Filed with the Securities and Exchange Commission on July 24, 1996


                            Registration No. 333-[ ]
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1

             Registration Statement Under The Securities Act of 1933

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                                   CONNECTICUT
         (State or other jurisdiction of incorporation or organization)

                                       63
            (Primary Standard Industrial Classification Code Number)

                                   06-1241288
                      (I.R.S. Employer Identification No.)

         ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                      M. PATRICIA PAEZ, CORPORATE SECRETARY
                 ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
        (203) 926-1888 (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copy To:

                              JOHN T. BUCKLEY, ESQ.
                                WERNER & KENNEDY
             1633 Broadway, New York, New York 10019 (212) 408-6900
             -------------------------------------------------------

     Approximate  date of commencement  of proposed sale to the public:  October
14, 1996 or as soon as practicable after the effective date of this Registration
Statement

     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933 check the following: X .

                         Calculation of Registration Fee
<TABLE>
<CAPTION>
=================================================================================================================================
          <S>                      <C>                    <C>                   <C>                 <C>                 <C> 
            Title of each                                 Proposed              Proposed
              class of                                     maximum               maximum
             securities              Amount               offering              aggregate             Amount of
                to be                 to be                 price               offering            registration
             registered            registered             per unit               price*                  fee
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
          Annuity Contracts                                                 $290,000.00              $100.00
</TABLE>
- --------------------------------------------------------------------------------

     *The proposed  aggregate offering price is estimated solely for determining
the  registration  fee. The amount to be  registered  and the  proposed  maximum
offering price per unit are not applicable since these securities are not issued
in predetermined amounts or units.
================================================================================
Registrant  hereby amends this  Registration  Statement on such date or dates as
may be necessary to delay its effective date until the  registrant  shall file a
further amendment which  specifically  states that this  Registration  Statement
shall  thereafter  become effective in accordance with the provisions of Section
8(a) of the Securities  Act of 1933 or until the  Registration  Statement  shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

- --------------------------------------------------------------------------------
CHC2


<TABLE>
<CAPTION>
                            CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501


<S>                                                                                              <C>                              
         S-1 Item No.                                                                            Prospectus Heading

1.       Forepart of the Registration Statement and                             Facing Page, Cross Reference Sheet,
         Outside Front Cover Page of Prospectus                                            Outside Front Cover Page

2.       Inside Front Cover and Outside Back Cover of Prospectus                             Available Information,
         Incorporation of Certain Documents by Reference,
         Reports to You, Table of Contents

3.       Summary Information, Risk Factors and Ratio of Earnings                            Highlights, Cover Page,
         to Fixed Charges                                                                       Separate Account D,
                                                                                   Insurance Aspects of the Annuity

4.       Use of Proceeds                            Fixed Investment Options, Separate Accounts, Separate Account D

5.       Determination of the Offering Price                                               Fixed Investment Options

6.       Dilution                                                                                    Not applicable

7.       Selling Security Holders                                                                    Not applicable

8.       Plan of Distribution                                                                 Sale of the Annuities

9.       Description of Securities to be Registered                       Investment Options, Purchasing Annuities,
         Account Value and Surrender Value,
         Rights, Benefits and Services

10.      Interests of named Expert and Counsel                                               Executive Compensation

11.      Information with Respect to the Registrant                                                     The Company

12.      Disclosure of Commission Position on Indemnification for                                   Indemnification
         Securities Act Liabilities

                                                                                                    Part II Heading

13.      Other Expenses of Issuance                                                      Other Expenses of Issuance
         and Distribution                                                                          and Distribution

14.      Indemnification of Directors and Officers                        Indemnification of Directors and Officers

15.      Recent Sales of Unregistered Securities                            Recent Sales of Unregistered Securities

16.      Exhibits and Financial Statement Schedules                      Exhibits and Financial Statement Schedules

17.      Undertakings                                                                                  Undertakings
</TABLE>

                                                             

This  Prospectus  describes a type of 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 individual annuity contracts or as interests in a group annuity. 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  and 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 is assessed any  applicable tax charge (see
"Tax  Charges").  It is then  allocated  to the  investment  options you select,
except in certain  jurisdictions,  where  allocations  of  Purchase  Payments we
receive during the "free-look"  period that you direct to any  Sub-accounts  are
temporarily allocated to a money-market type Sub-account (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 (see "Certain Tax Considerations").

Account Value in the variable investment options increases or decreases daily to
reflect investment  performance and the deduction of charges.  No minimum amount
is guaranteed (see "Account Value in the Sub-accounts"). The variable investment
options are Class 2 Sub-accounts of American Skandia Life Assurance  Corporation
Variable Account B ("Separate Account B")(see "Separate  Accounts" and "Separate
Account  B").  Each  Sub-account  invests  exclusively  in one  portfolio  of an
underlying  mutual fund or in 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,  Janus  Overseas
Growth, Lord Abbett Growth and Income,  Seligman Henderson International Equity,
Seligman Henderson International Small Cap, Federated Utility Income,  Federated
High Yield, AST Phoenix  Balanced Asset,  AST Money Market,  T. Rowe Price Asset
Allocation, T. Rowe Price International Equity, T. Rowe Price Natural Resources,
T. Rowe  Price  International  Bond,  Founders  Capital  Appreciation,  Founders
Passport, INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited Maturity
Bond, Berger Capital Growth,  Robertson  Stephens Value + Growth,  Putnam Growth
and Income,  Putnam  Overseas  Equity,  Twentieth  Century  Balanced,  Twentieth
Century International Equity); (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).

In most  jurisdictions,  Account  Value may be allocated  to a fixed  investment
option during the accumulation  phase.  Account Value so allocated earns a fixed
rate of  interest  for a  specified  period of time  referred  to as a Guarantee
Period.  Guarantee  Periods of  different  durations  may be offered (see "Fixed
Investment  Options").  Such an allocation and the interest earned is guaranteed
by us only if held to its Maturity  Date. You are cautioned that with respect to
the fixed investment options during the accumulation  phase, we do not guarantee
any minimum amount,  because the value may be increased or decreased by a market
value  adjustment  (see  "Account  Value  of  the  Fixed  Allocations").  Assets
supporting  such  allocations  in the  accumulation  phase are held in  American
Skandia Life Assurance  Corporation  Separate  Account D ("Separate  Account D")
(see "Separate Accounts" and "Separate Account D").

We guarantee fixed annuity  payments.  We also guarantee any adjustable  annuity
payments we may make available (see "Annuity Payments").

This  Annuity is  designed  for use in  connection  with  investment  allocation
services  provided  by an Advisor.  Before we issue an  Annuity,  we may require
evidence satisfactory to us that you have engaged the services of an Advisor.

                              (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:  October 14, 1996
Statement of Additional Information Dated:  October 14, 1996
CHC2 PROS(10/96)


<PAGE>


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 allocated to the variable  investment options 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...........................................................................................................          10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................................................................................10
CONTRACT EXPENSE SUMMARY........................................................................................................10
EXPENSE EXAMPLES................................................................................................................12
CONDENSED FINANCIAL INFORMATION.................................................................................................13
         Unit Prices And Numbers of Units.......................................................................................13
INVESTMENT OPTIONS..............................................................................................................15
         Variable Investment Options............................................................................................15
         Fixed Investment Options...............................................................................................17
OPERATIONS OF THE SEPARATE ACCOUNTS.............................................................................................18
         Separate Accounts......................................................................................................18
         SeparateAccount B..................................................................................................... 18
         Separate Account D.....................................................................................................19
INSURANCE ASPECTS OF THE ANNUITY................................................................................................20
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY..............................................................................20
         Maintenance Fee........................................................................................................20
         Tax Charges............................................................................................................20
         Transfer Fee...........................................................................................................20
         Allocation Of Annuity Charges..........................................................................................20
CHARGES ASSESSED AGAINST THE ASSETS.............................................................................................20
         Administration Charge..................................................................................................20
         Mortality and Expense Risk Charges.....................................................................................21
CHARGES OF THE UNDERLYING MUTUAL FUNDS..........................................................................................21
PURCHASING ANNUITIES............................................................................................................21
         Uses Of The Annuity....................................................................................................21
         Application And Initial Payment........................................................................................21
         Periodic Purchase Payments.............................................................................................22
         Right to Return the Annuity............................................................................................22
         Allocation of Net Purchase Payments....................................................................................22
         Balanced Investment Program............................................................................................22
         Ownership, Annuitant and Beneficiary Designations......................................................................22
ACCOUNT VALUE AND SURRENDER VALUE...............................................................................................23
         Account Value in the Sub-accounts......................................................................................23
         Account Value of the Fixed Allocations.................................................................................23
RIGHTS, BENEFITS AND SERVICES...................................................................................................24
         Additional Purchase Payments...........................................................................................24
         Changing Revocable Designations........................................................................................24
         Allocation Rules.......................................................................................................25
         Transfers..............................................................................................................25
                  Renewals......................................................................................................26
                  Dollar Cost Averaging.........................................................................................26
                  Rebalancing...................................................................................................26
         Distributions..........................................................................................................27
                  Surrender.....................................................................................................27
                  Partial Withdrawals...........................................................................................27
                  Systematic Withdrawals........................................................................................27
                  Minimum Distributions.........................................................................................28
                  Death Benefit.................................................................................................28
                  Annuity Payments..............................................................................................29
                  Qualified Plan Withdrawal Limitations.........................................................................30
         Pricing of Transfers and Distributions.................................................................................31
         Voting Rights..........................................................................................................31
         Transfers, Assignments or Pledges......................................................................................32
         Reports to You.........................................................................................................32
SALE OF THE ANNUITIES...........................................................................................................32
         Distribution...........................................................................................................32
         Advertising............................................................................................................32
CERTAIN TAX CONSIDERATIONS......................................................................................................33
         Our Tax Considerations.................................................................................................33
         Tax Considerations Relating to Your Annuity............................................................................33
                  Non-natural Persons...........................................................................................33
                  Natural Persons...............................................................................................33
                  Distributions.................................................................................................33
                  Assignments and Pledges.......................................................................................34
                  Penalty on Distributions......................................................................................34
                  Annuity Payments..............................................................................................35
                  Gifts.........................................................................................................35
                  Tax Free Exchanges............................................................................................35
                  Transfers Between Investment Options..........................................................................35
                  Generation-Skipping Transfers.................................................................................35
                  Diversification...............................................................................................35
                  Federal Income Tax Withholding................................................................................35
         Tax Considerations When Using Annuities in Conjunction with Qualified Plans............................................35
                  Individual Retirement Programs................................................................................36
                  Tax Sheltered Annuities.......................................................................................36
                  Corporate Pension and Profit-sharing Plans....................................................................36
                  H.R. 10 Plans.................................................................................................36
                  Tax Treatment of Distributions from Qualified Annuities.......................................................36
                  Section 457 Plans.............................................................................................36
OTHER MATTERS...................................................................................................................36
         Deferral of Transactions...............................................................................................36
         Resolving Material Conflicts...........................................................................................37
         Modification...........................................................................................................37
         Misstatement of Age or Sex.............................................................................................37
         Ending the Offer.......................................................................................................37
         Indemnification........................................................................................................38
         Legal Proceedings......................................................................................................38
THE COMPANY.....................................................................................................................38
         Lines of  Business.....................................................................................................38
         Selected Financial Data................................................................................................38
         Management's Discussion and Analysis of Financial Condition and Results of Operations..................................38
         Results of Operation...................................................................................................38
         Liquity and Capital Resources..........................................................................................39
                  Segment Information...........................................................................................40
         Reinsurance............................................................................................................40
         Surplus Notes..........................................................................................................40
         Reserves...............................................................................................................40
         Competition............................................................................................................40
         Employees..............................................................................................................40
         Regulation.............................................................................................................41
         Executive Officers and Directors.......................................................................................41
         Executive Compensation.................................................................................................43
                  Summary Compensation Table....................................................................................43
                  Long-Term Incentive Plans - Awards in the Last Fiscal Year....................................................44
                  Compensation of Directors.....................................................................................44
                  Compensation Committee Interlocks and Insider Participation...................................................45
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.............................................................................45
FINANCIAL STATEMENTS............................................................................................................45
APPENDIX A  FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION................................................46
APPENDIX B  SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES.....................46
</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  or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions   and  charges  thereon,   before  assessment  of  any  applicable
maintenance fee. Account Value is determined separately for each Sub-account and
for each Fixed Allocation,  and then totaled to determine Account Value for your
entire Annuity.  Account Value of each Fixed Allocation on other than such Fixed
Allocation's Maturity Date may be calculated using a market value adjustment.

ADVISOR is a person or entity: (a) registered under the Investment  Advisers Act
of 1940,  as amended,  and,  where  applicable,  under  equivalent  state law or
regulation  regarding the registration 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,  your individual  Annuity,  or with respect to a group Annuity,
the  certificate  evidencing  your  participation  in a group  Annuity.  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.

CURRENT RATES are the interest rates we offer to credit to Fixed Allocations for
the duration of newly beginning  Guarantee  Periods under this Annuity.  Current
Rates are contained in a schedule of rates  established  by us from time to time
for the  Guarantee  Periods  then  being  offered.  We may  establish  different
schedules for different classes and for different annuities.

FIXED  ALLOCATION  is an  allocation  of Account  Value that is to be credited a
fixed rate of interest for a specified  Guarantee Period during the accumulation
phase and is to be supported by assets in Separate Account D.

GUARANTEE PERIOD is a period of time during the accumulation  phase during which
we credit a fixed rate of interest on a Fixed Allocation.

IN WRITING is in a written form satisfactory to us and filed at the Office.

INTERIM  VALUE is,  as of any  particular  date,  the  initial  value of a Fixed
Allocation  plus all  interest  credited  thereon,  less the sum of all previous
transfers and withdrawals of any type from such Fixed Allocation of such Interim
Value and interest thereon from the date of each withdrawal or transfer.

ISSUE DATE is the effective date of your Annuity.

MVA is a market value  adjustment used in the  determination of Account Value of
each Fixed Allocation as of a date other than such Fixed  Allocation's  Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date.

MATURITY DATE is the last day in a Guarantee Period.

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 charge for taxes.

OFFICE is our business office, American Skandia Life Assurance Corporation,
One Corporate Drive, P.O. Box 883, 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 and 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.

STRIP  (Separate  Trading of  Registered  Interest  and  Principal)  is a direct
obligation  of the U.S.  Treasury.  It  consists of a Treasury  coupon  security
broken into  individual  payments of either the right to receive the  applicable
principal payment or the right to the applicable interest payment.

STRIP  YIELD,  for purposes of this  Annuity,  is the ask yield for Strips based
solely on the right to redeem coupons for interest payments.

SUB-ACCOUNT  is a  division  of  Separate  Account  B.  We use  Sub-accounts  to
calculate variable benefits under this Annuity.

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.



<PAGE>


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 variable and, in most
jurisdictions, fixed investment options.

During  the  accumulation  phase,  we  currently  offer  a  number  of  variable
investment options. Each of these investment options is a Class 2 Sub-account of
Separate  Account B. Each  Sub-account  invests  exclusively  in one  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 B. Certain variable 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, Janus Overseas Growth, Lord Abbett Growth and Income,  Seligman
Henderson  International  Equity,  Seligman Henderson  International  Small Cap,
Federated Utility Income,  Federated High Yield, AST Phoenix Balanced Asset, AST
Money  Market,  T. Rowe Price  Asset  Allocation,  T. Rowe  Price  International
Equity,  T. Rowe Price  Natural  Resources,  T. Rowe Price  International  Bond,
Founders Capital Appreciation,  Founders Passport,  INVESCO Equity Income, PIMCO
Total Return Bond, PIMCO Limited Maturity Bond, Berger Capital Growth, Robertson
Stephens  Value + Growth,  Putnam  Growth and Income,  Putnam Overseas Equity,
Twentieth Century Balanced,  Twentieth Century  International  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).

In most jurisdictions, we also offer the option during the accumulation phase of
earning one or more fixed rates of interest on all or a portion of your  Account
Value.  As of the  date  of this  Prospectus,  we  offered  the  option  to make
allocations  at interest rates that could be guaranteed for 1, 2, 3, 5, 7 and 10
years. Each such Fixed Allocation earns the fixed interest rate applicable as of
the date of such  allocation.  The interest rate credited to a Fixed  Allocation
does not change during its Guarantee  Period.  You may maintain  multiple  Fixed
Allocations.  From  time-to-time we declare Current Rates for Fixed  Allocations
beginning a new Guarantee Period. The rates we declare are subject to a minimum,
but we may declare  higher  rates.  The minimum is  determined in relation to an
index that we do not control.

The end of a  Guarantee  Period for a specific  Fixed  Allocation  is called its
Maturity Date. At that time, the Guarantee Period normally "renews" and we begin
crediting interest for a new Guarantee Period lasting the same amount of time as
the one just ended.  That Fixed  Allocation  then earns interest  during the new
Guarantee  Period at a rate that is not less than the one then  being  earned by
Fixed  Allocations  for that Guarantee  Period by new Annuity  purchasers in the
same class. You also may choose a different Guarantee Period from among those we
are then currently  making available or you may transfer that Account Value to a
variable Sub-account.

In the payout  phase,  you may elect fixed  annuity  payments  based on our then
current annuity rates. We also may make available adjustable annuity rates.

For more information, see the section entitled "Investment Options",
including the following  subsections:  (a) Variable Investment Options;  and (b)
Fixed Investment Options.

         (2) Operations of the Separate Accounts: In the accumulation phase, the
assets  supporting  guarantees we make in relation to Fixed Allocations are held
in our Separate Account D. This is a "non-unitized"  separate account.  However,
values and benefits  calculated on the basis of Fixed Allocations are guaranteed
by our general  account.  In the payout phase,  fixed  annuity  payments and any
adjustable  annuity  payments we may make  available are also  guaranteed by our
general  account,  but the  assets  supporting  such  payments  are not  held in
Separate Account D.

In the accumulation  phase, the assets  supporting the Account Values maintained
in the  Sub-accounts  are held in our  Separate  Account  B.  These  are 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 funds or fund portfolios, as applicable.

For more  information,  see the section  entitled  "Operations  of the  Separate
Accounts",  including  the following  subsections:  (a) Separate  Accounts;  (b)
Separate Account B; and (c) Separate Account D.

     (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  Assessed or  Assessable  Against the Annuity:  The Annuity
charges which are assessed or may be assessable under certain  circumstances are
the  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 Assessed or
Assessable  Against the  Annuity",  including  the  following  subsections:  (a)
Maintenance  Fee; (b) Tax  Charges;  (c) Transfer  Fee;  and (d)  Allocation  of
Annuity Charges.

     (5)  Charges  Assessed  Against the Assets:  The charges  assessed  against
assets in the Sub-accounts are the  administration  charge and the mortality and
expense risk charges.  There are no charges deducted from the assets  supporting
Fixed  Allocations.  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
assesses  various  charges,  including  charges for  investment  management  and
investment  advisory fees.  These charges  generally  differ between  portfolios
within the same underlying mutual fund. You will find additional details in each
fund prospectus and its statement 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, evidence that you have engaged the
services of an Advisor (e.g. a properly  registered  investment advisory firm or
bank) and any other  materials 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 and any  Purchase  Payments  received  during the  "free-look"
period are  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  such  Purchase  Payments  to  the  AST  Money  Market
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 Sub-account,  if you execute a return waiver.
We offer a balanced  investment  program in  relation to your  initial  Purchase
Payment. Certain designations must be made, including an Owner and an Annuitant.
You may also make  certain  other  designations  that  apply to the  Annuity  if
issued.  These designations  include a contingent Owner, a Contingent  Annuitant
(Contingent  Annuitants may be required in conjunction  with certain uses of the
Annuity), 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) Right to Return the Annuity;  (e) Allocation of Net Purchase  Payments;  (f)
Balanced  Investment  Program;  and (g)  Ownership,  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  and in  each  Fixed  Allocation.  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. We
also determine your Account Value separately for each Fixed Allocation.  A Fixed
Allocation's  Account Value as of a particular date is determined by multiplying
its then  current  Interim  Value  times  the  MVA.  No MVA  applies  to a Fixed
Allocation as of its Maturity Date.  Upon  surrender,  the Account Value payable
from any Sub-accounts is reduced by the maintenance  fee. For more  information,
see the section entitled "Account Value",  including the following  subsections:
(a)  Account  Value  in  the  Sub-accounts;  and  (b)  Account  Value  of  Fixed
Allocations.

         (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. 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  year are  subject  to a fee.  We  offer  dollar  cost  averaging  and
rebalancing  during  the  accumulation  phase.  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) Changing Revocable  Designations;  (c) Allocation Rules; (d) Transfers;  (e)
Renewals;  (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
and the following  subsections:  (a) Lines of Business;  (b) Selected  Financial
Data;  (c)  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations (including: (i) Results of Operations;  (ii) Liquidity and
Capital  Resources;  and  (iii)  Segment  Information);   (d)  Reinsurance;  (e)
Reserves; (f) Competition;  (g) Employees; (h) Regulation; (i) Executive Officer
and  Directors;   and  (j)  Executive  Compensation   (including:   (i)  Summary
Compensation  Table;  (ii) Long Term Incentive  Plans-Awards  in the Last Fiscal
Year;  (iii)  Compensation  of  Directors;   and  (iv)  Compensation   Committee
Interlocks and Insider Participation).

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
is part of the registration statements we filed with the Securities and Exchange
Commission ("SEC") regarding this offering. Additional information on us and
this  offering is available in those  registration  statements  and the exhibits
thereto.  You may obtain copies of these materials at the prescribed  rates from
the SEC's Public Reference  Section,  450 Fifth Street N.W.,  Washington,  D.C.,
20549. You may inspect and copy those  registration  statements and 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.

     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE:  To the extent and only to
the extent that any statement in a document  incorporated by reference into this
Prospectus is modified or  superseded by a statement in this  Prospectus or in a
later-filed document,  such statement is hereby deemed so modified or superseded
and not part of this Prospectus.

We furnish you without charge a copy of any or all of the documents incorporated
by reference in this Prospectus,  including any exhibits to such documents which
have been specifically  incorporated by reference. We 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.

     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  funds  and  their  portfolios  may be  found  either  in the
prospectuses  for such  mutual  funds or in the annual  reports  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.

                                                     Your Transaction Expenses

<TABLE>
<CAPTION>
<S>                                                                 <C>
Sales Charge                                                                                                                  None

Annual Maintenance Fee                                                                   Smaller of $35.00 or 2% of Account Value

Tax Charges                                                           Dependent on the requirements of the applicable jurisdiction

Transfer Fee                                                        $10.00 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                                                                                           0.50%
Administration Charge                                                                                                        0.15%
                                                                                                                             -----
Total Annual Expenses of the Sub-accounts                                                                                    0.65%
</TABLE>



<PAGE>


     Underlying  Mutual Fund  Portfolio  Annual  Expenses  (as a  percentage  of
average net assets)

Unless  otherwise  shown,  the  expenses  shown  below  are for the year  ending
December  31,  1995.  "N/A" shown below  indicates  that no entity has agreed to
reimburse the particular expense indicated.  "+" indicates that no reimbursement
was provided in 1995,  but that the  underlying  mutual fund has indicated to us
that current arrangements (which may change) provide for reimbursement.

<TABLE>
<CAPTION>
                                         Manage-         Manage-                                        Total          Total
                                          ment            ment           Other          Other          Annual         Annual
                                           Fee             Fee         Expenses       Expenses        Expenses       Expenses
                                          after          without         after         without          after         without
                                           any             any            any            any             any            any
                                       applicable      applicable     applicable     applicable      applicable     applicable
                                       reimburse-      reimburse-     reimburse-     reimburse-      reimburse-     reimburse-
                                          ment            ment           ment           ment            ment           ment
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>              <C>             <C>           <C>              <C>           <C>
American Skandia Trust
  JanCap Growth                            N/A            0.90%            +            0.22%             +            1.12%
  Janus Overseas Growth(4)                tbd              tbd            tbd            tbd             tbd            tbd
  Lord Abbett Growth
    and Income                             N/A            0.75%            +            0.24%             +            0.99%
  Seligman Henderson
    International Equity                  0.90%           1.00%            +            0.27%             +            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%
  Founders Passport(4)                     tbd             tbd            tbd            tbd             tbd            tbd
  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%          0.61%           1.45%          1.61%
  Putnam Growth and Income (4)             tbd             tbd            tbd            tbd             tbd            tbd
  Putnam Overseas Equity(4)                tbd             tbd            tbd            tbd             tbd            tbd
  Twentieth Century Balanced(4)            tbd             tbd            tbd            tbd             tbd            tbd
  Twentieth Century International Growth(4)tbd             tbd            tbd            tbd             tbd            tbd

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%

                                                    (continued on the next page)
</TABLE>



<PAGE>


<TABLE>
<CAPTION>
                                         Manage-         Manage-                                        Total          Total
                                          ment            ment           Other          Other          Annual         Annual
                                           Fee             Fee         Expenses       Expenses        Expenses       Expenses
                                          after          without         after         without          after         without
                                           any             any            any            any             any            any
                                       applicable      applicable     applicable     applicable      applicable     applicable
                                       reimburse-      reimburse-     reimburse-     reimburse-      reimburse-     reimburse-
                                        ment             ment           ment            ment           ment           ment
- ------------------------------------------------------------------------------------------------------------------------------------

<S>                                        <C>            <C>              <C>          <C>               <C>          <C>
Neuberger & Berman Advisers
    Management Trust
  Partners(5)                              N/A            0.85%            +            0.30%             +            1.15%

Montgomery Variable Series
  Emerging Markets(6)                      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)  These  portfolios  were  first  offered  for  sale  as of the  date of this
Prospectus, therefore expenses shown are estimated and annualized and should not
be considered  representative of future expenses; actual expenses may be greater
than those shown.

(5 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.

(6) 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  will  bear  directly  or
indirectly  if you  maintain  Account  Value in the  Sub-accounts.  The examples
reflect expenses of our Sub-accounts, as well as those for the underlying mutual
fund portfolios.

The examples shown assume that: (a) all your Account Value is maintained only in
Sub-accounts;   (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 PAST OR FUTURE  EXPENSES OF THE  UNDERLYING  MUTUAL  FUNDS OR
THEIR  PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER 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  $1,000.00  investment,  assuming  5% annual  return on
assets:

                                                                          After:
<TABLE>
<CAPTION>
Sub-accounts
                                                          1 yr.                                      3 yrs.

<S>                                                                    <C>                                                      
Seligman Henderson International Equity 2                              [to be provided upon amendment]
Seligman Henderson International Small Cap 2
LA Growth and Income
JanCap Growth 2
Janus Overseas Growth 2
Fed Utility Inc 2
Fed High Yield 2
AST Phoenix Balanced Asset 2
AST Money Market 2
T. Rowe Price Asset Allocation 2
T. Rowe Price International Equity 2
T. Rowe Price Natural Resources 2
T. Rowe Price International Bond 2
Founders Capital Appreciation 2
Founders  Passport 2 
INVESCO  Equity  Income 2 
PIMCO  Total  Return Bond 2 
PIMCO Limited  Maturity  Bond 2  
Berger  Capital  Growth  2 
RS Value + Growth 2 
Putnam Growth and Income 2 
Putnam Overseas Equity 2 
Twentieth Century Balanced 2
Twentieth Century International Growth 2
AA Small Capitalization 2
AA Growth 2
AA MidCap Growth 2 
NB Partners 2 
MV Emerging Markets 2
</TABLE>

CONDENSED FINANCIAL INFORMATION: The Unit Prices and number of Units in a number
of 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  as  investment  options on or before  12/31/1995  in other
annuities we offer; 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.

     The total annual  expenses of the Class 2 Sub-accounts  from 7/1/1994 until
the Valuation Date immediately  prior to the date of this Prospectus were 0.90%.
Prior to 7/1/1994,  the total annual expenses included an investment  allocation
services  charge of 1.00%,  so the total annual  expenses were 1.90%.  As of the
date of this  Prospectus,  such total  annual  expenses  were  reduced to 0.65%.
Therefore,  Unit Prices as of the dates shown  reflect the actual  total  annual
expenses assessed against the Class 2 Sub-accounts.

