AMERICAN SKANDIA TRUST, 497, 1996-10-15

AMERICAN SKANDIA TRUST
497, 1996-10-15

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AMERICAN SKANDIA TRUST
SUPPLEMENT TO THE MAY 1, 1996 PROSPECTUS
(Effective Date of Supplement: October 15, 1996)

AST PHOENIX BALANCED ASSET PORTFOLIO
SELIGMAN HENDERSON INTERNATIONAL EQUITY PORTFOLIO
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP PORTFOLIO

At a Special Meeting of the Shareholders of the AST Phoenix Balanced
Asset Portfolio (the "Balanced Portfolio"), the Seligman Henderson International
Equity Portfolio (the "International Equity Portfolio") and the Seligman
Henderson International Small Cap Portfolio (the "Small Cap Portfolio") of the
American Skandia Trust ("AST" or the "Trust"), each held on October 11, 1996,
the shareholders of the respective AST Portfolios voted to approve: (i) the
appointment of Putnam Investment Management, Inc. ("Putnam Management") to
replace Phoenix Investment Counsel, Inc. ("Phoenix") as Sub-advisor to the
Balanced Portfolio; (ii) the appointment of Putnam Management to replace
Seligman Henderson Co. ("Seligman Henderson") as Sub-advisor to the
International Equity Portfolio; and (iii) the appointment of Founders Asset
Management, Inc. to replace Seligman Henderson as Sub-advisor to the Small Cap
Portfolio. In connection with these appointments, the shareholders of the
respective AST Portfolios voted to approve a new Investment Management
Agreement, a new Sub-Advisory Agreement, a new investment objective and certain
changes to applicable fundamental investment restrictions, with respect to each
Portfolio.

Presented below are details of the changes to the disclosure contained
in the May 1, 1996 AST Prospectus for each Portfolio as a result of the
shareholders' vote which should be read in conjunction with the complete
Prospectus. A Supplement to the May 1, 1996 AST Statement of Additional
Information ("SAI"), addressing the details of additional changes to the
disclosure contained in the SAI as a result of the shareholders' vote, is
available without charge upon request to the Trust by writing to "American
Skandia Trust, One Corporate Drive, Shelton, CT 06484" or by calling (203)
926-1888.

I. CHANGES TO "COVER PAGE":

The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio on the cover page of
the Prospectus is replaced with the following disclosure, respectively:

AST Putnam Balanced Portfolio (formerly, the AST Phoenix Balanced Asset
Portfolio) seeks a balanced investment composed of a well-diversified
portfolio of stocks and bonds which will produce both capital growth
and current income.

AST Putnam International Equity Portfolio (formerly, the Seligman
Henderson International Equity Portfolio) seeks capital appreciation.

Founders Passport Portfolio (formerly, the Seligman Henderson
International Small Cap Portfolio) seeks capital appreciation.

II. CHANGES TO "FINANCIAL HIGHLIGHTS":

The following footnotes regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio are inserted under
the caption, "Financial Highlights," on pages 8, 5 and 11, respectively:

AST Phoenix Balanced Asset Portfolio*: (*) Since October 15, 1996,
Putnam Investment Management, Inc. has served as Sub-advisor to the
Portfolio, now named the "AST Putnam Balanced Portfolio." The
information presented in these financial highlights is historical and
is not intended to indicate future performance of the Portfolio as
sub-advised by Putnam Investment Management, Inc.

Seligman Henderson International Equity Portfolio*: (*) Since October
15, 1996, Putnam Investment Management, Inc. has served as Sub-advisor
to the Portfolio, now named the "AST Putnam International Equity
Portfolio." The information presented in these financial highlights is
historical and is not intended to indicate future performance of the
Portfolio as sub-advised by Putnam Investment Management, Inc.

Seligman Henderson International Small Cap Portfolio*: (*) Since
October 15, 1996, Founders Asset Management, Inc. has served as
Sub-advisor to the Portfolio, now named the "Founders Passport
Portfolio." The information presented in these financial highlights is
historical and is not intended to indicate future performance of the
Portfolio as sub-advised by Putnam Investment Management, Inc.

III. CHANGES TO "INVESTMENT OBJECTIVES AND POLICIES":

A. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio in the second
paragraph under the caption, "Investment Objectives and Policies," on page 12,
is replaced with the following disclosure, respectively:

(a) AST Putnam International Equity Portfolio: Putnam Investment
Management, Inc. (formerly, the Seligman Henderson International Equity
Portfolio when the Sub-advisor was Seligman Henderson Co.);

(b) Founders Passport Portfolio: Founders Asset Management, Inc. (formerly,
the Seligman Henderson International Small Cap Portfolio when the Sub-advisor
was Seligman Henderson Co.);

(h) AST Putnam Balanced Portfolio: Putnam Investment Management, Inc.
(formerly, the AST Phoenix Balanced Asset Portfolio when the Sub-advisor was
Phoenix Investment Counsel, Inc.);

B. The current disclosure regarding the Balanced Portfolio under the
caption, "Investment Objectives and Policies," beginning on page 29, is replaced
with the following disclosure:

AST Putnam Balanced Portfolio:

Investment Objective: The investment objective of the AST Putnam Balanced
Portfolio is to provide a balanced investment composed of a well-diversified
portfolio of stocks and bonds which will produce both capital growth and current
income.
This is a fundamental objective of the Portfolio.

Investment Policies:

In seeking its objective the Portfolio may invest in almost any type of
security or negotiable instrument, including cash or money market instruments.
The Portfolio's portfolio will include some securities selected primarily to
provide for capital protection, others selected for dependable income and still
others for growth in value. The portion of the Portfolio's assets invested in
equity securities and fixed income securities will vary from time to time in
light of the Portfolio's investment objective, changes in interest rates and
economic and other factors. However under normal market conditions, it is
expected that at least 25% of the Portfolio's total assets will be invested in
fixed income securities, which for this purpose includes debt securities,
preferred stocks and that portion of the value of convertible securities
attributable to the to the fixed income characteristics of those securities.

Defensive Strategies. At times, the Sub-advisor may judge that
conditions in the securities markets make pursuing the Portfolio's basic
investment strategy inconsistent with the best interests of its shareholders. At
such times, the Sub-advisor may temporarily use alternative strategies primarily
designed to reduce fluctuations in the value of the Portfolio's assets. In
implementing these defensive strategies, the Portfolio may concentrate its
investments in debt securities, preferred stocks, cash or money market
instruments or invest in any other securities the Sub-advisor considers
consistent with such defensive strategies. It is impossible to predict when, or
for how long, the Portfolio will use these alternative strategies.

Foreign Securities. The Portfolio may invest up to 20% of its assets in
securities denominated in foreign currencies. The Portfolio may also purchase
Eurodollar certificates of deposit without regard to the 20% limit. The
Portfolio may invest in securities principally traded in, or issued by issuers
located in, underdeveloped and developing nations, which are sometimes referred
to as "emerging markets." For a discussion of the special risks involved in
investing in developing countries and certain risks involved in foreign
investing, in general, see this Prospectus and the Trust's Statement of
Additional Information under "Certain Risk Factors and Investment Methods."

Risks of Currency Fluctuations. The value of Portfolio investments
denominated in foreign currencies may be affected, favorably or unfavorably, by
the relative strength of the U.S. dollar, changes in foreign currency and U.S.
dollar exchange rates and exchange control regulations. The Portfolio's net
asset value per share will be affected by changes in currency exchange rates.
Changes in foreign currency exchange rates may also affect the value of
dividends and interest earned, gains and losses realized on the sale of
securities and net investment income and gains, if any, to be distributed to
shareholders by the Portfolio. The rate of exchange between the U.S. dollar and
other currencies is determined by the forces of supply and demand in the foreign
exchange markets and in some cases, exchange controls. For an additional
discussion of the risks of currency fluctuations, see this Prospectus and the
Trust's Statement of Additional Information under "Certain Risk Factors and
Investment Methods."

