PROSPECTUS October 23, 2000
AMERICAN SKANDIA TRUST
One Corporate Drive, Shelton, Connecticut 06484
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American Skandia Trust (the "Trust") is an investment company made up of the following 41 separate portfolios
("Portfolios"), 9 of which are offered through this Prospectus:
AST American Century International Growth Portfolio
AST American Century International Growth Portfolio II
AST Janus Small-Cap Growth Portfolio
AST Alger Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST Alger All-Cap Growth Portfolio
AST JanCap Growth Portfolio
AST INVESCO Equity Income Portfolio
AST T. Rowe Price Global Bond Portfolio
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Trust is an investment vehicle for life insurance companies ("Participating Insurance Companies") writing variable
annuity contracts and variable life insurance policies. Shares of the Trust may also be sold directly to certain
tax-deferred retirement plans. Each variable annuity contract and variable life insurance policy involves fees and
expenses not described in this Prospectus. Please read the Prospectus for the variable annuity contract and variable
life insurance policy for information regarding the contract or policy, including its fees and expenses.
TABLE OF CONTENTS
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Caption Page
------- ----
Risk/Return Summary...............................................................................................3
Past Performance..................................................................................................8
Fees and Expenses of the Portfolios..............................................................................13
Investment Objectives and Policies...............................................................................15
AST American Century International Growth Portfolio.........................................................16
AST American Century International Growth Portfolio II......................................................18
AST Janus Small-Cap Growth Portfolio........................................................................19
AST Alger Mid-Cap Growth Portfolio..........................................................................21
AST Neuberger Berman Mid-Cap Value Portfolio................................................................22
AST Alger All-Cap Growth Portfolio..........................................................................24
AST JanCap Growth Portfolio.................................................................................25
AST INVESCO Equity Income Portfolio.........................................................................27
AST T. Rowe Price Global Bond Portfolio.....................................................................28
Portfolio Turnover...............................................................................................30
Net Asset Value..................................................................................................30
Purchase and Redemption of Shares................................................................................30
Management of the Trust..........................................................................................31
Tax Matters......................................................................................................34
Financial Highlights.............................................................................................36
Certain Risk Factors and Investment Methods......................................................................38
RISK/RETURN SUMMARY
American Skandia Trust (the "Trust") is comprised of forty-one investment portfolios (the "Portfolios"), nine of
which are offered through this Prospectus. The Portfolios are designed to provide a wide range of investment options.
Each Portfolio has its own investment goal and style (and, as a result, its own level of risk). Some of the Portfolios
offer potential for high returns with correspondingly higher risk, while others offer stable returns with relatively less
risk. It is possible to lose money when investing even in the most conservative of the Portfolios. Investments in the
Portfolios are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.
It is not possible to provide an exact measure of the risk to which a Portfolio is subject, and a Portfolio's
risk will vary based on the securities that it holds at a given time. Nonetheless, based on each Portfolio's investment
style and the risks typically associated with that style, it is possible to assess in a general manner the risks to which
a Portfolio will be subject. The following discussion highlights the investment strategies and risks of each Portfolio.
Additional information about each Portfolio's potential investments and its risks is included in this Prospectus under
"Investment Objectives and Policies."
International Portfolios:
Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------
American Century Int'l Capital growth The Portfolio invests primarily in equity securities of
Growth foreign companies.
American Century Int'l Capital growth The Portfolio invests primarily in equity securities of
Growth II foreign companies.
Principal Investment Strategies:
-------------------------------
The AST American Century International Growth Portfolio will seek to achieve its investment objective by investing
primarily in equity securities of international companies that the Sub-advisor believes will increase in value over
time. The Sub-advisor uses a growth investment strategy it developed that looks for companies with earnings and revenue
growth. Ideally, the Sub-advisor looks for companies whose earnings and revenues are not only growing, but are growing
at an accelerating pace. For purposes of the Portfolio, equity securities include common stocks, preferred stocks and
convertible securities.
The Sub-advisor tracks financial information for thousands of companies to research and select the stocks it believes
will be able to sustain accelerating growth. This strategy is based on the premise that, over the long term, the stocks
of companies with accelerating earnings and revenues have a greater-than-average chance to increase in value.
The Sub-advisor recognizes that, in addition to locating strong companies with accelerating earnings, the allocation of
assets among different countries and regions also is an important factor in managing an international portfolio. For
this reason, 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. 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.
While the Portfolio's focus will be on issuers in developed markets, the Sub-advisor expects to invest to some degree in
issuers in developing countries.
The AST American Century International Growth Portfolio II (formerly, the AST T. Rowe Price International Equity
Portfolio) will seek to achieve its investment objective in the same manner as the AST American Century International
Growth Portfolio as described above.
Principal Risks:
---------------
o The international portfolios are equity funds, and the primary risk of each is that the value of the stocks they
hold will decline. Stocks can decline for many reasons, including reasons related to the particular company, the
industry of which it is a part, or the securities markets generally.
o The level of risk of the international portfolios will generally be higher than the level of risk associated with
domestic equity funds. Foreign investments involve risks such as fluctuations in currency exchange rates, less
liquid and more volatile securities markets, unstable political and economic structures, reduced availability of
information, and lack of uniform financial reporting and regulatory practices such as those that apply to U.S.
issuers. While none of the international portfolios invest primarily in companies located in developing countries,
each may invest in those companies to some degree, and the risks of foreign investment may be accentuated by
investment in developing countries.
Capital Growth Portfolios:
Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------
Janus Small-Cap Growth Capital growth The Portfolio invests primarily in common stocks of small
capitalization companies.
Alger Mid-Cap Growth Long-term capital growth The Portfolio invests primarily in the equity securities of
medium-sized companies.
Neuberger Berman Mid-Cap Capital growth The Portfolio invests primarily in common stocks of medium
Value capitalization companies, using a value-oriented investment
approach.
Alger All-Cap Growth Long-term capital growth The Portfolio invests primarily in common and preferred
stocks.
JanCap Growth Capital growth The Portfolio invests primarily in common stocks.
Principal Investment Strategies:
-------------------------------
The AST Janus Small-Cap Growth Portfolio pursues its objective by normally investing at least 65% of its total assets in
the common stocks of small-sized companies. For purposes of the Portfolio, small-sized companies are those that have
market capitalizations of less than $1.5 billion or annual gross revenues of less than $500 million. To a lesser extent,
the Portfolio may also invest in stocks of larger companies with potential for capital appreciation.
The Sub-advisor generally takes a "bottom up" approach to building the Portfolio. In other words, it seeks to identify
individual companies with earnings growth potential that may not be recognized by the market at large. Although themes
may emerge in the Portfolio, securities are generally selected without regard to any defined industry sector or other
similar selection procedure.
The AST Alger Mid-Cap Growth 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 invests primarily in growth stocks. The
Sub-advisor believes that these stocks are those of two types of companies:
o High Unit Volume Growth Companies. These are vital creative companies that offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms, offering new or improved products, or firms
simply fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected to
produce advantageous results. These changes may be as varied as new management, products or technologies,
restructurings or reorganizations, or mergers and acquisitions.
The Portfolio focuses on midsize companies with promising 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(R)
MidCap 400 Index.
To pursue its objective, the AST Neuberger Berman Mid-Cap Value Portfolio primarily invests in the common stocks of
mid-cap companies. Some of the Portfolio's assets may be invested in the securities of large-cap companies as well as in
small-cap companies. The Portfolio seeks to reduce risk by diversifying among many companies and industries.
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 when other investors realize their worth. Factors that the Sub-advisor
may use to identify these companies include strong fundamentals, such as a low price-to-earnings ratio, consistent cash
flow, and a sound track record through all phases of the market cycle. The Sub-advisor may also look for other
characteristics in a company, such as a strong position relative to competitors, a high level of stock ownership among
management, or a recent sharp decline in stock price that appears to be the result of a short-term market overreaction to
negative news.
The Sub-advisor generally considers selling a stock when it reaches a target price, when it fails to perform as expected,
or when other opportunities appear more attractive.
The AST Alger All-Cap Growth 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.
The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two types of
companies:
o High Unit Volume Growth Companies. Vital creative companies that offer goods or services to a rapidly expanding
marketplace. They include both established and emerging firms, offering new or improved products, or firms simply
fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. Companies experiencing a major change that is expected to produce
advantageous results. These changes may be as varied as new management, products or technologies, restructurings or
reorganizations, or mergers and acquisitions.
The AST JanCap Growth Portfolio will pursue its objective by investing primarily in common stocks. Common stock
investments will be in 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 for the Portfolio. In other words, the Sub-advisor seeks to identify
individual companies with earnings growth potential that may not be recognized by the market at large.
Principal Risks:
---------------
o All of the capital growth portfolios are equity funds, and the primary risk of each is that the value of the
stocks they hold will decline. Stocks can decline for many reasons, including reasons related to the particular
company, the industry of which it is a part, or the securities markets generally. These declines can be substantial.
o The risk to which the capital growth portfolios are subject depends in part on the size of the companies in which
the particular portfolio invests. Securities of smaller companies tend to be subject to more abrupt and erratic
price movements than securities of larger companies, in part because they may have limited product lines, markets, or
financial resources. Market capitalization, which is the total market value of a company's outstanding stock, is
often used to classify companies based on size. Therefore, the AST Janus Small-Cap Growth Portfolio can be expected
to be subject to the highest degree of risk relative to the other capital growth funds. The AST Alger Mid-Cap Growth
Portfolio and the AST Neuberger Berman Mid-Cap Value Portfolio can be expected to be subject to somewhat less risk,
and the AST JanCap Growth Portfolio to somewhat less risk than the mid-cap funds. The AST Alger All-Cap Growth
Portfolio may invest in equity securities of companies without regard to capitalization, and may include large and
small companies at the same time.
o The AST Janus Small-Cap Growth Portfolio, the AST Alger Mid-Cap Growth Portfolio, the AST Alger All-Cap Growth
Portfolio and the AST JanCap Growth Portfolio generally take a growth approach to investing, while the AST Neuberger
Berman Mid-Cap Value Portfolio generally take a value approach. Value stocks are believed to be selling at prices
lower than what they are actually worth, while growth stocks are those of companies that are expected to grow at
above-average rates. A portfolio investing primarily in growth stocks will tend to be subject to more risk than a
value fund, although this will not always be the case. Value stocks are subject to the risks that the market may not
recognize the stock's actual value or that the market actually valued the stock appropriately.
o The AST Janus Mid-Cap Growth Portfolio is a non-diversified fund in that it may hold larger positions in a
smaller number of securities. As a result, a single security's increase or decrease in value may have a greater
impact on the Portfolio's share price and total return.
Growth and Income Portfolio:
Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------
INVESCO Equity Income Capital growth and current The Portfolio invests primarily in dividend-paying common and
income preferred stocks, and to a lesser extent in fixed income
securities.
Principal Investment Strategies:
-------------------------------
The AST INVESCO Equity Income 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. In addition, the Portfolio
normally will have some portion of its assets invested in debt securities or convertible bonds.
Principal Risks:
---------------
o Both equity securities (e.g., stocks) and fixed income securities (e.g., bonds) can decline in value, and the
primary risk of each of the growth and income portfolios is that the value of the securities they hold will decline.
The degree of risk to which the AST INVESCO Equity Income Portfolio is subject is likely to be somewhat less than a
portfolio investing exclusively for capital growth. Nonetheless, the share price of Portfolio can decline
substantially.
o The AST INVESCO Equity Income Portfolio invests primarily in equity securities, but will normally invest some of
its assets in fixed income securities. The values of equity securities tend to fluctuate more widely than the values
of fixed income securities. Therefore, those growth and income portfolios that invest primarily in equity securities
will likely be subject to somewhat higher risk than those portfolios that invest in both equity and fixed income
securities.
o The AST INVESCO Equity Income Portfolio may invest to some degree in lower-quality fixed income securities, which
are subject to greater risk that the issuer may fail to make interest and principal payments on the securities when
due. The Portfolio generally invests in intermediate- to long-term fixed income securities. Fixed income securities
with longer maturities are generally subject to greater risk than fixed income securities with shorter maturities, in
that their values will fluctuate more in response to changes in market interest rates.
Fixed Income Portfolio:
Portfolio: Investment Goal: Primary Investments:
--------- --------------- -------------------
T. Rowe Price Global Bond High current income and The Portfolio invests primarily in high-quality foreign and
capital growth U.S. government bonds.
Principal Investment Strategies:
-------------------------------
To achieve its objectives, the AST T. Rowe Price Global Bond Portfolio (formerly, the AST T. Rowe Price International
Bond 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 Portfolio seeks to moderate price fluctuation by actively managing its maturity structure and currency
exposure. 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.
Although the Portfolio expects to maintain an intermediate-to-long weighted average maturity, there are no maturity
restrictions on the overall portfolio or on individual securities. The Portfolio may and frequently does engage in
foreign currency transactions such as forward foreign currency exchange contracts, hedging its foreign currency exposure
back to the dollar or against other foreign currencies ("cross-hedging"). The Sub-advisor also attempts to reduce
currency risks through diversification among foreign securities and active management of maturities and currency
exposures.
The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds ("junk
bonds") and emerging market bonds. Some emerging market bonds, such as Brady Bonds, may be denominated in U.S. dollars.
Principal Risks:
---------------
o The risk of a fund or portfolio investing primarily in fixed income securities is determined largely by the
quality and maturity characteristics of its portfolio securities. Lower-quality fixed income securities are subject
to greater risk that the company may fail to make interest and principal payments on the securities when due. Fixed
income securities with longer maturities (or durations) are generally subject to greater risk than securities with
shorter maturities, in that their values will fluctuate more in response to changes in market interest rates.
o While the AST T. Rowe Price Global Bond Portfolio invests primarily in high-quality fixed income securities, its
substantial investments in foreign fixed income securities and relatively long average maturity will tend to increase
its level of risk. Like foreign equity investments, foreign fixed income investments involve risks such as
fluctuations in currency exchange rates, unstable political and economic structures, reduced availability of
information, and lack of uniform financial reporting and regulatory practices such as those that apply to U.S.
issuers. The AST T. Rowe Price Global Bond Portfolio can invest to some degree in securities of issuers in
developing countries and in lower-quality fixed income securities, and the risks of the Portfolio may be accentuated
by these holdings.