     [Values are shown for Class 2  Sub-accounts.  The document to which this is
compares shows Class 1 Sub-account values.]

            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)
                          ------            ------           ------            ------           ------            ------

<S>                     <C>               <C>              <C>               <C>              <C>               <C>
No. of Units
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>
                                     Sub-Account and the Year Sub-Account Operations Commenced

                                              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)
                          ------             -----           ------            ------           ------            ------
<S>                     <C>               <C>               <C>              <C>               <C>              <C>
No. of Units
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>
                                     Sub-Account and the Year Sub-Account Operations Commenced

                                                              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)
                          ------            ------           ------            ------           ------            ------

<S>                     <C>               <C>              <C>               <C>               <C>              <C>
No. of Units
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>




<PAGE>


<TABLE>
<CAPTION>
                                     Sub-Account and the Year Sub-Account Operations Commenced

                            AA                AA
                           Small            MidCap             NB
                           Cap 2           Growth 2        Partners 2
                          (1993)            (1993)           (1995)
                           -----            ------           ------

<S>                     <C>               <C>              <C>   
No. of Units
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
hypothetical yields for a hypothetical  contract.  The yield is calculated based
on the hypothetical performance of the AST Money Market 2 Sub-account,  assuming
total annual expenses of 0.65%,  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 and
other institutions which pay a fixed yield over a stated period of time, or with
investment  companies  which  do not  serve as  underlying  funds  for  variable
annuities.

Sub-account               Current Yield                  Effective Yield
 AST Money Market 2         [       ]                        [        ]

     INVESTMENT  OPTIONS: We offer a range of variable and fixed options as ways
to invest your Account Value.

     Variable  Investment  Options:  During the  accumulation  phase, we offer a
number of Sub-accounts  as variable  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 a portfolio of an underlying  mutual fund. As of the
date of this Prospectus,  our  Sub-accounts  and the underlying  mutual funds or
portfolios in which they invest are as follows:

<TABLE>
<CAPTION>
<S>                   <C>                                                     <C>      <C> 
                      Underlying Mutual Fund:                                          The Alger American Fund

                      Sub-account                                             Underlying Mutual Fund Portfolio

                      AA Small Capitalization 2                                           Small Capitalization
                      AA Growth 2                                                                       Growth
                      AA MidCap Growth 2                                                         MidCap Growth

                      Underlying Mutual Fund:                                      Neuberger & Berman Advisers
                                                                                              Management Trust

                      Sub-account                                             Underlying Mutual Fund Portfolio

                      NB Partners 2                                                                   Partners



<PAGE>


                      Underlying Mutual Fund:                                           American Skandia Trust

                      Sub-account                                            Underlying Mutual Fund Portfolio

                      Seligman Henderson International Equity 2        Seligman Henderson International Equity
                      Seligman Henderson International                        Seligman Henderson International
                        Small Cap 2                                                                  Small Cap
                      LA Growth and Income 2                                     Lord Abbett Growth and Income
                      JanCap Growth 2                                                            JanCap Growth
                      Janus Overseas Growth 2                                            Janus Overseas Growth
                      Fed Utility Inc 2                                               Federated Utility Income
                      Fed High Yield 2                                                    Federated High Yield
                      AST Phoenix Balanced Asset 2                                  AST Phoenix Balanced Asset
                      AST Money Market 2                                                      AST Money Market
                      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
                      Founders Passport 2                                                    Founders Passport
                      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
                      Putnam Growth and Income 2                                      Putnam Growth and Income
                      Putnam Overseas Equity 2                                          Putnam Overseas Equity
                      Twentieth Century Balanced 2                                  Twentieth Century Balanced
                      Twentieth Century International Growth 2          Twentieth Century International Growth

                      Underlying Mutual Fund:                                       Montgomery Variable Series

                      Sub-account                                            Underlying Mutual Fund Portfolio

                      MV Emerging Markets 2                      Montgomery Variable Series:  Emerging Markets
</TABLE>

Certain Sub-accounts may not be available in all jurisdictions.

We  may  make  other   underlying   mutual  funds   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 may be disclosed in its prospectus. However, addition of a portfolio
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.  A summary of the investment  objectives and policies 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 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 qualify 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 statements of
additional  information for such  underlying  mutual fund. Also included in such
information is the investment policy of each mutual fund or 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 or
portfolio will meet its investment objectives.

Shares  of the  underlying  mutual  funds  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 our Concierge Desk, 1-800-752-6342 or
writing to us, Attention:
Concierge Desk, at P.O. Box 883, Shelton, Connecticut, 06484-0883.

     Fixed Investment Options:  For the payout phase you may elect fixed annuity
payments based on our then current annuity rates. The discussion below describes
the fixed investment options in the accumulation phase.

As of the date of this  Prospectus we offer in most  jurisdictions  in which the
Annuity is available Fixed  Allocations with Guarantee  Periods of 1, 2, 3, 5, 7
and 10 years. Each such Fixed Allocation is accounted for separately. Each Fixed
Allocation earns a fixed rate of interest throughout a set period of time called
a Guarantee  Period.  Multiple Fixed  Allocations are permitted,  subject to our
allocation  rules.  The  duration  of a  Guarantee  Period  may be the  same  or
different from the duration of the Guarantee  Periods of any of your prior Fixed
Allocations.

We may  or may  not be  able  to  obtain  approval  in  the  future  in  certain
jurisdictions  of endorsements to individual or group annuities that include the
type of Fixed Allocations offered pursuant to this Prospectus.  If such approval
is  obtained,  we may take those  steps  needed to make such  Fixed  Allocations
available to purchasers to whom  Annuities were issued prior to the date of such
approval.

To the  extent  permitted  by law,  we  reserve  the  right at any time to offer
Guarantee  Periods with  durations  that differ from those which were  available
when your  Annuity  was  issued.  We also  reserve the right at any time to stop
accepting  new  allocations,  transfers or renewals  for a particular  Guarantee
Period.

A Guarantee Period for a Fixed Allocation  begins: (a) when all or part of a Net
Purchase  Payment is allocated for that particular  Guarantee  Period;  (b) upon
transfer of any of your Account Value to a Fixed  Allocation for that particular
Guarantee  Period;  or (c)  when a  Guarantee  Period  attributable  to a  Fixed
Allocation "renews" after its Maturity Date.

We declare the rates of interest applicable during the various Guarantee Periods
offered.  Declared  rates are  effective  annual rates of interest.  The rate of
interest  applicable  to a  Fixed  Allocation  is the  one in  effect  when  its
Guarantee Period begins. The rate is guaranteed throughout the Guarantee Period.
We inform you of the interest rate applicable to a Fixed Allocation,  as well as
its Maturity Date,  when we confirm the  allocation.  We declare  interest rates
applicable to new Fixed Allocations from time-to-time.  Any new Fixed Allocation
in an existing Annuity is credited  interest at a rate not less than the rate we
are then crediting to Fixed  Allocations for the same Guarantee  Period selected
by new Annuity purchasers in the same class.

The interest  rates we credit are subject to a minimum.  We may declare a higher
rate. The minimum is based on both an index and a reduction to the interest rate
determined according to the index.

The  index is based on the  Strip  Yields as  provided  to us by an  independent
pricing  service of our  choosing as of the date we declare a rate of  interest.
The  applicable  maturity  of the  Strips  is the  same as the  maturity  of the
Guarantee  Period.  If no Strips are available for such term,  the next shortest
term is used. If the United States Treasury discontinues offering or if there is
any disruption in the market for Strips that would have an impact on our ability
to obtain market  valuations for such  instruments,  we will substitute  indexes
which  in our  opinion  are  comparable.  If  required,  implementation  of such
substitute  indexes will be subject to approval by the  Securities  and Exchange
Commission  and the  Insurance  Department  of the  jurisdiction  in which  your
Annuity was delivered. (For Annuities issued as certificates of participation in
a group contract,  it is our expectation  that approval of only the jurisdiction
in which such group contract was delivered applies.)

The reduction used in determining the minimum  interest rate is one and one half
percent of interest (1.50%).

Where  required by the laws of a  particular  jurisdiction,  a specific  minimum
interest rate, compounded yearly, will apply should the index less the reduction
be less than the specific minimum interest rate applicable to that jurisdiction.

WE MAY CHANGE THE INTEREST  RATES WE CREDIT NEW FIXED  ALLOCATIONS  AT ANY TIME.
Any such  change  does not  have an  impact  on the  rates  applicable  to Fixed
Allocations with Guarantee Periods that began prior to such change.



<PAGE>


We have no specific formula for determining the interest rates we declare. Rates
may differ  between  classes and between  types of annuities we offer,  even for
guarantees  of the same  duration  starting  at the same  time.  We  expect  our
interest  rate  declarations  for  Fixed  Allocations  to  reflect  the  returns
available on the type of investments  we make to support the various  classes of
annuities  supported by the assets in Separate  Account D. However,  we may also
take into  consideration in determining  rates such factors  including,  but not
limited to, the durations  offered by the  annuities  supported by the assets in
Separate  Account D,  regulatory  and tax  requirements,  the  liquidity  of the
secondary   markets  for  the  type  of   investments   we  make,   commissions,
administrative expenses, investment expenses, our mortality and expense risks in
relation to Fixed  Allocations,  general  economic trends and  competition.  OUR
MANAGEMENT MAKES THE FINAL DETERMINATION AS TO INTEREST RATES TO BE CREDITED. WE
CANNOT PREDICT THE RATES WE WILL DECLARE IN THE FUTURE.

     OPERATIONS OF THE SEPARATE ACCOUNTS:  The assets supporting our obligations
under the Annuities may be held in various accounts, depending on the obligation
being supported. In the accumulation phase, assets supporting Account Values are
held  in  separate  accounts   established  under  the  laws  of  the  State  of
Connecticut.  In the payout phase,  assets supporting fixed annuity payments and
any  adjustable  annuity  payments  we make  available  are held in our  general
account.

     Separate  Accounts:  We are the  legal  owner  of  assets  in the  separate
accounts.  Income,  gains and  losses,  whether  or not  realized,  from  assets
allocated to these separate  accounts,  are credited to or charged  against each
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 each 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  separate  accounts  are  subject  to the  requirements  of
applicable state laws.  These  investment  requirements may differ between those
for separate  accounts  supporting  variable  obligations and those for separate
accounts supporting fixed obligations.

     Separate  Account  B: In the  accumulation  phase,  the  assets  supporting
obligations based on allocations to the variable  investment options are held in
our Separate  Account B. Separate  Account B consists of multiple  Sub-accounts.
Separate Account B was established by us pursuant to Connecticut  law.  Separate
Account B also  holds  assets of other  annuities  issued by us with  values and
benefits that vary according to the investment  performance of Separate  Account
B.

The   Sub-accounts   offered  pursuant  to  this  Prospectus  are  all  Class  2
Sub-accounts  of  Separate  Account B. Each class of  Sub-accounts  in  Separate
Account B have a different level of charges assessed against such  Sub-accounts.
From the date Class 2 operations  commenced,  November 16, 1993,  until June 30,
1994, the annualized  expenses charged against the Class 2 Sub-accounts  totaled
1.90%. This included 1.00% as an investment allocation services charge and 0.90%
for the  combination  of mortality and expense  risk, as well as  administration
charges.  Starting on July 1, 1994, we waived the investment allocation services
charge, so that the total annualized  charges were 0.90%. As of the date of this
Prospectus, the total annualized charges were reduced to 0.65%.

The amount of our obligations in relation to allocations to the  Sub-accounts is
based  on  the  investment  performance  of  such  Sub-accounts.   However,  the
obligations themselves are our general corporate obligations.

Separate  Account  B is  registered  with the SEC  under  the 1940 Act as a unit
investment trust, which is a type of investment  company.  This does not involve
any supervision by the SEC of the investment  policies,  management or practices
of Separate Account B. Each Sub-account  invests only in a single mutual fund or
mutual fund portfolio.

The only  Sub-accounts  available for allocation of your Account Value are those
offered pursuant to this Prospectus.  Persons  interested in our other annuities
may be offered the same or different  Sub-accounts of Separate  Account B or any
of our other separate  accounts.  Such sub-accounts may invest in some or all of
the same underlying  mutual funds or portfolios of such underlying  mutual funds
as the Sub-accounts offered pursuant to this Prospectus.  As of the date of this
Prospectus,  the Annuities  offered  pursuant to this  Prospectus  and annuities
offered pursuant to a number of other prospectuses  maintained assets in Class 2
Sub-accounts.  We may offer additional annuities that maintain assets in Class 2
Sub-accounts.  In  addition,  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 these  underlying  mutual funds and
portfolios  in  the  prospectuses  for  such  funds.  Portfolios  added  to  the
underlying mutual funds 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 funds or fund  portfolios,  as
applicable.  We do not guarantee the investment results of any Sub-account,  nor
is there any 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.

     Separate  Account  D: In the  accumulation  phase,  assets  supporting  our
obligations  based on Fixed Allocations are held in Separate Account D, which is
a "non-unitized"  separate  account.  Such obligations are based on the interest
rates we  credit to Fixed  Allocations  and the  terms of the  Annuities.  These
obligations  do not  depend  on the  investment  performance  of the  assets  in
Separate  Account  D.  Separate  Account D was  established  by us  pursuant  to
Connecticut law.

There are no discrete  units in Separate  Account D. No party with rights  under
any annuity nor any group contract owner  participates in the investment gain or
loss from  assets  belonging  to Separate  Account D. Such gain or loss  accrues
solely  to us.  We retain  the risk  that the  value of the  assets in  Separate
Account D may drop below the reserves and other  liabilities  we must  maintain.
Should the value of the assets in Separate  Account D drop below the reserve and
other  liabilities  we must maintain in relation to the  annuities  supported by
such  assets,  we will  transfer  assets  from our  general  account to Separate
Account  D to make up the  difference.  We have  the  right to  transfer  to our
general account any assets of Separate  Account D in excess of such reserves and
other liabilities.  We maintain assets in Separate Account D supporting a number
of annuities we offer.

If you  surrender,  withdraw or transfer  Account Value from a Fixed  Allocation
before the end of its  Guarantee  Period,  you bear the risk inherent in the MVA
(see  "Account  Value of the Fixed  Allocations").  The Account Value of a Fixed
Allocation is  guaranteed  on its Maturity  Date to be its then current  Interim
Value.

We operate  Separate  Account D in a fashion  designed  to meet the  obligations
created by Fixed  Allocations.  Factors  affecting these operations  include the
following:

         (1) The State of New York,  which is one of the  jurisdictions in which
we are  licensed  to do  business,  requires  that  we meet  certain  "matching"
requirements.  These  requirements  address the matching of the durations of the
assets with the durations of  obligations  supported by such assets.  We believe
these matching requirements are designed to control an insurer's ability to risk
investing in long-term assets to support short term interest rate guarantees. We
also believe this limitation  controls an insurer's ability to offer unrealistic
rate guarantees.

         (2) We  employ an  investment  strategy  designed  to limit the risk of
default.  Some of the guidelines of our current investment strategy for Separate
Account D include, but are not limited to, the following:

                  (a) Investments  may include cash;  debt securities  issued by
the United States Government or its agencies and instrumentalities; money market
instruments;   short,   intermediate   and  long-term   corporate   obligations;
asset-backed obligations; and municipal bonds.

                  (b) At the time of purchase,  fixed income  securities will be
in one of the top four generic lettered rating classifications as established by
a  nationally  recognized  statistical  rating  organization  (`NRSRO")  such as
Standard & Poor's or Moody's Investor Services, Inc.

We are not obligated to invest according to the aforementioned guidelines or any
other  strategy  except  as may be  required  by  Connecticut  and  other  state
insurance laws.

         (3) We have the sole discretion to employ  investment  managers that we
believe are qualified,  experienced and reputable to manage Separate  Account D.
We currently employ  investment  managers for Separate Account D including,  but
not  limited  to,  J.P.  Morgan  Investment  Management  Inc.  Each  manager  is
responsible for investment  management of different portions of Separate Account
D.  From  time  to  time  additional  investment  managers  may be  employed  or
investment  managers may cease being  employed.  We are under no  obligation  to
employ or continue to employ any investment manager(s).

     (4) The assets in  Separate  Account D are  accounted  for at their  market
value, rather than at book value.

         (5) We are  obligated by law to maintain  our capital and  surplus,  as
well as our reserves,  at the levels required by applicable  state insurance law
and regulation.
  
     INSURANCE  ASPECTS  OF THE  ANNUITY:  As an  insurance  company we bear the
insurance  risk inherent in the Annuity.  This includes the risks that mortality
and expenses exceed our expectations, and the investment and re-investment risks
in relation to the assets  supporting  obligations  not based on the  investment
performance of a separate  account.  We are subject to regulation  that requires
reserving and other practices in a manner that minimizes the insurance risk (see
"Regulation").

     CHARGES  ASSESSED OR ASSESSABLE  AGAINST THE ANNUITY:  The Annuity  charges
which are assessed or may be  assessable  under  certain  circumstances  are the
maintenance  fee, a charge  for taxes and a  transfer  fee.  These  charges  are
allocated  according to our rules.  The  maintenance fee and transfer charge are
not assessed if no Account Value is maintained in the  Sub-accounts  at the time
such fee or charge is payable.  However, we make certain  assumptions  regarding
maintenance  and transfer  expenses as part of the overall  expense  assumptions
used in determining the interest rates we credit to Fixed  Allocations.  Charges
are also assessed against the  Sub-accounts and the underlying  mutual funds. We
also may  charge  you for  special  services,  such as  dollar  cost  averaging,
rebalancing,  Systematic  Withdrawals,  Minimum  Distributions,  and  additional
reports. As of the date of this Prospectus, we do not charge you for any special
services.

     Maintenance  Fee: A maintenance fee equaling the smaller of $35.00 or 2% of
your then current  Account  Value is deductible  from the Account  Values in the
Sub-accounts  annually  and upon  surrender.  The fee is limited to the  Account
Values in the  Sub-accounts as of the Valuation  Period such fee is due. 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 31/2%,  and
are subject to change.  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 each
Annuity Year.  However,  the fee is only charged if there is Account Value in at
least one Sub-account immediately subsequent to such transfer.

     Allocation  Of Annuity  Charges:  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.  No fee is assessed if there is no Account Value
in any  Sub-account  at such time.  Tax charges are assessed  against the entire
Purchase Payment or Account Value as applicable. The 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.  There are no
charges deducted from the Fixed  Allocations.  The factors we use in determining
the  interest  rates we credit  Fixed  Allocations  are  described  above in the
subsection  entitled  Fixed  Investment  Options.  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 and the Fixed  Allocations
equal to any taxes which may be imposed upon the separate accounts.

     Administration  Charge:  We assess  each  Class 2  Sub-account,  on a daily
basis,  an  administration  charge.  The charge is 0.15% per year of the average
daily total value of such Sub-account.

We assess the  administration  charge and the maintenance fee,  described in the
subsection entitled  Maintenance Fee, at amounts we believe necessary to recover
the actual costs of 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.  However, we believe the
total  administration  charges made against the Class 2 Sub-accounts will not be
greater than the total  anticipated  costs.  We allocate costs pro-rata  between
classes in Separate  Account B in proportion  to the assets in various  classes.
Types of  expenses  which  might be incurred  include,  but are not  necessarily
limited to, the expenses  of:  developing  and  maintaining  a computer  support
system for  administering  the Account Values in the  Sub-accounts  and Separate
Account  B  itself,   preparing  and  delivering   confirmations  and  quarterly
statements,  processing transfers, withdrawal and surrender requests, responding
to Owner  inquiries,  reconciling and depositing cash receipts,  calculating and
monitoring  daily values of each  Sub-account,  reporting for the  Sub-accounts,
including quarterly,  semi-annual and annual reports, and mailing and tabulation
of shareholder proxy solicitations.

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: For Class 2 Sub-accounts, the mortality
risk  charge is 0.25% per year and the  expense  risk  charge is 0.25% per year.
These charges are assessed in combination  each day against each  Sub-account at
the rate of 0.50% 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:  Each  underlying  mutual  fund
assesses various charges for investment management and investment advisory fees.
These charges  generally  differ between  portfolios  within the same underlying
mutual fund. You will find additional  details in the fund  prospectuses 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.
Certain  benefits may be available to certain classes of purchasers.  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  (individual
retirement  accounts and individual  retirement  annuities - "IRAs";  Simplified
Employee Pensions).

We may require  additional  information  regarding such plans before we issue an
Annuity  to be used in  connection  with  such  retirement  plans.  We may  also
restrict  or  change  certain  rights  and  benefits  if, in our  opinion,  such
restrictions  or changes are necessary for your Annuity to be used in connection
with such  retirement  plans.  The Annuity may also be used in  connection  with
plans that do not qualify  under the sections of the Code noted  above.  Some of
the potential tax consequences  resulting from various uses of the Annuities are
discussed in the section entitled "Certain Tax Consequences".

     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. Where permitted
by law, we may issue an Annuity without completion of an Application for certain
classes of Annuities.

This Annuity is designed for use in connection with services, such as investment
allocation services,  provided by an Advisor. Before we issue an Annuity, we may
require  evidence  satisfactory  to us that you have  engaged the services of an
Advisor.

The minimum  initial  Purchase  Payment we accept is  $10,000.00  unless you are
participating in a program of periodic  Purchase  Payments that we accept (see "
Periodic  Purchase  Payments").  The minimum initial Purchase Payment  allowable
under  such a  program  is lower if the  total  Purchase  Payments  in the first
Annuity Year are scheduled to equal at least $10,000.00. We may require that the
initial Purchase Payment be a check or a wire transfer. 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  $1,000,000.00.
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.

     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 or automatic  periodic transfers to
us from a bank account ("bank drafting").  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 or bank drafting program and
we agree to accept Purchase Payments on this basis; (b) the allocations are only
to variable  investment  options or the frequency and number of  allocations  to
fixed  investment  options is limited in accordance with our rules;  and (c) the
total  amount 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 a certain period of time known as a "free-look" period.  Depending on the
applicable legal and regulatory requirements, this period may be within ten days
of receipt,  twenty-one  days of receipt or longer.  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 tax charge
deducted.   This  is  the  "standard  refund".  If  necessary  to  meet  Federal
requirements for IRAs or certain state law  requirements,  we return the greater
of the "standard  refund" or the Purchase Payments received less any withdrawals
(see  "Allocation of Net Purchase  Payments").  We tell you how we determine the
amount payable under any such right at the time we issue your Annuity.  Upon the
termination of the "free-look" period, if you surrender your Annuity, you may be
assessed the maintenance fee (see "Maintenance Fee").

     Allocation  of Net  Purchase  Payments:  All  allocations  of Net  Purchase
Payments  are  subject  to  our  allocation  rules  (see  "Allocation   Rules").
Allocation  of the  portion of the  initial  Net  Purchase  Payment  and any Net
Purchase Payments received during the free-look period that you wish to allocate
to any  Sub-accounts  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 that you indicate you
wish to go into the Sub-accounts to the AST Money Market 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  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  Payments received less
any withdrawals.  Instead,  you only are entitled to the return of the "standard
refund" (see "Right to Return the Annuity").

Your initial  Purchase  Payments,  as well as other  Purchase  Payments  will be
allocated in accordance with the then current  requirements of any  rebalancing,
asset  allocation  or market timing  program  which you have  authorized or have
authorized an  independent  third party to use in  connection  with your Annuity
(see "Allocation  Rules"). To the extent permitted by law, Net Purchase Payments
paid by check may be  delayed  until  such time as the  check  has  cleared  the
applicable bank upon which such check was drawn.

     Balanced  Investment  Program:  We offer a balanced  investment  program in
relation to your Purchase  Payments,  if Fixed  Allocations  are available under
your  Annuity.  If you  choose  this  program,  we commit a portion  of your Net
Purchase  Payments as a Fixed  Allocation  for the Guarantee  Period you select.
This Fixed  Allocation will have grown pre-tax to equal the exact amount of your
entire  Purchase  Payments  at the end of its  initial  Guarantee  Period  if no
amounts are  transferred  or withdrawn from such Fixed  Allocation.  The rest of
your Net Purchase Payments are invested in the variable  investment  options you
select.

     Ownership,   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.   Changing  the  Owner  or  Annuitant
designations may affect the minimum death benefit (see " Death Benefits").

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,  including,  but 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
during the  accumulation  phase.  Where allowed 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
qualifies 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, and
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 when death proceeds  become  payable or in the absence of any  Beneficiary
designation, the proceeds will vest in you or your estate.

     ACCOUNT VALUE AND SURRENDER 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.  However,  upon surrender,  the amount payable is the
Account Value less any applicable maintenance fee.

     Account  Value  in  the  Sub-accounts:  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.

     Account Value of the Fixed  Allocations:  We determine the Account Value of
each Fixed Allocation  separately.  A Fixed  Allocation's  Account Value as of a
particular  date is determined  by  multiplying  its then current  Interim Value
times the MVA.

A formula is used to  determine  the MVA. The formula is applied  separately  to
each Fixed  Allocation.  Values and time durations used in the formula are as of
the date for which the Account Value is being determined. The formula is:



<PAGE>


                           [(1+I) / (1+J+0.0010)]N/365

                                     where:

                  I is the Strip Yield as of the date the Guarantee Period began
                  (or if no Strip Yields are  available  on such date,  the most
                  recent  applicable  Strip Yield  available to us prior to such
                  date) for Strips  maturing at the end of the applicable  Fixed
                  Allocation's Guarantee Period. If there are no Strips maturing
                  at that time,  we use the Strip Yield for the Strips  maturing
                  as soon as possible after the Guarantee Period ends.

                  J is the Strip  Yield as of the date the MVA  formula is to be
                  applied (or if no Strip Yields are available on such date, the
                  most recent  applicable  Strip Yield  available to us prior to
                  such date) for Strips  maturing  at the end of the  applicable
                  Fixed  Allocation's  Guarantee  Period. If there are no Strips
                  maturing  at that time,  we use the Strip Yield for the Strips
                  maturing as soon as possible after the Guarantee Period ends.

                  N is the number of days remaining in such Guarantee Period.

No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date.

The MVA results in the Account Value of a Fixed  Allocation being lower than the
Interim  Value  when "J" plus 0.10  percent of  interest  exceeds  "I".  The MVA
results  in the  Account  Value of a Fixed  Allocation  being  greater  than the
Interim  Value when "J" plus 0.10  percent of interest is less than "I". See the
Statement of Additional Information for an illustration of how the MVA works.

The formula  that  applies if amounts are  surrendered  pursuant to the right to
return the  Annuity is  [(1+I)/(1+J]N/365  In this case,  the MVA results in the
Account Value of a Fixed  Allocation being lower than the Interim Value when "J"
exceeds "I", and in the Account  Value being greater than the Interim Value when
"J" is less than "I".

     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) changing  revocable
designations;  (c) transferring  Account Values between investment options;  (d)
receiving lump sum payments,  Systematic  Withdrawals or Minimum  Distributions,
annuity payments and death benefits; (e) transferring or assigning your Annuity;
(f) exercising  certain voting rights in relation to the underlying mutual funds
in which the  Sub-accounts  invest;  and (g)  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 voice or data transmission over the
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 transfer  over the telephone if we or such other person acted
on such  transfer  instructions  in good  faith in  reliance  on your  telephone
transfer  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 $100.00  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  instructions.  Should no  instructions be
received, we shall return your additional Purchase Payment.

     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.  Where  allowed by law,  such changes will be subject to our
acceptance.  Some of the changes we will not accept include, but are not limited
to:  (a) a new  Owner  subsequent  to the death of the Owner or the first of any
joint Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;  (b) a new Annuitant  subsequent to the Annuity Date
if the  annuity  option  selected  includes  a life  contingency;  and (c) 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.  Currently, you may also maintain an unlimited number
of Fixed  Allocations.  We reserve the right, to the extent permitted by law, to
limit the number of Fixed  Allocations  or the amount  you may  allocate  to any
Fixed  Allocation.  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 or Fixed  Allocation to the transaction and close
out your balance in that investment  option.  We also reserve the right to limit
the amount you may allocate to any Fixed Allocation.

Should you either: (a) request  rebalancing  services (see  "Rebalancing");  (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 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.

