<PAGE> 1
[GALAXY VIP FUND LOGO]
[PHOTO]
GALAXY VARIABLE ANNUITY REPORT
ANNUAL
REPORT
FOR THE YEAR ENDED
DECEMBER 31, 1995
<PAGE> 2
[EDGAR REFERENCE - IN THE PRINTED VERSION OF THIS REPORT THE AUDITED DECEMBER
31, 1995 FINANCIAL STATEMENTS OF THE GALAXY VIP 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 # 811-06726. 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.]
<PAGE> 3
[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.]
<PAGE> 4
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
FINANCIAL STATEMENTS
FOR THE PERIODS ENDED DECEMBER 31, 1995
91
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INDEPENDENT AUDITORS' REPORT
To the Contractowners of
American Skandia Life Assurance Corporation
Variable Account B -- Class 3 (Galaxy Annuity) and the
Board of Directors of
American Skandia Life Assurance Corporation
Shelton, Connecticut
We have audited the accompanying statement of assets and liabilities of the
eight sub-accounts of American Skandia Life Assurance Corporation Variable
Account B -- Class 3, referred to in Note 1, 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 the eight sub-accounts of American Skandia
Life Assurance Corporation Variable Account B -- Class 3, referred to in Note 1,
as of December 31, 1995, the results of their operations and the changes in
their net assets for the periods presented in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
New York, New York
February 20, 1996
92
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS:
Investment in mutual funds at market value (Note 2):
American Skandia Trust (AST):
T. Rowe Price International Equity Portfolio - 266,356 shares
(cost $2,761,591)................................................. $ 2,836,691
Founders Capital Appreciation Portfolio - 173,813 shares (cost
$2,408,771)....................................................... 2,476,832
INVESCO Equity Income Portfolio - 145,731 shares (cost
$1,702,123)....................................................... 1,821,640
Scudder International Bond Portfolio - 24,563 shares (cost
$254,114)......................................................... 260,369
Galaxy VIP Funds (GAL):
Money Market Portfolio - 2,987,957 shares (cost $2,987,957)....... 2,987,957
Equity Portfolio - 179,864 shares (cost $2,238,155)............... 2,336,429
High Quality Bond Portfolio - 103,568 shares (cost $1,049,583).... 1,074,000
Asset Allocation Portfolio - 187,504 shares (cost $2,216,067)..... 2,321,300
----------
Total Invested Assets................................. 16,115,218
Receivable from American Skandia Life Assurance Corp. ................................. 45,231
Receivable from The Galaxy VIP Funds................................................... 12,137
----------
Total Assets.......................................... $16,172,586
----------
LIABILITIES:
Payable to American Skandia Trust...................................................... $ 57,906
----------
Total Liabilities..................................... $ 57,906
----------
</TABLE>
NET ASSETS:
<TABLE>
<CAPTION>
Contractowners' Equity Units Unit Value
- ------------------------------------------------------------- ------- ----------
<S> <C> <C> <C>
AST - T. Rowe Price International Equity........... 265,448 $10.69 $ 2,836,615
AST - Founders Capital Appreciation................ 203,315 12.18 2,476,765
AST - INVESCO Equity Income........................ 155,507 11.71 1,821,640
AST - Scudder International Bond................... 24,422 10.66 260,273
GAL - Money Market................................. 290,495 10.29 2,987,874
GAL - Equity....................................... 205,306 11.38 2,336,365
GAL - High Quality Bond............................ 94,895 11.32 1,073,912
GAL - Asset Allocation............................. 199,741 11.62 2,321,236
-----------
Total Net Assets............ $16,114,680
===========
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
93
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
STATEMENT OF OPERATIONS
FOR THE PERIODS ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 3 SUB-ACCOUNTS INVESTING IN:
-------------------------------------------------------
AST - T. ROWE AST - FOUNDERS
PRICE INTERNATIONAL CAPITAL
EQUITY APPRECIATION
(MAY 30* THRU (MAY 16* THRU
TOTAL DEC. 31, 1995) DEC. 31, 1995)
---------- ------------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Income
Dividends.................................................... $ 93,979 $ 0 $ 0
Expenses
Mortality and Expense Risks Charges and Administrative Fees
(Note 4)................................................... (41,577) (6,138) (5,707)
---------- -------- -------
NET INVESTMENT INCOME (LOSS)......................................... 52,402 (6,138) (5,707)
---------- -------- -------
REALIZED GAIN ON INVESTMENTS:
Proceeds from Sales.............................................. 1,525,771 128,287 22,305
Cost of Securities Sold.......................................... 1,507,707 122,064 19,335
---------- -------- -------
Net Gain..................................................... 18,064 6,223 2,970
Capital Gain Distributions Received.............................. 0 0 0
---------- -------- -------
NET REALIZED GAIN.................................................... 18,064 6,223 2,970
UNREALIZED GAIN ON INVESTMENTS:
Beginning of Period.............................................. 0 0 0
End of Period.................................................... 496,857 75,100 68,061
---------- -------- -------
NET UNREALIZED GAIN.................................................. 496,857 75,100 68,061
