
It is impossible to illustrate exactly how a Policy will perform in the future.
However, you can illustrate how the Policy works and may be able to better
compare a Policy with other life insurance plans, using hypothetical
illustrations based on the personal characteristics of the Insured(s) as well as
certain assumptions about the future. You can also do this by requesting from us
personalized hypothetical illustrations based on: (a) the Age(s) of the
Insured(s); (b) the tobacco usage class and expected risk class(es) of the
Insured(s); (c) the gender of the Insured(s), where permitted; (d) the Face
Amount you seek or the amount of Premium you intend to pay; and (e) applicable
cost of insurance charges.
The hypothetical illustrations that follow show the changes in the Death
Benefit, Account Value and Cash Value over time based on certain assumptions.
All values are provided as of the end of each Policy Year shown. The assumptions
used are as follows:
1. Hypothetical average annual gross rates of return in the Portfolios of
0%, 6% and 12%. Of course, actual investment performance is not a
constant rate. If the hypothetical gross rate of return were to
fluctuate above or below the 0%, 6% or 12% average over a period of
years, the Death Benefit, Account Value and Cash Value may be
different. For hypothetical rates of return of 0% and 6%, the
illustrations will indicate if a Policy would lapse. HYPOTHETICAL RATES
OF RETURN ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A
REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
2. Hypothetical constant expense ratios of 1.15% for the Portfolios. The
total annual expenses for the underlying mutual funds are shown in the
section entitled "Variable Investment Options." The 1.15% hypothetical
expense ratio is the average of the actual total annual expenses for
all available Portfolios as of December 31, 1999. Certain of the
Portfolios have not been in existence for a full year and, therefore,
the total annual expenses for those Portfolios are estimated and
annualized. The 1.15% hypothetical expense ratio, when deducted from
the hypothetical average annual gross rates of return equals a
hypothetical average annual net rate of return of -1.15%, 4.85% and
10.85%, respectively.
3. The mortality and expense risk charge assessed against the assets in
the Separate Account at an annualized rate of 0.90%. The charge for
administrative expenses connected with operating the Separate Account
is 0.25% per year. It is also assumed that there is no tax charge
assessed against the Separate Account.
4. The charges under the Policy, including the cost of insurance charges
that differ by gender, tobacco usage class and attained age. It is
assumed that there are no transfer fees applicable. The hypothetical
illustrations are presented based on both the current and guaranteed
cost of insurance charges.
5. There are no loans, loan repayments, withdrawals, accelerated death
benefit payments or amounts paid to maintain the Policy in effect
during a grace period. The hypothetical values will include Cash Value
Credits, if applicable.
6. The Age(s) and, where applicable, gender of the Insured(s) shown in
each illustration. The cost of insurance charges differ based on the
age(s) of the Insured(s) on the Policy Date and, where permitted by
law, the gender of the Insured(s).
7. The Insured(s) is/are eligible for the no tobacco use class. For each
gender and age classification, the cost of insurance rate for the "No
Tobacco Use" classification is .35% lower than the rate for the
"Tobacco Usage" classification.
8. The Insured(s) is/are considered to be in the preferred risk class. If
the Insured is/are placed in a substandard risk class, the values for
the Death Benefit will differ; however, the applicable Account Value
and Cash Value will not differ because the risk classification does not
impact charges under the Policy.
