Filed with the Securities and Exchange Commission on March 1, 1999
Registration No. 33-91400
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Post-effective Amendment No. 4
On FORM S-2
Registration Statement Under The Securities Act of 1933*
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Exact name of registrant as specified in its charter)
CONNECTICUT
(State or other jurisdiction of incorporation or organization)
63
(Primary Standard Industrial Classification Code Number)
06-1241288
(I.R.S. Employer Identification No.)
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
M. PRISCILLA PANNELL, CORPORATE SECRETARY
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
(203) 926-1888 (Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copy To:
T. RICHARD KENNEDY, ESQ.
WERNER & KENNEDY
1633 Broadway, New York, New York 10019 (212) 408-6900
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Approximate date of commencement of proposed sale to the public:
May 1, 1999 or as soon as practicable after the effective date of this
Registration Statement
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following: X . --
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following: ___.
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Calculation of Registration Fee
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Title of each Proposed Proposed
class of maximum maximum
securities Amount offering aggregate Amount of
to be to be price offering registration
registered registered per unit price** fee
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Annuity Contracts $ $
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*Pursuant to Rule 429 under the Securities Act of 1934, the prospectus contained
in this Registration Statement also relates to annuity contracts which are
covered by our earlier registration statement, including Registration File
Number 33-86912.
**The proposed aggregate offering price is estimated solely for determining the
registration fee. The amount to be registered and the proposed maximum offering
price per unit are not applicable since these securities are not issued in
predetermined amounts or units. Registrant hereby amends this Registration
Statement on such date or dates as may be necessary to delay its effective date
until the registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in accordance
with the provisions of Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
ASImpact
AX 1/15/99
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CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501
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S-2 Item No. Prospectus Heading
1. Forepart of the Registration Statement and Facing Page, Cross Reference Sheet,
Outside Front Cover Page of Prospectus Outside Front Cover Page
2. Inside Front Cover and Outside Back Cover of Prospectus Available Information,
Incorporation of Certain Documents by
Reference, How Will I Receive Statements, Table of Contents
3. Summary Information, Risk Factors and Ratio of Earnings Investment Options, Fees and Charges,
Managing Your Account Value
4. Use of Proceeds Managing Your Account Value, What are Separate Accounts
5. Determination of the Offering Price Fees and Charges, Managing Your Account Value
6. Dilution Not applicable
7. Selling Security Holders Not applicable
8. Plan of Distribution Who Distributes Annuities Offered by American Skandia
9. Description of Securities to be Registered Investment Options, Purchasing Your Annuity,
Valuing Your Investment, What are Separate Accounts,
Rights, Benefits and Services
10. Interests of named Expert and Counsel Not Applicable
11. Information with Respect to the Registrant Who Is American Skandia?
12. Incorporation of Certain Documents by Reference Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on Indemnification for Indemnification
Securities Act Liabilities
Part II Heading
14. Other Expenses of Issuance Other Expenses of Issuance
and Distribution and Distribution
15. Indemnification of Directors and Officers Indemnification of Directors and Officers
16. Exhibits Exhibits
17. Undertakings Undertakings
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
One Corporate Drive, Shelton, Connecticut 06484
This Prospectus describes a flexible premium deferred annuity (the "Annuity")
offered by American Skandia Life Assurance Corporation ("we", "our" or "us").
The Annuity may be offered as an individual annuity contract or as an interest
in a group annuity. This Prospectus describes the important features of the
Annuity and what you should consider before purchasing the Annuity. We have also
filed a Statement of Additional Information that is available from us, without
charge, upon your request. The contents of the Statement of Additional
Information are described on page . The Annuity or certain of its investment
options may not be available in all states. Various rights and benefits may
differ between states to meet applicable laws and/or regulations. Certain terms
are capitalized in this prospectus. Those terms are either defined in the
Glossary of Terms or in the context of the particular section.
WHY WOULD I CHOOSE TO PURCHASE THIS ANNUITY?
This Annuity is frequently used for retirement planning. It may be used as an
investment vehicle for an IRA, SEP-IRA, Roth IRA and Tax Sheltered Annuity (or
403(b)). It may also be used for other purposes that are not "qualified"
investments. The Annuity allows you to invest your money in a number of variable
investment options as well as in one or more fixed investment options. You are
not taxed on any investment gains the Annuity earns until you make a withdrawal
from the Annuity or begin to receive annuity payments. This feature, referred to
as "tax-deferral", can be beneficial to the growth of your Account Value because
money that would otherwise be needed to pay taxes on investment gains each year
remains invested and can earn additional money. However, because the Annuity is
designed for long-term retirement savings, a 10% penalty tax may be applied on
withdrawals you make before you reach age 59 1/2.
WHAT ARE SOME OF THE KEY FEATURES OF THE ANNUITY?
- - The Annuity is a "flexible premium deferred annuity." It is called
"flexible premium" because you have considerable flexibility in the
timing and amount of premium payments. Generally, investors "defer"
receiving annuity payments until after an accumulation period.
- - This Annuity offers both variable and fixed investment options. If you
allocate your Account Value to variable investment options, the value of
your Annuity will vary daily to reflect the investment performance of the
underlying investment options. Fixed investment options of different
durations are offered that are guaranteed by us, but may have a Market
Value Adjustment.
- - The Annuity features two distinct phases - the accumulation period and
the payout period. During the accumulation period your Account Value is
allocated to one or more underlying investment options. The variable
investment options, each a Class 3 Sub-account of American Skandia Life
Assurance Corporation Variable Account B, invest in an underlying mutual
fund portfolio. Currently, portfolios of the following underlying mutual
funds are being offered: American Skandia Trust, The Alger American Fund,
Montgomery Variable Series, Life & Annuity Trust and Rydex Variable Trust
[First Defined Portfolio Fund LLC and American Skandia Trust].
- - During the payout period, commonly called "annuitization," you can elect
to receive fixed annuity payments (1) for life; (2) for life with a
guaranteed minimum number of payments; (3) based on joint lives; or (4)
for a guaranteed number of payments.
- - The Annuity provides an additional 1% credit on Purchase Payments made
within the first year and may provide certain additional benefits if your
Account Value has not reached a Target Value on its 10th anniversary.
- - This Annuity offers a basic Death Benefit and two Optional Death Benefits
that provide an enhanced level of protection for your beneficiary(ies)
for an additional charge.
- - You are allowed to withdraw a certain amount of money from your Annuity
on an annual basis free of any charges. Other product features allow you
to access your Account Value as necessary, although a charge may apply.
- - Transfers between investment options are tax-free. You may make twelve
transfers each year free of charge. We also offer several programs that
enable you to manage your Account Value as your financial needs and
investment performance change.
- - The Annuity may provide additional benefits for Owners who make large
Purchase Payments.
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These annuities are NOT deposits or obligations of, or issued, guaranteed or
endorsed by, any bank, are NOT insured or guaranteed by the U.S. government, the
Federal Deposit Insurance Corporation (FDIC), the Federal Reserve Board or any
other agency. An investment in this annuity involves certain investment risks,
including possible loss of principal.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE
READ THIS PROSPECTUS AND THE CURRENT PROSPECTUS FOR THE UNDERLYING MUTUAL FUNDS.
KEEP THEM FOR FUTURE REFERENCE.
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FOR FURTHER INFORMATION CALL 1-800-752-6342.
Prospectus Dated: May 1, 1999
Statement of Additional Information Dated: May 1, 1999
ASI-PROS- (05/99)
[NIKE-PROS-(05/99)]
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HOW DO I PURCHASE THIS ANNUITY?
We sell the Annuity through licensed, registered financial professionals. You
must complete an application and submit a minimum initial purchase payment of
$10,000. We may allow you to make a lower initial purchase payment provided that
the purchase payments received in the first Annuity Year total at least $10,000.
There is no age restriction to purchase the Annuity. However, the basic Death
Benefit provides greater protection for persons under age 70.
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TABLE OF CONTENTS
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GLOSSARY OF TERMS..................................................................................................................5
SUMMARY OF CONTRACT FEES AND CHARGES...............................................................................................6
EXPENSE EXAMPLES...................................................................................................................8
INVESTMENT OPTIONS................................................................................................................11
WHAT ARE THE INVESTMENT OBJECTIVES, POLICIES AND EXPENSES OF THE PORTFOLIOS?...................................................11
WHAT ARE THE FIXED INVESTMENT OPTIONS?.........................................................................................17
FEES AND CHARGES..................................................................................................................17
WHAT ARE THE CONTRACT FEES AND CHARGES?........................................................................................17
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?..................................................................18
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?...................................................................................18
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYOUT?..............................................................................19
PURCHASING YOUR ANNUITY...........................................................................................................19
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?..........................................................................19
MANAGING YOUR ANNUITY.............................................................................................................19
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?................................................................19
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?..................................................................................19
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?.......................................................................................20
ADDITIONAL AMOUNTS ON QUALIFYING PURCHASE PAYMENTS.............................................................................20
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?...................................................................21
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?...............................................................21
MANAGING YOUR ACCOUNT VALUE.......................................................................................................21
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?...................................................................................21
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?.....................................................21
DO YOU OFFER DOLLAR COST AVERAGING?............................................................................................22
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?...............................................................................22
DO YOU OFFER A PROGRAM TO BALANCE FIXED AND VARIABLE INVESTMENTS?..............................................................22
MAY I AUTHORIZE MY FINANCIAL REPRESENTATIVE TO MANAGE MY ACCOUNT?..............................................................23
HOW DO THE FIXED INVESTMENT OPTIONS WORK?......................................................................................23
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?..............................................................................23
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?.....................................................................................24
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?.................................................................................24
ADDITIONAL AMOUNTS IN THE FIXED ALLOCATIONS....................................................................................25
AMERICAN SKANDIA'S INVESTORS EDGE [AS Impact only]................................................................................25
ACCESS TO ACCOUNT VALUE...........................................................................................................26
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?...............................................................................26
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?..................................................................................27
CAN I WITHDRAW A PORTION OF MY ANNUITY?........................................................................................27
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?....................................................................................27
CAN I MAKE WITHDRAWALS FROM MY ANNUITY WITHOUT A CDSC?.........................................................................27
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?..................................................................................27
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?...............................................28
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(T) OF THE INTERNAL REVENUE CODE?.......................................28
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM?.............................................................28
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?......................................................................................29
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?....................................................................29
WHAT TYPES OF ANNUITY PAYMENT OPTIONS ARE AVAILABLE UPON ANNUITIZATION?........................................................29
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?...........................................................................30
HOW ARE ANNUITY PAYMENTS CALCULATED?...........................................................................................30
DEATH BENEFIT.....................................................................................................................30
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?..................................................................................30
DEATH BENEFIT OPTIONS..........................................................................................................30
VALUING YOUR INVESTMENT...........................................................................................................33
HOW IS MY ACCOUNT VALUE DETERMINED?............................................................................................33
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?.....................................................................................33
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?....................................................................................33
HOW DO YOU VALUE FIXED ALLOCATIONS?............................................................................................34
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?....................................................................................34
TAX CONSIDERATIONS................................................................................................................34
WHAT ARE SOME OF THE FEDERAL TAX CONSIDERATIONS OF THIS ANNUITY?...............................................................34
HOW IS AMERICAN SKANDIA AND THE SEPARATE ACCOUNT TAXED?........................................................................34
IN GENERAL, HOW ARE ANNUITIES TAXED?...........................................................................................35
HOW ARE DISTRIBUTIONS TAXED?...................................................................................................35
WHAT TAX CONSIDERATIONS ARE THERE FOR TAX-QUALIFIED RETIREMENT PLANS OR QUALIFIED CONTRACTS?...................................36
HOW ARE DISTRIBUTIONS FROM TAX-QUALIFIED RETIREMENT PLANS TAXED?...............................................................38
GENERAL TAX CONSIDERATIONS.....................................................................................................38
GENERAL INFORMATION...............................................................................................................39
HOW WILL I RECEIVE STATEMENTS AND REPORTS?.....................................................................................39
WHO IS AMERICAN SKANDIA?.......................................................................................................40
WHAT ARE SEPARATE ACCOUNTS?....................................................................................................40
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?...........................................................................41
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?.........................................................................41
AVAILABLE INFORMATION..........................................................................................................43
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE................................................................................43
HOW TO CONTACT US..............................................................................................................43
INDEMNIFICATION................................................................................................................43
LEGAL PROCEEDINGS..............................................................................................................43
EXECUTIVE OFFICERS AND DIRECTORS...............................................................................................43
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............................................................................45
APPENDIX A -FINANCIAL INFORMATION ABOUT AMERICAN SKANDIA...........................................................................1
APPENDIX B -CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B...............................................................1
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GLOSSARY OF TERMS
Many terms used within this Prospectus are described within the text where they
appear. The description of those terms are not repeated in this Glossary of
Terms.
Account Value: The value of each allocation to a Sub-account or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions and charges. The Account Value is calculated before we assess any
applicable Contingent Deferred Sales Charge and/or any Annual Maintenance Fee.
Account Value is determined separately for each Sub-account and for each Fixed
Allocation, and then totaled to determine Account Value for your entire Annuity.
Account Value of each Fixed Allocation on other than its Maturity Date may be
calculated using a market value adjustment.
Annuity Date: The date you choose for annuity payments to commence. There may be
a maximum Annuity Date in certain states.
Annuity Year: A 12-month period commencing on the Issue Date of the Annuity and
each successive 12-month period thereafter.
Code: The Internal Revenue Code of 1986, as amended from time to time.
Fixed Allocation: An allocation of Account Value that is to be credited a fixed
rate of interest for a specified Guarantee Period during the accumulation
period.
Guarantee Period: A period of time during the accumulation period where we
credit a fixed rate of interest on a Fixed Allocation.
Interim Value: As of any particular date, the initial value allocated to the
Fixed Allocation plus all interest credited to the Fixed Allocation as of the
date calculated, less any transfers or withdrawals from the Fixed Allocation.
Issue Date: The effective date of your Annuity.
MVA: A market value adjustment used in the determination of Account Value of
each Fixed Allocation on a day other than such Fixed Allocation's Maturity Date.
Owner: With an Annuity issued as an individual annuity contract, the Owner is
either an eligible entity or person named as having ownership rights in relation
to the Annuity. With an Annuity issued as a certificate under a group annuity
contract, the "Owner" refers to the person or entity who has the rights and
benefits designated as to the "Participant" in the certificate.
Surrender Value: The value of your Annuity available upon surrender prior to the
Annuity Date. It equals the Account Value as of the date we price the surrender
minus any applicable CDSC and Annual Maintenance Fee and any additional amounts
we applied to your Purchase Payments that we are entitled to recover upon
surrender of your Annuity.
Unit: A measure used to calculate your Account Value in a Sub-account during the
accumulation period.
Valuation Day: Every day the New York Stock Exchange is open for trading or any
other day the Securities and Exchange Commission requires mutual funds or unit
investment trusts to be valued.
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SUMMARY OF CONTRACT FEES AND CHARGES
Below is a summary of the fees and expenses we charge for the Annuity. Some
charges are assessed against your Annuity while others are assessed against
assets allocated to the variable investment options. The charges that are
assessed against the Annuity include the Contingent Deferred Sales Charge,
Annual Maintenance Fee, Transfer Fee and the Tax Charge. The charge that is
assessed against the variable investment options is the Insurance Charge, which
is the combination of a mortality and expense risk charge and a charge for
administration of the Annuity. Each underlying mutual fund portfolio assesses a
charge for investment management and for other expenses. The prospectus for each
underlying mutual fund provides more detailed information about the expenses for
the underlying funds. In certain states, a premium tax charge may be applicable.
All of these fees and expenses are described in more detail within this
Prospectus.
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Your Transaction Expenses
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Amount Deducted/
Fee/Expense Description Of Charge When Deducted
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Contingent Deferred Sales Yr. 1 Yr. 2 Yr. 3 Yr. 4 Yr. 5 Yr. 6 Yr. 7 Yr. 8+ Upon Surrender or
Charge Partial Withdrawal
The charge is a percentage of Applicable period measured from
each applicable purchase the date each purchase payment is
payment allocated
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6.0% 6.0% 5.0% 5.0% 4.0% 3.0% 2.0% 0.0%
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Annual Maintenance Fee Smaller of $35 or 2% of Account Value Annually on the contract's
anniversary date or upon surrender
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Transfer Fee $10.00 After the 12th transfer each annuity
year
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Tax Charge Depends on the requirements of the applicable jurisdiction Various
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Annual Expenses of the Sub-Accounts
(as a percentage of the average daily net assets of the Sub-accounts)
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Mortality & Expense Risk
Charge 0.85%
Daily
Administration Charge 0.15%
Total Annual Expenses of the 1.00% per year of the value of each Sub-account Applies to Variable Investment
Sub-accounts* Options only
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* The combination of the Mortality and Expense Risk Charges and Administration
Charge is referred to as the "Insurance Charge" elsewhere in this prospectus and
in the Annuity contract.
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Optional Benefits
We offer two different Optional Death Benefits that provide an enhanced level of
protection for your beneficiary(ies). Please refer to the section entitled
"Death Benefit" for a complete discussion of the Optional Death Benefits we
offer.
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Death Benefit Option Death Benefit equal to the greater of: Additional Charge (annually)
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1. Account Value (no MVA)
2. Sum of Purchase Payments minus
OPTION 1 the proportional impact of [0.xx%] of the current Death Benefit
withdrawals increasing at 5.0% [to be filed by amendment]
annually
3. Highest Anniversary Value
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1. Account Value (no MVA)
2. Sum of Purchase Payments minus
OPTION 2 the proportional impact of [0.xx%] of the current Death Benefit
withdrawals increasing at 7.2% [to be filed by amendment]
annually
3. Highest Anniversary Value
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Underlying Mutual Fund Portfolio Annual Expenses
(as a percentage of the average net assets of the underlying Portfolios)
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Below are the investment management fee, other expenses, and the total annual
expenses for each underlying Portfolio as of December 31, 1998. The total annual
expenses are the sum of the investment management fee and other expenses. Each
figure is stated as a percentage of the underlying Portfolio's average daily net
assets. For certain of the underlying Portfolios, a portion of the management
fee is being waived and/or other expenses are being partially reimbursed. "N/A"
indicates that no portion of the management fee and/or other expenses is being
waived and/or reimbursed. Any footnotes about expenses appear after the list of
all the portfolios. Those portfolios whose name includes the prefix "AST" are
portfolios of American Skandia Trust. The underlying mutual fund portfolio
information was provided by the underlying mutual funds and has not been
independently verified by us. See the prospectuses or statements of additional
information of the underlying Portfolios for further details.
[TO BE FILED BY AMENDMENT]
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Management Management Other Other Total Annual Total Annual
Fee Fee Expenses Expenses Expenses Expenses
UNDERLYING PORTFOLIO after before
after before reimbursement reimbursement after waiver before waiver
waiver waiver or or
reimbursement reimbursement
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AST Lord Abbett Growth and Income
AST Lord Abbett Small Cap Value
AST JanCap Growth(1)
AST Janus Small-Cap Growth(2)
AST Janus Overseas Growth
AST Money Market(3)
AST Federated High Yield
AST T. Rowe Price Asset Allocation
AST T. Rowe Price International Equity
AST T. Rowe Price Natural Resources
AST T.Rowe Price International Bond
AST T. Rowe Price Small Company Value
AST Founders Passport
AST INVESCO Equity Income
AST PIMCO Total Return Bond
AST PIMCO Limited Maturity Bond
AST Oppenheimer Large-Cap Growth(4)
AST American Century International Growth
AST American Century Strategic Balanced(5)
AST Putnam Value Growth & Income
AST Putnam International Equity
AST Putnam Balanced
AST Cohen & Steers Realty
AST Bankers Trust Enhanced 500(6)
AST Marsico Capital Growth
AST Neuberger Berman Mid-Cap Value(7)
AST Neuberger Berman Mid-Cap Growth(8)
AST Kemper Small-Cap Growth(9)
The Alger American Fund - Growth
portfolio
The Alger American Fund - MidCap Growth
portfolio
Montgomery Variable Series - Emerging
Markets portfolio(10)
Wells Fargo LAT Trust - Equity Value
portfolio(11)
Rydex Variable Trust - Nova portfolio
Rydex Variable Trust - Ursa portfolio
Rydex Variable Trust - OTC portfolio
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[TO BE FILED BY AMENDMENT]
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Manage- Manage- Other Other 12b-1 Fees Total Total
ment Fee ment Fee Expenses Expenses Annual Annual
Expenses Expenses
UNDERLYING PORTFOLIO after before after before
waiver waiver reimburse- reimburse-
ment ment after before
waiver or waiver or
reimburse- reimburse-
ment ment
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First Trust - The DowSM Target 5 portfolio
First Trust - The DowSM Target 10 portfolio
First Trust - Global Target 15 portfolio
First Trust - Target 10 Large Cap portfolio
First Trust - Target 15 Large Cap portfolio
First Trust - Target Small Cap portfolio
First Trust - 10 Uncommon Values portfolio
American Skandia Trust - Money Market
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1 The investment management fee without any voluntary waiver would have been
0.90%; the total annual expenses without any waiver or reimbursement would
have been 1.08%.
2 Prior to January 1, 1999, the Investment Manager had engaged Founders Asset
Management, LLC as Sub-advisor for the Portfolio (formerly the Founders
Capital Appreciation portfolios).
3 The investment management fee without any voluntary waiver would have been
0.50%; the other expenses without any reimbursement would have been 0.19%;
the total annual expenses without any waiver or reimbursement would have
been 0.69%.
4 Prior to January 1, 1999, the Investment Manager had engaged Robertson,
Stephens & Company Investment Management, L.P. as Sub-advisor for the
Portfolio (formerly the Robertson Stephens Value + Growth portfolio), and
the total Investment Management fee was at the annual rate of 1.00% of the
average daily net assets of the Portfolio. As of January 1, 1998, the
Investment Manager engaged OppenheimerFunds, Inc. as Sub-advisor for the
Portfolio, and the Investment Management fee is payable at the annual rate
of 0.90% of the first $1 billion of the average daily net assets of the
Portfolio, plus .85% of the Portfolio's average daily net assets in excess
of $1 billion. The Management Fee in the above chart reflects the current
Investment Management fee payable to the Investment Manager.
5 The other expenses without any reimbursement would have been 0.50%; the
total annual expenses without any waiver or reimbursement would have been
1.35%.
6 The other expenses without any reimbursement would have been 0.29%; the
total annual expenses without any waiver or reimbursement would have been
0.89%.