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.  For this  purpose  only,  the
Account Value in all your then current Fixed  Allocations is deemed to be in one
investment option. If you transfer or withdraw Account Value from multiple Fixed
Allocations  and do not provide  instructions  indicating the Fixed  Allocations
from which  Account Value should be taken:  (a) we transfer  Account Value first
from the Fixed  Allocation with the shortest amount of time remaining to the end
of its  Guarantee  Period,  and then  from the  Fixed  Allocation  with the next
shortest amount of time remaining to the end of its Guarantee Period,  etc.; and
(b) if there are multiple Fixed Allocations with the same amount of time left in
each Guarantee  Period,  as between such Fixed Allocations we first take Account
Value from the Fixed Allocation that had the shorter Guarantee Period.

     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 each 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 employ or you authorize to be employed
on your behalf.  Renewals or transfers of Account Value from a Fixed  Allocation
at the end of its  Guarantee  Period are not subject to the transfer  charge and
are not counted in  determining  whether  other  transfers may be subject to the
transfer charge (see  "Renewals").  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 an 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
funds; or (b) we are informed by one or more of the underlying mutual funds 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 affected underlying mutual funds.

To the extent  permitted by law, we may request up to 2 business days' notice of
any  transfer  into or out of a Fixed  Allocation  if the  market  value of such
transfer is at least $1,000,000.00.

In order to help you determine  whether you wish to transfer Account Values to a
Fixed  Allocation,  you may obtain our Current Rates by writing us or calling us
at  1-800-766-4530.  When doing so, please have readily  available  your Annuity
number and the personal identification number we provide.

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 for
transfers or allocations of Net Purchase Payments during any period in which you
authorize such third party that provides  market timing  services to act on your
behalf.  We give 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 an independent  Advisor 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 Advisor may employ,  or  transferring  Account  Values  between  investment
options in accordance  with market timing  strategies  employed by such Advisor.
Such  Advisors may or may not be appointed our agents for the sale of Annuities.
However,  we do not engage any Advisors 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  Advisors  or any  investment  allocation
recommendations  made by such Advisors.  We do not currently  charge you or your
Advisor extra for providing these support services.

     Renewals:  A renewal is a transaction  that occurs  automatically as of the
last day of a Fixed Allocation's  Guarantee Period unless we receive alternative
instructions.  This day as to each Fixed Allocation is called its Maturity Date.
As of the end of a  Maturity  Date,  the  Fixed  Allocation's  Guarantee  Period
"renews"  and a new  Guarantee  Period  of the  same  duration  as the one  just
completed begins. However, the renewal will not occur if the Maturity Date is on
the date we apply your Account  Value to  determine  the annuity  payments  that
begin on the Annuity Date (see "Annuity Payments").

As an  alternative  to a  renewal,  you may  transfer  all or part of that Fixed
Allocation's  Account Value to a different Fixed  Allocation or you may transfer
such Account Value to one or more Sub-accounts, subject to our allocation rules.
To accomplish  this, we must receive  instructions  from you In Writing at least
two  business  days before the Maturity  Date.  No MVA applies to transfers of a
Fixed Allocation's  Account Value occurring as of its Maturity Date. An MVA will
apply in determining the Account Value of a Fixed Allocation at the time annuity
payments are  determined,  unless the Maturity Date of such Fixed  Allocation is
the 15th day before the Annuity Date (see "Annuity Payments").

At least 30 days prior to a Maturity  Date,  or  earlier if  required  by law or
regulation,  we inform you of the Guarantee  Periods available as of the date of
such  notice.  We do not  provide  a similar  notice  if the Fixed  Allocation's
Guarantee Period is of less than a year's  duration.  Such notice may include an
example of the rates we are then crediting new Fixed  Allocations as of the date
such notice is prepared. The rates actually credited to a Fixed Allocation as of
the date of any renewal or transfer immediately  subsequent to the Maturity Date
may be more or less than any rates quoted in such notice.

If your Fixed  Allocation's  then ending Guarantee Period is no longer available
for new allocations and renewals or you choose a different Guarantee Period that
is no longer  available on the date  following the Maturity Date, we will try to
reach you so you may make another choice. If we cannot reach you, we will assign
the next shortest Guarantee Period then currently  available for new allocations
and renewals to that Fixed Allocation.

     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  $10,000.00  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 currently do not
permit dollar cost  averaging  programs  where Account Value is  transferred  to
Fixed Allocations. 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.

Dollar cost averaging from Fixed  Allocations is subject to the following rules:
(a) you may only use  Fixed  Allocations  with  Guarantee  Periods  of 1, 2 or 3
years;  (b)  such a  program  may  only be  selected  in  conjunction  with  and
simultaneous  to a new or  renewing  Fixed  Allocation;  (c) only  averaging  of
earnings only or principal plus earnings is permitted;  (d) a program  averaging
principal  plus earnings from a Fixed  Allocation  must be designed to last that
Fixed  Allocation's  entire current Guarantee Period;  (e) dollar cost averaging
transfers  from a Fixed  Allocation  are not subject to the MVA; (f) dollar cost
averaging  may  be  done  on  a  monthly  basis  only;   and  (g)  you  may  not
simultaneously  use Account  Value in any Fixed  Allocation  to  participate  in
dollar  cost   averaging   and  receive   Systematic   Withdrawals   or  Minimum
Distributions  from such Fixed  Allocation  (see  "Systematic  Withdrawals"  and
"Minimum Distributions").

     Rebalancing:  We 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 in variable investment options 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. If a transfer is requested  involving any investment option
participating in an automatic  rebalancing  program,  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  quarter  if  Account  Value  is  being
maintained  in the  AST  Money  Market  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 variable  investment  option at
any time. However,  you may not choose to allocate less than 5% of Account Value
to any variable investment option.

We do not offer automatic rebalancing in connection with Fixed Allocations.  The
Account Value of your Annuity must be at least  $10,000.00  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
variable  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 is permitted  during the accumulation
phase.  The amount payable is the then current Account Value less any applicable
maintenance  fee. We reserve the right to require  that your  Annuity  accompany
your surrender request.

     Partial  Withdrawals:  You may  withdraw  part of your Account  Value.  The
minimum partial withdrawal is $100.00. The Account Value that must remain in the
Annuity as of the date of this  transaction  is $1,000.00.  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.

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 requirements of Sections 401, 403 or
408 of the Code);  and (b) in relation to plans  pursuant to Section 403 or 408,
you and  your  Advisor  provide  representations  In  Writing  acceptable  to us
limiting the source of the Advisor's compensation to the assets of an applicable
qualified retirement plan, and making certain other representations.

     Systematic  Withdrawals:  We offer Systematic Withdrawals of earnings only,
principal plus earnings or a flat dollar  amount.  Systematic  Withdrawals  from
Fixed  Allocations  are  limited  to  earnings  accrued  after  the  program  of
Systematic  Withdrawals  begins, or payments of fixed dollar amounts that do not
exceed such earnings. A program of Systematic  Withdrawals begins on the date we
accept, at our Office, your request for such a program.

A Systematic  Withdrawal  from a Fixed  Allocation is not subject to the MVA. We
calculate the Fixed Allocation's credited interest since the prior withdrawal as
A minus B, plus C, where:

A is the Interim Value of the applicable Fixed Allocation as of the date of
the Systematic Withdrawal;

         B        is the Interim Value of the applicable  Fixed Allocation as of
                  the  later  of the  beginning  of its then  current  Guarantee
                  Period or the beginning of the Systematic  Withdrawal program;
                  and

         C        is the  total  of all  partial  or  free  withdrawals  and any
                  transfers  from such Fixed  Allocation  since the later of the
                  beginning  of  its  then  current   Guarantee  Period  or  the
                  beginning of the Systematic Withdrawal program.

Systematic  Withdrawals  are available on a monthly,  quarterly,  semi-annual or
annual basis. You may not simultaneously  receive Systematic  Withdrawals from a
Fixed Allocation and participate in a dollar cost averaging  program under which
Account Value is transferred  from the same Fixed  Allocation  (see "Dollar Cost
Averaging").  Systematic  Withdrawals are not available while you are taking any
Minimum Distributions (see "Minimum  Distributions").  Systematic Withdrawals of
earnings or earnings plus principal are not available  while any  rebalancing or
asset allocation program is in effect in relation to your Annuity.

The Account  Value of your  Annuity must be at least  $20,000.00  when we accept
your  request  for a program of  Systematic  Withdrawals.  The  minimum for each
Systematic  Withdrawal is $100.00. For any scheduled Systematic Withdrawal other
than the last that does not meet this  minimum,  we  reserve  the right to defer
such a  withdrawal  and add the amount  that would  have been  withdrawn  to the
amount that is to be withdrawn at the next Systematic Withdrawal.

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").  You may elect to
have  Minimum  Distributions  paid  out  monthly,  quarterly,  semi-annually  or
annually.

Each Minimum  Distribution will be taken from the investment options you select.
However,  the  portion of any  Minimum  Distribution  that can be taken from any
Fixed  Allocations  may not exceed the then current  ratio  between your Account
Value in all Fixed Allocations you maintain and your total Account Value. No MVA
applies to any portion of Minimum  Distributions  taken from Fixed  Allocations.
Minimum  Distributions are not available from any Fixed Allocation if such Fixed
Allocation  is being used in a dollar cost  averaging  program (see "Dollar Cost
Averaging").

     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. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant  dies,  the  Contingent  Annuitant then becomes the Annuitant.
There may be adverse tax  consequences  for certain entity Owners if they name a
Contingent Annuitant (see "Ownership, Annuitant and Beneficiary Designations").

The person upon whose death the death benefit is payable is referred to below as
the  "decedent".  For purposes of this death  benefit  provision,  "withdrawals"
means  withdrawals  of any type (partial  withdrawals,  Systematic  Withdrawals,
Minimum Distributions) after any applicable MVA. For purposes of this provision,
persons named Owner or Annuitant within 60 days of the Issue Date are treated as
if they were an Owner or Annuitant on the Issue Date.

The death benefit is as follows,  and is subject to the conditions  described in
(1),(2) and (3) below:

     (1) If death occurs before the  decedent's age 85: the death benefit is the
greater of (a) or (b), where:

     (a) is your Account  Value in  Sub-accounts  plus the Interim  Value of any
Fixed Allocations; or

     (b) the minimum death benefit ("Minimum Death Benefit").  The Minimum Death
Benefit is the sum of all Purchase Payments less the sum of all withdrawals.


     (2) If death occurs after the  decedent's age 85: the death benefit is your
Account Value.

         (3) If a decedent  was not named an Owner or  Annuitant as of the Issue
Date and did not  become  such as a result  of a prior  Owner's  or  Annuitant's
death:  the Minimum  Death Benefit is suspended as to that person for a two year
period  from the date he or she first  became an Owner or  Annuitant.  After the
suspension period is completed,  the death benefit is the same as if such person
had been an Owner or Annuitant on the Issue Date. During the suspension period:

                  (a) If that person's  death occurs before the  decedent's  age
85, the death benefit is your Account Value in the Sub-accounts plus the Interim
Value of any Fixed Allocation.

                  (b) If that person's death occurs after the decedent's age 85,
the death benefit is your Account Value.

The  amount of the death  benefit  is  determined  as of the date we  receive In
Writing:  (a) "due proof of death"; (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. The following constitutes "due proof of death":
(a) a certified copy of a death certificate; (b) a certified copy of a decree of
a court of competent  jurisdiction  as to the finding of death; or (c) any other
proof satisfactory to us.

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  allowed by law, if the Annuity is owned by 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.

     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.  Should Annuities subject to New York
law be made  available,  the Annuity Date for such  Annuities may not exceed the
first day of the calendar month following the Annuitant's  85th birthday.  Other
jurisdictions may impose similar requirements.

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.  Should
Annuities subject to New York law be made available,  for such Annuities, in the
absence of an election In Writing:  (a) the Annuity Date is the first day of the
calendar month  following the Annuitant's  85th birthday;  and (b) fixed monthly
payments will commence under Option 2, described  below,  with 10 years certain.
Other jurisdictions may impose similar requirements. 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, which is not less than 3% of interest per year,
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, but only to the extent selecting such
an option  does not alter the tax status of the  Annuity.  Except  where a lower
amount is required by law, the minimum monthly annuity payment is $100.00.

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.  Since no  minimum  number  of  payments  is
guaranteed,  this option  offers the maximum  level of periodic  payments of the
life contingent  annuity  options.  It is possible that only one payment will be
payable if the death of the key life occurs  before the date the second  payment
was due, and no other payments nor death benefits would be payable.

         (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,  and
thereafter during the remaining lifetime of the survivor,  ceasing with the last
payment  prior to the  survivor's  death.  No  minimum  number  of  payments  is
guaranteed  under this  option.  It is possible  that only one  payment  will be
payable  if the death of all the key lives  occurs  before  the date the  second
payment was due, and no other payments 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  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,  by the amount of the first  periodic
payment per $1,000.00 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 are  designed to qualify  under  various
sections of the Code.  These  limitations  do not affect  certain  roll-overs or
exchanges  between  qualified  plans.  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 may be 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, we are 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 us; 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 us.

     Pricing  of  Transfers  and   Distributions:   We  "price"   transfers  and
distributions on the dates indicated below.

         (1) We price  "scheduled"  transfers and  distributions  as of the date
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
date we receive 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  using  voice  or  data
transmission 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 date 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  involving  Sub-accounts includes the
determination  of the  applicable  Unit  Price  for  the  Units  transferred  or
distributed.   The  pricing  of  transfers  and  distributions  involving  Fixed
Allocations includes the determination of any applicable MVA. Any applicable MVA
alters the amount  available when all the Account Value in a Fixed Allocation is
being  transferred  or  distributed.  Any  applicable  MVA  alters the amount of
Interim  Value  needed  when  only a  portion  of the  Account  Value  is  being
transferred  or  distributed.  Unit Prices may change each  Valuation  Period to
reflect the investment  performance of the  Sub-accounts.  The MVA applicable to
each Fixed  Allocation  changes  once each month and also each time we declare a
different  rate for new Fixed  Allocations.  Payment  is subject to our right to
defer transactions for a limited 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
Account  Value  maintained in any Fixed  Allocations  or in relation to fixed or
adjustable annuity payments.

We will vote shares of the  underlying  mutual funds or  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  or  portfolio  will be
determined as of the record date for such underlying mutual fund or portfolio as
chosen by its board of trustees or board of 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 board of  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 a Sub-account  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.  Transfer  of all or a portion of
ownership rights may affect the minimum death benefit (see "Death Benefits").

     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 $50.00 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 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.

     SALE OF THE ANNUITIES:  American  Skandia  Marketing,  Incorporated  ("ASM,
Inc."),  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.  Under such distribution  agreements such  broker-dealers or
entities may offer Annuities to persons who have established an account with the
broker-dealer or entity. In addition,  ASM, Inc. may offer Annuities directly to
potential  purchasers.  Concessions  may be paid  based on  Account  Value.  The
maximum  concession to be paid in connection  with the sale is 0.30% per year of
the Account Value. 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
Investment Company Act of 1940.

     Advertising: We may advertise certain information regarding the performance
of the investment options.  Details on how we calculate performance measures for
the  Sub-accounts  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.

The information we may advertise regarding the Fixed Allocations may include the
then  current  interest  rates  we  are  crediting  to  new  Fixed  Allocations.
Information  on  Current  Rates  will  be as  of  the  date  specified  in  such
advertisement.  Given that the actual rates  applicable to any Fixed  Allocation
are as of the date of any such Fixed  Allocation's  Guarantee Period begins, the
rate credited to a Fixed  Allocation may be more or less than those quoted in an
advertisement.

Performance  information on the  Sub-accounts is based on past  performance only
and is no  indication of future  performance.  Performance  of the  Sub-accounts
should  not  be  considered  a   representation   of  the  performance  of  such
Sub-accounts in the future. Performance of the Sub-accounts is not fixed. Actual
performance will depend on the type,  quality and, for some of the Sub-accounts,
the  maturities  of the  investments  held by the  underlying  mutual  funds  or
portfolios  and  upon  prevailing  market  conditions  and the  response  of the
underlying mutual funds to such conditions.  Actual performance will also depend
on changes in the expenses of the underlying  mutual funds or  portfolios.  Such
changes  are  reflected,  in turn,  in the  Sub-accounts  which  invests in such
underlying mutual fund or portfolio. In addition, the amount of charges assessed
against each Sub-account will affect performance.

Some of the underlying mutual fund portfolios  existed prior to the inception of
these   Sub-accounts.   Performance   quoted  in   advertising   regarding  such
Sub-accounts  may indicate  periods during which the  Sub-accounts  have been in
existence but prior to the initial offering of the Annuities,  or periods during
which the  underlying  mutual fund  portfolios  have been in existence,  but the
Sub-accounts  have not. Such  hypothetical  performance is calculated  using the
same assumptions  employed in calculating  actual performance since inception of
the Sub-accounts.

Advertisements   we  distribute   may  also  compare  the   performance  of  our
Sub-accounts  with:  (a) certain  unmanaged  market  indices,  including but not
limited to the Dow Jones  Industrial  Average,  the  Standard & Poor's 500,  the
Shearson  Lehman Bond Index,  the Frank Russell  non-U.S.  Universal  Mean,  the
Morgan Stanley Capital  International  Index of Europe, Asia and Far East Funds,
and the Morgan  Stanley  Capital  International  World  Index;  and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio  underlying the Sub-accounts being compared.  This may include
the  performance  ranking  assigned by various  publications,  including but not
limited to the Wall Street Journal,  Forbes, Fortune, Money, Barron's,  Business
Week, USA Today and  statistical  services,  including but not limited to Lipper
Analytical  Services Mutual Funds Survey,  Lipper Annuity and Closed End Survey,
the Variable  Annuity  Research Data Survey,  SEI, the  Morningstar  Mutual Fund
Sourcebook and the Morningstar Variable Annuity/Life Sourcebook.

American  Skandia Life Assurance  Corporation  may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits,  pay annuity payments or administer Annuities.  Such
rankings  and  ratings do not reflect or relate to the  performance  of Separate
Account B.

     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.

     Transfers  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 Pension and Profit-sharing  Plans:  Annuities may be used to fund
employee   benefits  of  various   retirement  plans  established  by  corporate
employers.  Contributions  to such plans are not taxable to the  employee  until
distributions are made from the retirement plan. The Code imposes limitations on
contributions and  distributions.  The tax treatment of distributions is subject
to  special  provisions  of the  Code,  and also  depends  on the  design of the
specific   retirement   plan.   There  are  also  special   requirements  as  to
participation, nondiscrimination, vesting and nonforfeitability of interests.

     H.R. 10 Plans:  Annuities  may also be used to fund  benefits of retirement
plans  established  by  self-employed   individuals  for  themselves  and  their
employees.  These are commonly known as "H.R. 10 Plans" or "Keogh Plans".  These
plans are subject to most of the same types of limitations  and  requirements as
retirement plans established by corporations. However, the exact limitations and
requirements may differ from those for corporate plans.

     Tax Treatment of Distributions from Qualified Annuities:  A 10% penalty tax
applies to the  taxable  portion of a  distribution  from a  qualified  contract
unless one of the following  exceptions  apply to such  distribution:  (a) it is
part of a properly  executed  transfer to another IRA, an individual  retirement
account  or  another  eligible  qualified  plan;  (b) it  occurs on or after the
taxpayer's  age 59 1/2; (c) it is  subsequent  to the death or disability of the
taxpayer (for this purpose  disability is as defined in Section  72(m)(7) of the
Code);  (d) it is part of substantially  equal periodic  payments to be paid not
less  frequently than annually for the taxpayer's life or life expectancy or for
the  joint  lives  or  life  expectancies  of  the  taxpayer  and  a  designated
beneficiary;  (e) it is  subsequent  to a  separation  from  service  after  the
taxpayer  attains  age 55;  (f) it does  not  exceed  the  employee's  allowable
deduction in that tax year for medical care;  and (g) it is made to an alternate
payee pursuant to a qualified  domestic  relations order. The exceptions  stated
above in (e), (f) and (g) do not apply to IRAs.

     Section 457 Plans:  Under  Section 457 of the Code,  deferred  compensation
plans  established by  governmental  and certain other tax exempt  employers for
their employees may invest in annuity contracts.  The Code limits  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 distribution or transfer from a
Fixed Allocation or an annuity payout for a period not to exceed the lesser of 6
months or the period  permitted by law. If we defer a  distribution  or transfer
from any Fixed  Allocation  or 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  "unitized"  separate  accounts;  (c)  terminate
offering certain  Guarantee Periods for new or renewing Fixed  Allocations;  (d)
combine  Separate Account D with other  "non-unitized"  separate  accounts;  (e)
deregister Separate Account B under the 1940 Act; (f) operate Separate Account B
as a  management  investment  company  under the 1940 Act or in any  other  form
permitted by law; (g) make changes  required by any change in the Securities Act
of 1933,  the  Exchange  Act of 1934 or the 1940 Act;  (h) make changes that are
necessary  to maintain the tax status of your  Annuity  under the Code;  and (i)
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 "unitized"  separate account.  We also reserve the right to
transfer  assets of Separate  Account D which we determine to be associated with
the class of contracts to which your annuity belongs, to another  "non-unitized"
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.

     Indemnification:  Insofar as indemnification  for liabilities arising under
the  Securities  Act of 1933 may be permitted to directors,  officers or persons
controlling the registrant pursuant to the foregoing provisions,  the registrant
has been informed that in the opinion of the Securities and Exchange  Commission
such  indemnification  is against  public  policy as expressed in the Act and is
therefore unenforceable.

     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.

     THE  COMPANY:  American  Skandia  Life  Assurance  Corporation  is a  stock
insurance company domiciled in Connecticut with licenses in all 50 states. It 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,   and  American  Skandia   Information   Services  and  Technology
Corporation,  may undertake certain administrative  functions on our behalf. Our
affiliate, American Skandia Investment Services, Incorporated, currently acts as
the  investment  manager to the American  Skandia  Trust.  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.

     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.  Total shareholders' equity of Skandia Vida, S.A.
de C.V. is $881,648 at December 31, 1995.

     Lines of  Business:  The  Company is in the  business  of  issuing  annuity
policies,  and has been so since its  business  inception  in 1988.  The Company
currently offers the following annuity products:  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.

     Selected   Financial  Data:  The  following  selected  financial  data  are
qualified by reference to, and should be read in conjunction with, the financial
statements,  including related notes thereto,  and "Management's  Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this  Prospectus.  The  selected  financial  data as of and for each of the five
years ended December 31, 1995,  1994,  1993, 1992 and 1991 has not been audited.
The selected financial data has been derived from the full financial  statements
for the years ended  December 31,  1995,  1994,  1993,  1992 and 1991 which were
presented in accordance with generally accepted accounting  principles and which
were audited by Deloitte & Touch LLP, independent auditors, whose report thereon
is included herein.

Income Statement Data:
                         [to be updated upon amendment]



     Management's  Discussion and Analysis of Financial Condition and Results of
Operations

     Results of Operation:  The Company's  long term business plan was developed
reflecting  the current sales and marketing  approach.  Annuity sales  increased
19%, 54% and 210% in 1995, 1994 and 1993, respectively. The Company continues to
show  significant  growth in sales volume and increased  market share within the
variable annuity industry. Total assets grew 75%, 84% and 182% in 1995, 1994 and
1993,  respectively.  These  increases  were a direct result of the  substantial
sales volume increasing separate account assets and deferred  acquisition costs.
Liabilities grew 76%, 87%, and 198% in 1995, 1994 and 1993,  respectively,  as a
result of the reserves  required for the increased  sales activity and borrowing
during 1995,  1994 and 1993.  The  borrowing  is needed to fund the  acquisition
costs of the Company's variable annuity business.

The  Company  experienced  a net loss  after tax in 1995 and 1994,  which was in
excess of plan. The 1995 result was related to higher than  anticipated  expense
levels  and  additional  reserving  requirements  on our market  value  adjusted
annuities.  The increase in expenses was primarily attributable to improving our
service infrastructure and marketing related costs.

The 1994 loss is a result of additional  reserving of approximately $4.6 million
to cover the minimum death benefit exposure in the Company's  annuity  contracts
along with higher than expected general expenses  relative to sales volume.  The
additional  reserve  may be  required  from time to time,  within  the  variable
annuity market place, and is a result of volatility in the financial  markets as
it relates to the underlying separate account investments.  The Company achieved
profits in 1993 of $2 million which was expected.

Increasing  volume of annuity sales  results in higher assets under  management.
The fees realized on assets under management has resulted in annuity charges and
fees to increase 57%, 111% and 143% in 1995, 1994 and 1993, respectively.

Net investment income increased 23% and 88% in 1995 and 1994, respectively,  and
decreased  22% in 1993.  The  increase  in 1995 is a result of a higher  average
level of Company  bonds and  short-term  investments.  The increase in 1994 is a
result of an increase in the Company's bonds and short-term  investments,  which
were  $33.6   million  and  $29.1   million  at  December  31,  1994  and  1993,
respectively.  The  decrease  in  1993 is a  result  of the  need  to  liquidate
investments to support the cash needs required to fund the acquisition  costs on
the variable annuity business.

     Fee  income  has  increased  194%,  125% and 650% in 1995,  1994 and  1993,
respectively, as a result of income from transfer agency type activities.

Annuity benefits  represent  payments on annuity contracts with mortality risks,
this being the  immediate  annuity  with life  contingencies  and  supplementary
contracts with life contingencies.

Increase  in  annuity  policy  reserves  represent  change in  reserves  for the
immediate  annuity with life  contingencies,  supplementary  contracts with life
contingencies and minimum death benefit. During 1995 the Company entered into an
agreement to reinsure the guaranteed  minimum death benefit  exposure on most of
the variable annuity contracts. The costs associated with reinsuring the minimum
death  benefit  reserve  approximates  the change in the minimum  death  benefit
reserve during 1995,  thereby  having no significant  effect on the statement of
operations.  The significant  increase in 1994 reflects the required increase in
the minimum death benefit reserve on variable annuity  contracts.  This increase
covers the escalating death benefit in the product which was further enhanced as
a result of poor performance of the underlying  mutual funds within the variable
annuity contract.

Return credited to contractowners represents revenues on the variable and market
value adjusted  annuities  offset by the benefit payments and change in reserves
required on this business.  Also included are the benefit payments and change in
reserves on immediate annuity contracts without significant  mortality risks. In
1995, the Company earned a lower than anticipated  separate  account  investment
return on the market  value  adjusted  contracts  in support of the benefits and
required  reserves.  In  addition,  the 1995 result  includes an increase in the
required reserves associated with this product.

The  result  for  1994 was  better  than  anticipated  due to  separate  account
investment return on the market value adjusted  contracts being in excess of the
benefits and required reserves.

Underwriting,  acquisition and other  insurance  expenses for 1995 is made up of
$62.8 million of commissions and $42.2 million of general expenses offset by the
net  capitalization of deferred  acquisition costs totaling $69.2 million.  This
compares to the same period last year of $46.2 million of commissions  and $26.2
million  of  general  expenses  offset  by the net  capitalization  of  deferred
acquisition costs totaling $53.7 million.

Underwriting,  acquisition and other insurance  expenses in 1993 were made up of
$36.7 million of commissions and $19.3 million of general expenses offset by the
net capitalization of deferred acquisition costs totaling $46.3 million.

Interest  expense  increased  $2.9  million  and $3.4  million in 1995 and 1994,
respectively,  as a result  of  Surplus  Notes  totaling  $103  million  and $69
million, at 1995 and 1994, respectively.

     Liquidity and Capital Resources: The liquidity requirement of ASLAC was met
by cash from insurance operations, investment activities and borrowings from its
parent.