Past Performance
The bar charts show the performance of each Portfolio for each full calendar year the Portfolio has been in
operation. The tables below each bar chart show each such Portfolio's best and worst quarters during the periods
included in the bar chart, as well as average annual total returns for each Portfolio since inception. This information
may help provide an indication of each Portfolio's risks by showing changes in performance from year to year and by
comparing the Portfolio's performance with that of a broad-based securities index. The performance figures do not
reflect any charges associated with the variable insurance contracts through which Portfolio shares are purchased; and
would be lower if they did. All figures assume reinvestment of dividends. Past performance does not necessarily
indicate how a Portfolio will perform in the future. The 1999 performance figures for some of the Portfolios reflect the
substantial increases that occurred during 1999 in the markets for the types of securities in which those Portfolios
invest; it is unlikely that similarly large increases will continue in future years. No performance information is
included for the AST Alger Mid-Cap Growth Portfolio and the AST Alger All-Cap Growth Portfolio, which had commenced
operations after January, 1999.
AST American Century International Growth Portfolio
_________________________
65.20% 60.00%
40.00%
18.68% 20.00%
15.10%
0.00%
_________________________-20.00%
1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 49.04%, 4th quarter 1999 Down 17.66%, 3rd quarter 1998
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns Morgan Stanley Capital
For periods ending International (MSCI) EAFE
12/31/99 Index
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year 65.20% 26.96%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 31.21% 16.11%
(1/2/97)
---------------------- --------------------- ----------------------------
AST American Century International Growth Portfolio II*
31.95% 30.00%
11.09% 14.17% 14.03% 20.00%
1.36% 0.00%
-3.80%____________________________________________-20.00%
1994 1995 1996 1997 1998 1999
-------------------------------------- --------------------------------------
Best Quarter Worst Quarter
-------------------------------------- --------------------------------------
-------------------------------------- --------------------------------------
Up 24.22%, 4th quarter 1999 Down 13.58%, 3rd quarter 1998
-------------------------------------- --------------------------------------
---------------------- -------------------- -----------------------------
Average annual total Portfolio Index:
returns Morgan Stanley Capital
For periods ending International (MSCI) EAFE
12/31/99 Index
---------------------- -------------------- -----------------------------
---------------------- -------------------- -----------------------------
1 year 31.95% 26.96%
---------------------- -------------------- -----------------------------
---------------------- -------------------- -----------------------------
5 year 14.10% 12.82%
---------------------- -------------------- -----------------------------
---------------------- -------------------- -----------------------------
Since Inception 10.91% 11.90%
(1/4/94)
---------------------- -------------------- -----------------------------
*Prior to May 1, 2000, the AST American Century International
Growth Portfolio II was known as the AST T. Rowe Price
International Equity Portfolio, and Row Price-Fleming
International, Inc. served as Sub-advisor to the Portfolio.
AST Janus Small-Cap Growth Portfolio*
______________________________________________
141.96%
100.00%
60.00%
32.65% 40.00%
20.05% 20.00%
8.40% 6.01% 3.49%
0.00%
______________________________________________ -20.00%
1994 1995 1996 1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 79.79%, 4th quarter 1999 Down 23.95%, 3rd quarter 1998
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns Standard & Poors 500 Index
For periods ending
12/31/98
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year 141.96% 21.04%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
5 year 33.40% 28.52%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 28.84% 23.65%
(1/4/94)
---------------------- --------------------- ----------------------------
*Prior to January 1, 1999, the AST Janus Small-Cap Portfolio
was known as the Founders Capital Appreciation Portfolio, and
Founders Asset Management LLC served as Sub-advisor to the
Portfolio.
AST Neuberger Berman Mid-Cap Value Portfolio*
______________________________________________
60.00%
40.00%
26.13% 26.42% 20.00%
11.53% 5.67%
-6.95% -2.33% 0.00%
_____________________________________________ -20.00%
1994 1995 1996 1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 15.95%, 4th quarter 1998 Down 14.37%, 3rd quarter 1999
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns Standard & Poors 500 Index
For periods ending
12/31/99
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year 5.67% 21.04%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
5 year 12.91% 28.52%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 9.60% 22.22%
(5/3/93)
---------------------- --------------------- ----------------------------
*Prior to May 1, 1998, the AST Neuberger Berman Mid-Cap Value
Portfolio was known as the Federated Utility Income Portfolio,
and Federated Investment Counseling served as Sub-advisor to
the Portfolio.
AST JanCap Growth Portfolio
________________________________________________________________
68.26% 60.00%
55.01%
40.00%
11.87% 37.98% 28.66% 20.00%
28.36%
-4.51% 0.00%
______________________________________________________________-20.00%
1993 1994 1995 1996 1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 33.97%, 4th quarter 1999 Down 5.95%, 2nd quarter 1994
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns Standard & Poors 500 Index
For periods ending
12/31/99
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year 55.01% 21.04%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
5 year 42.82% 28.52%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 30.41% 21.80%
(11/5/92)
---------------------- --------------------- ----------------------------
AST INVESCO Equity Income Portfolio
_________________________________________________
60.00%
40.00%
30.07% 23.33% 20.00%
17.09% 13.34% 11.74%
-2.50% 0.00%
_______________________________________________________-20.00%
1994 1995 1996 1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 12.32%, 4th quarter 1998 Down 8.68%, 3rd quarter 1998
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns Standard & Poors 500 Index
For periods ending
12/31/99
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year 11.74% 21.04%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
5 year 18.92% 28.52%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 15.07% 23.65%
(1/4/94)
---------------------- --------------------- ----------------------------
AST T. Rowe Price Global Bond Portfolio*
_________________________________________________
60.00%
14.72% 40.00%
11.10% 20.00%
5.98%
-3.42% 0.00%
__________________________________-8.33%________-20.00%
1995 1996 1997 1998 1999
------------------------------------- -----------------------------------
Best Quarter Worst Quarter
------------------------------------- -----------------------------------
------------------------------------- -----------------------------------
Up 6.31%, 4th quarter 1998 Down 5.56%, 1st quarter 1999
------------------------------------- -----------------------------------
---------------------- --------------------- ----------------------------
Average annual total Portfolio Index:
returns J.P. Morgan Non-U.S.
For periods ending Government Bond Index
12/31/99
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
1 year -8.33% -6.17%
---------------------- --------------------- ----------------------------
---------------------- --------------------- ----------------------------
Since Inception 2.62% 6.14%
(5/3/94)
---------------------- --------------------- ----------------------------
*Prior to May 1, 1996, the AST T. Rowe Price Global Bond Portfolio was
known as the AST Scudder International Bond Portfolio, and Scudder, Stevens &
Clark, Inc. served as Sub-advisor to the Portfolio.
This page has been intentionally left blank.
FEES AND EXPENSES OF THE PORTFOLIOS: The table below describes the fees and expenses that you may pay if you buy and
hold shares of the Portfolios. Unless otherwise indicated, the expenses shown below are for the year ending December 31,
1999.
SHAREHOLDER TRANSACTION EXPENSES (fees paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases NONE*
Maximum Deferred Sales Charge (Load) NONE*
Maximum Sales Charge (Load) Imposed on Reinvested Dividends NONE*
Redemption Fees NONE*
Exchange Fee NONE*
* Because shares of the Portfolios may be purchased through variable insurance products, the prospectus of the relevant
product should be carefully reviewed for information on the charges and expenses of those products. This table does not
reflect any such charges.
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Portfolio assets, in %):
Management Estimated Other Total Annual Fee Waivers Net Annual
Fees Distribution Expenses Portfolio and Expense Fund
and Operating Reimbursement(4)Operating
Portfolio: Service Expenses Expenses
(12b-1)
Fees(3)
------------------------------------ ------------ ------------- ------------- --------------- --------------- ---------------
AST American Century International
Growth 1.00 0.00 0.50 1.50 N/A 1.50
AST American Century International
Growth II 1.00 0.02 0.26 1.28 N/A 1.28
AST Janus Small-Cap Growth 0.90 0.01 0.18 1.09 N/A 1.09
AST Alger Mid-Cap Growth(1) 0.80 0.00 0.23 1.03 0.18 0.85
AST Neuberger Berman Mid-Cap Value 0.90 0.12 0.23 1.25 N/A 1.25
AST Alger All-Cap Growth(2) 0.95 0.00 0.28 1.23 N/A 1.23
AST JanCap Growth 0.90 0.01 0.14 1.05 0.04 1.01
AST INVESCO Equity Income 0.75 0.04 0.18 0.97 N/A 0.97
AST T. Rowe Price Global Bond 0.80 0.00 0.31 1.11 N/A 1.11
(1) This Portfolio commenced operations in October 2000. "Other Expenses" and "Estimated Distribution and Service Fees"
shown are based on estimated amounts for the fiscal year ending December 31, 2000.
(2) This Portfolio commenced operations in January 2000. "Other Expenses" and "Estimated Distribution and Service Fees"
shown are based on actual amounts for the semi-annual period ended June 30, 2000.
(3) As discussed below under "Management of the Trust - Fees and Expenses, the Trustees adopted a Distribution Plan (the
"Distribution Plan") under Rule 12b-1 to permit an affiliate of the Trust's Investment Manager to receive brokerage
commissions in connection with purchases and sales of securities held by the Portfolios, and to use these commissions to
promote the sale of shares of the Portfolio. While the brokerage commission rates and amounts paid by the various
Portfolios are not expected to increase as a result of the Distribution Plan, the staff of the Securities and Exchange
Commission recently takes the position that commission amounts received under the Distribution Plan should be reflected
as distribution expenses of the Funds. The Distribution Fee estimates are derived and annualized from data regarding
commission amounts directed to the affiliate under the Distribution Plan from such Plan's commencement of operations for
each Portfolio (in late July through early August 1999) until December 31, 1999. Actual commission amounts directed
under the Distribution Plan will vary and the amounts directed during the first full fiscal year of the Plan's operations
may differ substantially from the annualized amounts listed in the above chart.
(4) The Investment Manager has agreed to reimburse and/or waive fees for certain Portfolios until at least April 30,
2001. 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.
EXPENSE EXAMPLES:
This example is intended to help you compare the cost of investing in the Portfolios with the cost of investing
in other mutual funds.
The Example assumes that you invest $10,000 in a Portfolio for the time periods indicated. The Example also
assumes that your investment has a 5% return each year, that the Portfolios' total operating expenses remain the same,
and that any expense waivers and reimbursements remain in effect only for the periods during which they are binding.
Although your actual costs may be higher or lower, based on these assumptions your costs would be:
After:
Portfolio: 1 yr. 3 yrs. 5 yrs. 10 yrs.
--------- ------------------------------------------------------------
AST American Century International Growth 153 474 818 1,791
AST American Century International Growth II 130 406 702 1,545
AST Janus Small-Cap Growth 111 347 601 1,329
AST Alger Mid-Cap Growth 87 271 N/A N/A
AST Neuberger Berman Mid-Cap Value 127 397 686 1,511
AST Alger All-Cap Growth 125 390 676 1,489
AST JanCap Growth 103 330 575 1,279
AST INVESCO Equity Income 99 309 536 1,190
AST T. Rowe Price Global Bond 113 353 612 1,352
INVESTMENT OBJECTIVES AND POLICIES:
The investment objective, policies and limitations for each of the Portfolios are described below. While certain
policies apply to all Portfolios, generally each Portfolio has a different investment objective and investment focus. As
a result, the risks, opportunities and returns of investing in each Portfolio will differ. The investment objectives and
policies of the Portfolios generally are not fundamental policies and may be changed by the Trustees without shareholder
approval.
There can be no assurance that the investment objective of any Portfolio will be achieved. Risks relating to
certain types of securities and instruments in which the Portfolios may invest are described in this Prospectus under
"Certain Risk Factors and Investment Methods."
If approved by the Trustees, the Trust may add more Portfolios and may cease to offer any existing Portfolios in
the future.
AST AMERICAN CENTURY INTERNATIONAL GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek capital growth.
Principal Investment Policies and Risks:
The Portfolio will seek to achieve its investment objective by investing primarily in equity securities of
international companies that the Sub-advisor believes will increase in value over time. The Sub-advisor uses a growth
investment strategy it developed that looks for companies with earnings and revenue growth. Ideally, the Sub-advisor
looks for companies whose earnings and revenues are not only growing, but are growing at an accelerating pace.
Accelerating growth is shown, for example, by growth that is faster this quarter than last or faster this year than the
year before. For purposes of the Portfolio, equity securities include common stocks, preferred stocks and convertible
securities.
The Sub-advisor tracks financial information for thousands of companies to research and select the stocks it
believes will be able to sustain accelerating growth. This strategy is based on the premise that, over the long term,
the stocks of companies with accelerating earnings and revenues have a greater-than-average chance to increase in value.
The Sub-advisor recognizes that, in addition to locating strong companies with accelerating earnings, the
allocation of assets among different countries and regions also is an important factor in managing an international
portfolio. For this reason, 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. 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. In order to maintain investment flexibility, the Portfolio has not otherwise established geographic
requirements for asset distribution.
While the Portfolio's focus will be on issuers in developed markets, the Sub-advisor expects to invest to some
degree in issuers in developing countries. The Portfolio may make foreign investments either directly in foreign
securities, or indirectly by purchasing depositary receipts. Securities purchased in foreign markets may either be
traded on foreign securities exchanges or in the over-the-counter markets.