7 Prior to May 1, 1998, the Investment Manager had engaged Federated
Investment Counseling as Sub-advisor for the Portfolio (formerly, the
Federated Utility Income portfolio), for a total Investment Management fee
payable at the annual rate of .75% of the first $50 million of the average
daily net assets of the Portfolio, plus .60% of the Portfolio's average
daily net assets in excess of $50 million. As of May 1, 1998, the
Investment Manager engaged Neuberger Berman Management Incorporated as
Sub-advisor for the Portfolio, for a total Investment Management fee
payable at the annual rate of 0.90% of the first $1 billion of the average
daily net assets of the Portfolio plus .85% of the Portfolio's average
daily net assets in excess of $1 billion. The Management Fee in the above
chart reflects the current Investment Management fee payable to the
Investment Manager.
8 Prior to May 1, 1998, the Investment Manager had engaged Berger Associates,
Inc. as Sub-advisor for the Portfolio (formerly, the Berger Capital Growth
portfolio), for a total Investment Management fee payable at the annual
rate of .75% of the average daily nets assets of the Portfolio. As of May
1, 1998, the Investment Manager engaged Neuberger Berman Management
Incorporated as Sub-advisor for the Portfolio, for a total Investment
Management fee payable at the annual rate of 0.90% of the first $1 billion
of the average daily net assets of the Portfolio plus .85% of the
Portfolio's average daily net assets in excess of $1 billion. The
Management Fee in the above chart reflects the current Investment
Management fee payable to the Investment Manager.
9 This portfolio commenced operations in January 1999. "Other Expenses" shown
are based on estimated expenses for the fiscal year ending December 31,
1999 with a voluntary expense reimbursement. Estimated other expenses
without any reimbursement would be 0.59%.
10 The other expenses without any reimbursement would have been 0.56%; the
total annual expenses without any waiver or reimbursement would have been
1.81%.
11 The other expenses without any reimbursement would have been 0.63%; the
total annual expenses would have been 1.23%.
EXPENSE EXAMPLES
These examples are designed to assist you in understanding the various costs and
expenses you will incur with the Annuity over certain periods of time based on
specific assumptions. The examples reflect expenses of our Sub-accounts, as well
as those of the underlying mutual fund portfolios. The Securities and Exchange
Commission ("SEC") requires these examples.
The examples shown assume that: (a) you only allocate Account Value in the
Sub-accounts; (b) fees and expenses remain constant; (c) you make no withdrawals
of Account Value during the period shown; (d) you make no transfers,
withdrawals, surrender or other transaction that we charge a fee during the
period shown; (e) no tax charge applies; (f) the 1.0% Target Value Credit is
applied to the Purchase Payment; and (g) the expenses throughout the period for
the underlying mutual fund portfolios will be the lower of the expenses without
any applicable reimbursement or expenses after any applicable reimbursement, as
shown above in the section entitled "Underlying Mutual Fund Portfolio Annual
Expenses." The examples do not reflect the charge for any optional benefits that
may be offered under the Annuity.
THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUNDS OR
THEIR PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Expense Examples
(amounts shown are rounded to the nearest dollar)
- ------------------------------------------------------------------------------------------------------------------------------------
[TO BE FILED BY AMENDMENT]
----------------------------------------- ------- -----------------------------------------
If you surrender your Annuity at the If you do not surrender your Annuity
end of the applicable time period, at the end of the applicable time period or
you would pay the following expenses begin taking annuity payments at such time,
on a $1,000 investment, assuming 5% you would pay the following expenses on a
annual return on assets: $1,000 investment, assuming 5% annual
return on assets:
After: After:
- ------------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sub-Account: 1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
--------- ---------- --------- ---------- ------------- --------- ---------- ----------
- -------------------------------------------- --------- ---------- --------- ---------- ------------- --------- ---------- ----------
AST LA Growth and Income 3
AST LA Small Cap Value 3
AST JanCap Growth 3
AST Janus Small-Cap Growth 3
AST Janus Overseas Growth 3
AST Money Market 3
AST Fed High Yield 3
AST T. Rowe Price Asset Allocation 3
AST T. Rowe Price International Equity 3
AST T. Rowe Price Natural Resources 3
AST T. Rowe Price International Bond 3
AST T. Rowe Price Small Company Value 3
AST Founders Passport 3
AST INVESCO Equity Income 3
AST PIMCO Total Return Bond 3
AST PIMCO Limited Maturity Bond 3
AST Oppenheimer Large-Cap Growth 3
AST American Century International Growth 3
AST American Century Strategic Balanced 3
AST Putnam Value Growth & Income 3
AST Putnam International Equity 3
AST Putnam Balanced 3
AST Cohen & Steers Realty 3
AST Bankers Trust Enhanced 500 3
AST Marsico Capital Growth 3
AST NB Mid-Cap Value 3
AST NB Mid-Cap Growth 3
AST Kemper Small-Cap Growth 3
AA Growth 3
AA MidCap Growth 3
MV Emerging Markets 3
WF LAT Trust Equity Value 3
Rydex Nova 3
Rydex Ursa 3
Rydex OTC 3
- --------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------
- --------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------
FT The DowSM Target 5 3
FT The DowSM Target 10 3
FT Global Target 15 3
FT Target 10 Large Cap 3
FT Target 15 Large Cap 3
FT Target Small Cap 3
FT 10 Uncommon Values 3
AST Money Market 3
- --------------------------------------- --------- ---------- --------- ---------- ------- ---------- --------- ---------- ----------
</TABLE>
<PAGE>
INVESTMENT OPTIONS
WHAT ARE THE INVESTMENT OBJECTIVES, POLICIES AND EXPENSES OF THE PORTFOLIOS?
Each variable investment option is a Class 3 Sub-account of American Skandia
Life Assurance Corporation Variable Account B (see "What are Separate Accounts"
for more detailed information.) Each Sub-account invests exclusively in one
Portfolio. You should carefully read the prospectus for any Portfolio in which
you are interested. The following chart classifies each of the Portfolios based
on our assessment of their investment style (as of the date of this Prospectus).
The chart also provides a short description of each Portfolio's investment
objective (in italics) and a short, summary description of their key policies to
assist you in determining which Portfolios may be of interest to you. The name
of the advisor/sub-advisor for each Portfolio appears next to the description.
Those portfolios whose name includes the prefix "AST" are portfolios of American
Skandia Trust. The investment manager for AST is American Skandia Investment
Services, Inc. ("ASISI"), an affiliated company. However, a sub-advisor, as
noted below, is engaged to conduct day-to-day investment decisions. Details
about the investment objectives, policies, risks, costs and management of the
Portfolios are found in the prospectuses for the underlying mutual funds. There
is no guarantee that any underlying mutual fund portfolios will meet its
investment objective.
Please refer to Appendix B for certain required financial information related to
the historical performance of the Sub-accounts.
<TABLE>
<CAPTION>
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
<S> <C> <C>
AST Money Market: seeks to maximize current income and maintain high levels of liquidity. The
CAPITAL Portfolio attempts to accomplish its objective by maintaining a dollar-weighted average J.P. Morgan
PRESERV-ATION maturity of not more than 90 days and by investing in securities which have effective Investment
maturities of not more than 397 days. Management Inc.
----------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------------------------------------------------------------------------------------
AST PIMCO Limited Maturity Bond: seeks to maximize total return, consistent with preservation Pacific
SHORT-TERM BOND of capital and prudent investment management. The Portfolio will invest in a diversified Investment
portfolio of fixed income securities of varying maturities Management
with a portfolio duration from one to three years. Company
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
LONG-TERM AST PIMCO Total Return Bond: seeks to maximize total return consistent with preservation of Pacific
BOND capital. The Portfolio will invest in a diversified portfolio of fixed-income securities of Investment
varying maturities with a portfolio duration from three to six years. Management Company
- ------------------- ----------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------------------------------------------------------------------------------------
AST Federated High Yield: seeks high current income by investing primarily in a diversified
portfolio of fixed income securities. The Portfolio will invest at least 65% of its assets in
HIGH YIELD BOND lower-rated (BBB or lower) fixed rate corporate debt obligations. Investments of
this type are subject to a greater risk of loss of principal and interest Federated
than investments in higher rated securities and are generally considered high risk. Investment
Lower-rated or unrated bonds are commonly referred to as "junk bonds." Counseling
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
AST T. Rowe Price International Bond: seeks to provide high current income and capital
appreciation by investing in high-quality, non dollar-denominated government and corporate Rowe Price-
INTER-NATIONAL bonds outside the United States. The Portfolio will invest at east 65% of its assets in Fleming
BOND high-quality, non dollar-denominated government and corporate bonds outside the United International,
States. The Portfolio may also invest up to 20% of its assets in below investment-grade, Inc.
high-risk bonds, including bonds in default or those with
the lowest rating (commonly referred to as "junk bonds").
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
AST T. Rowe Price Asset Allocation: seeks a high level of total return by investing primarily
ASSET in a diversified group of fixed income and
ALLOCA-TION equity securities. Under normal conditions over T. Rowe Price
the long-term, the Portfolio expects to allocate its Associates, Inc.
assets so that approximately 40% of its
assets will be in fixed income securities and approximately
60% in equity securities.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
<PAGE>
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
AST Putnam Balanced: seeks to provide a balanced investment
composed of a well-diversified portfolio of stocks and bonds
which will produce both capital growth and current income.
The Portfolio may invest in almost any type of security or
negotiable instrument, including cash or Putnam Investment
BALANCED money market instruments. The portion of the Portfolio's Management, Inc.
assets invested in equity securities and
fixed income securities will vary from time to time in light
of the Portfolio's investment objective, changes in interest
rates and economic of other factors. Under normal
market conditions, it is expected that at least 25% of the
Portfolio's total assets will be invested in fixed income
securities.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST American Century Strategic Balanced: seeks capital growth and current income. It is the
intention of the Portfolio's sub-advisor to maintain approximately 60% of the Portfolio's American Century
assets in common stocks that are considered by the sub-advisor to have better-than-average Investment
prospects for appreciation and the remainder in bonds and other fixed income securities. Management, Inc.
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
AST Cohen & Steers Realty: seeks to maximize total return
through investment in real estate securities. The
Portfolio pursues its investment objective of maximizing
total return by seeking, with approximately equal
REAL emphasis, capital appreciation (both realized and
ESTATE unrealized) and current income. Under normal Cohen & Steers
(REIT) circumstances, the Portfolio will invest substantially all Capital Management, Inc.
of its assets in the equity securities of "real estate
companies". Real estate companies include those companies
that derive at least 50% of its revenues from the
ownership, construction, financing, management or sale of
commercial, industrial, or residential real estate or that
has at least 50% of its assets in such real estate.
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
AST INVESCO Equity Income: seeks high current income while following sound investment
practices. Capital growth is a secondary consideration. The Portfolio seeks to achieve its
EQUITY INCOME objective by investing in securities which will provide a relatively high-yield and stable INVESCO Funds
return and which, over the years, may also provide capital appreciation. The Portfolio Group, Inc.
normally will invest at least 65% of its assets in dividend-paying, marketable common stocks
of domestic and foreign industrial issuers.
- ------------------- ----------------------------------------------------------------------------------------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------- ------------------------------------------------------------------------------------------------ ---------------
<S> <C> <C>
AST Bankers Trust Enhanced 500: seeks to outperform the
Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500(R)") through stock selection resulting in
ENHANCED different weightings of common stocks relative to the Bankers Trust
INDEX index. The Portfolio will include the common stocks of Company
companies included in the S&P 500(R). While the majority
of the issues held by the Portfolio will have neutral
weightings to the S&P 500, approximately 100 will be over-
or under-weighted relative to the index.
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
- ------------------- ---------------------------------------------------------------------------------------- -----------------------
AST Putnam Value Growth & Income: seeks capital growth
with current income as a secondary objective. The
Portfolio invests primarily in common stocks that offer
GROWTH potential for capital growth, and may, consistent with its Putnam Investment
& investment objectives, invest in stocks that offer Management, Inc.
INCOME potential for current income. The Portfolio may invest up
to 20% of its assets in securities traded in foreign
markets.
---------------------------------------------------------------------------------------- -----------------------
AST Lord Abbett Growth and Income: seeks long-term growth of
capital and income while attempting to avoid excessive
fluctuations in market value. Normally, investments will be Lord, Abbett & Co.
made in common stocks of seasoned companies which are
expected to show above-average growth and which the
Portfolio's sub-advisor believes to be in sound
financial condition.
- ------------------- ----------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------------------------------------------------------------------------------------
AST T. Rowe Price Natural Resources: seeks long-term
growth of capital through investment primarily in common
NATURAL stocks of companies which own or develop natural resources T.Rowe Price
RESOURCES and other basic commodities. The Portfolio will invest Associates, Inc.
primarily (at least 65% of its total assets) in common
stocks of companies which own or develop natural resources
and other basic commodities.
- ------------------- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------- ----------------------------------------------------------------------------------------------------------------
AST JanCap Growth: seeks growth of capital in a manner Janus Capital
consistent with the preservation of capital. The Portfolio Corporation
pursues its objective by emphasizing investments in common
stocks.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Marsico Capital Growth: seeks capital growth. Income
realization is not an investment objective and any income
realized on the Portfolio's investments, therefore, will Marsico Capital
be incidental to the Portfolio's objective. The Portfolio Management, LLC
will pursue its objective by investing primarily in common
stocks in industries and companies the sub-advisor
believes are experiencing favorable demand for their
products and services, and which operate in a favorable
competitive and regulatory environment.
----------------------------------------------------------------------------------------- -----------------------
----------------------------------------------------------------------------------------- -----------------------
AST Neuberger Berman Mid-Cap Growth: seeks capital
appreciation. The Portfolio invests in a diversified
portfolio of common stocks believed to have the maximum Neuberger Berman
potential for long-term above-average capital Management Incorporated
appreciation. Under normal conditions, the Portfolio
primarily invests in the common stocks of companies with
equity market capitalizations from $300 million to $10
billion at the time of investment. The Portfolio does not
seek to invest in securities that pay dividends or
interest, and any such income is incidental.
----------------------------------------------------------------------------------------- -----------------------
----------------------------------------------------------------------------------------- -----------------------
AST Neuberger Berman Mid-Cap Value: seeks capital growth.
The Portfolio seeks capital growth through an investment
approach that is designed to increase capital with
reasonable risk. The Portfolio invests principally in Neuberger Berman
GROWTH common stocks of medium to large capitalization Management Incorporated
established companies, using a value-oriented investment
approach. The Sub-advisor looks for securities believed to
be undervalued based on strong fundamentals, including a
low price-to-earnings ratio, consistent cash flow, and the
company's track record through all parts of the market
cycle.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Oppenheimer Large-Cap Growth*: seeks capital
appreciation. The Portfolio does not invest to seek
current income. The Portfolio emphasizes investment in
common stocks issued by established large-capitalization OppenheimerFunds,
growth companies. For purposes of the Portfolio, large-cap Inc.
companies have market capitalizations greater than $5
billion. Investment opportunities may be sought among
securities of smaller, less well-known companies. This
Portfolio is not intended for investors seeking assured
income or preservation of capital.
----------------------------------------------------------------------------------------- -----------------------
----------------------------------------------------------------------------------------- -----------------------
The Alger American Fund - Growth: seeks long-term capital
appreciation. Except during temporary defensive periods,
the Portfolio invests at least 65% of its total assets in Fred Alger
equity securities of companies that, at the time of Management, Inc.
purchase, have total market capitalization of $1 billion
or greater.
----------------------------------------------------------------------------------------- -----------------------
----------------------------------------------------------------------------------------- -----------------------
Wells Fargo Life & Annuity Trust - Equity Value: seeks to
provide investors with long-term capital appreciation by
investing primarily in equity securities, including common
stocks, and may invest in debt instruments that are Wells Fargo Bank, N.A.
convertible into common stocks of both domestic and
foreign companies. Income generation is a secondary
consideration. The Portfolio may invest in large,
well-established companies and smaller companies with
market capitalization exceeding $50 million.
----------------------------------------------------------------------------------------------------------- -----------------------
---------- ------------------------------------------------------------------------------------------------ -----------------------
The Alger American Fund - MidCap Growth: seeks long-term
AGGRES-SIVE capital appreciation. Except during temporary defensive
GROWTH periods, the Portfolio invests at least 65% of its total Fred Alger
assets in equity securities of companies that, at the time Management, Inc.
of purchase of the securities, have total market
capitalization within the range of companies included in
the S&P MidCap 400 Index, updated quarterly.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
<PAGE>
- ------------------- ----------------------------------------------------------------------------------------------------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ------------------- ----------------------------------------------------------------------------------------------------------------
- ------------------- ----------------------------------------------------------------------------------------------------------------
AST Janus Small-Cap Growth: seeks capital appreciation.
The Portfolio pursues its objective by normally investing
at least 65% of its total assets in securities issued by Janus Capital
small-sized companies. The Portfolio may also invest in Corporation
stocks of larger companies with potential for capital
appreciation.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Kemper Small-Cap Growth*: seeks maximum appreciation
of investors' capital from a portfolio primarily of growth
stocks of smaller companies. The Portfolio seeks maximum
appreciation of investors' capital. Current income will Scudder Kemper
not be a significant factor. The Portfolio's investment Investments, Inc.
portfolio will normally consist primarily of common stocks
and securities convertible into or exchangeable for common
stocks, including warrants and rights. The Portfolio is
designed as a long-term investment involving substantial
financial risk commensurate with potential substantial
gains.
SMALL ---------------------------------------------------------------------------------------- -----------------------
CAPITAL- ---------------------------------------------------------------------------------------- -----------------------
IZATION AST Lord Abbett Small Cap Value: seeks long-term capital
appreciation. Investments will be primarily made in equity
securities which are believed to be undervalued. Under Lord, Abbett & Co.
normal circumstances, the Portfolio will invest at least
65% of its assets in common stocks issued by smaller, less
well-known companies, with market capitalizations of less
than $1 billion. Smaller companies may carry more risk
than larger companies.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST T. Rowe Price Small Company Value: seeks to provide
long-term capital appreciation by investing primarily in
small-capitalization stocks that appear to be undervalued.
The Portfolio will invest at least 65% of its total assets T.Rowe Price
in companies with a market capitalization of $1 billion or Associates, Inc.
less that appear undervalued by various measures, such as
price/earnings or price/book value ratios. Investing in
small companies involves greater risk, as well as greater
opportunity, than is customarily associated with more
established companies.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
AST American Century International Growth: seeks capital
growth. The Portfolio will invest primarily in issuers in American Century
developed markets. Under normal conditions, the Portfolio Investment
will invest at least 65% of its assets in equity and Management, Inc.
equity equivalent securities of issuers from at least
three different countries outside the United States.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Founders Passport: seeks capital appreciation. The
Portfolio invests primarily in securities issued by
foreign companies which have market capitalizations or
annual revenues of $1 billion or less. At least 65% of the Founders Asset
Portfolio's assets will normally be invested in foreign Management LLC
securities representing a minimum of three countries. The
Portfolio will normally invest a significant proportion of
its assets in the securities of small and medium-sized
INTER- companies, which involves greater risk than is customarily
NATIONAL associated with more established companies.
EQUITY ---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Janus Overseas Growth: seeks long-term growth of
capital. The Portfolio pursues its objective primarily Janus Capital
through investments in common stocks of issuers located Corporation
outside the United States.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST Putnam International Equity: seeks capital
appreciation. The Portfolio seeks its objective by
investing primarily in equity securities of companies Putnam Investment
located in a country other than the United States. The Management, Inc.
Portfolio will, under normal circumstances, invest at
least 65% of its total assets in issuers located in at
least three different countries other than the United
States.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
AST T. Rowe Price International Equity: seeks total return
of its assets from long-term growth of capital and income, Rowe Price-Fleming
principally through investments in common stock of International, Inc.
established, non-U.S. companies. The Portfolio intends to
diversify broadly among countries and to normally have at
least three different countries represented in the
Portfolio.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Montgomery Variable Series - Emerging Markets: seeks
capital appreciation, which under normal conditions it
EMERGING seeks by investing at least 65% of its total assets in Montgomery Asset
MARKETS equity securities of companies in countries having Management, L.P.
emerging markets. Under normal conditions, investments are
maintained in at least six emerging market countries at
all times and no more than 35% of total assets are
invested in any one emerging market country.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
The Nova, Ursa and OTC portfolios of the Rydex Variable
Trust are available to all Owners. However, the fund's
advisor strongly recommends that only Owners who engage a
Financial Adviser to allocate their funds in strategic or
tactical asset allocation strategies invest in these
portfolios. There can be no assurance that any Financial
Advisor will successfully predict market fluctuations.
Each of the Rydex portfolios invests in the securities of
a relatively few number of issuers. Since the assets of
each portfolio are invested in a limited number of
issuers, the net asset value of the portfolio may be more
susceptible to a single adverse economic, political or
regulatory occurrence.
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Rydex Variable Trust - Nova: seeks to provide investment
returns that are 150% of the S&P 500 Composite Stock Price
Index by investing to a significant extent in futures
contracts and options on securities, futures contracts and PADCO Advisor II, Inc.
the value of Fund shares will tend to increase by 150% of
STRATEGIC OR the value of any increase in the S&P Inc. 500 Index.
TACTICAL However, when the value of the S&P 500 Index declines, the
ALLOCA- value of Fund shares should also decrease by 150% of the
TION value of any decrease in the S&P 500 Index.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
Rydex Variable Trust - Ursa: seeks to provide investment
results that will inversely correlate (e.g. be the
opposite) to the performance of the S&P 500 Composite
Stock Price Index by investing to a significant extent in PADCO Advisor II, Inc.
futures contracts and options on securities, futures
contracts and stock indexes. The Fund will generally not
invest in the securities included in the S&P 500 Index. If
the Fund meets its objective the value of Fund shares will
tend to increase when the value of the S&P 500 Index is
decreasing. However, when the value of the S&P 500 Index
is increasing, the value of Fund shares should decrease by
an inversely proportional amount.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
Rydex Variable Trust - OTC: seeks to provide investment
results that correspond to a benchmark for the
over-the-counter securities, currently the NASDAQ 100
Index(TM), by investing principally in the securities of PADCO Advisor II, Inc.
companies included in that Index. The Fund may also invest
in other instruments whose performance is expected to
correspond to that of the Index, and may engage in futures
and options transactions. If the Fund meets its objective
the value of Fund shares will tend to increase by the
amount of the increase in the NASDAQ 100 Index(TM).
However, when the value of the NASDAQ 100
Index(TM)declines, the value of Fund shares should also
decrease by the amount of the decrease in the value of the
Index(TM).