As previously  stated, the Company had significant growth during 1995. The sales
volume of $1.628 billion was primarily  (approximately  80%) variable  annuities
which carry a contingent  deferred  sales charge.  This type of product causes a
temporary  cash  strain in that 100% of the  proceeds  are  invested in separate
accounts  supporting the product  leaving a cash (but not capital) strain caused
by the  acquisition  cost for the new  business.  This cash strain  required the
Company to look beyond the insurance  operations and investments of the Company.
During 1995,  the Company  borrowed an additional $34 million from its parent in
the form of Surplus  Notes and extended  the  reinsurance  agreement  (which was
initiated  in 1993  and  1994)  along  with  entering  into a third  reinsurance
agreement with a large  reinsurer in support of its cash needs.  The reinsurance
agreements are modified  coinsurance  arrangements where the reinsurer shares in
the  experience  of a specific  book of business.  The income and expense  items
presented above are net of reinsurance.

The Company is  reviewing  various  options to fund the cash strain  anticipated
from the acquisition costs on the coming years' sales volume.

The tremendous growth of this young organization has depended on capital support
from its parent.

As of  December  31,  1995 and  December  31,  1994,  shareholder's  equity  was
$59,713,000 and $52,205,524  respectively,  which includes the carrying value of
the  state  insurance  licenses  in the  amount  of  $4,862,500  and  $5,012,500
respectively.

ASLAC has long term  surplus  notes with its  parent and a short term  borrowing
with an affiliate. No dividends have been paid to its parent company.

     Segment  Information:  As of the date of this  Prospectus,  we offered only
variable and fixed deferred annuities and immediate annuities.

     Reinsurance:  The Company  cedes  reinsurance  under  modified  coinsurance
arrangements.  The  reinsurance  arrangements  provide  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.

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.

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 agreement.

     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.

     Reserves: We are obligated to carry on our statutory books, as liabilities,
actuarial  reserves  to meet our  obligations  on  outstanding  annuity  or life
insurance contracts. This is required by the life insurance laws and regulations
in the  jurisdictions  in which  we do  business.  Such  reserves  are  based on
mortality  and/or  morbidity  tables in  general  use in the United  States.  In
general,  reserves are computed amounts that, with additions from premiums to be
received,  and with  interest on such  reserves  compounded  at certain  assumed
rates,  are expected to be  sufficient to meet our policy  obligations  at their
maturities if death occurs in accordance with the mortality tables employed.  In
the accompanying  Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted  accounting  principles and are
included in the  liabilities  of our separate  accounts and the general  account
liabilities for future benefits of annuity or life insurance contracts we issue.

     Competition: We are engaged in a business that is highly competitive due to
the large  number of insurance  companies  and other  entities  competing in the
marketing and sale of insurance  products.  There are approximately  2300 stock,
mutual and other types of insurers in the life insurance  business in the United
States.

     Employees:  As of December 31, 1995, we had 198 direct salaried  employees.
An affiliate,  American Skandia Information Services and Technology Corporation,
which  provides  services  almost  exclusively  to us,  had 67  direct  salaried
employees.

     Regulation: We are organized as a Connecticut stock life insurance company,
and are  subject  to  Connecticut  law  governing  insurance  companies.  We are
regulated and supervised by the Connecticut  Commissioner of Insurance. By March
1 of every  year,  we must  prepare  and  file an  annual  statement,  in a form
prescribed by the Connecticut Insurance Department,  which covers our operations
for the  preceding  calendar  year,  and must prepare and file our  statement of
financial  condition as of December 31 of such year. The Commissioner and his or
her  agents  have the  right at all times to  review  or  examine  our books and
assets.  A full  examination  of our operations  will be conducted  periodically
according to the rules and  practices of the National  Association  of Insurance
Commissioners ("NAIC"). We are subject to the insurance laws and various federal
and state  securities laws and regulations and to regulatory  agencies,  such as
the Securities and Exchange  Commission (the "SEC") and the Connecticut  Banking
Department, which administer those laws and regulations.

We can be assessed up to prescribed  limits for policyholder  losses incurred by
insolvent  insurers  under the insurance  guaranty fund laws of most states.  We
cannot predict or estimate the amount any such future assessments we may have to
pay. However,  the insurance  guaranty laws of most states provide for deferring
payment or  exempting  a company  from  paying  such an  assessment  if it would
threaten such insurer's financial strength.

Several states,  including  Connecticut,  regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates.  Under  such  laws,  inter-company  transactions,  such as  dividend
payments to parent  companies and  transfers of assets,  may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.

Currently,  the federal  government  does not directly  regulate the business of
insurance.  However, federal legislative,  regulatory and judicial decisions and
initiatives  often have  significant  effects on our business.  Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance  companies;  (b) the tax treatment of insurance products;  (c)
the  securities  laws,  particularly  as they  relate to  insurance  and annuity
products;  (d) the "business of insurance" exemption from many of the provisions
of the anti-trust  laws; (e) the barriers  preventing most banks from selling or
underwriting  insurance:  and (f) any initiatives  directed toward improving the
solvency  of  insurance  companies.   We  would  also  be  affected  by  federal
initiatives  that have impact on the ownership of or investment in United States
companies by foreign companies or investors.

Executive Officers and Directors:

Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding  work  experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.

<TABLE>
<CAPTION>
Name/                                                         Position with American Skandia
Age                                                            Life Assurance Corporation                       Principal Occupation

<S> <C>                                                       <C>                                <C>         <C> 
Alan Blank                                                    Employee                                           Vice President and,
48                                                                                                           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:
36                                                            Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

Henrik Danckwardt                                             Director (since July, 1991)                        Director of Finance
43                                                                                                               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,
42                                                                                                          Assurances and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

M. Patricia Paez                                              Assistant Vice President                      Assistant Vice President
36                                                            and Corporate Secretary                       and Corporate Secretary:
                                                                                                               American Skandia Life
                                                                                                               Assurance Corporation



<PAGE>


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>

Executive Compensation

     Summary   Compensation  Table:  The  summary  table  below  summarizes  the
compensation  payable  to our Chief  Executive  Officer  and to the most  highly
compensated of our executive  officers whose  compensation  exceeded $100,000 in
the fiscal year immediately preceding the date of this Prospectus.



<PAGE>


<TABLE>
<CAPTION>
                        <S>                          <C>               <C>                    <C>            <C>    
                        Name and Principal                              Annual                Annual         Other Annual
                             Position                Year               Salary                 Bonus         Compensation
                                                                          ($)                   ($)               ($)

                           Jan R. Carendi -           1995              $200,315
                             Chief Executive          1994               170,569
                             Officer                  1993               214,121

                           Gordon C. Boronow -        1995              $157,620
                             President and            1994               129,121
                             Chief Operating          1993               123,788
                             Officer

                           Lincoln R. Collins -       1995              $156,550
                             Senior Vice President    1994                92,700
                             Product Management       1993                72,100

                           N. David Kuperstock        1995              $133,120
                             Vice President,          1994               103,000
                             Product Development      1993                88,864

                           Bayard F. Tracy            1995              $168,052
                             Senior Vice President,   1994               127,050
                             Institutional Sales      1993               123,363
</TABLE>

     Long-Term  Incentive  Plans - Awards in the Last Fiscal Year: The following
table provides  information  regarding our long-term  incentive plan.  Units are
awarded to executive officers and other personnel. The table shows units awarded
to our Chief Executive Officer and the most highly  compensated of our executive
officers whose  compensation  exceeded  $100,000 in the fiscal year  immediately
preceding  the date of this  Prospectus.  This  program  is  designed  to induce
participants  to remain with the company  over long periods of time and to tie a
portion of their  compensation  to the fortunes of the company.  Currently,  the
program  consists of multiple  plans.  A new plan may be  instituted  each year.
Participants  are  awarded  units  at  the  beginning  of  a  plan.   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.  There
are certain exceptions, such as in cases of retirement or death.

Changes in the value of units  reflect  changes in the  "embedded  value" of the
company.  "Embedded  value" is the net asset  value of the  company  (valued  at
market value and not including the present  value of future  profits),  plus the
present  value of the  anticipated  future  profits  (valued  pursuant  to state
insurance  law) on its  existing  contracts.  Units  will not have any value for
participants  if  the  embedded  value  does  not  increase  by  certain  target
percentages  during the first four years of a plan. The target  percentages  may
differ between each plan. Any amounts available under a plan are paid out in the
fifth through eighth years of a plan.  Payments will be postponed if the payment
would exceed 20% of any profit (as determined  under state insurance law) earned
by the  company  in the prior  fiscal  year or 30% of the  individual's  current
salary year.  The amount to be received by a participant at the time any payment
is due will be the then current  number of units payable  multiplied by the then
current value of such units.

<TABLE>
<CAPTION>
                                                                             ---------Estimated Future Payouts---------

       Name                Number of Units    Period Until Payout        Threshold          Target          Maximum
                                   (#)                                      ($)              ($)               ($)

<S>                             <C>               <C>                                    <C>     
Jan R. Carendi                  120,000           Various                                $648,060
Gordon C. Boronow               110,000           Various                                $561,558
Lincoln R. Collins               36,750           Various                                $198,807
N. David Kuperstock              32,000           Various                                $200,968
Bayard E. Tracy                  52,500           Various                                $286,263
</TABLE>

     Compensation  of Directors:  The following  directors  were  compensated as
shown below in 1995:

Malcolm M. Campbell              $4,000      Gunnar Moberg                $2,500
Henrik Danckwardt                $4,000

     Compensation   Committee   Interlocks   and  Insider   Participation:   The
compensation  committee  of our  board of  directors  as of  December  31,  1995
consisted of Malcolm M. Campbell and Henrik Danckwardt.

     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) Calculating the Market Value Adjustment

(6) Independent Auditors

(7) Legal Experts

(8) Appendix A - Financial Statements for Separate Account B (Class 1
    Sub-accounts)

     FINANCIAL  STATEMENTS:  The financial statements which follow in Appendix A
are those of American  Skandia Life  Assurance  Corporation  for the years ended
December 31, 1995, 1994, and 1993,  respectively.  Financial  statements for the
Class 1  Sub-accounts  of  Separate  Account  B are  found in the  Statement  of
Additional Information.


<PAGE>
















                                   APPENDIXES


     APPENDIX  A  FINANCIAL  STATEMENTS  FOR  AMERICAN  SKANDIA  LIFE  ASSURANCE
CORPORATION


     APPENDIX B SHORT  DESCRIPTIONS  OF THE UNDERLYING  MUTUAL FUNDS'  PORTFOLIO
INVESTMENT OBJECTIVES AND POLICIES


<PAGE>


- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                   APPENDIX A

      FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

                           [to be filed by amendment]


<PAGE>


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>




                                   APPENDIX B

                            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.

Janus Overseas Growth Portfolio:  The investment objective of the Janus Overseas
Growth Portfolio is long-term growth of capital in a manner  consistent with the
preservation  of  capital.  It  is a  diversified  portfolio  that  pursues  its
objective  primarily  through  investments  in common stocks of issuers  located
outside the United  States.  The  portfolio has the  flexibility  to invest on a
worldwide  basis in  companies  and  organizations  of any size,  regardless  of
country of organization or place of principal business  activity.  The portfolio
will  normally  invest at least 65% of its total assets in securities of issuers
from at least five different  countries,  excluding the United States.  Although
the  portfolio  intends  to invest  substantially  all of its  assets in issuers
located outside the United States, it may at times invest in U.S. issuers and it
may at times  invest all of its assets in fewer  than five  countries  or even a
single  country.  The  portfolio  invests  primarily in common stocks of foreign
issuers  selected  for their growth  potential.  The  portfolio  may invest to a
lesser degree in other types of securities,  including preferred stock, warrants
convertible  securities and debt securities.  Debt securities that the portfolio
may purchase include corporate bonds and debentures (less than 35% of net assets
in  high-yield/high-risk  securities);   government  securities;  mortgage-  and
asset-backed securities (not to exceed 25% of assets); zero-coupon bonds (not to
exceed 10% of assets);  indexed/structured  notes;  high-grade commercial paper;
certificates of deposit;  and repurchase  agreements.  Such securities may offer
growth  potential  because of  anticipated  changes in  interest  rates,  credit
standing, currency relationships or other factors. The portfolio may also invest
in  short-term  debt  securities  as a means of receiving a return on idle cash.
When  the  portfolio's  Sub-advisor  believes  that  market  conditions  are not
favorable for profitable  investing or when the Sub-advisor is otherwise  unable
to locate favorable investment opportunities, the portfolio's investments may be
hedged to a greater degree and/or its cash or similar  investments may increase.
The  portfolio  may use  options,  futures  and other types of  derivatives  for
hedging purposes or as a means to enhancing return.

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
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  may be  made in two  principal  regions:  The  United  Kingdom  and
Continental  Europe;  and the  Pacific  Basin  Countries.  Continental  European
countries may include,  from time to time, 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 may 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 Portfolio:  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.

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.  Lower-rated  debt
obligations are generally considered to be high-risk investments.  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:  This 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.

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.

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%.

Founders Passport Portfolio:  The investment  objective of the Founders Passport
Portfolio is capital appreciation.  To achieve its objective, the portfolio will
invest  primarily in securities  issued by foreign  companies  which have market
capitalizations  or annual revenues of $1 billion or less.  These securities may
represent  companies in both established and emerging  economies  throughout the
world. At lease 65% of the portfolio's total assets will normally be invested in
foreign securities representing a minimum of three countries.  The portfolio may
invest  in  larger  foreign  companies  or in  U.S.-based  companies  if, in the
Sub-advisor's opinion they represent better prospects for appreciation.

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  Portfolio:  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.

Putnam  Growth and Income:  The  investment  objective of the Putnam  Growth and
Income  Portfolio  is to seek  capital  growth.  Current  income is a  secondary
objective. The portfolio invests primarily in common stocks that offer potential
for capital growth, and may, consistent with its investment objective, invest in
stocks that offer potential for current income.  The portfolio may also purchase
corporate bonds, notes and debentures,  preferred stocks, convertible securities
(both debt securities and preferred stocks) or U.S. government securities if the
sub-advisor  determines  that their purchase would help further the  portfolio's
investment  objective.  The types of  securities  held by the portfolio may vary
from time to time in light of the portfolio's  investment objective,  changes in
interest  rates,  and economic and other factors.  The portfolio may also hold a
portion of its assets in cash or money market  instruments.  The  portfolio  may
invest  up to 20% of its  assets in  securities  principally  traded in  foreign
markets.   The  portfolio  may  invest  in  both  higher-rated  and  lower-rated
fixed-income securities,  and is not subject to investment limitations on credit
ratings.

Putnam Overseas Equity  Portfolio:  The  investment  objective  of the  Putnam
Overseas  Equity  Portfolio is to seek capital  appreciation.  The  portfolio is
designed  for  investors  seeking  capital  appreciation   primarily  through  a
diversified  portfolio of equity  securities  of companies  located  outside the
United States of America.  The  portfolio's  investments  will normally  include
common stocks, preferred stocks, securities convertible into common or preferred
stocks,  and warrants to purchase common or preferred stocks.  The portfolio may
also invest to a lesser extent in debt securities and other types of investments
of the sub-advisor  believes  purchasing them would help achieve the portfolio's
objective. The portfolio will under normal circumstances, invest at least 65% of
its assets in at least three different countries outside of the United States.

Twentieth Century Balanced Portfolio:  The investment objective of the Twentieth
Century Balanced  Portfolio is to seek capital growth and current income.  It is
the  intention  of  the  sub-advisor  to  maintain   approximately  60%  of  the
portfolio's  assets in common stocks that are  considered by the  sub-advisor to
have better-than-average prospects for appreciation and the balance in bonds and
other fixed income securities.  The sub-advisor expects that a minimum of 25% of
the amount to be maintained in fixed income securities will be invested in fixed
income senior  securities.  Under normal market  conditions the weighted average
portfolio  maturity  of the  fixed  income  securities  will be in the  three-to
10-year  range.  At  least  80% of  fixed  income  assets  will be  invested  in
securities  which at the time of  purchase  are  rated  with the  three  highest
categories by a nationally recognized  statistical rating organization (at least
A by Moody's or Standard & Poor's).  The  remaining  portion of the fixed income
assets may be invested in issues in the fourth highest  category (Baa by Moody's
or BBB by S&P).

Twentieth Century  International  Growth Portfolio:  The investment objective of
the Twentieth  Century  International  Growth  Portfolio is capital growth.  The
portfolio will seek to achieve its investment  objective by investing  primarily
in securities of foreign  companies that meet certain  fundamental and technical
standards of selection  and have, in the opinion of the  Sub-advisor,  potential
for appreciation.  The portfolio will invest primarily in common stocks (defined
to include depository receipts for common stock and other equity equivalents) of
such  companies.  The  portfolio  will  try  to  stay  fully  invested  in  such
securities,  regardless of the movement of stock prices generally.  Although the
primary  investment of the portfolio  will be common  stocks,  the portfolio may
also invest in other types of securities  consistent with the  accomplishment of
the  portfolio's  objective.  When the  Sub-advisor  believes that total capital
growth potential of other  securities  equals or exceeds the potential return of
common  stocks,  the  portfolio may invest up to 35% of its assets in such other
securities.  The  portfolio  will  limit its  purchases  of debt  securities  to
investment-grade obligations. Under normal conditions, the portfolio will invest
at least 65% of its  assets in common  stocks  or other  equity  equivalents  of
issuers  from at  least  three  countries  outside  of the  United  States.  The
principal  criterion for inclusion of a security in the portfolio is its ability
to meet the fundamental and technical standards of selection and, in the opinion
of the Sub-advisor, to achieve better-than-average appreciation. The Sub-advisor
also will  consider a number of other  factors in making  investment  selections
including:  the  prospects  for  relative  economic  growth  among  countries or
regions,  economic and political conditions,  expected inflation rates, currency
exchange fluctuations and tax considerations.


                             The Alger American Fund

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 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  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 Management Trust).

     AMT  Partners  Investments:  The  investment  objective of the AMT Partners
Investments  is  to  seek  capital   growth.   This   investment   objective  is
non-fundamental.

The 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.






                   American Skandia Life Assurance Corporation
                            Attention: Concierge Desk
                                  P.O. Box 883
                           Shelton, Connecticut 06484

     
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PLEASE SEND ME A STATEMENT  OF  ADDITIONAL  INFORMATION  THAT  CONTAINS  FURTHER
DETAILS ABOUT THE AMERICAN  SKANDIA  ANNUITY  DESCRIBED IN PROSPECTUS 
 CHC2 PROS (10/96)
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     ADDITIONAL  INFORMATION:   Inquiries  will  be  answered  by  calling  your
representative or by writing to:

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                  P.O. Box 883
                           Shelton, Connecticut 06484


Issued by:                                                          Serviced at:
AMERICAN SKANDIA LIFE                                      AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION                                      ASSURANCE CORPORATION
One Corporate Drive                                                 P.O. Box 883
Shelton, Connecticut 06484                            Shelton, Connecticut 06484
Telephone: 1-800-752-6342                             Telephone:  1-800-752-6342

                                 Distributed by:

                    AMERICAN SKANDIA MARKETING, INCORPORATED
                               One Corporate Drive
                           Shelton, Connecticut 06484
                            Telephone: (203) 926-1888



- --------
* Trustees of American  Skandia  Trust,  one of the  underlying  mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.

                                                                

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution:  Not Applicable.

Item 14. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut  General  Statutes,  the  Registrant  must  indemnify  a director or
officer  against  judgments,  fines,  penalties,  amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought  against him in his capacity as a director or officer when certain
disinterested  parties  determine that he acted in good faith and in a manner he
reasonably  believed  to be in the  best  interests  of the  Registrant.  In any
criminal  action or proceeding,  it also must be determined that the director or
officer  had no reason to believe  his conduct  was  unlawful.  The  director or
officer  must also be  indemnified  when he is  successful  on the merits in the
defense of a proceeding or in circumstances  where a court determines that he is
fairly and  reasonable  entitled to be  indemnified,  and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged  not to have  breached  this  duty to the  Registrant  or a court  must
determine that he is fairly and reasonably  entitled to be indemnified  and must
approve the amount.  In a claim based upon the director's or officer's  purchase
or sale of the  Registrants'  securities,  the  director  or officer  may obtain
indemnification   only  if  a  court   determines  that,  in  view  of  all  the
circumstances,  he is fairly and reasonably  entitled to be indemnified and then
for such amount as the court shall  determine.  The By-Laws of American  Skandia
Life Assurance  Corporation  ("ASLAC") also provide  directors and officers with
rights of indemnification, consistent with Connecticut Law.

The foregoing statements are subject to the provisions of Section 33-320a.

Directors and officers of ASLAC and American  Skandia  Marketing,  Incorporated,
("ASM, Inc.") can also be indemnified  pursuant to Indemnity  Agreements between
each director and officer and American Skandia Investment Holding Corporation, a
corporation organized under the laws of the state of Delaware. The provisions of
the Indemnity  Agreement  are governed by Section 45 of the General  Corporation
Law of the State of Delaware.

The  directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers  liability  insurance  policy issued by an  unaffiliated  insurance
company and an insurance policy issued to Skandia  Insurance Company Ltd., their
ultimate  parent.  Such policy will reimburse ASLAC or ASM, Inc., as applicable,
for any payments  that it shall make to directors  and officers  pursuant to law
and, subject to certain exclusions  contained in the policy,  will pay any other
costs,  charges  and  expenses,  settlements  and  judgments  arising  from  any
proceeding  involving  any  director  or  officer  of  ASLAC  or ASM,  Inc.,  as
applicable, in his or her past or present capacity as such.

     Item 15. Recent Sales of Unregistered Securities:  ASLAC has not offered or
sold any unregistered securities.


<TABLE>
<CAPTION>
Item 16.  Exhibits and Financial Statement Schedules:

<S>      <C>                                                                                          <C> 
         Exhibits                                                                                     Page

1        Underwriting agreement incorporated by reference to Post-Effective Amendment
         No. 1 to Registration Statement No. 33-26122, filed March 1, 1990

2        Plan of acquisition, reorganization, arrangement, liquidation or succession        Not applicable

3        Articles of incorporation and by-laws incorporated by reference to Pre-Effective
         Amendment No. 2 to Registration Statement No. 33-19363, filed July 27, 1988

4        Instruments defining the rights of security holders, including indentures  (to be filed by amendment)

5        Opinion re legality                                                        (to be filed by amendment)

6 - 9                                                                                       Not applicable

10       Material contracts (Investment Management Agreement)

         (a) Agreement with J.P. Morgan Investment Management Inc. incorporated by reference to Post-Effective
              Amendment No. 5 to Registration Statement No. 33-26122, filed April 23, 1991

         (b) Agreement with Fleet Investment Advisors Inc., incorporated by reference to the initial filing of
               Registration Statement No. 33-86918 filed December 1, 1994

11 - 22                                                                                     Not applicable

23a      Consent of Deloitte & Touche LLP                                           (to be filed by amendment)

23b      Opinion & Consent of Werner & Kennedy                                      (to be filed by amendment)

24       Power of Attorney

         (a)  For Directors Boronow,  Campbell,  Carendi,  Danckwardt,  Dokken and Sutyak  incorporated by
              reference to Post-Effective  Amendment No. 10 to Registration Statement No. 33-19363,  filed
              February 28, 1992
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (b)  For Directors Mazzaferro,  Moberg, Soderstrom and Tracy incorporated by reference to initial
              Registration Statement No. 33-86918, filed December 1, 1994
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (c)  For  Director  Svensson  incorporated  by reference to initial  Registration  Statement  No.
              33-88360, filed January 10, 1995
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (d)  For  Directors  Brunetti,   Collins  and  Michael   incorporated  by  reference  to  initial
              Registration Statement No. 333-00941, filed February 15, 1996

25 - 28                                                                                     Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>


An index to the  financial  statement  schedules  is  omitted  because it is not
required or is not applicable.

Item 17.  Undertakings:  The undersigned Registrant hereby undertakes:

(1) To file,  during  any  period  in which  offers  or sales  are  being  made,
post-effective amendments to this registration statement:

 (i) To include any  prospectus  required by section 10 (a)(3) of the Securities
     Act of 1933; 

 (ii)To  reflect  in the  prospectus  any  facts or  events  arising  after  the
     effective  date  of  the   registration   statement  (or  the  most  recent
     post-effective amendment thereof) which,  individually or in the aggregate,
     represent  a  fundamental  change  in  the  information  set  forth  in the
     registration statement; and

 (iii) To  include  any  material  information  with  respect  to  the  plan  of
     distribution not previously disclosed in the registration  statement or any
     material change to such information in the registration statement.

(2) That, for the purpose of determining  any liability under the Securities Act
of  1933,  each  such  post-effective  amendment  shall  be  deemed  to be a new
registration statement relating the securities offered therein, and the offering
of such  securities  at that time  shall be deemed to be the  initial  bona fide
offering thereof.

(3) To remove from  registration by means of a  post-effective  amendment any of
the securities  being  registered  which remain unsold at the termination of the
offering.

(4)  The  undersigned   Registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to section  13(a) or section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(5) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

- --------------------------------------------------------------------------------

LEGAL EXPERTS:  Counsel with respect to Federal laws and regulations  applicable
to the issue and sale of the  Annuities and with respect to  Connecticut  law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.


<PAGE>


                                    Exhibits


                                   Exhibit 4

 Instruments defining the rights of security holders,  including  indentures 
                                                      (to be filed by amendment)


Exhibit 5 Opinion re Legality                         (to be filed by amendment)

Exhibit 23a Consent of Deloitte & Touche LLP          (to be filed by amendment)

Exhibit 23b Opinion & Consent to Werner & Kennedy     (to be filed by amendment)




                      Exhibit 4 (to be filed by amendment)



<PAGE>

                       Exhbit 5 (to be filed by amendment)



<PAGE>




                     Exhibit 23a (to be filed by amendment)

<PAGE>




                     Exhibit 23b (to be filed by amendment)

                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  registration  statement  to be signed  on its  behalf by the
undersigned,  thereunto  duly  authorized,  in the  City of  Shelton,  State  of
Connecticut, July 24, 1996.

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                   Registrant


By:/s/ M. Patricia Paez                             Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary                          Diana D. Steigauf

<TABLE>
<CAPTION>
Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed below by the following  persons in the  capacities and
on the date indicated.

Signature                                               Title                              Date
<S>                 <C>                                                                <C> 

                                             (Principal Executive Officer)


           Jan R. Carendi*                        Chief Executive Officer,         
           Jan R. Carendi                    Chairman of the Board and Director           July 24, 1996

                              (Principal Financial Officer and Principal Accounting Officer)


   /s/ Thomas M. Mazzaferro                  Executive Vice President and           
        Thomas M. Mazzaferro                       Chief Financial Officer                July 24, 1996


                              (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. 33-88630.
                   ****Pursuant to Powers of Attorney filed with the initial filing of Registration Statement No. 333-00941.
</FN>
</TABLE>
[{"type": "S-1", "sequence": "1", "description": "S1 CHOICE 2 INITIAL FILING", "secsgml_size_bytes": 380070}]
{"company-data": {"conformed-name": "AMERICAN SKANDIA LIFE ASSURANCE CORP/CT", "cik": "0000881453", "assigned-sic": "6399", "irs-number": "061241288", "state-of-incorporation": "CT", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-08743", "film-number": "96598503"}, "business-address": {"street1": "ONE CORPORATE DRIVE", "city": "SHELTON", "state": "CT", "zip": "06484", "phone": "2039261888"}, "mail-address": {"street1": "ONE CORPORATE DRIVE", "city": "SHELTON", "state": "CT", "zip": "06484"}}
Filed with the Securities and Exchange Commission on July 24, 1996

                            Registration No. 333-[ ]
================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM S-1

             Registration Statement Under The Securities Act of 1933

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
             (Exact name of registrant as specified in its charter)

                                   CONNECTICUT
         (State or other jurisdiction of incorporation or organization)

                                       63
            (Primary Standard Industrial Classification Code Number)

                                   06-1241288
                      (I.R.S. Employer Identification No.)

         ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484 (203) 926-1888
   (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                      M. PATRICIA PAEZ, CORPORATE SECRETARY
                 ONE CORPORATE DRIVE, SHELTON, CONNECTICUT 06484
        (203) 926-1888 (Name, address, including zip code, and telephone
               number, including area code, of agent for service)

                                    Copy To:

                              JOHN T. BUCKLEY, ESQ.
                                WERNER & KENNEDY
             1633 Broadway, New York, New York 10019 (212) 408-6900
             -------------------------------------------------------

     Approximate  date of commencement  of proposed sale to the public:  October
14, 1996 or as soon as practicable after the effective date of this Registration
Statement

     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933 check the following: X .