Foreign Currency Transactions. The Portfolio may buy or sell foreign
currencies and foreign currency forward contracts for hedging purposes in
connection with its foreign investments. For a discussion of foreign currency
transactions and certain risks involved therein, see this Prospectus and the
Trust's Statement of Additional Information under "Certain Risk Factors and
Investment Methods."

Fixed-Income Securities. The Portfolio may invest in both higher-rated
and lower-rated fixed-income securities. The values of fixed-income securities
fluctuate in response to changes in interest rates. Thus, a decrease in interest
rates will generally result in an increase in the value of the Portfolio's
fixed-income securities. Conversely, during periods of rising interest rates,
the value of the Portfolio's fixed-income securities will generally decline. In
addition, the values of such securities are affected by changes in general
economic conditions and business conditions affecting the specific industries of
their issuers. Changes by recognized rating services in their ratings of any
fixed-income security and in the ability of an issuer to make payments of
interest and principal may also affect the value of these investments. Changes
in the value of portfolio securities generally will not affect income derived
from such securities, but will affect the Portfolio's net asset value. The
values of lower-rated securities generally fluctuate more than those of
higher-rated securities.

The Portfolio will not invest in securities rated at the time of
purchase lower than B by Moody's Investors Service, Inc. ("Moody's") and
Standard & Poor's ("S&P"), or in unrated securities which the Sub-advisor
determines are of comparable quality. Securities rated B are predominantly
speculative and have large uncertainties or major risk exposures to adverse
conditions. Securities rated lower than Baa by Moody's or BBB by S&P and unrated
securities of comparable quality are sometimes referred to as "junk bonds." The
rating services' descriptions of securities in the various rating categories,
including the speculative characteristics of securities in the lower rating
categories, are set forth in the Appendix to the Trust's Statement of Additional
Information. The Portfolio will not necessarily dispose of a security when its
rating is reduced below its rating at the time of purchase, although the
Sub-advisor will monitor the investment to determine whether continued
investment in the security will assist in meeting the Portfolio's investment
objective.

The Sub-advisor seeks to minimize the risks of investing in lower-rated
securities through careful investment analysis. When the Portfolio invests in
securities in the lower rating categories, the achievement of the Portfolio's
goals is more dependent on the Sub-advisor's ability than would be the case if
the Portfolio were investing in securities in the higher rating categories. For
an additional discussion of lower-rated securities and certain risks involved
therein, see this Prospectus and the Trust's Statement of Additional Information
under "Certain Risk Factors and Investment Methods."

At times, a substantial portion of portfolio assets may be invested in
securities as to which the Portfolio, by itself or together with other funds and
accounts managed by the Sub-advisor and its affiliates, holds all or a major
portion. Under adverse market or economic conditions or in the event of adverse
changes in the financial condition of the issuer, the Portfolio could find it
more difficult to sell these securities when the Sub-advisor believes it
advisable to do so or may be able to sell the securities only at prices lower
than if they were more widely held. Under these circumstances, it may also be
more difficult to determine the fair value of such securities for purposes of
computing the Portfolio's net asset value. In order to enforce its rights in the
event of a default of these securities, the Portfolio may be required to
participate in various legal proceedings or take possession of and manage assets
securing the issuer's obligations on the securities. This could increase the
Portfolio's operating expenses and adversely affect the Portfolio's net asset
value.

Certain securities held by the Portfolio may permit the issuer at its
option to "call," or redeem, its securities. If an issuer were to redeem
securities held by the Portfolio during a time of declining interest rates, the
Portfolio may not be able to reinvest the proceeds in securities providing the
same investment return as the securities redeemed.

Zero Coupon Bonds. The Portfolio may invest in so-called zero coupon
bonds whose values are subject to greater fluctuation in response to changes in
market interest rates than bonds that pay interest currently. Zero coupon bonds
are issued at a significant discount from face value and pay interest only at
maturity rather than at intervals during the life of the security. Zero coupon
bonds allow an issuer to avoid the need to generate cash to meet current
interest payments. Accordingly, such bonds may involve greater credit risks than
bonds paying interest currently. The Portfolio is required to accrue and
distribute income from zero coupon bonds on a current basis, even though it does
not receive that income currently in cash. Thus the Portfolio may have to sell
other investments to obtain cash needed to make income distributions. For an
additional discussion of zero coupon bonds and certain risks involved therein,
see the Trust's Statement of Additional Information under "Certain Risk Factors
and Investment Methods."

Financial Futures, Index Futures and Options. The Portfolio may buy and
sell financial futures contracts on stock indexes, U.S. government securities,
fixed income securities and currencies.

A futures contract is a contract to buy or sell units of a particular
stock index, or a certain amount of a U.S. government security, foreign fixed
income security or foreign currency, at an agreed price on a specified future
date. Depending on the change in value of the index, security or currency
between the time a fund enters into and terminates a futures contract, that fund
realizes a gain or loss. The Portfolio may purchase and sell futures contracts
for hedging purposes and for non-hedging purposes, such as to adjust its
exposure to the relevant stock or bond markets. For example, when the
Sub-advisor wants to increase the Portfolio's exposure to equity securities, it
may do so by taking long positions in futures contracts on equity indices such
as futures contracts on the Standard & Poor's 500 Composite Stock Price Index.
Similarly, when the Sub-advisor wants to increase the Portfolio's exposure to
fixed income securities, it may do so by taking long positions in futures
contracts relating to fixed income securities such as futures contracts on U.S.
Treasury securities.

The Portfolio may buy and sell call and put options on futures
contracts or on stock indices in addition to or as an alternative to purchasing
or selling futures contracts or, to earn additional income.

Risks of Options and Futures Transactions. The effective use of options
and futures strategies depends on the Portfolio's ability to terminate options
and futures positions at times when the Sub-advisor deems it desirable to do so.
Although the Portfolio will enter into an option or futures contract position
only if the Sub-advisor believes that a liquid secondary market exists for such
option or futures contract, there is no assurance that the Portfolio will be
able to effect closing transactions at any particular time or at an acceptable
price. Options on certain U.S. government securities are traded in significant
volume on securities exchanges. However, other options which the Portfolio may
purchase or sell are traded in the "over-the-counter" market rather than on an
exchange. This means that the Portfolio will enter into such option contracts
with particular securities dealers who make markets in these options. The
Portfolio's ability to terminate options positions in the over-the-counter
market may be more limited than for exchange-traded options and may also involve
the risk that securities dealers participating in such transactions might fail
to meet their obligations to the Portfolio.

Options. The Portfolio may seek to increase its current return by
writing covered call and put options on securities it owns or in which it may
invest. The Portfolio receives a premium from writing a call or put option,
which increases the return if the option expires unexercised or is closed out at
a net profit.

When the Portfolio writes a call option, it gives up the opportunity to
profit from any increase in the price of a security above the exercise price of
the option; when it writes a put option, the Portfolio takes the risk that it
will be required to purchase a security from the option holder at a price above
the current market price of the security. The Portfolio may terminate an option
that it has written prior to its expiration by entering into a closing purchase
transaction in which it purchases an option having the same terms as the option
written.

The Portfolio may also buy and sell put and call options for hedging
purposes. From time to time, the Portfolio may also buy and sell combinations of
put and call options on the same underlying security to earn additional income.
The aggregate value of the securities underlying the options may not exceed 25%
of portfolio assets. The use of these strategies may be limited by applicable
law.

Risks of Options Transactions. The use of options transactions involves
certain special risks. For an additional discussion of option transactions and
certain risks involved therein, see this Prospectus and the Trust's Statement of
Additional Information under "Certain Risk Factors and Investment Methods."

Lending Portfolio Securities. The Portfolio may lend its securities to
broker-dealers. Such transactions must be fully collateralized at all times.
These transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction. For a discussion of
securities lending and certain risks involved therein, see this Prospectus under
"Certain Risk Factors and Investment Methods" and the Trust's Statement of
Additional Information under "Investment Objectives and Policies."