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
<PAGE>
- ------------ ----------------------------------------------------------------------------------------------- -----------------------
PORTFOLIO
STYLE/ INVESTMENT OBJECTIVES/POLICIES ADVISOR/
TYPE SUB-ADVISOR
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
AST Money Market: seeks to maximize current income and
CAPITAL maintain high levels of liquidity. Portfolio attempts to J.P. Morgan
PRESERV- accomplish its objective by maintaining a dollar-weighted Investment
ATION average maturity of not more than 90 days and by investing Management Inc.
in securities which have effective maturities of not more
than 397 days.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Each portfolio of the First Defined Portfolio Fund LLC
invests in the securities of a relatively few number of
issuers. Since the assets of each portfolio are invested
in a limited number of issuers, the net asset value of the
portfolio may be more susceptible to a single adverse
economic, political or regulatory occurrence. Each
portfolio is also exposed to additional market risk due to
its policy of investing based on an investment strategy
and generally not buying or selling securities in response
to market fluctuations. The portfolio's relative lack of
diversity and limited ongoing management may subject
Owners to greater market risk than other portfolios.
- ------------------------------------------------------------------------------------------------------------------------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
The DowSM Target 5: seeks to provide above-average total
return by investing in common stocks issued by companies
that are expected to provide income and to have the
potential for capital appreciation. Invests primarily in
the common stocks of the five companies with the lowest
per share stock price of the ten companies in the Dow First Trust Advisors L.P.
Jones Industrial AverageSM ("DJIA") that have the highest
LARGE CAP dividend yields as of the close of business on or about
BLEND the applicable stock selection date. Each year, on or
about the annual stock selection date, the fund invest in
the securities determined by the strategy in relatively
equal amounts.
---------------------------------------------------------------------------------------- -----------------------
---------------------------------------------------------------------------------------- -----------------------
The DowSM Target 10: seeks to provide above-average total
return by investing in common stocks issued by companies
that are expected to provide income and to have the
potential for capital appreciation. Invests primarily in
the common stocks of the ten companies in the DJIA that First Trust Advisors L.P.
have the highest dividend yields as of the close of
business on or about the applicable stock selection date.
Each year, on or about the annual stock selection date,
the fund expects to invest in the securities determined by
the strategy in relatively equal amounts.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Global Target 15: seeks to provide above-average total
return by investing in common stocks issued by companies
that are expected to provide income and to have the
potential for capital appreciation. Invests primarily in
GLOBAL the common stocks of the companies which are components of
EQUITY the DJIA, the Financial Times Industrial Ordinary Share First Trust Advisors L.P.
Index ("FT Index") and the Hang Seng Index. The fund
consists of common stocks of the five companies with the
lowest per share stock price of the ten companies in each
of the DJIA, FT Index and Hang Seng Index, respectively,
that have the highest dividend yield in the respective
index as of the close of business on or about the
applicable stock selection date.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Target 10 Large Cap: seeks to provide above-average total
return by investing in common stocks issued by companies
GROWTH that are expected to provide income and to have the
& potential for capital appreciation. Invests primarily in First Trust Advisors L.P.
INCOME the common stocks of ten companies which had the greatest
1-year stock price appreciation selected from a
pre-screened subset of the stocks included in the Standard
& Poor's 500 Composite Stock Price Index as of the close
of business on or about the applicable stock selection
date.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Target 15 Large Cap: seeks to provide above-average total
return by investing in common stocks issued by companies
LARGE that are expected to have the potential for capital
CAP appreciation. Invests primarily in the common stocks of First Trust Advisors L.P.
fifteen companies selected from a pre-screened First Trust
Advisors subset of the stocks included in the Nasdaq-100
Index as of the close of business on or about L.P. the
applicable stock selection date through a multi-step
process
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
Target Small Cap: seeks to provide above-average total
return by investing in common stocks issued by companies
that are expected to have the potential for capital
appreciation. Invests primarily in the common stocks of
SMALL small capitalization companies selected from a
CAP pre-screened subset of the common stocks listed on the New First Trust Advisors L.P.
York Stock Exchange the American Stock Exchange or The
NASDAQ Stock Market as of the close of business on or
about the applicable stock selection date each year. The
fund primarily consists of a portfolio of 40 common stocks
which had the greatest 12-month stock price appreciation
selected annually on or about the applicable stock
selection date through a six-step process.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
10 Uncommon Values: seeks to provide above-average capital
appreciation by investing primarily in the ten common
stocks selected by the Investment Policy Committee of
Lehman Brothers Inc. ("Lehman Brothers") with the
VALUE assistance of the Research Department of Lehman Brothers First Trust Advisors L.P.
which, in their opinion have the greatest potential for
capital appreciation during the next year. Each year, on
or about the annual stock selection date, the fund expects
to invest in the securities determined by Lehman Brothers
in relatively equal amounts.
- ----------- ------------------------------------------------------------------------------------------------ -----------------------
</TABLE>
[ASImpact ONLY] "Standard & Poor's(R)," "S&P(R)," "S&P 500(R)," "Standard &
Poor's 500," and "500" are trademarks of the McGraw-Hill Companies, Inc. and
have been licensed for use by American Skandia Investment Services, Incorporated
and Bankers Trust. The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Portfolio.
WHAT ARE THE FIXED INVESTMENT OPTIONS?
We offer fixed investment options of different durations during the accumulation
phase. These "Fixed Allocations" earn a guaranteed fixed rate of interest for a
specified period of time, called the "Guarantee Period." In most states, we
offer Fixed Allocations with Guarantee Periods of 1, 2, 3, 5, 7 and 10 years. We
guarantee the fixed rate for the entire Guarantee Period. However, if you
withdraw the Account Value before the end of the Guarantee Period, we will
adjust the value of your withdrawal or transfer based on a formula, called a
"Market Value Adjustment." The Market Value Adjustment can either be positive or
negative, depending on the rates that are currently being credited on Fixed
Allocations. Please refer to the section entitled "How does the Market Value
Adjustment Work?" for a description of the formula along with examples of how it
is calculated. You may allocate Account Value to more than one Fixed Allocation
at a time.
Fixed Allocations are currently not available in the state of Maryland, Nevada,
Oregon, Utah and Washington.
FEES AND CHARGES
Certain charges may apply regardless of how you allocate Account Value among the
investment options. These are the contingent deferred sales charge and any
annuity tax charges.
WHAT ARE THE CONTRACT FEES AND CHARGES?
(The Contingent Deferred Sales Charge is often referred to as a "Surrender
Charge" or "CDSC".)
Contingent Deferred Sales Charge: We may assess a Contingent Deferred Sales
Charge (CDSC) if you surrender your Annuity or when you make a partial
withdrawal. The CDSC is calculated as a percentage of your Purchase Payment
being surrendered or withdrawn during the applicable Annuity Year. The amount of
the CDSC decreases over time, measured from the date the Purchase Payment is
applied. The CDSC percentages are shown below.
------------------ ------- ----- ------ ------ ------ ----- ------ ------
YEARS 1 2 3 4 5 6 7 8+
------------- ------- ----- ------ ------ ------ ----- ------ ------
------------- ------- ----- ------ ------ ------ ----- ------ ------
CHARGE (%) 6.0 6.0 5.0 5.0 4.0 3.0 2.0 0
----------------- ------- ----- ------ ------ ------ ----- ------ ------
Each Purchase Payment has its own CDSC period. When you make a withdrawal, we
assume that the oldest Purchase Payment is being withdrawn first so that the
lowest CDSC is deducted from the amount withdrawn. After seven (7) complete
years from the date you make a Purchase Payment, no CDSC will be assessed if you
withdraw or surrender that Purchase Payment.
Under certain circumstances you can withdraw a limited amount of Account Value
without paying a CDSC. This is referred to as a "Free Withdrawal." We may waive
the CDSC under certain medically-related circumstances or when taking a Minimum
Distribution under an Annuity issued in connection with a qualified contract.
Free Withdrawals, Medically-Related Waivers and Minimum Distributions are each
explained more fully in the section entitled "Access to Your Account Value".
Reductions to the Contingent Deferred Sales Charge
We may reduce the amount of the CDSC or the length of time it applies if we
determine that our sales expenses for a particular individual or group is lower
than expected. Some of the factors we might consider in making such a decision
are: (a) the size and type of group; (b) the amounts of Purchase Payments; (c)
present Owners making additional Purchase Payments; and/or (d) other
transactions where sales expenses are likely to be reduced.
We will not discriminate unfairly between Annuity purchasers if and when we
reduce the length or amount of the CDSC.
Exceptions to the Contingent Deferred Sales Charge
We do not apply the CDSC provision on Annuities owned by: (a) any parent
company, affiliate or subsidiary of ours; (b) an officer, director, employee,
retiree, sales representative, or in the case of an affiliated broker-dealer,
registered representative of such company; (c) a director, officer or trustee of
any underlying mutual fund; (d) a director, officer or employee of any
investment manager, sub-advisor, transfer agent, custodian, auditing, legal or
administrative services provider that is providing investment management,
advisory, transfer agency, custodianship, auditing, legal and/or administrative
services to an underlying mutual fund or any affiliate of such firm; (e) a
director, officer, employee or registered representative of a broker-dealer or
insurance agency that has a then current selling agreement with us and/or with
American Skandia Marketing, Incorporated; (f) a director, officer, employee or
authorized representative of any firm providing us or our affiliates with
regular legal, actuarial, auditing, underwriting, claims, administrative,
computer support, marketing, office or other services; (g) the then current
spouse of any such person noted in (b) through (f), above; (h) the parents of
any such person noted in (b) through (g), above; (i) such person's child(ren) or
other legal dependent under the age of 21; and (j) the siblings of any such
persons noted in (b) through (h) above. We will not provide any Additional
Amounts for any such contracts (see "Additional Amounts in the Fixed
Allocations").
Annual Maintenance Fee: During the accumulation period we deduct an Annual
Maintenance Fee. The Annual Maintenance Fee is $35.00 or 2% of your Account
Value invested in the variable investment options, whichever is less. This fee
will be deducted annually on the Anniversary Date of your Annuity or, if you
surrender your Annuity during the annuity year, the fee is deducted at the time
of surrender. We may increase the Annual Maintenance Fee. However, any increase
will only apply to Annuities issued after the date of the increase.
We may reduce or eliminate the amount of the Annual Maintenance Fee and/or
reduce the portion of the Insurance Charge for administrative costs when
Annuities are sold to individuals or a group of individuals in a manner that
reduces our maintenance and/or administrative expenses. We would consider such
factors as: (a) the size and type of group; (b) the number of Annuities
purchased by an Owner; (c) the amount of Purchase Payments; and/or (d) other
transactions where maintenance and/or administration expenses are likely to be
reduced.
We will not discriminate unfairly between Annuity purchasers if and when we
eliminate or reduce the Annual Maintenance Fee and/or the portion of the
Insurance Charge attributed to the charge covering administrative costs.
Optional Death Benefits: If you elect to purchase one of the Optional Death
Benefits, we will deduct a charge from your Account Value on the anniversary of
your Annuity's Issue Date or, under certain circumstances on a date other than
the anniversary date. Please refer to the section entitled "Death Benefit" for a
description of the charge for each Optional Death Benefit.
Transfer Fee: You may make twelve (12) free transfers between investment options
each annuity year. We will charge $10.00 for each transfer after the twelfth in
each annuity year. We do not consider transfers made as part of a dollar cost
averaging program when we count the twelve free transfers. Transfers made as
part of a rebalancing, market timing or third party investment advisory service
will be subject to the twelve-transfer limit. However, all transfers made on the
same day will be treated as one (1) transfer. Renewals or transfers of Account
Value from a Fixed Allocation at the end of its Guarantee Period are not subject
to the Transfer Fee and are not counted toward the twelve free transfers.
Tax Charges: Several states and some municipalities charge premium taxes or
similar taxes. The amount of tax will vary from jurisdiction to jurisdiction and
is subject to change. The tax charge currently ranges up to 3 1/2%. We generally
will deduct the amount of tax payable at the time the tax is imposed, but may
also decide to deduct tax charges from each Purchase Payment at the time of a
withdrawal or surrender of your Annuity or at the time you elect to begin
receiving annuity payments. We may assess a charge against the Sub-accounts and
the Fixed Allocations equal to any taxes which may be imposed upon the separate
accounts.
WHAT CHARGES APPLY SOLELY TO THE VARIABLE INVESTMENT OPTIONS?
Insurance Charge: We deduct an Insurance Charge daily against the average daily
assets allocated to the Sub-accounts. The charge is equal to 1.00% on an annual
basis. This charge is for insurance benefits, including the Annuity's death
benefit that provides guaranteed benefits to your beneficiary even if the market
declines and the risk that persons we guarantee annuity payments to will live
longer than our assumptions. The charge also covers administrative costs
associated with providing the Annuity benefits, including preparation of the
contract, confirmation statements, annual account statements and annual reports,
legal and accounting fees as well as various related expenses. Finally, the
charge covers the risk that our assumptions about the administrative and
non-mortality expenses under this Annuity are incorrect. The Insurance Charge is
not deducted against assets allocated to a fixed investment option. We may
increase the portion of the Insurance Charge for administrative costs. However,
any increase will only apply to Annuities issued after the date of the increase.
WHAT CHARGES APPLY TO THE FIXED ALLOCATIONS?
We take into consideration mortality, expense, administration, profit and other
factors in determining the interest rates we credit to Fixed Allocations. No
specific fee or expenses are deducted when determining the rate we credit. Any
CDSC or Tax Charge applies to amounts that are taken from the variable
investment options or the Fixed Allocations. A Market Value Adjustment may also
apply to transfers, certain withdrawals or surrender from a Fixed Allocation.
WHAT CHARGES APPLY IF I CHOOSE AN ANNUITY PAYOUT?
In certain states a tax is due if and when you exercise your right to receive
periodic annuity payments. We do not deduct any specific charges during the
payout period. However, the amount payable will depend on the applicable
jurisdiction and on the annuity payment option you select. If you select an
option that guarantees payment for life, then the payment amount also will
depend on your age, and, where permitted by law, your gender. In all cases, the
amount of each payment will depend on the Account Value of your Annuity when you
elect to begin annuity payments.
PURCHASING YOUR ANNUITY
WHAT ARE OUR REQUIREMENTS FOR PURCHASING THE ANNUITY?
Minimum Initial Purchase Payment: You must make a minimum initial Purchase
Payment of $10,000. However, if you decide to make payments under a systematic
investment or "bank drafting" program, we will accept a lower initial Purchase
Payment provided that, within the first annuity year, you make at least $10,000
in total Purchase Payments.
Age Restrictions: There is no age restriction to purchase the Annuity. However,
the basic Death Benefit provides greater protection for persons under age 70.
Owner, Annuitant and Beneficiary Designations: On your Application, we will ask
you to name the Owner(s), Annuitant and one or more Beneficiaries for your
Annuity.
- Owner: The Owner(s) holds all rights under the Annuity. You may name
more than one Owner in which case all ownership rights are held jointly.
However, this Annuity does not provide a right of survivorship. Refer to
the Glossary of Terms for a complete description of the term "Owner."
- Annuitant: The Annuitant is the person we agree to make annuity
payments to and upon whose life we continue to make such payments. You
must name an Annuitant who is a natural person. We do not accept a
designation of joint Annuitants. Where allowed by law, you may name one
or more Contingent Annuitants. A Contingent Annuitant will become the
Annuitant if the Annuitant dies before the Annuity Date.
- Beneficiary: The Beneficiary is the person(s) or entity you name to
receive the death benefit. If no beneficiary is named the death benefit
will be paid to you or your estate.
You should seek competent tax advice on the income, estate and gift tax
implications of your designations.
MANAGING YOUR ANNUITY
MAY I CHANGE THE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS?
You may change the Owner, Annuitant and Beneficiary designations by sending us a
request in writing. Where allowed by law, such changes will be subject to our
acceptance. Some of the changes we will not accept include, but are not limited
to:
- - a new Owner subsequent to the death of the Owner or the first of any joint
Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;
- - a new Annuitant subsequent to the Annuity Date if the annuity option selected
includes a life contingency;
- - a new Annuitant prior to the Annuity Date if the Annuity is owned by an
entity; and
- - a change in Beneficiary if the Owner had previously made the designation
irrevocable.
Spousal Owners/Spousal Beneficiaries
If an Annuity is owned jointly by spouses, the death benefit will be payable
upon the death of the first spouse. However, if the sole primary Beneficiary is
designated as one of the following:
- - "surviving spouse";
- - each spouse named individually upon the death of the other; or
- - a designation which we, in our sole discretion, determine to be of similar
intent; then
upon the death of either Owner, the surviving spouse may elect to be treated as
the Owner and continue the Annuity, subject to its existing terms and
conditions, instead of taking the Death Benefit.
MAY I RETURN THE ANNUITY IF I CHANGE MY MIND?
(The right to return the Annuity is referred to as the "free-look" right or
"right to cancel.")
If after purchasing your Annuity you change your mind and decide that you do not
want it, you may return it to us within a certain period of time known as a
free-look period. Depending on the state in which you purchased your Annuity,
the free-look period may be ten (10) days, twenty-one (21) days or longer,
measured from the time that you received your Annuity. If you free-look your
Annuity, we will refund your current Account Value minus any additional amounts
we applied to your Annuity based on your Purchase Payments plus any tax charge
deducted. This amount may be higher or lower than your original Purchase
Payment. Certain states require that we return your current Account Value or the
amount of your initial Purchase Payment, whichever is greater. The same rule
applies to an Annuity that is purchased as an IRA. In those states where we are
required to return the greater of your Purchase Payment or Account Value, we
will allocate your Account Value to the AST Money Market Sub-account during the
free-look period and for a reasonable additional amount of time to allow for
delivery of your Annuity.
MAY I MAKE ADDITIONAL PURCHASE PAYMENTS?
The minimum amount that we accept as an additional Purchase Payment is $100
unless you participate in American Skandia's Systematic Investment Plan or a
periodic purchase payment program. An additional Purchase Payment will be
returned if we have not received written allocation instructions.
ADDITIONAL AMOUNTS ON QUALIFYING PURCHASE PAYMENTS
Under certain circumstances we may credit Additional amounts to your Annuity if
you submit a large initial or subsequent Purchase Payment. Each Purchase Payment
must qualify separately to receive any Additional Amounts. As of the date of
this Prospectus, Additional Amounts are being offered. However, we may modify,
suspend or terminate this program at any time at our sole discretion. Any
Additional Amounts are provided from our general account.
Additional Amounts are payable as a percentage of the qualifying Purchase
Payment made to your Annuity according to the breakpoints shown below. The
percentage also depends on the age of the oldest of any Owner on the date we
apply the Purchase Payment to your Annuity. If the Owner of the Annuity is an
entity, the age is determined based on the age of the Annuitant.
<TABLE>
<CAPTION>
----------------------------------------- -------------------------------------
Additional Amount*
Purchase Payment
Less than Age 80 Age 80 or more
----------------------------------------- ------------------ ------------------
----------------------------------------- ------------------ ------------------
<S> <C> <C>
Between $1,000,000 and $4,999,999 2.0% 1.0%
----------------------------------------- ------------------ ------------------
----------------------------------------- ------------------ ------------------
$5,000,000 or greater 3.0% 1.5%
----------------------------------------- ------------------ ------------------
* as a percentage of the Purchase Payment.
</TABLE>
Additional Amounts are not offered on Purchase Payments of less than $1 million.
How are Additional Amounts applied to my Account Value?
Any Additional Amounts are allocated to your Account Value at the time the
qualifying Purchase Payment is applied to your Account Value. Additional Amounts
are allocated to the investment options in the same ratio as the applicable
Purchase Payment is applied.
Special Treatment of Additional Amounts
- - Any Additional Amounts applied to your Annuity can be recovered by American
Skandia if you elect to "free-look" your Annuity. The amount returned to
you will not include any Additional Amounts.
- - We do not consider Additional Amounts to be "investment in the contract"
for income tax purposes.
- - You may not withdraw any Additional Amounts under the Free Withdrawal
provision without assessment of the contingent deferred sales charge (see
"Can I make withdrawals from my Annuity without a CDSC?").
Additional Amounts applied to estimated Purchase Payments
Under certain circumstances, we may consider two or more separate Purchase
Payments as if they had been submitted at the same time when determining the
percentage to apply based on the breakpoints described above. To make use of
this procedure, often referred to as a "letter of intent", you must provide
evidence of your intention to submit the cumulative additional Purchase Payments
within a 13-month period. A letter of intent must be provided to us prior to the
Issue Date to be effective. Acceptance of a letter of intent is at our sole
discretion and may be subject to restrictions as to the minimum initial Purchase
Payment that must be submitted to receive the next higher breakpoint.
Failure to inform us that you intend to submit two or more large Purchase
Payments within a 13-month period may result in your Annuity being credited no
Additional Amounts or fewer Additional Amounts than would otherwise be credited
to your Annuity.
If you submit a letter of intent and receive Additional Amounts that otherwise
would not have applied BUT do not submit the required Purchase Payments during
the 13-month period as required by your letter of intent, we may recover any
Additional Amounts pro-rata from the investment options based on your Account
Values as of the date we act to recover the Additional Amounts. If the amount of
the recovery exceeds your then current Surrender Value, we will recover all
remaining Account Value and terminate your Annuity.
MAY I MAKE SCHEDULED PAYMENTS DIRECTLY FROM MY BANK ACCOUNT?
You can make additional Purchase Payments to your Annuity by authorizing us to
deduct money directly from your bank account and applying it to your Annuity.
This type of program is often called "bank drafting". We call our bank drafting
program "American Skandia's Systematic Investment Plan." Purchase Payments made
through bank drafting may only be allocated to the variable investment options.
Bank drafting allows you to invest in an Annuity with a lower initial Purchase
Payment, as long as you authorize payments that will equal at least $10,000
during the first 12 months of your Annuity. We may suspend or cancel bank
drafting privileges if sufficient funds are not available from the applicable
financial institution on any date that a transaction is scheduled to occur.
MAY I MAKE PURCHASE PAYMENTS THROUGH A SALARY REDUCTION PROGRAM?
These types of programs are only available with certain types of plans. If your
employer sponsors such a program, we may agree to accept periodic Purchase
Payments through a salary reduction program as long as the allocations are made
only to variable investment options and the periodic Purchase Payments received
in the first year total at least $10,000.
MANAGING YOUR ACCOUNT VALUE
HOW AND WHEN ARE PURCHASE PAYMENTS INVESTED?
(See "Valuing Your Investment" for a description of our procedure for pricing
initial and subsequent Purchase Payments.)