9. The Premium and Face Amount are as shown in each illustration.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $55,346 55 Male Single Life 0% No Usage
(-1.15% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $24,107 $21,607 $51,818 $24,006 $21,506 $51,601
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 23,244 20,869 48,533 23,040 20,665 48,106
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 22,412 20,162 45,472 22,103 19,853 44,845
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 21,608 19,608 42,620 21,194 19,194 41,803
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 20,832 19,082 39,963 20,312 18,562 38,965
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 20,083 18,583 37,487 19,456 17,956 36,317
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 19,359 18,109 35,181 18,626 17,376 33,847
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 18,661 17,661 33,033 17,820 16,820 31,543
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 17,987 17,237 31,033 17,037 16,287 29,394
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 17,336 17,336 29,171 16,277 16,277 27,389
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 16,817 16,817 27,616 15,641 15,641 25,686
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 16,312 16,312 26,159 15,014 15,014 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 15,822 15,822 25,000 14,364 14,364 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 15,346 15,346 25,000 13,680 13,680 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 14,883 14,883 25,000 12,955 12,955 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 14,433 14,433 25,000 12,178 12,178 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 13,996 13,996 25,000 11,337 11,337 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 13,571 13,571 25,000 10,413 10,413 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 13,158 13,158 25,000 9,386 9,386 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 12,757 12,757 25,000 8,234 8,234 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 10,915 10,915 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 9,319 9,319 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 7,935 7,935 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $55,346 55 Male Single Life 6% No Usage
(4.85% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $25,554 $23,054 $54,929 $25,447 $22,947 $54,698
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 26,121 23,746 54,539 25,891 23,516 54,059
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 26,701 24,451 54,175 26,333 24,083 53,428
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 27,295 25,295 53,837 26,772 24,772 52,805
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 27,902 26,152 53,526 27,206 25,456 52,190
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 28,524 27,024 53,245 27,635 26,135 51,584
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 29,161 27,911 52,992 28,057 26,807 50,986
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 29,812 28,812 52,771 28,470 27,470 50,395
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 30,478 29,728 52,585 28,871 28,121 49,813
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 31,160 31,160 52,434 29,261 29,261 49,237
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 32,067 32,067 52,659 29,831 29,831 48,988
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 33,000 33,000 52,920 30,394 30,394 48,741
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 33,962 33,962 53,215 30,951 30,951 48,497
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 34,952 34,952 53,543 31,501 31,501 48,255
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 35,973 35,973 53,905 32,042 32,042 48,015
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 37,024 37,024 54,306 32,573 32,573 47,778
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 38,106 38,106 54,749 33,090 33,090 47,542
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 39,221 39,221 55,242 33,589 33,589 47,309
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 40,370 40,370 55,789 34,067 34,067 47,079
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 41,553 41,553 56,392 34,523 34,523 46,851
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 48,025 48,025 60,172 36,510 36,510 45,745
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 55,947 55,947 65,676 38,080 38,080 44,702
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 65,531 65,531 72,748 39,393 39,393 43,731
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $55,346 55 Male Single Life 12% No Usage
(10.85% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $27,001 $24,501 $58,040 $26,888 $24,388 $57,796
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 29,165 26,790 60,895 28,908 26,533 60,359
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 31,505 29,255 63,921 31,071 28,821 63,040
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 34,035 32,035 67,131 33,383 31,383 65,845
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 36,771 35,021 70,539 35,854 34,104 68,779
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 39,729 38,229 74,160 38,491 36,991 71,849
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 42,928 41,678 78,010 41,304 40,054 75,059
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 46,387 45,387 82,111 44,300 43,300 78,418
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 50,127 49,377 86,485 47,487 46,737 81,930
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 54,306 54,306 91,382 50,873 50,873 85,604
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 59,222 59,222 97,253 54,962 54,962 90,258
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 64,585 64,585 103,570 59,346 59,346 95,168
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 70,437 70,437 110,367 64,044 64,044 100,351
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 76,829 76,829 117,692 69,079 69,079 105,820
