Filed with the Securities and Exchange Commission on April 29, 1996
Registration No. 33-56770 Investment Company Act No. 811-8248
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
Registration Statement under The Securities Act of 1933
Post-effective Amendment No. 6
and/or
Registration Statement under The Investment Company Act of 1940
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B
(CLASS 2 SUB-ACCOUNTS)
(Exact Name of Registrant)
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(Name of Depositor)
ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
(Address of Depositor's Principal Offices)
(203) 926-1888
(Depositor's Telephone Number)
M. PATRICIA PAEZ, CORPORATE SECRETARY
One Corporate Drive, Shelton, Connecticut 06484
(Name and Address of Agent for Service of Process)
Copy To:
JOHN T. BUCKLEY, ESQ.
WERNER & KENNEDY
1633 Broadway, New York, New York 10019 (212) 408-6900
Approximate Date of Proposed Sale to the Public:
MAY 1, 1996 OR AS SOON AS PRACTICABLE FOLLOWING THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT.
It is proposed that this filing become effective: (check appropriate space)
__ immediately upon filing pursuant to paragraph (b) of Rule 485
X on May 1, 1996 pursuant to paragraph (b) of rule 485
__ 60 days after filing pursuant to paragraph (a) (i) of rule 485
__ on ______________ pursuant to paragraph (a) (i) of Rule 485
__ 75 days after filing pursuant to paragraph (a) (ii) of Rule 485
__ on _____________ pursuant to paragraph (a) (ii) of Rule 485
If appropriate, check the following box:
__ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<TABLE>
<CAPTION>
====================================================================================================================================
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Offering Registration
to be Registered Registered Per Unit Price Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
American Skandia Life Assurance
Corporation Annuity Contracts Indefinite* Indefinite* -- $0
====================================================================================================================================
</TABLE>
*Pursuant to Rule 24f-2 of the Investment Company Act
Registrant has registered an indefinite number or amount of securities
under the Securities Act of 1933 pursuant to Investment Company Act Rule 24f-2.
The Rule 24f-2 Notice for Registrant's fiscal year 1995 was filed within 60 days
of the close of the fiscal year.
================================================================================
WFee
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
<TABLE>
<CAPTION>
<S> <C> <C>
N-4 Item No. Prospectus Heading
1. Cover Page Cover Page
2. Definitions Definitions
3. Synopsis or Highlights Highlights
4. Condensed Financial Information Condensed Financial Information, Advertising
5. General Description of Registrant, Depositor Investment Options, Investment Allocation Services,
and Portfolio Companies Operations of the Separate Account, The Company, Appendix A
6. Deductions Charges Assessable Against the Annuity, Charges Assessed
Against The Assets, Charges of the Underlying Mutual Funds
7. General Description of Variable Annuity Contracts Purchasing Annuities, Rights, Benefits and
Services, Modification
8. Annuity Period Annuity Payments
9. Death Benefit Death Benefit
10. Purchases and Contract Value Purchasing Annuities, Account Value
11. Redemptions Distributions, Pricing of Transfers and Distributions, Deferral of Transactions
12. Taxes Investment Allocation Services Charge,
Certain Tax Considerations
13. Legal Proceedings Legal Proceedings
14. Table of Contents of the Statement of Additional Information Contents of the Statement of
Additional Information
SAI Heading
15. Cover Page Statement of Additional Information
16. Table of Contents Table of Contents
17. General Information and History General Information Regarding
American Skandia Life Assurance Corporation
18. Services Independent Auditors
19. Purchase of Securities Being Offered Noted in Prospectus under Sales Charge,
Exchange Contracts, Breakpoints, Bank Drafting
and Sale of the Annuities
(Continued)
<PAGE>
CROSS REFERENCE SHEET PURSUANT TO RULE 495(a)
N-4 Item No. SAI Heading
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Calculation of Performance Data
22. Annuity Payments Noted in Prospectus under Annuity Payments
23. Financial Statements Financial Statements
Part C Heading
24. Financial Statements and Exhibits Financial Statements and Exhibits
25. Directors and Officers of the Depositor Directors and Officers of the Depositor
26. Persons Controlled by or Under Common Persons Controlled by or Under Common
Control with the Depositor or Registrant Control with the Depositor or Registrant
27. Number of Contractowners Number of Contractowners
28. Indemnification Indemnification
29. Principal Underwriters Principal Underwriters
30. Location of Accounts and Records Location of Accounts and Records
31. Management Services Management Services
32. Undertakings Undertakings
</TABLE>
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 [ ]. 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, T. Rowe Price
Asset Allocation, T. Rowe Price International Equity, T. Rowe Price Natural
Resources, T. Rowe Price International Bond, Founders Capital Appreciation,
INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited Maturity Bond,
Berger Capital Growth and Robertson Stephens Value + Growth); (b) The Alger
American Fund (portfolios - Growth, Small Capitalization, MidCap Growth); (c)
Neuberger & Berman Advisers Management Trust (portfolio - Partners); and (d)
Montgomery Variable Series (portfolio - Emerging Markets).
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, 1996
Statement of Additional Information Dated: May 1, 1996
AC-PROS (05/96)
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, are not federally
insured by the Federal Deposit Insurance Corporation, the Federal Reserve Board,
or any other agency and are not insured by the Securities Investor Protection
Corporation ("SIPC") as to the loss of the principal amount invested. Purchase
Payments are subject to investment risks, including possible loss of principal.
<PAGE>
(This page has been purposely left blank.)
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
DEFINITIONS................................................................................................................6
HIGHLIGHTS.................................................................................................................8
AVAILABLE INFORMATION......................................................................................................9
CONTRACT EXPENSE SUMMARY..................................................................................................10
EXPENSE EXAMPLES..........................................................................................................12
CONDENSED FINANCIAL INFORMATION...........................................................................................13
Unit Prices And Numbers of Units.......................................................................................13
Yields On Money Market Sub-Account.....................................................................................15
INVESTMENT OPTIONS........................................................................................................15
INVESTMENT ALLOCATION SERVICES............................................................................................16
OPERATIONS OF THE SEPARATE ACCOUNT........................................................................................17
INSURANCE ASPECTS OF THE ANNUITY..........................................................................................17
CHARGES ASSESSABLE AGAINST THE ANNUITY....................................................................................17
Sales Charge...........................................................................................................17
Maintenance Fee........................................................................................................18
Tax Charges............................................................................................................18
Transfer Fee...........................................................................................................18
Allocation Of Annuity Charges..........................................................................................18
CHARGES ASSESSED AGAINST THE ASSETS.......................................................................................18
Administration Charge..................................................................................................18
Mortality and Expense Risk Charges.....................................................................................19
CHARGES OF THE UNDERLYING MUTUAL FUNDS....................................................................................19
PURCHASING ANNUITIES......................................................................................................19
Uses Of The Annuity....................................................................................................19
Application And Initial Payment........................................................................................20
Bank Drafting..........................................................................................................20
Periodic Purchase Payments.............................................................................................20
Right to Return the Annuity............................................................................................20
Allocation of Net Purchase Payments....................................................................................20
Owner, Annuitant and Beneficiary Designations..........................................................................21
ACCOUNT VALUE.............................................................................................................21
RIGHTS, BENEFITS AND SERVICES.............................................................................................22
Additional Purchase Payments...........................................................................................22
Changing Revocable Designations........................................................................................22
Allocation Rules.......................................................................................................22
Transfers..............................................................................................................22
Dollar Cost Averaging................................................................................................23
Rebalancing............................................................................................................23
Distributions..........................................................................................................24
Surrender............................................................................................................24
Partial Withdrawals..................................................................................................24
Systematic Withdrawals...............................................................................................24
Minimum Distributions................................................................................................24
Death Benefit........................................................................................................24
Annuity Payments.....................................................................................................25
Qualified Plan Withdrawal Limitations................................................................................26
Pricing of Transfers and Distributions.................................................................................27
Voting Rights..........................................................................................................27
Transfers, Assignments or Pledges......................................................................................28
Reports to You.........................................................................................................28
THE COMPANY...............................................................................................................28
SALE OF THE ANNUITIES.....................................................................................................28
Distribution...........................................................................................................29
Advertising............................................................................................................29
CERTAIN TAX CONSIDERATIONS................................................................................................29
Our Tax Considerations.................................................................................................30
Tax Considerations Relating to Your Annuity............................................................................30
Non-natural Persons..................................................................................................30
Natural Persons......................................................................................................30
Distributions........................................................................................................30
Assignments and Pledges..............................................................................................30
Penalty on Distributions.............................................................................................31
Annuity Payments.....................................................................................................31
Gifts................................................................................................................31
Tax Free Exchanges...................................................................................................31
Transfers Between Investment Options.................................................................................31
Generation-Skipping Transfers........................................................................................32
Diversification......................................................................................................32
Federal Income Tax Withholding.......................................................................................32
Tax Considerations When Using Annuities in Conjunction with Qualified Plans............................................32
Individual Retirement Programs.......................................................................................32
Tax Sheltered Annuities..............................................................................................32
Corporate Pension and Profit-sharing Plans...........................................................................33
H.R. 10 Plans........................................................................................................33
Tax Treatment of Distributions from Qualified Annuities..............................................................33
Section 457 Plans....................................................................................................33
OTHER MATTERS.............................................................................................................33
Deferral of Transactions...............................................................................................33
Resolving Material Conflicts...........................................................................................33
Modification...........................................................................................................34
Misstatement of Age or Sex.............................................................................................34
Ending the Offer.......................................................................................................34
Legal Proceedings......................................................................................................34
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.......................................................................34
APPENDIX A SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES...............36
</TABLE>
<PAGE>
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 totaled 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", "our" or "the Company" 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, T. Rowe Price
Asset Allocation, T. Rowe Price International Equity, T. Rowe Price Natural
Resources, T. Rowe Price International Bond, Founders Capital Appreciation,
INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited Maturity Bond,
Berger Capital Growth and Robertson Stephens Value + Growth); (b) The Alger
American Fund (portfolios - Growth, Small Capitalization, MidCap Growth); (c)
Neuberger & Berman Advisers Management Trust (portfolio - Partners); and (d)
Montgomery Variable Series (portfolio - Emerging Markets).
(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) Periodic Purchase Payments; (d) Bank Drafting; (e) Right to Return
the Annuity; (f) Allocation of Net Purchase Payments; and (g) 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. We support certain Periodic Purchase Payments,
subject to our rules. 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 filling in the coupon at the end of the
Prospectus and sending it (or a written request) to 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. In
certain states, premium taxes may be applicable.
<TABLE>
<CAPTION>
.........Your Transaction Expenses
.........
<S> <C>
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%
</TABLE>
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.
<PAGE>
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 1995, 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> <C>
Manage- Manage- Total Total
ment ment Other Other Annual Annual
Fee Fee Expenses Expenses Expenses Expenses
after without after without after without
any any any any any any
applicable applicable applicable applicable applicable applicable
reimburse- reimburse- reimburse- reimburse- reimburse- reimburse-
ment ment ment ment ment ment
- ----------------------------------------------------------------------------------------------------------------------------
American Skandia Trust
JanCap Growth N/A 0.90% + 0.22% + 1.12%
Lord Abbett Growth
and Income N/A 0.75% + 0.24% + 0.99%
Seligman Henderson
International Equity 0.90% 1.00% 0.27% 0.27% 1.17% 1.27%
Seligman Henderson
International Small Cap(1) N/A 1.00% + 0.46% + 1.46%
Federated Utility
Income N/A 0.75% + 0.18% + 0.93%
Federated High Yield N/A 0.75% + 0.36% + 1.11%
T. Rowe Price
Asset Allocation N/A 0.85% 0.40% 0.44% 1.25% 1.29%
T. Rowe Price
International Equity N/A 1.00% + 0.33% + 1.33%
T. Rowe Price
Natural Resources(1) N/A 0.90% 0.45% 0.90% 1.35% 1.80%
T. Rowe Price
International Bond(2) N/A 0.80% + 0.53% + 1.33%
Founders Capital Appreciation N/A 0.90% + 0.32% + 1.22%
INVESCO Equity Income N/A 0.75% + 0.23% + 0.98%
PIMCO Total Return Bond N/A 0.65% + 0.24% + 0.89%
PIMCO Limited Maturity Bond(1) N/A 0.65% + 0.24% + 0.89%
AST Phoenix Balanced Asset N/A 0.75% + 0.19% + 0.94%
AST Money Market 0.45% 0.50% 0.15% 0.22% 0.60% 0.72%
Berger Capital Growth N/A 0.75% + 0.42% + 1.17%
Robertson Stephens Value + Growth(3) N/A 1.00% + 0.45% + 1.45%
The Alger American Fund
Growth N/A 0.75% + 0.10% + 0.85%
Small Capitalization N/A 0.85% + 0.07% + 0.92%
MidCap Growth N/A 0.80% + 0.10% + 0.90%
Neuberger & Berman Advisers
Management Trust
Partners(4) N/A 0.85% + 0.30% + 1.15%
Montgomery Variable Series
Emerging Markets(5) N/A 1.25% + .50% + 1.75%
</TABLE>
(1) These portfolios commenced operation on May 1, 1995, therefore expenses
shown are annualized and should not be considered representative of future
expenses; actual expenses may be greater than shown.
(2) The Portfolio was formerly known as the "AST Scudder International Bond
Portfolio" and was managed by American Skandia Investment Services, Incorporated
("ASISI"), as investment manager, and was sub-advised by Scudder, Steven &
Clark, as sub-advisor, for a total fee payable at the annual rate of 1.0% of the
Portfolio's average daily net assets. As of May 1, 1996, the Portfolio is
managed by ASISI, as investment manager, and sub-advised by Rowe Price-Fleming
International, Inc., as sub-advisor, for a total fee payable at the annual rate
of .80 of 1.0% of the Portfolio's average daily net assets. The Management Fee
has been restated to reflect the current Management Fee. As of May 1, 1996
various changes have been made to the Portfolio's investment objective and
fundamental and non-fundamental investment restrictions.
(3) This portfolio commenced operation on May 1, 1996, therefore expenses shown
are estimated and annualized and should not be considered representative of
future expenses; actual expenses may be greater than shown.
(4) The "Management Fee" includes the aggregate of administration fees paid by
the Partners Portfolio of the Neuberger & Berman Advisers Management Trust
("AMT") and the management fees paid by the Series of AMT in which that
Portfolio invests, and "Other Expenses" include all other expenses of the
Portfolio and the corresponding Series. (See "Expenses" in the AMT prospectus).
The Management Fee has been restated to reflect current expenses.
(5) This portfolio commenced operation on February 2, 1996, therefore expenses
shown are estimated and annualized and should not be considered representative
of future expenses; actual expenses may be greater than shown.
The underlying mutual fund portfolio information was provided by the underlying
mutual funds. The Company has not independently verified such information.
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 of 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:
<TABLE>
<CAPTION>
Sub-Accounts After:
<S> <C> <C> <C> <C>
1 yr. 3 yrs. 5 yrs. 10 yrs.
JanCap Growth 2 35 78 123 247
LA Growth and Income 2 34 74 117 235
Seligman Henderson International Equity 2 36 79 125 252
Seligman Henderson International Small Cap 2 39 88 140 282
AST Money Market 2 30 62 96 193
Fed Utility Inc 2 33 72 113 226
Fed High Yield 2 35 77 122 245
AST Phoenix Balanced Asset 2 34 73 114 229
T. Rowe Price Asset Allocation 2 37 82 130 262
T. Rowe Price International Equity 2 38 85 134 269
T. Rowe Price Natural Resources 2 38 85 135 272
T. Rowe Price International Bond 2 38 85 134 269
Founders Capital Appreciation 2 36 81 128 258
INVESCO Equity Income 2 34 74 116 233
PIMCO Total Return Bond 2 33 71 111 223
PIMCO Limited Maturity Bond 2 33 71 111 223
Berger Capital Growth 2 36 79 125 252
RS Value + Growth 2 39 88 140 282
AA Growth 2 33 70 109 219
AA Small Capitalization 2 33 72 113 226
AA MidCap Growth 2 33 71 112 225
NB Partners 2 36 79 125 251
MV Emerging Markets 2 42 97 155 311
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 82 130 261
LA Growth and Income 2 36 79 124 247
Seligman Henderson International Equity 2 37 84 133 266
Seligman Henderson International Small Cap 2 40 92 147 295
AST Money Market 2 32 67 104 206
Fed Utility Inc 2 35 77 121 243
Fed High Yield 2 37 82 130 260
AST Phoenix Balanced Asset 2 35 77 121 243
T. Rowe Price Asset Allocation 2 38 86 137 274
T. Rowe Price International Equity 2 39 89 141 283
T. Rowe Price Natural Resources 2 39 89 142 284
T. Rowe Price International Bond 2 39 89 141 283
Founders Capital Appreciation 2 38 85 135 272
INVESCO Equity Income 2 35 78 123 246
PIMCO Total Return Bond 2 35 76 119 237
PIMCO Limited Maturity Bond 2 35 76 119 237
Berger Capital Growth 2 37 84 133 266
RS Value + Growth 2 40 92 147 294
AA Growth 2 34 74 116 233
AA Small Capitalization 2 35 76 120 240
AA MidCap Growth 2 35 76 119 238
NB Partners 2 37 83 132 264
MV Emerging Markets 2 43 101 162 324
</TABLE>
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 available prior to the date of this Prospectus 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, 1996.
Sub-Account and the Year Sub-Account Operations Commenced
<TABLE>
<CAPTION>
LA Seligman Seligman
Growth Henderson Henderson AST Fed
JanCap and International International Money Utility
Growth 2 Income 2 Equity 2 Small Cap 2 Market 2 Income 2
(1993) (1993) (1993) (1995) (1993) (1993)
------ ------ ------ ------ ------ ------
No. of Units
<S> <C> <C> <C> <C> <C> <C>
as of 12/31/95 384,701 498,080 452,589 137,991 968,666 164,976
as of 12/31/94 187,924 238,128 199,313 0 880,903 86,555
as of 12/31/93 17,956 9,793 12,521 0 36,093 467
Unit Price
as of 12/31/95 $13.04 $13.04 $11.29 $10.27 $10.70 $11.59
as of 12/31/94 9.54 10.21 10.36 0 10.23 9.27
as of 12/31/93 10.13 10.13 10.23 0 10.00 10.10
</TABLE>
<TABLE>
<CAPTION>
AST T. Rowe T. Rowe T. Rowe T. Rowe
Fed Phoenix Price Price Price Price
High Balanced Asset International Natural International
Yield 2 Asset 2 Allocation 2 Equity 2 Resources 2 Bond 2
(1993) (1993) (1993) (1993) (1995) (1993)
------ ----- ------ ------ ------ ------
No. of Units
<S> <C> <C> <C> <C> <C> <C>
as of 12/31/95 300,107 239,737 89,787 610,851 27,379 127,373
as of 12/31/94 122,508 114,927 74,058 301,423 0 25,171
as of 12/31/93 0 6,185 0 0 0 0
Unit Price
as of 12/31/95 $11.32 $12.04 $11.98 $10.44 $11.04 $10.58
as of 12/31/94 9.56 9.91 9.80 9.49 0 9.61
as of 12/31/93 0 10.04 0 0 0 0
</TABLE>
<TABLE>
<CAPTION>
PIMCO PIMCO
Founders INVESCO Total Limited Berger
Capital Equity Return Maturity Capital AA
Appreciation 2 Income 2 Bond 2 Bond 2 Growth 2 Growth 2
(1993) (1993) (1993) (1995) (1993) (1993)
------ ------ ------ ------ ------ ------
No. of Units
<S> <C> <C> <C> <C>
as of 12/31/95 221,840 293,340 846,356 399,158 89,474 506,542
as of 12/31/94 96,278 150,719 256,950 0 3,419 177,825
as of 12/31/93 0 0 0 0 0 4,589
Unit Price
as of 12/31/95 $14.04 $12.39 $11.32 $10.41 $12.27 $13.86
as of 12/31/94 10.69 9.62 9.62 0 9.95 10.26
as of 12/31/93 0 0 0 0 0 10.25
</TABLE>
<TABLE>
<CAPTION>
AA AA
Small MidCap NB
Cap 2 Growth 2 Partners 2
(1993) (1993) (1995)
----- ------ ------
No. of Units
<S> <C> <C> <C>
as of 12/31/95 321,334 204,227 230,034
as of 12/31/94 187,387 61,104 0
as of 12/31/93 17,264 3,255 0
Unit Price
as of 12/31/95 $14.22 $14.82 $12.09
as of 12/31/94 9.94 10.36 0
as of 12/31/93 10.55 10.67 0
</TABLE>
The financial statements of the Class 2 Sub-accounts being offered to you that
were available as investment options in 1995 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.