Repurchase Agreements. Subject to guidelines promulgated by the Board
of Trustees of the Trust, the Portfolio may enter into repurchase agreements.
Such transactions must be fully collateralized at all times. These transactions
involve some risk to the Portfolio if the other party should default on its
obligation and the Portfolio is delayed or prevented from recovering the
collateral or completing the transaction. For a discussion of repurchase
agreements and certain risks involved therein, see this Prospectus under
"Certain Risk Factors and Investment Methods" and the Trust's Statement of
Additional Information under "Investment Objectives and Policies."

Forward Commitments. The Portfolio may purchase securities for future
delivery, which may increase its overall investment exposure and involves a risk
of loss if the value of the securities declines prior to the settlement date.
These transactions involve some risk to the Portfolio if the other party should
default on its obligation and the Portfolio is delayed or prevented from
recovering the collateral or completing the transaction. For a discussion of
forward commitments and certain risks involved therein, see the Trust's
Statement of Additional Information under "Investment Objectives and Policies."

Borrowing. For a discussion of the limitations on borrowing by the
Portfolio and certain risks involved in borrowing, see this Prospectus under
"Certain Risk Factors and Investment Methods" and "Regulatory Matters," and the
Trust's Statement of Additional Information under "Investment Restrictions."

Portfolio Turnover. The length of time the Portfolio has held a
particular security is not generally a consideration in investment decisions. A
change in the securities held by the Portfolio is known as "portfolio turnover."
As a result of the Portfolio's investment policies, under certain market
conditions the Portfolio's turnover rate may be higher than that of other mutual
funds. Portfolio turnover generally involves some expense to the Portfolio,
including brokerage commissions or dealer markups and other transaction costs on
the sale of securities and reinvestment in other securities.

C. The current disclosure regarding the International Equity Portfolio
under the caption, "Investment Objectives and Policies," beginning on page 12,
is replaced with the following disclosure:

AST Putnam International Equity Portfolio:

Investment Objective: The investment objective of the AST Putnam
International Equity Portfolio is to seek capital appreciation. This is a
fundamental investment objective of the Portfolio.

Investment Policies:

The Portfolio seeks its objective by investing primarily in equity
securities of companies located in a country other than the United States. The
Portfolio's investments will normally include common stocks, preferred stocks,
securities convertible into common or preferred stocks, and warrants to purchase
common or preferred stocks. The Portfolio may also invest to a lesser extent in
debt securities and other types of investments if the Sub-advisor believes
purchasing them would help achieve the Portfolio's objective. The Portfolio
will, under normal circumstances, invest at least 65% of its total assets in
issuers located in at least three different countries other than the United
States. The Portfolio may hold a portion of its assets in cash or money market
instruments.

The Portfolio will consider an issuer of securities to be "located in a
country other than the United States" if it is organized under the laws of a
country other than the United States and has a principal office outside the
United States, or if it derives 50% or more of its total revenues from business
outside the United States. The Portfolio may invest in securities of issuers in
emerging markets, as well as more developed markets. Investing in emerging
markets generally involves more risks then in investing in developed markets.
See "Risks of Foreign Investments" below.

The Portfolio will not limit its investments to any particular type of
company. The Portfolio may invest in companies, large or small, whose earnings
are believed to be in a relatively strong growth trend, or in companies in which
significant further growth is not anticipated but whose market value per share
is thought to be undervalued. It may invest in small and relatively less
well-known companies which meet these characteristics.

The Sub-advisor believes that the securities markets of many nations
move relatively independently of one another, because business cycles and other
economic or political events that influence one country's securities markets may
have little effect on securities markets in other countries. By investing in a
diversified portfolio of foreign securities, the Sub-advisor attempts to reduce
the risks associated with being invested in the economy of only one country. The
countries which the Sub-advisor believes offer attractive opportunities for
investment may change from time to time.

The Portfolio may seek investment opportunities among securities of
large, widely-traded companies as well as securities of smaller, less well known
companies. Smaller companies may present greater opportunities for capital
appreciation, but may also involve greater risks. They may have limited product
lines, markets or financial resources, or may depend on a limited management
group. Their securities may trade less frequently and in limited volume. As a
result, the prices of these securities may fluctuate more than prices of
securities of larger, more established companies.

Defensive Strategies. At times, the Sub-advisor may judge that
conditions in the international securities markets make pursuing the Portfolio's
basic investment strategy inconsistent with the best interests of its
shareholders. At such times, the Sub-advisor may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the value of portfolio
assets. In implementing these defensive strategies, the Portfolio may invest
without limit in cash and money market instruments, securities primarily traded
in the U.S. markets, or in any other securities the Sub-advisor considers
consistent with such defensive strategies.

Risks of Foreign Investments. Since foreign securities are normally
denominated and traded in foreign currencies, the values of portfolio assets may
be affected favorably or unfavorably by currency exchange rates relative to the
U.S. dollar. There may be less information publicly available about a foreign
issuer than about a U.S. issuer, and foreign issuers may not be subject to
accounting standards comparable to those in the United States. The securities of
some foreign companies are less liquid and at times more volatile than
securities of comparable U.S. companies. Foreign brokerage commissions and other
fees are also generally higher than those in the United States. Foreign
settlement procedures and trade regulations may involve certain risks (such as
delay in payment or delivery of securities or in the recovery of portfolio
assets held abroad) and expenses not present in the settlement of domestic
investments.

In addition, there may be a possibility of nationalization or
expropriation of assets, imposition of currency exchange controls, confiscatory
taxation, political or financial instability and diplomatic developments that
could affect the value of investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be limited. The
laws of some foreign countries may limit investments in securities of certain
issuers located in those foreign countries. Special tax considerations apply to
foreign securities.

The risks described above are typically greater in less developed
nations, sometimes referred to as "emerging markets." For instance, political
and economic structures in these countries may be in their infancy and
developing rapidly, causing instability. High rates of inflation may adversely
affect the economies and securities markets of such countries. In addition, the
small size, limited trading volume and relative inexperience of the securities
markets in these countries may make investments in such countries less liquid
and more volatile than investments in more developed countries. Investments in
emerging markets are regarded as speculative. For an additional discussion of
the special risks involved in investing in developing countries and certain
risks involved in foreign investing, in general, see this Prospectus and the
Trust's Statement of Additional Information under "Certain Risk Factors and
Investment Methods."

Options and Futures Transactions. The Portfolio may engage in a variety
of transactions involving the use of options and futures contracts and in
foreign currency exchange transactions for purposes of increasing its investment
return or hedging against market changes. The Portfolio may seek to increase its
current return by writing covered call options and covered put options on its
portfolio securities or other securities in which it may invest. The Portfolio
receives a premium from writing a call or put option, which increases the
Portfolio's return if the option expires unexercised or is closed out at a net
profit. The Portfolio may also buy and sell put and call options on such
securities for hedging purposes. When the Portfolio writes a call option on a
portfolio security, it gives up the opportunity to profit from any increase in
the price of the security above the exercise price of the option; when it writes
a put option, the Portfolio takes the risk that it will be required to purchase
a security from the option holder at a price above the current market price of
the security. The Portfolio may terminate an option that it has written prior to
its expiration by entering into a closing purchase transaction in which it
purchases an option having the same terms as the option written. The Portfolio
may also from time to time buy and sell combinations of put and call options on
the same underlying security to earn additional income.

The Portfolio may buy and sell index futures contracts for hedging
purposes. An "index future" is a contract to buy or sell units of a particular
index at an agreed price on a specified future date. Depending on the change in
value of the index between the time when the Portfolio enters into and
terminates an index future transaction, the Portfolio realizes a gain or loss.
The Portfolio may also purchase and sell call and put options on index futures
or on indices in addition or as an alternative to purchasing or selling index
futures or, to the extent permitted by applicable law, to earn additional
income. The Portfolio may also purchase warrants, issued by banks and other
financial institutions, whose values are based on the values from time to time
of one or more securities indices.