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 83,827 83,827 125,615 74,468 74,468 111,591
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 91,463 91,463 134,157 80,259 80,259 117,724
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 99,795 99,795 143,380 86,444 86,444 124,198
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 108,885 108,885 153,361 93,031 93,031 131,030
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 118,804 118,804 164,179 100,034 100,034 138,240
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 129,626 129,626 175,915 107,470 107,470 145,848
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 200,445 200,445 251,148 152,202 152,202 190,702
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 309,957 309,957 363,858 212,544 212,544 249,505
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 479,299 479,299 532,089 294,340 294,340 326,758
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $62,362 55 Female Single Life 0% No Usage
(-1.15% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $24,143 $21,643 $58,448 $24,016 $21,516 $58,141
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 23,315 20,940 54,787 23,066 20,691 54,203
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 22,514 20,264 51,359 22,150 19,900 50,529
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 21,739 19,739 48,147 21,267 19,267 47,101
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 20,990 19,240 45,138 20,416 18,666 43,904
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 20,266 18,766 42,321 19,595 18,095 40,921
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 19,566 18,316 39,688 18,802 17,552 38,138
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 18,889 17,889 37,230 18,032 17,032 35,542
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 18,234 17,484 34,940 17,285 16,535 33,121
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 17,601 17,601 32,805 16,559 16,559 30,862
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 17,100 17,100 31,016 15,958 15,958 28,944
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 16,613 16,613 29,335 15,371 15,371 27,142
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 16,139 16,139 27,754 14,800 14,800 25,452
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 15,677 15,677 26,264 14,238 14,238 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 15,228 15,228 25,000 13,661 13,661 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 14,790 14,790 25,000 13,063 13,063 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 14,365 14,365 25,000 12,435 12,435 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 13,950 13,950 25,000 11,768 11,768 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 13,547 13,547 25,000 11,049 11,049 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 13,155 13,155 25,000 10,265 10,265 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 11,346 11,346 25,000 4,761 4,761 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 9,766 9,766 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 8,386 8,386 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $62,362 55 Female Single Life 6% No Usage
(4.85% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $25,593 $23,093 $61,957 $25,458 $22,958 $61,631
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 26,200 23,825 61,567 25,921 23,546 60,911
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 26,822 24,572 61,188 26,389 24,139 60,199
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 27,460 25,460 60,818 26,864 24,864 59,498
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 28,114 26,364 60,457 27,346 25,596 58,805
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 28,784 27,284 60,110 27,833 26,333 58,122
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 29,471 28,221 59,781 28,322 27,072 57,448
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 30,175 29,175 59,476 28,809 27,809 56,783
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 30,897 30,147 59,203 29,291 28,541 56,127
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 31,636 31,636 58,963 29,767 29,767 55,479
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 32,606 32,606 59,139 30,434 30,434 55,199
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 33,606 33,606 59,342 31,103 31,103 54,921
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 34,638 34,638 59,569 31,776 31,776 54,646
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 35,703 35,703 59,815 32,455 32,455 54,373
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 36,801 36,801 60,081 33,140 33,140 54,103
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 37,934 37,934 60,371 33,828 33,828 53,836
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 39,103 39,103 60,694 34,514 34,514 53,571
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 40,309 40,309 61,059 35,192 35,192 53,308
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 41,553 41,553 61,476 35,857 35,857 53,048
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 42,836 42,836 61,949 36,504 36,504 52,791
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 49,888 49,888 65,138 39,474 39,474 51,541
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 58,711 58,711 70,456 41,962 41,962 50,356
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 69,297 69,297 77,458 44,060 44,060 49,249
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $62,362 55 Female Single Life 12% No Usage
(10.85% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $27,042 $24,542 $65,466 $26,900 $24,400 $65,122
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 29,253 26,878 68,742 28,941 26,566 68,009
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 31,648 29,398 72,197 31,137 28,887 71,030
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 34,241 32,241 75,836 33,498 31,498 74,191