<TABLE>
<CAPTION>
<S> <C> <C>
Sub-account Current Yield Effective Yield
AST Money Market 2 5.85% 6.02%
</TABLE>
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>
<CAPTION>
<S> <C> <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
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
T. Rowe Price International Bond 2 T. Rowe Price International Bond
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
Berger Capital Growth 2 Berger Capital Growth
RS Value + Growth 2 Robertson Stephens Value + Growth
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: Neuberger & Berman
Advisers Management Trust
Sub-account Underlying Mutual Fund Portfolio
NB Partners 2 Partners
Underlying Mutual Fund: Montgomery Mutual Fund Portfolio
Sub-account Underlying Mutual Fund Portfolio
MV Emerging Markets 2 Montgomery Variable Series: Emerging Markets Fund
</TABLE>
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 or portfolio thereof 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 B. 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. 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. The
shares may also 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 equaling 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). With respect to tax sheltered annuities
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. 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. We may elect to no
longer offer Annuities in connection with various 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.
Periodic Purchase Payments: We may, from time-to-time, offer opportunities
to make Purchase Payments automatically on a periodic basis, subject to our
rules. These opportunities may include, but are not limited to, certain salary
reduction programs agreed to by an employer. As of the date of this Prospectus,
we only agree to accept Purchase Payments on such a basis if: (a) we receive
your request In Writing for a salary reduction program and we agree to accept
Purchase Payments on this basis; and (b) the total of Purchase Payments in the
first Annuity Year is scheduled to equal at least our then current minimum
requirements. We may also require an initial Purchase Payment to be submitted by
check or wire before agreeing to such a program. Our minimum requirements may
differ based on the usage of the Annuity, such as whether it is being used in
conjunction with certain retirement plans.
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 unless we authorize lower payments pursuant to a Periodic
Purchase Payment program (see "Periodic Purchase Payments") 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 on 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
annuity rates for that type of annuity and for the frequency of payment
selected. Our rates will not be less than our guaranteed minimum rates. These
guaranteed minimum rates are derived from the 1983a Individual Annuity Mortality
Table with ages set back one year for males and two years for females and with
an assumed interest rate of 3% per annum. Where required by law or regulation,
such annuity table will have rates that do not differ according to the gender of
the key life. Otherwise, the rates will differ according to the gender of the
key life.
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 DistributionsPricing 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 mail to Owners, at their last known address of record,
any statements and reports required by applicable law or regulation. Owners
should therefore give us prompt notice of any address change. We send a
confirmation statement to Owners each time a transaction is made affecting
Account Value, such as making additional Purchase Payments, transfers, exchanges
or withdrawals. Quarterly statements are also mailed detailing the activity
affecting your Annuity during the calendar quarter. You may request additional
reports. We reserve the right to charge up to $50 for each such additional
report. Instead of immediately confirming transactions made pursuant to some
type of periodic transfer program (such as a dollar cost averaging program) or a
periodic Purchase Payment program, such as a salary reduction arrangement, we
may confirm such transactions in quarterly statements. You should review the
information in these statements carefully. All errors or corrections must be
reported to us at our Office immediately to assure proper crediting to your
Annuity. For transactions for which we immediately send confirmations, we assume
all transactions are accurate unless you notify us otherwise within 30 days
after the date of the transaction. For transactions that are only confirmed on
the quarterly statement, we assume all transactions are accurate unless you
notify us within 30 days of the end of the calendar quarter. We may also send to
Owners each year an annual report and a semi-annual report containing financial
statements for the applicable Sub-accounts, as of December 31 and June 30,
respectively.
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.
SALE OF THE ANNUITIES: American Skandia Marketing, Incorporated ("ASM,
Inc."), 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.
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
a natural person. 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 includible in gross income. "Investment in the contract" may be affected by
whether an annuity or any "related contract" was purchased as part of a tax-free
exchange of life insurance or annuity contracts under Section 1035 of the Code.
"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 includible in gross income. The cost
basis is not affected by any repayment of any loan for which the annuity is
collateral or by payment of any interest thereon.
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. It is
also not known what effect, if any, such guidelines may have on transfers
between the investment options of the Annuity offered pursuant to this
Prospectus. We will take any action, including modifications to your Annuity or
the Sub-accounts, required to comply with such guidelines if promulgated.
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.
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.
Corporate Pensions 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 contributions
and distributions, and imposes eligibility requirements as well. Contributions
are not taxable to employees until distributed from the plan. However, plan
assets remain the property of the employer and are subject to the claims of the
employer's general creditors until such assets are made available to
participants or their beneficiaries.
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 at the minimum rate required by law but not less than 3%, or at least
4% if required by your contract, 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 deferral period begins on the date such
distribution or transfer would otherwise have been transacted (see "Pricing of
Transfers and Distributions").
All procedures, including payment, based on the valuation of the Sub-accounts
may be postponed during the period: (1) 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; (2) the SEC permits
postponement and so orders; or (3) 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 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 one of
the current underlying mutual funds 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
<PAGE>
- -------------------------------------------------------------------------------
APPENDIX A
- -------------------------------------------------------------------------------
APPENDIX A SHORT DESCRIPTIONS OF THE 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, and debt securities of U.S. issuers,
when the portfolio's sub-advisor perceives an opportunity for capital growth
from such securities or so that a return may be received on the portfolio's idle
cash. Debt securities which the portfolio may purchase include corporate bonds
and debentures (not to exceed 5% of net assets in bonds rated below investment
grade), mortgage-backed and asset-backed securities, zero-coupon bonds,
indexed/structured notes, high-grade commercial paper, certificates of deposit
and repurchase agreements. 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 on securities, financial indices and foreign
currencies, ("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 seasoned companies which are expected to show above-average growth and which
the Sub-advisor believes to be in sound financial condition.
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 at
least 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 objectives 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 objectives 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.
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 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 intermediate,
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 generally be stocks of
well-established companies with capitalization over $1 billion 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
from long-term growth of capital and income, principally 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.
T. Rowe Price International Bond Portfolio: The T. Rowe Price International Bond
Portfolio seeks to provide high current income and capital appreciation by
investing in high-quality, non dollar-denominated government and corporate bonds
outside the United States. The Portfolio is intended for long-term investors who
can accept the risks associated with investing in international bonds. Total
return consists of income after expenses, bond price gains (or losses) in terms
of the local currency and currency gains (or losses). 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 invest at least 65% of its assets in high-quality, non
dollar-denominated government and corporate bonds outside the United States.
Because the Portfolio's investments are primarily denominated in foreign
currencies, exchange rates are likely to have a significant impact on total
Portfolio performance. Investors should be aware that exchange rate movements
can be significant and endure for long periods of time.
The Portfolio may also invest up to 20% of its assets in below investment-grade,
high-risk bonds, including bonds in default or those with the lowest rating.
Defaulted bonds are acquired only if the Sub-advisor foresees the potential for
significant capital appreciation. Securities rated below investment-grade are
commonly referred to as "junk bonds" and involve greater price volatility and
higher degrees of speculation with respect to the payment of principal and
interest than higher quality fixed-income securities.
The Portfolio may also invest more than 5% of its assets in the fixed-income
securities of individual foreign governments. The Portfolio generally will not
invest more than 5% of its assets in any individual corporate issuer. Since, as
a nondiversified investment company, the Portfolio is permitted to invest a
greater proportion of its assets in the securities of a smaller number of
issuers, the Portfolio may be subject to greater credit risk with respect to its
portfolio securities than an investment company that is more broadly
diversified.
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.
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 may 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.
Berger Capital Growth Portfolio: The investment objective of the Berger Capital
Growth Portfolio is long-term capital appreciation. The Portfolio seeks to
achieve this objective by investing primarily in common stocks of established
companies which the Sub-advisor believes offer favorable growth prospects.
Current income is not an investment objective of the Portfolio, and any income
produced will be a by-product of the effort to achieve the Portfolio's
objective.
In general, investment decisions for the Portfolio are based on an approach
which seeks out successful companies because they are believed to be more apt to
become profitable investments. To evaluate a prospective investment, the
Sub-advisor analyzes information from various sources, including industry
economic trends, earnings expectations and fundamental securities valuation
factors to identify companies which in the Sub-advisor's opinion are more likely
to have predictable, above average earnings growth, regardless of the company's
size and geographic location. The Sub-advisor also takes into account a
company's management and its innovations in products and services in evaluating
its prospects for continued or future earnings growth.
In selecting its portfolio securities, the portfolio places 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
holdings, 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 its Sub-advisor believes these are likely to be the best suited at
that time to achieve the Portfolio's objective. The portfolio's policy of
investing in securities believed to have a potential for capital growth means
that a Portfolio share may be subject to greater fluctuations in value than if
the Portfolio invested in other securities.
Robertson Stephens Value + Growth Portfolio: The investment objective of the
Robertson Stephens Value + Growth Portfolio is to seek capital appreciation. The
Portfolio will invest primarily in growth companies believed by the Sub-advisor
to have favorable relationships between price/earnings ratios and growth rates
in sectors offering the potential for above-average returns.
In selecting investments for the Portfolio, the Sub-advisor's primary emphasis
is typically on evaluating a company's management, growth prospects, business
operations, revenues, earnings, cash flows, and balance sheet in relationship to
its share price. The Sub-advisor may select stocks which it believes are
undervalued relative to the current stock price. When the Sub-advisor
anticipates that the price of a security will decline, it may sell the security
short and borrow the same security from a broker or other institution to
complete the sale.
The Portfolio may invest a substantial portion of its assets in securities
issued by small companies. Such companies may offer greater opportunities for
capital appreciation than larger companies, but investments in such companies
may involve certain special risks such as limited product lines, markets and
financial or managerial resources. These securities may be less frequently
traded and the values may fluctuate more sharply than other securities.
The Portfolio may invest up to 35% of its net assets in securities principally
traded in foreign markets. The Portfolio may buy or sell foreign currencies and
options and futures contracts on foreign currencies for hedging purposes in
connection with its foreign investments. The Portfolio may also at times invest
a substantial portion of their assets in securities of issuers in developing
countries. Although many of the securities in which the Portfolio may invest are
traded on securities exchanges, the Portfolio may trade in limited volume, and
the exchanges may not provide all of the conveniences or protections provided by
securities exchanges in more developed markets.
At times, the Portfolio may invest more than 25% of its assets in securities of
issuers in one or more market sectors such as, for example, the technology
sector. A market sector may be made up of companies in a number of related
industries. The Portfolio would only concentrate its investments in a particular
market sector if the Sub-advisor were to believe the investment return available
from concentration in that sector justifies any additional risk associated with
concentration in that sector.
The Alger American Fund
Alger American Growth Portfolio: The investment objective of the Alger American
Growth Portfolio is long-term capital appreciation. Except during temporary
defensive periods, the Portfolio invests at least 65 percent of its total assets
in equity securities of companies that, at the time of purchase of the
securities, have total market capitalization of $1 billion or greater. The
Portfolio may invest up to 35% of its total assets in equity securities of
companies that, at the time of purchase, have total market capitalization of
less than $1 billion and in excess of that amount (up to 100% of its assets)
during temporary defensive periods.
Alger American Small Capitalization Portfolio: The investment objective of the
Portfolio is long-term capital appreciation. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the
Russell 2000 Growth Index, updated quarterly. The Russell 2000 Growth Index is
designed to track the performance of small capitalization companies. At the date
of this Prospectus, the range of market capitalization of these companies was
$20 million to $3.0 billion. The Portfolio may invest up to 35% of its total
assets in equity securities of companies that, at the time of purchase, have
total market capitalization outside the range of companies included in the
Russell 2000 Growth Index and in excess of that amount (up to 100% of its
assets) during temporary defensive periods.
Alger American MidCap Growth Portfolio: The investment objective of the
Portfolio is long-term capital appreciation. Except during temporary defensive
periods, the Portfolio invests at least 65% of its total assets in equity
securities of companies that, at the time of purchase of the securities, have
total market capitalization within the range of companies included in the S&P
MidCap 400 Index, updated quarterly. The S&P MidCap 400 Index is designed to
track the performance of medium capitalization companies. At the date of this
Prospectus, the range of market capitalization of these companies was $153
million to $8.9 billion. The Portfolio may invest up to 35% of its total assets
in equity securities of companies that, at the time of purchase, have total
market capitalization outside the range of companies included in the S&P MidCap
400 Index and in excess of that amount (up to 100% of its assets) during
temporary defensive periods.
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 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.
Montgomery Variable Series
Emerging Markets Fund: The investment objective of the Montgomery Variable
Series Emerging Markets Fund is capital appreciation, which under normal
conditions it seeks by investing at least 65% of its total assets in equity
securities of companies in countries having emerging markets. For these
purposes, the Fund defines an emerging market country as having an economy that
is or would be considered by the World Bank or the United Nations to be emerging
or developing. This Fund considers emerging market companies to be companies the
securities of which are principally traded in the capital market of an emerging
market country, companies that derive at least 50% of their total revenue from
either goods produced or services rendered in emerging market countries or from
sales made in such emerging market countries, regardless of where the securities
of such companies are principally traded, or companies organized under the laws
of, and with a principal office in, an emerging market country.
This Fund uses a proprietary, quantitative asset allocation model created by the
Manager. This model employs mean-variance optimization, a process used in
developed markets based on modern portfolio theory and statistics. Mean-variance
optimization helps determine the percent of assets to invest in each country to
maximize expected returns for a given risk level. This Fund's aims are to invest
in those countries that are expected to have the highest risk/reward tradeoff
when incorporated into a total portfolio context and to construct a portfolio of
emerging market investments approximating the risk level of an internationally
diversified portfolio of securities in developed markets. This "top-down"
country selection is combined with "bottom-up" fundamental industry analysis and
stock selection based on original research, publicly available information, and
company visits.
This Fund invests primarily in common stock but also may invest in other types
of equity and equity derivatives securities. It may invest up to 35% of its
total assets in debt securities, including up to 5% in debt securities rated
below investment grade. The Fund has the right to purchase securities in foreign
countries. Accordingly, shareholders should consider carefully the substantial
risks involved in investing in securities issued by companies and governments of
foreign nations, which are in addition to the usual risks inherent in domestic
investments. While the Fund may invest in mature suppliers of products and
services, and technologies, the Fund also may invest in smaller companies that
may benefit from the development of new products and services. These smaller
companies may present greater opportunities for capital appreciation but may
involve greater risk than larger, mature issuers. The Fund is authorized to
invest in medium quality (rated or equivalent to BBB by S&P or Baa by Moody's)
and in limited amounts of high risk, lower quality debt securities, sometimes
called "junk bonds," (i.e., securities rated below BBB or Baa) or, if unrated,
deemed to be of equivalent investment quality as determined by the Manager.
Medium quality debt securities have speculative characteristics, and changes in
economic conditions or other circumstances are more likely to lead to a weakened
capacity to make principal and interest payments than is the case with higher
grade debt securities.
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
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 (5/96)
===============================================================================
===============================================================================
-----------------------------------------------------------------
(print your name)
-----------------------------------------------------------------
(address)
-----------------------------------------------------------------
(city/state/zip code)
===============================================================================
<PAGE>
ADDITIONAL INFORMATION: Inquiries will be answered by calling your
representative or by writing to:
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
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
STATEMENT OF ADDITIONAL lNFORMATION
The investment options hereunder, registered under the Securities Act of 1933
and the Investment Company Act of 1940, are issued by AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION VARIABLE ACCOUNT B (CLASS 2 SUB-ACCOUNTS) and AMERICAN
SKANDIA LIFE ASSURANCE CORPORATION
THIS STATEMENT OF ADDITIONAL INFORMATlON IS NOT A PROSPECTUS. THE INFORMATION
CONTAINED HEREIN SHOULD BE READ IN CONJUNCTlON WITH THE PROSPECTUS FOR THE
AMERICAN SKANDIA LIFE VARIABLE ANNUITY CONTRACTS WHICH ARE REFERRED TO HEREIN.
THE PROSPECTUS SETS FORTH INFORMATION THAT A PROSPECTIVE INVESTOR OUGHT TO
KNOW BEFORE lNVESTING. FOR A COPY OF THE PROSPECTUS SEND A WRITTEN REQUEST TO
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION, P.O. BOX 883, SHELTON, CONNECTICUT
06484-0883, OR TELEPHONE 1-800-752-6342.
Date of Prospectus: May 1, 1996
Date of Statement of Additional Information: May 1, 1996
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Item Page
General Information Regarding American Skandia Life Assurance Corporation 1
Principal Underwriter 1
Calculation of Performance Data 2
Unit Price Determinations 5
Independent Auditors 6
Legal Experts 6
Financial Statements 6
</TABLE>
GENERAL INFORMATION REGARDING AMERICAN SKANDIA LIFE ASSURANCE CORPORATION:
American Skandia Life Assurance Corporation ("we", "our" or "us") is a
wholly-owned subsidiary of American Skandia Investment Holding Corporation
(formerly Skandia U.S. Investment Holding Corporation) whose indirect parent is
Skandia Insurance Company Ltd. (formerly Skandia Group Insurance Company Ltd.).
Skandia Insurance Company Ltd. is part of a group of companies whose predecessor
commenced operations in 1855. Skandia Insurance Company Ltd. is a major
worldwide insurance company operating from Stockholm, Sweden which owns and
controls, directly or through subsidiary companies, numerous insurance and
related companies. We are organized as a Connecticut stock life insurance
company, and are subject to Connecticut law governing insurance companies. Our
mailing address is P.O. Box 883, Shelton, Connecticut 06484.
PRINCIPAL UNDERWRITER: American Skandia Marketing, Incorporated , formerly
Skandia Life Equity Sales Corporation serves as principal underwriter for the
Annuities. We and ASM, Inc. are wholly-owned subsidiaries of American Skandia
Investment Holding Corporation.
AC-SAI (05/96)
<PAGE>
Annuities may be sold by agents of ASM, Inc. or agents of securities brokers or
insurance brokers who enter into agreements with ASM, Inc. and who are legally
qualified under federal and state law to sell the Annuities in those states
where the Annuities are to be offered. The Annuities are offered on a continuous
basis. ASM, Inc. is registered with the Securities and Exchange Commission under
the Securities Exchange Act of 1934 as a broker dealer and is a member of the
National Association of Securities Dealers, Inc. ASM, Inc. currently receives no
underwriting commissions.
CALCULATION OF PERFORMANCE DATA: We may advertise the performance of
Sub-accounts using two types of measures. These measures are "current and
effective yield", which may be used for money market type Sub-accounts, and
"total return", which may be used with other types of Sub-accounts. The
following descriptions provide details on how we calculate these measures for
Sub-accounts:
(1) Current and effective yield: The current yield of the AST Money
Market 2 Sub-account is calculated based upon a seven day period ending on the
date of calculation. The current yield of this Sub-account is computed by
determining the change (exclusive of capital changes) in the Account Value of a
hypothetical pre-existing allocation by an Owner to this Sub-account (the
"Hypothetical Allocation") having a balance of one Unit at the beginning of the
period, subtracting a hypothetical maintenance fee, and dividing such net change
in the Account Value of the Hypothetical Allocation by the Account Value of the
Hypothetical Allocation at the beginning of the same period to obtain the base
period return, and multiplying the result by (365/7). The resulting figure will
be carried to at least the nearest l00th of one percent.
This Sub-account computes effective compound yield according to the method
prescribed by the Securities and Exchange Commission. The effective yield
reflects the reinvestment of net income earned daily on assets of this
Sub-account. Net investment income for yield quotation purposes will not include
either realized or capital gains and losses or unrealized appreciation and
depreciation.
(2) Total Return: Total return for the other Sub-accounts is computed by
using the formula:
P(1+T)n = ERV
where:
P = a hypothetical allocation of $1,000;
T = average annual total return;
n = the number of years over which total return is being measured; and
ERV = the Account Value of the hypothetical $1,000 payment as
of the end of the period over which total return is being measured.
Some of the underlying mutual fund portfolios existed prior to the inception of
the Sub-accounts. Performance quoted in advertising regarding such Sub-accounts
may indicate 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.
The performance quoted regarding the Sub-accounts is "Standard Total Return".
Standard Total Return is shown below assuming the maximum sales charge applies
in all cases. However, performance figures are provided on the basis of: (a) the
maintenance fee applying at issue and in all subsequent years; and (b) not
applying at any time (the initial Purchase Payment is greater than $50,000 and
the Account Value at the beginning of each Annuity Year is above that amount).
Performance of the Sub-accounts quoted in advertisements for annuity plans that
assess less than the maximum sales charge will be based on the sales charge for
the applicable plan.
In addition to quotation in an advertisement of Standard Total Return, we may
quote in the same advertisements the performance of the Sub-accounts on the
basis of "Non-standard Total Return". "Non-standard Total Return" is based on
the return of the Sub-accounts assuming no sales charge and no maintenance fee.
<PAGE>
Total Return Percentages For Periods Of 1, 3, 5 and 10 Years As Well As
Inception-to-date ("ITD"), With All Periods Ending December 31, 1995
Standard Total Return information is provided below only for those Sub-accounts
which invest in underlying mutual fund portfolios that were operational as of
December 31, 1995. The inception date for the underlying mutual fund portfolios
and the performance of such portfolios prior to the inception dates of the
Sub-accounts shown are provided by the underlying mutual funds. The return shown
for Sub-accounts which began operations after the applicable underlying mutual
fund portfolio is hypothetical and is based on performance information provided
by such funds. "N/A" means "not applicable" and indicates that the underlying
mutual fund portfolio was not in operation for the applicable period. The
Annuity was designed initially to be used with investment allocation services
provided by an Advisor. From the date of the initial offering on January 6, 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 performance
information below reflects the impact of the 1.00% investment allocation
services charge for the period it was assessed.