As with all stocks, the value of the stocks held by the Portfolio can decrease as well as increase. As a fund
investing primarily in equity securities of foreign issuers, the Portfolio may be subject to a level of risk and share
price fluctuation higher than most funds that invest primarily in domestic equities. Foreign companies may be subject to
greater economic risks than domestic companies, and foreign securities are subject to certain risks relating to
political, regulatory and market structures and events that domestic securities are not subject to. To the extent the
Portfolio invests in securities of issuers in developing counties, the Portfolio may be subject to even greater levels of
risk and share price fluctuation.
Other Investments:
Securities of U.S. issuers may be included in the Portfolio from time to time. The Portfolio also may invest in
bonds, notes and debt securities of companies and obligations of domestic or foreign governments and their agencies. The
Portfolio will limit its purchases of debt securities to investment grade obligations. The Portfolio may enter into
non-leveraged stock index futures contracts and may make short sales "against the box."
Derivative Securities. The Portfolio may invest in derivative securities. Certain of these derivative
securities may be described as "index/structured" securities, which are securities whose value or performance is linked
to other equity securities (as in the case of depositary receipts), currencies, interest rates, securities indices or
other financial indicators ("reference indices"). The Portfolio may not invest in a derivative security unless the
reference index or the instrument to which it relates is an eligible investment for the Portfolio. For example, a
security whose underlying value is linked to the price of oil would not be a permissible investment because the Portfolio
may not invest in oil and gas leases or futures. The Portfolio may make short sales "against the box."
Forward Currency Exchange Contracts. As a fund investing primarily in foreign securities, the value of the
Portfolio will be affected by changes in the exchange rates between foreign currencies and the U.S. dollar. To protect
against adverse movements in exchange rates, the Portfolio may, for hedging purposes only, enter into forward foreign
currency exchange contracts. The Portfolio may enter into a forward contract to "lock-in" an exchange rate for a
specific purchase or sale of a security. Less frequently, the Portfolio may enter into a forward contract to seek to
protect its holdings in a particular currency from a decline in that currency. Predicting the relative future values of
currencies is very difficult, and there is no assurance that any attempt to reduce the risk of adverse currency movements
through the use of forward contracts will be successful.
Indirect Foreign Investments. The Portfolio may invest up to 10% of its assets in certain foreign countries
indirectly through investment funds and registered investment companies that invest in those countries. If the Portfolio
invests in investment companies, it will bear its proportionate share of the costs incurred by such companies, including
any investment advisory fees.
Additional information about the securities that the Portfolio may invest in and their risks is included below
under "Certain Risk Factors and Investment Methods."
Temporary Investments. Under exceptional market or economic conditions, the Portfolio may temporarily invest all
or a substantial portion of its assets in cash or investment-grade short-term securities. While the Portfolio is in a
defensive position, the ability to achieve its investment objective of capital growth may be limited.
AST AMERICAN CENTURY INTERNATIONAL GROWTH PORTFOLIO II:
The investment objective, policies and risks of the Portfolio (formerly, the AST T. Rowe Price International Equity
Portfolio) are substantially identical to those of the AST American Century International Growth Portfolio as described
immediately above.
AST JANUS SMALL-CAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is capital growth.
Principal Investment Policies and Risks:
The Portfolio pursues its objective by normally investing at least 65% of its total assets in the common stocks
of small-sized companies. For purposes of the Portfolio, small-sized companies are those that have market
capitalizations of less than $1.5 billion or annual gross revenues of less than $500 million. To a lesser extent, the
Portfolio may also invest in stocks of larger companies with potential for capital growth.
The Sub-advisor generally takes a "bottom up" approach to building the Portfolio. In other words, it seeks to
identify individual companies with earnings growth potential that may not be recognized by the market at large. Although
themes may emerge in the Portfolio, securities are generally selected without regard to any defined industry sector or
other similar selection procedure. Current income is not a significant factor in choosing investments.
Because the Portfolio invests primarily in common stocks, the fundamental risk of investing in the Portfolio is
that the value of the stocks it holds might decrease. Stock values may fluctuate in response to the activities of an
individual company or in response to general market or economic conditions. 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. Smaller companies are more likely to realize substantial
growth as well as suffer significant losses than larger issuers. Smaller companies may lack depth of management, they
may be unable to generate funds necessary for growth or potential development internally or to generate such funds
through external financing on favorable terms, or they may be developing or marketing products or services for which
there are not yet, and may never be, established markets. In addition, such companies may be subject to intense
competition from larger competitors, and may have more limited trading markets than the markets for securities of larger
issuers.
While the Sub-advisor tries to reduce the risk of the Portfolio by diversifying its assets among issuers (so that
the effect of any single holding is reduced), and by not concentrating its assets in any particular industry, there is no
assurance that these effort will be successful in reducing the risks to which the Portfolio is subject.
The Portfolio generally intends to purchase securities for long-term investment rather than short-term gains.
However, short-term transactions may occur as the result of liquidity needs, securities having reached a desired price or
yield, anticipated changes in interest rates or the credit standing of an issuer, or by reason of economic or other
developments not foreseen at the time the investment was made. To a limited extent, the Portfolio may purchase
securities in anticipation of relatively short-term price gains. The Portfolio may also sell one security and
simultaneously purchase the same or a comparable security to take advantage of short-term differentials in bond yields or
securities prices.
Special Situations. The Portfolio may invest in "special situations" from time to time. A special situation
arises when, in the opinion of the Sub-advisor, the securities of a particular issuer will be recognized and increase in
value due to a specific development with respect to that issuer. Developments creating a special situation might include
a new product or process, a technological breakthrough, a management change or other extraordinary corporate event, or
differences in market supply of and demand for the security. Investment in special situations may carry an additional
risk of loss in the event that the anticipated development does not occur or does not attract the expected attention.
Other Investments:
The Portfolio may invest to a lesser degree in types of securities other than common stocks, including preferred
stocks, warrants, convertible securities and debt securities. The Portfolio is subject to the following percentage
limitations on investing in certain types of debt securities:
-- 35% of its assets in bonds rated below investment grade by the primary rating agencies ("junk" bonds).
-- 25% of its assets in mortgage- and asset-backed securities.
-- 10% of its assets in zero coupon, pay-in-kind and step coupon securities (securities that do not, or may not
under certain circumstances, make regular interest payments).
The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of
securities and engage in the following investment techniques:
Index/structured Securities. The Portfolio may invest in indexed/structured securities, which typically are
short- to intermediate-term debt securities whose value at maturity or interest rate is linked to currencies, interest
rates, equity securities, indices, commodity prices or other financial indicators. Such securities may offer growth
potential because of anticipated changes in interest rates, credit standing, currency relationships or other factors.
Foreign Securities. The Portfolio may invest without limit in foreign equity and debt securities. The Portfolio
may invest directly in foreign securities denominated in foreign currencies, or may invest through depositary receipts or
passive foreign investment companies. Generally, the same criteria are used to select foreign securities as domestic
securities. The Sub-advisor seeks companies that meet these criteria regardless of country of organization or principal
business activity. However, certain factors such as expected inflation and currency exchange rates, government policies
affecting businesses, and a country's prospects for economic growth may warrant consideration in selecting foreign
securities.
Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities,
financial indices and foreign currencies and options on such contracts, and may invest in options on securities,
financial indices and foreign currencies, forward contracts and interest rate swaps and swap-related products
(collectively "derivative instruments"). The Portfolio intends to use most derivative instruments primarily to hedge the
value of its portfolio against potential adverse movements in securities prices, currency exchange rates or interest
rates. To a limited extent, the Portfolio may also use derivative instruments for non-hedging purposes such as seeking
to increase income.
For more information on the types of securities other than common stocks in which the Portfolio may invest, see
this Prospectus under "Certain Risk Factors and Investment Methods."
Temporary Investments. When the Sub-advisor believes that market conditions are not favorable for profitable
investing or when the Sub-advisor is otherwise unable to locate favorable investment opportunities, the Portfolio's
investments may be hedged to a greater degree and/or its cash or similar investments may increase. In other words, the
Portfolio does not always stay fully invested in stocks and bonds. The Portfolio's cash and similar investments may
include high-grade commercial paper, certificates of deposit, repurchase agreements and money market funds managed by the
Sub-advisor. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective of
capital growth will be limited.
AST ALGER MID-CAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.
Principal Investment Policies and Risks:
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 invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two
types of companies:
o High Unit Volume Growth Companies. These are vital, creative companies that offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms, offering new or improved products, or firms
simply fulfilling an increased demand for an existing product line.
o Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected to
produce advantageous results. These changes may be as varied as new management, products or technologies,
restructurings or reorganizations, or mergers and acquisitions.
The Portfolio focuses on midsize companies with promising 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(R)MidCap 400 Index. The Portfolio may invest up to 35% of its total assets in equity security of companies that,
at the time of purchase, have total market capitalization outside the range of companies in the S&P MidCap 400 Index and
in excess of 35% (up to 100% of its assets) during temporary defensive periods.
As with any fund investing primarily in equity securities, the value of the securities held by the Portfolio may
decline. These declines can be substantial. In addition, the growth stocks in which the Portfolio invests primarily
tend to fluctuate in price more than other types of stocks. Prices of growth stocks tend to be higher in relation to
their companies' earnings, and may be more sensitive to market, political and economic developments than other stocks.
Because the Portfolio invests primarily in the securities of medium-sized companies, there is a possibility of
greater risk than a fund that invests in larger, more established companies. Increased risk may result from such factors
as inexperienced management and limited financial resources.
Other Investments:
Foreign Securities. The Portfolio may invest up to 20% of the value of its total assets, measured at the time of
investment, in equity and debt securities that are denominated in foreign currencies. There is no limitation on the
percentage of the Portfolio's assets that may be invested in securities of foreign companies that are denominated in U.S.
dollars. In addition, the Portfolio may enter into foreign currency transactions, including forward foreign currency
contracts and options on foreign currencies, to manage currency risks, to facilitate transactions in foreign securities,
and to repatriate dividend or interest income received in foreign currencies.
Short sales "against the box." The Portfolio may from time to time makes short sales "against the box."
A discussion of these investments and their risks is included in this Prospectus under "Certain Risk Factors and
Investment Methods."
Temporary Investments. The Portfolio may invest up to 100% of its assets in cash, commercial paper, high-grade
bonds or cash equivalents for temporary defensive reasons if the Sub-advisor believes that adverse market or other
conditions warrant. This is to attempt to protect the Portfolio from a temporary unacceptable risk of loss. However,
while the Portfolio is in a defensive position, the opportunity to achieve its investment objective of long-term capital
growth will be limited.
AST NEUBERGER BERMAN MID-CAP VALUE PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek capital growth.
Principal Investment Policies and Risks:
To pursue its objective, the Portfolio primarily invests in the common stocks of mid-cap companies. Some of the
Portfolio's assets may be invested in the securities of large-cap companies as well as in small-cap companies. The
Portfolio seeks to reduce risk by diversifying among many companies and industries.
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. Fund managers may
identify value stocks in several ways, including based on earnings, book value or other financial measures. 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 through all phases of the market cycle.
The Sub-advisor may also look for other characteristics in a company, such as a strong position relative to
competitors, a high level of stock ownership among management, or a recent sharp decline in stock price that appears to
be the result of a short-term market overreaction to negative news.
The Sub-advisor generally considers selling a stock when it reaches a target price, when it fails to perform as
expected, or when other opportunities appear more attractive.
As a fund that invests primarily in mid-cap companies, the Portfolio's risk and share price fluctuation can be
expected to be more than that of many funds investing primarily in large-cap companies, but less than that of many funds
investing primarily in small-cap companies. Mid-cap stocks may fluctuate more widely in price than the market as a
whole, may underperform other types of stocks when the market or the economy is not robust, or fall in price or be
difficult to sell during market downturns. While value investing historically has involved less risk than investing in
growth companies, the stocks purchased by the Portfolio will remain undervalued during a short or extended period of
time. This may happen because value stocks as a category lose favor with investors compared to growth stocks, or because
the Sub-advisor failed to anticipate which stocks or industries would benefit from changing market or economic conditions.
Other Investments:
Although equity securities are normally the Portfolio's primary investment, it may invest in preferred stocks and
convertible securities, as well as the types of securities described below. Additional information about these
investments and the special risk factors that apply to them is included in this Prospectus under "Certain Risk Factors
and Investment Methods."
Fixed Income Securities. The Portfolio may invest up to 35% of its total assets, measured at the time of
investment, in fixed income or debt securities. The Portfolio may invest up to 15% of its total assets, measured at the
time of investment, in debt securities that are rated below investment grade or comparable unrated securities. There is
no minimum rating on the fixed income securities in which the Portfolio may invest.
Foreign Securities. The Portfolio may invest up to 10% of the value of its total assets, measured at the time of
investment, in equity and debt securities that are denominated in foreign currencies. There is no limitation on the
percentage of the Portfolio's assets that may be invested in securities of foreign companies that are denominated in U.S.
dollars. In addition, the Portfolio may enter into foreign currency transactions, including forward foreign currency
contracts and options on foreign currencies, to manage currency risks, to facilitate transactions in foreign securities,
and to repatriate dividend or interest income received in foreign currencies.
Covered Call Options. The Portfolio may try to reduce the risk of securities price changes (hedge) or generate
income by writing (selling) covered call options against securities held in its portfolio, and may purchase call options
in related closing transactions. The value of securities against which options will be written will not exceed 10% of
the Portfolio's net assets.
Temporary Investments. When the Portfolio anticipates unusual market or other conditions, it may temporarily
depart from its objective of capital growth and invest substantially in high-quality short-term investments. This could
help the Portfolio avoid losses but may mean lost opportunities.
AST ALGER ALL-CAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek long-term capital growth.
Principal Investment Policies and Risks:
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.