Risks of Options and Futures Transactions. Options and futures
transactions involve costs and may result in losses. Options and futures
transactions involve certain special risks, including the risks that the
Portfolio may be unable at times to close out such positions, that transactions
may not accomplish their purposes because of imperfect market correlations, or
that the Sub-advisor may not forecast market movements correctly.

The effective use of options and futures strategies depends on the
Portfolio's ability to terminate options and futures positions at times when the
Sub-advisor deems it desirable to do so. Although the Portfolio will enter into
an option or futures contract position only if the Sub-advisor believes that a
liquid secondary market exists for such option or futures contract, there is no
assurance that the Portfolio will be able to effect closing transactions at any
particular time or at an acceptable price.

The Portfolio generally expects that its options and futures contract
transactions will be conducted on recognized exchanges. In certain instances,
however, the Portfolio may purchase and sell options in the over-the-counter
markets. The Portfolio's ability to terminate options in over-the-counter
markets may be more limited than for exchange-traded options and may also
involve the risk that securities dealers participating in such transactions
would be unable to meet their obligations to the Portfolio.

The use of options and futures strategies also involves the risk of
imperfect correlation between movements in the prices of options and futures
contracts and movements in the value of the underlying securities, securities
index or foreign currency, or in the prices of the securities or currency that
are the subject of a hedge. Cross hedging transactions by the Portfolio involve
the risk of imperfect correlation between changes in the values of the
currencies to which such transactions relate and changes in the value of the
currency or other asset or liability which is the subject of the hedge. The
successful use of these strategies further depends on the ability of the
Sub-advisor to forecast market movements correctly.

Because the markets for certain options and futures contracts in which
the Portfolio will invest (including markets located in foreign countries) are
relatively new and still developing and may be subject to regulatory restraints,
the Portfolio's ability to engage in transactions using such investments may be
limited. The Portfolio's ability to engage in hedging transactions may be
limited by certain regulatory requirements and tax considerations. The
Portfolio's hedging transactions may affect the character or amount of the
Portfolio's distributions. For an additional discussion of options and futures
transactions and certain risks involved therein, see this Prospectus and the
Trust's Statement of Additional Information under "Certain Risk Factors and
Investment Methods."

Foreign Currency Exchange Transactions. The Portfolio may engage in
foreign currency exchange transactions to protect against uncertainty in the
level of future exchange rates. The Sub-advisor may engage in foreign currency
exchange transactions in connection with the purchase and sale of portfolio
securities ("transaction hedging") and to protect against changes in the value
of specific portfolio positions ("position hedging").

The Portfolio may engage in transaction hedging to protect against a
change in foreign currency exchange rates between the date on which the
Portfolio contracts to purchase or sell a security and the settlement date, or
to "lock in" the U.S. dollar equivalent of a dividend or interest payment in a
foreign currency. The Portfolio may purchase or sell a foreign currency on a
spot (or cash) basis at the prevailing spot rate in connection with the
settlement of transactions in portfolio securities denominated in that foreign
currency.

If conditions warrant, for transaction hedging purposes the Portfolio
may also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts. A foreign currency forward contract is a negotiated agreement to
exchange currency at a future time at a rate or rates that may be higher or
lower than the spot rate. Foreign currency futures contracts are standardized
exchange-traded contracts and have margin requirements. In addition, for
transaction hedging purposes the Portfolio may also purchase or sell
exchange-listed and over-the-counter call and put options on foreign currency
futures contracts and on foreign currencies.

The Portfolio may engage in position hedging to protect against a
decline in value relative to the U.S. dollar of the currencies in which its
portfolio securities are denominated or quoted (or an increase in value of a
currency in which securities the Portfolio intends to buy are denominated). For
position hedging purposes, the Portfolio may purchase or sell foreign currency
futures contacts, foreign currency forward contracts, and options on foreign
currency futures contracts and on foreign currencies. In connection with
position hedging, the Portfolio may also purchase or sell foreign currency on a
spot basis.

The Portfolio's currency hedging transactions may call for the delivery
of one foreign currency in exchange for another foreign currency and may at
times not involve currencies in which its portfolio securities are then
denominated. The Sub-advisor will engage in such "cross hedging" activities when
it believes that such transactions provide significant hedging opportunities for
the Portfolio. Cross hedging transactions by the Portfolio involve the risk of
imperfect correlation between changes in the values of the currencies to which
such transactions relate and changes in the value of the currency or other asset
or liability which is the subject of the hedge.

The decision as to whether and to what extent the Portfolio will engage
in foreign currency exchange transactions will depend on a number of factors,
including prevailing market conditions, the composition of the Portfolio's
portfolio and the availability of suitable transactions. Accordingly, there can
be no assurance that the Portfolio will engage in foreign currency exchange
transactions at any given time or from time to time.

Portfolio Turnover. The length of time the Portfolio has held a
particular security is not generally a consideration in investment decisions. A
change in the securities held by the Portfolio is known as "portfolio turnover."
As a result of the Portfolio's investment policies, under certain market
conditions the Portfolio's portfolio turnover rate may be higher than that of
other mutual funds. Portfolio turnover generally involves some expense to the
Portfolio, including brokerage commissions or dealer mark-ups and other
transaction costs on the sale of securities and reinvestment in other
securities.

D. The current disclosure regarding the Small Cap Portfolio under the
caption, "Investment Objectives and Policies," beginning on page 15, is replaced
with the following disclosure:

Founders Passport Portfolio:

Investment Objective: The investment objective of the Founders Passport
Portfolio is to seek capital appreciation. This is a fundamental objective of
the Portfolio.

Investment Policies:

To achieve its objective, the Portfolio invests primarily in securities
issued by foreign companies which 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 will normally be invested
in foreign securities representing a minimum of three countries. The Portfolio
may invest in larger foreign companies or in U.S.-based companies if, in the
Sub-advisor's opinion, they represent better prospects for capital appreciation.

Risks of Investments in Small and Medium-Sized Companies. The Portfolio
normally will invest a significant proportion of its assets in the securities of
small and medium-sized companies. As used with respect to this Portfolio, small
and medium-sized companies are those which are still in the developing stages of
their life cycles and are attempting to achieve rapid growth in both sales and
earnings. Capable management and fertile operating areas are two of the most
important characteristics of such companies. In addition, these companies should
employ sound financial and accounting policies; demonstrate effective research
and successful product development and marketing; provide efficient service; and
possess pricing flexibility. The Portfolio tries to avoid investing in companies
where operating results may be affected adversely by excessive competition,
severe governmental regulation, or unsatisfactory productivity.

Investments in small and medium-sized companies involve greater risk
than is customarily associated with more established companies. These companies
often have sales and earnings growth rates which exceed those of large
companies. Such growth rates may in turn be reflected in more rapid share price
appreciation. However, smaller companies often have limited operating histories,
product lines, markets, or financial resources, and they may be dependent upon
one-person management. These companies may be subject to intense competition
from larger entities, and the securities of such companies may have limited
marketability and may be subject to more abrupt or erratic movements in price
than securities of larger companies or the market averages in general.
Therefore, the net asset value of the Portfolio's shares may fluctuate more
widely than the popular market averages.

Fixed-Income Securities. The Portfolio may invest in convertible
securities, preferred stocks, bonds, debentures, and other corporate obligations
when the Sub-advisor believes that these investments offer opportunities for
capital appreciation. Current income will not be a substantial factor in the
selection of these securities.