<TABLE>
<CAPTION>
Standard Total Return
(Assuming maximum sales charge and maximum maintenance fees)
Incep-
1 3 5 10 tion-to
Yr. Yr. Yr. Yr. -Date
<S> <C> <C> <C> <C> <C>
JanCap Growth 2 34.60% 11.86% N/A N/A 13.00%
LA Growth and Income 2 25.73% 12.47% N/A N/A 11.91%
Seligman Henderson International Equity 2 7.24% 13.43% 6.97% N/A 9.53%
Seligman Henderson International Small Cap 2 N/A N/A N/A N/A 2.28%
Fed Utility Income 2 23.02% N/A N/A N/A 7.30%
Fed High Yield 2 16.60% N/A N/A N/A 5.51%
AST Phoenix Balanced Asset 2 19.56% N/A N/A N/A 8.27%
T. Rowe Price Asset Allocation 2 20.31% N/A N/A N/A 8.56%
T. Rowe Price International Equity 2 8.31% N/A N/A N/A 1.29%
T. Rowe Price Natural Resources 2 N/A N/A N/A N/A 14.15%
T. Rowe Price International Bond 2(1) 8.32% N/A N/A N/A 2.32%
Founders Capital Appreciation 2 29.30% N/A N/A N/A 17.60%
INVESCO Equity Income 2 26.87% N/A N/A N/A 10.42%
PIMCO Total Return 2 15.83% N/A N/A N/A 5.48%
PIMCO Limited Maturity Bond 2 N/A N/A N/A N/A 4.38%
Berger Capital Growth 2 21.35% N/A N/A N/A 16.95%
RS Value + Growth 2 N/A N/A N/A N/A N/A
AA Growth 2 33.03% 17.19% 19.97% N/A 17.93%
AA Small Capitalization 2 40.79% 14.08% 18.85% N/A 20.97%
AA Midcap Growth 2 40.93% N/A N/A N/A 26.75%
NB Partners 2 31.84% N/A N/A N/A 14.57%
MV Emerging Markets 2 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Standard Total Return
(Assuming maximum sales charge and no maintenance fee)
Incep-
1 3 5 10 tion-to
Yr. Yr. Yr. Yr. -Date
<S> <C> <C> <C> <C> <C>
JanCap Growth 2 34.81% 12.03% N/A N/A 13.22%
LA Growth and Income 2 25.92% 12.64% N/A N/A 12.09%
Seligman Henderson International Equity 2 7.40% 13.60% 7.13% N/A 9.70%
Seligman Henderson International Small Cap 2 N/A N/A N/A N/A 2.51%
Fed Utility Income 2 23.20% N/A N/A N/A 7.48%
Fed High Yield 2 16.78% N/A N/A N/A 5.67%
AST Phoenix Balanced Asset 2 19.74% N/A N/A N/A 8.46%
T. Rowe Price Asset Allocation 2 20.49% N/A N/A N/A 8.73%
T. Rowe Price International Equity 2 8.47% N/A N/A N/A 1.44%
T. Rowe Price Natural Resources 2 N/A N/A N/A N/A 14.41%
T. Rowe Price International Bond 2(1) 8.48% N/A N/A N/A 2.51%
Founders Capital Appreciation 2 29.49% N/A N/A N/A 17.78%
INVESCO Equity Income 2 27.06% N/A N/A N/A 10.59%
PIMCO Total Return 2 16.00% N/A N/A N/A 5.64%
PIMCO Limited Maturity Bond 2 N/A N/A N/A N/A 4.62%
Berger Capital Growth 2 21.53% N/A N/A N/A 17.25%
RS Value + Growth 2 N/A N/A N/A N/A N/A
AA Growth 2 33.23% 17.37% 20.15% N/A 18.10%
AA Small Capitalization 2 41.01% 14.25% 19.03% N/A 21.17%
AA Midcap Growth 2 41.14% N/A N/A N/A 26.97%
NB Partners 2 32.03% N/A N/A N/A 14.76%
MV Emerging Markets 2 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Non-standard Total Return
(Assumes no sales charge or maintenance fees)
Incep-
1 3 5 10 tion-to
Yr. Yr. Yr. Yr. -Date
<S> <C> <C> <C> <C> <C>
JanCap Growth 2 36.86% 12.60% N/A N/A 13.77%
LA Growth and Income 2 27.84% 13.21% N/A N/A 12.55%
Seligman Henderson International Equity 2 9.04% 14.18% 7.46% N/A 9.95%
Seligman Henderson International Small Cap 2 N/A N/A N/A N/A 4.07%
Fed Utility Income 2 25.08% N/A N/A N/A 8.10%
Fed High Yield 2 18.56% N/A N/A N/A 6.47%
AST Phoenix Balanced Asset 2 21.56% N/A N/A N/A 9.07%
T. Rowe Price Asset Allocation 2 22.32% N/A N/A N/A 9.56%
T. Rowe Price International Equity 2 10.12% N/A N/A N/A 2.22%
T. Rowe Price Natural Resources 2 N/A N/A N/A N/A 16.15%
T. Rowe Price International Bond 2(1) 10.14% N/A N/A N/A 3.45%
Founders Capital Appreciation 2 31.47% N/A N/A N/A 18.68%
INVESCO Equity Income 2 29.00% N/A N/A N/A 11.43%
PIMCO Total Return 2 17.77% N/A N/A N/A 6.45%
PIMCO Limited Maturity Bond 2 N/A N/A N/A N/A 6.21%
Berger Capital Growth 2 23.38% N/A N/A N/A 18.74%
RS Value + Growth 2 N/A N/A N/A N/A N/A
AA Growth 2 35.26% 17.96% 20.51% N/A 18.36%
AA Small Capitalization 2 43.15% 14.83% 19.39% N/A 21.42%
AA Midcap Growth 2 43.29% N/A N/A N/A 27.69%
NB Partners 2 34.04% N/A N/A N/A 15.74%
MV Emerging Markets 2 N/A N/A N/A N/A N/A
</TABLE>
<TABLE>
<CAPTION>
Non-standard Total Return
(Assumes no sales charge and maximum maintenance fees)
Incep-
1 3 5 10 tion-to
Yr. Yr. Yr. Yr. -Date
<S> <C> <C> <C> <C> <C>
JanCap Growth 2 36.65% 12.43% N/A N/A 13.55%
LA Growth and Income 2 27.65% 13.04% N/A N/A 12.37%
Seligman Henderson International Equity 2 8.87% 14.01% 7.30% N/A 9.78%
Seligman Henderson International Small Cap 2 N/A N/A N/A N/A 3.84%
Fed Utility Income 2 24.89% N/A N/A N/A 7.91%
Fed High Yield 2 18.38% N/A N/A N/A 6.31%
AST Phoenix Balanced Asset 2 21.38% N/A N/A N/A 8.89%
T. Rowe Price Asset Allocation 2 22.14% N/A N/A N/A 9.39%
T. Rowe Price International Equity 2 9.95% N/A N/A N/A 2.07%
T. Rowe Price Natural Resources 2 N/A N/A N/A N/A 15.89%
T. Rowe Price International Bond 2(1) 9.97% N/A N/A N/A 3.26%
Founders Capital Appreciation 2 31.27% N/A N/A N/A 18.50%
INVESCO Equity Income 2 28.80% N/A N/A N/A 11.27%
PIMCO Total Return 2 17.59% N/A N/A N/A 6.29%
PIMCO Limited Maturity Bond 2 N/A N/A N/A N/A 5.97%
Berger Capital Growth 2 23.19% N/A N/A N/A 18.45%
RS Value + Growth 2 N/A N/A N/A N/A N/A
AA Growth 2 35.05% 17.78% 20.33% N/A 18.18%
AA Small Capitalization 2 42.94% 14.66% 19.21% N/A 21.22%
AA Midcap Growth 2 43.08% N/A N/A N/A 27.47%
NB Partners 2 33.84% N/A N/A N/A 15.55%
MV Emerging Markets 2 N/A N/A N/A N/A N/A
</TABLE>
(1) During these periods, the Portfolio (formerly known as the "AST Scudder
International Bond Portfolio") was managed by American Skandia Investment
Services, Incorporated ("ASISI"), as investment manager, and was sub-advised by
Scudder, Steven & Clark, as sub-adviser. As of May 1, 1996, the Portfolio is
managed by ASISI, as investment manager, and sub-advised by Rowe Price-Fleming
International, Inc., as sub-adviser. As of May 1, 1996 various changes have been
made to the Portfolio's investment objective and to its fundamental and
non-fundamental investment restrictions.
The performance quoted in any advertising should not be considered a
representation of the performance of any Sub-accounts in the future since
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. In addition, the amount of charges against each Sub-account
will affect performance.
The information provided by these measures may be useful in reviewing
the performance of the Sub-accounts, and for providing a basis for comparison
with other annuities. These measures may be less useful in providing a basis for
comparison with other investments that neither provide some of the benefits of
such annuities nor are treated in a similar fashion under the Internal Revenue
Code.
UNIT PRICE DETERMINATIONS: For each Sub-account the initial Unit Price is
$10.00. The Unit Price for each subsequent period is the net investment factor
for that period, multiplied by the Unit Price for the immediately preceding
Valuation Period. The Unit Price for a Valuation Period applies to each day in
the period. The net investment factor is an index that measures the investment
performance of and charges assessed against a Sub-account from one Valuation
Period to the next. The net investment factor for a Valuation Period is: (a)
divided by (b), less (c) where:
(a) is the net result of:
(1) the net asset value per share of the underlying mutual
fund portfolio shares held by that Sub-account at the end of the current
Valuation Period plus the per share amount of any dividend or capital gain
distribution declared and unpaid by the underlying mutual fund portfolio during
that Valuation Period; plus or minus
(2) any per share charge or credit during the Valuation Period
as a provision for taxes attributable to the operation or maintenance of that
Sub-account.
(b) is the net result of:
(1) the net asset value per share plus any declared and unpaid
dividends per share of the underlying mutual fund portfolio shares held in that
Sub-account at the end of the preceding Valuation Period; plus or minus
(2) any per share charge or credit during the preceding
Valuation Period as a provision for taxes attributable to the operation or
maintenance of that Sub-account.
(c) is the mortality and expense risk charges and the administration charge.
We value the assets in each Sub-account at their fair market value in accordance
with accepted accounting practices and applicable laws and regulations. The net
investment factor may be greater than, equal to, or less than one.
INDEPENDENT AUDITORS: Deloitte & Touche LLP, Two World Financial Center,
New York, New York 10281-1433, independent auditors, have performed an annual
audit of American Skandia Life Assurance Corporation and an annual audit of
American Skandia Life Assurance Corporation Variable Account B (Class 2
Sub-accounts). Audited financial statements regarding American Skandia Life
Assurance Corporation as of December 31, 1995 and 1994, and the related
statements of operations, shareholders's equity and cash flows for each of the
three years in the period ended December 31, are included in the Prospectus.
Audited financial statements for Variable Account B (Class 2 Sub-accounts) are
included herein. The financial statements included herein have been audited by
Deloitte & Touche LLP, independent auditors, as stated in the report herein and
are included in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
LEGAL EXPERTS: Counsel with respect to Federal laws and regulations applicable
to the issue and sale of the Annuities and with respect to Connecticut law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.
FINANCIAL STATEMENTS FOR SEPARATE ACCOUNT B (CLASS 2 SUB-ACCOUNTS): The
financial statements which follow in Appendix A are those of American Skandia
Life Assurance Corporation Variable Account B (Class 2 Sub-accounts) for the
year ended December 31, 1995. There are other Sub-accounts included in Account B
that are not available in the product described in the applicable prospectus.
To the extent and only to the extent that any statement in a document
incorporated by reference into this Statement of Additional Information is
modified or superseded by a statement in this Statement of Additional
Information or in a later-filed document, such statement is hereby deemed so
modified or superseded and not part of this Statement of Additional Information.
We furnish you without charge a copy of any or all the documents incorporated by
reference in this Statement of Additional Information, including any exhibits to
such documents which have been specifically incorporated by reference. We do so
upon receipt of your written or oral request. Please address your request to
American Skandia Life Assurance Corporation, Attention: Concierge Desk, P.O. Box
883, Shelton, Connecticut, 06484. Our phone number is 1-(800) 752-6342.
<PAGE>
Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholder of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying consolidated statements of financial condition
of American Skandia Life Assurance Corporation (a wholly-owned subsidiary of
Skandia Insurance Company Ltd.) as of December 31, 1995 and 1994, and the
related consolidated statements of operations, shareholder's equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of American Skandia Life
Assurance Corporation as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
March 14, 1996
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1995 1994
--------------------- ----------------------
ASSETS
Investments:
<S> <C> <C>
Fixed maturities - at amortized cost $ 10,112,705 $ 9,621,865
Investment in mutual funds - at market value 1,728,875 840,637
Short-term investments - at amortized cost 15,700,000 24,000,000
--------------------- ----------------------
Total investments 27,541,580 34,462,502
Cash and cash equivalents 13,146,384 23,909,463
Accrued investment income 194,074 173,654
Fixed assets 82,434 0
Deferred acquisition costs 270,222,383 174,009,609
Reinsurance receivable 1,988,042 0
Receivable from affiliates 860,991 459,960
Income tax receivable 563,850 0
State insurance licenses 4,862,500 5,012,500
Other assets 1,589,006 1,261,513
Separate account assets 4,699,961,646 2,625,127,128
--------------------- ----------------------
Total Assets $ 5,021,012,890 $ 2,864,416,329
===================== ======================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES:
Reserve for future contractowner benefits $ 30,493,018 $ 11,422,381
Annuity policy reserves 19,386,490 24,054,255
Income tax payable 0 36,999
Accounts payable and accrued expenses 32,816,517 31,753,380
Payable to affiliates 314,699 261,552
Payable to reinsurer 64,995,470 40,105,406
Short-term borrowing-affiliate 10,000,000 10,000,000
Surplus notes 103,000,000 69,000,000
Deferred contract charges 332,050 449,704
Separate account liabilities 4,699,961,646 2,625,127,128
--------------------- ----------------------
Total Liabilities 4,961,299,890 2,812,210,805
--------------------- ----------------------
SHAREHOLDER'S EQUITY:
Common stock, $80 par, 25,000 shares
authorized, issued and outstanding 2,000,000 2,000,000
Additional paid-in capital 81,874,666 71,623,932
Unrealized investment gains and losses 111,359 (41,655)
Foreign currency translation (328,252) 0
Accumulated deficit (23,944,773) (21,376,753)
--------------------- ----------------------
Total Shareholder's Equity 59,713,000 52,205,524
--------------------- ----------------------
Total Liabilities and Shareholder's $ 5,021,012,890 $ 2,864,416,329
Equity
===================== ======================
</TABLE>
See notes to consolidated financial statements
10
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
---------------- ---------------- ---------------
REVENUES:
<S> <C> <C> <C>
Annuity charges and fees $ 38,837,358 $ 24,779,785 $ 11,752,984
Fee Income 6,205,719 2,111,801 938,336
Net investment income 1,600,674 1,300,217 692,758
Annuity premium income 0 70,000 101,643
Net realized capital gains/(losses) 36,774 (1,942) 330,024
Other 64,882 24,550 1,269
---------------- ---------------- ---------------
Total Revenues 46,745,407 28,284,411 13,817,014
---------------- ---------------- ---------------
BENEFITS AND EXPENSES:
Benefits:
Annuity benefits 555,421 369,652 383,515
Increase/(decrease) in annuity policy reserves (6,778,756) 5,766,003 1,208,454
Cost of minimum death benefit reinsurance 2,056,606 0 0
Return credited to contractowners 10,612,858 (516,730) 252,132
---------------- ---------------- ---------------
6,446,129 5,618,925 1,844,101
---------------- ---------------- ---------------
Expenses:
Underwriting, acquisition and other insurance expenses 35,820,524 18,792,720 9,397,951
Amortization of state insurance licenses 150,000 150,000 150,000
Interest expense 6,499,414 3,615,845 187,156
---------------- ---------------- ---------------
42,469,938 22,558,565 9,735,107
---------------- ---------------- ---------------
Total Benefits and Expenses 48,916,067 28,177,490 11,579,208
---------------- ---------------- ---------------
Income (loss) from operations before federal income taxes (2,170,660) 106,921 2,237,806
Income tax 397,360 247,429 182,965
---------------- ---------------- ---------------
Net income (loss) $ (2,568,020) $ (140,508) $ 2,054,841
================ ================ ===============
</TABLE>
See notes to consolidated financial statements
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
----------------- --------------- ---------------
<S> <C> <C> <C>
Common stock, balance at beginning and end of year $ 2,000,000 $ 2,000,000 $ 2,000,000
----------------- --------------- ---------------
Additional paid-in capital:
Balance at beginning of year 71,623,932 71,623,932 67,623,932
Additional contributions 10,250,734 0 4,000,000
----------------- --------------- ---------------
Balance at end of year 81,874,666 71,623,932 71,623,932
----------------- --------------- ---------------
Unrealized investment gains and losses:
Balance at beginning of year (41,655) 0 0
Change in unrealized investment gains and losses 153,014 (41,655) 0
----------------- --------------- ---------------
Balance at end of year 111,359 (41,655) 0
----------------- --------------- ---------------
Foreign currency translation:
Balance at beginning of year 0 0 0
Change in foreign currency translation (328,252) 0 0
----------------- --------------- ---------------
Balance at end of year (328,252) 0 0
----------------- --------------- ---------------
Accumulated deficit:
Balance at beginning of year (21,376,753) (21,236,245) (23,291,086)
Net income (loss) (2,568,020) (140,508) 2,054,841
----------------- --------------- ---------------
Balance at end of year (23,944,773) (21,376,753) (21,236,245)
----------------- --------------- ---------------
TOTAL SHAREHOLDER'S EQUITY $ 59,713,000 $ 52,205,524 $ 52,387,687
================= =============== ===============
</TABLE>
See notes to consolidated financial statements
<PAGE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of Skandia Insurance Company Ltd.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993
------------------ ------------------- -----------------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ (2,568,020) $ (140,508) $ 2,054,841
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
(Decrease)/increase in annuity policy reserves (4,667,765) 6,004,603 4,223,289
Decrease in policy and contract claims 0 0 (52,400)
Amortization of bond discount 23,449 21,964 6,754
Amortization of state insurance licenses 150,000 150,000 150,000
(Decrease)/increase in due to/from affiliates (347,884) 256,779 (397,125)
Change in income tax payable/receivable (600,849) 36,999 0
Increase in other assets (409,927) (742,041) (220,172)
(Increase)/decrease in accrued investment income (20,420) (44,847) 154,902
Change in reinsurance receivable (1,988,042) 0 0
Increase in accounts payables and accrued expenses 1,063,137 13,396,502 14,005,962
Change in deferred acquisition costs (96,212,774) (83,986,073) (57,387,042)
Change in deferred contract charges (117,654) (71,117) 13,898
Change in foreign currency translation (328,252) 0 0
Realized (gain)/loss on sale of investments (36,774) 1,942 (330,024)
------------------ ------------------- -----------------
Net cash used in operating activities (106,061,775) (65,115,797) (37,777,117)
------------------ ------------------- -----------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed maturity investments (614,289) (1,989,120) (6,847,630)
Proceeds from the maturity of fixed maturity investments 100,000 2,010,000 0
Proceeds from the sale of fixed maturity investments 0 0 10,971,574
Purchase of shares in mutual funds (1,566,194) (922,822) 0
Proceeds from sale of shares in mutual funds 867,744 38,588 0
Purchase of short-term investments (202,700,000) (513,100,000) (1,207,575,307)
Sale of short-term investments 211,000,000 508,500,000 1,202,333,907
Investments in separate accounts (1,609,415,439) (1,365,775,177) (890,125,018)
------------------ ------------------- -----------------
Net cash used in investing activities (1,602,328,178) (1,371,238,531) (891,242,474)
------------------ ------------------- -----------------
CASH FLOW FROM FINANCING ACTIVITIES:
Capital contributions from parent 10,250,734 0 4,000,000
Surplus notes 34,000,000 49,000,000 20,000,000
Short-term borrowing 0 0 10,000,000
Increase in payable to reinsurer 24,890,064 28,555,190 11,550,216
Proceeds from annuity sales 1,628,486,076 1,372,873,747 890,639,947
------------------ ------------------- -----------------
Net cash provided by financing activities 1,697,626,874 1,450,428,937 936,190,163
------------------ ------------------- -----------------
Net increase/(decrease) in cash and cash equivalents (10,763,079) 14,074,609 7,170,572
Cash and cash equivalents at beginning of year 23,909,463 9,834,854 2,664,282
------------------ ------------------- -----------------
Cash and cash equivalents at end of year $ 13,146,384 $ 23,909,463 $ 9,834,854
================== =================== =================
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Income taxes paid $ 995,496 $ 161,398 $ 169,339
================== =================== =================
Interest paid $ 540,319 $ 557,639 $ 111,667
================== =================== =================
</TABLE>
See notes to consolidated financial statements
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements
1. BUSINESS OPERATIONS
American Skandia Life Assurance Corporation (the "Company") is a
wholly-owned subsidiary of American Skandia Investment Holding
Corporation (the "Parent"), which in turn is a wholly-owned subsidiary
of Skandia Insurance Company Ltd., a Swedish corporation.