The Portfolio invests primarily in growth stocks. The Sub-advisor believes that these stocks are those of two
types of companies:
High Unit Volume Growth Companies. These are vital, creative companies that offer goods or services to a rapidly
expanding marketplace. They include both established and emerging firms, offering new or improved products, or firms
simply fulfilling an increased demand for an existing product line.
Positive Life Cycle Change Companies. These are companies experiencing a major change that is expected to
produce advantageous results. These changes may be as varied as new management, products or technologies, restructurings
or reorganizations, or mergers and acquisitions.
As with any fund investing primarily in equity securities, the value of the securities held by the Portfolio may
decline. These declines can be substantial. In addition, the growth stocks in which the Portfolio invests primarily
tend to fluctuate in price more than other types of stocks. Prices of growth stocks tend to be higher in relation to
their companies' earnings, and may be more sensitive to market, political and economic developments than other stocks.
The Portfolio's level of risk will vary based upon the size of the companies it invests in at a given time. To the
extent that the Portfolio emphasizes small-cap stocks, it will be subject to a level of risk higher than a fund investing
primarily in more conservative "large-cap" stocks.
Other Investments:
In addition to investing in common and preferred stocks, the Portfolio may invest in securities convertible into
or exchangeable for equity securities, including warrants and rights. The Portfolio may invest up to 20% of its total
assets in foreign securities. (American Depositary Receipts or other U.S. dollar denominated securities of foreign
issuers are not subject to the 20% limitation.)
The Fund may purchase put and call options and write (sell) put and covered call options on securities and
securities indices to increase gain or to hedge against the risk of unfavorable price movements. However, the
Sub-advisor does not currently intend to rely on these option strategies extensively, if at all. The Portfolio may
purchase and sell stock index futures contracts and options on stock index futures contracts. The Portfolio may sell
securities "short against the box."
An additional discussion of these types of investments and their risks is included in this Prospectus under
"Certain Risk Factors and Investment Methods."
Temporary Investments. The Portfolio may invest up to 100% of its assets in cash, commercial paper, high-grade
bonds or cash equivalents for temporary defensive reasons if the Sub-advisor believes that adverse market or other
conditions warrant. This is to attempt to protect the Portfolio from a temporary unacceptable risk of loss. However,
while the Portfolio is in a defensive position, the opportunity to achieve its investment objective of long-term capital
growth will be limited.
AST JANCAP GROWTH PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek growth of capital in a 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.
Principal Investment Policies and Risks:
The Portfolio will pursue its objective by investing primarily in common stocks. Common stock investments will
be in 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 for the Portfolio. In other words, the Sub-advisor seeks to identify individual
companies with earnings growth potential that may not be recognized by the market at large.
Because the Portfolio invests a substantial portion (or all) of its assets in stocks, the Portfolio is subject to
the risks associated with stock investments, and the Portfolio's share price therefore may fluctuate substantially. This
is true despite the Portfolio's focus on the stocks of larger more-established companies. The Portfolio's share price
will be affected by changes in the stock markets generally, and factors specific to a company or an industry will affect
the prices of particular stocks held by the Portfolio (for example, poor earnings, loss of major customers, major
litigation against an issuer, or changes in government regulations affecting an industry). Because of the types of
securities it invests in, the Portfolio is designed for those who are investing for the long term.
The Portfolio generally intends to purchase securities for long-term investment rather than short-term gains.
However, short-term transactions may occur as the result of liquidity needs, securities having reached a desired price or
yield, anticipated changes in interest rates or the credit standing of an issuer, or by reason of economic or other
developments not foreseen at the time the investment was made.
Special Situations. The Portfolio may invest in "special situations" from time to time. A "special situation"
arises when, in the opinion of the Sub-advisor, the securities of a particular company will be recognized and appreciate
in value due to a specific development, such as a technological breakthrough, management change or new product at that
company. Investment in "special situations" carries an additional risk of loss in the event that the anticipated
development does not occur or does not attract the expected attention.
Other Investments:
Although the Sub-advisor expects to invest primarily in equity securities, the Portfolio may also invest to a
lesser degree in preferred stocks, convertible securities, warrants, and debt securities when the Portfolio perceives an
opportunity for capital growth from such securities. The Portfolio is subject to the following percentage limitations on
investing in certain types of debt securities:
-- 35% of its assets in bonds rated below investment grade ("junk" bonds).
-- 25% of its assets in mortgage- and asset-backed securities.
-- 10% of its assets in zero coupon, pay-in-kind and step coupon securities (securities that do not, or may not
under certain circumstances, make regular interest payments).
The Portfolio may make short sales "against the box." In addition, the Portfolio may invest in the following types of
securities and engage in the following investment techniques:
Foreign Securities. The Portfolio may also purchase securities of foreign issuers, including foreign equity and
debt securities and depositary receipts. Foreign securities are selected primarily on a stock-by-stock basis without
regard to any defined allocation among countries or geographic regions. No more than 25% of the Portfolio's assets may
be invested in foreign securities denominated in foreign currencies and not publicly traded in the United States.
Futures, Options and Other Derivative Instruments. The Portfolio may enter into futures contracts on securities,
financial indices and foreign currencies and options on such contracts and may invest in options on securities, financial
indices and foreign currencies, forward contracts and interest rate swaps and swap-related products (collectively
"derivative instruments"). The Portfolio intends to use most derivative instruments primarily to hedge the value of its
portfolio against potential adverse movements in securities prices, foreign currency markets or interest rates. To a
limited extent, the Portfolio may also use derivative instruments for non-hedging purposes such as seeking to increase
income. The Portfolio may also use a variety of currency hedging techniques, including forward foreign currency exchange
contracts, to manage exchange rate risk with respect to investments exposed to foreign currency fluctuations.
For more information on the types of securities other than common stocks in which the Portfolio may invest, see
this Prospectus under "Certain Risk Factors and Investment Methods."
Temporary Investments. The Sub-advisor may increase the Portfolio's cash position without limitation when the
Sub-advisor is of the opinion that appropriate investment opportunities for capital growth with desirable risk/reward
characteristics are unavailable. Cash and similar investments (whether made for defensive purposes or to receive a
return on idle cash) will include high-grade commercial paper, certificates of deposit, repurchase agreements and money
market funds managed by the Sub-advisor. While the Portfolio is in a defensive position, the opportunity to achieve its
investment objective of capital growth will be limited.
AST INVESCO EQUITY INCOME PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to seek capital growth and current income while
following sound investment practices.
Principal Investment Policies and Risks:
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. In addition, the Portfolio normally will have some
portion of its assets invested in debt securities or convertible bonds. The Portfolio may invest up to 25% of its total
assets in foreign securities, including securities of issuers in countries considered to be developing. These foreign
investments may serve to increase the overall risks of the Portfolio.
The Portfolio's investments in common stocks may, of course, decline in value, which will result in declines in
the Portfolio's share price. Such declines could be substantial. To minimize the risk this presents, the Sub-advisor
will not invest more than 5% of the Portfolio's assets in the securities of any one company or more than 25% of the
Portfolio's assets in any one industry. In light of the Portfolio's focus on income producing stocks, its risk and share
price fluctuation (and potential for gain) may be less than many other stock funds.
Debt Securities. The Portfolio's investments in debt securities will generally be subject to both 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. Market risk relates to the fact that the market values of debt securities in which the Portfolio invests
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 debt securities, whereas a decline in interest rates will tend to increase their values. Although
the Sub-advisor will limit the Portfolio's debt security investments to securities it believes are not highly
speculative, both kinds of risk are increased by investing in debt securities rated below the top four grades by Standard
& Poor's Corporation or Moody's Investors Services, Inc., or equivalent unrated debt securities ("junk bonds").
In order to decrease its risk in investing in debt securities, the Portfolio will invest no more than 15% of its
assets in junk bonds, and in no event will the Portfolio ever invest in a debt security rated below Caa by Moody's or CCC
by Standard & Poor's. While the Sub-advisor will monitor all of the debt securities in the Portfolio for the issuers'
ability to make required principal and interest payments and other quality factors, the Sub-advisor may retain in the
Portfolio a debt security whose rating is changed to one below the minimum rating required for purchase of such a
security. For a discussion of the special risks involved in lower-rated bonds, see this Prospectus under "Certain Risk
Factors and Investment Methods."
Temporary Investments:
In periods of uncertain market and economic conditions, the Portfolio may assume a defensive position with up to
100% of its assets temporarily invested in high quality corporate bonds or notes or government securities, or held in
cash. While the Portfolio is in a defensive position, the opportunity to achieve its investment objective may be limited.
AST T. ROWE PRICE GLOBAL BOND PORTFOLIO:
Investment Objective: The investment objective of the Portfolio is to provide high current income and capital growth by
investing in high-quality, foreign and U.S. government bonds.
Principal Investment Policies and Risks:
To achieve its objectives, 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 of U.S. and foreign issuers may also be purchased. The Portfolio seeks to moderate
price fluctuation by actively managing its maturity structure and currency exposure. 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.
Although the Portfolio expects to maintain an intermediate-to-long weighted average maturity, there are no
maturity restrictions on the overall portfolio or on individual securities. The Portfolio may and frequently does engage
in foreign currency transactions such as forward foreign currency exchange contracts, hedging its foreign currency
exposure back to the dollar or against other foreign currencies ("cross-hedging"). The Sub-advisor also attempts to
reduce currency risks through diversification among foreign securities and active management of currency exposures.
The Portfolio may also invest up to 20% of its assets in the aggregate in below investment-grade, high-risk bonds
("junk bonds") and emerging market bonds. Some emerging market bonds, such as Brady Bonds, may be denominated in U.S.
dollars.
Like any fixed income fund, the value of the Portfolio will fluctuate in response to changes in market interest
rates and the credit quality of particular companies. International fixed income investing, however, involves additional
risks that can increase the potential for losses. These additional risks include varying stages of economic and
political development of foreign countries, differing regulatory and accounting standards in non-U.S. markets, and higher
transaction costs. Because a substantial portion of the Portfolio's investments are denominated in foreign currencies,
exchange rates are also likely to have a significant impact on total Portfolio performance. For example, a rise in the
U.S. dollar's value relative to the Japanese yen will decrease the U.S. dollar value of a Japanese bond held in the
Portfolio, even though the price of that bond in yen remains unchanged. Therefore, because of these currency risks and
the risks of investing in foreign securities generally, the Portfolio will involve a greater degree of risk and share
price fluctuation than a fund investing primarily in domestic fixed income securities, but ordinarily will involve less
risk than a fund investing exclusively in foreign fixed income securities. In addition, the Portfolio's focus on longer
maturity bonds will tend to cause greater fluctuations in value when interest rates change.
Types of Debt Securities. The Portfolio's investments in debt securities may include securities issued or
guaranteed by the U.S. and foreign governments, their agencies, instrumentalities or political subdivisions, securities
issued or guaranteed by supranational organizations (e.g., European Investment Bank, InterAmerican Development Bank or
the World Bank), bank or bank holding company securities, foreign and domestic corporate debt securities, and commercial
paper.
The Portfolio may invest in zero coupon securities, which are securities that are purchased at a discount from
their face value, but that do not make cash interest payments. Zero coupon securities are subject to greater fluctuation
in market value as a result of changing interest rates than debt obligations that make current cash interest payments.
The Portfolio may invest in Brady Bonds, which are used as a means of restructuring the external debt burden of
certain emerging countries. Even if the bonds are collateralized, they are often considered speculative investments
because of the country's credit history or other factors. The Portfolio may purchase the securities of certain foreign
investment funds or trusts called passive foreign investment companies. Such trusts have been the only or primary way to
invest in certain countries. In addition to bearing their proportionate share of the Trust's expenses, shareholders will
also indirectly bear similar expenses of such trusts.
The Portfolio from time to time may invest in collateralized mortgage obligations, asset-backed bonds and debt
securities convertible into equities.
Nondiversified Investment Company. The Portfolio intends to select its investments from a number of country and
market sectors, and intends to have investments in securities of issuers from a minimum of three different countries
(including the United States). However, the Portfolio is considered a "nondiversified" investment company for purposes
of the Investment Company Act of 1940. As such, the Portfolio may invest more than 5% of its assets in the fixed-income
securities of individual foreign governments. The Portfolio generally will not invest more than 5% of its assets in any
individual corporate issuer, except with respect to certain short-term investments. As a nondiversified fund, a price
decline in any one of the Portfolio's holdings may have a greater effect on the Portfolio's value than on the value of a
fund that is more broadly diversified.
Other Investments:
The Portfolio may buy and sell futures contracts (and related options) for a number of reasons including: to
manage exposure to changes in interest rates, securities prices and currency exchange rates; as an efficient means of
adjusting overall exposure to certain markets; to earn income; to protect the value of portfolio securities; and to
adjust the portfolio's duration. The Portfolio may purchase or write call and put options on securities, financial
indices, and foreign currencies. The Portfolio may invest up to 10% of its total assets in hybrid instruments, which
combine the characteristics of futures, options and securities.
Additional information on the securities in which the Portfolio may invest and their risks in included below
under "Certain Risk Factors and Investment Methods."
Temporary Investments. To protect against adverse movements of interest rates, the Portfolio may invest without
limit in short-term obligations denominated in U.S. and foreign currencies such as certain bank obligations, commercial
paper, short-term government and corporate obligations, repurchase agreements and money market mutual funds managed by
the Sub-advisor. Cash reserves also provide flexibility in meeting redemptions and paying expenses. While the Portfolio
is in a defensive position, the opportunity to achieve its investment objective of high current income and capital growth
may be limited.
PORTFOLIO TURNOVER:
Each Portfolio may sell its portfolio securities, regardless of the length of time that they have been held, if
the Sub-advisor and/or the Investment Manager determines that it would be in the Portfolio's best interest to do so. It
may be appropriate to buy or sell portfolio securities due to economic, market, or other factors that are not within the
Sub-advisor's or Investment Manager's control. Such transactions will increase a Fund's "portfolio turnover." A 100%
portfolio turnover rate would occur if all of the securities in a portfolio of investments were replaced during a given
period.