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 37,050 35,300 79,673 36,038 34,288 77,497
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 40,091 38,591 83,722 38,766 37,266 80,955
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 43,385 42,135 88,003 41,694 40,444 84,573
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 46,951 45,951 92,542 44,828 43,828 88,357
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 50,814 50,064 97,367 48,177 47,427 92,314
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 55,134 55,134 102,758 51,752 51,752 96,454
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 60,216 60,216 109,216 56,070 56,070 101,697
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 65,769 65,769 116,135 60,726 60,726 107,230
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 71,836 71,836 123,540 65,747 65,747 113,068
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 78,482 78,482 131,484 71,167 71,167 119,229
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 85,760 85,760 140,009 77,024 77,024 125,746
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 93,714 93,714 149,141 83,356 83,356 132,657
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 102,404 102,404 158,946 90,165 90,165 139,948
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 111,901 111,901 169,504 97,467 97,467 147,641
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 122,278 122,278 180,904 105,280 105,280 155,757
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 133,618 133,618 193,234 113,625 113,625 164,321
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 208,181 208,181 271,819 164,494 164,494 214,778
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 324,354 324,354 389,241 234,038 234,038 280,857
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 505,354 505,354 564,873 328,845 328,845 367,575
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $75,420 55 Female Joint Life 0% No Usage
55 Male (-1.15% net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $24,238 $21,738 $70,316 $24,238 $21,738 $70,316
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 23,493 21,118 65,554 23,493 21,118 65,554
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 22,764 20,514 61,113 22,764 20,514 61,113
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 22,052 20,052 56,969 22,052 20,052 56,969
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 21,355 19,605 53,105 21,355 19,605 53,105
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 20,672 19,172 49,500 20,672 19,172 49,500
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 20,003 18,753 46,138 20,003 18,753 46,138
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 19,348 18,348 43,002 19,348 18,348 43,002
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 18,706 17,956 40,082 18,704 17,954 40,077
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 18,085 18,085 37,377 18,071 18,071 37,349
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 17,597 17,597 35,101 17,563 17,563 35,032
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 17,122 17,122 32,982 17,058 17,058 32,858
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 16,660 16,660 31,009 16,556 16,556 30,817
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 16,208 16,208 29,171 16,058 16,058 28,901
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 15,768 15,768 27,460 15,563 15,563 27,102
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 15,340 15,340 25,867 15,071 15,071 25,414
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 14,922 14,922 25,000 14,577 14,577 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 14,515 14,515 25,000 14,062 14,062 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 14,118 14,118 25,000 13,517 13,517 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 13,731 13,731 25,000 12,932 12,932 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 11,938 11,938 25,000 8,893 8,893 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 10,361 10,361 25,000 16 16 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 8,974 8,974 25,000 0 0 25,000
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $75,420 55 Female Joint Life 6% No Usage
55 Male (4.85 % net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $25,693 $23,193 $74,538 $25,693 $23,193 $74,538
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 26,400 24,025 73,667 26,400 24,025 73,667
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 27,121 24,871 72,808 27,121 24,871 72,808
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 27,855 25,855 71,962 27,855 25,855 71,962
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 28,602 26,852 71,128 28,602 26,852 71,128
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 29,361 27,861 70,305 29,361 27,861 70,305
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 30,130 28,880 69,494 30,130 28,880 69,494
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 30,907 29,907 68,694 30,907 29,907 68,694
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 31,695 30,945 67,912 31,691 30,941 67,904
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 32,503 32,503 67,176 32,478 32,478 67,126
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 33,551 33,551 66,922 33,485 33,485 66,791
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 34,633 34,633 66,711 34,503 34,503 66,460
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 35,751 35,751 66,544 35,530 35,530 66,133
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 36,907 36,907 66,423 36,565 36,565 65,808
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 38,100 38,100 66,349 37,605 37,605 65,487
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 39,333 39,333 66,328 38,647 38,647 65,169
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 40,608 40,608 66,363 39,684 39,684 64,854
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 41,924 41,924 66,464 40,712 40,712 64,542