The Company develops annuity products and issues its products through
its affiliated broker/dealer company, American Skandia Marketing,
Incorporated. The Company currently issues variable, fixed, market
value adjusted and immediate annuities.
During 1995, Skandia Vida, S.A. de C.V. was formed by the ultimate
parent Skandia Insurance Company Ltd. The Company owns 99.9% ownership
in Skandia Vida, S.A. de C.V. which is a life insurance company
domiciled in Mexico. This Mexican life insurer is a start up company
with expectations of selling long term savings product within Mexico.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Reporting
------------------
The accompanying consolidated financial statements have been
prepared in conformity with generally accepted accounting
principles. Intercompany transactions and balances have been
eliminated in consolidation.
B. Investments
-----------
The Company has classified its fixed maturity investments as
held to maturity as the Company has the ability and intent to
hold those investments to maturity. Such investments are
carried at amortized cost.
The Company has classified its mutual fund investments as
available for sale. Such investments are carried at market
value and changes in unrealized gains and losses are reported
as a component of shareholder's equity.
Short-term investments are reported at cost which approximates
market value.
Realized gains and losses on disposal of investments are
determined by the specific identification method and are
included in revenues.
The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments
in Debt and Equity Securities", effective January 1, 1994. The
adoption of SFAS No. 115 had no impact on the Company's
financial statements.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
C. Cash Equivalents
----------------
The Company considers all highly liquid time deposits
purchased with a maturity of three months or less to be cash
equivalents.
D. State Insurance Licenses
------------------------
Licenses to do business in all states have been capitalized
and reflected at the purchase price of $6 million less
accumulated amortization. The cost of the licenses is being
amortized over 40 years.
E. Fixed Assets
------------
Fixed Assets consisting of furniture, equipment and leasehold
improvements are carried at cost and depreciated on a straight
line basis over a period of three to five years. Accumulated
depreciation at December 31, 1995 and related depreciation
expense for the year ended December 31, 1995 was $3,749.
F. Recognition of Revenue and Contract Benefits
--------------------------------------------
Annuity contracts without significant mortality risk, as
defined by Financial Accounting Standard No. 97, are
classified as investment contracts (variable, market value
adjusted and certain immediate annuities) and those with
mortality risk (immediate annuities) as insurance products.
The policy of revenue and contract benefit recognition is
described below.
Revenues for variable annuity contracts consist of charges
against contractowner account values for mortality and expense
risks and administration fees and an annual maintenance fee
per contract. Benefit reserves for variable annuity contracts
represent the account value of the contracts, and are included
in the separate account liabilities.
Revenues for market value adjusted annuity contracts consist
of separate account investment income reduced by benefit
payments and change in reserves in support of contractowner
obligations, all of which is included in return credited to
contractowners. Benefit reserves for these contracts represent
the account value of the contracts, and are included in the
general account liability for future contractowner benefits to
the extent in excess of the separate account liabilities.
Revenues for immediate annuity contracts without life
contingencies consist of net investment income. Revenues for
immediate annuity contracts with life contingencies consist of
single premium payments recognized as annuity considerations
when received. Benefit reserves for these contracts are based
on the Society of Actuaries 1983 - a Table with an assumed
interest rate of 8.25%.
Annuity sales were $1,628,486,000, $1,372,874,000 and
$890,640,000 for 1995, 1994 and 1993, respectively. Annuity
contract assets under management were $4,704,044,000,
$2,661,161,000 and $1,437,554,000 at December 31, 1995, 1994
and 1993, respectively.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
G. Deferred Acquisition Costs
--------------------------
The costs of acquiring new business, which vary with and are
primarily related to the production of new business, are being
amortized in relation to the present value of estimated gross
profits. These costs include commissions, cost of contract
issuance, and certain selling expenses that vary with
production. Details of the deferred acquisition costs for the
years ended December 31 follow:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $174,009,609 $ 90,023,536 $32,636,494
Acquisition costs deferred
during the year 106,063,698 85,801,180 59,676,296
Acquisition costs amortized
during the year 9,850,924 1,815,107 2,289,254
------------- --------------- -------------
Balance at end of year $270,222,383 $174,009,609 $90,023,536
============ ============= ===========
</TABLE>
H. Deferred Contract Charges
-------------------------
Certain contracts are assessed a front-end fee at the time of
issue. These fees are deferred and recognized in income in
relation to the present value of estimated gross profits of
the related contracts. Details of the deferred contract
charges for the years ended December 31 follow:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Balance at beginning of year $449,704 $520,821 $506,923
Contract charges deferred
during the year 21,513 87,114 144,537
Contract charges amortized
during the year 139,167 158,231 130,639
--------- --------- ---------
Balance at end of year $332,050 $449,704 $520,821
======== ======== ========
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
I. Separate Accounts
-----------------
Assets and liabilities in Separate Account are shown as
separate captions in the consolidated statement of financial
condition. The assets consist of long-term bonds, investments
in mutual funds and short-term securities, all of which are
carried at market value.
Included in Separate Account liabilities is $586,233,752 and
$259,556,863 at December 31, 1995 and 1994, respectively,
relating to annuity contracts for which the contractholder is
guaranteed a fixed rate of return. Separate Account assets of
$588,835,051 and $269,488,557 at December 31, 1995 and 1994,
respectively, consisting of long term bonds, short term
securities, transfers due from general account and cash are in
support of these annuity contracts, as pursuant to state
regulation.
J. Income taxes
------------
The Company is included in the consolidated federal income tax
return with all Skandia Insurance Company Ltd. subsidiaries in
the U.S. The federal and state income tax provision is
computed on a separate return basis in accordance with the
provisions of the Internal Revenue Code, as amended. Prior to
1995, the Company filed a separate federal income tax return.
K. Translation of Foreign Currency
-------------------------------
The financial position and results of operations of the
Company's foreign operations are measured using local currency
as the functional currency. Assets and liabilities of the
operations are translated at the exchange rate in effect at
each year-end. Statements of operations and shareholder's
equity accounts are translated at the average rate prevailing
during the year. Translation adjustments arising from the use
of differing exchange rates from period to period are included
in shareholder's equity.
L. Estimates
---------
The preparation of financial statements in conformity with
generally accepted accounting principles requires that
management make estimates and assumptions that affect the
reported amount of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting period. The more significant
estimates and assumptions are related to deferred acquisition
costs and involve policy lapses, investment return and
maintenance expenses. Actual results could differ from those
estimates.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
M. Reinsurance
-----------
The Company cedes reinsurance under modified co-insurance
arrangements. The reinsurance arrangements provides additional
capacity for growth in supporting the cash flow strain from
the Company's variable annuity business. The reinsurance is
effected under quota share contracts.
Effective January 1, 1995, the Company reinsured certain
mortality risks. These risks result from the guaranteed
minimum death benefit feature in the variable annuity
products.
3. INVESTMENTS
The carrying value (amortized cost), gross unrealized gains (losses)
and estimated market value of investments in fixed maturities by
category as of December 31, 1995 and 1994 are shown below. All
securities held at December 31, 1995 are publicly traded.
Investments in fixed maturities as of December 31, 1995 consist of the
following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
U.S. Government
Obligations $ 4,304,731 $183,201 $1,778 $4,486,154
Obligations of
State and Political
Subdivisions 256,095 0 3,165 252,930
Corporate
Securities 5,551,879 13,252 346 5,564,785
------------- ---------- -------- ------------
Totals $10,112,705 $196,453 $5,289 $10,303,869
=========== ======== ====== ===========
</TABLE>
The amortized cost and market value of fixed maturities, by contractual
maturity, at December 31, 1995 are shown below.
<TABLE>
<CAPTION>
<S> <C> <C>
Amortized Market
Cost Value
Due in one year or less $ 379,319 $ 393,745
Due after one through five years 6,358,955 6,519,880
Due after five through ten years 3,374,431 3,390,244
------------ -------------
$10,112,705 $10,303,869
=========== ===========
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
Investments in fixed maturities as of December 31, 1994 consist of the
following:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
U.S. Government
Obligations $3,796,390 $2,119 $156,759 $3,641,750
Obligations of
State and Political
Subdivisions 261,852 0 9,156 252,696
Corporate
Securities 5,563,623 0 547,023 5,016,600
----------- ---------- --------- -----------
Totals $9,621,865 $2,119 $712,938 $8,911,046
========== ====== ======== ==========
</TABLE>
Proceeds from maturities and sales of fixed maturity investments during
1995, 1994 and 1993, were $100,000, $2,010,000 and $10,971,574,
respectively.
<TABLE>
<CAPTION>
Gross gains and gross losses realized were as follows:
<S> <C> <C>
Gross Gross
Gains Losses
----- ------
1995 $ 0 $ 0
1994 $ 0 $ 0
1993 $329,000 $ 0
</TABLE>
19
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The cost, gross unrealized gains (losses) and market value of
investments in mutual funds at December 31, 1995 and 1994 are shown
below:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Gross Gross
Unrealized Unrealized Market
Cost Gains Losses Value
1995 $1,617,516 $111,686 $ 327 $1,728,875
========== ======== ========= ==========
1994 $ 882,292 $ 4,483 $ 46,138 $ 840,637
========== ======== ========= ==========
</TABLE>
Proceeds from sales of investments in mutual funds during 1995 and 1994
were $867,744 and $38,588.
Mutual fund gross gains and gross losses were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Gross Gross
Gains Losses
----- ------
1995 $65,236 $28,462
======= =======
1994 $ 510 $ 2,452
======== =======
</TABLE>
4. NET INVESTMENT INCOME
Additional information with respect to net investment income for the
years ended December 31, 1995, 1994 and 1993 is as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Fixed Maturities $ 629,743 $ 616,987 $409,552
Mutual Funds 59,895 12,049 0
Short-Term Investments 256,351 142,421 394,545
Cash and Cash Equivalents 730,581 633,298 15,034
Interest on Policy Loans 4,025 1,275 1,015
------------- ------------- ----------
Total Investment Income 1,680,595 1,406,030 820,146
Investment Expenses 79,921 105,813 127,388
------------ ----------- ---------
Net investment income $1,600,674 $1,300,217 $692,758
========== ========== ========
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
5. INCOME TAXES
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes, and (b) operating loss and tax credit carryforwards. The tax
effects of significant items comprising the Company's deferred tax
balance as of December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
1995 1994
---- ----
Deferred Tax (Liabilities):
<S> <C> <C>
Deferred acquisition costs ($57,399,960) ($37,885,053)
Payable to reinsurer (19,802,861) (12,754,591)
Unrealized investment gains and losses (38,976) 14,579
Other (308,304) (214,505)
-------------- --------------
Total ($77,550,101) ($50,839,570)
------------ ------------
Deferred Tax Assets:
Deferred contract charge $ 116,218 $ 157,396
Net separate account liabilities 72,024,094 51,637,155
Reserve for future contractowner benefits 10,672,556 3,997,833
Net operating loss carryforward 0 1,813,670
AMT credit carryforward 286,094 0
Foreign exchange translation 114,888 0
Other 3,661,104 878,030
------------ -------------
Total $86,874,954 $58,484,084
----------- -----------
Net before valuation allowance $ 9,324,853 $ 7,644,514
Valuation allowance (9,324,853) (7,644,514)
------------ ------------
Net deferred tax balance $ 0 $ 0
----------------- -----------------
</TABLE>
The significant components of federal tax expense are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Current tax expense $ 394,648 $184,771 $182,965
Deferred tax benefit:
(exclusive of the effects of
the change in valuation allowance) (1,680,339) (365,288) (404,480)
Change in valuation allowance 1,680,339 365,288 404,480
----------- ---------- ---------
Total deferred tax expense 0 0 0
------------ ---------- ---------
Total income tax expense $ 394,648 $184,771 $182,965
============ ======== ========
</TABLE>
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
The state income tax expense was $2,712 and $62,658 for the years ended
1995 and 1994, respectively.
The federal income tax expense was different from the amount computed
by applying the federal statutory tax rate of 35% to pre-tax income
from continuing operations as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Income (loss) before taxes ($2,170,660) $106,921 $2,237,806
Income tax rate 35% 35% 35%
------------ ---------- -----------
Tax expense at federal
statutory income tax rate (759,731) 37,422 783,232
Tax effect of:
Permanent tax differences (253,101) (82,188) 63,535
Difference between financial
statement and taxable income 2,986,464 3,161,331 2,414,254
Utilization of net operating
loss carryforwards (1,487,144) (3,116,565) (3,261,021)
Utilization of AMT credits (91,840) 0 0
Alternative minimum tax 0 184,771 182,965
-------------- ----------- -----------
Income tax expense $ 394,648 $ 184,771 $ 182,965
=========== ========== ==========
</TABLE>
6. RELATED PARTY TRANSACTIONS
Certain operating costs (including personnel, rental of office space,
furniture, and equipment) and investment expenses have been charged to
the Company at cost by American Skandia Information Services and
Technology Corporation, an affiliated company; and likewise, the
Company has charged operating costs to American Skandia Investment
Services, Incorporated, an affiliated company. Income received for
these items was $396,573, $248,799 and $146,134 for the years ended
December 31, 1995, 1994 and 1993, respectively. The total cost to the
Company for these items was $12,687,337, $8,524,840 and $3,537,566 for
the years ended December 31, 1995, 1994 and 1993, respectively. Amounts
receivable from affiliates under this arrangement were $857,156 and
$317,285 as of December 31, 1995 and 1994, respectively. Amounts
payable to affiliates under this arrangement were $304,525 and $261,552
as of December 31, 1995 and 1994, respectively.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
7. LEASES
The Company leases office space under a lease agreement established in
1989 with an affiliate (American Skandia Information Services and
Technology Corporation). The lease expense for 1995, 1994 and 1993 was
$1,265,771, $961,080 and $280,363, respectively. Future minimum lease
payments per year and in aggregate as of December 31, 1995 are as
follows:
1996 1,178,550
1997 1,178,550
1998 1,178,550
1999 1,178,550
2000 and thereafter 6,831,312
-----------
Total $11,545,512
===========
8. RESTRICTED ASSETS
In order to comply with certain state insurance departments'
requirements, the Company maintains bonds/notes on deposit with various
states. The carrying value of these deposits amounted to $3,267,357 and
$3,410,135 as of December 31, 1995, and 1994, respectively. These
deposits are required to be maintained for the protection of
contractowners within the individual states.
9. RETAINED EARNINGS AND DIVIDEND RESTRICTIONS
Statutory basis shareholder's equity was $132,493,899, $95,001,971 and
$60,666,243 at December 31, 1995, 1994 and 1993, respectively.
The statutory basis net income (loss) was ($7,183,003), ($9,789,297)
and $387,695 for the years ended December 31, 1995, 1994 and 1993,
respectively.
Under state insurance laws, the maximum amount of dividends that can be
paid shareholders without prior approval of the state insurance
departments is subject to restrictions relating to statutory surplus
and net gain from operations. At December 31, 1995, no amounts may be
distributed without prior approval.
10. EMPLOYEE BENEFITS
In 1989, the Company established a 401(k) plan for which substantially
all employees are eligible. Company contributions to this plan on
behalf of the participants were $627,161, $431,559 and $250,039 for the
years ended December 31, 1995, 1994 and 1993, respectively.
The Company has a long-term incentive plan where units are awarded to
executive officers and other personnel. The program consists of
multiple plans. A new plan is instituted each year. Generally,
participants must remain employed by the Company or its affiliates at
the time such units are payable in order to receive any payments under
the plan. The accrued liability representing the value of these units
is $4,600,831 and $1,564,407 as of December 31, 1995 and 1994,
respectively.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
In 1994, the Company established a deferred compensation plan which is
available to the internal field marketing staff and certain officers.
Company contributions to this plan on behalf of the participants were
$139,209 in 1995 and $106,882 in 1994.
11. REINSURANCE
The effect of the reinsurance agreements on the Company's operations
was to reduce annuity charges and fee income, death benefit expense and
policy reserves. The effect of reinsurance for the years ended December
31, 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Annuity Change in Annuity Return Credited
Charges and Fees Policy Reserves to Contractowners
---------------- --------------- -----------------
Gross $50,334,280 ($4,790,714) $10,945,831
Ceded 11,496,922 1,988,042 332,973
------------- ------------- -------------
Net $38,837,358 ($6,778,756) $10,612,858
=========== =========== ===========
</TABLE>
1994 1993
---------------- ----------------
Annuity Annuity
Charges and Fees Charges and Fees
---------------- ----------------
Gross $30,116,166 $12,446,277
Ceded 5,336,381 693,293
------------- -------------
Net $24,779,785 $11,752,984
=========== ===========
Such ceded reinsurance does not relieve the Company from its
obligations to policyholders. The Company remains liable to its
policyholders for the portion reinsured to the extent that any
reinsurer does not meet the obligations assumed under the reinsurance
agreements.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
12. SURPLUS NOTES
During 1995, the Company received $34 million from its parent in
exchange for three surplus notes. The amounts were $10 million, $15
million and $9 million, at interest rates of 7.52%, 7.49% and 7.47%,
respectively. Interest expense for these notes was $83,281 for the
year ended December 31, 1995.
During 1994, the Company received $49 million from its parent in
exchange for four surplus notes, two in the amount of $10 million, one
in the amount of $15 million and one in the amount of $14 million, at
interest rates of 7.28%, 7.90%, 9.13% and 9.78%, respectively. Interest
expense for these notes was $4,319,612 and $1,618,504 for the years
ended December 31, 1995 and 1994, respectively.
During 1993, the Company received $20 million from its parent in
exchange for a surplus note in the amount of $20 million at a 6.84%
interest rate. Interest expense for this note was $1,387,000,
$1,387,000 and $11,400 for the years ended December 31, 1995, 1994 and
1993, respectively.
Payment of interest and repayment of principal for these notes requires
approval by the Commissioner of the State of Connecticut. In 1995,
approval was granted for the payment of surplus note interest with the
stipulation that it be funded through a capital contribution from the
Parent.
13. SHORT-TERM BORROWING
During 1993, the Company received a $10 million loan from Skandia AB, a
Swedish affiliate. Upon the last renewal the loan became payable to the
Parent rather than Skandia AB. The loan matures on March 6, 1996 and
bears interest at 6.75.%. The total interest expense to the Company was
$709,521, $569,618 and $149,861 for the years ended December 31, 1995,
1994 and 1993, respectively, of which $219,375 and $50,174 was payable
as of December 31, 1995 and 1994, respectively.
14. CONTRACT WITHDRAWAL PROVISIONS
Approximately 98% of the Company's separate account liabilities are
subject to discretionary withdrawal with market value adjustment by
contractholders. Separate account assets which are carried at market
value are adequate to pay such withdrawals which are generally subject
to surrender charges ranging from 7.5% to 1% for contracts held less
than 7 years.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
(a wholly-owned subsidiary of
Skandia Insurance Company Ltd.)
Notes to Consolidated Financial Statements (continued)
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table summarizes information with respect to the
operations of the Company.