Although turnover rates may vary substantially from year to year, it is anticipated that the following Portfolios
may regularly have annual rates of turnover exceeding 100%:
AST American Century International Growth Portfolio
AST American Century International Growth Portfolio II
AST Janus Small-Cap Growth Portfolio
AST Alger Mid-Cap Growth Portfolio
AST Neuberger Berman Mid-Cap Value Portfolio
AST JanCap Growth Portfolio
AST T. Rowe Price Global Bond Portfolio
A high rate of portfolio turnover involves correspondingly higher brokerage commission expenses and other
transaction costs, which are borne by a Portfolio and will reduce its performance.
NET ASSET VALUE:
The net asset value per share ("NAV") of each Portfolio is determined as of the close of the New York Stock
Exchange (the "NYSE") (normally 4:00 p.m. Eastern Time) on each day that the NYSE is open for business. NAV is
determined by dividing the value of a Portfolio's total assets, less any liabilities, by the number of total shares of
that Portfolio outstanding. In general, the assets of each Portfolio are valued on the basis of market quotations.
However, in certain circumstances where market quotations are not readily available or are believed to be inaccurate,
assets are valued by methods that are believed to accurately reflect their fair value. Because NAV is calculated and
purchases may be made only on business days, and because securities traded on foreign exchanges may trade on other days,
the value of a Portfolio's investments may change on days when shares cannot be purchased or redeemed.
PURCHASE AND REDEMPTION OF SHARES:
Purchases of shares of the Portfolios may be made only by separate accounts of Participating Insurance Companies
for the purpose of investing assets attributable to variable annuity contracts and variable life insurance policies
("contractholders"), or by qualified plans. The separate accounts of the Participating Insurance Companies place orders
to purchase and redeem shares of the Trust based on, among other things, the amount of premium payments to be invested
and the amount of surrender and transfer requests to be effected on that day under the variable annuity contracts and
variable life insurance policies. Orders are effected on days on which the NYSE is open for trading. Orders received
before 4:00 P.M. Eastern time are effected at the NAV determined as of 4:00 P.M. Eastern Time on that same day. Orders
received after 4:00 P.M. Eastern Time are effected at the NAV calculated the next business day. Payment for redemptions
will be made within seven days after the request is received. The Trust does not assess any fees, either when it sells
or when it redeems its securities. However, surrender charges, mortality and expense risk fees and other charges may be
assessed by Participating Insurance Companies under the variable annuity contracts or variable life insurance policies.
Please refer to the prospectuses for the variable annuity contracts and variable insurance policies for further
information on these fees.
As of the date of this Prospectus, American Skandia Life Assurance Corporation ("ASLAC") and Kemper Investors
Life Insurance Company are the only Participating Insurance Companies. The profit sharing plan covering employees of
ASLAC and its affiliates, which is a retirement plan qualified under Section 401(a) of the Internal Revenue Code of 1986,
as amended, also may directly own shares of the Trust. Certain conflicts of interest may arise as a result of investment
in the Trust by various insurance companies for the benefit of their contractholders and by various qualified plans.
These conflicts could arise because of differences in the tax treatment of the various investors, because of actions of
the Participating Insurance Companies and/or the qualified plans, or other reasons. The Trust does not currently expect
that any material conflicts of interest will arise. Nevertheless, the Trustees intend to monitor events in order to
identify any material irreconcilable conflicts and to determine what action, if any, should be taken in response to such
conflicts. Should any conflict arise that would require a substantial amount of assets to be withdrawn from the Trust,
orderly portfolio management could be disrupted.
MANAGEMENT OF THE TRUST:
Investment Manager: American Skandia Investment Services, Incorporated ("ASISI"), One Corporate Drive, Shelton,
Connecticut, acts as Investment Manager to the Trust. ASISI has served as Investment Manager since 1992, and currently
serves as Investment Manager to a total of 66 investment company portfolios (including the Portfolios of the Trust).
ASISI is an indirect wholly-owned subsidiary of Skandia Insurance Company Ltd. ("Skandia"). Skandia is a Swedish company
that owns, directly or indirectly, a number of insurance companies in many countries. The predecessor to Skandia
commenced operations in 1855.
The Trust's Investment Management Agreements with ASISI (the "Management Agreements") provide that ASISI will
furnish each applicable Portfolio with investment advice and administrative services subject to the supervision of the
Board of Trustees and in conformity with the stated policies of the applicable Portfolio. The Investment Manager has
engaged Sub-advisors to conduct the investment programs of each Portfolio, including the purchase, retention and sale of
portfolio securities. The Investment Manager is responsible for monitoring the activities of the Sub-advisors and
reporting on such activities to the Trustees. The Investment Manager must also provide, or obtain and supervise, the
executive, administrative, accounting, custody, transfer agent and shareholder servicing services that are deemed
advisable by the Trustees.
The Trust has obtained an exemption from the Securities and Exchange Commission that permits ASISI, subject to
approval by the Board of Trustees of the Trust, to change sub-advisors for a Portfolio and to enter into new sub-advisory
agreements, without obtaining shareholder approval of the changes. This exemption (which is similar to exemptions
granted to other investment companies that are organized in a similar manner as the Trust) is intended to facilitate the
efficient supervision and management of the sub-advisors by ASISI and the Trustees.
Sub-advisors:
American Century Investment Management, Inc. ("American Century") (formerly, Investors Research Corporation),
American Century Tower, 4500 Main Street, Kansas City, Missouri 64111, serves as Sub-advisor for the AST American Century
International Growth Portfolio, the AST American Century International Growth Portfolio II. American Century has been
providing investment advisory services to investment companies and institutional clients since 1958. As of June 30,
2000, American Century and its affiliates managed assets totaling approximately $113 billion.
American Century utilizes a team of portfolio managers, assistant portfolio managers and analysts acting together
to manage the assets of the Portfolios.
The portfolio manager members of the portfolio team responsible for management of the AST American Century
International Growth Portfolio and AST American Century International Growth Portfolio II are Henrik Strabo and Mark S.
Kopinski. Henrik Strabo joined American Century in 1993 as an investment analyst, has been a portfolio manager member of
the international team since 1994 and has managed the AST American Century International Growth Portfolio since its
inception and the AST American Century International Growth Portfolio II since American Century became the Portfolio's
Sub-advisor in May 2000. Mark S. Kopinski, Vice President and Portfolio Manager for American Century, rejoined American
Century in April 1997 and has co-managed the AST American Century International Growth Portfolio since that time and the
AST American Century International Growth Portfolio II since American Century became the Portfolio's Sub-advisor. From
June 1995 to March 1997, Mr. Kopinski served as Vice President and Portfolio Manager for Federated Investors, Inc. Prior
to June 1995, Mr. Kopinski was a Vice President and Portfolio Manager for American Century.
Janus Capital Corporation ("Janus"), 100 Fillmore Street, Denver, Colorado 80206-4923, serves as Sub-advisor for
the AST Janus Small-Cap Growth Portfolio and the AST JanCap Growth Portfolio. Janus serves as investment advisor to the
Janus Funds, as well as advisor or sub-advisor to several other mutual funds and individual, corporate, charitable and
retirement accounts. As of June 30, 2000, Janus managed assets worth approximately $304 billion.
The AST Janus Small-Cap Growth Portfolio is managed by a management team consisting of William H. Bales and
Jonathan D. Coleman. Mr. Bales and Mr. Coleman have managed the Portfolio since Janus became the Portfolio's
Sub-
advisor in January 1999. Mr. Bales has been a Portfolio Manager since 1997 and a research analyst since 1993. He joined
Janus in 1991. Mr. Coleman has been a Portfolio Manager with Janus since 1997 and a research analyst since joining Janus
in 1994.
The portfolio manager responsible for management of the AST JanCap Growth Portfolio is Scott W. Schoelzel. Mr.
Schoelzel, a Senior Portfolio Manager at Janus who has managed the Portfolio since August, 1997, joined Janus in January,
1994 as Vice President of Investments.
Fred Alger Management, Inc. ("Alger"), One World Trade Center, Suite 9333, New York, New York 10048, serves as
Sub-advisor for the AST Alger Mid-Cap Growth Portfolio and the AST Alger All-Cap Growth Portfolio. Alger has been an
investment advisor since 1964, and as of June 30, 2000 managed mutual fund and other assets totaling approximately $21.2
billion.
The portfolio managers responsible for the management of the AST Alger Mid-Cap Growth Portfolio are David Alger
and Ron Tartaro. Both have managed these Portfolios since their inception. Mr. Alger has been employed by Alger since
1971 and served as Executive Vice President and Director of Research prior to being named President in 1995. Mr. Tartaro
has been employed by Alger since 1990 as a senior research analyst until 1995 and as a Senior Vice President since 1995.
The portfolio managers responsible for the management of the AST Alger All-Cap Growth Portfolio are David Alger
and Seilai Khoo. Mr. Alger has managed the Portfolio since its inception, while Ms. Khoo has been managing the Portfolio
since June 2000. Mr. Alger has been employed by Alger since 1971 and served as Executive Vice President and Director of
Research prior to being named President in 1995. Ms. Khoo has been employed by Alger since 1989, and has been a Senior
Vice President and Portfolio Manager since 1995.
Neuberger Berman Management Inc. ("NB Management"), 605 Third Avenue, New York, NY 10158, serves as sub-advisor
for the AST Neuberger Berman Mid-Cap Value Portfolio. NB Management and its predecessor firms have specialized in the
management of mutual funds since 1950. Neuberger Berman, LLC, an affiliate of NB Management, acts as a principal broker
in the purchase and sale of portfolio securities for the Portfolios for which it serves as Sub-advisor, and provides NB
Management with certain assistance in the management of the Portfolios without added cost to the Portfolios or ASISI. NB
Management and its affiliates manage securities accounts, including mutual funds, that had approximately $54.4 billion of
assets as of June 30, 2000.
The portfolio managers responsible for the day-to-day management of the AST Neuberger Berman Mid-Cap Value
Portfolio are Robert I. Gendelman and S. Basu Mullick. Mr. Gendelman has been managing the Portfolio since NB Management
became the Portfolio's Sub-advisor in May 1998, and Mr. Mullick has been managing the Portfolio since October 1998. Mr.
Gendelman has been with NB Management since 1994, where he is currently a Vice President. Mr. Mullick has been a Vice
President of NB Management since October 1998. From 1993 to 1998, Mr. Mullick was a portfolio manager for a prominent
investment adviser.
INVESCO Funds Group, Inc. ("INVESCO"), 7800 East Union Avenue, P.O. Box 173706, Denver, Colorado 80217-3706,
serves as Sub-advisor for the AST INVESCO Equity Income Portfolio. INVESCO was established in 1932. AMVESCAP PLC, the
parent of INVESCO, is one of the largest independent investment management businesses in the world and managed
approximately $389 billion of assets as of June 30, 2000.
The portfolio managers responsible for management of the Portfolio are Charles P. Mayer and Donovan J. (Jerry)
Paul. Mr. Mayer has served as Co-Manager of the Portfolio since April, 1993. Mr. Mayer began his investment career in
1969 and is now a director and senior vice president of INVESCO. From 1993 to 1994, he was vice president of INVESCO.
Mr. Paul has served as Co-Manager of the Portfolio since May 1994. Mr. Paul entered the investment management industry
in 1976, and has been a senior vice president of INVESCO since 1994. From 1993 to 1994, he was president of Quixote
Investment Management, Inc.
T. Rowe Price International, Inc. ("T. Rowe International"), 100 East Pratt Street, Baltimore, Maryland 21202,
serves as Sub-advisor for the AST T. Rowe Price Global Bond Portfolio. T. Rowe International is a wholly-owned
subsidiary of T. Rowe Price and the successor of Rowe Price-Fleming International, Inc., a joint venture in which T. Rowe
Price was a participant that was founded in 1979. T. Rowe International is one of the world's largest international
mutual fund asset managers with approximately $39.2 billion under management as of June 30, 2000 in its offices in
Baltimore, London, Tokyo, Hong Kong, Singapore, Buenos Aires and Paris.
The Portfolio has an investment advisory group that has day-to-day responsibility for managing the Portfolio and
developing and executing the Portfolio's investment program. The advisory group consists of Christopher Rothery, William
T. Reynolds, Daniel O. Shackelford, and Michael Conelius. Christopher Rothery joined T. Rowe International in 1994 and
has 12 years of experience managing multi-currency fixed-income portfolios. William T. Reynolds, CFA, CIC, is Director
of T. Rowe Price's Fixed Income Division and joined the firm in 1981. Daniel O. Shackelford, CFA joined T. Rowe Price in
1999; prior to that he was the Principal and Head of Fixed Income for Investment Counselors of Maryland. Michael
Conelius joined T. Rowe International in 1995. Prior to that, he had been with T. Rowe Price since 1988.
Fees and Expenses:
Investment Management Fees. ASISI receives a fee, payable each month, for the performance of its services.
ASISI pays each Sub-advisor a portion of such fee for the performance of the Sub-advisory services at no additional cost
to any Portfolio. The Investment Management fee for each Portfolio will differ, reflecting the differing objectives,
policies and restrictions of each Portfolio. Each Portfolio's fee is accrued daily for the purposes of determining the
sale and redemption price of the Portfolio's shares. The fees paid to ASISI for the fiscal year ended December 31, 1999
by each Portfolio that was in operation for that entire fiscal year, stated as a percentage of the Portfolio's average
daily net assets, were as follows:
Portfolio: Annual Rate:
---------- ------------
AST American Century International Growth Portfolio: 1.00%
AST American Century International Growth Portfolio II: 1.00%
AST Janus Small-Cap Growth Portfolio: 0.90%
AST Neuberger Berman Mid-Cap Value Portfolio: 0.82%
AST JanCap Growth Portfolio: 0.87%
AST INVESCO Equity Income Portfolio: 0.75%
AST T. Rowe Price Global Bond Portfolio: 0.80%
The investment management fee rate for the AST Alger Mid-Cap Growth Portfolio, which had not commenced operations
prior to the date of this Prospectus, is an annual rate of .80% of the average daily net assets of the Portfolio. The
investment management fee rate for the AST Alger All-Cap Growth Portfolio, which commenced operations in January 2000, is
an annual rate of .95% of the average daily net assets of the Portfolio.
