THIS PROSPECTUS DESCRIBES A TYPE OF VARIABLE ANNUITY (THE "ANNUITY") BEING
OFFERED BY AMERICAN SKANDIA LIFE ASSURANCE CORPORATION ("WE", "OUR" OR "US"),
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT, 06484. THIS FLEXIBLE PREMIUM
ANNUITY MAY BE OFFERED AS INTERESTS IN A GROUP ANNUITY OR AS INDIVIDUAL
CONTRACTS. THE TABLE OF CONTENTS IS ON PAGE 4. DEFINITIONS APPLICABLE TO THIS
PROSPECTUS ARE ON PAGE 6. THE HIGHLIGHTS OF THIS OFFERING ARE DESCRIBED
BEGINNING ON PAGE 8. THIS PROSPECTUS CONTAINS A DETAILED DISCUSSION OF MATTERS
YOU SHOULD CONSIDER BEFORE PURCHASING THIS ANNUITY. A STATEMENT OF ADDITIONAL
INFORMATION HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. IT IS
AVAILABLE FROM US WITHOUT CHARGE UPON REQUEST. THE CONTENTS OF THE STATEMENT
OF ADDITIONAL INFORMATION ARE DESCRIBED ON PAGE 38. THE ANNUITY OR CERTAIN OF
ITS INVESTMENT OPTIONS MAY NOT BE AVAILABLE IN ALL JURISDICTIONS. VARIOUS
RIGHTS AND BENEFITS MAY DIFFER BETWEEN JURISDICTIONS TO MEET APPLICABLE LAWS
AND/OR REGULATIONS.
A Purchase Payment for this Annuity may be assessed all or some of the
following charges, if applicable: (a) a sales charge (see "Sales Charge"); (b)
a maintenance fee (see "Maintenance Fee"); and (c) a tax charge (see "Tax
Charges"). It is then allocated to the investment options you select, except
in certain jurisdictions where allocations of initial Purchase Payments are
temporarily allocated to the AST Money Market 2 Sub-account (see "Allocation of
Your Initial Net Purchase Payment"). However, Purchase Payments received
during the "free-look" period may be allocated to other Sub-accounts under
certain conditions (see "Allocation of Net Purchase Payments"). You may
transfer Account Value between investment options (see "Investment Options" and
"Transfers"). Account Value may be distributed as periodic annuity payments in
a "payout phase". Such annuity payments can be guaranteed for life (see
"Annuity Payments"). During the "accumulation phase" (the period before any
payout phase), you may surrender the Annuity for its Account Value or make
withdrawals (see "Distributions"). Such distributions may be subject to tax,
including a tax penalty. A death benefit may be payable during the
accumulation phase (see "Death Benefit").
Account Value increases or decreases daily to reflect investment performance
and the deduction of charges. No minimum amount is guaranteed (see "Account
Value"). The investment options, which we may change, are Class 2 Sub-accounts
of American Skandia Life Assurance Corporation Variable Account B ("Separate
Account B") (see "Operations of the Separate Account"). Various charges are
assessed against the assets in the Sub-accounts. Each Sub-account invests
exclusively in an underlying mutual fund or a portfolio of an underlying mutual
fund. As of the date of this Prospectus, the underlying mutual funds (and the
portfolios of such underlying mutual funds in which Sub-accounts offered
pursuant to this Prospectus invest) are: (a) American Skandia Trust
(portfolios - JanCap Growth, Lord Abbett Growth and Income, Seligman Henderson
International Equity, Seligman Henderson International Small Cap, AST Money
Market, Federated Utility Income, Federated High Yield, AST Phoenix Balanced
Asset, AST Phoenix Capital Growth, T. Rowe Price Asset Allocation, T. Rowe
Price International Equity, T. Rowe Price Natural Resources, Founders Capital
Appreciation, INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited
Maturity Bond, Eagle Growth Equity, AST Scudder International Bond, and Berger
Capital Growth); (b) The Alger American Fund (portfolios - Growth, Small
Capitalization, MidCap Growth); (c) Alliance Variable Products Series Fund,
Inc. (portfolios - Short-Term Multi-Market, Growth and Income, Premier Growth,
U.S. Government/High Grade Securities, International, Total Return); (d)
Neuberger & Berman Advisers Management Trust (series - Growth, Limited Maturity
Bond, Balanced, Partners); (e) Scudder Variable Life Investment Fund
(portfolios - Bond, Capital Growth, Balanced, International); and (f) Janus
Aspen Series (portfolios - Growth, Aggressive Growth, Worldwide Growth,
Balanced, Flexible Income, Short-Term Bond).
We intend to cease offering certain Sub-accounts and their underlying mutual
fund portfolios as variable investment options under the Annuity. As of the
date of this Prospectus, we are in the process of seeking the necessary
regulatory approvals to substitute alternative Sub-accounts and their
underlying mutual fund portfolios for the Sub-accounts/portfolios we cease to
make available as investment options under the Annuity. (see "INVESTMENT
OPTIONS") You should take this into consideration when selecting any
investment options under the Annuity.
The Annuity is designed to be used with investment allocation services.
Providers of such services assist you in making allocation and transfer
decisions, or are engaged by you to make allocation and transfer decisions on
your behalf. You should consider whether such services are appropriate for
your needs.
(continued on page 2)
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 KEEP IT FOR FUTURE REFERENCE.
FOR FURTHER INFORMATION CALL 1-800-752-6342
Prospectus Dated: May 1, 1995Statement of Additional Information Dated: May
1, 1995
AD-PROS (05/95)
We guarantee fixed annuity payments. We also guarantee any adjustable annuity
payments we may make available (see "Annuity Payments").
Taxes on gains during the accumulation phase may be deferred until you begin to
take distributions from your Annuity. Distributions before age 59 1/2 may be
subject to a tax penalty. In the payout phase, a portion of each annuity
payment may be treated as a return of your "investment in the contract" until
it is completely recovered. Transfers between investment options are not
subject to taxation. The Annuity may also qualify for special tax treatment
under certain Sections of the Code, including, but not limited to, Sections
401, 403 or 408 (see "Certain Tax Considerations").
Purchase payments under these Annuities are not deposits or obligations of, or
guaranteed or endorsed by, any bank or bank subsidiary and are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve
Board, or any other agency.
Supplement to Prospectus Dated May 1, 1995
Supplement Dated May 1, 1995
This Supplement is to be placed immediately preceding the Table of Contents of
the Prospectus.
The Prospectus to which this supplement is added noted in the sections entitled
"Sales Charge" and "Death Benefit" that any sales charge and the specified rate
at which the minimum death benefit increases are specified immediately preceding
the Table of Contents. This Supplement provides such information for the type
of Annuity being offered to you, as follows:
The sales charge is 1.50% of each Purchase Payment.
The specified rate at which the minimum death benefit increases is 5% per year,
compounded yearly. Additional details are provided in the section entitled
"Death Benefit".
AD-SL-SUPP (5/95)
TABLE OF CONTENTS
DEFINITIONS 6
HIGHLIGHTS 8
AVAILABLE INFORMATION 9
CONTRACT EXPENSE SUMMARY 10
EXPENSE EXAMPLES 13
CONDENSED FINANCIAL INFORMATION 15
UNIT PRICES AND NUMBERS OF UNITS 15
YIELDS ON MONEY MARKET SUB-ACCOUNT 17
INVESTMENT OPTIONS 18
INVESTMENT ALLOCATION SERVICES 20
OPERATIONS OF THE SEPARATE ACCOUNT 20
INSURANCE ASPECTS OF THE ANNUITY 21
CHARGES ASSESSABLE AGAINST THE ANNUITY 21
SALES CHARGE 21
MAINTENANCE FEE 22
TAX CHARGES 22
TRANSFER FEE 22
ALLOCATION OF ANNUITY CHARGES 22
CHARGES ASSESSED AGAINST THE ASSETS 22
ADMINISTRATION CHARGE 22
MORTALITY AND EXPENSE RISK CHARGES 23
CHARGES OF THE UNDERLYING MUTUAL FUNDS 23
PURCHASING ANNUITIES 23
USES OF THE ANNUITY 23
APPLICATION AND INITIAL PAYMENT 23
BANK DRAFTING 24
RIGHT TO RETURN THE ANNUITY 24
ALLOCATION OF NET PURCHASE PAYMENTS 24
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS 24
ACCOUNT VALUE 25
RIGHTS, BENEFITS AND SERVICES 25
ADDITIONAL PURCHASE PAYMENTS 25
CHANGING REVOCABLE DESIGNATIONS 26
ALLOCATION RULES 26
TRANSFERS 26
DOLLAR COST AVERAGING 27
REBALANCING 27
DISTRIBUTIONS 27
SURRENDER 28
PARTIAL WITHDRAWALS 28
SYSTEMATIC WITHDRAWALS 28
MINIMUM DISTRIBUTIONS 28
DEATH BENEFIT 28
ANNUITY PAYMENTS 29
QUALIFIED PLAN WITHDRAWAL LIMITATIONS 30
PRICING OF TRANSFERS AND DISTRIBUTIONS 31
VOTING RIGHTS 31
TRANSFERS, ASSIGNMENTS OR PLEDGES 31
REPORTS TO YOU 32
THE COMPANY 32
CERTAIN TAX CONSIDERATIONS 32
OUR TAX CONSIDERATIONS 32
TAX CONSIDERATIONS RELATING TO YOUR ANNUITY 32
NON-NATURAL PERSONS 32
NATURAL PERSONS 32
DISTRIBUTIONS 32
ASSIGNMENTS AND PLEDGES 33
PENALTY ON DISTRIBUTIONS 33
ANNUITY PAYMENTS 33
GIFTS 34
TAX FREE EXCHANGES 34
TRANSFERS BETWEEN INVESTMENT OPTIONS 34
GENERATION-SKIPPING TRANSFERS 34
DIVERSIFICATION 34
FEDERAL INCOME TAX WITHHOLDING 34
TAX CONSIDERATIONS WHEN USING ANNUITIES IN CONJUNCTION WITH
QUALIFIED PLANS 34
INDIVIDUAL RETIREMENT PROGRAMS 35
TAX SHELTERED ANNUITIES 35
CORPORATE PENSION AND PROFIT-SHARING PLANS 35
H.R. 10 PLANS 35
TAX TREATMENT OF DISTRIBUTIONS FROM QUALIFIED ANNUITIES 35
SECTION 457 PLANS 35
SALE OF THE ANNUITIES 36
DISTRIBUTION 36
ADVERTISING 36
OTHER MATTERS 37
DEFERRAL OF TRANSACTIONS 37
RESOLVING MATERIAL CONFLICTS 37
MODIFICATION 37
MISSTATEMENT OF AGE OR SEX 38
ENDING THE OFFER 38
LEGAL PROCEEDINGS 38
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION 38
APPENDIX A SHORT DESCRIPTION OF THE UNDERLYING MUTUAL FUNDS'
PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES 39
.BEGIN TABLE C.
DEFINITIONS: THE FOLLOWING ARE KEY TERMS USED IN THIS PROSPECTUS. OTHER TERMS
ARE DEFINED IN THIS PROSPECTUS AS THEY APPEAR.
ACCOUNT VALUE IS THE VALUE OF EACH ALLOCATION TO A SUB-ACCOUNT PRIOR TO THE
ANNUITY DATE, PLUS ANY EARNINGS, AND/OR LESS ANY LOSSES, DISTRIBUTIONS AND
CHARGES THEREON. ACCOUNT VALUE IS DETERMINED SEPARATELY FOR EACH SUB-ACCOUNT,
AND THEN TOTALLED TO DETERMINE ACCOUNT VALUE FOR YOUR ENTIRE ANNUITY.
ADVISOR IS A PERSON OR ENTITY: (A) REGISTERED AS SUCH UNDER THE INVESTMENT
ADVISERS ACT OF 1940 AND, WHERE APPLICABLE, UNDER EQUIVALENT STATE LAW OR
REGULATION REGARDING THE REGISTRATION AND REGULATION OF INVESTMENT ADVISORS; OR
(B) THAT MAY PROVIDE INVESTMENT ADVISORY SERVICES BUT IS EXEMPT FROM SUCH
REGISTRATION.
ANNUITANT IS THE PERSON UPON WHOSE LIFE YOUR ANNUITY IS WRITTEN.
ANNUITY IS THE TYPE OF ANNUITY BEING OFFERED PURSUANT TO THIS PROSPECTUS. IT
IS ALSO, IF ISSUED, THE CERTIFICATE EVIDENCING YOUR PARTICIPATION IN A GROUP
ANNUITY OR AN INDIVIDUAL ANNUITY CONTRACT. IT ALSO REPRESENTS AN ACCOUNT WE
SET UP AND MAINTAIN TO TRACK OUR OBLIGATIONS TO YOU.
ANNUITY DATE IS THE DATE ANNUITY PAYMENTS ARE TO COMMENCE.
ANNUITY YEARS ARE CONTINUOUS 12-MONTH PERIODS COMMENCING ON THE ISSUE DATE AND
EACH ANNIVERSARY OF THE ISSUE DATE.
APPLICATION IS THE ENROLLMENT FORM OR APPLICATION FORM WE MAY REQUIRE YOU TO
SUBMIT FOR AN ANNUITY.
BENEFICIARY IS A PERSON DESIGNATED AS THE RECIPIENT OF THE DEATH BENEFIT.
CODE IS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED FROM TIME-TO-TIME.
CONTINGENT ANNUITANT IS THE PERSON NAMED TO BECOME THE ANNUITANT ON THE
ANNUITANT'S DEATH PRIOR TO THE ANNUITY DATE.
IN WRITING IS IN A WRITTEN FORM SATISFACTORY TO US AND FILED AT THE OFFICE.
ISSUE DATE IS THE EFFECTIVE DATE OF YOUR ANNUITY.
MINIMUM DISTRIBUTIONS ARE MINIMUM AMOUNTS THAT MUST BE DISTRIBUTED EACH YEAR
FROM AN ANNUITY IF USED IN RELATION TO CERTAIN QUALIFIED PLANS UNDER THE CODE.
NET PURCHASE PAYMENT IS A PURCHASE PAYMENT LESS ANY APPLICABLE SALES CHARGE,
INITIAL MAINTENANCE FEE AND/OR CHARGE FOR TAXES.
OFFICE IS OUR BUSINESS OFFICE, AMERICAN SKANDIA LIFE ASSURANCE CORPORATION, P.
O. BOX 883, ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484.
OWNER IS EITHER AN ELIGIBLE ENTITY OR PERSON NAMED AS HAVING OWNERSHIP RIGHTS
IN RELATION TO AN ANNUITY ISSUED AS AN INDIVIDUAL CONTRACT. AN ANNUITY MAY BE
ISSUED AS A CERTIFICATE EVIDENCING INTEREST IN A GROUP ANNUITY CONTRACT. IF
SO, THE RIGHTS, BENEFITS AND REQUIREMENTS OF AND THE EVENTS RELATING TO AN
OWNER, AS DESCRIBED IN THIS PROSPECTUS, WILL BE THE RIGHTS, BENEFITS
REQUIREMENTS OF AND EVENTS RELATING TO THE PERSON OR ENTITY DESIGNATED AS THE
PARTICIPANT IN SUCH CERTIFICATE.
PURCHASE PAYMENT IS A CASH CONSIDERATION YOU GIVE TO US FOR CERTAIN RIGHTS,
PRIVILEGES AND BENEFITS PROVIDED UNDER AN ANNUITY ACCORDING TO ITS TERMS.
SUB-ACCOUNT IS A DIVISION OF SEPARATE ACCOUNT B. WE USE SUB-ACCOUNTS TO
CALCULATE VARIABLE BENEFITS UNDER THIS ANNUITY AND CERTAIN OTHER ANNUITIES WE
OFFER.
SYSTEMATIC WITHDRAWAL IS ONE OF A PLAN OF PERIODIC WITHDRAWALS OF ACCOUNT VALUE
DURING THE ACCUMULATION PHASE. SUCH A PLAN IS SUBJECT TO OUR RULES.
UNIT IS A MEASURE USED TO CALCULATE YOUR ACCOUNT VALUE IN A SUB-ACCOUNT PRIOR
TO THE ANNUITY DATE.
UNIT PRICE IS USED FOR CALCULATING: (A) THE NUMBER OF UNITS ALLOCATED TO A SUB-
ACCOUNT; AND (B) THE VALUE OF TRANSACTIONS INTO OR OUT OF A SUB-ACCOUNT OR
BENEFITS BASED ON ACCOUNT VALUE IN A SUB-ACCOUNT PRIOR TO THE ANNUITY DATE.
EACH SUB-ACCOUNT HAS ITS OWN UNIT PRICE WHICH WILL VARY EACH VALUATION PERIOD
TO REFLECT THE INVESTMENT EXPERIENCE OF THAT SUB-ACCOUNT.
VALUATION DAY IS EVERY DAY THE NEW YORK STOCK EXCHANGE IS OPEN FOR TRADING OR
ANY OTHER DAY THAT THE SECURITIES AND EXCHANGE COMMISSION REQUIRES MUTUAL FUNDS
OR UNIT INVESTMENT TRUSTS TO BE VALUED.
VALUATION PERIOD IS THE PERIOD OF TIME BETWEEN THE CLOSE OF BUSINESS OF THE NEW
YORK STOCK EXCHANGE ON SUCCESSIVE VALUATION DAYS.
"WE", "US", OR "OUR" MEANS AMERICAN SKANDIA LIFE ASSURANCE CORPORATION.
"YOU" OR "YOUR" MEANS THE OWNER.
HIGHLIGHTS: THE FOLLOWING ARE ONLY THE HIGHLIGHTS OF THE ANNUITY BEING OFFERED
PURSUANT TO THIS PROSPECTUS. A MORE DETAILED DESCRIPTION FOLLOWS THESE
HIGHLIGHTS.
(1) INVESTMENT OPTIONS: WE CURRENTLY OFFER MULTIPLE INVESTMENT OPTIONS
IN THE ACCUMULATION PHASE. EACH OF THESE INVESTMENT OPTIONS IS A CLASS 2 SUB-
ACCOUNT OF SEPARATE ACCOUNT B. EACH SUB-ACCOUNT INVESTS EXCLUSIVELY IN AN
UNDERLYING MUTUAL FUND OR A PORTFOLIO OF AN UNDERLYING MUTUAL FUND. THE
UNDERLYING MUTUAL FUND PORTFOLIOS ARE MANAGED BY VARIOUS INVESTMENT ADVISORS,
AND IN CERTAIN CASES, VARIOUS SUB-ADVISORS. A SHORT DESCRIPTION OF THE
INVESTMENT OBJECTIVES AND POLICIES IS FOUND IN APPENDIX A. CERTAIN INVESTMENT
OPTIONS MAY NOT BE AVAILABLE IN ALL JURISDICTIONS.
AS OF THE DATE OF THIS PROSPECTUS, THE UNDERLYING MUTUAL FUNDS (AND THE
PORTFOLIOS OF SUCH UNDERLYING MUTUAL FUNDS IN WHICH SUB-ACCOUNTS OFFERED
PURSUANT TO THIS PROSPECTUS INVEST) ARE: (A) AMERICAN SKANDIA TRUST
(PORTFOLIOS - JANCAP GROWTH, LORD ABBETT GROWTH AND INCOME, SELIGMAN HENDERSON
INTERNATIONAL EQUITY, SELIGMAN HENDERSON INTERNATIONAL SMALL CAP, AST MONEY
MARKET, FEDERATED UTILITY INCOME, FEDERATED HIGH YIELD, AST PHOENIX BALANCED
ASSET, AST PHOENIX CAPITAL GROWTH, T. ROWE PRICE ASSET ALLOCATION, T. ROWE
PRICE INTERNATIONAL EQUITY, T. ROWE PRICE NATURAL RESOURCES, FOUNDERS CAPITAL
APPRECIATION, INVESCO EQUITY INCOME, PIMCO TOTAL RETURN BOND, PIMCO LIMITED
MATURITY BOND, EAGLE GROWTH EQUITY, AST SCUDDER INTERNATIONAL BOND, AND BERGER
CAPITAL GROWTH); (B) THE ALGER AMERICAN FUND (PORTFOLIOS - GROWTH, SMALL
CAPITALIZATION, MIDCAP GROWTH); (C) ALLIANCE VARIABLE PRODUCTS SERIES FUND,
INC. (PORTFOLIOS - SHORT-TERM MULTI-MARKET, GROWTH AND INCOME, PREMIER GROWTH,
U.S. GOVERNMENT/HIGH GRADE SECURITIES, INTERNATIONAL, TOTAL RETURN); (D)
NEUBERGER & BERMAN ADVISERS MANAGEMENT TRUST (SERIES - GROWTH, LIMITED MATURITY
BOND, BALANCED, PARTNERS); (E) SCUDDER VARIABLE LIFE INVESTMENT FUND
(PORTFOLIOS - BOND, CAPITAL GROWTH, BALANCED, INTERNATIONAL); AND (F) JANUS
ASPEN SERIES (PORTFOLIOS - GROWTH, AGGRESSIVE GROWTH, WORLDWIDE GROWTH,
BALANCED, FLEXIBLE INCOME, SHORT-TERM BOND).
(2) OPERATIONS OF THE SEPARATE ACCOUNT: IN THE ACCUMULATION PHASE, THE
ASSETS SUPPORTING THE ACCOUNT VALUES MAINTAINED IN THE SUB-ACCOUNTS ARE HELD IN
OUR SEPARATE ACCOUNT B. THESE SUB-ACCOUNTS ARE ALL CLASS 2 SUB-ACCOUNTS OF
SEPARATE ACCOUNT B. VALUES AND BENEFITS BASED ON THESE SUB-ACCOUNTS ARE NOT
GUARANTEED AND WILL VARY WITH THE INVESTMENT PERFORMANCE OF THE UNDERLYING
MUTUAL FUND PORTFOLIOS. IN THE PAYOUT PHASE, FIXED ANNUITY PAYMENTS, AND ANY
ADJUSTABLE ANNUITY PAYMENTS WE MAY MAKE AVAILABLE, ARE GUARANTEED BY OUR
GENERAL ACCOUNT. FOR MORE INFORMATION, SEE THE SECTION ENTITLED OPERATIONS OF
THE SEPARATE ACCOUNT.
(3) INSURANCE ASPECTS OF THE ANNUITY: THERE ARE INSURANCE RISKS WHICH WE
BEAR IN RELATION TO THE ANNUITY. FOR MORE INFORMATION, SEE THE SECTION
ENTITLED INSURANCE ASPECTS OF THE ANNUITY.
(4) CHARGES ASSESSABLE AGAINST THE ANNUITY: THE ANNUITY CHARGES WHICH
MAY BE ASSESSABLE UNDER CERTAIN CIRCUMSTANCES ARE A SALES CHARGE, A MAINTENANCE
FEE, A CHARGE FOR TAXES AND A TRANSFER FEE. THESE CHARGES ARE ALLOCATED
ACCORDING TO OUR RULES. WE MAY ALSO CHARGE FOR CERTAIN SPECIAL SERVICES. FOR
MORE INFORMATION, SEE THE SECTION ENTITLED CHARGES ASSESSABLE AGAINST THE
ANNUITY, INCLUDING THE FOLLOWING SUBSECTIONS: (A) SALES CHARGE; (B)
MAINTENANCE FEE; (C) TAX CHARGES; (D) TRANSFER FEE; AND (E) ALLOCATION OF
ANNUITY CHARGES.
(5) CHARGES ASSESSED AGAINST THE ASSETS: THE CHARGES ASSESSED AGAINST
ASSETS IN THE SUB-ACCOUNTS ARE THE ADMINISTRATION CHARGE, THE MORTALITY AND
EXPENSE RISK CHARGES AND THE INVESTMENT ALLOCATION SERVICES CHARGE. FOR MORE
INFORMATION, SEE THE SECTION ENTITLED CHARGES ASSESSED AGAINST THE ASSETS,
INCLUDING THE FOLLOWING SUBSECTIONS: (A) ADMINISTRATION CHARGE; AND (B)
MORTALITY AND EXPENSE RISK CHARGES.
(6) CHARGES OF THE UNDERLYING MUTUAL FUNDS: EACH UNDERLYING MUTUAL FUND
PORTFOLIO ASSESSES VARIOUS CHARGES, INCLUDING CHARGES FOR INVESTMENT MANAGEMENT
AND INVESTMENT ADVISORY FEES. THESE CHARGES GENERALLY DIFFER BETWEEN
PORTFOLIOS WITHIN AN UNDERLYING MUTUAL FUND. YOU WILL FIND ADDITIONAL DETAILS
IN THE FUND PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION.
(7) PURCHASING ANNUITIES: ANNUITIES ARE AVAILABLE FOR MULTIPLE USES,
INCLUDING AS A FUNDING VEHICLE FOR VARIOUS RETIREMENT PROGRAMS WHICH QUALIFY
FOR SPECIAL TREATMENT UNDER THE CODE. WE MAY REQUIRE A PROPERLY COMPLETED
APPLICATION, AN ACCEPTABLE PURCHASE PAYMENT, AND ANY OTHER MATERIALS WE REQUIRE
UNDER OUR UNDERWRITING RULES BEFORE WE AGREE TO ISSUE AN ANNUITY. YOU HAVE THE
RIGHT TO RETURN AN ANNUITY WITHIN A "FREE-LOOK" PERIOD IF YOU ARE NOT SATISFIED
WITH IT. IN MOST JURISDICTIONS, THE INITIAL PURCHASE PAYMENT IS ALLOCATED
ACCORDING TO YOUR INSTRUCTIONS. IN JURISDICTIONS THAT REQUIRE A "FREE-LOOK"
PROVISION SUCH THAT, IF THE ANNUITY IS RETURNED UNDER THAT PROVISION, WE MUST
RETURN AT LEAST YOUR PURCHASE PAYMENTS LESS ANY WITHDRAWALS, WE TEMPORARILY
ALLOCATE THE INITIAL PURCHASE PAYMENT AND ANY OTHER PURCHASE PAYMENTS RECEIVED
DURING THE "FREE-LOOK" PERIOD TO THE AST MONEY MARKET 2 SUB-ACCOUNT. WHERE
PERMITTED BY LAW IN SUCH JURISDICTIONS, WE WILL ALLOCATE SUCH PURCHASE PAYMENTS
ACCORDING TO YOUR INSTRUCTIONS WITHOUT ANY TEMPORARY ALLOCATION TO THE AST
MONEY MARKET 2 SUB-ACCOUNT, IF YOU EXECUTE A RETURN WAIVER. CERTAIN
DESIGNATIONS MUST BE MADE, INCLUDING AN OWNER AND AN ANNUITANT. YOU ALSO MAY
MAKE CERTAIN OTHER DESIGNATIONS THAT APPLY TO THE ANNUITY IF ISSUED. THESE
DESIGNATIONS INCLUDE A CONTINGENT OWNER, A CONTINGENT ANNUITANT, A BENEFICIARY,
AND A CONTINGENT BENEFICIARY. SEE THE SECTION ENTITLED PURCHASING ANNUITIES,
INCLUDING THE FOLLOWING SUBSECTIONS: (A) USES OF THE ANNUITY; (B) APPLICATION
AND INITIAL PAYMENT; (C) RIGHT TO RETURN THE ANNUITY; (D) ALLOCATION OF NET
PURCHASE PAYMENTS; AND (E) OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS.
(8) ACCOUNT VALUE: IN THE ACCUMULATION PHASE YOUR ANNUITY HAS AN ACCOUNT
VALUE. YOUR TOTAL ACCOUNT VALUE AS OF A PARTICULAR DATE IS THE SUM OF YOUR
ACCOUNT VALUE IN EACH SUB-ACCOUNT. TO DETERMINE YOUR ACCOUNT VALUE IN EACH SUB-
ACCOUNT, WE MULTIPLY THE UNIT PRICE AS OF THE VALUATION PERIOD FOR WHICH THE
CALCULATION IS BEING MADE TIMES THE NUMBER OF UNITS ATTRIBUTABLE TO YOU IN THAT
SUB-ACCOUNT AS OF THAT VALUATION PERIOD. FOR MORE INFORMATION, SEE THE SECTION
ENTITLED ACCOUNT VALUE.
(9) RIGHTS, BENEFITS AND SERVICES: YOU HAVE A NUMBER OF RIGHTS AND
BENEFITS UNDER AN ANNUITY ONCE ISSUED. WE ALSO CURRENTLY PROVIDE A NUMBER OF
SERVICES TO OWNERS. THESE RIGHTS, BENEFITS AND SERVICES ARE SUBJECT TO A
NUMBER OF RULES AND CONDITIONS. THESE RIGHTS, BENEFITS AND SERVICES INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DESCRIBED IN THIS PROSPECTUS. WE ACCEPT
ADDITIONAL PURCHASE PAYMENTS DURING THE ACCUMULATION PHASE. ADDITIONAL
PURCHASE PAYMENTS MAY BE MADE USING BANK DRAFTING. YOU MAY CHANGE REVOCABLE
DESIGNATIONS. YOU MAY TRANSFER ACCOUNT VALUES BETWEEN INVESTMENT OPTIONS.
TRANSFERS IN EXCESS OF 12 PER ANNUITY YEAR ARE SUBJECT TO A FEE. WE OFFER
DOLLAR COST AVERAGING AND MAY OFFER REBALANCING DURING THE ACCUMULATION PHASE
(SEE "DOLLAR COST AVERAGING" AND "REBALANCING"). DURING THE ACCUMULATION
PHASE, SURRENDER AND PARTIAL WITHDRAWALS ARE AVAILABLE. IN THE ACCUMULATION
PHASE WE OFFER SYSTEMATIC WITHDRAWALS AND, FOR ANNUITIES USED IN QUALIFIED
PLANS, MINIMUM DISTRIBUTIONS. WE OFFER FIXED ANNUITY OPTIONS, AND MAY OFFER
ADJUSTABLE ANNUITY OPTIONS, THAT CAN GUARANTEE PAYMENTS FOR LIFE. IN THE
ACCUMULATION PHASE, A DEATH BENEFIT MAY BE PAYABLE. YOU MAY TRANSFER OR ASSIGN
YOUR ANNUITY, UNLESS SUCH RIGHTS ARE LIMITED IN CONJUNCTION WITH CERTAIN USES
OF THE ANNUITY. YOU MAY EXERCISE CERTAIN VOTING RIGHTS IN RELATION TO THE
UNDERLYING MUTUAL FUND PORTFOLIOS IN WHICH THE SUB-ACCOUNTS INVEST. YOU HAVE
THE RIGHT TO RECEIVE CERTAIN REPORTS PERIODICALLY.
FOR ADDITIONAL INFORMATION, SEE THE SECTION ENTITLED RIGHTS, BENEFITS AND
SERVICES INCLUDING THE FOLLOWING SUBSECTIONS: (A) ADDITIONAL PURCHASE
PAYMENTS; (B) BANK DRAFTING; (C) CHANGING REVOCABLE DESIGNATIONS; (D)
ALLOCATION RULES; (E) TRANSFERS; (F) DOLLAR COST AVERAGING; (G) REBALANCING;
(H) DISTRIBUTIONS (INCLUDING: (I) SURRENDER; (II) PARTIAL WITHDRAWALS; (III)
SYSTEMATIC WITHDRAWALS; (IV) MINIMUM DISTRIBUTIONS; (V) DEATH BENEFIT; (VI)
ANNUITY PAYMENTS; AND (VII) QUALIFIED PLAN WITHDRAWAL LIMITATIONS); (I) PRICING
OF TRANSFERS AND DISTRIBUTIONS; (J) VOTING RIGHTS; (K) TRANSFERS, ASSIGNMENTS
AND PLEDGES; AND (L) REPORTS TO YOU.
(10) THE COMPANY: AMERICAN SKANDIA LIFE ASSURANCE CORPORATION IS A WHOLLY
OWNED SUBSIDIARY OF AMERICAN SKANDIA INVESTMENT HOLDING CORPORATION, WHOSE
INDIRECT PARENT IS SKANDIA INSURANCE COMPANY LTD. SKANDIA INSURANCE COMPANY
LTD. IS A SWEDISH COMPANY THAT HOLDS A NUMBER OF INSURANCE COMPANIES IN MANY
COUNTRIES. THE PREDECESSOR TO SKANDIA INSURANCE COMPANY LTD. COMMENCED
OPERATIONS IN 1855. FOR MORE INFORMATION, SEE THE SECTION ENTITLED THE
COMPANY.