<TABLE>
<CAPTION>
Three Months Ended
------------------
1995 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Premiums and other insurance
<S> <C> <C> <C> <C>
revenues $ 8,891,903 $10,066,478 $11,960,530 $14,189,048
Net investment income 551,690 434,273 293,335 321,376
Net realized capital gains (losses) (16,082) (370) 44,644 8,582
------------- ---------------- -------------- ---------------
Total revenues $ 9,427,511 $10,500,381 $12,298,509 $14,519,006
============ =========== =========== ===========
Benefits and expenses $11,438,798 $ 9,968,595 $11,600,587 $15,908,087
=========== ============ =========== ===========
Net income (loss) ($ 2,026,688) $ 531,486 $ 678,312 ($1,751,130)
============ ============= ============= ===========
Three Months Ended
1994 March 31 June 30 September 30 December 31
---- -------- ------- ------------ -----------
Premiums and other insurance
revenues $5,594,065 $6,348,777 $7,411,686 $7,631,608
Net investment income 252,914 336,149 264,605 446,549
Net realized capital gains (losses) 0 (30,829) 25,914 2,973
----------------- ------------- -------------- -------------
Total revenues $5,846,979 $6,654,097 $7,702,205 $8,081,130
========== ========== ========== ==========
Benefits and expenses $5,701,460 $7,883,829 $8,157,535 $6,434,666
========== ========== ========== ==========
Net income (loss) $ 104,636 ($1,257,768) ($503,793) $1,516,417
============ =========== ========= ==========
</TABLE>
INDEPENDENT AUDITORS' REPORT
- -------------------------------------
To the Contractowners of
American Skandia Life Assurance Corporation
Variable Account B -- Class 2 and the
Board of Directors of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying statement of assets and liabilities of American
Skandia Life Assurance Corporation Variable Account B -- Class 2 as of December
31, 1995, and the related statements of operations and of changes in net assets
for the periods presented. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1995 with the managers of
the mutual funds. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of American Skandia Life Assurance Corporation
Variable Account B -- Class 2 as of December 31, 1995, the results of its
operations and the changes in its net assets for the periods presented in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 20, 1996
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investment in mutual funds at market value (Note 2):
Neuberger & Berman Advisers Management Trust (NBAMT):
Partners Portfolio - 210,166 shares (cost $2,734,336).................................................. $ 2,780,494
The Alger American Fund (AAF):
Small Capitalization Portfolio - 115,943 shares (cost $4,538,396)...................................... 4,569,296
Growth Portfolio - 225,342 shares (cost $6,757,729).................................................... 7,021,672
MidCap Growth Portfolio - 155,737 shares (cost $3,020,442)............................................. 3,027,525
American Skandia Trust (AST):
Seligman Henderson International Equity Portfolio - 280,782 shares (cost $4,948,597)................... 5,110,226
Seligman Henderson International Small Cap Portfolio - 137,176 shares (cost $1,420,535)................ 1,417,025
Lord Abbett Growth & Income Portfolio - 433,559 shares (cost $6,018,950)............................... 6,494,711
JanCap Growth Portfolio - 325,786 shares (cost $4,503,294)............................................. 5,017,104
Money Market Portfolio - 10,367,753 shares (cost $10,367,753).......................................... 10,367,753
Federated Utility Income Portfolio - 160,127 shares (cost $1,768,237).................................. 1,911,912
Federated High Yield Portfolio - 305,062 shares (cost $3,148,429)...................................... 3,398,385
Phoenix Balanced Asset Portfolio - 230,339 shares (cost $2,715,306).................................... 2,886,154
T. Rowe Price Asset Allocation Portfolio - 89,593 shares (cost $958,906)............................... 1,076,010
T. Rowe Price International Equity Portfolio - 599,044 shares (cost $6,205,552)........................ 6,379,815
T. Rowe Price Natural Resources Portfolio - 27,224 shares (cost $293,877).............................. 302,455
Founders Capital Appreciation Portfolio - 218,617 shares (cost $3,042,639)............................. 3,115,296
INVESCO Equity Income Portfolio - 290,858 shares (cost $3,297,215)..................................... 3,635,719
PIMCO Total Return Bond Portfolio - 844,753 shares (cost $8,952,120)................................... 9,579,495
PIMCO Limited Maturity Bond Portfolio - 396,782 shares (cost $4,121,689)............................... 4,154,305
Scudder International Bond Portfolio - 127,101 shares (cost $1,300,684)................................ 1,347,267
Berger Capital Growth Portfolio - 88,556 shares (cost $997,511)........................................ 1,098,096
-----------
Total Invested Assets.......................................................................... 84,690,715
Receivable from American Skandia Life Assurance Corp........................................................... 350,875
Receivable from Neuberger & Berman Advisers Management Trust................................................... 3,373,549
Receivable from Alliance Variable Products Series Fund......................................................... 2,385,497
Receivable from Scudder Variable Life Investment Fund.......................................................... 1,965,212
Receivable from Janus Aspen Series............................................................................. 2,234,781
-----------
Total Assets................................................................................... $95,000,629
===========
</TABLE>
- --------------------------------------------------------------------------------
2
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF ASSETS AND LIABILITIES (CONCLUDED)
AS OF DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
LIABILITIES
Payable to American Skandia Trust.............................................................................. $ 8,656,699
Payable to The Alger American Fund............................................................................. 1,653,587
-----------
Total Liabilities.............................................................................. $10,310,286
-----------
</TABLE>
NET ASSETS
<TABLE>
<CAPTION>
UNIT
CONTRACTOWNERS' EQUITY UNITS VALUE
- ----------------------------------------------------------------------------------------- ------- ------
<S> <C> <C> <C>
NBAMT - Partners..................................................................... 230,034 $12.09 $ 2,780,494
AAF - Small Capitalization........................................................... 321,334 14.22 4,569,297
AAF - Growth......................................................................... 506,542 13.86 7,021,671
AAF - MidCap Growth.................................................................. 204,227 14.82 3,027,525
AST - Seligman Henderson International Equity........................................ 452,589 11.29 5,110,226
AST - Seligman Henderson International Small Cap..................................... 137,991 10.27 1,416,925
AST - Lord Abbett Growth & Income.................................................... 498,080 13.04 6,494,711
AST - JanCap Growth.................................................................. 384,701 13.04 5,017,104
AST - Money Market................................................................... 968,666 10.70 10,367,752
AST - Federated Utility Income....................................................... 164,976 11.59 1,911,912
AST - Federated High Yield........................................................... 300,107 11.32 3,398,385
AST - Phoenix Balanced Asset......................................................... 239,737 12.04 2,886,154
AST - T. Rowe Price Asset Allocation................................................. 89,787 11.98 1,076,010
AST - T. Rowe Price International Equity............................................. 610,851 10.44 6,379,815
AST - T. Rowe Price Natural Resources................................................ 27,379 11.04 302,358
AST - Founders Capital Appreciation.................................................. 221,840 14.04 3,115,296
AST - INVESCO Equity Income.......................................................... 293,340 12.39 3,635,719
AST - PIMCO Total Return Bond........................................................ 846,356 11.32 9,579,495
AST - PIMCO Limited Maturity Bond.................................................... 399,158 10.41 4,154,212
AST - Scudder International Bond..................................................... 127,373 10.58 1,347,267
AST - Berger Capital Growth.......................................................... 89,474 12.27 1,098,015
-----------
Total Net Assets......................................................... $84,690,343
===========
</TABLE>
- --------------------------------------------------------------------------------
3
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------
NBAMT
TOTAL GROWTH
------------ ----------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends............................................................................. $ 1,089,939 $ 1,795
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4).................. (534,682) (11,019)
------------ ---------
NET INVESTMENT INCOME (LOSS).............................................................. 555,257 (9,224)
------------ ---------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales..................................................................... 144,968,443 3,436,240
Cost of Securities Sold................................................................. 139,311,956 3,142,037
------------ ---------
Net Gain (Loss)....................................................................... 5,656,487 294,203
Capital Gain Distributions Received..................................................... 234,353 24,053
------------ ---------
NET REALIZED GAIN (LOSS).................................................................. 5,890,840 318,256
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period..................................................................... 81,078 8,784
End of Period........................................................................... 3,578,518 0
------------ ---------
NET UNREALIZED GAIN (LOSS)................................................................ 3,497,440 (8,784)
------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................... $ 9,943,537 $ 300,248
============ =========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
4
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------------------
NBAMT
PARTNERS
NBAMT - LIMITED NBAMT (JUN. 12* THRU AAF - SMALL AAF
MATURITY BOND BALANCED DEC. 31, 1995) CAPITALIZATION GROWTH
--------------- ---------- --------------- --------------- ----------
<S> <C> <C> <C> <C>
$ 120,964 $ 20,615 $ 0 $ 0 $ 5,417
(20,337) (11,902) (3,299) (27,252) (25,676)
--------- --------- --------- ---------- ---------
100,627 8,713 (3,299) (27,252) (20,259)
--------- --------- --------- ---------- ---------
4,460,417 1,765,291 436,860 23,631,682 1,816,625
4,340,159 1,537,905 424,757 22,616,602 1,432,949
--------- --------- --------- ---------- ---------
120,258 227,386 12,103 1,015,080 383,676
0 6,626 0 0 19,191
--------- --------- --------- ---------- ---------
120,258 234,012 12,103 1,015,080 402,867
13,949 (8,253) 0 96,549 78,117
0 0 46,158 30,900 263,943
--------- --------- --------- ---------- ---------
(13,949) 8,253 46,158 (65,649) 185,826
--------- --------- --------- ---------- ---------
$ 206,936 $ 250,978 $ 54,962 $ 922,179 $ 568,434
========= ========= ========= ========== =========
</TABLE>
- --------------------------------------------------------------------------------
5
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS (CONT'D)
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------------
AST - SELIGMAN
HENDERSON
AAF - MIDCAP INTERNATIONAL
GROWTH EQUITY
------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends...................................................................... $ 104 $ 0
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4)........... (13,124) (19,083)
-------- ---------
NET INVESTMENT INCOME (LOSS)....................................................... (13,020) (19,083)
-------- ---------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales.............................................................. 5,424,602 1,992,257
Cost of Securities Sold.......................................................... 5,065,144 2,157,181
-------- ---------
Net Gain (Loss)................................................................ 359,458 (164,924)
Capital Gain Distributions Received.............................................. 0 114,477
-------- ---------
NET REALIZED GAIN (LOSS)........................................................... 359,458 (50,447)
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period.............................................................. 29,711 (62,376)
End of Period.................................................................... 7,083 161,629
-------- ---------
NET UNREALIZED GAIN (LOSS)......................................................... (22,628) 224,005
-------- ---------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.................... $ 323,810 $ 154,475
======== =========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
6
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------------------------
AST - SELIGMAN
HENDERSON
INTL. SMALL CAP AST - LORD
(MAY 1* THRU ABBETT GROWTH AST - JANCAP AST - MONEY AST - FEDERATED
DEC. 31, 1995) & INCOME GROWTH MARKET UTILITY INCOME
----------------- -------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
$ 0 $ 41,130 $ 9,382 $ 486,456 $ 46,689
(3,035) (34,712) (22,929) (83,416) (11,394)
-------- ---------- --------- ----------- ----------
(3,035) 6,418 (13,547) 403,040 35,295
-------- ---------- --------- ----------- ----------
776,404 2,729,437 1,135,088 51,189,940 1,443,571
771,903 2,349,517 950,343 51,189,940 1,356,574
-------- ---------- --------- ----------- ----------
4,501 379,920 184,745 0 86,997
0 41,109 0 0 0
-------- ---------- --------- ----------- ----------
4,501 421,029 184,745 0 86,997
0 23,390 1,483 0 (11,262)
(3,510) 475,761 513,810 0 143,675
-------- ---------- --------- ----------- ----------
(3,510) 452,371 512,327 0 154,937
-------- ---------- --------- ----------- ----------
$ (2,044) $ 879,818 $ 683,525 $ 403,040 $ 277,229
======== ========== ========= =========== ==========
</TABLE>
- --------------------------------------------------------------------------------
7
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS (CONT'D)
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------
AST - FEDERATED AST - PHOENIX
HIGH YIELD BALANCED ASSET
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends..................................................................... $ 58,902 $ 28,949
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4).......... (22,127) (10,520)
---------- --------
NET INVESTMENT INCOME (LOSS)...................................................... 36,775 18,429
---------- --------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales............................................................. 1,516,395 675,522
Cost of Securities Sold......................................................... 1,421,910 635,829
---------- --------
Net Gain (Loss)............................................................... 94,485 39,693
Capital Gain Distributions Received............................................. 0 0
---------- --------
NET REALIZED GAIN (LOSS).......................................................... 94,485 39,693
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period............................................................. (3,175) 8,569
End of Period................................................................... 249,956 170,848
---------- --------
NET UNREALIZED GAIN (LOSS)........................................................ 253,131 162,279
---------- --------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $ 384,391 $ 220,401
========== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
8
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ----------------------------------------------------------------------------------------------------
AST - T. ROWE
PRICE NATURAL
AST - T. ROWE AST - T. ROWE RESOURCES AST - FOUNDERS
AST - PHOENIX PRICE ASSET PRICE INTERNATIONAL (MAY 19* THRU CAPITAL
CAPITAL GROWTH ALLOCATION EQUITY DEC. 31, 1995) APPRECIATION
-------------- ------------- -------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
$ 1,517 $ 12,254 $ 3,019 $ 0 $ 10,765
(2,132) (7,269) (34,379) (408) (17,810)
-------- -------- --------- ---- --------
(615) 4,985 (31,360) (408) (7,045)
-------- -------- --------- ---- --------
449,996 413,316 8,054,975 24,162 9,426,265
393,243 377,378 7,871,437 23,539 8,884,606
-------- -------- --------- ---- --------
56,753 35,938 183,538 623 541,659
0 0 6,221 0 0
-------- -------- --------- ---- --------
56,753 35,938 189,759 623 541,659
(4,589) 9,104 (71,869) 0 54,117
0 117,104 174,263 8,578 72,657
-------- -------- --------- ---- --------
4,589 108,000 246,132 8,578 18,540
-------- -------- --------- ---- --------
$ 60,727 $ 148,923 $ 404,531 $ 8,793 $ 553,154
======== ======== ========= ==== ========
</TABLE>
- --------------------------------------------------------------------------------
9
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS (CONT'D)
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------
AST - PIMCO
TOTAL
AST - INVESCO RETURN
EQUITY INCOME BOND
------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends..................................................................... $ 19,150 $ 61,741
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4).......... (17,745) (42,943)
---------- ----------
NET INVESTMENT INCOME (LOSS)...................................................... 1,405 18,798
---------- ----------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales............................................................. 1,046,356 1,617,960
Cost of Securities Sold......................................................... 918,977 1,538,878
---------- ----------
Net Gain (Loss)............................................................... 127,379 79,082
Capital Gain Distributions Received............................................. 0 0
---------- ----------
NET REALIZED GAIN (LOSS).......................................................... 127,379 79,082
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period............................................................. (11,342) (11,821)
End of Period................................................................... 338,504 627,375
---------- ----------
NET UNREALIZED GAIN (LOSS)........................................................ 349,846 639,196
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS................... $ 478,630 $ 737,076
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
10
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------------------
AST - PIMCO
LIMITED MATURITY
BOND AST - SCUDDER
(MAY 8* THRU INTERNATIONAL AST - EAGLE AST - BERGER AVP - ST
DEC. 31, 1995) BOND GROWTH EQUITY CAPITAL GROWTH MULTI-MKT
---------------- ------------- ------------- -------------- ---------
<S> <C> <C> <C> <C>
$ 0 $ 4,730 $ 45 $ 38 $ 0
(3,646) (5,006) (673) (5,327) (2,555)
-------- -------- -------- -------- --------
(3,646) (276) (628) (5,289) (2,555)
-------- -------- -------- -------- --------
321,611 291,425 380,431 307,577 632,355
319,439 285,754 363,463 267,774 636,019
-------- -------- -------- -------- --------
2,172 5,671 16,968 39,803 (3,664)
0 0 0 0 0
-------- -------- -------- -------- --------
2,172 5,671 16,968 39,803 (3,664)
0 (2,877) 571 31 (20,879)
32,616 46,583 0 100,585 0
-------- -------- -------- -------- --------
32,616 49,460 (571) 100,554 20,879
-------- -------- -------- -------- --------
$ 31,142 $ 54,855 $ 15,769 $135,068 $ 14,660
======== ======== ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
11
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS (CONT'D)
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
--------------------------------------
AVP - PREMIER AVP - GROWTH
GROWTH & INCOME
------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends....................................................................... $ 1,489 $ 7,545
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4)............ (7,406) (6,379)
---------- ----------
NET INVESTMENT INCOME (LOSS)........................................................ (5,917) 1,166
---------- ----------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales............................................................... 2,673,860 1,612,792
Cost of Securities Sold........................................................... 2,391,527 1,416,162
---------- ----------
Net Gain (Loss)................................................................. 282,333 196,630
Capital Gain Distributions Received............................................... 4,181 7,830
---------- ----------
NET REALIZED GAIN (LOSS)............................................................ 286,514 204,460
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period............................................................... (3,688) (5,287)
End of Period..................................................................... 0 0
---------- ----------
NET UNREALIZED GAIN (LOSS).......................................................... 3,688 5,287
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 284,285 $ 210,913
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
12
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------------------------------
AVP - U.S. GOV'T/ AVP - TOTAL AVP SVL SVL - CAPITAL SVL
HIGH GRADE RETURN INTERNATIONAL BOND GROWTH BALANCED
----------------- ----------- ------------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C>
$ 12,089 $ 849 $ 542 $ 42,985 $ 811 $ 1,514
(5,825) (1,277) (2,210) (6,100) (1,052) (491)
---------- -------- -------- ---------- -------- --------
6,264 (428) (1,668) 36,885 (241) 1,023
---------- -------- -------- ---------- -------- --------
1,676,631 237,179 592,704 1,142,672 188,033 106,279
1,557,011 210,146 587,572 1,093,356 161,961 95,506
---------- -------- -------- ---------- -------- --------
119,620 27,033 5,132 49,316 26,072 10,773
0 0 674 0 4,342 353
---------- -------- -------- ---------- -------- --------
119,620 27,033 5,806 49,316 30,414 11,126
(1,643) (2,375) (11,504) (14,556) 601 569
0 0 0 0 0 0
---------- -------- -------- ---------- -------- --------
1,643 2,375 11,504 14,556 (601) (569)
---------- -------- -------- ---------- -------- --------
$ 127,527 $ 28,980 $ 15,642 $ 100,757 $ 29,572 $11,580
========== ======== ======== ========== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
13
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENT OF OPERATIONS (CONCLUDED)
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
------------------------------------
SVL JAS
INTERNATIONAL GROWTH
------------- ----------
<S> <C> <C>
INVESTMENT INCOME:
Income
Dividends............................................................................ $ 1,815 $ 14,909
Expenses
Mortality and Expense Risks Charges and Administrative Fees (Note 4)................. (16,024) (6,150)
---------- ----------
NET INVESTMENT INCOME (LOSS)............................................................. (14,209) 8,759
---------- ----------
REALIZED GAIN (LOSS) ON INVESTMENTS:
Proceeds from Sales.................................................................... 3,407,422 1,215,440
Cost of Securities Sold................................................................ 3,224,294 1,050,357
---------- ----------
Net Gain (Loss)...................................................................... 183,128 165,083
Capital Gain Distributions Received.................................................... 5,165 0
---------- ----------
NET REALIZED GAIN (LOSS)................................................................. 188,293 165,083
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Beginning of Period.................................................................... (37,761) 1,295
End of Period.......................................................................... 0 0
---------- ----------
NET UNREALIZED GAIN (LOSS)............................................................... 37,761 (1,295)
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS.......................... $ 211,845 $ 172,547
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
14
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------------------------
JAS - AGGRESSIVE JAS - WORLDWIDE JAS JAS - FLEXIBLE JAS - SHORT-TERM
GROWTH GROWTH BALANCED INCOME BOND