Initial Purchase Payment: Once we accept your application, we invest your net
Purchase Payment in the Annuity. The net Purchase Payment is your initial
Purchase Payment minus any tax charges that may apply. On your application we
ask you to provide us with instructions for allocating your Account Value. You
can allocate Account Value to one or more variable investment options or Fixed
Allocations. In those states where we are required to return your Purchase
Payment if you elect to "free-look" your Annuity, we initially allocate all
amounts that you choose to allocate to the variable investment options to the
AST Money Market Sub-account. At the end of the "free-look" period we will
reallocate your Account Value according to your most recent allocation
instructions. Where permitted by law, we will allocate your Purchase Payments
according to your initial instructions, without temporarily allocating to the
AST Money Market Sub-account. To do this, we will ask that you execute our form
called a "return waiver" that authorizes us to allocate your Purchase Payment to
your chosen Sub-accounts immediately. If you submit the "return waiver" and then
decide to return your Annuity during the free-look period, you will receive your
current Account Value which may be more or less than your initial Purchase
Payment (see "May I Return the Annuity if I Change my Mind?").
Subsequent Purchase Payments: We will allocate any additional Purchase Payments
you make according to your most recent allocation instructions. If any
rebalancing, asset allocation or market timing programs are in effect, the
allocation must conform with such a program. We assume that your current
allocation instructions are valid for subsequent Purchase Payments until you
make a change to those allocations or request new allocations when you submit a
new Purchase Payment.
ARE THERE RESTRICTIONS OR CHARGES ON TRANSFERS BETWEEN INVESTMENT OPTIONS?
During the accumulation period you may transfer Account Value between investment
options. Transfers are not subject to taxation. We currently limit the number of
Sub-accounts you can invest in at any one time to ten (10). However, you can
invest in an unlimited number of Fixed Allocations. We may require a minimum of
$500 in each Sub-account you allocate Account Value to at the time of any
allocation or transfer. If you request a transfer and, as a result of the
transfer, there would be less than $500 in the Sub-account, we may transfer the
remaining Account Value in the Sub-account pro rata to the other investment
options to which you transferred.
We will charge $10.00 for each transfer after the twelfth (12th) in each Annuity
Year, including transfers made as part of any rebalancing, market timing, asset
allocation or similar program which you have authorized. Transfers made as part
of a dollar cost averaging program do not count toward the twelve free transfer
limit. Renewals or transfers of Account Value from a Fixed Allocation at the end
of its Guarantee Period are not subject to the transfer charge.
We reserve the right to limit the number of transfers in any Annuity Year for
all existing or new Owners. We also reserve the right to limit the number of
transfers in any Annuity Year or to refuse any transfer request for an Owner or
certain Owners if: (a) we believe that excessive trading or a specific transfer
request or group of transfer requests may have a detrimental effect on Unit
Values or the share prices of the Portfolios; or (b) we are informed by one or
more of the Portfolios that the purchase or redemption of shares must be
restricted because of excessive trading or a specific transfer or group of
transfers is deemed to have a detrimental effect on the share prices of affected
Portfolios. Without limiting the above, the most likely scenario where either of
the above could occur would be if the aggregate amount of a trade or trades
represented a relatively large proportion of the total assets of a particular
Portfolio. Under such a circumstance, we will process transfers according to our
rules then in effect and provide notice if the transfer request was denied. If a
transfer request is denied, a new transfer request may be required.
DO YOU OFFER DOLLAR COST AVERAGING?
Yes. We offer Dollar Cost Averaging during the accumulation period. Dollar Cost
Averaging allows you to systematically transfer an amount each month from one
investment option to one or more other investment options. You can choose to
transfer earnings only, principal plus earnings or a flat dollar amount. Dollar
Cost Averaging allows you to invest regularly each month, regardless of the
current unit value (or price) of the Sub-account(s) you invest in. This enables
you to purchase more units when the market price is low and fewer units when the
market price is high. This may result in a lower average cost of units over
time. However, there is no guarantee that Dollar Cost Averaging will result in a
profit or protect against a loss in a declining market.
You must have a minimum Account Value of at least $10,000 to enroll in a Dollar
Cost Averaging program.
You can Dollar Cost Average from variable investment options or Fixed
Allocations. Dollar Cost Averaging from Fixed Allocations is subject to a number
of rules that include, but are not limited to the following:
- - You may only use Fixed Allocations with Guarantee Periods of 1, 2 or 3
years.
- - You may only Dollar Cost Average earnings or principal plus earnings. If
transferring principal plus earnings, the program must be designed to last
the entire Guarantee Period for the Fixed Allocation.
- - Dollar Cost Averaging transfers from Fixed Allocations are not subject to
a Market Value Adjustment.
We may credit additional amounts to your Account Value if you allocate Purchase
Payments to Fixed Allocations as part of a dollar cost averaging program. Any
such offer is at our sole discretion and may be cancelled at any point. Specific
rules may also apply, including a change to the MVA formula. For more
information see "Additional Amounts in the Fixed Allocation."
DO YOU OFFER ANY AUTOMATIC REBALANCING PROGRAMS?
Yes. During the accumulation period, we offer automatic rebalancing among the
variable investment options you choose. You can choose to have your Account
Value rebalanced quarterly, semi-annually, or annually. On the appropriate date,
your variable investment options are rebalanced to the allocation percentages
you request. For example, over time the performance of the variable investment
options will differ, causing your percentage allocations to shift. With
automatic rebalancing, we transfer the appropriate amount from the
"overweighted" Sub-accounts to the "underweighted" Sub-accounts to return your
allocations to the percentages you request. If you request a transfer from or
into any variable investment option participating in the automatic rebalancing
program, we will assume that you wish to change your rebalancing percentages as
well, and will automatically adjust the rebalancing percentages in accordance
with the transfer unless we receive alternate instructions from you.
You must have a minimum Account Value of at least $10,000 to enroll in automatic
rebalancing. All rebalancing transfers made on the same day as part of an
automatic rebalancing program are considered as one transfer when counting the
number of transfers each year toward the maximum of 12 free transfers.
DO YOU OFFER A PROGRAM TO BALANCE FIXED AND VARIABLE INVESTMENTS?
Some investors wish to invest in the variable investment options but also wish
to protect a portion of their investment from market fluctuations. We offer a
balanced investment program where a portion of your Purchase Payment is
allocated to a Fixed Allocation for a Guarantee Period that you select and the
remaining Account Value is allocated to the variable investment options that you
select. The amount that we allocate to the Fixed Allocation is the amount (not
including any additional amounts we applied to your Annuity based on your
Purchase Payments) that will grow to a specific "principal amount" such as your
initial Purchase Payment. We determine the amount based on the rates then in
effect for the Guarantee Period you choose. If no amounts are transferred or
withdrawn from the Fixed Allocation, at the end of the Guarantee Period, it will
have grown to equal the "principal amount". The remaining Account Value that was
not allocated to the Fixed Allocation can be allocated to any of the
Sub-accounts that you choose. Account Value allocated to the variable investment
options is subject to market fluctuations and may increase or decrease in value.
Example
Assume you have $100,000 to invest. You choose to allocate a portion of your
Account Value to a Fixed Allocation with a 10-year Guarantee Period. The rate
for the 10-year Guarantee Period is 4.24%*. Based on the chosen Guarantee Period
and interest rate, the factor for determining how much of your Account Value can
be allocated to the Fixed Allocation is 0.660170. That means that $66,017 will
be allocated to the Fixed Allocation and the remaining Account Value ($33,983)
will be allocated to the variable investment options. Assuming that you do not
make any withdrawals from the Fixed Allocation, it will grow to $100,000 at the
end of the Guarantee Period. Of course we cannot predict the value of the
remaining Account Value that was allocated to the variable investment options.
* The rate in this example is hypothetical and may not reflect the current rate
for Guarantee Periods of this duration.
We may credit additional amounts to Fixed Allocations if you allocate Purchase
Payments in accordance with the balanced investment program we offer. Any such
offer is at our sole discretion and may be cancelled at any point. Specific
rules may also apply, including a change to the MVA formula. For more
information see "Additional Amounts in the Fixed Allocations."
MAY I AUTHORIZE MY FINANCIAL REPRESENTATIVE TO MANAGE MY ACCOUNT?
You may authorize your financial representative to decide on the allocation of
your Account Value and to make transfers between investment options, subject to
our rules. However, we can suspend or cancel these privileges at any time. We
will notify you if we do.
We may restrict the available investment options if you authorize a financial
representative to make financial transactions for you. We do this so that no
financial representative is in a position to control transfers of large amounts
of money for multiple clients into or out of any of the underlying portfolios
that have expressed concern about movement of a large proportion of a
portfolio's assets
We may also establish different "cut-off times" by which we must receive all
financial transactions for certain underlying portfolios. Currently, only the
three portfolios of the Rydex Variable Trust are subject to this restriction.
Financial transactions must be received by us no later than 3:00 p.m. Eastern
time to be processed on the current Valuation Day. If you request a transaction
involving the purchase or redemption of Units in one of the Rydex Sub-accounts
after 3:00 p.m. Eastern time, we will deem your request as received by us on the
next Valuation Day.
We or an affiliate of ours may provide administrative support to financial
representatives who make transfers on your behalf. These financial
representatives may be firms or persons who also are appointed by us as
authorized sellers of the Annuity. However, we do not offer you advice about how
to allocate your Account Value under any circumstance. Any financial firm or
representative you engage to provide advice and/or make transfers for you is not
acting on our behalf. We are not responsible for any recommendations such
financial representatives make, any market timing or asset allocation programs
they choose to follow or any specific transfers they make on your behalf.
HOW DO THE FIXED INVESTMENT OPTIONS WORK?
(Fixed Allocations may not be available in all states and may not be available
in certain durations.)
Fixed Allocations currently are offered with Guarantee Periods of 1, 2, 3, 5, 7
and 10 years. We credit the fixed interest rate to the Fixed Allocation
throughout a set period of time called a "Guarantee Period." The interest rate
credited to a Fixed Allocation is the rate in effect when the Guarantee Period
begins and does not change during the Guarantee Period. The rates are an
effective annual rate of interest. We determine the interest rates for the
various Guarantee Periods. At the time that we confirm your Fixed Allocation, we
will advise you of the interest rate in effect and the date your Fixed
Allocation matures. We may change the rates we credit new Fixed Allocations at
any time. To inquire as to the current rates for Fixed Allocations, please call
1-800-766-4530.
A Guarantee Period for a Fixed Allocation begins:
- when all or part of a net Purchase Payment is allocated to that
particular Guarantee Period;
- upon transfer of any of your Account Value to a Fixed Allocation for that
particular Guarantee Period; or
- when a Guarantee Period attributable to a Fixed Allocation "renews" after
its Maturity Date.
To the extent permitted by law, we may increase interest rates offered to a
class of Owners who choose to participate in various services we make available.
This may include, but is not limited to, Owners who elect to use dollar cost
averaging from Fixed Allocations (see "Do You Offer Dollar Cost Averaging?") or
the balanced investment program (see "Do You Offer a Program to Balance Fixed
and Variable Investments?"). Any such program is at our sole discretion.
HOW DO YOU DETERMINE RATES FOR FIXED ALLOCATIONS?
We do not have a specific formula for determining the fixed interest rates for
Fixed Allocations. Generally the interest rates we offer for Fixed Allocations
will reflect the investment returns available on the types of investments we
make to support our fixed rate guarantees. These investment types may include
cash, debt securities guaranteed by the United States government and its
agencies and instrumentalities, money market instruments, corporate debt
obligations of different durations, private placements, asset-backed obligations
and municipal bonds. In determining rates we also consider factors such as the
length of the Guarantee Period for the Fixed Allocation, regulatory and tax
requirements, liquidity of the markets for the type of investments we make,
commissions, administrative and investment expenses, our insurance risks in
relation to the Fixed Allocations, general economic trends and competition.
We will credit interest on a new Fixed Allocation in an existing Annuity at a
rate not less than the rate we are then crediting to Fixed Allocations for the
same Guarantee Period selected by new Annuity purchasers in the same class.
HOW DOES THE MARKET VALUE ADJUSTMENT WORK?
If you transfer or withdraw Account Value from a Fixed Allocation before the end
of its Guarantee Period, we will adjust the value of your investment based on a
formula, called a "Market Value Adjustment" or "MVA". The Market Value
Adjustment formula compares the interest rates credited for Fixed Allocations at
the time you invested, to interest rates being credited when you make a transfer
or withdrawal. The amount of any Market Value Adjustment can be either positive
or negative, depending on the rates that are currently being credited on Fixed
Allocations.
MVA Formula
The MVA formula is applied separately to each Fixed Allocation. The formula is
as follows:
[(1+I) / (1+J+0.0010)]N/12
where:
I is the fixed interest rate we guaranteed to credit to the
Fixed Allocation as of its starting date;
J is the fixed interest rate for your class of annuities at
the time of the withdrawal for a new Fixed Allocation with a
Guarantee Period equal to the remaining number of years in
your original Guarantee Period;
N is the number of months remaining in the original Guarantee
Period.
If you surrender your Annuity under the "free-look" provision, the MVA formula
is [(1 + I)/(1 + J)]N/12.
If the transfer or withdrawal does not occur on the yearly or monthly
anniversary of the beginning of the Fixed Allocation, the numbers used in `J'
and `N' will be rounded to the next highest integer.
MVA Examples
The following hypothetical examples show the effect of the MVA in determining
Account Value. Assume the following:
- - You allocate $50,000 into a Fixed Allocation with a Guarantee Period of
5 years.
- - The interest rate for your Fixed Allocation is 5.0% (I = 5.0%).
- - You make no withdrawals or transfers until you decided to withdraw the
entire Fixed Allocation after exactly three (3) years, therefore 24
months remain before the Maturity Date (N = 24).
Example of Positive MVA
Assume that at the time you request the withdrawal, the fixed interest rate for
a new Fixed Allocation with a Guarantee Period of 24 months is 3.5% (J = 3.5%).
Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(I+J+0.0010)]N/12 = [1.05/1.036]2 = 1.027210
Interim Value = $__________
Account Value after MVA = Interim Value X MVA Factor = $59,456.20.
Example of Negative MVA
Assume that at the time you request the withdrawal, the fixed interest rate for
a new Fixed Allocation with a Guarantee Period of 24 months is 6.0% (J = 6.0%).
Based on these assumptions, the MVA would be calculated as follows:
MVA Factor = [(1+I)/(1+J+0.0010)]N/12 = [1.05/1.061)]2 = 0.979372
Interim Value = $__________
Account Value after MVA = Interim Value X MVA Factor = $56,687.28.
WHAT HAPPENS WHEN MY GUARANTEE PERIOD MATURES?
The "Maturity Date" for a Fixed Allocation is the last day of the Guarantee
Period. On the Maturity Date, you may choose to renew the Fixed Allocation for a
new Guarantee Period of the same or different length or you may transfer all or
part of that Fixed Allocation's Account Value to another Fixed Allocation or to
one or more Sub-accounts. If you do not specify how you want a Fixed Allocation
to be allocated on its Maturity Date, it will be renewed for a Fixed Allocation
of the same duration. We will notify you 60 days before the end of the Guarantee
Period about the fixed interest rates that we are currently crediting to all
Fixed Allocations that are being offered. The rates being credited to Fixed
Allocations may change before the Maturity Date. We will not charge a MVA if you
choose to renew a Fixed Allocation on its Maturity Date or transfer the Account
Value to one or more variable investment options.
ADDITIONAL AMOUNTS IN THE FIXED ALLOCATIONS
If you allocate Account Value to the Fixed Allocations and participate in
certain programs we offer to help you to manage your Annuity's Account Value,
under certain circumstances we may apply Additional Amounts to your Account
Value allocated to the Fixed Allocation. Additional Amounts may be offered at
any time at our sole discretion. When offered, Additional Amounts are provided
from our general account.
Any program to provide Additional Amounts to Fixed Allocations are subject to
the following rules:
- - Additional Amounts are only offered if you participate in a balanced
investment program (see "Do you offer a program to balance fixed and
variable investment options?") or dollar cost averaging (see " Do you
offer Dollar Cost Averaging?").
- - Additional Amounts are only available on initial or additional Purchase
Payments. Account Value cannot be transferred to a Fixed Allocation for
use in the applicable programs. Additional Amounts are not available on
an Annuity that is issued following an exchange of another annuity
issued by us.
- - You may not withdraw any Additional Amounts under the Free Withdrawal
provision without assessment of the contingent deferred sales charge
(see "Can I make withdrawals from my Annuity without a CDSC?).
- - If Additional Amounts are applied to a Fixed Allocation, the MVA
formula is revised as follows:
[(1+I) / (1+J+0.0020)]N/12
Please refer to the section of the Prospectus entitled "How does the
Market Value Adjustment Work?" for a discussion of the MVA formula.
- - We do not consider Additional Amounts as "investment in the contract"
for income tax purposes.
- - We may require that you allocate Account Value to a Fixed Allocation
with a Guarantee Period of certain duration (i.e. 10 years).
- - Specific rules apply in relation to the duration of the Guarantee
Period you must choose to be eligible to receive any Additional
Amounts, and the date on which we allocate any Additional Amounts to
the Fixed Allocation and begin crediting interest on the Additional
Amount.
AMERICAN SKANDIA'S INVESTORS EDGE [AS Impact only]
- --------------------------------------------------------------------------------
This benefit is being offered as of May 1, 1999 in those jurisdictions where we
have received regulatory approvals. Certain terms and conditions may differ
between jurisdictions once approved.
- --------------------------------------------------------------------------------
Do you provide any guarantees on my investment?
The Annuity provides variable investment options and fixed investment options.
Only the fixed investment options provide a guaranteed return on your
investment, subject to certain terms and conditions. However, your Annuity
includes a feature at no additional cost that provides certain benefits if your
Account Value has not reached or exceeded a "target value" on its 10th
anniversary. If, on the 10th anniversary of your Annuity's Issue Date, your
Account Value has not reached the target value (as defined below) you can choose
either of the following benefits:
- - You may continue your Annuity without electing to receive Annuity
payments and receive an annual credit to your Account Value payable
until you begin receiving Annuity payments. The credit is equal to
0.25% of the average of your Annuity's Account Value for the preceding
four complete calendar quarters. This credit is applied to your
investment options pro-rata based on the allocation of your then
current Account Value.
- - You may begin receiving Annuity payments within one year and accept a
one-time credit to your Annuity equal to 10% of the net of the Account
Value on the 10th anniversary of its Issue Date minus the sum of all
Purchase Payments allocated in the prior 5 years. The annuity option
you select must initially guarantee payments for not less than seven
years.
Following the 10th anniversary of your Annuity's Issue Date, we will inform you
if your Account Value did not meet or exceed the Target Value. We will assume
that you have elected to receive the annual credit to your Account Value unless,
not less than 30 days prior to the next anniversary of the Annuity, we receive
at our home office your election to begin receiving Annuity payments.
Certain provisions of this feature and of the Target Value Credits described
below may differ if you purchase your Annuity as part of an exchange,
replacement or transfer, in whole or in part, from any other Annuity we issue.
What is the "Target Value" and how is it calculated?
The Target Value is a tool used to determine whether you are eligible to elect
either of the benefits described above. The Target Value does not impact the
Account Value available if you surrender your Annuity or make a partial
withdrawal and does not impact the Death Benefit available to your
Beneficiary(ies). The Target Value assumes a rate of return over ten (10)
Annuity years that will allow your initial investment to double in value,
adjusted for any withdrawals and/or additional Purchase Payments you make during
the 10 year period. We calculate the "Target Value" as follows:
1. Accumulate the initial Purchase Payment at an annual interest rate of
7.2% until the 10th anniversary of the Annuity's Issue Date; plus
2. Accumulate any additional Purchase Payments at an annual interest rate
of 7.2% from the date applied until the 10th anniversary of the
Annuity's Issue Date; minus
3. Each "proportional reduction" resulting from any withdrawal,
accumulating at an annual interest rate of 7.2% from the date the
withdrawal is processed until the 10th anniversary of the Annuity's
Issue Date. We determine each "proportional reduction" by determining
the percentage of your Account Value then withdrawn and reducing the
Target Value by that same percentage. We include any withdrawals under
your Annuity in this calculation, including the charge we deduct for
any optional benefits you elect under the Annuity, but not including
the Annual Maintenance Fee or the Transfer Fee.
Examples
1. Assume you make an initial Purchase Payment of $10,000 and make no further
Purchase Payments. The Target Value on the 10th anniversary of your
Annuity's Issue Date would be $20,042, assuming no withdrawals are made.
This is equal to $10,000 accumulating at an annual rate of 7.2% for the
10-year period.
2. Assume you make an initial Purchase Payment of $10,000 and make no further
Purchase Payments. Assume at the end of Year 6, your Account Value has
increased to $15,000 and you make a withdrawal of 10% or $1,500. The Target
Value on the 10th anniversary would be $18,722. This is equal to $10,000
accumulating at an annual rate of 7.2% for the 10-year period, minus the
proportional reduction accumulating at an annual interest rate of 7.2%.
Can I restart the 10-year Target Value calculation?
Yes, you can elect to lock in the growth in your Annuity by "restarting" the
10-year period on any anniversary of the Issue Date. If you elect to restart the
calculation period, we will treat your Account Value on the restart date as if
it was your Purchase Payment when determining if your Annuity's Account Value
meets or exceeds the Target Value on the appropriate tenth (10th) anniversary.
You may elect to restart the calculation more than once, in which case, the
10-year calculation period will begin on the date of the last restart date. We
must receive your election to restart the calculation at our home office not
later than 30 days after each anniversary of the Issue Date.
What are Target Value Credits?
Target Value Credits are additional amounts that we apply to your Account Value
to increase the likelihood that your Account Value will meet or exceed the
Target Value. Target Value Credits are payable on all Purchase Payments applied
before the first anniversary of the Issue Date of your Annuity.
The amount of the Target Value Credit is equal to 1.0% of each qualifying
Purchase Payment. Target Value Credits are only payable on qualifying Purchase
Payments if the Owner(s) of the Annuity is(are) less than age 81 on its Issue
Date. If the Annuity is owned by an entity, the age restriction applies to the
age of the Annuitant on the Issue Date. The Target Value Credit is payable from
our general account and is allocated to the investment options in the same ratio
that the qualifying Purchase Payment is allocated.
Target Value Credits will not be available if you purchase your Annuity as part
of an exchange, replacement or transfer, in whole or in part, of an Annuity we
issued that has the same or a similar benefit.
Recovery of Target Value Credits
We can recover the amount of any Target Value Credit under the following
circumstances:
1. If you surrender your Annuity before the 10th anniversary of the Issue
Date of the Annuity.
2. If you elect to begin receiving Annuity payments before the first
anniversary of the Issue Date.
3. If a person on whose life we pay the Death Benefit dies, or if a
"contingency event" occurs which triggers a medically-related surrender
(a) within 12 months after the date a Target Value Credit was allocated
to your Account Value; or
(b) within 10 years after the date a Target Value Credit was allocated
to your Account Value if any owner was over age 70 on the Issue Date,
or, if the Annuity was then owned by an entity, the Annuitant was over
age 70 on the Issue Date.