AVAILABLE INFORMATION: A STATEMENT OF ADDITIONAL INFORMATION IS AVAILABLE FROM
US WITHOUT CHARGE UPON REQUEST BY WRITING AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION, CONCIERGE DESK, P.O. BOX 883, SHELTON, CT 06484. IT INCLUDES
FURTHER INFORMATION, AS DESCRIBED IN THE SECTION OF THIS PROSPECTUS ENTITLED
"CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION." THIS PROSPECTUS AND THE
STATEMENT OF ADDITIONAL INFORMATION ARE 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 THIS
REGISTRATION STATEMENT 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 THE EXHIBITS THERETO AT THE SEC'S PUBLIC
REFERENCE FACILITIES AT THE ABOVE ADDRESS, RM. 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.
CONTRACT EXPENSE SUMMARY: THE SUMMARY PROVIDED BELOW INCLUDES INFORMATION
REGARDING THE EXPENSES FOR YOUR ANNUITY, FOR THE SUB-ACCOUNTS AND FOR THE
UNDERLYING MUTUAL FUND PORTFOLIOS. MORE DETAIL REGARDING THE EXPENSES OF THE
UNDERLYING MUTUAL FUND PORTFOLIOS MAY BE FOUND EITHER IN THE PROSPECTUSES FOR
THE UNDERLYING MUTUAL FUNDS OR, WHEN AVAILABLE, IN THE ANNUAL REPORT OF SUCH
MUTUAL FUNDS
THE EXPENSES OF OUR SUB-ACCOUNTS (NOT THOSE OF THE UNDERLYING MUTUAL FUND
PORTFOLIOS IN WHICH OUR SUB-ACCOUNTS INVEST) ARE THE SAME NO MATTER WHICH SUB-
ACCOUNT YOU CHOOSE. THEREFORE, THESE EXPENSES ARE ONLY SHOWN ONCE BELOW.
YOUR TRANSACTION EXPENSES
SALES CHARGE MAXIMUM OF 1.50% OF EACH PURCHASE PAYMENT.
MAINTENANCE FEE SMALLER OF $35 OR 2% OF: (A) THE INITIAL
PURCHASE PAYMENT; AND (B) EACH ANNUITY YEAR
AFTER THE FIRST, THE ACCOUNT VALUE. IT
APPLIES TO THE INITIAL PURCHASE PAYMENT ONLY
IF SUCH PURCHASE PAYMENT IS LESS THAN
$50,000. IT IS ASSESSED AS OF THE FIRST
VALUATION PERIOD OF EACH ANNUITY YEAR AFTER
THE FIRST ONLY IF, AT THAT TIME, THE ACCOUNT
VALUE OF THE ANNUITY IS LESS THAN $50,000.
TAX CHARGES DEPENDENT ON THE REQUIREMENTS OF THE
APPLICABLE JURISDICTION.
TRANSFER FEE $10 FOR EACH TRANSFER AFTER THE TWELFTH IN
ANY ANNUITY YEAR.
ANNUAL EXPENSES OF THE SUB-ACCOUNTS (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS)
MORTALITY AND EXPENSE RISK CHARGES 0.65%
ADMINISTRATION CHARGE 0.25%
TOTAL ANNUAL EXPENSES OF THE SUB-ACCOUNTS 0.90%
THE ANNUITY WAS DESIGNED INITIALLY TO BE USED WITH INVESTMENT ALLOCATION
SERVICES PROVIDED BY AN ADVISOR. FROM THE DATE OF THE INITIAL OFFERING ON
NOVEMBER 16, 1993 UNTIL JULY 1, 1994 A 1.00% INVESTMENT ALLOCATION SERVICES
CHARGE WAS ASSESSED AGAINST THE SUB-ACCOUNTS. AS OF JULY 1, 1994 THE
INVESTMENT ALLOCATION SERVICES CHARGE IS NO LONGER ASSESSED AGAINST THE SUB-
ACCOUNTS. THE EXPENSE INFORMATION IN THE TABLE HAS BEEN RESTATED TO REFLECT
CURRENT FEES.
UNDERLYING MUTUAL FUND PORTFOLIO ANNUAL EXPENSES (AS A PERCENTAGE OF
AVERAGE NET ASSETS)
"N/A" SHOWN BELOW INDICATES THAT NO ENTITY HAS AGREED TO REIMBURSE THE
PARTICULAR EXPENSE INDICATED. "+" INDICATES THAT NO REIMBURSEMENT WAS PROVIDED
IN 1994, BUT THAT UNDERLYING MUTUAL FUND HAS INDICATED TO US THAT CURRENT
ARRANGEMENTS (WHICH MAY CHANGE) PROVIDE FOR REIMBURSEMENT.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
MANAGE- MANAGE- TOTAL TOTAL
MENT MENT OTHER OTHER ANNUAL ANNUAL
FEE FEE EXPENSES EXPENSES EXPENSE EXPENSES
AFTER WITHOUT AFTER WITHOUT AFTER WITHOUT
ANY ANY ANY ANY ANY ANY
APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE
MENT MENT MENT MENT MENT MENT
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
AMERICAN SKANDIA TRUST
JANCAP GROWTH N/A 0.90% + 0.28% + 1.18%
LORD ABBETT GROWTH
AND INCOME N/A 0.75% + 0.31% + 1.06%
SELIGMAN HENDERSON
INTERNATIONAL EQUITY(1) 0.90% 1.00% 0.32% 0.32% 1.22% 1.32%
SELIGMAN HENDERSON
INTERNATIONAL SMALL CAP(2) N/A 1.00% 0.75% 1.58% 1.75% 2.58%
AST MONEY MARKET 0.49% 0.50% 0.15% 0.26% 0.64% 0.76%
FEDERATED UTILITY
INCOME N/A 0.71% + 0.28% + 0.99%
FEDERATED HIGH YIELD(3) N/A 0.75% 0.40% 0.59% 1.15% 1.34%
AST PHOENIX BALANCED ASSET N/A 0.71% + 0.28% + 0.99%
AST PHOENIX CAPITAL GROWTH(3) N/A 0.75% 0.40% 0.84% 1.15% 1.59%
T. ROWE PRICE
ASSET ALLOCATION(3) N/A 0.85% 0.40% 0.62% 1.25% 1.47%
T. ROWE PRICE
INTERNATIONAL EQUITY(3) N/A 1.00% 0.75% 0.77% 1.75% 1.77%
T. ROWE PRICE
NATURAL RESOURCES(2) N/A 0.90% 0.45% 1.45% 1.35% 2.35%
FOUNDERS CAPITAL
APPRECIATION(3) N/A 0.90% 0.40% 0.65% 1.30% 1.55%
INVESCO EQUITY INCOME(3) N/A 0.75% + 0.39% + 1.14%
PIMCO TOTAL RETURN BOND(3) N/A 0.65% + 0.37% + 1.02%
PIMCO LIMITED MATURITY BOND(2) N/A 0.65% 0.40% 0.86% 1.05% 1.51%
EAGLE GROWTH EQUITY(4) N/A 0.80% 0.45% 1.83% 1.25% 2.63%
AST SCUDDER INTERNATIONAL BOND(4) N/A 1.00% + 0.68% + 1.68%
BERGER CAPITAL GROWTH(5) N/A 0.75% 0.50% 0.95% 1.25% 1.70%
THE ALGER AMERICAN FUND
GROWTH N/A 0.75% + 0.11% + 0.86%
SMALL CAPITALIZATION N/A 0.85% + 0.11% + 0.96%
MIDCAP GROWTH N/A 0.80% + 0.17% + 0.97%
MANAGE- MANAGE- TOTAL TOTAL
MENT MENT OTHER OTHER ANNUAL ANNUAL
FEE FEE EXPENSES EXPENSES EXPENSE EXPENSES
AFTER WITHOUT AFTER WITHOUT AFTER WITHOUT
ANY ANY ANY ANY ANY ANY
APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE APPLICABLE
REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE- REIMBURSE
MENT MENT MENT MENT MENT MENT
ALLIANCE VARIABLE PRODUCTS
SERIES FUND, INC.
SHORT-TERM
MULTI-MARKET 0.50% 0.55% 0.44% 0.44% 0.94% 0.99%
GROWTH AND INCOME 0.62% 0.625% 0.28% 0.285% 0.90% 0.91%
PREMIER GROWTH(6) 0.55% 1.00% 0.40% 0.40% 0.95% 1.40%
U.S. GOVERNMENT/HIGH GRADE 0.00% 0.60% 0.95% 3.13% 0.95% 3.73%
INTERNATIONAL 0.00% 1.00% 0.95% 6.26% 0.95% 7.26%
TOTAL RETURN 0.00% 0.625% 0.95% 18.865% 0.95% 19.49%
NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST(7)
GROWTH N/A 0.79% + 0.12% + 0.91%
LIMITED MATURITY BOND N/A 0.60% + 0.13% + 0.73%
BALANCED N/A 0.80% + 0.17% + 0.97%
PARTNERS(8) N/A 0.80% + 0.50% + 1.30%
SCUDDER VARIABLE LIFE
INVESTMENT FUND
BOND N/A 0.475% + 0.105% + 0.58%
CAPITAL GROWTH N/A 0.475% + 0.105% + 0.58%
BALANCED N/A 0.475% 0.275% 0.305% 0.75% 0.78%
INTERNATIONAL N/A 0.875% + 0.205% + 1.08%
JANUS ASPEN SERIES
GROWTH .66% 1.00% .22% 0.22% .88% 1.22%
AGGRESSIVE GROWTH .77% 1.00% .28% 0.28% 1.05% 1.28%
WORLDWIDE GROWTH .69% 1.00% .49% 0.49% 1.18% 1.49%
BALANCED .83% 1.00% .74% 0.74% 1.57% 1.74%
FLEXIBLE INCOME .30% 0.65% .70% 0.70% 1.00% 1.35%
SHORT-TERM BOND 0.00% 0.65% .65% 0.75% 0.65% 1.40%
</TABLE>
(1) "SELIGMAN HENDERSON INTERNATIONAL EQUITY" PORTFOLIO WAS FORMERLY NAMED THE
"HENDERSON INTERNATIONAL GROWTH" PORTFOLIO.
(2) THESE PORTFOLIOS COMMENCED OPERATIONS ON MAY 1, 1995, THEREFORE EXPENSES
SHOWN ARE ESTIMATED AND ANNUALIZED AND SHOULD NOT BE CONSIDERED REPRESENTATIVE
OF FUTURE EXPENSES; ACTUAL EXPENSES MAY BE GREATER THAN SHOWN.
(3) THESE PORTFOLIOS COMMENCED OPERATIONS ON JANUARY 4, 1994, THEREFORE
EXPENSES SHOWN ARE ANNUALIZED.
(4) THESE PORTFOLIOS COMMENCED OPERATIONS ON MAY 3, 1994, THEREFORE EXPENSES
SHOWN ARE ANNUALIZED.
(5) THIS PORTFOLIO BECAME OPERATIONAL ON OCTOBER 20, 1994, THEREFORE EXPENSES
SHOWN ARE ANNUALIZED.
(6) "PREMIER GROWTH" PORTFOLIO WAS FORMERLY NAMED THE "GROWTH" PORTFOLIO BUT
IS TOTALLY SEPARATE FROM THE CURRENT "GROWTH" PORTFOLIO.
(7) THE MANAGEMENT FEE REFLECTS BOTH A MANAGEMENT AND ADMINISTRATIVE FEE
COMPONENT (SEE THE TRUST PROSPECTUS). THE MANAGEMENT FEE AND TOTAL ANNUAL
EXPENSES REFLECTED ABOVE HAVE BEEN RESTATED TO REFLECT A RESTRUCTURING OF THE
TRUST WHICH TAKES EFFECT MAY 1, 1995. THE ACTUAL MANAGEMENT FEES AS OF DECEMBER
31, 1994 WERE: 0.69% FOR THE GROWTH; 0.50% FOR THE LIMITED MATURITY BOND AND
0.70% FOR THE BALANCED. THE ACTUAL TOTAL ANNUAL EXPENSES FOR THE YEAR ENDED
DECEMBER 31, 1994 WERE: 0.84% FOR THE GROWTH ; 0.66% FOR THE LIMITED MATURITY
BOND; AND 0.91% FOR THE BALANCED. UNTIL MAY 1, 1995, ALL SERIES OF THE
ADVISERS MANAGEMENT TRUST ("TRUST") AVAILABLE AS INVESTMENT OPTIONS UNDER THE
ANNUITY HAD A DISTRIBUTION PLAN ("PLAN") PURSUANT TO RULE 12B-1 WHICH PROVIDED
FOR REIMBURSEMENT TO THE TRUST INVESTMENT ADVISOR, N&B MANAGEMENT, FOR CERTAIN
TRUST DISTRIBUTION EXPENSES UP TO A MAXIMUM OF 0.25% ON AN ANNUALIZED BASIS OF
EACH SERIES' AVERAGE DAILY NET ASSETS. THE "TOTAL ANNUAL EXPENSES WITHOUT ANY
APPLICABLE REIMBURSEMENT" WOULD BE INCREASED BY THE FOLLOWING PERCENTAGES IF
THE 12B-1 FEES FOR THE MONTHS OF JANUARY THROUGH APRIL, 1995 WERE TAKEN INTO
ACCOUNT: 0.02% FOR THE GROWTH, LIMITED MATURITY BOND, BALANCED AND PARTNERS
PORTFOLIOS.
(8) THIS PORTFOLIO COMMENCED OPERATION ON MARCH 22, 1994, THEREFORE EXPENSES
SHOWN ARE ESTIMATED AND ANNUALIZED.
THE EXPENSES OF THE UNDERLYING MUTUAL FUND PORTFOLIOS EITHER ARE CURRENTLY
BEING PARTIALLY REIMBURSED OR MAY BE PARTIALLY REIMBURSED IN THE FUTURE.
MANAGEMENT FEES, OTHER EXPENSES AND TOTAL ANNUAL EXPENSES ARE PROVIDED ABOVE ON
BOTH A REIMBURSED AND NOT REIMBURSED BASIS, IF APPLICABLE. SEE THE
PROSPECTUSES OR STATEMENTS OF ADDITIONAL INFORMATION OF THE UNDERLYING MUTUAL
FUNDS FOR DETAILS.
EXPENSE EXAMPLES: THE EXAMPLES WHICH FOLLOW ARE DESIGNED TO ASSIST YOU IN
UNDERSTANDING THE VARIOUS COSTS AND EXPENSES YOU MAY BEAR DIRECTLY OR
INDIRECTLY. THE EXAMPLES REFLECT EXPENSES OF OUR SUB-ACCOUNTS, AS WELL AS
THOSE FOR THE UNDERLYING MUTUAL FUND PORTFOLIOS.
THE EXAMPLES SHOWN ASSUME THAT: (A) THE MAXIMUM SALES CHARGE APPLIES (B) FEES
AND EXPENSES REMAIN CONSTANT; (C) THERE ARE NO WITHDRAWALS OF ACCOUNT VALUE
DURING THE PERIOD SHOWN; (D) THERE ARE NO TRANSFERS OR OTHER TRANSACTIONS
SUBJECT TO A FEE DURING THE PERIOD SHOWN; (E) NO TAX CHARGE APPLIES; AND (F)
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 CONTRACT EXPENSE SUMMARY.
THE EXAMPLES ARE ILLUSTRATIVE ONLY - THEY SHOULD NOT BE CONSIDERED A
REPRESENTATION OF ACTUAL FUTURE EXPENSES OF THE UNDERLYING MUTUAL FUND
PORTFOLIOS - ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. THE SUB-
ACCOUNTS ARE REFERRED TO BELOW BY THEIR SPECIFIC NAMES.
EXAMPLES (AMOUNTS SHOWN ARE ROUNDED TO THE NEAREST DOLLAR)
WHETHER OR NOT YOU SURRENDER YOUR ANNUITY AT THE END OF THE APPLICABLE TIME
PERIOD OR BEGIN TAKING ANNUITY PAYMENTS AT SUCH TIME, YOU WOULD PAY THE
FOLLOWING EXPENSES ON A $1,000 INVESTMENT, ASSUMING 5% ANNUAL RETURN ON ASSETS:
IF YOUR INITIAL PURCHASE PAYMENT IS AT LEAST $50,000 AND AT THE BEGINNING OF
EACH ANNUITY YEAR YOUR ACCOUNT VALUE IS $50,000 OR HIGHER, SO THAT THE
MAINTENANCE FEE DOES NOT APPLY:
SUB-ACCOUNTS AFTER:
1 YR. 3 YRS. 5 YRS. 10
YRS.
JANCAP GROWTH 2 $36 $80 $126 $254
LA GROWTH AND INCOME 2 35 76 120 242
SELIGMAN HENDERSON INTERNATIONAL EQUITY 2 36 81 128 258
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP 2 42 97 155 311
AST MONEY MARKET 2 31 64 99 197
FED UTILITY INC. 2 34 74 117 235
FED HIGH YIELD 2 36 79 125 251
AST PHOENIX BALANCED ASSET 2 34 74 117 235
AST PHOENIX CAPITAL GROWTH 2 36 79 125 251
T. ROWE PRICE ASSET ALLOCATION 2 37 82 130 262
T. ROWE PRICE INTERNATIONAL EQUITY 2 42 97 155 311
T. ROWE PRICE NATURAL RESOURCES 2 38 85 135 272
(CONTINUIED ON NEXT PAGE)
SUB-ACCOUNTS AFTER:
1 YR. 3 YRS. 5 YRS. 10 YRS.
FOUNDERS CAPITAL APPRECIATION 2 37 83 132 265
INVESCO EQUITY INCOME 2 36 79 124 250
PIMCO TOTAL RETURN BOND 2 34 75 118 236
PIMCO LIMITED MATURITY BOND 2 35 76 119 240
EAGLE GROWTH EQUITY 2 37 82 130 262
AST SCUDDER INTERNATIONAL BOND 2 41 95 152 305
BERGER CAPITAL GROWTH 2 37 82 130 262
AA GROWTH 2 33 70 109 219
AA SMALL CAPITALIZATION 2 34 73 115 231
AA MIDCAP GROWTH 2 34 73 115 232
AVP SHORT-TERM MULTI-MARKET 2 $34 $73 $114 $229
AVP GROWTH AND INCOME 2 33 71 112 225
AVP PREMIER GROWTH 2 34 73 114 229
AVP U.S. GOVERNMENT/HIGH GRADE 2 34 73 114 229
AVP INTERNATIONAL 2 34 73 114 229
AVP TOTAL RETURN 2 34 73 114 229
NB GROWTH 2 33 71 112 225
NB LIMITED MATURITY BOND 2 31 66 103 206
NB BALANCED 2 34 73 115 232
NB PARTNERS 2 37 83 132 265
SCUDDER BOND 2 30 61 95 190
SCUDDER CAPITAL GROWTH 2 30 61 95 190
SCUDDER BALANCED 2 32 67 104 209
SCUDDER INTERNATIONAL 2 35 77 121 243
ASPEN GROWTH 2 33 71 111 223
ASPEN AGGRESSIVE GROWTH 2 35 76 119 240
ASPEN WORLDWIDE GROWTH 2 36 80 126 254
ASPEN BALANCED 2 40 92 146 293
ASPEN FLEXIBLE INCOME 2 34 74 117 235
ASPEN SHORT-TERM BOND 2 31 64 99 197
IF YOUR INITIAL PURCHASE PAYMENT IS BELOW $50,000 AND AT THE BEGINNING OF EACH
ANNUITY YEAR YOUR ACCOUNT VALUE IS BELOW $50,000, SO THAT THE MAINTENANCE FEE
APPLIES:
SUB-ACCOUNTS AFTER:
1 YR. 3 YRS. 5 YRS. 10 YRS.
JANCAP GROWTH 2 $37 $84 $133 $266
LA GROWTH AND INCOME 2 36 80 127 254
SELIGMAN HENDERSON INTERNATIONAL EQUITY 2 38 85 135 272
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP 2 43 101 162 324
AST MONEY MARKET 2 32 68 106 211
FED UTILITY INC. 2 36 79 124 247
FED HIGH YIELD 2 37 83 132 264
AST PHOENIX BALANCED ASSET 2 36 79 124 247
AST PHOENIX CAPITAL GROWTH 2 37 83 132 264
T. ROWE PRICE ASSET ALLOCATION 2 38 86 137 274
T. ROWE PRICE INTERNATIONAL EQUITY 2 43 101 162 324
T. PRICE PRICE NATRES 2 39 89 142 284
FOUNDERS CAPITAL APPRECIATION 2 39 88 139 279
INVESCO EQUITY INCOME 2 37 83 131 263
PIMCO TOTAL RETURN BOND 2 36 79 125 250
PIMCO LTD. BOND 2 36 80 126 253
EAGLE GROWTH EQUITY 2 38 86 137 274
(CONTINUED ON NEXT PAGE)
SUB-ACCOUNTS AFTER:
1 YR. 3 YRS. 5 YRS. 10 YRS.
AST SCUDDER INTERNATIONAL BOND 2 43 100 159 317
BERGER CAPITAL GROWTH 2 38 86 137 274
AA GROWTH 2 34 74 116 233
AA SMALL CAPITALIZATION 2 35 77 122 244
AA MIDCAP GROWTH 2 35 77 122 245
AVP SHORT-TERM MULTI-MARKET 2 35 77 121 243
AVP GROWTH AND INCOME 2 35 76 119 238
AVP PREMIER GROWTH 2 35 77 121 243
AVP U.S. GOVERNMENT/HIGH GRADE 2 35 77 121 243
AVP INTERNATIONAL 2 35 77 121 243
AVP TOTAL RETURN 2 35 77 121 243
NB GROWTH 2 35 76 119 239
NB LIMITED MATURITY BOND 2 33 70 110 220
NB BALANCED 2 35 77 122 245
NB PARTNERS 2 39 88 139 279
SCUDDER BOND 2 31 65 102 204
SCUDDER CAPITAL GROWTH 2 31 65 102 204
SCUDDER BALANCED 2 33 71 111 222
SCUDDER INTERNATIONAL 2 36 81 128 256
ASPEN GROWTH 2 34 75 118 236
ASPEN AGGRESSIVE GROWTH 2 36 80 126 253
ASPEN WORLDWIDE GROWTH 2 37 84 133 266
ASPEN BALANCED 2 41 96 153 306
ASPEN FLEXIBLE INCOME 2 36 79 124 249
ASPEN SHORT-TERM BOND 2 32 68 106 211
CONDENSED FINANCIAL INFORMATION: THE UNIT PRICES AND NUMBER OF UNITS IN THE
SUB-ACCOUNTS ARE SHOWN BELOW, AS IS YIELD INFORMATION ON THE AST MONEY MARKET 2
SUB-ACCOUNT.
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 2 SUB-ACCOUNTS OF
SEPARATE ACCOUNT B BEING OFFERED PURSUANT TO THIS PROSPECTUS; AND (B) THE
NUMBER OF UNITS OUTSTANDING IN EACH 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.
NO INFORMATION IS SHOWN BELOW FOR SUB-ACCOUNTS THAT HAD NOT COMMENCED
OPERATIONS PRIOR TO JANUARY 1, 1995.
SUB-ACCOUNT AND THE YEAR SUB-ACCOUNT OPERATIONS COMMENCED
LA SELIGMAN
GROWTH HENDERSON AST FEDERATED
JANCAP AND INTENATIONAL MONEY UTILITY
GROWTH 2 INCOME 2 EQUITY 2 MARKET 2 INCOME 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 187,924 238,128 199,313 880,903 86,555
AS OF 12/31/93 17,956 9,793 12,521 36,093 467
UNIT PRICE
AS OF 12/31/94 $9.54 $10.21 $10.36 $10.23 $ 9.27
AS OF 12/31/93 10.13 10.13 10.23 10.00 10.10
AST AST T. ROWE T. ROWE
FEDERATED PHOENIX PHOENIX PRICE PRICE
HIGH BALANCED CAPITAL ASSET INTERNATIONAL
YIELD 2 ASSET 2 GROWTH 2 ALLOCATION 2 EQUITY 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 122,508 114,927 23,203 74,058 301,423
AS OF 12/31/93 6,185
UNIT PRICE
AS OF 12/31/94 $ 9.56 $ 9.91 $ 9.21 $ 9.80 $ 9.49
AS OF 12/31/93 10.04
PIMCO AST
FOUNDERS INVESCO TOTAL EAGLE SCUDDER
CAPITAL EQUITY RETURN GROWTH INTERNATIONAL
APPRECIATION 2 INCOME 2 BOND 2 EQUITY 2 BOND 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 96,278 150,719 256,950 1,634 25,171
AS OF 12/31/93
UNIT PRICE
AS OF 12/31/94 $10.69 $ 9.62 $ 9.62 $ 9.87 $ 9.61
AS OF 12/31/93
AVP
BERGER AA AA SHORT-TERM
CAPITAL AA SMALL MIDCAP MULTI-
GROWTH 2 GROWTH 2 CAP 2 GROWTH 2 MARKET 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 3,419 177,825 187,387 61,104 30,330
AS OF 12/31/93 4,589 17,264 3,255
UNIT PRICE
AS OF 12/31/94 $9.95 $10.26 $ 9.94 $10.36 $9.21
AS OF 12/31/93 10.25 10.55 10.67
AVP
AVP U. S.
GROWTH AVP GOVERNMENT/ AVP AVP
AND PREMIER HIGH GRADE INTER- TOTAL
INCOME 2 GROWTH 2 SECURITIES 2 NATIONAL 2 RETURN 2
(1993) (1993) (1993) ( 1993) (1993)
NO. OF UNITS
AS OF 12/31/94 65,886 75,250 85,679 33,633 16,344
AS OF 12/31/93 449 4,437
UNIT PRICE
AS OF 12/31/94 $10.04 $ 9.71 $9.46 $10.64 $9.60
AS OF 12/31/93 10.22 10.15
NB
LIMITED SCUDDER
NB MATURITY NB SCUDDER CAPITAL
GROWTH 2 BOND 2 BALANCED 2 BOND 2 GROWTH 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 76,158 231,497 97,266 75,644 9,998
AS OF 12/31/93 4,425 604
UNIT PRICE
AS OF 12/31/94 $ 9.59 $9.86 $9.66 $ 9.42 $13.31
AS OF 12/31/93 10.24 10.03
JANUS
SCUDDER JANUS WORLD-
SCUDDER INTER- JANUS AGGRESSIVE WIDE
BALANCED 2 NATIONAL 2 GROWTH 2 GROWTH 2 GROWTH 2
(1993) (1993) (1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 6,471 122,549 34,594 62,288 22,365
AS OF 12/31/93 2,674
UNIT PRICE
AS OF 12/31/94 $ 9.87 $10.60 $10.48 $13.53 $11.91
AS OF 12/31/93 11.80
JANUS
JANUS SHORT-
JANUS FLEXIBLE TERM
BALANCED 2 INCOME 2 BOND 2
(1993) (1993) (1993)
NO. OF UNITS
AS OF 12/31/94 23,225 45,477 43,662
AS OF 12/31/93 3,334
UNIT PRICE
AS OF 12/31/94 10.65 $ 9.83 $9.97
AS OF 12/31/93 10.06
THE FINANCIAL STATEMENTS OF THE CLASS 2 SUB-ACCOUNTS BEING OFFERED TO YOU THAT
WERE AVAILABLE AS INVESTMENT OPTIONS IN 1994 ARE FOUND IN THE STATEMENT OF
ADDITIONAL INFORMATION.
YIELDS ON MONEY MARKET SUB-ACCOUNT: SHOWN BELOW ARE THE CURRENT AND
EFFECTIVE YIELDS FOR A HYPOTHETICAL CONTRACT. THE YIELD IS CALCULATED BASED ON
THE PERFORMANCE OF THE AST MONEY MARKET CLASS 2 SUB-ACCOUNT DURING THE LAST
SEVEN DAYS OF THE CALENDAR YEAR ENDING PRIOR TO THE DATE OF THIS PROSPECTUS.
AT THE BEGINNING OF THE SEVEN DAY PERIOD, THE HYPOTHETICAL CONTRACT HAD A
BALANCE OF ONE UNIT. THE CURRENT AND EFFECTIVE YIELDS REFLECT THE RECURRING
CHARGES AGAINST THE SUB-ACCOUNT. PLEASE NOTE THAT CURRENT AND EFFECTIVE YIELD
INFORMATION WILL FLUCTUATE. THIS INFORMATION MAY NOT PROVIDE A BASIS FOR
COMPARISONS WITH DEPOSITS IN BANKS OR OTHER INSTITUTIONS WHICH PAY A FIXED
YIELD OVER A STATED PERIOD OF TIME, OR WITH INVESTMENT COMPANIES WHICH DO NOT
SERVE AS UNDERLYING FUNDS FOR VARIABLE ANNUITIES.
SUB-ACCOUNT CURRENT YIELD EFFECTIVE YIELD
AST MONEY MARKET 24.90% 5.02%
INVESTMENT OPTIONS: DURING THE ACCUMULATION PHASE, WE OFFER A NUMBER OF SUB-
ACCOUNTS AS INVESTMENT OPTIONS. THESE ARE ALL CLASS 2 SUB-ACCOUNTS OF AMERICAN
SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B ("SEPARATE ACCOUNT B").
EACH OF THESE SUB-ACCOUNTS INVESTS EXCLUSIVELY IN ONE UNDERLYING MUTUAL FUND OR
MUTUAL FUNDS PORTFOLIO. THE SUB-ACCOUNTS AND THE UNDERLYING MUTUAL FUND
PORTFOLIOS IN WHICH THEY INVEST ARE AS FOLLOWS:
UNDERLYING MUTUAL FUND: AMERICAN SKANDIA TRUST
<TABLE>
<S> <C>
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
JANCAP GROWTH 2 JANCAP GROWTH
LA GROWTH AND INCOME 2 LORD ABBETT GROWTH AND INCOME
SELIGMAN HENDERSON INTERNATIONAL EQUITY 2 SELIGMAN HENDERSON INTERNATIONAL GROWTH
SELIGMAN HENDERSON INTERNATIONAL SMALL CAP 2 SELIGMAN HENDERSON INTERNATIONAL SMALL CAP
AST MONEY MARKET 2 AST MONEY MARKET
FED UTILITY INC. 2 FEDERATED UTILITY INCOME
FED HIGH YIELD 2 FEDERATED HIGH YIELD
AST PHOENIX BALANCED ASSET 2 AST PHOENIX BALANCED ASSET
AST PHOENIX CAPITAL GROWTH 2 AST PHOENIX CAPITAL GROWTH
T. ROWE PRICE ASSET ALLOCATION 2 T. ROWE PRICE ASSET ALLOCATION
T. ROWE PRICE INTERNATIONAL EQUITY 2 T. ROWE PRICE INTERNATIONAL EQUITY
T. ROWE PRICE NATURAL RESOURCES 2 T. ROWE PRICE NATURAL RESOURCES
FOUNDERS CAPITAL APPRECIATION 2 FOUNDERS CAPITAL APPRECIATION
INVESCO EQUITY INCOME 2 INVESCO EQUITY INCOME
PIMCO TOTAL RETURN BOND 2 PIMCO TOTAL RETURN BOND
PIMCO LIMITED MATURITY BOND 2 PIMCO LIMITED MATURITY BOND
EAGLE GROWTH EQUITY 2 EAGLE GROWTH EQUITY
AST SCUDDER INTERNATIONAL BOND 2 AST SCUDDER INTERNATIONAL BOND
BERGER CAPITAL GROWTH 2 BERGER CAPITAL GROWTH
</TABLE>
UNDERLYING MUTUAL FUND: THE ALGER AMERICAN FUND
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
AA GROWTH 2 GROWTH PORTFOLIO
AA SMALL CAPITALIZATION 2 SMALL CAPITALIZATION
AA MIDCAP GROWTH 2 MIDCAP GROWTH
UNDERLYING MUTUAL FUND: ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC.