For more information about investment management fees, including voluntary fee waivers and the fee rates
applicable at various asset levels, and the fees payable by ASISI to each of the Sub-advisors, please see the Trust's SAI
under "Investment Advisory and Other Services."
Other Expenses. In addition to Investment Management fees, each Portfolio pays other expenses, including costs
incurred in connection with the maintenance of its securities law registrations, printing and mailing prospectuses and
statements of additional information to shareholders, certain office and financial accounting services, taxes or
governmental fees, brokerage commissions, custodial, transfer and shareholder servicing agent costs, expenses of outside
counsel and independent accountants, preparation of shareholder reports and expenses of trustee and shareholder
meetings. The Trust may also pay Participating Insurance Companies for printing and delivery of certain documents
(including prospectuses, semi-annual and annual reports and any proxy materials) to holders of variable annuity contracts
and variable life insurance policies whose assets are invested in the Trust. Expenses not directly attributable to any
specific Portfolio or Portfolios are allocated on the basis of the net assets of the Portfolios.
Distribution Plan. The Trust has adopted a Distribution Plan (the "Distribution Plan") under Rule 12b-1 under
the Investment Company Act of 1940 to permit American Skandia Marketing, Inc. ("ASM"), an affiliate of ASISI, to receive
brokerage commissions in connection with purchases and sales of securities held by the Portfolios, and to use these
commissions to promote the sale of shares of the Portfolios. Under the Distribution Plan, transactions for the purchase
and sale of securities for a Portfolio may be directed to certain brokers for execution ("clearing brokers") who have
agreed to pay part of the brokerage commissions received on these transactions to ASM for "introducing" transactions to
the clearing broker. In turn, ASM will use the brokerage commissions received as an introducing broker to pay various
distribution-related expenses, such as advertising, printing of sales materials, and payments to dealers. No Portfolio
will pay any new fees or charges resulting from the Distribution Plan, nor is it expected that the brokerage commissions
paid by a Portfolio will increase as the result of implementation of the Distribution Plan.
TAX MATTERS:
Each Portfolio intends to distribute substantially all its net investment income. Dividends from investment
income are expected to be declared and distributed annually, although the Trustees of the Trust may decide to declare
dividends at other intervals. Similarly, any net realized long- and short-term capital gains of each Portfolio will be
declared and distributed at least annually either during or after the close of the Portfolio's fiscal year.
Distributions will be made to the various separate accounts of the Participating Insurance Companies and to qualified
plans (not to holders of variable insurance contracts or to plan participants) in the form of additional shares (not in
cash). The result is that the investment performance of the Portfolios, either in the form of dividends or capital
gains, will be reflected in the value of the variable contracts or the qualified plans.
Holders of variable annuity contracts or variable life insurance policies should consult the prospectuses of
their respective contracts or policies for information on the federal income tax consequences to such holders, and plan
participants should consult any applicable plan documents for information on the federal income tax consequences to such
participants. In addition, variable contract owners and qualified plan participants may wish to consult with their own
tax advisors as to the tax consequences of investments in the Trust, including the application of state and local taxes.
This page has been intentionally left blank.
FINANCIAL HIGHLIGHTS: The financial highlights table is intended to help you understand the Portfolios' financial
performance for the past five years (or, for Portfolios that have not been in operation for five years, since their
inceptions). Certain information reflects financial results for a single Portfolio share. The total returns in the
table represent the rate that an investor would have earned or lost in a Portfolio. Except for the financial information
for the period ended June 30, 2000, which is unaudited, the information has been audited by Deloitte & Touche LLP, the
Trust's independent auditors. The report of the independent auditors, along with the Portfolios' financial statements,
are included in the annual reports of the separate accounts funding the variable annuity contracts and variable life
insurance policies, which are available without charge upon request to the Trust at One Corporate Drive, Shelton,
Connecticut or by calling (800) 752-6342. No financial information is included for the AST Alger Mid-Cap Growth
Portfolio, which had not commenced operations prior to October 23, 2000.
INCREASE (DECREASE) FROM
INVESTMENT OPERATIONS LESS DISTRIBUTIONS
----------------------------------------------------------------------------------------
NET ASSET NET
NET ASSET
VALUE INVESTMENT NET REALIZED TOTAL FROM FROM NET FROM NET
VALUE
PERIOD BEGINNING INCOME & UNREALIZED INVESTMENT INVESTMENT REALIZED TOTAL
END
PORTFOLIO ENDED OF PERIOD (LOSS) GAIN (LOSS) OPERATIONS INCOME GAINS DISTRIBUTIONS
--------- ----- --------- ------ ----------- ---------- ------ ----- -------------
OF PERIOD
---------
AST JanCap Growth 06/30/00** $55.21 $(0.10) $(3.45) $(3.55) $(0.07) $(4.45) $(4.52) $47.14
12/31/99 37.00 0.05 19.65 19.70 -- (1.49) (1.49) 55.21
12/31/98 23.15 0.04 15.10 15.14 (0.08) (1.21) (1.29) 37.00
12/31/97 18.79 0.06 5.16 5.22 (0.05) (0.81) (0.86) 23.15
12/31/96 15.40 0.02 4.19 4.21 (0.02) (0.80) (0.82) 18.79
12/31/95 11.22 0.06 4.18 4.24 (0.06) -- (0.06) 15.40
AST Neuberger Berman 06/30/00** $13.32 $0.02 $0.62 $0.64 $(0.04) $(0.05) $(0.09)
$13.87
Mid-Cap Value*** 12/31/99 13.16 0.10 0.60 0.70 (0.24) (0.30) (0.54) 13.32
12/31/98 15.15 0.21 (0.52) (0.31) (0.36) (1.32) (1.68) 13.16
12/31/97 12.83 0.32 2.87 3.19 (0.36) (0.51) (0.87) 15.15
12/31/96 11.94 0.36 0.97 1.33 (0.44) -- (0.44) 12.83
12/31/95 9.87 0.40 2.09 2.49 (0.42) -- (0.42) 11.94
AST INVESCO Equity 06/30/00** $18.65 $0.18 $0.04 $0.22 $(0.36) $(1.40) $(1.76) $17.11
Income 12/31/99 17.50 0.36 1.61 1.97 (0.32) (0.50) (0.82) 18.65
12/31/98 16.51 0.31 1.81 2.12 (0.32) (0.81) (1.13) 17.50
12/31/97 13.99 0.31 2.84 3.15 (0.26) (0.37) (0.63) 16.51
12/31/96 12.50 0.27 1.79 2.06 (0.24) (0.33) (0.57) 13.99
12/31/95 9.75 0.25 2.65 2.90 (0.15) -- (0.15) 12.50
AST Janus Small-Cap 06/30/00**$42.61 $(0.10) $(6.41) $(6.51) $ -- $(4.01) $(4.01) $32.09
Growth+ 12/31/99 17.61 (0.03) 25.03 25.00 -- -- -- 42.61
12/31/98 17.81 (0.08) 0.73 0.65 -- (0.85) (0.85) 17.61
12/31/97 16.80 (0.05) 1.06 1.01 -- -- -- 17.81
12/31/96 14.25 (0.03) 2.85 2.82 -- (0.27) (0.27) 16.80
12/31/95 10.84 (0.04) 3.54 3.50 (0.09) -- (0.09) 14.25
AST American Century 06/30/00** $16.67 $(0.01) $(1.17) $(1.18) $(0.03) $(1.64) $(1.67)
$13.82
International 12/31/99 13.39 0.06 3.95 4.01 (0.09) (0.64) (0.73) 16.67
Growth II++ 12/31/98 12.09 0.08 1.59 1.67 (0.14) (0.23) (0.37) 13.39
12/31/97 12.07 0.09 0.08 0.17 (0.07) (0.08) (0.15) 12.09
12/31/96 10.65 0.06 1.44 1.50 (0.08) -- (0.08) 12.07
12/31/95 9.62 0.07 0.99 1.06 (0.01) (0.02) (0.03) 10.65
AST T. Rowe Price 06/30/00** $9.60 $0.17 $(0.51) $(0.34) $(0.15) $ -- $(0.15) $9.11
Global Bond+++ 12/31/99 11.46 0.33 (1.25) (0.92) (0.71) (0.23) (0.94) 9.60
12/31/98 10.11 0.52 0.94 1.46 (0.03) (0.08) (0.11) 11.46
12/31/97 10.90 0.20 (0.57) (0.37) (0.16) (0.26) (0.42) 10.11
12/31/96 10.60 0.23 0.38 0.61 (0.14) (0.17) (0.31) 10.90
12/31/95 9.68 0.31 0.75 1.06 (0.14) -- (0.14) 10.60
AST Alger All-Cap 06/30/00**(2)$10.00 $ -- $(1.23) $(1.23) $ -- $ -- $ -- $8.77
Growth
---------------------------------------------------------------------------------------------------------------------------
(1) Annualized.
(2) Commenced operations on December 31, 1999.
* For 1999 and 2000, includes commissions received by American Skandia Marketing, Inc. under the Trust's Distribution
Plan, as described in this Prospectus under "Management of the Trust - Distribution Plan".
** Unaudited.
*** Prior to May 1, 1998, Federated Investment Counseling served as Sub-advisor to the AST Neuberger Berman Mid-Cap
Value Portfolio (formerly, the Federated Utility Income Portfolio). Neuberger Berman Management, Inc. has served as
Sub-advisor to the Portfolio since May 1, 1998.
+ Prior to January 1, 1999, Founders Asset Management LLC served as Sub-advisor to the AST Janus Small-Cap Growth Fund
(formerly, the Founders Capital Appreciation Portfolio). Janus Capital Corporation has served as Sub-advisor to the
Portfolio since January 1, 1999.
++ Prior to May 1, 2000, Rowe Price-Fleming International, Inc. served as Sub-advisor to the AST American Century
International Growth Portfolio II (formerly, the AST T. Rowe Price International Equity Portfolio). American Century
Investment Management, Inc. has served as Sub-advisor to the Portfolio since May 1, 2000.
+++ Prior to May 1, 2000, the AST T. Rowe Price Global Bond Portfolio was known as the AST T. Rowe Price International
Bond Portfolio.
RATIOS OF EXPENSES
SUPPLEMENTAL DATA TO AVERAGE NET ASSETS*
-------------------------------------------- ----------------------------------
AFTER ADVISORY BEFORE ADVISORY RATIO OF NET
NET ASSETS AT PORTFOLIO FEE WAIVER FEE WAIVER INVESTMENT
INCOME
TOTAL END OF PERIOD TURNOVER AND EXPENSE AND EXPENSE (LOSS) TO
AVERAGE
RETURN (IN 000'S) RATE REIMBURSEMENT REIMBURSEMENT NET ASSETS
------ ---------- ---- ------------- ------------- ----------
(7.24%) $5,905,963 16% 1.01%(1) 1.05%(1) (0.40%)(1)
55.01% 5,923,778 35% 1.00% 1.04% 0.12%
68.26% 3,255,658 42% 1.02% 1.04% 0.16%
28.66% 1,511,602 94% 1.07% 1.08% 0.24%
28.36% 892,324 79% 1.10% 1.10% 0.25%
37.98% 431,321 113% 1.12% 1.12% 0.51%
4.95% $677,747 92% 1.23%(1) 1.23%(1) 0.29%(1)
5.67% 664,383 176% 1.13% 1.13% 0.39%
(2.33%) 271,968 208% 1.05% 1.05% 1.83%
26.42% 201,143 91% 0.90% 0.90% 3.34%
11.53% 123,138 81% 0.93% 0.93% 3.14%
26.13% 107,399 71% 0.93% 0.93% 4.58%
1.88% $1,145,436 33% 0.95%(1) 0.95%(1) 2.21%(1)
11.74% 1,048,064 76% 0.93% 0.93% 2.10%
13.34% 831,482 67% 0.93% 0.93% 2.17%
23.33% 602,105 73% 0.95% 0.95% 2.54%
17.09% 348,680 58% 0.98% 0.98% 2.83%
30.07% 176,716 89% 0.98% 0.98% 3.34%
(18.05%) $1,052,163 53% 1.05%(1) 1.05%(1) (0.50%)(1)
141.96% 1,443,211 116% 1.08% 1.08% (0.46%)
3.49% 285,847 100% 1.12% 1.12% (0.53%)
6.01% 278,258 77% 1.13% 1.13% (0.32%)
20.05% 220,068 69% 1.16% 1.16% (0.38%)
32.56% 90,460 68% 1.22% 1.22% (0.28%)
(7.95%) $453,284 102% 1.26%(1) 1.26%(1) 0.06%(1)
31.95% 516,824 29% 1.26% 1.26% 0.47%
14.03% 472,161 32% 1.25% 1.25% 0.60%
1.36% 464,456 19% 1.26% 1.26% 0.71%
14.17% 402,559 11% 1.30% 1.30% 0.84%
11.09% 195,667 17% 1.33% 1.33% 1.03%
(3.53%) $136,272 108% 1.12%(1) 1.12%(1) 4.00%(1)
(8.33%) 138,144 106% 1.11% 1.11% 3.51%
14.72% 147,973 136% 1.11% 1.11% 4.78%
(3.42%) 130,408 173% 1.11% 1.11% 4.73%
5.98% 98,235 241% 1.21% 1.21% 5.02%
11.10% 45,602 325% 1.53% 1.53% 6.17%
(12.30%) $238,798 53% 1.23%(1) 1.23%(1) 0.00%(1)
CERTAIN RISK FACTORS AND INVESTMENT METHODS:
The following is a description of certain securities and investment methods that the Portfolios may invest in or
use, and certain of the risks associated with such securities and investment methods. The primary investment focus of
each Portfolio is described above under "Investment Objective and Policies" and an investor should refer to that section
to obtain information about each Portfolio. In general, whether a particular Portfolio may invest in a specific type of
security or use an investment method is described above or in the Company's SAI under "Investment Programs of the
Funds." As noted below, however, certain risk factors and investment methods apply to all or most of the Portfolios.