ACCESS TO ACCOUNT VALUE
WHAT TYPES OF DISTRIBUTIONS ARE AVAILABLE TO ME?
During the accumulation phase you can access your Account Value through Partial
Withdrawals, Systematic Withdrawals, and where required for tax purposes,
Minimum Distributions. You can also surrender your Annuity at any time. When you
access your Account Value, we may deduct a portion of the Account Value being
withdrawn or surrendered as a CDSC. We may also apply a Market Value Adjustment
when we determine your Account Value. Certain amounts may be available to you
each annuity year that are not subject to a CDSC. These are called "Free
Withdrawals." In addition, under certain circumstances, we may waive the CDSC
for surrenders made for qualified medical reasons or for withdrawals made to
satisfy Minimum Distribution requirements. Unless you notify us differently,
withdrawals are taken pro-rata based on the Account Value in the investment
options at the time we receive your withdrawal request. Each of these types of
distributions is described more fully below.
ARE THERE TAX IMPLICATIONS FOR DISTRIBUTIONS?
(For more information, see "Tax Considerations")
During the Accumulation Period
A distribution during the accumulation period is deemed to come first from any
"gain" in your Annuity and second as a return of your "tax basis", if any.
Distributions from your Annuity are generally subject to ordinary income
taxation on the amount of any investment gain. If you take a distribution prior
to the taxpayer's age 59 1/2, you may be subject to a 10% penalty in addition to
ordinary income taxes on any gain. You may wish to consult a professional tax
advisor for advice before requesting a distribution.
During the Annuitization Period
During the annuitization period, a portion of each annuity payment is taxed as
ordinary income at the tax rate you are subject to at the time you receive the
payment. The Code and regulations have "exclusionary rules" that we use to
determine what portion of each annuity payment should be treated as a return of
any tax basis you have in the Annuity. Once the tax basis in the Annuity has
been distributed, the remaining annuity payments are taxable as ordinary income.
The tax basis in the Annuity may be based on the tax-basis from a prior contract
in the case of a 1035 exchange or other qualifying transfer.
CAN I WITHDRAW A PORTION OF MY ANNUITY?
Yes, you can make a withdrawal during the accumulation phase. We call this a
"Partial Withdrawal." The amount that you may withdraw will depend on the
Annuity's Surrender Value. After any Partial Withdrawal, your Annuity must have
a Surrender Value of at least $1,000, or we may treat the Partial Withdrawal
request as a request to fully surrender your Annuity. The minimum Partial
Withdrawal you may request is $100.
IS THERE A CHARGE FOR A PARTIAL WITHDRAWAL?
A CDSC may be assessed against a Partial Withdrawal. Whether a CDSC applies and
the amount to be charged depends on whether the Partial Withdrawal exceeds any
Free Withdrawal amount and, if so, the length of time that the Purchase Payment
being withdrawn has been invested in the Annuity.
If you request a Partial Withdrawal:
1. we determine if the amount you requested is available as a Free Withdrawal
(in which case it would not be subject to a CDSC);
Then if the amount requested exceeds the available Free Withdrawal amount:
2. we withdraw the amount from Purchase Payments that have been invested for
longer than the CDSC period (with your Annuity, seven (7) years), if any;
Then if the amount requested exceeds that amount:
3. we withdraw the remaining amount from the Purchase Payments that are still
subject to a CDSC. We withdraw the amount from the "oldest" of your
Purchase Payments, which will result in the lowest CDSC being applied to
the amount withdrawn.
Then if the amount exceeds Purchase Payments still subject to a CDSC:
4. we withdraw the remaining amount from other surrender value due to
Additional Amounts on Qualifying Purchase Payments, Additional Amounts in
the Fixed Allocations and any Target Value Credits.
CAN I MAKE WITHDRAWALS FROM MY ANNUITY WITHOUT A CDSC?
Yes. During the accumulation phase you may withdraw a limited amount of Account
Value each annuity year from which we do not deduct a CDSC. This amount is
called the "Free Withdrawal" amount. Free Withdrawals are available to meet
liquidity needs. The amount of any Free Withdrawal is not available at the time
an Annuity is surrendered. NOTE: Withdrawals of any type made prior to age 59
1/2 may be subject to a 10% tax penalty.
HOW MUCH CAN I WITHDRAW AS A FREE WITHDRAWAL?
The maximum Free Withdrawal amount during any Annuity Year is the greater of:
- - the "Growth" in the Annuity; or
- - 10% of Purchase Payments that, as of the date of the withdrawal, have been
invested for less than the CDSC period (with your Annuity, seven (7)
years). The 10% amount is not cumulative.
"Growth" equals the current Account Value less all Purchase Payments that have
been invested for less than the CDSC period and have not been previously
withdrawn. "Growth" does not include any additional amounts we applied to your
Annuity based on your Purchase Payments (see "Additional Amounts in the Fixed
Allocations", "Additional Amounts on Qualifying Purchase Payments" and "What are
Target Value Credits").
NOTE: Free withdrawals do not reduce the amount of any CDSC that would apply
upon a partial withdrawal or subsequent surrender. The minimum Free Withdrawal
you may request is $100.
Examples
Assume you make a $10,000 Purchase Payment at the time your Annuity is issued.
You make no additional Purchase Payments, yet due to positive investment
performance, your Account Value is $11,500 in your second Annuity Year. Your
maximum Free Withdrawal amount would be the greater of Growth (Account Value
minus Purchase Payments = $1,500) or 10% of Purchase Payments ($1,000). Your
maximum Free Withdrawal amount would therefore be $1,500.
Further assume that in your third annuity year, you choose to surrender your
Annuity. Assume that after taking your $1,500 Free Withdrawal in Year 2, your
Account Value has increased to $12,000 due to positive investment performance.
Upon surrender, we will deduct a CDSC of 5.0% based on the number of years that
your Purchase Payment has been invested times the amount of your Purchase
Payment that has not been previously withdrawn (5.0% of $10,000 = $500). The
amount of the previous Free Withdrawal was not subject to a CDSC when withdrawn.
Therefore, upon surrender, the amount of the entire Purchase Payment is subject
to the CDSC. You would receive $11,500. The Annual Maintenance Fee and any
Target Value Credits would also be deducted if the Annuity is being surrendered.
When we determine if a CDSC applies to Partial Withdrawals and Systematic
Withdrawals, we will first determine what, if any, amounts qualify as a Free
Withdrawal. Those amounts are not subject to the CDSC. Partial Withdrawal or
Systematic Withdrawal of amounts greater than the maximum Free Withdrawal amount
will be subject to a CDSC.
CAN I MAKE PERIODIC WITHDRAWALS FROM THE ANNUITY DURING THE ACCUMULATION PERIOD?
Yes. We call these "Systematic Withdrawals." You can receive Systematic
Withdrawals of earnings only, principal plus earnings or a flat dollar amount.
Systematic Withdrawals may be subject to a CDSC. We will determine whether a
CDSC applies and the amount in the same way as we would for a Partial
Withdrawal.
Systematic Withdrawals can be made from Account Value allocated to the variable
investment options or Fixed Allocations. Generally, Systematic Withdrawals from
Fixed Allocations are limited to earnings accrued after the program of
Systematic Withdrawals begins, or payments of fixed dollar amounts that do not
exceed such earnings. Systematic Withdrawals are available on a monthly,
quarterly, semi-annual or annual basis. The Surrender Value of your Annuity must
be at least $20,000 before we will allow you to begin a program of Systematic
Withdrawals.
The minimum amount for each Systematic Withdrawal is $100. If any scheduled
Systematic Withdrawal is for less than $100, we may postpone the withdrawal and
add the expected amount to the amount that is to be withdrawn on the next
scheduled Systematic Withdrawal.
DO YOU OFFER A PROGRAM FOR WITHDRAWALS UNDER SECTION 72(t) OF THE INTERNAL
REVENUE CODE?
Yes. If your Annuity is used as a funding vehicle for certain retirement plans
that receive special tax treatment under Sections 401, 403(b) or 408 of the
Code, Section 72(t) of the Code may provide an exception to the 10% penalty tax
on distributions made prior to age 59 1/2 if you elect to receive distributions
as a series of "substantially equal periodic payments". Distributions received
under this provision in any annuity year that exceed the maximum amount
available as a free withdrawal will be subject to a CDSC. To request a program
that complies with Section 72(t), you must provide us with certain required
information in writing on a form acceptable to us. We may require advance notice
to allow us to calculate the amount of 72(t) withdrawals. The Surrender Value of
your Annuity must be at least $20,000 before we will allow you to begin a
program for withdrawals under Section 72(t).
The minimum amount for any such withdrawal is $100.
WHAT ARE MINIMUM DISTRIBUTIONS AND WHEN WOULD I NEED TO MAKE THEM? (See "Tax
Considerations" for a further discussion of Minimum Distributions.)
Minimum Distributions are a type of Systematic Withdrawal we allow to meet
distribution requirements under Sections 401, 403(b) or 408 of the Code. Under
the Code, you may be required to begin receiving periodic amounts from your
Annuity. In such case, we will allow you to make Systematic Withdrawals in
amounts that satisfy the minimum distribution rules under the Code. We do not
assess a CDSC on Minimum Distributions from your Annuity if you are required by
law to take such Minimum Distributions from your Annuity at the time it is
taken. However, a CDSC may be assessed on that portion of a Systematic
Withdrawal that is taken to satisfy the minimum distribution requirements in
relation to other savings or investment plans under other qualified retirement
plans not maintained with American Skandia.
If you request, we will calculate the annual required Minimum Distribution under
your Annuity. The amount of the required Minimum Distribution for your
particular situation may depend on other annuities, savings or investments. We
will only calculate the amount of your required Minimum Distribution based on
the value of your Annuity. We require three (3) days advance written notice to
calculate and process the amount of your payments. We may charge you for
calculating required Minimum Distributions. You may elect to have Minimum
Distributions paid out monthly, quarterly, semi-annually or annually. The $100
minimum that applies to Systematic Withdrawals does not apply to Minimum
Distributions.
CAN I SURRENDER MY ANNUITY FOR ITS VALUE?
Yes. During the accumulation phase you can surrender your Annuity at any time.
Upon surrender, you will receive the Surrender Value, which equals your Account
Value as of the date we process the surrender minus any applicable CDSC and the
Annual Maintenance Fee. Upon surrender of your Annuity, you will no longer have
any rights under the Annuity.
WHAT IS A MEDICALLY-RELATED SURRENDER AND HOW DO I QUALIFY?
Where permitted by law, you may request to surrender your Annuity for its
Account Value prior to the Annuity Date without application of any CDSC upon
occurrence of a medically-related "Contingency Event". The amount payable may be
reduced by the amount of any Target Value Credits under certain circumstances.
This waiver of any applicable CDSC is subject to our rules, including but not
limited to the following:
- - the Annuitant must be named or any change of Annuitant must be accepted by
us, prior to the "Contingency Event" described below;
- - the Annuitant must be alive as of the date we pay the proceeds of such
surrender request;
- - if the Owner is one or more natural persons, all such Owners must also be
alive at such time;
- - we must receive satisfactory proof of the Annuitant's confinement in a
Medical Care Facility or Fatal Illness in writing on a form satisfactory to
us; and
- - this benefit is not available if the total Purchase Payments received
exceed $500,000 for all annuities issued by us with this benefit where the
same person is named as Annuitant.
For contracts issued before May 1, 1996 a "Contingency Event" occurs if the
Annuitant is:
- - first confined in a "Medical Care Facility" while your Annuity is in force
and remains confined for at least 90 days in a row; or
- - first diagnosed as having a "Fatal Illness" while your Annuity is in force.
For contracts issued on or after May 1, 1996, and where allowed by law, the
Annuitant must have been named or any change of Annuitant must have been
accepted by us, prior to the "Contingency Event" described above, in order to
qualify for a Medically-Related Surrender.
The definitions of "Medical Care Facility" and "Fatal Illness," as well as
additional terms and conditions, are provided in your Annuity. Specific details
and definitions in relation to this benefit may differ in certain jurisdictions.
WHAT TYPES OF ANNUITY PAYMENT OPTIONS ARE AVAILABLE UPON ANNUITIZATION?
Annuity payments can be guaranteed for the life of the Annuitant, for the life
of the Annuitant with a certain period guaranteed, or for a certain fixed period
of time with no life contingency. We currently make available fixed payments and
adjustable payments. However, adjustable annuity payments may not be available
on your Annuity Date.
You may choose an Annuity Date, an annuity option and the frequency of annuity
payments when you purchase an Annuity, or at a later date. You may change your
choices up to 30 days before the Annuity Date. Any change to these options must
be in writing. The Annuity Date must be the first or the fifteenth day of a
calendar month. A maximum Annuity Date may be required by law.
We currently offer the following Annuity Payment Options. Additional Annuity
Payment Options may be offered in the future.
Key Life: is the person or persons upon whose life annuity payments with a life
contingency are based.
Option 1
Payments for Life: Under this option, income is payable periodically until the
death of the "key life". No additional annuity payments are made after the death
of the key life. Since no minimum number of payments is guaranteed, this option
offers the largest amount of periodic payments of the life contingent annuity
options. It is possible that only one payment will be payable if the death of
the key life occurs before the date the second payment was due, and no other
payments nor death benefits would be payable.
Option 2
Payments for Life with 10, 15, or 20 Years Certain: Under this option, income is
payable until the death of the key life. However, if the key life dies before
the end of the period selected (10, 15, or 20 years), the remaining payments are
paid to the Beneficiary until the end of such period.
Option 3
Payments Based on Joint Lives: Under this option, income is payable periodically
during the joint lifetime of two key lives, and thereafter during the remaining
lifetime of the survivor, ceasing with the last payment prior to the survivor's
death. No minimum number of payments is guaranteed under this option. It is
possible that only one payment will be payable if the death of all the key lives
occurs before the date the second payment was due, and no other payments or
death benefits would be payable.
Option 4
Payments for a Certain Period: Under this option, income is payable periodically
for a specified number of years. If the payee dies before the end of the
specified number of years, the remaining payments are paid to the Beneficiary to
the end of such period. Note that under this option, payments are not based on
any assumptions of life expectancy. Therefore, that portion of the Insurance
Charge assessed to cover the risk that key lives outlive our expectations
provides no benefit to an Owner selecting this option.
HOW AND WHEN DO I CHOOSE THE ANNUITY PAYMENT OPTION?
Unless prohibited by law, we require that you elect either a life annuity or an
annuity with a certain period of at least 5 years if any CDSC would apply were
you to surrender your Annuity on the Annuity Date. Therefore, making a purchase
payment within seven years of the Annuity Date limits your annuity payment
options.
If you have not provided us with your Annuity Date or Annuity Payment Option in
writing, then:
- - the Annuity Date will be the first day of the calendar month following the
later of the Annuitant's 85th birthday or the fifth anniversary of our
receipt of your request to purchase an Annuity; and
- - the Annuity Payments, where allowed by law, will be fixed monthly payments
for life with 10 years certain (See Option 2).
If you have not made an election prior to death benefit proceeds becoming due,
the Beneficiary may elect to receive the death benefit under one of the annuity
payment options. However, if you made an election, the Beneficiary may not alter
such election.
HOW ARE ANNUITY PAYMENTS CALCULATED?
The first annuity payment varies according to the annuity payment option and
payment frequency selected. The first payment is determined by multiplying the
Account Value plus any additional amounts applied by us under the Investors Edge
benefit by the factor determined from our table of annuity rates. Your Account
Value will be determined as of the close of business on the fifteenth day
preceding the Annuity Date, plus interest at not less that 3% per year from such
date to the Annuity Date. The table of annuity rates differ based on the type of
annuity chosen and the frequency of payment selected. Our rates will not be less
than our guaranteed minimum rates. These guaranteed minimum rates are derived
from the 1983a Individual Annuity Mortality Table with ages set back one year
for males and two years for females and with an assumed interest rate of 3% per
annum. Where required by law or regulation, such annuity table will have rates
that do not differ according to the gender of the key life. Otherwise, the rates
will differ according to the gender of the key life.
DEATH BENEFIT
WHAT TRIGGERS THE PAYMENT OF A DEATH BENEFIT?
The Annuity provides a Death Benefit during its accumulation phase. If the
Annuity is owned by one or more natural persons, the Death Benefit is payable
upon the first death of an Owner. If the Annuity is owned by an entity, the
Death Benefit is payable upon the Annuitant's death, if there is no Contingent
Annuitant. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant dies, then the Contingent Annuitant becomes the Annuitant and
a Death Benefit will not be paid at that time. The person upon whose death the
Death Benefit is paid is referred to below as the "decedent."
DEATH BENEFIT OPTIONS
Your Annuity provides a "basic" Death Benefit at no additional charge and also
offers two different optional Death Benefits that can be purchased for an
additional charge. Under certain circumstances, your Death Benefit may be
reduced by the amount of any additional amounts we applied to your Purchase
Payments.
Basic Death Benefit
The basic Death Benefit depends on the decedent's age on the date of death:
If death occurs before the decedent's age 70: The Death Benefit is the
greater of:
- - The sum of all Purchase Payments less the sum of all withdrawals; and
- - The sum of your Account Value in the variable investment options and your
Interim Value in the Fixed Allocations.
If death occurs when the decedent is age 70 or older: The Death Benefit is
your Account Value.
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The Optional Death Benefits are being offered as of May 1, 1999 in those
jurisdictions where we have received regulatory approval. Certain terms and
conditions may differ between jurisdictions once approved.
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Optional Death Benefits
We offer two optional Death Benefits to provide an enhanced level of protection
for your beneficiaries. Currently, these benefits are only offered and must be
elected at the time that you purchase your Annuity. We may, at a later date,
allow existing Annuity Owners to purchase either of the optional Death Benefits
subject to our rules.
If the Annuity has one Owner, the Owner must be age 80 or less at the time
either optional Death Benefit is purchased. If the Annuity has joint Owners, the
oldest Owner must be age 80 or less. If the annuity is owned by an entity, the
Annuitant must be age 80 or less.
Key Terms Used with the Optional Death Benefits
- - The Death Benefit Target Date is the contract anniversary on or after the
80th birthday of the current Owner, the oldest of either joint Owner or the
Annuitant, if entity owned.
- - The Highest Anniversary Value equals the highest Account Value of all
previous "Anniversary Values" on or before the earlier of the Owner's date
of death and the "Death Benefit Target Date".
- - The Anniversary Value is the Account Value as of each anniversary of the
Issue Date plus the sum of all Purchase Payments on or after such
anniversary less the sum of all "Proportional Reductions" since such
anniversary.
- - A Proportional Reduction is reduction to the value being measured caused by
a withdrawal, equaling the percentage of the withdrawal as compared to the
Account Value as of the date of the withdrawal. For example, if your
Account Value is $10,000 and you withdraw $2,000 (a 20% reduction), we
will reduce both your Anniversary Value and the amount determined by
Purchase Payments accumulating at the appropriate interest rate by 20%.
- - The Assumed Accumulation Rate is the rate of interest that we will apply to
your Purchase Payments only for purposes of calculating this benefit The
Assumed Accumulation Rate is different depending on which Optional Death
Benefit you select as shown below:
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Option 1 Option 2
5.0% per year 7.2% per year
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Certain terms and conditions may differ if you purchase your Annuity as part of
an exchange, replacement or transfer, in whole or in part, from any other
Annuity we issue.
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Calculation of Optional Death Benefits
The optional Death Benefit calculations depend on whether death occurs before or
after the Death Benefit Target Date.
Annuities with one Owner
The optional Death Benefits are calculated as follows:
If the Owner dies before the Death Benefit Target Date, the Death
Benefit equals the greatest of:
1. the Account Value in the Sub-accounts plus the Interim Value of any Fixed
Allocations (no MVA) as of the date we receive in writing "due proof of
death"; and
2. the sum of all Purchase Payments minus the sum of all Proportional
Reductions, each increasing daily until the Owner's date of death at the
applicable Assumed Accumulation Rate for the option you elect, subject to a
limit of 200% of the difference between the sum of all Purchase Payments
and the sum of all withdrawals as of the Owner's date of death; and
3. the "Highest Anniversary Value" on or immediately preceding the Owner's
date of death.
The amount determined by this calculation is increased by any Purchase Payments
received after the Owner's date of death and decreased by any Proportional
Reductions since such date.
If the Owner dies on or after the Death Benefit Target Date, the Death Benefit
equals the greater of:
1. the Account Value as of the date we receive in writing "due proof of death"
(an MVA may be applicable to amounts in any Fixed Allocations); and
2. the greater of Item 2 & 3 above on the Death Benefit Target Date plus the
sum of all Purchase Payments less the sum of all Proportional Reductions
since the Death Benefit Target Date.
Annuities with joint Owners
For Annuities with Joint Owners, the Death Benefit is calculated as shown above
except that the age of the oldest of the Joint Owners is used to determine the
Death Benefit Target Date. The Death Benefit Target Date is not based upon the
Joint Owner who dies first. NOTE: If you and your spouse own the Annuity
jointly, we will pay the Death Benefit to the Beneficiary. If the sole primary
Beneficiary is the surviving spouse, then the surviving spouse can elect to
assume ownership of the Annuity.
Annuities owned by entities
For Annuities owned by an entity, the Death Benefit is calculated as shown above
except that the age of the Annuitant is used to determine the Death Benefit
Target Date. Payment of the Death Benefit is based on the death of the Annuitant
(or Contingent Annuitant, if applicable).
Examples of Optional Death Benefit Calculation
The following are examples of how the Optional Death Benefits are calculated.
Each example assumes that a $50,000 initial Purchase Payment is made and that no
withdrawals are made prior to the Owner's death. Each example assumes that there
is one Owner who is age 50 on the Issue Date and that all Account Value is
maintained in the variable investment options.
Example of market increase greater than Assumed Accumulation Rate
Assume that the Owner's Account Value has generally been increasing. On the date
we receive due proof of death (the Owner's 58th birthday), the Account Value is
$80,000. The Highest Anniversary Value at the end of any previous period is
$72,000. The Death Benefit would be the Account Value ($80,000) because it is
greater than the Highest Anniversary Value ($72,000) or the sum of prior
Purchase Payments increased by 5.0% annually ($[ ] - Option 1) or 7.2% annually
for ($[ ] - Option 2).
Example of market decrease
Assume that the Owner's Account Value generally increased until the fifth
anniversary but generally has been decreasing since the fifth contract
anniversary. On the date we receive due proof of death (the Owner's 58th
birthday), the Account Value is $48,000. The Highest Anniversary Value at the
end of any previous period is $54,000. The Death Benefit would be the sum of
prior Purchase Payments increased by 5.0% annually ($[ ] - Option 1) or 7.2%
annually for ($[ ] - Option 2) because it is greater than the Highest
Anniversary Value ($54,000) or the Account Value ($48,000).