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
AVP SHORT-TERM MULTI-MARKET 2 SHORT-TERM MULTI-MARKET
AVP GROWTH AND INCOME 2 GROWTH AND INCOME
AVP PREMIER GROWTH 2 PREMIER GROWTH
AVP U.S. GOVERNMENT/HIGH GRADE 2 U.S. GOVERNMENT/HIGH GRADE SECURITIES
AVP INTERNATIONAL 2 INTERNATIONAL
AVP TOTAL RETURN 2 TOTAL RETURN
UNDERLYING MUTUAL FUND: NEUBERGER & BERMAN
ADVISERS MANAGEMENT TRUST
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
NB GROWTH 2 GROWTH
NB LIMITED MATURITY BOND 2 LIMITED MATURITY BOND
NB BALANCED 2 BALANCED
NB PARTNERS 2 PARTNERS
UNDERLYING MUTUAL FUND: SCUDDER VARIABLE LIFE
INVESTMENT FUND
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
SCUDDER BOND 2 BOND
SCUDDER CAPITAL GROWTH 2 CAPITAL GROWTH
SCUDDER BALANCED 2 BALANCED
SCUDDER INTERNATIONAL 2 INTERNATIONAL
UNDERLYING MUTUAL FUND: JANUS ASPEN SERIES
SUB-ACCOUNT UNDERLYING MUTUAL FUND PORTFOLIO
ASPEN GROWTH 2 GROWTH
ASPEN AGGRESSIVE GROWTH 2 AGGRESSIVE GROWTH
ASPEN WORLDWIDE GROWTH 2 WORLDWIDE GROWTH
ASPEN BALANCED 2 BALANCED
ASPEN FLEXIBLE INCOME 2 FLEXIBLE INCOME
ASPEN SHORT-TERM BOND 2 SHORT-TERM BOND
AS OF THE DATE OF THIS PROSPECTUS, WE ARE IN THE PROCESS OF REQUESTING
EXEMPTIVE RELIEF FROM THE SECURITIES AND EXCHANGE COMMISSION ("SEC") TO
SUBSTITUTE ALTERNATIVE SUB-ACCOUNTS AND THEIR UNDERLYING MUTUAL FUND PORTFOLIOS
("SUBSTITUTED OPTIONS") FOR CERTAIN SUB-ACCOUNTS AND THEIR UNDERLYING MUTUAL
FUND PORTFOLIOS THAT WE PROPOSE TO CEASE OFFERING AS INVESTMENT OPTIONS UNDER
THE ANNUITY ("ELIMINATED OPTIONS"). YOU WILL RECEIVE PRIOR NOTIFICATION
REGARDING THE DETAILS OF SUCH SUBSTITUTION. THE VARIABLE OPTIONS EXPECTED TO
BE ELIMINATED AND THE VARIABLE OPTIONS EXPECTED TO BE THE SUBSTITUTED OPTIONS
ARE AS FOLLOWS:
ELIMINATED OPTIONS: SUBSTITUTED OPTIONS:
<TABLE>
<S> <C>
ALLIANCE SHORT-TERM MULTI-MARKET PIMCO LIMITED MATURITY BOND
ALLIANCE PREMIER GROWTH ALGER GROWTH
ALLIANCE GROWTH & INCOME LORD ABBETT GROWTH AND INCOME
ALLIANCE U.S. GOVERNMENT/HIGH GRADE SECURITIES PIMCO LIMITED MATURITY BOND
ALLIANCE TOTAL RETURN AST PHOENIX BALANCED ASSET
ALLIANCE INTERNATIONAL SELIGMAN HENDERSON INTERNATIONAL EQUITY
NEUBERGER & BERMAN AMT GROWTH NEUBERGER & BERMAN AMT PARTNERS
NEUBERGER & BERMAN AMT BALANCED AST PHOENIX BALANCED ASSET
NEUBERGER & BERMAN AMT LIMITED MATURITY BOND PIMCO LIMITED MATURITY BOND
SCUDDER BOND PIMCO TOTAL RETURN BOND
SCUDDER CAPITAL GROWTH ALGER GROWTH
SCUDDER BALANCED AST PHOENIX BALANCED ASSET
SCUDDER INTERNATIONAL SELIGMAN HENDERSON INTERNATIONAL EQUITY
JANUS ASPEN GROWTH AST JANCAP GROWTH
JANUS ASPEN AGGRESSIVE GROWTH ALGER GROWTH
JANUS ASPEN WORLDWIDE GROWTH SELIGMAN HENDERSON INTERNATIONAL EQUITY
JANUS ASPEN BALANCED AST PHOENIX BALANCED ASSET
JANUS ASPEN FLEXIBLE INCOME PIMCO TOTAL RETURN BOND
JANUS ASPEN SHORT-TERM BOND PIMCO LIMITED MATURITY BOND
AST EAGLE GROWTH EQUITY ALGER GROWTH
AST PHOENIX CAPITAL GROWTH ALGER GROWTH
</TABLE>
IN THE EXEMPTIVE APPLICATION FILED WITH THE SEC WE ARE SEEKING PERMISSION TO
ALLOW TRANSFERS FROM ELIMINATED OPTIONS TO ANY OTHER INVESTMENT OPTIONS
AVAILABLE UNDER THE ANNUITY FOR A PERIOD OF 30 DAYS PRIOR TO ANY SUBSTITUTION
WITHOUT THE IMPOSITION OF ANY TRANSFER FEE. SUCH TRANSFERS WOULD NOT COUNT IN
DETERMINING WHETHER THE TWELVE FREE TRANSFERS HAVE BEEN EXCEEDED.
THE PROPOSED SUBSTITUTION OF THE SUBSTITUTED OPTIONS FOR THE ELIMINATED OPTIONS
LIKEWISE WOULD NOT IMPOSE A TRANSFER FEE NOR COUNT IN DETERMINING WHETHER THE
TWELVE FREE TRANSFERS HAVE BEEN EXCEEDED. THE PROPOSED SUBSTITUTION WILL NOT
AFFECT YOUR RIGHTS OR OUR OBLIGATIONS UNDER THE ANNUITY.
THE TERMS, CONDITIONS AND SCOPE OF ANY ORDER GRANTING, IN WHOLE OR PART, SUCH
REQUESTED EXEMPTIVE RELIEF, MAY VARY FROM SUCH REQUEST. APPLICANTS HAVE THE
RIGHT, AMONG OTHER THINGS, TO AMEND THEIR REQUEST FOR EXEMPTIVE RELIEF AS TO
ANY PORTFOLIOS.
WE MAY MAKE OTHER UNDERLYING MUTUAL FUND PORTFOLIOS AVAILABLE BY CREATING NEW
SUB-ACCOUNTS. ADDITIONALLY, NEW PORTFOLIOS MAY BE MADE AVAILABLE BY THE
CREATION OF NEW SUB-ACCOUNTS FROM TIME TO TIME. SUCH A NEW PORTFOLIO OF AN
UNDERLYING MUTUAL FUND WILL BE DISCLOSED IN ITS PROSPECTUS. HOWEVER, ADDITION
OF A PORTFOLIO IN AN UNDERLYING MUTUAL FUND DOES NOT REQUIRE US TO CREATE A NEW
SUB-ACCOUNT TO INVEST IN THAT PORTFOLIO. WE MAY TAKE OTHER ACTIONS IN RELATION
TO THE SUB-ACCOUNTS AND/OR SEPARATE ACCOUNT B (SEE "MODIFICATIONS").
EACH UNDERLYING MUTUAL FUND IS REGISTERED UNDER THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED (THE "1940 ACT") AS AN OPEN-END MANAGEMENT INVESTMENT COMPANY.
EACH UNDERLYING MUTUAL FUND MAY OR MAY NOT BE DIVERSIFIED AS DEFINED IN THE
1940 ACT. AS OF THE DATE OF THIS PROSPECTUS, THE PORTFOLIOS IN WHICH SUB-
ACCOUNTS OFFERED PURSUANT TO THIS PROSPECTUS INVEST ARE THOSE SHOWN ABOVE.
CERTAIN PORTFOLIOS MAY NOT BE AVAILABLE IN ALL JURISDICTIONS. A SUMMARY OF THE
INVESTMENT OBJECTIVES OF SUCH UNDERLYING MUTUAL FUND PORTFOLIOS IS FOUND IN
APPENDIX A. THE TRUSTEES OR DIRECTORS, AS APPLICABLE, OF AN UNDERLYING MUTUAL
FUND MAY ADD, ELIMINATE OR SUBSTITUTE PORTFOLIOS FROM TIME TO TIME. GENERALLY,
EACH PORTFOLIO ISSUES A SEPARATE CLASS OF SHARES. AS OF THE DATE OF THIS
PROSPECTUS, SHARES OF THE UNDERLYING MUTUAL FUND PORTFOLIOS ARE AVAILABLE ONLY
TO SEPARATE ACCOUNTS OF LIFE INSURANCE COMPANIES OFFERING VARIABLE ANNUITY AND
VARIABLE LIFE INSURANCE PRODUCTS. HOWEVER, THE SHARES MAY BE MADE AVAILABLE,
SUBJECT TO OBTAINING ALL REQUIRED REGULATORY APPROVALS, FOR DIRECT PURCHASE BY
VARIOUS PENSION AND RETIREMENT SAVINGS PLANS THAT QUALITY FOR PREFERENTIAL TAX
TREATMENT UNDER THE CODE.
THE INVESTMENT OBJECTIVES, POLICIES, CHARGES, OPERATIONS, THE ATTENDANT RISKS
AND OTHER DETAILS PERTAINING TO EACH UNDERLYING MUTUAL FUND PORTFOLIO ARE
DESCRIBED IN THE PROSPECTUS OF EACH UNDERLYING MUTUAL FUND AND THE STATEMENT OF
ADDITIONAL INFORMATION FOR SUCH UNDERLYING MUTUAL FUND. ALSO INCLUDED IN SUCH
INFORMATION IS THE INVESTMENT POLICY OF EACH MUTUAL FUND PORTFOLIO REGARDING
THE ACCEPTABLE RATINGS BY RECOGNIZED RATING SERVICES FOR BONDS AND OTHER DEBT
OBLIGATIONS. THERE CAN BE NO GUARANTEE THAT ANY UNDERLYING MUTUAL FUND
PORTFOLIO WILL MEET ITS INVESTMENT OBJECTIVE.
SHARES OF THE UNDERLYING MUTUAL FUND PORTFOLIOS MAY BE AVAILABLE TO VARIABLE
LIFE INSURANCE AND VARIABLE ANNUITY SEPARATE ACCOUNTS OF OTHER INSURANCE
COMPANIES. POSSIBLE CONSEQUENCES OF THIS MULTIPLE AVAILABILITY ARE DISCUSSED
IN THE SUBSECTION ENTITLED RESOLVING MATERIAL CONFLICTS.
THE PROSPECTUS FOR ANY UNDERLYING MUTUAL FUND OR FUNDS BEING CONSIDERED BY YOU
SHOULD BE READ IN CONJUNCTION HEREWITH. A COPY OF EACH PROSPECTUS MAY BE
OBTAINED WITHOUT CHARGE FROM US BY CALLING CONCIERGE DESK, 1-800-752-6342 OR
WRITING P.O. BOX 883, ATTENTION: CONCIERGE DESK, SHELTON, CONNECTICUT, 06484-
0883.
INVESTMENT ALLOCATION SERVICES: THE ANNUITY WAS DESIGNED TO BE USED WITH
INVESTMENT ALLOCATION SERVICES PROVIDED BY AN ADVISOR. FROM THE DATE OF THE
INITIAL OFFERING ON NOVEMBER 16, 1993 UNTIL JULY 1, 1994 A 1.00% INVESTMENT
ALLOCATION SERVICES CHARGE WAS ASSESSED AGAINST THE SUB-ACCOUNTS. AS OF JULY
1, 1994 THE INVESTMENT ALLOCATION SERVICES CHARGE IS NO LONGER ASSESSED. IT
MAY STILL SUIT YOUR NEEDS TO ENGAGE AN ADVISOR FOR INVESTMENT ALLOCATION
SERVICES IN RELATION TO THE ANNUITY. ANY ARRANGEMENTS FOR COMPENSATION FOR
SUCH SERVICES IS EXCLUSIVELY YOUR RESPONSIBILITY. IN CERTAIN SITUATIONS YOU
MAY BE SUBJECT TO INCOME TAXES AND PENALTIES FOR WITHDRAWALS FROM YOUR ACCOUNT
VALUE TO PAY ADVISORY FEES. YOU MAY ALSO PAY YOUR ADVISOR FROM SOURCES OTHER
THAN THE ANNUITY. HOWEVER, WE WILL ACCOMMODATE REQUESTS BY OWNERS TO PAY OVER
PARTIAL WITHDRAWALS TO ADVISORS THAT PROVIDE INVESTMENT ALLOCATION SERVICES,
SUBJECT TO OUR RULES AND REQUIREMENTS.
WE TREAT PARTIAL WITHDRAWALS AS TAXABLE DISTRIBUTIONS UNLESS: (A) YOUR ANNUITY
IS BEING USED IN CONJUNCTION WITH WHAT IS DESIGNED TO BE A "QUALIFIED"
RETIREMENT PLAN (PLANS DESIGNED TO MEET THE REQUIREMENT OF SECTIONS 401, 403 OR
408 OF THE CODE); AND (B) IN RELATION TO PLANS PURSUANT TO SECTIONS 403 OR 408,
YOU AND YOUR ADVISOR PROVIDE REPRESENTATIONS IN WRITING TO US LIMITING THE
SOURCE OF THE ADVISOR'S COMPENSATION TO THE ASSETS OF AN APPLICABLE QUALIFIED
RETIREMENT PLAN, AND MAKING CERTAIN OTHER REPRESENTATIONS.
OPERATIONS OF THE SEPARATE ACCOUNT: IN THE ACCUMULATION PHASE, ASSETS
SUPPORTING ACCOUNT VALUES ARE HELD IN OUR SEPARATE ACCOUNT B ESTABLISHED UNDER
THE LAWS OF THE STATE OF CONNECTICUT. SEPARATE ACCOUNT B CONSISTS OF MULTIPLE
SUB-ACCOUNTS. IN THE PAYOUT PHASE, ASSETS SUPPORTING FIXED ANNUITY PAYMENTS
AND ANY ADJUSTABLE ANNUITY PAYMENTS WE MAKE AVAILABLE ARE HELD IN OUR GENERAL
ACCOUNT.
WE ARE THE LEGAL OWNER OF ASSETS IN THE SEPARATE ACCOUNT. INCOME, GAINS AND
LOSSES, WHETHER OR NOT REALIZED, FROM ASSETS ALLOCATED TO THE SEPARATE ACCOUNT,
ARE CREDITED TO OR CHARGED AGAINST SUCH SEPARATE ACCOUNT IN ACCORDANCE WITH THE
TERMS OF THE ANNUITIES SUPPORTED BY SUCH ASSETS WITHOUT REGARD TO OUR OTHER
INCOME, GAINS OR LOSSES OR TO THE INCOME, GAINS OR LOSSES IN ANY OTHER OF OUR
SEPARATE ACCOUNTS. WE WILL MAINTAIN ASSETS IN THE SEPARATE ACCOUNT WITH A
TOTAL MARKET VALUE AT LEAST EQUAL TO THE RESERVE AND OTHER LIABILITIES WE MUST
MAINTAIN IN RELATION TO THE ANNUITY OBLIGATIONS SUPPORTED BY SUCH ASSETS.
THESE ASSETS MAY ONLY BE CHARGED WITH LIABILITIES WHICH ARISE FROM SUCH
ANNUITIES. THIS MAY INCLUDE ANNUITIES OFFERED PURSUANT TO THIS PROSPECTUS OR
CERTAIN OTHER ANNUITIES WE MAY OFFER. THE INVESTMENTS MADE BY THE SEPARATE
ACCOUNT ARE SUBJECT TO THE REQUIREMENTS OF APPLICABLE STATE LAWS.
THE SUB-ACCOUNTS OFFERED PURSUANT TO THIS PROSPECTUS ARE ALL CLASS 2 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.
AS OF THE DATE OF THIS PROSPECTUS, ONLY THE ANNUITIES OFFERED PURSUANT TO THIS
PROSPECTUS ARE TO MAINTAIN ASSETS IN CLASS 2 SUB-ACCOUNTS. WE MAY OFFER
ADDITIONAL ANNUITIES THAT MAINTAIN ASSETS IN CLASS 2 SUB-ACCOUNTS.
THE AMOUNT OF OUR OBLIGATIONS IN RELATION TO ALLOCATIONS TO THE SUB-ACCOUNTS
ARE BASED ON THE INVESTMENT PERFORMANCE OF SUCH SUB-ACCOUNTS. HOWEVER, THE
OBLIGATIONS THEMSELVES ARE OUR GENERAL CORPORATE OBLIGATIONS.
SEPARATE ACCOUNT B CLASS 2 SUB-ACCOUNTS ARE REGISTERED WITH THE SEC UNDER THE
1940 ACT (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 UNDERLYING MUTUAL FUND OR MUTUAL FUND
PORTFOLIO. SOME OF THE CLASS 2 SUB-ACCOUNTS MAY INVEST IN UNDERLYING MUTUAL
FUNDS OR UNDERLYING MUTUAL FUND PORTFOLIOS IN WHICH SUB-ACCOUNTS IN OTHER
CLASSES OF SEPARATE ACCOUNT B INVEST. YOU WILL FIND ADDITIONAL INFORMATION
ABOUT THE UNDERLYING MUTUAL FUND PORTFOLIOS IN THE PROSPECTUSES FOR SUCH FUNDS.
PORTFOLIOS ADDED TO AN UNDERLYING MUTUAL FUND MAY OR MAY NOT BE OFFERED THROUGH
ADDED SUB-ACCOUNTS.
SUB-ACCOUNTS ARE PERMITTED TO INVEST IN UNDERLYING MUTUAL FUNDS OR PORTFOLIOS
THAT WE CONSIDER SUITABLE. WE ALSO 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 FUND PORTFOLIOS. WE DO NOT
GUARANTEE THE INVESTMENT RESULTS OF ANY SUB-ACCOUNT. THERE IS NO ASSURANCE THAT
THE ACCOUNT VALUE ALLOCATED TO THE SUB-ACCOUNTS WILL EQUAL THE AMOUNTS
ALLOCATED TO THE SUB-ACCOUNTS AS OF ANY TIME OTHER THAN THE VALUATION PERIOD OF
SUCH ALLOCATION. YOU BEAR THE ENTIRE INVESTMENT RISK.
INSURANCE ASPECTS OF THE ANNUITY: AS AN INSURANCE COMPANY WE BEAR THE
INSURANCE RISK INHERENT IN THE ANNUITY. THIS INCLUDES: (A) THE RISKS THAT
MORTALITY AND EXPENSES EXCEED OUR EXPECTATIONS; AND (B) THE INVESTMENT AND RE-
INVESTMENT RISKS IN RELATION TO THE ASSETS SUPPORTING FIXED AND ADJUSTABLE
ANNUITY OBLIGATIONS. WE ARE SUBJECT TO REGULATION THAT REQUIRES RESERVING AND
OTHER PRACTICES IN A MANNER THAT MINIMIZES THE INSURANCE RISK.
CHARGES ASSESSABLE AGAINST THE ANNUITY: THE ANNUITY CHARGES WHICH ARE ASSESSED
OR MAY BE ASSESSABLE UNDER CERTAIN CIRCUMSTANCES ARE: (A) THE SALES CHARGE; (B)
THE MAINTENANCE FEE; (C) A CHARGE FOR TAXES; AND (D) A TRANSFER FEE. THESE
CHARGES ARE ALLOCATED ACCORDING TO OUR RULES. CHARGES ARE ALSO ASSESSED
AGAINST THE SUB-ACCOUNTS AND THE UNDERLYING MUTUAL FUND PORTFOLIOS. WE ALSO
MAY CHARGE YOU FOR SPECIAL SERVICES, SUCH AS DOLLAR COST AVERAGING, SYSTEMATIC
WITHDRAWALS, MINIMUM DISTRIBUTIONS, AND ADDITIONAL REPORTS. AS OF THE DATE OF
THIS PROSPECTUS, WE DO NOT CHARGE YOU FOR ANY SPECIAL SERVICES.
SALES CHARGE: WE MAY ASSESS A SALES CHARGE ON CERTAIN ANNUITY PLANS. WE
MAY OFFER VARIOUS ANNUITY PLANS WHICH DIFFER AS TO BOTH THE SALES CHARGE AND
THE SPECIFIED INTEREST RATE APPLICABLE TO THE MINIMUM DEATH BENEFIT (SEE DEATH
BENEFIT). THE SALES CHARGE AND SPECIFIED INTEREST RATE APPLICABLE TO THE
MINIMUM DEATH BENEFIT FOR THE ANNUITY PLAN BEING OFFERED TO YOU IS SPECIFIED ON
THE PAGE OF THIS PROSPECTUS IMMEDIATELY PRECEDING THE TABLE OF CONTENTS. THE
MAXIMUM CHARGE IS 1.50% OF EACH PURCHASE PAYMENT.
FROM TIME TO TIME WE MAY REDUCE THE AMOUNT OF ANY SALES CHARGE WHEN ANNUITIES
ON A PARTICULAR ANNUITY PLAN ARE SOLD TO INDIVIDUALS OR A GROUP OF INDIVIDUALS
IN A MANNER THAT REDUCES SALES EXPENSES. WE WOULD CONSIDER SUCH FACTORS AS:
(A) THE SIZE AND TYPE OF GROUP; (B) THE AMOUNT OF PURCHASE PAYMENTS; (C)
PRESENT OWNERS MAKING ADDITIONAL PURCHASE PAYMENTS; AND/OR (D) OTHER
TRANSACTIONS WHERE SALES EXPENSES ARE LIKELY TO BE REDUCED.
NO SALES CHARGE IS IMPOSED WHEN ANY GROUP ANNUITY CONTRACT OR ANY ANNUITY
ISSUED PURSUANT TO THIS PROSPECTUS IS OWNED ON ITS ISSUE DATE 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 OR TRUSTEE OF
ANY UNDERLYING MUTUAL FUND; (D) A DIRECTOR, OFFICER OR EMPLOYEE OF ANY
INVESTMENT MANAGER OR SUB-ADVISOR PROVIDING INVESTMENT MANAGEMENT AND/OR
ADVISORY SERVICES TO AN UNDERLYING MUTUAL FUND OR ANY AFFILIATE OF SUCH
INVESTMENT MANAGER OR SUB-ADVISOR; (E) A DIRECTOR, OFFICER, EMPLOYEE OR
REGISTERED REPRESENTATIVE OF A BROKER-DEALER THAT HAS A THEN CURRENT SELLING
AGREEMENT WITH AMERICAN SKANDIA MARKETING, INCORPORATED, FORMERLY SKANDIA LIFE
EQUITY SALES CORPORATION; (F) THE THEN CURRENT SPOUSE OF ANY SUCH PERSON NOTED
IN (B) THROUGH (E), ABOVE; AND (G) PARENTS OF ANY SUCH PERSON NOTED IN (B)
THROUGH (E) ABOVE; AND (H) SUCH PERSON'S CHILD OR OTHER LEGAL DEPENDENT UNDER
THE AGE OF 21;
ANY ELIMINATION OF THE SALES CHARGE OR ANY REDUCTION TO THE AMOUNT OF SUCH
CHARGES WILL NOT DISCRIMINATE UNFAIRLY BETWEEN ANNUITY PURCHASERS. WE WILL NOT
MAKE ANY CHANGES TO THIS CHARGE WHERE PROHIBITED BY LAW.
MAINTENANCE FEE: A MAINTENANCE FEE EQUALLING THE LESSER OF $35 OR 2% MAY
BE ASSESSED AGAINST: (A) THE INITIAL PURCHASE PAYMENT; AND (B) EACH ANNUITY
YEAR AFTER THE FIRST, THE ACCOUNT VALUE. IT APPLIES TO THE INITIAL PURCHASE
PAYMENT ONLY IF LESS THAN $50,000. IT IS ASSESSED AS OF THE FIRST VALUATION
PERIOD OF EACH ANNUITY YEAR AFTER THE FIRST ONLY IF, AT THAT TIME, THE ACCOUNT
VALUE OF THE ANNUITY IS LESS THAN $50,000. CERTAIN REPRESENTATIONS REGARDING
THE MAINTENANCE FEE ARE FOUND IN THE SECTION ENTITLED ADMINISTRATION CHARGE.
TAX CHARGES: IN SEVERAL STATES A TAX IS PAYABLE. WE WILL DEDUCT THE
AMOUNT OF TAX PAYABLE, IF ANY, FROM YOUR PURCHASE PAYMENTS IF THE TAX IS THEN
INCURRED OR FROM YOUR ACCOUNT VALUE WHEN APPLIED UNDER AN ANNUITY OPTION IF THE
TAX IS INCURRED AT THAT TIME. THE AMOUNT OF THE TAX VARIES FROM JURISDICTION
TO JURISDICTION. IT MAY ALSO VARY DEPENDING ON WHETHER THE ANNUITY QUALIFIES
FOR CERTAIN TREATMENT UNDER THE CODE. IN EACH JURISDICTION, THE STATE
LEGISLATURE MAY CHANGE THE AMOUNT OF ANY CURRENT TAX, MAY DECIDE TO IMPOSE THE
TAX, ELIMINATE IT, OR CHANGE THE TIME IT BECOMES PAYABLE. IN THOSE
JURISDICTIONS IMPOSING SUCH A TAX, THE TAX RATES CURRENTLY IN EFFECT RANGE UP
TO 3 1/2%. IN ADDITION TO STATE TAXES, LOCAL TAXES MAY ALSO APPLY. THE
AMOUNTS OF THESE TAXES MAY EXCEED THOSE FOR STATE TAXES.
TRANSFER FEE: WE CHARGE $10.00 FOR EACH TRANSFER AFTER THE TWELFTH IN ANY
ANNUITY YEAR.
ALLOCATION OF ANNUITY CHARGES: ANY APPLICABLE SALES CHARGE IS DEDUCTED
FROM EACH PURCHASE PAYMENT. THE TRANSFER FEE IS ASSESSED AGAINST THE SUB-
ACCOUNTS IN WHICH YOU MAINTAIN ACCOUNT VALUE IMMEDIATELY SUBSEQUENT TO SUCH
TRANSFER. THE TRANSFER FEE IS ALLOCATED ON A PRO-RATA BASIS IN RELATION TO THE
ACCOUNT VALUES IN SUCH SUB-ACCOUNTS AS OF THE VALUATION PERIOD FOR WHICH WE
PRICE THE APPLICABLE TRANSFER. TAX CHARGES ARE ASSESSED AGAINST THE ENTIRE
PURCHASE PAYMENT OR ACCOUNT VALUE AS APPLICABLE. THE INITIAL MAINTENANCE FEE,
IF APPLICABLE, IS ASSESSED AGAINST THE INITIAL PURCHASE PAYMENT. AFTER THE
FIRST ANNUITY YEAR, ANY APPLICABLE MAINTENANCE FEE IS ASSESSED AGAINST THE SUB-
ACCOUNTS ON A PRO-RATA BASIS IN RELATION TO THE ACCOUNT VALUES IN EACH SUB-
ACCOUNT AS OF THE VALUATION PERIOD FOR WHICH WE PRICE THE FEE.
CHARGES ASSESSED AGAINST THE ASSETS: THERE ARE CHARGES ASSESSED AGAINST ASSETS
IN THE SUB-ACCOUNTS. THESE CHARGES ARE DESCRIBED BELOW. NO CHARGES ARE
DEDUCTED FROM ASSETS SUPPORTING FIXED OR ADJUSTABLE ANNUITY PAYMENTS. THE
FACTORS WE USE IN DETERMINING FIXED OR ADJUSTABLE ANNUITY PAYMENTS INCLUDE, BUT
ARE NOT LIMITED TO, OUR EXPECTED INVESTMENT RETURNS, COSTS, RISKS AND PROFIT
TARGETS. WE RESERVE THE RIGHT TO ASSESS A CHARGE AGAINST THE SUB-ACCOUNTS
EQUAL TO ANY TAXES WHICH MAY BE IMPOSED UPON THE SUB-ACCOUNTS.
ADMINISTRATION CHARGE: WE ASSESS EACH CLASS 2 SUB-ACCOUNT, ON A DAILY
BASIS, AN ADMINISTRATION CHARGE. THE CHARGE IS 0.25% PER YEAR OF THE AVERAGE
DAILY TOTAL VALUE OF SUCH SUB-ACCOUNT.
WE ASSESS THE ADMINISTRATION CHARGE AND THE MAINTENANCE FEE DESCRIBED ABOVE AT
AMOUNTS WE BELIEVE NECESSARY TO RECOVER THE ACTUAL COSTS OF SETTING-UP,
MAINTAINING AND ADMINISTERING THE ACCOUNT VALUES ALLOCATED TO THE CLASS 2 SUB-
ACCOUNTS AND SEPARATE ACCOUNT B ITSELF. THE ADMINISTRATION CHARGE AND
MAINTENANCE FEE CAN BE INCREASED ONLY FOR ANNUITIES ISSUED SUBSEQUENT TO THE
EFFECTIVE DATE OF ANY SUCH CHANGE.
A RELATIONSHIP DOES NOT NECESSARILY EXIST BETWEEN THE PORTION OF THE
ADMINISTRATION CHARGE AND THE MAINTENANCE FEE ATTRIBUTABLE TO A PARTICULAR
ANNUITY AND THE EXPENSES ATTRIBUTABLE TO THAT ANNUITY. WE ALLOCATE COSTS PRO-
RATA BETWEEN CLASSES IN SEPARATE ACCOUNT B IN PROPORTION TO THE ASSETS IN THE
VARIOUS CLASSES. TYPES OF EXPENSES WHICH MIGHT BE INCURRED INCLUDE, BUT ARE
NOT NECESSARILY LIMITED TO, THE EXPENSES OF: (A) DEVELOPING AND MAINTAINING A
COMPUTER SUPPORT SYSTEM FOR ADMINISTERING THE ACCOUNT VALUES IN THE SUB-
ACCOUNTS AND SEPARATE ACCOUNT B ITSELF; (B) PREPARING AND DELIVERING
CONFIRMATIONS AND QUARTERLY STATEMENTS; (C) PROCESSING TRANSFER, WITHDRAWAL AND
SURRENDER REQUESTS; (D) RESPONDING TO OWNER INQUIRIES; (E) RECONCILING AND
DEPOSITING CASH RECEIPTS; (F) CALCULATING AND MONITORING DAILY VALUES OF EACH
SUB-ACCOUNT; (G) REPORTING FOR THE SUB-ACCOUNTS, INCLUDING QUARTERLY, SEMI-
ANNUAL AND ANNUAL REPORTS; (H) MAILING AND TABULATION OF SHAREHOLDER PROXY
SOLICITATIONS; AND (I) SUPPORTING VARIOUS INVESTMENT ALLOCATION PROGRAMS THAT
WE EXPECT MAY BE IMPLEMENTED BY ADVISORS ENGAGED BY OWNERS, SUCH AS ASSET
ALLOCATION, REBALANCING, MARKET TIMING AND SIMILAR PROGRAMS.
FROM TIME TO TIME WE MAY REDUCE THE AMOUNT OF THE MAINTENANCE FEE AND/OR THE
ADMINISTRATION CHARGE. WE MAY DO SO WHEN ANNUITIES ARE SOLD TO INDIVIDUALS OR
A GROUP OF INDIVIDUALS IN A MANNER THAT REDUCES 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.
ANY ELIMINATION OF THE MAINTENANCE FEE AND/OR THE ADMINISTRATION CHARGE OR ANY
REDUCTION OF SUCH CHARGES WILL NOT DISCRIMINATE UNFAIRLY BETWEEN ANNUITY
PURCHASERS. WE WILL NOT MAKE ANY CHANGES TO THESE CHARGES WHERE PROHIBITED BY
LAW.
MORTALITY AND EXPENSE RISK CHARGES: THE MORTALITY RISK CHARGE FOR CLASS 2
SUB-ACCOUNTS IS 0.30% PER YEAR AND THE EXPENSE RISK CHARGE FOR SUCH SUB-
ACCOUNTS IS 0.35% PER YEAR. THESE CHARGES ARE ASSESSED IN COMBINATION EACH DAY
AGAINST EACH SUB-ACCOUNT AT THE RATE OF 0.65% PER YEAR OF THE AVERAGE DAILY
TOTAL VALUE OF EACH SUB-ACCOUNT.