DERIVATIVE INSTRUMENTS:
To the extent permitted by the investment objectives and policies of a Portfolio, a Portfolio may invest in
securities and other instruments that are commonly referred to as "derivatives." For instance, a Portfolio may purchase
and write (sell) call and put options on securities, securities indices and foreign currencies, enter into futures
contracts and use options on futures contracts, and enter into swap agreements with respect to foreign currencies,
interest rates, and securities indices. In general, derivative instruments are securities or other instruments whose
value is derived from or related to the value of some other instrument or asset.
There are many types of derivatives and many different ways to use them. Some derivatives and derivative
strategies involve very little risk, while others can be extremely risky and can lead to losses in excess of the amount
invested in the derivative. A Portfolio may use derivatives to hedge against changes in interest rates, foreign currency
exchange rates or securities prices, to generate income, as a low cost method of gaining exposure to a particular
securities market without investing directly in those securities, or for other reasons.
The use of these strategies involves certain special risks, including the risk that the price movements of
derivative instruments will not correspond exactly with those of the investments from which they are derived. In
addition, strategies involving derivative instruments that are intended to reduce the risk of loss can also reduce the
opportunity for gain. Furthermore, regulatory requirements for a Portfolio to set aside assets to meet its obligations
with respect to derivatives may result in a Portfolio being unable to purchase or sell securities when it would otherwise
be favorable to do so, or in a Portfolio needing to sell securities at a disadvantageous time. A Portfolio may also be
unable to close out its derivatives positions when desired. There is no assurance that a Portfolio will engage in
derivative transactions. Certain derivative instruments and some of their risks are described in more detail below.
Options. Most of the Portfolios may purchase or write (sell) call or put options on securities, financial
indices or currencies. The purchaser of an option on a security or currency obtains the right to purchase (in the case
of a call option) or sell (in the case of a put option) the security or currency at a specified price within a limited
period of time. Upon exercise by the purchaser, the writer (seller) of the option has the obligation to buy or sell the
underlying security at the exercise price. An option on a securities index is similar to an option on an individual
security, except that the value of the option depends on the value of the securities comprising the index, and all
settlements are made in cash.
A Portfolio will pay a premium to the party writing the option when it purchases an option. In order for a call
option purchased by a Portfolio to be profitable, the market price of the underlying security must rise sufficiently
above the exercise price to cover the premium and other transaction costs. Similarly, in order for a put option to be
profitable, the market price of the underlying security must decline sufficiently below the exercise price to cover the
premium and other transaction costs.
Generally, the Portfolios will write call options only if they are covered (i.e., the Fund owns the security
subject to the option or has the right to acquire it without additional cost). By writing a call option, a Portfolio
assumes the risk that it may be required to deliver a security for a price lower than its market value at the time the
option is exercised. Effectively, a Portfolio that writes a covered call option gives up the opportunity for gain above
the exercise price should the market price of the underlying security increase, but retains the risk of loss should the
price of the underlying security decline. A Portfolio will write call options in order to obtain a return from the
premiums received and will retain the premiums whether or not the options are exercised, which will help offset a decline
in the market value of the underlying securities. A Portfolio that writes a put option likewise receives a premium, but
assumes the risk that it may be required to purchase the underlying security at a price in excess of its current market
value.
A Portfolio may sell an option that it has previously purchased prior to the purchase or sale of the underlying
security. Any such sale would result in a gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the option. A Portfolio may terminate an option it has written
by entering into a closing purchase transaction in which it purchases an option of the same series as the option written.
Futures Contracts and Related Options. Each Portfolio (except the AST Alger Mid-Cap Growth Portfolio, the the
AST Neuberger Berman Mid-Cap Value Portfolio and the AST INVESCO Equity Income Portfolio) may enter into financial
futures contracts and related options. The seller of a futures contract agrees to sell the securities or currency called
for in the contract and the buyer agrees to buy the securities or currency at a specified price at a specified future
time. Financial futures contracts may relate to securities indices, interest rates or foreign currencies. Futures
contracts are usually settled through net cash payments rather than through actual delivery of the securities underlying
the contract. For instance, in a stock index futures contract, the two parties agree to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between the stock index value when the contract
expires and the price specified in the contract. A Portfolio may use futures contracts to hedge against movements in
securities prices, interest rates or currency exchange rates, or as an efficient way to gain exposure to these markets.
An option on a futures contract gives the purchaser the right, in return for the premium paid, to assume a
position in the contract at the exercise price at any time during the life of the option. The writer of the option is
required upon exercise to assume the opposite position.
Under regulations of the Commodity Futures Trading Commission ("CFTC"), no Portfolio will:
(i) purchase or sell futures or options on futures contracts or stock indices for purposes other than bona
fide hedging transactions (as defined by the CFTC) if as a result the sum of the initial margin deposits and premiums
required to establish positions in futures contracts and related options that do not fall within the definition of bona
fide hedging transactions would exceed 5% of the fair market value of each Portfolio's net assets; and
(ii) enter into any futures contracts if the aggregate amount of that Portfolio's commitments under
outstanding futures contracts positions would exceed the market value of its total assets.
Risks of Options and Futures Contracts. Options and futures contracts can be highly volatile and their use can
reduce a Portfolio's performance. Successful use of these strategies requires the ability to predict future movements in
securities prices, interest rates, currency exchange rates, and other economic factors. If a Sub-advisor seeks to
protect a Portfolio against potential adverse movements in the relevant financial markets using these instruments, and
such markets do not move in the predicted direction, the Portfolio could be left in a less favorable position than if
such strategies had not been used. A Portfolio's potential losses from the use of futures extends beyond its initial
investment in such contracts.
Among the other risks inherent in the use of options and futures are (a) the risk of imperfect correlation
between the price of options and futures and the prices of the securities or currencies to which they relate, (b) the
fact that skills needed to use these strategies are different from those needed to select portfolio securities and (c)
the possible need to defer closing out certain positions to avoid adverse tax consequences. With respect to options on
stock indices and stock index futures, the risk of imperfect correlation increases the more the holdings of the Portfolio
differ from the composition of the relevant index. These instruments may not have a liquid secondary market. Option
positions established in the over-the-counter market may be particularly illiquid and may also involve the risk that the
other party to the transaction fails to meet its obligations.
FOREIGN SECURITIES:
Investments in securities of foreign issuers may involve risks that are not present with domestic investments.
While investments in foreign securities can reduce risk by providing further diversification, such investments involve
"sovereign risks" in addition to the credit and market risks to which securities generally are subject. Sovereign risks
includes local political or economic developments, potential nationalization, withholding taxes on dividend or interest
payments, and currency blockage (which would prevent cash from being brought back to the United States). Compared to
United States issuers, there is generally less publicly available information about foreign issuers and there may be less
governmental regulation and supervision of foreign stock exchanges, brokers and listed companies. Foreign issuers are not
generally subject to uniform accounting and auditing and financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. In some countries, there may also be the possibility of
expropriation or confiscatory taxation, difficulty in enforcing contractual and other obligations, political or social
instability or revolution, or diplomatic developments that could affect investments in those countries.
Securities of some foreign issuers are less liquid and their prices are more volatile than securities of
comparable domestic issuers. Further, it may be more difficult for the Trust's agents to keep currently informed about
corporate actions and decisions that may affect the price of portfolio securities. Brokerage commissions on foreign
securities exchanges, which may be fixed, may be higher than in the United States. Settlement of transactions in some
foreign markets may be less frequent or less reliable than in the United States, which could affect the liquidity of
investments. For example, securities that are traded in foreign markets may trade on days (such as Saturday or Holidays)
when a Portfolio does not compute its price or accept purchase or redemption orders. As a result, a shareholder may not
be able to act on developments taking place in foreign countries as they occur.
American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), Global Depositary Receipts
("GDRs"), and International Depositary Receipts ("IDRs"). ADRs are U.S. dollar-denominated receipts generally issued by
a domestic bank evidencing its ownership of a security of a foreign issuer. ADRs generally are publicly traded in the
United States. ADRs are subject to many of the same risks as direct investments in foreign securities, although
ownership of ADRs may reduce or eliminate certain risks associated with holding assets in foreign countries, such as the
risk of expropriation. EDRs, GDRs and IDRs are receipts similar to ADRs that typically trade in countries other than the
United States.
Depositary receipts may be issued as sponsored or unsponsored programs. In sponsored programs, the issuer makes
arrangements to have its securities traded as depositary receipts. In unsponsored programs, the issuer may not be
directly involved in the program. Although regulatory requirements with respect to sponsored and unsponsored programs
are generally similar, the issuers of unsponsored depositary receipts are not obligated to disclose material information
in the United States and, therefore, the import of such information may not be reflected in the market value of such
securities.
Developing Countries. Although none of the Portfolios invest primarily in securities of issuers in developing
countries, many of the Funds may invest in these securities to some degree. Many of the risks described above with
respect to investing in foreign issuers are accentuated when the issuers are located in developing countries. Developing
countries may be politically and/or economically unstable, and the securities markets in those countries may be less
liquid or subject to inadequate government regulation and supervision. Developing countries have often experienced high
rates of inflation or sharply devalued their currencies against the U.S. dollar, causing the value of investments in
companies located in these countries to decline. Securities of issuers in developing countries may be more volatile and,
in the case of debt securities, more uncertain as to payment of interest and principal. Investments in developing
countries may include securities created through the Brady Plan, under which certain heavily-indebted countries have
restructured their bank debt into bonds.
Currency Fluctuations. Investments in foreign securities may be denominated in foreign currencies. The value of
a Portfolio's investments denominated in foreign currencies may be affected, favorably or unfavorably, by exchange rates
and exchange control regulations. A Portfolio's share price may, therefore, also be affected by changes in currency
exchange rates. Foreign currency exchange rates generally are determined by the forces of supply and demand in foreign
exchange markets, including perceptions of the relative merits of investment in different countries, actual or perceived
changes in interest rates or other complex factors. Currency exchange rates also can be affected unpredictably by the
intervention or the failure to intervene by U.S. or foreign governments or central banks, or by currency controls or
political developments in the U.S. or abroad. In addition, a Portfolio may incur costs in connection with conversions
between various currencies.
Foreign Currency Transactions. A Portfolio that invests in securities denominated in foreign currencies will
need to engage in foreign currency exchange transactions. Such transactions may occur on a "spot" basis at the exchange
rate prevailing at the time of the transaction. Alternatively, a Portfolio may enter into forward foreign currency
exchange contracts. A forward contract involves an obligation to purchase or sell a specified currency at a specified
future date at a price set at the time of the contract. A Portfolio may enter into a forward contract when it wishes to
"lock in" the U.S. dollar price of a security it expects to or is obligated to purchase or sell in the future. This
practice may be referred to as "transaction hedging." In addition, when a Portfolio's Sub-advisor believes that the
currency of a particular country may suffer or enjoy a significant movement compared to another currency, the Portfolio
may enter into a forward contract to sell or buy the first foreign currency (or a currency that acts as a proxy for such
currency). This practice may be referred to as "portfolio hedging." In any event, the precise matching of the forward
contract amounts and the value of the securities involved generally will not be possible. No Portfolio will enter into a
forward contract if it would be obligated to sell an amount of foreign currency in excess of the value of the Fund's
securities or other assets denominated in or exposed to that currency, or will sell an amount of proxy currency in excess
of the value of securities denominated in or exposed to the related currency. The effect of entering into a forward
contract on a Portfolio's share price will be similar to selling securities denominated in one currency and purchasing
securities denominated in another. Although a forward contract may reduce a Portfolio's losses on securities denominated
in foreign currency, it may also reduce the potential for gain on the securities if the currency's value moves in a
direction not anticipated by the Sub-advisor. In addition, foreign currency hedging may entail significant transaction
costs.
COMMON AND PREFERRED STOCKS:
Stocks represent shares of ownership in a company. Generally, preferred stock has a specified dividend and ranks
after bonds and before common stocks in its claim on the company's income for purposes of receiving dividend payments and
on the company's assets in the event of liquidation. (Some of the Sub-advisors consider preferred stocks to be equity
securities for purposes of the various Portfolios' investment policies and restrictions, while others consider them fixed
income securities.) After other claims are satisfied, common stockholders participate in company profits on a pro rata
basis; profits may be paid out in dividends or reinvested in the company to help it grow. Increases and decreases in
earnings are usually reflected in a company's stock price, so common stocks generally have the greatest appreciation and
depreciation potential of all corporate securities.
FIXED INCOME SECURITIES:
Most of the Portfolios, including the Portfolios that invest primarily in equity securities, may invest to some
degree in bonds, notes, debentures and other obligations of corporations and governments. Fixed-income securities 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 and principal payments as they come due. The ratings given a security by Moody's Investors Service, Inc.