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 43,284 43,284 66,637 41,723 41,723 64,233
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 44,689 44,689 66,889 42,711 42,711 63,927
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 52,578 52,578 69,567 47,192 47,192 62,440
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 62,510 62,510 75,214 50,851 50,851 61,186
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 74,349 74,349 83,095 54,247 54,247 60,629
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Modified Single Premium Variable Life Insurance
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Illustration Assumptions:
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Initial Premium Initial Face Amount Issue Age(s) Male/Female Single Life/ Hypothetical Rate Tobacco Usage
Joint Life of Return Classification
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
$25,000 $75,420 55 Female Joint Life 12% No Usage
55 Male (10.85 % net)
- ------------------- -------------------- ------------------ ------------------- ----------------- ------------------- --------------
- ------------------- ----------------------------------------------------------- ----------------------------------------------------
End of Policy Year Current Charges Guaranteed Charges
----------------------------------------------------------- ----------------------------------------------------
------------------- ------------------ -------------------- ----------------- ------------------ ---------------
Account Value Cash Value Death Benefit Account Value Cash Value Death Benefit
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
1 $27,148 $24,648 $78,759 $27,148 $24,648 $78,759
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
2 29,477 27,102 82,252 29,477 27,102 82,252
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
3 32,000 29,750 85,908 32,000 29,750 85,908
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
4 34,734 32,734 89,732 34,734 32,734 89,732
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
5 37,692 35,942 93,734 37,692 35,942 93,734
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
6 40,893 39,393 97,920 40,893 39,393 97,920
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
7 44,353 43,103 102,300 44,353 43,103 102,300
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
8 48,089 47,089 106,881 48,089 47,089 106,881
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
9 52,124 51,374 111,687 52,118 51,368 111,674
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
10 56,642 56,642 117,066 56,600 56,600 116,978
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
11 61,957 61,957 123,582 61,836 61,836 123,341
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
12 67,773 67,773 130,545 67,518 67,518 130,056
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
13 74,138 74,138 137,993 73,680 73,680 137,141
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
14 81,130 81,130 146,014 80,377 80,377 144,660
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
15 88,787 88,787 154,617 87,632 87,632 152,606
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
16 97,167 97,167 163,851 95,470 95,470 160,990
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
17 106,337 106,337 173,782 103,922 103,922 169,834
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
18 116,374 116,374 184,491 113,014 113,014 179,165
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
19 127,357 127,357 196,069 122,771 122,771 189,009
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
20 139,378 139,378 208,614 133,218 133,218 199,395
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
25 218,795 218,795 289,493 196,940 196,940 260,576
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
30 343,464 343,464 413,270 283,141 283,141 340,687
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
35 539,170 539,170 602,598 398,915 398,915 445,843
- ------------------- ------------------- ------------------ -------------------- ----------------- ------------------ ---------------
</TABLE>
THE HYPOTHETICAL INVESTMENT RESULTS SHOWN ABOVE AND ELSEWHERE IN THIS PROSPECTUS
ARE FOR ILLUSTRATIVE PURPOSES ONLY AND ARE NOT A REPRESENTATION OF PAST OR
FUTURE INVESTMENT RESULTS. ACTUAL INVESTMENT RESULTS WILL DEPEND ON INVESTMENT
ALLOCATIONS MADE BY THE POLICY OWNER AND MAY BE MORE OR LESS THAN THOSE SHOWN.
THE DEATH BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD BE DIFFERENT
FROM THOSE SHOWN IF ACTUAL INVESTMENT RETURN APPLICABLE TO THE POLICY FLUCTUATED
ABOVE OR BELOW THE AVERAGE AMOUNT DURING A PERIOD OF POLICY YEARS. THE DEATH
BENEFIT, ACCOUNT VALUE AND CASH VALUE FOR A POLICY WOULD ALSO VARY DEPENDING ON
THE INVESTMENT ALLOCATIONS MADE TO THE SUB-ACCOUNTS AND THE RATES OF RETURN OF
THE SUB-ACCOUNTS. NO REPRESENTATION CAN BE MADE THAT THIS HYPOTHETICAL RATE OF
RETURN CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
American Skandia Life
Assurance Corporation
One Corporate Drive
P.O. Box 883
Shelton, CT 06484-0883
Telephone (203) 926-1888
Fax (203) 925-6932
April 25, 2000
American Skandia Life Assurance Corporation
One Corporate Drive
Shelton, Connecticut 06484
RE: Post-Effective Amendment No. 2 to Registration Statement on
Form S-6 filed by American Skandia Life Assurance Corporation,
Depositor, and American Skandia Life Assurance Corporation
Separate Account F, Trust
Securities Act Registration No. 333-38119
Related Investment Company Act Filing on Form N-8B-2: 811-08447
Dear Sir/Madam:
I have acted as General Counsel to American Skandia Life Assurance Corporation
(the "Company"), a Connecticut insurance company, and American Skandia Life
Assurance Corporation Separate Account F (the "Account") in connection with the
registration with the Securities and Exchange Commission under the Securities
Act of 1933, as amended, of a certain modified single premium variable life
insurance policy that will be issued by American Skandia (the "Policies").