WITH RESPECT TO THE MORTALITY RISK CHARGE, WE ASSUME THE RISK THAT THE
MORTALITY EXPERIENCE UNDER THE ANNUITIES MAY BE LESS FAVORABLE THAN OUR
ASSUMPTIONS. THIS COULD ARISE FOR A NUMBER OF REASONS, SUCH AS WHEN PERSONS
UPON WHOSE LIVES ANNUITY PAYMENTS ARE BASED LIVE LONGER THAN WE ANTICIPATED, OR
WHEN THE SUB-ACCOUNTS DECLINE IN VALUE RESULTING IN LOSSES IN PAYING DEATH
BENEFITS. IF OUR MORTALITY ASSUMPTIONS PROVE TO BE INADEQUATE, WE WILL ABSORB
ANY RESULTING LOSS. CONVERSELY, IF THE ACTUAL EXPERIENCE IS MORE FAVORABLE
THAN OUR ASSUMPTIONS, THEN WE WILL BENEFIT FROM THE GAIN. WE ALSO ASSUME THE
RISK THAT THE ADMINISTRATION CHARGE MAY BE INSUFFICIENT TO COVER OUR ACTUAL
ADMINISTRATION COSTS. IF WE REALIZE A PROFIT FROM THE MORTALITY AND EXPENSE
RISK CHARGES, SUCH PROFIT MAY BE USED TO RECOVER SALES EXPENSES INCURRED.
CHARGES OF THE UNDERLYING MUTUAL FUNDS: THE UNDERLYING MUTUAL FUNDS ASSESS
VARIOUS CHARGES FOR INVESTMENT MANAGEMENT AND INVESTMENT ADVISORY FEES. THESE
CHARGES GENERALLY DIFFER BETWEEN PORTFOLIOS WITHIN AN UNDERLYING MUTUAL FUND.
YOU WILL FIND ADDITIONAL DETAILS IN EACH FUND PROSPECTUS AND THE STATEMENTS OF
ADDITIONAL INFORMATION.
PURCHASING ANNUITIES: YOU MAY PURCHASE AN ANNUITY FOR VARIOUS PURPOSES. YOU
MUST MEET OUR REQUIREMENTS BEFORE WE ISSUE AN ANNUITY AND IT TAKES EFFECT. YOU
HAVE A "FREE-LOOK" PERIOD DURING WHICH YOU MAY RETURN YOUR ANNUITY FOR A REFUND
AMOUNT WHICH MAY BE LESS OR MORE THAN YOUR PURCHASE PAYMENT, EXCEPT IN SPECIFIC
CIRCUMSTANCES.
USES OF THE ANNUITY: THE ANNUITY MAY BE ISSUED IN CONNECTION WITH OR
PURCHASED AS A FUNDING VEHICLE FOR CERTAIN RETIREMENT PLANS DESIGNED TO MEET
THE REQUIREMENTS OF VARIOUS SECTIONS OF THE CODE. THESE INCLUDE, BUT ARE NOT
LIMITED TO: (A) SECTIONS 401 (CORPORATE, ASSOCIATION, OR SELF-EMPLOYED
INDIVIDUALS' RETIREMENT PLANS); (B) SECTION 403(B) (TAX-SHELTERED ANNUITIES
AVAILABLE TO EMPLOYEES OF CERTAIN QUALIFYING EMPLOYERS); AND (C) SECTION 408
(ROLLOVERS OR TRANSFERS FOR INDIVIDUAL RETIREMENT ACCOUNTS AND INDIVIDUAL
RETIREMENT ANNUITIES - "IRAS"; SIMPLIFIED EMPLOYEE PENSIONS). WE MAY REQUIRE
ADDITIONAL INFORMATION REGARDING SUCH PLANS BEFORE WE ISSUE AN ANNUITY TO BE
USED IN CONNECTION WITH SUCH RETIREMENT PLANS. WE MAY ALSO RESTRICT OR CHANGE
CERTAIN RIGHTS AND BENEFITS, IF IN OUR OPINION, SUCH RESTRICTIONS OR CHANGES
ARE NECESSARY FOR YOUR ANNUITY TO BE USED IN CONNECTION WITH SUCH RETIREMENT
PLANS. THE ANNUITY MAY ALSO BE USED IN CONNECTION WITH PLANS THAT DO NOT
QUALIFY UNDER THE SECTIONS OF THE CODE NOTED ABOVE. SOME OF THE POTENTIAL TAX
CONSEQUENCES RESULTING FROM VARIOUS USES OF THE ANNUITIES ARE DISCUSSED IN THE
SECTION ENTITLED "CERTAIN TAX CONSIDERATIONS'.
APPLICATION AND INITIAL PAYMENT: YOU MUST MEET OUR UNDERWRITING
REQUIREMENTS AND FORWARD A PURCHASE PAYMENT IF YOU SEEK TO PURCHASE AN ANNUITY.
THESE REQUIREMENTS MAY INCLUDE A PROPERLY COMPLETED APPLICATION. WE MAY ISSUE
AN ANNUITY WITHOUT COMPLETION OF AN APPLICATION FOR CERTAIN CLASSES OF
ANNUITIES, WHERE PERMITTED BY LAW.
THE MINIMUM INITIAL PURCHASE PAYMENT WE ACCEPT FOR ANNUITIES THAT ARE NOT TO BE
USED WITH VARIOUS RETIREMENT PLANS DESIGNED TO MEET THE REQUIREMENTS OF CERTAIN
SECTIONS OF THE CODE IS $10,000 UNLESS YOU AUTHORIZE THE USE OF BANK DRAFTING.
WE ACCEPT LOWER AMOUNTS FOR ANNUITIES THAT ARE DESIGNED TO BE USED IN
CONJUNCTION WITH SUCH RETIREMENT PLANS. OUR OFFICE MUST GIVE YOU PRIOR
APPROVAL BEFORE WE ACCEPT A PURCHASE PAYMENT THAT WOULD RESULT IN THE ACCOUNT
VALUE OF ALL ANNUITIES YOU MAINTAIN WITH US EXCEEDING $1,000,000. WE CONFIRM
EACH PURCHASE PAYMENT IN WRITING. MULTIPLE ANNUITIES PURCHASED FROM US WITHIN
THE SAME CALENDAR YEAR MAY BE TREATED FOR TAX PURPOSES AS IF THEY WERE A SINGLE
ANNUITY (SEE "CERTAIN TAX CONSIDERATIONS").
WE RESERVE THE RIGHT TO ALLOCATE YOUR INITIAL NET PURCHASE PAYMENT TO THE
INVESTMENT OPTIONS UP TO TWO BUSINESS DAYS AFTER WE RECEIVE, AT OUR OFFICE, ALL
OF OUR REQUIREMENTS FOR ISSUING THE ANNUITY AS APPLIED FOR. WE MAY RETAIN THE
PURCHASE PAYMENT AND NOT ALLOCATE THE INITIAL NET PURCHASE PAYMENT TO THE
INVESTMENT OPTIONS FOR UP TO FIVE BUSINESS DAYS WHILE WE ATTEMPT TO OBTAIN ALL
SUCH REQUIREMENTS. WE WILL TRY TO REACH YOU OR ANY OTHER PARTY FROM WHOM WE
NEED ANY INFORMATION OR MATERIALS. IF THE REQUIREMENTS CANNOT BE FULFILLED
WITHIN THAT TIME, WE WILL: (A) ATTEMPT TO INFORM YOU OF THE DELAY; AND (B)
RETURN THE AMOUNT OF THE PURCHASE PAYMENT, UNLESS YOU SPECIFICALLY CONSENT TO
OUR RETAINING IT UNTIL ALL OUR REQUIREMENTS ARE MET. ONCE OUR REQUIREMENTS ARE
MET, THE INITIAL NET PURCHASE PAYMENT IS APPLIED TO THE INVESTMENT OPTIONS
WITHIN TWO BUSINESS DAYS. ONCE WE ACCEPT YOUR PURCHASE PAYMENT AND OUR
REQUIREMENTS ARE MET, WE ISSUE AN ANNUITY.
BANK DRAFTING: YOU MAY MAKE PURCHASE PAYMENTS TO YOUR ANNUITY USING BANK
DRAFTING. HOWEVER, YOU MUST PAY AT LEAST ONE PRIOR PURCHASE PAYMENT BY CHECK
OR WIRE TRANSFER. WE WILL ACCEPT AN INITIAL PURCHASE PAYMENT LOWER THAN OUR
STANDARD MINIMUM PURCHASE PAYMENT REQUIREMENT OF $10,000 IF YOU ALSO FURNISH
BANK DRAFTING INSTRUCTIONS THAT PROVIDE AMOUNTS THAT WILL MEET A $1,000 MINIMUM
PURCHASE PAYMENT REQUIREMENT TO BE PAID WITHIN 12 MONTHS. THIS ALSO APPLIES TO
ANNUITIES DESIGNED TO BE USED IN CONJUNCTION WITH VARIOUS RETIREMENT PLANS. WE
WILL ACCEPT AN INITIAL PURCHASE PAYMENT IN AN AMOUNT AS LOW AS $100, BUT IT
MUST BE ACCOMPANIED BY A BANK DRAFTING AUTHORIZATION FORM ALLOWING MONTHLY
PURCHASE PAYMENTS OF AT LEAST $75.
RIGHT TO RETURN THE ANNUITY: YOU HAVE THE RIGHT TO RETURN THE ANNUITY
WITHIN TWENTY-ONE DAYS OF RECEIPT OR LONGER WHERE REQUIRED BY LAW. THE PERIOD
IN WHICH YOU CAN TAKE THIS ACTION IS KNOWN AS A "FREE-LOOK" PERIOD. TO
EXERCISE YOUR RIGHT TO RETURN THE ANNUITY DURING THE "FREE-LOOK" PERIOD, YOU
MUST RETURN THE ANNUITY. THE AMOUNT TO BE REFUNDED IS THE THEN CURRENT ACCOUNT
VALUE PLUS ANY SALES CHARGE, MAINTENANCE FEE AND/OR ANY TAX CHARGE DEDUCTED.
THIS IS THE "STANDARD REFUND". WE RETURN THE GREATER OF THE "STANDARD REFUND"
OR ANY PURCHASE PAYMENTS RECEIVED LESS ANY WITHDRAWALS IF NECESSARY TO MEET
FEDERAL REQUIREMENTS FOR IRAS OR CERTAIN STATE LAW REQUIREMENTS. WE TELL YOU
HOW WE DETERMINE THE AMOUNT PAYABLE UNDER ANY SUCH RIGHT AT THE TIME WE ISSUE
YOUR ANNUITY.
ALLOCATION OF NET PURCHASE PAYMENTS: ALL ALLOCATIONS OF NET PURCHASE
PAYMENTS ARE SUBJECT TO OUR ALLOCATION RULES (SEE "ALLOCATION RULES").
ALLOCATION OF YOUR INITIAL NET PURCHASE PAYMENT AND ANY NET PURCHASE PAYMENTS
RECEIVED DURING THE "FREE-LOOK" PERIOD ARE SUBJECT TO AN ADDITIONAL ALLOCATION
RULE IF STATE LAW REQUIRES RETURN OF AT LEAST YOUR PURCHASE PAYMENTS SHOULD YOU
RETURN THE ANNUITY UNDER SUCH "FREE-LOOK" PROVISION. IF SUCH STATE LAW APPLIES
TO YOUR ANNUITY: (A) WE ALLOCATE ANY PORTION OF ANY SUCH NET PURCHASE PAYMENTS
TO THE AST MONEY MARKET 2 SUB-ACCOUNT; AND (B) AT THE END OF SUCH "FREE-LOOK"
PERIOD WE REALLOCATE ACCOUNT VALUE ACCORDING TO YOUR THEN MOST RECENT
ALLOCATION INSTRUCTIONS TO US, SUBJECT TO OUR ALLOCATION RULES. HOWEVER, WHERE
PERMITTED BY LAW IN SUCH JURISDICTIONS, WE WILL ALLOCATE SUCH NET PURCHASE
PAYMENTS ACCORDING TO YOUR INSTRUCTIONS, WITHOUT ANY TEMPORARY ALLOCATION TO
THE AST MONEY MARKET 2 SUB-ACCOUNT IF YOU EXECUTE A RETURN WAIVER ("RETURN
WAIVER"). UNDER THE RETURN WAIVER, YOU WAIVE YOUR RIGHT TO THE RETURN OF THE
GREATER OF THE "STANDARD REFUND" OR THE PURCHASE PAYMENT RECEIVED LESS ANY
WITHDRAWALS. INSTEAD, YOU ONLY ARE ENTITLED TO THE RETURN OF THE "STANDARD
REFUND" (SEE "RIGHT TO RETURN THE ANNUITY")..
OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS: YOU MAKE CERTAIN
DESIGNATIONS THAT APPLY TO THE ANNUITY IF ISSUED. THESE DESIGNATIONS ARE
SUBJECT TO OUR RULES AND TO VARIOUS REGULATORY OR STATUTORY REQUIREMENTS
DEPENDING ON THE USE OF THE ANNUITY. THESE DESIGNATIONS INCLUDE AN OWNER, A
CONTINGENT OWNER, AN ANNUITANT, A CONTINGENT ANNUITANT, A BENEFICIARY, AND A
CONTINGENT BENEFICIARY. CERTAIN DESIGNATIONS ARE REQUIRED, AS INDICATED BELOW.
SUCH DESIGNATIONS WILL BE REVOCABLE UNLESS YOU INDICATE OTHERWISE OR WE ENDORSE
YOUR ANNUITY TO INDICATE THAT SUCH DESIGNATION IS IRREVOCABLE TO MEET CERTAIN
REGULATORY OR STATUTORY REQUIREMENTS.
SOME OF THE TAX IMPLICATIONS OF VARIOUS DESIGNATIONS ARE DISCUSSED IN THE
SECTION ENTITLED CERTAIN TAX CONSIDERATIONS. HOWEVER, THERE ARE OTHER TAX
ISSUES THAN THOSE ADDRESSED IN THAT SECTION. THESE INCLUDE, BUT ARE NOT
LIMITED TO, ESTATE AND INHERITANCE TAX ISSUES. YOU SHOULD CONSULT WITH A
COMPETENT TAX COUNSELOR REGARDING THE TAX IMPLICATIONS OF VARIOUS DESIGNATIONS.
YOU SHOULD ALSO CONSULT WITH A COMPETENT LEGAL ADVISOR AS TO THE IMPLICATIONS
OF CERTAIN DESIGNATIONS IN RELATION TO AN ESTATE, BANKRUPTCY, COMMUNITY
PROPERTY WHERE APPLICABLE AND OTHER MATTERS.
AN OWNER MUST BE NAMED. YOU MAY NAME MORE THAN ONE OWNER. IF YOU DO, ALL
RIGHTS RESERVED TO OWNERS ARE THEN HELD JOINTLY. WE REQUIRE THE CONSENT IN
WRITING OF ALL JOINT OWNERS FOR ANY TRANSACTION FOR WHICH WE REQUIRE THE
WRITTEN CONSENT OF OWNERS. WHERE REQUIRED BY LAW, WE REQUIRE THE CONSENT IN
WRITING OF THE SPOUSE OF ANY PERSON WITH A VESTED INTEREST IN AN ANNUITY.
NAMING SOMEONE OTHER THAN THE PAYOR OF ANY PURCHASE PAYMENT AS OWNER MAY HAVE
GIFT, ESTATE OR OTHER TAX IMPLICATIONS.
WHERE ALLOWED BY LAW, YOU MAY NAME A CONTINGENT OWNER. HOWEVER, THIS
DESIGNATION TAKES EFFECT ONLY ON OR AFTER THE ANNUITY DATE.
YOU MUST NAME AN ANNUITANT. WE DO NOT ACCEPT A DESIGNATION OF JOINT
ANNUITANTS. WHERE PERMITTED BY LAW, YOU MAY NAME ONE OR MORE CONTINGENT
ANNUITANTS. THERE MAY BE ADVERSE TAX CONSEQUENCES IF A CONTINGENT ANNUITANT
SUCCEEDS AN ANNUITANT AND THE ANNUITY IS OWNED BY A TRUST THAT IS NEITHER TAX
EXEMPT NOR DOES NOT QUALIFY FOR PREFERRED TREATMENT UNDER CERTAIN SECTIONS OF
THE CODE, SUCH AS SECTION 401 (A "NON-QUALIFIED" TRUST). IN GENERAL, THE CODE
IS DESIGNED TO PREVENT THE BENEFIT OF TAX DEFERRAL FROM CONTINUING FOR LONG
PERIODS OF TIME ON AN INDEFINITE BASIS. 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. WHERE
ALLOWED BY LAW, YOU MUST NAME CONTINGENT ANNUITANTS ACCORDING TO OUR RULES WHEN
AN ANNUITY IS USED AS A FUNDING VEHICLE FOR CERTAIN RETIREMENT PLANS DESIGNED
TO MEET THE REQUIREMENTS OF SECTION 401 OF THE CODE
YOU MAY NAME MORE THAN ONE PRIMARY AND MORE THAN ONE CONTINGENT BENEFICIARY.
IF YOU DO, THE PROCEEDS WILL BE PAID IN EQUAL SHARES TO THE SURVIVORS IN THE
APPROPRIATE BENEFICIARY CLASS, UNLESS YOU HAVE REQUESTED OTHERWISE IN WRITING.
IF THE PRIMARY BENEFICIARY DIES BEFORE DEATH PROCEEDS BECOME PAYABLE, THE
PROCEEDS WILL BECOME PAYABLE TO THE CONTINGENT BENEFICIARY. IF NO BENEFICIARY
IS ALIVE AT THE TIME OF THE DEATH UPON WHICH PROCEEDS BECOME PAYABLE OR IN THE
ABSENCE OF ANY BENEFICIARY DESIGNATION, THE PROCEEDS WILL VEST IN YOU OR YOUR
ESTATE.
ACCOUNT VALUE: IN THE ACCUMULATION PHASE YOUR ANNUITY HAS AN ACCOUNT VALUE.
YOUR TOTAL ACCOUNT VALUE IS THE SUM OF YOUR ACCOUNT VALUE IN EACH INVESTMENT
OPTION.
WE DETERMINE YOUR ACCOUNT VALUE SEPARATELY FOR EACH SUB-ACCOUNT. TO DETERMINE
THE ACCOUNT VALUE IN EACH SUB-ACCOUNT WE MULTIPLY THE UNIT PRICE AS OF THE
VALUATION PERIOD FOR WHICH THE CALCULATION IS BEING MADE TIMES THE NUMBER OF
UNITS ATTRIBUTABLE TO YOU IN THAT SUB-ACCOUNT AS OF THAT VALUATION PERIOD. THE
METHOD WE USE TO DETERMINE UNIT PRICES IS SHOWN IN THE STATEMENT OF ADDITIONAL
INFORMATION.
THE NUMBER OF UNITS ATTRIBUTABLE TO YOU IN A SUB-ACCOUNT IS THE NUMBER OF UNITS
YOU PURCHASED LESS THE NUMBER TRANSFERRED OR WITHDRAWN. WE DETERMINE THE
NUMBER OF UNITS INVOLVED IN ANY TRANSACTION SPECIFIED IN DOLLARS BY DIVIDING
THE DOLLAR VALUE OF THE TRANSACTION BY THE UNIT PRICE OF THE EFFECTED SUB-
ACCOUNT AS OF THE VALUATION PERIOD APPLICABLE TO SUCH TRANSACTION.
RIGHTS, BENEFITS AND SERVICES: THE ANNUITY PROVIDES VARIOUS RIGHTS, BENEFITS
AND SERVICES SUBSEQUENT TO ITS ISSUANCE AND YOUR DECISION TO KEEP IT BEYOND THE
"FREE-LOOK" PERIOD. A NUMBER OF THESE RIGHTS, BENEFITS AND SERVICES, AS WELL
AS SOME OF THE RULES AND CONDITIONS TO WHICH THEY ARE SUBJECT, ARE DESCRIBED
BELOW. THESE RIGHTS, BENEFITS AND SERVICES INCLUDE, BUT ARE NOT LIMITED TO:
(A) MAKING ADDITIONAL PURCHASE PAYMENTS; (B) BANK DRAFTING; (C) CHANGING
REVOCABLE DESIGNATIONS; (D) TRANSFERRING ACCOUNT VALUES BETWEEN INVESTMENT
OPTIONS; (E) RECEIVING LUMP SUM PAYMENTS, SYSTEMATIC WITHDRAWALS OR MINIMUM
DISTRIBUTIONS, ANNUITY PAYMENTS AND DEATH BENEFITS; (F) TRANSFERRING OR
ASSIGNING YOUR ANNUITY; (G) EXERCISING CERTAIN VOTING RIGHTS IN RELATION TO THE
UNDERLYING MUTUAL FUND PORTFOLIOS IN WHICH THE SUB-ACCOUNTS INVEST; AND (H)
RECEIVING REPORTS. THESE RIGHTS, BENEFITS AND SERVICES MAY BE LIMITED,
ELIMINATED OR ALTERED WHEN AN ANNUITY IS PURCHASED IN CONJUNCTION WITH A
QUALIFIED PLAN. WE MAY REQUIRE PRESENTATION OF PROPER IDENTIFICATION,
INCLUDING A PERSONAL IDENTIFICATION NUMBER ("PIN") ISSUED BY US, PRIOR TO
ACCEPTING ANY INSTRUCTION BY TELEPHONE. WE FORWARD YOUR PIN TO YOU SHORTLY
AFTER YOUR ANNUITY IS ISSUED. TO THE EXTENT PERMITTED BY LAW OR REGULATION,
NEITHER WE NOR ANY PERSON AUTHORIZED BY US WILL BE RESPONSIBLE FOR ANY CLAIM,
LOSS, LIABILITY OR EXPENSE IN CONNECTION WITH A TELEPHONE TRANSFER OR ANY OTHER
TRANSACTION FOR WHICH WE ACCEPT INSTRUCTIONS BY TELEPHONE IF WE OR SUCH OTHER
PERSON ACTED ON TELEPHONE INSTRUCTIONS IN GOOD FAITH IN RELIANCE ON YOUR
TELEPHONE INSTRUCTION AUTHORIZATION AND ON REASONABLE PROCEDURES TO IDENTIFY
PERSONS SO AUTHORIZED THROUGH VERIFICATION METHODS WHICH MAY INCLUDE A REQUEST
FOR YOUR SOCIAL SECURITY NUMBER OR A PERSONAL IDENTIFICATION NUMBER (PIN) AS
ISSUED BY US. WE MAY BE LIABLE FOR LOSSES DUE TO UNAUTHORIZED OR FRAUDULENT
INSTRUCTIONS SHOULD WE NOT FOLLOW SUCH REASONABLE PROCEDURES.
ADDITIONAL PURCHASE PAYMENTS: THE MINIMUM FOR ANY ADDITIONAL PURCHASE
PAYMENT IS $100, EXCEPT AS PART OF A BANK DRAFTING PROGRAM (SEE "BANK
DRAFTING"), OR LESS WHERE REQUIRED BY LAW. ADDITIONAL PURCHASE PAYMENTS MAY BE
PAID AT ANY TIME BEFORE THE ANNUITY DATE. SUBJECT TO OUR ALLOCATION RULES, WE
ALLOCATE ADDITIONAL NET PURCHASE PAYMENTS ACCORDING TO YOUR MOST RECENT
INSTRUCTIONS FOR ALLOCATION OF NET PURCHASE PAYMENTS.
CHANGING REVOCABLE DESIGNATIONS: UNLESS YOU INDICATED THAT A PRIOR CHOICE
WAS IRREVOCABLE OR YOUR ANNUITY HAS BEEN ENDORSED TO LIMIT CERTAIN CHANGES, YOU
MAY REQUEST TO CHANGE OWNER, ANNUITANT AND BENEFICIARY DESIGNATIONS BY SENDING
A REQUEST IN WRITING. SUCH CHANGES WILL BE SUBJECT TO OUR ACCEPTANCE. SOME OF
THE CHANGES WE WILL NOT ACCEPT INCLUDE, BUT ARE NOT LIMITED TO: (A) 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 A
OWNER'S DEATH; (B) A NEW OWNER OR ANNUITANT WHO DOES NOT MEET OUR THEN CURRENT
UNDERWRITING GUIDELINES; (C) A NEW ANNUITANT SUBSEQUENT TO THE ANNUITY DATE IF
THE ANNUITY OPTION SELECTED INCLUDES A LIFE CONTINGENCY; AND (D) A NEW
ANNUITANT PRIOR TO THE ANNUITY DATE IF THE ANNUITY IS OWNED BY AN ENTITY.
ALLOCATION RULES: IN THE ACCUMULATION PHASE, YOU MAY MAINTAIN ACCOUNT
VALUE IN UP TO TEN SUB-ACCOUNTS. SHOULD YOU REQUEST A TRANSACTION THAT WOULD
LEAVE LESS THAN ANY MINIMUM AMOUNT WE THEN REQUIRE IN AN INVESTMENT OPTION, WE
RESERVE THE RIGHT, TO THE EXTENT PERMITTED BY LAW, TO ADD THE BALANCE OF YOUR
ACCOUNT VALUE IN THE APPLICABLE SUB-ACCOUNT TO THE TRANSACTION AND CLOSE OUT
YOUR BALANCE IN THAT INVESTMENT OPTION. WITHDRAWALS OF ANY TYPE ARE TAKEN PRO-
RATA FROM THE INVESTMENT OPTIONS BASED ON THE THEN CURRENT ACCOUNT VALUES IN
SUCH INVESTMENT OPTIONS UNLESS WE RECEIVE INSTRUCTIONS FROM YOU PRIOR TO SUCH
WITHDRAWAL.
SHOULD YOU EITHER: (A) REQUEST ANY REBALANCING SERVICES WE MAY OFFER (SEE
"REBALANCING"); OR (B) AUTHORIZE AN INDEPENDENT THIRD PARTY TO TRANSACT
TRANSFERS ON YOUR BEHALF AND SUCH THIRD PARTY ARRANGES FOR REBALANCING OF ANY
PORTION OF YOUR ACCOUNT VALUE IN ACCORDANCE WITH ANY ASSET ALLOCATION STRATEGY;
OR (C) AUTHORIZE AN INDEPENDENT THIRD PARTY TO TRANSACT TRANSFERS IN ACCORDANCE
WITH A MARKET TIMING STRATEGY; THEN WE REQUIRE THAT ALL PURCHASE PAYMENTS,
INCLUDING THE INITIAL PURCHASE PAYMENT, RECEIVED WHILE YOUR ANNUITY IS SUBJECT
TO SUCH AN ARRANGEMENT ARE ALLOCATED TO THE SAME INVESTMENT OPTIONS AND IN THE
SAME PROPORTIONS AS THEN REQUIRED PURSUANT TO THE APPLICABLE REBALANCING, ASSET
ALLOCATION OR MARKET TIMING PROGRAM, UNLESS WE HAVE RECEIVED ALTERNATE
INSTRUCTIONS. SUCH ALLOCATION REQUIREMENTS TERMINATE SIMULTANEOUS TO THE
TERMINATION OF AN AUTHORIZATION FOR REBALANCING OR ANY AUTHORIZATION TO A THIRD
PARTY TO TRANSACT TRANSFERS ON YOUR BEHALF.
TRANSFERS: IN THE ACCUMULATION PHASE YOU MAY TRANSFER ACCOUNT VALUE
BETWEEN INVESTMENT OPTIONS, SUBJECT TO OUR ALLOCATION RULES (SEE "ALLOCATION
RULES"). TRANSFERS ARE NOT SUBJECT TO TAXATION (SEE "TRANSFERS BETWEEN
INVESTMENT OPTIONS"). WE CHARGE $10.00 FOR EACH TRANSFER AFTER THE TWELFTH IN
ANY ANNUITY YEAR, INCLUDING TRANSFERS TRANSACTED AS PART OF A DOLLAR COST
AVERAGING PROGRAM (SEE "DOLLAR COST AVERAGING") OR ANY REBALANCING, MARKET
TIMING, ASSET ALLOCATION OR SIMILAR PROGRAM WHICH YOU AUTHORIZE TO BE EMPLOYED
ON YOUR BEHALF. ALL TRANSFERS OF YOUR ACCOUNT VALUE OCCURRING DURING THE SAME
VALUATION PERIOD ARE COUNTED AS ONE TRANSFER FOR PURPOSES OF DETERMINING THE
NUMBER OF TRANSFERS IN AN ANNUITY YEAR. YOUR TRANSFER REQUEST MUST BE IN
WRITING OR MEET OUR REQUIREMENTS FOR ACCEPTING INSTRUCTIONS WE RECEIVE OVER THE
PHONE.
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 A OWNER OR
CERTAIN OWNERS IF WE BELIEVE THAT: (A) EXCESSIVE TRADING BY SUCH OWNER OR
OWNERS OR A SPECIFIC TRANSFER REQUEST OR GROUP OF TRANSFER REQUESTS MAY HAVE A
DETRIMENTAL EFFECT ON UNIT VALUES OR THE SHARE PRICES OF THE UNDERLYING MUTUAL
FUND PORTFOLIOS; OR (B) WE ARE INFORMED BY THE UNDERLYING MUTUAL FUND THAT THE
PURCHASE OR REDEMPTION OF SHARES IS TO BE RESTRICTED BECAUSE OF EXCESSIVE
TRADING OR A SPECIFIC TRANSFER OR GROUP OF TRANSFERS IS DEEMED TO HAVE A
DETRIMENTAL EFFECT ON SHARE PRICES OF AN AFFECTED UNDERLYING MUTUAL FUND
PORTFOLIO OR PORTFOLIOS.
WHERE PERMITTED BY LAW, WE MAY ACCEPT YOUR AUTHORIZATION OF A THIRD PARTY TO
TRANSFER ACCOUNT VALUES ON YOUR BEHALF, SUBJECT TO OUR RULES. WE MAY SUSPEND
OR CANCEL SUCH ACCEPTANCE AT ANY TIME. WE NOTIFY YOU OF ANY SUCH SUSPENSION OR
CANCELLATION. WE MAY RESTRICT THE INVESTMENT OPTIONS THAT WILL BE AVAILABLE TO
YOU FOR TRANSFERS OR ALLOCATIONS OF NET PURCHASE PAYMENTS DURING ANY PERIOD IN
WHICH YOU AUTHORIZE A THIRD PARTY THAT PROVIDES MARKET TIMING SERVICES TO ACT
ON YOUR BEHALF. WE GIVE YOU AND/OR THE THIRD PARTY YOU AUTHORIZE PRIOR
NOTIFICATION OF ANY SUCH RESTRICTIONS. HOWEVER, WE WILL NOT ENFORCE SUCH A
RESTRICTION IF WE ARE PROVIDED EVIDENCE SATISFACTORY TO US THAT: (A) SUCH
THIRD PARTY HAS BEEN APPOINTED BY A COURT OF COMPETENT JURISDICTION TO ACT ON
YOUR BEHALF; OR (B) SUCH THIRD PARTY HAS BEEN APPOINTED BY YOU TO ACT ON YOUR
BEHALF FOR ALL YOUR FINANCIAL AFFAIRS.
WE OR AN AFFILIATE OF OURS MAY PROVIDE ADMINISTRATIVE OR OTHER SUPPORT SERVICES
TO INDEPENDENT THIRD PARTIES YOU AUTHORIZE TO CONDUCT TRANSFERS ON YOUR BEHALF
OR WHO PROVIDE RECOMMENDATIONS AS TO HOW YOUR ACCOUNT VALUES SHOULD BE
ALLOCATED. THIS INCLUDES, BUT IS NOT LIMITED TO, REBALANCING YOUR ACCOUNT
VALUE AMONG INVESTMENT OPTIONS IN ACCORDANCE WITH VARIOUS INVESTMENT ALLOCATION
STRATEGIES SUCH THIRD PARTY MAY EMPLOY, OR TRANSFERRING ACCOUNT VALUES BETWEEN
INVESTMENT OPTIONS IN ACCORDANCE WITH MARKET TIMING STRATEGIES EMPLOYED BY SUCH
THIRD PARTIES. SUCH INDEPENDENT THIRD PARTIES MAY OR MAY NOT BE APPOINTED OUR
AGENTS FOR THE SALE OF ANNUITIES. HOWEVER, WE DO NOT ENGAGE ANY THIRD PARTIES
TO OFFER INVESTMENT ALLOCATION SERVICES OF ANY TYPE, SO THAT PERSONS OR FIRMS
OFFERING SUCH SERVICES DO SO INDEPENDENT FROM ANY AGENCY RELATIONSHIP THEY MAY
HAVE WITH US FOR THE SALE OF ANNUITIES. WE THEREFORE TAKE NO RESPONSIBILITY FOR
THE INVESTMENT ALLOCATIONS AND TRANSFERS TRANSACTED ON YOUR BEHALF BY SUCH
THIRD PARTIES OR ANY INVESTMENT ALLOCATION RECOMMENDATIONS MADE BY SUCH
PARTIES. WE DO NOT CURRENTLY CHARGE YOU EXTRA FOR PROVIDING THESE SUPPORT
SERVICES.