The Portfolio will only invest in bonds, debentures, and corporate
obligations (other than convertible securities and preferred stock) rated
investment grade (BBB or higher) at the time of purchase. Bonds in the lowest
investment grade category (BBB) have speculative characteristics, with changes
in the economy or other circumstances more likely to lead to a weakened capacity
of the bonds to make principal and interest payments than would occur with bonds
rated in higher categories. Convertible securities and preferred stocks
purchased by the Portfolio may be rated in medium and lower categories by
Moody's or S&P (Ba or lower by Moody's and BB or lower by S&P), but will not be
rated lower than B. The Portfolio may also invest in unrated convertible
securities and preferred stocks in instances in which the Sub-advisor believes
that the financial condition of the issuer or the protection afforded by the
terms of the securities limits risk to a level similar to that of securities
eligible for purchase by the Portfolio rated in categories no lower than B.
Securities rated B are referred to as "high-risk" securities, generally lack
characteristics of a desirable investment, and are deemed speculative with
respect to the issuer's capacity to pay interest and repay principal over a long
period of time. For a description of ratings of securities, see the Appendix to
the Trust's Statement of Additional Information. At no time will the Portfolio
have more than 5% of its total assets invested in any fixed-income securities
which are unrated or are rated below investment grade either at the time of
purchase or as a result of a reduction in rating after purchase. For a
discussion of the special risks involved in investing in lower-rated debt
securities, see this Prospectus and the Trust's Statement of Additional
Information under "Certain Risk Factors and Investment Methods."

The fixed-income securities in which the Portfolio may invest are
generally subject to two kinds of risk: credit risk and market risk. Credit risk
relates to the ability of the issuer to meet interest or principal payments, or
both, as they come due. The ratings given a security by Moody's and S&P provide
a generally useful guide as to such credit risk. The lower the rating given a
security by such rating service, the greater the credit risk such rating service
perceives to exist with respect to such security. Increasing the amount of
Portfolio assets invested in unrated or lower-grade securities, while intended
to increase the yield produced by those assets, also will increase the credit
risk to which those assets are subject. Market risk relates to the fact that the
market values of securities in which the Portfolio may invest generally will be
affected by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of such securities, whereas a
decline in interest rates will tend to increase their values. Medium- and
lower-rated securities (Baa or BBB and lower) and non-rated securities of
comparable quality tend to be subject to wider fluctuations in yields and market
values than higher-rated securities. Medium-rated securities (those rated Baa or
BBB) have speculative characteristics while lower-rated securities are
predominantly speculative. The Portfolio is not required to dispose of debt
securities whose ratings are downgraded below these ratings subsequent to the
Portfolio's purchase of the securities, unless such a disposition is necessary
to reduce the Portfolio's holdings of such securities to less than 5% of its
total assets. Relying in part on ratings assigned by credit agencies in making
investments will not protect the Portfolio from the risk that fixed-income
securities in which it invests will decline in value, since credit ratings
represent evaluations of the safety of principal, dividend and interest payments
on preferred stocks and debt securities, not the market values of such
securities, and such ratings may not be changed on a timely basis to reflect
subsequent events.

The Sub-advisor seeks to reduce overall risk associated with the
investments of the Portfolio through diversification and consideration of
relevant factors affecting the value of securities. No assurance can be given,
however, regarding the degree of success that will be achieved in this regard or
in the Portfolio achieving its investment objective.

Foreign Securities. The Portfolio may invest without limit in American
Depository Receipts and may invest in foreign securities. The term "foreign
securities" refers to securities of issuers, wherever organized, which, in the
judgment of the Sub-advisor, have their principal business activities outside of
the United States. The determination of whether an issuer's principal activities
are outside of the United States will be based on the location of the issuer's
assets, personnel, sales, and earnings, and specifically on whether more than
50% of the issuer's assets are located, or more than 50% of the issuer's gross
income is earned, outside of the United States, or on whether the issuer's sole
or principal stock exchange listing is outside of the United States. Foreign
securities typically will be traded on the applicable country's principal stock
exchange but may also be traded on regional exchanges or over-the-counter. For a
discussion of American Depository Receipts, see this Prospectus under "Certain
Risk Factors and Investment Methods."

Foreign investments of the Portfolio may include securities issued by
companies located in countries not considered to be major industrialized
nations. Such countries are subject to more economic, political and business
risk than major industrialized nations, and the securities they issue are
expected to be more volatile and more uncertain as to payments of interest and
principal. The secondary market for such securities is expected to be less
liquid than for securities of major industrialized nations. Such countries may
include (but are not limited to) Argentina, Australia, Austria, Belgium,
Bolivia, Brazil, Chile, China, Colombia, Costa Rica, Croatia, Czech Republic,
Denmark, Ecuador, Egypt, Finland, Greece, Hong Kong, Hungary, India, Indonesia,
Ireland, Italy, Israel, Jordan, Malaysia, Mexico, Netherlands, New Zealand,
Nigeria, North Korea, Norway, Pakistan, Paraguay, Peru, Philippines, Poland,
Portugal, Singapore, Slovak Republic, South Africa, South Korea, Spain, Sri
Lanka, Sweden, Switzerland, Taiwan, Thailand, Turkey, Uruguay, Venezuela,
Vietnam and the countries of the former Soviet Union. Investments may include
securities created through the Brady Plan, a program under which heavily
indebted countries have restructured their bank debt into bonds.

Foreign Securities Risks. Investments in foreign securities involve certain
risks which are not typically associated with U.S. investments. For a discussion
of certain risks involved in foreign investing, see this Prospectus and the
Trust's Statement of Additional Information under "Certain Risk Factors and
Investment Methods."

Risks of Currency Fluctuations. Since the Portfolio's assets will be
invested primarily in foreign securities and since substantially all of the
Portfolio's revenues will be received in foreign currencies, the Portfolio's net
asset values will be affected by changes in currency exchange rates. Changes in
foreign currency exchange rates may also affect the value of dividends and
interest earned, gains and losses realized on the sale of securities and net
investment income and gains, if any, to be distributed to shareholders by the
Portfolio. The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets
and in some cases, exchange controls. For an additional discussion of the risks
of currency fluctuations, see this Prospectus and Trust's Statement of
Additional Information under "Certain Risk Factors and Investment Methods."

Foreign Currency Exchange Contracts. The Portfolio currently is
permitted to use forward foreign currency contracts in connection with the
purchase or sale of a specific security. For a discussion of foreign currency
transactions, see this Prospectus and the Trust's Statement of Additional
Information under "Certain Risk Factors and Investment Methods."

The current investment policy for the Portfolio provides that the
Portfolio may conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign exchange currency
market, or on a forward basis to "lock in" the U.S. dollar price of the
security. By entering into a forward contract for the purchase or sale, for a
fixed amount of U.S. dollars, of the amount of foreign currency involved in the
underlying transactions, the Portfolio attempts to protect itself against
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold and the date on which such
payments are made or received.

In addition, the Portfolio is permitted to enter into forward contracts
for hedging purposes. When the Sub-advisor believes that the currency of a
particular foreign country may suffer a substantial decline against the U.S.
dollar (or sometimes against another currency), the Portfolio is permitted to
enter into forward contracts to sell, for a fixed-dollar or other currency
amount, foreign currency approximating the value of some or all of the
Portfolio's securities denominated in that currency. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible. The future value of such securities in foreign currencies
changes as a consequence of market movements in the value of those securities
between the date on which the contract is entered into and the date it expires.

The Portfolio generally will not enter into forward contracts with a
term greater than one year. In addition, the Portfolio generally will not enter
into forward contracts or maintain a net exposure to such contracts where the
fulfillment of the contracts would require the Portfolio to deliver an amount of
foreign currency in excess of the value of the Portfolio's securities or other
assets denominated in that currency. Under normal circumstances, consideration
of the possibility of changes in currency exchange rates will be incorporated
into the Portfolio's long-term investment strategies. In the event that forward
contracts and any securities placed in a segregated account in an amount at
least equal to the value of the total assets of the Portfolio committed to the
consummation of a forward contract are considered to be illiquid, the securities
would be subject to the Portfolio's limitation on investing in illiquid
securities. For an additional discussion of foreign currency contracts and the
risks involved therein, see this Prospectus and the Trust's Statement of
Additional Information under "Certain Risk Factors and Investment Methods."