("Moody's") and Standard & Poor's Corporation ("S&P"), which are described in detail in the Appendix to the Company's
SAI, provide a generally useful guide as to such credit risk. The lower the rating, the greater the credit risk the
rating service perceives to exist with respect to the security. Increasing the amount of Portfolio assets invested in
lower-rated securities generally will increase the Portfolio's income, but also will increase the credit risk to which
the Portfolio is subject. Market risk relates to the fact that the prices of fixed income securities generally will be
affected by changes in the level of interest rates in the markets generally. An increase in interest rates will tend to
reduce the prices of such securities, while a decline in interest rates will tend to increase their prices. In general,
the longer the maturity or duration of a fixed income security, the more its value will fluctuate with changes in
interest rates.
Lower-Rated Fixed Income Securities. Lower-rated high-yield bonds (commonly known as "junk bonds") are those
that are rated lower than the four highest categories by a nationally recognized statistical rating organization (for
example, lower than Baa by Moody's or BBB by S&P), or, if not rated, are of equivalent investment quality as determined
by the Sub-advisor. Lower-rated bonds are generally considered to be high risk investments as they are subject to
greater credit risk than higher-rated bonds. In addition, the market for lower-rated bonds may be thinner and less
active than the market for higher-rated bonds, and the prices of lower-rated high-yield bonds may fluctuate more than the
prices of higher-rated bonds, particularly in times of market stress. Because the risk of default is higher in
lower-rated bonds, a Sub-advisor's research and analysis tend to be very important ingredients in the selection of these
bonds. In addition, the exercise by an issuer of redemption or call provisions that are common in lower-rated bonds may
result in their replacement by lower yielding bonds.
Bonds rated in the four highest ratings categories are frequently referred to as "investment grade." However,
bonds rated in the fourth category (Baa or BBB) are considered medium grade and may have speculative characteristics.
MORTGAGE-BACKED SECURITIES:
Mortgage-backed securities are securities representing interests in "pools" of mortgage loans on residential or
commercial real property and that generally provide for monthly payments of both interest and principal, in effect
"passing through" monthly payments made by the individual borrowers on the mortgage loans (net of fees paid to the issuer
or guarantor of the securities). Mortgage-backed securities are frequently issued by U.S. Government agencies or
Government-sponsored enterprises, and payments of interest and principal on these securities (but not their market
prices) may be guaranteed by the full faith and credit of the U.S. Government or by the agency only, or may be supported
by the issuer's ability to borrow from the U.S. Treasury. Mortgage-backed securities created by non-governmental issuers
may be supported by various forms of insurance or guarantees.
Like other fixed-income securities, the value of a mortgage-backed security will generally decline when interest
rates rise. However, when interest rates are declining, their value may not increase as much as other fixed-income
securities, because early repayments of principal on the underlying mortgages (arising, for example, from sale of the
underlying property, refinancing, or foreclosure) may serve to reduce the remaining life of the security. If a security
has been purchased at a premium, the value of the premium would be lost in the event of prepayment. Prepayments on some
mortgage-backed securities may necessitate that a Portfolio find other investments, which, because of intervening market
changes, will often offer a lower rate of return. In addition, the mortgage securities market may be particularly
affected by changes in governmental regulation or tax policies.
Collateralized Mortgage Obligations (CMOs). CMOs are a type of mortgage pass-through security that are typically
issued in multiple series with each series having a different maturity. Principal and interest payments from the
underlying collateral are first used to pay the principal on the series with the shortest maturity; in turn, the
remaining series are paid in order of their maturities. Therefore, depending on the type of CMOs in which a Portfolio
invests, the investment may be subject to greater or lesser risk than other types of mortgage-backed securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities are mortgage pass-through securities
that have been divided into interest and principal components. "IOs" (interest only securities) receive the interest
payments on the underlying mortgages while "POs" (principal only securities) receive the principal payments. The cash
flows and yields on IO and PO classes are extremely sensitive to the rate of principal payments (including prepayments)
on the underlying mortgage loans. If the underlying mortgages experience higher than anticipated prepayments, an
investor in an IO class of a stripped mortgage-backed security may fail to recoup fully its initial investment, even if
the IO class is highly rated or is derived from a security guaranteed by the U.S. Government. Conversely, if the
underlying mortgage assets experience slower than anticipated prepayments, the price on a PO class will be affected more
severely than would be the case with a traditional mortgage-backed security. Unlike other fixed-income and other
mortgage-backed securities, the value of IOs tends to move in the same direction as interest rates.
ASSET-BACKED SECURITIES:
Asset-backed securities conceptually are similar to mortgage pass-through securities, but they are secured by and
payable from payments on assets such as credit card, automobile or trade loans, rather than mortgages. The credit
quality of these securities depends primarily upon the quality of the underlying assets and the level of credit support
or enhancement provided. In addition, asset-backed securities involve prepayment risks that are similar in nature to
those of mortgage pass-through securities.
CONVERTIBLE SECURITIES AND WARRANTS:
Certain of the Portfolios may invest in convertible securities. Convertible securities are bonds, notes,
debentures and preferred stocks that may be converted into or exchanged for shares of common stock. Many convertible
securities are rated below investment grade because they fall below ordinary debt securities in order of preference or
priority on the issuer's balance sheet. Convertible securities generally participate in the appreciation or depreciation
of the underlying stock into which they are convertible, but to a lesser degree. Frequently, convertible securities are
callable by the issuer, meaning that the issuer may force conversion before the holder would otherwise choose.
Warrants are options to buy a stated number of shares of common stock at a specified price any time during the
life of the warrants. The value of warrants may fluctuate more than the value of the securities underlying the
warrants. A warrant will expire without value if the rights under such warrant are not exercised prior to its expiration
date.
WHEN-ISSUED, DELAYED-DELIVERY AND FORWARD COMMITMENT TRANSACTIONS:
The Portfolios (other than the AST Alger All-Cap Growth Portfolio) may purchase securities on a when-issued,
delayed-delivery or forward commitment basis. These transactions generally involve the purchase of a security with
payment and delivery due at some time in the future. A Portfolio does not earn interest on such securities until
settlement and bears the risk of market value fluctuations in between the purchase and settlement dates. If the seller
fails to complete the sale, the Fund may lose the opportunity to obtain a favorable price and yield. While the
Portfolios will generally engage in such when-issued, delayed-delivery and forward commitment transactions with the
intent of actually acquiring the securities, a Portfolio may sometimes sell such a security prior to the settlement date.
Certain Portfolios may also sell securities on a delayed-delivery or forward commitment basis. If the
Portfolio does so, it will not participate in future gains or losses on the security. If the other party to such a
transaction fails to pay for the securities, the Portfolio could suffer a loss.
ILLIQUID AND RESTRICTED SECURITIES:
Subject to guidelines adopted by the Trustees of the Trust, each Portfolio may invest up to 15% of its net assets
in illiquid securities (except for the AST Alger Mid-Cap Growth Portfolio, which are limited to 10% of net assets).
Illiquid securities are those that, because of the absence of a readily available market or due to legal or contractual
restrictions on resale, cannot be sold within seven days in the ordinary course of business at approximately the amount
at which the Fund has valued the investment. Therefore, a Portfolio may find it difficult to sell illiquid securities at
the time considered most advantageous by its Sub-advisor and may incur expenses that would not be incurred in the sale of
securities that were freely marketable.
Certain securities that would otherwise be considered illiquid because of legal restrictions on resale to the
general public may be traded among qualified institutional buyers under Rule 144A of the Securities Act of 1933. These
Rule 144A securities, and well as commercial paper that is sold in private placements under Section 4(2) of the
Securities Act, may be deemed liquid by the Portfolio's Sub-advisor under the guidelines adopted by the Trustees of the
Trust. However, the liquidity of a Portfolio's investments in Rule 144A securities could be impaired if trading does not
develop or declines.
REPURCHASE AGREEMENTS:
Each Portfolio may enter into repurchase agreements. Repurchase agreements are agreements by which a Portfolio
purchases a security and obtains a simultaneous commitment from the seller to repurchase the security at an agreed upon
price and date. The resale price is in excess of the purchase price and reflects an agreed upon market rate unrelated to
the coupon rate on the purchased security. Repurchase agreements must be fully collateralized and can be entered into
only with well-established banks and broker-dealers that have been deemed creditworthy by the Sub-advisor. Repurchase
transactions are intended to be short-term transactions, usually with the seller repurchasing the securities within seven
days. Repurchase agreements that mature in more than seven days are subject to a Portfolio's limit on illiquid
securities.
A Portfolio that enters into a repurchase agreement may lose money in the event that the other party defaults on
its obligation and the Portfolio is delayed or prevented from disposing of the collateral. A Portfolio also might incur
a loss if the value of the collateral declines, and it might incur costs in selling the collateral or asserting its legal
rights under the agreement. If a defaulting seller filed for bankruptcy or became insolvent, disposition of collateral
might be delayed pending court action.
REVERSE REPURCHASE AGREEMENTS:
Certain Portfolios (specifically, the AST Janus Small-Cap Growth Portfolio, the AST Neuberger Berman Mid-Cap
Value Portfolio, the AST JanCap Growth Portfolio) may enter into reverse repurchase agreements. In a reverse repurchase
agreement, a Portfolio sells a portfolio instrument and agrees to repurchase it at an agreed upon date and price, which
reflects an effective interest rate. It may also be viewed as a borrowing of money by the Portfolio and, like borrowing
money, may increase fluctuations in a Portfolio's share price. When entering into a reverse repurchase agreement, a
Portfolio must set aside on its books cash or other liquid assets in an amount sufficient to meet its repurchase
obligation.
BORROWING:
Each Portfolio may borrow money from banks. Each Portfolio's borrowings are limited so that immediately after
such borrowing the value of the Portfolio's assets (including borrowings) less its liabilities (not including borrowings)
is at least three times the amount of the borrowings. Should a Portfolio, for any reason, have borrowings that do not
meet the above test, such Portfolio must reduce such borrowings so as to meet the necessary test within three business
days. The AST Neuberger Berman Mid-Cap Value Portfolio will not purchase securities when outstanding borrowings are
greater than 5% of the Portfolio's total assets.
LENDING PORTFOLIO SECURITIES:
Each Portfolio may lend securities with a value of up to 33 1/3% of its total assets to broker-dealers,
institutional investors, or others for the purpose of realizing additional income. Voting rights on loaned securities
typically pass to the borrower, although a Portfolio has the right to terminate a securities loan, usually within three
business days, in order to vote on significant matters or for other reasons. All securities loans will be collateralized
by cash or securities issued or guaranteed by the U.S. Government or its agencies at least equal in value to the market
value of the loaned securities. Nonetheless, lending securities involves certain risks, including the risk that the
Portfolio will be delayed or prevented from recovering the collateral if the borrower fails to return a loaned security.
OTHER INVESTMENT COMPANIES:
The Company has made arrangements with certain money market mutual funds so that the Sub-advisors for the various
Portfolios can "sweep" excess cash balances of the Portfolios to those funds for temporary investment purposes. In
addition, certain Sub-advisors may invest Portfolio assets in money market funds that they advise or in other investment
companies. Mutual funds pay their own operating expenses, and the Portfolios, as shareholders in the money market funds,
will indirectly pay their proportionate share of such funds' expenses.
SHORT SALES "AGAINST THE BOX":
While none of the Portfolios will make short sales generally, the AST American Century International Growth
Portfolio, the AST American Century International Growth Portfolio II, the AST Janus Small-Cap Growth Portfolio, the AST
Alger Mid-Cap Growth Portfolio, the AST JanCap Growth Portfolio and the AST INVESCO Equity Income Portfolio may make
short sales "against the box." A short sale against the box involves selling a security that the Portfolio owns, or has
the right to obtain without additional costs, for delivery at a specified date in the future. A Portfolio may make a
short sale against the box to hedge against anticipated declines in the market price of a portfolio security. If the
value of the security sold short increases instead, the Portfolio loses the opportunity to participate in the gain.
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Mailing Address
American Skandia Trust
One Corporate Drive
Shelton, CT 06484
Investment Manager
American Skandia Investment Services, Incorporated
One Corporate Drive
Shelton, CT 06484
Sub-Advisors
American Century Investment Management, Inc.
Fred Alger Management, Inc.
INVESCO Funds Group, Inc.
Janus Capital Corporation
Neuberger Berman Management Inc.
T. Rowe Price International, Inc.
Custodians
PFPC Trust Company
Airport Business Center, International Court 2
200 Stevens Drive
Philadelphia, PA 19113
The Chase Manhattan Bank
One Pierrepont Plaza
Brooklyn, NY 11201
Administrator
Transfer and Shareholder Servicing Agent
PFPC Inc.
103 Bellevue Parkway
Wilmington, DE 19809
Independent Accountants
Deloitte & Touche LLP
Two World Financial Center
New York, NY 10281
Legal Counsel
Stradley Ronon Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103
INVESTOR INFORMATION SERVICES:
Shareholder inquiries should be made by calling (800) 752-6342 or by writing to the American Skandia Trust at One
Corporate Drive, Shelton, Connecticut 06484.
Additional information about the Portfolios is included in a Statement of Additional Information, which is
incorporated by reference into this Prospectus. Additional information about the Portfolios' investments is available in
the annual and semi-annual reports to holders of variable annuity contracts and variable life insurance policies. In the
annual reports, you will find a discussion of the market conditions and investment strategies that significantly affected
each Portfolio's performance during its last fiscal year. The Statement of Additional Information and additional copies
of annual and semi-annual reports are available without charge by calling the above number.
The information in the Trust's filings with the Securities and Exchange Commission (including the Statement of
Additional Information) is available from the Commission. Copies of this information may be obtained, upon payment of
duplicating fees, by electronic request to [email protected] or by writing the Public Reference Section of the
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Commission, Washington, D.C. 20549-0102. The information can also be reviewed and copied at the Commission's Public
Reference Room in Washington, D.C. Information on the operation of the Public Reference Room may be obtained by calling
the Commission at 1-800-942-8090. Finally, information about the Trust is available on the EDGAR database on the
Commission's Internet site at HTTP://WWW.SEC.GOV.
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Investment Company Act File No. 811-5186