DOLLAR COST AVERAGING: WE OFFER DOLLAR COST AVERAGING IN THE
ACCUMULATION PHASE. DOLLAR COST AVERAGING IS A PROGRAM DESIGNED TO PROVIDE FOR
REGULAR, APPROXIMATELY LEVEL INVESTMENTS OVER TIME. YOU MAY CHOOSE TO TRANSFER
EARNINGS ONLY, PRINCIPAL PLUS EARNINGS OR A FLAT DOLLAR AMOUNT. WE MAKE NO
GUARANTEE THAT A DOLLAR COST AVERAGING PROGRAM WILL RESULT IN A PROFIT OR
PROTECT AGAINST A LOSS IN A DECLINING MARKET. YOU MAY SELECT THIS PROGRAM BY
SUBMITTING TO US A REQUEST IN WRITING. YOU MAY CANCEL YOUR PARTICIPATION IN
THIS PROGRAM IN WRITING OR BY PHONE IF YOU HAVE PREVIOUSLY AUTHORIZED OUR
ACCEPTANCE OF SUCH INSTRUCTIONS.
DOLLAR COST AVERAGING IS AVAILABLE FROM ANY OF THE INVESTMENT OPTIONS WE CHOOSE
TO MAKE AVAILABLE FOR SUCH A PROGRAM. YOUR ANNUITY MUST HAVE AN ACCOUNT VALUE
OF NOT LESS THAN $20,000 AT THE TIME WE ACCEPT YOUR REQUEST FOR A DOLLAR COST
AVERAGING PROGRAM. TRANSFERS UNDER A DOLLAR COST AVERAGING PROGRAM ARE COUNTED
IN DETERMINING THE APPLICABILITY OF THE TRANSFER FEE (SEE "TRANSFERS"). WE
RESERVE THE RIGHT TO LIMIT THE INVESTMENT OPTIONS INTO WHICH ACCOUNT VALUE MAY
BE TRANSFERRED AS PART OF A DOLLAR COST AVERAGING PROGRAM. WE ALSO RESERVE THE
RIGHT TO CHARGE A PROCESSING FEE FOR THIS SERVICE. SHOULD WE SUSPEND OR CANCEL
THE OFFERING OF THIS SERVICE, SUCH SUSPENSION OR CANCELLATION WILL NOT AFFECT
ANY DOLLAR COST AVERAGING PROGRAMS THEN IN EFFECT. DOLLAR COST AVERAGING IS
NOT AVAILABLE WHILE A REBALANCING, ASSET ALLOCATION, OR MARKET TIMING TYPE OF
PROGRAM IS USED IN CONNECTION WITH YOUR ANNUITY.
REBALANCING: WE MAY OFFER, DURING THE ACCUMULATION PHASE, AUTOMATIC
QUARTERLY, SEMI-ANNUAL OR ANNUAL REBALANCING AMONG THE VARIABLE INVESTMENT
OPTIONS OF YOUR CHOICE. THIS PROVIDES THE CONVENIENCE OF AUTOMATIC REBALANCING
WITHOUT HAVING TO PROVIDE US INSTRUCTIONS ON A PERIODIC BASIS. FAILURE TO
CHOOSE THIS OPTION DOES NOT PREVENT YOU FROM PROVIDING US WITH TRANSFER
INSTRUCTIONS FROM TIME-TO-TIME THAT HAVE THE EFFECT OF REBALANCING. IT ALSO
DOES NOT PREVENT OTHER REQUESTED TRANSFERS FROM BEING TRANSACTED.
UNDER THIS PROGRAM, ACCOUNT VALUES ARE REBALANCED QUARTERLY, SEMI-ANNUALLY OR
ANNUALLY, AS APPLICABLE, TO THE PERCENTAGES YOU REQUEST. THE REBALANCING MAY
OCCUR QUARTERLY, SEMI-ANNUALLY OR ANNUALLY BASED UPON THE ISSUE DATE
ANNIVERSARY. IF A TRANSFER IS REQUESTED PRIOR TO THE DATE ACCOUNT VALUES ARE
TO BE REBALANCED WHILE AN AUTOMATIC REBALANCING PROGRAM IS IN EFFECT, WE
AUTOMATICALLY ALTER THE REBALANCING PERCENTAGES GOING FORWARD (UNLESS WE
RECEIVE ALTERNATE INSTRUCTIONS) TO THE RATIOS BETWEEN ACCOUNT VALUES IN THE
VARIABLE INVESTMENT OPTIONS AS OF THE EFFECTIVE DATE OF SUCH REQUESTED TRANSFER
ONCE IT HAS BEEN PROCESSED. AUTOMATIC REBALANCING IS DELAYED ONE CALENDAR
QUARTER IF ACCOUNT VALUE IS BEING MAINTAINED IN THE AST MONEY MARKET 2 SUB-
ACCOUNT FOR THE DURATION OF YOUR ANNUITY'S "FREE-LOOK" PERIOD AND REBALANCING
WOULD OTHERWISE OCCUR DURING SUCH PERIOD (SEE "ALLOCATION OF NET PURCHASE
PAYMENTS").
YOU MAY CHANGE THE PERCENTAGE ALLOCABLE TO EACH INVESTMENT OPTION AT ANY TIME.
HOWEVER, YOU MAY NOT CHOOSE TO ALLOCATE LESS THAN 5% OF ACCOUNT VALUE TO ANY
INVESTMENT OPTION.
THE ACCOUNT VALUE OF YOUR ANNUITY MUST BE AT LEAST $10,000 WHEN WE RECEIVE YOUR
AUTOMATIC REBALANCING REQUEST. WE MAY REQUIRE THAT ALL VARIABLE INVESTMENT
OPTIONS IN WHICH YOU MAINTAIN ACCOUNT VALUE MUST BE USED IN THE REBALANCING
PROGRAM. YOU MAY MAINTAIN ACCOUNT VALUE IN AT LEAST TWO AND NOT MORE THAN TEN
INVESTMENT OPTIONS WHEN USING A REBALANCING PROGRAM. YOU MAY NOT
SIMULTANEOUSLY PARTICIPATE IN REBALANCING AND DOLLAR COST AVERAGING.
REBALANCING ALSO IS NOT AVAILABLE WHEN A PROGRAM OF SYSTEMATIC WITHDRAWALS OF
EARNINGS OR EARNINGS PLUS PRINCIPAL IS IN EFFECT.
FOR PURPOSES OF DETERMINING THE NUMBER OF TRANSFERS MADE IN ANY ANNUITY YEAR,
ALL REBALANCING TRANSFERS MADE ON THE SAME DAY ARE TREATED AS ONE TRANSFER. WE
RESERVE THE RIGHT TO CHARGE A PROCESSING FEE FOR SIGNING UP FOR THIS SERVICE.
TO ELECT TO PARTICIPATE OR TO TERMINATE PARTICIPATION IN AUTOMATIC REBALANCING,
WE MAY REQUIRE INSTRUCTIONS IN WRITING AT OUR OFFICE IN A FORM SATISFACTORY TO
US.
DISTRIBUTIONS: DISTRIBUTIONS AVAILABLE FROM YOUR ANNUITY DURING THE
ACCUMULATION PHASE INCLUDE SURRENDER, PARTIAL WITHDRAWALS, SYSTEMATIC
WITHDRAWALS, MINIMUM DISTRIBUTIONS (IN RELATION TO QUALIFIED PLANS) AND A DEATH
BENEFIT. IN THE PAYOUT PHASE WE PAY ANNUITY PAYMENTS. DISTRIBUTIONS FROM YOUR
ANNUITY GENERALLY ARE SUBJECT TO TAXATION, AND MAY BE SUBJECT TO A TAX PENALTY
AS WELL (SEE "CERTAIN TAX CONSIDERATIONS"). YOU MAY WISH TO CONSULT A
PROFESSIONAL TAX ADVISOR FOR TAX ADVICE PRIOR TO EXERCISING ANY RIGHT TO AN
ELECTIVE DISTRIBUTION. DURING THE ACCUMULATION PHASE, ANY DISTRIBUTION OTHER
THAN A DEATH BENEFIT: (A) MUST OCCUR PRIOR TO ANY DEATH THAT WOULD CAUSE A
DEATH BENEFIT TO BECOME PAYABLE; AND (B) WILL OCCUR SUBSEQUENT TO OUR RECEIPT
OF A COMPLETED REQUEST IN WRITING.
SURRENDER: SURRENDER OF YOUR ANNUITY FOR ITS ACCOUNT VALUE IS
PERMITTED DURING THE ACCUMULATION PHASE. YOUR ANNUITY MUST ACCOMPANY YOUR
SURRENDER REQUEST.
PARTIAL WITHDRAWALS: YOU MAY WITHDRAW PART OF YOUR ACCOUNT VALUE.
THE MINIMUM PARTIAL WITHDRAWAL IS $100. THE ACCOUNT VALUE THAT MUST REMAIN IN
THE ANNUITY AS OF THE DATE OF THIS TRANSACTION IS $1,000. IF THE AMOUNT OF THE
PARTIAL WITHDRAWAL REQUEST EXCEEDS THE MAXIMUM AMOUNT AVAILABLE, WE RESERVE THE
RIGHT TO TREAT YOUR REQUEST AS ONE FOR A FULL SURRENDER.
SYSTEMATIC WITHDRAWALS: WE OFFER SYSTEMATIC WITHDRAWALS OF EARNINGS
ONLY, PRINCIPAL PLUS EARNINGS OR A FLAT DOLLAR AMOUNT. YOU MAY CHOOSE AT ANY
TIME TO BEGIN SUCH A PROGRAM.
WE OFFER SYSTEMATIC WITHDRAWALS ON A MONTHLY, QUARTERLY, SEMI-ANNUAL OR ANNUAL
BASIS. SYSTEMATIC WITHDRAWALS ARE NOT AVAILABLE WHILE YOU ARE TAKING ANY
MINIMUM DISTRIBUTIONS (SEE "MINIMUM DISTRIBUTIONS"). SYSTEMATIC WITHDRAWALS OF
EARNINGS ONLY OR PRINCIPAL PLUS EARNINGS IS NOT AVAILABLE WHILE YOU ARE USING A
REBALANCING, ASSET ALLOCATION OR SIMILAR TYPE PROGRAM.
THE ACCOUNT VALUE OF YOUR ANNUITY MUST BE AT LEAST $25,000 WHEN WE ACCEPT YOUR
REQUEST FOR A PROGRAM OF SYSTEMATIC WITHDRAWALS. THE MINIMUM FOR EACH
SYSTEMATIC WITHDRAWAL IS $100.
WE RESERVE THE RIGHT TO CHARGE A PROCESSING FEE FOR THIS SERVICE. SHOULD WE
SUSPEND OR CANCEL OFFERING SYSTEMATIC WITHDRAWALS, SUCH SUSPENSION OR
CANCELLATION WILL NOT AFFECT ANY SYSTEMATIC WITHDRAWAL PROGRAMS THEN IN EFFECT.
MINIMUM DISTRIBUTIONS: YOU MAY ELECT TO HAVE US CALCULATE MINIMUM
DISTRIBUTIONS ANNUALLY IF YOUR ANNUITY IS BEING USED FOR CERTAIN QUALIFIED
PURPOSES UNDER THE CODE. WE CALCULATE SUCH AMOUNTS ASSUMING THE MINIMUM
DISTRIBUTION AMOUNT IS BASED SOLELY ON THE VALUE OF YOUR ANNUITY. THE REQUIRED
MINIMUM DISTRIBUTION AMOUNTS APPLICABLE TO YOUR PARTICULAR SITUATION MAY DEPEND
ON OTHER ANNUITIES, SAVINGS OR INVESTMENTS OF WHICH WE ARE UNAWARE, SO THAT THE
REQUIRED AMOUNT MAY BE GREATER THAN THE MINIMUM DISTRIBUTION AMOUNT WE
CALCULATE BASED ON THE VALUE OF YOUR ANNUITY. WE RESERVE THE RIGHT TO CHARGE A
FEE FOR EACH ANNUAL CALCULATION. MINIMUM DISTRIBUTIONS ARE NOT AVAILABLE IF
YOU ARE TAKING SYSTEMATIC WITHDRAWALS (SEE "SYSTEMATIC WITHDRAWALS"). WE PAY
MINIMUM DISTRIBUTIONS ANNUALLY. MINIMUM DISTRIBUTIONS WILL BE TAKEN FROM THE
INVESTMENT OPTIONS YOU SELECT.
DEATH BENEFIT: IN THE ACCUMULATION PHASE, A DEATH BENEFIT IS
PAYABLE. IF THE ANNUITY IS OWNED BY ONE OR MORE NATURAL PERSONS, IT IS PAYABLE
UPON THE FIRST DEATH OF SUCH OWNERS. IF THE ANNUITY IS OWNED BY AN ENTITY, THE
DEATH BENEFIT IS PAYABLE UPON THE ANNUITANT'S DEATH (IF THERE IS NO CONTINGENT
ANNUITANT). FOR APPLICABLE DEATHS OCCURRING PRIOR TO AGE 85 OF THE DECEASED,
THE DEATH BENEFIT IS THE GREATER OF (A) OR (B), WHERE: (A) IS YOUR ACCOUNT
VALUE; AND (B) IS THE MINIMUM DEATH BENEFIT. THE MINIMUM DEATH BENEFIT IS THE
TOTAL OF EACH PURCHASE PAYMENT GROWING DAILY AT THE EQUIVALENT OF A SPECIFIED
INTEREST RATE PER YEAR STARTING AS TO EACH PURCHASE PAYMENT ON THE DATE IT IS
ALLOCATED TO THE ACCOUNT VALUE, LESS THE TOTAL OF EACH WITHDRAWAL, OF ANY TYPE,
GROWING DAILY AT THE EQUIVALENT OF THE SAME SPECIFIED INTEREST RATE PER YEAR,
STARTING AS OF THE DATE OF EACH SUCH WITHDRAWAL. HOWEVER, THIS MINIMUM DEATH
BENEFIT MAY NOT EXCEED 200% OF (A) MINUS (B), WHERE: (A) IS THE TOTAL OF ALL
PURCHASE PAYMENTS RECEIVED; AND (B) IS THE TOTAL OF ALL WITHDRAWALS OF ANY
TYPE.
WE MAY OFFER VARIOUS ANNUITY PLANS WHICH DIFFER AS TO BOTH THE SPECIFIED
INTEREST RATE APPLICABLE TO THE MINIMUM DEATH BENEFIT AND THE SALES CHARGE (SEE
"SALES CHARGE"). THE SPECIFIED INTEREST RATE APPLICABLE TO THE MINIMUM DEATH
BENEFIT AND THE SALES CHARGE FOR THE ANNUITY PLAN BEING OFFERED TO YOU IS
SPECIFIED ON THE PAGE OF THIS PROSPECTUS IMMEDIATELY PRECEDING THE TABLE OF
CONTENTS.
IN ALL JURISDICTIONS, FOR APPLICABLE DEATHS OCCURRING ON OR AFTER AGE 85 OF THE
DECEASED, THE DEATH BENEFIT IS THE ACCOUNT VALUE. THE AMOUNT OF THE DEATH
BENEFIT IS DETERMINED AS OF THE DATE WE RECEIVE IN WRITING "DUE PROOF OF
DEATH". THE FOLLOWING CONSTITUTES "DUE PROOF OF DEATH": (A)(I) A CERTIFIED
COPY OF A DEATH CERTIFICATE, (II) A CERTIFIED COPY OF A DECREE OF A COURT OF
COMPETENT JURISDICTION AS TO THE FINDING OF DEATH, OR (III) ANY OTHER PROOF
SATISFACTORY TO US; (B) ALL REPRESENTATIONS WE REQUIRE OR WHICH ARE MANDATED BY
APPLICABLE LAW OR REGULATION IN RELATION TO THE DEATH CLAIM AND THE PAYMENT OF
DEATH PROCEEDS; AND (C) ANY APPLICABLE ELECTION OF THE MODE OF PAYMENT OF THE
DEATH BENEFIT, IF NOT PREVIOUSLY ELECTED BY THE OWNER. THE DEATH BENEFIT IS
REDUCED BY ANY ANNUITY PAYMENTS MADE PRIOR TO THE DATE WE RECEIVE IN WRITING
SUCH DUE PROOF OF DEATH.
IF THE DEATH BENEFIT BECOMES PAYABLE PRIOR TO THE ANNUITY DATE DUE TO THE DEATH
OF THE OWNER AND THE BENEFICIARY IS THE OWNER'S SPOUSE, THEN IN LIEU OF
RECEIVING THE DEATH BENEFIT, SUCH OWNER'S SPOUSE MAY ELECT TO BE TREATED AS AN
OWNER AND CONTINUE THE ANNUITY.
IN THE EVENT OF YOUR DEATH, THE 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.
DISTRIBUTION AFTER YOUR DEATH TO BE PAID UNDER (B) ABOVE, MUST COMMENCE WITHIN
ONE YEAR OF THE DATE OF DEATH.
IF THE ANNUITANT DIES BEFORE THE ANNUITY DATE, THE CONTINGENT ANNUITANT WILL
BECOME THE ANNUITANT WHERE PERMITTED BY LAW. IF THE OWNER IS ONE OR MORE
NATURAL PERSONS, THE OLDEST OF ANY SUCH OWNERS NOT NAMED AS THE ANNUITANT
IMMEDIATELY BECOMES THE CONTINGENT ANNUITANT IF: (A) THE CONTINGENT ANNUITANT
PREDECEASES THE ANNUITANT; OR (B) IF YOU DO NOT DESIGNATE A CONTINGENT
ANNUITANT.
IN THE PAYOUT PHASE, WE CONTINUE TO PAY ANY "CERTAIN" PAYMENTS (PAYMENTS NOT
CONTINGENT ON THE CONTINUANCE OF ANY LIFE) TO THE BENEFICIARY SUBSEQUENT TO THE
DEATH OF THE ANNUITANT. WE WILL COMMUTE ANY REMAINING "CERTAIN" PAYMENTS AND
PAY A LUMP SUM IF ELECTED BY YOU OR, IN THE ABSENCE OF SPECIFIC INSTRUCTIONS BY
YOU, BY THE BENEFICIARY.
IN THE PAYOUT PHASE, WE DISTRIBUTE ANY PAYMENTS DUE SUBSEQUENT TO THE DEATH OF
ANY OWNER AT LEAST AS RAPIDLY AS UNDER THE METHOD OF DISTRIBUTION IN EFFECT AS
OF THE DATE OF SUCH OWNER'S DEATH.
ANNUITY PAYMENTS: ANNUITY PAYMENTS CAN BE GUARANTEED FOR LIFE, FOR A
CERTAIN PERIOD, OR FOR A CERTAIN PERIOD AND LIFE. WE MAKE AVAILABLE FIXED
PAYMENTS, AND AS OF THE DATE OF THIS PROSPECTUS, ADJUSTABLE PAYMENTS (PAYMENTS
WHICH MAY OR MAY NOT BE CHANGED ON SPECIFIED ADJUSTMENT DATES BASED ON ANNUITY
PURCHASE RATES WE ARE THEN MAKING AVAILABLE TO ANNUITIES OF THE SAME CLASS).
WE MAY OR MAY NOT BE MAKING ADJUSTABLE ANNUITIES AVAILABLE ON THE ANNUITY DATE.
TO THE EXTENT THERE IS ANY TAX BASIS IN THE ANNUITY, A PORTION OF EACH ANNUITY
PAYMENT IS TREATED FOR TAX PURPOSES AS A RETURN OF SUCH BASIS UNTIL SUCH TAX
BASIS IS EXHAUSTED. THE AMOUNT DEEMED SUCH A RETURN OF BASIS IS DETERMINED IN
ACCORDANCE WITH THE REQUIREMENTS OF THE CODE (SEE "CERTAIN TAX
CONSIDERATIONS").
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. YOUR CHOICE OF
ANNUITY DATE AND ANNUITY OPTION MAY BE LIMITED DEPENDING ON YOUR USE OF THE
ANNUITY AND THE APPLICABLE JURISDICTION. SUBJECT TO OUR RULES, YOU MAY CHOOSE
AN ANNUITY DATE, OPTION AND FREQUENCY OF PAYMENTS SUITABLE TO YOUR NEEDS AND
CIRCUMSTANCES. YOU SHOULD CONSULT WITH COMPETENT TAX AND FINANCIAL ADVISORS AS
TO THE APPROPRIATENESS OF ANY SUCH CHOICE. FOR ANNUITANTS SUBJECT TO NEW YORK
AND PENNSYLVANIA LAW, THE ANNUITY DATE MAY NOT EXCEED THE FIRST DAY OF THE
CALENDAR MONTH FOLLOWING THE ANNUITANT'S 85TH BIRTHDAY.
YOU MAY CHANGE YOUR CHOICES AT ANY TIME UP TO 30 DAYS BEFORE THE EARLIER OF:
(A) THE DATE WE WOULD HAVE APPLIED YOUR ACCOUNT VALUE TO AN ANNUITY OPTION HAD
YOU NOT MADE THE CHANGE; OR (B) THE DATE WE WILL APPLY YOUR ACCOUNT VALUE TO AN
ANNUITY OPTION IN RELATION TO THE NEW ANNUITY DATE YOU ARE THEN SELECTING. YOU
MUST REQUEST THIS CHANGE IN WRITING. THE ANNUITY DATE MUST BE THE FIRST OR THE
FIFTEENTH DAY OF A CALENDAR MONTH.
IN THE ABSENCE OF AN ELECTION IN WRITING: (A) THE ANNUITY DATE IS THE FIRST
DAY OF THE CALENDAR MONTH FIRST FOLLOWING THE LATER OF THE ANNUITANT'S 85TH
BIRTHDAY OR THE FIFTH ANNIVERSARY OF OUR RECEIPT AT OUR OFFICE OF YOUR REQUEST
TO PURCHASE AN ANNUITY; AND (B) WHERE ALLOWED BY LAW, FIXED MONTHLY PAYMENTS
WILL COMMENCE UNDER OPTION 2, DESCRIBED BELOW, WITH 10 YEARS CERTAIN. THE
AMOUNT TO BE APPLIED IS YOUR ANNUITY'S ACCOUNT VALUE 15 BUSINESS DAYS PRIOR TO
THE ANNUITY DATE. IN DETERMINING YOUR ANNUITY PAYMENTS, WE CREDIT INTEREST
USING OUR THEN CURRENT CREDITING RATE FOR THIS PURPOSE. SUCH RATE IS NOT LESS
THAN 3% OF INTEREST PER YEAR. INTEREST IS CREDITED TO YOUR ACCOUNT VALUE
BETWEEN THE DATE ACCOUNT VALUE IS APPLIED TO AN ANNUITY OPTION AND THE ANNUITY
DATE. ANNUITY OPTIONS IN ADDITION TO THOSE SHOWN ARE AVAILABLE WITH OUR
CONSENT. THE MINIMUM INITIAL AMOUNT PAYABLE IS THE MINIMUM INITIAL ANNUITY
AMOUNT WE ALLOW UNDER OUR THEN CURRENT RULES. SHOULD YOU WISH TO RECEIVE A
LUMP SUM PAYMENT, YOU MUST REQUEST TO SURRENDER YOUR ANNUITY PRIOR TO THE
ANNUITY DATE (SEE "SURRENDER").
YOU MAY ELECT TO HAVE ANY AMOUNT OF THE PROCEEDS DUE TO THE BENEFICIARY APPLIED
UNDER ANY OF THE OPTIONS DESCRIBED BELOW. EXCEPT WHERE A LOWER AMOUNT IS
REQUIRED BY LAW, THE MINIMUM MONTHLY ANNUITY PAYMENT IS $50.
IF YOU HAVE NOT MADE AN ELECTION PRIOR TO PROCEEDS BECOMING DUE, THE
BENEFICIARY MAY ELECT TO RECEIVE THE DEATH BENEFIT UNDER ONE OF THE ANNUITY
OPTIONS. HOWEVER, IF YOU MADE AN ELECTION, THE BENEFICIARY MAY NOT ALTER SUCH
ELECTION.
FOR PURPOSES OF THE ANNUITY OPTIONS DESCRIBED BELOW, THE TERM "KEY LIFE" MEANS
THE PERSON OR PERSONS UPON WHOSE LIFE ANY PAYMENTS DEPENDENT UPON THE
CONTINUATION OF LIFE ARE BASED.
(1) OPTION 1 - PAYMENTS FOR LIFE: UNDER THIS OPTION, INCOME IS PAYABLE
PERIODICALLY PRIOR TO THE DEATH OF THE KEY LIFE, TERMINATING WITH THE LAST
PAYMENT DUE PRIOR TO SUCH 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 THE KEY LIFE OCCURS BEFORE THE DATE THE SECOND PAYMENT WAS DUE, AND NO
OTHER PAYMENTS NOR DEATH BENEFITS WOULD BE PAYABLE.
(2) OPTION 2 - PAYMENTS FOR LIFE WITH 10, 15, OR 20 YEARS CERTAIN: UNDER
THIS OPTION, INCOME IS PAYABLE PERIODICALLY FOR 10, 15, OR 20 YEARS, AS
SELECTED, AND THEREAFTER UNTIL THE DEATH OF THE KEY LIFE. SHOULD THE DEATH OF
THE KEY LIFE OCCUR BEFORE THE END OF THE PERIOD SELECTED, THE REMAINING
PAYMENTS ARE PAID TO THE BENEFICIARY TO THE END OF SUCH PERIOD.
(3) OPTION 3 - PAYMENTS BASED ON JOINT LIVES: UNDER THIS OPTION, INCOME
IS PAYABLE PERIODICALLY DURING THE JOINT LIFETIME OF TWO KEY LIVES. AFTER THE
FIRST DEATH, INCOME IS PAYABLE 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 NOR DEATH BENEFITS WOULD
BE PAYABLE.
(4) OPTION 4 - PAYMENTS FOR A CERTAIN PERIOD: UNDER THIS OPTION, INCOME
IS PAYABLE PERIODICALLY FOR A SPECIFIED NUMBER OF YEARS. THE NUMBER OF YEARS
IS SUBJECT TO OUR THEN CURRENT RULES. SHOULD THE PAYEE DIE 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 HOW LONG WE EXPECT ANY KEY LIFE TO LIVE. THEREFORE, THAT
PORTION OF THE MORTALITY RISK CHARGE ASSESSED TO COVER THE RISK THAT KEY LIVES
OUTLIVE OUR EXPECTATIONS PROVIDES NO BENEFIT TO AN OWNER SELECTING THIS OPTION.
THE FIRST PAYMENT VARIES ACCORDING TO THE ANNUITY OPTIONS AND PAYMENT FREQUENCY
SELECTED. THE FIRST PERIODIC PAYMENT IS DETERMINED BY MULTIPLYING (A) TIMES
(B); WHERE: (A) IS THE ACCOUNT VALUE (EXPRESSED IN THOUSANDS OF DOLLARS) AS OF
THE CLOSE OF BUSINESS OF THE FIFTEENTH DAY PRECEDING THE ANNUITY DATE, PLUS
INTEREST AT NOT LESS THAN 3% PER YEAR FROM SUCH DATE TO THE ANNUITY DATE; AND
(B) IS THE AMOUNT OF THE FIRST PERIODIC PAYMENT PER $1,000 OF VALUE OBTAINED
FROM OUR THEN CURRENT ANNUITY RATES FOR THAT TYPE OF ANNUITY AND FOR THE
FREQUENCY OF PAYMENT SELECTED. OUR THEN CURRENT 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.
QUALIFIED PLAN WITHDRAWAL LIMITATIONS: THE ANNUITIES ARE ENDORSED
SUCH THAT THERE ARE SURRENDER OR WITHDRAWAL LIMITATIONS WHEN USED IN RELATION
TO CERTAIN RETIREMENT PLANS FOR EMPLOYEES WHICH QUALIFY UNDER VARIOUS SECTIONS
OF THE CODE. THESE LIMITATIONS DO NOT AFFECT CERTAIN ROLL-OVERS OR EXCHANGES
BETWEEN QUALIFIED PLANS. GENERALLY DISTRIBUTION OF AMOUNTS ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT (AS DEFINED IN CODE
SECTION 403(B), OR ATTRIBUTABLE TO TRANSFERS TO A TAX SHELTERED ANNUITY FROM A
CUSTODIAL ACCOUNT (AS DEFINED IN CODE SECTION 403(B)(7)), IS RESTRICTED TO THE
EMPLOYEE'S: (A) SEPARATION FROM SERVICE; (B) DEATH; (C) DISABILITY (AS DEFINED
IN SECTION 72(M)(7) OF THE CODE); (D) REACHING AGE 59 1/2; OR (E) HARDSHIP.
HARDSHIP WITHDRAWALS ARE RESTRICTED TO AMOUNTS ATTRIBUTABLE TO SALARY REDUCTION
CONTRIBUTIONS, AND DO NOT INCLUDE INVESTMENT RESULTS. IN THE CASE OF TAX
SHELTERED ANNUITIES, THESE LIMITATIONS DO NOT APPLY TO CERTAIN SALARY REDUCTION
CONTRIBUTIONS MADE AND INVESTMENT RESULTS EARNED PRIOR TO DATES SPECIFIED IN
THE CODE. IN ADDITION, THE LIMITATION ON HARDSHIP WITHDRAWALS DOES NOT APPLY
TO SALARY REDUCTION CONTRIBUTIONS MADE AND INVESTMENT RESULTS EARNED PRIOR TO
DATES SPECIFIED IN THE CODE WHICH HAVE BEEN TRANSFERRED FROM CUSTODIAL
ACCOUNTS. ROLLOVERS FROM THE TYPES OF PLANS NOTED TO ANOTHER QUALIFIED PLAN OR
TO AN INDIVIDUAL RETIREMENT ACCOUNT OR INDIVIDUAL RETIREMENT ANNUITY ARE NOT
SUBJECT TO THE LIMITATIONS NOTED. CERTAIN DISTRIBUTIONS, INCLUDING ROLLOVERS,
THAT ARE NOT TRANSFERRED DIRECTLY TO THE TRUSTEE OF ANOTHER QUALIFIED PLAN, THE
CUSTODIAN OF AN INDIVIDUAL RETIREMENT ACCOUNT OR THE ISSUER OF AN INDIVIDUAL
RETIREMENT ANNUITY ARE SUBJECT TO AUTOMATIC 20% WITHHOLDING FOR FEDERAL INCOME
TAX. THIS MAY ALSO TRIGGER WITHHOLDING FOR STATE INCOME TAXES (SEE "CERTAIN
TAX CONSIDERATIONS").
WE MAY MAKE ANNUITIES AVAILABLE THROUGH THE TEXAS OPTIONAL RETIREMENT PROGRAM
SUBSEQUENT TO RECEIPT OF THE REQUIRED REGULATORY APPROVALS AND IMPLEMENTATION.
IN ADDITION TO THE RESTRICTIONS REQUIRED FOR SUCH ANNUITIES TO QUALIFY UNDER
SECTION 403(B) OF THE CODE, ANNUITIES ISSUED IN THE TEXAS OPTIONAL RETIREMENT
PROGRAM ARE AMENDED AS FOLLOWS: (A) NO BENEFITS ARE PAYABLE UNLESS YOU DIE
DURING, OR ARE RETIRED OR TERMINATED FROM, EMPLOYMENT IN ALL TEXAS INSTITUTIONS
OF HIGHER EDUCATION; AND (B) IF A SECOND YEAR OF PARTICIPATION IN SUCH PROGRAM
IS NOT BEGUN, THE TOTAL FIRST YEAR STATE OF TEXAS' CONTRIBUTION WILL BE
RETURNED, UPON ITS REQUEST, TO THE APPROPRIATE INSTITUTE OF HIGHER EDUCATION.