                         Calculation of Registration Fee
=================================================================================================================================
Title of each                                 Proposed              Proposed
              class of                                     maximum               maximum
             securities              Amount               offering              aggregate             Amount of
                to be                 to be                 price               offering            registration
             registered            registered             per unit               price*                  fee
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
          Annuity Contracts                                                 $290,000.00              $100.00
- --------------------------------------------------------------------------------

     *The proposed  aggregate offering price is estimated solely for determining
the  registration  fee. The amount to be  registered  and the  proposed  maximum
offering price per unit are not applicable since these securities are not issued
in predetermined amounts or units.
================================================================================
Registrant  hereby amends this  Registration  Statement on such date or dates as
may be necessary to delay its effective date until the  registrant  shall file a
further amendment which  specifically  states that this  Registration  Statement
shall  thereafter  become effective in accordance with the provisions of Section
8(a) of the Securities  Act of 1933 or until the  Registration  Statement  shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.

- --------------------------------------------------------------------------------
CHC2
CROSS REFERENCE SHEET PURSUANT TO REGULATION S-K, ITEM 501
S-1 Item No.                                                                            Prospectus Heading

1.       Forepart of the Registration Statement and                             Facing Page, Cross Reference Sheet,
         Outside Front Cover Page of Prospectus                                            Outside Front Cover Page

2.       Inside Front Cover and Outside Back Cover of Prospectus                             Available Information,
         Incorporation of Certain Documents by Reference,
         Reports to You, Table of Contents

3.       Summary Information, Risk Factors and Ratio of Earnings                            Highlights, Cover Page,
         to Fixed Charges                                                                       Separate Account D,
                                                                                   Insurance Aspects of the Annuity

4.       Use of Proceeds                            Fixed Investment Options, Separate Accounts, Separate Account D

5.       Determination of the Offering Price                                               Fixed Investment Options

6.       Dilution                                                                                    Not applicable

7.       Selling Security Holders                                                                    Not applicable

8.       Plan of Distribution                                                                 Sale of the Annuities

9.       Description of Securities to be Registered                       Investment Options, Purchasing Annuities,
         Account Value and Surrender Value,
         Rights, Benefits and Services

10.      Interests of named Expert and Counsel                                               Executive Compensation

11.      Information with Respect to the Registrant                                                     The Company

12.      Disclosure of Commission Position on Indemnification for                                   Indemnification
         Securities Act Liabilities

                                                                                                    Part II Heading

13.      Other Expenses of Issuance                                                      Other Expenses of Issuance
         and Distribution                                                                          and Distribution

14.      Indemnification of Directors and Officers                        Indemnification of Directors and Officers

15.      Recent Sales of Unregistered Securities                            Recent Sales of Unregistered Securities

16.      Exhibits and Financial Statement Schedules                      Exhibits and Financial Statement Schedules

17.      Undertakings                                                                                  Undertakings
This  Prospectus  describes a type of 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 individual annuity contracts or as interests in a group annuity. 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  and 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 is assessed any  applicable tax charge (see
"Tax  Charges").  It is then  allocated  to the  investment  options you select,
except in certain  jurisdictions,  where  allocations  of  Purchase  Payments we
receive during the "free-look"  period that you direct to any  Sub-accounts  are
temporarily allocated to a money-market type Sub-account (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 (see "Certain Tax Considerations").

Account Value in the variable investment options increases or decreases daily to
reflect investment  performance and the deduction of charges.  No minimum amount
is guaranteed (see "Account Value in the Sub-accounts"). The variable investment
options are Class 2 Sub-accounts of American Skandia Life Assurance  Corporation
Variable Account B ("Separate Account B")(see "Separate  Accounts" and "Separate
Account  B").  Each  Sub-account  invests  exclusively  in one  portfolio  of an
underlying  mutual fund or in 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,  Janus  Overseas
Growth, Lord Abbett Growth and Income,  Seligman Henderson International Equity,
Seligman Henderson International Small Cap, Federated Utility Income,  Federated
High Yield, AST Phoenix  Balanced Asset,  AST Money Market,  T. Rowe Price Asset
Allocation, T. Rowe Price International Equity, T. Rowe Price Natural Resources,
T. Rowe  Price  International  Bond,  Founders  Capital  Appreciation,  Founders
Passport, INVESCO Equity Income, PIMCO Total Return Bond, PIMCO Limited Maturity
Bond, Berger Capital Growth,  Robertson  Stephens Value + Growth,  Putnam Growth
and Income,  Putnam  Overseas  Equity,  Twentieth  Century  Balanced,  Twentieth
Century International Equity); (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).

In most  jurisdictions,  Account  Value may be allocated  to a fixed  investment
option during the accumulation  phase.  Account Value so allocated earns a fixed
rate of  interest  for a  specified  period of time  referred  to as a Guarantee
Period.  Guarantee  Periods of  different  durations  may be offered (see "Fixed
Investment  Options").  Such an allocation and the interest earned is guaranteed
by us only if held to its Maturity  Date. You are cautioned that with respect to
the fixed investment options during the accumulation  phase, we do not guarantee
any minimum amount,  because the value may be increased or decreased by a market
value  adjustment  (see  "Account  Value  of  the  Fixed  Allocations").  Assets
supporting  such  allocations  in the  accumulation  phase are held in  American
Skandia Life Assurance  Corporation  Separate  Account D ("Separate  Account D")
(see "Separate Accounts" and "Separate Account D").

We guarantee fixed annuity  payments.  We also guarantee any adjustable  annuity
payments we may make available (see "Annuity Payments").

This  Annuity is  designed  for use in  connection  with  investment  allocation
services  provided  by an Advisor.  Before we issue an  Annuity,  we may require
evidence satisfactory to us that you have engaged the services of an Advisor.

                              (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:  October 14, 1996
Statement of Additional Information Dated:  October 14, 1996
CHC2 PROS(10/96)
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 allocated to the variable  investment options are subject to investment
risks, including possible loss of principal.
(This page has been purposely left blank.)
- ---------------------------------------------------------------------------------------------------------------------------
                                                     TABLE OF CONTENTS
- ---------------------------------------------------------------------------------------------------------------------------
DEFINITIONS.....................................................................................................................6
HIGHLIGHTS......................................................................................................................8
AVAILABLE
INFORMATION...........................................................................................................          10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.................................................................................10
CONTRACT EXPENSE SUMMARY........................................................................................................10
EXPENSE EXAMPLES................................................................................................................12
CONDENSED FINANCIAL INFORMATION.................................................................................................13
         Unit Prices And Numbers of Units.......................................................................................13
INVESTMENT OPTIONS..............................................................................................................15
         Variable Investment Options............................................................................................15
         Fixed Investment Options...............................................................................................17
OPERATIONS OF THE SEPARATE ACCOUNTS.............................................................................................18
         Separate Accounts......................................................................................................18
         SeparateAccount B..................................................................................................... 18
         Separate Account D.....................................................................................................19
INSURANCE ASPECTS OF THE ANNUITY................................................................................................20
CHARGES ASSESSED OR ASSESSABLE AGAINST THE ANNUITY..............................................................................20
         Maintenance Fee........................................................................................................20
         Tax Charges............................................................................................................20
         Transfer Fee...........................................................................................................20
         Allocation Of Annuity Charges..........................................................................................20
CHARGES ASSESSED AGAINST THE ASSETS.............................................................................................20
         Administration Charge..................................................................................................20
         Mortality and Expense Risk Charges.....................................................................................21
CHARGES OF THE UNDERLYING MUTUAL FUNDS..........................................................................................21
PURCHASING ANNUITIES............................................................................................................21
         Uses Of The Annuity....................................................................................................21
         Application And Initial Payment........................................................................................21
         Periodic Purchase Payments.............................................................................................22
         Right to Return the Annuity............................................................................................22
         Allocation of Net Purchase Payments....................................................................................22
         Balanced Investment Program............................................................................................22
         Ownership, Annuitant and Beneficiary Designations......................................................................22
ACCOUNT VALUE AND SURRENDER VALUE...............................................................................................23
         Account Value in the Sub-accounts......................................................................................23
         Account Value of the Fixed Allocations.................................................................................23
RIGHTS, BENEFITS AND SERVICES...................................................................................................24
         Additional Purchase Payments...........................................................................................24
         Changing Revocable Designations........................................................................................24
         Allocation Rules.......................................................................................................25
         Transfers..............................................................................................................25
                  Renewals......................................................................................................26
                  Dollar Cost Averaging.........................................................................................26
                  Rebalancing...................................................................................................26
         Distributions..........................................................................................................27
                  Surrender.....................................................................................................27
                  Partial Withdrawals...........................................................................................27
                  Systematic Withdrawals........................................................................................27
                  Minimum Distributions.........................................................................................28
                  Death Benefit.................................................................................................28
                  Annuity Payments..............................................................................................29
                  Qualified Plan Withdrawal Limitations.........................................................................30
         Pricing of Transfers and Distributions.................................................................................31
         Voting Rights..........................................................................................................31
         Transfers, Assignments or Pledges......................................................................................32
         Reports to You.........................................................................................................32
SALE OF THE ANNUITIES...........................................................................................................32
         Distribution...........................................................................................................32
         Advertising............................................................................................................32
CERTAIN TAX CONSIDERATIONS......................................................................................................33
         Our Tax Considerations.................................................................................................33
         Tax Considerations Relating to Your Annuity............................................................................33
                  Non-natural Persons...........................................................................................33
                  Natural Persons...............................................................................................33
                  Distributions.................................................................................................33
                  Assignments and Pledges.......................................................................................34
                  Penalty on Distributions......................................................................................34
                  Annuity Payments..............................................................................................35
                  Gifts.........................................................................................................35
                  Tax Free Exchanges............................................................................................35
                  Transfers Between Investment Options..........................................................................35
                  Generation-Skipping Transfers.................................................................................35
                  Diversification...............................................................................................35
                  Federal Income Tax Withholding................................................................................35
         Tax Considerations When Using Annuities in Conjunction with Qualified Plans............................................35
                  Individual Retirement Programs................................................................................36
                  Tax Sheltered Annuities.......................................................................................36
                  Corporate Pension and Profit-sharing Plans....................................................................36
                  H.R. 10 Plans.................................................................................................36
                  Tax Treatment of Distributions from Qualified Annuities.......................................................36
                  Section 457 Plans.............................................................................................36
OTHER MATTERS...................................................................................................................36
         Deferral of Transactions...............................................................................................36
         Resolving Material Conflicts...........................................................................................37
         Modification...........................................................................................................37
         Misstatement of Age or Sex.............................................................................................37
         Ending the Offer.......................................................................................................37
         Indemnification........................................................................................................38
         Legal Proceedings......................................................................................................38
THE COMPANY.....................................................................................................................38
         Lines of  Business.....................................................................................................38
         Selected Financial Data................................................................................................38
         Management's Discussion and Analysis of Financial Condition and Results of Operations..................................38
         Results of Operation...................................................................................................38
         Liquity and Capital Resources..........................................................................................39
                  Segment Information...........................................................................................40
         Reinsurance............................................................................................................40
         Surplus Notes..........................................................................................................40
         Reserves...............................................................................................................40
         Competition............................................................................................................40
         Employees..............................................................................................................40
         Regulation.............................................................................................................41
         Executive Officers and Directors.......................................................................................41
         Executive Compensation.................................................................................................43
                  Summary Compensation Table....................................................................................43
                  Long-Term Incentive Plans - Awards in the Last Fiscal Year....................................................44
                  Compensation of Directors.....................................................................................44
                  Compensation Committee Interlocks and Insider Participation...................................................45
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.............................................................................45
FINANCIAL STATEMENTS............................................................................................................45
APPENDIX A  FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION................................................46
APPENDIX B  SHORT DESCRIPTIONS OF THE UNDERLYING MUTUAL FUNDS' PORTFOLIO INVESTMENT OBJECTIVES AND POLICIES.....................46
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  or a Fixed
Allocation prior to the Annuity Date, plus any earnings, and/or less any losses,
distributions   and  charges  thereon,   before  assessment  of  any  applicable
maintenance fee. Account Value is determined separately for each Sub-account and
for each Fixed Allocation,  and then totaled to determine Account Value for your
entire Annuity.  Account Value of each Fixed Allocation on other than such Fixed
Allocation's Maturity Date may be calculated using a market value adjustment.

ADVISOR is a person or entity: (a) registered under the Investment  Advisers Act
of 1940,  as amended,  and,  where  applicable,  under  equivalent  state law or
regulation  regarding the registration 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,  your individual  Annuity,  or with respect to a group Annuity,
the  certificate  evidencing  your  participation  in a group  Annuity.  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.

CURRENT RATES are the interest rates we offer to credit to Fixed Allocations for
the duration of newly beginning  Guarantee  Periods under this Annuity.  Current
Rates are contained in a schedule of rates  established  by us from time to time
for the  Guarantee  Periods  then  being  offered.  We may  establish  different
schedules for different classes and for different annuities.

FIXED  ALLOCATION  is an  allocation  of Account  Value that is to be credited a
fixed rate of interest for a specified  Guarantee Period during the accumulation
phase and is to be supported by assets in Separate Account D.

GUARANTEE PERIOD is a period of time during the accumulation  phase during which
we credit a fixed rate of interest on a Fixed Allocation.

IN WRITING is in a written form satisfactory to us and filed at the Office.

INTERIM  VALUE is,  as of any  particular  date,  the  initial  value of a Fixed
Allocation  plus all  interest  credited  thereon,  less the sum of all previous
transfers and withdrawals of any type from such Fixed Allocation of such Interim
Value and interest thereon from the date of each withdrawal or transfer.

ISSUE DATE is the effective date of your Annuity.

MVA is a market value  adjustment used in the  determination of Account Value of
each Fixed Allocation as of a date other than such Fixed  Allocation's  Maturity
Date, and, where required by law, the 30 days prior to the Maturity Date.

MATURITY DATE is the last day in a Guarantee Period.

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 charge for taxes.

OFFICE is our business office, American Skandia Life Assurance Corporation,
One Corporate Drive, P.O. Box 883, 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 and 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.

STRIP  (Separate  Trading of  Registered  Interest  and  Principal)  is a direct
obligation  of the U.S.  Treasury.  It  consists of a Treasury  coupon  security
broken into  individual  payments of either the right to receive the  applicable
principal payment or the right to the applicable interest payment.

STRIP  YIELD,  for purposes of this  Annuity,  is the ask yield for Strips based
solely on the right to redeem coupons for interest payments.

SUB-ACCOUNT  is a  division  of  Separate  Account  B.  We use  Sub-accounts  to
calculate variable benefits under this Annuity.

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 variable and, in most
jurisdictions, fixed investment options.

During  the  accumulation  phase,  we  currently  offer  a  number  of  variable
investment options. Each of these investment options is a Class 2 Sub-account of
Separate  Account B. Each  Sub-account  invests  exclusively  in one  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 B. Certain variable 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, Janus Overseas Growth, Lord Abbett Growth and Income,  Seligman
Henderson  International  Equity,  Seligman Henderson  International  Small Cap,
Federated Utility Income,  Federated High Yield, AST Phoenix Balanced Asset, AST
Money  Market,  T. Rowe Price  Asset  Allocation,  T. Rowe  Price  International
Equity,  T. Rowe Price  Natural  Resources,  T. Rowe Price  International  Bond,
Founders Capital Appreciation,  Founders Passport,  INVESCO Equity Income, PIMCO
Total Return Bond, PIMCO Limited Maturity Bond, Berger Capital Growth, Robertson
Stephens  Value + Growth,  Putnam  Growth and Income,  Putnam Overseas Equity,
Twentieth Century Balanced,  Twentieth Century  International  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).

In most jurisdictions, we also offer the option during the accumulation phase of
earning one or more fixed rates of interest on all or a portion of your  Account
Value.  As of the  date  of this  Prospectus,  we  offered  the  option  to make
allocations  at interest rates that could be guaranteed for 1, 2, 3, 5, 7 and 10
years. Each such Fixed Allocation earns the fixed interest rate applicable as of
the date of such  allocation.  The interest rate credited to a Fixed  Allocation
does not change during its Guarantee  Period.  You may maintain  multiple  Fixed
Allocations.  From  time-to-time we declare Current Rates for Fixed  Allocations
beginning a new Guarantee Period. The rates we declare are subject to a minimum,
but we may declare  higher  rates.  The minimum is  determined in relation to an
index that we do not control.

The end of a  Guarantee  Period for a specific  Fixed  Allocation  is called its
Maturity Date. At that time, the Guarantee Period normally "renews" and we begin
crediting interest for a new Guarantee Period lasting the same amount of time as
the one just ended.  That Fixed  Allocation  then earns interest  during the new
Guarantee  Period at a rate that is not less than the one then  being  earned by
Fixed  Allocations  for that Guarantee  Period by new Annuity  purchasers in the
same class. You also may choose a different Guarantee Period from among those we
are then currently  making available or you may transfer that Account Value to a
variable Sub-account.

In the payout  phase,  you may elect fixed  annuity  payments  based on our then
current annuity rates. We also may make available adjustable annuity rates.

For more information, see the section entitled "Investment Options",
including the following  subsections:  (a) Variable Investment Options;  and (b)
Fixed Investment Options.

         (2) Operations of the Separate Accounts: In the accumulation phase, the
assets  supporting  guarantees we make in relation to Fixed Allocations are held
in our Separate Account D. This is a "non-unitized"  separate account.  However,
values and benefits  calculated on the basis of Fixed Allocations are guaranteed
by our general  account.  In the payout phase,  fixed  annuity  payments and any
adjustable  annuity  payments we may make  available are also  guaranteed by our
general  account,  but the  assets  supporting  such  payments  are not  held in
Separate Account D.

In the accumulation  phase, the assets  supporting the Account Values maintained
in the  Sub-accounts  are held in our  Separate  Account  B.  These  are 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 funds or fund portfolios, as applicable.

For more  information,  see the section  entitled  "Operations  of the  Separate
Accounts",  including  the following  subsections:  (a) Separate  Accounts;  (b)
Separate Account B; and (c) Separate Account D.

     (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  Assessed or  Assessable  Against the Annuity:  The Annuity
charges which are assessed or may be assessable under certain  circumstances are
the  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 Assessed or
Assessable  Against the  Annuity",  including  the  following  subsections:  (a)
Maintenance  Fee; (b) Tax  Charges;  (c) Transfer  Fee;  and (d)  Allocation  of
Annuity Charges.

     (5)  Charges  Assessed  Against the Assets:  The charges  assessed  against
assets in the Sub-accounts are the  administration  charge and the mortality and
expense risk charges.  There are no charges deducted from the assets  supporting
Fixed  Allocations.  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
assesses  various  charges,  including  charges for  investment  management  and
investment  advisory fees.  These charges  generally  differ between  portfolios
within the same underlying mutual fund. You will find additional details in each
fund prospectus and its statement 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, evidence that you have engaged the
services of an Advisor (e.g. a properly  registered  investment advisory firm or
bank) and any other  materials 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 and any  Purchase  Payments  received  during the  "free-look"
period are  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  such  Purchase  Payments  to  the  AST  Money  Market
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 Sub-account,  if you execute a return waiver.
We offer a balanced  investment  program in  relation to your  initial  Purchase
Payment. Certain designations must be made, including an Owner and an Annuitant.
You may also make  certain  other  designations  that  apply to the  Annuity  if
issued.  These designations  include a contingent Owner, a Contingent  Annuitant
(Contingent  Annuitants may be required in conjunction  with certain uses of the
Annuity), 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) Right to Return the Annuity;  (e) Allocation of Net Purchase  Payments;  (f)
Balanced  Investment  Program;  and (g)  Ownership,  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  and in  each  Fixed  Allocation.  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. We
also determine your Account Value separately for each Fixed Allocation.  A Fixed
Allocation's  Account Value as of a particular date is determined by multiplying
its then  current  Interim  Value  times  the  MVA.  No MVA  applies  to a Fixed
Allocation as of its Maturity Date.  Upon  surrender,  the Account Value payable
from any Sub-accounts is reduced by the maintenance  fee. For more  information,
see the section entitled "Account Value",  including the following  subsections:
(a)  Account  Value  in  the  Sub-accounts;  and  (b)  Account  Value  of  Fixed
Allocations.

         (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. 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  year are  subject  to a fee.  We  offer  dollar  cost  averaging  and
rebalancing  during  the  accumulation  phase.  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) Changing Revocable  Designations;  (c) Allocation Rules; (d) Transfers;  (e)
Renewals;  (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
and the following  subsections:  (a) Lines of Business;  (b) Selected  Financial
Data;  (c)  Management's  Discussion  and  Analysis of Financial  Condition  and
Results of Operations (including: (i) Results of Operations;  (ii) Liquidity and
Capital  Resources;  and  (iii)  Segment  Information);   (d)  Reinsurance;  (e)
Reserves; (f) Competition;  (g) Employees; (h) Regulation; (i) Executive Officer
and  Directors;   and  (j)  Executive  Compensation   (including:   (i)  Summary
Compensation  Table;  (ii) Long Term Incentive  Plans-Awards  in the Last Fiscal
Year;  (iii)  Compensation  of  Directors;   and  (iv)  Compensation   Committee
Interlocks and Insider Participation).

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
is part of the registration statements we filed with the Securities and Exchange
Commission ("SEC") regarding this offering. Additional information on us and
this  offering is available in those  registration  statements  and the exhibits
thereto.  You may obtain copies of these materials at the prescribed  rates from
the SEC's Public Reference  Section,  450 Fifth Street N.W.,  Washington,  D.C.,
20549. You may inspect and copy those  registration  statements and 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.

     INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE:  To the extent and only to
the extent that any statement in a document  incorporated by reference into this
Prospectus is modified or  superseded by a statement in this  Prospectus or in a
later-filed document,  such statement is hereby deemed so modified or superseded
and not part of this Prospectus.

We furnish you without charge a copy of any or all of the documents incorporated
by reference in this Prospectus,  including any exhibits to such documents which
have been specifically  incorporated by reference. We 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.

     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  funds  and  their  portfolios  may be  found  either  in the
prospectuses  for such  mutual  funds or in the annual  reports  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.

                                                     Your Transaction Expenses
Sales Charge                                                                                                                  None

Annual Maintenance Fee                                                                   Smaller of $35.00 or 2% of Account Value

Tax Charges                                                           Dependent on the requirements of the applicable jurisdiction

Transfer Fee                                                        $10.00 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                                                                                           0.50%
Administration Charge                                                                                                        0.15%
                                                                                                                             -----
Total Annual Expenses of the Sub-accounts                                                                                    0.65%
Underlying  Mutual Fund  Portfolio  Annual  Expenses  (as a  percentage  of
average net assets)

Unless  otherwise  shown,  the  expenses  shown  below  are for the year  ending
December  31,  1995.  "N/A" shown below  indicates  that no entity has agreed to
reimburse the particular expense indicated.  "+" indicates that no reimbursement
was provided in 1995,  but that the  underlying  mutual fund has indicated to us
that current arrangements (which may change) provide for reimbursement.
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%
  Janus Overseas Growth(4)                tbd              tbd            tbd            tbd             tbd            tbd
  Lord Abbett Growth
    and Income                             N/A            0.75%            +            0.24%             +            0.99%
  Seligman Henderson
    International Equity                  0.90%           1.00%            +            0.27%             +            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%
  Founders Passport(4)                     tbd             tbd            tbd            tbd             tbd            tbd
  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%          0.61%           1.45%          1.61%
  Putnam Growth and Income (4)             tbd             tbd            tbd            tbd             tbd            tbd
  Putnam Overseas Equity(4)                tbd             tbd            tbd            tbd             tbd            tbd
  Twentieth Century Balanced(4)            tbd             tbd            tbd            tbd             tbd            tbd
  Twentieth Century International Growth(4)tbd             tbd            tbd            tbd             tbd            tbd

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%

                                                    (continued on the next page)
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
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger & Berman Advisers
    Management Trust
  Partners(5)                              N/A            0.85%            +            0.30%             +            1.15%

Montgomery Variable Series
  Emerging Markets(6)                      N/A            1.25%            +             .50%             +            1.75%
(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)  These  portfolios  were  first  offered  for  sale  as of the  date of this
Prospectus, therefore expenses shown are estimated and annualized and should not
be considered  representative of future expenses; actual expenses may be greater
than those shown.

(5 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.

(6) 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  will  bear  directly  or
indirectly  if you  maintain  Account  Value in the  Sub-accounts.  The examples
reflect expenses of our Sub-accounts, as well as those for the underlying mutual
fund portfolios.

The examples shown assume that: (a) all your Account Value is maintained only in
Sub-accounts;   (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 PAST OR FUTURE  EXPENSES OF THE  UNDERLYING  MUTUAL  FUNDS OR
THEIR  PORTFOLIOS - ACTUAL EXPENSES MAY BE GREATER 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  $1,000.00  investment,  assuming  5% annual  return on
assets:

                                                                          After:
Sub-accounts
                                                          1 yr.                                      3 yrs.
Seligman Henderson International Equity 2                              [to be provided upon amendment]
Seligman Henderson International Small Cap 2
LA Growth and Income
JanCap Growth 2
Janus Overseas Growth 2
Fed Utility Inc 2
Fed High Yield 2
AST Phoenix Balanced Asset 2
AST Money Market 2
T. Rowe Price Asset Allocation 2
T. Rowe Price International Equity 2
T. Rowe Price Natural Resources 2
T. Rowe Price International Bond 2
Founders Capital Appreciation 2
Founders  Passport 2 
INVESCO  Equity  Income 2 
PIMCO  Total  Return Bond 2 
PIMCO Limited  Maturity  Bond 2  
Berger  Capital  Growth  2 
RS Value + Growth 2 
Putnam Growth and Income 2 
Putnam Overseas Equity 2 
Twentieth Century Balanced 2
Twentieth Century International Growth 2
AA Small Capitalization 2
AA Growth 2
AA MidCap Growth 2 
NB Partners 2 
MV Emerging Markets 2
CONDENSED FINANCIAL INFORMATION: The Unit Prices and number of Units in a number
of 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  as  investment  options on or before  12/31/1995  in other
annuities we offer; 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.

     The total annual  expenses of the Class 2 Sub-accounts  from 7/1/1994 until
the Valuation Date immediately  prior to the date of this Prospectus were 0.90%.
Prior to 7/1/1994,  the total annual expenses included an investment  allocation
services  charge of 1.00%,  so the total annual  expenses were 1.90%.  As of the
date of this  Prospectus,  such total  annual  expenses  were  reduced to 0.65%.
Therefore,  Unit Prices as of the dates shown  reflect the actual  total  annual
expenses assessed against the Class 2 Sub-accounts.

     [Values are shown for Class 2  Sub-accounts.  The document to which this is
compares shows Class 1 Sub-account values.]

            Sub-Account and the Year Sub-Account Operations Commenced
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
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
Sub-Account and the Year Sub-Account Operations Commenced

                                              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
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
Sub-Account and the Year Sub-Account Operations Commenced

                                                              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
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
Sub-Account and the Year Sub-Account Operations Commenced

                            AA                AA
                           Small            MidCap             NB
                           Cap 2           Growth 2        Partners 2
                          (1993)            (1993)           (1995)
                           -----            ------           ------
No. of Units
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
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
hypothetical yields for a hypothetical  contract.  The yield is calculated based
on the hypothetical performance of the AST Money Market 2 Sub-account,  assuming
total annual expenses of 0.65%,  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 and
other institutions which pay a fixed yield over a stated period of time, or with
investment  companies  which  do not  serve as  underlying  funds  for  variable
annuities.

Sub-account               Current Yield                  Effective Yield
 AST Money Market 2         [       ]                        [        ]

     INVESTMENT  OPTIONS: We offer a range of variable and fixed options as ways
to invest your Account Value.