I have examined or caused to be examined such documents (including the Form S-6
registration statement) and reviewed or caused to be reviewed such questions of
law as I considered necessary and appropriate, and on the basis of such
examination and review, it is my opinion that:
1. The Company is a corporation duly organized and validly existing as a stock
life insurance company under the laws of the State of Connecticut and is
duly authorized by the Insurance Department of the State of Connecticut to
issue the Policies.
2. The Policies, when issued as contemplated by the Form S-6 Registration
Statement, will constitute legal, validly issued and binding obligations of
the Company.
I hereby consent to the filing of this opinion as an exhibit to the Form S-6
registration statement for the Policies and the Account.
Sincerely yours,
/s/ T. Richard Kennedy
T. Richard Kennedy
General Counsel
Trophy
SPVLI
INDEPENDENT AUDITORS' CONSENT
We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated February 11, 2000 relating to American Skandia Life
Assurance Corporation included in the Registration Statement (Form S-6 No.
333-38119) and related Prospectus, which is part of this Registration Statement,
and to the use of our report dated February 11, 2000 relating to American
Skandia Life Assurance Corporation Separate Account F, which is also part of
this Registration Statement.
/s/Ernst & Young LLP
Hartford, Connecticut
April 26, 2000
April 26, 2000
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir:
This opinion is furnished in connection with the Form S-6 Registration Statement
under the Securities Act of 1933, as amended ("1933 Act"), of a certain modified
single premium variable life insurance policy (the "Policy") that will be
offered and sold by American Skandia Life Assurance Corporation and certain
units of interest to be issued in connection with the Policy.
The hypothetical illustrations of the Policy used in the Form S-6 Registration
Statement accurately reflect reasonable estimates of projected performance of
the Policy under the stipulated rates of investment return, the contractual
expense deductions and guaranteed cost-of-insurance rates, and utilizing a
reasonable estimation for expected fund operating expenses.
I hereby consent to the use of this opinion as an exhibit to the Form S-6
Registration Statement and to the reference to my name under the heading
"Experts" in the Prospectus included as a part of such Form S-6 Registration
Statement.
Very truly yours,
/s/ William H. Strong
William H. Strong, FSA, MAAA
Vice President
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 198,165
<DEBT-CARRYING-VALUE> 201,525
<DEBT-MARKET-VALUE> 201,509
<EQUITIES> 16,404
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 219,388
<CASH> 89,212
<RECOVER-REINSURE> 4,062
<DEFERRED-ACQUISITION> 1,087,705
<TOTAL-ASSETS> 30,849,414 <F1>
<POLICY-LOSSES> 41,127
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 189,000
0
0
<COMMON> 2,500
<OTHER-SE> 356,934
<TOTAL-LIABILITY-AND-EQUITY> 30,849,414 <F2>
1,278
<INVESTMENT-INCOME> 10,441
<INVESTMENT-GAINS> 578
<OTHER-INCOME> 375,064 <F3>
<BENEFITS> 4,996
<UNDERWRITING-AMORTIZATION> 83,861
<UNDERWRITING-OTHER> 191,991
<INCOME-PRETAX> 106,513
<INCOME-TAX> 30,344
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,169
<EPS-BASIC> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Included in Total Assets are Assets Held in Separate Accounts of
$29,381,166.
<F2> Included in Total Liabilities and Equity are Liabilities Related to
Separate Accounts of $29,381,166.
<F3> Other income includes annuity charges and fees of $289,989 and fee income
of $83,243.
</FN>
</TABLE>