WITH RESPECT TO THE RESTRICTIONS ON WITHDRAWALS SET FORTH ABOVE, THE COMPANY IS
RELYING UPON: 1) A NO-ACTION LETTER DATED NOVEMBER 28, 1988 FROM THE STAFF OF
THE SECURITIES AND EXCHANGE COMMISSION TO THE AMERICAN COUNCIL OF LIFE
INSURANCE WITH RESPECT TO ANNUITIES ISSUED UNDER SECTION 403(B) OF THE CODE,
THE REQUIREMENTS OF WHICH HAVE BEEN COMPLIED WITH BY THE COMPANY; AND 2) RULE
6C-7 UNDER THE 1940 ACT WITH RESPECT TO ANNUITIES MADE AVAILABLE THROUGH THE
TEXAS OPTIONAL RETIREMENT PROGRAM, THE REQUIREMENTS OF WHICH HAVE BEEN COMPLIED
WITH BY THE COMPANY.
PRICING OF TRANSFERS AND DISTRIBUTIONS: WE "PRICE" TRANSFERS AND
DISTRIBUTIONS ON THE DATES INDICATED BELOW:
(1) WE PRICE "SCHEDULED" TRANSFERS AND DISTRIBUTIONS AS OF THE VALUATION
PERIOD SUCH TRANSACTIONS ARE SO SCHEDULED. "SCHEDULED" TRANSACTIONS INCLUDE
TRANSFERS UNDER A DOLLAR COST AVERAGING PROGRAM, SYSTEMATIC WITHDRAWALS,
MINIMUM DISTRIBUTIONS, TRANSFERS PREVIOUSLY SCHEDULED WITH US AT OUR OFFICE
PURSUANT TO ANY ON-GOING REBALANCING, ASSET ALLOCATION OR SIMILAR PROGRAM, AND
ANNUITY PAYMENTS.
(2) WE PRICE "UNSCHEDULED" TRANSFERS AND PARTIAL WITHDRAWALS AS OF THE
VALUATION PERIOD WE RECEIVE IN WRITING, AT OUR OFFICE THE REQUEST FOR SUCH
TRANSACTIONS. "UNSCHEDULED" TRANSFERS INCLUDE ANY TRANSFERS PROCESSED IN
CONJUNCTION WITH ANY MARKET TIMING PROGRAM, OR TRANSFERS NOT PREVIOUSLY
SCHEDULED WITH US AT OUR OFFICE PURSUANT TO ANY REBALANCING, ASSET ALLOCATION
OR SIMILAR PROGRAM WHICH YOU EMPLOY OR YOU AUTHORIZE TO BE EMPLOYED ON YOUR
BEHALF. "UNSCHEDULED" TRANSFERS RECEIVED PURSUANT TO AN AUTHORIZATION TO
ACCEPT TRANSFERS OVER THE PHONE ARE PRICED AS OF THE VALUATION PERIOD WE
RECEIVE THE REQUEST AT OUR OFFICE FOR SUCH TRANSACTIONS.
(3) WE PRICE SURRENDERS AND DEATH BENEFITS AS OF THE VALUATION PERIOD WE
RECEIVE AT OUR OFFICE ALL MATERIALS WE REQUIRE FOR SUCH TRANSACTIONS AND SUCH
MATERIALS ARE SATISFACTORY TO US (SEE "SURRENDERS" AND "DEATH BENEFITS").
THE PRICING OF TRANSFERS AND DISTRIBUTIONS INCLUDES THE DETERMINATION OF THE
APPLICABLE UNIT PRICE FOR THE UNITS TRANSFERRED OR DISTRIBUTED. UNIT PRICES
MAY CHANGE EACH VALUATION PERIOD TO REFLECT THE INVESTMENT PERFORMANCE OF THE
SUB-ACCOUNTS. PAYMENT IS SUBJECT TO OUR RIGHT TO DEFER TRANSACTIONS FOR A
LIMITED TIME PERIOD (SEE "DEFERRAL OF TRANSACTIONS").
VOTING RIGHTS: YOU HAVE VOTING RIGHTS IN RELATION TO ACCOUNT VALUE
MAINTAINED IN THE SUB-ACCOUNTS. YOU DO NOT HAVE VOTING RIGHTS IN RELATION TO
FIXED OR ADJUSTABLE ANNUITY PAYMENTS.
WE WILL VOTE SHARES OF THE UNDERLYING MUTUAL FUND PORTFOLIOS IN WHICH THE SUB-
ACCOUNTS INVEST IN THE MANNER DIRECTED BY OWNERS. OWNERS GIVE INSTRUCTIONS
EQUAL TO THE NUMBER OF SHARES REPRESENTED BY THE SUB-ACCOUNT UNITS ATTRIBUTABLE
TO THEIR ANNUITY.
WE WILL VOTE THE SHARES ATTRIBUTABLE TO ASSETS HELD IN THE SUB-ACCOUNTS SOLELY
FOR US RATHER THAN ON BEHALF OF OWNERS, OR ANY SHARE AS TO WHICH WE HAVE NOT
RECEIVED INSTRUCTIONS, IN THE SAME MANNER AND PROPORTION AS THE SHARES FOR
WHICH WE HAVE RECEIVED INSTRUCTIONS. WE WILL DO SO SEPARATELY FOR EACH SUB-
ACCOUNT FROM VARIOUS CLASSES THAT MAY INVEST IN THE SAME UNDERLYING MUTUAL FUND
PORTFOLIO.
THE NUMBER OF VOTES FOR AN UNDERLYING MUTUAL FUND PORTFOLIO WILL BE DETERMINED
AS OF THE RECORD DATE FOR SUCH UNDERLYING MUTUAL FUND PORTFOLIO AS CHOSEN BY
ITS BOARD OF TRUSTEES OR DIRECTORS, AS APPLICABLE. WE WILL FURNISH OWNERS WITH
PROPER FORMS AND PROXIES TO ENABLE THEM TO INSTRUCT US HOW TO VOTE.
YOU MAY INSTRUCT US HOW TO VOTE ON THE FOLLOWING MATTERS: (A)CHANGES TO THE
BOARD OF TRUSTEES OR DIRECTORS, AS APPLICABLE; (B) CHANGING THE INDEPENDENT
ACCOUNTANT; (C) APPROVAL OF CHANGES TO THE INVESTMENT ADVISORY AGREEMENT, OR
ADOPTION OF A NEW INVESTMENT ADVISORY AGREEMENT; (D) ANY CHANGE IN THE
FUNDAMENTAL INVESTMENT POLICY; AND (E) ANY OTHER MATTER REQUIRING A VOTE OF THE
SHAREHOLDERS.
WITH RESPECT TO APPROVAL OF CHANGES TO THE INVESTMENT ADVISORY AGREEMENT,
APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT OR ANY CHANGE IN FUNDAMENTAL
INVESTMENT POLICY, ONLY OWNERS MAINTAINING ACCOUNT VALUE AS OF THE RECORD DATE
IN SUB-ACCOUNTS INVESTING IN THE APPLICABLE UNDERLYING MUTUAL FUND PORTFOLIO
WILL INSTRUCT US HOW TO VOTE ON THE MATTER, PURSUANT TO THE REQUIREMENTS OF
RULE 18F-2 UNDER THE 1940 ACT.
TRANSFERS, ASSIGNMENTS OR PLEDGES: GENERALLY, YOUR RIGHTS IN AN ANNUITY
MAY BE TRANSFERRED, ASSIGNED OR PLEDGED FOR LOANS AT ANY TIME. HOWEVER, THESE
RIGHTS MAY BE LIMITED DEPENDING ON YOUR USE OF THE ANNUITY. THESE TRANSACTIONS
MAY BE SUBJECT TO INCOME TAXES AND CERTAIN PENALTY TAXES (SEE "CERTAIN TAX
CONSIDERATIONS"). YOU MAY TRANSFER, ASSIGN OR PLEDGE YOUR RIGHTS TO ANOTHER
PERSON AT ANY TIME, PRIOR TO ANY DEATH UPON WHICH THE DEATH BENEFIT IS PAYABLE.
YOU MUST REQUEST A TRANSFER OR PROVIDE US A COPY OF THE ASSIGNMENT IN WRITING.
A TRANSFER OR ASSIGNMENT IS SUBJECT TO OUR ACCEPTANCE. PRIOR TO RECEIPT OF
THIS NOTICE, WE WILL NOT BE DEEMED TO KNOW OF OR BE OBLIGATED UNDER ANY
ASSIGNMENT PRIOR TO OUR RECEIPT AND ACCEPTANCE THEREOF. WE ASSUME NO
RESPONSIBILITY FOR THE VALIDITY OR SUFFICIENCY OF ANY ASSIGNMENT.
REPORTS TO YOU: WE PROVIDE YOU WITH REPORTS AT LEAST ONCE EACH QUARTER IN
THE ACCUMULATION PHASE. YOU MAY REQUEST ADDITIONAL REPORTS. WE RESERVE THE
RIGHT TO CHARGE UP TO $50 FOR EACH SUCH ADDITIONAL REPORT.
THE COMPANY: AMERICAN SKANDIA LIFE ASSURANCE CORPORATION IS A WHOLLY OWNED
SUBSIDIARY OF AMERICAN SKANDIA INVESTMENT HOLDING CORPORATION, WHOSE INDIRECT
PARENT IS SKANDIA INSURANCE COMPANY LTD. SKANDIA INSURANCE COMPANY LTD. IS PART
OF A GROUP OF COMPANIES WHOSE PREDECESSOR COMMENCED OPERATIONS IN 1855. TWO OF
OUR AFFILIATES, AMERICAN SKANDIA MARKETING, INCORPORATED, FORMERLY SKANDIA LIFE
EQUITY SALES CORPORATION AND AMERICAN SKANDIA INFORMATION SERVICES AND
TECHNOLOGY CORPORATION, FORMERLY AMERICAN SKANDIA BUSINESS SERVICES
CORPORATION, MAY UNDERTAKE CERTAIN ADMINISTRATIVE FUNCTIONS ON OUR BEHALF. WE
CURRENTLY ENGAGE SKANDIA INVESTMENT MANAGEMENT, INC., AN AFFILIATE WHOSE
INDIRECT PARENT IS SKANDIA INSURANCE COMPANY LTD., AS INVESTMENT MANAGER FOR
OUR GENERAL ACCOUNT. WE ARE UNDER NO OBLIGATION TO ENGAGE OR CONTINUE TO
ENGAGE ANY INVESTMENT MANAGER. CERTAIN SUB-ACCOUNTS INVEST IN PORTFOLIOS OF
AMERICAN SKANDIA TRUST. OUR AFFILIATE, AMERICAN SKANDIA INVESTMENT SERVICES,
INCORPORATED, FORMERLY AMERICAN SKANDIA LIFE INVESTMENT MANAGEMENT, INC.,
CURRENTLY SERVES AS INVESTMENT MANAGER TO THE AMERICAN SKANDIA TRUST.
WE BEGAN OFFERING ANNUITIES IN 1988. AS OF THE DATE OF THIS PROSPECTUS, WE
OFFER: (A) CERTAIN DEFERRED ANNUITIES THAT ARE REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION, INCLUDING VARIABLE ANNUITIES AND FIXED INTEREST RATE
ANNUITIES THAT INCLUDE A MARKET VALUE ADJUSTMENT FEATURE; (B) CERTAIN OTHER
FIXED DEFERRED ANNUITIES THAT ARE NOT REGISTERED WITH THE SECURITIES AND
EXCHANGE COMMISSION; AND (C) FIXED AND ADJUSTABLE IMMEDIATE ANNUITIES. WE MAY,
IN THE FUTURE, OFFER OTHER ANNUITIES, LIFE INSURANCE AND OTHER FORMS OF
INSURANCE.
CERTAIN TAX CONSIDERATIONS: THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN
FEDERAL INCOME TAX LAWS AS THEY ARE CURRENTLY INTERPRETED. NO ONE CAN BE
CERTAIN THAT THE LAWS OR INTERPRETATIONS WILL REMAIN UNCHANGED OR THAT AGENCIES
OR COURTS WILL ALWAYS AGREE AS TO HOW THE TAX LAW OR REGULATIONS ARE TO BE
INTERPRETED. THIS DISCUSSION IS NOT INTENDED AS TAX ADVICE. YOU MAY WISH TO
CONSULT A PROFESSIONAL TAX ADVISOR FOR TAX ADVICE AS TO YOUR PARTICULAR
SITUATION
OUR TAX CONSIDERATIONS: WE ARE TAXED AS A LIFE INSURANCE COMPANY UNDER
PART I, SUBCHAPTER L, OF THE CODE.
TAX CONSIDERATIONS RELATING TO YOUR ANNUITY: SECTION 72 OF THE CODE
GOVERNS THE TAXATION OF ANNUITIES IN GENERAL. TAXATION OF AN ANNUITY IS
LARGELY DEPENDENT UPON: (A) WHETHER IT IS USED IN A QUALIFIED PENSION OR
PROFIT SHARING PLAN OR OTHER RETIREMENT ARRANGEMENT ELIGIBLE FOR SPECIAL
TREATMENT UNDER THE CODE; AND (B) THE STATUS OF THE BENEFICIAL OWNER AS EITHER
A NATURAL OR NON-NATURAL PERSON (WHEN THE ANNUITY IS NOT USED IN A RETIREMENT
PLAN ELIGIBLE FOR SPECIAL TAX TREATMENT). NON-NATURAL PERSONS INCLUDE
CORPORATIONS, TRUSTS, AND PARTNERSHIPS, EXCEPT WHERE THESE ENTITIES OWN AN
ANNUITY FOR THE BENEFIT OF NATURAL PERSONS. NATURAL PERSONS ARE INDIVIDUALS.
NON-NATURAL PERSONS: ANY INCREASE DURING A TAX YEAR IN THE VALUE OF
AN ANNUITY IF NOT USED IN A RETIREMENT PLAN ELIGIBLE FOR SPECIAL TREATMENT
UNDER THE CODE IS CURRENTLY INCLUDIBLE IN THE GROSS INCOME OF A NON-NATURAL
PERSON THAT IS THE CONTRACTHOLDER. THERE ARE EXCEPTIONS IF AN ANNUITY IS HELD
BY: (A) A STRUCTURED SETTLEMENT COMPANY; (B) AN EMPLOYER WITH RESPECT TO A
TERMINATED PENSION PLAN; (C) ENTITIES OTHER THAN EMPLOYERS, SUCH AS A TRUST,
HOLDING AN ANNUITY AS AN AGENT FOR A NATURAL PERSON; OR (D) A DECEDENT'S ESTATE
BY REASON OF THE DEATH OF THE DECEDENT.
NATURAL PERSONS: INCREASES IN THE VALUE OF AN ANNUITY WHEN THE
CONTRACTHOLDER IS A NATURAL PERSON GENERALLY ARE NOT TAXED UNTIL DISTRIBUTION
OCCURS. DISTRIBUTION CAN BE IN A LUMP SUM PAYMENT OR IN ANNUITY PAYMENTS UNDER
THE ANNUITY OPTION ELECTED. CERTAIN OTHER TRANSACTIONS MAY BE DEEMED TO BE A
DISTRIBUTION. THE PROVISIONS OF SECTION 72 OF THE CODE CONCERNING THESE
DISTRIBUTIONS ARE SUMMARIZED BRIEFLY BELOW.
DISTRIBUTIONS: DISTRIBUTIONS RECEIVED BEFORE THE ANNUITY PAYMENTS
BEGIN ARE TREATED AS BEING DERIVED FIRST FROM "INCOME ON THE CONTRACT" AND
INCLUDIBLE IN GROSS INCOME. THE AMOUNT OF THE DISTRIBUTION EXCEEDING "INCOME
ON THE CONTRACT" IS NOT INCLUDED IN GROSS INCOME. "INCOME ON THE CONTRACT" FOR
AN ANNUITY IS COMPUTED BY SUBTRACTING FROM THE VALUE OF ALL "RELATED CONTRACTS"
(OUR TERM, DISCUSSED BELOW) THE TAXPAYER'S "INVESTMENT IN THE CONTRACT": AN
AMOUNT EQUAL TO TOTAL PURCHASE PAYMENTS FOR ALL "RELATED CONTRACTS" LESS ANY
PREVIOUS DISTRIBUTIONS OR PORTIONS OF SUCH DISTRIBUTIONS FROM SUCH "RELATED
CONTRACTS" NOT INCLUDABLE 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.
"RELATED CONTRACTS" MAY MEAN ALL ANNUITY CONTRACTS OR CERTIFICATES EVIDENCING
PARTICIPATION IN A GROUP ANNUITY CONTRACT FOR WHICH THE TAXPAYER IS THE
BENEFICIAL OWNER AND WHICH ARE ISSUED BY THE SAME INSURER WITHIN THE SAME
CALENDAR YEAR, IRRESPECTIVE OF THE NAMED ANNUITANTS. IT IS CLEAR THAT "RELATED
CONTRACTS" INCLUDE CONTRACTS PRIOR TO WHEN ANNUITY PAYMENTS BEGIN. HOWEVER,
THERE MAY BE CIRCUMSTANCES UNDER WHICH "RELATED CONTRACTS" MAY INCLUDE
CONTRACTS RECOGNIZED AS IMMEDIATE ANNUITIES UNDER STATE INSURANCE LAW OR
ANNUITIES FOR WHICH ANNUITY PAYMENTS HAVE BEGUN. IN A RULING ADDRESSING THE
APPLICABILITY OF A PENALTY ON DISTRIBUTIONS, THE INTERNAL REVENUE SERVICE
TREATED DISTRIBUTIONS FROM A CONTRACT RECOGNIZED AS AN IMMEDIATE ANNUITY UNDER
STATE INSURANCE LAW LIKE DISTRIBUTIONS FROM A DEFERRED ANNUITY. THE SITUATION
ADDRESSED BY SUCH RULING INCLUDED THE FACT THAT: (A) THE IMMEDIATE ANNUITY WAS
OBTAINED PURSUANT TO AN EXCHANGE OF CONTRACTS; AND (B) THE PURCHASE PAYMENTS
FOR THE EXCHANGED CONTRACT WERE CONTRIBUTED MORE THAN ONE YEAR PRIOR TO THE
FIRST ANNUITY PAYMENT PAYABLE UNDER THE IMMEDIATE ANNUITY. THIS RULING ALSO
MAY OR MAY NOT IMPLY THAT ANNUITY PAYMENTS FROM A DEFERRED ANNUITY ON OR AFTER
ITS ANNUITY DATE MAY BE TREATED THE SAME AS DISTRIBUTIONS PRIOR TO THE ANNUITY
DATE IF SUCH DEFERRED ANNUITY WAS: (A) OBTAINED PURSUANT TO AN EXCHANGE OF
CONTRACTS; AND (B) THE PURCHASE PAYMENTS FOR THE EXCHANGED CONTRACT WERE MADE
OR MAY BE DEEMED TO HAVE BEEN MADE MORE THAN ONE YEAR PRIOR TO THE FIRST
ANNUITY PAYMENT.
IF "RELATED CONTRACTS" INCLUDE IMMEDIATE ANNUITIES OR ANNUITIES FOR WHICH
ANNUITY PAYMENTS HAVE BEGUN, THEN "RELATED CONTRACTS" WOULD HAVE TO BE TAKEN
INTO CONSIDERATION IN DETERMINING THE TAXABLE PORTION OF EACH ANNUITY PAYMENT
(AS OUTLINED IN THE "ANNUITY PAYMENTS" SUBSECTION BELOW) AS WELL AS IN
DETERMINING THE TAXABLE PORTION OF DISTRIBUTIONS FROM AN ANNUITY OR ANY
"RELATED CONTRACTS" BEFORE ANNUITY PAYMENTS HAVE BEGUN. WE CANNOT GUARANTEE
THAT IMMEDIATE ANNUITIES OR ANNUITIES FOR WHICH ANNUITY PAYMENTS HAVE BEGUN
COULD NOT BE DEEMED TO BE "RELATED CONTRACTS". YOU ARE PARTICULARLY CAUTIONED
TO SEEK ADVICE FROM YOUR OWN TAX ADVISOR ON THIS MATTER.
ASSIGNMENTS AND PLEDGES: 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 "TAX CONSIDERATIONS WHEN USING ANNUITIES IN
CONJUNCTION WITH QUALIFIED PLANS"), THE COST BASIS OF THE ANNUITY IS INCREASED
BY THE AMOUNT OF ANY ASSIGNMENT OR PLEDGE INCLUDABLE 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.
PENALTY ON DISTRIBUTIONS: SUBJECT TO CERTAIN EXCEPTIONS, ANY
DISTRIBUTION IS SUBJECT TO A PENALTY EQUAL TO 10% OF THE AMOUNT INCLUDIBLE IN
GROSS INCOME. THIS PENALTY DOES NOT APPLY TO CERTAIN DISTRIBUTIONS, INCLUDING:
(A) DISTRIBUTIONS MADE ON OR AFTER THE TAXPAYER'S AGE 59 1/2; (B) DISTRIBUTIONS
MADE ON OR AFTER THE DEATH OF THE HOLDER OF THE CONTRACT, OR, WHERE THE HOLDER
OF THE CONTRACT IS NOT A NATURAL PERSON, THE DEATH OF THE ANNUITANT; (C)
DISTRIBUTIONS ATTRIBUTABLE TO THE TAXPAYER'S BECOMING DISABLED; (D)
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); (E) DISTRIBUTIONS
OF AMOUNTS WHICH ARE ALLOCABLE TO "INVESTMENTS IN THE CONTRACT" MADE PRIOR TO
AUGUST 14, 1982; (F) PAYMENTS UNDER AN IMMEDIATE ANNUITY AS DEFINED IN THE
CODE; (G) DISTRIBUTIONS UNDER A QUALIFIED FUNDING ASSET UNDER CODE SECTION
130(D); OR (H) 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.
ANY MODIFICATION, OTHER THAN BY REASON OF DEATH OR DISABILITY, OF DISTRIBUTIONS
WHICH ARE PART OF A SCHEDULED SERIES OF SUBSTANTIALLY EQUAL PERIODIC PAYMENTS
AS NOTED IN (D), ABOVE, 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. IT IS OUR
UNDERSTANDING THAT THE INTERNAL REVENUE SERVICE DOES NOT CONSIDER A SCHEDULED
SERIES OF DISTRIBUTIONS TO QUALIFY UNDER (D), ABOVE, 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, IF THE DISTRIBUTIONS ARE
NOT BASED ON A SUBSTANTIALLY EQUAL NUMBER OF UNITS, RATHER THAN A SUBSTANTIALLY
EQUAL DOLLAR AMOUNT.
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.
ANNUITY PAYMENTS: THE TAXABLE PORTION OF EACH PAYMENT IS DETERMINED
BY A FORMULA WHICH ESTABLISHES THE RATIO THAT "INVESTMENT IN THE CONTRACT"
BEARS TO THE TOTAL VALUE OF ANNUITY PAYMENTS TO BE MADE. HOWEVER, THE TOTAL
AMOUNT EXCLUDED UNDER THIS RATIO IS LIMITED TO THE "INVESTMENT IN THE
CONTRACT". THE FORMULA DIFFERS BETWEEN FIXED AND VARIABLE ANNUITY PAYMENTS.
WHERE THE 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.
GIFTS: THE GIFT OF AN ANNUITY TO OTHER THAN THE SPOUSE OF THE
CONTRACT HOLDER (OR FORMER SPOUSE INCIDENT TO A DIVORCE) IS TREATED FOR TAX
PURPOSES AS A DISTRIBUTION.
TAX FREE EXCHANGES: 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 OBTAINED BY A TAX-FREE EXCHANGE OF A LIFE INSURANCE,
ANNUITY OR ENDOWMENT CONTRACT PURCHASED PRIOR TO AUGUST 14, 1982, THEN ANY
DISTRIBUTIONS OTHER THAN AS ANNUITY PAYMENTS WHICH DO NOT EXCEED THE PORTION OF
THE "INVESTMENT IN THE CONTRACT" (PURCHASE PAYMENTS MADE INTO THE OTHER
CONTRACT, LESS PRIOR DISTRIBUTIONS) PRIOR TO AUGUST 14, 1982, ARE NOT INCLUDED
IN TAXABLE INCOME. IN ALL OTHER RESPECTS, THE GENERAL PROVISIONS OF THE CODE
APPLY TO DISTRIBUTIONS FROM ANNUITIES OBTAINED AS PART OF SUCH AN EXCHANGE.
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. WE
WILL TAKE ANY ACTION, INCLUDING MODIFICATIONS TO YOUR ANNUITY OR THE SUB-
ACCOUNTS, REQUIRED TO COMPLY WITH SUCH GUIDELINES IF PROMULGATED.
GENERATION-SKIPPING TRANSFERS: UNDER THE CODE CERTAIN TAXES MAY BE
DUE WHEN ALL OR PART OF AN ANNUITY IS TRANSFERRED TO OR A DEATH BENEFIT IS PAID
TO AN INDIVIDUAL TWO OR MORE GENERATIONS YOUNGER THAN THE CONTRACT HOLDER.
THESE TAXES TEND TO APPLY TO TRANSFERS OF SIGNIFICANTLY LARGE DOLLAR AMOUNTS.
WE MAY BE REQUIRED TO DETERMINE WHETHER A TRANSACTION MUST BE TREATED AS A
DIRECT SKIP AS DEFINED IN THE CODE AND THE AMOUNT OF THE RESULTING TAX. IF SO
REQUIRED, WE WILL DEDUCT FROM YOUR ANNUITY OR FROM ANY APPLICABLE PAYMENT TO BE
TREATED AS A DIRECT SKIP ANY AMOUNT WE ARE REQUIRED TO PAY AS A RESULT OF THE
TRANSACTION.
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). 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.
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: (A) ANY PORTION OF A DISTRIBUTION PAID AS MINIMUM DISTRIBUTIONS; (B)
DIRECT TRANSFERS TO THE TRUSTEE OF ANOTHER RETIREMENT PLAN; (C) DISTRIBUTIONS
FROM AN INDIVIDUAL RETIREMENT ACCOUNT OR INDIVIDUAL RETIREMENT ANNUITY; (D)
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 (E) CERTAIN OTHER DISTRIBUTIONS WHERE AUTOMATIC 20% WITHHOLDING MAY
NOT APPLY.
TAX CONSIDERATIONS WHEN USING ANNUITIES IN CONJUNCTION WITH QUALIFIED
PLANS: THERE ARE VARIOUS TYPES OF QUALIFIED PLANS FOR WHICH AN ANNUITY MAY BE
SUITABLE. BENEFITS UNDER A QUALIFIED PLAN MAY BE SUBJECT TO THAT PLAN'S TERMS
AND CONDITIONS IRRESPECTIVE OF THE TERMS AND CONDITIONS OF ANY ANNUITY USED TO
FUND SUCH BENEFITS ("QUALIFIED CONTRACT"). WE HAVE PROVIDED BELOW GENERAL
DESCRIPTIONS OF THE TYPES OF QUALIFIED PLANS IN CONJUNCTION WITH WHICH WE MAY
ISSUE AN ANNUITY. THESE DESCRIPTIONS ARE NOT EXHAUSTIVE AND ARE FOR GENERAL
INFORMATIONAL PURPOSES ONLY. WE ARE NOT OBLIGATED TO MAKE OR CONTINUE TO MAKE
NEW ANNUITIES AVAILABLE FOR USE WITH ALL THE TYPES OF QUALIFIED PLANS SHOWN
BELOW.
THE TAX RULES REGARDING QUALIFIED PLANS ARE COMPLEX. THE APPLICATION OF THESE
RULES DEPEND ON INDIVIDUAL FACTS AND CIRCUMSTANCES. BEFORE PURCHASING AN
ANNUITY FOR USE IN FUNDING A QUALIFIED PLAN, YOU SHOULD OBTAIN COMPETENT TAX
ADVICE, BOTH AS TO THE TAX TREATMENT AND SUITABILITY OF SUCH AN INVESTMENT.
QUALIFIED CONTRACTS INCLUDE SPECIAL PROVISIONS CHANGING OR RESTRICTING CERTAIN
RIGHTS AND BENEFITS OTHERWISE AVAILABLE TO NON-QUALIFIED ANNUITIES. YOU SHOULD
READ YOUR ANNUITY CAREFULLY TO REVIEW ANY SUCH CHANGES OR LIMITATIONS. THE
CHANGES AND LIMITATIONS MAY INCLUDE, BUT MAY NOT BE LIMITED TO RESTRICTIONS ON
OWNERSHIP, TRANSFERABILITY, ASSIGNABILITY, CONTRIBUTIONS, DISTRIBUTIONS, AS
WELL AS REDUCTIONS TO THE MINIMUM ALLOWABLE PURCHASE PAYMENT FOR AN ANNUITY AND
ANY SUBSEQUENT ANNUITY YOU MAY PURCHASE FOR USE AS A QUALIFIED CONTRACT.
ADDITIONALLY, VARIOUS PENALTY AND EXCISE TAXES MAY APPLY TO CONTRIBUTIONS OR
DISTRIBUTIONS MADE IN VIOLATION OF APPLICABLE LIMITATIONS.
INDIVIDUAL RETIREMENT PROGRAMS: ELIGIBLE INDIVIDUALS MAY MAINTAIN AN
INDIVIDUAL RETIREMENT ACCOUNT OR INDIVIDUAL RETIREMENT ANNUITY ("IRA").
SUBJECT TO LIMITATIONS, CONTRIBUTIONS OF CERTAIN AMOUNTS MAY BE DEDUCTIBLE FROM
GROSS INCOME. PURCHASERS OF IRAS ARE TO 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 OTHER QUALIFIED PLANS MAY BE ROLLED OVER OR TRANSFERRED INTO AN IRA ON
A TAX-DEFERRED BASIS. ELIGIBLE EMPLOYERS THAT MEET SPECIFIED CRITERIA MAY
ESTABLISH SIMPLIFIED EMPLOYEE PENSIONS FOR EMPLOYEES USING THE EMPLOYEES' IRAS.
THESE ARRANGEMENTS ARE KNOWN AS SEP-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. IRAS GENERALLY MAY NOT PROVIDE
LIFE INSURANCE, BUT THEY MAY PROVIDE A DE MINIMUS DEATH BENEFIT. THE CONTRACT
PROVIDES AN INCREASING MINIMUM DEATH BENEFIT MIGHT BE DEEMED TO BE OTHER THAN A
DE MINIMUS DEATH BENEFIT, AND IF SO, MIGHT BE DEEMED TO BE LIFE INSURANCE. YOU
ARE PARTICULARLY CAUTIONED TO SEEK ADVICE FROM YOUR OWN TAX ADVISOR ON THIS
MATTER.
TAX SHELTERED ANNUITIES: A TAX SHELTERED ANNUITY ("TSA") UNDER
SECTION 403(B) OF THE CODE IS A CONTRACT INTO WHICH CONTRIBUTIONS MAY BE MADE
FOR THE BENEFIT OF THEIR EMPLOYEES BY CERTAIN QUALIFYING EMPLOYERS: PUBLIC
SCHOOLS AND CERTAIN CHARITABLE, EDUCATIONAL AND SCIENTIFIC ORGANIZATIONS. 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 APPLY AS WELL. PURCHASERS OF
THE CONTRACTS FOR SUCH PURPOSES SHOULD SEEK COMPETENT ADVICE AS TO ELIGIBILITY,
LIMITATIONS ON PERMISSIBLE AMOUNTS OF PURCHASE PAYMENTS AND OTHER TAX
CONSEQUENCES ASSOCIATED WITH THE CONTRACTS. IN PARTICULAR, PURCHASERS SHOULD
CONSIDER THAT THE CONTRACT PROVIDES AN INCREASING MINIMUM DEATH BENEFIT. IT IS
POSSIBLE THAT SUCH DEATH BENEFIT COULD BE CHARACTERIZED AS AN INCIDENTAL DEATH
BENEFIT. IF THE DEATH BENEFIT WERE SO CHARACTERIZED, THIS COULD RESULT IN
CURRENTLY TAXABLE INCOME TO PURCHASERS. IN ADDITION, THERE ARE LIMITATIONS ON
THE AMOUNT OF INCIDENTAL DEATH BENEFITS THAT MAY BE PROVIDED UNDER A TAX-
SHELTERED ANNUITY. EVEN IF THE DEATH BENEFIT UNDER THE CONTRACT WERE
CHARACTERIZED AS AN INCIDENTAL DEATH BENEFIT, IT IS UNLIKELY TO VIOLATE THOSE
LIMITS UNLESS THE PURCHASER ALSO PURCHASES A LIFE INSURANCE CONTRACT AS PART OF
HIS OR HER TAX-SHELTERED ANNUITY PLAN.