Example of Highest Anniversary Value
Assume that the Owner's Account Value increased significantly during the first
six years following the Issue Date. On the sixth anniversary date the Account
Value was $[ ]. During the seventh Annuity Year, the Account Value increases to
as high as $[ ] but then subsequently falls to $[ ] on the date we receive due
proof of death (the Owner's 58th birthday). The Death Benefit would be the
Highest Anniversary Value at the end of any previous period ($[ ]), which
occurred on the sixth anniversary, although the Account Value was higher during
the subsequent period. The Account Value on the date we receive due proof of
death ($[ ]) is lower, as is the sum of all prior Purchase Payments increased by
5.0% annually ($[ ] - Option 1) or 7.2% annually for ($[ ] - Option 2).
How much do you charge for the optional death benefits?
We deduct a charge from your Account Value if you elect to purchase either
Optional Death Benefit. For Option 1, each deduction is [ ]% of the then current
Death Benefit when the deduction is taken. For Option 2, each deduction is [ ]%
of the then current Death Benefit when the deduction is taken. No charge applies
after the Annuity Date.
We deduct the charge:
1. on each anniversary of the Issue Date;
2. when Account Value is transferred to our general account prior to the
Annuity Date;
3. if you surrender your Annuity; and
4. if you choose to terminate the benefit.
If you surrender the Annuity, elect to begin receiving Annuity payments or
terminate the benefit on a date other than an anniversary of the Issue Date, the
charge will be prorated. During the first year after the Issue Date, the charge
would be prorated from the Issue Date. In all subsequent years, it would be
prorated from the last anniversary of the Issue Date.
We first deduct the amount of the charge pro-rata from the Account Value in the
variable investment options. We only deduct the charge pro-rata from the Fixed
Allocations to the extent there is insufficient Account Value in the variable
investment options to pay the charge. If your Annuity's Account Value is
insufficient to pay the charge, we may deduct your remaining Account Value and
terminate your Annuity. We will notify you if your Account Value is insufficient
to pay the charge and allow you to submit an additional Purchase Payment to
continue your Annuity.
Are there any exceptions to these rules for paying the Death Benefit?
Yes, there are exceptions that apply no matter how your Death Benefit is
calculated. There are exceptions to the Death Benefit if the decedent was not
the Owner or Annuitant as of the Issue Date and did not become the Owner or
Annuitant due to the prior Owner's or Annuitant's death. Any minimum Death
Benefit that applies will be suspended for a two-year period from the date he or
she first became Owner or Annuitant. After the two-year suspension period is
completed, the Death Benefit is the same as if this person had been an Owner or
Annuitant on the Issue Date.
What options are available to my Beneficiary upon my death
- - During the accumulation period, if you die and the sole Beneficiary is
your spouse, then your spouse may elect to be treated as the current
Owner. The Annuity can be continued, subject to its terms and conditions,
in lieu of receiving the death benefit. Your spouse may only assume
ownership of the Annuity if he or she is designated as the sole primary
Beneficiary.
- - In the event of your death, the death benefit must be distributed within:
(a) five years of the date of death; or
(b) over a period not extending beyond the life expectancy of the
Beneficiary or over the life of the Beneficiary. Payments under this
option must begin within one year of the date of death.
When do you determine the Death Benefit?
We determine the amount of the death benefit as of the date we receive "due
proof of death" and any other written representations we require to determine
the proper payment of the Death Benefit to all Beneficiaries. "Due proof of
death" may include a certified copy of a death certificate, a certified copy of
a decree of a court of competent jurisdiction as to the finding of death or
other satisfactory proof of death.
We will require written acknowledgment of all named Beneficiaries before we can
determine the Death Benefit. During the period from the date of death until we
receive all required paper work, the amount of the Death Benefit may be subject
to market fluctuations.
VALUING YOUR INVESTMENT
HOW IS MY ACCOUNT VALUE DETERMINED?
During the Accumulation Period, the Annuity has an Account Value. The Account
Value is determined separately for each Sub-account allocation and for each
Fixed Allocation. The Account Value is the sum of the values of each Sub-account
allocation and the value of each Fixed Allocation. The Account Value does not
reflect any CDSC that may apply to a withdrawal or surrender. When determining
the Account Value on a day other than a Fixed Allocation's Maturity Date, the
Account Value may include any Market Value Adjustment that would apply to a
Fixed Allocation (if withdrawn or transferred) on that day.
WHAT IS THE SURRENDER VALUE OF MY ANNUITY?
The Surrender Value of your Annuity is the value available to you on any day
during the accumulation period. The Surrender Value is equal to your Account
Value minus any CDSC, the Annual Maintenance Fee and any additional amounts we
applied to your Purchase Payments that we are entitled to recover upon surrender
of your Annuity. The Surrender Value will also include any Market Value
Adjustment that may apply.
HOW AND WHEN DO YOU VALUE THE SUB-ACCOUNTS?
When you allocate Account Value to a Sub-Account, you are purchasing units of
the Sub-account. Each Sub-account invests exclusively in shares of an underlying
Portfolio. The value of the Units fluctuate with the market fluctuations of the
Portfolios. The value of the Units also reflect the daily accrual for the
Insurance Charge.
Each Valuation Day, we determine the price for a Unit of each Sub-account,
called the "Unit Price." The Unit Price is used for determining the value of
transactions involving Units of the Sub-accounts. We determine the number of
Units involved in any transaction by dividing the dollar value of the
transaction by the Unit Price of the Sub-account as of the Valuation Day.
Example
Assume you allocate $5,000 to a Sub-account. On the Valuation Day you make the
allocation, the Unit Price is $14.83. Your $5,000 buys 337.154 Units of the
Sub-account. Assume that later, you wish to transfer $3,000 of your Account
Value out of that Sub-account and into another Sub-account. On the Valuation Day
you request the transfer, the Unit Price of the original Sub-account has
increased to $16.79. To transfer $3,000, we sell 178.677 Units at the current
Unit Price, leaving you 158.477 Units. We then buy $3,000 of Units of the new
Sub-account at the Unit Price of $17.83. You would then have 168.255 Units of
the new Sub-account.
HOW DO YOU VALUE FIXED ALLOCATIONS?
During the Guarantee Period, we use the concept of an Interim Value. The Interim
Value can be calculated on any day and is equal to the initial value allocated
to a Fixed Allocation plus all interest credited to a Fixed Allocation as of the
date calculated. If you made any transfers or withdrawals from a Fixed
Allocation, the Interim Value will reflect the withdrawal of those amounts and
any interest credited to those amounts before they were withdrawn. To determine
the Account Value of a Fixed Allocation on any day other than its Maturity Date,
we multiply the Account Value of the Fixed Allocation times the Market Value
Adjustment factor.
WHEN DO YOU PROCESS AND VALUE TRANSACTIONS?
Initial Purchase Payments: We are required to allocate your initial Purchase
Payment to the Sub-accounts within two (2) days after we receive all of our
requirements to issue the Annuity. If we do not have all the required
information to allow us to issue your Annuity, we may retain the Purchase
Payment while we try to reach you or your representative to obtain all of our
requirements. If we are unable to obtain all of our required information within
five (5) days, we are required to return the Purchase Payment to you at that
time, unless you specifically consent to our retaining the Purchase Payment
while we gather the required information. Once we obtain the required
information, we will invest the Purchase Payment and issue the Annuity within
two (2) days. During any period that we are trying to obtain the required
information, your money is not invested.
Additional Purchase Payments: We will apply any additional Purchase Payments on
the Valuation Day that we receive the Purchase Payment with satisfactory
instructions.
Scheduled Transactions: "Scheduled" transactions include transfers under a
Dollar Cost Averaging, rebalancing, or asset allocation program, Systematic
Withdrawals, Minimum Distributions or annuity payments. Scheduled transactions
are processed and valued as of the date they are scheduled, unless the scheduled
day is not a Valuation Day. In that case, the transaction will be processed and
valued on Valuation Day prior to the scheduled transaction date.
Unscheduled Transactions: "Unscheduled" transactions include any other
non-scheduled transfers and requests for Partial Withdrawals or Free Withdrawals
or Surrenders. Unscheduled transactions are processed and valued as of the
Valuation Day we receive the request at our Office in good order.
Medically-related Surrenders & Death Benefits: Medically-related surrender
requests and death benefit claims require our review and evaluation before
processing. We price such transactions as of the date we receive at our Office
all materials we require for such transaction and that are satisfactory to us.
Transactions in Rydex Sub-accounts: Any financial transactions involving the
Rydex Sub-accounts must be received by us no later than 3:00 p.m. Eastern time
to be processed on the current Valuation Day. If you request a transaction
involving the purchase or redemption of Units in one of the Rydex Sub-accounts
after 3:00 p.m. Eastern time, we will deem your request as received by us on the
next Valuation Day.
TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSIDERATIONS OF THIS ANNUITY?
Following are a brief summary of some of the Federal Tax considerations relating
to this Annuity. However, since the tax law is complex and tax consequences are
affected by your individual circumstances, this summary is not intended to be
fully comprehensive nor is it intended as tax advice. Therefore, you may wish to
consult a professional tax advisor for tax advice as to your particular
situation.
HOW IS AMERICAN SKANDIA AND THE SEPARATE ACCOUNT TAXED?
The Separate Accounts are taxed as part of American Skandia. American Skandia is
taxed as a life insurance company under Part I, subchapter L of the Internal
Revenue Code of 1986, as amended (the "Code"). No taxes are due on interest,
dividends and short-term or long-term capital gains earned by the Separate
Accounts with respect to the Annuities.
IN GENERAL, HOW ARE ANNUITIES TAXED?
Section 72 of the Code governs the taxation of annuities in general. Generally,
taxation of the Annuity will depend on:
1. whether the Annuity is used by:
- a qualified pension plan, profit sharing plan or other retirement
arrangement that is eligible for special tax treatment under the Code
(for purposes of this discussion, a "Qualified Contract"); VERSUS
- an individual or a corporation, trust or partnership as a funding
vehicle for retirement or investment purposes (a "Non-qualified
Contract); and
2. whether the Owner is an:
- individual person or persons; or
- entity including a corporation, trust or partnership.
Individual Ownership: If one or more individuals owns an Annuity, the Owner of
the Annuity is generally not taxed on any increase in the value of an annuity
until an amount is received (a "distribution"). This is commonly referred to as
"tax deferral". A distribution can be in the form of a lump sum payment
including payment of a Death Benefit, or in annuity payments under one of the
annuity payment options. Certain other transactions may qualify as a
distribution and be subject to taxation.
Entity Ownership: If the Annuity is owned by an entity, generally the Owner of
the Annuity must currently include any increase in the value of an annuity
during a tax year in its gross income, unless the Annuity is used as a Qualified
Contract. An exception from current taxation applies for annuities held by a
structured settlement company, by an employer with respect to a terminated
tax-qualified retirement plan, a trust holding an annuity as an agent for a
natural person, or by a decedent's estate by reason of the death of the
decedent. A tax-exempt entity for federal tax purposes will not be subject to
income tax as a result of this provision.
HOW ARE DISTRIBUTIONS TAXED?
Distributions from an Annuity are taxed as ordinary income and not as capital
gains.
Distributions Before Annuitization: Distributions received before annuity
payments begin are generally treated as coming first from "income on the
contract" and then as a return of the "investment in the contract". The amount
of any distribution that is treated as receipt of "income on the contract" is
includible in the taxpayer's gross income and is taxable. The amount of any
distribution treated as a return of the "investment in the contract" is not
includible in gross income.
- - "Income on the contract" is calculated by subtracting the taxpayer's
"investment in the contract" from the aggregate value of all "related
contracts" (discussed below).
- - "Investment in the contract" is equal to total purchase payments for all
"related contracts" minus any previous distributions or portions of such
distributions from such "related contracts" not includible in gross income.
"Investment in the contract" may be affected by whether an annuity or any
"related contract" was purchased as part of a tax-free exchange of life
insurance or annuity contracts under Section 1035 of the Code. Unless
"after-tax" contributions have been made to a Qualified Contract, the
"investment in the contract" for a Qualified Contract is zero.
Distributions After Annuitization: A portion of each annuity payment received on
or after the annuity date will generally be taxable. The taxable portion of each
annuity payment is determined by a formula which establishes the ratio that the
"investment in the contract" bears to the total value of annuity payments to be
made. This is called the "exclusion ratio." Any additional payments received
that exceed the exclusion ratio will be entirely includible in gross income. The
formula for determining the exclusion ratio differs between fixed and variable
annuity payments. When annuity payments cease because of the death of the person
upon whose life payments are based and, as of the date of death, the amount of
annuity payments excluded from taxable income by the exclusion ratio does not
exceed the "investment in the contract," then the remaining portion of
unrecovered investment is allowed as a deduction in the tax year of such death.
Penalty Tax on Distributions: (Qualified Contracts are discussed below)
Generally, any distribution from an annuity not used in conjunction with a
Qualified Contract is subject to a penalty equal to 10% of the amount includible
in gross income. There may be exceptions to this penalty on certain
distributions, including:
- - Distributions made on or after the taxpayer has attained the age of 59 1/2;
- - Distributions made on or after the death of the contract owner, or, the
death of the annuitant, if the owner is an individual;
- - Distributions attributable to the taxpayer's becoming disabled;
- - Distributions which are part of a scheduled series of substantially equal
periodic payments for the life (or life expectancy) of the taxpayer (or the
joint lives of the taxpayer and the taxpayer's Beneficiary);
- - Distributions of amounts which are treated as "investments in the contract"
made prior to August 14, 1982
- - Payments under an immediate annuity as defined in the Code;
- - Distributions under a qualified funding asset under Code Section 130(d); or
- - Distributions from an annuity purchased by an employer on the termination
of a qualified pension plan that is held by the employer until the employee
separates from service.
Special rules applicable to "related contracts"
Contracts issued after October 21, 1988 by the same insurer to the same contract
owner within the same calendar year (other than certain contracts owned in
connection with a tax-qualified retirement arrangement) are to be treated as one
annuity contract when determining the taxation of distributions before
annuitization. We refer to these as "related contracts." In situations involving
"related contracts" we believe that the values under such contracts and the
investment in the contracts will be added together to determine the proper
taxation of a distribution described under the section "Distributions before
Annuitization." Distributions will be treated as coming first from income on the
contract until all of the income on all such "related contracts" is withdrawn,
and then as a return of the investment in the contract. There is some
uncertainty regarding the manner in which the Internal Revenue Service would
view "related contracts" when one or more contracts are immediate annuities or
are contracts that have been annuitized. The Internal Revenue Service has not
issued regulations clarifying this issue as of the date of this Prospectus. You
are particularly cautioned to seek advice from your own tax advisor on this
matter.
Special concerns regarding "substantially equal periodic payments": (also known
as "72(t) distributions")
Any modification to a program of distributions which are part of a scheduled
series of substantially equal periodic payments that occur before the taxpayer's
age 59 1/2 or within 5 years of the first of such scheduled payments will result
in the requirement to pay the taxes that would have been due had the payments
been treated as subject to tax in the years received, plus interest for the
deferral period. This does not apply when the modification is due by reason of
death or disability. It is our understanding that the Internal Revenue Service
may not consider a scheduled series of distributions to qualify under Sections
72(q) or 72(t) if the holder of the annuity retains the right to modify such
distributions at will, even if such right is not exercised, or, for a variable
annuity, depending on how payments are structured.
Special concerns regarding immediate annuities
The Internal Revenue Service has ruled that the exception to the 10% penalty
described above for "non-qualified" immediate annuities as defined under the
Code may not apply to annuity payments under a contract recognized as an
immediate annuity under state insurance law obtained pursuant to an exchange of
contracts if: (a) purchase payments for the exchanged contract were contributed
or deemed to be contributed more than one year prior to the first annuity
payment payable under the immediate annuity; and (b) the annuity payments under
the immediate annuity do not meet the requirements of any other exception to the
10% penalty. This ruling may or may not imply that the exception to the 10%
penalty may not apply to annuity payments paid pursuant to a deferred annuity
obtained pursuant to an exchange of contract if: (a) purchase payments for the
exchanged contract were contributed or may be deemed to be contributed more than
one year prior to the first annuity payment pursuant to the deferred annuity
contract; or (b) the annuity payments pursuant to the deferred annuity do not
meet the requirements of any other exception to the 10% penalty.
Special rules in relation to tax-free exchanges under Section 1035
Section 1035 of the Code permits certain tax-free exchanges of a life insurance,
annuity or endowment contract for an annuity. If an annuity is purchased through
a tax-free exchange of a life insurance, annuity or endowment contract that was
purchased prior to August 14, 1982, then any distributions other than as annuity
payments will be considered to come:
- - First, from the amount of "investment
in the contract" made prior to August 14, 1982 and exchanged into the Annuity;
- - Then, from any "income on the contract" that is attributable to the purchase
payments made prior to August 14, 1982
(including income on such original purchase payments after the exchange);
- - Then, from any remaining "income on the contract"; and |X| Last from the
remaining "investment in the contract."
Therefore, to the extent a distribution is less than the investment in the
contract made prior to August 14, 1982, such amounts are not included in taxable
income. Further, distributions received that are considered to be a return of
investment on the contract from purchase payments made prior to August 14, 1982,
such distributions are not subject to the 10% tax penalty. In all other
respects, the general provisions of the Code apply to distributions from
annuities obtained as part of such an exchange.
WHAT TAX CONSIDERATIONS ARE THERE FOR TAX-QUALIFIED RETIREMENT PLANS OR
QUALIFIED CONTRACTS?
An annuity may be suitable as a funding vehicle for various types of
tax-qualified retirement plans. We have provided summaries of the types of
tax-qualified retirement plans with which we may issue an Annuity. These
summaries provide general information about the tax rules and are not complete.
The tax rules regarding qualified plans are complex. These rules may include
limitations on contributions and restrictions on distributions, including
additional taxation of distributions and additional penalties. Owners are
cautioned that any rights and benefits under the Annuity are controlled by the
terms and conditions of the tax-qualified retirement plan regardless of the
terms of the Annuity. The application of these rules depends on individual facts
and circumstances. Before purchasing an annuity for use in a qualified plan, you
should obtain competent tax advice, both as to the tax treatment and suitability
of such an investment. American Skandia does not make all of its annuities
available to these types of tax-qualified retirement plans.
Corporate Pension and Profit-sharing Plans
Annuities may be used to fund employee benefits of various corporate pension and
profit-sharing plans established by corporate employers under Sections 401(a)
and 401(k) of the Code. Contributions to such plans are not taxable to the
employee until distributions are made from the retirement plan. The Code imposes
limitations on the amount that may be contributed and the timing of
distributions. The tax treatment of distributions is subject to special
provisions of the Code, and also depends on the design of the specific
retirement plan. There are also special requirements as to participation,
nondiscrimination, vesting and nonforfeitability of interests.
Annuities may also be used to fund benefits of retirement plans established by
self-employed individuals for themselves and their employees. These are commonly
known as "H.R. 10 Plans" or "Keogh Plans". These plans are subject to most of
the same types of limitations and requirements as retirement plans established
by corporations. However, the exact limitations and requirements may differ from
those for corporate plans.
Tax Sheltered Annuities
Under Section 403(b) of the Code a tax sheltered annuity ("TSA") is a contract
into which contributions may be made for the benefit of their employees by
certain qualifying employers such as, public schools and certain charitable,
educational and scientific organizations specified in Section 501(c)(3). Such
contributions are not taxable to the employee until distributions are made from
the TSA. The Code imposes limits on contributions, transfers and distributions.
Nondiscrimination requirements also apply.
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Under a TSA, you may be prohibited from taking distributions from the contract
attributable to contributions made pursuant to a salary reduction agreement
unless the distribution is made
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- - After the participating employee attains age 59 1/2;
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- - Upon separation from service, death or disability; or
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- - In the case of financial hardship (subject to restrictions)
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Deferred Compensation Plans
Under Section 457 of the Code, deferred compensation plans established by
governmental and certain other tax exempt employers for their employees may
invest in annuity contracts. The Code limits contributions and distributions,
and imposes eligibility requirements as well. Contributions are not taxable to
employees until distributed from the plan. However, plan assets remain the
property of the employer and are subject to the claims of the employer's general
creditors until such assets are made available to participants or their
beneficiaries.
Individual Retirement Programs or "IRAs"
Section 408 of the Code allows eligible individuals to maintain an individual
retirement account or individual retirement annuity ("IRA"). IRAs are subject to
limitations on the amount that may be contributed, the contributions that may be
deducted from taxable income, the persons who may be eligible and the time when
distributions must commence. Further, an Annuity may be used to "roll-over"
distributions from certain tax-qualified retirement plans and maintain their
tax-deferral.
Roth IRAs
A form of IRA is also available called a "Roth IRA". Contributions to a Roth IRA
are not tax deductible. However, distributions from a Roth IRA are free from
federal income taxes and are not subject to the 10% penalty tax if five (5) tax
years have passed since the first contribution was made or any conversion from a
traditional IRA was made, and the distribution is made (a) once the taxpayer is
age 59 1/2 or older, (b) upon the death or disability of the taxpayer, or (c)
for qualified first-time home buyer expenses, subject to certain limitations.
Distributions from a Roth IRA that are not "qualified" as described above may be
subject to a penalty tax.
SEP IRAs
Eligible employers that meet specified criteria may establish Simplified
Employee Pensions or SEP IRAs using the employees' IRAs. Employer contributions
that may be made to SEP IRAs are larger than the amounts that may be contributed
to other IRAs, and may be deductible to the employer.
Purchasers of IRAs and Roth IRAs will receive a special disclosure document,
which describes limitations on eligibility, contributions, transferability and
distributions. It also describes the conditions under which distributions from
IRAs and qualified plans may be rolled over or transferred into an IRA on a
tax-deferred basis and the conditions under which distributions from traditional
IRAs may be rolled over to, or the traditional IRA itself may be converted into
a Roth IRA.
HOW ARE DISTRIBUTIONS FROM TAX-QUALIFIED RETIREMENT PLANS TAXED?
Distributions from tax-qualified retirement plans are generally taxed under
Section 72 of the Code. Under these rules, a portion of each distribution may be
excludable from income. The excludable amount is the proportion of the
distribution that is based on the amount of investment gain on the after-tax
contributions. Generally, a 10% penalty tax applies to the taxable portion of a
distribution from a tax-qualified retirement plan made prior to age 59 1/2.
