ASXT(S) 1/97
Supplement to Prospectus Dated May 1, 1996
as Supplemented January 2, 1997
Supplement Dated January 2, 1997
The following additional portfolio of American Skandia Trust ("AST") is now
available as a variable investment option for Annuities purchased prior to
October 15, 1996: AST Putnam Value Growth & Income Portfolio.
On the cover page of the Prospectus after the third paragraph and under the
caption "HIGHLIGHTS - (1) Investment Options" the following is added:
Please note that the AST Putnam Value Growth & Income Portfolio is not available
as a variable investment option for Annuities purchased on or after October 15,
1996.
Under the caption "INVESTMENT OPTIONS - Variable Investment Options" the
following is added at the end of the chart:
Please note that the AST Putnam Value Growth & Income Portfolio and its
corresponding Sub-account is not available as a variable investment option for
Annuities purchased on or after October 15, 1996.
The following information is added to the table entitled "Underlying Mutual Fund
Portfolio Annual Expenses (as a percentage of average net assets):
Unless otherwise shown, the expenses shown below are for the year ending
December 31, 1995. "N/A" shown below indicates that no entity has agreed to
reimburse the particular expense indicated.
<TABLE>
<CAPTION>
Manage- Manage- Total Total
ment ment Other Other Annual Annual
Fee Fee Expenses Expenses Expenses Expenses
after without after without after without
any any any any any any
applicable applicable applicable applicable applicable applicable
reimburse- reimburse- reimburse- reimburse- reimburse- reimburse-
ment ment ment ment ment ment
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American Skandia Trust
<S> <C> <C> <C> <C> <C> <C>
AST Putnam Value Growth & Income(1) N/A 0.75% 0.33% 0.33% 1.08% 1.08%
</TABLE>
(1) This Portfolio is first being offered as of the date of this Supplement.
Expenses shown are estimated and annualized.
The following information is added to the table entitled "Expense Examples":
Examples (amounts shown are rounded to the nearest dollar)
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If you surrender your Annuity at the end of the applicable time period, you
would pay the following expenses on a $1,000.00 investment, assuming 5% annual
return on assets:
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After:
Sub-accounts 1 yr. 3 yrs.5 yrs. 10 yrs.
AST Putnam Value Growth & Income 112 167 215 297
If you do not surrender your Annuity at the end of the applicable time period or
begin taking annuity payments at such time, you would pay the following expenses
on a $1,000.00 investment, assuming 5% annual return on assets:
After:
Sub-accounts 1 yr. 3 yrs.5 yrs. 10 yrs.
- ------------
AST Putnam Value Growth & Income 27 82 140 297
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<TABLE>
<CAPTION>
The following is added to the section entitled "INVESTMENT OPTIONS - Underlying Mutual Fund: American Skandia Trust"
<S> <C>
Sub-account Underlying Mutual Fund Portfolio
AST Putnam Value Growth & Income AST Putnam Value Growth & Income
</TABLE>
<PAGE>
SHORT DESCRIPTIONS - APPENDIX B
The following short description of the AST Putnam Value Growth & Income
Portfolio is contained in an Appendix to the Prospectus:
AST Putnam Value Growth & Income Portfolio: The primary investment objective of
the AST Putnam Value Growth & Income Portfolio is to seek capital growth.
Current income is a secondary investment objective. The Portfolio invests
primarily in common stocks that offer potential for capital growth, and may,
consistent with its investment objectives, invest in stocks that offer potential
for current income. The Portfolio may also purchase corporate bonds, notes and
debentures, preferred stocks, or convertible securities (both debt securities
and preferred stocks) or U.S. government securities, if the Sub-advisor
determines that their purchase would help further the Portfolio's investment
objectives. The Portfolio may invest up to 20% of its assets in securities
denominated in foreign currency. The Portfolio may also purchase Eurodollar
certificates of deposit, without regard to the 20% limit. The Portfolio may
invest in securities principally traded in, or issued by issuers located in,
underdeveloped and developing nations, which are sometimes referred to as
"emerging markets." The Portfolio may buy or sell foreign currencies, foreign
currency futures contracts and foreign currency forward contracts for hedging
purposes in connection with its foreign investments. The Portfolio may invest a
portion of its assets in fixed-income securities, including lower-rated
fixed-income securities, which are commonly known as "junk bonds," without
limitation as to credit rating. The Portfolio may invest in zero coupon bonds
and payment-in-kind bonds. The Portfolio may buy and sell stock index futures
contracts. The Portfolio may buy and sell call and put options on index futures
or on stock indices in addition to or as an alternative to purchasing or selling
index futures or, to the extent permitted by applicable law, to earn additional
income. The Portfolio may seek to increase its current return by writing covered
call and put options on securities it owns or in which it may invest. The
Portfolio may also buy and sell put and call options for hedging purposes. The
aggregate value of the securities underlying the options may not exceed 25% of
Portfolio assets. The Portfolio may enter into repurchase agreements. The
Portfolio may purchase securities for future delivery, which may increase its
overall investment exposure and involves a risk of loss if the value of the
securities declines prior to the settlement date. The length of time the
Portfolio has held a particular security is not generally a consideration in
investment decisions. As a result of the Portfolio's investment policies, under
certain market conditions the Portfolio's turnover rate may be higher than that
of other mutual funds.