CORPORATE PENSION AND PROFIT-SHARING PLANS: ANNUITIES MAY BE USED TO
FUND EMPLOYEE BENEFITS OF VARIOUS RETIREMENT PLANS ESTABLISHED BY CORPORATE
EMPLOYERS. CONTRIBUTIONS TO SUCH PLANS ARE NOT TAXABLE TO THE EMPLOYEE UNTIL
DISTRIBUTIONS ARE MADE FROM THE RETIREMENT PLAN. THE CODE IMPOSES LIMITATIONS
ON CONTRIBUTIONS AND 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.
H.R. 10 PLANS: 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 TREATMENT OF DISTRIBUTIONS FROM QUALIFIED ANNUITIES: A 10%
PENALTY TAX APPLIES TO THE TAXABLE PORTION OF A DISTRIBUTION FROM A QUALIFIED
CONTRACT UNLESS ONE OF THE FOLLOWING EXCEPTIONS APPLY TO SUCH DISTRIBUTION:
(A) IT IS PART OF A PROPERLY EXECUTED TRANSFER TO ANOTHER IRA, AN INDIVIDUAL
RETIREMENT ACCOUNT OR ANOTHER ELIGIBLE QUALIFIED PLAN; (B) IT OCCURS ON OR
AFTER THE TAXPAYER'S AGE 59 1/2; (C) IT 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); (D) IT 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; (E) IT IS SUBSEQUENT TO A SEPARATION FROM SERVICE
AFTER THE TAXPAYER ATTAINS AGE 55; (F) IT DOES NOT EXCEED THE EMPLOYEE'S
ALLOWABLE DEDUCTION IN THAT TAX YEAR FOR MEDICAL CARE; AND (G) IT IS MADE TO AN
ALTERNATE PAYEE PURSUANT TO A QUALIFIED DOMESTIC RELATIONS ORDER. THE
EXCEPTIONS STATED ABOVE IN (E), (F) AND (G) DO NOT APPLY TO IRAS.
SECTION 457 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
CONTRIBUTION 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.
SALE OF THE ANNUITIES: AMERICAN SKANDIA MARKETING, INCORPORATED, FORMERLY
SKANDIA LIFE EQUITY SALES CORPORATION A WHOLLY-OWNED SUBSIDIARY OF AMERICAN
SKANDIA INVESTMENT HOLDING CORPORATION, ACTS AS THE PRINCIPAL UNDERWRITER OF
THE ANNUITIES. ASM, INC.'S PRINCIPAL BUSINESS ADDRESS IS ONE CORPORATE DRIVE,
SHELTON, CONNECTICUT 06484. ASM, INC. IS A MEMBER OF THE NATIONAL ASSOCIATION
OF SECURITIES DEALERS, INC. ("NASD").
DISTRIBUTION: ASM, INC. WILL ENTER INTO DISTRIBUTION AGREEMENTS WITH
CERTAIN BROKER-DEALERS REGISTERED UNDER THE SECURITIES AND EXCHANGE ACT OF 1934
OR WITH ENTITIES WHICH MAY OTHERWISE OFFER THE ANNUITIES THAT ARE EXEMPT FROM
SUCH REGISTRATION. ASM, INC. MAY OFFER ANNUITIES DIRECTLY TO POTENTIAL
PURCHASERS. WE RESERVE THE RIGHT TO BASE CONCESSIONS FROM TIME-TO-TIME ON THE
INVESTMENT OPTIONS CHOSEN BY ANNUITY OWNERS, INCLUDING INVESTMENT OPTIONS THAT
MAY BE DEEMED OUR "AFFILIATES" OR "AFFILIATES" OF ASM, INC. UNDER THE 1940 ACT.
AS OF THE DATE OF THIS PROSPECTUS, WE WERE PROMOTING THE SALE OF OUR PRODUCTS
AND THE SOLICITATION OF ADDITIONAL PURCHASE PAYMENTS, WHERE APPLICABLE, FOR OUR
PRODUCTS, INCLUDING ANNUITIES OFFERED PURSUANT TO THIS PROSPECTUS, THROUGH A
PROGRAM OF NON-CASH MERIT REWARDS TO REGISTERED REPRESENTATIVES OF
PARTICIPATING BROKER-DEALERS. WE MAY WITHDRAW OR ALTER THIS PROMOTION AT ANY
TIME.
ADVERTISING: WE MAY ADVERTISE CERTAIN INFORMATION REGARDING THE
PERFORMANCE OF THE INVESTMENT OPTIONS. DETAILS ON HOW WE CALCULATE PERFORMANCE
MEASURES FOR THE SUB-ACCOUNTS AND THE SOURCE OF PERFORMANCE INFORMATION
REGARDING THE UNDERLYING MUTUAL FUNDS ARE FOUND IN THE STATEMENT OF ADDITIONAL
INFORMATION. THIS PERFORMANCE INFORMATION MAY HELP YOU REVIEW THE PERFORMANCE
OF THE INVESTMENT OPTIONS AND PROVIDE A BASIS FOR COMPARISON WITH OTHER
ANNUITIES. THIS INFORMATION 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 TREATED LIKE ANNUITIES UNDER THE CODE.
PERFORMANCE INFORMATION IS BASED ON PAST PERFORMANCE ONLY AND IS NO INDICATION
OF FUTURE PERFORMANCE. PERFORMANCE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PERFORMANCE IN THE FUTURE. PERFORMANCE 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 FUND PORTFOLIOS AND
UPON PREVAILING MARKET CONDITIONS AND THE RESPONSE OF THE UNDERLYING MUTUAL
FUND PORTFOLIOS TO SUCH CONDITIONS. ACTUAL PERFORMANCE WILL ALSO DEPEND ON
CHANGES IN THE EXPENSES OF THE UNDERLYING MUTUAL FUND PORTFOLIOS. SUCH CHANGES
ARE REFLECTED, IN TURN, IN THE SUB-ACCOUNT WHICH INVESTS IN SUCH UNDERLYING
MUTUAL FUND PORTFOLIO. IN ADDITION, THE AMOUNT OF CHARGES ASSESSED AGAINST
EACH SUB-ACCOUNT WILL AFFECT SUB-ACCOUNT 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. SEE "CALCULATION OF PERFORMANCE DATA" IN THE STATEMENT OF
ADDITIONAL INFORMATION.
AS PART OF ANY ADVERTISEMENT OF STANDARD TOTAL RETURN, WE MAY ADVERTISE THE
"NON-STANDARD TOTAL RETURN" OF THE SUB-ACCOUNTS. NON-STANDARD TOTAL RETURN
DOES NOT TAKE INTO CONSIDERATION THE ANNUITY'S MAXIMUM SALES CHARGE OR MAXIMUM
MAINTENANCE FEES.
ADVERTISEMENTS WE DISTRIBUTE MAY ALSO COMPARE PERFORMANCE 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 UNDERLYING MUTUAL FUND PORTFOLIOS.
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 OR RATINGS
MAY HELP YOU IN EVALUATING OUR ABILITY TO MEET OUR OBLIGATIONS TO 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.
OTHER MATTERS: OUTLINED BELOW ARE CERTAIN MISCELLANEOUS MATTERS YOU SHOULD
KNOW BEFORE INVESTING IN AN ANNUITY.
DEFERRAL OF TRANSACTIONS: WE MAY DEFER ANY ANNUITY PAYOUT FOR A PERIOD
NOT TO EXCEED THE LESSER OF 6 MONTHS OR THE PERIOD PERMITTED BY LAW. IF WE
DEFER ANY ANNUITY PAYOUT FOR MORE THAN THIRTY DAYS OR LESS WHERE REQUIRED BY
LAW, WE PAY INTEREST OF AT LEAST 3% PER YEAR ON THE AMOUNT DEFERRED. WE MAY
DEFER PAYMENT OF PROCEEDS OF ANY DISTRIBUTION FROM ANY SUB-ACCOUNT OR ANY
TRANSFER FROM A SUB-ACCOUNT FOR A PERIOD NOT TO EXCEED 7 CALENDAR DAYS FROM THE
DATE THE TRANSACTION IS EFFECTED. ANY OTHER DEFERRAL PERIOD BEGINS ON THE DATE
SUCH DISTRIBUTION OR TRANSFER WOULD OTHERWISE HAVE BEEN TRANSACTED.
ALL PROCEDURES, INCLUDING PAYMENT, BASED ON THE VALUATION OF THE SUB-ACCOUNTS
MAY BE POSTPONED DURING THE PERIOD (A) THE NEW YORK STOCK EXCHANGE IS CLOSED
(OTHER THAN CUSTOMARY HOLIDAYS OR WEEKENDS), OR TRADING ON THE NEW YORK STOCK
EXCHANGE IS RESTRICTED AS DETERMINED BY THE SEC; (B) THE SEC PERMITS
POSTPONEMENT AND SO ORDERS; OR (C) THE SEC DETERMINES THAT AN EMERGENCY EXISTS
MAKING VALUATION OR DISPOSAL OF SECURITIES NOT REASONABLY PRACTICAL.
RESOLVING MATERIAL CONFLICTS: UNDERLYING MUTUAL FUNDS OR PORTFOLIOS MAY
BE AVAILABLE TO REGISTERED SEPARATE ACCOUNTS OFFERING EITHER OR BOTH LIFE AND
ANNUITY CONTRACTS OF INSURANCE COMPANIES NOT AFFILIATED WITH US. WE ALSO MAY
OFFER LIFE INSURANCE AND/OR ANNUITY CONTRACTS THAT OFFER DIFFERENT VARIABLE
INVESTMENT OPTIONS FROM THOSE OFFERED UNDER THIS ANNUITY, BUT WHICH INVEST IN
THE SAME UNDERLYING MUTUAL FUNDS OR PORTFOLIOS. IT IS POSSIBLE THAT
DIFFERENCES MIGHT ARISE BETWEEN OUR SEPARATE ACCOUNT B AND ONE OR MORE ACCOUNTS
OF OTHER INSURANCE COMPANIES WHICH PARTICIPATE IN A PORTFOLIO. IT IS ALSO
POSSIBLE THAT DIFFERENCES MIGHT ARISE BETWEEN A SUB-ACCOUNT OFFERED UNDER THIS
ANNUITY AND VARIABLE INVESTMENT OPTIONS OFFERED UNDER DIFFERENT LIFE INSURANCE
POLICIES OR ANNUITIES WE OFFER, EVEN THOUGH SUCH DIFFERENT VARIABLE INVESTMENT
OPTIONS INVEST IN THE SAME UNDERLYING MUTUAL FUND OR PORTFOLIO. IN SOME CASES,
IT IS POSSIBLE THAT THE DIFFERENCES COULD BE CONSIDERED "MATERIAL CONFLICTS".
SUCH A "MATERIAL CONFLICT" COULD ALSO ARISE DUE TO CHANGES IN THE LAW (SUCH AS
STATE INSURANCE LAW OR FEDERAL TAX LAW) WHICH AFFECT EITHER THESE DIFFERENT
LIFE AND ANNUITY SEPARATE ACCOUNTS OR DIFFERING LIFE INSURANCE POLICIES AND
ANNUITIES. IT COULD ALSO ARISE BY REASON OF DIFFERENCES IN VOTING INSTRUCTIONS
OF PERSONS WITH VOTING RIGHTS UNDER OUR POLICIES AND/OR ANNUITIES AND THOSE OF
OTHER COMPANIES, PERSONS WITH VOTING RIGHTS UNDER ANNUITIES AND THOSE WITH
RIGHTS UNDER LIFE POLICIES, OR PERSONS WITH VOTING RIGHTS UNDER ONE OF OUR LIFE
POLICIES OR ANNUITIES WITH THOSE UNDER OTHER LIFE POLICIES OR ANNUITIES WE
OFFER. IT COULD ALSO ARISE FOR OTHER REASONS. WE WILL MONITOR EVENTS SO WE
CAN IDENTIFY HOW TO RESPOND TO SUCH CONFLICTS. IF SUCH A CONFLICT OCCURS, WE
WILL TAKE THE NECESSARY ACTION TO PROTECT PERSONS WITH VOTING RIGHTS UNDER OUR
LIFE POLICIES OR ANNUITIES VIS-A-VIS THOSE WITH RIGHTS UNDER LIFE POLICIES OR
ANNUITIES OFFERED BY OTHER INSURANCE COMPANIES. WE WILL ALSO TAKE THE
NECESSARY ACTION TO TREAT EQUITABLY PERSONS WITH VOTING RIGHTS UNDER THIS
ANNUITY AND ANY PERSONS WITH VOTING RIGHTS UNDER ANY OTHER LIFE POLICY OR
ANNUITY WE OFFER.
MODIFICATION: WE RESERVE THE RIGHT TO DO ANY OR ALL OF THE FOLLOWING:
(A) COMBINE A SUB-ACCOUNT WITH OTHER SUB-ACCOUNTS; (B) COMBINE SEPARATE ACCOUNT
B OR A PORTION THEREOF WITH OTHER SEPARATE ACCOUNTS; (C) DEREGISTER SEPARATE
ACCOUNT B UNDER THE 1940 ACT; (D) OPERATE SEPARATE ACCOUNT B AS A MANAGEMENT
INVESTMENT COMPANY UNDER THE 1940 ACT OR IN ANY OTHER FORM PERMITTED BY LAW;
(E) MAKE CHANGES REQUIRED BY ANY CHANGE IN THE SECURITIES ACT OF 1933, THE
EXCHANGE ACT OF 1934 OR THE 1940 ACT; (F) MAKE CHANGES THAT ARE NECESSARY TO
MAINTAIN THE TAX STATUS OF YOUR ANNUITY UNDER THE CODE; AND (G) MAKE CHANGES
REQUIRED BY ANY CHANGE IN OTHER FEDERAL OR STATE LAWS RELATING TO RETIREMENT
ANNUITIES OR ANNUITY CONTRACTS.
ALSO, FROM TIME TO TIME, WE MAY MAKE ADDITIONAL SUB-ACCOUNTS AVAILABLE TO YOU.
THESE SUB-ACCOUNTS WILL INVEST IN UNDERLYING MUTUAL FUNDS OR PORTFOLIOS OF
UNDERLYING MUTUAL FUNDS WE BELIEVE TO BE SUITABLE FOR THE ANNUITY. WE MAY OR
MAY NOT MAKE A NEW SUB-ACCOUNT AVAILABLE TO INVEST IN ANY NEW PORTFOLIO OF THE
CURRENT UNDERLYING MUTUAL FUND SHOULD SUCH A PORTFOLIO BE MADE AVAILABLE TO
SEPARATE ACCOUNT B.
WE MAY ELIMINATE SUB-ACCOUNTS, COMBINE TWO OR MORE SUB-ACCOUNTS OR SUBSTITUTE
ONE OR MORE NEW UNDERLYING MUTUAL FUNDS OR PORTFOLIOS FOR THE ONE IN WHICH A
SUB-ACCOUNT IS INVESTED. SUBSTITUTIONS MAY BE NECESSARY IF WE BELIEVE AN
UNDERLYING MUTUAL FUND OR PORTFOLIO NO LONGER SUITS THE PURPOSE OF THE ANNUITY.
THIS MAY HAPPEN DUE TO A CHANGE IN LAWS OR REGULATIONS, OR A CHANGE IN THE
INVESTMENT OBJECTIVES OR RESTRICTIONS OF AN UNDERLYING MUTUAL FUND OR
PORTFOLIO, OR BECAUSE THE UNDERLYING MUTUAL FUND OR PORTFOLIO IS NO LONGER
AVAILABLE FOR INVESTMENT, OR FOR SOME OTHER REASON. WE WOULD OBTAIN PRIOR
APPROVAL FROM THE INSURANCE DEPARTMENT OF OUR STATE OF DOMICILE, IF SO REQUIRED
BY LAW, BEFORE MAKING SUCH A SUBSTITUTION, DELETION OR ADDITION. WE ALSO WOULD
OBTAIN PRIOR APPROVAL FROM THE SEC SO LONG AS REQUIRED BY LAW, AND ANY OTHER
REQUIRED APPROVALS BEFORE MAKING SUCH A SUBSTITUTION, DELETION OR ADDITION.
WE RESERVE THE RIGHT TO TRANSFER ASSETS OF SEPARATE ACCOUNT B, WHICH WE
DETERMINE TO BE ASSOCIATED WITH THE CLASS OF CONTRACTS TO WHICH YOUR ANNUITY
BELONGS, TO ANOTHER SEPARATE ACCOUNT. WE NOTIFY YOU (AND/OR ANY PAYEE DURING
THE PAYOUT PHASE) OF ANY MODIFICATION TO YOUR ANNUITY. WE MAY ENDORSE YOUR
ANNUITY TO REFLECT THE CHANGE.
MISSTATEMENT OF AGE OR SEX: IF THERE HAS BEEN A MISSTATEMENT OF THE AGE
AND/OR SEX OF ANY PERSON UPON WHOSE LIFE ANNUITY PAYMENTS OR THE MINIMUM DEATH
BENEFIT ARE BASED, WE MAKE ADJUSTMENTS TO CONFORM TO THE FACTS. AS TO ANNUITY
PAYMENTS: (A) ANY UNDERPAYMENTS BY US WILL BE REMEDIED ON THE NEXT PAYMENT
FOLLOWING CORRECTION; AND (B) ANY OVERPAYMENTS BY US WILL BE CHARGED AGAINST
FUTURE AMOUNTS PAYABLE BY US UNDER YOUR ANNUITY.
ENDING THE OFFER: WE MAY LIMIT OR DISCONTINUE OFFERING ANNUITIES.
EXISTING ANNUITIES WILL NOT BE AFFECTED BY ANY SUCH ACTION.
LEGAL PROCEEDINGS: AS OF THE DATE OF THIS PROSPECTUS, NEITHER WE NOR ASM,
INC. WERE INVOLVED IN ANY LITIGATION OUTSIDE OF THE ORDINARY COURSE OF
BUSINESS, AND KNOW OF NO MATERIAL CLAIMS.
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION: THE FOLLOWING ARE THE
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION:
(1) GENERAL INFORMATION REGARDING AMERICAN SKANDIA LIFE ASSURANCE
CORPORATION
(2) PRINCIPAL UNDERWRITER
(3) CALCULATION OF PERFORMANCE DATA
(4) UNIT PRICE DETERMINATIONS
(5) INDEPENDENT AUDITORS
(6) LEGAL EXPERTS
(7) FINANCIAL STATEMENTS
APPENDIX A
APPENDIX A UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND
POLICIES
The investment objectives for each underlying mutual fund are in bold face.
Please refer to the prospectuses of each underlying mutual fund for more
complete details and risk factors applicable to certain portfolios.
American Skandia Trust
JanCap Growth Portfolio: The investment objective of the JanCap Growth
Portfolio is growth of capital in a manner consistent with the preservation of
capital. Realization of income is not a significant investment consideration
and any income realized on investments, therefore, will be incidental to this
objective. The objective will be pursued by emphasizing investments in common
stocks. Common stock investments will be in industries and companies that the
portfolio's sub-advisor believes are experiencing favorable demand for their
products and services, and which operate in a favorable competitive and
regulatory environment. Investments may be made to a lesser degree in
preferred stocks, convertible securities, warrants, government securities,
corporate bonds and debentures, high-grade commercial paper, certificates of
deposit, or other securities of U.S. issuers, when the JanCap Growth Portfolio
perceives an opportunity for capital growth from such securities or so that a
return may be received on its idle cash. Securities of foreign issuers,
including securities of foreign governments and Euromarket securities, also may
be purchased. Although it is the general policy of the JanCap Growth Portfolio
to purchase and hold securities for capital growth, changes will be made
whenever the portfolio's sub-advisor believes they are advisable. Because
investment changes usually will be made without reference to the length of time
a security has been held, a significant number of short-term transactions may
result.
Investments also may be made in "special situations" from time to time. A
"special situation" arises when, in the opinion of the portfolio's sub-advisor,
the securities of a particular company will be recognized and appreciate in
value due to a specific development, such as a technological breakthrough,
management change or a new product at that company. Subject to certain
limitations, the JanCap Growth Portfolio may purchase and write options on
securities (including index options) and options on foreign currencies, and may
invest in futures contracts for the purchase or sale of instruments based on
financial indices, including interest rates or an index of U.S. Government or
foreign government securities or equity or fixed-income securities, futures
contracts on foreign currencies and fixed income securities ("futures
contracts"), options on futures contracts, forward contracts and swaps and swap-
related products. These instruments will be used primarily for hedging
purposes. Investment of up to 15% of the JanCap Growth Portfolio's total
assets may be made in securities that are considered illiquid because of the
absence of a readily available market or due to legal or contractual
restrictions.
Lord Abbett Growth and Income Portfolio: The investment objective of the Lord
Abbett Growth and Income Portfolio is long-term growth of capital and income
while attempting to avoid excessive fluctuations in market value. This
objective will be pursued by investing in securities which are selling at
reasonable prices in relation to value. Normally, investments will be made in
common stocks of large, seasoned companies which are in sound financial
condition and are expected to show above-average growth.
Seligman Henderson International Equity Portfolio: The investment objective of
the Seligman Henderson International Equity Portfolio is long-term capital
appreciation consistent with preservation of capital primarily through
investment in securities of non-United States issuers. The portfolio may
invest in securities of issuers domiciled in any country but under normal
conditions investments will be made in two principal regions: The United
Kingdom and Continental Europe; and the Pacific Basin Countries. Continental
European countries include Austria, Belgium, Denmark, Federal Republic of
Germany, Finland, France, Greece, Ireland, Italy, Luxembourg, Netherlands,
Norway, Portugal, Spain, Sweden and Switzerland. Countries in the Pacific
Basin include Australia, Hong Kong, India, Japan, Korea, Malaysia, New Zealand,
People's Republic of China, Philippines, Singapore, Taiwan, and Thailand. The
portfolio believes that it will usually have assets invested in both of these
regions. Although under normal market conditions the portfolio will invest in
a minimum of five countries, it may have assets invested in many of the above
countries. Investments will not normally be made in securities of issuers
located in the United States or Canada.
Seligman Henderson International Small Cap: The investment objective of the
Seligman Henderson International Small Cap Portfolio is long-term capital
appreciation. The portfolio seeks to achieve this objective primarily by
making international investments in securities of companies with small to
medium market capitalizations. The portfolio may invest in securities of
issuers domiciled in any country. Under normal conditions investments will be
made in three principal regions: The United Kingdom/Continental Europe; the
Pacific Basin; and Latin American. Under normal market conditions, the
portfolio's assets will be invested in securities of issuers located in at
least three different countries. Investments will not normally be made in
securities of issuers located in the United States or Canada. Some of the
countries in which the portfolio may invest may be considered to be developing
and may involve special risks The portfolio may invest in all types of
securities, most of which will be denominated in currencies other than the U.S.
dollar. The portfolio will normally invest its assets in equity securities,
including common stock, securities convertible into common stock, depository
receipts for these securities and warrants. The portfolio may, however, invest
up to 25% of its assets in preferred stock and debt securities if the sub-
advisor believes that the capital appreciation available from an investment in
such securities will equal or exceed the capital appreciation available from an
investment in equity securities. In extraordinary circumstances, the portfolio
may invest for temporary defensive purposes, without limit, in large
capitalization companies or increase its investments in debt securities.
Equity securities in which the portfolio will invest may be listed on a foreign
stock exchange or traded in foreign over-the-counter markets. Under normal
market conditions, the portfolio will invest at least 65% of its total assets
in securities of small-to medium-sized companies with market capitalizations up
to $750 million, although up to 35% of its total assets may be invested in
securities of companies with market capitalizations over $750 million There is
no requirement that the debt securities in which the portfolio may invest be
rated by a recognized rating agency. However, it is the portfolio's policy
that investments in debt securities, whether rated or unrated, will be made
only if they are "investment grade" securities or are, in the opinion of the
sub-advisor, of equivalent quality to "investment grade" securities. The
portfolio may also invest in securities represented by European Depository
Receipts ("EDRs") or American Depository Receipts ("ADRs"). Investments in
small companies may involve greater risks, such as limited product lines,
markets and financial or managerial resources. Less frequently-traded
securities may be subject to more abrupt price movements than securities of
larger companies.
AST Money Market Portfolio: The investment objectives of the AST Money Market
Portfolio are to maximize current income and maintain high levels of liquidity.
This portfolio attempts to accomplish its objectives by maintaining a
dollar-weighted average maturity of not more than 90 days and by investing in
the types of securities described below which have effective maturities of not
more than 397 days. Investments may include obligations of the United States
government, its agencies or instrumentalities; certificates of deposit, time
deposits and bankers' acceptances of certain financial institutions which have
more than $2 billion in total assets; commercial paper and corporate bonds;
asset-backed securities; and repurchase and reverse repurchase agreements.
Securities may be purchased on a when-issued or delayed delivery basis.
Subject to applicable investment restrictions, the AST Money Market Portfolio
also may lend its securities.
Federated Utility Income Portfolio: The investment objective of the Federated
Utility Income Portfolio is to achieve high current income and moderate capital
appreciation by investing primarily in a professionally managed and diversified
portfolio of equity and debt securities of utility companies. The portfolio
intends to achieve its investment objective by investing in equity and debt
securities of utility companies that produce, transmit or distribute gas and
electric energy as well as those companies that provide communications
facilities, such as telephone and telegraph companies. As a matter of
investment policy that can be changed without shareholder vote, the portfolio
will invest at least 65% of its total assets in securities of utility
companies.
Federated High Yield Portfolio: The investment objective of the Federated High
Yield Portfolio is to seek high current income by investing primarily in a
diversified portfolio of fixed income securities. The portfolio will invest 65%
of its assets in lower-rated fixed income bonds. The corporate debt
obligations in which the portfolio invests are usually not in the three highest
rating categories of a nationally recognized rating organization (AAA, AA, or A
for Standard & Poor's and Aaa, Aa or A for Moody's) but are in the lower rating
categories or are unrated but are of comparable quality and have speculative
characteristics or are speculative. Lower-rated or unrated bonds are commonly
referred to as "junk bonds". There is no minimal acceptable rating for a
security to be purchased or held in the portfolio, and the portfolio may, from
time to time, purchase or hold securities rated in the lowest rating category.
Under normal circumstances, the portfolio will not invest more than 10% of the
value of its total assets in equity securities. The fixed income securities in
which the portfolio may invest include, but are not limited to: preferred
stocks, bonds, debentures, notes, equipment lease certificates and equipment
trust certificates. The portfolio will invest primarily in fixed rate
corporate debt obligations.
AST Phoenix Balanced Asset Portfolio: The AST Phoenix Balanced Asset Portfolio
seeks as its investment objective reasonable income, long-term capital growth
and conservation of capital. The portfolio intends to invest based on combined
considerations of risk, income, capital enhancement and protection of capital
value. The portfolio may invest in any type or class of security. Normally,
the portfolio will invest in common stocks and fixed income securities;
however, it may also invest in securities convertible into common stocks. At
least 25% of the value of its assets will be invested in fixed income senior
securities. The portfolio may also engage in certain options transactions and
enter into financial futures contracts and related options for hedging purposes
and may invest in deferred or zero coupon debt obligations. In implementing
the investment objective of the portfolio, the sub-advisor will select
securities believed to have potential for the production of current income,
with emphasis on securities that also have potential for capital enhancement.
In an effort to protect its assets against major market declines, or for other
temporary defensive purposes, the portfolio may actively pursue a policy of
retaining cash or investing part or all of its assets in cash equivalents, such
as government securities and high grade commercial paper.
AST Phoenix Capital Growth Portfolio: The investment objective of the AST
Phoenix Capital Growth Portfolio is to seek long-term appreciation of capital.
Because income is not an objective, any income generated by the portfolio's
assets will be incidental to its objective. The portfolio intends to invest
primarily in the common stock of companies believed by management to have
appreciation potential. Normally its investment will consist largely of common
stocks selected for the promise they offer of appreciation of capital.
However, the portfolio may also invest in preferred stocks, bonds, convertible
preferred stocks and convertible debentures if, in the judgment of management,
the investment would further its investment objective. The portfolio may also
engage in certain options transactions and enter into financial futures
contracts and related options for hedging purposes. Each security held will be
monitored to determine whether it is contributing to the basic objective of
long-term appreciation of capital.
T. Rowe Price Asset Allocation Portfolio: The investment objective of the T.
Rowe Price Asset Allocation Portfolio is to seek a high level of total return
by investing primarily in a diversified group of fixed income and equity
securities. The portfolio is designed to balance the potential appreciation of
common stocks with the income and principal stability of bonds over the long
term. Under normal market conditions over the long-term, the portfolio expects
to allocate its assets (other than cash reserves) so that approximately 40% of
such assets will be in fixed income securities and approximately 60% in equity
securities.
The portfolio's fixed income securities will be allocated among investment
grade, high yield and non-dollar debt securities. The weighted average
maturity for this portion of the portfolio is generally expected to be between
four and nine years, although it may vary significantly. High-yielding, income-
producing debt securities (commonly referred to as "junk bonds") and preferred
stocks including convertible securities may be purchased without regard to
maturity, however, the average maturity of the bonds is expected to be
approximately 10 years, although it may vary if market conditions warrant.
Quality will generally range from lower-medium to low and the portfolio may
also purchase bonds in default if, in the opinion of the sub-advisor, there is
significant potential for capital appreciation.
The portfolio's equity securities will be allocated among large and small-cap
U.S. and non-dollar equity securities. Large-cap will be stocks in the S&P 500
and stocks of well-established companies which can produce increasing dividend
income. Small-cap will be common stocks of small companies or companies which
offer the possibility of accelerated earnings growth because of rejuvenated
management, new products or structural changes in the economy. Current income
is not a factor in the selection of these stocks.
The portfolio will generally trade in securities (either common stocks or
bonds) for short-term profits, but, when circumstances warrant, securities may
be purchased and sold without regard to the length of time held.
T. Rowe Price International Equity Portfolio: The investment objective of the
T. Rowe Price International Equity Portfolio is to seek total return on its
assets through investments in common stocks of established, non-U.S. companies.
Investments may be made solely for capital appreciation or solely for income or
any combination of both for the purpose of achieving a higher overall return.
Total return consists of capital appreciation or depreciation, dividend income,
and currency gains or losses. The portfolio intends to diversify investments
broadly among countries and to normally have at least three different countries
represented in the portfolio. The portfolio may invest in countries of the Far
East and Western Europe as well as South Africa, Australia, Canada and other
areas (including developing countries). Under unusual circumstances, the
portfolio may invest substantially all of its assets in one or two countries.
T. Rowe Price Natural Resources: The investment objective of the T. Rowe Price
Natural Resources Portfolio is to seek long-term growth of capital through
investment primarily in common stocks of companies which own or develop natural
resources and other basic commodities. Current income is not a factor in the
selection of stocks for investment by the portfolio. Total return will consist
primarily of capital appreciation (or depreciation). The portfolio will invest
primarily (at least 65% of its total assets) in common stocks of companies
which own or develop natural resources and other basic commodities. However,
it may also purchase other types of securities, such as selected, non-resource
growth companies, foreign securities, convertible securities and warrants, when
considered consistent with the portfolio's investment objective and policies.
The portfolio may also engage in a variety of investment management practices,
such as buying and selling futures and options.
Some of the most important factors evaluated by the sub-advisor in selecting
natural resource companies are the capability for expanded production, superior
exploration programs and production facilities, and the potential to accumulate
new resources. The portfolio expects to invest in those natural resource
companies which own or develop energy sources (such as oil, gas, coal and
uranium), precious metals, forest products, real estate, nonferrous metals,
diversified resources, and other basic commodities which, in the opinion of the
sub-advisor, can be produced and marketed profitably during periods of rising
labor costs and prices. However, the percentage of the portfolio's assets
invested in natural resource and related businesses versus the percentage
invested in non-resource companies may vary greatly depending upon economic
monetary conditions and the outlook for inflation. The earnings of natural
resource companies may be expected to follow irregular patterns, because these
companies are particularly influenced by the forces of nature and international
politics. Companies which own or develop real estate might also be subject to
irregular fluctuations of earnings, because these companies are affected by
changes in the availability of money, interest rates, and other factors.