However, the 10% penalty tax does not apply when the distribution:
- - is part of a properly executed transfer to another IRA or another eligible
qualified plan;
- - is subsequent to the death or disability of the taxpayer (for this purpose
disability is as defined in Section 72(m)(7) of the Code);
- - is part of substantially equal periodic payments to be paid not less
frequently than annually for the taxpayer's life or life expectancy or for the
joint lives or life expectancies of the taxpayer and a designated beneficiary;
- - *is subsequent to a separation from service after the taxpayer attains age 55;
- - *does not exceed the employee's allowable deduction in that tax year for
medical care; and
- - *is made to an alternate payee pursuant to a qualified domestic relations
order.
The exceptions above which are preceded by an * do not apply to IRAs.
Minimum Distributions after age 70 1/2: A participant's interest in a
tax-qualified retirement plan must generally be distributed, or begin to be
distributed, by the "required beginning date". This is generally not later than
April 1st of the calendar year following the later of: |X| the calendar year in
which the individual attains age 70 1/2; or |X| the calendar year in which the
individual retires from service with the employer sponsoring the plan.
The participant's entire interest must be distributed beginning no later than
the required beginning date over a period which may not extend beyond a maximum
of the life expectancy of the participant and a designated Beneficiary. Each
annual distribution must equal or exceed a "minimum distribution amount" which
is determined by dividing the account value by the applicable life expectancy.
The account balance is generally based upon the account value as of the close of
business on the last day of the previous calendar year. A larger annual
distribution may be required under certain circumstances.
If the participant dies before reaching his or her required beginning date, his
or her entire interest must generally be distributed within five years of death.
However, this rule will be deemed satisfied if distributions begin before the
close of the calendar year following death to a designated Beneficiary (or over
a period not extending beyond the life expectancy of the beneficiary). If the
Beneficiary is the individual's surviving spouse, distributions may be delayed
until the individual would have attained age 70 1/2. If a participant dies after
reaching his or her required beginning date or after distributions have
commenced, the individual's interest must generally be distributed at least as
rapidly as under the method of distribution in effect at the time of the
individual's death.
If the amount distributed is less than the minimum required distribution for the
year, the participant is subject to a 50% tax on the amount that was not
properly distributed.
GENERAL TAX CONSIDERATIONS
Diversification: Section 817(h) of the Code provides that a variable annuity
contract, in order to qualify as an annuity, must have an "adequately
diversified" segregated asset account (including investments in a mutual fund by
the segregated asset account of insurance companies). If the diversification
requirements under the Code are not met and the annuity is not treated as an
annuity, the taxpayer will be subject to income tax on the annual gain in the
contract. The Treasury Department's regulations prescribe the diversification
requirements for variable annuity contracts. We believe the underlying mutual
fund portfolios should comply with the terms of these regulations.
Transfers Between Investment Options: Transfers between investment options are
not subject to taxation. The Treasury Department may promulgate guidelines under
which a variable annuity will not be treated as an annuity for tax purposes if
persons with ownership rights have excessive control over the investments
underlying such variable annuity. Such guidelines may or may not address the
number of investment options or the number of transfers between investment
options offered under a variable annuity. It is not known whether such
guidelines, if in fact promulgated, would have retroactive effect. It is also
not known what effect, if any, such guidelines may have on transfers between the
investment options of the Annuity offered pursuant to this Prospectus. We will
take any action, including modifications to your Annuity or the Sub-accounts,
required to comply with such guidelines if promulgated.
Federal Income Tax Withholding: Section 3405 of the Code provides for Federal
income tax withholding on the portion of a distribution which is includible in
the gross income of the recipient. Amounts to be withheld depend upon the nature
of the distribution. However, under most circumstances a recipient may elect not
to have income taxes withheld or have income taxes withheld at a different rate
by filing a completed election form with us.
Certain distributions, including rollovers, from most retirement plans, may be
subject to automatic 20% withholding for Federal income taxes. This will not
apply to:
- -| any portion of a distribution paid as Minimum Distributions;
- - direct transfers to the trustee of another retirement plan;
- - distributions from an individual retirement account or individual
retirement annuity;
- - distributions made as substantially equal periodic payments for the life
or life expectancy of the participant in the retirement plan or the life
or life expectancy of such participant and his or her designated
beneficiary under such plan; and
- - certain other distributions where automatic 20% withholding may not apply.
Loans, Assignments and Pledges: Any amount received directly or indirectly as a
loan from, or any assignment or pledge of any portion of the value of an annuity
before annuity payments have begun are treated as a distribution subject to
taxation under the distribution rules set forth above. Any gain in an annuity
subsequent to the assignment or pledge of an entire annuity while such
assignment or pledge remains in effect is treated as "income on the contract" in
the year in which it is earned. For annuities not issued for use as qualified
plans (see "What Are Some of the Tax Considerations Regarding Qualified
Retirement Plans"), the cost basis of the annuity is increased by the amount of
any assignment or pledge includible in gross income. The cost basis is not
affected by any repayment of any loan for which the annuity is collateral or by
payment of any interest thereon.
Gifts: The gift of an annuity to other than the spouse of the owner (or former
spouse incident to a divorce) is treated, for income tax purposes, as a
distribution.
Estate and Gift Tax Considerations: You should obtain competent tax advice with
respect to possible federal and state estate and gift tax consequences flowing
from the ownership and transfer of annuities.
Generation-Skipping Transfers: Under the Code certain taxes may be due when all
or part of an annuity is transferred to, or a death benefit is paid to, an
individual two or more generations younger than the contract holder. These
generation-skipping transfers generally include those subject to federal estate
or gift tax rules. There is an aggregate $1 million exemption from taxes for all
such transfers. We may be required to determine whether a transaction is a
direct skip as defined in the Code and the amount of the resulting tax. We will
deduct from your Annuity or from any applicable payment treated as a direct skip
any amount of tax we are required to pay.
Considerations for Contingent Annuitants
There may be adverse tax consequences if a contingent annuitant succeeds an
annuitant when the Annuity is owned by a trust that is neither tax exempt nor
qualifies for preferred treatment under certain sections of the Code. In
general, the Code is designed to prevent indefinite deferral of tax. Continuing
the benefit of tax deferral by naming one or more contingent annuitants when the
Annuity is owned by a non-qualified trust might be deemed an attempt to extend
the tax deferral for an indefinite period. Therefore, adverse tax treatment may
depend on the terms of the trust, who is named as contingent annuitant, as well
as the particular facts and circumstances. You should consult your tax advisor
before naming a contingent annuitant if you expect to use an Annuity in such a
fashion.
GENERAL INFORMATION
HOW WILL I RECEIVE STATEMENTS AND REPORTS?
We send any statements and reports required by applicable law or regulation to
you at your last known address of record. You should therefore give us prompt
notice of any address change. We reserve the right, to the extent permitted by
law and subject to your prior consent, to provide any prospectus, prospectus
supplements, confirmations, statements and reports required by applicable law or
regulation to you through our Internet Website at http://www.americanskandia.com
or any other electronic means, including diskettes or CD ROMs. We send a
confirmation statement to you each time a transaction is made affecting Account
Value, such as making additional Purchase Payments, transfers, exchanges or
withdrawals. We also send quarterly statements detailing the activity affecting
your Annuity during the calendar quarter. You may request additional reports. We
reserve the right to charge up to $50 for each such additional report. Instead
of immediately confirming transactions made pursuant to some type of periodic
transfer program (such as a dollar cost averaging program) or a periodic
Purchase Payment program, such as a salary reduction arrangement, we may confirm
such transactions in quarterly statements. You should review the information in
these statements carefully.
All errors or corrections must be reported to us at our Office as soon as
possible to assure proper accounting to your Annuity. For transactions that are
confirmed immediately, we assume all transactions are accurate unless you notify
us otherwise within 10 days from the date you receive the confirmation. For
transactions that are only confirmed on the quarterly statement, we assume all
transactions are accurate unless you notify us within 10 days from the date you
receive the quarterly statement. All transactions confirmed immediately or by
quarterly statement are deemed conclusive after the applicable 10-day period. We
may also send an annual report and a semi-annual report containing applicable
financial statements, as of December 31 and June 30, respectively, to Owners or,
with your prior consent, make such documents available electronically through
our Internet Website or other electronic means.
WHO IS AMERICAN SKANDIA?
American Skandia Life Assurance Corporation (the "Company") is a stock life
insurance company domiciled in Connecticut with licenses in all 50 states and
the District of Columbia. It is a wholly-owned subsidiary of American Skandia
Investment Holding Corporation (the "Parent"), whose ultimate parent is Skandia
Insurance Company Ltd., a Swedish company. The Company markets its products to
broker-dealers and financial planners through an internal field marketing staff.
In addition, the Company markets through and in conjunction with financial
institutions such as banks that are permitted directly, or through affiliates,
to sell annuities.
The Company has 99.9% ownership in Skandia Vida, S.A. de C.V. which is a life
insurance company domiciled in Mexico. This Mexican life insurer is a start up
company with expectations of selling long-term savings products within Mexico.
The Company's investment in Skandia Vida, S.A. de C.V. is ____________ at
December 31, 1998.
The Company is in the business of issuing variable annuity and variable life
insurance contracts. The Company currently offers the following annuity
products: (a) flexible premium deferred variable annuities and single premium
fixed deferred annuities that are registered with the Securities and Exchange
Commission, (b) certain other fixed deferred annuities that are not registered
with the Securities and Exchange Commission; and (c) certain group variable
annuities that are exempt from registration with the Securities and Exchange
Commission that serve as funding vehicles for various types of qualified pension
and profit sharing plans. The Company recently launched a single premium
variable life insurance product and a flexible premium life insurance product.
WHAT ARE SEPARATE ACCOUNTS?
The assets supporting our obligations under the Annuities may be held in various
accounts, depending on the obligation being supported. In the accumulation
phase, assets supporting Account Values are held in separate accounts
established under the laws of the State of Connecticut. We are the legal owner
of assets in the separate accounts. In the payout phase, assets supporting fixed
annuity payments and any adjustable annuity payments we make available are held
in our general account. Income, gains and losses from assets allocated to these
separate accounts are credited to or charged against each such separate account
without regard to other income, gains or losses of American Skandia or of any
other of our separate accounts. These assets may only be charged with
liabilities which arise from the annuity contracts issued by American Skandia
Life Assurance Corporation. The amount of our obligation in relation to
allocations to the Sub-accounts is based on the investment performance of such
Sub-accounts. However, the obligations themselves are our general corporate
obligations.
Separate Account B
During the accumulation phase, the assets supporting obligations based on
allocations to the variable investment options are held in Class 3 Sub-accounts
of American Skandia Life Assurance Corporation Variable Account B, also referred
to as "Separate Account B". Separate Account B consists of multiple
Sub-accounts. The name of each Sub-account generally corresponds to the name of
the underlying Portfolio. The names of each Sub-account are shown in the
Statement of Additional Information. Separate Account B was established by us
pursuant to Connecticut law. Separate Account B also holds assets of other
annuities issued by us with values and benefits that vary according to the
investment performance of Separate Account B. The Sub-accounts offered pursuant
to this Prospectus are all Class 3 Sub-accounts of Separate Account B. Each
class of Sub-accounts in Separate Account B has a different level of charges
assessed against such Sub-accounts. You will find additional information about
these underlying mutual funds and portfolios in the prospectuses for such funds.
Separate Account B is registered with the SEC under the 1940 Act as a unit
investment trust, which is a type of investment company. This does not involve
any supervision by the SEC of the investment policies, management or practices
of Separate Account B. Each Sub-account invests only in a single mutual fund or
mutual fund portfolio. We reserve the right to add Sub-accounts, eliminate
Sub-accounts, to combine Sub-accounts, or to substitute underlying mutual funds
or portfolios of underlying mutual funds.
Values and benefits based on allocations to the Sub-accounts will vary with the
investment performance of the underlying mutual funds or fund portfolios, as
applicable. We do not guarantee the investment results of any Sub-account. Your
Account Value allocated to the Sub-accounts may increase or decrease. You bear
the entire investment risk
Separate Account D
During the accumulation phase, assets supporting our obligations based on Fixed
Allocations are held in American Skandia Life Assurance Corporation Separate
Account D, also referred to as Separate Account D. Such obligations are based on
the fixed interest rates we credit to Fixed Allocations and the terms of the
Annuities. These obligations do not depend on the investment performance of the
assets in Separate Account D. Separate Account D was established by us pursuant
to Connecticut law.
There are no units in Separate Account D. The Fixed Allocations are guaranteed
by our general account. An Annuity Owner who allocates a portion of their
Account Value to Separate Account D does not participate in the investment gain
or loss on assets maintained in Separate Account D. Such gain or loss accrues
solely to us. We retain the risk that the value of the assets in Separate
Account D may drop below the reserves and other liabilities we must maintain.
Should the value of the assets in Separate Account D drop below the reserve and
other liabilities we must maintain in relation to the annuities supported by
such assets, we will transfer assets from our general account to Separate
Account D to make up the difference. We have the right to transfer to our
general account any assets of Separate Account D in excess of such reserves and
other liabilities. We maintain assets in Separate Account D supporting a number
of annuities we offer.
We have sole discretion over the investment managers retained to manage the
assets maintained in Separate Account D. We currently employ investment managers
for Separate Account D including, but not limited to, J.P. Morgan Investment
Management Inc. Each manager we employ is responsible for investment management
of a different portion of Separate Account D. From time to time additional
investment managers may be employed or investment managers may cease being
employed. We are under no obligation to employ or continue to employ any
investment manager(s).
We are not obligated to invest according to specific guidelines or strategies
except as may be required by Connecticut and other state insurance laws.
WHAT IS THE LEGAL STRUCTURE OF THE UNDERLYING FUNDS?
Each underlying mutual fund is registered as an open-end management investment
company under the Investment Company Act of 1940. Shares of the underlying
mutual fund portfolios are sold to separate accounts of life insurance companies
offering variable annuity and variable life insurance products. The shares may
also be sold directly to qualified pension and retirement plans.
Voting Rights
We are the legal owner of the shares of the underlying mutual funds in which
Sub-accounts invest. However, under SEC rules, you have voting rights in
relation to Account Value maintained in the Sub-accounts. If an underlying
mutual fund portfolio requests a vote of shareholders, we will vote our shares
in the manner directed by Owners with Account Value allocated to that
Sub-account. Owners have the right to vote an amount equal to the number of
shares attributable to their contracts. If we do not receive voting instructions
in relation to certain shares, we will vote those shares in the same manner and
proportion as the shares for which we have received instructions. We will
furnish those Owners who have Account Value allocated to a Sub-account whose
underlying mutual fund portfolio has requested a "proxy" vote with the necessary
forms to provide us with their instructions. Generally, you will be asked to
provide instructions for us to vote on matters such as changes in a fundamental
investment strategy, adoption of a new investment advisory agreement, or matters
relating to the structure of the underlying mutual fund that require a vote of
shareholders.
Material Conflicts
It is possible that differences may occur between companies that offer shares of
an underlying mutual fund portfolio to their respective separate accounts
issuing variable annuities and/or variable life insurance products. Differences
may also occur surrounding the offering of an underlying mutual fund portfolio
to variable life insurance policies and variable annuity contracts that we
offer. Under certain circumstances, these differences could be considered
"material conflicts," in which case we would take necessary action to protect
persons with voting rights under our variable annuity contracts and variable
life insurance policies against persons with voting rights under other insurance
companies' variable insurance products. If a "material conflict" were to arise
between owners of variable annuity contracts and variable life insurance
policies issued by us we would take necessary action to treat such persons
equitably in resolving the conflict. "Material conflicts" could arise due to
differences in voting instructions between owners of variable life insurance and
variable annuity contracts of the same or different companies. We monitor any
potential conflicts that may exist.
WHO DISTRIBUTES ANNUITIES OFFERED BY AMERICAN SKANDIA?
American Skandia Marketing, Incorporated ("ASM"), a wholly-owned subsidiary of
American Skandia Investment Holding Corporation, is the distributor and
principal underwriter of the securities offered through this prospectus. ASM
acts as the distributor of a number of annuity and life insurance products we
offer and both American Skandia Trust and American Skandia Advisor Funds, Inc.,
a family of retail mutual funds. ASM's principal business address is One
Corporate Drive, Shelton, Connecticut 06484. ASM is registered as broker-dealer
under the Securities and Exchange Act of 1934 ("Exchange Act") and is a member
of the National Association of Securities Dealers, Inc. ("NASD").
The Annuity is offered on a continuous basis. ASM enters into distribution
agreements with independent broker-dealers who are registered under the Exchange
Act and with entities that may offer the Annuity but are exempt from
registration. Applications for the Annuity are solicited by registered
representatives of those firms. Such representatives will also be our appointed
insurance agents under state insurance law. In addition, ASM may offer the
Annuity directly to potential purchasers.
Compensation is paid to firms on sales of the Annuity according to one or more
schedules. The individual representative will receive a portion of the
compensation, depending on the practice of the firm. Compensation is generally
based on a percentage of Purchase Payments made, up to a maximum of 6.0%.
Alternative compensation schedules are available that provide a lower initial
commission plus ongoing annual compensation based on all or a portion of Account
Value. We may also provide compensation for providing ongoing service to you in
relation to the Annuity. Commissions and other compensation paid in relation to
the Annuity do not result in any additional charge to you or to the Separate
Account.
In addition, firms may receive separate compensation or reimbursement for, among
other things, training of sales personnel, marketing or other services they
provide to us or our affiliates. We or ASM may enter into compensation
arrangements with certain firms. These arrangements will not be offered to all
firms and the terms of such arrangements may differ between firms. Any such
compensation will be paid by us or ASM and will not result in any additional
charge to you. To the extent permitted by NASD rules and other applicable laws
and regulations, ASM may pay or allow other promotional incentives or payments
in the form of cash or other compensation.
Advertising: We may advertise certain information regarding the performance of
the investment options. Details on how we calculate performance for the
Sub-accounts are found in the Statement of Additional Information. This
information may help you review the performance of the investment options and
provide a basis for comparison with other annuities. It may be less useful when
comparing the performance of the investment options with other savings or
investment vehicles. Such other investments may not provide some of the benefits
of annuities, or may not be designed for long-term investment purposes.
Additionally other savings or investment vehicles may not be receive the
beneficial tax treatment given to annuities under the Code.
Performance information on the Sub-accounts is based on past performance only
and is not an indication or representation of future performance. Performance of
the Sub-accounts is not fixed. Actual performance will depend on the type,
quality and, for some of the Sub-accounts, the maturities of the investments
held by the underlying mutual funds or portfolios and upon prevailing market
conditions and the response of the underlying mutual funds to such conditions.
Actual performance will also depend on changes in the expenses of the underlying
mutual funds or portfolios. Such changes are reflected, in turn, in the
Sub-accounts which invest in such underlying mutual fund or portfolio. In
addition, the amount of charges assessed against each Sub-account will affect
performance.
Some of the underlying mutual fund portfolios existed prior to the inception of
these Sub-accounts. Performance quoted in advertising regarding such
Sub-accounts may indicate periods during which the Sub-accounts have been in
existence but prior to the initial offering of the Annuities, or periods during
which the underlying mutual fund portfolios have been in existence, but the
Sub-accounts have not. Such hypothetical performance is calculated using the
same assumptions employed in calculating actual performance since inception of
the Sub-accounts.
We may advertise the performance of the underlying mutual fund portfolios in the
form of "Standard" and "Non-Standard" Total Returns. "Standard Total Return"
figures assume that all charges and fees are applicable, including any
contingent deferred sales charge that may apply for the period shown.
"Non-standard Total Return" figures may also be used that do not reflect all
fees and charges. Non-standard Total Returns are calculated in the same manner
as standardized returns except that the calculations may assume no redemption at
the end of the applicable periods, thus these figures may not take into
consideration the Annuity's contingent deferred sales charge. In addition, we
may calculate Non-standard Total Returns that do not reflect deduction of the
Annual Maintenance Fee. Any performance advertisements will not reflect the
impact of any Target Value Credits.
The information we may advertise regarding the Fixed Allocations may include the
then current interest rates we are crediting to new Fixed Allocations.
Information on Current Rates will be as of the date specified in such
advertisement. Rates will be included in advertisements to the extent permitted
by law. Given that the actual rates applicable to any Fixed Allocation are as of
the date of any such Fixed Allocation's Guarantee Period begins, the rate
credited to a Fixed Allocation may be more or less than those quoted in an
advertisement.
Advertisements we distribute may also compare the performance of our
Sub-accounts with: (a) certain unmanaged market indices, including but not
limited to the Dow Jones Industrial Average, the Standard & Poor's 500, the
Shearson Lehman Bond Index, the Frank Russell non-U.S. Universal Mean, the
Morgan Stanley Capital International Index of Europe, Asia and Far East Funds,
and the Morgan Stanley Capital International World Index; and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio underlying the Sub-accounts being compared. This may include
the performance ranking assigned by various publications, including but not
limited to the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business
Week, USA Today and statistical services, including but not limited to Lipper
Analytical Services Mutual Funds Survey, Lipper Annuity and Closed End Survey,
the Variable Annuity Research Data Survey, SEI, the Morningstar Mutual Fund
Sourcebook and the Morningstar Variable Annuity/Life Sourcebook.
American Skandia Life Assurance Corporation may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits, pay annuity payments or administer Annuities. Such
rankings and ratings do not reflect or relate to the performance of Separate
Account B.
AVAILABLE INFORMATION
A Statement of Additional Information is available from us without charge upon
your request. This Prospectus is part of the registration statement we filed
with the Securities and Exchange Commission ("SEC") regarding this offering.
Additional information on us and this offering is available in those
registration statements and the exhibits thereto. You may obtain copies of these
materials at the prescribed rates from the SEC's Public Reference Section, 450
Fifth Street N.W., Washington, D.C., 20549. You may inspect and copy those
registration statements and exhibits thereto at the SEC's public reference
facilities at the above address, Room 1024, and at the SEC's Regional Offices, 7
World Trade Center, New York, NY, and the Everett McKinley Dirksen Building, 219
South Dearborn Street, Chicago, IL. These documents, as well as documents
incorporated by reference, may also be obtained through the SEC's Internet
Website (http://www.sec.gov) for this registration statement as well as for
other registrants that file electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
To the extent and only to the extent that any statement in a document
incorporated by reference into this Prospectus is modified or superseded by a
statement in this Prospectus or in a later-filed document, such statement is
hereby deemed so modified or superseded and not part of this Prospectus. The
Annual Report on Form 10-K for the year ended December 31, 1998 previously filed
by the Company with the SEC under the Securities Exchange Act of 1934 is
incorporated by reference in this Prospectus.
We will furnish you without charge a copy of any or all of the documents
incorporated by reference in this Prospectus, including any exhibits to such
documents which have been specifically incorporated by reference. We will do so
upon receipt of your written or oral request.