---------- -------- -------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........................................ $ 567,323 $ 75,185 $ 65,324
========= ================ ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
*Date Operations Commenced
94
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 3 SUB-ACCOUNTS INVESTING IN:
--------------------------------------------------------------------------------------------------------------
AST - SCUDDER
INTERNATIONAL GAL - MONEY GAL GAL - HIGH GAL - ASSET
AST - INVESCO BOND MARKET EQUITY QUALITY BOND ALLOCATION
EQUITY INCOME (MAY 16* THRU (MAY 24* THRU (MAY 16* THRU (MAY 31* THRU (MAY 19* THRU
(MAY 22* THRU DEC. 31, DEC. 31, DEC. 31, DEC. 31, DEC. 31,
DEC. 31, 1995) 1995) 1995) 1995) 1995) 1995)
--------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 $ 45,038 $ 14,270 $13,433 $ 21,238
(5,128) (611) (8,590) (6,581) (2,390) (6,432)
--------------- ------------- ------------- ------------- ------------- -------------
(5,128) (611) 36,448 7,689 11,043 14,806
--------------- ------------- ------------- ------------- ------------- -------------
48,340 12,937 1,232,595 59,393 2,598 19,316
43,792 12,860 1,232,595 56,422 2,539 18,100
--------------- ------------- ------------- ------------- ------------- -------------
4,548 77 0 2,971 59 1,216
0 0 0 0 0 0
--------------- ------------- ------------- ------------- ------------- -------------
4,548 77 0 2,971 59 1,216
0 0 0 0 0 0
119,517 6,255 0 98,274 24,417 105,233
--------------- ------------- ------------- ------------- ------------- -------------
119,517 6,255 0 98,274 24,417 105,233
--------------- ------------- ------------- ------------- ------------- -------------
$ 118,937 $ 5,721 $ 36,448 $ 108,934 $35,519 $ 121,255
=============== ============== ============== ============== ============== ==============
</TABLE>
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95
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 3 SUB-ACCOUNTS INVESTING IN:
----------------------------------------------------
AST - T. ROWE AST - FOUNDERS
PRICE INTL. CAPITAL
TOTAL EQUITY APPRECIATION
------------- ------------- --------------
PERIOD ENDED MAY 30* THRU MAY 16* THRU
DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995
------------- ------------- --------------
<S> <C> <C> <C>
INCREASE IN NET ASSETS:
OPERATIONS:
Net Investment Income (Loss)...................................... $ 52,402 $ (6,138) $ (5,707)
Net Realized Gain................................................. 18,064 6,223 2,970
Net Unrealized Gain On Investments................................ 496,857 75,100 68,061
------------- ------------- --------------
Net Increase In Net Assets
Resulting from Operations....................................... 567,323 75,185 65,324
------------- ------------- --------------
CAPITAL SHARE TRANSACTIONS:
Transfers of Annuity Fund Deposits................................ 12,141,943 798,237 741,715
Net Transfers Between Sub-accounts................................ 3,506,290 1,964,129 1,652,865
Surrenders........................................................ (100,876) (936) 16,861
------------- ------------- --------------
Net Increase In Net Assets
Resulting From Capital Share Transactions..................... 15,547,357 2,761,430 2,411,441
------------- ------------- --------------
TOTAL INCREASE IN NET ASSETS.......................................... 16,114,680 2,836,615 2,476,765
NET ASSETS:
Beginning of Period............................................... 0 0 0
------------- ------------- --------------
End of Period..................................................... $16,114,680 $ 2,836,615 $2,476,765
============ ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
*Date Operations Commenced
96
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS 3 SUB-ACCOUNTS INVESTING IN:
----------------------------------------------------------------------------------------------------------
AST - SCUDDER GAL - MONEY GAL GAL - HIGH GAL - ASSET
AST - INVESCO INTERNATIONAL MARKET EQUITY QUALITY BOND ALLOCATION
EQUITY INCOME BOND ------------ ------------ ------------ ------------
--------------- ------------- MAY 24* THRU MAY 16* THRU MAY 31* THRU MAY 19* THRU
MAY 22* THRU MAY 16* THRU DEC. 31, DEC. 31, DEC. 31, DEC. 31,
DEC. 31, 1995 DEC. 31, 1995 1995 1995 1995 1995
--------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
$ (5,128) $ (611) $ 36,448 $ 7,689 $ 11,043 $ 14,806
4,548 77 0 2,971 59 1,216
119,517 6,255 0 98,274 24,417 105,233
--------------- ------------- ------------ ------------ ------------ ------------
118,937 5,721 36,448 108,934 35,519 121,255
--------------- ------------- ------------ ------------ ------------ ------------
1,345,090 181,092 4,622,415 1,878,920 901,185 1,673,289
366,022 73,460 (1,620,326) 392,602 140,121 537,417
(8,409) 0 (50,663) (44,091) (2,913) (10,725)
--------------- ------------- ------------ ------------ ------------ ------------
1,702,703 254,552 2,951,426 2,227,431 1,038,393 2,199,981
--------------- ------------- ------------ ------------ ------------ ------------
1,821,640 260,273 2,987,874 2,336,365 1,073,912 2,321,236
0 0 0 0 0 0
--------------- ------------- ------------ ------------ ------------ ------------
$ 1,821,640 $ 260,273 $ 2,987,874 $2,336,365 $1,073,912 $2,321,236
=============== ============= ============= ============= ============= =============
</TABLE>
- --------------------------------------------------------------------------------
97
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
American Skandia Life Assurance Corporation Variable Account B -- Class 3 (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 May 1, 1995.