The portfolio may invest up to 50% of its total assets in foreign securities.
These include non-dollar denominated securities traded outside of the U.S. and
dollar denominated securities traded in the U.S. (such as ADRs). Some of the
countries in which the portfolio may invest may be considered to be developing
and may involve special risks The portfolio will not purchase a non-
investment grade debt security (or junk bond) if immediately after such
purchase the portfolio would have more than 10% of its total assets invested in
such securities. Junk bonds are regarded as predominantly speculative and high
risk. The portfolio may invest up to 10% of its total assets in hybrid
instruments. Such instruments may take a variety of forms, such as debt
instruments with interest or principal payments determined by reference to the
value of a currency, security index or commodity at a future point in time
Founders Capital Appreciation Portfolio: The investment objective of Founders
Capital Appreciation Portfolio is capital appreciation. The portfolio will
normally invest at least 65% of its total assets in common stocks of U.S.
companies with market capitalizations of $1.5 billion or less. These stocks
normally will be traded in the over-the-counter market. Since it may engage in
short-term trading, the portfolio normally will have annual portfolio turnover
rates in excess of 100%.
INVESCO Equity Income Portfolio: The investment objective of the INVESCO
Equity Income Portfolio is to seek high current income while following sound
investment practices. Capital growth potential is an additional, but
secondary, consideration in the selection of portfolio securities. The
portfolio seeks to achieve its objective by investing in securities which will
provide a relatively high-yield and stable return and which, over a period of
years, may also provide capital appreciation. The portfolio normally will
invest between 60% and 75% of its assets in dividend-paying, marketable common
stocks of domestic and foreign industrial issuers. The portfolio also will
invest in convertible bonds, preferred stocks and debt securities. The
portfolio may depart from the basic investment objective and assume a defensive
position with a large portion of its assets temporarily invested in high
quality corporate bonds, or notes and government issues, or held in cash. The
portfolio's investments in common stocks may decline in value. To minimize the
risk this presents, the portfolio only invests in dividend-paying common stocks
of domestic and foreign industrial issuers which are marketable, and will not
invest more than 5% of the portfolio's assets in the securities of any one
company or more than 25% of the portfolio's assets in any one industry. The
portfolio's investments in debt securities will generally be subject to both
credit risk and market risk. There are no fixed-limitations regarding
portfolio turnover. The rate of portfolio turnover may fluctuate as a result
of constantly changing economic conditions and market circumstances.
Securities initially satisfying the portfolio's basic objectives and policies
may be disposed of when they are no longer suitable. As a result, it is
anticipated that the portfolio's annual portfolio turnover rate may be in
excess of 100%, and may be higher than that of other investment companies
seeking current income with capital growth as a secondary consideration.
Increased portfolio turnover would cause the portfolio to incur greater
brokerage costs than would otherwise be the case.
PIMCO Total Return Bond Portfolio: The investment objective of the PIMCO Total
Return Bond Portfolio is to seek to maximize total return. A secondary
objective is preservation of capital. The sub-advisor will seek to employ
prudent investment management techniques, especially in light of the broad
range of investment instruments in which the portfolio may invest. The
proportion of the portfolio's assets committed to investment in securities with
particular characteristics (such as maturity, type and coupon rate) will vary
based on the outlook for the U.S. and foreign economies, the financial markets
and other factors. The portfolio will invest at least 65% of its assets in the
following types of securities which may be issued by domestic or foreign
entities and denominated in U.S. dollars or foreign currencies: securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities;
corporate debt securities; corporate commercial paper; mortgage and other asset-
backed securities; variable and floating rate debt securities; bank
certificates of deposit; fixed time deposits and bankers' acceptances;
repurchase agreements and reverse repurchase agreements; obligations of foreign
governments or their subdivisions, agencies and instrumentalities,
international agencies or supranational entities; and foreign currency exchange-
related securities, including foreign currency warrants. The portfolio will
invest in a diversified portfolio of fixed-income securities of varying
maturities with a portfolio duration from three to six years. The portfolio
may invest up to 20% of assets in corporate debt securities that are rated
below investment grade (i.e., rated below Baa by Moody's or BBB by S&P or, if
unrated, determined by the sub-advisor to be of comparable quality). These
securities are regarded as high risk and predominantly speculative with respect
to the issuer's continuing ability to meet principal and interest payments (see
the underlying fund prospectus for details).
PIMCO Limited Maturity Bond: The investment objective of the PIMCO Limited
Maturity Bond Portfolio is to seek to maximize total return, consistent with
preservation of capital and prudent investment management. The portfolio will
invest at least 65% of its total assets in the following types of securities,
which may be issued by domestic or foreign entities and denominated in U.S.
dollars or foreign currencies: securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities ("U.S. Government securities");
corporate debt securities; corporate commercial paper; mortgage and other asset-
backed securities; variable and floating rate debt securities; bank
certificates of deposit, fixed time deposits and bankers' acceptances;
repurchase agreements and reverse repurchase agreements; obligations of foreign
governments or their subdivisions, agencies and instrumentalities,
international agencies or supranational entities; and foreign currency exchange-
related securities, including foreign currency warrants.
The portfolio may hold different percentages of its assets in these various
types of securities, and may invest all of its assets in derivative instruments
or in mortgage- or asset-backed securities. There are special risks involved
in these instruments. The portfolio will invest in a diversified portfolio of
fixed income securities of varying maturities with a portfolio duration from
one to three years. The portfolio may invest up to 10% of its assets in
corporate debt securities that are rated below investment grade but rated B or
higher by Moody's or S&P (or, if unrated, determined by the sub-advisor to be
of comparable quality). The portfolio may also invest up to 20% of its assets
in securities denominated in foreign currencies. The "total return" sought by
the portfolio will consist of interest and dividends from underlying
securities, capital appreciation reflected in unrealized increases in value of
portfolio securities (realized by the shareholder only upon selling shares) or
realized from the purchase and sale of securities, and use of futures and
options, or gains from favorable changes in foreign currency exchange rates
The portfolio may invest directly in U.S. dollar- or foreign currency-
denominated fixed income securities of non-U.S. issuers. The portfolio will
limit its foreign investments to securities of issuers based in developed
countries (including Newly Industrialized Countries, "NICs", such as Taiwan,
South Korea and Mexico). Investing in the securities of issuers in any foreign
country involves special risks.
Eagle Growth Equity Portfolio: The investment objective of the Eagle Growth
Equity Portfolio is long-term capital appreciation primarily through investment
in common stocks and other equity securities. This is a fundamental investment
objective of the portfolio.
The portfolio will pursue its objective by investing primarily in common stocks
of companies which, in the view of the sub-advisor, have above-average
prospects for substantial long-term capital appreciation. The portfolio may
also invest in preferred stocks and securities convertible into common stock.
The portfolio may purchase securities traded on recognized securities exchanges
and in the over-the-counter market. The portfolio will normally invest at
least 65% of its total assets in equity securities of companies which the sub-
advisor believes will achieve significant growth. Common stock and other
equity investments will generally be in companies that the sub-advisor believes
are healthy, growing businesses with strong or dominant market share, free cash
flow, and availability at a price below the sub-advisor's perception of a
company's value as a going concern. The portfolio may invest its remaining
assets in U.S. Government securities, repurchase agreements or other short-term
money market instruments. The portfolio may purchase and sell a security
without regard to the length of time a security will be or has been held.
AST Scudder International Bond Portfolio: The AST Scudder International Bond
Portfolio seeks to provide income primarily by investing in a managed portfolio
of high-grade debt securities denominated in foreign currencies ("international
bonds"). As a secondary objective, the portfolio seeks protection and possible
enhancement of principal value by actively managing currency, bond market and
maturity exposure and by security selection.
The portfolio is intended for long-term investors who can accept the risks
associated with investing in international bonds. Total return from investment
in the portfolio will consist of income after expenses, bond price gains (or
losses) in terms of the local currency and currency gains (or losses). For tax
purposes, realized gains and losses on currency are regarded as ordinary income
and loss and could, under certain circumstances, have an impact on
distributions. The value of the portfolio will fluctuate in response to
various economic factors, the most important of which are fluctuations in
foreign currency exchange rates and interest rates.
The portfolio will normally invest at least 65% of its total assets in bonds
denominated in foreign currencies. Because the portfolio's investments are
primarily denominated in foreign currencies, exchange rates are likely to have
a significant impact on total portfolio performance. For example, a fall in
the U.S. dollar's value relative to the Japanese yen will increase the U.S.
dollar value of a Japanese bond held in the portfolio, even though the price of
that bond in yen terms remains unchanged. Conversely, if the U.S. dollar rises
in value relative to the yen, the U.S. dollar value of a Japanese bond will
fall. Investors should be aware that exchange rate movements can be
significant and endure for long periods of time.
Because of the portfolio's long-term investment objective, investors should not
rely on an investment in the portfolio for their short-term financial needs and
should not view the portfolio as a vehicle for playing short-term swings in the
international bond and foreign exchange markets. Shares of the portfolio alone
should not be regarded as a complete investment program. Also, investors
should be aware that investing in international bonds may involve a higher
degree of risk than investing in U.S. bonds.
Berger Capital Growth Portfolio: The investment objective of the Berger
Capital Growth Portfolio is to achieve long-term capital appreciation. The
portfolio seeks to achieve this objective primarily by investing in common
stocks of established companies. As a high level of income return is not an
investment objective, any income produced will be a by-product of the effort to
achieve the portfolio's objective. In making investment decisions, the
portfolio will utilize analyses and information obtained from various sources,
including industry economic trends, earnings expectations, fundamental
securities valuation factors and securities price trends. The investment
policies of the portfolio are described below.
In selecting its portfolio securities, the portfolio will place primary
emphasis on established companies which it believes to have favorable growth
prospects. Common stocks usually constitute all or most of the portfolio's
investment portfolio, but the portfolio remains free to invest in securities
other than common stocks, and may do so when deemed appropriate by the sub-
advisor to achieve the objective of the portfolio. The portfolio may, from
time to time, take substantial positions in securities convertible into common
stocks, and it may also purchase government securities, preferred stocks and
other senior securities if the sub-advisor believes these are likely to be the
best performing securities at that time. The portfolio's policy of investing
in securities believed to have a potential for capital growth means that the
assets of the portfolio generally may be subject to greater risk than is
involved in other securities.
The Alger American Fund
Alger American Growth Portfolio: The investment objective of the Alger
American Growth Portfolio is long-term capital appreciation. Income is a
consideration in the selection of investments but is not an investment
objective of the portfolio. It seeks to achieve its objective by investing in
equity securities, such as common or preferred stocks and limited partnership
interests that are listed on a national securities exchange, or securities
convertible into or exchangeable for equity securities, including warrants and
rights, selected by the investment manager on the basis of original research
produced by its research analysts. Except during temporary defensive periods,
the portfolio may invest at least 85 percent of its net assets in equity
securities and at least 65 percent of its net assets in equity securities of
companies that, at the time of purchase, have total market capitalization of $1
billion or greater.
Alger American Small Capitalization Portfolio: The investment objective of the
Alger American Small Capitalization Portfolio is long-term capital
appreciation. Income is a consideration in the selection of investments but is
not an investment objective of the portfolio. It seeks to achieve this
objective by investing its assets in equity securities, such as common or
preferred stocks and limited partnership interests that are listed on a
national securities exchange, or securities convertible into or exchangeable
for equity securities, including warrants and rights, selected by the
investment manager on the basis of original research produced by its research
analysts. Except during temporary defensive periods, the portfolio invests at
least 85 percent of its net assets in equity securities and at least 65 percent
of its net assets in equity securities of companies that, at the time of
purchase, have "total market capitalization" - present market value per share
multiplied by the total number of shares outstanding - of less than $1 billion.
Investing in smaller, newer issuers generally involves greater risk than
investing in larger, more established issuers.
Alger American MidCap Growth Portfolio: The investment objective of the Alger
American MidCap Growth Portfolio is long-term capital appreciation. Income is
a consideration in the selection of investments but is not an investment
objective of the portfolio. It seeks to achieve its objective by investing in
equity securities, such as common or preferred stocks and limited partnership
interests that are listed on a national securities exchange, or securities
convertible into or exchangeable for equity securities, including warrants and
rights, selected by the investment manager on the basis of original research
produced by its research analysts. Except during temporary defensive periods,
the portfolio may invest at least 85 percent of its net assets in equity
securities and at least 65 percent of its net assets in equity securities of
companies that, at the time of purchase, of the securities, have total market
capitalization between $750 million and $3.5 billion.
Alliance Variable Products Series Fund, Inc.
AVP Short-Term Multi-Market Portfolio: The investment objective of the Short-
Term-Multi-Market Portfolio is to seek the highest level of current income,
consistent with what the Fund's advisor considers to be prudent investment
risk, that is available from a portfolio of high-quality debt securities having
remaining maturities of not more than three years. The portfolio seeks high
current yields by investing in a portfolio of debt securities denominated in
the U.S. Dollar and a range of foreign currencies. Accordingly, the portfolio
will seek investment opportunities in foreign, as well as domestic, securities
markets. While the portfolio normally will maintain a substantial portion of
its assets in debt securities denominated in foreign currencies, the portfolio
will invest at least 25% of its net assets in U.S. Dollar denominated
securities. The portfolio is designed for the investor who seeks a higher
yield than a money market fund or certificate of deposit and less fluctuation
in net asset value than a longer-term bond fund.
AVP Growth and Income Portfolio: The Growth and Income Portfolio's investment
objective is to seek reasonable current income and reasonable opportunity for
appreciation through investments primarily in dividend-paying common stocks of
good quality. Whenever the economic outlook is unfavorable for investment in
common stock, investments in other types of securities, such as bonds,
convertible bonds, preferred stock and convertible preferred stocks may be made
by the portfolio. Purchases and sales of portfolio securities are made at such
times and in such amounts as are deemed advisable in light of market, economic
and other conditions.
AVP Premier Growth Portfolio: The investment objective of the Premier Growth
Portfolio is growth of capital by pursuing aggressive investment policies. The
investment objective of the Premier Growth Portfolio is growth of capital by
pursuing aggressive investment policies. Since investments will be made based
upon their potential for capital appreciation, current income will be
incidental to the objective of capital growth. Because of the market risks
inherent in any investment, the selection of securities on the basis of their
appreciation possibilities cannot ensure against possible loss in value, and
there is, of course, no assurance that the Portfolio's investment objective
will be met. The portfolio is therefore not intended for investors whose
principal objective is assured income and conservation of capital.
The portfolio will invest predominantly in the equity securities (common
stocks, securities convertible into common stocks and rights and warrants to
subscribe for or purchase common stocks) of a limited number of large,
carefully selected, American companies that, in the judgment of the advisor,
are high quality and likely to achieve superior earnings growth. The portfolio
investments in the 25 of these companies most highly regarded at any point in
time by the advisor will usually constitute approximately 70% of the
portfolio's net assets. Normally, approximately 40 companies will be
represented in the portfolio's investment portfolio. The portfolio thus
differs from more typical equity mutual funds by investing most of its assets
in a relatively small number of intensively researched companies.
The portfolio will, under normal circumstances, invest at least 85% of the
value of its total assets in the equity securities of American companies. The
portfolio defines American companies to be entities (i) that are organized
under the laws of the United States and have their principal office in the
United States, and (ii) the equity securities of which are traded principally
in the United States securities markets.
AVP U.S. Government/High Grade Securities Portfolio: The investment objective
of the U.S. Government/High Grade Securities Portfolio is high current income
consistent with preservation of capital. In seeking to achieve this objective,
the portfolio will invest principally in a portfolio of : (a) obligations
issued or guaranteed by the U.S. Government and repurchase agreements
pertaining to U.S. Government Securities, and (ii) other high grade debt
securities rated AAA, AA or A by Standard & Poor's Corporation or Aaa, Aa or A
by Moody's Investors Service, Inc. or that have not received a rating but are
determined to be of comparable quality by the portfolio's advisor. As a
fundamental investment policy, the portfolio will invest at least 65% of its
total assets in these types of securities, including the securities held
subject to repurchase agreements. The portfolio will utilize certain other
investment techniques, including options and futures contracts, intended to
enhance income and reduce market risk. The portfolio is designed primarily for
long-term investors and investors should not consider it a trading vehicle.
AVP International Portfolio: The International Portfolio's primary investment
objective is to seek to obtain a total return on its assets from long-term
growth of capital principally through a broad portfolio of marketable
securities of established non-United States companies (e.g., incorporated
outside the United States), companies participating in foreign economies with
prospects for growth, and foreign government securities. As a secondary
objective, the portfolio will attempt to increase its current income without
assuming undue risk. The portfolio's advisor considers it consistent with
these objectives to acquire securities of companies incorporated in the United
States and having their principal activities and interests outside of the
United States. The International Portfolio intends to be invested primarily in
such issuers and under normal circumstances more than 80% of its assets will be
so invested.
In seeking its objective, the International Portfolio expects to invest its
assets primarily in common stocks of established non-United States companies
which in the opinion of the portfolio's advisor have potential for growth of
capital or income or both.
It is the present intention of the portfolio's advisor to invest the
portfolio's assets in companies based in (or governments of or within) the Far
East (Japan, Hong Kong, Singapore and Malaysia), Western Europe (the United
Kingdom, Germany, The Netherlands, France and Switzerland), Australia, Canada,
and such other areas and countries as the portfolio's advisor may determine
from time to time. However, investments may be made from time to time in
companies in, or governments of, developing countries as well as developed
countries. Shareholders should be aware that investing in the equity and fixed-
income markets of developing countries involves exposure to economic structures
that are generally less diverse and mature, and to political systems which can
be expected to have less stability than those of developed countries. The
portfolio's advisor at present does not intend to invest more than 10% of the
International Portfolio's assets in companies in, or governments of, developing
countries.
AVP Total Return Portfolio: The investment objective of the Total Return
Portfolio is to achieve a high return through a combination of current income
and capital appreciation. The Total Return Portfolio's assets are invested in
U.S. Government and agency obligations, bonds, fixed-income senior securities
(including short and long-term debt securities and preferred stocks to the
extent their value is attributable to their fixed-income characteristics),
preferred and common stocks in such proportions and of such type as are deemed
best adapted to the current economic and market outlooks. The percentage of
the portfolio's assets invested in each type of security at any time shall be
in accordance with the judgement of the portfolio's advisor.
Neuberger & Berman Advisers Management Trust
(Each portfolio of the Neuberger & Berman Advisers Management Trust invests
exclusively in a corresponding series of Advisers Managers Trust in what is
sometimes known as a "master/feeder" fund structure. Therefore, the investment
objective of each portfolio matches that of the series of the Advisers Managers
Trust in which the portfolio invests. Therefore, the following information is
presented in terms of the applicable series of the Advisers Managers Trust.)
AMT Growth Investments: The investment objective of AMT Growth Investments and
its corresponding Portfolio is to seek capital appreciation without regard to
income. This investment objective is fundamental and may not be changed
without the approval of the holders of a majority of the outstanding shares of
the Portfolio and Series.
AMT Growth Investments invests in securities believed to have the maximum
potential for long-term capital appreciation. It does not seek to invest in
securities that pay dividends or interest, and any such income is incidental.
The Series expects to be almost fully invested in common stocks, often of
companies that may be temporarily out of favor in the market.
The Series' aggressive growth investment program involves greater risks and
share price volatility than programs that invest in more conservative
securities. Moreover, the Series does not follow a policy of active trading
for short-term profits. Accordingly, the Series may be more appropriate for
investors with a longer-range perspective. While the Series uses the Neuberger
& Berman value-oriented investment approach, when N&B Management believes that
particular securities have greater potential for long-term capital
appreciation, the Series may purchase such securities at prices with higher
multiples to measures of economic value (such as earnings) than other Series.
In addition, the Series focuses on companies with strong balance sheets and
reasonable valuations relative to their growth rates. It also diversifies its
investments into many companies and industries.
AMT Limited Maturity Bond Investments: The investment objective of AMT Limited
Maturity Bond Investments and its corresponding Portfolio is to provide the
highest current income consistent with low risk to principal and liquidity; and
secondarily, total return. This investment objective is fundamental and may
not be changed without the approval of the holders of a majority of the
outstanding shares of the Portfolio and Series.
AMT Limited Maturity Bond Investments invests in a diversified portfolio of
fixed and variable rate debt securities and seeks to increase income and
preserve or enhance total return by actively managing average portfolio
maturity in light of market conditions and trends.
AMT Limited Maturity Bond Investments invests in a diversified portfolio of
short-to-intermediate-term U.S. Government and Agency securities and debt
securities issued by financial institutions, corporations, and others, of at
least investment grade. These securities include mortgage-backed and asset-
backed securities, repurchase agreements with respect to U.S. Government and
Agency securities, and foreign investments. AMT Limited Maturity Bond
Investments may invest up to 5% of its net assets in municipal securities when
N&B Management believes such securities may outperform other available issues.
The Series may purchase and sell covered call and put options, interest-rate
futures contracts, and options on those futures contracts and may engage in
lending portfolio securities. The Series' dollar-weighted average portfolio
maturity may range up to five years.
AMT Balanced Investments: The investment objective of AMT Balanced Investments
is long-term capital growth and reasonable current income without undue risk to
principal. AMT Balanced Investments will seek to achieve its objective through
investment of a portion of its assets in common stocks and a portion of its
assets in debt securities. The investment adviser anticipates that the series'
investments will normally be managed so that approximately 60% of the series'
total assets will be invested in common stocks and the remaining assets will be
invested in debt securities. However, depending on the investment adviser's
views regarding current market trends, the common stock portion of the series'
investments may be adjusted downward to as low as 50% or upward to as high as
70%. At least 25% of the series' assets will be invested in fixed income
senior securities.
AMT Partners Investments: The investment objective of AMT Partners Investments
is to seek capital growth. This investment objective is non-fundamental. AMT
Partners Investments invests primarily in common stocks of established
companies, using the value-oriented investment approach. The series seeks
capital growth through an investment approach that is designed to increase
capital with reasonable risk. Its investment program seeks securities believed
to be undervalued based on strong fundamentals such as low price-to-earnings
ratios, consistent cash flow, and support from asset values. Up to 15% of the
series' net assets may be invested in corporate debt securities rated below
investment grade or in comparable unrated securities. Securities rated below
investment grade as well as unrated securities are often considered to be
speculative and usually entail greater risk.
Scudder Variable Life Investment Fund
Bond Portfolio: The Bond portfolio pursues a policy of investing for a high
level of income consistent with a high quality portfolio of debt securities.
Under normal circumstances, the portfolio invests at least 65% of its assets in
bonds, including those of the U.S. Government and its agencies and those of
corporations and other notes and bonds paying high current income. The
portfolio may also invest in preferred stocks consistent with the portfolio's
objectives It will attempt to moderate the effect of market price fluctuations
relative to that of a long-term bond by investing in securities with varying
maturities and by entering into futures contracts on debt securities and
related options for hedging purposes.
Capital Growth Portfolio: The Capital Growth Portfolio seeks long-term capital
appreciation and, consistent therewith, current income through a broad and
flexible investment program. The portfolio seeks to achieve these objectives
by investing primarily in income producing, publicly-traded equity securities,
such as common stocks and securities convertible into common stock, with an
emphasis on securities of established companies. However, in order to reduce
risk, as market or economic conditions may periodically warrant, the portfolio
may also invest up to 25% of its assets in short-term debt instruments.
In contrast to the specialized investment policies of some capital appreciation
funds, the portfolio is free to invest in a wide range of marketable securities
offering the potential for growth. This enables the portfolio to pursue
investment values in various sectors of the stock market including: (a)
companies that generate or apply new technologies, new and improved
distribution techniques, or new services such as those in the business
equipment, electronics, specialty merchandising, and health service industries;
(b) companies that own or develop natural resources, such as energy exploration
or precious metals companies; (c) companies that may benefit from changing
consumer demands and lifestyles, such as financial service organizations and
telecommunications companies; and (d) foreign companies.
While emphasizing investments in companies with above-average growth prospects,
the portfolio may also purchase and hold equity securities of companies that
may have only average growth prospects, but seem undervalued due to factors
thought to be of a temporary nature which may cause their securities to be out
of favor and to trade at a price below their potential value.
Balanced Portfolio: The Balanced Portfolio seeks a balance of growth and
income from a diversified portfolio of equity and fixed income securities. The
portfolio also seeks long-term preservation of capital through a quality-
oriented investment approach that is designed to reduce risk.
In seeking its objectives of a balance of growth and income, as well as long-
term preservation of capital, the portfolio invests in a diversified portfolio
of equity and fixed income securities. The portfolio invests, under normal
circumstances, at least 50%, but no more than 75% of its net assets in common
stocks and other equity investments. The portfolio will invest primarily in
securities issued by medium-to-large sized domestic companies with annual
revenues or market capitalization of at least $600 million, and which, in the
opinion of the advisor, offer above-average potential for price appreciation.
The portfolio seeks to invest in companies that have relatively consistent and
above-average rates of growth; companies that are in a strong financial
position with high credit standings and profitability; firms with important
business franchises, leading products, or dominant marketing and distribution
systems; companies guided by experienced and motivated managements; and
companies selling at attractive market valuations.
To enhance income and stability, the portfolio's remaining assets are allocated
to bonds and other fixed income securities, including cash reserves. The
portfolio will normally invest 25% to 50% of its net assets in fixed income
securities. However, at least 25% of the portfolio's net assets will always be
invested in fixed income securities.
The portfolio will, on occasion, adjust its mix of investments among equity
securities, bonds, and cash reserves. In reallocating investments, the advisor
weighs the relative values of different asset classes and expectations for
future returns. In doing so, the advisor analyzes, on a global basis, the
level and direction of interest rates, capital flows, inflation expectations,
anticipated growth of corporate profits, monetary and fiscal policies around
the world, and other related factors. The portfolio does not take extreme
investment positions as part of an effort to "time the market." Shifts between
stocks and fixed income investments are expected to occur in generally small
increments within the guidelines adopted in this prospectus. The portfolio is
designed as a conservative long-term investment program.
International Portfolio: The International Portfolio seeks long-term growth of
capital primarily through diversified holdings of marketable foreign equity
investments. The portfolio invests in companies, wherever organized, which do
business primarily outside the United States. The portfolio intends to
diversify investments among several countries and to have represented in its
holdings business activities in not less than three different countries. The
portfolio does not intend to concentrate investments in any particular
industry.
The portfolio invests primarily in equity securities of established companies,
listed on foreign exchanges, which the advisor believes have favorable
characteristics. It may also invest in fixed income securities of foreign
governments and companies. However, management intends to maintain a portfolio
consisting primarily of equity securities.
In the event of exceptional conditions abroad, the portfolio may temporarily
invest all or a portion of its assets in Canadian or U.S. Government
obligations or currencies, or securities of companies incorporated in and
having their principal activities in Canada or the United States.
Janus Aspen Series
Growth Portfolio: The investment objective of the Growth Portfolio is long-
term growth of capital in a manner consistent with the preservation of capital.
It is a diversified fund that pursues its investment objective by investing
primarily in common stocks of a large number of issuers of any size.
Generally, this portfolio emphasizes issuers with larger market
capitalizations.
Aggressive Growth Portfolio: The investment objective of the Aggressive Growth
Portfolio is long-term growth of capital in a manner consistent with the
preservation of capital. It is a nondiversified fund that pursues its
investment objective by emphasizing investments in companies with market
capitalization between $1 billion and $5 billion. Although the portfolio
expects to emphasize such securities, it may also invest in smaller or larger
companies. Companies with market capitalization of $1 billion to $5 billion
may suffer more significant losses as well as realize more substantial growth
than larger, more established issuers. Thus, investments in such companies
tend to be more volatile and somewhat speculative.
Worldwide Growth Portfolio: The investment objective of the Worldwide Growth
Portfolio is long-term growth of capital in a manner consistent with the
preservation of capital. It is a diversified fund that pursues its investment
objective primarily through investments in common stocks of foreign and
domestic issuers. The portfolio is permitted to invest on a worldwide basis in
companies and other organizations of any size, regardless of country of
organization or place of principal business activity, as well as domestic and
foreign governments, government agencies and other governmental entities. The
Worldwide Growth Portfolio normally invests in securities of issuers from at
least five different countries, including the U.S., although the portfolio may
at times invest all of its assets in fewer than five or even a single country.
Balanced Portfolio: The investment objective of the Balanced Portfolio is long-
term capital growth, consistent with preservation of capital and balanced by
current income. The portfolio normally invests 40-60% of its assets in equity
securities selected primarily for growth potential and 40-60% of its assets in
fixed income securities. At least 25% of the Balanced Portfolio's assets
normally will be invested in fixed income senior securities, which include debt
securities and preferred stocks. The portfolio is designed for investors who
want to participate in the equity markets through a more moderate investment
than a pure growth fund. Investments in income-producing securities are
intended to result in a portfolio that provides a more consistent total return
than may be attainable through investing solely in growth stocks. The
portfolio is not designed for investors who desire a consistent level of
income.
Subject to the policies discussed above, the Balanced Portfolio may shift
assets between the growth and income portions of its portfolio based on the
advisor's analysis of relevant market, financial and economic conditions. If
the advisor believes that growth securities will provide better returns than
the yields then available or expected on income-producing securities, the
portfolio will place a greater emphasis on that objective.
Flexible Income Portfolio: The investment objective of the Flexible Income
Portfolio is to obtain maximum total return, consistent with preservation of
capital. The portfolio pursues its objective primarily through investments in
income-producing securities. Total return is expected to result from a
combination of current income and capital appreciation. The portfolio is
designed for investors who want to participate in a broad array of income-
producing securities, and/or those investors who desire a more consistent level
of income from their securities investments. Because of this emphasis, income
rather than capital appreciation will normally be the dominant component of
total return.
The Flexible Income Portfolio may invest in virtually all types of income-
producing securities. As a fundamental policy, the portfolio will invest at
least 80% of its assets in income-producing securities. The portfolio may
purchase debt securities of any maturity and the average maturity of its
portfolio may vary substantially, depending on the advisor's analysis of
market, economic and financial conditions. The portfolio has no pre-
established quality standards and may invest in debt securities of any quality.
The Flexible Income Portfolio may deliberately vary the overall quality of its
portfolio and at times, may have substantial holdings of lower rated corporate
debt securities or unrated bonds. Such bonds are high risk or commonly known
as "junk bonds". The portfolio may also purchase mortgage or asset-backed
securities, preferred stocks or securities convertible into common stocks if
such securities appear to offer the best opportunity for maximum total return.
Short-Term Bond Portfolio: The investment objective of the Short-Term Bond
Portfolio is to seek as high a level of current income as is consistent with
preservation of capital. The portfolio pursues its objective by investing
primarily in short- and intermediate-term fixed income securities. The
portfolio seeks to provide investors with a consistent level of income and,
under normal circumstances, a higher yield than most money market funds, with
less capital fluctuation than higher yielding intermediate to long-term bond
funds. Unlike money market funds, the Short-Term Bond Portfolio does not seek
to maintain a stable net asset value and the value of shares redeemed may be
more or less than their original cost.
The Short-Term Bond Portfolio will normally maintain a dollar-weighted average
portfolio maturity of less than three years, but not to exceed five years.
Although the portfolio has no pre-established quality standards, it will invest
at least 65% of its assets in investment grade securities under normal
conditions.
This prospectus contains a short description of the
contents of the Statement of Additional Information. You
have the right to receive from us such Statement of
Additional Information. To do so, please complete the
following, detach it and forward it to us at:
American Skandia Life Assurance Corporation
Attention: Concierge Desk
P.O. Box 883
Shelton, Connecticut 06484
PLEASE SEND ME A STATEMENT OF ADDITIONAL INFORMATION THAT
CONTAINS FURTHER DETAILS ABOUT THE AMERICAN SKANDIA ANNUITY
DESCRIBED IN THE PROSPECTUS. WFEE-PROS (5/95)
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ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
P.O. Box 883
Shelton, Connecticut 06484
Issued by: Serviced by:
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
Distributed by:
AMERICAN SKANDIA MARKETING, INCORPORATED
One Corporate Drive
Shelton, Connecticut 06484
Telephone: (203) 926-1888