     Variable  Investment  Options:  During the  accumulation  phase, we offer a
number of Sub-accounts  as variable  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 a portfolio of an underlying  mutual fund. As of the
date of this Prospectus,  our  Sub-accounts  and the underlying  mutual funds or
portfolios in which they invest are as follows:
Underlying Mutual Fund:                                          The Alger American Fund

                      Sub-account                                             Underlying Mutual Fund Portfolio

                      AA Small Capitalization 2                                           Small Capitalization
                      AA Growth 2                                                                       Growth
                      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:                                           American Skandia Trust

                      Sub-account                                            Underlying Mutual Fund Portfolio

                      Seligman Henderson International Equity 2        Seligman Henderson International Equity
                      Seligman Henderson International                        Seligman Henderson International
                        Small Cap 2                                                                  Small Cap
                      LA Growth and Income 2                                     Lord Abbett Growth and Income
                      JanCap Growth 2                                                            JanCap Growth
                      Janus Overseas Growth 2                                            Janus Overseas Growth
                      Fed Utility Inc 2                                               Federated Utility Income
                      Fed High Yield 2                                                    Federated High Yield
                      AST Phoenix Balanced Asset 2                                  AST Phoenix Balanced Asset
                      AST Money Market 2                                                      AST Money Market
                      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
                      Founders Passport 2                                                    Founders Passport
                      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
                      Putnam Growth and Income 2                                      Putnam Growth and Income
                      Putnam Overseas Equity 2                                          Putnam Overseas Equity
                      Twentieth Century Balanced 2                                  Twentieth Century Balanced
                      Twentieth Century International Growth 2          Twentieth Century International Growth

                      Underlying Mutual Fund:                                       Montgomery Variable Series

                      Sub-account                                            Underlying Mutual Fund Portfolio

                      MV Emerging Markets 2                      Montgomery Variable Series:  Emerging Markets
Certain Sub-accounts may not be available in all jurisdictions.

We  may  make  other   underlying   mutual  funds   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 may be disclosed in its prospectus. However, addition of a portfolio
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.  A summary of the investment  objectives and policies 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 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 qualify 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 statements of
additional  information for such  underlying  mutual fund. Also included in such
information is the investment policy of each mutual fund or 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 or
portfolio will meet its investment objectives.

Shares  of the  underlying  mutual  funds  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 our Concierge Desk, 1-800-752-6342 or
writing to us, Attention:
Concierge Desk, at P.O. Box 883, Shelton, Connecticut, 06484-0883.

     Fixed Investment Options:  For the payout phase you may elect fixed annuity
payments based on our then current annuity rates. The discussion below describes
the fixed investment options in the accumulation phase.

As of the date of this  Prospectus we offer in most  jurisdictions  in which the
Annuity is available Fixed  Allocations with Guarantee  Periods of 1, 2, 3, 5, 7
and 10 years. Each such Fixed Allocation is accounted for separately. Each Fixed
Allocation earns a fixed rate of interest throughout a set period of time called
a Guarantee  Period.  Multiple Fixed  Allocations are permitted,  subject to our
allocation  rules.  The  duration  of a  Guarantee  Period  may be the  same  or
different from the duration of the Guarantee  Periods of any of your prior Fixed
Allocations.

We may  or may  not be  able  to  obtain  approval  in  the  future  in  certain
jurisdictions  of endorsements to individual or group annuities that include the
type of Fixed Allocations offered pursuant to this Prospectus.  If such approval
is  obtained,  we may take those  steps  needed to make such  Fixed  Allocations
available to purchasers to whom  Annuities were issued prior to the date of such
approval.

To the  extent  permitted  by law,  we  reserve  the  right at any time to offer
Guarantee  Periods with  durations  that differ from those which were  available
when your  Annuity  was  issued.  We also  reserve the right at any time to stop
accepting  new  allocations,  transfers or renewals  for a particular  Guarantee
Period.

A Guarantee Period for a Fixed Allocation  begins: (a) when all or part of a Net
Purchase  Payment is allocated for that particular  Guarantee  Period;  (b) upon
transfer of any of your Account Value to a Fixed  Allocation for that particular
Guarantee  Period;  or (c)  when a  Guarantee  Period  attributable  to a  Fixed
Allocation "renews" after its Maturity Date.

We declare the rates of interest applicable during the various Guarantee Periods
offered.  Declared  rates are  effective  annual rates of interest.  The rate of
interest  applicable  to a  Fixed  Allocation  is the  one in  effect  when  its
Guarantee Period begins. The rate is guaranteed throughout the Guarantee Period.
We inform you of the interest rate applicable to a Fixed Allocation,  as well as
its Maturity Date,  when we confirm the  allocation.  We declare  interest rates
applicable to new Fixed Allocations from time-to-time.  Any new Fixed Allocation
in an existing Annuity is credited  interest at a rate not less than the rate we
are then crediting to Fixed  Allocations for the same Guarantee  Period selected
by new Annuity purchasers in the same class.

The interest  rates we credit are subject to a minimum.  We may declare a higher
rate. The minimum is based on both an index and a reduction to the interest rate
determined according to the index.

The  index is based on the  Strip  Yields as  provided  to us by an  independent
pricing  service of our  choosing as of the date we declare a rate of  interest.
The  applicable  maturity  of the  Strips  is the  same as the  maturity  of the
Guarantee  Period.  If no Strips are available for such term,  the next shortest
term is used. If the United States Treasury discontinues offering or if there is
any disruption in the market for Strips that would have an impact on our ability
to obtain market  valuations for such  instruments,  we will substitute  indexes
which  in our  opinion  are  comparable.  If  required,  implementation  of such
substitute  indexes will be subject to approval by the  Securities  and Exchange
Commission  and the  Insurance  Department  of the  jurisdiction  in which  your
Annuity was delivered. (For Annuities issued as certificates of participation in
a group contract,  it is our expectation  that approval of only the jurisdiction
in which such group contract was delivered applies.)

The reduction used in determining the minimum  interest rate is one and one half
percent of interest (1.50%).

Where  required by the laws of a  particular  jurisdiction,  a specific  minimum
interest rate, compounded yearly, will apply should the index less the reduction
be less than the specific minimum interest rate applicable to that jurisdiction.

WE MAY CHANGE THE INTEREST  RATES WE CREDIT NEW FIXED  ALLOCATIONS  AT ANY TIME.
Any such  change  does not  have an  impact  on the  rates  applicable  to Fixed
Allocations with Guarantee Periods that began prior to such change.
We have no specific formula for determining the interest rates we declare. Rates
may differ  between  classes and between  types of annuities we offer,  even for
guarantees  of the same  duration  starting  at the same  time.  We  expect  our
interest  rate  declarations  for  Fixed  Allocations  to  reflect  the  returns
available on the type of investments  we make to support the various  classes of
annuities  supported by the assets in Separate  Account D. However,  we may also
take into  consideration in determining  rates such factors  including,  but not
limited to, the durations  offered by the  annuities  supported by the assets in
Separate  Account D,  regulatory  and tax  requirements,  the  liquidity  of the
secondary   markets  for  the  type  of   investments   we  make,   commissions,
administrative expenses, investment expenses, our mortality and expense risks in
relation to Fixed  Allocations,  general  economic trends and  competition.  OUR
MANAGEMENT MAKES THE FINAL DETERMINATION AS TO INTEREST RATES TO BE CREDITED. WE
CANNOT PREDICT THE RATES WE WILL DECLARE IN THE FUTURE.

     OPERATIONS OF THE SEPARATE ACCOUNTS:  The assets supporting our obligations
under the Annuities may be held in various accounts, depending on the obligation
being supported. In the accumulation phase, assets supporting Account Values are
held  in  separate  accounts   established  under  the  laws  of  the  State  of
Connecticut.  In the payout phase,  assets supporting fixed annuity payments and
any  adjustable  annuity  payments  we make  available  are held in our  general
account.

     Separate  Accounts:  We are the  legal  owner  of  assets  in the  separate
accounts.  Income,  gains and  losses,  whether  or not  realized,  from  assets
allocated to these separate  accounts,  are credited to or charged  against each
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 each 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  separate  accounts  are  subject  to the  requirements  of
applicable state laws.  These  investment  requirements may differ between those
for separate  accounts  supporting  variable  obligations and those for separate
accounts supporting fixed obligations.

     Separate  Account  B: In the  accumulation  phase,  the  assets  supporting
obligations based on allocations to the variable  investment options are held in
our Separate  Account B. Separate  Account B consists of multiple  Sub-accounts.
Separate Account B was established by us pursuant to Connecticut  law.  Separate
Account B also  holds  assets of other  annuities  issued by us with  values and
benefits that vary according to the investment  performance of Separate  Account
B.

The   Sub-accounts   offered  pursuant  to  this  Prospectus  are  all  Class  2
Sub-accounts  of  Separate  Account B. Each class of  Sub-accounts  in  Separate
Account B have a different level of charges assessed against such  Sub-accounts.
From the date Class 2 operations  commenced,  November 16, 1993,  until June 30,
1994, the annualized  expenses charged against the Class 2 Sub-accounts  totaled
1.90%. This included 1.00% as an investment allocation services charge and 0.90%
for the  combination  of mortality and expense  risk, as well as  administration
charges.  Starting on July 1, 1994, we waived the investment allocation services
charge, so that the total annualized  charges were 0.90%. As of the date of this
Prospectus, the total annualized charges were reduced to 0.65%.

The amount of our obligations in relation to allocations to the  Sub-accounts is
based  on  the  investment  performance  of  such  Sub-accounts.   However,  the
obligations themselves are our general corporate obligations.

Separate  Account  B is  registered  with the SEC  under  the 1940 Act as a unit
investment trust, which is a type of investment  company.  This does not involve
any supervision by the SEC of the investment  policies,  management or practices
of Separate Account B. Each Sub-account  invests only in a single mutual fund or
mutual fund portfolio.

The only  Sub-accounts  available for allocation of your Account Value are those
offered pursuant to this Prospectus.  Persons  interested in our other annuities
may be offered the same or different  Sub-accounts of Separate  Account B or any
of our other separate  accounts.  Such sub-accounts may invest in some or all of
the same underlying  mutual funds or portfolios of such underlying  mutual funds
as the Sub-accounts offered pursuant to this Prospectus.  As of the date of this
Prospectus,  the Annuities  offered  pursuant to this  Prospectus  and annuities
offered pursuant to a number of other prospectuses  maintained assets in Class 2
Sub-accounts.  We may offer additional annuities that maintain assets in Class 2
Sub-accounts.  In  addition,  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 these  underlying  mutual funds and
portfolios  in  the  prospectuses  for  such  funds.  Portfolios  added  to  the
underlying mutual funds 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 funds or fund  portfolios,  as
applicable.  We do not guarantee the investment results of any Sub-account,  nor
is there any 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.

     Separate  Account  D: In the  accumulation  phase,  assets  supporting  our
obligations  based on Fixed Allocations are held in Separate Account D, which is
a "non-unitized"  separate  account.  Such obligations are based on the interest
rates we  credit to Fixed  Allocations  and the  terms of the  Annuities.  These
obligations  do not  depend  on the  investment  performance  of the  assets  in
Separate  Account  D.  Separate  Account D was  established  by us  pursuant  to
Connecticut law.

There are no discrete  units in Separate  Account D. No party with rights  under
any annuity nor any group contract owner  participates in the investment gain or
loss from  assets  belonging  to Separate  Account D. Such gain or loss  accrues
solely  to us.  We retain  the risk  that the  value of the  assets in  Separate
Account D may drop below the reserves and other  liabilities  we must  maintain.
Should the value of the assets in Separate  Account D drop below the reserve and
other  liabilities  we must maintain in relation to the  annuities  supported by
such  assets,  we will  transfer  assets  from our  general  account to Separate
Account  D to make up the  difference.  We have  the  right to  transfer  to our
general account any assets of Separate  Account D in excess of such reserves and
other liabilities.  We maintain assets in Separate Account D supporting a number
of annuities we offer.

If you  surrender,  withdraw or transfer  Account Value from a Fixed  Allocation
before the end of its  Guarantee  Period,  you bear the risk inherent in the MVA
(see  "Account  Value of the Fixed  Allocations").  The Account Value of a Fixed
Allocation is  guaranteed  on its Maturity  Date to be its then current  Interim
Value.

We operate  Separate  Account D in a fashion  designed  to meet the  obligations
created by Fixed  Allocations.  Factors  affecting these operations  include the
following:

         (1) The State of New York,  which is one of the  jurisdictions in which
we are  licensed  to do  business,  requires  that  we meet  certain  "matching"
requirements.  These  requirements  address the matching of the durations of the
assets with the durations of  obligations  supported by such assets.  We believe
these matching requirements are designed to control an insurer's ability to risk
investing in long-term assets to support short term interest rate guarantees. We
also believe this limitation  controls an insurer's ability to offer unrealistic
rate guarantees.

         (2) We  employ an  investment  strategy  designed  to limit the risk of
default.  Some of the guidelines of our current investment strategy for Separate
Account D include, but are not limited to, the following:

                  (a) Investments  may include cash;  debt securities  issued by
the United States Government or its agencies and instrumentalities; money market
instruments;   short,   intermediate   and  long-term   corporate   obligations;
asset-backed obligations; and municipal bonds.

                  (b) At the time of purchase,  fixed income  securities will be
in one of the top four generic lettered rating classifications as established by
a  nationally  recognized  statistical  rating  organization  (`NRSRO")  such as
Standard & Poor's or Moody's Investor Services, Inc.

We are not obligated to invest according to the aforementioned guidelines or any
other  strategy  except  as may be  required  by  Connecticut  and  other  state
insurance laws.

         (3) We have the sole discretion to employ  investment  managers that we
believe are qualified,  experienced and reputable to manage Separate  Account D.
We currently employ  investment  managers for Separate Account D including,  but
not  limited  to,  J.P.  Morgan  Investment  Management  Inc.  Each  manager  is
responsible for investment  management of different portions of Separate Account
D.  From  time  to  time  additional  investment  managers  may be  employed  or
investment  managers may cease being  employed.  We are under no  obligation  to
employ or continue to employ any investment manager(s).

     (4) The assets in  Separate  Account D are  accounted  for at their  market
value, rather than at book value.

         (5) We are  obligated by law to maintain  our capital and  surplus,  as
well as our reserves,  at the levels required by applicable  state insurance law
and regulation.
  
     INSURANCE  ASPECTS  OF THE  ANNUITY:  As an  insurance  company we bear the
insurance  risk inherent in the Annuity.  This includes the risks that mortality
and expenses exceed our expectations, and the investment and re-investment risks
in relation to the assets  supporting  obligations  not based on the  investment
performance of a separate  account.  We are subject to regulation  that requires
reserving and other practices in a manner that minimizes the insurance risk (see
"Regulation").

     CHARGES  ASSESSED OR ASSESSABLE  AGAINST THE ANNUITY:  The Annuity  charges
which are assessed or may be  assessable  under  certain  circumstances  are the
maintenance  fee, a charge  for taxes and a  transfer  fee.  These  charges  are
allocated  according to our rules.  The  maintenance fee and transfer charge are
not assessed if no Account Value is maintained in the  Sub-accounts  at the time
such fee or charge is payable.  However, we make certain  assumptions  regarding
maintenance  and transfer  expenses as part of the overall  expense  assumptions
used in determining the interest rates we credit to Fixed  Allocations.  Charges
are also assessed against the  Sub-accounts and the underlying  mutual funds. We
also may  charge  you for  special  services,  such as  dollar  cost  averaging,
rebalancing,  Systematic  Withdrawals,  Minimum  Distributions,  and  additional
reports. As of the date of this Prospectus, we do not charge you for any special
services.

     Maintenance  Fee: A maintenance fee equaling the smaller of $35.00 or 2% of
your then current  Account  Value is deductible  from the Account  Values in the
Sub-accounts  annually  and upon  surrender.  The fee is limited to the  Account
Values in the  Sub-accounts as of the Valuation  Period such fee is due. 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 31/2%,  and
are subject to change.  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 each
Annuity Year.  However,  the fee is only charged if there is Account Value in at
least one Sub-account immediately subsequent to such transfer.

     Allocation  Of Annuity  Charges:  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.  No fee is assessed if there is no Account Value
in any  Sub-account  at such time.  Tax charges are assessed  against the entire
Purchase Payment or Account Value as applicable. The 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.  There are no
charges deducted from the Fixed  Allocations.  The factors we use in determining
the  interest  rates we credit  Fixed  Allocations  are  described  above in the
subsection  entitled  Fixed  Investment  Options.  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 and the Fixed  Allocations
equal to any taxes which may be imposed upon the separate accounts.

     Administration  Charge:  We assess  each  Class 2  Sub-account,  on a daily
basis,  an  administration  charge.  The charge is 0.15% per year of the average
daily total value of such Sub-account.

We assess the  administration  charge and the maintenance fee,  described in the
subsection entitled  Maintenance Fee, at amounts we believe necessary to recover
the actual costs of 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.  However, we believe the
total  administration  charges made against the Class 2 Sub-accounts will not be
greater than the total  anticipated  costs.  We allocate costs pro-rata  between
classes in Separate  Account B in proportion  to the assets in various  classes.
Types of  expenses  which  might be incurred  include,  but are not  necessarily
limited to, the expenses  of:  developing  and  maintaining  a computer  support
system for  administering  the Account Values in the  Sub-accounts  and Separate
Account  B  itself,   preparing  and  delivering   confirmations  and  quarterly
statements,  processing transfers, withdrawal and surrender requests, responding
to Owner  inquiries,  reconciling and depositing cash receipts,  calculating and
monitoring  daily values of each  Sub-account,  reporting for the  Sub-accounts,
including quarterly,  semi-annual and annual reports, and mailing and tabulation
of shareholder proxy solicitations.

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: For Class 2 Sub-accounts, the mortality
risk  charge is 0.25% per year and the  expense  risk  charge is 0.25% per year.
These charges are assessed in combination  each day against each  Sub-account at
the rate of 0.50% 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:  Each  underlying  mutual  fund
assesses various charges for investment management and investment advisory fees.
These charges  generally  differ between  portfolios  within the same underlying
mutual fund. You will find additional  details in the fund  prospectuses 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.
Certain  benefits may be available to certain classes of purchasers.  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  (individual
retirement  accounts and individual  retirement  annuities - "IRAs";  Simplified
Employee Pensions).

We may require  additional  information  regarding such plans before we issue an
Annuity  to be used in  connection  with  such  retirement  plans.  We may  also
restrict  or  change  certain  rights  and  benefits  if, in our  opinion,  such
restrictions  or changes are necessary for your Annuity to be used in connection
with such  retirement  plans.  The Annuity may also be used in  connection  with
plans that do not qualify  under the sections of the Code noted  above.  Some of
the potential tax consequences  resulting from various uses of the Annuities are
discussed in the section entitled "Certain Tax Consequences".

     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. Where permitted
by law, we may issue an Annuity without completion of an Application for certain
classes of Annuities.

This Annuity is designed for use in connection with services, such as investment
allocation services,  provided by an Advisor. Before we issue an Annuity, we may
require  evidence  satisfactory  to us that you have  engaged the services of an
Advisor.

The minimum  initial  Purchase  Payment we accept is  $10,000.00  unless you are
participating in a program of periodic  Purchase  Payments that we accept (see "
Periodic  Purchase  Payments").  The minimum initial Purchase Payment  allowable
under  such a  program  is lower if the  total  Purchase  Payments  in the first
Annuity Year are scheduled to equal at least $10,000.00. We may require that the
initial Purchase Payment be a check or a wire transfer. 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  $1,000,000.00.
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.

     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 or automatic  periodic transfers to
us from a bank account ("bank drafting").  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 or bank drafting program and
we agree to accept Purchase Payments on this basis; (b) the allocations are only
to variable  investment  options or the frequency and number of  allocations  to
fixed  investment  options is limited in accordance with our rules;  and (c) the
total  amount 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 a certain period of time known as a "free-look" period.  Depending on the
applicable legal and regulatory requirements, this period may be within ten days
of receipt,  twenty-one  days of receipt or longer.  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 tax charge
deducted.   This  is  the  "standard  refund".  If  necessary  to  meet  Federal
requirements for IRAs or certain state law  requirements,  we return the greater
of the "standard  refund" or the Purchase Payments received less any withdrawals
(see  "Allocation of Net Purchase  Payments").  We tell you how we determine the
amount payable under any such right at the time we issue your Annuity.  Upon the
termination of the "free-look" period, if you surrender your Annuity, you may be
assessed the maintenance fee (see "Maintenance Fee").

     Allocation  of Net  Purchase  Payments:  All  allocations  of Net  Purchase
Payments  are  subject  to  our  allocation  rules  (see  "Allocation   Rules").
Allocation  of the  portion of the  initial  Net  Purchase  Payment  and any Net
Purchase Payments received during the free-look period that you wish to allocate
to any  Sub-accounts  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 that you indicate you
wish to go into the Sub-accounts to the AST Money Market 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  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  Payments received less
any withdrawals.  Instead,  you only are entitled to the return of the "standard
refund" (see "Right to Return the Annuity").

Your initial  Purchase  Payments,  as well as other  Purchase  Payments  will be
allocated in accordance with the then current  requirements of any  rebalancing,
asset  allocation  or market timing  program  which you have  authorized or have
authorized an  independent  third party to use in  connection  with your Annuity
(see "Allocation  Rules"). To the extent permitted by law, Net Purchase Payments
paid by check may be  delayed  until  such time as the  check  has  cleared  the
applicable bank upon which such check was drawn.

     Balanced  Investment  Program:  We offer a balanced  investment  program in
relation to your Purchase  Payments,  if Fixed  Allocations  are available under
your  Annuity.  If you  choose  this  program,  we commit a portion  of your Net
Purchase  Payments as a Fixed  Allocation  for the Guarantee  Period you select.
This Fixed  Allocation will have grown pre-tax to equal the exact amount of your
entire  Purchase  Payments  at the end of its  initial  Guarantee  Period  if no
amounts are  transferred  or withdrawn from such Fixed  Allocation.  The rest of
your Net Purchase Payments are invested in the variable  investment  options you
select.

     Ownership,   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.   Changing  the  Owner  or  Annuitant
designations may affect the minimum death benefit (see " Death Benefits").

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,  including,  but 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
during the  accumulation  phase.  Where allowed 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
qualifies 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, and
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 when death proceeds  become  payable or in the absence of any  Beneficiary
designation, the proceeds will vest in you or your estate.

     ACCOUNT VALUE AND SURRENDER 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.  However,  upon surrender,  the amount payable is the
Account Value less any applicable maintenance fee.

     Account  Value  in  the  Sub-accounts:  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.

     Account Value of the Fixed  Allocations:  We determine the Account Value of
each Fixed Allocation  separately.  A Fixed  Allocation's  Account Value as of a
particular  date is determined  by  multiplying  its then current  Interim Value
times the MVA.

A formula is used to  determine  the MVA. The formula is applied  separately  to
each Fixed  Allocation.  Values and time durations used in the formula are as of
the date for which the Account Value is being determined. The formula is:
[(1+I) / (1+J+0.0010)]N/365

                                     where:

                  I is the Strip Yield as of the date the Guarantee Period began
                  (or if no Strip Yields are  available  on such date,  the most
                  recent  applicable  Strip Yield  available to us prior to such
                  date) for Strips  maturing at the end of the applicable  Fixed
                  Allocation's Guarantee Period. If there are no Strips maturing
                  at that time,  we use the Strip Yield for the Strips  maturing
                  as soon as possible after the Guarantee Period ends.

                  J is the Strip  Yield as of the date the MVA  formula is to be
                  applied (or if no Strip Yields are available on such date, the
                  most recent  applicable  Strip Yield  available to us prior to
                  such date) for Strips  maturing  at the end of the  applicable
                  Fixed  Allocation's  Guarantee  Period. If there are no Strips
                  maturing  at that time,  we use the Strip Yield for the Strips
                  maturing as soon as possible after the Guarantee Period ends.

                  N is the number of days remaining in such Guarantee Period.

No MVA applies in determining a Fixed Allocation's Account Value on its Maturity
Date.

The MVA results in the Account Value of a Fixed  Allocation being lower than the
Interim  Value  when "J" plus 0.10  percent of  interest  exceeds  "I".  The MVA
results  in the  Account  Value of a Fixed  Allocation  being  greater  than the
Interim  Value when "J" plus 0.10  percent of interest is less than "I". See the
Statement of Additional Information for an illustration of how the MVA works.

The formula  that  applies if amounts are  surrendered  pursuant to the right to
return the  Annuity is  [(1+I)/(1+J]N/365  In this case,  the MVA results in the
Account Value of a Fixed  Allocation being lower than the Interim Value when "J"
exceeds "I", and in the Account  Value being greater than the Interim Value when
"J" is less than "I".

     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) changing  revocable
designations;  (c) transferring  Account Values between investment options;  (d)
receiving lump sum payments,  Systematic  Withdrawals or Minimum  Distributions,
annuity payments and death benefits; (e) transferring or assigning your Annuity;
(f) exercising  certain voting rights in relation to the underlying mutual funds
in which the  Sub-accounts  invest;  and (g)  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 voice or data transmission over the
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 transfer  over the telephone if we or such other person acted
on such  transfer  instructions  in good  faith in  reliance  on your  telephone
transfer  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 $100.00  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  instructions.  Should no  instructions be
received, we shall return your additional Purchase Payment.

     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.  Where  allowed by law,  such changes will be subject to our
acceptance.  Some of the changes we will not accept include, but are not limited
to:  (a) a new  Owner  subsequent  to the death of the Owner or the first of any
joint Owners to die, except where a spouse-Beneficiary has become the Owner as a
result of an Owner's death;  (b) a new Annuitant  subsequent to the Annuity Date
if the  annuity  option  selected  includes  a life  contingency;  and (c) 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.  Currently, you may also maintain an unlimited number
of Fixed  Allocations.  We reserve the right, to the extent permitted by law, to
limit the number of Fixed  Allocations  or the amount  you may  allocate  to any
Fixed  Allocation.  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 or Fixed  Allocation to the transaction and close
out your balance in that investment  option.  We also reserve the right to limit
the amount you may allocate to any Fixed Allocation.

Should you either: (a) request  rebalancing  services (see  "Rebalancing");  (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 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.

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.  For this  purpose  only,  the
Account Value in all your then current Fixed  Allocations is deemed to be in one
investment option. If you transfer or withdraw Account Value from multiple Fixed
Allocations  and do not provide  instructions  indicating the Fixed  Allocations
from which  Account Value should be taken:  (a) we transfer  Account Value first
from the Fixed  Allocation with the shortest amount of time remaining to the end
of its  Guarantee  Period,  and then  from the  Fixed  Allocation  with the next
shortest amount of time remaining to the end of its Guarantee Period,  etc.; and
(b) if there are multiple Fixed Allocations with the same amount of time left in
each Guarantee  Period,  as between such Fixed Allocations we first take Account
Value from the Fixed Allocation that had the shorter Guarantee Period.

     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 each 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 employ or you authorize to be employed
on your behalf.  Renewals or transfers of Account Value from a Fixed  Allocation
at the end of its  Guarantee  Period are not subject to the transfer  charge and
are not counted in  determining  whether  other  transfers may be subject to the
transfer charge (see  "Renewals").  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 an 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
funds; or (b) we are informed by one or more of the underlying mutual funds 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 affected underlying mutual funds.

To the extent  permitted by law, we may request up to 2 business days' notice of
any  transfer  into or out of a Fixed  Allocation  if the  market  value of such
transfer is at least $1,000,000.00.

In order to help you determine  whether you wish to transfer Account Values to a
Fixed  Allocation,  you may obtain our Current Rates by writing us or calling us
at  1-800-766-4530.  When doing so, please have readily  available  your Annuity
number and the personal identification number we provide.

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 for
transfers or allocations of Net Purchase Payments during any period in which you
authorize such third party that provides  market timing  services to act on your
behalf.  We give 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 an independent  Advisor 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 Advisor may employ,  or  transferring  Account  Values  between  investment
options in accordance  with market timing  strategies  employed by such Advisor.
Such  Advisors may or may not be appointed our agents for the sale of Annuities.
However,  we do not engage any Advisors 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  Advisors  or any  investment  allocation
recommendations  made by such Advisors.  We do not currently  charge you or your
Advisor extra for providing these support services.