---------------- --------------- -------- -------------- ----------------
<S> <C> <C> <C> <C>
$ 13,606 $ 2,257 $ 2,889 $ 20,693 $ 32,284
(8,052) (3,991) (1,661) (3,790) (4,556)
---------- ---------- -------- -------- ----------
5,554 (1,734) 1,228 16,903 27,728
---------- ---------- -------- -------- ----------
2,396,695 1,053,405 307,063 677,281 2,284,227
2,124,243 943,812 275,076 632,554 2,275,122
---------- ---------- -------- -------- ----------
272,452 109,593 31,987 44,727 9,105
64 67 0 0 0
---------- ---------- -------- -------- ----------
272,516 109,660 31,987 44,727 9,105
72,580 (1,996) (6,245) (18,592) (6,252)
0 0 0 0 0
---------- ---------- -------- -------- ----------
(72,580) 1,996 6,245 18,592 6,252
---------- ---------- -------- -------- ----------
$ 205,490 $ 109,922 $39,460 $ 80,222 $ 43,085
========== ========== ======== ======== ==========
</TABLE>
- --------------------------------------------------------------------------------
15
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------
NBAMT
TOTAL GROWTH
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)................. $ 555,257 $ 20,451 $ (9,224) $ (3,605)
Net Realized Gain (Loss)..................... 5,890,840 (208,356) 318,256 (7,234)
Net Unrealized Gain (Loss) On Investments.... 3,497,440 74,877 (8,784) 8,600
------------ ------------ ----------- --------
Net Increase (Decrease) In Net Assets
Resulting from Operations.................. 9,943,537 (113,028) 300,248 (2,239)
------------ ------------ ----------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits........... 41,366,505 53,560,270 249,123 359,442
Net Transfers Between Sub-accounts........... 0 0 (1,107,325) 386,477
Surrenders................................... (10,154,466) (11,179,436) (172,730) (58,308)
------------ ------------ ----------- --------
Net Increase (Decrease) In Net Assets
Resulting From Capital Share
Transactions............................... 31,212,039 42,380,834 (1,030,932) 687,611
------------ ------------ ----------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS..................................... 41,155,576 42,267,806 (730,684) 685,372
NET ASSETS:
Beginning of Period.......................... 43,534,767 1,266,961 730,684 45,312
------------ ------------ ----------- --------
End of Period................................ $ 84,690,343 $ 43,534,767 $ 0 $ 730,684
============ ============ =========== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
16
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ---------------------------------------------------------------------------------------
NBAMT-LIMITED NBAMT
MATURITY BOND BALANCED NBAMT
------------------------------ ------------------------------ PARTNERS
YEAR ENDED YEAR ENDED -------------
DEC. 31, JAN. 20* THRU DEC. 31, JAN. 4* THRU JUN. 12* THRU
1995 DEC. 31, 1994 1995 DEC. 31, 1994 DEC. 31, 1995
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 100,627 $ (12,808) $ 8,713 $ (3,771) $ (3,299)
120,258 (3,549) 234,012 (6,628) 12,103
(13,949) 13,949 8,253 (8,253) 46,158
----------- ---------- ----------- -------- ----------
206,936 (2,408) 250,978 (18,652) 54,962
----------- ---------- ----------- -------- ----------
1,140,483 3,541,332 284,133 981,291 425,638
(3,293,409) (548,125) (1,369,431) 29,127 2,305,986
(336,036) (708,773) (105,668) (51,778) (6,092)
----------- ---------- ----------- -------- ----------
(2,488,962) 2,284,434 (1,190,966) 958,640 2,725,532
----------- ---------- ----------- -------- ----------
(2,282,026) 2,282,026 (939,988) 939,988 2,780,494
2,282,026 0 939,988 0 0
----------- ---------- ----------- -------- ----------
$ 0 $ 2,282,026 $ 0 $ 939,988 $ 2,780,494
=========== ========== =========== ======== ==========
</TABLE>
- --------------------------------------------------------------------------------
17
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------
AAF AAF
SMALL CAPITALIZATION GROWTH
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)...................... $ (27,252) $ (13,011) $ (20,259) $ (9,474)
Net Realized Gain (Loss).......................... 1,015,080 (51,309) 402,867 (16,829)
Net Unrealized Gain (Loss) On Investments......... (65,649) 92,257 185,826 77,643
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets Resulting
From Operations................................. 922,179 27,937 568,434 51,340
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits................ 1,553,855 1,642,052 1,852,564 1,155,761
Net Transfers Between Sub-accounts................ 607,263 436,497 3,091,666 828,667
Surrenders........................................ (377,209) (425,334) (314,980) (258,833)
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions................. 1,783,909 1,653,215 4,629,250 1,725,595
---------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS.......................................... 2,706,088 1,681,152 5,197,684 1,776,935
NET ASSETS:
Beginning of Period............................... 1,863,209 182,057 1,823,987 47,052
---------- ---------- ---------- ----------
End of Period..................................... $ 4,569,297 $ 1,863,209 $ 7,021,671 $ 1,823,987
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
18
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------------------------------------------------------------
AST - SELIGMAN AST - SELIGMAN
AAF - MIDCAP HENDERSON HENDERSON
GROWTH INTERNATIONAL EQUITY INTL SMALL CAP
------------------------------- ------------------------------- ---------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED MAY 1* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995
------------- ------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
$ (13,020) $ (4,115) $ (19,083) $ (16,752) $ (3,035)
359,458 2,520 (50,447) 30,239 4,501
(22,628) 29,711 224,005 (62,399) (3,510)
---------- -------- ---------- ----------- ----------
323,810 28,116 154,475 (48,912) (2,044)
---------- -------- ---------- ----------- ----------
1,602,947 472,855 502,827 2,070,903 735,596
658,117 159,097 2,930,457 982,813 686,043
(190,122) (62,011) (541,960) (1,068,514) (2,670)
---------- -------- ---------- ----------- ----------
2,070,942 569,941 2,891,324 1,985,202 1,418,969
---------- -------- ---------- ----------- ----------
2,394,752 598,057 3,045,799 1,936,290 1,416,925
632,773 34,716 2,064,427 128,137 0
---------- -------- ---------- ----------- ----------
$ 3,027,525 $ 632,773 $ 5,110,226 $ 2,064,427 $ 1,416,925
========== ======== ========== =========== ==========
</TABLE>
- --------------------------------------------------------------------------------
19
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------
AST AST
LORD ABBETT GROWTH & INCOME JANCAP GROWTH
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)...................... $ 6,418 $ (8,786) $ (13,547) $ (13,589)
Net Realized Gain (Loss).......................... 421,029 (6,088) 184,745 (53,045)
Net Unrealized Gain (Loss) On Investments......... 452,371 22,685 512,327 1,921
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets Resulting
From Operations................................. 879,818 7,811 683,525 (64,713)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits................ 1,668,658 1,634,907 1,244,816 1,644,051
Net Transfers Between Sub-accounts................ 1,893,405 1,067,560 1,692,035 568,663
Surrenders........................................ (377,686) (378,934) (395,583) (537,584)
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions................. 3,184,377 2,323,533 2,541,268 1,675,130
---------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS.......................................... 4,064,195 2,331,344 3,224,793 1,610,417
NET ASSETS:
Beginning of Period............................... 2,430,516 99,172 1,792,311 181,894
---------- ---------- ---------- ----------
End of Period..................................... $ 6,494,711 $ 2,430,516 $ 5,017,104 $ 1,792,311
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
20
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------------------------------------------
AST AST - FEDERATED AST - FEDERATED
MONEY MARKET UTILITY INCOME HIGH YIELD
------------------------------- ------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED JAN. 17* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 403,040 $ 142,930 $ 35,295 $ (3,368) $ 36,775 $ (7,781)
0 137 86,997 (25,279) 94,485 (8,632)
0 0 154,937 (11,262) 253,131 (3,175)
------------ ------------ ---------- ---------- ---------- ----------
403,040 143,067 277,229 (39,909) 384,391 (19,588)
------------ ------------ ---------- ---------- ---------- ----------
17,791,010 20,561,899 319,742 1,064,461 1,084,243 1,045,785
(14,985,879) (9,404,298) 795,403 118,585 1,503,618 403,588
(1,856,209) (2,645,914) (282,918) (345,397) (744,530) (259,122)
------------ ------------ ---------- ---------- ---------- ----------
948,922 8,511,687 832,227 837,649 1,843,331 1,190,251
------------ ------------ ---------- ---------- ---------- ----------
1,351,962 8,654,754 1,109,456 797,740 2,227,722 1,170,663
9,015,790 361,036 802,456 4,716 1,170,663 0
------------ ------------ ---------- ---------- ---------- ----------
$ 10,367,752 $ 9,015,790 $ 1,911,912 $ 802,456 $ 3,398,385 $ 1,170,663
============ ============ ========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
21
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------
AST - PHOENIX AST - PHOENIX
BALANCED ASSET CAPITAL GROWTH
-------------------------------- --------------------------------
YEAR ENDED YEAR ENDED
DEC. 31, YEAR ENDED DEC. 31, JAN. 11* THRU
1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)....................... $ 18,429 $ (9,076) $ (615) $ (1,788)
Net Realized Gain (Loss)........................... 39,693 (7,044) 56,753 (6,905)
Net Unrealized Gain (Loss) On Investments.......... 162,279 8,709 4,589 (4,589)
---------- ---------- --------- --------
Net Increase (Decrease) In Net Assets
Resulting From Operations........................ 220,401 (7,411) 60,727 (13,282)
---------- ---------- --------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits................. 145,633 1,671,380 60,791 242,064
Net Transfers Between Sub-accounts................. 1,766,825 163,736 (261,192) 78,148
Surrenders......................................... (385,500) (751,000) (74,041) (93,215)
---------- ---------- --------- --------
Net Increase (Decrease) In Net Assets
Resulting From Capital Share Transactions........ 1,526,958 1,084,116 (274,442) 226,997
---------- ---------- --------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS........................................... 1,747,359 1,076,705 (213,715) 213,715
NET ASSETS:
Beginning of Period................................ 1,138,795 62,090 213,715 0
---------- ---------- --------- --------
End of Period...................................... $2,886,154 $ 1,138,795 $ 0 $ 213,715
========== ========== ========= ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
22
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------------------
AST - T. ROWE PRICE AST - T. ROWE PRICE AST - T. ROWE
ASSET ALLOCATION INTERNATIONAL EQUITY PRICE NATURAL
------------------------------ ------------------------------ RESOURCES
YEAR ENDED YEAR ENDED -------------
DEC. 31, JAN. 4* THRU DEC. 31, JAN. 4* THRU MAY 19* THRU
1995 DEC. 31, 1994 1995 DEC. 31, 1994 DEC. 31, 1995
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 4,985 $ (8,353) $ (31,360) $ (20,516) $ (408)
35,938 (6,772) 189,759 (6,516) 623
108,000 9,104 246,132 (71,869) 8,578
---------- --------- ---------- ---------- --------
148,923 (6,021) 404,531 (98,901) 8,793
---------- --------- ---------- ---------- --------
172,468 980,530 1,831,025 2,584,608 25,830
229,988 85,064 1,815,568 1,175,638 268,840
(201,312) (333,630) (530,840) (801,814) (1,105)
---------- --------- ---------- ---------- --------
201,144 731,964 3,115,753 2,958,432 293,565
---------- --------- ---------- ---------- --------
350,067 725,943 3,520,284 2,859,531 302,358
725,943 0 2,859,531 0 0
---------- --------- ---------- ---------- --------
$1,076,010 $ 725,943 $6,379,815 $ 2,859,531 $ 302,358
========== ========= ========== ========== ========
</TABLE>
- --------------------------------------------------------------------------------
23
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------------------------------------------
AST - FOUNDERS AST - INVESCO
CAPITAL APPRECIATION EQUITY INCOME
--------------------------------- -------------------------------
YEAR ENDED JAN. 10* THRU YEAR ENDED JAN. 4* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)................. $ (7,045) $ (4,937) $ 1,405 $ (12,916)
Net Realized Gain (Loss)..................... 541,659 26,811 127,379 (18,005)
Net Unrealized Gain (Loss) On Investments.... 18,540 54,117 349,846 (11,342)
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets
Resulting From Operations.................. 553,154 75,991 478,630 (42,263)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits........... 746,112 788,882 927,382 1,625,871
Net Transfers Between Sub-accounts........... 984,142 286,927 1,068,051 358,856
Surrenders................................... (197,318) (122,594) (287,508) (493,300)
---------- ---------- ---------- ----------
Net Increase (Decrease) In Net Assets
Resulting From Capital Share
Transactions............................... 1,532,936 953,215 1,707,925 1,491,427
---------- ---------- ---------- ----------
TOTAL INCREASE (DECREASE) IN
NET ASSETS..................................... 2,086,090 1,029,206 2,186,555 1,449,164
NET ASSETS:
Beginning of Period.......................... 1,029,206 0 1,449,164 0
---------- ---------- ---------- ----------
End of Period................................ $ 3,115,296 $ 1,029,206 $ 3,635,719 $ 1,449,164
========== ========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
24
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------------------------------------------------------
AST - PIMCO
LIMITED
MATURITY AST - SCUDDER
AST - PIMCO BOND INTERNATIONAL BOND
TOTAL RETURN BOND ----------- ------------------------------
------------------------------- MAY 8* THRU MAY 18* THRU
YEAR ENDED JAN. 6* THRU DEC. 31, YEAR ENDED DEC. 31,
DEC. 31, 1995 DEC. 31, 1994 1995 DEC. 31, 1995 1994
------------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
$ 18,798 $ (18,563) $ (3,646) $ (276) $ (731)
79,082 (17,517) 2,172 5,671 (85)
639,196 (11,821) 32,616 49,460 (2,877)
---------- ---------- ---------- ---------- --------
737,076 (47,901) 31,142 54,855 (3,693)
---------- ---------- ---------- ---------- --------
2,886,195 2,260,277 297,651 507,501 142,551
4,398,745 765,338 3,834,604 582,592 144,045
(913,097) (507,138) (9,185) (39,481) (41,103)
---------- ---------- ---------- ---------- --------
6,371,843 2,518,477 4,123,070 1,050,612 245,493
---------- ---------- ---------- ---------- --------
7,108,919 2,470,576 4,154,212 1,105,467 241,800
2,470,576 0 0 241,800 0
---------- ---------- ---------- ---------- --------
$ 9,579,495 $ 2,470,576 $4,154,212 $ 1,347,267 $241,800
========== ========== ========== ========== ========
</TABLE>
- --------------------------------------------------------------------------------
25
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------------
AST-EAGLE
GROWTH EQUITY
---------------------------------------
YEAR ENDED JUL. 5* THRU
DEC. 31, 1995 DEC. 31, 1994
------------- -------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)....................................................... $ (628) $ (89)
Net Realized Gain (Loss)........................................................... 16,968 881
Net Unrealized Gain (Loss) On Investments.......................................... (571) 571
--------- --------
Net Increase (Decrease) In Net Assets Resulting
from Operations.................................................................. 15,769 1,363
--------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits................................................. 22,262 29,250
Net Transfers Between Sub-accounts................................................. (45,656) (1,565)
Surrenders......................................................................... (8,511) (12,912)
--------- --------
Net Increase (Decrease) In Net Assets Resulting
From Capital Share Transactions.................................................. (31,905) 14,773
--------- --------
TOTAL INCREASE (DECREASE)
IN NET ASSETS........................................................................ (16,136) 16,136
NET ASSETS:
Beginning of Period................................................................ 16,136 0
--------- --------
End of Period...................................................................... $ 0 $ 16,136
========= ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
26
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- -----------------------------------------------------------------------------------------------------------------------------
AVP
AST - BERGER AVP AVP GROWTH &
CAPITAL GROWTH ST MULTI-MKT PREMIER GROWTH INCOME
------------------------------- ------------------------------- ------------------------------- -------------
YEAR ENDED NOV. 23* THRU YEAR ENDED JAN. 23* THRU YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (5,289) $ (4) $ (2,555) $ 5,745 $ (5,917) $ (3,114) $ 1,166
39,803 0 (3,664) (5,466) 286,514 (147) 204,460
100,554 31 20,879 (20,879) 3,688 (3,563) 5,287
-------- -------- --------- ---- --------
135,068 27 14,660 (20,600) 284,285 (6,824) 210,913
-------- -------- --------- ---- --------
337,296 1,127 31,165 379,028 207,367 448,844 126,547
627,438 32,874 (283,372) (19,980) (997,887) 317,165 (926,998)
(35,815) 0 (41,818) (59,083) (224,679) (73,311) (72,002)
-------- -------- --------- ---- --------
928,919 34,001 (294,025) 299,965 (1,015,199) 692,698 (872,453)
-------- -------- --------- ---- --------
1,063,987 34,028 (279,365) 279,365 (730,914) 685,874 (661,540)
34,028 0 279,365 0 730,914 45,040 661,540
-------- -------- --------- ---- -------- --------- ---------
$ 1,098,015 $34,028 $ 0 $ 279,365 $ 0 $ 730,914 $ 0
======== ======== ========= ==== ======== ========= =========
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ----------------------------------
AVP
GROWTH &
INCOME
-------------
YEAR ENDED
DEC. 31, 1994
-------------
<S> <C>
$ 3,911
(2,671)
(5,389)
(4,149)
360,030
341,456
(40,389)
661,097
656,948
4,592
---------
$ 661,540
=========
</TABLE>
- --------------------------------------------------------------------------------
27
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
------------------------------------------------------------------
AVP
AVP - U.S. GOV'T TOTAL RETURN
HIGH GRADE SECURITIES ------------------------------
------------------------------- YEAR ENDED
YEAR ENDED JAN. 10* THRU DEC. 31, FEB. 17* THRU
DEC. 31, 1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)................. $ 6,264 $ 13,156 $ (428) $ (316)
Net Realized Gain (Loss)..................... 119,620 (26,858) 27,033 (259)
Net Unrealized Gain (Loss) On Investments.... 1,643 (1,643) 2,375 (2,375)
--------- --------- --------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Operations............................ 127,527 (15,345) 28,980 (2,950)
--------- --------- --------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits........... 66,402 496,927 15,460 75,384
Net Transfers Between Sub-accounts........... (830,445) 481,516 (166,251) 90,311
Surrenders................................... (173,603) (152,979) (35,161) (5,773)
--------- --------- --------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Capital Share Transactions............ (937,646) 825,464 (185,952) 159,922
--------- --------- --------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS..................................... (810,119) 810,119 (156,972) 156,972
NET ASSETS:
Beginning of Period.......................... 810,119 0 156,972 0
--------- --------- --------- --------
End of Period................................ $ 0 $ 810,119 $ 0 $ 156,972
========= ========= ========= ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
28
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ------------------------------------------------------------------------------------
AVP SVL
INTERNATIONAL BOND
----------------------------------- -----------------------------------
YEAR ENDED JAN. 24* THRU YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
$ (1,668) $ (1,206) $ 36,885 $ 21,533
5,806 14,916 49,316 (19,614)
11,504 (11,504) 14,556 (14,556)
--------- -------- --------- ---------
15,642 2,206 100,757 (12,637)
--------- -------- --------- ---------
3,176 372,251 81,738 655,147
(320,600) 19,060 (731,953) 241,053
(56,218) (35,517) (163,053) (177,113)
--------- -------- --------- ---------
(373,642) 355,794 (813,268) 719,087
--------- -------- --------- ---------
(358,000) 358,000 (712,511) 706,450
358,000 0 712,511 6,061
--------- -------- --------- ---------
$ 0 $ 358,000 $ 0 $ 712,511
========= ======== ========= =========
</TABLE>
- --------------------------------------------------------------------------------
29
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONT'D)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------------------------------------------
SVL - CAPITAL SVL
GROWTH BALANCED
--------------------------------- -------------------------------
YEAR ENDED JAN. 21* THRU YEAR ENDED FEB. 4* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)................. $ (241) $ (718) $ 1,023 $ 850
Net Realized Gain (Loss)..................... 30,414 (2,035) 11,126 (1,628)
Net Unrealized Gain (Loss) On Investments.... (601) 601 (569) 569
--------- -------- -------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Operations............................ 29,572 (2,152) 11,580 (209)
--------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits........... 2,999 153,772 20,059 96,871
Net Transfers Between Sub-accounts........... (123,277) 1,344 (62,709) 4,832
Surrenders................................... (42,330) (19,928) (32,817) (37,607)
--------- -------- -------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Capital Share Transactions............ (162,608) 135,188 (75,467) 64,096
--------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS..................................... (133,036) 133,036 (63,887) 63,887
NET ASSETS:
Beginning of Period.......................... 133,036 0 63,887 0
--------- -------- -------- --------
End of Period................................ $ 0 $ 133,036 $ 0 $ 63,887
========= ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
30
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ----------------------------------------------------------------------------------------
SVL JAS
INTERNATIONAL GROWTH
------------------------------------- -------------------------------------
YEAR ENDED JAN. 5* THRU YEAR ENDED JAN. 10* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
$ (14,209) $ (8,010) $ 8,759 $ (1,457)
188,293 3,955 165,083 (2,092)
37,761 (37,761) (1,295) 1,295
----------- ---------- --------- --------
211,845 (41,816) 172,547 (2,254)
----------- ---------- --------- --------
449,850 1,137,770 201,988 359,108
(1,691,446) 394,584 (648,651) 72,716
(269,216) (191,571) (88,402) (67,052)
----------- ---------- --------- --------
(1,510,812) 1,340,783 (535,065) 364,772
----------- ---------- --------- --------
(1,298,967) 1,298,967 (362,518) 362,518
1,298,967 0 362,518 0
----------- ---------- --------- --------
$ 0 $ 1,298,967 $ 0 $ 362,518
=========== ========== ========= ========
</TABLE>
- --------------------------------------------------------------------------------
31
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------
JAS - AGGRESSIVE JAS - WORLDWIDE
GROWTH GROWTH
------------------------------ ------------------------------
YEAR ENDED YEAR ENDED
DEC. 31, YEAR ENDED DEC. 31, JAN. 5* THRU
1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)................. $ 5,554 $ 1,689 $ (1,734) $ (2,599)
Net Realized Gain (Loss)..................... 272,516 21,165 109,660 (351)
Net Unrealized Gain (Loss) On Investments.... (72,580) 71,191 1,996 (1,996)
---------- -------- -------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Operations............................ 205,490 94,045 109,922 (4,946)
---------- -------- -------- --------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits........... 190,963 501,246 166,350 280,655
Net Transfers Between Sub-accounts........... (1,134,726) 313,628 (464,669) 60,543
Surrenders................................... (104,507) (97,676) (78,076) (69,779)
---------- -------- -------- --------
Net Increase (Decrease) In Net Assets
Resulting
From Capital Share Transactions............ (1,048,270) 717,198 (376,395) 271,419
---------- -------- -------- --------
TOTAL INCREASE (DECREASE) IN
NET ASSETS..................................... (842,780) 811,243 (266,473) 266,473
NET ASSETS:
Beginning of Period.......................... 842,780 31,537 266,473 0
---------- -------- -------- --------
End of Period................................ $ 0 $ 842,780 $ 0 $ 266,473
========== ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
* Date Operations Commenced.