HOW TO CONTACT US
You can contact us by:
- - calling our Concierge Desk at 1-800-752-6342; or
- - writing to us at American Skandia Life Assurance Corporation, P.O. Box 883,
Shelton, Connecticut 06484-0883, Attention: Concierge Desk; or
- - sending us an email to our electronic mail address at
[email protected]; or |X| accessing information about your Annuity
through our Internet Website at americanskandia.com.
We may require that you present proper identification before performing
transactions over the telephone, email or through our Internet website. This may
include a Personal Identification Number or PIN that will be provided to you on
or about the time that your Annuity is issued. To the extent permitted by law,
we will not be responsible for any claims, loss, liability or expense in
connection with a transaction requested by telephone or other electronic means
if we acted on such transaction instructions after following reasonable
procedures to identify those persons authorized to perform transactions on your
Annuity using verification methods which may include a request for your Social
Security number, PIN or other form of electronic identification. We may be
liable for losses due to unauthorized or fraudulent instructions if we did not
follow such procedures.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "1933 Act") may be permitted to directors, officers or persons
controlling the registrant pursuant to the foregoing provisions, the registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the 1933 Act and
is therefore unenforceable.
LEGAL PROCEEDINGS
As of the date of this Prospectus, neither we nor ASM were involved in any
litigation outside of the ordinary course of business, and know of no material
claims.
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS AND DIRECTORS
Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding work experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
<S> <C> <C> <C>
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
Gordon C. Boronow* Deputy Chief Executive Deputy Chief Executive
46 Officer and President Officer and President:
Director (since July, 1991) American Skandia Life
Assurance Corporation
Nancy F. Brunetti Director (since February, 1996) Executive Vice President and
37 Chief Operating Officer:
American Skandia Information
Services and Technology Corporation
Malcolm M. Campbell Director (since July, 1991) Director of Operations and
43 Chief Actuary, Assurance and
Financial Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi* Chief Executive Senior Executive Vice President and
54 Officer and Member of Executive Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Lincoln R. Collins Executive Vice President and Executive Vice President
38 Chief Operating Officer and Chief Operating Officer:
Director (since February, 1996) American Skandia Life
Assurance Corporation
Henrik Danckwardt Director (since July, 1991) Director of Finance
45 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Wade A. Dokken Director (since July, 1991) President and Deputy
39 Chief Executive Officer:
American Skandia Marketing, Incorporated
Brian L. Hirst Vice President, Vice President,
51 Corporate Actuary Corporate Actuary:
American Skandia Life
Assurance Corporation
Mr. Hirst joined us in 1996. He previously held the positions of Vice President
from 1993 to 1996 and Second Vice President from 1987 to 1992 at Allmerica
Financial.
N. David Kuperstock Vice President, Vice President,
47 Product Development Product Development:
American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
46 Chief Financial Officer, Chief Financial Officer:
Director (since September, 1994) American Skandia Life
Assurance Corporation
Gunnar J. Moberg Director (since October, 1994) Director - Marketing and Sales,
44 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
David R. Monroe Treasurer, Vice President, Treasurer, Vice President,
37 and Controller and Controller:
American Skandia Life
Assurance Corporation
Mr. Monroe joined us in 1996. He previously held positions of Assistant Vice
President and Director at Allmerica Financial from August, 1994 to July, 1996
and Senior Manager at KPMG Peat Marwick from July, 1983 to July, 1994.
Rodney D. Runestad Vice President Vice President:
49 American Skandia Life
Assurance Corporation
Anders O. Soderstrom Executive Vice President and President and
39 Chief Information Officer Chief Information Officer:
Director (since September, 1994) American Skandia Information
Services and Technology Corporation
Amanda C. Sutyak Executive Vice President Vice President
41 Director (since July, 1991) American Skandia
Marketing, Incorporated
C. Ake Svensson Director (since December, 1994) Vice President,
48 Business Development:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice
President with Nordenbanken.
Bayard F. Tracy Director (since September, 1994) Senior Vice President,
51 National Sales Manager:
American Skandia
Marketing, Incorporated
Jeffrey M. Ulness Vice President, Vice President,
38 Product Management Product Management:
American Skandia Life
Assurance Corporation
Mr. Ulness joined us in 1994. He previously held the positions of Counsel at
North American Security Life Insurance Company from March, 1991 to July, 1994.
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
</TABLE>
<PAGE>
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
The following are the contents of the Statement of Additional Information:
<TABLE>
<CAPTION>
<S> <C>
General Information about American Skandia
- - American Skandia Life Assurance Corporation
- - American Skandia Life Assurance Corporation Variable Account B (Class 3 Sub-accounts)
- - American Skandia Life Assurance Corporation Separate Account D
</TABLE>
Principal Underwriter/Distributor - American Skandia Marketing, Incorporated
How Performance Data is Calculated
- - Current and Effective Yield
- - Total Return
How the Unit Price is Determined
Additional Information on Fixed Allocations
- - How We Calculate the Market Value Adjustment
General Information
- - Voting Rights
- - Modification
- - Deferral of Transactions
- - Misstatement of Age or Sex
- - Ending the Offer
Independent Auditors
Legal Experts
Financial Statements
- - Appendix A - American Skandia Life Assurance Corporation Variable Account
B (Class 3 Sub-accounts)
<PAGE>
APPENDIX A - FINANCIAL INFORMATION ABOUT AMERICAN SKANDIA
(TO BE FILED BY AMENDMENT)
<PAGE>
APPENDIX B - CONDENSED FINANCIAL INFORMATION ABOUT SEPARATE ACCOUNT B
The Unit Prices and number of Units in the Sub-accounts that commenced
operations prior to January 1, 1999 are shown below. All or some of these
Sub-accounts were available during the periods shown as investment options for
other variable annuities we offer pursuant to different prospectuses. The
charges assessed against the Sub-accounts under the terms of those other
variable annuities are the same as the charges assessed against such
Sub-accounts under the Annuity offered pursuant to this Prospectus.
Unit Prices And Numbers Of Units The following table shows: (a) the
Unit Price, as of the dates shown, for Units in each of the Class 3 Sub-accounts
of Separate Account B that commenced operations prior to January 1, 1999 and are
being offered pursuant to this Prospectus or which we offer pursuant to certain
other prospectuses; and (b) the number of Units outstanding in each such
Sub-account as of the dates shown. The year in which operations commenced in
each such Sub-account is noted in parentheses. The portfolios in which a
particular Sub-account invests may or may not have commenced operations prior to
the date such Sub-account commenced operations. The initial offering price for
each Sub-account was $10.00.
<TABLE>
<CAPTION>
Year Ended December 31,
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AST Lord Abbett
Growth and Income 3
(1992) $21.74 17.79 15.22 11.98 11.88 10.60 - - -
Unit Price 42,197,002 28,937,085 18,411,759 7,479,449 4,058,228 956,949 - - -
Number of Units
AST Lord Abbett Small
Cap Value 3
(1998) - - - - - - - - -
Unit Price - - - - - - - - -
Number of Units
AST JanCap Growth 3
(1992)
Unit Price $23.83 18.79 14.85 10.91 11.59 10.51 - - -
Number of Units 62,486,302 46,779,164 28,662,737 22,354,170 13,603,637 1,476,139 - - -
AST Janus Small-Cap
Growth 3 (1)
(1994)
Unit Price $17.28 16.54 13.97 10.69 - - - - -
Number of Units 14,662,728 12,282,211 6,076,373 2,575,105 - - - - -
AST Janus Overseas
Growth 3
(1997) $11.70 - - - - - - - -
Unit Price 21,405,891 - - - - - - - -
Number of Units
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AST Money Market 3
(1992)
Unit Price $11.57 11.16 10.77 10.35 10.12 10.01 - - -
Number of Units 66,869,998 42,435,169 30,564,442 27,491,389 11,422,783 457,872 - - -
AST Federated High
Yield 3
(1994)
Unit Price $14.13 12.62 11.27 9.56 - - - - -
Number of Units 29,663,242 15,460,522 6,915,158 2,106,791 - - - - -
AST T. Rowe Price Asset
Allocation 3
(1994) $15.53 13.30 11.92 9.80 - - - - -
Unit Price 13,524,781 8,863,840 4,868,956 2,320,063 - - - - -
Number of Units
AST T. Rowe Price
International Equity 3
(1994)
Unit Price $11.69 11.70 10.39 9.49 - - - - -
Number of Units 37,784,426 32,628,595 17,935,251 11,166,758 - - - - -
AST T. Rowe Price
Natural Resources 3
(1995)
Unit Price $14.46 14.19 11.01 - - - - - -
Number of Units 7,550,076 6,061,852 808,605 - - - - - -
AST T. Rowe Price
International Bond 3 (2)
(1994)
Unit Price $10.45 10.98 10.51 9.59 - - - - -
Number of Units 12,089,872 8,667,712 4,186,695 1,562,364 - - - - -
AST T. Rowe Price
Small Company Value 3
(1997)
Unit Price $12.70 - - - - - - - -
Number of Units 14,612,510 - - - - - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AST Founders
Passport 3 (3)
(1994)
Unit Price $11.46 11.39 10.23 - - - - - -
Number of Units 9,988,104 9,922,698 2,601,283 - - - - - -
AST INVESCO Equity
Income 3
(1994)
Unit Price $17.31 14.23 12.33 9.61 - - - - -
Number of Units 33,420,274 23,592,226 13,883,712 6,633,333 - - - - -
AST PIMCO Total
Return Bond 3
(1994)
Unit Price $12.44 11.48 11.26 9.61 - - - - -
Number of Units 44,098,036 29,921,643 19,061,840 4,577,708 - - - - -
AST PIMCO Limited
Maturity Bond 3
(1995)
Unit Price $11.26 10.62 10.37 - - - - - -
Number of Units 25,008,310 18,894,375 15,058,644 - - - - - -
AST Oppenheimer
Large-Cap Growth 3 (4)
(1996)
Unit Price $12.33 10.89 - - - - - - -
Number of Units 18,736,994 4,324,161 - - - - - - -
AST American Century
International Growth 3
(1997)
Unit Price $11.35 - - - - - - - -
Number of Units 2,857,188 - - - - - - - -
AST American Century
Strategic Balanced 3
(1997)
Unit Price $11.18 - - - - - - - -
Number of Units 2,560,866 - - - - - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AST Putnam Value
Growth & Income 3
(1997)
Unit Price $12.06 - - - - - - - -
Number of Units 9,523,815 - - - - - - - -
AST Putnam
International Equity 3
(5)
(1989) $22.95 19.70 18.23 16.80 16.60 12.37 13.69 12.98 13.64
Unit Price 17,534,233 17,220,688 14,393,137 14,043,215 9,063,464 1,948,773 1,092,902 398,709 29,858
Number of Units
AST Putnam
Balanced 3 (6)
(1993)
Unit Price $15.98 13.70 12.49 10.34 10.47 - - - -
Number of Units 22,109,373 20,691,852 20,163,848 13,986,604 8,743,758 - - - -
AST Cohen & Steers
Realty 3
(1998) - - - - - - - - -
Unit Price - - - - - - - - -
Number of Units
AST Bankers Trust
Enhanced 500 3
(1998)
Unit Price - - - - - - - - -
Number of Units - - - - - - - - -
AST Marsico Capital
Growth 3
(1997)
Unit Price $10.03 - - - - - - - -
Number of Units 714,309 - - - - - - - -
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AST Neuberger Berman
Mid-Cap Value 3 (7)
(1993)
Unit Price $16.72 13.41 12.20 9.81 10.69 - - - -
Number of Units 11,745,440 9,062,152 8,642,186 7,177,232 5,390,887 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
AST Neuberger Berman
Mid-Cap Growth 3 (8)
(1994)
Unit Price $16.10 13.99 12.20 9.94 - - - - -
Number of Units 11,293,799 9,563,858 3,658,836 301,267 - - - - -
The Alger American
Fund - AA Growth 3
(1988)
Unit Price $43.20 34.84 31.18 23.18 23.18 19.19 17.32 12.51 12.19
Number of Units 15,854,570 15,666,357 12,092,291 5,614,760 2,997,458 1,482,037 559,779 82,302 6,900
The Alger American
Fund - AA MidCap
Growth 3
(1993)
Unit Price $23.76 20.96 19.00 13.34 13.74 - - - -
Number of Units 14,687,032 14,528,945 8,299,743 4,308,374 1,450,892 - - - -
The Montgomery Variable
Series - MV Emerging
Markets 3
(1996)
Unit Price $10.05 10.25 - - - - - - 0
Number of Units 10,371,104 2,360,940 - - - - - - 0
Wells Fargo LAT
Trust - Equity Value 3
(1998)
Unit Price - - - - - - - - 0
Number of Units - - - - - - - - 0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
1. Effective December 31, 1998 Janus Capital Corporation became Sub-advisor of
the Portfolio. Prior to December 31, 1998, Founders Asset Management, LLC
served as the Sub-advisor of the Portfolio. In connection with this change
the portfolio's name is changed to "AST Janus Small-Cap Growth." The
performance information provided in the above chart reflects that of the
Portfolio as sub-advised by the prior Sub-advisor from inception until
December 31, 1998.
2. Effective May 1, 1996, Rowe Price-Fleming International, Inc. became
Sub-advisor of the Portfolio. Prior to May 1, 1996, Scudder, Stevens &
Clark, Inc. served as the Sub-advisor of the Portfolio, then named the "AST
Scudder International Bond Portfolio." The performance information provided
in the above chart reflects that of the Portfolio as sub-advised by the
prior Sub-advisor from inception until May 1, 1996, and the current
Sub-advisor from May 1, 1996 through the current period.
3. Effective October 15, 1996, Founders Asset Management, Inc. became
Sub-advisor of the Portfolio. Prior to October 15, 1996, Seligman Henderson
Co. served as the Sub-advisor of the Portfolio, then named the "Seligman
Henderson International Small Cap Portfolio." The performance information
provided in the above chart reflects that of the Portfolio as sub-advised
by the prior Sub-advisor from inception until October 15, 1996, and the
current Sub-advisor from October 15, 1996 through the current period.
4. Effective December 31, 1998 OppenheimerFunds, Inc. became Sub-advisor of
the Portfolio. Prior to December 31, 1998, Robertson, Stephens & Company
Investment Management, L.P. served as the Sub-advisor of the Portfolio. In
connection with this change the portfolio's name is changed to "AST
Oppenheimer Large Cap Growth." The performance information provided in the
above chart reflects that of the Portfolio as sub-advised by the prior
Sub-advisor from inception until December 31, 1998.
5. Effective October 15, 1996, Putnam Investment Management, Inc. became
Sub-advisor of the Portfolio. Prior to October 15, 1996, Seligman Henderson
Co. served as the Sub-advisor of the Portfolio, then named the "Seligman
Henderson International Equity Portfolio." The performance information
provided in the above chart reflects that of the Portfolio as sub-advised
by the prior Sub-advisor from inception until October 15, 1996 and the
current Sub-advisor from October 15, 1996 through the current period.
6. Effective October 15, 1996, Putnam Investment Management, Inc. became
Sub-advisor of the Portfolio. Prior to October 15, 1996, Phoenix Investment
Counsel, Inc. served as the Sub-advisor of the Portfolio, then named the
"AST Phoenix Balanced Asset Portfolio." The performance information
provided in the above chart reflects that of the Portfolio as sub-advised
by the prior Sub-advisor from inception until October 15, 1996, and the
current Sub-advisor from October 15, 1996 through the current period.
7. Effective May 1, 1998, Neuberger Berman Management, Inc. became Sub-Advisor
to the Portfolio. Prior to May 1, 1998, Federated Investment Counseling
served as Sub-advisor of the Portfolio, then named the "Federated Utility
Income Portfolio." As of May 1, 1998 various changes have been made to the
Portfolio's investment objective and to its fundamental and non-fundamental
investment restrictions.
8. Effective May 1, 1998, Neuberger Berman Management, Inc. became Sub-Advisor
to the Portfolio. Prior to May 1, 1998, Berger Associates, Inc. served as
Sub-advisor to the Portfolio, then named the "Berger Capital Growth
Portfolio." As of May 1, 1998 various changes have been made to the
Portfolio's investment objective and to its fundamental and non-fundamental
investment restrictions.
<PAGE>
American Skandia Life Assurance Corporation
Attention: Concierge Desk
For Written Requests:
P.O. Box 883
Shelton, Connecticut 06484
For Electronic Requests:
[email protected]
For Requests by Phone:
1-800-752-6342
- --------------------------------------------------------------------------------
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT CONTAINS FURTHER
DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY DESCRIBED IN PROSPECTUS [NIKE-PROS]
ASI-PROS (05/99).
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
-------------------------------------------------------
(print your name)
-------------------------------------------------------
(address)
-------------------------------------------------------
(city/state/zip code)
<PAGE>
ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
at
P.O. Box 883
Shelton, Connecticut 06484
or
[email protected]
Issued by: Serviced at:
AMERICAN SKANDIA LIFE AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION ASSURANCE CORPORATION
One Corporate Drive P.O. Box 883
Shelton, Connecticut 06484 Shelton, Connecticut 06484
Telephone: 1-800-752-6342 Telephone: 1-800-752-6342
http://www.AmericanSkandia.com http://www.AmericanSkandia.com
Distributed by:
AMERICAN SKANDIA MARKETING, INCORPORATED
One Corporate Drive
Shelton, Connecticut 06484
Telephone: 203-926-1888
http://www.AmericanSkandia.com
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution: Not Applicable.
Item 15. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut General Statutes, the Registrant must indemnify a director or
officer against judgments, fines, penalties, amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought against him in his capacity as a director or officer when certain
disinterested parties determine that he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Registrant. In any
criminal action or proceeding, it also must be determined that the director or
officer had no reason to believe his conduct was unlawful. The director or
officer must also be indemnified when he is successful on the merits in the
defense of a proceeding or in circumstances where a court determines that he is
fairly and reasonable entitled to be indemnified, and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged not to have breached this duty to the Registrant or a court must
determine that he is fairly and reasonably entitled to be indemnified and must
approve the amount. In a claim based upon the director's or officer's purchase
or sale of the Registrants' securities, the director or officer may obtain
indemnification only if a court determines that, in view of all the
circumstances, he is fairly and reasonably entitled to be indemnified and then
for such amount as the court shall determine. The By-Laws of American Skandia
Life Assurance Corporation ("ASLAC") also provide directors and officers with
rights of indemnification, consistent with Connecticut Law.
The foregoing statements are subject to the provisions of Section 33-320a.
Directors and officers of ASLAC and American Skandia Marketing, Incorporated,
("ASM, Inc."), can also be indemnified pursuant to Indemnity Agreements between
each director and officer and American Skandia Investment Holding Corporation, a
corporation organized under the laws of the state of Delaware. The provisions of
the Indemnity Agreement are governed by Section 45 of the General Corporation
Law of the State of Delaware.
The directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers liability insurance policy issued by an unaffiliated insurance
company and an insurance policy issued to Skandia Insurance Company Ltd., their
ultimate parent. Such policy will reimburse ASLAC or ASM, Inc., as applicable,
for any payments that it shall make to directors and officers pursuant to law
and, subject to certain exclusions contained in the policy, will pay any other
costs, charges and expenses, settlements and judgments arising from any
proceeding involving any director or officer of ASLAC or ASM, Inc., as
applicable, in his or her past or present capacity as such.
<TABLE>
<CAPTION>
Item 16 Exhibits:
<S> <C> <C> <C> <C>
Exhibits Page
1 Underwriting agreement, incorporated by reference to Post-Effective Amendment No. 1
to Registration Statement No. 333-25733, filed via EDGAR March 2, 1998
2 Plan of acquisition, reorganization, arrangement, liquidation or succession Not applicable
3 Articles of incorporation and by-laws, incorporated by reference to
Post-Effective Amendment No. 6 to Registration Statement No. 33-87010,
filed via EDGAR March 2, 1998
4 Instruments defining the rights of security holders, including
indentures incorporated by reference to Post-Effective Amendment No. 2
to Registration Statement No. 33-86866, filed via EDGAR April 29, 1996
5 Opinion re legality (included as Exhibit 23b)
6 - 9 Not applicable
10 Material contracts (Investment Management Agreement)
(a) Agreement with J.P. Morgan Investment Management Inc. incorporated by reference to Post-Effective
Amendment No. 1 to Registration Statement No. 333-00941, filed via EDGAR February 25, 1997
(b) Agreement with Fleet Investment Advisors Inc., incorporated by reference to Post-Effective Amendment
No. 1 to Registration Statement No. 333-00941, filed via EDGAR February 25, 1997
11 - 22 Not applicable
23a (1) Consent of Ernst & Young LLP TO BE FILED BY AMENDMENT
(2) Consent of Deloitte & Touche LLP TO BE FILED BY AMENDMENT
23b Opinion & Consent of Werner & Kennedy TO BE FILED BY AMENDMENT
24 Power of Attorney
Directors Boronow, Campbell, Carendi, Danckwardt, Dokken, Sutyak,
Mazzaferro, Moberg, Soderstrom, Tracy, Svensson, Brunetti, and Collins
filed via EDGAR in the initial Registration Statement to Registration
Statement No. 333-25733, filed April 24, 1997
25 - 28 Not applicable
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
An index to the financial statement schedules is omitted because it is not
required or is not applicable.
Item 17. Undertakings: The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
post-effective amendments to this registration statement:
(i) To include any prospectus required by section 10 (a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
- --------------------------------------------------------------------------------
LEGAL EXPERTS: Counsel with respect to Federal laws and regulations applicable
to the issue and sale of the Annuities and with respect to Connecticut law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Shelton, State of Connecticut, March 1, 1999.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Registrant
By:/s/ Kathleen A. Chapman Attest:/s/ Soctt K. Richardson
Kathleen A. Chapman, Assistant Corporate Secretary Scott K. Richardson
<TABLE>
<CAPTION>
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
Signature Title Date
<S> <C> <C>
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, March 1, 1999
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer)
/s/ Thomas M. Mazzaferro Executive Vice President and March 1, 1999
Thomas M. Mazzaferro Chief Financial Officer
(Principal Accounting Officer)
/s/ David R. Monroe Treasurer, Vice President and March 1, 1999
David R. Monroe Controller
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro* Gunnar Moberg* Bayard F. Tracy*
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom* C. Ake Svensson* Lincoln R. Collins**
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
Nancy F. Brunetti*
Nancy F. Brunetti
*By: /s/Kathleen A. Chapman
Kathleen A. Chapman
<FN>
*Pursuant to Powers of Attorney filed with Initial Registration Statement No. 333-25733
</FN>
</TABLE>