Illiquid Securities. Subject to guidelines promulgated by the Board of
Trustees of the Trust, the Portfolio may invest up to 15% of the market value of
its net assets, measured at the time of purchase, in securities which are not
readily marketable, including repurchase agreements maturing in more than seven
days. Securities which are not readily marketable are those which, for whatever
reason, cannot be disposed of within seven days in the ordinary course of
business at approximately the amount at which the Portfolio has valued the
investment. Restricted securities are securities which cannot be resold or
distributed to the public without an effective registration statement under the
Securities Act of 1933. The Portfolio may invest a maximum of 5% of its net
assets in restricted securities.

The Portfolio may invest in Rule 144A securities (securities issued in
offerings made pursuant to Rule 144A under the Securities Act of 1933). Rule
144A securities are restricted securities which may or may not be deemed to be
readily marketable. Factors considered in evaluating whether such a security is
readily marketable include eligibility for trading, trading activity, dealer
interest, purchase interest, and ownership transfer requirements. The
Sub-advisor is required to monitor the readily marketable nature of each Rule
144A security no less frequently than quarterly. Readily marketable Rule 144A
securities may be resold to qualified institutional buyers as defined under Rule
144A. The liquidity of the Portfolio's investments in Rule 144A securities could
be impaired if institutional investors become disinterested in purchasing such
securities. For an additional discussion of Rule 144A securities and illiquid or
restricted securities, and the risks involved therein, see this Prospectus under
"Certain Risk Factors and Investment Methods" and the Trust's Statement of
Additional Information under "Investment Objectives and Policies."

Borrowing. The Portfolio may borrow money from banks in amounts up to
33 1/3% of the Portfolio's total assets. If the Portfolio borrows money, its
share price may be subject to greater fluctuation until the borrowing is repaid.
The Portfolio will attempt to minimize such fluctuations by not purchasing
securities when borrowings are greater than 5% of the value of the Portfolio's
total assets. For an additional discussion of the Portfolio's limitations on
borrowing and the risks involved in borrowing, see this Prospectus under
"Certain Risk Factors and Investment Methods" and "Regulatory Matters," and the
Trust's Statement of Additional Information under "Investment Restrictions."

Futures Contracts and Options. The Portfolio may enter into futures
contracts (or options thereon) for hedging purposes. The acquisition or sale of
a futures contract could occur, for example, if the Portfolio held or considered
purchasing equity securities and sought to protect itself from fluctuations in
prices without buying or selling those securities. The Portfolio may also enter
into interest rate and foreign currency futures contracts. Interest rate futures
contracts currently are traded on a variety of fixed-income securities. Foreign
currency futures contracts currently are traded on the British pound, Canadian
dollar, Japanese yen, Swiss franc, German mark and on Eurodollar deposits.

An option is a right to buy or sell a security at a specified price
within a limited period of time. The Portfolio may write ("sell") covered call
options on any or all of its portfolio securities from time to time as the
Sub-advisor shall deem appropriate. The extent of the Portfolio's option writing
activities will vary from time to time depending upon the Sub-advisor's
evaluation of market, economic and monetary conditions.

The Portfolio may purchase options on securities and stock indices.
Options on stock indices are similar to options on securities. However, because
options on stock indices do not involve the delivery of an underlying security,
the option represents the holder's right to obtain from the writer in cash a
fixed multiple of the amount by which the exercise price exceeds (in the case of
a put) or is less than (in the case of a call) the closing value of the
underlying index on the exercise date. The purpose of these transactions is not
to generate gain, but to "hedge" against possible loss. Therefore, successful
hedging activity will not produce net gain to the Portfolio. The Portfolio may
also purchase put and call options on futures contracts. An option on a futures
contract provides the holder with the right to enter into a "long" position in
the underlying futures contract, in the case of a call option, or a "short"
position in the underlying futures contract, in the case of a put option, at a
fixed exercise price to a stated expiration date. Upon exercise of the option by
the holder, a contract market clearing house establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position, in the case of a put option.

The Portfolio will not, as to any positions, whether long, short or a
combination thereof, enter into futures and options thereon for which the
aggregate initial margins and premiums exceed 5% of the fair market value of its
total assets after taking into account unrealized profits and losses on options
entered into. The Portfolio may buy and sell options on foreign currencies for
hedging purposes in a manner similar to that in which futures on foreign
currencies would be utilized.

Risks of Futures Contracts and Options. There are risks involved in
futures contracts and options. For an additional discussion of futures contracts
and options and the risks involved therein, see this Prospectus under " Certain
Risk Factors and Investment Methods" and the Trust's Statement of Additional
Information under "Investment Objectives and Policies" and "Certain Risk Factors
and Investment Methods."

Temporary Investments. Up to 100% of the assets of the Portfolio may be
invested temporarily in U.S. government obligations, commercial paper, bank
obligations, repurchase agreements relating to each of these securities,
negotiable U.S. dollar-denominated obligations of domestic and foreign branches
of U.S. depository institutions, U.S. branches of foreign depository
institutions, and foreign depository institutions, in cash, or in other cash
equivalents, if the Sub-advisor determines it to be appropriate for purposes of
enhancing liquidity or preserving capital in light of prevailing market or
economic conditions. There can be no assurance that the Portfolio will be able
to achieve its investment objective. While the Portfolio is in a defensive
position, the opportunity to achieve capital growth will be limited, and, to the
extent that this assessment of market conditions is incorrect, the Portfolio
will be foregoing the opportunity to benefit from capital growth resulting from
increases in the value of equity investments.

U.S. government obligations include Treasury bills, notes and bonds;
Government National Mortgage Association (GNMA) pass-through securities; and
issues of United States agencies, authorities and instrumentalities. Obligations
of other agencies and instrumentalities of the U.S. government include
securities issued by the Federal Farm Credit Bank System (FFCB), the Federal
Agricultural Mortgage Corporation ("Farmer Mac"), the Federal Home Loan Bank
System (FHLB), the Financing Corporation (FICO), Federal Home Loan Mortgage
Corporation (FHLMC), the Federal National Mortgage Association (FNMA), the
Student Loan Marketing Association (SLMA), the International Bank for
Reconstruction and Development (IBRD or "World Bank"), and the U.S. Small
Business Administration (SBA). Some government obligations, such as GNMA
pass-through certificates, are supported by the full faith and credit of the
United States Treasury. Other obligations, such as securities of the FHLB, are
supported by the right of the issuer to borrow from the United States Treasury;
and others, such as bonds issued by FNMA (a private corporation), are supported
only by the credit of the agency, authority or instrumentality.

The Portfolio may also acquire certificates of deposit and bankers'
acceptances of banks which meet criteria established by the Board of Trustees of
the Trust. A certificate of deposit is a short-term obligation of a bank. A
banker's acceptance is a time draft drawn by a borrower on a bank, usually
relating to an international commercial transaction.

The obligations of foreign branches of U.S. depository institutions may
be general obligations of the parent depository institution in addition to being
an obligation of the issuing branch. These obligations, and those of foreign
depository institutions, may be limited by the terms of the specific obligation
and by governmental regulation. The payment of these obligations, both interest
and principal, also may be affected by governmental action in the country of
domicile of the institution or branch, such as imposition of currency controls
and interest limitations. In connection with these investments, the Portfolio
will be subject to the risks associated with the holding of portfolio securities
overseas, such as possible changes in investment or exchange control
regulations, expropriation, confiscatory taxation, or political or financial
instability.

Obligations of U.S. branches of foreign depository institutions may be
general obligations of the parent depository institution in addition to being an
obligation of the issuing branch, or may be limited by the terms of a specific
foreign regulation applicable to the depository institutions and by government
regulation (both domestic and foreign).

Repurchase Agreements. Subject to guidelines promulgated by the Board
of Trustees of the Trust, the Portfolio may enter into repurchase agreements
with banks or well-established securities dealers. All repurchase agreements
entered into by the Portfolio will be fully collateralized and marked to market
daily. The Portfolio has not adopted any limits on the amounts of its total
assets that may be invested in repurchase agreements which mature in less than
seven days. For a discussion of repurchase agreements and certain risks involved
therein, see this Prospectus under "Certain Risk Factors and Investment
Methods."