     Renewals:  A renewal is a transaction  that occurs  automatically as of the
last day of a Fixed Allocation's  Guarantee Period unless we receive alternative
instructions.  This day as to each Fixed Allocation is called its Maturity Date.
As of the end of a  Maturity  Date,  the  Fixed  Allocation's  Guarantee  Period
"renews"  and a new  Guarantee  Period  of the  same  duration  as the one  just
completed begins. However, the renewal will not occur if the Maturity Date is on
the date we apply your Account  Value to  determine  the annuity  payments  that
begin on the Annuity Date (see "Annuity Payments").

As an  alternative  to a  renewal,  you may  transfer  all or part of that Fixed
Allocation's  Account Value to a different Fixed  Allocation or you may transfer
such Account Value to one or more Sub-accounts, subject to our allocation rules.
To accomplish  this, we must receive  instructions  from you In Writing at least
two  business  days before the Maturity  Date.  No MVA applies to transfers of a
Fixed Allocation's  Account Value occurring as of its Maturity Date. An MVA will
apply in determining the Account Value of a Fixed Allocation at the time annuity
payments are  determined,  unless the Maturity Date of such Fixed  Allocation is
the 15th day before the Annuity Date (see "Annuity Payments").

At least 30 days prior to a Maturity  Date,  or  earlier if  required  by law or
regulation,  we inform you of the Guarantee  Periods available as of the date of
such  notice.  We do not  provide  a similar  notice  if the Fixed  Allocation's
Guarantee Period is of less than a year's  duration.  Such notice may include an
example of the rates we are then crediting new Fixed  Allocations as of the date
such notice is prepared. The rates actually credited to a Fixed Allocation as of
the date of any renewal or transfer immediately  subsequent to the Maturity Date
may be more or less than any rates quoted in such notice.

If your Fixed  Allocation's  then ending Guarantee Period is no longer available
for new allocations and renewals or you choose a different Guarantee Period that
is no longer  available on the date  following the Maturity Date, we will try to
reach you so you may make another choice. If we cannot reach you, we will assign
the next shortest Guarantee Period then currently  available for new allocations
and renewals to that Fixed Allocation.

     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  $10,000.00  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 currently do not
permit dollar cost  averaging  programs  where Account Value is  transferred  to
Fixed Allocations. 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.

Dollar cost averaging from Fixed  Allocations is subject to the following rules:
(a) you may only use  Fixed  Allocations  with  Guarantee  Periods  of 1, 2 or 3
years;  (b)  such a  program  may  only be  selected  in  conjunction  with  and
simultaneous  to a new or  renewing  Fixed  Allocation;  (c) only  averaging  of
earnings only or principal plus earnings is permitted;  (d) a program  averaging
principal  plus earnings from a Fixed  Allocation  must be designed to last that
Fixed  Allocation's  entire current Guarantee Period;  (e) dollar cost averaging
transfers  from a Fixed  Allocation  are not subject to the MVA; (f) dollar cost
averaging  may  be  done  on  a  monthly  basis  only;   and  (g)  you  may  not
simultaneously  use Account  Value in any Fixed  Allocation  to  participate  in
dollar  cost   averaging   and  receive   Systematic   Withdrawals   or  Minimum
Distributions  from such Fixed  Allocation  (see  "Systematic  Withdrawals"  and
"Minimum Distributions").

     Rebalancing:  We 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 in variable investment options 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. If a transfer is requested  involving any investment option
participating in an automatic  rebalancing  program,  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  quarter  if  Account  Value  is  being
maintained  in the  AST  Money  Market  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 variable  investment  option at
any time. However,  you may not choose to allocate less than 5% of Account Value
to any variable investment option.

We do not offer automatic rebalancing in connection with Fixed Allocations.  The
Account Value of your Annuity must be at least  $10,000.00  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
variable  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 is permitted  during the accumulation
phase.  The amount payable is the then current Account Value less any applicable
maintenance  fee. We reserve the right to require  that your  Annuity  accompany
your surrender request.

     Partial  Withdrawals:  You may  withdraw  part of your Account  Value.  The
minimum partial withdrawal is $100.00. The Account Value that must remain in the
Annuity as of the date of this  transaction  is $1,000.00.  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.

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 requirements of Sections 401, 403 or
408 of the Code);  and (b) in relation to plans  pursuant to Section 403 or 408,
you and  your  Advisor  provide  representations  In  Writing  acceptable  to us
limiting the source of the Advisor's compensation to the assets of an applicable
qualified retirement plan, and making certain other representations.

     Systematic  Withdrawals:  We offer Systematic Withdrawals of earnings only,
principal plus earnings or a flat dollar  amount.  Systematic  Withdrawals  from
Fixed  Allocations  are  limited  to  earnings  accrued  after  the  program  of
Systematic  Withdrawals  begins, or payments of fixed dollar amounts that do not
exceed such earnings. A program of Systematic  Withdrawals begins on the date we
accept, at our Office, your request for such a program.

A Systematic  Withdrawal  from a Fixed  Allocation is not subject to the MVA. We
calculate the Fixed Allocation's credited interest since the prior withdrawal as
A minus B, plus C, where:

A is the Interim Value of the applicable Fixed Allocation as of the date of
the Systematic Withdrawal;

         B        is the Interim Value of the applicable  Fixed Allocation as of
                  the  later  of the  beginning  of its then  current  Guarantee
                  Period or the beginning of the Systematic  Withdrawal program;
                  and

         C        is the  total  of all  partial  or  free  withdrawals  and any
                  transfers  from such Fixed  Allocation  since the later of the
                  beginning  of  its  then  current   Guarantee  Period  or  the
                  beginning of the Systematic Withdrawal program.

Systematic  Withdrawals  are available on a monthly,  quarterly,  semi-annual or
annual basis. You may not simultaneously  receive Systematic  Withdrawals from a
Fixed Allocation and participate in a dollar cost averaging  program under which
Account Value is transferred  from the same Fixed  Allocation  (see "Dollar Cost
Averaging").  Systematic  Withdrawals are not available while you are taking any
Minimum Distributions (see "Minimum  Distributions").  Systematic Withdrawals of
earnings or earnings plus principal are not available  while any  rebalancing or
asset allocation program is in effect in relation to your Annuity.

The Account  Value of your  Annuity must be at least  $20,000.00  when we accept
your  request  for a program of  Systematic  Withdrawals.  The  minimum for each
Systematic  Withdrawal is $100.00. For any scheduled Systematic Withdrawal other
than the last that does not meet this  minimum,  we  reserve  the right to defer
such a  withdrawal  and add the amount  that would  have been  withdrawn  to the
amount that is to be withdrawn at the next Systematic Withdrawal.

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").  You may elect to
have  Minimum  Distributions  paid  out  monthly,  quarterly,  semi-annually  or
annually.

Each Minimum  Distribution will be taken from the investment options you select.
However,  the  portion of any  Minimum  Distribution  that can be taken from any
Fixed  Allocations  may not exceed the then current  ratio  between your Account
Value in all Fixed Allocations you maintain and your total Account Value. No MVA
applies to any portion of Minimum  Distributions  taken from Fixed  Allocations.
Minimum  Distributions are not available from any Fixed Allocation if such Fixed
Allocation  is being used in a dollar cost  averaging  program (see "Dollar Cost
Averaging").

     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. If a Contingent Annuitant was designated before the Annuitant's death
and the Annuitant  dies,  the  Contingent  Annuitant then becomes the Annuitant.
There may be adverse tax  consequences  for certain entity Owners if they name a
Contingent Annuitant (see "Ownership, Annuitant and Beneficiary Designations").

The person upon whose death the death benefit is payable is referred to below as
the  "decedent".  For purposes of this death  benefit  provision,  "withdrawals"
means  withdrawals  of any type (partial  withdrawals,  Systematic  Withdrawals,
Minimum Distributions) after any applicable MVA. For purposes of this provision,
persons named Owner or Annuitant within 60 days of the Issue Date are treated as
if they were an Owner or Annuitant on the Issue Date.

The death benefit is as follows,  and is subject to the conditions  described in
(1),(2) and (3) below:

     (1) If death occurs before the  decedent's age 85: the death benefit is the
greater of (a) or (b), where:

     (a) is your Account  Value in  Sub-accounts  plus the Interim  Value of any
Fixed Allocations; or

     (b) the minimum death benefit ("Minimum Death Benefit").  The Minimum Death
Benefit is the sum of all Purchase Payments less the sum of all withdrawals.

     (2) If death occurs after the  decedent's age 85: the death benefit is your
Account Value.

         (3) If a decedent  was not named an Owner or  Annuitant as of the Issue
Date and did not  become  such as a result  of a prior  Owner's  or  Annuitant's
death:  the Minimum  Death Benefit is suspended as to that person for a two year
period  from the date he or she first  became an Owner or  Annuitant.  After the
suspension period is completed,  the death benefit is the same as if such person
had been an Owner or Annuitant on the Issue Date. During the suspension period:

                  (a) If that person's  death occurs before the  decedent's  age
85, the death benefit is your Account Value in the Sub-accounts plus the Interim
Value of any Fixed Allocation.

                  (b) If that person's death occurs after the decedent's age 85,
the death benefit is your Account Value.

The  amount of the death  benefit  is  determined  as of the date we  receive In
Writing:  (a) "due proof of death"; (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. The following constitutes "due proof of death":
(a) a certified copy of a death certificate; (b) a certified copy of a decree of
a court of competent  jurisdiction  as to the finding of death; or (c) any other
proof satisfactory to us.

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  allowed by law, if the Annuity is owned by 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.

     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.  Should Annuities subject to New York
law be made  available,  the Annuity Date for such  Annuities may not exceed the
first day of the calendar month following the Annuitant's  85th birthday.  Other
jurisdictions may impose similar requirements.

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.  Should
Annuities subject to New York law be made available,  for such Annuities, in the
absence of an election In Writing:  (a) the Annuity Date is the first day of the
calendar month  following the Annuitant's  85th birthday;  and (b) fixed monthly
payments will commence under Option 2, described  below,  with 10 years certain.
Other jurisdictions may impose similar requirements. 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, which is not less than 3% of interest per year,
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, but only to the extent selecting such
an option  does not alter the tax status of the  Annuity.  Except  where a lower
amount is required by law, the minimum monthly annuity payment is $100.00.

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.  Since no  minimum  number  of  payments  is
guaranteed,  this option  offers the maximum  level of periodic  payments of the
life contingent  annuity  options.  It is possible that only one payment will be
payable if the death of the key life occurs  before the date the second  payment
was due, and no other payments nor death benefits would be payable.

         (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,  and
thereafter during the remaining lifetime of the survivor,  ceasing with the last
payment  prior to the  survivor's  death.  No  minimum  number  of  payments  is
guaranteed  under this  option.  It is possible  that only one  payment  will be
payable  if the death of all the key lives  occurs  before  the date the  second
payment was due, and no other payments 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  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,  by the amount of the first  periodic
payment per $1,000.00 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 are  designed to qualify  under  various
sections of the Code.  These  limitations  do not affect  certain  roll-overs or
exchanges  between  qualified  plans.  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 may be 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, we are 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 us; 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 us.

     Pricing  of  Transfers  and   Distributions:   We  "price"   transfers  and
distributions on the dates indicated below.

         (1) We price  "scheduled"  transfers and  distributions  as of the date
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
date we receive 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  using  voice  or  data
transmission 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 date 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  involving  Sub-accounts includes the
determination  of the  applicable  Unit  Price  for  the  Units  transferred  or
distributed.   The  pricing  of  transfers  and  distributions  involving  Fixed
Allocations includes the determination of any applicable MVA. Any applicable MVA
alters the amount  available when all the Account Value in a Fixed Allocation is
being  transferred  or  distributed.  Any  applicable  MVA  alters the amount of
Interim  Value  needed  when  only a  portion  of the  Account  Value  is  being
transferred  or  distributed.  Unit Prices may change each  Valuation  Period to
reflect the investment  performance of the  Sub-accounts.  The MVA applicable to
each Fixed  Allocation  changes  once each month and also each time we declare a
different  rate for new Fixed  Allocations.  Payment  is subject to our right to
defer transactions for a limited 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
Account  Value  maintained in any Fixed  Allocations  or in relation to fixed or
adjustable annuity payments.

We will vote shares of the  underlying  mutual funds or  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  or  portfolio  will be
determined as of the record date for such underlying mutual fund or portfolio as
chosen by its board of trustees or board of 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 board of  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 a Sub-account  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.  Transfer  of all or a portion of
ownership rights may affect the minimum death benefit (see "Death Benefits").

     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 $50.00 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 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.

     SALE OF THE ANNUITIES:  American  Skandia  Marketing,  Incorporated  ("ASM,
Inc."),  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.  Under such distribution  agreements such  broker-dealers or
entities may offer Annuities to persons who have established an account with the
broker-dealer or entity. In addition,  ASM, Inc. may offer Annuities directly to
potential  purchasers.  Concessions  may be paid  based on  Account  Value.  The
maximum  concession to be paid in connection  with the sale is 0.30% per year of
the Account Value. 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
Investment Company Act of 1940.

     Advertising: We may advertise certain information regarding the performance
of the investment options.  Details on how we calculate performance measures for
the  Sub-accounts  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.

The information we may advertise regarding the Fixed Allocations may include the
then  current  interest  rates  we  are  crediting  to  new  Fixed  Allocations.
Information  on  Current  Rates  will  be as  of  the  date  specified  in  such
advertisement.  Given that the actual rates  applicable to any Fixed  Allocation
are as of the date of any such Fixed  Allocation's  Guarantee Period begins, the
rate credited to a Fixed  Allocation may be more or less than those quoted in an
advertisement.

Performance  information on the  Sub-accounts is based on past  performance only
and is no  indication of future  performance.  Performance  of the  Sub-accounts
should  not  be  considered  a   representation   of  the  performance  of  such
Sub-accounts in the future. Performance of the Sub-accounts is not fixed. Actual
performance will depend on the type,  quality and, for some of the Sub-accounts,
the  maturities  of the  investments  held by the  underlying  mutual  funds  or
portfolios  and  upon  prevailing  market  conditions  and the  response  of the
underlying mutual funds to such conditions.  Actual performance will also depend
on changes in the expenses of the underlying  mutual funds or  portfolios.  Such
changes  are  reflected,  in turn,  in the  Sub-accounts  which  invests in such
underlying mutual fund or portfolio. In addition, the amount of charges assessed
against each Sub-account will affect performance.

Some of the underlying mutual fund portfolios  existed prior to the inception of
these   Sub-accounts.   Performance   quoted  in   advertising   regarding  such
Sub-accounts  may indicate  periods during which the  Sub-accounts  have been in
existence but prior to the initial offering of the Annuities,  or periods during
which the  underlying  mutual fund  portfolios  have been in existence,  but the
Sub-accounts  have not. Such  hypothetical  performance is calculated  using the
same assumptions  employed in calculating  actual performance since inception of
the Sub-accounts.

Advertisements   we  distribute   may  also  compare  the   performance  of  our
Sub-accounts  with:  (a) certain  unmanaged  market  indices,  including but not
limited to the Dow Jones  Industrial  Average,  the  Standard & Poor's 500,  the
Shearson  Lehman Bond Index,  the Frank Russell  non-U.S.  Universal  Mean,  the
Morgan Stanley Capital  International  Index of Europe, Asia and Far East Funds,
and the Morgan  Stanley  Capital  International  World  Index;  and/or (b) other
management investment companies with investment objectives similar to the mutual
fund or portfolio  underlying the Sub-accounts being compared.  This may include
the  performance  ranking  assigned by various  publications,  including but not
limited to the Wall Street Journal,  Forbes, Fortune, Money, Barron's,  Business
Week, USA Today and  statistical  services,  including but not limited to Lipper
Analytical  Services Mutual Funds Survey,  Lipper Annuity and Closed End Survey,
the Variable  Annuity  Research Data Survey,  SEI, the  Morningstar  Mutual Fund
Sourcebook and the Morningstar Variable Annuity/Life Sourcebook.

American  Skandia Life Assurance  Corporation  may advertise its rankings and/or
ratings by independent financial ratings services. Such rankings may help you in
evaluating our ability to meet our obligations in relation to Fixed Allocations,
pay minimum death benefits,  pay annuity payments or administer Annuities.  Such
rankings  and  ratings do not reflect or relate to the  performance  of Separate
Account B.

     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.

     Transfers  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 Pension and Profit-sharing  Plans:  Annuities may be used to fund
employee   benefits  of  various   retirement  plans  established  by  corporate
employers.  Contributions  to such plans are not taxable to the  employee  until
distributions are made from the retirement plan. The Code imposes limitations on
contributions and  distributions.  The tax treatment of distributions is subject
to  special  provisions  of the  Code,  and also  depends  on the  design of the
specific   retirement   plan.   There  are  also  special   requirements  as  to
participation, nondiscrimination, vesting and nonforfeitability of interests.

     H.R. 10 Plans:  Annuities  may also be used to fund  benefits of retirement
plans  established  by  self-employed   individuals  for  themselves  and  their
employees.  These are commonly known as "H.R. 10 Plans" or "Keogh Plans".  These
plans are subject to most of the same types of limitations  and  requirements as
retirement plans established by corporations. However, the exact limitations and
requirements may differ from those for corporate plans.

     Tax Treatment of Distributions from Qualified Annuities:  A 10% penalty tax
applies to the  taxable  portion of a  distribution  from a  qualified  contract
unless one of the following  exceptions  apply to such  distribution:  (a) it is
part of a properly  executed  transfer to another IRA, an individual  retirement
account  or  another  eligible  qualified  plan;  (b) it  occurs on or after the
taxpayer's  age 59 1/2; (c) it is  subsequent  to the death or disability of the
taxpayer (for this purpose  disability is as defined in Section  72(m)(7) of the
Code);  (d) it is part of substantially  equal periodic  payments to be paid not
less  frequently than annually for the taxpayer's life or life expectancy or for
the  joint  lives  or  life  expectancies  of  the  taxpayer  and  a  designated
beneficiary;  (e) it is  subsequent  to a  separation  from  service  after  the
taxpayer  attains  age 55;  (f) it does  not  exceed  the  employee's  allowable
deduction in that tax year for medical care;  and (g) it is made to an alternate
payee pursuant to a qualified  domestic  relations order. The exceptions  stated
above in (e), (f) and (g) do not apply to IRAs.

     Section 457 Plans:  Under  Section 457 of the Code,  deferred  compensation
plans  established by  governmental  and certain other tax exempt  employers for
their employees may invest in annuity contracts.  The Code limits  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 distribution or transfer from a
Fixed Allocation or an annuity payout for a period not to exceed the lesser of 6
months or the period  permitted by law. If we defer a  distribution  or transfer
from any Fixed  Allocation  or 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  "unitized"  separate  accounts;  (c)  terminate
offering certain  Guarantee Periods for new or renewing Fixed  Allocations;  (d)
combine  Separate Account D with other  "non-unitized"  separate  accounts;  (e)
deregister Separate Account B under the 1940 Act; (f) operate Separate Account B
as a  management  investment  company  under the 1940 Act or in any  other  form
permitted by law; (g) make changes  required by any change in the Securities Act
of 1933,  the  Exchange  Act of 1934 or the 1940 Act;  (h) make changes that are
necessary  to maintain the tax status of your  Annuity  under the Code;  and (i)
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 "unitized"  separate account.  We also reserve the right to
transfer  assets of Separate  Account D which we determine to be associated with
the class of contracts to which your annuity belongs, to another  "non-unitized"
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.

     Indemnification:  Insofar as indemnification  for liabilities arising under
the  Securities  Act of 1933 may be permitted to directors,  officers or persons
controlling the registrant pursuant to the foregoing provisions,  the registrant
has been informed that in the opinion of the Securities and Exchange  Commission
such  indemnification  is against  public  policy as expressed in the Act and is
therefore unenforceable.

     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.

     THE  COMPANY:  American  Skandia  Life  Assurance  Corporation  is a  stock
insurance company domiciled in Connecticut with licenses in all 50 states. It 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,   and  American  Skandia   Information   Services  and  Technology
Corporation,  may undertake certain administrative  functions on our behalf. Our
affiliate, American Skandia Investment Services, Incorporated, currently acts as
the  investment  manager to the American  Skandia  Trust.  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.

     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.  Total shareholders' equity of Skandia Vida, S.A.
de C.V. is $881,648 at December 31, 1995.

     Lines of  Business:  The  Company is in the  business  of  issuing  annuity
policies,  and has been so since its  business  inception  in 1988.  The Company
currently offers the following annuity products:  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.

     Selected   Financial  Data:  The  following  selected  financial  data  are
qualified by reference to, and should be read in conjunction with, the financial
statements,  including related notes thereto,  and "Management's  Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere in
this  Prospectus.  The  selected  financial  data as of and for each of the five
years ended December 31, 1995,  1994,  1993, 1992 and 1991 has not been audited.
The selected financial data has been derived from the full financial  statements
for the years ended  December 31,  1995,  1994,  1993,  1992 and 1991 which were
presented in accordance with generally accepted accounting  principles and which
were audited by Deloitte & Touch LLP, independent auditors, whose report thereon
is included herein.

Income Statement Data:
                         [to be updated upon amendment]

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations

     Results of Operation:  The Company's  long term business plan was developed
reflecting  the current sales and marketing  approach.  Annuity sales  increased
19%, 54% and 210% in 1995, 1994 and 1993, respectively. The Company continues to
show  significant  growth in sales volume and increased  market share within the
variable annuity industry. Total assets grew 75%, 84% and 182% in 1995, 1994 and
1993,  respectively.  These  increases  were a direct result of the  substantial
sales volume increasing separate account assets and deferred  acquisition costs.
Liabilities grew 76%, 87%, and 198% in 1995, 1994 and 1993,  respectively,  as a
result of the reserves  required for the increased  sales activity and borrowing
during 1995,  1994 and 1993.  The  borrowing  is needed to fund the  acquisition
costs of the Company's variable annuity business.

The  Company  experienced  a net loss  after tax in 1995 and 1994,  which was in
excess of plan. The 1995 result was related to higher than  anticipated  expense
levels  and  additional  reserving  requirements  on our market  value  adjusted
annuities.  The increase in expenses was primarily attributable to improving our
service infrastructure and marketing related costs.

The 1994 loss is a result of additional  reserving of approximately $4.6 million
to cover the minimum death benefit exposure in the Company's  annuity  contracts
along with higher than expected general expenses  relative to sales volume.  The
additional  reserve  may be  required  from time to time,  within  the  variable
annuity market place, and is a result of volatility in the financial  markets as
it relates to the underlying separate account investments.  The Company achieved
profits in 1993 of $2 million which was expected.

Increasing  volume of annuity sales  results in higher assets under  management.
The fees realized on assets under management has resulted in annuity charges and
fees to increase 57%, 111% and 143% in 1995, 1994 and 1993, respectively.

Net investment income increased 23% and 88% in 1995 and 1994, respectively,  and
decreased  22% in 1993.  The  increase  in 1995 is a result of a higher  average
level of Company  bonds and  short-term  investments.  The increase in 1994 is a
result of an increase in the Company's bonds and short-term  investments,  which
were  $33.6   million  and  $29.1   million  at  December  31,  1994  and  1993,
respectively.  The  decrease  in  1993 is a  result  of the  need  to  liquidate
investments to support the cash needs required to fund the acquisition  costs on
the variable annuity business.

     Fee  income  has  increased  194%,  125% and 650% in 1995,  1994 and  1993,
respectively, as a result of income from transfer agency type activities.

Annuity benefits  represent  payments on annuity contracts with mortality risks,
this being the  immediate  annuity  with life  contingencies  and  supplementary
contracts with life contingencies.

Increase  in  annuity  policy  reserves  represent  change in  reserves  for the
immediate  annuity with life  contingencies,  supplementary  contracts with life
contingencies and minimum death benefit. During 1995 the Company entered into an
agreement to reinsure the guaranteed  minimum death benefit  exposure on most of
the variable annuity contracts. The costs associated with reinsuring the minimum
death  benefit  reserve  approximates  the change in the minimum  death  benefit
reserve during 1995,  thereby  having no significant  effect on the statement of
operations.  The significant  increase in 1994 reflects the required increase in
the minimum death benefit reserve on variable annuity  contracts.  This increase
covers the escalating death benefit in the product which was further enhanced as
a result of poor performance of the underlying  mutual funds within the variable
annuity contract.

Return credited to contractowners represents revenues on the variable and market
value adjusted  annuities  offset by the benefit payments and change in reserves
required on this business.  Also included are the benefit payments and change in
reserves on immediate annuity contracts without significant  mortality risks. In
1995, the Company earned a lower than anticipated  separate  account  investment
return on the market  value  adjusted  contracts  in support of the benefits and
required  reserves.  In  addition,  the 1995 result  includes an increase in the
required reserves associated with this product.

The  result  for  1994 was  better  than  anticipated  due to  separate  account
investment return on the market value adjusted  contracts being in excess of the
benefits and required reserves.

Underwriting,  acquisition and other  insurance  expenses for 1995 is made up of
$62.8 million of commissions and $42.2 million of general expenses offset by the
net  capitalization of deferred  acquisition costs totaling $69.2 million.  This
compares to the same period last year of $46.2 million of commissions  and $26.2
million  of  general  expenses  offset  by the net  capitalization  of  deferred
acquisition costs totaling $53.7 million.

Underwriting,  acquisition and other insurance  expenses in 1993 were made up of
$36.7 million of commissions and $19.3 million of general expenses offset by the
net capitalization of deferred acquisition costs totaling $46.3 million.

Interest  expense  increased  $2.9  million  and $3.4  million in 1995 and 1994,
respectively,  as a result  of  Surplus  Notes  totaling  $103  million  and $69
million, at 1995 and 1994, respectively.

     Liquidity and Capital Resources: The liquidity requirement of ASLAC was met
by cash from insurance operations, investment activities and borrowings from its
parent.

As previously  stated, the Company had significant growth during 1995. The sales
volume of $1.628 billion was primarily  (approximately  80%) variable  annuities
which carry a contingent  deferred  sales charge.  This type of product causes a
temporary  cash  strain in that 100% of the  proceeds  are  invested in separate
accounts  supporting the product  leaving a cash (but not capital) strain caused
by the  acquisition  cost for the new  business.  This cash strain  required the
Company to look beyond the insurance  operations and investments of the Company.
During 1995,  the Company  borrowed an additional $34 million from its parent in
the form of Surplus  Notes and extended  the  reinsurance  agreement  (which was
initiated  in 1993  and  1994)  along  with  entering  into a third  reinsurance
agreement with a large  reinsurer in support of its cash needs.  The reinsurance
agreements are modified  coinsurance  arrangements where the reinsurer shares in
the  experience  of a specific  book of business.  The income and expense  items
presented above are net of reinsurance.

The Company is  reviewing  various  options to fund the cash strain  anticipated
from the acquisition costs on the coming years' sales volume.

The tremendous growth of this young organization has depended on capital support
from its parent.

As of  December  31,  1995 and  December  31,  1994,  shareholder's  equity  was
$59,713,000 and $52,205,524  respectively,  which includes the carrying value of
the  state  insurance  licenses  in the  amount  of  $4,862,500  and  $5,012,500
respectively.

ASLAC has long term  surplus  notes with its  parent and a short term  borrowing
with an affiliate. No dividends have been paid to its parent company.

     Segment  Information:  As of the date of this  Prospectus,  we offered only
variable and fixed deferred annuities and immediate annuities.

     Reinsurance:  The Company  cedes  reinsurance  under  modified  coinsurance
arrangements.  The  reinsurance  arrangements  provide  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.

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.

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 agreement.

     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.

     Reserves: We are obligated to carry on our statutory books, as liabilities,
actuarial  reserves  to meet our  obligations  on  outstanding  annuity  or life
insurance contracts. This is required by the life insurance laws and regulations
in the  jurisdictions  in which  we do  business.  Such  reserves  are  based on
mortality  and/or  morbidity  tables in  general  use in the United  States.  In
general,  reserves are computed amounts that, with additions from premiums to be
received,  and with  interest on such  reserves  compounded  at certain  assumed
rates,  are expected to be  sufficient to meet our policy  obligations  at their
maturities if death occurs in accordance with the mortality tables employed.  In
the accompanying  Financial Statements these reserves for policy obligations are
determined in accordance with generally accepted  accounting  principles and are
included in the  liabilities  of our separate  accounts and the general  account
liabilities for future benefits of annuity or life insurance contracts we issue.