As of December 31, 1995, the Account consisted of twenty-five sub-accounts.
These financial statements report on eight sub-accounts offered in the Galaxy
Annuity. Each of the eight sub-accounts invests only in a single corresponding
portfolio of either the Galaxy VIP Fund or the American Skandia Trust (the
"Trusts"). Fleet Investment Advisors Inc. is the advisor for The Galaxy VIP
Fund. American Skandia Investment Services, Incorporated is the investment
manager for American Skandia Trust, while Rowe Price-Fleming International,
Inc., Founders Asset Management, Inc., INVESCO Trust Company and Scudder,
Stevens & Clark, Inc. are the sub-advisors. The investment advisors are paid
fees for their services by the respective Trusts.
The following eight sub-accounts have commenced operations during 1995: the
AST-T. Rowe Price International Equity on May 30, 1995; the AST-Founders Capital
Appreciation on May 16, 1995; the AST-INVESCO Equity Income on May 22, 1995; the
AST-Scudder International Bond on May 16, 1995; the VIP-Galaxy Money Market on
May 24, 1995; the VIP-Galaxy Equity on May 16, 1995; the VIP-Galaxy High Quality
Bond on May 31, 1995 and the VIP-Galaxy Asset Allocation on May 19, 1995.
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.
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 0.85% of the net assets.
Administrative Fees -- Charged daily against the Account at an annual
rate of .15% of the net assets. A maintenance fee equaling the smaller
of $35 or 2% of the current Account Value is deducted at the end of
each contract year and on surrender.
Transfer Fees -- Charged at a rate of $10 for each transfer after the
fourth in each annuity year.
Contingent Deferred Sales Charges are computed as set forth in the
Galaxy Annuity. These charges may be imposed on the full, or partial
surrender of certain contracts. There is no contingent deferred sales
charge if all premiums were received at least seven complete years
prior to the date of the full or partial surrender.
98
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AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
VARIABLE ACCOUNT B -- CLASS 3
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
5. CHANGES IN THE UNITS OUTSTANDING
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------
CLASS 3 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------------
AST - T. ROWE AST - FOUNDERS AST - INVESCO AST - SCUDDER
PRICE INTL. EQUITY CAP. APPRECIATION EQUITY INCOME INTERNATIONAL BOND
------------------ ----------------- --------------- ------------------
MAY 30* THRU MAY 16* THRU MAY 22* THRU MAY 16* THRU
DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995
------------------ ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period......... 0 0 0 0
Units Purchased................................... 76,823 63,628 122,816 17,411
Units Transferred Between Sub-accounts............ 188,642 140,067 33,440 7,012
Units Surrendered................................. (17) (380) (749) (1)
-------- ------- ------- -------
Units Outstanding End of the Period............... 265,448 203,315 155,507 24,422
=============== ================ =============== ================
<CAPTION>
-----------------------------------------------------------------------------
CLASS 3 SUB-ACCOUNTS INVESTING IN:
-----------------------------------------------------------------------------
GAL - MONEY GAL GAL - HIGH GAL - ASSET
MARKET EQUITY QUALITY BOND ALLOCATION
------------------ ----------------- --------------- ------------------
MAY 24* THRU MAY 16* THRU MAY 31* THRU MAY 19* THRU
DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995 DEC. 31, 1995
------------------ ----------------- --------------- ------------------
<S> <C> <C> <C> <C>
Units Outstanding Beginning of the Period......... 0 0 0 0
Units Purchased................................... 455,101 173,110 82,302 151,771
Units Transferred Between Sub-accounts............ (159,658) 36,280 12,855 48,932
Units Surrendered................................. (4,948) (4,084) (262) (962)
-------- ------- ------- -------
Units Outstanding End of the Period............... 290,495 205,306 94,895 199,741
=============== ================ =============== ================
</TABLE>
- --------------------------------------------------------------------------------
*Date Operations Commenced
99
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[GALAXY VIP FUND LOGO]
4400 Computer Drive
Box 5108
Westboro, MA 01581-5108
First Class Mail
U.S. Postage
PAID
New York, NY
Permit No. 8048