Portfolio Turnover. The Portfolio reserves the right to sell its
securities, regardless of the length of time that they have been held, when it
is determined by the Sub-advisor that those securities have attained or are
unable to meet the investment objective of the Portfolio. The Portfolio may
engage in short-term trading and therefore normally will have annual portfolio
turnover rates in excess of 100%. Such portfolio turnover rates, which are
considered to be high, often may be greater than those of other investment
companies seeking capital appreciation. Such turnover rates would cause the
Portfolio to incur greater brokerage commissions than would otherwise be the
case. A 100% portfolio turnover rate would occur if all the securities of the
Portfolio were replaced during the period. Portfolio turnover rates may also
increase as a result of the need for the Portfolio to effect significant amounts
of purchases or redemptions of portfolio securities due to economic, market, or
other factors that are not within the Sub-advisor's control.

IV. CHANGES TO "PORTFOLIO TURNOVER":

The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"Portfolio Turnover," on page 73, is replaced with the following disclosure,
respectively:

AST Putnam Balanced Portfolio: not to exceed 200% under normal market
conditions.

AST Putnam International Equity Portfolio: not to exceed 100% under normal
market conditions.

Founders Passport Portfolio: not to exceed 150% under normal market
conditions.

V. CHANGES TO "MANAGEMENT OF THE TRUST":

A. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"Sub-advisors," beginning on page 75, is replaced with the following disclosure,
respectively:

AST Putnam Balanced Portfolio: Putnam Investment Management, Inc.
("Putnam Management"), One Post Office Square, Boston, Massachusetts
02109, acts as Sub-advisor to the AST Putnam Balanced Portfolio, the
AST Putnam Value Growth and Income Portfolio, and the AST Putnam
International Equity Portfolio. Putnam Management is a subsidiary of
Putnam Investments, Inc., a holding company which in turn is wholly
owned by Marsh & McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international insurance and
reinsurance brokerage, employee benefit consulting and investment
management. Putnam Management is one of America's oldest and largest
money management firms, managing mutual funds since 1937. As of June
30, 1996, Putnam Management and its affiliates managed over $146
billion in assets.

Putnam Management's Global Asset Allocation Committee has primary
responsibility for the day-to-day management of the AST Putnam Balanced
Portfolio. No person is primarily responsible for making
recommendations to that Committee in respect of the Portfolio.

AST Putnam International Equity Portfolio: Putnam Investment
Management, Inc. ("Putnam Management"), One Post Office Square, Boston,
Massachusetts 02109, acts as Sub-advisor to the AST Putnam Balanced
Portfolio, the AST Putnam Value Growth and Income Portfolio, and the
AST Putnam International Equity Portfolio. Putnam Management is a
subsidiary of Putnam Investments, Inc., a holding company which in turn
is wholly owned by Marsh & McLennan Companies, Inc., a publicly-owned
holding company whose principal businesses are international insurance
and reinsurance brokerage, employee benefit consulting and investment
management. Putnam Management is one of America's oldest and largest
money management firms, managing mutual funds since 1937. As of June
30, 1996, Putnam Management and its affiliates managed over $146
billion in assets.

Justin Scott, Managing Director of Putnam Management, has primary
responsibility for the day-to-day management of the AST Putnam
International Equity Portfolio. Mr. Scott has been employed as an
investment professional by Putnam Management since 1988.

Founders Passport Portfolio: Founders Asset Management, Inc.
("Founders"), Founders Financial Center, 2930 East Third Avenue,
Denver, Colorado 80206, has acted as an investment advisor since 1938
and serves as investment advisor to Founders Discovery, Frontier,
Passport, Special, International Equity, Worldwide Growth, Growth, Blue
Chip, Balanced, Government Securities, and Money Market Funds.
Founders, which is also the investment advisor for a number of private
accounts, managed assets aggregating approximately $3.1 billion as of
December 31, 1995.

The portfolio manager responsible for management of the Portfolio is
Michael W. Gerding, a Vice President of Investments of Founders. Mr. Gerding is
a chartered financial analyst who has been part of Founders' investment
department since 1990. Prior to joining Founders, Mr. Gerding served as a
portfolio manager and research analyst with NCNB Texas for several years.

B. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"Investment Management Agreements," beginning on page 79, is replaced with the
following disclosure, respectively:

AST Putnam Balanced Portfolio: .75% of the average daily net assets of
the Portfolio not in excess of $300 million; plus .70% of the
Portfolio's average daily net assets in excess of $300 million. Prior
to October 15, 1996, the Investment Manager had engaged Phoenix
Investment Counsel, Inc. as Sub-advisor for the Portfolio (formerly,
the AST Phoenix Balanced Asset Portfolio), for a total Investment
Management fee of .75% of the average daily net assets of the Portfolio
not in excess of $75 million; plus .65% of the Portfolio's average
daily net assets in excess of $75 million. For the year ended December
31, 1995, the amount of the fee paid by the Trust to the Investment
Manager was $1,107,736.

Putnam Investment Management, Inc. for the AST Putnam Balanced
Portfolio: An annual rate of .45 of 1% of the portion of the average
daily net assets of the Portfolio not in excess of $150 million; plus
.40 of 1% of the portion of the average daily net assets of the
Portfolio over $150 million but not in excess of $300 million; plus .35
of 1% of the portion of the average daily net assets of the Portfolio
in excess of $300 million. Prior to October 15, 1996, the Investment
Manager had engaged Phoenix Investment Counsel, Inc. as Sub-advisor for
the Portfolio (formerly, the AST Phoenix Balanced Asset Portfolio), for
a total Sub-advisory fee of .50 of 1% of the average daily net assets
of the Portfolio not in excess of $25 million; plus .40 of 1% of the
portion of the average daily net assets of the Portfolio over $25
million but not in excess of $75 million; plus .30 of 1% of the portion
of the average daily net assets of the Portfolio in excess of $75
million. For the year ended December 31, 1995, the amount paid by the
Investment Manager to the Sub-advisor was $576,648.

AST Putnam International Equity Portfolio: 1.0% of the average daily
net assets of the Portfolio not in excess of $75 million; plus .85% of
the Portfolio's average daily net assets over $75 million. Prior to
October 15, 1996, the Investment Manager had engaged Seligman Henderson
Co. as Sub-advisor for the Portfolio (formerly, the Seligman Henderson
International Equity Portfolio), for a total Investment Management fee
of 1.0% of the average daily nets assets of the Portfolio. The
Investment Manager also had agreed voluntarily to waive a portion of
its fee equal to .15% on assets in excess of $75 million. Such
agreement was terminated as of the opening of business on October 15,
1996. For the year ended December 31, 1995, the amount of the fee paid
by the Trust to the Investment Manager was $2,198,484.

Putnam Investment Management, Inc. for the AST Putnam International
Equity Portfolio: An annual of .65 of 1% of the portion of the average
daily net assets of the Portfolio not in excess of $150 million; plus
.55 of 1% of the portion of the average daily net assets of the
Portfolio over $150 million but not in excess of $300 million; plus .45
of 1% of the portion of the average daily net assets of the Portfolio
in excess of $300 million. Prior to October 15, 1996, the Investment
Manager had engaged Seligman Henderson Co. as Sub-advisor for the
Portfolio (formerly, the Seligman Henderson International Equity
Portfolio), for a Sub-advisory fee of 1.0% of the average daily nets
assets of the Portfolio not in excess of $100 million; plus .75 of 1%
of the portion of the average daily net assets of the Portfolio over
$100 million. The Sub-advisor also had agreed voluntarily to waive a
portion of its fee equal to .25% on assets not in excess of $50
million; plus .35% on assets over $50 million but not in excess of $75
million; plus .50% on assets over $75 million but not in excess of $100
million; plus .25% on assets over $100 million. Such agreement was
terminated as of the opening of business on October 15, 1996. For the
year ended December 31, 1995, the amount paid by the Investment Manager
to the Sub-advisor was $1,389,549.