     Competition: We are engaged in a business that is highly competitive due to
the large  number of insurance  companies  and other  entities  competing in the
marketing and sale of insurance  products.  There are approximately  2300 stock,
mutual and other types of insurers in the life insurance  business in the United
States.

     Employees:  As of December 31, 1995, we had 198 direct salaried  employees.
An affiliate,  American Skandia Information Services and Technology Corporation,
which  provides  services  almost  exclusively  to us,  had 67  direct  salaried
employees.

     Regulation: We are organized as a Connecticut stock life insurance company,
and are  subject  to  Connecticut  law  governing  insurance  companies.  We are
regulated and supervised by the Connecticut  Commissioner of Insurance. By March
1 of every  year,  we must  prepare  and  file an  annual  statement,  in a form
prescribed by the Connecticut Insurance Department,  which covers our operations
for the  preceding  calendar  year,  and must prepare and file our  statement of
financial  condition as of December 31 of such year. The Commissioner and his or
her  agents  have the  right at all times to  review  or  examine  our books and
assets.  A full  examination  of our operations  will be conducted  periodically
according to the rules and  practices of the National  Association  of Insurance
Commissioners ("NAIC"). We are subject to the insurance laws and various federal
and state  securities laws and regulations and to regulatory  agencies,  such as
the Securities and Exchange  Commission (the "SEC") and the Connecticut  Banking
Department, which administer those laws and regulations.

We can be assessed up to prescribed  limits for policyholder  losses incurred by
insolvent  insurers  under the insurance  guaranty fund laws of most states.  We
cannot predict or estimate the amount any such future assessments we may have to
pay. However,  the insurance  guaranty laws of most states provide for deferring
payment or  exempting  a company  from  paying  such an  assessment  if it would
threaten such insurer's financial strength.

Several states,  including  Connecticut,  regulate insurers and their affiliates
under insurance holding company laws and regulations. This applies to us and our
affiliates.  Under  such  laws,  inter-company  transactions,  such as  dividend
payments to parent  companies and  transfers of assets,  may be subject to prior
notice and approval, depending on factors such as the size of the transaction in
relation to the financial position of the companies.

Currently,  the federal  government  does not directly  regulate the business of
insurance.  However, federal legislative,  regulatory and judicial decisions and
initiatives  often have  significant  effects on our business.  Types of changes
that are most likely to affect our business include changes to: (a) the taxation
of life insurance  companies;  (b) the tax treatment of insurance products;  (c)
the  securities  laws,  particularly  as they  relate to  insurance  and annuity
products;  (d) the "business of insurance" exemption from many of the provisions
of the anti-trust  laws; (e) the barriers  preventing most banks from selling or
underwriting  insurance:  and (f) any initiatives  directed toward improving the
solvency  of  insurance  companies.   We  would  also  be  affected  by  federal
initiatives  that have impact on the ownership of or investment in United States
companies by foreign companies or investors.

Executive Officers and Directors:

Our executive officers, directors and certain significant employees, their ages,
positions with us and principal occupations are indicated below. The immediately
preceding  work  experience is provided for officers that have not been employed
by us or an affiliate for at least five years as of the date of this Prospectus.
Name/                                                         Position with American Skandia
Age                                                            Life Assurance Corporation                       Principal Occupation
Alan Blank                                                    Employee                                           Vice President and,
48                                                                                                           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:
36                                                            Director (since February, 1996)                  American Skandia Life
                                                                                                               Assurance Corporation

Henrik Danckwardt                                             Director (since July, 1991)                        Director of Finance
43                                                                                                               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,
42                                                                                                          Assurances and Financial
                                                                                                                  Services Division:
                                                                                                      Skandia Insurance Company Ltd.

M. Patricia Paez                                              Assistant Vice President                      Assistant Vice President
36                                                            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
Executive Compensation

     Summary   Compensation  Table:  The  summary  table  below  summarizes  the
compensation  payable  to our Chief  Executive  Officer  and to the most  highly
compensated of our executive  officers whose  compensation  exceeded $100,000 in
the fiscal year immediately preceding the date of this Prospectus.
Name and Principal                              Annual                Annual         Other Annual
                             Position                Year               Salary                 Bonus         Compensation
                                                                          ($)                   ($)               ($)

                           Jan R. Carendi -           1995              $200,315
                             Chief Executive          1994               170,569
                             Officer                  1993               214,121

                           Gordon C. Boronow -        1995              $157,620
                             President and            1994               129,121
                             Chief Operating          1993               123,788
                             Officer

                           Lincoln R. Collins -       1995              $156,550
                             Senior Vice President    1994                92,700
                             Product Management       1993                72,100

                           N. David Kuperstock        1995              $133,120
                             Vice President,          1994               103,000
                             Product Development      1993                88,864

                           Bayard F. Tracy            1995              $168,052
                             Senior Vice President,   1994               127,050
                             Institutional Sales      1993               123,363
Long-Term  Incentive  Plans - Awards in the Last Fiscal Year: The following
table provides  information  regarding our long-term  incentive plan.  Units are
awarded to executive officers and other personnel. The table shows units awarded
to our Chief Executive Officer and the most highly  compensated of our executive
officers whose  compensation  exceeded  $100,000 in the fiscal year  immediately
preceding  the date of this  Prospectus.  This  program  is  designed  to induce
participants  to remain with the company  over long periods of time and to tie a
portion of their  compensation  to the fortunes of the company.  Currently,  the
program  consists of multiple  plans.  A new plan may be  instituted  each year.
Participants  are  awarded  units  at  the  beginning  of  a  plan.   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.  There
are certain exceptions, such as in cases of retirement or death.

Changes in the value of units  reflect  changes in the  "embedded  value" of the
company.  "Embedded  value" is the net asset  value of the  company  (valued  at
market value and not including the present  value of future  profits),  plus the
present  value of the  anticipated  future  profits  (valued  pursuant  to state
insurance  law) on its  existing  contracts.  Units  will not have any value for
participants  if  the  embedded  value  does  not  increase  by  certain  target
percentages  during the first four years of a plan. The target  percentages  may
differ between each plan. Any amounts available under a plan are paid out in the
fifth through eighth years of a plan.  Payments will be postponed if the payment
would exceed 20% of any profit (as determined  under state insurance law) earned
by the  company  in the prior  fiscal  year or 30% of the  individual's  current
salary year.  The amount to be received by a participant at the time any payment
is due will be the then current  number of units payable  multiplied by the then
current value of such units.
---------Estimated Future Payouts---------

       Name                Number of Units    Period Until Payout        Threshold          Target          Maximum
                                   (#)                                      ($)              ($)               ($)
Jan R. Carendi                  120,000           Various                                $648,060
Gordon C. Boronow               110,000           Various                                $561,558
Lincoln R. Collins               36,750           Various                                $198,807
N. David Kuperstock              32,000           Various                                $200,968
Bayard E. Tracy                  52,500           Various                                $286,263
Compensation  of Directors:  The following  directors  were  compensated as
shown below in 1995:

Malcolm M. Campbell              $4,000      Gunnar Moberg                $2,500
Henrik Danckwardt                $4,000

     Compensation   Committee   Interlocks   and  Insider   Participation:   The
compensation  committee  of our  board of  directors  as of  December  31,  1995
consisted of Malcolm M. Campbell and Henrik Danckwardt.

     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) Calculating the Market Value Adjustment

(6) Independent Auditors

(7) Legal Experts

(8) Appendix A - Financial Statements for Separate Account B (Class 1
    Sub-accounts)

     FINANCIAL  STATEMENTS:  The financial statements which follow in Appendix A
are those of American  Skandia Life  Assurance  Corporation  for the years ended
December 31, 1995, 1994, and 1993,  respectively.  Financial  statements for the
Class 1  Sub-accounts  of  Separate  Account  B are  found in the  Statement  of
Additional Information.
APPENDIXES

     APPENDIX  A  FINANCIAL  STATEMENTS  FOR  AMERICAN  SKANDIA  LIFE  ASSURANCE
CORPORATION

     APPENDIX B SHORT  DESCRIPTIONS  OF THE UNDERLYING  MUTUAL FUNDS'  PORTFOLIO
INVESTMENT OBJECTIVES AND POLICIES
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
                                   APPENDIX A

      FINANCIAL STATEMENTS FOR AMERICAN SKANDIA LIFE ASSURANCE CORPORATION

                           [to be filed by amendment]
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
AS OF DECEMBER 31,
                                                                                   1995                       1994
                                                                           ---------------------      ----------------------

ASSETS

Investments:
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
                                                                           =====================      ======================
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
FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                1994                 1993
                                                                       ----------------    ----------------     ---------------

REVENUES:
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
                                                                       ================    ================     ===============
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
FOR THE YEAR ENDED DECEMBER 31,
                                                                         1995               1994                1993
                                                                  -----------------    ---------------     ---------------
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
                                                                  =================    ===============     ===============
See notes to consolidated financial statements
AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
         (a wholly-owned subsidiary of Skandia Insurance Company Ltd.)

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
                                                                            1995                 1994                 1993
                                                                      ------------------  -------------------   -----------------
CASH FLOW FROM OPERATING ACTIVITIES:
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
                                                                      ==================  ===================   =================
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:
1995             1994              1993
                                                              ----             ----              ----
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
                                                           ============    =============       ===========
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:
1995              1994             1993
                                                               ----              ----             ----
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
                                                               ========         ========          ========
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:
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
                                       ===========         ========              ======            ===========
The amortized cost and market value of fixed maturities, by contractual
         maturity, at December 31, 1995 are shown below.
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
                                                      ===========                     ===========
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:
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
                                        ==========           ======            ========             ==========
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.
Gross gains and gross losses realized were as follows:
Gross                 Gross
                                  Gains                Losses
                                  -----                ------
                                  
         1995              $           0           $         0

         1994              $           0           $         0

         1993                   $329,000           $         0
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:
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
                                     ==========            ========           =========         ==========
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:
Gross                 Gross
                                  Gains                Losses
                                  -----                ------

         1995                    $65,236               $28,462
                                 =======               =======

         1994                   $    510               $ 2,452
                                ========               =======
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:
1995                    1994                    1993
                                                       ----                    ----                    ----
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
                                                    ==========              ==========               ========
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:
1995                  1994
                                                                    ----                  ----
         Deferred Tax (Liabilities):
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
                                                           -----------------     -----------------
The significant components of federal tax expense are as follows:
1995               1994               1993
                                                              ----               ----               ----
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

                                                         ============          ========           ========
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:
1995              1994               1993
                                                               ----              ----               ----
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
                                                           ===========       ==========         ==========
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:
1995
- ----------------------------------------------------------------------------------------------
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
                              ===========            ===========              ===========
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.
Three Months Ended
                                                                             ------------------
                1995                              March 31            June 30         September 30       December 31
                ----                              --------            -------         ------------       -----------

         Premiums and other insurance
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
                                                 ============         ===========        =========        ==========
APPENDIX B

                            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.

Janus Overseas Growth Portfolio:  The investment objective of the Janus Overseas
Growth Portfolio is long-term growth of capital in a manner  consistent with the
preservation  of  capital.  It  is a  diversified  portfolio  that  pursues  its
objective  primarily  through  investments  in common stocks of issuers  located
outside the United  States.  The  portfolio has the  flexibility  to invest on a
worldwide  basis in  companies  and  organizations  of any size,  regardless  of
country of organization or place of principal business  activity.  The portfolio
will  normally  invest at least 65% of its total assets in securities of issuers
from at least five different  countries,  excluding the United States.  Although
the  portfolio  intends  to invest  substantially  all of its  assets in issuers
located outside the United States, it may at times invest in U.S. issuers and it
may at times  invest all of its assets in fewer  than five  countries  or even a
single  country.  The  portfolio  invests  primarily in common stocks of foreign
issuers  selected  for their growth  potential.  The  portfolio  may invest to a
lesser degree in other types of securities,  including preferred stock, warrants
convertible  securities and debt securities.  Debt securities that the portfolio
may purchase include corporate bonds and debentures (less than 35% of net assets
in  high-yield/high-risk  securities);   government  securities;  mortgage-  and
asset-backed securities (not to exceed 25% of assets); zero-coupon bonds (not to
exceed 10% of assets);  indexed/structured  notes;  high-grade commercial paper;
certificates of deposit;  and repurchase  agreements.  Such securities may offer
growth  potential  because of  anticipated  changes in  interest  rates,  credit
standing, currency relationships or other factors. The portfolio may also invest
in  short-term  debt  securities  as a means of receiving a return on idle cash.
When  the  portfolio's  Sub-advisor  believes  that  market  conditions  are not
favorable for profitable  investing or when the Sub-advisor is otherwise  unable
to locate favorable investment opportunities, the portfolio's investments may be
hedged to a greater degree and/or its cash or similar  investments may increase.
The  portfolio  may use  options,  futures  and other types of  derivatives  for
hedging purposes or as a means to enhancing return.

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
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  may be  made in two  principal  regions:  The  United  Kingdom  and
Continental  Europe;  and the  Pacific  Basin  Countries.  Continental  European
countries may include,  from time to time, 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 may 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 Portfolio:  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.

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.  Lower-rated  debt
obligations are generally considered to be high-risk investments.  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:  This 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.

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.

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%.

Founders Passport Portfolio:  The investment  objective of the Founders Passport
Portfolio is capital appreciation.  To achieve its objective, the portfolio will
invest  primarily in securities  issued by foreign  companies  which have market
capitalizations  or annual revenues of $1 billion or less.  These securities may
represent  companies in both established and emerging  economies  throughout the
world. At lease 65% of the portfolio's total assets will normally be invested in
foreign securities representing a minimum of three countries.  The portfolio may
invest  in  larger  foreign  companies  or in  U.S.-based  companies  if, in the
Sub-advisor's opinion they represent better prospects for appreciation.

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  Portfolio:  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.

Putnam  Growth and Income:  The  investment  objective of the Putnam  Growth and
Income  Portfolio  is to seek  capital  growth.  Current  income is a  secondary
objective. The portfolio invests primarily in common stocks that offer potential
for capital growth, and may, consistent with its investment objective, invest in
stocks that offer potential for current income.  The portfolio may also purchase
corporate bonds, notes and debentures,  preferred stocks, convertible securities
(both debt securities and preferred stocks) or U.S. government securities if the
sub-advisor  determines  that their purchase would help further the  portfolio's
investment  objective.  The types of  securities  held by the portfolio may vary
from time to time in light of the portfolio's  investment objective,  changes in
interest  rates,  and economic and other factors.  The portfolio may also hold a
portion of its assets in cash or money market  instruments.  The  portfolio  may
invest  up to 20% of its  assets in  securities  principally  traded in  foreign
markets.   The  portfolio  may  invest  in  both  higher-rated  and  lower-rated
fixed-income securities,  and is not subject to investment limitations on credit
ratings.

Putnam Overseas Equity  Portfolio:  The  investment  objective  of the  Putnam
Overseas  Equity  Portfolio is to seek capital  appreciation.  The  portfolio is
designed  for  investors  seeking  capital  appreciation   primarily  through  a
diversified  portfolio of equity  securities  of companies  located  outside the
United States of America.  The  portfolio's  investments  will normally  include
common stocks, preferred stocks, securities convertible into common or preferred
stocks,  and warrants to purchase common or preferred stocks.  The portfolio may
also invest to a lesser extent in debt securities and other types of investments
of the sub-advisor  believes  purchasing them would help achieve the portfolio's
objective. The portfolio will under normal circumstances, invest at least 65% of
its assets in at least three different countries outside of the United States.

Twentieth Century Balanced Portfolio:  The investment objective of the Twentieth
Century Balanced  Portfolio is to seek capital growth and current income.  It is
the  intention  of  the  sub-advisor  to  maintain   approximately  60%  of  the
portfolio's  assets in common stocks that are  considered by the  sub-advisor to
have better-than-average prospects for appreciation and the balance in bonds and
other fixed income securities.  The sub-advisor expects that a minimum of 25% of
the amount to be maintained in fixed income securities will be invested in fixed
income senior  securities.  Under normal market  conditions the weighted average
portfolio  maturity  of the  fixed  income  securities  will be in the  three-to
10-year  range.  At  least  80% of  fixed  income  assets  will be  invested  in
securities  which at the time of  purchase  are  rated  with the  three  highest
categories by a nationally recognized  statistical rating organization (at least
A by Moody's or Standard & Poor's).  The  remaining  portion of the fixed income
assets may be invested in issues in the fourth highest  category (Baa by Moody's
or BBB by S&P).

Twentieth Century  International  Growth Portfolio:  The investment objective of
the Twentieth  Century  International  Growth  Portfolio is capital growth.  The
portfolio will seek to achieve its investment  objective by investing  primarily
in securities of foreign  companies that meet certain  fundamental and technical
standards of selection  and have, in the opinion of the  Sub-advisor,  potential
for appreciation.  The portfolio will invest primarily in common stocks (defined
to include depository receipts for common stock and other equity equivalents) of
such  companies.  The  portfolio  will  try  to  stay  fully  invested  in  such
securities,  regardless of the movement of stock prices generally.  Although the
primary  investment of the portfolio  will be common  stocks,  the portfolio may
also invest in other types of securities  consistent with the  accomplishment of
the  portfolio's  objective.  When the  Sub-advisor  believes that total capital
growth potential of other  securities  equals or exceeds the potential return of
common  stocks,  the  portfolio may invest up to 35% of its assets in such other
securities.  The  portfolio  will  limit its  purchases  of debt  securities  to
investment-grade obligations. Under normal conditions, the portfolio will invest
at least 65% of its  assets in common  stocks  or other  equity  equivalents  of
issuers  from at  least  three  countries  outside  of the  United  States.  The
principal  criterion for inclusion of a security in the portfolio is its ability
to meet the fundamental and technical standards of selection and, in the opinion
of the Sub-advisor, to achieve better-than-average appreciation. The Sub-advisor
also will  consider a number of other  factors in making  investment  selections
including:  the  prospects  for  relative  economic  growth  among  countries or
regions,  economic and political conditions,  expected inflation rates, currency
exchange fluctuations and tax considerations.

                             The Alger American Fund

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 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  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 Management Trust).

     AMT  Partners  Investments:  The  investment  objective of the AMT Partners
Investments  is  to  seek  capital   growth.   This   investment   objective  is
non-fundamental.

The 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.

                   American Skandia Life Assurance Corporation
                            Attention: Concierge Desk
                                  P.O. Box 883
                           Shelton, Connecticut 06484

     
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PLEASE SEND ME A STATEMENT  OF  ADDITIONAL  INFORMATION  THAT  CONTAINS  FURTHER
DETAILS ABOUT THE AMERICAN  SKANDIA  ANNUITY  DESCRIBED IN PROSPECTUS 
 CHC2 PROS (10/96)
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     ADDITIONAL  INFORMATION:   Inquiries  will  be  answered  by  calling  your
representative or by writing to:

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                  P.O. Box 883
                           Shelton, Connecticut 06484

Issued by:                                                          Serviced at:
AMERICAN SKANDIA LIFE                                      AMERICAN SKANDIA LIFE
ASSURANCE CORPORATION                                      ASSURANCE CORPORATION
One Corporate Drive                                                 P.O. Box 883
Shelton, Connecticut 06484                            Shelton, Connecticut 06484
Telephone: 1-800-752-6342                             Telephone:  1-800-752-6342

                                 Distributed by:

                    AMERICAN SKANDIA MARKETING, INCORPORATED
                               One Corporate Drive
                           Shelton, Connecticut 06484
                            Telephone: (203) 926-1888

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* Trustees of American  Skandia  Trust,  one of the  underlying  mutual funds in
which the Sub-accounts offered pursuant to this Prospectus invest.

                                                                

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.  Other Expenses of Issuance and Distribution:  Not Applicable.

Item 14. Indemnification of Directors and Officers: Under Section 33-320a of the
Connecticut  General  Statutes,  the  Registrant  must  indemnify  a director or
officer  against  judgments,  fines,  penalties,  amounts paid in settlement and
reasonable expenses including attorneys' fees, for actions brought or threatened
to be brought  against him in his capacity as a director or officer when certain
disinterested  parties  determine that he acted in good faith and in a manner he
reasonably  believed  to be in the  best  interests  of the  Registrant.  In any
criminal  action or proceeding,  it also must be determined that the director or
officer  had no reason to believe  his conduct  was  unlawful.  The  director or
officer  must also be  indemnified  when he is  successful  on the merits in the
defense of a proceeding or in circumstances  where a court determines that he is
fairly and  reasonable  entitled to be  indemnified,  and the court approves the
amount. In shareholder derivative suits, the director or officer must be finally
adjudged  not to have  breached  this  duty to the  Registrant  or a court  must
determine that he is fairly and reasonably  entitled to be indemnified  and must
approve the amount.  In a claim based upon the director's or officer's  purchase
or sale of the  Registrants'  securities,  the  director  or officer  may obtain
indemnification   only  if  a  court   determines  that,  in  view  of  all  the
circumstances,  he is fairly and reasonably  entitled to be indemnified and then
for such amount as the court shall  determine.  The By-Laws of American  Skandia
Life Assurance  Corporation  ("ASLAC") also provide  directors and officers with
rights of indemnification, consistent with Connecticut Law.

The foregoing statements are subject to the provisions of Section 33-320a.

Directors and officers of ASLAC and American  Skandia  Marketing,  Incorporated,
("ASM, Inc.") can also be indemnified  pursuant to Indemnity  Agreements between
each director and officer and American Skandia Investment Holding Corporation, a
corporation organized under the laws of the state of Delaware. The provisions of
the Indemnity  Agreement  are governed by Section 45 of the General  Corporation
Law of the State of Delaware.

The  directors and officers of ASLAC and ASM, Inc. are covered under a directors
and officers  liability  insurance  policy issued by an  unaffiliated  insurance
company and an insurance policy issued to Skandia  Insurance Company Ltd., their
ultimate  parent.  Such policy will reimburse ASLAC or ASM, Inc., as applicable,
for any payments  that it shall make to directors  and officers  pursuant to law
and, subject to certain exclusions  contained in the policy,  will pay any other
costs,  charges  and  expenses,  settlements  and  judgments  arising  from  any
proceeding  involving  any  director  or  officer  of  ASLAC  or ASM,  Inc.,  as
applicable, in his or her past or present capacity as such.

     Item 15. Recent Sales of Unregistered Securities:  ASLAC has not offered or
sold any unregistered securities.
Item 16.  Exhibits and Financial Statement Schedules:
Exhibits                                                                                     Page

1        Underwriting agreement incorporated by reference to Post-Effective Amendment
         No. 1 to Registration Statement No. 33-26122, filed March 1, 1990

2        Plan of acquisition, reorganization, arrangement, liquidation or succession        Not applicable

3        Articles of incorporation and by-laws incorporated by reference to Pre-Effective
         Amendment No. 2 to Registration Statement No. 33-19363, filed July 27, 1988

4        Instruments defining the rights of security holders, including indentures  (to be filed by amendment)

5        Opinion re legality                                                        (to be filed by amendment)

6 - 9                                                                                       Not applicable

10       Material contracts (Investment Management Agreement)

         (a) Agreement with J.P. Morgan Investment Management Inc. incorporated by reference to Post-Effective
              Amendment No. 5 to Registration Statement No. 33-26122, filed April 23, 1991

         (b) Agreement with Fleet Investment Advisors Inc., incorporated by reference to the initial filing of
               Registration Statement No. 33-86918 filed December 1, 1994

11 - 22                                                                                     Not applicable

23a      Consent of Deloitte & Touche LLP                                           (to be filed by amendment)

23b      Opinion & Consent of Werner & Kennedy                                      (to be filed by amendment)

24       Power of Attorney

         (a)  For Directors Boronow,  Campbell,  Carendi,  Danckwardt,  Dokken and Sutyak  incorporated by
              reference to Post-Effective  Amendment No. 10 to Registration Statement No. 33-19363,  filed
              February 28, 1992
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (b)  For Directors Mazzaferro,  Moberg, Soderstrom and Tracy incorporated by reference to initial
              Registration Statement No. 33-86918, filed December 1, 1994
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (c)  For  Director  Svensson  incorporated  by reference to initial  Registration  Statement  No.
              33-88360, filed January 10, 1995
              (i) Filed  via EDGAR  with  Pre-effective  Amendment  No. 1 to  Registration  Statement  No.
              333-00941, filed April 26, 1996

         (d)  For  Directors  Brunetti,   Collins  and  Michael   incorporated  by  reference  to  initial
              Registration Statement No. 333-00941, filed February 15, 1996

25 - 28                                                                                     Not applicable
- ---------------------------------------------------------------------------------------------------------------------------
An index to the  financial  statement  schedules  is  omitted  because it is not
required or is not applicable.

Item 17.  Undertakings:  The undersigned Registrant hereby undertakes:

(1) To file,  during  any  period  in which  offers  or sales  are  being  made,
post-effective amendments to this registration statement:

 (i) To include any  prospectus  required by section 10 (a)(3) of the Securities
     Act of 1933; 

 (ii)To  reflect  in the  prospectus  any  facts or  events  arising  after  the
     effective  date  of  the   registration   statement  (or  the  most  recent
     post-effective amendment thereof) which,  individually or in the aggregate,
     represent  a  fundamental  change  in  the  information  set  forth  in the
     registration statement; and

 (iii) To  include  any  material  information  with  respect  to  the  plan  of
     distribution not previously disclosed in the registration  statement or any
     material change to such information in the registration statement.

(2) That, for the purpose of determining  any liability under the Securities Act
of  1933,  each  such  post-effective  amendment  shall  be  deemed  to be a new
registration statement relating the securities offered therein, and the offering
of such  securities  at that time  shall be deemed to be the  initial  bona fide
offering thereof.

(3) To remove from  registration by means of a  post-effective  amendment any of
the securities  being  registered  which remain unsold at the termination of the
offering.

(4)  The  undersigned   Registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to section  13(a) or section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(5) Insofar as indemnification  for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the Registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the Registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

- --------------------------------------------------------------------------------

LEGAL EXPERTS:  Counsel with respect to Federal laws and regulations  applicable
to the issue and sale of the  Annuities and with respect to  Connecticut  law is
Werner & Kennedy, 1633 Broadway, New York, New York 10019.
Exhibits

                                   Exhibit 4

 Instruments defining the rights of security holders,  including  indentures 
                                                      (to be filed by amendment)

Exhibit 5 Opinion re Legality                         (to be filed by amendment)

Exhibit 23a Consent of Deloitte & Touche LLP          (to be filed by amendment)

Exhibit 23b Opinion & Consent to Werner & Kennedy     (to be filed by amendment)

                      Exhibit 4 (to be filed by amendment)
Exhbit 5 (to be filed by amendment)
Exhibit 23a (to be filed by amendment)
Exhibit 23b (to be filed by amendment)

                                   SIGNATURES

Pursuant to the  requirements  of the Securities Act of 1933, the Registrant has
duly  caused  this  registration  statement  to be signed  on its  behalf by the
undersigned,  thereunto  duly  authorized,  in the  City of  Shelton,  State  of
Connecticut, July 24, 1996.

                   AMERICAN SKANDIA LIFE ASSURANCE CORPORATION
                                   Registrant

By:/s/ M. Patricia Paez                             Attest:/s/ Diana D. Steigauf
M. Patricia Paez, Corporate Secretary                          Diana D. Steigauf
Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed below by the following  persons in the  capacities and
on the date indicated.

Signature                                               Title                              Date
(Principal Executive Officer)

           Jan R. Carendi*                        Chief Executive Officer,         
           Jan R. Carendi                    Chairman of the Board and Director           July 24, 1996

                              (Principal Financial Officer and Principal Accounting Officer)

   /s/ Thomas M. Mazzaferro                  Executive Vice President and           
        Thomas M. Mazzaferro                       Chief Financial Officer                July 24, 1996

                              (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
*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. 33-88630.
                   ****Pursuant to Powers of Attorney filed with the initial filing of Registration Statement No. 333-00941.