32
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- -----------------------------------------------------------------------------------------------------------
JAS JAS - FLEXIBLE JAS - SHORT-TERM
BALANCED INCOME BOND
------------------------------- ------------------------------- -------------------------------
YEAR ENDED JAN. 25* THRU YEAR ENDED YEAR ENDED YEAR ENDED JAN. 26* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,228 $ 239 $ 16,903 $ 13,725 $ 27,728 $ 8,126
31,987 81 44,727 (6,726) 9,105 223
6,245 (6,245) 18,592 (18,327) 6,252 (6,252)
--------- -------- --------- --------- ----------- ---------
39,460 (5,925) 80,222 (11,328) 43,085 2,097
--------- -------- --------- --------- ----------- ---------
2,195 264,388 20,194 578,188 1,364,271 899,382
(106,274) (10,505) (480,612) 36,510 (1,708,024) (461,945)
(182,758) (581) (66,925) (189,798) (134,795) (4,071)
--------- -------- --------- --------- ----------- ---------
(286,837) 253,302 (527,343) 424,900 (478,548) 433,366
--------- -------- --------- --------- ----------- ---------
(247,377) 247,377 (447,121) 413,572 (435,463) 435,463
247,377 0 447,121 33,549 435,463 0
--------- -------- --------- --------- ----------- ---------
$ 0 $ 247,377 $ 0 $ 447,121 $ 0 $ 435,463
========= ======== ========= ========= =========== =========
</TABLE>
- --------------------------------------------------------------------------------
33
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
NOTES TO
FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION
American Skandia Life Assurance Corporation Variable Account B -- Class 2 (the
"Account") is a separate investment account of American Skandia Life Assurance
Corporation ("American Skandia"). The Account is registered with the SEC under
the Investment Company Act of 1940 as a unit investment trust. The Account
commenced operations December 16, 1993.
As of December 31, 1995 the Account consisted of twenty-one sub-accounts, each
of which invests only in a single corresponding portfolio of either the
Neuberger and Berman Advisers Management Trust, The Alger American Fund or the
American Skandia Trust (the "Trusts"). Neuberger and Berman Management, Inc. is
the advisor for the Neuberger and Berman Advisers Management Trust. Fred Alger
Management, Inc. is the advisor for The Alger American Fund. American Skandia
Investment Services Incorporated is the investment manager for the American
Skandia Trust, while Seligman Henderson Co., Inc., Lord Abbett & Co., Janus
Capital Corporation, Federated Investment Counseling, Phoenix Investment
Counsel, Inc., J. P. Morgan Investment Management Incorporated, T. Rowe Price
Associates Inc., Rowe Price-Fleming International, Inc., Founders Asset
Management, Inc., INVESCO Trust Company, Pacific Investment Management Company,
Scudder, Stevens & Clark, Inc. and Berger Associates, Inc. are the sub-advisors.
The investment advisors are paid fees for their services by the respective
Trusts.
The following four Class 2 sub-accounts have commenced operations in 1995: the
NBAMT-Partners on June 12, 1995; the AST-Seligman Henderson International Small
Cap on May 1, 1995; the AST- T. Rowe Price Natural Resources on May 19, 1995;
and the AST-PIMCO Limited Maturity Bond on May 8, 1995.
Effective May 1, 1995 the AST-Seligman Henderson International Equity
sub-account changed its name from Henderson International Growth.
The following twenty-one sub-accounts ceased operations on December 29, 1995;
NBAMT-Growth; the NBAMT-Limited Maturity Bond; the NBAMT-Balanced; the
AST-Phoenix Capital Growth; the AST-Eagle Growth Equity; the AVP-Short-Term
Multi-Market; the AVP-Premier Growth; the AVP-Growth & Income; the AVP-U.S.
Government/High Grade Securities; the AVP-Total Return; the AVP-International;
the SVL-Bond; the SVL-Capital Growth; the SVL-Balanced; the SVL-International;
the JAS-Growth; the JAS-Aggressive Growth; the JAS-Worldwide Growth; the
JAS-Balanced; the JAS-Flexible Income and the JAS-Short-Term Bond.
2. VALUATION OF INVESTMENTS
The market value of the investments in the sub-accounts is based on the net
asset values of the Trust shares held at the end of the current period.
Transactions are accounted for on the trade date and dividend income is
recognized on an accrual basis. Realized gains and losses on sales of
investments are determined on a first-in first-out basis.
3. INCOME TAXES
American Skandia does not expect to incur any Federal income tax liability on
earnings, or realized capital gains attributable to the Account, therefore, no
charges for Federal income taxes are currently deducted from the Account. If
American Skandia incurs income taxes attributable to the Account, or determines
that such taxes will be incurred, it may make a charge for such taxes against
the Account.
34
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
NOTES TO
FINANCIAL STATEMENTS (CONT'D)
- --------------------------------------------------------------------------------
Under current laws, American Skandia may incur state and local income taxes (in
addition to premium tax) in several states. The company does not anticipate that
these will be significant. However, American Skandia may make charges to the
Account in the event that the amount of these taxes change.
4. CONTRACT CHARGES
The following contract charges are paid to American Skandia:
Mortality and Expense Risk Charges -- Charged daily against the Account at
an annual rate of .65% of the net assets.
Administrative Fees -- Charged daily against the Account at an annual rate of
.25% of the net assets.
Maintenance Fee -- A maintenance fee equaling 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.
35
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
NOTES TO
FINANCIAL STATEMENTS (CONT'D)
- --------------------------------------------------------------------------------
5. CHANGES IN THE UNITS OUTSTANDING
<TABLE>
<CAPTION>
-------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------
NBAMT - LIMITED
NBAMT - GROWTH MATURITY BOND
----------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED JAN. 20* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................ 76,158 4,425 231,497 0
Units Purchased.......................................... 21,029 36,682 109,675 359,217
Units Transferred Between Sub-accounts................... (83,108) 41,144 (308,596) (55,815)
Units Surrendered........................................ (14,079) (6,093) (32,576) (71,905)
------- ------- ------- --------
Units Outstanding End of the Period...................... 0 76,158 0 231,497
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------
AAF AST - SELIGMAN HENDERSON
MIDCAP GROWTH INTERNATIONAL EQUITY
----------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................ 61,104 3,255 199,313 12,521
Units Purchased.......................................... 111,398 47,595 46,746 197,417
Units Transferred Between Sub-accounts................... 45,805 16,888 259,303 91,134
Units Surrendered........................................ (14,080) (6,634) (52,773) (101,759)
------- ------- ------- --------
Units Outstanding End of the Period...................... 204,227 61,104 452,589 199,313
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------
AST - FEDERATED AST - FEDERATED
UTILITY INCOME HIGH YIELD
----------------------------- -----------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED JAN. 17* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................ 86,555 467 122,508 0
Units Purchased.......................................... 31,714 110,844 102,869 107,541
Units Transferred Between Sub-accounts................... 74,384 12,204 145,895 41,664
Units Surrendered........................................ (27,677) (36,960) (71,165) (26,697)
------- ------- ------- --------
Units Outstanding End of the Period...................... 164,976 86,555 300,107 122,508
======= ======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------------
AST - T. ROWE PRICE AST - T. ROWE PRICE
INTERNATIONAL EQUITY NATURAL RESOURCES
----------------------------- -------------------
YEAR ENDED JAN. 4* THRU MAY 19* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995
------------- ------------- -------------------
<S> <C> <C> <C>
Units Outstanding Beginning of the Period................ 301,423 0 0
Units Purchased.......................................... 182,552 264,699 2,488
Units Transferred Between Sub-accounts................... 182,488 120,989 25,033
Units Surrendered........................................ (55,612) (84,265) (142)
------- ------- -------
Units Outstanding End of the Period...................... 610,851 301,423 27,379
======= ======= =======
</TABLE>
- --------------------------------------------------------------------------------
* Date Operations Commenced.
36
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
--------------------------------------------------------------------------------------------------------------
NBAMT AAF - SMALL
NBAMT - BALANCED PARTNERS CAPITALIZATION AAF - GROWTH
-------------------------------------- ------------- ------------------------------- -------------
YEAR ENDED JAN. 4* THRU JUN. 12* THRU YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995
-------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
97,266 0 0 187,387 17,264 177,825
26,464 99,729 36,516 113,725 169,945 135,786
(114,178) 3,025 193,958 55,814 47,423 219,573
(9,552) (5,488) (440) (35,592) (47,245) (26,642)
-------- ------ ------- ------- ------- -------
0 97,266 230,034 321,334 187,387 506,542
======== ====== ======= ======= ======= =======
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ----------------------------------
AAF - GROWTH
-------------
YEAR ENDED
DEC. 31, 1994
----------------
<S> <C>
4,589
117,603
82,538
(26,905)
-------
177,825
=======
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
--------------------------------------------------------------------------------------------------------------
AST - SELIGMAN HEND. AST - LORD ABBETT AST - MONEY
INTL SMALL CAP GROWTH & INCOME AST - JANCAP GROWTH MARKET
-------------------- ------------------------------- ------------------------------- -------------
MAY 1* THRU YEAR ENDED DEC. 21* THRU YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995
-------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
0 238,128 9,793 187,924 17,956 880,903
72,430 138,629 161,906 99,388 166,950 1,692,225
66,470 153,819 104,811 133,317 59,974 (1,426,490)
(909) (32,496) (38,382) (35,928) (56,956) (177,972)
------- ------- ------- ------- ------- -------
137,991 498,080 238,128 384,701 187,924 968,666
======= ======= ======= ======= ======= =======
<CAPTION>
CLASS 2 SUB-ACCOUNTS INVESTING IN:
- ----------------------------------
AST - MONEY
MARKET
------------
YEAR ENDED
DEC. 31, 1994
----------------
<S> <C>
36,093
2,038,930
(931,463)
(262,657)
-------
880,903
=======
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
--------------------------------------------------------------------------------------------------------------
AST - PHOENIX AST - PHOENIX AST - T. ROWE PRICE
BALANCED ASSET CAPITAL GROWTH ASSET ALLOCATION
-------------------------------------- ------------------------------- -------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED JAN. 11* THRU YEAR ENDED JAN. 4* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
-------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
114,927 6,185 23,203 0 74,058 0
14,069 168,492 5,700 24,865 15,761 99,783
147,198 16,570 (22,408) 8,251 19,141 8,434
(36,457) (76,320) (6,495) (9,913) (19,173) (34,159)
------- ------- ------- ------ ------- -------
239,737 114,927 0 23,203 89,787 74,058
======= ======= ======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
--------------------------------------------------------------------------------------------------------------
AST - FOUNDERS AST - INVESCO AST - PIMCO TOTAL
CAP. APPRECIATION EQUITY INCOME RETURN BOND
-------------------------------------- ------------------------------- -------------------------------
YEAR ENDED JAN. 10* THRU YEAR ENDED JAN. 4* THRU YEAR ENDED JAN. 6* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
-------------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
96,278 0 150,719 0 256,950 0
58,187 79,701 78,361 165,131 268,109 231,757
83,179 29,469 89,676 36,322 409,444 77,945
(15,804) (12,892) (25,416) (50,734) (88,147) (52,752)
------- ------- ------- ------- ------- --------
221,840 96,278 293,340 150,719 846,356 256,950
======= ======= ======= ======= ======= ========
<CAPTION>
----------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------
AST - SCUDDER
AST - PIMCO LTD. INTERNATIONAL BOND
MATURITY BOND ------------------------------
---------------- MAY 18* THRU
MAY 8* THRU YEAR ENDED DEC. 31,
DEC. 31, 1995 DEC. 31, 1995 1994
---------------- ------------- ------------
<S> <C> <C> <C>
0 25,171 0
29,331 49,331 14,630
370,820 56,647 14,871
(993) (3,776) (4,330)
--------- ------ -------
399,158 127,373 25,171
========= ====== =======
</TABLE>
- --------------------------------------------------------------------------------
37
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 2
NOTES TO
FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
-------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------
AST - EAGLE AST - BERGER
GROWTH EQUITY CAPITAL GROWTH
----------------------------- -----------------------------
YEAR ENDED JUL. 5* THRU YEAR ENDED NOV. 23* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................... 1,634 0 3,419 0
Units Purchased............................................. 1,853 2,931 29,846 117
Units Transferred Between Sub-accounts...................... (2,684) 0 59,519 3,302
Units Surrendered........................................... (803) (1,297) (3,310) 0
------ ------ ------- ------
Units Outstanding End of the Period......................... 0 1,634 89,474 3,419
====== ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------
AVP - TOTAL RETURN AVP - INTERNATIONAL
----------------------------- -----------------------------
YEAR ENDED FEB. 17* THRU YEAR ENDED JAN. 24* THRU
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................... 16,344 0 33,633 0
Units Purchased............................................. 1,465 7,662 290 34,799
Units Transferred Between Sub-accounts...................... (14,355) 9,258 (28,561) 2,055
Units Surrendered........................................... (3,454) (576) (5,362) (3,221)
------ ------ ------- ------
Units Outstanding End of the Period......................... 0 16,344 0 33,633
====== ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------------
JAS - GROWTH JAS - AGGRESSIVE GROWTH
----------------------------- -----------------------------
YEAR ENDED JAN. 10* THRU YEAR ENDED YEAR ENDED
DEC. 31, 1995 DEC. 31, 1994 DEC. 31, 1995 DEC. 31, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period................... 34,594 0 62,288 2,674
Units Purchased............................................. 17,766 34,196 13,717 42,847
Units Transferred Between Sub-accounts...................... (44,966) 6,714 (68,934) 24,792
Units Surrendered........................................... (7,394) (6,316) (7,071) (8,025)
------ ------ ------- ------
Units Outstanding End of the Period......................... 0 34,594 0 62,288
====== ====== ======= ======
</TABLE>
- --------------------------------------------------------------------------------
* Date Operations Commenced.
38
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------------------------------------------------------------------------
AVP - ST AVP - GROWTH
MULTI-MKT AVP - PREMIER GROWTH & INCOME
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, JAN. 23* THRU DEC. 31, YEAR ENDED DEC. 31, YEAR ENDED
1995 DEC. 31, 1994 1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------ ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
30,330 0 75,250 4,437 65,886 449
3,360 38,258 16,214 45,774 10,154 35,995
(29,048) (2,001) (70,502) 32,488 (69,773) 33,535
(4,642) (5,927) (20,962) (7,449) (6,267) (4,093)
------ ------- ------- ------ ------ -------
0 30,330 0 75,250 0 65,886
====== ======= ======= ====== ====== =======
<CAPTION>
----------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------
AVP - U.S. GOV'T
HIGH GRADE SECS.
---------------------------------
YEAR ENDED
DEC. 31, JAN. 10* THRU
1995 DEC. 31, 1994
------------ -------------
<S> <C>
85,679 0
6,617 51,331
(75,458) 50,457
(16,838) (16,109)
-------- -------
0 85,679
======== =======
<CAPTION>
----------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
----------------------------------------------------------------------------------------------------
SVL - BOND GROWTH SVL - BALANCED
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, YEAR ENDED DEC. 31, JAN. 21* THRU DEC. 31, FEB. 4* THRU
1995 DEC. 31, 1994 1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------ ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
75,644 604 9,998 0 6,471 0
7,937 68,497 108 11,338 1,745 9,808
(67,415) 25,324 (7,486) 95 (5,086) 544
(16,166) (18,781) (2,620) (1,435) (3,130) (3,881)
------ ------- ------- ------ ------ -------
0 75,644 0 9,998 0 6,471
====== ======= ======= ====== ====== =======
<CAPTION>
---------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------
SYL
INTERNATIONAL
---------------------------------
YEAR ENDED
DEC. 31, JAN. 5* THRU
1995 DEC. 31, 1994
--------- -------------
<S> <C>
122,549 0
41,598 104,506
(140,158) 35,725
(23,989) (17,682)
-------- -------
0 122,549
======== =======
<CAPTION>
-----------------------------------------------------------------------------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------------------------------------
JAS - WORLDWIDE JAS - FLEXIBLE
GROWTH JAS - BALANCED INCOME
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED
DEC. 31, JAN. 5* THRU DEC. 31, JAN. 25* THRU DEC. 31, YEAR ENDED
1995 DEC. 31, 1994 1995 DEC. 31, 1994 1995 DEC. 31, 1994
------------ ------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
22,365 0 23,225 0 45,477 3,334
12,733 23,302 197 24,241 1,880 57,696
(28,908) 4,869 (8,428) (963) (41,119) 3,546
(6,190) (5,806) (14,994) (53) (6,238) (19,099)
------ ------- ------- ------ ------ -------
0 22,365 0 23,225 0 45,477
====== ======= ======= ====== ====== =======
<CAPTION>
---------------------------------
CLASS 2 SUB-ACCOUNTS INVESTING IN:
---------------------------------
JAS - SHORT-TERM
BOND
---------------------------------
YEAR ENDED
DEC. 31, JAN. 26* THRU
1995 DEC. 31, 1994
------------ -------------
<S> <C>
43,662 0
133,413 90,465
(164,153) (46,404)
(12,922) (399)
-------- -------
0 43,662
======== =======
</TABLE>
- -------------------------------------------------------------
39
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED
DECEMBER 31, 1995 FINANCIAL STATEMENTS OF THE ALGER AMERICAN FUND FOLLOW AT THIS
POINT. THE FINANCIAL STATEMENTS WERE FILED WITH THE COMMISSION VIA THE EDGAR
FORMAT ON FEBRUARY 28, 1996; FORM TYPE N-30D; FILE # 811-5550. THE FINANCIAL
STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE NOT AVAILABLE TO OWNERS
OF THE LIFEVEST PERSONAL SECURITY ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN
ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN II ANNUITIES NOR THE ALLIANCE CAPITAL
NAVIGATOR ANNUITIES.]
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED
DECEMBER 31, 1995 FINANCIAL STATEMENTS OF THE NEUBERGER & BERMAN ADVISORS
MANAGEMENT TRUST FOLLOW AT THIS POINT. THE FINANCIAL STATEMENTS WERE FILED WITH
THE COMMISSION VIA THE EDGAR FORMAT ON FEBRUARY 28, 1996; FORM TYPE N-30D; FILE
#811-04255. THE FINANCIAL STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE
NOT AVAILABLE TO OWNERS OF THE LIFEVEST PERSONAL SECURITY ANNUITIES, AMERICAN
SKANDIA ADVISORS PLAN ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN II ANNUITIES NOR
THE ALLIANCE CAPITAL NAVIGATOR ANNUITIES.]
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED
DECEMBER 31, 1995 FINANCIAL STATEMENTS OF THE AMERICAN SKANDIA TRUST FUND FOLLOW
AT THIS POINT. THE FINANCIAL STATEMENTS WERE FILED WITH THE COMMISSION VIA THE
EDGAR FORMAT ON MARCH 7, 1996; FORM TYPE N-30D; FILE # 811-05186. THE FINANCIAL
STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE NOT AVAILABLE TO OWNERS
OF THE LIFEVEST PERSONAL SECURITY ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN
ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN II ANNUITIES NOR THE ALLIANCE CAPITAL
NAVIGATOR ANNUITIES.]
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED DECEMBER
31, 1995 FINANCIAL STATEMENTS OF THE ALLIANCE VARIABLE PRODUCTS SERIES FUND,
INC. FOLLOW AT THIS POINT. THE FINANCIAL STATEMENTS WERE FILED WITH THE
COMMISSION VIA THE EDGAR FORMAT ON FEBRUARY 28, 1996; FORM TYPE N-30B-2; FILE
# 811-5398. THE FINANCIAL STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE
NOT AVAILABLE TO OWNERS OF THE LIFEVEST PERSONAL SECURITY ANNUITIES, AMERICAN
SKANDIA ADVISORS PLAN ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN II ANNUITIES NOR
THE ALLIANCE CAPITAL NAVIGATOR ANNUITIES.]
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED DECEMBER
31, 1995 FINANCIAL STATEMENTS OF THE SCUDDER VARIABLE LIFE INVESTMENT FUND
FOLLOW AT THIS POINT. THE FINANCIAL STATEMENTS WERE FILED WITH THE COMMISSION
VIA THE EDGAR FORMAT ON FEBRUARY 28, 1996; FORM TYPE N-30D; FILE # 811-4257. THE
FINANCIAL STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE NOT AVAILABLE
TO OWNERS OF THE LIFEVEST PERSONAL SECURITY ANNUITIES, AMERICAN SKANDIA ADVISORS
PLAN ANNUITIES, AMERICAN SKANDIA ADVISORS PLAN II ANNUITIES NOR THE ALLIANCE
CAPITAL NAVIGATOR ANNUITIES.]
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED
DECEMBER 31, 1995 FINANCIAL STATEMENTS OF THE JANUS ASPEN SERIES FOLLOW AT THIS
POINT. THE FINANCIAL STATEMENTS WERE FILED WITH THE COMMISSION VIA THE EDGAR
FORMAT ON FEBRUARY 28, 1996; FORM TYPE N-30D; FILE #811-07736. THE FINANCIAL
STATEMENTS INCLUDE INFORMATION ON PORTFOLIOS WHICH ARE NOT AVAILABLE TO OWNERS
OF THE ADVISORS SELECT ANNUITY, THE ADVISORS CHOICE ANNUITY NOR THE ADVISORS
DESIGN ANNUITY.]
PART C
OTHER INFORMATION
<PAGE>
Item 24. Financial Statements and Exhibits:
(a) All financial statements are included in Parts A & B of this
Registration Statement.
(b) Exhibits are attached as indicated.
(1) Copy of the resolution of the board of directors of Depositor
authorizing the establishment of the Registrant for Separate Account B
(previously filed in the initial Registration Statement of Registration
Statement No. 33-19363, filed December 30, 1987).