Founders Passport Portfolio: 1.0% of the average daily net assets of
the Portfolio. Prior to October 15, 1996, the Investment Manager had
engaged Seligman Henderson Co. as Sub-advisor for the Portfolio
(formerly, the Seligman Henderson International Small Cap Portfolio),
for a total Investment Management fee of 1.0% of the average daily nets
assets of the Portfolio. For the period May 2, 1995 (commencement of
operations) to December 31, 1995, the amount of the fee paid by the
Trust to the Investment Manager was $76,285.

Founders Asset Management, Inc. for the Founders Passport Portfolio: An
annual rate of .60 of 1% of the portion of the average net assets of
the Portfolio not in excess of $100 million; plus .50 of 1% of the
portion of the average net assets of the Portfolio in excess of $100
million. Prior to October 15, 1996, the Investment Manager had engaged
Seligman Henderson Co. as Sub-advisor for the Portfolio (formerly, the
Seligman Henderson International Small Cap Portfolio), for a
Sub-advisory fee of .60 of 1% of the average daily net assets of the
Portfolio not in excess of $100 million; plus .50 of 1% of the average
daily net assets of the Portfolio in excess of $100 million. For the
period May 2, 1995 (commencement of operations) to December 31, 1995,
the amount paid by the Investment Manager to the Sub-advisor was
$45,904.

C. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"The Administration Agreement," beginning on page 83, is amended as follows:

1. Reference to the "AST Phoenix Balanced Asset Portfolio" in the fourth
sentence of the first full paragraph on page 84 is replaced with the "AST Putnam
Balanced Portfolio."

2. Reference to the "Seligman Henderson International Equity Portfolio" in
the fifth sentence of the first full paragraph on page 84 is replaced with the
"AST Putnam International Equity Portfolio."

3. Reference to the "Seligman Henderson International Small Cap Portfolio"
in the seventh sentence of the first full paragraph on page 84 is replaced with
the "Founders Passport Portfolio."

VI. CHANGES TO "PORTFOLIO ANNUAL EXPENSES":

A. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"Annual Fund Operating Expenses," on page 87, is amended as follows:

Annual Fund Operating Expenses (as a percentage of average net assets)

Total Total
Annual Annual
Management Management Other Other Expenses Expenses
Fee Fee Expenses Expenses after any without any
after any without any after any without any applicable applicable
voluntary voluntary any applicable applicable waiver or waiver or
waiver waiver reimbursement reimbursement reimbursementreimbursement
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AST Putnam Balanced(6) N/A 0.75% 0.24% 0.24% 0.99% 0.99%
AST Putnam Int'l Equity(4) N/A 0.90% 0.27% 0.27% 1.17% 1.17%
Founders Passport(1)(5) N/A 1.00% 0.46% 0.46% 1.46% 1.46%
</TABLE>

(4) Prior to October 15, 1996, the Investment Manager had engaged Seligman
Henderson Co. as Sub-advisor for the Portfolio (formerly, the Seligman Henderson
International Equity Portfolio), for a total Investment Management fee payable
at the annual rate of .90% of the average daily net assets of the Portfolio
after each voluntary waiver and 1.0% of the average daily nets assets of the
Portfolio without any voluntary waiver. As of October 15, 1996, the Investment
Manager has engaged Putnam Investment Management, Inc. as Sub-advisor for the
Portfolio, for a total Investment Management fee payable at the annual rate of
1.0% of the average daily net assets of the Portfolio not in excess of $75
million; plus .85% of the Portfolio's average daily net assets over $75 million.
The Management Fee in the above chart has been stated to reflect the current
Investment Management fee payable to the Investment Manager.

(5) Prior to October 15, 1996, the Investment Manager had engaged Seligman
Henderson Co. as Sub-advisor for the Portfolio (formerly, the Seligman Henderson
International Small Cap Portfolio), for a total Investment Management fee
payable at the annual rate of 1.0% of the average daily nets assets of the
Portfolio. As of October 15, 1996, the Investment Manager has engaged Founders
Asset Management, Inc. as Sub-advisor for the Portfolio, for a total Investment
Management fee payable at the annual rate of 1.0% of the average daily net
assets of the Portfolio. The Management Fee in the above chart has been stated
to reflect the current Investment Management fee payable to the Investment
Manager.

(6) Prior to October 15, 1996, the Investment Manager had engaged Phoenix
Investment Counsel, Inc. as Sub-advisor for the Portfolio (formerly, the AST
Phoenix Balanced Asset Portfolio), for a total Investment Management fee payable
at the annual rate of .75% of the average daily net assets of the Portfolio not
in excess of $75 million; plus .65% of the Portfolio's average daily net assets
in excess of $75 million. As of October 15, 1996, the Investment Manager has
engaged Putnam Investment Management, Inc. as Sub-advisor for the Portfolio, for
a total Investment Management fee payable at the annual rate of .75% of the
average daily net assets of the Portfolio not in excess of $300 million; plus
.70% of the Portfolio's average daily net assets in excess of $300 million. The
Management Fee in the above chart has been stated to reflect the current
Investment Management fee payable to the Investment Manager.

B. The current disclosure regarding the Balanced Portfolio, the
International Equity Portfolio and the Small Cap Portfolio under the caption,
"Expense Examples," on page 88, is amended as follows:
<TABLE>
<CAPTION>
After:

<S> <C> <C> <C> <C>
Portfolio: 1 yr. 3 yrs. 5 yrs. 10 yrs.
AST Putnam Balanced Portfolio 10 32 55 121
AST Putnam Int'l Equity Portfolio 12 37 64 142
Founders Passport Portfolio 15 46 80 175
</TABLE>

VII. CHANGES TO "PERFORMANCE":

The current disclosure regarding the International Equity Portfolio and
the Small Cap Portfolio under the caption, "Performance," beginning on page 88,
is amended as follows:

1. Reference to the "Seligman Henderson International Equity Portfolio" in
the fourth sentence of the third full paragraph on page 89 is replaced with the
"AST Putnam International Equity Portfolio."

2. Reference to the "Seligman Henderson International Small Cap Portfolio"
in the fourth sentence of the third full paragraph on page 89 is replaced with
the "Founders Passport Portfolio."

VIII. CHANGES TO "TRANSFER AND SHAREHOLDER SERVICING AGENT AND CUSTODIAN":

The current disclosure regarding the International Equity Portfolio and
the Small Cap Portfolio under the caption, "Transfer and Shareholder Servicing
Agent and Custodian," on page 89, is amended as follows:

1. Reference to the "Seligman Henderson International Equity Portfolio" in
the first sentence of the paragraph on page 89 is replaced with the "AST Putnam
International Equity Portfolio."

2. Reference to the "Seligman Henderson International Small Cap Portfolio"
in the first sentence of the paragraph on page 89 is replaced with the "Founders
Passport Portfolio."

AST JANCAP GROWTH PORTFOLIO

Presented below are details of certain changes to the current
disclosure contained in the Prospectus for the JanCap Growth Portfolio. These
changes were reported previously by a Supplement to the Prospectus and SAI,
dated September 4, 1996.

The twenty-sixth paragraph under the caption "Investment Management
Agreements," which appears as the first full paragraph on page 82 of the
Prospectus, is amended to read as follows:

Janus Capital Corporation for the JanCap Growth Portfolio: an annual
rate of .60% of the portion of the average daily net assets of the
Portfolio not in excess of $100 million; plus .55% of the portion over
$100 million but not in excess of $1 billion; plus .50% of the portion
over $1 billion. Commencing September 4, 1996, the Sub-advisor has
voluntarily agreed to waive a portion of its fee equal to .10% of the
Portfolio's average daily net assets over $500 million but not in
excess of $1 billion; and .05% of the portion of the Portfolio's
average daily net assets over $1 billion. For the year ended December
31, 1995 the amount paid by the Investment Manager to the Sub-advisor
was $1,869,411.