(2) Not applicable. American Skandia Life Assurance Corporation maintains
custody of all assets.
(3) (a) Form of Revised Principal Underwriting Agreement between American
Skandia Life Assurance Corporation and American Skandia Marketing, Incorporated,
formerly Skandia Life Equity Sales Corporation (previously filed in
Post-Effective Amendment No. 3 to Registration Statement No. 33-44436, filed
April 20, 1993).
(b) Form of Revised Dealer Agreement (previously filed in Post-Effective
Amendment No. 3 to Registration Statement No. 33-44436, filed April 20, 1993).
(4) Copy of the form of the Annuity (previously filed in Pre-Effective
Amendment No. 1 to this Registration Statement filed November 9, 1993).
(5) Copy of the application form used with the annuity contracts
(previously filed in Post-Effective Amendment No. 4, filed February 17, 1995).
(6) (a) Copy of the certificate of incorporation of American Skandia Life
Assurance Corporation (previously filed in Pre-Effective Amendment No. 2 to
Registration Statement No. 33-19363, filed July 27, 1988).
(b) Copy of the By-Laws of American Skandia Life Assurance Corporation
(previously filed in Pre-Effective Amendment No. 2 to Registration Statement No.
33-19363, filed July 27, 1988).
(7) Not applicable.
(8) Agreements between Depositor and:
(a) Neuberger & Berman Advisers Management Trust (previously filed in
Post-Effective No. 5 to Registration Statement No. 33-19363, filed February 28,
1990).
(b) The Alger American Fund (previously filed in Post-Effective No. 5 to
Registration Statement No. 33-19363, filed February 28, 1990).
(c) Alliance Variable Products Series Fund, Inc. (previously filed in
Pre-Effective Amendment No. 1 to Registration Statement No. 33-44436, filed
March 30, 1992).
(d) American Skandia Trust (previously filed in Post-Effective Amendment
No. 5 to Registration Statement No. 33-19363, filed February 28, 1990. At such
time, what later became American Skandia Trust was known as the Henderson Global
Asset Trust).
(e) Scudder Variable Life Investment Fund, its advisor and distributor
(previously filed in Pre-Effective Amendment No. 1 to this Registration
Statement filed November 9, 1993).
(f) Janus Aspen Series (previously filed in Pre-Effective Amendment No. 1
to this Registration Statement filed November 9, 1993).
(9) Opinion and consent of Werner & Kennedy.
(10) Consent of Deloitte & Touche LLP.
(11) Not applicable.
(12) Not applicable.
(13) Calculation of Performance Information for Advertisement of
Performance (previously filed in Pre-Effective Amendment No. 1 to this
Registration Statement filed November 9, 1993).
(14) Not applicable.
<TABLE>
<CAPTION>
Item 25. Directors and Officers of the Depositor: The Directors and Officers of the Depositor are as follows:
<S> <C> <C>
Name/ Position with American Skandia
Age Life Assurance Corporation Principal Occupation
Alan Blank Employee Vice President and,
47 National Sales Manager:
American Skandia
Marketing, Incorporated
Mr. Blank joined us in 1994. He previously held the position of Vice-Chairman at Liberty Securities.
Gordon C. Boronow* President President and
43 and Chief Chief Operating Officer:
Operating Officer, American Skandia Life
Director (since July, 1991) Assurance Corporation
Nancy F. Brunetti Senior Vice President, Senior Vice President, Business and
34 Business and Application Application Development:
Development American Skandia Life
Director (since February, 1996) Assurance Corporation
Ms. Brunetti joined us in 1992. She previously held the position of Senior Business Analyst at Monarch Life Insurance Company.
Malcolm M. Campbell Director (since April, 1991) Director of Operations,
40 Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Jan R. Carendi* Chief Executive Executive Vice President and
51 Officer and Member of Corporate Management Group:
Chairman of the Skandia Insurance Company Ltd.
Board of Directors
Director (since May, 1988)
Lincoln R. Collins Senior Vice President, Senior Vice President,
Product Management Product Management:
35 Director (since February, 1996) American Skandia Life
Assurance Corporation
Henrik Danckwardt Director (since July, 1991) Director of Finance
42 and Administration,
Assurance and Financial
Services Division:
Skandia Insurance Company Ltd.
Wade A. Dokken Director (since July, 1991) Director:
36 and Employee American Skandia Life
Assurance Corporation;
President, Chief Operating Officer
and Chief Marketing Officer:
American Skandia Marketing, Incorporated
N. David Kuperstock Vice President, Vice President,
44 Product Development Product Development:
American Skandia Life
Assurance Corporation
Thomas M. Mazzaferro Executive Vice President and Executive Vice President and
43 Chief Financial Officer, Chief Financial Officer:
Director (since October, 1994) American Skandia Life
Assurance Corporation
Dianne B. Michael Senior Vice President, Senior Vice President,
41 Customer Service Customer Service:
Director (since February, 1996) American Skandia Life
Assurance Corporation
Ms. Michael joined us in 1995. She previously held the position of Vice President with J. P. Morgan Investment Management Inc.
Gunnar Moberg Director (since November, 1994) Director - Marketing and Sales,
41 Assurances and Financial
Services Division:
Skandia Insurance Company Ltd.
M. Patricia Paez Assistant Vice President Assistant Vice President
35 and Corporate Secretary and Corporate Secretary:
American Skandia Life
Assurance Corporation
Don Thomas Peck Employee Vice President,
52 National Sales Manager:
American Skandia
Marketing, Incorporated
Mr. Peck joined us in 1995. He previously held the position of Regional Vice President with MFS Financial Services Inc.
Rodney D. Runestad Vice President and Vice President and
46 Valuation Actuary Valuation Actuary:
American Skandia Life
Assurance Corporation
Hayward Sawyer Employee Vice President and
51 National Sales Manager:
American Skandia
Marketing, Incorporated
Mr. Sawyer joined us in 1994. He previously held the position of Regional Vice President with AIM Distributors, Inc.
Todd L. Slade Vice President, Vice President,
38 Applications Development Applications Development:
American Skandia Life
Assurance Corporation
Anders O. Soderstrom Director (since October, 1994) President and
36 Chief Operating Officer:
American Skandia Information
Services and Technology Corporation
Amanda C. Sutyak Executive Vice President Executive Vice President
38 and Deputy Chief and Deputy Chief
Operating Officer, Operating Officer:
Director (since July, 1991) American Skandia Life
Assurance Corporation
C. Ake Svensson Treasurer, Vice President, Treasurer
45 Director (since December, 1994) and Corporate Controller:
American Skandia Investment
Holding Corporation
Mr. Svensson joined us in 1994. He previously held the position of Senior Vice President with Nordenbanken.
Bayard F. Tracy Senior Vice President, Senior Vice President,
48 Institutional Sales, Institutional Sales and Marketing:
Director (since October, 1994) American Skandia Life
Assurance Corporation
</TABLE>
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant: The Depositor does not directly or indirectly control any person.
The following persons are under common control with the Depositor by American
Skandia Investment Holding Corporation:
(1) American Skandia Information Services and Technology
("ASIST"), formerly American Skandia Business Services
Corporation: The organization (formerly known as Skandia U.S.
Business Services Corporation) is a general business
corporation organized in the State of Delaware. Its primary
purpose is to provide various types of business services to
American Skandia Investment Holding Corporation and all of its
subsidiaries including computer systems acquisition,
development and maintenance, human resources acquisition,
development and management, accounting and financial reporting
services and general office services.
(2) American Skandia Marketing, Incorporated ("ASM, Inc.") ,
formerly Skandia Life Equity Sales Corporation: The
organization is a general business corporation organized in
the State of Delaware. It was formed primarily for the purpose
of acting as a broker-dealer in securities. It acts as the
principal "underwriter" of annuity contracts deemed to be
securities, as required by the Securities and Exchange
Commission, which insurance policies are to be issued by
American Skandia Life Assurance Corporation. It provides
securities law supervisory services in relation to the
marketing of those products of American Skandia Life Assurance
Corporation registered as securities. It also may provide such
services in relation to marketing of certain public mutual
funds. It also has the power to carry on a general financial,
securities, distribution, advisory, or investment advisory
business; to act as a general agent or broker for insurance
companies and to render advisory, managerial, research and
consulting services for maintaining and improving managerial
efficiency and operation.
(3) American Skandia Investment, Services, Incorporated ("ASISI"),
formerly American Skandia Life Investment Management, Inc.:
The organization is a general business corporation organized
in the state of Connecticut. The organization is authorized to
provide investment service and investment management advice in
connection with the purchasing, selling, holding or exchanging
of securities or other assets to insurance companies,
insurance-related companies, mutual funds or business trusts.
It's primary role is expected to be as investment manager for
certain mutual funds to be made available primarily through
the variable insurance products of American Skandia Life
Assurance Corporation.
(4) Skandia Vida: This subsidiary American Skandia Life Assurance
Corporation was organized in March, 1995, and began operations
in July, 1995. It offers investment oriented life insurance
products designed for long-term savings through independent
banks and brokers.
Item 27. Number of Contract Owners: As of December 31, 1995 there were
1,111 owners of contracts.
Item 28. Indemnification: Under Section 33-320a of the Connecticut General
Statutes, the Depositor must indemnify a director or officer against judgments,
fines, penalties, amounts paid in settlement and reasonable expenses including
attorneys' fees, for actions brought or threatened to be brought against him in
his capacity as a director or officer when certain disinterested parties
determine that he acted in good faith and in a manner he reasonably believed to
be in the best interests of the Depositor. In any criminal action or proceeding,
it also must be determined that the director or officer had no reason to believe
his conduct was unlawful. The director or officer must also be indemnified when
he is successful on the merits in the defense of a proceeding or in
circumstances where a court determines that he is fairly and reasonably entitled
to be indemnified, and the court approves the amount. In shareholder derivative
suits, the director or officer must be finally adjudged not to have breached
this duty to the Depositor or a court must determine that he is fairly and
reasonably entitled to be indemnified and must approve the amount. In a claim
based upon the director's or officer's purchase or sale of the Registrant's
securities, the director or officer may obtain indemnification only if a court
determines that, in view of all the circumstances, he is fairly and reasonably
entitled to be indemnified and then for such amount as the court shall
determine. The By-Laws of American Skandia Life Assurance Corporation ("ASLAC")
also provide directors and officers with rights of indemnification, consistent
with Connecticut Law.
The foregoing statements are subject to the provisions of Section 33-320a.
Directors and officers of ASLAC and ASM, Inc. can also be indemnified pursuant
to indemnity agreements between each director and officer and American Skandia
Investment Holding Corporation, a corporation organized under the laws of the
State of Delaware. The provisions of such an indemnity agreement are governed by
Section 45 of the General Corporation Law of the State of Delaware.
The directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers liability insurance policy issued by an unaffiliated insurance
company to Skandia Insurance Company Ltd., their ultimate parent. Such policy
will reimburse ASLAC or ASM, Inc., as applicable, for any payments that it shall
make to directors and officers pursuant to law and, subject to certain
exclusions contained in the policy, will pay any other costs, charges and
expenses, settlements and judgments arising from any proceeding involving any
director or officer of ASLAC or ASM, Inc., as applicable, in his or her past or
present capacity as such.
Registrant hereby undertakes as follows: Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of Registrant pursuant
to the foregoing provisions, or otherwise, Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and, therefore, is unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by Registrant of expenses incurred or paid by a director,
officer or controlling person of Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, unless in the opinion
of Registrant's counsel the matter has been settled by controlling precedent,
Registrant will submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters:
(a) At present, ASM, Inc. acts as principal underwriter only for annuities
to be issued by ASLAC.
(b) Directors and officers of ASM, Inc.
<TABLE>
<CAPTION>
<S> <C>
Name and Principal Business Address Positions and Offices with Underwriter
Alan H. Blank Vice President and
American Skandia Life Assurance Corporation National Sales Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Gordon C. Boronow Director
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Jan R. Carendi Chief Executive Officer
Skandia Insurance Company Ltd. and Chairman of the
Sveavagen 44, S-103 50 Stockholm, Sweden Board of Directors
Paul De Simone Controller
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Wade A. Dokken President, Chief Operating
American Skandia Life Assurance Corporation Officer, Chief Marketing Officer
One Corporate Drive, P.O. Box 883 and Director
Shelton, Connecticut 06484-0883
N. David Kuperstock Vice President and Director
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Thomas M. Mazzaferro Executive Vice President and
American Skandia Life Assurance Corporation Chief Financial Officer
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Don Thomas Peck Vice President and
American Skandia Life Assurance Corporation National Sales Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Hayward Sawyer Vice President and
American Skandia Life Assurance Corporation National Sales Manager
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
M. Priscilla Pannell Corporate Secretary
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Kristen Newall Assistant Corporate Secretary
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
Amanda C. Sutyak Executive Vice President
American Skandia Life Assurance Corporation
One Corporate Drive, P.O. Box 883
Shelton, Connecticut 06484-0883
</TABLE>
Item 30. Location of Accounts and Records: Accounts and records are
maintained by ASLAC at its principal office in Shelton, Connecticut.
Item 31. Management Services: None
Item 32. Undertakings:
(a) Registrant hereby undertakes to file a post-effective amendment to this
Registration Statement as frequently as is necessary to ensure that the audited
financial statements in the Registration Statement are never more than 16 months
old so long as payments under the annuity contracts may be accepted and
allocated to the Sub-accounts of Separate Account B.
(b) Registrant hereby undertakes to include either (1) as part of any enrollment
form or application to purchase a contract offered by the prospectus, a space
that an applicant or enrollee can check to request a Statement of Additional
Information, or (2) a post card or similar written communication affixed to or
included in the prospectus that the applicant can remove to send for a Statement
of Additional Information.
(c) Registrant hereby undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
- --------
* Trustees of American Skandia Trust, one of the underlying mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company
Act of 1940, the Registrant certifies that it meets the requirements of
Securities Act Rule 485(b) for effectiveness of the Registration Statement and
has duly caused this Registration Statement to be signed on its behalf, in the
Town of Shelton and State of Connecticut, on this day of April 26, 1996.
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION VARIABLE ACCOUNT B
(CLASS 2 SUB-ACCOUNTS)
Registrant
By: American Skandia Life Assurance Corporation
By:/s/ M. Patricia Paez Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary Diana D. Steigauf
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
Depositor
By:/s/ M. Patricia Paez Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary Diana D. Steigauf
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signature Title Date
(Principal Executive Officer)
Jan R. Carendi* Chief Executive Officer, April 26, 1996
Jan R. Carendi Chairman of the Board and Director
(Principal Financial Officer and Principal Accounting Officer)
/s/ Thomas M. Mazzaferro Executive Vice President and April 26, 1996
Thomas M. Mazzaferro Chief Financial Officer
(Board of Directors)
Jan. R. Carendi* Gordon C. Boronow* Malcolm M. Campbell*
Jan. R. Carendi Gordon C. Boronow Malcolm M. Campbell
Henrik Danckwardt* Amanda C. Sutyak* Wade A. Dokken*
Henrik Danckwardt Amanda C. Sutyak Wade A. Dokken
Thomas M. Mazzaferro** Gunnar Moberg** Bayard F. Tracy**
Thomas M. Mazzaferro Gunnar Moberg Bayard F. Tracy
Anders Soderstrom** C. Ake Svensson*** Lincoln R. Collins****
Anders Soderstrom C. Ake Svensson Lincoln R. Collins
Nancy F. Brunetti**** Dianne B. Michael****
Nancy F. Brunetti Dianne B. Michael
*/**/***/****By: /s/ M. Patricia Paez
M. Patricia Paez
<FN>
*Pursuant to Powers of Attorney previously filed with Post-Effective Amendment No. 10 to Registration Statement No. 33-19363
**Pursuant to Powers of Attorney previously filed with the initial filing of Registration Statement No. 33-86918.
***Pursuant to Power of Attorney previously filed with the initial filing of Registration Statement No. 33-88360.
****Pursuant to Powers of Attorney previously filed with the initial filing of Registration Statement No. 333-00941
</FN>
</TABLE>
EXHIBITS
As noted in Item 24(b), various exhibits are incorporated by reference
or are not applicable. The exhibits included are as follows:
No. 9 Opinion and consent of Werner & Kennedy
No. 10 Consent of Deloitte & Touche LLP
(212) 408-6900
April 26, 1996
American Skandia Life
Assurance Corporation
One Corporate Drive
Shelton, Connecticut 06484
Re: Post-effective Amendment No. 6 to Form N-4 filed by American Skandia
Life Assurance Corporation, Depositor, and American Skandia Life Assurance
Corporation Variable Account B (Class 2 Sub-Accounts), Registrant Registration
No.: 33-56770 Investment Company No.: 811-8248 Our File No. 74877-00101
Dear Mesdames and Messrs.:
You have requested us, as general counsel to American Skandia
Life Assurance Corporation ("American Skandia"), to furnish you with this
opinion in connection with the above-referenced registration statement by
American Skandia, as Depositor, and American Skandia Life Assurance Corporation
Variable Account B (Class 2 Sub-Accounts) ("American Skandia Variable Account B
Class 2 Sub-Accounts"), as Registrant, under the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, Registration
Statement No. 33-56770, Investment Company Act No. 811-8248, (the "Registration
Statement") of a certain Variable Annuity Contract (the "Contract") that will be
issued by American Skandia through American Skandia Variable Account B (Class 2
Sub-Accounts).
We have made such examination of the statutes and authorities,
corporate records of American Skandia, and other documents as in our judgment
are necessary to form a basis for opinions hereinafter expressed.
In our examination, we have assumed the genuineness of all
signatures on, and authenticity of, and the conformity to original documents of
all copies submitted to us. As to various questions of fact material to our
opinion, we have relied upon statements and certificates of officers and
representatives of American Skandia and others.
Based upon the foregoing, we are of the opinion that:
1. American Skandia is a validly existing corporation under the laws of the
State of Connecticut.
2. American Skandia Variable Account B (Class 2 Sub-Accounts) is validly
existing as a separate account pursuant to the laws of the State of Connecticut.
3. The form of the Contract has been duly authorized by American Skandia,
and has been or will be filed in states where it is eligible for approval, and
upon
issuance in accordance with the laws of such jurisdictions, and with the
terms of the Prospectus and the Statement of Additional Information included as
part of the Registration Statement, will be valid and binding upon American
Skandia.
We represent that the above-referenced Post-effective
Amendment No. 6 to the Registration Statement does not contain disclosures which
would render it ineligible to become effective pursuant to paragraph (b) of Rule
485.
We hereby consent to the use of this opinion as an exhibit to
the above-referenced Registration Statement of American Skandia on Form N-4
under the Securities Act of 1933, as amended, and the Investment Company Act of
1940, as amended, and to the reference to our name under the heading "Legal
Experts" included in the Registration Statement.
Very truly yours,
/s/Werner & Kennedy
Exhibit 10
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-effective Amendment No. 6 to Registration
Statement No. 33-56770 of American Skandia Life Assurance Corporation Variable
Account B (Class 2 Sub-Accounts) on Form N-4 of our report dated March 14, 1996
relating to American Skandia Life Assurance Corporation, our report dated
February 20, 1996 relating to American Skandia Life Assurance Corporation
Variable Account B - Class 2 and to the reference to us under the heading
"Independent Auditors" appearing in the Statement of Additional Information
which is a part of such Registration Statement.
/s/ Deloitte & Touche LLP
New York, New York
April 26, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> Variable Account B - Class 2
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 81,112,198
<INVESTMENTS-AT-VALUE> 84,690,715
<RECEIVABLES> 10,309,914
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 95,000,629
<PAYABLE-FOR-SECURITIES> 10,310,286
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 10,310,286
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 84,690,343
<DIVIDEND-INCOME> 1,089,939
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> (534,682)
<NET-INVESTMENT-INCOME> 555,257
<REALIZED-GAINS-CURRENT> 5,890,840
<APPREC-INCREASE-CURRENT> 3,497,440
<NET-CHANGE-FROM-OPS> 9,943,537
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 41,155,576
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 0
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<DEBT-HELD-FOR-SALE> 0
<DEBT-CARRYING-VALUE> 10,112,705
<DEBT-MARKET-VALUE> 0
<EQUITIES> 1,728,875
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 27,541,580
<CASH> 13,146,384
<RECOVER-REINSURE> 0
<DEFERRED-ACQUISITION> 270,222,383
<TOTAL-ASSETS> 5,021,012,890 <F1>
<POLICY-LOSSES> 49,879,508
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 103,000,000
0
0
<COMMON> 2,000,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,021,012,890 <F2>
0
<INVESTMENT-INCOME> 1,600,674
<INVESTMENT-GAINS> 36,774
<OTHER-INCOME> 45,107,959
<BENEFITS> 6,446,129
<UNDERWRITING-AMORTIZATION> 35,970,524
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> (2,170,660)
<INCOME-TAX> 397,360
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,568,020)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<FN>
<F1> Included in Total Assets are assets held in Separate Accounts of
$4,699,961,646.
<F2> Included in Total Liabilities and Equity are Liabilities related to
Separate Acocunts of $4,699,961,646.
</FN>
</TABLE>
